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MOVEABLE HYPOTHEC AGREEMENT



This Moveable Hypothec Agreement (the Agreement) is effective [DATE],


BETWEEN:  [YOUR COMPANY NAME] (the "Grantor"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at:

      [YOUR COMPLETE ADDRESS]


AND:  [COMPANY NAME] (the "Creditor"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at:

      [COMPLETE ADDRESS]


WHICH PARTIES HAVE AGREED AND DECLARED AS FOLLOWS:


INTERPRETATION

Definitions

The following words and expressions, whenever used in this Deed or in any deed, document or agreement supplemental or ancillary hereto, unless there be something in the subject or the context inconsistent therewith, shall have the following meanings:

Creditor means [COMPANY NAME] and includes any successor thereto;
Deed of Hypothec, this Deed, this Deed of Hypothec, these presents, herein, hereby, hereunder and other similar expressions refer collectively to this Deed of Hypothec, its accompanying schedules as well as any and every deed or other instrument which is supplementary or ancillary hereto or in implementation hereof, the whole as same may be amended, supplemented or restated at any time and from time to time;

Default means any one of the events specified in Section 5.1, the occurrence or failure to occur of which constitutes, or with the passage of time or the giving of notice or both, would constitute an Event of Default;

Event of Default shall have the meaning ascribed to it in Section 5.1;

Grantor means [COMPANY NAME] / [COMPANY NAME] and includes any successor thereto;

Hypothecated Property shall have the meaning ascribed to it in Section 2.1;

Leases shall have the meaning ascribed to it in Section 2.1.1;

Lien means any interest in property or the income or profits therefrom securing an obligation owed to, or a claim by, a person other than the owner of such property, whether such interest is based on common [YOUR COUNTRY LAW], civil [YOUR COUNTRY LAW], statute or contract, and including but not limited to any security interest, hypothec, mortgage, pledge, lien, claim, charge, cession, transfer, assignment, encumbrance, title retention agreement, lessors interest under a lease which would be capitalized on a balance sheet of the owner of such property or analogous interest in, of or on any property or the income or profits therefrom of a person other than liens incurred in the ordinary course of business and for the purposes thereof, but not in respect of the borrowing of money or the obtaining of credit, and which in the aggregate do not affect in a material manner the use of or the income or profits derived from the property encumbered thereby in the course of the business of the person.

Obligations is the collective reference to all the obligations, present and future, direct and indirect, absolute and contingent, presently owing and due or hereafter to become owing and due to the Creditor whether such obligations result or not from agreements or arrangements between the Grantor and the Creditor or from agreements or arrangements with third parties, pursuant to which the Creditor may in any manner whatsoever become a creditor of the Grantor, or in any other manner whether the Grantor is bound alone or with others as principal or guarantor, including, without limiting the generality of the foregoing, the Leases;

Permitted Encumbrances means, as at any time, any one or more of the following:

The Liens resulting from this Deed or which are specifically authorized by this Deed; any other Lien created or permitted with the written consent of the Creditor;

Plural and Masculine

Unless there be something in the subject or the context inconsistent therewith, words importing the singular only shall include the plural and vice versa and words importing the masculine gender shall include the feminine gender and vice versa, and any reference to currency shall mean [COUNTRY] currency.

Division in Articles

The division of this Deed into Articles, Sections, subsections and paragraphs and the insertion of titles are for convenience of reference only and do not affect the meaning or the interpretation of the present Deed.


HYPOTHECS

Principal Hypothec

As a general and continuing collateral security for the performance by the Grantor of the Obligations, the Grantor hereby hypothecates to and in favor of the Creditor the following property (collectively referred to herein as the Hypothecated Property) to the extent of the sum of [AMOUNT], with interest thereon at the rate of [PERCENTAGE %]) per annum:

all of the rights, titles and interests of the Grantor in, to and under (i) that certain lease agreement dated [DATE] between the Grantor and the Creditor in respect of the lease by the Grantor from the Creditor of the equipment referred to in Section 2.1.2(a), (ii) that certain lease agreement dated [DATE] between the Grantor and the Creditor in respect of the lease by the Grantor from the Creditor of the equipment referred to in Section 2.1.2(b), and (iii) that certain Lease Agreement dated [DATE] between the Grantor and the Creditor in respect of the lease by the Grantor from the Creditor of the equipment referred to in Section 2.1.2(c) (collectively the Leases) together with all renewals thereof;

all of the rights, titles and interests of the Grantor in and to the following equipment (the Equipment) under the Leases:

([NUMBER]) [DESCRIBE EQUIPMENT] [SERIAL NUMBERS]
 
([NUMBER]) [DESCRIBE EQUIPMENT] [SERIAL NUMBERS]; and

[NUMBER] [DESCRIBE EQUIPMENT] [SERIAL NUMBERS];

the universality of all proceeds of all insurance policies taken out by the Grantor or on its behalf, at any time and from time to time, in respect of the Hypothecated Property;

Additional Hypothec

As general and continuing collateral security for the performance by the Grantor of the Obligations not otherwise secured by the hypothecs created under the terms of Section 2.1, including, without limiting the generality of the foregoing, interest on all overdue interest, as well as the costs and expenses incurred by the Creditor in order to preserve or realize upon the Liens created under the terms hereof and all other costs and expenses related to the Obligations, the Grantor hereby hypothecates the Hypothecated Property in favor of the Creditor, to the extent of an additional sum of [AMOUNT] with interest thereon at the rate of [PERCENTAGE %] percent per annum.


