Exhibit 10.22
Loan Agreement between DRMC and World Ventures Trust, and Promissory Note, all
dated April 26, 1995.
THIS CONVERTIBLE NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THE NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE, AND NEITHER THE NOTE NOR THE SHARES NOR ANY
INTEREST IN THE NOTE OR THE SHARES MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER AND UNDER APPLICABLE STATE LAW, THE AVAILABILITY OF WHICH MUST BE
ESTABLISHED TO THE SATISFACTION OF THE MAKER.
CONVERTIBLE PROMISSORY NOTE AND NOTE SECURED BY DEED OF TRUST
FOR THE VALUE RECEIVED, XXXXXX XXXXXXXX HOTEL AND CASINO, INC., a Nevada
corporation with its principal executive office in Las Vegas, Nevada ("Maker")
promises to pay to the order of WORLD VENTURES, a trust, ("Payee"), the sum of
TWO HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($275,000.00) in legal and lawful
money of the United States of America on April 26, 1995 at Las Vegas, Nevada.
This Note shall bear interest from the date hereof until paid at the rate of 10
% per annum, payable on maturity. The Maker shall have the right to prepay prior
to maturity all or any part of the principal of this Note, together with all
accrued interest thereon, without premium or penalty.
1. Conversion. At the option of the Payee, but only after maturity, after a
five (5) day notice, the principal and all accrued interest represented by this
Note may be converted, in full or in part, into shares of the Common Stock
$.0001 par value of Maker ("Shares") at the conversion price of $1.375 per share
("Conversion Price") subject to adjustment as hereinafter provided.
In order to exercise the conversion privilege, the holder of this Note
shall surrender this Note, duly endorsed or assigned to Maker or in blank, at
the principal executive office of Maker, accompanied by written notice to Maker
at such office that the holder elects to convert this Note. If the full
conversion privilege is exercised, this Note shall be deemed to have been fully
converted immediately prior to the close of business on the day of surrender of
this Note for full conversion in accordance with this paragraph and at such time
the rights of the holder of this Note as such shall cease, and the person or
persons entitled to receive the Shares issuable upon full conversion shall be
treated for all purposes as the record holder or holders of such Shares at such
time. In order to exercise the partial conversion privilege, the holder and the
Maker of this Note shall, on the back of this Note, indicate the fraction of the
indebtedness converted for Shares and the indebtedness remaining after such
partial conversion. In the event of such partial conversion, each party
1
shall affix its signature and the date of such partial conversion to the back of
this Note. If the partial conversion privilege is exercised, this Note shall be
deemed to have been partially converted immediately prior to the close of
business on the date the holder and the Maker indicate such partial conversion
on the back of this Note in accordance with this paragraph and at such time the
rights of the holder of this Note as to that portion of the Note converted for
Shares shall cease, and the person or persons entitled to receive the Shares
issuable upon partial conversion shall be treated for all purposes as the record
holder or holders of such Shares at such time. As promptly as practicable on or
after the conversion date, whether full or partial, the maker shall issue and
shall deliver to the holder at the address specified in the notice a certificate
or certificates evidencing the ownership of the shares by the holder hereof,
which shall bear only a standard restrictive legend that the Shares have not
been registered.
The Conversion Price and number of Shares purchasable pursuant to this Note
shall be subject to adjustment from time to time as hereinafter stated. In the
event Maker shall at any time after the date of execution hereof exchange as a
whole, by subdivision or consolidation in any manner or by effecting a stock
dividend, the number of Shares then outstanding into a different number of
Shares, with or without par value, then thereafter the number of Shares which
the holder shall have the right to purchase (calculated immediately prior to
such change), shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in the number of Shares of Maker issued
and outstanding by reason of such change, and the Conversion Price of the Shares
after such change shall in the event of an increase in the number of Shares be
proportionately reduced, and in the event of a decrease in the number of Shares
be proportionately increased.
In case of any consolidation of Maker with, or merger of Maker into, any
other corporation (other than a consolidation or merger in which Maker is the
continuing corporation), the sale of all the shares of the Company's outstanding
Common Stock or any transaction pursuant to which Maker shall become a
subsidiary of a holding company, the corporation formed by such consolidation or
the corporation resulting from such merger, or such holding company, as the case
may be, shall execute an amendment to this Note providing that the holder of
this Note then outstanding shall have the right thereafter to convert this Note
in full or in part into the Shares upon such consolation, merger, transfer or
holding company transaction by the holder into which this Note might have been
converted immediately prior to such consolidation, merger, transfer or holding
company transaction. The provisions of this paragraph shall similarly apply to
successive consolidations, mergers, transfers or holding company transactions.
The holder of this Note, by his acceptance hereof, consents and agrees to any
and all such amendment or amendments.
