Exhibit 10.34
NOTE: DECEMBER 20, 2013
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQIDREMENTS OF THE SECURITIES ACT.
THIS NOTE DOES NOT REQIDRE PHYSICAL SURRENDER OF mE NOTE IN THE EVENT OF A
PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR
CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT
REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
10% CONVERTIBLE PROMISSORY NOTE
OF
RED GIANT ENTERTAINMENT INC.
Issuance Date: December 20, 2013
Beginning Value of this Note: $17,500
Original Issue Discount: $7,500
Total Face Value of Note: $25,000
THIS NOTE ("Note" or "Note") is a duly authorized Convertible Promissory
Note of RED GIANT ENTERTAINMENT INC. a corporation duly organized and existing
under the laws of the State of Nevada (the "Company"), designated as the
Company's 10% Convertible Promissory Note Due December 20, 2014 ("Maturity
Date"}in the principal amount of Twenty Five Thousand Dollars ($25,000) (the
"Note").
FOR VALUE RECEIVED, the Company hereby promises to pay to the order of
Iconic Holdings, LLC or its registered assigns or successors-in-interest
("Holder") the principal sum of Twenty Five Thousand Dollars ($25,000) together
with all accrued but unpaid interest, if any, on the Maturity Date, to the
extent such principal amount and interest has not been repaid or converted into
the Company's Common Stock, $0.0001 par value per share (the "Common Stock"), in
accordance with the terms hereof.
The initial Purchase Price will be seventeen thousand five hundred dollars
($17,500) of consideration upon execution of the Note Purchase Agreement and all
supporting documentation. The sum of seventeen thousand five hundred dollars
($17,500) shall be remitted and delivered to the Company, and seven thousand
five hundred dollars ($7,500) shall be retained by the Purchaser through an
original issue discount for due diligence and legal bills related to this
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transaction. The Holder reserves the right to pay additional consideration at
any time and in any amount it desires, at its sole discretion. The principle sum
owed by the Company shall be prorated to the amount of consideration paid by the
Holder and only the consideration received by the Company, plus prorated
interest, fees and original issue discount, shall be deemed owed by the Company.
The original issue discount is set at ten percent (10%) of any consideration
paid. The Company is not responsible to repay any unfunded portion of this Note.
Interest on any outstanding principal balance shall accrue at a rate of I
0% per annum. In the Event of Default pursuant to Section 2(f), interest will
accrue at the rate equal to the lower of twenty (20%) per annum or the highest
rate permitted by law (the "Default Rate").
This Note may not be prepaid in whole or in part except as otherwise
provided herein. Whenever any amount expressed to be due by the terms of this
Note is due on any day which is not a Business Day (as defined below), the same
shall instead be due on the next succeeding day which is a Business Day.
For purposes hereof the following terms shall have the meanings ascribed to
them below:
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which commercial banks in the City of New York are authorized or required by law
or executive order to remain closed.
"CONVERSION PRICE" shall be equal to the lower of $.0033 or sixty percent
(60%) of the lowest trading price of the Company's common stock during the
twenty (20) consecutive trading days prior to the date on which Holder elects to
convert all or part ofthe Note. If the Company is placed on "chilled" status
with the Depository Trust Company ("DTC"), the discount will be increased by ten
percent (10%) until such chill is remedied.
"PRINCIPAL AMOUNT" shall refer to the sum of (i) the original principal
amount of this Note, (ii) all accrued but unpaid interest hereunder, and (iii)
any default payments owing under the Agreements but not previously paid or added
to the Principal Amount.
"TRADING DAY" shall mean a day on which there is trading on the
PrincipalMarket.
"UNDERLYING SHARES" means the shares . of common stock into which o the
Note is convertible (including interest or principal payments in common stock as
set forth herein) in accordance with the terms hereof.
The following terms and conditions shall apply to this Note:
SECTION 1.00 CONVERSION.
(a) Conversion Right. Subject to the terms hereof and restrictions and
limitations contained herein, the Holder shall have the right, at the Holder's
option, at any time to convert the outstanding Principal Amount and Interest
under this Note in whole or in part.
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(b) The date of any Conversion Notice hereunder and any Payment Date shall
be referred to herein as the "Conversion Date".
