THIS PROMISSORY NOTE IS ONE OF A SERIES OF TWO PROMISSORY NOTES OF LIKE TERMS
AND TENOR.
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED ("ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR
AN OPINION OF COUNSEL SATISFACTORY TO THE MAKER THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.
SECURED PROMISSORY NOTE AND SECURITY AGREEMENT
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August 22, 2000. $500,000
FOR VALUE RECEIVED, the undersigned, VIVA GAMING & RESORT INC., a corporation
duly incorporated under the laws of the State of Florida ("Maker"), hereby
promises to pay to the order of XXXXXX XXX ("Payee") the principal sum of Five
Hundred Thousand Dollars ($500,000) with interest on the unpaid principal
balance, payable as herein provided, at the rate of ten percent (10%) per annum
in accordance with the terms and conditions of this Promissory Note and Security
Agreement (the "Promissory Note"). The outstanding principal balance of this
Promissory Note and all accrued and unpaid interest thereon, shall become due
and payable on September 30, 2000, unless extended as hereinafter provided (the
"Maturity Date").
1. Payments of Interest and Principal.
-----------------------------------
a. Interest. Maker shall pay interest to Payee on the outstanding
principal balance owed to Payee hereunder at the rate of ten percent (10%) per
annum. Interest shall be accrued and all accrued and unpaid interest shall be
paid on the Maturity Date of this Promissory Note.
b. Principal. Maker shall have no duty or obligation to pay any portion
of the outstanding principal owed hereunder, except as hereinafter provided,
until the Maturity Date. On the Maturity Date all outstanding principal, and
accrued but unpaid interest, shall be due and payable, and shall be paid to
Payee.
c. Payments. All payments made hereunder shall be applied as made first
to the payment of interest then due, and the balance of said payment shall be
applied to the payment of principal.
d. Prepayments. This Promissory Note may be prepaid, in whole or in
part, at any time, without penalty.
2. Extensions.
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a. Acknowledgment. Maker and Payee acknowledge their intent that
amounts due under this Promissory Note are to be paid from the proceeds of a
private placement of $10 million in securities (the "Placement") of VIVA Gaming
& Resorts Inc., a Florida corporation ("VIVA (US)") to be undertaken promptly
following the date hereof, with the assistance of Payee. To the extent that the
Placement is not consummated on or prior to September 30, 2000. Maker and Payee
have agreed to extend the Maturity Date as follows.
b. Failure by Payee. In the event the Placement is not consummated on
or prior to September 30, 2000 for any reason other than as set forth in Section
2(c) below, the Maturity Date of this Promissory Note shall be extended to
December 31, 2000.
c. Failure by Maker. In the event the Placement is not consummated on
or prior to September 30, 2000 due to a "flaw of or by VIVA (US)", then (i) the
Maturity Date shall be extended to October 31, 2000, (ii) Payee shall not be
obligated to use its best efforts to enable VIVA (US) to complete the Placement,
and (iii) Payee shall be entitled to foreclose on the Collateral in the manner
set forth in the Escrow Agreement. For purposes hereof, a "flaw of or by VIVA
(US)" shall mean an event or events relating to VIVA (US) that would materially
and adversely affect a reasonable investor's determination to participate in the
Placement. A "flaw of or by VIVA (US)" shall not include a change in general
economic conditions, information contained in any of the documents described in
Section 2(d)(i)- (iii) or information actually known to Payee as of the date
hereof.
d. Available Information and Best Efforts. Payee understands that VIVA
(US) has a class of securities registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and is required to file
periodic reports with the Securities and Exchange Commission ("SEC"), in
accordance with Exchange Act rules. Payee acknowledges that it has received and
reviewed copies of the following documents of VIVA (US):
(i) Registration Statement on Form 10-SB filed April 10, 2000;
(ii) Quarterly Report on Form 10-QSB for the quarter ended
March 31, 2000, filed May 15, 2000; and
(iii) draft Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2000, not yet filed with the SEC.
Payee confirms and acknowledges that based upon its review of the foregoing
documents, conversations it has had with management of VIVA (US) and the results
of its due diligence investigation, nothing has come to the attention of Payee
that would constitute a "flaw" within the meaning of Section 2(c) hereof. Payee
hereby agrees to use its best efforts to enable VIVA (US) to complete the
Placement.
3. Place of Payment. All payments of principal and interest shall
be made to Payee at its address specified in Section 8(e) below, or as otherwise
specified by Payee, in writing, to Maker.
4. Collateral Security. Maker's obligation to pay amounts due
under this Promissory Note and the Promissory Note issued to Thomson Kernaghan &
Co. Ltd. are secured by the collateral identified on Schedule A hereto (the
"Collateral"). The Collateral is to be held in escrow for that purpose under the
terms of an Escrow Agreement by and among Maker, Lenders and Wuersch & Xxxxxx
LLP, Attorneys At Law, as escrow agent. Payee's entitlement to foreclose on the
collateral is governed by the terms of this Promissory Note and such Escrow
Agreement of even date herewith relating to the Collateral. The Maker represents
and warrants that this Promissory Note, together with the taking by the Payee of
possession of the Collateral with respect hereto, creates a valid first priority
lien and security interest in the Collateral, enforceable against the Maker and
all third parties, and validly secures the payment of the secured obligations.
Maker represents and warrants that it has good and marketable title to and will
at all times keep the Collateral free of all liens and encumbrances, except for
the security interest created hereby, and the Maker has made no other
assignment, transfer, conveyance, pledge or grant of a security interest in the
Collateral. The Maker shall not, without the prior written consent of the Payee,
which will not be unreasonably withheld or delayed, sell, convey, assign,
pledge, grant a security interest in or otherwise transfer or encumber all or
any part of the Collateral. Maker covenants it shall not cause the issuance of
any additional securities in the issuer of the Collateral other than those
issued and outstanding as of execution hereof. Maker will duly endorse, in
blank, each and every instrument constituting the Collateral by signing on said
instrument or by signing a separate assignment or other documents of transfer,
if required by the Payee, and will at any time or times hereafter perform such
other acts as the Payee may request to establish, maintain, perfect and enforce
the Payee's security interest in the Collateral and rights under this Promissory
Note.
5. Default and Remedies.
---------------------
(a) Default. The occurrence of any of the following shall
constitute an event of default ("Event of Default"):
(i) Failure to Pay. Maker fails to pay, when due, any
of its obligations under this Promissory Note at their due date, and such
failure continues unremedied for a period of three business days after written
notice from Payee to Maker of such failure.
(ii) Failure to Perform. Maker fails to perform or
observe any other material covenant, term or condition of this Promissory Note
to be performed or observed by Maker and such failure continues unremedied for a
period of ten business days after written notice from Payee to Maker of such
failure.
