-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DVfYEstQN5L4mKUedlXOy2D7WJsmtVIJs3rBUF/QesCuDd/VLIAmGqcFEZ3v/LT0 DdQiyRMqFcyI1+y9gScU2g== 0000950123-02-009788.txt : 20021018 0000950123-02-009788.hdr.sgml : 20021018 20021018124340 ACCESSION NUMBER: 0000950123-02-009788 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20021018 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FT CAPITAL LTD CENTRAL INDEX KEY: 0001198320 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2050-1055 WEST GEORGIA STREET CITY: VANCOUVER STATE: A1 ZIP: 00000 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHELL GROUP CORP CENTRAL INDEX KEY: 0000797313 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 112805051 STATE OF INCORPORATION: NY FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-41619 FILM NUMBER: 02792360 BUSINESS ADDRESS: STREET 1: 14 METEOR DR STREET 2: BLDG 18 CITY: ETOBICOKE ONTARIO STATE: A6 ZIP: M9W 1A4 BUSINESS PHONE: 4166756666 MAIL ADDRESS: STREET 1: 14 METEOR DR STREET 2: ETOBICOKE CITY: ONTARIO CANADA STATE: A6 ZIP: M9W 1A4 FORMER COMPANY: FORMER CONFORMED NAME: NTN CANADA INC DATE OF NAME CHANGE: 19961016 FORMER COMPANY: FORMER CONFORMED NAME: TRIOSEARCH INC DATE OF NAME CHANGE: 19880718 FORMER COMPANY: FORMER CONFORMED NAME: NETWORKS NORTH INC DATE OF NAME CHANGE: 19980811 SC 13D 1 y64566dsc13d.txt FT CAPITAL LTD. CUSIP No. 163223 10 0 Page 1 of 8 United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No.__)* CHELL GROUP CORPORATION (Name of Issuer) COMMON STOCK, $0.0467 PAR VALUE PER SHARE (Title of Class of Securities) 163223 10 0 (CUSIP Number) FT CAPITAL LTD. 2050 - 1055 WEST GEORGIA STREET VANCOUVER, BRITISH COLUMBIA, V6E 3R5 ATTN: BRIAN KENNING WITH A COPY TO: ANDREW J. BECK, ESQ. TORYS LLP 237 PARK AVENUE NEW YORK, NEW YORK 10017 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) SEPTEMBER 30, 2002 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ?. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 2 of 8 CUSIP No. 163223 10 0 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) FT Capital Ltd. Tax ID Number: Not applicable. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS* OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or (e) ? [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Alberta, Canada
NUMBER OF 7 SOLE VOTING POWER SHARES - 0 - BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH 4, 201,487 REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH - 0 - 10 SHARED DISPOSITIVE POWER 4, 201,487
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4, 201,487 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 23.43% 14 TYPE OF REPORTING PERSON* CO * SEE INSTRUCTIONS BEFORE FILLING OUT. Page 3 of 8 CUSIP No. 163223 10 0 ITEM 1. SECURITY AND ISSUER This Schedule 13D relates to the shares of common stock, $0.0467 par value (the "Shares"), of Chell Group Corporation, a New York corporation (the "Issuer"). The principal executive office of the Issuer is 14 Meteor Drive, Toronto, Ontario, Canada M9W 1A4. ITEM 2. IDENTITY AND BACKGROUND (a) FT Capital Ltd. is an Alberta, Canada corporation ("FT Capital"). (b) The address of the principal executive office of FT Capital is 2050 - 1055 West Georgia Street, Vancouver, British Columbia, V6E 3R5. (c) FT Capital operates in the financial services and financial management segments. (d) During the last five years, FT Capital has not been convicted in any criminal proceeding. (e) During the last five years, FT Capital has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, as a result of which it is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Information regarding the directors and executive officers of FT Capital is set forth on Schedule I attached hereto. The citizenship of the directors and executive officers of FT Capital is as stated on Schedule I. During the last five years, to the knowledge of FT Capital, no person named on Schedule I has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Page 4 of 8 CUSIP No. 163223 10 0 ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The 4,201,487 Shares have been assigned to FT Capital pursuant to that certain Assignment Agreement, dated as of September 30, 2002, by and between Trilon Bancorp Inc. ("Trilon") and FT Capital (the "Agreement"). The 4,201,487 Shares had been pledged to Trilon pursuant to that certain Pledge and Security Agreement, dated June 1, 2002, by and between Trilon and Big Fish Ltd., a Bermudan company ("Big Fish"), and that certain Pledge and Security Agreement, dated June 1, 2002, by and between Trilon and Hammock Group Limited, a Bermudan company ("Hammock") (the "Pledge Agreements"), to secure the respective obligations of Big Fish and Hammock pursuant to that certain Guarantee, dated June 1, 2002, by and between Trilon and Big Fish, and that certain Guarantee, dated June 1, 2002, by and between Trilon and Hammock of a loan (the "Loan") from Trilon to a third party. The Loan is currently in default and, pursuant to the terms of the Pledge Agreements, Trilon has the right to foreclose upon its security interest in the Shares and is entitled to vote and dispose of the Shares. Pursuant to the Agreement, Trilon has sold the Loan to FT Capital in exchange for FT Capital's agreement to pay an amount equal to the amount of principal, interest and costs payable pursuant to the Loan. Trilon also assigned its rights under the Pledge Agreements, including the right to foreclose upon its security interest in the Shares and to vote and dispose of the Shares, to FT Capital. ITEM 4. PURPOSE OF TRANSACTION Pursuant to the Agreement, FT Capital has acquired the right to foreclose upon the Shares and vote and dispose of the Shares. FT Capital has no plans or proposals which relate to or would result in: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) Any change in the present board of directors or management of the Issuer; (e) Any material change in the present capitalization or dividend policy of the Issuer; (f) Any other material change in the Issuer's business or corporate structure; (g) Changes in the Issuer's charter, bylaws or instruments corresponding thereto Page 5 of 8 CUSIP No. 163223 10 0 or other actions which may impede the acquisition of control of the Issuer by any person; (h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or (j) Any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a)-(b) As of the date hereof, FT Capital beneficially owns and has the sole power to vote and to direct the vote and has the sole power to dispose or direct the disposition of 4,201,487 Shares, representing 23.43% of the outstanding Shares of the Issuer. The calculation of the foregoing percentage is based on the number of Shares reported in the Issuer's most recent Form 10-Q, dated as of July 15, 2002. Except as set forth herein, to the knowledge of FT Capital, no director or executive officer of FT Capital beneficially owns any other Shares of the Issuer. (c) Trilon has assigned to FT Capital any and all rights to the Shares existing under the Pledge Agreements. There have been no other transactions by FT Capital in the securities of the Issuer during the past 60 days. To the knowledge of FT Capital, there have been no transactions by any director or executive officer of FT Capital in the securities of the Issuer during the past 60 days. (d) Pursuant to the Agreement and the Pledge Agreements, FT Capital has the right to receive, or the power to direct the receipt of dividends from, or the proceeds from the sale of, any of the securities of the Issuer acquired by it as described in Item 5. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Other than the Agreement, to the knowledge of FT Capital, there are no contracts, arrangements, understandings or relationships between FT Capital and any person with respect to any securities of the Issuer, including but not limited to the transfer or voting of any of the securities of the Issuer, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Page 6 of 8 CUSIP No. 163223 10 0 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 1. Assignment Agreement, dated September 30, 2002, by and between Trilon and FT Capital (Exhibit A). 2. Pledge Agreement, dated June 1, 2002, by and between Trilon and Big Fish (Exhibit B). 3. Pledge Agreement, dated June 1, 2002, by and between Trilon and Hammock (Exhibit C). 4. Guarantee, dated June 1, 2002, by and between Trilon and Big Fish (Exhibit D). 5. Guarantee, dated June 1, 2002, by and between Trilon and Hammock (Exhibit E). Page 7 of 8 CUSIP No. 163223 10 0 After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 9, 2002 FT CAPITAL LTD. By: /s/ Brian Kenning ----------------------------- Name: Brian Kenning Title: Vice President of Finance Page 8 of 8 CUSIP No. 163223 10 0 SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF FT CAPITAL DIRECTORS AND EXECUTIVE OFFICERS OF FT CAPITAL. The following table sets forth the name, age, current business address, citizenship and present principal occupation or employment of each director and executive officer of FT Capital. Each such person is a citizen of Canada. Unless otherwise indicated, the current business address of each person is c/o FT Capital. Each occupation set forth opposite an individual's name refers to employment with FT Capital, unless otherwise noted.
