QuantRx Biomedical Corporation Doylestown, PA 18901 RE: Bridge Loan Letter Agreement Ladies and Gentlemen:
June
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2008
QuantRx
Biomedical Corporation
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RE: Bridge
Loan Letter Agreement
Ladies
and Gentlemen:
1. Loan.
This
letter when fully executed will constitute a loan agreement (this “Agreement”)
between __________________________
(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 $__________ (the “Loan”).
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. Bridge
Loan Documents.
a. Promissory
Bridge Notes.
The
Loan shall be evidenced by a senior secured promissory bridge 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 “Bridge
Note”).
The
principal amount of the Loan and interest thereon, calculated at the rate of
8%
per annum, as provided in the Bridge Note, shall be payable as set forth more
particularly therein.
b. Common
Stock and Warrants.
In
consideration for the Loan, for each $100,000 of new principal loaned to the
Borrower by the Lender, the Borrower shall issue to the Lender 25,000 shares
of
unregistered common stock of the Borrower and warrants to purchase 25,000 shares
of common stock at an exercise price of $0.85 per share and a term of five
years.
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 Bridge 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
“Bridge
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 Bridge 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 Bridge 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 Bridge Loan Documents or on the business,
operations, properties or financial condition of the Borrower.
b. Each
of
the Bridge 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 Bridge Loan Documents and to perform its obligations hereunder and
thereunder.
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c. The
execution, delivery and performance of this Agreement and the Bridge 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.
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 Bridge Loan
Documents.
5. Miscellaneous.
a. The
Borrower has executed and delivered to Platinum Long Term Growth VII LLC
(“Platinum”)
a Stock Pledge Agreement (the “Pledge
Agreement”),
in the form attached hereto as Exhibit
B,
and the Patent, Trademark and Copyright Security Agreement (the “IP
Security Agreement”
and, together with the Pledge Agreement, the “Security
Documents”),
in the form attached hereto as Exhibit
C,
together with all certificates and documentation required under each such
document (including, without limitation, stock certificates and stock powers
referenced therein).
b. 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 Bridge Notes (collectively, and together with the Lender and Platinum,
the
“Purchasers”)
pro rata, based on the aggregate principal amount of the Bridge Notes, Other
Bridge Notes (as defined in the Bridge Note), and Senior Secured Convertible
Promissory Notes (as defined in the Bridge Note) (collectively, and expressly
including any Other Notes issued prior to the date hereof, the “Notes”)
held by each Purchaser. The Lender acknowledges and agrees as follows:
i. Each
Purchaser shall be deemed to appoint Platinum 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 Purchaser 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 Bridge Loan
Documents.
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.
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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
Purchaser acknowledges that it shall, independently and without reliance upon
the Collateral Agent or any other Purchaser conduct its own independent
investigation of the financial condition and affairs of the Borrower and its
Subsidiaries in connection with the issuance of the Securities. Each Purchaser
also acknowledges that it shall, independently and without reliance upon the
Collateral Agent or any other Purchaser 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
Bridge 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 Borrower. 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 Bridge 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 Bridge 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 Bridge 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
Borrower if such sale or disposition is permitted by this Agreement and the
other Bridge Loan Documents (or permitted pursuant to a waiver or consent of
a
transaction otherwise prohibited by this Agreement and the other Bridge 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 therein.
xi. Platinum
is an express third party beneficiary of the provisions of this Section 5(b),
which may not be amended or waived without its prior written
consent.
c. [reserved]
d. [reserved]
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.
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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 Bridge 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 Bridge Note and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 5(g) 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.
l. This
Agreement, the Bridge 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.
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o. All
remedies of the Lender under this Agreement, the Bridge Note and the other
Bridge 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 11 of the
Bridge 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.
| Very truly yours, | |
| By: | |
| Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
| Title: Chairman & CEO | |
| QuantRx Biomedical Corporation |
By:
Name:
Title:
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Exhibit
A
[Form
of Note]
9
Exhibit
B
[Stock
Pledge Agreement]
10
Exhibit
C
[IP
Security Agreement]
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