Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is made by and between Red
Giant Entertainment, Inc., a Nevada corporation (the "Company") and Xxxxx X.
Xxxxxx, an individual (the "Investor") (the Company and the Investor may be
referred to collectively as the "Parties").
RECITALS
WHEREAS, the Company currently has 3,000,000,000 shares of common stock, par
value $0.0001 per share ("Common Stock") authorized, and 2,675,721,877 shares of
Common Stock outstanding;
WHEREAS, the Company currently has 100,000,000 shares of preferred stock
authorized and a series of preferred stock designated as Series Z, of which
5,000,000 shares of preferred stock are issued and outstanding;
WHEREAS, the Company has offered to sell to the Investor 5,000,000 shares of its
Series Z Preferred Stock (the "Shares" for a purchase price of $150,000 (the
"Purchase Price");
WHEREAS, the Company desires to sell to the Investor and the Investor desires to
purchase from the Company the Shares upon the terms and conditions set forth
herein.
NOW THEREFORE, in consideration of the promises and respective mutual agreements
herein contained, it is agreed by and between the Parties hereto as follows:
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
Section 1.01. ISSUANCE OF THE SHARES.
Subject to the terms and conditions set forth herein, and on the basis of the
representations, warranties and agreements herein contained, the Company shall
sell to the Investor, and the Investor shall purchase from the Company, the
Shares.
Section 1.02. CONSIDERATION AND PAYMENT FOR THE SHARES.
As consideration for this Agreement, the Investor hereby tenders $150,000.00,
and in exchange therefor the Company offers the Shares.
Section 1.03. LEGENDS; SHARES NOT REGISTERED UNDER THE SECURITIES ACT OF 1933.
The Shares have not been registered under the Securities Act of 1933, as amended
(the "Act"). The certificates representing the Shares shall bear a legend
substantially the same as the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
This Agreement is not part of a public offering and is intended to be made
pursuant to exemption from registration as set forth in Section 4(2) of the Act
and to be exempt from the registration requirements of various state securities
laws as may be applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. INVESTOR REPRESENTATIONS AND WARRANTIES.
The Investor hereby represents and warrants that:
(a) The Investor acknowledges that the Shares are "restricted securities" (as
such term is defined in Rule 144 promulgated under the Act ("Rule 144")), that
the Shares will include the restrictive legend set forth in Section 1.03 of this
Agreement, and, except as otherwise set forth in this Agreement, that the Shares
cannot be sold unless registered with the United States Securities and Exchange
Commission ("SEC") and qualified by appropriate state securities regulators, or
unless Investor otherwise complies with an exemption from such registration and
qualification (including, without limitation, compliance with Rule 144).
(b) The Investor has adequate means of providing for current needs and
contingencies, has no need for liquidity in the investment, and is able to bear
the economic risk of an investment in the Shares. Investor represents that
Investor is able to bear the economic risk of the investment and at the present
time could afford a complete loss of such investment. Investor has reviewed this
Agreement and the Disclosure Documents (as defined in Section 2.02(b)) with
care. Additionally, Investor has had a full opportunity to inspect the books and
records of the Company and to make any and all inquiries of Company officers and
directors regarding the Company and its business as Investor has deemed
appropriate.
(c) The Investor is an "Accredited Investor" as defined in Regulation D of the
Act or Investor, either alone or with Investor's professional advisers who are
unaffiliated with, have no equity interest in and are not compensated by the
Company or any affiliate or selling agent of the Company, directly or
indirectly, has sufficient knowledge and experience in financial and business
matters that Investor is capable of evaluating the merits and risks of an
investment in the Shares offered by the Company and of making an informed
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investment decision with respect thereto and has the capacity to protect
Investor's own interests in connection with Investor's proposed investment in
the Shares.
(d) The Investor is acquiring the Shares solely for the Investor's own account
as principal, for investment purposes only and not with a view to the resale or
distribution thereof, in whole or in part, and no other person or entity has a
direct or indirect beneficial interest in such Shares.
(e) The Investor will not sell or otherwise transfer the Shares without
registration under the Act or an exemption therefrom and fully understands and
agrees that the Investor must bear the economic risk of the Investor's purchase
for an indefinite period of time because, among other reasons, the Shares have
not been registered under the Act or under the securities laws of any state and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of unless
they are subsequently registered under the Act and under the applicable
securities laws of such states or unless an exemption from such registration is
available.
(f) The Investor is not acquiring the Shares based upon his knowledge of
material non-public information about the Company, and the Investor further
avers that he is not aware of any material non-public information about the
Company.
