Exhibit 99.5
THIS NOTE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE ALIENATED OR ENCUMBERED WITHOUT THE PRIOR WRITTEN CONSENT OF THE
BORROWER.
State of Illinois
$100,000.00 June 21, 2013
SECURED BUYER NOTE #2
FOR VALUE RECEIVED, TYPENEX CO-INVESTMENT, LLC, an Illinois limited
liability company (the "BORROWER"), hereby promises to pay to RED GIANT
ENTERTAINMENT, INC., a Nevada corporation (the "LENDER," and together with the
Borrower, the "PARTIES"), the principal sum of $100,000.00 together with all
accrued and unpaid interest thereon, fees incurred or other amounts owing
hereunder, all as set forth below in this Secured Buyer Note #2 (this "NOTE").
This Note is issued pursuant to that certain Securities Purchase Agreement of
even date herewith, entered into by and between the Borrower and the Lender (as
the same may be amended from time to time, the "PURCHASE AGREEMENT"), pursuant
to which the Lender issued to the Borrower that certain Secured Convertible
Promissory Note in the principal amount of $557,500.00 (as the same may be
amended from time to time, the "LENDER NOTE"), convertible into shares of the
Company's Common Stock. All capitalized terms used but not otherwise defined
herein shall have the meanings ascribed thereto in the Purchase Agreement.
1. Principal and Interest. Interest shall accrue on the unpaid principal
balance and any unpaid late fees or other fees under this Note at a rate of five
percent (5.0%) per annum until the full amount of the principal and fees has
been paid. Interest shall be computed on the basis of a 365-day year for the
actual number of days elapsed. Notwithstanding any provision to the contrary
herein, in no event shall the applicable interest rate at any time exceed the
maximum interest rate allowed under applicable law, as provided in Section 11
below. The entire unpaid principal balance and all accrued and unpaid interest,
if any, under this Note, shall be due and payable (such date is referred to as
the "SECURED BUYER NOTE MATURITY DATE") on the date that is two (2) months
following the occurrence of the Maturity Date (as defined in the Lender Note)
under the Lender Note.
2. Payment. Unless prepaid, all principal and accrued interest under this
Note is payable in one lump sum on the Secured Buyer Note Maturity Date. All
payments of interest and principal shall be (i) in lawful money of the United
States of America, and (ii) in the form of immediately available funds. All
payments shall be applied first to costs of collection, if any, then to accrued
and unpaid interest, and thereafter to principal. Payment of principal and
interest hereunder shall be delivered to the Lender at the address furnished to
the Borrower for that purpose.
3. Prepayment by the Borrower. The Borrower may, in the Borrower's sole and
absolute discretion, pay, without penalty, all or any portion of the outstanding
balance along with any accrued but unpaid interest on this Note at any time
prior to the Secured Buyer Note Maturity Date. Notwithstanding the foregoing, so
long as no Equity Conditions Failure (as defined in the Lender Note) has ever
occurred, regardless of whether or not such Equity Conditions Failure has been
cured, the Borrower shall be required to pay the entire unpaid principal balance
and all accrued and unpaid interest, if any, under this Note on the date that is
nine (9) months after the date the Lender Note is issued. For purposes of
determining an Equity Conditions Failure, the Equity Conditions Measuring Period
(as defined in the Lender Note) will begin as of the date hereof and continue
through the Secured Buyer Note Maturity Date.
4. Security. The payment of this Note (and all the other Secured Buyer
Notes (as defined in the Purchase Agreement)) shall be secured by that certain
Membership Interest Pledge Agreement of even date herewith (as the same may be
amended from time to time, the "PLEDGE AGREEMENT") executed by the Borrower, as
Pledgor, in favor of the Lender, as Secured Party, whereby Borrower has pledged
as collateral its 40% membership interest in Typenex Medical, LLC, an Illinois
limited liability company, as more specifically set forth in the Pledge
Agreement. All the terms and conditions of the Pledge Agreement are hereby
incorporated into and made a part of this Note.
