LOAN AGREEMENT
THIS
LOAN
AGREEMENT (this "Agreement")
is
executed as of March 30, 2008, by and among Legend Media, Inc., a Nevada
corporation (formerly known as Noble Quests, Inc. and hereinafter the
"Company"),
and
Xxxxxxxx Xxxxxx, an individual residing in Weston, Florida ("Xxxxxx")
(each
a “Party”
and
collectively the “Parties”).
WHEREAS,
the Company recently completed a reverse merger (the "Merger")
with
and into a wholly-owned subsidiary Well Chance Investments Limited, a company
incorporated in the British Virgin Islands, whereby Well Chance became the
wholly-owned subsidiary and operating business of the Company, and a loan
financing (“Financing”)
with
RMK Emerging Growth Opportunity Fund, LP (the Merger and Financing are
collectively referred to herein as the “Transaction”);
WHEREAS,
in order to fund the Company’s fees and expenses for the Transaction and also
for a post-merger equity financing, the Company has borrowed one hundred
thousand dollars ($100,000) from Xxxxxx as a short term bridge loan (the
“Loan”);
and
WHEREAS,
the Company and Xxxxxx hereby agree that Xxxxxx delivered the Loan for the
benefit of the Company on November 19, 2007 (“Loan
Delivery Date”)
and
the Loan was provided on terms and conditions as set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Xxxxxx, intending
to be legally bound, agree as follows:
ARTICLE
1
DEFINITIONS
1.1 Defined
terms.
Certain
capitalized terms used in this Agreement shall have the specific meanings
defined below:
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of California are
authorized or required by law or other governmental action to
close;
“Transaction
Fees”
means
the Company’s expenses, including but not limited to the audit and legal fees,
in connection with the Transaction.
ARTICLE
2
THE
LOAN
2.1 Loan
and Promissory Note.
Xxxxxx
delivered a bridge loan for the benefit of the Company as of the Loan Delivery
Date in the amount of $100,000 (the "Loan").
The
Loan shall be evidenced by promissory note(s) in the form attached hereto as
Exhibit
A
("Note"),
duly
executed on behalf of the Company and dated as of the Loan Delivery
Date.
2.2 Repayment.
The
Company shall repay the Loan to Xxxxxx pursuant to the following repayment
terms:
(a) Initial
Payment Period Repayments.
The
total repayment amount due and payable to Xxxxxx on or before April 1, 2008
shall be the sum of the Loan ($100,000 and hereinafter the “Loan
Principal”)
plus a
loan fee of fifty percent (50%) of the amount of the Loan Principal, or $50,000
(the “Initial
Loan Premium”),
for a
total of $150,000. Any funds received by Xxxxxx as a partial repayment of the
Loan (“Partial
Repayment”)
on or
before April 1, 2008 shall be applied toward repayment as follows:
(i) two-thirds
(2/3) of the Partial Repayment shall be applied toward payment of the remaining
outstanding Loan Principal owed by the Company as of the date of such Partial
Repayment; and
(ii) one
third
(1/3) of the Partial Repayment shall be applied toward payment of the remaining
outstanding Initial Loan Premium as of the date of such Partial Repayment.
1
(b) Subsequent
Period Repayments.
In the
event that full repayment of all outstanding amounts of Loan Principal and
Initial Loan Fee owed to Xxxxxx (“Full
Repayment”)
is not
made by the Company on or before April 1, 2008, then, in addition to the
remaining outstanding Loan Principal and Initial Loan Premium due, the total
amount due and payable to Xxxxxx shall also include an additional loan fee
that
shall be a percentage of the remaining outstanding Loan Principal at the time
repayment is made (“Additional
Loan Fee”).
The
applicable Additional Loan Fee if repayments are made on April 2, 2008 and
for
the 44-day period (“Initial
45-day Period”)
thereafter, shall be ten percent (10%) of the remaining outstanding Loan
Principal at the time repayment is made. The Additional Loan Fee percentage
amount shall increase in ten percent (10%) increments for every 45-day period
subsequent to the Initial 45-day Period and shall continue to increase until
the
Company makes Full Repayment. (The Initial 45-day Period and all subsequent
45-day periods are hereinafter collectively referred to as the “Subsequent
Periods”.)
