Document:

ex10-1.htm

THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE “SUBSCRIPTION AGREEMENT”) RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.  “UNITED STATES” AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE [Insert Date].

WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE (THE “EXCHANGE”) AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL [Insert Date].

 

CONFIDENTIAL

 

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

 

	
TO:

	
CounterPath Corporation (the “Company”)

                                Suite 300, One Bentall Centre, 505 Burrard Street

                                Vancouver, British Columbia, Canada  V7X 1M3

 

 

	
  

	
PURCHASE OF CONVERTIBLE DEBENTURES

 

	
1.

	
Subscription

 

1.1                      On the basis of the representations and warranties and subject to the terms and conditions set forth herein, the undersigned (the “Subscriber”) hereby irrevocably subscribes for and agrees to purchase unsecured convertible debentures in the aggregate principal amount of $__________________ (the “Debentures”), in the form attached hereto as Schedule “A” (such subscription and agreement to purchase being the “Subscription”), for an aggregate purchase price of $____________________ (the “Aggregate Subscription Proceeds”) on the basis of the representations and warranties and subject to the terms and conditions set forth herein and in the Debentures.

 

1.2                      The principal amount of the Debentures and any accrued interest thereon will be convertible from time to time into common shares of the Company (the “Conversion Shares”) at a conversion price per Conversion Share equal to the Market Price (as defined in TSX Venture Exchange (the “Exchange”) Policy 1.1) of the Company’s common shares on the date on which the Company reserves the conversion price in accordance with the policies of the Exchange.  The Debentures and the Conversion Shares are referred to herein as the “Securities”.

  

1

  

 

1.3                      On the basis of the representations and warranties and subject to the terms and conditions set forth herein, including the approval of this Subscription by the Exchange, the Company hereby agrees to sell and issue the Debentures to the Subscriber.  Subject to the terms hereof, the Subscription Agreement will be effective upon its acceptance by the Company.

 

1.4                      Unless otherwise provided, all dollar amounts referred to in this Subscription Agreement are in lawful money of Canada.

 

	
2.

	
Payment

 

2.1                      The Aggregate Subscription Proceeds shall be paid to the Company by the Subscriber as follows:

 

	
  

	
(a)

	
an initial payment of $______________ (the “First Tranche”) shall be paid by the Subscriber to the Company on or before _____________ (the “Closing Date”); and

 

	
  

	
(b)

	
a second payment of $_____________ (the “Second Tranche”) shall be paid by the Subscriber to the Company on or before __________________.

 

2.2                      The Company and the Subscriber acknowledge and agree that the obligation of the Subscriber to purchase the Debentures from the Company is binding upon the Subscriber, however, the Company, in its sole option, may elect not to proceed with the completion of the sale of a Debenture for the Second Tranche by providing written notice of such election to the Subscriber on or before _______________.  In the event that the Company does not proceed with the completion of the sale of a Debenture for the Second Tranche, the principal amount of the Debenture will be $_________________.

 

2.3                      Each of the proceeds for (the “Subscription Proceeds”) for the First Tranche and the Second Tranche shall be paid by certified cheque or bank draft drawn on a Canadian chartered bank, and made payable and delivered to the Company.  Alternatively, the Subscription Proceeds may be wired to the Company or its lawyers pursuant to wiring instructions that will be provided to the Subscriber upon request.  If the Subscription Proceeds are wired to the Company’s lawyers, the Subscriber authorizes such lawyers to immediately deliver the Subscription Proceeds to the Company upon receipt of the Subscription Proceeds from the Subscriber.

 

2.4                      The Subscriber acknowledges and agrees that this Subscription Agreement, the Subscription Proceeds and any other documents delivered in connection herewith will be held on behalf of the Company.  In the event that this Subscription Agreement is not accepted by the Company for whatever reason, which the Company expressly reserves the right to do, at any time before the Closing Date, this Subscription Agreement, the Subscription Proceeds (without interest thereon) and any other documents delivered in connection herewith will be returned to the Subscriber at the address of the Subscriber as set forth in this Subscription Agreement.

 

	
3.

	
Documents Required from Subscriber

 

3.1                      The Subscriber must complete, sign and return to the Company the following documents:

 

	
  

	
(a)

	
two (2) executed copies of this Subscription Agreement;

 

	
  

	
(b)

	
if the Subscriber is investing less than CDN$150,000, an Investor Questionnaire (the “Questionnaire”) attached as Exhibit C hereto; and

 

	
  

	
(c)

	
if the Subscriber is not an individual and does not have a current Corporate Placee Registration Form on file with the Exchange, the Corporate Placee Registration Form attached as Exhibit D hereto.

  

2

  

3.2                      The Subscriber shall complete, sign and return to the Company as soon as possible, on request by the Company, any additional documents, questionnaires, notices and undertakings as may be required by any regulatory authorities and applicable law.

	
  

	
 

	
 

 

3.3                      Both parties to this Subscription Agreement acknowledge and agree that Clark Wilson LLP has acted as counsel only to the Company and is not protecting the rights and interests of the Subscriber.  The Subscriber acknowledges and agrees that the Company and Clark Wilson LLP have given him the opportunity to seek, and have recommended that the Subscriber obtain, independent legal advice with respect to the subject matter of this Subscription Agreement and, further, the Subscriber hereby represents and warrants to the Company and Clark Wilson LLP that the Subscriber has sought independent legal advice or waives such advice.

 

	
4.

	
Conditions and Closing

 

4.1                      Closing of the offering (the “Offering”) of the Debentures shall occur on the Closing Date.

 

4.2                      The Subscriber acknowledges that certificates representing the Debentures will be available for delivery upon closing of each of the First Tranche and the Second Tranche provided that the Subscriber has satisfied the requirements of Section 3 hereof and the Company has accepted this Subscription Agreement.

 

	
5.

	
Acknowledgements and Agreements of Subscriber

 

5.1                      The Subscriber acknowledges and agrees that:

 

	
  

	
(a)

	
none of the Securities have been or will be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the 1933 Act (“Regulation S”), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state and provincial securities laws;

 

	
  

	
(b)

	
the Subscriber acknowledges that the Company has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act or any other securities legislation;

 

	
  

	
(c)

	
by completing the Questionnaire, if applicable, the Subscriber is representing and warranting that the Subscriber satisfies one of the categories of registration and prospectus exemptions provided in National Instrument 45-106 adopted by the British Columbia Securities Commission (the “BCSC”);

 

	
  

	
(d)

	
the decision to execute this Subscription Agreement and purchase the Securities agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company and such decision is based entirely upon a review of any public information which has been filed by the Company with the Securities and Exchange Commission (the “SEC”) and Canadian securities commissions in compliance, or intended compliance, with applicable securities legislation;

 

	
  

	
(e)

	
the Subscriber and the Subscriber’s advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the distribution of the Securities hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Company;

  

3

  

 

	
  

	
(f)

	
the books and records of the Company were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Subscriber during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Securities hereunder have been made available for inspection by the Subscriber, the Subscriber’s lawyer and/or advisor(s);

 

	
  

	
(g)

	
all of the information which the Subscriber has provided to the Company is correct and complete as of the date the Subscription Agreement is signed, and if there should be any change in such information prior to this Subscription Agreement being executed by the Company, the Subscriber will immediately provide the Company with such information;

 

	
  

	
(h)

	
the Company is entitled to rely on the representations and warranties of the Subscriber contained in this Subscription Agreement and the Questionnaire and the Subscriber will hold harmless the Company from any loss or damage it or they may suffer as a result of the Subscriber’s failure to correctly complete this Subscription Agreement or the Questionnaire;

 

	
  

	
(i)

	
the Subscriber will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Subscriber contained in this Subscription Agreement, the Questionnaire or in any document furnished by the Subscriber to the Company in connection herewith being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber to the Company in connection therewith;

 

	
  

	
(j)

	
the Company will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in accordance with any other applicable securities laws;

 

	
  

	
(k)

	
the Subscriber has been advised to consult the Subscriber’s own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions, and it is solely responsible (and the Company is not in any way responsible) for compliance with:

 

	
  

	
(i)

	
any applicable laws of the jurisdiction in which the Subscriber is resident in connection with the distribution of the Securities hereunder, and

 

	
  

	
(ii)

	
applicable resale restrictions;

 

	
  

	
(l)

	
in addition to resale restrictions imposed under U.S. securities laws, there are additional restrictions on the Subscriber’s ability to resell in Canada any of the Securities under the Securities Act (British Columbia) (the “BC Act”) and National Instrument 45-102 Resale of Securities adopted by the BCSC;

 

	
  

	
(m)

	
the Company has advised the Subscriber that the Company is relying on an exemption from the requirements to provide the Subscriber with a prospectus to issue the Securities and, as a consequence of acquiring the Securities pursuant to such exemption certain protections, rights and remedies provided by the applicable securities legislation of British Columbia including statutory rights of rescission or damages, will not be available to the Subscriber;

  

4

  

 

	
  

	
(n)

	
neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of any of the Securities and no documents in connection with the sale of the Securities hereunder have been reviewed by the SEC or any other commissions or securities regulatory authorities;

 

	
  

	
(o)

	
there is no government or other insurance covering any of the Securities;

 

	
  

	
(p)

	
the Company will refuse to register the transfer any of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in each case in accordance with applicable securities laws;

 

	
  

	
(q)

	
the Subscriber has not purchased the Securities as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the 1933 Act) in the United States in respect of any of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Securities; provided, however, that the Subscriber may sell or otherwise dispose of any of the Securities pursuant to registration of any of the Securities pursuant to the 1933 Act and any applicable securities laws or under an exemption from such registration requirements and as otherwise provided herein;

 

	
  

	
(r)

	
the statutory and regulatory basis for the exemption claimed for the offer and sale of the Securities, although in technical compliance with Regulation S, would not be available if the offering is part of a plan or scheme to evade the registration provisions of the 1933 Act; and

 

	
  

	
(s)

	
this Subscription Agreement is not enforceable by the Subscriber unless it has been accepted by the Company, and the Subscriber acknowledges and agrees that the Company reserves the right to reject any Subscription for any reason whatsoever.

 

	
6.

