EXHIBIT 10.9
LOAN AGREEMENT
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This Loan Agreement (this "AGREEMENT") dated as of January 26, 2005
among Teckn-O-Laser Company/Compagnie Teckn-O-Laser, a corporation amalgamated
under the laws of Nova Scotia ("BORROWER"), Adsero Corp. ("ADSERO"), YAC Corp.
("YAC"), 3091732 Nova Scotia Company ("CALLCO"), 3091503 Nova Scotia Company
("TAC"), Compagnie Teckn-O-Laser Global/Teckn-O-Laser Global Company ("TOLG")
and TecknoLaser USA Inc. ("TOL USA") (collectively "GUARANTORS") and Barrington
Bank International Limited, a Bahamian banking company ("LENDER").
RECITALS
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A. Lender has agreed to make a loan to Borrower pursuant to the terms
and conditions contained herein.
B. Borrower's obligations under the Loan will be secured by, among
other things, a hypothec (the "BORROWER'S HYPOTHEC") over the universality of
the Borrower's assets and property, immovable, real, personal and movable,
tangible and intangible, present and future (the "COLLATERAL"). This Agreement,
the Borrower's Hypothec, the Guaranty Agreements and any other documents
evidencing or securing the Loan or the Guaranty Agreements or executed in
connection therewith, and any modifications, renewals and extensions thereof,
are referred to herein collectively as the "LOAN DOCUMENTS".
C. A list of certain defined terms used in this Agreement appears on
the attached Schedule II.
Now, therefore, in consideration of the foregoing and the mutual
conditions and agreements contained herein the parties agree as follows:
ARTICLE 1
THE LOAN
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1.1 Disbursements. On the Closing Date (as such term is defined in the
Funding and Pay-Off Agreement), and subject to the terms and conditions of this
Agreement (and in particular of Article 3) and the Funding and Pay-Off
Agreement, Lender shall disburse to Borrower the proceeds of the Loan in the
amount of CDN$2,000,000 (the "LOAN"). All payments to be made by Borrower, any
other Borrower Party or any other Person to Lender in respect of the Loan,
including all principal and interest thereon, shall be made in the lawful
currency of Canada and shall be made by wire transfer in immediately available
funds in the manner set forth in Section 1.5 hereof.
1.2 Loan Term. The Loan shall mature on the day which is five (5) years
and one (1) day following disbursement of the Loan or any earlier date on which
the Loan shall be required to be paid in full, whether by acceleration or
otherwise (the "MATURITY DATE").
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1.3 Interest Rate.
1.3.1 Interest Rate. Borrower shall pay interest on the outstanding
principal balance of the Loan at a fixed rate per annum equal to 12% during the
first 12 months of the term of the Loan and at a fixed rate per annum equal to
20% thereafter (the "INTEREST RATE").
1.3.2 Calculation Method. Interest for the Loan shall be computed on
the basis of a 360-day year and charged for the actual number of days elapsed.
For purposes of disclosure pursuant to the Interest Act (Canada), the annual
rates of interest or fees to which the rates of interest or fees provided in
this Agreement and the other Loan Documents (and stated herein or therein, as
applicable, to be computed on the basis of a 360-day year) are equivalent to the
rates so determined multiplied by the actual number of days in the applicable
calendar year and divided by 360. Borrower hereby acknowledges that Interest on
the Loan is to be calculated by Lender on the basis of a 360-day year and is
fully aware that such calculations result in an accrual and/or payment of
interest in amounts greater than corresponding interest calculations based on a
365-day year.
1.4 Interest Payments. Borrower shall make interest payments quarterly
in arrears (a) commencing on March 31, 2005 and on the last day of each
subsequent fiscal quarter (June 30, September 30, December 31 and March 31)
until the Maturity Date and (b) ending on the Maturity Date, in each case,
computed on the outstanding principal balance of the Loan together with any
unpaid interest at the applicable Interest Rate.
1.5 Method of Payments. Borrower shall make each payment under this
Agreement not later than 11:00 a.m. (Montreal time) on the day when due in
immediately available funds in the lawful currency of Canada by wire transfer to
the Lender at the following account or, upon five (5) days prior written notice
by the Lender to the Borrower, to such other account indicated in such notice:
Correspondent Bank: CIBC TORONTO
CORRESPONDENT BANKING
RELATION & SERVICE
COMMERCE COURT, 10TH FLOOR
TORONTO, ON X0XX 0X0
XXXXXX
Cash a/c #: 724819
Swift Code: XXXXXXXX
Beneficiary Bank: XXX XXXX XX XXXXXXX XXXXXXX, XXXXXXXX,
XXXXXXX
Chips UID: 005584
Swift Code: BBDA BMHM
For Further Credit To: BARRINGTON BANK INTERNATIONAL LIMITED
ACCOUNT NUMBER: 0000000
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1.6 Default and Acceleration. Upon the occurrence of an Event of
Default, (a) the principal sum of the Loan outstanding from time to time, and
(b) interest, default interest, late charges, prepayment charges (including,
without limitation, the Prepayment Fee) and other sums due under this Agreement
and (c) without duplication, any and all amounts due to Lender under the Loan
Documents (the sums referred to in (a), (b) and (c) above, collectively, the
"DEBT") may be declared due and payable at the option of Lender in the manner
provided in Article 8 hereof. Unless payments are made in the amount and as
required hereunder, remittances in payment of all or any part of the Debt shall
not, regardless of any receipt or credit issued therefor, constitute payment
until the required amount is actually received by Lender in funds immediately
available as specified herein and shall be made and accepted subject to the
condition that any check or draft may be handled for collection in accordance
with the practice of the collecting bank or banks. Acceptance by Lender of any
payment in an amount less than the amount then due shall be deemed an acceptance
on account only.
1.7 Default Interest. Borrower hereby agrees that upon the occurrence
of an Event of Default, Lender shall be entitled to receive and Borrower shall
pay interest on the entire unpaid principal sum at a per annum rate equal to the
lesser of (a) (i) during the first 90 days after such Default, the Interest Rate
plus 3%, and (ii) during the period after the first 90 days after such Default,
the Interest Rate plus 6%, and (b) the maximum interest rate which Borrower may
by law pay (the "DEFAULT RATE"). The Default Rate shall be computed from the
occurrence of the Event of Default until the earlier of the date upon which the
Event of Default is cured or the date upon which the Debt is paid in full.
Interest calculated at the Default Rate shall be added to the Debt and shall be
deemed secured by the Loan Documents. This clause, however, shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default.
1.8 Deferred Interest Payments. In the event that Borrower is not
permitted under the terms of the Intercreditor Agreement to make all or part of
any interest payment as and when due in accordance with the terms of this
Agreement, Lender hereby agrees that it shall not declare the Debt to be
immediately due and payable, provided that (i) the Debt, including for greater
certainty any and all interest that is due and that remains unpaid, shall bear
interest at the Default Rate in accordance with Section 1.7 hereof until all
unpaid interest is paid in full, (ii) Borrower shall pay all unpaid interest
(including interest thereon) from time to time as and when such payment shall be
permitted under the terms of the Intercreditor Agreement, and (iii)
notwithstanding the terms of the Intercreditor Agreement, no interest payment
shall remain unpaid for a period of more than 180 days from the initial
scheduled interest payment date. In the event of a default of any of the
foregoing, Lender shall be entitled to declare the Debt immediately due and
payable and shall be permitted to exercise all of its rights and recourses under
this Agreement.
1.9 Savings Clause. It is the intention of Borrower and Lender to
conform strictly to the usury and similar laws relating to interest from time to
time in force (including in particular the Criminal Code (Canada)), and all
agreements between Lender and Borrower, whether now existing or hereafter
arising and whether oral or written, are hereby expressly limited so that in no
contingency or event whatsoever, whether by acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid in the aggregate to Lender
as interest hereunder or under the other Loan Documents result in a receipt by
the Lender of interest at a criminal rate (as such term is construed under the
Criminal Code (Canada)), or otherwise exceed the maximum permissible under
applicable usury or such other laws (the "MAXIMUM AMOUNT"). If from any possible
construction of any document, interest would otherwise be payable
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hereunder or under the other Loan Documents in excess of the Maximum Amount, or
in the event for any reason whatsoever any payment by or act of Borrower
pursuant to the terms or requirements hereof or the other Loan Documents shall
result in the payment of interest which would exceed the Maximum Amount, then
any such construction shall be subject to the provisions of this Section, and
ipso facto such document shall be automatically reformed, without the necessity
of the execution of any amendment or new document, so that the obligation of
Borrower to pay interest or perform such act or requirement shall be reduced to
the limit authorized under the applicable laws, and in no event shall Borrower
be obligated to pay any interest, perform any act, or be bound by any
requirement which would result in the payment of interest in excess of the
Maximum Amount. Any amount received by Lender in excess of the Maximum Amount
shall, without further agreement or notice between or by any party hereto, be
deemed applied to reduce the principal sum hereof immediately upon receipt of
such moneys by Lender, with the same force and effect as though Borrower has
specifically designated such sums to be applied to principal prepayment. The
provisions of this Article shall supersede any inconsistent provision of this
Agreement or any other Loan Document.
1.10 Late Charge. If any sum payable under this Agreement or the Loan
Documents is not paid prior to the 5th Business Day after the date on which it
is due (except for any failure to pay the amounts due under this Agreement at
maturity), Borrower shall pay to Lender upon demand an amount equal to the
lesser of 5% of such unpaid sum or the maximum amount permitted by applicable
law to defray the expenses incurred by Lender in handling and processing the
delinquent payment and to compensate Lender for the loss of the use of the
delinquent payment. The amount thereof shall be secured by the Loan Documents.
1.11 Waivers. Borrower hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest and non-payment and
all other notices of any kind. No release of any security for the Debt or
extension of time for payment of the Loan or any installment hereof, and no
alteration, amendment or waiver of any provision of this Agreement or any of the
other Loan Documents made by agreement between Lender or any other person or
party shall release, modify, amend, waive, extend, change, discharge, terminate
or affect the liability of Borrower, and any other person or entity who may
become liable for the payment of all or any part of the Debt, under this
Agreement or any of the other Loan Documents. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Agreement or the other Loan Documents.
1.12 Prepayments of Loan. The Loan may be prepaid by Borrower in whole
or in part, for any reason, at any time following the Closing Date upon not less
than 30 and not more than 60 days prior written notice to Lender specifying the
date on which the prepayment is to be made (the "PREPAYMENT DATE"). All
prepayments of the Loan, whether pursuant to this Section 1.12, upon the
occurrence of an Event of Default, or otherwise, shall include full payment of
the Prepayment Amount. "PREPAYMENT AMOUNT" shall mean: (1) an amount equal to
the principal amount of the Loan being prepaid by Borrower (the "PRINCIPAL
REPAYMENT"); plus (2) all accrued and unpaid interest and all other sums due
under the Loan Agreement and other Loan Documents relating to the Principal
Repayment; plus (3) the Prepayment Fee, plus (4) all other charges payable in
connection with a prepayment of the Loan. The "PREPAYMENT FEE" shall mean an
amount equal to (1) if the Prepayment Date occurs prior to the one (1) year
anniversary of the Loan, the amount that would have been paid to Lender in
Interest on account of the Principal Repayment from the Prepayment Date to the
one (1) year anniversary of the Loan, (2) if the Prepayment Date occurs
thereafter, that there shall be no Prepayment Fee for any prepayment of the
Loan.
