Loan Agreement
THIS AGREEMENT made as of the 27th day of May, 2005.
BETWEEN:
NEWTECH BRAKE CORP., a corporation incorporated under the laws of
Delaware, U.S.A., and having its head office at 000, xxxx.
Xxxxxxxxxx, Xxxxxxxxxx, Xxxxxxxx of Quebec, Canada, J7C 3V3
(hereinafter referred to as the "Borrower")
OF THE FIRST PART,
-and -
CAPITAL POWER INTERNATIONAL LIMITED, a corporation incorporated
under the laws of Hong Kong and having its office at 000 Xxxx,
Xxxxxxxxxx Xxxxxx, Xxxxx 000, in the City and District of Montreal,
Province xx Xxxxxx, Xxxxxx, X0X 0X0
(hereinafter referred to as the "Lender")
OF THE SECOND PART.
WHEREAS the Borrower has requested the Lender to loan to the Borrower the
aggregate sum of TEN MILLION DOLLARS US ($US 10,000,000.00) on the terms and
conditions hereinafter set forth and to subscribe to purchase THREE MILLION
DOLLARS US ($US 3,000,000.00) in common shares of Newtech Brake Corp.;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
respective covenants and agreements of the parties contained herein, and other
good and valuable consideration, (the receipt and sufficiency of which is hereby
acknowledged by each of the parties hereto), it is agreed as follows:
ARTICLE ONE - DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Agreement unless something in the subject matter or
context is inconsistent therewith:
a) "Business Day" means any day other than a Saturday or Sunday, or
holiday, on which Canadian chartered banks are open for business in
Toronto, Ontario;
b) "Security Agreement" means the security agreement entitled moveable
hypothec and trust agreement issued by the Borrower to the Lender
dated as of the 26 day of may , 2005, and attached hereto as
Schedule "A";
c) "Convertible debenture" means the convertible debentures issued by
the Borrower in favour of the Lender denominated in U.S. Dollars,
Series `A' $US10,000,000.00 attached hereto as Schedule "B";
d) "Return on investment" means the conditions set out in Schedule "C";
and in the convertible debentures;
e) "Loan" means the loan and subscription of shares of Newtech Brake
Corp mentioned in Schedule "C" herein.
f) "Attorney of the creditors" means an attorney as stipulated in the
article 2692 Civil Code of the Province of Quebec.
1.2 Schedules. Schedule "A", Schedule "B", and Schedule "C"; attached hereto,
are incorporated in and deemed to be an integral part of this Agreement.
ARTICLE TWO - THE LOAN
2.1 The Loan. The Lender hereby agrees that on the terms and subject to the
conditions set forth in Schedule "C"; herein, it will make a loan (the
"Loan") in the aggregate amount of TEN MILLION DOLLARS US ($US
10,000,000.00) to the Borrower and it will purchase THREE MILLION DOLLARS
US ($US 3,000,000.00) common shares of Newtech Brake Corp. at the price
set out in the terms and conditions of Schedule "C" herein.
2.2 It is the Borrower's intention to affect a second loan evidenced by an
issue series "B" debentures for an amount of TWELVE MILLION dollars US
($US 12,000,000.00). The said debentures shall have a face value of TWO
HUNDRED FIFTY THOUSAND dollars US ($US250,000.00) each and shall be paid
pari passu with the series "A" debentures and shall be secured by a
movable hypothec of first rank upon the three (3) know how and production
licenses held by the Borrower. Notwithstanding that the said debentures
are not issued at the date of issue of debentures series "A", the series
"B" debentures shall also be secured immediately by the moveable hypothec
and trust agreement affecting the series "A" debentures for future
purposes.
ARTICLE THREE - FORM OF THE CONVERTIBLE DEBENTURES
3.1 Convertible debentures. The disbursement of funds made pursuant to Section
2.1 hereof, shall be evidenced by the Convertible debentures Series `A' a
copy of which is attached hereto as Schedule "B" and described in Schedule
"C".
3.2 A total of 40 series `A' convertible debentures payable to bearer are
issued in order to evidence the loan for a total amount of
$US10,000,000.00. Each debenture is composed of one convertible debenture
series `A' having a face value of $US 250,000.00 convertible into common
shares of Newtech Brake Corp.
3.3 The series `A' debentures shall be payable pari passu with the series `B'
debentures.
3.4 The series `A' debentures shall be secured by a moveable hypothec already
in existence and registered in first rank on the Register of Moveable
Hypothec held by the Publicity Office on the know how and production
licenses of the Borrower.