	
Representations, Warranties and Covenants of the Subscriber

 

6.1                      The Subscriber hereby represents and warrants to and covenants with the Company (which representations, warranties and covenants shall survive the Closing) that:

 

	
  

	
(a)

	
the Subscriber is not a U.S. Person and the Subscriber is not acquiring the Securities for the account or benefit of, directly or indirectly, any U.S. Person;

 

	
  

	
(b)

	
the Subscriber is resident in the jurisdiction set out under the heading “Name and Address of Subscriber” on the signature page of this Subscription Agreement;

 

	
  

	
(c)

	
the Subscriber:

 

	
  

	
(i)

	
is knowledgeable of, or has been independently advised as to, the applicable securities laws of the securities regulators having application in the jurisdiction in which the Subscriber is resident (the “International Jurisdiction”) which would apply to the acquisition of the Securities,

 

	
  

	
(ii)

	
the Subscriber is purchasing the Securities pursuant to exemptions from prospectus or equivalent requirements under applicable securities laws or, if such is not applicable, the Subscriber is permitted to purchase the Securities under the applicable securities laws of the securities regulators in the International Jurisdiction without the need to rely on any exemptions,

  

5

  

 

	
  

	
(iii)

	
the applicable securities laws of the authorities in the International Jurisdiction do not require the Company to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the issue and sale or resale of any of the Securities,

 

	
  

	
(iv)

	
the purchase of the Securities by the Subscriber does not trigger:

 

	
  

	
A.

	
any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase in the International Jurisdiction, or

 

	
  

	
B.

	
any continuous disclosure reporting obligation of the Company in the International Jurisdiction, and

 

	
  

	
(v)

	
the Subscriber will, if requested by the Company, deliver to the Company and the Agent a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in subparagraphs (ii), (iii) and (iv) above to the satisfaction of the Company, acting reasonably;

 

	
  

	
(d)

	
it has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Subscriber is a corporate entity, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Subscriber;

 

	
  

	
(e)

	
the entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or the constating documents of, the Subscriber or of any agreement, written or oral, to which the Subscriber may be a party or by which the Subscriber is or may be bound;

 

	
  

	
(f)

	
the Subscriber has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Subscriber enforceable against the Subscriber;

 

	
  

	
(g)

	
the Subscriber has received and carefully read this Subscription Agreement;

 

	
  

	
(h)

	
the Subscriber is aware that an investment in the Company is speculative and involves certain risks, including the possible loss of the entire investment;

 

	
  

	
(i)

	
the Subscriber has made an independent examination and investigation of an investment in the Securities and the Company and has depended on the advice of its legal and financial advisors and agrees that the Company will not be responsible in any way whatsoever for the Subscriber’s decision to invest in the Securities and the Company;

 

	
  

	
(j)

	
the Subscriber (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Securities for an indefinite period of time;

 

	
  

	
(k)

	
the Subscriber (i) is able to fend for him/her/itself in the Subscription; (ii) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Securities; and (iii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;

 

	
  

	
(l)

	
the Subscriber understands and agrees that the Company and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Subscription Agreement and the Questionnaire and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Subscriber shall promptly notify the Company;

  

6

  

 

	
  

	
(m)

	
the Subscriber is purchasing the Securities as principal for investment only and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and, in particular, it has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons;

 

	
  

	
(n)

	
the Subscriber is outside the United States when receiving and executing this Subscription Agreement;

 

	
  

	
(o)

	
the Subscriber understands and agrees that offers and sales of any of the Securities prior to the expiration of the period specified in Regulation S (such period hereinafter referred to as the “Distribution Compliance Period”) shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions of the 1933 Act or an exemption therefrom, and that all offers and sales after the Distribution Compliance Period shall be made only in compliance with the registration provisions of the 1933 Act or an exemption therefrom and in each case only in accordance with applicable state and provincial securities laws;

 

	
  

	
(p)

	
the Subscriber understands and agrees not to engage in any hedging transactions involving any of the Securities unless such transactions are in compliance with the provisions of the 1933 Act and in each case only in accordance with applicable state and provincial securities laws;

 

	
  

	
(q)

	
the Subscriber acknowledges that it has not purchased the Securities as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the 1933 Act) in the United States in respect of any of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Securities; provided, however, that the Subscriber may sell or otherwise dispose of any of the Securities pursuant to registration of any of the Securities pursuant to the 1933 Act and any applicable securities laws or under an exemption from such registration requirements and as otherwise provided herein;

 

	
  

	
(r)

	
the Subscriber is not an underwriter of, or dealer in, the common shares of the Company, nor is the Subscriber participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

 

	
  

	
(s)

	
the Subscriber is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

 

	
  

	
(t)

	
no person has made to the Subscriber any written or oral representations:

 

	
  

	
(i)

	
that any person will resell or repurchase any of the Securities,

 

	
  

	
(ii)

	
that any person will refund the purchase price of any of the Securities,

 

	
  

	
(iii)

	
as to the future price or value of any of the Securities, or

 

	
  

	
(iv)

	
that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities on any stock exchange or automated dealer quotation system other than the Exchange; and

  

7

  

 

	
  

	
(u)

	
the Subscriber acknowledges and agrees that the Company shall not consider the Subscriber’s Subscription for acceptance unless the undersigned provides to the Company, along with an executed copy of this Subscription Agreement:

 

	
  

	
(i)

	
a fully completed and executed Questionnaire, if applicable, in the form attached hereto as Exhibit C, and

 

	
  

	
(ii)

	
such other supporting documentation that the Company or its legal counsel may request to establish the Subscriber’s qualification as a qualified investor.

 

6.2                      In this Subscription Agreement, the term “U.S. Person” shall have the meaning ascribed thereto in Regulation S promulgated under the 1933 Act and for the purpose of the Subscription Agreement includes any person in the United States.

 

	
7.

	
Present Ownership of Securities

 

7.1                      The Subscriber either [check appropriate box]:

 

	
  

	 o	
does not own directly or indirectly, or exercise control or direction over, any common shares of the Company or securities convertible into common shares of the Company; or

 

	
  

	 o	
owns directly or indirectly, or exercises control or direction over, ____________ common shares of the Company and convertible securities entitling the holder thereof to acquire an additional ____________ common shares of the Company.

 

	
8.

	
Insider Status

 

8.1                      The Subscriber either [check appropriate box]:

 

	
  

	 o	
is an “Insider” of the Company as defined in the BC Act, namely: “Insider” means:

 

	
  

	
(i)

	
a director or senior officer of the Company;

 

	
  

	
(ii)

	
a director or senior officer of a person that is itself an insider or subsidiary of the Company;

 

	
  

	
(iii)

	
a person that has:

 

	
  

	
A.

	
direct or indirect beneficial ownership of;

 

	
  

	
B.

	
control or direction over; or

 

	
  

	
C.

	
a combination of direct or indirect beneficial ownership of and of control or direction over

 

securities of the Company carrying more than 10% of the voting rights attached to all the Company’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person as underwriter in the course of a distribution; or

 

	
  

	
(iv)

	
the Company itself, if it has purchased, redeemed or otherwise acquired any securities of its own issue, for so long as it continues to hold those securities; or

 

     o      is not an Insider of the Company.

  

8

  

9.                             Member of “Pro Group”

 

9.1                      The Subscriber either [check appropriate box]:

 

	
  

	 o	
is a Member of the “Pro Group” as defined in the policies of the Exchange, namely: “Pro Group” means:

 

	
  

	
(i)

	
Subject to subparagraphs (ii), (iii) and (iv) below, “Pro Group” shall include, either individually or as a group:

 

	
  

	
A.

	
the member (i.e. a member of the Exchange under the Exchange requirements);

 

	
  

	
B.

	
employees of the member;

 

	
  

	
C.

	
partners, officers and directors of the member;

 

	
  

	
D.

	
affiliates of the member; and

 

	
  

	
E.

	
associates of any parties referred to in subparagraphs (i) through (iv).

 

	
  

	
(ii)

	
The Exchange may, in its discretion, include a person or party in the Pro Group for the purposes of a particular calculation where the Exchange determines that the person is not acting at arm’s length of the member.

 

	
  

	
(iii)

	
The Exchange may, in its discretion, exclude a person from the Pro Group for the purposes of a particular calculation where the Exchange determines that the person is acting at arm’s length of the member.

 

	
  

	
(iv)

	
The member may deem a person who would otherwise be included in the Pro Group pursuant to subparagraph (i) to be excluded from the Pro Group where the member determines that:

 

	
  

	
A.

	
the person is an affiliate or associate of the member acting at arm’s length of the member;

 

	
  

	
B.

	
the associate or affiliate has a separate corporate and reporting structure;

 

	
  

	
C.

	
there are sufficient controls on information flowing between the member and the associate or affiliate; and

 

	
  

	
D.

	
the member maintains a list of such excluded persons; or

 

	
  

	
(b)

	 o	
is not a member of the Pro Group.

 

	
10.

	
Conditional upon Exchange Acceptance

 

10.1                      Without limitation, this Subscription and the transactions contemplated hereby are conditional upon and subject to the Company receiving acceptance from the Exchange of the Offering and the transactions contemplated hereby.

 

	
11.

	
Representations and Warranties will be Relied Upon by the Company

 

11.1                      The Subscriber acknowledges that the representations and warranties contained herein are made by it with the intention that such representations and warranties may be relied upon by the Company and its legal

  

9

  

 

counsel in determining the Subscriber’s eligibility to purchase the Securities under applicable securities legislation, or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to purchase the Debentures under applicable securities legislation.  The Subscriber further agrees that by accepting delivery of certificates representing the Securities, it will be representing and warranting that the representations and warranties contained herein are true and correct as at each date of acceptance of such certificates with the same force and effect as if they had been made by the Subscriber on such date and that they will survive the purchase by the Subscriber of the Debentures and the acquisition by the Subscriber of the Conversion Shares and will continue in full force and effect notwithstanding any subsequent disposition by the Subscriber of such Securities.

 

	
12.

	
Acknowledgement and Waiver

 

12.1                      The Subscriber has acknowledged that the decision to purchase the Debentures was solely made on the basis of publicly available information.  The Subscriber hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Subscriber might be entitled in connection with the distribution of any of the Securities.

 

	
13.

	
Legending and Registration of Subject Securities

 

13.1                      The Subscriber consents to the placement of a legend on any certificate or other document evidencing any of the Securities to the effect that such securities have not been registered under the 1933 Act or any state securities or “blue sky” laws and setting forth or referring to the restrictions on transferability and sale thereof contained in this Subscription Agreement such legend to be substantially as follows:

 

“THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

 

ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS DEBENTURE RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED HEREIN) OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. “UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE [Insert Date].

 

WITHOUT PRIOR WRITTEN APPROVAL OF THE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL [Insert Date].”

 

13.2                      The Subscriber hereby acknowledges and agrees to the Company making a notation on its records or giving instructions to the registrar and transfer agent of the Company in order to implement the restrictions on transfer set forth and described in this Subscription Agreement.

 

	
14.

	
Collection of Personal Information

 

14.1           The Subscriber acknowledges and consents to the fact that the Company is collecting the Subscriber’s personal information for the purpose of fulfilling this Subscription Agreement.  The Subscriber’s personal

  

10

  

 

information (and, if applicable, the personal information of those on whose behalf the Subscriber is contracting hereunder) may be disclosed by the Company to (a) stock exchanges or securities regulatory authorities, including the Exchange, (b) the Company’s registrar and transfer agent, (c) Canadian tax authorities, (d) authorities pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), and (e) any of the other parties involved in the issuance of the Securities, including legal counsel, and may be included in record books in connection with the issuance of the Securities.  By executing this Subscription Agreement, the Subscriber is deemed to be consenting to the foregoing collection, use and disclosure of the Subscriber’s personal information (and, if applicable, the personal information of those on whose behalf the Subscriber is contracting hereunder) and to the retention of such personal information for as long as permitted or required by law or business practice.  Notwithstanding that the Subscriber may be purchasing the Securities as agent on behalf of an undisclosed principal, the Subscriber agrees to provide, on request, particulars as to the identity of such undisclosed principal as may be required by the Company in order to comply with the foregoing.

