LOAN AGREEMENT
THIS
made
the
___20Th
_______
day of November, 2006
AMONG:
SERVICE
AIR GROUP INC. (New Jersey), 00000
-
00xx Xxxxxx, Xxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(herein
“Lender”)
OF
THE
FIRST PART
AND:
SERVICE
AIR GROUP INC. (Canada),
0000
Xxxxxxx Xxxx Xxxxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(herein
“Company”)
OF
THE
SECOND PART
WHEREAS:
A. This
Loan
Agreement (the “Loan Agreement”) is entered into this date by and between the
Lender and the Company.
B. The
purpose of this Loan Agreement is to set out terms of the arrangement by which
Lender agrees to make a loan of up to US$227,400 (“Loan”) to the Company. A
portion of the funds comprising the Loan have been previously advanced to the
Company by virtue of the Company’s previous status as a subsidiary of the
Lender. However, the transaction under which the Lender acquired the Company
has
been rescinded and the parties hereby seek to treat all funds advanced as the
Loan to be governed by the terms contained herein.
1. |
DEFINITIONS
|
1.1 “Indebtedness”
means all loans and advances made or which may be made by the Lender to the
Company and Interest thereon and all costs, charges and expenses of or incurred
by the Lender in connection with any Securities and in connection with any
property covered by or comprised in the Securities, whether in protecting,
preserving, realizing or collecting any Securities or property aforesaid or
attempting so to do or otherwise and all other obligations and liabilities,
present or future, direct or indirect, absolute or contingent, mature or not,
of
the Company to the Lender arising under or by virtue of this Agreement, the
Securities or otherwise howsoever.
1.2 “Interest”
will be at 6% (six percent) simple interest per annum.
1.3 “Principal”
means the aggregate principal amount of money loaned to the Company by the
Lender of up to two hundred
twenty-seven thousand four hundred dollars (US$227,400).
1.4 “Securities”
means the securities referred to in Article 3 or any renewal thereof or
substitution therefore.
2. |
TERMS
OF THE LOAN
|
2.1 The
Lender has lent to the Company, and the Company has borrowed from the Lender
by
way of one advance to be evidenced by a promissory note in the form attached
hereto as Schedule “A”, the Principal sum of up to two hundred
twenty-seven thousand four hundred dollars (US$227,400)
subject
to the terms and conditions of this Agreement and the Securities.
2.2 For
value
received, Company promises to pay to Lender on the tenth anniversary of the
date
of this Loan Agreement (the “Maturity Date”) the amount of the Principal
which
has been advanced hereunder and remains outstanding, with accrued and unpaid
Interest, in respect of any amount of the Principal
and
Interest from the date of funding. Interest will be calculated on basis of
6%
(six percent) per annum and will be calculated and payable quarterly, commencing
from the date funds advanced. Notwithstanding the above the Company may repay
any or all of the Principal then outstanding and accrued and unpaid Interest
without penalty on giving 20 days notice to the Lender.
3. |
SECURITY
FOR THE LOAN
|
3.1 The
Company hereby grants a lien over all of its present and after acquired property
in favour of the Lender as security for all Indebtedness incurred by the Company
hereunder; and the Company agrees that forthwith upon request by the Lender
that
it will execute and deliver to the Lender such security agreements and financing
statements (collectively, the “Securities”) as the Lender may require, acting
reasonably, to secure and perfect the security interests granted hereby, and
to
co-operate with the Lender in the registration and perfection of such security
interests as may be advisable in light of applicable law.
4. |
AFFIRMATIVE
COVENANTS OF THE
COMPANY
|
4.1 At
all
times while any Principal or Interest on the Loan is outstanding, the Company
will:
(1) |
maintain
the properties and assets being the subject of the Securities in
good
repair;
|
(2) |
keep
true records and books of account in which full, true and correct
entries
will be made in accordance with generally accepted accounting principles
consistently applied throughout the period involved, and maintain
adequate
accounts and reserves for all taxes, including taxes on income and
profits, all depreciation and amortization of his properties and
assets
and all such other reserves for contingencies as would normally be
required in accordance with generally accepted accounting
principles;
|
(3) |
permit
any representative of the Lender to visit and inspect the properties
charged by the Securities and to examine the Company’s books, records,
leases and other documents relating thereto and to enquire from time
to
time as to particulars of any of the foregoing, all at such times
and so
often as may reasonably be requested;
and
|
(4) |
forthwith
upon request of the Lender execute and deliver to the Lender all
such
further and other mortgages, deeds, documents, matters, acts, things
and
insurances in law (collectively, the “Ancillary Items”) for the purpose of
record or otherwise which the Lender may reasonably require to perfect
the
intentions and provisions of this Agreement; provided that the Company
will not be obligated to execute and deliver any Ancillary Items
where the
execution and delivery of such Ancillary Items would breach the terms
and
conditions of any lease of real property existing on the date hereof
to
which the Company is a party.
|
5. |
DEFAULT
|
5.1 Default
by the Company.
