LOAN AGREEMENT AMENDING AGREEMENT
THIS AMENDING AGREEMENT is entered into as of August 30, 2002, by and
between ADB SYSTEMS INTERNATIONAL INC., ADB SYSTEMS INTERNATIONAL LTD., each a
corporation having its principal place of business at 0000 Xxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxxx, Xxxxxxx X0X 0X0, and THE BRICK WAREHOUSE CORPORATION, a
corporation having its principal place of business at 00000 - 000 Xxxxxx,
Xxxxxxxx, Xxxxxxx, X0X 0X0.
WHEREAS:
1. The Parties entered into a loan agreement dated as of August 23, 2002
(the "Loan Agreement").
2. The Borrower has indicated in its Drawdown Notice delivered in
connection with the First Advance that it is unable to satisfy a condition of
the First Advance requiring that the Borrower shall have entered into
irrevocable subscription agreements with arm's length third parties to issue
equity securities of the Borrower or debt securities convertible into equity
securities of the Borrower raising aggregate gross proceeds to the Borrower of
not less than $1,000,000 and received aggregate gross proceeds of not less than
$1,000,000 from the sale of such equity securities or debt securities
convertible into equity of the Borrower on terms and conditions satisfactory to
the Lender.
3. The Lender is willing to waive compliance with the above condition and
nevertheless to make the First Advance to the Borrower in accordance with and
subject to the terms and conditions of the Loan Agreement provided the Borrower
and the Guarantor enter into this Amending Agreement to the Loan Agreement.
NOW THEREFORE in consideration of the premises, the mutual covenants
contained in this Agreement, and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the Parties agree as
follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS.
In this Agreement, unless the context otherwise requires, each capitalized term
not otherwise defined herein shall have the meaning ascribed thereto in the Loan
Agreement.
ARTICLE 2 - AMENDMENTS
2.1 AMENDMENTS.
(1) Section 3.2 of the Loan Agreement is hereby amended by adding
thereto to the conditions to the Second Advance the following:
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"(f) the Borrower shall have delivered evidence
satisfactory to the Lender that each of the
subscribers, having executed on or before August
30, 2002, subscription agreements for the issue of
Series D Subordinated Notes (i) shall have paid the
Loan Amount (as therein defined) to Old ADB; and (ii)
shall have executed (A) an acknowledgement of the
subordination of the Subordinated Notes to the
Security, and (B) a release of Old ADB from the
obligations of the Subordinated Notes upon the
Restructuring, each in form satisfactory to the
Lender."
(2) Section 8.1 of the Loan Agreement is hereby amended by adding
thereto to the Events of Default the following:
"(r) if the condition in Section 3.2(f) is not satisfied on
or before October 31, 2002."
ARTICLE 3 - GENERAL
3.1 LOAN AGREEMENT.
The Parties acknowledge that the Loan Agreement has been amended by this
amending Agreement and as amended, the Loan Agreement remains in full force and
effect as of the date hereof.
3.2 BINDING ON SUCCESSORS.
This Amending Agreement shall enure to the benefit of and be binding upon the
Parties and their respective successors and permitted assigns.
3.3 GOVERNING LAW.
This Amending Agreement shall be governed and construed according to the laws of
the Province of Ontario and the laws of Canada applicable therein, and shall be
treated, in all respects, as an Ontario contract, without prejudice to or
limitation of any other rights or remedies available under the laws of any
jurisdiction where property or assets of the Borrower may be found. Each of the
Parties hereby attorns to the jurisdiction of the Province of Ontario.
3.4 COUNTERPARTS.
This Amending Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Counterparts may be executed either in
original or faxed form and the Parties may adopt any signatures received by a
receiving fax machine as original signatures of the Parties.
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IN WITNESS WHEREOF this Amending Agreement is executed by the Parties as of the
date first written, above.
ADB SYSTEMS INTERNATIONAL INC.
By: [ILLEGIBLE]
-----------------------------
Name:
Title:
ADB SYSTEMS INTERNATIONAL LTD.
By: [ILLEGIBLE]
-----------------------------
Name:
Title:
THE BRICK WAREHOUSE CORPORATION
By: _____________________________
Name:
Title:
LOAN AGREEMENT
BETWEEN
THE BRICK WAREHOUSE CORPORATION
AND
ADB SYSTEMS INTERNATIONAL INC.
AND
ADB SYSTEMS INTERNATIONAL LTD.
MADE AS OF
AUGUST 23, 2002
XXXXXXXX XXXXXXXX LLP
GOWLING XXXXXXX XXXXXXXXX LLP
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION....................................................................................... 1
1.1 Definitions.......................................................................................... 1
1.2 Headings............................................................................................. 9
1.3 Extended Meanings.................................................................................... 9
1.4 Entire Agreement..................................................................................... 9
1.5 Invalidity........................................................................................... 9
1.6 Accounting Principles................................................................................ 10
1.7 Per Annum Calculations............................................................................... 10
1.8 Schedules............................................................................................ 10
ARTICLE 2 - LOAN TERMS........................................................................................... 11
2.1 Principal Amount..................................................................................... 11
2.2 Interest............................................................................................. 12
2.3 Repayment............................................................................................ 12
ARTICLE 3 - CONDITIONS PRECEDENT TO ADVANCES..................................................................... 12
3.1 Conditions for First Advance......................................................................... 12
3.2 Subsequent Advances.................................................................................. 13
3.3 Waiver............................................................................................... 14
3.4 Disbursement of Expenses Advance..................................................................... 14
3.5 Account of Record.................................................................................... 15
ARTICLE 4 - SECURITY............................................................................................. 15
4.1 Security............................................................................................. 15
4.2 Registration......................................................................................... 15
4.3 After Acquired Property and Further Assurances....................................................... 16
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES....................................................................... 16
5.1 Organization, Standing and Power..................................................................... 16
5.2 Authority and Enforceability......................................................................... 16
5.3 Subsidiaries......................................................................................... 17
5.4 Capital Structure.................................................................................... 17
5.5 Title to Assets; Condition; Sufficiency of Assets.................................................... 18
5.6 No Violations Resulting From Transactions............................................................ 19
5.7 Compliance with Laws................................................................................. 19
5.8 Litigation........................................................................................... 19
5.9 Taxes................................................................................................ 19
5.10 Employees............................................................................................ 20
5.11 Financial Advisors................................................................................... 22
5.12 Financial Statements; Losses......................................................................... 22
5.13 No Undisclosed Liabilities........................................................................... 23
5.14 Absence of Certain Developments...................................................................... 23
5.15 Intellectual Property................................................................................ 23
5.16 Real Property........................................................................................ 27
5.17 Insurance............................................................................................ 27
5.18 Contracts............................................................................................ 28
5.19 Related Party Transactions........................................................................... 29
5.20 Restrictions on Business Activities.................................................................. 29
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5.21 Books and Records.................................................................................... 30
5.22 Benefit Plans........................................................................................ 30
5.23 Environmental Matters................................................................................ 31
5.24 Public Grants........................................................................................ 31
5.25 OSC Reports.......................................................................................... 31
5.26 General.............................................................................................. 31
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF LENDER............................................................. 31
6.1 Organization, Standing and Power..................................................................... 32
6.2 Authority and Enforceability......................................................................... 32
6.3 No Violations Resulting from Transactions............................................................ 32
ARTICLE 7 - COVENANTS............................................................................................ 33
7.1 Affirmative Covenants of the Borrower................................................................ 33
7.2 Negative Covenants of the Borrower................................................................... 38
7.3 Termination of Negative and Positive Covenants....................................................... 40
7.4 Performance of Obligations........................................................................... 40
ARTICLE 8 - EVENTS OF DEFAULT AND ACCELERATION................................................................... 41
8.1 Events of Default.................................................................................... 41
8.2 Acceleration......................................................................................... 43
8.3 Default Interest..................................................................................... 44
8.4 Remedies Cumulative and Waivers...................................................................... 44
8.5 Termination of Lender's Obligations.................................................................. 44
ARTICLE 9 - COSTS, EXPENSES, SURVIVAL AND INDEMNIFICATION........................................................ 44
9.1 Costs and Expenses................................................................................... 44
9.2 General Survival..................................................................................... 45
9.3 Indemnification by ADB Entities...................................................................... 45
9.4 Specific Environmental Indemnification............................................................... 46
ARTICLE 10 - PUT Option.......................................................................................... 46
10.1 Put Option........................................................................................... 46
ARTICLE 11 - GUARANTEE........................................................................................... 48
11.1 Guarantee............................................................................................ 48
11.2 Indemnity............................................................................................ 48
11.3 Primary Obligation................................................................................... 48
11.4 Obligations Absolute................................................................................. 48
11.5 No Release........................................................................................... 49
11.6 No Exhaustion of Remedies............................................................................ 49
11.7 Prima Facie Evidence................................................................................. 49
11.8 No Set-off........................................................................................... 49
11.9 Continuing Guarantee................................................................................. 50
11.10 Demand............................................................................................ 50
11.11 Interest.......................................................................................... 50
11.12 Assignment and Postponement....................................................................... 50
11.13 Subrogation....................................................................................... 50
ARTICLE 12 - GENERAL............................................................................................. 51
12.1 Notice............................................................................................... 51
12.2 Assignment........................................................................................... 52
12.3 Binding on Successors................................................................................ 52
iii
12.4 Further Assurances................................................................................... 52
12.5 Waiver............................................................................................... 53
12.6 Interpretation....................................................................................... 53
12.7 Amendment............................................................................................ 53
12.8 Governing Law........................................................................................ 53
12.9 Time of the Essence.................................................................................. 53
12.10 Counterparts...................................................................................... 1
LOAN AGREEMENT
THIS LOAN AGREEMENT is entered into as of August 23, 2002, by and
between ADB SYSTEMS INTERNATIONAL INC. ("OLD ADB"), ADB SYSTEMS INTERNATIONAL
LTD. ("NEW ADB"), each a corporation having its principal place of business at
0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxx X0X 0X0, and THE BRICK
WAREHOUSE CORPORATION ("LENDER"), a corporation having its principal place of
business at 00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx, X0X 0X0.
WHEREAS:
1. The Lender, New ADB and Old ADB are entering into a Co-Operation Agreement
pursuant to which Old ADB will agree to focus its undertaking to selling and
marketing consumer goods on-line using technology and related services to be
provided by New ADB and supplies and retailing services to be provided by the
Lender.
2. As a term of the Co-Operation Agreement, Old ADB and New ADB propose to
complete the Restructuring, pursuant to which, among other things, Old ADB will
become a wholly-owned Subsidiary of New ADB and New ADB will assume all of the
rights and obligations of Old ADB under this Agreement.
3. In order to enable Old ADB to proceed with the Restructuring contemplated
by the Co-Operation Agreement entered into this day by the Parties and to fund
future operations, Old ADB desires to obtain from the Lender, and the Lender
desires to advance to the Borrower, the Loan upon the terms and conditions
hereof.
NOW THEREFORE in consideration of the premises, the mutual covenants
contained in this Agreement, and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the Parties agree as
follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS.
In this Agreement, unless the context otherwise requires, each capitalized term
shall have the meanings indicated below.
"ADB ENTITIES" means collectively, Old ADB and New ADB and "ADB ENTITY" means
either one of them.
"ADB ENTITY CONTRACT" means any Contract to which any ADB Entity is a party or
by which any ADB Entity or the Assets may be bound.
"ADVANCE" means an advance of funds by the Lender to the Borrower hereunder.
"AFFILIATE" of the Borrower means any other corporation directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Borrower; for the purposes of
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this definition, "control" means the ownership of more than 50% of the Voting
Shares of a corporation.
"AGREEMENT" means this Loan Agreement and all schedules annexed to this
Agreement as the same may be amended from time to time in accordance with the
provisions hereof or thereof, "hereof" "hereto" and "hereunder" and similar
expressions mean and refer to this Agreement and not to any particular article
or section; except where the context specifically requires, "Article" or
"Section" means and refers to the specified article or section of this
Agreement.
"ARRANGEMENT AGREEMENT" has the meaning ascribed thereto in the Co-Operation
Agreement.
"ASSETS" mean all personal property of Old ADB including, without limiting the
foregoing, all equipment, goodwill, cash, cash equivalents, cash deposits,
marketable securities, investments, books and records, accounts, notes and other
receivables, Intellectual Property, Intellectual Property Rights, contractual
and other rights, claims and interests and all other assets and rights of Old
ADB, including all assets and rights of Old ADB which are specifically referred
to or reflected in the Financial Statements.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the general conveyance and
assumption agreement as of the date hereof between Old ADB and New ADB.
"BENEFIT PLANS" has the meaning ascribed thereto in Section 5.22.
"BIDCOM ASSETS" means all Assets used by Old ADB in the operation of the Bidcom
Business.
"BIDCOM BUSINESS" means the business of conducting on-line retail sales through
the URL www.bid-com.
"BORROWER" means Old ADB and its permitted assignees.
"BUSINESS DAY" means any day from Monday to Friday inclusive, except statutory
or civic holidays observed in Toronto, Ontario or Edmonton, Alberta.
"BUSINESS INFORMATION" means all information, know-how and records (whether or
not confidential and no matter in what form held) including business plans and
forecasts, sales and accounting records, customer and supplier lists,
correspondence, orders and inquiries.
"CCRA" has the meaning ascribed in Section 5.12(3).
"COMMERCIAL AND MARKETING KNOW-HOW" means all commercial and marketing
information, know-how and records (whether or not confidential and no matter in
what form held) including all designs, specifications, drawings, lists and
particulars of customers, marketing methods and procedures, advertising copy and
sales and promotional information.
"COMPUTER SOFTWARE" includes all computer programs in source and object code
form as well as all Documentation related thereto, however recorded.
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"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated August 9,
2002 between Old ADB and Lender.
"CONTRACT" means any agreement, license, contract, commitment or understanding,
whether written or verbal.
"CO-OPERATION AGREEMENT" means the co-operation agreement entered into as of the
date hereof by the Parties.
"DEFAULT" means, with respect to any Contract, (i) any breach of or default
under such Contract; (ii) any event which could (either with or without notice
or lapse of time or both) give rise to any right of termination, cancellation or
acceleration of any obligation to repay with respect to such Contract; or (iii)
any event which could result in either an increase in the obligations or
liabilities of, or a loss of any benefit to which, the party in question or any
of its Affiliates may be entitled or subject to under such Contract.
"DEMAND" has the meaning ascribed thereto in Section 2.3.
"DISPOSITION" means, in respect of any share of Old ADB, any offer to sell,
contract to sell or otherwise sell, dispose of, loan, pledge or grant any rights
with respect to such share and "DISPOSE" has a corresponding meaning.
"DISTRIBUTE" means the act of marketing, distributing, promoting, selling,
reselling, licensing, sublicensing, or providing support or customer assistance
for any of Old ADB's Software.
"DISTRIBUTOR" and "DISTRIBUTORS" includes any Person granted the right or
authorization by Old ADB to market, distribute, promote, sell, resell, license,
sublicense, or provide support or customer assistance for any of Old ADB's
Software and includes VARs, OEMs, and resellers.
"DOCUMENTATION" means all user documentation, technical documentation, and
system documentation, however recorded, including user manuals, training
materials, product specifications, technical documentation, description of
computational algorithms, flow charts, programmer's notes and other design
documentation and manuals.
"DOCUMENTS" means this Agreement, the Security and all certificates and other
documents delivered or to be delivered to the Lender pursuant hereto or thereto
and, when used in relation to any person the term "DOCUMENTS" shall mean and
refer to the Documents executed and delivered by such person.
"DOMAIN NAME" means the domain name xxx.Xxx.xxx.
"DRAWDOWN DATE" means the date on which an Advance is made by the Lender to the
Borrower pursuant to the provisions hereof and which shall be a Business Day.
"DRAWDOWN NOTICE" means a notice substantially in the form annexed hereto as
Schedule B to be given to the Lender by the Borrower pursuant to Section 3.1 or
Section 3.2.
"EFFECTIVE TIME" has the meaning ascribed thereto in the Co-Operation Agreement.
4
"ENCUMBRANCE" mean any mortgage, pledge, claim, charge, lien, encumbrance,
interest, option, restriction, condition, violation, security interest,
assessment or other rights of others of any nature affecting in any way the
assets or property involved.
"EVENT OF DEFAULT" means any of the events described in Section 8.1.
"EXPENSES ADVANCE" has the meaning ascribed thereto in Section 2.1(c);
"FINANCIAL STATEMENTS" means the audited financial statements of Old ADB for the
year ended December 31, 2001, together with the report of Deloitte & Touche LLP
thereon and the notes thereto.
"FIRST ADVANCE" has the meaning ascribed thereto in Section 2.1(a);
"GAAP" means generally accepted accounting principles as in effect, from time to
time, in Canada.
"GENERAL SECURITY AGREEMENT" means the security agreement in favour of the
Lender by Old ADB, substantially in the form annexed hereto as Schedule 1.1-A.
"GOVERNMENTAL ENTITY" means any domestic or foreign governmental authority,
court, administrative agency or commission or other governmental or regulatory
body or entity or Person having or purporting to have jurisdiction in the
relevant circumstances.
"INCLUDING" means including, without limitation.
"INDEBTEDNESS" means, with respect to any person, indebtedness of such person
which would in accordance with GAAP be classified upon a balance sheet (and the
notes thereto) of such person as liabilities (absolute or contingent), of such
person and in addition shall include:
(a) all indebtedness of any other person guaranteed, directly or
indirectly, in any manner by such person or endorsed
(otherwise than for collection or deposit in the ordinary
course of business) or discounted with recourse;
(b) all indebtedness in effect guaranteed or indemnified, directly
or indirectly, by such person through an agreement, contingent
or otherwise,
(i) to purchase such indebtedness or to advance or supply
funds for the payment or purchase of such
indebtedness, including the purchase of debt
securities, obligations or shares,
(ii) to purchase, sell or lease (as lessee or lessor)
property, assets, goods, services, products,
materials or supplies, or to purchase or sell
transportation or services, primarily for the purpose
of enabling the debtor to make payment of such
indebtedness or to assure the owner of such
indebtedness against loss, regardless of the delivery
or non-delivery for any reason of the property,
products, materials or supplies or the
5
furnishing or non-furnishing for any reason of the
transportation or services, or
(iii) to make any payment, loan, advance, capital
contribution or other investment in the debtor, or
become or be bound by any agreement to do so, for the
purpose of assuring a minimum equity, an asset base,
a working capital or other balance sheet test or
condition for any date or to provide funds for the
payment of any debt liability, dividend or share
liquidation payment, or otherwise to supply funds to
or in any manner invest in the debtor;
(c) indebtedness of any joint venture, partnership or other person
for which such person is liable;
(d) all indebtedness, including lease obligations, of such person
created or arising under any conditional sales agreement or
other title retention agreement or under any capital lease,
even though the rights and remedies of the seller or Lender or
lessor under such agreement or lease in the event of the
default are limited to repossession or sale of property; and
(e) all indebtedness secured by any lien upon or in property owned
by such person, even though such person has not assumed or
become liable for the payment of such indebtedness.
"INTELLECTUAL PROPERTY" means all intellectual and industrial property (whether
or not confidential and no matter in what form held) including all works in
which copyright may subsist such as plans, drawings, manuals, maps,
Documentation, specifications, schematics, Computer Software, databases and
compilations of information (whether or not protected by copyright) and
algorithms, designs, formula, process, trade secrets and confidential
information, know-how, discoveries and inventions, mask works, integrated
circuit topographies, and trade-marks, trade-names, logos, Internet domain
names, uniform resource locator, and service marks, and the term "INTELLECTUAL
PROPERTY" includes Business Information, Commercial and Marketing Know-How, and
Technical Information and, in respect of the Business, includes Old ADB's
Software and Old ADB's Algorithms and Old ADB's Domain Names.
"INTELLECTUAL PROPERTY RIGHTS" includes all intellectual and industrial property
rights and rights of a similar nature such as copyrights, patents, industrial
designs, design rights, trade-marks, data base rights, trade secrets, rights to
use domain names and rights in confidential information, and all applications
and registrations pertaining to the foregoing and all causes of action, rights
of recovery and claims for damage or other relief relating, referring or
pertaining to the foregoing (including all rights to oppose applications for the
registration of similar or confusing trademarks), along with all income
royalties, damages or payments due or payable including claims for past or
future infringement or misappropriation of Intellectual Property or Intellectual
Property Rights.
"JOINT ACCOUNT" has the meaning ascribed thereto in Section 3.4.
6
"LATEST BALANCE SHEET" means the balance sheet of Old ADB as of December 31,
2001 included in the Financial Statements.
"LATEST BALANCE SHEET DATE" means December 31, 2001.
"LAW" shall mean any domestic or foreign statute, law, ordinance, rule,
regulation or administrative ruling or any governmental permit, franchise or
license or any injunction, judgment, order or consent or similar decree or
agreement.
"LOAN" means the advances of funds by the Lender to the Borrower in an aggregate
principal amount of $2,000,000 pursuant to the First Advance, the Second Advance
and the Expenses Advance as such terms are defined in Section 2.1.
"LOSSES" has the meaning ascribed thereto in Section 9.3.
"MANAGEMENT INFORMATION CIRCULAR" has the meaning ascribed in the Co-Operation
Agreement.
"MATERIAL ADVERSE EFFECT" means (i) any material adverse change in, or material
adverse effect on, the business, assets, prospects, results of operations or
financial or other condition of Old ADB or (ii) any event or circumstance which
does or would reasonably be expected to prevent, hinder or materially delay the
consummation of any of the Transactions.
"NEW ADB GSA" means the security agreement in favour of the Lender by New ADB,
substantially in the form annexed hereto as Schedule 1.1-B.
"NORCO PLEDGE" means a pledge of all of the issued and outstanding shares of the
Norway Subsidiary to the Lender substantially in the form annexed hereto as
Schedule 1.1-C.
"NORWAY SUBSIDIARY" means ADB Systemer AS.
"OLD ADB CONTRACTS" means any Contract to which Old ADB is a party or by which
the Assets may be bound;
"OLD ADB'S DOMAIN NAMES" means the Internet domain names set forth in Schedule
1.1-D.
"OLD ADB'S SOFTWARE" means the Computer Software described in Schedule 1.1-E.
"OLD ADB'S TRADE-MARKS" means any word, symbol, icon, logo or other indicia of
origin adopted or used in connection with Old ADB's Bidcom Business anywhere in
the world on or prior to the date hereof or the Put Closing Date, as applicable,
including the trade-marks, trade-names and service-marks listed on Schedule
1.1-F.
"PARTIES" means the Borrower, New ADB and the Lender and "Party" means any one
of them.
"PERMITTED ENCUMBRANCE" means any (i) Encumbrance securing Taxes, assessments
and Governmental Entity charges not yet due and payable or the amount or
validity of which is being contested in good faith by appropriate proceedings by
Old ADB and for which appropriate
7
reserves have been established in accordance with GAAP, (ii) mechanics, carrier
workers, repairer and similar statutory liens arising or incurred in the
ordinary course of Old ADB's business for amounts which are not delinquent and
which are not in the aggregate material to Old ADB, (iii) liens securing rental
payments under capital lease arrangements arising or incurred in the ordinary
course of Old ADB's business, (iv) zoning law or ordinance or any similar legal
requirement; (v) in the case of leased property, (a) the rights of any lessor
and (b) any Encumbrance granted by any lessor of leased property; (vi)
Encumbrance relating to the security interest in patent rights of the Borrower
granted to the XXX Xxxxxxxxxxx by the Borrower pursuant to the security
agreement made on April 17, 2002 (vii) Encumbrance relating to the security
interest granted to Xxxxxxxxxxx Limited Partnership by the Borrower pursuant to
the general security agreement dated August 30, 2002 and such security interest
being subordinated to the Security; (viii) Encumbrance relating to the security
interest granted to Greenwich Growth Fund Ltd. by the Borrower pursuant to a
general security agreement dated August 30, 2002 and such security interest
being subordinated to the Security and (ix) Encumbrance relating to the security
interest granted to subscribers (other than Greenwich Growth Fund Ltd. and
Xxxxxxxxxxx Limited Partnership) of convertible secured notes of the Borrower
for an amount not greater than $300,000 and such security interest being
subordinated to the Security; provided that "Permitted Encumbrance" does not
include any Encumbrance which could prevent or impair in any material way the
conduct of Old ADB's business as it is currently being conducted.
"PERSON" means any individual, corporation, partnership, limited liability
company, trust, unincorporated association or other entity or organization,
including Governmental Entity.
"PLAN OF ARRANGEMENT" has the meaning ascribed in the Arrangement Agreement.
"PRINCIPAL" has the meaning ascribed thereto in Section 2.1.
"PROPRIETARY RIGHTS REGISTRATIONS" means any and all applications and
registrations anywhere in the world in respect of any Intellectual Property or
Intellectual Property Rights owned or used by Old ADB and includes the
applications and registrations listed in Schedule 5.15.
"PUT CLOSING", "PUT CLOSING DATE", "PUT NOTICE", "PUT OPTION" and "PUT PERIOD"
have the meanings set forth in Section 10.1.
"REQUIREMENTS OF ENVIRONMENTAL LAW" means all requirements of the common law or
of statutes, regulations, by-laws, ordinances, treaties, judgments and decrees,
and (to the extent that they have the force of law) rules, policies, guidelines,
orders, approvals, notices, permits, directives, and the like, of any federal,
territorial, provincial, regional, municipal or local judicial, regulatory or
administrative agency, board or governmental authority in Canada, the United
States and any other jurisdiction in which the Borrower or any of its
Subsidiaries have assets relating to environmental or occupation health and
safety matters and the assets and undertaking of the Borrower and its
Subsidiaries and the intended uses thereof, including but not limited to, all
such requirements relating to: (i) the protection, preservation or remediation
of the natural environment (the air, land, surface water or groundwater); (ii)
solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation; and (iii) hazardous substances or conditions
(matters that are prohibited, controlled or otherwise regulated, such as
contaminants, pollutants, toxic substances, dangerous goods, wastes, hazardous
wastes, liquid
8
industrial wastes, hazardous materials, urea formaldehyde foam type of
insulation, asbestos or asbestos-containing materials, polychlorinated byphenyls
(PCBs) or PCB contaminated fluids or equipment, explosives, radioactive
substances, petroleum and associated products, underground storage tanks or
surface impoundments).
"RESTRUCTURING" shall have the meaning ascribed to such term in the Co-Operation
Agreement.
"SECOND ADVANCE" has the meaning ascribed thereto in Section 2.1(b).
"SECURITY" means the security described in Section 4.1.
"SHARES" means all of the issued and outstanding shares in the capital of Old
ADB.
"SUBORDINATE NOTES" means (i) the convertible secured notes (including but not
limited to Series A, Series B and Series C) issued to Xxxxxxxxxxx Limited
Partnership by the Borrower pursuant to a subscription agreement dated as of
August 30, 2002; (ii) the convertible secured notes (including but not limited
to Series D) issued to Greenwich Growth Fund Ltd. by the Borrower pursuant to a
subscription agreement dated as of August 30, 2002; and (iii) the convertible
secured notes (including but not limited to Series D) issued to a subscriber
other than Greenwich Growth Fund Ltd. by the Borrower for an amount not greater
than $300,000.
"SUBSIDIARY" of the Borrower means any corporation more than 50% of the Voting
Shares of which at the time of determination are owned, directly or indirectly,
by the Borrower or by one or more Subsidiaries.
"SUPPLY, SERVICES AND LICENSE AGREEMENT" means the supply, services and license
agreement dated as of the date hereof between Old ADB, New ADB and the Lender.
"TAX" or "TAXES" means all taxes, charges, fees, levies, imposts and other
assessments, including all income, sales, use, goods and services, harmonized
sales value added, capital, capital gains, alternative, net worth, transfer,
profits, withholding, payroll, employer health, excise, franchise, real property
and personal property taxes, and any other taxes, customs duties, fees,
assessments, royalties, duties, fees, deductions, compulsory loans or similar
charges in the nature of a tax including Canada Pension Plan and provincial
pension plan contributions, unemployment insurance payments and workers
compensation premiums, together with any instalments with respect thereto, and
any interest, fines and penalties, imposed by any Governmental Authority
(including, without limitation, those imposed under the Tax Act and where
applicable, under The Internal Revenue Code of 1986 of the United States).
"TAX ACT" means the Income Tax Act (Canada).
"TAX RETURN" means any report, return, statement, or other information required
to be supplied to a foreign or domestic taxing authority in connection with
Taxes.
"TECHNICAL INFORMATION" means information or data, regardless of the form or
method of the recording, of a scientific or technical nature such as (i)
technical data that describes the steps, sequences, and conditions of
manufacturing, processing or assembly used to produce an item or component or to
perform a process, (ii) technical data that describes the physical configuration
9
and performance characteristics of an item or component, (iii) application
engineering data, (iv) manuals and instructional materials and performance data
including Documentation, (v) methods, inspection techniques and procedures, and
(vi) information pertaining to quality control or standards, assembly
procedures, and includes specifications, technical drawings, algorithms, formula
and schematics.
"TRANSACTION COSTS" shall mean all reasonable fees and expenses of financial,
legal, accounting and other advisors retained by the Borrower or New ADB and all
other out-of-pocket costs of the Borrower or New ADB incurred prior to the
completion of the Restructuring in connection with the transactions contemplated
by the Restructuring, excluding any success or contingent fees relating to the
Transactions.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the General
Security Agreement, New ADB GSA, the Norco Pledge, the Supply, Services and
License Agreement, the Co-Operation Agreement, Arrangement Agreement,
Confidentiality Agreement and the Assignment and Assumption Agreement.
"TRANSACTIONS" means the transactions contemplated by the Transaction Documents.
"VOTING SHARES" means shares of any class of any corporation carrying voting
rights generally under all circumstances.
1.2 HEADINGS.
The use of headings in this Agreement is for convenience of reference only and
shall not affect its interpretation.
1.3 EXTENDED MEANINGS.
Words expressed in the singular include the plural and vice-versa and words in
one gender include all genders and words importing persons shall include
individuals, partnerships, associations, trusts, unincorporated organizations
and corporations and vice versa.
1.4 ENTIRE AGREEMENT.
The Transaction Documents, and any agreements and other documents to be
delivered pursuant to any Transaction Document constitutes the entire agreement
between the Parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, oral or written
between the Parties. The execution of this Agreement has not been induced by,
nor do either of the Parties rely upon or regard as material, any
representations, warranties, conditions, other agreements or acknowledgments not
expressly made in this Agreement, the Transaction Documents or in the agreements
or other documents to be delivered pursuant hereto.
1.5 INVALIDITY.
If in any jurisdiction a provision contained in this Agreement is found by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, the validity, legality or
10
enforceability of the remaining provisions contained herein, or of such
provision in any other jurisdiction shall not be affected or impaired thereby.
1.6 ACCOUNTING PRINCIPLES.
Wherever in this Agreement reference is made to generally accepted accounting
principles, such reference shall be deemed to be to the generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants, or any successor institute, applicable as at the date on
which such calculation is made or required to be made in accordance with
generally accepted accounting principles. Where the character or amount of any
asset or liability or item of revenue or expense is required to be determined,
or any consolidation or other accounting computation is required to be made for
the purpose of this Agreement or any Document, such determination or calculation
shall, to the extent applicable and except as otherwise specified herein or as
otherwise agreed in writing by the parties, be made in accordance with generally
accepted accounting principles applied on a consistent basis.
1.7 PER ANNUM CALCULATIONS.
Unless otherwise stated, wherever in this Agreement reference is made to a rate
of interest "per annum" or a similar expression is used, such interest shall be
calculated using the nominal rate method, and not the effective rate method, of
calculation and on the basis of a calendar year of 365 days or 366 days, as the
case may be.
1.8 SCHEDULES.
The following are the Schedules to this Agreement:
Schedule B - Form of Drawdown Notice
Schedule 1.1-A - General Security Agreement
Schedule 1.1-B - Form of New ADB GSA
Schedule 1.1-C - Form of Norco Pledge
Schedule 1.1-D - Old ADB's Domain Names
Schedule 1.1-E - Old ADB's Software
Schedule 1.1-F - Old ADB's Trade Marks
Schedule 3.1(i) - Legal opinion (Gowlings)
Schedule 3.2(e) - Form of Consent
Schedule 5.3(1) - Subsidiaries of ADB Entities
Schedule 5.3(2) - Shares, etc. owned by ADB Entities
Schedule 5.3(4) - Liability of ADB Entities
Schedule 5.4(1) - Share conditions, etc. of Old ADB and
subsidiaries
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Schedule 5.4(2) - Options, warrants, shareholder agreements, etc.
Schedule 5.6 - Required consents or approvals
Schedule 5.10 - Employment and consulting contracts
Schedule 5.11 - List of brokers or advisors acting for Old ADB
or Affiliates re: Transactions
Schedule 5.12 - Financial Statements
Schedule 5.13 - Liabilities since Last Balance Sheet Date
Schedule 5.15 - Intellectual Property
Schedule 5.16 - Property with leasehold interest
Schedule 5.18 - Contracts
Schedule 5.19 - Outstanding indebtedness of Old ADB
Schedule 5.20 - Contracts impairing business
Schedule 5.23 - Benefit and other incentive plans
Schedule 9.3 - Indebtedness, obligations or liabilities of Old
ADB
Schedule 10.1(a) - Form of Put Notice
Schedule 10.1(e)(iv) - Form of opinion of counsel to New ADB
Schedule 10.1(e)(vi) - Release by New ADB in favour of Old ADB
ARTICLE 2 - LOAN TERMS
2.1 PRINCIPAL AMOUNT.
Subject to the terms and conditions hereof, Lender shall make the Loan to
Borrower during the period commencing on the date hereof and ending on October
31, 2002. Subject to the terms and conditions hereof, the Loan will be advanced
as follows:
(a) an initial advance in the principal amount of One Million
Dollars ($1,000,000.00) (the "FIRST ADVANCE");
(b) a second advance in the principal amount of Five Hundred
Thousand Dollars ($500,000.00) (the "SECOND ADVANCE"); and
(c) Lender shall deposit into a bank account of the Borrower to be
held and disbursed in accordance with Section 3.4, the
principal sum of Five Hundred Thousand Dollars ($500,000.00)
(the "EXPENSES ADVANCE").
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The First Advance, Second Advance and Expenses Advance shall together constitute
the aggregate principal sum of the Loan hereunder (the "PRINCIPAL").
2.2 INTEREST.
The Borrower shall pay interest on each Advance at a rate per annum equal to 12%
per annum, compounded monthly. Such interest shall be payable on repayment of
the Principal from and including the Drawdown Date for such Advance to and
including the day immediately preceding repayment of Principal hereunder and
shall be calculated on the principal amount of the Loan outstanding during such
period and on the basis of the actual number of days elapsed in a year of 365
days or 366 days, as the case may be. All interest payments to be made hereunder
shall be paid without allowance or deduction for deemed re-investment or
otherwise, both before and after maturity and before and after default and/or
judgment, if any, until payment thereof, and interest shall accrue on overdue
interest, if any.
2.3 REPAYMENT.
The Borrower hereby agrees to repay the Principal and accrued and unpaid
interest thereon as follows:
(a) on or before October 31, 2002, upon the occurrence of an Event
of Default by the Borrower; and
(b) after October 31, 2002, upon the earliest to occur of (i) June
30, 2003, (ii) the occurrence of an Event of Default by the
Borrower, or (iii) on demand by the Lender ("DEMAND").
ARTICLE 3 - CONDITIONS PRECEDENT TO ADVANCES
3.1 CONDITIONS FOR FIRST ADVANCE.
On or before the advance by the Lender of the First Advance or the Expenses
Advance hereunder, the following conditions shall be satisfied by the Borrower:
(a) the Lender shall have received a duly completed Drawdown
Notice from the Borrower;
(b) the Borrower shall have delivered to the Lender certified
copies of its constating documents and by-laws, the directors'
resolutions authorizing the borrowings hereunder and the
incumbency of the officers of the Borrower signing this
Agreement and any documents to be provided pursuant to the
provisions hereof;
(c) the representations and warranties set forth in Article 5
shall be true and accurate;
(d) each of the Transaction Documents shall have been executed and
delivered by the parties thereto;
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(e) the Security shall have been executed and delivered and all
filings or recordings necessary or desirable in connection
therewith shall have been made;
(f) no event shall have occurred which would constitute an Event
of Default or which would constitute an Event of Default with
the giving of notice or lapse of time or both nor shall the
Advance result in the occurrence of any such event;
(g) all existing registrations of lien, mortgage or security in
respect of the Assets shall have been discharged or otherwise
dealt with in a manner acceptable to the Lender;
(h) the Borrower shall have entered into irrevocable subscription
agreements with arm's length third parties to issue equity
securities of the Borrower or debt securities convertible into
equity securities of the Borrower raising aggregate gross
proceeds to the Borrower of not less than $1,000,000 and
received aggregate gross proceeds of not less than $1,000,000
from the sale of such equity securities or debt securities
convertible into equity of the Borrower on terms and
conditions satisfactory to the Lender; and
(i) a legal opinion in the form attached as Schedule 3.1(i) shall
have been delivered to the Lender.
3.2 SUBSEQUENT ADVANCES.
On or before the advance by the Lender of the Second Advance, the following
conditions shall be satisfied by the Borrower:
(a) the Lender shall have received a proper and timely Drawdown
Notice from the Borrower;
(b) the representations and warranties set forth in Article 5
shall be true and accurate;
(c) no event shall have occurred which would constitute an Event
of Default or which would constitute an Event of Default with
the giving of notice or lapse of time or both nor shall the
Advance result in the occurrence of any such event; and
(d) the Borrower and New ADB shall have delivered a copy of the
minutes of the meeting of shareholders approving the
Restructuring, the court order approving the Restructuring and
the certificate and articles of arrangement of New ADB issued
by the Ministry of Consumer and Business Affairs in connection
therewith, all certified by such officers of the Borrower and
New ADB as the Lender may reasonably require.
(e) the Borrower shall have delivered to Lender (i) executed
consents in the form set forth in Schedule 3.2(e) for all
Contracts set forth in Schedule 5.18 other than employment
contracts entered into by the Borrower not relating to the
Xxx.xxx Assets and Xxx.xxx Liabilities as defined in the
Co-operation Agreement, and (ii) releases from employees of
Old ADB to be employed by New ADB, unless
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requested otherwise by the Lender, with the form of the
release to be approved by the Lender.
3.3 WAIVER.
The conditions set forth in Sections 3.1 and 3.2 are inserted for the sole
benefit of the Lender and may be waived by the Lender, in whole or in part (with
or without terms or conditions) without prejudicing the right of the Lender at
any time to assert such conditions in respect of any subsequent Drawdown.
