Exhibit 4.2
$150,000.00
5.00% UNSECURED SUBORDINATED CONVERTIBLE DEBENTURE
Due January 18, 2007
CEDARA SOFTWARE CORP.
and
RBC CAPITAL MARKETS in trust for
EPIC LIMITED PARTNERSHIP
(the "Holder")
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Effective as of January 18, 2002
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STIKEMAN ELLIOTT
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR
APPLICABLE STATE SECURITIES LAWS. THIS DEBENTURE MAY NOT BE TRANSFERRED IN THE
UNITED STATES OR TO U.S. PERSONS UNLESS THE DEBENTURE HAS BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY
SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE.
"UNITED STATES" AND "U.S. PERSONS" ARE DEFINED BY REGULATION "S" UNDER THE
U.S. SECURITIES ACT.
Cedara Software Corp.
Incorporated under the Business Corporations Act (Ontario)
5.00% Unsecured Subordinated Convertible Debenture
Due January 18, 2007
CEDARA SOFTWARE CORP. (the "Corporation") for value received hereby
promises to pay to RBC Capital Markets in trust for Epic Limited Partnership
(the "Holder") on January 18, 2007, or such earlier date as the Principal Sum
hereof may become due, subject to and in accordance with the terms, conditions
and provisions of Schedule "A" attached hereto and forming a part hereof, on
presentation and surrender of this Debenture, the sum of $150,000.00 in lawful
money of Canada, or at such other times as set out in Schedule "A", at the
offices of the Holder at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, (or
such other place or in such other manner as is herein provided) and to pay
interest on the Principal Sum outstanding hereunder at such time, or at such
other times as set out in Schedule "A", at the rate of 5.00% per annum from
the date of issue until full and final payment and discharge hereof, or until
conversion or redemption of this Debenture on the terms set out in Schedule
"A". Interest accruing hereunder shall be calculated daily on the basis of a
365 day year and shall be due and payable semi-annually in arrears on June 30
and December 31 in each year, the first such payment to fall due on June 30,
2002. Any amount of interest not paid when due (including overdue and unpaid
interest), and all interest calculated after maturity, default and judgement,
shall bear interest at the same rate per annum, 5.00%, be calculated daily,
and be compounded on the last Business Day of each calendar month, and shall
be paid without the necessity of any demand being made. The theory of deemed
reinvestment shall not apply to the calculation of interest or the payment of
other amounts hereunder.
This Debenture is issued upon the terms and conditions, including
redemption and conversion, as are set out in Schedule "A" hereto, and the
terms, conditions and provisions contained in Schedule "A", including its
appendices are incorporated herein and constitute a part hereof. Unless the
context otherwise requires, capitalized expressions herein shall have the
meaning ascribed to them in Schedule "A" hereto.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be hereunto affixed and this Debenture to be signed as of January 18, 2002.
CEDARA SOFTWARE CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
SCHEDULE "A"
The following conditions are applicable to 5.00% Unsecured
Subordinated Convertible Debentures, due January 18, 2007, of Cedara Software
Corp.
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions.
In this Debenture, unless there is something in the subject matter or
context inconsistent therewith, the expressions following shall have the
following meanings, namely:
"acting jointly or in concert" has the meaning ascribed to that
expression in the Securities Act (Ontario), as now in effect;
"Adjustment Period" means the period from and including the date
hereof up to and including the Expiry Date;
"Affiliate" has the meaning ascribed thereto in Section 1(1) of the
Business Corporations Act (Ontario), as now in effect;
"Applicable Canadian Securities Laws" means all applicable
securities, corporate and related laws, rules, regulations, and the
notices and policies of the Securities Commissions in which the
Corporation is a "reporting issuer" or has similar status;
"Applicable Laws" means, in relation to any Person, property,
transaction or event, all applicable provisions, whether now or
hereafter in effect (or mandatory applicable provisions, if so
specified) of federal, provincial, state or local laws, statutes,
rules, regulations, official directives and orders of all
Governmental Authorities (whether or not having the force of law) and
all judgements, orders and decisions of all Governmental Authorities
in which the Person in question is a party or by which it is bound or
having application to the Person, property, transaction or event;
"Applicable Securities Laws" means Applicable Canadian Securities
Laws together with Applicable U.S. Securities Laws;
"Applicable U.S. Securities Laws" means all applicable United States
Federal and state securities laws, rules, regulations, notices and
policies;
"Associate" has the meaning ascribed thereto in Section 1(1) of the
Business Corporations Act (Ontario), as now in effect;
"Business Day" means a day (other than a Saturday, Sunday or
statutory holiday) on which banks are generally open for business in
the City of Toronto, Ontario;
"Common Shares" means, subject adjustment by application of Article
7, fully paid and non-assessable common shares of the Corporation as
presently constituted;
"Common Share Redemption Price" has the meaning set forth in Section
6.6;
"Conversion Date" means the date on which this Debenture, or any
portion thereof, is surrendered by the Holder for conversion as
specified in Article 4;
"Conversion Price" means $2.50 per Common Share, or 400 Common Shares
per $1,000 of Principal Sum, subject to adjustment in accordance with
the provisions of Article 7, in which case it shall mean the adjusted
price in effect at such time after such adjustment;
"Conversion Right" means the right of the Holder to convert any or
all of the Principal Sum into Common Shares at the Conversion Price
pursuant to Article 4;
"Corporation" means Cedara Software Corp.;
"Corporation's Auditors" means, currently, KPMG LLP, or such other
firm of independent chartered accountants as may be duly appointed as
auditors of the Corporation;
"Counsel" means a barrister or solicitor or a firm of barristers or
solicitors or other legal counsel advising the Corporation or the
Holder;
"Debenture" or "Debentures" means this 5.00% unsecured subordinated
convertible debenture, or the class of 5.00% unsecured subordinated
convertible debentures as the context requires, of the Corporation;
"Debenture Holder's Agreement" means the agreement, dated the
Debenture Issue Date, required to be executed by the Holder, the form
of which is attached hereto as Appendix 2;
"Debenture Issue Date" means January 18, 2002;
"Default" means any event or circumstance which, with the giving of
notice of lapse of time or otherwise, would constitute an Event of
Default;
"Director" means a director of the Corporation for the time being
and, unless otherwise specified herein, reference to action "by the
directors" means action by the directors of the Corporation as a
board or, whenever duly empowered, action by any committee of such
board;
"Event of Default" means any event specified in Article 9, which has
not been waived, cured or remedied;
"Expiry Date" means 5:00 p.m. on January 18, 2007;
"Extraordinary Resolution" has the meaning set forth in Section 14.12
and Section 14.15;
"Fiscal Year" means the Corporation's fiscal year which at present
commences on July 1 of each year and ends on June 30 of the following
year;
"Forced Conversion Date" means the date set forth in Section 5.1(3)(d);
"Forced Conversion Price" means the product of two (2) multiplied by
the Conversion Price (subject to adjustment in accordance with
Article 7, in which case it shall mean the adjusted price in effect
at such time);
"Forced Conversion Right" has the meaning set forth in Section 5.1;
"GAAP" means generally accepted accounting principles as may be
described from time to time in the Canadian Institute of Chartered
Accountants Handbook and other principal sources recognized from time
to time by the Canadian Institute of Chartered Accountants, applied
on a consistent basis;
"Governmental Authority" means any Canadian or U.S. federal, state,
provincial, county, local or municipal government; any governmental
body, agency, authority, board, bureau, department or commission
(including any taxing authority) or any instrumentality or office of
any of the foregoing (including any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative
functions or any Person directly or indirectly controlled by any of
the foregoing;
"Governmental Declaration" means an authorization, consent, approval,
waiver, order, decree, licence, exemption, permit, registration,
filing, qualification or declaration of or with any Government
Authority or the giving of notice by any Governmental Authority or
any other action in respect of a Governmental Authority;
"Holder" means the Person from time to time registered as the holder
of this Debenture and "Holders" means all of the Debentureholders
referred to in the Debenture Holder's Agreement;
"including" means including, without limitation, and shall not be
construed to limit any general statement which it follows to the
specific or similar items or matters immediately following it, and
"includes" shall be construed in a like manner;
"Indebtedness" means all present and future obligations,
indebtedness, liabilities, covenants, agreements and undertakings of
the Corporation howsoever arising, whether direct or indirect,
secured or unsecured, absolute or contingent, matured or not,
extended or renewed, wheresoever and howsoever incurred, including
all future advances and re-advances, and whether the same is from
time to time reduced and thereafter increased or entirely
extinguished and thereafter incurred again and whether the
Corporation be bound alone or with others and whether as principal or
surety, including all interest, fees, expenses, indemnities and
costs;
"Interest" means the interest from time to time calculated and
payable pursuant to Article 2;
"Interest Payment Date" means June 30 and December 31, provided each
such day is a Business Day, and if not, the next day that is a
Business Day, and continuing for so long as any Principal Sum of this
Debenture is outstanding and shall include the Maturity Date or date
of redemption, conversion or purchase for cancellation, as
applicable, provided that in the event that:
(a) all or any part of the Principal Sum is partially or totally
repaid, whether in cash or by issuing Common Shares, at any
time other than on June 30 or December 31, then the date upon
which such partial or total prepayment occurs shall be an
Interest Payment Date in respect of the amount of such
Principal Sum so prepaid;
"Interest Period" means:
(a) the period beginning on (and including) the Debenture Issue
Date and ending on June 30, 2002;
(b) thereafter, successive periods (i) beginning on (and including)
July 1, and ending on (and including) December 31, and (ii)
beginning on (and including) January 1, and ending on (and
including) June 30, as applicable; and
(c) if applicable, after the Maturity Date, the period beginning on
(and including) the Maturity Date and ending on (and including)
the last day of each calendar month and thereafter beginning on
(and including) the first day of each calendar month and ending
on (and including) the last day of each calendar month; and
(d) if applicable, where Interest is paid other than on June 30,
December 31, or the Maturity Date, the period commencing on
(and including) the day after the last Interest Payment Date
and ending on (and including) such other day where Interest is
paid;
