Bonanza Oil and
Gas, Inc.
3000 Richmond
Ave.
Suite
400
Houston, TX
77098
RE:
Bridge Loan Letter Agreement
1. Loan
. This letter when fully executed will constitute a loan
agreement (this “ Agreement ”) between
Entrust CAMA FBO Daniel A. Foy IRA (the “
Lender ”) and Bonanza Oil and Gas, Inc, a Nevada
corporation (the “ Borrower ”), pursuant to
which the Lender, on the terms and conditions provided herein,
shall agree to make one loan to the Borrower hereunder in an amount
of $ 40,000 (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
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 14% per annum,
as provided in the Bridge Note, shall be payable as set forth more
particularly therein.
b. Term of
Note. “ The Bridge Note ” shall
have a term of 90 days starting from the date the Borrower receives
the funds from the Lender in their entirety. In the event of
prepayment by the Borrower, the Lender will receive interest for
the entire term of the note as set forth in Section 2(b). Any
changes to the term of the note must be accordance to Section
5(c).
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, 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 validly exists and is 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 there under.
c. The execution,
delivery a
