LOAN AGREEMENT

 

 

THIS AGREEMENT, dated for reference the 24th day of May, 2007, is made

 

BETWEEN:

COACH CAPITAL LLC, having an address of EPS-D (2016), PO Box 02-5548, Miami, Florida, USA, 33102

(hereinafter referred to as the “Lender”)

AND:	RADIAL ENERGY INC., a company incorporated under the laws of the State of Nevada, having an office at 1200 Smith Street, Suite 1600, Two Allen Center Building, Houston, Texas, USA, 77002

(hereinafter referred to as the “Borrower”)

 

WHEREAS the Borrower wishes to borrow and the Lender is willing to lend to the Borrower the sum of One Million, Three Hundred Thousand Dollars in US funds (US$1, 300,000) on the terms hereinafter set out.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

 

1.	Definitions

 

Where used in this Agreement, the following words and phrases shall have the following meaning:

 

(a)	“Agreement” means this Agreement and the schedules hereto, as at any time amended or modified and in effect;

 

(b)	“Charter” means the Memorandum and Articles, the Articles and By-Laws or other constating documents of the Borrower, as at any time amended or modified and in effect;

 

(c)	“Event of Default” means any event specified in subsection 7.1;

 

(d)	“Lender’s Security” means the Note;

 

(e)	“Loan” means the loan by the Lender to the Borrower established pursuant to subsection 3.1; and

 

(f)	“Note” means the non-interest bearing promissory note to be made by the Borrower to the Lender as evidence of the Loan which shall substantially be in the form set out in Schedule “A”.

 

2.	INTERPRETATION

 

2.1	Governing Law

 

This Agreement is governed by the laws of the State of Nevada and the parties attorn to the non-exclusive jurisdiction of the courts of Nevada for the resolution of all disputes under this Agreement.

 

 

2.2	Severability

 

If any one or more of the provisions contained in this Agreement is found to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby.

 

2.3	Parties in Interest

 

This Agreement enures to the benefit of and is binding on the parties hereto and their respective successors and permitted assigns.

 

2.4	Headings and Marginal References

 

The division of this Agreement into sections, subsections, paragraphs and subparagraphs and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement.

 

2.5

Currency

 

All statements of, or references to, dollar amounts in this Agreement means lawful currency of the United States of America.

 

3.

THE LOAN

 

3.1	Establishment of the Loan

 

The Lender agrees, on the terms and conditions set forth in this Agreement, to lend to the Borrower the sum of One Million, Three Hundred Thousand Dollars ($1,300,000).

 

3.2	Evidence of Indebtedness

 

Indebtedness of the Borrower to the Lender in respect of the Loan will be evidenced by the Note, which will be made by the Borrower to the Lender at the time funds are advanced, a copy of which form is attached hereto as Schedule “A”.

 

3.3	Repayment of the Loan

 

The Borrower will repay the Loan upon demand from the Lender. The Borrower may repay the Loan at any time without penalty, bonus or charges and must pay the Loan immediately after repaying the convertible debts issued by Cornell Capital Partners LP and before the repayment to any other long term debt currently outstanding or not yet incurred.

 

3.4

Interest

 

The Loan will be subject to a Two Percent (2%) interest charge calculated monthly and payable on a monthly basis on the seventeenth day of each month the Agreement is in effect commencing June 17, 2007.

 

In the event the Borrower is unable to pay any interest charge due and owing to the Lender on the required date, the Lender may, at its option, grant an extension in respect of the interest payment in question or render the whole Loan due and payable.

 

 

3.5	Conversion into Securities

 

During the term of the Agreement, the Lender will have the option to convert the Loan, or any portion thereof, into securities of the Borrower.

 

In the event the Lender wishes to convert the loan into shares, the shares will be offered at a price per share of (a) $1.0536 (the “Fixed Conversion Price”) or (b) ninety percent (90%) of the lowest daily volume weighted average price during the fifteen (15) trading days immediately preceding the Conversation Date (the “Market Conversion Price”).

 

In any event, no amount of the Loan will be convertible into shares of the Borrower until such time as the Borrower has repaid the convertible debts issued by Cornell Capital Partners LP.

 

A Notice of Conversion is attached hereto as Schedule “B”.

 

4.	SECURITY FOR THE LOAN

 

4.1	Costs, Charges and Expenses

 

The Borrower will assume and pay all costs, charges and expenses, including reasonable solicitors’ costs, charges and expenses on a special costs basis, which may be incurred by the Lender in respect of this Agreement or the Lender’s Security or which may be incurred by the Lender in respect of any proceedings taken or things done by the Lender in connection therewith to collect, protect, realize or enforce the Lender’s Security.