"Interest Rate" means a rate of interest of five per cent (5.00%) per
annum calculated on the basis of a 365 day year;
"Maturity Date" means the earlier of January 18, 2007 and the date on
which the Principal Sum is declared, or deemed to be, due and owing
as a result of an Event of Default;
"Meeting Request" means a written notice given to the Corporation and
signed by Holders of Debentures representing no less than 30% of the
then outstanding Principal Sums requesting that the Corporation call
a meeting of Holders of Debentures for the purpose(s) set out in such
written notice;
"Obligations" means all of the present and future obligations,
liabilities, indebtedness, covenants and agreements, direct or
indirect, absolute or contingent, matured or not, extended or
renewed, of the Corporation to the Holder under this Debenture,
including Interest, Interest on overdue and unpaid Interest, fees,
costs, expenses and indemnities and "Obligation" means any of them;
"Payment Account" means the account of the Holder as the Holder may
from time to time advise the Corporation in writing;
"Person" means any individual, firm, partnership, company,
corporation or other body corporate, government, governmental body,
agency, instrumentality, unincorporated body of Persons or
association and the heirs, executors, administrators or other legal
representatives of an individual;
"Principal Sum" means $150,000.00 or such lesser Principal Sum as is
owing under this Debenture from time to time;
"Receiver" means any receiver, manager, or receiver and manager
whether appointed by the Holder under this Debenture or by a court
pursuant to Applicable Law and any nominee of the Holder or any other
Person that is appointed by the Holder to exercise all or any of the
powers, rights, benefits and discretion of the Holder under this
Debenture;
"Redemption Amount" means, in respect of any redemption of this
Debenture pursuant to Article 6, the Principal Sum to be redeemed,
together with accrued and unpaid Interest on the Principal Sum so
redeemed and all other amounts then payable by the Corporation to the
Holder hereunder to the date fixed for redemption;
"Redemption Date" means the date set forth by the Corporation on the
notice given under Section 6.2 for repayment of the Redemption
Amount;
"Securities Commissions" means, collectively, the securities
commissions or similar regulatory authorities in the Provinces of
Canada in which the Corporation is or becomes a "reporting issuer" or
has similar status;
"Senior Indebtedness" has the meaning set forth in Section 3.1(1);
"Shareholder" means a holder of record of one or more Common Shares;
"Subordinated Indebtedness" has the meaning set forth in Section
3.1(2);
"Tax" means all present and future taxes, rates, levies, imposts,
assessments, dues, government fees, stamp taxes, deductions, charges
or withholdings, and all indebtedness with respect thereto, and any
interest, additions to tax and penalties imposed with respect
thereto, excluding, with respect to the Holder, taxes imposed on its
income or capital and franchise taxes imposed on it by any taxation
authority;
"Trading Day" means, a (i) day on which The Toronto Stock Exchange
or, if on such day the Common Shares are not listed on The Toronto
Stock Exchange, on such other exchange or over-the counter market
upon which such shares are listed, or traded, and as selected by the
Directors, is open for the transaction of business, and (ii) upon
which at least one (1) trade in such shares occurs;
"Twenty Day Weighted Average Trading Price" means, at any date, for
the twenty (20) consecutive Trading Day period ending immediately
prior to such date, if the Common Shares are listed on the TSE, the
quotient resulting from dividing a fraction, (x) the numerator of
which is determined by adding together the dollar trading values for
the Common Shares for each such Trading Day, as provided by the TSE,
and (y) the denominator of which is the aggregate number of Common
Shares traded on the TSE during such twenty (20) consecutive Trading
Day period, OR if the Common Shares shall not be listed on the TSE at
such time, a similar calculation shall be applicable provided that
the other stock exchange or over-the-counter market upon which the
Common Shares then trade, as selected by the Directors for this
purpose, can readily provide the information relating to the dollar
trading values, failing which the "Twenty Day Weighted Average
Trading Price" shall equal the quotient resulting from dividing a
fraction, (a) the numerator of which shall be determined by adding
together the twenty (20) products resulting from multiplying, for
each such Trading Day, the closing price of the Common Shares on such
other stock exchange or over-the-counter market selected by the
Directors for this purpose by the number of Common Shares traded on
such other stock exchange or over-the-counter market on each such
Trading Day, and (b) the denominator of which is the aggregate number
of Common Shares traded during such twenty (20) consecutive Trading
Day period on such other stock exchange or over-the-counter market.
"TSE" means The Toronto Stock Exchange;
"U.S. Securities Act" means the United States Securities Act of 1933,
as amended;
"United States" and "U.S. Person" have the meaning given to such
terms under Regulation S of the U.S. Securities Act. For purposes of
Regulation S, "United States" means the United States of America, its
territories and possessions, any state of the United States and the
District of Columbia. "U.S. Person" includes, with certain
exceptions, any partnership or corporation organized or incorporated
under the laws of the United States;
"written order of the Corporation", written request of the
Corporation", "written consent of the Corporation" and "certificate
of the Corporation" mean, respectively, a written order, request,
consent and certificate signed in the name of the Corporation by its
Chairman, President, Chief Executive Officer, Chief Financial Officer
or Secretary, and may consist of one or more instruments so executed.
Section 1.2 Headings, Etc.
The division of this Debenture into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Debenture.
Section 1.3 Day Not a Business Day.
In the event that any day on or before which any action is required
to be taken hereunder is not a Business Day, then, except as otherwise
provided herein, such action shall be required to be taken on a Business Day
which is the next following day that is a Business Day.
Section 1.4 Currency.
All references to currency herein shall be to lawful money of Canada
unless otherwise expressly specified. Notwithstanding Section 2.8, if for any
reason a U.S. dollar amount is required to be converted to a Canadian dollar
amount, and vice-versa, it shall be so converted utilizing the noon spot rate
posted by the Bank of Canada on the date of the event, transaction, or
occurrence giving rise to the conversion.
Section 1.5 Consents of Approvals.
It shall be a condition hereof that any consent or approval of the
Holder required hereby shall be obtained in writing prior to the event for
which it is required.
Section 1.6 Expanded Meanings.
Unless the context otherwise necessarily requires, the following
provisions shall govern the interpretation of this Debenture:
(a) words used herein importing the singular number only shall
include the plural and vice versa, and words importing the
use of any gender shall include all genders;
(b) all references to Sections, Articles, and Schedules are to
Sections, Articles, and Appendices to this Debenture;
(c) references herein to any agreement or instrument shall be
deemed to be references to the agreement or instrument as
varied, amended, modified, supplemented or replaced from
time to time, and any specific references herein to any
enactment, regulation, order, ruling or decision shall be
deemed to be references to such enactment, regulation,
order, ruling or decision as the same may be re-enacted,
varied, amended, modified, supplemented or replaced from
time to time; and
(d) "this Debenture", "the Debenture", "hereto", "herein",
"whereby", "hereunder", "hereof" and similar expressions
refer to the 5.00% unsecured subordinated convertible
debenture due January 18, 2007, to which this Schedule is
attached and to the Schedules attached thereto, taken as a
whole, and not to any particular Article, Section,
subsection, paragraph, subdivision or other portion hereof
and include any and every instrument supplemental or
ancillary hereto and every debenture issued in replacement
hereof.
Section 1.7 Interpretation of "Outstanding".
This Debenture shall be deemed to be outstanding until the later of
the date on which:
(a) monies or securities for the payment of all amounts owing to
the Holder hereunder shall have been paid and delivered to
the Holder whether on, after or prior to the Maturity Date;
(b) the obligations of the Corporation hereunder shall have been
duly performed as herein contemplated, or otherwise
discharged to the satisfaction of the Holder; and
(c) the Principal Sum has been converted by the Holder to Common
Shares in accordance with Article 4, or converted by the
Corporation to Common Shares in accordance with Article 5;
Section 1.8 Appendices.
The following are the Appendices annexed to and incorporated in this
Debenture by reference to their respective numbers as given below and which
are deemed to be part hereof:
Appendix 1 - Conversion Notice
Appendix 2 - Form of Debenture Holder Agreement
ARTICLE 2
INTEREST
Section 2.1 Interest on Principal Sum.
The Corporation shall pay to the Holder, by depositing to the Payment
Account, Interest on the Principal Sum at a rate equal to the Interest Rate.
Such Interest is payable in arrears on each Interest Payment Date for the
Interest Period immediately concluded, which includes such Interest Payment
Date, and shall be calculated on a daily basis and on the basis of the actual
number of days elapsed in a year of 365 days.
Section 2.2 Payment of Interest.
As Interest on this Debenture becomes due, the Corporation shall, on
each Interest Payment Date, cause to be deposited to the Payment Account an
amount equal to such Interest in immediately available funds.
Section 2.3 Payment of Overdue Interest.
The Corporation shall, on demand, pay to the Holder by depositing to
the Payment Account, interest on all overdue payments in connection with this
Debenture from the date any such payment becomes overdue and for so long as
such amount remains unpaid at a rate per annum which is equal to the Interest
Rate. Interest at the Interest Rate on overdue amounts shall be computed
daily, compounded monthly and shall be payable both before and after default,
maturity, and judgement.
Section 2.4 Compliance with the Interest Act (Canada).
For the purposes of this Debenture, whenever any interest is
calculated on the basis of a period of time other than a calendar year, the
annual rate of interest to which each rate of interest determined pursuant to
such calculation is equivalent for the purposes of the Interest Act (Canada)
is such rate as so determined multiplied by the actual number of days in the
calendar year in which the same is to be paid and divided by the number of
days used in the basis of such determination.
Section 2.5 Withholding Tax.
If the Corporation is obliged to withhold any payment hereunder on
account of present or future taxes, duties, assessments or other governmental
charges, it shall make such withholding or deduction and pay the balance owing
to the Holder.
Section 2.6 Interest Generally.
The theory of deemed reinvestment shall not apply to the calculation
of Interest or payment of fees or other amounts hereunder, notwithstanding
anything contained in this Debenture, and all Interest and fees payable by the
Corporation to the Holder shall accrue from day to day and be computed as
described herein.
Section 2.7 Time, Place and Currency of Payment.
