Exhibit 10.7
LOAN AGREEMENT
This Loan Agreement dated February 19, 2002 is
Between:
PURSUIT CAPITAL LLC
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(here in after referred to as the "Lender")
And:
BSI2000, Inc.
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(here in after referred to as the "Borrower")
WHEREAS the Lender has agreed to lend to the Borrower the sum of up to $500,000
on the terms and subject to the terms of this Agreement, for good and valuable
consideration the receipt and sufficiency of which each party acknowledges,
Borrower and the Lender agree as follows:
1. Agreement to Advance Funds. The Lender hereby agrees that it will advance
up to a total of $500,000 (the "Loan") to the Borrower. Each advance under
the Loan shall be secured by a Promissory Note in the Form annexed hereto
as Schedule "A", signed by BSI2000, Inc.
2. Use of Proceeds. The Borrower covenants and agrees with the Lender that
the Loan funds will only be used by the Borrower in accordance with the
Loan Proceeds Budget annexed hereto as Schedule "B" and such other
activities as the Lender may approve through its authorized
representative, ▇▇▇▇▇ ▇▇▇▇▇▇▇. The Borrower agrees upon the request of the
Lender, but no more frequently than monthly, to provide the Lender with
written reports detailing the Borrower's use of the loan proceeds and
comparing the actual expenditures with the Loan Proceeds Budget.
3. Term. Subject to the Lender's right of Conversion set out herein, the Loan
together with the accrued interest, shall be due and payable by the
Borrower to the Lender on the earlier of:
(a) January 31, 2003;
(b) The cumulative receipt of equity financing subsequent to the date of
this agreement of $2,000,000 or more.
The Borrower may repay the Loan at any time before maturity, without
penalty, by giving 15 days written notice of the prepayment date (the
"Prepayment Notice") to the Lender.
4. Interest. Interest shall be calculated from the date of advance of the
Loan funds at the rate of 10% per annum, and shall accrue and be payable
upon the completion of the Term of this Loan. No interest shall be payable
in the event that the Lender exercises its right of conversion.
5. Conversion Right. The Lender shall have the right, at any time until the
Loan Funds are paid in full, to convert such amount of the Loan Funds as
have been advanced to the Borrower, but not interest outstanding, into
shares of the Borrower on the following terms:
(a) The Lender shall notify the Borrower of its intention to convert the
principal of the Loan by delivering a notice in writing (the
"Conversion Notice") to the Borrower, specifying the place for
delivery of the certificates representing the shares issuable by the
Borrower upon conversion by the Lender ("Conversion Shares");
(b) The Loan is convertible into that number of common voting shares of
the Borrower as equals Ten Percent (10%) of the issued and
outstanding shares of the Borrower, or a pro-rata number of shares
if the Loan is less than $500,000, such percentage to be determined
on a fully diluted basis, after the issuance of the Conversion
Shares and all other options and warrants outstanding as of the date
of the receipt of the Conversion Notice. The shares shall be
"restricted" as that term is defined in SEC rule 144 under the
securities act of 1933.
(c) The Conversion Right may be exercised at any time and shall survive
any Borrower's Notice of Prepayment. Upon the Lender's receipt of a
Prepayment Notice from the Borrower, the Lender may exercise the
conversion right by delivering the Conversion Notice to the Borrower
on or before the prepayment date.
(d) The Conversion Right will survive any merger or other business
combination and will be converted into the right to acquire common
stock in the surviving company at the same exchange ratio as
BSI2000, Inc. common stock, but only as to the percentage ownership
calculated under (b) as issued to the shareholders or the Borrower,
not upon the total shares outstanding of the surviving company. The
exercise price shall be proportionately adjusted based upon the
number of shares to be acquired in the surviving company.
6. Representations.
The Borrower represents to the Lender as follows:
(a) The Borrower is a duly incorporated company and is in good standing
under the laws of the State of Colorado and has the power and
authority to carry on its business as now being conducted;
(b) This Agreement has been duly authorized by all necessary action of
the Borrower and constitutes a legal, valid and binding obligation
of the Borrower enforceable against it in accordance with its terms;
and
(c) The Conversion Shares, once issued, will have been duly authorized
and issued as fully paid and non-assessable common shares of the
Borrower or the surviving company, as the case may be.