(iii) Petition By or Against Maker. There is filed by
or against Maker any petition or complaint with respect to its own financial
condition under any state or federal bankruptcy law or any amendment thereto
(including without limitation a petition for reorganization, arrangement or
extension of debts) or under any other similar insolvency laws providing for the
relief of debtors and such petition or complaint is not set aside, stayed or
terminated within 60 days after filing; or
(iv) Appointment of Receiver. A receiver, trustee,
conservator or liquidator is appointed for Maker, or for all or a substantial
part of its assets; or Maker shall be adjudicated bankrupt, insolvent or in need
of any relief provided to debtors by any court and such appointment or
adjudication is not set aside, stayed or terminated within 60 days after filing.
b. Remedies. Upon the occurrence of an Event of Default and for so long
as such default is continuing:
(i) The outstanding principal amount of this Promissory Note
and accrued interest thereon shall, at the option of Payee, become
immediately due and payable.
(ii) Payee may exercise any of other remedies available to it
under applicable law. Foreclosure upon the Collateral shall not be the
sole or prerequisite remedy of Payee.
(iii) Maker shall be liable for all costs, charges and
expenses incurred by Payee by reason of the occurrence of any Event of
Default or the exercise of Payee's remedies with respect thereto.
(iv) In case of any one or more of the Events of Default, the
holder of this Promissory Note may proceed to protect and enforce its
rights either by suit in equity and/or by action at law, whether for
the specific performance of any covenant or agreement contained in this
Promissory Note, other instrument or in aid of the exercise of any
power granted in this Promissory Note, other instrument or proceed to
enforce the payment of this Promissory Note or to enforce any other
legal or equitable right of the registered holder of this Promissory
Note.
(v) The Maker hereby waives and releases all benefits that
might accrue to the Maker by virtue of any present or future laws
exempting any property, real or personal, or any part of the proceeds
arising from any sale of any such property, from attachment, levy, or
sale under execution, or providing for any stay of execution, exemption
from civil process or extension of time for payment; and the Maker
agrees that any real estate that may be levied upon pursuant to a
judgment obtained by virtue hereof, on any writ of execution issued
thereon, may be sold upon any such writ in whole or in part in any
order desired by the holder.
(vi) Except as expressly set forth herein, the Maker hereby
waives demand, notice of demand, notice of nonpayment or dishonor,
protest and notice of protest of this Promissory Note, and all other
notices not specifically required hereby in connection with the
delivery, acceptance, performance, default, or enforcement of the
payment of this Promissory Note, and agrees that its liability
hereunder shall be unconditional.
(vii) The holder of this Promissory Note shall not be deemed,
by any act of omission or commission, to have waived any of its rights
or remedies hereunder unless such waiver is in writing and signed by
the holder, and then only to the extent specifically set forth in
writing. A waiver of one event shall not be construed as continuing or
as a bar to or waiver of any right or remedy to a subsequent event.
(viii) No right or remedy herein conferred upon the holder of
this Promissory Note is intended to be exclusive of any other right or
remedy, and each and every such right and remedy shall be cumulative
and shall be in addition to every other right or remedy given hereunder
or now or hereafter existing at law or in equity or by statute or
otherwise, and the failure to exercise any such right or remedy shall
in no event be construed as a waiver or release thereof. No course of
dealing between the Maker and the holder hereof or any delay on the
part of the holder hereof in exercising any rights hereunder shall
operate as a waiver of any rights of such holder.
6. Investment Intent. This Promissory Note is delivered to Payee
in reliance upon its representation that Payee is acquiring this Promissory Note
for investment purposes only and not with a view to resale, or with an intent of
participating directly or indirectly in any distribution within the meaning of
the Act. Payee may not divide his participation with others or resell, assign or
otherwise dispose of all or any part of this Promissory Note, except in
accordance with applicable securities laws.
7. No Shareholder Rights. Neither delivery of this Promissory
Note by Maker, nor ownership of this Promissory Note by Payee, shall confer upon
Payee any rights as a shareholder of Maker.
8. Miscellaneous.
a. Waivers. No waiver of any term or condition of this Promissory Note
shall be construed to be a waiver of any succeeding breach of the same term or
condition. No failure or delay of Payee to exercise any power hereunder, or to
insist upon strict compliance by Maker of any obligations hereunder, and no
custom or other practice at variance with the terms hereof shall constitute a
waiver of the right of Payee to demand exact compliance with such terms.
b. Invalid Terms. In the event any provision contained in this
Promissory Note shall, for any reason, be held invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Promissory Note, and this Promissory Note shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
c. Successors. This Promissory Note shall be binding upon Maker, its
legal representatives, successors and assigns, and inure to the benefit of
Payee, its legal representatives, successors and assigns.
d. Controlling Law. This Promissory Note shall be read, construed and
governed in all respects in accordance with the laws of the State of New York;
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
e. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be sufficiently given if
addressed to Maker x/x Xxxxx Xxxxxxxx, Xxxxx 0000, 000 Xxxx Xxx Xxxx Xxxxxxxxx,
Xxxx Xxxxxxxxxx, Xxxxxxx 00000 and to Payee at the last designated address as
provided by Payee, posted in the U.S. mail by certified or registered mail,
return receipt requested.
f. Construction of Terms. Whenever the context so requires, any gender
is deemed to include any other, and the singular is deemed to include the
plural, and conversely.
g. Time of Essence. Time is of the essence in this Promissory Note and
each and every provision hereof.
h. Headings. All section and subsection headings herein, wherever they
appear, are for convenience only and shall not affect the construction of any
terms herein.
i. Payment of Expenses. The Maker shall pay at closing all of the
Payee's reasonable attorneys' fees and other costs related to this Agreement,
including, without limitation, all fees and costs incurred in connection with
(i) the preparation of this Agreement, (ii) the handling and monitoring of the
Subsidiary shares pledged hereunder, (iii) the preparation, filing and
effectiveness of a Registration Statement with respect to shares of the Maker's
common stock issued in a related transaction, and (iv) enforcement of the terms
of this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to be
executed by its duly authorized officer as of the day and year first above
written.
VIVA GAMING & RESORTS INC.
By: /s/ Xxxxxx Xxxxx
--------------------------
Name: Xxxxxx Xxxxx
Title: President/CEO
Witness:
/s/ Xxxxx Xxxxx
------------------------
Name: Xxxxx Xxxxx
Title: Database Mgr. Viva Gaming
SCHEDULE A
Collateral Security under Promissory Note dated August 22, 2000, issued by VIVA
Gaming & Resorts Inc., in favor of Xxxxxx Xxx.
(i) All stock and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of 3,215,000 common shares in the capital stock of Viva
Gaming & Resort de Mexico, S.A. de C.V. a variable capital corporation
(hereinafter "Viva Mexico"), duly incorporated pursuant to the laws of the
Republic of Mexico, such shares comprising 64.3% of the total issued and
outstanding shares of Viva Mexico's common stock (the "Collateral Security").
The Maker covenants it shall not cause the issuance of any additional securities
in Viva Mexico during the term of the Promissory Note.
ESCROW AGREEMENT
Xxxxxx Xxx
ESCROW AGREEMENT made as of this 22nd day of August, 2000 (the "Escrow
Agreement"), by and between the VIVA Gaming & Resort, a Florida corporation (the
"Company"), Xxxxxx Xxx, the holder of a promissory Note of the company with a
principle amount of $ 500,000 (the "Lender") and Wuersch & Xxxxxx LLP, with
offices at 00 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile:
212-509-9559 (the "Escrow Agent", which term shall include any successor escrow
agent appointed in accordance with Section 7(b) hereof).
