UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): June 30, 2015
iWallet Corporation
(Exact name of small business issuer
as specified in its charter)
| Nevada |
27-1830013 |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
| 7394 Trade Street, San Diego, California 92121 |
| (Address of principal executive offices) |
| 1-800-508-5042 |
| (Issuer’s telephone number) |
|
_____________________________________________________
(Former name or former address, if changed
since last report) |
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
[ ] Written communications pursuant to
Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 3 – Securities and Trading
Markets
Item 3.02. Unregistered Sales of Equity Securities
On June 30, 2015, we approved an issuance of Secured Convertible
Debentures (the “Debentures”) totaling $120,000 to a total of four (4) investors, including one affiliate who subscribed
for a $50,000 Debenture. The sale of these debentures was a follow-on offering to the $372,500 in Debentures we issued on May 7,
2015. The terms of the Debentures issued in this offering are identical to those of the Debentures issued on May 7, 2015. The Debentures
bear interest at a rate of eight percent (8%) per year, with interest payments due semi-annually beginning on October 31, 2015.
The Debentures mature on April 30, 2017. The Debentures are convertible at any time, in whole, to shares of our common stock at
a conversion price of $0.15 per share. The conversion price is subject to adjustment for stock splits, stock dividends, and other
capital reorganizations. Under the terms of the Debentures, we may not pay dividends or incur aggregate additional indebtedness
in excess of $50,000 without the consent of the Debenture holders. The Debentures are secured by a security interest in substantially
all of our assets, including our intellectual property. The form of the Debentures is filed herewith as Exhibit 10.1 and should
be reviewed in its entirety for additional information.
Our offer and sale of the Debentures was exempt from registration
under Rule 903 of Regulation S. The Debentures were offered solely to residents of Canada and all sales were made to buyers located
in Canada. No directed selling efforts were made in the United States by us, a distributor, or any of our respective affiliates
or anyone acting on their behalf. In Canada, the offer and sale of the Debentures was exempt from registration under National Instrument
45-106 and was made solely to accredited investors as defined thereunder.
Section 9 – Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits
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.
iWallet Corporation
/s/ Jack Chadsey
Jack Chadsey
Chief Executive Officer
Date: July 13, 2015
UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS DEBENTURE MUST NOT TRADE THE DEBENTURE BEFORE THE DATE THAT IS 4 MONTHS
AND A DAY AFTER THE LATER OF (I) <INSERT CLOSING DATE> AND (II) THE DATE
THE CORPORATION BECOMES A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY
THE
SECURITIES REPRESENTED BY THIS DEBENTURE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN ACCORDANCE WITH SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS.
SECURED
CONVERTIBLE DEBENTURE
| Principal Amount: US <INSERT AMOUNT> |
Maturity Date: April 30, 2017 |
1.
Promise to Pay. FOR VALUE RECEIVED, the undersigned, iWallet Corporation (the “Company”)
promises to pay to or to the order of <INSERT NAME AND ADDRESS> (the “Holder”), or such other place and/or
person as the Holder may by notice in writing to the Company direct, the principal amount of <INSERT AMOUNT> in lawful money
of the United States of America (the “Principal Amount”), together with all other moneys which may from time
to time be owing hereunder or pursuant hereto, as hereinafter provided on and subject to the following terms and conditions:
2. Definitions.
As used herein, the following terms shall have the following respective meanings, unless the context otherwise requires:
“Business
Day” means any day except Saturday, Sunday or any other day on which chartered banks in the City of Toronto are generally
not open for business.
“Capital
Reorganization” has the meaning ascribed thereto in Section 8 hereof.
“Common
Shares” means the common shares in the capital of the Company as such shares exist at the close of business on the date
of execution and delivery of this Debenture; provided that in the event of a change, subdivision, reclassification or consolidation
thereof or successive changes, subdivisions, reclassifications or consolidations, then, subject to adjustments, if any, having
been made in accordance with Section 6, “Common Shares” shall thereafter mean the shares resulting from such change,
subdivision, reclassification or consolidation.
“Common
Share Reorganization” has the meaning ascribed thereto in Section 8 hereof.
“Company”
means iWallet Corporation, a corporation incorporated under the laws of the State of California.
“Conversion
Date” means the date on which this Debenture is surrendered for conversion.
“Conversion
Price” means USD$0.15 per Common Share.
“Debenture”
means this convertible debenture as it may be amended or supplemented from time to time.
“Encumbrance”
means any mortgage, charge, hypothec, pledge, security interest, encumbrance, lien or deposit arrangement or any other arrangement
or condition that in substance secures the payment of any indebtedness or liability or the observance or performance of any obligation,
regardless of form and whether consensual or arising from law, statutory or otherwise;
“Event
of Default” means any one or more of the events described in Section 15 hereof.