Payments of principal, (including the Principal Sum) Interest, fees
and all other amounts payable by the Corporation pursuant to this Debenture
shall be paid at or before 3:00 p.m. (Toronto time) on the day such amount is
due. If any such day is not a Business Day such amount shall be deemed for all
purposes of this Debenture to be due on the next immediately following day
that is a Business Day. All payments shall be made to the Payment Account.
Section 2.8 Judgement Currency.
If, for the purpose of calculating the amount of any judgement in any
court, it is necessary to convert the currency of any obligation giving rise
to the judgement (the "First Currency") into another currency (the "Other
Currency"), the rate of exchange used shall be that at which the party
obtaining such judgement could purchase the First Currency with the Other
Currency from the Holder determined at the close of business on the Business
Day immediately preceding the day on which judgement is rendered. The
obligation of the party making payment on account of any judgement shall,
notwithstanding any judgement in such Other Currency, be discharged only to
the extent that, on the Business Day following the receipt of any sum paid on
account of the judgement in the Other Currency, the recipient could purchase
the First Currency from the Holder at 12:00 o'clock noon (Toronto time) on
such date. If the value in the Other Currency of the First Currency so
purchased or capable of being purchased is less than the sum due to the payee
in the First Currency before conversion into the Other Currency, the payor, as
a separate and distinct obligation and notwithstanding such judgement or
payment, shall indemnify the payee against any loss and, if the value in the
Other Currency of the First Currency so purchased or capable of being
purchased exceeds the sum originally due to the payee in the First Currency
before the conversion into the Other Currency, the payee shall remit such
excess to the payor.
ARTICLE 3
SUBORDINATION
Section 3.1 Subordination.
(1) For all purposes of this Debenture Senior Indebtedness" means all
Indebtedness for money borrowed by the Corporation, whether
outstanding on the date of this Debenture or thereafter created or
incurred, unless, in the case of any such Indebtedness, the terms of
the instrument evidencing or creating the same specifically provide
that such Indebtedness is not superior in right of payment to the
Principal Sum and Interest on this Debenture.
(2) The indebtedness payable under this Debenture, including the
Principal Sum and Interest hereunder (such indebtedness being
hereinafter referred to as "Subordinated Indebtedness"), shall be
subordinate and junior in right of payment, to the extent and in the
manner set forth herein, to the payment in full of all Senior
Indebtedness, and the Holder by its acceptance hereof agrees to and
shall be bound by the provisions hereof.
(3) If and whenever at any time, or from time to time, an event of
default has occurred and is continuing uncured under, or in
connection with, any Senior Indebtedness or any agreement or
instrument relating thereto, and written notice of such event of
default has been given by or on behalf of one or more holders of such
Senior Indebtedness to the Corporation, no payment on account of the
Subordinated Indebtedness shall be made to the Holder of this
Debenture and such Holder shall not be entitled to receive any
payment or benefit whatever on account of the Subordinated
Indebtedness, other than upon exercise of the Conversion Right,
unless and until all Senior Indebtedness shall have been first paid
in full or the holders of all Senior Indebtedness shall have
consented to such payment on account of the Subordinated
Indebtedness.
(4) Nothing contained herein is intended to or shall impair, as between
the Corporation, its creditors, other than the holders of Senior
Indebtedness, and the Holder, the obligation of the Corporation,
which is absolute and unconditional, to pay to the Holder the
Indebtedness represented by this Debenture, including the Principal
Sum and Interest, as and when the same shall become due and payable,
or affect the relative rights of the Holder and creditors of the
Corporation other than the holders of Senior Indebtedness, nor shall
anything herein or therein prevent the Holder from exercising all
remedies otherwise permitted by Applicable Law upon Default under
this Debenture, subject to the rights, if any, under this Section 3.1
of the holders of Senior Indebtedness in respect of assets of the
Corporation received upon the exercise of any such remedy.
(5) By its acceptance hereof, the Holder agrees, acknowledges and accepts
that the indebtedness hereunder shall not be secured by any mortgage,
pledge, hypothec, charge or other security interest granted in, or
over, any of the property or assets of the Corporation.
ARTICLE 4
EXERCISE OF CONVERSION RIGHT
Section 4.1 Conversion Right.
(1) Upon delivering a conversion notice to the Corporation substantially
in the form provided in Appendix "1", and subject to the terms and
conditions of this Article 4, the Holder shall have the right, at its
option, at any time, and from time to time prior to the Expiry Date,
to convert the Principal Sum, in whole or in whole multiples of
$1,000, into fully paid and non-assessable Common Shares at the
Conversion Price in effect on the Conversion Date.
(2) The Conversion Right shall entitle the Holder, and the Holder shall
have authority to exercise its option at its sole discretion, to
receive on the Conversion Date (i) Common Shares, and (ii) all
accrued and unpaid Interest on the Principal Sum so converted and any
other amount then payable by the Corporation to the Holder hereunder
up to the Conversion Date.
(3) The Holder may only exercise the Conversion Right by surrendering to
the Corporation, prior to the Maturity Date, this Debenture with a
duly completed and conversion notice specifying the following:
(a) the Principal Sum in respect of which the Conversion Right
is being exercised;
(b) to the extent known, the number of Common Shares which the
Holder wishes to acquire (being not more than those which
the Holder is entitled to acquire);
(c) the Person or Persons in whose name or names such Common
Shares are to be issued;
(d) the address or addresses of such Persons;
(e) the number of Common Shares to be issued to each such Person
if more than one is so specified;
(f) the address where the new Debenture, if any, representing
the unconverted portion of the Principal Sum may be sent, if
applicable; and
(g) the Conversion Date for the Debenture being converted, being
a date not less than three (3) days nor more than twenty
(20) days after the date that the conversion notice is
deemed by Section 15.3 to have been effectively given and
received.
(4) Once notice of the exercise of the Conversion Right, in whole or in
part, by the Holder is received, or deemed to be received by the
Corporation pursuant to Section 15.3, the Holder may not revoke,
cancel or otherwise withdraw the giving of notice to exercise its
Conversion Right, except with the express, written consent of the
Corporation, given prior to the Conversion Date.
Section 4.2 Effect of Exercise of Conversion Right.
(1) Upon the exercise of the Conversion Right pursuant to Section 4.1 and
subject to Section 4.3, the Common Shares subscribed for shall be
deemed to have been issued and the Person or Persons to whom such
Common Shares are to be issued shall be deemed to have become the
holder or holders of record of such Common Shares on the Conversion
Date (i) unless the transfer registers of the Corporation shall be
closed on such date (including by application of any Applicable Law),
or (ii) such notice of conversion is withdrawn, revoked or cancelled
in accordance with Section 4.1(4), and in the case of (i) the Common
Shares subscribed for shall be deemed to have been issued and such
Person or Persons deemed to have become the holder or holders of
record of such Common Shares, on the date on which such transfer
registers are reopened.
(2) Within five (5) Business Days following the Conversion Date, the
Corporation shall cause to be delivered to the Person or Persons in
whose name or names the Common Shares have been issued, as specified
in the conversion notice referred to in Section 4.1, at the address
specified in such notice, a share certificate or certificates for the
appropriate number of Common Shares acquired.
Section 4.3 Partial Exercise of Conversion Right; Fractions.
(1) The Holder may elect to convert less than the whole Principal Sum (in
whole multiples of $1,000), in which case the Holder upon such
exercise shall, in addition, be entitled to receive, without charge
therefor, a new Debenture in respect of the balance of the Principal
Sum which is not converted.
(2) Notwithstanding anything herein contained, including any adjustment
provided for in Article 7, the Corporation shall not be required,
upon the exercise of the Conversion Right, or the Forced Conversion
Right, or upon redemption, to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares. In
lieu of fractional Common Shares, the Corporation shall pay to the
Holder within five (5) Business Days after the Conversion Date, or
Forced Conversion Date, or upon redemption, an amount in lawful money
of Canada equal to the Conversion Price of the Common Shares on such
date multiplied by an amount equal to the fractional interest of
Common Shares such Holder would otherwise be entitled to receive upon
such exercise or upon conversion, provided that the Corporation shall
not be required to make any payment, calculated as aforesaid, that is
less than $1.00.
Section 4.4 Cancellation and Distribution of Debenture.
Any portion of this Debenture converted under this Article 4 shall
forthwith be cancelled by the Corporation and no Debenture shall be issued in
substitution for the portion so cancelled as a result of conversion.
Section 4.5 Expiration of Conversion Right.
At 5:00 p.m. (Toronto time) on the Maturity Date, the Conversion
Right shall cease and terminate with respect to any amount of the Principal
Sum which has not been converted, and is otherwise outstanding at such time,
and for which the conversion notice described in Section 4.1 was not duly and
properly given before such time, except to the extent that the Holder has not
received certificates representing the Common Shares issued, or has not
received payment for any fractional Common Shares pursuant to Section 4.3(2),
upon due exercise of the Conversion Right prior to 5:00 p.m. (Toronto time) on
the Maturity Date, in which instances the Holder's rights hereunder shall
continue until it has received that to which it is entitled hereunder.
Section 4.6 Securities Restrictions.
Notwithstanding anything herein contained, Common Shares will only be
issued pursuant to the Conversion Right in compliance with Applicable
Securities Laws.
Section 4.7 Holder Not a Shareholder.
Nothing in this Debenture shall, in itself, confer or be construed as
conferring upon the Holder any right or interest whatsoever as a Shareholder
or as any other shareholder of the Corporation, including, but not limited to,
the right to vote at, to receive notice of, or to attend, meetings of
Shareholders or any other proceedings of the Corporation, or the right to
receive dividends and other distributions.
Section 4.8 Charges for Exchange or Transfer.
The Corporation will from time to time promptly pay or make provision
satisfactory to the Holder for the payment of any and all Taxes which may be
imposed by Applicable Law with respect to the issuance or delivery of the
Common Shares to the Holder upon the exercise of the Conversion Right.
Section 4.9 Common Share Limitation.
(1) The Corporation shall maintain a record of the number of Common
Shares issued to Holders of Debentures in the aggregate (i) upon the
exercise of the Conversion Right set forth in this Article 4, (ii) as
a result of the exercise by the Corporation of its Forced Conversion
Right set forth in Article 5, and (iii) as a result of the redemption
or purchase for cancellation of any or all Debentures.