The parties hereto are entering into this Escrow Agreement in
connection with a certain Promissory Note executed by the Company on the date
set forth therein (the "Note"); capitalized terms used but not otherwise defined
herein shall have the meaning ascribed to them in the Notes.
Now therefore, in consideration of the mutual agreements
herein contained, the parties hereto hereby agree as follows:
1. Appointment of Escrow Agent. The Escrow Agent is hereby
appointed to act as escrow agent hereunder and the Escrow Agent agrees to act as
such pursuant to the terms hereinafter set forth.
2. Escrow Certificate. (a) In accordance with the terms of the
Escrow Agreement, the Company will be delivering to the Escrow Agent a stock
certificate or certificates representing 1,071,667 shares of common stock of the
Viva Gaming & Resort de Mexico, S.A. de C.V. (the "Viva Mexico Stock") held by
the Company (the "Escrow Certificate"). The Escrow Certificate shall be held in
escrow by the Escrow Agent, pending its release as hereinafter provided.
3. Release of Escrow Certificate. The Escrow Certificate shall
be released by the Escrow Agent upon mutual written consent by the Company and
the Lender to this agreement or in absence thereof, by the order of a court of
competent jurisdiction. Such written instructions shall be in form and substance
reasonably satisfactory to the Escrow Agent and shall be duly executed by the
Company and the Lender. Except as otherwise provided herein, upon receipt of
such written instructions, the Escrow Agent shall be entitled to dispose of the
Escrow Certificate in the manner and to the persons reasonably set forth
therein. If no reasonable delivery method is specified in such instructions, the
Escrow Agent shall be entitled to deliver the Escrow Certificate by overnight
courier, certified mail or hand delivery or such other method as Escrow Agent,
in its sole discretion, deems appropriate under the circumstances.
4. Termination. This Escrow Agreement may be terminated by
mutual consent of the Company and the Lender at any time by giving the Escrow
Agent prior written notice of termination executed by the Company and the
Lender, directing the distribution of all the Escrow Certificate by the Escrow
Agent under and pursuant to this Escrow Agreement. In such event, the Escrow
Agent shall dispose of the Escrow Certificate as specified in such notice. In
the event that a dispute arises in connection with the release of the Escrow
Certificate, the Escrow Agent shall have the sole and absolute right to resign
in accordance with the provisions of Section 5(b) hereof. This Escrow Agreement
shall automatically terminate if and when the Escrow Certificate shall have been
distributed by the Escrow Agent in accordance with the terms of this Escrow
Agreement.
5. The Escrow Agent.
----------------
(a) Obligations. (i) The obligations of the Escrow Agent are
those specifically provided in this Escrow Agreement and no others, and the
Escrow Agent shall have no liability under, and no duty to inquire into the
terms and provisions, of any agreement between the parties hereto and no implied
covenants or obligations shall be read into this Escrow Agreement or the Hold
Agreement against the Escrow Agent, nor shall the Escrow Agent have any
responsibility to inquire into the validity or enforceability of any agreement,
instrument or instructions. The Escrow Agent is acting hereunder as an
accommodation to the Company and the Lender. The Escrow Agent may consult with
counsel of its choice, and shall not be liable for following the advice of such
counsel. The Escrow Agent shall not be liable FOR THE PERFORMANCE OF ITS DUTIES
HEREUNDER, for any action taken in accordance with the terms hereof or any
instructions, requests or directions it is required or authorized to follow
under any provision of this Escrow Agreement or otherwise or which is otherwise
within the rights and powers conferred upon it by this Escrow Agreement, IN EACH
CASE, EXCEPT FOR ITS WILLFUL MISCONDUCT OR GROSS NEGLIGENCE. The duties of the
Escrow Agent are purely ministerial in nature and shall not include the
provision of legal services to the Company or the Lender in connection with the
transactions contemplated hereby or by the Hold Agreement.
(ii) The Escrow Agent shall not have any responsibility for
the genuineness or validity of any document or other item deposited with it or
of any signature thereon or for the identity, authority or right of any person
executing or depositing the same and shall not have any liability for acting in
accordance with any written instructions or certificates given to it hereunder
signed by the proper parties.
(iii) The Escrow Agent shall have no responsibility whatsoever
for the loss in transit of the Escrow Certificate or any portion thereof to or
from the Escrow Agent or the failure of any portion of the Escrow Certificate to
reach the intended destination; provided that the Escrow Agent shall have
complied with Section 3 hereof and shall actually have delivered the Escrow
Certificate to the appropriate delivery service provider. Unless the Escrow
Agent shall have received reasonable delivery instructions in form and substance
satisfactory to it, the Escrow Agent shall not be obligated to release any
portion of the Escrow Certificate. Escrow Agent's liability for any loss or
damage to the Escrow Certificate prior to such delivery shall be limited to the
reasonable replacement costs thereof, and the Escrow Agent shall have no further
liability to any party as a result of such loss or damage; provided that the
Escrow Agent shall have kept such items in a locked compartment within or
outside of its premises, except for reasonable periods of time following
receipt, during transit from one locked compartment to another and prior to the
delivery of such items. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE FOR
CONSEQUENTIAL OR SPECIAL DAMAGES AS A RESULT OF ANY LOSS OF OR DAMAGE TO ALL OR
PART OF THE ESCROW CERTIFICATE.
(iv) Anything herein contained to the contrary
notwithstanding, the Escrow Agent shall not be obligated to take any action
which might in its reasonable judgment involve it in any expense or liability
unless furnished with reasonable indemnity.
(v) In making any distribution or taking any other action
hereunder, the Escrow Agent shall have the right to rely upon and shall be
protected in acting or refraining from acting upon any certificate, opinion,
consent or other document believed by it to be genuine and to have been executed
or presented by the proper party or parties. Any such signature of any party
hereto on any notice or instruction transmitted by facsimile shall constitute
the due execution and delivery of such notice or instruction by such party. The
Escrow Agent shall have the right to assume that any person purporting to give
any notice in accordance with this Escrow Agreement or in connection with any
transaction to which this Agreement related has been duly authorized to do so.
The Escrow Agent shall not be obligated to make any inquiry as to the authority,
capacity, existence, or identity of any person purporting to give any such
notice. The Escrow Agent may perform any of the duties provided for herein
either directly or through agents or attorneys and be protected from any
liability in acting, in the absence of bad faith, upon the advice of attorneys
and accountants.
(vi) If the Escrow Agent is uncertain as to its duties or
rights hereunder or shall receive a notice from the Company or the Lender with
respect to the Escrow Certificate that, in the Escrow Agent's sole and absolute
discretion, is in conflict with any of the terms hereof it may refrain from
taking any action until otherwise directed by an order of a court or arbitrator
of competent jurisdiction.
(vii) The Escrow Agent makes no representation as to and has
no responsibility for the validity or sufficiency of this Escrow Agreement,
except that the Escrow Agent represents and warrants that the partner executing
this Escrow Agreement on its behalf has the authority to do so and that this
Escrow Agreement is valid and binding in respect of the Escrow Agent in
accordance with its terms.