The
occurrence of one or more of the following events shall constitute an “event of
default”, namely:
(1) |
if
the Company fails to make payment of the Indebtedness or any part
thereof
as and when the same comes due and
payable;
|
(2) |
if
any representation or warranty contained herein or otherwise made
in
writing to the Lender in connection with any of the transactions
contemplated by this Agreement is found to be false or misleading
or
incorrect in any material respect on the date which it was
made;
|
(3) |
if
the Company defaults in the performance of or compliance with any
term,
covenant or agreement contained in this Agreement or in any of the
Securities and the default is not remedied within twenty (20) days
after notice thereof has been given to the
Company;
|
(4) |
the
entry of a decree or order for relief by a court having jurisdiction
in
respect of the Company in an involuntary case under the federal bankruptcy
laws, as now or hereafter constituted, or any other applicable federal
or
state bankruptcy, insolvency or other similar
laws;
|
(5) |
the
commencement by the Company of a voluntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar
laws;
|
(6) |
the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any material
part
of the Company’s property;
|
(7) |
the
consent by the Company to the appointment of, or taking possession
by, a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or
similar official) of the Company or for any material part of the
Company’s
property;
|
(8) |
the
issuance of an order for the winding up or liquidation of the affairs
of
the Company and the continuance of such decree, order or appointment
unstayed and in effect for a period of sixty (60) consecutive
days;
|
(9) |
the
making by the Company of an assignment for the benefit of its
creditors;
|
(10) |
the
institution by or against the Company of any formal or informal proceeding
for the dissolution or liquidation of, settlement of claims against
or
winding-up of the affairs of the
Company;
|
(11) |
the
threat by the Company of ceasing to carry on business or the Company
ceasing to carry on business;
|
(12) |
the
entry of a decree or order or an effective resolution passed for
winding-up the Company;
|
(13) |
the
entry by the Company into any reconstruction, reorganization,
amalgamation, merger or other similar arrangement with any other
person;
or
|
(14) |
if
any encumbrancer takes possession of the properties being the subject
of
the Securities or being financed with the Loan, unless the Company
in good
faith dispute the encumbrancer’s claim and non-payment does not jeopardize
the title of the Company to any such property or any way impairs
any of
the Securities; or
|
5.2 Upon
the
occurrence of any one of these events of default, the entire amount of the
Principal and Interest then outstanding shall immediately become due and
payable.
5.3 Lender’s
delay or failure to insist upon the strict performance of the Company’s
obligations under this Loan Agreement or the Securities shall not be construed
as a waiver of Lender’s right to later require strict performance nor as a
waiver of any of Lender’s legal and equitable remedies.
6. |
PAYMENT
ON MATURITY
|
6.1 On
the
Maturity Date, the Company will deliver the Principal then outstanding and
any
earned Interest due Lender by wire transfer to Lender’s nominated bank account
or in cash or certified cheque delivered to the address of Lender.
7. |
NOTICES
|
7.1 Any
notice, request, demand, claim, instruction, or other document to be given
to
any party pursuant to this Loan Agreement shall be in writing delivered
personally or sent by mail, registered or certified, postage fully prepaid,
as
follows:
If
to,
Lender to the address set forth on the first page of this Loan
Agreement.
If
to
Company, to the addresses set forth on the first page of this Loan Agreement,
with a copy to:
Xxxxx
Xxxxxx LLP
800
- 000
Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx
X0X
0X0
Attention:
Xxxxxxx X. Xxxxxxxxx
7.2 Any
party
may give any notice, request, demand, claim, instruction, or other document
under this section using any other means (including expedited courier, messenger
service, telecopy, facsimile, telex, ordinary mail, or electronic mail), but
no
such notice, request, demand, claim, instruction, or other document shall be
deemed to have been duly given unless and until it actually is received by
the
individual for whom it is intended. Any party may change its address for
purposes of this section by giving notice of the change of address to the other
party in the manner provided in this section.
8. |
TERMINATION
|
8.1 This
Loan
Agreement may, by written notice, be terminated as follows:
(a) |
by
either the Company or the Lender if a material breach of any provision
of
this Loan Agreement has been committed by the other party and such
breach
has not been waived; or
|
(b) |
by
mutual written consent of the Company and
Lender.
|
8.2 Each
Party’s right of termination is in addition to any other rights it may have
under this Loan Agreement or otherwise, and the exercise of a right of
termination will not be an election of remedies; provided, however, that if
this
Loan Agreement is terminated by a party because of a breach of the Loan
Agreement by the other party or because one or more of the conditions to the
terminating party’s obligations under this Loan Agreement is not satisfied as a
result of the other party’s failure to comply with its obligations under this
Loan Agreement, the terminating party’s right to pursue all legal remedies will
survive such termination unimpaired. For greater certainty, termination of
this
Loan Agreement does not release the Company from its obligations hereunder
in
respect of any Principal then outstanding.
