Document:

Concerto Software, Inc. 2000 Stock Option Plan

Exhibit 4.1 
 
CONCERTO SOFTWARE, INC. 
2000 STOCK OPTION PLAN 
 
1.    PURPOSE 
 
The name of this plan is the Concerto Software, Inc. 2000 Stock Option Plan (the “2000 Plan”). The purpose of the 2000 Plan is to promote the long-term success of Concerto Software, Inc., a Delaware corporation (the
“Company”), by providing financial incentives to employees and consultants of the Company who are in positions to make significant contributions toward such success except that no member of the Board of Directors of Concerto
Software, Inc. (the “Board”) or officer of the Company appointed by the Board shall be eligible for grants of options under the 2000 Plan. The 2000 Plan is designed to attract individuals of outstanding ability to become or to
continue as employees of the Company or consultants of the Company, to enable such individuals to acquire or increase proprietary interests in the Company through the ownership of shares of common stock of the Company, and to render superior
performance during their associations with the Company. The Company intends that this purpose will be effected by the granting, pursuant to the 2000 Plan, of options for shares of the Company’s Common Stock that do not meet the definition of
“incentive stock options” in Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”) (such options granted hereunder, “Nonqualified Options”). 
 
References herein to “the Company” shall include any
successor corporation to the Company and, except where the context requires otherwise, also any direct or indirect subsidiary of the Company (such that if the Company has one or more subsidiaries, individuals who are employees thereof or consultants
thereto are eligible to be granted Nonqualified Options under the 2000 Plan). References herein to “the Board” shall include the board of directors of any successor corporation to the Company. 
 
2.    OPTIONS TO BE GRANTED AND ADMINISTRATION

 
(a)    Options
Granted.    Options granted under the 2000 Plan shall only be Nonqualified Options. 
 
(b)    Administration of 2000 Plan.    The 2000 Plan shall be administered by the Board or
by a committee (the “Option Committee”) appointed by the Board. Hereinafter, all references in this 2000 Plan to the “Option Committee” shall mean the Board if no Option Committee is appointed. The Option Committee may
select one of its members as its chairman, and shall hold meetings at such time and places as it may determine. A majority of the Option Committee shall constitute a quorum and acts of a majority of the members of the Option Committee at a meeting
at which a quorum is present, or acts reduced to or approved in writing by all the members of the 
 

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Option Committee (if consistent with applicable state law), shall be the valid acts of the Option
Committee. From time to time, the Board may increase the size of the Option Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or
remove all members of the Option Committee and thereafter directly administer the 2000 Plan. 
 
(c)    Option Committee.    Subject to the terms and conditions of the 2000 Plan, the Option Committee shall have the power: 
 
(i)    To determine from time to time the
Nonqualified Options to be granted to eligible persons under the 2000 Plan, and to prescribe the terms and provisions (which need not be identical) of each Nonqualified Option granted under the 2000 Plan to such persons; 
 
(ii)    To construe and interpret the 2000
Plan and Nonqualified Options granted thereunder and to establish, amend, and revoke rules and regulations for administration of the 2000 Plan. In this connection, the Option Committee may correct any defect or supply any omission, or reconcile any
inconsistency in the 2000 Plan, or in any nonqualified option agreement, in the manner and to the extent it shall deem necessary or expedient to make the 2000 Plan fully effective. All decisions and determinations by the Option Committee in the
exercise of this power shall be final and binding upon the Company and all optionees; and 
 
(iii)    Generally, to exercise such powers and to perform such acts as are deemed necessary or expedient to promote the best interests of the Company with respect to the 2000 Plan,
including all actions the Option Committee deems necessary, under Section 422 of the Code and the regulations thereunder, to ensure that no Nonqualified Option issued hereunder is treated as an “incentive stock option” under Section 422(b)
of the Code. 
 
3.    STOCK SUBJECT TO THE
2000 PLAN 
 
(a)    Stock under the 2000 Plan.    The stock subject to the Nonqualified Options granted under the 2000 Plan shall be shares of the Company’s authorized but unissued common stock,
par value $.10 per share (the “Common Stock”), or previously issued shares of Common Stock that have been reacquired and reserved by the Board for resale upon exercise of Nonqualified Options granted under the 2000 Plan. The total
number of shares of Common Stock that may be issued pursuant to Nonqualified Options granted under the 2000 Plan shall not exceed an aggregate of 1,500,000 shares of Common Stock. Such number shall be subject to adjustment as provided in Section 9
hereof. 
 
(b)    Reallocation of Unexercised Options.    Whenever any outstanding Nonqualified Option under the 2000 Plan expires, is canceled or is otherwise terminated (other than by exercise),
the shares of Common Stock allocable to the unexercised portion of such Nonqualified Option may again be the subject of Nonqualified Options under the 2000 Plan. 
 

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4.    STOCK OPTION GRANTS 
 
Nonqualified Options may be granted to employees of the
Company, to consultants to the Company who are not employees of the Company, and to such other persons as the Option Committee shall select from time to time, provided that, in no event, shall any member of the Board or any officer of
the Company appointed by the Board be eligible to receive any grants of Nonqualified Options issued under the 2000 Plan. The determination of the persons eligible to receive grants and the number of shares of Common Stock for which Nonqualified
Options are granted shall be made by the Option Committee. 
 
5.    TERMS OF THE NONQUALIFIED OPTION AGREEMENTS 
 
Each nonqualified option agreement for Nonqualified Options granted under the 2000 Plan (each, a “Nonqualified Option Agreement”) shall contain such provisions as the Option Committee
shall from time to time deem appropriate, including restrictions applicable to shares of Common Stock issuable upon exercise of Nonqualified Options. The Option Committee may from time to time confer authority and responsibility on one or more of
its own members and/or one or more officers of the Company to execute and deliver the Nonqualified Option Agreements. The proper officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time
to carry out the terms of the Nonqualified Option Agreements. The Nonqualified Option Agreements need not be identical, but each Nonqualified Option Agreement by appropriate language, or by reference to this Section 5 of the 2000 Plan, shall include
the substance of all of the following provisions: 
 
(a)    Expiration.    Each Nonqualified Option shall expire on the date specified in the Nonqualified Option Agreement, which date shall not be later than the tenth anniversary of the
date on which the Nonqualified Option was granted. Unless otherwise determined by the Option Committee, each Nonqualified Option shall in any event expire not later than 90 days after the optionee is for any reason no longer employed by (or in the
case of a consultant, engaged in a business relationship with) the Company, except  (i) if such termination of employment (or business relationship) results from optionee’s disability (within the meaning of Section 22(e)(3) of the Code), a
Nonqualified Option may be exercised within 180 days thereafter (but in no event later than the scheduled expiration date set forth in the Nonqualified Option Agreement), to the extent such Nonqualified Option could have been exercised on the date
of such termination of employment, and (ii) if such termination of employment (or business relationship) results from the optionee’s death, a Nonqualified Option may be exercised by his executors or administrators within 180 days thereafter
(but in no event later than the scheduled expiration date set forth in the Nonqualified Option Agreement), to the extent such Nonqualified Option could have been exercised on the date of such optionee’s death. 
 
(b)    Exercise.    Subject to the provisions of Section 5(a), each Nonqualified Option granted under the 2000 Plan shall be exercisable as follows: 
 
1.    Vesting.    The Nonqualified Option shall either be fully exercisable on the date of grant or shall become exercisable thereafter in such installments as the Option Committee may
specify. 
 

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2.    Full Vesting of
Installments.    Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Nonqualified Option, unless otherwise specified by the Option Committee. 
 
3.    Partial
Exercise.    Each Nonqualified Option or installment may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable. 
 
4.    Acceleration of
Vesting.    The Option Committee shall have the right to accelerate the date that any installment of any Nonqualified Option becomes exercisable. 
 
Unless otherwise provided by the Option Committee, for this purpose the date of the grant of a Nonqualified
Option shall be the date on which the Option Committee approves the grant. To the extent not exercised, vested installments shall accumulate and be exercisable in whole or in part at any time after becoming exercisable, but not later than the date
the Nonqualified Option expires or terminates. Nonqualified Option Agreements may also contain provisions relating to the treatment of Nonqualified Options in the event of a merger, consolidation or liquidation of, or sale of assets by, the Company.

 
(c)    Purchase
Price.    Unless the Option Committee shall otherwise determine at the time the Nonqualified Option is granted, the purchase price per share of Common Stock under each Nonqualified Option shall be not less than the fair
market value of a share of Common Stock on the date the Nonqualified Option is granted. For the purposes of the 2000 Plan, the fair market value of the shares of Common Stock of the Company shall be determined by the Option Committee. 
 
6.    LIMITATION ON RIGHTS OF OPTIONEES

 
(a)    Transferability of Nonqualified Options.    Except as set forth below, (i) no Nonqualified Option shall be transferable by any optionee other than by will or by the laws of
descent and distribution and (ii) Nonqualified Options may be exercised during the optionee’s lifetime only by the optionee (or, if the optionee is disabled and so long as the Nonqualified Option remains exercisable, by the optionee’s duly
appointed guardian or other legal representative). However, the Option Committee may, in its discretion, permit a Nonqualified Option recipient to transfer such Nonqualified Option to family members or other persons for estate planning purposes. In
connection with permitting transfers, the Option Committee may require that (i) no consideration be given or payment made for any such transfer, (ii) the Nonqualified Option Agreement pursuant to which such Nonqualified Option is granted must be
approved by the Option Committee, and must expressly provide for transferability at the date of grant in a manner consistent with the 2000 Plan, and (iii) subsequent transfers of the transferred Nonqualified Option shall be prohibited except those
in accordance with this Section. Following any such transfer, any such Nonqualified Options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that for purposes of Sections
2(c)(ii), 6(b), 6(c), 7, 8, 9 and 12 hereof the term “optionee” shall be deemed to refer to the transferee. The events of termination of employment (or business relationship in the case of a consultant) set forth in an optionee’s
Nonqualified Option Agreement shall continue to be 
 

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applied with respect to the original optionee, following which the Nonqualified Options shall be
exercisable by the transferee only to the extent, and for the periods specified, therein. 
 
(b)    No Shareholder Rights.    No optionee shall be deemed for any purpose to be the owner of any shares of Common Stock subject to any Nonqualified
Option unless and until (i) the Nonqualified Option shall have been exercised pursuant to the terms thereof, (ii) the Company shall have issued and delivered the shares to the optionee, and (iii) the optionee’s name shall have been entered as a
shareholder of record on the books of the Company. Thereupon, the optionee shall have full voting, dividend and other ownership rights with respect to such shares of Common Stock. 
 
(c)    No Employment Rights.    Neither the 2000 Plan nor the
grant of any Nonqualified Option thereunder shall be deemed to confer upon any optionee any rights of employment with the Company, including, without limitation, any right to continue in the employ of the Company, or affect the right of the Company
to terminate the employment of an optionee at any time, with or without cause. 
 
