ex455





  EXHIBIT
4.55








12% CONVERTIBLE TERM DEBENTURE

 



DUE: December 31, 2019

 





	
  PRINCIPAL
SUM: US$250,000.00

	
 DATE:
November 15, 2019













PROMISE

 

1. Promise to Pay:
Intellipharmaceutics International Inc., a corporation incorporated
under the laws of Canada (the “Borrower”), for value received,
hereby acknowledges itself indebted and covenants and promises to
pay to or to the order of Dr. Isa Odidi and Dr. Amina Odidi
(collectively the “Lender”), at the Lender’s
address set out in section 19 hereof,
or at such other place as the Lender may designate by notice in
writing to the Borrower, on December 31, 2019 (the
“Maturity
Date”), the principal amount of $250,000.00 in lawful
money of the United States of America and to pay interest thereon
at a rate of twelve per cent (12%) per annum. The same rate of
interest will be payable both before and after demand as well as
before and after default or judgment, with interest payable on
overdue interest at the same rate. From the date hereof to and
including the Maturity Date, interest shall be calculated and paid
monthly on the last business day of each calendar
month.

 



CONVERSION

 

2. Exercise: At any time and from
time to time after the date hereof on not less than three (3)
days’ and not more than ten (10) days’ written notice
to the Borrower, the Lender shall have the right to convert any or
all of the principal owing to it hereunder (as at the date of
election to so convert) into fully paid and non-assessable common
shares (the “Common
Shares”) of the Borrower at a price of US$0.12 per
share (the “Exercise
Price”). Such conversion may be effected by the
tendering of this Debenture at the office of the Borrower,
accompanied by a written direction of conversion signed by the
Lender notifying the Borrower as to the exercise of the right of
conversion and specifying the amount of principal hereunder in
respect of which this Debenture is converted and setting forth the
name and address of the person(s) in whose name(s) the shares
issuable upon such conversion are to be registered. This Debenture
may, at the Lender’s option, be converted at any time after
the date hereof, in whole, or from time to time in part, and for so
long as any amount remains outstanding hereunder. For greater
certainty, no conversion in part or in whole of the principal owing
under the Debenture shall extinguish or satisfy, or relieve the
Borrower of its obligation to pay the balance of the principal
owing hereunder and any interest on such principal amount accruing
prior to the effective date of such conversion.

 

3. Calculation of Purchase Price:
“Purchase Price”
means, in respect of any conversion of this Debenture in whole or
in part, the aggregate of the Exercise Price applicable on such
conversion multiplied by the number of Common Shares which the
Lender gives notice in writing to the Borrower that the Lender
elects to purchase via the conversion in whole or part of the
amounts owing under this Debenture at such time.

 

4. Share Issuance: As promptly as
practicable after the surrender of this Debenture for conversion,
the Borrower shall issue to the Lender or its nominee(s) a
certificate or certificates representing the number of fully paid
and non-assessable Common Shares of the Borrower into which all or
any portion of the indebtedness hereunder has been converted and,
in the event that any amounts remain outstanding hereunder after
giving effect to such conversion, the Lender shall make a notation
hereon of the principal amount of such unconverted indebtedness for
the aggregate of principal and interest that remains owing
hereunder.

 



 







 





 

5. No Fractional Shares: No
fractional share or scrip representing a fractional share shall be
required to be issued upon the conversion of this Debenture. If the
conversion of this Debenture would otherwise result in a fractional
share, the Borrower shall, in lieu of issuing such fractional
share, pay to the Lender an amount equal to the value of the
fractional share based upon the Exercise Price for a whole
share.

 

6. Timing: The conversion of this
Debenture shall be deemed to have been made in full at the close of
business on the date at which time the entire balance owing under
this Debenture is tendered for conversion, so that the
Lender’s rights in respect of the converted portion shall
terminate at such time, and the person or persons entitled to
receive the shares into which the whole or any part of this
Debenture is converted shall be treated, as between the Borrower
and such person or persons, as having become the holder or holders
of record of such shares at such time.