9. |
INDEMNIFICATION
|
9.1 All
representations, warranties, covenants, and obligations in this Loan Agreement,
and any other certificate or document delivered pursuant to this Loan Agreement
will survive the Loan Agreement. The right to indemnification, payment of
damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Loan Agreement,
with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right
to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.
9.2 The
Company and the Lender mutually agree to indemnify and hold each other harmless
along with their respective representatives, stockholders, controlling persons,
and affiliates (collectively, the “Indemnified Persons”) for, and will pay to
the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs
of
investigation and defense and reasonable attorneys’ fees) or diminution of
value, whether or not involving a third-party claim, arising, directly or
indirectly, from or in connection with any breach of any representation,
warrant, covenant or obligation made by the other Party in this Loan Agreement.
10. |
GENERAL
PROVISIONS
|
10.1 The
Parties agree to furnish upon request to each other such further information,
and to execute and deliver to each other such other documents, and to do such
other acts and things, all as the other party may reasonably request for the
purpose of carrying out the intent of this Loan Agreement.
10.2 The
rights and remedies of the parties to this Loan Agreement are cumulative and
not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Loan Agreement or the documents referred
to in this Loan Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power,
or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising
out of this Loan Agreement or the documents referred to in this Loan Agreement
can be discharged by one party, in whole or in part, by a waiver or renunciation
of the claim or right unless in writing signed by the other party; (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of such party or of the right
of
the party giving such notice or demand to take further action without notice
or
demand as provided in this Loan Agreement or the documents referred to in this
Loan Agreement.
10.3 This
Loan
Agreement supersedes all prior agreements between the parties with respect
to
its subject matter and constitutes (along with the documents referred to in
this
Loan Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Loan Agreement
may
not be amended except by a written agreement executed by the party to be charged
with the amendment.
10.4 Neither
party may assign any of its rights under this Loan Agreement without the prior
consent of the other parties. This Loan Agreement will apply to, be binding
in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Loan Agreement
will be construed to give any Person other than the parties to this Loan
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Loan Agreement or any provision of this Loan Agreement. This Loan
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Loan Agreement and their successors
and
assigns.
10.5 If
any
provision of this Loan Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Loan Agreement will
remain in full force and effect. Any provision of this Loan Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
10.6 This
Loan
Agreement will be governed by the laws of the Province of British
Columbia.
10.7 This
Loan
Agreement may be signed in as many counterparts is as necessary and all
signatures so executed shall constitute one Agreement, binding on all Parties
as
if each was a signatory on the original.
11. |
SIGNATURES
|
11.1 IN
WITNESS WHEREOF, the parties have executed and delivered this Loan Agreement
as
of the date first written above.
SERVICE
AIR GROUP INC. (New Jersey)
Per:/s/
Xxxxxxxx Xxxxxx (President/CEO)
Authorized
Signatory
SERVICE
AIR GROUP INC. (Canada)
Per:
_/s/
Jag Xxxxxxx (President/CEO)
Authorized
Signatory
SCHEDULE
“A”
PROMISSORY
NOTE
November
20, 2006
US$227,400
FOR
VALUE
RECEIVED, the undersigned (the “Borrower”) promise to pay to Service Air Group
Inc. (New Jersey), of
00000
- 00xx Xxxxxx, Xxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 (the “Lender”) the principal sum
of two hundred twenty-seven thousand four hundred United States Dollars
(US$227,400) in lawful currency of the United States (the “Principal Sum”),
together with Interest thereon as herein provided.
The
Principal Sum or such amount as shall remain outstanding from time to time
shall
bear simple Interest thereon, calculated monthly, not in advance, at a rate
of
six percent (6%) percent per annum both before and after each of maturity,
default and judgment commencing on the day the Principal Sum is advanced by
the
Lender to the Borrower. In the event of any partial repayments made on the
Principal Sum, such payments shall be applied firstly towards accrued Interest
and then towards the Principal Sum.
The
Principal Sum and all accrued but unpaid Interest at the rate aforesaid will
become due and payable on the 21st
day of
November, 2016.
Extension
of time of payment of all or any part of the amount owing hereunder at any
time
or times and failure of the Lender to enforce any of its rights or remedies
hereunder shall not release the Borrower from its obligations hereunder or
constitute a waiver of the rights of the Lender to enforce any rights and
remedies therein.
On
default in payment of any sum due hereunder for the Principal Sum or Interest
or
after 15 days’ notice of Default to the Borrower upon the occurrence of an Event
of Default as defined pursuant to the Loan Agreement, entered into between
the
Borrower and the Lender and dated for reference November 20, 2006, or any
amendments thereto, the unpaid balance of the Principal Sum and all accrued
Interest thereon shall at the option of the Lender forthwith become due and
payable.
The
undersigned, when not in default hereunder, will have the privilege of prepaying
in whole or in part the Principal Sum and accrued Interest without bonus or
penalty upon 20 days’ notice.
Presentment,
protest, notice of protest and notice of dishonour are hereby
waived.
SERVICE
AIR GROUP INC. (Canada)
Per:
/s/
Jag Xxxxxxx (President/CEO)
Authorized
Signatory