(2) Subject to Sections 4.9(3) and 4.9(4), the Corporation shall be
limited to issuing, in the aggregate under the Debentures, only
3,000,000 Common Shares upon the exercise of the Conversion Right,
the Forced Conversion Right, or upon the redemption of any or all
Debentures, which limitation the Holder hereby acknowledges.
(3) In the event that the due exercise of the Conversion Right would
result in the Corporation having issued more than 3,000,000 Common
Shares in the aggregate to Holders of the Debentures, the Corporation
shall take all action necessary (including the calling and holding of
a meeting of Shareholders), to permit it to duly and lawfully issue
more than 3,000,000 Common Shares. The costs of complying with this
section shall be borne entirely by the Corporation.
(4) In the event that the proposed exercise of the Forced Conversion
Right by the Corporation, or the proposed redemption of any or all
Debentures would result in the Corporation having issued more than
3,000,000 Common Shares in the aggregate hereunder, such proposed
action shall only be permitted to the extent no more than 3,000,000
Common Shares are issued less the number of Common Shares into which
the Debentures which remain outstanding after such Forced Conversion
Right or redemption are convertible in accordance with the Conversion
Right.
(5) In the event the Conversion Price is adjusted pursuant to Article 7,
the aggregate number of Common Shares issuable by the Corporation
hereunder, being 3,000,000 on the date hereof, shall also be rateably
and equitably adjusted.
ARTICLE 5
FORCED CONVERSION
Section 5.1 Forced Conversion Right
(1) Subject to the terms and conditions otherwise set forth herein, the
Corporation shall have the right (the "Forced Conversion Right"), at
its option, at any time, and from time to time, prior to the Maturity
Date, to give notice to all Holders of Debentures of the forced
conversion of all then outstanding Principal Sums, into fully paid
and non-assessable Common Shares at the Conversion Price in effect on
the Forced Conversion Date.
(2) The Forced Conversion Right may only be exercised by the Corporation
if, during any consecutive twenty (20) Trading Day period ending on
the day immediately prior to the giving of the notice required by
Section 5.1(3), the closing price of the Common Shares on the TSE,
for each such Trading Day, shall have been no less than the Forced
Conversion Price.
(3) Subject to fulfilling the requirement set forth in Section 5.2(2),
the Corporation may exercise the Forced Conversion Right by giving to
all Holders of Debentures, at any time after the condition set forth
in Section 5.2(2) shall have been satisfied, and prior to the
Maturity Date, written notice specifying the following:
(a) that the Corporation is exercising its Forced Conversion
Right in respect of the Principal Sum then outstanding under
all Debentures;
(b) the twenty (20) consecutive Trading Days during which the
closing price of Common Shares on each such day was no less
than the Forced Conversion Price;
(c) the number of Common Shares to be issued to each Holder upon
exercise of the Forced Conversion Right;
(d) the Forced Conversion Date for the Debentures being
converted, being a date not less than ten (10) days nor more
than thirty (30) days after the date that the notice is
deemed by Section 15.3 to have been effectively given and
received; and
(e) the address to which the Debenture must be delivered by the
Holder to the Corporation for cancellation.
Section 5.2 Exercise of Forced Conversion Right.
(1) The Holder may, at any time prior to 5:00 p.m. (Toronto time) on the
day immediately prior to the Forced Conversion Date, whether notice
of the exercise of the Forced Conversion Right having been received
or deemed to have been received, or not, exercise the Conversion
Right set forth in Article 4, in full in which case the conversion of
all the then outstanding Principal Sum under such Debenture shall be
governed by Article 4, and this Article 5 shall have no effect on
such conversion.
(2) Upon the exercise of the Forced Conversion Right on the Forced
Conversion Date, if a Holder shall have not exercised its Conversion
Right, the Holder shall be deemed to have become the holder or
holders of record of such Common Shares on the Forced Conversion
Date, as set out in the notice required by Section 5.1(3) unless the
transfer registers of the Corporation shall be closed on such date
(including by application of any Applicable Law), in which case the
Common Shares acquired shall be deemed to have been issued and such
Person or Persons deemed to have become the holder or holders of
record of such Common Shares, on the date on which such transfer
registers are reopened. At such time, the Holder shall cease to have
any rights or to receive any benefits whatsoever under the Debenture,
except (i) the right to receive a certificate representing the Common
Shares converted under this Article, and (ii) the right to receive
accrued and unpaid Interest on the Principal Sum so converted to the
Forced Conversion Date.
(3) Within five (5) Business Days after the Forced Conversion Date, the
Corporation shall cause to be delivered to the Holder, or its
designated agent, a share certificate or certificates for the
appropriate number of Common Shares acquired.
(4) Within five (5) Business Days after the Forced Conversion Date, the
Holder shall cause to be delivered to the Corporation for
cancellation, at the address specified in the notice, this Debenture.
(5) The Corporation shall concurrently with the delivery of the share
certificate described in Section 5.2(3) pay in cash to the Holder all
Interest accrued on the Principal Sum so converted to the Forced
Conversion Date. For greater certainty, any Interest owing under the
Debenture may not be paid in Common Shares.
Section 5.3 Cancellation and Distribution of Debenture.
Once this Debenture has been converted to Common Shares under this
Article 5, it shall forthwith be cancelled by the Corporation and no Debenture
shall be issued in substitution therefor.
Section 5.4 Securities Restrictions.
Notwithstanding anything herein contained, Common Shares will be
issued pursuant to the Forced Conversion Right in compliance with Applicable
Securities Laws and the limitation set forth in Section 4.9.
ARTICLE 6
REDEMPTION and REPAYMENT BY THE CORPORATION
Section 6.1 Limited Right of Redemption.
The Debenture is not redeemable by the Corporation at any time prior
to the Business Day that is three (3) years following the Debenture Issue Date
and thereafter only if notice of redemption has been given in accordance with
and subject to the provisions of this Article 6, and the conditions to
redemption set out herein have occurred and are existing, as the case may be.
Section 6.2 Notice of Redemption by the Corporation.
Notice of intention of the Corporation to redeem all or any portion
of this Debenture pursuant to Section 6.1 must be given by the Corporation to
the Holder at least twenty-five (25) Trading Days prior to the date of
redemption specified in such notice. The Debenture and then outstanding
Principal Sum may be redeemed by the Corporation in whole, or in multiples of
$1,000. The notice of redemption required by this section shall specify the
(a) Redemption Date, (b) the Redemption Amount, indicating the Principal Sum
thereof and Interest, separately, in respect of which the right of redemption
is being exercised, and (c) subject to Section 6.6, whether the redemption is
to occur in cash, Common Shares, or a combination of the cash and Common
Shares, provided that Interest is only payable in cash. After giving a Notice
of Redemption, the Holder may continue to exercise the Conversion Right with
respect to all or part of the Principal Sum to be redeemed prior to the
Redemption Date fixed for redemption in which case the Corporation's right of
redemption shall be extinguished to the extent of the Principal Sum so
converted by the Holder prior to the Redemption Date.
Section 6.3 Debenture Due on Redemption Date.
Upon a notice having been given and subject to the Holder exercising
its Conversion Right prior to the Redemption Date as provided in Section 6.2,
the portion of this Debenture so called for redemption shall thereupon be and
become due and payable at the Redemption Amount, on the Redemption Date, in
the same manner and with the same effect as if it were the Maturity Date
specified in this Debenture, and from and after such Redemption Date, if the
cash, or cash and Common Shares, as the case may be, necessary to redeem this
Debenture shall have been paid to the Holder as herein provided, this
Debenture shall not be considered as outstanding hereunder to the extent of
the Principal Sum redeemed, and Interest on the Principal Sum so redeemed,
shall cease to accrue after such date.
Section 6.4 Payment of Redemption Amount.
Upon this Debenture having been called for redemption as hereinbefore
provided, the Corporation shall, on the Redemption Date fixed in the notice of
the redemption thereof, pay the Redemption Amount to the Holder by deposit to
the Payment Account of cash, as set out in the notice of redemption, and where
Common Shares are to be issued to pay the Redemption Amount, the Corporation
shall, within five (5) Business Days after the Redemption Date, cause to be
delivered to the Holder, a share certificate or certificates for the
appropriate number of Common Shares acquired.
Section 6.5 Partial Redemption of Debenture.
If this Debenture is called for redemption in part only, for the
purposes of this Article 6, unless the context otherwise requires:
(a) references to this Debenture shall be deemed to include any
such part of the Principal Sum of this Debenture which has
been called for redemption; and
(b) upon surrender of the Debenture for payment as required by
Section 6.7, the Holder shall be entitled to receive,
without expense to the Holder, a new Debenture for the
unredeemed part of the Debenture so surrendered, and the
Corporation shall execute and deliver such new Debenture of
the Holder.
Section 6.6 Redemption in Common Shares.
(1) The Corporation may pay any or all of that portion of the Redemption
Amount representing the Principal Sum to be redeemed by issuing to
the Holder a number of Common Shares that is equal to the quotient
resulting from dividing that portion of the Redemption Amount
representing the Principal Sum which is to be redeemed in Common
Shares by the Common Share Redemption Price.
(2) The Common Share Redemption Price shall be equal to 95% of the Twenty
Day Weighted Average Trading Price determined as of the Trading Day
immediately prior to the date of redemption.
(3) Notwithstanding the foregoing, the Corporation may only satisfy all
or part of the Redemption Amount by issuing Common Shares if on the
Trading Day immediately prior to the date of redemption, the closing
price of the Common Shares on the TSE or such other exchange or
market selected by the Directors shall have been no less than 120% of
the Conversion Price then in effect on such date.
Section 6.7 Surrender of Debenture for Cancellation.
If all or any portion of the Principal Sum due hereunder shall be
paid under this Article 6 before the Expiry Date, the Holder shall surrender
this Debenture for cancellation, and no Debenture shall be issued in
substitution therefor for the portion of Principal Sum so redeemed.
