Exhibit 99.7
DEBENTURE
DATE: December 19, 2002
WHEREAS D'Angelo Brands Ltd. and D'Angelo Brands, Inc. (collectively the
"Companies") have applied to Wasanda Enterprises Inc. (the "Holder") for a loan
and the Holder has agreed to lend certain amounts to the Companies on the
security of the assets and undertaking charged herein and on the terms and
conditions set out herein;
ARTICLE 1.00 - INTERPRETATION
1.1 Definitions
As used herein the following expressions shall have the following meanings:
(a) "Affiliate" has the meaning ascribed to such term in the Ontario
Business Corporations Act;
(b) "Business Day" means any day other than a Saturday, Sunday or a
statutory holiday in the Province of Ontario or a day on which
Canadian chartered banks are not open for the transaction of business
at their head office branch in the City of Toronto throughout normal
business hours;
(c) "Companies" means D'Angelo Brands Ltd. and D'Angelo Brands, Inc.
collectively and "Company" means any one of them;
(d) "Debenture" means this debenture when executed and delivered by the
Companies and all instruments supplemental or ancillary hereto or in
amendment or confirmation hereof; "hereof", "hereto", "herein",
"hereby" and "hereunder" or similar expressions mean and refer to this
Debenture as a whole, including any schedules hereto, and not to any
particular Article or section unless the context expressly requires
otherwise; "Article" or "section" means and refers to the specified
article or section of this Debenture;
(e) "Encumbrance" means any mortgage, lien, pledge, assignment, charge,
security interest, title retention agreement, hypothec, levy,
execution, seizure, attachment, garnishment, right of distress or
other claim in respect of property of any nature or kind whatsoever
howsoever arising (whether consensual, statutory or arising by
operation of law or otherwise) and includes arrangements such as a
capital lease or arrangements known as sale and lease-back, sale and
buy-back and sale with option to buy-back;
(f) "Environmental Assessment" means any inquiry, investigation or report
of the environmental condition of the Premises;
(g) "Environmental Laws" means all applicable federal, provincial,
regional, state, municipal or local laws, international treaties and
agreements, common law, statutes, regulations, ordinances, codes,
rules, guidelines, requirements, certificates of approval, licences or
permits relating to the protection and preservation of the
environment, Hazardous Substances or the use, consumption, handling,
transportation, storage or Release thereof including without
limitation (and in addition to any such laws relating to the
environment generally) any such laws relating to public health,
occupational health and safety, product liability or transportation;
(h) "Environmental Order" means any prosecution, order, decision, notice,
direction, report, recommendation or request issued, rendered or made
by any Governmental Authority in connection with Environmental Laws or
Environmental Orders;
(i) "Event of Default" means any one or more of the events set out or
referred to in section 8.1;
(j) "Financial Indebtedness" of the Companies means the aggregate (without
duplication) of the following amounts:
(i) money borrowed, indebtedness represented by notes payable, and
drafts accepted representing extensions of credit (including, as
regards any note or draft issued at a discount, any amount that
could reasonably be regarded as being the amortized portion of
such discount as at the date of determination);
(ii) all obligations (whether or not with respect to the borrowing of
money) which are evidenced by bonds, debentures, notes or other
similar instruments or not so evidenced but which would be
considered to be indebtedness for borrowed money;
(iii)all indebtedness upon which interest charges are customarily
paid;
(iv) net amounts payable pursuant to interest swap arrangements;
(v) capital lease obligations and all other indebtedness issued or
assumed as full or partial payment for property or services or by
way of capital contribution;
(vi) all letters of credit and letters of guarantee issued by a
financial institution at the request of or for the benefit of a
Company;
(vii)any guarantee (other than by endorsement of negotiable
instruments for collection or deposit in the ordinary course of
business) in any manner, directly or indirectly, of any part or
all of any obligation of a type referred to in any of paragraphs
(i) to (v) above; and
(viii) any of the foregoing amounts in respect of any Subsidiary of
either Company whose accounts are not required under generally
accepted accounting principles to be consolidated with the
accounts of the Company including (without limitation) all
Obligations but excluding trade payables, expenses accrued in the
ordinary course of business, customer advance payments and
deposits received in the ordinary course of business unless the
time for due payment of which extends, or is intended to extend,
more than ninety (90) days form the date as of which the
determination of Financial Indebtedness is being made;
(k) "Governmental Authority" means any nation, government, province,
state, region, municipality or other political subdivision or any
governmental department, ministry, commission, board, agency or
instrumentality or other public authority or person, domestic or
foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, government, any
authority providing services or utilities to any real property owned
or occupied by a Company and any corporation or other entity owned or
controlled (through stock or capital ownership or otherwise) by any of
the foregoing and includes any court of competent jurisdiction;
(l) "Guarantor" means any person who has guaranteed the indebtedness of
the Companies in favour of the Holder;
(m) "Hazardous Substance" means any contaminant, toxic substance,
pollutant or other such substance, combination of such substances or
by-product of any such substance which is or may become hazardous,
toxic, injurious or dangerous to any person, property, air, land,
water, flora, fauna or wildlife either immediately or at some future
time, or may cause material harm to the natural environment or
material risk to human health, and includes but is not limited to
contaminants, pollutants, wastes and dangerous, toxic, deleterious or
designated substances as defined in or pursuant to any Environmental
Laws or Environmental Orders;
(n) "Holder" means Wasanda Enterprises Inc.;
(o) "Instrument" means this Debenture, any of the Security Documents or
any other agreement or instrument (whether now existing, presently
arising or created in future) delivered by either Company or by any
Guarantor to the Holder;
(p) "Interest Rate" means the rate of ten percent (10%) per annum,
calculated, compounded and payable monthly;
(q) "Inventory" means property of the Companies, including vehicles, held
for sale or lease or that have been leased or that are to be furnished
or have been furnished under a contract of service or that are raw
materials, work in process or materials used or consumed in a business
or profession;
(r) "Lease" means any lease (whether now existing, presently arising or
created in future) whereby the Premises or any part thereof are
demised and leased by a Company to any person or are leased to a
Company by any person;
(s) "Mortgaged Property" means all property and assets of the Companies
whether specifically charged or subjected to the floating charge under
section 3.1 (except as excluded pursuant to section 3.3);
(t) "Normal Business" means processing, manufacturing, wholesaling and
distributing food products and juices;
(u) "Obligations" means all monies now or at any time and from time to
time hereafter owing or payable by the Companies to the Holder
hereunder, all other obligations hereunder or under any of the
Security Documents and all other obligations (whether now existing,
presently arising or created in the future) of the Companies or either
of them in favour of the Holder;
(v) "Occupants" means the Companies, their tenants and all other occupants
of any Premises;
(w) "Permitted Encumbrances" means the following:
(i) liens for taxes, assessments, governmental charges or levies not
for the time being due and delinquent or the validity of which is
being contested at the time by a Company, in good faith by proper
legal proceedings and provided such proceedings effectively
postpone enforcement of any such lien;
(ii) the lien of any judgement rendered or claim filed against a
Company which is being contested at the time by the Company, in
good faith by proper legal proceedings and provided such
proceedings effectively postpone enforcement of any such lien;
(iii)undetermined or inchoate liens and charges incidental to current
operations which have not at the time been filed pursuant to law
or of which notice in writing has not been given or which relate
to obligations not yet due or delinquent;
(iv) liens or rights of distress reserved in or exercisable under any
lease for rent or for compliance with the terms of such lease;
(v) easements, rights of way, servitudes or other similar rights in
land granted to or reserved by other persons existing at the date
of this Debenture which individually or in the aggregate do not,
in the Holder's opinion, detract from the value of the property
concerned or impair its use in the operation of the Normal
Business of the Companies or either of them;
(vi) rights reserved to or vested in any Governmental Authority by the
terms of any lease, licence, franchise, grant or permit, or by
any statutory provision, to terminate the same or to require
annual or other periodic payments as a condition of the
continuance thereof;
(vii)any Encumbrance the validity of which is being contested by a
Company in good faith by appropriate legal proceedings and in
respect of which either:
(A) security, adequate in the opinion of the Holder, has been
provided to it to ensure payment of such liens; or
(B) the Holder is of the opinion that such liens are not
materially prejudicial to the security hereof;
(viii) any reservations, limitations, provisos and conditions
expressed in any original grant from the Crown which do not, in
the Holder's opinion, either individually or in the aggregate,
detract from the value of the property concerned or impair its
use in the operation of the Normal Business of the Companies or
either of them;
(ix) title defects or irregularities which, in the opinion of counsel
to the Holder, are of a minor nature and in the aggregate will
not detract from the value of the property concerned or impair
its use in the operation of the Normal Business of the Companies
or either of them;
(x) Purchase Money Securities;
(xi) any other Encumbrances specifically approved in writing by the
Holder from time to time and postponed to the charges described
in this Debenture in a form acceptable to the Holder; and
(xii)the mortgages, charges or security interests set out in Schedule
"A" annexed hereto;
(x) "Permitted Substances" means substances which are necessary to carry
on the Normal Business of either Company and which are handled and
stored in compliance with all applicable laws, including Environmental
Laws;
(y) "Premises" means the lands and premises included in the Specifically
Mortgaged Property (including without limitation the lands and
premises referred to in Schedule "B" hereto) and any other premises
owned or occupied by either Company from time to time;
(z) "Principal Amount" means Ten Million ($10,000,000.00) Dollars;
(aa) "Purchase Money Security" means any Encumbrance given, reserved,
created, assumed or arising by operation of law, whether or not in
favour of the transferor, after the date hereof to provide or secure,
or to provide a Company with funds to pay the whole or any part of the
consideration for the acquisition of tangible or personal property
other than Inventory where:
(i) the principal amount of such Encumbrance is at least seventy-five
per cent (75%) but not greater than one hundred per cent (100%)
of the cost to the Company of all of the property encumbered
thereby, and
(ii) the Encumbrance only covers the property being acquired by the
Company and includes the renewal, extension or refunding of any
such Encumbrance and of the indebtedness represented thereby upon
the same property provided that the indebtedness secured thereby
and the security therefor are not increased thereby;
(bb) "Receiver" shall include one or more of a receiver, receiver-manager
or receiver and manager of all or a portion of the undertaking,
property and assets of a Company or the Companies appointed by the
Holder pursuant to this Debenture, by a third party under the terms of
any security held by it or by or under any judgment or order of a
court;
(cc) "Release" includes abandon, add, deposit, discharge, disperse,
dispose, dump, emit, empty, escape, leach, leak, migrate, pour, pump,
release or spill;
(dd) "Security Documents" means, collectively, this Debenture and all other
agreements and other instruments delivered to the Holder by either
Company (whether now existing or created, executed and delivered after
the date hereof) for the purpose of establishing, perfecting,
preserving or protecting any security held by the Holder in respect of
any Obligations;
(ee) "Specifically Mortgaged Property" means all property and assets
expressed herein to be now, or which may hereafter become, subject to
the fixed and specific charge of this Debenture; and
(ff) "Subsidiary" means a corporation in which either Company owns,
directly and/or indirectly through one or more Subsidiaries, a
majority of shares carrying the right to elect at least a majority of
the members of the board of directors.
