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Exhibit 3.11
$450,000 No. 2.
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INTERNATIONAL TELEPRESENCE (CANADA) INC.
UNSECURED NON-INTEREST BEARING CONVERTIBLE DEBENTURE
DUE SEPTEMBER 10, 2000
INTERNATIONAL TELEPRESENCE (CANADA) INC. (herein called the "Corporation"), FOR
VALUE RECEIVED, hereby acknowledges itself indebted to and promises to pay to
Adelite Communications Corporation (the "Holder") on September 10, 2000, or on
such earlier date as the principal amount hereof may become payable hereunder,
the principal amount (the "Principal") of Four Hundred and Fifty Thousand
Dollars ($450,000.00) in lawful money of Canada upon presentation and surrender
of this Debenture, at the head office of the Corporation in Burnaby, British
Columbia, with no interest, either prior to or following maturity, and in
accordance with the provisions set out herein:
1. INTERPRETATION
1.1 Definitions
Where used in this Debenture, the following words and phrases shall,
unless there is something in the context otherwise inconsistent therewith, have
the following meanings:
(a) "Business Day" means a day other than a Saturday, Sunday,
civic or statutory holiday;
(b) "Conversion Price" means, at any time, $0.10 pe Share, subject
to adjustment in accordance with Section 3.3;
(c) "Corporation" means International Telepresence (Canada) Inc.;
(d) "Debenture" means this debenture issued by the Corporation in
the Principal of $450,000.00 Canadian dollars;
(e) "herein", "hereto", "hereunder", "hereof", "hereby" and
similar expressions mean or refer to these conditions of the
Debenture and not to any particular Section, clause,
subclause, subdivision or portion hereof, and the expressions
"Section", "clause", and "subclause" followed by a number or a
letter mean and refer to the specified Section, clause or
subclause hereof;
(f) "Holder", "Registered Holder" or "Debentureholder" means
initially Adelite Communications Corporation and any other
person or persons from time to time being entered in the
register hereinafter mentioned as a holder of this Debenture;
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(g) "Person" means an individual, a partnership, a corporation, a
trust, an unincorporated organization, a government or any
department or agency thereof and the heirs, executors,
administrators or other legal representatives of an individual
and words importing persons have a similar meaning;
(h) "Shares" means fully paid and non-assessable common shares in
the capital of the Corporation as constituted on the date
hereof, subject to adjustments, if any, in accordance with the
provisions of clause 3.3;
(i) AWarrant means one common share purchase warrant, exercisable
by the holder thereof at a price of $0.15 per Share for a
period of 18 months from the date of issue.
1.2 Gender, etc.
Words importing the singular number only include the plural and vice
versa and words importing any gender include both genders.
1.3 Currency
All dollar amounts referred to herein shall be in lawful money of
Canada, unless otherwise specifically identified herein.
1.4 Headings
The division of this Debenture into Sections, clauses, subclauses or
other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
1.5 Business Day
In the event that any date upon which the Principal is payable by the
Corporation, or upon or by which any other action is required to be taken by the
Corporation hereunder is not a Business Day, then the Principal shall be
payable, or such other action required to be taken shall be taken, on or by the
next succeeding day which is a Business Day.
2. TRANSFER AND REGISTER, ETC.
2.1 Transfer
This Debenture may not be transferred by the Holder without the prior
written consent of the Corporation which shall not be unreasonably withheld. In
the event of a transfer, the Holder shall complete and deliver to the
Corporation the Transfer Form in the form attached hereto as Schedule A. In
addition, the transferor shall ensure that such transfer is effected in
accordance with applicable requirements of the Securities Act (Ontario).
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The Register for the transfer and registration of this Debenture will
be kept at the head office of the Corporation in Burnaby, British Columbia. Upon
presentation and surrender at the registered office of the Corporation, this
Debenture may be, subject to compliance with Section 2.1 above, transferred by
the Registered Holder in person or by attorney duly appointed in writing, in
which case a new debenture(s) registered in the name of the transferee(s) will
be issued.
2.3 Loss, Theft, Destruction or Mutilation of Debentures. Upon receipt of
evidence reasonably satisfactory to the Corporation of the loss, theft,
destruction or mutilation of any debenture and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity bond in such reasonable
amount as the Corporation may determine, the Corporation will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated debenture, a new debenture
of like tenor and unpaid principal amount and dated as of the date to which
interest has been paid on the Debenture so lost, stolen, destroyed or mutilated.
