Contract
EXHIBIT
10.18
THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ASTRIS ENERGI INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
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Principal
Amount: <Amount>
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Maturity
Date: December
10, 2005
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1. Promise
to Pay.
FOR
VALUE RECEIVED,
the
undersigned, ASTRIS
ENERGI INC. (the
“Company”)
promises to pay to or to the order of NBCN
Clearing Inc. ITF 3C-S841-A, <Name>, <Address>(the
“Holder”),
or
such other place and/or person as the Holder may by notice in writing to the
Company direct, the principal amount of<Amount>
THOUSAND
DOLLARS in
lawful
money of Canada ($__0,000) (the “Principal
Amount”),
together with all other moneys which may from time to time be owing hereunder
or
pursuant hereto, as hereinafter provided on and subject to the following terms
and conditions:
2. Definitions.
As
used
herein, the following terms shall have the following respective meanings, unless
the context otherwise requires:
“Business
Day” means
any
day except Saturday, Sunday or any other day on which chartered banks in the
City of Toronto are generally not open for business.
“Capital
Reorganization”
has the
meaning ascribed thereto in Section 9 hereof.
“Charged
Assets”
has the
meaning attributed thereto in Section 14.1(f);
“Common
Shares” means
the
common shares in the capital of the Company as such shares exist at the close
of
business on the date of execution and delivery of this Debenture; provided
that
in the event of a change, subdivision, reclassification or consolidation thereof
or successive changes, subdivisions, reclassifications or consolidations, then,
subject to adjustments, if any, having been made in accordance with Section
6,
“Common Shares” shall thereafter mean the shares resulting from such change,
subdivision, reclassification or consolidation.
“Common
Share Reorganization”
has the
meaning ascribed thereto in Section 9 hereof.
“Company”
means
Astris Energi Inc., a corporation continued under the laws of
Ontario.
“Conversion
Date” means
the
date on which this Debenture is surrendered for conversion.
“Conversion
Price” means,
unless and until adjusted in accordance with Section 9 hereof, the following
prices at which the outstanding Principal Amount shall be convertible into
Common Shares
subject
to a minimum share price of USD $0.20 and a maximum share price of USD
$0.70:
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(a)
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in
connection with a forced conversion by the Company under Section
5 hereof:
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| (i) |
upon
completion of a financing (the "Equity Financing") and the receipt
by the
Company of conditional approval of the TSXV for the listing of the
Company’s Common Shares thereon, at a conversion price equal to the lesser
of:
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| (a) |
the
conversion price described below in (b);
and
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(b)
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the
price at which the Company’s Common Shares are offered in the Equity
Financing;
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(ii)
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in
the event that the Equity Financing includes the issuance of warrants,
the
Company undertakes to issue warrants (the "Warrants") to each Subscriber
for Debentures on the same terms and conditions to those issued pursuant
to the Equity Financing; and
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(b)
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in
connection with a conversion at the option of the Holder under section
6
hereof:
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(i)
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at
the holder’s
option at a 20% discount to the average closing price in the 5 preceding
trading days of the Company’s shares listed on the Nasdaq OTC BB (the
"Exchange") prior to conversion or a 20% discount to the average
closing
price in the 5 preceding trading days of the Company’s shares listed on
the Exchange at the date that this agreement is signed, whichever
is the
lesser.
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“Converted
Shares” has
the
meaning ascribed thereto in Section 8 hereof.
“Debenture”
means
this convertible debenture as it may be amended or supplemented from time to
time.
“Encumbrance”
means
any mortgage, charge, hypothec, pledge, security interest, encumbrance, lien
or
deposit arrangement or any other arrangement or condition that in substance
secures the payment of any indebtedness or liability or the observance or
performance of any obligation, regardless of form and whether consensual or
arising from law, statutory or otherwise;
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“Equity
Financing” means
the
proposed sale by the Company from treasury of securities on a private placement
basis with a view to raising proceeds of a minimum of $2,500,000 and a maximum
of $3,500,000.
“Exchange
Rate”
means
the rate reported by the Bank of Canada as its daily official noon (Toronto
time) rate of exchange for converting U.S. Dollars into Canadian Dollars on
the
day in question.
“Event
of Default” means
any
one or more of the events described in Section 16 hereof.
“Holder”
means
<Name>.
“Intellectual
Property Rights”
means
the intellectual property set out in Schedule C.
“Maturity
Date” means
December 10, 2005.
“NASDAQ
BB”
means
the National Association of Securities Dealers’ over-the-counter bulletin board
quotation system.