1.2 Land Registration Reform Act
(a) The implied covenants deemed to be included in a charge under
subsection 7(1) of the Land Registration Reform Act, R.S.O. 1990,
Chapter L.4 shall be and are hereby expressly excluded from the terms
of this Charge and do not form a part of this charge.
(b) Pursuant to subsection 7(6) of the Land Registration Reform Act the
prescribed standard charge terms which would otherwise be deemed by
subsection 7(5) of the Land Registration Reform Act, to be included in
this charge are hereby expressly excluded from and do not form a part
of this charge.
(c) If any of the forms or words contained herein are also contained in
Column One of Schedule "B" of the Short Forms of Mortgages Act and
distinguished by a number therein, this Debenture shall be deemed to
include and shall have the same effect as if it contained the form of
words in Column Two of Schedule "B" of the said Short Forms of
Mortgages Act distinguished by the same number, and this Debenture
shall be interpreted as if the Short Forms of Mortgages Act were still
in full force and effect.
(d) In the event of any inconsistency between the covenants, agreements
and obligations of the Companies contained or included in this
Debenture and the covenants, agreements and obligations of the charges
contained in the standard charge terms, if any, prescribed under the
said Land Registration Reform Act, the covenants, agreements and
obligations of the Company expressly contained or included in this
charge shall prevail.
1.3 Governing Law
This Debenture shall be construed, governed and enforced in accordance with
and the rights of the parties shall be governed by 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. The parties hereto agree that the courts of the
Province of Ontario shall have exclusive jurisdiction to determine all disputes
and claims arising between the parties, whether as to the interpretation,
performance or otherwise, and the parties hereto irrevocably attorn to the
exclusive jurisdiction of the courts of the Province of Ontario.
1.4 Grammar
In this Debenture, unless the context otherwise requires, words importing
the singular include the plural and vice versa, words importing gender include
all genders and words importing persons include individuals, partnerships,
corporations, trusts, unincorporated associations, joint ventures, Governmental
Authorities and other entities.
1.5 Headings
The division of this Debenture into Articles and sections and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Debenture. The headings are specifically
not intended to be full or accurate descriptions of the content of any Article
or section or to define, limit, amplify or describe the scope thereof and shall
be considered not to form a part of this Debenture.
1.6 Personal Property Security Act Terms
Except as otherwise expressly provided herein, the terms used herein which
are defined by and ascribed meanings in the Personal Property Security Act of
Ontario, as amended from time to time, shall have the same meanings when used
herein. Provided however, that the term "goods" when used herein shall not
include "consumer goods" as that term is defined in the said Personal Property
Security Act.
1.7 Accounting Terms
All financial or accounting determinations, reports and statements provided
for in this Debenture shall be made or prepared in accordance with generally
accepted accounting principles (as described and promulgated by the Canadian
Institute of Chartered Accountants for time to time) applied on a consistent
basis and in a consistent manner and shall be prepared, as applicable, on a
consolidated basis.
1.8 Severability
If any one or more provisions contained herein is determined by a court of
competent jurisdiction to be illegal, invalid, void or unenforceable in whole or
in part in any respect under any applicable law, it shall be independent and
severable from this Debenture, it shall not be deemed to affect or impair the
validity, legality or enforceability of any other provision herein and each such
provision is deemed to be separate and distinct. This Debenture shall thereafter
be construed and enforced as if such illegal, invalid, void or unenforceable
part had never been inserted herein with the effect that the validity, legality
and enforceability of the remaining provisions hereof or of any other agreement,
document or instrument to be delivered pursuant to this Debenture shall not be
affected or impaired thereby and the remaining provisions of this Debenture
shall continue in full force and effect.
1.9 Waiver and Amendment
No supplement, modification, amendment, waiver or termination to this
Debenture or any agreement, document or instrument delivered to any party hereto
shall be binding upon the parties hereto unless agreed to by such parties in
writing. The Holder shall be entitled to waive any term or condition hereof or
in any agreement, document or instrument to be delivered hereunder which is
inserted therein for its benefit, but no such waiver shall be deemed to or shall
constitute a waiver of any other provisions (whether or not similar) nor shall
such a waiver constitute a continuing waiver.
1.10 Consent and Discretion of Holder
Whenever in this Debenture the Holder is entitled to grant or withhold
consent, the Holder shall be entitled to do so in its sole and absolute
discretion for such reasons as it may think fit and proper with or without
giving any reasons for doing so. Similarly, in the exercise of its discretion
herein, the Holder shall be entitled to make decisions for such reasons as it
sees fit in its sole and absolute discretion, it being expressly agreed that
there shall be no obligation on the part of the Holder to act or to refrain from
acting in any particular manner.
1.11 Determination of Effective Date
When the date for the expiry of any time period or for the completion of
any matter hereunder falls or expires on a day which is not a Business Day, the
time so limited extends to and the thing shall be done on the day next following
that is a Business Day. When calculating the period of time within which or
following which any act is to be done or a step is to be taken pursuant to this
Agreement, the date which is the reference date in calculating such period shall
be excluded.
1.12 Reference to Statute, etc.
Any reference herein to any law, by-law, rule, regulation, order or act of
any Governmental Authority shall be construed as a reference thereto as amended
or re-enacted from time to time or as a reference to any successor thereto.
1.13 Corporations
Any reference to a corporate entity includes and is also a reference to any
entity that is a predecessor or successor to such entity.
1.14 Currency
All payments contemplated pursuant to this Debenture and all dollar amounts
referred to herein shall be paid or calculated in lawful money of Canada.
1.15 Time of the Essence
Time shall be the essence of this Debenture and of all agreements,
documents or instrument to be delivered hereunder or contemplated herein.
ARTICLE 2.00 - PRINCIPAL MONEYS, INTEREST AND REPAYMENT
2.1 Promise to Pay
The Companies, for value received, hereby jointly and severally acknowledge
themselves indebted and promise to pay the Principal Amount to the Holder, or so
much thereof as may then be outstanding, on demand, or on such earlier date as
the principal moneys hereby secured may become payable as hereafter provided
together with all other monies which may from time to time be owing hereunder or
pursuant to this Debenture. All such payments shall be made in lawful money of
Canada from time to time at 000 Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx, X0X 0X0, or at
such other place as the Holder may designate by notice in writing to the
Company. The Principal amount outstanding from time to time shall bear interest
at the Interest Rate. The Companies shall pay interest on the Principal Amount
outstanding from time to time at the same place from January 31, 2003 on the
last day of each and every month, at the Interest Rate, as well after as before
maturity and both before and after default, together with interest on overdue
interest at that rate. In the event interest is not paid as hereinbefore
provided, the Holder may in its sole discretion advance moneys on account of
principal to the Companies to be applied towards interest but in no event shall
any such advance or series of advances by the Holder be construed so as to
obligate it to make any further advances to be applied on account of interest or
otherwise.
2.2 Prepayment Privilege
The Companies may pre-pay the Principal Amount in whole or in part at any
time and from time to time without notice or bonus
ARTICLE 3.00 - MORTGAGE AND CHARGE
3.1 As security for the due payment of the Obligations and the due performance
of all covenants herein:
(a) Specific Charge of Real Property
The Companies, as applicable, each hereby (subject to the exception as
to the leaseholds hereafter contained) grant, convey, bargain, sell,
assign, transfer, mortgage, hypothecate, pledge and charge as and by
way of a fixed and specific mortgage and charge to and in favour of
the Holder its successors and assigns, all lands and other real and
immoveable property of every nature and kind whatsoever and wherever
situate now owned by or leased to the Companies or either of them or
at any time and from time hereafter owned by or leased to the
Companies or either of them including the real or immoveable property
more particularly described in Schedule "B" annexed hereto, owned by
D'Angelo Brands Ltd., whether or not forming part of the Premises, and
including the buildings erections, improvements and fixtures of every
kind thereon erected or to be erected or affixed on all such real or
immoveable property whether now owned or hereafter acquired by either
Company;
(b) Specific Charge of Personal Property
The Companies each hereby grant, convey, bargain, sell, assigns,
transfer, mortgage, hypothecate, pledge, grant a security interest in
and charge as and by way of a fixed and specific mortgage and charge
to and in favour of the Holder, its successors and assigns all the
goods, chattels, fixtures, plant, vehicles, machinery, equipment and
accessories of every nature and kind whatsoever and wherever situate
now owned or at any time and from time to time hereafter owned or
acquired by them or either of them including, without limitation the
goods, chattels, fixtures, plant, machinery, equipment and accessories
listed in Schedule "C" annexed hereto; and
(c) Floating Charge
The Companies each hereby charge, as and by way of a floating charge
to and in favour of the Holder, its successors or assigns, its
respective undertaking and all of its property and assets, real and
personal, moveable and immovable, tangible and intangible for the time
being, both present and future, of whatsoever nature and kind and
wheresoever situated (other than such property and assets as are
effectively and validly specifically mortgaged and charged pursuant to
sections 3.1(a) and (b) hereof, property and assets from time to time
effectively subjected to a fixed and specific mortgage and charge
created by any instrument supplemental hereto and subject to the
exceptions as to leaseholds set out in section 3.3 hereof). Without in
any way limiting the generality of the foregoing, the undertaking,
property and assets referred to above shall include (subject as
aforesaid) all of each Company's present and future real and personal
property, goodwill, securities in other companies (whether or not such
other companies are a Subsidiary) trade marks, inventions, processes,
patents and patent rights, franchises, privileges, benefits,
immunities, materials, supplies, inventories, furniture, implements,
rents, revenues, incomes, moneys, contracts, agreements, leases,
licences, credits, book debts, accounts receivable, negotiable and
non-negotiable instruments, documents of title, judgments, securities,
choses in action, unpaid capital and all other property and things of
value of every kind and nature, tangible or intangible, legal or
equitable, of which either Company is or may become possessed, to
which it is or may become entitled or which it now owns or may
hereafter acquire.
