EXHIBIT 10.34
LOAN AND SECURITY AGREEMENT
This agreement (the "Agreement") is entered into by and between Cell Robotics
International, Inc. (the "Company") and X.X. Xxxxxx & Associates (the "Lender"),
(the "Parties") as of August 29, 2003.
WHEREAS, the Company requires working capital in order to implement its business
plan which calls for the commercial launch of its proprietary laser medical and
research products in several key markets; and
WHEREAS, the Lender is a significant shareholder of the Company and is fully
familiar with its business strategy and desires to assist the Company in
achieving its business development by providing the working capital it requires;
and
WHEREAS, the Lender understands that funds being provided to Company are
significant to its continuing operations and will specifically serve as a bridge
funding source leading to a substantial equity source of funding;
WHEREAS, the Company and the Lender have negotiated a Term Sheet under which the
Lender has agreed to provide a secured working capital facility (the "Facility")
in order to meet the working capital needs of the Company; and
WHEREAS, the Term Sheet which the Company and the Lender have executed requires
the negotiation and execution of a Definitive Agreement to implement and adjust
the terms set forth therein.
NOW THEREFORE intending to be legally bound the parties hereto do agree as
follows:
1. EXTENSION OF CREDIT. The Lender hereby agrees to extend credit to the Company
in the minimum amount of $250,000 and at the Company's request up to a maximum
amount of $750,000. The First Funding in the amount of $250,000 shall be
provided to the Company within ten business (10) days of the date hereof. Two
additional advances in the amounts of $250,000 each, Second Funding and Third
Funding, respectively, shall be provided upon not less than ten business days
written request by the Company. Following the First Funding, the Company shall
be entitled to make only one such request per each ten business days and only
two such requests altogether. The Lender shall release requested fundings to the
Company as the funds become available to the Lender. It is anticipated that the
request for funds by the Company shall be according to the Funding Schedule
attached hereto as Exhibit E.
2. TERM OF THE FACILITY: The Facility must be retired fully within twelve (12)
months of the date of the first funding unless the Company elects to renew the
Facility for an additional period of six (6) months upon payment of the renewal
fee set forth below.
3. FACILITY FEE: The Company shall issue to the Lender 75,000 shares of its
restricted common stock as a Facility Fee to the Lender upon delivery of the
First Funding by the Lender under this Agreement. The shares shall be registered
within 180 days by the filing of an SB2 or similar registration statement with
the SEC. This fee shall be deemed fully earned even if the full Facility is not
drawn. This fee covers the initial term of the Facility. Should the Company
elect to renew the Facility for a further period of six (6) months, it may do
so, provided the Company is not in default of the Loan and Security Agreement,
upon payment of a Renewal Fee of 1.5% of the amount outstanding. This Renewal
Fee shall be paid in cash and will permit the existing advances to remain
outstanding but no new advances may be made.
4. INTEREST. The Company further agrees to pay to the Lender as interest for the
Total Advances, an amount equal to two per cent (2.00% ) for every 30 day period
that the Total Advances have been outstanding. This interest shall be paid in
advance. The Lender shall calculate the amount required for the next 30 day
period of the outstanding advances and either deduct that amount from a new
advance or invoice the Company for the funds needed. The Company agrees to fund
any interest deposit within five (5) days of receiving a written request for
same. A minimum of 90 days of interest shall be paid for all funds advanced to
the Company under this Agreement
5. PROMISSORY NOTES. The Company shall execute one or more promissory notes in
the form attached hereto as Exhibit "A".
6. ORIGINATION AND GUARANTEE FEE. The Company recognizes the special efforts of
Xxxxxxxxx X. Xxxxxx and his associates in creating the funding being made
available to the Company under this Agreement. The Company also recognizes the
fact that Xx. Xxxxxx may personally guarantee the repayment to his investors. In
consideration of the foregoing, the Company agrees to pay by way of deduction
from each new advance under this Agreement a cash fee of 4% of each such
advance. The Lender represents and warrants to the Company that no other
finder's fee related to the present Agreement is due and payable to anyone other
than Xxxxxxxxx X. Xxxxxx by the Company (by virtue of any understanding between
the Lender and any other party) and the Lender agrees to indemnify the Company
for any claims that may be made by any other party for fees with respect to the
funds provided to the Company as part of this overall transaction.