“Holder”
means the holder of this Debenture specified on the cover page of the Debenture, and “Holders” mean the
holder of all Debentures issued pursuant to an agency agreement between the Company and the First Republic Capital Corporation,
dated <INSERT CLOSING DATE>.
“Intellectual
Property Rights” means the intellectual property set out in Schedule C.
“Maturity
Date” means April 30, 2017.
“Official
Body” means any government or political subdivision or any agency, authority, bureau, central bank, commission, department
or instrumentality of either, or any court, tribunal, grand jury or arbitrator, whether foreign or domestic;
“Person”
includes an individual, a trust, a partnership, a body corporate or politic, a syndicate, a joint venture, a company, an association
and any other form of incorporated or unincorporated organization or entity.
“Permitted
Encumbrances” means collectively:
(a) liens
for taxes, assessments and governmental charges not yet due or, if due, the validity of which is being diligently contested in
good faith and by appropriate proceedings and in respect of which adequate provision has been made on the books of the Company;
(b) mechanics',
workers', repairers' or other like possessory liens in respect of any personal property, arising in the ordinary course of business
for amounts the payment of which is either not yet due or, if due, representing, in the aggregate, less than Ten Thousand Dollars
($10,000) or, if greater than such amount, the validity of
which
is being contested in good faith and by appropriate proceedings and in respect of which adequate provision has been made on the
books of the Company;
(c) liens
arising out of judgments or awards representing, in the aggregate, less than Ten Thousand Dollars ($10,000) or, if greater than
such amount, with respect to which at any time an appeal or proceeding for review is being prosecuted in good faith and by appropriate
proceedings and in respect of which adequate provision has been made on the books of the Company, and with respect to which there
shall have been secured a stay of execution pending such appeal or proceeding for review;
(d) servitudes,
easements, restrictions, rights-of-way and other similar rights in real or immovable property or any interest therein which will
not in the aggregate materially impair any Encumbrance on such property in favour of the Holder or the value or use of such property;
(e) the
liens resulting from the deposits of cash or securities in connection with contracts, tenders or compensation, surety or appeal
bonds or costs of litigation when required by law;
(f) liens
given to a public utility or any municipality or governmental or other public authority when required to obtain the services of
such utility or other authority in connection with the operations of the Company in the ordinary course of its business;
(g) purchase
money security interests and capital leases entered into by the Company in the ordinary course of business; and
| (h) | the
Encumbrances set out on Schedule B
or the continued existence of which have been consented
to by the Holder, including the renewal, extension or refinancing of any such Encumbrance
and of the Debt secured thereby upon the same property provided that such Debt and the
security therefor are not increased thereby. |
“Pledged
Assets” has the meaning attributed thereto in Section 13.
“Principal
Amount” has the meaning ascribed thereto in Section 1 hereof.
“Special
Distribution” has the meaning ascribed thereto in Section 8 hereof.
3. Interest.
Interest shall accrue on any Principal Amount outstanding hereunder at 8% per annum, payable semi-annually, with the first
payment on October 31, 2015.
4. Payment.
Except for any Principal Amount converted into Common Shares in accordance with Section 5 or Section 6 hereof, the Company
shall pay in full the Principal Amount outstanding as of the Maturity Date, on the Maturity Date.
5.
Conversion at Option of Holder
1. The
Holder shall have the right at any time to require the conversion of this Debenture, in whole, including any accrued interest,
into fully paid and non-assessable Common Shares of the Company at the Conversion Price.
2.
To exercise its right to require the conversion of this Debenture pursuant to section 5 hereof, the Holder shall provide the Company
with written notice specifying the effective date of the conversion, the applicable Conversion Price and the number of Common
Shares issuable on the conversion, in the form attached hereto as Exhibit “A”, and the Holder shall surrender this
Debenture to the Company for conversion. As soon as practicable after the receipt of this Debenture, the Company shall issue Common
Shares to the Holder in accordance with section 8 hereof.
6. Regulatory
Approval. The conversion of any Principal Amount or accrued interest owing under this Debenture shall be conditional
upon the Company obtaining all necessary regulatory approvals required in connection therewith.