3.2 Habendum
To have and to hold the property mortgaged or charged hereby and all of the
rights hereby conferred unto the Holder, its successors and assigns, forever
with the powers herein contained and subject, nevertheless, to the provisions
herein contained.
3.3 Exception as to Leases
It is hereby declared that the last day of any term of years reserved by
any lease, verbal or written, or any agreement therefor, now held or hereafter
acquired by either Company, whether falling within the general or particular
description of the mortgaged premises or property hereunder, is hereby and shall
be excepted out of the mortgage and charge created hereby or by any other
instrument supplemental hereto. As further security for payment of the principal
and interest under this Debenture and all other money and liabilities hereby
secured, each Company agrees that it will stand possessed of the reversion of
one day remaining on the Company in respect of any such terms of years,
respectively, of or to which it may now or hereafter be possessed or entitled to
upon trust to assign and dispose of the same in such manner as the Holder may
from time to time direct. Upon any sale or sales of the leasehold premises or
any part thereof, the Holder, for the purpose of vesting the aforesaid residue
of any such term or any renewal thereof in any purchaser or purchasers or any
other person or persons, shall be entitled to appoint in place of a Company, by
deed or writing, such purchaser, purchasers or other person or persons, as the
case may be, as new trustee or trustees of the aforesaid residue of any such
term or renewal thereof and to vest the same accordingly in the new trustee or
trustees so appointed freed and discharged from any obligation respecting the
same. Where the giving of a fixed and specific mortgage and charge on any real
or personal property held by a Company under lease requires the consent of the
lessor of such property, the Company shall obtain same expeditiously and in a
form satisfactory to the Holder, but the giving of the fixed and specific
mortgage and charge hereunder on such property shall only take effect to the
extent that it is capable of attaching to such leasehold interest until such
consent is obtained or legally dispensed with, and the suspension of the effect
of the fixed and specific mortgage and charge on such property shall not affect
the fixed and specific mortgage and charge on any other property of the Company.
3.4 Charge Valid Irrespective of Advance of Moneys
The grants, conveyances, bargains, sales, assignments, transfers,
mortgages, hypothecs, pledges and charges hereby created shall have effect and
be deemed to be effective whether or not the money hereby secured, or any part
thereof, be advanced or owing before or after or upon the date of this
Debenture. Neither the giving of this Debenture nor any advance of funds shall
obligate the Holder to advance any funds or any additional funds. The Companies
acknowledge that the parties have not agreed to postpone the time for attachment
of any of the charges created hereby, whether fixed or floating, all of which
shall attach upon the execution hereof. The Companies specifically acknowledge
that value has been given by the Holder.
3.5 Supplemental Indentures
The Companies hereby jointly and severally covenant and agree with the
Holder that they will at all times on demand by the Holder do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all and every such further acts, deeds, mortgages, transfers,
assignments, indentures and assurances in law (which shall thereafter form part
hereof) as the Holder may require for the better assuring, mortgaging,
transferring, assigning, charging and confirming unto the Holder all and
singular the property and assets hereby mortgaged, transferred, assigned or
charged or intended so to be or which either Company may hereafter become bound
to mortgage, transfer, assign and charge in favour of the Holder for better
accomplishing and effectuating of the intentions of this Debenture or for
correcting or amplifying the description of any property hereby mortgaged or
charged or intended so to be or for any other purpose not inconsistent with the
terms of this Debenture.
3.6 Defeasance
If the Companies have performed all of their covenants and obligations
hereunder and pay to the Holder the principal, interest and other moneys owing
hereunder and the security hereby constituted shall not have become enforceable,
the Holder shall forthwith, upon request in writing by the Companies, their
successors or assigns, deliver up this Debenture to the Companies and, at the
expense of the Companies, cancel and discharge the mortgages and charges created
by or enforceable under this Debenture and execute and deliver to the Companies
such deeds or other instruments as shall be requisite to discharge the mortgages
and charges hereby constituted. Until the time of the execution and delivery of
such discharge, this Debenture shall remain in full force and effect despite the
repayment or satisfaction from time to time of the whole or any part of the
Obligations. The Holder is the person entitled to receive the money payable
hereunder and to give a discharge hereof and to cancel this Debenture.
ARTICLE 4.00 - REPRESENTATIONS AND WARRANTIES
4.1 General Representations and Warranties
In addition to and not in substitution for any other representations and
warranties made by the Companies to the Holder, however and whenever made, the
Companies jointly and severally represent, warrant and covenant to and with the
Holder as follows:
(a) Incorporation and Status
Each Company is duly incorporated and validly subsisting under the
laws of its jurisdiction of incorporation and has the corporate power
and capacity to own its properties and assets and to carry on its
business as presently carried on by it and holds all material
licences, permits and assets as are required to own its properties and
assets to carry on business in each jurisdiction in which it does so.
(b) Power and Capacity
Each Company has the corporate power and capacity to enter into this
Debenture and each of the Security Documents to which it is a party
and to do all acts and things as are required or contemplated
hereunder or thereunder to be done, observed and performed by it.
(c) Due Authorization and Enforceability
Each Company has taken all necessary corporate action to authorize the
execution, delivery and performance of each of the Security Documents
to which it is a party and each such document constitutes, or upon
execution and delivery will constitute, a valid and binding obligation
of the Company enforceable against it in accordance with its terms.
(d) No Contravention
The execution and delivery of this Debenture and other Security
Documents and the performance by each Company of its obligations
thereunder:
(i) does not and will not violate any law or any provision of the
articles, by-laws, constating documents or other organizational
documents of either Company or constitute a breach of any
existing contractual or other obligation of either Company or
contravene any licence or permit to which either Company is
subject;
(ii) will not result in the creation of, or require either Company to
create, any Encumbrance in favour of any person other than the
Holder; and
(iii)will not result in or permit the acceleration of the maturity of
any indebtedness or other obligation of either Company.
(e) No Consents Required
No authorization, consent or approval of, or filing with or notice to,
any person is required in connection with the execution, delivery or
performance of this Debenture or any of the other Security Documents
by either Company.
(f) Permitted Use
The Premises are not subject to any Encumbrance other than Permitted
Encumbrances and except for any laws of general application such as
zoning or building by-laws, all of which have been complied with.
(g) Financial Statements
The financial statements and all other financial information of the
Companies in the form delivered by the Companies to the Holder have
been prepared in accordance with generally accepted accounting
principles and fairly, completely and accurately present the financial
condition of the Companies and the financial information presented
therein for the period and as at the date thereof. Since the date of
the last financial statements delivered to the Holder, there has been
no development which has had or will have a material adverse effect
upon the business, property, financial condition or prospects of
either Company or upon the ability of the Companies to perform their
obligations under any of the Security Documents.
(h) Solvency
The Companies are not insolvent persons within the meaning of the
Bankruptcy and Insolvency Act (Canada).
(i) No Litigation
There are no actions, suits, judgments, awards or proceedings pending
or, to the knowledge of either Company, threatened against either
Company before any Governmental Authority, including any court or
before any arbitrator or mediator of any kind, which would, if
determined adversely to either Company, materially adversely affect
its business, property, financial condition or prospects or its
ability to perform any of the provisions of any Security Document, and
neither Company is in default with respect to any judgment, order,
writ, injunction, award, rule or regulation of any Governmental
Authority including any court or any arbitrator or mediator, which
individually or in the aggregate results or could result in any such
material adverse effect.
(j) No Default
The Companies are not in default or breach under any material
commitment or obligation (including, without limitation, obligations
in relation to Financial Indebtedness) or under any order, writ,
decree or demand of any Governmental Authority or with respect to any
leases, licences or permits to own and/or operate material properties
and assets or to carry on business and there exists no state of facts
which, after notice or the passage of time or both, would constitute
such a default or breach; and there are not any proceedings in
progress, pending or threatened which may result in the revocation,
cancellation, suspension or any adverse modification of any such
leases, licences or permits.
(k) All Material Information Supplied
The Companies have each provided to the Holder all material
information relating to their financial condition, business and
prospects and all such information is true, accurate and complete in
all material respects.
(l) Serial Numbered Goods and Fixtures
Full particulars (including serial numbers) of each motor vehicle,
trailer, mobile home, boat, outboard motor, aircraft and all machinery
and equipment in which either Company has rights and which is not
Inventory are set out in Schedule "C" hereto. None of the goods
comprised in the Mortgaged Property are fixtures except any fixtures
that are described so that they may be readily identified in Schedule
"C" hereto and that are affixed or attached to the Premises described
in Schedule "B" hereto.