Section 6.8 Failure to Surrender Debenture Called for Redemption.
If this Debenture is called for redemption in whole or in part and
the amount required to be paid pursuant hereto is paid or deposited as
contemplated herein, and whether or not the Holder shall have surrendered the
Debenture for endorsement as to the amount of repayment or for cancellation,
as the case may be, prior to the date fixed for redemption, such payment shall
for all purposes be and be deemed to be a payment to the Holder of the
Redemption Amount and, to the extent of the Redemption Amount, this Debenture
shall thereafter not be considered as outstanding hereunder and the Holder
shall have no right in respect thereof.
Section 6.9 Cancellation and Destruction of Debenture.
Any portion of this Debenture redeemed under this Article 6 shall
forthwith be cancelled by the Corporation and no Debenture shall be issued in
substitution for the portion so cancelled.
Section 6.10 Repayment at the Maturity Date.
This Debenture shall be repayable in full as to the Principal Sum,
together with all accrued and unpaid Interest then outstanding hereunder, as
well as any and all other sums then payable by the Corporation to the Holder
hereunder, on the Maturity Date, provided that the Corporation may repay any
or all of the sums due on the Maturity Date in Common Shares, if it shall have
given to the Holder no less than thirty (30) Trading Days notice of its
intention to do so, failing which repayment on the Maturity Date shall be in
cash only. The number of Common Shares to be issued by the Corporation on the
Maturity Date, in satisfaction of its obligations under this Section 6.10
shall be equal to the quotient resulting from dividing the Principal Sum to be
satisfied by the issuance of Common Shares by 95% of the Twenty Day Weighted
Average Trading Price for the period ending on the fifth Trading Day
immediately prior to the Maturity Date.
ARTICLE 7
ADJUSTMENT OF CONVERSION PRICE
Section 7.1 Adjustment of Conversion Price
The Conversion Price in effect at any date shall be subject to
adjustment from time to time as follows:
(a) if and whenever at any time during the Adjustment Period,
the Corporation shall:
(i) subdivide, redivide or change its outstanding
Common Shares into a greater number of such shares;
or
(ii) reduce, combine or consolidate its outstanding
Common Shares into a smaller number of such shares;
the Conversion Price in effect on the effective date of such
subdivision, redivision, change, reduction, combination or
consolidation, as the case may be, shall in the case of the
events referred to in (i) above, be decreased in proportion
to the number of outstanding Common Shares resulting from
such subdivision, redivision or change, or shall, in the
case of the events referred to in (ii) above, be increased
in proportion to the number of outstanding Common Shares
resulting from such reduction, combination or consolidation
in each case by multiplying the Conversion Price in effect
on such effective date by a fraction of which the numerator
shall be the total number of Common Shares outstanding
immediately prior to such date and the denominator shall be
the total number of Common Shares outstanding immediately
after such date. Such adjustment shall be made successively
whenever any event referred to in this Section 7.1(a) shall
occur;
(b) if and whenever at any time during the Adjustment Period,
the Corporation shall fix a record date for the issuance of
rights, options or warrants to all or substantially all the
holders of its outstanding Common Shares entitling them, for
a period expiring not more than 45 days after such record
date, to subscribe for or purchase Common Shares (or
securities convertible or exchangeable into Common Shares)
at a price per share (or having a conversion or exchange
price per share) less than the Twenty Day Weighted Average
Trading Price on such record date, the Conversion Price
shall be adjusted immediately after such record date so that
it shall equal the amount determined by multiplying the
Conversion Price in effect on such record date by a
fraction, of which the numerator shall be the total number
of Common Shares outstanding on such record date multiplied
by the Twenty Day Weighted Average Trading Price on such
record date, less the fair market value (as determined by
the Directors, subject to Section 7.4) of such rights,
options or warrants, and of which the denominator shall be
the total number of Common Shares outstanding on such record
date multiplied by such Twenty Day Weighted Average Trading
Price provided that
(i) any Common Shares owned by or held for the account
of the corporation or any subsidiary shall be
deemed not to be outstanding for the purpose of any
such computation;
(ii) such adjustment shall be made successively whenever
such a record date is fixed;
(iii) to the extent that any such rights, options or
warrants are not exercised prior to the expiration
thereof, the Conversion Price shall be readjusted
to the Conversion Price which would then be in
effect if such record date had not been fixed or to
the Conversion Price which would then be in effect
based upon the number of Common Shares (or
securities convertible or exchangeable into Common
Shares) actually issued upon the exercise of such
rights, options or warrants, as the case may be;
(c) if and whenever at any time during the Adjustment Period the
Corporation shall fix a record date for the making of a
distribution to all or substantially all the holders of its
outstanding Common Shares of (i) shares of any class,
whether of the Corporation or any other corporation
(including stock dividends), (ii) rights, options or
warrants (excluding those referred to in Section 7.1(b));
(iii) evidences of its indebtedness or (iv) assets
(including cash) of the Corporation, then, in each such
case, the Conversion Price shall be adjusted immediately
after such record date so that it shall equal the price
determined by multiplying the Conversion Price in effect on
such record date by a fraction, of which the numerator shall
be the total number of Common Shares outstanding on such
record date multiplied by the Twenty Day Weighted Average
Trading Price on such record date, less the fair market
value (as determined by the Directors, subject to Section
7.4 of such shares, rights, options, warrants, evidences of
indebtedness or assets so distributed, and of which the
denominator shall be the total number of Common Shares
outstanding on such record date multiplied by such Twenty
Day Weighted Average Trading Price provided that:
(i) Common Shares owned by or held for the account of
the Corporation or any subsidiary shall be deemed
not to be outstanding for the purpose of any such
computation;
(ii) such adjustment shall be made successively whenever
such a record date is fixed;
(iii) to the extent that such distribution is not so
made, the Conversion Price shall be readjusted to
the Conversion Price which would then be in effect
if such record date had not been fixed or to the
Conversion Price which would then be in effect
based upon such shares or rights, options or
warrants or evidences of indebtedness or assets
actually distributed, as the case may be;
(d) if and whenever at any time during the Adjustment Period,
there is a reclassification of the Common Shares or a
capital reorganization of the Corporation other than as
described in Section 7.1(a) or a consolidation,
amalgamation, arrangement or merger of the Corporation with
or into any other body corporate, trust, partnership or
other entity, or a sale or conveyance of the property and
assets of the Corporation as an entirety or substantially as
an entirety to any other body corporate, trust, partnership
or other entity, the Holder shall, upon the exercise of the
Conversion Right, be entitled to receive and shall accept,
in lieu of the number of shares then sought to be acquired
by it, the number of Common Shares or other securities or
property of the Corporation or of the body corporate, trust,
partnership or other entity resulting from such merger,
amalgamation, arrangement or consolidation, or to which such
sale or conveyance may be made, as the case may be, that the
Holder would have been entitled to receive on such
reclassification, capital reorganization, consolidation,
amalgamation, arrangement or merger, sale or conveyance, if,
on the record date or the effective date thereof, as the
case may be, the Holder had been the registered holder of
the number of Common Shares sought to be acquired by it and
to which it was entitled to acquire upon the exercise of the
Conversion Right and a contemporaneous and equal adjustment
shall be made to the Conversion Price;
(e) in any case in which Section 7.1(b) or 7.1(c) require that
an adjustment be made to the Conversion Price, no such
adjustment shall be made if, subject to the prior approval
of applicable stock exchanges the Holder receives the
rights, options or warrants referred to in Section 7.1(b) or
the share rights, options, warrants, evidences of
indebtedness or assets referred to in Section 7.1(c), as the
case may be, in such kind and number as it would have
received if it had been a holder of Common Shares on the
applicable record date or effective date, as the case may
be, by virtue of the Principal Sum having then been
converted into Common Shares at the Conversion Price in
effect on the applicable record or effective date, as the
case may be;
(f) the adjustments provided for in this Section 7.1 are
cumulative, and shall, in the case of adjustments to the
Conversion Price be computed to the nearest whole cent and
shall apply to successive subdivisions, redivisions,
reductions, combinations, consolidations, distributions,
issues or other events resulting in any adjustment under the
provisions of this Section 7.1.
(g) if, in the opinion of the Directors, the provisions of this
Section 7.1 are not strictly applicable, or if strictly
applicable would not fairly protect the rights of the Holder
in accordance with the intent and purposes hereof, the
Directors shall make any adjustment in such provisions for
the benefit of the Holder as the Directors deem appropriate.
Section 7.2 Entitlement to Securities on Exercise of Conversion Right or
Forced Conversion Right.
All shares of any class or other securities which the Holder is at
the time in question entitled or obligated to receive on the exercise of the
Conversion Right or Forced Conversion Right, whether or not as a result of
adjustments made pursuant to this Article 7, shall, for the purposes of the
interpretation of this Debenture, be deemed to be shares which the Holder is
entitled or obligated to acquire pursuant to the exercise of the Conversion
Right or Forced Conversion Right.
Section 7.3 No Adjustment for Stock Options.
Notwithstanding anything in this Article 7, no adjustment shall be
made in the Conversion Price if the issue of Common Shares is being made
pursuant to this Debenture or pursuant to any stock option plan in force from
time to time for directors, officers or employees of the Corporation.
Section 7.4 Determination by Corporation's Auditors.
In the event of any question arising with respect to the adjustments
provided for in this Article 7, such question shall be conclusively determined
by the Corporation's Auditors, or if such auditors are unable or unwilling to
act, such other firm of chartered accountants mutually acceptable to the
Corporation and the Holder, who shall have access to all necessary records of
the Corporation, and such determination shall be binding upon the Corporation,
the Holder and all other Persons interested therein.
Section 7.5 Proceedings Prior to any Action Requiring Adjustment.
As a condition precedent to the taking of any action which would
require an adjustment in any of the conversion rights pursuant hereto,
including the number of Common Shares which are to be received upon the
exercise thereof, the Corporation shall take any corporate action which may,
in the opinion of Counsel to the Corporation, be necessary in order that the
Corporation has unissued and reserved in its authorized capital and may
validly and legally issue as fully paid and non-assessable all the shares or
other securities which the Holder is entitled to receive on the full exercise
of the Conversion Right in accordance with the provisions hereof.