(d)    Authority of the Company.    The existence of the Nonqualified Options shall not affect: the right or power of the Company or its shareholders to
make adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; any issue of bonds, debentures, preferred or prior preference stock affecting the Common Stock or the rights thereof; the
dissolution or liquidation of the Company, or sale or transfer of any part of its assets or business; or any other act, whether of a similar character or otherwise. 
 
7.    METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE 
 
(a)    Notice of
Exercise.    Any Nonqualified Option granted under the 2000 Plan may be exercised by the optionee by delivering to the Chief Financial Officer of the Company (or such other representative of the Company as the Option
Committee may designate) on any business day within the Company’s “trading window” (as defined in the Company’s Securities Compliance Policy in effect on the date of such exercise) a written notice specifying the number (which
shall be consistent with the provisions of Section 5(b) hereof) of shares of Common Stock the optionee then desires to purchase (the “Notice”). 
 
(b)    Payment.    A Nonqualified Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company at its principal office address, or to such transfer agent as the Company shall designate. Such notice shall identify the Nonqualified Option being exercised and specify
the number of shares as to which such Nonqualified Option is being exercised, accompanied by full payment of the purchase price therefor either (a) in United States dollars in cash or by check, (b) at the discretion of the Option Committee, through
delivery of shares of Common Stock having a fair market value equal as of the date of the exercise to the cash exercise price of the Nonqualified Option, (c) at the discretion of the Option Committee, by delivery of the optionee’s personal
recourse note bearing interest payable not less than annually at no less than 100% of the lowest applicable Federal rate, as defined in Section 1274(d) of the 
 

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Code, (d) at the discretion of the Option Committee and consistent with applicable law, through the
delivery of an assignment to the Company of a sufficient amount of the proceeds from the sale of the Common Stock acquired upon exercise of the Nonqualified Option and an authorization to the broker or selling agent to pay that amount to the
Company, which sale shall be at the participant’s direction at the time of exercise, or (e) at the discretion of the Option Committee, by any combination of (a), (b), (c) and (d) above. 
 
8.    WITHHOLDING; ESCROW 
 
The Company shall be entitled to withhold from any
compensation or other payments then or thereafter due to the optionee such amounts as may be necessary to satisfy any withholding requirements of federal or state law or regulation and, further, to collect from the optionee any additional amounts
which may be required for such purpose as a condition of delivering the shares of Common Stock acquired pursuant to a Nonqualified Option. The Option Committee may, in its discretion, require shares of the Common Stock acquired by an optionee upon
the exercise of a Nonqualified Option to be held in an escrow arrangement for the purpose of enabling compliance with this Section 8. 
 
9.    ADJUSTMENT UPON CHANGES IN CAPITALIZATION 
 
Upon the occurrence of any of the following events, an optionee’s rights with respect to Nonqualified
Options granted to such optionee hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in the Nonqualified Option Agreement between the optionee and the Company relating to such Nonqualified Option:

 
(a)    Stock Dividends
and Stock Splits.    If the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding
Common Stock, the number of shares of Common Stock deliverable upon the exercise of Nonqualified Options shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to
reflect such subdivision, combination or stock dividend. 
 
(b)    Consolidations or Mergers.    If the Company is to be consolidated with or acquired by another entity in a merger or other reorganization in which the holders of the outstanding
voting stock of the Company immediately preceding the consummation of such event, shall, immediately following such event, hold, as a group, less than a majority of the voting securities of the surviving or successor entity, or in the event of a
sale of all or substantially all of the Company’s assets or otherwise (each, an “Acquisition”), the Option Committee or the board of directors of any entity assuming the obligations of the Company hereunder (the
“Successor Board”), shall, as to outstanding Nonqualified Options, either (i) make appropriate provision for the continuation of such Nonqualified Options by substituting on an equitable basis for the shares then subject to such
Nonqualified Options either (a) the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition, (b) shares of stock of the surviving or successor corporation or (c) such other securities as the
Successor Board deems appropriate, the fair market value of which shall not materially exceed the fair market value of the shares of Common Stock subject to such 
 

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Nonqualified Options immediately preceding the Acquisition; or (ii) upon written notice to the optionees,
provide that all Nonqualified Options must be exercised, to the extent then exercisable or to be exercisable as a result of the Acquisition, within a specified number of days of the date of such notice, at the end of which period the Nonqualified
Options shall terminate; or (iii) terminate all Nonqualified Options in exchange for a cash payment equal to the excess of the fair market value of the shares subject to such Nonqualified Options (to the extent then exercisable or to be exercisable
as a result of the Acquisition) over the exercise price thereof. 
 
(c)    Recapitalization or Reorganization.    In the event of a recapitalization or reorganization of the Company (other than a transaction described in subparagraph (b) above) pursuant
to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, an optionee upon exercising a Nonqualified Option shall be entitled to receive for the purchase price paid upon such
exercise the securities he or she would have received if he or she had exercised such Nonqualified Option prior to such recapitalization or reorganization. 
 
(d)    Dissolution or Liquidation.    In the event of the proposed dissolution or
liquidation of the Company, each Nonqualified Option will terminate immediately prior to the consummation of such proposed action or at such other time and subject to such other conditions as shall be determined by the Option Committee.

 
(e)    Issuances of
Securities.    Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares subject to Nonqualified Options. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. 
 
(f)    Fractional
Shares.    No fractional shares shall be issued under the 2000 Plan and the optionee shall receive from the Company cash in lieu of such fractional shares. 
 
(g)    Adjustments.    Upon the happening of any of the events
described in subparagraphs (a), (b) or (c) above, the class and aggregate number of shares set forth in Section 3 hereof that are subject to Nonqualified Options which previously have been or subsequently may be granted under the 2000 Plan shall
also be appropriately adjusted to reflect the events described in such subparagraphs. The Option Committee or the Successor Board shall determine the specific adjustments to be made under this Section 9 and, subject to Section 2, its determination
shall be conclusive. 
 
10.    AMENDMENT OR
TERMINATION OF 2000 PLAN 
 
The Board may
modify, revise or terminate the 2000 Plan at any time and from time to time. Except as provided in Section 9 hereof, rights and obligations under any Nonqualified Option granted before any amendment of the 2000 Plan shall not be altered or impaired
by such amendment, except with the consent of the optionee. 
 

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11.    EFFECTIVE DATE; NONEXCLUSIVITY 
 
(a)    Effective
Date.    This 2000 Plan will be deemed to have been adopted and to be effective when approved by the Board. 
 
(b)    Nonexclusivity.    The adoption of the 2000 Plan shall not be construed as creating
any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options otherwise than under the 2000 Plan, and such arrangements may be either applicable
generally or only in specific cases. 
 
12.    GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW 
 
(a)    Securities Laws.    If in the opinion of legal counsel for the Company, the issuance
or sale of any shares of Common Stock pursuant to the exercise of a Nonqualified Option would not be lawful for any reason, including, without limitation, the inability of the Company to obtain from any governmental authority or regulatory body
having jurisdiction the authority deemed by such counsel to be necessary to such issuance or sale, the Company shall not be obligated to issue or sell any shares of Common Stock pursuant to the exercise of a Nonqualified Option to an optionee or any
other authorized person unless a registration statement that complies with the provisions of the Securities Act of 1933, as amended (the “Act”), in respect of such shares of Common Stock is in effect at the time thereof, or other
appropriate action has been taken under and pursuant to the terms and provisions of the Act, or the Company receives evidence satisfactory to such counsel that the issuance and sale of such shares of Common Stock, in the absence of an effective
registration statement or other appropriate action, would not constitute a violation of the Act or any applicable state securities law. The Company is in no event obligated to register any such shares of Common Stock, to comply with any exemption
from registration requirements or to take any other action which may be required in order to permit, or to remedy or remove any prohibition or limitation on, the issuance or sale of such shares of Common Stock to any optionee or other authorized
person. 
 
(b)    Governing
Law.    The 2000 Plan shall be governed by and interpreted under the laws of the State of Delaware. 
 
13.    TERMINATION OF GRANTING OF NONQUALIFIED OPTIONS UNDER THE 2000 PLAN 
 
No Nonqualified Option may be granted under the 2000 Plan
after the tenth anniversary of the effective date of the 2000 Plan (as set forth in Section 11 hereto). 
 

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AMENDMENT
NO. 1 
TO THE 
CONCERTO SOFTWARE, INC. 
2000 STOCK OPTION PLAN 
 
Pursuant to actions taken by the Board of Directors of
Concerto Software, Inc. (the “Corporation”), the Corporation’s 2000 Stock Option Plan (the “Plan”) is amended as follows: 
 
1.    Amending Section 3(a) thereof to increase the aggregate number of shares which may be issued pursuant to the Plan to 1,831,391
shares. 
 
Except as modified hereby, the Plan shall remain in full
force and effect. 
 

9Agency Agreement

 

 EXHIBIT 4.1

 NOTE PURCHASE, PAYING AND CONVERSION AGENCY AGREEMENT

 NORSAT INTERNATIONAL INC.

 BURNABY, B.C., Canada

 USD 2’000’000.—
8% Convertible Notes of 2002 due March 31, 2007

 March 28, 2002

  

 

TABLE OF CONTENTS

DEFINITIONS

	 	 	 	 	 	 	 	 	 	 	 	 	 
	I.
    
