Exhibit 10.2
LOAN AGREEMENT
THIS LOAN AGREEMENT dated effective as of
the 8th day of January,
2008.
BETWEEN:
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- DYNAMIC GOLD CORP. , a company
organized in accordance with
the laws of the State of Nevada (hereinafter called the "
Borrower ")
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- TIM COUPLAND , an individual,
residing in the Province of British
Columbia (hereinafter called the " Lender ")
WHEREAS :
| 1. |
The Lender has agreed to lend to the Borrower and the Borrower
has agreed to borrow from the Lender, the principal amount of U.S.
$75,000 on the terms and subject to the conditions contained
herein. |
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| 2. |
As continuing security for the repayment of the Indebtedness,
the Borrower has agreed to execute and deliver a general security
agreement to the Lender for the full Indebtedness due under the
Loan. |
NOW THEREFORE THIS AGREEMENT WITNESSES
that in consideration of the covenants and agreements herein
contained and for other good and valuable consideration (the
receipt and adequacy whereof is hereby acknowledged) the parties
hereto agree as follows:
Definitions
For the purposes of this Agreement, unless there
is something in the subject matter or context inconsistent
therewith:
| (a) |
" Administrative Body " means any domestic or foreign,
national, federal, provincial, state, municipal or other local
government or regulatory body and any division, agency, ministry,
commission, board or authority or any quasi-governmental or private
body exercising any statutory, regulatory, expropriation or taxing
authority under the authority of any of the foregoing, and any
domestic, foreign or international judicial, quasi-judicial,
arbitration or administrative court, tribunal, commission, board or
panel acting under the authority of any of the foregoing; |
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| (b) |
" Agreement ", "this Agreement", "hereto", "herein",
"hereof', "hereby", "hereunder" and similar expressions refer to
this Loan Agreement and not to any particular section or other
portion hereof, and the expressions "article" or "section" followed
by a number mean and refer to the specified article or section of
this Loan Agreement; |
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| (c) |
" Business Day " means a day other than Saturday, Sunday
or a statutory holiday, or any other day upon which the Lender is
not open for the transaction of business throughout normal business
hours, at its principal office, in the City of Vancouver; |
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| (d) |
" Business Hours " means those hours on a Business Day
during which the Lender or the Borrower, as the case requires, is
normally open to the public for the conduct of its business; |
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| (e) |
" Control " and " Controlled " shall
have the same meaning as defined in the Business Corporations
Act, (Alberta), and "controlling" shall have a comparable
meaning; |
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| (f) |
" Corporate Distribution " means: |
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(i) |
the declaration by the Borrower of any dividend or other
distribution based on issued shares of the Borrower; |
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(ii) |
the purchase, redemption or retirement, by the Borrower, of any
issued shares of the |
Borrower;
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(iii) |
the payment by the Borrower of any management, consulting fee,
or bonus to shareholders or persons related to shareholders, other
than normal remuneration payable to employees, directors, officers
or consultants of the Borrower or reimbursement of Project expenses
incurred by such Persons; and |
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(iv) |
any payment by the Borrower on account of any principal or
interest on any loans or advances owing at any time by the Borrower
to any of its Controlled companies or to its shareholders,
directors or officers; |
| (g) |
" Default " or " Event of
Default " means any of the events specified in section 5.1
hereof, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse
of time, or the happening of any further condition, event or
act; |
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| (h) |
" Guarantee " means a guarantee
of the Material Subsidiaries to be issued by each of the Material
Subsidiaries in favour of the Lender with respect to the Borrower's
obligations to the Lendor; |
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| (i) |
" Indebtedness " includes all
principal, Interest, interest on unpaid interest and costs and
expenses payable pursuant to the provisions of this Agreement and
the Security, from time to time outstanding; |
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| (j) |
" Interest " shall have the
meaning ascribed thereto in Section 2.2 hereof; |
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| (k) |
" Law " means all
constitutions, treaties, laws, statutes, codes, ordinances, orders,
decrees, rules, regulations and municipal by-laws, whether
domestic, foreign or international, any judgments, orders, writs,
injunctions, decisions, rulings, decrees and awards of any
Administrative Body, and any policies voluntary restraints,
practices or guidelines of any Administrative Body, and including
any principles of common law and equity; |
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| (l) |
" Lien " means any mortgage,
lien, pledge, charge (whether fixed or floating), security
interest, title retention agreement (other than operating leases in
respect of tangible personal property which are not in the nature
of financing transactions) or other encumbrance of any kind,
contingent or absolute but excludes any contractual right of
set-off created in the ordinary course of business and any writ of
execution, or other similar instrument, arising from a judgment
relating to the non- payment of Indebtedness; |
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| (m) |
" Loan " means a loan from the
Lender to the Borrower in the aggregate principal amount of U.S..