 

7. Pre-Payment: The Borrower may
prepay this Debenture in whole or in part at any time without prior
written notice to the Lender or any bonus or penalty. Any notice of
prepayment from the Borrower to the Lender shall be without
prejudice to the Lender’s right to convert all or any part of
the principal amounts that remain outstanding under this Debenture
into Common Shares in accordance with the provisions of the
Debenture.

 

8. Anti-Dilution:

 




(a)

If and whenever at
any time while this Debenture is outstanding, the
Borrower:





 




(i)

issues any Common
Shares to all or substantially all of the holders of Common Shares
by way of a stock dividend or other distribution (other than the
issue of Common Shares to holders of Common Shares as dividends by
way of stock dividend in lieu of a cash Dividend Paid in the
Ordinary Course or pursuant to any dividend reinvestment plan in
force from time to time);





 




(ii)

subdivides or
re-divides the outstanding Common Shares into a greater number of
Common Shares; or





 




(iii)

combines, reduces
or consolidates the outstanding Common Shares into a lesser number
of Common Shares;





 


then,
in each such event:

 




(iv)

the number of
Common Shares obtainable on conversion of the amounts outstanding
under this Debenture will be adjusted immediately after the
effective date of the events referred to in (ii) or (iii) or the
record date for the issue of the Common Shares referred to in (i)
by multiplying the number of Common Shares theretofore obtainable
on conversion of the amounts outstanding under this Debenture by
the fraction which is the reciprocal of the fraction referred to in
section 8(a)(v)(B); and





 



 







 





 




(v)

the Exercise Price
will, on the effective date of the events referred to in (ii) or
(iii) or on the record date for the issue of Common Shares referred
to in (i), be adjusted to a price which is equal to the product
of:





 




(A)

the Exercise Price
in effect immediately prior to such effective date or record date;
and





 




(B)

the fraction of
which:





 



(X) 

the numerator is
equal to the total number of Common Shares that are outstanding on
such date before giving effect to such event; and





 



(Y) 

the denominator is
equal to the total number of Common Shares that are outstanding on
such date after giving effect to such event.





 


Such
adjustments will be made successively whenever any event referred
to in this section shall occur and any such issue of Common Shares
by way of a stock dividend or other distribution will be deemed to
have been made on the record date for such stock dividend or other
distribution for the purpose of calculating the number of
outstanding Common Shares under sections 8(b) and
8(c).

 




(b)

If and whenever at
any time while this Debenture is outstanding, the Borrower fixes a
record date for the issuance of rights, options or warrants to all
or substantially all of the holders of Common Shares entitling the
holders thereof, within a period expiring not more than 45 days
after the date of issue thereof, to subscribe for or purchase
Common Shares (or securities convertible into or exchangeable for
Common Shares) at a price per share (or having a conversion or
exercise price per share) of less than 95% of the Current Market
Price of the Common Shares on the earlier of such record date and
the date on which the Borrower announces its intention to make such
issuance, then, in each case:





 




(i)

the number of
Common Shares obtainable on conversion of the amounts outstanding
under this Debenture will be adjusted immediately after such record
date so that it will equal the number determined by multiplying the
number of Common Shares theretofore obtainable on such record date
by a fraction which is the reciprocal of the fraction referred to
in section 8(b)(ii)(B); and





 




(ii)

the Exercise Price
will be adjusted immediately after such record date to a price
which is equal to the product of:





 




(A)

the Exercise Price
in effect on such record date; and





 




(B)

the fraction of
which:





 



(X)            

the numerator is
equal to the aggregate of:





 



 







 





 



(I) 

the total number of
Common Shares that are outstanding on such record date;
and





 



(II) 

the number
determined by dividing the aggregate price of the total number of
additional Common Shares so offered for subscription or purchase
(or the aggregate conversion or exchange price of the convertible
or exchangeable securities so offered) by the Current Market Price
of the Common Shares on the earlier of such record date and the
date on which the Borrower announces its intention to make such
issuance; and





 



(Y) 

the denominator is
equal to the aggregate of:





 



(I) 

the total number of
Common Shares that are outstanding on such record date;
and





 



(II) 

the total number of
additional Common Shares so offered for subscription or purchase
(or into or for which the convertible or exchangeable securities so
offered are convertible or exchangeable).