(b) Resignation and Removal. The Escrow Agent may resign from
its duties hereunder at any time by giving at least 10 days prior written notice
of such resignation to the Company or the Lender and specifying a date upon
which such resignation shall take effect; provided, however, that the Escrow
Agent shall continue to serve until its successor accepts the Escrow Certificate
pursuant to a written assignment and assumption instrument pursuant to which the
rights of the Escrow Agent are assigned to such successor and such successor
expressly assumes the obligations of the Escrow Agent hereunder. Notwithstanding
the foregoing, however, the Escrow Agent shall, in the alternative, have the
right but not the obligation, at any time, following 5 business days written
notice to the other parties hereto, to resign as Escrow Agent and deposit the
Escrow Certificate with a court of competent jurisdiction and the Escrow Agent
shall thereupon have no further obligation with respect thereto. Upon receipt of
such notice, a successor escrow agent shall be appointed by the Lender, such
successor escrow agent to become the Escrow Agent hereunder on the resignation
date specified in such notice. If an instrument of assignment and assumption by
a successor escrow agent shall not have been delivered to the Escrow Agent
within 15 business days after the giving of such notice of resignation, the
resigning Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor escrow agent. The Lender may at any time remove the
Escrow Agent and substitute a new escrow agent by giving 10 business days prior
written notice thereof to the Escrow Agent then acting.
(c) Indemnification. The Company and the Lender have agreed to
hold the Escrow Agent harmless from and against and indemnify the Escrow Agent
for any loss, liability, expense (including reasonable attorneys' fees and
expenses), claim or demand arising out of or in connection with its performance
under this Escrow Agreement, except in the event of gross negligence or willful
misconduct of the Escrow Agent. The foregoing indemnities in this Section 5(c)
shall survive the resignation or substitution of the Escrow Agent and the
termination of this Escrow Agreement.
(d) Expenses of the Escrow Agent. The Company agrees herewith
to bear the cost for reasonable expenses incurred by the Escrow Agent in the
performance of services pursuant to this Escrow Agreement and to promptly
reimburse the Escrow Agent upon receipt of a written request for reimbursement
and the presentation of proper vouchers or receipts therefor.
6. Disputes. (a) If any dispute should arise with respect to
the ownership or right of possession of the Escrow Certificate, the Escrow Agent
shall be authorized and directed to retain in its possession, without liability
to anyone, all or any portion of the Escrow Certificate until such dispute shall
have been settled either by agreement of the parties concerned or by a Final
Decree, but the Escrow Agent shall be under no duty whatsoever to institute or
defend any such proceedings.
(b) The Company shall bear all of its own costs and expenses
and all costs and expenses incurred by the Lender in resolving any dispute
arising under this Escrow Agreement. Any costs incurred by the Escrow Agent in
connection with any dispute arising under this Escrow Agreement shall be
reimbursed to the Escrow Agent pursuant to the provisions of Section 5 (d) . If
the Escrow Agent is not reimbursed for such expenses within 30 days' written
notice thereof, the Escrow Agent shall be entitled to resign, upon 15 days'
prior written notice to the Company and the Lender. If no successor escrow agent
is named by the end of such 15 day period, the Escrow Agent shall have the right
to deposit the Escrow Certificate with an appropriate court and the Escrow Agent
shall have no further obligation under this Escrow Agreement.
7. Notices and Instructions. All notices, instructions
(including without limitation any instructions pursuant to Section 3 hereof) or
other communications which are required or permitted to be given hereunder shall
be in writing and shall be personally delivered, sent by certified mail, return
receipt requested, by a nationally-recognized overnight courier or facsimile, to
the other party at the address first above written, or to such other address as
the party to whom notice is to be given may have furnished to the other party in
writing. Any such communication shall be deemed to have been given when (i)
delivered, if personally delivered, (ii) on receipt, if sent by mail, (iii) on
the third business day after dispatch, if sent by a recognized overnight courier
(without limiting the generality of the foregoing, Federal Express, DHL and UPS
shall be deemed to be recognized overnight couriers for purposes of this
Agreement), and (iv) within one business day if sent by facsimile.
8. Counterparts. This Escrow Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement
9. Governing Law and Jurisdiction. This Escrow Agreement shall
be governed by and construed in accordance with the laws of the State of New
York, without giving effect to the principles of conflicts of laws thereunder.
This Escrow Agreement shall be subject to the exclusive jurisdiction of the
courts located in New York County, New York. The parties to this Escrow
Agreement agree that any breach of any term or condition of this Escrow
Agreement shall be deemed to be a breach occurring in the State of New York by
virtue of a failure to perform an act required to be performed in the State of
New York, and the parties irrevocably and expressly agree to submit to the
jurisdiction of the courts of the State of New York for the purpose of resolving
any disputes among the parties relating to this Escrow Agreement or the
transactions contemplated hereby. The parties hereto irrevocably waive, to the
fullest extent permitted by law, any objection which they may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Escrow Agreement, or any judgment entered by any court in
respect hereof brought in New York County, New York, and further irrevocably
waive any claim that any suit, action or proceeding brought in New York County,
New York has been brought in an inconvenient forum.
10. Benefits of Agreement. All the terms and provisions of
this Escrow Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; and nothing in this
Escrow Agreement, express or implied, is intended to confer on any person,
corporation, group or other entity other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Escrow Agreement. Anything contained
herein to the contrary notwithstanding, this Escrow Agreement shall not be
assignable by any party hereto without the consent of the other parties hereto.
11. Full Force and Effect. This Escrow Agreement shall remain
in full force and effect until the Escrow Agent has delivered the Escrow
Certificate in accordance with the terms hereof.
12. Severability. If any provision contained herein shall be
illegal or unenforceable, the parties hereto agree that the remainder of this
Escrow Agreement shall remain in full force and effect and that such illegal or
unenforceable provision shall be replaced with a provision which provides the
party or parties affected thereby with the same or a comparable economic benefit
as that provided by such illegal or unenforceable provision.
13. Modification. This Escrow Agreement shall not be altered
or otherwise amended, except pursuant to an instrument in writing signed by each
of the parties hereto.
14. Descriptive Headings. The descriptive headings in this
Escrow Agreement are for convenience only and shall not control or affect the
meaning or constructing of any provision of this Escrow Agreement.
15. Transfer. The Lender shall not sell, assign, transfer
exchange or otherwise dispose of, or grant any option or warrant with respect
to, all or any part of the Escrow Certificate, nor shall it create, incur or
permit to exist any pledge, lien, mortgage, hypothecation, security interest,
charge or other encumbrance with respect to all or part of the Escrow
Certificate.
[signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed and delivered on the date first above written.
Company: VIVA GAMING & RESORTS INC.
/s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: President & CEO
-----------------------------
Lender:
/s/ Xxxxxx Xxxx
-----------------------------------
Name: Xxxxxx X. Xxxx
-----------------------------------
Title: Chairman, Viva Gaming & Resorts Inc.
-----------------------------------
ESCROW AGENT:
WUERSCH & XXXXXX LLP
/s/ Xxxxxx Xxxxxx
---------------------------------
By: Xxxxxx Xxxxxx
Partner
THIS PROMISSORY NOTE IS ONE OF A SERIES OF TWO PROMISSORY NOTES OF LIKE TERMS
AND TENOR.