Any
Partial Repayments delivered to Xxxxxx during Subsequent Periods shall be
applied proportionately toward repayment in accordance with the amounts of:
(a)
the remaining outstanding Loan Principal; (b) the remaining outstanding Initial
Loan Premium; and (c) the applicable Additional Loan Fee due on the date of
repayment as follows 2:
1
For
example, if the Company’s first repayment is a Partial Repayment of $75,000
during the Initial Payment Period, $50,000 of such Partial Repayment will be
applied toward payment of the outstanding Loan Principal (thus reducing the
amount outstanding owed for Loan Principal to $50,000), and $25,000 of such
Partial Repayment will be applied toward payment of the outstanding Initial
Loan
Premium (thus reducing the amount of outstanding Initial Loan Premium to
$25,000).
2 Variable
Index:
| A = |
total
remaining outstanding Loan Principal on date of
repayment
|
| B = |
total
remaining outstanding Initial Loan Premium on date of
repayment
|
| C = |
“A”
multiplied by the applicable Additional Loan Fee percentage amount
(e.g.
10% during Initial 45-day Period, or 20% during first 45-day Period
after
the Initial 45-day Period)
|
(i) the
portion of the Partial Repayment that shall be applied to the remaining
outstanding Loan Principal due shall equal the product of P multiplied by the
quotient of A divided by T (as such variables are defined in the Variable
Index
set
forth in footnote 2 hereto);
(ii) the
portion of the Partial Repayment to be applied to the remaining outstanding
Initial Loan Premium shall equal the product of P multiplied by the quotient
of
B divided by T (as such variables are defined in the Variable
Index
set
forth in footnote 2 hereto); and
(iii) the
portion of the Partial Repayment to be deducted from the outstanding Additional
Loan Fee due shall equal the product of P multiplied by the quotient of C
divided by T (as such variables are defined in the Variable
Index
set
forth in footnote 2 hereto). 3
(c) In
the
event that Full Repayment is not received on or before June 30, 2008, then
the
Loan shall be subject to the Event of Default provisions set forth in Sections
6.1 and 6.2 herein, and the total amount due and payable to Xxxxxx shall include
all remaining unpaid amounts of the Loan Principal and Initial Loan Premium
and
shall also include and continue to accrue the Additional Loan Fee (as described
in Section 2.2(b)) during the Subsequent Periods until Full Repayment is
received by Xxxxxx.
ARTICLE
3
[Intentionally
Omitted.]
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES
4.1 Due
Incorporation and Good Standing.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, with full and adequate power to carry
on
and conduct its business as presently conducted, and is duly licensed or
qualified in all foreign jurisdictions wherein the failure to be so qualified
or
licensed would reasonably be expected to have a material adverse effect on
the
business of the Company.
|
P
=
|
total
Partial Repayment amount made
|
| T = |
A
+
B + C
|
3 For
example and continuing with the hypothetical described in footnote 1 above,
assume the Company makes another $20,000 Partial Repayment to Blueday during
the
Initial 45-day Period. The portion of the $20,000 Partial Repayment to be
allocated toward payment of the remaining outstanding Loan Principal would
equal
$12,500 (thus further reducing the remaining outstanding Loan Principal from
$50,000 to $37,500). The portion of the $20,000 Partial Repayment to be
allocated toward payment of the remaining outstanding Initial Loan Premium
would
equal $6,250 (thus further reducing the remaining outstanding Initial Loan
Premium from $25,000 to $18,750). The portion of the $20,000 Partial Repayment
that would be applied toward payment of the total outstanding Additional Loan
Fee due would equal $1,250.
4.2 Due
Authorization.
The
Company has full right, power and authority to enter into this Agreement, to
make the borrowings hereunder and execute and deliver the Note as provided
herein and to perform all of its duties and obligations under this Agreement
and
the Note. The execution and delivery of this Agreement will not, nor will the
observance or performance of any of the matters and things herein or therein
set
forth, violate or contravene any provision of law or the Company's bylaws or
certificate of incorporation. All necessary and appropriate corporate action
on
the part of the Company has been taken to authorize the execution and delivery
of this Agreement. On the Execution Date, the Company will deliver to Xxxxxx
a
copy of the written resolutions by or the minutes of the meeting of the
Company’s Board of Directors authorizing the Company to enter into this
Agreement, to make the borrowings as provided herein, and to perform all of
its
duties and obligations under this Agreement.
