Document:

ex102.htm

 

 

                                                        EXHIBIT
10.2

 

BROADPOINT GLEACHER SECURITIES GROUP, INC.

 

2007 INCENTIVE COMPENSATION PLAN

RESTRICTED STOCK UNITS AGREEMENT

 

 

THIS RESTRICTED STOCK UNITS AGREEMENT (the “Agreement”) confirms the grant on August 21, 2009 (the “Grant Date”) by Broadpoint Gleacher Securities Group, Inc., a New York corporation (the “Company”), to Lee Fensterstock (“Employee”) of Restricted
Stock Units (the “Units”), including rights to Dividend Equivalents as specified herein, as follows:

 

	
Number Granted:  832,147 Units

 

How Units Vest:  33-1/3% of the Units, if not previously forfeited, will vest on the first anniversary of the Grant Date, 33-1/3% of the Units, if not previously forfeited, will vest on the second anniversary of the Grant Date and 33-1/3% of the Units, if not previously
forfeited, will vest on the third anniversary of the Grant Date, provided that Employee continues to be employed by the Company or a subsidiary on each vesting date (each, a “Stated Vesting Date”). In addition, if not previously forfeited, the Units will become vested upon the occurrence of certain events relating to Termination of Employment and certain events relating to a Change
of Control (as defined below) in each case to the extent provided in Section 4 of the Terms and Conditions of Restricted Stock Units attached hereto (the “Terms and Conditions”). The terms “vest” and “vesting” mean that the Units have become non-forfeitable. If Employee has a Termination of Employment prior to the Stated Vesting Date and the Units are not
otherwise deemed vested by that date, the Units will be immediately forfeited except as otherwise provided in Section 4 of the Terms and Conditions.

 

Settlement Date:  Settlement of vested Units will occur on the earlier of the third anniversary of the Grant Date or when an Employee has had a Termination of Employment (such date being the “Settlement Date”), except settlement shall be deferred in certain
cases if required in accordance with Section 8(a) of the Terms and Conditions, and Units that become vested after (and not upon) Termination of Employment shall be settled at the later of vesting or the date determined in accordance with Section 8(a) of the Terms and Conditions. Units granted hereunder will be settled by delivery of one Share for each Unit being settled (together with any cash or Shares resulting from Dividend Equivalents).

 

 

 

 

 

 

 

The Units are subject to the terms and conditions of the Company’s 2007 Incentive Compensation Plan (the “Plan”), and this Agreement, including the Terms and Conditions attached hereto. The number of Units, the kind
of shares deliverable in settlement of Units, and other terms relating to the Units are subject to adjustment in accordance with Section 5 of the Terms and Conditions and Section 5.3 of the Plan.

 

Employee acknowledges and agrees that (i) Units are nontransferable, except as provided in Section 3 of the Terms and Conditions and Section 9.2 of the Plan, (ii) Units are subject to forfeiture upon Employee’s Termination of Employment in certain circumstances and,
as specified in Section 4 of the Terms and Conditions, and (iii) sales of shares delivered in settlement of Units will be subject to the Company’s policies regulating trading by employees. 

 

IN WITNESS WHEREOF, BROADPOINT GLEACHER SECURITIES GROUP, INC. has caused this Agreement to be executed by its officer thereunto duly authorized, and Employee has duly executed this Agreement, by which each has agreed to the terms of this
Agreement.

 

	
Employee:                                 BROADPOINT GLEACHER SECURITIES GROUP, INC. 

 

 

/s/Lee Fensterstock                  By: /s/ Peter McNierney

LEE FENSTERSTOCK                    PETER MCNIERNEY

 

 

 

 

TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS 

 

 

The following Terms and Conditions apply to the Units granted to Employee by Broadpoint Gleacher Securities Group, Inc. (the “Company”), and Units (if any) resulting from Dividend Equivalents, as specified in the Restricted
Stock Units Agreement (of which these Terms and Conditions form a part). Certain terms of the Units, including the number of Units granted, vesting date(s) and Settlement Date, are set forth in the Agreement.

 

1.  GENERAL. The Units are granted to Employee under the Company’s 2007 Incentive Compensation
Plan (the “Plan”). A copy of the Plan and information regarding the Plan, including documents that constitute the “Prospectus” for the Plan under the Securities Act of 1933, can be obtained from the Company upon request. All of the applicable terms, conditions and other provisions of the Plan are incorporated by reference herein. Capitalized
terms used in the Agreement and this Terms and Conditions but not defined herein shall have the same meanings as in the Plan. If there is any conflict between the provisions of the Agreement and this Terms and Conditions and mandatory provisions of the Plan, the provisions of the Plan govern, otherwise, the terms of this document shall prevail. If there is any conflict between the provisions
of the Agreement and this Terms and Conditions and the Employment Agreement, the terms of this document shall prevail. By accepting the grant of the Units, Employee agrees to be bound by all of the terms and provisions of the Plan (as presently in effect or later amended), the rules and regulations under the Plan adopted from time to time, and the decisions and determinations of the Company’s Executive Compensation Committee (the “Committee”)
made from time to time, provided that no such Plan amendment, rule or regulation or Committee decision or determination without the consent of an affected Participant shall materially affect the rights of the Employee with respect to the Units.

 

 

-2-

 

 

2.  ACCOUNT FOR EMPLOYEE. The Company shall maintain a bookkeeping account for Employee (the “Account”)
reflecting the number of Units then credited to Employee hereunder as a result of such grant of Units and any crediting of additional Units to Employee pursuant to payments equivalent to dividends paid on Common Stock under Section 5 hereof (“Dividend Equivalents”).

 

3.  NONTRANSFERABILITY. Until Units are settled in accordance with the terms of this Agreement, Employee
may not sell, transfer, assign, pledge, margin or otherwise encumber or dispose of Units or any rights hereunder to any third party other than by will or the laws of descent and distribution, except for transfers to a Beneficiary or as otherwise permitted and subject to the conditions under Section 9.2 of the Plan.

 

4.  TERMINATION PROVISIONS. The following provisions will govern the vesting, forfeiture and settlement
of the Units that are not vested as of immediately prior to Employee’s Termination of Employment, in each case, unless otherwise determined by the Committee and subject to any delay provided for in Section 8(a) hereof:

 

(a)           Death or Disability. In the event of (i) Employee’s Termination of Employment due to death
or (ii) Employee’s Disability (as defined below), all Units then outstanding, if not previously vested, will immediately vest, and all Units will be settled in accordance with the settlement terms set out in the Agreement, giving effect to any valid deferral election of Employee then in effect.

 

(b)           Termination by Employee Without Good Reason or by the Company for Cause. In the event of Employee's
Termination of Employment by Employee without Good Reason (as defined below) or by the Company or any Group Entity for Cause, Units not vested at the date of Termination of Employment will be forfeited.  For the avoidance of doubt, Employee’s Termination of Employment under the circumstances set forth in Section 5(a) of the Employment Agreement (as such Section 5(a) is in effect as of the Grant Date) shall be deemed a Termination of Employment by Employee without Good Reason (and shall not be
considered a Termination of Employment by the Company or any Group Entity without Cause) for all purposes of this Agreement and these Terms and Conditions.

 

(c)            Termination by the Company Without Cause, other than in connection with a Change of Control. In
the event of Employee's Termination of Employment by the Company or any Group Entity for any reason other than Cause, death or Disability, which Termination of Employment occurs prior to a Change of Control or more than two years following a Change of Control, Units not vested at the date of Termination of Employment shall not be forfeited, but will continue to vest and be settled in accordance with the vesting and settlement schedules specified in the Agreement, provided that Employee executes a settlement agreement
and release and a restrictive covenant agreement substantially as set forth in Section 8(a) of the Employment Agreement, in accordance with and for a term not to exceed eighteen (18) months as provided by the Incentive Compensation Plan.

 

 

 

-3-

 

(d)           Termination by Employee With Good Reason, other than in connection with a Change of Control. In the
event of Employee's Termination of Employment by Employee for Good Reason which occurs prior to a Change of Control or more than two years following a Change of Control, Units not vested at the date of Termination of Employment shall not be forfeited, but will continue to vest and be settled in accordance with the vesting and settlement schedules specified in the Agreement, provided that Employee executes a settlement agreement and release and a restrictive covenant agreement substantially as set forth in Section
8(a) of the Employment Agreement, in accordance with and for a term not to exceed eighteen (18) months as provided by the Incentive Compensation Plan.

 

(e)           Termination by the Company without Cause or by the Employee for Good Reason in connection with a Change of Control.  In the event of Employee’s
Termination of Employment (i) by the Company or any Group Entity for any reason other than Cause, death or Disability or (ii) by Employee for Good Reason, in each case, during the two-year period following a Change of Control which constitutes a “change in control event” within the meaning of Code Section 409A (a “409A Change of Control”), all Units not vested as of the date of Termination of Employment will immediately vest in full as of the date of Termination of Employment and will
be settled in accordance with the settlement schedule specified in the Agreement, giving effect to any valid deferral election of Employee then in effect and the provisions of Section 8(a) of these Terms and Conditions.  In the event that such Change of Control is not a 409A Change of Control, all Units not vested as of the date of Termination of Employment will immediately vest in full as of the date of Termination of Employment, but such Units will not be settled until their originally scheduled Stated
Vesting Date, giving effect to any valid deferral election of Employee then in effect.  Vesting of Employee’s Units pursuant to this Section 4(e) shall be contingent on Employee’s execution of a settlement agreement and release in substantially the form customarily used by the Company prior to the Change of Control transaction.

 

(f)           Certain Definitions. The following definitions apply for purposes of this Agreement, whether or not
Employee has an employment agreement or other agreement with a Group Entity that contains the same or similar defined terms.

 

(i) “Cause” has the meaning given in the Employment Agreement.

 

                (ii) “Change of Control” has the meaning given in the Employment Agreement.

 

(iii) “Disability” means “disability” as defined in Code Section 409A.

