Document:

pdmt_ex102.htm

Exhibit 10.2

 

BRIDGE LOAN AGREEMENT

THIS BRIDGE LOAN AGREEMENT (this “Agreement”) made this 21st day of May, 2014, by and between Urban Cultivator Inc., a British Colombia corporation (“UC”), BC Northern Lights Enterprises Ltd., a British Colombia corporation (“BCNL”), and W3 Metal Inc., a British Colombia corporation (“W3,” and together with UC and BCNL, “Borrowers”), and Placer Del Mar Ltd., a Nevada corporation (“Lender”);

W I T N E S S E T H:

WHEREAS, Borrowers and Valor Invest Ltd. (“Valor”) have agreed upon certain of the terms and conditions of a merger (the “Merger”) by and among the Borrowers and a U.S. publicly traded company (“Pubco”) and related transactions (collectively, the “Transactions”), as contemplated by that certain term sheet between the Borrowers and Valor, dated as of May 5, 2014 (the “Term Sheet”); and

WHEREAS, Valor has identified Lender, and the Borrowers have hereby acknowledged their acceptance of Lender, as Pubco for purposes of the Term Sheet and the Merger; and

WHEREAS, simultaneously herewith Lender is engaged in an offering (the “Note Offering”) of its 10% Secured Convertible Promissory Notes (the “Convertible Notes”) in the aggregate principal amount of up to $1,000,000, pursuant to a Securities Purchase Agreement between the Lender and the Buyers party thereto (the “Securities Purchase Agreement”), which offering is being conducted pursuant to the exemption from registration provided by Rule 506 of Regulation D, Regulation S and/or Section 4(2) under the Securities Act of 1933, as amended (the “Securities Act”) (capitalized terms used herein without definition shall have the meanings ascribed to them in the Securities Purchase Agreement); and

WHEREAS, to provide the Borrowers with sufficient working capital to enable the Borrowers to fulfill their obligations under certain contractual agreements incident to their businesses while Lender and the Borrowers prepare the documentation necessary and appropriate to consummate the Transactions and obtain all necessary approvals from stockholders and third parties, Lender has agreed to utilize a  portion of the net proceeds of the Note Offering to provide a loan facility (each advance a "Loan" and collectively the “Loans”) to the Borrowers (i) initially with a temporary loan in the principal amount of up to $400,000 and (ii) on the last working day of each month beginning May 30, 2014 until the Transactions are concluded additional temporary loans in the principal amount of up to $120,000 each, in exchange for one or more 10% secured bridge loan promissory notes (the “Note” or “Notes”), to meet working capital requirements agreed upon by the Borrowers and Lender, and to expend other proceeds of the Notes for the benefit of the Borrowers in contemplation of the Merger and the PIPE offering;

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers and Lender, intending to be legally bound, agree as follows:

  

  

  

 

ARTICLE I – LOAN

1.1. Loan.

(a)           Lender agrees, on the terms and conditions of this Agreement, and subject to closing of the Note Offering, to make Loans to the Borrowers (i) initially in the principal amount of up to $400,000 and (ii) on the last working day of each month beginning May 30, 2014 until the earlier of August 29, 2014 and the date the Transactions are concluded additional temporary loans in the principal amount of up to $120,000 each.

(b)           Upon each Closing of Convertible Notes under the Note Offering, the Lender shall disburse the net proceeds thereof, after payment of any fees and expenses agreed to in advance in writing by the Borrowers, to the Borrowers as principal amounts of the Loan.

1.2. The Notes. The Borrowers have authorized the issuance of the Notes made in favor of Lender by the Borrowers, which shall be substantially in the form set forth in Exhibit A attached hereto.  The Borrowers shall execute and deliver to Lender a Note in the face amount equal to the gross proceeds of each Loan.  The Loan shall bear interest at the rate or rates, and shall be due and payable on the date or dates, set forth in the Notes; provided, however, that if the Merger and the PIPE been consummated, all indebtedness (including accrued interest) evidenced by the Notes shall be deemed canceled and paid in full.

1.3. Payments. Subject to the proviso in the preceding Section, the Borrowers shall repay the unpaid principal amount of, and accrued but unpaid interest on, the Loan (the “Repayment Amount”) on the Due Date (as defined in the Notes) or as otherwise set forth in the Notes, as set forth below:

The Borrowers shall wire the Repayment Amount in same-day funds in accordance with the wire instructions set forth immediately below, which Repayment Amount shall be held in escrow pursuant to the terms of an escrow agreement by and between Lender and Gottbetter & Partners, LLP, as escrow agent (the “Bridge Escrow Agent”), and disbursed in accordance therewith solely for repayment of the aggregate amounts due and payable to the Buyers (defined below) on the Convertible Notes.

 

Wire Instructions

 

Account Name:                                               Gottbetter & Partners, LLP

Account Number:                                           9998176923

Routing Number:                                           021000089

Swift Code:                                                      CITIUS33

Bank Name and Address:                             Citibank, N.A.

           330 Madison Ave., New York, NY 10017

                                Reference:                                                       Urban Cultivator Inc., BC Northern Lights Enterprises Ltd., W3 Metal Inc.

  

2

  

1.4. Conditions to Loan. Notwithstanding the foregoing, the obligation of Lender to disburse the Loan to the Borrowers is subject to the satisfaction of the following conditions:

 

 

(a)           The Borrowers shall have obtained (and shall have provided copies thereof to Lender) all waivers, consents or approvals, if any, from third parties, and shall have given all notices to third parties, and the failure of which to obtain or to give notice would result in a conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which the Borrowers are a party or by which the Borrowers  are bound or to which any of their assets is subject, except for any conflict, breach, default, acceleration, termination, modification or cancellation in any contract or instrument which would not have a Company Material Adverse Effect (as hereinafter defined) and would not adversely affect the consummation of the Loan or the other transactions contemplated hereby, including but not limited to the Merger.

(b)           The Borrowers shall have entered into a security agreement of even date herewith, substantially in the form attached as Exhibit B attached hereto (the “General Security Agreement”) with the Lender and Gottbetter & Partners, LLP, as collateral agent (the “Collateral Agent”) pursuant to which the Borrowers shall have granted and conveyed to the Collateral Agent, for the benefit of the Buyers, a second priority security interest in all of the tangible and intangible assets of the Borrowers now owned or hereafter acquired by the Borrowers, as security for the timely repayment of the Convertible Notes in accordance with the terms of the Convertible Notes.

 

 (c)           The Borrowers shall have delivered to the Lender a certificate, executed on behalf of each of the Borrowers by its Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Boards of Directors of each of the Borrowers approving the transactions contemplated by this Agreement and the issuance of the Notes, certifying the current versions of the Articles of Incorporation of each of the Borrowers and certifying as to the signatures and authority of persons signing this Agreement and the Notes on behalf of the Borrowers.

 

ARTICLE II – REPRESENTATIONS AND WARRANTIES OF THE BORROWERS

The Borrowers represent and warrant to Lender as follows:

2.1. Organization. Each of the Borrowers and its Subsidiaries (as defined below) is a corporation or limited liability company, as the case may be, duly existing under the laws of its jurisdiction of organization and qualified and licensed to do business in any jurisdiction in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to be so qualified would not have a material adverse effect on the business, operations, condition (financial or otherwise), property or prospects of Borrowers or any Subsidiary, or the ability of the Borrowers and any Subsidiary to carry out its respective obligations under the Loan Documents (as defined in Section 2.3 below) (a “Company Material Adverse Effect”).

  

3

  

 

2.2. Corporate Structure. The corporate structure of the Borrowers is as set forth in Schedule 2.2.

2.3. Authorization. All corporate action on the part of the Borrowers and their officers, directors and stockholders necessary for the authorization, execution, delivery and performance of all obligations of the Borrowers under this Agreement, the Note, the General Security Agreement and all other documents executed in connection with the Loans (collectively, the “Loan Documents”) to which any of them may be a party have been taken.  This Agreement, the Note and the other Loan Documents, when executed and delivered by the Borrowers shall constitute legal, valid and binding obligations of the Borrowers, enforceable against the Borrowers in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights and the enforcement of debtors’ obligations generally and by general principles of equity, regardless of whether enforcement is pursuant to a proceeding in equity or at law.