 


Such
adjustment will be made successively whenever such a record date is
fixed, provided that if two or more such record dates or record
dates referred to in section 8(c) are fixed within a period of 25
trading days, such adjustment will be made successively as if each
of such record dates occurred on the earliest of such record dates.
To the extent that any such rights, options or warrants are not so
issued or any such rights, options or warrants are not exercised
prior to the expiration thereof, the number of Common Shares
obtainable on conversion of the amounts outstanding under this
Debenture will then be readjusted to that which would then be in
effect if such record date had not been fixed or to that which
would then be in effect based upon the number of Common Shares (or
securities convertible into or exchangeable for Common Shares)
actually issued upon the exercise of such rights, options or
warrants, as the case may be.

 




(c)

If and whenever at
any time while this Debenture is outstanding, the Borrower fixes a
record date for the making of a distribution, to all or
substantially all of the holders of Common Shares, of:





 




(i)

shares of any class
other than Common Shares whether of the Borrower or any other
corporation (other than shares distributed to holders of Common
Shares as Dividends Paid in the Ordinary Course (as hereinafter
defined) as stock dividends);





 




(ii)

rights, options or
warrants (other than rights, options or warrants exercisable by the
holders thereof not more than 45 days after the date of issue
thereof);





 




(iii)

evidences of
indebtedness; or





 



 







 





 




(iv)

cash, securities or
other property or assets (other than cash Dividends Paid in the
Ordinary Course);





 


then,
in each case:

 




(v)

the number of
Common Shares obtainable on conversion of the amounts outstanding
under this Debenture shall be adjusted immediately after such
record date so that it will equal the number determined by
multiplying the number of Common Shares theretofore obtainable on
conversion of the amounts outstanding under this Debenture on such
record date by a fraction which is the reciprocal of the fraction
referred to in section 8(c)(vi)(B); and





 




(vi)

the Exercise Price
will be adjusted immediately after such record date to a price
which is equal to the product of:





 




(A)

the Exercise Price
in effect on such record date; and





 




(B)

the fraction of
which:





 



(X)            

the numerator is
equal to the amount by which:





 



(I) 

the product of (x)
the total number of Common Shares that are outstanding on such
record date and (y) the Current Market Price of the Common Shares
on the earlier of such record date and the date on which the
Borrower announces its intention to make such
distribution;





 


exceeds

 



(II) 

the aggregate fair
market value (as determined by the directors at the time such
distribution is authorized) of such shares, rights, options or
warrants or evidences of indebtedness or cash, securities or other
property or assets so distributed; and





 



(Y) 

the denominator is
equal to the product determined under clause (I)
above.





 



 







 





 


Such
adjustment will be made successively whenever such a record date is
fixed, provided that if two or more such record dates or record
dates referred to in section 8(b) are fixed within a period of 25
trading days, such adjustment will be made successively as if each
of such record dates occurred on the earliest of such record dates.
To the extent that such distribution is not so made or to the
extent that any such rights, options or warrants so distributed are
not exercised prior to the expiration thereof, the number of Common
Shares obtainable on conversion of the amounts outstanding under
this Debenture will then be readjusted to that which would then be
in effect if such record date had not been fixed or to that which
would then be in effect based upon such shares or rights, options
or warrants or evidences of indebtedness or cash, securities or
other property or assets actually distributed or based upon the
number or amount of securities or the property or assets actually
issued or distributed upon the exercise of such rights, options or
warrants, as the case may be.

 




(d)

In the event that
any adjustment of the Exercise Price is made pursuant to sections
8(a), (b) and (c), the number of Common Shares that may be
purchased upon the conversion of the amounts outstanding under this
Debenture will, contemporaneously with such adjustment of such
Exercise Price, be adjusted to a number which is equal to the
product of:





 




(i)

the total number of
Common Shares so purchaseable immediately before such adjustment of
such Exercise Price; and





 




(ii)

the fraction which
is the reciprocal of the fraction used in such adjustment of such
Exercise Price.





