INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT between AO BONANZA LAS VEGAS, INC., a Nevada
corporation ("Borrower") and EUROWEB RE CORP., a Nevada corporation ("Lender")
includes three parts and incorporates the following agreements:
1. A Line of Credit construction loan agreement according to the terms
and conditions presented below and according to the attached Line of
Credit Promissory Note.
2. Option Agreement commencing on page 25.
3. Line of Credit Promissory Note (secured by a Deed of Trust) ---
Attached as Exhibit "B".
BORROWER'S BOARD OF DIRECTORS: To secure any and all of Lender's interests and
rights as set forth in this Investment Agreement and all related agreements and
documents, Borrower, its officer(s), shareholder(s), and director(s) agree to
appoint Xxxxx Xxxxx or other representative as Lender chooses, as a board member
in Borrower's board of directors. Xxxxx Xxxxx'x scope of decisions as a board of
directors shall be limited solely to matters that are directly or indirectly
related to this Investment Agreement and to the Bonanza development project. It
is understood that as of the date of this agreement Darrren Xxxxxxx is the sole
shareholder and sole director of Borrower. Xxxxx Xxxxx shall have the voting
power of not less than fifty percent (50%) of the total voting power of
Borrower's board of directors. In case Borrower, through its shareholders, board
of directors, or otherwise, appoints additional directors other than Xxxxxx
Xxxxxxx and Xxxxx Xxxxx, Borrower shall appoint additional Lender's
representative(s) as board members as instructed by Lender for the purpose of
maintaining Lender's minimum 50% board voting power. Borrower, its
shareholder(s), officer(s), and director(s) agree to not take any measures to
directly or indirectly dilute Lender's board voting power. Is such dilution
occurs; it shall constitute a breach of this agreement by Borrower.
Upon Lender's written authorization to Borrower that Borrower has paid back all
principal and interest amounts as set forth under this Investment Agreement
and/or that all conditions and performance under this Investment Agreement are
satisfied, Borrower shall have the right to remove any and all representative(s)
of Lender.
Board of Directors. Borrower agrees to deliver at Closing shareholders and board
resolutions appointing the above-mentioned Lender's representative. On the
closing, the Board of Directors shall consist of two members, as follows: Xxxxx
Xxxxx and Xxxxxx Xxxxxxx.
Protective Provisions. The consent of Lender shall be required for any action by
Borrower if such action would materially and adversely change the rights of
Lender under this Investment Agreement, including but not limited to acts that
(i) amend or repeal any provision of Borrower's Articles of Incorporation if
such action would materially and adversely change the rights, preferences, or
privileges of Lender under this Investment Agreement (ii) authorize or issue
shares of any class of stock having any preference or priority as to dividends
or assets superior to or on a parity with Lender's rights under this Investment
Agreement (iii) pay or declare any dividend on any junior securities, or (iv)
authorize a merger, sale of substantially all the assets of the Borrower,
recapitalization or reorganization of Borrower.
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I. CONSTRUCTION LOAN AGREEMENT (Line of Credit)
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
AGREEMENT. The word "Agreement" means this Investment Agreement, as this
Investment Agreement may be amended or modified from time to time, together with
all exhibits and schedules attached to this Investment Agreement from time to
time.
NOTE. The word "Note" means the promissory note or credit agreement
executed with this investment agreement, in the original principal amount of up
to $10,000,000.00 from Borrower to Lender, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitutions for the promissory note or agreement.
ARCHITECTURE CONTRACT. The words "Architecture Contract" mean the
architect's contract relating to the Project, if any.
BORROWER. The word "Borrower" means each and every person or entity
signing the Note, including without limitation AO BONANZA LAS VEGAS, INC.
COLLATERAL. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan, whether real
or personal property, whether granted directly or indirectly, whether granted
now or in the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt lien, charge,
lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"EVENTS OF DEFAULT."
GRANTOR. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in and Collateral
for the Indebtedness, including without limitation all Borrowers granting such a
Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation all
guarantors, sureties, and accommodation parties, including without limitation
all guarantors under the Completion Guaranty.
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IMPROVEMENTS. The word "Improvements" means and includes without
limitation all existing and future buildings, structures, facilities, fixtures,
additions, and similar construction on the Property.
INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and liabilities
of Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or hereafter
existing, voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor, surety,
or otherwise; whether recovery upon such Indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness may
be or hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means EUROWEB RE CORP., its successors and
assigns.
LOAN. The word "Loan" means the loan made to Borrower under this Agreement
and the related Documents as described below.
LOAN FUND. The words "Loan Fund" mean the undisbursed proceeds of the Loan
under this Agreement together with any equity funds or other deposits required
from Borrower under this Agreement.
PLANS AND SPECIFICATIONS. The words "Plans and Specifications" mean the
plans and specifications for the Project which have been submitted to and
initiated by Lender, together with such changes and additions as may be approved
by Lender in writing.
PROJECT. The word "Project" means the construction and completion of all
improvements contemplated by this Agreement, including without limitation the
erection of the building or structure, installation of equipment and fixtures,
landscaping, and all other work necessary to make the Property usable and
complete for the intended purposes. The Project includes the following work:
Bonanza Condominiums
NE Corner Bonanza Rd. & Main Street
Las Vegas, Nevada
296 Condominium units with 34,700 sq. ft. retail over (3) levels of parking
The project consists of three parts: parking structure, residential
(including more than 20,000 sq.ft of recreation area), and commercial.
The Architect is:
Xxxxxx X. Xxxx Architect, Limited Liability Company
0000 X. Xxxxxxx Xxxx, #000
Xxx Xxxxx, Xxxxxx 00000
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The Construction Manager is:
To be decided, and as interim period:
Xxx Xxxxxx from Trafford Associates, LLC
0000 X. Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
PROJECT DOCUMENTS. The words "Project Documents" mean the Plans and
Specifications, all studies, data and drawings relating to the Project, whether
prepared by or for Borrower, the Construction Contract, the Architecture
Contract, and all other contracts and agreements relating to the Project or the
construction of the improvements.
