LOAN AGREEMENT
THIS AGREEMENT is made as of
October 2, 2009,
BETWEEN:
EDEN
ENERGY CORP. , a
corporation incorporated under the
laws of Nevada, having an office at 1680- 200 Burrard Street,
Vancouver, British Columbia V6C 3L6
(the “ Borrower ”)
AND:
D
Sharpe Management Inc. ,
a businessman with an address at
1281 Eldon Road, North Vancouver, British Columbia V7R
1T5
(the “ Lender ”)
WHEREAS:
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A.
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The Lender is the President and a
director of the Borrower. The Borrower has requested and the Lender
has agreed to lend to the Borrower an aggregate principal amount of
up to $1,000,000 (the “ Loan ”), to be used by
the Borrower for general corporate purposes;
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B.
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The Borrower has agreed to
provide the Lender with security for the Loan in the form of a
pledge and security agreement (the “ Security
Agreement ”) in the form attached as Schedule
“A” granting to the Lender a first ranking security
interest in all of the present and after acquired property of the
Lender (the “ Collateral ”); and
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C.
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The parties wish to record the
terms and conditions of the Loan to be made pursuant to the terms
of this Agreement.
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NOW THEREFORE THIS AGREEMENT
WITNESSES that pursuant to the premises and in consideration of the
mutual covenants contained in this Agreement and the agreement of
the Lender to advance funds to the Borrower, the parties covenant
and agree as follows:
1.
LOAN
1.1
Loan . The Lender will make the Loan available to the
Borrower, to be drawn down in an initial draw of $500,000 and, upon
the provision of 30 days written notice to the Lender, further
draws of not less than $50,000, to an aggregate maximum of
$1,000,000. An advance will be made by the Lender thirty (30) days
following the receipt of a draw request and Borrower’s
Certificate in the form attached as Schedule “B”
(“ Draw Request ”). Each Draw request must
state:
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(a)
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that the Borrower will use the
funds to be advanced by the Lender upon receipt of the Draw Request
for the operation of the Borrower’s business;
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(b)
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the total amount of all previous
draw requests (if any);
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(c)
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the amount of funds requested,
provided that the sum of the amount requested and the aggregate
amount of all previous draw requests cannot exceed
$1,000,000;
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(d)
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the details of the
Borrower’s bank account into which the funds are to be paid;
and
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(e)
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a confirmation that no default
exists under this Agreement.
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1.2
Closing. Subject to section 1.4 below, t he Lender
will make the first advance of $500,000 to the Borrower on
execution of this Agreement or such other date as the parties may
agree.
1.3
Interest
Rate . The Loan is to bear interest from the date any funds are
advanced to the Borrower to the date of full repayment of all
amounts outstanding under the Loan at 20% per annum,
accruing daily before as well as after maturity, default or
judgment (the “ Interest Rate ”). Interest shall
be payable quarterly, in arrears, commencing January 5, 2010, and
quarterly thereafter, for the initial draw. For subsequent draws,
interest shall be payable three months after such draws, in
arrears, and quarterly thereafter.
1.4
Loan
Facilitation Fee . The undrawn amount of the Loan shall
bear interest at the rate of 1% per month (the “ Loan
Facilitation Fee ”), which amount shall be payable
quarterly, commencing three months after the date of this
Agreement.
1.5
Conditions Precedent to Advance. The Lender will not have any
obligation to advance all or any portion of the Loan to the
Borrower until all of the following have been fulfilled to the
Lender’s satisfaction:
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(a)
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the Borrower has executed and
delivered this Agreement and the Security Agreement;
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(b)
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the Borrower has executed and
delivered to the Lender a Draw Request and Promissory Note;
and
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(c)
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all filings necessary or
advisable have been made in the appropriate jurisdictions and there
exists valid, perfected and enforceable security over the
Collateral.
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1.6
Payment of Principal and Interest. The Borrower will pay to
the Lender in full the principal amount of the Loan and all accrued
and unpaid Loan Facilitation Fee amounts and Interest on the
earlier to occur of:
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(a)
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October 5, 2010, subject to
extension upon mutual agreement of the Lender and Borrower;
or
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(b)
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an Event of Default occurring
hereunder.