(i) Stock Certificates or DWAC. The Company will deliver to the Holder, or
Xxxxxx's authorized designee, no later than two (2) Trading Days after the
Conversion Date, a certificate or certificates (which certificate(s) shall be
free of restrictive legends and trading restrictions) representing the number of
shares of Common Stock being acquired upon the conversion of this Note. In lieu
of delivering physical certificates representing the shares of Common Stock
issuable upon conversion of this Note, provided the Company's transfer agent is
participating in the DTC Fast Automated Securities Transfer ("FAST") program,
upon request of the Holder, the Company shall use commercially reasonable
efforts to cause its transfer agent to electronically transmit such shares
issuable upon conversion to the Holder (or its designee), by crediting the
account of the Holder's (or such designee's) prime broker with DTC through its
Deposits and Withdrawal at Custodian (DWAC) program (provided that the same time
periods herein as for stock certificates shall apply).
If the Company fails to deliver to the Holder such certificate or certificates
(or shares through DTC) pursuant to this Section (free of any restrictions on
transfer or legends) prior to the third Trading Day after the Conversion Date,
the Company shall pay to the Holder as liquidated damages, in cash, an amount
equal to Two Thousand Dollars ($2,000) per day, until such certificate or
certificates are delivered. The Company acknowledges that it would be extremely
difficult or impracticable to determine the Holder'sactual damages and costs
resulting from a failure to deliver the Common stock and the inclusion herein of
any such additional amounts are the agreed upon liquidated damages representing
a reasonable estimate of those damages and costs. Such liquidated damages will
be added to the principal value ofthe.Note.
(c) Reservation and Issuance. of Underlying Securities. The Company
covenants that it will at all times reserve and keep available out of its
authorized and unissued Common Stock solely for the purpose of issuance upon
conversion of this Note (including repayments in stock), free from preemptive
rights or any other actual contingent purchase rights of persons other than the
Holder, not less than three times (3x) the number of shares of Common Stock as
shall be issuable (taking into account the adjustments under this Section! but
without regard to any ownership limitations contained herein) upon the
conversiono of this Note in Common Stock. These shares shall be reserved in
proportion with the Consideration actually received by the Company and the total
reserve will be increased with future payments of consideration by Xxxxxx. The
Company covenants that all shares of Common Stock that shall be issuable will,
upon issue, be duly authorized, validly issued, fully-paid, non-assessable and
freely-tradable. The Company agrees that this is a material term ofthis Note.
(d) Conversion Limitation. The holder will not submit a conversion to the
Company that would result in the Holder owning more than 9.99% of the total
outstanding shares ofthe Company.
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SECTION 2.00 DEFAULTS AND REMEDIES.
(e) Events of Default. An "EVENT OF DEFAULT" is: (i) a default in payment
of any amount due hereunder which default continues for more than five (5)
business days after the due date; (ii) a default in the timely issuance of
underlying shares upon and in accordance with terms hereof, which default
continues for three (3) Business Days after the Company has received notice
informing the Company that it has failed to issue shares or deliver stock
certificates within the third erd) day following the Conversion Date; (iii)
failure by the Company for three (3) days after notice has been received by the
Company to comply with any material provision of the Exchange Agreement
(including without limitation the failure to issue the requisite number of
shares of Common Stock upon conversion hereof; (iv) a material breach by the
Company of its representations or warranties in the Exchange Agreement; (v) any
default after any cure period under, or acceleration prior to maturity of, any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the
Company in excess of $7,500 or for money borrowed the repayment of which is
guaranteed by the Company in excess of $7,500, whether such indebtedness or
guarantee now exists or shall be created hereafter; (vi) any failure of the
Company to satisfy its "filing" obligations under the rules and guidelines
issued by OTC Markets News Service, OTC Xxxxxxx.xxx and their affiliates; (vii)
Any failure of the Company to provide the Holder with information related to the
corporate structure including, but not limited to, the number of authorized and
outstanding shares, public float, etc. within one (1) day of request by Holder;
(viii) failure to have sufficiento number of authorized but unissued shares of
the Company's Common Stock available for any conversion; (ix) failure of
Company's stock to maintain a bid price in its trading market which occurs for
at least three (3) consecutive days; (x) any delisting for any reason; (xi)
failure by Company to pay any of its Transfer Agent fees or to maintain a
Transfer Agent of record; (xii) any trading suspension imposed by the Securities
and Exchange Commission under Sections 12G) or 12(k) of the 1934 Act; (xiii) if
the Company is subject to any Bankruptcy Event; (xiv) failure of the Company to
remain compliant with DTC, thus incurring a "chilled" status with DTC; or (xv)
failure of the Company to abide by the terms of the right of first refusal
contained in Section 3.00 (i).