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Lender shall not be obligated to accept prepayment of the principal
balance of the Loan unless it is accompanied by the sums referenced in clauses
(1) through (4) inclusive. BORROWER ACKNOWLEDGES AND AGREES THAT THE PREPAYMENT
FEE REPRESENTS A REASONABLE AND FAIR ESTIMATE OF COMPENSATION FOR THE LOSS THAT
LENDER MAY SUSTAIN FROM THE PREPAYMENT OF THE LOAN.
1.13 Conversion Right. At any time and from time to time after the six
month anniversary of the date hereof, Lender shall have the right to convert the
remaining principal balance plus accrued and unpaid interest thereon of the Loan
into common shares of Adsero, at a conversion price of US$1.00 per share. Adsero
shall, at all times while any principal amount of the Loan remains outstanding,
and from time to time as may be necessary, reserve out of its authorized but
unissued share capital a sufficient number of common shares to permit the
conversion of the full principal amount of the Loan into common shares of
Adsero. Adsero covenants that all securities, including the common shares to be
issued upon exercise of the conversion right will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from
pre-emptive rights, adverse claims and all taxes, Liens (save and except for any
restrictions as may be imposed by securities regulatory authorities) and charges
caused or created by Adsero with respect to the issuance thereof. Adsero will
use its best efforts to cause prompt compliance with all applicable securities
laws regulating the offer and delivery of common shares upon conversion of any
part of the principal amount of the Loan, if any. The common shares to be issued
and delivered upon exercise of the conversion right shall be validly created,
authorized and issued as fully paid and non-assessable securities in the capital
of Adsero. All necessary corporate action has been taken by Adsero to allot and
authorize the issuance of the common shares to be issued in connection with the
conversion right.
ARTICLE 2
SECURITY
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2.1 Security. As general and continuing collateral security for the
performance by the Borrower of its present and future obligations under this
Agreement and the Loan Documents to which the Borrower is a party including,
without limitation, the obligation of the Borrower to repay all amounts in
principal, interest, fees and accessories and interest on arrears of interest,
upon the terms provided for hereunder, the Borrower shall have provided and
delivered to the Lender, in form and substance satisfactory to the Lender, an
executed copy of the Borrower's Hypothec, an executed copy of a general security
agreement under the laws of the Province of Nova Scotia and such additional
Security as the Lender may reasonably require over the assets of the Borrower.
Borrower undertakes and covenants to execute such further instruments and
documents and to do all such things as the Lender shall require to ensure that
the Security Documents secure said obligations.
2.2 Guaranty Agreements. Borrower shall cause each of the Guarantors so
requested by Lender, to (a) guaranty in favour of the Lender the prompt and
complete payment and performance of all obligations of Borrower under the Loan
and the Loan Documents by executing guaranty agreements ("GUARANTEE
AGREEMENTS"), and (b) provide in favour of the Lender a hypothec and/or general
security agreement and/or any other instrument, document or agreement which the
Lender may reasonably require over a universality of such Guarantors' assets and
property, immovable, real, personal and movable, tangible and intangible,
present and future, in each case in form and substance satisfactory to the
Lender.
2.3 Registration and Validity. Borrower acknowledges and agrees that
the Lender may register, file or record the Security Documents and may renew
same from time to
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time, in each case at the expense of Borrower, in all jurisdictions and offices
where such registration, filing or recording is necessary or of advantage, in
the Lender's sole discretion, to the creation, perfection and preserving of the
hypothecs, security interests or guarantees arising pursuant to such Security
Documents. Borrower acknowledges and agrees that each Security Document shall
remain valid and in force at all times.
2.4 Subordination. Borrower acknowledges and agrees that the Security
contemplated in Sections 2.1 and 2.2 hereof shall at all times be first-ranking
security, subject only to the Senior Loan, pursuant to the Intercreditor
Agreement.
ARTICLE 3
CONDITIONS PRECEDENT
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Lender's obligation to disburse the Loan is subject to satisfaction, on
or prior to January 28, 2005, of all of the following conditions.
3.1 Senior Loan. There shall be no change to the terms of, or any
default under, the Senior Loan. Borrower shall have obtained, and shall have
delivered copies thereof, of waivers and/or consents from Senior Lender for all
past or existing breaches of covenants under the Senior Loan Documents.
3.2 Loan Documents. Lender shall have received the Loan Documents and
the Security Documents, duly executed by the Borrower Parties party thereto all
in form and substance satisfactory to Lender.
3.3 Shares. Lender shall have received 200,000 validly issued,
non-assessable and fully paid common shares in the share capital of Adsero,
which shares will be included in a registration statement filed under the U.S.
Securities Act of 1933, as amended, within 90 days following the date hereof.
3.4 Legal Opinion. Lender shall receive a legal (corporate,
enforceability and perfection of all Loan Documents) opinion from Borrower's and
Guarantors' counsel in form and substance reasonably satisfactory to Lender,
together with search reports for registered Liens.
3.5 Corporate Documents. Lender shall have received the following
documents, all in form and substance satisfactory to Lender:
(a) certified copies of the organizational documents of
Borrower and each Guarantor;
(b) certificates of good standing in respect of Borrower and
each Guarantor, in all relevant jurisdictions;
(c) certified copies of resolutions authorizing the
transactions contemplated in this Agreement and the other Loan Documents and of
the documents attesting to the authenticity of the signatures of the persons
acting on behalf of Borrower and each Guarantor;
(d) a certificate evidencing the insurance coverage required
to be maintained by Borrower pursuant to this Agreement; and
(e) an Intercreditor Agreement, duly executed by the Senior
Lender.
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3.6 Funding and Pay-Off Agreement. The conditions to the disbursement
of the Loan set forth in the Funding and Pay-Off Agreement shall have been
satisfied.
3.7 Equity Financing. Adsero shall have completed, on or prior to the
date hereof, a financing by way of the issuance of shares (the "EQUITY
FINANCING") in an amount not less than $750,000, the proceeds of which Equity
Financing are to be used solely for the purposes set forth in the Funding and
Pay-Off Agreement dated as of the date hereof by and among certain of the
parties hereto and Caisse de depot et placement du Quebec ("CDP").
3.8 Additional Items. Lender shall have received such other items as
Lender may reasonably require.
ARTICLE 4
TAXES
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4.1 Taxes.
(a) Any and all payments by or on behalf of Borrower hereunder
or under any other Loan Document shall be made, in accordance with this Section
4.1, free and clear of and without deduction for any and all present or future
Taxes (excluding Taxes imposed on or measured by the net income or capital of
Lender by the jurisdiction under the laws of which it is organized or is
resident or carries on business through a permanent establishment located
therein or any political subdivisions thereof). If Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
any other Loan Document (excluding Taxes imposed on or measured by the net
income or capital of Lender by the jurisdiction under the laws of which it is
organized or is resident or carries on business through a permanent
establishment located therein or any political subdivisions thereof), (i) the
sum payable shall be increased as much as shall be necessary so that, after
making all required withholdings and deductions (including withholdings and
deductions applicable to additional sums payable under this Section 4.1), Lender
receives an amount equal to the sum it would have received had no such
withholdings or deductions been made, (ii) Borrower shall make such withholdings
and deductions, and (iii) Borrower shall pay the full amount withheld or
deducted to the relevant taxing or other authority in accordance with applicable
law. Within thirty (30) days after the date of any payment of Taxes, Borrower
shall furnish to Lender the original or a certified copy of a receipt evidencing
payment thereof.
(b) In addition, Borrower agrees to pay any present or future
Taxes that arise from any payment made under this Agreement or under any other
Loan Document or from the execution, sale, transfer, delivery or registration
of, or otherwise with respect to, this Agreement, the other Loan Documents and
any other agreements and instruments contemplated hereby or thereby (except for
Taxes imposed on or measured by the net income or capital of Lender by the
jurisdiction under the laws of which it is organized or is resident or carries
on business through a permanent establishment located therein or any political
subdivisions thereof). Lender agrees that, as promptly as reasonably practicable
after it becomes aware of any circumstances referred to above which would result
in additional payments under this Section 4.1, it shall notify Borrower thereof.
(c) Borrower hereby indemnifies Lender for the full amount of
Taxes (excluding Taxes imposed on or measured by the net income or capital of
the Lender by the jurisdiction under the laws of which it is organized or is
resident or carries on business through a permanent establishment located
therein or any political subdivisions thereof but including any
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Taxes imposed by any jurisdiction on amounts payable by Borrower under this
Section 4.1) paid by Lender, as appropriate, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted. Each payment under
this indemnification shall be made within ten (10) days after Lender makes
written demand therefor.
4.2 Capital Adequacy; Increased Costs; Illegality.
(a) If Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by Lender with any request or directive regarding capital adequacy,
reserve requirements or similar requirements (whether or not having the force of
law), in each case, adopted after the Closing Date, from any central bank or
other Governmental Authority increases or would have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by
Lender and thereby reducing the rate of return on Lender's capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by the Lender pay to Lender, additional amounts sufficient to
compensate Lender for such reduction; provided, however, that Borrower shall
only be liable to so compensate Lender during the period commencing the later of
ninety (90) days prior to the date Borrower was notified by Lender of the need
for such compensation, and (y) the date the need for such compensation actually
arose, and continuing for so long thereafter as Lender requires such
compensation. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by Lender to Borrower shall be
presumptive evidence of the matters set forth therein.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to
Lender of agreeing to make or making, funding or maintaining the Loan, then
Borrower shall from time to time, upon demand by Lender, pay to Lender
additional amounts sufficient to compensate Lender for such increased cost;
provided, however, that Borrower shall only be liable to so compensate Lender
during the period commencing the later of ninety (90) days prior to the date
Borrower was notified by Lender of the need for such compensation, and (y) the
date the need for such compensation actually arose, and continuing for so long
thereafter as Lender requires such compensation. A certificate as to the amount
of such increased cost, submitted to Borrower by Lender, shall be presumptive
evidence of the matters set forth therein. Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, Lender shall, to the extent not
inconsistent with Lender's internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrower pursuant to this Section 4.2.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
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As an inducement to Lender to disburse the Loan, Borrower and
Guarantors hereby represent and warrant, on a solidary (joint and several)
basis, as follows, which representations and warranties shall be true as of the
Closing Date and shall remain true throughout the term of the Loan:
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5.1 Borrower's Existence. Borrower is a corporation duly incorporated
under the laws of the Province of Nova Scotia. Borrower is duly organized,
validly existing and in good standing under the laws of the Province of Nova
Scotia and the federal laws of Canada applicable therein, and is in good
standing and is authorized to do business in each province, state or other
jurisdiction where it carries on business including, without limitation, the
Province of Quebec. The Loan Documents have each been duly authorized, executed
and delivered by Borrower and each constitutes the duly authorized, valid and
legally binding obligation of Borrower enforceable against Borrower in
accordance with their respective terms, except to the extent that enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting creditor's rights generally and by equity principals
(regardless of whether enforcement is sought in equity or law).
5.2 Borrower's Structure and Ownership. Exhibit B is a true and correct
structure chart depicting the ownership (direct and indirect) of Borrower and
Guarantors. Each of the Persons identified on Exhibit B own, or will own after
consummation of the transactions described in the Funding and Pay-Off Agreement,
their respective shares and other interests in Borrower and Guarantors (other
than Adsero) (direct and indirect) free and clear of all Liens (save and except
for a Lock-Up Agreement dated January 2, 2005, between 0000-0000 Xxxxxx Inc.,
0000-0000 Xxxxxx Inc., TAC, Adsero, YAC and Callco, and other restrictions which
may be imposed by applicable securities regulatory authorities), claims and
encumbrances. As of the Closing Date, neither Borrower nor any of the Guarantors
have any subsidiaries, are engaged in any joint venture or partnership with any
other Person, and other than as set for in Exhibit C are an Affiliate of any
other Person. There are no outstanding rights to purchase, options, warrants or
similar rights or agreements pursuant to which Borrower or Guarantors may be
required to issue, sell, repurchase or redeem any shares of Borrower or
Guarantors.
