LOAN AGREEMENT
THIS
LOAN
AND (this “Agreement”) is made this 17th day of May, 2007, by and among
BLACKSANDS PETROLEUM, INC. (“Lender”) and ACCESS ENERGY INC.
(“Borrower”).
WITNESSETH:
WHEREAS,
Lender and Borrower are negotiating the terms and conditions of Lender’s
investment in Borrower (the “Investment”) so that Borrower will issue and Lender
will acquire shares of Borrower’s common stock that will total approximately 75%
of Borrower’s shares of issued and outstanding common stock immediately after
the Investment (the “Borrower Shares”) and related transactions (collectively,
the “Transactions”);
WHEREAS,
shortly hereafter, Borrower has acquired or intends to acquire a seismic study
of the Project Lands, as defined in a Joint Venture Agreement between Buffalo
River Dene Development Corporation and Borrower, dated November 3, 2006 (the
study together with all data obtained in the course thereof and any and all
rights attached thereto, the “Seismic”);
WHEREAS,
to provide Borrower with sufficient working capital Lender has agreed to provide
Borrower with a loan as described herein; and
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Lender, intending to be legally bound, agree as
follows:
ARTICLE
I
- LOAN
1.1.
Loan.
Lender
agrees, on the terms and conditions of this Agreement, to make loans to Borrower
in an amount of CDN$250,000 (two hundred fifty thousand Canadian dollars) (the
“Loan”), subject to the further terms hereof. Upon the execution and delivery of
this Agreement, Lender shall loan to Borrower the Loan.
1.2.
The
Note.
Borrower has authorized the issuance of a promissory note (the “Note”) made in
favor of Lender by Borrower, which shall be in the form set forth in Exhibit
A
attached hereto. The Loan shall be due and payable to the order of Lender on
August 7, 2007 (the “Due Date”). The Loan shall bear interest at the rate of
nine percent (9%) per annum on the full amount of the Loan, such interest to
commence accruing on the date hereof and payable at the start of each calendar
month preceding the Due Date; provided, however, that from and after an Event
of
Default, as defined in Article VI hereof, such interest rate shall increase
to
fifteen percent (15%) per annum.
1.3.
Payments.
If
prior to the Due Date, Lender makes the Investment, it shall forgive all
outstanding amounts under the Loan, provided that the Note is offset against
the
purchase price of Borrower Shares in the Investment.
ARTICLE
II -
[Intentionally
omitted]
ARTICLE
III
[Intentionally
omitted]
ARTICLE
IV - REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower
represents and warrants as follows:
4.1.
Organization.
Borrower is a corporation duly existing under the laws of the Province of
Ontario and is qualified and licensed to do business in any jurisdiction in
which the conduct of its business or its ownership of property requires that
it
be so qualified, except where the failure to be so qualified would not have
a
material adverse effect on the business, operations, condition (financial or
otherwise), property or prospects of Borrower or any subsidiary, or the ability
of Borrower or any subsidiary to carry out their respective obligations under
the Loan Documents (as defined in Section 4.2 below) (a “Company Material
Adverse Effect”).
4.2.
Authorization.
All
corporate action on the part of Borrower and its subsidiaries and their
respective officers, directors and stockholders necessary for the authorization,
execution, delivery and performance of all obligations of Borrower and each
such
subsidiary under this Agreement, the Note and all other documents necessary
or
desirable in connection with the Loan (collectively, the “Loan Documents”) to
which any of them may be a party have been taken. The Loan Documents, when
executed and delivered by Borrower and each such subsidiary, shall constitute
legal, valid and binding obligations of Borrower and each such subsidiary,
enforceable against Borrower and each such subsidiary in accordance with their
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors’ rights and the
enforcement of debtors’ obligations generally and by general principles of
equity, regardless of whether enforcement is pursuant to a proceeding in equity
or at law.
4.3.
Absence
of Conflicts.
The
execution, delivery and performance of this Agreement is not in conflict with
nor does it constitute a breach of any provision contained in Borrower’s
organizational documents, nor will it constitute an event of default under
any
material agreement to which Borrower is a party or by which Borrower is
bound.
2
4.4.
Consents
and Approvals.
Borrower has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all governmental
authorities and agencies that are necessary for the continued operation of
Borrower’s business as currently conducted, or are required by law.
4.5.
[intentionally omitted]
4.6.
Litigation.
