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THIS LOAN AGREEMENT Is dated April 30, 1996
BETWEEN:
XXXXXXXX CAPITAL INC., a proprietorship carrying on business
in the Province of Quebec, and having its offices at 000 Xxxxx
Xxxx, Xxxxxx, Xxxxxx, XXX IRO.
(And hereinafter referred to as "Lender")
OF THE FIRST PART
AND:
FIRST AMERICAN SCIENTIFIC CORP, a company duly incorporated
under the laws of Nevada, and having offices at Xxxxx 0000 - 000
Xxxxxxxxx Xx, Xxxxxxxxx, X.X. X0X lVS.
(And hereinafter referred to as " Borrower")
OF THE SECOND PART
WHEREAS:
The lender is engaged in the business of venture capital
financing and is desirous of providing financial and bridge
financing to the Borrower, on terms and conditions mutually
agreed upon; and WHEREAS the Borrower is the owner of an
exclusive world wide licence for sonic disintegration equipment
being used in various products such as gypsum, limestone, glass,
and rubber; and WHEREAS the Borrower is desirous of obtaining
short term financial assistance to assist in the completion of
its new plant in Bakersfield, Ca, and to assist in general
corporate matters as part of its business plan;
IT IS AGREED:
1. The lender will provide financing up to S800,000U.S to be
drawn down as requested by the Borrower. Said Borrower shall
provide five (5) days notice of the amount of funds to be
drawn.
2. Interest shall he charged at the rate of 10% per annum,
calculated semi-annually, not in advance.
3. This financing shall be available until the earlier of
completion of the preferred share financing that is being
undertaken, or December 31, 1996, whichever occurs first.
4. There is no penalty for early retirement of the financing
and interest shall be calculated only on the period the
funds are outstanding.
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5. The lender has the option to convert outstanding loans per
contemplated financing to common shares at a price of $0.75
U.S. per share.
6. Should the loan by the Lender not be retired by December 31,
1996, and should the Lender not exercise option to convert
as stated in 5. then Lender has option to extend loan for
additional six months to June 30, 1997 on similar terms with
the interest being 3% over CIBC bank prime at January 1,
1997.
7. Security shall be provided to the Lender by way of a
collateral mortgage on the assets at the Bakersfield plant.
These assets include all equipment purchased by the
operation at Bakersfield for the plant. The security shall
include all corporate assets owned by the borrower.
8. Borrower shall not pledge intellectual property or any other
tangible or intangible assets owned by the Borrower without
the expressed written consent of the Lender.
9. The Borrower shall provide monthly financial statements and
any other information as so requested by the Lender.
10. The Borrower shall not incur any other debt without the
expressed written consent of the Lender.
11. The Borrower will not acquire fixed assets over $25,000 U.S.
without the verbal consent of the Lender.
12. The parties hereto agree to enter into any other agreements,
undertakings, or obligations as are reasonably necessary, in
order to fulfil the intent of this Agreement.
13. If the Borrower breaches any terms as specified in 8,9,10,
and 11, and does not rectify said default within 10 days of
receiving written notice of breach, then the full amount of
the financing then outstanding shall become due and payable,
and the credit facility available shall at that moment. be
canceled, and future credit not available.
14. It is agreed that this Agreement shall be governed by the
laws of British Columbia, and disputes which cannot be
resolved by the parties to this Agreement, shall be subject
to Arbitration, under the terms and conditions as specified
in the British Columbia Arbitration Act.
15. Time shall the of the essence in this Agreement.
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Xxxxxxxx Capital Inc.
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First American Scientific Corp
