LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") date this 12th day of August, 1998, is
made by and between FRONTEER CAPITAL, INC., a Delaware corporation ("Lender")
whose address is 0000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxx 00000, and
GLOBAL MED TECHNOLOGIES, INC., a Colorado corporation ("Borrower") whose address
is 00000 Xxxx Xxxxxx Xxxxxx, Xxxxx X000, Xxxxxxxx, Xxxxxxxx 00000.
RECITALS
A. Borrower and Lender entered into that certain Loan Commitment ("Loan
Commitment") whereby Lender has agreed to commit to make a loan ("Loan") as
described in Section 1.01 of this Agreement; and
B. Lender and Borrower desire to formalize the terms of the Loan in
accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreement contained herein and other good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged, Lender and
Borrower hereby covenant and agree as follows:
ARTICLE 1.
THE LOAN
1.1. Agreement to Borrow and Lend. Subject to all of the terms, provisions,
conditions, covenants and agreements contained in this Agreement, Lender agrees
to make available to Borrower a Loan in the maximum principal amount of up to
$1,650,000.00 ("Maximum Loan Amount"). The Loan may be drawn in amounts of not
less than $250,000.00 as and when required by Borrower.
1.2. Promissory Note. The Loan will be evidenced by one or more Promissory
Notes ("Notes") substantially in the form attached hereto as Exhibit A and
incorporated herein by reference, executed by Borrower and delivered to Lender,
which in the aggregate do not exceed the Maximum Loan Amount. The outstanding
principal balance of each Note shall bear interest at the rate of twelve (12%)
per annum. Interest shall accrue and be paid monthly on the last day of each
month during the term of the Notes. If not sooner paid, the entire outstanding
principal balance of the Notes, together with all accrued but unpaid interest
thereon, all additional interest and all other sums due thereunder, shall be due
and payable in full on April 15, 1999.
1.3. Loan Fee and Other Costs. Pursuant to the Loan Commitment, Borrower
issued to Lender a Warrant to Purchase Common Shares relating to 1,000,000
shares of Borrower's common stock. Upon Borrower making its first draw against
the Loan, Borrower will, as additional consideration for Lender making the Loan
to Borrower, issue to Lender an additional Warrant to Purchase Common Shares
entitling Lender to Purchase 5,000,000 shares of Borrower's common stock at an
exercise price of $0.25 per share, such Warrant to Purchase Shares to be
substantially in the form attached hereto as Exhibit B and incorporated herein
by reference (both Warrants to Purchase Common Shares shall hereinafter be
referred to as the "Warrants"). Notwithstanding any provision herein or in any
of the Notes or Warrants to the contrary, Lender may apply any amounts due
hereunder or under any of the Notes toward the purchase of common stock pursuant
to the Warrants issued hereunder by giving Borrower written notice of its intent
to do so.
1.4. Finders Fee. In addition to other fees and costs set forth herein,
Borrower agrees to pay to R A F Financial Corporation ("RAF"), a Nevada
corporation, a finder's fee ("Finder's Fee") equal to nine percent (9%) of the
amount of the Loan drawn upon by Borrower. The Finder's Fee shall be deducted by
Lender from the amount of each draw and paid by Lender directly to RAF at 0000
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxx 00000.
1.5. Use of Proceeds. The Borrower represents, warrants, covenants,
acknowledges and agrees to and with Lender that the proceeds of the Loan shall
be used by Borrower solely for business or investment purposes and shall not be
used for personal, family, household or agricultural purposes.
1.6. Relationship of the Parties. The relationship between Borrower and
Lender is that of a borrower and a lender only and neither of these parties is,
nor shall hold themselves out to be, the agent, employee, joint venturer or
partner of the other party.
1.7. Security. The Loan and each of the Notes shall be unsecured.
1.8. Guarantee. The Loan shall be guaranteed by Xxxxxxx X. Xxxxx, M.D., the
Chief Executive Officer of Borrower, up to the maximum amount of $1,500,000.00,
in accordance with that certain Personal Guaranty, attached hereto as Exhibit C,
and made a part hereof by reference.
1.9. Loan Documents. As used herein, the term "Loan Documents" shall refer
to this Agreement, the Notes, the Warrants and any other documents or
instruments executed by any person in connection with the Loan.
ARTICLE 2.
MANAGEMENT OF BORROWER
2.1. Borrower's Board of Directors. In accordance with the terms of the
Loan Commitment, Borrower and its Board of Directors have taken the following
actions:
a. Increased the number of members to the Borrower's Board of
Directors to nine.
b. Appointed five members selected by Lender and/or Xxxx Xxxx to the
Borrower's Board of Directors.
