EXHIBIT 10.10
LOAN AGREEMENT
BETWEEN:
E-CAPITAL MANAGEMENT INC.
00 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
(the "Lender")
OF THE ONE PART
-and-
xxxxXXX.xxx CORPORATION
Xxxxx 000, Xxxxx 0
0 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
("ThinWEB")
OF THE OTHER PART
WHEREAS ThinWEB has and will continue to have a need of bridge financing to fund
its operations until such time as it completes a major private placement, public
offering or other significant financing event ("the Significant Financing
Event");
AND WHEREAS the Lender is acting on behalf of shareholders of ThinWEB who are
clients of Lines Overseas Management Limited (listed in Schedule "A") and who
have provided financial assistance to date and have agreed to continue to assist
in thinWEB's financing requirements;
AND WHEREAS the parties agree that it is in the interests of all concerned to
formalize their financing arrangements.
IN CONSIDERATION of the mutual covenants hereinafter set out each party agrees
with the other as follows:
1. The continuing financial support consists of two separate credit
arrangements:
(i) a component of $375,000 CDN to be advanced in tranches of $75,000
every two weeks commencing June 4, 1999 ("Credit Facility A");
(ii) a component of up to $960,000 CDN to be drawn down on an as needed
basis ("Credit Facility B") which is expected to fund ThinWEB
operations through October, 1999.
2. Credit Facility A shall not bear interest.
3. Credit Facility A shall become due and payable upon completion of a
Significant Financing Event and ThinWEB covenants to immediately repay to the
Lender all advances made under Credit Facility A following completion of such
transaction.
4. Credit Facility B shall bear interest at an annual rate of 12%. Interest
shall be calculated and be payable monthly at a rate of 1% per month on the
outstanding balance. ThinWEB shall have the option to pay the interest or have
it added to the outstanding principal balance.
5. Credit Facility B shall become due and payable upon completion of a
Significant Financing Event and ThinWeb covenants to immediately repay to the
Lender all advances made under Credit Facility B together with accrued interest,
subject to the Lender's option under paragraph 6.
6. In respect of Credit Facility B, the Lender may, at its sole option, elect
to convert all or any portion of the outstanding amount, including accrued
interest, into securities of ThinWEB on the same terms and conditions as such
securities are issued pursuant to a Significant Financing Event, at the time of
such Event.
7. In respect of Credit Facility B, the Lender shall have issued to it, for no
additional consideration, share purchase warrants equal in number to the amount
of the facility which was drawn down divided by the price of ThinWEB shares
issued pursuant to a Significant Financing Event, which warrants shall be
exercisable on the basis of one warrant for one common share, at a strike price
equal to the price at which ThinWEB shares are issued pursuant to a Significant
Financing Event, for a period of one year from the closing of such Event.
8. If a Significant Financing Event occurs which is denominated in U.S.
currency the outstanding amount under Credit Facility B shall be converted from
Canadian dollars accordingly by reference to the Royal Bank of Canada's currency
conversion rate on the date of the Significant Financing Event.
9. The Lender shall be entitled from time to time, if and when it considers
such action to be prudent, to appoint an agent to review any financial, legal or
business records of ThinWEB in order to monitor ThinWEB's use of funds and
operations. Provided that such agent's access to confidential information about
impending sales and alliances may be restricted in such manner as ThinWEB
considers necessary to ensure compliance with any disclosure requirements of the
United States Securities Exchange Commission or similar regulatory authority.
IN WITNESS WHEREOF the parties have executed this Agreement this day of
July, 1999.
E-CAPITAL MANAGEMENT INC.
per:_________________________________
xxxxXXX.xxx CORPORATION
per:_________________________________