PROPERTY. The word "Property" means the Real Property together with all
improvements, all equipment, fixtures, and other articles of personal property
now or subsequently attached or affixed to the real property, together with all
accessions, parts, and additions to, all replacements of, and all substitutions
for any of such property, and all proceeds (including insurance proceeds and
refunds of premiums) from any sale or other disposition of such property.
REAL PROPERTY. The words "Real Property" mean the real property located in
Xxxxx County, State of Nevada, and legally described as:
SEE ATTACHED EXHIBIT "A"
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the
indebtedness.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
SECURITY INTEREST. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
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Value. The word "Value" means such amount or worth as defined and
determined by Lender in its sole discretion unless agreed to the contrary
by Lender in writing.
LOAN. The Loan shall be in an amount not to exceed the principal sum of U.S.
$10,000.000.00 and shall bear interest on so much of the principal sum as shall
be advanced pursuant to the terms of this Agreement and the Related Documents.
The Loan shall bear interest on each Advance from the date of the Advance in
accordance with the terms of the Note. Borrower shall use the Loan Funds solely
for the payment of (a) the costs of constructing the improvements and equipping
the Project in accordance with the Construction Contract; (b) other costs and
expenses incurred or to be incurred in connection with the construction of the
improvements as Lender in its sole discretion shall approve; and (c) if
permitted by Lender, interest due under the Note, including all expenses and all
loan and commitment fees described in this Agreement. The Loan amount shall be
subject at all times to all maximum limits and conditions set forth in this
Agreement or in any of the Related Documents, including without limitation, any
limits relating to loan to value ratios and acquisition and Project costs.
FEES AND EXPENSES. Whether or not the Project shall be consummated, Borrower
shall assume and pay upon demand all out-of-pocket expenses incurred by Lender
in connection with the preparation of loan documents and the making of the Loan,
including without limitation the following: (a) all closing costs, fees, and
disbursements; (b) all expenses of Lender's legal counsel; and (c) all title
examination fees, title insurance premiums, appraisal fees, survey costs,
required fees, and filing and recording fees.
NO CONSTRUCTION PRIOR TO RECORDING OF SECURITY DOCUMENT. Borrower will not
permit any work or materials to be furnished in connection with the Project
until (a) Borrower has signed the Related Documents; (b) Lender's mortgage or
deed of trust and other Security interests in the Property have been duly
recorded and perfected; and (c) Lender has been provided evidence, satisfactory
to Lender, that Borrower has obtained all insurance required under this
Agreement or any Related Agreement and that Lender's liens on the Property and
improvements are valid perfected first liens, subject only to such exceptions,
if any, acceptable to Lender.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Nevada and
is validly existing and in good standing in all states in which Borrower
is dong business. Borrower has the full power and authority to own its
properties and to transact the business in which it is presently engaged
or presently proposes to engage. Borrower also is duly qualified as a
foreign corporation and is in good standing in all states in which the
failure to so qualify would have a material adverse effect on its business
or financial condition.
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Authorization. The execution delivery, and performance of this Agreement
by Borrower, to the extent to be executed, delivered or performed by
Borrower, have been duly authorized by all necessary action by Borrower;
do not require the consent or approval of any other person, regulatory
authority or governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of its
articles of organization, operating agreement, or any other agreement or
other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledge by Lender in writing.
Title to Property. Borrower has, or on the date of first disbursement of
Loan proceeds will have, good and marketable title to the Property fee and
clear of all defects, liens, and encumbrances, excepting only liens for
taxes, assessments, or governmental charges or levels not yet delinquent
or payable without penalty or interest, and such liens and encumbrances as
may be approved in writing by the Lender.
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Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601 et seq, ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"),
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. Except as disclosed to and
acknowledged by Lender in writing, Borrower represents and warrants that:
(a) During the period of Borrower's ownership of the properties, there has
been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any hazardous waste or substance by any
person on, under, about or from any of the properties. (b) Borrower has no
knowledge of, or reason to believe that there has been (i) any use,
generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance on, under, about or
from the properties by any prior owners or occupants of any of the
properties, or (ii) any actual or threatened litigation or claims of any
kind by any person relating to such matters. (C) Neither Borrower nor any
tenant, contractor, agent or other authorized user of any of the
properties; and any such activity shall be conducted in compliance with
all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation those laws, regulations and
ordinances described above. Borrower authorizes Lender and its agents to
enter upon the properties to make such inspections and tests as Lender may
deem appropriate to determine compliance of the properties with this
section of the Agreement. Any inspections or tests made by Lender shall be
at Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and warranties
contained herein are based on Borrower's due diligence in investigating
the properties for hazardous waste and hazardous substances. Borrower
hereby (a) releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable for cleanup
or other costs under any such laws, and (b) agrees to indemnify and hold
harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal,
release or threatened release of a hazardous waste or substance on the
properties. The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the indebtedness and
the satisfaction of this Agreement and shall not be affect by Lender's
acquisition of any interest in any of the properties, whether by
foreclosure or otherwise.
Project Costs. The Project costs are true and accurate estimates of the
costs necessary to complete the Improvements in a good and workmanlike
manner according to the Plans and Specifications presented by Borrower to
Lender, and Borrower shall take all steps necessary to prevent the actual
cost of the improvements from exceeding the Project costs.
Utility Services. All utility services appropriate to the use of the
Project after completion of construction are available at the boundaries
of the Property. Access. The Property is contiguous to publicly dedicated
streets, roads, or highways providing access to the Property.
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Assessment of Property. The Property is and will continue to be assessed
and taxed as an independent parcel by all governmental authorities.
Compliance with Governing Authorities. Borrower has examined and is
familiar with all the assessments, covenants, conditions, restrictions,
reservations, building laws, regulations, zoning ordinances, and federal,
state, and local requirements affecting the Project. The Project will at
all times and in all respects conform to and comply with the requirements
of such easements, covenants, conditions, restrictions, reservations,
building laws, regulations, zoning ordinances, and federal, state and
local requirements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
Binding Effect. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note are
binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance
with their respective terms.