	 	SUBJECT
	 	 	 	 	 	 	 	2
	II.
	 	ANNEXES
	 	 	 	 	 	 	 	3
	III.
	 	SALES RESTRICTIONS
	 	 	 	 	 	 	 	3
	IV.
	 	COMMISSION AND EXPENSES
	 	 	 	 	 	 	 	3
	V.
	 	WARRANTIES
	 	 	 	 	 	 	 	4
	VI.
	 	PAYMENT TO THE COMPANY
	 	 	 	 	 	 	 	7
	VII.
	 	CONDITIONS TO THE OBLIGATIONS OF BANCA DEL GOTTARDO
	 	 	 	 	 	 	 	7
	VIII.
	 	INFORMATION MEMORANDUM
	 	 	 	 	 	 	 	8
	IX.
	 	PRINTING OF THE NOTES
	 	 	 	 	 	 	 	8
	X.
	 	SERVICING OF THE NOTES
	 	 	 	 	 	 	 	9
	XI.
	 	CANCELLATION OF NOTES AND COUPONS
	 	 	 	 	 	 	 	11
	XII.
	 	COVENANTS
	 	 	 	 	 	 	 	11
	XIII.
	 	RIGHT OF TERMINATION
	 	 	 	 	 	 	 	12
	XIV.
	 	COMMUNICATIONS
	 	 	 	 	 	 	 	13
	XV.
	 	APPLICABLE LAW AND JURISDICTION
	 	 	 	 	 	 	 	13
	XVI.
	 	EFFECTIVENESS
	 	 	 	 	 	 	 	13
	XVII.
	 	CURRENCY INDEMNITY
	 	 	 	 	 	 	 	14
	XVIII.
	 	ENTIRE AGREEMENT
	 	 	 	 	 	 	 	14
	XIX.
	 	AMENDMENT, CANCELLATION AND WAIVER
	 	 	 	 	 	 	 	15
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ANNEX A
	 	TERMS OF THE NOTES
	 	 	 	 	 	 	 	16
	ANNEX B
	 	PERMANENT GLOBAL NOTE
	 	 	 	 	 	 	 	26

 

 

NOTE PURCHASE, PAYING AND CONVERSION AGENCY AGREEMENT

entered into effective as of March 28, 2002

between

NORSAT INTERNATIONAL INC.

being a corporation existing under the laws of the Province of British

Columbia, Canada, whose head office is situated at 300-4401 Still Creek Drive,

Burnaby, B.C. V5C 6G9.,

(hereinafter called the “Company” or the “Issuer”)

     
on the one part

and

BANCA DEL GOTTARDO

being a corporation duly organized with limited liability and existing under

the laws of Switzerland, whose registered office is situated at Viale Stefano

Franscini 8, 6901 Lugano, Switzerland,

     
on the other part

Some Definitions

The Company’s 8% Unsecured Convertible Debentures of 2002 due March 31, 2007,
are referred to herein as the “Notes”.

Until the Notes have been printed in definitive form, if printed, pursuant to
Article IX hereof, the expression “Notes” herein shall include entitlements
under the Permanent Global Note, and the expressions “Noteholder(s)” and
“Couponholder(s)”, mutatis mutandis, shall mean and include persons and
entities entitled to the benefits under the Permanent Global Note. Each
Noteholder possesses a co-ownership in the Permanent Global Note in relation to
the principal amount of Notes of which he is an owner. “Permanent Global Note”
means a global note for the total principal amount of U.S. Dollars (“USD”)
2’000’000. The Permanent Global Note may be replaced by Notes issued in bearer
form and representing 200 single Notes each in the amount of USD 10’000 and
representing the aforementioned total principal amount. The Permanent Global
Note will be destroyed by Banca del Gottardo when the Notes are printed, if
printed. Banca del Gottardo shall promptly after destruction provide to the
Company a written certificate that the Permanent Global Note has been
destroyed.

 

 

     
Page 2

	I.	 	SUBJECT

	 	Subject to the terms and conditions hereof

	 	-	the Company, pursuant to authorization by its Board of Directors,
agrees to issue and sell to Banca del Gottardo USD 2’000’000.— Notes
at a price of 100% of their principal amount and
	 
	 	-	Banca del Gottardo agrees not later than March 28, 2002

	 	(1)	to purchase (i.e. underwrite) on a firm basis for USD 2’000’000.— Notes
at a price of 100% of their principal amount, and
	 
	 	(2)	to offer the Notes in a placement exclusively to its clients and other
financial institutions at a price of 100% of their principal amount,

	 	 	 
	with a total principal amount of	 	
USD 2’000’000.—

(United States Dollars two million)
	 	 	 
	maturing on	 	
March 31, 2007
	 	 	 
	bearing interest at the rate of	 	
8% per annum, payable
semi-annually in arrears each
on September 28 and March 28,
commencing September 28, 2002
until maturity.

	 	 	The last coupon will be payable on March 31, 2007 and it will include the
interests maturing from September 28, 2006 until March 31, 2007.
	 
	 	 	The aggregate amount for which Notes are sold are hereinafter
referred to as the “Proceeds”.
	 
	 	 	The Net Proceeds of the Notes will be utilized by the Company for the
financing of working capital and general corporate purposes.
	 
	 	 	Banca del Gottardo shall not have any responsibility for or be obliged to
concern itself with the application of the net Proceeds of the Notes.

 

 

     
Page 3

	II.	 	ANNEXES

	 	 	The contents of each of the Annexes attached hereto, i.e.

	 	 	 
	Annex A:

Annex B:	 	
Terms of the Notes

Form of Permanent Global Note

shall constitute an integral part of this Agreement.

	III.	 	SALES RESTRICTIONS
	 
	 	 	No action has been or will be taken by the Issuer that would permit
a public offering of the Notes or possession or distribution of any
offering material in relation to the Notes in any jurisdiction where
action for that purpose is required. No distribution of any offering
material relating to the Notes may be made in or from any
jurisdiction except in circumstances which will result in compliance
with any applicable laws and regulations and will not impose any
obligations on the Issuer.
	 
	 	 	The Notes to be issued pursuant to this Agreement have not been
registered under the United States Securities Act of 1933, as amended
(the “Securities Act”), and may not be offered, sold or delivered,
directly or indirectly, in the United States or to, or for the
account of, any U.S. person except in transactions exempt from the
registration requirements of the Securities Act.
	 
	 	 	The Notes have not been and will not be qualified for sale under the
securities laws of Canada or any province of territory thereof. The
Notes will not be offered or sold directly or indirectly in Canada or to
persons established or residing, or having their usual residence in
Canada in contravention of the securities laws of Canada or any province
or territory thereof. The present agreement or any other offering
material relating to the Notes will not be distributed or delivered in
Canada in contravention of the securities laws of Canada.
	 
	IV.	 	COMMISSION AND EXPENSES

	 	a)	 	The Company will pay on March 28, 2002 Lugano time (the
“Closing Date”) to Banca del Gottardo

	 	 	(1)	 	a managing and underwriting commission of 5 % calculated on the principal
amount of the Notes.

 

 

     
Page 4

	 	 	 	The payment by the Company of (1) above will be made by deduction from
the payment by Banca del Gottardo to the Company of the Proceeds,
resulting in the Net Proceeds as per Article VI.

	 	b)	 	The Company shall further bear when ascertainable and due

	 	 	-	 	 all present or future taxes, duties or other charges levied by or within
the Province of British Columbia, Canada in connection with the execution
and delivery of this Agreement, the Permanent Global Note (excluding tax
on interest or principal on the Notes which is addressed in Annex A); and

	 	(c)	 	The Company will reimburse Banca del Gottardo on first demand
for all reasonable bank charges, reasonable legal fees and other
reasonable costs and expenses incurred or to be incurred by Banca
del Gottardo in case of or in connection with reorganization,
merger, restructuring or default, actual or threatened, of the
Company as well as in connection with the convening of a
Noteholders’ meeting and the preservation and enforcement of any of
the rights under this Agreement, the Permanent Global Note or the
Notes.
	 
	 	(d)	 	Banca del Gottardo shall bear

	 	 	-	 	all costs and expenses in connection with the initial offering and
placement of the Notes incurred by it.

	 	 	Banca del Gottardo shall further bear

	 	 	-	 	 the cost for the printing and delivery to the holders of the
definitive Notes, if printed, incurred by Banca del Gottardo on behalf
of the Company.
	 
	 	 	-	 	 all costs incurred by it in connection with the offering, including
the printing in Switzerland of the Information Memorandum relating to
the Notes.

	V.	 	WARRANTIES

	 	A)	 	The Company warrants to and for the benefit of Banca del
Gottardo that:

	 	 	1.	 	Status: it is a corporation duly incorporated and existing in good
standing under the laws of the Province of British Columbia, Canada,
capable of suing and being

 

 

     
Page 5

	 	 	 	 	sued and has the power and authority to own its assets and to
conduct the business which it presently conducts;
	 
	 	 	2.	 	Powers: it has the power to enter into, exercise its rights and perform
and comply with its obligations under this Agreement;
	 
	 	 	3.	 	Authorization and Consents:, except for the filing of documentation
within ten (10) days following the Closing Date with the British Columbia
Securities Commission and the Toronto Stock Exchange, all actions,
conditions and things required by the laws of the Province of British
Columbia and Canada have been taken, fulfilled and done (including the
obtaining of any necessary consents) in order

	 	 	 	 	a)	 	to enable it lawfully to enter into,
exercise its rights and perform and comply with its
obligations under this Agreement; and
	 
	 	 	 	 	b)	 	to ensure that those obligations are
legally binding and enforceable in accordance with their
terms subject to general equity principles, to applicable
bankruptcy, insolvency, conservatorship, reorganization
and other similar debtor relief laws, and to other laws
establishing liens and priorities or otherwise relating to
or affecting creditors-rights;

	 	 	4.	 	Non-Violation of Laws, etc: its entry into, and exercise of its rights
and/or performance of or compliance with its obligations under this
Agreement, the terms of the Permanent Global Note and the Notes do not and
will not violate in any material way

	 	 	 	 	a)	 	any law to which it is subject; or
	 
	 	 	 	 	b)	 	its Certificate and Articles of
Incorporation; or
	 
	 	 	 	 	c)	 	except for matters for which the Company
has received a waiver, any agreement to which it is a
party or which is binding on it or its assets, and does
not and will not result in the existence of, or obligate
it to increase, any security interest in those assets,
except to the extent that such violations in the aggregate
would not have a material adverse effect on the financial
conditions of the Company;

	 	 	5.	 	Obligations Binding: its obligations under this Agreement, the Permanent
Global Note and the Notes when duly executed are valid, binding and
enforceable in

 

 

     
Page 6

	 	 		 	accordance with their terms subject to general equity
principles, to applicable bankruptcy, insolvency,
conservatorship, reorganization and other similar debtor relief
laws, and to other laws establishing liens and priorities or
otherwise relating to or affecting creditors’ rights;
	 
	 	 	6.	 	Information Memorandum: the information pertaining to the Company and its
subsidiaries which may be contained in the Information Memorandum (defined
in Article VIII) will be accurate in all material respects and there will
be no other facts the omission of which makes any statement therein
materially misleading;
	 
	 	 	7.	 	Accounts: the audited and unaudited consolidated financial statements
filed with the B.C. and Ontario Securities Commissions present fairly the
results and financial condition of the Company as a whole for the periods
and as of the dates thereof, and are in accordance with generally accepted
accounting principles in the Province of British Columbia and Canada;
	 
	 	 	8.	 	No Material Adverse Change: save as disclosed in the Company’s filings
with the British Columbia and Ontario Securities Commissions, there has
been no material adverse change in the consolidated financial condition of
the Company since December 31, 2001;
	 
	 	 	9.	 	Litigation: except as disclosed herein, no litigation, arbitration or
administrative proceedings or judgment or award is current or, so far as
the Company is aware, threatened or pending that could result in a
material adverse financial change to the Company;

	 	 	 	 	a)	 	to restrain the entry into, exercise of
its rights under and/or performance or enforcement of or
compliance with its obligations under this Agreement; or
	 
	 	 	 	 	b)	 	which either individually or collectively
are material in the context of the issue and sale of the
Notes or the making and performance of this Agreement;

	 	 	10.	 	No Breach or Default: no event described in Sections 8, 9 or 10 of the
Terms of the Notes has occurred and is continuing. The Company is not in
breach or in default under any agreement to an extent or in a manner which
has had or could have a material adverse effect on the financial condition
of the Company and its consolidated affiliates taken as a whole.