3.5 The moveable hypothec mentioned in the previous paragraph shall provide
that an Attorney of the creditors shall act on behalf of the debenture
holders in order to protect their rights, shall be deposited for the
security, shall hold the debentures series `A' and series `B' in trust for
payment and retirement, shall act as transfer agent and registrar of the
debentures, the whole in accordance with the terms and conditions of the
Power Attorney Agreement.
3.6 The denomination of $US250,000.00 of each debenture shall not be broken
down into smaller denominations.
ARTICLE FOUR - REPAYMENT
4.1 Repayment. Subject to Section 6.2 and unless otherwise due earlier
hereunder, the principal amount of the Term Loan shall be repaid together
with any other amounts payable hereunder upon the terms and conditions set
out in Schedule "C", herein, to Attorney of the creditors, Me Xxxx Batiot,
notary having its head office at 000 xxx Xxxxxxxx, Xxxxxxxx, Xxxxxx,
Xxxxxx, X0X 0X0.
ARTICLE FIVE - RETURN ON INVESTMENT
5.1 Return on investment. The Loan shall have the Return on investment set out
in Schedule "C", herein.
ARTICLE SIX - PAYMENTS AND PREPAYMENTS
6.1 Type and Place of Payment. All funds made available to the Borrower by the
Lender hereunder, and all payments of Return on investment payable
hereunder by the Borrower, shall be made or delivered to the Attorney of
the creditors at the following address:
Me Xxxx Batiot, notary having its head office at 000 xxx Xxxxxxxx,
Xxxxxxxx, Xxxxxx, Xxxxxx, X0X 0X0.
6.2 Prepayments. The Borrower shall be entitled to prepay the Loan, or any
portion thereof, as mentioned in the terms and conditions of the Loan
comprised in Schedule "C", herein.
ARTICLE SEVEN - REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of the Borrower. To induce the Lender to
enter into this Agreement and to make the Loan, the Borrower makes the
following representations and warranties, which shall survive the
execution and delivery of this Agreement and the Note:
(a) Neither the execution and delivery of this Agreement nor compliance
with the terms, conditions and provisions hereof, will conflict with
or result in a breach of any of the terms, conditions or provisions
of:
(i) any agreement, instrument or arrangement to which the Borrower
is now a party or by which it is or may be bound, or
constitute a default thereunder;
(ii) any judgment or order, writ, injunction or decree of any
court; or
(iii) any applicable law or governmental regulation.
(b) The Borrower will comply when obligatory to any filing with any
governmental or public body or authority is required to authorize,
or is otherwise required in connection with, the execution, delivery
and performance of this Agreement and the Convertible debentures by
the Borrower.
(c) There are no actions, suits or proceedings pending, to the knowledge
of the Borrower, threatened (nor to the best knowledge of the
Borrower is there any pending investigation) against or involving
the Borrower at law or in equity or before or by any federal,
provincial, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind, which involve a reasonable
possibility (so far as the Borrower can foresee) of any material
adverse change in the financial affairs of the Borrower, and the
Borrower is not in default with respect to any judgment, order,
writ, injunction, decree, rule or regulation of any court,
arbitrator or federal, provincial, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which involves a reasonable
possibility (so far as the Borrower can foresee) of any material
adverse change in the financial affairs of the Borrower.
ARTICLE EIGHT - COVENANTS
8.1 Covenants of the Borrower. From the date of this Agreement and thereafter
until the Loan (including interest thereon) and any other amounts to be
paid by the Borrower to the Lender hereunder, are paid in full:
(a) The Borrower will notify the Lender immediately if the Borrower
shall default in a material manner in the payment of any of its
indebtedness for borrowed money, whether such indebtedness now
exists or shall hereafter be created. The Borrower also shall notify
the Lender immediately if there shall occur a material event of
default under any mortgage, indenture or instrument (including
without limitation this Agreement) under which there may be issued,
or by which there may be incurred or evidenced, any indebtedness of
the Borrower for borrowed money, whether such indebtedness now
exists or shall hereafter be created.
(b) The Borrower will comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority, a
breach of which would materially and adversely affect the financial
condition or businesses of the Borrower, except where contested in
good faith and by proper proceedings.
(c) The Borrower will promptly give the Lender notice in writing of all
litigation and all proceedings before any governmental or regulatory
agencies or arbitration authorities affecting the Borrower, except
those which, if adversely determined, would not have a material
adverse effect on the financial condition or business of the
Borrower.