 

 

-4-

 

 

(iv) “Employment Agreement” means that certain employment agreement entered into by and between Employee and the Company dated as of September 21, 2007, as amended from time to time.

 

(v) “Good Reason” has the meaning given in the Employment Agreement.

 

(vi) “Group Entity” means either the Company or any of its subsidiaries and affiliates.

 

(vii) “Termination of Employment” means the event by which Employee ceases to be employed by a Group Entity and immediately thereafter is not employed by any other Group Entity and which constitutes a “separation from service” under Code Section 409A and its associated
regulations.

 

5.  DIVIDEND EQUIVALENTS AND ADJUSTMENTS.

 

(a)           Dividend Equivalents. Subject to Section 5(d), Dividend Equivalents will be credited on Units (other
than Units that, at the relevant record date, previously have been settled or forfeited) and deemed reinvested in additional Units, to the extent and in the manner as follows:

 

(i)  Cash Dividends. If the Company declares and pays a dividend or distribution on Shares in the form of cash, then a number of additional Units shall be
credited to Employee’s Account as of the last day of the calendar quarter in which such dividend or distribution was paid equal to the number of Units credited to the Account as of the record date for such dividend or distribution multiplied by cash amount of the dividend or distribution paid on each outstanding Share at such payment date, divided by the Fair Market Value of a share of Common Stock at the date of such crediting; provided, however,
that in the case of an extraordinary cash dividend or distribution the Company may provide for such crediting at the dividend or distribution payment date instead of the last day of the calendar quarter.

 

(ii)  Stock Dividends and Splits. If the Company declares and pays a dividend or distribution on Shares in the form of additional Shares, or there occurs a
forward split of Shares, then a number of additional Units shall be credited to Employee’s Account as of the payment date for such dividend or distribution or forward split equal to the number of Units credited to the Account as of the record date for such dividend or distribution or split multiplied by the number of additional Shares actually paid as a dividend or distribution or issued in such split in respect of each outstanding Share. 

 

(iii)  Other Dividends. If the Company declares and pays a dividend or distribution on Shares in the form of property other than additional Shares, then a
number of additional Units shall be credited to Employee’s Account as of the payment date for such dividend or distribution equal to the number of Units credited to the Account as of the record date for such dividend or distribution multiplied by the Fair Market Value of such property actually paid as a dividend or distribution on each outstanding Share at such payment date, divided by the Fair Market Value of a Share at such payment date.

 

 

 

-5-

 

 

(b)           Adjustments. The number of Units credited to Employee’s Account shall be appropriately adjusted,
in order to prevent dilution or enlargement of Employee’s rights with respect to Units or to reflect any changes in the number of outstanding shares of Common Stock resulting from any event referred to in Section 5.3 of the Plan, taking into account any Units credited to Employee in connection with such event under Section 5(a) hereof.

 

(c)           Risk of Forfeiture and Settlement of Units Resulting from Dividend Equivalents and Adjustments. Units
which directly or indirectly result from Dividend Equivalents on or adjustments to a Unit granted hereunder and which do not result from a dividend or distribution on Shares in the form of cash, shall be subject to the same risk of forfeiture as applies to the granted Unit and, if not forfeited, will be settled at the same time as the granted Unit. Units which directly or indirectly result from Dividend Equivalents on or adjustments to a Unit granted
hereunder and which result from an ordinary dividend or distribution on Shares in the form of cash, shall not be subject to forfeiture and will be settled at the same time as the granted Unit (or if the granted Unit is forfeited, then at the time the granted Unit would have been settled if it were not forfeited). Units which directly or indirectly result from Dividend Equivalents on or adjustments to a Unit granted hereunder and which result from an
extraordinary dividend or distribution on Shares in the form of cash, shall, unless otherwise determined by the Company at the time of such extraordinary dividend or distribution, be subject to the same risk of forfeiture as applies to the granted Unit and, if not forfeited, will be settled at the same time as the granted Unit.

 

(d)           Changes to Manner of Crediting Dividend Equivalents.  The provisions of Section 5(a) notwithstanding,
the Company may vary the manner and timing of crediting Dividend Equivalents for administrative convenience, including, for example, by crediting cash Dividend Equivalents rather than additional Units.

 

6.  ADDITIONAL FORFEITURE PROVISIONS NOT APPLICABLE.  The forfeiture conditions set forth in Section
7.4 of the Plan shall not apply to all Units hereunder and to gains realized upon the settlement of the Units, except as specifically stated herein.

 

7.  EMPLOYEE REPRESENTATIONS AND WARRANTIES AND RELEASE. As a condition to any non-forfeiture of the
Units at or after Termination of Employment and to any settlement of the Units, the Company may require Employee (i) to make any representation or warranty to the Company as may be required under any applicable law or regulation, to make a representation and warranty that no Forfeiture Event has occurred or is contemplated, and that otherwise the requirements of Section 7 above have been met, and (ii) to execute a release of claims against the Company arising before the date of such release, in such form as may
be specified by the Company.

 

 

 

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8.  OTHER TERMS RELATING TO UNITS.

 

(a)           Deferral of Settlement; Compliance with Code Section 409A. Settlement of any Unit, which otherwise
would occur at the Settlement Date, will be deferred in certain cases if and to the extent Employee is permitted to defer the Units and timely makes a valid deferral election relating to the Units. Deferrals, whether elective or mandatory under the terms of this Agreement, shall comply with requirements under Code Section 409A. Deferrals will be subject to such other restrictions and terms
as may be specified by the Company prior to deferral. This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent.  Each payment and benefit hereunder shall constitute a “separately identified” amount within the meaning of Treasury Regulation Section 1.409A-2(b)(2).  In the event that the terms of this Agreement would subject
the Employee to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and the Employee shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement.  To the extent any amounts under this Agreement are payable by reference to the Employee’s termination
of employment, such term shall be deemed to refer to the Employee’s separation from service, within the meaning of Section 409A of the Code.  Notwithstanding any other provision in this Agreement to the contrary, if the Employee is a “specified employee,” as defined in Section 409A of the Code, as of the date of the Employee’s separation from service, then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation,
within the meaning of Section 409A of the Code, (ii) is payable upon the Employee’s separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Employee’s separation from service, such payment shall be delayed until the earlier to occur of (a) the six-month anniversary of the separation from service or (b) the date of the Employee’s death.  It is understood that Code Section 409A and regulations
thereunder may require any elective deferral to comply with Section 409A(a)(4)(C). In addition, under U.S. federal income tax laws and Treasury Regulations (including proposed regulations) as presently in effect or hereafter implemented, (i) if the timing of any distribution in settlement of Units would result in Employee’s constructive receipt of income relating to the Units prior to
such distribution, the date of distribution will be the earliest date after the specified date of distribution that distribution can be effected without resulting in such constructive receipt (or, if delayed distribution would not avoid such constructive receipt, distribution will be accelerated to the date that would avoid such constructive receipt, but in no event will distribution occur before the vesting date); and (ii) any rights of Employee or retained authority of the Company with respect to Units hereunder
shall be automatically modified and limited to the extent necessary so that Employee will not be deemed to be in constructive receipt of income relating to the Units prior to the distribution and so that Employee shall not be subject to any 409A Penalties. 

 

(b)           Fractional Units and Shares. The number of Units credited to Employee’s Account shall include
fractional Units calculated to at least three decimal places, unless otherwise determined by the Committee. Unless settlement is effected through a broker or agent that can accommodate fractional shares (without requiring issuance of a fractional share by the Company), upon settlement of the Units Employee shall be paid, in cash, an amount equal to the value of any fractional share that would have otherwise been deliverable in settlement of such Units.

 

 

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(c)           Tax Withholding. Employee shall make arrangements satisfactory to the Company, or, in the absence
of such arrangements, a Group Entity may deduct from any payment to be made to Employee any amount necessary, to satisfy requirements of federal, state, local, or foreign tax law to withhold taxes or other amounts with respect to the lapse of the risk of forfeiture (including FICA due upon such lapse) or the settlement of the Units. Unless Employee has made separate arrangements satisfactory to the Company, the Company may elect to withhold shares deliverable
in settlement of the Units having a fair market value (as determined by the Committee) equal to the amount of such tax liability required to be withheld in connection with the settlement of the Units, but the Company shall not be obligated to withhold such Shares.

 

(d)           Statements. An individual statement of Employee’s Account will be issued to Employee at such
times as may be determined by the Company. Such a statement shall reflect the number of Units credited to Employee’s Account, transactions therein during the period covered by the statement, and other information deemed relevant by the Committee. Such a statement may be combined with or include information regarding other plans and compensatory arrangements for employees. Employee’s
statements shall be deemed a part of this Agreement, and shall evidence the Company’s obligations in respect of Units, including the number of Units credited as a result of Dividend Equivalents (if any). Any statement containing an error shall not, however, represent a binding obligation to the extent of such error, notwithstanding the inclusion of such statement as part of this Agreement.

 

9.  MISCELLANEOUS.

 

(a)           Binding Agreement; Written Amendments. This Agreement shall be binding upon the heirs, executors,
administrators and successors of the parties. This Agreement and the Plan, and any deferral election separately filed with the Company relating to the grant of Units under the Agreement, constitute the entire agreement between the parties with respect to the Units, and supersede any prior agreements or documents with respect thereto. No amendment, alteration, suspension, discontinuation, or
termination of this Agreement which may impose any additional obligation upon the Company or materially impair the rights of Employee with respect to the Units shall be valid unless in each instance such amendment, alteration, suspension, discontinuation, or termination is expressed in a written instrument duly executed in the name and on behalf of the Company and by Employee. 

 

(b)           No Promise of Employment. The Units and the granting thereof shall not constitute or be evidence
of any agreement or understanding, express or implied, that Employee has a right to continue as an officer or employee of the Company for any period of time, or at any particular rate of compensation.