5.3 Organizational Documents. A true and complete copy of the
certificate of incorporation, articles and by-laws of Borrower and each of the
Guarantors (collectively, the "ORGANIZATIONAL AGREEMENTS") have been furnished
to Lender. No breach exists under the Organizational Agreements and no condition
exists which, with the giving of notice or the passage of time, would constitute
a breach under the Organizational Agreements.
5.4 Other Agreements. Borrower is not in default under any contract,
agreement or commitment to which it is a party including, without limitation,
under any of the Senior Loan Documents and, specifically, the financial ratio
covenants set forth therein. The execution, delivery and compliance with the
terms and provisions of this Agreement and the Loan Documents will not (a)
violate any provisions of law or any applicable regulation, order or other
decree of any Governmental Authority, or (b) conflict or be inconsistent with,
or result in any default under, any contract, agreement or commitment to which
Borrower is bound. Borrower has delivered to Lender copies of any material
agreements to which it is a party. There are no outstanding options to purchase,
rights of first offer or refusal or other rights to acquire ownership of all or
any portion of the Collateral.
5.5 Borrower's Taxes. All federal, provincial and other material tax
returns, reports and statements, including information returns, required by any
Governmental Authority to be filed by Borrower has been filed with the
appropriate Governmental Authority, and all Charges have been paid prior to the
date on which any fine, penalty, interest or late charge may be added thereto
for nonpayment thereof. Proper and accurate amounts have been withheld by
Borrower from its respective employees for all periods in full and complete
compliance with all applicable federal, provincial, local and foreign laws and
such withholdings have been timely paid to the respective Governmental
Authorities. Exhibit C sets forth as of the Closing Date (i)
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those taxation years that have not yet been assessed by the Canada Revenue
Agency or the applicable provincial, local or foreign Governmental Authorities,
(ii) the taxation years that are currently being audited by the Canada Revenue
Agency or any other applicable Governmental Authority and (iii) any assessments
or threatened assessments in connection with such audit, or otherwise currently
outstanding and (iv) the most recent taxation year that an audit by Canada
Revenue Agency or the applicable provincial, local or foreign Governmental
Authorities has been completed. Except as described in Exhibit C, as of the
Closing Date, Borrower has not executed or filed with the Canada Revenue Agency
or any other Governmental Authority any agreement or other document extending,
or having the effect of extending, the period for assessment or collection of
any Charges. Borrower and their respective predecessors are not liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to Borrower's and Guarantors' knowledge, as a transferee.
5.6 Litigation. Except as set forth in Exhibit D and in Adsero's
periodic filings with the Securities and Exchange Commission including and after
Adsero's last Form 10-KSB, there is no litigation, arbitration or other
proceeding or governmental investigation pending or, to the best of Borrower's
and Guarantors' knowledge, threatened against or relating to Borrower,
Guarantors or any of their respective property, assets, or business. No such
litigation, arbitration or other proceeding or governmental investigation could
reasonably be expected to cause a Material Adverse Change.
5.7 Senior Loan Documents. Borrower and Guarantors have furnished
Lender with a true and complete copy of all documents relating to the Senior
Loan.
5.8 Accuracy. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement furnished to Lender by
Borrower or Guarantors contains any untrue statement of a material fact or omits
to state a material fact which could reasonably be expected to affect Lender's
decision to make the Loan.
5.9 Solvency. Neither Borrower nor any Guarantor are insolvent and
there has been no: (a) assignment made for the benefit of the creditors of any
of them; (b) appointment of a receiver for any of them or for the property of
any of them; or (c) bankruptcy, reorganization, or liquidation proceeding
instituted by or against any of them.
5.10 Financial Condition/No Change. Borrower and Guarantors have
heretofore delivered to Lender copies of the most current audited annual
financial statements of Borrower and Guarantors. Said financial statements were
prepared on a basis consistent with that of preceding years, and all of such
financial statements present fairly the financial condition of Borrower and
Guarantors as of the dates in question and the results of operations for the
periods indicated. Since the dates of such statements, there has been no
Material Adverse Change in the business, operations, credit, prospects or
financial condition of Borrower or Guarantors. Neither Borrower nor Guarantors
have any material contingent liabilities not provided for or disclosed in said
financial statements.
5.11 No Broker. No brokerage commission or finder's fee is owing to any
broker or finder arising out of any actions or activity of Borrower in
connection with the Loan.
5.12 Environmental. The business carried on and the property owned or
used at any time by Borrower have at all times been carried on, owned or used in
compliance with all Environmental Laws. Borrower is not subject to any
proceedings alleging the violation of any Environmental Law, and no part of its
business or property is the subject of any proceeding to
10
evaluate whethe remedial action is needed as a result of the release from or
presence of any hazardous substance on any lands owned or occupied by it, and
there are no circumstances that could reasonably be expected to give rise to any
such proceedings or to any liability related to any such release or presence on
any lands used in or related to the business or property of Borrower or on any
lands on which Borrower has disposed or arranged for the disposal of any
materials arising from the business carried on by it, or regarding the violation
of any Environmental Law by Borrower or by any other person for which it is
responsible. All hazardous substances disposed of, treated or stored on lands
owned or occupied by Borrower have been disposed of, treated and stored in
compliance with all Environmental Laws. There are no proceedings and, to the
knowledge of Borrower or Guarantors, there are no circumstances or material
facts which could give rise to any proceeding in which it is or could be alleged
that any of the Borrower Parties are responsible for any domestic or foreign
clean up or remediation of lands contaminated by hazardous substances or for any
other remedial or corrective action under any Environmental Laws.
5.13 Property and Assets. The real or immoveable property ("REAL
ESTATE") listed in Exhibit F constitutes all of the real or immoveable property
currently owned, leased, subleased, or used by Borrower and Guarantors. Borrower
and each Guarantor, as the case may be, owns good and marketable title to all of
its owned Real Estate, and has valid and marketable leasehold interests in all
of its leased Real Estate, all as described on Exhibit F, and copies of all such
leases or a summary of terms thereof reasonably satisfactory to Lender have been
delivered to Lender. Borrower and each Guarantor, as the case may be, has good
and marketable title to, or valid leasehold interests in, all of its movable and
personal property and assets. As of the date hereof, save as set forth in
Exhibit F annexed hereto, none of the properties and assets of Borrower or any
Guarantor are subject to any Liens, title defects or restrictions other than
Permitted Liens and there are no facts, circumstances or conditions known to
Borrower or any Guarantor that may result in any Liens (including Liens arising
under Environmental Laws), title defects or restrictions other than Permitted
Liens on any such properties or assets. No portion of the Real Estate has
suffered any material damage by fire or other casualty loss that has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied.
5.14 Employees. As of the Closing Date: (a) no strikes or other
material labour disputes against Borrower are pending or, to Borrower's or any
Guarantor's knowledge, threatened; (b) hours worked by and payment made to
employees of Borrower comply with each federal, provincial, local or foreign law
applicable to such matters; (c) Borrower has withheld all employee withholdings
and has made all employer contributions to be withheld and made by it pursuant
to applicable law on account of the Canada and Quebec pension plans, employment
insurance and employee income taxes; (d) except as has been delivered to Lender
and is listed on Exhibit E, Borrower is not party to or bound by any collective
bargaining agreement, restricted stock, stock option, or stock appreciation plan
or agreement or any similar plan, agreement or arrangement; (e) there is no
organizing activity involving Borrower or, to Borrower's or any Guarantor's
knowledge, threatened by any labour union or group of employees; (f) there are
no certification applications or representative proceedings pending or, to
Borrower's or any Guarantor's knowledge, threatened with any labour relations
board, and no labour organization or group of employees of Borrower has made a
pending demand for certificate; and (g) there are no material complaints or
charges against Borrower pending or, to the knowledge of Borrower or any
Guarantor, threatened to be filed with any Governmental Authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by Borrower of any individual.
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5.15 Intellectual Property. Borrower and each Guarantor owns, or is
licensed to use, all proprietary rights provided in law to all patents,
trademarks, service marks, trade names, copyrights, industrial designs,
software, firmware, trade secrets, know-how, show-how, concepts, information and
other intellectual and industrial property (collectively, "INTELLECTUAL
PROPERTY") necessary to permit them to conduct their business, except where the
failure to do so would not result in a Material Adverse Change. To the knowledge
of Borrower or any Guarantor, neither Borrower nor any Guarantor has interfered
with or infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of third parties and neither Borrower nor any
Guarantor has received any complaint, claim, demand or notice alleging any such
interference, misappropriation or violation.
5.16 True and Complete Disclosure. The information, reports, financial
statements and documents furnished or to be furnished by or on behalf of
Borrower or any Guarantor to Lender in connection with the negotiation,
preparation, execution, delivery or performance of the Loan Documents, do not
and will not contain any untrue statement of material fact or omit to state any
material fact necessary to make the statements therein, not misleading. Neither
Borrower nor any Guarantor has any material information or knowledge of any
facts relating to it or their respective business which, if known to the Lender,
might reasonably be expected to deter Lender from entering into this Agreement
and making the Loan on the terms and conditions contemplated therein.
ARTICLE 6
AFFIRMATIVE COVENANTS
---------------------
6.1 Conduct of Business. Borrower shall carry on and conduct its
business in a proper, efficient and businesslike manner, in accordance with good
business practice; take all reasonable action to obtain and maintain in full
force and effect all rights, privileges, franchises, permits, licenses and
governmental or regulatory approvals necessary or desirable in the conduct of
its business, the absence of which could constitute a Material Adverse Change.
6.2 Performance of Obligations. Borrower shall promptly pay when due
all Debt and shall promptly perform all other obligations of Borrower to Lender
under the Loan Documents (collectively with the Debt, the "Obligations").
6.3 Taxes and Other Obligations. Borrower shall pay, when due, and
before any interest, collection fees or penalties shall accrue, all taxes,
assessments, fines, impositions and other charges and obligations, which may
become a lien on or charge against the Collateral (collectively, "IMPOSITIONS");
provided, however, that Borrower shall have the right to contest, in good faith
by appropriate proceedings, the amount or validity of any such Impositions, so
long as: (a) Borrower has given prior written notice to Lender of Borrower's
intent to so contest or object to any such Impositions; (b) such contest stays
the enforcement or collection of the Impositions or any lien created; and (c)
Borrower has posted any security required therefor. Upon the request of Lender,
Borrower shall immediately furnish to Lender all notices of amounts due and
receipts evidencing payment. Borrower shall promptly notify Lender of any lien
on all or any part of the Collateral and shall promptly discharge any
unpermitted Lien or encumbrance.
6.4 Insurance. Borrower shall keep all of its assets and property
insured and shall maintain commercial general liability coverage, and such other
coverages required by the Senior Loan Documents (including, but not limited to,
earthquake coverage and insurance against flood), by insurers, in amounts and in
the form specified in the Senior Loan Documents, copies of which have been
furnished to Lender. Copies of all insurance policies in respect of the
Collateral
12
have been delivered to Lender, and Borrower shall deliver to Lender any
amendments, renewals, or modifications to the insurance policies within 15 days
of any such amendments, renewals, or modifications. At the request of the Lender
at any time during the term of the Loan, Lender shall be named as an additional
insured and as a loss payee under Borrower's casualty insurance policy, subject
to the rights of the Senior Lender. In case of loss or damage by fire or other
casualty, Borrower shall give prompt written notice thereof to the insurers and
to Lender and, casualty insurance proceeds that are not applied to reduce the
Senior Loan or restore the assets in accordance with the Senior Loan Documents
shall be applied to reduce the Loan or restore the assets as determined by
Lender.
