Exhibit 10.3
 
LOAN AGREEMENT
 
Loan Agreement (“Agreement”) dated as of March 30, 2007 between Pure Vanilla
eXchange, Inc., a Nevada corporation (the “Company”), and George W. Bennedict
(the “Lender”).
 
WITNESSETH:
 
Whereas, the Company borrowed $40,000, $8,333.33 and $8,333.33 from Lender on
March 15, 2007, March 20, 2007 and March 23, 2007, respectively, and Lender may
make additional loans to the Company from time to time, (individually, a “Loan”
and, collectively, the “Loans”): and
 
Whereas, Lender and the Company have agreed that each such Loan shall be
represented by a Promissory Note, in the form of Exhibit A attached hereto,
which shall be delivered by the Company to the Lender in connection with each
such Loan; and
 
Whereas, to induce the Lender to make each Loan, the Company will issue to the
Lender in connection with each such Loan warrants (the “Warrants”) exercisable
to purchase shares of the Company’s Common Stock, par value $0.001 (“Common
Stock”) at a exercise price of $0.80 per share (the “Exercise Price”), in the
form attached as Exhibit B;
 
Now, Therefore, in consideration of the foregoing premises and the covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
 
ARTICLE 1
Loans, Notes and Warrants, Etc.
 
Section 1.1 Loans, Notes and Warrants.
 
(a) Loans. At any time on or after the date hereof, and until 5:00 on June 30,
2007, the Lender may elect to make one or more Loans to the Company. Such
election shall be made by delivering to the Company a Notice of Election to Make
Loan in the form of Exhibit C to this Agreement (an “Election Notice”),
appropriately completed to reflect the amount of the Loan then proposed to be
made by him, together with the principal amount of such Loan either by (i)
delivering to the Company with such Election Notice a certified or cashier’s
check in the amount of such Loan or (ii) effecting, prior to or concurrently
with the delivery of such Election Notice, a wire transfer in immediately
available funds to an account designated in writing by the Company. If the
Company chooses to accept such Loan, it shall execute such Election Notice and
return it to the Lender with the other Loan Documents (as hereinafter defined).
The Company my reject any such election, in its sole discretion, in which event
it shall return all tendered documents and funds to the Lender.
 
 
 

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(b) Loan Documents.
 
(i) Promptly (but in any event within three (3) business days) after the receipt
of an Election Notice accompanied by the principal amount of the Loan as
provided in Section 1.1(a), unless the Company does not elect to receive the
Loan proposed to be made pursuant to such Election Notice, the Company shall
deliver to the Lender (A) one or more Notes, in the form of Exhibit A (the
outstanding principal amount of each such Note to be as reasonably requested by
the Lender) representing the Loan then being made by the Lender, (B) one or more
Warrants registered in the name of the Lender or his nominee (in such
proportions as may reasonably be requested by the Lender) entitling the Lender
or his nominee, if any, to purchase an aggregate number of shares of Common
Stock that is equal to 25% of the amount of the principal amount of the Loan
then being made by the Lender divided by the Exercise Price, exercisable for
five years from the date upon which the Company accepts the applicable Loan, and
(C) a certificate of an officer of the Company certifying that the
representations of the Company contained in Section 2.1 of this Agreement were
true and correct when made and continue to be true and correct as of the date of
such certificate.
 
(ii) All of the shares of Common Stock that may be acquired by the Lender upon
exercise of the Warrants are referred to in this Agreement as the “Warrant
Shares”.
 
(iii) The date of this Agreement and date upon which the Company has accepted
any Loan from the Lender are each referred to herein as a “Closing Date”.
 
ARTICLE 2
Representations and Warranties
 
Section 2.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Lender as of the date
hereof and as of the applicable Closing Date:
 
(a) Organization and Qualification; Material Adverse Effect. The Company is a
corporation duly incorporated and existing in good standing under the laws of
the State of Nevada and has the requisite corporate power to own its properties
and to carry on its business as now being conducted. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary.
 
