QuantRx Biomedical Corporation Doylestown, PA 18901 RE: Letter Loan Agreement Ladies and Gentlemen:
January
23, 2008
QuantRx
Biomedical Corporation
000
X.
Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
RE: Letter
Loan Agreement
Ladies
and Gentlemen:
1. Loan.
This
letter when fully executed will constitute a loan agreement (this “Agreement”)
between Platinum
Long Term Growth VII LLC
(the
“Lender”)
and
QuantRx Biomedical Corporation, a Nevada corporation (the “Borrower”),
pursuant to which the Lender, on the terms and conditions provided herein,
shall
agree to make one or more loans to or for the benefit of the Borrower hereunder
in an amount not to exceed $1,407,246.58 (the “Loan”).
The
day on which the Lender makes the Loan is referred to herein as the
“Closing
Date.”
The
Lender’s obligation to make the Loan is subject to the Borrower’s fulfillment of
each of the applicable conditions set forth in Section 3 hereof.
2. Loan
Documents.
a. Notes.
The
Loan shall be evidenced by a senior secured convertible promissory note issued
to the Lender in the principal amount of the Loan, dated the date the Borrower
receives the funds from the Lender, in the form attached hereto as Exhibit
A
(together with any replacements and substitutes therefore, the “Note”).
The
principal amount of the Loan and interest thereon, calculated at the rate of
10%
per annum, as provided in the Note, shall be payable as set forth more
particularly therein. A portion of the Loan shall be made by the Lender’s
cancellation and surrender to the Borrower of the Senior Secured Convertible
Promissory Note, dated October 15, 2007, of the Borrower issued to the Lender
upon exercise of the exchange rights of the Lender set forth in Section 7 of
such surrender note. On or before February 13, 2008, the Lender may, in its
discretion, elect to make an additional loan (the “Platinum
Follow-On Investment”)
in the
amount of $500,000, which additional loan shall be on substantially the same
terms as the Loan hereunder (including with respect to Section 2(b) below)
and
evidenced by a senior secured convertible promissory note in substantially
the
form of the Note (and be deemed an “Other Note” hereunder and under the Note).
b. Warrants.
In
consideration for the Loan, for each $100,000 of new principal loaned to the
Borrower by the Lender (including the Platinum Follow-On Investment, if made),
the Borrower shall issue to the Lender a warrant (the “Warrant”),
in
the form attached hereto as Exhibit
B,
for the
issuance of 25,000 shares of common stock of the Borrower at an exercise price
of $1.25 per share and a five-year term.
c. Accredited
Investor.
The
Lender hereby represents and warrants that it is an “accredited investor” as
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended
d. This
Agreement, the Note and any other instruments or documents required or
contemplated hereunder or thereunder (including, without limitation, the Pledge
Agreement and the IP Security Agreement (each as defined below)), whether now
existing or at any time hereafter arising, are herein referred to as the
“Loan
Documents.”
3. Conditions
Precedent.
a. Documents
to be Delivered.
The
obligation of the Lender to make the Loan is subject to the due execution and
delivery by the Borrower (or the Borrower causing the due execution and
delivery) to the Lender of each of the following (all documents to be in form
and substance satisfactory to the Lender):
i. This
Agreement, the Note and each other instrument, agreement and document to be
executed and/or delivered pursuant to this Agreement and/or the instruments,
agreements and documents referred to in this Agreement.
ii. A
certified copy of the resolutions of the Board of Directors (or if the Board
of
Directors takes action by unanimous written consent, a copy of such unanimous
written consent containing all of the signatures of the members of the Board
of
Directors) of the Borrower, dated as of the Closing Date, authorizing the
execution, delivery and performance of the Loan Documents.
iii. A
certificate, dated as of the Closing Date, signed by an executive officer of
the
Borrower to
the
effect that the representations and warranties set forth in Section 4 of this
Agreement are true and correct as of the Closing Date.
b. Absence
of Certain Events.
The
occurrence of a Material Adverse Effect (as defined below) shall not have
occurred or be occurring as of the Closing Date.
4. Representations
and Warranties of the Borrower.