6.5 Preservation and Maintenance of Assets. Borrower shall: (a) not
commit waste or permit impairment or deterioration of its assets; (b) not
abandon its assets; (c) keep its assets in good repair and restore or repair
promptly, in a good and workmanlike manner, all or any part of its assets to the
equivalent of its current condition; and (d) give notice in writing to Lender of
and, unless otherwise directed in writing by Lender, appear in and defend any
action or proceeding purporting to affect its assets, the security or right of
Lender granted by the Loan Documents or the rights or powers of Lender. Borrower
shall not remove, demolish or alter its assets, except to the extent that such
action could not reasonably be expected to cause a Material Adverse Change.
6.6 Inspection. Borrower will furnish the Lender all information,
documents and records and allow any enquiry, study, audit or inspection that the
Lender may reasonably request in connection with the business, financial
condition, property, assets or prospects of any of the Borrower Parties, or to
verify compliance with the obligations of any of the Borrower Parties under any
Loan Document.
6.7 Books and Records. Borrower shall keep and maintain at all times at
its address stated below, or such other place as Lender may approve in writing,
complete and accurate books of accounts and records adequate to reflect the
results of its operations and business and to provide the financial statements
required to be provided to Lender pursuant to Section 6.8 below and upon request
copies of all written contracts, correspondence, reports of Senior Lender's
independent consultant and other documents affecting its assets. Lender and its
designated agents shall have the right to inspect and copy any of the foregoing.
6.8 Financial Statements; Balance Sheets.
6.8.1 Annual Reports. Borrower and Guarantors will deliver to the
Lender the following, as soon as available and, in any event, no later than the
earlier of (i) the delivery of the following to Senior Lender or (ii) the date
that is 5 days after the filing of the following (or date required for filing)
by Adsero:
(a) audited annual financial statements of Adsero, on a
consolidated basis (if applicable), audited by a major U.S. accounting firm
acceptable to the Lender; and
(b) such other financial statements, reports and projections
as are delivered to Senior Lender on an annual basis (no later than the delivery
thereof to Senior Lender).
6.8.2 Quarterly Reports. (a) Borrower and Adsero will deliver to the
Lender, as soon as possible and, in any event no later than the periodic filings
made (or required of) by Adsero (excluding for the fourth quarter), the
unaudited financial statements of Borrower and
13
Adsero for the relevant fiscal quarter, on a consolidated basis (if applicable),
together with a comparison to budget and to the corresponding quarter of the
previous fiscal year and (b) such other financial statements, reports and
projections as are delivered to Senior Lender on an annual basis (no later than
the delivery thereof to Senior Lender).
6.8.3 Monthly and Annual Operating Statements. Borrower and Adsero will
deliver to the Lender, as soon as possible and, in any event within ten (10)
Business Days after the end of each month, a monthly financial statement package
containing the same information and statements as required under the Senior Loan
Documents, including a report as to the Borrower's compliance with all of its
financial ratio covenants pursuant to the Senior Loan.
Lender agrees to maintain all of the above information as
confidential and not to trade shares of Adsero upon acquiring such information
in accordance with U.S. Federal Disclosure regulations.
6.8.4 Periodic Reporting. Borrower and Guarantors will promptly deliver
to the Lender any auditor letter highlighting issues or deficiencies that, if
not addressed or corrected, could result in a Material Adverse Change. Borrower
and Guarantors will also furnish the Lender all securities filings by Adsero
within 5 Business Days of the filing thereof with the Securities and Exchange
Commission, and all other information, documents and records and allow any
enquiry, study, audit or inspection that the Lender may, with a three (3) day
prior written notice, reasonably request in connection with the business,
financial condition, property, assets or prospects of any of the Borrower
Parties, or to verify compliance with the obligations of any of the Borrower
Parties under any Loan Document.
6.8.5 Late Penalty. If Borrower shall be in default of any of its
obligations to deliver any report, statement, or other delivery in this Section
6.8 within 15 days of the required delivery date, Borrower shall pay Lender a
penalty of CDN$100 per day, together with Interest thereon at the Interest Rate,
for each day that the required deliveries remain outstanding.
6.9 Use of Proceeds. The proceeds of the Loan shall be used by the
Borrower Parties as set forth in the Funding and Pay-Off Agreement. The Borrower
Parties hereby acknowledge and accept the directions and flow of funds set forth
in the Funding and Pay-Off Agreement.
6.10 Notice of Litigation, Default or Equity Contribution. Borrower
shall promptly provide Lender with:
(a) written notice of any litigation, arbitration, or other
proceeding or governmental investigation pending or, to Borrower's or
Guarantors' knowledge, threatened against or relating to Borrower or Guarantors
where the amount in question exceeds CDN$25,000;
(b) a copy of all notices of default and violations of laws,
regulations, codes, ordinances and the like received by Borrower or Guarantors;
(c) written notice of any default under the Senior Loan
Documents within (i) 2 Business Days of Borrower's receipt of such written
notice of default from the Senior Lender if such default (if uncured or
unwaived, and assuming all notice requirements were satisfied) would entitle
Senior Lender to accelerate obligations under the Senior Loan of at least
14
$500,000 or (ii) in all other cases, within 5 Business Days of Borrower's
receipt of such written notice from the Senior Lender, in each case, together
with a copy of such notice; and
(d) prior written notice of any capital or other equity
contributions to Borrower.
6.11 Affiliate Transactions. Borrower shall not enter into any
agreement with an Affiliate of Borrower unless such agreement is on market terms
and conditions, Borrower shall deliver to Lender a copy of all such agreements.
Such agreements shall provide Lender the right to terminate same upon exercise
of Lender's (or its designee's) security or rights under any of the Loan
Documents.
6.12 Senior Loan. Borrower shall fully and timely comply with all of
the terms and provisions in the Senior Loan Documents.
6.13 Notices under Senior Loan. Borrower shall promptly, and in no case
later than 5 Business Days following receipt thereof, send to Lender copies of
all notices and correspondence whatsoever received by Borrower under the Senior
Loan Documents.
ARTICLE 7
NEGATIVE COVENANTS
------------------
7.1 Major Decisions. Borrower shall not, without first obtaining
Lender's written consent, take any action in furtherance of a Major Decision. As
used herein, a "MAJOR DECISION" shall mean any of the following:
(a) the voluntary Dissolution and winding up of Borrower;
(b) (i) instituting, prosecuting, defending or settling any
material (i.e., CDN$50,000 or more) legal, arbitration, or administrative
actions or proceedings on behalf of Borrower or (ii) taking any action in order
to enforce Borrower remedies as borrower under the Senior Loan (including,
without limitation, delivering any material notice to Senior Lender, filing any
pleading, motion or brief in defense of any enforcement or foreclosure
proceeding brought under the Senior Loan, settling, compromising, reinstating or
restructuring the Senior Loan or entering into any binding agreement therefor or
exercising any rights or remedies, or amending or otherwise modifying the Senior
Loan or any of the Senior Loan Documents);
(c) Subject to Section 7.6, replacing, renewing, extending,
substituting, adding to, supplementing, amending in any respect, modifying in
any respect, increasing, restructuring or refinancing the Senior Loan and all of
the terms and conditions thereof, provided that the written consent of the
Lender shall not be required if the Lender shall be fully repaid all amounts
owing to it under the Loan Documents pursuant to such replacement, renewal,
extension, substitution, addition, supplement, amendment, modification,
increase, restructuring or refinancing;
(d) admitting or permitting or causing Borrower to admit new
or substitute shareholders or causing Borrower to redeem or repurchase any
shares of its capital stock;
(e) causing or consenting to the taking of any Bankruptcy
Action in respect of Borrower;
15
(f) taking or permitting or causing Borrower to take any
action which would cause Borrower to become an entity other than an unlimited
liability company under the laws of the Province of Nova Scotia;
(g) taking or permitting or causing Borrower to take any
action that would constitute a default under the Senior Loan Documents;
(h) modifying or amending any Organizational Agreement;
(i) executing any document that permits a confession of
judgment against Borrower or granting or permitting a confession of judgment
against Borrower in any lawsuit or proceeding or settling any lawsuit or
proceeding which settlement requires a payment by Borrower in excess of
CDN$50,000 or requires an admission of liability on the part of Borrower.
(j) Borrower may request Lender's consent concerning any of
the items listed above in this Section 7.1 by written notice to Lender
describing in reasonable detail the item concerning which such consent is
requested. Lender shall utilize its best efforts to respond to such request
within 10 Business Days following the date of its receipt of Borrower's request
for such consent.
7.2 No Transfers. Notwithstanding any provision of this Agreement to
the contrary, there shall be no Transfer permitted, without the prior written
consent of the Lender, not to be unreasonably withheld. The Lender may, without
limitation, withhold its consent if, as a result of such Transfer, (i) the
Security provided to the Lender or the perfection or the ranking thereof is
affected, (ii) there could be adverse consequence to the Lender as a result of
such Transfer, including, without limitation, the imposition of any tax
liability upon the Lender, (iii) the Lender shall not have received such legal
opinions and such other documents from Borrower's counsel as it reasonably
requires in connection with such Transfer including as to the matters set forth
in clauses (i) and (ii) of this Section 7.2, or (iv) such Transfer would result
in a default under any security agreement and/or pledge agreement constituting a
Loan Document or an Event of Default is then continuing thereunder or would be
created thereby. In connection with clause (iv) of this Section 7.2 the terms of
the security agreement and/or pledge agreement shall govern any inconsistencies
with this Loan Agreement.
7.3 No Additional Liens, Encumbrances or Debt. Borrower and Guarantors
covenant not to grant or permit the filing of any lien or encumbrance on any of
their assets or properties or the shares of Borrower, other than those created
by the Senior Loan Documents and the Loan Documents, and Borrower and Guarantors
covenant not to encumber or pledge, and not to grant or permit the making of any
Lien or encumbrance on any of their assets or properties or the Collateral;
provided, however, that Borrower may, by appropriate proceedings, contest the
validity or amount of any asserted lien and, pending such contest, Borrower
shall not be deemed to be in default hereunder if (a) Borrower has given prior
written notice to Lender of Borrower's intent to so contest, (b) such contest
stays the enforcement of the contested lien, and (c) Borrower has posted
security therefor in a manner acceptable to Lender. Borrower and Guarantors will
not provide material financial assistance (whether by way of loan, guarantee,
contingent obligation or otherwise) to any Person.
7.4 No Additional Debt. Except as expressly permitted under this
Agreement, Borrower shall not, without Lender's prior written consent which may
be withheld in its entire and unfettered discretion, incur additional
indebtedness at any one time outstanding, except for
16
trade payables incurred in the ordinary course of business that are outstanding
for not more than 60 days and except debt which is entirely subordinated to the
Loan pursuant to an agreement satisfactory to the Lender, in its sole
discretion.
7.5 Sales of Property. Neither Borrower nor Guarantors shall, without
the prior written consent of Lender, sell, assign, transfer, or remove any
property owned by Borrower or any Guarantor now or at any time located at or
used in connection with the business of Borrower or such Guarantor, except
inventory sold in the ordinary course of business; provided, however, that so
long as no Event of Default exists, Borrower may sell or otherwise dispose of
the certain tangible personal property when obsolete, worn out, inadequate,
unserviceable or unnecessary for use in the operation of the business, but, for
personal property valued in excess of $50,000, only upon replacing the same with
other property at least equal in value and utility to the disposed property.