3. CONVERSION
3.1 Conversion
(a) Upon and subject to the provisions and conditions of this
Section 3, the Debenture shall be convertible into Shares and
Warrants upon written notice (the "Conversion Notice") by the
Corporation to the Holder in the form attached hereto as
Schedule B, to convert, as follows:
(i) in the event that the Corporation has obtained
approval of shareholders (the "Shareholder Approval")
for the conversion of the Debenture into Shares and
Warrants, the principal amount of the Debenture shall
immediately be converted into 4,500,000 Shares and
4,500,000 Warrants;
(ii) in the event that Shareholder Approval is not
obtained by April 30, 1999:
(1) $249,268.00 of the principal amount of the
Debenture shall be converted into 2,492,683
Shares and 2,492,683 Warrants; and
(2) the sum of $200,732.00, representing the
balance of the principal amount of the
Debenture shall be converted immediately
after the earlier of: (i) Shareholder
Approval has been obtained; (ii) The
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Canadian Dealing Network Inc. has given its
approval to such conversion in the absence
of Shareholder Approval; or (iii) the day
which is six months plus one day after the
date upon which the Debenture Shares and
Debenture Warrants referred to in
subparagraph (a) above were issued, provided
that the Company has not issued any other
securities during such period which shall
constitute a private placement in the
opinion of DCN, if the shares of the Company
are then quoted and/or traded on CDN, into
2,007,317 Debenture Shares and 2,007,317
Debenture Warrants.
(b) No fractional Shares and Warrants will be issue on any
conversion provided that any fractional interest which would
result from the conversion of the Debenture shall be rounded
up to the next whole number (for fractions 1/2 and above) and
rounded down to the next whole number (for fractions below
1/2).
3.2 Conversion Procedure for Conversion
(a) Upon the Corporation providing to the Holder with a Conversion
Notice, the Holder shall surrender this Debenture to the
Corporation at its head office, whereupon the Corporation
shall issue certificate(s) representing the Shares and
Warrants issuable upon conversion registered in the name of
the Holder.
(b) For the purposes of this Section, this Debentur shall be
deemed to be surrendered for conversion on the date (herein
called the "Date of Conversion") on which it is so surrendered
in accordance with the provisions of this Section and, in case
this Debenture is surrendered by post or other means of
transmission, on the date on which it is received by the
Corporation at its offices specified in Section 7 of this
Debenture.
3.3 Adjustment of Conversion Price
The Conversion Price in effect at any date shall be subject to
adjustment from time to time as follows:
(1) In the event that the Corporation shall: (i) subdivide the outstanding
Shares into a greater number of Shares, or (ii) consolidate the issued and
outstanding Shares into a lesser number of Shares, (any of such events being
called a "Share Reorganization"), the Conversion Price shall be adjusted
effective immediately after the effective date or record date, as the case may
be, on which the holders of Shares are determined for the purpose of the Share
Reorganization by
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multiplying the Conversion Price in effect immediately prior to such effective
date or record date by a fraction, the numerator of which shall be the number of
Shares outstanding on such effective date or record date before giving effect to
such Share Reorganization and the denominator of which shall be the number of
Shares outstanding immediately after giving effect to such Share Reorganization
including, in the case where securities exchangeable for or convertible into
Shares are distributed, the number of Shares that would have been outstanding
had such securities been exchanged for or converted into Shares on such record
date.
(2) In the event any reorganization, amalgamation, consolidation or merger of
the Corporation with or into any other corporation, or in the case of any sale
of the properties and assets of the Corporation as, or substantially as, an
entirety to any other corporation, this Debenture shall, after such
reorganization, amalgamation, consolidation, merger or sale, be convertible into
the number of Shares and Warrants or other securities or property of the
Corporation, as the case may be, that such Holder would have been entitled to
receive as a result thereof, if on the effective date thereof, he had been the
holder of the number of Shares and Warrants to which he was theretofore entitled
upon conversion.
(3) In the event of any reclassification or other change in the outstanding
Shares or securities convertible or exchangeable into Shares of the Corporation,
other than a Share Reorganization, the Conversion Price shall be adjusted in
such manner, if any, and at such time as the directors, in their sole
discretion, may determine to be equitable in the circumstances. Failure of the
directors to provide for an adjustment on or prior to the effective date of any
such reclassification of, or change in, the outstanding Shares of the
Corporation shall be conclusive evidence that the directors have determined that
it is equitable to make no adjustment in the circumstances.
(4) In any case in which clause 3.3 shall require that an adjustment shall
become effective immediately after a record date for an event referred to
herein, the Corporation may defer, until the occurrence of such event, issuing
to the Holder the additional Shares and Warrants issuable upon such conversion
by reason of the adjustment required by such event before giving effect to such
adjustment; provided, however, that the Corporation shall deliver to such Holder
an appropriate instrument evidencing such Holder's right to receive such
additional Shares and Warrants upon the occurrence of the event requiring such
adjustment and the right to receive any distributions made on such additional
Shares and Warrants declared in favour of Holders of record of Shares on and
after the Date of Conversion or such later date as such Holder would, but for
the provisions of this subclause (4), have become the holder of record of such
additional Shares pursuant to clause 3.3.