(m) Consumer Goods
None of the Mortgaged Property now owned or hereafter acquired is now
or shall at any time be consumer goods of either Company.
4.2 Environmental Representations and Warranties
In addition to and not in substitution for any other representation and
warranties made by the Companies to the Holder, however and whenever made, the
Companies jointly and severally represent, warrant and covenant to and with the
Holder as follows:
(a) The Mortgaged Property and the operations of the Occupants now and
will at all times in future comply with all Environmental Laws and
Environmental Orders.
(b) After due and diligent inquiry, it has been found that, except for
Permitted Substances necessary to the carrying on of the Normal
Business of the Companies, there is no Hazardous Substance on or in
any of the Premises, no Hazardous Substance has ever been used,
stored, located or Released on or in any of the Premises, and no part
of the Premises is or has ever been contaminated by any Hazardous
Substance.
(c) After due and diligent inquiry and except as approved by the Holder in
writing, it has been found that there are no:
(i) underground or above-ground storage tanks;
(ii) asbestos or material containing asbestos;
(iii) urea formaldehyde or material containing urea formaldehyde;
at, on or under the Premises and none of the foregoing will at any
time in future be placed, installed or Released at, on or under the
Premises without the prior written consent of the Holder.
(d) Any underground or above-ground storage tanks located at, on or under
the Premises which have been approved by the Holder have been
identified, registered, constructed, operated and maintained as
required by Environmental Laws and Environmental Orders and they are
presently in a state of good condition and repair, have not leaked and
are not presently leaking any of their contents.
(e) There is no judicial or administrative proceeding or investigation
pending and no Environmental Order has been issued or, to the best of
either Company's knowledge, threatened concerning the possible
violation of any Environmental Laws or Environmental Orders by any of
the Occupants, by any of the operations of the Occupants or otherwise
in relation to the Premises.
(f) To the best of the Companies' knowledge (after due and diligent
inquiry), no condition exists as to any parcel of real property
contiguous to or in close proximity with the Premises which would
require a qualification to any of the representations or warranties in
this section 4.2 if such condition applied to the Premises.
(g) Except for Permitted Substances necessary to the carrying on of the
Normal Business of the Companies, no Hazardous Substance has been or
shall be brought on to or used on or in any part of the Premises
without the prior written consent of the Holder and any Hazardous
Substance brought on to or into any part of the Premises or used by
any person on or in any part of the Premises shall be transported,
used and stored only in accordance with all Environmental Laws, other
lawful requirements, prudent industrial standards (including without
limitation any published environmental standards of any applicable
industry association) and any requirements of applicable insurance
policies.
(h) The Companies have created, properly organized and maintained all
documentation and records concerning environmental matters as required
by any Environmental Laws or Environmental Orders and will maintain
such documentation and records at all times in future as aforesaid.
(i) The Companies have each provided to the Holder any environmental
assessment and related documentation concerning any of the Premises in
its possession or control and shall promptly provide to the Holder any
such material as either Company may obtain in future.
4.3 Continuing Representations and Warranties
The representations and warranties made by the Companies in Article 4.00
shall be true and correct on each day that this Debenture or any of the Security
Documents remains in force, with the same effect as if such representations and
warranties had been made and given on and as of such day (except to the extent
any such representation and warranty is expressly limited to a particular date
or particular period of time), notwithstanding any investigation made at any
time by or on behalf of the Holder.
ARTICLE 5.00 - CERTAIN COVENANTS
The Companies hereby jointly and severally covenant and agree with the
Holder that until all moneys and liabilities hereby secured are paid and
satisfied in full:
5.1 To Maintain and Operate
Each Company shall:
(a) maintain its corporate existence;
(b) diligently preserve all its rights, powers, privileges, franchises and
good will;
(c) carry on and conduct its business in a proper and efficient manner so
as to preserve and protect the Mortgaged Property and the earnings,
incomes, rents, issues and profits of its undertaking;
(d) observe and conform to all valid requirements of any Governmental
Authority relative to any of the Mortgaged Property or the carrying on
of the business of the Company;
(e) exercise any rights of renewal or extension of any lease, licence,
concession, franchise or other rights whenever it is advantageous to
the Company to do so;
(f) observe and perform all of its obligations and comply with all
conditions under all leases, licences and other agreements to which it
is a party or by which it is bound or upon or under which any of the
Mortgaged Property is held;
(g) immediately notify the Holder in writing of any actual or proposed
change of name of either Company, of any actual or proposed
re-location of either Company's head office or chief place of
business, of the opening or proposed opening of any additional places
of business and of the location or proposed re-location of any of the
Mortgaged Property or the books of account and other records of either
Company; and
(h) effect such registration and renewals or amendments of registration as
may be required from time to time to preserve protect and continue the
security hereof.
5.2 To Pay Taxes
The Companies will from time to time pay or cause to be paid all rents,
taxes, rates, levies or assessments, ordinary or extraordinary government fees
or dues, lawfully levied, assessed or imposed upon or in respect of the
Mortgaged Property or any part thereof, as and when the same become due and
payable, that they will diligently prevent any lien from arising against the
Mortgaged Property in respect of the failure to make such payment, that they
will exhibit or cause to be exhibited to the Holder, when required, the receipts
and vouchers establishing such payment, and that they will duly observe and
conform to all valid requirements of any Governmental Authority relating to any
of the property mortgaged or charged hereby and to all covenants, terms and
conditions upon or under which the Mortgaged Property is held, save and except
when and so long as a Company is in good faith contesting the validity of any
such rents, taxes, rates, levies, assessments, fees or dues, requirements,
covenants, terms and conditions and a Company has satisfied the Holder that any
such contestation will involve no forfeiture of any part of the property
mortgaged or charged hereby and, if required by the Holder, furnished security
satisfactory to it.
5.3 To Repair
Each Company will at all times repair and keep in repair and good order and
condition, or cause to be so repaired and kept in repair and good order and
condition all buildings, erections, machinery and plant owned by the Company or
used in or in connection with its business or the businesses of its Subsidiaries
or Affiliates if any, or which are necessary in connection with the efficient
operation of such businesses and will at all reasonable times during normal
business hours allow the Holder or its representatives access to the Mortgaged
Property in order to view the state and condition the same are in and, in
addition to any other rights or remedies the Holder may have, the Holder may
make repairs or renew or replace any or all of the foregoing property as it
reasonably deems necessary, and the cost thereof shall be added to the principal
of the debt secured by this Debenture.
5.4 To Insure
Each Company will insure and keep insured, under insurance policies
containing a mortgage clause approved by the Holder with companies approved by
the Holder and in a form approved by the Holder, its business operations and all
property, present and future, which is or shall from time to time be subject to
the mortgages and charges created under Article 3.00 of this Debenture
(including Inventory) against loss or damage by fire or other insurable hazards
on an all risks basis to the full insurable value thereof. Each Company shall
duly and reasonably pay all premiums and other amounts payable for maintaining
such insurance and shall cause the insurance money thereunder to be made payable
in case of loss to the Holder, shall assign any such policy of insurance to the
Holder as requested and shall give to the Holder evidence of such insurance,
such payment and such assignment to the Holder.
5.5 To Furnish Proofs of Claim
Forthwith after the happening of any insured loss or damage and at the sole
expense of the applicable Company, each Company shall furnish all necessary
proofs of claim, duly and accurately completed and signed, and do all necessary
acts to enable the Holder to obtain payment of insurance monies. The Holder
shall be entitled to apply such monies to reinstate the insured property or in
payment of amounts due to the Holder hereunder, whether or not then due, or
partly in one way and partly in the other, all in the sole discretion of the
Holder. Notwithstanding the foregoing, if an Event of Default has not occurred
and is not continuing either at the time that the loss or damage was incurred or
at the time that the insurance monies are paid by the insurer, and if the
Company is under an obligation under any Lease to apply the insurance proceeds
to reinstate the loss or damage in respect of which such monies are payable, the
Holder shall cause such monies to be so applied to the extent necessary to
reinstate such loss or damage.
5.6 Not to Remove or Destroy Buildings
Each Company will not, without the previous consent in writing of the
Holder, or as expressly permitted hereunder, remove or destroy any of the
Mortgaged Property or any of the buildings, improvements, structures or fixtures
attached or appertaining the Premises.
5.7 Not to Encumber or Dispose of its Assets
Each Company will not, without the previous consent in writing of the
Holder had and received or as expressly permitted hereunder, do or purport to do
any of the following things:
(a) create or suffer the creation, directly or indirectly, of any
Encumbrance of any nature and kind whatsoever upon its undertaking or
any of its assets except to and in favour of the Holder or as may be
approved in writing by the Holder prior to their creation or
assumption and except for Permitted Encumbrances and will not permit
any Subsidiary to do the same except in favour of the Company or the
Holder;
(b) remove, sell, assign, transfer, lease, destroy or otherwise dispose
of, or authorize or permit the removal, sale, assignment, transfer,
lease, destruction or other disposal of any of the assets or Mortgaged
Property singly or as a group, except for the sale of Inventory in the
ordinary course of business and for the purpose of carrying on same
and save and except where such assets have become worn out, damaged or
otherwise unsuitable for their purposes and, where it is desirable to
do so for the efficient operation of the Company's business, are
replaced by substitute assets of equal or greater value which are
subject to the lien hereof and free from any prior liens or charges
(including any Purchase Money Security) so that the security hereby
constituted shall not thereby be in any way reduced or impaired; and
(c) remove, sell, assign, transfer, lease, destroy or otherwise dispose
of, or authorize or permit the removal, sale, assignment, transfer,
lease, destruction or other disposal of any goods and chattels of the
Company not forming part of the Mortgaged Property except for the
purpose of immediately replacing the same by other property of a
similar nature which is free and clear of any prior liens or charges
(including any Purchase Money Security) and is of a more useful or
convenient character and of at least equal value.
