LOAN AGREEMENT
THIS LOAN AGREEMENT, made this 17th day of August, 2000 by and between:
OLDE MONMOUTH CAPITAL CORP., a New Jersey corporation having its
principal offices located at 00 Xxxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxx
00000 (hereinafter "LENDER")
AND
ARCTURUS VENTURES, INC., a Nevada corporation having its principal
offices at 00 Xxxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
(hereinafter "LENDER") 0000 X. Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx
00000 (hereinafter "BORROWER")
WITNESSETH THAT:
WHEREAS, BORROWER is a blank check company which intends to make a
public offering of its securities pursuant to SEC Rule 419, and pursuant to such
offering BORROWER intends to escrow all proceeds received in the Escrow Account
with Summit Bank and, accordingly, will not use any of the funds for working
capital, as a result of which BORROWER anticipates needing working capital in
order to meet its costs and expenses;
WHEREAS, LENDER, as the founder and the primary shareholder of
BORROWER, for its business purposes is willing to loan to BORROWER a total sum
equal to the gross proceeds raised in the offering, up to a total of Forty
Thousand Dollars ($40,000) on certain terms and conditions; and
WHEREAS, BORROWER desires to borrow such funds in order to meet its
costs and expenses pending release of the escrowed proceeds of the offering; on
certain terms and conditions; and
WHEREAS, the parties have negotiated and reached certain understandings
with respect to the terms and conditions and they desire a written document to
evidence and formalize their understandings;
NOW, THEREFORE, intending to be legally bound, and in consideration of the
mutual promises and covenants contained herein, the parties have agreed as
follows:
1. (a) On the terms and conditions of this Loan Agreement, LENDER shall, as
provided in Paragraph 2(a)
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below, lend to BORROWER a sum equal to the gross proceeds of BORROWER's public
offering, which proceeds will be escrowed with Summit Bank, 000 Xxxxxxx 00,
Xxxxxxxx, Xxx Xxxxxx 00000.. On the terms and conditions of this Agreement,
BORROWER may borrow any sums, from time to time during the term of this Loan
Agreement, up to the total proceeds raised in such public offering and escrowed
with Summit Bank.
(b) On the terms and conditions of this Loan Agreement LENDER may, as provided
in Paragraph 2(b) below, lend to BORROWER any sum which LENDER, in its sole
discretion, may determine. LENDER shall be under no obligation to make any loan
either (i) prior to successful completion of the offering or (ii) in excess of
the gross proceeds of the offering.
2. (a) The contracted loan shall be made in installment draws from time to time
at any time after successful completion of the public offering by BORROWER
(i.e.,after the sale by BORROWER of at least 24,000 Units) on the next banking
day after any request made by BORROWER, provided that the sum requested, when
added to all prior loans hereunder shall not exceed the total gross proceeds of
the offering.
(b) Any discretionary loans shall be made at any time, and from time to time, as
LENDER may determine in response to a request from BORROWER.
(c) The interest on all loans made by LENDER to BORROWER shall be equal to that
being paid by the escrow, Summit Bank, on the proceeds deposited with it in the
Escrow Account.
3. The purpose of this Loan Agreement is to permit BORROWER to have working
capital with which to meet its costs and expenses until release of the escrowed
funds in accordance with SEC Rule 419. LENDER acknowledges that:
(a) any and all loans which may be made hereunder are unsecured, and
LENDER has no lien on the escrow account at Summit Bank or in the funds
deposited therein; and
(b) investors in the offering have the right to a "reconfirmation
vote", and may vote not to reconfirm their investments in BORROWER, in which
event the escrowed funds attributable to such non-reconfirming investors will be
returned to them, with the interest earned thereon, and the amount of the funds
released to BORROWER may be less than the original gross proceeds and therefore
less than the contracted loan; and
(c) insufficient investors in the offering may vote to reconfirm their
investments, in which event all funds and the interest earned thereon would be
returned to the subscribers in the offering and no funds would be released to
BORROWER which would therefore lack funds for repayment of the loans or any
interest thereon.
