Loan Agreement
THIS LOAN AGREEMENT is made on
this 8th day of
October, 2010 (the “Effective
Date”)between Xxxxx Xxxxxxx (hereinafter referred to as the “Lender”),
and Innovative Wireless
Technologies, Inc. a Delaware corporation (hereinafter referred to as the
“Borrower” and together with the Lender, the “Parties”)
2.
SUBJECT OF THE
AGREEMENT
2.1.
Making of the Loan
In
accordance with terms and provisions set forth herein the Lender shall make a
loan to the Borrower in US Dollars in the maximum principal amount up to USD$
100,000 (one hundred thousand) (hereinafter the “Loan”).
The
Borrower undertakes to accept the Loan and to repay to the Lender all received
principal amount of the Loan and all accrued interest thereon within the period
of time stipulated herein.
2.2.
Purpose of the Loan
The
purpose of the Loan is to enable the Borrower to (i) make
investments research and development and (ii) cover legal, corporate and
marketing costs associated with advancing new technology onto the word
market.
The
Borrower undertakes to provide the Lender without delay with an appropriate
documentary confirmation of the target utilization of the Loan upon Lender’s
requests.
3.
DRAWDOWN OF THE
LOAN
3.1. The
principal amount of the Loan referred to in Section 1.1 herein shall be
available in 2 (two) drawings of a minimum amount of USD$ 42,500 (Forty-Five
Thousand, Five Hundred Dollars) and USD$ 57,500 (Fifty-Seven Thousand, Five
Hundred Dollars)
3.2. The
date of the disbursement of the principal amount of the Loan or any portion of
it shall be considered the date of crediting a respective amount to the bank
account of the Borrower in an authorized bank.
4.COMMITMENT PERIOD AND
CONDITIONS PRECEDENT
4.1.
Commitment Period
The Loan
will be available for the period commencing on the Effective Date and ending on
October 7, 2020 (the “Commitment
Period”).
5.
REPAYMENT AND LOAN
INTEREST RATE
5.1.
Repayment of the Loan
All
outstanding principal and accrued and unpaid interest on such principal amount
shall be due and payable on the last day of the Commitment
Period.
5.2.
Loan Interest Rate
The
Borrower undertakes to pay interest at a rate of 10% (Ten Percent) per annum on
the outstanding principal amount of the Loan from the date of the disbursement
of principal under the Loan until such principal amount is repaid. Interest
shall be payable quarterly in arrears in all principal outstanding during the
preceding quarter. Interest shall be computed on the basis of a 365
day year for the actual number of days elapsed.
5.3.
Prepayments
The
Borrower shall be entitled to prepay outstanding principal and any accrued
interest as any time without penalty.
6.
PAYMENTS AND
TAXATION
6.1. The
total amount payable by the Borrower to the Lender in respect of the Loan shall
be the aggregate of the principal amount of the Loan and including also,
interest due thereon as specified in the Loan Agreement and the additional fees,
costs and charges referred to in the Loan Agreement (including costs and charges
arising by reason of any default by the Borrower).
6.2. All
repayments and payments by the Borrower hereunder shall be made, without set-off
or counterclaim, in the currency of the Loan to such account of the Lenders the
Lender may from time to time notify to the Borrower.
6.3.
Where any payment under the Loan Agreement falls due on a day which is not a
Business day, it shall be made on the next succeeding Business Day.
6.4. The
Borrower shall pay all amounts of principal, interest and fees due under this
Agreement in full, free and clear of, and without deduction or withholding for,
all present and future taxes, levies, imposts, duties, fees or other charges,
now or hereafter imposed by any federal or political subdivision thereof. If any
such taxes are required by law of the Russian Federation to be deducted or
withheld from any payment under this Agreement, the Borrower shall deduct or
withhold such taxes and shall increase the amounts paid under this Agreement so
that the Lender receives when due, after deduction or withholding for such
taxes, the full amount of the payments provided for in this Agreement which
would have been received had there been no deduction or
withholding.
6.5.The
Lender and the Borrower will use all reasonable efforts to file all necessary
documents with Russian tax authorities to be granted any reduction of taxes
deducted or withheld at source, in accordance with provisions of the
Russian-Cyprus Treaty on Avoiding of Double Taxation.
7.
