EXHIBIT 10.23
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of the 29th day of October, 2007.
AMONG:
WYNDOM CAPITAL INVESTMENTS INC., a corporation having an office located
at 00 Xxx Xxxx, #0000 Xxxxxx Xxxx, Xxxxxx;
(the "Lender")
AND:
HYBRID TECHNOLOGIES, INC., a corporation incorporated pursuant to the
laws of Nevada having a mailing address at 0000 Xxxx Xxxxxxxxxx, Xxxxx
000-000, Xxx Xxxxx, Xxxxxx 00000;
(the "Borrower")
WHEREAS:
A. The Lender has agreed to lend up to $4,000,000 ("the Loan"), to be
evidenced by 10% Promissory Notes, due three (3) years from the date
of issuance (the "Notes"), to the Borrower to be used by the
Borrower for development of its business assets and for general
working capital;
B. The Borrower has agreed to grant to the Lender certain shares
described in this Agreement to be held in escrow by Lender in order
to secure the repayment of the Loan and the performance of the
Borrower's obligations; and
C. The sole recourse of the Lender in the event of a default on the
Loan is to the shares held in escrow by Lender to secure repayment
of the Loan.
In consideration of the premises, covenants, and agreements hereinafter set
forth, and each party legally intending to be bound hereby, the parties hereby
represent, warrant, covenant, and agree as follows:
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Article 1-Definitions & Interpretation
1.1 Definitions
In this Agreement:
"Banking Day" means any day on which United States banks are generally
open to the public for business in Las Vegas, Nevada; and
"Interest" means simple interest at a rate of 10% per annum calculated on
the Loan.
1.2 Headings
Headings have been inserted into this Agreement for reference only and they do
not define, limit, alter, or enlarge the meaning of any provision of this
Agreement.
1.3 Recitals
The recitals set out above form a part of this Agreement.
1.4 Currency
Unless otherwise specified, a statement of, or reference to, a dollar amount in
this Loan Agreement without currency specification will mean United States
dollars.
Article 2-Terms of Loan
2.1 Loan Amount
On and subject to the terms of this Agreement, the Lender hereby agrees to lend
and the Borrower hereby agrees to borrow the principal sum of up to $4,000,000
from the Lender, evidenced by Notes in the aggregate principal amount borrowed,
issuable upon the following terms and conditions:
(a) $500,000 principal amount of Notes to be purchased from the Borrower
by Lender at a closing ("Closing") to be held within fifteen (15)
days of the execution of this Agreement; and
(b) up to an additional $3,500,000 principal amount to the Borrower in
additional installments (each an "Installment") to be advanced by
Lender to Borrower within one hundred eighty (180) days of execution
of this Agreement;
The Loan advances are subject to the Borrower satisfying all of its covenants
and agreements. Upon receipt of each Installment of the Loan, a 10% finders fee
("Finders Fee") shall be paid to Kisumu S.A. that the Lender will deduct from
the Loan proceeds as they are advanced, the Borrower shall be bound to accept
the Loan upon the terms described herein.
2.2 Expenses
Each party shall be responsible for its own costs related to the preparation and
execution of this Agreement and any related documentation.
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2.3 Non-Revolving Facility
The Loan will be a non-revolving facility and any principal of it that the
Borrower repays will not be available for re-advance under this Agreement.
2.4 Promise to Pay
The Borrower hereby promises to make Loan payments to the Lender at its address
shown on the first page of this Agreement, or at any other address directed by
the Lender from time to time, in accordance with the schedule provided in
paragraph 3.1.
Article 3-Repayment of Loan
3.1 Repayment of Principal; Interest
Subject to section 8.2, the Borrower hereby promises to repay the principal of
each Loan Installment evidenced by a Note on the date that is three (3) years
from the date on which the Installment is advanced to the Borrower. The Interest
on the Loan shall be payable monthly in arrears on the first day of the
following month.
3.2 Prepayment
The Borrower may not, without the Lender's permission, prepay all or any part of
the Loan.
Article 4-General Payment Provisions
4.1 Payment Dates
If the date upon which any act or payment under this Agreement is required to be
done or made falls on a day that is not a Banking Day, then such act or payment
will be performed or made on the immediate subsequent Banking Day.
4.2 Receipt of Payments
All payments required to be made under this Agreement and received by the Lender
after 3:00 pm Pacific Time will be deemed for all purposes of this Agreement to
have been received by the Lender on the Banking Day following the date of
payment.
