Exhibit 10.1
STOCK EXCHANGE AGREEMENT BETWEEN
RED GIANT ENTERTAINMENT, INC. AND RED GIANT MEDIA, LLC
THIS AGREEMENT, made this 25th day of September, 2015, by and among Red
Giant Entertainment, Inc., a Florida Corporation, ("REDG"), and Red Giant Media,
LLC, a Delaware limited liability company ("RMED").
RECITALS
WHEREAS, REDG, a public, company desires to acquire 100% of the total
outstanding membership interests of RMED from RMED's Unit Holders (the "RMED
Unit Holders"); and
WHEREAS, REDG offers to acquire 300 (Three Hundred) Units of RMED in
exchange for 10,000,000 (Ten Million) shares of the restricted Series Z
preferred shares stock of REDG (the "REDG Restricted Stock" or "REDG Shares");
and
WHEREAS, RMED Stockholders offer to exchange 300 Units of RMED for
10,000,000 shares of REDG restricted Series Z preferred shares. The 300 Units
represent all of the issued and outstanding ownership and membership interests
of RMED.
WHEREAS, the Preferred Shares shall have the rights, privileges and
preferences set forth in REDG's Certificate of Incorporation, as amended, and
the designations thereof, and
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, the parties hereto intending to be legally
bound hereby, agree as follows:
The foregoing recitals are hereby restated, incorporated into this
Agreement, and made a part of it, as if each were fully set forth here in their
entirety.
ARTICLE 1
COMPENSATION, CONSIDERATION, AND EXCHANGE OF SECURITIES.
1.2 ISSUANCE OF SHARES.
1.2.1 REDG SHARES TO RMED. Subject to all of the terms and conditions
of this Agreement, REDG agrees to deliver a total of Ten Million (10,000,000)
newly issued, restricted, Series Z Preferred Shares of REDG, in exchange for one
hundred percent (100%) of the outstanding Units of RMED (the "RMED Units") in
the amounts shown on Exhibit "A" to this Agreement.
1.3 TRANSFER OF UNITS BY RMED UNIT HOLDERS. Subject to all of the
terms and conditions of this Agreement, the RMED Unit Holders agree to transfer
to REDG all of their ownership in the RMED Units.
1.3.1 EXEMPTION FROM REGISTRATION; REORGANIZATION. The parties hereto
expect this transfer of Units by RMED Unit Holders to REDG to qualify as a
tax-free reorganization under Sections 368 (a)(1)(A) and 368 (a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "Code"), but no IRS ruling or
opinion of counsel is being sought in connection therewith and such ruling or
opinion is not a condition to closing the transactions herein contemplated.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF RMED AND RMED'S UNIT HOLDERS
RMED AND RMED'S UNIT HOLDERS REPRESENT AND WARRANT TO REDG THAT:
2.1 ORGANIZATION. RMED is a corporation duly organized, validly existing,
and in good standing under the laws of Delaware, has all necessary corporate
powers to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each of the states and other jurisdictions where its business requires
qualification.
2.2 COMPLIANCE WITH LAWS. RMED has substantially complied with, and is not
in violation of, all applicable federal, state or local statutes, laws and
regulations, including, without limitation, any applicable building, zoning,
environmental, employment or other law, ordinance or regulation affecting its
properties, products or the operation of its business except where such
non-compliance would not have a materially adverse effect on the business or
financial condition of RMED. RMED has all licenses and permits required to
conduct its business as now being conducted.
2.3 LITIGATION. RMED is not a party to any suit, action, arbitration or
legal, administrative or other proceeding, or governmental investigation pending
or, to the best knowledge of RMED, threatened against or affecting RMED or its
business, assets or financial condition, except for matters which would not have
a material effect on RMED or its properties. RMED is not in default with respect
to any order, writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality applicable to it. RMED is not
engaged in any lawsuits to recover any material amount of monies due to it.
2.4 BUSINESS. Following the closing, the only business and operations of
RMED shall be that conducted by REDG.
2.5 UNIT HOLDERS. The undersigned two (2) Unit Holders of RMED are the only
Unit Holders of RMED. Further no other person or entity has a right to receive
RMED Units or phantom Units for any reason; no rights or options to receive RMED
Units exist or are extant.