 




(e)

If and whenever at
any time while this Debenture is outstanding there is:





 




(i)

any
reclassification of the Common Shares at any time outstanding, any
change of the Common Shares into other shares or any other capital
reorganization of the Borrower other than as described in sections
8(a), (b) and (c);





 




(ii)

any consolidation,
arrangement, amalgamation, merger or other form of business
combination of the Borrower with or into any other body corporate,
trust, partnership or other entity resulting in a reclassification
of the outstanding Common Shares, any change of the Common Shares
into other shares or any other capital reorganization of the
Borrower other than as described in sections 8(a), (b) and (c);
or





 




(iii)

any sale, lease,
exchange or transfer of the undertaking or assets of the Borrower
as an entirety or substantially as an entirety to another
corporation or entity;





 


then:

 




(iv)

the holder hereof
will be entitled to receive and will accept, in lieu of the number
of Common Shares then to be acquired by it upon conversion of the
amounts outstanding under this Debenture;





 



 







 





 


the
kind and number or amount of shares or other securities or property
that the holder would have been entitled to receive as a result of
such event if, on the record date or effective date thereof, as the
case may be, the holder had been the registered holder of the
number of Common Shares to which the holder was theretofore
entitled upon such exercise or deemed exercise. If necessary as a
result of any such event, appropriate adjustments will be made in
application of the provisions set forth in this section 8 with
respect to the rights and interests of the holder so that the
provisions set forth in this section 8 will thereafter
correspondingly be made applicable, as nearly as may reasonably be,
in relation to any shares or other securities or property to which
a holder of this Debenture is entitled on conversion of the amounts
outstanding under this Debenture. Any such adjustment will be made
by and set forth in amendment hereto approved by the directors and
will for all purposes be conclusively deemed to be an appropriate
adjustment.

 




(f)

As a condition
precedent to taking any action that would require an adjustment
pursuant to this section 8, the Borrower will take all action which
may, in the opinion of counsel to the Borrower, be necessary in
order that the Borrower, or any successor to the Borrower or
successor to the undertaking and assets of the Borrower, will be
obligated to and may validly and legally issue, as fully paid and
non-assessable, all the Common Shares or other shares or securities
or property to which the holder hereof would be entitled to receive
thereafter on conversion of the amounts outstanding under this
Debenture.





 




(g)

The Borrower will
give notice to the holder hereof, at least 10 days prior to the
record date for the making of such distribution, of:





 




(i)

the
Borrower’s intention to make a distribution referred to in
section 8(c) which results in the fraction calculated pursuant to
section 8(c)(vi)(B) thereof being a negative number;
and,





 




(ii)

any action or event
that would require an adjustment pursuant to this section
8.





 

9. Adjustment Rules:

 




(a)

The following rules
and procedures will be applicable to adjustments made pursuant to
section 8, including any readjustments:





 




(i)

the adjustments
provided for in section 8 are cumulative, will, in the case of any
adjustment to the Exercise Price, be computed to the nearest
one-tenth of one cent and, subject to section 9(a)(ii) below, will
apply (without duplication) to successive subdivisions,
consolidations, distributions, issuances or other events that
require such an adjustment;





 




(ii)

no such adjustment
in the Exercise Price will be made unless the price adjustment
would result in an increase or decrease of at least 1% in such
Exercise Price, provided that any such adjustment which, except for
the provisions of this section 9(a)(ii), would otherwise have been
required to be made, will be carried forward and taken into account
in any subsequent adjustment;





 




(iii)

for the purposes of
sections 8(a), (b) and (c), the following will be deemed not to be
outstanding:





 




(A)

any Common Share
owned or held for the account of any subsidiary of the Borrower
that is a wholly-owned subsidiary; and





 



 







 





 




(B)

that percentage of
the Common Shares owned by or held for the account of any
subsidiary of the Borrower that is not a wholly-owned subsidiary,
that is equal to the direct and indirect percentage interest of the
Borrower in the outstanding shares of such subsidiary that carry a
residual right to participate to an unlimited degree in its
earnings and in its assets on liquidation or
winding-up;





 