(5) The adjustments provided for herein are cumulative; shall, in the case of
adjustments to the Conversion Price, be computed to the nearest cent; and shall
apply (without duplication) to successive subdivisions, reductions,
consolidations, distributions, issues or other events resulting
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in any adjustment under the provisions hereof; provided that, notwithstanding
any other provision hereof, no adjustment of the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in the Conversion Price then in effect; provided however, that any
adjustments which by reason of this subclause (5) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
(6) If, in the opinion of the board of directors of the Corporation, the
provisions of clause 3.3 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 board of directors of the Corporation shall make any
adjustment in such provisions for the benefit of the Holder as such board of
directors deems appropriate.
4. EXCLUSIVE BENEFIT
The Registered Holder or its legal personal representative will be
regarded as exclusively entitled to the benefit of this Debenture and all
persons may act accordingly and the Corporation shall not be bound to enter in
the register, notice of any trust or, except as may be required by some court of
competent jurisdiction having so ordered, to recognize any trust or equity
affecting the title to this Debenture.
5. DEFAULT
5.1 Events of Default
Each of the following events is herein sometimes referred to as an
"Event of Default":
(a) if the Corporation shall fail to pay the principal hereof or
other amount hereunder which shall have become due and payable
and such default continues for a period of ten (10) Business
Days;
(b) if an order is made or a resolution is passed for the
winding-up, dissolution or liquidation of the Corporation or
if a petition is filed or other process taken for the
winding-up, dissolution or liquidation of the Corporation and
is not disputed by the Corporation in good faith;
(c) if the Corporation commits or threatens to commit an act of
bankruptcy or becomes insolvent or goes into liquidation or
makes a general assignment for the benefit of its creditors or
otherwise acknowledges its insolvency or if a bankruptcy
petition is filed or presented against the Corporation and is
not contested in good faith and discharged within sixty (60)
days after it is filed or presented or if a custodian or
sequestrator or a receiver or receiver and manager or any
other
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officer with similar powers is appointed for such Corporation
or for any part of its property which, in the reasonable
opinion of the Holder, is a substantial part;
(d) if the Corporation makes an assignment for the benefit of its
creditors or a bulk sale of all or substantially all of its
property and assets;
(e) if any proceedings involving the Corporation ar taken with
respect to a compromise arrangement under the Bankruptcy and
Insolvency Act (Canada) or The Companies Creditors Arrangement
Act (Canada) or similar legislation of any other jurisdiction
in Canada, or any province thereof;
(f) if an encumbrancer takes possession of any part of the
property of the Corporation which, in the reasonable opinion
of the Holder, represents all or substantially all of the
Corporation's property and assets or if a distress or
execution or any similar process is enforced against such
property and assets and remains unsatisfied for so long as
would permit any part of such property and assets to be sold
thereunder; and
(g) if the Corporation shall cease to carry on in the ordinary
course, its business or a substantial part thereof.
5.2 Acceleration of Maturity on Default
In case any Event of Default has occurred, the Holder may in its
discretion, subject to the provisions of Section 5.5 hereof, by notice in
writing to the Corporation, declare the Principal of this Debenture then
outstanding on the date of declaration, and all other moneys outstanding
hereunder and thereunder, to be immediately due and payable, anything therein or
herein to the contrary notwithstanding, and the Corporation shall forthwith pay
to the Holder, subject to and in accordance with the Debenture, the Principal.
Payment when made shall be deemed to have been made in discharge of the
Corporation's obligations hereunder.
5.3 Remedies Cumulative
No remedy of the Holder is intended to be exclusive of any other remedy
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now existing or hereafter to exist by law
or statute.
5.4 No Merger, Etc.
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Neither the taking of any judgment nor the exercise of any power of
seizure or sale shall operate to extinguish the liabilities of the Corporation
to make payment of the Principal hereby secured, nor shall such operate as a
merger of any covenant or affect the right of the Holder to interest calculated
as hereinbefore provided, nor shall the acceptance of any payment or alternative
security constitute or create any novation, and it is further agreed that the
taking of a judgment or judgments under any of the covenants herein contained
shall not operate as a merger of any of said covenants.
5.5 Waiver of Default
Upon the happening of an Event of Default, the Holder shall have power
to waive in writing its rights hereunder provided that no act or omission of the
Holder in the premises shall extend to or be taken in any manner whatsoever to
affect any subsequent Event of Default hereunder or the rights resulting
therefrom.
6. COVENANTS OF THE CORPORATION
6.1 Payment of Principal
The Corporation shall, duly and punctually pay or cause to be paid to
the Holder the principal of, the Debenture on the date at the place in the
moneys, and in the manner mentioned herein.