 

14.2                      Furthermore, the Subscriber is hereby notified that:

 

	
  

	
(a)

	
the Company may deliver to a provincial securities commission and/or the SEC certain personal information pertaining to the Subscriber, including such Subscriber’s full name, residential address and telephone number, the number of shares or other securities of the Company owned by the Subscriber, the number of Securities purchased by the Subscriber and the total purchase price paid for such Securities, the prospectus exemption relied on by the Company and the date of distribution of the Securities;

 

	
  

	
(b)

	
such information is being collected indirectly by the provincial securities commission under the authority granted to it in securities legislation; and

 

	
  

	
(c)

	
such information is being collected for the purposes of the administration and enforcement of the securities legislation of Canada.

 

	
15.

	
Consent

 

15.1                      By executing this Subscription Agreement, the Subscriber (on its own behalf and, if applicable, on behalf of each beneficial purchaser on whose behalf the Subscriber is acting) acknowledges and expressly consents to:

 

	
  

	
(a)

	
the disclosure of Personal Information by the Company to the Exchange (as described in Exchange Appendix 6A, a copy of which is attached as Exhibit B hereto) pursuant to Form 4B; and

 

	
  

	
(b)

	
the collection, use and disclosure of personal information by the Exchange for the purposes described in Appendix 6A or as otherwise identified by the Exchange, from time to time.

 

For the purposes of this Section 15, “Personal Information” means any information about the Subscriber, and includes information contained in Part II Items 8, 9, 10 and Part IV Item 3(a), as applicable, of Form 4B, and “Form 4B” means Exchange Form 4B entitled Private Placement Notice Form.

 

	
16.

	
Costs

 

16.1                      The Subscriber acknowledges and agrees that all costs and expenses incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the purchase of the Debentures shall be borne by the Subscriber.

 

	
17.

	
Governing Law

 

17.1                      All questions concerning the construction, validity, enforcement and interpretation of this Subscription Agreement shall be governed by and construed and enforced in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein, without regard to the principles of conflicts of law thereof.

  

11

  

 

	
18.

	
Survival

 

18.1                      This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the Debentures by the Subscriber pursuant hereto.

 

	
19.

	
Assignment

 

19.1                      This Subscription Agreement is not transferable or assignable.

 

	
20.

	
Severability

 

20.1                      The invalidity or unenforceability of any particular provision of this Subscription Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement.

 

	
21.

	
Entire Agreement

 

21.1                      Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Debentures and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Company or by anyone else.

 

	
22.

	
Notices

 

22.1                      Any notice required or permitted to be given to the Company will be in writing and may be given by prepaid registered post, electronic facsimile transmission or other means of electronic communication capable of producing a printed copy to the address of the Company set forth below or such other address as the Company may specify by notice in writing to the Subscriber, and any such notice will be deemed to have been given and received by the Company to whom it was addressed if mailed, on the third day following the mailing thereof, if by facsimile or other electronic communication, on successful transmission, or, if delivered, on delivery; but if at the time or mailing or between the time of mailing and the third business day thereafter there is a strike, lockout, or other labour disturbance affecting postal service, then the notice will not be effectively given until actually delivered:

 

CounterPath Corporation

Suite 300, One Bentall Centre

505 Burrard Street

Vancouver, British Columbia V7X 1M3

Attention: Chief Financial Officer

Fax No. (604) 320-3399

 

with a copy, which shall not constitute notice, to:

 

Clark Wilson LLP

Barristers and Solicitors

800 – 885 West Georgia Street

Vancouver, British Columbia V6C 3H1

Attention: Virgil Z. Hlus

Fax:  (604) 687-6314

  

12

  

 

	
23.

	
Counterparts and Electronic Means

 

23.1                      This Subscription Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall constitute an original and all of which together shall constitute one instrument.  Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date hereinafter set forth.

 

IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement as of the date of acceptance by the Company.

 

_____________________________________________

(Name of Subscriber – Please type or print)

 

_____________________________________________

(Signature and, if applicable, Office)

 

_____________________________________________

(Address of Subscriber)

 

_____________________________________________

(City, State or Province, Postal Code of Subscriber)

 

_____________________________________________

(Country of Subscriber)

  

13

  

 

A C C E P T A N C E

 

The above-mentioned Subscription Agreement in respect of the purchase of the Debentures is hereby accepted by CounterPath Corporation.

 

DATED at Vancouver, British Columbia, the _______ day of ____________________, 2010.

 

COUNTERPATH CORPORATION

 

 

 

Per:           ______________________________________

Authorized Signatory

  

14

  

 

EXHIBIT A

 

FORM OF DEBENTURE

 

 

THE SECURITY REPRESENTED HEREBY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

NEITHER THE SECURITY REPRESENTED HEREBY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE SHALL NOT TRADE SUCH SECURITIES BEFORE [Insert date].

WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE (THE “EXCHANGE”) AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITY REPRESENTED HEREBY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL [insert date].

 

 

Issue Date:  [Insert date]

 

Conversion Price (subject to adjustment as contemplated herein):                                                                                                           US$________

 

 US$__________________________

 

UNSECURED CONVERTIBLE DEBENTURE

 

FOR VALUE RECEIVED, COUNTERPATH CORPORATION (the “Company”) promises to pay to _____________________________________ or its registered assigns (the “Holder”), the principal sum of _______________________________________________________ Dollars ($_________________) in lawful currency of the United States of America (the “Principal Amount”) on or before _________________________ (the “Maturity Date”), subject to the terms and conditions hereof.  This Debenture shall bear interest calculated per annum at the Prime Bank Rate (as defined herein), adjusted immediately without notice on each change of the Prime Bank Rate. The Company may prepay any portion of the Principal Amount without the prior written consent of the Holder subject, however, to the provisions of Section 4 below.

 

This Debenture is subject to the following additional terms and conditions:

 

	
1.

	
Definitions

 

	
1.1

	
For the purposes hereof, in addition to the terms defined elsewhere in this Debenture: (i) capitalized terms not otherwise defined herein have the meanings given to such terms in the Subscription Agreement, and (ii) the following terms shall have the following meanings:

  

15

  

 

	
(a)

	
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in Canada or a day on which banking institutions in the Province of British Columbia are authorized or required by law or other government action to close;

 

	
  

	
(b)

	
“Common Stock” means the common stock, par value $0.001 per share, of the Company and stock of any other class into which such Common Stock may hereafter have been reclassified or changed;

 

	
  

	
(c)

	
“Conversion Date” has the meaning set forth in subsection 5.2 hereof;

 

	
  

	
(d)

	
“Conversion Price” means $__________, being the Market Price (as defined in Exchange Policy 1.1) per share of Common Stock on the date on which the Company reserved the conversion price in accordance with the policies of the Exchange;

 

	
  

	
(e)

	
“Conversion Share” means a share of Common Stock to be issued upon conversion, from time-to-time, of any portion of the Principal Amount and accrued interest thereon;

 

	
  

	
(f)

	
“Debenture” means this unsecured convertible debenture;

 

	
  

	
(g)

	
“Exchange” means the TSX Venture Exchange;

 

	
  

	
(h)

	
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;

 

	
  

	
(i)

	
“Exchange Policy 1.1” means Policy 1.1 – Interpretation of the Exchange;

 

	
  

	
(j)

	
“Issue Date” means ____________________;

 

	
  

	
(k)

	
“Maturity Date” means _____________________;

 

	
  

	
(l)

	
“Person” means a corporation, association, partnership, organization, business, individual, government or political subdivision thereof;

 

	
  

	
(m)

	
“Prime Bank Rate” means the commercial lending rate of interest expressed as an annual rate quoted or published by the Bank of Montreal as the reference rate of interest from time to time (commonly known as “prime”) for the purpose of determining the rate of interest that it charges to its commercial customers for loans in Canadian funds;

 

	
  

	
(n)

	
“Principal Amount” means the principal amount as may be due and owing by the Company to the Holder from time to time under this Debenture;

 

	
  

	
(o)

	
“Subscription Agreement” means the Subscription Agreement, dated as of ____________________, to which the Company and the Holder are parties and pursuant to which the Holder agreed to purchase this Debenture; and

 

	
  

	
(p)

	
“Trading Day” means a day on which the shares of Common Stock are traded on the Exchange or other trading market on which the shares of Common Stock are then listed or quoted, provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

 

	
1.2

	
Unless otherwise provided, all dollar amounts referred to in this Debenture are in lawful money of the Unite States.

  

16

  

 

	
2.

	
Subscription Agreement

 

	
2.1

	
This Debenture has been issued pursuant to the Subscription Agreement, is subject in all respects to the terms of the Subscription Agreement, and incorporates the terms of the Subscription Agreement to the extent that they do not conflict with the terms of this Debenture.  This Debenture may not be transferred or exchanged without the prior written consent of the Company and may be transferred or exchanged only in compliance with applicable securities laws and regulations.

 

	
3.

	
Interest and Usury; Senior Debt

 

	
3.1

	
The Principal Amount outstanding from time to time shall bear interest both before and after maturity, default and judgment from and including the Issue Date to the date of repayment in full at the Prime Bank Rate, adjusted immediately without notice on each change of the Prime Bank Rate.  Such interest will be calculated monthly, not in advance, on the basis of a year of 365 days and payable within ten (10) days of the end of each month, commencing with the first full month that ends subsequent to the Issue Date. The Company may pay accrued and unpaid interest in Canadian dollars calculated as the Canadian dollar equivalent to the U.S. dollar monthly interest payment, calculated on the last day of the applicable month at the noon Canadian – U.S. dollar exchange rate as reported by the Bank of Canada.  Interest on overdue interest shall be calculated at the same rate and is payable on demand.

 

	
3.2

	
If it shall be found that any amount deemed to be interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal Amount of this Debenture or accrued interest thereon as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such power of the Holder as though no such law has been enacted.

 

	
3.3

	
The Company covenants that it will obtain the written approval of the Holder prior to incurring any debt which ranks in priority with respect to repayment to this Debenture.

 

	
4.

	
Prepayment

 

	
4.1

	
The Company shall have the right to prepay all or any part of sums due under this Debenture at any time and from time to time, upon the Company giving to the Holder at least 30 calendar days prior written notice of the Company’s intent to make a prepayment (a “Prepayment Notice”), as follows:

 

	
  

	
(a)

	
on or before ____________________, the Company shall pay105% of the Principal Amount or any portion thereof together with accrued and unpaid interest on such amount to be repaid; and

 

	
  

	
(b)

	
from ____________________ to ____________________, the Company shall pay 102.5% of the Principal Amount or any portion thereof together with accrued and unpaid interest on such amount to be repaid.

 

	
4.2

	
The prepayment (less any tax required to be withheld by the Company) shall be paid by cheque or by such other reasonable means as the Company deems desirable.  The mailing of such cheque from the Company's registered office, or the payment by such other reasonable means as the Company deems desirable, on or before the prepayment date shall be deemed to be payment on the prepayment date unless the cheque is not paid upon presentation or payment by such other means is not received.  Notwithstanding the foregoing, the Company shall be entitled to require at any time, and from time to time, that the prepayment be paid to the

  

17

  

 

	
  

	
Holder only upon presentation and surrender at the registered office of the Company or at any other place or places in British Columbia designated by the Prepayment Notice.  If only a part of the Debenture is to be prepaid, a new certificate for the balance shall be issued at the expense of the Company.