5.8 To Maintain Security
Each Company will fully and effectually maintain and keep maintained the
security hereby created as a valid and effective security at all times so long
as any moneys payable hereunder remain unpaid and that it will not permit or
suffer the registration of any lien or privilege whatsoever, whether of
government, workmen, builders, contractors, engineers, architects or suppliers
of material upon or in respect of any of the Mortgaged Property which would rank
prior to or pari passu with the lien of this Debenture, provided that the
registration of any such lien or privilege shall not be deemed to be a breach of
this covenant if a Company should desire to contest the same and shall, if the
Holder so requires, give security to the satisfaction of the Holder for the due
payment of the account claimed in respect thereof in case it be held to be a
valid lien or privilege.
5.9 To Perform Obligations
Each Company will punctually pay and discharge every obligation lawfully
incurred by it or imposed upon it or upon any or the Mortgaged Property by
virtue of any law, regulation, order, direction or requirement of any
Governmental Authority or pursuant to any contract, agreement, lease, licence,
concession, franchise or otherwise, the failure to pay or discharge which might
result in any lien or charge or any right of distress, forfeiture, termination
or sale or any other remedy being enforced against the Mortgaged Property or any
part thereof and will exhibit to the Holder when required a certificate of the
Company's auditor or other evidence satisfactory to the Holder establishing such
payments. However, a Company may, upon furnishing such security, if any, as the
Holder may require, refrain from paying and discharging any obligation so long
as it is in good faith contesting its liability therefor. In addition, each
Company shall at all times fully comply with, perform and discharge all of its
obligations under any Lease or contract, will not, without the prior written
consent of the Holder, terminate, surrender, amend, vary or alter the terms and
conditions of any Lease or contract or waive performance by other parties to any
such Lease or contract of any of such other parties' obligations thereunder.
5.10 To Perform All Obligations Imposed by Law
Each Company will do, observe and perform all of its obligations and all
matters and things necessary or expedient to be done, observed or performed by
virtue of any law or regulation of any Governmental Authority for the purpose of
creating and maintaining the security hereby constituted or intended to be
constituted.
5.11 To Comply with Environmental Obligations
The Companies jointly and severally covenant and agree to:
(a) obey and fully comply with all Environmental Laws;
(b) allow the Holder or its representatives and agents access at all times
during normal business hours to the Premises of the Companies to
monitor and inspect all property and business activities of the
Companies, to conduct testing and monitoring with respect to Hazardous
Substances and to remove and analyze any Hazardous Substance (whether
or not it is a Permitted Substance) on, from, in or under any part of
the Premises;
(c) promptly notify the Holder from time to time of any business activity
conducted by either Company which involves the use or handling of a
Hazardous Substance whether or not it is a Permitted Substance, which
increases or potentially could increase the environmental liability of
either Company in any material manner and to promptly notify the
Holder of any Hazardous Substance (whether or not it is a Permitted
Substance) that has been or will be brought on to the Premises;
(d) promptly notify the Holder of any proposed change in the use or
occupation of any of the Premises prior to any change occurring;
(e) promptly notify the Holder of any actual, threatened or potential
Release of any Hazardous Substance (whether or not it is a Permitted
Substance) on, from, in or under any part of the Premises;
(f) provide the Holder with immediate written notice of any breach or
alleged breach of any Environmental Laws, any environmental problem
and any Hazardous Substances which have or may have an adverse effect
on the property, equipment, or business activities of either Company
which notice shall include, if applicable full copies of any written
notices received from any Governmental Authority of any violation or
potential violation of any Environmental Laws of Environmental Orders,
including the Release of a Hazardous Substance, which has occurred or
been committed or may occur or may be committed, and full copies of
any notice of any administrative or judicial complaint, claim or
Environmental order that has been filed or issued or is about to be
filed or issued against either Company or any of the Occupants or
their representatives alleging a breach or violation of any
Environmental Laws or Environmental Orders or directing or requiring
the taking of any action in connection with any Hazardous Substance or
any Release;
(g) advise the Holder of the enactment of any Environmental Laws or the
issuance of any Environmental Orders which may have a material adverse
affect on the Premises or on the condition, financial or otherwise, of
the Premises or the business of either Company;
(h) provide the Holder with any other environmental information reasonably
requested by the Holder from time to time;
(i) conduct all environmental remedial activities which a commercially
reasonable person would perform in similar circumstances to meet its
environmental responsibilities and obligations;
(j) pay for any environmental investigations, assessments or remedial
activities with respect to any property or assets used in the business
of either Company that may be performed for or by the Holder from time
to time and to pay any reasonable expenses which the Holder may incur
to verify the Companies' compliance with applicable environmental or
other laws and regulations; and
(k) indemnify the Holder and save the Holder harmless from and against any
and all losses, costs, damages, liabilities, obligations and expenses
of any kind or nature whatsoever which the Holder may sustain or incur
or for which it may become liable by reason of or arising from the
presence, clean-up, removal or disposal of any Hazardous Substance or
compliance with Environmental Laws or Environmental Orders relating
thereto or relating to the Premises, including any clean-up,
decommissioning, restorations or remediation of the Premises or any
other affected lands or property, which indemnification shall survive
the satisfaction, release or extinguishment of the indebtedness
secured hereby.
5.12 Financial Records, Financial Statements, etc.
The Companies jointly and severally covenant and agree that they will:
(a) deliver to the Holder as soon as practicable and in any event within
one hundred and five (105) days after the end of each fiscal year of
each Company the audited annual financial statements of the Company
consisting of at least a balance sheet, earnings statement, statement
of source and application of funds, a statement of retained earnings
and a statement of changes in financial position, together with
comparative figures for the previous fiscal year, all in reasonable
detail and accompanied by report and opinion of the Company's
auditors, which shall be a firm of recognized standing acceptable to
the Holder and qualified and entitled to carry on the practice of
public accounting and auditing in the Province of Ontario;
(b) deliver to the Holder quarterly interim financial statements within
fifty (50) days after the end of each quarter of its fiscal year;
(c) provide the Holder with such other information relating to the
financial position, conduct of business and affairs of each Company as
the Holder may reasonably request from time to time including evidence
of compliance with the covenants and obligations of the Company
hereunder;
(d) permit the Holder to discuss each Company's financial position,
financial statements and business operations with the Company's
executives, including executives of all related and affiliated
companies and its accountants and to examine from time to time and at
any time during normal business hours its books of account and all
supporting material; and
(e) keep and maintain proper books of account with correct and complete
entries therein of all transactions in relation to its business,
including such accounting records as will enable each Company and its
independent auditors to prepare and provide the reports, financial
statements and information hereby required to be provided.
5.13 Not to Change Capital Structure or Pay Dividend
The Companies will not declare or pay any dividends on any of their
outstanding shares or capital stock or permit the withdrawal of any equity,
capital or profits unless and until the sum secured hereby, together with
interest shall be fully paid and satisfied and shall not make any distribution
to any partners or joint venturers having any interest in the profits or assets
of either Company without the prior written consent of the Holder.
5.14 Not to Pay Salaries, etc.
The Companies shall not pay salaries, wages, bonuses, benefits, management
fees, director's fees, profit sharing payments or other remuneration of any kind
or nature whatsoever in excess of the aggregate amounts approved in writing by
the Holder from time to time in any complete fiscal year to any officer,
director, direct or indirect shareholders holding more than five percent (5%) of
either Company's Shares or to any person related or affiliated to any of them or
to any person not dealing at arms length with any of them.
5.15 Not to Become Surety
The Companies will not, without the prior written consent of the Holder,
guarantee, endorse or otherwise become surety for or upon the obligations of
others, nor will they permit any of their Subsidiaries to do so.
5.16 Not to Lend or Invest
The Companies will not, without the written consent of the Holder, lend
money to or invest money in any person, firm, joint venture, partnership,
company or corporation whether by way of loan, acquisition of shares,
acquisition of debt obligations or in any other way whatsoever.
5.17 Inspection by the Holder
In addition to and not in substitution for any other rights of access or
inspection granted herein, the Companies shall at their sole expense, including
all expenses incurred by the Holder to third parties acting on behalf of the
Holder, allow any employees or authorized agents of the Holder at any reasonable
time to enter their Premises in order to inspect the Mortgaged Property and to
inspect the books and records of the Companies and make extracts therefrom, and
shall permit the Holder prompt access to such other persons as the Holder may
deem necessary or desirable for the purposes of inspecting or verifying any
matters relating to any part of the Mortgaged Property or the books and records
of the Companies, provided that any information so obtained shall be kept
confidential, save as required by the Holder in exercising its rights hereunder.
All amounts payable by the Companies under this section 5.17 shall be payable by
the Companies to the Holder forthwith after demand and shall be secured hereby
and have the full benefit of the lien hereby created.
5.18 Accounts Receivable
Subject to any Permitted Encumbrances thereon, accounts receivable shall be
received by the Companies in trust for the Holder; provided that as long as an
Event of Default has not occurred the Companies may collect and use the accounts
receivable in the ordinary course of business.
5.19 Notice to Holder
The Companies will each promptly give written notice to the Holder of:
(a) all claims or proceedings pending or threatened against either Company
which may give rise to uninsured liability in excess of Ten Thousand
Dollars ($10,000.00) or which may have a material adverse affect on
the business or operations of the Company;
(b) all damage to or loss or destruction of any property comprising part
of the Mortgaged Property which may give rise to an insurance claim in
excess of Ten Thousand Dollars ($10,000.00) together with all
information requested by the Holder or available to the Company in
respect of any such claim; and
(c) the occurrence of any Event of Default or of any event which after
notice or lapse of time would constitute an Event of Default.