$75,000, of which $10,000 was advanced by the Lender to the
Borrower on December 8, 2006, $10,800 was advanced by the Lender to
the Borrower on March 31,2007, $10,000 was advanced by the Lender
to the borrower on April 3, 2007, $19,200 was advanced by the
Lender to the borrower on December 21, 2007 and $25,000 was
advanced by the Lender to the Borrower on January 8, 2008. The
principal amount outstanding under the Loan from time to time shall
be evidenced by the Promissory Note; |
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| (n) |
" Material Subsidiaries " means Dynamic
Grovel Holdings Ltd. and any other Subsidiary of the Borrower who
from time to time owns Mortgaged Property and "Material Subsidiary"
means anyone of them; |
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| (o) |
" Maturity Date " means January 8,
2009; |
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| (p) |
" Mortgaged Property " means and includes
all the undertaking, property, intellectual property and otherwise
whatsoever, and wheresoever situate, and assets of the Borrower and
Material Subsidiaries expressed herein or in the Security
Agreement, or by any instrument supplemental hereto or thereto, to
be mortgaged, hypothecated, pledged, charged, ceded and/or
transferred, or in which a security interest is granted, or
intended so to be, in favour of the Lender; |
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| (q) |
" Permitted Encumbrances " means anyone or
more of the following: |
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(i) |
those mortgages and other charges set out in Schedule "A" or
specifically approved from time to time by the Lender in writing,
and, if requested by the Lender, postponed to the charges described
in the Security pursuant to an agreement acceptable to the
Lender; |
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(ii) |
security given in the ordinary course of business to a public
utility or any municipality or governmental or other public
authority when required by such utility or municipality or
governmental or other authority in connection with the operations
of the Borrower and Material Subsidiaries; |
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(iii) |
Liens for taxes, assessments and governmental charges which are
not due or the validity of which is being diligently contested in
good faith by the Borrower or the Material Subsidiaries; and |
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(iv) |
mechanics', builders' materialmen' s and like Liens in respect
of services rendered or goods supplied for which payment is not at
the time more than sixty (60) days past due or is being diligently
contested in good faith by the Borrower and the Material
Subsidiaries; |
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| (r) |
" Person " includes an individual, a
partnership, a joint venture, a trust, an unincorporated
organization or any other association, a corporation and a
government or any department or agency thereof; |
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| (s) |
" Promissory Note " means a promissory note
or promissory notes issued by the Borrower evidencing the principal
amount outstanding under the Loan; |
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| (t) |
" Security " means the Security Agreement
and any other instrument or agreement from time to time that
purports to secure the Indebtedness; |
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| (u) |
" Security Agreement " means a general
security agreements of the Borrower and Material Subsidiaries to be
issued by the Borrower in favour of the Lender as collateral
security for the payment of the Indebtedness; |
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| (v) |
" Subsidiary " means any Person of which
more than 50% of the outstanding Voting Securities are owned,
directly or indirectly by or for the Borrower, provided that the
ownership of such securities confers the right to elect at least a
majority of the board of directors of such Person, or a majority of
Persons serving similar roles and includes any legal entity in like
relationship to a Subsidiary; and |
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| (w) |
" Voting Securities " means securities of
capital stock of any class of any corporation, partnership units in
the case of a partnership, trust units in the case of a trust or
other evidence of ownership |
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serving similar
purposes, carrying voting rights under all circumstances, provided
that, for the purposes of this definition, shares which only carry
the right to vote conditionally on the happening of an event will
not be considered Voting Securities, whether or not such event will
have occurred, nor will any securities be deemed to cease to be
Voting Securities solely by reason of a right to vote accruing to
securities of another class or classes by reason of the happening
of such event.