 

 

     
Page 7

	 	(B)	 	Since the commitment of Banca del Gottardo to purchase the
Notes is made on the basis of the aforesaid representations and
warranties, the Company hereby undertakes with Banca del Gottardo
that it will hold Banca del Gottardo harmless against all losses,
liabilities, costs, charges and expenses which it may incur as a
Noteholder as a result of or in relation to any material
misrepresentation or any material breach of said representations
and warranties by the Company, and as long as any of the Notes are
outstanding Banca del Gottardo shall be given prompt notice by the
Company of any claim, action or proceeding which might in the
Company’s good faith judgment give rise to an obligation under this
clause (B) of Article V. This indemnification by the Company shall
be in addition to any other remedy available to Banca del Gottardo
under applicable law.

	VI.	 	PAYMENT TO THE COMPANY

	 	 	On the Closing Date, Banca del Gottardo will pay to the Company the
net proceeds (the “Net Proceeds”) amounting to the Issue price of
100% (U.S.$2,000,000) less the commission of 5% of the total amount
against the Permanent Global Note being delivered to Banca del
Gottardo pursuant to Article VII.

	VII.	 	CONDITIONS TO THE OBLIGATIONS OF BANCA DEL GOTTARDO

	 	 	Banca del Gottardo shall have received from the Company at the latest
on March 28, 2002 the following documents:

	 	(1)	 	a copy of the Certificate of Incorporation, together with all amendments
thereto, of the Company certified by the Secretary or the Assistant
Secretary of the Company and a copy of a Certificate of Status from the
Registrar of Companies in the Province of British Columbia as to the good
standing of the Company, each dated as of a recent date;
	 
	 	(2)	 	a certified copy of a resolution or resolutions duly adopted by the Board
of Directors of the Company signed by a duly authorized officer of the
Company, conferring the necessary authority upon the person(s) signing
this Agreement, the Information Memorandum, the Permanent Global Note, the
Notes and any related documents; and a certificate of the Secretary, or
Assistant Secretary of the Company as to the incumbency and signatures of
the officer(s) of the Company signing the documents provided for in this
clause (2) on behalf of the Company and the approval of this Agreement and
the Information Memorandum;

 

 

     
Page 8

	 	(3)	 	Permanent Global Note (in the form of Annex B, without interest coupons
and without reproduction of the Terms of the Notes) duly issued and signed
by an authorized officer of the Company to be held in escrow by Banca del
Gottardo pending payment of the Net Proceeds pursuant to Article VI;
	 
	 	(4)	 	Certificate of No Material Adverse Change dated as of the Closing Date
and signed by an authorized officer of the Company;
	 
	 	(5)	 	a legal opinion of external counsel to the Company on the laws of the
Province of British Columbia, dated as of the Closing Date; and
	 
	 	(6)	 	a certificate of two officers of the Company approving the terms of the
Notes and the issue and sale thereof by the Company.

	 	 	Each of documents 4, 5, and 6 shall be substantially as agreed by the
Company and Banca del Gottardo prior to the Closing Date.
	 
	VIII.	 	INFORMATION MEMORANDUM
	 
	 	 	If requested by Banca del Gottardo, the Company will supply Banca
del Gottardo on behalf of the holders of the Notes in due time with
such reasonable and publicly available information and documentation
as may be requested by Banca del Gottardo including the Company’s
annual and quarterly financial information, its annual report, and
the term sheet respecting the notes for the preparation by Banca del
Gottardo of the Information Memorandum (the “Information
Memorandum”) relating to the Issue, in compliance with Swiss law.
	 
	 	 	The Information Memorandum shall be reviewed by the Company and
Banca del Gottardo.
	 
	IX.	 	PRINTING OF THE NOTES
	 
	 	 	The Notes and Coupons and all rights and obligations in connection
therewith are documented solely in form of a Permanent Global Note as
per Annex B hereto. Each Noteholder of a Note or Coupon therefore
retains a co-ownership in the Permanent Global Note to the extent of his
claim against the Company. Content and form of the Permanent Global Note
must be in accordance with the regulations of SIS SEGAINTERSETTLE AG
(the “SEGA”). Except as provided in item c) below, no printing and
delivery of definitive Notes or Coupons will occur.

 

 

     
Page 9

	 	a)	 	Publicity: All documents and publications established in
connection with the issue of the Notes (i.e. the Information
Memorandum, advertisements, if any, as well as possible additional
publications) must explicitly and prominently state that the Notes
are represented by way of a Permanent Global Note and that
investors are not entitled to receive definitive Notes or Coupons.
	 
	 	b)	 	Custodianship: Banca del Gottardo undertakes to hold in
custody the Permanent Global Note, which it has received duly
signed in accordance with Article VII item 3) above, after payment
of the Net Proceeds to the Company. The Permanent Global Note
remains in safekeeping with Banca del Gottardo during the entire
duration of the issue and until the complete redemption of the
Notes.
	 
	 	c)	 	Arrangements for printing of the definitive Notes and
Coupons: The Company irrevocably authorizes Banca del Gottardo to
arrange for the printing of the definitive Notes with Coupons
attached, in the name of and at the expense of the Company, should
Banca del Gottardo deem such printing to be necessary or useful, or
if the presentation of definitive Notes and Coupons is required by
Swiss or foreign laws and regulations in connection with the
enforcement of rights (e.g. in cases of bankruptcy, consolidation
or reorganisation of the Issuer).
	 
	 	 	 	Should the definitive Notes and Coupons be printed, Banca del Gottardo
will then exchange the Permanent Global Note against the definitive
Notes and Coupons and thereupon cancel and return the Permanent Global
Note to the Company.

	 	 	 	Notes and/or Coupons which are mutilated, lost or destroyed may be
replaced by Banca del Gottardo in accordance with the respective
provisions of the Terms of the Notes.

	X.	 	SERVICING OF THE NOTES

	 	(1)	 	Transfer of funds
	 
	 	 	 	The Company will effect transfer of the funds in freely disposable
U.S. Dollars required to make any payment of principal or interest
on the Notes, including the commissions referred to in paragraph
(2) hereafter, to Banca del Gottardo, Lugano, as Paying Agent, for
value the respective due date provided that, if such due date does
not fall on a Business Day, the Company shall be obliged to effect
transfer of such payments for value the Business Day immediately
preceding such due date. Any transfer risk shall be borne by the
Company.

 

 

     
Page 10

	 	 	 	“Business Day” means a day on which commercial banks are open for
domestic business and foreign exchange in Lugano and Vancouver,
Canada.
	 
	 	 	 	Banca del Gottardo will supply the Company, by facsimile or
otherwise in writing received by the Company not less than five
Business Days prior to each due date for any payment under the
Notes, with any necessary information including reference numbers
and the name of a contact person for the receipt of funds. Further
information regarding the transfer may be obtained by Banca del
Gottardo from the Company at the address set out in Article XIV
below.
	 
	 	 	 	Banca del Gottardo shall credit the funds received to separate
non-interest bearing accounts with Banca del Gottardo for each
Coupon due date and/or redemption date. The receipt by Banca del
Gottardo of the due and punctual payment of the funds in Lugano
shall release the Company of its obligations under the Permanent
Global Note or under the Notes for the interest and principal, to
the extent of such payment.
	 
	 	 	 	The risk of any exchange loss on the transfer of funds so held by
Banca del Gottardo from Banca del Gottardo to the Company shall be
borne by the Company, provided the transfer is made by order of, or
with the consent of, the Company.

	 	(2)	 	Modalities

	 	 	 	Any transfer by the Company as per (1) and (2) above, shall be made
in U.S. Dollars freely disposable, without any restrictions, and
whatever the circumstances may be, irrespective of the nationality
or domicile of the holder of Notes and/or Coupons, and without
requiring any affidavit, or the fulfilment of any other formality.

	 	(3)	 	Paying Agency

	 	 	 	The Company hereby appoints Banca del Gottardo as sole Paying Agent
(the “Paying Agent”) and Banca del Gottardo agrees to pay to the
Noteholders all amounts to become due under the Notes.
	 
	 	 	 	The Company undertakes, in connection with the Issue, not to
appoint any institutions as paying agent without the consent of
Banca del Gottardo, which consent shall not be unreasonably
withheld and not to pay to other banks any commission or
remuneration for the payment of interest or principal on the Notes.

 

 

     
Page 11

	XI.	 	CANCELLATION OF NOTES AND COUPONS

	  	 	The Company requests and authorizes Banca del Gottardo and Banca del Gottardo undertakes to cancel and destroy all Coupons
(if printed) paid and Notes (if printed) redeemed, converted or replaced, after the period prescribed by law, and to
certify to the Company in writing the serial numbers of Notes destroyed, the dates when such destruction took place and
the names of the persons witnessing such destruction.
	 
	 	 	Banca del Gottardo reserves the right to record cashed Coupons as well as redeemed, repaid, converted or replaced Notes on
video tape or other data carriers and to store them in this way instead of keeping them physically during the period
prescribed by law and to destroy them subsequently. This reproduction of Coupons and/or Notes will remain in safekeeping
at Banca del Gottardo during the statutory limitation.

	XII.	 	COVENANTS

	 	 	As long as any of the Notes remain outstanding, the Company undertakes:

	 	(1)	 	 	To provide Banca del Gottardo forthwith upon becoming aware thereof with

	 	 	 	-	 	any change of its Certificate of Incorporation or Articles, and
without waiting for Banca del Gottardo to take any of the actions
mentioned in Section 8, 9 or 10 of the Terms of the Notes,
	 
	 	 	 	-	 	a notice in writing of any event provided for in Section 8, 9 or 10 of
the Terms of the Notes.

	 	(2)	 	 	To hold meetings of the Board of Directors on at least a quarterly basis,
i.e. at least one meeting each quarter.
	 
	 	(3)	 	 	To provide Banca del Gottardo with quarterly financial statements of the
Company by no later than the 60th day of the month following the quarter
covered by such statements. Such statements shall provide Banca del
Gottardo with a summary of all of the Company’s operations, in addition to
a brief summary of how the Net Proceeds of this issue have been used by
Company.