“Official
Body”
means
any government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, whether foreign or domestic;
“Person”
includes
an individual, a trust, a partnership, a body corporate or politic, a syndicate,
a joint venture, a company, an association and any other form of incorporated
or
unincorporated organization or entity.
“Permitted
Encumbrances”
means
collectively:
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(a)
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liens
for taxes, assessments and governmental charges not yet due or, if
due,
the validity of which is being diligently contested in good faith
and by
appropriate proceedings and in respect of which adequate provision
has
been made on the books of the
Company;
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(b)
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mechanics',
workers', repairers' or other like possessory liens in respect of
any
personal property, arising in the ordinary course of business for
amounts
the payment of which is either not yet due or, if due, representing,
in
the aggregate, less than Ten Thousand Dollars ($10,000) or, if greater
than such amount, the validity of which is being contested in good
faith
and by appropriate proceedings and in respect of which adequate provision
has been made on the books of the
Company;
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(c)
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liens
arising out of judgments or awards representing, in the aggregate,
less
than Ten Thousand Dollars ($10,000) or, if greater than such amount,
with
respect to which at any time an appeal or proceeding for review is
being
prosecuted in good faith and by appropriate proceedings and in respect
of
which adequate provision has been made on the books of the Company,
and
with respect to which there shall have been secured a stay of execution
pending such appeal or proceeding for
review;
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(d)
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servitudes,
easements, restrictions, rights-of-way and other similar rights in
real or
immovable property or any interest therein which will not in the
aggregate
materially impair any Encumbrance on such property in favour of the
Holder
or the value or use of such
property;
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(e)
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the
liens resulting from the deposits of cash or securities in connection
with
contracts, tenders or compensation, surety or appeal bonds or costs
of
litigation when required by law;
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(f)
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liens
given to a public utility or any municipality or governmental or
other
public authority when required to obtain the services of such utility
or
other authority in connection with the operations of the Company
in the
ordinary course of its business;
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(g)
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purchase
money security interests and capital leases entered into by the Company
in
the ordinary course of business;
and
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(h)
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the
Encumbrances set out on Schedule B or
the continued existence of which have been consented to by the Holder,
including the renewal, extension or refinancing of any such Encumbrance
and of the Debt secured thereby upon the same property provided that
such
Debt and the security therefor are not increased thereby. [NOTE:
Include existing PPSA registration in favour of Energy
Ventures.]
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“Principal
Amount” has
the
meaning ascribed thereto in Section 1 hereof.
“Rights
Offering” has
the
meaning ascribed thereto in Section 9 hereof.
“Special
Distribution” has
the
meaning ascribed thereto in Section 9 hereof.
“TSXV”
means
the TSX Venture Exchange.
3. Interest.
Interest
shall accrue on any Principal Amount outstanding hereunder at 6% per annum:
| (a) |
from
the date hereof until the date which is 270 days after the date hereof
or
the Conversion Date, whichever is earlier, interest shall accrue
at an
annual rate of 6% calculated monthly, not in
advance.
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Interest
shall be paid upon conversion on the Conversion Date in common shares of the
Company at the Conversion Price or Forced Conversion Price or, if applicable,
upon maturity on the Maturity Date in cash.
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4. Payment.
Except
for any Principal Amount converted into Common Shares in accordance with Section
5 or Section 6 hereof:
| (b) |
The
Company shall pay in full the Principal Amount outstanding as of
the
Maturity Date, on the Maturity
Date.
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5. Forced
Conversion.
2. The
Common Shares are currently quoted on the NASDAQ BB. In connection with the
Equity Financing, the Company is proposing to apply to list the Common Shares
on
the TSXV. In the event that the TSXV approves the listing of the Common Shares,
the Company shall have the right, at any time after receipt of such approval
from the TSXV, to require the conversion of this Debenture, in whole, including
any accrued interest, into fully paid and non-assessable Common Shares of the
Company at the Conversion Price.
3. To
exercise its right to require the conversion of this Debenture pursuant to
section 5 hereof, the Company shall provide the Holder with written notice
specifying the effective date of the conversion, the applicable Conversion
Price
and the
number of Common Shares issuable on the conversion. Within 2 Business Days
after
receipt of such notice, the Holder shall surrender this Debenture to the Company
for conversion. As soon as practicable after the receipt of this Debenture,
the
Company shall issue Common Shares to the Holder in accordance with section
8
hereof.
6. Conversion
at Option of Holder.
| (a) |
This
Debenture is convertible, in whole, at the option of the Holder,
including
any accrued interest, at any time prior to the close of business
on the
Business Day immediately preceding the Maturity Date into fully
paid and
non-assessable Common Shares of the Company at the
Conversion Price.
