-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LNKQz80mSNuA3owZP4ZY3iYK/ewSccqUdOddzM0eS1LPxwNt6Tol83h6REqHkOCX v4fnmrIZzPLm4GM2MOWkbw== 0000898432-98-000680.txt : 19981014 0000898432-98-000680.hdr.sgml : 19981014 ACCESSION NUMBER: 0000898432-98-000680 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19980925 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981013 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ITC LEARNING CORP CENTRAL INDEX KEY: 0000764867 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 521078263 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-13741 FILM NUMBER: 98724813 BUSINESS ADDRESS: STREET 1: 13515 DULLES TECHNOLOGY DR CITY: HERNDON STATE: VA ZIP: 22071 BUSINESS PHONE: 7037133335 MAIL ADDRESS: STREET 1: 13515 DULLES TECHNOLOGY DRIVE CITY: HERNDON STATE: VA ZIP: 22071 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL TRAINING CORP DATE OF NAME CHANGE: 19920703 8-K 1 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) 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 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 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 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 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 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) 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 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 EX-2.1 2 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 EX-2.2 3 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 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. 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 -------------------------------- 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. 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 EX-2.3 4 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. 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 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 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 robbie@coxhanson.ca 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 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 NET LEASE (TOWER 1) BETWEEN PURDY'S WHARF DEVELOPMENT LIMITED as Landlord AND MENTOR NETWORKS INC. as Tenant Dated: ___________________, 1997 02/97 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 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 ii 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 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 iv 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 v 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 vi 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; 1 (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. 2 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. 3 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. 4 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 5 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. 6 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, 7 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 8 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 9 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: 10 (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. 11 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 12 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., 13 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. 14 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. 15 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 16 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, 17 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. 18 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. 19 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. 20 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. 21 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 22 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, 23 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. 24 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 25 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; 27 (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 28 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 29 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 30 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 31 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. 32 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. 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 34 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. 35 (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 36 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 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 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. 39 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 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. 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: 2 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 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 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 THE above described Parcel - A being part of Block 3 and Spatial Element SE-3A as shown on the above referred to plan. 6 SCHEDULE "B" PURDY'S WHARF DEVELOPMENT HALIFAX, NOVA SCOTIA GRAPH TOWER 1 6th FLOOR PLAN 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 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. 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 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; 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 (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 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 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 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 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 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
WORK ORDER # DATE REQUEST LIGHTS MATERIAL UNIT COST COST 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 -----
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 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 EX-2.4 5 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. 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 ) ------------------------------- 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 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 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; 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 ) ---------------------------------- 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) 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 EX-2.5 6 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; 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 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 ------------------------------- 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 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 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 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. 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 -------------------------------- 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 EX-2.6 7 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 ------------------------------- 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 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 EX-2.7 8 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 ---------------------------- 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. 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. 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; 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. 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 EX-2.8 9 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 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 (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 -------------------- EX-2.9 10 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. 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 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 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 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 (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 (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 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 (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 (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 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 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 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 EX-2.10 11 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; (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 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 EX-2.11 12 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"); (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 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 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; 4 (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; 5 (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. 6 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 7 (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 (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; 9 (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. 10 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 11 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. 12 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 ------------------- EX-2.12 13 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. (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. 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: ____________________________ -------------------------------------------------------- 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 EX-2.13 14 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 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: ________________________ 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 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 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: ____________________________ 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 EX-2.14 15 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 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. 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. 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: ___________________________ ) ) -------------------------------------------------- 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 EX-2.15 16 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. 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 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 (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 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 (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 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 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 ) --------------------------- EX-99.1 17 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 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. # # # -----END PRIVACY-ENHANCED MESSAGE-----