2.6 DEBTS. RMED has no debts or liabilities or payables of any kind. RMED
has no debt instruments outstanding that could be converted into RMED Units or
membership interests.
2.7 ASSETS. RMED has good title to all of its assets and properties, and no
assets or properties are subject to liens or assignments.
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2.8 BOOKS AND RECORDS. The books and records of RMED fairly reflect the
transactions to which it is a party or by which its properties are subject or
bound. Such books and records have been properly kept and maintained and are in
compliance in all material respects with all applicable accounting and legal
requirements. RMED follows generally accepted accounting principles applied on a
consistent basis in the preparation and maintenance of its books of account and
financial statements, including using the accrual method of accounting for all
items of income and expense. RMED has made all accruals in amounts that
accurately report income and expense in the proper periods in accordance with
generally accepted accounting principles. RMED has filed all material reports
and returns required by any law or regulation to be filed by it.
2.9 FINANCIAL STATEMENTS. RMED has furnished to REDG its year end balance
sheet from inception through June 30, 2015, and its related statements of
operations, changes in stockholders' equity and cash flows for each of the
fiscal year periods then ended, and the notes thereto, and its unaudited balance
sheet as of March 31, and June 30, 2015, and its related unaudited statements of
operations, changes in stockholders' equity and cash flows for the three month
period then ended (collectively, the "RMED Financial Statements"). All of the
RMED Financial Statements, including the related notes, (a) were prepared in
accordance with generally accepted accounting principles consistently applied in
all material respects; (b) are in accordance with the books and records of RMED,
(c) fairly reflect the financial position of RMED as of such dates, and the
results of operations of RMED for the periods ended on such dates, and do not
fail to disclose any material extraordinary or out-of-period items.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF REDG.
REDG REPRESENTS AND WARRANTS TO RMED AND ITS UNIT HOLDERS THAT:
3.1 ORGANIZATION. REDG is a corporation duly organized, validly existing,
and in good standing under the laws of Florida, has all necessary corporate
powers to own its properties and to carry on its business as now owned and
operated, and duly qualified to do business in each of such states and other
jurisdictions where its business requires such qualification.
3.2 COMPLIANCE WITH LAWS. REDG has substantially complied with, and is not
in violation of, all applicable federal, state or local statutes, laws and
regulations, including, without limitation, any applicable building, zoning,
environmental, employment or other law, ordinance or regulation affecting its
properties, products or the operation of its business except where such
non-compliance would not have a materially adverse effect on the business or
financial condition of RMED. RMED has all licenses and permits required to
conduct its business as now being conducted.
3.3 LITIGATION. REDG is not a party to any suit, action, arbitration or
legal, administrative or other proceeding, or governmental investigation pending
or, to the best knowledge of REDG, threatened against or affecting REDG or its
business, assets or financial condition, except for matters which would not have
a material affect on REDG or its properties. REDG is not in default with respect
to any order, writ, injunction or decree of any federal, state, local or foreign
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court, department, agency or instrumentality applicable to it. REDG is not
engaged in any lawsuits to recover any material amount of monies due to it.
3.4 BUSINESS. Following the closing, the only business and operations of
REDG shall be that conducted by REDG. Xxxxx Xxxxxx and Xxxx Xxxxxxx shall remain
as active Producers for RMED as agreed upon by REDG, but under the direction and
on behalf of REDG solely.
3.5 RIGHTS UPON LIQUIDATION OF REDG. REDG represents, covenants, and
warrants to Xxxxx Xxxxxx and Xxxx Xxxxxxx that in the event of a liquidation or
insolvency of REDG, that they retain a lien on, and REDG hereby automatically
assigns to them upon an event of liquidation or insolvency, any and all film and
television rights transferred hereby by REDG by RMED to the following
properties:
"Shockwave Darkside"
"Journey to Magika"
"Last Blood"
"Omphalos"
"Wayward Sons Legends"
"Wayward Sons"
(collectively, the "Properties").