(b) Authorization; Enforcement. (i) The Company has all requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Notes and the Warrants and to issue the Warrant Shares in
accordance with the terms of the Warrants, (ii) the execution and delivery of
this Agreement, the Notes and the Warrants by the Company and the consummation
by it of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors (or any committee or subcommittee thereof) or
stockholders is required, (iii) this Agreement has been and the Notes and the
Warrants will be duly executed and delivered by the Company, and (iv) this
Agreement, the Notes and the Warrants constitute and will constitute, as the
case may be, valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of creditors’ rights and remedies or by other equitable principles of general
application.
 
 
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(c) Issuance of Shares. The Warrant Shares are duly authorized and reserved for
issuance and, upon exercise of the Warrants in accordance with the terms
thereof, such Warrant Shares will be validly issued, fully paid and
non-assessable, free and clear of any and all liens, claims and encumbrances,
and the holders of such Shares shall be entitled to all rights and preferences
accorded to a holder of the Common Stock.
 
(d) No Conflicts. The execution, delivery and performance of this Agreement, the
Notes and the Warrants by the Company, the consummation by the Company of the
transactions contemplated hereby and thereby and the issuance of the Notes and
the Warrants do not and will not (i) result in a violation of the Company’s
charter or by-laws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument
to which the Company or any of its subsidiaries is a party or (iii) result in a
violation of any federal, state, local or foreign law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected, except (other than in the case of clause (i) above) where
such violation would not reasonably be expected to have a Material Adverse
Effect (as defined below). For purposes of this Agreement, “Material Adverse
Effect” shall mean any adverse effect on the business, operations, properties or
financial condition of the Company and which is (either alone or together with
all other adverse effects) material to the Company taken as a whole. The
business of the Company is being conducted in material compliance with (i) its
charter and by-laws, and (ii) all applicable laws, ordinances or regulations of
any governmental entity, except (other than in the case of clause (i) above)
where such violation would not reasonably be expected to have a Material Adverse
Effect. Except for filings, consents and approvals required under applicable
state and federal securities laws, the Company is not required under federal,
state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Notes and the Warrants.
 
 
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Section 2.2 Representations and Warranties of the Lender. The Lender makes the
following representations and warranties to the Company as of the date hereof
and on each Closing Date:
 
(a) Authorization; Enforcement. (i) The Lender has the requisite power and
authority to enter into and to perform its under this Agreement and to make the
Loans and (ii) this Agreement constitutes the valid and binding obligation of
the Lender enforceable against him in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of creditors’ rights and remedies or by
other equitable principles of general application.
 
(b) No Conflicts. The execution, delivery and performance of this Agreement and
the consummation by the Lender of the transactions contemplated hereby do not
and will not (i) conflict with any agreement, indenture or instrument to which
the Lender is a party, or (ii) result in a material violation of any law, rule,
or regulation, or any order, judgment or decree of any court or governmental
agency applicable to the Lender. The Lender is not required to obtain any
consent or authorization of any governmental agency in order to perform his
obligations under this Agreement.
 
(c) Investment Representations.
 
(i) Access to Information. The Lender acknowledges that he has had full and
complete access to the books and records and to the management of the Company.
The Lender acknowledges that the Company has made available to him the
opportunity to examine such documents from the Company and to ask questions of,
and receive full answers from, the Company concerning, among other things, the
Company, its financial condition, its management, its prior activities and any
other information which the Lender considers relevant or appropriate in
connection with entering into this Agreement.
 
(ii) Risks of Investment. The Lender acknowledges that the Notes, the Warrants
and the Shares (together, the “Securities”) have not been registered under the
Securities Act of 1933, as amended (the “Act”). The Lender is familiar with the
provisions of Rule 144 under the Act and understands that in the event all of
the applicable requirements of Rule 144 are not satisfied, registration under
the Act or some other exemption from the registration requirements of the Act
will be required in order to dispose of the Notes, the Warrants and the Shares,
and that the Lender may be required to hold the Notes, the Warrants and the
Shares for a significant period of time prior to reselling them. The Lender is
capable of assessing the risks of an investment in the Securities and is fully
aware of the economic risks thereof.
 