5. Termination of Security Interest. As set forth in the Pledge Agreement,
the Lender covenants and agrees that upon the earlier of (i) the date on which
all of the Secured Buyer Notes are repaid in full and (ii) at Borrower's
election, the date that is six (6) months and three (3) days following the
execution of the Pledge Agreement, or such later date as specified by the
Borrower in its sole discretion (the "TERMINATION DATE"), the Pledge Agreement
and all security interests granted thereunder with respect to the Collateral (as
defined in the Pledge Agreement) shall terminate, and the Borrower, as the
Lender's attorney-in-fact, shall be authorized to terminate all UCC Financing
Statements (Form UCC1) (each, a "FINANCING STATEMENT") filed under the Pledge
Agreement by way of filing a UCC Financing Statement Amendment (Form UCC3) with
respect to each such Financing Statement, and to take all other actions
(including making all filings) necessary to reflect that the Pledge Agreement
and the security interests granted thereunder have terminated. For avoidance of
doubt, after the Termination Date, there shall be no collateral securing this
Note.
6. Right of Offset. Notwithstanding anything to the contrary herein or in
any of the other Transaction Documents, in the event (i) of the occurrence of
any Event of Default (as defined in the Lender Note) under the Lender Note or
any other note issued by the Lender in connection with the Purchase Agreement,
(ii) the Borrower exercises any Event of Default Redemption Right or Fundamental
Transaction Redemption Right (as such terms are defined in the Lender Note)
under the Lender Note, (iii) the Lender Note is accelerated for any reason, or
(iv) of a breach of any material term, condition, representation, warranty,
covenant or obligation of the Lender under any Transaction Document, the
Borrower shall be entitled to deduct and offset any amount owing by the Lender
under the Lender Note from any amount owed by the Borrower under this Note. In
the event that the Borrower's exercise of the Borrower's offset rights under
this Section 6 results in the full satisfaction of the Borrower's obligations
under this Note, then the Lender shall return this Note to the Borrower for
cancellation or, in the event this Note has been lost, stolen or destroyed, the
Lender shall provide the Borrower with a lost note affidavit in a form
reasonably acceptable to the Borrower.
7. Default. If any of the events specified below shall occur (each, an
"EVENT OF DEFAULT") the Lender may declare the unpaid principal balance under
this Note, together with all accrued and unpaid interest thereon, fees incurred
or other amounts owing hereunder immediately due and payable, by notice in
writing to the Borrower. If any default, other than a Payment Default (as
defined below), is curable, then the default may be cured (and no Event of
Default will have occurred) if the Borrower, after receiving written notice from
the Lender demanding cure of such default, either (a) cures the default within
fifteen (15) days of the receipt of such notice, or (b) if the cure requires
more than fifteen (15) days, immediately initiates steps that the Lender deems
in the Lender's reasonable discretion to be sufficient to cure the default and
thereafter diligently continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical. Each of the
following events shall constitute an Event of Default:
7.1. Failure to Pay. The Borrower's failure to make any payment when due
and payable under this Note (a "PAYMENT DEFAULT");
7.2. Breaches of Covenants. The Borrower's failure to observe or perform
any other covenant, obligation, condition or agreement contained in this Note;
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7.3. Representations and Warranties. If any representation, warranty,
certificate, or other statement (financial or otherwise) made or furnished by or
on behalf of the Borrower to the Lender in writing in connection with this Note
or any of the other Transaction Documents, or as an inducement to the Lender to
enter into the Purchase Agreement, shall be false, incorrect, incomplete or
misleading in any material respect when made or furnished; and
7.4. Involuntary Bankruptcy. If any involuntary petition is filed under any
bankruptcy or similar law or rule against the Borrower, and such petition is not
dismissed within sixty (60) days, or a receiver, trustee, liquidator, assignee,
custodian, sequestrator or other similar official is appointed to take
possession of any of the assets or properties of the Borrower or any guarantor.
8. Binding Effect; Assignment. This Note shall be binding on the Parties
and their respective heirs, successors, and assigns; PROVIDED, HOWEVER, that
neither party shall assign any of its rights hereunder without the prior written
consent of the other party, except that the Borrower may assign this Note to any
of the Borrower's Affiliates without the prior written consent of the Lender
and, furthermore, the Lender agrees that it shall not unreasonably withhold,
condition or delay its consent to any other assignment of this Note by the
Borrower.
9. Governing Law; Venue. The terms of this Note shall be construed in
accordance with the laws of the State of Illinois as applied to contracts
entered into by Illinois residents within the State of Illinois which contracts
are to be performed entirely within the State of Illinois. With respect to any
disputes arising out of or related to this Note, the Parties consent to the
exclusive personal jurisdiction of, and venue in, the state courts located in
Cook County, State of Illinois (or in the event of federal jurisdiction, the
United States District Court for the Northern District of Illinois - Eastern
Division), and hereby waive, to the maximum extent permitted by law, any
objection, including any objection based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdiction or to any claim that such
venue of the suit, action or proceeding is improper.