Survival of Representation and Warranties. Borrower understands and agrees
that Lender is relying upon the above representations and warranties in
extending Loan Advances to Borrower. Borrower further agrees that the
foregoing representations and warranties shall be continuing in nature and
shall remain in full force and effect until such time as Borrower's Loan
and Note shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement.
Approval of Contractors, Subcontractors, and Materialmen. Lender shall
have approved a list of all contractors employed in connection with the
construction of the improvements, showing the name, address, and telephone
number of each contractor, a general description of the nature of the work
to be done, that labor and materials to be supplied, the names of
materialmen, if known, and the appropriate dollar value of the labor,
work, or materials with respect to each contractor or materialmen. Lender
shall have the right to communicate with any person to verify the facts
disclosed by the list or by any application for any Advance, or for any
other purpose.
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PLANS, SPECIFICATIONS, AND PERMITS. Lender shall have received and
accepted a complete set of Plans and Specifications setting forth
improvements for the Project, and Borrower shall have furnished to Lender
copies of all permits and requisite approvals of any governmental bond
necessary for the construction and use of the Project.
ARCHITECTURE AND CONSTRUCTION CONTRACTS. Borrower shall have furnished in
form and substance satisfactory to Lender an executed copy of the Architecture
Contract and an executed copy of the Construction Contract.
SUPPORT DOCUMENTS. Borrower shall provide to Lender in form satisfactory
to Lender the following support documents for the Loan: Completion
Guaranty.
BUDGET AND SCHEDULE OF ESTIMATED ADVANCES. Lender shall have approved
detailed budget and cash flow projections of total Project costs and a
schedule of the estimated amount and time of disbursements of each
Advance.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of the Loan documents, and the
consummation of the Project, and such other authorizations and other
documents as Lender in its sole discretion may require.
BOND. If requested by Lender, Borrower shall have furnished a performance
and payment bond in an amount equal to 100% of the amount of the
Construction Contract, as well as a materialmen's and mechanics' payment
bond, with such riders and supplements as Lender may require, each in form
and substance satisfactory to Lender, naming the General Contractor as
principal and Lender as an additional obligee.
APPRAISAL. If required by Lender, an appraisal shall be prepared for the
Property, at Borrower's expense, which in form and substance shall
satisfactory to Lender, in its sole discretion, including applicable
regulatory requirements.
PLANS AND SPECIFICATIONS. If requested by Lender, Borrower shall have
assigned to Lender on Lender's forms the Plans and Specifications for the
Project.
ENVIRONMENT REPORT. If requested by Lender, Borrower shall have furnished
to Lender, at Borrower's expense, an environmental report and certificate
on the Property in form and substance satisfactory to Lender, prepared by
an engineer or other expert satisfactory to Lender stating that the
Property complies with all applicable provisions and requirements of the
"Hazardous Substances" paragraph set forth below.
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SOIL REPORT. If requested by Lender, Borrower shall have furnished to
Lender, at Borrower's expenses, a soil report for the Property in form and
substance satisfactory to Lender, prepared by a registered engineer
satisfactory to Lender stating that the Property is free from soil or
other geological conditions that would preclude its use or development as
contemplated without extra expense for precautionary, corrective or
remedial measures.
SURVEY. If requested by Lender, Borrower shall have furnished to Lender a
survey of recent date, prepared and certified by a qualified surveyor and
providing that the improvements, if constructed in accordance with the
Plans and Specifications, shall lie wholly within the boundaries of the
Property without encroachment or violation of any zoning ordinances,
building codes or regulations, or setback requirements, together with such
other information as Lender in its sole discretion may require.
ZONING. Borrower shall have furnished evidence satisfactory to Lender that
the Property is duly and validly zoned for the construction maintenance,
and operation of the Project.
TITLE INSURANCE. Borrower shall have provided to Lender an ALTA Lender's
extended coverage policy of title insurance with such endorsements as
Lender may require, issued by a title insurance company acceptable to
Lender and in a form, amount, and content satisfactory to Lender insuring
or agreeing to insure that Lender's Mortgage or Deed of Trust on the
Property is or will be upon recordation a valid lien on the Property free
and clear of all defects, liens, encumbrances, and exceptions except those
as specifically accepted by Lender in writing. If requested by Lender,
Borrower shall provide to Lender, at Borrower's expense, a foundation
endorsement to he title policy upon the completion of each foundation for
the improvements, showing no encroachments, and upon completion an
endorsement which insures the lien-free completion of the improvements.
INSURANCE. Unless waived by Lender in writing, Borrower shall have
delivered to Lender the following insurance policies or evidence thereof:
an all risks course of construction insurance policy (builder's risk),
with extended coverage covering the improvements issued in an amount and
by a company acceptable to Lender, containing a loss payable or other
endorsement satisfactory to Lender insuring Lender as mortgagee together
with such other endorsements as may be required by Lender including
stipulations that coverage will not be cancelled or diminished without at
least ten (10) days, prior written notice to lender; (b) owners and
General Contractor general liability insurance, public liability and
workmen's compensation insurance; (c) flood insurance if required by
Lender or applicable law; and (d) all other insurance required by this
Agreement or by the Related Documents.
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WORKERS' COMPENSATION COVERAGE. Provide to Lender proof of the General
Contractor's compliance with all applicable workers' compensation laws and
regulations with regard to all work performed on the Project.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
expenses specified in this Agreement as are then due and payable.
SATISFACTORY CONSTRUCTION. All work usually done at the stage of
construction for which disbursement is requested shall have been done in a
good and workmanlike manner and all materials and fixtures usually
furnished and installed at that stage of construction shall have been
furnished and installed, all in compliance with the Plans and
Specifications. Borrower shall also have furnished to Lender such proofs
as Lender may require to establish the progress of the work, compliance
with applicable laws, freedom of the Property from liens, and the basis
for the requested disbursement.
CERTIFICATION. Borrower shall have furnished to Lender a certification by
an engineer, architect, or other qualified inspector acceptable to Lender
that the construction of the improvements has complied and will continue
with all applicable statutes, ordinances, codes, regulations, and similar
requirements.