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| (b) |
To
exercise its right to require the conversion of this Debenture
pursuant to
section 6 hereof, the Holder shall provide the Company with written
notice
specifying the effective date of the conversion, the applicable
Conversion
Price
and the number of Common Shares issuable on the conversion, together
with
this Debenture. As soon as practicable after receipt of such notice
and
this Debenture, the Company shall issue Common Shares to the Holder
in
accordance with section 8 hereof.
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7. Regulatory
Approval. The
conversion of any Principal Amount or accrued interest owing under this
Debenture shall be conditional upon the Company obtaining all necessary
regulatory approvals required in connection therewith.
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8. Issue
of Shares Upon Conversion.
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(a)
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Issue
of Shares.
Upon conversion of this Debenture in accordance with the terms hereof,
the
Company shall issue to the Holder, or to its written order, certificates
representing such number of Common Shares (the “Converted
Shares”)
as are issuable in accordance with the provisions hereof. The Principal
Amount of this Debenture shall be deemed to be repaid in full by
the
issuance of the Converted Shares.
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(b)
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Reservation
of Shares.
The Company shall at all times so long as any portion of this Debenture
remains outstanding ensure that there remains available out of its
authorized but unissued Common Shares, for the purpose of effecting
the
conversion of this Debenture, such number of Common Shares as shall
from
time to time be sufficient to effect the conversion of this Debenture.
The
Company covenants that all Common Shares which shall be issued on
conversion of this Debenture shall be duly and validly issued as
fully
paid and non-assessable shares. As a condition precedent to the taking
of
any action which would result in an adjustment to the Conversion
Price,
the Company shall take any corporate action which may be necessary
in
order that the securities to which the Holder is entitled on the
full
exercise of its conversion rights in accordance with the provisions
hereof
shall be available for such purpose and that such shares may be validly
and legally issued as fully paid and non-assessable
shares.
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| (a) |
No
Requirement to Issue Fractional Shares.
No fractional Common Share or scrip representing fractional shares
shall
be issued upon the conversion of this Debenture. If any fractional
interest in a Common Share would, except for the provisions of
this
Section, be deliverable upon conversion, the Company shall pay
to
the
Holder an
amount in cash equal (to the nearest cent) to the appropriate fraction
of
the Conversion Price.
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| (b) |
Fully
Paid Shares.
The Company covenants that all Common Shares which shall be issued
in
accordance with the terms of this Debenture shall be duly and validly
issued as fully paid and non-assessable shares.
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9. Anti-Dilution
Provisions
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(a)
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Adjustment
to Conversion Price.
The Conversion Price in effect at any date shall be subject to adjustment
from time to time as follows:
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| (i) |
If
and whenever at any time while any portion of this Debenture remains
outstanding the Company shall (i) subdivide its then outstanding
Common
Shares into a greater number of Common Shares, (ii) consolidate
its then
outstanding Common Shares into a lesser number of Common Shares,
or (iii)
issue Common Shares (or securities exchangeable for or convertible
into
Common Shares) to the holders of all or substantially all of the
outstanding Common Shares by way of stock dividend (any of such
events in
these clauses (i), (ii) and (iii) being called a “Common
Share Reorganization”),
then the Conversion Price shall be adjusted effective immediately
on the
effective date of the event in (i) or (ii) above or the record
date at
which the holders of Common Shares are determined for the purposes
of any
such dividend or distribution in (iii) above, as the case may be,
by
multiplying the Conversion Price in effect immediately prior to
such
effective date or record date, as the case may be, by a fraction,
the
numerator of which shall be the number of outstanding Common Shares
on
such effective date or record date, as the case may be, before
giving
effect to such Common Share Reorganization and the denominator
of which
shall be the number of outstanding Common Shares after giving effect
to
such Common Share Reorganization including, in the case where securities
exchangeable for or convertible into Common Shares are distributed,
the
number of Common Shares that would have been outstanding had such
securities been exchanged for or converted into Common Shares.
Such
adjustment shall be made successively whenever any such effective
date or
record date shall occur; and any such issue of Common Shares by
way of
stock dividend or other distribution shall be deemed to have been
made on
the record date for the stock dividend or other distribution for
the
purpose of calculating the number of outstanding Common Shares
under this
Section 9.