4. (a) Upon release to it of any of the escrowed funds, following the
reconfirmation vote, BORROWER shall
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promptly repay to LENDER all loans made hereunder, whether contracted loans or
discretionary loans, and the interest thereon, to the full extent of the
proceeds released if necessary, except as specifically provided in sub-
paragraph (c) below..
(b) If the proceeds released to BORROWER are insufficient to repay fully the
loans and the interest thereon, LENDER may, in its sole discretion, convert any
un-repaid principal and interest into Common Stock of the BORROWER. Such
conversion shall be at a price per share of ten cents ($ 10), the offering price
in BORROWER's public offering. Such shares shall be restricted as to further
transfer and LENDER shall take such shares for investment purposes. LENDER shall
be under no obligation to make any conversion. To the extent that the loans and
the interest thereon are not fully repaid, and LENDER does not convert all of
the un-repaid balance, BORROWER shall promptly issue to LENDER its promissory
note, due within twenty-four months after issuance, in a principal amount equal
to the un-repaid and un-converted balance of loans and interest thereon, which
principal amount shall bear simple interest, payable quarterly in arrears, at
the rate of twelve percent (12%) per annum.
(c) In the event that the proceeds released to BORROWER, if fully or partially
used to repay loans hereunder, would not permit BORROWER to meet its commitments
under any acquisition or merger agreement, BORROWER shall retain the funds
required. LENDER shall have the conversion privilege set forth in sub-paragraph
(b) above and in the event that LENDER does not elect to convert all of the
unpaid principal and interest, BORROWER shall issue its promissory note as
provided in such sub-paragraph.
5. All notices to a party shall be deemed given when mailed by registered or
certified mail to the address at the head of this Loan Agreement or such other
address as may be substituted therefor.
6. This Agreement is the entire Agreement among the parties. No alteration,
modification, or waiver of term or condition hereof shall be binding unless in
writing and signed by all parties.
7. This Agreement may be amended only with the written approval of the party to
be charged therewith; provided, however, that no such amendment may be made that
would cause a breach of any warranty or representation herein or cause any
breach by BORROWER of SEC Rule 419.
8 Whenever required by the context hereof: the masculine gender shall be deemed
to include the feminine and neuter; and the singular member shall be deemed to
include the plural. Time is expressly declared to be of the essence of this
Agreement.
9. It is the intent of the parties that this Agreement shall be construed and
interpreted, and that all questions
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arising hereunder shall be determined in accordance with the provisions of the
laws of the State of New Jersey.
10. Any controversy, claim or dispute arising out of or resulting from this
Agreement, or the breach thereof, that cannot be resolved by negotiation, shall
be resolved by arbitration, to be held in Atlantic Highlands, NewJersey, in
accordance with the rules and regulations of the American Arbitration
Association, except that the provisions for discovery shall be as set forth in
the Rules of Civil Procedure then in effect in New Jersey. Failure of a party to
participate or cooperate shall constitute grounds for default judgment. The
arbitrator shall award legal fees and costs to the prevailing party. The
decision of the arbitrator shall in each case, including awards and the
allocation of costs, be final and binding upon the parties. Judgment upon the
award rendered by the arbitrator may be entered in any Court having jurisdiction
thereof.
11. This Agreement may be executed in two or more counterparts, any one of which
shall be deemed to be an original.
12. No agent, broker, person, or firm acting on behalf of either party or any of
their subsidiaries or under the authority of any of them is or will be entitled
to any commission or broker's or finder's fee or financial advisory fee in
connection with any of the transactions contemplated herein.
IN WITNESS WHEREOF, and intending to be legally bound, the parties have
hereunto set their hands and seal the day and year first above written.
ARCTURUS VENTURES INC. (Borrower)
ATTEST:
BY: /s/ Xxxxxxx Xxxxxxx Pres.
-------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------
Secretary
OLDE MONMOUTH CAPITAL CORP. (Lender)
ATTEST:
BY: /s/ Xxxx Xxxxxxxxx Pres.
-------------------
Xxxx Xxxxxxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------
Secretary
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