For so long as any amounts remain due hereunder or under any other Loan
Documents, including the Notes, Borrower and its Board of Directors shall
support in any election of directors by the shareholders of Borrower, those
members appointed to the Board of Directors that were selected by Lender or Xxxx
Xxxx. Further, Lender and/or Xxxx Xxxx shall have the right to select a
replacement director for any member of the Borrower's Board of Directors that
was selected by either Lender of Xxxx Xxxx who resigns or otherwise fails to
serve as a director.
2.2. Employment Agreements with Management and Key Employees. The Board of
Directors of Borrower has taken all steps necessary, and has delivered to Lender
proof thereof, to modify and amend all employment or similar agreements with
those persons constituting Borrower's management personnel and key employees, as
determined in the sole discretion of Lender, to provide that upon a default of
Borrower under any of the Loan Documents, such management personnel or key
employee's employment with Borrower may be terminated at will by Borrower,
without any liability to Borrower or Lender other than to pay unpaid wages or
salary and vacation pay accrued to such management personnel or key employee
through the date of such termination of employment.
2.3. Resignation Letters of the Members of the Board of Directors,
Management Personnel and Key Employees. Upon execution of this Agreement, each
current member of the Board of Directors of Borrower, other than any such member
appointed by Lender or Xxxx Xxxx, and each management personnel or key employee
of Borrower, shall deliver to Lender his or her letter of resignation, which
letters of resignation shall be held in escrow by Lender, subject to all of the
terms and conditions of this Agreement.
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ARTICLE 3.
BORROWER'S REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
a. Borrower is duly incorporated and is validly existing and in good
standing under the laws of the State of Colorado and Borrower has all
requisite power and authority to conduct its business, to own its
properties and to execute, deliver and perform all of its obligations under
the Loan Documents.
b. The execution, delivery and performance of the Loan Documents by
the Borrower have been authorized by all necessary corporate actions and do
not and will not contravene any legal or contractual restriction binding on
the Borrower or any of the property and assets thereof.
c. The Loan Documents constitute, and any other agreement required
hereby will constitute, when executed and delivered by Borrower to Lender,
legal, valid and binding obligations of Borrower, enforceable in accordance
with their terms. The execution and delivery by Borrower of the Loan
Documents and consummation of all the transactions contemplated thereby, do
not and will not conflict with, or be in contravention of, any law, order,
rule or regulation applicable to Borrower or any agreement or instrument to
which Borrower is a party.
d. There is no legal action, suit, proceeding or investigation by or
before any governmental instrumentality or other agency, now pending,
threatened against or affecting the Borrower, or which questions or would
bring into question the validity of the Loan Documents.
e. Other than the pro forma financial reports, all balance sheets,
income statements, financial statements, operating statements and other
financial data pertaining to Borrower that have been delivered (or will be
delivered) to Lender by or on behalf of Borrower are or will be accurate
and complete in all material respects and accurately present or will
present the financial condition of the person or entity to which they
pertain as of their respective dates and there has been no material change
with respect thereto.
ARTICLE 4.
BORROWER'S COVENANTS
4.1. Covenants of Borrower. So long as the Loan shall remain unpaid,
Borrower covenants and agrees as follows:
a. For so long as any amounts remain due under any of the Notes or
other Loan Documents, Borrower:
i. shall not increase the number of members to serve on the
Borrower's Board of Directors above nine; and
ii. shall support those members to the Borrower's Board of
Directors selected by Lender and/or Xxxx Xxxx in any election of
directors by the shareholders of Borrower.
b. Without the express written consent of Lender, which consent may be
withheld for any purpose, Borrower shall not enter into any contracts,
agreements, leases, instruments or other documents of any kind or nature,
with any third party, other than such contracts, agreements, leases,
instruments or other such documents entered into in the normal course of
Borrower's business and which do not, in the aggregate, exceed a monetary
obligation on behalf of the Borrower in excess of $250,000.00.