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| (ii) |
If
and whenever at any time while any portion of this Debenture remains
outstanding the Company shall fix a record date for the issuance
of rights
or warrants to its shareholders entitling the holders thereof to
subscribe
for or purchase Common Shares (or securities convertible into Common
Shares) at a price per share (or having a conversion price per
share) less
than the Conversion Price in effect on such record date (any such
of these
events being called a “Rights
Offering”),
the Conversion Price shall be adjusted immediately thereafter so
that it
shall equal the price per share at which the Common Shares are
issued
under the Rights Offering.
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| (iii) |
If
and whenever at any time while any portion of this Debenture is
outstanding the Company distributes to all or substantially all
the
holders of its outstanding Common Shares of (i) shares of any class
other
than Common Shares, (ii) rights, options or warrants to acquire
Common
Shares or securities exchangeable for or convertible into Common
Shares or
property or other assets of the Company, (iii) evidence of indebtedness,
or (iv) any property or other assets, if such distribution does
not
constitute (a) a dividend paid in the ordinary course, (b) a Common
Share
Reorganization, or (c) a Rights Offering (any of such non-excluded
events
herein called a “Special
Distribution”),
the Conversion Price shall be adjusted effective immediately after
the
record date at which holders of Common Shares are determined for
purposes
of the Special Distribution to be a price determined by multiplying
the
Conversion Price in effect on such record date by a fraction, of
which the
numerator shall be the number of Common Shares outstanding on such
record
date multiplied by the Conversion Price on such record date, less
the fair
market value of such shares, rights, options, warrants, evidences
of
indebtedness or property or other assets issued or distributed
(as
determined conclusively by the auditors of the Company), and of
which the
denominator shall be the number of Common Shares outstanding on
such
record date multiplied by such Conversion Price; any Common Shares
owned
by or held for the account of the Company or any subsidiary thereof
shall
be deemed not to be outstanding for the purpose of any such
computation.
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| (iv) |
If
and whenever at any time while any portion of this Debenture is
outstanding there is a capital reorganization of the Company or
a
reclassification of the Common Shares or other change of the Common
Shares
(other than a Common Share Reorganization) or a consolidation or
an
amalgamation or merger of the Company with or into any other corporation
(other than a consolidation, amalgamation or merger which does
not result
in a reclassification of the outstanding Common Shares or a change
of the
Common Shares into other securities), or a transfer of all or
substantially all of the undertaking or assets of the Company to
another
corporation or other entity in which the holders of Common Shares
are
entitled to receive shares or other securities or property (any
of such
events being a “Capital
Reorganization”),
the Holder thereafter shall, upon converting this Debenture, be
entitled
to receive, and shall accept, in lieu of the number of Common Shares
to
which it was theretofore entitled upon such conversion, the kind
and
amount of shares and other securities or property which the Holder
would
have been entitled to receive as a result of such Capital Reorganization,
on the effective date thereof, the Holder had been the registered
holder
of the number of Common Shares to which it was theretofore entitled
upon
conversion.
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| (v) |
There
will be no adjustment of the Conversion Price in respect of any
event
described in clause (i) (ii) or (iii) of this subsection 9(a) if
the
Holder is entitled to participate in such event on the same terms
mutatis
mutandis
as
if it had converted its Debenture prior to or on the applicable
record
date.
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| (vi) |
In
any case in which this subsection 9(a) shall require that an adjustment
shall become effective immediately after a record date for an event
referred to herein, the Company may defer, until the occurrence
of such
event, issuing to the Holder in the event this Debenture is converted
after such record date and before the occurrence of such event
the
additional Common Shares issuable upon such conversion by reason
of the
adjustment required by such event before giving effect to such
adjustment;
provided, however, that the Company shall deliver to the Holder
an
appropriate instrument evidencing the Holder’ right to receive such
additional Common Shares upon the occurrence of the event requiring
such
adjustment and the right to receive any distributions made on such
additional Common Shares declared in favour of holders of record
of Common
Shares on and after the Conversion Date or such later date as the
Holder
would, but for the provisions of this clause (vi), have become
the Holder
of record of such additional Common
Shares.
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| (vii) |
The
adjustments provided for in this subsection 9(a) are cumulative,
shall be
computed to the nearest one tenth of one cent and shall be made
successively whenever an event referred to therein shall occur,
provided,
that, notwithstanding any other provision of this subsection 9(a),
no
adjustment of the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1%
in the
Conversion Price then in effect; provided however, that any adjustments
which by reason of this clause (vii) are not required to be made
shall be
carried forward and taken into account in any subsequent
adjustment.
