Bonanza Oil and
Gas, Inc.
3417
Mercer
Houston, TX
77027
RE:
Loan Letter Agreement
1. Loan
. This letter when fully executed will constitute a loan
agreement (this “ Agreement ”) between Marie
Baier Foundation (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 fifty five thousand
dollars ($ 55,000) (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.
a. Promissory
Notes . The Loan shall be evidenced by a promissory
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 “ Note
”). The principal amount of the Loan and interest thereon,
calculated at the rate of 12% per annum, as provided in the Note,
shall be payable as set forth more particularly therein.
b. Term of
Note. “ The Note ” shall have a
term of one (1) year, starting from the date the Borrower receives
the funds from the Lender in their entirety (the “ Closing
Date ”). 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 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 “
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 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 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 Loan Documents or on the business, operations, properties
or financial condition of the Borrower.
b. Each of the 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 Loan Documents and to perform its obligations hereunder and
there under.
c. The execution,
delivery and performance of this Agreement and the 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 Loan Documents.
a. The
representations and warranties of the Borrower contained herein
shall not survive the Closing Date.
b.
This Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada
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.
c.
The Bank and Borrower agree to
submit to binding arbitration by the American Arbitration
Association (the "AAA") of all claims, disputes and controversies
(whether in tort, contract, or otherwise, except "core proceedings"
under the U.S. Bankruptcy Code) arising between themselves and
their respective employees, officers, directors, attorneys and
other agents, which relate in any way without limitation to
existing and future loans and extensions of credit or requests for
additional credit, including by way of example but not by way of
limitation the negotiation, collateralization, administration,
repayment, modification, default, termination and enforcement of
such loans or extensions of credit. Arbitration under this
Agreement will be governed by the Federal Arbitration Act and
proceed in California in accordance with AAA Rules. Arbitration
will be conducted before a single neutral arbitrator selected in
accordance with AAA Rules and who shall be an attorney who has
practiced commercial law for at least ten years. The arbitrator
will determine whether an issue is arbitratable and will give
effect to applicable statutes of limitation. Judgment upon the
arbitrator's award may be entered in any court having jurisdiction.
The arbitrator has the discretion to decide, upon documents only or
with a hearing, any motion to dismiss for failure to state a claim
or any motion for summary judgment. The institution and maintenance
of an action for judicial relief or for any provisional or
ancillary remedy shall not constitute a waiver of the right of any
party, including the plaintiff, to submit the controversy or claim
to arbitration if any other party contests such action for judicial
relief. Each request for an extension and all other discovery
disputes will be determined by the arbitrator upon a showing that
the request is essential for the party's presentation and that no
alternative means for obtaining information are available during
the initial discovery period. This Agreement does not limit the
right of either party to a) foreclose against real or personal
property collateral; b) exercise self-help remedies such as setoff
or repossession; c) obtain provisional remedies such as replevin,
injunctive relief, attachment or the appointment of a receiver
during the pendency or before or after any arbitration proceeding;
or d) obtain a cognovit judgment, if available. These exceptions do
not constitute a waiver of the right or obligation of either party
to submit any dispute to arbitration, including those arising from
the exercise of these remedies.
d. 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.
e. 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.
f. The headings of
this Agreement are for convenience of reference and shall not form
p
