LOAN AGREEMENT
With
STOCK OPTION "KICKER"
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR PERMIT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS REQUIRED
UNDER THE SECURITIES ACT OF 1933.
This LOAN AGREEMENT, dated, this 21st day of July, 1998, is entered into by and
between Global Entertainment Holdings/Equities, Inc. ("GEHE"), a Colorado
corporation (the "Company"), and Xxxxx Zilligan, the ("Subscriber" or "Lender").
WITNESSETH
A. WHEREAS, the Company desires to borrow money for operating capital to fund
expanded operations and various on going costs and expenses; and
B. WHEREAS, Subscriber/Lender desires to loan to the Company, and the Company
desires to borrow from Subscriber/Lender, the sum of One Hundred Thousand
and no cents ($100,000.00) upon and subject to the terms and conditions of
the Agreement, now therefore,
AGREEMENT
IN CONSIDERATION of the foregoing and the covenants and conditions set forth in
this Agreement, the parties agree as follows:
1. Term of Loan. Subscriber/Lender hereby agrees to loan to the Company, the
sum set forth above for a period of 24 months from the date of receipt of
funds by the Company from Subscriber/Lender, or until the Company shall
repay the loan and accrued interest, whichever shall come first. The
Company shall have the right to pre-pay the note at any time prior to the
due date without penalty and upon a Thirty (30) days notice to Subscriber/
Lender.
2. Interest Rate. The loan shall accrue simple interest at the rate of 10% per
annum; however, no payments of the principal and interest shall be made
during the first twelve (12) month period of the twenty-four (24) month
loan.
3. Repayment Terms of Loan. The first payment of accrued principal and
interest will begin on the 13th month and continue through the 23rd month;
this will constitute 50% of the loan repayment value with interest in equal
monthly installments. The balance will be paid on the 24th month by way of
a balloon payment.
4. Common Stock Option "Equity Kicker". In consideration and as an inducement
for the Subscriber/Lender in making the above-stated loan to the Company,
the Company shall cause to be issued to the Subscriber/Lender, a Stock
Option, pursuant to his option, as set forth herein;
(a) The number of shares of common stock in the option will be determined
by multiplying 15% by the loan amount as herein set forth. (A $100,000
loan will receive 15,000 shares as a "kicker".)
5. Terms of Option. At the option of the Subscriber/Lender, until the due date
of this loan, the Subscriber/Lender may, upon written notice to the Company,
elect to exercise the Option, into shares of the Company's common stock at
the strike price of $1.25 per share.
6. Loan Not Secured. The assets of the Company or its officers and directors
shall not secure this Promissory Note which Note is attached hereto as
Exhibit "A" and is incorporated herein by this reference.
7. Representations of Subscriber/Lender. Subscriber/Lender hereby represents,
warrants and agrees as follows:
(a) Subscriber/Lender is an accredited investor by, (i) having an
individual income of more than $200,000 per year in each of the most
recent two years and Subscriber/Lender reasonably expects to have an
income of at least $200,000 in the current year; OR (ii) Subscriber/
Lender and his or her spouse had joint income of more than $300,000 in
each of the two most recent years and they reasonably expect to have
such joint income in excess of $300,000 for the current year; OR (iii)
Subscriber/Lender has an individual net worth, or a combined net worth
with his (or her) spouse of at least $1,000,000 (for purposes of this
paragraph, "net worth" means the excess of total assets at fair market
value, including home an personal property, less total liabilities);
AND, (iv) Subscriber's individual net worth (or joint net worth with
his or her spouse) must exceed by at least ten (10) times the aggregate
value of this investment for which the Subscriber/Lender wishes to
subscribe.
(b) Subscriber/Lender is aware of the high degree of risk this Agreement
entails, and that the loan could be at risk in the event the business
of it's wholly owned subsidiary (Internet Gaming and Wagering, N.V.)
fails to meet it's financial projections, in which case the Company may
not be able to repay the loan on time or at all, and that the entire
loan amount might be lost, and further understands that the securities
underlying this Agreement ("Securities") are of a highly speculative
nature.
(c) Subscriber/Lender is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision about entering
into this Agreement.
(d) Subscriber/Lender understands that the Securities have not been
registered under the Securities Act of 1933 ("Securities Act") in
reliance upon a specific exemption therefrom which exemption depends
upon among other things, the bona fide nature of its investment,
intends as expressed herein. In this connection Subscriber/Lender
understands that in the view of the SEC, the statutory basis for such
exemptions may be unavailable if its representation was predicated
solely upon a present intention to hold the securities for a minimum
capital gain period specified under tax statuses for a deferred sale or
until an increase or decrease in the market price of the securities, or
for a period of one year, or any fixed period in the future.