3.4 DISBURSEMENT OF EXPENSES ADVANCE.
(1) Concurrently with the advance by the Lender of the First
Advance, the Lender shall advance the Expenses Advances by
depositing the principal amount of the Expenses Advance in a
bank account (the "JOINT ACCOUNT") established and maintained
by ADB exclusively for the purpose of Expense Advances. The
Joint Account shall require two signatures on any cheque or
other withdrawal of funds, one of whom shall be the nominee of
the Lender. Notwithstanding any rights of the Lender hereunder
or otherwise with respect to the Joint Account, all monies
maintained in the Joint Account shall constitute an obligation
of the Borrower to the Lender hereunder. No amount of the
Expenses Advance shall be withdrawn, transferred or otherwise
removed from the Joint Account by Old ADB unless such
withdrawal, transfer or removal has been approved in writing
by the Chief Financial Officer or Senior Vice President,
Treasurer of the Lender.
(2) Prior to any such withdrawal, the Borrower shall deliver to
the Lender copies of all invoices in respect of the
Transaction Costs that will be paid with the proceeds of such
withdrawal certified by such officers of the Borrower as the
Lender may reasonably require.
(3) Upon the Borrower satisfying the condition in Section 3.2(d),
any amounts in the Joint Account shall be released to the
Borrower for its use if the Borrower has (i) paid all the
Transaction Costs relating to the Transaction and (ii)
provided evidence satisfactory to the Lender that this Section
3.4(3)(i) has been satisfied.
(4) If the Transaction Costs are in excess of $500,000, such costs
may be paid by the Lender from funds advanced in any
Subsequent Advance made in accordance with Section 3.2.
(5) Upon the occurrence of an Event of Default or upon a Demand,
any amount then existing in the Joint Account shall be
withdrawn by the Lender and applied as a payment of the
Principal then outstanding and, for such purpose, Old ADB, on
behalf of itself and its successors, hereby appoints the Chief
Financial Officer or Senior Vice President, Treasurer of the
Lender or its successors or assigns as the attorney for Old
ADB to do, sign and execute all acts, deeds, assurances and
other instruments which in the discretion of the said
attorneys or attorney may be necessary or desirable for the
purpose of vesting in the Lender, its successors and assigns,
all such amounts in such event. Such power of attorney, being
coupled
15
with an interest, will not be revoked by the dissolution,
surrender of charter, winding-up, bankruptcy or insolvency of
Old ADB and may be exercised in the name and on behalf of the
successors and assigns of the Lender.
3.5 ACCOUNT OF RECORD.
The Lender shall open and maintain books of account evidencing all Loans and all
other amounts owing by the Borrower to the Lender hereunder. The Lender shall
enter in the foregoing accounts details of all amounts from time to time owing,
paid or repaid by the Borrower hereunder. The information entered in the
foregoing accounts shall constitute prima facie evidence of the obligations of
the Borrower to the Lender hereunder with respect to all Loans and all other
amounts owing by the Borrower to the Lender hereunder. After a request by the
Borrower the Lender shall promptly advise the Borrower of such entries made in
the Lender's books of account.
ARTICLE 4 - SECURITY
4.1 SECURITY.
The Borrower or New ADB, as applicable, shall execute and deliver to the Lender
the following:
(a) the Norco Pledge;
(b) the General Security Agreement; and
(c) New ADB GSA
as continuing collateral security for the performance by the Borrower or new
ADB, as applicable, of all of its obligations hereunder.
4.2 REGISTRATION.
The Borrower shall, at its expense, register, file or record the Security in all
offices where such registration, filing or recording is necessary or of
advantage to the creation, perfection and preserving of the security applicable
to it including, without limitation, any land registry offices. The Borrower
shall renew such registrations, filings and recordings from time to time as and
when required to keep them in full force and effect. The forms of the New ADB
GSA and General Security Agreement have been prepared based upon the laws of
Canada and Ontario applicable thereto and the form of Norco Pledge has been
prepared in accordance with the laws of Norway applicable thereto, in each case
in effect at the date hereof and that such laws may change. The Lender shall
have the right to require that any such forms be amended to reflect any changes
in such laws, whether arising as a result of statutory amendments, court
decisions or otherwise, in order to confer upon the Lender the security
interests intended to be created thereby, except that in no event shall the
Lender require that any such amendment be effected if the result thereof would
be to grant the Lender greater rights than is otherwise contemplated herein.
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4.3 AFTER ACQUIRED PROPERTY AND FURTHER ASSURANCES.
The Borrower shall from time to time execute and deliver all such further deeds
or other instruments of conveyance, assignment, transfer, mortgage, pledge or
charge in connection with all assets acquired by the Borrower after the date
hereof and intended to be subject to the security interests created hereby
including any insurance thereon; provided, however, that the foregoing
obligation of the Borrower to execute and deliver deeds or other instruments
shall only apply:
(a) whenever the Borrower is requested to do so by the Lender; or
(b) in any event, not later than 90 days after the end of each
fiscal year of the Borrower, with respect to all real and
immoveable property and rights acquired by the Borrower during
such fiscal year.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
Each of the ADB Entities hereby severally and not jointly
represents and warrants to the Lender as follows:
5.1 ORGANIZATION, STANDING AND POWER.
Each ADB Entity is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and has made all necessary
filings under all Applicable Laws.
5.2 AUTHORITY AND ENFORCEABILITY.
(1) Each ADB Entity has all requisite corporate power and
authority to execute and deliver each of the Transaction
Documents and all other documents required hereunder and to do
all acts and to perform fully its obligations hereunder and
thereunder. The execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated hereby or thereby have been duly authorized and
approved by all necessary corporate action on the part of each
ADB Entity.
(2) This Agreement constitutes valid and legally binding
obligations of each ADB Entity enforceable against it in
accordance with their respective terms subject to applicable
bankruptcy, insolvency and other laws of general application
limiting the enforceability of creditors' rights and to the
fact that specific performance is an equitable remedy
available only in the discretion of the court. Neither the
execution and delivery of any Transaction Document, nor
compliance with the terms and conditions of any of them, (i)
has resulted or will result in a violation of the articles or
the by-laws of any ADB Entity or any resolutions passed by the
Board of Directors or shareholders of any ADB Entity or any
applicable Law, (ii) has resulted or will result in a breach
of, or constitute a default under, any loan agreement,
indenture, trust deed or any other agreement or instrument to
which
17
any ADB Entity is a party or by which it is bound or (iii)
requires any approval or consent of any Person except such as
has already been obtained.
5.3 SUBSIDIARIES.
(1) Except as set forth in Schedule 5.3(1), none of the ADB
Entities has any Subsidiaries.
(2) Except as set forth in Schedule 5.3(2) none of the ADB
Entities owns any shares of capital stock, units or any other
interest of any other Person or any rights, options, warrants
or other securities of any other Person, (ii) does not have
any agreement for the purchase, subscription or issuance of
any of the unissued shares of capital rights, options,
warrants, securities or any other interest of any other
Person, and (iii) does not have any interest, directly or
indirectly, in any other Person.
(3) Each Subsidiary of each ADB Entity is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation with the corporate
power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and has
made all necessary filings under all Applicable Laws.
(4) No bankruptcy, insolvency or receivership proceedings have
been instituted or are pending against any ADB Entity or any
of its Subsidiaries and except as set forth on Schedule
5.3(4), each ADB Entity and its Subsidiaries are able to
satisfy their liabilities as they become due.
5.4 CAPITAL STRUCTURE.
(1) The authorized capital of Old ADB consists of an unlimited
number of common shares and an unlimited number of preference
shares issuable in series, of which 41,583,628 common shares
have been validly issued and are outstanding as fully paid and
non-assessable. In the event the Put Option is exercised, the
authorized capital of Old ADB will consist of an unlimited
number of common shares, of which 41,583,628 common shares
will have been validly issued and will be outstanding as fully
paid and non-assessable. The rights, privileges, restrictions
and conditions attached to the common shares of Old ADB are as
set out in Schedule 5.4(1) attached hereto. The authorized and
issued and outstanding capital of each Subsidiary of Old ADB
is set out on Schedule 5.4(1) hereto and all such issued
shares have been validly issued and are outstanding as fully
paid and non-assessable. All shares of each ADB Entity and
each Subsidiary thereto are non-assessable and free of
pre-emptive or similar rights.
(2) Except as contemplated by this Agreement or as set forth in
Schedule 5.4(2) , there are no (a) options, warrants, calls,
puts, rights (including pre-emptive rights), commitments or
any other agreements of any character to which Old ADB or any
Subsidiary thereof is a party or by which Old ADB or any
Subsidiary thereof may be bound, or which at any time in the
future may become binding on
18
Old ADB or any Subsidiary thereof requiring it to issue,
transfer, dispose of, sell, purchase, redeem or otherwise
acquire (or to refrain from doing any of the foregoing) any
shares of Old ADB or any Subsidiary thereof or any other
shares of capital stock or other securities of Old ADB or any
Subsidiary thereof or its successors or rights convertible
into, exchangeable for, or evidencing the right to subscribe
for, any shares or other securities of Old ADB or any
Subsidiary thereof or its successors, or other ownership
interests in Old ADB or any Subsidiary thereof or its
successors; or (b) shareholders agreements, voting trusts or
other agreements or understandings to which Old ADB or any
Subsidiary thereof is a party or by which Old ADB or any
Subsidiary thereof may be bound relating to the voting of, or
placing any restrictions on, any shares of Old ADB or any
Subsidiary thereof or its successors.
5.5 TITLE TO ASSETS; CONDITION; SUFFICIENCY OF ASSETS.
(1) Except for Permitted Encumbrances, Old ADB owns beneficially
and of record, and has good and marketable title to, the
Assets, free and clear of any Encumbrance. All tangible Assets
have been properly maintained and are in good working
condition and repair, except for reasonable wear and tear for
machinery and equipment of comparable age.
(2) In the event the Put Option is exercised, New ADB shall own
all of the outstanding securities of Old ADB, and shall have
good and marketable title thereto, free and clear of any
Encumbrance.
(3) The accounts receivable reflected on the Latest Balance Sheet
arose and the accounts receivable of Old ADB that have arisen
during the period from the Latest Balance Sheet Date through
the date hereof have arisen from bona fide transactions in the
ordinary course of business and, to the best of the knowledge
of each ADB Entity, such receivables will be collected in full
or be fully callable at their face amounts (less any
applicable reserves reflected in the Financial Statements or
thereafter established on a basis consistent with reserves
reflected in the Financial Statements which reserves do not
exceed $100,000 in the aggregate) within 90 days.
(4) The Assets include all the assets (including Intellectual
Property and Intellectual Property Rights), properties,
equipment, licenses and rights used or employed by Old ADB in
its business as presently conducted, including the Bidcom
Business. Old ADB and each of its Subsidiaries have (a) all
right, title, and interest in and to, or a valid right to use,
all of the Assets, including, Intellectual Property,
Intellectual Property Rights, properties, equipment, licenses
and rights owned, used, employed or retained by Old ADB and
its Subsidiaries in the conduct of its business prior to the
date hereof; and (b) all assets, including, Intellectual
Property, Intellectual Property Rights, properties, equipment,
licenses, quotas, permits and rights that are necessary to
carry on the business and operations of Old ADB and its
Subsidiaries as presently conducted by Borrower. Neither of
the ADB Entities has received notice that any employee or
subcontractor, consultant,
19
independent contractor, or software developer of any ADB
Entity or their Subsidiaries will discontinue his, her or its
employment or other relationship with any ADB Entity or their
Subsidiaries after giving effect to the transaction
contemplated hereby.
5.6 NO VIOLATIONS RESULTING FROM TRANSACTIONS.
The execution and delivery by each ADB Entity of the Transaction Documents to
which it is a party and the consummation of the Transactions by each ADB Entity
will not: (a) conflict with or violate any provision of the articles or by-laws
of any ADB Entity, as amended through the date hereof; (b) except as set forth
on Schedule 5.6, require any consent, waiver, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity; (c) except as
set forth in Schedule 5.6, result in or constitute a Default, or require any
consent or approval of or notice to any Person, or result in the creation of any
Encumbrance, under or pursuant to (i) any ADB Entity Contract; or (d) violate
any Law applicable to any ADB Entity or by which it or any of the Assets may be
bound.
5.7 COMPLIANCE WITH LAWS.
Each ADB Entity and each Subsidiary of each ADB Entity is, and at all times has
been, in compliance in all material respects with all Laws applicable to such
ADB Entity or Subsidiary, as applicable, or to the conduct of its business or
operations or the use of the Assets, and none of the ADB Entities nor any
Subsidiary of an ADB Entity has received, and does not know of the issuance or
threatened issuance by any Governmental Entity, of any notices of violation or
alleged violation of any Law applicable to such ADB Entity or Subsidiary, as
applicable. The manner in which each ADB Entity and each Subsidiary of ADB
Entities has offered, delivered, advertised, labelled and sold its products and
services complies with all applicable Laws pertaining thereto.
5.8 LITIGATION.
There is no action, suit, claim, investigation or proceeding, whether at law or
in equity and whether or not purportedly on behalf of any ADB Entity or any
Subsidiary or an ADB Entity (each, a "LEGAL PROCEEDING"), or, to the knowledge
of each ADB Entity, pending or threatened against or affecting any ADB Entity or
any Subsidiary thereof. No event has occurred and no circumstance, matter or set
of facts exist which would constitute a valid basis for the assertion by any
third party of any claim or Legal Proceeding. There is no outstanding or
threatened judgment, injunction, order or consent or similar decree or agreement
of any Governmental Entity against, naming any ADB Entity, any Subsidiary of an
ADB Entity or affecting any of the Assets.
5.9 TAXES.
(1) All Taxes with respect to any periods ending on or before the
date hereof which are due and payable (whether or not shown on
any Tax Return) by Old ADB or any Subsidiary thereof have been
paid in full and no such Taxes remain outstanding. Old ADB and
each of its Subsidiaries do not have any liability, obligation
or commitment for the payment of any Taxes except such Taxes
as are
20
disclosed in the Financial Statements or Taxes payable by Old
ADB or any Subsidiary thereof which are not yet due and
payable with respect to its results of operations for all
periods ending on or before the date hereof or the date on
which the Loan is repaid or otherwise satisfied in full, as
applicable. Old ADB and each of its Subsidiaries have
established current accruals that are adequate for the payment
of all Taxes payable by them which are not yet due and payable
with respect to its results of operations for all periods
ending on or before the date hereof or the date on which the
Loan is repaid or otherwise satisfied in full. Old ADB and
each of its Subsidiaries have filed all Tax Returns required
to have been filed by them prior to the date hereof and no
extension of time for filing a Tax Return is presently in
effect. Old ADB and each of its Subsidiaries have not filed
any waiver for a taxation year. The Tax Returns that have been
filed by Old ADB and each of its Subsidiaries have been
accurately prepared, duly and timely filed and are correct and
complete in all respects. Old ADB and each of its Subsidiaries
have withheld and paid all Taxes required to have been
withheld and paid by them under social security laws or any
other Law imposing tax or social security contributions on Old
ADB or any of its Subsidiaries, including in connection with
amounts paid to or owing to any employee, independent
contractor, creditor or any other third party. Without
limitation to the generality of the foregoing, Old ADB and
each of its Subsidiaries have in particular withheld and paid
all Taxes and social security contributions required to have
been withheld and paid by it for all its Employees, including
part time employees.
(2) There has been no examination by any Tax authority of any
return of Old ADB or any of its Subsidiaries or of any Person
for which Old ADB or any of its Subsidiaries is liable, during
the past five (5) years, and to the best of each ADB Entity's
knowledge there are no audits, actions, suits, proceedings,
investigations or claims now pending or threatened against Old
ADB or any of its Subsidiaries in respect of any Taxes.
5.10 EMPLOYEES.
(1) Neither Old ADB nor any of its Subsidiaries is a party to or
bound by any Contract to pay any management fee.
(2) Except as set forth in Schedule 5.10, neither Old ADB nor any
of its Subsidiaries has any written employment contract or
consulting contract with any Person.
(3) Schedule 5.10 sets forth a true, correct and complete list of:
(i) the names of all employees or consultants of Old ADB
and each of its Subsidiaries and all Contracts with
such Persons,
(ii) their annual salary or remuneration payable by Old
ADB or any of its Subsidiaries,
(iii) their job title with Old ADB or any of its
Subsidiaries,
21
(iv) their total length of employment including any prior
employment as disclosed in Old ADB's or any of its
Subsidiaries' records that would affect calculation
of years of service for purposes of benefit
entitlement (including statutory notice or statutory
severance pay) or pension entitlement,
(v) the term of any consulting contract with Old ADB or
any of its Subsidiaries,
(vi) whether any such employees are on any approved or
statutory leave of absence from Old ADB or any of its
Subsidiaries and, if so, the reason for such absence,
and
(vii) other terms and conditions of their employment (other
than Benefit Plans and Compensation Policies);
(4) Neither Old ADB nor any of its Subsidiaries is bound by or a
party to any collective bargaining agreement.
(5) No trade union, council of trade unions, employee bargaining
agency or affiliated bargaining agent:
(i) holds bargaining rights with respect to any employees
of Old ADB or any of its Subsidiaries by way of
certification, interim certification, voluntary
recognition, designation or successor rights,
(ii) has applied to be certified as the bargaining agent
of any employees of Old ADB or any of its
Subsidiaries, or
(iii) has applied to have Old ADB or any of its
Subsidiaries declared a related employer or successor
employer pursuant to applicable labour legislation.
(6) There are no actual, threatened or pending organizing
activities of any trade union, council of trade unions,
employee bargaining agency or affiliated bargaining agent or
any actual, threatened or pending unfair labour practice
complaints, strikes, work stoppages, picketing, lock-outs,
hand-xxxxxxxx, boycotts, slowdowns, arbitrations, grievances,
complaints, charges or similar labour related disputes or
proceedings pertaining to Old ADB or any of its Subsidiaries,
and there have not been any such activities or disputes or
proceedings within the last year.
(7) All vacation pay and sick leave pay for employees of Old ADB
and its Subsidiaries is properly reflected and accrued in the
books and accounts of Old ADB or its Subsidiaries, as
applicable.
(8) Neither the execution and delivery of any Transaction Document
nor the consummation of the Transactions will: (a) result in
any payment, including severance, unemployment compensation,
golden parachute, bonus or otherwise
22
becoming due to any director or employee of Old ADB or any of
its Subsidiaries; (b) increase any benefits otherwise payable
under any Benefit Plan; or (c) result in the acceleration of
the time of payment or vesting of any such benefits. Old ADB
and each of its Subsidiaries are in compliance in all respects
with all applicable Laws, Contracts relating to employment,
employment practices, wages, hours, and terms and conditions
of employment, including employee compensation matters.
5.11 FINANCIAL ADVISORS.
(1) Except as set forth in Schedule 5.11, no Person has acted
directly or indirectly as a broker, finder or financial
advisor for or to Old ADB or any of its Affiliates in
connection with the negotiations relating to the Transactions.
(2) No Person is entitled to any fee or commission or like
payment, or expense reimbursement from Old ADB or any of its
Affiliates, in respect of any Transaction Document or any of
the Transactions, based in any way on agreements, arrangements
or understandings made by or on behalf of Borrower.
5.12 FINANCIAL STATEMENTS; LOSSES.
(1) Schedule 5.12 sets forth true, correct and complete copies of
the Financial Statements.
(2) The Financial Statements:
(i) are in accordance with the books and account of Old
ADB as at the Latest Balance Sheet Date,
(ii) are true and correct in all material respects and
present fairly in all material respects the financial
position of Old ADB as at the Latest Balance Sheet
Date,
(iii) have been prepared in accordance with GAAP,
consistently applied, and
(iv) present fairly all of the assets and liabilities of
Old ADB as at December 31, 2001, including all
contingent liabilities of Old ADB as at December 31,
2001.
(3) The information provided in the Tax Returns of Old ADB for the
years ending December 31, 1994 to December 31, 2001
(i) reflect the results of the operations of Old ADB for
the respective years;
(ii) calculate the taxable income or non-capital losses in
accordance with the Income Tax Act and Regulations in
effect at the relevant time;
23
(iii) have been filed with Canada Customs and Revenue
Agency ("CCRA"); and
(iv) have not been subject to challenge by CCRA.
5.13 NO UNDISCLOSED LIABILITIES.
Except for liabilities and obligations disclosed in Schedule 5.13, neither Old
ADB nor any of its Subsidiaries have, since the Latest Balance Sheet Date,
incurred any Indebtedness, obligation or liability of any kind (whether accrued,
absolute, contingent or otherwise, and whether due or to become due or asserted
or unasserted) except in the ordinary course of business and there is no basis
for the assertion of any Claim against Old ADB or any of its Subsidiaries which
was not fully reflected in, reserved against or otherwise described in the
latest Balance Sheet that would be required to be disclosed on a balance sheet
prepared in accordance with GAAP.
5.14 ABSENCE OF CERTAIN DEVELOPMENTS.
Except as contemplated by the Restructuring or hereby, during the period from
December 31, 2001 to the date hereof or the date on which the Loan is repaid or
otherwise satisfied in full, as applicable, (a) the business and operations of
Old ADB and each of its Subsidiaries have been carried on in their usual and
ordinary course and neither Old ADB nor any of its Subsidiaries has entered into
any transaction out of the usual and ordinary course of business; (b) there has
been no event, condition or statement of facts of any character that has had or
would reasonably be expected to result in a Material Adverse Effect (c) there
has been no action taken that would have been prohibited by Section 7.2 had that
Section been effective since such date; and (d) there has not been any damage,
destruction or loss, whether or not covered by insurance, with respect to the
property and assets of Old ADB or any of its Subsidiaries having a replacement
cost of more than $10,000 for any single loss or $20,000 for all such losses.
5.15 INTELLECTUAL PROPERTY.
(1) Schedule 5.15 sets forth a true, correct and complete list of
all Intellectual Property and Intellectual Property Rights
owned by Old ADB or any of its Subsidiaries or used by Old ADB
or any of its Subsidiaries and which are necessary or material
to them in the conduct of their business and indicates, with
respect to each item of Intellectual Property or Intellectual
Property Rights listed thereon, the owner thereof and, if
applicable, the name of the licensor or licensee thereof and
the date or dates of any Old ADB Contracts with respect
thereto.
(2) Except as set forth in Schedule 5.15:
(a) Neither Old ADB nor any of its Subsidiaries has received nor
is aware of any notice or claim (whether written, oral or
otherwise) challenging Old ADB's or any of its Subsidiaries'
ownership or rights in the Intellectual Property and
Intellectual Property Rights used in its business or
suggesting that any other Person has any claim of legal or
beneficial ownership with respect thereto;
24
(b) Old ADB has all necessary rights to all Intellectual Property
and Intellectual Property Rights used in Old ADB's or any of
its Subsidiaries' business without any material qualification,
limitation or restriction on its use, and neither Old ADB nor
any of its Subsidiaries have, directly or indirectly received
any notice or claim (whether written, oral or otherwise)
challenging the validity or enforceability of any such
Intellectual Property or Intellectual Property Rights or any
claim of infringement of any such Intellectual Property,
Intellectual Property Right or moral right, in each case which
remains unresolved;
(c) With respect to any Intellectual Property or Intellectual
Property Rights used in Old ADB's or any of its Subsidiaries'
business for which registration with any private or
governmental Person is permitted, but which has not yet been
registered, all applications with respect thereto, the filing
of which would be undertaken by a reasonably prudent operator
of a comparable business, have been filed and are pending;
(d) Neither the business nor any of the operations, products or
services of Old ADB or any of its Subsidiaries' nor Old ADB's
Software or the use, or Distribution thereof conflict with,
infringe upon, violate or interfere with or constitute an
appropriation of any right, title or interest held by any
other person or entity, and there have been no claims made
with respect thereto;
(e) To the knowledge of Old ADB, no person is infringing in any
respect on any part of the Intellectual Property or
Intellectual Property Rights listed in Schedule 5.15;
(f) Old ADB and its Subsidiaries together are the owners of free
and clear of Encumbrances except Permitted Encumbrances, or
have all necessary rights to use all Intellectual Property and
all Intellectual Property Rights used in Old ADB's and each of
its Subsidiaries' business;
(g) Old ADB is the owner of Old ADB's Trade-Marks;
(h) Old ADB and its Subsidiaries together are the owners of, free
and clear of Encumbrances except Permitted Encumbrances, the
Proprietary Rights Registrations;
(i) Old ADB is the owner of, free and clear of Encumbrances except
Permitted Encumbrances, Old ADB's Software and all
Intellectual Property Rights therein;
(j) To the knowledge of each ADB Entity, the use of Old ADB's
Trade-Marks in its business does not conflict or interfere
with, infringe upon or constitute an infringement, violation
or misappropriation of Intellectual Property Right or moral
right of any Person;
(k) Borrower is the registrant of each Borrower's Domain Name as
shown by the records of the relevant accredited registrar;
25
(l) To the knowledge of each ADB Entity, the Intellectual Property
used in Old ADB's and each of its Subsidiaries' business and
the conduct of Old ADB's and each of its Subsidiaries'
business does not conflict or interfere with, infringe upon or
constitute an infringement, violation, or misappropriation of
an Intellectual Property Right or moral right of any Person;
(m) To the knowledge of each ADB Entity, the manufacture,
production, reproduction, sale, distribution, marketing, and
use of Old ADB's Software does not conflict or interfere with,
infringe upon, or violate any Intellectual Property Right or
moral right of any person;
(n) All Proprietary Rights Registrations are in good standing and
without challenge of any kind; and
(o) No Person has any Intellectual Property Right or right to use
Old ADB's Software except pursuant to licenses granted in the
ordinary course of business;
(3) Old ADB has in its possession complete copies of all of the
computer programs in source and object code forms and related
flow charts, specifications, and technical and user
documentation for each component of Old ADB's Software;
(4) No part of Old ADB's Software has fallen into the public
domain;
(5) Old ADB's Software is an original work of authorship and
copyright subsists in Old ADB's Software in Canada and the
United States. Old ADB is the owner of such copyrights in
Canada and the United States.
(6) The only persons who have been authorized by Old ADB, or who
have the right, to Distribute, manufacture or produce copies
of Old ADB's Software are the persons listed in Schedule 5.15
and Old ADB's Subsidiaries;
(7) Except as set forth in Schedule 5.15, no person who is an end
user of Old ADB's Software has any right to use same, other
than its Subsidiaries or pursuant to a written license
agreement between Old ADB and the end-user, copies of which
have been made available to the Lender;
(8) All machinery, equipment, computers, hardware, and Computer
Software owned or used by Old ADB or any of its Subsidiaries
in their respective businesses have been properly maintained
and are in good working order for the purposes of on-going
operation, subject to ordinary wear and tear for machinery,
equipment, computers, hardware and Computer Software of
comparable age;
(9) No Person other than Old ADB and its Subsidiaries has been
given or has in its possession or has any right to use the
source codes or algorithms, has had made available to them, or
has any copies of, the source codes or algorithms, to or used
in Old ADB's Software, except as provided in Schedule 5.15;
26
(10) The Intellectual Property and Intellectual Property Rights
described in Schedule 5.15 constitute all of the Intellectual
Property and Intellectual Property Rights necessary to conduct
Old ADB's business in the ordinary course of its business;
(11) To the best of the knowledge of Old ADB, there are no material
problems or defects in Old ADB's Software (including bugs,
logic errors and the failure of Old ADB's Software to operate
as described in Product Documentation commercially distributed
with such product) and Old ADB's Software performs materially
in conformance with its related end-user and technical
Documentation;
(12) Schedule 5.15 sets out details as to all warranties provided
by Old ADB connection with the license or sale of Old ADB's
Software, and services related thereto. Such Schedule also
sets out all known warranty claims in respect of Old ADB's
Software;
(13) Schedule 5.15 contains a list of all contracts and agreements
of the Old ADB to provide maintenance, support and customer
support service to customers with respect of Old ADB's
Software;
(14) Old ADB's Software does not contain any protection feature
designed by Old ADB to prevent copying, or intentionally to
prevent the use of such Computer Software and without limiting
the generality of the foregoing, no portion of Old ADB's
Software contains any virus, "back door", "time bomb", "Trojan
Horse" or other Computer Software routines or hardware
components which are designed by Old ADB, are intended to
prevent, are likely to, or have the effect of preventing
unauthorized access, disabling, erasing, corrupting or
affecting the normal use of software or data, or performing
like actions;
(15) Neither Old ADB nor any of its Subsidiaries has conducted its
respective business, or used or enforced (or failed to use or
enforce) any Intellectual Property or Intellectual Property
Rights, in a manner that would result in the abandonment,
cancellation or unenforceability of any item of the
Intellectual Property or Intellectual Property Rights listed
in Schedule 5.15, and neither Old ADB nor any of its
Subsidiaries have taken or failed to take any action that
would result in the forfeiture or relinquishment of any
Intellectual Property or Intellectual Property Rights used in
the conduct of its business;
(16) Each of Old ADB and its Subsidiaries, (a) has taken all
commercially reasonable steps to (i) protect its rights to the
Intellectual Property and Intellectual Property Rights listed
in Schedule 5.15; and (ii) prevent the unauthorized use
thereof by, or the unauthorized disclosure thereof to, any
other Person; and (b) shall use all reasonable efforts to
maintain, or cause to be maintained, the Intellectual Property
and Intellectual Property Rights listed in Schedule 5.15 in
full force and effect through the date on which the Loan is
repaid or otherwise satisfied in full and, without limiting
the generality of the foregoing, has renewed or has made, and
will make within an applicable renewal period ending on or
prior to the date hereof or the Put Closing Date, as
applicable, application to renew all of such
27
Intellectual Property Rights subject to expiration on or prior
to the date on which the Loan is repaid or otherwise satisfied
in full. With respect to any part of the Intellectual Property
and Intellectual Property Rights listed in Schedule 5.15 which
was created by Old ADB or any of its Subsidiaries or any of
their agents or representatives, except in the ordinary course
of business (a) no third party has any rights (whether
non-exclusive or otherwise) in such Intellectual Property and
Intellectual Property Rights and, no third party has received
any confidential information relating to such Intellectual
Property and Intellectual Property Rights; and (b) neither Old
ADB nor any of its Subsidiaries, is under any contractual or
other obligation to disclose to any third party any such
Intellectual Property and Intellectual Property Rights;
(17) To the knowledge of each ADB Entity, Old ADB and each of its
Subsidiaries are in compliance in all material respects with
all applicable Laws related to privacy and data protection in
relation to their businesses as presently carried on by them
and, subject to the forgoing:
(a) Old ADB and its Subsidiaries have all necessary and required
consents from all persons with respect to the collection, use
and disclosures of personal information collected, used, and
disclosed by Old ADB or its Subsidiaries;
(b) Old ADB and each of its Subsidiaries has a comprehensive
privacy policy that is compliant with all applicable Laws and
Old ADB and each of its Subsidiaries is in compliance with
such requirements in all material respects;
(c) None of Old ADB or any of its Subsidiaries has received any
notice or complaint related to its collection, use, or
disclosure of personal information and, to the knowledge of
each ADB Entity, there are no investigations current or
pending with respect to personal information collected, used
or disclosed by Old ADB or any of its Subsidiaries.
5.16 REAL PROPERTY.
Neither Old ADB nor any of its Subsidiaries own or have any contractual right to
acquire and have never owned or had any contractual right to acquire any real
property. Schedule 5.16 sets forth all property in which Old ADB or its
Subsidiaries have a leasehold interest. Old ADB and each of its Subsidiaries
have a good and valid leasehold interest in each parcel of real property leased
by it.
5.17 INSURANCE.
Old ADB and each of its Subsidiaries currently maintain, and as of the date on
which the Loan is repaid or otherwise satisfied in full will maintain, valid
insurance policies, which policies provide coverage for Old ADB and its
Subsidiaries and the operations conducted by them that is customary in scope and
amount for Persons conducting business or owning assets similar to Old ADB and
its Subsidiaries. There are no pending claims against such insurance by Old ADB
or any of its Affiliates as to which the applicable insurers have denied
coverage and there exist no claims under such insurance that have not been
properly filed by Old ADB or any of its
28
Affiliates. Neither Old ADB nor any of its Subsidiaries has been refused any
insurance coverage by any insurer from which Old ADB or any of its Subsidiaries
has sought coverage.
5.18 CONTRACTS.
(1) Except as stated in Schedule 5.18 or Schedule 5.10, Old ADB is
not a party to, nor are any of the Assets bound by, any: (a)
Contract not made in the usual and ordinary course of business
or the performance of which will extend over a period greater
than thirty (30) days and which is not cancellable by Old ADB
without penalty; (b) employment, consulting, independent
contractor, non-competition, severance, golden parachute or
indemnification Contract; (c) advertising, public relations,
franchise, distributorship or sales agency Contract; (d)
Contract involving the commitment or payment in excess of
$5,000 for the future purchase of services, properties,
materials or equipment; (e) Contract among shareholders to
which Old ADB or any of its Subsidiaries is a party or
granting a right of first refusal or for a partnership or for
a joint venture or for the acquisition, sale or lease of any
properties or assets of Old ADB or any of its Subsidiaries;
(f) mortgage, pledge, conditional sales contract, security
agreement, factoring agreement or other similar Contract with
respect to any property of Old ADB or any of its Subsidiaries;
(g) loan agreement, credit agreement, promissory note,
guarantee, subordination agreement, letter of credit or any
other similar type of Contract; (h) retainer Contract with
investment bankers, attorneys, accountants, actuaries,
appraisers or other professional advisers; (i) Contract with
any Governmental Entity; (j) Contract which could limit or
restrain Old ADB or any of its Subsidiaries engaging in any
line of business, competing with any Person or conducting
business in any particular geographic area; (k) software
development agreement or any other similar Contract to which
Old ADB or any of its Subsidiaries or any entity acting on
behalf of Old ADB or any of its Subsidiaries is a party; (l)
Contract, the performance or non-performance of which by Old
ADB or any of its Subsidiaries could cause a Material Adverse
Effect; or (m) Contract to enter into any of the foregoing.
Old ADB has delivered or otherwise made available to Lender
true, correct and complete copies of the Contracts listed in
Schedule 5.18, together with all amendments, modifications and
supplements thereto and side letters to which Old ADB or any
of its Subsidiaries is a party affecting the obligations of
any party thereunder. No Person holds a power of attorney to
act on behalf of Old ADB or any of its Subsidiaries.
(2) Except as set forth in Schedule 5.18:
(a) Each Old ADB Contract is valid and enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting
creditors rights and remedies generally and subject, as to
enforceability, to general principles of equity, regardless of
whether enforcement is sought in a proceeding at law or in
equity;
29
(b) No Default, except such Default that has not and would not
result in a Material Adverse Effect, exists under any Old ADB
Contract by Old ADB or any of its Subsidiaries or, to Old
ADB's knowledge, by any other party thereto;
(c) Old ADB is not aware of the assertion by any third party of
any claim of Default that would result in a Material Adverse
Effect under any Old ADB Contract;
(d) With respect to Old ADB Contracts that were assigned or
subleased to Old ADB or any of its Subsidiaries by any third
party, all necessary consents to such assignments or subleases
have been obtained; and
(e) Neither Old ADB nor any of its Subsidiaries have been notified
by any customer, licensor, licencee, supplier or key employee
of Old ADB or any of its Subsidiaries that it has or that it
intends to either (i) terminate or significantly change its
existing business relationship with Old ADB or any of its
Subsidiaries, either now or in the foreseeable future; or (ii)
not renew or extend its existing business relationship with
Old ADB or any of its Subsidiaries at the end of the term of
any existing contractual or other arrangement such person or
entity may have with Old ADB or any of its Subsidiaries.
5.19 RELATED PARTY TRANSACTIONS.
Except as set forth in Schedule 5.19, no vendor, director, officer, partner,
employee, member, "affiliate" or "associate" (as such terms are defined in Rule
12b-2 under the United States Securities Exchange Act of 1934, as amended) of
Old ADB (a) since the Latest Balance Sheet Date has lent or borrowed any monies
to or from or has outstanding any Indebtedness or other similar obligations to
Old ADB or any of its Subsidiaries; (b) to Old ADB's knowledge, owns any direct
or indirect interest of any kind (except with respect to the ownership of not
more than one percent (1%) of any class of equity security in a publicly-held
entity) in, or is a director, officer, employee, partner, affiliate or associate
of, or consultant or lender to, or borrower from, or has the right to
participate in the management, operations or profits of, any Person that is a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of Borrower or any of its Subsidiaries; (c) is otherwise a party to, or since
the Latest Balance Sheet Date, has been a party to, any Contract, arrangement or
understanding with Old ADB or any of its Subsidiaries; or (d) owns or has any
rights in any assets, including Intellectual Property, properties, licenses or
rights which are or were used or leased by Old ADB or any of its Subsidiaries in
the conduct of their business.
5.20 RESTRICTIONS ON BUSINESS ACTIVITIES.
Except as set forth in Schedule 5.20, there is no Contract, judgment,
injunction, order or decree binding upon Borrower or any of its Subsidiaries
that has or could have the effect of prohibiting or impairing any business
practice of Old ADB or any of its Subsidiaries, any acquisition of property by
Old ADB or any of its Subsidiaries or the conduct of its business.
30
5.21 BOOKS AND RECORDS.
The books, records and accounts of Old ADB and each of its Subsidiaries: (a)
have in all respects been maintained in accordance with good business practices
on a basis consistent with prior years; and (b) are stated in reasonable detail
and in all respects accurately and fairly reflect the transactions and
dispositions of the assets of Old ADB and each of its Subsidiaries. Old ADB and
each of its Subsidiaries have devised and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that, (a)
transactions are executed in accordance with management's general or specific
authorization; and (b) transactions are recorded as necessary, (i) to permit
preparation of financial statements in accordance with GAAP; and (ii) to
maintain accountability for assets.
5.22 BENEFIT PLANS.
(1) Schedule 5.23 sets forth a true, correct and complete list of
every benefit plan, bonus, stock option, stock purchase,
deferred compensation, incentive compensation, stock
appreciation, phantom stock, savings, profit sharing,
severance or termination pay, health or other medical, life,
disability or other insurance (whether insured or
self-insured, supplementary unemployment benefit, pension,
retirement and supplementary retirement plans, programs,
agreements or arrangements maintained, contributed to, or
provided by Old ADB or any of its Subsidiaries for the benefit
of any current or former employees or dependent or independent
contractors of Borrower or with respect to which Old ADB or
any of its Subsidiaries has any liability (all the foregoing
being herein called "BENEFIT PLANS"). Old ADB has delivered to
Lender true, complete and correct copies of: (a) each Benefit
Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof); (b) the most recent summary plan
description for each Benefit Plan for which such a summary
plan description has been prepared; and (c) each trust
agreement, group annuity contract or other funding and
financing arrangement relating to any Benefit Plan.
(2) Each Benefit Plan has been administered in all respects in
accordance with its terms. Old ADB, each of its Subsidiaries
and all Benefit Plans are in compliance in all respects with
all other applicable Laws and all applicable collective
bargaining agreements. Except as set forth in Schedule 5.23,
there are no proceedings pending, threatened against or
involving any Benefit Plan and, there are no investigations by
any Governmental Entity or other claims (except routine claims
for benefits payable in the normal operation of the Benefit
Plans) pending, threatened against or involving any Benefit
Plan or asserting any rights to benefits under any Benefit
Plan. None of the proceedings, investigations and claims
listed in such Schedule as to which there is at least a
reasonable possibility of adverse determination, would have,
if so determined, individually or in the aggregate, a Material
Adverse Effect. To Old ADB's knowledge, there are no
unasserted claims of the type that would be required to be
disclosed in such Schedule, if pending or threatened, that are
considered probable of assertion and that if asserted would
have at least a reasonable possibility of an adverse
determination.