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| (viii) |
No
adjustment of the Conversion Price shall be made pursuant to this
subsection 9(a) in respect of the issue from time to time of Common
Shares
pursuant to this Debenture or pursuant to any stock option or stock
purchase plan(s) in force from time to time for officers, employees
or
consultants of the Company or shareholders of the Company who exercise
an
option to receive substantially equivalent dividends in Common
Shares in
lieu of receiving a cash dividend paid in the ordinary course,
and any
such issue shall be deemed not to be a Common Share
Reorganization.
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| (ix) |
In
the event of any question arising with respect to the adjustments
provided
in this subsection 9(a), such question shall be conclusively determined
by
a firm of chartered accountants acceptable to the Company and the
Holder.
Such accountants shall have access to all necessary records of
the Company
and such determination shall be binding upon the Company and the
Holder.
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(b)
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Notice
of Adjustment of Conversion Price, etc..
If there shall be any adjustment as provided in subsection 9(a) above,
the
Company shall forthwith cause written notice thereof to be sent
to
the Holder,
which notice shall be accompanied by a certificate of the President
of the
Company setting forth in reasonable detail the basis of such
adjustment.
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| (c) |
Notice
of Certain Events.
In the event that:
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| (x) |
the
Company shall declare on its Common Shares any dividend or make
any other
distribution on its Common
Shares;
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| (xi) |
there
shall be an amalgamation or merger of the Company with or into
any other
corporation or a sale, transfer or other disposition of all or
substantially all of the assets of the Company;
or
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| (xii) |
there
shall be a voluntary or involuntary dissolution, liquidation or
winding up
of the Company;
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then,
and
in each of such cases, the Company shall cause notice thereof to be given to
the
Holder at least 10 Business Days prior to the date on which the books of the
Company shall close or a record date shall be taken for such dividend,
distribution, stock split or combination or issue of rights or to vote upon
such
capital reorganization, reclassification, change, consolidation, merger or
sale
of properties and assets, as the case may be, and shall specify such record
date
or dates for the closing of the transfer books.
10. Representations
and Warranties.
The
Company represents and warrants to the Holder as follows:
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(a)
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it
has been continued and is validly subsisting as a corporation under
the
laws of Ontario, and has the power and authority to enter into and
perform
its obligations under this Debenture and to own its property and
carry on
its business as currently
conducted;
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(b)
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the
execution, delivery and performance of this Debenture has been duly
authorized by all requisite corporate action; this Debenture and
all
instruments and agreements delivered pursuant hereto have been duly
executed and delivered by the Company and constitute valid and binding
obligations of the Company enforceable against the Company in accordance
with their terms;
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(c)
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neither
the execution nor delivery of this Debenture or any agreements or
instruments delivered pursuant hereto, the consummation of the
transactions herein and therein contemplated, nor compliance with
the
terms, conditions and provisions hereof or thereof conflicts with
or will
conflict with, or results or will result in any material breach of,
or
constitutes a default under any of the provisions of the constating
documents or by-laws of the Company any law, rule or regulation having
the
force of law applicable to the Company, including applicable securities
laws, rules, policies and regulations or any contract or agreement
binding
upon or to which the Company is a
party;
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(d)
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no
event has occurred which constitutes, or with notice or lapse of
time or
both, would constitute an Event of
Default;
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(e)
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the
execution and delivery of this Debenture by the Company and the
performance by the Company of its obligations hereunder have been
duly
authorized by all necessary corporate action; no consent, approval,
order,
authorization, licence, exemption or designation of or by any Official
Body is required in connection with the execution, delivery and
performance by the Company of its obligations under this Debenture
and no
registration, qualification, designation, declaration of filing with
any
Official Body is or was necessary to enable or empower the Company
to
enter into and to perform its obligations under this Debenture except
such
as have been made or obtained and are in full force and effect, unamended,
on the Closing Date;
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(f)
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the
Company is the sole and beneficial owner of all of the Charged Assets
(except any leased assets) and, where applicable, are duly registered
as
the owner thereof, with a good and marketable title thereto, free
and
clear of all Encumbrances except for Permitted
Encumbrances;
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(g)
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there
are no actions, suits, grievances or proceedings threatened or taken
before or by any Official Body or by any elected or appointed public
official or private person, which challenges the validity or propriety
of
the transactions contemplated under this Debenture or any of the
documents, instruments and agreements executed or delivered in connection
therewith or related thereto which could be reasonably anticipated
to have
a material adverse effect on the business, operations, properties,
assets,
capitalization, financial condition or prospects of the
Company;
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(h)
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the
Company is not in default under any material applicable statute,
rule,
order, decree or regulation of any Official Body having jurisdiction
over
it or any of the Charged Assets;
and
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(i)
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to
the best of the knowledge of the Company, the Company has complied
and is
complying in all material respects with all federal, provincial and
local
laws, rules, regulations, notices, approvals, ordinances and orders
applicable to its business, property, assets and
operations.