4.3 Overdue Amounts
In addition to any other interest payable pursuant to this Agreement, any amount
payable by the Borrower to the Lender in connection with this Agreement, and not
paid when due, will bear interest at 15% per annum calculated from the date such
amount first becomes due until paid in full.
Article 5-Security
5.1 Equity Security
As security for the indebtedness, liabilities and obligations of the Borrower to
the Lender under this Agreement, upon the Lender delivering the Loan funds to
the Borrower, the Borrower shall issue and deliver to the Lender 10,000,000
shares of restricted common stock in its capital (the "Shares" or "Share
Collateral"), deliverable proportionately to delivery of funds (i.e. 1,250,000
shares when the first $500,000 of the Loan is advanced, and a further 8,750,000
shares upon delivery of the balance of the Loan at the rate of 2.5 shares for
each dollar advanced); provided, that, upon the initial delivery of funds
totaling $1,000,000 by Lender, Borrower shall deliver to Lender, in addition to
the certificate or certificates representing the 2,500,000 Shares that
collateralize such $1,000,000, a certificate or certificates representing the
additional 7,500,000 Shares (the "Advance Collateral Shares") that are to
collateralize the additional $3,000,000 principal amount of Installments of the
Loan and that will bear an appropriate legend to the effect that such Shares are
issued subject to the terms of this Agreement. To the extent the Advance
Collateral Shares held by the Lender are not allocated to collateralize further
Installments of the Loan pursuant to this Agreement, the Lender hereby agrees
that the Borrower, without any further consent of the Lender, may cancel,
pursuant to Nevada Revised Statutes 78.250, the certificate or certificates
representing such outstanding Advance Collateral Shares that are not so
allocated to collateralize the Loan hereunder and the Lender will forthwith
redeliver the certificates representing such Advance Collateral Shares to
Borrower or Borrower's transfer agent, as requested. The Shares shall be
represented by stock certificates issued by the Borrower's registrar and
transfer agent in the name of the Lender, to be held in escrow by the Lender.
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5.2 Anti-Dilution Protection; Dividends on Shares
The Share Collateral shall have customary anti-dilution protection for forward
stock splits, stock dividends and major corporate transactions. In the event of
a reverse stock split or combination of shares, the number of shares of common
stock constituting the Share Collateral will, immediately following such reverse
stock split or combination of shares, be increased by a new issuance of common
stock of the Company to that number of shares constituting the Share Collateral
immediately prior to such reverse stock split or combination of shares. The
certificates representing any share dividends that the Borrower pays during the
term of the Loan with respect to the Shares being held in escrow shall be
credited and delivered to the Lender and held by the Lender pursuant to the
terms of this Agreement.
5.3 Cancellation of Shares
After a Note and all accrued Interest thereon are repaid in full, the Lender
shall deliver the Shares that are the designated collateral for such Note to the
Borrower for return to Borrower's treasury. In such circumstances, the Lender
shall provide the Borrower with such documentation as it may reasonably require
for the cancellation and return to treasury of such Shares.
5.4 Disposal of Shares
The Lender shall not have the right to dispose of all or part of its interest in
the Shares, except in accordance with the provisions of Article 8 of this
Agreement upon the occurrence of an Event of Default.
5.5 Voting Rights
Unless a voting trust is signed, the Lender shall vote the Shares held by it in
escrow.
Article 6-Conditions of Lending
6.1 Conditions Precedent to Advance
The obligations of the Lender to advance the Loan proceeds to the Borrower is
subject to the satisfaction or waiver of following conditions precedent on or
before the advance:
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(a) receipt by the Lender of certified copies of all documents
evidencing all corporate action taken by the Borrower
authorizing the execution and delivery of this Agreement and
the issuance of the Shares as security, all to be satisfactory
in form and substance to the Lender;
(c) no Event of Default will have occurred or no event which, with
the lapse of time or with notice and lapse of time specified
herein would become an Event of Default, will have occurred
and be continuing;
(d) no action, proceeding, or investigation will be pending or
threatened against the Borrower which would, if successful,
have a material adverse effect on the financial condition of
the Borrower or its ability to observe and perform its
covenants under this Agreement; and
(e) all representations and warranties contained in Article 7 of
this Agreement will be true on and as of the date of any
advance under the Loan with the same effect as if such
representations and warranties had been made on and as of the
date of such advance.
6.2 Waiver of Conditions Precedent
The above conditions precedent are for the sole benefit of the Lender. The
Lender may in its sole discretion, waive by notice in writing any condition
precedent, in whole or in part, without incurring any liability therefor.