Remedies. If an Event of Default occurs and is continuing with respect to
the Note, the Holder may declare all of the then outstanding Principal Amount of
this Note, including any interest due thereon, to be due and payable immediately
without further action or notice. In the event of such acceleration, the amount
due and owing to the Holder shall be increased to one hundred and fifty percent
(150%) of the outstanding Principal Amount of the Note held by the Holder plus
all accrued and unpaid interest, fees, and liquidated damages, if any.
Additionally, this Note shall bear interest on any unpaid principal from and
after the occurrence and during the continuance of an Event of Default at a rate
of twenty percent (20%). Finally, the Note will accrue liquidated damages of one
thousand dollars ($1,000) per day from and after the occurrence and during the
continuance of an Event of Default. The Company acknowledges that it would be
extremely difficult or impracticable to determine the Holder's actual damages
and costs resulting from an Event of Default and any such additional amounts are
the agreed upon liquidated damages representing a reasonable estimate of those
damages and costs. The remedies under this Note shall be cumulative and added to
the principal value of the Note.
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SECTION 3.00 GENERAL.
(f) Payment of Expenses. The Company agrees to pay all reasonable charges
and expenses, including attorneys' fees and expenses, which may be incurred by
the Holder in successfully enforcing this Note and/or collecting any amount due
under this Note.
(g) Assignment, Etc. The Holder may assign or transfer this Note to any
transferee at its sole discretion. This Note shall be binding upon the Company
and its successors and shall inure to the benefit of the Holder and its
successors and permitted assigns.
(h) Governing Law; Jurisdiction.
(I) GOVERNING LAW. This note will be governed by and construed in
accordance with the laws of the state of California without regard to any
conflicts of laws or provisions thereof that would otherwise require the
application of the law of any other jurisdiction.
(II) JURISDICTION. Any dispute or claim arising to or in any way related to
this Note or the rights and obligations of each of the parties hereto shall be
settled by binding arbitration in San Diego, California. All arbitration shall
be conducted in accordance with the rules and regulations of the American
Arbitration Association ("AAA"). AAA shall designate an arbitrator from an
approved list of arbitrators following both parties' review and deletion of
those arbitrators on the approved list having a conflict of interest with either
party. The Company agrees that a final non-appealable judgement in any such suit
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(II) . NO JURY TRIAL. The Company hereto knowingly and voluntarily waives
any and all rights it may have to a trial byjury with respect to any litigation
based on, or arising out of, under, or in connection with, this note.
(i) Right of .first Refusal From and after the date of this Note and at all
times hereafter while the Note is outstanding, the Parties agree that in the
event that the Company receives any written or oral proposal (the "Proposal")
containing one or more offers to provide additional capital or financing in an
amount equal to or exceeding an aggregate of fifty thousand dollars ($7,500.00)
(the "Financing Amount"), the Company agrees that it shall provide a copy of all
documents received relating to the Proposal together with a complete and
accurate description of the Proposal to the Holder and all amendments,
revisions, and supplements thereto (the "Proposal Documents") no later than
three (3). business days from the receipt of the Proposal Documents. Following
receipt of the Proposal Documents from the Company, the Holder shall have the
right (the "Right of First Refusal"), for a period of five (5) business days
thereafter (the "Exercise Period"), to invest, at similar or better terms to the
Company, in an amount equal to or greater than the Financing Amount, upon
written notice to the Company that the Holder is exercising the Right of First
Refusal provided hereby. In furtherance of the Right of First Refusal, the
Company agrees that it will cooperate and assist Xxxxxx in conducting a due
diligence investigation of the Company and its corporate and financial affairs
and provide Holder with information and documents that Holder may reasonably
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request so as to allow the Holder to make an informed investment decision.