LIEN WAIVERS. Borrower shall have obtained and attached to each
application for an Advance, including the Advance to cover final payment
to the General Contractor, executed acknowledgments of payments of all
sums due and releases of mechanic's and materialmen's liens, satisfactory
to Lender, from any party having lien rights, which acknowledgments of
payment and releases of liens shall cover all work, labor, equipment,
materials done, supplied, performed, or furnished prior to such
application for an Advance.
LACK OF DEFAULT. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement.
DISBURSEMENT OF LOAN PROCEEDS. The following provisions relate to the
disbursement of funds from the Loan Fund.
APPLICATION FOR ADVANCES. Each application shall be stated on a standard
AIA payment request form or other form approved by Lender, executed by
Borrower, and supported by such evidence as Lender shall reasonably
require. Borrower shall apply only for disbursement with respect to work
actually done by the General Contractor and for materials and equipment
actually incorporated into the Project. Each application for an Advance
shall be deemed a certification of Borrower that as of the date of such
application, all representations and warranties contained in the Agreement
are true and correct, and that Borrower is in compliance with all of the
provisions of this Agreement.
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PAYMENTS. At the sole option of Lender, Advances may be paid in the joint
names of Borrower and the General Contractor, subcontractor(s), or
supplier(s) in payment of sums due under the Construction Contract. At its
sole option, Lender may directly pay the General Contractor and any
subcontractors or other parties the sums due under the Construction
Contract. Borrower appoints Lender as its attorney-in-fact to make such
payments. This power shall be deemed to be coupled with an Interest, shall
be irrevocable, and shall survive an Event of Default under this
Agreement.
PROJECTED COST OVERRUNS. If Lender at any time determines in its sole
discretion that the amount in the Loan Fund is insufficient, or will be
insufficient, to complete fully and to pay for the Project, then within
ten (10) days after receipt of a written request from Lender, Borrower
shall deposit in the Loan Fund an amount equal to the deficiency as
determined by Lender. The judgment and determination of Lender under this
section shall be final and conclusive. Any such amounts deposited by
Borrower shall be disbursed prior to any Loan proceeds.
FINAL PAYMENT TO GENERAL CONTRACTOR. Upon completion of the Project and
fulfillment of the Construction Contract to the satisfaction of Lender and
provided sufficient Loan Funds are available, Lender shall make an Advance
to cover the final payment due to the General Contractor upon delivery to
Lender of endorsements to the ALTA title insurance policy following the
posting of the completion notice, as provided under applicable law.
Construction shall not be deemed complete for purposes of final
disbursement unless and until Lender shall have received all of the
following:
(a) Evidence satisfactory to Lender that all work under the
Construction Contract requiring inspection by any governmental
authority with jurisdiction has been duly inspected and approved by
such authority that a certificate of occupancy has been issued, and
that all parties performing work have been paid, or will be paid,
for such work;
(b) A certification by an engineer, architect, or other qualified
inspector acceptable to Lender that the improvements have been
completed substantially in accordance with the Plans and
Specifications and the Construction Contract, that direct connection
has been made to all utilities set forth in the Plans and
Specifications, and that the Project is ready for occupancy; and
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(c) Acceptance of the completed improvements by Lender and Borrower.
Construction Default. If Borrower fails in any respect to comply with the
provisions of this Agreement or if construction ceases before completion
regardless of the reason, Lender, at its option, may refuse to make
further Advances, may accelerate the indebtedness under the terms of the
Note, and without thereby impairing any of its rights, powers, or
privileges, may enter into possession of the construction site and perform
or cause to be performed any and all work and labor necessary to complete
the improvements, substantially in accordance with the Plans and
Specifications.
Damage or Destruction. If any of the Property or Improvements is damaged
or destroyed by casualty of any nature, within sixty (60) days thereafter
Borrower shall restore the Property and improvements to the condition in
which they were before such damage or destruction with funds other than
those in the Loan Fund. Lender shall not be obligated to make
disbursements under this Agreement until such restoration has been
accomplished.
Right to Advance Funds. When any event occurs that Lender determines may
endanger completion of the Project or the fulfillment of any condition or
covenant in this Agreement, Lender may require Borrower to furnish, within
ten (10) days after delivery of a written request, adequate security to
eliminate, reduce, or indemnity Lender against, such danger. In addition,
upon such occurrence, Lender in its sole discretion may advance funds or
agree to undertake to advance funds to any party to eliminate, reduce, or
indemnify Lender against such danger or to complete the Project. All sums
paid by Lender pursuant to such agreements or undertakings shall be for
Borrower's account and shall be without prejudice to Borrower's rights, if
any, to receive such funds from the party to whom paid. All sums expended
by Lender in the exercise of its option to complete the Project or protect
Lender's interests shall be payable to Lender on demand together with
interest from the date of the Advance at the rate applicable to the Loan.
In addition, any Advance of funds under this Agreement, including without
limitation direct disbursements to the General Contractor or other parties
in payment of sums due under the Construction Contract, shall be deemed to
have been expended by or on behalf of Borrower and to have been secured by
Lender's Mortgage or Deed of Trust, if any, on the Property.
13
LIMITATION OF RESPONSIBILITY. The making of any Advance by Lender shall not
constitute or be interpreted as either (a) an approval or acceptance by Lender
of the work done through the date of the Advance, or (b) a representation or
indemnity by Lender to any party against any deficiency or defect in the work or
against any breach of any contract. Inspections and approvals of the Plans and
Specifications, the Improvements, the workmanship and materials used in the
Improvements, and the exercise of any other right of inspection, approval, or
inquiry granted to Lender in this Agreement are acknowledged to be solely for
the protection of Lender's interests, and under no circumstances shall they be
construed to impose any responsibility or liability of any nature whatsoever on
Lender to any party. Neither Borrower nor any contractor, subcontractor,
materialmen, laborer, or any other person shall rely, or have any right to rely,
upon Lender's determination of the appropriateness of any Advance. No
disbursement or approval by Lender shall constitute a representation by Lender
as to the nature of the Project, its construction, or its intended use for
Borrower or for any other person, nor shall it constitute an indemnity by Lender
to Borrower or to any other person against any deficiency or defects in the
Project or against any breach of any contract.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, list of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the use or occupancy of the
Property, including without limitation, the Americans With Disabilities
Act. Borrower may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Borrower has notified Lender in writing
prior to doing so and so long as, in Lender's sole opinion, Lender's
interests in the Property are not jeopardized. Lender may require Borrower
to post adequate security or a surety bond, reasonably satisfactory to
Lender, to protect Lender's interest.