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED ("ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR
AN OPINION OF COUNSEL SATISFACTORY TO THE MAKER THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.
SECURED PROMISSORY NOTE AND SECURITY AGREEMENT
----------------------------------------------
August 22, 2000. $1,000,000
FOR VALUE RECEIVED, the undersigned, VIVA GAMING & RESORT INC., a corporation
duly incorporated under the laws of the State of Florida ("Maker"), hereby
promises to pay to the order of Thomson Kernaghan & Co. Ltd. ("Payee") the
principal sum of one million Dollars ($1,000,000) with interest on the unpaid
principal balance, payable as herein provided, at the rate of ten percent (10%)
per annum in accordance with the terms and conditions of this Promissory Note
and Security Agreement (the "Promissory Note"). The outstanding principal
balance of this Promissory Note and all accrued and unpaid interest thereon,
shall become due and payable on September 30, 2000, unless extended as
hereinafter provided (the "Maturity Date").
1. Payments of Interest and Principal.
----------------------------------
a. Interest. Maker shall pay interest to Payee on the outstanding
principal balance owed to Payee hereunder at the rate of ten percent (10%) per
annum. Interest shall be accrued and all accrued and unpaid interest shall be
paid on the Maturity Date of this Promissory Note.
b. Principal. Maker shall have no duty or obligation to pay any portion
of the outstanding principal owed hereunder, except as hereinafter provided,
until the Maturity Date. On the Maturity Date all outstanding principal, and
accrued but unpaid interest, shall be due and payable, and shall be paid to
Payee.
c. Payments. All payments made hereunder shall be applied as made first
to the payment of interest then due, and the balance of said payment shall be
applied to the payment of principal.
d. Prepayments. This Promissory Note may be prepaid, in whole or in
part, at any time, without penalty.
2. Extensions.
a. Acknowledgment. Maker and Payee acknowledge their intent
that amounts due under this Promissory Note are to be paid from the proceeds of
a private placement of $10 million in securities (the "Placement") of VIVA
Gaming & Resorts Inc., a Florida corporation ("VIVA (US)") to be undertaken
promptly following the date hereof, with the assistance of Payee. To the extent
that the Placement is not consummated on or prior to September 30, 2000, Maker
and Payee have agreed to extend the Maturity Date as follows.
b. Failure by Payee. In the event the Placement is not consummated on
or prior to September 30, 2000 for any reason other than as set forth in Section
2(c) below, the Maturity Date of this Promissory Note shall be extended to
December 31, 2000.
c. Failure by Maker. In the event the Placement is not consummated on
or prior to September 30, 2000 due to a "flaw of or by VIVA (US)", then (i) the
Maturity Date shall be extended to October 31, 2000, (ii) Payee shall not be
obligated to use its best efforts to enable VIVA (US) to complete the Placement,
and (iii) Payee shall be entitled to foreclose on the Collateral in the manner
set forth in the Escrow Agreement. For purposes hereof, a "flaw of or by VIVA
(US)" shall mean an event or events relating to VIVA (US) that would materially
and adversely affect a reasonable investor's determination to participate in the
Placement. A "flaw of or by VIVA (US)" shall not include a change in general
economic conditions, information contained in any of the documents described in
Section 2(d)(i)- (iii) or information actually known to Payee as of the date
hereof.
d. Available Information and Best Efforts. Payee understands that VIVA
(US) has a class of securities registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and is required to file
periodic reports with the Securities and Exchange Commission ("SEC"), in
accordance with Exchange Act rules. Payee acknowledges that it has received and
reviewed copies of the following documents of VIVA (US):
(i) Registration Statement on Form 10-SB filed April 10, 2000;
(ii) Quarterly Report on Form 10-QSB for the quarter ended
March 31, 2000, filed May 15, 2000; and
(iii) draft Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2000, not yet filed with the SEC.
Payee confirms and acknowledges that based upon its review of the foregoing
documents, conversations it has had with management of VIVA (US) and the results
of its due diligence investigation, nothing has come to the attention of Payee
that would constitute a "flaw" within the meaning of Section 2(c) hereof. Payee
hereby agrees to use its best efforts to enable VIVA (US) to complete the
Placement.
3. Place of Payment. All payments of principal and interest shall
be made to Payee at its address specified in Section 8(e) below, or as otherwise
specified by Payee, in writing, to Maker.
4. Collateral Security. Maker's obligation to pay amounts due
under this Promissory Note and the Promissory Note issued to Thomson Kernaghan &
Co. Ltd. are secured by the collateral identified on Schedule A hereto (the
"Collateral"). The Collateral is to be held in escrow for that purpose under the
terms of an Escrow Agreement by and among Maker, Lenders and Wuersch & Xxxxxx
LLP, Attorneys At Law, as escrow agent. Payee's entitlement to foreclose on the
collateral is governed by the terms of this Promissory Note and such Escrow
Agreement of even date herewith relating to the Collateral. The Maker represents
and warrants that this Promissory Note, together with the taking by the Payee of
possession of the Collateral with respect hereto, creates a valid first priority
lien and security interest in the Collateral, enforceable against the Maker and
all third parties, and validly secures the payment of the secured obligations.
Maker represents and warrants that it has good and marketable title to and will
at all times keep the Collateral free of all liens and encumbrances, except for
the security interest created hereby, and the Maker has made no other
assignment, transfer, conveyance, pledge or grant of a security interest in the
Collateral. The Maker shall not, without the prior written consent of the Payee,
which will not be unreasonably withheld or delayed, sell, convey, assign,
pledge, grant a security interest in or otherwise transfer or encumber all or
any part of the Collateral. Maker covenants it shall not cause the issuance of
any additional securities in the issuer of the Collateral other than those
issued and outstanding as of execution hereof. Maker will duly endorse, in
blank, each and every instrument constituting the Collateral by signing on said
instrument or by signing a separate assignment or other documents of transfer,
if required by the Payee, and will at any time or times hereafter perform such
other acts as the Payee may request to establish, maintain, perfect and enforce
the Payee's security interest in the Collateral and rights under this Promissory
Note.
5. Default and Remedies.
(a) Default. The occurrence of any of the following shall
constitute an event of default ("Event of Default"):
(i) Failure to Pay. Maker fails to pay, when due, any
of its obligations under this Promissory Note at their due date, and such
failure continues unremedied for a period of three business days after written
notice from Payee to Maker of such failure.
(ii) Failure to Perform. Maker fails to perform or
observe any other material covenant, term or condition of this Promissory Note
to be performed or observed by Maker and such failure continues unremedied for a
period of ten business days after written notice from Payee to Maker of such
failure.