To
induce the Lender to make the Loan, the Borrower hereby represents and warrants
to the Lender that at and as of the date hereof:
a. The
Borrower has been duly incorporated and is validly existing and in good standing
under the laws of the state of Nevada, with full corporate power and authority
to own, lease and operate its properties and to conduct its business as
currently conducted.
The
Borrower is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary and where
the
failure so to qualify would have a Material Adverse Effect. “Material
Adverse Effect”
means
any material adverse effect on the ability of the Borrower to perform its
obligations hereunder or under the Loan Documents or on the business,
operations, properties or financial condition of the Borrower.
b. Each
of
the Loan Documents has been duly authorized, validly executed and delivered
on
behalf of the Borrower and is a valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy
or
other laws affecting the enforcement of creditors’ rights generally, and the
Borrower has full power and authority to execute and deliver this Agreement
and
the Loan Documents and to perform its obligations hereunder and
thereunder.
c. The
execution, delivery and performance of this Agreement and the Loan Documents
will not (i) conflict with or result in a breach of or a default under any
of
the terms or provisions of (A) the Borrower’s articles of incorporation or
by-laws, or (B) any material provision of any indenture, mortgage, deed of
trust
or other material agreement or instrument to which the Borrower is a party
or by
which it or any of its material properties or assets is bound, (ii) result
in a
violation of any material provision of any law, statute, rule, regulation,
or
any existing applicable decree, judgment or order by any court, Federal or
state
regulatory body, administrative agency, or other governmental body having
jurisdiction over the Borrower, or any of its material properties or assets
or
(iii) result in the creation or imposition of any material lien, charge or
encumbrance upon any material property or assets of the Borrower or any of
its
subsidiaries pursuant to the terms of any agreement or instrument to which
any
of them is a party or by which any of them may be bound or to which any of
their
property or any of them is subject, except, in the cases of (i), (ii) and (iii)
above, as would not have a Material Adverse Effect.
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d. No
consent, approval or authorization of or designation, declaration or filing
with
any governmental authority on the part of the Borrower is required in connection
with the valid execution and delivery of this Agreement or the Loan
Documents.
5. Miscellaneous.
a. The
Borrower has executed and delivered to the Lender a Stock Pledge Agreement
(the
“Pledge
Agreement”),
substantially in the form attached hereto as Exhibit
C,
and the
Patent, Trademark and Copyright Security Agreement (the “IP
Security Agreement”
and,
together with the Pledge Agreement, the “Security
Documents”),
substantially in the form attached hereto as Exhibit
D,
together with all certificates and documentation required under each such
document (including, without limitation, stock certificates and stock powers
referenced therein). The
Borrower hereby authorizes the Lender to file any UCC financing statements
evidencing the security interests granted in the Security
Documents.
b. In
the
event that Other Notes (as defined in the Note) are issued, the security
interest granted pursuant to the Security Documents shall be deemed to be
granted pro rata for the benefit of the Lender and each purchaser of such Other
Notes (collectively, and together with the Lender, the “Purchasers”)
pro
rata, based on the aggregate principal amount of the Notes, PIK Notes (as
defined in the Notes) and Other Notes (collectively, the “Notes”)
held
by each Purchaser. The Borrower shall not issue any Other Notes unless the
Purchaser(s) of such Other Notes shall have agreed to the terms set forth below
regarding the Collateral Agent (as defined below):
i. Each
Purchaser shall be deemed to appoint the Lender as the Collateral Agent under
the Security Documents (the “Collateral
Agent”)
and
each Purchaser authorizes the Collateral Agent to take such action as agent
on
its behalf and to exercise such powers under the Security Documents as are
delegated to the Collateral Agent under such agreements and to exercise such
powers as are reasonably incidental thereto. Without limiting the foregoing,
each Secured Party hereby authorizes the Collateral Agent to execute and
deliver, and to perform its obligations under, each of the documents to which
the Collateral Agent is a party relating to security for the obligations under
the Notes, to exercise all rights, powers and remedies that the Collateral
Agent
may have under such Security Documents and, in the case of the Security
Documents, to act as agent for the Purchasers under such Loan
Documents.