NAME, AGE AND CURRENT BUSINESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT ADDRESS William J.M. Henning, Q.C., 75 Senior Partner, Henning, Byrne, Whitmore & McKall Brian G. Kenning, 53 Managing Partner and Chairman, B.C. Pacific Capital Corporation Terrence A. Lyons, 53 President and Chief Executive Officer John M. Messer, 61 Director and Consultant John B. Newman, 68 Chairman, MBNT Financial Holdings Limited A. Samuel Wakim, Q.C., 65 Associate, Weir & Foulds
EX-99.A 3 y64566dexv99wa.txt ASSIGNMENT AGREEMENT ASSIGNMENT AGREEMENT THIS AGREEMENT is made as of the 30th day of September, 2002. B E T W E E N: TRILON BANCORP INC., a corporation incorporated under the laws of the Province of Ontario (the "Assignor") - and - FT CAPITAL LTD., a corporation incorporated under the laws of the Province of Alberta (the "Assignee") RECITALS: A. M.E.V. ("Debtor") is currently indebted to the Assignor pursuant to a loan agreement dated July 31, 2001 as amended by amending agreements dated December 31, 2001, January 7, 2002, April 8, 2002 and June 8, 2002 in the aggregate amount of US$5,336,361 for principal and interest (the "Indebtedness), particulars of which are set out in Schedule A hereto; B. S.V. has guaranteed the obligations of the Debtor to the Assignor pursuant to a guarantee dated April 8, 2002; Hammock Group Ltd. has guaranteed the obligations of the Debtor to the Assignor pursuant to a guarantee dated June 1, 2002; Big Fish Ltd. has guaranteed the obligations of the Debtor to the Assignor pursuant to a guarantee dated June 1, 2002; Carmavic Realty Inc. has guaranteed the obligations of the Debtor to the Assignor pursuant to a guarantee dated December 31, 2001; 810990 Alberta Ltd. has guaranteed the obligations of the Debtor to the Assignor pursuant to a guarantee dated June 27, 2002; (together the "Guarantees"); C. As security for the Indebtedness and the Guarantees, the Assignor holds the security listed in Schedule B hereto (collectively the "Security"); D. The Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Indebtedness, the Guarantees and Security (collectively the "Assets"), upon payment by the Assignee to the Assignor of the amount of the Indebtedness plus costs as of the date hereof. NOW THEREFORE in consideration of the sum of $1.00 now paid by the Assignee to the Assignor and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged): 1. (a) The Assignor hereby transfers, assigns and sets over unto the Assignee, its successors and assigns, without recourse, the Assets and all its right, title, interest, property, claim and demand whatsoever therein and thereto and the full benefit of all rights, powers, covenants and provisos therein contained and all and any claims or rights of action arising therefrom or in connection therewith, to have and to hold the Assets and each and every part thereof, and all the right, title and interest of the Assignor therein and thereto unto and to the use of the Assignee. (b) The Assignor releases to the Assignee all its claims against the Assets. 2. The Assignor represents and warrants as follows to the Assignee and acknowledges and confirms that the Assignee is relying upon such representations and warranties in entering into this agreement: (a) the Assignor has the full right, power and authority to enter into this agreement and to perform its covenants hereunder; (b) the facts contained in the recitals to this agreement are true and correct; and (c) the Assignor has not sold, transferred, assigned, alienated, released or encumbered the Assets or any part thereof. 3. The representations and warranties contained in paragraph 2 hereof shall survive for a period of 1 year from the date hereof. 4. Save and except as contained in paragraph 2 hereof, the Assignor is not making any representations or warranties to the Assignee in respect of the Assets or the Debtor. Without limitation, the Assignee acknowledges that it has relied entirely on its own investigations and due diligence, that it is purchasing the Assignor's right, title and interest in the Assets on an "as is, where is" basis and that no representations, conditions or warranties are expressed or can be implied as to title, encumbrances, description, quality or quantity thereof or in respect of any other matter or thing whatsoever, except as specifically represented and warranted in paragraph 2. 5. The Assignor shall from time to time hereafter, at the reasonable request of the Assignee and at the cost of the Assignee, make, do, execute or deliver, or cause to be made, done, executed or delivered, all such further acts, instruments and assurances necessary or desirable to more effectually assign over the Assets to the Assignee as set out in this agreement. Without limitation, such further acts, instruments and assurances shall include any documents required to be filed or executed pursuant to the provisions of any statutes governing the Assets or any part thereof. 6. This agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. 7. This agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. IN WITNESS WHEREOF the parties have executed this agreement. TRILON BANCORP INC. By: ----------------------------------- FT CAPITAL LTD. By: ----------------------------------- SCHEDULE A Indebtedness of M.E.V. to Trilon Bancorp Inc. As at September 30, 2002 pursuant to a loan agreement dated July 31, 2001 as amended by amending agreements dated December 31, 2001, January 7, 2002, April 8, 2002 and June 8, 2002.
US Dollar Advances Canadian Dollar Advances Principal: $3,564,909.13 $2,500,000 Interest: $130,648.79 $62,758.66 Maintenance Fee $ 33,198.58 $19,505.65 Total Indebtedness: $ 3,732,754.14 $2,582,264.21
SCHEDULE B Security held by Trilon Bancorp Inc. pursuant to a loan agreement dated July 31, 2001 as amended by amending agreements dated December 31, 2001, January 7, 2002, April 8, 2002 and June 8, 2002 between Trilon Bancorp Inc. as lender and M.E.V as borrower and S.V., Hammock Group Ltd., Big Fish Ltd., Carmavic Realty Inc. and 810990 Alberta Ltd. as Guarantors pursuant to various guarantees. A. S.V. 1. Charge/Mortgage of Land in the amount of $9,000,000 on property located in the Town of Georgina and more particularly described as Part Lot 15, Concession 9 in the Town of Georgina, Regional Municipality of York, Part 1, 2 and 3 on reference plan no. 65R-2624. 2. Mortgage and Security Agreement on property located at Unit 504 , Grand Bay Tower, a condominium according to the declaration thereof, recorded in Official Records Book 18893, Page 1027, of the Public Records of Miami-Dade County , Florida. B. HAMMOCK GROUP LTD. 3. Pledge and Security Agreement dated June 1, 2002 secured on 2,310,994 shares of Chell Group Corp. C. BIG FISH LTD. 4. Pledge and Security Agreement dated June 1, 2002 secured on 1,890, 493 shares of Chell Group Corp. and all indebtedness and liability owed by BOTB Corporation to Big Fish Ltd. pursuant to the secured US$1,000,000 promissory note dated as of June 1, 2002 issued by BOTB Corporation to Big Fish Ltd. D. CARMAVIC REALTY INC. 7. Charge/Mortgage of Land in the amount of US$4,446,896.13 on property located at 421-437 Spadina Road, Toronto, Ontario, M5P 2W3 and more particularly described as Lot 1, Plan 758 and Lots 1, 2,3 and 4, Plan 861 in the City of Toronto, registered on January 8, 2002. 8. General Security Agreement dated December 31, 2001. E. 810990 ALBERTA LTD. 9. Mortgage of Land in the amount of US$1,000,000 on property located at 25102 Lower Springbank Road, Calgary, Alberta and more particularly described as Plan 1415LK, Block D, Lot 2. EX-99.B 4 y64566dexv99wb.txt PLEDGE AGREEMENT PLEDGE AND SECURITY AGREEMENT THIS AGREEMENT is made as of the 1st day of June, 2002, BY: BIG FISH LTD. (the "Corporation") IN FAVOUR OF: TRILON BANCORP INC. (the "Lender") RECITALS: A. The Lender and M.E.V. (the "Borrower") have entered into an agreement dated as of July 31, 2001 as amended by an amending agreement dated as of December 31, 2001, an amending agreement dated as of January 7, 2002, an amending agreement dated as of April 8, 2002 and an amending agreement dated as of June 1, 2002 (together the "Loan Agreement") pursuant to which the Lender has advanced the Loan to the Borrower; B. It is a condition of the Loan Agreement that the Corporation enter into the Guarantee and secure its obligations thereunder by entering into this Agreement. NOW THEREFORE in consideration of the sum of $1.00 and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Corporation agrees with the Lender as follows: ARTICLE 1. INTERPRETATION 1.1. DEFINITIONS In this Agreement: 1.1.1. "THIS AGREEMENT", "HERETO", "HEREIN", "HEREOF", "HEREBY", "HEREUNDER" and any similar expressions refer to this Agreement as it may be amended or supplemented from time to time, and not to any particular Article, section or other portion hereof; 1.1.2. "BOTB RECEIVABLE" means all indebtedness and liability of BOTB to the corporation pursuant to the secured, US$1,000,000 Promissory Note dated as of June 1, 2002 issued by BOTB Corporation to the Corporation. 1.1.3. "BUSINESS DAY" means any day, other than Saturday, Sunday or any statutory holiday in the Province of Ontario; -2- 1.1.4. "CHATTEL PAPER" means one or more than one writing that evidences both a monetary obligation and a security interest in or a lease of specific Goods; 1.1.5. "CHELL SHARES" means the 2,310,994 shares of Chell Group Corp. beneficially owned by the Corporation and held in the investment Account; 1.1.6. "COLLATERAL" means all of the property of the Corporation subject to, or intended to be subject to, the Security Interest, and any reference to "Collateral" shall be deemed to be a reference to "Collateral or any part thereof" except where otherwise specifically provided; 1.1.7. "DOCUMENT OF TITLE" means any writing that purports to be issued by or addressed to a bailee and purports to cover such Goods in the bailee's possession as are identified or fungible portions of an identified mass, and that in the ordinary course of business is treated as establishing that the Person in possession of it is entitled to receive, hold and dispose of the document and the Goods it covers; 1.1.8. "EVENT OF DEFAULT" has the meaning attributed to such term in the Loan Agreement; 1.1.9. "GOODS" means tangible personal property other than Chattel Paper, Documents of Title, Instruments, Money and Securities, and includes fixtures, growing crops, the unborn young of animals, timber to be cut, and minerals and hydrocarbons to be extracted; 1.1.10. "INSTRUMENT" means, 1.1.10.1. a bill, note or cheque within the meaning of the Bills of Exchange Act (Canada) or any other writing that evidences a right to the payment of Money and is of a type that in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment, or 1.1.10.2. a letter of credit and an advice of credit if the letter or advice states that it must be surrendered upon claiming payment thereunder, but does not include a writing that constitutes part of Chattel Paper, a Document of Title or a Security; 1.1.11. "INTANGIBLE" means all personal property, including choses in action, that is not Goods, Chattel Paper, Documents of Title, Instruments, Money or Securities; 1.1.12. "INVESTMENT ACCOUNT" means account numbers 22UHG14 and 321063F in the name of the Corporation established with Thomson Kernaghan & Co. Limited; 1.1.13. "LIEN" means any mortgage, pledge, charge, assignment, security interest, hypothec, lien or other encumbrance, including, without limitation, any agreement to give any of the foregoing, or any conditional sale or other title retention agreement; -3- 1.1.14. "MONEY" means a medium of exchange authorized or adopted by the Parliament of Canada as part of the currency of Canada or by a foreign government as part of its currency; 1.1.15. "OBLIGATIONS" means all of the obligations, liabilities and indebtedness of the Corporation to the Lender from time to time, whether present or future, absolute or contingent, liquidated or unliquidated, as principal or as surety, alone or with others, of whatsoever nature or kind, in any currency or otherwise, under or in respect of agreements or dealings between the Corporation and the Lender or agreements or dealings between the Lender and any Person by which the Lender may be or become in any manner whatsoever a creditor of the Corporation, including without limitation under the Loan Agreement and this Agreement or any one or more of the foregoing as the same may be amended or supplemented from time to time; 1.1.16. "PERSON" means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted; 1.1.17. "PPSA" means the Personal Property Security Act (Ontario) as amended from time to time and any Act substituted therefor and amendments thereto; 1.1.18. "PROCEEDS" means identifiable or traceable personal property in any form derived directly or indirectly from any dealing with Collateral or the proceeds therefrom, and includes any payment representing indemnity or compensation for loss of or damage to the Collateral or proceeds therefrom; 1.1.19. "SECURITY" means a document that is, 1.1.19.1. issued in bearer, order or registered form, 1.1.19.2. of a type commonly dealt in upon securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment, 1.1.19.3. one of a class or series or by its terms is divisible into a class or series of documents, 1.1.19.4. evidence of a share, participation or other interest in property or in an enterprise or is evidence of an obligation of the issuer, 1.1.19.5. and includes an uncertifcated security within the meaning of Part VI (Investment Securities) of the Business Corporations Act (Ontario); and 1.1.20. "SECURITY INTEREST" has the meaning attributed to such term in section 2.1. -4- 1.2. HEADING The inclusion of headings in this Agreement is for convenience of reference only and shall not affect the construction or interpretation hereof. 