SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): SEPTEMBER 25, 1998
------------------
ITC LEARNING CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 0-13741 52-1078263
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
13515 Dulles Technology Drive
Herndon, Virginia 20171
- ----------------- -----
(Address of Principal Executive Offices) (Zip Code)
(703) 713-3335
(Registrant's telephone number, including area code)
NONE
(Former name and address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On September 25, 1998, ITC Canada Limited ("ITC Canada"), a wholly owned
and newly formed subsidiary of ITC Learning Corporation ("ITC Learning"),
acquired substantially all of the assets and the business of Mentor Networks
Inc. and its wholly owned subsidiary, High Performance Group (collectively,
"Mentor"), of Halifax, Nova Scotia, Canada. Mentor has engaged since 1993 in the
development and distribution of multi-media interactive courseware products for
the corporate educational market.
ITC Learning invested U.S. $1 million in Mentor in January of 1998 in
exchange for 8% of Mentor's outstanding common stock and the option to acquire
an additional 12% through the exercise of warrants. At that time, ITC Learning
and Mentor also entered into a reseller agreement awarding ITC Learning a
one-year exclusive right to distribute Mentor PC Skills Products in the United
States. In June, ITC Learning and Mentor amended the reseller agreement,
extending it to three years. ITC Learning also agreed to prepay U.S. $300,000 to
Mentor under the reseller agreement and gave up its option to acquire additional
Mentor common stock, in exchange for an improved pricing scheme under the
reseller agreement.
On July 20, 1998, Mentor was placed into receivership by its secured
lender, the Nova Scotia Business Development Corporation ("NSBDC"). Based on ITC
Learning's familiarity with Mentor's products, the existing relationship between
ITC Learning and Mentor under the reseller agreement, the substantial
integration of Mentor's products into ITC Learning's library, ITC Learning's
desire to assure continued and expanded access to Mentor products and ITC
Learning's due diligence investigation subsequent to the receivership, ITC
Learning submitted a bid to purchase the assets and business of Mentor.
Under the agreement reached with the NSBDC, ITC Canada purchased the
assets and business of Mentor for Cdn. $1 million of cash (approximately U.S.
$661,000) and a five-year promissory note at 8% interest payable to the NSBDC in
the amount of Cdn. $2 million (approximately U.S. $1,320,000), plus an agreement
to pay up to Cdn. $1.6 million (approximately U.S. $1,058,000) in certain future
royalty payments based on the ongoing performance of the Mentor assets. As part
of the transaction, ITC Learning also committed to provide ITC Canada with
working capital up to Cdn. $1.1 million (approximately US $727,000). (The U.S.
equivalent for all amounts shown as payable are at current exchange rates and
the actual amount paid in U.S. dollars may be different depending upon
fluctuations in exchange rates.)
The Mentor assets will be combined with ITC Learning's Toronto-based
sales and marketing office and will be operated by ITC Canada. The source of the
funds required to consummate the Mentor acquisition were derived from ITC
Learning's working capital and its line of credit with Wachovia Bank, N.A.
2
<PAGE>
As a result of the acquisition, ITC Canada acquired 42 employees, 34 of
whom are technical development personnel. ITC Canada also acquired seven PC
Skills titles associated with the Microsoft Office Suite(TM) of products, three
call center titles, intellectual property rights to an additional 25 soft skills
products and certain fixed assets. Following the acquisition, ITC Learning will
continue to use these assets to develop and distribute multimedia courseware for
corporate North America.
A copy of ITC Learning's press release issued on September 29, 1998, is
attached and incorporated herein.
3
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
It is impracticable to provide the required financial statements at the time of
this report. However, the required financial statements will be filed not later
than 60 days after the filing of this report.
(b) Pro Forma Financial Information
It is impracticable to provide the required pro forma financial information at
the time of this report. However, the required pro forma financial information
will be filed not later than 60 days after the filing of this report.
(c) Exhibits
DESCRIPTION EXHIBIT
Assignment of Rights Under Offer from 2.1
ITC Learning Corporation to ITC Canada
Limited dated September 1, 1998
Receiver's Bill of Sale from Grant 2.2
Thornton Limited to ITC Canada Limited
dated September 16, 1998
Assignment of Lease from Grant 2.3
Thornton Limited to ITC Canada Limited
dated September 16, 1998
Assignments of Courseware from Grant 2.4
Thornton Limited to ITC Canada Limited
dated September 16, 1998
Assignments of Intellectual Property 2.5
Rights from Grant Thornton Limited to
ITC Canada Limited dated September 16,
1998
4
<PAGE>
Assignment of Trademarks from Grant 2.6
Thornton Limited to ITC Canada Limited
dated September 23, 1998
Principal Agreement between ITC Canada 2.7
Limited and Nova Scotia Business
Development Corporation dated
September 16, 1998
Promissory Note in the Amount of Cdn. 2.8
$2,000,000 Executed by ITC Canada
Limited dated September 16, 1998
Demand Debenture between ITC Canada 2.9
Limited and Nova Scotia Business
Development Corporation dated
September 18, 1998
Debenture Pledge Agreement in the 2.10
Amount of Cdn. $3,600,000 between ITC
Canada Limited and Nova Scotia
Business Development Corporation dated
September 18, 1998
General Security Agreement between ITC 2.11
Canada Limited and Nova Scotia
Business Development Corporation dated
September 18, 1998
Guarantee of Obligation by ITC 2.12
Learning Corporation dated September
22, 1998
Agreement between ITC Learning 2.13
Corporation and Nova Scotia Business
Development Corporation dated
September 22, 1998
Royalty Agreement among ITC Canada 2.14
Limited, ITC Learning Corporation and
Grant Thornton Limited dated September
18, 1998
5
<PAGE>
Inter-Lender Agreement among ITC 2.15
Canada Limited, Nova Scotia Business
Development Corporation and Wachovia
Bank, N.A. dated September 23, 1998
ITC Learning Corporation Press Release 99.1
dated September 29, 1998
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ITC LEARNING CORPORATION
BY /s/ CARL D. STEVENS
(Carl D. Stevens, President and
Chief Executive Officer)
<PAGE>
EXHIBIT LIST
DESCRIPTION EXHIBIT
Assignment of Rights Under Offer from 2.1
ITC Learning Corporation to ITC Canada
Limited dated September 1, 1998
Receiver's Bill of Sale from Grant 2.2
Thornton Limited to ITC Canada Limited
dated September 16, 1998
Assignment of Lease from Grant 2.3
Thornton Limited to ITC Canada Limited
dated September 16, 1998
Assignments of Courseware from Grant 2.4
Thornton Limited to ITC Canada Limited
dated September 16, 1998
Assignments of Intellectual Property 2.5
Rights from Grant Thornton Limited to
ITC Canada Limited dated September 16,
1998
Assignment of Trademarks from Grant 2.6
Thornton Limited to ITC Canada Limited
dated September 23, 1998
Principal Agreement between ITC Canada 2.7
Limited and Nova Scotia Business
Development Corporation dated
September 16, 1998
Promissory Note in the Amount of Cdn. 2.8
$2,000,000 Executed by ITC Canada
Limited dated September 16, 1998
Demand Debenture between ITC Canada 2.9
Limited and Nova Scotia Business
Development Corporation dated
September 18, 1998
<PAGE>
Debenture Pledge Agreement in the 2.10
Amount of Cdn. $3,600,000 between ITC
Canada Limited and Nova Scotia
Business Development Corporation dated
September 18, 1998
General Security Agreement between ITC 2.11
Canada Limited and Nova Scotia
Business Development Corporation dated
September 18, 1998
Guarantee of Obligation by ITC 2.12
Learning Corporation dated September
22, 1998
Agreement between ITC Learning 2.13
Corporation and Nova Scotia Business
Development Corporation dated
September 22, 1998
Royalty Agreement among ITC Canada 2.14
Limited, ITC Learning Corporation and
Grant Thornton Limited dated September
18, 1998
Inter-Lender Agreement among ITC 2.15
Canada Limited, Nova Scotia Business
Development Corporation and Wachovia
Bank, N.A. dated September 23, 1998
ITC Learning Corporation Press Release 99.1
dated September 29, 1998
Exhibit 2.1
This Assignment made as of the 1st day of September, 1998.
BETWEEN:
ITC LEARNING CORPORATION, a body corporate
(hereinafter "ITCL")
OF THE FIRST PART
-and-
ITC CANADA LIMITED, a body corporate, incorporated
under the laws of the Province of Nova Scotia (hereinafter
"ITC")
OF THE SECOND PART
WHEREAS:
a) Grant Thornton Limited, as receiver of Mentor Networks Inc.
("Mentor") and High Performance Group (Canada) Inc. ("HPG")
issued an Information Memorandum dated July 21, 1998 inviting
Offers to Purchase certain of the assets and undertaking of
Mentor and HPG (the "Assets");
b) ITCL made an offer to purchase the Assets which offer was
accepted;
c) ITCL has caused ITC to be incorporated to purchase the Assets;
NOW THEREFORE THIS INDENTURE WITNESSETH that for and in consideration of the sum
of $1.00 and other good and valuable consideration ITCL hereby conveys and
transfers to ITC without recourse all of its interest in the agreement arising
from the acceptance of its offer to purchase the Assets.
IN WITNESS WHEREOF ITCL hereto has caused this indenture to be properly executed
as of the day, month and year herein above first written.
ITC LEARNING CORPORATION
/s/ Christina R. Mexicotte Per: /s/ Christopher E. Mack
- ------------------------------ --------------------------------
Witness Christopher E. Mack
Exhibit 2.2
RECEIVER'S BILL OF SALE
This Indenture made as of the 16th day of September, 1998;
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property
and assets of each of Mentor Networks Inc. and High Performance
Group (Canada) Inc., (the "Grantor")
OF THE FIRST PART
- and -
ITC CANADA LIMITED, a body corporate, having its registered
office in the City of Halifax, County of Halifax, Province of
Nova Scotia, (the "Grantee")
OF THE SECOND PART
RECITALS:
A. Mentor Networks Inc. ("Mentor") granted certain security to the Nova
Scotia Business Development Corporation, a Crown Corporation of the
Province of Nova Scotia ("NSBDC") comprising, inter alia, the
following:
a. a Debenture in the original principal amount of $2,500,000 dated
April 29, 1997 and registered under the Corporations Security
Registration Act on May 1, 1997 as number 30928A and also filed
under the Personal Property Registry on December 23, 1997 as
number 155622 (the "Debenture"), whereby Mentor charged certain
of its property, assets and undertaking including the property
herein described as security for its indebtedness to NSBDC;
b. the Debenture provided, inter alia, that upon it becoming
enforceable NSBDC, by instrument in writing may appoint any
person to be a receiver with power to convey, transfer and assign
the title to any of the undertaking, property and assets charged
by the Debenture;
c. a Mortgage by way of sublease of Mentor's business premises
located in the Purdy's Wharf Tower;
High Performance Group (Canada) Inc. ("HPG") granted certain security
to Nova Scotia Business Development Corporation, a Crown Corporation of
the Province of Nova Scotia ("NSBDC") comprising a Debenture in the
original principal amount of $1,000,000 dated April 29, 1997 and
registered under the Corporations Securities Registration Act on May 1,
1997 as number 30927A and also filed under the Personal Property
Registry on December 23, 1997 as number 155606, (the "Debenture"),
whereby HPG charged certain of its property, assets and undertaking
<PAGE>
including the property herein described as security for its
indebtedness to NSBDC.
(collectively, the "Security")
B. Default having occurred under the Security, Grant Thornton Limited was
appointed Receiver of the property, assets and undertaking of Mentor
and HPG by NSBDC on July 20, 1998 by written appointment;
C. In response to an open tendering process, the Grantee offered to
purchase the Receiver's right, title and interests in the assets of
Mentor and HPG on August 19, 1998 which offer was accepted August 21,
1998, pursuant to which the Grantor agreed to sell to the Grantee and
the Grantee agreed to purchase from the Grantor, the Grantor's right,
title and interest in the personal property and assets of Mentor and
HPG, including the property referred to herein and in Schedule "A"
attached hereto.
WITNESSETH THAT:
1. In consideration of the sum of One Dollar ($1.00) of lawful money of
Canada now paid by the Grantee to the Grantor and other good and
valuable consideration, the receipt whereof is hereby acknowledged, the
Grantor has granted, bargained, sold, assigned, transferred and set
over and by these presents does grant, bargain, sell, convey, assign,
transfer and set over unto the Grantee and the Grantee's successors and
assigns, all of the Grantor's right, title and interest in and to the
personal property and assets of Mentor and HPG, under and pursuant to
the Debenture being more particularly described in Schedule "A"
attached hereto (collectively, the "Personal Property"), on an "as is,
where is" basis, without warranties.
2. The Grantor covenants that it has done no act or thing to encumber the
Personal Property.
3. The Grantor covenants and agrees with the Grantee, its successors and
assigns, that it will, from time to time, and at all times hereafter,
upon every reasonable request of the Grantee, its successors and
assigns, but at the cost of the Grantee, its successors and assigns,
make, do and execute or cause and procure to be made, done and executed
all such further acts, deeds or assurances as may be reasonably be
required by the Grantee, its successors and assigns, for more
effectually and completely vesting in the Grantee, its successors and
assigns, the Personal Property hereby assigned and transferred in
accordance with the terms hereof
IN WITNESS WHEREOF the Grantor has caused this indenture to be properly
executed as of the day, month and year herein above first written.
<PAGE>
SIGNED, SEALED AND ) GRANT THORNTON LIMITED, as receiver
DELIVERED in the presence of: ) and manager of the property and
) assets of each of Mentor Networks
) Inc. and High Performance Group
/s/ Robert G. MacKeigan ) (Canada) Inc.
- ------------------------------------ )
) BY:/s/ Ross Landers
--------------------------------
<PAGE>
SCHEDULE "A"
MENTOR NETWORKS INC.
FIXED ASSETS
The Receiver's right, title and interest in the following:
o Furniture, fixtures and equipment located on the 6th floor, 1959 Upper
Water Street, Halifax, Nova Scotia.
o Computers and computer systems located on the 6th floor, 1959 Upper
Water Street, Halifax, Nova Scotia, including all software programs
installed thereon.
o Inventory on the 6th floor, Purdy's Wharf, Halifax.
o Fixed assets located in Annapolis, Maryland.
<PAGE>
DATED: September 1998
- --------------------------------------------------------------------------------
BETWEEN:
GRANT THORNTON LIMlTED, as receiver and manager of the property and
assets of each of Mentor Networks Inc. and High Performance Group
(Canada) Inc.
GRANTOR
- and -
ITC CANADA LIMITED, a body corporate, having its registered office in the City
of Halifax, County of Halifax, Province of Nova Scotia,
GRANTEE
- --------------------------------------------------------------------------------
RECEIVER'S BILL OF SALE
Parcel 1
- --------------------------------------------------------------------------------
C. Holm, Q.C.
HUESTIS o HOLM
Barristers and Solicitors
708 - 1809 Barrington Street- CIBC Building
Halifax - Nova Scotia - Canada
B3J 3K8
File #32796
Exhibit 2.3
RECEIVER'S ASSIGNMENT OF LEASE
This Indenture made as of the 16th day of September, 1998;
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and assets
of MENTOR NETWORKS INC., (the "Grantor")
OF THE FIRST PART
- and -
ITC CANADA LIMITED, a body corporate, having its registered office in the
City of Halifax, County of Halifax, Province of Nova Scotia, (the
"Grantee)
OF THE SECOND PART
RECITALS:
A. Mentor Networks Inc. granted certain security to the Nova Scotia Business
Development Corporation, a Crown Corporation of the Province of Nova
Scotia ("NSBDC") comprising, inter alia, the following:
a. A Debenture in the original principal amount of $2,500,000 dated
April 29, 1997 and registered under the CORPORATIONS SECURITY
REGISTRATION ACT on May 1, 1997 as number 30928A and also filed
under the PERSONAL PROPERTY REGISTRY on December 23, 1997 as number
155622;
b. A Mortgage by way of sublease of the Mentor's business premises
located in the Purdy's Wharf Tower;
(collectively, the "Security")
B. Default having occurred under the Security, Grant Thornton Limited was
appointed Receiver of the property, assets and undertaking of Mentor
Networks Inc. by NSBDC on July 20, 1998 by written appointment;
C. In response to an open tendering process, the Grantee offered to purchase
the Receiver's right, title and interests in the assets of the Grantor on
August 19, 1998 which offer was accepted August 21, 1998, pursuant to
which the Grantor agreed to assign to the Grantee and the Grantee agreed
to purchase from the Grantor, inter alia, the interest of the Grantor in
the Lease dated 1997 between Mentor Networks Inc. and Purdy's Wharf
Developments Limited for approximately 19,000 square feet of 1959 Upper
Water Street, Halifax, Nova Scotia, more accurately referred to as the 6th
floor thereof defined in the Lease.
<PAGE>
WITNESSETH THAT:
(1) In consideration of the sum of One Dollar ($1.00) of lawful money of
Canada now paid by the Grantee to the Grantor and other good and valuable
consideration, the receipt whereof is hereby acknowledged, the Grantor has
assigned to the Grantee all its interest in and to a Lease dated 1997
between Mentor Networks Inc. and Purdy's Wharf Development Limited for
approximately 19,000 square feet of 1959 Upper Water Street, Halifax, Nova
Scotia, more accurately referred to as the 6th floor thereof defined in
the Lease.
(2) TO HAVE AND TO HOLD the Lease unto and to the use of the Grantee, and the
Grantee's successors and assigns, FOREVER.
IN WITNESS WHEREOF the Grantor has caused this indenture to be properly
executed as of the day, month and year herein above first written.
SIGNED, SEALED AND DELIVERED )
in the presence of: ) GRANT THORNTON LIMITED,
) as receiver and manager of the
) property and assets of MENTOR
) NETWORKS INC.
)
) By: /s/ Ross Landers
) ---------------------------
/s/ Robert G. MacKeigan )
------------------------------ )
) NOVA SCOTIA BUSINESS
) DEVELOPMENT CORPORATION,
) as attorney of Mentor
Networks Inc., beneficial
) holder of the last day of
) the Lease.
)
) By: /s/ Andrew H. Hare
/s/ ) ---------------------------
------------------------------ )
)
/s/
---------------------------
2
<PAGE>
DATED: SEPTEMBER 1998
- --------------------------------------------------------------------------------
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and
assets of Mentor Networks Inc.,
GRANTOR
- and -
ITC CANADA LIMITED, a body corporate, having its registered office
in the City of Halifax, County of Halifax, Province of Nova Scotia,
GRANTEE
- ------------------------------------------------------------------------------
RECEIVER'S ASSIGNMENT OF LEASE
PARCEL 4
- ------------------------------------------------------------------------------
C. Holm, Q.C.
HUESTIS o HOLM
Barristers and Solicitors
708 - 1809 Barrington Street - CIBC Building
Halifax - Nova Scotia - Canada
B3J 3K8
File #32796
3
<PAGE>
Cox Hanson O'Reilly Matheson
1100 Purdy's Wharf Tower One
1959 Upper Water Street
Halifax, Nova Scotia, Canada
Correspondence
PO Box 2380 Stn Central RPO
Halifax NS B3J 3E5
Robert G.MacKeigan, Q.C.
Barrister and Solicitor
Phone (902) 421-6262
Fax (902) 421-3130
Direct (902) 491-4121
E-Mail [email protected]
September 17, 1998
Purdy's Wharf Development Limited
Suite 305, Xerox Building
1949 Upper Water Street
Halifax, NS B3J3N3
Dear Sirs:
Re: Mentor Networks Inc.
- Assignment of Lease by Receiver to ITC Canada Limited
As you are aware, we have been acting as solicitors to Nova Scotia
Business Development Corporation and to Grant Thornton Limited, receiver of the
property and assets of Mentor Networks Inc. and of High Performance Group
(Canada) Inc.
I refer to the terms of the lease entered into by you with Mentor Networks
Inc., a copy of which attached, and the terms of the Indenture agreement between
Purdy's Wharf Development Limited, Nova Scotia Business Development Corporation,
and Mentor Networks Inc. and High Performance Group (Canada) Inc. dated April
29, 1997, a copy of which is attached.
Grant Thornton Limited as receiver appointed by Nova Scotia Business
Development Corporation has agreed to assign the lease to ITC Canada Limited and
you have indicated that the landlord is prepared to consent to this assignment,
provided the assignee, ITC Canada Limited, agrees to be bound by all covenants,
terms and conditions of the attached lease.
It would be appreciated if you would confirm your consent by signing a
copy of this letter and returning it to me. I will treat your signing of the
letter as confirmation of the approval and also confirmation of your advice that
there is no default under the lease and that there is no outstanding rental,
save for the amount of $36,700.41 payable on September 18, 1998 in accordance
with your invoice number 980920, dated August 28, 1998, and outstanding invoices
#98065 dated July 6, 1998 for lights and #9806EX dated July 13, 1998 for excess
electricity.
4
<PAGE>
Thank you for your co-operation on this matter.
Yours very truly,
/s/ Robert G.MacKeigan
Robert G. MacKeigan
RGM/cb
Agreed September 17, 1998:
Purdy's Wharf Development Limited
Per: /s/ John W. Lindsay, Jr.
-----------------------------
5
<PAGE>
NET LEASE
(TOWER 1)
BETWEEN
PURDY'S WHARF DEVELOPMENT LIMITED
as Landlord
AND
MENTOR NETWORKS INC.
as Tenant
Dated: ___________________, 1997
02/97
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1- INTENT OF LEASE...................................................1
1.1 General Provisions.....................................................1
ARTICLE 2- DEFINITIONS.......................................................1
2.1........................................................................1
(1) "lease"............................................................1
(2) "Phase I"..........................................................1
(3) "Phase II".........................................................1
(4) "Future Phases"....................................................1
(5) "Land".............................................................1
(6) "Building".........................................................1
(7) "Common Areas".....................................................2
(8) "Premises".........................................................2
(9) "Operating Year"...................................................2
(10) "Proportion"......................................................2
ARTICLE 3- DEMISE AND POSSESSION.............................................2
3.1 Demise.................................................................2
3.2 Delivery of Premises...................................................3
3.3 Notice of Defects......................................................3
3.4 Substitution of Premises...............................................3
ARTICLE 4- TERM OF LEASE.....................................................3
4.1 General Provisions.....................................................3
4.2 Renewal Option.........................................................4
ARTICLE 5- MONIES PAYABLE BY TENANT..........................................4
5.1 Rent...................................................................4
5.2 Business Taxes & Taxes on Improvements or Rent.........................5
5.2.1 Taxes Payable on Business and Improvements.........................5
5.2.2 Tenant to Reimburse Landlord.......................................5
5.2.3 Taxes Payable on Rent..............................................5
5.3 Real Estate Taxes......................................................5
5.3.2 Real Estate Taxes Payable..........................................6
5.3.3 Expenses for Contestation..........................................7
5.3.4 No Reduction in Rent...............................................7
5.4 Operating Expenses.....................................................7
5.4.1 Definitions........................................................7
5.4.2 Operating Expenses Payable.........................................9
5.4.3 Operating Expense Estimate.........................................9
5.4.4 Operating Expense Statement.......................................10
i
<PAGE>
5.4.5 Payment for Final Period of Lease.................................10
5.5 Payment of Monies.....................................................10
5.5.1 When and Where to Send Monies.....................................10
5.5.2 For a Fraction of a Month.........................................10
5.5.3 Adjustments Between Estimated and Actual Amounts Payable..........10
5.5.4 Interest on Overdue Amounts.......................................10
5.5.5 No Offsets Against Rent...........................................11
5.5.6 On Termination of Lease...........................................11
5.6 Utilities.............................................................11
5.6.1 General Provisions................................................11
ARTICLE 6 - USE OF PREMISES.................................................11
6.1 General Use.........................................................11
6.2 Restrictions..........................................................11
ARTICLE 7 - UTILITIES AND SERVICES..........................................12
7.1 General Provisions....................................................12
7.1.1 Cleaning..........................................................12
7.1.2 Elevators.........................................................12
7.1.3 Electric Energy...................................................12
7.1.4 Drinking Water, Towels and Toiletries.............................13
7.1.5 Heating or Air-Conditioning.......................................13
7.2 Services for Special Equipment........................................14
7.3 Discontinuance of Services............................................14
ARTICLE 8 - ALTERATIONS. REPAIRS, CHANGES, ADDITIONS, IMPROVEMENTS..........15
8.1 General Provisions....................................................15
8.1.1 Consent of Landlord...............................................15
8.1.2 Building Standard Air Quality Control.............................15
8.1.3 Landlord's Prior Consent..........................................15
8.1.4 Tenant's Contractor...............................................15
8.1.5 Tenant Responsible for Cost of Improvements.......................16
8.1.6 Tenant Responsible for Construction of Improvements...............16
8.1.7 Additional Improvements...........................................16
8.1.8 Removal of Improvements...........................................16
8.2 No Allowance for Inconvenience........................................16
8.3 Connections to Electrical System......................................16
8.4 Landlord's Right to Perform...........................................16
8.5 Installation of Necessary Equipment...................................17
ARTICLE 9 - TENANT CARE AND RESPONSIBILITY..................................17
9.1 General Provisions....................................................17
9.2 Proceeds of Insurance.................................................18
9.3 Tenant's Responsibility...............................................18
9.4 Fire, Police and Health Departments' Regulations......................18
9.5 Fire Protection Equipment.............................................19
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<PAGE>
9.6 Exhibitions, Signs or Advertisements Inside or Outside the Premises...19
9.7 Supervision Fee for Tenant Repairs....................................19
9.8 Privileges and Liens..................................................19
ARTICLE 10 - DESERTION AND SURRENDER........................................20
10.1 General Provisions...................................................20
ARTICLE 11 - ASSIGNMENT AND SUBLETTING......................................20
11.1 General Provisions...................................................20
11.2 Advertising the Premises for Subletting..............................20
11.3 Conditions Precedent to Any Assignment or Subletting.................21
11.4 Delays in Accepting Assignee or Subtenant............................21
11.5 Transfer to Assignee or Subtenant....................................21
11.6 New Lease with Assignee..............................................21
11.7 Assignment to Related or Associated Companies........................21
ARTICLE 12 - FIRE AND DESTRUCTION OF PREMISES...............................22
12.1
(1) Premises Wholly Unfit for Occupancy and Not Repairable Within 180
Days..................................................................22
(2) Premises Wholly Unfit for Occupancy and Repairable within 180 days22
(3) Premises Partially Damaged and Repairable within 180 Days.........22
12.2 Building Partially Destroyed or Damaged Affecting more than 20% of
Rentable Area.............................................................22
12.3 Insurance Proceeds...................................................23
12.4 Repair of Alterations, Improvements or Tenant's Property.............23
12.5 Where Tenant is at Fault.............................................23
ARTICLE 13 - NO RESPONSIBILITY OF LANDLORD..................................23
13.1 General Provisions...................................................23
13.2 Delay in Completion of Premises......................................24
13.3 Tenant Indemnification...............................................24
13.4 Special Permits......................................................24
ARTICLE 14 - RIGHT OF ENTRY.................................................25
14.1 General Provisions...................................................25
iii
<PAGE>
14.2 Alteration of Locks..................................................25
ARTICLE 15 - COMPLIANCE WITH LAW............................................25
15.1 General Provisions...................................................25
ARTICLE 16 - INSURANCE REQUIREMENTS.........................................25
16.1 General Provisions...................................................25
16.2 Comprehensive General Liability and All Risk Insurance...............26
16.3 Failure of Tenant to Obtain Insurance................................26
16.4 Landlord Covenants to Insure.........................................26
ARTICLE 17 - MORTGAGES AND SUBORDINATION....................................26
17.1 General Provisions...................................................26
17.2 Landlord's Default under any Underlying Lease; Mortgage, Hypothec or
Deed......................................................................27
17.3 Request from Landlord to Tenant for Written Statement................27
17.4 Certificate from Tenant..............................................27
17.5 Assignment by Landlord...............................................28
ARTICLE 18 - EXPROPRIATION..................................................28
18.1 General Provisions...................................................28
ARTICLE 19 - WAIVER.........................................................28
19.1 General Provisions...................................................28
ARTICLE 20 - NOTICE AND DEMANDS.............................................29
20.1 By Landlord to Tenant................................................29
20.2 Tenant's Domicile....................................................29
20.3 By Tenant to Landlord................................................29
20.4 Prior to Commencement Date...........................................29
ARTICLE 21 - LANDLORD AND TENANT............................................29
21.1 Definition of Landlord...............................................29
21.2 Tenant Partnership...................................................30
21.3 Relationship Between Landlord and Tenant.............................30
ARTICLE 22 - BROKERAGE COMMISSION...........................................30
22.1 General Provisions...................................................30
ARTICLE 23 - SECURITY.......................................................30
23.1 To Secure Payment of Rent............................................30
ARTICLE 24 - EXPIRATION OF THE TERM OF THE LEASE............................30
24.1 Tenant's Notice to Landlord..........................................30
24.2 Tenant's Credit Rating...............................................31
ARTICLE 25 - FORCE MAJEURE..................................................31
25.1 General Provisions...................................................31
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ARTICLE 26 - GOVERNING LAW..................................................31
26.1 General Provisions...................................................31
ARTICLE 27 - PRIOR AGREEMENTS...............................................31
27.1 General Provisions...................................................31
27.2 Amendments of Lease..................................................32
ARTICLE 28 - RULES AND REGULATIONS..........................................32
28.1 Acts to Injure Premises or Persons...................................32
28.2 Preservation of Good Order and Cleanliness...........................32
28.3 Animals..............................................................32
28.4 Canvassing...........................................................32
28.5 Sidewalks, Entries, Passages, Elevators, etc.........................32
28.6 Advertising..........................................................33
28.7 Signs or Advertisements on the Building..............................33
28.8 Selling Articles or Carrying on Business other than that specifically
Provided for in lease.....................................................33
28.9 Workmen for Repairs..................................................33
28.10 Care of Premises....................................................33
28.11 Window Shades.......................................................33
28.12 Washrooms...........................................................33
28.13 Apparatus Requiring Permit..........................................34
28.14 Entering Building After Normal Office Hours.........................34
28.15 Safes and Heavy Equipment...........................................34
28.16 Rules and Regulations for Security of Building......................34
28.17 Further Rules and Regulations.......................................34
28.18 Access to Loading Area..............................................35
28.19 Keys................................................................35
28.20 Graphics............................................................35
28.21 Environmental.......................................................35
ARTICLE 29 - DEFAULT BY TENANT..............................................36
29.1 Events of Default....................................................36
29.2 Continuance of any Event of Default..................................36
29.3 Payment of Monies in Event of Default................................37
29.4 The exercise of any Right of Landlord................................37
29.5 No waiver by Landlord................................................37
29.6 Landlord's Right to enter Premises...................................37
29.7 No Limitation on Right to Distrain...................................38
ARTICLE 30 - MISCELLANEOUS..................................................38
30.1 Captions.............................................................38
30.2 No Registration......................................................38
30.3 Tenant's Acceptance of lease.........................................38
30.4 Successors and Assigns...............................................38
30.5 Early Occupancy......................................................39
30.6 Leasehold Improvements...............................................39
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30.7 Leasehold Improvement Allowance......................................39
30.8 Parking..............................................................39
Schedules
A Description of Land
B Plan of Premises
C Definition of Rentable Area Proportion Formula
D Building Standard Installation Schedule
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THIS NET LEASE entered into as of _________________, 1997
BETWEEN:
PURDY'S WHARF DEVELOPMENT LIMITED, a company duly incorporated under the
laws of Nova Scotia and having its Head Office in the City of Halifax, Nova
Scotia,
hereinafter called the "Landlord";
AND:
MENTOR NETWORKS INC., a body corporate,
hereinafter called the "Tenant";
ARTICLE 1- INTENT OF LEASE
1.1 General Provisions
It is the intent of the parties that this Net Lease be a lease that is
absolutely net to Landlord except as expressly hereinafter set out. Any amount
and any obligation as is not expressly declared herein to be that of Landlord
shall be deemed to be the obligation of Tenant to be performed by and at the
expense of Tenant.
ARTICLE 2- DEFINITIONS
2.1 In this Net Lease Agreement:
(1) "lease" - any reference to the "lease" shall mean this Net
Lease Agreement;
(2) "Phase I" - means the lands and buildings known as the Purdy's
Wharf Tower, Xerox Building and Purdy's parking garage
constructed at or near Upper Water Street, Halifax, Nova
Scotia;
(3) "Phase II" - means the lands and buildings known as Purdy's
Wharf Tower II including extension to the parking garage on
lands at or near Upper Water Street, Halifax, Nova Scotia;
(4) "Future Phases" - means such future phases of the Purdy's
Wharf Development as may be constructed from time to time;
(5) "Land" -means the land more particularly described in Schedule
"A" attached hereto;
(6) "Building" - means the buildings, structures and improvements,
including parking garage constructed or to be constructed on
the Land;
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(7) "Common Areas" - means all the facilities from time to time
provided and designated by Landlord to serve Phase I, Phase
II, Future Phases, the Building and the Land and shall
include, where applicable, and without limitation, roadways,
walkways, sidewalks, parking facilities, landscaped areas,
plazas, lobbies, washrooms available for use of tenants and/or
public, open or enclosed pedestrian malls, courts, arcades,
tunnels, bridges, truck courts, common loading areas and
delivery facilities, driveways, customer and service ramps,
stairways, escalators and elevators available for use by the
public or by tenants generally, fire detection, fire
prevention and communication facilities, common pipes,
electrical, plumbing and other common mechanical and
electrical installations, equipment and services, public
seating facilities, and all other areas and facilities from
time to time provided, designated or made available by
Landlord for the use of Tenant and other tenants or members of
the public, Landlord expressly reserving the right to
eliminate, substitute and/or rearrange any or all of the areas
so provided and designated without claim by Tenant in respect
of any such elimination, substitution or rearrangement;
(8) "Premises" - means that part of the Building which Tenant has
agreed to rent from Landlord and being that portion of the
Building substantially as outlined in red on the plan attached
hereto as Schedule "B";
(9) "Operating Year" - means such fiscal period as Landlord shall
adopt for the purposes of the accounts relating to the Land
and Building, provided that Landlord shall be permitted at any
time and from time to time to change the commencement and
termination dates of any Operating Year, so long as Tenant
shall not be unduly prejudiced by any such change;
(10) "Proportion" when used herein to refer to Tenant's share of
any tax, expense or cost shall be the percentage of the
aggregate of any such tax, expense or cost calculated as more
particularly set out in Schedule "C" attached hereto.