Article 7-Representations & Warranties
The Borrower hereby represents and warrants to and in favor of and covenants
with the Lender as follows:
7.1 General
All representations and warranties made under this Agreement will survive the
advance of the Loan and the delivery of the Shares, and no investigation at any
time made by or on behalf of the Lender will diminish in any respect whatsoever
its rights to rely upon them. All statements contained in any certificate or
other instrument delivered by or on behalf of the Borrower under or pursuant to
this Agreement will constitute representations and warranties made by the
Borrower under this Agreement.
7.2 Binding Effect
This Agreement, upon execution by the Lender, will be duly and validly
authorized by all necessary corporate action, will have been validly executed,
and will be legal, valid, and binding obligations of the Borrower enforceable in
accordance with its terms.
7.3 Contravention of Law
Neither the execution and delivery of this Agreement and the issuance of the
Shares, nor performance in accordance therewith, is or will contravene any
provision of any law, regulation, order, license, permit, or consent applicable
to each, or conflict with or result in a breach, or constitute a default under,
or require any consent under the terms or conditions of any agreement or
instrument to which the Borrower is a party or by which the Borrower is bound.
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7.4 No Default Under Agreements
The Borrower is not in default under any agreement or instrument to which it is
a party and which default may materially adversely affect its ability to observe
and perform its covenants under this Agreement.
7.5 No Claims
There are no actions, claims, or proceedings pending or, to the knowledge of the
Borrower, threatened against the Borrower or its directors or officers before
any court, administrative board, or other tribunal, which if decided against the
Borrower or its directors or officers would materially or adversely affect its
business or financial status and there is no unsatisfied claim or outstanding
judgment or writ of execution against the Borrower.
The Lender hereby represents and warrants to and in favor of and covenants with
the Borrower as follows:
7.6 Sales of the Notes will be made only to "accredited investors", as such
term is defined in Rule 501(a) under the Securities Act of 1933, as
amended.
Article 8-Events of Default & Remedies
8.1 Events of Default
Any one or more of the following events will constitute an Event of Default,
whether any such Event of Default is voluntary or involuntary or effected by
operation of law or pursuant to or in compliance with any judgment, decree, or
order of any court or any order, rule, or regulation of any administrative or
governmental body:
(a) default by the Borrower in the due payment of any amount
payable under this Agreement or in the due and complete
observance or performance of any other condition, covenant, or
provision of this Agreement;
(b) the occurrence of a material adverse change in the financial
position of the Borrower or in the value of the security held
by the Lender for the Loan;
(c) any action by the Borrower that constitutes a denial of the
Lender's rights set forth in this Agreement;
(d) an order is made or a petition is filed for the bankruptcy of
the Borrower;
(e) the Borrower commits an act of bankruptcy or makes a general
assignment for the benefit of its creditors or otherwise
acknowledges its insolvency;
(f) the appointment of a receiver, receiver-manager, or receiver
and manager of any part of the properties or assets of the
Borrower;
(g) the enforceability of any execution, or any other process of
any court against the Borrower, or the levy of a distress or
analogous process upon the properties or assets or any part
thereof of the Borrower;
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(h) default by the Borrower in the performance of any contractual
obligation to the Lender under any other agreement or legal
instrument, whether or not collateral or supplemental to this
Agreement;
(i) the holder of any mortgage, charge, or encumbrance on any of
the properties or assets or any part thereof of the Borrower
does anything to enforce or realize on such mortgage, charge,
or encumbrance;
(j) if, at any time during the term of this Agreement, the
Borrower is subject to a change of control. For the purposes
of this subparagraph, a "change of control" shall be deemed to
occur if:
(i) any person, or group of persons acting in concert,
other than any current control person(s), hold
greater than 20% of the issued and outstanding shares
in the capital stock of the Borrower;
(ii) there is a 50% or greater change in the composition
of the Borrower's Board of Directors, effected by
stockholders of the Borrower other than with the
consent of the current control person(s); or
(iii) if a takeover bid is issued with respect to the
Borrower's securities;
(k) if any representation or warranty made in writing to the
Lender by the Borrower made in this Agreement or in any
certificate or other instrument delivered or to be delivered
by or on behalf of the Borrower to the Lender in contemplation
of this Agreement is incorrect in any material respect on the
date as of which such representation or warranty was made or
purported to be made; or
(l) trading in the shares of common stock of the Borrower is suspended
by a regulatory authority.