(iii) Petition By or Against Maker. There is filed by
or against Maker any petition or complaint with respect to its own financial
condition under any state or federal bankruptcy law or any amendment thereto
(including without limitation a petition for reorganization, arrangement or
extension of debts) or under any other similar insolvency laws providing for the
relief of debtors and such petition or complaint is not set aside, stayed or
terminated within 60 days after filing; or
(iv) Appointment of Receiver. A receiver, trustee,
conservator or liquidator is appointed for Maker, or for all or a substantial
part of its assets; or Maker shall be adjudicated bankrupt, insolvent or in need
of any relief provided to debtors by any court and such appointment or
adjudication is not set aside, stayed or terminated within 60 days after filing.
b. Remedies. Upon the occurrence of an Event of Default and
for so long as such default is continuing:
(i) The outstanding principal amount of this Promissory Note
and accrued interest thereon shall, at the option of Payee, become
immediately due and payable.
(ii) Payee may exercise any of other remedies available to it
under applicable law. Foreclosure upon the Collateral shall not be the
sole or prerequisite remedy of Payee.
(iii) Maker shall be liable for all costs, charges and
expenses incurred by Payee by reason of the occurrence of any Event of
Default or the exercise of Payee's remedies with respect thereto.
(iv) In case of any one or more of the Events of Default, the
holder of this Promissory Note may proceed to protect and enforce its
rights either by suit in equity and/or by action at law, whether for
the specific performance of any covenant or agreement contained in this
Promissory Note, other instrument or in aid of the exercise of any
power granted in this Promissory Note, other instrument or proceed to
enforce the payment of this Promissory Note or to enforce any other
legal or equitable right of the registered holder of this Promissory
Note.
(v) The Maker hereby waives and releases all benefits that
might accrue to the Maker by virtue of any present or future laws
exempting any property, real or personal, or any part of the proceeds
arising from any sale of any such property, from attachment, levy, or
sale under execution, or providing for any stay of execution, exemption
from civil process or extension of time for payment; and the Maker
agrees that any real estate that may be levied upon pursuant to a
judgment obtained by virtue hereof, on any writ of execution issued
thereon, may be sold upon any such writ in whole or in part in any
order desired by the holder.
(vi) Except as expressly set forth herein, the Maker hereby
waives demand, notice of demand, notice of nonpayment or dishonor,
protest and notice of protest of this Promissory Note, and all other
notices not specifically required hereby in connection with the
delivery, acceptance, performance, default, or enforcement of the
payment of this Promissory Note, and agrees that its liability
hereunder shall be unconditional.
(vii) The holder of this Promissory Note shall not be deemed,
by any act of omission or commission, to have waived any of its rights
or remedies hereunder unless such waiver is in writing and signed by
the holder, and then only to the extent specifically set forth in
writing. A waiver of one event shall not be construed as continuing or
as a bar to or waiver of any right or remedy to a subsequent event.
(viii) No right or remedy herein conferred upon the holder of
this Promissory Note is intended to be exclusive of any other right or
remedy, and each and every such right and remedy shall be cumulative
and shall be in addition to every other right or remedy given hereunder
or now or hereafter existing at law or in equity or by statute or
otherwise, and the failure to exercise any such right or remedy shall
in no event be construed as a waiver or release thereof. No course of
dealing between the Maker and the holder hereof or any delay on the
part of the holder hereof in exercising any rights hereunder shall
operate as a waiver of any rights of such holder.
6. Investment Intent. This Promissory Note is delivered to Payee
in reliance upon its representation that Payee is acquiring this Promissory Note
for investment purposes only and not with a view to resale, or with an intent of
participating directly or indirectly in any distribution within the meaning of
the Act. Payee may not divide his participation with others or resell, assign or
otherwise dispose of all or any part of this Promissory Note, except in
accordance with applicable securities laws.
7. No Shareholder Rights. Neither delivery of this Promissory
Note by Maker, nor ownership of this Promissory Note by Payee, shall confer upon
Payee any rights as a shareholder of Maker.
8. Miscellaneous.
a. Waivers. No waiver of any term or condition of this Promissory Note
shall be construed to be a waiver of any succeeding breach of the same term or
condition. No failure or delay of Payee to exercise any power hereunder, or to
insist upon strict compliance by Maker of any obligations hereunder, and no
custom or other practice at variance with the terms hereof shall constitute a
waiver of the right of Payee to demand exact compliance with such terms.
b. Invalid Terms. In the event any provision contained in this
Promissory Note shall, for any reason, be held invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Promissory Note, and this Promissory Note shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
c. Successors. This Promissory Note shall be binding upon Maker, its
legal representatives, successors and assigns, and inure to the benefit of
Payee, its legal representatives, successors and assigns.
d. Controlling Law. This Promissory Note shall be read, construed and
governed in all respects in accordance with the laws of the State of New York;
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
e. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be sufficiently given if
addressed to Maker x/x Xxxxx Xxxxxxxx, Xxxxx 0000, 000 Xxxx Xxx Xxxx Xxxxxxxxx,
Xxxx Xxxxxxxxxx, Xxxxxxx 00000 and to Payee at the last designated address as
provided by Payee, posted in the U.S. mail by certified or registered mail,
return receipt requested.
f. Construction of Terms. Whenever the context so requires, any gender
is deemed to include any other, and the singular is deemed to include the
plural, and conversely.
g. Time of Essence. Time is of the essence in this Promissory Note and
each and every provision hereof.
h. Headings. All section and subsection headings herein, wherever they
appear, are for convenience only and shall not affect the construction of any
terms herein.
i. Payment of Expenses. The Maker shall pay at closing all of the
Payee's reasonable attorneys' fees and other costs related to this Agreement,
including, without limitation, all fees and costs incurred in connection with
(i) the preparation of this Agreement, (ii) the handling and monitoring of the
Subsidiary shares pledged hereunder, (iii) the preparation, filing and
effectiveness of a Registration Statement with respect to shares of the Maker's
common stock issued in a related transaction, and (iv) enforcement of the terms
of this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to be
executed by its duly authorized officer as of the day and year first above
written.
VIVA GAMING & RESORTS INC.
By: /s/ Xxxxxx Xxxxx
---------------------------
Name: Xxxxxx Xxxxx
Title: President/CEO
Witness:
/s/ Xxxxx Xxxxx
------------------------
Name: Xxxxx Xxxxx
Title: Database Mgr. Viva Gaming
SCHEDULE A
Collateral Security under Promissory Note dated August 22, 2000, issued by VIVA
Gaming & Resorts Inc., in favor of Thomson Kernaghan & Co. Ltd.
(i) All stock and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of 3,215,000 common shares in the capital stock of Viva
Gaming & Resort de Mexico, S.A. de C.V. a variable capital corporation
(hereinafter "Viva Mexico"), duly incorporated pursuant to the laws of the
Republic of Mexico, such shares comprising 64.3% of the total issued and
outstanding shares of Viva Mexico's common stock (the "Collateral Security").
The Maker covenants it shall not cause the issuance of any additional securities
in Viva Mexico during the term of the Promissory Note.
ESCROW AGREEMENT
Thomson Kernaghan & Co. Ltd
ESCROW AGREEMENT made as of this 22nd day of August, 2000 (the "Escrow
Agreement"), by and between the VIVA Gaming & Resort, a Florida corporation (the
"Company"), Thomson Kernaghan & Co. Ltd., the holder of a promissory Note of the
company with a principle amount of $ 1,000,000 (the "Lender") and Wuersch &
Xxxxxx LLP, with offices at 00 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, facsimile: 212-509-9559 (the "Escrow Agent", which term shall include any
successor escrow agent appointed in accordance with Section 7(b) hereof).
