EXHIBIT 10.5
LOAN AGREEMENT
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This LOAN AGREEMENT (the "Agreement") is made as of the 12th day of July 2002 by
and among Hosting Site Network Inc., a Delaware corporation, with offices at 00
Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the "Lender"), 2 Chansis, Inc., a
California corporation with offices at 0000 Xxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxx, XX 00000 (the "Borrower"), and Xxx Xxxxx and Xxxxxx Xxxxxx, officers
of the Borrower (the "Guarantors") with offices at 0000 Xxxxxxx Xxxxxxx, Xxxxx
000, Xxxxxxxx, XX 00000.
The parties hereby agree as follows:
SECTION 1. AMOUNT AND TERMS OF THE LOAN
1.1 THE LOAN. Subject to the terms of this Agreement, the Borrower
shall borrow from the Lender and the Lender shall lend to the Borrower Two
Hundred Thousand Dollars ($200,000) (the "Loan") pursuant to a promissory note
in the form attached hereto as Exhibit A (the "Note").
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1.2 INTEREST. Subject to Section 1.4 hereof, the Loan shall bear interest
on the unpaid principal balance thereof from the date of disbursement until the
Loan is repaid in full at a per annum rate equal to eight percent (8%). Interest
shall be payable at such time as the principal is due hereunder.
1.3 METHOD OF PAYMENT TO LENDER. Subject to Section 1.4 hereof, all
payments of principal and interest on the Note shall be paid directly to the
Lender at its office as provided above, Attn: Xxxxx Xxxxxx or to such other
place as the Lender shall designate.
1.4 WAIVER OF OBLIGATION IN THE EVENT OF ACQUISITION OF BORROWER BY LENDER.
Borrower and Lender are parties to a Letter of Intent dated July 11, 2002
pursuant to which Lender expects to enter into an acquisition agreement (the
"Acquisition Agreement") involving Lender's purchase of Borrower. In the event
the Acquisition Agreement is executed and a closing with respect thereto occurs,
Lender will waive all of its rights under the Note and this Agreement, the note
will be cancelled and the Loan will be treated as a contribution to capital.
SECTION 2. THE CLOSING.
2.1 CLOSING DATE. The closing of the purchase and sale of the Note
(the "Closing") shall be held as soon as practicable following Lender's receipt
of $200,000 in proceeds from the sale of Lender's units in a private offering
consisting of an aggregate of 1,250,000 units at a price of $.40 per unit or an
aggregate of $500,000. Each unit consists of one share of Lender's common stock
and one common stock purchase warrant exercisable for the purchase of one
additional share of Lender's common stock at a purchase price of $1.20 per
share. The Loan is conditional upon and subject to Lender's sale of $200,000 of
units.
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2.2 DELIVERY. At the Closing (i) the Lender will deliver to Borrower a
check or wire transfer funds in the amount of $200,000, and (ii) the Borrower
shall deliver to the Lender, the Note representing the Loan.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower hereby represents and warrants to the Lender as follows:
3.1 CORPORATE POWER. The Borrower will have at the Closing, all
requisite corporate power to execute and deliver this Agreement and to carry out
and perform its obligations under the terms of this Agreement.
3.2 AUTHORIZATION. All corporate action on the part of the Borrower
necessary for the authorization, execution, delivery and performance of this
Agreement by the Borrower and the performance of the Borrower's obligations
hereunder, including the issuance and delivery of the Note, has been taken or
will be taken prior to the Closing. This Agreement and the Note, when executed
and delivered by the Borrower, shall constitute valid and binding obligations of
the Borrower enforceable in accordance with their terms, subject to laws of
general application relating to bankruptcy.
3.3 SOLVENCY. Presently and as at the date of Closing, Borrower is not and
will not be insolvent within the meaning of applicable state and federal law.
3.4 GOVERNMENTAL CONSENTS. All consents, approvals, orders or
authorizations of, or registrations, qualifications, designations, declarations
or filings with, any governmental authority, required on the part of the
Borrower in connection with the valid execution and delivery of this Agreement,
the offer, sale or issuance of the Note or the consummation of any other
transaction contemplated hereby shall have been obtained and will be effective
at the Closing.
SECTION 4. REPRESENTATION AND WARRANTIES OF THE LENDER
4.1 PURCHASE FOR OWN ACCOUNT. The Lender represents that it is
acquiring the Note solely for its own account and beneficial interest for
investment and not for sale or with a view to distribution of the Note or any
part thereof, has no present intention of selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise
distributing the same, and does not presently have reason to anticipate a change
in such intention.
4.2 NO COMMISSIONS. The Lender represents that it has no knowledge that any
commission or other remuneration is due or payable, directly or indirectly, to
any arising from the transaction contemplated hereby.
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SECTION 5. MISCELLANEOUS
5.1 GUARANTY. The performance of all obligations of the Borrower
hereunder and the payment of all amounts payable by the Borrower hereunder shall
be jointly and severally guaranteed by the Guarantors, in the form of guaranty
attached hereto as Exhibit B.
5.2 PROHIBITION ON TRANSFER OR ASSIGNMENT. The Lender agrees that it shall
not sell, transfer, assign, or otherwise convey the Note.