ARTICLE 3- DEMISE AND POSSESSION
3.1 Demise
Landlord in consideration of the rents, covenants and agreements herein
contained on the part of Tenant to be paid, kept and performed, does hereby
lease to Tenant and Tenant does hereby hire and take from Landlord the Premises,
together with a right of use, with others having a like right, to the Common
Areas.
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3.2 Delivery of Premises
It is agreed between the parties hereto that the Premises are being
delivered to Tenant completed in accordance with Schedule "D" attached hereto
(or with the allowance to finish) all items set forth therein being hereinafter
sometimes collectively referred to as the "Alterations" which shall become the
responsibility of Tenant on and from the Commencement Date.
3.3 Notice of Defects
Taking possession of all or any portion of the Premises by Tenant shall be
conclusive evidence as against Tenant that the Premises or such portion thereof
are in satisfactory condition on the date of taking possession, subject only to
latent defects and to deficiencies (if any) listed by notice in writing
delivered by Tenant to Landlord not more than 30 days after the date of taking
possession.
3.4 Substitution of Premises
At any time after the execution of this lease, Landlord may (subject to
Tenant's consent not to be unreasonably withheld) substitute for the Premises
other premises in the Building, excluding the Xerox Building (the New Premises)
in which event the New Premises shall be deemed to be the Premises for all
purposes hereunder, provided:
(1) The New Premises shall be similar to the Premises in area and in
appropriateness for use for Tenant's purposes;
(2) If Tenant is then occupying the Premises, Landlord shall pay the
expense of moving Tenant, its property and equipment to the New
Premises, and such moving shall be done at such times and in such
manner so as to cause the least inconvenience to Tenant;
(3) If Tenant is then occupying the Premises, Landlord shall give to
Tenant not less than 90 days' notice of such substitution, and if
Tenant is not occupying the Premises, Landlord shall give Tenant not
less than 30 days' prior notice of such substitution;
(4) Landlord shall, at its sole cost, improve the New Premises with
improvements substantially similar to those located in the Premises.
ARTICLE 4- TERM OF LEASE.
4.1 General Provisions
The term of this lease shall commence on July 1, 1997 and, unless the said
term shall sooner be terminated under the provisions hereof, shall expire at
12:00 noon on June 30, 2002.
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4.2 Renewal Option
Provided it is not in default under this lease, and provided it gives
notice to Landlord at least 9 months prior to the expiry of the term, Tenant
shall have the option to renew this lease for a further term of 5 years under
the same terms and conditions as herein provided, except as follows:
(1) there shall be no right of further renewal;
(2) the provisions of Article 5.1 shall not apply to the renewal term and
rental for the renewal term shall be at the then current market renewal
rental rate for comparable space in the Building, such rental to be
mutually agreed to between Landlord and Tenant and failing agreement, to
be determined by reference to a single arbitrator, provided, however, that
notwithstanding anything else herein contained, the said renewal rent
shall not be greater than $10 per square foot per annum of rentable area
of the Premises. If Landlord and Tenant fail to concur in the appointment
of a single arbitrator, either party may serve the other with a written
notice to appoint an arbitrator and such appointment shall be made by a
court or a judge and the application of either party pursuant to the
provisions of the Arbitration Act of Nova Scotia. The cost of arbitration
shall be divided equally between Landlord and Tenant. In the event of
arbitration and if the decision of the arbitrator is not given on or
before the renewal date, Tenant shall continue to pay the rent at the rate
payable during the term which has just expired, which payment shall be
adjusted within 15 days following receipt of the arbitrator's decision;
and
(3) the provisions of Articles 30.5 and 30.7 shall not apply to the
renewal term.
ARTICLE 5- MONIES PAYABLE BY TENANT
5.1 Rent
Tenant covenants and agrees to pay to Landlord yearly throughout the term
of this lease an annual rent computed at the following rates per square foot of
rentable area of the Premises (rentable area being calculated as more
particularly set out in Schedule "C"), said annual rental being payable in equal
monthly installments in advance without set-off, compensation or reduction
whatsoever on the first day of each month during the term:
(1) for the first year of the term at the rate of $2.75 per square foot;
(2) for the second year of the term at the rate of $3.30 per square foot;
(3) for the third year of the term at the rate of $3.85 per square foot;
(4) for the fourth year of the term at the rate of $4.40 per square foot;
and
(5) for the fifth year of the term at the rate of $4.95 per square foot.
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5.2 Business Taxes & Taxes on Improvements or Rent
5.2.1 Taxes Payable on Business and Improvements
Tenant shall pay all business taxes or other similar rates and taxes which
may be levied or imposed upon the Premises or the business carried on therein;
all other rates and taxes which are or may be payable by Tenant as tenant and
occupants thereof; on Tenant's fixtures, equipment and machinery; and any and
all taxes that may be levied upon the Improvements (as hereinafter defined in
Article 8.1)
5.2.2 Tenant to Reimburse Landlord
If by law, regulation or otherwise, business taxes or other similar rates
and taxes or taxes upon Tenant's fixtures, equipment, machinery or upon
Improvements are made payable by landlords or proprietors, or if the mode of
collecting such taxes and/or rates be so altered as to make Landlord liable
therefor instead of Tenant, Tenant shall repay to Landlord prior to the due date
but, in any event within 7 days after demand upon Tenant, the amount of the
charge imposed on Landlord as a result of such change, and shall save Landlord
harmless from any cost or expense in respect thereof.
5.2.3 Taxes Payable on Rent
If any business transfer tax, value-added tax, multi-stage sales tax,
sales tax, goods and services tax, blended or harmonized sales tax, or any like
tax is imposed on Landlord by any governmental authority on any rent (whether
fixed minimum rent, percentage rent, additional rent or any other type of rent)
payable by Tenant under this lease, Tenant shall reimburse Landlord for the
amount of such tax forthwith upon demand (or at any time designated from time to
time by Landlord) as additional rent. Landlord shall have the right if permitted
by law, to require Tenant to pay directly to any taxing authority or other
supplier of goods or services the amounts which may otherwise be payable by
Landlord but chargeable to Tenant under this lease.
5.3 Real Estate Taxes
5.3.1 Definitions
For the purposes of this Article:
(1) "Real Estate Taxes" means all taxes, rates and assessments, general
and special, levied or imposed with respect to the Building
(including any accessories and improvements therein or thereto) and
the Land and all improvements thereto including where applicable,
all taxes, rates, assessments and impositions, general and special,
levied or imposed for schools, public betterment, general or local
improvements.
If the system of real estate taxation shall be altered or varied
and/or any new tax or levy shall be levied or imposed on the
Building and/or the Land and/or the revenues therefrom and/or
Landlord in substitution for and/or in addition to Real Estate Taxes
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presently levied or imposed on immovables in the city, town or
municipality in which the Building and Land are situate, then any
such new tax or levy shall be included within the term "Real Estate
Taxes" and the provisions of this Article 5.3 shall apply MUTATIS
MUTANDIS.
The amount of the Real Estate Taxes which shall be deemed to have
been levied or imposed with respect to the Building and the Land
shall be such amount as the legal authority imposing Real Estate
Taxes shall have attributed to the Building and the Land
respectively, or, in the absence of such attribution, or, if such
legal authority shall include other immovables other than the
Building and the Land in imposing such Real Estate Taxes, such
amount as Landlord in the exercise of reasonable judgment shall
establish.
(2) If in any year, the taxing authority has not fully assessed and
fully taxed the Building and Land as entirely completed and entirely
occupied by tenants having no special exemptions with respect to
Real Estate Taxes, then taxes shall be adjusted and determined by
including therein such additional amount as would have formed part
of Real Estate Taxes if the Building and Land had been fully
assessed and fully taxed as entirely completed and entirely occupied
by tenants having no special exemptions.
(3) Real Estate Taxes shall be determined without reference to, or
deduction for, any abatement, concession or reduction of taxes
provided or granted as an incentive to builders or developers and
Real Estate Taxes shall be adjusted and determined by including
therein the amount of any such concession, abatement or reduction.
5.3.2 Real Estate Taxes Payable
The rent payable during the term of this lease in respect of each
year shall be increased by an amount equal to the Proportion of Real
Estate Taxes attributable to such year. Tenant shall pay to Landlord, not
later than 10 days prior to the tax due date, or such other date as may be
specified in writing to Tenant by Landlord (hereinafter referred to as the
"Specified Date"), the amount of such increase in the annual rent.
At the option of Landlord, Landlord may at any time and from time to
time estimate the amount of increased rent as will become payable by
Tenant by the tax due date or Specified Date, and bill Tenant therefor,
and in such event Tenant shall pay to Landlord the full amount of such
estimate in equal monthly installments commencing with the first month
following such estimate and terminating on the tax due date or Specified
Date. Such monthly amounts when paid to Landlord shall be available
(without interest) as a credit against Tenant's obligations to Landlord
under this Article 5.3.
Any amounts payable by Tenant hereunder shall be adjusted on a pro
rata basis to reflect the actual commencement and termination dates of
this lease having regard to the period in respect of which the calculation
of Real Estate Taxes is made.
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The obligations of the parties hereto to adjust pursuant to this
Article 5.3.2 for the final period of the lease shall survive the
expiration of the term of this lease.
Landlord shall furnish to Tenant upon the specific written request
of Tenant copies of all pertinent valuation and assessment notices and of
all pertinent tax bills and notices received by Landlord.
5.3.3 Expenses for Contestation
Tenant shall pay to Landlord as additional rent the Proportion of
any expenses, including legal, appraisal, administration and overhead
expenses, incurred by Landlord in obtaining or attempting to obtain a
reduction of any Real Estate Taxes. Real Estate Taxes which are contested
by Landlord shall nevertheless be included for purposes of the computation
of the liability of Tenant under Article 5.3.2 provided, however, that in
the event that Tenant shall have paid any amount of increased rent
pursuant to this Article 5.3 and Landlord shall thereafter receive a
refund of any portion of the Real Estate Taxes on which such payment shall
have been based, Landlord shall pay to Tenant the appropriate portion of
such refund after deduction of the aforementioned expenses.
Landlord shall have no obligation to contest, object to or to
litigate the levying or imposition of any Real Estate Taxes and may
settle, compromise, consent to, waive or otherwise determine in its
discretion any Real Estate Taxes without notice to, consent or approval of
Tenant.
5.3.4 No Reduction in Rent
Nothing contained in this Article 5.3 shall be construed at any time
so as to reduce the monthly installments of rent payable hereunder below
the amount stipulated in Article 5.1.
5.4 Operating Expenses
5.4.1 Definitions
For the purposes of this Article, "Operating Expenses" means the
aggregate of any and all expenses incurred by Landlord, without
duplication thereto, which are attributable to the maintenance, operation,
repair, supervision or replacement of the Building and the maintenance,
operation and supervision of the Land, provided that if the Building is
less than 95% occupied during any part of an Operating Year, Operating
Expenses shall mean the amount obtained by adjusting the actual Operating
Expenses for such Operating Year to a 95% building occupancy level, such
adjustment to be made by adding to the actual Operating Expenses during
such Operating Year such additional costs that would have been incurred if
the Building had been 95% occupied. Without in any way limiting the
generality of the foregoing, Operating Expenses shall include the
following:
(1) the cost of salaries, wages, medical, surgical and general welfare
benefits (including group life insurance) and pension payments for
employees of Landlord engaged in the maintenance, operation, repair,
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security or replacement of the Building, payroll taxes, workmen's or
workers' compensation insurance, electricity (except as otherwise
payable by Tenant hereunder), steam, utility, taxes (not included in
Articles 5.2 and 5.3), water (including sewer rental), cleaning,
building and cleaning supplies, uniforms and dry cleaning, cleaning
of windows and exterior curtain wall, snow removal, repair and
maintenance of grounds, service contracts, telephone, telegraph and
stationery;
(2) the cost of heating, ventilating and air-conditioning the Building,
including without limitation the cost of operating, repairing,
maintaining, replacing and inspecting the machinery, equipment and
other facilities required for the heating, ventilating and
air-conditioning of the Building and the cost of providing condenser
water from cooling towers for heating, ventilating and
air-conditioning machinery and equipment;
(3) the cost of goods and services, supplied, used or incurred in the
operation, maintenance, repair, security, supervision, replacement
and management of the Building and Land, or in the provision of
services generally for the benefit of tenants of the Building and
their staff, the cost of providing hot and cold water, the cost of
maintenance of and repairs to the Building or services including
elevators, escalators, and any equipment, machinery or apparatus and
the cost of repair and replacement of windows and plate glass,
including exterior glass;
(4) business and water taxes and governmental impositions not otherwise
charged directly to tenants, such portion or portions of taxes on
capital as Landlord shall have allocated to the Building and Land,
accounting and auditing costs, and the fair rental value (having
regard to rentals prevailing from time to time for similar space) of
space occupied by Landlord's employees for administrative,
supervisory or management purposes relating to the Building and the
Land and of space occupied by a party or parties providing a service
generally for the benefit of tenants in the building and their staff
(such as, by way of example, a day care centre or fitness
facilities):
(5) the cost of operating and maintaining the Common Areas including
without limitation all costs and expenses of repairing, lighting,
cleaning, snow removal, garbage removal, decorating, supervising,
policing, replacing, striping, rental of music programme and
loudspeaker systems, and business taxes and governmental impositions
not otherwise charged directly to tenants; the cost of operating and
maintaining those of the Common Areas which serve more than one of
Phase I, Phase II and/or any Future Phases shall be allocated as
between phases on a pro rata basis based upon the rentable area
contained in each phase or such other basis as Landlord may
reasonably determine;
(6) the cost of any modification and additions to the Building and/or
the machinery and equipment therein and thereon where in the
reasonable opinion of Landlord such expenditure may reduce Operating
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Expenses, or any additional equipment or improvements required by
law or in landlord's reasonable opinion for the benefit or safety of
Building users;
(7) the total annual amortization of capital (on a straight line basis
over the useful life or such other period as reasonably determined
by Landlord), and interest on the unamortized capital at a rate
equivalent to the lending rate actually charged or chargeable by
Landlord's bankers from time to time, of the cost of all machinery,
equipment, supplies, repairs. replacements, modifications and
improvements which in Landlord's reasonable opinion have an
estimated useful life longer than one fiscal year of Landlord and
the cost whereof has not previously been charged to Tenant;
(8) the actual costs of all insurance as may be carried by Landlord in
respect of, or attributable to, the Building and the Land or related
thereto including without limitation all risk insurance against fire
and other perils and liability regarding casualties, injuries and
damages, boiler and machinery insurance and rental income insurance;
(9) a management charge equal to 15% of such total costs incurred
provided, however, that Landlord shall not include in Operating
Expenses any depreciation except as specifically contemplated by
sub-paragraph 5.4.1(7).
5.4.2 Operating Expenses Payable
During each Operating Year Tenant shall pay to Landlord as
additional rent the Proportion of the Operating Expenses.
5.4.3 Operating Expense Estimate
Prior to the commencement of each Operating Year during the term,
Landlord may at its option estimate the amount of Operating Expenses for
such Operating Year or (if applicable) broken portion thereof, as the case
may be, and notify Tenant in writing of the amount of its Proportion of
Operating Expenses. The amounts so estimated shall be payable in equal
consecutive monthly installments in advance over such Operating Year or
(if applicable) broken portion thereof, such monthly installments being
payable on the same day as the monthly payments of rental. Landlord may,
from time to time, alter the Operating Year, in which case, and in the
case where only a broken portion of the Operating Year is included within
the term of this lease, the appropriate adjustment in monthly payments
shall be made.
From time to time during the Operating Year, Landlord may
re-estimate any of the foregoing on a reasonable basis for such Operating
Year or broken portion thereof, in which event Landlord shall notify
Tenant in writing of such re-estimate and fix monthly installments for the
then remaining balance for such Operating Year or broken portion thereof
such that, after giving credit for the installments paid by Tenant on the
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basis of the previous estimate or estimates, the entire amount of its
Proportion of Operating Expenses will have been paid during such Operating
Year or broken portion thereof.
5.4.4 Operating Expense Statement
As soon as practicable after the expiration of each Operating Year,
Landlord shall make a final determination of Operating Expenses and the
amounts of the Proportion thereof for such Operating Year, or (if
applicable) broken portion thereof, and provide Tenant with an audited
statement of Operating Expenses; and Landlord and Tenant agree to
immediately make the appropriate readjustment and payments and repayments.
Notices by Landlord stating the amount of any estimate, re-estimate or
determination of Operating Expenses, or the amount of the Proportion of
Operating Expenses, or monthly installments payable, need not include
particulars of Operating Expenses. Provided, however, that upon request
made within a reasonable time after receipt of such notice Tenant shall be
entitled to inspect statements disclosing in reasonable detail the
particulars of Operating Expenses, and the calculation of the amount of
its Proportion of Operating Expenses and the books and records of Landlord
pertaining thereto.
5.4.5 Payment for Final Period of Lease
The obligations of the parties hereto to adjust pursuant to Article
5.4.4 hereof shall survive the expiration of the term of the lease for a
period not exceeding one year.
5.5 Payment of Monies
5.5.1 When and Where to Send Monies
All monies payable pursuant to this lease by Tenant shall be payable
immediately when due and shall be collectible as rent and shall be paid to
Landlord and/or its nominees at the head office of Landlord or at such
place in Canada as shall be designated from time to time by Landlord in
writing to Tenant.
5.5.2 For a Fraction of a Month
If the term of this lease begins on any day of the month other than
the first day, then any amounts payable hereunder for such month shall be
pro rated and paid on a per diem basis.
5.5.3 Adjustments Between Estimated and Actual Amounts Payable
Upon final determination of the actual amounts payable by Tenant the
parties shall adjust any differences between the estimated amounts so paid
and the actual amounts payable.
5.5.4 Interest on Overdue Amounts
Tenant shall pay interest at a rate per annum, which shall be the
lesser of:
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(1) the maximum legal rate of interest permissible in the applicable
jurisdiction,
or
(2) 3 percentage points above the prime lending rate established from
time to time at the principal branch in the city of Landlord's bank,
compounded monthly on all rent and/or all amounts collectible as rent
under the terms of this lease and not paid when due.
5.5.5 No Offsets Against Rent
Tenant hereby waives and renounces any and all existing and future
claims, set-off and compensation against any rent or other amounts due
hereunder and agrees to pay such rent and other amounts regardless of any
claim, set-off or compensation which may be asserted by Tenant or on its
behalf.
5.5.6 On Termination of Lease
Upon any termination of this lease, as a condition precedent to
being permitted by Landlord to vacate the Premises, Tenant shall, in
addition to all other amounts as it is obliged to pay hereunder, pay to
Landlord such amount as is estimated by Landlord to represent that portion
of the aggregate amount of Real Estate Taxes and Operating Expenses
payable and to become payable by Tenant in virtue of Articles 5.3 and 5.4
hereof, as has not yet been paid.
5.6 Utilities
5.6.1 General Provisions
Tenant shall be solely responsible for and promptly pay all charges
for water, gas, electricity, and any other utility used or consumed in the
Premises, provided there shall be no duplication of charges to Tenant for
utilities.
ARTICLE 6 - USE OF PREMISES
6.1 General Use
The Premises hereby leased shall be used and occupied by Tenant solely for
the purpose of a software company and general office purposes and related
activities and for no other purpose.
6.2 Restrictions
And in particular and by way of further restriction to the specific
purposes herein set forth Tenant shall not carry on in the Premises (i) a
restaurant, cafeteria or cocktail lounge business and/or the sale and/or
delivery of food and/or beverages; or (ii) any other activity restricted by the
rules and regulations hereof.
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ARTICLE 7 - UTILITIES AND SERVICES
7.1 General Provisions
Landlord covenants and agrees that, so long as Tenant shall not be in
default hereunder:
7.1.1 Cleaning
Landlord shall, 5 days per week, except holidays, cause the office
portion of the Premises, excluding storage areas, to be cleaned in
accordance with building standards.
7.1.2 Elevators
Landlord will provide and maintain in working order automatic
passenger elevators for operation between the hours of 7:00 A.M. and 6:00
P.M. for each business day, except Saturdays when the hours shall be from
7:00 A.M. to 12:00 noon, and one such passenger elevator will be subject
to call at all other time. Landlord to continue such provision.
Freight service will be provided at such hours as Landlord may
designate from time to time, and shall be subject to a charge as
determined from time to time by Landlord.
Tenant shall have the use of the elevators in common with others but
Landlord shall not be liable for any damage caused to Tenant and its
officers, agents, employees, servants, visitors or licensees by such other
using the elevators in common.
7.1.3 Electric Energy
(1) Landlord, subject to its ability to obtain the same from its
principal supplier and to the needs of Landlord and co-tenants,
shall cause the Premises to be supplied with electric current for
lighting and power. Landlord shall permit its wires and conduits,
(being normal office lighting and duplex receptacles) to be used for
such purpose. Tenant's use of electric current shall never exceed
the safe capacity of existing electric wiring on, and supplying the
Premises.
Any special wires and conduits for Tenant's special equipment shall
be supplied and installed by Tenant at its expense.
Tenant agrees to receive power for the purpose of lighting and
normal office use from Landlord, the cost of which will be included in the
Operating Expenses of the Building. Should Tenant require power in excess
of that required for a normal office operation, Tenant agrees to pay for
such additional power and such amount shall be collectible as rent. The
amount shall be payable by Tenant monthly, and shall be calculated in such
a manner that it shall not exceed the amount that would have been payable
for the said electricity had Tenant been charged directly for the
electricity at the rate fixed by the authority providing the same. The
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charge to Tenant for this electricity may vary from time to time in
accordance with changes in the rate charged to Landlord. Any rental so
collected will be credited to the total light and power expense of the
Building prior to determining a Tenant's Proportion of Operating Expenses.
The cost of any required sub-meters and the installation thereof
shall be at Tenant's expense.
The obligation of Landlord hereunder shall be subject to any rules
or regulations to the contrary of the authority providing electricity or
any other municipal or governmental authority.
(2) Tenant agrees to pay the cost, including installation, of all
electric light bulbs, tubes and ballasts used to replace those installed
in the Premises at the commencement of the term and the cost of cleaning,
maintenance and repair of the fluorescent fixtures as may be from time to
time required by Landlord in accordance with prudent building management
practices and Landlord shall at its option have the exclusive right to
provide and carry out at Tenant's expense such installations, maintenance,
repair, relamping and destaticizing at reasonably competitive rates.
(3) Any electrical energy consumed in the Premises in excess of 2.3
watts per square foot multiplied by 60 hours per week, multiplied by the
rentable area of the Premises, shall be billed to and paid for by Tenant.
7.1.4 Drinking Water, Towels and Toiletries
Landlord will provide to Tenant, its agents, servants, employees and
invitees the right of access and use in common with other tenants of the
Building to the toilet and washroom facilities in the Building and to keep
the same in good working order and supplied with water and to have the
same repaired with all reasonable diligence whenever such repairs are
necessary, and to furnish soap, towels, toilet tissue and hot and cold
water for lavatory, drinking and cleaning purposes, drawn through fixtures
installed by Landlord, subject to its ability to obtain same from its
principal supplier.
7.1.5 Heating or Air-Conditioning
Landlord will provide, by operation of the heating or
air-conditioning system between the hours of 7:00 A.M. and 6:00 P.M. of
each business day, except Saturdays which shall be between the hours of
7:00 A.M. and 12:00 noon, and except Sundays and holidays, a constant
supply of air that is filtered and either heated or cooled as conditions
may require, subject to the following conditions and provisions:
Landlord shall be under no obligation to operate the
air-conditioning system in excess of what may be, in its opinion,
reasonable and normal in the circumstances and, in any event, and without
prejudice to the foregoing, Landlord shall be deemed to have fully
satisfied its obligation under this Article 7.1.5 if it shall when the
exterior temperature is higher than 90 degrees F. maintain a maximum
interior temperature 10 degrees F. less and when the exterior temperature
is not higher than 90 degrees F. and not lower than -20 degrees F.,
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maintain an interior temperature between 70 degrees F. and 80 degrees F.
and, when the exterior temperature is lower than -20 degrees F. maintain a
minimum interior temperature 90 degrees F. higher than the exterior
temperature, provided always, however that the obligations of Landlord
hereunder shall be conditional upon the following:
(1) Tenant keeping an exterior windows closed at all times and keeping
all registers free from obstruction so as to permit the proper flow
and circulation of air therefrom;
(2) the average amount of electrical energy consumed by lights and
machines in the Premises not exceeding 2.3 watts per square foot;
(3) the occupancy of the Premises not exceeding one person per hundred
square feet of useable space.
All individual controls required by Tenant, except those set forth
in the attached Schedule "D" shall be installed at Tenant's expense.
In case Landlord deems it necessary to run portions of the system
through the Premises in order to serve other tenants, Tenant shall permit
Landlord and its agents and contractors to perform such work in the
Premises.
Should Tenant require heating and/or air-conditioning at any time
other than specified above, such service if supplied, shall be at the
entire cost of Tenant.
7.2 Services for Special Equipment
Nothing contained in this lease shall be deemed to create any obligation
of landlord to furnish electricity, heating, air-conditioning or any other
services to Tenant to the extent these are required by the use in the Premises
of special equipment such as computers or other electrical or similar equipment.
7.3 Discontinuance of Services
Landlord shall be privileged, without liability or obligation to Tenant,
and without such action constituting an eviction of Tenant, to discontinue or
modify any services required of it under this Article 7 or elsewhere in this
lease during such times as may be necessary, or as Landlord may deem advisable
by reason of accident, or for the purpose of effecting repairs, replacements,
alterations or improvements. Without limiting the foregoing, Landlord shall not
be liable to Tenant for failure for any reason to supply the said services or
any of them, Landlord however, undertaking to correct any such failure with
reasonable diligence.
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ARTICLE 8 - ALTERATIONS. REPAIRS, CHANGES, ADDITIONS, IMPROVEMENTS
8.1 General Provisions
8.1.1 Consent of Landlord
Landlord and Tenant agree that any and all alterations, repairs,
changes, additions or improvements (hereinafter collectively referred to
as the "Improvements") to the Premises, including without restricting the
generally of the foregoing, any Improvements to the heating, ventilating
and air-conditioning systems (HVAC Systems) serving the Premises must
comply with Landlord's Building Standard, including without restricting
the generality of the foregoing Landlord's Building Standard Air Quality
Control.
8.1.2 Building Standard Air Quality Control
Tenant shall not, prior to or during the term of this lease, make
any Improvements to the Premises including the HVAC System without the
prior written consent of Landlord. Any Improvements to the Premises made
by Tenant from time to time shall at all times include such Improvements
to the HVAC System as may be required to maintain Landlord's Building
Standard Air Quality Control.
For purposes of this Article 8.1.2, Improvements to the Premises
requiring modification to the HVAC System shall include any modifications
from time to time to the approved office layout for the Premises to which
the HVAC System has been designed by way of partitions, personnel and
equipment changes or otherwise, and the HVAC System shall be altered to
suit such modified Premises accordingly.
8.1.3 Landlord's Prior Consent
All plans for Improvements, including engineering designs and plans,
including Improvements to the HVAC System must have prior approval and
written consent of Landlord before the commencement of work. All such
Improvements shall be done at Tenant's expense by such contractor or
contractors as Tenant may select subject to Landlord's approval. Landlord
shall also have the right to have any such work supervised by its
architects, engineers, contractors and workmen at Tenant's expense.
8.1.4 Tenant's Contractor
In the event that any contractor is not satisfactory to Landlord, or
is causing, or in Landlord's reasonable opinion is likely to cause, labour
trouble in the Building, Landlord shall have the right to require that
such contractor cease or refrain from doing any work in the Premises and
upon receipt of written notice from Landlord, Tenant agrees to disallow
such contractor from entering the Premises. Landlord shall also have the
right to require that any contractor carry property damage and public
liability insurance in an amount acceptable to Landlord and in no event
less than $1,000,000 for its operations in the Building. The work
necessary to perform any improvements or repairs shall be performed at
such times and in such a manner as to not unreasonably interfere with
other tenants.
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8.1.5 Tenant Responsible for Cost of Improvements
The cost of the Improvements shall be the sole responsibility of
Tenant and if any payment in respect thereof shall be made by Landlord the
same shall be immediately repayable to Landlord by Tenant and collectible
as additional rent. Landlord shall not, for any reason whatsoever, be
liable for any damage arising from or through any defects in the said
work.
8.1.6 Tenant Responsible for Construction of Improvements
Except to the extent of Landlord's work as set out in Schedule "D"
Tenant shall be fully responsible for the cost of all Improvements to the
Premises including, without restriction, the engineering cost of designing
the electrical, heating, ventilating and air conditioning systems for the
Premises, utilizing engineers as Tenant may select subject however, to
Landlord's approval.
8.1.7 Additional Improvements
If Tenant constructs Improvements beyond those constructed at the
time of Tenant's initial occupancy of the Premises, Tenant shall pay to
Landlord an amount equal to Landlord's cost, if any, incurred in
coordination and inspection with respect to such Improvements.
8.1.8 Removal of Improvements
Any Improvements made to the Premises shall not be removed either
before or after the termination of this lease without the consent or
request of Landlord.
8.2 No Allowance for Inconvenience
There shall be no allowance to Tenant for diminution of rental value and
no liability on the part of Landlord by reason of inconvenience, annoyance or
injury to business arising from Landlord, Tenant or others making or failing to
diligently make any repairs, alterations, additions or improvements in or to any
portion of the Building or the Premises or in and to the fixtures, equipment or
appurtenances thereof.
8.3 Connections to Electrical System
Any connection of apparatus to the electrical system other than a
connection to an existing base receptacle, any connection of apparatus to the
plumbing lines, or any connection to the heating and/or the air-conditioning
system shall be deemed to be an Improvement within the meaning of this Article
8.
8.4 Landlord's Right to Perform
In the event that Tenant should fail to carry out its obligations
hereunder to the satisfaction of Landlord, Landlord shall perform such
maintenance and repairs it considers necessary from time to time, the costs of
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which shall be the sole responsibility of Tenant and if any payment in respect
thereof shall be made by Landlord then a sum equal to the amount so paid shall
forthwith become due and payable by Tenant to Landlord and if Tenant shall
neglect or refuse to pay such amount on demand, any such cost or expense to
Landlord shall be recoverable as additional rent.
8.5 Installation of Necessary Equipment
Landlord shall have the right to install and maintain in the Premises
whatever is reasonable, useful or necessary for the equipment, use and
convenience of the Building or other tenant, and Tenant shall have no claim
against Landlord in respect thereof provided the same does not interfere with
Tenant's enjoyment of the Premises.
ARTICLE 9 - TENANT CARE AND RESPONSIBILITY
9.1 General Provisions
Except as otherwise specifically provided in this lease:
(1) Tenant shall be solely responsible for, and pay the cost of all
repairs of every nature and kind to the Premises other than
maintenance, repairs and rebuilding thereof which in the reasonable
opinion of Landlord would constitute major structural repairs to the
Building; and
(2) Tenant shall pay the cost in the Proportion set forth in Article
2.1(10) hereof for all other repairs of every nature and kind
(including major structural repairs) to the structural elements of
the Building, as effected by Landlord in the following categories:
(a) repairs, maintenance and replacement of every nature to the
Building;
(b) modernization and improvements to the Building,
(i) where in the reasonable opinion of Landlord any such
expenditure may reduce the annual Operating Expenses to
be paid by tenants, or
(ii) additional equipment or improvements required by law or
in Landlord's reasonable opinion for the safety of
Building users,
and without limiting the generality of the foregoing, Tenant shall
take care of the Premises and the Alterations and improvement
therein and, at the expiration or other termination of the term of
this lease shall surrender the Premises, including the Alterations
and Improvements in as good condition as reasonable use will permit.
Tenant shall give to Landlord immediate verbal and prompt written
notice of any accident to or defect in the water pipes, steam pipes,
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heating or air-conditioning equipment, electric light, elevators,
wires or other services of any portion of the Premises.
9.2 Proceeds of Insurance
Landlord shall make all reasonable attempts to utilize the proceeds of
insurance as well as to exercise any and all reasonable recourses available to
Landlord against any contractor, builder, supplier or any third party in order
to reduce Tenant's liability for repairs, maintenance, replacements,
modernization and improvements, provided however, that Tenant shall
notwithstanding any such proceedings advance the amounts required to be paid by
Tenant hereunder and to receive its proportion of any reimbursement so obtained
by Landlord, and provided further that Tenant shall advance its proportionate
share being the Proportion utilized in Article 2.1(10) of costs and expenses of
any legal action as landlord may institute against any such party.
Landlord shall have no obligation to litigate any such claim and may
settle, compromise, consent to, waive or otherwise determine in its discretion
any claim without notice to, consent or approval of Tenant.
9.3 Tenant's Responsibility
Tenant shall be solely responsible for any and all injury and damages
suffered by Landlord and/or Tenant and/or co-tenants or other occupants of the
Building and their respective officers, agents, employees, servants, visitors,
contractors, subcontractors and suppliers, and for any and all injury or damage
to the Building and/or to the Premises, and/or the Alterations, and/or the
Improvements, and/or the furnishings, fixtures, partitions or any equipment or
merchandise (including damage caused by the overflow or escape of water, steam,
gas, electricity or other substance, or the falling of any substance), caused or
occasioned by Tenant, or the officers, agents, employees, servants, visitors,
contractors, subcontractors and suppliers of Tenant, and whether due to
negligence or careless operation or otherwise. Any and all such injury and
damages may be repaired by landlord at the expense of Tenant.
9.4 Fire, Police and Health Departments' Regulations
Tenant shall not do, or permit anything to be done on or about the
Premises or the Building or the Land which may injure or obstruct the rights of
Landlord, or of co-tenants or other occupants of the Building, or of owners or
occupants of adjacent or contiguous property, or do anything which is a
nuisance, and Tenant shall not do or permit anything to be done on or about the
Premises or the Building or the Land or bring or keep anything therein which
will in any way conflict with the regulations of the Fire, Police, or Health
Departments or with the rules, regulations, by-laws or ordinances of any
governmental authority having jurisdiction over the Premises and/or the Building
and/or the Land, all of which Tenant undertakes to abide by and conform to.
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9.5 Fire Protection Equipment
Tenant specifically undertakes to install and maintain at its cost such
fire protection equipment including, without limitation, emergency lighting as
is deemed reasonably necessary or desirable by Landlord or any governmental or
insurance body, and if so required by Landlord or any such body Tenant shall
appoint a warden to coordinate with the fire protection facilities and personnel
of Landlord.
9.6 Exhibitions, Signs or Advertisements Inside or Outside the Premises
No activity considered offensive or improper by Landlord shall be
permitted by Tenant in or about the Premises, the Building or the Land, and no
sign, advertisement, notice, awning or electrical display shall be placed on any
part of the outside or inside of the Premises and/or the Building and/or the
Land, or in any area near the same, except with the written consent of Landlord.