REPRESENTATIONS AND COVENANTS OF THE GRANTOR

So long as any amount payable hereunder or any Obligation is outstanding and unpaid, the Grantor makes the following representations, provides the following warranties and covenants and agrees as follows:

Authority to Hypothecate

That it has full, good and lawful authority to hypothecate the Hypothecated Property as provided in this Deed. The Hypothecated Property is free and clear of all Liens, except Permitted Encumbrances, and the Grantor will maintain the Hypothecated Property free and clear of all Liens, except Permitted Encumbrances.

Payment of Taxes

That all federal, provincial and other tax returns of the Grantor which are required to be filed have been duly prepared and timely filed and all taxes, assessments and other governmental levies or charges of any nature or kind whatsoever payable by the Grantor in respect of its property, income. Profits and assets or otherwise have been paid. That it will pay or cause to be paid as and when due and payable all taxes, rates, charges, levies or assessments, ordinary or extraordinary, governmental levies or other charges of a like nature, assessed or payable in respect of any of the Hypothecated Property or the Grantor, its property, income or profits, it being expressly agreed that the Grantor shall not be in Default hereunder in the payment of any such taxes, rates, charges, levies or assessments if it shall be contesting the same in good faith, and shall have furnished the Creditor, at the option of the Grantor either an amount in cash or a letter of credit or a suretyship satisfactory to the Creditor, in each case sufficient to pay for any loss or liability which may result from such contestation, and if it shall not be necessary in the sole judgment of the Creditor to pay such taxes, rates, charges, levies or assessments to prevent a sale or foreclosure of any property or rights comprised in the Hypothecated Property.




Maintenance of Security

That it will fully and effectively maintain the Liens hereby constituted as valid and effective security, subject only to Permitted Encumbrances, and that it will perform all acts and execute and publish all documents as may be necessary to ensure that the Liens hereof remain effective and at all times opposable to third Persons.

Insurance Coverage

That it will insure the Equipment and keep it insured at all times in accordance with the provisions of the Leases.

Restriction on Alienation of Hypothecated Property

That the Grantor shall not sell, transfer, assign or otherwise dispose of any of the Hypothecated Property.

No Inchoate Liens

The Grantor represents and warrants that (a) it has not executed or agreed to execute any deed, document, contract or agreement with any person whomsoever which would necessitate or result in the creation in favor of such person of any Lien whatsoever on the Hypothecated Property and (b) no creditor of the Grantor has, within the meaning of Articles [NUMBER] and [NUMBER] of the Civil Code of [STATE/PROVINCE], given value to the Grantor in the [NUMBER] days preceding the execution of this Deed.

Information

That it shall provide the Creditor with all information that the Creditor may reasonably request in respect of the Hypothecated Property or for the purpose of verifying whether the Grantor is respecting its Obligations.

Payment of Moneys Advanced by the Creditor

That, it will pay to the Creditor, on demand, all expenditures incurred by the Creditor in order to preserve and protect the Liens created hereunder or to perform or cause the performance of any obligation of the Grantor hereunder, with interest thereon calculated and payable at the rate of [PERCENTAGE %] percent per annum calculated daily and payable on demand, the whole without prejudice to any other rights the Creditor may now or at any time hereafter have in this respect.

Leased Premises

That, if the Hypothecated Property is situated in premises leased pursuant to a lease concluded prior to [DATE] or, if the Hypothecated Property is at any time placed in such premises, it shall give the lessor of such premises, immediately following the execution of these presents or immediately following the transfer of the Hypothecated Property into such premises, written notice of the Liens created hereunder and provide the Creditor with proof of such notification within [NUMBER] days of it having been given.


