Houston, TX 77027 RE: Loan Letter Agreement Mr. Lender:
Exhibit 4.1
November
10th ,
2009
Bonanza
Oil and Gas, Inc. 0000 Xxxxxx
Xxxxxxx,
XX 00000
RE: Loan
Letter Agreement
Mr.
Lender:
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1.
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Loan. This letter when
fully executed will constitute a loan agreement (this “Agreement”) between
Xxxxx Xxxxx Foundation (the “Lender”) and Bonanza Oil
and Gas, Inc, a Nevada corporation (the “Borrower”), pursuant to
which the Lender, on the terms and conditions provided herein, shall agree
to make one loan to the Borrower hereunder in an amount of fifty thousand
dollars ($50,000) (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.
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2.
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Loan
Documents.
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a. Promissory
Notes. The Loan shall be evidenced by a promissory note issued to the Lender in
the principal amount of the Loan, dated the date the Borrower receives the funds
from the Lender, in the form attached hereto as Exhibit A (together with any
replacements and substitutes therefore, the “Note”). The principal amount
of the Loan and interest thereon, calculated at the rate of 12% per annum, as
provided in the Note, shall be payable as set forth more particularly
therein.
b. Term of
Note. “The Note” shall
have a term of one (51) days, starting from the date the Borrower receives the
funds from the Lender in their entirety (the “Closing Date”). This note
shall by payable in full by 12/31/2009. In the event of prepayment by the
Borrower, the Lender will receive interest for the entire term of the note as
set forth in Section 2(b). Any changes to the term of the Note must be
accordance to Section 5(c).
c. Accredited
Investor. The Lender hereby represents and warrants that it is an “accredited
investor” as defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended
d. This
Agreement, the Note and any other instruments or documents required or
contemplated hereunder or thereunder, whether now existing or at any time
hereafter arising, are herein referred to as the “Loan Documents.”
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3.
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Conditions
Precedent.
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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):
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i. This
Agreement, the Note and each other instrument, agreement and document to be
executed and/or delivered pursuant to this Agreement and/or the instruments,
agreements and documents referred to in this Agreement.
ii. A
certified copy of the resolutions of the Board of Directors (or if the Board of
Directors takes action by unanimous written consent, a copy of such unanimous
written consent containing all of the signatures of the members of the Board of
Directors) of the Borrower, dated as of the Closing Date, authorizing the
execution, delivery and performance of the Loan Documents.
iii. A
certificate, dated as of the Closing Date, signed by an executive officer of the
Borrower to the effect that the representations and warranties set forth in
Section 4 of this Agreement are true and correct as of the Closing
Date.
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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.
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4.
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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:
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a.
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The
Borrower has been duly incorporated and validly exists and is in good
standing under the laws of the state of Nevada, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as currently conducted. The Borrower is duly qualified as a
foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. “Material Adverse Effect”
means any material adverse effect on the ability of the Borrower to
perform its obligations hereunder or under the Loan Documents or on the
business, operations, properties or financial condition of the
Borrower.
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b.
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Each
of the Loan Documents has been duly authorized, validly executed and
delivered on behalf of the Borrower and is a valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with its
terms, subject to limitations on enforcement by general principles of
equity and by bankruptcy or other laws affecting the enforcement of
creditors’ rights generally, and the Borrower has full power and authority
to execute and deliver this Agreement and the Loan Documents and to
perform its obligations hereunder and there
under.
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c. The
execution, delivery and performance of this Agreement and the Loan Documents
will not (i) conflict with or result in a breach of or a default under any of
the terms or provisions of (A) the Borrower’s articles of incorporation or
bylaws, or (B) any material provision of any indenture, mortgage, deed of
trust or other material agreement or instrument to which the Borrower is a party
or by which it or any of its material properties or assets is bound, (ii) result
in a violation of any material provision of any law, statute, rule, regulation,
or any existing applicable decree, judgment or order by any court, Federal or
state regulatory body, administrative agency, or other governmental body having
jurisdiction over the Borrower, or any of its material properties or assets or
(iii) result in the creation or imposition of any material lien, charge or
encumbrance upon any material property or assets of the Borrower or any of its
subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of their
property or any of them is subject, except, in the cases of (i), (ii) and (iii)
above, as would not have a Material Adverse Effect.
d. No
consent, approval or authorization of or designation, declaration or filing with
any governmental authority on the part of the Borrower is required in connection
with the valid execution and delivery of this Agreement or the Loan
Documents.