7. Issue
of Common Shares Upon Conversion.
| (a) | Issue
of Common Shares. Upon conversion of this Debenture in accordance with the terms
hereof, the Company shall issue to the Holder, or to its written order, certificates
representing such number of Common Shares as are issuable in accordance with the provisions
hereof. The Principal Amount of this Debenture shall be deemed to be repaid in full by
the issuance of the Common Shares. |
| (b) | Reservation
of Common Shares. The Company shall at all times so long as any portion of this Debenture
remains outstanding ensure that there remains available out of its authorized but unissued
Common Shares, for the purpose of effecting the conversion of this Debenture, such number
of Common Shares as shall from time to time be sufficient to effect the conversion of
this Debenture. The Company covenants that all Common Shares which shall be issued on
conversion of this Debenture, shall be duly and validly issued as fully paid and non-assessable
shares. As a condition precedent to the taking of any action which would result in an
adjustment to the Conversion Price, the Company shall take any corporate action which
may be necessary in order that the securities to which the Holder is entitled on the
full exercise of its conversion rights in accordance with the provisions hereof shall
be available for such purpose and that such shares may be validly and legally issued
as fully paid and non-assessable shares. |
| (a) | No
Requirement to Issue Fractional Shares. No fractional Common Share or scrip representing
fractional shares shall be issued upon the conversion of this Debenture. If any fractional
interest in a Common Share would, except for the provisions of this Section, be deliverable
upon conversion, the Company shall pay to the Holder an amount in cash equal (to the
nearest cent) to the appropriate fraction of the Conversion Price. |
| (b) | Fully
Paid Shares. The Company covenants that all Common Shares which shall be issued in
accordance with the terms of this Debenture shall be duly and validly issued as fully
paid and non-assessable shares. |
8. Anti-Dilution
Provisions
| (a) | Adjustment
to Conversion Price. The Conversion Price in effect at any date shall be subject
to adjustment from time to time as follows: |
(i) If and whenever at any time while any
portion of this Debenture remains outstanding the Company shall (i) subdivide its then outstanding Common Shares into a greater
number of Common Shares, (ii) consolidate its then outstanding Common Shares into a lesser number of Common Shares, or (iii) issue
Common Shares (or securities exchangeable for or convertible into Common Shares) to the holders of all or substantially all of
the outstanding Common Shares by way of stock dividend (any of such events in these clauses (i), (ii) and (iii) being called a
“Common Share Reorganization”), then the Conversion Price shall be adjusted effective immediately on the effective
date of the event in (i) or (ii) above or the record date at which the holders of Common Shares are determined for the purposes
of any such dividend or distribution in (iii) above, as the case may be, by multiplying the Conversion Price in effect immediately
prior to such effective date or record date, as the case may be, by a fraction, the numerator of which shall be the number of
outstanding Common Shares on such effective date or record date, as the case may be, before giving effect to such Common Share
Reorganization and the denominator of which shall be the number of outstanding Common Shares after giving effect to such Common
Share Reorganization including, in the case where securities exchangeable for or convertible into Common Shares are distributed,
the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares.
Such adjustment shall be made successively whenever any such effective date or record date shall occur; and any such issue of
Common Shares by way of stock dividend or other distribution shall be deemed to have been made on the record date for the stock
dividend or other distribution for the purpose of calculating the number of outstanding Common Shares under this Section 9.
(ii) If and whenever at any time while any
portion of this Debenture is outstanding the Company distributes to all or substantially all the holders of its outstanding Common
Shares of (i) shares of any class other than Common Shares, (ii) rights, options or warrants to acquire Common Shares or securities
exchangeable for or convertible into Common Shares or property or other assets of the Company, (iii) evidence of indebtedness,
or (iv) any property or other assets, if such distribution
does
not constitute (a) a dividend paid in the ordinary course, (b) a Common Share Reorganization, or (c) a rights offering (any of
such non-excluded events herein called a “Special Distribution”), the Conversion Price shall be adjusted
effective immediately after the record date at which holders of Common Shares are determined for purposes of the Special Distribution
to be a price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the numerator
shall be the number of Common Shares outstanding on such record date multiplied by the Conversion Price on such record date, less
the fair market value of such shares, rights, options, warrants, evidences of indebtedness or property or other assets issued
or distributed (as determined conclusively by the auditors of the Company), and of which the denominator shall be the number of
Common Shares outstanding on such record date multiplied by such Conversion Price; any Common Shares owned by or held for the
account of the Company or any subsidiary thereof shall be deemed not to be outstanding for the purpose of any such computation.
(iii) If and whenever at any time while any
portion of this Debenture is outstanding there is a capital reorganization of the Company or a reclassification of the Common
Shares or other change of the Common Shares (other than a Common Share Reorganization) or a consolidation or an amalgamation or
merger of the Company with or into any other corporation (other than a consolidation, amalgamation or merger which does not result
in a reclassification of the outstanding Common Shares or a change of the Common Shares into other securities), or a transfer
of all or substantially all of the undertaking or assets of the Company to another corporation or other entity in which the holders
of Common Shares are entitled to receive shares or other securities or property (any of such events being a “Capital
Reorganization”), the Holder thereafter shall, upon converting this Debenture, be entitled to receive, and shall accept,
in lieu of the number of Common Shares to which it was theretofore entitled upon such conversion, the kind and amount of shares
and other securities or property which the Holder would have been entitled to receive as a result of such Capital Reorganization,
on the effective date thereof, the Holder had been the registered holder of the number of Common Shares to which it was theretofore
entitled upon conversion.