8.2 Remedies on Default
After any Event of Default has occurred and continues for seven (7) days and at
any time thereafter, provided that the Borrower has not theretofore remedied all
outstanding Events of Default, the Lender may, in its discretion, declare this
Agreement to be in default. At any time thereafter while the Borrower has not
remedied all outstanding Events of Default, the Lender may, at its discretion
and subject to compliance with any mandatory requirements of applicable law then
in effect, exercise one or more of the following remedies:
(a) declare the then outstanding balance of the Loan, Interest,
costs, and all money owing by the Borrower to be immediately
due and payable and such funds and liabilities will forthwith
become due and payable without presentment, demand, protest,
or other notice of any kind to the Borrower, all of which are
hereby expressly waived; and/or
(b) as Lender's sole recourse, take possession of the Shares
designated as collateral for the principal amount of the Loan
that is in default for its sole benefit; provided, that, in
the event of a trading halt in the common stock of Borrower or
upon the occurrence of an Event of Default under Section 8.1
(d), (e) or (f), the Loan shall be full recourse, and the
Lender shall have all remedies available under applicable laws
to enforce payment of amounts due under this Agreement,
including a first security interest in all of the assets of
Borrower. Upon the occurrence of any Event of Default or a
trading halt in the common stock of Borrower, the Lender shall
be deemed to be the registered and beneficial owner of a 100%
right, interest and title to the Shares free of all charges,
liens and encumbrances, other than any resale or other
restrictions imposed by law.
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8.3 Other Securities
The rights and powers conferred by section 8.2 are in addition to and not in
substitution for any other security which the Lender now or from time to time
may hold or take from the Borrower in relation to this Agreement.
8.4 Remedies Non-Exclusive
No remedy set out in this Agreement is intended to be exclusive of each and
every remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. The exercise or commencement of exercise by the Lender
of any one or more of such remedies will not preclude the simultaneous or later
exercise by the Lender of any or all other such remedies.
8.5 Set-Off or Counterclaim
The obligation of the Borrower to make all payments under this Agreement will be
absolute and unconditional and will not be affected by any circumstance,
including, without limitation, any set-off, compensation, counterclaim,
recoupment, defense, or other right which the Borrower may have against the
Lender, or anyone else for any reason whatsoever and any insolvency, bankruptcy,
reorganization, or similar proceedings by or against the Borrower.
Article 9-General
9.1 Entire Agreement
This Agreement embodies the entire agreement and understanding between the
parties with respect to the Loan and supersedes all prior agreements and
undertakings, whether oral or written, relative to the subject matter hereof.
9.2 Amendments
This Agreement shall not be amended, waived, discharged, or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement of the amendment, waiver, discharge, or termination is sought.
9.3 Waiver
Every condition and covenant, and each and every representation and warranty
contained in this Agreement has been inserted for the sole benefit of the Lender
and any breach of any such conditions, covenants, representations, and
warranties may, at the Lender's discretion, be waived or partially waived by the
Lender. No failure or delay on the part of the Lender to exercise any right,
power, or remedy given herein or by statute or at law or in equity or otherwise
will operate as a waiver thereof, nor will any single or partial exercise of any
right preclude any other exercise thereof or the exercise of any other right,
power, or remedy.
9.4 Forbearance
No condonation, forgiveness, waiver, or forbearance by the Lender of any
non-observance or non-performance by the Borrower of any of the provisions of
this Agreement will operate as a waiver or estoppel by or against the Lender in
respect of any provision, or any subsequent non-observance or non-performance by
the Borrower of any of the provisions of this Agreement.
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9.5 Approvals
The acceptance or approval by the Lender of any matter required hereunder will
be of no force and effect unless given in writing, and given prior to the event
or thing for which it is required.
9.6 Lender's Discretion
The Lender may grant extensions of time, take and give up securities, accept
compositions, grant releases and discharges, and otherwise deal with the
Borrower and other parties, sureties, or securities as the Lender may see fit
without prejudice to the liability of the Borrower, to the Lender and without
prejudice to the Lender's rights under this Agreement.
9.7 No Merger of Judgment
Neither the taking of any judgment nor the exercise of any power of seizure and
sale will operate to extinguish the obligation of the Borrower to pay its debts
and liabilities under this Agreement or operate as a merger of any covenant in
this Agreement, and the acceptance of any payment or alternate security will not
constitute or create a novation, and the taking of a judgment or judgments under
a covenant in this Agreement contained will not operate as a merger of those
covenants or affect the Lender's rights to interest at the rate and times
provided in this Agreement.
9.8 Other Indebtedness
Nothing contained in this Agreement will prejudice or impair any rights or
remedies the Lender may have with respect to other loans which the Lender may
make with the Borrower.