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c. Upon the request of Lender, or in accordance with the Warrants,
Borrower shall register any common stock of the Borrower issued to Lender
in accordance with the Warrants or issued as Conversion Shares in
accordance with Section 6.2.b.iii below.
d. Upon the request of Lender, Borrower shall use its best efforts to
obtain a letter of resignation from each member of the Board of Directors
who was elected or appointed to replace any member of the Board of
Directors of Borrower who had previously executed and delivered to Lender a
letter of resignation in accordance with Section 2.3 of this Agreement. and
deliver such letter of resignation to Lender to be held in escrow in
accordance with Section 2.3 of this Agreement.
e. Without Lender's prior written consent, Borrower shall not
authorize or otherwise permit any stock splits; reverse stock splits; stock
dividends; issuance of common shares of the Borrower below the exercise
price of the common shares to be issued pursuant to the Warrants, other
than the issuance of the Conversion Shares; mergers or consolidations;
recapitalization of Borrower; or the sale of any assets of Borrower other
than sales of assets in the normal course of Borrower's business.
f. Borrower shall not, without the prior written consent of Lender,
grant or permit any security interest in any of the assets of Borrower to
anyone, including, but not limited to, purchase money security interests to
trade creditors.
g. Borrower will, at its expense, furnish to Lender promptly and upon
request such instruments including, without limitation, other instruments
in addition to those specifically provided for herein, and take all further
actions as Lender may reasonably require from time to time in order to
fully comply with the terms of this Agreement.
h. Borrower will maintain and preserve its corporate existence, as
applicable, under the laws of every jurisdiction in which it does business.
i. Financial statements of Borrower which have been audited by a
certified public accountant, and income tax returns for the Borrower are to
be provided to Lender as soon as reasonably possible after the end of each
fiscal year during the term of the Loan.
j. Borrower will immediately notify Lender of any event or
circumstance which reasonably could be deemed to have a materially adverse
effect on Borrower's financial condition or Borrower's ability to perform
its agreements and obligations under the Loan Documents.
k. Borrower shall notify Lender in writing prior to the time there is
any change of name, identity or business structure of Borrower, including
the addition of any trade names.
ARTICLE 5.
OTHER AGREEMENTS
5.1. Other Agreements. In addition to the other agreements contained in the
Loan Documents, the parties hereto agree as follows:
a. Any and all monies received by lender from Borrower, whether prior
or subsequent to or as a result of a default hereunder shall be applied by
Lender first to any interest due under any of the Notes, but thereafter may
be applied by Lender to any of the amounts due under the Notes or other
Loan Documents, in any order selected by lender, notwithstanding any
contrary provision of the Loan Documents.
b. In the event that a default shall exist under any of the Loan
Documents, Lender shall be authorized to proceed with any and all remedies
available to Lender thereunder or under this Agreement.
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c. To the extent not previously waived, Borrower hereby knowingly,
intentionally and voluntarily waives, relinquishes and forgoes any and all
rights which it may have to the marshalling by Lender of the assets of
Borrower. Borrower acknowledges that such waiver is made with and pursuant
to the advice of competent legal counsel.
d. A default under any of the Loan Documents, including a default
under any of the Notes, shall constitute a default under each other Loan
Document, including each other Note, and shall entitle Lender to pursue any
and all remedies under each or any of the Loan Documents.
e. Borrower hereby irrevocably authorizes Lender to correct without
notice any clerical errors or omissions that may be present in the Loan
Documents executed in connection with the Loan. Borrower further
understands that such corrections shall not result in any increase in the
amount of the obligation that it must repay to Lender, or any change of
essential terms of repayment of the loan obligation. Borrower further
consents in advance to the correction of any errors or omissions as
outlined herein and acknowledge that it understands such correction
procedure and agrees to such correction procedure, without prior notice and
without the necessity of written authorization or approval.
ARTICLE 6.
DEFAULT AND REMEDIES
6.1. Events of Default. The occurrence of any one or more of the following
events or the existence of one or more of the following conditions shall
constitute an event of default under this Agreement:
a. Nonpayment. Borrower shall fail to pay when due, after the
expiration of all cure periods, any installment of principal or interest
due under any of the Notes, whether due on the date provided for therein or
by acceleration or otherwise, or Borrower shall fail to pay when due any
other amounts due under any of the Loan Documents.
b. Other Defaults. The occurrence of any of the following events:
i. any representation or warranty made in writing to Lender by
Borrower herein or in any other Loan Document, or in the Loan
Commitment, or otherwise in connection with the making of the Loan
shall prove at any time to have been incorrect in any material respect
when made; or
ii. the breach, default or violation by Borrower of any
obligation, agreement or covenant contained in the Notes, this
Agreement, or any other Loan Documents executed by Borrower; or
iii. any default under any obligation or duty Borrower may have
to Xxxx Xxxx; or
iv. any material provision of any of the Loan Documents shall at
any time for any reason cease to be in full force and effect or shall
be declared to be null and void; or
v. any litigation or proceeding is pending which may materially
adversely affect the ability of Borrower to perform its obligations
under the Loan Documents; or
vi. Borrower's failure to comply with any other covenants or
agreements contained in any of the Loan Documents and not herein
specifically referenced, unless the same is cured within any
applicable grace periods.