(iv) There will be no adjustment of the Conversion
Price in respect of any event described in clause (i) (ii) or (iii) of this subsection 9(a) if the Holder is entitled to participate
in such event on the same terms mutatis mutandis as if it had converted its Debenture prior to or on the applicable record
date.
(v) In any case in which this subsection 9(a)
shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Company
may defer, until the occurrence of such event, issuing to the Holder in the event this Debenture is converted after such record
date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment
required by such event before giving effect to such adjustment; provided, however, that the Company shall deliver to the Holder
an appropriate instrument evidencing the Holder’ right to receive such additional Common Shares upon the occurrence of the
event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour
of holders of record of Common Shares on and after the Conversion Date or such later date as the Holder would, but for the provisions
of this clause (vi), have become the Holder of record of such additional Common Shares.
(vi) The adjustments provided for in this
subsection 9(a) are cumulative, shall be computed to the nearest one tenth of one cent and shall be made successively whenever
an event referred to therein shall occur, provided, that, notwithstanding any other provision of this subsection 9(a), no adjustment
of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion
Price then in effect; provided however, that any adjustments which by reason of this clause (vii) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
(vii) No adjustment of the Conversion Price
shall be made pursuant to this subsection 9(a) in respect of the issue from time to time of Common Shares pursuant to this Debenture
or pursuant to any stock option or stock purchase plan(s) in force from time to time for officers, employees or consultants of
the Company or shareholders of the Company who exercise an option to receive substantially equivalent dividends in Common Shares
in lieu of receiving a cash dividend paid in the ordinary course, and any such issue shall be deemed not to be a Common Share
Reorganization.
(viii) In the event of any question arising
with respect to the adjustments provided in this subsection 9(a), such question shall be conclusively determined by a firm of
chartered accountants acceptable to the Company and the Holder. Such accountants shall have access to all necessary records of
the Company and such determination shall be binding upon the Company and the Holder.
| (b) | Notice
of Adjustment of Conversion Price, etc.. If there shall be any adjustment as provided
in subsection 9(a) above, the Company shall forthwith cause written notice thereof to
be sent to the Holder, which notice shall be accompanied by a |
certificate
of the President of the Company setting forth in reasonable detail the basis of such adjustment.
(c) Notice
of Certain Events. In the event that:
(ix) the Company shall declare on its Common
Shares any dividend or make any other distribution on its Common Shares;
(x) there shall be an amalgamation or merger
of the Company with or into any other corporation or a sale, transfer or other disposition of all or substantially all of the
assets of the Company; or
(xi) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then,
and in each of such cases, the Company shall cause notice thereof to be given to the Holder at least 10 Business Days prior to
the date on which the books of the Company shall close or a record date shall be taken for such dividend, distribution, stock
split or combination or issue of rights or to vote upon such capital reorganization, reclassification, change, consolidation,
merger or sale of properties and assets, as the case may be, and shall specify such record date or dates for the closing of the
transfer books.
9. Representations
and Warranties. The Company represents and warrants to the Holder as follows:
| (a) | it
has been incorporated and is validly subsisting as a corporation under the laws of the
State of California, and has the power and authority to enter into and perform its obligations
under this Debenture and to own its property and carry on its business as currently conducted; |
| (b) | the
execution, delivery and performance of this Debenture has been duly authorized by all
requisite corporate action; this Debenture and all instruments and agreements delivered
pursuant hereto have been duly executed and delivered by the Company and constitute valid
and binding obligations of the Company enforceable against the Company in accordance
with their terms; |
| (c) | neither
the execution nor delivery of this Debenture or any agreements or instruments delivered
pursuant hereto, the consummation of the transactions herein and therein contemplated,
nor compliance with the terms, conditions and provisions hereof or thereof conflicts
with or will conflict with, or results or will result in any material breach of, or constitutes
a default under any of the provisions of the constating documents or by-laws of the Company
any law, rule or regulation having the force of law applicable to the Company, including
applicable securities laws, rules, policies and regulations or any contract or agreement
binding upon or to which the Company is a party; |
| (d) | no
event has occurred which constitutes, or with notice or lapse of time or both, would
constitute an Event of Default; |
(e) the
execution and delivery of this Debenture by the Company and the performance by the Company of its obligations hereunder have been
duly authorized by all necessary corporate action; no consent, approval, order, authorization, licence, exemption or designation
of or by any Official Body is required in connection with the execution, delivery and performance by the Company of its obligations
under this Debenture and no registration, qualification, designation, declaration of filing with any Official Body is or was necessary
to enable or empower the Company to enter into and to perform its obligations under this Debenture except such as have been made
or obtained and are in full force and effect, unamended, on the Closing Date;
(f) the
Company is the sole and beneficial owner of all of the Pledged Assets (except any leased assets) and, where applicable, are duly
registered as the owner thereof, with a good and marketable title thereto, free and clear of all Encumbrances except for Permitted
Encumbrances;
(g) there
are no actions, suits, grievances or proceedings threatened or taken before or by any Official Body or by any elected or appointed
public official or private person, which challenges the validity or propriety of the transactions contemplated under this Debenture
or any of the documents, instruments and agreements executed or delivered in connection therewith or related thereto which could
be reasonably anticipated to have a material adverse effect on the business, operations, properties, assets, capitalization, financial
condition or prospects of the Company;
| (h) | the
Company is not in default under any material applicable statute, rule, order, decree
or regulation of any Official Body having jurisdiction over it or any of the Pledged
Assets; and |
| (i) | to
the best of the knowledge of the Company, the Company has complied and is complying in
all material respects with all federal, provincial and local laws, rules, regulations,
notices, approvals, ordinances and orders applicable to its business, property, assets
and operations. |
10. Survival
of Representations and Warranties. The representations and warranties herein set forth or contained in any certificates
or documents delivered to the Holder shall survive the execution and delivery of this Debenture until all obligations of the Company
to the Holder Party herein have been fully satisfied, which, for greater certainty, shall include, without limitation, the conversion
of this Debenture pursuant to the terms hereof.
11. Affirmative
Covenants. The Company covenants and agrees with the Holder that, so long as this Debenture is outstanding and in force
and except as otherwise permitted by the prior written consent of the Holder, it will:
| (a) | do
or cause to be done all things necessary to keep in full force and effect its corporate
existence and all qualifications to carry on its business in each jurisdiction in which
it owns property or carries on business from time to time; |
| (b) | comply
with all applicable governmental laws, restrictions and regulations and orders; |
| (c) | pay
or cause to be paid all taxes, government fees and dues levied, assessed or imposed upon
it and its property or any part thereof, as and when the same become due and payable,
unless any such taxes, fees, dues, levies, assessments or imposts are in good faith contested
by it; |
| (d) | forthwith
notify the Holder of the occurrence of any Event of Default or any event of which it
is aware which with notice or lapse of time or both would constitute an Event of Default;
and |
| (e) | it
shall duly and pay or cause to be paid to the Holder the Principal Amount and all other
moneys payable on or pursuant to this Debenture on the dates, at the places and in the
manner set forth herein. |
12. Negative
Covenants. The Company covenants and agrees with the Holder that, so long
as this Debenture is outstanding and in force and except as otherwise permitted by the prior written consent of the Holder, it
will not:
| (a) | Encumbrances,
etc. - Create or suffer to exist any Encumbrance to secure or provide for the payment
of any Debt or any other obligation other than Permitted Encumbrances. |
| (b) | Mergers,
etc. - Enter into any transaction (whether by way of reconstruction, reorganization,
arrangement, consolidation, amalgamation, merger, joint venture, transfer, sale, lease
or otherwise) whereby any material part of the Pledged Assets would become the property
of any Person other than the Company or whereby all or any material part of the undertaking,
property and assets would become the property of any Person other than the Company or
in the case of any amalgamation involving the Company would become the property of any
other person other than the Company by virtue of such Person's direct or indirect ownership
interest in the continuing Debtor resulting therefrom. |
| (c) | Sale
of the Company - Enter into any transaction for the Sale of the Company. |
| (d) | Financial
Internal Controls - Signing Officers – The Company will have no less than 3
signing officers with the ability to transfer funds. As a financial internal control
mechanism, any payment amounts of $10,000 or more must be authorized and signed by 2
signing officers. No payee can receive more than $10,000 from the Company in one week
without at least 2 signing officers authority simultaneously. The Company will not change
the signing officers without prior written consent of the Holder. Standard public company
internal control practices of the Company are material factors in the Holder’s
willingness to institute and maintain a lending relationship with the Company. |
| (e) | Dividends,
Etc. – The Company shall not declare nor pay any dividend of any kind, in cash
or in property, nor make
any distribution of any kind in respect thereof, nor make any return of capital to shareholders
without the prior written consent of the Holder. |
| (f) | Guaranties,
Loans - Except in the
ordinary course of business, the Company shall not guarantee nor be liable in any manner,
whether directly or indirectly, or become contingently liable after the date of this
Debenture in connection with the obligations or indebtedness of any person or persons,
except for the endorsement of negotiable instruments payable to the Company for deposit
or collection in the ordinary course of business. The Company shall not make any loan,
advance or extension of credit to any person other than in the normal course of its business. |
| (g) | Debt
- The Company shall
not create, incur, assume or suffer to exist any additional indebtedness of any description
whatsoever in an aggregate amount in excess of $50,000 (excluding any indebtedness of
the Company to the Holder, trade accounts payable and accrued expenses incurred in the
ordinary course of business and the endorsement of negotiable instruments payable to
the Company, respectively for deposit or collection in the ordinary course of business). |
13. Grant
of Mortgages, Charges and Security Interests
13.1 Security
As
security for the due payment of the Principal Amount, interest thereon and all other indebtedness and liability from time to time
payable hereunder and for the fulfillment of its obligations of the Company hereunder, the Company hereby:
(a) mortgages
and charges as and by way of a fixed and specific mortgage and charge to and in favour of the Holder, and grants to the Holder
a security interest in, all real and immoveable property (including, by way of sub-lease) any leased premises now or hereafter
owned or acquired by the Company and all buildings erections, improvements, fixtures and plants now or hereafter owned or acquired
by the Holder (whether the same form part of the realty or not) and all appurtenances to any of the foregoing; for the purposes
of this subsection 13.1(a), all references to "real and immoveable property" shall be read to include any estate or
interest in or right with respect to real and immoveable property;
(b) mortgages
and charges to the Holder and grants to the Holder a security interest in, all its present and future equipment, and all fixtures,
plant, machinery, tools and furniture now or hereafter owned or acquired by them;
(c) mortgages
and charges to and in favour of the Holder, and grants to the Holder a security interest in, all its present and future inventory,
including, without limiting the generality of the foregoing, all raw materials, goods in process, finished goods
and
packaging material and goods acquired or held for sale or furnished or to be furnished under contracts of rental or service;
(d) grants
to the Holder a security interest in, all its present and future intangibles, including, without limiting the generality of the
foregoing, all its present and future book debts, accounts and other amounts receivable, contract rights and chooses in action
of every kind or nature including insurance rights arising from or out of any insurance now or hereafter placed on or in respect
of the assets referred to in subsections 13.1(a), (b) or (c), goodwill, chattel paper, instruments of title, investments, money,
securities and all Intellectual Property Rights;
(e) charges
in favour of the Holder as and by way of a floating charge, and grants to the Holder a security interest in, its business and
undertaking and all of its property and assets, real and personal, moveable or immoveable, of whatsoever nature and kind, both
present and future (other than property and assets hereby validly assigned or subjected to a specific mortgage, charge or security
interest by this subsections 13.1(a), (b), (c) or (d) and subject to the exceptions hereinafter contained);
(f) assigns,
mortgages and charges to and in favour of the Holder, and grants to the Holder a security interest in, the proceeds arising from
any of the assets referred to in this Section 13.1;
(g) grants
to the Holder a security interest in the right, title and interest the Company has to the Intellectual Property Rights;
all
of which present and future property and assets of the Company referred to in the foregoing subparagraphs of this Section 13.1
are hereinafter collectively called the "Pledged Assets".
13.2 The
security interest of all Holders shall rank pari passu with each other. The Company shall cause any party which holds security
or a security interest against the Company to postpone and subordinate in favour of the Holder and all other Holders.
13.3 The
Holder shall have all of the rights and remedies provided by law, including, without limitation, those under the Uniform Commercial
Code (“UCC”). The Company will execute or deliver this Debenture and any other document delivered in connection herewith,
including, without limitation, any UCC Financing Statements required by the Holder to which it is or will be a party, or perform
any of its obligations hereunder.
13.4 Location
of the Pledged Assets
The
Company hereby represents and warrants to the Holder that the Pledged Assets are on the date hereof primarily situate or located
at the locations set out in Schedule A. The Company shall notify the Holder of any other premises where the Pledged Assets are
located. In the event the Pledged Assets are moved, the Company will notify the Holder in writing prior to moving
the
Pledged Assets and providing all details of where the Pledged Assets will be. In no event can the Pledged Assets be moved outside
of the United States of America unless they are sold.
14. Remedies
| (a) | Upon
the occurrence and continuation of an Event of Default which has not been remedied, the
Holder may proceed to realize upon the Security granted hereby and under the Security
and to enforce its rights by: |
(i) entry
or taking into possession of all or any part of the Pledged Assets;
| (ii) | the
appointment by instrument in writing of a receiver or receivers of the Pledged Assets
or any part thereof (which receiver or receivers may be any person or persons, whether
an officer or officers or employee or employees of the Holder or not, and the Holder
may remove any receive or receivers so appointed and appoint another or others in his
or her stead); |
(iii) proceedings
in any court of competent jurisdiction for the appointment of a receiver or receivers or for the sale of the Pledged Assets or
any part thereof;
(iv) any
other action, suit, remedy or proceeding authorized or permitted hereby or by law or by equity;
(v) collecting
any proceeds arising in respect of the Pledged Assets;
(vi) collecting,
realizing upon or selling or otherwise dealing with any accounts of the Company; or
(vii) preparing
for the disposition of the Pledged Assets, whether on the premises of the Company or otherwise.
| (b) | In
addition, the Holder may file such proofs of claim and other documents as may be necessary
or advisable in order to have its claim lodged in any bankruptcy, winding-up or other
judicial proceedings relative to the Company. |
15. Events
of Default and Remedies.
| (a) | Events
of Default. Any one or more of the following events shall constitute an Event
of Default hereunder: |
(i) Default in Principal - If the
Company fails to repay the Principal Amount then outstanding on the Maturity Date.
(ii) Default hereunder - If the
Company materially defaults in the performance or observance of any term, condition or covenant contained in this Debenture and
such default continues for a period of 15 Business
Days
or more after written notice thereof has been delivered by the Holder to the Company.
(iii) Winding-up, etc. - If
an order is made or an effective resolution passed for the winding-up, liquidation or dissolution of the Company.
(iv) Insolvency, etc. - If the
Company consents to or makes a general assignment for the benefit of creditors or makes a proposal under Bankruptcy Act (Canada),
the Companies’ Creditors Arrangement Act (Canada) or any other bankruptcy, insolvency or analogous laws, or is declared
bankrupt, or if a liquidator, trustee in bankruptcy, custodian or receiver and manager or other officer with similar powers is
appointed of the Company or of its property or any part thereof which in the opinion of the Holder, acting reasonably, is a substantial
part thereof and such appointment is not being contested in good faith by the Company.
(v) Encumbrancers - If an encumbrancer
takes possession of the property of the Company or any part thereof which in the opinion of the Holder, acting reasonably, is
a substantial part thereof, or if a distress or execution or any similar process is levied or enforced against such property and
remains unsatisfied for such period as would permit such property or such part thereof to be sold thereunder, provided that such
possession or process has not been stayed and is not being contested in good faith by the Company.
| (b) | Acceleration.
Upon the occurrence of any one or more of the Events of Default, all indebtedness of
the Company to the Holder hereunder shall, at the option of the Holder, immediately become
due and payable without presentment, demand, protest or other notice of any kind, all
of which are expressly waived by the Company, and all collateral and securities shall
thereupon become enforceable by the Holder or its duly authorized agent. |
(c) Remedies
Cumulative. The rights and remedies of the Holder hereunder are cumulative and in addition to and not in substitution
for any rights or remedies provided by law.
16. Further
Assurances. The Company shall from time to time forthwith on the Holder’ request do, make and execute all such further
assignments, documents, acts, matters and things as may be required by the Holder with respect to this Debenture or any part hereof
or thereof or as may be required to give effect to these presents.
17. Dealings
by the Holder. the Holder may grant extensions of time and other indulgences, take and give up securities, accept compositions,
grant releases and discharges and otherwise deal with the Company, debtors of the Company, sureties and others and with the Security
and other securities as the Holder may see fit without prejudice to the liability of the Company hereunder or the Holder’
right to hold and enforce the Security.
18. Notices.
Any notice or communication to be given hereunder may be effectively given by delivering the same at the addresses hereinafter
set forth or by sending the same by facsimile or prepaid registered mail to the parties at such addresses. Any notice so
mailed shall be deemed to have been received on the fifth Business Day next following the mailing thereof provided the postal
service is in operation during such time. Any facsimile notice shall be deemed to have been received on the Business Day
next following the date of transmission. The mailing and facsimile addresses of the parties for the purposes hereof shall
respectively be:
if
the Holder: as set out on the cover page of this Debenture
with
a copy to:
First
Republic Capital Corporation
55
University Avenue, Suite 1003
Toronto,
ON M5J 2H7
Attention:
Richard C. Goldstein, President
if
to the Company:
7968
Arjons Drive
San
Diego, California 92126
Attention:
Jack B. Chadsey, Chief Executive Officer
Either
party may from time to time notify the other party hereto, in accordance with the provisions hereof, of any change of address
which thereafter, until changed by like notice, shall be the address of such party for all purposes of this Agreement.
19. Successors
and Assigns. This Debenture shall be binding upon and shall enure to the benefit of the Company and the Holder and their
respective successors and assigns, provided that the Company shall not assign any of its rights or obligations hereunder without
the prior written consent of the Holder.
20. Governing
Law. This Debenture and all other documents delivered to the Holder hereunder shall be construed and interpreted in accordance
with the laws of Ontario applicable therein. If any provision of this Debenture is invalid, illegal or unenforceable, the balance
of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest
due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically
be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal
of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this debenture, and the Company (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or
impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though
no such law has been enacted. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF
THEM
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
21. Currency.
All dollar amounts herein are expressed in US dollars.
22. Headings.
The headings of the sections of this Debenture are inserted for convenience only and shall not be deemed to constitute a part
hereof.
23. Entire
Agreement. This Debenture constitutes the entire agreement and supercedes all other prior agreements and undertakings,
both written and oral, among the parties with respect of the subject matter hereof.
[signature
appears on the following page]
DATED
as of ______, 2015.
IWALLET
CORPORATION
Per:
Name:
Title:
I
have the authority to bind the Company.
EXHIBIT
“A”
NOTICE
OF CONVERSION
(To
be executed by the Holder in order to convert the Debenture)
To:
The
undersigned hereby irrevocably elects to convert $ of the principal amount of the above Debenture into Common Shares
of iWallet Corporation, according to the conditions stated therein, as of the Conversion Date written below.
| Conversion
Date: |
______________ |
| Amount
to be converted: |
$______________ |
| Amount
of Debenture unconverted: |
$______________ |
| Conversion
Price per Share: |
$______________ |
| Number
of Common Shares to be issued: |
______________ |
|
|
| Please
issue the Common Shares in the following name and to the following address: |
______________ |
| Issue
to: |
______________ |
| Authorized
Signature: |
______________ |
| Name: |
______________ |
| Title: |
______________ |
| Phone
Number: |
______________ |
| Broker
DTC Participant Code: |
______________ |
| Account
Number: |
______________ |
Schedule
A
Location
of Assets
7968
Arjons Drive
San
Diego, California 92126
7394 Trade
Street
San
Diego, California 92121
USA
Schedule B
Encumbrances
None
Schedule
C
Intellectual
Property Rights
PATENTS
AND PATENTS PENDING
SMART
WALLET filed under Utility Patent Application No. 12/125,003 with the United States Patent & Trademark Office;
SMART
WALLET filed under Utility Patent Application No. 2008/299811 with the Australian Patent Office;
SMART
WALLET filed under Utility Patent Application No. 2,702,803 with the Canadian Intellectual Property Office;
SMART
WALLET filed under Utility Patent Application No. 2008/80108371.4 with the State Intellectual Property Office of the People’s
Republic of China;
SMART
WALLET filed under Utility Patent Application No. 658/MUMNP/2010 with the Indian Patent Office;
SMART
WALLET filed under Utility Patent Application No. 2201498 with the European Patent Office;
SMART
WALLET filed under Utility Patent Application No. 2010-524893 with the Japanese Patent Office;
SMART
WALLET filed under Utility Patent Application No. MX2010002874 with the Mexican Intellectual Property Office;
SMART
WALLET filed under Utility Patent Application No. 2010/114728 with the Russian Federal Service for Intellectual Property;
SMART
WALLET filed under Utility Patent Application No. 2010/02561-7 with the Intellectual Property Office of Singapore and Issued as
Patent 160736;
A
DEVICE FOR SECURING A SMART WALLET AND A METHOD THEREOF filed under Utility Patent Application No. 10/0115924 with the Taiwanese
Intellectual Property Office;
SMART
WALLET filed under Design Patent Application 29/394,013 with the United States Patent & Trademark Office;
SMART
WALLET filed under Design Application 001305163 with the Office of Harmonization of the Internal Market (European Union) and Issued
as Registered Community Design 001305163-0001;
SMART
WALLET filed under Industrial Design Application 2011/30467952.1 with the State Intellectual Property Office of the People’s
Republic of China and Issued as Design 2012/042300454730;
SMART
WALLET filed under Industrial Design Application D2011/1472/C with the Intellectual Property Office of Singapore and Issued as
Design D2011/1472/C;
SMART
WALLET filed under Industrial Design Application 100306735 with the Taiwanese Intellectual Property Office and Issued as Design
1012/1061980;
SMART
WALLET filed under Industrial Design Application 143603 with the Canadian Intellectual Property Office and Issued as Design 143603;
SMART
WALLET filed under Industrial Design Application 15707/2011 with the Australian Patent Office and Issued as Design 340320;
SMART
WALLET filed under Industrial Design Application 241379 with the Indian Patent Office;
SMART
WALLET filed under Industrial Design Application 2011-028887 with the Japanese Patent Office and Issued as Design 1444043;
SMART
WALLET filed under Industrial Design Application MX/f/2011/004080 with the Mexican Intellectual Property Office;
SMART
WALLET filed under Industrial Design Application 2011/503884 with the Russian Federal Service for Intellectual Property and Issued
as Design 84009;
TRADEMARKS
IWALLET
filed as Trademark Application No. 77/745,963 with the United States Patent & Trademark Office and issued as Trademark 4,042,510;
IWALLET
filed as Trademark Application No. 85/593,836 with the United States Patent & Trademark Office and issued as Trademark 4,245,653;
IWALLET
filed as Trademark Application No. 85/369,514 with the United States Patent & Trademark Office; and
I-WALLET
filed as Trademark Application No. 77/291,012 with the United States Patent & Trademark Office and issued as Trademark 3,763,757.
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