There
are no actions, suits, claims, investigations, arbitrations or other legal
or
administrative proceedings, to the Knowledge of Borrower, threatened against
Borrower at law or in equity, and to Borrower’s Knowledge, there is no basis for
any of the foregoing. There are no unsatisfied judgments, penalties or awards
against or affecting Borrower or its businesses, properties or assets. Borrower
is not in default, and no event has occurred which with the passage of time
or
giving of notice or both would constitute a default by Borrower with respect
to
any order, writ, injunction or decree known to or served upon Borrower of any
court or of any foreign, federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or
foreign. There is no action or suit by Borrower pending or threatened against
others. Borrower has complied with all laws, rules, regulations and orders
applicable to its current business, operations, properties, assets, products
and
services the violation of which would have a material adverse effect. There
is
no existing law, rule, regulation or order, and Borrower has no Knowledge of
any
proposed law, rule, regulation or order, whether foreign, federal or state,
that
would prohibit or materially restrict Borrower from, or otherwise materially
adversely affect Borrower in, conducting its businesses in any jurisdiction
in
which it is now conducting business.
As
defined in this Agreement, “Knowledge” of Borrower means the actual knowledge by
a director or officer of Borrower of a particular fact or circumstance or such
knowledge as may reasonably be imputed to such person as a result of his actual
knowledge of other facts or circumstances as well as any other knowledge which
such person would have possessed had they made reasonable inquiry of appropriate
employees and agents of Borrower with respect to the matter in
question.
4.7.
Absence
of Certain Events.
To
Borrower’s Knowledge, there is no existing condition, event or series of events
which reasonably would be expected to have a Company Material Adverse
Effect.
4.8
Governmental
Permits.
Borrower (including its subsidiaries) holds all licenses, franchises, permits
and other governmental authorizations which are required for the conduct of
any
aspect of Borrower’s (including its subsidiaries’) business, as presently
conducted and as presently contemplated to be conducted, including, but not
limited to, all such business operations contemplated by, or incident to, the
Transactions. All such licenses, franchises, permits and other governmental
authorizations are valid and current, and Borrower has not received any notice
that any governmental authority intends to cancel, terminate or not renew any
such license, franchise, permit or other governmental authorization. Borrower
has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in such licenses,
franchises, permits and other governmental authorizations, and all laws and
regulations applicable thereto, and is not in violation of any of the foregoing.
The consummation of the transactions contemplated hereunder will not alter
or
impair or require changes to any such license, franchise, permit or other
governmental authorization.
3
ARTICLE
V
- COVENANTS OF BORROWER
So
long
as the Note is outstanding, Borrower agrees that, unless Lender shall give
its
prior consent in writing, which consent shall not be unreasonably
withheld:
5.1.
Ordinary
Course.
Borrower shall carry on its business in the ordinary course substantially as
conducted heretofore, and shall not engage in any transaction outside of the
ordinary course of business.
5.2.
[Intentionally Omitted]
5.3.
Performance
under Agreements.
Borrower shall perform all of its obligations under agreements relating to
or
affecting its assets, properties or rights.
5.5.
Cooperation
with Lender.
Borrower shall cooperate with Lender and shall use its reasonable best efforts
to complete and sign the Securities Purchase Agreement (the “Securities Purchase
Agreement”) contemplated by the Investment and shall use its reasonable best
efforts to consummate the Transactions contemplated thereby.
5.5.
[Intentionally Omitted]
5.6.
Maintenance
of Business Organization.
Borrower shall maintain and preserve its business organization intact and use
its best efforts to retain its present key employees and relationships with
suppliers, customers and others having business relationships with Borrower.
5.7.
Compliance
with Permits.
Borrower shall maintain compliance with all permits, laws, rules and
regulations, consent orders and all other orders of applicable courts,
regulatory agencies, first nations and similar governmental authorities.
5.8.
[Intentionally
Omitted]
5.9.
Payments
and Indebtedness.
Borrower shall provide Lender with four business days’ advance written notice
prior to (i) making any payment, or incurring any obligation to make any payment
in the ordinary course of business in excess of US$250,000 or (ii) incurring
any
indebtedness other than: (a) trade debt incurred in the ordinary course of
business, (b) purchase money obligations in the ordinary course of business
up
to US$5,000, or (c) taxes and assessments not delinquent or actively being
contested in good faith by Borrower and for which Borrower has adequate
reserves.
4
5.10.
[Intentionally Omitted]
5.11.
[Intentionally Omitted]
5.12.
[Intentionally Omitted]
5.13.
Mergers.
Except
as contemplated by the Transactions, Borrower shall not merge or consolidate
with or into any other corporation, or sell, assign, lease or otherwise dispose
of or voluntarily part with the control (whether in one transaction or in a
series of related transactions) of assets (whether now owned or hereafter
acquired) having a fair market value of more than US$5,000 at the time(s) of
transfer, or sell, assign or otherwise dispose of (whether in one transaction
or
in a series of transactions) any of its accounts receivable (whether now in
existence or hereafter created) at a discount or with recourse, to any person,
except sales or other dispositions of assets in the ordinary course of business.