4.3 Enforceability.
This
Agreement has been validly executed and delivered by the Company and constitutes
the legal, valid and binding obligations of the Company enforceable against
it
in accordance with its respective terms, subject to applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors’ right and to the availability of the remedy of
specific performance.
4.4 Capitalization.
All of
the Company's authorized and outstanding equity securities (including securities
convertible into equity securities) are identified on Schedule
A
attached
hereto. Other than as set forth on Schedule
A,
there
are no outstanding shares of capital stock or any options, warrants or other
preemptive rights, rights of first refusal or similar rights to purchase equity
securities of the Company.
4.5 Subsidiaries.
The
Company owns no securities of any other entity, and, except as set forth in
this
Section 4.5, there are no outstanding shares of capital stock or any options,
warrants or other preemptive rights, rights of first refusal or similar rights
to purchase equity securities of any other entity.
4.6 Compliance
with Laws.
The
nature and transaction of the Company's business and operations and the use
of
its properties and assets do not, and during the term of this Agreement shall
not, violate or conflict with in any material respect any applicable law,
statute, ordinance, rule, regulation or order of any kind or
nature.
4.7 Absence
of Conflicts.
The
execution, delivery and performance by the Company of this Agreement, and the
transactions contemplated hereby, do not constitute a breach or default, or
require consents under, any agreement, permit, contract or other instrument
to
which the Company is a party, or by which the Company is bound or to which
any
of the assets of the Company is subject, or any judgment, order, writ, decree,
authorization, license, rule, regulation, or statute to which the Company is
subject and will not result in the creation of any lien upon any of the assets
of the Company.
4.8 Litigation
and Taxes.
There
is no
litigation or governmental proceeding pending, or to the best knowledge of
the
Company after due inquiry, threatened, against the Company. The Company has
duly
filed all applicable income or other tax returns and has paid all material
income or other taxes when due. There is no controversy or objection pending,
or
to the best knowledge of the Company after due inquiry, threatened in respect
of
any tax returns of the Company.
4.9 No
Omissions or Misstatements.
None of
the information included in this Agreement, other documents or information
furnished or to be furnished by the Company, or any of its representations,
contains any untrue statement of a material fact or is misleading in any
material respect or omits to state any material fact. Copies of all documents
referred to in herein have been delivered or made available to Xxxxxx and
constitute true and complete copies thereof and include all amendments,
schedules, appendices, supplements or modifications thereto or waivers
thereunder.
ARTICLE
5
COVENANTS
5.1 Negative
Covenants of the Company.
The
Company covenants and agrees that, from the Execution Date until the date on
which Xxxxxx receives Full Repayment (and, in any event, during such time as
any
portion of the Loan or any applicable Initial Loan Premium, and Additional
Loan
Fee thereon is outstanding), without the consent of Xxxxxx, the Company will
not:
(a) except
for the Merger and the Company’s future acquisition of or merger with Chinese
media advertising companies, merge or consolidate with or into any other
corporation or sell or otherwise convey a majority of its assets;
(b) engage
in
any business other than the business conducted or reasonably planned to be
conducted by the Company on the Execution Date;
(c) declare,
set aside or pay any dividend or other distribution on any of its capital stock;
or
(d) amend
its
Certificate of Incorporation or Bylaws in any manner that adversely affects
the
rights associated with this Agreement.
5.2 Affirmative
Covenants of the Company.
The
Company covenants and agrees that, from the Execution Date until the date on
which Xxxxxx receives Full Repayment (and, in any event, during such time as
any
portion of the Loan or any applicable Initial Loan Premium or Additional Loan
Fee thereon is outstanding), the Company shall:
(a) operate
its business only in the ordinary course and maintain its properties and assets
in good repair, working order and condition;
(b) cause
to
be done all things reasonably necessary to maintain, preserve and renew its
corporate existence and all material licenses, authorizations and permits
necessary to the conduct of its businesses; and
(c) comply
with all applicable laws, rules and regulations of all governmental authorities,
the violation of which could reasonably be expected to have a material adverse
effect on its business, properties or prospects.
