LOAN AGREEMENT
THIS
LOAN AGREEMENT (the “Agreement”) dated this
19th day of March,
2008
BETWEEN:
Xxxxxxxx
XxXxxxx of 00 Xxxxx Xxxxxx Xxxx Xxxxxxxxx 00X, Xxxxxxxx, XX 00000
(the
“Lender”)
AND
SheerVision,
Inc. of 0000 Xxxxx Xxxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX
00000
(the
“Borrower”)
IN
CONSIDERATION OF the Lender loaning certain monies (the “Loan”) to the
Borrower and the Borrower repaying the Loan to the Lender, both parties agree
to
keep, perform and fulfill the promises and conditions set out in this
Agreement:
Loan
Amount &
Interest
1.
The
Lender promises to loan up to three hundred thousand ($300,000) USD to the
Borrower and the Borrower promises to repay the principal amount to the
Lender, at such address as may be provided in writing, with interest
payable on the unpaid principal at the rate of 9.00 percent per annum.
Borrower may request advances against the Loan periodically.
Payment
2.
The
loan will be repaid in full (both principal and interest) 9 months from the
execution of this Agreement or earlier upon an Event of Default (as
defined below) (the “Term”).
3.
At any
time while not in default under this Agreement, the Borrower may pay the
outstanding balance then owing under this Agreement to the Lender without
penalty.
Representations
and
Covenants of the Borrower
4.
The
Borrower represents and warrants to the Lender that:
(a)
this
Agreement constitutes the legal, valid, and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization or similar
laws generally affecting the enforcement of the rights of creditors.
(b)
it
will not create, incur, assume or suffer to exist, contingently or otherwise,
any indebtedness for borrowed money that is either pari passu or
senior in right of payment to this Loan.
(c)
it is
the legal and beneficial owner and will continue to be the legal and
beneficial owner of all of the Collateral (as defined below) free of all
liens, charges, security interests, mortgages and other encumbrances and
it shall defend the Collateral against all claims and demands of all
persons at any time charging the same or any interest therein;
(d)
it
shall not, without the prior written consent of the Lender, create, permit,
assume, have outstanding or suffer to exist, any assignment, mortgage,
lien, charge, security interest or other encumbrance on the Collateral, or
any part thereof, ranking or purporting to rank prior to or pari
passu with the charge and security interest created by this
Agreement.
Default
5.
Notwithstanding anything to the contrary in this Agreement, upon the
occurrence or during the continuance of an Event of Default, then the
Lender may declare the principal amount owing and interest due under this
Agreement at that time to be immediately due and payable.
Unless
the parties otherwise agree in writing, each of the following events shall
be
an “Event of Default” hereunder:
(a)
Borrower fails to pay timely any of the amounts due under this Agreement on
the date the same becomes due and payable;
(b)
Borrower is in breach of any of the representations, warranties or covenants
herein applicable to it;
(c)
if an
encumbrancer, whether permitted or otherwise, takes possession of any part
of the Collateral, or if any process of a court, execution, distress, or
analogous process becomes enforceable or is enforced against any of the
Collateral, the validity of which is not being diligently contested
in good faith at the time by Borrower by proper legal proceedings provided
that such proceedings effectively postpone enforcement of same and
provided further that same is vacated or lifted within 30 days of
Borrower becoming aware of or receiving notice thereof; or
(d)
Borrower shall commence, or have commenced involuntarily against it, any
case, proceeding or other action seeking to have an order for relief
entered on its behalf as debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, liquidation or dissolution under any
law relating to bankruptcy, insolvency, reorganization or relief of
debtors or seeking an appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
property.
Additional
Clauses
6.
It is
acknowledged that at Lender’s option, at the end of Term of this
Agreement, Lender may elect to receive additional consideration in
warrants in the amount of 50% of the principal amount loaned at a warrant
price of $0.25.
7.
It is
acknowledged that at Lender’s option, Lender or Lender’s representative
may have access to SheerVision’s board of directors meetings and other
actions brought to the board of directors.
8.
Borrower hereby covenants and agrees with Lender that it shall insure and
keep insured all insurable property included in the Collateral against
loss or damage by fire and all other perils covered by a policy with an
extended coverage endorsement, in an amount not less than the full
replacement value of the Collateral, and will maintain general business
insurance satisfactory to the Lender.
Security
9.
Borrower hereby grants Lender a first position security interest and lien in
and
to the Collateral. Such security interest in the Collateral shall secure
all of Borrower’s obligations to Lender hereunder (the “Obligations”),
including, but not limited to, the payment of the principal amount of the
loan and any interest thereon. Borrower agrees to execute and deliver to
Lender a Financing Statement on Form UCC-1 in order to perfect the
security interest granted hereunder. Borrower shall not, without the prior
written consent of Lender: (i) sell, lease or otherwise dispose of the
Collateral or any part thereof; or (ii) release, surrender or abandon
possession of the Collateral or any part thereof.
Governing
Law
10.
This
agreement will be construed in accordance with and governed by the laws of
the State of New York.
Notice
11.
Any
demand, notice or other communication to Borrower in connection with this
Agreement will be deemed to be made, given and received:
(a)
if
mailed by prepaid registered mail addressed to Borrower at the address for
notice set forth on the signature page hereof, on the day following the
day on which it was mailed, during a period of uninterrupted mail service,
whether or not the same be returned undelivered; or
(b)
if
delivered to Borrower at, or sent by prepaid courier service to the address
for notice set forth on the signature page hereof, or personally served
upon any director, officer, servant, employee or partner of Borrower, at
the time of such delivery or service; or
(c)
if
sent prepaid by telecopier, telefax or other similar means of electronic
communication, to the number set forth on the signature page hereof or
where Borrower has the facilities to receive such communication, provided
that a copy thereof is sent on the same day by prepaid mail, at the time
of such sending.
Binding
Effect
12.
This
agreement will pass to the benefit of and be binding upon the respective
heirs, executors, administrators, successors and permitted assigns of the
Borrower and Lender.
Amendments
13.
This
agreement may only be amended or modified by a written instrument executed
by both the Borrower and Lender.
Entire
Agreement
This
agreement constitutes the entire agreement between the parties and there are
no further items or provisions, either oral or otherwise.
IN
WITNESS WHEREOF, the parties have duly affixed their signatures under
hand and seal the 19th day of March, 2008.
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SIGNED,
SEALED AND DELIVERED
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this
19th day of March, 2008
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Xxxxxxxx
XxXxxxx
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SIGNED,
SEALED AND DELIVERED
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this
19th day of March, 2008
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