ARTICLE NINE - EVENTS OF DEFAULT
9.1 Default. The Loan, together with accrued interest thereon, and all other
obligations of the Borrower hereunder shall become and be immediately due
and payable upon written notice of the Lender if any one or more of the
following events (herein called "Events of Default") shall occur for any
reason whatsoever:
(a) if default shall be made in the due and punctual payment of the
principal of the Loan, when and as the same shall become due and
payable, whether on demand by the Lender or by acceleration or
otherwise and such default shall have continued for a period of
forty five (45) days after notice from the Lender to the Borrower;
(b) if default shall be made in the due and punctual payment of interest
on the Loan or any other amounts due hereunder, when and as the same
shall become due and payable, and such default shall have continued
for a period of forty five (45) days after notice from the Lender to
the Borrower;
(c) if any representation or warranty of the Borrower in this Agreement
shall prove to have been untrue or incorrect in any material respect
on the date as of which it was made and such default shall have
continued for a period of forty five (45) days after notice from the
Lender to the Borrower;
(d) if the Borrower shall default in the performance or observance of
any covenant in this Agreement and such default shall have continued
for a period of forty five (45) days after notice from the Lender to
the Borrower;
(e) if the Borrower shall:
(i) admit in writing its inability to pay its debts generally as
they become due, or not pay its debts generally as they become
due;
(ii) file an assignment or a petition in bankruptcy, as the case
may be, or a petition to take advantage of any insolvency
statute;
(iii) make an assignment for the benefit of its creditors;
(iv) consent to the appointment of a receiver of the whole or any
substantial part of their properties;
(v) file a petition or answer seeking reorganization, arrangement,
adjustment or composition under applicable bankruptcy laws or
any other applicable law or statute of Canada or the U.S.A. or
any subdivision thereof; and
(vi) have been adjudged by a court having jurisdiction in the
premises a bankrupt or insolvent, or a decree or order of a
court having jurisdiction in the premises shall have been
entered for the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy of the Borrower and such
decree or order shall remain in force undischarged or unstayed
for a period of sixty (60) days;
(f) the validity or enforceability of this Agreement or the convertible
debentures shall be contested by the Borrower; and
(g) the occurrence of any Event of Default as such term is used in the
Security Agreement dated of even date herewith among the same
parties or the failure of the Borrower to comply with any provision
contained in such Security Agreement.
9.2 Remedies. After any acceleration provided for in Section 9.1, the Lender
shall have, in addition to the rights and remedies given it by this
Agreement, all those allowed by all applicable laws.
9.3 Suspensive clause. In the event of an act of God and/or unforeseeable
event and/or irresistible force (hereinafter called "Force majeure") not
imputable to the Company, such as: war, embargo, labour disputes, national
or international conflicts, politic or government problems, payment of the
return on investment and/or reimbursement of the capital of the Debentures
(face value or residual face value) will be postponed for a period of time
equal to the delays occasioned by said Force Majeure.
The company shall advise the Attorney of the creditors of any such Force
Majeure, who, in turn, shall advise the holders of Debentures.
ARTICLE TEN - GENERAL CONTRACT PROVISIONS
10.1 Notices. All notices, requests, demands or other communications
(collectively, "Notices") by the terms hereof required or permitted to be
given by one party to any other party, or to any other person shall be
given in writing by personal delivery or by registered mail, postage
prepaid, or by facsimile transmission to such other party as follows:
(a) To the Borrower at: 000. xxxx. Xxxxxxxxxx, Xxxxxxxxxx,
Xxxxxxxx of Quebec, Canada, J7C 3V3
(b) To the Lender at: 000 Xxxx, Xxxxxxxxxx Xxxxxx, Xxxxx
000, in the City and District of
Montreal, Province of Xxxxxx,
Xxxxxx, X0X 0X0
or at such other address as may be given by such person to the other
parties hereto in writing from time to time.
All such Notices shall be deemed to have been received when delivered or
transmitted, or, if mailed, 48 hours after 12:01 a.m. on the day following
the day of the mailing thereof. If any Notice shall have been mailed and
if regular mail service shall be interrupted by strikes or other
irregularities, such Notice shall be deemed to have been received 48 hours
after 12:01 a.m. on the day following the resumption of normal mail
service, provided that during the period that regular mail service shall
be interrupted all Notices shall be given by personal delivery or by
facsimile transmission.