Landlord shall have the right in its absolute discretion to enter into the
Premises or the Building or the Land and to remove and/or eliminate anything not
in conformity herewith.
9.7 Supervision Fee for Tenant Repairs
Should Landlord deem it necessary to undertake any repairs or to do
anything which is required to be undertaken or done by Tenant under this lease
then Tenant shall pay to Landlord as a fee for supervision or carrying out of
Tenant's obligation an amount as additional rent equal to l0% of the cost of the
obligation, repairs or other work, carried out by or under the supervision of
Landlord, which amount shall be in addition to the cost of such obligation or
work and shall be collectible by Landlord from Tenant as if it were rental in
arrears.
9.8 Privileges and Liens
Tenant shall require that any contractors, prior to effecting any work on
the Premises, and if permitted under the governing law, provide Landlord with a
waiver and release of any and all privileges or rights of privilege or hens that
may then or thereafter exist for work done/or to be done or labour performed/or
to be performed or material furnished/or to be furnished under any contract or
subcontract; or in the event such waiver and release is not permitted or is not
obtained, furnish adequate security acceptable in all respects to Landlord to
guarantee the payment in full for all such work, labour or materials.
In any event, any mechanics' lien or privilege filed against the Premises
or the Building for work claimed to have been done or materials furnished to
Tenant shall be discharged by Tenant within l0 days thereafter at Tenant's
expense. For the purposes hereof, the bonding of such lien by a reputable
casualty or insurance company reasonably satisfactory to Landlord shall be
deemed the equivalent of a discharge of any such lien. Should any action, suit
or proceeding be brought upon any such lien for the enforcement or foreclosure
of the same, Tenant agrees, at its own cost and expense, to defend Landlord
therein, by counsel satisfactory to Landlord, and to pay any damages and satisfy
and discharge any judgment entered therein against Landlord.
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ARTICLE 10 - DESERTION AND SURRENDER
10.1 General Provisions
Tenant shall not leave the Premises unoccupied or vacant (and surrender of
the keys shall not be necessary in order that the Premises may be deemed
unoccupied or vacant) during the term of this lease. Acceptance of the surrender
of this lease shall not be effective unless made in writing and signed by
Landlord.
ARTICLE 11 - ASSIGNMENT AND SUBLETTING
11.1 General Provisions
Tenant shall not be entitled to assign, transfer or encumber this lease,
or any part thereof, or any of Tenant's title or interest therein or thereto, or
sublet the whole or any part of the Premises or permit the Premises or any part
thereto to be used by another without conforming to the terms of the next
paragraph hereof, and in any event without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Landlord's refusal
of consent shall be deemed reasonable (without in any way restricting Landlord's
right to refuse its consent on other reasonable grounds) where the assignee or
sub-tenant proposed by Tenant is then a tenant of the Building and Landlord has
or will have during the next ensuing six months suitable space for rent in the
Building. The consent of Landlord to any such assignment, transfer, encumbrance,
subletting and/or use shall not constitute a waiver of this Article, and shall
not be deemed to permit any further assignment, transfer, encumbrance,
subletting or use by another. Notwithstanding any such assignment, transfer,
encumbrance, subletting and/or use, Tenant shall remain jointly and severally,
without benefit of division or discussion, responsible for the payment of the
rental and the performance of the other obligations of Tenant under this lease.
The following shall be deemed to be an assignment or sublease for the
purpose of the lease and shall require the prior written consent of Landlord and
the prior compliance with all of the provisions of this Article 11:
(1) if any person other than Tenant has or exercises the right to
occupy, manage or control the Premises or any part thereof, or any
of the business carried on therein, other than subject to the direct
and full supervision and control of Tenant.
11.2 Advertising the Premises for Subletting
Tenant shall not print, publish, post, mail, display, broadcast or
otherwise advertise or offer the whole or any part of the Premises for purposes
of assignment, sublet, transfer or encumbrance, and shall not permit any broker
or other party to do any of the foregoing, unless the complete text and format
of any notice, advertisement or offer for any of the aforesaid purposes shall
have first been approved in writing by Landlord. Without in any way restricting
or limiting Landlord's right to refuse any text and format on other grounds, any
text and format proposed by Tenant shall not contain any reference to the rental
rate for the Premises.
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11.3 Conditions Precedent to Any Assignment or Subletting
As a condition precedent to any assignment of this lease or subleasing of
the whole or any part of the Premises:
(1) Tenant shall indicate to Landlord the bona fide assignee or
sub-tenant and the specific terms and conditions of such proposed
assignment or sublease; and
(2) Tenant shall first offer to assign or sublease, as the case may be,
to Landlord on the same terms and conditions and for the same rental
as provided in this lease.
11.4 Delays in Accepting Assignee or Subtenant
Landlord shall have a period of 30 days in which to accept the offer
referred to in Article 11.3(2) and if not so accepted Tenant shall have a period
of 60 days thereafter in which to assign or sublease on obtaining the prior
written consent of Landlord as hereinabove provided to the party and in
accordance with the terms and conditions so indicated to Landlord.
11.5 Transfer to Assignee or Subtenant
In the event that Tenant does not so assign or sublet within such 60 day
period, Landlord's consent to such assignment or subleasing shall be deemed null
and void and Tenant shall not be permitted to assign or sublet without again
conforming to all of the express provisions hereof.
11.6 New Lease with Assignee
As an alternative to giving its consent to any sublease or assignment of
lease, Landlord shall have the right to require the prospective sub-tenant or
assignee to execute a new lease with Landlord under the same terms and
conditions as contained in the offer from the bona fide assignee or subtenant,
and in such event Tenant agrees to guarantee to Landlord (on Landlord's standard
form of guarantee) the performance of all obligations of such sub-tenant or
assignee under the new lease. Tenant agrees to pay to Landlord reasonable costs
of administration incurred by Landlord to effect such new lease.
11.7 Assignment to Related or Associated Companies
Notwithstanding anything else contained in this Article 11, Tenant shall
have the right to assign or sublet to a related or associated company (meaning a
company related or associated to the Tenant within the meaning of the Income Tax
Act [Canada]) without Landlord's consent provided that such assignment or
subletting shall not relieve the Tenant of its obligations under this lease.
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ARTICLE 12 - FIRE AND DESTRUCTION OF PREMISES
12.1 If the Premises shall be destroyed or damaged by fire or other casualty,
insurable under fire and all risks insurance coverage, then:
(1) Premises Wholly Unfit for Occupancy and Not Repairable Within 180
Days
If in the opinion of Landlord the damage or destruction is such that
the Premises are rendered wholly unfit for occupancy or it is
impossible or unsafe to use and occupy them, and if in either event
the damage in the further opinion of Landlord (which shall be given
by written notice to Tenant within 30 days of the happening of such
damage or destruction) cannot be repaired with reasonable diligence
within 180 days from the happening of such damage or destruction,
either Landlord or Tenant may within 5 days next succeeding the
giving of Landlord's opinion as aforesaid, terminate this lease by
giving to the other notice in writing of such termination, in which
event the term of this lease shall cease and be at an end as of the
date of such destruction or damage and the rent and an other
payments for which Tenant is liable under the terms of this lease
shall be apportioned and paid in full to the date of such
destruction or damage. In the event that neither Landlord nor Tenant
so terminates this lease, rent shall abate from the date of the
happening of the damage until the damage shall be made good to the
extent of enabling Tenant to use and occupy the Premises;
(2) Premises Wholly Unfit for Occupancy and Repairable within 180 days
If the damage be such that the Premises are wholly unfit for
occupancy, or if it is impossible or unsafe to use or occupy them
but if in either event the damage, in the opinion of Landlord (which
shall be given to Tenant within 30 days from the happening of such
damage) can be repaired with reasonable diligence within 180 days of
the happening of such damage, rent shall abate from the date of the
happening of such damage until the damage shall be made good to the
extent of enabling Tenant to use and occupy the Premises;
(3) Premises Partially Damaged and Repairable within 180 Days
If in the opinion of Landlord, the damage can be made good as
aforesaid within 180 days of the happening of such destruction or
damage, and the damage is such that the Premises are capable of
being partially used for the purposes for which leased, until such
damage has been repaired, rent shall abate in the proportion that
the part of the Premises rendered unfit for occupancy bears to the
whole of the Premises.
12.2 Building Partially Destroyed or Damaged Affecting more than 20% of
Rentable Area
If the Building is partially destroyed or damaged so as to affect 20% or
more of the rentable area of the Building containing the Premises, or in the
opinion of Landlord the Building is rendered unsafe, and whether or not the
Premises are affected, and in the opinion of Landlord (which shall be given by
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written notice to Tenant within 30 days of the happening of such damage or
destruction), cannot be repaired with reasonable diligence within 180 days from
the happening of such damage or destruction, Landlord may within 5 days next
succeeding the giving of Landlord's opinion as aforesaid, terminate this lease
by giving to Tenant notice in writing of such termination, in which event the
term of this lease shall cease and be at an end as of the date of such
destruction or damage and the rent and all other payments for which Tenant is
liable under the terms of this lease shall be apportioned and paid in full to
the date of such destruction or damage.
12.3 Insurance Proceeds
In the event of the termination of this lease as hereinabove provided, all
insurance proceeds excluding those relating to Tenant's property to the extent
Tenant is not indebted to Landlord under the provisions of this lease, shall be
and remain the absolute property of Landlord.
12.4 Repair of Alterations, Improvements or Tenant's Property
Nothing herein contained shall oblige Landlord to repair or reconstruct
any Alterations, Improvements, or property of Tenant.
12.5 Where Tenant is at Fault
If any damage or destruction by fire or other cause to the Building or
Premises, whether partial or not, is due to the fault or neglect of Tenant, its
officers, agents, employees, servants, visitors or licensees, without prejudice
to any other rights and remedies of Landlord and without prejudice to the rights
of subrogation of Landlord's insurer.
(1) Tenant shall be liable for all costs and damages,
(2) the damages may be repaired by Landlord at Tenant's expense,
(3) Tenant shall forfeit its right to terminate this lease as provided
in Article 12.1(1),
(4) Tenant shall forfeit any abatement of rent provided in this Article
12 and rent shall not abate.
ARTICLE 13 - NO RESPONSIBILITY OF LANDLORD
13.1 General Provisions
Save as set our in Article 12, there shall be no abatement from or
reduction of the rent due hereunder nor shall Tenant be entitled to damages,
costs, losses or disbursements from Landlord regardless of the cause or reason
therefor (except where such cause of reason is Landlord's direct fault or
negligence) on account of fire or other casualty. Neither shall there be any
abatement or reduction of rent, or recovery by Tenant from Landlord on account
of partial or total failure of, damage caused by, lessening of supply of, or
stoppage of, heat air-conditioning, electric light, power, water, plumbing,
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sewage, elevators, escalators or any other service, nor on account of any damage
or annoyance occasioned by water, snow, or ice being upon or coming through the
roof, skylight, trapdoors, windows, or otherwise, or by an defect or break in
any pipes, tanks, fixtures, or otherwise whereby steam, water, snow, smoke or
gas, leak, issue or flow into the Premises, nor on account of any damage or
annoyance occasioned by the condition or arrangements of any electric or other
wiring, nor on account of any damage or annoyance arising from any acts,
omissions, or negligence of co-tenants or other occupants of the Building, or of
owners or occupants of adjacent or contiguous property, nor on account of the
making of alterations, repairs, improvements, or structural changes to the
Building, or any thing or service therein or thereon or contiguous thereto
provided the same shall be made with reasonable expedition.
Without restricting the foregoing, Landlord shall not be liable for any
other damage to or loss, theft, or destruction of property, or death of, or
injury to, persons at any time in or on the Premises or in or about the
Building, howsoever occurring.
Providing that the foregoing paragraphs of this 13.1 shall not exempt the
Landlord for liability for its own negligence.
Notwithstanding the foregoing, liability of Landlord shall under no
circumstances extend to any property other than normal office furniture which
term, without limiting its normal meaning, shall not include securities, specie,
papers, typewriters, electric computers, or other machines or other similar
items.
13.2 Delay in Completion of Premises
Landlord shall not be liable for any damages suffered by Tenant should any
delay in the completion of the Premises in any way delay or inconvenience the
occupant thereof or the enjoyment of the Building or accessories or services.
13.3 Tenant Indemnification
Tenant covenants and agrees that it will protect, save and keep Landlord
harmless and indemnified against any penalty or damage or charge imposed for any
violation of any laws or ordinances occasioned by Tenant or those connected with
Tenant, and that it will protect, indemnify, save and keep harmless Landlord
against any and all damage or expense arising out of any accident or other
occurrence on or about the Premises causing injury to any person or property
(except to the extent Landlord may be otherwise liable therefor), and against
any and all damage or expense arising out of any failure of Tenant in any
respect to comply with and perform all the requirements and provisions of this
lease.
13.4 Special Permits
If any equipment, installation or apparatus to be used or installed by
Tenant in the Premises requires a permit from any governmental authority, Tenant
agrees to secure the required permit before installation at its expense and to
file a copy of such permit with Landlord.
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ARTICLE 14 - RIGHT OF ENTRY
14.1 General Provisions
Landlord may, at any reasonable time and without liability to Tenant,
enter the Premises to examine or to exhibit the same or to make alterations and
repairs, or for any purpose which it may deem necessary for the operation or
maintenance of the Building or its equipment. During the last 9 months of the
term of the lease or of its renewal, Tenant shall allow such person or persons
as may be desirous of leasing the Premises to visit the same on business days
between the hours of 9 A.M. and 5 P.M.
14.2 Alteration of Locks
Tenant shall install and maintain Landlord's building standard
locking/keying system in the Premises and shall not alter any locks on any doors
of the Premises without the prior written consent of Landlord. In no
circumstances shall the locks on any doors alter the building standard
locking/keying system to the intent that Landlord shall at all times have access
to the Premises by way of the building standard key.
ARTICLE 15 - COMPLIANCE WITH LAW
15.1 General Provisions
Tenant shall promptly and at its expense execute and comply with all laws,
rules, orders, ordinances and regulations of the Municipal, Provincial and
Federal authorities and of any department or bureau of any of them, and of any
other governmental authority having jurisdiction over the Premises, Tenant's
occupancy of the Premises or Tenant's business conducted thereon.
ARTICLE 16 - INSURANCE REQUIREMENTS
16.1 General Provisions
Tenant shall not do or commit any act upon the Premises or bring into or
keep upon the Premises any article which will affect the fire risk or increase
the rate of fire insurance or other insurance on the Building.
Tenant shall comply with the rules and requirements of the Insurers'
Advisory Organization of Canada or any successor body, and with the requirements
of all insurance companies having policies of any kind whatsoever in effect
covering the Building, including policies insuring against tort or delictual
liability.
In no event shall any flammable materials, except for kinds and quantities
required for ordinary office occupancy and permitted by the insurance policies
covering the Building, or any explosive whatsoever, be taken into the Premises
or retained therein.
Should the rate of any type of insurance on the Building be increased by
reason of any violation of this lease by Tenant, Landlord, in addition to all
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other remedies, may pay the amount of such increase, and the amount so paid
shall become due and payable immediately by Tenant and collectible as additional
rent.
16.2 Comprehensive General Liability and All Risk Insurance
Tenant shall take out and keep in force during the term of this lease
comprehensive general liability insurance in amounts and with policies in form
satisfactory from time to time to Landlord and with insurers acceptable to
Landlord, the comprehensive general liability insurance in no event to be for
less than $2,000,000 inclusive limits and all risks insurance covering
furniture, fixtures and Improvements in an amount equal to the full insurable
value thereof. Copies of each insurance policy shall forthwith upon execution be
delivered to Landlord. Each such policy shall name Landlord as an additional
insured as its interest may appear and the comprehensive general liability
policy shall contain a cross liability clause. The cost or premium for each and
every such policy shall be paid by Tenant. Tenant shall obtain from the insurers
under such policies, undertakings to notify Landlord in writing at least 10 days
prior to any cancellation thereof.
16.3 Failure of Tenant to Obtain Insurance
Tenant agrees that if Tenant fails to take our or to keep in force such
insurance Landlord will have the right to do so and to pay the premium therefor
and in such event Tenant shall repay to Landlord the amount paid as premium,
which repayment shall be collectible as additional rent payable on the first day
of the next month following the said payment by Landlord.
16.4 Landlord Covenants to Insure
Landlord covenants and agrees to insure and cause the Building to be kept
insured to replacement value against all such risks as would be customary for a
prudent owner to insure against; provided, however, that it is understood that
Tenant shall contribute to the cost of such insurance as provided in this lease.
ARTICLE 17 - MORTGAGES AND SUBORDINATION
17.1 General Provisions
This lease and all rights of Tenant hereunder shall be subject and
subordinate at all times to any and all underlying leases, mortgages, hypothecs
or deeds of trust affecting the Building and/or the Land which have been
executed or which may at any time hereafter be executed, and any and all
extensions and renewals thereof and substitutions therefor. Tenant agrees to
execute any instrument or instruments which Landlord may deem necessary or
desirable to evidence the subordination of this lease to any or all such leases,
mortgages, hypothecs or deeds of trust. Any instrument to be signed by Tenant
pursuant to this paragraph 17.1 shall be prepared at the expense of Landlord.
17.2 Landlord's Default under any Underlying Lease; Mortgage, Hypothec or Deed
Tenant covenants and agrees that, if by reason of a default upon the part
of Landlord as lessee under any underlying lease in the performance of any of
the terms or provisions of such underlying lease or by reason of a default under
any mortgage, hypothec or deed of trust to which this lease is subject or
subordinate, Landlord's estate is terminated, it will attorn to the lessor under
such underlying lease or the acquirer of the Building pursuant to any action
taken under any such mortgage, hypothec or deed of trust, and will recognize
such lessor or such acquirer, as Tenant's Landlord under this lease.
Tenant waives the provisions of any statute or rule of law now or
hereafter in effect which may give or purport to give Tenant any right of
election to terminate this lease or to surrender possession of the Premises in
the event any such proceeding to terminate the underlying lease is brought be
the lessor under any such underlying lease or any such action is taken under any
such mortgage, hypothec or deed of trust and agrees this lease shall not be
affected in any way whatsoever by any such proceedings.
17.3 Request from Landlord to Tenant for Written Statement
Tenant agrees to execute and deliver, at any time and from time to time,
upon the request of Landlord or of the lessor under any such underlying lease,
or of the holder of any such mortgage, hypothec or deed of trust, any instrument
which may be necessary or appropriate to evidence such attornment.
Tenant will upon request of Landlord furnish to the lessor under any
underlying lease and/or to each creditor under a mortgage, hypothec or deed of
trust a written statement that this lease is in full force and effect and that
Landlord has complied with all its obligations under this lease and any other
reasonable written statement, document or estoppel certificate requested by any
such creditor. Landlord shall, at its own expense, prepare any instrument which
it wishes Tenant to sign pursuant to this paragraph 17.3.
17.4 Certificate from Tenant
Tenant, at any time and from time to time, upon not less than 10 days
prior written notice from Landlord, will execute, acknowledge and deliver to
Landlord and, at Landlord's request, addressed to any prospective purchaser,
ground or underlying lessor or mortgagee of the Building, a certificate of
Tenant saying:
(1) that Tenant has accepted the Premises, or, if Tenant has not done
so, that Tenant has not accepted the Premises and specifying the
reasons therefor;
(2) the commencement and expiration dates of this lease;
(3) that this lease is unmodified and in full force and effect, or if
there have been modifications, that the same is in full force and
effect as modified, and stating the modifications;
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(4) whether or not there are then existing any defenses against the
enforcement of any of the obligations of Tenant under this lease
and, if so, specifying the same;
(5) whether or not there are then existing any defaults by Landlord in
the performance of its obligations under this lease, and, if so,
specifying the same;
(6) the dates, if any, to which the rent and other charges under this
lease have been paid; and
(7) any other information which may reasonably be required by any such
persons.
It is intended that any such certificate of Tenant delivered pursuant to
this Article 17.4 may be relied upon by any prospective purchaser, ground or
underlying lessor or mortgagee of the Building.
17.5 Assignment by Landlord
Landlord shall have the right to assign the lease or its right to rent and
additional rent to a lending institution as collateral security for a loan, and
in the event that such an assignment is given and executed by Landlord this
lease shall not be cancelled or modified for any reason whatsoever, except as
provided for, anticipated or permitted by the terms of this lease or by law
without the consent in writing of such lending institution. Tenant agrees that
it will, if and whenever required by Landlord, within 15 days of such written
request forwarded to Tenant by registered mail consent to and become a party to
any instrument or instruments permitting a mortgage, trust deed or charge to be
placed on the Building or Premises or any part thereof as security for any
indebtedness covered by the trust deed, mortgage or charge. Landlord is hereby
irrevocably appointed and constituted Tenant's representative for the purpose of
signing such document on behalf of Tenant.
ARTICLE 18 - EXPROPRIATION
18.1 General Provisions
If the whole or any part of the Premises, or the whole of the Building, or
so much thereof as shall in the opinion of the Landlord, render it commercially
undesirable to continue operation of the Building, be expropriated, condemned or
taken by any competent authority for any purpose whatsoever, Landlord shall have
the right, at its discretion, to terminate this lease upon notice in writing to
Tenant of at least 30 days. Tenant shall have no claim in damages or otherwise
against Landlord relating to or arising out of the expropriation or
condemnation, or arising out of the cancellation of this lease, nor shall
Landlord be obliged to contest any expropriation proceedings.
ARTICLE 19 - WAIVER
19.1 General Provisions
Failure of Landlord to insist upon strict performance of any of the
covenants or conditions of this lease or to exercise any right or option herein
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contained shall not be construed as a waiver or relinquishment of any such
covenant, condition, right or option, but the same shall remain in full force
and effect. Tenant undertakes and agrees, and any person claiming to be a
subtenant or assignee undertakes and agrees, that the acceptance by Landlord of
any rent from any person other than Tenant shall not be construed as a
recognition of any rights not herein expressly granted, or as a waiver of any of
Landlord's rights, or as an admission that such person is, or as a consent that
such person shall be deemed to be, a subtenant or assignee of this lease,
irrespective of whether Tenant or said person claims that such person is a
subtenant or assignee of this lease. Landlord may accept rent from any person
occupying the Premises at any time without in any way waiving any right under
this lease.
ARTICLE 20 - NOTICE AND DEMANDS
20.1 By Landlord to Tenant
Any notice or demand given by Landlord to Tenant shall be deemed to be
duly given when served upon Tenant personally, or when left upon the Premises,
or when mailed, to Tenant at the address of the Premises on the third business
day following such mailing.
20.2 Tenant's Domicile
Tenant elects Domicle at the Premises for the purpose of service of all
notices, writs of summons or other legal documents in any suit at law, action or
proceeding which Landlord may take.
20.3 By Tenant to Landlord
Any notice or demand given by Tenant to Landlord shall be deemed to be
duly given when served upon Landlord personally or when mailed by registered
mail to Landlord at the address designated by Landlord for purposes of payment
of the rent hereunder on the third business day following such mailing.
20.4 Prior to Commencement Date
Prior to Commencement Date of this lease, any notice or demand shall be
deemed to be duly given by Landlord to Tenant when delivered personally to
Tenant, or when mailed to Tenant at its principal place of business in the City
of Halifax, or at its mailing address as made known by Tenant to Landlord.
ARTICLE 21 - LANDLORD AND TENANT
21.1 Definition of Landlord
The term "Landlord", as used in this lease, means only the owner for the
time being of the Building or the lessee of a lease of the whole Building, so
that in the event of any sale or sales or transfer or transfers of the Building,
or the making of any lease or leases thereof, or the sale of sales or the
transfer or transfers or the assignment or assignments of any such lease or
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leases, Landlord shall be and hereby is relieved of all covenants and
obligations of Landlord hereunder and its shall be deemed and construed without
further agreement between the parties, or their successors in interest, or
between the parties and the transferee or acquirer at any such sale, transfer or
assignment, or lessee on the making of any such lease, that the transferee,
acquirer or lessee has assumed and agreed to carry out any and all of the
covenants and obligations of Landlord hereunder to Landlord's exoneration, and
Tenant shall thereafter be bound to and shall attorn to such transferee,
acquirer or lessee, as the case may be, as Landlord under this lease.
21.2 Tenant Partnership
If Tenant shall be a partnership (hereafter referred to as the "Tenant
Partnership"), each person who is presently a member of Tenant Partnership, and
each person who becomes a member of any successor Tenant Partnership hereafter,
shall be and continue to be liable for the full and complete performance of, and
shall be and continue to be subject to, terms and provisions of this lease,
whether or not he ceases to be a member of such Tenant Partnership or successor
Tenant Partnership.
21.3 Relationship Between Landlord and Tenant
It is understood and agreed that nothing contained in this lease nor in
any acts of the parties hereto shall be deemed to create any relationship
between the parties hereto other than the relationship of landlord and tenant.
ARTICLE 22 - BROKERAGE COMMISSION
22.1 General Provisions
As part of the consideration for the granting of this lease, Tenant
represents and warrants to Landlord that no broker or agent (other than any
broker or agent authorized in writing by Landlord) negotiated or was
instrumental in negotiating or consummating this lease. Any broker or agent of
Tenant shall be paid by Tenant.
ARTICLE 23 - SECURITY
23.1 To Secure Payment of Rent
Tenant covenants with Landlord to furnish the Premises with and maintain
therein a sufficient quantity of furniture, fixtures and other effects to secure
the payment of 6 months' rent.
ARTICLE 24 - EXPIRATION OF THE TERM OF THE LEASE
24.1 Tenant's Notice to Landlord
Tenant shall give Landlord 9 months' written notice prior to the date of
expiration of this lease of its intention to vacate the Premises, failing which
Landlord may at its option given written notice to Tenant within a period of not
less than 30 days before the date of expiration of this lease that this lease is
renewed for a further period of 12 months from the said date of expiration under
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the same terms and conditions as herein set forth. If neither of the notices
hereinabove described is given the present lease shall terminate IPSO FACTO and
without or demand on the date stated in Article 4.1 of this lease and any
continued occupation of the Premises by Tenant shall not have the effect of
extending the period or of renewing the present lease for any period of time,
the whole notwithstanding any provisions of law and Tenant shall be presumed to
occupy the Premises against the will of Landlord who shall thereupon be entitled
to make use of any and all remedies by law provided for the expulsion of Tenant
and for damages, provided, however, that Landlord shall have the right at its
option in the event of such continued occupation by Tenant to give to Tenant at
any time written notice that Tenant may continue to occupy the Premises under a
tenancy from month to month in consideration of a rental equal to that provided
in Article 5.1 hereof plus 50% thereof, payable monthly and in advance and
otherwise under the same terms and conditions as are herein set forth.
24.2 Tenant's Credit Rating
Landlord shall have the right at its sole option and discretion to refuse
any renewal of this lease where Tenant's credit rating is not at least as good
at the time of such renewal as it was at the commencement of the term of this
lease; the obligations to prove such credit rating to the entire satisfaction of
Landlord at either or both of such times, to be incumbent on Tenant.
ARTICLE 25 - FORCE MAJEURE
25.1 General Provisions
Save for Tenant's monetary obligations, neither Landlord nor Tenant shall
be liable for failure to perform any of its obligations hereunder, or for
damages or loss to the other party if such failure, damage or loss is caused by
Acts of God or of the Queen's enemies, fire or other casualty, war, disaster,
riots, lockouts, FORCE MAJEURE, CAS FORTUIT or any similar circumstance, or
circumstances attributable to the other party or other emergency or cause beyond
the reasonable control of either party.
ARTICLE 26 - GOVERNING LAW
26.1 General Provisions
This lease shall be construed and governed by the laws of the Province of
Nova Scotia. Should any provisions of this lease and/or of its conditions be
illegal or not enforceable under the laws of such Province it or they shall be
considered severable and the lease and its conditions shall remain in force and
be binding upon the parties as though the said provision or provisions had never
been included.
ARTICLE 27 - PRIOR AGREEMENTS
27.1 General Provisions
Tenant acknowledges that the execution of this lease shall constitute a
conclusive presumption that all agreements and representations of every kind
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whatsoever, written or oral, previously entered into or made by the parties
hereto or their agents, shall be solely those set forth in this date.
27.2 Amendments of Lease
This lease may not be amended save by written instrument duly executed by
both Landlord and Tenant and the acceptance by Landlord of any plan, drawing,
specification and/or notice and/or the consent of Landlord to any such plan,
drawing, specification and/or notice, shall not be deemed to be an amendment to
this lease without the express written undertaking and consent of Landlord that
such acceptance and/or consent is to constitute an amendment.
ARTICLE 28 - RULES AND REGULATIONS
28.1 Acts to Injure Premises or Persons
Tenant shall not perform any acts or carry on any practices which may
injure the Premises or be a nuisance or menace to other tenants, or make or
permit any improper noises in the Building and shall forthwith upon request by
Landlord discontinue all acts or practices in violations of this clause and
repair any damage or injury to the Premises caused thereby.
28.2 Preservation of Good Order and Cleanliness
Tenant shall not cause unnecessary labour by reason of carelessness and
indifference to the preservation of good order and cleanliness in the Premises
and in the Building.
28.3 Animals
No animals shall be brought or kept in or about the Building.
28.4 Canvassing
Canvassing, soliciting and peddling in the Building is prohibited and
Tenant shall co-operate to prevent the same.
28.5 Sidewalks, Entries, Passages, Elevators, etc.
The sidewalks, entries, passages, elevators and staircases shall not be
obstructed or used by Tenant or its clerks, servants, agents, visitors or
licensees for any other purpose than ingress to and egress from the offices.
Nothing shall be thrown by Tenant, its clerk, servants, agents, visitors or
licensees, out of the windows or doors, or into the entries, passages, elevators
or staircases of the Building. Landlord reserves entire control of the
sidewalks, entries, elevators, staircases, or corridors and passages which are
not expressly included within this lease, and shall have the right to make such
repairs, replacements, alterations, additions, decorations and improvements and
to place such signs and appliances therein, as it may deem advisable, provided
that ingress to and egress from the Premises is not unduly impaired thereby.
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28.6 Advertising
Landlord shall have the right to prohibit any advertising of or by Tenant,
which in its opinion, tends to impair the reputation of the Building or its
desirability as a building for offices or for financial, insurance and other
institutions and businesses of a like nature. Upon written notice from Landlord,
Tenant shall refrain from or discontinue such advertising.
28.7 Signs or Advertisements on the Building
No sign, advertisement or notice shall be inscribed, painted or affixed on
any part of the outside or inside of the Building, except on the directories and
doors of offices, and then only of such size, color and style as Landlord shall
determine and approve.
28.8 Selling Articles or Carrying on Business other than that specifically
Provided for in lease
Tenant shall not sell or permit the sale at retail, of newspapers,
magazines, periodicals, theatre tickets, or such articles as are customarily
sold in tobacco shops, soda fountains or lunch counters, or any other goods,
wares or merchandise whatsoever, in or from Premises. Tenant shall not carry on
or permit or allow any employee or other person to carry on the business of
stenography, typewriting or any similar business in or from the Premises for the
service or accommodation of the occupants of any other portion of the Building,
or the business of a public barber shop or a manicuring or chiropodist business,
or any business other than that specifically provided for in this lease.
28.9 Workmen for Repairs
The workmen of Landlord must be employed by Tenant at Tenant's expense for
lettering, interior moving and other similar work that may be done on the
Premises.
28.10 Care of Premises
Tenant shall not mark, paint, drill into or in any way deface the walls,
ceilings, partitions, floors, wood, stone or iron work, or any other
appurtenance to the Premises.
28.11 Window Shades
Tenant shall not install window shades of any color other than the typical
colors from time to time approved by Landlord. Tenant shall not install curtains
or venetian blinds without the approval of Landlord. Tenant shall submit plans
to Landlord for prior approval before installing curtains or blinds in the
Premises.
28.12 Washrooms
The water and wash closets and urinals shall not be used for any other
purpose than the purposes for which they were respectively constructed, and the
expense of any breakage, stoppage or damage resulting from a violation of this
rule by Tenant or its clerks, agents, servants, visitors or licensees, shall be
borne by Tenant.
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28.13 Apparatus Requiring Permit
If any apparatus used or installed by Tenant requires a permit as a
condition for installation, Tenant must file such permit with Landlord.
28.14 Entering Building After Normal Office Hours
Landlord shall have the right to determine the business hours for the
Premises. Until such time as Landlord may determine to the contrary, such
business hours shall be between the hours of 7:00 A.M. and 6:00 P.M. on business
days and between the hours of 7:00 A.M. and 12:00 noon on Saturdays. All persons
entering and leaving the Building at any time other than within such business
hours shall register in the books kept by Landlord at or near the night
entrance. Landlord will have the right to prevent any person from entering or
leaving the Building except during such business hours unless provided with a
key to the Premises to which such person seeks entrance, or a pass issued and
signed by Tenant upon the letterhead of Tenant and countersigned by Landlord.
Any persons found the Building at times other than such business ours without
such keys or passes will be subject to the surveillance of the employees and
agents of Landlord. This rule is made for the protection of Tenant, but Landlord
shall be under responsibility for failure to enforce it.
28.15 Safes and Heavy Equipment
Landlord shall have power to prescribe the weight and position of safes
and other heavy equipment, which shall be placed and stand on such plant strips
or skids as Landlord may prescribe, to distribute the weight properly. All
damage done to the Building by taking in or moving out a safe or any other
article of Tenant's equipment, or due to its being on the Premises, shall be
repaired at the expense of Tenant. The moving of safes shall occur only during
such hours as Landlord may from time to time establish and upon previous notice
to Landlord, and the persons employed to move the safes in and out of the
building must be acceptable to Landlord. Safes will be moved through the halls
and corridors only upon steel bearing plates. No freight or bulky matter of any
description will be received into the building or carried in the elevators,
except during hours approved by Landlord.
28.16 Rules and Regulations for Security of Building
Tenant agrees to observe all reasonable rules and regulations regarding
the security and protection of the Building and Tenants thereof including
without limitation the right of Landlord to search the person of and/or any
article carried by any person entering or leaving the building.
28.17 Further Rules and Regulations
Tenant covenants that the rules and regulations hereinabove stipulated,
and such other and further rules and regulations as Landlord may make and
communicate to Tenant, being its judgment needful for the reputation, safety,
care or cleanliness of the Building and Premises, or the operation, maintenance
or protection of the Building and its equipment, or the comfort of the tenants,
shall be faithfully observed and performed by Tenant, and by its clerks,
servants, agents, visitors and licensees. Landlord shall have the right to
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change said rules and to waive in writing, or otherwise, any or all of the said
rules in respect to any one or more tenants, and Landlord shall not be
responsible to Tenant for the non-observance or violation of any of said rules
and regulations by any other tenant or other person. The provisions of the rules
and regulations shall not be deemed to limit any covenant or provision of this
lease to be performed or fulfilled by Tenant.
