Exhibit 4.7
NEITHER THIS NOTE NOR THE SECURITIES THAT MAY BE ISSUED BY THE BORROWER UPON
CONVERSION HEREOF (COLLECTIVELY, THE "SECURITIES") HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AM ENDED (THE "1933 ACT"), OR THE SECURITIES L
AWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INT EREST
OR PART ICIP AT ION T HEREIN M AY BE OFFER ED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED: (I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION ST ATEMENT FOR THE
SECURITIES UNDER THE 1933 ACT, OR APPLICABLE STATE SECURITIES LAWS; OR (II) IN
THE AB SEN CE OF AN OPINION OF COUN SEL, IN A FORM AC CEPT AB LE T O THE ISSUER,
THAT REGISTRATION IS NOT REQUIRED UNDER THE 0000 XXX XX; (III) UNLESS SOLD,
TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.
CONVERTIBLE NOTE
$27,500.00 August 5, 2013 (the "ISSUANCE DATE")
FOR VALUE RECEIVED, Red Giant Entertainment Inc., a Nevada Corporation (the
"Company") doing business in Florida, hereby promises to pay to the order of JSJ
Investments Inc., an accredited investor and Texas Corporation, assigns (the
"Holder") the principal amount of Twenty Seven Thousand Five Hundred Dollars
($27,500.00), on demand of the Holder (the "Maturity Date") which shall be six
(6) months. The principal balance of this Note shall be payable pursuant to
Paragraph 1.
1. Payments of Principal and Interest.
(a) Paym ent of Principal. This note would have a cash redemption premium
of 1 25% of the principal amount. The principal balance of this Note shall be
paid to the Holder hereof on the Demand. The Company shall not prematurely pay
or prepay any outstanding principal balance to the Holder.
(b) Default Interest. Any amount of principal on this Note which is not
paid when due shall bear ten percent (10%) interest per annum from the date
thereof until the same is paid ("DEFAULT INTEREST") and the Holder, at the
Holder's sole discretion, may include any accrued but unpaid Default Interest in
the Conversion Amount.
(d) General Payment Provisions. This Note shall be made in lawful money of
the United States of America by check to such account as the Holder may from
time to time designate by written notice to the Company in accordance with the
provisions of this Note. Whenever any amount expressed to be due by the terms of
this Note is due on any d ay 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
and, in the case of any interest payment date which is not the date on which
this Note is paid in full, the extension of the due date thereof shall not be
taken into account for purposes of determining the amount of interest due on
such date. For purposes of this Note, "BUSINESS DAY" shall mean any day other
than a Saturday, Sunday or a day on which commercial banks in the State of
Georgia are authorized or required by law or executive order to remain closed.
2, Conversion of Note. At any time prior to the Maturity Date, this Note
shall be convertible into shares of the Company's common stock, share (the
"COMMON STOCK"), on the terms and conditions set forth in this Paragraph 2.
(a) Certain Defined Terms. For purposes of this Note, the following terms
shall have the following meanings:
(1) "CONVERSION AMOUNT" means the sum of (A) the principal amount of this
Note to be converted with respect to which this determination is being made, and
(B) Default Interest, if any, on unpaid interest and principal, if so included
at the Holder's sole discretion.
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(2) "CONVERSION PRICE" means 45% discount to the average of the three
lowest trades on the previous ten (10) trading days to the date of Conversion,
with a maximum conversion price equal to that price that would be obtained if
the conversion were to be made on the date that this note was executed.
(3) "OTHER NOTE" means the convertible notes, other than this Note, issued
by the Company to the Holder whether prior, simultaneously with or hereinafter
executed.
(4) "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
(b) Holder's Conversion Right. At any time or times on or after the
Issuance Date, the Holder shall be entitled to convert all of the outstanding
and unpaid principal amount of this Note into fully paid and non-assessable
shares of Common Stock in accordance with Paragraph 2(d), at the Conversion Rate
(as defined below). The Company shall not issue any fraction of a share of
Common Stock upon any conversion; if such issuance would result in the issuance
of a fraction of a share of Common Stock, the Company shall round such fraction
of a share of Common Stock up to the nearest whole share.
(c) Conversion Rate. The number of shares of Common Stock issuable upon
conversion of a Conversion Amount of this Note pursuant to Paragraph 2(b) shall
be determined according to the following formula (the "CONVERSION RATE"):
Conversion Amount / Conversion Price = number of shares of Common Stock
issuable upon conversion of a Conversion Amount of this Note
(d) Conversion Amount. Loan shall be converted pursuant to Rule 504(b) of
regulation D promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, into un-legend shares at the Conversion
Price.