	 	(4)	 	(a)		So long as any Notes are outstanding, to keep available authorized
shares of Common Stock sufficient to permit all Notes outstanding and
unconverted to be converted in accordance with the Provisions;

 

 

     
Page 12

	 	 	 	(b)		to assure that all shares of Common Stock
delivered upon conversion of Notes will be validly issued as
fully-paid and non-assessable;

	XIII.	 	RIGHT OF TERMINATION

	 	 	Notwithstanding anything contained in this Agreement, Banca del
Gottardo may by notice, setting forth in detail the basis for Banca
del Gottardo’s reasonable opinion giving rise to such notice, to the
Company terminate this Agreement at any time before the time on the
Closing Date when payment would otherwise be due under this
Agreement to the Company in respect of the Notes if:

	 	(1)	 	in the reasonable opinion of Banca del Gottardo, circumstances shall be
such as:

	 	 	a)	 	to prevent or to a material extent restrict
payment for the Notes in the manner contemplated in this
Agreement; or
	 
	 	 	b)	 	to a material extent prevent or restrict
settlement of transactions in the Notes in the market or
otherwise; or

	 	(2)	 	in the reasonable opinion of Banca del Gottardo, there shall have been:

	 	 	a)	 	any change in national or international
political, legal, tax or regulatory conditions; or
	 
	 	 	b)	 	any calamity or emergency

	 	 	which has in the view of Banca del Gottardo caused a substantial
deterioration in the price and/or value of the Notes.
	 
	 	 	Any such termination of this Agreement shall be without liability on the
part of Banca del Gottardo or on the part of the Company.
	 
	 	 	Upon any such termination of this Agreement pursuant to Article XIII
(1), the parties hereto shall (except for the liability of the Company
in relation to expenses as provided in Article IV (a) (2) hereof and
except for any liability arising before or in relation to such
termination) be released and discharged from their respective
obligations under this Agreement.

 

 

     
Page 13

	XIV.	 	COMMUNICATIONS

	 	 	All communications among Banca del Gottardo and the Company regarding this Agreement shall be made in the English
language, by facsimile, followed by registered letter, and shall be transmitted

	 	 	 
	by the Company to:	 	by Banca del Gottardo to:
	
	 	

	Banca del Gottardo

Viale Stefano Franscini 8

6901 Lugano, Switzerland	 	
Norsat International Inc.

Suite 300, 4401 Still Creek Drive

Burnaby, British Columbia V5C 6G9
	 	 	 
	Attn:Marco Camozzi	 	
Attn:Troy Bullock
	 	 	 
	Facsimile:0114191 808 18 43	 	
Facsimile:(604) 292.9011

	XV.	 	APPLICABLE LAW AND JURISDICTION
	 
	 	 	The Terms of this Agreement shall be governed by Swiss law, save and except that paragraph 7 of the Terms of the Notes
shall be governed by the laws of the Province of British Columbia.
	 
	 	 	Any dispute which might arise between Banca del Gottardo on the one hand and the Company on the other hand regarding this
Agreement shall fall within the jurisdiction of the ordinary Courts of Justice of the Canton of Ticino, the place of
jurisdiction being Lugano, with the right of appeal to the Swiss Federal Court of Justice in Lausanne where the law
permits.
	 
	 	 	Solely for purposes of the preceding paragraph and for the purpose of execution of a judgment in Switzerland, the Company
elects legal and special domicile at Banca del Gottardo’s office in Lugano, and Banca del Gottardo shall send to the
Company as soon as possible any documents received by it in this connection.
	 
	 	 	Banca del Gottardo shall also be at liberty to enforce its rights and to take legal action before the competent courts of
the Province of British Columbia and Canada, in which case Swiss law, save and except that paragraph 8 of the Terms of the
Notes shall be governed by the laws of the Province of British Columbia and the applicable laws of Canada, shall be
applicable with respect to the construction and interpretation of this Agreement.
	 
	XVI.	 	EFFECTIVENESS
	 
	 	 	The effectiveness of this Agreement is subject to:

 

 

     
Page 14

	 	(a)	 	the receipt by Banca del Gottardo of all documents as
requested in Article VII of this Agreement, in a form reasonably
acceptable to Banca del Gottardo,
	 
	 	(b)	 	no exercise of the Right of Termination as per Article
XIII.

	XVII.	 	CURRENCY INDEMNITY
	 
	 	 	If any sum due from the Company in favour of the Paying Agent has
to be converted from U.S. Dollars (the “first currency”) into
another currency (the “second currency”) for the purpose of (i)
making or filing a claim or proof against the Company, (ii)
obtaining an order or judgment in any court or other tribunal or
(iii) enforcing any order or judgment given or made in relation
hereto, the Company shall indemnify and hold harmless Banca del
Gottardo from and against any loss suffered as a result of any
discrepancy between (a) the rate of exchange used for such purpose
to convert the sum in question from the first currency into the
second currency and (b) the rate or rates of exchange at which
Banca del Gottardo may in the ordinary course of business purchase
the first currency with the second currency upon receipt of a sum
paid to them in the second currency in satisfaction in whole or in
part of any such order, judgment, claim or proof.
	 
	 	 	This indemnity shall constitute a separate and independent
obligation from the other obligations contained herein, shall give
rise to a separate and independent cause of action and shall apply,
irrespective of any waiver granted by Banca del Gottardo from time
to time and shall continue in full force and effect notwithstanding
any judgment or order for a liquidated sum or sums in respect of
amounts due hereunder or under any such judgment or order. Any such
loss or damage aforesaid shall be deemed to constitute a loss
suffered by Banca del Gottardo and no further proof or evidence of
any actual loss shall be required by the Company.
	 
	XVIII.	 	ENTIRE AGREEMENT
	 
	 	 	This Agreement together with the Annexes hereto and other
agreements and documents delivered pursuant hereto set forth the
entire agreement and understanding of the parties in respect of the
subject matter hereof and thereof and supersede all prior or
contemporaneous agreements, arrangements and understandings
relating to the subject matter hereof and thereof.

 

 

     
Page 15

	XIX.	 	AMENDMENT, CANCELLATION AND WAIVER

	 	 	This Agreement and the Annexes hereto may be amended, modified,
superseded or cancelled, and any of the terms hereof or thereof may
be waived, only by a written instrument executed by the Company and
Banca del Gottardo hereto or thereto, as the case may be, or, in
the case of a waiver, by the party or parties waiving compliance.
The failure of any party at any time or times to require
performance of any provision hereof or of any Annex hereto shall in
no manner affect the rights at a later time to enforce the same. No
waiver by any party of any condition or of the breach of any term
contained in this Agreement or in any Annex hereto, whether by
conduct or otherwise, in any one or more instances, shall be deemed
to be construed as a further or continuing waiver of any such
breach or the breach of any other term of this Agreement or of the
Annexes hereto.

THUS DONE AND SIGNED in 2 originals, of which one is for the Company,

in Lugano and Burnaby effective as of March 28, 2002

NORSAT INTERNATIONAL INC.

By:                                                      

BANCA DEL GOTTARDO

By:                                                      

 

 

     
Page 16

ANNEX A

TERMS OF THE “CONVERTIBLE NOTES” OF THE COMPANY

	(1)	 	Form and Denomination
	 
	 	 	The Notes are issuable in bearer form in the denominations of USD
10’000.— nominal amount each, with interest coupons (the “Coupons”)
attached. The Notes will be represented solely by a permanent Global
Note (the “Permanent Global Note”), without interest coupons, to be
deposited by the Company with Banca del Gottardo on the Payment Date.
Each holder of a Note or Coupon, retains a co-ownership in the Permanent
Global Note to the extent of his claim against the Company. Except as
provided below, no printing of Notes and Coupons will occur. Holders of
Notes and Coupons, therefore, do not have the right to request the
printing and delivery of individual Notes and Coupons. The Notes are
issued in the initial aggregate principal amount of two million United
States Dollars (USD 2’000’000.—).
	 
	 	 	The Permanent Global Note will remain in safekeeping with Banca del
Gottardo during the entire duration of the issue and until the complete
redemption of the Notes.
	 
	 	 	Should the definitive Notes and Coupons be printed, the Notes shall be
evidenced by bearer Notes with Coupons attached in the denomination of
USD 10’000.— nominal and multiples thereof.
	 
	 	 	Should Banca del Gottardo deem the printing of the Notes with Coupons
attached to be necessary or useful, or if the presentation of definitive
Notes and Coupons is required by Swiss or foreign laws in connection with
the enforcement of rights (e.g. in cases of bankruptcy, consolidation or
reorganization of the Company), Banca del Gottardo will provide for such
printing without cost for the holders of the Notes and Coupons. Should the
definitive Notes and Coupons be printed, Banca del Gottardo will then
exchange the Permanent Global Note (deposited as above provided) as soon as
possible against the definitive Notes and Coupons. The Company has
irrevocably authorized Banca del Gottardo to provide for the printing of
the definitive Notes and Coupons on its behalf.
	 
	 	 	The Permanent Global Note may be exchanged, as a whole or in part, for
appropriate definitive Notes, if printed, in bearer form in denominations
of USD 10’000.— with the Coupons attached..
Until such time as and if and when the definitive Notes and Coupons have
been issued, the expressions “Notes” and “Coupons” mean and include
co-ownership under the Permanent Global Note and the expressions “holder of
Note” and “holder of Coupon” shall mean and

 

 

     
Page 17

	 	 	include any person entitled to co-ownership and any further benefit under
the Permanent Global Note.
	 
	(2)	 	Interest
	 
	 	 	The Notes bear interest from the Payment Date at the rate of 8% per annum,
payable semi-annually in arrears on March 28 and September 28 of each year
until maturity (the “Coupon Due Dates”), the first time on September 28,
2002. Such interest is payable in U.S. Dollars. Each Note will cease to
bear interest on the date on which they become due for redemption or
repayment unless payment of principal and/or premium (if any) is improperly
withheld or refused or default is otherwise made in respect of such
payment. In such event, interest will continue to accrue (as well after as
before any judgment) up to but excluding the date on which payment in full
of the principal of such Note is made or (if earlier) the date on which,
payment in full of the principal thereof having been received by Banca del
Gottardo, notice to that effect shall have been given to the holders of the
Notes. Interest is computed on the basis of a 360-day year of twelve 30-day
months.
	 
	(3)	 	Repayment
	 
	 	 	The Company undertakes to repay the principal amount of the Notes, unless
previously redeemed or converted under paragraph 8 herein, without any
previous notice on March 31, 2007.
	 
	(4)	 	Payments
	 
	 	 	Payments with respect to the Notes and Coupons shall be made in U.S.
Dollars against presentation and surrender of such Notes or Coupons in the
manner specified below. Such payments shall be made without cost to the
Noteholders, without any limitations and under all circumstances
notwithstanding any transfer restrictions, regardless of any bilateral or
multilateral payment or clearing agreement in existence between Canada and
the Swiss Confederation, irrespective of the nationality, residence or
domicile of any of the Noteholders and without requiring any affidavit or
the fulfillment of any formalities. The funds required for the payment of
principal and interest shall be made available to Banca del Gottardo in
Switzerland as Paying Agent by the Company prior to each Coupon Due Date.
The receipt of the funds by Banca del Gottardo in Switzerland shall release
the Company from its obligations in respect of the payments due on the
respective dates for principal and interest.
	 