(iv)

no such adjustment
will be made in respect of an event described in section 8(a)(i) or
section 8(b) or 8(c) if the holders are entitled to participate in
such event, or are entitled to participate within 45 days in a
comparable event, on the same terms, mutatis mutandis, as if the holder had
converted the amounts outstanding under this Debenture immediately
before the record date for or effective date of such
event;





 




(v)

in the absence of a
resolution of the directors fixing a record date at which holders
of Common Shares are determined for purposes of any event referred
to in section 8, the Borrower will be deemed to have fixed as the
record date therefor the date on which the event is effected or
such other date as may be required by law; and





 




(vi)

no fractional
Common Share will be issued upon the conversion of the amounts
outstanding under this Debenture and accordingly if as a result of
any such adjustment the holder hereof becomes entitled to acquire a
fractional Common Share the holder shall have the right to acquire
only the next lowest whole number of Common Shares and no payment
or other adjustment will be made with respect to the fractional
Common Share so disregarded.





 




(b)

In any case in
which section 8 requires an adjustment to take effect on or
immediately after the record date for an event referred to therein,
the Borrower may postpone, until the occurrence and consummation of
such event, issuing to the holder hereof after such record date and
before the occurrence and consummation of such event the additional
Common Shares or other securities or property issuable upon such
exercise by reason of the adjustment required by such event;
provided, however, that the Borrower will deliver to such holder an
appropriate instrument evidencing such holder’s right to
receive such additional Common Shares or other securities or
property upon the occurrence and consummation of such event and the
right to receive any dividend or other distribution in respect of
such additional Common Shares or other securities or property
declared in favour of the holders of record of Common Shares or of
such other securities or property as such holder would, but for the
provisions of this section 9(b), have become the holder of record
of such additional Common Shares or of such other securities or
property.





 




(c)

If and whenever at
any time while this Debenture is outstanding the Borrower takes any
action affecting or relating to the Common Shares, other than any
action described in section 8, which in the opinion of the
directors of the Borrower would prejudicially affect the rights of
the holder hereof, the conversion rights in effect at any date
arising hereunder will be adjusted by the directors in such manner,
if any, and at such time, as the directors may in their sole
discretion determine to be equitable in the circumstances to such
holder, subject to obtaining prior approval of the Toronto Stock
Exchange before giving effect to any such change. Failure of the
directors to take any action so as to provide for any such
adjustment on or before the effective date of any such action by
the Borrower affecting or relating to the Common Shares will be
conclusive evidence that the directors have determined that it is
equitable to make no such adjustment in the
circumstances.





 



 







 





 




(d)

In the event of any
question arising with respect to the adjustments provided for in
this section 9, including any readjustment, such question shall be
conclusively determined by the firm of chartered accountants duly
appointed as auditors of the Borrower for the time being or, if
they are unable or unwilling to act, by such firm of chartered
accountants as is appointed by the Borrower. The Borrower will
provide such accountants access to all necessary records of the
Borrower. Such determination will be binding upon the Borrower and
holder hereof.





 

10. Definitions: In these sections
8, 9 and 10, unless there is something in the subject matter or
context inconsistent therewith:

 




(a)

“Current Market Price”, on any
date, means the average, during the period of 20 consecutive
trading days ending on the fifth trading day before such date, of
the average of all prices per share at which the Common Shares have
traded on the stock exchange having the greatest trading volume in
such shares in such period (the “Relevant Stock Exchange”) or, if
the Common Shares have not been listed on a stock exchange for such
number of trading days, then such lesser number of trading days as
the Common Shares have been so listed, or, if the Common Shares are
not listed on any stock exchange, then in the over-the-counter
market as reported by the Toronto Stock Exchange (or such other
stock exchange or as quoted by the most commonly quoted or carried
source of quotations for Common Shares traded in the
over-the-counter market), provided that if, on any such trading
day, there are no such reported or quoted prices, the average of
the closing bid and asked prices per share for board lots of the
Common Shares reported by the Relevant Stock Exchange (or such
other stock exchange or as quoted by the most commonly quoted or
carried source of quotations for shares traded in the
over-the-counter market) for such trading day will be utilized in
computing such average, and provided further that if the Common
Shares are not listed on any stock exchange or traded in any
over-the-counter market, then the Current Market Price of the
Common Shares will be determined by the directors of the Borrower,
acting reasonably.