1.3. REFERENCES TO ARTICLES AND SECTIONS Whenever in this Agreement a particular Article, section or other portion thereof is referred to then, unless otherwise indicated, such reference pertains to the particular Article, section or portion thereof contained herein. 1.4. CURRENCY Except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in Canadian currency. 1.5. GENDER AND NUMBER In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. 1.6. INVALIDITY OF PROVISIONS Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of law which renders any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 1.7. AMENDMENT, WAIVER No amendment or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 1.8. GOVERNING LAW, ATTORNMENT This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and the Corporation hereby irrevocably attorns to the jurisdiction of the courts of Ontario. -5- ARTICLE 2. SECURITY INTEREST 2.1. CREATION OF SECURITY INTEREST The Corporation hereby grants to the Lender, by way of security interest, pledge, charge, assignment and hypothee, a security interest (the "Security Interest") in: 2.1.1. the Chell Shares; 2.1.2. the BOTB Receivable; 2.1.3. all Securities, Instruments, negotiable Documents of Title and other personal property of any kind which may hereafter be acquired by the Corporation in renewal of, substitution for, as owner of, or as a result of the exercise of any rights relating to, any of the property described in this section; 2.1.4. all books, statements of account, bills, invoices, letters, papers, documents and computer records in any way evidencing or relating to the BOTB Receivable; 2.1.5. all Securities, Instruments, negotiable Documents of Title and other personal property of any kind which may hereafter be acquired by the Corporation in renewal of, substitution for, as owner of, or as a result of the exercise of any rights relating to, any of the property described in this section; 2.1.6. all dividends, income or other distributions, whether paid or distributed in cash, Securities or other property, in respect of any of the property described in this section; and 2.1.7. all Proceeds of any of the property described in this section. 2.2. ATTACHMENT The attachment of the Security Interest has not been postponed and the Security Interest shall attach to any particular Collateral as soon. as the Corporation has rights in such Collateral, ARTICLE 3. OBLIGATIONS SECURED 3.1. OBLIGATIONS SECURED The Security Interest granted hereby secures payment, performance satisfaction of the Obligations. -6- ARTICLE 4. DEALING WITH COLLATERAL 4.1. RESTRICTIONS ON DEALING WITH COLLATERAL The Corporation shall not, without the prior consent in writing of the Lender: 4.1.1. sell, assign, transfer, exchange, or otherwise dispose of the Collateral except to the extent permitted by section 4.4.1.1; or 4.1.2. create, assume or suffer to exist any Lien upon the Collateral ranking or purporting to rank in priority to or pari passu with the Security Interest other than the Security Interest. No provision hereof shall be construed as a subordination or postponement of the Security Interest to or in favour of any other Lien, whether or not such Lien is permitted hereunder or otherwise. 4.2. REGISTRATION OF COLLATERAL IN NAME OF LENDER At the request of the Lender, the Corporation shall cause such of the Collateral as is registrable to be registered in the name of the Lender or its nominee and authorizes the Lender to transfer such Collateral into the name of the Lender or its nominee, so that the Lender or its nominee may appear as the sole owner of record of such Collateral. The Corporation shall, at the request of the Lender, deliver to the Lender appropriate powers of attorney for transfer in blank, duly executed, in respect of such of the Collateral as is registrable, At the request of the Lender, the Corporation shall cause the Chell Shares to be deposited to one or more investment accounts with a registered dealer in the name of the Lender as may be directed by the Lender from time to time. 4.3. NOTICES AND OTHER COMMUNICATIONS IN RESPECT OF COLLATERAL The Corporation shall deliver promptly to the Lender copies of all notices or other communications received by the Corporation in respect of the Collateral. Until the occurrence of an Event of Default, the Lender shall deliver promptly to the Corporation all notices or other communications received by the Lender or its nominee in respect of the Collateral. After the occurrence of an Event of Default, the Corporation waives all rights to receive any notices or communications received by the Lender or its nominee in respect of the Collateral. 4.4. VOTING AND OTHER RIGHTS 4.4.1. Until the occurrence of an Event of Default: 4.4.1.1. the Corporation may exercise all rights to vote or other similar rights with respect to any Collateral; and -7- 4.4.1.2. the Corporation shall be entitled to receive all dividends (whether paid or distributed in cash, securities or other property) and interest declared and paid or distributed in respect of the Collateral. 4.4.2. Upon the occurrence of an Event of Default: 4.4.2.1. the Corporation shall have no rights to vote or take any other action with respect to any Collateral; 4.4.2.2. the Lender may, but shall not be obliged to, vote and take all other action with respect to any Collateral; and 4.4.2.3. the Corporation shall cease to be entitled to receive any dividends or interest, whether declared or payable before or after the occurrence of the Event of Default, in respect of the Collateral. 4.5. DELIVERY OF COLLATERAL TO LENDER Subject to section 4,4.1.2, all Collateral received at any time by or on behalf of the Corporation, whether before or after the occurrence of an Event of Default, shall be received and held by or on behalf of the Corporation in trust, or as agent in the Province of Quebec, for the Lender and shall be delivered to the Lender immediately upon such receipt. 4.6. FURTHER ASSURANCES The Corporation shall at its own expense do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, security agreements, pledges, charges, assignments, hypothecs, powers of attorney and assurances (including instruments supplemental or ancillary hereto) and such financing statements as the Lender may from time to time request to better assure and perfect its security on the Collateral. ARTICLE 5. REMEDIES 5.1. REMEDIES AVAILABLE Upon the occurrence of an Event of Default, the Lender may, either directly or through its agents or nominees, sell or otherwise dispose of, or concur in selling or otherwise disposing of, whether by public sale, private sale or otherwise, Collateral in such manner and on such terms as it considers to be commercially reasonable. In addition, the Lender shall have the following rights, powers and remedies: 5.1.1. to make payments to Persons having prior rights or Liens on the Collateral; and 5.1.2. to demand, commence, continue or defend proceedings in the name of the Lender or in the name of the Corporation for the purpose of protecting, seizing, collecting, realizing -8- or obtaining possession or payment of, or otherwise enforcing rights, powers or remedies with respect to, the Collateral and to give effectual receipts and discharges therefor. In addition to the rights granted in this Agreement and in any other agreement now or hereafter in effect between the Corporation and the Lender and in addition to any other rights the Lender may have at law or in equity or otherwise, the Lender shall have, both before and after the occurrence of an Event of Default, all rights and remedies of a secured party under the PPSA. The Lender may incur reasonable expenses in the exercise of its rights, powers and remedies set out in this Agreement. 5.2. POSSESSION OF COLLATERAL The Corporation acknowledges that the Lender may at any time take possession of Collateral wherever it may be located and by any method permitted by law, whether before or after the occurrence of an Event of Default. 5.3. REMEDIES NOT EXCLUSIVE All rights, powers and remedies of the Lender under this Agreement may be exercised separately or in combination and shall be in addition to, and not in substitution for, any other security now or hereafter held by the Lender and any other rights, powers and remedies of the Lender however created or arising. No single or partial exercise by the Lender of any of the rights, powers and remedies under this Agreement or under any other security now or hereafter held by the Lender shall preclude any other and further exercise of any other right, power or remedy pursuant to this Agreement or any other security or at law, in equity or otherwise. The Lender shall at all times have the right to proceed against Collateral or any other security in such order and in such manner as it shall determine without waiving any rights, powers or remedies which the Lender may have with respect to this Agreement or any other security or at law, in equity or otherwise. No delay or omission by the Lender in exercising any right, power or remedy hereunder or otherwise shall operate as a waiver thereof or of any other right, power or remedy. 5.4. CORPORATION LIABLE FOR DEFICIENCY The Corporation shall remain liable to the Lender for any deficiency after the proceeds of any sale or other disposition of Collateral are received by the Lender. 5.5. EXCLUSION OF LIABILITY OF LENDER The Lender shall not be liable for any exercise or any failure to exercise its rights, powers or remedies arising hereunder or otherwise, including, without limitation, taking possession of, collecting, enforcing, realizing, selling or otherwise disposing of, preserving or protecting the Collateral, or taking any steps or proceedings for any such purposes or any failure to do any of the foregoing. The Lender shall not have any obligation to examine any notices or other communications with respect to the Collateral or to advise the Corporation of the expiry of -9- any warrants, options or other rights in respect of or comprising the Collateral or to advise the Corporation of any other matter relating to any Persons which are issuers of any Collateral, and the Lender shall not have any obligation to take any steps or proceedings to preserve rights against prior parties to or in respect of the Collateral, whether or not in the Lender's possession Subject to the foregoing, the Lender shall use reasonable care in the custody and preservation of the Collateral in its possession. 5.6. NOTICE OF SALE Unless required by law, the Lender shall not be required to give the Corporation any notice of any sale or other disposition of the Collateral, the date, time and place of any public sale of Collateral or the date after which any private disposition of Collateral is to be made. ARTICLE 6. APPLICATION OF PROCEEDS 6.1. APPLICATION OF PROCEEDS The Proceeds arising from the enforcement of the Security Interest as a result of the possession by the Lender of the Collateral or from any sale or other disposition of, or realization of security on, the Collateral (except following acceptance of Collateral in satisfaction of the Obligations) shall be applied by the Lender in such order as the Lender may in its discretion determine (subject to applicable law, including the PPSA). 6.2. PAYMENT INTO COURT Where there is a question as to who is entitled to receive payment of any portion of the Proceeds, the Lender may pay the Proceeds referred to therein into court. 6.3. MONIES ACTUALLY RECEIVED The Corporation shall be entitled to be credited only with the actual Proceeds arising from the possession, sale or other disposition of, or realization of security on, the Collateral when received by the Lender and such actual Proceeds shall mean all amounts received in cash by the Lender upon such possession, sale or other disposition of, or realization of security on, the Collateral. ARTICLE 7. GENERAL 7.1. POWER OF ATTORNEY The Corporation hereby appoints the Lender, as the Corporation's attorney, with full power of substitution, in the name and on behalf of the Corporation, to execute, deliver and do all such acts, deeds, documents, transfers, demands, conveyances, assignments, contracts, -10- assurances, consents, financing statements and things as the Corporation has herein agreed to execute, deliver and do or as may be required by the Lender to give effect to this Agreement or in the exercise of any rights, powers or remedies hereby conferred on the Lender, and generally to use the name of the Corporation in the exercise of all or any of the rights, powers or remedies hereby conferred on the Lender. This appointment, coupled with an interest, shall not be revoked by the insolvency, bankruptcy, dissolution, liquidation or other termination of the existence of the Corporation or for any other reason. 