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1.7
Prepayment. The Borrower may prepay the Loan in whole or
in part, at any time and from time to time without notice, bonus or
penalty.
1.8
Applications of Payments. All payments of cash made by the
Borrower to the Lender are to firstly be applied to interest,
secondly to any outstanding Loan Facilitation Fee amount and
thirdly to the principal balance outstanding under the
Loan.
1.9
Promissory Notes. The Loan is to be evidenced by promissory
notes (each, a “ Promissory Note ”) in the form
attached hereto as Schedule “C”, issued by the Borrower
to the Lender for the amount of each and every advance.
1.10
Manner of
Payments . The Borrower will make all payments to the
Lender under this Agreement by wire transfer, cheque, direct
deposit or bank draft in immediately available funds to such
account or accounts of the Lender the Lender may direct from time
to time.
1.11
Withholding
Taxes . If the Borrower is required by law to withhold
from any payment required to be made to the Lender under this
Agreement or a Promissory Note, any amount on account of any taxes
imposed by the laws of Canada, or the laws applicable therein, the
Borrower will make the withholding and pay the amount withheld to
the appropriate governmental authority before penalties attach or
interest accrues. The amount of any payment required to be made
hereunder by the Borrower to the Lender is to be reduced by any
amount withheld and paid in respect of such payment in accordance
with this Section. Upon request of the Lender, the Borrower will
deliver to the Lender official tax receipts evidencing such
payments.
2.
SECURITY AGREEMENT
2.1
Security
Agreement. The Loan advanced under this Agreement is to be
secured by the Security Agreement in the form required by the
Lender, and the Borrower agrees to execute and deliver, or cause to
be delivered, an original copy of the Security Agreement for at the
time of execution of this Agreement.
3.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Borrower. The
Borrower represents and warrants to the Lender that:
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(a)
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it has been duly incorporated,
validly exists and is in good standing under the jurisdiction of
its incorporation and each jurisdiction where it carries on
business and has been duly licensed to carry on business in all
jurisdictions where it is carrying on business,
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(b)
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it has the power and authority to
enter into, execute and deliver and to keep, observe and perform
all of the covenants, agreements and other obligations made by or
imposed on it under this Agreement and the Security Agreement
(together the “ Loan Documents ”),
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(c)
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the Loan Documents and all other
instruments and agreements delivered by the borrower to the Lender
pursuant to this Agreement have been or will be validly executed by
it or on its behalf and, when delivered to the Lender, will be
legal, valid and binding obligations of it, enforceable in
accordance with their respective terms, except as enforcement may
be limited by,
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(i)
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applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws at the time
in effect affecting the rights of creditors generally,
and
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(ii)
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equitable principles which may
limit the availability of certain remedies, including the remedy of
specific performance,
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(d)
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the execution, delivery and
performance by it of the Loan Documents does not contravene any
material provision of any regulation, order or permit applicable to
it, or cause a breach of or constitute a default under or require
any consent under any agreement or instrument to which it is a
party or by which it is bound except such as have been
obtained,
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(e)
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there are no suits or judicial
proceedings or proceedings before any governmental commission,
board or other agency, actual, pending or to its knowledge
threatened against it which involves a significant risk of a
judgment or liability which, if satisfied, would have an adverse
effect upon its financial position or the ability to meet its
obligations under this Agreement or to grant the Loan
Documents,
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(f)
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it is not in default under any
guarantee, note or other instrument evidencing any indebtedness,
other than as disclosed in writing to the Lender by the Borrower,
and to its knowledge there exists no state of facts which, after
notice or lapse of time or both or otherwise, would constitute such
a default, and
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(g)
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no event is outstanding which
constitutes, or with notice or lapse of time or both would
constitute, an Event of Default (as defined below).
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4.
COVENANTS
4.1
Affirmative Covenants. Until such time that the Loan and any
outstanding Interest are repaid in full, the Borrower
will:
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(a)
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pay all amounts due and owing to
the Lender when due;
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(b)
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at all times maintain its
corporate existence and be registered or licensed to carry on
business in all jurisdictions where the nature of its business
makes it prudent to do so;
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(c)
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preserve and protect the
goodwill, assets, business and undertaking of the
Borrower;
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