 




(b)

“Dividends Paid in the Ordinary
Course” means any dividend paid by the Borrower on the
Common Shares in any fiscal year of the Borrower (whether in cash,
securities, property or other assets), provided that the amount of
such dividend paid in cash and the value of such dividend paid
otherwise than in cash (any securities, property or other assets so
distributed as a dividend to be valued at an amount equal to the
fair market value thereof as determined by the directors at the
times such dividend is declared), plus the aggregate amount or
value (as so determined) of all other dividends previously paid by
the Borrower on the Common Shares (or on any other shares in the
capital of the Borrower ranking with respect to the payment of
dividends on a parity with the Common Shares) in such fiscal year,
does not exceed the greatest of:





 



 







 





 




(i)

the amount or value
(as so determined) which results in the amount or value (as so
determined) of dividends per Common Share paid by the Borrower on
the Common Shares (or on any other shares in the capital of the
Borrower ranking with respect to the payment of dividends on a
parity with the Common Shares) during such fiscal year not
exceeding 200% of the amount or value (as so determined) per Common
Share of all dividends paid by the Borrower on the Common Shares
(or on any other shares in the capital of the Borrower ranking with
respect to the payment of dividends on a parity with the Common
Shares) during the fiscal year of the Borrower ended immediately
prior to the commencement of such fiscal year;





 




(ii)

the amount or value
(as so determined) which results in the amount or value (as so
determined) of dividends per Common Share of all dividends paid by
the Borrower on the Common Shares (or on any other shares in the
capital of the Borrower ranking with respect to the payment of
dividends on a parity with the Common Shares) during such fiscal
year not exceeding 100% of the amount or value (as so determined)
per Common Share of all dividends paid by the Borrower on the
Common Shares (or on any other shares in the capital of the
Borrower ranking with respect to the payment of dividends on a
parity with the Common Shares) during the three successive fiscal
years of the Borrower ended immediately prior to the commencement
of such fiscal year; and





 




(iii)

150% of the
consolidated net income of the Borrower before extraordinary items
for (but after dividends payable on all shares in the capital of
the Borrower ranking with respect to the payment of dividends prior
to the Common Shares in respect of) the fiscal year of the Borrower
ended immediately prior to the commencement of such fiscal year
(such consolidated net income, extraordinary items and dividends to
be as shown in the audited consolidated financial statements of the
Borrower for such fiscal year or, if there are no audited
consolidated financial statements for such fiscal year, computed in
accordance with generally accepted accounting
principles);





 


provided that if
any fiscal year which is relevant for purposes of the foregoing
provisions of this definition is less than 365 days, any amount or
value determined in respect of such fiscal year pursuant to such
provisions will be adjusted by multiplying such amount or value by
the number obtained by dividing the number of days in such fiscal
year by 365;

 




(c)

“subsidiary” has the meaning which
that term has in the Canada
Business Corporations Act;
and





 



 







 





 




(d)

“trading day”, with respect to any
stock exchange or over-the-counter market, means a day on which
shares may be traded through the facilities on such stock exchange
or in such over-the-counter market.





 

11. Proceedings Prior to any Action
Requiring Adjustment: As a condition precedent to the taking
of any action which would require an adjustment in any of the
conversion rights pursuant to this Debenture, including the number
and classes of shares which are to be received upon the exercise
thereof, the Borrower shall take any corporate action which may be
necessary in order that the Borrower has unissued and reserved in
its authorized capital and may validly and legally issue as fully
paid and non-assessable all the shares which the Lender is entitled
to receive on the full exercise of the conversion rights under this
Debenture in accordance with the provisions hereof.

 

12. Notice of Adjustment of Subscription
Rights: Immediately upon the occurrence of any event which
requires an adjustment in any of the subscription rights pursuant
to this Debenture, the Borrower shall forthwith give notice to the
Lender of the particulars of such event and the required adjustment
in the subscription rights.