In the event of a liquidation or insolvency of REDG, the film and
television rights RMED previously held to the above Properties shall
automatically transfer to Xxxxx Xxxxxx and Xxxx Xxxxxxx without further order,
authorization or consent, and these Properties shall not be considered property
of the estate of REDG or RMED in any bankruptcy or insolvency proceeding because
the rights to these Properties will belong to Xxxxx Xxxxxx and Xxxx Xxxxxxx as
joint tenants.
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF UNIT HOLDERS
4.1 UNIT OWNERSHIP. Unit Holders hold the RMED Units in the amounts shown
on Exhibit "A" to this Agreement. Such Units are owned of record, and such Units
are not subject to any lien, encumbrance or pledge. Each Unit Holder has the
authority to exchange such Units pursuant to this Agreement.
4.2 INVESTMENT INTENT. Unit Holders understand and acknowledge that the
REDG Restricted Stock is being offered for exchange in reliance upon the
exemption provided in Section 4(a)(2) of the Securities Act of 1933 (the
"Securities Act") for non-public offerings; and each Unit Holder makes the
following representations and warranties with the intent that the same may be
relied upon in determining the suitability of each Unit Holder as a purchaser of
securities.
(a) The REDG Shares are being acquired solely for the account of each
Unit Holder, for investment purposes only, and not with a view to, or for sale
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in connection with, any distribution thereof and with no present intention of
distributing or reselling any part of the REDG Shares.
(b) Each Unit Holder agrees not to dispose of his REDG Shares or any
portion thereof unless and until counsel for REDG shall have determined that the
intended disposition is permissible and does not violate the Securities Act of
1933 (the "1933 Act") or any applicable state securities laws, or the rules and
regulations thereunder.
(c) Unit Holders acknowledge that REDG has made all documentation
pertaining to all aspects of REDG and the transaction herein available to
him/her and to his/her qualified representative(s), if any, and has offered such
person or persons an opportunity to discuss REDG and the transaction herein with
the officers of REDG.
4.3 INDEMNIFICATION. Unit Holders recognize that the offer of REDG Shares
to him/her is based upon his/her representations and warranties set forth and
contained herein and hereby agrees to indemnify and hold harmless REDG against
all liability, costs or expenses (including reasonable attorney's fees) arising
as a result of any misrepresentations made herein by such Unit Holder.
4.4 RESTRICTIVE LEGEND. Unit Holders agree that the certificates evidencing
the REDG Shares acquired pursuant to this Agreement will have a legend placed
thereon which will restrict the sale of said shares for times and upon
conditions that are subject to federal and state securities laws.
ARTICLE 5
PRE-CLOSING COVENANTS
5.1 INVESTIGATIVE RIGHTS. From the date of this Agreement each party shall
provide to the other party, and such other party's counsels, accountants,
auditors, and other authorized representatives, full access during normal
business hours to all of RMED's and REDG's properties, books, contracts,
commitments, and records for the purpose of examining the same. Each party shall
furnish the other party with all information concerning RMED's and REDG's
affairs as the other party may reasonably request.
5.2 CONDUCT OF BUSINESS. Prior to the Closing, RMED and REDG shall each
conduct its business in the normal course, and shall not sell, pledge, or assign
any assets, without the prior written approval of the other party, except in the
regular course of business. Neither RMED or REDG shall amend its Articles of
Incorporation or Bylaws, declare dividends, redeem or sell stock or other
securities, incur additional or newly-funded liabilities, acquire or dispose of
fixed assets, change employment terms, enter into any material or long-term
contract, guarantee obligations of any third party, settle or discharged any
balance sheet receivable for less than its stated amount, pay more on any
liability than its stated amount, or enter into any other transaction other than
in the regular course of business. Xxxxx Xxxxxx and Xxxx Xxxxxxx shall remain as
active Producers for RMED as agreed upon by REDG, but under the direction and on
behalf of REDG solely.
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ARTICLE 6
POST-CLOSING COVENANTS
6.1 FOLLOWING THE CLOSING HEREIN:
(a) PROMPT REGISTRATION OF TRANSFER. REDG shall register transfer of
the common stock of REDG within three (3) business days after receipt of proper
documentation for such transfer request. Restricted securities shall be
transferred without restrictive legend if supported by an opinion of counsel to
REDG provided that REDG's counsel has no reasonable objection.
