Exhibit 10.19
LOAN RESTRUCTURE AND
SUBSCRIPTION AGREEMENT
This Agreement is made as of July 26, 1999, between GLOBAL MEDIA CORP.,
a Washington corporation (the "Company"), and SANDCASTLE INN LTD. (the
"Lender").
BACKGROUND
A. Between November 15, 1997 and March 31, 1999, the Lender advanced
funds to the Company on an open account (the "Advances"), and the Company made
partial payments against the Advances, in the amounts listed on the attached
EXHIBIT A.
B. In connection with the Company's recent convertible debt offering,
the Company and the Lender agreed to restructure and document the Advances as
set forth in this Agreement.
AGREEMENT
In consideration of the terms and conditions of this Agreement, the
parties agree as follows:
1. CONFIRMATION OF AMOUNT AND TITLE. The Lender confirms and agrees
that the outstanding principal amount of the Advances as of the date of this
Agreement is Cdn $200,000 (approximately U.S. $132,776 as of the date of this
Agreement). The Lender represents and warrants that it is the sole owner of the
Advances and that it has not transferred, assigned, pledged, mortgaged, or
conveyed any of its interest in the Advances.
2. RESTRUCTURE. Upon execution and delivery of this Agreement, the
Company shall execute and deliver to the Lender:
2.1 NOTE. A Note in the initial principal amount of Cdn
$115,000 (approximately U.S. $76,346 as of the date of this Agreement), in
substantially the form attached as EXHIBIT B (the "Note"). The initial Note
amount is equal to Cdn $100,000 (one-half of the current balance of the Advances
and approximately U.S. $66,388 as of the date of this Agreement) plus Cdn
$15,000 (approximately U.S. $9,958 as of the date of this Agreement) in accrued
interest.
2.2 SHARES. Instructions to the Company's Transfer Agent to
issue a certificate representing 12,215 shares of the Company's common stock
(the "Shares"), subject to Section 5.4, below. The number of Shares is equal to
U.S. $66,388 (one-half of the current balance of the Advances) plus U.S. $9,958
in accrued interest, divided by $6.25.
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3. CANCELLATION OF ADVANCES. The Lender hereby accepts the Note and the
Shares as payment in full of the Advances, and cancels any obligation of the
Company to repay the Advances, except as set forth in the Note.
4. SUBSCRIPTION. The Lender hereby irrevocably subscribes for the
Shares at a price of $6.25 per share, for a total purchase price of $76,346. The
Lender certifies that it is an "Accredited Investor" as defined in Regulation D
of the Securities Act of 1933, as amended.
5. OTHER SECURITIES ISSUES.
5.1 RISK OF LOSS. The Lender recognizes that an investment in
the Company involves certain substantial risks which could result in the loss of
the Lender's entire investment.
5.2 INVESTMENT INTENT. The Lender certifies that it is
purchasing the Note and the Shares for investment for its own account and not on
behalf of any other person, nor with a view to, or for resale or other
distribution of the Note or the Shares.
5.3 NO REGISTRATION. The Lender acknowledges and understands
that: (a) the Note and the Shares have not been registered under either federal
or state securities laws; (b) the Note and the Shares are being offered and sold
to the Lender pursuant to Section 4(2) or other exemption available under the
Securities Act of 1933, as amended, and comparable state securities exemptions;
and (c) no federal or state agency has made any finding or determination as to
the fairness of this offering for investment, nor any recommendation or
endorsement of the Note or the Shares.
5.4 LEGEND. The Lender consents to the placement of a legend
on the Note and all certificates representing the Shares in substantially the
following form:
These securities have not been registered under the Securities
Act of 1933, the Securities Act of Washington, or the
securities act of any other state. They may not be sold or
offered for sale in the absence of an effective registration
statement under the applicable act, or an opinion of counsel
satisfactory to the issuer of the securities that an exemption
under the applicable act is available and that such
registration is not required.
5.5 RESTRICTIONS ON TRANSFER. The Lender understands and
acknowledges that: (a) no assignment, sale, transfer, exchange or other
disposition of the Note or the Shares can be made except in accordance with
applicable federal and state securities laws; (b) the Note and the Shares cannot
be sold or otherwise distributed in the absence of registration or an exemption
from the registration requirements of federal and state securities laws; and (c)
the Company is not obligated to take any actions to register the Note or the
Shares or make available any exemptions from federal or state registration
requirements.
5.6 RESIDENCE. The Lender certifies that it is a resident of
the jurisdiction set forth beneath its signature.
