INVESTMENT AGREEMENT

Investment Agreement (this "Agreement"), dated as of July 19, 2013 (“Effective Date”), by and among ProGreen Properties, Inc., a Delaware corporation (“ProGreen”), and American Residential Fastigheter AB (“ARF”), a company formed under the laws of Sweden for the purpose of investing in U.S. residential and/or other properties.

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, ProGreen shall provide fully-leased and managed investment properties to ARF; and

 

WHEREAS, ARF desires to invest up to 3 million USD in the form of a first round in 2013, and if to ARF’s satisfaction, plans to invest in excess of such amount in 2014 and thereafter (“Investment Funds”) to purchase properties from ProGreen; and

 

WHEREAS, a portion of such Investment Funds may at ARF’s option, be allocated to the subscription and purchase of shares in ProGreen in reliance upon the provisions of the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations promulgated thereunder by the Securities and Exchange Commission (“SEC”).

NOW THEREFORE, ProGreen and ARF hereby agree as follows:

 

1. Purchase of Investment Properties by ARF.

2. Initial Funding by ARF. ARF plans to conduct an offering in Sweden to raise the funds necessary for the investments described in this Agreement and also plans to list its shares on the Swedish Exchange, “Aktietorget”, in accordance with an Information Memorandum. ARF initially intends to invest up to 3 million USD (“Investment Funds”) with ProGreen during 2013 in the form of a first round, with a maximum 10 % of such funds designated for the subscription of shares of ProGreen common stock, at the option of ARF.

3. Investment Funds Escrow Account. ARF will deposit Investment Funds into a designated ProGreen escrow account (“Escrow Account”), requiring joint signatures by a ProGreen representative and by a ARF nominated legal representative in the US. The funds may be applied solely for: (a) ARF’s acquisitions from ProGreen of fully-leased Investment Properties, (b) purchase by ARF of shares of ProGreen common stock, and (c) ARF funding of ProGreen property acquisitions and refurbishment costs through Property Loans (defined below). In the event that a property is found to be difficult, or otherwise proves unsuitable, to rent, ProGreen shall have the right to sell the property in the open market, and repay the loan amount into the escrow account without any loss of interest due to ARF.

4. ARF Property Loans. ARF will make Investment Funds in the Escrow Account available to ProGreen as property loans (“Property Loans”) from the Escrow Account to fund ProGreen property acquisitions. Once the Investment Funds have been deposited into the Escrow Account, 8% interest will charged to ProGreen.Interest to be payable bi-annually in arrears. Interest shall be due and payable by ProGreen until such time as the property is sold to ARF as a qualified Investment Property as described under paragraph (1) above, or shall be paid in full by ProGreen when the property is sold to a third party purchaser in the event that ARF declines to acquire such property. Property Loans shall be evidenced by a separate Note for each such loan, with a maturity date not later than one (1) year from the date the Investment Funds have been deposited in the Escrow Account and bearing interest at 8% per annum. To secure any Property Loan, a mortgage shall be issued in favor of ARF at the time the loan amount is drawn, the mortgage to secure the principal amount of the Property Loan and interest thereon. This mortgage will be extinguished once the property is sold to ARF, or the mortgage loan amount has been repaid by ProGreen.

5. Right of First Refusal. If ProGreen determines to sell a property subject to a ARF provided mortgage, ProGreen shall provide to ARF a Property Sale Notice with respect to the property, and ARF shall have a first refusal option to acquire such property by giving ProGreen notice within the Offer Response Period of its agreement to purchase the property.

6. Purchases of ProGreen Common Stock by ARF. ARF will have the right to subscribe to ProGreen, shares of ProGreen’s common stock, up to a maximum of 10 % of the investment funds, but at no time resulting in the purchase in the aggregate by ARF of more than 9.9% of the outstanding common stock in ProGreen, calculated at the time the final purchase is made. All purchases shall be subject to a subscription agreement between the parties containing standard representations and warranties of an issuer and a purchaser for private sales of securities under the Securities Act. This subscription right may be exercised in whole or in part, at ARF’s sole discretion, in up to a maximum of three tranches, with the first tranche being executed in conjunction with the initial funding in ProGreen, as described under paragraph (2) and the last tranche no later than 12 months thereafter. The share price will be calculated as the average share price for the period commencing on the 20th trading day prior to the funding and ending on the closing date, with a floor set at $0.05 (5 cents US) per share. If ARF intends to purchase any ProGreen shares in the open market during the term of this Agreement, clearance by ProGreen legal counsel will have to be obtained by ARF prior to any shares being acquired, in order to ensure compliance with SEC rules on insider trading and insider filing requirements.

7. Term and Termination. This Agreement shall be in effect from the Effective Date through July 18, 2014, and shall be renewable for successive one (1) year terms by agreement of the parties.

 

 

8. Governing Law; Miscellaneous.

 

Each party shall provide five (5) days' prior written notice to the other party of any change in address or facsimile number.