Section 7.6 Certificate of Adjustment.
The Corporation shall from time to time immediately after the
occurrence of any event which requires an adjustment or readjustment as
provided in Article 7, deliver a certificate of the Corporation to the Holder
specifying the nature of the event requiring the same and the amount of the
adjustment necessitated thereby and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
Section 7.7 Notice of Special Matters.
The Corporation covenants that it will give notice to the Holder of
its intention to fix a record date that is prior to the Expiry Date for the
issuance of rights, options or warrants to all or substantially all the
holders of its outstanding Common Shares or for the payment of any cash
dividend, stock dividend or other distribution on its Common Shares. Such
notice shall specify the particulars of such event, the record date for such
event and, if prepared or available as at the date that such notice is
required to be given pursuant to this Section 7.7, such notice shall be
accompanied by the material (i.e., proxy circulars, information booklets etc.)
sent to the holders of Common Shares in respect of the event in question,
provided that the Corporation shall only be required to specify in the notice
such particulars of the event as shall have been fixed and determined on the
date on which the notice is given. The notice shall be given in each case not
less than ten (10) days prior to such applicable record date.
ARTICLE 8
COVENANTS OF THE CORPORATION
Section 8.1 Positive Covenants.
The Corporation covenants with the Holder that while any Principal
Sum remains outstanding under this Debenture it shall:
(a) Payment and Performance: duly and punctually pay all amounts
due by it hereunder, and shall perform all other obligations
on its part to be performed under the terms of this
Debenture at the times and places and in the manner provided
for herein;
(b) Corporate Existence: maintain its corporate existence in
good standing under the laws of the Province of Ontario;
(c) Insurance: maintain in full force and effect such policies
of insurance in such amounts issued by insurers of
recognized standing covering its properties and operations,
as are customarily maintained by Persons engaged in the same
or similar business in the localities where its properties
and operations are located;
(d) Conduct of Business and Compliance With Applicable Laws:
(i) carry on and conduct its business in the ordinary
course in compliance with all Applicable Laws and
in accordance with industry practice; and
(ii) punctually observe and perform all of its
obligations and shall pay and discharge all amounts
payable under or by virtue of any lease, licence,
concession, franchise or right held by it so long
as the same is of commercial value and beneficial
to it, and during such time shall not suffer or
permit any default for which any such lease,
licence, concession, franchise or right might be
terminated, so that its interests therein may at
all times be preserved unimpaired; provided,
however, that nothing herein contained shall
require the Corporation to make any such payments
or to observe any such obligations so long as the
Corporation shall in good faith contest its
liability therefor;
(e) Payment of Taxes:
(i) file all income tax returns which are required to
be filed; and
(ii) pay or make provision for payment (in accordance
with GAAP) of all Taxes which are due and payable,
or will provide adequate reserves (in accordance
with GAAP) for the payment of any Tax, the payment
of which is being contested in good faith;
(f) Maintenance of Books and Records: keep proper and adequate
records and books of account in which true and complete
entries will be made in a manner sufficient to enable the
preparation of financial statements in accordance with GAAP;
(g) Notice of an Event of Default: provide the Holder with
prompt written notice of the occurrence of any Event of
Default;
(h) Additional Information: furnish to Counsel retained by the
Holder, on request (acting reasonably), any additional
information regarding its business, affairs, operations,
properties, assets and financial condition, provided
however, that the Corporation shall not be obligated to
provide the Holder with confidential information without the
Holder entering into a confidentiality agreement on terms
acceptable to the Corporation, acting reasonably;
(i) Inspections by the Holder: allow the Holder at any
reasonable time to enter the premises of the Corporation to
inspect the books and records of the Corporation, and shall
permit the Holder prompt access to such other persons as the
Holder may deem necessary or desirable for the purposes of
inspecting or verifying any matters relating to any part of
the premises or the books and records of the Corporation,
provided that any information so obtained shall be kept
confidential, save as required by the Holder in exercising
its rights hereunder or pursuant to any Applicable Law.
(j) Share Capital:
(i) reserve and keep available a sufficient number of
Common Shares for the purpose of enabling it to
satisfy its obligations to issue Common Shares upon
the exercise of the Conversion Right;
(ii) cause the Common Shares and the certificates
representing the Common Shares, from time to time
acquired pursuant to the exercise of the Conversion
Right, to be duly issued and delivered in
accordance with the terms hereof;
(iii) ensure that all Common Shares which shall be issued
upon the exercise of the Conversion Right be issued
as fully paid and non-assessable;
(iv) ensure that all Common Shares otherwise issued
hereunder be issued as fully-paid and
non-assessable; and
(k) Regulatory Filings: the Corporation shall make available to
the Holder, at the Holder's request, all financial
statements, proxy statements, information circulars,
prospectuses, notices and other documentation required to be
provided by Applicable Securities Laws to its Shareholders.
Section 8.2 Negative Covenants of the Corporation.
The Corporation covenants with the Holder that it shall not without
having first obtained the permission of the Holders of Debentures in
accordance with Article 14:
(a) Change of Business: change in any material respect the
nature of its business or operations from the development
and sale of medical imaging software and related products
and services;
(b) Prohibited Disposition: directly or indirectly sell,
transfer, assign, abandon, surrender, exchange, lease,
sublease, convey or otherwise dispose of all, or
substantially all, of its property, assets, and undertakings
provided, however, that the Corporation may sell all or any
part of the common shares it owns in Surgical Navigation
Specialists Inc. without restriction and without having
first obtained the permission of the Holders of Debentures;
and
(c) Corporate Changes: amend, modify, or otherwise change the
articles of incorporation of the Corporation (and all
amendments thereto), or the by-laws of the Corporation (and
all amendments thereto).
ARTICLE 9
DEFAULT
Section 9.1 Events of Default.
An Event of Default shall occur upon the happening of any one or more
of the following events, namely:
(a) if the Corporation defaults in payment of the Principal Sum
when the same becomes due and payable under this Debenture;
(b) if the Corporation defaults in payment of any Interest due
under this Debenture when the same becomes due and payable,
and any such default continues uncured for a period of sixty
(60) days;
(c) if the Corporation (i) makes a general assignment for the
benefit of creditors, (ii) institutes or has instituted
against it any proceeding seeking (x) to adjudicate it a
bankrupt or insolvent, (y) liquidation, winding-up,
reorganization, arrangement, adjustment, protection, relief
or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors
including any plan of compromise or arrangement or other
corporate proceeding involving its creditors, or (z) the
entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for
any substantial part of its properties and assets, and in
the case of any such proceeding instituted against it (but
not instituted by it), either the proceeding remains
undismissed or unstayed for a period of thirty (30) days, or
any of the actions sought in such proceeding (including the
entry of an order for relief against it or the appointment
of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its properties and
assets) occurs, or (iii) takes any corporate action to
authorize any of the above actions;
(d) if the Corporation shall breach or otherwise fail to perform
or observe any other covenant, term or condition contained
in this Debenture, and the breach is not cured after sixty
(60) days written notice by the Holder to the Corporation;
(e) expropriation of all, or substantially all of the assets of
the Corporation;
(f) the Corporation ceases to carry on business as presently
conducted by it; and
(g) if a custodian or a Receiver, or any other officer with
similar powers is appointed for the Corporation or for any
part of its property and assets which, in the reasonable
opinion of the Holder, is a substantial part.
Section 9.2 Acceleration.
Upon the occurrence of an Event of Default, the Holder may by notice
in writing to the Corporation declare the Principal Sum and all accrued
Interest thereon, and all other amounts owing hereunder, to be immediately due
and payable and the same shall become immediately due and payable to the
Holder and the Corporation shall forthwith pay the same to the Holder, failing
which all rights and remedies of the Holder hereunder or at law or equity in
respect of such non-payment shall become enforceable.
Section 9.3 Remedies Not Exclusive.
No right, power or remedy herein conferred upon or reserved to the
Holder is intended to be exclusive of any other right, power or remedy or
remedies, and each and every right, power and remedy shall, to the extent
permitted by Applicable Law, be cumulative and shall be in addition to every
other right, power or remedy given hereunder or now or hereafter existing at
law, in equity or by statute. The Holder shall have the power to waive any
Default or Event of Default, provided such waiver is obtained in accordance
with Article 14, and shall not constitute a waiver of any other or subsequent
Default or Event of Default. No delay or omission of the Holder or Holders in
the exercise of any right, power or remedy accruing upon any Default or Event
of Default shall impair any such right, power or remedy or shall be construed
to be a waiver of any such Default or Event of Default or an acquiescence
therein. Every right, power and remedy given to the Holder by this Debenture
or under Applicable Law may be exercised from time to time and as often as may
be deemed expedient by the Holder. In case the Holder shall have proceeded to
enforce any right under this Debenture and the proceedings for the enforcement
thereof shall have been discontinued or abandoned for any reason or shall have
been determined adversely to the Holder, then and in every such case, the
Corporation and the Holder shall, without any further action hereunder, to the
full extent permitted by Applicable law, subject to any determination in such
proceedings, severally and respectively, be restored to their former positions
and rights hereunder and thereafter all rights, remedies and powers of the
Holder shall continue as though no such proceeding had been taken.
Section 9.4 Power of Attorney.
The Corporation hereby irrevocably constitutes and appoints the
Holder its true and lawful attorney and agent, with full power and authority
in the Corporation's name, place and stead from time to time to do all acts
and things and execute and deliver all share transfers, certificates, proxies,
resolutions, consents, assignments, transfers, conveyances and agreements, in
such form as the Holder, acting reasonably, considers necessary or desirable
to do all things which the Corporation is required to sign, execute and do
hereunder if the Corporation has failed to sign, execute or do the same and
generally to use the name of the Corporation, as applicable, in the exercise
of all or any of the powers hereby conferred on the Holder, with full powers
of substitution and revocation, provided that this power of attorney may not
be exercised the Holder until an Event of Default shall have occurred. Such
appointment and power of attorney is hereby declared by the Corporation to be
an irrevocable power coupled with an interest.
Section 9.5 Application of Monies.