The parties hereto are entering into this Escrow Agreement in
connection with a certain Promissory Note executed by the Company on the date
set forth therein (the "Note"); capitalized terms used but not otherwise defined
herein shall have the meaning ascribed to them in the Notes.
Now therefore, in consideration of the mutual agreements
herein contained, the parties hereto hereby agree as follows:
1. Appointment of Escrow Agent. The Escrow Agent is hereby
appointed to act as escrow agent hereunder and the Escrow Agent agrees to act as
such pursuant to the terms hereinafter set forth.
2. Escrow Certificate. (a) In accordance with the terms of the
Escrow Agreement, the Company will be delivering to the Escrow Agent a stock
certificate or certificates representing 2,143,333 shares of common stock of the
Viva Gaming & Resort de Mexico, S.A. de C.V. (the "Viva Mexico Stock") held by
the Company (the "Escrow Certificate"). The Escrow Certificate shall be held in
escrow by the Escrow Agent, pending its release as hereinafter provided.
3. Release of Escrow Certificate. The Escrow Certificate shall
be released by the Escrow Agent upon mutual written consent by the Company and
the Lender to this agreement or in absence thereof, by the order of a court of
competent jurisdiction. Such written instructions shall be in form and substance
reasonably satisfactory to the Escrow Agent and shall be duly executed by the
Company and the Lender. Except as otherwise provided herein, upon receipt of
such written instructions, the Escrow Agent shall be entitled to dispose of the
Escrow Certificate in the manner and to the persons reasonably set forth
therein. If no reasonable delivery method is specified in such instructions, the
Escrow Agent shall be entitled to deliver the Escrow Certificate by overnight
courier, certified mail or hand delivery or such other method as Escrow Agent,
in its sole discretion, deems appropriate under the circumstances.
4. Termination. This Escrow Agreement may be terminated by
mutual consent of the Company and the Lender at any time by giving the Escrow
Agent prior written notice of termination executed by the Company and the
Lender, directing the distribution of all the Escrow Certificate by the Escrow
Agent under and pursuant to this Escrow Agreement. In such event, the Escrow
Agent shall dispose of the Escrow Certificate as specified in such notice. In
the event that a dispute arises in connection with the release of the Escrow
Certificate, the Escrow Agent shall have the sole and absolute right to resign
in accordance with the provisions of Section 5(b) hereof. This Escrow Agreement
shall automatically terminate if and when the Escrow Certificate shall have been
distributed by the Escrow Agent in accordance with the terms of this Escrow
Agreement.
5. The Escrow Agent.
-----------------
(a) Obligations. (i) The obligations of the Escrow Agent are
those specifically provided in this Escrow Agreement and no others, and the
Escrow Agent shall have no liability under, and no duty to inquire into the
terms and provisions, of any agreement between the parties hereto and no implied
covenants or obligations shall be read into this Escrow Agreement or the Hold
Agreement against the Escrow Agent, nor shall the Escrow Agent have any
responsibility to inquire into the validity or enforceability of any agreement,
instrument or instructions. The Escrow Agent is acting hereunder as an
accommodation to the Company and the Lender. The Escrow Agent may consult with
counsel of its choice, and shall not be liable for following the advice of such
counsel. The Escrow Agent shall not be liable FOR THE PERFORMANCE OF ITS DUTIES
HEREUNDER, for any action taken in accordance with the terms hereof or any
instructions, requests or directions it is required or authorized to follow
under any provision of this Escrow Agreement or otherwise or which is otherwise
within the rights and powers conferred upon it by this Escrow Agreement, IN EACH
CASE, EXCEPT FOR ITS WILLFUL MISCONDUCT OR GROSS NEGLIGENCE. The duties of the
Escrow Agent are purely ministerial in nature and shall not include the
provision of legal services to the Company or the Lender in connection with the
transactions contemplated hereby or by the Hold Agreement.
(ii) The Escrow Agent shall not have any responsibility for
the genuineness or validity of any document or other item deposited with it or
of any signature thereon or for the identity, authority or right of any person
executing or depositing the same and shall not have any liability for acting in
accordance with any written instructions or certificates given to it hereunder
signed by the proper parties.
(iii) The Escrow Agent shall have no responsibility whatsoever
for the loss in transit of the Escrow Certificate or any portion thereof to or
from the Escrow Agent or the failure of any portion of the Escrow Certificate to
reach the intended destination; provided that the Escrow Agent shall have
complied with Section 3 hereof and shall actually have delivered the Escrow
Certificate to the appropriate delivery service provider. Unless the Escrow
Agent shall have received reasonable delivery instructions in form and substance
satisfactory to it, the Escrow Agent shall not be obligated to release any
portion of the Escrow Certificate. Escrow Agent's liability for any loss or
damage to the Escrow Certificate prior to such delivery shall be limited to the
reasonable replacement costs thereof, and the Escrow Agent shall have no further
liability to any party as a result of such loss or damage; provided that the
Escrow Agent shall have kept such items in a locked compartment within or
outside of its premises, except for reasonable periods of time following
receipt, during transit from one locked compartment to another and prior to the
delivery of such items. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE FOR
CONSEQUENTIAL OR SPECIAL DAMAGES AS A RESULT OF ANY LOSS OF OR DAMAGE TO ALL OR
PART OF THE ESCROW CERTIFICATE.
(iv) Anything herein contained to the contrary
notwithstanding, the Escrow Agent shall not be obligated to take any action
which might in its reasonable judgment involve it in any expense or liability
unless furnished with reasonable indemnity.
(v) In making any distribution or taking any other action
hereunder, the Escrow Agent shall have the right to rely upon and shall be
protected in acting or refraining from acting upon any certificate, opinion,
consent or other document believed by it to be genuine and to have been executed
or presented by the proper party or parties. Any such signature of any party
hereto on any notice or instruction transmitted by facsimile shall constitute
the due execution and delivery of such notice or instruction by such party. The
Escrow Agent shall have the right to assume that any person purporting to give
any notice in accordance with this Escrow Agreement or in connection with any
transaction to which this Agreement related has been duly authorized to do so.
The Escrow Agent shall not be obligated to make any inquiry as to the authority,
capacity, existence, or identity of any person purporting to give any such
notice. The Escrow Agent may perform any of the duties provided for herein
either directly or through agents or attorneys and be protected from any
liability in acting, in the absence of bad faith, upon the advice of attorneys
and accountants.
(vi) If the Escrow Agent is uncertain as to its duties or
rights hereunder or shall receive a notice from the Company or the Lender with
respect to the Escrow Certificate that, in the Escrow Agent's sole and absolute
discretion, is in conflict with any of the terms hereof it may refrain from
taking any action until otherwise directed by an order of a court or arbitrator
of competent jurisdiction.
(vii) The Escrow Agent makes no representation as to and has
no responsibility for the validity or sufficiency of this Escrow Agreement,
except that the Escrow Agent represents and warrants that the partner executing
this Escrow Agreement on its behalf has the authority to do so and that this
Escrow Agreement is valid and binding in respect of the Escrow Agent in
accordance with its terms.