14
Construction of the Project. Commence construction of the Project no later
than end of 2006, and cause the Improvements to be constructed and
equipped in a diligent and orderly manner and in strict accordance with
the Plans and Specifications approved by Lender, the Construction
Contract, and all applicable laws, ordinances, codes, regulations, and
rights of adjoining or concurrent property owners. Borrower agrees to
complete the Project for purposes of final payment to the General
Contractor on or before end of , 2008, regardless of the reason for any
delay.
Loan Proceeds. Use the Loan Funds solely for payment of bills and expenses
directly related to the Project.
Defects. Upon demand of Lender, promptly correct any defect in the
Improvements or any departure from the Plans and Specifications not
approved by Lender before further work shall be done upon the portion of
the Improvements affected.
Project Claims and Litigation. Promptly inform Lender of (a) all material
adverse changes in the financial condition of the General Contractor; (b)
any litigation and claims, actual or threatened, affecting the Project or
the General Contractor, which could materially affect the successful
completion of the Project or the ability of the General Contractor to
complete the Project as agreed; and (c) any condition or event which
constitutes a breach or default under any of the Related Documents or any
contract related to the Project.
Payment of Claims and Removal of Liens. (a) Cause all claims for labor
done and materials and services furnished in connection with the
Improvements to be fully paid and discharged in a timely manner, (b)
diligently file or procure the filing of a valid notice of completion of
the Improvements, or such comparable document as may be permitted under
applicable lien laws, (c) diligently file or procure the filing of a
notice of cessation, or such comparable document as may be permitted under
applicable lien laws, upon the happening of cessation of labor on the
Improvements for a continuous period of thirty (30) days or more, and (d)
take all reasonable steps necessary to remove all claims of liens against
the Property, the Improvements or any part of the Property or
Improvements, or any rights or interests appurtenant to the Property or
Improvements. Upon Lender's request, Borrower shall make such demands or
claims upon or against laborers, materialmen, subcontractors, or other
persons who have furnished or claim to have furnished labor, services, or
materials in connection with the Improvements, which demands or claims
shall under the laws of the State of Nevada require diligent assertions of
lien claims upon penalty of loss or waiver thereof, Borrower shall, within
ten (10) days after the filing of any claim of lien that is disputed or
contested by Borrower, provide Lender with surety bond issued by a surety
acceptable to Lender sufficient to release the claim of lien or deposit
with Lender an amount satisfactory to Lender for the possibility that the
contest will be unsuccessful. If Borrower fails to remove any lien on the
Property or Improvements or provide a bond or deposit pursuant to this
provision, Lender may pay such lien, or may contest the validity of the
lien, and Borrower shall pay all costs and expenses of such contest,
including Lender's reasonable attorneys' fees.
15
Taxes and Claims. Pay and discharge when due all of Borrower's
Indebtedness, obligations, and claims that, if unpaid, might become a lien
or charge upon the Property or Improvements; provided, however, that
Borrower shall not be required to pay and discharge any such indebtedness,
obligation, or claim so long as (a) its legality shall be contested in
good faith by appropriate proceedings, (b) the Indebtedness, obligation,
or claim does not become a lien or charge upon the Property or
Improvements, and (c) Borrower shall have established on its books
adequate reserves with respect to the amount contested in accordance with
generally accepted accounting practices. If the indebtedness, obligation,
or claim does become a lien or charge upon the Property or Improvements,
Borrower shall remove the lien or charge as provided in the preceding
paragraph.
Performance. Perform and comply with all terms, conditions, and
provisions, set forth in this Agreement and in all other instruments and
agreements between Borrower and Lender, and in all other loan agreements
now or hereafter existing between Borrower and any other party. Borrower
shall notify Lender immediately in writing of any default in connection
with any agreement.
Additional Assurances. Make, execute, and deliver to Lender such Security
Agreements, instruments, documents, and other agreements reasonably
necessary to document and secure the Loan and to perfect Lender's Security
interests in the Property and Improvements.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets,
or (c) sell with recourse any of Borrower's accounts, except to Lender.
16
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, or (c)
make any distribution with respect to any capital account, whether by
reduction of capital or otherwise.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other enterprise or
entity, or (c) incur any obligation as surely or guarantor other than in the
ordinary course of business.
MODIFICATION OF CONTRACT. Make or permit to be made any modification of
the Construction Contract.
LIENS. Create or allow to be created any lien or charge upon the Property
or the improvements.
GENERAL PROJECT PROVISIONS. The following provisions relate to the construction
and completion of the Project.
CHANGE ORDERS. All requests for changes in the Plans and Specifications,
other than minor changes involving no extra cost, must be in writing
signed by Borrower and the architect, and delivered to Lender for it's
approval. Borrower will not permit the performance of any work pursuant to
any change order or modification of the Construction Contract or any
subcontract without the written approval of Lender. Borrower will obtain
any required permits or authorizations from governmental authorities
having jurisdiction before approving or requesting a new change order.
PURCHASE OF MATERIALS; CONDITIONAL SALES CONTRACTS. No materials,
equipment, fixtures, or articles of personal property placed in or incorporated
into the Project shall be purchased or installed under any Security Agreement or
other agreement whereby the seller reserves or purports to reserve title or the
right of removal or repossession, or the right to consider such items as
personal property after their incorporation into the Project, unless otherwise
authorized by Lender in writing.