 

(c)           Unfunded Plan. Any provision for distribution in settlement of Employee’s Account hereunder
shall be by means of bookkeeping entries on the books of the Company and shall not create in Employee or any Beneficiary any right to, or claim against any, specific assets of the Company, nor result in the creation of any trust or escrow account for Employee. With respect to any entitlement of Employee or any Beneficiary to any distribution hereunder, Employee or such Beneficiary shall be a general creditor of the Company.

 

 

 

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(d)           Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.

 

(e)           Legal Compliance. Employee agrees to take any action the Company reasonably deems necessary in order
to comply with federal and state laws, or the rules and regulations of the NASDAQ Global Market or any other stock exchange, or any other obligation of the Company or Employee relating to the Units or this Agreement.

 

(f)           Notices. Any notice to be given the Company under this Agreement shall be addressed to the Company
at 12 East 49th Street, 31st Floor, New York, New York 100017 Attention: Corporate Secretary, and any notice to the Employee shall be addressed to the Employee at Employee’s address as then appearing in the records of the Company.

 

-9-lunlexhibit10_1august-2009.htm

     

     

    
      

      

    

     

    
 

    Exhibit
10.1

    OUTSOURCING
AND ROYALTY AGREEMENT

    

    THIS AGREEMENT made the ___
day of August,
2009.

    

    B E T W E E N :

    

    
      	
               
      

            	
              LUMONALL INTERNATIONAL
      CORPORATION, a corporation incorporated pursuant to the laws of
      British Virgin Islands (hereinafter called the "Grantee")

            

    

     OF
THE FIRST PART

                                                                       -
and -

    

    
      	
               
      

            	
              LUMONALL, INC., a
      corporation incorporated pursuant to the laws of the State of Nevada
      (hereinafter called the "Grantor")

            

    

     OF
THE SECOND PART

    

    WHEREAS the Grantor
beneficially owns the rights to distribute Lumonall and Prolink branded photo
luminescent glow-in-dark signs and safety way guidance products in North America
(the "Master
Rights");

    

    AND WHEREAS the Grantor
desires to grant and the Grantee desires to obtain the exclusive sub right to
distribute photo luminescent products (the “Rights”) under the Master
Rights in North America to non-Government parties, all upon and subject to the
terms and conditions hereinafter set forth;

    

    NOW THEREFORE, in
consideration of the premises and the mutual agreements and covenants herein
contained (the adequacy of which consider­ation as to each of the parties
hereto is hereby mutually admitted), the parties hereby covenant and agree as
follows.

    

     

    ARTICLE 1

     

    DEFINITIONS AND PRINCIPLES OF INTERPRETATION

    

    
      	
              1.1

            	
              Definitions
      - Whenever used in
      this Agreement, unless there is something in the subject matter or context
      inconsistent therewith, the following words and terms shall have the
      respective meanings ascribed to them as
follows:

            

    

    

    
      	
               
      

            	
              (a)"Agreement" means this
      Outsourcing and Royalty Agreement and all instru­ments supplemental
      hereto or in amendment or confirmation
hereof;

            

    

    

    
      	
               
      

            	
              (b)"Business" means the
      business presently carried on by the Grantor being that of a distribution
      businesses selling branded photo luminescent products, and related and
      ancillary activities thereto;

            

    

    

    
      	
               
      

            	
              (c)"Business Day" means a
      day other than a Saturday, Sunday or any day on which the principal
      commercial banks located at Toronto, Ontario are not open for business
      during normal banking hours;

            

    

    

    
      	
               
      

            	
              (d)

            	
              "Government" means the
      Crown in Right of Canada and all its agencies, all Provinces and
      Territories of Canada and all their agencies and Agents of the Crown in
      Right of Canada, or of any province, in their capacity as owners or
      managers of buildings located within
Canada;

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
               
      

            	
              (e)

            	
              "Note" has the meaning
      attributed thereto in Section 2.3
hereof;

            

    

    

    
      	
               
      

            	
              (f)"Parties" means the
      Grantor and the Grantee, collective­ly, and "Party" means any one of
      them;

            

    

    

    
      	
               
      

            	
              (g)

            	
              "Person" means any
      individual, corporation, partnership, trustee or trust or unincorporated
      association, and pronouns have a similarly extended
    meaning;

            

    

    

    
      	
              1.2

            	
              Gender
      and Number -
      Words importing the singular include the plural and vice versa;
      words importing gender include all
genders.

            

    

    

    
      	
              1.3

            	
              Entire
      Agreement -
      This Agreement, including the Schedules hereto, together with the
      agreements and other documents to be delivered pursuant hereto, constitute
      the entire agreement between the Parties pertaining to the subject matter
      hereof and supersede all prior agreements, understandings, negotiations
      and discussions, whether oral or written, of the Parties and there are no
      warranties, representations or other agreements between the Parties in
      connection with the subject matter hereof except as specifically set forth
      herein and therein.

            

    

    

    
      	
              1.4

            	
              Waivers,
      etc.  -  No
      supplement, modification, waiver or termination of this Agreement shall be
      binding unless executed in writing by the Party to be bound
      thereby.  No waiver of any of the provisions of this Agreement,
      in whole or in part, shall be deemed or shall constitute a waiver of any
      other provisions hereof (whether or not similar), nor shall such waiver
      constitute a continuing waiver unless otherwise expressly
      provided.

            

    

    

    
      	
              1.5

            	
              Headings - The Article and
      Section headings contained herein are included solely for convenience of
      reference, are not intended to be full or accurate descriptions of the
      content thereof and shall not be considered part of this
      Agreement.

            

    

     

    
      	
              1.6  

            	
              Applicable
      Law - This
      Agreement and the rights, obligations and relations of the Parties shall
      be governed by and construed in accordance with the laws of the Province
      of Ontario applicable therein, and the courts of Ontario shall have
      exclusive jurisdiction to entertain any action in connection with this
      Agreement.

            

    

     

    
      	
              1.7  

            	
              Currency - Unless otherwise
      specified, all references to currency herein are deemed to mean lawful
      money of United States of America, and all amounts to be paid or
      calculated pursuant to this Agreement are to be paid or calculated in
      lawful money of United States of
America.

            

    

    

    
      	
              1.8  

            	
              Schedules - The following are the
      schedules attached to and incorp­orated in this Agreement by reference
      and deemed to be an integral part
hereof:

            

    

    

    
      	
               
      

            	
              Schedule
      A

            	
              -

            	
              Inventory

            

    

    
      	
               
      

            	
              Schedule
      B

            	
              -

            	
              Note

            

    

    
      	
               
      

            	
              Schedule
      C

            	
              -

            	
              General
      Security Agreement

            

    

    

     

    ARTICLE 2

    GRANT OF
RIGHTS

    

    
      	
              2.1

            	
              Royalty - The Grantor hereby
      grants the Rights to the Grantee for a royalty to be paid by the Grantee
      to the Grantor (the “Royalty”). The Royalty
      shall be calculated as ten percent (10%) of gross margin for the ten (10)
      year period beginning on the Closing Date (the “Term”). For greater
      certainty, the total amount due to the Grantor as Royalty is unlimited
      during the ten year Term. Gross margin is defined as gross sales, less
      payment discounts, direct cost of goods sold, applicable taxes and sales
      commissions. The Royalty shall be paid in arrears on the last business day
      of the following month for the calendar month in which the Royalty has
      accrued and became payable.

            

    

    

    All
amounts to be paid by the Grantee to the Grantor in terms of this agreement,
shall be paid by the Grantee to the Grantor into a bank account nominated in
writing from time to time by the Grantor without set-off or deduction of any
nature and free of exchange.

    

    Any
amount payable by the Grantee to the Grantor, which is not paid on due date
shall, without prejudice to the Grantor's other rights, bear interest at the
greater of the prime rate plus 3% flat or if such rate exceeds the maximum rate
permissible by law, the then maximum interest rate permitted by law calculated
from due date for payment thereof or, in the case of an amount payable by way of
damages with effect from the due date those damages are sustained, to date of
actual payment.

    

    The
Grantee shall provide the Grantor with documentary confirmation in respect of
each and every payment made to the Grantor as the case may be, under this
Agreement by fax on the date of each such payment to the address detailed in 6.4
of this Agreement.

    

    
      	
              2.2

            	
              Business
      Assets -
      The Grantor hereby sells and the Grantee hereby purchases inventory
      of the Grantor (the “Inventory”) as described
      in Schedule A, for cash consideration of $17,521 at
    Closing.

            

    

    

    
      	
              2.3

            	
              Tradename - The Grantor hereby
      sells and the Grantee hereby purchases all intellectual property,
      websites, Internet domain names associated with the tradename “Lumonall”
      (the “Tradename”),
      for a $200,000 secured promissory note (the “Note”) in form as
      described in Schedule B. The Note shall bear interest at Canadian bank
      prime rate per annum, payable at maturity and shall mature on the earlier
      of; i) the transfer, sale or assignment of the Tradename by the Grantee,
      or ii) five years from the Closing Date. The Grantee agrees to pledge the
      Tradename as the security for the payment of the Note and execute a first
      charge General Security Agreement in favour of the Grantor as security for
      the Note.

            

    

    

    
      	
              2.4

            	
              Reporting

            

    

    

    On or
before the last business day of each and every month during the term hereof, the
Grantee shall deliver to the Grantor, a written statement, in such form as the
Grantor shall reasonably require, certifying by the Grantee the gross sales for
the preceding calendar month.  The Grantee shall keep and preserve
full and complete records of all Gross Sales for at least six (6) years after
the end of each calendar year during the term, in manner and form satisfactory
to the Grantor and shall also deliver such additional financial, operating and
other information and reports as the Grantor may reasonably request, on the
forms and in the manner prescribed by the Grantor from time to time. The Grantee
further agrees to submit within ninety (90) days after the end of each fiscal
year of his operation, a profit and loss statement and balance sheet (and, if
requested by the Grantor, certified by a Chartered Accountant approved by the
Grantor, and after consultation with the Grantor), covering each fiscal period
of operation.  The original of all statements and reports required by
this paragraph shall be delivered to the Grantor.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    The
Grantor or his representative shall have the right to inspect and audit the
accounts, books, records, at all reasonable times, to ensure that the Grantee is
complying with the terms of this Agreement.