(e) Mechanics of Conversion. The conversion of this Note shall be conducted
in the following manner:
(1) Holder's Delivery Requirements. To convert this Note into shares of
Common Stock on any date set forth in the Conversion Notice by the Holder (the
"Conversion Date"), the Holder hereof shall (A) transmit by facsimile (or
otherwise deliver), for receipt on or prior to 11:59 p.m., Eastern Time on such
date, a copy of a fully executed notice of conversion in the form attached
hereto as Exhibit 2.(e)(1) (the "CONVERSION NOTICE") to the Company; and (B)
surrender to a common carrier for delivery to the Company as soon as practicable
following the date of the Conversion Notice original of the Note being
converted.
(2) Company's Response. Upon receipt by the Company of a copy of a
Conversion Notice, the Company shall as soon as practicable, but in no event
later than three (3) Business Days after receipt of such Conversion Notice,
send, via facsimile and overnight courier, a confirmation of receipt of such
Conversion Notice (the "CONVERSION CONFIRMATION") to such Holder indicating that
the Company will process such Conversion Notice in accordance with the terms
herein. Within five (5) Business Days after the date of the Conversion
Confirmation, the Company shall issue and surrender to a common carrier for
delivery to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder, for the number of shares of Common Stock
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to which the Holder shall be entitled. If less than the full principal amount of
this Note is submitted for conversion, then the Company shall within five (5)
Business Days after receipt of the Note and at its own expense, issue and
deliver to the Holder a new Note for the outstanding principal amount not so
converted; provided that such new Note shall be substantially in the same form
as this Note.
(3) Record Holder. The person or persons entitled to receive the shares of
Common Stock issuable upon a conversion of this Note shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on the
Conversion Date.
(e) Taxes. The Company shall pay any and all taxes that may be payable with
respect to the issuance and delivery of Common Stock upon the conversion of
Notes.
3. Other Rights of Holders.
(a) Reorganization, Reclassification, Consolidation, Mergeror Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets to another Person or other
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "ORGANIC CHANGE." Prior to the consummation of any (i) Organic
Change or (ii) other Organic Change following which the Company is not a
surviving entity, the Company will secure from the Person purchasing such assets
or the successor resulting from such Organic Change (in each case, the
"ACQUIRING ENTITY") a written agreement (in form and substance reasonably
satisfactory to the Holder) to deliver to Holder in exchange for this Note, a
security of the Acquiring Entity evidenced by a written instrument substantially
similar in form and substance to this Note, and reasonably satisfactory to the
Holder. Prior to the consummation of any other Organic Change, the Company shall
make appropriate provision (in form and substance reasonably satisfactory to the
Holders of a majority of the Conversion Amount of the Notes then outstanding) to
ensure that each of the Holders will thereafter have the right to acquire and
receive in lieu of or in addition to (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
such Holder's Note, such shares of stock, securities or assets that would have
been issued or payable in such Organic Change with respect to or in exchange for
the number of shares of Common Stock which would have been acquirable and
receivable upon the conversion of such Holder's Note as of the date of such
Organic Change (without taking into account any limitations or restrictions on
the convertibility of the Note).
(b). Security Interest. None.
4. Reservation of Shares. The Company shall at all times, so long as any
principal amount of the Notes is outstanding, reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Notes, such number of shares of Common Stock as shall at
all times be sufficient to effect the conversion of all of the principal amount
of the Notes then outstanding; provided that the number of shares of Common
Stock so reserved shall at no time be less than one hundred twenty percent
(125%) of the number of shares of Common Stock for which the principal amount of
the Notes are at any time convertible. The initial number of shares of Common
Stock reserved for conversions of the Notes and each increase in the number of
shares so reserved shall be allocated pro rata among the Holders of the Notes
based on the principal amount of the Notes held by each Holder at the time of
issuance of the Notes or increase in the number of reserved shares, as the case
may be. In the event a Holder shall sell or otherwise transfer any of such
Holder's Notes, each transferee shall be allocated a pro rata portion of the
number of reserved shares of Common Stock reserved for such transferor. Any
shares of Common Stock reserved and allocated to any Person which ceases to hold
any Notes shall be allocated to the remaining Holders, pro rata based on the
principal amount of the Notes then held by such Holders.
5. Voting Rights. Holders shall have no voting rights, except as required
by law.
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6. Reissuance of Note. In the event of a conversion or redemption pursuant
to this Note of less than all of the Conversion Amount represented by this Note,
the Company shall promptly cause to be issued and delivered to the Holder, upon
tender by the Holder of the Note converted or redeemed, a new note of like tenor
representing the remaining principal amount of this Note which has not been so
converted or redeemed and which is in substantially the same form as this Note.