28.18 Access to Loading Area
Landlord shall be entitled to control access to the truck loading area.
28.19 Keys
Landlord shall furnish Tenant, free of charge, with two keys for each
corridor door entering the Premises, and additional keys will be furnished at a
charge by Landlord equal to its cost, plus 15%, on an order signed by Tenant or
Tenant's authorized representative. All such keys shall remain the property of
Landlord. No additional locks shall be allowed on any door of the Premises
without Landlord's written permission, and Tenant shall not make or permit to be
made any duplicate keys, except those furnished by Landlord. Upon termination of
this lease, or any renewal thereof, Tenant shall surrender to Landlord all keys
for the Premises and give to Landlord the explanation of the combination of all
locks for safes, safe cabinets and vault doors, if any, in the Premises.
28.20 Graphics
Landlord shall provide and install, at Tenant's expense, all letters or
numbers on doors to the Premises; all such letters and numbers shall be in the
building standard graphics, and no others shall be used or permitted on the
Premises. In addition, Landlord shall maintain a directory board in the lobby of
the Building and provide reasonable identification of Tenant at Tenant's
expense.
28.21 Environmental
(1) Tenant agrees that all activities conducted on the Premises during
the term of this lease will comply with any and all laws,
regulations and ordinances relating to environmental matters and
the protection of the environment or other safety and health
concerns including, without restriction, the storage, handling,
disposal, discharge and or removal of any hazardous, nuclear or
toxic waste, substance or material. Tenant agrees to indemnify and
hold Landlord harmless from and against any loss, cost, damage or
expense arising out of or attributable to the failure of Tenant to
comply with its obligations under this paragraph 28.21.
(2) Landlord will have the right to inspect the Premises at all
reasonable times to determine Tenant's compliance with its
obligations under this Article 28.21 and if Tenant fails to meet
any of its obligations hereunder Landlord may perform, at Tenant's
expense, any lawful actions necessary to redress such default.
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(3) If, on termination of this lease Tenant is in default of any of its
obligations under this Article 28.21 Landlord may, at its option,
extend the term of this lease for such period of time as may be
reasonable to cure such default, in which event this lease shall
remain in full force and effect until such default has been cured.
(4) If Tenant's business includes in any way the storage, handling,
disposal, discharge and/or removal of any hazardous, nuclear or
toxic waste, substance or material, Tenant's liability insurance as
provided for in Article 16.2 shall specifically insure against its
obligations under this Article 28.21.
ARTICLE 29 - DEFAULT BY TENANT
29.1 Events of Default
Each of the following events (hereinafter called an "Event of Default")
shall be a default hereunder by tenant and a breach of this lease:
(1) if Tenant shall violate any covenant or agreement providing for the
payment of rent, including increased rent, or additional rent and
such violation shall continue for 5 days;
(2) if Tenant shall assign, transfer, encumber, sublet or permit the
use of the Premises by others except in a manner herein permitted;
(3) if Tenant shall be adjudicated a bankrupt or make any general
assignment for the benefit of creditors or take or attempt to take
the benefit of any insolvency or bankruptcy legislation;
(4) if a receiver or trustee shall be appointed for the property of
Tenant or any part thereof;
(5) if any execution be issued pursuant to a judgment rendered against
Tenant;
(6) save where otherwise permitted hereunder if any person other than
Tenant has or exercises the right to manage or control the
Premises, any part thereof, or any of the business carried on
herein other than subject to the direct and full supervision and
control of Tenant;
(7) if Tenant shall be in default in fulfilling any of the other
covenants and conditions of this lease and such default shall
continue for 15 days after written notice thereof from Landlord to
Tenant.
29.2 Continuance of any Event of Default
During the continuance of any such Event of Default, Landlord may, at its
option, give to Tenant a written notice of its intention to terminate this
lease, and the term hereof shall expire at noon upon the fifth day following the
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date upon which such notice is given as fully and completely as if that day were
the date fixed for the expiration of the term without the necessity of further
notice or legal process whatsoever, provided always, however, that Tenant shall
remain liable to pay all amounts and damages then due or to become due,
including the liquidated damages as hereinafter provided. Tenant upon such a
termination of this lease shall thereupon quit and surrender the Premises to
Landlord or if not in possession shall no longer have any right to possession of
the Premises. Landlord, its agents and servants, may immediately, or at any time
thereafter, re-enter the Premises and dispossess Tenant, and remove any and all
persons and any or all property therefrom, either by summary dispossession
proceedings or by any suitable action or proceeding at law, or by force or
otherwise, without being liable to prosecution or damages therefor.
Tenant specifically acknowledges that without prejudice to any other right
or remedy Landlord may, after the giving of the notice and the expiration of the
5 day notice period hereinabove referred to, cease to furnish any services
hereunder and without limiting the foregoing may terminate or interrupt
electrical service to the Premises.
29.3 Payment of Monies in Event of Default
In any of the foregoing cases Tenant shall pay any and all monies payable
under this lease up to and including the day of such termination or re-entry,
whichever shall be the later.
In addition there shall immediately become due and payable in one lump sum
as liquidated damages and not a penalty the aggregate rental for a period of one
year, being the estimated time required for re-leasing the Premises or, if less
than one year remains of the term hereof, the aggregate of rental for the
unexpired portion of the term.
29.4 The exercise of any Right of Landlord
The exercise by Landlord of any right it may have hereunder or by law
shall not preclude the exercise by Landlord of any other right it may have
hereunder or by law.
29.5 No waiver by Landlord
Failure of Landlord to insist upon the performance of any covenant or
condition of this lease or to exercise any right or option contained in this
lease shall not be construed as a waiver or relinquishment of any such covenant,
condition, right or option. No violation of any covenant or condition of this
lease shall be valid unless in writing and signed by duly authorized persons on
behalf of Landlord. The acceptance of rent from or the performance of any
obligation by a person other than Tenant shall not be construed as an admission
by Landlord or any right, title or interest of such person as sub-tenant,
assignee, transferee or otherwise in the place of Tenant.
29.6 Landlord's Right to enter Premises
Tenant further covenants and agrees that, on Landlord becoming entitled to
re-enter upon the Premises under any of the provisions in this lease, Landlord,
in addition to all other rights, shall have the right to enter the Premises as
agent of Tenant, either by force or otherwise, without being liable for damages
37
<PAGE>
or loss therefore and to relet the Premises as the agent of Tenant, and to
receive the rent therefor and, as the agent of Tenant, to take possession of any
furniture or other property on the Premises and to sell the same at public or
private sale without notice and to apply the proceeds of such sale and any rent
derived form reletting the Premises upon account of the rent under this lease
and Tenant shall be liable to Landlord for the deficiency, if any.
29.7 No Limitation on Right to Distrain
Tenant waives and renounces the benefit of any present or future statute
taking away or limiting Landlord's right to distress and covenants and agrees
that notwithstanding any such statute none of the goods and chattels of Tenant
on the Premises at any time during the term shall be exempt from levy by
distress for rent or any other charges; all goods and chattels brought by Tenant
onto the Premises shall be the unencumbered property of Tenant and they shall
not be subjected to any claim or other encumbrance at any time without the
written consent of Landlord. If Tenant shall leave the Premises leaving any rent
or other amounts owing under this lease unpaid, Landlord, in addition to any
other available remedy, may seize and sell the goods and chattels of Tenant at
any place to which Tenant or other person may have removed them in t he same
manner as if such goods and chattels have remained and been distrained upon the
Premises. Notwithstanding the provision of this paragraph 29.1 (7) and paragraph
23.1, Tenant shall have the right to grant the charges on its furniture and
equipment which have priority over the Landlord's right to distrain as security
for financing to lenders who are at arms' length with the Tenant.
ARTICLE 30 - MISCELLANEOUS
30.1 Captions
The captions and headings appearing in this lease have been inserted as a
matter of convenience and for reference only and, in no way define, limit or
enlarge the scope of meaning of this lease, nor of any provision hereof.
30.2 No Registration
Tenant covenants that it will not register this lease or any notice
thereof except in a form which shall be acceptable to the Landlord.
30.3 Tenant's Acceptance of lease
Tenant hereby accepts this lease of the above described Premises to be
held by it as Tenant subject tot he covenants, conditions and restrictions above
and in the Schedules attached hereto set forth.
30.4 Successors and Assigns
AND IT IS AGREED, that the provisions hereof shall be binding upon and
enure to the benefit of the successors, legal representatives and assigns of the
parties, except as may be hereinabove otherwise provided, and if there is more
than one tenant, the covenants herein contained on the part of Tenant shall be
construed as being several as well as joint, and where necessary, the singular
38
<PAGE>
number shall be taken to include the plural, and the neuter, the masculine
and/or the feminine gender.
30.5 Early Occupancy
Notwithstanding the provisions of Articles 4.1 and 5.1, Tenant may occupy
the Premises prior to the Commencement Date subject to the following provisions:
(1) For the period from the commencement of occupancy to December 31,
1996, Tenant shall not be required to pay rent under Article 5.1,
Real Estate Taxes under Article 5.3 or Operating Expenses under
Article 5.4 other than actual cost of electricity and cleaning for
the Premises which Tenant shall pay and Tenant shall otherwise be
subject to the terms of this lease; and
(2) For the period from January 1, 1997 to the Commencement Date, Tenant
shall pay to Landlord the amount of $11,000 per month, payable in
advance on the first day of each month without set-off, compensation
or reduction whatsoever, which amount shall be inclusive of rent
under Article 5.1, Real Estate Taxes under Article 5.3 and Operating
Expenses under Article 5.4 and Tenant shall otherwise be subject to
the terms of this lease.
30.6 Leasehold Improvements
The parties agree that the Premises are being delivered by Landlord to
Tenant in their condition "as is" on the Commencement Date of the term and
Tenant shall be responsible for all leasehold improvements which shall include,
without limitation, all of construction costs, construction management costs,
engineering costs, all design/specification/plan preparation costs and all
telephone and data cabling costs. Landlord and Tenant agree that any and all
alternations, repairs, changes, additions or improvements to the Premises beyond
those specified in Schedule "D" shall at all items constitute Tenant improvement
for which Tenant shall assume full responsibility.
30.7 Leasehold Improvement Allowance
Landlord agrees to pay to Tenant a leasehold improvement allowance
computed at the rate of $8.00 per square foot or rentable area of the Premises
payable on the due execution of this lease by Tenant.
30.8 Parking
Landlord agrees to make available to Tenant during the initial term of
this lease up to 6 parking spaces in the parking garage forming part of the
Building at the monthly rate of $70 per parking space and up to 20 additional
parking spaces at the monthly rental rate in the parking Garage prevailing from
time to time. Landlord agrees to make available to Tenant during the renewal
term up to 26 parking spaces in the parking garage forming part of the Building
at the monthly rental rate in the parking garage prevailing from time to time.
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<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have duly executed and signed
these presents as of the day and year first above written.
SIGNED, SEALED & DELIVERED
in the presence of:
PURDY'S WHARF DEVELOPMENT LIMITED
/s/ Martha Zimmerman Per: /s/ Marilyn Brownell
-------------------------------- ------------------------------
Witness
Per: /s/ John W. Lindsay, Jr.
------------------------------
/s/ Richard K. Jones MENTOR NETWORKS INC.
---------------------------------
Witness
Per: /s/ William Ring
------------------------------
Per: /s/ Phillip Read
------------------------------
40
<PAGE>
SCHEDULE "A"
BLOCK 1A
ALL that certain block of land and land covered by water on the northeastern
side of Upper Water Street in the City of Halifax, Province of Nova Scotia shown
as Block - 1A on a plan (Servant, Dunbrack, McKenzie & MacDonald Limited Plan
Number 14-309-0) of survey of Blocks 1A, 2A, 4A and 5, Resubdivision of Blocks
1, 2 and 4 and Lot P, Lands and Lands Covered by Water Conveyed to Purdy's Wharf
Development Limited, City of Halifax and The Great-West Life Assurance Company
signed by Terrance R. Doogue, N.S.L.S.
dated April 27th, 1987 and described as follows:
BEGINNING on the northeastern official street line of Upper Water Street at a
point distant 1,211.55 feet on a bearing of N 19(degree) 16' 15" W from Nova
Scotia Coordinate Monument Number 4819;
THENCE N 49(degree) 46' 23" W, 109.26 feet along the northeastern official
street line of Upper Water Street to a southern corner of Block - 2A;
THENCE N 43(degree) 07' 13" E, 190.36 feet along a southeastern boundary of
BlocK - 2A to an eastern corner thereof;
THENCE N 46(degree) 52' 47" W, 83.33 feet along a northeastern boundary of Block
- - 2A to an angle therein;
THENCE N 43(degree) 07' 13" E, 130.44 feet along a southeastern boundary of
BlocK - 2A to an angle therein;
THENCE N 88(degree) 07' 13" E, 52.84 feet along a southern boundary of Block -
2A to an angle therein;
THENCE S 46(degree) 52' 47" - E, 137.21 feet along a southwestern boundary of
BloCK - 2A to its intersection with the northwestern boundary of Block S;
THENCE S 48(degree) 14' 10" W, 109.76 feet along the northwestern boundary of
BloCK S to an angle therein;
THENCE S 41(degree) 42' 49" E, 49.46 feet along the southwestern boundary of
BlocK S to an angle therein;
THENCE S 48(degree) 17' 06" W, 239.85 feet along the northwestern boundary of
BloCK S to the place of beginning.
CONTAINING 52,142 square feet.
<PAGE>
ALL bearings are Nova Scotia Coordinate Survey System Grid Bearings and are
referred to Central Meridian, 64(degree) 30' West.
A southeastern portion of the above described Lot 1A as shown on the above
referred to plan being subject to View Plane No. 2 restrictions, as defined by
the Zoning By-law of the City of Halifax.
SUBJECT also to Easement P lying across the southern portion of the above
described Block 1A as shown and mathematically delineated on the above referred
to plan and containing an area of 1,119 square feet. Said Easement P being the
subject of an Agreement recorded at the Registry of Deeds Office for the County
of Halifax in Book 4043 at Page 151.
EXCEPTING and reserving out of the foregoing Block 1A that portion thereof
described as Parcel C and more particularly described as follows:
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<PAGE>
ALL that certain parcel of land on the northeastern side of Upper Water Street
in the City of Halifax, Province of Nova Scotia Shown as Parcel - C on a plan
(Servant, Dunbrack, McKenzie & MacDonald Ltd. Plan No. 14-453-0) of survey of
Blocks 2B and 2C and Parcels - A, B and C, Subdivision of Block 2A and Portions
of Blocks 1A & 3, Lands Conveyed to The Great-West Life Assurance Company and
123715 Canada Limited signed by Terrance R. Doogue, N.S.L.S. dated September
1st, 1989 and described as follow:
BEGINNING on the northeastern official street line of Upper Water Street at a
southern corner of Parcel - B;
THENCE N 43(degree) 07' 13" E, 10.00 feet along the southeastern boundary of
Parcel - B to a western corner of Remaining Portion of Block - 1A lands as
conveyed to The Great-West Life Assurance Company and 123715 Canada Limited by
Indenture recorded at the Registry of Deeds for the County of Halifax in Book
3706 at Page 762 (Portion thereof);
THENCE S 03(degree) 19' 50" E, 13.78 feet along the western boundary of
Remaining Portion of Block - 1A to its intersection with the northeastern
boundary of Upper Water Street;
THENCE N 49(degree) 46' 23" W, 10.00 feet along the northeastern boundary of
UppeR Water Street to the place of beginning.
CONTAINING 50 square feet.
ALL bearings are Nova Scotia Coordinate Survey System Grid Bearings and are
referred to Central Meridian, 64(degree) 30' West.
THE above described Parcel - C being part of Block 1A as shown on the above
referred to plan.
BLOCK 3 AND SPATIAL ELEMENT SE-3A
ALL that certain block of land on the northeastern side of a Service Road of the
Cogswell Street Interchange in the City of Halifax, Province of Nova Scotia,
shown as Block 3 on a plan (Servant, Dunbrack, McKenzie & MacDonald Limited Plan
Number 12-131-A) of survey of Blocks 1 to 4 inclusive, Lot C-l and Parcel S
Lands and Lands Covered by Water, Acquired by Purdy Brothers Limited and City of
Halifax, signed by Roy A. Dunbrack, N.S.L.S. dated November 10, 1982 and
described as follows:
BEGINNING on the official city street line (confirmed by City Council October
14, 1982) of the Service Road at the most southern corner of Lot C-l,
THENCE N 43(degree) 07' 13" E, 300.72 feet along the southeastern boundary of
Lot C-l to the most western corner of Block 4;
3
<PAGE>
THENCE S 46(degree) 52' 47" E, 158.0 feet along the southwestern boundary of
BlocK 4 to an angle therein;
THENCE S 01(degree) 52' 47" E, 35.83 feet along the western boundary of Block 4
tO A northwestern boundary of Block 2;
THENCE S 43(degree) 07' 13" W, 295. 24 feet along said boundary of Block 2 to
the curved official city street line (confirmed by City Council October 14,
1982) of the Service Road;
THENCE northwesterly on a curve to the right which as a radius of 1,189.77 feet
for a distance of 88.45 feet along said official city street line to a point of
curvature thereon;
THENCE N 39(degree) 40' 45" W, 96.01 feet along the aforementioned official city
street line to the place of beginning".
CONTAINING a total area of 56,837 square feet, comprised of 37,657 square feet
more or less of land area and 19,180 square feet more or less of land covered by
water.
ALL bearings are Nova Scotia Coordinate Survey System Grid Bearings and are
referred to Central Meridian, 64(degree) 30' West.
ALL that certain volume of space, overlying Block 3, on the northeastern side of
a Service Road of the Cogswell Street Interchange in the City of Halifax,
Province of Nova Scotia, designated as Spatial Element SE-3A. Said Spatial
Element SE-3A being bounded, by horizontal planes having geodetic elevations of
146.50 feet and 196.50 feet and by vertical planes which are coincident with the
boundaries of Block 3 as said Block 3 is shown on a plan (Servant, Dunbrack,
McKenzie & MacDonald Limited Plan Number 12-131-A) of survey of Blocks 1 to 4
inclusive, Lot C-l and Parcel S Lands and Lands Covered by Water, Acquired by
Purdy Brothers Limited and City of Halifax, signed by Roy A. Dunbrack, N.S.L.S.
dated November 10, 1982 and described as follows:
BEGINNING on the official city street line (confirmed by City Council October
14, 1982) of the Service Road at the most southern corner of Lot C-l;
THENCE N 43(degree) 07' 13" E, 300.72 feet along the southeastern boundary of
Lot C-l to the most western corner of Block 4;
THENCE S 46(degree) 52' 47" E, 158.0 feet along the southwestern boundary of
BlocK 4 to an angle therein;
THENCE S 01(degree) 52' 47" E, 35.83 feet along the western boundary of Block 4
tO A northwestern boundary of Block 2;
THENCE 5 43(degree) 07' 13" W, 295.24 feet along said boundary of Block 2 to the
curved official city street line (confirmed by City Council October 14, 1982) of
the Service Road;
4
<PAGE>
THENCE northwesterly on a curve to the right which has a radius of 1,189.77 feet
for a distance of 88.45 feet along said official city street line to a point of
curvature thereon;
THENCE N 39(degree) 40' 45" W, 96.01 feet along the aforementioned official city
street line to the place of beginning.
SAID Block 3 containing a total area of 56,837 square feet, comprised of 37,657
square feet more or less of land area and 19,180 square feet more or less of
land covered by water.
ALL bearings are Nova Scotia Coordinate Survey System Grid Bearings and are
referred to Central Meridian, 64(degree) 30' West.
ALL elevations are geodetic elevations plus 100 feet, derived from monuments of
the Nova Scotia Coordinate Survey System.
EXCEPTING and reserving out of the foregoing Block 3 and Spatial Element SE-3A
that portion thereof described as Parcel A and more particularly described as
follows:
ALL that certain parcel of land on the northeastern side of Upper Water Street
in the City of Halifax, Province of Nova Scotia shown as Parcel - A on a plan
(Servant, Dunbrack, McKenzie & MacDonald Ltd. Plan No. 14-453-0) of survey of
Blocks 2B and 2C and Parcels - A, B and C, Subdivision of Block 2A and Portions
of Blocks 1A & 3, Lands Conveyed to The Great-West Life ASSURANCE Company and
123715 Canada Limited signed by Terrance R. Doogue, N.S.L.S. dated September
1st, 1989 and described as follows:
BEGINNING on the curved northeastern official street line of Upper Water Street
at a western corner of Parcel - B lands as conveyed to The Great-West Life
Assurance Company by indenture recorded at the Registry of Deeds for the County
of Halifax in Book 3833 at Page 621;
THENCE northwesterly on a curve to the right which has a radius of 1,189.77 feet
for a distance of 10.00 feet along the curved northeastern official street line
of Upper Water Street to the southern corner Remaining Portion of Block - 3
lands as conveyed to The Great-West Life Assurance Company by Indenture recorded
at the Registry of Deeds for the County of Halifax in Book 3833 at Page 621;
THENCE N 89 42' 40" E, 13.74 feet along the southern boundary of Remaining
Portion of Block - 3 to its intersection with the northwestern boundary of the
aforementioned Parcel - B;
THENCE S 43 07' 13" W, 10.00 feet along the northwestern boundary of Block - B
to the place of beginning.
CONTAINING 50 square feet.
ALL bearings are Nova Scotia Coordinate Survey System Grid Bearings and are
referred to Central Meridian, 64 30' West.
5
<PAGE>
THE above described Parcel - A being part of Block 3 and Spatial Element SE-3A
as shown on the above referred to plan.
6
<PAGE>
SCHEDULE "B"
PURDY'S WHARF DEVELOPMENT
HALIFAX, NOVA SCOTIA
GRAPH
TOWER 1 6th FLOOR PLAN
<PAGE>
SCHEDULE "C"
The method of measuring office building rentable area shall be that
developed by the Building Owners and Managers Association International
and published in their booklet "Standard Method for Measuring Floor area
in Office Building" reprinted May 1981.
Rentable area is a measure of the tenants pro rata portion of the entire
office floor, excluding elements of the building that penetrate the floor
to area below. The rentable area of a floor is fixed for the life of the
building and is not affected by changes in corridor sizes or
configurations.
The rentable area of a floor is computed by measuring to the inside
finished surface of the dominant portion of the permanent outer building
walls excluding any major penetrations of the floor. No deductions are
made of columns and projections necessary to the building. Dominant
portion means that portion of the inside finished surface of the permanent
outer building wall which is 50% or more of the vertical floor-to-ceiling
dimension measured at the dominant portion. If the dominant portion is not
vertical, the measurement for area shall be to the inside finished surface
of the permanent outer building wall where it intersects the finished
floor. In the subject building the dominant portion is the inside surface
of the exterior windows.
PROPORTION FORMULA
A = net rentable area of tenant
B = net rentable area of
Tower 1 and Xerox Building
Proportion is A
---------
95% of B
<PAGE>
SCHEDULE "D"
BUILDING STANDARD INSTALLATION SCHEDULE
1. LIGHTING
One 20" x 60" recessed fluorescent light fixture is provided at as per an
8 foot centre line spacing located on a standard ceiling grid. Any
installation of the light fixtures shall be at the Lessee's expense.
2. HEATING AND AIR-CONDITIONING SERVICES
Each floor is air-conditioned by a separate recirculation type variable
air volume unit located in the core area. The air is introduced through
lighting troffers. Perimeter and interior areas are divided into zones,
each with automatic controls.
The perimeter of each floor is heated by hot water radiation, with
continuous cabinets. One thermostat is provided on average for each bay to
automatically control perimeter space conditions. Interior space is
provided with one thermostat for each 2,000 square feet of area to control
the variable air volume boxes and maintain proper temperature.
The installation of interior heating, ventilation and air-conditioning
services and any relocation of exterior wall heating, ventilation and
air-conditioning services to accommodate lessee's partition requirements
or any special requirement such as exhaust for printing machines, air
circulation for boardrooms, computer rooms, or reception areas shall be at
lessee's expense.
3. SPRINKLER SYSTEM
The Building is fully sprinklered according to standards of the Nova
Scotia Fire Marshall and the Fire Department of the City of Halifax.
Should changes be required to the Building Standard system due to the
Lessee's partition layout, then the changes and/or additional sprinklers
shall be at the Lessee's expense.
4. ELECTRICAL SERVICE
Electrical power is provided or Lessee's electrical service requirements
at junction boxes within the suspended ceiling on each floor.
5. TELEPHONE SERVICE
Conduit to receive telephone circuits will be provided from each bay to
the central core of each floor.
<PAGE>
6. TOILET ROOMS
One Men's and one Women's toilet room are provided on each floor, fully
furnished and fixtured according to Building Standards. Any additional
plumbing shall be at the Lessee's expense.
7. DEMISING WALLS AND ENTRANCE DOORS
Demising Walls and Partitions are not provided on a single tenant floor.
On multiple tenant floors, demising walls and corridor walls are to be
provided in Building Standard drywall and steel stud construction, to
underside of slab with sound baffle. A Building Standard, full height,
wood grain, solid core entrance door plus hardware is provided.
8. FLOORING
Smooth finish concrete floor.
2
<PAGE>
THIS INDENTURE made as of the 29th day of April , 1997
AMONG:
MENTOR NETWORKS INCORPORATED,
a body corporate, incorporated under the
laws of Canada ("Mentor") and its wholly
owned subsidiary
HIGH PERFORMANCE GROUP (CANADA)
INCORPORATED,
a body corporate continued under the laws
of the Province of Nova Scotia ("HPG"),
together, the "Companies"
OF THE FIRST PART
- and -
NOVA SCOTIA BUSINESS
DEVELOPMENT
CORPORATION, A Crown Corporation
of the Province of Nova Scotia
("NSBDC")
OF THE SECOND PART
- and -
PURDY'S WHARF DEVELOPMENT
LIMITED, a body corporate under the
laws of the province of nova scotia
("NSBDC")
OF THE THIRD PART
WHEREAS:
A NSBDC has entered into financing agreements with the Companies (the
"Financing Agreements") under the terms of which NSBDC agreed, subject to
certain conditions, to advance loans to the Companies ("NSBDC Loans");
B The Companies have agreed to execute this Indenture as additional security
for the payment of the NSBDC Loans;
<PAGE>
C By a Lease made between the Landlord and Mentor as tenant (the "Lease")
the Landlord leased to Mentor the 6th floor of its building know as
Purdy's Wharf Tower I located at 1959 Upper Water Street, Halifax, Nova
Scotia which is outlined in red on Schedule "B" annexed to the Lease (the
Premises");
D HPG is also utilizing the Premises through arrangements with Mentor;
E It was a condition of the advance by NSBDC of the NSBDC Loans that the
Lease be on terms satisfactory to NSBDC and, that this Indenture be
executed and delivered to NSBDC.
NOW THEREFORE THIS INDENTURE WITNESSETH that for and in consideration of
the foregoing, and also in consideration of the sum of One Dollar ($1.00) now
paid by NSBDC to each of the Companies and the Landlord, the receipt and
sufficiency whereof is hereby acknowledged by each of the Companies and
Landlord, the parties hereto agree, each with the other, as follows:
I. SUBLEASE
1.1 The Companies hereby demise and sublet to NSBDC all of their right, title
and interest in and to the Premises, and in and to the Lease, save and
except only the last day of the Lease, PROVIDED ALWAYS, that this sublease
shall be null and void if the Companies pay or cause to be paid all sums,
whether for principal, interest or otherwise due and owing on the NSBDC
Loans.
II. COMPANIES' COVENANTS
2.1 The Companies covenant with NSBDC as follows:
(a) they have the right to convey their interest in and to the Premises
and the Lease, as conveyed herein, to NSBDC;
(b) they have a good leasehold title to the Premises;
(c) they shall have quiet possession of the Premises but if:
(i) either of the Companies defaults in payment of the NSBDC Loans
in accordance with their terms; or
(ii) either of the Companies fails to observe or perform any of its
covenants in favor of NSBDC, however arising,
then, on the happening of either one of the foregoing events, NSBDC
shall have quiet possession of the Premises, free from all
encumbrances, subject only to the terms, covenants and conditions of
the Lease;
2
<PAGE>
(d) they will execute such further assurances of the Premises and of the
Lease as NSBDC may reasonably require;
(e) they have done no act to encumber the Premises or their interest in
the Lease;
(f) they will not, while any amounts remain unpaid under the NSBDC
Loans, assign the Lease;
(g) the Lease is a valid and subsisting Lease and they have done no act
or omitted to do any act whereby the Lease has become in any way
impaired or invalid;
(h) they will comply with all covenants, provisos and conditions
contained in the Lease, including payment of the rent reserved
thereunder, and will do no act or be guilty of any default which
shall or may cause the Lease to be forfeited or terminated;
(i) NSBDC, upon becoming aware that either of the Companies is in
default under the Lease, may pay any monies for rent or otherwise
that may be due under the Lease, and may perform or cause to be
performed any covenant thereunder or otherwise rectify and make good
any default committed by the Companies under the Lease, and any
monies so paid or costs, charges or expenses sustained by NSBDC
pursuant thereto, shall bear interest at the rate of 15% per annum
until paid;
(j) they will promptly pay, as and when due, all taxes, rates, levies,
charges and other impositions that may be rated or charged against
their interest in the Premises as a tenant under the Lease;
(k) they shall stand possessed of the last day of the term of the Lease
upon trust for NSBDC, to assign and dispose thereof as NSBDC may
direct, and upon any sale or sales of the interest of the Companies
under the Lease, NSBDC may, for the purposes of vesting the said day
or any such term or any renewal thereof in any purchaser or
purchasers thereof entitled, by deed in writing convey the interest
of the Companies as tenant under the Lease, including the said last
day of the term, and the Companies hereby irrevocably appoint NSBDC
as their attorney to do so.
III. Landlord's Consent
3.1 The Landlord acknowledges and consents to the execution and delivery of
this Indenture by the Companies and covenants and agrees with NSBDC that
it will, at the same time it gives a written notice to either of the
Companies pursuant to Section 29.2 of the Lease, give a copy of the notice
to NSBDC and, if NSBDC remedies the default giving rise to the giving of
3
<PAGE>
such notice prior to the effective time of termination of the Lease, the
Lease shall not terminate and at NSBDC's option, either the Companies may
remain in possession of the Premises or NSBDC and/or its receiver may take
possession of the Premises under the terms of the Lease and the Landlord
will not, subject to compliance with the requirements of Article 11 of the
Lease, unreasonably withhold its consent to the assignment of the Lease to
a third party by NSBDC and/or its receiver in realizing on its security
including the security constituted by this Agreement.
3.2 The Landlord agrees that except for NSBDC's right to remedy any default in
accordance with paragraph 3.1 hereof and to realize upon the security
constituted hereby that NSBDC shall not be liable for any failure of the
Companies to comply with any covenant or obligation herein contained.
3.3 Nothing contained in this Agreement shall be construed as a waiver by the
Landlord of any of the Landlord's rights under the Lease.
IV. GENERAL
4.1 This Indenture shall enure to the benefit of and be binding on each of the
Companies, NSBDC and the Landlord and their respective successors and
assigns.
4.2 Time shall be the essence of this Indenture.
4.3 This Indenture shall be governed by the laws of the Province of Nova
Scotia.
IN WITNESS WHEREOF the parties hereto have properly executed this
Indenture on the day and year first above written.
SIGNED SEALED AND DELIVERED MENTOR NETWORKS
in the presence: INCORPORATED
/s/ Phillip Read Per: /s/ William Ring
Witness
HIGH PERFORMANCE GROUP
(CANADA) INCORPORATED
/s/ Phillip Read Per: /s/ William Ring
Witness
PURDY'S WHARF DEVELOPMENT
LIMITED
/s/ Martha Zimmerman PER: /s/ John R. Lindsay Jr.
Witness
NOVA SCOTIA BUSINESS
DEVELOPMENT CORPORATION
/s/ Zandra Worthen PER: /s/ Donald A. Leaf
Witness /s/ Douglas Giannon
5
<PAGE>
CANADA
PROVINCE OF NOVA SCOTIA
On this 29th day of April, A.D. 1997, before me, the subscriber personally
came and appeared Phillip Read, a subscribing witness to the foregoing
Indenture, who, having been by me duly sworn, made oath and said that High
Performance Group (Canada) Incorporated, one of the parties thereto, caused the
same to be executed in its name and on its behalf and its corporate seal to be
thereunto affixed by its proper officers in his presence. ~
/s/ Richard K. Jones
A Commissioner of the
Court of Nova Scotia
CANADA
PROVINCE OF NOVA SCOTIA
On this 23rd day of June, A.D. 1997, before me, the subscriber personally
came and appeared Martha Zimmerman, a subscribing witness to the foregoing
Indenture, who, having been by me duly sworn, made oath and said that Purdy's
Wharf Development Limited, one of the parties thereto, caused the same to be
executed in its name and on its behalf and its corporate seal to be thereunto
affixed by its proper officers in her presence. ~
/s/ George A. Caines
A Commissioner of the
Court of Nova Scotia
CANADA
PROVINCE OF NOVA SCOTIA
On this 29th day of April, A.D. 1997, before me, the subscriber
personally came and appeared Phillip Read, a subscribing witness to the
foregoing Indenture, who, having been by me duly sworn, made oath and said that
Mentor Networks Incorporated, one of the parties thereto, caused the same to be
executed in its name and on its behalf and its corporate seal to be thereunto
affixed by its proper officers in his presence.
/s/ Richard K. Jones
A Commissioner of the
Court of Nova Scotia
6
<PAGE>
CANADA
PROVINCE OF NOVA SCOTIA
On this 4th day of June, A.D. 1997, before me, the subscriber personally
came and appeared Zandra Worthen, a subscribing witness to the foregoing
Indenture, who, having been by me duly sworn, made oath and said that Nova
Scotia Business Development Corporation, one of the parties thereto, caused the
same to be executed in its name and on its behalf and its corporate seal to be
thereunto affixed by its proper officers in her presence. ~
/s/ Diana E. Saxby
A Commissioner of the
Court of Nova Scotia
<PAGE>
PURDYS WHARF
DEVELOPMENT LIMITED
PHASE I
INVOICE
HST REGISTRATION NUMBER AUGUST 28, 1998
R137130340
INVOICE #980920
MENTOR NETWORKS INC.