5.20 Not to Make Certain Changes
Neither Company shall, without the prior written consent of the Holder:
(a) change its financial year end;
(b) purchase, establish or acquire in any manner any new business
undertakings;
(c) materially change the nature of its business as presently carried on;
(d) amalgamate, consolidate or merge or enter into a partnership, joint
venture or syndicate with any other person, or acquire or establish
any Subsidiary;
(e) enter into any transaction, or permit any Subsidiary to do so, outside
the Normal Business of the Company or the ordinary active business
operations of its Subsidiaries;
(f) acquire or invest in any securities except instruments or securities
issued by a financial institution or liquid securities traded on a
recognized public securities exchange and acquired only for the
Company's cash management purposes or permit any Subsidiary to do so;
or
(g) remove any of the Mortgaged Property or any of the books of account or
other records of the Company from the jurisdiction where presently
located.
5.21 To Pay Costs
In addition to and not in substitution for any other costs payable by the
Companies hereunder, the Companies shall pay all costs, charges and expenses of
or incurred by the Holder incidental to the preparation, execution and filing of
this Debenture, any other Security Documents and any instruments relating
thereto (including without limitation any supplemental security or any
instrument amending any of the Security Documents), or in inspecting the
Mortgaged Property. All such costs and expenses and other monies payable
hereunder, together with interest at the Interest Rate shall be payable on
demand and shall constitute a charge on the Mortgaged Property. Without limiting
the generality of the foregoing, such costs shall extend to and include any
legal costs incurred by or on behalf of the Holder as between solicitor and his
own client.
ARTICLE 6.00 - TITLE TO ASSETS
The Companies hereby jointly and severally covenant, warrant and agree with
the Holder that at the date hereof and thereafter during the entire term of this
Debenture until all the monies and liabilities hereby secured are paid and
satisfied in full:
6.1 Title to Specifically Mortgaged Property
The Companies lawfully own and are lawfully possessed of the Mortgaged
Property and all property and assets indicated by the financial statements or
other material or information delivered to the Holder to be owned by it, subject
only to Permitted Encumbrances, and that they have good and lawful right and
authority to grant, convey, bargain, sell, assign, transfer, mortgage,
hypothecate, pledge, grant a security interest in and charge the same as
provided hereunder; and that all the Mortgaged Property is free and clear of any
charges or encumbrances ranking or which are capable of ranking prior to or pari
passu with the specific mortgage and charge of this Debenture, other than
Permitted Encumbrances; and that they will defend the title of such property and
any property or rights hereafter acquired by it, for the benefit of the Holder,
its successors and assigns. No person has any right or option to acquire any of
such property except under unfilled orders or agreements entered into or
accepted in the ordinary course of the business of the Companies.
6.2 Sale of Property or Acquisition of Additional Property
If, whether in compliance with the terms of this Debenture or in breach
thereof, any of the Mortgaged Property is sold or if either Company acquires any
additional property or assets of any nature or kind whatsoever (whether as
replacement or otherwise), such Company will forthwith advise the Holder in
writing of such sale or acquisition and will, upon the request of the Holder,
execute and deliver to the Holder in a form satisfactory to the Holder, as
additional and collateral security for the payment of all moneys and interest
hereby secured, a fixed mortgage or charge of such property or assets acquired
by it. It is understood and agreed that nothing herein contained implies or
shall be deemed to imply that any such sale shall discharge any of the property
specifically mortgaged or charged by the Debenture from the provisions of this
Debenture.
ARTICLE 7.00 - RELATED AND AFFILIATED CORPORATIONS
7.1 Applicability to Subsidiaries etc.
Each and every one of the covenants, representations and warranties
contained or set out in Articles 4.00, 5.00 or 6.00 hereof shall apply equally
to any Subsidiary, any corporation that is an Affiliate and to any related
corporation (to the full extent that they are applicable to such Subsidiary,
Affiliate or related corporation), to the same extent that they apply to each
Company, and the covenants, representations and warranties in Articles 4.00,
5.00 and 6.00 shall apply in respect of any event relating to any such
Subsidiary, Affiliate or related corporation.
ARTICLE 8.00 - DEFAULT
8.1 Events of Default
The moneys hereby secured, together with interest thereon as aforesaid,
shall become payable and the security hereby constituted shall become
enforceable immediately upon the occurrence or happening of any of the following
events ("Events of Default"):
(a) if either Company makes default in the payment of the principal or
interest or any other amounts hereby secured or any principal or
interest payment or any other amounts owed by it to the Holder,
whether secured by this Debenture or not;
(b) if default occurs in payment or performance of any other Obligations,
whether arising herein or otherwise;
(c) if either Company fails to strictly and fully observe and perform any
condition, agreement, covenant or term set out herein or in any other
document creating a contractual relationship between either Company
and the Holder including, but not limited to additional Security
Documents and related agreements or undertakings;
(d) if, without the prior consent in writing of the Holder, either Company
purports to create (except to the Holder) any mortgage, charge, lien
or encumbrance upon any of its property or assets, present or future,
or sell or dispose of such property otherwise than in the ordinary
course of business;
(e) if the Company ceases or threatens to cease carrying on its business
or if a petition is filed, an order is made, an act, matter or thing
is done toward or an effective resolution is passed for the
winding-up, liquidation, amalgamation or reorganization of either
Company or the surrender of its charter, or if a petition is filed for
the winding-up or liquidation of either Company;
(f) if any proposal is made or petition is filed by either Company under
any law having for its purpose the extension of time for payment,
composition or compromise of the liabilities of either Company or
other reorganization or arrangement respecting its liabilities or if
either Company gives notice of its intention to make or file any such
proposal or petition including, without limitation, an application to
any court for an order to stay or suspend any proceedings of creditors
pending the making or filing of any such proposal or petition;
(g) if either Company commits an act of bankruptcy, becomes insolvent or
makes an assignment for the benefit of its creditors or a proposal
under the Bankruptcy and Insolvency Act, or if a bankruptcy petition
shall be filed or presented or if a custodian, sequestrator,
administrator, monitor, receiver or manager or any other officer with
similar powers shall be appointed for any of the properties or assets
of either Company or any part thereof, or either Company otherwise
acknowledges its insolvency;
(h) if any proceedings with respect to either Company are commenced under
the Companies' Creditors Arrangement Act or the Winding-Up Act;
(i) if any execution, sequestration, extent or any other process of any
court becomes enforceable against either Company or if a distress or
analogous process is levied upon the property or assets of either
Company or any part thereof or if either Company permits any sum which
it has admitted is due by it or is not disputed to be due to remain
unpaid for thirty (30) days after proceedings have been taken to
collect same or enforce the right to payment of same;
(j) if the Company makes or agrees to make a bulk sale of its assets or
any sale of its assets out of the ordinary course of business;
(k) if default shall occur under any obligation to repay borrowed money or
interest thereon to any person or if a material default of either
Company shall occur under any agreement by which the Company is bound
and such default is not rectified within the period provided for
rectification in the governing agreement;
(l) if any party to any security arrangement supplemental or collateral to
this Debenture fails to observe any provision of such an arrangement
or is in default thereunder or if the validity or enforcement of any
such security arrangement is brought into question or disputed in
whole or in part where the effect of such invalidity would adversely
affect the interests or security of the Holder;
(m) if either Company defaults under or breaches any of the terms of any
licence, agreement, lease, instrument, mortgage, charge, debenture,
security agreement or other encumbrance affecting the Mortgaged
Property including, without limiting the generality of the foregoing,
under any Permitted Encumbrances;
(n) if any material adverse change occurs in the financial condition of
either Company or in the environmental condition of any property or
equipment of either Company or which is used by it in its business
activities;
(o) if any certificate, statement, representation, warranty or financial
report heretofore or hereafter furnished by or on behalf of either
Company or any Affiliate or related corporation pursuant to or in
connection with this Debenture, or otherwise (including, without
limitation, the representations and warranties contained herein) or as
an inducement to the Holder to extend any credit to or to enter into
this or any other agreement with either Company, proves to have been
false or incomplete in any material respect at the time as of which
the facts therein set forth were stated or certified or are deemed to
have been stated or certified, or proves to have omitted any
contingent or unliquidated liability or claim against either Company,
any Affiliate thereof or any related corporation or if upon the date
of execution of this Debenture, there shall have been any material
adverse change in any of the facts disclosed by any such certificate,
representation, statement, warranty or financial report, which change
shall not have been disclosed to the Holder at or prior to the time of
such execution;
(p) if, without the prior written consent of the Holder, the outstanding
shares of either Company are sold, assigned, transferred, hypothecated
or if additional shares of either Company are issued so as to cause a
change in control of either Company;
(q) if any action is taken or power or right be exercised by any
Governmental Authority or if any claim or proceeding is pending or
threatened by any person which may have a material adverse effect on
either Company, its business, operations, properties or prospects;
(r) if any event occurs with respect to any Subsidiary which, if like
event had occurred with respect to either Company, would have
constituted an Event of Default; and
(s) if any event occurs with respect to any Guarantee, with respect to any
guarantor or with respect to any Affiliate of either Company or any
related corporation which, if like event had occurred with respect to
either Company, would have constituted an Event of Default.
8.2 Waiver of Default
The Holder may expressly waive in writing any Event of Default or any
breach by either Company of any of the provisions contained in this Debenture or
any default by either Company in the observance or performance of any covenant
or condition required to be observed or performed by either Company under the
terms of this Debenture, but no act or omission by the Holder in waiver of a
particular breach or default shall extend to or be taken in any manner
whatsoever to affect any subsequent breach or default or the rights resulting
therefrom, and no Event of Default or breach shall be deemed to waive nor shall
enforcement rights hereunder be postponed or be deemed to be postponed except in
the specific instance and to the extent (and only to the extent) expressly
waived in writing by the Holder. The Companies each expressly waive each and
every defence to which they may otherwise be entitled based upon any or all
indulgences or waivers that may be granted by the Holder and acknowledge that
the Holder has relied upon this waiver in the granting of any indulgences or
waivers.
