RE: Bridge Loan Letter Agreement Mr. Lender:
Exhibit
4.2
February
2, 2009
Bonanza
Oil and Gas, Inc.
0000
Xxxxxxxx Xxx.
Xxxxx
000
Xxxxxxx,
XX 00000
RE: Bridge Loan Letter
Agreement
Mr.
Lender:
|
1.
|
Loan.
This letter when fully executed will constitute a loan agreement (this
“Agreement”)
|
between
Xxxxxx X. Xxxxxx (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 $285,000 (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.
1
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 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.
2
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
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 Virginia 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.
3
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
part of, or affect the interpretation of, this Agreement.
g. 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.
h. 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.
i. 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.
j. 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.
k.
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.
l. All
notices required hereunder shall be made in accordance with Section 10 of the
Bridge Note.
m. 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:/s/ Xxxxxxx
Xxxxxxx Date:
February 2, 2009
Name:
Xxxxxxx Xxxxxxx
Title:
CEO
Bonanza
Oil and Gas, Inc.
0000
Xxxxxxxx Xxx. Xxxxx 000
Xxxxxxx,
XX 00000
By: /s/Xxxxxx
X. Xxxxxx
Xxxxxx X.
Xxxxxx
0000 Xxxx
Xxxxxx Xxxx
XX Xxx
000
Xxxxxxxxxxxx,
XX 00000
_______________
Date
4