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11. Survival
of Representations and Warranties.
The
representations and warranties herein set forth or contained in any certificates
or documents delivered to the Holder shall survive the execution and delivery
of
this Debenture until all obligations of the Company to the Holder Party herein
have been fully satisfied, which, for greater certainty, shall include, without
limitation, the conversion of this Debenture pursuant to the terms
hereof.
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12. Affirmative
Covenants.
The
Company covenants and agrees with the Holder that, so long as this Debenture
is
outstanding and in force and except as otherwise permitted by the prior written
consent of the Holder, it will:
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(a)
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do
or cause to be done all things necessary to keep in full force and
effect
its corporate existence and all qualifications to carry on its business
in
each jurisdiction in which it owns property or carries on business
from
time to time;
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(b)
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comply
with all applicable governmental laws, restrictions and regulations
and
orders;
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(c)
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pay
or cause to be paid all taxes, government fees and dues levied, assessed
or imposed upon it and its property or any part thereof, as and when
the
same become due and payable, unless any such taxes, fees, dues, levies,
assessments or imposts are in good faith contested by it;
|
|
(d)
|
forthwith
notify the Holder of the occurrence of any Event of Default or any
event
of which it is aware which with notice or lapse of time or both would
constitute an Event of Default;
|
| (c) |
it
shall continue to make all required filings under the Securities
Act
(Alberta) to maintain its reporting issuer status in Alberta;
and
|
| (d) |
it
shall duly and pay or cause to be paid to the Holder the Principal
Amount
and all other moneys payable on or pursuant to this Debenture on
the
dates, at the places and in the manner set forth herein.
|
13. Negative
Covenants.
The
Company covenants and agrees with the Holder that, so long as this Debenture
is
outstanding and in force and except as otherwise permitted by the prior written
consent of the Holder, it will not:
|
(a)
|
Encumbrances,
etc.
-
Create or suffer to exist any Encumbrance to secure or provide for
the
payment of any Debt or any other obligation other than Permitted
Encumbrances;
|
|
(b)
|
Mergers,
etc.
-
Enter into any transaction (whether by way of reconstruction,
reorganization, arrangement, consolidation, amalgamation, merger,
joint
venture, transfer, sale, lease or otherwise) whereby any material
part of
the Charged Assets would become the property of any Person other
than the
Company or whereby all or any material part of the undertaking, property
and assets would become the property of any Person other than the
Company
or in the case of any amalgamation involving the Company would become
the
property of any other person other than the Company by virtue of
such
Person's direct or indirect ownership interest in the continuing
Debtor
resulting therefrom; and
|
| (c) |
Sale
of the Company
-
Enter into any transaction for the Sale of the
Company.
|
-11-
14. Grant
of Mortgages, Charges and Security Interests
14.1 Security
As
security for the due payment of the Principal Xxxxxx, interest thereon and
all
other indebtedness and liability from time to time payable hereunder and for
the
fulfillment of its obligations of the Company hereunder, the Company
hereby:
|
(a)
|
mortgages
and charges (subject to the exceptions as to leaseholds hereinafter
contained) as and by way of a fixed and specific mortgage and charge
to
and in favour of the Holder, and grants to the Holder a security
interest
in, all real and immoveable property (including, by way of sub-lease)
any
leased premises now or hereafter owned or acquired by the Company
and all
buildings erections, improvements, fixtures and plants now or hereafter
owned or acquired by the Holder (whether the same form part of the
realty
or not) and all appurtenances to any of the foregoing; for the purposes
of
this subsection 14.1(a), all references to "real and immoveable property"
shall be read to include any estate or interest in or right with
respect
to real and immoveable property;
|
|
(b)
|
mortgages
and charges to the Holder and grants to the Holder a security interest
in,
all its present and future equipment, and all fixtures, plant, machinery,
tools and furniture now or hereafter owned or acquired by
them;
|
|
(c)
|
mortgages
and charges to and in favour of the Holder, and grants to the Holder
a
security interest in, all its present and future inventory, including,
without limiting the generality of the foregoing, all raw materials,
goods
in process, finished goods and packaging material and goods acquired
or
held for sale or furnished or to be furnished under contracts of
rental or
service;
|
|
(d)
|
grants
to the Holder a security interest in, all its present and future
intangibles, including, without limiting the generality of the foregoing,
all its present and future book debts, accounts and other amounts
receivable, contract rights and choses in action of every kind or
nature
including insurance rights arising from or out of any insurance now
or
hereafter placed on or in respect of the assets referred to in subsections
14.1(a), (b) or (c), goodwill, chattel paper, instruments of title,
investments, money, securities and all Intellectual Property
Rights;
|
|
(e)
|
charges
in favour of the Holder as and by way of a floating charge, and grants
to
the Holder a security interest in, its business and undertaking and
all of
its property and assets, real and personal, moveable or immoveable,
of
whatsoever nature and kind, both present and future (other than property
and assets hereby validly assigned or subjected to a specific mortgage,
charge or security interest by this subsections 14.1(a), (b), (c)
or (d)
and subject to the exceptions hereinafter contained); and
|
-12-
|
(f)
|
assigns,
mortgages and charges to and in favour of the Holder, and grants
to the
Holder a security interest in, the proceeds arising from any of the
assets
referred to in this Section 14.1;
|
|
(g)
|
grants
to the Holder a security interest in the right, title and interest
the
Company has to the Intellectual Property
Rights;
|
all
of
which present and future property and assets of the Company referred to in
the
foregoing subparagraphs of this Section 14.1 are hereinafter collectively called
the "Charged Assets".