31
(3) All required contributions to, and distributions from, each of
the Benefit Plans have been made. No event has occurred with
respect to any Benefit Plan that could result in the
imposition of an Encumbrance on any material Assets under any
applicable Law.
5.23 ENVIRONMENTAL MATTERS.
The business carried on by Old ADB and its Subsidiaries is in compliance in all
material respects with all Environmental Laws and there are no facts that could
give rise to a notice of non-compliance with any Environmental Law. There are no
environmental permits used in or required to carry on such business.
5.24 PUBLIC GRANTS.
Old ADB and each of its Subsidiaries have applied for, received and used all
public grants only in accordance with applicable law and in compliance with all
regulatory orders, conditions and impositions. No such grants will have to be
repaid as a result of the consummation of the transactions reflected in this
Agreement nor due to the other circumstances already known. The granting
institutions do not have or have waived any rights for early termination on
grounds of this Agreement and/or its consummation.
5.25 OSC REPORTS.
Since December 31, 2000, Old ADB has filed all forms, reports and documents with
the Ontario Securities Commission ("OSC") required to be filed by it pursuant to
the Securities Act (Ontario) and the regulations promulgated thereunder and the
applicable rules and policies of the OSC (such forms, reports and documents
collectively referred to as the "OSC REPORTS"), all of which complied when filed
in all material respects with the applicable requirements of such statute,
regulations, policies and rules. None of the OSC Reports at the time filed or as
subsequently amended, contained any untrue statement of a material fact (as
defined in the Securities Act (Ontario)) or omitted to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
5.26 GENERAL.
Old ADB has provided to Lender all information relating to the business carried
on by Old ADB and its Subsidiaries that would be material to a purchaser of the
assets or shares of Old ADB, its Subsidiaries and such business. All such
information is true and correct and no material facts have been omitted
therefrom that would make such information misleading. Old ADB does not have
knowledge of any material facts relating to its assets or shares of Old ADB, its
Subsidiaries or such business that could reasonably be expected, individually or
in the aggregate, to materially adversely affect such business.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF LENDER
Lender hereby represents and warrants to the ADB Entities as follows:
32
6.1 ORGANIZATION, STANDING AND POWER.
Lender is duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and has made all necessary filings
under all Laws applicable to the Lender.
6.2 AUTHORITY AND ENFORCEABILITY.
(1) Lender has all requisite corporate power and authority to
execute and deliver this Agreement and all other documents
required hereunder and to do all acts and to perform fully its
obligations hereunder and thereunder. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized and
approved by all necessary corporate action on the part of
Lender.
(2) This Agreement constitutes valid and legally binding
obligations of Lender enforceable against it in accordance
with their respective terms subject to applicable bankruptcy,
insolvency and other laws of general application limiting the
enforceability of creditors' rights and to the fact that
specific performance is an equitable remedy available only in
the discretion of the court. Neither the execution and
delivery of this Agreement or any Document, nor compliance
with the terms and conditions of any of them, (i) has resulted
or will result in a violation of the articles or the by-laws
of Lender or any resolutions passed by the Board of Directors
or shareholders of Lender or any applicable law, rule,
regulation, order, judgment, injunction, award or decree, (ii)
has resulted or will result in a breach of, or constitute a
default under, any loan agreement, indenture, trust deed or
any other agreement or instrument to which Lender is a party
or by which it is bound or (iii) requires any approval or
consent of any governmental authority or agency having
jurisdiction except such as has already been obtained.
6.3 NO VIOLATIONS RESULTING FROM TRANSACTIONS.
The execution and delivery by Lender and the performance by Lender of its
obligations under this Agreement and each other Transaction Documents executed
or to be executed by Lender will not, (a) conflict with or violate any provision
of the respective Articles or By-laws of Lender; (b) require any consent,
waiver, approval, authorization or permit of, or filing with or notification to
any Governmental Entity, (c) result in or constitute a Default, or require any
consent or approval of or notice to any Person, or result in the creation of an
encumbrance, under or pursuant to any material agreement to which Lender is a
party or by which any of its assets are bound; or (d) violate any Law applicable
to Lender or by which any of its assets are bound.
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ARTICLE 7 - COVENANTS
7.1 AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees with the Lender that, unless the Lender
otherwise consents in writing:
(a) Punctual Payment
The Borrower shall duly and punctually pay the principal of
all Advances, all interest thereon and all fees and other
amounts required to be paid by the Borrower hereunder in the
manner specified hereunder.
(b) Corporate Existence and Conduct of Business
Except as contemplated by the Restructuring, the Borrower
shall, and shall cause its Subsidiaries to, maintain their
respective corporate existences in good standing and do or
cause to be done all things necessary to keep in full force
and effect all properties, rights, franchises, licences and
qualifications to carry on business in any jurisdiction in
which it or they carry on business and it shall, and shall
cause its Subsidiaries to, maintain all of its or their
respective properties and assets consistent with industry
standards.
(c) Compliance with Legislation
The Borrower shall do or cause to be done, and shall cause its
Subsidiaries to do or cause to be done, all acts necessary or
desirable to comply with all applicable Laws and to preserve
and keep in full force and effect all franchises, licences,
rights, privileges and permits necessary to enable the
Borrower and each of its Subsidiaries to operate and conduct
their respective businesses in accordance with standard
industry practice and to advise the Lender of any anticipated
changes, loss or sale of such franchises, licences, rights,
privileges and permits.
(d) Material Litigation
The Borrower shall promptly give written notice to the Lender
of any litigation, proceeding or dispute affecting the
Borrower or any of its Subsidiaries if the result might, in
the Borrower's bona fide opinion, have a Material Adverse
Effect on the Borrower or any of its Subsidiaries and from
time to time furnish to the Lender all reasonable information
requested by the Lender concerning the status of any such
litigation, proceeding or dispute.
(e) Financial Statements and Other Information
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The Borrower shall deliver to the Lender:
(i) Annual Financials - as soon as available and, in any
event, within 140 days after the end of each of its
fiscal years, copies of its audited annual financial
statements on a consolidated and unconsolidated basis
consisting of balance sheets, statement of profit and
loss and surplus and statement of changes in
financial condition for each such year, together with
the notes thereto, all prepared in accordance with
generally accepted accounting principles consistently
applied together, in the case of the consolidated
financial statements, with a report of the Borrower's
auditors thereon which shall not contain any
qualification which materially adversely affects the
credit risk of the Lender hereunder;
(ii) Quarterly Financials - as soon as available and, in
any event within 60 days after the end of each of its
first, second and third fiscal quarters, copies of
its unaudited quarterly financial statements on a
consolidated basis, in each case consisting of
balance sheets, statement of profit and loss and
surplus and statement of changes in financial
condition for each such period all in reasonable
detail and stating in comparative form the figures
for the corresponding date and period in the previous
fiscal year prepared and certified by the Borrower's
chief financial officer;
(iii) Monthly Financials - within ten Business Days of each
month end (A) copies of the unaudited unconsolidated
monthly financial statements of the Norwegian
Subsidiary and unaudited consolidated monthly
financial statements of the Borrower, in each case
consisting of balance sheets, statement of profit and
loss and surplus, statement of changes in financial
condition for each such period and (B) the monthly
business report to management (as prepared in the
ordinary course of business), all in reasonable
detail prepared and certified by the Borrower's chief
financial officer, and (C) an updated monthly
consolidated cash forecast for each month until
December 31, 2002, a quarterly cash forecast for the
period between December 31, 2002 and December 31,
2003, and (D) a monthly consolidated cash forecast
for each month as of and following January 1, 2003.
All of the above reports and forecasts must be
reasonably detailed.
(iv) Weekly Cash Reports - by the end of the next Business
Day following the Friday of each week, a weekly cash
report in reasonable detail showing bank balances and
marketable securities prepared and certified by the
Borrower's chief financial officer;
(v) No Event of Default - concurrently with furnishing
the financial statements pursuant to Sections
7.1(e)(i), (ii) and (iii), an Officer's Certificate
signed by the Borrower's chief financial officer
stating (A) that no Event of Default has occurred and
is continuing, and (B) the covenants contained in
Sections 7.1 and 7.2 have been or are being complied
with; and
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(vi) Other - such other reports, certificates, projections
of income and cash flow or other matters affecting
its business affairs or financial condition or the
business, affairs or financial condition of any of
its Subsidiaries as the Lender may reasonably
request.
(f) Rights of Inspection
At any reasonable time and from time to time upon reasonable
prior notice, the Borrower shall permit the Lender or any
representative thereof, at the expense and risk of the Lender,
to examine and make copies of and abstracts from the records
and books of account of the Borrower or any of its
Subsidiaries and information and statements relating to the
Assets and to visit and inspect the premises and properties of
the Borrower or any of its Subsidiaries and to discuss the
affairs, finances and accounts of the Borrower or any of its
Subsidiaries with any of the officers, senior employees or
managers of the Borrower or any of its Subsidiaries.
(g) Insurance
(i) The Borrower shall maintain all risks property
insurance in connection with its assets and business
and other types of insurance, including business
interruption insurance and liability insurance with
respect to claims for personal injury, death or
property damage, with respect to the operation of its
business, all with responsible and reputable
insurance companies in such amounts and with such
deductibles as are customary in the case of
businesses of established reputation engaged in the
same or similar businesses and in any event as are
reasonably acceptable to the Lender.
The proceeds of all insurance other than public
liability, third party and business interruption
insurance shall be payable to the Lender to be
applied by it in reduction of the amounts outstanding
hereunder. The proceeds of business interruption
insurance shall be payable to the Lender to be
applied by the Borrower on account of ongoing
obligations of the Borrower hereunder as the same
fall due from time to time and, to the extent of any
surplus, to arrears of such payments. The balance, if
any, remaining after application of such proceeds as
aforesaid shall be paid to the Borrower.
(ii) The proceeds of all insurance held by the Lender
shall, unless and until the same are applied or
released to the Borrower as aforesaid, constitute
continuing collateral security for the Borrower's
obligations and liabilities in respect of amounts
outstanding hereunder. The Lender shall place such
funds in an interest-bearing account with the
interest thereon to accrue to the benefit of the
Borrower.
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(h) Accounts Receivable Reports
The Borrower shall, within 30 days after the end of each
calendar month, prepare and deliver to the Lender a
consolidated statement of accounts receivable in form
satisfactory to the Lender and denominated in Canadian
Dollars.
(i) Proxies, Annual Reports, Etc.
The Borrower shall provide the Lender copies of all proxy
statements, reports and information circulars that the
Borrower or any of its Subsidiaries make available to its
shareholders and copies of all regular and periodic reports
which the Borrower or any of its Subsidiaries may file with
any securities commission or any other regulatory body or
governmental body in Canada or the United States.
(j) Notice of Event of Default
The Borrower shall deliver to the Lender, forthwith upon
becoming aware of any default in the performance of any
covenant, agreement or condition contained in a Transaction
Document or the occurrence of an Event of Default under
Article Fourteen, an Officer's Certificate specifying such
default or defaults or such event.
(k) Payment of Taxes, etc.
The Borrower shall, and shall cause its Subsidiaries to, from
time to time pay or cause to be paid all rents, taxes, rates,
levies or assessments, ordinary or extraordinary, governmental
fees or dues, lawfully levied, assessed or imposed upon the
Borrower or its Subsidiaries or any of the assets of the
Borrower or its Subsidiaries, as and when the same become due
and payable, except when and so long as the validity of any
such rents, taxes, rates, levies, assessments, fees or dues is
in good faith being contested by the Borrower or its
Subsidiaries.
(l) Security
The Borrower shall provide the Security contemplated hereunder
perfected to the satisfaction of the Lender.
(m) Environmental Law
The Borrower shall:
(i) notify the Lender promptly of any event or occurrence
that will, or is likely to, give rise to a material
report, inquiry or investigation, or any legal
proceeding, relating to, or a violation of,
Requirements of Environmental Law;
(ii) provide the Lender upon request such information,
certificates, or statutory declarations and shall
conduct such environmental audits or site
37
assessments as may be reasonably necessary to ensure
the compliance with all Requirements of Environmental
Law; and
(iii) execute all consents, authorizations and directions
to appropriate governmental authorities that are
required to permit any inspection of the assets and
undertakings of the Borrower and its Subsidiaries and
the release to the Lender, or its representatives, of
information relating to the assets or undertakings of
the Borrower and its Subsidiaries. The Borrower
hereby irrevocably constitutes and appoints the
Lender the true and lawful attorney of the Borrower,
with full power of substitution, to execute any of
the foregoing consents, authorizations and
directions.
(n) Payment of Preferred Claims
The Borrower shall, and shall cause its Subsidiaries to, from
time to time pay or cause to be paid all amounts related to
taxes, wages, workers' compensation obligations, government
royalties or pension fund obligations and any other amount
which may result in a lien, charge or similar encumbrance
against the assets of the Borrower or such Subsidiary arising
under statute or regulation.
(o) Conduct Business in Ordinary Course
The Borrower shall conduct its business only in the ordinary
course consistent with past practice.
(p) Preserve Business
The Borrower shall use commercially reasonable efforts to (i)
preserve the present business operations, organization,
including management and the sales force and goodwill of Old
ADB, and (ii) preserve the present relationship of Old ADB
with Persons having business dealings with Old ADB.
(q) Comply with Laws
The Borrower shall comply with all Laws and comply with all
contractual and other obligations applicable to the Borrower.
(r) Advise of Changes; Filings
The Borrower shall confer on a regular and frequent basis with
Lender, report on operational matters and promptly advise
Lender orally and in writing of any change or event having, or
which could have, an Material Adverse Effect. Borrower shall
promptly provide Lender, or its counsel, with copies of all
filings made by Borrower with any Governmental Entity in
connection with this Agreement or the transactions
contemplated hereby.
(s) Intellectual Property
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The Borrower shall take all commercially reasonable steps to
(i) protect its rights to the Intellectual Property and
Intellectual Property Rights listed in Schedule 5.15; and (ii)
prevent the unauthorized use thereof by, or the unauthorized
disclosure thereof to, any other Person; and (b) shall use all
reasonable efforts to maintain, or cause to be maintained, the
Intellectual Property and Intellectual Property Rights listed
in Schedule 5.15 in full force and effect and, without
limiting the generality of the foregoing, will make within the
applicable renewal period an application to renew all of such
Intellectual Property Rights subject to expiration.
7.2 NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees with the Lender that, unless the Lender
otherwise consents in writing:
(a) No Sale of Assets
Except as contemplated by the Restructuring, the Borrower
shall not, nor shall it permit any of its Subsidiaries to,
sell, transfer, assign, convey or otherwise dispose of in any
fiscal year of the Borrower in any one transaction or series
of transactions any assets (except current assets,
characterized as such in accordance with generally accepted
accounting principles in the ordinary course of business)
having an aggregate market value in excess of Cdn. $25,000.
(b) No Capital Expenditures
Between the date hereof and August 31, 2003, the Borrower
shall not, nor shall it permit any of its Subsidiaries to,
purchase or otherwise acquire in any fiscal year of the
Borrower in any one transaction or series of transactions any
assets or otherwise make any capital expenditures having an
aggregate market value in excess of Cdn. $25,000, except with
the consent of the Lender, not to be unreasonably withheld,
capital expenditures in respect of new customer contracts.
(c) No Incurring of Indebtedness
Except for the Subordinated Notes, the Borrower shall not, nor
shall it permit any of its Subsidiaries to, create, issue,
incur, assume or permit to exist any Indebtedness other than
trade payables incurred in the ordinary course of business.
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(d) No Encumbrances
The Borrower shall not create, incur, assume or permit to
exist any Encumbrance upon any of its Assets except Permitted
Encumbrances.
(e) No Investments or Guarantees
Except in the ordinary course of business, the Borrower shall
not, directly or indirectly, make investments in or otherwise
acquire any property or capital of any other person or
guarantee the obligations of any other person.
(f) No Dividends
The Borrower shall not pay or distribute any dividend or other
distribution nor declare or set aside for payment dividends on
any of its issued shares.
(g) No Reduction of Capital
Except as contemplated by the Restructuring, the Borrower
shall not purchase, redeem or retire in any way any shares of
its capital or otherwise reduce its issued or paid-up capital
in respect of any such shares.
(h) No Merger, Amalgamation, etc.
Except as contemplated by the Restructuring, the Borrower
shall not amalgamate, merge, consolidate or otherwise enter
into any other form of business combination with any other
Person.
(i) No Dissolution
The Borrower shall not liquidate, dissolve or wind-up or take
any steps or proceedings in connection therewith.
(j) Non-Arm's Length Transactions
Except as contemplated by the Restructuring, the Borrower
shall not, nor shall it permit any Subsidiary to enter into,
any contract whatsoever one with the other or another or an
Affiliate for the sale, purchase, lease or other dealing in
any property other than at a consideration which equals the
fair value of such property or other than at a fair market
rental as regards leased property.
40
(k) Negative Covenant
The Borrower shall not, nor shall it permit any of its
Subsidiaries to, create, issue, incur, assume or permit to
exist any mortgage, charge, lien or other encumbrance on any
of its undertakings or assets other than Permitted
Encumbrances.
(l) No Amendment to Articles or By-laws
The Borrower shall not, nor shall it permit any of its
Subsidiaries to amend its constating documents or by-laws.
(m) No Alteration of Capital Structure
Except for the Subordinate Notes and issuance of options under
the Borrower's stock option plan, the Borrower will not alter
the capital structure of the Borrower or any of its
Subsidiaries in any way or issue additional options, warrants
or other convertible or exchangeable securities or enter into
any agreement of any character to take any such action.
(n) Reserve Rights
The Borrower shall not dispose of or permit to lapse any
rights to the use of any Intellectual Property, or dispose of
or disclose to any Person, other then the Lender and its
Affiliates and representatives, any Intellectual Property of
Old ADB not theretofore a matter of public knowledge and not
waive or release any material right of Old ADB except in the
ordinary course of business consistent with past practice.
(o) Salaries and Bonuses
The Borrower shall not pay any bonuses, salaries, management
fees or other forms of compensation to its employees or to its
Affiliates other than the amounts set forth in Schedule 5.10
and any salary increases or bonus thereafter made in the
normal and ordinary course of business.
7.3 TERMINATION OF NEGATIVE AND POSITIVE COVENANTS
In the event the Loan is repaid or otherwise satisfied in full, the obligations
of the Borrower pursuant to Sections 7.1 and 7.2 shall terminate.
7.4 PERFORMANCE OF OBLIGATIONS
All obligations of the Borrower as at the Effective Time, except such
obligations relating to Xxx.xxx Assets and Xxx.xxx Liabilities as defined in the
Assignment and Assumption Agreement, that cannot or may not have been assigned
to New ADB pursuant to such agreement shall in all circumstances be performed
and assumed by New ADB and New ADB hereof indemnifies and saves harmless Old ADB
from all liability in respect thereof.
41
ARTICLE 8 - EVENTS OF DEFAULT AND ACCELERATION
8.1 EVENTS OF DEFAULT.
The occurrence of any one or more of the following events (each such event being
herein referred to as an "Event of Default") shall constitute a default under
this Agreement:
(a) if the Borrower defaults in payment of the principal of the
Loan when due and payable;
(b) if the Borrower defaults in payment of
(i) any interest (including, if applicable, default
interest) due on the Loan; or
(ii) any other amount not specifically referred to herein
payable by the Borrower to the Lender when due and
payable;
and such default continues for five Business Days after notice
of such default has been given by the Lender to the Borrower;
(c) if the shareholders of the Borrower do not approve the
Management Information Circular pursuant to the Restructuring
or if the conditions in Article 5 of the Arrangement Agreement
are not satisfied;
(d) if any ADB Entity neglects to observe or perform any covenant
or obligation of such ADB Entity, the Entity contained in this
Agreement or any Transaction Documents, and such default
continues for five Business Days after notice of such default
has been given by the Lender to the Borrower;
(e) if the aggregate of cash and the fair market value of
marketable securities owned by the Borrower is less than
$300,000;
(f) if the employment of either of the individuals currently
holding the positions of head of technology group or director
of finance of the Borrower is terminated for any reason and
such positions are not filled by a senior person or consultant
qualified to perform the duties required of such position
within a reasonable period of time;
(g) if a change of control occurs. For purposes of this Agreement,
"change of control" means the occurrence of (i) a Person,
including the Person's Affiliates and Associates, becoming the
beneficial owner of directly or indirectly, or, exercising
control or direction over, Common Shares carrying in excess of
50.1% of the total voting rights attached to the Common
Shares; or (ii) except as contemplated by the Restructuring,
the Borrower consolidating or amalgamating with, or merging
with or into, another Person or selling, assigning, conveying,
transferring, leasing or otherwise disposing of all or
substantially all of its assets to any Person, or any Person
consolidating or amalgamating with, or merging with or into,
the Borrower, in any such event pursuant to a transaction in
which
42
any of the outstanding Common Shares are converted into or
exchanged for cash, securities or other property, other than
any such transaction in which the outstanding Common Shares
are converted into or exchanged for, or the assets of the
Borrower are exchanged for, voting securities or securities
exchangeable at the option of the holder into voting
securities of the surviving or transferee Person constituting
a majority of such voting securities (giving effect to such
issuance and the exercise of any rights to exchange such
securities into voting securities);
(h) notwithstanding Section 8.1(i), if an event of default occurs
as defined in the Subordinated Notes or any security granted
in connection therewith;
(i) if an event of default as defined in any indenture or
instrument evidencing, or under which, any Indebtedness for
borrowed money of the Borrower or any Subsidiary is
outstanding shall happen and be continuing, and such
Indebtedness shall have been accelerated so that the same
shall be or have become due and payable prior to the date on
which the same would otherwise become due and payable and such
acceleration shall not be stayed, rescinded or annulled within
10 days after written notice thereof shall have been given to
the Lender by the Borrower or to the Borrower by the Lender or
if the Borrower shall fail, within 10 days after the maturity
or extended maturity of any such Indebtedness or acceleration,
to pay or refund the same; provided, however, that if such
event of default under such indenture or instrument shall be
remedied or cured by the Borrower or be waived by the holders
of such Indebtedness before any judgment or decree for the
payment of the money due shall have been obtained or entered,
then the Event of Default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or
waived without further action upon the part of the Lender;
(j) if a decree or order of a court of competent jurisdiction is
entered adjudging the Borrower or any Subsidiary a bankrupt or
insolvent or approving as properly filed a petition seeking
the winding-up of the Borrower under the Companies' Creditors
Arrangement Act (Canada), the Bankruptcy and Insolvency Act
(Canada) or the Winding Up and Restructuring Act (Canada) or
any other bankruptcy, insolvency or analogous laws or issuing
sequestration or process of execution against, or against any
substantial part of the assets of the Borrower or any
Subsidiary or ordering the winding up or liquidation of its
affairs, and any such decree or order continues unstayed and
in effect for a period of 10 days;
(k) if the Borrower or any Subsidiary becomes insolvent, makes any
assignment in bankruptcy or makes any other assignment for the
benefit of creditors, makes any proposal under the Bankruptcy
and Insolvency Act (Canada) or any comparable law, seeks
relief under the Companies' Creditors Arrangement Act
(Canada), the Winding Up and Restructuring Act (Canada) or any
other bankruptcy, insolvency or analogous law, is adjudged
bankrupt, files a petition or proposal to take advantage of
any act of insolvency, consents to or acquiesces in the
appointment of a trustee, receiver, receiver and manager,
interim receiver, custodian, sequestrator or other person with
similar powers of itself or of all or any
43
substantial portion of its assets, or files a petition or
otherwise commences any proceeding seeking any reorganization,
arrangement, composition or readjustment under any applicable
bankruptcy, insolvency, moratorium, reorganization or other
similar law affecting creditors' rights or consents to, or
acquiesces in, the filing of such a petition;
(l) if a final judgment or decree for the payment of money due
shall have been obtained or entered against the Borrower or
any Subsidiary in an amount which, in the reasonable opinion
of the Lender, would materially and adversely affect the
ability of the Borrower to fulfil its obligations to the
Lender under this Agreement and such judgment or decree shall
not have been and remain vacated, discharged or stayed pending
appeal within the applicable appeal period;
(m) if any representation or warranty made by the Borrower in any
Transaction Document or in any certificate or other document
at any time delivered hereunder or thereunder to the Lender
shall prove to have been incorrect or misleading in any
material respect on and as of the date thereof;
(n) if any of the Security shall cease to be a valid and perfected
first priority security interest as against third parties;
(o) if proceedings are commenced for the dissolution, liquidation
or winding-up of the Borrower or any of its Subsidiaries, or
for the suspension of the operations of the Borrower or any of
its Subsidiaries unless such proceedings are being actively
and diligently contested in good faith;
(p) if the conditions in Section 3.2(e) is not satisfied by the
Effective Time; or
(q) if Lender in good faith reasonably believes that the prospect
of payment or performance of any of the obligations under this
Agreement is or is about to be impaired or that the Security
or any part thereof is or is about to be impaired.
8.2 ACCELERATION.
(1) If any Event of Default shall occur:
(a) the entire principal amount of Loans then outstanding and all
accrued and unpaid interest thereon, and
(b) all other payments due hereunder,
shall, at the option of the Lender become immediately due and payable with
interest thereon, at the rate or rates determined as herein provided, to the
date of actual payment thereof, all without notice, presentment, protest,
demand, notice of dishonour or any other demand or notice whatsoever, all of
which are hereby expressly waived by the Borrower. In such event or in the event
of a Demand, the Lender may, in its discretion, exercise any right or recourse
and/or proceed by any action, suit, remedy or proceeding against the Borrower
authorized or permitted by law for the recovery of all the Indebtedness and
liabilities of the Borrower to the Lender and
44
proceed to exercise any and all rights hereunder and no such remedy for the
enforcement of the rights of the Lender shall be exclusive of or dependent on
any other remedy but any one or more of such remedies may from time to time be
exercised independently or in combination.
8.3 DEFAULT INTEREST
Notwithstanding Section 2.2 from and after an acceleration of the Loan as
provided in Section 8.2, or following a Demand interest on the outstanding
Principal and all accrued and unpaid interest thereon will accrue at a rate per
annum equal to 24% per annum, compounded monthly with interest on all overdue
interest at the same rate.
8.4 REMEDIES CUMULATIVE AND WAIVERS.
For greater certainty, it is expressly understood and agreed that the rights and
remedies of the Lender hereunder or under any other Document or instrument
executed pursuant to this Agreement are cumulative and are in addition to and
not in substitution for any rights or remedies provided by law or by equity; and
any single or partial exercise by the Lender of any right or remedy for a
default or breach of any term, covenant, condition or agreement contained in
this Agreement or other document or instrument executed pursuant to this
Agreement shall not be deemed to be a waiver of or to alter, affect or prejudice
any other right or remedy or other rights or remedies to which the Lender may be
lawfully entitled for such default or breach. Any waiver by the Lender of the
strict observance, performance or compliance with any term, covenant, condition
or other matter contained herein and any indulgence granted, either expressly or
by course of conduct, by the Lender shall be effective only in the specific
instance and for the purpose for which it was given and shall be deemed not to
be a waiver of any rights and remedies of the Lender under this Agreement or any
other Document or instrument executed pursuant to this Agreement as a result of
any other default or breach hereunder or thereunder.
8.5 TERMINATION OF LENDER'S OBLIGATIONS.
Upon the occurrence of an Event of Default or the making of the Demand, the
Lender shall be relieved of all obligations to provide any further Loans
hereunder.
ARTICLE 9 - COSTS, EXPENSES, SURVIVAL AND INDEMNIFICATION
9.1 COSTS AND EXPENSES.
The Borrower shall pay promptly upon notice from the Lender all reasonable costs
and expenses in connection with the preparation or review of waivers, consents
and amendments and questions of interpretation of this Agreement and in
connection with the establishment of the validity and enforceability of this
Agreement and the preservation or enforcement of rights of the Lender under this
Agreement and other documents to be delivered hereunder, including, without
limitation, all reasonable costs and expenses sustained by the Lender as a
result of any failure by the Borrower to perform or observe any of its
obligations hereunder, together with interest at 12% per annum from and after
such 10th Business Day if such payment is not made by such time.
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9.2 GENERAL SURVIVAL
The parties agree that, regardless of any investigation made by the parties, (a)
the representations and warranties of the parties contained in this Agreement
shall survive the execution and delivery of this Agreement for a period
beginning on the date hereof and ending on the second anniversary of the later
of (i) the date of this Agreement, and (ii) the date the Loan is repaid or
otherwise satisfied in full; provided, however, that the representations and
warranties of the ADB Entities set forth in Sections 5.4, 5.8, 5.9, 5.12, 5.13,
5.22 and 5.23 shall survive until the expiration of all applicable statutes of
limitation; and (b) nothing contained this Agreement or otherwise shall in any
way limit any claim, suit, cause or action or remedy that may be available to
Lender or any other Indemnitee based on fraud or intentional misrepresentation.
9.3 INDEMNIFICATION BY ADB ENTITIES.
Subject to the provisions of Section 9.2, each of the ADB Entities shall
severally and not jointly indemnify and hold harmless Lender and its respective
Affiliates, officers, directors, shareholders, representatives and agents
(collectively the "INDEMNITEES") from and against and in respect of any and all
Losses incurred by, resulting from, arising out of, relating to, imposed upon or
incurred by any other Indemnitee by reason of:
(1) any inaccuracy in or breach of any of the representations or
warranties of any ADB Entity contained in any Transaction
Document;
(2) breach of any covenants or agreements of any ADB Entity
contained in any Transaction Document;
(3) any misrepresentation contained in any statement or
certificate furnished to any Indemnitee by or on behalf of any
ADB Entity in connection with the Transactions;
(4) any Indebtedness, obligation or liability of any kind of Old
ADB, save and except the Indebtedness, obligations and
liabilities set forth on Schedule 9.3; and
(5) any obligation or liability of any kind of Old ADB in
connection with the exercise by any holder of securities of
Old ADB of rights of dissent in respect of the Restructuring.
For purposes of this Agreement, the term, "LOSSES" means any and all
deficiencies, judgments, settlements, demands, claims, suits, actions or causes
of action, liabilities, losses, damages, interest, fines, penalties, costs and
expenses (including reasonable legal, accounting and other costs and expenses
incurred in connection with investigating, defending, settling or satisfying any
and all demands, claims, actions, causes of action, suits, proceedings,
assessments, judgments or appeals, and in seeking indemnification therefor).
Notwithstanding the foregoing, the Borrower shall not be liable to the Lender
for any Losses with respect to Section 9.3(A), unless and until the aggregate of
all such Losses exceeds $25,000, other than any Losses attributable to the lack
of ownership of, or title to, the Assets of Old ADB.
46
9.4 SPECIFIC ENVIRONMENTAL INDEMNIFICATION.
The Borrower and New ADB shall indemnify the Lender and hold the Lender harmless
at all times from and against any and all losses, damages and reasonable costs
(including counsel fees and expenses) resulting from any legal action commenced
or claim made by a third party against the Lender related to or as a result of
actions on the part of the Borrower or any Subsidiary related to or as a
consequence of environmental matters or Requirements of Environmental Law. The
Borrower or the Subsidiary, as the case may be, shall have the sole right, at
its expense, to control any such legal action or claim and to settle on terms
and conditions approved by the Borrower or the Subsidiary, as the case may be,
and approved by the party named in such legal action or claim, acting reasonably
provided that if, in the sole opinion of the Lender, the interests of the Lender
are different from those of the Borrower or the Subsidiary in connection with
such legal action or claim, the Lender shall have the sole right, at the
Borrower's expense, to defend its own interests provided that any settlement of
such legal action or claim shall be on terms and conditions approved by the
Borrower, acting reasonably. If the Borrower or the Subsidiary does not defend
the legal action or claim, the Lender shall have the right to do so on its own
behalf and on behalf of the Borrower or the Subsidiary, as the case may be, at
the expense of the Borrower.
ARTICLE 10 - PUT OPTION
10.1 PUT OPTION.
Provided that the Restructuring shall have been completed upon the terms and
conditions set forth in the Plan of Arrangement attached to the Arrangement
Agreement, New ADB will have the right (the "PUT OPTION") (i) if at any time the
Lender makes a Demand, (ii) Lender has accelerated the Loan pursuant to Section
8.2 or (iii) at any time on and after June 1, 2003 until midnight (Toronto time)
on June 30, 2003 (the "PUT PERIOD") to require the Lender, on the terms and
conditions of this Section , to purchase from New ADB all, but not less than
all, of the issued and outstanding shares in the capital of Old ADB (the
"SHARES"). The purchase and sale of the Shares on the exercise of the Put Option
will be subject to the following:
(a) the Put Option will be exercised by New ADB by delivering to
the Lender a notice in the form attached hereto as Schedule
10.1(a) (the "PUT NOTICE") during the Put Period;
(b) the Lender will purchase the Shares on the date that is 10
Business Days after the date upon which the Lender received
the Put Notice (the "PUT CLOSING DATE");
(c) the purchase price for the Shares will be an amount equal to
the aggregate amount of the Principal and accrued and unpaid
interest thereon to the day immediately preceding the Put
Closing Date and will be satisfied by the set-off by the
Lender of the amount owing in respect of the purchase price of
the Shares in full satisfaction of such aggregate amount of
Principal and accrued and unpaid interest.
47
(d) the closing (the "PUT CLOSING") of the transaction of purchase
and sale pursuant to the exercise of the Put Option will take
place at the offices of New ADB in Mississauga, Ontario;
(e) at the Put Closing:
(i) New ADB will deliver to the Lender the certificates
representing the Shares to be purchased, duly
endorsed for transfer or accompanied by stock powers;
(ii) New ADB will provide the Lender with certification in
a form reasonably acceptable to the Lender's counsel
that the Shares conveyed are free and clear of all
encumbrances;
(iii) New ADB will deliver to the Lender a certificate of
an officer certifying to the Lender that (A) the
articles and by-laws of Old ADB (as attached to such
certificate) are in full force and effect, unamended,
and that no proceedings have been taken to amend
same, (B) the representations and warranties as they
relate to Old ADB contained in this Agreement are
true and correct as of the time of the Put Closing as
if given at such time, (C) New ADB is not a
non-resident of Canada for purposes of the Income Tax
Act (Canada), (D) there is no actions, suits or
proceedings before any court or before or by any
governmental commission, board, bureau, agency or
other authority pending or threatened against, or
affecting, Old ADB which could have a Material
Adverse Effect, with the exception of such actions,
suits or proceedings, if any, arising from the
operation of Old ADB in the ordinary course of
business from and after the Effective Time, and (F)
such other matters as the Lender may reasonably
request;
(iv) New ADB will deliver an opinion of its legal counsel
substantially in the form attached hereto as Schedule
10.1(e)(iv) regarding the due and proper transfer of
the Shares by New ADB to the Lender;
(v) New ADB will deliver resignations of all directors
and officers of Old ADB, except those directors who
are nominees of the Lender pursuant to the
Co-Operation Agreement;
(vi) New ADB will deliver a release in favour of Old ADB
substantially in the form attached hereto as Schedule
10.1(e)(vi).
(f) Without prejudice to the Lender's rights to take such action
as it deems necessary to preserve or protect its interest in
the recovery of the indebtedness and liabilities of the
Borrower to the Lender hereunder, the Lender will forebear
from exercising any of its rights and recourses under Section
8.2 as a result of the acceleration the Loan or the making of
a Demand, if any, until the Put Closing Date.
48
ARTICLE 11 - GUARANTEE
11.1 GUARANTEE.
New ADB hereby unconditionally and irrevocably guarantees (the "GUARANTEE")
payment of all the debts and liabilities, present or future, direct or indirect,
absolute or contingent, matured or not, at any time owing Old ADB to the Lender
or remaining unpaid by Old ADB to the Lender pursuant to this Agreement
(hereinafter collectively referred to as the "OBLIGATIONS").
11.2 INDEMNITY.
If any or all of the Obligations are not duly performed by Old ADB and are not
performed under Section 11.1 for any reason whatsoever, New ADB will, as a
separate and distinct obligation, indemnify and save harmless the Lender from
and against all losses resulting from the failure of Old ADB to perform such
Obligations.
11.3 PRIMARY OBLIGATION.
If any or all of the Obligations are not duly performed by Old ADB and are not
performed under Section 11.1 or the Lender is not indemnified under Section
11.2, in each case, for any reason whatsoever, such Obligations will, as a
separate and distinct obligation, be performed by New ADB as primary obligor.
11.4 OBLIGATIONS ABSOLUTE.
The liability of New ADB hereunder will be absolute and unconditional and will
not be affected by:
(a) any lack of validity or enforceability of any agreement
between Old ADB and the Lender;
(b) any impossibility, impracticability, frustration of purpose,
illegality, force majeure or act of government;
(c) the bankruptcy, winding-up, liquidation, dissolution or
insolvency of Old ADB or any other person or the amalgamation
of or any change in the status, function, control or ownership
of Old ADB, New ADB, the Lender or any other Person;
(d) any lack or limitation of power, incapacity or disability on
the part of Old ADB or of the directors, partners or agents
thereof or any other irregularity, defect or informality on
the part of Old ADB in its obligations to the Lender; or
(e) any other law, regulation or other circumstance that might
otherwise constitute a defence available to, or a discharge
of, Old ADB in respect of any or all of the Obligations.
49
11.5 NO RELEASE.
The liability of New ADB hereunder will not be released, discharged, limited or
in any way affected by anything done, suffered or permitted by the Lender in
connection with any duties or liabilities of Old ADB to the Lender or any
security therefor including any loss of or in respect of any security received
by the Lender from Old ADB or others. Without limiting the generality of the
foregoing and without releasing, discharging, limiting or otherwise affecting in
whole or in part New ADB's liability hereunder, without obtaining the consent of
or giving notice to New ADB, the Lender may:
(a) discontinue, reduce, increase or otherwise vary the credit of
Old ADB in any manner whatsoever;
(b) make any change in the time, manner or place of payment under,
or in any other term of, any agreement between Old ADB and the
Lender or the failure on the part of Old ADB to carry out any
of its obligations under any such agreement;
(c) grant time, renewals, extensions, indulgences, releases and
discharges to the Obligor;
(d) take or abstain from taking or enforcing securities or
collateral from Old ADB or from perfecting securities or
collateral of Old ADB;
(e) accept compromises from Old ADB;
(f) apply all money at any time received from Old ADB or from
securities upon such part of the Obligations as the Lender may
see fit or change any such application in whole or in part
from time to time as the Lender may see fit; and
(g) otherwise deal with Old ADB and all other persons and
securities as the Lender may see fit.
11.6 NO EXHAUSTION OF REMEDIES.
The Lender will not be bound or obligated to exhaust its recourse against Old
ADB or other persons or any securities or collateral it may hold or take any
other action before being entitled to demand payment from New ADB hereunder.