2
In the event of the sale of all or substantially all of the assets of
Maker, or in the event of any distribution of all or substantially all of its
assets in dissolution or liquidation, Maker shall mail notice thereof by
registered mail to the holder and shall make no distribution to the shareholders
of Maker until the expiration of thirty (30) days from the date of mailing of
the aforesaid notice. If the holder shall not exercise this conversion privilege
within thirty (30) days from the date of mailing notice to the holder by Maker,
that Maker either (i) proposes to sell all or substantially all of its assets or
(ii) proposes to distribute assets in dissolution or liquidation, all rights
herein granted not exercised within such thirty (30) day period, shall there
after become null and void. Maker shall not, however, be prevented from
consummating any such sale without waiting the expiration of such thirty (30)
period, it being the intent and purpose hereof to enable the holder, upon
exercise of this conversion privilege, to participate in the distribution of the
consideration to be received to Maker upon any such sale or sublease, or in the
distribution of assets upon any dissolution or liquidation.
This Note and the Shares issuable upon conversion of the Note have not been
registered under the Securities Act of 1933, as amended, (the "Securities Act")
or the securities laws of any states and will be offered and sold in reliance on
exemptions from the registration requirement of such laws. The Note and the
underlying Shares are deemed to be "restricted securities" as that term is
defined under Rule 144 promulgated under the Securities Act. Prior to the
issuance of the underlying Shares upon the conversion of the Note the Payee
will be required to execute an investment letter in substantially the form
attached hereto acknowledging that the Shares are "restricted securities" and
representing that the Shares are being taken by Payee for investment purposes
only and not for distribution. Maker at any time after the Note is converted
into the Shares and while the Shares remain "restricted securities" proposes to
register under the Securities Act any of its securities, either for its own
account or for the account of security holders, other than a registration on
Form S-8 or S-14, or any registration on a form which does not permit secondary
sales, the Maker shall, at such time, give written notice of such intention to
the Payee and upon written request of the Payee received by the Maker within
thirty (30) days after the Maker has given such notice, include in such
registration (and all related qualifications under state securities laws) all of
such Shares held by Payee or a portion thereof specified in such written
request. If Payee exercises such right to have the Shares so registered, Payee's
registration rights with respect to such registration statement shall be those
that are customary in the industry.
2. Interest Savings Clause. Notwithstanding anything to the contrary
contained herein, no provision of this Note shall require
3
the payment or permit the collection of interest in excess of the maximum rate
(the "Maximum Rate") permitted by applicable law. If any excess of interest in
such respect is herein provided for, or shall be adjudicated to be so provided,
in this Note or otherwise in connection with the transaction that gave rise to
the indebtedness evidenced by this Note, the provisions of this Section shall
govern and prevail, and neither Maker nor the successors or assigns of Maker
shall be obligated to pay the excess amount of such interest, or any other
excess sun paid for the use, forbearance or detention of sums loaned pursuant
hereto. If for any reason interest in excess of the maximum rate of interest
permitted by applicable law shall be deemed charged, required or permitted by
any court of competent jurisdiction, any such excess shall be applied as a
payment and reduction of the principal indebtedness evidenced by this Note, and,
if the principal amount hereto has been paid in full, any remaining excess shall
forthwith be paid to Maker. In determining whether the amount of interest paid
or payable under any contingency exceeds the amount of interest paid or payable,
if the indebtedness evidenced by this Note had at all times accrued interest at
the Maximum Rate, Maker agrees that, to the maximum extent permitted under
applicable law, (a) any non principal payment shall be characterized as an
expense fee, or premium rather than as interest, (b) prepayments and the effects
thereof shall be excluded, (c) the total amount of interest shall be "spread"
throughout the entire contemplated term of the Note to and including the
maturity date of this Note, and (d) if the indebtedness evidenced by this Note
is paid and performed in full prior to the end of the full stated term of this
Note and if the aggregate amount of interest received by Payee for the actual
period of existence hereof exceeds the amount of interest that would have
accrued on the indebtedness evidenced by this Note had such indebtedness at all
times from the inception thereof borne interest at the Maximum Rate, Payee shall
refund to Maker the amount of such excess, and, in such event Payee shall not be
subject to any penalties provided by any laws for contracting for, charging,
reserving, taking or receiving interest in any amount in excess of the amount
which would have accrued on the indebtedness evidenced by this Note if such
indebtedness had, at all times from the inception thereof, borne interest at the
Maximum Rate.
3. Waiver. Maker, and any other person liable for the payment of
indebtedness evidenced hereby, jointly and severally waive diligence in
collecting, presentment for payment, demand, dishonor and bringing suit against
any party liable hereon, and all notices, including notice of intention to
accelerate the maturity hereof, notice that such acceleration of maturity has
occurred, notice of protest, demand, dishonor and nonpayment of the indebtedness
evidenced by this Note, (except as otherwise provided in this Note); and
expressly agree to any and all extensions, renewals, partial payments,
substitutions of evidence of indebtedness and the taking, release or
substitution of any security or collateral without notice before or after
maturity
4
without in any way affecting the liability of Maker or any other person liable
for the indebtedness evidenced hereby. No extension of time for payment of any
of the indebtedness or any installment thereof evidenced by this Note made by
agreement by Payee with any person now or hereafter liable under this Note shall
affect the original liability on this Note of Maker or any other person liable
for the payment of the indebtedness or any installment thereof evidenced hereby,
even if Maker or other person liable for the payment of the indebtedness
evidenced hereby are not parties to such agreement.