The Lender represents to the Borrower as follows:
(a) The Lender understands that the Borrower is a development stage
company and has no operating revenue.
(b) The Lender has conducted its own due diligence in connection with
making the Loan. The Lender has had opportunity discuss the affairs
of the Borrower with Borrower's management, its strategic alliance
partners, and its potential customers. Lender has conducted such
other due diligence procedures as it considered necessary.
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(c) The Lender understands the nature of the high risks associated with
the Loan and is economically able to bear the loss of the entire
Loan principal.
7. Confidentiality. The Lender agrees to keep confidential all materials
provided to it by the Borrower on a confidential basis pending the
Borrower's public disclosure of such information and thereafter, to the
extent Borrower reasonably requires such information to be kept
confidential.
8. Notices. Any notice, direction or other document required or permitted to
be given pursuant to this Agreement shall, unless otherwise specifically
provided, be given in writing and may be mailed, postage prepaid by
registered mail, sent by facsimile transmission, or personally served upon
the appropriate parties at the following addresses:
If to the Borrower:
BSI2000, Inc.
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Attention: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender:
Pursuit Capital LLC
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9. Governing Laws. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Colorado.
10. Amendment. This Agreement may be amended only in a writing signed by both
the Lender and the Borrower.
11. Counterparts. This Agreement may be signed in one or more counterparts,
originally or by facsimile, each counterpart taken together shall form one
and the same Agreement.
SIGNATURES
Borrower:
BSI2000, Inc.
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, President Date
Lender:
Pursuit Capital LLC
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇, Manager Date
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Schedule A
Promissory Note
February ___, 2002 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Inc., a Colorado corporation located at ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, for value received promises to pay to the
order of Pursuit Capital LLC, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ the sum of __________________________________, said
principal, together with interest thereon computed at the rate of 10% per
annum, payable on January 31, 2003 or earlier as provided in the Loan
Agreement. The principal of this note is an advance to BSI2000, Inc. by
Pursuit Capital LLC under that certain Loan Agreement between the BSI2000,
Inc. and Pursuit Capital LLC dated February ___, 2002, the terms of which
are incorporated in this note by reference. The maker waives presentment
for payment. It is agreed that if this note is not paid when due the
principal and accrued interest thereon shall draw interest at the rate of
18% per annum. Any default under that Loan Agreement between BSI2000, Inc.
and Pursuit Capital LLC shall cause this note to be due at once. If this
note or interest thereon is not paid when due the maker agrees to pay all
reasonable costs of collection, including reasonable attorney's fees. This
note is entered into and delivered in Lakewood, Colorado and is to be
construed under Colorado law. Venue shall be in the Denver District Courts.
Borrower's Signature:
BSI2000, Inc.
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▇▇▇▇ ▇▇▇▇▇▇, President Date
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LOAN AGREEMENT AMENDMENT
Amendment to Loan Agreement dated February 19, 2002
This amendment is effective for all purposes nunc pro tunc, as of the February
19, 2002 date of the original Loan Agreement, notwithstanding dates of execution
by the parties,
Between:
PURSUIT CAPITAL LLC
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▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(hereinafter referred to as the "Lender")
And:
BSI2000, Inc.
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(hereinafter referred to as the "Borrower")
The text of paragraph 5 in the original loan agreement is deleted and replaced
with the following:
5. Conversion Right. The Lender shall have the right, at the closing of the
Borrower's merger into any public company, to convert the Loan Funds
advanced to the Borrower, but not interest outstanding, into 1,666,600
shares of common stock of the surviving public company. The shares shall
be issued as restricted securities under rule 144 established by the
Securities and Exchange Commission pursuant to the Securities Act of 1933.
No other provision of the Loan Agreement is changed. There are no other
amendments to the Loan Agreement.
SIGNATURES
Borrower:
BSI2000, Inc.
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▇▇▇▇ ▇▇▇▇▇▇, President Date
Lender:
Pursuit Capital LLC
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▇▇▇▇▇ ▇▇▇▇▇▇▇, Manager Date
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