5.14.
[Intentionally
Omitted]
5.15.
Charter
Documents.
Borrower shall not make any amendment to its Certificate of Incorporation or
its
By-Laws.
ARTICLE
VI - DEFAULTS AND REMEDIES
6.1.
An
“Event of Default” occurs if:
(a)
Borrower defaults in the payment of any principal or interest of the Note when
the same shall become due, either by the terms thereof or otherwise as herein
provided; or
(b)
Borrower defaults in the performance or observance of any other agreement,
term
or condition contained in the Note or the other Loan Documents; or
(c)
Borrower shall default in the payment of any principal of, or premium, if any,
or interest on, any other indebtedness in excess of US$100,000 or obligation
with respect to borrowed money after expiration of any grace or cure period
or
shall default in the performance of any material term of any instrument
evidencing such Indebtedness or of any mortgage, indenture or agreement relating
thereto after expiration of any grace or cure period, and the effect of such
default is to cause or to permit the holder or holders of such obligation to
cause, such Indebtedness or obligation to become due and payable prior to its
stated maturity; or
(d)
The
Investment shall not have closed by the Due Date; or
5
(e)
Borrower pursuant to or within the meaning of any Bankruptcy Law (as defined
herein):
(i)
commences a voluntary case,
(ii)
consents to the entry of an order for relief against it in an involuntary
case,
(iii)
consents to the appointment of a Custodian (as defined herein) of it or for
all
or substantially all of its property,
(iv)
makes a general assignment for the benefit of its creditors, or
(v)
is
the debtor in an involuntary case which is not dismissed within thirty (30)
days
of the commencement thereof, or
(f)
A
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:
(i)
provides for relief against Borrower in an involuntary case,
(ii)
appoints a Custodian of Borrower for all or substantially all of its property,
or
(iii)
orders the liquidation of Borrower,
(g)
A
final judgment for the payment of money in an amount in excess of US$5,000
shall
be rendered against Borrower (other than any judgment as to which a reputable
insurance company shall have accepted full liability in writing) and shall
remain undischarged for a period (during which execution shall not be
effectively stayed) of 20 days after the date on which the right to appeal
has
expired;
(h)
Any
representation or warranty made by Borrower in this Agreement, any other Loan
Document or in any other document or instrument furnished in connection with
the
transactions contemplated hereby shall prove to be materially false or incorrect
on the date as of which made; or
(i)
An
event shall occur or there exist facts or circumstances which create or result
in a Borrower’s Material Adverse Effect;
then
upon
the occurrence of any Event of Default described in paragraphs (e) or (f),
the
unpaid principal amount of and accrued interest on the Note shall automatically
become due and payable, without presentment, demand, protest or notice of any
kind, all of which are hereby waived by Borrower.
6
Upon
the
occurrence of any other Event of Default, Lender shall give Borrower written
notice of default. Borrower shall have thirty (30) days (the “Cure Period”)
after receipt of written notice of default from Lender to cure said default.
Borrower may cure the default prior to the expiration of the Cure Period by
making payment in full to Lender of the entire principal amount outstanding
under the Note and all accrued interest thereon, together with all other sums
due thereunder and hereunder.
Notwithstanding
the foregoing, if an Event of Default is cured prior to the end of the Cure
Period (including, but not limited to, an Event of Default pursuant to Section
6.1(d) above), Borrower shall use its best efforts to ensure that the Investment
and the Transactions are consummated.
If
the
Event of Default is not cured by the end of the Cure Period, then in addition
to
any other rights, powers and remedies permitted by law or in equity, Lender
may,
at its option, by notice in writing to Borrower, declare the Note to be, and
the
Notes shall thereupon be and become, immediately due and payable, together
with
interest accrued thereon and all other sums due hereunder, without presentment,
demand, protest or other notice of any kind, all of which are waived by
Borrower.
Upon
the
continuance of any Event of Default after the expiration of the applicable
Cure
Period, the holder of the Note may proceed to protect and enforce its rights
by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in the Note held
by it, for an injunction against a violation of any of the terms hereof or
thereof, or for the pursuit of any other remedy which it may have by virtue
of
the Loan Documents or pursuant to applicable law. Borrower shall pay to the
holder of the Notes upon demand the reasonable costs and expenses of collection
and of any other actions referred to in this Article, including without
limitation reasonable attorneys’ fees, expenses and disbursements.