2.4. Absence of Conflicts. The execution, delivery and performance of this Agreement and each of the other Loan Documents is not in conflict with nor does it constitute a breach of any provision contained in any of the Borrowers’ organizational documents, nor will it constitute an event of default under any material agreement to which any of the Borrowers is a party or by which any of the Borrowers is bound.

2.5. Consents and Approvals. The Borrowers have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities and agencies that are necessary for the continued operation of their businesses as currently conducted, or are required by law.

2.6. Capitalization. The authorized and outstanding capital stock of each of the Borrowers is described on Schedule 2.6 attached hereto. Except as set forth on Schedule 2.6 or as contemplated by the Transactions, there are no subscriptions, convertible securities, options, warrants or other rights (contingent or otherwise) currently outstanding to purchase any of the authorized but unissued capital stock of any of the Borrowers.  Except as set forth in Schedule 2.6 or as contemplated by the Transactions, none of the Borrowers has any obligation to issue shares of its capital stock, or subscriptions, convertible securities, options, warrants, or other rights (contingent or otherwise) to purchase any shares of its capital stock or to distribute to holders of any of its equity securities, any evidence of indebtedness or asset.  No shares of capital stock of the Borrowers are subject to a right of withdrawal or a right of rescission under any applicable securities law.  Except as set forth in Schedule 2.6, there are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Borrowers.  To the Knowledge (as defined below) of the Borrowers, except as described in Schedule 2.6 or otherwise contemplated by this Agreement, there are no agreements to which any of the Borrowers is a party or by which it is bound with respect to the voting (including without limitation voting trusts or proxies), registration under any applicable securities laws, or sale or transfer (including without limitation agreements relating to pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Borrowers.  Except as provided in Schedule 2.6, to the Knowledge of the Borrowers, there are no agreements among other parties, to which any of the Borrowers is not a party and by which it or any of them is not bound, with respect to the voting (including without limitation voting trusts or proxies) or sale or transfer (including without limitation agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Borrowers.

  

4

  

 

2.7. Litigation. Except as disclosed on Schedule 2.7, there are no actions, suits, claims, investigations, arbitrations or other legal or administrative proceedings, to the Knowledge of the Borrowers, threatened against Borrowers  at law or in equity, and to the Borrowers’ Knowledge, there is no basis for any of the foregoing.  Except as disclosed on Schedule 2.7, there are no unsatisfied judgments, penalties or awards against or affecting Borrowers or their respective businesses, properties or assets.  Except as disclosed on Schedule 2.7, neither the Borrowers is in default, and no event has occurred which with the passage of time or giving of notice or both would constitute a default by the Borrowers with respect to any order, writ, injunction or decree known to or served upon the Borrowers of any court or of any foreign, federal, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign.  Except as disclosed on Schedule 2.7, there is no action or suit by the Borrowers pending or threatened against others.  Except as disclosed on Schedule 2.7, the Borrowers have complied with all laws, rules, regulations and orders applicable to their current business, operations, properties, assets, products and services the violation of which would have a Company Material Adverse Effect.  There is no existing law, rule, regulation or order, and Borrowers have no Knowledge of any proposed law, rule, regulation or order, whether foreign, federal or provincial, that would prohibit or materially restrict the Borrowers from, or otherwise materially adversely affect the Borrowers in, conducting their businesses in any jurisdiction in which they are now conducting business.

As defined in this Agreement, “Knowledge” of the Borrowers means the actual knowledge by a director or officer of any of the Borrowers of a particular fact or circumstance or such knowledge as may reasonably be imputed to such person as a result of such person’s actual knowledge of other facts or circumstances as well as any other knowledge which such person would have possessed had such person made reasonable inquiry of appropriate employees and agents of Borrowers with respect to the matter in question.

2.8. Absence of Certain Events. To the Borrowers’ Knowledge, there is no existing condition, event or series of events which reasonably would be expected to have a Company Material Adverse Effect.

2.9. Title to Property and Assets. Except as set forth on Schedule 2.9, the Borrowers own no real property.  Except as set forth on Schedule 2.9, the Borrowers have good and marketable title to all of their personal property and assets free and clear of any material restriction, mortgage, deed of trust, pledge, lien, security interest or other charge, claim or encumbrance which would have a Company Material Adverse Effect.  Except as set forth on Schedule 2.9, with respect to properties and assets they lease, the Borrowers are in material compliance with such leases and hold valid leasehold interests free of any liens, claims or encumbrances which would have a Company Material Adverse Effect.

  

5

  

 

2.10. Governmental Permits. The Borrowers hold all licenses, franchises, permits and other governmental authorizations which are required for the conduct of any aspect of their respective businesses, as presently conducted and as presently contemplated to be conducted, including, but not limited to, all such business operations contemplated by, or incident to, the Transactions.  All such licenses, franchises, permits and other governmental authorizations are valid and current, and the Borrowers have not received any notice that any governmental authority intends to cancel, terminate or not renew any such license, franchise, permit or other governmental authorization.  Borrowers have conducted and are conducting their business in material compliance with the requirements, standards, criteria and conditions set forth in such licenses, franchises, permits and other governmental authorizations, and all laws and regulations applicable thereto, and are not in violation of any of the foregoing.  The consummation of the transactions contemplated hereunder will not alter or impair or require changes to any such license, franchise, permit or other governmental authorization.

ARTICLE III.A – COVENANTS OF THE BORROWERS

So long as any Note is outstanding, the Borrowers agree that, unless Lender shall give its prior consent in writing:

3.1. Ordinary Course. Each of the Borrowers shall carry on its business in the ordinary course substantially as conducted heretofore, and shall not engage in any transaction outside of the ordinary course of business.

3.2. Maintain Properties. Each of the Borrowers shall maintain its properties and facilities in good working order and condition, reasonable wear and tear excepted.

3.3. Performance under Agreements. Each of the Borrowers shall perform all of its material obligations under agreements relating to or affecting its assets, properties or rights.

3.4. Cooperation with Lender. The Borrowers shall cooperate with Lender and shall use their reasonable best efforts to complete and sign the merger agreement contemplated by the Merger and shall use their reasonable best efforts to consummate the Transactions contemplated thereby.

3.5. Financial Statements. The Borrowers shall provide to Lender prior to the Closing Date (as defined in the Term Sheet) any such audited or unaudited financial statements as may be required under applicable U.S. Securities Exchange Commission (“SEC”) regulations for inclusion of such statements in Lender’s SEC and other regulatory filings upon and following the closing of the Merger.

3.6. Maintenance of Business Organization. Subject to the Lender making each of the Loans contemplated hereby, each of the Borrowers shall maintain and preserve its business organization intact and use its reasonable best efforts to retain its present key employees and relationships with suppliers, customers and others having business relationships with the Borrowers.

  

6

  

 

3.7. Compliance with Permits. Each of the Borrowers shall maintain material compliance with all permits, laws, rules and regulations, consent orders and all other orders of applicable courts, regulatory agencies, and similar governmental authorities.

 

3.8. Leases. Each of the Borrowers shall maintain its present leases in accordance with their respective terms, and may enter into new or amended lease instruments.

3.9. Payments; Use of Proceeds. Except with respect to fees due to attorneys, accountants, and investment bankers relating to the Transactions, including with respect to the Loans, the Borrowers shall not make any payment, or incur any obligation to make any payment outside the ordinary course of business in excess of $15,000 without the prior written consent of Lender. The Borrowers shall use the proceeds from the Loan as described on Schedule 3.9.

3.10. Loan Documents. Each of the Borrowers shall comply in all respects with the terms of the Loan Documents to which it is a party.

3.11. Mergers. Except as contemplated by the Transactions, none of the Borrowers shall merge or consolidate with or into any other corporation, or sell, assign, lease or otherwise dispose of or voluntarily part with the control (whether in one transaction or in a series of related transactions) of assets (whether now owned or hereafter acquired) having a fair market value of more than $25,000 at the time(s) of transfer, or sell, assign or otherwise dispose of (whether in one transaction or in a series of transactions) any of its accounts receivable (whether now in existence or hereafter created) at a discount or with recourse, to any person, except sales or other dispositions of assets in the ordinary course of business.

3.12. Charter Documents. The Borrowers shall not make any amendment to its Certificate of Incorporation or equivalent constitutive document, but may amend, revise and/or restate its articles of incorporation.