7.6 Refinancing. The Senior Loan shall not be repaid (in whole or in
part), refinanced or otherwise satisfied (in whole or in part) by or on behalf
of Borrower prior to the Maturity Date without the consent of Lender, which
consent shall not be unreasonably withheld (provided that, without limiting the
generality of the foregoing, the Lender may reasonably withhold its consent if,
in its sole discretion,(a) the refinancing of the Senior Loan would be on terms
and conditions which would be disadvantageous to the Lender as compared to the
terms and conditions of the Senior Loan, (b) the value of the Security would be
adversely affected or (c) a satisfactory intercreditor agreement between the
Lender and any new lender is not entered into). Notwithstanding the foregoing,
Borrower shall be permitted to repay the Senior Loan in full provided that the
Senior Lender grants a full and final discharge of all security against the
Collateral.
7.7 Bonuses. From and after the time of a default or an event of
default under any of the Senior Loan Documents or the Loan Documents until the
time such default has been cured to the satisfaction of the Lender or waived in
writing by the Lender, none of the Borrower Parties shall pay to Xxxxx Xxxxxxxx
and Xxxxx Xxxxxxxxx any bonus to which they are entitled pursuant to any
employment agreement to which either of them is a party with any of the Borrower
Parties including, without limitation, the Employment Agreement dated January 2,
2005 by and among the Borrower, Xxxx Xxxxxxxx and Adsero and the Employment
Agreement dated January 2, 2005 by and among the Borrower, Xxxxx Xxxxxxxxx and
Xxxxxx, as such agreements may be modified, amended or supplemented from time to
time. Such bonus shall accrue until payment in full has occurred.
ARTICLE 8
EVENTS OF DEFAULT; ACCELERATION OF DEBT
8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT" under this Agreement:
(a) Failure of Borrower to pay, within 5 Business Days of the
due date, any of the Debt, including any payment due under this Agreement or the
Loan Documents; or
(b) failure of Borrower and Guarantors, as applicable,
strictly to comply with Sections 6.4 (insurance), 6.6 (inspection), 7.2
(restrictions on transfers), 7.3 (no additional liens), 7.6 (refinancing) or 7.7
(bonuses) of this Agreement; or
17
(c) (i) breach of any covenant contained in this Agreement
other than as set forth in Sections 8.1(a) and (b) above which is not cured
within 30 days after notice or (ii) any representation or warranty contained in
this Agreement or any other Loan Document by Borrower and Guarantors was false
in any material respect as of the date made; provided, however, that if the
actions referenced in clauses (i) or (ii) above cannot by its nature be cured
within 30 days, and Borrower diligently pursues the curing thereof (and then in
all events cures such failure within 60 days after the original notice thereof),
Borrower shall not be in default hereunder; or
(d) any involuntary case or proceeding (including the filing
of any notice of intention in respect thereof) is commenced against Borrower or
Guarantors under any Insolvency Law, any incorporation law or other applicable
law in any jurisdiction in respect of the: (a) bankruptcy, liquidation,
winding-up, dissolution or suspension of general operations; (b) composition,
rescheduling, reorganization, arrangement or readjustment of, or other relief
from, or stay of proceedings to enforce, some or all of the debts or
obligations; (c) appointment of a trustee, interim receiver, receiver, receiver
and manager, liquidator, administrator, custodian, sequestrator, agent or other
similar official for Borrower, or for all or a substantial part of the assets of
Borrower or Guarantors; (d) possession, foreclosure, seizure or retention, sale
or other disposition of, or other proceedings to enforce security over, all or
any substantial part of the assets, of such Borrower or Guarantors; and such
case or proceeding shall remain undismissed or unstayed for 30 days or more or
such court shall enter a decree or order granting the relief sought in such case
or proceeding; or
(e) any Borrower or Guarantors (i) commences on a voluntary
basis, or fails to contest in a timely and appropriate manner or consents to the
institution of any proceeding referred to in Section 8.1(d) above or to the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, interim receiver, receiver and manager liquidator,
assignee, trustee or sequestrator (or similar official) of such Borrower or
Guarantors or of all or any substantial part of such Borrower's or Guarantors'
assets, or (ii) take any corporate (or analogous) action in furtherance of any
of the foregoing or of any of the proceedings referred to in Section 8.1(d), or
(iii) admits in writing its inability to, or is generally unable to, pay its
debts as such debts become due or is otherwise insolvent; or
(f) a final judgment or judgments for the payment of money in
excess of CDN$50,000 in the aggregate at any time is entered or rendered against
Borrower (which judgments are not covered by insurance policies as to which
liability has been accepted by the insurance carrier), and the same are not,
within thirty (30) days after the entry thereof, discharged or execution thereof
stayed or bonded pending appeal, or such judgments are not discharged prior to
the expiration of any such stay; or
(g) any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or
Borrower or Guarantors shall challenge the enforceability of any Loan Document
or shall assert in writing, or engage in any action or inaction based on any
such assertion, that any provision of any of the Loan Documents has ceased to be
or otherwise is not valid, binding and enforceable in accordance with its
terms), or any security created under any Loan Document ceases to be a valid and
perfected security interest; or (h) any Transfer (except as permitted hereunder
and under the other Loan Documents) or Change in Control occurs; or
(h) any Transfer (except as permitted hereunder and under the
other Loan Documents) or Change in Control occurs; or
(i) should any of the transactions described and set forth in
the Funding and Pay-Off Agreement not be consummated in the manner contemplated
therein; or
18
(j) the occurrence of a default and the expiration of any cure
period applicable thereto under any other Loan Document; or
(k) if YAC, Callco, TAC or TOLG engages at any time in any
commercial enterprise or activity or engages in any transactions other than
owning, directly or indirectly the Borrower, or if any of them causes, suffers
or permits Liens on any of its assets; or
(l) Borrower shall fail to pay any indebtedness (other than
the Debt and Senior Loan) within 30 days of the due date of such indebtedness;
provided, however, that if any demand for payment or action in respect of the
non-payment has been made, Borrower shall be immediately in default hereunder
unless the failure to pay is cured to the satisfaction of the relevant creditor;
or
(m) any statement, report or certificate made or delivered to
Lender by Borrower or Guarantors is not materially true and complete as of the
date thereof;
(n) the occurrence of a default under the Senior Loan
Documents; or
(o) any prepayment of principal or interest, whether or not
optional, as a result of a demand or acceleration, or otherwise, under that
certain Convertible Promissory Note dated January 7, 2005, by Adsero in favor of
Westminster Capital, Inc. in the principal amount of $1,000,000 (as amended,
restated, supplemented or substituted from time to time).
8.2 Acceleration; Remedies. Upon the occurrence of an Event of Default
which is continuing, at the option of Lender, the Debt shall become immediately
due and payable without notice to Borrower and Lender shall be entitled to all
of the rights and remedies provided in the Loan Documents or at law or in
equity. Each remedy provided in the Loan Documents is distinct and cumulative to
all other rights or remedies under the Loan Documents or afforded by law or
equity, and may be exercised concurrently, independently, or successively, in
any order whatsoever.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Borrower and Lien Not Released. Without affecting the liability of
Borrower, Guarantors or any other Person liable for the payment of the Debt, and
without affecting Lender's rights under this Agreement, Lender may, from time to
time: (a) release any person so liable; (b) waive or modify any provision of
this Agreement or the other Loan Documents or grant other indulgences; (c)
release all or any part of the Collateral; (d) take additional security for any
obligation herein mentioned; or (e) subordinate its rights under any of the Loan
Documents.
9.2 Lender's Consultation Rights. Subject to the second paragraph of
Section 6.8.3, Lender shall have the right from time to time (a) to consult with
Borrower and/or Adsero regarding its business and operations, and the financial
and other condition of Borrower and/or Adsero with the officers, employees,
directors and managers of Borrower and/or Adsero, (b) to discuss with Borrower
and/or Adsero any significant business issues, and (c) to request from Borrower
and/or Adsero such forecasts, projections and other financial and business data
as Lender may deem reasonably appropriate.
19
9.3 Expenses. Borrower shall pay all reasonable Expenses incurred by
Lender in connection with the documentation, modification, workout, collection
or enforcement of the Loan or any of the Loan Documents (as applicable) and all
such Expenses shall be included as additional Debt bearing interest at the
default rate set forth in this Agreement until paid. For the purposes hereof
"EXPENSES" means all reasonable costs and expenses which may be paid or incurred
by or on behalf of Lender including payments to remove or protect against liens,
attorneys' fees (including fees of Lender's inside counsel), receivers' fees,
appraisers' fees, engineers' fees, accountants' fees, independent consultants'
fees (including environmental consultants), all costs and expenses incurred in
connection with any of the foregoing, Lender's out-of-pocket costs and expenses
related to any audit or inspection of the Borrower, outlays for documentary and
expert evidence, stenographers' charges, stamp taxes, publication costs, title
searches and examination, title insurance policies, and similar data and
assurances with respect to title as Lender may deem reasonably necessary either
to prosecute any action or to evidence to bidders at any sale, the true
condition of the title to, or the value of, the Collateral.
9.4 Disclosure of Information. Lender shall have the right (but shall
be under no obligation) to make available to any party for the purpose of
granting participations in or selling, transferring, assigning, syndicating or
conveying all or any part of the Loan (including any governmental agency or
authority and any prospective bidder at any sale of the Collateral) any and all
information which Lender may have with respect to the Collateral, the Borrower
and the Guarantors, whether provided by Borrower or Guarantors or any third
party. Borrower and Guarantors agree that Lender shall have no liability
whatsoever as a result of delivering any such information to any third party,
and Borrower and Guarantors, on behalf of themselves and their successors and
assigns, hereby release and discharge Lender from any and all liability, claims,
damages, or causes of action, arising out of, connected with or incidental to
the delivery of any such information to any third party.
9.5 Sale of Loan. Lender, at any time and without the consent of
Borrower or Guarantors, may grant participations in or sell, transfer, assign
and convey all or any portion of its right, title and interest in and to the
Loan, this Agreement and the other Loan Documents, any guaranties given in
connection with the Loan and any collateral given to secure the Loan.
9.6 Indemnity. Borrower and Guarantors shall indemnify, protect, hold
harmless and defend Lender, its successors, assigns, members, directors,
officers, employees, and agents from and against any and all loss, damage, cost,
expense (including attorneys' fees), and claims arising out of or in connection
with (a) the Collateral, (b) any act or omission of Borrower, Guarantors, or
their respective employees or agents, whether actual or alleged, and (c) any and
all brokers' commissions or other costs of similar type by any party in
connection with the Loan, in each case except to the extent arising from the
indemnitee's gross negligence or wilful misconduct. Upon written request by an
indemnitee, Borrower and Guarantors will undertake, at its own costs and
expense, on behalf of such indemnitee, using counsel satisfactory to the
indemnitee, the defense of any legal action or proceeding whether or not such
indemnitee shall be a party and for which such indemnitee is entitled to be
indemnified pursuant to this section; provided, however, that if Borrower and
Guarantors fail to undertake such defense, Lender may undertake such defense
with counsel of Lender's choosing and at Borrower's sole cost and expense.
9.7 Document Protocols. This Agreement and all of the other Loan
Documents shall be subject to the Document Protocols attached hereto as Schedule
I.
20
9.8 Language. The parties hereto have expressly required that this
Agreement and all documents and notices relating hereto be drafted in English.
Les parties aux presentes ont expressement exige que la presente convention et
tous les documents et avis qui y sont afferents soient rediges en anglais.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
21
The parties hereto have executed this Agreement or have caused the same
to be executed by their duly authorized representatives as of the date first
above written.
TECKN-O-LASER COMPANY /
COMPAGNIE TECKN-O-LASER
By: /s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
Title: President
GUARANTORS
ADSERO CORP.
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
YAC CORP.