No
course
of dealing and no delay on the part of the holder of the Note in exercising
any
of its rights shall operate as a waiver thereof or otherwise prejudice the
rights of such holders, nor shall any single or partial exercise of any right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. No right, power or remedy
conferred hereby or by the Note on the holder thereof shall be exclusive of
any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.
6.2.
For
purposes of this Article, the following definitions shall apply:
“Bankruptcy
Law” means Title 11, U.S. Code or any similar federal or state law for the
relief of debtors, or equivalent law of a non-U.S. jurisdiction.
“Custodian”
means any receiver, trustee, assignee, liquidator or similar official under
any
Bankruptcy Law.
7
ARTICLE
VII - NOTICES
All
notices, requests and demands shall be given to or made upon the respective
parties hereto in writing, such address as may be designated by it in a written
notice to the other party. All notices, requests, consents and demands hereunder
shall be effective when duly deposited in the mails (by overnight delivery
by a
nationally-recognized overnight courier service or by United States or Canadian
registered or certified mail, postage prepaid, return receipt requested) with
a
copy via facsimile. Unless the parties designate otherwise, notices should
be
addressed as follows:
If
to
Borrower:
Access
Energy Inc.
Xxxxx
0000, 000 Xxx Xxxxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Xxxxxx
Fax:
000-000-0000
Attn:
Xxxx Xxxxxxxxx
with
a
copy to:
Fraser
Xxxxxx Casgrain LLP, Suite 3900
1
First
Canadian Place
000
Xxxx
Xxxxxx Xxxx
Xxxxxxx,
Xxxxxxx, X0X 0X0
Xxxxxx
Fax:
000
000 0000
Attn:
Xxxx Xxxxxx
If
to
Lender:
Xxxxx
0000, 000 0xx Xxxxxx XX
Xxxxxxx,
Xxxxxxx
Xxxxxx
X0X 0X0
Attn:
Xxxxxx Xxxxxxxxx
with
a
copy to:
Gottbetter
& Partners, LLP
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
8
ARTICLE
VIII - MISCELLANEOUS
8.1.
Governing
Law.
This
Agreement shall be governed by and construed under the laws of the State of
New
York without giving effect to the choice of law provisions thereof. Each of
the
parties hereto hereby irrevocably and unconditionally consents to submit to
the
exclusive jurisdiction of the courts of the State of New York and of the United
States of America, in each case located in the County of New York, for any
action, proceeding or investigation in any court or before any governmental
authority ("Litigation") arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any Litigation
relating thereto except in such courts), and further agrees that service of
any
process, summons, notice, or document by U.S. registered mail to its respective
address set forth in this Agreement, or such other address as may be given
by
one or more parties to the other parties in accordance with the notice
provisions of Article VII, shall be effective service of process for any
Litigation brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any Litigation arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United States
of America, in each case located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any
such court that any such Litigation brought in any such court has been brought
in an inconvenient forum.
8.2.
Amendment.
This
Agreement may be amended, modified or terminated only by an instrument in
writing signed by all parties.
8.3.
No
Assignment.
Neither
this Agreement nor any right or obligation provided for herein may be assigned
by any party without the prior written consent of the other
parties.
8.4.
Successors.
The
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of, and be enforceable by, the respective successors and assigns of
the
parties hereto.
8.5.
Counterparts.
The
Agreement may be executed in any number of counterparts, with the same effect
as
if all parties had signed the same document. All such counterparts shall be
deemed an original, shall be construed together and shall constitute one and
the
same instrument. This Agreement may be executed by facsimile
signature.
8.6.
Construction.
The
language used in this Agreement shall be deemed to be the language chosen by
the
parties to express their mutual intent, and no rule of strict construction
shall
be applied against any party.
8.8.
Counterparts.
The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
8.8.
Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of
the remaining terms and provisions hereof or the validity or enforceability
of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent jurisdiction
declares that any term or provision hereof is invalid or unenforceable, the
parties agree that the court making the determination of invalidity or
unenforceability shall have the power to limit the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term
or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified.
[signature
pages follow]
9
IN
WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly
executed as of the day and year first above written.
| BORROWER: | ||
| ACCESS ENERGY INC. | ||
| |
|
|
| By: | /s/ Xxxx Xxxxxxxxx | |
|
Name:
Xxxx Xxxxxxxxx
Title:
President
|
||
| LENDER: | ||
| BLACKSANDS PETROLEUM, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxxx | |
|
Name:
Xxxxxx Xxxxxxxxx
|
||
| Title: President | ||
10
EXHIBIT
A
[Form
of Note]
11
