exhibit (e) (7)
PLEDGE AGREEMENT
Montreal, November 30, 2001
BY: ALPNET, INC. (the "PLEDGOR")
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IN FAVOUR OF: ARCTIC INC. (the "LENDER")
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1. DEFINITIONS
Unless it is otherwise apparent from or inconsistent with the context,
certain words and expressions in this Agreement which employ first capitals and
which are not otherwise defined in the text itself, have the meaning ascribed
thereto in Schedule I.
2. OBLIGATIONS SECURED
The Pledgor hereby acknowledges having executed a Secured Convertible
Promissory Note in favour of the Lender dated even date hereof under the terms
of which Pledgor has obligated itself towards the Lender and the Pledgor has
agreed to secure its said obligations towards the Lender by way of the present
hypothec. In this Agreement, the term "SECURED NOTE" means, collectively, the
said Secured Convertible Promissory Note as the same may be amended, extended,
renewed or restated from time to time, and the word "OBLIGATIONS" means all
present and future obligations, debts and liabilities, in principal, interest or
otherwise, of the Pledgor to the Lender under the said Secured Note.
3. HYPOTHEC
As security for the full and final satisfaction of the Obligations and
of the expenses, if any, incurred by the Lender to obtain satisfaction of the
Obligations or to conserve the Pledged Property, the Pledgor hereby hypothecates
with delivery to and in favour of the Lender to the extent of the sum of
$4,000,000 in lawful money of Canada, with interest thereon at the rate of 25%
per annum, the Pledged Property.
4. DECLARATION OF THE PLEDGOR
4.1 The Pledgor hereby declares and represents that it alone holds the
right of ownership in all of the Pledged Property, and the latter is free and
clear of any Encumbrances except only for those in favour of the Lender or which
the Lender has expressly permitted in writing.
4.2 The Pledgor has full legal capacity and authority to grant this
hypothec, and nothing herein constitutes a conflict, a breach or a default under
any other contract or agreement evidencing or securing other obligations of the
Pledgor.
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4.3 The Pledgor is a corporation duly constituted and in good standing with
respect to the filing of such returns and documents as are required to be filed
from time to time under the laws of its constating jurisdiction, the hypothec
hereby created has been duly authorized by resolution or other internal action
of the Pledgor as may be needed to make it a legal, binding and enforceable
obligation of the Pledgor, and the person who has signed this Agreement on
behalf of the Pledgor has been duly authorized to do so.
5. COVENANTS OF THE PLEDGOR
The Pledgor hereby undertakes and covenants to:
5.1 Advise the Lender forthwith upon the occurrence of any change in any
declaration and representation made by the Pledgor in Section 4 above.
5.2 Maintain the Pledged Property entirely free and clear of Encumbrances
other than those in favour of the Lender or which the Lender has expressly
permitted in writing.
5.3 Pay or reimburse to the Lender on demand all appraisals and legal fees
and all other amounts for which the Pledgor is responsible but which the Lender
has had or has elected to pay in order to preserve the integrity of its security
(including in particular all reasonable judicial and extra-judicial fees and
expenses incurred by the Lender for the recovery of its claim and the
enforcement of its rights hereunder). All such amounts, when paid by the Lender,
shall be added to the Obligations hereby secured and shall bear interest at the
annual rate of 15% until fully paid.
5.4 Not to consent to the issuance of any shares by Alpnet Canada Inc.
6. DEALING WITH THE PLEDGED PROPERTY
6.1 All securities or other property hereafter issued by the issuer of the
Pledged Property or by any other person in respect of the Pledged Property as a
result of any dividend in kind, conversion, stock split, merger or other change
affecting the Pledged Property, and all moneys or property distributed thereon
by way of return of capital, shall become part of the Pledged Property and shall
be delivered to and be held by the Lender pursuant to this Agreement in the same
manner as the original securities hypothecated hereunder.
6.2 Until the security hereby constituted has become enforceable:
(a) all cash dividends, interest and other amounts attributable to the
Pledged Property (other than by way of return of capital) shall be
payable directly to the Pledgor or if paid to the Lender, shall be
remitted by it to the Pledgor on demand; and
(b) the Pledgor shall continue to exercise all voting rights, if any,
attaching to the Pledged Property; provided that if the Pledged
Property is registered in the name of the Lender or its nominee,
nothing herein or in any law shall constitute an obligation on the part
of the Lender to execute and deliver any proxy or other document
enabling the Pledgor to exercise such voting rights if, in the
reasonable opinion of the Lender acting in good faith, the exercise of
such voting rights by the Pledgor would substantially reduce the
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value of the Pledged Property or otherwise jeopardize the security
hereby constituted. In executing and delivering or refusing to execute
and deliver any such proxy or other document, the Lender shall not in
any way be responsible for any loss or damages, direct or indirect,
which may be suffered by the Pledgor, the issuer of the Pledged
Property or any other person except as a result of its own intentional
or gross fault.
