EXHIBIT 10.18
LOAN RESTRUCTURE AND
SUBSCRIPTION AGREEMENT
This Agreement is made as of July 26, 1999, between GLOBAL MEDIA CORP., a
Washington corporation (the "Company"), and XXXXXXXX XXXXXXXX (the "Lender").
BACKGROUND
A. Between October 1, 1998 and December 1, 1998, 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 $220,552. 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 $127,000, in
substantially the form attached as EXHIBIT B (the "Note"). The initial Note
amount is equal to $110,276 (one-half of the current balance of the Advances)
plus $16,724 in accrued interest.
2.2 SHARES. Instructions to the Company's Transfer Agent to issue a
certificate representing 15,631 shares of the Company's common stock (the
"Shares"), subject to Section 5.4, below. The number of Shares is equal to
$110,276 (one-half of the current balance of the Advances) plus $16,724 in
accrued interest, divided by $8.125.
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 $8.125 per share, for a total purchase price of $127,000. 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.
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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 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.
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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:
------------------------------------- ---------------------------------------
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:
------------------------------------- ---------------------------------------
___________________________________ ____________________________________
___________________________________ ____________________________________
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.
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Executed as of the first date written above.
LENDER:
XXXXXXXX XXXXXXXX
/s/ XXXXXXXX XXXXXXXX
------------------------------------
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
DATE CDN FUNDS EXCHANGE RATE US FUNDS CUMULATIVE TOTAL
(US FUNDS)
$ $ $ $
10/01/98 50,407 1.47 34,290.48 34,290
10/13/98 (31,250) 1.47 (21,258.50) 13,032
10/23/98 (15,575 1.47 (10,595.20) 2,437
11/20/98 150,000 1.47 102,040.80 104,478
12/08/98 100,000 1.47 68,027.21 172,506
12/09/98 30,000 202,505
12/29/98 (11,000) 191,505
12/01/98 28,890 220,395
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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: $127,000.00 DATE: July 26, 1999
1. PROMISE TO PAY. In return for value received, GLOBAL MEDIA CORP.
("Borrower") promises to pay to the order of Xxxxxxxx Xxxxxxxx ("Lender"), at
the address below the Lender's signature, or at such other place as Lender may
designate, the principal amount of One Hundred Twenty-Seven Thousand Dollars
($127,000.00), 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 $31,750.00 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.
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
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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
------------------------------
Name: L. Xxxxx Xxxxxx
Title: Chief Financial Officer
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