However, the Company and Holder agree that Holder shall have no more than five
(5) calendar days from and after the expiration of the Exercise Period to
exercise its Right of First Refusal hereunder. This Right of First Refusal shall
extend to all purchases of debt held by current shareholders, vendors, or
creditors.
IN WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to
be duly executed on the day and in the year first above written.
RED GIANT ENTERTAINMENT INC
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: CEO
Date: Dec 20, 2013
This Note is acknowledged as: Note of December 20, 2013
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EXHIBIT A
FORM OF CONVERSION NOTICE
(To be executed by the Holder in order to convert that certain $25,000
Convertible Promissory Note identified as the Note)
DATE:
------------------------------------
FROM: Iconic Holdings, LLC
Re: $25,000 Convertible Promissory Note (this "Note") originally issued by
RED GIANT ENTERTAINMENT INC., a Nevada corporation, to Iconic
Holdings, LLC on December 20,2013.
The undersigned on behalf of ICONIC HOLDINGS, LLC, hereby elects to convert
$____________ of the aggregate outstanding Principal Amount (as defined in the
Note) indicated below of this Note into shares of Common Stock, $0.0001 par
value per share, of RED GIANT ENTERTAINMENT INC (the "Company") according to the
conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for
such transfer taxes, if any. The undersigned represents as ofthe date hereof
that, after giving effect to the conversion of this Note pursuant to this
Conversion Notice, the undersigned will not exceed the "Restricted Ownership
Percentage" contained in this Note.
Conversion information:
--------------------------------------------------
Date to Effect Conversion
--------------------------------------------------
Aggregate Principal Amount of Note Being Converted
--------------------------------------------------
Aggregate Interest on Amount Being Converted
--------------------------------------------------
Number of Shares of Common Stock to be Issued
--------------------------------------------------
Applicable Conversion Price
--------------------------------------------------
Signature
--------------------------------------------------
Name
--------------------------------------------------
Address
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NOTARIZED CERTIFICATE OF CORPORATE SECRETARY
OF
RED GIANT ENTERTAINMENT INC.
(Two Pages)
The undersigned, Xxxxx X. Xxxxxx is the duly elected Corporate Secretary of
Red Giant Entertainment Inc., a Xxxx a corporation (the "Company").
I hereby warrant and represent that I have undertaken a complete and
thorough review of the Company's corporate and financial books and records
including, but not limited to, the Company's records relating to the following:
(A) that certain issuance of that certain convertible promissory note dated
December 20, 2013 (the "Note Issuance Date") issued to Iconic Holdings,
LLC (the "Holder") in the stated original principal amount of twenty
five thousand dollars ($25,000) (the "Note");
(B) the Company's Board of Directors duly approved the issuance of the Note
to the Holder.
(C) The Company has not received and does not contemplate receiving any new
consideration from any persons in connection with any later conversion
of the Note and the issuance of the Company's Common Stock upon any
said conversion.
(D) To my best knowledge and after completing the aforementioned review of
the Company's shareholder and corporate records, I am able to certify
that the Holder (and the persons affiliated with the Holder) are not
officers, directors, or directly or indirectly, ten percent(IO.OO%) or
more stockholders of the Company and none of said persons have had any
such status in the one hundred (100) days immediately preceding the
date of this Certificate.
(E) The Company's Board of Directors have approved duly adopted resolutions
approving the Irrevocable Instructions to the Company's Stock Transfer
Agent attached to the Note Purchase Agreement, dated December 20, 2013.
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(F) The Company is not, nor has ever been, a "shell company" as described
in Rule 144(i)(l)(i) of the Securities Act of 1933, as amended.
(G) I understand the constraints imposed under Rule 144 on those persons
who are or may be deemed to be "affiliates," as that term is defined in
Rule 144(a)(l) of the Securities Act of 1933.
(H) I understand that all of the representations set forth in this
Certificate will be relied upon by counsel to Iconic Holdings, LLC in
connection with the preparation of a legal opinion.