9.9 Notices
Any notice, direction, or other instrument required or permitted to be given
under this Agreement will be in writing and may be delivered, sent by registered
mail, or transmittal by facsimile machine to the respective addresses set out on
the first page of this Agreement.
9.10 Effect of Notice
Any notice, direction, or instrument given will:
(a) if delivered, be deemed to have been given or made at the time
of delivery;
(b) if mailed by registered mail and properly addressed, be deemed
to have been given or made on the fourth Banking Day following
the day on which it was so mailed, provided that should there
be at the time of mailing or between the time of mailing and
the actual receipt of the notice a mail strike, slowdown, or
other labour dispute which might affect the delivery of that
notice, then the notice will be only effective if actually
delivered; and
(c) if sent by facsimile machine, be deemed to have been given or
made on the Banking Day immediately following the day on which
it was transmitted.
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9.11 Notice of Change of Address
Any party may give written notice of change of address in the same manner in
which event notice will thereafter be given at that changed address.
9.12 Further Assurances
As and so often as the Lender may require, the Borrower will execute and deliver
to the Lender, at the expense of the Borrower, such further and other assurances
and conveyances as may be necessary to properly carry out the intention of this
Agreement.
9.13 Severability
If any term, covenant, or condition of this Agreement or application thereof to
any person or circumstance is found to any extent to be invalid, illegal, or
unenforceable in any respect, the remainder of this Agreement or application of
such term, covenant, or condition to such person or circumstance other than
those as to which it is held invalid, illegal, or unenforceable will not be
affected thereby, and each term, covenant, and condition of this Agreement will
be valid and legal and will be endorsed to the fullest extent permitted by law.
9.14 No Partnership
The parties specifically acknowledge that the Borrower and the Lender are not
partners, that the Borrower has no right or authority to obligate the Lender and
the Lender has no right to obligate the Borrower (except in the manner and to
the extent provided in this Agreement), and that nothing contained in this
Agreement, nor any acts of the parties in fulfilling their respective rights and
obligations under this Agreement will be construed so as to create a partnership
relationship between the Borrower and the Lender.
9.15 Assignment by Lender
The Borrower acknowledges and agrees that the Lender may assign all or any
portion of its interest in the Loan, and its rights, obligations, and benefits
under this Agreement, without the consent of the Borrower. The Borrower will
execute such assurances and conveyances as may be reasonably required by the
Lender in order to give effect to such assignment, including executing
additional documents to facilitate assignment thereof by the Lender. The Lender
will be fully released from its obligations hereunder upon any assignment of all
the Loan and in respect of any partial assignment, will be fully released in
respect of such assigned part of the Loan.
9.16 Access to Documentation
On execution of this Agreement, the Lender, at its own expense and at reasonable
intervals and times, shall upon two Business Days' notice have access to the
Borrower's minute book, corporate records, accounting files and to all technical
records and other factual engineering data and information relating to the
Borrower's assets which are in the possession of the Borrower.
9.17 Time of the Essence
Time will be of the essence of this Agreement in respect of all payments to be
made under this Agreement and all covenants and agreements to be performed and
fulfilled. Any extension of time under this Agreement will not be deemed to be
or operate in law as a waiver on the part of the Lender that time is to be of
the essence of this Agreement.
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9.18 Jurisdiction
The Borrower hereby irrevocably agrees that any legal action or proceedings
against it with respect to this Agreement may be brought in the courts of Nevada
or in such other court as the Lender may elect and, by execution and delivery of
this Agreement, the Borrower hereby irrevocably submits to each such
jurisdiction.
9.19 Governing Law
This Agreement, and the rights and obligations of the parties will be governed
by and be construed in accordance with the laws of Nevada. The parties hereby
attorn to the non-exclusive jurisdiction of the Courts of Nevada.
9.20 Counterparts
This Agreement may be signed in counterparts and by facsimile machine, and when
a counterpart of this Agreement has been executed by each of the parties, such
counterparts will be treated as one and the same Agreement, as if each such
counterpart had been executed by all of the parties.
9.21 Enurement
This Agreement will be binding upon and enure to the benefit of the Borrower and
the Lender and each of their respective successors and permitted assigns.
AS EVIDENCE OF THEIR AGREEMENT the parties have executed this Loan Agreement on
the date appearing on page 1, above.
WYNDOM CAPITAL INVESTMENTS INC. HYBRID TECHNOLOGIES, INC.
By: /s/ Xxx Xxxxxxxxxx By: /s/ Xxxxx Xxxxxxxxx
------------------- --------------------
Authorized Signatory Authorized Signatory
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