Exhibit 99.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. XXXXXXX SHOULD
BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
LG CAPITAL FUNDING, LLC
COLLATERALIZED SECURED PROMISSORY NOTE
BACK END NOTE
$50,000.00 Brooklyn, NY
May 30, 2014
1. Principal and Interest
FOR VALUE RECEIVED, LG Capital Funding, LLC, a New York Limited Liability
Company (the "Company") hereby absolutely and unconditionally promises to pay to
Red Giant Entertainment, Inc (the "Lender"), or order, the principal amount of
Fifty Thousand Dollars ($50,000) no later than January 30, 2015, unless the
Lender does not meet the "current information requirements" required under Rule
144 of the Securities Act of 1933, as amended, in which case the Company may
declare the offsetting note issued by the Lender on the same date herewith to be
in Default (as defined in that note) and cross cancel its payment obligations
under this Note as well as the Lenders payment obligations under the offsetting
note. This Full Recourse Note shall bear simple interest at the rate of 8%.
2. Repayments and Prepayments; Security.
a. All principal under this Note shall be due and payable no later than
January 30, 2015, unless the Lender does not meet the "current information
requirements" required under Rule 144 of the Securities Act of 1933, as amended,
in which case the Company may declare the offsetting note issued by the Lender
on the same date herewith to be in Default (as defined in that note) and cross
cancel its payment obligations under this Note as well as the Lenders payment
obligations under the offsetting note.
b. The Company may pay this Note at any time. This note may not be assigned
by the Lender, except by operation of law.
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c. This Note shall initially be secured by the pledge of the $50,000.00 9%
convertible promissory note issued to the Company by the Lender on even date
herewith (the "Lender Note"). THE COMPANY MAY EXCHANGE THIS COLLATERAL FOR OTHER
COLLATERAL WITH AN APPRAISED VALUE OF AT LEAST $50,000.00, BY PROVIDING 3 DAYS
PRIOR WRITTEN NOTICE TO THE LENDER. IF THE LENDER DOES NOT OBJECT TO THE
SUBSTITUTION OF COLLATERAL IN THAT 3 DAY PERIOD, SUCH SUBSTITUTION OF COLLATERAL
SHALL BE DEEMED TO HAVE BEEN ACCEPTED BY THE LENDER. All collateral shall be
retained by New Venture Attorneys, P.C., which shall act as the escrow agent for
the collateral for the benefit of the Lender. The Company may not effect any
conversions under the Lender Note until it has made full cash payment for the
portion of the Lender Note being converted.
3. Events of Default; Acceleration.
a. The principal amount of this Note is subject to prepayment in whole or
in part upon the occurrence and during the continuance of any of the following
events (each, an "Event of Default"): the initiation of any bankruptcy,
insolvency, moratorium, receivership or reorganization by or against the
Company, or a general assignment of assets by the Company for the benefit of
creditors. Upon the occurrence of any Event of Default, the entire unpaid
principal balance of this Note and all of the unpaid interest accrued thereon
shall be immediately due and payable. The Company may offset amounts due to the
Lender under this Note by similar amounts that may be due to the Company by the
Lender resulting from breaches under the Lender Note.
b. No remedy herein conferred upon the Lender is intended to be exclusive
of any other remedy and each and every remedy shall be cumulative and in
addition to every other remedy hereunder, now or hereafter existing at law or in
equity or otherwise. The Company accepts and agrees that this Note is a full
recourse note and that the Holder may exercise any and all remedies available to
it under law.
4. Notices.
a. All notices, reports and other communications required or permitted
hereunder shall be in writing and may be delivered in person, by telecopy with
written confirmation, overnight delivery service or U.S. mail, in which event it
may be mailed by first-class, certified or registered, postage prepaid,
addressed (i) if to a Lender, at such Xxxxxx's address as the Lender shall have
furnished the Company in writing and (ii) if to the Company at such address as
the Company shall have furnished the Lender(s) in writing.
b. Each such notice, report or other communication shall for all purposes
under this Note be treated as effective or having been given when delivered if
delivered personally or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or, if
sent by electronic communication with confirmation, upon the delivery of
electronic communication.
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5. Miscellaneous.
a. Neither this Note nor any provisions hereof may be changed, waived,
discharged or terminated orally, but only by a signed statement in writing.
b. No failure or delay by the Lender to exercise any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege preclude any other right, power or privilege. The
provisions of this Note are severable and if any one provision hereof shall be
held invalid or unenforceable in whole or in part in any jurisdiction, such
invalidity or unenforceability shall affect only such provision in such
jurisdiction. This Note expresses the entire understanding of the parties with
respect to the transactions contemplated hereby. The Company and every endorser
and guarantor of this Note regardless of the time, order or place of signing
hereby waives presentment, demand, protest and notice of every kind, and assents
to any extension or postponement of the time for payment or any other
indulgence, to any substitution, exchange or release of collateral, and to the
addition or release of any other party or person primarily or secondarily
liable.
c. If Xxxxxx retains an attorney for collection of this Note, or if any
suit or proceeding is brought for the recovery of all, or any part of, or for
protection of the indebtedness respected by this Note, then the Company agrees
to pay all costs and expenses of the suit or proceeding, or any appeal thereof,
incurred by the Lender, including without limitation, reasonable attorneys'
fees.
d. This Note shall for all purposes be governed by, and construed in
accordance with the laws of the State of New York (without reference to conflict
of laws).
e. This Note shall be binding upon the Company's successors and assigns,
and shall inure to the benefit of the Lender's successors and assigns.
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IN WITNESS WHEREOF, the Company has caused this Note to be executed by its
duly authorized officer to take effect as of the date first hereinabove written.
LG CAPITAL FUNDING, LLC
By: /s/ Xxxxxx Xxxxxx
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Title: Managing Member
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APPROVED:
RED GIANT ENTERTAINMENT, INC.
By: /s/ Xxxxx X. Xxxxxx
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Title: CEO
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