I HEREBY AFFIX MY SIGNATURE TO THIS NOTARIZED CERTIFICAT AND HEREBY CONFIRM
THE ACCURACY OF THE STATEMENTS MADE HEREIN.
SIGNED: /s/ Xxxxx X. Xxxxxx DATE:
-------------------------------------- --------------------
Name: Xxxxx X. Xxxxxx Title:
-------------------------------------- --------------------
SUBSCRIBED AND SWORN TO BEFORE ME ON THIS _____DAY OF ;2013.
Commission Expires:
------------------
--------------------------------------
Notary Public
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NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (the "Agreement") is made as of December 20,
2013 by and between Red Giant Entertainment Inc. a Nevada corporation with
principal offices at 000 X. Xxx 00, Xxxxx 000, Xxxxxxxx XX 00000 (the "Company")
and Iconic Holdings, LLC, a Delaware LLC with principal offices at 0000
Xxxxxxxxx Xxx. Suite 206, Bethesda, MD 20814 (the "Purchaser"). As used herein,
the term "Parties" shall be used to refer to the Company and Purchaser jointly.
WHEREAS:
A. The Parties jointly warrant and represent that they have a pre-existing
relationship prior to the date of this Agreement.
B. Purchaser warrants and represents that it is sophisticated and
experienced in acquiring the debt instruments issued by small
early-stage companies that have not achieve profitability, positive
cash flow or both.
C. Purchaser warrants and represents that it is an "accredited investor,"
as that term is defined in Rule 501 of the Securities Act of 1933, as
amended (the "1933 Act").
D. Purchaser warrants and represents that prior to entering into this
Agreement that it has received and completed its review ofthe Company's
corporate and financial statements as included in the filings and
disclosures as listed for the Company with the Securities and Exchange
Commission which has allowed Purchaser to. make an informed investment
decision with respect to purchase of that certain Convertible
Promissory Note in the stated original principal amount of Twenty Five
Thousand Dollars ($25,000.00) (the "Note") attached in Exhibit A and
dated December 20, 2013.
E. The Purchaser acknowledges and agrees that it is acquiring the Note for
investment purposes only and not with a view to a distribution.
F. The Purchaser acknowledges and agrees that: (i) the Note is a
"restricted security," as that tennis defined inthe 1933 Act and (ii)
no registration rights have been granted to Purchaser to register the
Note.
NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:
Section 1. SALE AND ISSUANCE OF THE NOTE. In consideration of the Company's
receipt of the initial sum of Seventeen Thousand Five Hundred Dollars
($17,500.00) at Closing (as defined in Section 2.1), the Company shall sell to
the Purchaser, and the Purchaser shall purchase from the Company (the
"Issuance") the Note upon the terms set forth in this Agreement. In addition, a
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copy of that certain Action of the Board of Directors, dated December 20, 2013
(the "ACTION OF THE BOARD OF DIRECTORS") is attached in Exhibit A, attached
hereto.
SECTION 2. THE CLOSING.
2.1. PLACE OF CLOSING AND PROCEDURE AT CLOSING. The closing of the issuance
ofthe Note to the Purchaser (the "CLOSING") shall take place simultaneously with
and upon the satisfaction of the following conditions:
(1) the Company's execution and delivery to the Purchaser of the following:
(a) an executed copy of this Agreement; (b) an executed copy of the Note; (c) a
signed copy of the Irrevocable Instructions to the Transfer Agent; and (d) the
signed Action of the Board of Directors.
(2) the Purchaser's execution of a wire transfer to the Company no later
than one (1) business day following the Closing as follows: the sum of seventeen
thousand five hundred dollars ($17,500.00) in cash shall be remitted and
delivered to the Company and seven thousand five hundred dollars ($7,500.00)
shall be retained by the Purchaser through an original issue discount for due
diligence and legal bills related to this transaction.
(3) the Purchaser reserves the right to pay additional consideration at any
time and in any amount it desires, at its sole discretion.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser as follows:
3.1. ORGANIZATION. The Company is duly organized, validly existing and in
good standing under the laws of the State of Nevada and is qualified to conduct
its business as a foreign corporation in each jurisdiction where the failure to
be so qualified would have a material adverse effect on the Company.