(iii) Investment Intent. The Lender will acquire the Securities for his own
account and not with a view to distribution in violation of any securities laws.
The Lender has no present intention to sell any of the Securities in violation
of federal or state securities laws and such Lender has no present arrangement
(whether or not legally binding) to sell any of the Securities to or through any
person or entity; provided, however, that by making the representations herein,
the Lender does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with federal and state securities laws applicable to such
disposition.
 
 
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(iv) Restricted Securities. The Lender acknowledges and understands that the
terms of issuance of the Securities have not been reviewed by the U.S.
Securities and Exchange Commission (the “SEC”) or by any state securities
authorities and that the Securities will be issued in reliance on the certain
exemptions for non-public offerings under the Act, which exemptions depend upon,
among other things, the representations made and information furnished by the
Lender, including the bona fide nature of the Lender’s investment intent as
expressed above.
 
(v) Ability to Bear Economic Risk. The Lender is an “accredited investor” as
defined in Rule 501 of Regulation D under the Act, and that he (i) is able to
bear the economic risk of his investment in the Securities, (ii) is able to hold
the Securities for an indefinite period of time, (iii) can afford a complete
loss of its investment in the Securities and (iv) has adequate means of
providing for his current needs.
 
(vi) No Public Solicitation. At no time was the Lender presented with or
solicited by any general mailing, leaflet, public promotional meeting, newspaper
or magazine article, radio or television advertisement, or any other form of
general advertising or general solicitation in connection with the issuance.
 
(vii) Reliance by the Company. The Lender understands that the Securities will
be offered and sold in reliance on a transactional exemptions from the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Lender set
forth herein in order to determine the applicability of such exemptions and the
suitability of the Lender to acquire the Securities.
 
ARTICLE 3
Covenants

Section 3.1 Warrants on Exercise. Upon any partial exercise by the Lender (or
then holder of the Warrants) of the Warrants, the Company shall issue and
deliver to the Lender (or holder) within ten (10) business days of the date on
which such Warrants are exercised, a new Warrant or Warrants representing the
number of adjusted Warrant Shares in accordance with such Warrants.
 
 
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Section 3.2 Replacement Warrants. The Warrants will be exchangeable at the
option of the Lender (or then holder of the Warrants) at the office of the
Company for other Warrants of different denominations entitling the holder
thereof to purchase in the aggregate the same number of Warrant Shares as are
purchasable under such Warrants. No service charge will be made for such
transfer or exchange.
 
Section 3.3 Reservation of Stock Issuable Upon Exercise of the Warrants. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
exercise of the Warrants such number of its shares of Common Stock as shall from
time to time be sufficient to effect the full exercise of the Warrants, and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the exercise of all the then outstanding Warrants
and the conversion of all then outstanding Notes, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose, including without limitation engaging in
best efforts to obtain the requisite shareholder approval.
 
Section 3.4 Registration Rights.

(a) Right to Piggy Back. If, at any time, the Company proposes or is required to
register any of its equity securities under the Act (other than pursuant to
registrations on Form S-4 or Form S-8 or such form or similar form(s) solely for
registration of securities in connection with an employee benefit plan or
dividend reinvestment plan or a merger, consolidation or acquisition) whether
for its own account or the account of other security holders, the Company shall
give prompt written notice of its intention to do so to the holder of each
Registrable Securities (as defined below). Upon the written request of any
holder, made within 15 days following the receipt of any such written notice
(which request shall specify the maximum number of Registrable Securities
intended to be disposed of by such holder and the intended method of
distribution thereof), the Company shall use, subject to Sections 3.4(c) and
3.4(e) hereof, its best efforts to cause all such Registrable Securities, the
holders of which have so requested the registration thereof, to be registered
under the Act (with the securities which the Company at the time proposes to
register) to permit the sale or other disposition by the holders (in accordance
with the intended method of distribution thereof) of the Registrable Securities
to be so registered. There is no limitation on the number of such piggyback
registrations pursuant to the preceding sentence which the Company is obligated
to effect.