LEGAL
OPINION
Within 15
(fifteen) calendar days of the execution of this Loan Agreement the Borrower
will provide the Lender with a legal opinion issued by lawyers competent to give
such an opinion confirming, inter alia, that: the
Borrower is legally incorporated as a corporate entity, and the Borrower is
legally able to enter into and be bound by the terms of this Loan Agreement, and
the persons which signed the Loan Agreement can legally bind the
Borrower.
8. REPRESENTATIONS AND
WARRANTIES
The
Borrower hereby represents and warrants to the Lender that:
8.1. It
is a legal entity duly organized and registered with power to own its own
assets, to conduct its business, to enter into the Loan Agreement and to
exercise its rights and perform its obligations and all corporate and other
action required to authorize its execution of the Loan Agreement and its
performance of its obligations has been duly taken;
8.2. the
claims of the Lender under the Loan Agreement will rank above the claims of all
other unsecured creditors of Borrower unless otherwise provided by any security,
bankruptcy, insolvency, liquidation or other similar laws of general
application;
8.3. in
any proceedings taken against Borrower in relation to the Loan Agreement,
Borrower shall not be entitled to claim for itself or any of its assets immunity
from suit, execution, attachment or other legal process and
8.4. The
obligations of Borrower under the Loan Agreement are legal and valid obligations
binding on it in accordance with the terms thereof; and
8.5. Borrower
has the power to avail of the Loan and no limitation on its borrowing powers or
applicable currency control regulations will be exceeded or breached as a result
of borrowing under this Loan Agreement.
The
representations and warranties referred to in this Section 8 shall survive the
execution of this Loan Agreement and shall be deemed to be repeated on each day
on which the Loan remains outstanding by reference to the facts and
circumstances for the time being then pertaining.
9.COVENANTS
The
Borrower hereby covenants and agrees that until all monies due to the Lender
pursuant to the Loan Agreement have been paid in full it shall:
9.1.
carry on and conduct its business in a proper and efficient manner and shall not
make any substantial alteration in the nature of its business;
9.2.
ensure that at all times the claims of the Lender against it rank above the
claims of all its other creditors save those whose claims are preferred by any
security, bankruptcy, insolvency, liquidation or other similar laws of general
application;
9.3.
promptly provide to the Lender details of any litigation, arbitration or
administrative proceeding pending, or to the Borrower's knowledge, threatened
against the Borrower which could have a material adverse effect on the business,
assets or financial condition of the Borrower or on the ability of the Borrower
to perform its obligations hereunder;
9.4. not
create any new pledge nor make any security arrangement over any of its assets
without the specific consent of the Lender.
10.
NEGATIVE
COVENANTS
The
Borrower shall not, without the prior written consent of the
Lender:
10.1. use
the proceeds of any drawing under the Loan Agreement for any purpose other than
for the purpose stated in the Loan Agreement;
10.2.
cease to carry on the business carried on at the date hereof or materially alter
the nature of its business or enter into any unrelated business.
11.
DEFAULT
11.1. Any
of the following events or circumstances shall constitute an Event of Default
hereunder:
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1.
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if
the Borrower defaults in the repayment on the due date thereof of any
amounts due to be paid by the Borrower to the Lender pursuant to the terms
of the Loan Agreement and such default continues for a period of 90
(ninety) Business Days;
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2.
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if
an application is presented or an effective resolution is passed for the
liquidation or winding-up on the Borrower other than for the purpose of a
reconstruction or amalgamation pursuant to a scheme the Lender has
approved previously;
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3.
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if
any bankruptcy or other similar proceedings shall be initiated by or
against the Borrower, or an arbitration court receiver or manager shall be
appointed of the assets or undertaking of the
Borrower;
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4.
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if
any distress, execution of other process shall be levied or enforced or
sued out upon or against any of the assets of the Borrower and the same
shall not be removed or discharged or paid out within 30 (thirty) calendar
days;
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5.
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if
the Borrower shall stop or threaten to stop payment of capital or interest
under any agreement or shall cease or threaten to cease to carry on its
business or substantially the whole of its
business;
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6.
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if
the Borrower shall suspend payment of its debts or be deemed to be unable
under any relevant law to pay its
debts;
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7.
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if
the security constituted by any mortgage or charge of the Borrower shall
become enforceable and steps are taken to enforce the same or any
borrowings shall become repayable by default of the Borrower or any of its
subsidiaries and steps are taken to obtain such
repayment;
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8.
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if
an application is made for any type of administration order to be made
against the Borrower; or
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9.
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if
the Borrower fails for 30 (thirty) calendar days to perform or satisfy any
other material condition, undertaking or agreement herein stated to be
performed or satisfied by it.