Section 2.02. COMPANY REPRESENTATIONS AND WARRANTIES.
The Company hereby represents, warrants and covenants to the Investor as
follows:
(a) The Company has been duly organized and is validly existing as a corporation
in good standing under the laws of its state of incorporation. The Company is
duly qualified or licensed and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing and where
failure to so qualify would have a material effect on the Company. The Company
has all requisite corporate power and authority, and all material and necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies to own or lease its
properties and conduct its businesses as described in the Disclosure Documents
(as defined below) and the Company is doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates and permits and all
federal, state and local laws, rules and regulations concerning the business in
which it is engaged except where the failure so to do business in compliance
would not have a material adverse effect on the business of the Company. The
Company has all corporate power and authority to enter into this Agreement and
to carry out the provisions and conditions hereof and thereof, and all consents,
authorizations, approvals and orders required in connection herewith and
therewith have been obtained or will have been obtained prior to the Closing. No
consent, authorization or order of, and no filing with, any court, government
agency or other body is required for the issuance of the Shares or any
securities issuable in respect of the Shares pursuant to this Agreement except
with respect to applicable federal and state securities laws.
(b) All material and relevant information about the Company is set forth in all
of the reports and documents filed by the Company with the SEC (collectively,
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the "Disclosure Documents"), all of which are incorporated herein by this
reference as if such documents were set forth herein in their entirety.
(c) This Agreement has been duly and validly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company, enforceable
in accordance with its terms, except to the extent that the enforceability
hereof may be limited by (A) bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect and affecting the rights of
creditors generally, (B) limitations upon the power of a court to grant specific
performance or any other equitable remedy, or (C) a finding by a court of
competent jurisdiction that the indemnification provisions herein are in
violation of public policy. The Shares have been duly authorized and will be
validly issued, fully paid and non-assessable; all corporate action required to
be taken for the authorization, issue and sale of the Shares has been duly and
validly taken; to the best knowledge of the Company, the Shares are not and will
not be subject to the preemptive rights of any stockholder of the Company which
have not been waived.
(d) The Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property owned or leased by
it, free and clear of all liens, claims, encumbrances, security interests and
defects of any material nature whatsoever, except for Permitted Liens.
"Permitted Liens" means liens, claims, encumbrances, security interests and
defects of any material nature whatsoever that are described in the Disclosure
Documents or otherwise disclosed to the Investor.
(e) There is no litigation or governmental proceeding pending or threatened
against, or involving the properties or business of, the Company which the
Company believes would materially adversely affect the value or the operation of
the properties or the business of the Company, except as set forth in the
Disclosure Documents.
(f) The financial statements of the Company contained in the Disclosure
Documents fairly present the financial position and the results of operations of
the Company at the dates and for the periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved.
(g) There has been no material adverse change in the condition or prospects for
commercialization of the Company, financial or otherwise, as of the latest dates
as of which such condition or prospects, respectively, are set forth in this
Agreement and the Disclosure Documents; and the outstanding debt, the property
and the business of the Company each conforms in all material respects to the
descriptions thereof contained herein and therein.
(h) The Company is not in violation of its Articles of Incorporation or Bylaws
concerning the Shares. Neither the execution and delivery of this Agreement nor
the consummation of any of the transactions contemplated herein, nor the
compliance by the Company with the terms and provisions contained herein, has
conflicted with or will conflict with, or has resulted in or will result in a
breach of, any of the terms and provisions of, or has constituted or will
constitute a default under, or has resulted in or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
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Company pursuant to the terms of any indenture, mortgage, deed of trust, note,
loan or credit agreement or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to which the
Company is subject; nor will such action result in any violation of the
provisions of the Articles of Incorporation or the Bylaws of the Company, or any
statute or any order, rule or regulation applicable to the Company of any court
or of any federal, state or other regulatory authority or other government body
having jurisdiction over the Company; except for any conflict, breach, default,
lien, charge or encumbrance which does not have a material and adverse effect on
the Company, any of its business, property or assets, or any transactions
contemplated hereby.
(i) Neither the Disclosure Documents nor this Agreement contain any untrue
statement of a material fact or omits to state any material fact required to be
stated herein or therein or necessary to make the statements herein or therein,
in light of the circumstances under which they were made, not misleading. All
statements of material facts herein or therein (including, without limitation,
any attachment, exhibit or schedule hereto or thereto) are true and correct as
of the date hereof.
(j) (Reserved).