EVENTS OF DEFAULT

Events of Default

The occurrence of any one or more of the following events shall constitute an event of default hereunder (herein referred to as an Event of Default).

should the Grantor fail to pay, observe or perform all or any part of its Obligations when such payment, observance or performance becomes due or payable;

should any representation or warranty which has been made by the Grantor in Article [NUMBER] or pursuant to these presents prove to be either incorrect or substantially inaccurate at any time and from time to time;

should the Grantor cease to operate its enterprise or a substantial part thereof;

should the Grantor be in default under any agreement or contract binding it to the Creditor,

should the Grantor make an assignment for the benefit of creditors, or file or consent to the filing of a petition in bankruptcy, a proposal or a notice of intention under the [YOUR COUNTRY] Bankruptcy and Insolvency [ACT/LAW/RULE] or be adjudicated insolvent or bankrupt, or petition or apply to any tribunal for any receiver, trustee, liquidator or sequestrator of, or for any substantial portion of its property or if the Grantor commences any proceeding relating to it or its property or any substantial portion thereof under any reorganization, arrangement, readjustment, composition or liquidation [YOUR COUNTRY LAW] of any jurisdiction, whether now or hereafter in effect (any of which proceedings, including, without limitation, the making of an assignment for the benefit of creditors, 

or the filing or consenting to the filing of a petition in bankruptcy, a proposal or a notice of intention under the [YOUR COUNTRY] Bankruptcy and Insolvency [ACT/LAW/RULE] shall be referred to herein as a Proceeding); or if there is commenced against the Grantor any Proceeding and such Proceeding remains un-dismissed for a period of [NUMBER] days; or any receiver, trustee, liquidator or sequestrator of, or for the Grantor or any substantial portion of its property is appointed or if the Grantor consents to or approves or accepts any Proceeding or the appointment of any receiver, trustee, liquidator or sequestrator of, or for, the Grantor or any substantial portion of its property;

should any process of execution be enforced or levied upon any of the property of the Grantor and remain unsatisfied for a period of [NUMBER] days, provided that such process is not in good faith disputed by or on behalf of the Grantor and, if it is so disputed, provided further that non-payment shall not, in the judgment of the Creditor, jeopardize or impair the security created hereby and that the Grantor shall also give or cause to be given security which, in the discretion of the Creditor, shall be sufficient to pay in full the amount claimed in the event that it shall be held to be a valid claim;

should the Grantor fail to obtain the cancellation of any prior notice of exercise of hypothecary rights or any other registered entry affecting the whole or any part of the Hypothecated Property by or in favor of any other creditor of the Grantor within [NUMBER] days of their respective publication or registration, as the case may be;

Lapse of Time

The Grantor shall be in default of performing its Obligations by the mere lapse of time stipulated for performance without the necessity of any notice whatsoever.


REMEDIES

Exercise of Rights

If an Event of Default shall occur and be continuing, to the extent and in the manner permitted by [YOUR COUNTRY LAW] and subject to any preliminary measures thereby contemplated, but without in any way limiting any of the rights, remedies or recourses which the Creditor may otherwise have under any [YOUR COUNTRY LAW] or under any other deed or document:

Declaration by the Creditor. The Creditor may declare the whole or any part of the Obligations as being immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Grantor, anything in this Deed to the contrary notwithstanding; and

Exercise of Rights. The Creditor may exercise any and all rights, remedies and recourses which it possesses by virtue of this contract or by [YOUR COUNTRY LAW].


MISCELLANEOUS

Separate Security

The security granted to the Creditor under these presents shall be in addition to and without prejudice to or novation of any other security, by whomsoever given, held at any time by the Creditor, and the Creditor shall be under no obligation to exercise any right, whether hypothecary or otherwise, or realize upon such other security or any of the funds or assets the Creditor may be entitled to receive or have a claim upon and the Creditor may in its absolute discretion and without diminishing the security created hereunder, grant extensions of time or other indulgences with respect to the Obligations and security given therefore and give up or modify, vary, exchange, renew or abstain from perfecting or taking advantage of any security and may discharge any party or parties and accept or make any compositions or arrangements and realize upon any security when and in such manner as the Creditor may see fit and such security shall not be reduced, affected or amended by these presents.

Application of Money received by Creditor

Any and all monies received by the Creditor from the Grantor or others or from any hypothec or other security by whomsoever granted to the Creditor to secure the performance of the Obligations of the Grantor, including the capital and interest of the Claims, may be applied by the Creditor upon such part of the Obligations as the Creditor in its absolute discretion sees fit, the whole notwithstanding the rules governing the application of payments.

Remedies Cumulative

The rights and remedies of the Creditor under this Agreement shall be cumulative and not exclusive of any rights or remedies which it would otherwise have, and no failure or delay by the Creditor in exercising any right shall operate as a waiver thereof, nor shall any single or partial exercise of any power or right preclude its other or further exercise or the exercise of any other power or right.

Delegation of Exercise of Rights

The Creditor may delegate to any other person the exercise of its rights or the performance of its duties hereunder and may provide such agents or mandataries with any information that the Creditor may possess with respect to the Grantor or the Hypothecated Property.