LENDER'S RIGHT OF ENTRY AND INSPECTION. Lender and its agents shall have
at all times the right of entry and free access to the Property and the right to
inspect all work done, labor performed, and materials furnished with respect to
the Project. Lender shall have unrestricted access to and the right to copy all
records, accounting books, contracts, subcontracts, bills, statements, vouchers,
and supporting documents of Borrower relating in any way during the Project.
17
LENDER'S RIGHT TO STOP WORK. If Lender in good faith determines that any
work or materials do not conform to the approved Plans and Specifications
or sound building practices, or otherwise depart from any of the
requirements of this Agreement, Lender may require the work to be stopped
and withhold disbursements until the matter is corrected. In such event,
Borrower will promptly correct the work to Lender's satisfaction. No such
action by Lender will affect Borrower's obligation to complete the
Improvements on or before the Completion Date. Lender is under no duty to
supervise or inspect the construction or examine any books and records.
Any inspection or examination by Lender is for the sole purpose of
protecting Lender's security and preserving Lender's rights under this
Agreement. No default of Borrower will be waived by any inspection by
Lender. In no event will any inspection by Lender be a representation that
there has been or will be compliance with the Plans and Specifications or
that the construction is free from defective materials or workmanship.
INDEMNITY. Borrower shall indemnify and hold Lender harmless from any and
all claims asserted against Lender or the Property by any person, entity,
or governmental body, or arising out of or in connection with the
Property, Improvements, or Project. Lender shall be entitled to appear in
any action or proceeding to defend itself against such claims, and all
costs incurred by Lender in connection with such defense, including
attorney's fees, shall be paid by Borrower to Lender. Lender shall, in its
sole discretion be entitled to settle or compromise any asserted claims
against it, and such settlement shall be binding upon Borrower for
purposes of this indemnification. All amounts paid by Lender under this
paragraph shall be secured by Lender's Mortgage or Deed of Trust, if any,
on the Property, shall be deemed an additional principal Advance under the
Loan, payable upon demand, and shall bear interest at the rate applicable
to the Loan.
PUBLICITY. Lender may display a sign at the construction site informing
the public that Lender is the construction lender of the Project. Lender
may obtain other publicity in connection with the Project through press
releases and participation in ground-breaking and opening ceremonies and
similar events.
ACTIONS. Lender shall also have the right to commence, appear in, or
defend any action or proceeding purporting to affect the rights, duties,
or liabilities of the parties to this Agreement, or the disbursement of
funds from the Loan Fund. In connection with the right, Lender may incur
and pay reasonable costs and expenses, including, but not limited to,
attorney's fees, for both trial and appellate proceedings. Borrower
covenants to pay to Lender on demand all such expenses, together with
interest from the date Lender incurs the expense at the rate specified in
the Note, and Lender is authorized to disburse funds from the Loan Fund
for such purposes.
18
RELATIONSHIP TO THIS AGREEMENT. The terms and provisions of this
Agreement, the Note and the Related Documents supersede any inconsistent
terms and conditions of Lender's loan commitment letter to Borrower,
provided that all obligations of Borrower under the commitment to pay any
fees to Lender or any costs and expenses relating to the Loan or the
commitment shall survive the execution and delivery of this Agreement, the
Note and the Related Documents. Any failure of Borrower to perform any
such obligation shall constitute a default under this Agreement.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all XXX and Xxxxx accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the indebtedness against any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
on the Loans.
OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition continued in any other agreement between Lender and
Borrower.
ENVIRONMENTAL DEFAULT. Failure of any party to comply with or perform when
due any term, obligation, covenant or condition contained in any
environmental agreement executed in connection with any Loan.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at
any time thereafter.
DEFECTIVE COLLATERALIZATION. This agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or
lien) at any time and for any reason.
19
DEATH OR INSOLVENCY. The dissolution (regardless of whether election to
continue is made), any member withdraws from Borrower, or any other
termination of Borrower's existence as a going business or the death of
any member, the Insolvency of Borrower, the appointment of a receiver for
any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor or Borrower, any
creditor of any Grantor against any collateral securing the indebtedness,
or by any governmental agency. This includes a garnishment, attachment, or
levy on or of any of Borrower's deposit accounts with Lender. However,
this event of Default shall not apply if there is a good faith dispute by
Borrower or Grantor, as the case may be, as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding, and if Borrower or Grantor gives Lender written
notice of the creditor or forfeiture proceeding and furnishes reserves or
a surety bond for the creditor or forfeiture proceeding satisfactory to
Lender.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) if Borrower or
Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within thirty (30)
days; or (b) if the cure requires more than thirty (30) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
BREACH OF CONSTRUCTION CONTRACT. The improvements are not constructed in
accordance with the Plans and Specifications or in accordance with the
terms of the Construction Contract.
20
CESSATION OF CONSTRUCTION. Prior to the completion of construction of the
improvements and equipping of the Project, the construction of the
improvements or the equipping of the Project is abandoned or work thereon
ceases for a period of more than ten (10) days for any reason, or the
improvements are not completed for purposes of final payment to the
General Contractor regardless of the reason for the delay.
Transfer of Property. Sale, transfer, hypothecation, assignment, or
conveyance of the Property or the improvements or any portion thereof or
interest therein by Borrower or any Grantor without Lender's prior written
consent.
Condemnation. All or any material portion of the Property is condemned,
seized, or appropriated without compensation, and Borrower does not within
thirty (30) days after such condemnation, seizure, or appropriation,
initiate and diligently prosecute appropriate action to contest in good
faith the validity of such condemnation, seizure, or appropriation.
EFFECT OF AN EVENT OF DEFAULT; REMEDIES. Upon the occurrence of any Event of
Default and at any time thereafter, Lender may, at its option, but without any
obligation to do so, and in addition to any other right Lender may have ,do any
one or more of the following without notice to Borrower:(a) Cancel this
Agreement; (b) Institute appropriate proceedings to enforce the performance of
this Agreement; (c) Withhold further disbursement of Loan Funds; (d) Expend
funds necessary to remedy the default; (e) Take possession of the Property and
continue construction of the Project; (f) Accelerate maturity of the Note and/or
indebtedness and demand payment of all sums due under the Note and/or
indebtedness; (g) Bring an action on the Note and/or indebtedness; (h) Foreclose
Lender's Mortgage or Deed of Trust, if any, on the Property in any manner
available under law; and (i) Exercise any other right or remedy which it has
under the Note of Related Documents, or which is otherwise available at law or
in equity or by statute.
