EX 10.1
LOAN AGREEMENT
DATE: 28th day of October, 2004
PARTIES:
1. Xxxx Xxx Xxxxx (Xxxxxxxx) ("Lender")
2. Human BioSystems ("Borrower")
RECITALS:
1. Borrower requires the principal sum of two million three hundred
thousand (2,300,000) Euros (the "Principal Amount") to use as working capital,
acquisitions and for any other company purpose that is approved by the Board of
Directors of the Borrower.
2. Lender is willing to loan funds to Borrower pursuant to the terms and
conditions of this Loan Agreement (the "Agreement"), to be secured by twenty-
three million (23,000,000) shares of Borrower's Reg S restricted common stock
(the "Shares").
3. The Shares will be released to the Lender upon maturity of the loan term
if the loan is unpaid, as set forth in that certain Escrow Agreement of even
date herewith between Borrower and Lender.
4. The Lender understands the Shares may be used only as security and will
not sell the Shares into the market. The Lender will inform any person or
entity to whom the Shares are pledged as security of the terms and conditions of
this Agreement and the Escrow Agreement, so that said person or entity
understands and agrees that the Shares may be not be sold or otherwise
transferred.
5. Lender and Borrower by this Agreement wish to record the terms and
conditions governing the loan and security contemplated by this Agreement.
LENDER AND BORROWER AGREE AS FOLLOWS:
1. ADVANCE Lender shall advance by way of loan to Borrower, the full Principal
Amount (the "Loan") by wire transfer, to Borrower's bank within 15 calendar days
from the date of this Agreement. If the entire Principal Amount is not received
by Borrower by the 15th calendar day from the date of this Agreement, then the
Lender shall be considered to be in default of this Loan Agreement under Section
7 hereof.
2. LOAN-FEES Borrower shall pay Lender a non-refundable fee of 70,000 Euros
(3.5% of the Principal Amount) less 10,000 Euros for Escrow costs incurred by
Borrower, upon Lender advancing the Principal Amount to Borrower pursuant to
this Agreement.
3. INTEREST
(a) The Loan bears interest at the rate of 3% per year. Interest is
calculated on the unpaid principal balance of the Loan, starting on the date the
Loan is advanced by Lender until fully repaid. Interest which has accrued in
this fashion over all or part of a calendar month is payable on the first day of
the next calendar month.
(b) All overdue interest shall be treated as principal, and interest as set
out above is payable on it.
4. REPAYMENT The Loan is due and payable on the 1st of November, 2007. No
later than five (5) business days before the due date of the Loan, Borrower
shall deposit into escrow, pursuant to the Escrow Agreement attached hereto as
Exhibit B, funds in an amount equal to the unpaid balance of the Loan (including
accrued but unpaid interest thereon), and Lender shall deposit into escrow the
Shares. The Escrow Agreement shall govern the release of the funds and the
Shares. In the event
5. PREPAYMENT Borrower may prepay all or part of the Loan at any time
without notice, bonus or penalty. No later than five (5) business days before
the any such prepayment of the Loan, Borrower shall deposit into escrow,
pursuant to the Escrow Agreement attached hereto as Exhibit B, funds in an
amount equal to the amount to be prepaid. The Escrow Agent shall then notify
Lender of the deposit, and Lender shall deposit into escrow Shares with a value
equal to such prepayment. The Escrow Agreement shall govern the release of the
funds and the Shares.
6. DEFAULT BY BORROWER The Borrower shall be considered to be in default of
this Loan Agreement if any part of the loan and accrued interest is unpaid after
the 1st of November, 2007. The Escrow Agreement shall govern the release of
shares held in escrow to Lender in the event the loan is not paid in full after
this date.
7. DEFAULT BY LENDER The Lender shall be considered to be in default of
this Loan Agreement if the Principal Amount is not received by Borrower by the
15th calendar day following the date of this Loan Agreement. In the event of
such default, the Borrower shall have the right to cause the shares issued to
Lender to be cancelled immediately, without notice to Lender and without any
further obligation by Borrower to Lender.
8. SECURITY
(a) Borrower hereby grants to Lender as security, Reg S shares of the
Borrower. Upon receipt of the Shares, Lender shall deposit the certificate or
certificates representing the Shares with a bank or other financial institution
of Lender's choice, in return for a Bank Safekeeping Receipt in the form of
Exhibit "A" hereto. Lender shall promptly forward a copy of said Bank
Safekeeping Receipt to Borrower. Borrower shall execute such additional
agreements, charges and covenants in this regard as Lender may require and as
acceptable to Borrower. To the extent permitted by law, Borrower waives its
rights to receive copies of any registrations, financing statements, or other
evidence of registration.
(b) Borrower shall use the Principal Amount for the purpose of general
working capital, acquisitions and any other purposes as approved by the Board of
Directors of Borrower.
9. GENERAL PROVISIONS
(a) The parties' addresses for notice are: (i) Lender: Xxxx Xxx Xxxxx;
Schlloeslihaldi 22; 6006 Luzern; Switzerland, (address) Borrower: Human
BioSystems, 0000 Xxxxxx Xxx, Xxxx Xxxx, XX 00000; U.S.A. (address)
(b) A party can change his or its notice address to another address by
giving notice in the manner permitted by this agreement. Any notice required or
permitted under this Agreement can be sent by any means, but it is not effective
until:
(i) the first weekday after the day it is delivered, and
(ii) "delivered" means actual arrival at the address provided for in
this Agreement for the addressee, in legible form (or where sent by fax or e-
mail, produced and printed).
(c) Borrower shall execute and deliver to Lender such further assurances,
conveyances and documents as may be necessary to carry out the intention of this
Agreement.
(d) Borrower must perform every one of its obligations in this Agreement,
except to the extent Lender has given the Borrower a written waiver of
performance. Lender's failure to fully enforce this agreement is not a waiver.
(e) This Agreement can only be amended by written agreement signed by both
Lender and Borrower.
(f) This Agreement is governed by the laws of the State of California and
the U.S. Federal Law. The parties hereby irrevocably attorn to the jurisdiction
of the courts of the State of California, which courts have sole and exclusive
jurisdiction over all disputes or matters arising from this agreement.
(g) Time is of the essence with respect to performance of obligations in
this Agreement.
(h) Borrower cannot assign its obligations under this Agreement, except with
Lender's previous written consent. Lender can assign this Agreement.
(i) This Agreement is binding upon and enures to the benefit of the parties
hereto and their respective successors and assigns.
(j) This Agreement, the Bank Safekeeping Receipt and the Escrow Agreement
constitute the entire agreement between Lender and Borrower regarding the Loan.
Where there is a conflict between the terms of this Agreement and the Escrow
Agreement, the Escrow Agreement shall prevail.
SIGNED:
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Chief Executive Officer
By: /s/ Xxxx Xxx Xxxxx (Xxxxxxxx)
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Xxxx Xxx Xxxxx (Xxxxxxxx)
Lender