7. EVENTS OF DEFAULT
The hypothecary rights hereby constituted shall become enforceable upon
the occurrence of any of the following events:
7.1 If the Pledgor fails to satisfy all or any part of the Obligations when
due or payable;
7.2 If the Pledgor becomes subject to the provisions of the Bankruptcy and
Insolvency Act (Canada) or of any other bankruptcy, insolvency or winding-up
legislation;
7.3 If the declaration and representation of the Pledgor set forth in
Section 4 hereof or otherwise made by Pledgor in connection with the Guarantee
is incorrect or misleading in any material respect; or
7.4 If the Pledgor defaults in the performance of any of its other
obligations hereunder and fails to remedy such default to the reasonable
satisfaction of the Lender within 10 days following written notice of such
default from the Lender.
8. EXERCISE OF HYPOTHECARY RIGHTS
8.1 Upon the occurrence of an Event of Default, the Pledgor immediately
loses the benefit of the term inasmuch as it could claim any such benefit, and
the Lender may also demand from the Pledgor the immediate satisfaction of the
Obligations or any part thereof and, failing satisfaction there within the
specified period, the Lender may proceed to realize upon the Pledged Property.
8.2 The Lender shall not be bound to exercise the same hypothecary rights
against all of the Pledged Property. Whatever hypothecary rights the Lender
elects to exercise, the following provisions shall apply:
(a) The Lender shall have the right, at the expense of the Pledgor and in
order to conserve or realize upon the Pledged Property:
(i) to dispose of the Pledged Property which may perish,
deteriorate or devaluate rapidly;
(ii) to use any information obtained by reason of the exercise of
its rights;
(iii) to perform any obligation or covenant of the Pledgor; and
(iv) to exercise any right (including any voting right) with
respect to the Pledged Property.
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(b) The Lender shall not be bound to make an inventory, to take out
insurance or to furnish any security.
(c) The Lender may acquire directly or indirectly any of the Pledged
Property.
(d) The Lender may from time to time in the course of the exercise of its
rights, renounce, with or without consideration, any right of the
Pledgor.
(e) The Lender shall not be bound to make the Pledged Property productive
or to conserve the same.
(f) Should the Lender at any time abandon the exercise of its rights,
hypothecary or otherwise, against the Pledged Property, the Lender may
elect, at its option, to return to the Pledgor without any
representation or warranty, the Pledged Property which the Pledgor had
surrendered to the Lender, or the remainder thereof if any, the whole
without prejudice to its other rights and recourses.
(g) The Lender shall be deemed to have acted in the best interest of the
Pledgor and its successors if the Lender has acted in good faith.
8.3 Where the Lender exercises a right of taking in payment and the
Pledgor, inasmuch as it has the right to do so, requires that the Lender sell
the Pledged Property upon which such recourse was exercised, the Pledgor
acknowledges that the Lender shall not be bound to abandon the right of taking
in payment unless the Lender has obtained, before the end of the period allowed
for surrender, (i) a satisfactory security guaranteeing that the sale will be
made at a sufficiently high price to enable the Lender's claim to be paid in
full, (ii) the full reimbursement of all costs thus incurred by it, and (iii) an
advance of the funds needed for the sale of the said properties.
8.4 If the Lender itself sells the Pledged Property, it shall not be
required to obtain any prior appraisal thereof.
8.5 The sale by the Lender of the Pledged Property may be concluded by the
Lender without legal warranty or, at its option, without any warranty
whatsoever.
9. ACQUITTANCE, REDUCTION AND CANCELLATION
The Lender may unilaterally at its entire discretion grant an
acquittance and consent to the reduction or cancellation of the hypothecary
rights hereby constituted. However, the Lender shall not be bound to consent to
any such reduction or cancellation unless and until it has received the full and
final satisfaction of all obligations hereby secured and there is no outstanding
commitment on the part of the Lender to advance further sums or extend further
credits to the Pledgor. Any such reduction or cancellation shall be at the
expense of the Pledgor.
10. GENERAL PROVISIONS
10.1 This Agreement does not operate novation and the hypothec hereby
constituted shall be in addition to any other guarantee or security which the
Lender may have from time to time.
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10.2 The Lender may waive any covenant in its favour and any Event of
Default. The Lender may also grant extensions, take and give up security, accept
arrangements and otherwise deal with the Pledgor or with any other party as the
Lender may see fit, the whole without prejudice to the Obligations or to any
other right of the Lender hereunder or otherwise. No failure or delay on the
part of the Lender in exercising any right hereunder shall operate as a waiver
thereof nor shall any waiver be effective unless the same be in writing.
10.3 The Pledgor shall be "en demeure" by the mere lapse of time, or may be
put "en demeure" by any other method provided by law.
10.4 This hypothec is a continuous security which will subsist
notwithstanding any fluctuation of the amounts hereby secured. The Pledgor shall
be deemed to obligate itself again as provided in Article 2797 of the Civil Code
with respect to any future obligation hereby secured.