3.13. Senior or Pari Passu Indebtedness. The Borrowers shall not incur, create, assume, guaranty or permit to exist any indebtedness that ranks senior in priority to, or pari passu with, the obligations under the Notes and the other Loan Documents, except for (i) indebtedness existing on the date hereof and set forth in Schedule 3.13 attached hereto, and (ii) indebtedness secured by a lien described in Section 3.14(i) below in an aggregate amount outstanding not to exceed $10,000, provided the Borrowers may refinance any existing facilities with the Royal Bank of Canada.

3.14. INTENTIONALLY DELETED.

3.15. Dividends and Distributions. The Borrowers shall not declare or pay, directly or indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any shares of its capital stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value any shares of any class of its capital stock or set aside any amount for any such purpose.

  

7

  

 

3.16. Limitation on Certain Payments and Prepayments.  Provided the Lender is performing its obligations under this Agreement and the Term Sheet, including making all Loan advances in accordance with Section 1.1 hereof and other than to repay the Lender any amount of the Loans that have been called due by the Lender, the Borrowers shall not:

(a)           borrow any monies or pledge any assets other than under their existing credit facilities described in Schedule 3.17 attached hereto;

Within three (3) business days following the Borrowers’ request for a waiver of any provision of this Article III, Lender shall provide Borrowers with their response to such request.

3.17. INTENTIONALLY DELETED.

3.18. Future issuances. Provided the Lender is performing its obligations under this Agreement and the Term Sheet, including making all Loan advances in accordance with Section 1.1 hereof, and other than to raise funds to repay the Lender any amount of the Loans that have been called due by the Lender, the Borrowers shall not issue any of their equity securities without prior approval of the Lender.

 

 

3.19. Pubco Acknowledgment and Acceptance.  The Borrowers hereby acknowledge and accept Lender as “Pubco” for purposes of the Term Sheet and the Merger.

ARTICLE III.B – COVENANTS OF LENDER

Lender covenants and agrees that it shall use the proceeds from the Borrowers of the Repayment Amount solely to repay in full the outstanding principal amount of the Convertible Notes, with interest, if any, to the Buyers.  Lender further agrees to issue its instruction letter (the “Instruction Letter”) to the Bridge Escrow Agent authorizing the Bridge Escrow Agent to release from escrow in favor of Buyers the Repayment Amount in repayment of the Convertible Notes, which Instruction Letter shall be signed by Lender and held in trust by Gottbetter & Partners, LLP on behalf of the Borrowers until repayment on the Due Date or as otherwise set forth herein.

Lender hereby acknowledges and agrees that it shall be the “Pubco” for purposes of the Term Sheet and the Merger.

ARTICLE IV – DEFAULTS AND REMEDIES

4.1. An “Event of Default” occurs if:

(a)           any of the Borrowers default in the payment of any principal of the Note when the same shall become due, either by the terms thereof or otherwise as herein provided; or

  

8

  

 

(b)           any of the Borrowers default, in whole or in part, in the performance or observance of any other material agreement, term or condition contained in the Note or the other Loan Documents, and such breach shall not have been cured within thirty (30) days after receipt of written notice thereof; or

(c)           any of the Borrowers default with respect to any other indebtedness for borrowed money of the Borrowers or under any agreement under which such indebtedness may be issued by the Borrowers and such default shall continue for more than the period of grace, if any, therein specified, if the aggregate amount of such indebtedness for which such default shall have occurred exceeds $25,000;

(d)           any of the Borrowers default with respect to any contractual obligation of the Borrowers under or pursuant to any contract, lease, or other agreement to which any the of Borrowers is a party and such default shall continue for more than the period of grace, if any, therein specified, if the aggregate amount of the Borrowers’ contractual liability arising out of such default exceeds or is reasonably estimated to exceed $25,000;

(e)           the Merger shall not have closed and the Note shall not have been repaid in full by the Due Date; or

(f)           any of the Borrowers pursuant to or within the meaning of any Bankruptcy Law (as defined below):

(i) commences a voluntary case,

(ii) consents to the entry of an order for relief against it in an involuntary case,

(iii) consents to the appointment of a Custodian (as defined below) of it or for all or substantially all of its property,

(iv) makes a general assignment for the benefit of its creditors, or

(v) is the debtor in an involuntary case which is not dismissed within thirty (30) days of the commencement thereof, or

(g)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(i) provides for relief against any of the Borrowers in an involuntary case,

(ii) appoints a Custodian of any of the Borrowers for all or substantially all of its property, or

(iii) orders the liquidation of any of the Borrowers,

  

9

  

 

(h)           a final judgment for the payment of money in an amount in excess of $25,000 shall be rendered against any of the Borrowers (other than any judgment as to which a reputable insurance company shall have accepted full liability in writing) and shall remain undischarged for a period (during which execution shall not be effectively stayed) of 20 days after the date on which the right to appeal has expired; or

(i)           an event shall occur or there exist facts or circumstances which create or result in a Company Material Adverse Effect.

then and in any such case upon the occurrence of any Event of Default described in paragraphs (f) or (g), the unpaid principal amount of the Notes shall automatically become due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Borrowers, and upon the occurrence of any other Event of Default, in addition to any other rights, powers and remedies permitted by law or in equity, Lender may, at its option, by notice in writing to the Borrowers, declare the Notes to be, and the Notes shall thereupon be and become, immediately due and payable, together with all other sums due hereunder, without presentment, demand, protest or other notice of any kind, all of which are waived by the Borrowers.

Upon the occurrence of any Event of Default, the holder of the Notes may proceed to protect and enforce its rights by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in the Notes held by it, for an injunction against a violation of any of the terms hereof or thereof, or for the pursuit of any other remedy which it may have by virtue of this Agreement or pursuant to applicable law. Borrowers shall pay to the holder of the Notes upon demand the reasonable costs and expenses of collection and of any other actions referred to in this Article, including without limitation reasonable attorneys’ fees, expenses and disbursements.

No course of dealing and no delay on the part of the holder of the Notes in exercising any of its rights shall operate as a waiver thereof or otherwise prejudice the rights of such holders, nor shall any single or partial exercise of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. No right, power or remedy conferred hereby or by the Notes on the holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise.

4.2. For purposes of this Article, the following definitions shall apply:

“Bankruptcy Law” means the Bankruptcy and Insolvency Act (Canada), the Companies Creditors’ Arrangement Act (Canada) or similar legislation in Canada;

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

  

10

  

 

ARTICLE V – NOTICES

All notices, requests and demands shall be given to or made upon the respective parties hereto in writing, at such address as may be designated by it in a written notice to the other party. All notices, requests, consents and demands hereunder shall be effective when duly deposited in the mails (by overnight delivery by a nationally-recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested) with a copy via facsimile. Unless the parties designate otherwise, notices should be addressed as follows:

If to the Borrowers:

BC Northern Lights Enterprises Ltd.

                Urban Cultivator Inc.

                W3 Metal Inc.

                Unit 311-13060 80th Avenue

                Surrey, BC V3W 3B2 Canada

Attention: Tarren Wolfe

Telephone: 1 877 352-0490

Facsimile:                      604 543-1768

with a copy to:

Boughton law Corporation

595 Burrard Street, #700

Vancouver, BC V7X 1S8 Canada

Attention:                      Rory Godinho

Telephone:                      1-604-647-5525

Facsimile:                      1- 604-683-5317

  If to Lender:

                Placer Del Mar Ltd.

                4045 Sheridan Ave., Suite 433

                Miami Beach, FL 33140

Attention: Frank Terzo

Telephone:  1-561-543-8882

Facsimile:

  with a copy to:

Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor

New York, NY  10022

Attn: Adam S. Gottbetter, Esq.

Facsimile: (212) 400-6901

 

  

11

  

 

ARTICLE VI – MISCELLANEOUS

6.1. Governing Law. This Agreement shall be conclusively deemed to be a contract made under, and shall for all purposes be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada therein applicable to contracts made in and to be wholly performed in such Province, without prejudice to or limitation of any other rights or remedies available under the laws of any jurisdiction where property or assets of the Borrower may be found.

6.2. Amendment. This Agreement may be amended, modified or terminated only by an instrument in writing signed by all parties.

6.3. Assignment. Neither this Agreement nor any right or obligation provided for herein may be assigned by the Borrowers without the prior written consent of the Lender.  The Lender may assign this Agreement or any right or obligation provided for herein without the prior written consent of the Borrowers.