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5.
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Miscellaneous.
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a. The
representations and warranties of the Borrower contained herein shall not
survive the Closing Date.
b.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Nevada without giving effect to conflicts of laws principles that would
result in the application of the substantive laws of another jurisdiction. This
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted.
c. The
Bank and Borrower agree to submit to binding arbitration by the American
Arbitration Association (the "AAA") of all claims, disputes and controversies
(whether in tort, contract, or otherwise, except "core proceedings" under the
U.S. Bankruptcy Code) arising between themselves and their respective employees,
officers, directors, attorneys and other agents, which relate in any way without
limitation to existing and future loans and extensions of credit or requests for
additional credit, including by way of example but not by way of limitation the
negotiation, collateralization, administration, repayment, modification,
default, termination and enforcement of such loans or extensions of credit.
Arbitration under this Agreement will be governed by the Federal Arbitration Act
and proceed in California in accordance with AAA Rules. Arbitration will be
conducted before a single neutral arbitrator selected in accordance with AAA
Rules and who shall be an attorney who has practiced commercial law for at least
ten years. The arbitrator will determine whether an issue is arbitratable and
will give effect to applicable statutes of limitation. Judgment upon the
arbitrator's award may be entered in any court having jurisdiction.
The arbitrator has the discretion to decide, upon documents only or with a
hearing, any motion to dismiss for failure to state a claim or any motion for
summary judgment. The institution and maintenance of an action for judicial
relief or for any provisional or ancillary remedy shall not constitute a waiver
of the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief. Each request for an extension and all other discovery disputes will be
determined by the arbitrator upon a showing that the request is essential for
the party's presentation and that no alternative means for obtaining information
are available during the initial discovery period. This Agreement does not limit
the right of either party to a) foreclose against real or personal property
collateral; b) exercise self-help remedies such as setoff or repossession; c)
obtain provisional remedies such as replevin, injunctive relief, attachment or
the appointment of a receiver during the pendency or before or after any
arbitration proceeding; or d) obtain a cognovit judgment, if available. These
exceptions do not constitute a waiver of the right or obligation of either party
to submit any dispute to arbitration, including those arising from the exercise
of these remedies.
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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 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 Note and the other
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.
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6.
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Notices. All notices
required hereunder shall be made in accordance with Section 10 of
the Note.
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a. 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
Name:
Xxxxxxx Xxxxxxx Title: CEO
Bonanza
Oil and Gas, Inc. 0000 Xxxxxx
Xxxxxxx,
XX 00000
Date:
November 1 0th, 2009
By: /s/
XXXXX XXXXX
XXXXX
XXXXX FOUNDATION COAST XXXXXXX #0X
XXXXXX,
XX 00000
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Exhibit
A
NOTE
THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAW. THIS NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, ASSIGNED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT
SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.
November
00xx ,
0000 Xxxxxxx, Xxxxx
FOR VALUE
RECEIVED, the adequacy of which is hereby acknowledged, Bonanza Oil and Gas,
Inc. (the "Borrower"), hereby promises to pay Xxxxx Xxxxx Foundation (the
"Lender"), at such place as Lender may, from time to time, designate, the
principal sum of fifty thousand
dollars
($50,000) in lawful money of the United States on 12/31/2009 (the
“Maturity Date”).
1. Interest:
Borrower further promises to pay interest on the unpaid principal balance
hereof at the rate of twelve percent (12%) per annum, such interest to be paid
at maturity. Interest shall be calculated on the basis of a 360 day year and
actual days elapsed. In no event shall the interest charged hereunder exceed the
maximum permitted under the laws of the State of California.