7.2. SET-OFF The Lender may at any time and from time to time, without notice to the Corporation or to any other Person, set-off, appropriate and apply any and all deposits, general or special, matured or unmatured, held by or for the benefit of the Corporation with the Lender, and any other indebtedness and liability of the Lender to the Corporation, matured or unmatured, against and on account of the Obligations when due, in such order of application as the Lender may from time to time determine. 7.3. DEALINGS WITH OTHERS The Lender may grant extensions of time and other indulgences, take and give up security, accept compositions, make settlements, grant releases and discharges and otherwise deal with the Corporation, debtors of the Corporation, sureties and other Persons and with Collateral and other security as the Lender sees fit, without prejudice to the liability of the Corporation to the Lender or the rights, powers and remedies of the Lender under this Agreement 7.4. NO OBLIGATION TO ADVANCE Nothing herein contained shall in any way obligate the Lender to advance any funds, or otherwise make or continue to make any credit available, to the Corporation. 7.5. PERFECTION OF SECURITY The Corporation authorizes the Lender to file such financing statements and other documents and do such acts, matters and things as the Lender may consider appropriate to perfect and continue the Security Interest, to protect and preserve the interest of the Lender in Collateral and to realize upon the Security Interest. 7.6. COMMUNICATION Any notice or other communication, including a demand or a direction, required or permitted to be given hereunder shall be effective if given in accordance with section 10.4 of the Loan Agreement. Notwithstanding the foregoing, if the PPSA requires that a notice or other communication be given in a specified manner, then any such notice or communication shall be given in such manner. -11- 7.7. SUCCESSORS AND ASSIGNS This Agreement shall be binding on the Corporation and its successors and shall enure to the benefit of the Lender and its successors and assigns. This Agreement shall be assignable by the Lender free of any set-off, counter-claim or equities between the Corporation and the Lender, and the Corporation shall not assert against an assignee of the Lender any claim or defense that the Corporation has against the Lender, 7.8. COPY RECEIVED The Corporation hereby acknowledges receipt of a copy of this Agreement. IN WITNESS WHEREOF the Corporation has executed this Agreement as of the 1st day of Tune, 2002. BIG FISH LTD. by: ----------------------------------- Name: Title: EX-99.C 5 y64566dexv99wc.txt PLEDGE AGREEMENT BETWEEN TRILON AND HAMMOCK PLEDGE AND SECURITY AGREEMENT THIS AGREEMENT is made as of the 1st day of June, 2002, BY: HAMMOCK GROUP LTD. (the "Corporation") IN FAVOUR OF: TRILON BANCORP INC. (the "Lender") RECITALS: A. The Lender and M.E.V. (the "Borrower") have entered into an agreement dated as of July 31, 2001 as amended by an amending agreement dated as of December 31, 2001, an amending agreement dated as of January 7, 2002, an amending agreement dated as of April 8, 2002 and an amending agreement dated as of June 1, 2002 (together the "Loan Agreement") pursuant to which the Lender has advanced the Loan to the Borrower; B. It is a condition of the Loan Agreement that the Corporation enter into the Guarantee and secure its obligations thereunder by entering into this Agreement. NOW THEREFORE in consideration of the sum of $1.00 and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Corporation agrees with the Lender as follows: ARTICLE 1. INTERPRETATION 1.1. DEFINITIONS In this Agreement: 1.1.1. "THIS AGREEMENT", "HERETO", "HEREIN", "HEREOF', "HEREBY", "HEREUNDER" and any similar expressions refer to this Agreement as it may be amended or supplemented from time to time, and not to any particular Article, section or other portion hereof; 1.1.2. "BUSINESS DAY" means any day, other than Saturday, Sunday or any statutory holiday in the Province of Ontario; 1.1.3. "CHATTEL PAPER" means one or more than one writing that evidences both a monetary obligation and a security interest in or a lease of specific Goods; -2- 1.1.4. "CHELL SHARES" means the 2,310,994 shares of Chell Group Corp. beneficially owned by the Corporation and held in the investment Account; 1.1.5. "COLLATERAL" means all of the property of the Corporation subject to, or intended to be subject to, the Security Interest, and any reference to "Collateral" shall be deemed to be a reference to "Collateral or any part thereof" except where otherwise specifically provided; 1.1.6. "DOCUMENT OF TITLE" means any writing that purports to be issued by or addressed to a bailee and purports to cover such Goods in the bailee's possession as are identified or fungible portions of an identified mass, and that in the ordinary course of business is treated as establishing that the Person in possession of it is entitled to receive, hold and dispose of the document and the Goods it covers; 1.1.7. "EVENT OF DEFAULT" has the meaning attributed to such term in the Loan Agreement; 1.1.8. "GOODS" means tangible personal property other than Chattel Paper, Documents of Title, Instruments, Money and Securities, and includes fixtures, growing crops, the unborn young of animals, timber to be cut, and minerals and hydrocarbons to be extracted; 1.1.9. "INSTRUMENT" means, 1.1.9.1. a bill, note or cheque within the meaning of the Bills of Exchange Act (Canada) or any other writing that evidences a right to the payment of Money and is of a type that in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment, or 1.1.9.2. a letter of credit and an advice of credit if the letter or advice states that it must be surrendered upon claiming payment thereunder, but does not include a writing that constitutes part of Chattel Paper, a Document of Title or a Security; 1.1.10. "INTANGIBLE" means all personal property, including choses in action, that is not Goods, Chattel Paper, Documents of Title, Instruments, Money or Securities; 1.1.11. "INVESTMENT ACCOUNT" means account numbers 22UHG14 and 321063F in the name of the Corporation established with Thomson Kernaghan & Co. Limited; 1.1.12. "LIEN" means any mortgage, pledge, charge, assignment, security interest, hypothec, lien or other encumbrance, including, without limitation, any agreement to give any of the foregoing, or any conditional sale or other title retention agreement; 1.1.13. "MONEY" means a medium of exchange authorized or adopted by the Parliament of Canada as part of the currency of Canada or by a foreign government as part of its currency; -3- 1.1.14. "OBLIGATIONS" means all of the obligations, liabilities and indebtedness of the Corporation to the Lender from time to time, whether present or future, absolute or contingent, liquidated or unliquidated, as principal or as surety, alone or with others, of whatsoever nature or kind, in any currency or otherwise, under or in respect of agreements or dealings between the Corporation and the Lender or agreements or dealings between the Lender and any Person by which the Lender may be or become in any manner whatsoever a creditor of the Corporation, including without limitation under the Loan Agreement and this Agreement or any one or more of the foregoing as the same may be amended or supplemented from time to time; 1.1.15. "PERSON" means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted; 1.1.16. "PPSA" means the Personal Property Security Act (Ontario) as amended from time to time and any Act substituted therefor and amendments thereto; 1.1.17. "PROCEEDS" means identifiable or traceable personal property in any form derived directly or indirectly from any dealing with Collateral or the proceeds therefrom, and includes any payment representing indemnity or compensation for loss of or damage to the Collateral or proceeds therefrom; 1.1.18. "SECURITY" means a document that is, 1.1.18.1. issued in bearer, order or registered form, 1.1.18.2. of a type commonly dealt in upon securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment, 1.1.18.3. one of a class or series or by its terms is divisible into a class or series of documents, 1.1.18.4. evidence of a share, participation or other interest in property or in an enterprise or is evidence of an obligation of the issuer, 1.1.18.5. and includes an uncertifcated security within the meaning of Part VI (Investment Securities) of the Business Corporations Act (Ontario); and 1.1.19. "SECURITY INTEREST" has the meaning attributed to such term in section 2.1. 1.2. HEADING The inclusion of headings in this Agreement is for convenience of reference only and shall not affect the construction or interpretation hereof. -4- 1.3. REFERENCES TO ARTICLES AND SECTIONS Whenever in this Agreement a particular Article, section or other portion thereof is referred to then, unless otherwise indicated, such reference pertains to the particular Article, section or portion thereof contained herein. 1.4. CURRENCY Except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in Canadian currency. 1.5. GENDER AND NUMBER In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. 1.6. INVALIDITY OF PROVISIONS Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of law which renders any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 1.7. AMENDMENT, WAIVER No amendment or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 1.8. GOVERNING LAW, ATTORNMENT This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and the Corporation hereby irrevocably attorns to the jurisdiction of the courts of Ontario. ARTICLE 2. SECURITY INTEREST 2.1. CREATION OF SECURITY INTEREST The Corporation hereby grants to the Lender, by way of security interest, pledge, charge, assignment and hypothee, a security interest (the "Security Interest") in: -5- 2.1.1. the Chell Shares; 2.1.2. all Securities, Instruments, negotiable Documents of Title and other personal property of any kind which may hereafter be acquired by the Corporation in renewal of, substitution for, as owner of, or as a result of the exercise of any rights relating to, any oL the property described in this section; 2.1.3. all dividends, income or other distributions, whether paid or distributed in cash, Securities or other property, in respect of any of the property described in this section; and 2.1.4. all Proceeds of any of the property described in this section. 2.2. ATTACHMENT The attachment of the Security Interest has not been postponed and the Security Interest shall attach to any particular Collateral as soon as the Corporation has rights in such Collateral. ARTICLE 3. OBLIGATIONS SECURED 3.1. OBLIGATIONS SECURED The Security Interest granted hereby secures payment, performance satisfaction of the Obligations. ARTICLE 4. DEALING WITH COLLATERAL 4.1. RESTRICTIONS ON DEALING WITH COLLATERAL The Corporation shall not, without the prior consent in writing of the Lender: 4.1.1. sell, assign, transfer, exchange, or otherwise dispose of the Collateral except to the extent permitted by section 4.4.1.1; or 4.1.2. create, assume or suffer to exist any Lien upon the Collateral ranking or purporting to rank in priority to or pari passu with the Security Interest other than the Security Interest. No provision hereof shall be construed as a subordination or postponement of the Security Interest to or in favour of any other Lien, whether or not such Lien is permitted hereunder or otherwise. -6- 4.2. REGISTRATION OF COLLATERAL IN NAME OF LENDER At the request of the Lender, the Corporation shall cause such of the Collateral as is registrable to be registered in the name of the Lender or its nominee and authorizes the Lender to transfer such Collateral into the name of the Lender or its nominee, so that the Lender or its nominee may appear as the sole owner of record of such Collateral. The Corporation shall, at the request of the Lender, deliver to the Lender appropriate powers of attorney for transfer in blank, duly executed, in respect of such of the Collateral as is registrable, At the request of the Lender, the Corporation shall cause the Chell Shares to be deposited to one or more investment accounts with a registered dealer in the name of the Lender as may be directed by the Lender from time to time. 4.3. NOTICES AND OTHER COMMUNICATIONS IN RESPECT OF COLLATERAL The Corporation shall deliver promptly to the Lender copies of all notices or other communications received by the Corporation in respect of the Collateral. Until the occurrence of an Event of Default, the Lender shall deliver promptly to the Corporation all notices or other communications received by the Lender or its nominee in respect of the Collateral. After the occurrence of an Event of Default, the Corporation waives all rights to receive any notices or communications received by the Lender or its nominee in respect of the Collateral. 