5.3 BINDING AGREEMENT. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
5.4 GOVERNING LAW. This Agreement and the Note shall be governed by and
construed under the laws of the State of New.
5.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute this Agreement.
5.6 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are for convenience only and are not to be considered in constructing or
interpreting this Agreement.
5.7 NOTICES. Any notice required or permitted under this Agreement shall be
in writing given to the parties at their addresses indicated above, or at such
other address as such party may designate by ten (10) days advance written
notice to the other party. Copies of all notices shall be sent to Xxxx X.
Xxxxxxxxxx, Esq., Xxxxxx Gottbetter & Xxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
XX 00000, Facsimile Number (000) 000-0000. Any notice so given shall be deemed
given on the day transmitted; provided however that if said transmission is made
after 4:00 p.m. EST, the notice shall be deemed given the following business
day.
5.8 MODIFICATION; WAIVER. No modification or waiver of any provision of
this Agreement or consent or departure therefrom shall be effective unless in
writing and approved by the Borrower and the Lender.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
BORROWER: LENDER:
2 CHANSIS, INC. HOSTING SITE NETWORK INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx Name: Xxxxx Xxxxxx
Title: President Title: President
GUARANTORS:
/s/ Xxxxxx Xxxxxx /s/ Xxx Xxxxx
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Xxxxxx Xxxxxx Xxx Xxxxx
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EXHIBIT A
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2 CHANSIS, INC.
PROMISSORY NOTE
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US$200,000 July 17, 2002
FOR VALUE RECEIVED, 2 Chansis, Inc., a California corporation with an address at
0000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000 (the "Borrower"), hereby
promises to pay to the order of Hosting Site Network Inc., a Delaware
corporation (the "Lender"), the sum of Two Hundred Thousand Dollars ($200,000)
together with interest at the rate of 8% per annum within 15 business days of
the termination of the July 11, 2002 Letter of Intent among Lender, Borrower and
the shareholders of Borrower. In accordance with Section 1.4 of the related
Loan Agreement among Lender, Borrower and the shareholders of Borrower, however,
in the event an acquisition agreement is executed among the parties and a
closing with respect thereto occurs, Lender waives all rights under this Note,
which shall thereafter be cancelled. Payment on this Note shall be made in
lawful money of the United States of America at such place as the Lender or any
subsequent holder hereof shall have designated to the Borrower in writing.
The Borrower hereby agrees to indemnify the holder of this Note against and hold
it harmless from any costs and expenses, including, without limitation,
reasonable attorneys' fees, disbursements and court costs, incurred by the
holder of this Note in connection with the enforcement of the terms hereof.
If this Note becomes due or payable on a Saturday, Sunday or public holiday
under the laws of the State of New York, the due date thereof shall be extended
to the next succeeding business day.
Presentment for payment, notice of dishonor, protest and notice of protest are
hereby waived.
This Note may not be modified orally, and shall be governed, construed and
interpreted under the internal laws of the State of New York without reference
to principles of conflicts or choice of law. Borrower agrees that any legal
suit, action or proceeding arising out of or relating to this Note shall be
instituted exclusively in the courts of the State of New York and waives any
objection to the venue of any such suit, action or proceeding and the right to
assert that such forum is not a convenient forum for such suit, action or
proceeding.
No delay on the part of any holder hereof in exercising any power or rights
hereunder shall operate as a waiver of any power or rights. Any demand or
notice hereunder to the Borrower shall be deemed duly given or made when sent,
if given by telecopier, when delivered, if given by personal delivery or
overnight commercial carrier, or the third day after deposit in the United
States mail, certified mail, return receipt requested, addressed to the Borrower
at its address (or telecopier number) set forth above or such other address or
telecopier number as may be hereafter designated in writing by the Borrower to
the Lender.
Witness 2 CHANSIS, INC.
/s/ Xxx Xxxxx By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: President
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EXHIBIT B
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PERSONAL GUARANTY
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For value received, the undersigned, Xxx Xxxxx and Xxxxxx Xxxxxx, (the
"Guarantors"), officers of 2 Chansis, Inc., a California corporation with
offices at 0000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000 (the "Borrower"),
do hereby unconditionally and irrevocably, jointly and severally, personally
guarantee unto Hosting Site Network Inc. a Delaware corporation with offices at
00 Xxxxxx Xxxxx, Xxxxxxx, XX 00000 (the "Lender") prompt payment if an when due,
of Borrower's Promissory Note issued in favor of Lender, dated July 17, 2002, in
the principal amount of $200,000 together with all accrued interest due thereon
through the date of payment. This Guaranty shall also include all attorneys
fees which Lender may incur in enforcing the terms of this Guaranty should
Guarantors default in its terms.
All notices or other communications provided for herein shall be deemed
validly and properly given if made in writing and delivered by hand or certified
mail, return receipt requested, postage prepaid.
IN WITNESS WHEREOF, the Guarantors have executed and sealed this
instrument, this 17th day of July, 2002.
/s/ Xxx Xxxxx
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Xxx Xxxxx
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
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