8.3 Holder May Perform Covenants and Remedy Default
The Holder may pay and satisfy any Encumbrance or other charge, rate or
levy now or hereafter existing or to arise or to be claimed upon the Mortgaged
Property and ranking in priority to or pari passu with any portion of the
security constituted by this Debenture and any such sum so paid and any sum paid
by the Holder shall be added to the principal and be payable and secured hereby
in the same manner as all other moneys hereby secured and shall bear interest at
the Interest Rate until paid. In addition, if either Company fails to perform
any covenant or do anything herein required to be done by it, the Holder may,
but shall not be obligated to perform such covenant or do such thing, or cause
such covenant to be performed or thing to be done and all sums thereby expended
by the Holder whether as expenses or as payments, shall be payable forthwith by
the Companies without the necessity of demand, shall be added to the
indebtedness secured by this Debenture, shall be secured hereby, shall have the
full benefit of the lien hereby created, and shall bear interest at the Interest
Rate until paid but no such performance or payment by the Holder shall relieve
or be deemed to relieve either Company from any default hereunder.
8.4 Consequences of and Event of Default
Upon the occurrence of an Event of Default, unless such Event of Default is
waived pursuant to section 8.2, all Obligations and all monies secured hereby
shall at the option of the Holder become forthwith due and payable whereupon the
floating charge hereby created shall crystallize, all of the rights and remedies
hereby conferred in respect of the Mortgaged Property shall become immediately
enforceable and any and all additional and collateral securities for payment of
this Debenture shall become immediately enforceable.
8.5 Enforcement
Upon the occurrence of an Event of Default which has not been remedied and
the security hereby constituted having become enforceable, and so long as it
shall remain enforceable, the Holder may proceed to realize the security hereby
constituted and to enforce its rights in any one or more of the following ways:
(a) by entry;
(b) by the appointment by instrument in writing of any person to be a
Receiver of the subject matter of such security or any part thereof,
including any rents and profits thereof, and may remove any Receiver
and appoint another in his stead, and any Receiver so appointed shall
have power to exercise all of the rights and remedies granted herein
to the Holder, to take possession of the Mortgaged Property or any
part thereof and wherever same may be found and to carry on the
business of Companies or either of them or any part thereof in the
name of the Receiver or in the name of the Company or Companies or to
concur in selling any or all of such property and assets. Without
limiting the foregoing, the Receiver shall have all of the powers of a
receiver appointed by a court of competent jurisdiction. The rights
and powers conferred by this section 8.5(b) are in supplement of and
not in substitution for any rights of the Holder. The Holder may from
time to time fix the remuneration of any Receiver and direct payment
thereof out of the property mortgaged or charged hereby. Any Receiver
may be vested with all or any of the powers and discretions of the
Holder and, except as may be otherwise directed by the Holder, all
moneys from time to time received by any Receiver shall be held in
trust for and paid over to the Holder. The Holder in appointing or
refraining from appointing any Receiver shall not incur any liability
to the Receiver, the Companies or otherwise. In exercising the
foregoing powers, any Receiver shall have the power to borrow and
create obligations and give security, whether by way of receiver's
certificate or otherwise, for any such borrowing or obligation upon
all or any part of the undertaking, property and assets hereby charged
in priority to the security hereby constituted;
(c) by entering upon and leasing or selling or otherwise disposing of the
whole or any part or parts of the Mortgaged Property and any such sale
may be made hereunder by public auction, by public tender or by
private contract, with or without notice and with or without
advertising and without any other formality, save and except as
required by law, and such sale shall be on such terms and conditions
as to credit or otherwise and as to upset or reserve bid or price as
to the Holder in its sole discretion may seem advantageous and such
sale may take place whether or not the Holder has taken possession of
such property and assets;
(d) by proceedings in any court of competent jurisdiction for the
appointment of a Receiver or Receivers of all or any part of the
security hereunder or for sale of the subject matter of such security
or any part thereof;
(e) on default of payment for at least fifteen (15) days, the Holder may
on at least thirty-five (35) days' notice enter on and lease the
Premises or on default of payment for at least fifteen (15) days may
on at least thirty-five (35) days' notice sell the said Premises. Such
notice shall be given to such persons and in such manner and form and
within such time as provided in the Mortgages Act, R.S.O., 1990,
Chapter M.40 as amended. In the event that the giving of such notice
shall not be required by law or to the extent that such requirements
shall not be applicable, it is agreed that notice may be effectually
given by leaving it with a grown-up person on the said Premises, if
occupied, or by placing it on the said Premises if unoccupied, or at
the option of the Holder, by mailing it in a registered letter
addressed to the applicable Company at its last known address, or by
publishing it once in a newspaper published in the county or district
in which the Premises are situate; and such notice shall be sufficient
although not addressed to any person or persons by name or
designation; and notwithstanding that any person to be affected
thereby may be unknown, unascertained, or under disability;
(f) it is hereby further agreed that the whole or parts of the Premises
may be sold by public auction or private contract, or partly one or
partly the other; and that the proceeds of any sale hereunder may be
applied in payment of any costs, charges and expenses incurred in
taking, recovering or keeping possession of the Premises or by reason
of non-payment or procuring payment of moneys, secured hereby or
otherwise, and that the Holder may sell any of the Premises on such
terms as to credit and otherwise as shall appear to it most
advantageous and for such prices as can reasonably be obtained
therefor and may make any stipulations as to title or evidence or
commencement of title or otherwise which it shall deem proper, and may
buy in or rescind or vary any contract for the sale of the whole or
any part of the Premises and resell without being answerable for loss
occasioned thereby, and in the case of a sale on credit, the Holder
shall be bound to pay the applicable Company only such moneys as have
been actually received from purchasers after the satisfaction of the
claims of the Holder and for any of said purposes may make and execute
all agreements and assurances as it shall think fit. The Companies
shall be accountable for any deficiency and the Holder shall be
accountable for any surplus. The Holder may deliver to the purchaser
or purchasers of the Mortgaged Property or any part thereof good and
sufficient conveyances or deeds for same free and clear of any claim
by applicable Company. Any purchaser or lessee shall not be bound to
see to the propriety or regularity of any sale or lease or be affected
by any irregularity or any nature or kind relating to the
crystallizing or enforcing of the security hereof, the taking of
possession of the Mortgaged Property, the sale, lease or disposition
thereof or by express notice that any sale or lease is improper, and
no want of notice or publication when required hereby or any other
irregularity shall invalidate any sale or lease hereunder;
(g) by any other action, suit, remedy or proceeding authorized or
permitted hereby or by law or by equity;
(h) by filing such proofs of claim and other documents as may be necessary
or advisable in order to have their claim lodged in any bankruptcy,
winding-up or other judicial proceeding relative to either Company;
(i) by proceeding in any Court of competent jurisdiction for sale or
foreclosure of all or any part of the property charged herein;
(j) by payment of any amount which the Holder considers necessary or
advisable to preserve and maintain the Mortgaged Property or make
replacements thereof or additions thereto which the Holder determines
is advisable for the purpose of improving the Mortgaged Property or
the marketability thereof; and
(k) by paying or otherwise satisfying in whole or in part any Encumbrances
or liabilities, including Permitted Encumbrances, which, in the
opinion of the Holder, ranks or may rank in priority to the security
hereof or which it is advisable to be paid.
8.6 Cessation of Function of Companies
Upon the Holder declaring that the security hereof has become enforceable
and crystallized or the Holder having taken possession of any of the Mortgaged
Property or upon the exercising the remedies or rights provided for in section
8.5(b) hereof, all the powers, functions, rights and privileges of each and
every of the directors and officers of the Companies in respect of the Mortgaged
Property or the business of the Companies shall cease unless specifically
continued by the written consent of the Holder.
8.7 Expenses of Enforcement
The Companies jointly and severally agree to pay to the Holder forthwith
upon demand all costs, charges and expenses incurred by the Holder in recovering
or enforcing payment of moneys owing hereunder or in realizing upon this
Debenture or any other securities for such moneys, including but without
limiting the generality of the foregoing, legal fees and disbursements on a full
indemnity basis related thereto, expenses of inspecting, taking, recovering or
keeping possession, and protecting and realizing upon any property comprised in
any such security, expenses of enforcing the remedies provided herein or
otherwise in relation to this Debenture or the Mortgaged Property, the costs of
any sale proceedings hereunder, whether such sale proves abortive or not, the
costs of any Receiver with respect to, and all expenditures made by the Holder
or a Receiver, all expenditures made by the Holder or such Receiver including,
without limitation, any costs and expenditures relating to compliance with the
Bankruptcy and Insolvency Act (Canada) and any and all such further and other
costs or expenses which the Holder may incur. All such sums, together with
interest thereon at the Interest Rate, shall be added to the indebtedness
secured by this Debenture and shall also be secured thereby, together with all
other indebtedness secured thereby.
8.8 Remedies Not Exclusive
No failure or delay on the part of the Holder in exercising any right,
power or privilege under this Debenture shall operate as a waiver thereof nor
shall any single or partial exercise of any one or more than one right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which the Holder would otherwise have. The Holder may also, in its sole
discretion, exercise any and all rights, powers, remedies and recourses
available to it as set out herein, or any other remedy available to it, and such
rights, powers, remedies and recourses may be exercised concurrently or
individually without the necessity of any election.
8.9 No Merger or Novation
Neither the taking of any judgement nor the exercise of any power of
seizure or sale shall operate to extinguish the liability of the Companies to
jointly and severally pay the full amount due and owing hereunder or secured
hereby nor shall the same operate as a merger of any covenant contained herein
or of any other Obligation, nor shall the acceptance of any payment or other
security constitute or create any novation.
