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COMMERCIAL LINE OF CREDIT AGREEMENT
THIS LOAN AGREEMENT made this 10TH day of SEPTEMBER, 2002
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BETWEEN:
XXXXX-XXXX XXXXXXXX XXXXXXXXX XXXXX XXXXX of 0000 Xxxxxx
Xxxxx, Xxxxxxx, X.X. X0X 0X0
(the "Lender")
AND:
XXXXXXXXXXXX.XXX, INC. a corporation incorporated under the
laws of the State of Florida, USA and having a Canadian office at
0000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
(the "Borrower")
WHEREAS:
A. The Borrower is a United States corporation extra-provincially incorporated
in the Province of British Columbia;
B. The Lender has agreed to loan monies to the Borrower from time to time on a
revolving line basis upon the terms and conditions set out below:
Maximum Principal Amount: $
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Interest Rate: Interest shall be payable at the rate specified from time to
time within promissory notes signed by the borrower in
respect of a particular advance of monies by the Lender.
The following are the terms and conditions of this Agreement:
1. DEFINITIONS
(1) In this Agreement,
(a) "Advance" means an extension of credit by the Lender to the
Borrower under or in respect of this Agreement;
(b) "Charge" means any mortgage, hypothec, charge, lien, encumbrance
or
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other security interest;
2. LINE OF CREDIT
(1) Subject to the terms and conditions of this Agreement, the Lender
agrees to advance funds under the line of credit up to the Maximum
Principal Amount as requested by the Borrower from time to time
provided that the Lender under no circumstances be obliged to make
advances. All advances under the line of credit shall at all times be
subject to the terms and conditions of this Agreement.
(2) The obligation of the Borrower to repay the Lender shall not be
affected in any way by reason of the aggregate of advances made to or
for the Borrower under the line of credit exceeding the Maximum
Principal Amount.
(3) Advances under this Agreement may be drawn, repaid and redrawn from
time to time, and may be made by the issue of a draft payable to the
Borrower or to a third party designated by the Borrower.
3. REPAYMENT
(1) Advances may be made under this Line of Credit on a revolving basis,
and all advances to the Borrower and all interests and costs shall be
repayable upon demand by the Lender, but until such a demand is made,
shall be paid as otherwise provided in this Agreement, any promissory
note issued in respect of an advance or as directed by the Lender from
time to time.
(2) Where an advance of funds is made to or for the benefit of the
Borrower under the terms of this Agreement, the following rules apply
in the case of any such advance:
(a) The Borrower shall pay the Lender interest on any amount advanced
under this Line of Credit and upon all arrears of interest and
costs and fees payable under this Agreement at the rate
specified, that interest to be calculated not-in-advance and
compounded monthly and payable on the amount outstanding from day
to day both before and after default and judgment, until payment
is made.
(b) Interest shall be payable in monthly instalments, the first such
instalment to be payable on the first day of the month next
following the date on which the advance was made, with each
subsequent instalment to be paid on the first day of each month
thereafter.
(c) Interest shall be payable by the Borrower for the day on which
any
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advance is made but shall not be payable for the day on which
repayment is made, if the Lender was notified of the intended
repayment by 12:00 noon (Vancouver time) on the day prior to the
day on which the repayment is made, provided the advance is in
fact repaid by 3:00 p.m. on the day specified for repayment.
(d) The Borrower shall repay the Lender the amounts advanced from
time to time on demand, by the Lender, and where such a demand is
made the payment shall include all interest owing up to the time
when the repayment is made, but the Borrower may at any time
repay to the Lender all or any part of the money advanced under
the Line of Credit without notice, penalty or bonus.
4. REPAYMENTS
(1) All payments received under this Agreement shall be applied,
(a) first in accordance with the provisions of any security given in
respect of the Loan, if any;
(b) second, to the payment of any costs payable under this Agreement,
or under any security agreement relating to this Agreement;
(c) third, in successive order, to the payment of all compound
interest and interest on the Loan;
(d) fourth, to the payment of the principal amount of the Loan.
(2) The monthly payment made by the Borrower shall not be less than an
amount sufficient to pay at least the interest costs chargeable.
5. WARRANTIES OF THE BORROWER
The Borrower expressly warrants as follows:
(1) That it is duly incorporated and organized and is a subsisting
corporation, and has all requisite powers, capacities, licences and
permissions under its governing legislation and the other laws
applicable to it, and under its articles of incorporation, by-laws and
governing resolutions to,
(a) own the assets which the Borrower has represented as belonging to
the Borrower in any financial statement or representation made by
the Borrower to the Lender,
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(b) carry on all activities in which the Borrower is engaged,
(c) enter into, exercise its rights and perform and comply with its
obligations under the Agreement,
and that all actions, conditions and things have been done,
taken or fulfilled with respect thereto, that are required by
law, contract or otherwise.
(2) The Borrower is not a party to any agreement under the terms of which
the Borrower is prohibited or restricted from entering into any of the
obligations assumed, liabilities imposed, or restrictions accepted by
the Borrower under this Agreement.