ARTICLE
6
DEFAULT
6.1 Events
of Default.
The
occurrence of the events described in either Sections 6.1(a) or 6.1(c), if
not
cured within a ten (10) Business Day cure period from the date of such default,
or the occurrence of the event described in Section 6.1(b), for which there
shall be no cure period (each event an “Event
of Default”),
if
any, shall constitute an Event of Default of the Company:
(a) a
material breach of any representation, warranty, covenant or other provision
of
this Agreement or the Note;
(b) the
Company’s failure to make Full Repayment as described in this Agreement or the
Note, to Xxxxxx on or before June 30, 2008; and
(c) (i)
the
application for the appointment of a receiver or custodian for the Company
or
the property of the Company, (ii) the entry of an order for relief or the filing
of a petition by or against the Company under the provisions of any bankruptcy
or insolvency law, (iii) any assignment for the benefit of creditors by or
against the Company, or (iv) the Company becomes insolvent.
6.2 Effect
of Default.
Upon
the occurrence of any Event of Default that is not cured within any applicable
cure period, Xxxxxx may elect, by written notice delivered to the Company,
to
take any or all of the following actions: (i) declare this Agreement terminated
and the outstanding amounts under the Note to be forthwith due and payable,
whereupon the entire unpaid Loan Principal, together with all of the unpaid
applicable outstanding Initial Loan Premium and Additional Loan Fee (if
applicable) owed to Xxxxxx, and all other cash obligations hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Company, anything contained herein or in any of the Note to the contrary
notwithstanding, and (ii) exercise any and all other remedies provided hereunder
or available at law or in equity upon the occurrence and continuation of an
Event of Default. In addition, during the occurrence of any Event of Default,
the Company shall not pay make any payment on any other outstanding indebtedness
of the Company unless the Parties have agreed in writing to subordinate this
Agreement and the Note hereunder.
ARTICLE
7
WARRANT
7.1 Issuance
of Warrant.
No
later than seven (7) business days after the Execution Date, the Company shall
also issue to Xxxxxx a Common Stock Purchase Warrant (the “Warrant”)
substantially in the form attached hereto as Exhibit
B.
The
Warrant shall be immediately exercisable upon issuance and shall be exercisable
until the third anniversary of the issuance date of the Warrant. The Warrant
exercise price shall equal $2.50 per share, subject to adjustments as set forth
in Section 2 of the Warrant (the “Initial
Exercise Price”).
The
total number of shares underlying the Warrant that Xxxxxx may receive shall
equal forty thousand (40,000) shares of the Company’s common
stock.
7.2 Registration
of Shares Underlying Warrant.
(a) If,
at
any time commencing on the date hereof until the second anniversary of the
Loan
Delivery Date, the Company prepares and files a Registration Statement under
the
Securities Act or otherwise registers securities under the Securities Act as
to
any of its securities (other than under a Registration Statement pursuant to
Form S-8 or Form S-4) (each such filing, a "Registration
Document"),
the
Company will give written notice, at least twenty (20) calendar days prior
to
the filing of such Registration Document to the holder of the Warrant of its
intention to do so. The Company shall include all of the shares underlying
the
Warrant (the “Registrable
Securities”)
in
such Registration Documents with respect to which the Company has received
written requests for inclusion therein within 15 calendar days of actual receipt
of the Company's notice.
(b) In
the
event of an underwritten registered offering in which the managing
underwriter(s) advise the Company in writing that in their opinion the number
of
Registrable Securities exceeds the number of securities which can be sold
therein without adversely affecting the marketability of the offering, then
the
Company shall include in such registration the number of Registrable Securities
requested to be included which in the opinion of such underwriter(s) can be
sold
without adversely affecting the marketability of the offering, pro rata among
the respective holders thereof on the basis of the amount of Registrable
Securities owned by each such holder.
ARTICLE
8
MISCELLANEOUS
8.1 Successors
and Assigns.