4. Deed of Trust and Guaranty. The payment of the indebtedness evidenced by
this Note is secured by a Deed of Trust executed on this same date, encumbering
the property located at 000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000,
and Payee or any subsequent holder is entitled to the benefits thereof. This
Note is also guaranteed by M. Xxxxxx Xxxxxxxxxxx, pursuant to the Guaranty
executed by him as of the date hereof.
5. Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default, and Maker shall have five (5) days,
after written notice is received from Payee, to cure such default or Payee may
exercise the Remedies upon Default detailed hereinafter. The events of default
are:
(a) Maker shall fail to pay this Note when due;
(b) Maker shall admit in writing its inability to pay its debts, or
shall make a general assignment of its assets or property rights for
the benefit of its creditors; or any proceeding shall be instituted by
or against Maker seeking to adjudicate Maker a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment or composition of
Maker or Maker's debts under any law relating to bankruptcy,
insolvency or reorganization or release of debtors, or seeking
appointment of a receiver, custodian, trustee, or other similar
official for Maker or for any substantial part of Maker's property.
(c) Maker dissolves or any action shall be taken by Maker, or the
holders of a majority of the issued and outstanding capital stock of
Maker, to wind-up or liquidate the business, property or assets of
Maker; or
(d) The lease for the operation of a gambling casino between Jackpot
Enterprises shall be in default or the lessee is not in compliance
with all requisite regulatory requirements for the operation of its
casino business, or the Maker shall not have received all requisite
regulatory approvals required for this loan; or
5
(e) Maker shall sell or attempt to sell substantially all of its
assets.
6. Remedies upon Default. Upon the occurrence of any Event of Default, and
five (5) days after receipt of notice has elapsed, the holder hereof may at its
option:
(a) Declare the principal balance of this Note and any accrued
interest thereon immediately due and payable without presentment,
demand, protest or further notice of any kind, including notice of
intention to accelerate and notice of acceleration, all of which are
hereby waived by Maker:
(b) Exercise any and all right and remedies provided for in, or
pursuant to this Note, the Dead of Trust or the Guaranty or by
creditors generally; and
(c) to the extent permitted by law, bring suit at law, in equity or
through other appropriate proceedings, whether for the specific
performance of any covenant or agreement contained in the Deed of
Trust, for an injection against the violation of the terms hereof or
thereof, in aid of the exercise of any power granted hereby or thereby
or by law, to recover judgment for any and all amounts due on this
Note, under the Deed of Trust or otherwise against Maker and Maker's
assets.
7. Cumulative Rights. No delay on the part of the holder of this note in
the exercise of any power or right under this Note, under the Deed of Trust, or
the Guaranty, shall operate as a waiver hereof. Failure of the holder hereof to
exercise any right granted herein shall not constitute a waiver of the right to
exercise the same upon the occurrence of a subsequent Event of Default.
Enforcement by the holder of this Note of any security for the payment hereof
shall not constitute an election by such holder of remedies so as to preclude
the exercise of any other remedy available to such holder.
8. Attorneys' Fees and Costs. In the event this Note is placed in the hands
of an attorney for collection after the occurrence of an Event of Default, or in
the event this Note is collected in whole or in part through legal or judicial
proceedings of any nature, including bankruptcy, after the occurrence of an
Event of Default, then Make agrees and promises to pay in addition to the
remaining unpaid principal and accrued interest on the Note all of the holder's
costs of collection, when incurred, including, without limitation, reasonable
attorneys' fees, irrespective of whether legal action is filed with a court of
competent jurisdiction.
9. Assignment. This Note shall not be assignable by Payee,
6
without prior written consent of the Maker.
10. Governing Law. THIS NOTE IS MADE, ENTERED INTO AND PERFORMABLE IN LAS
VEGAS, NEVADA. THE MAKER HAS ITS PRINCIPAL PLACE OF BUSINESS IN LAS VEGAS,
NEVADA AND ALL PAYMENTS UNDER THIS NOTE SHALL BE PAID IN XXXXX COUNTY, NEVADA
CONSEQUENTLY, THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEVADA AND ANY LITIGATION OR OTHER PROCEEDING BETWEEN
MAKER AND PAYEE THAT MAY BE BROUGHT, OR ARISE OUT OF, IN CONNECTION WITH OR BY
REASON OF THIS NOTE SHALL BE BROUGHT IN THE APPLICABLE FEDERAL OR STATE COURT IN
AND FOR XXXXX COUNTY, NEVADA WHICH COURTS SHALL BE THE EXCLUSIVE COURTS OF
JURISDICTION AND VENUE.
IN WITNESS WHEREOF, Maker has caused this Note to be executed by a duly
authorized officer of Maker, as of the day and year first above written.
MAKER:
XXXXXX XXXXXXXX HOTEL AND CASINO,
INC.
By: /S/ XXXXXX XXXXXXXXXXX