4.4. VOTING AND OTHER RIGHTS 4.4.1. Until the occurrence of an Event of Default: 4.4.1.1. the Corporation may exercise all rights to vote or other similar rights with respect to any Collateral; and 4.4.1.2. the Corporation shall be entitled to receive all dividends (whether paid or distributed in cash, securities or other property) and interest declared and paid or distributed in respect of the Collateral. 4.4.2. Upon the occurrence of an Event of Default: 4.4.2.1. the Corporation shall have no rights to vote or take any other action with respect to any Collateral; 4.4.2.2. the Lender may, but shall not be obliged to, vote and take all other action with respect to any Collateral; and 4.4.2.3. the Corporation shall cease to be entitled to receive any dividends or interest, whether declared or payable before or after the occurrence of the Event of Default, in respect of the Collateral. -7- 4.5. DELIVERY OF COLLATERAL TO LENDER Subject to section 4,4.1.2, all Collateral received at any time by or on behalf of the Corporation, whether before or after the occurrence of an Event of Default, shall be received and held by or on behalf of the Corporation in trust, or as agent in the Province of Quebec, for the Lender and shall be delivered to the Lender immediately upon such receipt. 4.6. FURTHER ASSURANCES The Corporation shall at its own expense do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, security agreements, pledges, charges, assignments, hypothecs, powers of attorney and assurances (including instruments supplemental or ancillary hereto) and such financing statements as the Lender may from time to time request to better assure and perfect its security on the Collateral. ARTICLE 5. REMEDIES 5.1. REMEDIES AVAILABLE Upon the occurrence of an Event of Default, the Lender may, either directly or through its agents or nominees, sell or otherwise dispose of, or concur in selling or otherwise disposing of, whether by public sale, private sale or otherwise, Collateral in such manner and on such terms as it considers to be commercially reasonable. In addition, the Lender shall have the following rights, powers and remedies: 5.1.1. to make payments to Persons having prior rights or Liens on the Collateral; and 5.1.2. to demand, commence, continue or defend proceedings in the name of the Lender or in the name of the Corporation for the purpose of protecting, seizing, collecting, realizing or obtaining possession or payment of, or otherwise enforcing rights, powers or remedies with respect to, the Collateral and to give effectual receipts and discharges therefor. In addition to the rights granted in this Agreement and in any other agreement now or hereafter in effect between the Corporation and the Lender and in addition to any other rights the Lender may have at law or in equity or otherwise, the Lender shall have, both before and after the occurrence of an Event of Default, all rights and remedies of a secured party under the PPSA. The Lender may incur reasonable expenses in the exercise of its rights, powers and remedies set out in this Agreement. -8- 5.2. POSSESSION OF COLLATERAL The Corporation acknowledges that the Lender may at any time take possession of Collateral wherever it may be located and by any method permitted by law, whether before or after the occurrence of an Event of Default. 5.3. REMEDIES NOT EXCLUSIVE All rights, powers and remedies of the Lender under this Agreement may be exercised separately or in combination and shall be in addition to, and not in substitution for, any other security now or hereafter held by the Lender and any other rights, powers and remedies of the Lender however created or arising. No single or partial exercise by the Lender of any of the rights, powers and remedies under this Agreement or under any other security now or hereafter held by the Lender shall preclude any other and further exercise of any other right, power or remedy pursuant to this Agreement or any other security or at law, in equity or otherwise. The Lender shall at all times have the right to proceed against Collateral or any other security in such order and in such manner as it shall determine without waiving any rights, powers or remedies which the Lender may have with respect to this Agreement or any other security or at law, in equity or otherwise. No delay or omission by the Lender in exercising any right, power or remedy hereunder or otherwise shall operate as a waiver thereof or of any other right, power or remedy. 5.4. CORPORATION LIABLE FOR DEFICIENCY The Corporation shall remain liable to the Lender for any deficiency after the proceeds of any sale or other disposition of Collateral are received by the Lender. 5.5. EXCLUSION OF LIABILITY OF LENDER The Lender shall not be liable for any exercise or any failure to exercise its rights, powers or remedies arising hereunder or otherwise, including, without limitation, taking possession of, collecting, enforcing, realizing, selling or otherwise disposing of, preserving or protecting the Collateral, or taking any steps or proceedings for any such purposes or any failure to do any of the foregoing. The Lender shall not have any obligation to examine any notices or other communications with respect to the Collateral or to advise the Corporation of the expiry of any warrants, options or other rights in respect of or comprising the Collateral or to advise the Corporation of any other matter relating to any Persons which are issuers of any Collateral, and the Lender shall not have any obligation to take any steps or proceedings to preserve rights against prior parties to or in respect of the Collateral, whether or not in the Lender's possession Subject to the foregoing, the Lender shall use reasonable care in the custody and preservation of the Collateral in its possession. 5.6. NOTICE OF SALE Unless required by law, the Lender shall not be required to give the Corporation any notice of any sale or other disposition of the Collateral, the date, time and place of any public sale of Collateral or the date after which any private disposition of Collateral is to be made. -9- ARTICLE 6. APPLICATION OF PROCEEDS 6.1. APPLICATION OF PROCEEDS The Proceeds arising from the enforcement of the Security Interest as a result of the possession by the Lender of the Collateral or from any sale or other disposition of, or realization of security on, the Collateral (except following acceptance of Collateral in satisfaction of the Obligations) shall be applied by the Lender in such order as the Lender may in its discretion determine (subject to applicable law, including the PPSA). 6.2. PAYMENT INTO COURT Where there is a question as to who is entitled to receive payment of any portion of the Proceeds, the Lender may pay the Proceeds referred to therein into court. 6.3. MONIES ACTUALLY RECEIVED The Corporation shall be entitled to be credited only with the actual Proceeds arising from the possession, sale or other disposition of, or realization of security on, the Collateral when received by the Lender and such actual Proceeds shall mean all amounts received in cash by the Lender upon such possession, sale or other disposition of, or realization of security on, the Collateral. ARTICLE 7. GENERAL 7.1. POWER OF ATTORNEY The Corporation hereby appoints the Lender, as the Corporation's attorney, with full power of substitution, in the name and on behalf of the Corporation, to execute, deliver and do all such acts, deeds, documents, transfers, demands, conveyances, assignments, contracts, assurances, consents, financing statements and things as the Corporation has herein agreed to execute, deliver and do or as may be required by the Lender to give effect to this Agreement or in the exercise of any rights, powers or remedies hereby conferred on the Lender, and generally to use the name of the Corporation in the exercise of all or any of the rights, powers or remedies hereby conferred on the Lender. This appointment, coupled with an interest, shall not be revoked by the insolvency, bankruptcy, dissolution, liquidation or other termination of the existence of the Corporation or for any other reason. 7.2. SET-OFF The Lender may at any time and from time to time, without notice to the Corporation or to any other Person, set-off, appropriate and apply any and all deposits, general or special, matured or unmatured, held by or for the benefit of the Corporation with the Lender, and any other indebtedness and liability of the Lender to the Corporation, matured or unmatured, -10- against and on account of the Obligations when due, in such order of application as the Lender may from time to time determine. 7.3. DEALINGS WITH OTHERS The Lender may grant extensions of time and other indulgences, take and give up security, accept compositions, make settlements, grant releases and discharges and otherwise deal with the Corporation, debtors of the Corporation, sureties and other Persons and with Collateral and other security as the Lender sees fit, without prejudice to the liability of the Corporation to the Lender or the rights, powers and remedies of the Lender under this Agreement 7.4. NO OBLIGATION TO ADVANCE Nothing herein contained shall in any way obligate the Lender to advance any funds, or otherwise make or continue to make any credit available, to the Corporation. 7.5. PERFECTION OF SECURITY The Corporation authorizes the Lender to file such financing statements and other documents and do such acts, matters and things as the Lender may consider appropriate to perfect and continue the Security Interest, to protect and preserve the interest of the Lender in Collateral and to realize upon the Security Interest. 7.6. COMMUNICATION Any notice or other communication, including a demand or a direction, required or permitted to be given hereunder shall be effective if given in accordance with section 10.4 of the Loan Agreement. Notwithstanding the foregoing, if the PPSA requires that a notice or other communication be given in a specified manner, then any such notice or communication shall be given in such manner. 7.7. SUCCESSORS AND ASSIGNS This Agreement shall be binding on the Corporation and its successors and shall enure to the benefit of the Lender and its successors and assigns. This Agreement shall be assignable by the Lender free of any set-off, counter-claim or equities between the Corporation and the Lender, and the Corporation shall not assert against an assignee of the Lender any claim or defense that the Corporation has against the Lender, -11- 7.8. COPY RECEIVED The Corporation hereby acknowledges receipt of a copy of this Agreement. IN WITNESS WHEREOF the Corporation has executed this Agreement as of the 1st day of Tune, 2002. HAMMOCK GROUP LTD. by: ---------------------------------- Name: Title: EX-99.D 6 y64566dexv99wd.txt GUARANTEE BETWEEN TRILON AND BIG FISH GUARANTEE THIS AGREEMENT OF GUARANTEE is made as of the lst day of June, 2002, BY: BIG FISH LTD. (the "Guarantor") IN FAVOUR OF: TRILON BANCORP INC. ("the Lender") RECITALS: A. The Lender and M.E.V. (the "Borrower") have entered into an agreement dated as of July 31, 2001 as amended by an amending agreement dated as of December 31, 2001, an amending agreement dated as of January 7, 2002, an amending agreement dated as of April 8, 2002 and an amending agreement dated as of June 1, 2002 (together the "Loan Agreement") pursuant to which the Lender has agreed to establish a credit facility for the Borrower; B. It is a condition of the Loan Agreement, that the Guarantor enters into this Agreement to guarantee the obligations of the Borrower under the Loan Documents (referred to herein as the "Obligations"), NOW THEREFORE in consideration of the sum of $1.00 and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Guarantor agrees with the Lender as follows: ARTICLE 1. INTERPRETATION 1.1. DEFINITIONS In this Agreement, terms that are defined in the Loan Agreement, unless otherwise defined herein, have the same meaning herein as are ascribed to such terms in the Loan Agreement. 1.2. INVALIDITY OF PROVISIONS Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of law that renders any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 1.3. ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, or any amendment or supplement thereto, by any party to this Agreement or its directors, officers, employees or agents, to any other party to this Agreement or its directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement, and none of the parties to this Agreement has been induced to enter into this Agreement or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact. Accordingly, there shall be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above. 