COMPLETION OF IMPROVEMENT BY LENDER. If Lender takes possession of the property,
it may take any and all actions necessary in its judgment to complete
construction of the Improvements, including but not limited to making changes in
the Plans and Specifications, work, or materials and entering into, modifying or
terminating any contractual arrangements, subject to Lender's right at any time
to discontinue any work without liability. If Lender elects to complete the
Improvements, it will not assume any liability to Borrower or to any other
person for completing the improvements or for the manner or quality of
construction of the improvements, and Borrower expressly waives any such
liability. Borrower irrevocably appoints Lender as its attorney-in-fact, with
full power of substitution, to complete its improvements, at Lender's option,
either in Borrower's name or in its own name. In any event, all sums expended by
Lender in completing its construction of the improvements will be considered to
have been disbursed to Borrower and will be secured by the collateral for the
Loan. Any such sums that cause the principal amount of the Loan to exceed the
face amount of the Note will be considered to be an additional Loan to Borrower,
bearing interest at the Note rate and being secured by the collateral. For these
purposes, Borrower assigns to Lender all of its right, title and interest in and
to the Project Documents; however Lender will not have any obligation under the
Project Documents unless Lender expressly hereafter agrees to assume such
obligations in writing. Lender will have the to exercise any rights of Borrower
under the Project Documents upon the occurrence of an Event of Default. All
rights, powers, and remedies of Lender under this Agreement are cumulative and
alternative, and are in addition to all rights which Lender may have under
applicable law.
21
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Agency. Nothing in this Agreement shall be construed to constitute the
creation of a partnership or joint venture between Lender and Borrower or
any contractor. Lender is not an agent or representative of Borrower. This
Agreement does not create a contractual relationship with and shall not be
construed to benefit or bind Lender in any way with or create any
contractual duties by Lender to any contractor, subcontractor,
materialman, laborer, or any other person.
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This agreement has been delivered to Lender and accepted
by Lender in the State of California. If there is a lawsuit, Borrower
agrees upon Lender's request to submit to the jurisdiction of the courts
of XXXXX County, the State of Nevada
This Agreement shall be governed by and construed accordance with the laws of
the State of Nevada.
Authority to File Notices. Borrower appoints and designates Lender as its
attorney-in-fact to file for record any notice that Lender deems necessary
to protect its interest under this Agreement. This power shall be deemed
coupled with an interest and shall be irrevocable while any sum or
performance remains due and owing under any of the Related Documents.
22
Caption Headings. Caption heading is this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy it may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will
be considered as the absolute owners of such interests in the Loans and
will have all the rights granted under the participation agreement or
agreements governing the sale of such participation interest. Borrower
further waives all rights of offset or countercism that it may have now or
later against Lender or against any purchaser of such a participation
interest and unconditionally agrees that either Lender or such purchaser
may enforce Borrower's obligation under the Loans irrespective of the
failure or insolvency of any holder of any interest in the Loans. Borrower
further agrees that the purchaser of any such participation interests may
enforce its interests irrespective of any personal claims or defenses that
Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made pursuant
to this Agreement. Lender may pay someone else to help collect the Loans
and to enforce this Agreement, and Borrower will pay that amount. This
includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses, whether or not there is a lawsuit,
including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any
court costs, in addition to all other sums provided by law.
Entire Agreement. This Agreement and the Related Documents constitute all
of the agreements between the parties relating to the Project and
supersede all other prior or concurrent oral or written agreements or
understandings relating to the Project.
23
Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required
by law), and shall be effective when actually delivered or when deposited
with a nationally recognized overnight courier or deposited in the United
States mail, first class, postage prepaid, addressed to the party to whom
the notice is to be given at the address shown above. Any party may change
its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party's address. To the extent permitted by applicable law,
if there is more than one Borrower, notice to any Borrower will constitute
notice to all Borrowers. For notice purposes, Borrower will keep Lender
informed at all times of Borrower's current address(es).
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under its Agreement or any
interest therein, without the prior written consent of Lender.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made
by Lender or on Lender's behalf.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in willing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's
rights or of any obligations of Borrower or of any Grantor as to any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent in subsequent instances where such
consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
24
II. OPTION AGREEMENT
As set forth in the Line of Credit Promissory Note, the unpaid principal of this
line of credit shall bear simple interest at the rate of twelve percent (12%)
per annum. In the alternative, the amount of the total interest or return shall
be equal to 33% of all gross profits from the real estate development project
located at 000 X. Xxxx Xx., Xxx Xxxxx, Xxxxxx, whichever is higher.
In addition to the above-mentioned terms and as part of this Investment
Agreement, Borrower ("Optionor") grants to Lender ("Optionee") the option to
purchase the real property described in Exhibit A, attached, including all
improvements and the Project ("Property"). This option is on the terms and
conditions set forth below:
Optionor grants Optionee an option to purchase the full Property and Project for
twenty million dollars ($15,000,000.00), which shall be paid in the following
manner:
o The loan amount lent by Lender/Optionee to Borrower/Optionor in the amount
of ten million dollars ($10,000,000.00) shall be considered as cash paid
for the exercise of the option.
o The remaining five million dollars ($5,000,000.00) (the "Share Purchase
Price") shall be paid in shares of common stock of Euroweb International
Corp. (the "Shares") The amount of Shares to be issued shall be determined
by dividing $5,000,000 by the higher value of (i) the per share book value
according to Euroweb International Corp's (the "Company")most recent
balance sheet as filed with the Securities and Exchange Commission , or
(ii) 90 day weighted average price of Euroweb International Corp.'s shares
prior to the notice multiplied by 110%. The issuance of such Shares shall
be subject to the completion and filing of a Notification Form: Listing of
Additional Shares with the Nasdaq Stock Market.