3.2. AUTHORIZATION OF AGREEMENT, ETC, The execution, delivery. and
performance by the Company of this Agreement, the Note, and each other document
or instrument contemplated hereby or thereby (collectively, the "FINANCING
DOCUMENTS") have been duly authorized by all requisite corporate action by the
Company and delivered by the Company. Each of the Financing Documents, when
executed and delivered by the Company, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting creditors'
rights and remedies generally, and subject as to enforceability to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
SECTION 4.. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company as follows:
4.1. AUTHORIZATION OF THE DOCUMENTS. Purchaser has all requisite power and
authority(corporate or otherwise) to execute, deliver and perform the Financing
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Documents to which it is a party and the transactions contemplated thereby, and
the execution, delivery and performance by such Purchaser of the Financing
Documents to which it is a party have been duly authorized by all requisite
action by such Purchaser and each such Financing Document, when executed and
delivered by the Purchaser, constitutes a valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
4.2. INVESTMENT REPRESENTATIONS. The Purchaser warrants and represents
that:
(a) the Purchaser is an accredited investor (as that term is defined in
Rule 50l(a)(l) of Regulation D ofthe 1933 Act;
(b) the Purchaser is sophisticated and experienced in acquiring the
securities of small public companies;
(c) the Purchaser has reviewed the Company's Annual and Quarterly Reports
together with the audited financial statements contained therein;
(d) the Purchaser has had sufficient opportunity to review and evaluate
the risks and uncertainties associated with the purchase ofthe
Company's securities;
(e) the Purchaser is acquiring the Note from the Company for investment
purposes only o and not with a view to a distribution.
4.3 RESTRICTED SECURITY. Purchaser understands and acknowledges that the
Note has not been, and when issued will not be, registered with the Securities
and Exchange Commission. Purchaser warrants and represents that it has fully
reviewed the restricted securities legend and the terms thereof with its
financial, legal, investment, and business advisors and that it has not relied
upon the Company or any other person for any advice in connection with the
purchase of the Note, this Agreement, or both of them.
4.4 LEGAL COUNSEL. Purchaser has consulted with its own independent legal,
tax, investment, and other advisors of its own choosing prior to entering into
this Agreement.
4.5 ABSENCE OF REGISTRATION RIGHTS. Xxxxxxxxx understands and agrees that
it is not acquiring and has not been granted any registration rights with
respect to the Note. The Note is a restricted security and the Purchaser
understands that there is no trading market for the Note and no such market will
likely ever develop.
SECTION 5. BROKERS AND FINDERS.
The Company shall not be obligated, unless previously detailed in Section
2.1(2), to pay any commission, brokerage fee or finder's fee based on any
alleged agreement or understanding between the Purchaser and a third person in
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respect of the transactions contemplated hereby. The Purchaser hereby agrees to
indemnify the Company against any claim by any third person for any commission,
brokerage or finder's fee or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or understanding
between the Purchaser and such third person, whether express or implied from the
actions of the Purchaser.
SECTION 6. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the Company, the Purchaser
and their respective successors and assigns.
SECTION 7. ENTIRE AGREEMENT.
This Agreement and the other writings and agreements referred to in this
Agreement or delivered pursuant to this Agreement contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto.
SECTION 8. NOTICES.
All notices, demands and requests of any kind to be delivered to any party in
connection with this Agreement shall be personally served, sent via facsimile or
e-mail, or sent in writing via an internationally recognized overnight courier
or by registered or certified mail, return receipt requested and postage prepaid
to the address of each party listed on the first page of this Agreement or to
such other address as the party to whom notice is to be given may have furnished
to the other parties to this Agreement in writing in accordance with the
provisions of this Section 8. Any such notice or communication shall be deemed
to have been received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of facsimile or e-mail, immediately (iii) in the case
of an internationally-recognized overnight courier, on the next business day
after the date when sent and (iv) in the case of mailing, on the third business
day following that on which the piece of mail containing such communication is
posted.
SECTION 9. AMENDMENTS.
This Agreement may not be modified or amended, or any of the provisions of this
Agreement waived, except by written agreement of the Company and the Purchaser.
SECTION 10. ATTORNEYS' FEES.
