EXHIBIT 10(A) - MATERIAL CONTRACTS
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LOAN AGREEMENT
1. BORROWER: Metal Recovery Technologies, Inc. (MRTI) (hereinafter called
"Borrower"), a Delaware corporation.
2. LENDER (hereinafter called "Lender")
3. AMOUNT: a loan not exceeding US ( US Dollars) to assist MRTI (Borrower) to
finance its subsidiary MRIUS, Inc.
4. SECURITY:
a) The borrower will grant to the lender a first secured interest in
100% of the share capital of its subsidiary MRI(US), Inc. The
borrower will provide the share certificate of its subsidiary to
the lender together with a signed transfer of its 100% interest in
the shares of its subsidiary prior to any loans being made.
b) The borrower will, upon receipt of any loan from the lender, enter
into a loan agreement with its subsidiary MRI(US), similar to this
agreement. The subsidiary, MRI(US) will have loan obligations to
its parent company equal to those of MRTI to the lender. MRTI will
as part of this agreement assign the rights to collect such loan
to the lender with the express purpose of giving the lender a
secured interest in the assets of the subsidiary MRI(US), Inc.
5. DRAWDOWN: Drawdown to be denominated in US Dollars and to be in such amounts
as are agreed from time to time the Lender and the Borrower (subject to the
maximum herein before specified). Each drawdown shall be treated as a separate
advance and shall be repayable not later than twelve (12) months after the date
of drawdown of such particular advance.
6. INTEREST:
a) The interest rate for each advance shall be 10% per annum and shall
be deemed to accrue from day to day.
b) Interest shall be payable annually, on the anniversary hereof.
c) Any interest period which would otherwise terminate on a day which
is not a business day shall be extended to the next following business
day.
d) Interest will be calculated on the basis of a 365-day year.
e) Overdue advances will be rolled over on a day to day basis after
the maturity date following which interest will be charged at 12% per
annum.
7. NOTICE OF DRAWDOWN: The Borrower shall give at least 24 hours notice of
drawdown in writing or by telefax which shall be irrevocable unless the
Lender agrees otherwise.
8. PAYMENTS: All payments by the Borrower of principal and interest will be
made no later than 11 a.m. on the day on which repayment should be effected
to an account specified by the Lender.
9. WARRANTIES: The Borrower warrants that:
a) It has the power to borrow and its subsidiary MRI(US), Inc. has the
power to borrow and has taken all necessary action to authorize the
borrowing upon the terms and conditions of this loan agreement and that
drawings made hereunder will not exceed authorized limits.
b) It is not in default under any agreement, document or other
obligations where such default might have a material adverse affect on
its business, assets or trading conditions taken as a whole.
c) It has obtained all necessary consents to the borrowing and the
borrowing will not constitute a breach of any restrictions contained in
its by-laws of certificate and incorporation.
d) The acceptance of this offer by the Borrower constitutes a legally
binding obligation on the Borrower enforceable in accordance with its
terms and there are no actual, pending or threatened actions or
proceedings that may materially adversely affect its financial
condition or operation.
These warranties are deemed to be given in respect of each drawdown of the
facility hereby granted.
10. TERMINATION: The Lender shall have the right to terminate this facility and
demand repayment of advances and payment of accrued interest if:
a) the Borrower makes any default in any payments hereunder;
b) any advance to the Borrower becomes repayable at a date earlier
than its normal due date;
c) the warranties prove inaccurate in a material way; or
d) a default as specified in clause 11 shall occur.