6. GENERAL PROVISIONS.
6.1 ASSIGNMENT; BENEFIT. No party may voluntarily or
involuntarily assign its interest under this Agreement without the prior written
consent of the other party. Subject to the
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foregoing, this Agreement shall be binding upon and shall be for the benefit
of the parties and their respective successors and assigns.
6.2 AMENDMENT; WAIVER. The provisions of this Agreement, or of
any agreement or document executed in connection with this Agreement, may be
amended or waived only in a written agreement signed by the party against which
enforcement of such amendment or waiver is sought. Any waiver of any right or
breach under this Agreement shall not be construed as a waiver of any other or
any subsequent right or breach.
6.3 SEVERABILITY. If any portion of this Agreement is held to
be invalid by a court of competent jurisdiction, the remaining terms of this
Agreement shall remain in full force and effect to the extent possible.
6.4 GOVERNING LAW; VENUE. This Agreement shall be governed by
and construed in accordance with the laws of the State of Washington, other than
its conflict of law rules. The parties consent to the jurisdiction of and venue
in any appropriate court in King County, Washington.
6.5 INDEPENDENT COUNSEL. The Lender acknowledges that it has
been represented by independent legal counsel with regard to this Agreement, and
has had an adequate opportunity to seek independent legal counsel with regard to
all documents executed in connection with this Agreement. The Lender
acknowledges that Xxxxx Xxxxxx Xxxxxxxx LLP has represented the Company and has
not represented the Lender.
6.6 NOTICES. The parties shall deliver any notices required
under this Agreement in writing by personal or courier delivery, facsimile
transmission, or by registered or certified mail, return receipt requested,
postage prepaid, to the addresses set forth below, or to such other address as
specified by a party in writing. Notices shall be deemed effective as of the
date of personal or courier delivery, confirmed facsimile transmission, or three
days after the date on the postmark affixed to the notice.
6.7 ASSIGNMENT; BENEFIT. No party may voluntarily or
involuntarily assign its interest under this Agreement without the prior written
consent of the other party. Subject to the foregoing, this Agreement shall be
binding upon and shall insure to the benefit of the parties and their respective
successors and assigns.
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IF TO THE COMPANY: WITH A COPY TO:
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Global Media Corp. Xxxxx Xxxxxx Xxxxxxxx LLP
000 Xxxxxx Xxxxxx 0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX Xxxxxx X0X 0X0 0000 Xxxxxx Xxxxxx
FACSIMILE: (000) 000-0000 Xxxxxxx, Xxxxxxxxxx 00000-0000
ATTENTION: Xxxxx X. Xxxxxx, FACSIMILE: (000) 000-0000
Chief Financial Officer ATTENTION: Xxxxxxx X. Xxxxxxxxx, Esq.
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IF TO LENDER: WITH A COPY TO:
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_____________________________________ _____________________________________
_____________________________________ _____________________________________
Facsimile:___________________________ Facsimile:___________________________
Attention: __________________________ Attention: __________________________
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6.8 ATTORNEY FEES. The prevailing party in any arbitration or
litigation concerning this Agreement is entitled to reimbursement of its
reasonable attorneys' fees, costs and expenses from the non-prevailing party,
including fees, costs and expenses incurred on appeal or in bankruptcy
proceedings.
6.9 ENTIRE AGREEMENT. This Agreement, its attached schedules
and exhibits, and the documents executed in connection with this Agreement,
contain the entire agreement of the parties with respect to the subject matter
of this Agreement, and supersede any and all prior agreements, written or oral,
relating to their subject matter.
6.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original but all of which
together will constitute the same instrument.
Executed as of the first date written above.
LENDER:
SANDCASTLE INN LTD.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
--------------------------------
Title:
-------------------------------
Jurisdiction of Residence:
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COMPANY:
GLOBAL MEDIA CORP.