	 	 	Banca del Gottardo will arrange for payment of such funds as and when due
to the holders of Notes and Coupons. Notes and coupons may be presented for
payment at the principal amount

 

 

     
Page 18

	 	 	printed on the Notes and the amount of interest printed on the Coupons only
at the offices in Switzerland of Banca del Gottardo. No payment on the
Notes or Coupons will be made by transfer to an account in, or by mailing
to an address in Canada.
	 
	(5)	 	Tax Status
	 
	 	 	All payments of principal and interest on the Notes and Coupons by the
Company shall be made without deduction for or on account of any present or
future tax, assessment or other governmental charge (“Taxes”) imposed upon
such payment by Canada or any political subdivision or taxing authority
thereof or therein. If the Company shall at any time be required by law to
withhold any such Taxes, the Company will pay as additional amounts to
Banca del Gottardo for the account of the holders of Notes and Coupons,
such amounts as may be necessary so that every net payment on each Note or
Coupon, after withholding for or on account of any such Taxes (including
any backup withholding tax or similar charge that may be required in order
for such payment to be made without any certification or disclosure of the
nationality, residence or identity of the beneficial owner of such Note or
Coupon) will not be less than the amount provided in such Note or Coupon to
be then due or payable.
	 
	 	 	If, as the result of any change in, enactment of, or amendment to any laws
or regulations of the Province of British Columbia and Canada or any
political subdivision or taxing authorities thereof affecting taxation, or
any change in the official application of such laws or regulations, or any
change in, execution of or amendment to any treaty or treaties affecting
taxation to which the Province of British Columbia and Canada is a party,
it is determined by the Company that it would be required at any time to
pay additional amounts pursuant to the preceding paragraph, the Company is
entitled to redeem the Notes, as a whole but not in part, on giving not
more than 60 days’ but not less than 30 days’ prior notice to Banca del
Gottardo, on or after September 28, 2002 at par.
	 
	 	 	Notice of redemption shall be given by the Company in writing to Banca del
Gottardo and such notice so given shall constitute good and sufficient
notice and shall be binding upon all holders of the Notes, regardless of
who they may be or where they may be located.
	 
	 	 	Banca del Gottardo shall as soon as practicable notify the Noteholders of
such redemption in accordance with Section 10 hereof.
	 
	 	 	The Company has been advised by Banca del Gottardo that pursuant to the
Swiss federal laws at present in force, interest payments on the Notes are
not subject to Swiss withholding tax.

 

 

     
Page 19

	(6)	 	Authorizations
	 
	 	 	The Company has confirmed to Banca del Gottardo that no authorizations or
approvals are required under the laws of the Province of British Columbia
and Canada for the performance of its obligations hereunder, except for the
filings that are required to be made by the Company within ten days of the
Closing Date with the British Columbia Securities Commission and the
Toronto Stock Exchange.
	 
	(7)	 	Status of the Notes and Negative Pledge
	 
	 	 	The Notes constitute unsecured direct obligations of the Company, ranking
equally with other unsecured and unsubordinated indebtedness for borrowed
money of the Company.
	 
	(8)	 	Conversion
	 
	 	 	The Notes may at any time prior to their redemption be converted into
Shares of Common Stock (being the equivalent of USD 10’000.— divided by
USD 1.70 (“Conversion Price”), the initial conversion price per Share, (the
“Conversion Amount”)
	 
	 	 	The holder of 1 Note or more will be entitled at any time up to the close
of business on March 20, 2007, subject to prior redemption, to convert the
Notes, at the Conversion Amount thereof, into initially 5’882 shares of
Common Stock of the Company. No payment or adjustment will be made on
conversion of any Note for interest accrued thereon or dividends on any
Common Stock issued, except that accrued interest will be paid on the
conversion of any Note which has been called for redemption prior to the
conversion date. The Company is not required to issue fractional shares of
Common Stock upon conversion of Notes and, in lieu thereof, will pay a cash
adjustment based upon the market price of the Common Stock on the last
trading day prior to the date of conversion. In the case of Notes called
for redemption, conversion rights will expire at the close of business on
the fifth business day prior to the redemption date. Notes may be presented
for conversion only to the Head office of Banca del Gottardo in Lugano and
Banca del Gottardo will deliver Common Stock or other consideration
received upon conversion.
	 
	 	 	The Conversion Price is subject to adjustment in the following events
occurring after March 28, 2002:

	 	-	 	the issuance of stock of the Company as a dividend or distribution on the Common Stock;
	 
	 	-	 	subdivisions of outstanding shares of the Common Stock into a greater number of shares;
	 
	 	-	 	consolidations of outstanding shares of Common Stock into a smaller number of shares;

 

 

     
Page 20

	 	-	 	reclassification of the Common Stock into other shares of the Company’s capital stock;
	 
	 	-	 	issuance to all holders of Common Stock of certain rights entitling them
to subscribe for Common Stock at a price per share less than the current
market price but not for shares issuable under the Company’s stock option
and stock purchase plans; and
	 
	 	-	 	the distribution to all holders of Common Stock of debt securities or
assets of the Company or rights to purchase assets or debt securities of
the Company (excluding cash dividends or distributions from retained
earnings).

	 	 	No adjustment in the Conversion Price will be made unless such adjustment
would require an increase or decrease of at least one Share in the
Conversion Price then in effect; but any adjustment that would otherwise be
required to be made shall be carried forward and taken into account in any
subsequent adjustment. No adjustment need be made for rights to purchase
Common Stock pursuant to a Company dividend or interest reinvestment plan.
If the Company consolidates or merges into or transfers or leases all or
substantially all of its assets to any person, or is a party to a merger
that reclassifies or changes its outstanding Common Stock, the Notes will
become convertible into the kind and amount of securities, cash or other
assets which the Holders would have owned immediately after the transaction
if the holders had converted the Notes immediately before the effective
date of the transaction.
	 
	 	 	The Company hereby appoints Banca del Gottardo, acting through its
specified office in Switzerland, as sole Conversion Agent (the “Conversion
Agent”) for the conversion of Notes or coupons into Shares (the “Conversion
Provisions”)
	 
	 	 	The appointment of the Conversion Agent hereunder shall continue in effect
until the conversion right in respect of the Convertible Notes shall have
terminated. So long as Banca del Gottardo satisfactorily performs its
obligations hereunder the Company shall not without the consent of Banca
del Gottardo appoint any other Conversion Agent or pay any other bank any
commission or remuneration for the conversion of the Convertible Notes or
coupons..
	 
	 	 	The Company will indemnify and hold harmless the Conversion Agent against
any losses, liabilities, costs, claims, actions or demands which it may
incur or which may be made against it as a result of or in connection with
its appointment or the exercise of its powers and duties under this
Agreement other than those based upon or arising out of the negligence of
willful misconduct on the part of the Conversion Agent or any of its
employees.

 

 

     
Page 21

	 	 	Each Convertible Note, if printed, and all unmatured coupons attached
thereto, submitted for conversion to the Conversion Agent (a “Converted
Note”) shall be imprinted or stamped by the Conversion Agent with a legend
to the effect that such Convertible Note or coupon has been converted. All
Converted Notes and coupons shall be held by Banca del Gottardo for the
account of the Company. Banca del Gottardo shall maintain a record of
Convertible Notes and coupons converted.

The Conversion Agent undertakes to:

	 	(a)	 	make available to Noteholders the Conversion Notice in such form
as may from time to time be agreed by the Company and the Conversion
Agent;
	 
	 	(b)	 	upon receipt of a Conversion Notice from a Noteholder:

	 	 	(i)	 	verify that (A) the Conversion Notice has been duly
completed and signed by or on behalf of the Noteholder named
therein, (B) the Conversion Notice is accompanied by all Notes,
if printed, to which it relates and all unmatured coupons
appertaining to such Notes and/or an amount equal to the face
value of any missing unmatured coupons and (C) the amount of any
stamp or other taxes payable by the Noteholder has been paid; and
	 
	 	 	(ii)	 	endorse the Conversion Notice;

	 	(c)	 	imprint or stamp all Notes, if printed, submitted to it for
conversion, and all unmatured coupons attached thereto; and
	 
	 	(d)	 	dispatch within two business days after satisfaction by the
Noteholder of all conditions precedent to the conversion to the
relevant tax authorities, payment in respect of any stamp or other
taxes payable on the conversion, in accordance with the laws of
Switzerland.

	 	 	The Conversion Agent shall promptly, upon the later of the date of receipt
of the Conversion Notice and the satisfaction of all other conditions
precedent to the conversion stated above, endorse the Conversion Notice and
notify the Company by facsimile, telex or cable of (a) the principal amount
and serial numbers of the Notes deposited for conversion, (b) the number of
Shares issuable upon conversion of such Notes and (c) the name and address
of each person (the “Shareholder”) to whom such Shares are to be issued.
Such conversion shall become effective at the close of business on the date
(the “Conversion Date”) on which the Company shall have received at its
principal executive offices, during normal business hours, from the
Conversion

 

 

     
Page 22

	 	 	Agent a telex or cable notification. If such facsimile, telex or cable
notification is received after the close of business on such date, the
Conversion Date will be the immediately following business day. At such
Conversion Date the rights of the holder (other than the Company) of a Note
shall cease and the Shareholder shall be deemed to have become the holder
of such Shares.
	 
	 	 	The Company covenants that:

	 	(a)	 	so long as any Notes are outstanding, it shall keep available
authorized shares of Common Stock sufficient to permit all Notes
outstanding and unconverted to be converted in accordance with these
Conversion Provisions;
	 
	 	(b)	 	all shares of Common Stock delivered upon conversion of Notes
as provided herein will be validly issued as fully-paid and
non-assessable;

	(8)(1)	 	Forced Conversion
	 
	 	 	Banca del Gottardo and any holders of the Notes will be forced to convert
all, but not less than all of the Principal Amount at the Conversion
Price, if the closing Price of the common shares on the NASDAQ is greater
than USD 3.40 for two consecutive trading days (the “Forced Conversion
Event”). The Company will not be required to issue fractional common
shares upon forced conversion of the Principal Amount or, at the option
of the Company, interest thereon.
	 
	(8)(2)	 	Restriction
	 
	 	 	Banca del Gottardo is aware that any shares acquired upon
conversion or forced conversion pursuant hereto before July 28,
2002 will be subject to a hold period and will not be able to be
traded on or through the facilities of The Toronto Stock Exchange
or otherwise in Canada until July 28, 2002.
	 