600 - 1959 UPPER WATER STREET
HALIFAX, NS B3J 3N2
ATTENTION: PHIL READ
1998/99 REALTY TAX
YOUR PROPORTIONATE SHARE OF REALTY TAXES FOR THE PERIOD APRIL 1, 1998 TO MARCH
31, 1999 AS PER ATTACHED TAX ASSESSMENT PREPARED BY CHARLES HARDY APPRAISALS
(NOVA SCOTIA) LIMITED.
TOTAL 1998/99 REALTY TAXES $987,324.05
**TENANT PROPORTIONATE SHARE 6.241%
TOTAL REALTY TAXES DUE $ 61,618.66
LESS: TAXES PREVIOUSLY BILLED {29,705.26}
---------
SUBTOTAL BEFORE HST $ 31,913.40
5% HST 4,787.01
---------
1998/99 REALTY TAXES DUE $ 36,700.41
============
PAYMENT DUE SEPTEMBER 18, 1998
**BASED ON SQUARE FOOTAGE OCCUPIED 19,365/310,288 S.F.
PLEASE DIRECT ANY INQUIRIES TO ALISON MACKINNON 902-496-3038
Suite 305, Xerox Building, 1949 Upper Water Street Halifax Nova Scotia, B3J 3N3
Tel: (902) 421-1122 Fax: 423-1894
<PAGE>
PURDY'S WHARF
DEVELOPMENT LIMITED
PHASE I
INVOICE
July 6, 1998
HST #: R137130340
INVOICE #: 980656
MENTOR NETWORKS
600 - 1959 UPPER WATER STREET
HALIFAX, NS B3J 3N2
<TABLE>
<CAPTION>
WORK ORDER # DATE REQUEST LIGHTS MATERIAL UNIT COST COST
<S> <C> <C> <C> <C> <C> <C>
98-06-13554 01/04/98 RPLC LIGHTS - RECEPTION 2 F40CW/SS $1.60 $3.20
Total $3.20
HST $0.48
-----
INVOICE TOTAL $3.68
-----
</TABLE>
DUE UPON RECEIPT
ANY INQUIRIES SHOULD BE ADDRESSED TO ALISON MACKINNON 421-1122
Suite 305, Xerox Building, 1949 Upper Water Street Halifax Nova Scotia, B3J 3N3
Tel: (902) 421-1122 Fax: 423-1894
<PAGE>
PURDY'S WHARF
DEVELOPMENT LIMITED
PHASE I
INVOICE
HST REGISTRATION NUMBER INVOICE #9806EX
R137130340
JULY 13, 1998
MENTOR NETWORKS INC.
600 - 1959 UPPER WATER STREET
HALIFAX, NS B3J 3N2
For electricity consumed in excess of the allowable consumption for the period
March 31, 1998 - June 30, 1998 as per Section 7.1.3(A) of the standard lease.
Allowable Allowable Actual Actual
Demand Consumption Demand Consumption
PERIOD K.W. K.W.H. K.W. K.W.H. COST
- ------ --------- ----------- ------ ----------- ----
Mar 31 - Apr 30 44.6 11,490 41.4 14,400 $ 119.12
Apr 30 - May 29 44.6 11,107 39.6 14,040 99.45
May 29 - Jun 30 44.6 12,256 39.6 15,210 100.58
------
Pretax $ 319.15
Invoice
15% H.S.T. 47.87
-------
TOTAL $ 367.02
INVOICE ==========
Allowable Kilowatt consumption per sq. ft. = 19,365 x 2.3/1,000 + 44.6
Allowable Kilowatt consumption per day = 44.6 x 60 hrs./7 days = 383
DUE UPON RECEIPT
PLEASE DIRECT ANY INQUIRIES TO ALISON MACKINNON 496-3038
Suite 305, Xerox Building, 1949 Upper Water Street Halifax Nova Scotia, B3J 3N3
Tel: (902) 421-1122 Fax: 423-1894
Exhibit 2.4
RECEIVER'S ASSIGNMENT OF INTEREST IN COURSEWARE
This Indenture made as of the 16th day of September, 1998;
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and
assets of High Performance Group (Canada) Inc., (the "Grantor")
OF THE FIRST PART
ITC CANADA LIMITED, a body corporate, having its registered office in
the City of Halifax, County of Halifax, Province of Nova Scotia, (the
"Grantee")
OF THE SECOND PART
RECITALS:
A. High Performance Group (Canada) Inc. ("HPG") granted certain security
to Nova Scotia Business Development Corporation, a Crown Corporation of
the Province of Nova Scotia ("NSBDC") comprising a Debenture in the
original principal amount of $1,000,000 dated April 29, 1997 and
registered under the Corporations Securities Registration Act on May 1,
1997 as number 30927A and also filed under the Personal Property
Registry on December 23, 1997 as number 155606, (the "Debenture"),
whereby HPG charged certain of its property, assets and undertaking
including the property herein described as security for its
indebtedness to NSBDC;
B. The Debenture provided, inter alia, that upon it becoming enforceable
NSBDC by instrument in writing may appoint any person to be a receiver
with power to convey, transfer and assign the title to any of the
undertaking, property and assets charged by the Debenture;
C. Default having occurred under the Debenture, Grant Thornton Limited was
appointed Receiver of the property, assets and undertaking of HPG by
NSBDC on July 20, 1998 by written appointment;
D. In response to an open tendering process, the Grantee offered to
purchase the Receiver's right, title and interests in the assets of HPG
on August 19, 1998 which offer was accepted August 21, 1998, pursuant
to which the Grantor agreed to sell to the Grantee and the Grantee
agreed to purchase from the Grantor, the Grantor's right, title and
interest in the courseware and other assets of HPG, including the
property referred to herein and in Schedule "A" attached hereto.
<PAGE>
WITNESSETH THAT:
1. In consideration of the sum of One Dollar ($1.00) of lawful money of
Canada now paid by the Grantee to the Grantor and other good and
valuable consideration, the receipt whereof is hereby acknowledged, the
Grantor has granted, bargained, sold, assigned, transferred and set
over and by these presents does grant, bargain, sell, convey, assign,
transfer and set over unto the Grantee and the Grantee's successors and
assigns, all of the Grantor's right, title and interest, under and
pursuant to the Debenture, in and to the technology courseware,
software engines, software and related materials, training courses,
CD-Roms, computer discs, (and any computer programs contained on discs
or CD-Roms or work in process) manuals and any property developed
therefrom and the right to copy, publish, amend, transmit, alter,
license, franchise, digitize and further develop all such property,
including but not limited to those described in Schedule "A" attached
hereto, (collectively, the "Courseware"), on an "as is, where is" basis
without warranties.
2. The Grantor covenants that it has done no act or thing to encumber the
Courseware.
3. The Grantor covenants and agrees with the Grantee, its successors and
assigns, that it will, from time to time, and at all times hereafter,
upon every reasonable request of the Grantee, its successors and
assigns, but at the cost of the Grantee, its successors and assigns,
make, do and execute or cause and procure to be made, done and executed
all such further acts, deeds or assurances as may be reasonably be
required by the Grantee, its successors and assigns, for more
effectually and completely vesting in the Grantee, its successors and
assigns, the Courseware hereby assigned and transferred in accordance
with the terms hereof.
IN WITNESS WHEREOF the Grantor has caused this indenture to be properly
executed as of the day, month and year herein above first written.
SIGNED, SEALED AND DELIVERED )
in the presence of: ) GRANT THORNTON LIMITED, as
) receiver and manager of the property
) and assets of High Performance Group
/s/ Robert G. MacKeigan ) (Canada) Inc.
- ------------------------------ )
) By: /s/ Ross Landers
) -------------------------------
<PAGE>
Schedule "A" Parcel 3
APPENDIX C
HIGH PERFORMANCE GROUP (CANADA) INC.
COURSEWARE
The Receiver's right, title and interest in courseware products developed or
owned by HPG including but not limited to the following:
Call Centre
The ART of Customer Service
The ART of Customer Service - French adaption
Promises that Pay
Ask for the Business...and Get It!
Hiring Assessment (in Development)
Leadership Training (in Development)
Engine
Soft Skills delivery engine
Stand Up Training Titles - Not yet Digitized
Changing the Face of Trauma
I'm a Great Trainer: Advanced Platform Skills
Quality Performance Solutions
<PAGE>
DATED: September 1998
- --------------------------------------------------------------------------------
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and
assets of High Performance Group (Canada) Inc.,
GRANTOR
- and -
ITC CANADA LIMITED, a body corporate, having its registered office in
the City of Halifax, County of Halifax, Province of Nova Scotia,
GRANTEE
- --------------------------------------------------------------------------------
RECEIVER'S ASSIGNMENT OF INTEREST IN COURSEWARE
Parcel 3
- --------------------------------------------------------------------------------
C. Holm, Q.C.
HUESTIS o HOLM
Barristers and Solicitors
708 - 1809 Barrington Street - CIBC Building
Halifax - Nova Scotia - Canada
B3J 3K8
File #32796
<PAGE>
RECEIVER'S ASSIGNMENT OF INTEREST IN COURSEWARE
This Indenture made as of the 16th day of September, 1998;
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and
assets of Mentor Networks Inc., (the "Grantor")
OF THE FIRST PART
- and -
ITC CANADA LIMITED, a body corporate, having its registered office in
the City of Halifax, County of Halifax, Province of Nova Scotia, (the
"Grantee")
OF THE SECOND PART
RECITALS:
A. Mentor Networks Inc. ("Mentor") granted certain security to the Nova
Scotia Business Development Corporation, a Crown Corporation of the
Province of Nova Scotia ("NSBDC") comprising, inter alia, the
following:
a. A Debenture in the original principal amount of $2,500,000
dated April 29, 1997 and registered under the Corporations
Security Registration Act on May 1, 1997 as number 30928A and
also filed under the Personal Property Registry on December
23, 1997 as number 155622 (the "Debenture"), whereby Mentor
charged certain of its property, assets and undertaking
including the property herein described as security for its
indebtedness to NSBDC;
b. the Debenture provided, inter alia, that upon it becoming
enforceable NSBDC, by instrument in writing may appoint any
person to be a receiver with power to convey, transfer and
assign the title to any of the undertaking, property and
assets charged by the Debenture;
c. A Mortgage by way of sublease of Mentor's business premises
located in the Purdy's Wharf Tower;
(collectively, the "Security")
B. Default having occurred under the Security, Grant Thornton Limited was
appointed Receiver of the property, assets and undertaking of Mentor by
NSBDC on July 20, 1998 by written appointment;
<PAGE>
C. In response to an open tendering process, the Grantee offered to
purchase the Receiver's right, title and interests in the assets of
Mentor on August 19, 1998 which offer was accepted August 21, 1998,
pursuant to which the Grantor agreed to sell to the Grantee and the
Grantee agreed to purchase from the Grantor, the Grantor's right, title
and interest in the personal property and assets of Mentor, including
the property referred to herein and in Schedule "A" attached hereto.
WITNESSETH THAT:
1. In consideration of the sum of One Dollar ($1.00) of lawful money of
Canada now paid by the Grantee to the Grantor and other good and
valuable consideration, the receipt whereof is hereby acknowledged, the
Grantor has granted, bargained, sold, assigned, transferred and set
over and by these presents does grant, bargain, sell, convey, assign,
transfer and set over unto the Grantee and the Grantee's successors and
assigns, all of the Grantor's right, title and interest, under and
pursuant to the Debenture, in and to the technology courseware,
software engines, software and related materials, training courses,
CD-Roms, computer discs, (and any computer programs contained on discs
or CD-Roms or work in process) manuals and any property developed
therefrom and the right to copy, publish, amend, transmit, alter,
licence, franchise, digitize and further develop all such property,
including but not limited to those described in Schedule "A" attached
hereto, (collectively, the "Courseware"), on an "as is, where is" basis
without warranties.
2. The Grantor covenants that it has done no act or thing to encumber the
Courseware.
3. The Grantor covenants and agrees with the Grantee, its successors and
assigns, that it will, from time to time, and at all times hereafter,
upon every reasonable request of the Grantee, its successors and
assigns, but at the cost of the Grantee, its successors and assigns,
make, do and execute or cause and procure to be made, done and executed
all such further acts, deeds or assurances as may be reasonably be
required by the Grantee, its successors and assigns, for more
effectually and completely vesting in the Grantee, its successors and
assigns, the Courseware hereby assigned and transferred in accordance
with the terms hereof.
IN WITNESS WHEREOF the Grantor has caused this indenture to be properly
executed as of the day, month and year herein above first written.
SIGNED, SEALED AND DELIVERED )
in the presence of: ) GRANT THORNTON LIMITED, as
) receiver and manager of the property
) and assets of Mentor Networks Inc.
/s/ Robert G. MacKeigan )
- ------------------------------- )
) By: /s/ Ross Landers
) ----------------------------------
<PAGE>
Schedule "A" Parcel 2
APPENDIX B
MENTOR NETWORKS INC.
COURSEWARE
The Receiver's right, title and interest in courseware products developed or
owned by Mentor including, but not limited to the following:
Learn Windows 95
Learn Windows 95 - Version 2 with Desktop Coach
Learn Windows NT 4.0
Learn Windows NT 4.0 - Version 2 with Desktop Coach
Learn Word 6.0
Learn Word 7.0
Learn Word 97
Learn Word 97 - Version 2 with Desktop Coach
Learn Excel 5.0
Learn Excel 7.0
Learn Excel 97
Learn Excel 97 - Version 2 with Desktop Coach
Learn PowerPoint 4.0
Learn PowerPoint 7.0
Learn PowerPoint 97
Learn PowerPoint 97 - Version 2 with Desktop Coach
Learn Access 97
Learn Access 97 - Version 2 with Desktop Coach
Learn Outlook 97
Learn Outlook 97 - Version 2 with Desktop Coach
Mentor System Administrator
Mentor Engine 16 Bit
Mentor Engine 32 Bit
Mentor Engine - Installer
Mentor Engine - System Administrator
Mentor Engine - Courseware Site Manager
Mentor Engine - Progress Report
Mentor Engine - Stand Alone Assessment
Wireless World (development for Telecommunications Learning
Institute)
<PAGE>
DATED: September 1998
- --------------------------------------------------------------------------------
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and
assets of Mentor Networks, Inc.,
GRANTOR
- and -
ITC CANADA LIMITED, a body corporate, having its registered office in
the City of Halifax, County of Halifax, Province of Nova Scotia,
GRANTEE
- --------------------------------------------------------------------------------
RECEIVER'S ASSIGNMENT OF INTEREST IN COURSEWARE
Parcel 2
- --------------------------------------------------------------------------------
C. Holm, Q.C.
HUESTIS o HOLM
Barristers and Solicitors
708 - 1809 Barrington Street - CIBC Building
Halifax - Nova Scotia - Canada
B3J 3K8
File #32796
Exhibit 2.5
RECEIVER'S ASSIGNMENT OF INTEREST IN INTELLECTUAL PROPERTY RIGHTS
This Indenture made as of the 16th day of September, 1998;
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and
assets of Mentor Networks Inc., (the "Grantor")
OF THE FIRST PART
- and -
ITC CANADA LIMlTED, a body corporate, having its registered office in
the City of Halifax, County of Halifax, Province of Nova Scotia, (the
"Grantee")
OF THE SECOND PART
RECITALS:
A. Mentor Networks Inc. ("Mentor") granted certain security to the Nova
Scotia Business Development Corporation, a Crown Corporation of the
Province of Nova Scotia ("NSBDC") comprising, inter alia, the
following:
a. a Debenture in the original principal amount of $2,500,000
dated April 29, 1997 and registered under the Corporations
Security Registration Act on May 1, 1997 as number 30928A and
also filed under the Personal Property Registry on December
23, 1997 as number 155622 (the "Debenture"), whereby Mentor
charged certain of its property, assets and undertaking
including the property herein described as security for its
indebtedness to NSBDC;
b. the Debenture provided, inter alia, that upon it becoming
enforceable NSBDC, by instrument in writing may appoint any
person to be a receiver with power to convey, transfer and
assign the title to any of the undertaking, property and
assets charged by the Debenture;
c. a Mortgage by way of sublease of Mentor's business premises
located in the Purdy's Wharf Tower;
(collectively, the "Security")
B. Default having occurred under the Security, Grant Thornton Limited was
appointed Receiver of the property, assets and undertaking of Mentor by
NSBDC on July 20, 1998 by written appointment;
<PAGE>
C. In response to an open tendering process, the Grantee offered to
purchase the Receiver's right, title and interests in the assets of
Mentor on August 19, 1998 which offer was accepted August 21, 1998,
pursuant to which the Grantor agreed to sell to the Grantee and the
Grantee agreed to purchase from the Grantor, the Grantor's right, title
and interest in the personal property and assets of Mentor, including
the property referred to herein and in Schedule "A" attached hereto.
WITNESSETH THAT:
1. In consideration of the sum of One Dollar ($1.00) of lawful money of
Canada now paid by the Grantee to the Grantor and other good and
valuable consideration, the receipt whereof is hereby acknowledged, the
Grantor hereby sells, assigns, and transfers to the Grantee the right,
title and interest of the Grantor under and pursuant to the Debenture
in and to all intellectual property of Mentor, (the "Intellectual
Property"), including registered and unregistered Trade-marks, together
with the goodwill of the business related to the goods and/or services
in respect of which the Trademarks are registered, trade and brand
names, service marks, copyrights and/or copyright materials and/or
materials capable of being copyrighted, designs, inventions, patents,
patent applications, patent rights including any patents issuing on
such applications or rights, licenses, sublicenses, franchises,
formula, processes, technology courseware, software, software engine
and related materials, training courses and disks, manuals,
publications, know-how, business methodology and any property developed
thereunder and therefrom and other industrial and intellectual property
owned and/or used in connection with the business of Mentor and
computer programs, customer and vendor lists, and records in connection
with such business now owned by Mentor, and the right to copy, publish,
amend, transmit, alter, license, franchise, digitize and further
develop all such property, all logos, marketing images, and other
intellectual property, including, without limitation, the Trade-marks
described in Schedule "A" attached hereto, on an "as is, where is"
basis, without warranties.
2. The Grantor also assigns all of its rights (if any) to enforce all
confidentiality, non-disclosure and non-competition covenants now
benefiting or which may benefit Mentor, with past or present employees
of Mentor.
3. The Grantor covenants that it has done no act or thing to encumber the
Intellectual Property.
4. The Grantor covenants and agrees with the Grantee, its successors and
assigns, that it will, from time to time, and at all times hereafter,
upon every reasonable request of the Grantee, its successors and
assigns, but at the cost of the Grantee, its successors and assigns,
make, do and execute or cause and procure to be made, done and executed
all such further acts, deeds or assurances as may be reasonably be
required by the Grantee, its successors and assigns, for more
effectually and completely vesting in the Grantee, its successors and
<PAGE>
assigns, the Intellectual Property hereby assigned and transferred in
accordance with the terms hereof.
IN WlTNESS WHEREOF the Grantor has caused this indenture to be properly
executed as of the day, month and year herein above first written.
SIGNED, SEALED AND )
DELIVERED in the presence of ) GRANT THORNTON LIMITED, as
) receiver and manager of the property
) and assets of Mentor Networks Inc.
/s/ Robert G. MacKeigan )
- -------------------------------- )
) By: /s/ Ross Landers
-------------------------------
<PAGE>
Schedule "A" to Assignment of Interest in Intellectual Property
1. Desk Top Coach
US Trade-mark serial number 75513389
2. Desk Top Coach
Canadian Trade-mark application number 087577000
3. Intermed
Canadian Trade-mark application number 077377500
4. Digital Assets
Canadian Trade-mark application number 074982300
5. Mentor Networks & Design
Canadian Trade-mark application number 074900300
Canadian Trade-mark registration number TMA 475109
<PAGE>
DATED: September 1998
- --------------------------------------------------------------------------------
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and
assets of Mentor Networks Inc.,
GRANTOR
- and -
ITC CANADA LIMITED, a body corporate, having its registered office in
the City of Halifax, County of Halifax, Province of Nova Scotia,
GRANTEE
- --------------------------------------------------------------------------------
RECEIVER'S ASSIGNMENT OF INTEREST IN
INTELLECTUAL PROPERTY RIGHTS
Parcel 6
- --------------------------------------------------------------------------------
C. Holm, Q.C.
HUESTIS o HOLM
Barristers and Solicitors
708 - 1809 Barrington Street - CIBC Building
Halifax - Nova Scotia - Canada
B3J 3K8
File #32796
<PAGE>
RECEIVER'S ASSIGNMENT OF INTEREST IN INTELLECTUAL PROPERTY RIGHTS
This Indenture made as of the 16th day of September, 1998;
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the
property and assets of High Performance Group (Canada) Inc.,
(the "Grantor")
OF THE FIRST PART
- and -
ITC CANADA LIMITED, a body corporate, having its registered
office in the City of Halifax, County of Halifax, Province of
Nova Scotia, (the "Grantee")
OF THE SECOND PART
RECITALS:
A. High Performance Group (Canada) Inc. ("HPG") granted certain security
to Nova Scotia Business Development Corporation, a Crown Corporation of
the Province of Nova Scotia (NSBDC) comprising a Debenture in the
original principal amount of $1,000,000 dated April 29, 1997 and
registered under the Corporations Securities Registration Act on May 1,
1997 as number 30927A and also filed under the Personal Property
Registry on December 23, 1997 as number 155606, (the "Debenture"),
whereby HPG charged certain of its property, assets and undertaking
including the property herein described as security for its
indebtedness to NSBDC;
B. The Debenture provided, inter alia, that upon it becoming enforceable
NSBDC by instrument in writing may appoint any person to be a Receiver
with power to convey, transfer and assign the title to any of the
undertaking, property and assets charged by the Debenture;
C. Default having occurred under the Debenture, Grant Thornton Limited was
appointed Receiver of the property, assets and undertaking of HPG by
NSBDC on July 20, 1998 by written appointment;
D. In response to an open tendering process, the Grantee offered to
purchase the Receiver's right, title and interests in the assets of HPG
on August 19, 1998 which offer was accepted August 21, 1998, pursuant
<PAGE>
to which the Grantor agreed to sell to the Grantee and the Grantee
agreed to purchase from the Grantor, the Grantor's right, title and
interest in the courseware and other assets of HPG, including the
property referred to herein.
WITNESSETH THAT:
1. In consideration of the sum of One Dollar ($1.00) of lawful money of
Canada now paid by the Grantee to the Grantor and other good and
valuable consideration, the receipt whereof is hereby acknowledged, the
Grantor hereby sells, assigns, and transfers to the Grantee the right,
title and interest of the Grantor under and pursuant to the Debenture
in and to all intellectual property of HPG, (the "Intellectual
Property"), including registered and unregistered Trade-marks, together
with the goodwill of the business related to the goods and/or services
in respect of which the Trademarks are registered, trade and brand
names, service marks, copyrights and/or copyright materials and/or
materials capable of being copyrighted, designs, inventions, patents,
patent applications, patent rights including any patents issuing on
such applications or rights, licenses, sublicenses, franchises,
formula, processes, technology courseware, software, software engine
and related materials, training courses and disks, manuals,
publications know-how, business methodology and any property developed
thereunder and therefrom and other industrial and intellectual property
owned and/or used in connection with the business of HPG and computer
programs, customer and vendor lists, and records in connection with
such business now owned by HPG, and the right to copy, publish, amend,
transmit, alter, license, franchise, digitize and further develop all
such property, all logos, marketing images, and other intellectual
property, on an "as is, where is" basis, without warranties.
2. The Grantor also assigns all of its rights (if any) to enforce all
confidentiality, non-disclosure and non-competition covenants now
benefiting or which may benefit HPG, with past or present employees of
HPG.
3. The Grantor covenants that it has done no act or thing to encumber the
Intellectual Property.
4. The Grantor covenants and agrees with the Grantee, its successors and
assigns, that it will, from time to time, and at all times hereafter,
upon every reasonable request of the Grantee, its successors and
assigns, but at the cost of the Grantee, its successors and assigns,
make, do and execute or cause and procure to be made, done and executed
all such further acts, deeds or assurances as may be reasonably be
required by the Grantee, its successors and assigns, for more
effectually and completely vesting in the Grantee, its successors and
assigns, the Intellectual Property hereby assigned and transferred in
accordance with the terms hereof.
IN WITNESS WHEREOF the Grantor has caused this indenture to be properly
executed as of the day, month and year herein above first written.
<PAGE>
SIGNED, SEALED AND DELIVERED ) GRANT THORNTON LIMITED, as
in the presence of: ) receiver and manager of the property
) and assets of High Performance
) Group (Canada) Inc.
/s/ Robert G. MacKeigan )
- --------------------------------- )
)
) By: /s/ Ross Landers
--------------------------------
<PAGE>
DATED: September 1998
- --------------------------------------------------------------------------------
BETWEEN:
GRANT THORNTON LIMITED, as receiver and manager of the property and
assets of High Performance Group (Canada) Inc.,
GRANTOR
- and -
ITC CANADA LIMITED, a body corporate, having its registered office in
the City of Halifax, County of Halifax, Province of Nova Scotia,
GRANTEE
- --------------------------------------------------------------------------------
RECEIVER'S ASSIGNMENT OF INTEREST IN
INTELLECTUAL PROPERTY RIGHTS
Parcel 7
- --------------------------------------------------------------------------------
C. Holm, Q.C.
HUESTIS o HOLM
Barristers and Solicitors
708 - 1809 Barrington Street - CIBC Building
Halifax - Nova Scotia - Canada
B3J 3K8
File #32796
Exhibit 2.6
ASSIGNMENT OF TRADE-MARKS
Mentor Networks Inc., the full post office address of whose principal
office or place of business is Suite 600, 1959 Upper Water Street, Halifax, Nova
Scotia, B3J 3N2, by its receiver and manager, Grant Thornton Limited, in
consideration of the sum of One Dollar ($1.00) and other good and valuable
consideration, the receipt of which is hereby acknowledged, has agreed to sell,
assign and transfer and does hereby sell, assign and transfer to ITC Canada
Limited, the full post office address of whose principal office or place of
business is Suite 600, 1959 Upper Water Street, Halifax, Nova Scotia, B3J 3N2,
all of the said receiver's right, title and interest in Canada and elsewhere in
and to the trade-marks and applications therefor shown and described on the
attached Schedule "A", together with the goodwill of the business connected with
the use of and symbolized by the said trade-marks and applications therefor.
Executed at Halifax Regional Municipality, Nova Scotia, this 23rd day
of September, 1998.
GRANT THORNTON LIMITED, as
receiver and manager of the property
and assets of Mentor Networks Inc.
Per: /s/ Ross Landers
-------------------------------
<PAGE>
SCHEDULE "A"
Trade Mark Application/Registration No.
- ---------- ----------------------------
US Trade Marks
DESKTOP COACH App. 75-513389
Canadian Trade Marks
DESKTOP COACH App. 875,770
INTERMED App. 773,775
DIGITAL ASSETS App. 749,823
MENTOR NETWORKS & DESIGN App. 749,003/Reg. TMA 475,109
<PAGE>
MARK : DESKTOP COACH
STATUS TEXT : PENDING
SERIAL NUMBER : 75-513389
FILING DATE : 06 JUL 1998
REGISTER : PRINCIPAL
MARK DRAWING CODE : (1) TYPESET: WORDS, LETTERS AND/OR
NUMBERS
ORIGINAL OWNER : Mentor Networks Inc.
CANADA - CORPORATION
Purdy's Wharf Tower 1, Suite 600
Halifax
NSC B3J 3N2
CORRESP. ADDR : MICHAEL J. KLINE
THORP REED & ARMSTRONG
1 RIVERFRONT CTR 9TH FL
PITTSBURGH PA 15222-4895
ATTORNEY NAME : MICHAEL J. KLINE
DOMESTIC REPRESENT : THORP REED & ARMSTRONG
INTERNAT. CLASS : 09
U.S. CLASS : 21 23 26 36 38
DETAILED STATUS : New Appl. - Record initialized not
assigned to examiner
BASIS : Intent to Use
GOODS/SERVICES:
IC 09; US 21 23 26 36 38; Software used for computer skills training and user
assistance.
FIRST USE: 00000000; FIRST USE IN COMMERCE: 00000000
Exhibit 2.7
NOVASCOTIA Business World Trade and Bus: 902 424-8958
Development Convention Centre Fax: 902 424-6823
Corporation 1800 Argyle Street
PO Box 519
Halifax, Nova Scotia Our File Number:
Canada B3J 2R7
September 16, 1998
Mr. Carl Stevens
ITC Canada Limited
ITC Learning Corporation
13515 Dulles Technology Drive
Herndon, VA 20171, USA
Dear Mr. Stevens:
The Board of Directors of the Nova Scotia Business Development Corporation
(NSBDC) has reviewed the request of 3021586 Nova Scotia Limited now renamed ITC
Canada Limited for financial assistance.
I am pleased to inform you the Board of Directors has approved a $2,000,000 loan
relating to your purchase of the assets of Mentor Networks Inc. and High
Performance Group (Canada) Inc., subject to the terms and conditions as detailed
in the attached Schedule "A", which forms an integral part of the Offer.
We require your written acceptance to this Offer by September 21, 1998. You may
indicate your Acceptance by executing and returning the attached copy of this
Letter of Offer. Upon receipt of your Acceptance, we will instruct our
solicitors to prepare the appropriate legal documentation.
We are pleased to be able to provide your company with financial assistance and
look forward to working with you on this and future projects.
Yours truly,
ITC Canada Limited accepts
and agrees to comply with
the conditions of the Letter
of Offer and the attached
Schedule "A" which form an
Integral part of the Offer
/s/ Andrew H. Hare
- ----------------------------------- ----------------------------
Andrew H. Hare, C.A. ITC Canada Limited
Director of Lending and Special Projects
cc: Jeannine Lagasse
att: /s/ Wendy G. Berney
----------------------------
Per:
http://www.gov.ns.ca
/s/ Phillip Read
----------------------------
<PAGE>
SCHEDULE "A"
TERMS AND CONDITIONS
RELATING TO A $2,000,000 LOAN (THE "LOAN")
AUTHORIZED ON BEHALF OF
3021586 NOVA SCOTIA LIMITED HEREIN DEFINED AS ITC CANADA
REGIONAL MUNICIPALITY OF HALIFAX
UNDER THE NOVA SCOTIA BUSINESS DEVELOPMENT CORPORATION ACT
BY THE NOVA SCOTIA BUSINESS DEVELOPMENT CORPORATION (NSBDC)
PROGRAM AND FINANCING
================================================================================
Program Financing
================================================================================
Assets of Mentor HPG $3,000,000 NSBDC $2,000,000
- --------------------------- ---------------- ---------------------- ------------
Working Capital 1,100,000 ITC Learning 2,100,000
--------- ------------
- --------------------------- ---------------- ---------------------- ------------
$4,100,000 $4,100,000
---------- ------------
================================================================================
Additional Considerations:
a) Up to an additional $1,600,00 will be paid by ITC Canada for the assets
of Mentor and HPG by royalty payments, which payments are anticipated
to be assigned by the receiver of Mentor and HPG to NSBDC and to be
payable as follows:
a) Beginning January 1, 1999, a 3% royalty payment to NSBCD on net
revenues (after deducting third party commissions, discounts, returns
and allowances) generated by sales of ITC Canada's generic courseware
products;
b) Effective January 1, 1999, a 1% royalty payment on custom course ware
developed by the Nova Scotia operations;
Total cash consideration to NSBDC, if full royalty earnings are
realized is $4,600,000;
c) In recognition of the Province of Nova Scotia's desire to continually
develop relevant employable skills within its workforce, ITC Learning
will provide the Province with access to ITC's Process & Manufacturing
libraries (153 titles) for utilization within the provincial education
system (P-12 and community colleges) for a period of two years at the
cost to the Province of only replication the titles and actual shipping
costs. These products are not for resale or general distribution and
will licensed in accordance with ITC Learning Corporation's normal
licensing arrangements.
<PAGE>
3021586 NOVA SCOTIA LIMITED HEREIN DEFINED AS ITC CANADA PAGE 2
d) No changes to be made to the Program and Financing without the prior
written approval of NSBDC;
e) Should the legal documentation for this loan not be executed within one
(1) month of date of this offer, then the offer will expire unless
extended in writing by NSBDC.
TERMS
Interest - 8% simple interest paid monthly commencing September 30, 1998.
Principal Repayment:
a) Quarterly principal payments of $100,000 commencing with first payment
March 31, 1999. Maturity date for the loan is December 31, 2003. The
entire principal may be repaid in full or in part at any time without
notice, bonus or penalty.
Security:
The loan shall be on the obligation of the Company and shall be secured as
follows:
a) By a debenture and other security documents containing a fixed charge
on furniture, fixtures, computers, equipment, and the interest of the
company in the leased premises together with a floating charge on the
remaining undertakings and assets of the Company located in Nova Scotia
on terms satisfactory to NSBDC ranking pari passu to security on such
assets provided to a bank or other financial institution relating to
loan advances up to $1 Can. million loan advanced for purchase of ITC
Canada assets, the security to be held by NSBDC to rank subject to
security on Accounts Receivable and Inventory provided to a bank or
other financial institution.
b) Intellectual property, courseware and software engine to be assigned to
NSBDC on terms and conditions satisfactory to NSBDC; and ranking pari
passu with security on such assets provided to a bank or other
financial institution relating to loan advances up to $1 Can. Million
advanced for purchase of ITC Canada assets.
<PAGE>
3021586 NOVA SCOTIA LIMITED HEREIN DEFINED AS ITC CANADA PAGE 3
c) Fire and extended insurance coverage on all leaseholds, machinery,
equipment and chattels in amounts and on terms satisfactory to NSBDC to
be assigned to NSBDC to the extent of its interest for the term of the
loan.
d) Corporate guarantee from ITC Learning Corporation in the full amount of
the obligations of ITC Canada to the NSBDC.
e) Such additional security and other documents as may be required by
NSBDC, including an agreement with the Company's bank or financial
institution that NSBDC will provide copies of notices of default and
will receive similar notices from the bank or other financial
institution.