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title:
3091732 NOVA SCOTIA COMPANY
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title:
3091503 NOVA SCOTIA COMPANY
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title:
22
COMPAGNIE TECKN-O-LASER GLOBAL
/ TECKN-O-LASER GLOBAL COMPANY
By: /s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
Title: President
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice-President and Treasurer
TECKNOLASER USA INC.
By: /s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
Title: President
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice-President and Treasurer
LENDER
BARRINGTON BANK
INTERNATIONAL LIMITED
By: /s/ Xxxxxxx Xxxxxx
------------------
Name: Xxxxxxx Xxxxxx
Title: President
23
SCHEDULE I
DOCUMENT PROTOCOLS
1. Certain Definitions. For the purposes of this Schedule I and the
Document Protocols contained herein, all capitalized terms used but not
otherwise defined herein shall have the meanings provided therefor in this
Agreement or, if the context requires, in the agreement which incorporates this
Schedule I by reference.
2. Document Protocols. With respect to any instrument that states in
substance that it is governed by the "Document Protocols," the following shall
apply:
(a) General Rules of Usage. These Document Protocols shall apply to
such instrument as from time to time amended, modified, replaced, restated,
extended or supplemented, including by waiver or consent, and to all attachments
thereto and all other documents or instruments incorporated therein. When used
in any instrument governed by these Document Protocols: (i) references to a
Person are, unless the context otherwise requires, also to its heirs, executors,
legal representatives, successors and assigns, as applicable; "hereof,"
"herein," "hereunder" and comparable terms refer to the entire instrument in
which such terms are used and not to any particular article, section or other
subdivision thereof or attachment thereto; references to any gender include,
unless the context otherwise requires, references to all genders, and references
to the singular include, unless the context otherwise requires, references to
the plural, and vice versa; (ii) "shall" and "will" have equal force and effect;
(iii) references in an instrument to "Article," "Section," "Paragraph" or
another subdivision or to an attachment are, unless the context otherwise
requires, to an article, section, paragraph or subdivision of or an attachment
to such instrument; (iv) all accounting terms not otherwise defined therein have
the meanings assigned to them in accordance with Canadian GAAP; and (v)
"include," "includes" and "including" shall be deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of
like import.
(b) Full Recourse. Borrower's and Guarantors' liability under the Loan
Documents shall be solidary and unlimited.
(c) Notices, Etc. All notices, consents, approvals, statements,
requests, reports, demands, instruments or other communications to be made,
given or furnished pursuant to, under or by virtue of such instrument (each, a
"notice") shall be in writing and shall be deemed given or furnished if
addressed to the party intended to receive the same at the address of such party
as set forth below (i) upon receipt when personally delivered or received by
facsimile transmission at such address, or (ii) 1 Business Day after the date of
delivery of such notice to a nationwide, reputable overnight commercial courier
service:
Lender: Barrington Bank International Limited
Cumberland House
P.O. Box N3026
2nd Floor
Nassau, Bahamas
Attention: Mr. Xxxxxxx Xxxxxx
Fax: (000) 000-0000 and
(000) 000-0000
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with a copy by the same means sent simultaneously to:
Davies Xxxx Xxxxxxxx & Xxxxxxxx LLP
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxxx Xxxxxxx
Fax: 000-000-0000
Borrower: Teckn-O-Laser Company
0000-X, Xxxxx Xxxxxx
Xxx-Xxxxx (Xxxxxx) X0X 0X0
Attention: Xxxx Xxxxxxxx
Fax: 000-000-0000
with copy by the same means sent simultaneously to:
Xxxxxxxx Xxxxx s.e.n.c
1, Place Ville-Xxxxx
Suite 1700
Montreal (Quebec) H3B 2C1
Attention: Xxxxxx Xxxxxx
Fax: 000-000-0000
Guarantors: Teckn-O-Laser Global Company
0000-X, Xxxxx Xxxxxx
Xxx-Xxxxx (Xxxxxx) X0X 0X0
Attention: Xxxx Xxxxxxxx
Fax: 000-000-0000
with copy by the same means sent simultaneously to:
Xxxxxxxx Xxxxx s.e.n.c
1, Place Ville-Xxxxx
Suite 1700
Montreal (Quebec) H3B 2C1
Attention: Xxxxxx Xxxxxx
Fax: 000-000-0000
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TOL USA: Tecknolaser USA Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx X, Xxxxx 000
Xxxxxxx, Xxxxxxxxx
00000
Attention: Xxxx Xxxxxxxx
Fax: 000-000-0000
with copy by the same means sent simultaneously to:
Xxxxxxxx Xxxxx s.e.n.c
1, Place Ville-Xxxxx
Suite 1700
Montreal (Quebec) H3B 2C1
Attention: Xxxxxx Xxxxxx
Fax: 000-000-0000
Callco: 3091732 Nova Scotia Company
00 Xxxxxxx Xxx.
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxx
Fax: 000-000-0000
TAC: 3091503 Nova Scotia Company
00 Xxxxxxx Xxx.
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxx
Fax: 000-000-0000
Adsero: Adsero Corp
00 Xxxxxxx Xxx.
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxx
Fax: 000-000-0000
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YAC: YAC Corp.
00 Xxxxxxx Xxx.
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxx
Fax: 000-000-0000
Any party may change the address to which any notice is to be delivered
to any other address within Canada or the United States of America by furnishing
written notice of such change at least 15 days prior to the effective date of
such change to the other parties in the manner set forth above, but no such
notice of change shall be effective unless and until received by such other
parties.
(d) Severability. Whenever possible, each provision of such instrument
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of such instrument shall be prohibited by
or invalid or unenforceable under the applicable law of any jurisdiction with
respect to any Person or circumstance, such provision shall be ineffective to
the extent of such prohibition, invalidity or unenforceability, without
invalidating the remaining provisions of such instrument or affecting the
validity or enforceability of such provisions in any other jurisdiction or with
respect to other Persons or circumstances. To the extent permitted by applicable
law, the parties to such instrument thereby waive any provision of law that
renders any provision thereof prohibited, invalid or unenforceable in any
respect.
(e) Remedies Not Exclusive. No remedy therein conferred upon or
reserved to Lender is intended to be exclusive of any other remedy or remedies
available to Lender under such instrument, at law, in equity or by statute, and
each and every such remedy shall be cumulative and in addition to every other
remedy given thereunder or now or hereafter existing at law, in equity or by
statute.
(f) Liability. If Borrower or Guarantors (each as defined in the Loan
Documents) (each, a "BORROWER PARTY") consists of more than one Person, the
obligations and liabilities of each such Person under such instrument shall be
solidary (joint and several).
(g) Binding Obligations. The Loan Documents and the Schedules thereto
shall be binding upon the applicable Borrower Party and the successors, assigns,
heirs and personal representatives of such Borrower Party, and shall inure to
the benefit of Lender and all subsequent holders of such agreements and their
respective officers, directors, employees, shareholders, agents, successors and
assigns. Nothing in the Loan Documents or the Schedules thereto, whether express
or implied, shall be construed to give any Person (other than the parties
thereto and their permitted successors and assigns and as expressly provided
therein) any legal or equitable right, remedy or claim under or in respect of
such instrument or any covenants, conditions or provisions contained therein.
(h) No Oral Modifications. The Loan Documents and the Schedules
thereto, and any of the provisions thereof, cannot be altered, modified,
amended, waived, extended, changed, discharged or terminated orally or by any
act on the part of any party thereto, but only
I-4
by an agreement in writing signed by the party against whom enforcement of any
alteration, modification, amendment, waiver, extension, change, discharge or
termination is sought.
(i) Entire Agreement. The Loan Documents and the Schedules thereto
(including this Schedule I), constitutes the entire agreement of the parties
thereto with respect to the subject matter thereof and supersedes all prior
written and oral agreements and understandings with respect to such subject
matter.
(j) Waiver of Acceptance. Each Borrower Party hereby waives any
acceptance of such instrument by Lender in writing, and such instrument shall
immediately be binding upon such Borrower Party.
(k) JURISDICTION, COURT PROCEEDINGS. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE PROVINCE OF QUEBEC APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
PROVINCE AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, EACH BORROWER PARTY HEREBY
CONSENTS AND AGREES THAT THE COURTS OF THE PROVINCE OF QUEBEC SHALL HAVE
NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
THE BORROWER PARTIES AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE ANY AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER. EACH BORROWER
PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH BORROWER PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY OVERNIGHT
COURIER (RETURN RECEIPT REQUESTED) ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS
SET FORTH IN SCHEDULE I OF THIS AGREEMENT.
(l) Service of Process. Each party hereto hereby agrees that service of
process mailed or delivered to such party in the manner provided in this
Schedule I shall be deemed in every respect effective service of process upon
such party.
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(m) WAIVER OF COUNTERCLAIM. EACH BORROWER PARTY HEREBY KNOWINGLY WAIVES
THE RIGHT TO ASSERT ANY COUNTERCLAIM, OTHER THAN A COMPULSORY OR MANDATORY
COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT AGAINST IT BY LENDER OR ITS
AGENTS.
(n) WAIVER OF JURY TRIAL. LENDER AND EACH BORROWER PARTY, TO THE FULL
EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH
AND AFTER CONSULTATION WITH COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER
FORGOES HEREBY THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY OF THEM BASED
UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO OR IN CONNECTION WITH SUCH
INSTRUMENT, THE LOAN OR ANY COURSE OF CONDUCT, ACT, OMISSION, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON (INCLUDING,
WITHOUT LIMITATION, SUCH PERSON'S DIRECTORS, OFFICERS, PARTNERS, MEMBERS,
EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH SUCH
PERSON), IN CONNECTION WITH THE LOAN OR SUCH INSTRUMENT, INCLUDING, WITHOUT
LIMITATION, IN ANY COUNTERCLAIM WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
THIS WAIVER BY EACH SUCH BORROWER PARTY OF ITS RIGHT TO A JURY TRIAL IS A
MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN.
(o) No Waivers by Lender. No delay or omission of Lender in exercising
any right or power accruing upon any default under such instrument shall impair
any such right or power or shall be construed to be a waiver of any default
under such instrument or any acquiescence therein, nor shall any single or
partial exercise of any such right or power or any abandonment or discontinuance
of steps to enforce such right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. Acceptance of any payment
after the occurrence of a default under such instrument shall not be deemed to
waive or cure such default under such instrument; and every power and remedy
given by such instrument to Lender may be exercised from time to time as often
as may be deemed expedient by Lender. Each Borrower Party hereby waives any
right to require Lender at any time to pursue any remedy in Lender's power
whatsoever.
(p) Waiver of Notice. No Borrower Party shall be entitled to, and
Borrower Party hereby waives its right to receive, any notices of any nature
whatsoever from Lender except with respect to matters for which such instrument
specifically and expressly provides for the giving of notice by Lender to such
Borrower Party, and except with respect to matters for which such Borrower
Party, is not, pursuant to applicable legal requirements, permitted to waive the
giving of notice.
(q) TIME OF THE ESSENCE. TIME SHALL BE OF THE ESSENCE IN THE
PERFORMANCE OF ALL OBLIGATIONS OF EACH PARTY THEREUNDER.
(r) GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, EACH INSTRUMENT SHALL BE
I-6
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF
QUEBEC.
(s) Sole Discretion of Lender. Unless Lender's right to approve or
disapprove any matter is expressly qualified to require that Lender shall be
reasonable (or words to similar effect), the decision of Lender to approve or
disapprove such matter shall be in the sole discretion of Lender and shall be
final and conclusive.