 

	
4.3

	
At any time after a Prepayment Notice is given, the Company shall have the right to deposit the amount of the prepayment with any chartered bank or banks or with any trust company or trust companies in British Columbia named for such purpose in the Prepayment Notice to the credit of a special account or accounts in trust for Holder, to be paid to it upon surrender to such bank or banks or trust company or trust companies of the certificate or certificates representing the Debenture.  Upon such deposit or deposits being made or upon the prepayment date, whichever is later, the Debenture shall be and be deemed to be paid and the rights of the Holder shall be limited to receiving, without interest, the amount so deposited.  Any interest allowed on such deposit or deposits shall accrue to the Company.

 

	
5.

	
Conversion

 

	
5.1

	
At any time after the Issue Date until the Maturity Date, and provided that this Debenture is then outstanding, the Principal Amount then outstanding and any accrued interest thereon may be converted into Conversion Shares at the option of the Holder, in whole or in part, at any time and from time to time.  The Holder shall convert a minimum $100,000 of the Principal Amount for any conversion, unless there is less than $100,000 of the Principal Amount outstanding.

 

	
5.2

	
The Holder shall effect conversions by delivering to the Company the form of Notice of Conversion attached hereto as Annex A (a “Notice of Conversion”), specifying the amount of the Principal Amount to be converted and the date on which such conversion is to be effected (a “Conversion Date”), which shall not be less than ten (10) days following the date of delivery of the Notice of Conversion.  If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that is ten (10) days following the date of delivery of the Notice of Conversion.  To effect conversions hereunder, the Holder shall not be required to physically surrender the Debenture to the Company unless the entire Principal Amount has been converted.

 

	
5.3

	
Conversions hereunder shall have the effect of lowering the outstanding Principal Amount in an amount equal to the applicable amount of the Principal Amount being converted.  The Holder and the Company shall maintain records showing the Principal Amount converted and the date of such conversions.  The Company shall deliver any objection to any Notice of Conversion within five (5) business days of receipt of such notice.  The Holder, by acceptance of this Debenture, acknowledges and agrees that following conversion of a portion of this Debenture, the unpaid and unconverted Principal Amount may be less than the amount stated on the face hereof.

 

	
5.4

	
The number of Conversion Shares issuable upon a conversion shall be determined by the quotient obtained by dividing (x) by (y) where (x) is equal to the amount of the Principal Amount to be converted plus any  accrued but unpaid interest on such Principal Amount to be converted and (y) is the Conversion Price.

 

	
5.5

	
Not later than ten (10) Trading Days after any Conversion Date, the Company will deliver to the Holder a certificate or certificates representing the Conversion Shares which shall bear such restrictive legends and trading restrictions as are required by applicable laws, representing the number of Conversion Shares being acquired.

 

	
5.6

	
If the Company shall at any time or from time to time while any Principal Amount is still outstanding, effect a subdivision or reverse stock split of the outstanding Common Stock, the Conversion Price in effect immediately before a subdivision shall be proportionately decreased, and, conversely, the Conversion Price in effect immediately before a reverse stock split shall be proportionately increased.  Any adjustment under this subsection 5.6 shall become effective at the close of business on the date the subdivision or reverse stock split becomes effective.

  

18

  

 

	
5.7

	
If the Company at any time or from time to time while any Principal Amount is still outstanding, issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable solely in additional shares of Common Stock, the Conversion Price that is then in effect shall be decreased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Conversion Price by a fraction (i) the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (ii) the denominator of which is the sum of the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted pursuant to this subsection 5.7 to reflect the actual payment of such dividend or distribution.

 

	
5.8

	
If the Company at any time or from time to time while any Principal Amount is still outstanding, issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Company other than shares of Common Stock or in other property, in each such event provision shall be made so that the Holder shall receive upon conversion hereof, in addition to the number of Conversion Shares receivable hereupon, the amount of securities of the Company or other property which the Holder would have received had this Debenture been converted into Common Stock on the date of such event and had it thereafter, during the period from the date of such event to and including the conversion date, retained such securities or other property receivable by it as aforesaid during such period, subject to all other adjustments called for during such period under this subsection 5.8 with respect to the rights of the Holder or with respect to such other securities or other property by their terms.  As used herein, the term “other property” does not include cash.

 

	
5.9

	
If at any time or from time to time while any Principal Amount is still outstanding, the Conversion Shares issuable upon the conversion of this Debenture are changed into the same or a different number of shares of any class or series of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or reverse stock split or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Section 5), then in any such event the Holder shall have the right thereafter to convert this Debenture into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the number of shares of Common Stock into which this Debenture could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

 

	
5.10

	
The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of the Debenture, free from pre-emptive rights or any other actual contingent purchase rights of Persons other than the Holder, not less than such number of Conversion Shares as shall (subject to any additional requirements of the Company as to reservation of such shares set forth in the Subscription Agreement) be issuable upon the conversion of the Principal Amount and accrued interest thereon.  The Company covenants that all Conversion Shares that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid and non-assessable.

 

	
5.11

	
Upon a conversion hereunder, the Company shall not be required to issue stock certificates representing fractions of Conversion Shares, and the Holder shall be entitled to receive, in lieu of the final fraction of a Conversion Share, cash equal to the value of such fraction of a Conversion Share.

 

	
5.12

	
If at any time while this Debenture is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another entity, (ii) the Company effects any sale of all or substantially all of its assets in one or more transactions, (iii) any tender offer or exchange offer (whether by the Company or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or

  

19

  

 

	
  

	
exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than a subdivision or reverse stock split or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Section 5) (in any such case, a “Fundamental Change”), then upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion absent such Fundamental Change, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Change if it had been, immediately prior to such Fundamental Change, the holder of one share of Common Stock (the “Alternate Consideration”).  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Change, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Change.  In the event of a Fundamental Change, the Company or the successor or purchasing entity, as the case may be, shall execute with the Holder a written agreement providing that:

 

	
  

	
(a)

	
this Debenture shall thereafter entitle the Holder to purchase the Alternate Consideration;

 

	
  

	
(b)

	
in the case of any such successor or purchasing entity, upon such consolidation, merger, statutory exchange, combination, sale or conveyance such successor or purchasing entity shall be jointly and severally liable with the Company for the performance of all of the Company’s obligations under this Debenture and the Subscription Agreement entered into in connection with the issuance of this Debenture; and

 

	
  

	
(c)

	
if registration or qualification is required under the Exchange Act or other applicable securities laws for the public resale by the Holder of shares of stock and other securities so issuable upon conversion of this Debenture, such registration or qualification shall be completed prior to such reclassification, change, consolidation, merger, statutory exchange, combination or sale.

 

	
5.13

	
If, in the case of any Fundamental Change, the Alternate Consideration includes shares of stock, other securities, other property or assets of an entity other than the Company or any such successor or purchasing entity, as the case may be, in such Fundamental Change, then such written agreement shall also be executed by such other entity and shall contain such additional provisions to protect the interests of the Holder as the board of directors of the Company shall reasonably consider necessary by reason of the foregoing.  At the Holder’s request, any successor to the Company or surviving entity in such Fundamental Change shall issue to the Holder a new Debenture consistent with the foregoing provisions and evidencing the Holder’s right to convert such Debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Change is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this section and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Change.

 

	
5.14

	
In each case of an adjustment or readjustment of the Conversion Price for the number of Conversion Shares issuable upon conversion of this Debenture, the Company, at its own expense, shall cause its Secretary or Treasurer to compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Holder at the Holder’s address as shown in the Company’s books.  The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based.  No adjustment in the Conversion Price shall be required to be made unless it would result in an increase or decrease of at least one cent, but any adjustments not made because of this sentence shall be carried forward and taken into account in any subsequent adjustment otherwise required hereunder

 

	
6.

	
Events of Default

 

	
6.1

	
The occurrence of any of the following shall constitute an “Event of Default” under this Note:

  

20

  

 

	
(a)

	
the Company failing to pay (i) when due any Principal Amount or interest payment hereof on the due date hereunder or (ii) any other payment required under the terms of this Debenture on the date due and such failure continuing for ten (10) days after written notice thereof is delivered to the Company;

 

	
  

	
(b)

	
the Company failing to observe or perform any other covenant or agreement contained in this Debenture or the Subscription Agreement which failure is not cured, if possible to cure, within thirty (30) calendar days after notice of such default is sent by the Holder to the Company;

 

	
  

	
(c)

	
any representation, warranty, certificate, or other statement (financial or otherwise) made or furnished by or on behalf of the Company to the Holder in writing in connection with this Debenture or the Subscription Agreement being false, incorrect, incomplete or misleading in any material respect when made or furnished;

 

	
  

	
(d)

	
the Company (i) applying for or consenting to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) being unable, or admitting in writing its inability, to pay its debts generally as they mature, (iii) making a general assignment for the benefit of its or any of its creditors, (iv) being dissolved or liquidated in full or in part (v) commencing a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consenting to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) taking any action for the purpose of effecting any of the foregoing;

 

	
  

	
(e)

	
proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect being commenced and an order for relief entered or such proceeding is not dismissed or discharged within thirty (30) days of commencement;

 

	
  

	
(f)

	
one or more judgments for the payment of money in an amount in excess of One Million Dollars (US$1,000,000) in lawful money of the United States of America in the aggregate, outstanding at any one time, being rendered against the Company and the same remaining undischarged for a period of thirty (30) days during which execution shall not be effectively stayed, or any judgment, writ, assessment, warrant of attachment, or execution or similar process being issued or levied against a substantial part of the property of the Company and such judgment, writ, or similar process is not released, stayed, vacated or otherwise dismissed within thirty (30) days after issue or levy; or

 

	
  

	
(g)

	
a “Change of Control” (as defined herein) occurs.  For the purposes of this subsection 6.1(g), a “Change of Control” means the occurrence of any of the following in one or a series of related transactions: (i) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of more than one-third of the voting rights or equity interests in the Company; (ii) a replacement of more than one-half of the members of the Company’s board of directors that is not approved by those individuals who are members of the board of directors on the date hereof (or other directors previously approved by such individuals); (iii) a merger or consolidation of the Company or a sale of more than one-third of the assets of the Company in one or a series of related transactions, unless following such transaction or series of transactions, the holders of the Company’s securities prior to the first such transaction continue to hold at least two-thirds of the voting rights and equity interests in of the surviving entity or acquirer of such assets; (iv) a recapitalization, reorganization or other transaction involving the Company that constitutes or results in a transfer of more than one-third of the voting rights or equity interests in the Company; (v) consummation of a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act

  

21

  

 

	
  

	
with respect to the Company, or (vi) the execution by the Company or its controlling shareholders of an agreement providing for or reasonably likely to result in any of the foregoing events.

 

	
6.2

	
Upon the occurrence or existence of any Event of Default and following the expiry of any applicable grace periods (other than an Event of Default referred to in subsections 6.1(e) or 6.1(f) hereof) and at any time thereafter during the continuance of such Event of Default, the Holder may, by written notice to the Company, declare all outstanding amounts payable by the Company hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding.  Upon the occurrence or existence of any Event of Default described in subsections 6.1(e) or 6.1(f) hereof, immediately and without notice, all outstanding amounts payable by the Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding.  In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, the Holder may exercise any other right, power or remedy permitted to it by law, either by suit in equity or by action at law, or both.

 

	
7.