Subject to Applicable Law, all monies collected or received by the
Holder pursuant to or in exercise of any right or remedy shall be applied on
account of the amounts outstanding hereunder in such manner as the Holder
deems best or, at the option of the Holder, or released to the Corporation,
all without prejudice to the liability of the Corporation or the rights of the
Holder hereunder, and any surplus shall be accounted for as required by law.
ARTICLE 10
INCREASED COST AND EXPENSES
Section 10.1 Expenses.
Unless stated to the contrary, all statements, reports, certificates,
opinions and other documents or information required to be furnished to the
Holder by the Corporation under this Debenture shall be supplied by the
Corporation without cost to the Holder. If the Corporation fails to pay any
amounts required to be paid by it under this Debenture or if the Corporation
fails to observe or perform any of the covenants and obligations set forth in
this Debenture to be observed or performed by it, the Holder may, but shall be
under no obligation to, pay such amounts or do such acts or things as may be
required to ensure such observance and performance, without waiving any of its
rights under this Debenture. No such payment, act or thing done by the Holder
shall relieve the Corporation from any Default under this Debenture or the
consequences of such Default. The Corporation shall reimburse the Holder for
any such payments made or reasonable expenditures incurred by the Holder in
connection with ensuring the observance and performance of any of the
covenants or obligations under this Debenture, other than expenses for
management time and other expenses detailed below, as such expenses are
incurred. All other reasonable expenses (including the cost of any insurance
and payment of Taxes or other charges and legal fees and expenses on a
solicitor-client, basis) paid by the Holder shall be deemed advanced to the
Corporation by the Holder, shall become party of the Obligations, and shall,
from the time they are paid by the Holder until repaid by the Corporation,
bear interest at the Interest Rate.
ARTICLE 11
SUPPLEMENTAL DEBENTURES
Section 11.1 Supplemental Indentures.
From time to time the Corporation may, and it shall, when required by
this Debenture, execute, acknowledge and deliver, by its proper officers,
indentures supplemental hereto or in replacement hereof, as the case may be,
which thereafter shall form part hereof in the case of a supplemental
indenture, for any one or more of the following purposes:
(a) evidencing the succession, or successive successions, of
other corporations to the Corporation, and the terms,
provisions, conditions, covenants and obligations assumed by
any such successor;
(b) evidencing the remaining Principal Sum where a partial
conversion, redemption or repurchase occurs; and
(c) for any other purpose not inconsistent with the terms of
this Debenture.
Section 11.2 No Amendment or Waiver.
Notwithstanding any other provisions of this Debenture, no amendment
or waiver of any provisions of this Debenture, nor consent to any departure by
the Corporation therefrom (except as described in Article 13), shall in any
event be effective unless the same shall be obtained in the manner, and on the
terms and conditions set forth in Article 14, and then such amendment, waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which it was given and shall not extend to or be taken in
any manner whatsoever to affect any subsequent breach or Default or to affect
the rights of the Holders resulting therefrom.
ARTICLE 12
REGISTRATION AND TRANSFER OF DEBENTURE
Section 12.1 Register of the Debenture.
(1) The Corporation shall keep or cause to be kept a register in which
the Holder or Holders of the Debentures shall be registered. The name
and address of each Holder of the Debenture and particulars of the
Debenture held shall be entered in the register. For the purposes of
this Debenture, the Corporation may treat the registered owner of
this Debenture as the beneficial owner thereof for all purposes,
unless otherwise notified.
(2) The Corporation shall have full power and authority to appoint, at
any time, and at its sole discretion, an agent or trustee to maintain
the register of Holders of the Debentures. Where the Corporation
appoints an agent or trustee to maintain the register of holders of
Debentures, the Holder agrees to execute and deliver all such
agreements, indentures, and other documents required by such agent or
trustee. The Corporation shall pay all costs associated with
appointing an agent or trustee to maintain the register of Holders of
Debentures, and all on-going costs.
Section 12.2 Transfer of the Debentures.
This Debenture or part hereof is transferable and assignable by the
Holder to any other Person at any time provided that (i) any transfer or
assignment of the Principal Sum, in whole or in part, occurs in multiples of
$1,000, and (ii) the transferee of all or any portion of this Debenture,
contemporaneously with the occurrence of such transfer, executes and otherwise
agrees to be bound by, the Debenture Holder Agreement. The Holder acknowledges
and understands that the transfer or assignment of all or part of the
Principal Sum is subject to Applicable Securities Laws, and may only be
effected upon compliance with such laws.
Section 12.3 U.S. Transferee.
This Debenture and the Common Shares issuable upon exercise of the
Conversion Right or otherwise under this Debenture have not been registered
under the U.S. Securities Act, or any other Applicable U.S. Securities Laws,
and may not be transferred in the United States or to a U.S. Person unless
this Debenture and the Common Shares issuable upon exercise of the Conversion
Right or otherwise under this Debenture have been registered under the U.S.
Securities Act and any other Applicable U.S. Securities Laws or an exemption
from such registration requirements is available.
Section 12.4 Exchange of Debentures.
Any one or more Debentures may, upon compliance with the reasonable
requirements of the Corporation (including compliance with Applicable
Securities Laws), be exchanged for one or more other Debentures representing
the same aggregate Principal Sum as represented by the Debenture so exchanged.
Any Debenture tendered for exchange shall be cancelled and surrendered by the
Holder to the Corporation.
Section 12.5 Replacement Debenture.
If this Debenture becomes mutilated or is lost, destroyed or stolen,
the Corporation, subject to Applicable Law, shall issue and deliver, a new
debenture of like tenor as the one mutilated, lost, destroyed or stolen in
exchange for and in place of and upon cancellation of this Debenture. The
Holder shall bear the cost of the issue of a replacement Debenture and in case
of loss, destruction or theft shall, as a condition precedent to the issuance
thereof, furnish to the Corporation such evidence of ownership and of the
loss, destruction or theft of this Debenture as shall be satisfactory to the
Corporation, in its sole discretion, and the Holder may also be required to
furnish an indemnity in amount and form satisfactory to the Corporation, its
sole discretion, and shall pay the reasonable charges of the Corporation in
connection therewith.
ARTICLE 13
PURCHASE FOR CANCELLATION
Section 13.1 Purchase for Cancellation
At any time prior to the Maturity Date, and subject to Applicable
Laws (including the rules, regulation, policies and by-laws of the TSE), the
Corporation may purchase any Principal Sum of Debentures for cancellation, at
any price, by tender, by private contract, or any other means permitted at
law, subject only to the consent of the Holder of such Debenture having been
obtained, which consent, in the case of a single Holder, may be obtained
without resort to Article 14.
ARTICLE 14
MEETINGS OF HOLDERS OF DEBENTURES
Section 14.1 Right to Convene Meeting.
The Corporation may at any time and from time to time convene a
meeting of the Holders of the Debentures. The Corporation shall, from time to
time, convene such a meeting upon receiving a Meeting Request. If within
twenty-one (21) Business Days of receiving a Meeting Request, the Corporation
shall have not called a meeting of Holders of Debentures, then those Holders
of Debentures signing the Meeting Request may organize and convene such a
meeting on the terms and conditions of this Article 14 as though such Holders
were the Corporation, and the Corporation shall pay all reasonable costs
associated with the convening and organizing of a meeting by such Holders of
Debentures. Every such meeting shall be held in the City of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ or at such other place in the Province of Ontario as the Holders may
determine.
Section 14.2 Notice of Meetings.
At least twenty-one (21) days notice of any meeting shall be given to
the Holders of Debentures by the Corporation. Such notice shall state the time
when, and the place where, the meeting is to be held and shall state briefly
the general nature of the business to be transacted thereat, but it shall not
be necessary for any such notice to set out the terms of any resolution to be
proposed or any of the provisions of this Article. The accidental omission to
give notice of a meeting to any Holder of Debentures shall not invalidate any
resolution passed at any such meeting.
Section 14.3 Chairman.
The Holders present in person or by proxy at the meeting shall choose
from among their number the chairman of the meeting.
Section 14.4 Quorum.
At any meeting of the Holders of Debentures a quorum shall consist of
one Holder present in person or by proxy and representing at least 50% in
Principal Sum of the then outstanding Debentures. If a quorum of the Holders
shall not be present within 30 minutes from the time fixed for holding any
meeting, the meeting shall be adjourned to the same day in the next week
(unless such day is not a Business Day in which case it shall be adjourned to
the first Business Day thereafter) at the same time and place and no notice
shall be required to be given with respect to such adjourned meeting. At the
adjourned meeting the Holders present in person or by proxy shall form a
quorum and may transact the business for which the meeting was originally
convened notwithstanding, that they may not represent 50% of the Principal Sum
of the outstanding Debentures. Any business may be brought before or dealt
with at an adjourned meeting, which might have been brought before or dealt
with at the original meeting in accordance with the notice calling the same.
No business shall be transacted at any meeting unless the required quorum be
present at the commencement of business.
Section 14.5 Power to Adjourn.
The chairman of any meeting at which a quorum is present may, with
the consent of the Holders of a majority in Principal Sum of the Debentures
represented thereat, adjourn any such meeting and no notice of such
adjournment need be given except such notice, if any, as the meeting may
prescribe.
Section 14.6 Show of Hands.
Every question submitted to a meeting shall, subject to Section 14.7,
be decided in the first place by a majority of the votes given on a show of
hands. At any such meeting, unless a poll is duly demanded as herein provided,
a declaration by the chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of that fact. The chairman of any
meeting shall be entitled, both on a show of hands and on a poll, to vote with
respect to the Debentures, if any, held by him.
Section 14.7 Poll.
On every Extraordinary Resolution, and on any other question
submitted to a meeting, when demanded by the chairman or by one or more
Holders or proxies for Holders, a poll shall be taken in such manner and
either at once or after an adjournment as the chairman shall direct. Questions
other than Extraordinary Resolutions shall, if a poll be taken, be decided by
the votes of the Holders of a majority in Principal Sum of the Debentures
represented at the meeting and voted on the poll.
Section 14.8 Voting.