    

    Any such
inspection, examination and/or audit shall be at the cost of the Grantor unless
same is either necessitated by failure of Grantee to prepare and deliver its
Statement of Gross Sales or Statements, or to keep and preserve records as
herein provided.  In the event that the audit shall disclose that
gross sales as reported by the Grantee shall have been understated by an amount
in excess of 3% of the Gross Sales reported by the Grantee, then the cost of the
audit shall be paid by the Grantee forthwith upon presentation to the Grantee of
the auditor's account together with all outstanding Royalty Fees and interest
chargeable thereon as otherwise provided for in this Agreement.

    

     

    ARTICLE 3 

    REPRESENTATIONS AND
WARRANTIES

    

    
      	
              3.1

            	
              Representations
      and Warranties of the Grantor - The Grantor hereby
      represents and warrants to the Grantee as
  follows.

            

    

    

    
      	
               
      

            	
              (a)

            	
              Organization
      and Valid Existence;  the Grantor - The Grantor is a
      corporation duly incorporated and organized and is validly existing under
      the laws of State of Nevada, and the Grantor has all necessary corporate
      power, authority and capacity to grant the Rights.  The
      execution and delivery of this Agreement and the consummation of the
      transactions contemplated hereunder have been duly authorized by all
      necessary corporate action on the part of the
  Grantor.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Enforceability
      of Obligations - This Agreement consti­tutes a valid and
      binding obligation of the Grantor enforceable against it in accordance
      with its terms, subject, however, to limitations with respect to
      enforce­ment imposed by law in connection with bankruptcy or similar
      proceedings and to the extent that equitable remedies such as specific
      performance and injunction are in the discretion of the court from which
      they are sought.

            

    

    

    
      	
               
      

            	
              (c)

            	
              Right
      to Grant - The Grantor:

            

    

    

    
      	
               
      

            	
              (i)is
      the sole beneficial owner of the Master
Rights;

            

    

    

    
      	
               
      

            	
              (ii)has
      the exclusive right to grant the Rights as herein provided and such grant
      will not violate, con­travene, breach or offend against or result in
      any default under any indenture, mortgage, lease, agreement, instrument,
      charter or by-law provision, statute, regulation, order, judgment, decree
      or law to which the Vendor is a party or subject or by which the Grantor
      is bound or affected; and

            

    

    

    
      	
              (iii)

            	
              is
      the holder of record of the Master Rights, free and clear of any liens,
      charges, encumbrances or rights of others (other than the rights of the
      Grantee hereunder) and no Person (other than the Grantee hereunder) has
      any agreement, option or any rights capable of becoming an agreement or
      option for the acquisition of the
Rights.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Consents,
      Authorizations and Registrations - All consents, approvals, orders
      and authorizations of any Persons or governmental authorities in Canada or
      elsewhere (or

            

    

                registrations, declarations, filings or
recordings with any such authorities) required in connection with this
Agree­ment, have been obtained.

    

    
      	
               
      

            	
              (f)

            	
              Change
      of Name –the Grantor hereby undertakes to change its name as soon
      as practically possible under business and securities law following the
      execution of this Agreement

            

    

    

    
      	
              3.2

            	
              Representations
      and Warranties of the Grantee - The Grantee hereby
      represents and warrants to the Grantor as
  follows:

            

    

    

    
      	
               
      

            	
              (a)

            	
              Organization
      and Valid Existence - The Grantee is
      corporation duly incorporated, organized and validly existing under the
      laws of the British Virgin Islands and has all necessary power, authority
      and capacity to enter into this Agreement and to carry out its obligations
      hereunder.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Enforceability
      of Obligations - This Agreement consti­tutes a valid and
      binding obligation of the Grantee enforceable against it in accordance
      with its terms, subject, however, to limitations with respect to
      enforce­ment imposed by law in connection with bankruptcy or similar
      proceedings and to the extent that equitable remedies such as specific
      performance and injunction are in the discretion of the court from which
      they are sought.

            

    

    

    
      	
               
      

            	
              (c)

            	
              Absence
      of Conflicting Agreements - The Grantee is
      not a party to, bound or affected by or subject to any indenture,
      mortgage, lease, agreement, instrument, statute, regula­tion, order,
      judgment, decree or law which would be violated, contra­vened or
      breached by, or under which any default would occur, as a result of the
      execution and delivery of this Agreement or the con­summation of any
      of the transac­tions provided for
herein.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Residence
      of the Grantee - The Grantee is not a non-resident Canadian within
      the meaning of the Investment Canada
Act.

            

    

    

    
      	
               
      

            	
              (e)

            	
              Litigation
      - There is no suit, action, litigation, arbitration proceeding or
      governmental proceeding, including appeals and applications for review, in
      progress, pending or, to the best of the knowledge, information and belief
      (after due enquiry) of the Grantee, threatened against or involving the
      Grantee or any judgment, decree, injunction, rule or order of any court,
      governmental department, commission, agency, instrumentality or arbitrator
      which, in any such case, might adversely affect the ability of the Grantee
      to enter into this Agreement or to consummate the transactions
      contemplated hereby.  The Grantee is not aware of any existing
      ground on which any such action, suit or proceeding may be commenced with
      any reasonable likelihood of
success.

            

    

    

    
      	
               
      

            	
              (f)

            	
              Consents,
      Authorizations and Registrations - All con­sents, approvals,
      orders and authorizations of any Persons or governmental authorities in
      Canada or elsewhere (or registrations, declarations, filings or recordings
      with any such authorities) required in connection with this
      Agree­ment, have been obtained.

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              3.3

            	
              Nature
      and Survival of Representations, Warranties and Covenants - All statements
      contained in any certificate or other instrument delivered by or on behalf
      of a Party pursuant to or in connection with the transactions contemplated
      by this Agreement shall be deemed to be made by such Party
      hereunder.  All representations, warranties, coven­ants and
      agreements herein contained on the part of each of the Parties shall
      survive the Closing, the execution and delivery hereunder of share or
      security transfer instruments and other documents of title to the Rights
      and the payment of the considera­tion therefor, provided that the
      representations and warranties contained in Sections 3.1 and 3.2 (except
      with respect to tax matters or the title of the Grantor to the Rights
      which shall survive forever), shall only survive for a period of 2 years
      from the date of the execution of this Agreement, if no claim shall, prior
      to the expiry of the said period, have been made hereunder against a Party
      hereto with respect to any incorrect­ness in or breach of any such
      representation or warranty, such Party shall have no further liability
      hereunder with respect to such represent­ation or
      warranty.

            

    

    

     

    ARTICLE 4

    GENERAL

    

    
      	
              4.1

            	
              Assignment
      ─ The
      Grantee shall not directly, indirectly or contingently, sell, assign,
      transfer, convey, mortgage or encumber, in any way, this Agreement or any
      right or interest herein or hereunder, or suffer or permit any such
      assignment, transfer or encumbrance to occur either voluntarily or by
      operation of law unless the written consent of the Grantor is first had
      and obtained (which consent may be arbitrarily withheld) save and except
      for the assignment of the Tradename by the Grantee to Lumonall
      International Corporation, a BVI corporation, to which the Grantor hereby
      grants its consent to such
assignment.

            

    

    

    
      	
              4.2

            	
              Grantee
      not an Agent ─
      The Grantee shall have no authority, express or implied, to act as
      agent of the Grantor, or any of their affiliates for any
      purpose.  The Grantee is, and shall remain, an independent
      contractor responsible for all obligations and liabilities of, and for all
      loss or damage to its business including any personal property, equipment,
      fixtures or real property connected therewith and for all claims or
      demands based on damage or destruction of property or based upon injury,
      illness or death of any person or persons, directly or indirectly,
      resulting from the operation of the
Business.

            

    

    

    
      	
              4.3

            	
              Material
      Breach ─
      The parties agree that the happening of any of the following events
      shall constitute a material breach of this Agreement and violate the
      essence of the Grantee's obligations and, without prejudice to any other
      of its rights or remedies at law or equity, the Grantor, at its option,
      may forthwith terminate this Agreement upon the happening of any of the
      following events:

            

    

    

    
      	
               
      

            	
              (a)

            	
              If
      the Grantee shall default in the performance of any of the terms,
      covenants, undertakings or conditions of this Agreement including its
      obligation to make prompt payment of Royalties when
  due;

            

    

    

    
      	
               
      

            	
              (b)

            	
              If
      the Grantee shall be adjudicated a bankrupt, become insolvent, or if a
      receiver, whether permanent or temporary, for all or substantially all of
      the Grantee's property, shall be appointed by any person, or if the
      Grantee shall make a general assignment for the benefit of his creditors,
      or shall make a proposal under the Bankruptcy Act, or commence any
      proceedings to wind-up or liquidate or dissolve his
    business;

            

    

    

    
      	
               
      

            	
              (c)

            	
              if
      any judgment or judgments or any federal, provincial or legal tax lien
      against the Grantee remains unsatisfied or unbonded of record in excess of
      thirty (30) days;

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
               
      

            	
              (d)

            	
              If
      the Grantee shall violate the terms of this Agreement by the use Tradename
      and carrying on of business with Government parties in contravention of
      this Agreement.

            

    

    

    
      	
               
      

            	
              (e)

            	
              If
      any assignment, pledge, hypothecation, sale or other transfer of
      any

            

    

    interest of the Grantee in the
Tradename shall occur without the prior written

    consent of the Grantor;

    

    
      	
               
      

            	
              (f)

            	
              If
      the Grantee shall falsify the report to the Grantor of the Gross Sales and
      gross margin used to calculate the Royalty payable to the
      Grantor;

            

    

    

    

    In
addition to and without prejudice to the rights and remedies of the Grantor to
terminate the Agreement, the Grantor shall have the right to seek judicial
enforcement of its rights and remedies including, and not by way of limitation,
injunctive relief, damages or

    specific
performance.