14.2 Notwithstanding
the security interests granted pursuant to subsections 14.1(b) and 14.1(c),
the
Company shall have the right to sell any of the Charged Assets referred to
therein in the ordinary course of business.
For
avoidance of doubt, notwithstanding the security interests granted pursuant
to
subsections 14.1, the Company shall have the right to grant licences of its
Intellectual Property Rights from time to time in the ordinary course of
business.
14.3 Location
of the Charged Assets
The
Company hereby represents and warrants to the Holder that the Charged Assets
are
on the date hereof primarily situate or located at the locations set out in
Schedule A. The Company shall notify the Holder of any other premises where
the
Charged Assets are located.
14.4 Exceptions
to Charge
The
last
day of any term reserved by any Lease, oral or written, or any Agreement
therefore, now held or hereafter acquired by the Company, and whether falling
within the general or particular description of the Charged Assets, is hereby
and shall be excepted out of the mortgage, charge and security interest hereby
or by any other instrument created but the Company shall stand possessed or
the
reversion of one day remaining in the Company in respect of any such term,
for
the time being demised, as aforesaid, upon trust to assign and dispose of the
same as any purchase of such term shall direct.
15. Remedies
|
(a)
|
Upon
the occurrence and continuation of an Event of Default which has
not been
remedied, the Holder shall not be required to advance any portion
of the
Loan which has not then been advanced. Upon the occurrence and
continuation of an Event of Default which has not been remedied,
the
Holder may proceed to realize upon the Security granted hereby and
under
the Security and to enforce its rights
by:
|
| (i) |
entry
or taking into possession of all or any part of the Charged
Assets;
|
-13-
|
(ii)
|
the
appointment by instrument in writing of a receiver or receivers of
the
Charged Assets or any part thereof (which receiver or receivers may
be any
person or persons, whether an officer or officers or employee or
employees
of the Holder or not, and the Holder may remove any receive or receivers
so appointed and appoint another or others in his or her
stead);
|
|
(iii)
|
proceedings
in any court of competent jurisdiction for the appointment of a receiver
or receivers or for the sale of the Charged Assets or any part
thereof;
|
|
(iv)
|
any
other action, suit, remedy or proceeding authorized or permitted
hereby or
by law or by equity;
|
| (v) |
collecting
any proceeds arising in respect of the Charged
Assets;
|
|
(vi)
|
collecting,
realizing upon or selling or otherwise dealing with any accounts
of the
Company; or
|
|
(vii)
|
preparing
for the disposition of the Charged Assets, whether on the premises
of the
Company or otherwise.
|
|
(b)
|
In
addition, the Holder may file such proofs of claim and other documents
as
may be necessary or advisable in order to have its claim lodged in
any
bankruptcy, winding-up or other judicial proceedings relative to
the
Company.
|
16. Events
of Default and Remedies.
| (a) |
Events
of Default.
Any one or more of the following events shall constitute an Event
of
Default hereunder:
|
| (i) |
Default
in Principal -
If the Company fails to repay the Principal Amount then outstanding
on the
Maturity Date.
|
| (ii) |
Default
hereunder
-
If the Company materially defaults in the performance or observance
of any
term, condition or covenant contained in this Debenture and such
default
continues for a period of 15 Business Days or more after written
notice
thereof has been delivered by the Holder to the
Company.
|
| (iii) |
Winding-up,
etc.