	
Notices

 

	
7.1

	
Any notice required or permitted to be given to the Company will be in writing and may be given by prepaid registered post, electronic facsimile transmission or other means of electronic communication capable of producing a printed copy to the address of the Company set forth below or such other address as the Company may specify by notice in writing to the Holder, and any such notice will be deemed to have been given and received by the Company to whom it was addressed if mailed, on the third day following the mailing thereof, if by facsimile or other electronic communication, on successful transmission, or, if delivered, on delivery; but if at the time or mailing or between the time of mailing and the third business day thereafter there is a strike, lockout, or other labour disturbance affecting postal service, then the notice will not be effectively given until actually delivered:

 

CounterPath Corporation

Suite 300, One Bentall Centre

505 Burrard Street

Vancouver, British Columbia V7X 1M3

Attention: Chief Financial Officer

Fax No. (604) 320-3399

 

with a copy, which shall not constitute notice, to:

 

Clark Wilson LLP

Barristers and Solicitors

800 – 885 West Georgia Street

Vancouver, British Columbia V6C 3H1

Attention: Virgil Z. Hlus

Fax:  (604) 687-6314

 

	
8.

	
Exchange or Replacement of Debenture

 

	
8.1

	
The Holder may, at its option, in person or by duly authorized attorney, surrender this Debenture for exchange, at the principal business office of the Company, and receive in exchange therefore, a new Debenture in the same principal amount as the unpaid Principal Amount of this Debenture and bearing interest at the same annual rate as this Debenture, each such new Debenture to be dated as of the date of this Debenture and to be in such Principal Amount as remains unpaid and payable to such Holder.

  

22

  

 

	
8.2

	
Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction, or mutilation of this Debenture and (in the case of loss, theft or destruction) of an indemnity reasonably satisfactory to it, and upon surrender and cancellation of this Debenture, if mutilated, the Company will deliver a new Debenture of like tenor in lieu of this Debenture.  Any Debenture delivered in accordance with the provisions of this subsection 8.2 shall be dated as of the date of this Debenture.

 

	
9.

	
Governing Law

 

	
9.1

	
All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein, without regard to the principles of conflicts of law thereof.

 

	
10.

	
Waivers

 

	
10.1

	
The Company hereby waives presentment, demand for payment, notice of dishonor, notice of protest and all other notices or demands in connection with the delivery, acceptance, performance or default of this Debenture.  No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right, nor shall any single or partial exercise of any power or right preclude other or further exercise thereof, or the exercise thereof, or the exercise of any other power or right hereunder or otherwise; and no waiver whatsoever or modification of the terms hereof shall be valid unless set forth in writing by the Holder and then only to the extent set forth therein.

 

	
11.

	
Amendments.

 

	
11.1

	
Subject to the provisions of the Subscription Agreement, this Debenture may not be amended without the express written consent of both the Company and the Holder.

 

	
12.

	
Severability

 

	
12.1

	
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.

 

	
13.

	
Next Business Day

 

	
13.1

	
Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

	
14.

	
Time of the Essence

 

	
14.1

	
Time will be of the essence of this Debenture.

 

IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.

 

 

COUNTERPATH CORPORATION

 

 

Per:  ______________________________

        Authorized Signatory

  

23

  

 

ANNEX A

 

NOTICE OF CONVERSION

 

The undersigned hereby irrevocably elects to convert principal and, if applicable, interest due under the Debenture of COUNTERPATH CORPORATION, a Nevada corporation (the “Company”), into Conversion Shares according to the terms and conditions of the Debenture, as of the date written below.  If Conversion Shares are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.  No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.  Capitalized terms used herein and not otherwise defined shall have the meanings set out in the Debenture.

 

The undersigned agrees to comply with applicable securities laws in connection with any transfer of the aforesaid Conversion Shares.

 

	
Conversion Date:

	
____________________________________________________

	
Applicable Conversion Price:

	
$___________________________________________________

	
Amount to be converted:

	
$___________________________________________________

	
Number of Conversion Shares

to be issued:

	
 

____________________________________________________

	
 

Principal Amount of Debenture unconverted: $

	
 

$___________________________________________________

	
Please issue the Conversion Shares in the following name and to the following address:

	
 

____________________________________________________

 

____________________________________________________

	  	
____________________________________________________

	  	  
	
Signature of the Holder:

	
____________________________________________________

	
Name:

	
____________________________________________________

	
Address:

	
____________________________________________________

____________________________________________________

	  	
____________________________________________________

	
Phone Number:

	
____________________________________________________

	  	  

 

 

  

24

  

EXHIBIT B

 

APPENDIX 6A

ACKNOWLEDGEMENT – PERSONAL INFORMATION

TSX Venture Exchange Inc. and its affiliates, authorized agents, subsidiaries and divisions, including the TSX Venture Exchange (collectively referred to as “the Exchange”) collect Personal Information in certain Forms that are submitted by the individual and/or by an Issuer or Applicant and use it for the following purposes:

	
  

	
·

	
to conduct background checks,

	
  

	
·

	
to verify the Personal Information that has been provided about each individual,

	
  

	
·

	
to consider the suitability of the individual to act as an officer, director, insider, promoter, investor relations provider or, as applicable, an employee or consultant, of the Issuer or Applicant,

	
  

	
·

	
to consider the eligibility of the Issuer or Applicant to list on the Exchange,

	
  

	
·

	
to provide disclosure to market participants as to the security holdings of directors, officers, other insiders and promoters of the Issuer, or its associates or affiliates,

	
  

	
·

	
to conduct enforcement proceedings, and

	
  

	
·

	
to perform other investigations as required by and to ensure compliance with all applicable rules, policies, rulings and regulations of the Exchange, securities legislation and other legal and regulatory requirements governing the conduct and protection of the public markets in Canada.

As part of this process, the Exchange also collects additional Personal Information from other sources, including but not limited to, securities regulatory authorities in Canada or elsewhere, investigative, law enforcement or self-regulatory organizations, regulations services providers and each of their subsidiaries, affiliates, regulators and authorized agents, to ensure that the purposes set out above can be accomplished.

The Personal Information the Exchange collects may also be disclosed:

	
(a)

	
to the agencies and organizations in the preceding paragraph, or as otherwise permitted or required by law, and they may use it in their own investigations for the purposes described above; and

	
(b)

	
on the Exchange’s website or through printed materials published by or pursuant to the directions of the Exchange.

The Exchange may from time to time use third parties to process information and/or provide other administrative services.  In this regard, the Exchange may share the information with such third party service providers.

  

25

  

 

EXHIBIT C

 

INVESTOR QUESTIONNAIRE

 

All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Subscription Agreement.

 

The purpose of this Questionnaire is to assure the Company that the Subscriber will meet certain requirements of National Instrument 45-106 (“NI 45-106”).  The Company will rely on the information contained in this Questionnaire for the purposes of such determination.

 

The Subscriber covenants, represents and warrants to the Company that:

 

1.           the Subscriber is (tick one or more of the following boxes):

	
(A)

	
a director, executive officer, employee or control person of the Company or an affiliate of the Company

	  o
	
(B)

	
a spouse, parent, grandparent, brother, sister or child of a director, executive officer, founder or control person of the Company or an affiliate of the Company

	  o
	
(C)

	
a parent, grandparent, brother, sister or child of the spouse of a director, executive officer, founder or control person of the Company or an affiliate of the Company

	  o
	
(D)

	
a close personal friend of a director, executive officer, founder or control person of the Company

	  o
	
(E)

	
a close business associate of a director, executive officer, founder or control person of the Company or an affiliate of the Company

	  o
	
(F)

	
an accredited investor

	  o
	
(G)

	
a company, partnership or other entity of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, persons described in paragraphs A to F

	  o
	
(H)

	
a trust or estate of which all of the beneficiaries or a majority of the trustees or executors are persons described in paragraphs A to F

	  o

 

	
  

	
2.

	
if the Subscriber has checked box B, C, D, E, G or H in paragraph 1 above, the director, executive officer, founder or control person of the Company with whom the undersigned has the relationship is:

 

_______________________________________________________________________________

 

(Instructions to Subscriber: fill in the name of each director, executive officer, founder and control person which you have the above-mentioned relationship with.  If you have checked box G or H, also indicate which of A to F describes the securityholders, directors, trustees or beneficiaries which qualify you as box G or H and provide the names of those individuals.  Please attach a separate page if necessary).

  

26

  

                 3.           if the Subscriber has ticked box F in Section 1 above, the Subscriber satisfies one or more of the categories of “accredited investor” (as that term is defined in NI 45-106) indicated below (please check the appropriate box):

 

	
  

	 o	
(a) an individual who either alone or with a spouse beneficially owns, directly or indirectly, financial assets (as defined in NI 45-106) having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds CDN$1,000,000;

 

	
  

	 o	
(b) an individual whose net income before taxes exceeded CDN$200,000 in each of the two more recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of those years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;

 

	
  

	 o	
(c) an individual who, either alone or with a spouse, has net assets of at least CDN $5,000,000;

 

	
  

	 o	
(d) a person, other than an individual or investment fund, that had net assets of at least CDN$5,000,000 as reflected on its most recently prepared financial statements.

 

	
  

	 o	
(e) an individual registered or formerly registered under securities legislation in a jurisdiction of Canada, as a representative of a person or company registered under securities legislation in a jurisdiction of Canada, as an adviser or dealer, other than a limited market dealer registered under the Securities Act (Ontario) or the Securities Act (Newfoundland);

 

	
  

	 o	
(f) an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (e);

 

	
  

	 o	
(g) an investment fund that distributes it securities only to persons that are accredited investors at the time of distribution, a person that acquires or acquired a minimum of CDN$150,000 of value in securities, or a person that acquires or acquired securities under Sections 2.18 or 2.19 of NI 45-106;

 

	
  

	 o	
(h) an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt;

 

	
  

	 o	
(i) a person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is not a security of an investment fund;

 

	
  

	 o	
(j) a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law are persons or companies that are accredited investors; or

 

	
  

	 o	
(k) an investment funds that is advised by a person registered as an advisor or a person that is exempt from registration as an advisor.

  

27

  

 

	
  

	
The Subscriber acknowledges and agrees that the Subscriber may be required by the Company to provide such additional documentation as may be reasonably required by the Company and its legal counsel in determining the Subscriber’s eligibility to acquire the Shares under relevant legislation.

 

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the ________ day of ______________________, 2010.

 

	
If an Individual:

	
If a Corporation, Partnership or Other Entity:

	
 

___________________________________

Signature

 

___________________________________

Print or Type Name

 

	
 

__________________________________

Print or Type Name of Entity

 

__________________________________

Signature of Authorized Signatory

 

__________________________________

Type of Entity

 

  

28

  

 

EXHIBIT D

FORM 4C

CORPORATE PLACEE REGISTRATION FORM

 

 

This Form will remain on file with the Exchange and must be completed if required under section 4(b) of Part II of Form 4B.  The corporation, trust, portfolio manager or other entity (the “Placee”) need only file it on one time basis, and it will be referenced for all subsequent Private Placements in which it participates.  If any of the information provided in this Form changes, the Placee must notify the Exchange prior to participating in further placements with Exchange listed Issuers.  If as a result of the Private Placement, the Placee becomes an Insider of the Issuer, Insiders of the Placee are reminded that they must file a Personal Information Form (2A) or, if applicable, Declarations, with the Exchange.