(3) No encumbrance exists on or over any of its assets or revenues or the
assets or revenues of any of its subsidiaries, except as disclosed in
writing to the Lender.
(4) The financial statements provided to the Lender by the Borrower
present fairly the financial position of the Borrower and the results
of the Borrower's activities in accordance with generally accepted
accounting principles applied on a consistent basis with that of the
preceding year, or other relevant financial period, except for such
changes or departures from such principles as are expressly identified
by the auditors of the Borrower in their report on the financial
statements, or are expressly noted in the notes to the financial
statements, and there has been no material adverse change, since the
date of the Borrower's most recently audited financial statements.
(5) No litigation, arbitration or administrative proceeding is current or
pending, so far as the Borrower is aware, in respect of the Borrower
which appears reasonably likely to have a materially adverse effect on
the Borrower.
(6) No event of default has occurred since the date on which the Borrower
applied for the loan, or appears reasonably likely to occur as of the
date of this Agreement.
(7) To the best of the Borrower's information and belief and after making
diligent inquiries,
(a) the information concerning the activities, affairs and financial
and other conditions of the Borrower that are contained in all
documents, memoranda, records, statements made, sent or given by
the Borrower to the Lender during the course of the negotiation
of this Agreement, its application for a credit facility of any
kind with the Lender, or in connection with the renewal of this
Agreement, and in its current regulatory filings, are true and
accurate in all material respects; and
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(b) the Borrower is not aware of any material facts or circumstances
which have not been disclosed.
(8) There are no outstanding judgments, writs of execution, work orders,
injunctions, or administrative or regulatory directives against the
Borrower or any of the Borrower's assets that might reasonably be seen
to have a materially adverse impact upon the Borrower's prospects or
condition or those assets.
6. COVENANTS OF THE BORROWER
(1) The Borrower covenants and agrees with the Lender that as long as the
loan is outstanding, it shall:
(a) pay all amounts owing (including interest, costs and other
charges) under this Agreement and any loan or other credit
facility agreement between the Borrower and the Lender;
(b) refrain from and prevent waste from being committed on or against
the Borrower's assets (reasonable wear and tear excepted), and
maintain the assets in good order and repair;
(c) observe all laws and conform to all valid requirements of any
governmental authority with respect to all or any part of its
activities ad assets, and all covenants, terms and contracts upon
or under which any of the Borrower's assets are held, and all
terms and conditions relating to any licence held by the Borrower
and required in connection with the Borrower's activities;
(d) notify the Lender of any change in the information contained in
any loan application completed by the Borrower with respect to
this loan;
(e) not create or permit any mortgage, charge, lien or other security
interest in any or all of its assets, unless, simultaneously with
the grant of that security interest, provision is then made to
secure the amounts owing under this Agreement equally and ratably
with the indebtedness to which that security interest relates,
but this clause shall not apply in the case of,
(i) undetermined or inchoate liens or other charges that arise
by operation of law and that are incidental to the
construction of improvements to real property, the repair of
personal property, or any part of the operations of the
Borrower, provided that all payments by the Borrower or
subsidiary, as the case may be, are being made when due and
in accordance with applicable
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legislation; or
(ii) security interests granted to secure the purchase price of
the asset against which the security interest is granted.
7. DEFAULT
(1) The following are acts or events of default:
(a) where the Borrower defaults in the payment of any amount owed
under a promissory note issued by the Borrower to the Lender,
this Agreement or the performance of anything required to be done
by this Agreement;
(b) Where any formal or informal proceeding for the dissolution of,
liquidation of, or winding up of, the affairs of the Borrower is
instituted by or against the Borrower, or where a resolution is
passed or any other act undertaken for the winding up of the
Borrower;
(c) where the Borrower defaults in payment of any indebtedness or
liability to a bank or other lending institution, whether secured
or not;
(d) where the Borrower is adjudged bankrupt or becomes insolvent, or
a petition in bankruptcy is filed against the Borrower, or where
the Borrower makes an assignment for the general benefit of
creditors, or where proceedings of any type are instituted in any
jurisdiction in respect of the alleged insolvency or bankruptcy
of the Borrower;
(e) where any guarantor of the Borrower is adjudged bankrupt or
becomes insolvent, or a petition in bankruptcy is filed against
the guarantor, or where the guarantor makes an assignment for the
general benefit of creditors, or where proceedings of any type
are instituted in any jurisdiction in respect of the alleged
insolvency or bankruptcy of the guarantor;
(f) where any certificate, statement, representation, warranty or
audit report made in connection with this Agreement or any
agreement between the Borrower and the Lender as an inducement to
the Lender to enter into a lending transaction, was false or
misleading in any material respect at the time of its making or
where any material fact which ought to have been disclosed in the
certificate, statement, representation, warranty or audit report
was not disclosed, or where the Borrower fails to inform the
Lender forthwith of any such material fact.