11.7 PRIMA FACIE EVIDENCE.
Any account settled or stated in writing by or between the Lender and Old ADB
will be prima facie evidence that the balance or amount thereof appearing due to
the Lender is so due.
11.8 NO SET-OFF.
In any claim by the Lender against New ADB, New ADB may not assert any set-off
or counterclaim that either New ADB or Old ADB may have against the Lender.
50
11.9 CONTINUING GUARANTEE.
The obligations of New ADB hereunder will constitute and be continuing
obligations and will apply to and secure any ultimate balance due or remaining
due to the Lender and will not be considered as wholly or partially satisfied by
the payment or liquidation at any time of any sum of money for the time being
due or remaining unpaid to the Lender. This Guarantee will continue to be
effective even if at any time any payment of any of the Obligations is rendered
unenforceable or is rescinded or must otherwise be returned by the Lender upon
the occurrence of any action or event including the insolvency, bankruptcy or
reorganization of Old ADB or otherwise, all as though such payment had not been
made.
11.10 DEMAND.
If any Obligation is not paid for any reason whatsoever, the Lender may treat
all Obligations as due and payable and may demand forthwith from New ADB the
total amount guaranteed hereunder whether or not such Obligations are yet due
and payable at the time of demand for payment hereunder. New ADB will make
payment to or performance in favour of the Lender of the total amount guaranteed
hereunder forthwith after demand therefor is made to New ADB. New ADB will make
payment to the Lender forthwith upon demand of all costs and expenses incurred
by the Lender in enforcing this Guarantee.
11.11 INTEREST.
New ADB will pay interest to the Lender at the rate of 12% per annum on the
unpaid portion of all amounts payable by New ADB under this Guarantee, such
interest to accrue from and including the date of demand by the Lender on New
ADB.
11.12 ASSIGNMENT AND POSTPONEMENT.
All debts and liabilities, present and future, of Old ADB to New ADB are hereby
assigned to the Lender and postponed to the Obligations, and all money received
by New ADB in respect thereof will be held in trust for the Lender and forthwith
upon receipt will be paid over to the Lender, the whole without in any way
lessening or limiting the liability of New ADB hereunder and this assignment and
postponement is independent of the Guarantee and will remain in full force and
effect until, in the case of the assignment, the liability of New ADB under this
Guarantee has been discharged or terminated and, in the case of the
postponement, until all Obligations are performed and paid in full; provided
however that until an Event of Default occurs all such liabilities may be paid
by Old ADB to New ADB without reference to this Section 11.12 but otherwise
without prejudice to the rights of the Lender hereunder.
11.13 SUBROGATION.
New ADB will not be entitled to subrogation until (i) New ADB performs or makes
payment to the Lender of all amounts owing by New ADB to the Lender under this
Guarantee and (ii) the Obligations are performed and paid in full. Thereafter,
the Lender will, at New ADB's request and expense, execute and deliver to New
ADB appropriate documents, without recourse and without representation and
warranty, necessary to evidence the transfer by subrogation to New
51
ADB of an interest in the Obligations and any security held therefor resulting
from such performance or payment by New ADB.
ARTICLE 12 - GENERAL
12.1 NOTICE.
Any notice or other communication (a "Notice") required or permitted to be given
or made hereunder shall be in writing and shall be well and sufficiently given
or made if:
(a) delivered by overnight courier service; or
(b) sent by facsimile transmission or other means of electronic
communication,
in the case of a Notice to the Lender addressed to the Lender at:
The Brick Warehouse Corporation
00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxx, Chief Financial Officer
Fax No.: (000) 000-0000
with a copy to:
XxXxxxxx Xxxxxxxx XXX
Xxx 00, Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxxx Xxxxx
Fax No.: (000) 000-0000
and in the case of a Notice to Borrower or New ADB addressed to it at:
c/o ADB Systems International Inc.
000 - 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx, General Counsel
Fax No.: (000) 000-0000
with a copy to:
52
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Any Notice given or made in accordance with this Section 12.1 shall be deemed to
have been given or made and to have been received on the next Business Day after
it was delivered, if delivered as aforesaid. Either Party may from time to time
change its address for notice by giving Notice to other Party in accordance with
the provisions of this Section 12.1.
12.2 ASSIGNMENT.
Neither the Borrower nor New ADB may on written notice to the Lender, assign its
rights and obligations under this Agreement, in whole or in part, without the
prior consent in writing of the Lender provided however the Borrower and New ADB
may assign its rights and obligations under this Agreement to a bona fide third
party purchaser of substantially all of the assts of such Party. Any purported
assignment by the Borrower or New ADB made without required consent is void and
of no effect. No assignment of this Agreement by the Borrower or New ADB shall
relieve such Party from any obligation under this Agreement. Notwithstanding the
foregoing, the Lender may, without the prior written consent of the Borrower or
New ADB at any time, on written notice to the Borrower and New ADB, assign its
rights and obligations under this Agreement to an Affiliate of the Lender, or to
a bona fide third party purchaser of substantially all of the assets of the
Lender.
12.3 BINDING ON SUCCESSORS.
This Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns.
12.4 FURTHER ASSURANCES.
Each of the Borrower, New ADB and the Lender shall promptly cure any default by
it in the execution and delivery of this Agreement, the Documents or of any the
agreements provided for hereunder to which it is a party. The Borrower, at its
expense, shall promptly execute and deliver to the Lender, upon request by the
Lender, all such other and further documents, agreements, opinions, certificates
and instruments in compliance with, or accomplishment of the covenants and
agreements of the Borrower hereunder or more fully to state the obligations of
the Borrower as set out herein or to make any recording, file any notice or
obtain any consent, all as may be reasonably necessary or appropriate in
connection therewith.
53
12.5 WAIVER.
A waiver by a Party hereto of any of its rights hereunder or of the performance
by the other Party of any of its obligations hereunder shall be without
prejudice to all of the other rights hereunder of the Party so waiving and shall
not constitute a waiver of any such other rights or, in any other instance, of
the rights so waived, or a waiver of the performance by the other Party of any
of its other obligations hereunder or of the performance, in any other instance,
of the obligations so waived. No waiver shall be effective or binding upon a
Party unless the same shall be expressed in writing and executed by the Party to
be bound.
12.6 INTERPRETATION.
This Agreement has been negotiated by the parties hereto and their respective
counsel and shall be fairly interpreted in accordance with its terms and without
any rules of construction relating to which Party drafted the Agreement being
applied in favour or against either Party.
12.7 AMENDMENT.
Any provision of this Agreement may be amended only if the Borrower, New ADB and
the Lender so agree in writing and may be waived only if the Lender so agrees in
writing. Any such waiver and any consent by the Lender under any provision of
this Agreement must be in writing and may be given subject to any conditions
thought fit by the person giving that waiver or consent.
12.8 GOVERNING LAW.
This Agreement shall be governed and construed according to the laws of the
Province of Ontario and the laws of Canada applicable therein, and shall be
treated, in all respects, as an Ontario contract, without prejudice to or
limitation of any other rights or remedies available under the laws of any
jurisdiction where property or assets of the Borrower may be found. Each of the
parties hereby attorns to the jurisdiction of the Province of Ontario.
12.9 TIME OF THE ESSENCE.
Time shall be of the essence of this Agreement.
12.10 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument. Counterparts may be executed either in original or faxed
form and the Parties may adopt any signatures received by a receiving fax
machine as original signatures of the Parties.
IN WITNESS WHEREOF this Agreement is executed by the Parties as of the date
first written, above.
ADB SYSTEMS INTERNATIONAL INC.
By: /s/ [ILLEGIBLE]
---------------------------
Name:
Title:
ADB SYSTEMS INTERNATIONAL LTD.
By: /s/ [ILLEGIBLE]
---------------------------
Name:
Title:
THE BRICK WAREHOUSE CORPORATION
By: ___________________________
Name:
Title:
12.10 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument. Counterparts may be executed either in original or faxed
form and the Parties may adopt any signatures received by a receiving fax
machine as original signatures of the Parties.
IN WITNESS WHEREOF this Agreement is executed by the Parties as of the date
first written, above.
ADB SYSTEMS INTERNATIONAL INC.
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
ADB SYSTEMS INTERNATIONAL LTD.
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
THE BRICK WAREHOUSE CORPORATION
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SCHEDULES TO LOAN AGREEMENT
SCHEDULE B
DRAWDOWN NOTICE
TO: The Brick Warehouse Corporation (the "Lender")
FROM: ADB Systems International Inc. ("Old ADB")
DATE: August____________, 2002
1. This Drawdown Notice is delivered to you pursuant to the loan agreement
(the "Loan Agreement") made as of August 23,2002 between the Lender,
Old ADB and ADB Systems International Ltd.
2. Terms used herein that are defined in the Loan Agreement and are not
otherwise defined herein will have the same meaning herein as in the
Loan Agreement.
3. We hereby request an Advance of the Loan as follows:
Advance: Drawdown Date: Amount of Advance:
(a) First Advance $
(b) Second Advance $
(c) Expense Advance $
4. We hereby authorize and direct you to make payment of the Advance as
follows:
- [INSERT PAYMENT INSTRUCTIONS OR REFERENCE A SCHEDULE TO THIS NOTICE]
5. All of the representations and warranties of the Borrower contained in
Article 5 of the Loan Agreement are true and correct.
6. All of the covenants of the Borrower contained in Article 7 of the Loan
Agreement together with all of the conditions precedent to advances, as
applicable, and all other terms and conditions contained in the Loan
Agreement to be complied with by the Borrower have been fully complied
with.
7. No Event of Default has occurred and remains outstanding and no event
has occurred and remains outstanding which, with the giving of notice
or lapse of time or both, would
constitute an Event of Default nor will any Event of Default occur as a
result of the aforementioned Advance.
Yours very truly,
ADB SYSTEMS INTERNATIONAL INC.
Per: ________________________________
Title:_______________________________
SCHEDULE 1.1-A
GENERAL SECURITY AGREEMENT
THIS AGREEMENT is made as of August 23, 2002
BETWEEN:
ADB SYSTEMS INTERNATIONAL INC., an Ontario
corporation having its principal place of business at
0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxx
X0X 0X0 (hereinafter referred to as the "DEBTOR")
- and -
THE BRICK WAREHOUSE CORPORATION, a federal
corporation having its principal place of business at
00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx X0X 0X0
(hereinafter referred to as the "SECURED PARTY").
WHEREAS the Debtor has agreed to grant a security interest and
assignment, mortgage and charge in the Collateral in order to secure the
performance of its Obligations to the Secured Party;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of the premises and the covenants and agreements herein contained the parties
hereto agree as follows:
ARTICLE 1 - INTERPRETATION
1.01 INTERPRETATION
In this Agreement, unless something in the subject matter or
context is inconsistent therewith,
"AGREEMENT" means this agreement and all amendments made hereto by written
agreement between the Secured Party and the Debtor;
"COLLATERAL" has the meaning set out in Section 2.01;
"COMPUTER SOFTWARE" includes all computer programs in source and object code
form as well as all Documentation related thereto, however recorded;
- 2 -
"DOCUMENTATION" means all user documentation, technical documentation, and
system documentation, however recorded, including user manuals, training
materials, product specifications, technical documentation, description of
computational algorithms, flow charts, programmer's notes and other design
documentation and manuals;
"ENCUMBRANCE" has the meaning ascribed in the Loan Agreement;
"EVENT OF DEFAULT" means any of the events described as "events of default" in
the Loan Agreement;
"INTELLECTUAL PROPERTY" means all intellectual and industrial property (whether
or not confidential and no matter in what form held) including all works in
which copyright may subsist such as plans, drawings, manuals, maps,
Documentation, specifications, schematics, Computer Software, databases and
compilations of information (whether or not protected by copyright) and
algorithms, designs, formula, process, trade secrets and confidential
information, know-how, discoveries and inventions, mask works, integrated
circuit topographies, and trade-marks, trade-names, logos, Internet domain
names, uniform resource locator, and service marks;
"INTELLECTUAL PROPERTY RIGHTS" includes all intellectual and industrial property
rights and rights of a similar nature such as copyrights, patents, industrial
designs, design rights, trade-marks, data base rights, trade secrets, rights to
use domain names and rights in confidential information, and all applications
and registrations pertaining to the foregoing and all causes of action, rights
of recovery and claims for damage or other relief relating, referring or
pertaining to the foregoing (including all rights to oppose applications for the
registration of similar or confusing trademarks), along with all income
royalties, damages or payments due or payable including claims for past or
future infringement or misappropriation of Intellectual Property or Intellectual
Property Rights;
"LOAN AGREEMENT" means the loan agreement made as of the date hereof between ADB
Systems International Inc., the Debtor and the Secured Party as the same may be
amended from time to time;
"OBLIGATIONS" means all obligations and liabilities of any kind whatsoever of
the Debtor to the Secured Party in connection with or relating to the Loan
Agreement;
"PERMITTED ENCUMBRANCE" has the meaning ascribed in the Loan Agreement;
"RESTRUCTURING" has the meaning ascribed thereto in the Loan Agreement; and
The terms "accessions", "accounts", "chattel paper", "documents of title",
"goods", "instruments", "intangibles", "inventory", "money", "proceeds" and
"securities" whenever used herein have the meanings given to those terms in the
Personal Property Security Act (Ontario), as now enacted or as the same may from
time to time be amended, re-enacted or replaced.
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1.02 SECTIONS AND HEADINGS
The division of this Agreement into Articles and Sections and
the insertion of headings are for convenience of reference only and will not
affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof, "hereunder" and similar expressions refer to this Agreement
and not to any particular Article, Section or other portion hereof and include
any agreement supplemental hereto. Unless something in the subject matter or
context is inconsistent therewith, reference herein to Articles and Sections are
to Articles and Sections of this Agreement.
1.03 EXTENDED MEANINGS
In this Agreement words importing the singular number only
include the plural and vice versa, words importing any gender include all
genders and words importing persons include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations.
ARTICLE 2 - GRANT OF SECURITY INTEREST
2.01 SECURITY INTEREST
As general and continuing security for the payment and
performance of all Obligations, the Debtor hereby grants to the Secured Party a
security interest in the present and future undertaking and property, both real
and personal, of the Debtor (collectively, the "Collateral"), and as further
general and continuing security for the payment and performance of the
Obligations, the Debtor hereby assigns the Collateral to the Secured Party and
mortgages and charges the Collateral as and by way of a fixed and specific
mortgage and charge to the Secured Party. Without limiting the generality of the
foregoing, the Collateral will include all right, title and interest that the
Debtor now has or may hereafter have, be possessed of, be entitled to, or
acquire, by way of amalgamation or otherwise, now or hereafter or may hereafter
have in all property of the following kinds:
(a) Receivables: all debts, accounts, claims and choses in action
for monetary amounts which are now or which may hereafter
become due, owing or accruing due to the Debtor (collectively,
the "Receivables");
(b) Inventory: all inventory of whatever kind and wherever
situated including, without limiting the generality of the
foregoing, all goods held for sale or lease or furnished or to
be furnished under contracts for service or used or consumed
in the business of the Debtor (collectively, the "Inventory");
(c) Equipment: all machinery, equipment, fixtures, furniture,
plant, vehicles and other tangible personal property which are
not Inventory (collectively, the "Equipment");
(d) Chattel Paper: all chattel paper;
- 4 -
(e) Documents of Title: all warehouse receipts, bills of lading
and other documents of title, whether negotiable or not;
(f) Securities and Instruments: all shares, stock, warrants,
bonds, debentures, debenture stock and other securities and
all instruments including, without limiting the generality of
the foregoing any and all shares of ADB Systemer ASA
(collectively, the "Securities");
(g) Intangibles: all intangibles not otherwise described in this
Section 2.01 including, without limiting the generality of the
foregoing, all goodwill, Intellectual Property and
Intellectual Property Rights;
(h) Money: all coins or bills or other medium of exchange adopted
for use as part of the currency of Canada or of any foreign
government;
(i) Books, Records, Etc.: all books, papers, accounts, invoices,
documents and other records in any form evidencing or relating
to any of the property described in this Section 2.01 and all
contracts, securities, instruments and other rights and
benefits in respect thereof;
(j) Substitutions, Etc.: all replacements of, substitutions for
and increases, additions and accessions to any of the property
described in this Section 2.01; and
(k) Proceeds: all proceeds of any Collateral in any form derived
directly or indirectly from any dealing with the Collateral or
that indemnifies or compensates for the loss of or damage to
the Collateral;
provided that the said assignment and mortgage and charge will not (i) extend or
apply to the last day of the term of any lease or any agreement therefor now
held or hereafter acquired by the Debtor, but should the Secured Party enforce
the said assignment or mortgage and charge, the Debtor will thereafter stand
possessed of such last day and must hold it in trust to assign the same to any
person acquiring such term in the course of the enforcement of the said
assignment and mortgage and charge, or (ii) render the Secured Party liable to
observe or perform any term, covenant or condition of any agreement, document or
instrument to which the Debtor is a party or by which it is bound.
2.02 ATTACHMENT OF SECURITY INTEREST
The Debtor acknowledges that value has been given and agrees
that the security interest granted hereby will attach when the Debtor signs this
Agreement and the Debtor has any rights in the Collateral.
- 5 -
ARTICLE 3 - GENERAL REPRESENTATIONS AND WARRANTIES AND
COVENANTS OF THE DEBTOR
3.01 REPRESENTATIONS AND WARRANTIES
The Debtor hereby represents and warrants to the Secured Party
that:
(a) except for Permitted Encumbrances, the Debtor owns
beneficially and of record, and has good and marketable title
to, the Collateral, free and clear of any Encumbrance; and
(b) the address of the Debtor's chief executive office and the
office where it keeps its records respecting the Receivables,
is that given at the end of this Agreement.
3.02 COVENANTS
The Debtor covenants with the Secured Party that the Debtor
will:
(a) ensure that the representations and warranties set forth
herein will be true and correct at all times;
(b) maintain, use and operate the Collateral and carry on and
conduct its business in a lawful and business-like manner;
(c) not permit the Collateral to be affixed to real or personal
property so as to become a fixture or accession without the
prior written consent of the Secured Party;
(d) defend Collateral against all claims and demands respecting
the Collateral made by all persons other than the Secured
Party at all times;
(e) not change its chief executive office and the location of the
office where it keeps its records respecting the Receivables,
or move any of the Inventory, Securities or Equipment from the
locations specified in any schedule hereto, without the prior
written consent of the Secured Party;
(f) keep proper books of account in accordance with sound
accounting practice, will furnish to the Secured Party such
financial information and statements and such information and
statements relating to the Collateral as the Secured Party may
from time to time require;
(g) from time to time forthwith at the request of the Secured
Party execute and deliver all such financing statements,
schedules, assignments and documents, and do all such further
acts and things as may be reasonably required by the Secured
Party to effectively carry out the full intent and meaning of
this Agreement or to better evidence and perfect the security
interest, assignment and mortgage and charge granted hereby,
and the Debtor hereby irrevocably constitutes and appoints the
Secured Party, or any Receiver appointed by the court or the
Secured Party, the
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true and lawful attorney of the Debtor, with full power of
substitution, to do any of the foregoing in the name of the
Debtor whenever and wherever the Secured Party or any such
Receiver may consider it to be necessary or expedient;
(h) except as permitted by the Loan Agreement, not change its name
or amalgamate with any other corporation without first giving
notice to the Secured Party of its new name and the names of
all amalgamating corporations and the date when such new name
or amalgamation is to become effective; and
(i) pay to the Secured Party forthwith upon demand all reasonable
costs and expenses (including, without limiting the generality
of the foregoing, all legal, Receiver's and accounting fees
and expenses) incurred by or on behalf of the Secured Party in
connection with the carrying out of any of the provisions of
this Agreement including, without limiting the generality of
the foregoing, protecting and preserving the security
interest, assignment and mortgage and charge granted hereby
and enforcing by legal process or otherwise the remedies
provided herein; and all such costs and expenses will be added
to and form part of the Obligations secured hereunder.
ARTICLE 4 - INSURANCE
4.01 INSURANCE
The Debtor must obtain and maintain, at its own expense,
insurance as required by section 7.1(g) of the Loan Agreement.
ARTICLE 5 - DEALING WITH COLLATERAL
5.01 DEALING WITH COLLATERAL BY THE DEBTOR
The Debtor must not sell, lease or otherwise dispose of any of
the Collateral without the prior written consent of the Secured Party, except
that, subject to the provisions of the Loan Agreement, the Debtor may, until an
Event of Default occurs, deal with the Collateral in the ordinary course of its
business, free and clear of the security interest, assignment and mortgage and
charge granted hereby, but all proceeds of any such sale will continue to be
subject to the security interest, assignment and mortgage and charge granted
hereby.
5.02 RIGHTS AND DUTIES OF THE SECURED PARTY
(1) The Secured Party may perform any of its rights and duties
hereunder by or through agents and is entitled to retain counsel and to act in
reliance upon the advice of such counsel concerning all matters pertaining to
its rights and duties hereunder.
(2) In the holding of the Collateral, the Secured Party and any
nominee on its behalf is only bound to exercise the same degree of care as it
would exercise with respect to similar
- 7 -
property of its own of similar value held in the same place. The Secured Party
and any nominee on its behalf will be deemed to have exercised reasonable care
with respect to the custody and preservation of the Collateral if it takes such
action for that purpose as the Debtor reasonably requests in writing, but
failure of the Secured Party or its nominee to comply with any such request will
not of itself be deemed a failure to exercise reasonable care.
5.03 REGISTRATION OF SECURITIES
The Secured Party may have any Securities registered in its
name or in the name of its nominee and will be entitled but not bound or
required to exercise any of the rights that any holder of such Securities may at
any time have, provided that until an Event of Default has occurred and is
continuing, the Debtor will be entitled to exercise, in a manner not prejudicial
to the interests of the Secured Party or which would violate or be inconsistent
with this Agreement, all voting power from time to time exercisable in respect
of the Securities. The Secured Party will not be responsible for any loss
occasioned by its exercise of any of such rights or by failure to exercise the
same within the time limited for the exercise thereof. The Debtor must from time
to time forthwith upon the request of the Secured Party deliver to the Secured
Party those Securities requested by the Secured Party duly endorsed for transfer
to the Secured Party or its nominee to be held by the Secured Party subject to
the terms of this Agreement.
5.04 NOTIFICATION OF ACCOUNT DEBTORS
Before an Event of Default occurs, the Secured Party may give
notice of this Agreement and the security interest and assignment granted hereby
to any account debtors of the Debtor or to any other person liable to the Debtor
and, after the occurrence of an Event of Default, may give notice to any such
account debtors or other person to make all further payments to the Secured
Party, and any payment or other proceeds of Collateral received by the Debtor
from account debtors or from any other person liable to the Debtor whether
before or after any notice is given by the Secured Party must be held by the
Debtor in trust for the Secured Party and paid over to the Secured Party on
request.
5.05 APPLICATION OF FUNDS
Except where the Debtor, when not in default hereunder, so
directs in writing at the time of payment, all money collected or received by
the Secured Party in respect of the Collateral may be applied on account of such
parts of the Obligations as the Secured Party in its sole discretion determines,
or may be held unappropriated in a collateral account, or in the discretion of
the Secured Party may be released to the Debtor, all without prejudice to the
Secured Party's rights against the Debtor.
ARTICLE 6 - REMEDIES
6.01 REMEDIES
(1) On or after the occurrence of any Event of Default, (i) any or
all of the Obligations will at the option of the Secured Party become
immediately due and payable or be
- 8 -
subject to immediate performance, as the case may be, without presentment,
protest or notice of dishonour, all of which are expressly waived; (ii) the
obligation, if any, of the Secured Party to extend further credit to the Debtor
will cease; (iii) any or all security granted hereby will, at the option of the
Secured Party, become immediately enforceable; and (iv) in addition to any right
or remedy provided by law, the Secured Party will have the rights and remedies
set out below, all of which rights and remedies will be enforceable
successively, concurrently or both:
(a) the Secured Party may by appointment in writing appoint a
receiver or receiver and manager (each herein referred to as
the "Receiver") of the Collateral (which term when used in
this Section 6.01 will include the whole or any part of the
Collateral) and may remove or replace such Receiver from time
to time or may institute proceedings in any court of competent
jurisdiction for the appointment of a Receiver of the
Collateral; and the term "Secured Party" when used in this
Section 6.01 will include any Receiver so appointed and the
agents, officers and employees of such Receiver; and the
Secured Party will not be in any way responsible for any
misconduct or negligence of any such Receiver;
(b) the Secured Party may take possession of the Collateral and
require the Debtor to assemble the Collateral and deliver or
make the Collateral available to the Secured Party at such
place or places as may be specified by the Secured Party;
(c) the Secured Party may take such steps as it considers
desirable to maintain, preserve or protect the Collateral;
(d) the Secured Party may carry on or concur in the carrying on of
all or any part of the business of the Debtor;
(e) the Secured Party may enforce any rights of the Debtor in
respect of the Collateral by any manner permitted by law;
(f) the Secured Party may sell, lease or otherwise dispose of the
Collateral at public auction, by private tender, by private
sale or otherwise either for cash or upon credit upon such
terms and conditions as the Secured Party may determine and
without notice to the Debtor unless required by law;
(g) the Secured Party may accept the Collateral in satisfaction of
the Obligations upon notice to the Debtor of its intention to
do so in the manner required by law;
(h) the Secured Party may, for any purpose specified herein,
borrow money on the security of the Collateral in priority to
the security interest, assignment and mortgage and charge
granted by this Agreement;
(i) the Secured Party may enter upon, occupy and use all or any of
the premises, buildings and plant occupied by the Debtor and
use all or any of the Equipment and other personal property of
the Debtor for such time as the Secured Party requires to
facilitate the realization of the Collateral, free of charge,
and the Secured Party will not be liable to the Debtor for any
neglect in so doing or in
- 9 -
respect of any rent, charges, depreciation or damages in
connection with such actions;
(j) the Secured Party may charge on its own behalf and pay to
others all reasonable amounts for expenses incurred and for
services rendered in connection with the exercise of the
rights and remedies of the Secured Party hereunder, including,
without limiting the generality of the foregoing, reasonable
legal, Receiver and accounting fees and expenses, and in every
such case the amounts so paid together with all costs, charges
and expenses incurred in connection therewith, including
interest thereon at such rate as the Secured Party deems
reasonable, will be added to and form part of the Obligations
hereby secured; and
(k) the Secured Party may discharge any claim, lien, mortgage,
charge, security interest, encumbrance or any rights of others
that may exist or be threatened against the Collateral, and in
every such case the amounts so paid together with costs,
charges and expenses incurred in connection therewith will be
added to the Obligations hereby secured.
(2) The Secured Party may (i) grant extensions of time, (ii) take
and perfect or abstain from taking and perfecting security, (iii) give up
securities, (iv) accept compositions or compromises, (v) grant releases and
discharges, and (vi) release any part of the Collateral or otherwise deal with
the Debtor, debtors of the Debtor, sureties and others and with the Collateral
and other security as the Secured Party sees fit without prejudice to the
liability of the Debtor to the Secured Party or the Secured Party's rights
hereunder.
(3) The Secured Party will not be liable or responsible for any
failure to seize, collect, realize, or obtain payment with respect to the
Collateral and is not bound to institute proceedings or to take other steps for
the purpose of seizing, collecting, realizing or obtaining possession or payment
with respect to the Collateral or for the purpose of preserving any rights of
the Secured Party, the Debtor or any other person, in respect of the Collateral.
(4) The Secured Party may apply any proceeds of realization of the
Collateral to payment of expenses in connection with the preservation and
realization of the Collateral as above described and the Secured Party may apply
any balance of such proceeds to payment of the Obligations in such order as the
Secured Party sees fit. If there is any surplus remaining, the Secured Party may
pay it to any person having a claim thereto in priority to the Debtor of whom
the Secured Party has knowledge and any balance remaining must be paid to the
Debtor. If the disposition of the Collateral fails to satisfy the Obligations
secured by this Agreement and the aforesaid expenses, the Debtor will be liable
to pay any deficiency to the Secured Party forthwith on demand.
- 10 -
ARTICLE 7 - GENERAL
7.01 BENEFIT OF THE AGREEMENT
This Agreement will enure to the benefit of and be binding
upon the successors and permitted assigns of the parties hereto.
7.02 ENTIRE AGREEMENT
This Agreement has been entered into pursuant to the
provisions of the Loan Agreement and is subject to all the terms and conditions
thereof and, if there is any conflict or inconsistency between the provisions of
this Agreement and the provisions of the Loan Agreement, the rights and
obligations of the parties will be governed by the provisions of the Loan
Agreement. This Agreement cancels and supersedes any prior understandings and
agreements between the parties hereto with respect thereto. There are no
representations, warranties, terms, conditions, undertakings or collateral
agreements, express, implied or statutory, between the Secured Party and the
Debtor with respect to the subject matter hereof except as expressly set forth
herein or in any Transaction Documents (as such term is defined in the Loan
Agreement).
7.03 AMENDMENTS AND WAIVERS
No amendment to this Agreement will be valid or binding unless
set forth in writing and duly executed by all of the parties hereto. No waiver
of any breach of any provision of this Agreement will be effective or binding
unless made in writing and signed by the party purporting to give the same and,
unless otherwise provided in the written waiver, will be limited to the specific
breach waived.
7.04 ASSIGNMENT
The rights of the Secured Party under this Agreement may be
assigned by the Secured Party without the prior consent of the Debtor in
accordance with the requirements of section 12.2 of the Loan Agreement and only
if the rights of the Secured Party in the Loan Agreement are assigned to the
assignee as part of the same transaction. The Debtor may not assign its
obligations under this Agreement, in whole or in part without the prior consent
in writing of the Secured Party, except as contemplated in the Restructuring.
7.05 SEVERABILITY
If any provision of this Agreement is determined to be invalid
or unenforceable in whole or in part, such invalidity or unenforceability will
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof will continue in full force and
effect.
- 11 -
7.06 NOTICES
Any demand, notice or other communication to be given in
connection with this Agreement must be given in writing and may be given by
personal delivery or by electronic means of communication, addressed to the
recipient as follows:
To the Secured Party:
The Brick Warehouse Corporation
00000-000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Financial Officer
Fax No.: (000)000-0000
with a copy to:
XxXxxxxx Xxxxxxxx XXX
Xxx 00, Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX X0X0X0
Attention: Xxxxxxxx Xxxxx
Fax No.: (000)000-0000
To the Debtor:
c/o ADB Systems International Inc.
000 - 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx, General Counsel
Fax No.: (000)000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxx
Fax No.: (000)000-0000
- 12 -
or such other address, individual or electronic communication number as may be
designated by notice given by any party to the other. Any demand, notice or
other communication given by personal delivery will be conclusively deemed to
have been given on the day of actual delivery thereof and, if given by
registered mail, on the next business day following the deposit thereof in the
mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
next business day during which such normal business hours next occur if not
given during such hours on any day. If the party giving any demand, notice or
other communication knows or ought reasonably to know of any difficulties with
the postal system that might affect the delivery of mail, any such demand,
notice or other communication must not be mailed but must be given by personal
delivery or by electronic communication.
7.07 ADDITIONAL CONTINUING SECURITY
This Agreement and the security interest, assignment and
mortgage and charge granted hereby are in addition to and not in substitution
for any other security now or hereafter held by the Secured Party and this
Agreement is a continuing agreement and security that will remain in full force
and effect until discharged by the Secured Party.
7.08 FURTHER ASSURANCES
The Debtor must at its expense from time to time do, execute
and deliver, or cause to be done, executed and delivered, all such financing
statements, further assignments, documents, acts, matters and things as may be
reasonably requested by the Secured Party for the purpose of giving effect to
this Agreement or for the purpose of establishing compliance with the
representations, warranties and covenants herein contained.
7.09 POWER OF ATTORNEY
Upon the occurrence of an Event of Default that is continuing,
the Debtor hereby irrevocably constitutes and appoints any officer for the time
being of the Secured Party the true and lawful attorney of the Debtor, with full
power of substitution, to do, make and execute all such statements, assignments,
documents, acts, matters or things with the right to use the name of the Debtor
whenever and wherever the officer may deem necessary or expedient and from time
to time to exercise all rights and powers and to perform all acts of ownership
in respect to the Collateral in accordance with this Agreement.
7.10 RELEASE AND DISCHARGE
The Debtor will only be discharged from the Obligations and
from this Agreement upon payment in full to the Secured Party of the Obligations
in accordance with the terms of the Loan Agreement.
7.11 GOVERNING LAW
This Agreement will be governed by and construed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein.
7.12 EXECUTED COPY
The Debtor acknowledges receipt of a fully executed copy of
this Agreement.
IN WITNESS WHEREOF this Agreement is executed by the Parties
as of the date first written, above.
ADB SYSTEMS INTERNATIONAL INC.
By: _________________________________
Name:
Title:
THE BRICK WAREHOUSE CORPORATION
By: _________________________________
Name:
Title:
ADDRESS OF DEBTOR
Location of Chief Executive Office and location of Business Records:
ADB Systems International Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Norwegian Office:
Xxxxxxxx 0,
0000, Xxxx, Xxxxxx
United Kingdom Office:
0000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxx
Xxxxxxx
SCHEDULE 1.1-B
GENERAL SECURITY AGREEMENT
THIS AGREEMENT is made as of August 23, 2002
BETWEEN:
ADB SYSTEMS INTERNATIONAL LTD., a corporation having
its principal place of business at 0000 Xxxxxxx Xxxx,
Xxxxx 000 Xxxxxxxxxxx, Xxxxxxx X0X 0X0 (hereinafter
referred to as the "DEBTOR")
- and -
THE BRICK WAREHOUSE CORPORATION, a federal
corporation having its principal place of business at
00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx X0X 0X0
(hereinafter referred to as the "SECURED PARTY").
WHEREAS the Debtor has agreed to grant a security interest and
assignment, mortgage and charge in the Collateral in order to secure the
performance of its Obligations to the Secured Party;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of the premises and the covenants and agreements herein contained the parties
hereto agree as follows:
ARTICLE 1 - INTERPRETATION
1.01 INTERPRETATION
In this Agreement, unless something in the subject matter or
context is inconsistent therewith,
"AGREEMENT" means this agreement and all amendments made hereto by written
agreement between the Secured Party and the Debtor;
"COLLATERAL" has the meaning set out in Section 2.01;
"COMPUTER SOFTWARE" includes all computer programs in source and object code
form as well as all Documentation related thereto, however recorded;
- 2 -
"DOCUMENTATION" means all user documentation, technical documentation, and
system documentation, however recorded, including user manuals, training
materials, product specifications, technical documentation, description of
computational algorithms, flow charts, programmer's notes and other design
documentation and manuals;
"ENCUMBRANCE" has the meaning ascribed in the Loan Agreement;
"EVENT OF DEFAULT" means any of the events described as "events of default" in
the Loan Agreement;
"GAAP" has the meaning ascribed in the Loan Agreement;
"GOVERNMENT ENTITY" has the meaning ascribed in the Loan Agreement;
"INTELLECTUAL PROPERTY" means all intellectual and industrial property (whether
or not confidential and no matter in what form held) including all works in
which copyright may subsist such as plans, drawings, manuals, maps,
Documentation, specifications, schematics, Computer Software, databases and
compilations of information (whether or not protected by copyright) and
algorithms, designs, formula, process, trade secrets and confidential
information, know-how, discoveries and inventions, mask works, integrated
circuit topographies, and trade-marks, trade-names, logos, Internet domain
names, uniform resource locator, and service marks;
"INTELLECTUAL PROPERTY RIGHTS" includes all intellectual and industrial property
rights and rights of a similar nature such as copyrights, patents, industrial
designs, design rights, trade-marks, data base rights, trade secrets, rights to
use domain names and rights in confidential information, and all applications
and registrations pertaining to the foregoing and all causes of action, rights
of recovery and claims for damage or other relief relating, referring or
pertaining to the foregoing (including all rights to oppose applications for the
registration of similar or confusing trademarks), along with all income
royalties, damages or payments due or payable including claims for past or
future infringement or misappropriation of Intellectual Property or Intellectual
Property Rights;
"LOAN AGREEMENT" means the loan agreement made as of August 23, 2002 between ADB
Systems International Ltd., the Debtor and the Secured Party as the same may be
amended from time to time;
"OBLIGATIONS" means all obligations and liabilities of any kind whatsoever of
the Debtor to the Secured Party in connection with or relating to the Loan
Agreement;
"PERMITTED ENCUMBRANCE" means any (i) Encumbrance securing Taxes, assessments
and Governmental Entity charges not yet due and payable or the amount or
validity of which is being contested in good faith by appropriate proceedings by
the Debtor and for which appropriate reserves have been established in
accordance with GAAP, (ii) mechanics, carrier workers, repairer and similar
statutory liens arising or incurred in the ordinary course of the Debtor's
business for amounts which are not delinquent and which are not in the aggregate
material to the Debtor, (iii) liens securing rental payments under capital lease
arrangements arising or incurred in the ordinary course of the Debtor's
business, (iv) zoning law or ordinance or any similar legal
- 3 -
requirement; (v) in the case of leased property, (a) the rights of any lessor
and (b) any Encumbrance granted by any lessor of leased property; (vi)
Encumbrance relating to the security interest in patent rights granted to the
XXX Xxxxxxxxxxx by the ADB Systems International Inc. pursuant to the security
agreement made on April 17, 2002 assigned and assumed by the Debtor; (vii)
Encumbrance relating to the security interest granted to Xxxxxxxxxxx Limited
Partnership by the ADB Systems International Inc. pursuant to the general
security agreement dated August 30, 2002 (with such security interest being
subordinated to the Security) assigned and assumed by the Debtor; (viii)
Encumbrance relating to the security interest granted to Greenwich Growth Fund
by the Borrower pursuant to a general security agreement dated August 30, 2002
(with such security interest being subordinated to the Security) assigned and
assumed by the Debtor and (ix) Encumbrance relating to the security interest
granted to subscribers (other than Greenwich Growth Fund Ltd. and Xxxxxxxxxxx
Limited Partnership) of convertible secured notes of ADB Systems International
Inc. for an amount not greater than $300,000 (with such security interest being
subordinated to the Security and such notes assigned and assumed by the Debtor);
provided that "Permitted Encumbrance" does not include any or any Encumbrance
which could prevent or impair in any material way the conduct of the Debtor's
business as it is being conducted.
"SECURITY" has the meaning ascribed in the Loan Agreement;
"TAXES" has the meaning ascribed in the Loan Agreement; and
the terms "accessions", "accounts", "chattel paper", "documents of title",
"goods", "instruments", "intangibles", "inventory", "money", "proceeds" and
"securities" whenever used herein have the meanings given to those terms in the
Personal Property Security Act (Ontario), as now enacted or as the same may from
time to time be amended, re-enacted or replaced.
1.02 SECTIONS AND HEADINGS
The division of this Agreement into Articles and Sections and
the insertion of headings are for convenience of reference only and will not
affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof, "hereunder" and similar expressions refer to this Agreement
and not to any particular Article, Section or other portion hereof and include
any agreement supplemental hereto. Unless something in the subject matter or
context is inconsistent therewith, reference herein to Articles and Sections are
to Articles and Sections of this Agreement.