7. SECURITY INTEREST. The underlying collateral for the Total Advances made to
the Company under the terms of this Agreement shall be existing and future
accounts receivable, inventory, purchase orders, and the intellectual property
related to the Work Station Product Line ("Work Station IP") and the Lender is
hereby granted a security interest in said assets. These assets are set forth as
Exhibit "B" hereto. The Company agrees to execute and file a UCC-1 Financing
Statement in favor of the Lender in the form set forth in Exhibit "C". To the
extent that any UCC-1 Financing Statement is now active, the Company agrees to
obtain subordination or cancellation of said UCC-1 Financing Statement unless a
debt is now outstanding which is the result of a previously made loan to the
Company by the secured party in which event any pledged invoice may be repaid in
accordance with its terms. The lien granted on the Work Station IP of the
Company shall operate solely as a preference upon liquidation and the Lender
shall not without the consent of the Company or an order from a court of
competent jurisdiction be entitled to seize the Work Station IP and sell or
license same as a remedy for any default hereunder. In the event that the
Company has repaid all the outstanding advances and declared its intention not
to make further use of the Facility, the Lender shall forthwith release its
first security lien on the above described assets of the Company and the
Facility shall be terminated.
8. ADDITIONAL CONSIDERATION. The Lender shall receive as additional
consideration Warrants to purchase common shares of the Company in the form
attached hereto as Exhibit "D" covering the number of shares set forth below at
an exercise price of $0.375 per share. The common stock underlying the Warrants
shall be registered on Form SB2 or similar registration statement with the SEC
within 180 days of the each advance under this Facility.
The Warrants shall be valid for a period of three years from the date of each
funding under this Facility but may be called by the Company if its common stock
is quoted on the NASDAQ exchange (or some equivalent exchange) at a Trading
Price of not less than $0.90 for fifteen (15) consecutive trading sessions,
provided that the underlying common stock is subject to an effective
Registration Statement. "Trading Price" shall mean the closing price at which
sales of Common Stock shall have been sold.
The number of shares to be covered by the Warrants shall be as follows:
Upon the First Funding of $250,000 150,000 Shares On/Before 9/12/03
Upon the Second Funding of $250,000 150,000 Shares On/Before 9/26/03
Upon the Third Funding of $250,000 100,000 Shares On/Before 10/10/03
Provided, however, that should the Lender provide funding by the dates specified
below, the Lender will be entitled to additional shares covered by Warrant for
accelerated delivery of funds, as follows:
First Funding of $250,000 100,000 Warrants On/Before 9/5/03
Second Funding of $250,000 50,000 Warrants On/Before 9/19/03
Third Funding of $250,000 50,000 Warrants On/Before 10/3/03
9. PENALTIES. The Company understands that Shares and Warrants issued by Company
to Lender as consideration in this Agreement shall be registered within 180 days
from issuance by the filing of an SB2 or similar registrations statement with
the SEC. The Lender shall be entitled to 10% additional Shares or Warrants for
each 30 day delay beyond the 180 day stipulated time period, less a 30 day grace
period.
The Lender understands that funds being provided to Company are significant to
its continuing operations and will specifically serve as a bridge funding source
leading to a substantial equity source of funding. Should the Lender not perform
in providing any of the funds pursuant to the terms of this Agreement, the
Lender shall forfeit its Facility Fee. Should the Lender not perform in
providing any of the individual advances, the Lender shall forfeit its Warrants
consideration associated with the stipulated funding advance not performed.
10. ENTIRE AGREEMENT, AMENDMENTS. This is the entire Agreement of the parties
relating to this subject matter. It is to be governed by the laws of the State
of New Mexico and shall be enforced in the state or federal courts of the State
of New Mexico if the parties cannot amicably resolve any disputes by voluntary
submission to an agreed upon mediator or arbitration mechanism. The Agreement
may be modified only by a writing signed by the parties.
11. AGREEMENT IN COUNTERPARTS. The Company and Lender recognize the importance
of expediency. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
WITNESS THE HAND AND SEAL OF THE PARTIES AS OF THE DATE FIRST ABOVE WRITTEN:
CELL ROBOTICS INTERNATIONAL, INC.
/s/ Xxxxxxx Xxxx
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By: Xxxxxxx X. Xxxx, President and Chief Executive Officer
X. X. XXXXXX & ASSOCIATES
/s/ Xxxxxxxxx X. Xxxxxx
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By: Xxxxxxxxx X. Xxxxxx, President