(e) Subscriber/Lender is aware of the provisions of Rule 144, promulgated
under the Securities Act, which in substance, permits limited public
resale of "restricted securities" acquired, directly or indirectly,
from issuer thereof (or from an affiliate of such issuer), in a non-
public offering subject to the satisfaction of certain conditions,
including, among other things: the availability of certain public
information about the Company; the resale occurring not less than one
year after the party has purchased and paid for the securities to be
sold; the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the
amount of securities being sold during any three month period not
exceeding the specified limitations stated therein.
(f) Subscriber/Lender further understands that at the time Subscriber/
Lender wishes to sell the Securities, there may be no public market
upon which to make such a sale, and even if such a public market
exists, the Company may not be able to satisfy the current public
information requirements of Rule 144, and that in such event,
Subscriber/Lender would be precluded from selling the Securities under
Rule 144, even if the one-year minimum holding period had been
satisfied.
(g) Subscriber/Lender further understands that in the event all of the
requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other
registration exemption will be required, and that, notwithstanding the
fact that Rule 144 is not exclusive, the Staff of the SEC has expressed
its opinion that persons proposing to sell private placement securities
other than in a registered offering and otherwise than pursuant to Rule
144 will have a substantial burden of proof establishing that an
exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk.
8. Representations of the Corporation. The Company hereby represents and
warrant that:
(a) The Company is a corporation duly organized, existing and in good
standing under the laws of the State of Colorado, and has the corporate
power to carry on its present business.
(b) The Shares underlying this agreement have been duly authorized and upon
payment therefore in accordance with the terms hereof will be validly
issued and outstanding, fully paid and non-assessable, and free and
clear of liens, claims and encumbrances.
(c) The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, of which no more than 3,300,000 shares are
currently issued and outstanding, or potentially committed to be
issued.
9. Company's Rights. The Board of Directors ("Board") of the Company shall
have sole control over any decision regarding any offering of the Company's
securities to the general public. If, at any time or from time to time, the
Company shall determine to register any of its common stock with the SEC,
and if the Board and Underwriter of such an offering determine that there
may be selling shareholders in such offering, Subscriber may join with other
selling shareholders on a pro-rata basis, as determined by the Board, in the
offering of all or a portion of Subscriber's shares. Subscriber/Lender
shall have no right to demand a registration of its securities, and shall
not have any right to join in a registration of the Company's securities of
either the Board or the Underwriter shall determine that there shall not be
selling shareholders in the registration.
10. Voting Rights. Subscriber/Lender shall have no voting rights in the shares
reserved under this Agreement until the Option is exercised and the shares
are issued.
11. Notice of Exercise. Subscriber/Lender shall notify the Company in writing
of its election to exercise the stock option at anytime prior to the due
date of the loan and upon Thirty (30) days notice.
11. Governing Law. This Agreement shall be governed by the laws of the State
of Nebraska.
12. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire agreement between
and among the parties and supersedes any prior written or oral
agreements between or among the parties concerning the subject matter
contained herein. There are no representations, agreements, or
understandings, oral or written, between or among the parties, relating
to the subject matter contained in this Agreement, which are not fully
expressed herein.
(b) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but such counterparts, when
taken together, shall constitute but one and the same agreement.
(c) Notice. Any notice, demand or other communication with respect to this
Agreement shall be in writing and shall be deemed delivered personally
to an authorized representative of either party, or if mailed, 48 hours
after deposit in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, addressed to the party at
the address set forth below the signature hereto. Either party may
change the address to which notice shall be given by giving notice to
the other party.
If to the Company: Global Entertainment Holdings/Equities, Inc.
0000 X. Xx. Xxxxx #0
Xxxxx, XX 00000
Tel: 000-000-0000
If to the Subscriber/Lender: Xxxxx Zilligan
00 Xxxxxx Xxx.
Xxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Email: xxxxxxx@xxxx.xxx
In witness whereof the parties hereto have caused this Agreement to be executed
on the day and year indicated below.
Global Entertainment Holdings/Equities, Inc. Xxxxx Zilligan (Subscriber/Lender)
/s/ Xxxxxx X Xxxxxx /s/ Xxxxx X. Xxxxxxxx
By ________________________ By __________________
Xxxxxx X Xxxxxx Xxxxx Zilligan
President
Date 7-21-98 Date 7-21-98
By /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Date 7-21-98