1.4. WAIVER, AMENDMENT Except as expressly provided in this Agreement, no amendment or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 1.5. GOVERNING LAW, ATTORNMENT This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and the Guarantor hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of Ontario. 1.6. GENDER AND NUMBER Words importing the singular include the plural and vice versa and words importing gender include all genders. ARTICLE 2. GUARANTEE 2.1. GUARANTEE The Guarantor unconditionally guarantees the due payment and performance of all Obligations. 2.2. CONTINUING GUARANTEE The guarantee herein shall be a continuing guarantee of the payment and performance of all the Obligations and shall apply to and secure any ultimate balance thereof due or remaining unpaid to the Lender. The guarantee herein shall not be considered as wholly or partially satisfied by the intermediate payment or satisfaction at any time of all or any part of the Obligations. 2.3. LIMITATION AS TO RECOURSE The recourse of the Lender against the Guarantor in respect of the Obligations, shall be limited to realizing on security interests granted pursuant to Article 9 hereof. The Guarantor shall not be liable to the Lender for any deficiency resulting from any such realization or otherwise. In the event of any conflict or inconsistency between the provisions of such security and the provisions of this Guarantee, the provisions of this Guarantee shall govern, ARTICLE 3. ENFORCEMENT 3.1. DEMAND Upon default in the payment or performance of the Obligations or any part thereof, the Guarantor shall, on demand by the Lender, forthwith pay to the Lender, or perform or cause the performance of, all Obligations for which such demand was made, whether or not any demand for the payment or performance of such Obligations has been made upon the Borrower or any other Person or any other action has been taken to enforce the payment or performance of such Obligations. In the event that the Lender makes demand upon the Guarantor as provided in this section 3.1, the Guarantor shall be liable to the Lender as principal debtor and not as surety only, and will not plead or assert to the contrary in any proceedings taken by the Lender in enforcing this Agreement. 3.2. REMEDIES UPON DEMAND If the Lender makes demand upon the Guarantor as provided herein, the Lender may: (i) realize upon all or part of the assets subject to the Security; and (ii) take such actions and commence such proceedings as may be permitted at law or in equity (whether or not provided for herein or in the Loan Documents) at such times and in such manner as the Lender in its sole discretion may consider expedient; all without, except as may be required by applicable law, any additional notice, presentment, demand, protest, notice of protest, dishonour or any other action. The rights and remedies of the Lender hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by applicable law or by any of the Loan Documents. 3.3. DISTRIBUTIONS All distributions under or in respect of any of the Security Documents shall be held by the Lender on account of the Obligations without prejudice to any claim by the Lender for any deficiency after such distributions are received by the Lender and the Guarantor shall remain liable for any such deficiency. All such distributions may be applied to such part of the Obligations as the Lender may see fit in its sole discretion, and the Lender may at any time change any appropriation of any such distributions or other moneys received by it and to reapply the same on any other part of the Obligations as the Lender may see fit, notwithstanding any previous application. 3.4. RENUNCIATION The Guarantor hereby renounces all benefits of discussion and division, and the Lender shall not be bound to take any recourse available to it against the Borrower or any other Person or any security the Lender may hold, nor to value any security before requiring or being entitled to payment from or performance by the Guarantor. 3.5. PROTECTION OF THE LENDER The Lender shall not be concerned to see or enquire into the powers of the Borrower or its directors, officers, employees or agents acting or purporting to act on its behalf. Monies, advances, renewals and credits in fact borrowed or obtained from, or obligations otherwise created in favour of, the Lender in the professed exercise of such powers shall be deemed to form part of the Obligations even though the borrowing or obtaining of such monies, advances, renewals or credits or the creation of such obligations was irregularly, fraudulently, defectively or informally effected or in excess of the powers of the Borrower or its directors, officers, employees or agents and notwithstanding that the Lender has specific notice of the powers of the Borrower or its directors, officers, employees or agents. 3.6. LENDER'S STATEMENT The statement in writing of the Lender as to the amount of the Obligations shall be binding upon the Guarantor and conclusive against the Guarantor, in the absence of bad faith or manifest error. ARTICLE 4. APPROPRIATION AND SET-OFF 4.1. APPROPRIATION The Lender shall be at liberty, without in any way prejudicing or affecting its rights hereunder, to appropriate any payment made to, or monies received by, the Lender to any portion of the Obligations whether then due or to become due, and from time to time to revoke or alter any such appropriation, all as the Lender may from. time to time in its sole discretion determine. 4.2. SET-OFF The Lender may, without demand or notice of any kind, set off, appropriate and apply any and all deposits, general or special, matured or unmatured, held by or for the benefit of the Guarantor with the Lender, any other indebtedness and liability of the Lender to the Guarantor, matured or unmatured, against and on account of the Guarantor's liability hereunder or the Obligations irrespective of whether or not the Lender has made any demand for payment hereunder, in such order of application as the Lender may from time to time elect. ARTICLE 5. POSTPONEMENT OF DEBTS 5.1. POSTPONEMENT OF DEBTS All debts and liabilities, present and future, of the Borrower to the Guarantor are hereby assigned to the Lender and postponed to the payment and performance in full of the Obligations, and all monies received by the Guarantor in respect thereof shall be received in trust for the Lender or, in the Province of Quebec, as agent for the Lender and forthwith upon receipt shall be paid over to the Lender, the whole without in any way lessening or limiting the liability of the Guarantor under this Agreement. This assignment and postponement is independent of the guarantee herein and shall remain in full force and effect until the Lender has received payment and performance in full of all Obligations, notwithstanding that the liability of the Guarantor under the guarantee herein may have been discharged or terminated. ARTICLE 6. REPRESENTATIONS AND WARRANTIES 6.1. REPRESENTATIONS AND WARRANTIES The Guarantor represents and warrants to the Lender that the Guarantor is not involved in any investigation or litigation, regulatory, arbitration or other proceedings which, if adversely determined, could have a material adverse effect on the Guarantor's business, property, financial condition or prospects or the ability of the Guarantor to perform its obligations under this Guarantee. 6.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES The Guarantor covenants that the representations and warranties made in this Article 6 shall be true and correct on each day that this Guarantee remains in force and effect, with the same effect as if such representations and warranties had been made and given on and as of such day, notwithstanding any investigation made at any time by or on behalf of the Lender. ARTICLE 7. OBLIGATIONS OF GUARANTOR NOT RELEASED 7.1. NO RELEASE The obligation and liability of the Guarantor hereunder shall be absolute and unconditional and shall not be released, discharged or in any way affected by: 7.1.1. any release, renewal, extension, indulgence, discharge, loss or alteration in or dealing with any security whatsoever, whether granted under the Loan Agreement or otherwise, or anything done, suffered or permitted by the Lender in relation to such security or any other security which the Lender may now or hereafter hold in connection with the Obligations; 7.1.2. time being given to the Borrower or to any other Person by the Lender or by any increase, decrease or other alteration of the Obligations or any part thereof including, without limitation, any supplement or amendment of the Loan Agreement or other agreement; 7.1.3. the merging of the Loan Agreement or any of the Obligations in, or any alteration thereof by virtue of, any supplement or amendment to the Loan Agreement or other agreement; 7.1.4. any compromise, arrangement or plan of reorganization affecting the Borrower or any other Person; 7.1.5. any change in the Borrower's business or any part thereof or in the capital structure or constating documents of the Borrower; 7.1.6. the Borrower being amalgamated with any other corporation or being wound up or dissolved; 7.1.7. the release of any other guarantor or of any Person liable directly or as surety or otherwise; 7.1.8. any omission or refraining from proving the claim or any part of the claim of the Lender in any bankruptcy, winding up, compromise or other proceedings relating to the Borrower; 7.1.9. any other act or proceeding relating to the Obligations, the Loan Agreement, or any other agreement relating thereto, this Agreement or any other guarantee or security collateral to any thereof or hereof or the security created by any thereof, whereby the Guarantor might otherwise be released or exonerated; 7.1.10. any lack of validity or enforceability for any reason of, or any defect in or omission from, the Loan Agreement or any other agreement relating thereto or any other guarantee or security collateral to any thereof or the security created by any thereof; 7.1.11. any amendment in the manner, time or place of payment or calculation of any of the Obligations, or any other amendment or waiver of or consent to departure from the terms of any of the Obligations, the Loan Agreement or any other agreement relating thereto; 7.1.12. any right or power of the Borrower or any other Person to assert any claim or defence as to the invalidity or unenforceability of the Obligations or any part thereof; 7.1.13. the fact that the Borrower ceases for any reason whatsoever, as a matter of law, to be liable to the Lender in respect of the Obligations (otherwise than by reason of the payment in full of all the Obligations to the Lender) or the fact that a court determines that the liability of the Borrower to the Lender in respect of the Obligations has been satisfied or is deemed to have been satisfied (except in circumstances where payment in full of all the Obligations has been received by the Lender); or 7.1.14. any other circumstance which might otherwise constitute a defence available to, or discharge of, the Guarantor under this Agreement or to or of the Borrower in respect of the Obligations or the Loan Agreement or any other agreement relating thereto or any security therefor. 7.2. NO SATISFACTION OR REDUCTION OF LIABILITY OF GUARANTOR The guarantee herein shall not be considered as wholly or partially satisfied by the payment at any time of any sum of money for the time being due or remaining unpaid to the Lender, and the Guarantor shall have no right to claim, in reduction of the liability of the Guarantor hereunder, the benefits of any dividends, compositions, proceeds of security or payments received by the Lender from the Borrower or from other Persons. 7.3. NO SUBROGATION The Guarantor shall have no right to be subrogated to any rights of the Lender or claim or prove in any bankruptcy or insolvency of the Borrower in competition with the Lender, until the Lender shall have received payment and performance in full of the Obligations. 