ARTICLE 1 - REPRESENTATIONS AND
WARRANTIES OF THE BORROWER
| 1.1 |
Representations and Warranties |
The Borrower represents and warrants to the
Lender, on the date hereof and acknowledges that the Lender is
relying on such representations and warranties in entering into
this Agreement and in making the Loan, as follows:
The Borrower has been
duly incorporated and organized and is a valid and subsisting
corporation under the laws of its jurisdiction of incorporation,
and has full capacity and power to carry on its business and to own
and lease property; the Borrower has the power and is duly
authorized to borrow the monies herein contemplated, and to enter
into, execute, deliver and perform this Agreement and the Security
Agreement, and holds all necessary licences, permits and consents
to carry on such business in all jurisdictions in which it does
so;
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(b) |
Non-Violation of Other Instruments and
Authorization |
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(i) |
The borrowing of money by the Borrower, the entering into and
performance of this Agreement and the Security Agreement does not
conflict, and will not result with the passage of time or
otherwise, in a breach or violation of, or constitute a default
under, its articles of incorporation or its by-laws, or any of the
covenants or the provisions contained in any agreement to which it
is a party, or by which it or its assets are, or may be, bound, or
to which it or its assets are, or may be, subject, and does not
require the consent or approval of any person; and |
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(ii) |
All necessary steps and proceedings have been taken by the
Borrower, and all consents have been obtained to authorize the
entering into, delivery and performance of this Agreement and the
Promissory Note and to create and authorize the issuance, delivery
and performance of the Security Agreement; |
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(c) |
Valid Security |
This Agreement, the
Promissory Note and the Security Agreement constitute valid and
binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms subject to the
usual bankruptcy, insolvency and equitable principles;
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(d) |
Title to Assets and Property |
Subject only to the
Permitted Encumbrances, the Borrower has good and marketable title
to the Mortgaged Property owned by it free and clear of any
encumbrances or security interests whatsoever, and no person has
any agreement or right to acquire any of such properties out of the
ordinary course of business;
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The Borrower is not in
default in the performance or observance of any of the material
obligations, covenants or conditions contained in any material
contract, agreement or other instrument to which it is a party or
by which it is bound;
To the best knowledge
and belief of the Borrower, the Borrower is not in breach of any
by-law, law, statute, regulation, rule or order of any governmental
authority relating in any way to the Mortgaged Property, or the
operation of its business, or both;
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(g) |
Judgments and Executions |
There are no judgments
or executions filed or pending against the Borrower;
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(h) |
Insolvency Proceedings |
The Borrower has not
made any assignment for the benefit of creditors, nor has any
receiving order been made against it under the provisions of the
Bankruptcy and Insolvency Act (Canada), nor has any petition
for such an order been served upon it, nor are there any
proceedings in effect or threatened under the provisions of the
Winding-Up and Restructuring Act (Canada) or the
Companies' Creditors Arrangement Act (Canada), nor has any
receiver, receiver and manager, monitor, custodian or official with
similar powers been appointed by court order or privately
respecting the Borrower, or any of its assets or property;
The Borrower is in good
standing under all leases to which it is a party, and no right
currently exists in any lessor or lessee thereunder to terminate
any such lease, and each such lease is valid and binding;
The Borrower has duly
and timely filed all tax returns required to be filed by it, and
has paid all taxes which are due and payable, and has paid all
assessments and reassessments, and all other taxes, governmental
charges, governmental royalties, penalties, interest and fines
claimed against it on or before the date hereof. Adequate provision
and installment payments have been made for taxes and governmental
royalties payable for the current period for which returns are not
yet required to be filed. There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
filing of any tax return, or payment of any taxes, governmental
charge, governmental royalties or deficiency against the
Borrower;
The Borrower has
withheld from each payment to any of its officers, directors and
employees the amount of all taxes, including but not limited to,
income tax and other deductions required to be withheld therefrom,
and has paid the same to the proper tax or other receiving
authorities within the time required under any applicable tax
legislation;
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As of the date hereof,
there are no material liabilities of the Borrower of any kind
whatsoever, absolute or contingent, in respect of which the
Borrower is, or may become, liable or obligated to pay on or after
the date of this Agreement which are not fully and properly
reflected in the financial information of the Borrower previously
delivered to the Lender;
The Borrower owns or
licenses, free of adverse claim, all licences, patents, trademarks,
copyright, industrial designs, know how, trade secrets and other
industrial and intellectual property used in connection with its
business, and all such licences are in good standing and registered
as applicable; and
As of the date of
execution of this Agreement, there are no litigation, arbitration
or administrative proceedings outstanding and, to the Borrower's
knowledge after having made reasonable inquiry, there are no such
proceedings pending or threatened, against the Borrower.
| 1.2 |
Survival of Representations, Warranties and
Covenants |
The covenants, agreements, representations and
warranties set forth in this Agreement, and in any certificate or
other document delivered hereunder, shall continue in full force
and effect until repayment in full of all of the Indebtedness.