CONDITIONS PRECEDENT
The following are conditions precedent to NSDC's obligations to disburse the
loan:
a) All security documents and other legal requirements will be completed
and registered in form and substance satisfactory of NSBDC solicitors;
ADDITIONAL CONDITIONS AND COVENANTS
a) The Company shall be responsible for and pay all legal and other
charges up to Cdn. $5,000 relative to the preparation, execution and
registration of the security documents and completion of the Program
and Financing;
b) All licenses and permits shall be obtained and all laws (municipal,
provincial and federal) shall be adhered to;
c) The Company shall use its best efforts to employ and use whenever
possible, Nova Scotia and/or Maritime companies, contractors and
labour, Nova Scotia and/or Maritime products and materials, and Nova
Scotia and/or Maritime services for all work undertaken and products
and materials purchased, provided such companies, contractors, labour,
products and materials are competitive in productivity, equality, price
and delivery terms;
d) Closing maybe withheld if, in the opinion of the NSBDC, any material
adverse change in risk occurs;
e) This offer may, at the discretion of the NSBDC, be cancelled or
withdrawn in the event the applicant or the officers of the company or
any of its shareholders are involved in any litigation, or any
proceedings before any government board, tribunal or agency which has
not been disclosed;
<PAGE>
3021586 NOVA SCOTIA LIMITED HEREIN DEFINED AS ITC CANADA PAGE 4
f) The obligation of ITC Canada relating to the loan will become due and
payable by ITC Learning Corporation/ITC Canada should ITC Canada
discontinue operating as a going concern in Nova Scotia. Should ITC
Canada discontinue Nova Scotia operations the payment of royalties on
applicable products will continue as an obligation of ITC Learning
Corporation until fully paid.
g) The Company shall provide to NSBDC annual audited financial statements
of the Company within 90 days of each fiscal year end and
company-prepared statements within 45 days of the end of each quarter;
h) The Company will provide to NSBDC an auditor prepared calculation of
the royalty payment calculation, together with the appropriate royalty
payment within 120 days of each fiscal year;
i) The Company's parent (ITC Learning Corporation) shall covenant to fund
the Company's working capital requirements to an amount of not less
than $1,100,000;
j) The Company will not, without the prior written consent of NSBDC, which
will not be unreasonably withheld:
[1] redeem or purchase any shares of the Company or pay out dividends
or make any other distributions thereon.
[2] repay any shareholder's loans or interest thereon.
[3] pay bonuses, management fees, or remuneration of any kind to any
shareholder of the company or associated or related party.
In addition, the Company will at all times deal at fair market value and at arms
length with affiliated, associated or related companies or persons and, upon
request, provide satisfactory evidence to that effect to NSBDC.
k) The Company shall undertake to cause the election to its Board a
Director nominated by NSBDC, if requested by NSBDC, which appointment
may terminate upon the payout of this loan.
The applicant consents to a public announcement of the project, by or on behalf
of the Nova Scotia Business Development Corporation (NSBDC) or the Province of
Nova Scotia. In such cases, the NSBDC shall inform the Applicant of the date on
which the announcements is to be made and the Applicant shall keep this offer
confidential until such date, except as may in ITC Learning's reasonable
judgment be consistent with generally accepted practices for publicly held
companies or as required by the U.S. Federal Securities Law or other contractual
obligations. If the NSBDC does not communicate its intention to make an
announcement to the Applicant within sixty (60) days of the Applicant's
acceptance of this Offer, the Applicant may proceed independently.
<PAGE>
3021586 NOVA SCOTIA LIMITED HEREIN DEFINED AS ITC CANADA PAGE 5
The Province shall be advised, at least 14 days in advance, of any ceremony the
Applicant proposes to held in connection with the announcement of the Project. A
ceremony shall only be held on a date which is mutually acceptable to the NSBDC
and the Applicant. Furthermore, the Applicant consents to having the officials
of NSBDC and the Minister or his designate participate in any such ceremony.
HALIFAX, NOVA SCOTIA
SEPTEMBER , 1998
EXHIBIT 2.8
TERM NOTE
$2,000,000 As of September 16, 1998
1. DEFINITIONS
1.1 In this Promissory Note:
(a) "Company" means ITC Canada Limited, a body corporate, incorporated
under the Companies Act of Nova Scotia;
(b) "Debenture" means the collateral demand debenture issued by the
Company to NSBDC as collateral security for its obligations to NSBDC
under this Note;
(c) "NSBDC" means Nova Scotia Business Development Corporation, a crown
corporation of the Province of Nova Scotia and/or the holder in due
course of this Note;
(d) "Note" means this Note which has been created and issued pursuant to
the provisions of the Principal Agreement;
(e) "Principal Agreement" means the agreement between NSBDC and the
Company evidenced by an offer from NSBDC to the Company dated
September 16, 1998 and accepted by the Company on September 22, 1998
under the terms of which, inter alia, the Company agreed to issue this
Note to NSBDC and NSBDC agreed to purchase this Note from the Company;
(f) "Principal Amount" means the sum of two million dollars ($2,000,000)
Canadian funds.
2. PAYMENT - INTEREST
2.1 FOR VALUE RECEIVED, the Company hereby promises to pay to NSBDC or order,
interest at the rate of 8% per annum on the Principal Amount advanced and
outstanding from time to time computed from the respective dates of such
advances, calculated half-yearly, not in advance, as well after as before
maturity and after as well as before default on the last day of the month in
which any portion of the Principal Amount is advanced and thereafter on the last
day of each succeeding month so long as any of the Principal Amount remains
outstanding and the balance then accrued and outstanding to be paid on the date
of repayment in full of the Principal Amount.
2.2 If the Company defaults in the payment of any interest which becomes due and
payable at the time appointed for payment, compound interest shall be payable
monthly for the sum or sums in arrears from time to time, as well after as
<PAGE>
before maturity and after as well as before default at the rate aforesaid, and
if the interest and compound interest is not paid within six (6) months from the
time of default, a rest shall be made, and compound interest at the rate
aforesaid shall be payable on the aggregate amount then due, as well after as
before maturity, and so on from time to time.
3. PAYMENT -PRINCIPAL AMOUNT
3.1 FOR VALUE RECEIVED the Company hereby acknowledges itself indebted to and
promises to pay to or to the order of NSBDC the Principal Amount by 20
installments of $100,000 each payable on the last day of March, June, September
and December in each year commencing March 31, 1999 to and including December
31, 2003.
4. PREPAYMENT
4.1 If the Company is not in default under this Note, the Company may prepay the
whole or from time to time any part of the Principal Amount outstanding in
reverse order of maturity without penalty or interest bonus.
5. ADVANCES AND PAYMENTS
5.1 Advances of the Principal Amount will be made from time to time at the
discretion of NSBDC in accordance with the terms and conditions of the Principal
Agreement and the entries on the records of NSBDC shall be prima facie evidence
of the aggregate Principal Amount advanced and outstanding from time to time
under this Note and of the Principal Payment Commencement Date
5.2 All payments to be made by the Company to NSBDC shall be made at the offices
of NSBDC at 1800 Argyle Street, 6th Floor, World Trade & Convention Centre, PO
Box 519, Halifax, Nova Scotia, B3J 2K7.
6. DEFAULT
6.1 Upon the occurrence of any of the following events of default, the Principal
Amount and all accrued and unpaid interest shall, at the option of NSBDC, become
immediately due and payable without presentation, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Company:
(a) if the Company defaults in the payment of the Principal Amount or
interest on this Note when due; or
(b) if the Company fails to perform any of its obligations undertaken in
favor of NSBDC pursuant to the Principal Agreement, the Debenture or
this Note or any agreements, indentures or notes supplemental
thereto or any other agreements or evidences of indebtedness between
the Company and NSBDC; or
<PAGE>
(c) the occurrence of an event of default under the Debenture; or
(d) if the Company should discontinue its operations in the normal
course of business in the Province of Nova Scotia.
7. GOVERNING LAW
7.1 This Note shall be interpreted in accordance with and governed by the laws
of the Province of Nova Scotia and, for such purposes, the Company hereby
irrevocably consents and submits, both as to person and subject matter, to the
jurisdiction of the courts of Nova Scotia and to the entry of any judgment
rendered in any proceedings therein.
IN WHEREOF the Company has caused its corporate seal to be hereunto
affixed and this Note to be signed by its proper officers duly authorized in
that behalf.
SIGNED, SEALED AND DELIVERED ITC CANADA LIMITED
in the presence of
/s/ Robert G. MacKeigan Per: /s/ Wendy G. Berney
------------------------ --------------------
Witness
Per: /s/ Phillip Read
--------------------
Exhibit 2.9
ITC CANADA LIMITED
DEMAND DEBENTURE
1. In this Debenture:
(a) "Company" means ITC Canada Limited, a body corporate, incorporated
under the laws of Nova Scotia;
(b) "Funded Obligations" means any money indebtedness whether by way
of bonds, debentures, debenture stock, or otherwise, the principal
amount of which, by its terms, is not payable on demand, and the
date of payment of which is more than twelve (12) months from the
date of incurring the same;
(c) "Lien hereof" means the security constituted hereunder or pursuant
hereto in any manner howsoever created;
(d) "Mortgaged Premises" means the Specifically Mortgaged Premises and
also the undertaking, property and assets hereby assigned and
transferred to and charged by way of a floating charge to or in
favour of NSBDC;
(e) "NSBDC" means Nova Scotia Business Development Corporation, a
crown corporation of the Province of Nova Scotia and/or the holder
in due course of this Debenture;
(f) "Principal Agreement" means a certain agreement between NSBDC and
the Company, evidenced by a letter of offer from NSBDC to the
Company dated September 16, 1998 and accepted by the Company on
September 22, 1998 under the terms of which, inter alia, the
Company agreed to create and issue this Debenture to NSBDC;
(g) "Principal Amount" means $3,600,000.00 (Canadian Funds);
(h) "Specific Lien hereunder" and similar expressions refer to the
security constituted hereby or pursuant hereto upon the
Specifically Mortgaged Premises;
(i) "Specifically Mortgaged Premises" means the property and assets
hereby mortgaged or charged by way of a fixed and specific
mortgage or charge to or in favour of NSBDC;
(j) "This Debenture" means this Debenture created and issued pursuant
to the provisions of the Principal Agreement.
2. FOR VALUE RECEIVED the Company hereby acknowledges itself indebted and
promises to pay on demand to or to the order of NSBDC the Principal
Amount in lawful money of Canada, on presentation and surrender of this
Debenture, to NSBDC at its address, 1800 Argyle Street, 6th Floor, PO
Box 519, Halifax, NS B3J 2R7, or at such other place as NSBDC may
designate by notice in writing to the Company, and to pay interest
thereon from the date hereof at the rate of 8% per annum in like money
at the same place on the last day of each month, and, should the
Company at any time make default in payment of any principal or
interest, to pay interest both before and after judgment on the amount
in default at the same rate in like money at the same place on the same
dates.
<PAGE>
3. This Debenture shall be construed in accordance with the laws of the
Province of Nova Scotia, and shall be treated in all respects as a Nova
Scotia contract.
4. As security for the payment of the Principal Amount, interest and all
other monies from time to time owing hereunder, the Company hereby:
(a) grants, mortgages, and charges as and by way of a fixed and
specific mortgage, pledge and charge, to and in favour of
NSBDC, its successors and assigns, and grants to NSBDC a
security interest in its premises located at 1959 Upper Water
Street, Suite 600, Purdy's Wharf Tower One, Halifax, NS, B3J
3N2 and in all equipment and leasehold improvements now owned
or hereafter acquired by the Company including those located
at the said premises;
(b) assigns and transfers to NSBDC, its successors and assigns,
and, all right, title, benefit and interest of the Company in
and to all registered or unregistered trademarks, trade and
brand names, service marks, copyrights and/or copyright
materials and/or materials capable of being copyrighted,
designs, inventions, patents, patent applications, patent
rights (including any patents issuing on such applications or
rights), licences, sub-licences, franchises, formulae,
processes, technology courseware, software and related
materials, training courses and discs, manuals, publications
and any property developed thereunder and therefrom and other
industrial and intellectual property owned and/or used in
connection with the Company's business and computer programs,
customer and vendor lists and records in connection with such
business now owned or hereafter acquired or developed by the
Company, and the right to copy, publish, amend, transmit,
alter, licence, franchise, digitize and further develop all
such property; and
(c) grants, mortgages, and charges as and by way of a first
floating charge to and in favour of NSBDC, its successors and
assigns, and grants to NSBDC a security interest in all the
undertaking, property and assets of the Company both present
and future, of whatsoever nature and kind (other than such
thereof as are from time to time effectively and validly
subjected to and not released from or discharged or disposed
of free from the Specific Lien hereof), including without
limitation franchises, uncalled capital and goodwill; it being
understood that the charges on the Company's inventory and
accounts receivable held by NSBDC shall be subject to charges
now given or which may hereafter be given to the bankers for
ITC Learning Corporation (presently Wachovia Bank, N.A.) and
that the charges on all other assets of the Company shall rank
pari passu with the rights of the bankers for ITC Learning
Corporation to be shared on the basis of the amounts
outstanding at the commencement of enforcement of any security
to NSBDC on the Cdn. $2,000,000 loan advanced or to be
advanced by NSBDC to the Company and, with respect to the
bankers for ITC Learning Corporation, the lesser of (i) the
amount owed by ITC Learning Corporation to its bankers, and
(ii) Cdn. $1,000,000. If the security constituted by this
Debenture is enforced to obtain repayment of any obligation of
the Company to NSBDC other than in respect to the said Cdn.
$2,000,000 loan, it shall be enforced subject to the prior
right of the bankers for ITC Learning Corporation to obtain
full repayment of the obligations of the Company under a
guarantee to such bankers for the indebtedness of ITC Learning
Corporation.
2
<PAGE>
5. The mortgages and charges created under Subsection 4(c) shall in no way
hinder or prevent the Company from, and the Company is hereby permitted
and authorized to, until the security hereby constituted becomes
enforceable and NSBDC determines to enforce it, sell alienate, assign,
lease, licence and dispose of or deal with the subject matter of such
assignment, transfer and charges in the normal course of its operations
and for the purpose of carrying on such operations, provided:
(a) that such action is not a breach of any express provisions of
the Principal Agreement or this Debenture; and
(b) that the Company does not (and it hereby covenants that it
will not make, give, create or assume any mortgage, pledge,
charge, assignment or other security, whether fixed or
floating, upon the subject matter thereof other than charges
on inventory or receivables or both given to the Company's
bankers in the ordinary course of business as security for
obligations other than Funded Obligations.
6. The assignments, transfers, mortgages and charges hereby created or for
which provision is hereby made shall:
(a) be effective whether the moneys secured thereby or any part
thereof is advanced before or after or at the time of the
issue of this Debenture;
(b) not extend or apply to the last day of the term of any lease
or agreement therefor but upon the enforcement of any of the
assignments, transfers, mortgages and charges, the Company
shall stand possessed of such last day in trust to assign the
same to any person acquiring such term.
7. Subject to any defects in title and any charges or encumbrances
existing at the date of conveyance to the Company by Grant Thornton
Limited as receiver of Mentor Networks Inc. and High Performance Group
(Canada) Inc., the Company hereby warrants and represents:
(a) that it lawfully owns and is lawfully possessed of the
Mortgaged Premises;
(b) that it has good right and lawful authority to assign,
transfer, mortgage and charge its undertaking, property and
assets as hereby mortgaged and charged;
(c) that the Mortgaged Premises are free and clear of any deed of
trust, mortgage, lien, charge or encumbrance except as herein
specifically authorized;
(d) that it will warrant and defend title to the Mortgaged
Premises against the claims and demands of all persons
whatsoever.
8. The Company hereby covenants and agrees with NSBDC that:
(a) it will at all times do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged and delivered all and
every such further acts, deeds, mortgages, transfers,
3
<PAGE>
assignments and assurances as NSBDC may reasonably require for
the better assuring, mortgaging, transferring, assigning and
confirming to NSBDC all and singular the property and assets
hereby mortgaged, transferred, assigned and charged or
intended so to be or which the Company may hereafter become
bound to mortgage, transfer, assign and charge in favour of
NSBDC and for the better accomplishing and effectuating of the
intentions of this Debenture;
(b) it will from time to time, execute and do all such assurances
and things as in the opinion of NSBDC are necessary or
advisable for validly giving to NSBDC (so far as possible
under the laws of the various jurisdictions where the
Specifically Mortgaged Premises are situate) the security
hereby intended to be created, all such assurances being in
such form as NSBDC may advise;
(c) it immediately after its execution, cause this Debenture and
every instrument supplemental or ancillary thereto to be
registered, filed or recorded at all offices where such
registration, filing or recording may in the opinion of NSBDC
be necessary or of advantage to the security hereby created or
intended to be created, and will on demand deliver or exhibit
to NSBDC certificates, establishing such registration, filing
or recording and will do, observe and perform all matters and
things necessary or expedient to be done, observed or
performed for the purpose of creating and maintaining the
security thereby constituted as a valid and effective
security;
(d) it will after the security hereby created has become
enforceable and NSBDC has determined to enforce it, from time
to time, execute and do all such assurances and things as
NSBDC may reasonably require for facilitating the realization
of the Mortgaged Premises and for exercising all the powers,
authorities and discretions hereby conferred upon NSBDC and
for confirming to any purchaser of any of the Mortgaged
Premises whether sold by NSBDC hereunder or by or pursuant to
judicial proceedings, the title to the property so sold, and
that it will give all notices and directions as NSBDC may
consider expedient;
(e) at any and all times the Company will do, execute, acknowledge
and deliver or will cause to be done, executed, acknowledged
and delivered all and every such further acts, deeds,
conveyances, mortgages, hypothecates, charges, cessions,
transfers and assurances in law as NSBDC shall reasonably
require, for the purpose of giving NSBDC a valid assignment,
transfer, mortgage, hypothecate, charge or security of the
nature herein specified upon all property, whether now owned
or hereafter acquired by the Company, intended to be covered
hereby, and for the better assuring, conveying, mortgaging,
hypothecating, assigning, confirming, pledging, charging,
ceding or transferring to NSBDC all and singular the
hereditaments and premises, estates and property hereby
mortgaged, hypothecated, pledged and/or charged and/or ceded
and transferred, or intended so to be, or which the Company
may hereafter become bound to mortgage, hypothecate, pledge
and/or charge and/or cede and transfer in favour of NSBDC.
9. Until the security hereby constituted becomes enforceable and NSBDC
determines to enforce it, the Company shall be permitted in the same
manner and to the same extent as if this Debenture had not been
executed, but subject to the express terms thereof, to possess,
operate, manage, use and enjoy the Mortgaged Premises, freely to
control the conduct of its business and to take and use the rents,
incomes, profits and issues thereof.
4
<PAGE>
10. General Covenants: The Company covenants with NSBDC that so long as
this Debenture remains outstanding:
(a) the Company will well, duly and punctually pay or cause to be
paid to NSBDC, all amounts due and owing to NSBDC from time to
time (including, in the case of default, interest on the
amount in default) at the place and in the manner stipulated
herein;
(b) at all times the Company will maintain its corporate
existence, carry on and conduct its business in a proper,
efficient and businesslike manner and in accordance with good
business practice, keep or cause to be kept proper books and
accounts in accordance with sound accounting principles, and
without limiting the generality of the Company's obligations
under the Principal Agreement, file promptly with NSBDC copies
of all its annual financial statements after the date hereof
as well as any other information relating to the Company's
business as NSBDC may require to enable it to evaluate its
security;
(c) the Company will punctually pay and discharge all indebtedness
lawfully incurred by or imposed upon it, the Mortgaged
Premises or any part thereof by virtue of any law, regulation,
order, direction or requirement of any competent authority or
any contract, agreement, lease, licence, concession,
franchise, permit or otherwise, failure to pay or discharge
which might result in any lien or charge or any right of
distress, forfeiture, termination or sale or other remedy
being enforced against the Mortgaged Premises or any part
thereof, and will exhibit to NSBDC when required a certificate
of its auditors or other evidence establishing such payments,
provided that the Company may refrain from paying and
discharging any such indebtedness so long as it in good faith
contests liability therefor, and provided further that the
Company may upon delivery to NSBDC of a certificate signed by
its duly authorized officers to the effect that any asset, not
being part of the Specifically Mortgaged Premises, is no
longer useful in the conduct of its business, refrain and
continue to refrain from paying and discharging any
obligations in respect of such asset;
(d) except as specifically authorized herein, the Company will
not, without the prior written consent of NSBDC, create or
assume any mortgage, pledge, charge, lien or other encumbrance
of any kind whatsoever on any asset subject to the Lien
hereof;
(e) generally, the Company will well and truly perform and carry
out all the acts or things to be done by it respectively as
provided in this Debenture;
(f) the Company will duly and punctually perform all of its
obligations under the Principal Agreement;
(g) the Company will insure and keep itself insured against fire
and extended coverage, property damage and public liability in
amounts satisfactory to NSBDC;
5
<PAGE>
(i) all such insurance shall be taken out and maintained by
specific or blanket policies or both with such insurers
as the Company selects and NSBDC approves;
(ii) all insurance against loss or damage to the Specifically
Mortgaged Premises or any part thereof will be made
payable to NSBDC and the Company as their interests may
appear, and the Company will cause NSBDC to be kept
supplied with up to date copies of all policies therefor
and to be paid the proceeds of any claims payable
thereunder in respect to the Specifically Mortgaged
Premises, but, without limiting the generality of the
foregoing, nothing herein contained shall be deemed to
hinder or prevent the Company in respect of blanket
policies which include or cover, in addition to property
forming part of the Specifically Mortgaged Premises,
property not forming) part thereof upon which security
is or may be given to any bank or other encumbrances as
permitted under any provisions hereof, from providing in
such policies that any losses payable thereunder be paid
to NSBDC and such bank or other encumbrances as their
respective interests may appear;
(iii) the Company shall, prior to the expiry of any insurance
policy, deliver to NSBDC a renewal receipt, binder or
new policy, replacing such expiring insurance and will
keep NSBDC informed of any change or alteration in the
property of the Company of a character so usually
insured, and shall furnish NSBDC with particulars of all
insurance covering the Mortgaged Premises or any part
thereof.
(h) whether or not the transactions contemplated by the Principal
Agreement or this Debenture are consummated, the Company will
reimburse NSBDC or cause it to be reimbursed for any
reasonable out of pocket expenses incurred by NSBDC in
connection with the transactions therein or herein
contemplated (either as therein stipulated or as they may
hereafter from time to time be amended) including, without
limitation, the reasonable charges and disbursements of its
financial consultant retained at the request of the Company or
retained in the event NSBDC deems its security in jeopardy and
its counsel and any counsel whom it or they may consult on
matters of the laws of any jurisdiction which its counsel
deems relevant to the transaction therein contemplated, for
the services of such counsel in connection with the
preparation of any future modifications of the Debenture or
any security for the Debenture or any waiver or consent under
or in respect thereof and any monies so paid or costs, charges
or expenses incurred by NSBDC in respect thereto shall be
added to the principal monies secured by this Debenture and if
not paid by the Company within 30 days of demand shall bear
interest at the rate of fifteen percent (15%) per annum which
amount so incurred by NSBDC and interest shall be secured by
the Debenture in the same manner as the Principal Amount and
interest under this Debenture.
11. Subject to the terms of the Debenture, in each and every of the
following events all amounts owed by the Company to NSBDC shall
immediately become due and payable to the full extent of the Principal
Amount and interest and the security constituted by this Debenture
shall become enforceable:
6
<PAGE>
(a) if the Company defaults in the payment of the Principal Amount
and interest at the rate hereinbefore set out upon demand; or
(b) if the Company falls to pay any taxes or assessments levied
upon or in respect of the Mortgaged Premises after they have
become due and payable provided that, the Company may with the
consent of NSBDC delay payment of such taxes or assessments
for such period as NSBDC may agree and further provided that
if the Company bona fide disputes the legality or amount of
any such taxes or assessments, they shall not be deemed due
and payable within the meaning of this subclause (b) until
they are so adjudged by the last tribunal to which the Company
appeals. (If NSBDC requires the Company to do so, the Company
will post security with NSBDC for the full amount of such
taxes or assessments.); or
(c) if any execution foreclosure or other process is levied or
enforced against any of the property, undertaking or assets of
the Company; or
(d) if any sum admitted due or not disputed to be due by the
Company and forming or capable of being made a charge upon the
Mortgaged Premises in priority to the security of this
Debenture remains unpaid after proceedings have been taken to
enforce it as such prior charge or for a period of more than
five (5) days after NSBDC has demanded that such sum be paid;
or
(e) if the Company becomes bankrupt within the meaning of the
applicable bankruptcy law or insolvent or makes a general
assignment for the benefit of creditors or otherwise
acknowledges its insolvency, or if any order is made or a
resolution passed for the winding up of the Company, or any
application be made under the Company's Creditors Arrangement
Act, or an encumbrancer shall take possession of the Mortgaged
Premises or any part thereof; or
(f) if the Company, without the consent of NSBDC, ceases to carry
on its business; or
(g) if the Company at any time creates or purports or attempts to
create any mortgage, pledge, charge, assignment or other
security, whether fixed or floating on the Mortgaged Premises
or any part thereof other than encumbrances expressly
authorized by any provisions hereof; or
(h) if the Company neglects to carry out or observe any other
covenant or condition of this Debenture; or
(i) if the Company or any of its affiliates falls to perform any
of their obligations undertaken in favour of NSBDC pursuant to
the Principal Agreement or any agreements supplemental thereto
or any other agreements between the Company or its affiliates
and NSBDC; or
(j) if the Company shall make default under the provisions of any
instrument creating a charge on the Mortgaged Premises ranking
after the security of this Debenture unless within such time
as will prevent the exercise under such instrument of the
remedies provided therein or available thereunder in cases of
default and in any event within 30 days from receipt of notice
to that effect from NSBDC, the Company remedies such default
and the rights of NSBDC hereunder have not been prejudicially
affected; or if the trustee or holder under any such
instrument, whether or not any such default shall have been
made shall take any proceedings with a view, to appointing a
receiver or with a view to entering upon or foreclosing on the
Mortgaged Premises.
7
<PAGE>
12. Any time after an event of default has occurred NSBDC may, on such
terms and conditions (if any) as it may prescribed, waive such default
and/or that part of Section I 1 hereof rendering this Debenture
outstanding immediately due and payable, provided that no such waiver
shall affect or be deemed to affect in any way any subsequent default
or any rights resulting therefrom.
13. Whenever the security hereby constituted shall have become enforceable
NSBDC may:
(a) by instrument in writing appoint any person or persons,
whether an employee or employees of NSBDC or not, to be a
receiver ("receiver" in this Section 13 includes receivers; a
receiver and manager; and receivers and managers) of the
Mortgaged Premises or any part thereof, wherever located, and
may remove any receiver so appointed and appoint another in
his stead. Any such receiver so far as concerns responsibility
for his acts, be the agent of the Company and NSBDC shall not
in any way be responsible for any misconduct or negligence on
the part of such receiver. Any such receiver shall have such
powers as are set out in Section 13 (b) and (d) hereof, shall
have power with or without taking possession to lease all or
any part of the Mortgaged Premises to such person and upon
such terms as he deems fit and shall have the power to take
possession of the Mortgaged Premises or any part of such
property and to convey, transfer and assign to a purchaser or
purchasers the title to any of the undertaking, property and
assets so sold. Subject to NSBDC's right of waiver under
Section 12 hereof the floating charge hereby created shall
crystallize on the earlier of:
(i) the commencement of any proceedings in any Court by
NSBDC to enforce the security herein constituted;
(ii) the appointment hereunder or by a Court of any receiver
of the Mortgaged Premises or any part thereof;
(iii) the happening of any event sufficient at law or in
equity to crystallize the said floating charge; and/or
(b) by its agents or attorney take possession of all or any part
or parts of the Mortgaged Premises with full power to exclude
the Company, its agents and servants therefrom, carry on,
manage and conduct the business operations of the Company;
preserve and maintain the Mortgaged Premises and make such
replacements thereto and additions thereto as it shall deem
judicious; receive the rents, incomes and profits thereof of
any kind whatsoever; and enjoy and exercise all powers
necessary to the performance of all functions provided for in
this paragraph including but not in limitation thereof, the
power to purchase on credit, borrow money in the Company's or
its own name; and/or
8
<PAGE>
(c) apply to a Court of competent jurisdiction for the appointment
of a receiver to take possession of all or such part or parts
of the Mortgaged Premises wherever located as NSBDC desires
with the duties, powers and obligations otherwise set forth in
this Section 13 and with such additional powers as the Court
making the appointment shall confer; and the Company hereby
consents to the appointment of such receiver and waives notice
of any application to make such appointment; and/or
(d) with or without taking possession sell all or part of the
Mortgaged Premises either as a whole or in separate parcels at
public auction or by private sale at such times and places and
subject to adjournment from time to time and on such terms and
conditions as NSBDC shall appoint; and/or
(e) take any action or proceedings to enforce payment of this
Debenture or performance of any other covenant contained
herein or to enforce the security hereby constituted and to
bring to sale the Mortgaged Premises and any part or parts
thereof under a judgment or decree of the court of competent
jurisdiction or by an enforcement of any other legal remedy
which NSBDC shall deem most effectual to protect and enforce
its rights; and/or
(f) NSBDC may foreclose the security constituted under this
Debenture by suit of foreclosure in accordance with the
practice from time to time prevailing for such foreclosures.
14. On any sale or sales under Section 13 hereof or otherwise, NSBDC may
purchase the whole or part of the property so sold and may apply
towards the purchase price thereof this Debenture at an amount equal to
the sum that would be received in respect of this Debenture upon the
distribution of the proceeds of such sale.
15. After any default NSBDC may either before, during, or after any act,
action or proceeding for realizing upon the Mortgaged Premises or
enforcing the security constituted hereby or any obligation of the
Company hereunder recover judgment against the Company and levy
execution thereon for the whole amount then due and payable to the
Company. The right to recover such judgment and levy such execution
shall not be affected by any entry or taking possession or sale
hereunder or by the exercise of any other right, power or remedy and
the exercise of such right to recover judgment and levy execution shall
not in any mariner or to any extent affect the Lien hereof or rights,
powers, or remedies of NSBDC.
16. No remedy conferred on NSBDC shall be deemed exclusive of any other
remedy. Each such remedy shall be cumulative and in addition to every
other remedy given hereunder or now or hereafter existing at law or in
equity and may be exercised from time to time and as often as is deemed
expedient.
17. Any and all moneys arising from any sale or realization of the whole or
any part of the Mortgaged Premises shall be held by NSBDC, IN TRUST,
for the following purposes, in the order of priority in which they are
listed:
(a) to pay or retain the compensation, cost, expenses and outlays
including any interest thereon incurred or payable by or to it
or any receiver as defined in Section 14 hereof in connection
with such sale or realization;
9
<PAGE>
(b) to pay or retain the costs of NSBDC taxed as between solicitor
and client of any proceeding in any Court taken by NSBDC to
enforce the security herein constituted;
(c) to pay all taxes, assessments and other charges upon the
Mortgage Premises to the extent they form a charge prior to
this Debenture;
(d) to pay or retain all amounts due and payable to NSBDC by the
Company for any reason whatsoever, under or pursuant to this
Debenture or otherwise;
(e) to pay the balance of such moneys, if any, to the Company or
to the Accountant General of the Supreme Court of Nova Scotia,
at the option to NSBDC.
18. All amounts described in Sections 17 (a), (b) and (c) hereof which are
paid by NSBDC or any receiver shall be added to the Principal Amount
hereby secured and shall be a charge upon the property and assets of
the Company charged hereunder in priority to the Principal Amount.
19. Upon default by the Company and demand for possession by NSBDC, the
Company, its officers, agents and servants shall immediately surrender
and deliver to NSBDC all the Mortgaged Premises and execute all such
instruments and do all such acts and things as may be necessary or
desirable to put NSBDC in actual possession of the Mortgaged Premises.
20. Any notice or demand upon the Company shall be valid if given by
postage prepaid registered letter addressed to the principal office of
the Company and shall be deemed to have been served or given five
business days after the day such letter is posted. Nothing herein shall
preclude the delivery of notices or demands by means other than
mailing.
21. No delay or omission of NSBDC to exercise any right or power accruing
upon any default, shall impair any such right or power or shall be
construed to be a waiver of any such default or in acquiescence therein
and every power and remedy given hereby to NSBDC may be exercised by
it, from time to time and as often as may be deemed by it.
22. This security is in addition to and not in substitution for any other
security now or hereafter held by NSBDC.
23. This Debenture may be assigned, deposited and pledged by the Company as
collateral security for all of its present and future indebtedness and
liabilities to NSBDC and, when redelivered to the Company or its
nominee, shall be forthwith cancelled, provided however, that this
Debenture shall not be deemed to have been redeemed by reason of the
account of the Company having ceased to be in debit while this
Debenture was so assigned, deposited or pledged and no payment shall
reduce the amount owing or payable under this Debenture unless
specifically appropriated to the payment on account of this Debenture
at the time of payment.
24. This Debenture and all of its provisions shall ensure to the benefit of
NSBDC and shall be binding upon the Company, its successors and
assigns.
10
<PAGE>
IN WITNESS WHEREOF the Company has caused its corporate seal to be
hereunto affixed and this Debenture to be signed by its proper officers duly
authorized in that behalf as of the 18th day of September, 1998.
SIGNED, SEALED AND DELIVERED ITC CANADA LIMITED
in the presence of:
/s/ Robert G. MacKeigan By: /s/ Wendy G. Berney
- ------------------------------ ------------------------------
Witness
And: /s/ Phillip Read
------------------------------
11
<PAGE>
CANADA
PROVINCE OF NOVA SCOTIA
ON THIS 23rd day of September, 1998, before me, the subscriber
personally came and appeared Robert G. MacKeigan, a subscribing witness to the
foregoing Indenture, who, having by me duly sworn, made oath and said that ITC
CANADA LIMITED, one of the parties thereto, caused the same to be executed in
its name and on its behalf and its corporate seal to be thereunto affixed by its
proper officers in his presence.
/s/ Roy F. Redgrave
----------------------------------
A Commissioner of the Supreme
Court of Nova Scotia
<PAGE>
September 1998
-------------------------------------------------------
ITC CANADA LIMITED
and
NOVA SCOTIA BUSINESS
DEVELOPMENT CORPORATION
-------------------------------------------------------
DEMAND DEBENTURE
-------------------------------------------------------
Robert G. MacKeigan
Cox Hanson O'Reilly Matheson
Barristers and Solicitors
Suite 1100, Purdy's Wharf Tower One
1959 Upper Water Street
PO Box 2380, Stn Central RPO
Halifax NS B3J 3E5
EXHIBIT 2.10
DEBENTURE PLEDGE AGREEMENT
DESCRIPTION OF DEBENTURE
PRINCIPAL AMOUNT $3,600,000
DATE SEPTEMBER 18, 1998
INTEREST RATE 8% PER ANNUM
FOR VALUABLE CONSIDERATION, the receipt and sufficiency whereof is
acknowledged by the undersigned, ITC CANADA LIMITED, a body corporate,
incorporated under the laws of Nova Scotia (the "Company"), hereby assigns to,
deposits with and pledges to NOVA SCOTIA BUSINESS DEVELOPMENT CORPORATION
("NSBDC") the debenture created by the Company and described above together with
all renewals thereof, amendments thereto or substitutions therefore, interest
thereon and proceeds thereof (the "Debenture') to be held by NSBDC as general
and continuing collateral security for the payment of all present and future
indebtedness and liability of the Company to NSBDC (the "Indebtedness").