6.2 Payment of Costs
The Corporation will pay all reasonable costs, charges and expenses of
and incidental to the creation of the Debenture.
6.3 Corporate Existence and Good Standing
The Corporation will at all times maintain its status as a corporation
duly and validly incorporated, organized and subsisting under the laws of
Canada, with all necessary corporate power and authority to own its properties
and carry on its business as presently carried on, duly qualified as a
corporation to do business or own or lease property in each jurisdiction where
the nature of its business or the property owned or leased by it makes such
qualification necessary.
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6.4 Laws
The Corporation will comply with all applicable statutes, laws,
regulations, orders and restrictions of any government and of any agencies and
instrumentalities of government, and of all other governmental authorities, in
respect of the conduct of its properties, except such as are being contested in
good faith by appropriate legal or administrative proceedings, by or on behalf
of the Corporation, and except for isolated instances of non-compliance, if any,
which in each case, and as to all thereof in the aggregate have no material and
adverse effect.
6.5 Reporting Issuer
The Corporation will take all commerically reasonable steps within its
power to ensure that at all material times it is a "reporting issuer" (as
defined in the Securities Act (Ontario)) not in default of any requirement of
such act.
7. NOTICES
7.1 Any notice to the Corporation under the provisions of this Debenture shall
be in writing and may be given by registered mail, postage prepaid or delivering
the same to the Corporation at 8604 Commerce Court, Burnaby, British Columbia
V5N 4A6. Any notice to the Holder under the provisions of this Debenture shall
be in writing and may be given by registered mail, postage prepaid or delivering
the same to the Holder at Suite 2 / Lot 22, Windy Ridge, Christ Church,
BARBADOS.
7.2 Any notice if delivered shall be deemed to have been given or made on the
date on which it was delivered or if given by registered mail shall be deemed to
have been given or made on the third Business Day following the day on which it
was mailed.
7.3 In the event of any disruption of mail service which may affect delivery of
any notice given pursuant to clause 7.1 by registered mail after the mailing of
such notice and before the date upon which such notice is deemed to have been or
made pursuant to clause 7.2, such notice shall be deemed not to have been given
and must be given or made by delivering the same. In the event of any disruption
of mail service which may affect delivery of any notice, Debenture, share
certificate, cheque or other writing by registered mail or ordinary mail before
the mailing of any of the foregoing, such notice, Debenture, share certificate,
cheque or other writing shall be delivered by hand in lieu of mailing the same.
8. AMENDMENT
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This Debenture may be amended only by agreement in writing executed by
the Corporation and the Holder at the date of such amendment.
9. GOVERNING LAW
This Debenture shall be governed by the laws of the Province of
Ontario.
10. TIME OF THE ESSENCE
Time shall be of the essence.
11. FURTHER ASSURANCE
The Corporation hereto covenants and agrees that it will at all times
do, execute, acknowledge and deliver or cause to be done, executed or delivered
all such further acts, deeds and assurances as the Holder of this Debenture may
reasonably require.
12. BINDING EFFECT
The terms and provisions of this Debenture shall enure to the benefit
of and be binding upon the registered Holder hereof, its successors and
permitted assigns to the extent provided herein and shall enure to the benefit
of and be binding upon the Corporation and its successors and permitted assigns.
IN WITNESS WHEREOF the undersigned has caused this Debenture to be
sealed with its corporate seal and to be signed by its duly authorized officer
in that respect this day of March, 1999.
INTERNATIONAL TELEPRESENCE
(CANADA) INC.
Per:
Name:
Title:
I have authority to bind the Corporation
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SCHEDULE A
TRANSFER FORM
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
(name and address of assignee)
the within
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(principal amount of the Debenture assigned)
Debenture of International Telepresence (Canada) Inc. (the "Corporation") and
hereby irrevocably constitutes and appoints
as Attorney to transfer the said Debenture with full power of substitution in
the premises.
DATED the day of , 199 .
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Adelite Communications Corporation
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SCHEDULE B
NOTICE OF CONVERSION
TO: Adelite Communications Corporation
The Corporation hereby gives notice of the conversion of the within
Convertible Debenture (or $ principal amount thereof) into Shares and Warrants
of International Telepresence (Canada) Inc. in accordance with the terms of the
said Debenture and hereby confirms that the certificates representing the Shares
and Warrants issuable and deliverable upon such conversion will be issued and
delivered to you.
DATED the day of , 199 .
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International Telepresence (Canada) Inc.
By:
CONVERSION OF DEBENTURE
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<CAPTION>
Unpaid Principal Name of Officer of Signature of
Amt. of Principal Balance of Corporation Officer Making
Date Converted Debenture Making Notation Notation
<S> <C> <C> <C> <C>
</TABLE>