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6.2. Remedies.
a. Upon the occurrence of any event of default hereunder as above
provided, and at any time thereafter, all principal, interest and other
amounts payable under the Loan Documents shall, at the option of Lender,
become immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived by Borrower.
Lender may proceed with every remedy available at law or in equity or
provided for in the Loan Documents or in any other document executed in
connection with the Loan, in such order or sequence as Lender may determine
in its sole discretion, including concurrently, independently, or
successively, and all expenses incurred by Lender in connection with any
remedy shall be deemed indebtedness of Borrower to Lender including, but
not limited to, reasonable attorneys' fees incurred by Lender.
b. In addition to any other right or remedy Lender may have hereunder
or under any of the Notes or other Loan Documents, Lender may pursue any or
all of the following additional remedies, to wit:
i. Demand the resignation of any or all of the members of the
Board of Directors of Borrower, other than those members appointed by
Lender and/or Xxxx Xxxx, and if such members refuse to resign, deliver
to the Borrower the letters of resignation held by Lender in escrow in
accordance with Section 2.3 or Section 4.1.d of this Agreement, and
thereafter Lender shall have the right to appoint such resigned or
terminated member's replacement to the Board of Directors; and
ii. Demand the resignations of any or all of the management
personnel of the Borrower and/or any and all of the key employees of
Borrower, and if such management personnel or key employees refuse to
resign, deliver to the Borrower the letters of resignation held by
Lender in escrow in accordance with Section 2.3 of this Agreement;
provided that nothing herein shall be deemed a representation or
covenant of Borrower that such letters of resignation are enforceable;
and
iii. Convert any or all of the amounts due under any of the Notes
into common stock of the Borrower ("Conversion Shares") at an exercise
price of $0.05 per share. Lender shall make such standard investment
representations to show an exemption from registration exists for the
issuance of such Conversion Shares.
ARTICLE 7.
GENERAL PROVISIONS
7.1. Notices. All notices, communications and materials to be given or
delivered pursuant to the Loan Documents shall, except in those cases where
giving notice by telephone is expressly permitted, be given or delivered in
writing to the address of the appropriate party set forth in the header hereof
or at such other address as shall be changed in accordance with the notice
provisions of this Section 7.1.
7.2. Amendments. No provision or term of the Loan Documents may be amended,
modified, revoked, supplemented, waived or otherwise changed except by a written
instrument duly executed by Borrower and Lender and designated as such.
7.3. Severability. Whenever possible, each provision of the Loan Documents
shall be interpreted so as to be effective and valid under Colorado law. Should
any provision, covenant or agreement contained herein be deemed invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions of this Agreement shall not be impaired thereby, nor
shall the validity, legality or enforceability of any such defective provision
be in any way affected or impaired in any other jurisdiction.
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7.4. Successors and Assigns Bound; Assignment. The covenants and agreements
contained herein shall bind Borrower, its successors and assigns. This Agreement
may not be assigned by Borrower without the prior written consent of Lender.
Subject to the foregoing restriction, this Agreement shall inure to the benefit
of Lender, its successors and assigns.
7.5. No Third Party Benefits. This Agreement is made for the sole benefit
of Borrower and Lender and their respective successors and assigns, and no other
person or persons shall have any rights or remedies under or by reason of this
Agreement.
7.6. Headings. The captions and headings of the paragraphs in the Agreement
are for convenience only and are not used to interpret or define the provisions
of the Agreement.
7.7. Governing Law. This Agreement and the Loan Documents or any other
documents executed in connection with the Loan shall be governed by and
interpreted in accordance with the laws of the State of Colorado.
7.8. Conflict. Should any provision of any other Loan Documents conflict
with any provision of this Agreement, the provision selected by Lender, in its
sole discretion, shall govern and shall be controlling.
7.9. Limitation of Liability. LENDER SHALL NOT HAVE ANY LIABILITY WITH
RESPECT TO, AND THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX FOR,
ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY THE BORROWER IN
CONNECTION WITH ANY LOAN DOCUMENTS OR CLAIM RELATED THERETO.
7.10. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument.
DATED:
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BORROWER:
GLOBAL MED TECHNOLOGIES, INC.,
Attest: a Colorado corporation
By: By:
-------------------------------- -------------------------------
Title: Title:
----------------------------- ----------------------------
LENDER:
FRONTEER CAPITAL, INC.,
a Delaware corporation
By:
-------------------------------
Title:
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EXHIBIT A
PROMISSORY NOTE
EXHIBIT B
WARRANT TO PURCHASE COMMON SHARES
EXHIBIT C
PERSONAL GUARANTY