1.03 EXTENDED MEANINGS
In this Agreement words importing the singular number only
include the plural and vice versa, words importing any gender include all
genders and words importing persons include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations.
- 4 -
ARTICLE 2 - GRANT OF SECURITY INTEREST
2.01 SECURITY INTEREST
As general and continuing security for the payment and
performance of all Obligations, the Debtor hereby grants to the Secured Party a
security interest in the present and future undertaking and property, both real
and personal, of the Debtor (collectively, the "Collateral"), and as further
general and continuing security for the payment and performance of the
Obligations, the Debtor hereby assigns the Collateral to the Secured Party and
mortgages and charges the Collateral as and by way of a fixed and specific
mortgage and charge to the Secured Party. Without limiting the generality of the
foregoing, the Collateral will include all right, title and interest that the
Debtor now has or may hereafter have, be possessed of, be entitled to, or
acquire, by way of amalgamation or otherwise, now or hereafter or may hereafter
have in all property of the following kinds:
(a) Receivables: all debts, accounts, claims and choses in action
for monetary amounts which are now or which may hereafter
become due, owing or accruing due to the Debtor (collectively,
the "Receivables");
(b) Inventory: all inventory of whatever kind and wherever
situated including, without limiting the generality of the
foregoing, all goods held for sale or lease or furnished or to
be furnished under contracts for service or used or consumed
in the business of the Debtor (collectively, the "Inventory");
(c) Equipment: all machinery, equipment, fixtures, furniture,
plant, vehicles and other tangible personal property which are
not Inventory (collectively, the "Equipment");
(d) Chattel Paper: all chattel paper;
(e) Documents of Title: all warehouse receipts, bills of lading
and other documents of title, whether negotiable or not;
(f) Securities and Instruments: all shares, stock, warrants,
bonds, debentures, debenture stock and other securities and
all instruments including, without limiting the generality of
the foregoing any and all shares of Old ADB and ADB Systemer
AS that New ADB may hereafter acquire (collectively, the
"Securities");
(g) Intangibles: all intangibles not otherwise described in this
Section 2.01 including, without limiting the generality of the
foregoing, all goodwill, Intellectual Property and
Intellectual Property Rights;
(h) Money: all coins or bills or other medium of exchange adopted
for use as part of the currency of Canada or of any foreign
government;
- 5 -
(i) Books, Records, Etc.: all books, papers, accounts, invoices,
documents and other records in any form evidencing or relating
to any of the property described in this Section 2.01 and all
contracts, securities, instruments and other rights and
benefits in respect thereof;
(j) Substitutions. Etc.: all replacements of, substitutions for
and increases, additions and accessions to any of the property
described in this Section 2.01; and
(k) Proceeds: all proceeds of any Collateral in any form derived
directly or indirectly from any dealing with the Collateral or
that indemnifies or compensates for the loss of or damage to
the Collateral;
provided that the said assignment and mortgage and charge will not (i) extend or
apply to the last day of the term of any lease or any agreement therefor now
held or hereafter acquired by the Debtor, but should the Secured Party enforce
the said assignment or mortgage and charge, the Debtor will thereafter stand
possessed of such last day and must hold it in trust to assign the same to any
person acquiring such term in the course of the enforcement of the said
assignment and mortgage and charge, or (ii) render the Secured Party liable to
observe or perform any term, covenant or condition of any agreement, document or
instrument to which the Debtor is a party or by which it is bound.
2.02 ATTACHMENT OF SECURITY INTEREST
The Debtor acknowledges that value has been given and agrees
that the security interest granted hereby will attach when the Debtor signs this
Agreement and the Debtor has any rights in the Collateral.
ARTICLE 3 - GENERAL REPRESENTATIONS AND WARRANTIES AND
COVENANTS OF THE DEBTOR
3.01 REPRESENTATIONS AND WARRANTIES
The Debtor hereby represents and warrants to the Secured Party
that:
(a) except for Permitted Encumbrances, the Debtor owns
beneficially and of record, and has good and marketable title
to, the Collateral, free and clear of any Encumbrance; and
(b) the address of the Debtor's chief executive office and the
office where it keeps its records respecting the Receivables,
is that given at the end of this Agreement.
3.02 COVENANTS
The Debtor covenants with the Secured Party that the Debtor
will:
- 6 -
(a) ensure that the representations and warranties set forth
herein will be true and correct at all times;
(b) maintain, use and operate the Collateral and carry on and
conduct its business in a lawful and business-like manner;
(c) not permit the Collateral to be affixed to real or personal
property so as to become a fixture or accession without the
prior written consent of the Secured Party;
(d) defend the Collateral against all claims and demands
respecting the Collateral made by all persons at any time and,
except as otherwise provided herein, will keep the Collateral
free and clear of all security interests, mortgages, charges,
liens and other encumbrances or interests except for those
disclosed in a schedule hereto or hereafter approved in
writing by the Secured Party prior to their creation or
assumption;
(e) not change its chief executive office and the location of the
office where it keeps its records respecting the Receivables,
or move any of the Inventory, Securities or Equipment from the
locations specified in any schedule hereto, without the prior
written consent of the Secured Party;
(f) pay all rents, taxes, levies, assessments and government fees
or dues lawfully levied, assessed or imposed in respect of the
Collateral or any part thereof as and when the same become due
and payable, and will exhibit to the Secured Party, when
required, the receipts and vouchers establishing such payment;
(g) keep proper books of account in accordance with sound
accounting practice, will furnish to the Secured Party such
financial information and statements and such information and
statements relating to the Collateral as the Secured Party may
from time to time require, and the Debtor will permit the
Secured Party or its authorized agents at any time at the
expense of the Debtor to examine the books of account and
other financial records and reports relating to the Collateral
and to make copies thereof and take extracts therefrom;
(h) from time to time forthwith at the request of the Secured
Party furnish to the Secured Party in writing all information
requested relating to the Collateral, and the Secured Party
will be entitled from time to time at any reasonable time to
inspect the Collateral and make copies of all information
relating to the Collateral and for such purposes the Secured
Party will have access to all premises occupied by the Debtor
or where the Collateral may be found;
(i) from time to time forthwith at the request of the Secured
Party execute and deliver all such financing statements,
schedules, assignments and documents, and do all such further
acts and things as may be reasonably required by the Secured
Party to effectively carry out the full intent and meaning of
this Agreement or to better evidence and perfect the security
interest, assignment and mortgage and charge
- 7 -
granted hereby, and the Debtor hereby irrevocably constitutes
and appoints the Secured Party, or any Receiver appointed by
the court or the Secured Party, the true and lawful attorney
of the Debtor, with full power of substitution, to do any of
the foregoing in the name of the Debtor whenever and wherever
the Secured Party or any such Receiver may consider it to be
necessary or expedient;
(j) not change its name or, if the Debtor is a corporation, will
not amalgamate with any other corporation without first giving
notice to the Secured Party of its new name and the names of
all amalgamating corporations and the date when such new name
or amalgamation is to become effective; and
(k) pay to the Secured Party forthwith upon demand all reasonable
costs and expenses (including, without limiting the generality
of the foregoing, all legal, Receiver's and accounting fees
and expenses) incurred by or on behalf of the Secured Party in
connection with the carrying out of any of the provisions of
this Agreement including, without limiting the generality of
the foregoing, protecting and preserving the security
interest, assignment and mortgage and charge granted hereby
and enforcing by legal process or otherwise the remedies
provided herein; and all such costs and expenses will be added
to and form part of the Obligations secured hereunder.
ARTICLE 4 - INSURANCE
4.01 INSURANCE
The Debtor must obtain and maintain, at its own expense,
insurance as required by section 7.1(g) of the Loan Agreement.
ARTICLE 5 - DEALING WITH COLLATERAL
5.01 DEALING WITH COLLATERAL BY THE DEBTOR
The Debtor must not sell, lease or otherwise dispose of any of
the Collateral without the prior written consent of the Secured Party, except
that the Debtor may, until an Event of Default occurs, deal with the Collateral
in the ordinary course of its business free and clear of the security interest,
assignment and mortgage and charge granted hereby, but all proceeds of any such
sale will continue to be subject to the security interest, assignment and
mortgage and charge granted hereby.
5.02 RIGHTS AND DUTIES OF THE SECURED PARTY
(1) The Secured Party may perform any of its rights and duties
hereunder by or through agents and is entitled to retain counsel and to act in
reliance upon the advice of such counsel concerning all matters pertaining to
its rights and duties hereunder.
- 8 -
(2) In the holding of the Collateral, the Secured Party and any
nominee on its behalf is only bound to exercise the same degree of care as it
would exercise with respect to similar property of its own of similar value held
in the same place. The Secured Party and any nominee on its behalf will be
deemed to have exercised reasonable care with respect to the custody and
preservation of the Collateral if it takes such action for that purpose as the
Debtor reasonably requests in writing, but failure of the Secured Party or its
nominee to comply with any such request will not of itself be deemed a failure
to exercise reasonable care.
5.03 REGISTRATION OF SECURITIES
The Secured Party may have any Securities registered in its
name or in the name of its nominee and will be entitled but not bound or
required to exercise any of the rights that any holder of such Securities may at
any time have, provided that until an Event of Default has occurred and is
continuing, the Debtor will be entitled to exercise, in a manner not prejudicial
to the interests of the Secured Party or which would violate or be inconsistent
with this Agreement, all voting power from time to time exercisable in respect
of the Securities. The Secured Party will not be responsible for any loss
occasioned by its exercise of any of such rights or by failure to exercise the
same within the time limited for the exercise thereof. The Debtor must from time
to time forthwith upon the request of the Secured Party deliver to the Secured
Party those Securities requested by the Secured Party duly endorsed for transfer
to the Secured Party or its nominee to be held by the Secured Party subject to
the terms of this Agreement.
5.04 NOTIFICATION OF ACCOUNT DEBTORS
Before an Event of Default occurs, the Secured Party may give
notice of this Agreement and the security interest and assignment granted hereby
to any account debtors of the Debtor or to any other person liable to the Debtor
and, after the occurrence of an Event of Default, may give notice to any such
account debtors or other person to make all further payments to the Secured
Party, and any payment or other proceeds of Collateral received by the Debtor
from account debtors or from any other person liable to the Debtor whether
before or after any notice is given by the Secured Party must be held by the
Debtor in trust for the Secured Party and paid over to the Secured Party on
request.
5.05 APPLICATION OF FUNDS
Except where the Debtor, when not in default hereunder, so
directs in writing at the time of payment, all money collected or received by
the Secured Party in respect of the Collateral may be applied on account of such
parts of the Obligations as the Secured Party in its sole discretion determines,
or may be held unappropriated in a collateral account, or in the discretion of
the Secured Party may be released to the Debtor, all without prejudice to the
Secured Party's rights against the Debtor.
- 9 -
ARTICLE 6 - REMEDIES
6.01 REMEDIES
(1) On or after the occurrence of any Event of Default, (i) any or
all of the Obligations will at the option of the Secured Party become
immediately due and payable or be subject to immediate performance, as the case
may be, without presentment, protest or notice of dishonour, all of which are
expressly waived; (ii) the obligation, if any, of the Secured Party to extend
further credit to the Debtor will cease; (iii) any or all security granted
hereby will, at the option of the Secured Party, become immediately enforceable;
and (iv) in addition to any right or remedy provided by law, the Secured Party
will have the rights and remedies set out below, all of which rights and
remedies will be enforceable successively, concurrently or both:
(a) the Secured Party may by appointment in writing appoint a
receiver or receiver and manager (each herein referred to as
the "Receiver") of the Collateral (which term when used in
this Section 6.01 will include the whole or any part of the
Collateral) and may remove or replace such Receiver from time
to time or may institute proceedings in any court of competent
jurisdiction for the appointment of a Receiver of the
Collateral; and the term "Secured Party" when used in this
Section 6.01 will include any Receiver so appointed and the
agents, officers and employees of such Receiver; and the
Secured Party will not be in any way responsible for any
misconduct or negligence of any such Receiver;
(b) the Secured Party may take possession of the Collateral and
require the Debtor to assemble the Collateral and deliver or
make the Collateral available to the Secured Party at such
place or places as may be specified by the Secured Party;
(c) the Secured Party may take such steps as it considers
desirable to maintain, preserve or protect the Collateral;
(d) the Secured Party may carry on or concur in the carrying on of
all or any part of the business of the Debtor;
(e) the Secured Party may enforce any rights of the Debtor in
respect of the Collateral by any manner permitted by law;
(f) the Secured Party may sell, lease or otherwise dispose of the
Collateral at public auction, by private tender, by private
sale or otherwise either for cash or upon credit upon such
terms and conditions as the Secured Party may determine and
without notice to the Debtor unless required by law;
(g) the Secured Party may accept the Collateral in satisfaction of
the Obligations upon notice to the Debtor of its intention to
do so in the manner required by law;
(h) the Secured Party may, for any purpose specified herein,
borrow money on the security of the Collateral in priority to
the security interest, assignment and mortgage and charge
granted by this Agreement;
- 10 -
(i) the Secured Party may enter upon, occupy and use all or any of
the premises, buildings and plant occupied by the Debtor and
use all or any of the Equipment and other personal property of
the Debtor for such time as the Secured Party requires to
facilitate the realization of the Collateral, free of charge,
and the Secured Party will not be liable to the Debtor for any
neglect in so doing or in respect of any rent, charges,
depreciation or damages in connection with such actions;
(j) the Secured Party may charge on its own behalf and pay to
others all reasonable amounts for expenses incurred and for
services rendered in connection with the exercise of the
rights and remedies of the Secured Party hereunder, including,
without limiting the generality of the foregoing, reasonable
legal, Receiver and accounting fees and expenses, and in every
such case the amounts so paid together with all costs, charges
and expenses incurred in connection therewith, including
interest thereon at such rate as the Secured Party deems
reasonable, will be added to and form part of the Obligations
hereby secured; and
(k) the Secured Party may discharge any claim, lien, mortgage,
charge, security interest, encumbrance or any rights of others
that may exist or be threatened against the Collateral, and in
every such case the amounts so paid together with costs,
charges and expenses incurred in connection therewith will be
added to the Obligations hereby secured.
(2) The Secured Party may (i) grant extensions of time, (ii) take
and perfect or abstain from taking and perfecting security, (iii) give up
securities, (iv) accept compositions or compromises, (v) grant releases and
discharges, and (vi) release any part of the Collateral or otherwise deal with
the Debtor, debtors of the Debtor, sureties and others and with the Collateral
and other security as the Secured Party sees fit without prejudice to the
liability of the Debtor to the Secured Party or the Secured Party's rights
hereunder.
(3) The Secured Party will not be liable or responsible for any
failure to seize, collect, realize, or obtain payment with respect to the
Collateral and is not bound to institute proceedings or to take other steps for
the purpose of seizing, collecting, realizing or obtaining possession or payment
with respect to the Collateral or for the purpose of preserving any rights of
the Secured Party, the Debtor or any other person, in respect of the Collateral.
(4) The Secured Party may apply any proceeds of realization of the
Collateral to payment of expenses in connection with the preservation and
realization of the Collateral as above described and the Secured Party may apply
any balance of such proceeds to payment of the Obligations in such order as the
Secured Party sees fit. If there is any surplus remaining, the Secured Party may
pay it to any person having a claim thereto in priority to the Debtor of whom
the Secured Party has knowledge and any balance remaining must be paid to the
Debtor. If the disposition of the Collateral fails to satisfy the Obligations
secured by this Agreement and the aforesaid expenses, the Debtor will be liable
to pay any deficiency to the Secured Party forthwith on demand.
- 11 -
ARTICLE 7 - GENERAL
7.01 BENEFIT OF THE AGREEMENT
This Agreement will enure to the benefit of and be binding
upon the successors and permitted assigns of the parties hereto.
7.02 ENTIRE AGREEMENT
This Agreement has been entered into pursuant to the
provisions of the Loan Agreement and is subject to all the terms and conditions
thereof and, if there is any conflict or inconsistency between the provisions of
this Agreement and the provisions of the Loan Agreement, the rights and
obligations of the parties will be governed by the provisions of the Loan
Agreement. This Agreement cancels and supersedes any prior understandings and
agreements between the parties hereto with respect thereto. There are no
representations, warranties, terms, conditions, undertakings or collateral
agreements, express, implied or statutory, between the Secured Party and the
Debtor with respect to the subject matter hereof except as expressly set forth
herein or in any Transaction Document (as such term is defined in the Loan
Agreement).
7.03 AMENDMENTS AND WAIVERS
No amendment to this Agreement will be valid or binding unless
set forth in writing and duly executed by all of the parties hereto. No waiver
of any breach of any provision of this Agreement will be effective or binding
unless made in writing and signed by the party purporting to give the same and,
unless otherwise provided in the written waiver, will be limited to the specific
breach waived.
7.04 ASSIGNMENT
The rights of the Secured Party under this Agreement may be
assigned by the Secured Party without the prior consent of the Debtor in
accordance with the requirements of section 12.2 of the Loan Agreement and only
if the rights of the Secured Party in the Loan Agreement are assigned to the
assignee as part of the same transaction.
7.05 SEVERABILITY
If any provision of this Agreement is determined to be invalid
or unenforceable in whole or in part, such invalidity or unenforceability will
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof will continue in full force and
effect.
7.06 NOTICES
Any demand, notice or other communication to be given in
connection with this Agreement must be given in writing and may be given by
personal delivery or by electronic means of communication, addressed to the
recipient as follows:
- 12 -
To the Secured Party:
The Brick Warehouse Corporation
00000-000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Financial Officer
Fax No.: (000)000-0000
with a copy to:
XxXxxxxx Xxxxxxxx XXX
Xxx 00, Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxxx Xxxxx
Fax No.: (000)000-0000
To the Debtor:
c/o ADB Systems International Inc.
000 - 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx, General Counsel
Fax No.: (000)000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxx
Fax No.: (000)000-0000
or such other address, individual or electronic communication number as may be
designated by notice given by any party to the other. Any demand, notice or
other communication given by personal delivery will be conclusively deemed to
have been given on the day of actual delivery thereof and, if given by
registered mail, on the next business day following the deposit thereof in the
mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
next business day during which such
- 13 -
normal business hours next occur if not given during such hours on any day. If
the party giving any demand, notice or other communication knows or ought
reasonably to know of any difficulties with the postal system that might affect
the delivery of mail, any such demand, notice or other communication must not be
mailed but must be given by personal delivery or by electronic communication.
7.07 ADDITIONAL CONTINUING SECURITY
This Agreement and the security interest, assignment and
mortgage and charge granted hereby are in addition to and not in substitution
for any other security now or hereafter held by the Secured Party and this
Agreement is a continuing agreement and security that will remain in full force
and effect until discharged by the Secured Party.
7.08 FURTHER ASSURANCES
The Debtor must at its expense from time to time do, execute
and deliver, or cause to be done, executed and delivered, all such financing
statements, further assignments, documents, acts, matters and things as may be
reasonably requested by the Secured Party for the purpose of giving effect to
this Agreement or for the purpose of establishing compliance with the
representations, warranties and covenants herein contained.
7.09 POWER OF ATTORNEY
Upon the occurrence of an Event of Default that is continuing,
the Debtor hereby irrevocably constitutes and appoints any officer for the time
being of the Secured Party the true and lawful attorney of the Debtor, with full
power of substitution, to do, make and execute all such statements, assignments,
documents, acts, matters or things with the right to use the name of the Debtor
whenever and wherever the officer may deem necessary or expedient and from time
to time to exercise all rights and powers and to perform all acts of ownership
in respect to the Collateral in accordance with this Agreement.
7.10 DISCHARGE
The Debtor will only be discharged from the Obligations or
from this Agreement upon payment in full to the Secured Party of the Obligations
in accordance with the Loan Agreement.
7.11 GOVERNING LAW
This Agreement will be governed by and construed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein.
7.12 EXECUTED COPY
The Debtor acknowledges receipt of a fully executed copy of
this Agreement.
IN WITNESS WHEREOF this Agreement is executed by the Parties
as of the date first written, above.
ADB SYSTEMS INTERNATIONAL LTD.
By: _________________________________
Name:
Title:
THE BRICK WAREHOUSE CORPORATION
By: _________________________________
Name:
Title:
ADDRESS OF DEBTOR
Location of Chief Executive Office and location of Business Records:
ADB Systems International Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Norwegian Office:
Xxxxxxxx 0,
0000, Xxxx, Xxxxxx
United Kingdom Office:
0000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxx
Xxxxxxx
SCHEDULE 1.1-C
NORWEGIAN PLEDGE AGREEMENT
THIS AGREEMENT is made as of August 23, 2002
BETWEEN
ADB SYSTEMS INTERNATIONAL INC., an Ontario
corporation having its principal place of business at
0000 Xxxxxxx Xxxx, Xxxxx Xxxxxxxxxxx, Xxxxxxx X0X
0X0, Xxxxxx (hereinafter referred to as the
"BORROWER")
and
THE BRICK WAREHOUSE CORPORATION, a federal
corporation having its principal place of business at
00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
(hereinafter referred to as the "LENDER").
WHEREAS the Borrower and the Lender have entered into as of August 23,
2002 a loan agreement for funding the future operations of the Borrower;
WHEREAS the Borrower and the Lender have entered into as of August 23,
2002 a general security agreement whereby the Borrower agrees to grant the
security interest and assignment mortgage and charge in order to secure the
performance of its obligations to the Lender and whereby this pledge agreement
constitute the Norwegian implementation of the loan and security arrangement;
and
WHEREAS the Borrower owns 99,3 % of issued and outstanding shares in
the Norwegian company ADB Systemer AS, having its principal place of business at
Xxxxxxxxx 0, 0000 Xxxx, Xxxxxx, and has the right to acquire the remaining 0,7 %
shares.
NOW, THEREFORE, the parties agree as follows:
1. THE LOAN
1.1 PRINCIPAL AMOUNT.
Subject to the terms and conditions hereof and in accordance with the loan
agreement as referred to above, Lender shall make the loan to Borrower during
the period commencing on the date hereof and ending on November 30, 2003.
Subject to the terms hereof, the loan will be advanced as follows:
(a) an initial advance in the principal amount of One Million Dollars
($1,000,000.00) (the "FIRST ADVANCE");
- 2 -
(b) a second advance in the principal amount of Five Hundred Thousand
Dollars ($500,000.00) (the "SECOND ADVANCE"); and
(c) Lender shall deposit into a joint bank account of the Borrower and the
Lender to be held and disbursed to Borrower the principal sum of Five
Hundred Thousand Dollars ($500,000.00) (the "EXPENSES ADVANCE").
The First Advance, Second Advance and Expenses Advance shall together
constitute the aggregate principal sum of the loan hereunder (the
"PRINCIPAL").
1.2 INTEREST.
The Borrower shall pay interest on each Advance at a rate per annum
equal to 12% per annum, compounded monthly. Such interest shall be
payable on repayment of the Principal from and including the drawdown
date for such advance to and including the day immediately preceding
repayment of Principal hereunder and shall be calculated on the
principal amount of the loan outstanding during such period and on the
basis of the actual number of days elapsed in a year of 365 days or 366
days, as the case may be.
Upon the occurance of an event of default, the Borrower shall pay
interest on the outstanding Principal at a rate per annum equal to 24%
per annum, coumpounded monthly with interest on all overdue interest at
the same rate, such interest to be payable on demand.
1.3 REPAYMENT.
The Borrower hereby agrees to repay the Principal and accrued and
unpaid interest thereon as follows:
a) on or before November 30, 2002 upon the occurrence of an
event of default by the Borrower; and
b) after November 30, the earlier of (i) June 30, 2003, or
(ii) upon the occurrence of and event of default by the
Borrower, or (iii) on demand by the Lender.
2. LEGAL STATUS OF LOAN ARRANGEMENT.
This Norwegian Pledge Agreement is to be considered as a written
acknowledgement of debt whereby the Borrower accepts that the loan,
interest and collection expenses may be collected in Norway by the
Lender without taking out legal actions before the courts, pursuant the
Norwegian Enforcement Act section 7-2, litra a, of June 26, 1992 No. 86
by taking advantage of the pledge arrangement.
3. PLEDGED ARRANGEMENT.
Borrower accepts that all its presents and future owned shares in the
Norwegian company ADB Systemer AS are pledged as security for the loan
as referred to under article 1 hereabove in favour of Lender.
- 3 -
This Norwegian Pledge Agreement is to be registered in the Shareholder
Registry Book of ADB Industrier AS pursuant to the Norwegian Joint
Stock Companies' Act of 13 June 1997, No. 44, article 4-8.
ADB Systems International Inc. shall cause and ADB Systemer AS shall,
pursuant to section 4-8, third paragraph, third sentence issue a
statement saying that this Norwegian Pledge Agreement has been
registered in the company's Shareholder Registry Book.
4. GOVERNING LAW.
This agreement is to be construed and interpreted according to
Norwegian law.
This agreement has been executed into two originals, one to each party.
_____________________________ ______________________
ADB SYSTEMS INTERNATIONAL INC. THE BRICK WAREHOUSE
CORPORATION
The following two witnesses confirm the signatures of ADB Systems International
Inc:
Signature: Signature:
Name: Name:
Age: Age:
Position: Position:
Address: Address:
The following two witnesses confirm the signatures of The Brick Warehouse
Corporation:
Signature: Signature:
Name: Name:
Age: Age:
Position: Position:
Address: Address:
SCHEDULE 1.1-D
OLD ADB'S DOMAIN NAMES
DOMAIN NAME RECORD CREATED RECORD EXPIRES LAST UPDATED
Xxx.xxx Mar. 04, 1998 Mar. 04, 2010 April 8, 2000
SCHEDULE 1.1-E
OLD ADB'S SOFTWARE
WorkMate - a comprehensive enterprise asset management solution that allows
organizations to automate and integrate maintenance management, materials
management and procurement activities.
ProcureMate - a web-based solution that allows organization to streamline the
purchasing of maintenance, repairs and operating (MRO) supplies while reducing
procurement costs.
Dyn@mic Buyer - an on-line solution that helps organizations automate their
tendering activities (e.g. reverse auctions, request for quotations/proposals)
and reduce procurement costs.
Dyn@mic Seller - a web-based sales solution that enables organizations to manage
inventory and reduce surplus through the use of on-line auctions, including the
completion of on-line retail transactions.
In each case there are various versions in existence.
SCHEDULE 1.1-F
OLD ADB'S TRADE-MARKS
---------------------------------------------------------------------------------------------------
COUNTRY TRADEMARK APP. NO. REG. NO. STATUS
---------------------------------------------------------------------------------------------------
Canada XXX.XXX 1,056,622 - In Examination
---------------------------------------------------------------------------------------------------
Canada XXX.XXX Design 1,056,624 - In Examination
---------------------------------------------------------------------------------------------------
SCHEDULE 3.1(i)
[LETTERHEAD OF GOWLING XXXXXXX XXXXXXXXX LLP]
August 28, 2002
The Brick Warehouse Corporation
00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
- and -
XxXxxxxx Xxxxxxxx XXX
Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Sirs/Mesdames:
RE: ADB SYSTEMS INTERNATIONAL INC.
We have acted as counsel to ADB Systems International Inc. ("Old ADB") and ADB
Systems International Ltd. ("New ADB") in connection with a loan agreement (the
"Loan Agreement") made as of August 23, 2002 among The Brick Warehouse
Corporation (the "Lender"), Old ADB and New ADB.
Terms used in this opinion that are defined in the Loan Agreement and are not
otherwise defined herein have the same meaning herein as in the Loan Agreement.
MATERIALS REVIEWED
We have examined executed copies of each of the following documents, and all
such documents except the Norco Pledge are referred to as the "Documents":
(a) the Loan Agreement;
(b) the general security agreement (the "Old ADB GSA") made as of
August 23, 2002 between the Lender and Old ADB;
(c) the general security agreement (the "New ADB GSA") made as of
August 23, 2002 between the Lender and New ADB;
(d) the co-operation agreement (the "Co-operation Agreement") made
as of August 23, 2002 between the Lender, Old ADB and New ADB;
2
(e) the arrangement agreement (the "Arrangement Agreement") made
as of August 23, 2002 between Old ADB and New ADB;
(f) the general conveyance and assumption agreement (the "General
Conveyance and Assumption Agreement") made as of August 23,
2002 between Old ADB and New ADB;
(g) the supply, services and license agreement (the "Supply
Services and License Agreement") made as of August 23, 2002
between the Lender, Old ADB and New ADB; and
(h) the Dynamic Seller(TM)joint ownership agreement (the "Joint
Ownership Agreement") made as of August 23, 2002 between the
Lender and New ADB.
Old ADB and New ADB are hereinafter collectively referred to as the
"Corporations".
ASSUMPTIONS AND FACT RELIANCE
For the purposes of the opinions expressed herein, we have examined:
(a) a certified copy of the articles and by-laws of the
Corporations;
(b) a certificate of status (the "Certificate of Status") dated
August 26, 2002 issued pursuant to the Business Corporations
Act (Ontario) (the "OBCA") in respect of Old ADB, a copy of
which has been delivered to you;
(c) a Certificate of Status dated August 26, 2002 issued pursuant
to the Business Corporations Act (Ontario) (the "OBCA") in
respect of New ADB, a copy of which has been delivered to you;
(d) a certified copy of the resolutions of the directors of the
Corporations dated August 26, 2002, authorizing the execution
and delivery of the Documents;
(e) the Documents;
(f) certificates of officer of the Corporation (the "Officer's
Certificates"), a copy of each of which is attached hereto as
Schedule "A" and Schedule "B"; and
(g) certificates issued under the Personal Property Security Act
(Ontario) (the "PPSA Certificates") in respect of each of Old
ADB and New ADB dated as of August 22, 2002 showing
registration of financing statements numbers 886586994 and
886672368, respectively, in favour of the Lender.
3
We have also examined originals or copies, certified or otherwise identified to
our satisfaction, of such public and corporate records, certificates,
instruments and other documents and have considered such questions of law as we
have deemed relevant and necessary as a basis for the opinions hereinafter
expressed. In connection with all documents which we have examined, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as copies, whether facsimile, photostatic, certified
or otherwise. We have also assumed that all facts set forth in the official
public records, certificates and documents supplied by public officials or
otherwise conveyed to us by public officials, including without limitation the
PPSA Certificate, are complete, true and accurate.
We have also assumed that each of the Documents has been duly authorized,
executed and delivered by, and constitutes a legal, valid and binding obligation
of, each of the parties thereto other than the Corporations, enforceable against
each of the parties thereto other than the Corporations in accordance with its
terms. In particular, and with your permission, in expressing our opinions
herein, we have relied exclusively and without independent investigation or
verification, upon the following instruments, all of which have been provided to
you:
(a) as to our opinion expressed in paragraph 1 herein, the
Certificates of Status; and
(b) as to certain matters of fact set out therein, the Officer's
Certificates.
The opinions expressed below are restricted to the laws of the Province of
Ontario and the federal laws of Canada applicable therein.
Our opinions do not anticipate or take into account any changes in law whether
by legislative, governmental, regulatory or judicial action after the date
hereof. We understand that the reliances, limitations and assumptions expressed
herein are satisfactory to you.
We did not effect the registration of financing statements under the PPSA
against Old ADB or New ADB or any other entity and we have relied exclusively on
the PPSA Certificates as evidence that valid and effective registrations have
been made in accordance with the information shown in such PPSA Certificates.
OPINIONS
Based and relying upon the foregoing, and subject to the qualifications
hereinafter expressed, we are of the opinion that:
1. Old ADB and New ADB are corporations incorporated and existing under
the Business Corporations Act (Ontario) (the "Act").
4
2. Each Corporation has the corporate power and capacity to execute,
deliver and perform its obligations under each Document to which it is
a party.
3. Each Corporation has taken all necessary corporate action to authorize
the execution, delivery and performance by it of each Document to which
it is a party, and each Corporation has duly executed and delivered
each Document to which it is a party.
4. Each Document constitutes a legal, valid and binding obligation of the
Corporation which is a party thereto, enforceable against such
Corporation in accordance with its terms.
5. The execution and delivery of each Document by the Corporation which is
a party thereto and the performance by such Corporation of its
obligations thereunder do not breach or result in a default under:
(a) the articles or by-laws of such Corporation, or
(b) any law, statute or regulation of the Province of Ontario or
of Canada which is applicable in the Province of Ontario to
which such Corporation is subject.
6. To the best of our knowledge, there are no actions, proceedings or
investigations pending against either of the Corporations.
7. No authorization, consent, permit or approval of, or other action by,
or filing with or notice to, any governmental agency or authority,
regulatory body, court, tribunal or other similar entity having
jurisdiction is required in connection with the execution and delivery
of each Document by the Corporation which is a party thereto and the
performance by such Corporation of its obligations thereunder, other
than the registration of a financing statement pursuant to the PPSA
against each of the Corporations.
8. The Old ADB GSA Agreement:
(a) creates a valid security interest in favour of the Lender in
the personal property collateral described therein in which
Old ADB now has rights, and
(b) is sufficient to create a valid security interest in favour of
the Lender in the personal property collateral described
therein in which Old ADB hereafter acquires rights when those
rights are acquired by Old ADB,
in each case to secure the payment and performance of the obligations
described therein as being secured thereby.
5
9. The New ADB GSA:
(a) creates a valid security interest in favour of the Lender in
the personal property collateral described therein in which
New ADB now has rights, and
(b) is sufficient to create a valid security interest in favour of
the Lender in the personal property collateral described
therein in which New ADB hereafter acquires rights when those
rights are acquired by New ADB,
in each case to secure the payment and performance of the obligations
described therein as being secured thereby.
10. Old ADB has (i) the corporate power and capacity to execute, deliver
and perform its obligations under the Norco Pledge, (ii) taken all
necessary corporate action to authorize the execution, delivery and
performance by it under the Norco Pledge, and (iii) duly executed and
delivered the Norco Pledge.
QUALIFICATIONS
The foregoing opinions are subject to the following qualifications:
(a) The enforceability of the Documents is subject to bankruptcy,
insolvency, reorganization, arrangement, winding-up,
moratorium, and other laws of general application limiting the
enforcement of creditors' rights generally.
(b) The enforceability of the Documents is subject to general
equitable principles, including the fact that the availability
of equitable remedies, such as injunctive relief and specific
performance, is in the discretion of a court.
(c) The Lender may be required to give a reasonable time to repay
following a demand for payment prior to taking any action to
enforce any right of repayment or before exercising any of the
rights and remedies expressed to be exercisable under the
Documents.
(d) The validity and enforceability of any provision inserted in
any Document that purports to sever from such Document any
provision that is prohibited or unenforceable under applicable
law without affecting the enforceability or validity of the
remainder of such Document would be determined only in the
discretion of a court.
(e) The costs of and incidental to any proceedings taken in a
court are in the discretion of the court, and the court has
the power to determine by whom and to what extent such costs
shall be paid.
6
(f) A receiver, manager or receiver-manager appointed pursuant to
any Document may be treated as the agent of the Lender and not
solely of the applicable Corporation, notwithstanding any
provision in such Document to the contrary.
(g) The qualification of any opinion or statement with respect to
the existence or absence of facts "to the best of our
knowledge" means actual knowledge of the lawyers of the firm
involved in the preparation of the Documents without any
independent investigation or inquiry.
(h) The enforceability of the Documents may be limited by general
principles of law and equity relating to the conduct of the
parties thereto prior to execution of or in the administration
or performance of the Documents, including, without
limitation:
(i) Undue influence, unconscionability, duress,
misrepresentation and deceit;
(ii) Estoppel and waiver;
(iii) Laches; and
(iv) Reasonableness and good faith in the exercise of
discretionary powers.
(i) We express no opinion as to the enforceability of any
provision of which purports to limit jurisdiction of
proceedings to the courts of Ontario;
(j) The PPSA imposes certain obligations on secured creditors
which cannot be varied by contract. The PPSA may also affect
the enforcement of certain rights and remedies contained in
the Security Documents to the extent that those rights and
remedies are inconsistent with or contrary to the PPSA
including, without limitation, sections 16, 17 and 39 and Part
V of the PPSA;
(k) We have taken no steps to provide the notices or to obtain the
acknowledgements prescribed in Part VII of the Financial
Administration Act (Canada) relating to the assignment of
federal Crown debts. An assignment of federal Crown debts
which does not comply with that Act is ineffective as between
the assignor and the assignee and as against the Crown.
Consequently, the Lender would not have a valid security
interest in federal Crown debts unless that act is complied
with;
(l) We express no opinion as to whether a security interest may be
created in:
7
(i) property consisting of a receivable, license,
approval, privilege, franchise, permit, lease or
agreement (collectively, "Special Property") to the
extent that the terms of the Special Property or any
applicable law prohibit its assignment or require, as
a condition of its assignability, a consent, approval
or other authorization or registration which has not
been made or given; or
(ii) permits, quotas or licenses which are held by or
issued to either of the Corporations.
(m) We express no opinion as to any security interest created by
the Old ADB GSA or the New ADB GSA with respect to any
property of the Corporation that is transformed in such a way
that it is not identifiable or traceable or any proceeds of
property of the Corporations that are not identifiable or
traceable;
(n) We express no opinion as to whether either of the Corporations
has title to or any rights in the Collateral, nor as to the
priority of any security interest created by the Old ADB GSA
or the New ADB GSA;
(o) We have not registered the Old ADB GSA or the New ADB GSA in
any land registry office or under any land registry statutes
even though the PPSA Security Documents may create a security
interest in real property, leases of real property, property
which is now or may hereafter become a fixture or a right to
payment under a lease, mortgage or charge of real property;
(p) We express no opinion as to the enforceability of Section 8.3
of the Loan Agreement; and
(q) Old ADB cannot effect the Arrangement contemplated in the
Documents without the prior approval of its shareholders, the
approval of the Court and the filing of articles of
arrangement and issuance of a certificate of arrangement
pursuant to Section 182 and 183 of the Act and the approval of
the Court pursuant to the Bulk Sales Act (Ontario).
This opinion is furnished solely for the benefit of the addressees hereof in
connection with the transactions contemplated by the Loan Agreement and may not
be circulated to, or relied upon by, quoted from, or referred to by any other
person or used for any other purpose, without our prior written consent.
Yours very truly,
SCHEDULE"A"
TO THE OPINION OF
GOWLING XXXXXXX XXXXXXXXX LLP
DATED AUGUST 28, 2002
OFFICER'S CERTIFICATE
ADB SYSTEMS INTERNATIONAL INC.
TO: GOWLING XXXXXXX XXXXXXXXX LLP
RE: Certificate in connection with opinion delivered on closing of a Loan
Transaction and Plan of Arrangement
THE UNDERSIGNED, Vice-President, General Counsel and Secretary of ADB Systems
International Inc. (the "Corporation") hereby certifies on behalf of the
Corporation and not in a personal capacity as follows:
1. I have read and am familiar with a Loan Agreement and the Schedules
thereto (the "Loan Agreement") among the Corporation and The Brick
Warehouse Corporation and ADB Systems International Ltd. made as of
August 23, 2002. All terms used herein and not otherwise defined herein
and which are defined in the Loan Agreement shall have the meanings
ascribed to them therein, unless the context otherwise requires.