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11.2.
Upon the occurrence of any Event of Default as defined in Section 13.1
above:
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1.
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the
Lender will cease to have any obligation to provide further financing
under this Agreement; and
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2.
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all
outstanding principal and accrued interest due under the Loan Agreement
shall become immediately due and payable together with all accrued
interest and charges upon first demand being made by the
Lender.
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12.
ASSIGNMENT
12.1.
This Loan Agreement shall be binding and inure to the benefit of the Borrower
and the Lender and their respective successors and assigns, provided, however,
that the Borrower may not assign any of its obligations or rights under this
Loan Agreement without the prior written approval of the Lender.
12.2.
Lender may grant participation in all or any part of the Loan to any third
person. The Lender may transfer all or a part of its rights or obligations under
this Loan Agreement to any third person.
13.
DESIGNATED
BANKS
All
payments and settlements under this Loan Agreement shall be effected thought the
Parties’ bank accounts which shall be specified by each Party.
14.
FORCE
MAJEURE
14.1. The
Parties shall not be held liable for failure to fulfill obligations hereof in
part or in full if such non-performance is the result of force majeure
circumstances, occurred after execution of the Loan Agreement, which a Party
could neither foresee nor prevent by any reasonable means.
14.2. Force
majeure shall mean circumstances beyond reasonable control of the Parties
including actions of state and/or municipal agencies, adoption of laws of
prohibitive character, wars, disturbances, strikes, as well as acts of God
(floods, fires, earthquakes, epidemics, landslides, etc) which result in
impossibility to perform obligations hereunder.
14.3. In
case of force majeure preventing any of the Parties hereto from performance of
its obligations hereunder, such Party shall be released from liability for
non-performance of obligations which was the result of force majeure, provided
that such Party shall immediately notify the other Party in writing on
occurrence of force majeure circumstances.
14.4. In
case force majeure lasts for more than 6 (six) months, any of the Parties shall
be entitled to terminate the Loan Agreement upon notifying the other Party
with this respect in writing 15 (fifteen) calendar days in advance.
14.5. The
disbursements under this Loan Agreement made during the Commitment Period are
subject to acceptance by the Borrower of a force majeure clause, that is that
the Lender is satisfied, at its own discretion, that normal market conditions
prevail in Russian Federation. No further disbursements shall be made if the
Lender reasonably comes to the conclusion that the economic, social and other
conditions in the Russian Federation deteriorate significantly.
15.
APPLICABLE LAW AND
ARBITRATION
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15.1.
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Any
dispute or claim hereunder between the named Parties shall be resolved by
binding arbitration before the American Arbitration Association in San
Diego, California under the laws of the State of California. This shall be
the exclusive remedy between the Parties, and both parties hereby give up
any rights to trial by jury, court, appeal, or any other judicial
mechanism for resolving disputes.
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16.
MISCELLANEOUS
16.1. If
any provision hereof is held to be illegal, invalid, or unenforceable under
present or future laws effective during the term thereof, such provision shall
be fully severable, and this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part
hereof; and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance therefrom.
16.2. A
certificate by any director, secretary or manager of the Lender as to the amount
due from the Borrower hereunder or the amount of any interest, fees or other
sums owing hereunder shall save for manifest error be conclusive evidence
thereof.
16.3. All
rights of the Lender contained in the Loan Agreement are in addition to all
rights vested or to be vested in the Lender pursuant to the Security Documents
or under the applicable law.
16.4. Any
notice or demand to be given under the Loan Agreement shall be in writing and
shall be effective and shall be deemed to have been duly given if sent by hand
or by courier immediately upon delivery, or if sent by prepaid ordinary mail to
the Parties' addresses specified below or such other address of the Party as may
be advised in writing to other Party, at the expiration of 15 (fifteen) Business
Days after the date of posting.
16.5. Any
amendment or supplement hereto shall be effective if made in writing and duly
signed by the authorized representatives of the Parties.
16.6. This
Loan Agreement is executed in two original copies in each of the Russian and
English languages; one original copy for each of the Parties. In case of any
inconsistency of conflict the English version language shall
prevail.
Lender:
Xxxxx
Xxxxxxx
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Signature
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/s/
Xxxxx Xxxxxxx
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Borrower:
Xxxxx
Xxxxxxx
President,
CEO, CFO
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Signature
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/s/
Xxxxx Xxxxxxx
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