    

    Upon
termination of this Agreement for any reason, the Grantee shall immediately
discontinue the use of the Tradename in conjunction with the Business. The
Grantee agrees to execute all documents on the Grantor's behalf to give effect
to the foregoing. The Grantee named in this Agreement and any permitted assignee
acknowledges and agrees that all its warranties, representations, covenants,
obligations, agreements and undertakings set out in the Agreement shall survive
the assignment and the termination of this Agreement, whether such termination
be by expiration or for any other reason, notwithstanding the termination of the
Grantee rights under this Agreement.

    

    No waiver
by the Grantor of any default in performance on the part of the Grantee, or a
like waiver by the Grantor of any breach or a series of breaches, shall
constitute a waiver of any subsequent breach or default or a waiver of the terms
of this Agreement.  Any waiver to be binding upon the Grantor shall be
in writing and signed by the Grantor.

    

    If the
Grantor institutes any action at law or in equity against the Grantee to secure
or protect the Grantor's rights under or to enforce the terms of this Agreement,
the Grantor shall be entitled to recover in addition to any judgment entered in
its favour, such reasonable solicitor's fees as may be allowed by the Court,
together with court costs and expenses of such litigation and such costs and
damages as may be provided by law.

    

    
      	
              4.4

            	
              Public
      Notices - Except for
      disclosures required by law, all public notices to third parties and all
      other publicity concerning the transactions contemplated by this Agreement
      shall be jointly planned and co-ordinated by the Grantor and the Grantee
      and no Party shall act unilaterally in this regard without the prior
      approval of the Grantor and the Grantee or the other of them, such
      approval not to be unreasonably
withheld.

            

    

    

    
      	
              4.5

            	
              Expenses - All costs and
      expenses (including, without limitation, the fees and disbursements of
      legal counsel) incurred in connection with this Agreement and the
      transactions contemplated hereby shall be paid by the Party incurring such
      expenses.

            

    

    
 

    
      
        	
                4.6

              	
                Time - Time shall be of the
      essence hereof.

              
	 	 
	4.7	Notices 
      - Any notice, direction or other
      document required or
      permittted to be given herunder or for the purposes herof (hereinafter in
      this Section 6.4 called a "notice") to any Party shall be in writing and
      shall be sufficiently given if delivered, if sent by prepaid registered
      mail or if transmitted by facsimile tested prior to transmission to such
      Party:

      

    

    

    
      	
               
      

            	
              (a)

            	
              in
      the case of a notice to the Grantor
at:

            

    

    

    
      	
               
      

            	
              3565
      King Road, Unit 102

            

    

    King City, Ontario L7B 1M3

    with a facsimile number of
905-833-9847

    Attention: John Simmonds

    

    

    
      	
               
      

            	
              (b)in
      the case of a notice to the Grantee if delivered or sent by facsimile as
      above at:

            

    

    

           C/O 175 Romina
Drive

    Concord,
Ontario L4K 4V3

                                   with a facsimile number
of 905-761-0334

    Attention: Angelo Catenaro

    

    or at
such other address as the Party to whom such writing is to be given shall have
last notified the Party giving the same in the manner provided in this
section.  Any notice delivered to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the notice shall be deemed to have been given and received on the first
Business Day next following such day.  Any notice mailed as aforesaid
shall be deemed to have been given and received on the third Business Day
following the date of its mailing.  Any notice transmitted by
facsimile communication shall be deemed given and received on the first Business
Day after its transmission.

    

    
      	
              4.8

            	
              Assignment - Neither this
      Agreement nor any rights or obligations here­under shall be assignable
      by any Party without the prior written consent of the other Party hereto,
      not unreasonably withheld.  This Agreement shall enure to the
      benefit of and be binding upon the Parties and their respective heirs,
      executors, administrators and success­ors and permitted
      assigns.

            

    

    

    
      	
              4.9

            	
              Further
      Assurances -
      The Parties hereto shall with reasonable diligence do all such
      things and provide all such reasonable assurances as may be required to
      consum­mate the transactions contemplated hereby, and each Party shall
      provide such further documents or instruments required by any other Party
      as may be reasonably necessary or desirable to effect the purpose of this
      Agreement and carry out its provisions, whether before or after the
      Closing.

            

    

    

    
      	
              4.10

            	
              Severability - If any covenant or
      provision of this Agreement is prohibited in whole or in part in any
      jurisdiction, such covenant or provision shall, as to such jurisdiction,
      be ineffective to the extent of such prohibition without invalidating the
      remaining covenants and provisions hereof and shall, as to such
      jurisdiction, be deemed to be severed from this Agreement to the extent of
      such prohibition.

            

    

    

    
      	
              4.11  

            	
              Counterparts - This Agreement may be
      executed by the Parties in separate counterparts each of which when so
      executed and delivered shall be an original, but all such counterparts
      shall together constitute one and the same
  instrument.

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    IN WITNESS WHEREOF the Parties
have hereunto duly executed this Agree­ment as of the date first written
above.

    

    

    
      	 
      	 
      	
              LUMONALL,
      INC.

            
	 
      	 
      	
              By:

            	 
      
	 
      	 
      	 
      	
              Name:
      John G. Simmonds

              Title:
      CEO

              I
      have authority to bind the
Corporation

            

    

    

    

    
      	 
      	 
      	
              LUMONALL
      INTERNATIONAL CORPORATION

            
	 
      	 
      	
              By:

            	 
      
	 
      	 
      	 
      	
              Name:
      Angelo Catenaro

              Title:
      President

              I
      have authority to bind the
Corporation

            

    

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              Schedule
      A

            

    

    

    
      	
               
      

            	
              INVENTORY

            

    

    

    

    

     

     

    
 

    
      	
               
      

            	
              Omitted
      Intentionally

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              Schedule
      B

            

    

    

    PROMISSORY
NOTE

     

    
      	
              AMOUNT:                                US$200,000

            	
              ·DATE: August 20,
  2009

            

    

    

     

    FOR VALUE RECEIVED the
undersigned promises to pay to LUMONALL INC. (the "Holder"), or as the Holder may
direct in writing, the principal sum of $200,000 (the “Principal Sum”) in lawful
money of the United States of America payable at the address of the Holder at
3565 King Road, Suite 102, King City, Ontario, L7B 1M3 or at such other place as
the Holder may designate in writing. The Principal Sum is to be payable on the
earlier of; i) August 20, 2014, or ii) the date the undersigned transfers,
assigns or sells the tradename “Lumonall”.

     

    The
Holder shall have no recourse to enforce such payment except that the Holder may
enforce against the tradename “Lumonall” pursuant to the terms of the General
Security Agreement of the date hereto.

     

    Interest
shall accrue in respect of the Principal Sum hereunder at a rate of Canadian
Schedule A bank prime and shall be paid at maturity.  The undersigned
shall have the right to prepay the whole or any part of the principal amount of
this promissory note from time to time without notice, bonus or
penalty.  Any and all monies payable hereunder shall be paid to the
Holder or as it may otherwise direct.

     

    Demand,
presentment, protest and notice of non-payment are hereby waived by the
undersigned.

     

    Time
shall be of the essence hereof.

     

    This
promissory note shall be construed and interpreted in accordance with the laws
of the Province of Ontario and the laws of Canada applicable
therein.

     

    This
promissory note shall enure to the benefit of the Holder and the Holder's
successor and assigns, and shall be binding on the undersigned and its
successors and assigns.

     

    IN WITNESS WHEREOF, the
undersigned has duly executed this promissory note this 20th day of
August, 2009.

     

    
      	 
      	 
      	
              LUMONALL
      INTERNATIONAL CORPORATION

            
	 
      	 
      	
              Per:

            	 
      
	 
      	 
      	
              Name:

              Title

            	 
      
	 
      	 
      	 
      	
              I
      have the authority to bind the
corporation.

            

    

    

     

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              Schedule
      C

            

    

    

    GENERAL SECURITY
AGREEMENT

     

    THIS AGREEMENT made this 20th day of
August, 2009,

     

    B E T W E
E N:

     

    

     

    LUMONALL INTERNATIONAL CORPORATION,
a corporation incorporated

     

    pursuant
to the  laws of the British Virgin Islands with offices care of 175
Romina Drive,

     

     Concord,
Ontario, L4K 4V3

     

    (hereinafter
referred to jointly and severally as the “Debtor”)

     

     OF
THE FIRST PART

     

    - and
-

     

    LUMONALL, INC. a corporation
incorporated pursuant to the laws of the

     

    State of
Nevada

     

    (hereinafter
referred to as the “Secured Party”)

     

    

     

     OF
THE SECOND PART

     

    WITNESSES
THAT:

     

    

     

    WHEREAS
pursuant to an Outsourcing and Royalty Agreement dated August 20, 2009 Lumonall
International Corporation (the “Corporation”) agreed to purchase the Rights and
Tradename of “Lumonall” from the Secured Party and agreed to provide a general
security agreement from the 

     

    Corporation
to secure the payment of promissory note due to the Secured Party; 

     

    

     

    AND
WHEREAS the Corporation is now the owner of all assets including the Tradename,
“Lumonall” (the “Assets”);

     

    AND
WHEREAS the Debtor has acknowledged the indebtedness to the Secured Party in the
amount of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) (“Indebtedness”) for the
payment of the purchase price for the Tradename and have delivered a promissory
note (the “Note”) to the Secured Party;

     

    AND
WHEREAS the Debtor has agreed to grant, as general and continuing security for
the payment and performance of all of its obligations to the Secured Party, the
security interest, assignment and mortgage and charge granted
herein;

     

    NOW THEREFORE, in consideration of
these premises, the covenants and agreements hereinafter set forth and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby covenant and agree as
follows:

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    ARTICLE 1–
INTERPRETATION

     

    1.1           Definitions.  Whenever
used in this Agreement or in any schedules hereto, unless something in the
subject matter or context is inconsistent therewith:

     

    
      	
               
      

            	
              “Collateral”
      - has the meaning set forth in section 2.1
hereof;

            

    

     

    
      	
               
      

            	
              “Event
      of Default” - has the meaning set forth in section 5.1
hereof;

            

    

     

    
      	
               
      

            	
              “Obligations”
      - means all Indebtedness of the Debtor to the Secured
      Party  together with all of the other obligations of the Debtor
      to the Secured Party set forth
herein;

            

    

     

    
      	
               
      

            	
              “Permitted
      Encumbrances” - means the security interests, liens, charges, pledges,
      encumbrances, mortgages, adverse interests or title retention agreements
      described in Schedule A
      hereto;

            

    

     

    
      	
               
      

            	
              “PPSA”
      - means the Personal
      Property Security Act (Ontario), as now enacted or as the same may
      from time to time be amended, re-enacted or replaced;
  and

            

    

     

    
      	
               
      

            	
              “Receiver”
      - has the meaning set forth in paragraph 5.2(a)
  hereof.