2. I have made or caused to be made such examinations and investigations
as are, in my opinion, necessary to make the statements contained
herein and I have furnished this certificate with the intention that it
may be relied upon by Gowling Xxxxxxx Xxxxxxxxx LLP ("Gowlings") in
connection with the opinion to be given by Gowlings to the parties
named in such opinion. I acknowledge that the matters set forth herein
are being relied upon by Gowlings, without independent investigation,
in connection with its opinion.
3. The minute books and corporate records of the Corporation made
available to you are the original minute books and records of the
Corporation and contain the minutes, or certified copies thereof, of
all proceedings of the shareholders, directors and committees of the
board of directors of the Corporation as of the date hereof and,
subject as aforesaid and herein otherwise provided, there have been no
other meetings, resolutions or proceedings of the shareholders, of the
board of directors or of committees of the board of directors of the
Corporation to the date hereof not reflected in such minute books and
corporate records. Such minute books and records are true, correct and
complete in all material respects and since being made available as
aforesaid there have been no changes, additions or alterations thereto.
The articles and by-laws of the Corporation attached hereto as Appendix
"A" are certified to be true and complete copies of
- 2 -
such documents and are in full force and effect, unamended as of the
date hereof.
4. The Corporation is a corporation amalgamated under the laws of Ontario
and has not been dissolved.
5. The Corporation is not insolvent. No acts or proceedings have been
taken by the Corporation, its directors or shareholders for, and no
notice has been received in respect of, the liquidation, dissolution,
winding-up, insolvency, bankruptcy, amalgamation, arrangement,
reorganization or continuation of the Corporation and no such
proceedings are pending, in the process or contemplated by have been
commenced or are being contemplated by such corporations, its directors
or shareholders or, to my knowledge, have been commenced or are being
contemplated by any other party.
6. At the date hereof, the Corporation is up-to-date in the filing of all
returns required by governmental authorities, including under
corporate, securities and tax legislation. Neither the Corporation nor
the Subsidiaries have received any notice of any proceedings to cancel
their certificates of incorporation or otherwise to terminate their
existence.
7. The Corporation has all licenses, permits, authorizations and other
approvals and the proprietary rights provided in law to all patents,
trademarks, copyrights, industrial designs, software, firmware, trade
secrets, know-how, show-how, concepts, information and other
intellectual and industrial property necessary to permit it to conduct
its business.
8. The Transaction Documents and the agreements, certificates and
instruments contemplated thereby to be delivered by the Corporation
(collectively, the "Agreements") were executed on behalf of the
Corporation by Xxxx Xxxxxx, who holds the office of Vice-President,
General Counsel and Secretary of the Corporation, on the date of
execution and delivery of the Agreements.
DATED the 28th day of August, 2002.
_____________________________________
XXXX XXXXXX
VICE-PRESIDENT, GENERAL COUNSEL AND
SECRETARY
For Ministry Use Only Ontario Corporation Number
A i'usage exclusif du ministere Numero de la societe en Ontario
[OFFICIAL SEAL] 1217515
--------------------------------
Form 3 Business Corporations Act
Formule 3 Loi sur les societes par actions
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The name of the corporation is: Denomination sociale de la societe:
--------------------------------------------------------------------------------
B I D. C O M I N T E R N A T I O N A L I N C.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. The name of the corporation is Nouvelle denomination sociale de la
changed to (if applicable): societe(s'il y a lieu):
--------------------------------------------------------------------------------
A D B S Y S T E M S I N T E R N A T I O N X X X X X.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Date of incorporation/amalgamation: Date de la constitution ou de la
fusion:
1997 01 09
--------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
4. The articles of the corporation are Les statuts de la societe sont
amended as follows: modifies de la facon suivante:
To consolidate all of the common shares of the Corporation presently issued and
outstanding on the basis of 1 consolidated common share for each 2 common shares
presently outstanding with any fractional shares arising as a result of such
consolidation being adjusted to the nearest whole share.
To change the name of the Corporation to ADB Systems International Inc.
5. The amendment has been duly La modification a ete dument
authorized as required by Sections autorisee contormement aux articles
168 & 17.0 (as applicable) of the 168 et 170 (selon le cas) de la Loi
Business Corporations Act. sur les societes par actions.
6. The resolution authorizing the Les actionnaires ou les
amendment was approved by the administrateurs (selon le cas) de
shareholders/directors (as la societe ont approuve la
applicable) of the corporation on resolution autorisant la
modification le
2001 10 10
--------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
These articles are signed in Les presents status sont signes en
duplicate. double exemplaire.
Xxx.Xxx International Inc.
------------------------------------
(Name of Corporation)
(Denomination sociale de la societe)
By:/Par: /s/ [ILLEGIBLE] Secretary
--------------------------------------
(Signature) (Description of Office)
(Signature) (Fonction)
For Ministry Use Only Ontario Corporation Number
A i'usage exclusif du ministere Numero de la societe en Ontario
[OFFICIAL SEAL] 1217515
--------------------------------
Form 3 Business Corporations Act
Formule 3 Loi sur les societes par actions
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The present name of the corporation Denomination sociale actuelle de la
is: societe:
--------------------------------------------------------------------------------
B I D. C O M I N T E R N A T I O N A L I N C.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. The name of the corporation is Nouvelle denomination sociale de la
changed to (if applicable): societe(s'il y a lieu):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Date of incorporation/amalgamation: Date de la constitution ou de la
fusion:
1997 Jan 9
--------------------------------------------------------------------------------
(Year, Month, Day) (annee, mois, jour)
4. The articles of the corporation are Les statuts de la societe sont
amended as follows: modifies de la facon suivante:
By deleting from paragraph 8 of the articles of amalgamation of the Corporation,
certified effective January 9, 1997, the First Series of Preference Shares
designated as Series "A" 7% Cumulative Preference Shares.
5. The amendment has been duly La modification a ete dument
authorized as required by Sections autorisee conformement aux articles
168 & 170 (as applicable) of the 168 et 170 (selon le cas) de la Loi
Business Corporations Act. sur les societes par actions.
6. The resolution authorizing the Les actionnaires [?](selon le cas)
amendment was approved by the de la societe ont approuve la
shareholders/[?](as applicable) of the resolution autorisant la
corporation on modification le
1999 Jun 7
-----------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
These articles are signed in Les presents statuts sont signes en
duplicate. double exemplaire.
XXX.XXX INTERNATIONAL INC.
------------------------------------
(Name of Corporation)
(Denomination sociale de la societe)
Assistant
By/Par: /s/ [ILLEGIBLE] Secretary
---------------------------------------
(Signature) (Description of Office)
(Signature) (Fonction)
For Ministry Use Only Ontario Corporation Number
A i'usage exclusif du ministere Numero de la societe en Ontario
[OFFICIAL SEAL] 1217515
--------------------------------
Form 3 Business Corporations Act
Formule 3 Loi sur les societes par actions
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The present name of the corporation Denomination sociale actuelle de
is: la societe:
--------------------------------------------------------------------------------
I N T E R N E T L I Q U I D A T O R S I N T E R N A T I O N A L I N C .
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. The name of the corporation is Nouvelle denomination sociale de la
changed to (if applicable): societe(s'il y a lieu):
--------------------------------------------------------------------------------
B I D. C O M I N T E R N A T I O N A L I N C.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Date of incorporation/amalgamation: Date de la constitution ou de la
fusion:
1997 Jan 9
--------------------------------------------------------------------------------
(Year, Month, Day) (annee, mois, jour)
4. The articles of the corporation are Les statuts de la societe sont
amended as follows: modifies de la facon suivante:
To change the name of the Corporation to Xxx.Xxx International Inc.
To increase the allowable maximum number of directors from ten (10) to fifteen
(15).
5. The amendment has been duly La modification a ete dument
authorized as required by Sections autorisee conformement aux articles
168 and 170 (as applicable) of the 168 et 170 (selon le cas) de la
Business Corporations Act. Loi sur les societes par actions.
6. The resolution authorizing the Les actionnaires[?](selon le cas)
amendment was approved by the de la societe ont approuve la
shareholders/[?](as applicable) of the resolution autorisant la
corporation on modification le
1998 Jun 23
--------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
These articles are signed in Les presents statuts sont signes en
duplicate. double exemplaire.
INTERNET LIQUIDATORS
INTERNATIONAL INC.
-----------------------------------
(Name of Corporation)
(Denomination sociale de la societe)
By/Par: /s/ [ILLEGIBLE] Secretary
---------------------------------------
(Signature) (Description of Office)
(Signature) (Fonction)
For Ministry Use Only Ontario Corporation Number
A i'usage exclusif du ministere Numero de la societe en Ontario
[OFFICIAL SEAL] 1217515
--------------------------------
Form 4 Business Corporations Act
Formule 4 Loi sur les societes par actions
ARTICLES OF AMALGAMATION
STATUTS DE FUSION
1. The name of the amalgamated Denomination sociale de la societe
corporation is: issue De la fusion:
--------------------------------------------------------------------------------
I N T E R N E T L I Q U I D A T O R S I N T E R N A T I O N A L I N C.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. The address of the registered Address du siege social:
office is:
0000 Xxxxxxx Xxxx, Xxxxx 000
--------------------------------------------------------------------------------
(Street & Number, or R.R. Number & if Multi-Office Building give Room No.)
(Rue et numero, ou numero de la R.R. et, s'il s'agit d'un edifice a bureaux,
numero ou bureau)
Mississauga, Ontario L 4 V 1 T 1
--------------------------------------------------------------------------------
(Name of Municipality or Post Office) (Postal Code)
(Nom de la municipalite ou du bureau de poste) (Code Postal)
3. Number (or minimum and maximum Nombre (ou nombres minimal et
number) of directors is: maximal) d'administrateurs:
Minimum of 3; Maximum of 10
4. The director(s) is/are: Administrateur(s):
Resident
Canadian
Residence address, giving Street & No. or R.R. No., State
municipality and postal code Yes or No
Adresse personnelle. y compns la rue et le numero, le Resident
First name. initials and surname numero de la R.R., le nom de la municipalite et le code Canadian
Prenom, initiales et nom de famille postal Oui/Non
-------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx 000 Xxxxx'x Xxxx, Xxx 000, X.X. #0,
Xxxxxxxx, Xxxxxxx LOG 1J0 Yes
Xxxxxxxxxxx Xxxxxx 00 Xxxxxxx Xxxx,
Xxxxxxx, Xxxxxxx X0X 0X0 Yes
Xxxxxx Xxxxxxxx X00 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxx X0X 0X0 Yes
Xxxxxxx Xxxxxxxxx 00 Xxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxxxx X0X 0X0 Yes
Xxxxx Xxxxx 0000 Xxxxxx Xxxx Xxxxxxxxx,
Xxxxxxxxxxx, Xxxxxxx X0X 0X0 Yes
5. (A) The amalgamation agreement has (A) Les administrateurs de chaque
been duly adopted by [?] societe qui fusione ont [?] adopte
shareholders of each of the la convention de fusion
amalgamating corporations as conformement au paragraphe 176 (4)
required by subsection 176 (4) de la Loi sur les societes par
of the Business Corporations [ ] actions a la date
Act on the date set out below. mentionnee ci-dessous.
-----------------------------------------------------------------
Check Cocner
A or B A ou B
-----------------------------------------------------------------
(B) The amalgamation has been (B) Les administrateurs de chaque
approved by the directors of [X] societe qui fusionne ont approuve
each amalgamating corporation la fusion par vote de resolution
by a resolution as required by conformement a l'article 177 de la
section 177 of the Business sur les societes par actions a la
Corporations Act on the date date mentionnee ci-dessous.
set out below.
The articles of amalgamation in Les status de fusion reprennent
substance contain the provisions essentieliement les dispositions
of the articles of incorporation des status constitutes de
of
INTERNET LIQUIDATORS INTERNATIONAL INC.
--------------------------------------------------------------------------------
and are more particularly set out in et sont enonces textuellement
these articles. aux presents status.
Names of amalgamating
corporations Ontario Corporation Number
Denomination sociale des Numero de la societe en Date of Adoption/Approval
societes qui fusionnent Ontario Date d'adoption ou d'approbation
-------------------------------------------------------------------------------------------------------------------
Internet Liquidators
International Inc. 571083 November 25, 1996
Internet Liquidators
Inc. 1145907 November 25, 1996
6. Restrictions if any, [?] business [?]
the corporation may carry on or
on [?] the corporation may
exercise.
None.
7. The classes and any maximum number Categories et nombre maximal,
of shares that the corporation is s'ily a lieu, d'actions que la
authorized to issue: socite est autonsee a emmettre:
An unlimited number of common shares and an unlimited number of
Preference Shares, issuable in series.
8. Rights, privileges [?] and [?]
conditions (if any) attaching to
[?] of shares and
directors authority with
[?] to any class of shares
which is to be issued in series:
See pages 4A to 4E.
4A
(i) the preference shares may from time to time be issued in one
or more series and subject to the following provisions, and
subject to the sending of articles of amendment in prescribed
form, and the endorsement on them of a certificate of
amendment in respect of them, the directors may fix from time
to time before such issue the number of shares that is to
comprise each series and the designation, rights, privileges,
restrictions and conditions attaching to each series of
preference shares including, without limiting the generality
of the foregoing, the rate or amount of dividends or the
method of calculating dividends, the dates of payment, the
redemption, purchase and/or conversion prices and terms and
conditions of redemption, purchase and/or conversion, and any
sinking fund or other provisions;
(ii) the preference shares of each series shall, with respect to
the payment of dividends and the distribution of assets or
return of capital in the event of liquidation, dissolution or
winding up of the Corporation, whether voluntary or
involuntary, or any other return of capital or distribution of
the assets of the Corporation among its shareholders for the
purpose of winding up its affairs, rank on a parity with the
preference shares of every other series and be entitled to
preference over the common shares and over any other shares of
the Corporation ranking junior to the preference shares. The
preference shares of any series may also be given such other
preferences, not inconsistent with these articles, over the
common shares and any other shares of the Corporation ranking
junior to such preference shares as may be fixed in accordance
with clause (b)(i);
(iii) if any cumulative dividends or amounts payable on the return
of capital in respect of a series of preference shares are not
paid in full, all series of preference shares shall
participate ratably in respect of such dividends and return of
capital:
(iv) the preference shares of any series may be voting shares,
entitled to vote pari passu with the common shares at meetings
of the common shareholders of the Corporation; and.
(v) the preference shares of any series may be made convertible
into common shares.
First Series - Series "A" 7% Cumulative Preference Shares
1. creating an unlimited number of 7% cumulative preference
shares with the following terms, rights, conditions and attributes:
4B
(i) Liquidation, Dissolution or Winding-Up
In the event of the liquidation, dissolution or winding-up of
the Corporation or other distribution of assets of the
Corporation among shareholders for the purpose of winding-up
its affairs:
(a) the holders of the 7% cumulative preference shares
shall be entitled to receive from the assets of the
Corporation a sum equivalent to the aggregate Redemption
Amount (as hereinafter defined) of all of the shares held by
them respectively before any amount shall be paid or any
property or assets of the Corporation distributed to the
holders of any common share or shares of any other class
ranking junior to the shares. After payment to the holders of
the shares of the amount so payable to them as above provided
they shall not be entitled to share in any further
distribution of the assets or property of the Corporation. The
Redemption Amount is hereby defined as $ 10.00 per share and
the aggregate Redemption Amount shall be $10.00 times the
total amount of issued and outstanding 7% cumulative
preference shares at such time as any one of the above defined
events occurs.
(ii) Voting Rights
(a) the holders of the 7% cumulative preference shares
shall not be entitled to receive notice of or to attend any
meeting of the shareholders of the Corporation unless the
meeting is called for the purpose of authorizing the
dissolution of the Corporation or the sale of its undertaking
or a substantial part thereof, in which case the holders of
the 7% cumulative preference shares shall be entitled to
receive notice of such meeting. The holders of the 7%
cumulative preference shares shall not be entitled either to
vote at any meeting of the shareholders of the Corporation or
to sign a resolution in writing, except a meeting called to
consider, or a resolution in writing in respect of, any
amendment to these Articles in respect of which the holders of
the 7% cumulative preference shares would be entitled to vote
separately as a class pursuant to the Act.
(iii) Dividends
The holders of the 7% cumulative preference shares shall be
entitled to receive out of the moneys of the Corporation,
fixed, preferential, cumulative, cash dividends at the rate of
$0.70 per share per annum payable quarterly on dates to be
fixed from time to time by the directors; such dividends shall
accrue and be cumulative from the respective dates of issue of
the 7% cumulative preference shares if the Corporation shall
not have paid the said dividends in full on all of the 7%
cumulative preference shares then issued and outstanding, such
dividends on the unpaid amount thereof shall be paid on a
subsequent date or dates in priority to dividends on any
convertible preference shares and any
4C
shares of any other class ranking junior to the 7% cumulative
preference shares; no dividend shall be declared or paid or
set apart for the 7% cumulative preference shares and any
shares of any other class ranking junior to the 7% cumulative
preference shares then issued and outstanding until such
dividends or the unpaid par thereof on all 7% cumulative
preference shares then issued and outstanding shall have been
declared or paid or provided for at the date of such
declaration on payment or setting apart.
(iv) Redemption at the Option of the Holder
(a) A holder of 7% cumulative preference shares shall be
entitled to require the Corporation to redeem at any time and
from time to time upon giving notice as hereinafter provided,
all or any number of the 7% cumulative preference shares
registered in the name of such holder on the books of the
Corporation at a redemption price per share of $10.00 and all
unpaid cumulative dividends, whether or not declared, which
shall have accrued thereon and which, for such purpose, shall
be treated as accruing up to the date of such redemption (less
the amount of any tax which the Corporation is required to and
does withhold therefrom).
(b) A holder of 7% cumulative preference shares
exercising his option to have the Corporation redeem, shall
give notice to the Corporation which notice shall set out the
date on which the Corporation is to redeem which date shall
not be less than 10 days nor more than 30 days from the ate of
the notice and if the holder desires to have less than all the
7% cumulative preference shares registered in his name
redeemed by the Corporation, the number of the holder's shares
to be redeemed. The date on which the redemption at the option
of the holder is to occur shall be the option redemption date.
The holder of any 7% cumulative preference shares may, with
the consent of the Corporation, revoke such notice prior to
the option redemption date.
(c) Upon delivery to the Corporation of a share
certificate or certificates representing the 7% cumulative
preference shares which the holder desires to have the
Corporation redeem, the Corporation shall on the option
redemption date, to the extent permitted by applicable law,
redeem such 7% cumulative preference shares by paying to the
holder the redemption price therefor.
(d) Upon payment of the redemption price of the 7%
cumulative preference shares so redeemed by the Corporation,
the holder thereof shall cease to be entitled to dividends or
to exercise any rights of holders in respect thereof.
(e) If the redemption by the Corporation on any option
redemption date of all 7% cumulative preference shares to be
redeemed on such date would be contrary to applicable law, the
Corporation shall be obligated to redeem only the maximum
number of 7% cumulative preference shares (rounded to the next
4D
lower multiple of 100 shares) which the Corporation determines
it is then permitted to redeem, such redemptions to be made
pro rata (disregarding fractions of shares) according to the
number of 7% cumulative preference shares required by each
such holder to be redeemed by the Corporation and the
Corporation shall issue new certificates representing the 7%
cumulative preference shares not redeemed by the Corporation
and the Corporation shall redeem in the manner contemplated by
paragraph (iv) on each dividend date thereafter the maximum
number of such 7% cumulative preference shares as would then
be not contrary to applicable law.
(v) Redemption at the Option of the Corporation
(a) The Corporation may at its option at any time from
the date of issue redeem all or from time to time any pan of
the outstanding 7% cumulative preference shares on payment to
the holders thereof, for each share to be redeemed, an amount
equal to $10.00 and all unpaid cumulative dividends, whether
or not declared, which shall have accrued thereon and which,
for such purpose, shall be treated as accruing up to the date
of such redemption (less the amount of any tax which the
Corporation is required to and does withhold tax therefrom).
(b) Before redeeming any 7% cumulative preference shares
the Corporation shall mail to each person who, at the date of
such mailing, is a registered holder of shares to be redeemed,
notice of the intention of the Corporation to redeem such
shares held by such registered holder; such notice shall be
mailed by ordinary prepaid post addressed to the last address
of such holder as it appears on the records of the Corporation
or, in the event of the address of any such holder not
appearing on the record of the Corporation, then to the last
known address of such holder, at least 30 days before the date
specified for redemption; such notice shall set out the
redemption price, the date on which redemption is to take
place and, if par only of the shares held by the person to
whom it is addressed is to be redeemed, the number thereof so
to be redeemed; on or after the date so specified for
redemption the Corporation shall pay or cause to be paid the
redemption price to the registered holders of the shares to be
redeemed, on presentation and surrender of the certificates
for the shares so called for redemption at such place or
places as may be specified in such notice, and the
certificates for such shares shall thereupon be cancelled, and
the shares represented thereby shall thereupon be redeemed. In
case a part only of the outstanding 7% cumulative preference
shares is at any time to be redeemed, the shares to be
redeemed shall be selected, at the option of the directors,
either by lot in such manner as the directors in their sole
discretion shall determine or as nearly as may be pro rata
(disregarding fractions) according to the number of 7%
cumulative preference shares held by each holder. In case a
part only of the 7% cumulative preference shares represented
by any certificate shall be redeemed, a new certificate for
the balance shall be
4E
issued at the expense of the Corporation. From and after the
date specified for redemption in such notice, the holders of
the shares called for redemption shall cease to be entitled to
dividends and shall not be entitled to any rights in respect
thereof, except to receive the redemption price, unless
payment of the redemption price shall not be made by the
Corporation in accordance with the foregoing provisions, in
which case the rights of the holders of such shares shall
remain unimpaired. On or before the date specified for
redemption the Corporation shall have the right to deposit the
redemption price of the shares called for redemption in a
preference account with any chartered bank or trust company in
Canada named in the notice of redemption to be paid without
interest, to or to the order of the respective holders of such
shares called for redemption upon presentation and surrender
of the certificates representing the same and, upon such
deposit being made, the shares in respect whereof such deposit
shall have been made shall be redeemed and the rights of the
several holders thereof, after such deposit, shall be limited
to receiving, out of the moneys so deposited, without
interest, the redemption price applicable to their respective
shares against presentation and surrender of the certificates
representing such shares.
9. The issue, transfe, ownership of L'emisson, ie unstert ou is propnete
shares is/is not restricted and c acdons esur es: pas restro [?]
the instructions (if any) are as
follows:
No shareholder shall be entitled to sell, assign, transfer or
otherwise dispose of any Preference Share or Shares without
both:
(a) the previous express sanction of the directors of the
Corporation expressed by a resolution passed at a
meeting of the Board of Directors of the Corporation
or consented to by an instrument or instruments in
writing signed by a majority of the directors; and
(b) the prior written consent of the Ontario Securities
Commission.
10. Other provisions, if any, are: Autres dispositions, s'il y a lieu:
None.
11. The statements required by Les declarations exigees aux
subsection 178(2) of the Business termes du paragraphs 178(2) de la
Corporations Act are attached as Loi sur les societes par actions
Schedule "A". constituent I'annexe "A".
12. A copy of the amalgamation Une copie de la convention de
agreement or directors resolutions fusion our les resolutions des
(as the case may be) is/are administrateurs (selon le cas)
attached as Schedule "B". constitue(nt) I'annexe "B".
[?] [?]
Names of the amalgamating Denomination sociate des societes
corporations and signatures and qui fusionnent signature at
descriptions at office of their function de leurs dingeants
proper officers requirement designes.
INTERNET LIQUIDATORS
INTERNATIONAL INC. INTERNET LIQUIDATORS INC.
Per: /s/ Xxxx Xxxxx Per: /s/ Xxxx Xxxxx
---------------------- ----------------------
Xxxx Xxxxx - President Xxxx Xxxxx - President
SCHEDULE "A"
STATEMENT
IN THE MATTER OF THE AMALGAMATION OF
INTERNET LIQUIDATORS INTERNATIONAL INC. AND INTERNET LIQUIDATORS INC.
The undersigned, XXXX XXXXX, the President of INTERNET LIQUIDATORS INTERNATIONAL
INC. states that:
1. there are reasonable grounds for believing that:
(a) each of Internet Liquidators International In. and Internet
Liquidators Inc. is and the amalgamated corporation will be
able to pay its liabilities as they become due, and
(b) the realizable value of the amalgamated corporation's assets
will not be less than the aggregate of its liabilities and
stated capital of all classes of its shares;
2. there are reasonable grounds for believing that no creditor will be
prejudiced by the amalgamation; and
3. with respect to paragraphs 178 (2) (c) and (d) of the Business
Corporations Act, 1990, no creditors have notified Internet Liquidators
International Inc. that they object to the present amalgamation.
DATED the 7th day of January, 1997.
/s/ Xxxx Xxxxx
-------------------
Xxxx Xxxxx
SCHEDULE "A"
STATEMENT
IN THE MATTER OF THE AMALGAMATION OF
INTERNET LIQUIDATORS INC. AND INTERNET LIQUIDATORS INTERNATIONAL INC.
The undersigned, XXXX XXXXX, the President of INTERNET LIQUIDATORS INC. states
that:
1. there are reasonable grounds for believing that:
(a) each of Internet Liquidators Inc. and Internet Liquidators
International Inc., is and the amalgamated corporation will be
able to pay its liabilities as they become due, and
(b) the realizable value of the amalgamated corporation's assets
will not be less than the aggregate of its liabilities and
stated capital of all classes of its shares;
2. there are reasonable grounds for believing that no creditor will be
prejudiced by the amalgamation; and
3. with respect to paragraphs 178 (2) (c) and (d) of the Business
Corporations Act, 1990, no creditors have notified Internet Liquidators
Inc. that they object to the present amalgamation.
DATED the 7th day of January, 1997.
/s/ Xxxx Xxxxx
-------------------
Xxxx Xxxxx
SCHEDULE "B"
CERTIFIED COPY OF AN EXTRACT FROM THE MINUTES OF A MEETING OF
THE BOARD OF DIRECTORS
OF
INTERNET LIQUIDATORS INTERNATIONAL INC.
(the "Corporation")
"Amalgamation with Internet Liquidators Inc.
WHEREAS the Corporation wholly owns and has decided to amalgamate with
Internet Liquidators Inc. pursuant to subsection (1) of Section 177 of the
Business Corporations Act (Ontario);
IT IS RESOLVED THAT:
1. The amalgamation of the Corporation and Internet Liquidators Inc. under
the Business Corporations Act (Ontario), pursuant to subsection (1) of
Section 177 thereof is approved;
2. The amalgamation shall become effective as of the opening of business
on the date on which the Director, Companies Branch, endorses his
certificate on the Articles of Amalgamation.
3. Upon the issuance of a Certificate of Amalgamation pursuant to Section
178 of the Business Corporations Act (Ontario), all shares in the
capital of Internet Liquidators Inc., including all shares which have
been issued and are outstanding at the date hereof, shall be cancelled
on the amalgamation without any repayment of capital in respect
thereof;
4. Upon the issuance of a Certificate of Amalgamation pursuant to Section
178 of the Business Corporations Act (Ontario), all shares in the
capital of the Corporation, including all shares which have been issued
and are outstanding at the date hereof, be and the same are hereby
converted on a one-for-one basis into shares of the amalgamated
corporation;
5. The Articles of Amalgamation of the amalgamated corporation shall be
the same as the Articles of Incorporation, as amended, of the
Corporation;
6. The by-laws of the amalgamated corporation shall be the same as the
by-laws of the Corporation;
7. No securities shall be issued and no assets shall be distributed by the
Amalgamated Corporation in connection with the amalgamation; and
- 2 -
8. Any officer or director of the Corporation is authorized to do all
things and execute all instruments and documents necessary or desirable
to carry out and give effect to the foregoing."
CERTIFIED a true copy of a resolution passed at a Meeting of
the Board of Directors of INTERNET LIQUIDATORS INTERNATIONAL INC. held on the
25th day of November, 1996 and that such resolution is still in full force and
effect, unamended.
/s/ Xxxx Xxxxx
--------------------------
Xxxx Xxxxx - President
SCHEDULE "B"
CERTIFIED COPY OF AN EXTRACT FROM THE MINUTES OF A MEETING OF
THE BOARD OF DIRECTORS
OF
INTERNET LIQUIDATORS INC.
(the "Corporation")
"Amalgamation With Internet Liquidators International Inc.
WHEREAS the Corporation is a wholly-owned subsidiary of and has decided
to amalgamate with Internet Liquidators International Inc. pursuant to
subsection (1) of Section 177 of the Business Corporations Act (Ontario);
IT IS RESOLVED THAT:
1. The amalgamation of the Corporation and Internet Liquidators
International Inc. under the Business Corporations Act (Ontario),
pursuant to subsection (1) of Section 177 thereof is approved;
2. The amalgamation shall become effective as of the opening of business
on the date on which the Director, Companies Branch, endorses his
certificate on the Articles of Amalgamation.
3. Upon the issuance of a Certificate of Amalgamation pursuant to Section
178 of the Business Corporations Act (Ontario), all shares in the
capital of the Corporation, including all shares which have been issued
and are outstanding at the date hereof, shall be cancelled on the
amalgamation without any repayment of capital in respect thereof;
4. The Articles of Amalgamation of the amalgamated corporation shall be
the same as the Articles of Incorporation of Internet Liquidators
International Inc., as amended;
5. The by-laws of the amalgamated corporation shall be the same as the
by-laws of Internet Liquidators International Inc.;
6. No securities shall be issued and no assets shall be distributed by the
amalgamated corporation in connection with the amalgamation; and
7. Any officer or director of the Corporation is authorized to do all
things and execute all instruments and documents necessary or desirable
to carry out and give effect to the foregoing."
- 2 -
CERTIFIED a true copy of a resolution passed at a Meeting of the
Board of Directors of INTERNET LIQUIDATORS INC. held on the 25th day of
November, 1996 and that such resolution is still in full force and effect,
unamended,
/s/ Xxxx Xxxxx
----------------------------
Xxxx Xxxxx - President
BY-LAW NO. 5
A by-law relating generally to the
transaction of the business and affairs of
INTERNET LIQUIDATORS INTERNATIONAL INC.
ARTICLE 1. DEFINITIONS
(a) DEFINITIONS - In this by-law and in all other by-laws of the
Corporation unless the context otherwise requires:
(i) "Act" means the Business Corporations Act (Ontario)
R.S.O. 1990 c.B. 17. as from time to time amended,
and a reference to a particular provision or part of
the Act shall be deemed to be a reference to such
provision or part as the same may thereafter from
time to time be amended or supplemented;
(ii) "Board" means the board of directors of the
Corporation; and
(iii) "Corporation" means Internet Liquidators
International Inc.
(b) EXPRESSIONS DEFINED IN ACT - Save as aforesaid, words and
expressions defined in the Act have the same meanings when used herein.
(c) INTERPRETATION - Words importing the singular number include
the plural and vice versa; words importing gender include the
masculine, feminine and neuter genders; and words importing persons
include individuals, bodies corporate, partnerships, trust and
unincorporated organizations.
ARTICLE 2. BOARD NUMBER
Where the Articles of the Corporation provide for a minimum
and maximum number of directors, the number of directors and the number
to be elected at the annual meeting shall be the number fixed by
special resolution of the shareholders or by resolution of the
directors from time to time.
ARTICLE 3. BUSINESS OF THE CORPORATION
(a) REGISTERED OFFICE - Until changed in accordance with the Act,
the registered office of the Corporation shall be at the City of
Mississauga in the Province of Ontario and at such location therein as
the Board may from time to time determine.
(b) FINANCIAL YEAR - Until changed by the Board, the financial
year of the Corporation shall end on the 30th day of November in each
year.
ARTICLE 4. MEETINGS OF SHAREHOLDERS
(a) ANNUAL MEETINGS - The annual meeting of shareholders shall be
held at such time in each year and, subject to section 4(c), at such
place as the Board, the Chairman of the Board or the President may from
time to time determine, for the purpose of considering the financial
statements and reports required by the Act to be placed before the
annual
- 2 -
meeting, electing directors, appointing auditors and for the transaction of such
other business as may properly be brought before the meeting.
(b) SPECIAL MEETINGS - The Board, the Chairman of the Board or the
President shall have power to call a special meeting of shareholders at any
time.
(c) PLACE OF MEETINGS - Meetings of shareholders shall be held at the
registered office of the Corporation or at such other place in or outside
Ontario as the directors determine.
(d) NOTICE OF MEETINGS - Notice of the time and place of each meeting of
shareholders shall be given in the manner provided in section 6(a) not less than
21 nor more than 50 days before the date of the meeting to each director, to the
auditor and to each shareholder who at the close of business on the record date
for notice is entered in the securities register as the holder of one or more
shares carrying the right to vote at the meeting. Notice of a meeting of
shareholders called for any purpose other than consideration of the financial
statements and auditor's report, election of directors and reappointment of the
incumbent auditor shall state the nature of such business in sufficient detail
to permit the shareholders to form a reasoned judgment thereon and shall state
the text of any special resolution to be submitted to the meeting. A shareholder
and any other person entitled to attend a meeting of shareholders may in any
manner waive notice of or otherwise consent to a meeting of shareholders.
(e) LIST OF SHAREHOLDERS ENTITLED TO NOTICE - For every meeting of
shareholders, the Corporation shall prepare a list of shareholders entitled to
receive notice of the meeting, arranged in alphabetical order and showing the
number of shares entitled to vote at the meeting held by each shareholder. If a
record date for the meeting is fixed pursuant to section 4(f), the shareholders
listed shall be those registered at the close of business on such record date.
If no record date is fixed, the shareholders listed shall be those registered at
the close of business on the day immediately preceding the day on which notice
of the meeting is given, or where no such notice is given, on the day on which
the meeting is held. The list shall be available for examination by any
shareholder during usual business hours at the registered office of the
Corporation or at the place where the securities register is maintained and at
the meeting for which the list was prepared. Where a separate list of
shareholders has not been prepared, the names of persons appearing in the
securities register at the requisite time as the holder of one or more shares
carrying the right to vote at such meeting shall be deemed to be a list of
shareholders.
(f) RECORD DATE FOR NOTICE - The Board may fix in advance a date, preceding
the date of any meeting of shareholders by not more than 50 days and not less
than 35 days, as a record date for the determination of the shareholders
entitled to notice of the meeting. If a record date is fixed, unless notice
thereof is waived in writing by every holder of a share of the class or series
affected whose name is set out in the share register at the close of business on
the day the directors fix the record date, notice thereof shall, not less than
seven days before the date so fixed, be given in the manner provided in the Act.
If no record date is so fixed, the record date for the determination of the
shareholders entitled to notice of the meeting shall be the close of business on
the day immediately preceding the day on which the notice is given or if no
notice is given, the day on which the meeting is held.
(g) MEETINGS WITHOUT NOTICE - A meeting of shareholders may be held without
notice at any time and place permitted by the Act:
(i) if all the shareholders entitled to vote thereat are present
in person or represented by proxy or if those not present or
represented by proxy waive notice of or otherwise consent to such
meeting being held; and
(ii) if the auditors and the directors are present or waive notice
of or otherwise consent to such meeting being held.
At such a meeting any business may be transacted which the Corporation at a
meeting of shareholders may transact. If the meeting is held at a place outside
Canada, shareholders not present or represented by proxy, but who have waived
- 3 -
notice of or otherwise consented to such meeting, shall also be deemed to have
consented to the meeting being held at such place.
(h) CHAIRMAN, SECRETARY AND SCRUTINEERS - The chairman of any meeting of
shareholders shall be the first mentioned of such of the following officers as
have been appointed and who is present at the meeting: Chairman of the Board,
President or a Vice-President who is a director. If no such officer is present
within 15 minutes from the time fixed for holding the meeting, the persons
present and entitled to vote shall choose one of their members to be chairman.
If the Secretary of the Corporation is absent, the chairman shall appoint some
person, who need not be a shareholder, to act as secretary of the meeting. If
desired, one or more scrutineers, who need not be shareholders, may be
appointed by a resolution or by the chairman with the consent of the meeting.
(i) PERSONS ENTITLED TO BE PRESENT - The only persons entitled to be
present at a meeting of shareholders shall be those entitled to vote thereat,
the directors and auditors of the Corporation and others who, although not
entitled to vote, are entitled or required under any provision of the Act or the
articles or by-laws to be present at the meeting. Any other person may be
admitted only on the invitation of the chairman of the meeting or with the
consent of the meeting.
(j) QUORUM - A quorum for the transaction of business at any meeting of
shareholders shall be the lesser of the number of shareholders or two persons
present in person, each being a shareholder or representative duly authorized
in accordance with the Act entitled to vote thereat or a duly appointed proxy
for a shareholder so entitled (and together holding or representing by proxy not
less than 20% of the outstanding shares of the Corporation entitled to vote at
the meeting). If a quorum is present at the opening of the meeting, the
shareholders present in person or by proxy may proceed with the business of the
meeting even if a quorum is not present throughout the meeting.
(k) RIGHT TO VOTE - Subject to the provisions of the Act as to authorized
representatives of any other body corporate, at any meeting of shareholders in
respect of which the Corporation has prepared the list referred to in section
4(e), every person who is named in such list shall be entitled to vote the
shares shown thereon opposite his name, except:
(i) where the Corporation has fixed a record date in respect of
such meeting pursuant to section 4(f), to the extent that any such
person has transferred any of his shares after such record date and the
transferee either produces properly endorsed share certificates or
otherwise established that he owns such shares and demands, on or
before the commencement of the meeting, that his name be included
in the list before the meeting; or
(ii) where the Corporation has not fixed a record date in respect
of such meeting pursuant to section 4(f), to the extent that any such
person has transferred any of his shares after the date on which the
list referred to in section 4(e) is prepared and the transferee,
either produces properly endorsed share certificates or otherwise
establishes that he owns such shares and demands, on or before the
commencement of the meeting, that his name be included in the list
before the meeting,
in either of which cases the transferee is entitled to vote his shares at the
meeting.
In the absence of a list prepared as aforesaid in respect of a meeting
of shareholders, every person shall be entitled to vote at the meeting whose
name appears in the securities register as the holder of one or more shares
carrying the right to vote at such meeting.
(l) PROXIES - Every shareholder entitled to vote at a meeting of
shareholders may appoint a proxyholder, or one or more alternate proxyholders,
who need not be shareholders, to attend and act at the meeting in the manner and
to the extent authorized and with the authority conferred by the proxy. A proxy
shall be in writing executed by the shareholder or his attorney and shall
conform with the requirements of the Act.
(m) TIME FOR DEPOSIT OF PROXIES - The Board may specify in a notice calling
a meeting of shareholders a time, preceding the time of such meeting by not
more than 48 hours exclusive of non-business days, before which time
- 4 -
proxies to be used at such meeting must be deposited. A proxy shall be acted
upon only if, prior to the time so specified, it shall have been deposited with
the Corporation or an agent thereof specified in such notice or, if no such time
is specified in such notice, unless it has been received by the Secretary of the
Corporation or by the chairman of the meeting or any adjournment thereof prior
to the time of voting.