	 	 	The Company will, upon the occurrence of the Forced Conversion
Event, give written notice to Banca del Gottardo that the Forced
Conversion Event has occurred. Such notice will specify the date
for forced conversion (the “Forced Conversion Date”), which will
not be more than five (5) days after the Forced Conversion Event
has occurred. On the Forced Conversion Date, Banca del Gottardo
will be deemed to have surrendered the Notes for conversion and, as
of such date, to have subscribed for and will be entitled to be
issued, as fully paid and non-assessable, the whole number of
common shares of the Company into which the Principal Amount has
been converted. On the later of the Forced Conversion Date and the
day on which the Notes are actually surrendered by delivery to the
Company, the Company will deliver to

 

 

     
Page 23

	 	 	Banca del Gottardo a single certificate in definitive form representing
the whole number of common shares into which the Principal Amount has
been converted.
	 
	 	 	The Company agrees that if it files a registration statement with the US
Securities and Exchange Commission following the Closing Date it will
provide piggyback rights and include for registration the common shares of
the Company issuable pursuant to the conversion of the Notes.
	 
	(9)	 	Events of Default
	 
	 	 	Banca del Gottardo as regards all Notes or Holders having 10% or more of
the aggregate principal amount of all Notes outstanding shall have the
right to declare by notice to the Company the Notes held by such Holder,
plus accrued interest, to be due and payable if any of the following events
of default shall occur:

	 	(a)	 	default in the payment of principal, or, for a period of 15 days
after due and payable, in the payment of interest on any Note; or
	 
	 	(b)	 	default in the performance or observance in any material respect
of any covenant or agreement of the Company in the Notes if such
default continues for a period of 30 days after notice thereof has
been given by Banca del Gottardo to the Company; or
	 
	 	(c)	 	a default shall occur under any evidence of indebtedness for
money borrowed by the Company or under any instrument under which
there may be issued or by which there may be secured or guaranteed any
indebtedness for money borrowed by the Company, which default involves
the failure to pay when due (after any applicable grace period and
subject to any extension or postponement of such maturity), or results
in the acceleration of, indebtedness in an amount in excess of USD
500’000.— without such indebtedness having been discharged or such
default or acceleration having been waived, rescinded or annulled,
within a period of 30 days after notice thereof shall have been given
by Banca del Gottardo to the Company; or
	 
	 	(d)	 	the entry of a decree or order in respect of the Company in an
involuntary case under any bankruptcy, insolvency or other similar
law, or appointing a receiver, liquidator, trustee or other similar
official of the Company or for any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a
period of 45 consecutive days; or

 

 

     
Page 24

	 	(e)	 	the Company shall commence a voluntary case under any bankruptcy,
insolvency or other similar law, or consent to the appointment of or
taking possession by a receiver, liquidator, trustee or other similar
official, of the Company or for any substantial part of its property,
or the making by it of a general assignment for the benefit of
creditors, or if it shall fail generally to pay its debts as they
become due, or shall take any corporate action in furtherance of any
of the foregoing; or
	 
	 	(f)	 	if the Company shall merge or consolidate, or sell or convey all
or substantially all of its assets to, any other corporation, unless
(i) the Company is the surviving corporation, or (ii) the surviving or
transferee corporation expressly assumes all obligations of the
Company under the Notes by supplemental agreement, reasonably
satisfactory to Banca del Gottardo and the Company, or (iii) the
Company or the surviving or transferee corporation irrevocably
deposits in trust with Banca del Gottardo, money or U.S. government
obligations sufficient to pay principal and interest on the Notes to
maturity.

	 	 	Upon the occurrence of an event of default, the Company shall promptly give
notice thereof to Banca del Gottardo which shall publish such notice of
default in accordance with Section 10 hereof. Banca del Gottardo shall in
relation to any event of default have no other obligation than the
publication of such event of default.
	 
	 	 	The principal amount of all Notes declared to be due and payable plus
accrued interest thereon shall become due and payable 15 days after notice
to the Company by Banca del Gottardo or by each Holder of such event of
default; provided, however, that such declaration shall be rescinded if,
within 15 days of such notice, such event of default shall have been
remedied by payment, in the case of a payment default, or in a manner
reasonably satisfactory to Banca del Gottardo.
	 
	(10)	 	Notices and Publications
	 
	 	 	All notices to the Holders shall be deemed to have been duly given if
communicated to Banca del Gottardo, which will inform accordingly the
Noteholders. All notices to the Company by any Holder shall be deemed to
have been duly given if sent by fax to the principal office of the Company
to the attention of Troy Bullock, V.P. Finance, of the Company.

 

 

     
Page 25

	(11)	 	Replacement of Notes or Coupons
	 
	 	 	If any Note or Coupon, if printed, is defaced, mutilated, destroyed, stolen
or lost, it may be renewed or replaced at the head office of Banca del
Gottardo in Lugano, Switzerland on payment of such costs as may be incurred
in connection therewith and on presentation of such evidence and indemnity
as Banca del Gottardo may require. Defaced or mutilated Notes or Coupons
must be surrendered before replacements may be issued.
	 
	(12)	 	Applicable Law and Jurisdiction
	 
	 	 	The terms, conditions and form of the Notes and coupons (the English
language version of which shall govern) shall be governed by and construed
in accordance with Swiss law, with the exception of Section 7 which shall
be governed by the laws of the Province of British Columbia and the laws of
Canada applicable therein.
	 
	 	 	Any action or proceedings against the Company relating to the Notes may be
brought and enforced in the ordinary courts of the Canton of Ticino, venue
being in the City of Lugano, or, if such courts fail to grant jurisdiction
in the ordinary courts of the Canton of Basle-City, venue being in Basle,
and the Company hereby irrevocably submits to the jurisdiction of such
courts in respect of any such action or proceeding, with the right to
appeal, as provided by law, to the Swiss Federal Court in Lausanne, the
judgment of which shall be final. Solely for that purpose, the Company
hereby elects legal and special domicile at the office of Banca del
Gottardo, Viale Stefano Franscini 8, 6901 Lugano, Switzerland. Banca del
Gottardo shall notify the Company promptly upon receipt of any notice by it
in its capacity as the Company’s agent for service of process. The Company
covenants that so long as any Notes are outstanding it will maintain an
agent for service of process in Switzerland. The aforementioned
jurisdiction shall also be valid for the cancellation and replacement of
lost, stolen, defaced, mutilated or destroyed Notes and coupons. Payment
effected to a holder of Notes who has been identified as the legitimate
holder of a Note or coupon by a final judgment of a Swiss court shall
release the Company from its payment obligations under such Note or coupon.

 

 

     
Page 26

     
ANNEX B

(to be typed on security paper)

PERMANENT GLOBAL NOTE

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO,
OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION
S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.

Norsat International Inc.

USD 2’000’000.—

8% Notes due March 31, 2007

Convertible into shares

of Common Stock of the Company

This Permanent Global Note without interest coupons is a Permanent Global Note
in respect of a duly authorized issue of 8% Notes due March 31, 2007 (the
“Notes”) of Norsat International Inc (the “Company”), a corporation duly
organized and existing under the laws of the Province of British Columbia, in
the principal amount of two million US Dollars and issued pursuant to a Note
Purchase, Paying and Conversion Agency Agreement (the “Agreement”) dated as of
March, 28 2002 between the Company of the first part and Banca del Gottardo of
the second part.

Subject to the provisions of the Agreement, Norsat International Inc., for
value received, hereby promises to pay to the holder of this Permanent Global
Note, payable upon presentation and surrender hereof, the amount of U.S.
Dollars 2’000’000.— (USD Two Million) and interest thereon at 8% per annum, in
accordance with the Terms of the Notes set forth in Annex A of the Agreement.

 

 

     
Page 27

Each holder of Notes retains a co-ownership in this Permanent Global Note to
the extent of his claims against the Company. The decision, if and when the
definitive Notes with Coupons attached are to be printed, is at the sole
discretion of Banca del Gottardo. An exchange of this Permanent Global Note
prior to the complete redemption of the issue can only be effected against the
definitive Notes with Coupons attached.

If definitive Notes are printed, this Permanent Global Note is exchangeable for
the definitive Notes in accordance with this Agreement. Unless and until so
exchanged, Banca del Gottardo, on behalf of the holders of the Notes, as the
bearer of this Permanent Global Note shall enjoy the benefit of and be subject
to the Agreement (including the Terms of the Notes).

The Terms of the Notes set forth in Annex A of the Agreement are hereby
incorporated by reference herein mutatis mutandis and, except as otherwise
provided herein, shall be binding on the Company and the holder hereof as if
fully set forth herein. Except as otherwise provided herein, the Company shall
make all payments hereunder as and when provided in the Terms of the Notes and
shall be bound by all its covenants set forth therein.

This Permanent Global Note shall be governed by and construed in accordance
with the laws of Switzerland.

IN WITNESS WHEREOF, the Company has caused this Permanent Global Note to be
duly executed under its corporate seal as of March 28, 2002.

Dated: March 28, 2002

	 	 	 	 	 
	Swiss Security no.:1’397’650

ISIN: CH0013976508	 	 	 
	 	 	NORSAT INTERNATIONAL INC.
	 
	 	 	By:	 

This Permanent Global Note shall not become valid for any purpose until this
Permanent Global Note has been authenticated by any two officers of Banca del
Gottardo.

	 	 	 	 	 	 	 
	By:	 

	 	 	By:	 

		Authorized Officer	 	 		Authorized Officer

 

 

     
Page 28

CONVERSION AGENCY AGREEMENT

This agreement is entered into effective as of April 5, 2002, between Norsat
International Inc., a corporation existing under the laws of the Province of
British Columbia, Canada, with principal offices at 300-4401 Still Creek Drive,
Burnaby, B.C. V5C 6G9 (the “Company”) of the first part and BANCA DEL GOTTARDO,
a Swiss corporation with principal offices at Viale Stefano Franscini 8, 6901
Lugano, Switzerland (“Banca del Gottardo”) of the second part.

The present agreement is to be considered an integral part of the “Note
Purchase, Paying and Conversion Agency Agreement” entered into between the
Company and Banca del Gottardo on March 28, 2002 (the “Agreement”). It is
available for inspection at the Head Office in Lugano of Banca del Gottardo.

Premises

As authorized by its Board of Directors March 26, 2002 and pursuant to the
Agreement, the Company proposes to make an offer on the Swiss capital market
for the sale of its convertible notes (the “Convertible Notes”). The
Convertible Notes will be convertible into shares (the “Shares”) of the Common
Stock of the Company (the “Common Stock”), on the terms and conditions provided
hereafter. The Board of Directors of the Company has approved this agreement as
regards the conversion of the Notes and has authorized the conversion of the
Convertible Notes into the Common Stock of the Company on the terms and
conditions hereof.

These provisions relates to the conversion of the USD 2’000’000.— 8%
Convertible Notes due March 31, 2007 of the Company into shares of the common
stock of the Company. Unless otherwise defined herein, the terms used herein
have the meanings ascribed to them in the Note Purchase, Paying and Conversion
Agency Agreement dated as of March 28, 2002, between the Company and Banca del
Gottardo.

