Exhibit 71 - LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is dated for reference November 6, 2005,
and is made by and between XXXX, INC., a Japanese corporation ("Lender"), and
PEAKSOFT MULTINET CORP., an Alberta corporation ("Borrower").
WITNESSETH:
WHEREAS, Lender and Borrower are in discussion regarding a potential transaction
in which Borrower would merge with an affiliate of Lender (the "Transaction");
WHEREAS, Borrower has requested that Lender extend to Borrower certain funds to
cover Borrower's operating expenses during the period of discussions between
Lender and Borrower, and Lender has extended and is willing to continue to
extend such funds; and
WHEREAS, Lender has made and is willing to continue to make the loans described
herein to Borrower, and Borrower is willing accept the funds from Lender, on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereby agree as follows:
SECTION 1. LOAN
(1) Subject to the terms and conditions of this Agreement, Lender agrees to
make, or to cause to be made, certain loans to Borrower (the "Loans"), which
shall be reflected in Promissory Notes executed by Borrower from time to time as
requested by Lender. The Promissory Notes shall be in the form attached hereto
as Exhibit A.
(2) The Loans shall be made in the form of direct payment by Lender of the
necessary operating expenses of Borrower, as determined in accordance with the
following procedure. Borrower shall submit to Lender invoices for necessary
operating expenses each month, and any additional evidence of the expense as may
be reasonably requested by Lender or its counsel or other representative. For
all invoices (including reasonably requested additional evidence)submitted by
Borrower by the fifteenth (15th) day of a particular month, Lender shall pay
such invoices by the last day of that same month, unless Lender (or its counsel
or other representative)has a good faith objection to such expense, and provides
the Borrower with reasons therefor.
SECTION 2. INTEREST
Borrower shall pay to Lender interest on the principal amount of the Loan at the
rate of___ percent per annum from and including the date on which the Loan is
advanced and excluding the date on which the Loan is repaid, converted or
forgiven, as further described in Section 3 below. Any outstanding principal of,
or accrued interest on, the Loan that is not paid when due shall bear interest
from and including such due date to and excluding the date of payment in full
thereof, at the rate of ___ percent per annum ("Default Interest"). Interest
(including Default Interest) shall be calculated for the actual number of days
elapsed on the basis of a 365 day year.
SECTION 3. CONVERSION; REPAYMENT; FORGIVENESS
(1) Upon the closing of the Transaction (the "Closing"), the first $125,000 of
Loans, plus accrued interest other than Default Interest, shall be applied to
the purchase price to be paid by Lender to Borrower in the Transaction (the
"Purchase Price"). Any Loan amounts exceeding $125,000 plus accrued interest
other than Default Interest shall be converted into common shares of Borrower at
the Closing, at a conversion price of the higher of CDN$0.26 or US$0.17 (based
on the exchange rate published in the Wall Street Journal on the Business Day
next preceding the date of the Closing), with any amount resulting in fractional
shares to be repaid in cash; provided, however, that this sentence shall not be
effective until all regulatory authorities having jurisdiction over PeakSoft's
affairs or over the transactions herein contemplated shall have granted their
approval of this sentence. Notwithstanding the foregoing, if such Loan amount
exceeding $125,000, or any portion thereof, was advanced for the reimbursement
of operating expenses of Borrower incurred after January 1, 2004, then such
amount shall be added and applied to the Purchase Price, unless such expenses
(or portion thereof) were incurred as a result of Borrower's unwillingness or
inability to proceed with the Transaction. For purposes of this Agreement, the
parties agree that Borrower shall not be deemed unwilling or unable to proceed
with the transaction if such unwillingness or inability is caused by Lender's
nonpayment of Borrower's operating expenses.
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(2) Subject to the foregoing, Borrower shall repay the entire principal amount
of the Loans and accrued but unpaid interest thereon on (i) November 1, 2007, or
(ii) such earlier date as hereby accelerated under Section 6 below (the
"Repayment Date"). If the Repayment Date falls on a day which is not a Business
Day, it must be made on the immediately succeeding Business Day. For the
purposes of this Agreement, "Business Day" means any day (other than a Saturday
or Sunday) on which banks are open for business in the City of Bellingham,
Washington, U.S.A. and in Tokyo, Japan. (3) Notwithstanding the foregoing, if
either of the following conditions come into being, Lender shall forgive, or
shall cause to be forgiven, the principal amount of the Loans (as well as any
interest accrued thereon) and shall cause to be terminated the pledge agreement
described in Section 4 below: (a) the Closing does not occur on or before
October 31, 2006 as a result of the unwillingness or inability to close the
Transaction by Lender; or (b) Lender does not comply with its obligations under
Section 1(2) above within five Business Days (as defined in Section 3(2) above)
after receipt of written notice from Borrower of its failure to comply with such
obligations.
SECTION 4. SECURITY
The parties agree that the principal amount of the Loans (as well as any
interest accrued thereon) shall be secured by the pledge of shares by Xxxxxxx X.
Xxxx, President & CEO of Borrower, as reflected in the Stock Pledge Agreement
executed as of even date herewith between Wealth Trend Holdings Limited, an
affiliate of Lender, and Xx. Xxxx. A copy of the Stock Pledge Agreement is
attached hereto as Exhibit B.
SECTION 5. BORROWER COVENANT
Borrower hereby covenants that so long as any indebtedness of Borrower under
this Agreement remains outstanding and unpaid, Borrower shall, unless otherwise
consented to in writing by Lender, promptly give notice in writing to Lender of
(a) the occurrence of any Event of Default (as defined in Section 6 below) under
this Agreement or under any other material agreement of Borrower and (b) any
litigation, proceeding, investigation or dispute which may exist at any time
between Borrower and any third party which might substantially interfere with
the performance of any obligation under this Agreement.