 

5.	REPRESENTATIONS AND WARRANTIES

 

5.1	Representations and Warranties

 

The Borrower represents and warrants to the Lender that:

 

(a)	the Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada;

 

(b)	the Borrower has all requisite corporate power and authority to enter into this Agreement and to grant the Lender’s Security and to carry out the obligations contemplated herein and therein;

 

(c)	this Agreement and the Lender’s Security have been duly and validly authorized, executed and delivered by the Borrower and are valid obligations of it; and

 

(d)	no Event of Default and no event which, with the giving of notice or lapse of time would become an Event of Default, has occurred or is continuing.

 

5.2	Survival of Representations and Warranties

 

All representations and warranties made herein will survive the delivery of this Agreement to the Lender and no investigation at any time made by or on behalf of the Lender shall diminish in any respect whatsoever its rights to rely on those representations and warranties. All statements contained in any certificate or other instrument delivered by or on behalf of the Borrower under or pursuant to this Agreement will constitute representations and warranties made by the Borrower thereunder.

 

 

6.	COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees with the Lender that, at all times during the currency of this Agreement, it will:

 

(a)	pay the Loan and all other monies required to be paid to the Lender pursuant to this Agreement in the manner set forth herein;

 

(b)	duly observe and perform each and every of its covenants and agreements set forth in this Agreement and the Lender’s Security;

 

(c)	provide the Lender with immediate notice of any Event of Default; and

 

(d)	do all things necessary to obtain and maintain the Lender’s Security in good standing and make payment of all fees and charges in respect thereto.

 

7.	EVENT OF DEFAULT

 

7.1	Definition of Event of Default

 

The Loan, costs and any other money owing to the Lender under this Agreement will immediately become payable upon demand by the Lender or, unless otherwise waived in writing by the Lender, in any of the following events:

 

(a)	if the Borrower defaults in any payment when due under this Agreement;

 

(b)	if the Borrower commits any default under any of the Lender’s Security instruments;

 

(c)

if the Borrower becomes insolvent or makes a general assignment for the benefit of its creditors, or if any order is made or an effective resolution is passed for the winding-up, merger or amalgamation of the Borrower or if the Borrower is declared bankrupt or if a custodian or receiver be appointed for the Borrower under the applicable bankruptcy or insolvency legislation, or if a compromise or arrangement is proposed by the Borrower to its creditors or any class of its creditors, or if a receiver or other officer with like powers is appointed for the Borrower;

 

(d)	if the Borrower defaults in observing or performing any other covenant or agreement of this Agreement on its part to be observed or performed and such default has continued for a period of seven (7) days after notice in writing has been given by the Lender to the Borrower specifying the default.

 

8.

GENERAL

 

8.1	Waiver or Modification

 

No failure on the part of the Lender in exercising any power or right hereunder will operate as a waiver of power or right nor will any single or partial exercise of such right or power preclude any other right or power hereunder. No amendment, modification or waiver of any condition of this Agreement or consent to any departure by the Borrower therefrom will be effective unless it is in writing signed by the Lender. No notice to or demand on the Borrower will entitle the Borrower to any other further notice or demand in similar or other circumstances unless specifically provided for in this Agreement.

 

 

8.2

Time

 

Time is of the essence of this Agreement.

 

8.3	Further Assurances

 

The parties to this Agreement will do, execute and deliver or will cause to be done, executed and delivered all such further acts, documents and things as may be reasonably required for the purpose of giving effect to this Agreement.

 

8.4	Assignment

 

The Borrower may not assign this Agreement or its interest herein or any part hereof except with the prior written consent of the Lender.

 

9.

NOTICES

 

 

9.2	If notice is sent by fax, telex, telegram or is delivered, it will be deemed to have been given at the time of transmission or delivery.

 

9.3	If notice is mailed, it will be deemed to have been received 48 hours following the date of mailing of the notice.

 

9.4	If there is an interruption in normal mail service due to strike, labour unrest or other cause at or before the time a notice is mailed the notice will be sent by fax, telex, telegram or will be delivered.

 

10.	AMENDMENTS

 

This Agreement may be amended, waived, discharged, or terminated only by instrument in writing signed by the party against whom enforcement of the amendment, waiver, discharge or termination is sought.

 

 

11.	EXECUTION IN COUNTERPART

This Agreement may be signed in counterpart and each such counterpart, whether in original or facsimile form, together shall constitute a true original and provide satisfactory evidence that this Agreement has been duly executed by the parties hereto.

 

IN WITNESS WHEREOF the Lender and the Borrower have executed and delivered this Agreement as of the day and year first written above.