In the event of a dispute between the parties concerning the enforcement or
interpretation of this Agreement, the prevailing party in such dispute, whether
by legal proceedings or otherwise, shall be reimbursed immediately for the
reasonably incurred attorneys' fees and other costs and expenses by the other
parties to the dispute.
SECTION LL. GOVERNING LAW AND ARBITRATION.
(A) All questions concerning the construction, interpretation and validity of
this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the State of California without giving effect to any
choice or conflict of law provision or rule (whether in the State of California
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or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California. In furtherance of the
foregoing, the internal law of the State of California will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily or necessarily apply.
SECTION 12. CAPTIONS AND EXHIBIT A.
The captions by which the sections and subsections of this Agreement are
identified are for convenience only, and shall have no effect whatsoever upon
its interpretation. Exhibit A is attached hereto and each of the attachments
listed in Exhibit A are each with Exhibit A incorporated by reference herein.
SECTION 13. SEVERANCE.
If any provision of this Agreement is held to be illegal or invalid by a court
of competent jurisdiction, such provision shall be deemed to be severed and
deleted; and neither such provision, nor its severance and deletion, shall
affect the validity of the remaining provisions.
SECTION 14. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and each such
counterpart of this Agreement shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures . to this Agreement shall be acceptable and binding.
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5
IN WITNESS WHEREOF, each of the undersigned has duly executed this Note
Purchase Agreement as of the date first written above.
FOR THE COMPANY:
RED GIANT ENTERTAINMENT INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Its: CEO
FOR THE PURCHASER:
ICONIC HOLDINGS, LLC
By:
Name:
Title: Managing Member
[SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT]
[The remainder of this page has been left intentionally blank.]
6
EXHIBIT A
(COPY OF CONVERTIBLE PROMISSORY NOTE, BOARD RESOLUTION, AND IRREVOCABLE
INSTRUCTIONS TO STOCK TRANSFER AGENT, ARE EACH ATTACHED HERETO.)
1. Copy of Convertible Promissory Note
2. Copy of the Board Resolution of the Borrower
3. Copy of Irrevocable Instructions to Stock Transfer Agent
[The remainder of this page has been left intentionally blank.]
7
ATTACHED TO NOTE PURCHASE AGREEMENT
Irrevocable Transfer Agent Instructions
DATE: December 20, 2013
Xxxxxxxx Stock Transfer
0000 X 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Ladies and Gentlemen:
On behalf of Red Giant Entertainment Inc., a Nevada corporation (the "COMPANY"),
reference is made to that certain Note Purchase Agreement, dated as of December
20, 2013, and the Convertible Note with principle value of $25,000 (the "NOTE"),
dated December 20, 2013 (both of which are jointly referred to as the
"AGREEMENT"), by and between the Company and ICONIC HOLDINGS, LLC, a Delaware
limited liability company (the "HOLDER"). A copy of each of the above are
attached hereto. Pursuant to the terms of the Note the holder is given the the
right to convert all or any portion of the Note into shares of common stock (the
"SHARES") of the Company, par value $0.0001 per share (the "COMMON STOCK" or
"SUBJECT SHARES"). We ask that you familiarize yourself with your issuance and
delivery obligations as Transfer Agent, contained herein.
You are hereby irrevocably authorized and instructed to reserve a sufficient
number of shares of common stock ("Common Stock") of the Company (initially
20,000,000 shares) for issuance upon partial or full conversion of the Note in
accordance with the terms thereof (the "RESERVE SHARES"). Following the
submission of any conversion notice for the Note by the Holder, this reserve
amount shall automatically be increased back to 20,000,000 shares until the Note
has been fully retired, at which point this reserve will be extinguished. In the
event that the amount of Reserve Shares are exhausted prior to the full
conversion of the Note, for any reason, you are authorized and instructed to
immediately issue, upon receipt of a Conversion Notice for any remaining portion
of the Note such additional shares of Common Stock due and owing to Holder and
arising out of said conversion from the remaining authorized and unissued common
stock of the company. o
The ability to convert the Note in a timely manner is a material obligation of
the Company pursuant to. the Note. Your firm is hereby irrevocably authorized
and instructed to issue shares of Common Stock of the Company (without any
restrictive legend)to the Investor without any further action or confirmation by
the Company upon your receipt from the Investor of (a) a notice of conversion
("Conversion Notice") executed by the Investor; and (b) an opinion of counsel of
the Investor, in form, substance and. scope customary for opinions of counsel in
comparable transactions (and satisfactory to the transfer agent), to the effect
that the shares of Common Stock of the Company issued to the Investor pursuant
1
to the Conversion Notice are not "restricted securities" as defined in Rule 144
and should be issued to the Investor without any restrictive legend.