(b) Registrable Securities. For purposes of this Agreement, the term
“Registrable Securities” means (i) shares of Common Stock issued or issuable
upon exercise of the Warrants and (ii) any securities received by way of a stock
split or as a dividend with respect to such shares and any security into which
such shares may hereafter be changed or for which such shares may be exchanged
(by way of reorganization, recapitalization, merger, consolidation or
otherwise). As to any particular Registrable Securities, such securities will
cease to be Registrable Securities when (i) they have been effectively
registered under the Act and disposed of in accordance with the registration
statement covering them, or (ii) they may be transferred pursuant to Rule 144
under the Act (or any successor to such rule).
 
 
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(c) Abandonment or Delay. If, at any time after giving written notice of its
intention to register any equity securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay registration
of such equity securities, the Company may, at its election, give written notice
of such determination to all holders of record of Registrable Securities and (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
abandoned registration, without prejudice, however, to the rights of holders
under Section 3.4, and (ii) in the case of a determination to delay such
registration of its equity securities, permitted to delay the registration of
such Registrable Securities for the same period as the delay in registering such
other equity securities.

(d) Holder’s Right to Withdraw. Any holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 3.4 by giving written notice to the Company
of its request to withdraw; provided, however, that (i) such request must be
made in writing prior to the earlier of the execution of the underwriting
agreement or the execution of the custody agreement with respect to such
registration and (ii) such withdrawal shall be irrevocable and, after making
such withdrawal, a holder shall no longer have any right to include Registrable
Securities in the registration as to which such withdrawal was made.

(e) Cutbacks.

(i)  If the managing underwriter of any underwritten offering shall inform the
Company by letter of its belief that the number of Registrable Securities
requested to be included in a registration under this Section 2.2 would
materially adversely affect such offering, then the Company will include in such
registration, first, the securities being included in such registration by the
holder(s) of securities initiating such registration pursuant to the terms of
any contractual demand registration rights that may be granted to any person
other than pursuant to this Agreement (or, if the Company initiates the
registration, the securities being included in such registration by the
Company), and second, Registrable Securities requested to be included in such
registration and any other securities of the Company the holders of which have
been granted piggy back registration rights, pro rata based on the number of
shares that such holders of Registrable Securities and such other securities
have requested for inclusion (without regard to whether such other piggy back
registration rights were granted before or after the date hereof).

(ii) If, in connection with a financing of the Company in an amount exceeding
$5,000,000 (a “Substantial Financing”), the investor or investors object to the
inclusion of the Registrable Securities in a registration statement of
securities of the issued in connection with such financing, the Lender or
holders agree to either waive their rights to have their Warrant Shares included
in such registration statement unless they agree to a lock-up of the Warrant
Shares for a period set by the investors not exceeding 9 months from the
effective date of the registration statement.
 
 
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(iii) If the aggregate number of shares of the Company’s common stock included
in a registration statement filed to register securities issued or issuable in a
Substantial Financing exceeds the number of securities which the Securities and
Exchange Commission, by rule or administrative practice, will be permitted to be
registered at one time (the “Registration Maximum”), the Lender or holders agree
that such number of Registrable Securities may be, pro rata with other
securities registered for other holders who have been granted piggy back rights,
removed from the registration statement until the Registration Maximum is
reached.
 
ARTICLE 4
Legend and Stock
 
Each Note, each certificate representing Warrants and any shares of Common Stock
issued upon exercise of the Warrants shall be stamped or otherwise imprinted
with a legend substantially in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE TRANSFERRED, ASSIGNED, SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL, IN
FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT
REQUIRED BECAUSE OF AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

The Company agrees to reissue Notes or Warrants, and to issue or reissue
certificates representing Warrant Shares, as the case may be, without the legend
set forth above, at such time as (i) the holder thereof is permitted to dispose
of such Notes, Warrants and/or Shares pursuant to Rule 144 under the Act, or
(ii) such Notes, Warrants and/or Shares are sold to a purchaser or purchasers
who (in the opinion of counsel to the seller or such purchaser(s), in form and
substance reasonably satisfactory to the Company and its counsel) are able to
dispose of such shares publicly pursuant to an effective registration or
exemption.
 