8.10 Limitations of Liability
Neither the provisions of this Debenture nor anything done under or
pursuant to the rights, remedies and powers conferred upon the Holder and the
Receiver, whether hereunder or otherwise, will render the Holder a mortgagee in
possession. Neither the Holder nor any Receiver will be bound to collect,
dispose of, realize, enforce or sell any Securities, Instruments, Chattel Paper
or Intangibles (including any Accounts) comprised in the Mortgaged property or
to allow any such Mortgaged Property to be sold or disposed of, nor will it be
responsible for any loss occasioned by any such sale or other dealing or for any
failure to sell or so act, nor will it be responsible for any failure to take
necessary steps to preserve rights against others in respect of such Mortgaged
Property, nor will it be responsible for any loss occasioned by the failure to
exercise any rights in respect of Mortgaged Property within the time limited for
the exercise thereof. Neither the Holder nor the Receiver will be obligated to
keep Mortgaged Property separate or identifiable.
8.11 General
No remedy for the realization of the security hereof or for the enforcement
of the rights of the Holder shall be exclusive of or dependent on any other such
remedy, but any one or more of such remedies may from time to time be exercised
independently or in combination. In exercising any of his or their powers
pursuant to their appointment hereunder, any Receiver or Receivers shall for all
purposes be deemed to act as agent or agents for the Companies and the Holder
shall not be responsible for any misconduct or negligence on the part of any
Receiver or for his or their actions or for any loss resulting from any of the
foregoing. All moneys from time to time received by the Receiver, may be applied
as follows: First, in discharge of all operating expenses and other outgoings
affecting the security hereunder; Second, in keeping in good standing all
charges and liens on the security hereunder having priority over this Debenture;
Third, in payment of remuneration and disbursements of the Receiver; Fourth, in
payment to the Holder of the moneys payable hereunder; Fifth, to such reserves
against potential claims which the receiver bona fide believes should be
maintained until such potential claims are settled; and Sixth, the balance, if
any, should be paid to applicable Company.
ARTICLE 9.00 - OTHER
9.1 Pledge
This Debenture may be deposited with or pledged to the Holder by the
Companies as collateral security for its indebtedness and liabilities to the
Holder and, when redelivered to the Companies or their nominees, shall be
forthwith cancelled; but this Debenture shall not be deemed to have been
redeemed by reason of the account of the Companies having ceased to be in debt
while this Debenture was pledged.
9.2 Nature of Security
This Debenture shall also constitute a continuing collateral security for
the debts, liabilities and obligations of the Companies to the Holder
wheresoever and howsoever incurred.
ARTICLE 10.00 - GENERAL
10.1 Assignment
The Holder shall be entitled to assign this Debenture and all of its
rights, title and interest thereunder.
10.2 Other Security
This security is in addition to and not in substitution for any other
security now or hereafter held by the Holder. The rights of the Holder shall not
be prejudiced nor shall the liabilities of the Companies or of any other person
be reduced, diminished or affected in any way by the taking of any other
security, of any kind or nature whatsoever by the Holder either before, at the
same time as subsequent to the date of execution and delivery of this Debenture.
10.3 Notices
Any demand, notice or communication made, given or sent by the Holder in
connection with this Debenture, may be made, given or sent by personal delivery,
by facsimile transmission or by mailing the same by prepaid registered post
addressed to the Companies at:
00 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
and shall be conclusively deemed to have been received by the Companies on the
date of personal delivery or delivery by facsimile transmission or on the second
Business Day following the day of such mailing.
10.4 Successors and Assigns
This Debenture and all its provisions shall enure to the benefit of the
Holder, its successors and assigns, and shall be binding on the Companies, their
successors and assigns. The term "successor" shall include, without limiting its
meaning, any company or corporation or from the continuation of the Companies or
either of them under any statute of any jurisdiction. Presentment, notice of
dishonour, protest and notice of protest hereof are waived.
10.5 Acknowledgement
The Companies hereby acknowledge having received a true copy of this
Debenture and a copy of the Financing Statement respecting it, in which the
Companies were named as the debtor, registered under the Personal Property
Security Act of Ontario in respect of the security created hereby.
10.6 No "Deemed Reinvestment"
The parties hereby agree that the Holder shall not be deemed to reinvest
any monthly or other payments received by it hereunder.
10.7 Power of Attorney
The Companies, for valuable consideration, hereby appoint the Holder and
its officers from time to time or any of them to be the attorneys of the
Companies and authorized signing officers of the Companies in the name of and on
behalf of the Companies to execute and do any deeds, transfers, conveyances,
assignments, assurances and things which the Companies ought to execute and do
under the covenants and provisions herein contained and generally to use the
name of the Companies in the exercise of all or any of the powers hereby
conferred on the Holder. This power of attorney and the appointment as an
authorized signing officer for the purposes specified in this section 10.7,
being coupled with an interest, is irrevocable.
10.8 Construction Liens
Provided also that upon the registration of any construction lien against
title to any Premises for an amount in excess of ten thousand ($10,000.00)
dollars which is not discharged within a period of ten (10) days from the
registration thereof, all moneys hereby secured shall, at the option of the
Holder, forthwith become due and payable.
The Holder may at its option, withhold from any advances for which either
Company may have qualified, such holdback as the Holder, in its sole discretion,
considers advisable to protect its position under the provisions of the
Construction Lien Act, R.S.O. 1990, Chapter C.30, so as to secure its priority
over any construction liens, until the Holder is fully satisfied that all
construction lien periods have expired and that there are no preserved or
perfected liens outstanding. Nothing in this clause shall be construed to make
the Holder an "owner" or "payer" as defined under the Construction Lien Act, nor
shall there be, or be deemed to be, any obligation by the Holder to retain any
holdback which may be required by the said legislation. Any holdback which may
be required to be made by the owner or payer shall remain solely the Companies'
obligations. The Companies hereby covenant and agree to comply in all respects
with the provisions of the said Construction Lien Act.
10.9 Effect of Conveyances or Encumbrances
Provided that in the event of a further encumbrance or a sale, conveyance
or transfer of the Premises or any portion thereof, except as permitted herein
or a change in control of either Company or a change in the beneficial ownership
of the Premises or any portion thereof or a lease of the Premises or any portion
thereof out of the ordinary course of business of either Company, all sums
secured hereunder shall, unless the written consent of the Holder has been first
obtained, forthwith become due and payable at the Holder's option. The rights of
the Holder pursuant to this provision shall not be affected or limited in any
way by the acceptance of payments due under this charge from the Companies or
any person claiming through or under them and the rights of the Holder hereunder
shall continue without diminution for any reason whatsoever until such time as
the Holder has consented in writing as required by this provision.
Provided further that no permitted sale or other dealing by the Companies
with the Premises or any part thereof shall in any way change the liability of
the Companies or in any way alter the rights of the Holder as against the
Companies or any other person liable for payment of the moneys hereby secured.
10.10 Expropriation
If the Premises or any part thereof shall be expropriated by any
Governmental Authority, body or corporation clothed with the powers of
expropriation, such that, in the judgement of the Holder, the value of the
remaining land in the operation of the business is adversely affected, the
Principal Amount remaining unpaid shall, at the option of the Holder, forthwith
become due and payable together with interest thereon at the Interest Rate to
the date of payment, and in any event all the proceeds of any expropriation
shall be paid to the Holder at its sole option in priority to the claims of any
other party.
10.11 Purchaser Money Security Interest
The Companies acknowledge that the security interest in any item of
Mortgaged Property and its proceeds shall constitute a Purchase-Money Security
Interest to the extent it secures Obligations incurred by either Company to
enable the Company to acquire rights in such Mortgaged Property. The Holder
hereby reserves title to any item of Mortgaged Property which may be sold by the
Holder to either Company until satisfaction of the Obligations as aforesaid.
IN WITNESS WHEREOF the Companies have caused their respective corporate
seals to be affixed and this Debenture to be signed by their proper officers,
duly authorized in this behalf as of the date set forth above.
D'ANGELO BRANDS, INC.
Per: /s/ Xxxxx X'Xxxxxx
---------------------------------
Xxxxx X'Xxxxxx, President
c/s
I have authority to bind the
Corporation.
D'ANGELO BRANDS LTD.
Per: /s/ Xxxxx X'Xxxxxx
---------------------------------
Xxxxx X'Xxxxxx, President
c/s
I have authority to bind the
Corporation.
SCHEDULE "A"
PERMITTED ENCUMBRANCES
In addition to the encumbrances expressly permitted by section 1.1(2)
hereof, "Permitted Encumbrances" shall include the following mortgages, charges
or security interests:
MORTGAGES - 00 XXXXXXXX XXXX, XXXXXXXX
REGISTRATION DATE AMOUNT SECURED PARTY
2001/10/09 $650,000.00 X. Xxxxxxxx Investments Canada Limited
2001/10/09 $2,520,000.00 Reagens Canada Ltd.
2002/03/13 $116,000.00 X. Xxxxxxxx Investments Canada Limited
2002/04/02 $1,100,000.00 X. Xxxxxxxx Investments Canada Limited
2002/05/02 $2,500,000.00 B. & X. Xxxxxxxxx Investments Limited
Wintraub, Xxxx
Xxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx
Xxxxx, Xxxxx,
Xxxxx, Xxxxxx
Xxxxxxx, Virginia
PPSA REGISTRATIONS - D'ANGELO BRANDS, INC.
FILE NO. SECURED PARTY
To be completed when required discharges have been filed.
PPSA REGISTRATIONS - D'ANGELO BRANDS LTD.
FILE NO. SECURED PARTY
To be completed when required discharges have been filed.
SCHEDULE "B"
LEGAL DESCRIPTION
Parcel 5-1, Section 43M-772; Lot 5, Plan 43M-772, City of Brampton, Regional
Municipality of Peel
SCHEDULE "C"
GOODS AND FIXTURES