 

13. Covenants of the Borrower: The
Borrower covenants with the Lender that so long as this Debenture
remains outstanding:

 




(a)

The Borrower shall
duly and punctually pay or cause to be paid to the Lender the
principal of and the interest accrued on this Debenture on the
dates, at the place, in the moneys, and in the manner set forth in
this Debenture.





 




(b)

The Borrower shall
pay all reasonable costs, charges and expenses (including legal
fees and disbursements) of or incurred by the Lender in connection
with this Debenture and all ancillary documents including the
ongoing administration hereof (other than normal course reviews and
reports) and the enforcement hereof.





 




(c)

The Borrower shall
provide immediate notice to the Lender of any event which
constitutes or, with the giving of notice or lapse of time or both,
or the satisfaction of any other condition, would constitute an
event of default under this Debenture.





 




(d)

The Borrower shall
not:





 




(i)

sell, lease or
otherwise transfer any of its undertaking, property and assets as
an entirety or substantially as an entirety in one or more
transactions, or sell, lease or otherwise dispose of its
undertaking, property and assets as an entirety or substantially as
an entirety in one or more transactions; or





 




(ii)

amalgamate or merge
with any other corporation or effect any corporate reorganization
if such transaction involves the issue of shares of the
Borrower;





 


without
the prior written consent of the Lender or as expressly provided
for herein.

 




(e)

The Borrower shall
not, at any time, without the prior written approval of the Lender,
incur any indebtedness, other than indebtedness evidenced by this
Debenture, for money borrowed by the Borrower or for money borrowed
by others for the payment of which the Borrower is responsible or
liable.





 



 







 





 




(f)

The Borrower shall
not without the prior written consent of the Lender or except as
contemplated herein, permit a reorganization, amalgamation, merger,
acquisition, divestiture or any other corporate event including,
but not limited to, an amendment of the charter documents which
would cause the corporate structure or the shareholdings, whether
legal or beneficial, of the Borrower to be varied from the
corporate structure or shareholdings, whether legal or beneficial,
as it exists as of the date of this Debenture.





 



DEFAULT

 

14. Default: Upon the happening of
any one or more of the following events, namely:

 




(a)

if the Borrower
makes default in payment of the principal and/or interest on this
Debenture when the same becomes due and payable under any provision
hereof;





 




(b)

if proceedings for
the bankruptcy, receivership, dissolution, liquidation, winding-up,
reorganization or readjustment of debt of the Borrower or for the
suspension of the operations of the Borrower are commenced or
notice of intention in respect thereof is given under any law or
statute of any jurisdiction relating to such matter whether now or
hereafter in effect and such proceedings are not being contested by
the Borrower; and





 




(c)

if the Borrower is
adjudged or declared bankrupt or insolvent, or makes an assignment
for the benefit of its creditors, or petitions or applies to any
tribunal for the appointment of a receiver or trustee for it or for
any substantial part of its property, or commences any proceedings
relating to it under any reorganization, arrangement, readjustment
of debt, dissolution, liquidation, or other similar law or statute
of any jurisdiction whether now or hereafter in effect, or by any
act or failure to act indicates its consent to, approval of, or
acquiescence in, any such proceeding relating to it or any
substantial part of its property, or suffers the appointment of any
receiver or trustee,





 


then in
each and every such event the principal of and interest on this
Debenture and all other moneys outstanding hereunder shall
forthwith become immediately due and payable, anything herein to
the contrary notwithstanding, and the Borrower shall forthwith pay
to the Lender the principal of this Debenture and accrued and
unpaid interest, together with interest at the rate borne by this
Debenture on such principal, interest and such other moneys from
the date of the said declaration until payment is received by the
Lender.

 



 







 





 



GENERAL

 

15. Further Assurances: Whether
before or after the happening of an event of default, the Borrower
shall, at its own expense do, make, execute or deliver, or cause to
be done, made, executed or delivered, all such further acts,
things, agreements, documents and instruments in connection with
this Debenture as the Lender may request from time to time for the
purpose of giving effect to the terms of this Debenture, all
immediately upon the request of the Lender.