(t) Counterparts. Such instrument may be executed in any number of
separate counterparts, each of which, when so executed and delivered, shall be
deemed an original, but all of which, collectively and separately, shall
constitute one and the same instrument. All signatures need not be on the same
counterpart. The failure of any party thereto to execute such instrument, or any
counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.
(u) Exhibits Incorporated; Headings. The exhibits annexed to such
instrument, if any, shall be deemed to be incorporated therein as a part thereof
with the same effect as if set forth in the body thereof. The headings and
captions of the various articles, sections and paragraphs of such instrument are
for convenience of reference only and shall not be construed as modifying,
defining or limiting, in any way, the scope or intent of the provisions thereof.
(v) No Joint Venture or Partnership. Each Borrower Party and Lender
intends that the relationship created under such instrument be solely that of
borrower and lender, or indemnitor and lender, as the case may be. Nothing
therein is intended to create a joint venture, partnership, agency or joint
tenancy relationship between any Borrower Party and Lender other than that of
lender; it being the intent of the parties hereto that Lender shall not share in
any loss whatsoever generated by the Borrower.
(w) Remedies of Borrower and Indemnitors. If any Borrower Party shall
seek the approval or consent of Lender under such instrument, which instrument
expressly provides that Lender's approval shall not be unreasonably withheld,
and Lender shall fail or refuse to give such consent or approval, the burden of
proof as to whether or not Lender acted unreasonably shall be upon the Borrower
Party. In addition thereto, in the event that a claim or adjudication is made
that Lender has acted unreasonably or unreasonably delayed acting in any case
where by law or under such instrument it has an obligation to act reasonably or
promptly, Lender shall not be liable for any monetary damages, and a Borrower
Party's remedies shall be limited to injunctive relief or declaratory judgment.
I-7
SCHEDULE II
CERTAIN DEFINED TERMS
"Affiliate" shall mean, with respect to any specified Person, any other
Person directly or indirectly Controlling, Controlled by or under direct or
indirect common Control with such specified Person.
"Bankruptcy Action" means, with respect to any Person, (a) the
commencement of any case, action or proceeding relating to bankruptcy,
insolvency, reorganization or relief of debtors, (b) the institution of any
proceedings by such Person to have Borrower or Guarantors adjudicated as
bankrupt or insolvent, (c) the consent by such Person to the institution of
bankruptcy or insolvency proceedings against such Person, (d) the filing by such
Person of a petition, or consent by such Person to a petition, seeking
reorganization, arrangement, adjustment, winding up, dissolution, composition,
liquidation or other relief or other action by or on behalf of such Person under
Insolvency Laws or any other existing or future law of any jurisdiction on
behalf of such Person under Insolvency Laws or any other federal or state law
relating to bankruptcy, (e) the seeking or consenting by such Person to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for such Person or for all or substantially
all of such Person's assets, (f) the making by such Person of an assignment for
the benefit of the creditors of such Person or (g) the taking by such Person of
any action by such Person in furtherance of any of the foregoing.
"Borrower Party" shall mean each of Borrower and Guarantors.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the City of Nassau,
Bahamas, or the City of Montreal, Quebec.
"CDN$" or "CAD" shall mean the lawful currency of Canada.
"Change in Control" shall mean any Transfer that has the effect of
reducing either (a) the direct or indirect legal or beneficial ownership
interests in Borrower of Adsero Corp. below that reflected on the structure
chart attached as Exhibit B (which structure chart reflects the consummation of
the transactions described in the Funding and Pay-Off Agreement), or (b) the
current ability of Adsero to Control Borrower.
"Charges" means all Taxes assessed, levied or imposed against Borrower
or upon or relating to (a) the Collateral, (b) the employees, payroll, income or
gross receipts or capital of a Borrower, (c) any Borrower's ownership or use of
any properties or other assets, or (d) any other aspect of Borrower's business.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of management or policies of a Person (whether
through ownership of securities or partnership or trust interests, by contract
or otherwise); without limiting the generality of the foregoing (i) a Person is
deemed to Control a corporation if such Person (or such Person and its
Affiliates) holds outstanding shares of the corporation carrying votes in
sufficient number to elect a majority of the board of directors of the
corporation, (ii) a Person is deemed to Control a partnership if such Person (or
such Person and its Affiliates) holds more than 50% in
II-1
value of the equity of the partnership, (iii) a Person is deemed to Control a
trust if such Person (or such Person and its Affiliates) holds more than 50% in
value of the beneficial interests in the trust, and (iv) a Person that controls
another Person is deemed to Control any Person controlled by that other Person;
and the terms "Controlling" and "Controlled" have the meanings correlative to
the foregoing.
"Environmental Laws" shall mean all laws, rules and regulations, and
any orders or legally binding policies, in each case as now or hereafter in
effect, relating to the regulation or protection of human health, safety or the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or toxic or hazardous substances or wastes
into the indoor or outdoor environment, including, without limitation, ambient
air, soil, surface water, ground water, wetlands, land or subsurface strata, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals
or toxic or hazardous substances or wastes;
"Funding and Pay-Off Agreement" means that certain Funding and Pay-Off
Agreement entered into by Borrower, TOLG, TOL, Xxxx Xxxxxxxx, Xxxxx Xxxxxxxxx,
Xxxxxx Xxxxxxx, Adsero, YAC, Callco, TAC, Lender and CDP on the date hereof, a
copy of which is attached hereto as Exhibit A.
"Governmental Authority" means the government of Canada, the United
States of America, any other nation or any political subdivision thereof,
whether provincial, state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"Insolvency Laws" shall mean any of the U.S. Bankruptcy Code of 1978,
as amended, the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors
Arrangement Act (Canada), and the Winding-Up and Restructuring Act (Canada),
each as now and hereafter in effect, any successors to such statutes and any
other applicable insolvency or other similar law of any jurisdiction, including
any law of any jurisdiction permitting a debtor to obtain a stay or a compromise
of the claims of its creditors against it.
"Intercreditor Agreement" means that certain Subordination and
Intercreditor Agreement entered into between Senior Lender and Lender on the
date hereof.
"Lien" means any hypothec, security interest, mortgage, lien, right of
preference, priority, pledge, assignment by way of security or any other
agreement or encumbrance of any nature that secures the performance of an
obligation, and a Person is deemed to own subject to a Lien any property or
assets that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital or synthetic lease or
similar agreement relating to such property or assets;
"Major Contract" means any contract obligating Borrower to pay more
than CDN$50,000 per annum.
"Major Decision" has the meaning ascribed in Section 7.1 of this Loan
Agreement.
"Material Adverse Change" shall mean shall mean any set of
circumstances or events which (a) has or could reasonably be expected to have
any material adverse effect upon the
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validity or enforceability of enforcement of remedies with respect to this
Agreement or any of the other Loan Documents, (b) is or could reasonably be
expected to be material and adverse to the business, properties, assets,
financial condition, or results of operations of Borrower or the Guarantors, or
(c) materially impairs or could reasonably be expected to materially impair the
ability of Borrower or the Guarantors to duly and punctually pay or perform its
obligations under the Loan Documents.
"Permitted Liens" means:
(i) Liens for taxes, assessments or government charges, including
charges for workers compensation and employment insurance, which are not due or
delinquent, or the validity of which is being contested in good faith, provided
the outcome of such contest would not reasonably be expected to result in a
Material Adverse Change;
(ii) undetermined or inchoate Liens arising in the ordinary course of
and incidental current operations which have not been filed pursuant to law and
in respect of which no steps or proceedings to enforce such Lien have been
initiated and which relate to obligations which are not due or delinquent or
which, although filed, relate to obligations not overdue or to obligations being
contested in good faith with a reasonable likelihood of success;
(iii) Liens with respect to judgments rendered or claims filed which
are being contested in good faith by proper legal proceedings, provided such
proceedings effectively postpone enforcement of any such Lien;
(iv) Liens granted to secure the Senior Loan Documents, subject to
Sections 7.1(c) and 7.6; and
(v) Liens granted to the Lender pursuant to the Security.
"Person" shall mean any individual, corporation, partnership, joint
venture, estate, trust, limited liability company, unincorporated association,
any federal, provincial, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Security" means the mortgage and security interest, guarantees,
undertakings and acknowledgments provided to or for the benefit of the Lender as
security for the Borrower's obligations to the Lender under the Loan Agreement;
"Security Documents" means any document or agreement evidencing or
relating to the Security including, without limitation, the Borrower's Hypothec;
"Senior Lender" shall mean Banque Nationale du Canada, and its
successors and assigns under the Senior Loan Documents.
"Senior Loan" shall mean the credit facilities entered into between the
Borrower and the Senior Lender in the aggregate amount of CDN$4,467,666 as
evidenced by and set forth in the Senior Loan Documents.
"Senior Loan Documents" shall mean (i) the letter of offer from the
Senior Lender to the Borrower dated December 23, 2004, and (ii) all other
documents and instruments
II-3
referred to therein or executed and delivered in connection therewith, in each
case as modified, supplemented, amended, restated, extended, renewed or
refinanced from time to time.
"Tax" and "Taxes" includes all present and future taxes, surtaxes,
duties, levies, imposts, rates, fees, assessments, withholdings and other
charges of any nature (including income, corporate, capital (including large
corporations), net worth, sales, consumption, use, transfer, goods and services,
value-added, stamp, registration, franchise, withholding, payroll, employment,
health, education, employment insurance, pension, excise, business, school,
property, occupation, customs, anti-dumping and countervail taxes, surtaxes,
duties, levies, imposts, rates, fees, assessments, withholdings and other
charges) imposed by any Governmental Authority, together with any fines,
interest, penalties or other additions on, to, in lieu of, for non-collection of
or in respect of those taxes, surtaxes, duties, levies, imposts, rates, fees,
assessments, withholdings and other charges.
"Transfer" shall mean the conveyance, assignment, sale, transfer,
mortgaging, collateral assignment, encumbrance, pledging, alienation,
hypothecation, granting of a security interest in, granting of options with
respect to, or other disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) all or any portion of any legal or beneficial
interest in Borrower or the Collateral. The term "Transfer" shall include,
without limitation, the following: an instalment sales agreement wherein
Borrower or person holding an interest in Borrower agrees to sell all or any
part of the Collateral or interest in Borrower, respectively, for a price to be
paid in instalments; the dissolution or termination of Borrower; the issuance of
new stock in any corporation which is a Borrower or any Guarantor; the merger or
consolidation with any other Person of Borrower or any Guarantor.
II-4
EXHIBIT A
FUNDING AND PAY-OFF AGREEMENT
-----------------------------
[see attached]
A-1
EXHIBIT B
STRUCTURE CHART
---------------
The following are all the shareholders of Borrower and each of the Guarantors
(other than Adsero Corporation), holding the number and type of shares set
opposite their names:
[see attached]
B-1
EXHIBIT C
TAXES
-----
BORROWER
(SECTION 5.5)
i) Years not yet assessed: 2004;
ii) None;
iii) None;
iv) Audit related to the Ontario Sales Taxes in 2004;
X-0
XXXXXXX X
XXXXXXXXXX
----------
Xxxx
X-0
EXHIBIT E
EMPLOYEES
---------
Further to a judgment granting a petition for certification, a collective
bargaining agreement will be negotiated within the next year. The Borrower is
bound by a profit sharing plan with its employees a copy of which is attached
herewith. No such other plan, agreement or arrangement exists within the
Borrower;
E-1
EXHIBIT F
PROPERTY AND ASSETS
-------------------
Real Estate
(Section 5.13)
1. Property owned: Teckn-O-Laser Global Company: 0000-X, Xxxxx Xxxxxx,
Xxx-Xxxxx,
Xxxxxx, X0X 0X0;
2. Property leased: Borrower: 0000, xxxxx Xxxx, xxxxx 000,
Xxxxxx, Xxxxxx, X0X 0X0;
000, Xxxxxxxx Xxxxx, #00-00,
Xxxxxxxxx, Xxxxxxx, X0X 0X0
0000-X, Xxxxx Xxxxxx, Xxx-Xxxxx,
Xxxxxx, X0X 0X0;
Property Leased: Tecknolaser USA, Inc. 0000,
Xxxxxxx Xxxx, Xxxxxxxx X, Xxxxx 000,
Xxxxxxx, Xxxxxxxxx, 00000.