In the event of any default by the Company in payment of any part of the
Indebtedness or in the performance of any other obligation of the Company to
NSBDC, NSBDC may at any time during the continuance of any such default realize
upon the Debenture by sale, transfer or delivery, or exercise and enforce all
rights and remedies of a holder of the Debenture as if NSBDC were absolute owner
thereof, without notice to or control by the Company, and any such remedy may be
exercised separately or in combination and shall be in addition to and not in
substitution for any other rights of NSBDC however created, provided that NSBDC
shall not be bound to exercise any such right or remedy.
The proceeds of the Debenture may be applied by NSBDC on account of such
part of the Indebtedness as it chooses without prejudice to NSBDC's claim upon
the Company for any deficiency.
NSBDC may grant extensions of time or other indulgences, take and give up
securities, accept compositions, grant releases and discharges and otherwise
deal with the Company and with other parties, sureties or securities as NSBDC
may see fit without prejudice to the liability of the Company or NSBDC's rights
in respect of the Debenture.
PROVIDED HOWEVER as follows:
(a) notwithstanding that the Debenture is in the principal amount of
Cdn. $3,600,000 the liability of the Company under the Debenture at
any time shall be limited to the amount of the Indebtedness;
(b) notwithstanding that the Debenture is expressed to be payable on
demand, payment may only be demanded upon the occurrence of an event
of default under any instrument representing the Indebtedness or the
Debenture;
<PAGE>
(c) payment to NSBDC of interest for any period in respect of the
Indebtedness, whether before or after default, in accordance with
the terms of the Indebtedness shall be deemed payment in
satisfaction of the interest payment for the same period under the
Debenture.
The Debenture shall not operate by way of merger of any of the
Indebtedness and no judgment recovered by NSBDC shall operate by way of merger
of or in any way affect the security of the Debenture which is in addition to
and not in substitution for any other security now or hereafter held by NSBDC.
This Debenture Pledge Agreement shall be interpreted in accordance with
and governed by the laws of the Province of Nova Scotia and, for such purposes,
the Company hereby irrevocably consents and submits, both as to person and
subject matter, to the jurisdiction of the courts of Nova Scotia and to the
entry of any judgment rendered in any proceedings therein.
The provisions hereof shall be binding upon and shall ensure to the
benefit of the Company and NSBDC and their respective successors and assigns.
IN WITNESS WHEREOF the undersigned has duly executed this instrument as of
the 18th day of September, 1998.
SIGNED, SEALED & DELIVERED ITC CANADA LIMITED
in the presence of:
/s/ Robert G. MacKeigan Per: /s/ Wendy G. Berney
- ------------------------ -------------------------
/s/ Phillip Read
-------------------------
2
<PAGE>
Date: September 18, 1998
====================================================
ITC CANADA LIMITED
and
NOVA SCOTIA BUSINESS
DEVELOPMENT CORPORATION
====================================================
DEBENTURE PLEDGE AGREEMENT
====================================================
Robert G. MacKeigan
Cox Hanson O'Reilly Matheson
Barristers and Solicitors
Suite 1100, Purdy's Wharf Tower One
1959 Upper Water Streest
PO Box 2380, Stn Central RPO
Halifax NS B3J 3E5
EXHIBIT 2.11
THIS SECURITY AGREEMENT is made as of the 18th day of September, 1998.
BETWEEN:
ITC CANADA LIMITED, a body corporate under the laws of Nova
Scotia (the "Debtor")
OF THE ONE PART
-and-
NOVA SCOTIA BUSINESS DEVELOPMENT CORPORATION, a crown corporation of
the Province of Nova Scotia (the "Secured Party")
OF THE OTHER PART
1. SECURITY INTEREST
1.1 FOR VALUABLE CONSIDERATION the receipt and sufficiency whereof is hereby
acknowledged by the Debtor, the Debtor hereby mortgages, charges, assigns and
transfers to the Secured Party, and grants to the Secured Party a security
interest in, all the Debtor's right, title and interest in and to all now owned
or held and after acquired or held personal property, assets and undertakings of
the Debtor, of whatever nature or kind and wheresoever situate, and all proceeds
thereof and therefrom (all of which is hereinafter collectively called the
"COLLATERAL") including, without limiting the generality of the foregoing:
(a) all equipment, including, without limiting the generality of the
foregoing, machinery, tools, fixtures, furniture, furnishings,
chattels, motor vehicles, vessels and other tangible personal
property that is not Inventory, and all parts, components,
attachments, accessories, accessions, replacements, substitutions,
additions and improvements to any of the foregoing (all of which is
collectively called the "EQUIPMENT");
(b) all inventory, including, without limiting the generality of the
foregoing, goods acquired or held for sale or lease or famished
or to be furnished under contracts of rental or service, all raw
materials, work in process, finished goods, returned goods,
repossessed goods, and all packaging materials, supplies and
containers relating to or used or consumed in connection with any
of the foregoing (all of which is collectively called the
"INVENTORY");
(c) all debts, accounts, claims, demands, money and choses in action
which now are, or which may at any time hereafter be, due or owing
to or owned by the Debtor and all books, records, documents, papers
and electronically recorded data recordings, evidencing or relating
to such debts, accounts, claims, demands, money and choses in action
or any part thereof (all of which is collectively called the
"ACCOUNTS");
<PAGE>
(d) all documents of title, chattel paper, instruments, securities and
money, and all other goods of the Debtor that are not Equipment,
Inventory or Accounts;
(e) all right, title, benefit and interest of the Company in and to
all registered or unregistered trademarks, trade and brand names,
service marks, copyrights and/or copyright materials and/or
materials capable of being copyrighted, designs, inventions,
patents, patent applications, patent rights (including any
patents issuing on such applications or rights), licences,
sublicences, franchises, formulae, processes, technology
courseware, software and related materials, training courses and
discs, manuals, publications and any property developed
thereunder and therefrom and other industrial and intellectual
property owned and/or used in connection with the Company's
business and computer programs, customer and vendor lists and
records in connection with such business now owned or hereafter
acquired or developed by the Company, and the right to copy,
publish, amend, transmit, alter, licence, franchise, digitize and
further develop all such property;
(f) all contractual rights, licenses, goodwill, patents, trademarks,
trade names, copyrights and other intellectual property of the
Debtor, all other choses in action of the Debtor of every kind which
now are, or which may at any time hereafter be, due or owing to or
owned by the Debtor, and all other intangible property of the Debtor
which is not Accounts, chattel paper, instruments, documents of
title, securities or money.
Any reference in this Agreement to Collateral shall, unless the context
otherwise requires, be deemed to be a reference to Collateral as a whole or any
part thereof. The mortgages, charges, assignments and transfers and the security
interests created pursuant to this Agreement are hereinafter collectively called
the "SECURITY INTERESTS".
The charges on the Debtor's inventory and accounts receivable held by the
Secured Party shall be subject to charges now given or which may hereafter be
given to the bankers for ITC Learning Corporation (presently Wachovia Bank,
N.A.) and that the charges on all other assets of the Debtor shall rank pari
passu with the rights of the bankers for ITC Learning Corporation to be shared
on the basis of the amounts outstanding at the commencement of enforcement of
any security to the Secured Party on the Cdn. $2,000,000 loan advanced or to be
advanced by the Secured Party to the Debtor and, with respect to the bankers for
ITC Learning Corporation, the lesser of (i) the amount owed by ITC Learning
Corporation to its bankers, and (ii) Cdn. $1,000,000. If the security
constituted by this Agreement is enforced to obtain repayment of any obligation
of the Debtor to the Secured Party other than in respect to the said Cdn.
$2,000,000 loan, it shall be enforced subject to the prior right of the bankers
for ITC Learning Corporation to obtain full repayment of the obligations of the
Debtor under a guarantee to such bankers for the indebtedness of ITC Learning
Corporation.
1.2. Without limiting the foregoing, all right, title and interest in all
Inventory and other goods from time to time sold, delivered or supplied to the
Debtor by the Secured Party shall remain in the Secured Party, at the risk of
2
<PAGE>
the Debtor, until the payment in full by the Debtor to the Secured Party of the
purchase price of such Inventory and other goods and the Debtor has fully
performed all other obligations in respect thereof.
1.3. The last day of the term created by any lease or agreement therefor is
hereby excepted out of any charge or security interest created by this Agreement
but the Debtor shall stand possessed of the reversion thereby remaining upon
trust to assign and dispose thereof to any third party as the Secured Party
shall direct.
1.4. The Security Interests shall not apply to any consumer goods of the Debtor.
2. ATTACHMENT
The Debtor acknowledges that the Security Interests hereby created attach
upon the execution of this Agreement or, in the case of any after acquired
property, upon the acquisition thereof, that value has been given, and that the
Debtor has, or in the case of any after acquired property will have upon its
acquisition, rights in the Collateral.
3. PROHIBITIONS
Without the prior written consent of the Secured Party the Debtor will not
create or permit to exist any security interest in, mortgage, charge,
encumbrance or lien over, assignment of, or claim against any of its property,
assets, or undertakings which ranks or could in any event rank in priority to or
pari passu with any Security Interest.
4. OBLIGATIONS SECURED
This Agreement and the Security Interests are in addition to and not in
substitution for any other mortgage, charge, assignment or security interest now
or hereafter held by the Secured Party from the Debtor or from any other person
whomsoever and shall be general and continuing security for the payment of all
indebtedness and liability of the Debtor to the Secured Party (including
interest thereon), present and future, absolute or contingent, joint or several,
direct or indirect, matured or not, extended or renewed, wheresoever and
howsoever incurred, and any ultimate balance thereof, including all advances on
current or future advances and re-advances, and for the performance of all
obligations of the Debtor to the Secured Party, whether or not contained in this
Agreement (all of which indebtedness, liability and obligations are hereinafter
collectively called the "Obligations").
5. REPRESENTATIONS AND WARRANTIES
5.1 The Debtor represents and warrants that this Agreement is granted in
accordance with resolutions of the shareholders and directors of the Debtor (in
the case where the Debtor is a body corporate) and all matters and things have
been done and performed so as to authorize and make the execution and delivery
of this Agreement, and the performance of the Debtor's obligations hereunder,
legal, valid and binding.
5.2 Subject to any defects in title and any charges or encumbrances existing at
the date of conveyance to the Debtor by Grant Thornton Limited as receiver of
Mentor Networks Inc. and High Performance Group (Canada) Inc., the Debtor
3
<PAGE>
represents and warrants that the Debtor lawfully owns and possesses all
Collateral now held and has good title thereto, free from all security
interests, mortgages, charges, assignments, encumbrances, liens and claims, save
only the charges or security interests, if any, consented to in writing by the
Secured Party, and the Debtor has good right and lawful authority to grant a
security interest in the Collateral as provided by this Agreement.
6. COVENANTS OF THE DEBTOR
6.1 The Debtor covenants that at all times while this Agreement remains in
effect the Debtor will:
(a) defend the title to the Collateral for the benefit of the Secured
Party against the claims and demands of all persons;
(b) fully and effectually maintain and keep maintained the Security
Interests valid and effective;
(c) maintain the Collateral in good order and repair;
(d) forthwith pay:
(i) all taxes, assessments, rates, duties, levies, government
fees, claims and dues lawfully levied, assessed or imposed
upon it or the Collateral when due, unless the Debtor shall in
good faith contest its obligations so to pay and shall furnish
such security as the Secured Party may require; and
(ii) all mortgages, security interests, charges, encumbrances,
assignments, liens and claims which rank or could in any event
rank in priority to any Security Interest save only the
charges or security interests, if any, consented to in writing
by the Secured Party or shown in any Schedule hereto;
(e) forthwith pay all costs, charges, expenses and legal fees and
disbursements (on a solicitor and his own client basis) which may be
incurred by the Secured Party in:
(i) inspecting the Collateral;
(ii) negotiating, preparing, perfecting and registering this
Agreement or notice thereof and other documents, whether or
not relating to this Agreement;
(iii) investigating title to the Collateral;
(iv) taking, recovering, insuring and keeping possession of the
Collateral;
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(v) all other actions and proceedings taken in connection with the
preservation of the Collateral and the enforcement of this
Agreement and of any other security interest held by the
Secured Party as security for the Obligations;
(f) at the Secured Party's request at any time and from time to time
execute and deliver such further and other documents and instruments
and do all acts and things as the Secured Party in its absolute
discretion requires in order to confirm and perfect, and maintain
perfection of, the Security Interests upon any of the Collateral;
(g) notify the Secured Party promptly of:
(i) any change in the information contained herein relating to the
Debtor, its business or the Collateral, including without
limitation any change of name or address of the Debtor and any
change in the present location of any Collateral;
(ii) the details of any material acquisition of Collateral;
(iii) any material loss or damage to Collateral;
(iv) any material default by any account debtor in payment or other
performance of such debtor's obligations to the Debtor with
respect to any Accounts; and
(v) the return to or repossession by the Debtor of Collateral
where such return or repossession of Collateral is material in
relation to the business of the Debtor;
(h) prevent Collateral, other than Inventory sold, leased, or otherwise
disposed of as permitted hereby, from being or becoming an accession
to property not covered by this Agreement;
(i) carry on and conduct its business in a proper and businesslike
manner, including maintenance of proper books of account and
records;
(j) permit the Secured Party and its representatives, at all reasonable
times, access to all its property, assets and undertakings and to
all its books of account and records for the purpose of inspection
and render all assistance necessary for such inspection; and
(k) deliver to the Secured Party from time to time promptly upon
request:
(i) any documents of title, instruments, securities and chattel
paper constituting, representing or relating to Collateral;
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<PAGE>
(ii) all books of account and all records, ledgers, reports,
correspondence, schedules, documents, statements, lists and
other writings relating to Collateral for the purpose of
inspecting, auditing or copying the same;
(iii) all financial statements prepared by or for the Debtor
regarding the Debtor's business;
(iv) all policies and certificates of insurance relating to
Collateral; and
(v) such information concerning Collateral, the Debtor and the
Debtor's business and affairs as the Secured Party may
require.
7. INSURANCE
7.1 The Debtor covenants that at all times while this Agreement is in effect the
Debtor shall:
(a) maintain or cause to be maintained insurance on the Collateral with
an insurer, of kinds, for amounts and payable to such person or
persons, all as the Secured Party may require, and in particular
maintain insurance on the Collateral to the full insurable value
against loss or damage by fire including extended coverage
endorsement and in the case of motor vehicles, maintain insurance
against theft;
(b) cause the insurance policy or policies required hereunder to be
assigned to the Secured Party and have as part thereof a standard
mortgage clause or a mortgage endorsement, as appropriate; and
(c) pay any premium in connection with such insurance, and deliver all
such policies to the Secured Party, if it so requires.
7.2. If proceeds of any insurance required hereunder become payable, the Secured
Party may, in its absolute discretion apply such proceeds to such part or parts
of the Obligations as the Secured Party may see fit or the Secured Party may
release any such insurance proceeds to the Debtor for the purpose of repairing,
replacing or rebuilding, but any release of insurance proceeds to the Debtor
shall not operate as a payment on account of the Obligations or in any way
affect this Agreement.
7.3. The Debtor will forthwith, on the happening of loss or damage to the
Collateral, notify the Secured Party thereof and furnish to the Secured Party at
the Debtor's expense any necessary proof and do any necessary act to enable the
Secured Party to obtain payment of the insurance proceeds, but nothing herein
contained shall limit the Secured Party's right to submit to the insurer a proof
of loss on its own behalf
7.4. The Debtor hereby authorizes and directs the insurer under any policy of
insurance required hereunder to include the name of the Secured Party as a loss
payee on any cheque or draft which may be issued with respect to a claim under
and by virtue of such insurance, and the production by the Secured Party to any
insurer of a certified copy of this Agreement shall be its full and complete
authority for so doing.
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7.5 If the Debtor fails to maintain insurance as required by this Agreement, the
Secured Party may, but shall not be obliged to, maintain or effect such
insurance coverage, or so much thereof as the Secured Party considers necessary
for its protection.
8. PERFORMANCE OF OBLIGATIONS
If the Debtor fails to perform its obligations hereunder, the Secured
Party may, but shall not be obliged to, perform any or all of such obligations
without prejudice to any other rights and remedies of the Secured Party
hereunder, and any payments made and any costs, charges, expenses and legal fees
and disbursements (on a solicitor and his own client basis) incurred in
connection therewith shall be payable by the Debtor to the Secured Party
forthwith with interest until paid at the highest rate borne by any of the
Obligations and such amounts shall be Obligations secured hereunder.
9. RESTRICTIONS ON SALE OR DISPOSAL OF COLLATERAL
9.1 Except as herein provided, without the prior written consent of the Secured
Party the Debtor will not:
(a) sell, lease or otherwise dispose of the Collateral;
(b) release, surrender or abandon possession of the Collateral; or
(c) move or transfer the Collateral from Nova Scotia.
9.2. Provided that the Debtor is not in default under this Agreement, at any
time without the consent of the Secured Party the Debtor may lease, sell,
license, consign or otherwise deal with items of Inventory in the ordinary
course of its business and for the purposes of carrying on its business.
10. DEFAULT
10.1 Unless such event of default is waived by the Secured Party, the Debtor
shall be in default under this Agreement, in any of the following events:
(a) the Debtor fails to pay when due or perform or carry out any of the
Obligations; or
(b) the Debtor is in breach of any term, condition, obligation or
covenant to the Secured Party, or any representation or warranty to
the Secured Party is untrue, whether or not contained in this
Agreement; or
(c) the Debtor declares itself to be insolvent or admits in writing its
inability to pay its debts generally as they become due, or makes an
assignment for the benefit of its creditors, is declared bankrupt,
makes a proposal or otherwise takes advantage of provisions for
relief under the Bankruptcy and Insolvency Act, the Companies'
Creditors Arrangement Act or similar legislation in any
jurisdiction, or makes an authorized assignment; or
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(d) a receiver, receiver and manager or receiver-manager of all or any
part of the Collateral is appointed; or
(e) the Debtor ceases or threatens to cease to carry on all or a
substantial part of its business; or
(f) an order of execution against the Collateral or any part thereof
remains unsatisfied for a period of 10 days; or
(g) without the prior written consent of the Secured Party, the Debtor
creates or permits to exist any security interest in, charge,
encumbrance, lien on or claim against any of the Collateral which
ranks or could in any event rank in priority to or PARI PASSU with
any Security Interest; or
(h) the holder of any other security interest, charge, encumbrance or
lien on or claim against any of the Collateral does anything to
enforce or realize on such security interest, charge, encumbrance,
lien or claim; or
(i) if the Debtor is a company or a partnership, an order is made or an
effective resolution is passed for winding up the Debtor; or
(j) the Debtor, if a company, enters into an amalgamation, merger,
reconstruction, reorganization or other similar arrangement with any
other person or persons; or
(k) the Debtor, if an individual, dies or is declared incompetent by a
court of competent jurisdiction; or
(1) the Secured Party in good faith believes and has commercially
reasonable grounds to believe that the prospect of payment or
performance of any of the Obligations is impaired or that any of the
Collateral is or is about to be placed in jeopardy.
11. ENFORCEMENT
11.1 Upon any default under this Agreement the Secured Party may declare any or
all of the Obligations to become immediately due and payable and the security
hereby constituted will immediately become enforceable. To enforce and realize
on the Security Interests the Secured Party may take any action permitted by law
or in equity, as it may deem expedient, and in particular without limiting the
generality of the foregoing, the Secured Party may do any of the following:
(a) appoint by instrument a receiver, receiver and manager or
receiver-manager (the person so appointed is hereinafter called the
"Receiver") of the Collateral, with or without bond as the Secured
Party may determine, and from time to time in its absolute
discretion remove such Receiver and appoint another in its stead:
8
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(b) enter upon any premises of the Debtor and take possession of the
Collateral with power to exclude the Debtor, its agents and its
employees therefrom, without becoming liable as a mortgagee in
possession;
(c) preserve, protect and maintain the Collateral and make such
replacements thereof and repairs and additions thereto as the
Secured Party may deem advisable:
(d) sell, lease or otherwise dispose of all or any part of the
Collateral, whether by public or private sale or lease or otherwise,
in such manner, at such price as can be reasonably obtained therefor
and on such terms as to credit and with such conditions of sale and
stipulations as to title or conveyance or evidence of title or
otherwise as to the Secured Party may seem reasonable, provided that
if any sale, lease or other disposition is on credit the Debtor will
not be entitled to be credited with the proceeds of any such sale,
lease or other disposition until the money therefor is actually
received; and
(e) exercise all of the rights and remedies of a secured parry under the
PERSONAL PROPERTY SECURITY ACT of Nova Scotia and all regulations
thereunder, as amended from time to time (the "Act").
11.2. A Receiver appointed pursuant to this Agreement shall be the agent of the
Debtor and not of the Secured Party and, to the extent permitted by law or to
such lesser extent permitted by its appointment, shall have all the powers of
the Secured Party hereunder, and in addition shall have power to carry on the
business of the Debtor and for such purpose from time to time to borrow money
either secured or unsecured, and if secured by a security interest on any
Collateral such security interest may rank before or PARI PASSU with or behind
any Security Interest, and if it does not so specify such security interest
shall rank before the Security Interests.
11.3. Subject to the claims, if any, of the creditors of the Debtor ranking in
priority to this Agreement, all amounts realized from the disposition of
Collateral pursuant to this Agreement will be applied as the Secured Party, in
its absolute discretion, may direct as follows:
(a) in payment of all costs, charges and expenses (including legal fees
and disbursements on a solicitor and his own client basis) incurred
by the Secured Party in connection with or incidental to:
(i) the exercise by the Secured Party of all or any of the powers
granted to it pursuant to this Agreement; and
(ii) the appointment of the Receiver and the exercise by the
Receiver of all or any of the powers granted to it pursuant to
this Agreement, including the Receiver's reasonable
remuneration and all outgoings properly payable by the
Receiver;
(b) in or toward payment to the Secured Party of all principal and other
amounts (except interest) due in respect of the Obligations;
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(c) in or toward payment to the Secured Party of all interest remaining
unpaid in respect of the Obligations.
Subject to applicable law and the claims, if any, of other creditors of
the Debtor, any surplus will be paid to the Debtor.
12. DEFICIENCY
If the amounts realized from the disposition of the Collateral are not
sufficient to pay the Obligations in full the Debtor will immediately pay to the
Secured Party the amount of such deficiency.
13. LIABILITY OF THE SECURED PARTY
The Secured Party shall not be responsible or liable for any debts
contracted by it, for damages to persons or property or for salaries or
non-fulfilment of contracts during any period when the Secured Party shall
manage the Collateral upon entry, as herein provided, nor shall the Secured
Party be liable to account as a mortgagee in possession or for anything except
actual receipts or be liable for any loss on realization or for any default or
omission for which a mortgagee in possession may be liable. The Secured Party
shall not be bound to do, observe or perform or to see to the observance or
performance by the Debtor of any obligations or covenants imposed upon the
Debtor nor shall the Secured Party, in the case of securities, instruments or
chattel paper, be obliged to preserve rights against other persons, nor shall
the Secured Party be obliged to keep any of the Collateral identifiable. The
Debtor hereby waives any applicable provision of law permitted to be waived by
it which imposes higher or greater obligations upon the Secured Party than
aforesaid.
14. APPOINTMENT OF ATTORNEY
The Debtor hereby irrevocably appoints the Secured Party or the Receiver,
as the case may be, with full power of substitution, to be the attorney of the
Debtor for and in the name of the Debtor to sign, endorse or execute under seal
or otherwise any deeds, documents, transfers, cheques, instruments, demands,
assignments, assurances or consents that the Debtor is obliged to sign, endorse
or execute and generally to use the name of the Debtor and to do all things as
may be necessary or incidental to the exercise of all or any of the powers
conferred on the Secured Party or the Receiver, as the case may be, pursuant to
this Agreement.
15. ACCOUNTS
Notwithstanding any other provision of this Agreement, the Secured Party
may collect, realize, sell or otherwise deal with the Accounts or any part
thereof in such manner, upon such terms and conditions and at such time or
times, after default, as may seem to it advisable, and without notice to the
Debtor, except in the case of disposition after default and then subject to the
provisions of the Act. All money or other forms of payment received by the
Debtor in payment of any Account will be received and held by the Debtor in
trust for the Secured Party.
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16. APPROPRIATION OF PAYMENTS
Any and all payments made in respect of the Obligations from time to time
and money realized from any security interests held therefor (including amounts
collected in accordance with or realized on any enforcement of this Agreement)
may be applied to such part or parts of the Obligations as the Secured Party may
see fit and the Secured Party may at all times and from time to time change any
appropriation as the Secured Party may see fit.
17. WAIVER
The Secured Party may from time to time and at any time waive in whole or
in part any right, benefit or default under any clause of this Agreement but any
such waiver of any right, benefit or default on any occasion shall be deemed not
to be a waiver of any such right, benefit or default thereafter, or of any other
right, benefit or default, as the case may be. No waiver shall be effective
unless it is in writing.
18. NOTICE
Notice may be given to either party by sending it by prepaid mail or
delivered to the party for whom it is intended, at the address of such party
provided herein or at such other address as may be given in writing by such
party to the other, and any notice if posted shall be deemed to have been given
at the expiration of three business days after posting and if delivered, on
delivery.
19. EXTENSIONS
The Secured Party may grant extensions of time and other indulgences, take
and give up security, accept compositions, compound, compromise, settle, grant
releases and discharges, refrain from perfecting or maintaining perfection of
security interests, and otherwise deal with the Debtor, account debtors of the
Debtor, sureties and others and with Collateral and other security interests as
the Secured Party may see fit without prejudice to the liability of the Debtor
or the Secured Party's right to hold and realize on the Security Interests.
20. NO MERGER
This Agreement shall not operate so as to create any merger or discharge
of any of the Obligations, or of any assignment transfer, guarantee, lien,
contract, promissory note, bill of exchange or security interest of any form
held or which may hereafter be held by the Secured Party from the Debtor or from
any other person whomsoever. The taking of a judgment with respect to any of the
Obligations will not operate as a merger of any of the covenants contained in
this Agreement.
21. RIGHTS CUMULATIVE
All rights and remedies of the Secured Party set out in this Agreement,
and in any other security agreement held by the Secured Party from the Debtor or
any other person whomsoever to secure payment and performance of the
Obligations, are cumulative and no right or remedy contained herein or therein
is intended to be exclusive but each is in addition to every other right or
remedy contained herein or therein or in any existing or future security
agreement or now or hereafter existing at law, in equity or by statute, or
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pursuant to any other agreement between the Debtor and the Secured Party that
may be in effect from time to time.
22. ASSIGNMENT
The Secured Party may, without further notice to the Debtor, at any time
assign, transfer or grant a security interest in this Agreement and the Security
Interests. The Debtor expressly agrees that the assignee, transferee or secured
party, as the case may be, shall have all of the Secured Party's rights and
remedies under this Agreement and the Debtor will not assert any defense,
counterclaim, right of set-off or otherwise any claim which it now has or
hereafter acquires against the Secured Party in any action commenced by such
assignee, transferee or secured party, as the case may be, and will pay the
Obligations to the assignee, transferee or secured party, as the case may be, as
the Obligations become due.
23. SATISFACTION AND DISCHARGE
Any partial payment or satisfaction of the Obligations or any ceasing by
the Debtor to be indebted to the Secured Party shall be deemed not to be a
redemption or discharge of this Agreement. The Debtor shall be entitled to a
release and discharge of this Agreement upon full payment and satisfaction of
all Obligations, and upon written request by the Debtor and payment to the
Secured Party of a discharge fee to be fixed by the Secured Party and payment of
all costs, charges, expenses and legal fees and disbursements (on a solicitor
and his own client basis) incurred by the Secured Party in connection with the
Obligations and such release and discharge.
24. ENUREMENT
This Agreement shall enure to the benefit of the Secured Party and its
successors and assigns, and shall be binding upon the successors and permitted
assigns of the Debtor.
25. INTERPRETATION
25.1 Debtor and the personal pronoun "it" or "its" and any verb relating thereto
and used therewith shall be read and construed as required by and in accordance
with the context in which such words are used.
25.2. Words and expressions used herein that have been defined in the Act shall
be interpreted in accordance with their respective meaning given in the Act
unless otherwise defined herein or unless the context otherwise requires.
25.3. The invalidity or unenforceability of the whole or any part of any clause
of this Agreement shall not affect the validity or enforceability of any other
clause or the remainder of such clause.
25.4. The headings of the clauses of this Agreement have been inserted for
reference only and do not define, limit, alter or enlarge the meaning of any
provision of this Agreement.
25.5. This Agreement shall be governed by the laws of the Province of Nova
Scotia.
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26. COPY OF AGREEMENT AND FINANCING STATEMENT
The Debtor hereby:
(a) acknowledges receiving a copy of this Agreement; and
(b) waives all rights to receive from the Secured Party a copy of any
financing statement or financing change statement filed, or any
verification statement received, at any time in respect of this
Agreement.
IN WITNESS WHEREOF the Debtor has executed this Agreement as of the day
and date first above written.
SIGNED, SEALED & DELIVERED ITC CANADA LIMITED
in the presence of:
/s/ Robert G. MacKeigan By: /s/ Wendy G. Berney
- ------------------------ -------------------
By: /s/ Phillip Read
-------------------
EXHIBIT 2.12
GUARANTEE
TO: NOVA SCOTIA BUSINESS DEVELOPMENT CORPORATION
PART I
FOR VALUABLE CONSIDERATION, the undersigned (herein referred to as the
"Guarantor"), hereby guarantees payment to NOVA SCOTIA BUSINESS DEVELOPMENT
CORPORATION (NSBDC) forthwith after demand therefor as hereinafter provided of
the liabilities which ITC CANADA LIMITED (herein referred to as the "Borrower")
has incurred or is under or may incur or be under to NSBDC, whether arising from
dealings between NSBDC and the borrower or from any other dealings by which the
borrower may become in any manner whatever liable to NSBDC.
AND THE GUARANTOR AGREES
(1) THAT if more than one Guarantor executes this instrument the
provisions hereof shall be read with all grammatical changes thereby rendered
necessary and each reference to the Guarantor shall include the undersigned and
each and every one of them severally and this guarantee and all covenants and
agreements herein contained shall be deemed to be joint and several.
(2) THAT NSBDC may grant extensions of time or other indulgences, take and
give up securities, accept compositions, grant releases and discharges and
otherwise deal with the borrower and other parties and securities as NSBDC may
reasonably see fit, and may apply all moneys received from the borrower or
others, or form securities, upon such part of the borrower's liability as it may
think best, without prejudice to or in any way limiting or lessening the
liability of the Guarantor under this guarantee.
(3) THAT NSBDC shall not be bound to exhaust its recourse against the
borrower or other parties or the securities it may hold before being entitled to
payment from the Guarantor under this guarantee.
(4) THAT any loss of or in respect of securities received by NSBDC from
the borrower or any other person whether occasioned through the fault of NSBDC
or otherwise shall not discharge pro tanto or limit or lessen the liability of
the Guarantor under this guarantee.
(5) THAT this shall be a continuing guarantee and shall cover present
liabilities (if any) of the borrower to NSBDC and all liabilities incurred after
the date hereof with respect to the loan and royalty agreement referred to in
the letter form NSBDC to the Borrower dated September 16, 1998, a copy of which
is attached and shall apply to and secure any ultimate balance due or remaining
due to NSBDC and shall be binding as a continuing security on the Guarantor
until all obligations of the Borrow with respect to the said loan and royalty
agreement have been fully performed.
<PAGE>
(6) THAT any change or changes in the name of the borrower, or (if the
borrower be a partnership) any change or changes in the membership of the
borrower's firm by death or by the retirement of one or more of the partners or
by the introduction of one or more other partners shall not affect or in any way
limit or lessen the liability of the Guarantor hereunder and this guarantee
shall extend to the person, firm or corporation acquiring or from time to time
carrying on the business of the borrower.
(7) THAT all moneys, advances, renewals and credits in fact borrowed or
obtained from NSBDC by the Borrower shall be deemed to form part of the
liabilities hereby guaranteed notwithstanding any incapacity, disability or lack
or limitation of status or of power of the borrower or of the directors,
partners or agents thereof, or that the borrower may not be a legal entity, or
any irregularity, defect or informality in the borrowing or obtaining of such
moneys, advances, renewals or credits; and any amount which may not be
recoverable from the Guarantor on the footing of a guarantee shall be
recoverable from the Guarantor as principal debtor in respect thereof and shall
be paid to NSBDC after demand therefor as hereinafter provided.
(8) THAT any account settled or stated by or between NSBDC and the
borrower shall be accepted by the Guarantor as conclusive evidence that the
balance or amount thereby appearing due by the borrower to NSBDC is so due.
(9) THAT should NSBDC receive from the Guarantor a payment or payments in
full or on account of the liability under this guarantee, the Guarantor shall
not be entitled to claim repayment against the borrower or the borrower's estate
until NSBDC's claims against the borrower have been paid in full; and in case of
liquidation, winding up or bankruptcy of the borrower (whether voluntary or
compulsory) or in the event that the borrower shall make a bulk sale of any of
the borrower's assets within the bulk transfer provisions of any applicable
legislation or any composition with creditors or scheme or arrangements, NSBDC
shall have the right to rank for its full claim and receive all dividends or
other payments in respect thereof until its claim has been paid in full and the
Guarantor shall continue liable, up to the amount guaranteed, less any payments
made by the Guarantor, for any balance which may be owing to NSBDC by the
borrower; and in the event of the valuation by NSBDC of any of its securities
and/or retention thereof by NSBDC, such valuation and/or retention shall not, as
between NSBDC and the Guarantor, be considered as a purchase of such securities,
or as payment or satisfaction or reduction of the borrower's liabilities to
NSBDC, or any part thereof.
(10) THAT the Guarantor shall make payment to NSBDC of the amount of the
liability of the Guarantor forthwith after demand therefor is made in writing
and such demand shall be conclusively deemed to have been effectually made when
an envelope containing it addressed to the Guarantor at the last address of the
Guarantor known to NSBDC is deposited, postage prepaid and registered, in the
Post Office and the liability of the Guarantor shall bear interest from the date
of such demand at the rate or rates then applicable to the liabilities of the
borrower of NSBDC.
<PAGE>
PART II
(11) THAT this instrument is in addition and without prejudice to any
securities of any kind (including without limitation guarantees and postponement
agreements whether or not in the same form as this instrument) now or hereafter
held by NSBDC.
(12) THAT there are not representations, collateral agreements or
conditions with respect to this instrument or affecting the Guarantor's
liability hereunder other than as contained herein.