2. Prepayment:
This Note can be prepaid in whole or in part at any time without the
consent of the Lender provided that Borrower shall pay all interest on the
principal for the entire term of the note. Borrower shall not be liable
hereunder for any further interest on any amounts so prepaid. All prepayments of
this Note shall be applied first to accrued and unpaid interest, and then to
outstanding principal.
3. Other Financings:
Borrower warrants that any proceeds from an offering of financial
instruments of any type (including equity, debt, hybrid, or other offering) that
it receives after the date of receipt of monies related to this Note shall be
first used to repay all interest and principal pursuant to this Note before
being used for any other purpose whatsoever.
4. Remedies in Event of
Default: Notwithstanding the due date of this Note specified above, the
entire unpaid principal balance of this Note and interest accrued with respect
thereto shall be immediately due and payable upon the occurrence of any of the
following events of default (individually, “an Event of Default” and
collectively, “Events of Default”): (i) the Borrower fails to pay any of the
principal, interest or any other amounts payable under this Note within five (5)
business days when due and payable;
(ii) the
Borrower files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law or any other law for the relief of,
or relating to, debtors, now or hereafter in effect, or seeks the appointment of
a custodian, receiver, trustee (or other similar official) of the Borrower or
all or any
substantial
portion of the Borrower’s assets, or makes any assignment for the benefit of
creditors or takes any action in furtherance of any of the foregoing, or fails
to generally pay its debts as they become due;
(iii) an
involuntary petition is filed, or any proceeding or case is commenced, against
the Borrower (unless such proceeding or case is dismissed or discharged within
ninety (90) days of the filing or commencement thereof) under any bankruptcy,
reorganization, arrangement, insolvency, adjustment of debt, liquidation or
moratorium statute now or hereafter in effect, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar official) is
applied or appointed for the B457890orrower or to take possession, custody or
control of any property of the Borrower, or an order for relief is entered
against the Borrower by any court having jurisdiction in any of the
foregoing;
(iv) the
occurrence of a breach or default under any agreement, instrument or document to
which the Borrower is a party or by which it is bound involving any obligation
for borrowed money of more than $100,000 in the aggregate that remains uncured
for at least thirty (60) business days.
Upon and
after an Event of Default, the outstanding principal balance hereunder shall
continue to bear interest at a per annum interest rate equal to prime plus ten
percent (10%) until the Event of Default is cured or repayment in full has been
made to the Lender.
Upon the
existence of an Event of Default that remains uncured, the Lender shall have the
right to declare the outstanding principal balance of this Note, together with
all accrued interest, immediately due and payable and the Lender shall
thereafter have all of the rights and remedies afforded creditors generally by
the applicable federal laws or the laws of the state of California. The Borrower
waives demand, presentment, protest and notice of any kind.
5. No Rights
as Stockholder. This Note, as such, shall not entitle the Lender to any rights
as a stockholder of the Borrower.
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6. Expenses. Borrower agrees to
pay any and all expenses (including attorneys’ fees
and
expenses) incurred by the Lender which are incurred in endeavoring to collect
any amounts payable hereunder which are not paid when due (whether by
acceleration or otherwise) or in otherwise enforcing any rights under this
Note.
7. Notices. All notices and other
communications provided for herein shall be in writing
and shall
be deemed to have been duly given if delivered personally, sent by registered or
certified mail, return receipt requested, postage prepaid, sent via overnight
delivery service or sent via facsimile, and shall be effective (1) when
personally delivered, (2) on the day following delivery to an overnight courier
service if sent for delivery within the United States (or on the second business
day following delivery to such courier service if sent for delivery outside the
United States), (3) on the business day following receipt of transmission if
sent via facsimile, or (4) on the fifth business day after the date of mailing
if sent by registered or certified mail, in each case to the following
addresses:
(a) If to the
Borrower: Xxxxx Xxxxx Foundation
Coast
Highway, #2A
Malibu,
CA 92065
(b) If to the
Lender, to the address set forth in the Note Purchase Agreement, or such other
address as is provided in writing to the Borrower by the Lender.