10.5 The Lender shall have the right, at the expense of the Pledgor, to
perform all acts and things and to execute all documents as may be necessary to
ensure that this hypothec remains effective and opposable to third parties,
including the execution and filing of any forms required for the renewal hereof
from time to time.
10.6 Any amount received by the Lender in the exercise of its rights
hereunder or under any law may, at its option, be retained by it as part of the
Pledged Property, or may be applied by it towards the partial satisfaction of
the Obligations, even if not yet exigible, as the Lender shall alone determine
notwithstanding the rules governing the application of payments.
10.7 The Lender is not bound by any degree of care beyond a reasonable
diligence in the exercise of its rights or in the performance of its duties, and
it shall not be liable for any loss or damage resulting therefrom except as a
result of its own intentional or gross fault.
10.8 The Lender may delegate to any other person the exercise of its rights
or the performance of its duties hereunder and may provide such agents or
mandataries with any information that the Lender may possess with respect to the
Pledgor or the Pledged Property.
10.9 The Lender and each of its officers are hereby irrevocably authorized
and empowered to complete the blanks in any transfer form or power of attorney
of any certificate representing the Pledged Property with such names and dates
and in such manner as the Lender or any such officer may deem advisable, and to
deal with and deliver the same in the manner herein provided. Such rights of the
Lender shall survive and have effect notwithstanding the dissolution of the
Pledgor or the appointment of any trustee or receiver to its assets.
10.10 The property or sums of money received or held by the Lender by reason
of these presents may be invested by the Lender in such manner as it shall deem
appropriate without regard to rules governing the administration of the property
of others.
10.11 Every divisible obligation in favour of the Lender arising out of this
Agreement must be performed in its entirety, as if it were indivisible, by each
heir or legal representative of any person who shall have been bound therefor.
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10.12 The Pledgor shall continue to be bound by all the obligations expressed
herein notwithstanding any transfer of the Pledged Property or any part thereof.
10.13 Upon indefeasible satisfaction of the Obligations in full, the Lender
shall remit the Pledged Property to the Pledgor.
10.14 Except as may be otherwise apparent from the context, the word
"PLEDGOR" shall be interpreted as referring to the Pledgor itself and to all
subsequent owners of the Pledged Property as well as to any other person or
persons having assumed the Pledgor's liabilities to the Lender.
10.15 Unless there is something in the context inconsistent therewith, words
importing the singular shall include the plural and vice-versa, and words
importing the neuter gender shall include the masculine and feminine genders and
vice-versa.
10.16 This Agreement need not be signed for acceptance by the Lender in order
to be binding on the Pledgor. Such acceptance by the Lender shall be presumed
and cannot be disputed by the Pledgor.
10.17 THE PLEDGOR ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT, THAT IT HAS
RECEIVED ADEQUATE EXPLANATION OF THE NATURE AND SCOPE OF ITS OBLIGATIONS
HEREUNDER AND THAT IT IS SATISFIED THEREWITH.
10.18 This Agreement is governed by, and shall be construed and interpreted
under, the laws of the Province of Quebec and the federal laws of Canada
applicable therein.
10.19 The parties confirm their express wish that this Agreement and all
documents related thereto be drawn up in English. Les parties confirment leur
volonte expresse de voir le present contrat et tous les documents s'y rattachant
etre rediges en anglais.
Done and passed as of the date hereinabove first mentioned.
ALPNET, INC.
per: /s/ Xxxx X. Xxxxxxx
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Duly authorized representative
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SCHEDULE I
CERTAIN DEFINITIONS
"CIVIL CODE" or the abbreviation "C.C.Q" means the Civil Code of Quebec.
"CONVENTIONAL SECURITY" means a conventional hypothec, a resolutory right, a
right of redemption, a reservation of ownership, a trust and any security device
or other real right, whether or not capable of registration, granted by
agreement for the purpose of securing the performance of an obligation.
"ENCUMBRANCE" means a legal cause of preference, a dismemberment of the right of
ownership, a special mode of ownership, a restriction on the right to dispose
and a Conventional Security.
"EVENT OF DEFAULT" means any of the events described in Section 7 hereof.
"PLEDGED PROPERTY" means the movable property listed in Appendix A hereof (as
amended or supplemented from time to time), and all substitutions and
replacements thereof and increases, additions and accessions thereto, and all
proceeds in any form derived directly or indirectly from any dealing with any of
the foregoing or the proceeds therefrom.
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APPENDIX A
DESCRIPTION OF THE PLEDGED PROPERTY
100 common shares of Automated Language Processing Systems Ltd. evidenced by
share certificate C-2, which has been remitted and delivered to the Lender.
1,924,825 preferred shares of Automated Language Processing Systems Ltd.
evidenced by share certificate P-2, which has been remitted and delivered to the
Lender.
1,455,050 second preferred shares of Alpnet Canada Inc. evidenced by share
certificate SP-2, which has been remitted and delivered to the Lender.