11. COVENANTS: The Borrower hereby covenants and undertakes with the Lender
that until all amounts whether in respect of principal or interest due or
to become due under this facility have been paid in full to the Lender:
a) to furnish to the Lender as soon as practicable and in any event
not later than 90 days after the close of each annual accounting
period a copy of its audited consolidated accounts for each period;
b) to furnish to the Lender as soon as practicable and in any event
not later than 45 days after the close of each quarterly accounting
period a copy of its management accounts together with quarterly
management reports;
c) not to enter into any transaction which in the reasonable opinion
of the Lender would or might materially adversely affect its business,
property, assets, operation, financial condition or the Borrower's
ability to perform its obligations hereunder; or
d) will not amend its corporate charter in a manner which in the
reasonable opinion of the Lender would be prejudicial to the interest
of the Lender.
e) not to use any of the loaned funds for any purpose other than for
investment in its subsidiary MRI(US), Inc. Under no circumstances are
any of the funds to be invested in Malvy Technology, or for the
repayment of any liabilities the corporation has to Xxxx Xxxxxxxxx to
redemption of A Preference shares or payments to entities connected
with Xxxx Xxxxxxxxx or any other obligations of the corporation.
f) will retain corporate separation of the MRI(US) subsidiary and will
not permit guarantees, cross guarantees or any other confusion to
occur which would give rise to any creditors of MRTI having any claim
over the assets of MRI(US), Inc.
12. EVENTS OF DEFAULT: Each of the following shall constitute an event of
default:
a) If the Borrower defaults in the repayment of the principal or
interest due on the advances and such default continues for five (5)
business days after notice.
b) If any indebtedness or obligation of the Borrower for payment of
borrowed money becomes due and payable and is demanded by the lender
thereof prior to the specified maturity date thereof, due to any
default on the part of the Borrower or is otherwise not paid when due.
c) If any representation or warranty made by Borrower proves to have
been materially untrue and inaccurate.
d) Borrower files a voluntary petition for relief under any chapter of
the U.S. Bankruptcy Code, or under any state debtor's act law, or if
such a petition is filed against Borrower under the Code or any such
law and is not stayed or dismissed within 30 days.
e) If the Borrower ceases or threatens to cease to carry on its
business or any part thereof or changes the nature of its business or
any part thereof material to the Borrower which would in the opinion
of the Lender affect its ability to discharge its commitments under
this facility.
f) If any distress, execution, sequestration attachment or other
process is levied or enforced upon or sued out against the Borrower
for an amount in excess of $25,000 and is not discharged or bonded
within seven days.
g) If the Borrower enters into any arrangement or composition with its
creditors.
h) If encumbrances take possession of or a receiver or trustee is
appointed over any material portion of the assets of the Borrower.
i) If in the opinion of the Lender there has occurred a material or
adverse change in circumstances affecting the Borrower which would in
the Lender's sole opinion affect the ability of the Borrower to
discharge its commitments under this facility.
j) The Lender reserves the right to review or revoke the maintenance
of this facility herein contained should further information material
to the facility and which might be prejudicial to the Lender's
interest become available.
13. CONVERSION OPTION:
a) The Lender shall on the occasion of each drawdown of the facility
have the option of subscribing for common shares of the Borrower at a
conversion price of one share for each $___ of loan previously
advanced or to be advanced, which price shall be paid by reducing
Borrower's then outstanding indebtedness to Lender, as set forth
below.
b) The said option may be exercisable at any time during the period
when this facility shall remain extant or the indebtedness incurred
hereunder shall remain outstanding and unpaid.
c) The said option may be exercised by notice in writing from the
Lender to the Borrower to that effect specifying the amount of
advances to be paid by issuance to Lender of shares of common stock of
the Borrower.
d) Such shares shall be issued pursuant to Regulation S of the U.S.
Securities and Exchange Commission, and subject to all terms and
conditions thereof.
14. NOTICES:
The address of the Borrower for purposes of serving all notices hereunder shall
be the address set forth above, unless and until Borrower notifies Lender of
another address by written notice given by certified U.S. mail, postage prepaid,
return receipt requested.
Should the terms and conditions of this offer be acceptable to you please
evidence your acceptance by signing the form of acceptance endorsed on the copy
of this letter enclosed and returning it to us together with:
1) Certified copy of the Certificate of Incorporation of the Borrower.
Yours faithfully,
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Accepted: Metal Recovery Technologies, Inc. For and on behalf of
By: ___________________________
Dated: ________________________