(n) JOINT SHAREHOLDERS - If two or more persons hold shares jointly, any
one of them present in person or represented by proxy at a meeting of
shareholders may, in the absence of the other or others, vote the shares; but if
two or more of those persons are present in person or represented by proxy and
vote, they shall vote as one on the shares jointly held by them.
(o) VOTES TO GOVERN - At any meeting of shareholders every question shall,
unless otherwise required by the articles or by-laws or by law, be determined by
the majority of the votes cast on the question. In case of an equality of votes
either upon a show of hands or upon a poll, the chairman of the meeting shall
be entitled to a second or casting vote.
(p) SHOW OF HANDS - Subject to the provisions of the Act, any question at a
meeting of shareholders shall be decided by a show of hands unless a ballot
thereon is required or demanded as hereinafter provided. Upon a show of hands
every person who is present and entitled to vote shall have one vote. Whenever a
vote by show of hands shall have been taken upon a question, unless a ballot
thereon is so required or demanded, a declaration by the chairman of the meeting
that the vote upon the question has been carried or carried by a particular
majority or not carried and an entry to that effect in the minutes of the
meeting shall be prima fncie evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against any resolution or other
proceeding in respect of the said question, and the result of the vote so taken
shall be the decision of the shareholders upon the said question.
(q) BALLOTS - On any question proposed for consideration at a meeting of
shareholders, and whether or not a show of hands has been taken thereon, any
shareholder or proxyholder entitled to vote at the meeting may require or
demand a ballot. A ballot so required or demanded shall be taken in such
manner as the chairman shall direct. A requirement or demand for a ballot may
be withdrawn at any time prior to the taking of the ballot. If a ballot is taken
each person present shall be entitled, in respect of the shares which he is
entitled to vote at the meeting upon the question, to that number of votes
provided by the Act or the articles, and the result of the ballot so taken shall
be the decision of the shareholders upon the said question.
(r) ADJOURNMENT - If a quorum is not present at or within 15 minutes from
the opening of a meeting of shareholders, the shareholders present may adjourn
the meeting to a fixed time and place but may not transact any other business.
If a meeting of shareholders is adjourned for less than 30 days. It shall not be
necessary to give notice of the adjourned meeting, other than by announcement at
the earliest meeting that is adjourned. If a meeting of shareholders is
adjourned by one or more adjournments for an aggregate of 30 days or more,
notice of the adjourned meeting shall be given as for an original meeting.
(s) RESOLUTION IN WRITING - Subject to the Act, a resolution in writing
signed by all the shareholders entitled to vote on that resolution at a meeting
of shareholders is as valid as if it has been passed at a meeting of the
shareholders.
(t ) ONLY ONE SHAREHOLDER - Where the Corporation has only one shareholder
or only one holder of any class or series of shares, the shareholder present in
person or by proxy constitutes a meeting.
- 5 -
ARTICLE 5. MEETINGS OF DIRECTORS
(a) FIRST MEETING - Immediately after the annual meeting of shareholders in
each year, a meeting of such of the newly elected directors as are then present
may be held (provided that they shall constitute a quorum) without notice, for
the appointment of officers of the Corporation and the transaction of such other
business as may come before the meeting.
(b) NOTICE - Subject to the foregoing and to the provisions of any
resolution of the Board, meetings of the Board may be called at any time by the
Chairman of the Board, the President or any two directors and notice of the time
and place for holding any meeting of the Board shall be given at least
forty-eight hours prior to the time fixed for the meeting. Any meeting so called
may be held at the registered office of the Corporation or such other place as
the Board may determine in or outside Ontario.
(c) ABBREVIATED NOTICE - In any case when it is considered by the Chairman
of the Board or the President in his discretion to be a matter of urgency that a
directors' meeting be convened, he may give notice of a meeting of directors by
telegraph or telephone not less than one hour before such meeting is to be held
and such notice shall be adequate for the meeting so convened.
(d) QUORUM - The quorum for the transaction of business of any meeting of
the Board shall be a majority of the number of directors or minimum number of
directors, as the case may be.
(e) CHAIRMAN - The chairman of any meeting of the Board shall be the first
mentioned of such of the following officers as have been appointed and who is a
director and is present at the meeting: Chairman of the Board, President or
Vice-President. If all such officers be absent or unable or refuse or fail to
act, the directors present may choose a chairman from among their number. The
chairman at any meeting may vote as a director.
(f) VOTES TO GOVERN - At all meetings of the Board every question shall be
decided by a majority of the votes cast on the question. In the case of an
equality of votes the chairman of the meeting shall be entitled to a second or
casting vote.
ARTICLE 6. NOTICES
(a) METHOD OF GIVING NOTICE - Any notice (which term includes any
communication or document) to be given (which term includes sent, delivered or
served) pursuant to the Act, the regulations thereunder, the articles, the
by-laws or otherwise to a shareholder, director, officer, auditor or member of a
committee of the Board shall be sufficiently given if delivered personally to
the person to whom it is to be given or if delivered to his recorded address or
if mailed to him at his recorded address by prepaid ordinary or air mail or if
sent to him at his recorded address by any means of prepaid transmitted or
recorded communication. A notice so delivered shall be deemed to have been given
when it is delivered personally or to the recorded address as aforesaid; a
notice so mailed shall be deemed to have been given when deposited in a post
office or public letter box; and a notice so sent by any means of transmitted or
recorded communication shall be deemed to have been given when dispatched or
delivered to the appropriate communication company or agency or its
representative for dispatch. The Secretary may change or cause to be changed the
recorded address of any shareholders, director, officer, auditor or member of a
committee of the Board in accordance with any information believed by him to be
reliable.
(b) NOTICE TO JOINT SHAREHOLDER - If two or more persons are registered as
joint holders of any share, any notice shall be addressed to all of such joint
holders but notice to one of such persons shall be sufficient notice to all of
them.
(c) COMPUTATION OF TIME - In computing the date when notice must be given
under any provision requiring a specified number of days' notice of any meeting
or other event, the date of sending the notice shall be included and the date of
the meeting or other event shall both be excluded.
- 6 -
(d) UNDELIVERED NOTICES - If any notice given to a shareholder pursuant to
section 4(a) is returned on three consecutive occasions because he cannot be
found, the Corporation shall not be required to give any further notices to
such shareholder until he informs the Corporation in writing of his new address.
(e) OMISSIONS AND ERRORS - The accidental omission to give any notice to
any shareholder, director, officer, auditor or member of a committee of the
Board or the non-receipt of any notice by any such person or any error in any
notice not affecting the substance thereof shall not invalidate any action taken
at any meeting held pursuant to such notice or otherwise founded thereon.
(f) PERSONS ENTITLED BY DEATH OR OPERATION OF LAW - Every person who, by
operation of law, transfer, death of a shareholder or any other means
whatsoever, shall become entitled to any share, shall be bound by every notice
in respect of such share which shall have been duly given to the shareholder
from whom he derives his title to such share prior to his name and address being
entered on the securities register (whether such notice was given before or
after the happening of the event upon which he became so entitled) and prior to
his furnishing to the Corporation the proof of authority or evidence of his
entitlement prescribed by the Act.
(g) WAIVER OF NOTICE - Any shareholder (or his duly appointed
proxyholder), director, officer, auditor or member of a committee of the Board
may at any time waive the sending of any notice or waive or abridge the time for
any notice, required to be given to him under any provision of the Act, the
regulations thereunder, the articles, the by-laws or otherwise and such waiver
or abridgement shall cure any default in the giving or in the time of such
notice, as the case may be. Any such waiver or abridgement shall be in writing
except a waiver of notice of a meeting of shareholders or of the Board which may
be given in any manner.
ARTICLE 7. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify a director or officer of the
Corporation, a former director or officer of the Corporation, or a person who
acts or acted at the Corporation's request as a director or officer of a body
corporate of which the Corporation is or was a shareholder or creditor, and his
heirs and legal representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, reasonably
incurred by him in respect of any civil, criminal or administrative action or
proceeding to which he or she is made a party by reason of being or having been
a director or officer of the Corporation or body corporate, if:
(a) he or she acted honestly and in good faith with a view to the
best interests of the Corporation, and
(b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he or she
had reasonable grounds for believing that his or her conduct
was lawful.
ARTICLE 8. EFFECTIVE DATE
This by-law shall come into force and effect when enacted by the Board,
subject to the Act, whereupon this by-law shall repeal and replace By-law Number
1 of the Corporation, without prejudice to any action previously taken pursuant
to such by-law.
Enacted by the Board the 16th day of September, 1996.
/s/ [ILLEGIBLE]
---------------------------
Secretary
[?]
SCHEDULE"B"
TO THE OPINION OF
GOWLING XXXXXXX XXXXXXXXX LLP
DATED AUGUST 28, 2002
OFFICER'S CERTIFICATE
ADB SYSTEMS INTERNATIONAL LTD.
TO: GOWLING XXXXXXX XXXXXXXXX LLP
RE: Certificate in connection with opinion delivered on closing of a Loan
Transaction and Plan of Arrangement
THE UNDERSIGNED, Secretary of ADB Systems International Ltd. (the "Corporation")
hereby certifies on behalf of the Corporation and not in a personal capacity as
follows:
1. I have read and am familiar with a Loan Agreement among The Brick
Warehouse Corporation, ADB Systems International Inc. and the
Corporation made as of August 23, 2002 and the Schedules thereto (the
"Loan Agreement"). All terms used herein and not otherwise defined
herein and which are defined in the Loan Agreement shall have the
meanings ascribed to them therein, unless the context otherwise
requires.
2. I have made or caused to be made such examinations and investigations
as are, in my opinion, necessary to make the statements contained
herein and I have furnished this certificate with the intention that it
may be relied upon by Gowling Xxxxxxx Xxxxxxxxx LLP ("Cowlings") in
connection with the opinion to be given by Gowlings to the parties
named in such opinion. I acknowledge that the matters set forth herein
are being relied upon by Gowlings, without independent investigation,
in connection with its opinion.
3. The minute books and corporate records of the Corporation made
available to you are the original minute books and records of the
Corporation and contain the minutes, or certified copies thereof, of
all proceedings of the shareholders, directors and committees of the
board of directors of the Corporation as of the date hereof and,
subject as aforesaid and herein otherwise provided, there have been no
other meetings, resolutions or proceedings of the shareholders, of the
board of directors or of committees of the board of directors of the
Corporation to the date hereof not reflected in such minute books and
corporate records. Such minute books and records are true, correct and
complete in all material respects and since being made available as
aforesaid there have been no changes, additions or alterations thereto.
The articles and by-laws of the Corporation attached hereto as Appendix
"A" are certified to be true and complete copies of such documents and
are in full force and effect, unamended as of the date hereof.
- 2 -
4. The Corporation is a corporation amalgamated under the laws of Ontario
and has not been dissolved.
5. The Corporation is not insolvent. No acts or proceedings have been
taken by the Corporation, its directors or shareholders for, and no
notice has been received in respect of, the liquidation, dissolution,
winding-up, insolvency, bankruptcy, amalgamation, reorganization or
continuation of the Corporation and no such proceedings are pending, in
the process or contemplated by have been commenced or are being
contemplated by such corporations, its directors or shareholders or, to
my knowledge, have been commenced or are being contemplated by any
other party.
6. At the date hereof, the Corporation is up-to-date in the filing of all
returns required by governmental authorities, including under
corporate, securities and tax legislation. Neither the Corporation nor
the Subsidiaries have received any notice of any proceedings to cancel
their certificates of incorporation or otherwise to terminate their
existence.
7. The Corporation has all licenses, permits, authorizations and other
approvals and the proprietary rights provided in law to all patents,
trademarks, copyrights, industrial designs, software, firmware, trade
secrets, know-how, show-how, concepts, information and other
intellectual and industrial property necessary to permit it to conduct
its business.
8. The Transaction Documents and the agreements, certificates and
instruments contemplated thereby to be delivered by the Corporation
(collectively, the "Agreements") were executed on behalf of the
Corporation by Xxxx Xxxxxx, who holds the office of Secretary of the
Corporation, on the date of execution and delivery of the Agreements.
DATED the 28th day of August, 2002.
________________________
XXXX XXXXXX
SECRETARY
For Ministry Use Only Ontario Corporation Number
A i'usage exclusif du ministere Numero de la compagnie en Ontario
[OFFICIAL SEAL] 1539169
---------------------------------
Form 1 Business Corporation Act
Formule 1 numero 1 Loi sur les compagnies
ARTICLES OF INCORPORATION
STATUS CONSTITUTIFS
1. The name of the corporation is: Denomination sociale de la compagnie:
--------------------------------------------------------------------------------
A D B S Y S T E M S I N T E R N A T I O N A L L T D.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. The address of the registered Adresse du siege social:
office is:
0000 Xxxxxxx Xxxx, Xxxxx 000
--------------------------------------------------------------------------------
(Street & Number, or R.R. Number & if Multi-Office Building give Room No.)
(Rue et numero, ou numero de la R.R. et s'il s'agit edifice a bureaux, numero du
bureau)
MISSISSAUGA. ONTARIO X 0 X 0 X 0
--------------------------------------------------------------------------------
(Xxxx of Municipality or Post Office) (Postal Code/ Code postal)
(Nom de la municipalite ou du bureau de poste)
3. Number (or minimum and maximum Nombre (ou nombres minimal et maximal)
number) of directors is: d'administrateurs:
A minimum of 3 and a maximum of 15.
4. The first director(s) is/are: Premier(s) administrateur(s):
Address for service, giving Street & Resident
No. or R.R. No., Municipality and Canadian
Postal Code State
First name, initials Domicile elu. y compris Yes or No
and surname Prenom, la rue et le numero, le numero de la Resident
initiales et nom de R.R. ou le nom de la municipalite et le Canadien
famille code postal Oui/Non
--------------------------------------------------------------------------------------------------
Xxxx Xxxxxx 0000 Xxxxxxx Xxxx. Xxxxx 000.
Xxxxxxxxxxx. Xxxxxxx. Xxxxxx. X0X 0X0 Yes
Xxxxxxx Xxxxxxxxx 0000 Xxxxxxxxx Xxxxxx. Xxxxxxx.
Xxxxxxx. Xxxxxx Xxxxxx. 00000 No
Xxxx Xxxxxxx 00 Xxxxxxxxxx Xxxxxx. Xxxxxxx. Xxxxxxx.
Xxxxxx. X0X 0X0 Yes
2
5. Restrictions, if any, on business Limites. s'il y a lieu, imposees
the corporation may carry on or on aux activites commerciales ou aux
powers the corporation may pouvoirs de la compagnie.
exercise.
None.
6. The classes and any maximum number Categories et nombre maximal,
of shares that the corporation is s'il y a lieu, d'actions que la
authorized to issue: compagnie est autorisee a emettre:
The Corporation is authorized to issue an unlimited number of common shares and
an unlimited number of preference shares, issuable in series.
3
7. Rights, privileges, restrictions Droits, privileges, restrictions et
and conditions (if any) attaching conditions s'il y a lieu, rattaches
to each class of shares and a chaque categorie d'actions et
directors authority with respect pouvoirs des administrateurs
to any class of shares which may relatifs a chaque categorie
be issued in series: d'actions qui peut etre emise en
serie:
See attached page 3A.
3A
PREFERENCE SHARES
1. PRIVILEGES OF PREFERENCE SHARES. The preference shares, shall have
attached to them, as a class, the rights, privileges, restrictions and
conditions as hereinafter set forth.
(a) the preference shares may from time to time be issued in one
or more series and subject to the following provisions, and
subject to the sending of articles of amendment in prescribed
form, and the endorsement on them of a certificate of
amendment in respect of them, the directors may fix from time
to time before such issue the number of shares that is to
comprise each series and the designation, rights, privileges,
restrictions and conditions attaching to each series of
preference shares including, without limiting the generality
of the foregoing, the rate or amount of dividends or the
method of calculating dividends, the dates of payment, the
redemption, purchase and/or conversion prices and terms and
conditions of redemption, purchase and/or conversion, and any
sinking fund or other provisions:
(b) the preference shares of each series shall, with respect to
the payment of dividends and the distribution of assets or
return of capital in the event of liquidation, dissolution or
winding up of the Corporation, whether voluntary or
involuntary, or any other return of capital or distribution of
the assets of the Corporation among its shareholders for the
purpose of winding up its affairs, rank on a parity with the
preference shares of every other series and be entitled to
preference over the common shares and over any other shares of
the Corporation ranking junior to the preference shares. The
preference shares of any series may also be given such other
preferences, not inconsistent with these articles, over the
common shares and any other shares of the Corporation ranking
junior to such preference shares as may be fixed in accordance
with clause (1)(a):
(c) if any cumulative dividends or amounts payable on the return
of capital in respect of a series of preference shares are not
paid in full, all series of preference shares shall
participate ratably in respect of such dividends and return of
capital:
(d) the preference shares of any series may be voting shares,
entitled to vote pari passu with the common shares at meetings
of the common shareholders of the Corporation: and,
(e) the preference shares of any series may be made convertible
into common shares.
4
8. The issue, transfer or ownership L'emission, le transfert ou la
of shares is/is not restricted and propriete d'actions est/n'est pas
the restrictions (if any) are as restreinte. Les restrictions,
follows: s'il y a lieu sont les suivantes:
None.
5
9. Other provisions, if any, are: Autres dispositions, s'il y a lieu:
None.
6
10. The names and addresses of the Full address for service or address
incorporators are Nom et adresse of registered office or of
des fondateurs principal place of business giving
First name,initials and last name or street & No. or R.R. No., corporate
name Prenom, initiale et municipality and postal code
nom de famille ou denomination Domicile elu, adresse du siege
sociale social ou adresse de
l'etablissement principal, y
compris la rue et le numero, le
numero de la R.R., le nom de la
municipalite et le code postal
Xxxx Xxxxxx 0000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxx, X0X 0X0
These articles are signed in Les presents statuts sont signes en
duplicate. double exemplaire.
________________________________________________________________________________
Signatures of incorporators / signatures des fondateurs
/s/ Xxxx Xxxxxx
----------------------
Xxxx Xxxxxx
BY-LAW NO. 1
A BY-LAW RELATING GENERALLY TO THE
TRANSACTION OF THE BUSINESS AND AFFAIRS OF
ADB SYSTEMS INTERNATIONAL LTD.
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS
In this by-law and in all other by-laws of the Corporation
unless the context otherwise requires:
(a) "Act" means the Business Corporations Act (Ontario) R.S.O.
1990 c.B.17, as from time to time amended, and a reference to
a particular provision or part of the Act shall be deemed to
be a reference to such provision or part as the same may
thereafter from time to time be amended or supplemented;
(b) "Board" means the board of directors of the Corporation; and
(c) "Corporation" means ADB Systems International Ltd.
SECTION 1.2 EXPRESSIONS DEFINED IN ACT
Save as aforesaid, words and expressions defined in the Act
have the same meanings when used herein.
SECTION 1.3 INTERPRETATION
Words importing the singular number include the plural and
vice versa; words importing gender include the masculine, feminine and neuter
genders; and words importing persons include individuals, bodies corporate,
partnerships, trust and unincorporated organizations.
ARTICLE 2
BOARD NUMBER
Where the Articles of the Corporation provide for a minimum
and maximum number of directors, the number of directors and the number to be
elected at the annual meeting shall be the number fixed by special resolution of
the shareholders or by resolution of the directors from time to time.
- 2 -
ARTICLE 3
BUSINESS OF THE CORPORATION
SECTION 3.1 REGISTERED OFFICE
Until changed in accordance with the Act, the registered
office of the Corporation shall be at the City of Mississauga in the Province of
Ontario and at such location therein as the Board may from time to time
determine.
SECTION 3.2 FINANCIAL YEAR
Until changed by the Board, the financial year of the
Corporation shall end on the 30th day of November in each year.
ARTICLE 4
MEETINGS OF SHAREHOLDERS
SECTION 4.1 ANNUAL MEETINGS
The annual meeting of shareholders shall be held at such time
in each year and, subject to Section 4.3, at such place as the Board, the
Chairman of the Board or the President may from time to time determine, for the
purpose of considering the financial statements and reports required by the Act
to be placed before the annual meeting, electing directors, appointing auditors
and for the transaction of such other business as may properly be brought before
the meeting.
SECTION 4.2 SPECIAL MEETINGS
The Board, the Chairman of the Board or the President shall
have power to call a special meeting of shareholders at any time.
SECTION 4.3 PLACE OF MEETINGS
Meetings of shareholders shall be held at the registered
office of the Corporation or at such other place in or outside Ontario as the
directors determine.
SECTION 4.4 NOTICE OF MEETINGS
Notice of the time and place of each meeting of shareholders
shall be given in the manner provided in Section 6.1 not less than 21 nor more
than 50 days before the date of the meeting to each director, to the auditor and
to each shareholder who at the close of business on the record date for notice
is entered in the securities register as the holder of one or more shares
carrying the right to vote at the meeting. Notice of a meeting of shareholders
called for any purpose other than consideration of the financial statements and
auditor's report, election of directors and reappointment of the incumbent
auditor shall state the nature of such business in sufficient detail to permit
the shareholders to form a reasoned judgment thereon and shall state
- 3 -
the text of any special resolution to be submitted to the meeting. A shareholder
and any other person entitled to attend a meeting of shareholders may in any
manner waive notice of or otherwise consent to a meeting of shareholders.
SECTION 4.5 LIST OF SHAREHOLDERS ENTITLED TO NOTICE
For every meeting of shareholders, the Corporation shall
prepare a list of shareholders entitled to receive notice of the meeting,
arranged in alphabetical order and showing the number of shares entitled to vote
at the meeting held by each shareholder. If a record date for the meeting is
fixed pursuant to Section 4.6, the shareholders listed shall be those registered
at the close of business on such record date. If no record date is fixed, the
shareholders listed shall be those registered at the close of business on the
day immediately preceding the day on which notice of the meeting is given, or
where no such notice is given, on the day on which the meeting is held. The list
shall be available for examination by any shareholder during usual business
hours at the registered office of the Corporation or at the place where the
securities register is maintained and at the meeting for which the list was
prepared. Where a separate list of shareholders has not been prepared, the names
of persons appearing in the securities register at the requisite time as the
holder of one or more shares carrying the right to vote at such meeting shall be
deemed to be a list of shareholders.
SECTION 4.6 RECORD DATE FOR NOTICE
The Board may fix in advance a date, preceding the date of any
meeting of shareholders by not more than 50 days and not less that 35 days, as a
record date for the determination of the shareholders entitled to notice of the
meeting. If a record date is fixed, unless notice thereof is waived in writing
by every holder of a share of the class or series affected whose name is set out
in the share register at the close of business on the day the directors fix the
record date, notice thereof shall, not less than seven days before the date so
fixed, be given in the manner provided in the Act. If no record date is so
fixed, the record date for the determination of the shareholders entitled to
notice of the meeting shall be the close of business on the day immediately
preceding the day on which the notice is given or if no notice is given, the day
on which the meeting is held.
SECTION 4.7 MEETINGS WITHOUT NOTICE
A meeting of shareholders may be held without notice at any
time and place permitted by the Act:
(a) if all the shareholders entitled to vote thereat are present
in person or represented by proxy or if those not present or
represented by proxy waive notice of or otherwise consent to
such meeting being held; and
(b) if the auditors and the directors are present or waive notice
of or otherwise consent to such meeting being held.
- 4 -
At such a meeting any business may be transacted which the
Corporation at a meeting of shareholders may transact. If the meeting is held at
a place outside Canada, shareholders not present or represented by proxy, but
who have waived notice of or otherwise consented to such meeting, shall also be
deemed to have consented to the meeting being held at such place.
SECTION 4.8 CHAIRMAN, SECRETARY AND SCRUTINEERS
The chairman of any meeting of shareholders shall be the first
mentioned of such of the following officers as have been appointed and who is
present at the meeting: Chairman of the Board, President or a Vice-President who
is a director. If no such officer is present within 15 minutes from the time
fixed for holding the meeting, the persons present and entitled to vote shall
choose one of their members to be chairman. If the Secretary of the Corporation
is absent, the chairman shall appoint some person, who need not be a
shareholder, to act as secretary of the meeting. If desired, one or more
scrutineers, who need not be shareholders, may be appointed by a resolution or
by the chairman with the consent of the meeting.
SECTION 4.9 PERSONS ENTITLED TO BE PRESENT
The only persons entitled to be present at a meeting of
shareholders shall be those entitled to vote thereat, the directors and auditors
of the Corporation and others who, although not entitled to vote, are entitled
or required under any provision of the Act or the articles or by-laws to be
present at the meeting. Any other person may be admitted only on the invitation
of the chairman of the meeting or with the consent of the meeting.
SECTION 4.10 QUORUM
A quorum for the transaction of business at any meeting of
shareholders shall be the lesser of the number of shareholders or two persons
present in person, each being a shareholder or representative duly authorized in
accordance with the Act entitled to vote thereat or a duly appointed proxy for a
shareholder so entitled (and together holding or representing by proxy not less
than 20% of the outstanding shares of the Corporation entitled to vote at the
meeting). If a quorum is present at the opening of the meeting, the shareholders
present in person or by proxy may proceed with the business of the meeting even
if a quorum is not present throughout the meeting.
SECTION 4.11 RIGHT TO VOTE
Subject to the provisions of the Act as to authorized
representatives of any other body corporate, at any meeting of shareholders in
respect of which the Corporation has prepared the list referred to in Section
4.5, every person who is named in such list shall be entitled to vote the shares
shown thereon opposite his name, except:
(a) where the Corporation has fixed a record date in respect of
such meeting pursuant to Section 4.6, to the extent that any
such person has transferred any of his shares after such
record date and the transferee either produces properly
endorsed share
- 5 -
certificates or otherwise established that he owns such shares
and demands, on or before the commencement of the meeting,
that his name be included in the list before the meeting; or
(b) where the Corporation has not fixed a record date in respect
of such meeting pursuant to Section 4.6, to the extent that
any such person has transferred any of his shares after the
date on which the list referred to in Section 4.5 is prepared
and the transferee either produces properly endorsed share
certificates or otherwise establishes that he owns such shares
and demands, on or before the commencement of the meeting,
that his name be included in the list before the meeting,
in either of which cases the transferee is entitled to vote his shares at the
meeting.
In the absence of a list prepared as aforesaid in respect of a
meeting of shareholders, every person shall be entitled to vote at the meeting
whose name appears in the securities register as the holder of one or more
shares carrying the right to vote at such meeting.
SECTION 4.12 PROXIES
Every shareholder entitled to vote at a meeting of
shareholders may appoint a proxyholder, or one or more alternate proxyholders,
who need not be shareholders, to attend and act at the meeting in the manner and
to the extent authorized and with the authority conferred by the proxy. A proxy
shall be in writing executed by the shareholder or his attorney and shall
conform with the requirements of the Act.
SECTION 4.13 TIME FOR DEPOSIT OF PROXIES
The Board may specify in a notice calling a meeting of
shareholders a time, preceding the time of such meeting by not more than 48
hours exclusive of non-business days, before which time proxies to be used at
such meeting must be deposited. A proxy shall be acted upon only if, prior to
the time so specified, it shall have been deposited with the Corporation or an
agent thereof specified in such notice or, if no such time is specified in such
notice, unless it has been received by the Secretary of the Corporation or by
the chairman of the meeting or any adjournment thereof prior to the time of
voting.
SECTION 4.14 JOINT SHAREHOLDERS
If two or more persons hold shares jointly, any one of them
present in person or represented by proxy at a meeting of shareholders may, in
the absence of the other or others, vote the shares: but if two or more of those
persons are present in person or represented by proxy and vote, they shall vote
as one on the shares jointly held by them.
SECTION 4.15 VOTES TO GOVERN
At any meeting of shareholders every question shall, unless
otherwise required by the articles or by-laws or by law, be determined by the
majority of the votes cast on the question.
- 6 -
In case of an equality of votes either upon a show of hands or upon a poll, the
chairman of the meeting shall be entitled to a second or casting vote.
SECTION 4.16 SHOW OF HANDS
Subject to the provisions of the Act, any question at a
meeting of shareholders shall be decided by a show of hands unless a ballot
thereon is required or demanded as hereinafter provided. Upon a show of hands
every person who is present and entitled to vote shall have one vote. Whenever a
vote by show of hands shall have been taken upon a question, unless a ballot
thereon is so required or demanded, a declaration by the chairman of the meeting
that the vote upon the question has been carried or carried by a particular
majority or not carried and an entry to that effect in the minutes of the
meeting shall be prima facie evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against any resolution or other
proceeding in respect of the said question, and the result of the vote so taken
shall be the decision of the shareholders upon the said question.
SECTION 4.17 BALLOTS
On any question proposed for consideration at a meeting of
shareholders, and whether or not a show of hands has been taken thereon, any
shareholder or proxyholder entitled to vote at the meeting may require or demand
a ballot. A ballot so required or demanded shall be taken in such manner as the
chairman shall direct. A requirement or demand for a ballot may be withdrawn at
any time prior to the taking of the ballot. If a ballot is taken each person
present shall be entitled, in respect of the shares which he is entitled to vote
at the meeting upon the question, to that number of votes provided by the Act or
the articles, and the result of the ballot so taken shall be the decision of the
shareholders upon the said question.
SECTION 4.18 ADJOURNMENT
If a quorum is not present at or within 15 minutes from the
opening of a meeting of shareholders, the shareholders present may adjourn the
meeting to a fixed time and place but may not transact any other business. If a
meeting of shareholders is adjourned for less than 30 days, it shall not be
necessary to give notice of the adjourned meeting, other than by announcement at
the earliest meeting that is adjourned. If a meeting of shareholders is
adjourned by one or more adjournments for an aggregate of 30 days or more,
notice of the adjourned meeting shall be given as for an original meeting.
SECTION 4.19 RESOLUTION IN WRITING
Subject to the Act, a resolution in writing signed by all the
shareholders entitled to vote on that resolution at a meeting of shareholders is
as valid as if it has been passed at a meeting of the shareholders.
- 7 -
SECTION 4.20 ONLY ONE SHAREHOLDER
Where the Corporation has only one shareholder or only one
holder of any class or series of shares, the shareholder present in person or by
proxy constitutes a meeting.
ARTICLE 5
MEETINGS OF DIRECTORS
SECTION 5.1 FIRST MEETING
Immediately after the annual meeting of shareholders in each
year, a meeting of such of the newly elected directors as are then present may
be held (provided that they shall constitute a quorum) without notice, for the
appointment of officers of the Corporation and the transaction of such other
business as may come before the meeting.
SECTION 5.2 NOTICE
Subject to the foregoing and to the provisions of any
resolution of the Board, meetings of the Board may be called at any time by the
Chairman of the Board, the President or any two directors and notice of the time
and place for holding any meeting of the Board shall be given at least
forty-eight hours prior to the time fixed for the meeting. Any meeting so called
may be held at the registered office of the Corporation or such other place as
the Board may determine in or outside Ontario.
SECTION 5.3 ABBREVIATED NOTICE
In any case when it is considered by the Chairman of the Board
or the President in his discretion to be a matter of urgency that a directors'
meeting be convened, he may give notice of a meeting of directors by telegraph
or telephone not less than one hour before such meeting is to be held and such
notice shall be adequate for the meeting so convened.
SECTION 5.4 QUORUM
The quorum for the transaction of business of any meeting of
the Board shall be a majority of the number of directors or minimum number of
directors, as the case may be.
SECTION 5.5 CHAIRMAN
The chairman of any meeting of the Board shall be the first
mentioned of such of the following officers as have been appointed and who is a
director and is present at the meeting: Chairman of the Board, President or
Vice-President. If all such officers be absent or unable or refuse or fail to
act, the directors present may choose a chairman from among their number. The
chairman at any meeting may vote as a director.
- 8 -
SECTION 5.6 VOTES TO GOVERN
At all meetings of the Board every question shall be decided
by a majority of the votes cast on the question. In the case of an equality of
votes the chairman of the meeting shall be entitled to a second or casting vote.
ARTICLE 6
NOTICES
SECTION 6.1 METHOD OF GIVING NOTICE
Any notice (which term includes any communication or document)
to be given (which term includes sent, delivered or served) pursuant to the Act,
the regulations thereunder, the articles, the by-laws or otherwise to a
shareholder, director, officer, auditor or member of a committee of the Board
shall be sufficiently given if delivered personally to the person to whom it is
to be given or if delivered to his recorded address or if mailed to him at his
recorded address by prepaid ordinary or air mail or if sent to him at his
recorded address by any means of prepaid transmitted or recorded communication.
A notice so delivered shall be deemed to have been given when it is delivered
personally or to the recorded address as aforesaid; a notice so mailed shall be
deemed to have been given when deposited in a post office or public letter box;
and a notice so sent by any means of transmitted or recorded communication shall
be deemed to have been given when dispatched or delivered to the appropriate
communication company or agency or its representative for dispatch. The
Secretary may change or cause to be changed the recorded address of any
shareholder, director, officer, auditor or member of a committee of the Board in
accordance with any information believed by him to be reliable.
SECTION 6.2 NOTICE TO JOINT SHAREHOLDER
If two or more persons are registered as joint holders of any
share, any notice shall be addressed to all of such joint holders but notice to
one of such persons shall be sufficient notice to all of them.
SECTION 6.3 COMPUTATION OF TIME
In computing the date when notice must be given under any
provision requiring a specified number of days' notice of any meeting or other
event, the date of sending the notice shall be included and the date of the
meeting or other event shall both be excluded.
SECTION 6.4 UNDELIVERED NOTICES
If any notice given to a shareholder pursuant to Section 4.1
is returned on three consecutive occasions because he cannot be found, the
Corporation shall not be required to give any further notices to such
shareholder until he informs the Corporation in writing of his new address.
- 9 -
SECTION 6.5 OMISSIONS AND ERRORS
The accidental omission to give any notice to any shareholder,
director, officer, auditor or member of a committee of the Board or the
non-receipt of any notice by any such person or any error in any notice not
affecting the substance thereof shall not invalidate any action taken at any
meeting held pursuant to such notice or otherwise founded thereon.
SECTION 6.6 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW
Every person who, by operation of law, transfer, death of a
shareholder or any other means whatsoever, shall become entitled to any share,
shall be bound by every notice in respect of such share which shall have been
duly given to the shareholder from whom he derives his title to such share prior
to his name and address being entered on the securities register (whether such
notice was given before or after the happening of the event upon which be became
so entitled) and prior to his furnishing to the Corporation the proof of
authority or evidence of his entitlement prescribed by the Act.
SECTION 6.7 WAIVER OF NOTICE
Any shareholder (or his duly appointed proxyholder), director,
officer, auditor or member of a committee of the Board may at any time waive the
sending of any notice or waive or abridge the time for any notice, required to
be given to him under any provision of the Act, the regulations thereunder, the
articles, the by-laws or otherwise and such waiver or abridgement shall cure any
default in the giving or in the time of such notice, as the case may be. Any
such waiver or abridgement shall be in writing except a waiver of notice of a
meeting of shareholders or of the Board which may be given in any manner.
ARTICLE 7
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify a director or officer of the
Corporation, a former director or officer of the Corporation, or a person who
acts or acted at the Corporation's request as a director or officer of a body
corporate of which the Corporation is or was a shareholder or creditor, and his
heirs and legal representatives, against all costs, charges and expenses,
including any amount paid to settle an action or satisfy a judgment, reasonably
incurred by him in respect of any civil, criminal or administrative action or
proceeding to which he or she is made a party by reason of being or having been
a director or officer of the Corporation or body corporate, if,
(a) he or she acted honestly and in good faith with a view to the
best interests of the Corporation; and
(b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he or she
had reasonable grounds for believing that his or her conduct
was lawful.
- 10 -
ARTICLE 8
EFFECTIVE DATE
This by-law shall come into force and effect when enacted by
the Board, subject to the Act.
Enacted by the Board the 20th day of August, 2002.
/s/ XXXX XXXXXX
-----------------------
XXXX XXXXXX
SECRETARY
SCHEDULE 3.2(e)
[LETTERHEAD OF ADB SYSTEMS INTERNATIONAL INC.]
-, 2002
- [ADDRESS]
Dear -:
RE: -[REFERENCE AGREEMENT OR RELATIONSHIP]
We refer to the - [NAME OF AGREEMENT] (the "Agreement") dated - between - ("-")
and ADB Systems International Inc. ("Old ADB") in connection with - [DESCRIBE
NATURE OF AGREEMENT].
[AS PART OF A PROPOSED TRANSACTION AND A RELATED RESTRUCTURING OF OUR COMPANY],
we are transferring all of our business and operations relating to the agreement
to a new entity, ADB Systems International Ltd. ("New ADB"). Following the
restructuring, New ADB will be the parent of Old ADB with no change of control
of either company [DESCRIBE NATURE AND MERITS OF NEW ADB (i.e., NEW ABD) WILL
CONTINUE TO PROVIDE THE SERVICE THAT YOU COME TO EXPECT FROM OLD ADB].
In connection with this transfer, all of our rights under the Agreement will be
assigned to [OR HAVE BEEN ASSIGNED] New ADB effective November 30, 2002, and New
ADB will assume all of our obligations and liabilities under the Agreement and
will perform them in substitution for ADB as if New ADB were the original party
to the Agreement.
Would you kindly indicate your concurrence to the assignment and assumption of
the Agreement by signing and returning a copy of this letter. [NEW ADB LOOKS
FORWARD TO CONTINUED SUCCESS IN PROVIDING SERVICE AND SUPPORT TO -].
Yours truly,
ADB SYSTEMS INTERNATIONAL INC.
By: _______________________________
- [NAME]
- [TITLE]
Acknowledged and confirmed,
ADB SYSTEMS INTERNATIONAL LTD.
By: _______________________________
- [NAME]
- [TITLE]
Acknowledged and agreed as of ________________________________, 2002.
[-]
By: ______________________________________
Name:
Title:
SCHEDULE 5.3(1)
SUBSIDIARIES
-----------------------------------------------------------------------------------------------------------------
SUBSIDIARY AUTHORIZED AND ISSUED CAPITAL PARENT
-----------------------------------------------------------------------------------------------------------------
ADB Systemer AS Authorized and Issued - 12,732,000 ADB Systems International Inc.
shares (1)
-----------------------------------------------------------------------------------------------------------------
ADB Systems International Authorized and Issued - 50,000 ADB Systems International Inc.
Limited ordinary shares at(pound)1.00 each
-----------------------------------------------------------------------------------------------------------------
ADB Systems Limited Wholly-owned ADB Systemer AS
-----------------------------------------------------------------------------------------------------------------
Xxx.Xxx (U.K.) Limited Authorized and Issued - 1,000 ordinary ADB Systems International Limited
shares at(pound)0.10 each
-----------------------------------------------------------------------------------------------------------------
ADB Systems, Inc. Wholly-owned ADB Systemer AS
-----------------------------------------------------------------------------------------------------------------
Xxx.Xxx USA, Inc. Authorized - 10,000 shares having a ADB Systems International Inc.
par value of $ 1 .00 each
Issued- 100 shares
-----------------------------------------------------------------------------------------------------------------
Xxx.Xxx International Pty. Ltd. Authorized - 100 ordinary shares ADB Systems International Inc.