SECTION 6. EVENTS OF DEFAULT
If any of the Events of Default (as hereinafter defined) occurs, then the
principal amount of the Loans (as well as any interest accrued thereon) shall be
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are expressly waived, anything contained herein to the
contrary notwithstanding. For the purpose of this Agreement, an Event of Default
shall be deemed to have occurred: (a) if Borrower fails to pay the principal of
and interest on the Loans when due; (b) if the Closing does not occur on or
before October 31, 2006 as a result of the unwillingness or inability to close
the Transaction by Borrower; (c) if any representation, warranty or covenant
made by Borrower (or an affiliate of Borrower, including Xx. Xxxx) under this
Agreement, or any other agreement(s) made with Lender (or an affiliate of
Lender, including Wealth Trend Holdings Limited), shall prove to have been
untrue or misleading in any material respect when made; or (d) if Borrower files
a petition in bankruptcy or for liquidation or reorganization or other similar
petition, makes an assignment for the benefit of creditors, consents to the
appointment of a receiver, trustee or other custodian for all or a substantial
part of its property, is adjudicated a bankrupt, or fails to cause to be
vacated, set aside or stayed within 60 days of any court order appointing a
receiver, trustee or other custodian for all or a substantial part of its
property or ordering relief against it in any involuntary case of bankruptcy.
SECTION 7. INDEMNIFICATION
Borrower agrees to indemnify Lender from and against any and all claims, losses
and liabilities arising out of or resulting from the occurrence of any Event of
Default (including, but not limited to, the costs for the enforcement hereof).
Borrower further agrees to pay all reasonable expenses of Lender, including,
without limitation, the fees and expenses of its counsel, incurred in connection
with (i) the enforcement of any part of this Agreement, and any waiver or
amendment of any provision hereof, (ii) the administration of this Agreement
after the occurrence of any Event of Default or (iii) the failure by Borrower to
perform or observe any of the provisions of this Agreement.
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SECTION 8. WAIVERS
No single or partial waiver by Lender of any Event of Default, right or remedy
which it may have shall operate as a waiver of any other Event of Default, right
or remedy or of the same Event of Default, right or remedy on a future occasion.
Borrower hereby waives presentment, notice of dishonor and protest and all other
notices and demands whatsoever, except as specifically provided in this
Agreement.
SECTION 9. AMENDMENT
No amendment, modification or waiver of any provision of this Agreement, nor
consent to any departure by Borrower herefrom, shall in any event be effective
unless the same shall be in writing and signed by Lender and shall otherwise be
made in accordance with the provisions hereof, and then such amendment, waiver
or consent shall be effective only in the specific instance and the specific
purpose for which given.
SECTION 10. TERM
This Agreement shall commence on the date first set forth above and shall remain
in full force and effect until (i) Borrower has paid in full all principal
amounts and accrued interest on the Loans, (ii) all principal amounts and
accrued interest on the Loans have been converted or applied to the Purchase
Price under Section 3(1), or (iii) all principal amounts and accrued interest on
the Loans are forgiven under Section 3(3).
SECTION 11. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of Borrower and
Lender and their respective permitted successors and assigns; provided, however,
that Borrower may not transfer or assign any of its rights or obligations
hereunder without the prior written consent of Lender.
SECTION 12. NOTICE
(1) All notices given under this Agreement shall be in writing and shall be
given (a) by hand, (b) by internationally-recognized courier, or (c) by
facsimile (with receipt confirmed), to the following address:
If to Lender:
Xxxx, Inc.
Suite 320, Residence Viscountess
0-00-00 Xxxxxxx
Xxxxxx-xx, Xxxxx 000-0000
Xxxxx Attn: Xxxxxx Xxxxxxxxx, Representative Director
Facsimile No.: x00-0-0000-0000
If to Borrower: PeakSoft Multinet Corp.
0000 Xxxxxxxx Xxxxxx, Xxxxx X000
Xxxxxxxxxx, XX 00000
U.S.A.
Attn: Xxxxxxx X. Xxxx, President & CEO
Facsimile No.: (000) 000-0000
(2) Any notice hereunder shall be deemed to have been received by the addressee
thereof: (a)on the same day of the dispatch by the addressee thereof if
delivered by hand, (b) on the third Business Day after the dispatch thereof if
sent by courier, and (c) on the following Business Day after the dispatch
thereof if sent by confirmed facsimile. Either party may change its address or
its facsimile number for purposes of this Agreement by giving the other party
written notice of its new address or facsimile number.
SECTION 13. GOVERNING LAW
This Agreement shall be governed by and shall be construed in accordance with
both the procedural and the substantive laws of the State of Delaware, one of
the United States of America, to the exclusion of the law of any other
jurisdiction. By entering into this Agreement the parties hereto agree: (a) that
any cause of action which arises in respect of the construction and/or the
performance of this Agreement or any provision hereof shall be deemed to have
arisen in the State of Delaware; and (b) to accept and to attorn to the
jurisdiction of the Delaware courts.
The parties hereto agree that no resort shall be taken to any other court or
tribunal in any other jurisdiction, save only where and in those instances in
which it shall become necessary to seek the enforcement of an order of the
Delaware courts beyond its territorial jurisdiction.
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IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed and delivered on their behalf as of the date first written above.
XXXX, INC.
By: "Xxxxxx Xxxxxxxxx" (signed)
--------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Representative Director
PEAKSOFT MULTINET CORP.
By: "X.X. Xxxx" (signed)
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Name: Xxxxxxx X. Xxxx
Title: President & CEO
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