7.4. RIGHTS OF LENDER Without limiting the generality of section 7.1, the Lender shall be at liberty, without in any way prejudicing or affecting its rights hereunder, from time to time to receive such further or other security for the Obligations or any part thereof as the Lender may consider advisable, to release, discharge, abandon or otherwise deal with or fail to deal with, the Borrower or other Persons or any such security or any part thereof or with any security or any part thereof now held or deal with and allow the Borrower or other Persons to deal with the goods or property covered thereby, all as the Lender may consider advisable. The Lender may, without exonerating the Guarantor, give up, modify or abstain from perfecting or taking advantage of any security, accept or make any compositions or arrangements, and realize any security when, and in such manner, and with or without notice, as the Lender may consider advisable. The Lender may from time to time grant to the Borrower or to any Persons liable to the Lender for the Obligations or any part thereof, or in respect of any bill of exchange, promissory note, guarantee, undertaking or any instrument, paper or document now or hereafter representing the Obligations or any part thereof, time for payment or any other indulgence and may compromise with all or any of such Persons as the Lender may consider advisable. Neither the Lender nor any of its directors, officers, employees or agents shall be responsible for any act taken or omitted to be taken by the Lender hereunder or in connection herewith. ARTICLE 8. GENERAL AGREEMENTS OF GUARANTOR 8.1. GENERAL AGREEMENTS The Guarantor agrees that: 8.1.1. she shall not provide any guarantees, make any loans or become contingently liable for the obligations of any other Person; 8.1.2. she shall not create, grant, assume or suffer to exist any Lien upon any of her properties or assets ranking or purporting to rank prior to or on a parity with the Security. ARTICLE 9. SECURITY 9.1. SECURITY As security for the due and punctual payment of all obligations of the Guarantor hereunder, the Guarantor shall execute and deliver to the Lender security documents in a form acceptable to the Lender with respect to the security interests described in Schedule A. 9.2. FURTHER ASSURANCES - SECURITY The Guarantor shall take such action and execute and deliver to the Lender such agreements, conveyances, deeds and other documents and instruments as the Lender shall request, and register, file or record the same (or a notice or financing statement in respect thereof) in all offices where such registration, filing or recording is, in the opinion of the Lender or Lender's counsel, necessary or advisable to constitute, perfect and maintain the Liens created by the security documents executed pursuant to section 9.1 in all jurisdictions reasonably required by the Lender, in each case within a reasonable time after the request therefor by the Lender, and in each case in form and substance satisfactory to the Lender and Lender's counsel. ARTICLE 10. GENERAL 10.1. NO WAIVER No delay on the part of the Lender in the exercise of any right, power or remedy hereunder or otherwise shall operate as a waiver thereof, and no single or partial exercise by the Lender of any right, power or remedy shall preclude other or further exercise thereof or the exercise of any other right, power or remedy. No action of the Lender permitted hereunder shall in any way impair or affect its rights, powers or remedies under this Agreement. 10.2. WAIVER AND ACKNOWLEDGEMENT BY GUARANTOR The Guarantor hereby expressly waives notice of the existence or creation of all or any of the Obligations and presentment, demand, notice of dishonour, protest and all other notices whatsoever in respect of the Obligations, The Guarantor hereby acknowledges communication to her of the terms of the Loan Agreement and all instruments referred to in the Loan Agreement and of all the provisions therein contained and consents to and approves the same. 10.3. ASSIGNMENT BY LENDER The Lender may sell, assign or transfer all or any of the Obligations to the extent provided in the Loan Agreement, and in such event each and every immediate and successive assignee, transferee or holder of all or any of the Obligations, shall have, in respect of the rights or obligations sold, assigned or transferred to it, the full benefit hereof to the same extent as if it were an original party to the Obligations or the part thereof so sold, assigned or transferred, without regard to any set-off, counter-claim or equities between the Borrower and the Lender or the Guarantor and the Lender. 10.4. COMMUNICATION Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by facsimile or other means of electronic communication or by hand-delivery as hereinafter provided. Any such notice or other communication, if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the Business Day following the sending, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. This section shall also govern notice of change of address. Notices and other communications shall be addressed as follows: (a) if to the Lender: Trilon Bancorp Inc. Suite 4420, BCE Place 181 Bay Street Toronto, Ontario M5J 2T3 Attention: Brian Kingston Telecopier number: (416) 365-9642 (b) if to the Guarantor: Big Fish Ltd. c/o Voyager Financial Services 129 Front Street, Penthouse Hamilton, Bermuda Attention; Paul Lemmon Facsimile No.: (441) 296-4548 with a copy to: Thomson Kernaghan & Co. Limited 120 Adelaide Street West, Suite 1600 Toronto, Ontario M5H 1T1 Canada Facsimile No.: (416) 860-6352 10.5. SUCCESSORS AND ASSIGNS This Agreement shall be binding upon the Guarantor and her heirs, executors, administrators and personal representatives and enure to the benefit of the Lender and its successors and assigns. 10.6. COPY RECEIVED The Guarantor hereby acknowledges receipt of a copy of this Agreement. IN WITNESS WHEREOF the Guarantor has executed this Agreement the date first above written. BIG FISH LTD. by: ---------------------------------- Name: Title: SCHEDULE A SECURITY INTERESTS TO BE GRANTED l. Perfected security interest in the 1,890,493 shares of Chell Group Corp. held in accounts 17U2105 and 320274F in the name of the Corporation established with Thomson Kernaghan & Co. Limited 2. Perfected security interest in all indebtedness and liability of BOTB to the Corporation pursuant to the secured, US$1,000,000 Promissory Note dated as of June l, 2002 issued by BOTB Corporation to the Corporation and all agreements, guarantees, securities, bills, notes, judgments, security agreements, chattel mortgages, mortgages, hypothecs, conditional sales contracts and other rights and benefits which are now or may hereafter be vested in the Corporation in respect of or as security for such indebtedness. EX-99.E 7 y64566dexv99we.txt GUARANTEE BETWEEN TRILON AND HAMMOCK GUARANTEE THIS AGREEMENT OF GUARANTEE is made as of the 1st day of June, 2002, BY: HAMMOCK GROUP LTD. (the "Guarantor") IN FAVOUR OF: TRILON BANCORP INC. ("the Lender")
RECITALS: A. The Lender and M.E.V. (the "Borrower") have entered into an agreement dated as of July 31, 2001 as amended by an amending agreement dated as of December 31, 2001, an amending agreement dated as of January 7, 2002, an amending agreement dated as of April 8, 2002 and an amending agreement dated as of June 1, 2002 (together the "Loan Agreement") pursuant to which the Lender has agreed to establish a credit facility for the Borrower; B. It is a condition of the Loan Agreement, that the Guarantor enters into this Agreement to guarantee the obligations of the Borrower under the Loan Documents (referred to herein as the "Obligations"), NOW THEREFORE in consideration of the sum of $1.00 and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Guarantor agrees with the Lender as follows: ARTICLE 1. INTERPRETATION 1.1. DEFINITIONS In this Agreement, terms that are defined in the Loan Agreement, unless otherwise defined herein, have the same meaning herein as are ascribed to such terms in the Loan Agreement. 1.2. INVALIDITY OF PROVISIONS Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of law that renders any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 1.3. ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, or any amendment or supplement thereto, by any party to this Agreement or its directors, officers, employees or agents, to any other party to this Agreement or its directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement, and none of the parties to this Agreement has been induced to enter into this Agreement or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact. Accordingly, there shall be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above. 1.4. WAIVER, AMENDMENT Except as expressly provided in this Agreement, no amendment or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 1.5. GOVERNING LAW, ATTORNMENT This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and the Guarantor hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of Ontario. 1.6. GENDER AND NUMBER Words importing the singular include the plural and vice versa and words importing gender include all genders. ARTICLE 2. GUARANTEE 2.1. GUARANTEE The Guarantor unconditionally guarantees the due payment and performance of all Obligations. 2.2. CONTINUING GUARANTEE The guarantee herein shall be a continuing guarantee of the payment and performance of all the Obligations and shall apply to and secure any ultimate balance thereof due or remaining unpaid to the Lender. The guarantee herein shall not be considered as wholly or partially satisfied by the intermediate payment or satisfaction at any time of all or any part of the Obligations. 2.3. LIMITATION AS TO RECOURSE The recourse of the Lender against the Guarantor in respect of the Obligations, shall be limited to realizing on security interests granted pursuant to Article 9 hereof. The Guarantor shall not be liable to the Lender for any deficiency resulting from any such realization or otherwise. In the event of any conflict or inconsistency between the provisions of such security and the provisions of this Guarantee, the provisions of this Guarantee shall govern, ARTICLE 3. ENFORCEMENT 3.1. DEMAND Upon default in the payment or performance of the Obligations or any part thereof, the Guarantor shall, on demand by the Lender, forthwith pay to the Lender, or perform or cause the performance of, all Obligations for which such demand was made, whether or not any demand for the payment or performance of such Obligations has been made upon the Borrower or any other Person or any other action has been taken to enforce the payment or performance of such Obligations. In the event that the Lender makes demand upon the Guarantor as provided in this section 3, 1, the Guarantor shall be liable to the Lender as principal debtor and not as surety only, and will not plead or assert to the contrary in any proceedings taken by the Lender in enforcing this Agreement. 3.2. REMEDIES UPON DEMAND If the Lender makes demand upon the Guarantor as provided herein, the Lender may: (i) realize upon all or part of the assets subject to the Security; and (ii) take such actions and commence such proceedings as may be permitted at law or in equity (whether or not provided for herein or in the Loan Documents) at such times and in such manner as the Lender in its sole discretion may consider expedient; all without, except as may be required by applicable law, any additional notice, presentment, demand, protest, notice of protest, dishonour or any other action. The rights and remedies of the Lender hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by applicable law or by any of the Loan Documents. 3.3. DISTRIBUTIONS All distributions under or in respect of any of the Security Documents shall be held by the Lender on account of the Obligations without prejudice to any claim by the Lender for any deficiency after such distributions are received by the Lender and the Guarantor shall remain liable for any such deficiency. All such distributions may be applied to such part of the Obligations as the Lender may see fit in its sole discretion, and the Lender may at any time change any appropriation of any such distributions or other moneys received by it and to reapply the same on any other part of the Obligations as the Lender may see fit, notwithstanding any previous application. 3.4. RENUNCIATION The Guarantor hereby renounces all benefits of discussion and division, and the Lender shall not be bound to take any recourse available to it against the Borrower or any other Person or any security the Lender may hold, nor to value any security before requiring or being entitled to payment from or performance by the Guarantor. 3.5. PROTECTION OF THE LENDER The Lender shall not be concerned to see or enquire into the powers of the Borrower or its directors, officers, employees or agents acting or purporting to act on its behalf. Monies, advances, renewals and credits in fact borrowed or obtained from, or obligations otherwise created in favour of, the Lender in the professed exercise of such powers shall be deemed to form part of the Obligations even though the borrowing or obtaining of such monies, advances, renewals or credits or the creation of such obligations was irregularly, fraudulently, defectively or informally effected or in excess of the powers of the Borrower or its directors, officers, employees or agents and notwithstanding that the Lender has specific notice of the powers of the Borrower or its directors, officers, employees or agents. 3.6. LENDER'S STATEMENT The statement in writing of the Lender as to the amount of the Obligations shall be binding upon the Guarantor and conclusive against the Guarantor, in the absence of bad faith or manifest error. ARTICLE 4. APPROPRIATION AND SET-OFF 4.1. APPROPRIATION The Lender shall be at liberty, without in any way prejudicing or affecting its rights hereunder, to appropriate any payment made to, or monies received by, the Lender to any portion of the Obligations whether then due or to become due, and from time to time to revoke or alter any such appropriation, all as the Lender may from. time to time in its sole discretion determine. 