8. Assignment. This Note shall be
binding on the Borrower and its successors
and
permitted assigns, and shall be binding upon and inure to the benefit of the
Lender, any future holder of this Note and their respective successors and
permitted assigns. Neither the Borrower nor the Lender may assign or transfer
this Note or any of its rights or obligations hereunder (other than by operation
of law) without the other party’s prior written consent. 9. Waivers; Amendments.
No delay or omission of Lender in exercising any right or power hereunder shall
impair such right or power or be a waiver of any default or an acquiescence
therein; and no single or partial exercise of any such right or power shall
preclude other or further exercise thereof, or the exercise of any other right;
and no waiver shall be valid unless in writing signed by Lender, and then only
to the extent specifically set forth in such writing. All remedies hereunder or
by law afforded shall be cumulative and shall be available to Lender until the
principal amount of and all interest on this Note have been paid in full. No
amendment of any provision of this Note shall be effective unless the same shall
be in writing and signed by the Borrower and the Lender. 10. Governing Law. This
Note shall be governed by and construed in accordance with the laws of the State
of Califoria, without regard for the conflicts of laws principles thereof. 11.
Severability. 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. In the event any one or more of the provisions contained in this Note
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision hereof, and this Note shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
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9. Miscellaneous.
a. All
payments by the Borrower under this Note shall be made without setoff or
counterclaim and be free and clear and without any deduction or withholding for
any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law.
b. The
representations and warranties of the Borrower contained herein shall not
survive the Closing Date.
c. The
Bank and Borrower agree to submit to binding arbitration by the American
Arbitration Association (the "AAA")of all claims, disputes and controversies
(whether in tort, contract, or otherwise, except "core proceedings" under the
U.S. Bankruptcy Code) arising between themselves and their respective employees,
officers, directors, attorneys and other agents, which relate in any way without
limitation to existing and future loans and extensions of credit or requests for
additional credit, including by way of example but not by way of limitation the
negotiation, collateralization, administration, repayment, modification,
default, termination and enforcement of such loans or extensions of credit.
Arbitration under this Agreement will be governed by the Federal Arbitration Act
and proceed in California in accordance with AAA Rules. Arbitration will be
conducted before a single neutral arbitrator selected in accordance with AAA
Rules and who shall be an attorney who has practiced commercial law for at least
ten years. The arbitrator will determine whether an issue is arbitratable and
will give effect to applicable statutes of limitation. Judgment upon the
arbitrator's award may be entered in any court having jurisdiction. The
arbitrator has the discretion to decide, upon documents only or with a hearing,
any motion to dismiss for failure to state a claim or any motion for summary
judgment. The institution and maintenance of an action for judicial relief or
for any provisional or ancillary remedy shall not constitute a waiver of the
right of any party, including the plaintiff, to submit the controversy or claim
to arbitration if any other party contests such action for judicial relief.
Discovery will be governed by the California Rules of Civil Procedure. Discovery
must be completed at least 20 days before the hearing date and within 180 days
of the commencement of arbitration. Each request for an extension and all other
discovery disputes will be determined by the arbitrator upon a showing that the
request is essential for the party's presentation and that no alternative means
for obtaining information are available during the initial discovery period.
This Agreement does not limit the right of either party to a) foreclose against
real or personal property collateral; b) exercise self-help remedies such as
setoff or repossession; c) obtain provisional remedies such as replevin,
injunctive relief, attachment or the appointment of a receiver during the
pendency or before or after any arbitration proceeding; or d) obtain a cognovit
judgment, if available. These exceptions do not constitute a waiver of the right
or obligation of either party to submit any dispute to arbitration, including
those arising from the exercise of these remedies.
d. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
e. This
Agreement, the 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.
f. 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.
g. All
remedies of the Lender under this Agreement, the Note and the other 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.
(remainder
of the page intentionally left blank)
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Bonanza
Oil and Gas, Inc.
Date:
November 10,2009
By: /s/
Xxxxxxx
Xxxxxxx
Name:
Xxxxxxx Xxxxxxx Title: CEO
By:
/s/ Xxxxx Xxxxx
Xxxxx
Xxxxx Foundation Coast Xxxxxxx #0X Xxxxxx, XX 00000
Date:
November 11, 2009
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