6.4. Successors. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of, and be enforceable by, the respective successors and assigns of the parties hereto.

6.5. Counterparts. This Agreement may be executed in any number of counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement may be executed by facsimile signature.

6.6. Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

6.8. Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

6.8. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.

 

  

12

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Bridge Loan Agreement to be duly executed as of the day and year first above written.

	
LENDER:

 

PLACER DEL MAR LTD.

 

         /s Frank Terzo

By:                                                      

Name:           Frank Terzo

Title:           President and CEO

 

 

	  
	  	  

BORROWERS:

URBAN CULTIVATOR INC.

            /s/Tarren Wolfe

By:                                                      

Name: Tarren Wolfe

Title:   CEO

BC NORTHERN LIGHTS ENTERPRISES LTD.

            /s/Tarren Wolfe

By:                                                      

Name: Tarren Wolfe

Title:

W3 METAL INC.

          /s/Tarren Wolfe

By:                                                      

Name: Tarren Wolfe

Title:pdmt_ex103.htm

Exhibit 10.3

 

GENERAL SECURITY AGREEMENT

 

 

THIS SECURITY AGREEMENT dated for reference the 21st day of May, 2014.

 

 

FROM:

 

BC NORTHERN LIGHTS ENTERPRISES LTD., a company incorporated under the laws of British Columbia, having a registered and records office at #201 - 130 Brew Street, Port Moody BC V3H 0E3 Canada

("BCNL")

AND

 

W3 METAL INC., a company incorporated under the laws of British Columbia, having a registered and records office at #201 - 130 Brew Street, Port Moody BC V3H 0E3 Canada

("W3")

AND

 

URBAN CULTIVATOR INC., a company incorporated under the laws of British Columbia, having a registered and records office at #201 - 130 Brew Street, Port Moody BC V3H 0E3 Canada

("UC")

 

(BCNL, W3 and UC are collectively the "Debtor")

 

TO:

 

PLACER DEL MAR, LTD., having an address at 302 Washington St, San Diego, CA 92103, United States, on behalf of itself and those persons listed as “Buyers” on the Schedule of Buyers attached to that certain Securities Purchase Agreement dated of even date herewith by and among Placer Del Mar Ltd. and the Buyers, together,

 

 (the "Secured Party")

 

  

  

  

 

WHEREAS Placer Del Mar Ltd., the Debtor and certain others are parties to a Term Sheet dated for reference May 5, 2014, as amended, varied, supplemented, restated, renewed or replaced at any time and from time to time (the "Term Sheet"), for which this Agreement is a condition precedent for funding.

 

WHEREAS, pursuant to that certain bridge loan agreement dated as of even date herewith between the Lender and the Debtor (the “Bridge Loan Agreement”), the Lender has agreed to lend (i) initially, the sum of $400,000 and (ii) on the last working day of each month beginning May 30, 2014 until the earlier of August 29, 2014 and the date the Transactions are concluded additional temporary loans in the principal amount of up to $120,000 each to the Borrowers (together, the “Bridge Loan”); and

 

FOR VALUE RECEIVED, the Debtor covenants, agrees, warrants, represents, acknowledges, and confirms to and with the Secured Party and creates and grants the mortgages, charges, transfers, assignments, and security interests as follows:

 

	
1.  

	
Security Interest

 

As security for the payment and performance of the Obligations (as defined in paragraph 3), the Debtor, jointly and severally, subject to the exceptions set out in paragraph 2, does:

 

	
1.1  

	
Grant to the Secured Party a security interest in, and mortgages, charges, transfers and assigns absolutely, all of the Debtor's present and after acquired personal property, and all personal property in which the Debtor has rights, of whatever nature or kind and wherever situate, including, without limitation, all of the following now owned or in future owned or acquired by or on behalf of the Debtor:

 

	
(a)  

	
all goods, including:

 

	
(i)  

	
all inventory of whatever kind and wherever situate, including, without limitation, goods acquired or held for sale or lease or furnished or to be furnished under contracts of rental or service, all raw materials, work in progress, finished goods, returned goods, repossessed goods, and all packaging materials, supplies, and containers relating to or used or consumed in connection with any of the foregoing (collectively the "Inventory");

 

	
(ii)  

	
all equipment of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, fixtures, furniture, furnishings, chattels, motor vehicles, vessels, and other tangible personal property of whatever nature or kind (collectively the "Equipment");

 

	
(b)  

	
all book accounts and book debts and generally all accounts, debts, dues, claims, choses in action, and demands of every nature and kind however arising or secured including letters of credit and advices of credit, which are now due, owing, or accruing, or growing due to, or owned by, or which may in future become due, owing, or accruing, or growing due to, or owned by the Debtor (the "Accounts");

 

  

  

  

 

	
(c)  

	
all contractual rights, insurance claims, licenses, goodwill, patents, trademarks, trade names, copyrights, and other industrial or intellectual property of the Debtor or in which the Debtor has an interest, all other choses in action of the Debtor of every kind which now are, or which may in future be, due or owing to or owned by the Debtor, and all other intangible property of the Debtor which is not Accounts, Chattel Paper, Instruments, Documents of Title, Investment Property, or Money;

 

	
(d)  

	
all Money;

 

	
(e)  

	
all property described in Schedule A to this Agreement, or in any schedule now or at any time in future annexed to this Agreement or agreed to form part of this Agreement;

 

	
(f)  

	
the undertaking of the Debtor;

 

	
(g)  

	
all Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles, Licenses and Investment Property now owned or in future owned or acquired by or on behalf of the Debtor (including those returned to or repossessed by the Debtor) and all other goods of the Debtor that are not Equipment, Inventory, or Accounts;

 

	
(h)  

	
all proceeds, renewals, and accretions, and substitutions of any of the foregoing; and

 

	
(i)  

	
all deeds, documents, writings, papers, books of account, and other books and electronically recorded data relating to any of the foregoing or by which any of the foregoing is or may in future be secured, evidenced, acknowledged, or made payable.

 

	
1.2  

	
Charge as and by way of a floating charge to and in favour of the Secured Party, and grant to the Secured Party a security interest, mortgage, and charge in and to:

 

	
(a)  

	
all the Debtor's right, title, and interest in and to all its presently owned or held and after acquired or held real, immovable, and leasehold property and all interests therein, and all easements, rights-of-way, privileges, benefits, licenses, improvements, and rights whether connected therewith or appurtenant thereto or separately owned or held, including all structures, plant, and other fixtures (collectively the "Real Property"); and

 

	
(b)  

	
all property, assets, and undertakings of the Debtor, both present and future, of whatever nature or kind and wherever situate, and all Proceeds thereof and therefrom,

 

other than any of its property, assets, and undertakings otherwise validly and effectively subject to the charges and security interests in favour of the Secured Party created under paragraph 1.1A of this Agreement. This charge attaches immediately upon the Debtor acquiring any rights in any of that property.

 

  

  

  

 

	
1.3  

	
Mortgage and charge as and by way of a fixed and specific charge to and in favour of the Secured Party, and assign and transfer to the Secured Party and grant to the Secured Party, by way of mortgage, charge, assignment, and transfer, a security interest in all of the Debtor's right, title, and interest, both present and future, in and to all of its presently owned or held and after acquired or held property which:

 

	
(a)  

	
is or in future becomes a fixture, or

 

	
(b)  

	
constitutes a license, quota, permit or other similar right or benefit, or crops.

 

	
1.4  

	
The mortgages, charges, assignments, transfers, and security interests created or granted under paragraphs 1.1, 1.2, and 1.3 of this Agreement are collectively called the "Security Interest", and all property, assets, interests, and undertakings (including Proceeds) subject to the Security Interest or otherwise charged or secured by this Agreement or expressed to be charged, assigned or transferred, or secured by any instruments supplemental to this Agreement or in implementation of this Agreement are collectively called the "Collateral".

 

	
2.  

	
Exceptions and Definitions

 

The Security Interest granted by this Agreement shall not extend or apply to and the Collateral shall not extend to the last day of the term of any lease or agreement to lease Real Property, but upon the enforcement of the Security Interest the Debtor shall stand possessed of such last day in trust to assign and dispose thereof as the Secured Party shall direct.