ARTICLE 2 - REPAYMENT, INTEREST AND
CONVERSION
The Lender agrees to lend to the Borrower and
the Borrower agrees to borrow from the Lender a Loan in the
principal amount of up to U.S. $75,000, which Loan shall be
repayable in accordance with the terms of this Agreement. The
outstanding principal amount due and payable from the Borrower to
the Lender pursuant to the Loan from time to time shall be
evidenced by a Promissory Note or Promissory Notes delivered by the
Borrower to the Lender at the time of any advance or advanced from
the Lender to the Borrower. The Borrower hereby acknowledges
receipt on: (i) December 8, 2006 of the principal amount of
$10,000; (ii) March 31, 2007 of the principal amount of $10,800;
(iii) April 3, 2007 of the principal amount of $10,000; (iv)
December 21, 2007 of the principal amount of $19,200; and (v)
January 8, 2008 of the principal amount of $25,000; advanced by the
Lender and forming part of the Loan.
Interest shall accrue and be payable on the
outstanding amount of the Loan at a rate per annum equal at all
times to ten (l0%) percent. Interest shall be payable, before and
after demand, default and judgment, at the same rate until paid in
full. In the event the foregoing rate of interest on all overdue
payments under this Agreement is not recoverable under applicable
law, the applicable rate of interest shall be reduced to the
highest rate permitted under applicable law. Interest shall accrue
for the exact number of days such Indebtedness is outstanding and
shall be calculated on the basis of a three hundred and sixty-five
day year. Accrued and unpaid interest on the Loan shall be paid in
full by the Borrower on the Maturity Date.
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Notwithstanding anything else contained herein
or in the Security Agreement, the Indebtedness shall be due and
payable in full by the Borrower to the Lender on the earlier of
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(a) |
the Maturity Date; or |
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(b) |
any demand for payment as a result of an Event of Default
pursuant to Section 5.1. |
| 2.4 |
Place and Manner of Payment |
All sums to be paid the Lender pursuant to the
terms of this Agreement, whether for principal, interest or
otherwise, shall be paid to the Lender at its offices as designated
pursuant to Article 7 hereof.
The obligations of the Borrower to make all
payments of amounts due with respect to the Loan shall be absolute
and unconditional, and shall not be affected by any circumstance,
including without limitation, any set-off, compensation,
counter-claim, recoupment, defence or other right which the
Borrower may have against the Lender or anyone else for any reason
whatsoever.
Proceeds from the Loan granted hereunder shall
be used solely for the purpose of satisfying and paying costs and
expenses of the Borrower associated with:
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(a) |
the acquisition of the Northern Gravel and Super Mammoth 5
gravel claims by the Borrower, through its wholly owned subsidiary;
and |
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(b) |
accounts payable and general working capital. |
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(a) |
All interest, fees and other amounts payable by a party
hereunder shall accrue daily, be computed as described herein, and
be payable both before and after maturity, default and
judgment. |
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(b) |
To the maximum extent permitted by law, the covenant of a party
to pay interest at the rates provided herein shall not merge in any
judgment relating to any obligation of such party . |
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(c) |
In no event shall any interest, fees or other amounts payable
hereunder exceed the maximum rate permitted by law. In the event
and for so long as any such interest or fee exceeds such maximum
rate, such interest or fee shall be reduced to the maximum rate
recoverable under law. |
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(d) |
The records and entries kept and made by the Lender shall
constitute prima facie evidence of the matters recorded therein and
the existence and amounts of the obligations of the parties
hereunder, provided, however, that the failure of the Lender to
record or to correctly record any such amount or date shall not
affect the obligation of a party to pay amounts actually due
hereunder in accordance with this Agreement. |
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(e) |
All principal, interest, fees and other amounts payable
hereunder shall be paid by a party in United States Dollars on the
day such amount is due by cheque or time of deposit to the account
of the party entitled thereto or transfer thereof to the account of
such party in Vancouver, British Columbia. |
| 2.8 |
General Indemnity of the Borrower |
To the extent not otherwise provided for herein,
the Borrower shall indemnify, defend and hold harmless the Lender
from and against any and all losses, costs, expenses, damages,
claims or liabilities incurred by the Lender with respect to any
Loan to the Borrower hereunder whether before, during or after any
period that such Loan are outstanding including, without
limitation, any loss of profits, commissions or fees anticipated
hereunder, and any expense or cost incurred in the liquidation and
re-deployment of any f
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