10. Customer Identification-USA Patriot Act Notice. The Lender hereby
notifies the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56, signed into law October 26, 2001) (the "Act"), and
the Lender's policies and practices, the Lender is required to obtain, verify
and record certain information and documentation that identifies the Borrower,
which information includes the name and address of the Borrower and such other
information that will allow the Lender to identify the Borrower in accordance
with the Act.
11. Lawful Interest. It being the intention of the Lender and the Borrower
to comply with all applicable laws with regard to the interest charged
hereunder, it is agreed that, notwithstanding any provision to the contrary in
this Note or any of the other Transaction Documents, no such provision,
including without limitation any provision of this Note providing for the
payment of interest or other charges, shall require the payment or permit the
collection of any amount in excess of the maximum amount of interest permitted
by law to be charged for the use or detention, or the forbearance in the
collection, of all or any portion of the indebtedness evidenced by this Note or
by any extension or renewal hereof ("EXCESS INTEREST"). If any Excess Interest
is provided for, or is adjudicated to be provided for, in this Note or any of
the other Transaction Documents, then in such event:
11.1. the provisions of this Section 11 shall govern and control;
11.2. the Borrower shall not be obligated to pay any Excess Interest;
11.3. any Excess Interest that the Lender may have received hereunder
shall, at the option of the Lender, be (i) applied as a credit against the
principal balance due under this Note or the accrued and unpaid interest thereon
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not to exceed the maximum amount permitted by law, or both, (ii) refunded to the
Borrower, or (iii) any combination of the foregoing;
11.4. the applicable interest rate or rates shall be automatically subject
to reduction to the maximum lawful rate allowed to be contracted for in writing
under the applicable governing usury laws, and this Note and the Transaction
Documents shall be deemed to have been, and shall be, reformed and modified to
reflect such reduction in such interest rate or rates; and
11.5. the Borrower shall not have any action or remedy against the Lender
for any damages whatsoever or any defense to enforcement of this Note or arising
out of the payment or collection of any Excess Interest.
12. Pronouns. Regardless of their form, all words used in this Note shall
be deemed singular or plural and shall have the gender as required by the text.
13. Headings. The various headings used in this Note as headings for
sections or otherwise are for convenience and reference only and shall not be
used in interpreting the text of the section in which they appear and shall not
limit or otherwise affect the meanings thereof.
14. Time of Essence. Time is of the essence with this Note.
15. Severability. If any part of this Note is construed to be in violation
of any law, such part shall be modified to achieve the objective of the Parties
to the fullest extent permitted by law and the balance of this Note shall remain
in full force and effect.
16. Attorneys' Fees. If any action at law or in equity is necessary to
enforce this Note or to collect payment under this Note, the Lender shall be
entitled to recover reasonable attorneys' fees directly related to such
enforcement or collection actions.
17. Amendments and Waivers; Remedies. No failure or delay on the part of
either party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to either party hereto at law, in equity or otherwise. Any amendment,
supplement or modification of or to any provision of this Note, any waiver of
any provision of this Note, and any consent to any departure by either party
from the terms of any provision of this Note, shall be effective (i) only if it
is made or given in writing and signed by the Borrower and the Lender and (ii)
only in the specific instance and for the specific purpose for which made or
given.
18. Notices. Unless otherwise provided for herein, all notices, requests,
demands, claims and other communications hereunder shall be given in accordance
with the subsection of the Purchase Agreement titled "Notices." Either party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by providing notice thereof in the
manner set forth in the Purchase Agreement.
19. Final Note. This Note, together with the other Transaction Documents,
contains the complete understanding and agreement of the Borrower and the Lender
and supersedes all prior representations, warranties, agreements, arrangements,
understandings, and negotiations of the Borrower and Xxxxxx with respect to the
subject matter of the Transaction Documents. THIS NOTE, TOGETHER WITH THE OTHER
TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the Parties have executed this Note as of the date
set forth above.
BORROWER:
TYPENEX CO-INVESTMENT, LLC
By: Red Cliffs Investments, Inc., its Manager
By: /s/ Xxxx X. Xxxx
------------------------------------------
Xxxx X. Xxxx, President
ACKNOWLEDGED, ACCEPTED AND AGREED:
RED GIANT ENTERTAINMENT, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx, President/CEO
[Signature page to Secured Buyer Note #2]
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