Unless the Warrant Shares are registered under the Act, certificates
representing such hares shall bear a legend in the same form as the legend
indicated above. Nothing herein shall limit the right of any holder to pledge
these securities pursuant to a bona fide margin account or lending arrangement.
 
 
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ARTICLE 5
Miscellaneous
 
Section 5.1 Stamp Taxes. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of the Notes, Warrants and/or the
Shares.
 
Section 5.2 Entire Agreement; Amendment. This Agreement, together with the
Notes, the Warrants and the agreements and documents executed in connection
herewith and therewith, contains the entire understanding of the parties with
respect to the matters covered hereby and thereby, supercedes any prior
understanding, memoranda or other written or oral agreements between or among
any of them respecting the matters covered hereby and thereby and, except as
specifically set forth herein or therein, neither the Company nor the Lender
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
 
Section 5.3 Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing by mail, facsimile or personal delivery
and shall be effective upon actual receipt of such notice. The addresses for
such communications shall be given to the Company at 805 Third Avenue, New York,
NY 10022 and to the Lender at the address shown on the signature page to this
Agreement. Either party hereto may from time to time change its address for
notices by giving at least 10 days written notice of such changed address to the
other party hereto.

Section 5.4 Indemnity. Each party shall indemnify each other party against any
loss, cost or damages (including reasonable attorney’s fees but excluding
consequential damages) incurred as a result of such party’s breach of any
representation, warranty, covenant or agreement in this Agreement; or incurred
as a result of the enforcement of this indemnity.
 
Section 5.5 Waivers. No waiver by either party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
 
Section 5.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
Section 5.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns.
 
 
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Section 5.8 No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
 
Section 5.9 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to conflicts of laws principles.
 
Section 5.10 Survival. The representations and warranties and the agreements and
covenants of the Company and the Lender contained herein shall survive the
Closing.
 
Section 5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that both parties need not sign the same counterpart.
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

    COMPANY:            PURE VANILLA EXCHANGE, INC.            By:  /s/ Steven
Yevoli        Name: Steven Yevoli        Title: CEO              LENDER:       
      George W. Bennedict      GEORGE BENNEDICT      74 South Main Street     
Southampton, NY 11968 

 
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EXHIBITS AND SCHEDULES

Exhibit A
Form of Note
   
Exhibit B
Form of Warrant
   
Exhibit C
Form of Notice of Election to Make Loan

 
 
 

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Exhibit A

Form of Note
 
 
 

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Exhibit B

Form of Warrant
 
 
 

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Exhibit C

Notice of Election to Make Loan

Pure Vanilla eXchange, Inc.
805 Third Avenue
New York, NY 10022

Gentlemen:

Reference is made to a Loan Agreement dated as of March 29, 2007 (the
“Agreement”) between Pure Vanilla Exchange, Inc., a Delaware corporation (the
“Company”), and the undersigned.

Pursuant to Section 1.1(a)(ii) of the Agreement, the undersigned proposes to
make a Loan to the Company in the principal amount of $_______.

a. In connection therewith, the undersigned is delivering to the Company the sum
of $100,000 (check one)

[__] by wire transfer to the account of the Company
[__] by delivery to the Company of a certified or cashier’s check in such
amount, concurrently with the delivery of this notice.

b. The undersigned confirms that each of the representations and warranties
contained in Section 2.2 of the Agreement is true and correct with respect to
the undersigned as of the date of this Notice.

IN WITNESS WHEREOF, the undersigned has executed this Notice of Election to Make
Loan on ____________, 2007.

    Lender:                  George Bennedict            Address:  74 South Main
Street        Southampton, NY 11968 

 
 
 

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