(b) Resignation and Removal. The Escrow Agent may resign from
its duties hereunder at any time by giving at least 10 days prior written notice
of such resignation to the Company or the Lender and specifying a date upon
which such resignation shall take effect; provided, however, that the Escrow
Agent shall continue to serve until its successor accepts the Escrow Certificate
pursuant to a written assignment and assumption instrument pursuant to which the
rights of the Escrow Agent are assigned to such successor and such successor
expressly assumes the obligations of the Escrow Agent hereunder. Notwithstanding
the foregoing, however, the Escrow Agent shall, in the alternative, have the
right but not the obligation, at any time, following 5 business days written
notice to the other parties hereto, to resign as Escrow Agent and deposit the
Escrow Certificate with a court of competent jurisdiction and the Escrow Agent
shall thereupon have no further obligation with respect thereto. Upon receipt of
such notice, a successor escrow agent shall be appointed by the Lender, such
successor escrow agent to become the Escrow Agent hereunder on the resignation
date specified in such notice. If an instrument of assignment and assumption by
a successor escrow agent shall not have been delivered to the Escrow Agent
within 15 business days after the giving of such notice of resignation, the
resigning Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor escrow agent. The Lender may at any time remove the
Escrow Agent and substitute a new escrow agent by giving 10 business days prior
written notice thereof to the Escrow Agent then acting.
(c) Indemnification. The Company and the Lender have agreed to
hold the Escrow Agent harmless from and against and indemnify the Escrow Agent
for any loss, liability, expense (including reasonable attorneys' fees and
expenses), claim or demand arising out of or in connection with its performance
under this Escrow Agreement, except in the event of gross negligence or willful
misconduct of the Escrow Agent. The foregoing indemnities in this Section 5(c)
shall survive the resignation or substitution of the Escrow Agent and the
termination of this Escrow Agreement.
(d) Expenses of the Escrow Agent. The Company agrees herewith
to bear the cost for reasonable expenses incurred by the Escrow Agent in the
performance of services pursuant to this Escrow Agreement and to promptly
reimburse the Escrow Agent upon receipt of a written request for reimbursement
and the presentation of proper vouchers or receipts therefor.
6. Disputes. (a) If any dispute should arise with respect to
the ownership or right of possession of the Escrow Certificate, the Escrow Agent
shall be authorized and directed to retain in its possession, without liability
to anyone, all or any portion of the Escrow Certificate until such dispute shall
have been settled either by agreement of the parties concerned or by a Final
Decree, but the Escrow Agent shall be under no duty whatsoever to institute or
defend any such proceedings.
(b) The Company shall bear all of its own costs and expenses
and all costs and expenses incurred by the Lender in resolving any dispute
arising under this Escrow Agreement. Any costs incurred by the Escrow Agent in
connection with any dispute arising under this Escrow Agreement shall be
reimbursed to the Escrow Agent pursuant to the provisions of Section 5 (d) . If
the Escrow Agent is not reimbursed for such expenses within 30 days' written
notice thereof, the Escrow Agent shall be entitled to resign, upon 15 days'
prior written notice to the Company and the Lender. If no successor escrow agent
is named by the end of such 15 day period, the Escrow Agent shall have the right
to deposit the Escrow Certificate with an appropriate court and the Escrow Agent
shall have no further obligation under this Escrow Agreement.
7. Notices and Instructions. All notices, instructions
(including without limitation any instructions pursuant to Section 3 hereof) or
other communications which are required or permitted to be given hereunder shall
be in writing and shall be personally delivered, sent by certified mail, return
receipt requested, by a nationally-recognized overnight courier or facsimile, to
the other party at the address first above written, or to such other address as
the party to whom notice is to be given may have furnished to the other party in
writing. Any such communication shall be deemed to have been given when (i)
delivered, if personally delivered, (ii) on receipt, if sent by mail, (iii) on
the third business day after dispatch, if sent by a recognized overnight courier
(without limiting the generality of the foregoing, Federal Express, DHL and UPS
shall be deemed to be recognized overnight couriers for purposes of this
Agreement), and (iv) within one business day if sent by facsimile.
8. Counterparts. This Escrow Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement
9. Governing Law and Jurisdiction. This Escrow Agreement shall
be governed by and construed in accordance with the laws of the State of New
York, without giving effect to the principles of conflicts of laws thereunder.
This Escrow Agreement shall be subject to the exclusive jurisdiction of the
courts located in New York County, New York. The parties to this Escrow
Agreement agree that any breach of any term or condition of this Escrow
Agreement shall be deemed to be a breach occurring in the State of New York by
virtue of a failure to perform an act required to be performed in the State of
New York, and the parties irrevocably and expressly agree to submit to the
jurisdiction of the courts of the State of New York for the purpose of resolving
any disputes among the parties relating to this Escrow Agreement or the
transactions contemplated hereby. The parties hereto irrevocably waive, to the
fullest extent permitted by law, any objection which they may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Escrow Agreement, or any judgment entered by any court in
respect hereof brought in New York County, New York, and further irrevocably
waive any claim that any suit, action or proceeding brought in New York County,
New York has been brought in an inconvenient forum.
10. Benefits of Agreement. All the terms and provisions of
this Escrow Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; and nothing in this
Escrow Agreement, express or implied, is intended to confer on any person,
corporation, group or other entity other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Escrow Agreement. Anything contained
herein to the contrary notwithstanding, this Escrow Agreement shall not be
assignable by any party hereto without the consent of the other parties hereto.
11. Full Force and Effect. This Escrow Agreement shall remain
in full force and effect until the Escrow Agent has delivered the Escrow
Certificate in accordance with the terms hereof.
12. Severability. If any provision contained herein shall be
illegal or unenforceable, the parties hereto agree that the remainder of this
Escrow Agreement shall remain in full force and effect and that such illegal or
unenforceable provision shall be replaced with a provision which provides the
party or parties affected thereby with the same or a comparable economic benefit
as that provided by such illegal or unenforceable provision.
13. Modification. This Escrow Agreement shall not be altered
or otherwise amended, except pursuant to an instrument in writing signed by each
of the parties hereto.
14. Descriptive Headings. The descriptive headings in this
Escrow Agreement are for convenience only and shall not control or affect the
meaning or constructing of any provision of this Escrow Agreement.
15. Transfer. The Lender shall not sell, assign, transfer
exchange or otherwise dispose of, or grant any option or warrant with respect
to, all or any part of the Escrow Certificate, nor shall it create, incur or
permit to exist any pledge, lien, mortgage, hypothecation, security interest,
charge or other encumbrance with respect to all or part of the Escrow
Certificate.
[signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed and delivered on the date first above written.
Company: VIVA GAMING & RESORTS INC.
/s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: President & CEO
-----------------------------
Lender:
/s/ Xxx XxXxxxxx
-----------------------------------
Name: Xxx XxXxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
ESCROW AGENT:
WUERSCH & XXXXXX LLP
/s/ Xxxxxx Xxxxxx
---------------------------------
By: Xxxxxx Xxxxxx
Partner