 

 

	
1.

	
Placee Information:

 

 

	
  

	
(a)

	
Name: ____________________________________________________________________

	 

 

	
  

	
(b)

	
Complete Address:___________________________________________________________

	 

 

	
  

	
(c)

	
Jurisdiction of Incorporation or Creation:__________________________________________

	 

 

 

	
2.

	
(a)

	
Is the Placee purchasing securities as a portfolio manager: (Yes/No)? __________

	 

 

	
  

	
(b)

	
Is the Placee carrying on business as a portfolio manager outside of Canada:

 

	
  

	
(Yes/No)? __________

 

 

	
3.

	
If the answer to 2(b) above was “Yes”, the undersigned certifies that:

 

 

	
  

	
(a)

	
it is purchasing securities of an Issuer on behalf of managed accounts for which it is making the investment decision to purchase the securities and has full discretion to purchase or sell securities for such accounts without requiring the client’s express consent to a transaction;

 

	
  

	
(b)

	
it carries on the business of managing the investment portfolios of clients through discretionary authority granted by those clients (a “portfolio manager” business) in ____________________ [jurisdiction], and it is permitted by law to carry on a portfolio manager business in that jurisdiction;

 

	
  

	
(c)

	
it was not created solely or primarily for the purpose of purchasing securities of the Issuer;

 

	
  

	
(d)

	
the total asset value of the investment portfolios it manages on behalf of clients is not less than $20,000,000; and

 

	
  

	
(e)

	
it has no reasonable grounds to believe, that any of the directors, senior officers and other insiders of the Issuer, and the persons that carry on investor relations activities for the Issuer has a beneficial interest in any of the managed accounts for which it is purchasing.

 

  

29

  

 

	
  

4.

	
 

	
If the answer to 2(a). above was “No”, please provide the names and addresses of Control Persons of the Placee:

 

 

	
Name *

	
City

	
Province or State

	
Country

	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  

 

*   If the Control Person is not an individual, provide the name of the individual that makes the investment decisions on behalf of the Control Person.

 

5.           Acknowledgement - Personal Information and Securities Laws

	
  

	
(a)

	
“Personal Information” means any information about an identifiable individual, and includes information contained in sections 1, 2 and 4, as applicable, of this Form.

 

The undersigned hereby acknowledges and agrees that it has obtained the express written consent of each individual to:

	
  

	
(i)

	
the disclosure of Personal Information by the undersigned to the Exchange (as defined in Appendix 6B) pursuant to this Form; and

	
  

	
(ii)

	
the collection, use and disclosure of Personal Information by the Exchange for the purposes described in Appendix 6B or as otherwise identified by the Exchange, from time to time.

 

	
  

	
(b)

	
The undersigned acknowledges that it is bound by the provisions of applicable Securities Law, including provisions concerning the filing of insider reports and reports of acquisitions.

 

Dated and certified (if applicable), acknowledged and agreed, at ________________________________ on ____________________________________________

___________________________________________

(Name of Purchaser - please print)

___________________________________________

(Authorized Signature)

___________________________________________

(Official Capacity - please print)

___________________________________________

(Please print name of individual whose signature

appears above)

THIS IS NOT A PUBLIC DOCUMENT

  

30exhibit101.htm

EXHIBIT 10.1

 

CLECO CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT

(Level One)

This Executive Employment Agreement (the “Agreement”) is made and entered into by and between Darren J. Olagues (“Executive”), and Cleco Corporation, a Louisiana corporation (the “Company”), and is intended to amend, restate, and replace, in its entirety, that certain Executive Employment Agreement (Level 1) by and between the Company and Executive dated July 30, 2007 (the “Prior Agreement”).

1.           Employment; Term:

1.1           Position.  The Company shall employ and retain Executive as its Senior Vice President and CFO or in such other capacity or capacities as shall be mutually agreed upon, from time to time, by Executive and the Company, and Executive agrees to be so employed, subject to the terms and conditions set forth herein.  Executive’s duties and responsibilities shall be those assigned to him or her hereunder, from time to time, by the Chief Executive Officer of the Company and shall include such duties as are the type and nature normally assigned to similar executive officers of a corporation of the size, type and stature of the Company.  Executive shall report to the Company’s Chief Executive Officer.

1.2           Term.  Executive’s employment hereunder shall commence as of July 30, 2010 (the “Effective Date”) and shall continue until April 30, 2012 (the period between the Effective Date and the expiration or termination of this Agreement referred to herein as the “Employment Term”).

1.3           Full Time and Attention.  During the Employment Term, Executive shall devote his or her full time and attention to the business of the Company and will not, without the prior written consent of the Chief Executive Officer of the Company, be engaged (whether or not during normal business hours) in any other business or professional activity, whether or not such activities are pursued for gain, profit or other pecuniary advantage.

Notwithstanding the foregoing, Executive shall not be prevented from (a) engaging in any civic or charitable activity for which Executive receives no compensation or other pecuniary advantage, (b) investing his or her personal assets in businesses which do not compete with the Company, provided that such investments will not require any services on the part of Executive in the operation of the affairs of the businesses and that Executive’s participation is solely that of an investor, or (c) purchasing securities in any corporation whose securities are regularly traded, provided that such purchases will not result in Executive owning beneficially at any time 5% or more of the equity securities of any corporation engaged in a business competitive with that of the Company.

2.           Compensation and Benefits:

2.1           Base Compensation.  The Company shall pay Executive an annual salary equal to his or her annual base salary in effect as of the Effective Date, such amount shall be prorated and paid in equal installments in accordance with the Company’s regular payroll practices and policies (Executive’s “Base Compensation”).  Executive’s Base Compensation shall be reviewed not less often than annually and may be increased or reduced by the Board of Directors of the Company (the “Board”), in its sole discretion; provided, however, that Executive’s Base Compensation may not be reduced at any time unless such reduction is part of a reduction in pay uniformly applicable to all officers of the Company.

2.2           Bonuses, Incentives and Other Benefits.  During the Employment Term, Executive shall be eligible for participation in the Company’s:

 

 

  

  

  

 

	
  

	
a.

	
Annual Incentive Compensation Plan (referred to as the “Incentive Plan”; any bonus paid thereunder referred to as an “Incentive Bonus”);

b.         2000 or 2010 Long-Term Incentive Compensation Plan (the “Equity Incentive Plan”); and

c.         Supplemental Executive Retirement Plan (the “SERP”),

each as may be amended, restated, supplemented or replaced, from time to time, in accordance with its terms.

Executive further shall participate in such plans, policies, and programs as may be maintained, from time to time, by the Company or any affiliate thereof, at least 80% of the common stock or other equity interests of which is owned, directly or indirectly, by the Company (an “Affiliate”), for the benefit of senior executives or employees of the Company.  Such plans, policies and programs may include, without limitation, profit sharing, life insurance, and group medical and other welfare benefit plans.  Any payments or benefits thereunder shall be subject to and determined in accordance with the specific terms and conditions of the documents evidencing any such separate plans, policies, and programs.

2.3           Reimbursement of Expenses.  The Company shall reimburse Executive for such reasonable and necessary expenses as are incurred in carrying out his or her duties hereunder, consistent with the Company’s standard policies and annual budget.  The Company’s obligation to reimburse Executive hereunder shall be contingent upon the presentment by Executive of an itemized accounting of such expenditures.

3.           Termination:

3.1           Termination Payments to Executive.  As otherwise provided in this Section 3, in the event of his or her termination of employment with the Company (the date of such termination referred to herein as Executive’s “Termination Date”), Executive may be paid:

	
  

	
a.

	
Executive’s Base Compensation in effect as of his or her Termination Date for the remainder of his or her Employment Term, such term determined as if the notice of nonrenewal described in Section 1.2 hereof was furnished to Executive as of the Termination Date, but in no event less than his or her annualized Base Compensation.

	
  

	
b.

	
Executive’s Incentive Bonus for the year in which his or her Termination Date occurs,  prorated to reflect Executive’s actual period of service during such year.

	
  

	
c.

	
The Company shall, at the written request of Executive:

	
  

	
i.

	
Purchase of the principal residence occupied by Executive as of his or her Termination Date (Executive’s “Principal Residence”), provided such Principal Residence is located within 60 miles of Executive’s primary work location, for an amount equal to the greater of (x) the fair market value of such residence as determined by the Company’s third party relocation service, or (y) the purchase price of such residence and the documented cost of any capital improvements made to the such residence made by Executive, but not more than 120% of such purchase price; and

 

  

2

  

 

	
  

	
ii.

	
Pay or reimburse Executive for the cost of relocating Executive, his or her immediate family and their household goods and other personal property, in accordance with the Company’s usual relocation practice, to any location in the continental United States.

Notwithstanding the foregoing, the Company shall not be obligated hereunder, unless Executive actually relocates to a new principal residence that is more than 60 miles from his or her Principal Residence and Executive submits his or her written request to the Company for the purchase of such residence not later than 12 months after Executive’s Termination Date.  In any event, payment hereunder shall be made not later than December 31st of the calendar year following the year in which Executive’s Termination Date occurs.

	
  

	
d.

	
If Executive timely elects to continue coverage under the Company’s group medical plan within the meaning of Code Section 4980B(f)(2), the Company shall pay to the Executive an amount equal to the continuation coverage premium for the same type and level of coverage elected by Executive and/or his or her spouse or dependents for a period of 18 months or until the Executive secures other employment where group health insurance is provided, whichever period is shorter.

	
  

	
e.

	
Executive’s Incentive Bonus in the target amount, determined with respect to the year in which his or her Termination Date occurs.

Any amount or benefit provided hereunder shall be in lieu of any severance or other cash payment available under any severance pay plan or similar arrangement maintained by the Company or an Affiliate.  The amount and benefits described herein shall be in addition to any amount or benefit the Company is required by law to provide, including, without limitation, Executive’s accrued but unpaid wages, and any amount or benefit to which Executive may be entitled as of his or her Termination Date under any separation benefit or retirement plan maintained by the company or its Affiliates.

3.2           Waiver and Release.  Any amount payable to Executive under this Section 3, other than a payment on account of Executive’s death or Disability, shall be contingent upon Executive’s timely execution and delivery to the Company of a waiver and release in form and substance satisfactory to the Company.   If Executive fails to execute such a waiver and release at the time and in the manner requested by the Company, no payment, benefit or reimbursement shall be due hereunder.

3.3           Death or Disability.  If Executive dies or becomes Disabled during the Employment Term, Executive’s employment hereunder shall immediately terminate and the Company’s obligations hereunder shall cease.  In such event, the Company shall pay to Executive (or his or her estate) an amount determined in accordance with Section 3.1b hereof in the form of a single-sum at the time Executive would have otherwise received such bonus notwithstanding his or her death or Disability.   For purposes of this Section 3.2, Executive shall be deemed “Disabled” or a “Disability” shall be deemed to occur if Executive is actually receiving benefits under the Company’s separate long-term disability plan.

3.4           Company’s Termination for Cause.  This Agreement and Executive’s employment hereunder may be terminated by the Company on account of Cause.  In such event, no payments or benefits shall be due to Executive from the Company, except as may be required under a separate plan, policy or program evidencing a retirement or other benefit arrangement or as may be required by law to be provided.