            

    

     

    1.2           Extended
Meanings.  In this Agreement, unless something in the subject
matter or context is inconsistent therewith, words importing:

     

    
      	
               
      

            	
              (a)

            	
              the
      singular number shall include the plural and vice
  versa;

            

    

     

    
      	
               
      

            	
              (b)

            	
              any
      gender shall include all genders;
and

            

    

     

    
      	
               
      

            	
              (c)

            	
              persons
      shall include individuals, partnerships, corporations, bodies corporate,
      unincorporated organizations,  associations, trusts, trustees,
      government agencies and any other form of entity or organization
      whatsoever.

            

    

     

    The terms
“accessions”, “accounts”, “chattel paper”, “documents of title”, “goods”,
“instruments”, “intangibles”, “inventory”, “money”, “proceeds” and “securities”
and any other terms defined  in the PPSA shall have the meanings
ascribed thereto therein, unless otherwise defined herein.

     

    1.3           Sections and
Headings.  The division of this Agreement into articles,
sections and paragraphs and the use of headings are for convenience of reference
only and shall not affect the construction or interpretation
hereof.  The terms “this Agreement”, “hereof”, “hereunder” and similar
expressions refer to this Agreement in its entirety and not to any particular
article, section, paragraph or other subdivision or portion hereof and include
any agreement or instrument supplemental or ancillary hereto.  Unless
something in the subject matter or context is inconsistent therewith, references
herein to article, section and paragraph numbers are to articles, sections and
paragraphs of this Agreement.

     

    1.4           Schedules.  The
following are the schedules annexed hereto and incorporated by reference and
deemed to form part of this Agreement:

     

    Schedule A - Permitted
Encumbrances

    Schedule B - Locations of
Collateral

    Schedule C - Description of
Equipment

     

    1.5           Accounting
Principles.  Wherever in this Agreement reference is made to
any accounting principles, terms or concepts, such reference shall be deemed to
be to, and shall be interpreted in accordance with, the generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants, or any successor institute, applicable as at the date in
respect of which such reference is made or required to be made.

     

    1.6

     

    Entire
Agreement.  Except as otherwise provided herein, this
Agreement, including any schedules now or hereafter annexed hereto, constitutes
the entire agreement between the Debtor and the Secured Party with respect to
the subject matter hereof and cancels and supersedes any prior understandings
and agreements between the parties hereto with respect thereto.  There
are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, between the Secured Party
and the Debtor except as expressly set forth herein.

     

    1.7           Severability.  If
any provision of this Agreement is determined to be illegal, invalid or
unenforceable in whole or in part, such illegality, invalidity or
unenforceability shall attach only to such provision or part thereof and the
remaining part of such provision and all other provisions hereof shall continue
in full force and effect.  To the extent permitted by applicable law
the parties hereby waive any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.

     

    1.8           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE 2 – GRANT OF
SECURITY INTEREST

     

    2.1           Security
Interest.  As general and continuing security for the payment
and performance of the Obligations, the Debtor hereby grants to the Secured
Party a first priority purchase-money security interest in all of the Assets,
together with:

     

    
      	
               
      

            	
              (a)

            	
              Substitutions,
      Etc.  All replacements of, substitutions for and
      increases, additions and accessions to the Assets;
  and

            

    

     

    
      	
               
      

            	
              (b)

            	
              Proceeds.   All
      proceeds of the Assets and the property described in paragraph 2.1(a), including,
      without limiting the generality of the foregoing, all personal property in
      any form or fixtures derived directly or indirectly from any dealing with
      such property or that indemnifies or compensates for the loss of or damage
      to such property;

            

    

     

    (collectively,
the “Collateral”), and as further general and continuing security for the
payment and performance of the Obligations, the Debtor hereby assigns the
Collateral to the Secured Party and mortgages and charges the Collateral as and
by way of a fixed and specific mortgage and charge to the Secured Party,
provided that the said assignment and mortgage and charge shall not (i) extend
or apply to the last day of the term of any lease or any agreement therefor now
held or hereafter acquired by the Debtor, but should the Secured Party enforce
the said assignment or mortgage and charge, the Debtor shall thereafter stand
possessed of such last day and shall hold it in trust to assign the same to any
person acquiring such term in the course of the enforcement of the said
assignment and mortgage and charge, or (ii) render the Secured Party liable to
observe or perform any term, covenant or condition of any agreement, document or
instrument to which the Debtor is a party or by which it is bound.

     

    2.2           Attachment of Security
Interest.  The Debtor acknowledges that value has been given
and agrees that the security interest granted hereby shall attach when the
Debtor signs this Agreement and the Debtor has any rights in the
Collateral.

     

    2.3           Exclusions.  Notwithstanding
any other provisions hereof, the security interest granted hereby does not and
shall not extend to, and Collateral shall not include any agreement, right,
franchise, license or permit (the “contractual rights”) to which the Debtor is a
party or of which the Debtor has the benefit, to the extent that the creation of
the security interest herein would constitute a breach of the terms of or permit
any person to terminate such contractual rights, but the Debtor shall hold its
interest therein in trust for the Secured Party and shall assign such
contractual rights to the Secured Party forthwith upon obtaining the consent of
the other party thereto.  The Debtor agrees that it shall, upon the
request of the Secured Party, use its best efforts to obtain any consent
required to permit such contractual rights to be subjected to the security
interest.

     

    ARTICLE
3

     

     – REPRESENTATIONS,
WARRANTIES AND COVENANTS

     

    3.1           Representations and
Warranties.  The Debtor hereby represents and warrants to the
Secured Party, as follows:

     

    
      	
               
      

            	
              (a)

            	
              Incorporation and
      Subsistence.  The Corporation is incorporated and
      subsisting under the laws of the jurisdiction hereinbefore set
      forth.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Corporate Power and
      Authority.  The Debtor has the corporate power and
      capacity to enter into, and to perform its obligations under, this
      Agreement.  This Agreement has been duly authorized by all
      necessary corporate action on the part of the
  Debtor.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Enforceability.  This
      Agreement has been duly executed and delivered by the Debtor and
      constitutes a legal, valid and binding agreement enforceable against the
      Debtor in accordance with its
terms.

            

    

     

    
      	
               
      

            	
              (d)

            	
              No
      Contravention.  The making and performance of this
      Agreement will not result in the breach of, constitute a default under,
      contravene any provision of, or result in the creation of, any lien,
      charge, security interest, encumbrance or any other rights of others upon
      any property of the Debtor pursuant to any agreement, indenture or other
      instrument to which the Debtor is a party or by which the Debtor or any of
      its property may be bound or
affected.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Financial
      Information.  All financial information provided by the
      Debtor to the Secured Party is true, correct and complete and all
      financial statements have been prepared in accordance with generally
      accepted accounting principles consistently
  applied.

            

    

     

    
      	
               
      

            	
              (f)

            	
              Title to
      Collateral.  Except for Permitted Encumbrances ranking
      junior to the security interests granted hereby, all of the Collateral is
      the sole property of the Debtor free from any security interests, liens,
      charges, pledges, encumbrances, mortgages, adverse interests, title
      retention agreements or any rights of others, whether they rank prior or
      junior to, or pari
      passu with, the security interest, assignment and mortgage and
      charge granted hereby.

            

    

     

    
      	
               
      

            	
              (g)

            	
              Location of
      Records.  The address of the Debtor’s chief executive
      office and the office where it keeps its records respecting the
      Receivables, is that set forth on the first page
  hereof.

            

    

     

    3.2           Covenants.  The
Debtor covenants with the Secured Party that the Debtor shall:

     

    
      	
               
      

            	
              (a)

            	
              ensure
      that the representations and warranties set forth in section 3.1 shall be true and correct at all
      times;

            

    

     

    
      	
               
      

            	
              (b)

            	
              maintain,
      use and operate the Collateral in a lawful and business-like manner and
      comply in all material respects with all applicable laws, rules,
      regulations and orders, including, without limitation, those relating to
      environmental and occupational health and safety
  matters;

            

    

     

    
      	
               
      

            	
              (c)

            	
              not
      permit the Collateral to be affixed to real or personal property so as to
      become a fixture or accession without the prior written consent of the
      Secured Party;

            

    

     

    
      	
               
      

            	
              (d)

            	
              defend
      the Collateral against all claims and demands respecting the Collateral
      made by all persons at any time and, except for the Permitted Encumbrances
      ranking junior to the security interests granted hereby, shall keep the
      Collateral free and clear of all security interests, mortgages, charges,
      liens and other encumbrances or interests except for
  those

            

    

     

    
      	
               
      

            	
              (e)

            

    

     

    permitted
hereby or hereafter approved in writing by the Secured Party prior to their
creation or assumption;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (f)

            	
              not
      change its chief executive office or the location of the office where it
      keeps its records respecting the Receivables, or move any of the
      Inventory, Securities, Equipment or other Collateral from their current
      locations, as the same may be specified in Schedule B hereto, without the prior
      written consent of the Secured
Party;

            