10.2 Additional Considerations. The parties shall sign such further and other
documents, cause such meetings to be held, resolutions passed and by-laws
enacted, exercise their vote and influence, do and perform and cause to be
done and performed such further and other acts and things as may be
necessary or desirable in order to give full effect to this agreement and
every part thereof.
10.3 Counterparts. This Agreement may be executed in several counterparts, each
of which when executed shall be deemed to be an original and such
counterparts together shall be but one and the same instrument.
10.4 Time of the Essence. Time shall be of the essence of this Agreement and of
every part hereof and no extension or variation of this Agreement shall
operate as a waiver of this provision.
10.5 Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to all of the matters herein and its execution
has not been induced by, nor do any of the parties rely upon or regard as
material, any representations or writings whatever not incorporated herein
and made a part hereof and may not be amended or modified in any respect
except by written instrument signed by the parties hereto. Any schedules
referred to herein are incorporated herein by reference and form part of
the entire agreement.
10.6 Supremacy. The terms of this agreement supersede and override all previous
agreements and constitute the governing agreement between the parties
hereto.
10.7 Enurement. This agreement shall enure to the benefit of and be binding
upon the parties and their respective successors and assigns.
10.8 Currency. Unless otherwise provided for herein, all monetary amounts
referred to herein shall refer to the lawful money of U.S.A..
10.9 Headings for Convenience Only. The division of this Agreement into
articles and sections is for convenience of reference only and shall not
affect the interpretation or construction of this Agreement.
10.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Quebec and each of the parties
hereto agrees irrevocably to conform to the exclusive jurisdiction of the
Courts of such Province.
10.11 Gender. In this Agreement, words importing the singular number shall
include the plural and vice versa, and words importing the use of any
gender shall include the masculine, feminine and neuter genders and the
word "person" shall include an individual, a trust, a partnership, a body
corporate, an association or other incorporated or unincorporated
organization or entity.
10.12 Calculation of Time. When calculating the period of time within which or
following which any act is to be done or step taken pursuant to this
Agreement, the date which is the reference date in calculating such period
shall be excluded. If the last day of such period is not a Business Day,
then the time period in question shall end on the first business day
following such non-business day.
10.13 Legislation References. Any references in this Agreement to any law,
by-law, rule, regulation, order or act of any government, governmental
body or other regulatory body shall be construed as a reference thereto as
amended or re-enacted from time to time or as a reference to any successor
thereto.
10.14 Severability. If any Article, Section or any portion of any Section of
this Agreement is determined to be unenforceable or invalid for any reason
whatsoever, that unenforceability or invalidity shall not affect the
enforceability or validity of the remaining portions of this Agreement and
such unenforceable or invalid Article, Section or portion thereof shall be
severed from the remainder of this Agreement.
10.15 Transmission by Facsimile. The parties hereto agree that this Agreement
may be transmitted by facsimile or such similar device and that the
reproduction of signatures by facsimile or such similar device will be
treated as binding as if originals and each party hereto undertakes to
provide each and every other party hereto with a copy of the Agreement
bearing original signatures forthwith upon demand.
10.16 Les parties aux presentes ont convenu que cette entente soit redigee dans
la langue anglaise. The parties hereto have agreed that this Agreement be
drawn up in the English language.
IN WITNESS WHEREOF the parties have duly executed this Loan Agreement this
27th day of May, 2005.
NEWTECH BRAKE CORP.
Per: /s/ Xxxx Xxxxxxxx
---------------------------------
President
CAPITAL POWER INTERNATIONAL LIMITED
Per: /s/ Xxxxxxx Laponite
---------------------------------
SCHEDULE "A"
LOAN AGREEMENT
NEWTECH BRAKE CORP. AND
CAPITAL POWER INTERNATIONAL LIMITED
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MOVEABLE HYPOTHEC AND TRUST AGREEMENT
SCHEDULE "B"
LOAN AGREEMENT
NEWTECH BRAKE CORP. AND
CAPITAL POWER INTERNATIONAL LIMITED
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SPECIMEN CONVERTIBLE DEBENTURE SERIES `A'
SCHEDULE "C"
LOAN AGREEMENT
NEWTECH BRAKE CORP. AND
CAPITAL POWER INTERNATIONAL LIMITED
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TERMS AND CONDITIONS OF LOAN
AND SUBSCRIPTION OF SHARES IN LOAN PROPOSAL
SIGNED ON MARCH 29TH, 2005