 

  

3

  

 

For purposes of this Agreement, “Cause” means that Executive has:

	
  

	
a.

	
Committed an intentional act of fraud, embezzlement or theft in the course of employment or otherwise engaged in any intentional misconduct which is materially injurious to the financial condition or business reputation of the Company or its Affiliates;

	
  

	
b.

	
Committed intentional damage to the property of the Company and its Affiliates or Executive has committed intentional wrongful disclosure of proprietary information or Confidential Information (as defined in Section 5.2 hereof), which is materially injurious to the financial condition or business reputation of the Company or its Affiliates;

	
  

	
c.

	
Been convicted with no further possibility of appeal, or entered a guilty or nolo contendere plea, for a felony or a crime involving moral turpitude;

	
  

	
d.

	
Willfully and substantially refused to perform the essential duties of his or her position after written notice from the Company;

	
  

	
e.

	
Intentionally, recklessly or negligently violated any material provision of the Company’s code of conduct or equivalent code of policy that is applicable to Executive;

	
  

	
f.

	
Intentionally, recklessly or negligently violated any material provision of the Sarbanes-Oxley Act of 2002 or any of the rules adopted by the Securities and Exchange Commission implementing any such provision; or

	
  

	
g.

	
Failed to fully cooperate to the extent requested by the Company or an Affiliate with investigations by government or independent agencies involving the Company or an Affiliate.

No act or failure to act on the part of Executive will be deemed “intentional” if it was due primarily to an error in judgment or negligence, but will be deemed “intentional” only if done or omitted to be done by Executive not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company or an Affiliate.

3.5           Executive’s Constructive Termination.  Executive may terminate this Agreement and his or her employment on account of a Constructive Termination. In such event, the Company shall pay or provide to Executive:

	
  

	
a.

	
The amounts determined under Sections 3.1a, 3.1d and 3.1e hereof, which shall be payable in the form of a single-sum 45 days after Executive’s Termination Date, provided that Executive has then satisfied all applicable conditions; and

	
  

	
b.

	
The benefit described in Section 3.1c hereof, subject to the terms and conditions set forth therein.

For purposes of this Agreement, “Constructive Termination” means:

	
  

	
a.

	
A material reduction (other than a reduction in pay uniformly applicable to all officers of the Company) in the amount of Executive’s Base Compensation;

 

  

4

  

 

	
  

	
b.

	
A material reduction in Executive’s authority, duties or responsibilities from those contemplated in Section 1.1 of this Agreement; or

c.         A material breach of this Agreement by the Company.

No event or condition described in this Section 3.5 shall constitute a Constructive Termination unless (a) Executive provides to the Company written notice of his or her objection to such event or condition not later than 60 days after Executive first learns of such event or condition, (b) such event or condition is not corrected by the Company promptly after receipt of such notice, but in no event more than 30 days after receipt of notice, and (c) Executive resigns his or her employment with the Company and all Affiliates not more than 15 days following the expiration of the 30-day period described in subparagraph (b) hereof.

3.6           Termination by the Company, Without Cause.  The Company may terminate this Agreement and Executive’s employment hereunder, without Cause, upon 30 days prior written notice to Executive (or such shorter period as may be agreed upon by Executive and the Chief Executive Officer.  In such event, the Company shall pay or provide to Executive the amounts and benefits described in Section 3.5 hereof, subject to the terms and conditions set forth therein.

3.7           Termination by Executive.  Executive may terminate this Agreement and his or her employment hereunder, other than on account of Constructive Termination, upon 30 days prior written notice to the Company or such shorter period as may be agreed upon by the Chief Executive Officer and Executive.  In such event, no additional payments or benefits shall be due hereunder, except as may be provided under a separate plan, policy or program evidencing a retirement or other benefit plan or as may be required by law to be provided.

3.8           Return of Property.  Upon termination of this Agreement for any reason, Executive  shall promptly return to the Company all of the property of the Company and its Affiliates, including, without limitation, automobiles, equipment, computers, fax machines, portable telephones, printers, software, credit cards, manuals, customer lists, financial data, letters, notes, notebooks, reports and copies of any of the above and any Confidential Information that is in the possession or under the control of Executive, regardless of the form in which it is held or maintained.

3.9           Expiration of Agreement.  Upon expiration of the term of this Agreement, including any renewal thereof, the obligations of the Company hereunder shall cease.  Executive shall then be deemed to be an at-will employee of the Company or an Affiliate, as the case may be, subject to the rights and limitations attendant to such status.  He or she shall be and remain bound by the provisions of Section 5 hereof, which shall survive such expiration.

4.           Change in Control:

4.1           Waiver and Release.  Any amount payable to Executive under this Section 4, whether on account of Change in Control or a Business Transaction, shall be contingent upon Executive’s timely execution and delivery to the Company of a waiver and release in form and substance satisfactory to the Company.  If Executive fails to execute such a waiver and release at the time and in the manner requested by the Company, no payment, benefit or reimbursement shall be due hereunder.

4.2           Definitions.  The terms “Change in Control” and “Business Transaction” shall have the meanings ascribed to them in the Equity Incentive Plan, as the same may be amended from time to time.  The term “Good Reason” shall mean that in connection with a Change in Control:

 

  

5

  

 

	
  

	
a.

	
Executive’s Base Compensation in effect immediately before such Change in Control is reduced or there is a significant reduction or termination of Executive’s rights to any employee benefit in effect immediately prior to the change;

	
  

	
b.

	
Executive’s authority, duties or responsibilities are significantly reduced from those contemplated in Section 1.1 hereof or Executive has reasonably determined that, as a result of a change in circumstances that significantly affects his or her employment with the Company or an Affiliate, he or she is unable to exercise the authority, power, duties and responsibilities contemplated in such section;

	
  

	
c.

	
Executive is required to be away from his or her office in the course of discharging his or her duties and responsibilities under this Agreement significantly more than was required prior to the Change in Control; or

	
  

	
d.

	
Executive is required to transfer to an office or business location located more than 60 miles from the primary location to which he or she was assigned prior to the Change in Control.

No event or condition described in this Section 4.2 shall constitute Good Reason unless (a) Executive gives the Company written notice of his or her objection to such event or condition within 60 days after Executive first learns of it, (b) such event or condition is not promptly corrected by the Company, but in no event later than 30 days after receipt of such notice, and (c) Executive resigns his or her employment with the Company and its Affiliates not more than 60 days following the expiration of the 30-day period described in subparagraph (b) hereof.

4.3           Termination In Connection With a Change in Control.  If Executive’s employment is involuntarily terminated by the Company, without Cause, and other than on account of Executive’s death or Disability or Executive terminates his or her employment hereunder for Good Reason, either occurring during the 60-day period preceding or the 36-month period following a Change in Control, then notwithstanding any provision of this Agreement to the contrary and in lieu of any compensation or benefits otherwise provided or payable hereunder:

	
  

	
a.

	
The Company shall pay to Executive an amount equal to three times the sum of Executive’s annualized Base Compensation and target bonus, each determined immediately before the consummation of the Change in Control, which amount shall be payable in the form of a single-sum 30 days after Executive’s Termination Date or the first business day thereafter;

	
  

	
b.

	
The Company shall provide to Executive the benefit described in Section 3.1c hereof, subject to the terms and conditions set forth therein;

	
  

	
c.

	
The Company shall pay to Executive the amount described in Section 3.1d hereof, subject to the terms and conditions set forth therein, but for a period of 36 months, which amount shall be payable in the form of a single-sum 30 days after Executive’s Termination Date or the first business day thereafter;

	
  

	
d.

	
The Company shall pay to Executive an amount equal to three times the maximum matching contribution determined under the Cleco Corporation 401(k) Savings and Investment Plan, as the same may be amended or restated from time to time, determined as if Executive deferred thereunder the maximum amount permitted under Code Section 

 

  

6

  

 

 

	
  

	
 

	
402(g); such amount shall be paid in the form of a single-sum payment 30 days after Executive’s Termination Date or the first business day thereafter;

 

	
  

	
e.

	
Vesting shall be accelerated, any restrictions shall lapse, and all target and opportunity performance objectives shall be deemed satisfied at the maximum level as to any then outstanding grant or award made under the Equity Incentive Plan and/or the 1990 Long-Term Incentive Compensation Plan; Executive shall further be entitled to such additional benefits or rights as may be provided in the documents evidencing such plans or the terms of any agreement evidencing such grant or award; and

	
  

	
f.

	
Executive shall be fully vested for purposes of any service or similar requirement imposed under the SERP, regardless of the actual number of his or her years of service; Executive shall be credited with an additional three years of age for purposes of determining his or her benefit percentage under the SERP, but in no event shall such benefit percentage be less than 50%; and Executive shall be credited with an additional three years of age for purposes of determining any reduction taken with respect to benefits commencing before Executive’s normal retirement date (as defined in such plan).

4.4           Tax Payment. If any payment to Executive pursuant to this Agreement or any other payment or benefit made for the benefit of Executive by the Company or an Affiliate in connection with a Change in Control is subject to the excise tax imposed under Code Section 4999 or any similar excise or penalty tax payable under any United States federal, state, local or other law, the Company shall pay to Executive an amount such that, after the payment by Executive of all taxes due on such amount, there remains a balance sufficient to pay the principal amount of such excise or penalty tax.  Executive shall promptly submit to the Company the amount to be paid under this Section 4.4, together with supporting documentation.  If Executive and the Company disagree as to such amount, an independent public accounting firm appointed by the Company shall make such determination, and such determination shall be final and binding on the parties hereto.  Any payment due hereunder shall be made by the Company in the form of a single-sum promptly, but in no event later than December 31st of the calendar year following the year in which Executive remits the amount of such excise or penalty tax to the Internal Revenue Service or other taxing authority.

4.5           Business Transaction Benefit.  If Executive’s employment with the Company and its Affiliates is involuntarily terminated by the Company in connection with a Business Transaction, other than on account of Cause, then Executive shall receive the benefits described in Sections 4.3e and 4.3f hereof.  Further, if Executive is not rehired by the successor or surviving entity involved in such transaction, the Company shall pay to Executive the amount described in Section 3.6 hereof, subject to the terms and conditions set forth therein.

5.           Limitations on Activities:

5.1.           Consideration for Limitation on Activities.  Executive acknowledges that the execution of this Agreement and the payments described herein constitute consideration for the limitations on activities set forth in this Section 5, the adequacy of which is hereby acknowledged.

5.2           Confidential Information.  Executive recognizes and acknowledges that during the terms of his or her employment, he or she has and will have access to confidential, proprietary, non-public information concerning the Company and its Affiliates, which may include, without limitation, (a) books and records relating to operations, finance, accounting, personnel and management, (b) price, rate and volume data, future price and rate plans, and test data, (c) information related to product design and 

 

 

7

 

development, (d) computer software, customer lists, information obtained on competitors, and sales tactics, and (e) various other non-public trade or business information, including business opportunities, marketing or business diversification plans, acquisitions, methods and processes, and financial data and the like (collectively, the “Confidential Information”).  Executive agrees that he or she will not at any time, either while employed by the Company or afterwards, make any independent use of, or disclose to any other person or organization (except as authorized by the Company or pursuant to court order) any of the Confidential Information.