 

The terms "Chattel Paper", "Document of Title", "Equipment", "Consumer Goods", "Instrument", "Intangible", "Investment Property", "Licenses", "Proceeds", "Inventory", "Accessions", "Money", "financing statement", "financing change statement", "verification statement", and "control" shall, unless otherwise defined in this Agreement or otherwise required by the context, be interpreted according to their respective meanings as set out in the British Columbia Personal Property Security Act, as amended.

 

Any reference in this Agreement to "Collateral" shall, unless the context otherwise requires, be deemed a reference to "Collateral or any part thereof". The Collateral shall not include consumer goods of the Debtor.

 

The term "Proceeds", whenever used and interpreted as above, shall by way of example include trade-ins, equipment, cash, bank accounts, notes, chattel paper, goods, contract rights, accounts, and any other personal property or obligation received when such collateral or proceeds are sold, exchanged, collected, or otherwise disposed of. The term "license" means any license or similar right at any time owned or held by the Debtor including without limitation a "license" as defined in the Act, and the meaning of the term "crops" whenever used in this Agreement includes but is not limited to "crops" as defined in the Act.

 

  

  

  

 

	
3.  

	
Obligations Secured

 

This Agreement and the Security Interest are in addition to and not in substitution for any other security interest now or in future held by the Secured Party from the Debtor or from any other person and shall be general and continuing security for the payment of all indebtedness and liability of the Debtor to the Secured Party (including interest thereon), present or future, absolute or contingent, joint or several, direct or indirect, matured or not, extended or renewed, wherever and however incurred, and any ultimate balance thereof, including all advances on current or running account and all future advances and re-advances, and whether the same is from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again, and whether the Debtor be bound alone or with another or others, and whether as principal or surety, and for the performance and satisfaction of all obligations of the Debtor to the Secured Party, whether or not contained in this Agreement, and whether the Debtor be bound alone or with another or others (all of which indebtedness, liability, and obligations are collectively the "Obligations").

 

	
4.  

	
Prohibitions

 

Without the prior written consent of the Secured Party, the Debtor shall not and shall not have power to:

 

	
(a)  

	
grant, create, or permit to be created any security interest in, charge, encumbrance, or lien over, or claim against any of its property, assets, or undertakings that rank or could rank in priority to or pari passu with the Security Interest, save and except for any refinancing of the operating line of credit of the Debtor with the Royal Bank of Canada;

 

	
(b)  

	
grant, sell, or otherwise assign its Chattel Paper; or

 

	
(c)  

	
issue or have outstanding at any time any secured or unsecured bonds, debentures, debenture stock, or other evidences of indebtedness of the Debtor or of any predecessor in title of the Debtor issued under a trust deed or other instrument running in favour of a trustee.

 

	
5.  

	
Attachment

 

The Debtor acknowledges and confirms that:

 

	
(a)  

	
there is no intention to delay the time of attachment of the Security Interest created by this Agreement, and the Security Interest shall attach at the earliest time permissible under the laws governing this Agreement;

 

	
(b)  

	
that value has been given; and

 

	
(c)  

	
that the Debtor has (or in the case of any after acquired property, will have at the time of acquisition) rights in the Collateral.

 

  

  

  

 

	
6.  

	
Representations and Warranties

 

	
6.1  

	
The Debtor represents and warrants to the Secured Party that:

 

	
(a)  

	
if the Debtor is a company or a partnership, this Agreement is granted in accordance with resolutions of the directors (and of the shareholders as applicable) or of the partners, as the case may be, of the Debtor, and that all other matters and things have been done and performed so as to authorize and make the execution and delivery of this Agreement, and the performance of the Debtor's obligations hereunder, legal, valid, and binding;

 

	
(b)  

	
the Debtor lawfully owns and possesses all presently held Collateral and has good title thereto, free from all security interests, charges, encumbrances, liens, and claims, save only the charges or security interests, if any, shown in any schedule to this Agreement and those consented to in writing by the Secured Party, and the Debtor has good right and lawful authority to grant a security interest in the Collateral as provided by this Agreement;

 

	
(c)  

	
where the Collateral includes Accounts, Chattel Paper, or Instruments, each is enforceable in accordance with its terms against the party obligated thereunder, and that the Debtor has fully and accurately disclosed to the Secured Party the amount owing thereunder and any other relevant information concerning liability for payment thereunder;

 

  

  

  

 

	
(d)  

	
where the Collateral includes investment property, the Debtor has not given control of the investment property to any person; and

 

	
(e)  

	
for goods constituting Collateral, the Debtor has in this Agreement or elsewhere fully and accurately disclosed to the Secured Party the locations thereof and of the business operations and records of the Debtor.

 

	
7.  

	
Covenants of the Debtor

 

	
7.1  

	
The Debtor covenants with the Secured Party that at all times while this Agreement remains in effect the Debtor shall:

 

	
(a)  

	
defend the title to the Collateral for the benefit of the Secured Party against the claims and demands of all persons;

 

	
(b)  

	
fully and effectually maintain and keep maintained the validity and effectiveness of the Security Interest;

 

	
(c)  

	
maintain the Collateral in good order and repair;

 

	
(d)  

	
forthwith pay:

 

	
(i)  

	
all taxes, assessments, rates, duties, levies, government fees, claims, dues and other charges of every nature that may be lawfully levied, assessed, or imposed upon it or the Collateral when due, unless the Debtor shall in good faith contest its obligations so to pay and shall furnish such security as the Secured Party may require; and

 

	
(ii)  

	
all security interests, charges, encumbrances, liens and claims that rank or could in any event rank in priority to the Security Interest, other than the charges or security interests, if any, shown in any Schedule to this Agreement and those consented to in writing by the Secured Party;

 

	
(e)  

	
forthwith reimburse and indemnify the Secured Party for all costs, charges, expenses, and legal fees and disbursements that may be incurred by the Secured Party in:

 

	
(i)  

	
inspecting the Collateral;

 

	
(ii)  

	
negotiating, preparing, perfecting, and registering this Agreement or notice of it and other documents, whether or not relating to this Agreement;

 

	
(iii)  

	
investigating title to the Collateral;

 

	
(iv)  

	
taking, recovering, keeping possession of, and insuring the Collateral; and

 

	
(v)  

	
all other actions and proceedings taken in connection with the preservation of the Collateral and the enforcement of this Agreement and of any other Security Interest held by the Secured Party as security for the Obligations;

 

	
(f)  

	
at the Secured Party's request at any time and from time to time, execute and deliver such further and other documents and instruments and do all acts and things as the Secured Party in its absolute discretion requires in order to confirm and perfect, and maintain perfection of, the Security Interest in favour of the Secured Party upon any of the Collateral;

 

	
(g)  

	
notify the Secured Party promptly of

 

	
(i)  

	
any change in the information contained in this Agreement relating to the Debtor, its address, its business, or the Collateral, including without limitation any change of name or address of the Debtor and any change in location of any Collateral;

 

	
(ii)  

	
the details of any material acquisition of Collateral;

 

	
(iii)  

	
any material loss or damage to the Collateral;

 

  

  

  

 

	
(iv)  

	
any material default by any account debtor in payment or other performance of his or her obligations to the Debtor with respect to any Accounts;

 

	
(v)  

	
the return to or repossession by the Debtor of the Collateral where such return or repossession of the Collateral is material in relation to the business of the Debtor; and

 

	
(vi)  

	
the details of any material claims or litigation affecting the Debtor or the Collateral;

 

	
(h)  

	
prevent the Collateral, other than Inventory sold, leased, or otherwise disposed of as permitted by this Agreement, from being or becoming an accession to other property not covered by this Agreement;

 

	
(i)  

	
permit the Secured Party and its representatives, at all reasonable times, access to all its property, assets, and undertakings and to all its books of account and records for the purpose of inspection, and render all assistance necessary for such inspection; and

 

	
(j)  

	
deliver to the Secured Party from time to time promptly upon request:

 

	
(i)  

	
any Documents of Title, Instruments, certificated Securities, and Chattel Paper constituting, representing, or relating to Collateral;

 

	
(ii)  

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

 

	
(iii)  

	
account control agreements in respect of Investment Property, in form and substance satisfactory to the Secured Party;

 

	
(iv)  

	
all financial statements prepared by or for the Debtor regarding the Debtor's business;

 

	
(v)  

	
all policies and certificates of insurance relating to the Collateral; and

 

	
(vi)  

	
any information concerning the Collateral, the Debtor, and the Debtor's business and affairs as the Secured Party may reasonably require;

 

	
(k)  

	
carry on and conduct the business of the Debtor in a proper and efficient manner and so as to protect and preserve the Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for the Debtor's business as well as accurate and complete records concerning the Collateral;

 

  

  

  

 

	
(l)  

	
where the Collateral is Investment Property, shall prevent any party other than the Secured Party from having control;

 

	
(m)  

	
observe and perform the additional covenants, if any, set out in any schedule attached to this Agreement.