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ii. The
Collateral Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of
the Purchasers holding at least 51% of the aggregate amount of the Notes then
outstanding, and such instructions shall be binding upon all Purchasers;
provided,
however,
that
the Collateral Agent shall not be required to take any action that (i) the
Collateral Agent in good faith believes exposes it to personal liability unless
the Collateral Agent receives an indemnification satisfactory to it from the
Purchasers with respect to such action or (ii) is contrary to this Agreement
or
applicable law.
iii. In
performing its functions and duties under the Security Documents and the other
documents required to be executed or delivered in connection therewith, the
Collateral Agent is acting solely on behalf of the Purchasers and its duties
are
entirely administrative in nature. The Collateral Agent does not assume and
shall not be deemed to have assumed any obligation other than as expressly
set
forth herein. The Collateral Agent may perform any of its duties under any
Security Document by or through its agents or employees.
iv. None
of
the Collateral Agent, any of its affiliates or any of their respective
directors, officers, agents or employees shall be liable for any action taken
or
omitted to be taken by it, him, her or them under or in connection with the
Security Documents, except for its, his, her or their own gross negligence
or
willful misconduct.
v. Each
Secured Party acknowledges that it shall, independently and without reliance
upon the Collateral Agent or any other Secured Party conduct its own independent
investigation of the financial condition and affairs of the Company and its
Subsidiaries in connection with the issuance of the Securities. Each Secured
Party also acknowledges that it shall, independently and without reliance upon
the Collateral Agent or any other Secured Party and based on such documents
and
information as it shall deem appropriate at the time, continue to make its
own
credit decisions in taking or not taking action under this Agreement and other
Loan Documents.
vi. Each
Purchaser agrees to indemnify the Collateral Agent and each of its affiliates,
and each of their respective directors, officers, employees, agents and advisors
(to the extent not reimbursed by the Borrower), from any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements (including fees, expenses and disbursements of
financial and legal advisors) of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against, the Collateral Agent or any of
its
affiliates, directors, officers, employees, agents and advisors in any way
relating to or arising out of the Security Documents or any action taken or
omitted by the Collateral Agent under the Security Documents or the document
related thereto; provided,
however,
that no
Purchaser shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Collateral Agent’s or such Affiliate’s gross
negligence or willful misconduct.
vii. The
Collateral Agent may resign at any time by giving written notice thereof to
the
Purchasers and the Company. Upon any such resignation, the Purchasers shall
have
the right to appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed by the Purchasers, and shall have accepted
such appointment, within 30 days after the retiring Collateral Agent’s giving of
notice of resignation, then the retiring Collateral Agent may, on behalf of
the
Purchasers, appoint a successor Collateral Agent, selected from among the
Purchasers. Upon the acceptance of any appointment as Collateral Agent by a
successor Collateral Agent, such successor Collateral Agent shall succeed to,
and become vested with, all the rights, powers, privileges and duties of the
retiring Collateral Agent, and the retiring Collateral Agent shall be discharged
from its duties and obligations under this Agreement, the Loan Documents and
any
other documents required to be executed or delivered in connection therewith.
Prior to any retiring Collateral Agent’s resignation hereunder as Collateral
Agent, the retiring Collateral Agent shall take such action as may be reasonably
necessary to assign to the successor Collateral Agent its rights as Collateral
Agent under the Loan Documents. After such resignation, the retiring Collateral
Agent shall continue to have the benefit of this Agreement as to any actions
taken or omitted to be taken by it while it was Collateral Agent under this
Agreement, the Security Documents and any other documents required to be
executed or delivered in connection therewith.
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viii. Each
Purchaser agrees that any action taken by the Collateral Agent in accordance
with the provisions of this Agreement or of the other document relating thereto,
and the exercise by the Collateral Agent or the Purchasers of the powers set
forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the
Purchasers.
ix. Each
of
the Purchasers hereby directs, in accordance with the terms hereof, the
Collateral Agent to release (or in the case of clause (ii) below, release or
subordinate) any Lien held by the Collateral Agent for the benefit of the
Purchasers against any of the following: (i) all of the Collateral upon payment
and satisfaction in full of all obligations under the Notes and all other
obligations under the Loan Documents that the Collateral Agent has been notified
in writing are then due and payable; (ii) any assets that are subject to a
Lien;
and (iii) any part of the Collateral sold or disposed of by the Company if
such
sale or disposition is permitted by this Agreement and the other Loan Documents
(or permitted pursuant to a waiver or consent of a transaction otherwise
prohibited by this Agreement and the other Loan Documents). Each of the
Purchasers hereby directs the Collateral Agent to execute and deliver or file
such termination and partial release statements and do such other things as
are
necessary to release Liens to be released pursuant to this Section promptly
upon
the effectiveness of any such release.