5.3           Non-Solicitation.  Executive agrees that during the one-year period commencing as of the date of voluntary termination by Executive as described in Section 3.7 hereof or the involuntary termination of Executive on account of Cause as described in Section 3.4 hereof, he or she shall not, directly or indirectly, for his or her own benefit or on behalf of another or to the Company’s or an Affiliate’s detriment:

	
  

	
a.

	
Hire or offer to hire any of the Company’s or Affiliate’s officers, employees or agents;

	
  

	
b.

	
Persuade or attempt to persuade in any manner any officer, employee or agent of the Company or an Affiliate to discontinue any relationship with the Company; or

	
  

	
c.

	
Solicit or divert or attempt to divert any customer or supplier of the Company or an Affiliate.

The provisions of this Section 5.3 shall apply in the locations set forth on Exhibit A hereto, as the same may be amended by the Company from time to time.  Executive acknowledges that the Company and its Affiliates are presently doing business in such locations and that during the Employment Term Executive will be required to provide services to or for the benefit of the Company or its Affiliates in such locations.

5.4           Business Reputation.  Executive agrees that during the Employment Term and at all times thereafter, he or she shall refrain from performing any act, engaging in any conduct or course of action or making or publishing an adverse, untrue or misleading statement which has or may reasonably have the effect of demeaning the name or business reputation of the Company or its Affiliates or which adversely affects (or may reasonably adversely affect) the best interests, economic or otherwise, of the Company or an Affiliate.

5.5           Restrictions Reasonable.  The parties agree that each of the restrictions set forth in this Section 5 is intended to constitute a separate restriction.  Accordingly, should any such prohibition be declared invalid or unenforceable, such prohibition shall be deemed severable from and shall not affect the remainder thereof.  The parties further agree that each of the foregoing restrictions is reasonable in both time and geographic scope.  The parties further agree that should a court or arbitrator determine that any restriction set forth herein is unenforceable, such court of arbitrator may reform such restriction to the extent necessary to provide for its enforcement under applicable law.

5.6           Remedies.  In the event of a breach or threatened breach by Executive of the provisions of Sections 5.2, 5.3 or 5.4 hereof, Executive agrees that (a) the Company shall be entitled to a temporary restraining order or a preliminary injunction, without the necessity of posting bond in connection therewith, which may be obtained by means of a judicial proceeding notwithstanding the provisions of Section 6.16 hereof, and (b) any additional payments or benefits due to Executive or his or her spouse or dependents under Sections 3 and 4 hereof shall be canceled and forfeited, except any amount tendered to Executive as consideration for his or her waiver and release.  Nothing herein shall be construed as prohibiting the Company from pursuing any other remedy available to it for such breach or threatened breach, including the recovery of damages from Executive.

 

 

  

8

  

 

6.           General:

6.1           Specified Executive Delay.  In the event the Company determines that Executive is a “specified employee” within the meaning of Code Section 409A as of his or her Termination Date, then, notwithstanding any provision of this Agreement to the contrary, the Company shall postpone until the first business day of the seventh calendar month following Executive’s Termination Date (the “Delayed Payment Date”) any payment or benefit hereunder which is deemed on account of Executive’s separation from service and not otherwise permitted to be paid or furnished under Code Section 409A, including any regulation or guidance promulgated thereunder.  Any payment made as of Executive’s Delayed Payment Date shall include the principal amount of all payments suspended between Executive’s Termination Date and such date, without liability for interest or other loss of investment opportunity.

6.2           Mitigation Not Required.  Except as provided in Section 3.1d hereof, as a condition of any payment hereunder, Executive shall not be required to mitigate the amount of such payment by seeking other employment or otherwise, nor will any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of Executive under this Agreement.

6.3           Attorneys’ Fees and Costs.  In the event any dispute in connection with this Agreement arises with respect to obligations of Executive or the Company that were required prior to the occurrence of a Change in Control, all costs, fees and expenses, including attorney fees, of any arbitration or other legal action in connection with such matters in which Executive substantially prevails, shall be borne by the Company.

After a Change in Control has occurred, Executive shall not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of Executive’s rights under this Agreement.  Accordingly, if, following a Change in Control, the Company fails to comply with any of its obligations under this Agreement or the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, Executive shall be entitled to retain counsel of Executive’s choice, at the expense of the Company, to advise and represent Executive in connection with any such interpretation, enforcement or defense, except as to any action brought to enforce the provisions of Section 5 hereof.  In such event, the Company shall pay and be solely financially responsible for any and all attorneys’ and related fees and expenses incurred by Executive in connection with any of the foregoing, without regard to whether Executive prevails, in whole or in part.

In no event shall Executive be required to reimburse the Company for any of the costs and expenses incurred by the Company relating to arbitration, litigation or other legal action in connection with this Agreement.

If Executive claims the reimbursement of fees, costs or expenses hereunder, Executive’s claim shall be made not later than the last day of the calendar year following the year in which the expense was incurred.  The Company shall pay such amount promptly, but not later than the last day of the calendar year following the year in which Executive claims reimbursement hereunder.

6.4           No Set-Off.  There shall be no right of set-off or counterclaim in respect of any claim, debt or obligation against any payment to Executive provided for in this Agreement.

6.5           Assistance with Litigation.  After Executive’s Termination Date and for a period of one year after the end of the last period with respect to which Executive will have received any compensation under this Agreement, Executive will furnish such information and proper assistance as may be 

 

9

 

reasonably necessary in connection with any litigation in which the Company or an Affiliate is then or may become involved.

6.6           Headings.  Section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

6.7           Entire Agreement.  This Agreement constitutes the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no other agreements, understandings, restrictions, representations or warranties among the parties other than those set forth herein.  Executive expressly acknowledges that this Agreement extinguishes, in their entirety, the rights and obligations of the parties under Executive’s Prior Agreement.

6.8           Amendments.  This Agreement may be amended or modified at any time in any or all respects, but only by an instrument in writing executed by the parties hereto.

6.9           Choice of Law.  The validity of this Agreement, the construction of its terms, and the determination of the rights and duties of the parties hereto shall be governed by and construed in accordance with the internal laws of the State of Louisiana applicable to contracts made to be performed wholly within such state.

6.10           Notices.  All notices and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand, (b) sent by telecopier to a telecopier number given below, provided that a copy is sent by a nationally recognized overnight delivery service (receipt requested), or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case as follows:

If to Executive:              Last address on file with the Company

If to the Company:         Cleco Corporation

2030 Donahue Ferry Road

Pineville, LA 71360

Telecopier: 318- 484-7777

Attention: Chief Executive Officer

or to such other addresses as a party may designate by notice to the other party.

6.11           Assignment.  This Agreement will inure to the benefit of and be binding upon the Company, its Affiliates, and their successors and assigns, including, without limitation, any person, partnership, company, corporation or other entity that may acquire substantially all of the Company’s assets or business or with or into which the Company may be liquidated, consolidated, merged or otherwise combined, and will inure to the benefit of and be binding upon Executive, his or her heirs, estate, legatees and legal representatives.  If payments become payable to Executive’s surviving spouse or other assigns and such person thereafter dies, such payment will revert to Executive’s estate.

6.12           Severability.  Each provision of this Agreement is intended to be severable.  In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable, the same shall not affect the validity or enforceability of any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision was not contained herein.  Notwithstanding the foregoing, however, no provision shall be severed if it is clearly apparent under the circumstances that the parties would not have entered into this Agreement without such provision.

 

 

  

10

  

 

 

6.13           Withholding.  As a condition of the receipt of any payment or benefit hereunder, the Company or an Affiliate shall be entitled to withhold any federal, state or local taxes required by law to be withheld.

6.14           Survival.  Notwithstanding anything herein to the contrary, to the extent applicable, the rights and obligations of the Company under Sections 3, 4, and 6 hereof and the rights and obligations of Executive under Sections 5 and 6, shall remain operative and in full force and effect regardless of the expiration or termination of this Agreement.

6.15           Waiver.  The failure of either party to insist in any one or more instances upon performance of any terms or conditions of this Agreement will not be construed as a waiver of future performance of any such term, covenant, or condition and the obligations of either party with respect to such term, covenant or condition will continue in full force and effect.

6.16           Arbitration.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration administered by the American Arbitration Association under its Employment Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.  Both the Company and Executive hereby consent to this binding arbitration provision.

The existence of any claim or cause of action by Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company or any of its Affiliates of any provision hereof.  The Company’s remedies for breach of this Agreement shall be cumulative and the pursuit of one remedy shall not be deemed to exclude any other remedies.

This Executive Employment Agreement is executed in multiple counterparts as of the dates set forth below, each of which shall be deemed an original, to be effective as of the Effective Date designated above.

 

	
Cleco Corporation:

 

	
Executive:

	
By:           /s/  G. W. Bausewine          

 

	
/s/  Darren J. Olagues 

	
Its:           SVP – Corporate Services  

                                                   

	
Date:           07/30/10                                                      

	
Date:           7/30/10                                 

	  

 

 

  

11

 

 

CLECO CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT

EXHIBIT A

This Exhibit A is intended to form a part of that certain Executive Employment Agreement by and between Cleco Corporation and Darren J. Olagues effective as of July 30, 2010.  The parties agree that the proscriptions set forth in Section 5.3 thereof shall apply in the State of Louisiana, Parishes of:

Acadia

Allen

Avoyelles

Beauregard

Calcasieu

Catahoula

DeSoto

Evangeline

Grant

Iberia

Jefferson Davis

Lafayette

Natchitoches

Rapides

Red River

Sabine

St. Landry

St. Martin

St. Mary

St. Tammany

Vernon

Washington

Executive and the Company agree that the Company shall amend this Exhibit A, from time to time, to eliminate Parishes in which the Company is no longer doing business and to add Parishes in which the Company is currently doing business.

 

  

12

  

 

ADDENDUM TO EXECUTIVE EMPLOYMENT AGREEMENT

(LEVEL 1)

THIS ADDENDUM (the “Addendum”) is made and entered into effective as of this 30th day of July, 2010, by and between Darren J. Olagues (“Olagues”) and Cleco Corporation, a Louisiana corporation (the “Company”), to amend that certain Executive Employment Agreement by and between Olagues and the Company entered into as of July 30, 2010 (the “Agreement”), as follows:

1.           Section 3.1 of the Agreement, “Termination Payments to Executive,” shall be amended by the addition of the following subparagraph f, to read in its entirety as follows:

	
  

	
“f.

	
Executive shall be deemed fully vested for purposes of any service vesting requirement imposed under the Cleco Corporation Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2009, regardless of the actual number of years of service attained by Executive.”

2.           Section 3.5b of the Agreement shall be amended and restated, in its entirety, to read as follows:

	
  

	
“b.

	
The benefits described in Sections 3.1c and 3.1f hereof, subject to the terms and conditions set forth therein.”

Otherwise, the terms of the Agreement shall remain in full force and effect.  This Addendum was executed by the parties hereto, in multiple counterparts, each of which shall be deemed an original, as of the dates set forth below.

 

 

	
Cleco Corporation:

 

	
Executive:

	
By:           /s/  G. W. Bausewine          

 

	
/s/  Darren J. Olagues 

	
Its:           SVP – Corporate Services  

                                                   

	
Date:           07/30/10                                                      

	
Date:           7/30/10                                 

	  

 

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]