(13) THAT this instrument shall be construed in accordance with the laws
of Nova Scotia, and the Guarantor agrees that any legal suit, action or
proceeding arising out of or relating to this instrument may be instituted in
the courts of such province or territory, and the Guarantor hereby accepts and
irrevocably submits to the jurisdiction of the said courts and acknowledges
their competence and agrees to be bound by any judgment thereof, provided that
nothing herein shall limit NSBDC's right to bring proceedings against the
Guarantor elsewhere.
(14) THAT this instrument shall extend to and enure to the benefit of the
successors and assigns of NSBDC, and shall be binding upon the Guarantor and the
heirs, executors, administrators and successors of the Guarantor.
GIVEN UNDER SEAL at Virginia, this 22nd day of September, 1998.
WITNESS: ) ITC LEARNING CORPORATION
)
)
)
/s/ Christina R. Mexicotte ) PER: /s/ Christopher E. Mack
- -------------------------- ) ----------------------------
)
)
) PER: ____________________________
<PAGE>
--------------------------------------------------------
ITC LEARNING CORPORATION
--------------------------------------------------------
GUARANTEE
--------------------------------------------------------
Robert G. MacKeigan
Cox Hanson O'Reilly Matheson
Barristers and Solicitors
Suite 1100, Purdy's Wharf Tower One
1959 Upper Water Street
PO Box 2380, Stn Central RPO
Halifax NS B3J 3E5
EXHIBIT 2.13
THIS AGREEMENT made as of the 22nd day of September, 1998
BETWEEN:
ITC LEARNING CORPORATION, a body corporate
(hereinafter called "ITC Learning")
OF THE ONE PART
- and -
NOVA SCOTIA BUSINESS DEVELOPMENT CORPORATION
(hereinafter called "NSBDC")
OF THE OTHER PART
WHEREAS ITC Canada Limited, a wholly-owned subsidiary of ITC Learning, has
agreed to acquire certain assets from the receiver of Mentor Networks Inc. and
High Performance Group (Canada) Inc., which receiver was appointed by NSBDC;
AND WHEREAS ITC Canada Limited has arranged for a loan of Cdn.
$2,000,000 to assist ITC Canada Limited in the acquisition of the said assets;
AND WHEREAS ITC Learning has agreed with NSBDC as hereinafter provided:
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the
premises and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, it is agreed as follows:
1.ITC Learning agrees that it will provide to such departments of the Province
of Nova Scotia as may be designated by NSBDC, complete access to the process
and manufacturing libraries (153 titles) maintained by ITC Learning, which
may be used by such departments and agencies within the provincial education
system (P-12 and community colleges) for a period of two years without cost
to NSBDC or any department or agency of the Province of Nova Scotia save only
the cost of replicating the titles and actual shipping costs. These products
are not for resale or general distribution and will be licensed in accordance
with the normal licensing arrangement of ITC Learning.
2.ITC Learning agrees that it shall provide the funding for the working
capital requirements of ITC Canada Limited up to Cdn. $1,100,000 to enable
ITC Canada Limited to operate in the ordinary course of business.
3.ITC Learning agrees that it shall execute a guarantee substantially in the
terms set out in Schedule "A" attached hereto and agrees that such guarantee
<PAGE>
shall apply to the obligations of ITC Canada Limited to pay a royalty on
certain net revenues when and if earned, such royalty to continue until the
sum of Cdn. $1,600,000 is paid pursuant to the agreement between ITC Canada
Limited and the receiver of Mentor Networks Inc. and High Performance
(Canada) Inc.
IN WITNESS WHEREOF ITC Learning has executed this indenture the day and
year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of: ) ITC LEARNING CORPORATION
)
)
) Per: /s/ Christopher E. Mack
) -----------------------
)
)
) Per: ________________________
<PAGE>
SCHEDULE "A"
GUARANTEE
TO: NOVA SCOTIA BUSINESS DEVELOPMENT CORPORATION
PART I
FOR VALUABLE CONSIDERATION, the undersigned (herein referred to as the
"Guarantor"), hereby guarantees payment to NOVA SCOTIA BUSINESS DEVELOPMENT
CORPORATION (NSBDC) forthwith after demand therefor as hereinafter provided of
the liabilities which ITC CANADA LIMITED (herein referred to as the "Borrower")
has incurred or is under or may incur or be under to NSBDC, whether arising from
dealings between NSBDC and the borrower or from any other dealings by which the
borrower may become in any manner whatever liable to NSBDC.
AND THE GUARANTOR AGREES
(1) THAT if more than one Guarantor executes this instrument the
provisions hereof shall be read with all grammatical changes thereby rendered
necessary and each reference to the Guarantor shall include the undersigned and
each and every one of them severally and this guarantee and all covenants and
agreements herein contained shall be deemed to be joint and several.
(2) THAT NSBDC may grant extensions of time or other indulgences, take and
give up securities, accept compositions, grant releases and discharges and
otherwise deal with the borrower and other parties and securities as NSBDC may
reasonably see fit, and may apply all moneys received from the borrower or
others, or from securities, upon such part of the borrower's liability as it may
think best, without prejudice to or in any way limiting or lessening the
liability of the Guarantor under this guarantee.
(3) THAT NSBDC shall not be bound to exhaust its recourse against the
borrower or other parties or the securities it may hold before being entitled to
payment from the Guarantor under this guarantee.
(4) THAT any loss of or in respect of securities received by NSBDC from
the borrower or any other person whether occasioned through the fault of NSBDC
or otherwise shall not discharge pro tanto or limit or lessen the liability of
the Guarantor under this guarantee.
(5) THAT this shall be a continuing guarantee and shall cover present
liabilities (if any) of the borrower to NSBDC and all liabilities incurred after
the date hereof with respect to the loan and royalty agreement referred to in
the letter form NSBDC to the Borrower dated September 16, 1998, a copy of which
is attached and shall apply to and secure any ultimate balance due or remaining
<PAGE>
due to NSBDC and shall be binding as a continuing security on the Guarantor
until all obligations of the Borrower with respect to the said loan and royalty
agreement have been fully performed.
(6) THAT any change or changes in the name of the borrower, or (if the
borrower be a partnership) any change or changes in the membership of the
borrower's firm by death or by the retirement of one or more of the partners or
by the introduction of one or more other partners shall not affect or in any way
limit or lessen the liability of the Guarantor hereunder and this guarantee
shall extend to the person, firm or corporation acquiring or from time to time
carrying on the business of the borrower.
(7) THAT all moneys, advances, renewals and credits in fact borrowed or
obtained from NSBDC by the Borrower shall be deemed to form part of the
liabilities hereby guaranteed notwithstanding any incapacity, disability or lack
or limitation of status or of power of the borrower or of the directors,
partners or agents thereof, or that the borrower may not be a legal entity, or
any irregularity, defect or informality in the borrowing or obtaining of such
moneys, advances, renewals or credits; and any amount which may not be
recoverable from the Guarantor on the footing of a guarantee shall be
recoverable from the Guarantor as principal debtor in respect thereof and shall
be paid to NSBDC after demand therefor as hereinafter provided.
(8) THAT any account settled or stated by or between NSBDC and the
borrower shall be accepted by the Guarantor as conclusive evidence that the
balance or amount thereby appearing due by the borrower to NSBDC is so due.
(9) THAT should NSBDC receive from the Guarantor a payment or payments in
full or on account of the liability under this guarantee, the Guarantor shall
not be entitled to claim repayment against the borrower or the borrower's estate
until NSBDC's claims against the borrower have been paid in full; and in case of
liquidation, winding up or bankruptcy of the borrower (whether voluntary or
compulsory) or in the event that the borrower shall make a bulk sale of any of
the borrower's assets within the bulk transfer provisions of any applicable
legislation or any composition with creditors or scheme or arrangement, NSBDC
shall have the right to rank for its full claim and receive all dividends or
other payments in respect thereof until its claim has been paid in full and the
Guarantor shall continue liable, up to the amount guaranteed, less any payments
made by the Guarantor, for any balance which may be owing to NSBDC by the
borrower; and in the event of the valuation by NSBDC of any of its securities
and/or retention thereof by NSBDC, such valuation and/or retention shall not, as
between NSBDC and the Guarantor, be considered as a purchase of such securities,
or as payment or satisfaction or reduction of the borrower's liabilities to
NSBDC, or any part thereof.
(10) THAT the Guarantor shall make payment to NSBDC of the amount of the
liability of the Guarantor forthwith after demand therefor is made in writing
and such demand shall be conclusively deemed to have been effectually made when
an envelope containing it addressed to the Guarantor at the last address of the
Guarantor known to NSBDC is deposited, postage prepaid and registered, in the
Post Office and the liability of the Guarantor shall bear interest from the date
<PAGE>
of such demand at the rate or rates then applicable to the liabilities of the
borrower of NSBDC.
PART II
(11) THAT this instrument is in addition and without prejudice to any
securities of any kind (including without limitation guarantees and postponement
agreements whether or not in the same form as this instrument) now or hereafter
held by NSBDC.
(12) THAT there are not representations, collateral agreements or
conditions with respect to this instrument or affecting the Guarantor's
liability hereunder other than as contained herein.
(13) THAT this instrument shall be construed in accordance with the laws
of Nova Scotia, and the Guarantor agrees that any legal suit, action or
proceeding arising out of or relating to this instrument may be instituted in
the courts of such province or territory, and the Guarantor hereby accepts and
irrevocably submits to the jurisdiction of the said courts and acknowledges
their competence and agrees to be bound by any judgment thereof, provided that
nothing herein shall limit NSBDC's right to bring proceedings against the
Guarantor elsewhere.
(14) THAT this instrument shall extend to and enure to the benefit of the
successor and assigns of NSBDC, and shall be binding upon the Guarantor and the
heirs, executors, administrators and successors of the Guarantor.
GIVEN UNDER SEAL at , this ______ day of September, 1998,
WITNESS: ) ITC LEARNING CORPORATION
)
)
/s/ Christina R. Mexicotte ) PER: /s/ Christopher E. Mack
- -------------------------- ) ---------------------------
)
)
) PER: ____________________________
<PAGE>
DATE: SEPTEMBER ____, 1998_____________________________
ITC LEARNING CORPORATION
- AND -
NOVA SCOTIA BUSINESS
DEVELOPMENT CORPORATION
--------------------------------------------------------
AGREEMENT
--------------------------------------------------------
Robert G. MacKeigan
Cox Hanson O'Reilly Matheson
Barristers and Solicitors
Suite 1100, Purdy's Wharf Tower One
1959 Upper Water Street
PO Box 2380, Stn Central RPO
Halifax NS B3J 3E5
EXHIBIT 2.14
ROYALTY AGREEMENT
THIS AGREEMENT entered into at Halifax, in the Providence of Nova Scotia,
effective the 18th day of September, 1998;
AMONG:
ITC CANADA LIMITED, a body corporate
(referred to as "ITC")
- and -
GRANT THORNTON LIMITED, receiver and manager of
Mentor Networks Inc. and High Performance Group (Canada)
Inc.
(referred to as the "Receiver")
- and -
ITC LEARNING CORPORATION, a body corporate
(referred to as "ITC Learning")
WHEREAS the Receiver has agreed to sell to ITC certain assets for a sum
certain and in addition ITC has agreed to pay certain royalties, when and if
earned;
IN CONSIDERATION of the mutual promises and agreements contained in this
agreement, and other good and valuable consideration, the parties agree as
follows:
1. DEFINITIONS
In this agreement, unless there is something in the subject or context
inconsistent with it, the following words shall have the following meaning:
(a) "Net Receipts" mean all gross receipts actually received by ITC and
its affiliates and related entities from all sales, conveyances or grants of
licenses of Generic Software or Custom Software which may be produced excluding
any and all rebates, commissions, credits, returns, freight and insurance
charges, value added taxes, and sales taxes or other similar taxes and duties to
the extent these charges are actually paid or credited by ITC.
(b) "Custom Software" means all software developed as custom courseware by
ITC including, but not limited to, entertainment or educational software,
interactive or otherwise, for use in networks, computers, optical disk base
<PAGE>
systems such as CD ROM's and in any and all media whether now known or hereafter
developed, including semiconductor, magnetic and optical based media.
(c) "Generic Software" means all of the software formerly owned or
developed by mentor Networks Inc. and/or High Performance Group (Canada) Inc.
and all software other than Custom Software which is developed by or owned by
ITC including, but not limited to, entertainment or educational software,
interactive or otherwise, for use in networks, computers, optical disk base
systems such as CD ROM's and in any and all media whether now known or hereafter
developed, including semiconductor, magnetic and optional based media.
2. ROYALTY PAYMENTS
2.1 ITC shall pay to the Receiver a royalty calculated at 3% of 100% of
Net Receipts, derived from the exploitation of the Generic Software which may be
produced hereunder, provided that such royalty shall not apply with respect to
Generic Software which is distributed at no charge for the purposes of
promotional demonstrations, including any Generic Software provided to the
Province of Nova Scotia by ITC Learning Corporation.
2.2 ITC shall pay to the Receiver a royalty calculated at 1% of 100% of
Net Receipts, derived from the exploitation of the Custom Software which may be
produced hereunder, provided that such royalty shall not apply with respect to
Custom Software which is distributed at no charge for the purposes of
promotional demonstrations.
2.3 ITC shall calculate the royalty payments for each fiscal year (for the
period ended December 31) and shall, within 120 days of each fiscal year end pay
the amount so calculated and deliver to the Receiver a calculation certified by
the auditor for ITC confirming the amount of the payment.
2.4 The royalty payments payable by ITC to the Receiver pursuant to
sections 2.1 and 2.2 above shall continue until such time as the Receiver
receives the sum of $1,600,000.00. In the event that ITC for any reason
discontinues operations as a going concern in Nova Scotia, all obligations of
ITC hereunder shall forthwith become obligations of ITC Learning Corporation.
3. BOOKS AND RECORDS
3.1 ITC shall maintain books of accounts and records of revenues and
expenses in connection with the Generic Software and Custom Software and the
royalties to which the Receiver shall be entitled to, which books and records
pertaining to the Generic software and Custom software shall be available for
inspection by the Receiver or anyone on the Receiver's behalf at ITC's local or
head office, during normal business hours, upon seven days advance written
notice.
<PAGE>
4. ASSIGNMENT
ITC acknowledges that the Receiver may assign its rights under this
agreement to Nova Scotia Business Development Corporation ("NSBDC") and
effective the date of any such assignment any security held by NSBDC on the
assets of ITC shall secure the obligations of ITC under this agreement.
5. MISCELLANEOUS
5.1 HEADINGS. Headings are not to be considered part of this agreement,
are included solely for convenience and are not intended to be full or accurate
descriptions of the content of the paragraphs.
5.2 INTERPRETATION. In this agreement, words importing the singular number
include the plural and vice versa, words importing the masculine gender include
the feminine and neuter genders; and words importing persons include
individuals, sole proprietors, corporations, partnerships, trusts and
unincorporated associations.
5.3 APPLICATION LAW. This agreement shall be governed by and construed in
accordance with the laws of the Province of Nova Scotia and the laws of Canada
in force therein.
5.4 INVALIDITY OF PROVISION. The invalidity or unenforceability of any
provision of this agreement or any covenant in it shall not affect the validity
or enforceability of any other provision or covenant in it and the invalid
provision or covenant shall be deemed to be severable.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement on the day
and year first above written.
SIGNED, SEALED AND DELIVERED ) ITC CANADA LIMITED
IN THE PRESENCE OF: )
) PER: /s/ Wendy G. Berney
) -----------------------
)
)
/s/ Robert G. Mackeigan ) PER: /s/ Phillip Read
- ------------------------ ) -----------------------
WITNESS: )
)
) GRANT THORNTON LIMITED, AS
) RECEIVER AND MANAGER OF THE PROPERTY
) AND ASSETS OF MENTOR NETWORKS INC. AND
) HIGH PERFORMANCE GROUP (CANADA) INC.
)
)
/s/ Robert G. Mackeigan ) PER: /s/ Ross Landers
- -------------------------- ) ---------------------------
WITNESS: )
) ITC LEARNING CORPORATION
)
) PER: /s/ Christopher E. Mack
) ---------------------------
/s/Christina R. Mexicotte )
- -------------------------- )
) PER: ___________________________
)
)
<PAGE>
--------------------------------------------------
ITC CANADA LIMITED, A BODY CORPORATE
(REFERRED TO AS "ITC")
- AND -
GRANT THORNTON LIMITED, RECEIVER AND MANAGER OF
MENTOR NETWORKS INC. AND HIGH PERFORMANCE GROUP (CANADA)
INC. (REFERRED TO AS THE "RECEIVER")
- AND -
ITC LEARNING CORPORATION, A BODY CORPORATE
(REFERRED TO AS "ITC LEARNING")
----------------------------------------------------------
ROYALTY AGREEMENT
----------------------------------------------------------
ROBERT G. MACKEIGAN
COX HANSON O'REILLY MATHESON
BARRISTERS AND SOLICITORS
SUITE 1100, PURDY'S WHARF TOWER ONE
1959 UPPER WATER STREET
PO BOX 2380, STN CENTRAL RPO
HALIFAX NS B3J 3E5
EXHIBIT 2.15
INTER-LENDER AGREEMENT
THIS AGREEMENT dated as of the 23rd day of September, 1998
AMONG:
NOVA SCOTIA BUSINESS DEVELOPMENT CORPORATION
("NSBDC")
OF THE FIRST PART
-and-
WACHOVIA BANK, N.A.
("Wachovia")
OF THE SECOND PART
-and-
ITC CANADA LIMITED
("ITC Canada")
OF THE THIRD PART
WHEREAS:
1. NSBDC has agreed to provide certain financing to ITC Canada;
2. Wachovia finances ITC Learning Corporation and is providing certain
financing to ITC Leaning Corporation to be advanced to ITC Canada to enable ITC
Canada to acquire certain assets and to carry on business;
3. ITC Canada has agreed to guarantee the obligations of ITC Learning
Corporation to Wachovia;
4. Each of Wachovia and NSBDC are to hold mortgages and charges on the property
and assets of ITC Canada.
<PAGE>
NOW THEREFORE, for value received, the parties hereto agree with each other as
follows:
1. INTERPRETATION
1.1 DEFINITIONS. For the purposes of this agreement:
(a) "NSBDC Debt" means the obligations of ITC Canada to NSBDC
pursuant to the terms of a note in the principal amount of
Cdn. $2,000,000 and the obligations of ITC Canada under the
terms of a Royalty Agreement entered into between ITC
Canada and Grant Thornton Limited as receiver of the
property and assets of Mentor Networks Inc. and High
Performance Group (Canada) Inc., when and if such Royalty
Agreement is assigned by the said Grant Thornton Limited to
NSBDC;
(b) "NSBDC Security" means security documents now or hereafter
delivered under or on connection with the NSBDC Debt or
otherwise securing or being intended to secure the NSBDC Debt
including:
(i) a debenture in the principal amount of Cdn. $3,600,000
executed or to be executed by ITC Canada in favour of
NSBDC and the pledge of the debenture pursuant to the
terms of a pledge agreement;
(ii) a general security agreement executed or to be executed
by ITC Canada in favour of NSBDC containing a charge on
all of the assets of ITC Canada;
(c) "Wachovia Debt" means the obligations of ITC Canada under a
guarantee executed or to be executed by ITC Canada in favour
of Wachovia to secure the debts and obligations of ITC
Learning Corporation to Wachovia;
(d) "Wachovia Security" means security documents now or hereafter
delivered under or in connection with the Wachovia Debt or
otherwise securing or being intended to secure the Wachovia
Debt including:
(i) a debenture executed or to be executed by ITC Canada in
favour of Wachovia and the pledge of the debenture
pursuant to the terms of a pledge agreement;
(ii) a general security agreement executed or to be executed
by ITC Canada in favour of Wachovia containing a charge
on all of the assets of ITC Canada.
2
<PAGE>
2. CONSENTS
2.1 NSBDC hereby consents to the creation and issuance by ITC Canada to
Wachovia of the Wachovia Security and to the incurring by ITC Canada
of the obligations secured thereby.
2.2. Wachovia hereby consents to the creation and issuance by ITC Canada
to NSBDC of the NSBDC Security and to the incurring of the
obligations secured thereby.
3. PRIORITIES
3.1 Each of NSBDC, Wachovia and ITC Canada declare, covenant and agree
with each other that the NSBDC Security and the Wachovia Security
shall operate as follows:
(a) the Wachovia Security shall constitute a first security
interest in all of the accounts receivable and inventory of
ITC Canada and the NSBDC Security shall be enforced subject to
the rights of Wachovia to the accounts receivable and
inventory so long as ITC Canada is obligated to Wachovia;
(b) subject to section 3.1(a), the NSBDC Security and the Wachovia
Security shall rank pari passu on all other assets of ITC
Canada on the basis of the amounts outstanding at the
commencement of enforcement of any security held by NSBDC or
by Wachovia on the Cdn. $2,000,000 loan advanced or to be
advanced by NSBDC and, with respect to Wachovia, the lesser
of:
(i) the amount owed by ITC Learning Corporation to
Wachovia, and
(ii) Cdn. $1,000,000;
(c) after the sharing pari passu as provided for in section
3.1(b), the Wachovia Security may be enforced to recover
payment of any other obligation of ITC Canada to Wachovia
and, following full satisfaction of such obligations, the
NSBDC Security may be enforced to recover payment of any
other portion of the NSBDC Debt remaining after recovery by
NSBDC of the amounts referred to in the preceding section
3.1(b).
3.2 Any proceeds received by ITC Canada or by NSBDC or by Wachovia in
respect of assets of ITC Canada charged by the NSBDC Security or the
Wachovia Security shall be dealt with according to the preceding
provisions hereof as so paid or payable as proceeds of realization
of the collateral for which they compensate, and all proceeds
received by ITC Canada shall be held in trust by it for the benefit
of NSBDC and Wachovia as the case may be, in accordance with the
provisions hereof.
3.3 The provisions hereof shall apply in all events and circumstances
regardless of:
3
<PAGE>
(a) the date of execution, attachment, registration, perfection or
reperfection of any security interest held by NSBDC or
Wachovia;
(b) the date of any advance or advances made to ITC Canada by
NSBDC or to ITC Learning Corporation by Wachovia;
(c) the date of default by ITC Canada under either the NSBDC
Security or the Wachovia Security, the date of crystallization
of any floating charges held by NSBDC or by Wachovia or the
date of any enforcement action of either of them;
(d) any priority granted by any principle of law or any statute.
3.4 If any of the NSBDC Security or the Wachovia Security is found to be
unenforceable, invalid, unregistered or unperfected against any
party other than NSBDC or Wachovia by a court of competent
jurisdiction, and all appeals from any such party have been heard
and determined or the time for making any such appeal has expired
without an appeal being made, the provisions of Section 3.1 to and
including 3.3 of this Agreement shall not apply to such security to
the extent that it is so found.
4. DEFAULT AND DEMAND
4.1 In the event that there is a default by ITC Canada with respect to
the NSBDC Debt or the Wachovia Debt which results in NSBDC or
Wachovia notifying ITC Canada in writing of such a default, then
NSBDC or Wachovia, as the case may be, shall give a copy of that
written notice of default to the other coincidentally with it giving
such notice to ITC Canada.
4.2 Either party may, in accordance with the terms of its respective
loans, demand repayment from ITC Canada. Not less than two (2)
business days before issuing a demand, NSBDC or Wachovia, as the
case may be, shall give notice to the other providing particulars of
the default and a copy of the intended demand. In the event that
either NSBDC or Wachovia believes that the two (2) business days
notice as hereinbefore provided may adversely affect its ability to
enforce its security and to recover its indebtedness, it may proceed
without giving such two (2) business days notice but it shall
nevertheless provide to the other any notice of demand or other
proceedings which it may serve upon ITC Canada.
4.3 In the event that NSBDC or Wachovia gives notice as provided in
article 4.2 hereof, then NSBDC or Wachovia, as the case may be,
within two (2) business days from the date of receipt of the notice
shall have the right to pay to the other the amount of the other's
debt then outstanding and to take an assignment of the other's debt
and an assignment of the other's interest in either the NSBDC
Security or the Wachovia Security.
4
<PAGE>
5. RECOVERY
5.1 In the event that either NSBDC or Wachovia desires to appoint an
agent or receiver to invoke any other process to effect recovery of
its indebtedness or to realize upon its security, it shall first
attempt to consult with the other and to agree as to the appointment
of a common agent or receiver and as to the process to be followed
with respect to recovery. However, neither NSBDC nor Wachovia shall
be barred from appointing an agent or receiver or to effect other
process, by failure to contact the other, or to agree as to the
terms of the appointment, provided always that any agent or receiver
appointed will be a licensed trustee in bankruptcy employed with a
national accounting firm.
5.2 If the parties agree to a common course of action in accordance with
article 5.1 and any matter arises which requires a direction to be
given to the agent or the receiver or approval of any step taken or
any act to be done in and about the management of the agency or
receivership, then the matter shall be decided jointly by NSBDC and
Wachovia. If NSBDC and Wachovia are unable to agree on the direction
to be given then another licensed trustee, independent of the agent
or receiver, and selected by the agent or the receiver shall decide
on the direction to be given.
6. DISTRIBUTION OF PROCEEDS
6.1 Any monies and proceeds received by NSBDC or Wachovia pursuant to
any realization on or enforcement of the NSBDC Security or Wachovia
Security, as the case may be, whether from sale, insurance proceeds
or other source of funds, or under any dissolution, winding-up,
liquidation or other scheme of arrangement or any insolvency,
receivership or bankruptcy proceedings, will be distributed and paid
as follows:
(a) firstly, in payment of all costs, charges and expenses of and
incidental to and that may be properly incurred in connection
with any realization or enforcement procedures as may have
been taken;
(b) secondly, in payment of any disbursements made by either NSBDC
or Wachovia pursuant to the NSBDC Security, NSBDC Debt,
Wachovia Security or Wachovia Debt;
(c) thirdly, in payment of the Wachovia Debt to the extent that
such monies and proceeds derive from the inventories and
accounts receivable of ITC Canada and there is at such time
outstanding Wachovia Debt owed to Wachovia;
(d) fourthly, distributed pari passu in payment of the Wachovia
Debt and the NSBDC Debt shared as set out in section 3.1(b)
hereof;
5
<PAGE>
(e) fifthly, in the event that after the application of the
recoveries pursuant to the preceding paragraphs hereof, there
is still additional monies and at that time there is still
outstanding Wachovia Debt, the amount of such surplus shall be
paid to the Wachovia to be applied against the Wachovia Debt;
(f) sixthly, in the event that after repayment of the amount owed
to NSBDC on the Cdn. $2,000,000 note there is still NSBDC Debt
outstanding, the amount of any surplus monies shall be paid to
NSBDC to be applied to the NSBDC Debt;
(g) seventhly, as to any surplus, after repayment of NSBDC Debt
and Wachovia Debt as hereinbefore provided for, to such other
persons or corporations as required by the terms of the NSBDC
Security and Wachovia Security or as required by law.
6.2 Should NSBDC or Wachovia receive any payments, distributions, funds
or proceeds contemplated under this article 6, then they must
provide an accounting to the other in connection therewith upon
request.
7. PAYMENT ARRANGEMENTS
7.1 From time to time upon request therefore, NSBDC and Wachovia may
advise each other of the particulars of the indebtedness and
obligations to each other and all security held by each therefore.
7.2 Each of the parties hereto shall permit any of the other parties and
their employees, agents and contractors, access at all reasonable
times to inspect any property and assets of ITC Canada upon which
such other party has a charge or security interest in accordance
with the terms hereof, to make copies of or extracts from any books
of account and all records, ledgers, reports, documents and other
writings relating to such property and assets, and to permit such
other party to remove such property and assets from the premises of
ITC Canada at all reasonable times without interference, provided
that such other party shall promptly repair any damage caused to the
premises by the removal of any such property or assets.
8. CONSENT OF ITC CANADA
8.1 ITC Canada hereby consents and agrees to the terms of this
Agreement, and confirms to and agrees with NSBDC and Wachovia that
so long as ITC Canada remains obligated or indebted to NSBDC and
Wachovia, ITC Canada shall stand possessed of its assets so charged
in favour of NSBDC and Wachovia in accordance with their respective
interests and priorities as set out in this Agreement.
6
<PAGE>
9. GENERAL
9.1 NSBDC or Wachovia may transfer or assign its respective security so
long as the transfer or assignment is subject to the terms of this
Agreement.
9.2 Any notice required or permitted to be given pursuant to this
Agreement shall be in writing and shall be addressed and delivered
to the parties at the following addresses:
(a) if to NSBDC:
World Trade and Convention Centre
1800 Argyle Street
PO Box 519
Halifax, NS B3J 2R7
Attention: President
Facsimile: (902) 424-6823
(b) if to Wachovia:
8117 Leesburg Pike
Vienna, Virginia 22182
Attention: D. Randolph Bryan Wilson, Vice-President
Facsimile: (703) 827-1206
(c) if to ITC Canada:
Suite 600
Purdy's Wharf Tower One
1959 Upper Water Street
Halifax, NS B3J 3N2
Attention: President
Facsimile: (902) 421-5199
Notice may be sent by fax or served personally and in each case
shall be deemed to be received on the day so transmitted by fax or
personally delivered.
9.3 This Agreement may be executed in several counterparts and by
facsimile signature, each of which when so executed shall be deemed
to be an original and such counterparts together shall constitute
one and the same instrument and shall be effective as of the formal
date hereof.
7
<PAGE>
9.4 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted
assigns.
9.5 This Agreement shall continue in full force and effect until the
date on which it is either terminated by the unanimous consent of
NSBDC and Wachovia, or the indebtedness secured by the NSBDC
Security and the Wachovia Security, as the case may be, ceases to
exist.
9.6 The execution and delivery of this Agreement by NSBDC and Wachovia
or the performance of their respective obligations hereunder shall
not constitute or be deemed to be construed as constituting any
partnership, joint venture, association, syndication or similar
relationship between them.
9.7 Nothing to this Agreement is intended to or shall impair or affect
the obligations of ITC Canada to pay the NSBDC Debt or the Wachovia
Debt in accordance with their respective terms nor entitle it to any
notice or delay in demand or realization or enforcement of the
security.
9.8 The parties hereto agree to execute and provide such further and
other documents and do such further and other acts as may be
necessary to give effect to this Agreement.
9.9 This Agreement shall be governed by and construed in accordance with
the laws of the Province of Nova Scotia.
IN WITNESS WHEREOF the parties hereto have executed this Agreement under
the hands of their duly authorized officers.
SIGNED, SEALED AND DELIVERED ) NOVA SCOTIA BUSINESS
in the presence of ) DEVELOPMENT CORPORATION
)
) /s/ Roy Sherwood
/s/ Robert G. MacKeigan ) Per: /s/ Andrew H. Hare
) ----------------------
) WACHOVIA BANK, N.A.
)
)
) Per: /s/ D. Randolph Bryan Wilson
) ------------------------------
)
) ITC CANADA LIMITED
)
) Per: /s/ Wendy G. Berney
) /s/ Phillip Read
) ---------------------------
EXHIBIT 99.1
ITC LEARNING CORPORATION
13515 Dulles Technology Drive PRESS RELEASE
Herndon, VA 20171-3413
(703) 713-3335 (800) 638-3757
HTTP://WWW.itclearning.com
NASDAQ: ITCC
September 29, 1998 Contact:
Carl Stevens, President & CEO
Chris Mack, CFO
(800) 638-3757
(703) 713-3335
ITC LEARNING COMPLETES ASSET ACQUISITION
Herndon, VA - ITC Learning Corporation ("ITC") announced today that it has
completed the acquisition of the assets of Mentor Networks Inc. ("Mentor") of
Halifax, Nova Scotia. As previously announced, Mentor had been placed in
Receivership by its secured lender, the Nova Scotia Business Development
Corporation ("NSBDC"). The purchase price of approximately US$2,000,000 includes
a combination of cash (approximately US$700,000) and a five year note
(approximately US$1,300,000). ITC has also agreed to pay up to a maximum of
approximately US$1,100,000 in certain future royalty payments based on the
ongoing performance of the Mentor assets. Since this is an international
transaction, the five year note and royalty payments are subject to relevant
exchange rates.
As part of the acquisition, ITC acquires 42 employees (of whom 34 are
technical/development personnel), seven PC Skills titles associated with the
Microsoft Office Suite(TM) of products, three Call Center titles, intellectual
property rights to an additional 25 soft skills products, and certain fixed
assets. The Halifax operations have been combined with ITC's Toronto-based sales
and marketing office and are being operated by ITC's newly formed and
wholly-owned subsidiary, ITC Canada Limited. With the expansion of ITC Canada
Limited, ITC has established a significant presence in Canada.
Carl D. Stevens, President and CEO of ITC stated, "We have long recognized that
Mentor's capabilities and courseware are among the finest in the industry. That
is what led us to establish a business relationship with Mentor over a year ago,
when we were desirous of capitalizing on their development expertise and
instructional design to expand ITC's courseware portfolio. Not only do they
provide us with a family of PC skills products that can be used for electronic
performance support at the employee's desk, they have an award-winning family of
business productivity products, such as "The Art of Customer Service" (call
center training), "Promises that Pay" (debt collections) and "Ask for the
Business...and Get It" (telesales training). The addition of these courses take
ITC into new and expanding markets. In essence, ITC was able to take a
<PAGE>
potentially negative receivership situation and turn it into something very
positive for ITC and its customers and we are very excited about that."
* * * M O R E * * *
ITC Learning Corporation develops and markets workplace training solutions for
business, education and government and is headquartered in Herndon, Virginia.
With over 5,000 organizations worldwide using ITC's products to improve employee
productivity and skills, ITC is recognized for excellence in quality and
customer support. ITC provides complete administrative software and over 600
courses of CD-ROM, intranet and Internet delivered multimedia training on such
topics as Personal Computer Skills, Business Productivity, Information
Technology Services, Regulatory Compliance, Industrial Technical Skills and
Basic Literacy Skills. The Company's stock is traded on NASDAQ -ITCC.
The matters described herein contain forward looking statements that are
pursuant to safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Forward looking statements involve a number of risks and
uncertainties including, but not limited to, economic, competitive, governmental
and technological factors outside the control of the Company. For a more
detailed description of ITC and the risk factors facing the Company, please
refer to the Company's SEC filings, including its annual report on Form 10-KSB
for the fiscal year ended December 31, 1997 and its quarterly reports on Form
10-Q for the current fiscal year.
In addition to the risks and uncertainties that exist with ITC and its newly
formed subsidiary's business operations, the acquisition includes risks that the
integration of operations, technologies and products might not occur as planned
or as anticipated.
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