x. Each
Purchaser acknowledges that the security interests evidenced by the Security
Documents is subject to termination as set forth in Section 5(c)
below.
c. Notwithstanding
anything to the contrary contained herein, in the Security Documents or in
any
documents evidencing the Other Notes (including any agreements with Purchasers
other than the Lender), the security interest evidenced by the Security
Documents shall be terminated and of no further force and effect on and after
February 14, 2008 unless, (i) an Event of Default shall have occurred under
the
Notes and be continuing or (ii) on or prior to February 13, 2008, the Lender
shall have fully funded the Platinum Follow-On Investment. Upon any such
termination, Lender shall promptly return any collateral under the Security
Documents to the Company and take any action reasonably requested by the Company
to cause the release of the security interests created under the Security
Documents. In the event the Lender shall have funded the Platinum Follow-On
Investment, the security interests created under the Security Documents will
remain in full force and effect.
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d. The
Company shall pay the legal fees and expenses of the Lender in an amount equal
to $7,500 (which amount may be withheld from funds delivered by the Lender
at
closing hereunder or delivered by the Company promptly following closing
hereunder); provided that it is understood that no additional legal fees and
expenses shall be due to Lender in connection with the Platinum Follow-On
Investment.
e. The
representations and warranties of the Borrower contained herein shall not
survive the Closing Date.
f. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without
giving effect to conflicts of laws principles that would result in the
application of the substantive laws of another jurisdiction. This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted.
g. Each
of
the Borrower and the Lender (i) hereby irrevocably submits to the jurisdiction
of the United States District Court sitting in the Southern District of New
York
and the courts of the State of New York located in New York county for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or the Loan Documents and (ii) hereby waives, and agrees not to assert
in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that the suit, action or proceeding
is brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Each of the Borrower and the Lender consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
to
such party at the address set forth in the Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing in this Section 5(d) shall affect or limit any right to serve process
in
any other manner permitted by law.
h. Any
forbearance, failure, or delay by the Lender in exercising any right, power,
or
remedy shall not preclude the further exercise thereof, and all of the Lender’s
rights, powers, and remedies shall continue in full force and effect until
specifically waived in writing by the Lender.
i. This
Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party.
j. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
k. If
any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
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l. This
Agreement, the Note and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein. No provision of this Agreement may be waived or amended other than
by
an instrument in writing signed by the party to be charged with
enforcement.
m. This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. The Borrower shall not assign this Agreement
or
any rights or obligations hereunder without the prior written consent of the
Lender. Notwithstanding the foregoing, the Lender may assign its rights
hereunder to any other person or entity without the consent of the
Borrower.
n. 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.
o. All
remedies of the Lender under this Agreement, the Note and the other Loan
Documents (i) are cumulative and concurrent, (ii) may be exercised
independently, successively or together with other lenders against the Borrower,
(iii) shall not be exhausted by any exercise thereof, but may be exercised
as
often as occasion therefore may occur, and (iv) shall not be construed to be
waived or released by the Lender’s delay in exercising, or failure to exercise,
them or any of them at any time it may be entitled to do so.
p. All
notices required hereunder shall be made in accordance with Section 17 of the
Note.
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By
executing the appropriate signature line below, the Borrower, intending to
be
legally bound hereby, agrees to the terms and conditions of this Agreement
as of
the date hereof.
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Very
truly yours,
Platinum
Long Term Growth VII LLC
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| By: | ||
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Name: |
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| Title: | ||
QuantRx
Biomedical Corporation
By:
Name:
Xxxxxx X. Xxxxxxxxx
Title:
Chairman & CEO
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Exhibit
A
[Form
of
Note]
9
Exhibit
B
[Form
of
Warrant]
10
Exhibit
C
[Stock
Pledge Agreement]
11
Exhibit
D
[IP
Security Agreement]
12