By: /s/ L. Xxxxx Xxxxxx
----------------------------------
Name: L. Xxxxx Xxxxxx
Title: Chief Financial Officer
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EXHIBIT A
ADVANCE AND PAYMENT HISTORY
CUMULATIVE TOTAL
DATE CANADIAN FUNDS (CANADIAN FUNDS)
$ $
11/15/97 5,950 5,950
11/30/97 840 6,790
12/05/97 7,588 14,378
12/05/97 465 14,843
12/05/97 480 15,323
12/09/97 138 15,761
12/15/97 11,214 26,975
12/15/97 785 27,760
12/31/97 3,061 30,821
12/31/97 187 31,008
01/03/98 2,210 33,218
01/12/98 2,091 35,309
137 35,446
01/14/98 3,327 38,773
232 39,005
02/02/98 6,000 45,005
03/03/98 1,935 46,940
03/05/98 2,182 49,122
03/25/98 332 49,454
04/02/98 11,095 60,549
04/27/98 (13,283) 47,266
04/28/98 (12,000) 35,266
04/30/98 2,266 37,534
05/01/98 1,824 39,358
05/03/98 200 39,558
05/15/98 10,948 50,506
05/19/98 8,970 59,476
05/31/98 7,844 67,320
06/05/98 (20,000) 47,320
06/03/98 857 48,177
06/05/98 (20,000) 28,177
06/15/98 7,505 35,682
06/15/98 625 36,307
06/18/98 3,698 40,005
06/30/98 9,438 49,443
06/30/98 12,000 61,443
07/03/98 (11,573) 49,870
07/09/98 8,967 58,837
07/10/98 5,000 63,837
07/31/98 6,140 69,977 (YEAR END)
08/07/98 13,173 83,150
08/07/98 (15,000) 68,150
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08/11/98 623 68,773
08/18/98 10,000 78,773
08/21/98 10,000 88,773
08/24/98 10,000 98,773
09/01/98 10,000 108,773
09/15/98 10,000 118,773
09/23/98 5,000 123,773
09/28/98 50,000 173,773
10/01/98 6,000 179,773
10/16/98 5,000 184,773
10/19/98 10,000 194,773
03/31/99 (194,773) 0
03/31/99 200,000 200,000
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EXHIBIT B
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, THE
SECURITIES ACT OF WASHINGTON, OR THE SECURITIES ACT OF ANY OTHER STATE. THEY MAY
NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE APPLICABLE ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER OF THE SECURITIES THAT AN EXEMPTION UNDER THE APPLICABLE ACT IS AVAILABLE
AND THAT SUCH REGISTRATION IS NOT REQUIRED.
NOTE
PRINCIPAL: Cdn $115,000.00 DATE: July 26, 1999
1. PROMISE TO PAY. In return for value received, GLOBAL MEDIA CORP.
("Borrower") promises to pay to the order of SANDCASTLE INN LTD. ("Lender"), at
the address below the Lender's signature, or at such other place as Lender may
designate, the principal amount of One Hundred Fifteen Thousand Canadian Dollars
(Cdn $115,000), plus interest and all other sums due under this Note.
2. INTEREST. Interest on the unpaid principal balance of this Note
shall accrue daily at rate 9% per annum, until all sums due under this Note are
paid in full.
3. PAYMENTS. Borrower shall make payments of Cdn $28,750 in principal
plus accrued and unpaid interest to Lender on October 31, 1999, January 31,
2000, April 30, 2000, and July 31, 2000 (the "Due Date"). On the Due Date, the
Borrower shall also pay to Lender all outstanding principal, accrued interest,
and any other unpaid sums due under this Note. The Borrower may completely or
partially prepay this Note at any time. The Borrower, however, must continue to
make all payments when due, despite any prepayments. Lender shall apply every
payment or prepayment first to Lender's charges and costs, then to unpaid
accrued interest due under this Note, and then to the principal balance.
4. DEFAULT. Lender may declare the Borrower to be in default, and all
amounts due under this Note immediately due in full if the Borrower fails to
make any payment when due under this Note. However, Lender's failure to exercise
any right available to it upon the Borrower's default, or to strictly enforce
any term of this Note, the Loan Agreement or the Security Documents, does not
constitute a waiver of that right or term.
5. USURY. Lender and the Borrower specifically intend this Note to bear
a lawful rate of interest. If any competent court finds that this Note's rate of
interest is unlawful, the interest rate shall be reduced to the highest legal
rate. Lender shall apply any excess interest previously collected to this Note's
unpaid principal balance, or, if this Note is fully repaid, return it to the
Borrower.
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6. WAIVERS. The Borrower and all other persons liable or to become
liable on this Note waive presentment, demand of payment, notice of dishonor,
protest, notice of nonpayment, and all other notices and demands.
7. APPLICABLE LAW, JURISDICTION; VENUE. This Note shall be governed by,
construed, and enforced under the laws of the state of Washington. The Borrower
submits to the jurisdiction and venue of any court located in King County,
Washington.
8. ATTORNEY FEES AND COSTS. The Borrower agrees to pay all of Lender's
reasonable costs incurred, with or without legal action, in collecting any
amounts due under this Note, or upon appeal or bankruptcy proceedings, including
attorneys' fees incurred as a result of a lawsuit, appeal and/or bankruptcy
proceeding.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FOREBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
GLOBAL MEDIA CORP.
By: /s/ L. Xxxxx Xxxxxx
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Name: L. Xxxxx Xxxxxx
Title: Chief Financial Officer
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