-
If an order is made or an effective resolution passed for the winding-up,
liquidation or dissolution of the
Company.
|
| (iv) |
Insolvency,
etc.
-
If the Company consents to or makes a general assignment for the
benefit
of creditors or makes a proposal under Bankruptcy
Act (Canada),
the Companies’
Creditors Arrangement Act (Canada)
or any other bankruptcy, insolvency or analogous laws, or is declared
bankrupt, or if a liquidator, trustee in bankruptcy, custodian
or receiver
and manager or other officer with similar powers is appointed of
the
Company or of its property or any part thereof which in the opinion
of the
Holder, acting reasonably, is a substantial part thereof and such
appointment is not being contested in good faith by the
Company.
|
-14-
| (v) |
Encumbrancers
-
If an encumbrancer takes possession of the property of the Company
or any
part thereof which in the opinion of the Holder, acting reasonably,
is a
substantial part thereof, or if a distress or execution or any
similar
process is levied or enforced against such property and remains
unsatisfied for such period as would permit such property or such
part
thereof to be sold thereunder, provided that such possession or
process
has not been stayed and is not being contested in good faith by
the
Company.
|
| (vi) |
If
the Common Shares of the Company are delisted from the NASDAQ BB
or if the
Company ceases to be a Reporting Issuer in the Province of Alberta
or
another Province in Canada acceptable to the
Holder.
|
|
(b)
|
Acceleration.
Upon the occurrence of any one or more of the Events of Default,
all
indebtedness of the Company to the Holder hereunder shall, at the
option
of the Holder, immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly
waived by the Company, and all collateral and securities shall thereupon
become enforceable by the Holder or its duly authorized
agent.
|
| (c) |
Remedies
Cumulative.
The rights and remedies of the Holder hereunder are cumulative and
in
addition to and not in substitution for any rights or remedies provided
by
law.
|
17. Further
Assurances.
The
Company shall from time to time forthwith on the Holder’ request do, make and
execute all such further assignments, documents, acts, matters and things as
may
be required by the Holder with respect to this Debenture or any part hereof
or
thereof or as may be required to give effect to these presents.
18. Dealings
by the Holder.
the
Holder may grant extensions of time and other indulgences, take and give up
securities, accept compositions, grant releases and discharges and otherwise
deal with the Company, debtors of the Company, sureties and others and with
the
Security and other securities as the Holder may see fit without prejudice to
the
liability of the Company hereunder or the Holder’ right to hold and enforce the
Security.
19. Notices.
Any
notice or communication to be given hereunder may be effectively given by
delivering the same at the addresses hereinafter set forth or by sending the
same by facsimile or prepaid registered mail to the parties at such
addresses. Any notice so mailed shall be deemed to have been received on
the fifth Business Day next following the mailing thereof provided the postal
service is in operation during such time. Any facsimile notice shall be
deemed to have been received on the Business Day next following the date of
transmission. The mailing and facsimile addresses of the parties for the
purposes hereof shall respectively be:
-15-
if
the
Holder:
<Name>
<Address>
Facsimile:
if
to the
Company:
Xxxx
0 -
0000 Xxxxxx Xx.
Mississauga,
Ontario
L5L
1X2
Attention: Xxxxxxx
X. Xxxxxxx, Vice-President of Finance
Facsimile: (000)
000-0000
Either
party may from time to time notify the other party hereto, in accordance with
the provisions hereof, of any change of address which thereafter, until changed
by like notice, shall be the address of such party for all purposes of this
Agreement.
20. Successors
and Assigns.
This
Debenture shall be binding upon and shall enure to the benefit of the Company
and the Holder and their respective successors and assigns, provided that the
Company shall not assign any of its rights or obligations hereunder without
the
prior written consent of the Holder.
21. Governing
Law.
This
Debenture and all other documents delivered to the Holder hereunder shall be
construed and interpreted in accordance with the laws of Ontario and the laws
of
Canada applicable therein.
22. Currency.
All
dollar amounts herein are expressed in Canadian dollars.
23. Headings.
The
headings of the sections of this Debenture are inserted for convenience only
and
shall
not be deemed to constitute a part hereof.
24. Entire
Agreement.
This
Debenture constitutes the entire agreement and supercedes all other prior
agreements
and
undertakings, both written and oral, among the parties with respect of the
subject matter hereof.
-16-
DATED
as
of
March 24th, 2005.
Per:
/s/
Xxxxxxx X. Xxxxxxx
Name:
Xxxxxxx X. Xxxxxxx
Title:
Vice-President of Finance
I
have
the authority to bind the Corporation.
-17-