8. COST OF THE LENDER
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(1) The Borrower shall pay to the Lender forthwith upon demand all costs,
charges and expenses (including legal fees and disbursements on a
solicitor-and-client basis) of or incurred by the Lender in connection
with,
(a) the preparation or execution of this Agreement or the perfection
of any security interest given by the Borrower in respect of the
loan;
(b) the delivery of any notice or document required under the terms
of this Agreement or by law; and
(c) any cost incurred by the Lender in respect of the recovery of
funds or enforcement of payment of any of the monies owing
borrowed under this Agreement, including all costs, charges and
expenses in connection with taking possession, protecting,
preserving, collecting and realizing upon any part of the assets
together with interest thereon at the rate provided in this
Agreement from the date of incurring such costs, charges and
expenses to the date of payment.
9. FURTHER ASSURANCES
(1) The Borrower shall draw, execute and deliver at its own expense, all
such instruments and documents, and do all such acts and things as the
Lender may from time to time reasonably consider necessary or
advisable for the purpose of carrying out the intent and provisions of
this Agreement.
10. SECURITY
(1) All advances made under this Agreement shall be secured by:
(a) promissory notes from time to time issued by the Borrower in
favour of the Lender in a form satisfactory to the Lender; and
(b) a General Security Agreement creating a fixed and floating charge
over the assets and undertaking of the Borrower,
and the Borrower shall not enter into any new borrowing with any
creditor after the date of this Agreement which would afford that
creditor priority over the claims of the Lender under this
Agreement, or grant any creditor any new or further security in
respect of any existing indebtedness, but nothing in this
Agreement affects any security given by the Borrower prior to the
date of this Agreement.
11. TERM OF AGREEMENT
(1) The term of this Agreement shall be for five years from the date of
this
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Agreement, but that term shall be automatically extended for further
periods of one year, unless at least 30 days prior to an expiration
date, a party this Agreement gives the other party written notice of
the termination of this Agreement, and where any such notice is given
all amounts advanced under this Agreement shall be due and payable on
that expiration date or such later date as may be specified in the
notice.
12. COSTS AND EXPENSES
(1) In addition to any interest payable under section 2, the Borrower
agrees to pay to the Lender on demand all legal fees and other costs
or expenses incurred in connection with or arising out of the
operation of the revolving line of credit, and such expenses, fees or
charges shall be charged to the Borrower whether or not this creates
or increases any indebtedness or creates an overdraft with the Lender;
(2) The Borrower shall remain liable to the Lender in respect of each
amount charged under subsection (1) and promises to pay on demand all
charges and legal expenses incurred by the Lender on behalf of the
Borrower in connection with this Agreement, the line of credit or the
enforcement or realization of any security, together with interest
thereon at the current interest rate.
13. ACCOUNT RECORDS
(1) The records and books maintained by the Lender in the usual and
ordinary course of its business that touch or concern the state of
accounts between the parties hereto shall be PRIMA FACIE evidence of
the true state of accounts between the parties for all purposes
including litigation.
14. NOTICE
(1) Any notice, instruction or document required or permitted to be given
or served by this Agreement or by law may be given personally or by
telex or fax (where the intended recipient is equipped to receive such
a form of telecommunication) or by prepaid courier or regular mail to
the addresses of the parties as set out on the first page of this
Agreement and either party may by notice given in accordance with this
subsection change its address for the purposes of this subsection.
(2) Any notice shall be deemed (in the absence of evidence of prior
receipt to have been received by the intended recipient the same day
if personally served, the next business day if sent by telex or fax,
and on the fifth business day next following
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where sent by mail.
15. AMENDMENTS
(1) This Agreement shall not be deemed to be or construed as having been
amended as a result of any oral communication between the parties or as a
result of any practice of the parties, but all amendments to this Agreement
shall be in writing and shall be signed by both parties, provided that any
such agreement may be executed in counterpart form.
16. INTERPRETATION
(1) In this Agreement,
(a) a word importing the masculine, feminine or neuter gender only
includes members of the other genders;
(b) a word defined in or importing the singular number has the same
meaning when used in the plural number, and vice versa;
(c) a reference to any Act, by-law, rule or regulation or to a
provision thereof shall be deemed to include a reference to any
Act, by-law, rule or regulation or provision enacted in
substitution thereof or amendment thereof; (d) the headings to
each section are inserted for convenience of reference only and
do not form part of the Agreement;
(e) all accounting terms have the same meaning as are applied to
those terms by the Canadian Institute of Chartered Accountants.
(2) Where in this Agreement more than one person or entity is named and
signs as the Borrower, each such person or entity shall be jointly and
severally liable to the Lender for all obligations, debts and
liabilities incurred under this Agreement.
17. RIGHTS AND OBLIGATIONS OF SUCCESSORS
(1) The rights of the Borrower under this Agreement are specific to the
Borrower and neither the benefits nor the obligations of the Borrower
under this Agreement may be assigned.
(2) All rights of the Lender under this Agreement shall enure to the
benefit of its successors or assigns and all obligations of the
Borrower shall bind the Borrower's heirs, executors and administrators
and successors.
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18. ACKNOWLEDGEMENT OF RECEIPT OF COPY OF AGREEMENT
(1) The Borrower acknowledges the receipt of a true copy of this Agreement
signed by the Borrower.
EXECUTED AND DELIVERED as of the date first above written.
XXXXXXXXXXXX.XXX, INC.
PER:
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