7. Defaults and Remedies.
(a) Even ts of Def a ult. An "EVENT OF DEFAULT" is: (i) default for ten
(10) da ys in payment of interest or Default Interest on this Note; (ii) default
in payment of the principal amount of this Note when due; (iii) failure by the
Company for thirty (30) days after notice to it to comply with any other
material provision of this Note; (iv) if the Company pursuant to or within the
meaning of any Bankruptcy Law; (A) commences a voluntary case; (B) consents to
the entry of an order for relief against it in an involuntary case; (C) consents
to the appointment of a Custodian of it or for all or substantially all of its
property; (D) makes a general assignment for the benefit of its creditors; or
(E) admits in writing that it is generally unable to pay its debts as the same
become due; or (vi) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (I) is for relief against the Company in an
involuntary case; (2) appoints a Custodian of the Company or for all or
substantially all of its property; or (3) orders the liquidation of the Company
or any subsidiary, and the order or decree remains unstayed and in effect for
thirty (30) days. The Term "Bankruptcy Law" means Title 11, U.S. Code, or any
similar Federal or State Law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(b) Remedies. If an Event of Default occurs and is continuing, the Holder
of this Note may declare all of this Note, including any interest and Default
Interest and other amounts due, to be due and payable immediately.
8. Vote to Change the Terms of this Note. This Note and any provision
hereof may only be amended by an instrument in writing signed by the Company and
holders of a majority of the aggregate Conversion Amount of the Notes then
outstanding.
9. Lost or Stolen Note. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Note, and, in the case of loss, theft or destruction, of an indemnification
undertaking by the Holder to the Company in a form reasonably acceptable to the
Company and, in the case of mutilation, upon surrender and cancellation of the
Notes, the Company shall execute and deliver a new Note of like tenor and date
and in substantially the same form as this Note; provided, however, the Company
shall not be obligated to re-issue a Note if the Holder contemporaneously
requests the Company to convert such remaining principal amount into Common
Stock.
10. Payment of Collection, Enforcement and Other Costs. If: (i) this Note
is placed in the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding; or (ii) an attorney is
retained to represent the Holder of this Note in any bankruptcy, reorganization,
receivership or other proceedings affecting creditors' rights and involving a
claim under this Note, then the Company shall pay to the Holder all reasonable
attorneys' fees, costs and expenses incurred in connection therewith, in
addition to all other amounts due hereunder.
11. Cancellation. After all principal and accrued interest at any time owed
on this Note has been paid in full, this Note shall automatically be deemed
canceled, shall be surrendered to the Company for cancellation and shall not be
reissued.
12. Waiver of Notice. To the extent permitted by law, the Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.
13. Governing Law. This Note shall be construed and enforced in accordance
with, and all questions concerning the construction, validity, interpretation
and performance of this Note shall be governed by, the laws of the State of
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Florida, without giving effect to provisions thereof regarding conflict of laws.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
state and federal courts sitting in North Carolina for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by sending by certified mail or overnight courier a copy thereof
to such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOC ABLY WAIVES ANY RIGHT IT M AY H AVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
14. Remedies, Characterizations, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Note shall be cumulative and in addition
to all other remedies available under this Note, at law or in equity (including
a decree of specific performance and/or other injunctive relief), and no remedy
contained herein shall be deemed a waiver of compliance with the provisions
giving rise to such remedy and nothing herein shall limit a Holder's right to
pursue actual damages for any failure by the Company to comply with the terms of
this Note. The Company covenants to each Holder of Notes that there shall be no
characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the Holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof).
15. Specific Shall Not Limit General; Construction. No specific provision
contained in this Note shall limit or modify any more general provision
contained herein. This Note shall be deemed to be jointly drafted by the Company
and all Holders and shall not be construed against any person as the drafter
hereof.
16. Failure or Indulgence Not Waiver. No failure or delay on the part of
this Note in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
IN WITNESS WHEREOF, the Company has caused this Note to be signed by its
CEO, on and as of the Issuance Date.
Red Giant Entertainment Inc.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx, CEO
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EXHIBIT 2.(E)(1)
CONVERSION NOTICE
Reference is made to the Convertible Note issued by Red Giant Entertainment Inc.
(the "Note").
In accordance with and pursuant to the Note, the undersigned hereby elects to
convert a portion or all of the principal balance of the Note, indicated below
into shares of Common Stock (the "Common Stock"), of the Company, by tendering
the Note specified below as of the date specified below.
Date of Conversion:
Principal Amount to be converted: $
Please confirm the following information:
Conversion Amount:
Conversion Price:
Number of shares of Common Stock to be issued:
Please issue the Common Stock into which the Note is being converted in the name
of the Holder of the Note and to the following address:
Authorization:
Holder:
By:
Name:
Date:
Accepted by:
Red Giant Entertainment Inc.
By:
-------------------------------
Xxxxx Xxxxxx, CEO
Accepted as of:
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