Liens
TECKN-O-LASER GLOBAL COMPANY
1. An Immovable hypothec dated September 30, 2003, in favour of the
Business Development Bank of Canada to guarantee a three million
dollars (3 000 000 $) loan to Teckn-O-Laser Global Inc. Such hypothec
was granted on two buildings as described hereunder.
IMMEUBLE 1
Un immeuble connu et designe comme etant compose comme suit :
a) le lot numero VINGT-DEUX de la subdivision du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-22) du cadastre de
la Paroisse de Sainte-Xxxxx, circonscription fonciere de VERCHERES;
b) le lot numero SEPT de la subdivision du lot originaire
numero DEUX CENT QUATRE-VINGT-SEIZE (296-7), dudit cadastre.
Avec toutes les batisses y erigees, notamment celle portant le
numero 0000, XXXXXXXXX XXXXX, XXXXXX-XXXXX, XXXXXXXX XX XXXXXX, X0X
0X0.
Tel que le tout se trouve presentement avec toutes les
servitudes actives et passives, apparentes ou occultes attachees a
l'immeuble, sans exception ni reserve et notamment sujet au reglement
de zonage aerien publie sous le numero 135912.
IMMEUBLE II
Un immeuble VACANT connu et designe comme etant compose comme
suit :
F-1
a) le lot numero CENT QUATRE-VINGT-HUIT de la subdivision du
lot originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-188), du
cadastre de la Paroisse de Sainte-Xxxxx, circonscription fonciere de
VERCHERES;
b) le lot numero DEUX CENT SOIXANTE-DEUX de la subdivision du
lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-262), dudit
cadastre.
Tel que le tout se trouve presentement avec toutes les
servitudes actives et passives, apparentes ou occultes attachees a
l'immeuble, sans exception ni reserve et notamment sujet au reglement
de zonage aerien publie sous le numero 135912 et a la servitude de non
construction creee aux termes de l'acte publie sous le numero 327599.
Le Debiteur hypotheque egalement les biens suivants, pour les
fins et pour la somme (avec les interets) indiquees precedemment au
present article :
1. tous les loyers et revenus produits par l'immeuble, presents et a
venir;
2. tous les biens meubles qui sont presentement ou seront dans l'avenir
materiellement attaches ou reunis a l'immeuble; et
3. les indemnites payables en vertu de tout contrat d'assurance couvrant
l'immeuble et les biens mentionnes aux paragraphes 1 et 2 qui
precedent.
Servitude
1. An aerial zoning servitude is granted in favour of the St-Xxxxxx
Airport.
2. Teckn-O-Laser Global inc. encumbered in favour of the dominant lands
(described hereunder), the land located at 0000, xxxxxxxxx Xxxxx,
Xxxxxx-Xxxxx, xxxxxxxx xx Xxxxxx, X0X 0X0 of a servitude of
non-construction prohibiting any construction or plantation with the
exception of what could be required by municipal by-laws.
DESIGNATION OF THE DOMINANT LANDS
PARCELLE 1
Le lot numero DEUX CENT de la subdivision officielle du lot originaire
numero DEUX CENT QUATRE-VINGT-QUATORZE (294-200), au cadastre officiel
de la Paroisse de Sainte-Xxxxx, circonscription fonciere de VERCHERES.
PARCELLE 2
Le lot numero DEUX CENT UN de la subdivision officielle du lot
originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-201), audit
cadastre.
F-2
PARCELLE 3
Le lot numero DEUX CENT CINQUANTE-TROIS de la subdivision officielle du
lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-253), audit
cadastre;
PARCELLE 4
Le lot numero DEUX CENT CINQUANTE-QUATRE de la subdivision officielle
du lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-254),
audit cadastre;
PARCELLE 5
De forme triangulaire, une PARTIE du lot QUATRE de la subdivision
officielle du lot originaire DEUX CENT QUATRE-VINGT-QUATORZE (294-4
PTIE), audit cadastre, bornee vers le Nord-Est par une partie du lot
294-253, sur une distance de 38,530 metres, vers le Sud-Est par une
partie du lot 294-254, sur une distance de 10,600 metres, vers le
Sud-Ouest par une partie du xxx 000-0, xxx xxx xxxxxxxx xx 37,300
metres, ayant une superficie totale de 197,7 metres carre.
PARCELLE 6
De forme irreguliere, une PARTIE du lot QUATRE de la subdivision
officielle du lot originaire DEUX CENT QUATRE-VINGT-QUATORZE (294-4
PTIE), audit cadastre, bornee vers le Nord-Est par une partie du lot
294 (boulevard Nobel), ayant une courbe de 20,950 metres et un rayon de
159,620 sur une distance de 2,500 metres, vers le Sud-Est par le lot
294-253, sur une distance de 24,974 metres, vers le Sud-Ouest par une
partie du lot 295, sur une distance de 23,114 metres, et vers le
Nord-Ouest par le lot 294-262, sur une distance de 17,520 metres, ayant
une superficie totale de 480,7 metres carres.
PARCELLE 7
Le lot numero TRENTE-TROIS de la subdivision officielle du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-33), audit
cadastre;
PARCELLE 8
De forme irreguliere, une PARTIE du lot originaire DEUX CENT
QUATRE-VINGT-QUINZE (295 PTIE), audit cadastre, bornee vers le
Sud-Ouest par une partie du lot 295-22 sur une distance de 33,100
metres, vers le Nord-Ouest par le lot 295-188, sur une distance de
43,780 metres, vers le Nord-Est par une partie du xxx 000-0, xxx xxx
xxxxxxxx xx 23,114 metres, vers le Sud-Est par le lot 295-33, sur une
distance de 7,462 metres, vers le Nord-Est par le lot 295-33, sur une
distance de 26,092 metres et vers le Sud-Est par une partie du xxx
000-0, xxx xxx xxxxxxxx xx 40,570 metres, ayant une superficie totale
de 1 576,6 metres carres.
PARCELLE 9
De forme irreguliere, une PARTIE du lot UN de la subdivision officielle
du lot originaire DEUX CENT QUATRE-VINGT-QUINZE (295-1 PTIE), audit
cadastre, bornee vers le
F-3
Sud-Ouest par une partie du lot 295-17 (rue Xxxxxxx xx Xxxxx), par une
partie du lot 295 et une partie du lot 295-22, sur une distance de
38,200 metres, vers le Nord-Ouest par une partie du lot 295, sur une
distance de 40,570 metres, vers le Nord-Est par une partie du xxx
000-0, xxx xxx xxxxxxxx xx 37,300 metres et vers le Sud-Est par le lot
295-34, sur une distance de 40,584 metres, ayant une superficie totale
de 1 531,8 metres carres.
PARCELLE 10
Le lot numero TRENTE-QUATRE de la subdivision officielle du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-34), audit
cadastre;
PARCELLE 11
Le lot numero TRENTE-DEUX de la subdivision officielle du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-32), audit
cadastre;
PARCELLE 12
Le lot numero DEUX CENT SOIXANTE-TROIS de la subdivision officielle du
lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-263), audit
cadastre;
Tous montres sur le plan de compilation de Xxxxxxxx XXXXXXXX,
arpenteur-geometre, du douze octobre deux mille un (2001).
Guarantee
A guarantee granted by Teckn-O-Laser Global Inc. in favour of GE VFS Canada
Limited Partnership to secure the leasing of computer technology by
Teckn-O-Laser Inc.
A guarantee granted by Teckn-O-Laser Global Inc. in favour of National Bank of
Canada to secure the loan of five million dollars (5 000 000 $) by Teckn-O-Laser
Inc.
Borrower
Movable Hypothecs
A. A movable hypothec granted by Teckn-O-Laser inc. in favour of the
National Bank of Canada to guarantee a five million dollars (5 000 000
$) loan including an additional hypothec in the amount of one million
dollars (1 000 000 $) which hypothec was executed on December 10, 2003
and published on December 12, 2003 at the Register of Personal and
Movable Real Rights under number 00-0000000-0000. Such hypothec was
granted on the items described hereunder.
Tous les stocks du client, present et futures, ou qu'ils se trouvent et
toutes les creances du client, presentes et futures, quel que soit le
lieu ou se trouvent les debiteurs de ces creances.
Le produit de toute vente, location ou autre disposition de ces biens,
toute creance resultant d'une vente, location ou autre disposition de
ces biens, ainsi que tout bien acquis en remplacement de ceux-ci.
F-4
B. A movable hypothec granted by Teckn-O-Laser inc. in favour of the
National Bank of Canada to guarantee a five million two hundred eighty
thousand dollars (5 280 000 $) loan including an additional hypothec in
the amount of eight hundred eighty thousand dollars ( 880 000 $) which
hypothec was executed on July 3, 2003 and published on July 4, 2003 at
the Register of Personal and Movable Real Rights under number
00-0000000-0000. Such hypothec was granted on the items described
hereunder.
TOUS LES STOCKS DU CLIENT, PRESENT ET FUTURES, OU QU'ILS SE TROUVENT ET
TOUTES LES CREANCES DU CLIENT, PRESENTES ET FUTURES, QUEL QUE SOIT LE
LIEU OU SE TROUVENT LES DEBITEURS DE CES CREANCES.
LE PRODUIT DE TOUTE VENTE, LOCATION OU AUTRE DISPOSITION DE CES BIENS,
TOUTE CREANCE RESULTANT D'UNE VENTE, LOCATION OU AUTRE DISPOSITION DE
CES BIENS, AINSI QUE TOUT BIEN ACQUIS EN REMPLACEMENT DE CEUX-CI.
C. A movable hypothec granted by Teckn-O-Laser inc. in favour of the
National Bank of Canada to guarantee a one million two hundred thousand
dollars (1 200 000 $) loan including an additional hypothec in the
amount of two hundred thousand dollars ( 200 000 $) which hypothec was
executed on July 30, 2002 and published on August 1, 2003 at the
Register of Personal and Movable Real Rights under number
00-0000000-0000. Such hypothec was granted on the items described
hereunder.
TOUT L'EQUIPEMENT, L'OUTILLAGE ET LE MOBILIER DE BUREAU DU CLIENT,
PRESENT ET FUTURS.
LE PRODUIT DE TOUTE VENTE, LOCATION OU AUTRE DISPOSITION DE CES BIENS,
TOUTE CREANCE RESULTANT D'UNE VENTE, LOCATION OU AUTRE DISPOSITION DE
CES BIENS, AINSI QUE TOUT BIEN ACQUIS EN REMPLACEMENT DE CEUX-CI.
Lease
The lease of a Bulldog Battery Model 12-125B-13 and of a Xxxxxxx Truck Model
EASI-R30TT between Teckn-O-Laser inc. and Equipements X.X. Xxxxxxxx Ltee
executed on June 20, 2003 and published on September 29, 2003 at the Register of
Personal and Movable Real Rights under number 00-0000000-0000.
Bank Act Security - section 427
A security was granted by the Borrower in favour of the National Bank of Canada
under section 427 of the Bank Act executed on January 23, 2003 and expiring on
December 31, 2008 registered under the number 01128908 of the Canadian
Securities Registration Systems.
F-5