4.2. SET-OFF The Lender may, without demand or notice of any kind, set off, appropriate and apply any and all deposits, general or special, matured or unmatured, held by or for the benefit of the Guarantor with the Lender, any other indebtedness and liability of the Lender to the Guarantor, matured or unmatured, against and on account of the Guarantor's liability hereunder or the Obligations irrespective of whether or not the Lender has made any demand for payment hereunder, in such order of application as the Lender may from time to time elect. ARTICLE 5. POSTPONEMENT OF DEBTS 5.1. POSTPONEMENT OF DEBTS All debts and liabilities, present and future, of the Borrower to the Guarantor are hereby assigned to the Lender and postponed to the payment and performance in full of the Obligations, and all monies received by the Guarantor in respect thereof shall be received in trust for the Lender or, in the Province of Quebec, as agent for the Lender and forthwith upon receipt shall be paid over to the Lender, the whole without in any way lessening or limiting the liability of the Guarantor under this Agreement. This assignment and postponement is independent of the guarantee herein and shall remain in full force and effect until the Lender has received payment and performance in full of all Obligations, notwithstanding that the liability of the Guarantor under the guarantee herein may have been discharged or terminated. ARTICLE 6. REPRESENTATIONS AND WARRANTIES 6.1. REPRESENTATIONS FIND WARRANTIES The Guarantor represents and warrants to the Lender that the Guarantor is not involved in any investigation or litigation, regulatory, arbitration or other proceedings which, if adversely determined, could have a material adverse effect on the Guarantor's business, property, financial condition or prospects or the ability of the Guarantor to perform its obligations under this Guarantee; 6.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES The Guarantor covenants that the representations and warranties made in this Article 6 shall be true and correct on each day that this Guarantee remains in force and effect, with the same effect as if such representations and warranties had been made and given on and as of such day, notwithstanding any investigation made at any time by or on behalf of the Lender. ARTICLE 7. OBLIGATIONS OF GUARANTOR NOT RELEASED 7.1. NO RELEASE The obligation and liability of the Guarantor hereunder shall be absolute and unconditional and shall not be released, discharged or in any way affected by: 7.1.1. any release, renewal, extension, indulgence, discharge, loss or alteration in or dealing with any security whatsoever, whether granted under the Loan Agreement or otherwise, or anything done, suffered or permitted by the Lender in relation to such security or any other security which the Lender may now or hereafter hold in connection with the Obligations; 7.1.2. time being given to the Borrower or to any other Person by the Lender or by any increase, decrease or other alteration of the Obligations or any part thereof including, without limitation, any supplement or amendment of the Loan Agreement or other agreement; 7.1.3. the merging of the Loan Agreement or any of the Obligations in, or any alteration thereof by virtue of, any supplement or amendment to the Loan Agreement or other agreement; 7.1.4. any compromise, arrangement or plan of reorganization affecting the Borrower or any other Person; 7.1.5. any change in the Borrower's business or any part thereof or in the capital structure or constating documents of the Borrower; 7.1.6. the Borrower being amalgamated with any other corporation or being wound up or dissolved; 7.1.7. the release of any other guarantor or of any Person liable directly or as surety or otherwise; 7.1.8. any omission or refraining from proving the claim or any part of the claim of the Lender in any bankruptcy, winding up, compromise or other proceedings relating to the Borrower; 7.1.9. any other act or proceeding relating to the Obligations, the Loan Agreement, or any other agreement relating thereto, this Agreement or any other guarantee or security collateral to any thereof or hereof or the security created by any thereof, whereby the Guarantor might otherwise be released or exonerated; 7.1.10. any lack of validity or enforceability for any reason of, or any defect in or omission from, the Loan Agreement or any other agreement relating thereto or any other guarantee or security collateral to any thereof or the security created by any thereof; 7.1.11. any amendment in the manner, time or place of payment or calculation of any of the Obligations, or any other amendment or waiver of or consent to departure from the terms of any of the Obligations, the Loan Agreement or any other agreement relating thereto; 7.1.12. any right or power of the Borrower or any other Person to assert any claim or defence as to the invalidity or unenforceability of the Obligations or any part thereof; 7.1.13. the fact that the Borrower ceases for any reason whatsoever, as a matter of law, to be liable to the Lender in respect of the Obligations (otherwise than by reason of the payment in full of all the Obligations to the Lender) or the fact that a court determines that the liability of the Borrower to the Lender in respect of the Obligations has been satisfied or is deemed to have been satisfied (except in circumstances where payment in full of all the Obligations has been received by the Lender); or 7.1.14. any other circumstance which might otherwise constitute a defence available to, or discharge of, the Guarantor under this Agreement or to or of the Borrower in respect of the Obligations or the Loan Agreement or any other agreement relating thereto or any security therefor. 7.2. NO SATISFACTION OR REDUCTION OF LIABILITY OF GUARANTOR The guarantee herein shall not be considered as wholly or partially satisfied by the payment at any time of any sum of money for the time being due or remaining unpaid to the Lender, and the Guarantor shall have no right to claim, in reduction of the liability of the Guarantor hereunder, the benefits of any dividends, compositions, proceeds of security or payments received by the Lender from the Borrower or from other Persons. 7.3. NO SUBROGATION The Guarantor shall have no right to be subrogated to any rights of the Lender or claim or prove in any bankruptcy or insolvency of the Borrower in competition with the Lender, until the Lender shall have received payment and performance in full of the Obligations. 7.4. RIGHTS OF LENDER Without limiting the generality of section 7.1, the Lender shall be at liberty, without in any way prejudicing or affecting its rights hereunder, from time to time to receive such further or other security for the Obligations or any part thereof as the Lender may consider advisable, to release, discharge, abandon or otherwise deal with or fail to deal with, the Borrower or other Persons or any such security or any part thereof or with any security or any part thereof now held or deal with and allow the Borrower or other Persons to deal with the goods or property covered thereby, all as the Lender may consider advisable. The Lender may, without exonerating the Guarantor, give up, modify or abstain from perfecting or taking advantage of any security, accept or make any compositions or arrangements, and realize any security when, and in such manner, and with or without notice, as the Lender may consider advisable. The Lender may from time to time grant to the Borrower or to any Persons liable to the Lender for the Obligations or any part thereof, or in respect of any bill of exchange, promissory note, guarantee, undertaking or any instrument, paper or document now or hereafter representing the Obligations or any part thereof, time for payment or any other indulgence and may compromise with all or any of such Persons as the Lender may consider advisable. Neither the Lender nor any of its directors, officers, employees or agents shall be responsible for any act taken or omitted to be taken by the Lender hereunder or in connection herewith. ARTICLE 8. GENERAL AGREEMENTS OF GUARANTOR 8.1. GENERAL AGREEMENTS The Guarantor agrees that: 8.1.1. she shall not provide any guarantees, make any loans or become contingently liable for the obligations of any other Person; 8.1.2. she shall not create, grant, assume or suffer to exist any Lien upon any of her properties or assets ranking or purporting to rank prior to or on a parity with the Security. ARTICLE 9. SECURITY 9.1. SECURITY As security for the due and punctual payment of all obligations of the Guarantor hereunder, the Guarantor shall execute and deliver to the Lender security documents in a form acceptable to the Lender with respect to the security interests described in Schedule A. 9.2. FURTHER ASSURANCES - SECURITY The Guarantor shall take such action and execute and deliver to the Lender such agreements, conveyances, deeds and other documents and instruments as the Lender shall request, and register, file or record the same (or a notice or financing statement in respect thereof) in all offices where such registration, filing or recording is, in the opinion of the Lender or Lender's counsel, necessary or advisable to constitute, perfect and maintain the Liens created by the security documents executed pursuant to section 9.1 in all jurisdictions reasonably required by the Lender, in each case within a reasonable time after the request therefor by the Lender, and in each case in form and substance satisfactory to the Lender and Lender's counsel. ARTICLE 10. GENERAL 10.1. NO WAIVER No delay on the part of the Lender in the exercise of any right, power or remedy hereunder or otherwise shall operate as a waiver thereof, and no single or partial exercise by the Lender of any right, power or remedy shall preclude other or further exercise thereof or the exercise of any other right, power or remedy. No action of the Lender permitted hereunder shall in any way impair or affect its rights, powers or remedies under this Agreement. 10.2. WAIVER AND ACKNOWLEDGEMENT BY GUARANTOR The Guarantor hereby expressly waives notice of the existence or creation of all or any of the Obligations and presentment, demand, notice of dishonour, protest and all other notices whatsoever in respect of the Obligations, The Guarantor hereby acknowledges communication to her of the terms of the Loan Agreement and all instruments referred to in the Loan Agreement and of all the provisions therein contained and consents to and approves the same. 10.3. ASSIGNMENT BY LENDER The Lender may sell, assign or transfer all or any of the Obligations to the extent provided in the Loan Agreement, and in such event each and every immediate and successive assignee, transferee or holder of all or any of the Obligations, shall have, in respect of the rights or obligations sold, assigned or transferred to it, the full benefit hereof to the same extent as if it were an original party to the Obligations or the part thereof so sold, assigned or transferred, without regard to any set-off, counter-claim or equities between the Borrower and the Lender or the Guarantor and the Lender. 10.4. COMMUNICATION Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by facsimile or other means of electronic communication or by hand-delivery as hereinafter provided. Any such notice or other communication, if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the Business Day following the sending, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. This section shall also govern notice of change of address. Notices and other communications shall be addressed as follows: (a) if to the Lender: Trilon Bancorp Inc. Suite 4420, BCE Place 181 Bay Street Toronto, Ontario M5J 2T3 Attention: Brian Kingston Telecopier number: (416) 365-9642 (b) if to the Guarantor: Hammock Group Ltd. c/o Voyager Financial Services 129 Front Street, Penthouse Hamilton, Bermuda Attention; Paul Lemmon Facsimile No.: (441) 296-4548 with a copy to: Thomson Kernaghan & Co. Limited 120 Adelaide Street West, Suite 1600 Toronto, Ontario M5H 1T1 Canada Facsimile No.: (416) 860-6352 10.5. SUCCESSORS AND ASSIGNS This Agreement shall be binding upon the Guarantor and her heirs, executors, administrators and personal representatives and enure to the benefit of the Lender and its successors and assigns. 10.6. COPY RECEIVED The Guarantor hereby acknowledges receipt of a copy of this Agreement. IN WITNESS WHEREOF the Guarantor has executed this Agreement the date first above written. HAMMOCK GROUP LTD. by: --------------------------------- Name: Title: SCHEDULE A SECURITY INTERESTS TO BE GRANTED l. Perfected security interest in the 2,310,994 shares of Chell Group Corp. held in accounts 17U2105 and 320274F in the name of the Corporation established with Thomson Kernaghan & Co. Limited -----END PRIVACY-ENHANCED MESSAGE-----