Issued - 100 ordinary shares
-----------------------------------------------------------------------------------------------------------------
Internet Liquidators USA, Inc Authorized - 500 shares having a par ADB Systems International Inc.
value of $0.10 each
Issued - 100 shares
-----------------------------------------------------------------------------------------------------------------
1345746 Ontario Limited Authorized - unlimited common shares ADB Systems International Inc.
Issued - 100 common shares
-----------------------------------------------------------------------------------------------------------------
(1) ADB holds 12,648,429 shares. The remaining 83,571 shares, or 0.7% of
the shares issued are held by third parties)
SCHEDULE 5.3(2)
SHARES, ETC, OWNED BY ADB ENTITIES
------------------------------------------------------------------------------------------
INVESTEE COMPANY NATURE OF INVESTMENT
------------------------------------------------------------------------------------------
Megawheels Technologies Inc. 1,038,200 shares
------------------------------------------------------------------------------------------
SCS Solars Computing Services Inc. 10,000 shares
------------------------------------------------------------------------------------------
EssentiaLink LLC 200,000 shares of common stock
------------------------------------------------------------------------------------------
Buzzgolf, Art Vault, GSO Solutions All now defunct
------------------------------------------------------------------------------------------
This listing does not reference Subsidiaries.
SCHEDULE 5.3(4)
LIABILITY OF ADB ENTITIES
The ability of ADB and its Subsidiaries to satisfy their liabilities as they
become due is subject to receipt of the funds to be advanced hereunder and
pursuant to the Subordinated Notes (the "New Funds"). It is unlikely that ADB
will be able to raise funds from borrowing or the sale of securities in the
foreseeable future, given the current state of its business and of the financial
markets. Consequently ADB must finance its ongoing operations from cash on hand,
the New Funds and revenue from operations. All Subsidiaries are dependent on ADB
for their operating funds.
SCHEDULE 5.4 (2)
OPTIONS, WARRANTS, SHAREHOLDER AGREEMENTS, ETC.
1. All options of Old ADB presently outstanding pursuant to the 1999 Stock
Option Plan of Old ADB, as amended.
2. 512,500 warrants issued by Old ADB and held by GE Capital, having an
exercise price of $15.80.
3. 1,050,000 warrants issued by Old ADB and held by XxxxxXxxxxx XX and
XxxxxXxxxxx Corporation, having an exercise price of US $0.35.
4. 607,600 warrants issued by Old ADB in exchange for warrants of ADB
Systemer ASA, having an exercise price of NOK 2 (approximately $0.36).
5. The Board Representation Agreement dated as of September 7, 2001
between Old ADB, LimeRock Partners LLC, Xxx Xxxxxxxx, Sandnes
Investering, Rogaland Investering, AIG Private Bank Ltd. and Xxxxxxxx
Xxxxxxxx.
6. Convertible Notes and related documentation.
SCHEDULE 5.6
REQUIRED CONSENTS OR APPROVALS
In accordance with the Loan Agreement, consents are to be provided in respect of
the transfer of all Contracts.
SCHEDULE 5.10
EMPLOYMENT AND CONSULTING CONTRACTS
FIRST LAST TITLE SALARY REDUCED HIRE DATE
NORTH AMERICA
Xxxx Xxxxxxxxx CEO 300,000 150,000 01-Jan-96
Xxxx Xxxxxxx President 250,000 200,000 5/17/1999
Xxx Xxxxxx President, NA BU 250,000 200,000 9/1/1997
Xxxx Xxxxxx VP Gen. Counsel 170,000 11/15/1999
Xxxxxx Xxxxxxx Director of Finance 105,000 5/1/2000
Xxxx Xxxxx Graphic Artist 54,000 6/15/1999
Faisal Karoji Programmer 45,000 5/20/2002
Xxxx Xxxxxxxxx Tech. Support 42,000 4/20/1998
Xxxx Xxxxxxxxxx Director, Sales Cons. 132,250 3/27/2000
Xxxxx Xxxxxxxx Director, Bus. Dev. 84,500 12/0199
Don Clearwater Project Manager 105,000 9/18/2000
Xxxxxx Xxx Senior Developer 92,000 3/19/2001
Xxx Xxxxxxxxx Tech. Writer 49,000 9/18/2000
Xxxxxxx Xxxxxx Programmer 59,000 1/16/1999
Xxxxx Xxxxx Reception, Tampa 20,088 01-Jan-98
Xxxxxx Xxxxx Systems Eng. 55,000 11/27/2000
Xxxxxx Xxxxx Junior Accountant 42,500 7/6/1998
Xxxxx Xxxxxx Production Coord 37,800 6/14/1999
Xxx Xxxxxx Programmer 45,500 9/5/2000
Xxxxx Xxxxxx Programmer 80,000 7/5/1999
Xxxx Xxxxxxx Systems Mgr. 71,000 7/1/1998
Xxxxxx Xxxxxxxxx Director of Marketing 105,500 4/3/2000
Xxxxx Xxxxx Programmer 49,000 9/5/2000
Nile Said Content Manager 50,000 2/9/1996
Xxxxxxxxx Xxxxxx Director, Sales 120,000 4/18/2001
Xxxxxx Xxxxxx Programmer 51,744 6/28/1999
Xxxx Xxxxxxx Corp. Acctg and Reporting
Manager 70,000 12/7/2000
Xxxxx Xxxxxx Director, Sales 130,000 07-Jan-02
IRE/UK (Note 7)
Xxxxx Xxxxxxx VP Global Sales 191,000 162,500 01-Jan-99
Xxxx Xxxxxxx Sales Director 154,000 131,000 01-Jan-00
Xxxxx Xxxxxx Office Manager 51,000 43,660 17-May-00
Xxxxxxx Xxxxx Directors, Sales Cons 115,000 99,500 01-Jan-00
Xxxx Xxxxx Sr. Project Manager 97,000 84,000 20-Feb-01
Xxxxx XxXxxxxx Sales Consultant 105,000 88,700 01-Jan-01
Xxxxx Xxxxx Sales Consultant 105,000 88,700 01-Sep-01
Xxxxxxx Xxxxx Sales Director 133,000 113,000 06-Jan-00
NORWAY (Note 7)
Jan Xxxxx Xxxxxxxx President, Norway 253,328 195,000 01-Jan-89
Kjell Xxxxx Xxxxx Manager Prod Gp 158,740 01-Oct-96
Xxxx Xxxxxx Xxxxxxx System Architect 160,544 01-Jan-98
Xxxxx-Xxxxx Xxxxxxxx Account Mgr 61,331 01-Mar-98
Xxxxxx Xxxxxxxxx Programmer 63,135 17-Feb-98
Kjell Are Xxxx-Xxxxx Marketing 96,507 01-Aug-98
Oystein Xxxxxxxxx XX Coordinator 89,471 01-Feb-91
Ole Xxxxxx Xxxxxx Integration 65,841 10-Jun-96
Xxxx Xxxxxx Database 97,408 2-Jul-96
Gro Xxxxx Bo Support 55,018 01-Jan-99
Xxxxx Xxxx Programmer 61,331 29-Jun-98
Xxxxxxx Xxxxxxx Support 52,312 1-Apr-00
Xxxxxxx Xxxxxxxxx Programmer 68,547 15-Nov-94
Kjell Are Xxxxxxx Systems Cons 92,899 01-Oct-97
Unn Xxxxxxxx Integration 73,056 01-May-97
Svein Xxxxxx Xxxx Implementation 81,174 01-Jun-93
Kato Indrevoll Database 65,841 26-Oct-98
Xxxxx Xxxxxxxxxxx Data Conversion 88,389 1-Sep-00
Xxxxxx Xxxxxxx Product Innovator 93,801 17-Jun-96
Inut Xxxxxx Systems Cons 71,252 01-Jul-99
Xxxxxxxx Xxxxxxx Admin Asst 45,097 01-Apr-97
Xxxx Xxxxx Systems Cons 91,997 01-Jan-99
Xxx Xxxxxxx Office Mgr 70,351 16-Jan-96
Stig Sundsli Account Mgr 61,331 01-Apr-99
Xxx Georg Sundsvoll Manager Imp & Supp 95,605 12-Jul-93
Jorund Saeverud Tech/Data Supp 51,410 01-Jul-98
Per Xxx Xxxxxxx Programmer 93,801 01-May-92
Leiv Vatle Sales - O&G/Pub 76,664 25-Nov-00
Xxxx Xxxx Sales - Pub Sector 76,664 25-May-99
Notes:
1. All employees are subject to an employment contract with the local
corporate entity.
2. There are no employees on leave of absence.
3. All salary reductions noted are for the 2002 year only, and are
reductions of salary (not deferrals). Severance obligations are not
affected by reductions.
4. Fixed severance entitlements are set out in the employment contracts
for Xxxx Xxxxxxxxx, Xxxx Xxxxxxx, Xxx Xxxxxxxx, Xxxx Xxxxxxxxxx and the
Ireland/UK employees (in the latter case, one month each except Xxxxx
Xxxxxxx, which is not fixed).
5. Specific reference to car allowances and benefit details have not been
included but are referenced in the individual contracts.
6. Bonus plan details are agreed upon annually with sales reps (typically
4-9% of cash collections on contracts). The management team bonus plan
is determined by the Board.
7. Numbers vary depending on exchange rate in effect.
SCHEDULE 5.11
LIST OF BROKERS OR ADVISORS ACTING FOR OLD ADB OR AFFILIATES RE: TRANSACTIONS
KPMG have been retained pursuant to an engagement letter executed November 27,
2001 pursuant to which they shall earn a fee in connection with this
transaction.
Advisory fees payable in respect of the Convertible Note funding are detailed in
the documentation relating to same.
Old ADB retains Xxx Xxxxxxxxxx in an Investor Relations advisory role. Xx.
Xxxxxxxxxx'x mandate has included identifying funding partners, including
XxxxxXxxxxx. Xx. Xxxxxxxxxx is paid a monthly retainer.
SCHEDULE 5.4 (1)
SHARE CONDITIONS, ETC. OF OLD ADB
4A
(i) the preference shares may from time to time be issued in one or more
series and subject to the following provisions, and subject to the
sending of articles of amendment in prescribed form, and the
endorsement on them of a certificate of amendment in respect of them,
the directors may fix from time to time before such issue the number of
shares that is to comprise each series and the designation, rights,
privileges, restrictions and conditions attaching to each series of
preference shares including, without limiting the generality of the
foregoing, the rate or amount of dividends or the method of calculating
dividends, the dates of payment, the redemption, purchase and/or
conversion prices and terms and conditions of redemption, purchase
and/or conversion, and any sinking fund or other provisions;
(ii) the preference shares of each series shall, with respect to the payment
of dividends and the distribution of assets or return of capital in the
event of liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, or any other return of capital or
distribution of the assets of the Corporation among its shareholders
for the purpose of winding up its affairs, rank on a parity with the
preference shares of every other series and be entitled to preference
over the common shares and over any other shares of the Corporation
ranking junior to the preference shares. The preference shares of any
series may also be given such other preferences, not inconsistent with
these articles, over the common shares and any other shares of the
Corporation ranking junior to such preference shares as may be fixed in
accordance with clause (b)(i);
(iii) if any cumulative dividends or amounts payable on the return of capital
in respect of a series of preference shares are not paid in full, all
series of preference shares shall participate ratably in respect of
such dividends and return of capital;
(iv) the preference shares of any series may be voting shares, entitled to
vote pari passu with the common shares at meetings of the common
shareholders of the Corporation; and,
(v) the preference shares of any series may be made convertible into common
shares.
SCHEDULE 5.12
FINANCIAL STATEMENTS
SCHEDULE 5.13
LIABILITIES SINCE LAST BALANCE SHEET DATE
1. Liabilities arising by virtue of the Transaction Documents or the
Convertible Notes.
2. Trade Payables as reflected in trade payable lists provided to
the Lender.
SCHEDULE 5.15
INTELLECTUAL PROPERTY
ADB Systems International has established Intellectual Property and Intellectual
Property Rights through its software development activities and creation of
on-line transaction processes.
OVERVIEW OF SOFTWARE PRODUCTS
ADB Systems has developed an integrated series of software applications designed
for asset lifecycle management. These software applications include:
- Dyn@mic Buyer, an on-line solution that helps organizations
automate their tendering activities (e.g. reverse auctions,
request for quotations/proposals) and reduce procurement costs.
- ProcureMate, a web-based solution that allows organization to
streamline the purchasing of maintenance, repairs and operating
(MRO) supplies while reducing procurement costs.
- WorkMate, a comprehensive enterprise asset management solution
that allows organizations to automate and integrate maintenance
management, materials management and procurement activities.
- Dyn@mic Seller, a web-based sales solution that enables
organizations to manage inventory and reduce surplus through the
use of on-line auctions.
OVERVIEW OF PATENTS AND ON-LINE TRANSACTION PROCESS
ADB has also registered a number of patents, (issued and pending), with U.S.
Patent Office relating to its on-line transaction processes. These patents
include:
- Real-time Dutch Auction, an on-line process that enables
organizations to sell individual products on-line in real-time
using declining price auction formats
DYN@MIC BUYER - OVERVIEW
Dyn@mic Buyer is a web-based solution that supports multiple sourcing formats
and enables buyers to automate their sourcing activities. Dyn@mic Buyer
significantly reduces the time needed to create, manage, complete, and analyze
sourcing events.
Using a simple-to-use interface, procurement managers can easily create tenders
- or re-use existing templates - that assign values to purchasing criteria such
as price, product availability, post-sales support, or compliance with
certification standards.
Once buyers initiate a request for quotation or reverse auction event, Dyn@mic
Buyer automatically notifies qualified suppliers and provides them with the
opportunity to respond. After supplier responses are submitted, Dyn@mic Buyer
automatically assigns values to bids based on criteria pre-determined by
procurement managers, and ranks suppliers based on responses.
Purchasing managers can then select the supplier that provides the greatest
value - lowest price, fastest delivery schedule, best after-sales support or a
combination of all parameters.
DYN@MIC BUYER CAPABILITIES AND BENEFITS
Dyn@mic Buyer delivers a series of business and technical benefits that result
in:
- Streamlined procurement processes - By automating interactions
with suppliers and ensuring that RFXs can be re-used for future
use, Dyn@mic Buyer accelerates purchasing cycles by as much as 50
percent.
- Improved purchasing decisions - Dyn@mic Buyer provides advanced
reporting capabilities that help purchasing managers analyze all
aspects of their sourcing activities and facilitate supplier
selection.
- Reduced purchasing costs - Using Dyn@mic Buyer's reverse auction
capabilities, procurement managers can realize up to 20 percent
savings on their purchasing expenses.
- Reduced IT investments - ADB Systems delivers Dyn@mic Buyer
through an ASP or hosted model, resulting in no additional
investments in IT infrastructure.
- Increased value from suppliers - By allowing suppliers to compete
on a variety of factors, purchasing managers can select suppliers
based on the over-all value they provide.
- Improved relations with suppliers - Since Dyn@mic Buyer allows
suppliers to compete on factors beyond lowest price, suppliers
are not threatened by the erosion of margins.
- Easy integration with existing information systems - By
leveraging XML standards, Dyn@mic Buyer enables complete
integration with existing Enterprise Resource Planning (ERP) and
supply chain management applications.
TECHNOLOGY USED TO DEVELOP DYN@MIC BUYER
Dynamic Buyer was constructed on the Microsoft. Net platform and used the MS-SQL
database engine. The related core IP includes XML parsers and translation
components, user abstraction layers and specialized component factories.
DYN@MIC SELLER OVERVIEW
Dyn@mic Seller is an on-lines sales solution that integrates multiple dynamic
pricing formats with shopping cart, catalogue and financial settlement
functionalities within a single environment.
ADB's Dyn@mic Seller supports the industry most comprehensive array of dynamic
pricing transaction methods including:
- Ascending Price or Top Bid - where the price of a product
increases until the highest bid is reached or the end of an
auction.
- Descending or Dutch Auction - where the price of a product
automatically decreases at set levels and time periods until a
buyer makes a bid.
- Fixed Price - where the price of a product remains constant
throughout the sales event.
- Progressive markdown - where the price of a good is decreased at
set intervals and set times by the vendor until all available
inventory is sold
- Hybrid - where a combination of different pricing models is
applied to an on-line sales event.
This wide selection of transaction methods enables organizations to apply the
most effective pricing strategy that will yield the greatest return and highest
margin.
DYN@MIC SELLER CAPABILITIES AND BENEFITS
Dyn@mic Seller delivers a series of business and technical benefits that result
in:
- Enhanced brand equity and improved relationships with customers -
By powering transactions directly from our customers' web-sites,
Dyn@mic Seller helps organizations build long-term relationships
with their end-customers and strengthen the value of their brand.
- Improved sales processes - Dyn@mic Seller's advanced reporting
capabilities allows organizations to improve their sales and
marketing processes as a result of comprehensive data analysis
and reporting. Dyn@mic Seller enables organizations to track user
activity, monitor transaction history, determine sales margins
and more.
- Increased speed to market - Through a rapid and proven
implementation methodology, Xxx.Xxx allows organizations to take
advantage of on-line sales activities in weeks and not months
common with other industry applications.
- Reduced cost of sales - By enabling customer self-service and
automating the sales process, Dyn@mic Seller reduces the average
cost of sale.
- Reduced IT investments - ABD delivers Dyn@mic Seller through a
web-based business services model, resulting in no additional
investments in IT infrastructure.
- Easy integration with existing information systems - By
leveraging XML standards, Dyn@mic Seller enables complete
integration with existing Enterprise Resource Planning (ERP),
supply chain management and customer relationship management
applications.
DYN@MIC SELLER TECHNOLOGY COMPONENTS
Dynamic Seller was developed using the Microsoft COM+ and D-Com architectures
and technologies. It utilizes MS-SQL as its database. The related core IP
includes XML parsers and translation components, user abstraction layers and
specialized component factories.
WORKMATE OVERVIEW
WorkMate(R) is an Enterprise Asset Management (EAM) solution designed
specifically for asset intensive industries. WorkMate comprises procurement,
materials management and maintenance modules that can be licensed individually
or bundled together as a fully integrated solution.
WorkMate Procurement handles the most sophisticated domestic and international
purchasing operations. It ensures accurate information on requisitions and
purchase orders, providing easy access to purchasing specifications and detailed
technical information. WorkMate also monitors supplier performance based on a
variety of factors including accuracy, punctuality and cost -enabling
organizations to identify preferred vendors.
WorkMate's Materials Management module delivers all of the functionality needed
to manage inventory and logistics operations. WorkMate enables organizations to
determine if materials are in stock at local or remote locations. WorkMate logs
all movements and generates the necessary financial transactions.
WorkMate handles all types of maintenance activities including corrective,
preventive or condition-based maintenance. WorkMate allows organizations to
automate manual routines, track maintenance costs and equipment history.
WORKMATE CAPABILITIES AND BENEFITS
ADB's WorkMate delivers the following business and technology benefits
including:
- Reduced maintenance costs
- Improved maintenance planning activities
- Reduced operational downtime due maintenance interruptions or
lack of spare parts inventory
- Compliance with regulatory requirements
- Tighter integration of materials management, maintenance and
procurement activities
WORKMATE TECHNOLOGY COMPONENTS
The Workmate application is constructed using the Powerbuilder suite of
development tools and using Oracle as the multi-platform database engine. The
related IP includes integration engines, component class libraries and
specialized OLAP reporting engines.
PROCUREMATE OVERVIEW
ADB's ProcureMate supports the complex purchasing requirements of public and
private sector organizations, delivering cost savings and efficient purchasing
processes.
ProcureMate simplifies procurement activities, ensuring greater use of standing
agreements with preferred vendors and reduced rogue purchasing.
ProcureMate, is designed to simplify procurement activities by making it easier
to process purchase orders, schedule delivery terms, apply current cost codes,
and ensure integration with financial systems.
ProcureMate also keeps track of purchasing activities enabling the analysis of
supplier effectiveness, use of contracts with preferred vendors, and other
purchasing transactions.
BENEFITS AND COST SAVINGS DELIVERED BY PROCUREMATE:
ADB's ProcureMate delivers proven cost savings increased purchasing efficiencies
that result in:
- Streamlined purchases of low-value items
- Reduced maverick buying through greater use of approved suppliers
- Electronic approvals of requisitions and invoices
- By decentralizing non-core purchasing activities, buyers can
focus on more strategic procurement activities such as contract
management and supplier negotiation
- Simplified invoice registration and processing
- Unnecessary paperwork is reduced and less time spent on
non-strategic purchasing activities.
TECHNOLOGY COMPONENTS:
Procuremate was created using the Microsoft Visual Studio suite of development
tools. It utilizes Oracle as the multi-platform database engine. The related
core IP includes XML parsers and translation components, user abstraction
layers, Web Integration Engines and components, as well as specialized component
factories.
SCHEDULE 5.16
PROPERTY WITH LEASEHOLD INTEREST
-------------------------------------------------------------------------------------------------
Square Feet Term of Lease
Location Use (Approximate)
-------------------------------------------------------------------------------------------------
6725 Airport Road, Executive, Administrative, 10,165 Expires Oct. 2004
Suite 201 Engineering and Marketing
Mississauga, Ontario
-------------------------------------------------------------------------------------------------
Xxxxxxxxx 0, Xxxxxxxxx, Administrative, 13,493 Expires July 2003
4050, Sola Norway Engineering and Marketing
-------------------------------------------------------------------------------------------------
000 Xxxxx Xxxxxxxx Xxxx Administrative, Engineering 2,000 Expires Jan. 2003
Kilmainham, and Marketing
Dublin, Ireland
-------------------------------------------------------------------------------------------------
3000 Cathedral Hill, Marketing 000 Xxxxxxx
Xxxxxxxxx, Xxxxxx, Xxxxxxx
-------------------------------------------------------------------------------------------------
0000 Xxxxx Xxxxx Xxxxx Executive 143 Expires Dec. 0000
Xxxxx Xxxx,
Xxxxx, Xxxxxxx
-------------------------------------------------------------------------------------------------
SCHEDULE 5.18
CONTRACTS
1. Employment contracts per Schedule 5.10.
2. Option, warrants and other agreements per Schedule 5.4 (2).
3. Convertible Notes and related documentation.
4. The Transaction Documents.
5. E-Commerce Enabling Agreement between Xxx.xxx International Inc. and
Commercial Equipment Financing Unit of General Electric Capital
Corporation dated February 15, 2001.
6. Termination Agreement between ADB Systemer ASA and Explorer Software
Solutions Inc., dated May 28, 2002.
7. First Amended and Restated Technology Services and License Agreement
between Value Vision International, Inc. and Xxx.xxx International Inc.
dated June 6, 2001
8. Megawheels License and Services Agreement between Xxx.xxx International
Inc. and Xxxxxxxxxx.xxx Inc. dated September 30, 1999 and Megawheels
License Fee Agreement dated September 30, 1999.
9. Xxx.xxx/Xxxxxx License and Services Agreement between Xxx.xxx
International Inc., 3537846 Canada Inc. and SCS Solars Computing
Systems Inc.
10. Software License Agreement between ADB Systems International Inc. and
Halliburton Productos dated March 15, 2002.
11. Consulting/Technical Services Agreement between ADB Systems
International Inc. and Halliburton Productos dated March 15, 2002.
12. Software License Agreement between ADB Systems International Inc. and
Forest Oil Corporation dated October 31, 2001.
13. Consulting/Technical Services Agreement between ADB Systems
International Inc. and Forest Oil Corporation dated October 31, 2001.
14. WorkMate License Agreement between Encal Energy Ltd. and Explorer
Software Solutions Ltd. dated October 26, 2000, as subsequently
assigned to ADB Systems International Inc.
15. WorkMate License Agreement between Paramount Resources Ltd. and
Explorer Software Solutions Ltd. dated October 26, 2000, as
subsequently assigned to ADB Systems International Inc.
16. Patent License Agreement between ADB Systems International Inc. and XXX
Xxxxxxxxxxx dated April 17, 2002.
17. Security Agreement between ADB Systems International Inc. and XXX
Xxxxxxxxxxx dated April 17, 2002.
18. Strategic Marketing Agreement between Bid. Com. International Inc. and
General Electric Capital Corporation dated April 10, 2000.
19. Strategic Marketing Agreement between Bid. Com. International Inc. and
ecwebworks Inc. dated October 4, 2000.
20. Strategic Marketing Agreement between Bid. Com. International Inc. and
Eloqua Corporation dated April 2, 2001.
21. Strategic Alliance Agreement between Xxx.Xxx. USA Inc. and BServe
Internet Payments Inc. dated March 30, 2001.
22. XXX Xxxxx Agreement between Industrial Development Agency (Ireland),
Xxx.Xxx International Limited, and Xxx.Xxx International Inc. dated
August 10, 2000.
23. Referral and Resource Sharing Agreement (Letter Agreement) between ADB
Systems International and Production Access, Inc. dated March 5, 2002.
24. American Home Assurance Company (Insurer) Executive and Organization
Liability Insurance Policy No. 231 67 15, ADB Systems International
Inc. (Insured) renewal of 231 56 19 dated May 1, 2002 - May 1, 2003.
25. Lease regarding 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxx
between Chiefton Investments Limited and Investors Group Trust Co. Ltd.
(as Trustee for Investors Real Property Fund) and Bid. Com.
International Inc. Attached to and forming part of above noted lease is
a Storage Agreement between the parties dated August 27, 1999.
26. Master Broadband and IP Services Agreement between ADB Systems
International Inc. and Xxxx Canada executed May 1, 2002.
27. Business Services Bundling Agreement between Tempest Global Telecom
Inc. and ADB Systems International Inc. for Tl and phone line service.
28. Research in Motion agreement for pager services
29. Hewlett Packard equipment leases and related maintenance and service
agreements
30. Xerox Canada equipment leases and related maintenance and services
agreements
31. Global Crossing Teleconferencing services agreement
32. Intercon Security office security agreement
33. Iron Mountain agreement for off-site tape storage
34. Banking agreements with various financial institutions.
35. Informal arrangements with service providers (various) - legal and
accounting advisors, media buyers, printers, mailing agencies, etc.
SCHEDULE 5.19
RELATED PARTY TRANSACTIONS
In June 1999, Old ADB entered into an agreement under which it would provide
technology and related services to SCS Solars Computing. One of the directors of
Old ADB was a director and shareholder of SCS Solars at the time. That
individual is no longer a director of Old ADB.
In September 1999, Old ADB entered into an agreement under which it would
provide technology and related services to MegaWheels, of which one of the
directors of Old ADB was a director and shareholder. Old ADB received shares, a
hosting fee and a share of net on-line auction revenue. In late 2001, this
individual assumed the position of CEO of MegaWheels.
In February 2000, Old ADB entered into an agreement under which it would provide
technology and related services to Art Vault, in which certain directors of the
company, in aggregate, had a controlling interest. Old ADB received shares, a
hosting fee and a share of net on-line auction revenue. In April 2001, Art Vault
went into receivership, the technology and services agreement was terminated,
and Old ADB's equity holdings in Art Vault were written down to zero.
In October 2001, Old ADB acquired ADB Systemer ASA. Following the acquisition,
several directors of ADB Systemer became directors, officers and/or shareholders
of Old ADB. Prior to the acquisition, none of these individuals were directors,
officers or shareholders of Old ADB.
SCHEDULE 5.20
CONTRACTS IMPAIRING BUSINESS
1. First Amended and Restated Technology Services and License Agreement
between ValueVision International, Inc. and Xxx.xxx International Inc.
dated June 6, 2001
2. Megawheels License and Services Agreement between Xxx.xxx International
Inc. and Xxxxxxxxxx.xxx Inc. dated September 30, 1999 and Megawheels
License Fee Agreement dated September 30, 1999.
3. Xxx.xxx/Xxxxxx License and Services Agreement between Xxx.xxx
International Inc., 3537846 Canada Inc. and SCS Solars Computing
Systems Inc.
4. Security Agreement between ADB Systems International Inc. and XXX
Xxxxxxxxxxx dated April 17, 2002 and Patent License Agreement between
the parties of the same date.
5. The Transaction Documents.
SCHEDULE 5.23
BENEFIT AND OTHER INCENTIVE PLANS
Medical/Dental/Disability/Life
Canadian Employees: ADB Systems International Inc. has contracted Great West
Life to provide industry standard medical, dental, disability, and life
insurance coverage for its employees and immediate families. The employer pays
for medical and dental coverage, while employees pay for disability and life
coverage.
US Employees: ADB USA has contracted Blue Cross Florida to provide industry
standard medical and dental coverage for its employees and immediate families.
The employer pays for medical and dental coverage premiums.
Ireland/UK Employees: Details to follow.
Norway Employees: Details to follow.
Retirement Benefits
Ireland/UK Employees: ADB Systems International Limited has contracted with AXA
Sunlife to provide a matching contribution retirement plan where by employees
and employers contribute up to 7% of an employees' salary.
SCHEDULE 9.3
INDEBTEDNESS, OBLIGATIONS OR LIABILITIES OF OLD ADB
1. Employment obligations under agreements with Xxx Xxxxxx, Xxxxx Xxxxxx
and Xxxxxx Xxxxx.
2. Obligations to be assumed/retained by Xxx.Xxx under cell phone, pager
and office phone arrangements for the employees specified in 1. above.
3. Obligations to be assumed/retained by Xxx.Xxx in respect of hardware,
software and connectivity arrangements, including the Hewlett Packard
Lease.
SCHEDULE 10.1 (a)
PUT NOTICE
TO: The Brick Warehouse Corporation (the "Lender")
FROM: ADB Systems International Ltd. ("New ADB")
RE: The loan agreement (the "Loan Agreement") made as of August 23, 2002
between the Lender, ADB Systems International Inc. ("Old ADB") and New
ADB
1. New ADB hereby gives notice to the Lender that it is exercising the Put
Option pursuant to the terms and conditions of Section 10.1 of the Loan
Agreement.
2. Terms used herein that are defined in the Loan Agreement and are not
otherwise defined herein will have the same meaning herein as in the
Loan Agreement.
DATED the___________day of June, 2003.
ADB SYSTEMS INTERNATIONAL LTD.
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
DRAFT: AUGUST 25, 2002
FOR DISCUSSION PURPOSES ONLY
SCHEDULE 10.1(e)(iv)
[LETTERHEAD OF GOWLINGS LLP]
-, 2002
[NTD: RE PUT TRANSACTION]
The Brick Warehouse Corporation
00000-000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
XxXxxxxx Xxxxxxxx XXX
Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Sirs:
RE: ADB SYSTEMS INTERNATIONAL INC.
We have acted as counsel for ADB Systems International Ltd. (the "ADB") in
connection with the sale of all the issued and outstanding shares ("Shares") of
ADB Systems International Inc. (the "Corporation") pursuant to a loan agreement
made as of August 23, 2002 (the "Loan Agreement") between The Brick Warehouse
Corporation ("The Brick"), ADB and the Corporation. Terms used in this opinion
that are defined in the Loan Agreement and are not otherwise defined herein will
have the same meaning herein as in the Loan Agreement.
MATERIALS REVIEWED
We have examined originals or copies, certified or otherwise identified to our
satisfaction.
ASSUMPTIONS AND FACT RELIANCE
We have examined originals or copies, certified or otherwise identified to our
satisfaction, of such public and corporate records, certificates, instruments
and other documents and have considered such questions of law as we have deemed
relevant and necessary as a basis for the opinions hereinafter expressed. In
such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as copies, whether
facsimile, photostatic, certified or otherwise.
- 2 - -, 2002
We have also assumed that the Loan Agreement has been duly authorized, executed
and delivered by, and constitutes a valid and legally binding obligation of each
of The Brick and the Corporation, enforceable against each of The Brick and the
Corporation in accordance with its terms.
OPINIONS
Based and relying upon the foregoing, and subject to the qualifications
hereinafter expressed, we are of the opinion that:
1. The Corporation is a corporation incorporated and subsisting under the
laws of the Province of Ontario.
2. The articles of the Corporation contain no restrictions on the business
that the Corporation may carry on, on the powers that the Corporation
may exercise or on the transfer of shares, except -.
3. The authorized capital of the Corporation consists of - shares, of
which - have been validly issued and are outstanding.
4. The ADB is a corporation incorporated and subsisting under the laws of
the Province of Ontario.
5. All necessary corporate action and proceedings have been taken to
permit the due and valid transfer of the Shares from ADB to The Brick.
6. No consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental authority in the Province
of Ontario is required for due and valid transfer of the Shares from
ADB to The Brick.
7. The Purchaser today became the registered holder of the Shares and as
such is exclusively entitled to vote, to receive notices, to receive
dividends or other payments in respect of the Shares, and otherwise to
exercise all the rights and powers of a holder of the Shares.
This opinion is furnished solely for the benefit of the addressees in connection
with the purchase of the Shares and may not be circulated to, or relied upon by,
any other person or used for any other purpose.
Yours very truly,
SCHEDULE 10.1(e)(vi)
RELEASE
WHEREAS ADB Systems International Inc. ("Old ADB") has agreed
with The Brick Warehouse Corporation ("The Brick") to sell to The Brick all of
the issued and outstanding common shares of ADB Systems International Ltd. ("New
ADB") pursuant to the terms of a loan agreement (the "Loan Agreement") made as
of August 23, 2002 between The Brick, Old ADB and New ADB and, as a condition of
the Put Closing as contemplated by the Loan Agreement, New ADB has agreed to
release Old ADB from all claims against Old ADB; capitalized terms herein have
the same meaning as in the Loan Agreement unless stated otherwise;
NOW THEREFORE THIS RELEASE WITNESSES that in consideration of
the Put Closing and the payment to New ADB of the sum of $1 of lawful money of
Canada by Old ADB (the receipt and sufficiency of which are hereby
acknowledged), New ADB:
1. releases and forever discharges Old ADB from all actions, causes of
action, liabilities, claims and demands whatsoever which New ADB as a
creditor of Old ADB prior to the Restructuring and as a shareholder or
creditor after the Restructuring or otherwise ever had, now has or may
hereafter have for or by reason of or in any way arising out of any
cause, matter or thing whatsoever existing up to the present time and,
in particular, without in any way limiting the generality of the
foregoing, for or by reason of or in any way arising out of any claims
for money advanced, salary, wages, retirement or pension allowances,
director's fees bonus, expenses, participation in profits, earnings or
other remuneration whether authorized or provided for by by-law,
resolution, contract or otherwise save and except matters arising under
the Transaction Documents; and
2. agrees that New ADB shall not make any claim or take any proceedings
with respect to any matter released and discharged in (1) above which
may result in any claim arising against Old ADB for contribution or
indemnity or other relief.
THIS RELEASE shall be governed by and construed in accordance
with the laws of the Province of Ontario.
THIS RELEASE shall enure to the benefit of your successors and
assigns and shall be binding upon the successors and assigns of New ADB.
IN WITNESS WHEREOF New ADB has executed this Release
this__________day of June, 2003.
ADB SYSTEMS INTERNATIONAL LTD.
Per: _________________________________
Name;
Title:
LOAN AGREEMENT AMENDING AGREEMENT
THIS AMENDING AGREEMENT is entered into as of August 30, 2002, by and
between ADB SYSTEMS INTERNATIONAL INC., ADB SYSTEMS INTERNATIONAL LTD., each a
corporation having its principal place of business at 0000 Xxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxxx, Xxxxxxx X0X 0X0, and THE BRICK WAREHOUSE CORPORATION, a
corporation having its principal place of business at 00000 - 000 Xxxxxx,
Xxxxxxxx, Xxxxxxx, X0X 0X0.
WHEREAS:
1. The Parties entered into a loan agreement dated as of August 23, 2002
(the "Loan Agreement").
2. The Borrower has indicated in its Drawdown Notice delivered in
connection with the First Advance that it is unable to satisfy a condition of
the First Advance requiring that the Borrower shall have entered into
irrevocable subscription agreements with arm's length third parties to issue
equity securities of the Borrower or debt securities convertible into equity
securities of the Borrower raising aggregate gross proceeds to the Borrower of
not less than $1,000,000 and received aggregate gross proceeds of not less than
$1,000,000 from the sale of such equity securities or debt securities
convertible into equity of the Borrower on terms and conditions satisfactory to
the Lender.
3. The Lender is willing to waive compliance with the above condition and
nevertheless to make the First Advance to the Borrower in accordance with and
subject to the terms and conditions of the Loan Agreement provided the Borrower
and the Guarantor enter into this Amending Agreement to the Loan Agreement.
NOW THEREFORE in consideration of the premises, the mutual covenants
contained in this Agreement, and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the Parties agree as
follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS.
In this Agreement, unless the context otherwise requires, each capitalized term
not otherwise defined herein shall have the meaning ascribed thereto in the Loan
Agreement.
ARTICLE 2 - AMENDMENTS
2.1 AMENDMENTS.
(1) Section 3.2 of the Loan Agreement is hereby amended by adding
thereto to the conditions to the Second Advance the following:
2
"(f) the Borrower shall have delivered evidence
satisfactory to the Lender that each of the
subscribers, having executed on or before August 30,
2002, subscription agreements for the issue of Series
D Subordinated Notes (i) shall have paid the Loan
Amount (as therein defined) to Old ADB; and (ii)
shall have executed (A) an acknowledgement of the
subordination of the Subordinated Notes to the
Security, and (B) a release of Old ADB from the
obligations of the Subordinated Notes upon the
Restructuring, each in form satisfactory to the
Lender."
(2) Section 8.1 of the Loan Agreement is hereby amended by adding
thereto to the Events of Default the following:
"(r) if the condition in Section 3.2(f) is not satisfied
on or before October 31, 2002."
ARTICLE 3 - GENERAL
3.1 LOAN AGREEMENT.
The Parties acknowledge that the Loan Agreement has been amended by this
amending Agreement and as amended, the Loan Agreement remains in full force and
effect as of the date hereof.
3.2 BINDING ON SUCCESSORS.
This Amending Agreement shall enure to the benefit of and be binding upon the
Parties and their respective successors and permitted assigns.
3.3 GOVERNING LAW.
This Amending Agreement shall be governed and construed according to the laws of
the Province of Ontario and the laws of Canada applicable therein, and shall be
treated, in all respects, as an Ontario contract, without prejudice to or
limitation of any other rights or remedies available under the laws of any
jurisdiction where property or assets of the Borrower may be found. Each of the
Parties hereby attorns to the jurisdiction of the Province of Ontario.
3.4 COUNTERPARTS.
This Amending Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Counterparts may be executed either in
original or faxed form and the Parties may adopt any signatures received by a
receiving fax machine as original signatures of the Parties.
3
IN WITNESS WHEREOF this Amending Agreement is executed by the Parties as of the
date first written, above.
ADB SYSTEMS INTERNATIONAL INC.
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
ADB SYSTEMS INTERNATIONAL LTD.
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
THE BRICK WAREHOUSE CORPORATION
By: ________________________________
Name:
Title:
