Exhibit 10.5
 
GUARANTEE AND INDEMNITY
 
(YAPPN CANADA INC.)

TO:
Toronto Tree Top Holdings Ltd.  (the “Lender”)

 
DATE:
April 7, 2014

 
RECITALS:
 
A.
The Obligor is a subsidiary of the Borrower.  The Obligor (as defined herein) is
required to deliver this Agreement under the terms of the Credit Agreement.  The
Obligor will derive substantial direct and indirect benefits and advantages from
the financial accommodations to the Borrower under the Credit Agreement, and it
will be to the Obligor’s direct interest and economic benefit to deliver this
Agreement in order to allow the Borrower to obtain those financial
accommodations.  The Obligor acknowledges the value of that benefit.

 
FOR VALUE RECEIVED and intending to be legally bound by this guarantee and
indemnity (the “Agreement”), the undersigned (the “Obligor”) agrees as follows:
 
1.
INTERPRETATION

 
1.1
Capitalized Terms  In this Agreement, except where the context otherwise
requires, capitalized terms that are used and not otherwise defined have the
meanings defined in the Credit Agreement (as defined below), and:

 
 
(a)
“Borrower” means Yappn Corp. and its successors.

 
 
(b)
“Credit Agreement” means the credit agreement dated as of the date hereof
entered into by the Borrower, as borrower, and the Lender, as lender, as
amended, supplemented, restated, modified or replaced from time to time.

 
 
(c)
“Obligations” means all debts, liabilities and obligations of the Borrower to
the Lender under or in connection with the Credit Agreement, whether present or
future, direct or indirect, absolute or contingent, matured or not, at any time
owing or remaining unpaid by the Borrower to the Lender in any currency, whether
arising from dealings between the Lender and the Borrower or from other dealings
or proceedings by which the Lender may be or become in any manner whatever a
creditor of the Borrower, and wherever incurred, and whether incurred by the
Borrower alone or with another or others and whether as principal or surety
(including obligations under or in connection with any guarantee or indemnity
given by the Borrower), and all interest, fees, commissions and legal and other
costs, charges and expenses owing or remaining unpaid by the Borrower to the
Lender in any currency.

 
 
 

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1.2
No Contra Proferentem  This Agreement has been negotiated by the Obligor and the
Lender with the benefit of legal representation, and any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not apply to the construction or interpretation of this Agreement.

 
1.3
Conflict With Credit Agreement  If there is any conflict or inconsistency
between the terms of the Credit Agreement and the terms of this Agreement, the
provisions of the Credit Agreement shall govern to the extent necessary to
remove the conflict or inconsistency.

 
1.4
Other Interpretation Rules  In this Agreement:

 
 
(a)
The division into Sections and the insertion of headings are for convenience of
reference only and do not affect the construction or interpretation of this
Agreement.

 
 
(b)
Unless otherwise specified or the context otherwise requires, (i) “including” or
“includes” means “including (or includes) but is not limited to” and shall not
be construed to limit any general statement preceding it to the specific or
similar items or matters immediately following it, (ii) a reference to any
legislation, statutory instrument or regulation or a section of it is a
reference to the legislation, statutory instrument, regulation or section as
amended, restated and re-enacted from time to time, and (iii) words in the
singular include the plural and vice-versa and words in one gender include all
genders.

 
 
(c)
Unless otherwise specified or the context otherwise requires, any reference in
this Agreement to payment of the Obligations includes performance of the
Obligations.

 
2.
GUARANTEE AND INDEMNITY

 
2.1
Guarantee  The Obligor unconditionally guarantees payment to the Lender of the
Obligations.

 
2.2
Indemnity  The Obligor also unconditionally agrees that, if the Borrower does
not unconditionally and irrevocably pay any Obligations when due and those
Obligations are not recoverable from the Obligor for any reason under Section
2.1, the Obligor shall indemnify the Lender immediately on demand against any
cost, loss, damage, expense or liability suffered by the Lender as a result of
the Borrower’s failure to do so.

 
2.3
Separate Liabilities  The liabilities of the Obligor under Sections 2.1 and 2.2
are separate and distinct from each other, but the provisions of this Agreement
shall apply to the liabilities under both of those Sections unless the context
otherwise requires.

 
2.4
Limit on Liability  The liability of the Obligor under this Agreement is
unlimited.

 
2.5
Irrevocable  This Agreement is irrevocable by the Obligor, and the Obligor
expressly and unconditionally waives any right to terminate this Agreement.

 
 
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3.
CONTINUING AGREEMENT AND REINSTATEMENT

 
3.1
Continuing Agreement  This Agreement is a continuing guarantee and indemnity for
a current or running account and will extend to the ultimate balance of the
Obligations, regardless of any intermediate payment or discharge of the
Obligations in whole or in part.  Without limiting the foregoing, the
Obligations may include advances and re-advances under revolving credit
facilities, which permit borrowing, repayment of all or part of the amount
borrowed and re-borrowing of amounts previously paid.

 
3.2
Payments in Gross  Until this Agreement has been terminated in accordance with
Section 3.4, all amounts of any kind received by the Lender from any source in
respect of the Obligations shall be regarded for all purposes as payments in
gross without any right on the part of the Obligor to claim the benefit of those
amounts in reduction of its liabilities under this Agreement.

 
3.3
Reinstatement  If at any time any payment of the Obligations is or must be
rescinded or returned by the Lender as a result of insolvency or reorganization
of the Borrower or any other person, or for any other reason whatsoever, the
Obligations will be deemed to have continued in existence and this Agreement
shall continue to be effective, or be reinstated, as if the payment had not
occurred.  The Lender may concede or compromise any claim that any payment ought
to be rescinded or returned without diminishing the liability of the Obligor
under this Section.

 
3.4
Termination  If the Obligations have been indefeasibly paid in full in cash and
if all obligations of the Lender to extend credit under the Credit Agreement has
been cancelled, then the Lender shall, at the request and expense of the
Obligor, execute and deliver whatever documents are reasonably required to
acknowledge the termination of this Agreement.

 
4.
WAIVER OF DEFENCES AND OTHER MATTERS

 
4.1
In Addition to Other Rights; No Marshalling  This Agreement is in addition to
and is not in any way prejudiced by or merged with any other guarantee,
indemnity or security now or subsequently held by the Lender in respect of any
Obligations.  The Lender shall be under no obligation to marshal in favour of
the Obligor any other guarantees or other securities or any money or other
property that the Lender may be entitled to receive or may have a claim upon.

 
 
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4.2
Liabilities Unconditional  The liabilities of the Obligor under this Agreement
are absolute and unconditional, and will not be affected by any act, omission,
matter or thing that, but for this Section, would reduce, release or prejudice
any of its liabilities under this Agreement, or that might constitute a legal or
equitable defence to or a discharge, limitation or reduction of the Obligor’s
liabilities under this Agreement, including the following, whether or not known
to it or the Lender or consented to by it or the Lender:

 
 
(a)
any discontinuance, reduction, increase, extension or other variance in the
credit granted by the Lender to the Borrower or any time, waiver or consent
granted to, or any release of or compromise with, the Borrower or any other
person;

 
 
(b)
any amendment, supplement or restatement (however fundamental) or replacement of
the Credit Agreement;

 
 
(c)
any unenforceability, illegality or invalidity of any obligation of any person
under or in connection the Credit Agreement, including any bar to recovery under
any statute of limitations;

 
 
(d)
the death or loss of capacity of the Borrower, any change in the name of the
Borrower, or in the membership of the Borrower, if a partnership, or in the
ownership, objects, capital structure or constitution of the Borrower, if a
corporation, the sale of all or any part of the Borrower’s business or the
Borrower being amalgamated or merged with one or more other entities, but shall,
notwithstanding any such event, continue to apply to all Obligations whether
previously or subsequently incurred; and in the case of a change in the
membership of a Borrower that is a partnership or in the case of the Borrower
being amalgamated or merged with one or more other entities, this Agreement
shall also apply to the liabilities of the resulting or continuing entity, and
the term “Borrower” shall include each resulting or continuing entity;

 
 
(e)
any credit being granted or continued by the Lender purportedly to or for the
Borrower after the death, loss of capacity, bankruptcy or insolvency of the
Borrower;

 
 
(f)
any lack or limitation of power, incapacity or disability of the Borrower or of
the directors, partners or agents of the Borrower, or the Borrower not being a
legal or suable entity, or any irregularity, defect or lack of formality in the
obtaining of credit by the Borrower;

 
 
(g)
any bankruptcy, insolvency or similar proceedings, including any stay of or
moratorium on proceedings;

 
 
(h)
any impossibility, impracticability, frustration of purpose, force majeure,
illegality or act of governmental authority affecting the Credit Agreement;

 
 
(i)
any taking or failure to take security, any loss of or loss of value of security
for the Obligations, any invalidity, lack of perfection or unenforceability of
any security, or any enforcement of, failure to enforce or irregularity or
deficiency in the enforcement of any security; or

 
 
(j)
the existence of any claim, set-off or other right that the Obligor may have
against the Borrower, the Lender or any other person, whether in connection with
the Credit Agreement or otherwise.

 
Each of the defences mentioned above is waived by the Obligor to the fullest
extent permitted under applicable law.
 
 
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4.3
Information Concerning Borrower  The Obligor acknowledges that it is presently
familiar with the Credit Agreement, the financial condition of the Borrower and
any other circumstances affecting the risk incurred by the Obligor in connection
with this Agreement.  The Obligor shall be solely responsible for keeping itself
informed concerning those matters in the future.  The Obligor acknowledges that
the Lender has no obligation to provide any information concerning those matters
now or in the future and that, if it does so at any time, it shall have no
obligation to update the information or provide other information subsequently.

 
4.4
No Obligation to Enforce Other Rights  The Obligor waives any right it may have
of requiring the Lender (or any trustee or agent on its behalf) to proceed
against or enforce any other rights or security or claim payment from any person
before claiming from the Obligor under this Agreement and the Obligor waives all
benefits of discussion and division.  These waivers apply irrespective of any
law or any provision of the Credit Agreement to the contrary.

 
5.
USE OF AMOUNTS RECEIVED

 
5.1
Use of Amounts Received  Until this Agreement has been terminated in accordance
with Section 3.4, the Lender (or any trustee or agent on its behalf) may:

 
 
(a)
refrain from applying any money received or enforcing any other security or
rights held by or on behalf of the Lender in respect of the Obligations, or
apply any money and enforce any other security or rights in any manner and order
as it sees fit;

 
 
(b)
change any application of money received in whole or in part from time to time;
and

 
 
(c)
hold in a suspense account any money received from the Obligor or on account of
the Obligor’s liabilities under this Agreement.

 
6.
POSTPONEMENT OF OBLIGOR’S RIGHTS

 
6.1
Postponement of Subrogation Etc.  Until this Agreement has been terminated in
accordance with Section 3.4, the Obligor shall not exercise any rights that it
may have by reason of performance by it of its liabilities under this Agreement:

 
 
(a)
to be indemnified by the Borrower;

 
 
(b)
to claim contribution from any other guarantor of the Obligations; or

 
 
(c)
to take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of the Lender under the Credit Agreement.

 
 
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6.2
Postponement of Set-Off Etc.  Until this Agreement has been terminated in
accordance with Section 3.4, the Obligor shall not claim any set-off or
counterclaim against the Borrower as a result of any liability of the Borrower
to the Obligor, or claim or prove in the bankruptcy or insolvency of the
Borrower in competition with the Lender.

 
6.3
Postponement and Assignment  The Obligor postpones payment of all present and
future debts, liabilities and obligations of the Borrower to the Obligor until
this Agreement has been terminated in accordance with Section 3.4.  The Obligor
assigns to the Lender all present and future debts, liabilities and obligations
of the Borrower to the Obligor as security for payment of the Obligor’s
liabilities under this Agreement, and agrees that all money received by the
Obligor in respect of those debts, liabilities and obligations shall be received
in trust for the Lender and forthwith upon receipt shall be paid over to the
Lender, all without in any way lessening or limiting the liabilities of the
Obligor under this Agreement.  The provisions of this Section 6.3 are
independent of the other provisions of this Agreement and shall remain in full
force and effect until this Agreement has been terminated in accordance with
Section 3.4, notwithstanding that the other liabilities of the Obligor under
this Agreement may have been discharged or terminated.

 
7.
OBLIGATION TO MAKE PAYMENT

 
7.1
Payment Immediately After Demand  The Obligor’s liability to make a payment
under this Agreement shall arise immediately after demand for payment has been
made in writing on the Obligor.  In connection with any demand, the Lender may
treat all Obligations as due and payable and may demand immediate payment from
the Obligor of the total amount of its liabilities under this Agreement, whether
or not all Obligations are otherwise due and payable at the time of demand.

 
7.2
Right to Enforce  Demands under this Agreement may be made from time to time,
and the liabilities of the Obligor under this Agreement may be enforced,
irrespective of:

 
 
(a)
whether any demands, steps or proceedings are being or have been made or taken
against the Borrower and/or any third party; or

 
 
(b)
whether or in what order any security to which the Lender may be entitled in
connection with the Credit Agreement is enforced.

 
7.3
Certificate as to Amount  A certificate of the Lender specifying the outstanding
amount of the Obligations shall be conclusive evidence of that amount against
the Obligor in the absence of any manifest error.

 
7.4
Interest  The Obligor’s liabilities under this Agreement shall bear interest
from the date of demand at the highest rate of interest per annum that is
applicable to any part of the Obligations.

 
 
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7.5
Rights Cumulative  No failure on the part of the Lender to exercise, nor any
delay in exercising, any right or remedy under the Credit Agreement or this
Agreement shall operate as a waiver, nor shall any single or partial exercise of
any right or remedy prevent any further or other exercise or the exercise of any
other right or remedy.  Neither the taking of any judicial or extra-judicial
proceeding nor the exercise of rights under any security held from the Obligor
shall extinguish the liability of the Obligor to pay and perform its liabilities
under this Agreement, nor shall the acceptance of any payment or security create
any novation.  No covenant, representation or warranty of the Obligor in this
Agreement shall merge in any judgment.  The rights and remedies provided in this
Agreement are cumulative and do not exclude any rights and remedies provided by
law or otherwise.

 
7.6
Limitation Periods  To the extent that any limitation period applies to any
claim for payment of the Obligations or remedy for enforcement of the
Obligations, the Obligor agrees that:

 
 
(a)
any limitation period is expressly excluded and waived entirely if permitted by
applicable law;

 
 
(b)
if a complete exclusion and waiver of any limitation period is not permitted by
applicable law, any limitation period is extended to the maximum length
permitted by applicable law;

 
 
(c)
any applicable limitation period shall not begin before an express demand for
payment of the Obligations is made in writing by the Lender to the Obligor;

 
 
(d)
any applicable limitation period shall begin afresh upon any payment or other
acknowledgment of the Obligations by the Obligor; and

 
 
(e)
this Agreement is a “business agreement” as defined in the Limitations Act, 2002
(Ontario) if that Act applies.

 
8.
PAYMENTS

 
8.1
Withholdings Etc.  Any payment made by the Obligor under this Agreement shall be
made without any deduction or withholding for or on account of tax and without
any set-off or counterclaim of any kind.  However, if the Obligor is required by
law to deduct, withhold or pay any tax in respect of any payment under this
Agreement, then (i) the Obligor shall pay additional sums under this Agreement
as necessary so that, after making or allowing for all required deductions,
withholdings and payments (including deductions, withholdings and payments
applicable to additional sums payable under this Section), the Lender receives
an amount equal to the sum it would have received had no deductions,
withholdings or payments been required, (ii) the Obligor shall make any
deductions, withholdings or payments required by law to be made by it and (iii)
the Obligor shall timely pay the full amount required to be deducted, withheld
or paid to the relevant governmental authority in accordance with applicable
law.

 
 
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8.2
Currency and Place of Payment  Payment shall be made in the currency or
currencies specified in the demand for payment to the Lender at the Branch of
Account, or another address or account that the Lender may specify by written
notice to the Obligor from time to time.

 
8.3
Currency Indemnity  If a judgment or order is rendered by any court or tribunal
for the payment of any amount owing to the Lender under or in connection with
this Agreement and the judgment or order is expressed in a currency (the
“Judgment Currency”) other than the currency payable under or in connection with
this Agreement (the “Agreed Currency”), the Obligor shall indemnify and hold the
Lender harmless against any deficiency in terms of the Agreed Currency in the
amount received by the Lender arising or resulting from any variation as between
(a) the rate at which the Agreed Currency is converted into the Judgment
Currency for the purposes of the judgment or order, and (b) the rate at which
the Lender is able to purchase the Agreed Currency in accordance with normal
banking practice with the amount of the Judgment Currency actually received by
the Lender on the date of receipt.  The indemnity in this Section shall
constitute a separate and independent liability from the other liabilities of
the Obligor under this Agreement, shall apply irrespective of any indulgence
granted by the Lender, and shall be secured by any security held by the Lender
from the Obligor.

 
8.4
Set-Off  The Lender and each of its affiliates is authorized at any time and
from time to time to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by the Lender or
affiliate to or for the credit or the account of the Obligor against any and all
of the liabilities of the Obligor now or in the future existing under this
Agreement, irrespective of whether or not the Lender has made any demand under
this Agreement and although those liabilities of the Obligor may be contingent
or unmatured or are owed to a branch or office of the Lender different from the
branch or office holding any deposit or obligated to the Obligor.  The rights of
the Lender and its affiliates under this Section 8.4 are in addition to other
rights and remedies (including other rights of set-off, consolidation of
accounts and bankers’ lien) that the Lender or its affiliates may have.

 
9.
NOTICES

 
9.1
Notices in Writing  Any communication to be made under this Agreement shall be
made in accordance with the Credit Agreement.

 
10.
ENTIRE AGREEMENT; SEVERABILITY

 
10.1
Entire Agreement  This Agreement embodies all the agreements between the Obligor
and the Lender relating to the guarantee and indemnity contemplated in this
Agreement.  No party shall be bound by any representation or promise made by any
person relating to this Agreement that is not embodied in it.  It is
specifically agreed that the Lender shall not be bound by any representation or
promise made by the Borrower to the Obligor.  Any waiver of, or consent to
departure from, the requirements of any provision of this Agreement shall be
effective only if it is in writing and signed by the Lender, and only in the
specific instance and for the specific purpose for which it has been given.

 
 
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10.2
Severability  If, in any jurisdiction, any provision of this Agreement or its
application to any circumstance is restricted, prohibited or unenforceable, that
provision shall, as to that jurisdiction, be ineffective only to the extent of
that restriction, prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, without affecting the validity or
enforceability of that provision in any other jurisdiction and, if applicable,
without affecting its application to other circumstances.

 
11.
DELIVERY OF AGREEMENT

 
11.1
Counterparts  This Agreement may be executed in any number of counterparts and
all counterparts taken together shall be deemed to constitute one agreement.

 
11.2
Delivery  To evidence the fact that it has executed this Agreement, the Obligor
may send a signed copy of this Agreement or its signature to this Agreement by
facsimile transmission or e-mail and the signature sent in that way shall be
deemed to be its original signature for all purposes.

 
11.3
No Conditions  Possession of this Agreement by the Lender shall be conclusive
evidence against the Obligor that the Agreement was not delivered in escrow or
pursuant to any agreement that it should not be effective until any condition
precedent or subsequent has been complied with.  This Agreement shall be
operative and binding notwithstanding that it is not executed by any proposed
signatory.

 
11.4
Receipt and Waiver  The Obligor acknowledges receipt of a copy of this
Agreement.  The Obligor waives any notice of acceptance of this Agreement by the
Lender.  The Obligor also waives the right to receive a copy of any financing
statement or financing change statement that may be registered in connection
with this Agreement or any verification statement issued with respect to a
registration, if waiver is not otherwise prohibited by law.  The Obligor agrees
that the Lender may from time to time provide information regarding this
Agreement and the Obligations to persons that the Lender believes in good faith
are entitled to the information under applicable law.

 
12.
GOVERNING LAW

 
12.1
Governing Law  This Agreement and any dispute arising from or in relation to
this Agreement shall be governed by, and interpreted and enforced in accordance
with, the law of the Province of Ontario and the laws of Canada applicable in
that province, excluding the conflict of law rules of that province.

 
12.2
Obligor’s Exclusive Dispute Resolution Jurisdiction  The Obligor agrees that the
courts of the Province of Ontario have exclusive jurisdiction over any dispute
arising from or in relation to this Agreement and the Obligor irrevocably and
unconditionally attorns to the exclusive jurisdiction of that province.  The
Obligor agrees that the courts of that province are the most appropriate and
convenient forum to settle disputes and agrees not to argue to the contrary.

 
 
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12.3
Lender Entitled to Concurrent Jurisdiction  Despite Section 12.2, the Lender is
permitted to take proceedings in relation to any dispute arising from or in
relation to this Agreement in any court of another province or another state
with jurisdiction and to the extent allowed by law may take concurrent
proceedings in any number of jurisdictions.

 
13.
SUCCESSORS AND ASSIGNS

 
13.1
Successors and Assigns  The Obligor may not assign or transfer all or any part
of its liabilities under this Agreement.  This Agreement shall enure to the
benefit of the Lender and its successors and assigns and be binding on the
Obligor and its successors and any permitted assigns.

 
[SIGNATURE PAGE FOLLOWS]
 
 
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IN WITNESS OF WHICH, the Obligor has duly executed this Agreement as of the date
set forth above.
 

 
YAPPN CANADA INC.
       
By:
/s/ David Lucatch    
Name:  David Lucatch – A. S. O.

 
[signature page for Guarantee and Indemnity]
 
 
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