Article 1. Conversion Agent

As described in point 6 of Annex A to the Agreement, the Company appoints Banca
del Gottardo, acting through its head office in Lugano, Switzerland, as sole
Conversion Agent (the “Conversion Agent”) for the conversion of Notes or
coupons into Shares. So long as any Notes are outstanding, the Company shall
maintain a stock transfer agent (the “Stock Transfer Agent”) or shall itself
perform the functions required of such agent under this agreement.

 

 

     
Page 29

Article 2. Conversion Right

	2.1	 	 Subject to and upon compliance with these Conversion Provisions, the
holder of any Note (a “Noteholder”) will have the right at any time on
and after March 28, 2002 up to the close of business of banks in Lugano
on March 20, 2007 to convert USD 10’000.— (the Conversion Amount) of
one Note or more Notes into initially 5’882 shares of common stock of
the Company, calculated as to each conversion to the greatest number of
full Shares, disregarding fractions, at a price of initially USD 1.70
per share, such price being subject to adjustment in certain instances
(as so adjusted from time to time, the “Conversion Price”). Fractions of
a share will not be issued on conversion; provided, however, that if a
Noteholder at any one time delivers more than one Note for conversion,
the number of Shares issued shall be calculated on the basis of the
aggregate principal amount of the Notes so delivered. A cash adjustment
shall be paid in respect of any fractional Share which would otherwise
be issuable upon conversion of any Note in an amount based upon the
market price of the Common Stock on the last trading day prior to the
date of conversion.
	 
	2.2.	 	 In order to exercise the right of conversion, a Noteholder shall (a)
deliver the Note or Notes to be converted during normal business hours,
accompanied by the conversion notice in the form obtainable from the
Conversion Agent (the “Conversion Notice”) to the Conversion Agent and (b)
pay to the Conversion Agent any stamp or other taxes that may be payable
in Switzerland on such conversion. Each Note, if printed, delivered for
conversion must be delivered with all unmatured coupons attached and/or
with an amount equal to the face value of any missing, unmatured coupons.
Such missing, unmatured coupons shall be paid by Banca del Gottardo upon
subsequent presentation thereof, provided they shall not have become
barred pursuant to Art. 127 et seq. of the Code of Obligations (five years
after their due date).

Article 3. Adjustment of the Conversion Price

	3.1.	 	 Whenever the Conversion Price is adjusted as described in point 8 of the
Terms of the Convertible Notes in the Agreement (the “Adjustment Price
Provisions”), the Company shall promptly send to Banca del Gottardo a
certificate of the Company setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment and the date on which it becomes effective. The contents of any
certificate required by this Section may be transmitted by fax, but shall
be confirmed in writing as hereinbefore provided. Banca del Gottardo may
rely upon such certificate (or such transmission by fax, whether or not so
confirmed) as conclusive evidence of the correctness of the adjustment
referred to therein.

 

 

     
Page 30

	3.2.	 	 Anything in the Adjustment Price Provisions to the contrary
notwithstanding, the Company shall be entitled, but shall not be required,
to make such reductions in the Conversion Price in addition to those
required by the Adjustment Price Provisions as it, in its discretion,
shall determine to be advisable.
	 
	3.3.	 	In any case in which an adjustment shall be required to be made
retroactively immediately following a record date, the Company shall as
promptly as practicable issue to the holder of any Note converted after
such record date the shares of Common Stock and other common stock of the
Company issuable on such conversion in excess of the shares of Common
Stock and other common stock of the Company issuable on such conversion on
the basis of the Conversion Price prior to such adjustment.

Article 4. Notices

	4.1. 	 	In the event that:

	 	(a)	 	the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options to subscribe for or
purchase any shares of Common Stock or any securities convertible
into shares of Common Stock, or of any other subscription rights;
	 
	 	(b)	 	the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in
Common Stock);
	 
	 	(c)	 	there shall be any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company
is required, or there shall be the conveyance or transfer of all or
substantially all of the properties and assets of the Company, or
there shall be any reorganization or reclassification or change of
outstanding Common Stock issuable upon the exercise of conversion
rights hereunder (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of
a subdivision or combination);
	 
	 	(d)	 	there shall be voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or

 

 

     
Page 31

	 	(e)	 	the Company proposes to take any action which would require an
adjustment of the Conversion Price pursuant to the Adjustment Price
Provisions;

	 	 	then the Company shall, at least 10 days prior to the applicable record
date, provide written notice of such event to Banca del Gottardo stating
(x) the record date in Canada as of which the holders of record of shares
of Common Stock to be entitled to receive any such rights, warrants, or
distributions are to be determined, or (y) the date in Canada on which
such reorganization, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective,
and the date as of which it is expected that holders of record of the
shares of Common Stock shall be entitled to vote upon, and, if approved,
to exchange their shares of Common Stock for securities or other property,
if any, deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up.
	 
	4.2	 	 If the event described in the notice given pursuant to this article will
result in an adjustment of the Conversion Price, such notice shall also
state the new Conversion Price unless the Conversion Price cannot be
calculated at the time such notice is given.
	 
	4.3	 	 The failure to give or publish the notice required by this article or any
defect therein shall not affect the legality or validity of the
proceedings referred to above in this article.

Article 5

So long as any of the Convertible Notes remain convertible, the Company shall
not take any action which would result in an adjustment of the Conversion Price
if, after giving effect thereto, the Conversion Price would be decreased to
such an extent that the Shares could not be legally issued, under applicable
law of the jurisdiction of incorporation of the Company then in effect, at such
decreased Conversion Price as fully-paid and non-assessable Shares.

Article 6

The Conversion Agent shall not at any time be responsible to any Noteholder for
determining whether any facts exist (a) which may require any adjustment of the
Conversion Price, (b) with respect to the nature or extent of any such
adjustment when made, (c) with respect to the method employed, or herein or in
any supplemental agreement (if any) provided to be employed in making any such
adjustment. The Conversion Agent makes no representation as to the validity or
value (or the kind or

 

 

     
Page 32

amount) of any shares of Common Stock, or of any securities, property or cash,
which may at any time be issued or delivered upon the conversion of any
Convertible Note. The Conversion Agent shall not be responsible for any failure
of the Company to make any cash payment or to issue, transfer or deliver any
shares of stock or stock certificates or other securities or property upon the
surrender of any Note for the purpose of conversion or to comply with any of
the covenants of the Company contained in these Conversion Provisions.

Article 7

	7.1.	 	 In case of any consolidation of the Company with, or merger of the
Company into, any other corporation (other than a consolidation or merger
in which the Company is the continuing corporation), or in the case of any
sale or transfer of all of the assets of the Company as an entirety or
substantially as an entirety, the corporation formed by such consolidation
or the corporation into which the Company shall have been merged or the
corporation which shall have acquired such assets, as the case may be,
shall execute with Banca del Gottardo a supplemental agreement which shall
(a) provide that the holder of each Convertible Note then outstanding
shall have the right to receive thereafter, during the period such
Convertible Note shall be convertible, upon conversion of such Convertible
Note, in lieu of each share of Common Stock deliverable on such conversion
immediately prior to such event, only the kind and amount of shares and/or
other securities and/or property and/or cash which are receivable, upon
such consolidation, merger, sale or transfer and (b) set forth the
Conversion Price for the shares and/or other securities and/or property
and/or cash so issuable, which shall be an amount equal to the Conversion
Price per share of Common Stock of the Company immediately prior to such
event.
	 
	7.2.	 	 In case of any reclassification or change of the shares of Common Stock
issuable upon conversion of the Notes (other than a change in par value,
or from par value to no par value, or as a result of a subdivision or
combination) or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing
corporation and in which the holders of the shares of Common Stock
thereafter receive shares, other securities, property, cash or any
combination thereof for such shares of Common Stock (including for this
purpose shares reflecting a change in par value or from par value to no
par value or as a result of a subdivision or combination of the shares of
Common Stock), the Company shall execute with Banca del Gottardo a
supplemental agreement which shall (a) provide that the holder of each
Convertible Note then outstanding shall receive, upon conversion thereof,
in lieu of each share of Common Stock of the Company deliverable upon such
conversion immediately prior to such

 

 

     
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	 	 	event, the kind and amount of shares and/or other securities and/or
property and/or cash receivable upon such reclassification, change,
consolidation or merger, and (b) set forth the Conversion Price for the
shares and/or other securities and/or property and/or cash so issuable,
which shall be an amount equal to the Conversion Price per share of Common
Stock immediately prior to such event.
	 
	7.3.	 	 If, as a result of Section 7.1 or Section 7.2, the holder of any
Convertible Note thereafter surrendered for conversion shall become
entitled to receive shares of two or more classes of common stock of the
Company, the Board of Directors (whose determination shall be conclusive)
shall determine the allocation of the Conversion Price between or among
shares of such classes of capital stock. Any supplemental agreement
executed pursuant to Sections 7.1 and 7.2 shall provide for adjustments
which shall be as nearly equivalent as practicable to the adjustments
provided for herein, and, where appropriate, state the Conversion Price in
terms of one full share of Common Stock or one full share of common stock
of any successor or purchasing corporation. The terms of this Article 7
also shall apply to successive consolidations, mergers, sales or
transfers. In the event that at any time as a result of an adjustment made
pursuant to this Article 7 the holder of any Note thereafter surrendered
for conversion shall become entitled to receive any shares or securities
other than shares of Common Stock, thereafter the prices or price of such
other shares or other securities so receivable on conversion of any
Convertible Note shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in the Adjustment Price Provisions
and accordingly.
	 
	7.4. 	 	The Conversion Agent shall have no responsibility for any consolidation,
merger, sale or transfer, the form or substance or any plan relating
thereto or the consequences thereof to any Noteholder.
	 
	 	 	The Conversion Agent shall have no responsibility to determine the
correctness of any provision contained in any supplemental agreement
relating either to the kind or amount of shares of stock or securities or
property receivable by Noteholders upon the conversion of their
Convertible Notes after any such consolidation, merger, sale or transfer,
or to any adjustment made with respect thereto. Not withstanding any
provision herein, in the event that there is an inconsistency or ambiguity
in this article 7 with the terms contained in the Agreement, the
provisions contained within the Agreement shall govern.

 

 

     
Page 34

Article 8 Counterparts

This agreement may be executed in any number of counterparts,
each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.

IN WITNESS WHEREOF, the Company and Banca del Gottardo have
caused this agreement to be signed and acknowledged by their
officers authorized to do so, as of April 5, 2002 in Lugano and Burnaby, respectively.

	 	 	 
	 	
NORSAT INTERNATIONAL INC.
	 
	 	By:	 

	 
	 	BANCA DEL GOTTARDO	 
	 
	 	By:

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