 

	
7.2  

	
The Debtor covenants that at all times while this Agreement remains in effect, without the prior written consent of the Secured Party, it shall not

 

	
(a)  

	
declare or pay any dividends;

 

	
(b)  

	
purchase or redeem any of its shares or otherwise reduce its share capital;

 

	
(c)  

	
become guarantor of any obligation; or

 

	
(d)  

	
become an endorser of any obligation or otherwise become liable upon any note or other obligation other than bills of exchange deposited to any bank accounts of the Debtor.

 

	
7.3  

	
Except as provided in this Agreement, without the prior written consent of the Secured Party, the Debtor shall not

 

	
(a)  

	
sell, lease, or otherwise dispose of the Collateral except in the ordinary course of business and for the purposes of carrying on its business;

 

	
(b)  

	
release, surrender, or abandon possession of the Collateral except in the ordinary course of business and for the purposes of carrying on its business; or

 

	
(c)  

	
move or transfer the Collateral from the jurisdiction or jurisdictions in which the Security Interest has been perfected.

 

	
7.4  

	
Provided that the Debtor is not in default under this Agreement, at any time without the consent of the Secured Party the Debtor may lease, sell, license, consign, or otherwise deal with items of Inventory in the ordinary course of its business and for the purposes of carrying on its business.

 

	
7.5  

	
The Debtor covenants that to the extent that any monies, credit, or other consideration provided by the Secured Party has enabled the Debtor to purchase or acquire rights in any personal property or assets, the Security Interest is and shall remain a purchase money security interest.

 

	
8.  

	
Insurance

 

	
8.1  

	
The Debtor covenants that at all times while this Agreement is in effect the Debtor shall maintain or cause to be maintained insurance on the Collateral in accordance with the Bridge Loan Agreement and if it is silent upon this then:

 

  

  

  

 

	
(a)  

	
maintain or cause to be maintained insurance on the Collateral with an insurer, of kinds, for amounts and payable to such person or persons, all as the Secured Party may require, and in particular but without limitation maintain insurance on the Collateral to its full insurable value against loss or damage by fire including extended coverage endorsement, and in the case of motor vehicles and other mobile Collateral, maintain insurance against theft;

 

	
(b)  

	
cause the insurance policy or policies required under this Agreement to be assigned to the Secured Party and have as part thereof a standard mortgage clause or a mortgage endorsement, as appropriate; and

 

	
(c)  

	
pay all premiums in connection with such insurance, and deliver all such policies to the Secured Party, if it so requires.

 

	
8.2  

	
If proceeds of any insurance required under this Agreement become payable, the Secured Party may, in its absolute discretion, apply those proceeds to such part or parts of the Obligations as the Secured Party may see fit, or the Secured Party may release any such insurance proceeds to the Debtor for the purpose of repairing, replacing, or rebuilding, but any release of insurance proceeds to the Debtor shall not operate as a payment on account of the Obligations or in any way affect this Agreement.

 

	
8.3  

	
The Debtor shall forthwith, on the happening of loss or damage to the Collateral, notify the Secured Party thereof and furnish to the Secured Party at the Debtor's expense any necessary proof and do any necessary act to enable the Secured Party to obtain payment of the insurance proceeds, but nothing contained in this Agreement shall limit the Secured Party's right to submit to the insurer a proof of loss on its own behalf.

 

	
8.4  

	
The Debtor irrevocably authorizes and directs the insurer under any policy of insurance required under this Agreement to include the name of the Secured Party as a loss payee on any cheque or draft that may be issued with respect to a claim under and by virtue of such insurance, and the production by the Secured Party to any insurer of a certified copy of this Agreement shall be its full and complete authority for so doing.

 

	
8.5  

	
If the Debtor fails to maintain insurance as required by this Agreement, the Secured Party may, but shall not be obliged to, maintain or effect such insurance coverage, or so much thereof as the Secured Party considers necessary for its protection.

 

	
9.  

	
Use and Verification of Collateral

 

Subject to compliance with the Debtor's covenants contained in this Agreement and compliance with paragraph 11 of this Agreement, the Debtor may, until default, possess, operate, collect, use and enjoy, and deal with the Collateral in the ordinary course of the Debtor's business in any manner not inconsistent with the provisions of this Agreement; provided always that the Secured Party shall have the right at any time and from time to time to verify the existence and state of the Collateral in any manner the Secured Party may consider appropriate. The Debtor agrees to furnish all assistance and information and to perform all such acts as the Secured Party may reasonably request in connection therewith, and for such purpose to grant to the Secured Party or its agents access to all places where the Collateral may be located and to all premises occupied by the Debtor.

 

  

  

  

 

	
10.  

	
Investment Property

 

If Collateral at any time includes Investment Property, the Debtor authorizes the Secured Party to transfer the same or any part of it into its own name or that of its nominee(s) so that the Secured Party or its nominee(s) may appear on record as the sole owner of it, or has sole rights to it, as applicable; provided that, until default, the Secured Party shall deliver promptly to the Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to the Debtor or its order a proxy to vote and take all action with respect to such Investment Property. After default, the Debtor waives all rights to receive any notices or communications received by the Secured Party or its nominee(s) as such registered owner and agrees that no proxy issued by the Secured Party to the Debtor or its order as aforesaid shall thereafter be effective.

 

	
11.  

	
Collection of Debts

 

Before or after default under this Agreement, without notice to the Debtor, the Secured Party may notify all or any account debtors of the Debtor of the Security Interest and may also direct such account debtors to make all payments on Collateral to the Secured Party. The Debtor acknowledges that any payments on or other proceeds of Collateral received by the Debtor from account debtors, whether before or after notification of this Security Interest to account debtors, and whether before or after default under this Agreement, shall be received and held by the Debtor in trust for the Secured Party and shall be turned over to the Secured Party upon request. This includes interest on deferred payment contracts, and the payments themselves, and lease payments, if any.

 

	
12.  

	
Income from and Interest on Collateral

 

	
12.1  

	
Until default, the Debtor reserves the right to receive any money constituting income from or interest on Collateral and if the Secured Party receives any such money before default, the Secured Party shall either credit that money against the Obligations or pay it promptly to the Debtor.

 

	
12.2  

	
After default, the Debtor shall not request or receive any money constituting income from or interest on Collateral and if the Debtor receives any such money in any event, the Debtor shall hold that money in trust for the Secured Party and shall pay it promptly to the Secured Party.

 

	
13.  

	
Increases, Profits, Payments, or Distributions

 

	
13.1  

	
Whether or not default has occurred, the Debtor authorizes the Secured Party

 

	
(a)  

	
to receive any increase in or profits on the Collateral (other than money) and to hold the same as part of the Collateral. Money so received shall be treated as income for the purposes of paragraph 12 of this Agreement and dealt with accordingly, and

 

  

  

  

 

	
(b)  

	
to receive any payment or distribution upon redemption or retirement or upon dissolution and liquidation of the issuer of Collateral; to surrender such Collateral in exchange therefor; and to hold any such payment or distribution as part of Collateral.

 

	
13.2  

	
If the Debtor receives any such increase or profits (other than money) or payments or distributions, the Debtor shall deliver the same promptly to the Secured Party to be held by the Secured Party as provided in this Agreement.

 

	
14.  

	
Disposition of Monies

 

Subject to any applicable requirements of the Act and the Bridge Loan Agreement, all monies collected or received by the Secured Party under or in exercise of any right it possesses with respect to Collateral shall be applied on account of the Obligations in such manner as the Secured Party deems best or, at the option of the Secured Party, may be held unappropriated in a collateral account or released to the Debtor, all without prejudice to the liability of the Debtor or the rights of the Secured Party under this Agreement, and any surplus shall be accounted for as required by law.

 

	
15.  