The Company hereby requests that your firm act immediately, without delay and
without the need for any action or confirmation by the Company with respect to
the issuance of Common Stock pursuant to any Conversion Notices received from
the Investor. Your firm will not delay in processing any Conversion Notices
owing to the fact that the Company is in arrears of its fees and other monies
owed to your firm, provided that the Investor agrees that each time a Conversion
Notice is delivered to your firm, the Investor agrees to pay the cost of
processing the Conversion Notice a sum not to exceed $150.00 for each such
transaction.
The Company hereby directs you, upon request by the Investor or Investor's
broker dealer, to. immediately provide any capitalization structure information
pertaining to the number of common shares of the Company that are issued and
outstanding, authorized, reserved, or in the public float.
The Company shall indemnify you and your officers, directors, principals,
partners, agents and representatives, and hold each of them harmless from and
against any and all loss, liability, damage, claim or expense (including the
reasonable fees and disbursements of its attorneys) incurred by or asserted
against you or any of them arising out of or in connection with the instructions
set forth herein, the performance of your duties hereunder and otherwise in
respect hereof, including the costs and expenses of defending yourself or
themselves against any claim or liability hereunder, except that the Company
shall not be liable hereunder as to matters in respect of which it is determined
that you have acted with gross negligence or in bad faith (which gross
negligence, bad faith or willful misconduct must be determined by a final,
non-appealable order, judgri:lent, decree or ruling of a court of competent
jurisdiction). You shall have no liability to the Company in respect to any
action taken or any failure to act in respect of this if such action was taken
or omitted to be taken in good faith, and you shall be entitled to rely in this
regard on theo advice of counsel.
The Board of Directors of the Company has approved the foregoing (irrevocable
instructions) and does hereby extend the Company's irrevocable agreement to
indemnify your firm for all loss, liability or expense in carrying out the
authority and direction herein contained on the terms herein set forth.
The Company agrees that in the event that the Transfer Agent resigns as the
Company's transfer agent, the Company shall engage a suitable replacement
transfer agent that will agree to serve as transfer agent for the Company and be
bound by the terms and conditions of these Irrevocable Instructions within five
(5}business days.
The Investor .is intended to be and are third party beneficiaries hereof, and no
amendment or modification to the instructions set forth herein may be made
without the consent of the Investor.
2
Please execute this letter in the space indicated to acknowledge your agreement
to act in accordance with these instructions and return a copy of this agreement
to the Company and to the Holder.
Very truly yours,
RED GIANT ENTERTAINMENT INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: CEO
ACKNOWLEDGED AND AGREED:
XXXXXXXX STOCK TRANSFER
By: Date:
--------------------------------------- -------------------
Name:
-------------------------------------
Title:
------------------------------------
Date:
-------------------------------------
3
MEMORANDUM
TO: Iconic Holdings, LLC
FROM: Red Giant Entertainment Inc.
DATE: December 20,2013
RE: Disbursement of Funds
Pursuant to that certain Note Purchase Agreement between the parties listed
above dated December 20, 2013, a disbursement of funds will take place in the
amount and manner described below:
PLEASE DISBURSE TO:
Amount to disburse: $17,500
---------------------------------------
Form of distribution Wire
---------------------------------------
Name Red Giant Entertainment Inc.
---------------------------------------
Address
---------------------------------------
---------------------------------------
---------------------------------------
Wire Instructions:
ACCOUNT:
Bank
ABA Routing Number:
Account Number: SWIFT
Code:
Account Name:
Phone:
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------- Dated: December 20,2013
Name:
Red Giant Entertainment Inc.