    

     

    
      	
               
      

            	
              (g)

            	
              pay
      all rents, taxes, levies, assessments and government fees or dues lawfully
      levied, assessed or imposed in respect of the Collateral or any part
      thereof as and when the same shall become due and payable, and shall
      exhibit to the Secured Party, when required, the receipts and vouchers
      establishing such payment;

            

    

     

    
      	
               
      

            	
              (h)

            	
              keep
      proper books of account in accordance with sound accounting practice,
      furnish to the Secured Party such financial or other information relating
      to the Debtor and the Collateral as the Secured Party may from time to
      time require and permit the Secured Party or its authorized agents at any
      time and at the expense of the Debtor to inspect the Collateral and to
      examine the books of account and other financial records and reports of
      the Debtor and to make copies thereof and take extracts therefrom and for
      such purposes the Secured Party shall have access to all premises occupied
      by the Debtor or where the Collateral may be
  found;

            

    

     

    
      	
               
      

            	
              (i)

            	
              not
      change its name and, if the Debtor is a corporation, shall not amalgamate
      with any other corporation, without first giving notice to the Secured
      Party of its new name and the names of all amalgamating corporations and
      the date when such new name or amalgamation is to become effective;
      and

            

    

     

    
      	
               
      

            	
              (j)

            	
              pay
      to the Secured Party forthwith upon demand all reasonable costs and
      expenses (including, without limiting the generality of the foregoing, all
      legal, Receiver's and accounting fees and expenses) incurred by or on
      behalf of the Secured Party in connection with the preparation, execution
      and perfection of this Agreement and the carrying out of any of the
      provisions of this Agreement including, without limiting the generality of
      the foregoing, protecting and preserving the security interest, assignment
      and mortgage and charge granted hereby and enforcing by legal process or
      otherwise the remedies provided herein; and all such costs and expenses
      shall be added to and form part of the Obligations secured
      hereunder.

            

    

     

    3.3           Insurance.  The
Debtor shall obtain and maintain, at its own expense, insurance against loss of
or damage to the Collateral including, without limiting the generality of the
foregoing, loss by fire (including so-called extended coverage), theft,
collision and such other risks of loss as are customarily insured against on
this type of Collateral, in an amount not less than the full replacement value
thereof, in such form and with such insurers as shall be reasonably satisfactory
to the Secured Party.  If any such policies of insurance contain a
co-insurance clause, the Debtor shall either cause any such co-insurance clause
to be waived or maintain at all times a sufficient amount of insurance to meet
the requirements of any such co-insurance clause so as to prevent the Debtor
from becoming a co-insurer under the terms of any such policy.  All
such policies shall name the Secured Party as an additional insured and loss
payee thereof, as the Secured Party's interests may appear, and shall provide
that the insurer will give the Secured Party at least 30 days written notice of
intended cancellation.  At the Secured Party's request, the Debtor
shall furnish the Secured Party with a copy of any policy of insurance and
certificate of insurance or other evidence satisfactory to the Secured Party
that such insurance coverage is in effect.  The Debtor shall give the
Secured Party notice of any damage to, or loss of, the Collateral forthwith upon
the occurrence of any such damage or loss.  Should the Debtor fail to
make any payment or perform any other obligation provided in this section, the
Secured Party shall have the right, but not the obligation, without notice or
demand upon the Debtor and without releasing the Debtor from any obligation
hereunder or waiving any rights to enforce this Agreement, to perform any or all
of such obligations.

     

    3.4

     

    The
amount of all such payments made and all costs, fees and expenses incurred by
the Secured Party in performing such obligations shall be immediately due and
payable by the Debtor and shall form part of the Obligations hereby
secured.

     

    ARTICLE 4 – DEALING WITH
COLLATERAL

     

    4.1           Dealing with Collateral by
the Debtor.  The Debtor shall not sell, lease or otherwise
dispose of any of the Collateral without the prior written consent of the
Secured Party, except that the Debtor may, until an Event of Default occurs,
sell items of Inventory in the ordinary course of its business so that the
purchaser thereof takes title thereto free and clear of the security interest,
assignment and mortgage and charge granted hereby, but all proceeds of any such
sale shall continue to be subject to the security interest, assignment and
mortgage and charge granted hereby and all money received by the Debtor shall be
received as trustee for the Secured Party and shall be held separate and apart
from other money of the Debtor and shall be paid over to the Secured Party upon
request.

     

    4.2           Registration of
Securities.  The Secured Party may have any Securities
registered in its name or in the name of its nominee and shall be entitled but
not bound or required to exercise any of the rights that any holder of such
Securities may at any time have, provided that until an Event of Default has
occurred and is continuing, the Debtor shall be entitled to exercise, in a
manner not prejudicial to the interests of the Secured Party or which would
violate or be inconsistent with this Agreement, all voting power from time to
time exercisable in respect of the Securities.  The Secured Party
shall not be responsible for any loss occasioned by its exercise of any of such
rights or by failure to exercise the same within the time limited for the
exercise thereof.  The Debtor shall from time to time forthwith upon
the request of the Secured Party deliver to the Secured Party those Securities
requested by the Secured Party duly endorsed for transfer to the Secured Party
or its nominee to be held by the Secured Party subject to the terms of this
Agreement.

     

    4.3           Notification of Account
Debtors.  Before an Event of Default occurs, the Secured Party
may give notice of this Agreement and the security interest and assignment
granted hereby to any account debtors of the Debtor or to any other person
liable to the Debtor and, after the occurrence of an Event of Default, may give
notice to any such account debtors or other person to make all further payments
to the Secured Party, and any payment or other proceeds of Collateral received
by the Debtor from account debtors or from any other person liable to the Debtor
whether before or after any notice is given by the Secured Party shall be held
by the Debtor in trust for the Secured Party and paid over to the Secured Party
on request.

     

    4.4           Application of
Funds.  Except where the Debtor, when not in default hereunder,
so directs in writing at the time of payment, all money collected or received by
the Secured Party in respect of the Collateral may be applied on account of such
parts of the Obligations as the Secured Party in its sole discretion determines,
or may be held unappropriated in a collateral account, or in the discretion of
the Secured Party may be released to the Debtor, all without prejudice to the
Secured Party's rights against the Debtor.

     

    4.5           Limitation of
Liability.  The Secured Party will not be liable or responsible
for any failure to seize, collect, realize, or obtain payment with respect to
the Collateral and is not bound to institute proceedings or to take other steps
for the purpose of seizing, collecting, realizing or obtaining possession or
payment with respect to the Collateral or for the purpose of preserving any
rights of the Secured Party, the Debtor or any other person, in respect of the
Collateral.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE 5– DEFAULT AND
REMEDIES

     

    5.1           Events of
Default.  The Debtor shall be in default under this Agreement
upon the occurrence of any one or more of the following events (herein referred
to as an “Event of Default”):

     

    
      	
               

            	
              (a)

            

    

     

    the
Debtor fails to make any payment, or any portion thereof, due to the Secured
Party, when due, and such default is not remedied within five business days
following such due date;

     

    
      	
               
      

            	
              (b)

            	
              the
      Debtor does not perform when due any of its obligations under section 3.3;

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      Debtor does not observe or perform any covenant or obligation of the
      Debtor contained in this Agreement (other than a covenant or condition the
      breach or default in performance of which is specifically dealt with
      elsewhere in this section 5.1) and
      such default is not remedied within 10 days after notice has been given by
      the Secured Party to the Debtor specifying such
  default;

            

    

     

    
      	
               
      

            	
              (d)

            	
              any
      representation or warranty made by the Debtor herein or in any document or
      certificate provided at any time to the Secured Party in connection
      herewith shall prove to be incorrect or misleading in any material
      respect;

            

    

     

    
      	
               
      

            	
              (e)

            	
              the
      Debtor is in default under any other agreement with the Secured Party; or
      under any material agreement with any other
  person;

            

    

     

    
      	
               
      

            	
              (f)

            	
              any
      event of default, subject to expiry of any applicable cure periods, under
      any other security held by the Secured Party for the Obligations, whether
      such other security is provided directly by the Debtor or by any other
      person;

            

    

     

    
      	
               
      

            	
              (g)

            	
              any
      change in the legal or effective ownership or control of the Debtor
      without the prior written consent of the Secured
  Party;

            

    

     

    
      	
               
      

            	
              (h)

            	
              the
      Debtor ceases or threatens to cease to carry on the business currently
      being carried on by it or a substantial portion thereof or makes or agrees
      to make an assignment, disposition or conveyance, whether by way of sale,
      lease, exchange or otherwise, of its assets in
  bulk;

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Debtor shall be an insolvent person within the meaning of the Bankruptcy and Insolvency
      Act (Canada) or commit or threaten to commit any act of
      bankruptcy;

            

    

     

    
      	
               
      

            	
              (j)

            	
              the
      commencement of any proceeding or the taking of any step by or against the
      Debtor for the dissolution, liquidation or winding-up of the Debtor or for
      any relief under the laws of any jurisdiction relating to bankruptcy,
      insolvency, reorganization, arrangement, compromise or winding-up, or for
      the appointment of one or more of a trustee, receiver, receiver and
      manager, custodian, liquidator or any other person with similar powers
      with respect to the Debtor or the Collateral or any part
      thereof;

            

    

     

    
      	
               
      

            	
              (k)

            	
              the
      Collateral or any part thereof is seized or otherwise attached by anyone
      pursuant to any legal process or other means, including distress,
      execution or any other step or proceeding with similar effect, and the
      same is not released, bonded, satisfied, discharged or vacated within the
      shorter of a period of 15 days and 10 days less than such period as would
      permit such property or any part thereof to be sold pursuant thereto;
      or

            

    

     

    
      	
               
      

            	
              (l)

            	
              the
      Secured Party believes in good faith that the prospect of payment or
      performance of any of the Obligations is impaired or that the Collateral
      is in danger of being lost, damaged or confiscated, or of being encumbered
      by the Debtor or seized or otherwise attached by anyone pursuant to any
      legal process.