	
Performance of Obligations

 

If the Debtor fails to perform any of its obligations under this Agreement, the Secured Party may, but shall not be obliged to, perform any or all of those obligations without prejudice to any other rights and remedies of the Secured Party under this Agreement, and any payments made and any costs, charges, expenses, and legal fees and disbursements (on a solicitor and own client basis) incurred in connection therewith shall be payable by the Debtor to the Secured Party forthwith with interest until paid at the highest rate borne by any of the Obligations and such amounts shall be secured by this Agreement and rank prior to all claims subsequent to this Agreement.

 

	
16.  

	
Default

 

	
16.1  

	
Unless waived by the Secured Party, and subject to the Bridge Loan Agreement, it shall be an event of default under this Agreement and the security constituted by this Agreement shall immediately become enforceable if:

 

	
(a)  

	
any term, covenant, or representation of this Agreement is breached or if default occurs under the Bridge Loan Agreement or any other security document provided thereto; or

 

	
(b)  

	
any amount owed to the Secured Party is not paid when due; or

 

	
(c)  

	
the Debtor defaults or threatens to default in payment when due or performance of any of the Obligations; or

 

  

  

  

 

	
(d)  

	
the Debtor or any guarantor of the Debtor declares itself to be insolvent, makes an assignment for the benefit of its creditors, is declared bankrupt, declares bankruptcy, makes a proposal, or otherwise takes advantage of provisions under the Bankruptcy and Insolvency Act, the Companies Creditors' Arrangement Act, or similar legislation in any jurisdiction, or fails to pay its debts generally as they become due; or

 

	
(e)  

	
a receiver or receiver-manager is appointed; or

 

	
(f)  

	
the Debtor ceases to carry on all or a substantial part of its business; or

 

	
(g)  

	
distress, execution, or seizure of any of the Collateral occurs; or

 

	
(h)  

	
if the Debtor is a corporation, there is a change of voting control without the Secured Party's consent; or

 

	
(i)  

	
the Debtor changes its name or amalgamates or merges without the Secured Party's consent; or

 

	
(j)  

	
the Debtor allows any hazardous materials to be brought upon any lands or premises occupied by the Debtor; or

 

	
(k)  

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

 

	
16.2  

	
In accordance with the British Columbia Property Law Act, the doctrine of consolidation applies to this Agreement.

 

	
16.3  

	
It shall be an event of default under this Agreement and the security constituted by this Agreement shall immediately become enforceable if any term, covenant, or representation in any other agreement, contract, or other commitment of the Debtor to the Secured Party is breached or if default should occur under the same.

 

	
17.  

	
Acceleration

 

The Secured Party, in its sole discretion, may declare all or any part of the Obligations that are not by their terms payable on demand to be immediately due and payable in the event of any default, or, in the absence of default, if the Secured Party in good faith believes and has commercially reasonable grounds to believe that the prospect of payment or performance of the Obligations is impaired or that any of the Collateral is or is about to be placed in jeopardy

 

	
18.  

	
Enforcement

 

	
18.1  

	
Upon any default under this Agreement, the security constituted by this Agreement shall immediately become enforceable, and any floating charge will immediately attach the Real Property and Collateral. To enforce and realize on the security constituted by this Agreement, the Secured Party may take any action permitted by law or in equity, as it may deem expedient, and in particular, but without limiting the generality of the foregoing, the Secured Party may do any of the following:

 

	
(a)  

	
appoint by instrument a receiver, receiver and manager, or receiver-manager (the person so appointed is called the "Receiver") of the Collateral, with or without bond as the Secured Party may determine, and from time to time in its absolute discretion remove such Receiver and appoint another in its stead;

 

  

  

  

 

	
(b)  

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

 

	
(c)  

	
preserve, protect, and maintain the Collateral and make such replacements and repairs and additions as the Secured Party may deem advisable;

 

	
(d)  

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

 

	
(e)  

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

 

	
18.2  

	
A Receiver appointed under this Agreement shall be the agent of the Debtor and not of the Secured Party, and the Secured Party shall not be in any way responsible for any misconduct, negligence or nonfeasance on the part of any Receiver, its servants, agents, or employees. A Receiver shall, to the extent permitted by law or to such lesser extent permitted by its appointment, have all the powers of the Secured Party under this Agreement, and in addition shall have power to carry on the business of the Debtor and for such purpose to enter upon, use, and occupy all premises owned or occupied by the Debtor in which Collateral may be situate, maintain Collateral upon such premises, use, Collateral directly or indirectly in carrying on the Debtor's business, and from time to time borrow money either unsecured or secured by a security interest in any of the Collateral.

 

	
18.3  

	
Subject to the claims, if any, of the creditors of the Debtor ranking in priority to this Agreement, all amounts realized from the disposition of Collateral under this Agreement shall be applied in accordance with the Bridge Loan Agreement and if it is silent upon this then the Secured Party, in its absolute discretion, may direct or as follows:

 

  

  

  

 

	
(a)  

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

 

	
(i)  

	
the exercise by the Secured Party of all or any of the powers granted to it under this Agreement; and

 

	
(ii)  

	
the appointment of the Receiver and the exercise by the Receiver of all or any of the powers granted to it under this Agreement, including the Receiver's reasonable remuneration and all outgoings properly payable by the Receiver excluding the Receiver's borrowings;

 

	
(b)  

	
in payment of any sum or sums borrowed by the Receiver from the Secured Party and interest thereon if such sum or sums are secured by the Collateral;

 

	
(c)  

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

 

	
(d)  

	
in or toward payment to the Secured Party of all interest remaining unpaid in respect of the Obligations;

 

	
(e)  

	
in or toward payment of any sum or sums borrowed by the Receiver from any financial institution, corporation, or person other than the Secured Party, and interest thereon if such sum or sums are secured by the Collateral.

 

Subject to applicable law and the claims, if any, of other creditors of the Debtor, any surplus shall be paid to the Debtor.

 

	
18.4  

	
The Debtor agrees that the Secured Party may exercise its rights and remedies under this Agreement immediately upon default, except as may be otherwise provided in the Act, and the Debtor expressly confirms that, except as may be otherwise provided in this Agreement or in the Act, the Secured Party has not given any covenant, express or implied, and is under no obligation to allow the Debtor any period of time to remedy any default before the Secured Party exercises its rights and remedies under this Agreement.

 

	
19.  

	
Deficiency

 

If the amounts realized from the disposition of the Collateral are not sufficient to pay the Obligations in full, the Debtor shall pay to the Secured Party the amount of such deficiency immediately upon demand for the same.

 

	
20.  

	
Rights Cumulative

 

All rights and remedies of the Secured Party set out in this Agreement are cumulative, and no right or remedy contained in this Agreement is intended to be exclusive but each shall be in addition to every other right or remedy contained in this Agreement or in any existing or future security agreement or now or in future existing at law, in equity or by statute, or under any other agreement between the Debtor and the Secured Party that may be in effect from time to time.

 

  

  

  

 

	
21.  

	
Liability of Secured Party

 

The Secured Party shall not be responsible or liable for any debts contracted by it, for damages to persons or property or for salaries or non-fulfilment of contracts during any period when the Secured Party shall manage the Collateral upon entry, as provided in this Agreement, nor shall the Secured Party be liable to account as mortgagee in possession or for anything except actual receipts or be liable for any loss on realization or for any default or omission for which a mortgagee in possession may be liable. The Secured Party shall not be bound to do, observe, or perform or to see to the observance or performance by the Debtor of any obligations or covenants imposed upon the Debtor, nor shall the Secured Party, in the case of Investment Property, Instruments, or Chattel Paper, be obliged to preserve rights against other persons, nor shall the Secured Party be obliged to keep any of the Collateral identifiable. The Debtor waives any applicable provision of law permitted to be waived by it which imposes higher or greater obligations upon the Secured Party than as contained in this paragraph.

 

	
22.  

	
Appointment of Attorney and Deed

 

	
22.1  

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

 

	
22.2  

	
Whether or not the Debtor attaches its corporate seal, if a corporation, this Agreement is intended to be and is deemed to be a deed given under seal.

 

	
23.  