Optionor acknowledges that the Shares to be received by such Optionor
hereunder will be acquired for such Optionor's own account, not as nominee or
agent, and not with a view to the resale or distribution of any part thereof in
violation of the Securities Act of 1933, as amended (the "1933 Act"), such
Optionor does not have any agreement or understanding, directly or indirectly,
with any person to distribute the Shares and such Optionor has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of the 1933 Act.
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Optionor acknowledges that it can bear the economic risk and complete loss
of its investment in the Shares and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment contemplated hereby.
Optionor has had an opportunity to receive all information related to
Euroweb International Corp. requested by it and to ask questions of and receive
answers from the Euroweb International Corp. regarding Euroweb International
Corp., its business and the terms and conditions of the offering of the Shares.
Optionor understands that the Shares are characterized as "restricted
securities" under the U.S. federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the 1933 Act only in certain limited circumstances.
It is understood that, except as provided below, certificates evidencing
the Shares may bear the following or any similar legend:
"The securities represented hereby may not be transferred unless (i)
such securities have been registered for sale pursuant to the
Securities Act of 1933, as amended, (ii) such securities may be sold
pursuant to Rule 144(k), or (iii) the Company has received an
opinion of counsel reasonably satisfactory to it that such transfer
may lawfully be made without registration under the Securities Act
of 1933 or qualification under applicable state securities laws."
Optionor is an "accredited investor" as defined in Rule 501(a) of
Regulation D, as amended, under the 1933 Act.
Unless permitted by the applicable rules and regulations of the principal
securities market on which the Shares are then listed or traded, in no event
shall the Company issue upon exercise of the Option more than the maximum number
of shares of Common Stock that the Borrower can issue pursuant to any rule of
the principal United States securities market on which the Shares is then traded
(the "Maximum Share Amount"), which shall be 19.99% of the total shares
outstanding. Once the Maximum Share Amount has been issued (the date of which is
hereinafter referred to as the "Maximum Conversion Date"), if the Company fails
to eliminate any prohibitions under applicable law or the rules or regulations
of any stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or any of its securities on the
Company's ability to issue shares of common stock in excess of the Maximum Share
Amount, the Company shall pay the remaining portion of the Share Purchase Price
in cash. The Company will use its best efforts to seek and obtain Shareholder
Approval (or obtain such other relief as will allow issuance of the Shares
hereunder in excess of the Maximum Share Amount) as soon as practicable and
before the Maximum Conversion Date. As used herein, "Shareholder Approval" means
approval by the stockholders of the Company to authorize the issuance of the
full number of shares of common stock which would be issuable upon exercise of
the Option but for the Maximum Share Amount.
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The term of the option shall begin on the date of signing of this agreement and
shall terminate on January 01, 2015.
The option shall be exercised by delivering written notice from Optionee to
Optionor before the expiration of the term of this option and in accordance with
the notice provisions of the "Exercise Notice" provision below. The Exercise
Notice shall affirmatively state that the Optionee exercises the option without
condition or qualification. Within three business days after exercise of the
option, the parties shall execute and deliver a grant deed and deposit the funds
and documents in escrow that are required to be deposited in order to fully
transfer title of the Property and Project to Lender/Optionee.
Optionor covenants, warrants, and represents to Optionee that all the covenants,
warranties, and representations set forth in this Investment Agreement are true
and correct.
Within 10 days after execution of this Option Agreement, Optionor shall deliver
to Optionee a current preliminary report on the Property prepared by a reputable
title company, together with copies of all documents identified as exceptions in
the report ("Preliminary Report"). Optionee shall have the sole discretion to
approve or disapprove any or all of the exceptions shown in the Preliminary
Report.
If Optionee disapproves any exception to title, as provided above, Optionor
shall notify Optionee within 10 days after receipt of such notice of disapproval
if Optionor is unwilling to clear the disapproved exceptions. Optionor covenants
that, if the option is exercised, Optionor shall, on or before closing, which
shall occur 30 days after Optionee exercises its option, cause all disapproved
exceptions to be removed as encumbrances against title to the Property except
any exceptions that Optionor has notified Optionee that Optionor will not
remove, in accordance with the notice provisions of this section.
At any time and from time to time during the term of the option, Optionee may
enter the Property for purposes of inspection, survey, tests, design of
improvements, and other actions reasonably related to the investigation by
Optionee of the suitability of the Property for the Optionee's purposes.
Optionee may make minor changes in the Property in the course of any
investigation permitted under this Option Agreement (e.g., soils borings),
provided that the change or damage is only temporary, that it is reasonably
necessary to the investigation of the physical characteristics of the Property,
and that Optionee repairs such damage and restores the Property to its original
condition promptly on completion of the investigation.
On execution of this Option Agreement, Optionor and Optionee shall execute and
record in the official records of the county in which the Property is located a
memorandum of option in the form of Exhibit C, attached. Optionee shall pay the
recording cost. Optionee covenants to execute and deliver to Optionor
immediately on the expiration or earlier termination of the term of this Option
Agreement a quitclaim deed in recordable form releasing and reconveying to
Optionor all right, title, and interest of Optionee in the Property.
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All notices and other communications authorized or required under this Option
Agreement shall be in writing and shall be given by (1) personal delivery, (2)
mailing by certified mail or registered mail, return receipt requested, postage
prepaid, or United States express mail, or (3) delivery by commercially
recognized courier service. Any such notice or other communication shall be
deemed to have been given on the date of delivery or refusal to accept delivery
if addressed to the Optionor's or Optionee's place of business:
Optionee may assign this option and the rights under it.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS INVESTMENT
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF June
19th , 2006.
Exhibits List
-------------
Exhibit A: Property Legal Description
Exhibit B: Line of Credit Promissory Note
Exhibit C: Memorandum of Option
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BORROWER/OPTIONOR:
AO BONANZA LAS VEGAS, INC.,
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx, its President
LENDER/OPTIONEE:
EUROWEB RE CORP.
By: /s/Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx, its president
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