            

    

     

    5.2           Remedies.  On
or after the occurrence of any Event of Default, any or all of the Obligations
shall at the option of the Secured Party become immediately due and payable or
be subject to immediate

    performance,
as the case may be, without presentment, protest or notice of dishonour, all of
which are expressly waived; the obligation, if any, of the Secured Party to
extend further credit to the Debtor shall cease; any or all security granted
hereby shall, at the option of the Secured Party, become immediately
enforceable; and in addition to any right or remedy provided by law, the Secured
Party will have the rights and remedies set out below, all of which rights and
remedies will be enforceable successively, concurrently or both:

     

    
      	
               
      

            	
              (a)

            	
              the
      Secured Party may by appointment in writing appoint a receiver or receiver
      and manager (each herein referred to as the “Receiver”) of the Collateral
      (which term when used in this section shall include the whole or any part
      of the Collateral) and may 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 of the Collateral; and the term “Secured
      Party” when used in this section shall include any Receiver so appointed
      and the agents, officers and employees of such Receiver; and the Secured
      Party shall not be in any way responsible for any misconduct or negligence
      of any such Receiver;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Secured Party may take possession of the Collateral and require the Debtor
      to assemble the Collateral and deliver or make the Collateral available to
      the Secured Party at such place or places as may be specified by the
      Secured Party;

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      Secured Party may take such steps as it considers desirable to maintain,
      preserve or protect the Collateral;

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      Secured Party may carry on or concur in the carrying on of all or any part
      of the business of the Debtor;

            

    

     

    
      	
               
      

            	
              (e)

            	
              the
      Secured Party may enforce any rights of the Debtor in respect of the
      Collateral by any manner permitted by
law;

            

    

     

    
      	
               
      

            	
              (f)

            	
              the
      Secured Party may sell, lease or otherwise dispose of the Collateral at
      public auction, by private tender, by private sale or otherwise either for
      cash or upon credit upon such terms and conditions as the Secured Party
      may determine and without notice to the Debtor unless required by
      law;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (g)

            	
              the
      Secured Party may accept the Collateral in satisfaction of the Obligations
      upon notice to the Debtor of its intention to do so in the manner required
      by law;

            

    

     

    
      	
               
      

            	
              (h)

            	
              the
      Secured Party may, for any purpose specified herein, borrow money on the
      security of the Collateral in priority to the security interest,
      assignment and mortgage and charge granted by this
    Agreement;

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Secured Party may enter upon, occupy and use all or any of the premises,
      buildings and plant occupied by the Debtor and use all or any of the
      Equipment and other personal property of the Debtor for such time as the
      Secured Party requires to facilitate the realization of the Collateral,
      free of charge, and the Secured Party will not be liable to the Debtor for
      any neglect in so doing or in respect of any rent, charges, depreciation
      or damages in connection with such
actions;

            

    

     

    
      	
               
      

            	
              (j)

            	
              the
      Secured Party may charge on its own behalf and pay to others all
      reasonable amounts for expenses incurred and for services rendered in
      connection with the exercise of the rights and remedies of the Secured
      Party hereunder, including, without limiting the generality of the
      foregoing, reasonable legal, Receiver and accounting fees and expenses,
      and in every such case the amounts so paid together with all costs,
      charges and expenses incurred in connection therewith, including interest
      thereon at such rate as the Secured

            

    

     

    
      	
               
      

            	
              (k)

            

    

     

    Party
deems reasonable, will be added to and form part of the Obligations hereby
secured; and

     

    
      	
               
      

            	
              (l)

            	
              the
      Secured Party may discharge any claim, lien, mortgage, charge, security
      interest, encumbrance or any rights of others that may exist or be
      threatened against the Collateral, and in every such case the amounts so
      paid together with costs, charges and expenses incurred in connection
      therewith shall be added to the Obligations hereby
  secured.

            

    

     

    5.3           Additional
Rights.  The Secured Party may (i) grant extensions of time,
(ii) take and perfect or abstain from taking and perfecting security, (iii) give
up securities, (iv) accept compositions or compromises, (v) grant releases and
discharges, and (vi) release any part of the Collateral or otherwise deal with
the Debtor, debtors of the Debtor, sureties and others and with the Collateral
and other security as the Secured Party sees fit without prejudice to the
liability of the Debtor to the Secured Party or the Secured Party's rights
hereunder.

     

    5.4           Application of
Proceeds.  The Secured Party may apply any proceeds of
realization of the Collateral to payment of expenses in connection with the
preservation and realization of the Collateral as above described and the
Secured Party may apply any balance of such proceeds to payment of the
Obligations in such order as the Secured Party sees fit.  If there is
any surplus remaining, the Secured Party may pay it to any person having a claim
thereto in priority to the Debtor of whom the Secured Party has knowledge and
any balance remaining must be paid to the Debtor.  If the disposition
of the Collateral fails to satisfy the Obligations secured by this Agreement and
the aforesaid expenses, the Debtor will be liable to pay any deficiency to the
Secured Party forthwith on demand.

     

    ARTICLE 6 –
GENERAL

     

    6.1           Multiple
Debtors.  If there is more than one Debtor named herein, the
term “Debtor” shall mean all and each of them, their obligations under this
Agreement shall be joint and several, the Obligations shall include those of all
or any one of them and no Debtor shall have any right of subrogation,
exoneration, reimbursement or indemnity whatsoever and no right of recourse to
the Collateral for the Obligations hereunder unless and until all of the
Obligations have been paid or performed in full.

     

    6.2           Power of
Attorney.  Upon the occurrence of an Event of Default that is
continuing, the Debtor hereby irrevocably constitutes and appoints any
representative for the time being of the Secured Party the true and lawful
attorney of the Debtor, with full power of substitution, to do, make and execute
all such statements, assignments, documents, acts, matters or things with the
right to use the name of the Debtor whenever and wherever such representative
may deem necessary or expedient and from time to time to exercise all rights and
powers and to perform all acts of ownership in respect of the Collateral in
accordance with this Agreement.

     

    6.3           Additional Continuing
Security.  This Agreement and the security interest, assignment
and mortgage and charge granted hereby are in addition to and not in
substitution for any other security now or hereafter held by the Secured Party
and this Agreement is a continuing agreement and security that shall remain in
full force and effect until discharged by the Secured Party.

     

    6.4           Enurement.  This
Agreement shall be binding upon the heirs, executors, administrators, successors
and permitted assigns of the Debtor (including, without limitation, any
corporation resulting from an amalgamation with the Debtor) and shall benefit
the heirs, executors, administrators, successors and assigns of the Secured
Party.

     

    6.5           No
Waiver.  No delay or failure by the Secured Party in the
exercise of any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude the other or further
exercise thereof or the exercise of any other right.

     

    6.6    Notices.  Any
demand, notice or other communication to be given in connection with this
Agreement shall be given in writing and may be given by personal delivery,
courier, telecopy or registered mail addressed to the recipient at the address
set forth on the first page hereof or to such other address, or to the attention
of such other individual, as may be designated by notice by any party to the
other in accordance herewith.  No such communication shall be deemed
to be received until actually delivered or transmitted to the address specified
herein or in accordance herewith.

     

    6.7           Modification and
Assignment.  This Agreement may not be amended or modified in
any respect except by written instrument signed by the party intended to be
bound hereby. The rights of the Secured Party under this Agreement may be
assigned by the Secured Party without the prior consent of the
Debtor.  The Debtor may not assign its obligations under this
Agreement.

     

    6.8           Further
Assurances.  The parties hereto shall promptly do, make,
execute or deliver, or cause to be done, made, executed or delivered, all such
further acts, documents and things as the other party hereto or its or her
counsel may reasonably require from time to time for the purpose of giving
effect to this Agreement and shall use reasonable efforts and take all such
steps as may be reasonably within its or her power to implement to the full
extent the provisions of this Agreement.

     

    6.9           Discharge.  The
Debtor shall not be discharged from any of the Obligations or from this
Agreement except by a release or discharge signed in writing by the Secured
Party upon payment in full of the Indebtedness.

     

    6.10        Executed
Copy.  The Debtor acknowledges receipt of a fully executed copy
of this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF the parties hereto
have executed this Agreement as of the date first above written.

     

    
      	 
      	 
      	
              LUMONALL
      INTERNATIONAL CORPORATION

              Per: c/s

              Name:

              Title:
      President

            

    

    

     

    
      	 
      	 
      	
              LUMONALL,
      INC.

               

              Per:
      ________________________________c/s

              Name:
      John Simmonds

              Title:
      CEO

               

               

            
	 
      	 
      	 
      
	 
      	 
      	 
      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
A

     

    Permitted
Encumbrances

     

    A.1           Liens
for taxes, assessments or governmental charges or levies not at the time due and
delinquent or the validity of which is being contested at the time by the Debtor
in good faith by proper legal proceedings and provided that such proceedings
effectively postpone enforcement of any such lien.

     

    A.2           Liens
of any judgement rendered or claim filed against the Debtor which the Debtor
shall be contesting in good faith by proper legal proceedings and provided that
such proceedings effectively postpone enforcement of any such lien.

     

    A.3           Encumbrances
resulting from the deposit of cash or securities in connection with contracts,
tenders or expropriation proceedings or to secure worker’s compensation, surety
or appeal bonds, costs of litigation when required by law, public and statutory
obligations and, subject to the terms otherwise set out in this Agreement, liens
or claims incidental to current construction, repair, storage, carrier or
similar liens.

     

    A.4           Any
security given to a public utility or any municipal or governmental or other
public authority when required by such utility or other authority in connection
with the operations of the Debtor in the ordinary course of its
business.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    Schedule
B

     

    Locations
of Collateral

     

    175
Romina Drive, Concord, Ontario L4K 4V3, the Debtor’s registered head office, or
wherever located

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
C

     

    Description

     

    Tradename :  “Lumonall” and
equipment, inventory, accounts receivable and any proceeds thereof.

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