(b) DELIVERY OF SHARES. RMED Unit Holders will deliver to REDG'S
management within 10 days of execution of this Agreement any share certificates
representing the RMED Common Stock.
ARTICLE 7
CLOSING
7.1 CLOSING. The Closing of this transaction shall occur upon the execution
of this Agreement by all parties.
7.2 ATTORNEY FEES. Each of REDG, RMED, and the RMED Unit Holders shall be
responsible for their own attorney fees, if applicable.
ARTICLE 8
MISCELLANEOUS
8.1 CONFIDENTIALITY. Unless compelled by a subpoena or otherwise required
under the rule of law no party to this transaction will discuss terms of the
transaction, its parties, or any other aspect of this transaction, contemplated,
executed, or finalized with any individual other than counsel and individuals or
parties directly related to this transaction.
8.2 CAPTIONS. The Article and paragraph headings throughout this Agreement
are for convenience and reference only, and shall in no way be deemed to define,
limit, or add to the meaning of any provision of this Agreement.
8.3 NO ORAL CHANGE. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, or discharged is sought.
8.4 NON-WAIVER. Except as otherwise expressly provided herein, no waiver of
any covenant, condition, or provision of this Agreement shall be deemed to have
been made unless expressly in writing and signed by the party against whom such
waiver is charged; and (i) the failure of any party to insist in any one or more
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cases upon the performance of any of the provisions, covenants, or conditions of
this Agreement or to exercise any option herein contained shall not be construed
as a waiver or relinquishment for the future of any such provisions, covenants,
or conditions, (ii) the acceptance of performance of anything required by this
Agreement to be performed with knowledge of the breach or failure of a covenant,
condition, or provision hereof shall not be deemed a waiver of such breach or
failure, and (iii) no waiver by any party of one breach by another party shall
be construed as a waiver with respect to any other or subsequent breach.
8.5 TIME OF THE ESSENCE. Time is of the essence of this Agreement and
of each and every provision hereof.
8.6 ENTIRE AGREEMENT. This Agreement contains the entire Agreement and
understanding among the parties hereto, supersedes all prior agreements and
understandings, and constitutes a complete and exclusive statement of the
agreements, responsibilities, representations and warranties of the parties.
8.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.8 BINDING EFFECT. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
8.9 ANNOUNCEMENTS. REDG and RMED will consult and cooperate with each other
as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers.
8.10 BROKERAGE. RMED and REDG each represent that no finder, broker,
investment banker or other similar person has been involved in this transaction.
Each party agrees to indemnify and hold the others harmless from payment of any
brokerage fee, finder's fee or commission claimed by any other person or entity
who claims to have been involved in the transaction herein because of an
association with such party.
8.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties set forth in this Agreement or in any instrument,
certificate, opinion, or other writing providing for it, shall survive the
Closing irrespective of any investigation made by or on behalf of any party for
a period of one year.
8.12 CHOICE OF LAW. This Agreement and its application shall be
governed by the laws of the State of Florida.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized representatives, all as of the date first written
above.
RED GIANT ENTERTAINMENT, INC.:
(a Florida Corporation)
By:
----------------------------------- -----------------------------------
Xxxxx X. Xxxxxx, CEO Date
RED GIANT MEDIA, LLC:
(a Delaware Limited Liability Company)
By:
----------------------------------- -----------------------------------
Xxxxx Xxxxxx, Member of Board Date
By:
----------------------------------- -----------------------------------
Xxxx Xxxxxxx, Member of Board Date
RED GIANT MEDIA, LLC UNIT HOLDERS:
By:
----------------------------------- -----------------------------------
Xxxxx Xxxxxx, Individually Date
By:
----------------------------------- -----------------------------------
Xxxx Xxxxxxx, Individually Date
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EXHIBIT "A"
Xxxxx Xxxxxx 5,000,000 Series Z preferred shares
Xxxx Xxxxxxx 5,000,000 Series Z preferred shares
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