Performance by Creditor

The Creditor may, without being obliged to, perform any one of the Obligations of the Grantor hereunder should the latter fail to do so and the Grantor shall, forthwith after demand therefore, reimburse the Creditor for all costs incurred by the Creditor in so doing with interest on such sums at the rate of the [PERCENTAGE %] percent per annum.

Notices

Any notice, request or other communication hereunder to any party hereto in connection with this agreement shall be deemed to have been duly given or made to the party to which such notice, request or other communication is required or permitted to be given or made under this agreement, when delivered to such party (by prepaid courier, by telecopier or by hand delivery) at its address set forth with its signature below or at such other address as any of the parties hereto may hereafter notify the others in writing.

Governing Law

This Agreement and the interpretation and enforcement thereof shall be governed by and in accordance with [YOUR COUNTRY LAW] of the Province of [STATE/PROVINCE].

Continuing Security

The Liens created hereunder shall constitute continuing security which shall remain in full force and effect until the Obligations shall have been fulfilled in full and the Liens hereof shall have been cancelled. The Grantor expressly acknowledges, for the purpose of Article [NUMBER] of the Civil Code of [STATE/PROVINCE], that until it shall have received a written notice from the Agent, acting upon the instructions of the Majority Lenders, to the effect that the Obligations have been fulfilled in full, it binds and obliges itself anew continuously under the Obligations.


IN WITNESS WHEREOF, each party to this agreement has caused it to be executed at [PLACE OF EXECUTION] on the date indicated above.


GRANTOR             CREDITOR



                          
Authorized Signature          Authorized Signature


                          
Print Name and Title          Print Name and Title
SCHEDULE A

[COMPANY NAME] / [COMPANY NAME].

IT IS RESOLVED THAT:

1.  The Corporation be and it is hereby authorized to hypothecate to and in favor of [COMPANY NAME] (the Creditor), up to an amount of [AMOUNT] bearing interest at [PERCENTAGE %] per annum, as principal hypothec, and up to an amount of [AMOUNT] bearing interest at [PERCENTAGE %] per annum, as additional hypothec:

(a)  all of the rights, titles and interests of the Grantor in, to and under (i) that certain lease agreement dated [DATE] between the Grantor and the Creditor in respect of the lease by the Corporation from the Creditor of the equipment referred to in paragraph (b)(i), (ii) that certain lease agreement dated [DATE] between the Corporation and the Creditor in respect of the lease by the Corporation from the Creditor of the equipment referred to in paragraph (b)(ii), and (iii) that certain Lease Agreement dated [DATE] between the Corporation and the Creditor in respect of the lease by the Corporation from the Creditor of the equipment referred to in  paragraph (b)(iii) (collectively the Leases) together with all renewals thereof;

(b)  all of the rights, titles and interests of the Corporation in and to the following equipment (the Equipment) under the Leases:

(i)  [NUMBER] [DESCRIBE EQUIPMENT] [SERIAL NUMBER];

(ii)  [NUMBER] [DESCRIBE EQUIPMENT] [SERIAL NUMBER]; and

(iii)  [NUMBER] [DESCRIBE EQUIPMENT] [SERIAL NUMBER];
and, more specifically, the Hypothecated Property (as the latter expression is defined in the Deed of Hypothec to which reference is made hereinafter), the whole upon the terms and subject to the conditions set forth and provided in the draft deed of hypothec to be entered into among the Corporation and the Creditor, submitted to and hereby approved by the Board of Directors of the Corporation (the Deed of Hypothec);

2.  the Corporation be and it is hereby authorized to execute the Deed of hypothec in the form of the draft submitted to the Board of Directors of the Corporation, with such changes or modifications as may be necessary;

3.  any officer or director of the Corporation be and he is hereby authorized to sign, for and on behalf of and in the name of the Corporation the Deed of Hypothec, substantially in the form of the draft submitted to the Board of Directors of the Corporation;
the above-noted person be and he is hereby authorized to make such amendments and modifications to the said documents as he may judge necessary or useful in order to give full effect to the present resolution and to sign all other documents in order to give it full effect;
the approval of the Board of Directors of the Corporation of any amendments or modifications made to the said document by such signing officer or director shall be conclusively proven by the signature of such signing officer or director on the said documents;

4.  any officer or director of the Corporation be and he is hereby authorized and directed for and on behalf of and in the name of the Corporation to execute and deliver all such deeds, documents and writings, and to perform and do all such acts and things as he in his discretion may consider to be necessary or useful for the purpose of giving effect to this resolution in accordance with the terms hereof.

I, the undersigned, Secretary of [COMPANY NAME] / [COMPANY NAME], hereby certify that the foregoing is a true copy of a resolution duly adopted by the Board of Directors of the Corporation on [DATE] and that the said Resolution is still in full force and effect, without any modification or amendment thereto.

[STATE/PROVINCE], [STATE/PROVINCE], this [DATE] day of, [YEAR] ([DATE]).


Secretary

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