	
Accounts

 

Notwithstanding any other provision of this Agreement, the Secured Party may collect, realize, sell, or otherwise deal with the Accounts or any part of them in such manner, upon such terms and conditions, and at such time or times, whether before or after default, as may seem to it advisable, and without notice to the Debtor, except in the case of disposition after default and then subject to the provisions of Part 5 of the Act. All monies or other forms of payment received by the Debtor in payment of any Account shall be received and held by the Debtor in trust for the Secured Party.

 

	
24.  

	
Appropriation of Payments

 

Any and all payments made in respect of the Obligations from time to time and monies realized from any security interests held therefor (including monies collected in accordance with or realized on any enforcement of this Agreement) may be applied to such part or parts of the Obligations as the Secured Party may see fit, and the Secured Party may at all times and from time to time change any appropriation as the Secured Party may see fit.

 

  

  

  

 

	
25.  

	
Liability to Advance

 

None of the preparation, execution, perfection, and registration of this Agreement or notice of this Agreement or the advance of any monies shall bind the Secured Party to make any advance or loan or further advance or loan, or renew any note or extend any time for payment of any indebtedness or liability of the Debtor to the Secured Party.

 

	
26.  

	
Waiver

 

The Secured Party may from time to time and at any time waive in whole or in part any right, benefit, or default under any paragraph of this Agreement but any such waiver of any right, benefit, or default on any occasion shall be deemed not to be a waiver of any such right, benefit, or default thereafter, or of any other right, benefit or default, as the case may be, and no delay or omission by the Secured Party in exercising any right or remedy under this Agreement or with respect to any default shall operate as a waiver thereof or of any other right or remedy.

 

	
27.  

	
Notice

 

Any notice, demand, or other communication required or permitted to be given under this Agreement shall be given in accordance with notice provisions in the Bridge Loan Agreement and they shall be deemed to be incorporated herein.

 

	
28.  

	
Extensions

 

The Secured Party may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, compromise, settle, grant releases and discharges, refrain from perfecting or maintaining perfection of the Security Interest, and otherwise deal with the Debtor, account debtors of the Debtor, sureties, and others and with the Collateral, the Security Interest, and other security interests as the Secured Party sees fit without prejudice to the liability of the Debtor or the Secured Party's right to hold and realize on the security constituted by this Agreement.

 

	
29.  

	
No Merger

 

This Agreement shall not operate to create any merger or discharge of any of the Obligations, or of any assignment, transfer, guarantee, lien, mortgage, contract, promissory note, bill of exchange, or security interest of any form held or which may in future be held by the Secured Party from the Debtor or from any other person. The taking of a judgment with respect to any of the Obligations shall not operate as a merger of any of the covenants contained in this Agreement.

 

  

  

  

 

	
30.  

	
Assignment

 

The Secured Party may, without further notice to the Debtor, at any time assign, transfer, or grant a security interest in this Agreement and the Security Interest. The Debtor expressly agrees that the assignee, transferee, or secured party, as the case may be, shall have all of the Secured Party's rights and remedies under this Agreement, and the Debtor shall not assert any defence, counterclaim, right of setoff, or otherwise with respect to any claim that the Debtor now has or in future acquires against the Secured Party in any action commenced by such assignee, transferee, or secured party, as the case may be, and shall pay the Obligations to the assignee, transferee, or secured party, as the case may be, as the Obligations become due.

 

	
31.  

	
Satisfaction and Discharge

 

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

 

	
32.  

	
Enurement

 

This Agreement shall enure to the benefit of and be binding upon the parties and their respective heirs, executors, personal representatives, successors, and permitted assigns.

 

	
33.  

	
Interpretation

 

	
33.1  

	
In this Agreement:

 

	
(a)  

	
"Debtor" and the personal pronoun "it" or "its" and any verb relating thereto and used therewith shall be read and construed as required by and in accordance with the context in which such words are used, depending upon whether the Debtor is one or more individuals, corporations, or partnerships and, if more than one, shall apply to and be binding upon each of them jointly and severally;

 

	
(b)  

	
"Act" means the British Columbia Personal Property Security Act and all regulations thereunder as amended;

 

  

  

  

 

	
33.2  

	
Words and expressions used in this Agreement that have been defined in the Act shall be interpreted in accordance with their respective meanings given in the Act, whether expressed in this Agreement with or without initial capital letters and whether in the singular or the plural, unless otherwise defined in this Agreement or unless the context otherwise requires, and, wherever the context so requires, in this Agreement the singular shall be read as if the plural were expressed, and vice-versa, and the provisions of this Agreement shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm, or corporation.

 

	
33.3  

	
Should any provision of this Agreement be declared or held invalid or unenforceable in whole or in part or against or with respect to the Debtor by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of any or all of the remaining provisions of this Agreement, which shall continue in full force and effect and be construed as if this Agreement had been executed without the invalid or unenforceable provision.

 

	
33.4  

	
The headings of the paragraphs of this Agreement have been inserted for reference only and do not define, limit, alter, or enlarge the meaning of any provision of this Agreement.

 

	
33.5  

	
This Agreement shall be conclusively deemed to be a contract made under, and shall for all purposes be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada therein applicable to contracts made in and to be wholly performed in such Province, without prejudice to or limitation of any other rights or remedies available under the laws of any jurisdiction where property or assets of the Borrower may be found.

 

	
33.6  

	
Each party hereby irrevocably attorns to the courts of the Province of British Columbia.

 

	
34.  

	
Miscellaneous

 

	
34.1  

	
The Debtor authorizes the Secured Party to file such financing statements, financing change statements, and other documents, and do such acts, matters, and things as the Secured Party may deem appropriate, to perfect on an ongoing basis and continue the Security Interest, to protect and preserve the Collateral, and to realize upon the Security Interest.

 

	
34.2  

	
The Debtor waives protest of any Instrument constituting Collateral at any time held by the Secured Party on which the Debtor is any way liable and, subject to the provisions of the Act, notice of any other action taken by the Secured Party.

 

	
34.3  

	
The Debtor covenants that it shall not amalgamate with any other company or entity without first obtaining the written consent of the Secured Party.  The Debtor acknowledges and agrees that if it amalgamates with any other company or companies, then it is the intention of the parties that the term "Debtor" when used in this Agreement shall apply to each of the amalgamating companies and to the amalgamated company, so that the Security Interest granted by this Agreement:

 

	
(a)  

	
shall extend to "Collateral" (as that term is defined in this Agreement) owned by each of the amalgamating companies and the amalgamated company at the time of amalgamation and to any "Collateral" owned or acquired by the amalgamated company thereafter, and

 

  

  

  

 

	
(b)  

	
shall secure the "Obligations" (as that term is defined in this Agreement) of each of the amalgamating companies and the amalgamated company to the Secured Party at the time of amalgamation and any "Obligations" of the amalgamated company to the Secured Party arising thereafter. The Security Interest shall attach to "Collateral" owned by each company amalgamating with the Debtor, and by the amalgamated company, at the time of amalgamation, and shall attach to any "Collateral" thereafter owned or acquired by the amalgamated company when that Collateral becomes owned or is acquired.

 

	
34.4  

	
The Debtor authorizes the Secured Party to provide a copy of this Agreement and such other information and documents specified under the Act to any person entitled under the Act to demand and receive them.

 

	
34.5  

	
In the event of a conflict or inconsistency between the provisions of this Agreement and the provisions of the Bridge Loan Agreement, the provisions of the Bridge Loan Agreement shall prevail.

 

	
35.  

	
Copy of Agreement and Financing Statement

 

The Debtor

 

	
(a)  

	
acknowledges receiving a copy of this Agreement, and

 

	
(b)  

	
waives all rights to receive from the Secured Party a copy of any financing statement, financing change statement, or verification statement filed, issued, or obtained at any time in respect of this Agreement.

 

  

  

  

 

IN WITNESS WHEREOF the Debtor has executed this Agreement on the date first indicated above.

 

	
 

BC NORTHERN LIGHTS ENTERPRISES LTD.

 

           /s/Tarren Wolfe

Per:

Authorized Signatory

	
W3 METAL INC.

                     /s/Tarren Wolfe

Per:                                                                

Authorized Signatory

	
URBAN CULTIVATOR INC.

 

             /s/Tarren Wolfe

Per:

Authorized Signatory

	
Acknowledged as of the date first indicated above

PLACER DEL MAT LTD.

          /s/Frank Terzo

Per:                                                       

Frank Terzo, Authorized Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00231-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00231-of-00352.parquet"}]]