Subject
to the exceptions specifically set forth in this Agreement, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective executors, administrators, heirs, successors and assigns of
the
parties. This Agreement may be assigned solely by Xxxxxx provided that Xxxxxx
complies with all applicable federal and state securities laws. In the event
of
an assignment by Xxxxxx, each of the parties to this Agreement acknowledge
and
agree that Xxxxxx’x assignee is assigned and takes over all rights, obligations,
responsibilities, duties, remedies, powers and privileges under this Agreement
from Xxxxxx.
8.2 Further
Assurances.
Each
party to this Agreement agrees to promptly produce and execute such other
documents or agreements as may be necessary or desirable for the execution
and
implementation of this Agreement, Xxxxxx’x assignment of this Agreement (if
applicable), and the consummation of the transactions contemplated
thereby.
8.3 Titles
and Subtitles.
The
titles and subtitles of the Sections of this Agreement are used for convenience
only and shall not be considered in construing or interpreting this
agreement.
8.4 Notices.
Any
notice, request or other communication required or permitted hereunder shall
be
in writing and shall be delivered personally or by facsimile (receipt confirmed
electronically) or shall be sent by a reputable express delivery service or
by
certified mail, postage prepaid with return receipt requested, addressed as
follows:
if
to
the Company, to:
Attn:
Xx.
Xxxxxxx Dash, CEO
0000
Xxxxx Xxxxxx Xxxx.
Xxxxx
000
Xxxxxxx
Xxxxx, XX 00000
if
to
Xxxxxx, to:
the
address set forth on the signature page
Either
party hereto may change the above specified recipient or mailing address by
notice to the other party given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above
(if
delivered personally or by facsimile, provided that any such facsimile is
received during regular business hours at the recipient's location) or on the
day shown on the return receipt (if delivered by mail or delivery
service).
8.5 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of California without giving effect to any choice of law
or
conflict of law provision or rule (whether of the State of California or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.
8.6 Waiver
and Amendment.
Any
term of this Agreement may be amended, waived or modified with the written
consent of the Company and Xxxxxx.
8.7 Remedies.
No
delay or omission by Xxxxxx in exercising any of its rights, remedies, powers
or
privileges hereunder or at law or in equity and no course of dealing between
Xxxxxx and the undersigned or any other person shall be deemed a waiver by
Xxxxxx of any such rights, remedies, powers or privileges, even if such delay
or
omission is continuous or repeated, nor shall any single or partial exercise
of
any right, remedy, power or privilege preclude any other or further exercise
thereof by Xxxxxx or the exercise of any other right, remedy, power or privilege
by Xxxxxx. The rights and remedies of Xxxxxx described herein shall be
cumulative and not restrictive of any other rights or remedies available under
any other instrument, at law or in equity.
8.8 Counterparts.
This
Agreement may be executed in separate counterparts each of which will be an
original and all of which taken together will constitute one and the same
agreement.
8.9 Facsimile.
This
Agreement may be executed using facsimiles of signatures, and a facsimile of
a
signature shall be deemed to be the same, and equally enforceable, as an
original of such signature.
*
* * *
*
IN
WITNESS WHEREOF, the parties have caused this Loan Agreement to be executed
on
the date first set forth above.
|
By:
|
/s/
Xxxxxxx Dash
|
|
Xxxxxxx
Dash,
|
|
|
Chief
Executive Officer
|
|
|
XXXXXXXX
XXXXXX
|
|
|
By:
|
/s/
Xxxxxxxx Xxxxxx
|
|
Xxxxxxxx
Xxxxxx,
|
|
|
Individual
|
|
|
0000
Xxxxxxx Xxx
|
|
|
Xxxxxx,
XX 00000
|
|
|
Tel:
x0 (000) 000-0000
|
|
|
Amount
of Loan: $100,000
|
|
SCHEDULE
A
CAPITALIZATION
Intentionally
Omitted
EXHIBIT
A
PROMISSORY
NOTE
See
attached.
[SEE
EXHIBIT 10.2 TO THIS CURRENT REPORT ON FORM 8-K]
EXHIBIT
B
FORM
OF COMMON STOCK PURCHASE WARRANT
See
attached.
[SEE
EXHIBIT 4.1 TO THIS CURRENT REPORT ON FORM 8-K]