 

16. Waiver of Default: The Lender
may, by written notice to the Borrower, waive any default of the
Borrower on such terms and conditions as the Lender may determine,
but no such waiver shall be taken to affect any subsequent default
or the rights resulting therefrom.

 

17. Expenses: The Borrower shall
pay to the Lender forthwith upon demand all reasonable
out-of-pocket costs, charges and expenses (including legal fees on
a solicitor-client basis) incurred by the Lender in connection with
the recovery or enforcement of payment of any of the moneys owing
hereunder at the rate hereinbefore specified calculated from the
date of incurring such costs, charges and expenses.

 

18. Severability: If any term,
covenant, obligation or agreement contained in this Debenture, or
the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this
Debenture or the application of such term, covenant, obligation or
agreement to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby
and each term, covenant, obligation or agreement herein contained
shall be separately valid and enforceable to the fullest extent
permitted by law.

 

19. Notices: Any notice or other
communication which may be or is required to be given or made
pursuant to this Debenture shall, unless otherwise expressly
provided herein, be in writing and shall be deemed to have been
sufficiently and effectively given if signed by or on behalf of the
party giving notice and delivered or sent by registered mail,
postage prepaid, to the party for which it is intended at its
address as follows:

 




(a)

if to the Borrower,
at:





 


30
Worcester Road,


Toronto,
Ontario


M9W
5X2


Facsimile Number:
(416) 798-3007

 


Attention: Chief
Financial Officer

 




(b)

if to the Lender,
at:





 


30
Worcester Road,


Toronto,
Ontario


M9W
5X2


Facsimile Number:
(416) 798-3007

 


Any
notice or communication which may or is required to be given or
made shall be made or given as herein provided or to such other
address or in care of such other officer as a party may from time
to time advise to the other parties hereto by notice in writing as
aforesaid. Any notice or communication given by mail shall be
deemed to have been received on the fifth business day following
the date of mailing unless delivery by mail is likely to be delayed
by strike or slowdown of postal workers, in which event it shall be
delivered by hand or transmitted by telecopier. Any notice which is
delivered by hand shall be deemed to have been received on the date
of such delivery if such date is a business day and such delivery
was made during normal business hours; otherwise it shall be deemed
to have been received on the business day next following such date
of delivery. Any notice which is delivered by telecopier shall be
deemed to have been received on the date of transmission if such
date is a business day and such transmission was made during normal
business hours; otherwise it shall be deemed to have been received
on the business day next following such date of
transmission.

 



 







 





 

20. Assignment: The Borrower and
the Lender shall not assign all or any part of their rights,
benefits or obligations under this Debenture without the prior
written consent of the other party, acting reasonably.

 

21. Entire Agreement: This
Debenture constitutes the entire agreement between the parties
pertaining to the subject matter described herein and therein.
There are no warranties, conditions or representations and there
are no agreements in connection with such subject matter except as
specifically set forth or referred to in this
Debenture.

 

22. Law Governing: This Debenture
shall be governed in all respects by the law of the Province of
Ontario and the laws of Canada applicable therein and shall be
treated in all respects as an Ontario contract.

 

23. Amendment and Waiver: No
amendment or waiver of any provision of this Debenture or consent
to any departure by the Borrower from any provision hereof or
thereof is effective unless it is in writing and signed by the
Lender. Such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it
is given.

 

24. Currency of Payment: The
principal, interest and other moneys payable hereunder shall be
paid in lawful money of Canada.

 

25. Successors: This Debenture and
all its provisions shall enure to the benefit of the Lender and
their heirs, executors and assigns, and shall be binding upon the
Borrower and its successors and assigns. The parties hereto
irrevocably submit and attorn to the non-exclusive jurisdiction of
the courts of the Province of Ontario for all matters arising out
of or in connection with this Debenture.

 



[Signature page follows]

 


 




 








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2
-

 







IN WITNESS WHEREOF the Borrower has duly executed this
Debenture as of the date first above written.

 


 



INTELLIPHARMACEUTICS INTERNATIONAL INC.

 

Per: 
/s/
Greg Powell          




    
    Name: Greg Powell


   
    Title: CFO