On a show of hands every person who is present and entitled to vote,
whether as a Holder or as proxy for one or more Holders or both, shall have
one vote. On a poll each Holder present in person or represented by a proxy
duly appointed by an instrument in writing shall be entitled to one vote with
respect to each $1,000 Principal Sum of Debentures of which he shall then be
the Holder. A proxy need not be a Holder. In the case of joint registered
Holders, any one of them present in person or by proxy at the meeting may vote
in the absence of the other or others, but in case more than one of them be
present in person or by proxy, they shall vote together with respect to the
Debentures of which they are joint registered Holders.
Section 14.9 Persons Entitled to Attend at Meetings.
The Corporation (by their respective employees, officers and
directors) and the legal advisors of the Corporation, and any Holder may
attend any meeting of the Holders of Debentures, but shall have no vote as
such.
Section 14.10 Ordinary Powers.
Any resolution or matter placed before Holders at a duly called and
held meeting shall be approved provided a simple majority of Holders present
or represented by proxy at such meeting, vote in favour, except for the
matters set forth in Section 14.11 which shall require approval by
Extraordinary Resolution.
Section 14.11 Powers Exercisable by Extraordinary Resolution.
In addition to the powers conferred upon them by any other provisions
of the Debenture or by law, a meeting of the Holders shall have the following
powers exercisable from time to time by Extraordinary Resolution:
(a) power to sanction any modification, abrogation, alteration,
compromise or arrangement of the rights of the Holders
against the Corporation or against its property, whether
such rights arise under the Debentures or otherwise;
(b) power to assent to any modification of or change in or
addition to or omission from or amendment of the provisions
contained in the Debenture which shall be agreed to by the
Corporation and to authorize the Corporation to concur in
and execute any indenture supplemental hereto embodying any
modification, change, addition, omission or amendment;
(c) power to sanction any scheme for the reconstruction,
reorganization or arrangement of the Corporation or for the
consolidation, amalgamation or merger of the Corporation
with any other corporation or for the sale, leasing,
transfer or other disposition of the undertaking, property
and assets of the Corporation or any part thereof;
(d) power to assent to any compromise or arrangement with any
creditor or creditors or any class or classes of creditors,
whether secured or otherwise, and with holders of any shares
or other securities of the Corporation;
(e) power to sanction the exchange of the Debentures for or the
conversion thereof into shares, bonds, debentures or other
securities or obligations of the Corporation or of any
company formed or to be formed;
(f) power, authorize the Corporation to grant extensions of time
for payment of Interest on any of the Debentures whether or
not the Interest, the payment with respect to which is
extended, is at the time due or overdue;
(g) power to amend, alter or repeal any Extraordinary Resolution
previously passed or sanctioned by the Holders; and
(h) power to waive any Event of Default which remains uncured
and continuing at the time of the meeting.
Section 14.12 Meaning of "Extraordinary Resolution".
(1) The expression "Extraordinary Resolution" when used in this Debenture
means, subject as hereinafter in this Article provided, a resolution
proposed to be passed as an Extraordinary Resolution at a meeting of
Holders of Debentures (including an adjourned meeting) duly convened
for the purpose and held in accordance with the provisions of this
Article at which the Holders of more than 50% in Principal Sum of the
Debentures then outstanding are present in person or by proxy and
passed by the favourable votes of the Holders of not less than 66
2/3% of the Principal Sum of Debentures represented at the meeting
and voted on a poll upon such resolution.
(2) Votes on an Extraordinary Resolution shall always be given on a poll
and no demand for a poll on an Extraordinary Resolution shall be
necessary.
Section 14.13 Powers Cumulative.
It is hereby declared and agreed that any one or more of the powers
of this Debenture stated to be exercisable by the Holders by Extraordinary
Resolution or otherwise may be exercised from time to time and the exercise of
any one or more of such powers from time to time shall not be deemed to
exhaust the rights of the Holders to exercise the same or any other such power
or powers thereafter from time to time.
Section 14.14 Minutes.
Minutes of all resolutions and proceedings at every meeting as
aforesaid shall be made and duly entered in books to be from time to time
provided for that purpose by the Corporation at its expense, and any such
minutes as aforesaid, if signed by the chairman of the meeting at which such
resolutions were passed or proceedings had, or by the chairman of the next
succeeding meeting of the Holders, shall be prima facie evidence of the matter
therein stated and, until the contrary is proved, every such meeting, with
respect to the proceedings of which minutes shall have been made, shall be
deemed to have been duly held and convened, and all resolutions passed thereat
or proceedings taken thereat to have been duly passed and taken.
Section 14.15 Instrument in Writing.
All actions which may be taken and all powers that may be exercised
by the Holders at a meeting held as hereinbefore in this Article provided may
also be taken and exercised by the Holders of 66 2/3% of the Principal Sum of
all the outstanding Debentures, by an instrument in writing signed in one or
more counterparts and the expression "Extraordinary Resolution" when used in
this Debenture shall include an instrument so signed.
Section 14.16 Binding Effect of Resolutions.
Every resolution and every Extraordinary Resolution passed in
accordance with the provisions of this Article at a meeting of Holders of
Debentures shall be binding upon all the Holders whether present at or absent
from such meeting, and every instrument in writing signed by Holders in
accordance with Section 14.15 shall be binding upon all the Holders, whether
signatories thereto or not, and each and every Holders shall be bound to give
effect accordingly to every such resolution, Extraordinary Resolution and
instrument in writing.
ARTICLE 15
MISCELLANEOUS
Section 15.1 Severability.
If any one or more of the provisions or parts thereof contained in
this Debenture should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, the remaining provisions or parts thereof
contained herein shall be and shall be conclusively deemed to be, as to such
jurisdiction, severable therefrom and:
(a) the validity, legality or enforceability of such remaining
provisions or parts thereof shall not in any way be affected
or impaired by the severance of the provisions or parts
thereof severed; and
(b) the invalidity, illegality or unenforceability of any
provision or any part thereof contained in this Debenture in
any jurisdiction shall not affect or impair such provision
or part thereof or any other provisions of this Debenture in
any other jurisdiction.
Section 15.2 Governing Law.
This Debenture shall be deemed to have been made and shall be
construed in accordance with the laws of the Province of Ontario and the laws
of Canada applicable therein and shall be treated in all respects as an
Ontario contract. The Corporation and the Holder hereby irrevocably submit to
the jurisdiction of the courts of the Province of Ontario for any action, suit
or any other proceeding arising out of or relating to this Debenture and any
other agreement or instrument mentioned therein or any of the transactions
contemplated thereby.
Section 15.3 Notices.
All notices, reports or other communication required or permitted by
this Debenture must be in writing and either delivered by hand or by any form
of electronic communication by means of which a written or typed copy is
produced by the receiver thereof and is effective on actual receipt unless
sent by electronic means in which case it is effective on the Business Day
next following the date of transmission, addressed to the relevant party, as
follows:
(a) if to the Corporation:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(b) if to the Holder:
RBC Capital Markets in trust for Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Epic Limited Partnership
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Equity Finance
or the last address or telecopier number of the party concerned, notice of
which was given in accordance with this Section 15.3.
Section 15.4 Term.
The provisions of this Debenture shall become effective as of the
date set forth on the first page hereof and shall continue in full force and
effect until discharged in accordance with Section 1.7.
Section 15.5 No Merger or Novation.
The execution and delivery of this Debenture or of any instruments or
documents supplemental hereto shall not operate as a merger of any
representation, warranty, term, condition or other provision contained in any
other obligation or indebtedness of the Corporation to the Holder.
Section 15.6 Enurement.
This Debenture and all its provisions shall enure to the benefit of
the Holder, its successors and assigns and shall be binding upon the
Corporation, its successors and permitted assigns.
Section 15.7 Time of Essence.
Time shall be of the essence hereof.
IN WITNESS WHEREOF Cedara Software Corp. has caused this Debenture to
be signed by its Chief Financial Officer and Secretary as of the 18th day of
January, 2002.
CEDARA SOFTWARE CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
and Secretary
APPENDIX 1
CONVERSION NOTICE
TO: CEDARA SOFTWARE CORP. (the "Corporation")
The undersigned hereby exercises its right to acquire common shares
in the capital of the Corporation pursuant to the terms of a 5% unsecured
subordinated convertible debenture, issued by the Corporation effective as of
January 18, 2002, on the terms set therein and herein. Capitalized terms not
defined herein shall have the meaning ascribed to such terms in such
debenture.
***
1. PRINCIPAL SUM TO BE CONVERTED: _____________________________
(Principal Sums may only be converted in
multiples of $1,000 only.)
2. NUMBER OF COMMON SHARES
TO BE ACQUIRED: _____________________________
3. CONVERSION PRICE: _____________________________
4. PRINCIPAL SUM REMAINING
FOLLOWING CONVERSION: _____________________________
5. CONVERSION DATE: _____________________________
(Must be between three (3) and
twenty (20) days following the
date of this notice.)
6. NAME AND ADDRESS OF THE PERSON
TO WHOM SUCH COMMON SHARES ARE
TO BE ISSUED AND DELIVERED:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
5. IF THIS CONVERSION IS PARTIAL, THE
NAME AND ADDRESS WHERE A NEW
DEBENTURE REPRESENTING THE UNCONVERTED
PRINCIPAL SUM IS TO BE DELIVERED:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
DATED this _______ day of ___________________, ______________.
----------------------------------- ------------------------------------
Signature Guarantee (Signature of Debentureholder or
authorized representative)
------------------------------------
Print Full Name
Note:
1. Once this notice is delivered to the Corporation, the Debentureholder
may not revoke, cancel, or otherwise withdraw the giving of this
notice, except with the express, written consent of the Corporation.
2. This notice must be accompanied by the Debenture(s) representing the
Principal Sums to be converted. Until such delivery the Corporation
is under no obligation to deliver, or cause to be delivered, to the
Debentureholder, the common shares to be acquired.
3. The Debentureholder may exercise its right to receive Common Shares
by completing this form and surrendering this form and the Debenture
to the Corporation at its principal office at Cedara Software Corp.,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
APPENDIX 2
FORM OF DEBENTURE HOLDER AGREEMENT