(k) Neither the Company, nor any of its respective officers, directors,
employees or agents, nor any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who is or may be in a position to help or hinder the
business of the Company (or assist it in connection with any actual or proposed
transaction) which (A) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (B) if not given in
the past, might have had a materially adverse effect on the assets, business
operations of the Company as reflected in any of the financial statements
delivered to the Investor, or (C) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
(l) The minute books and corporate records of the Company contain a complete
summary of all meetings and actions of the managers, members, officers,
directors and stockholders of the Company since the time of its incorporation
(and of any predecessor to the Company) and reflect all transactions referred to
in such minutes accurately in all respects.
(m) The Company has not paid or promised to pay any form of compensation to any
unlicensed finders, whether in the form of finders fees, origination fees,
referral fees, or otherwise.
ARTICLE III
CONDITIONS TO THE PARTIES' OBLIGATIONS
The obligation of the Company to sell the Shares at the Closing is subject to
the following conditions:
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(a) The representations and warranties of the Investor contained herein shall be
true and correct in material respects on and as of the Closing.
(b) There shall be no preliminary or permanent injunction or other order,
decree, or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining the sale or purchase of the
Securities.
ARTICLE IV
INDEMNIFICATION
(a) The Company hereby agrees to defend, indemnify and hold harmless the
Investor against any and all losses, claims, damages or liabilities to which
such Investor may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained herein, in the Disclosure Documents, in any documents
executed or delivered in connection herewith or therewith, or in any statement
made to or in any filing with the SEC or to or with any state securities
commission, bureau or office (including any amendments thereto), or arise out of
or based upon the omission or alleged omission to state herein or therein a
material fact required to be stated herein or therein or necessary to make the
statements herein or therein not misleading (unless such statements are made or
omitted in reliance upon and in conformity with written information furnished to
the Company with respect to such Investor by such Investor expressly for use
herein or therein or any amendment hereof or supplement hereto), or any
violation by the Company of the Act or state "blue sky" laws, or any breach by
the Company of its obligations, representations or warranties hereunder.
(b) The Investor hereby agrees to defend, indemnify and hold harmless the
Company and its respective stockholders, directors, employees, agents and each
person, if any, who controls any of the foregoing within the meaning of the Act,
against any and all losses, claims, damages or liabilities, to which the Company
or any of the Company's stockholders, directors, employees, agents or
controlling persons may become subject, under the Act or otherwise, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any breach by Investor of its obligations,
representations or warranties hereunder.
(c) Promptly after receipt by an indemnified party under either subparagraph (a)
or (b), as the case may be, of the notice of commencement of any action covered
by subparagraph (a) or (b), such indemnified party shall within five business
days notify the indemnifying party of the commencement thereof; the omission by
one indemnified party to so notify such indemnifying party shall not relieve the
indemnifying party of its obligations hereunder except to the extent such
indemnifying part has been materially prejudiced by such omission, shall not
relieve the indemnifying party of its obligation to indemnify any other
indemnified party that has given such notice and shall not relieve the
indemnifying party of any liability outside of this indemnification.
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In the event that any action is brought against the indemnified party, and it
shall notify the indemnifying party in a timely manner, the indemnifying party
will be entitled to participate in such action and, to the extent it may desire,
to assume and control the defense thereof with counsel chosen by it. After
notice from the indemnifying party to such indemnified party of its election to
so assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under such subparagraph for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof, but the indemnified party may, at its own expenses, participate in such
defense by counsel chosen by it without, however, impairing the indemnifying
party's control of the defense. Notwithstanding anything to the contrary
contained herein, the indemnified party shall have the right to choose its own
counsel and control the defense of any action, all at the reasonable expense of
the indemnifying party, if (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action at the expense of the indemnifying party, (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to such
indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party shall have reasonably conclude that there may be defenses
available to such indemnified party that differ from the defenses available to
the indemnifying party (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party),
in any of which events such reasonable fees and expenses of one additional
counsel (for all indemnified parties) shall be borne by the indemnifying party
(in the case of the Investor, one additional counsel for the Investor. No
settlement of any action or proceeding against an indemnified party shall be
made without the consent of the indemnified party, which consent shall not be
unreasonably withheld.
(d) In order to provide for just and equitable contribution under the Act in any
case in which (i) any indemnified party makes a claim for indemnification
pursuant to this paragraph but it is judicially determined (by entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
the time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact the
this paragraph provides for indemnification in such case, or (ii) contribution
under the Act is required on the part of any such person in circumstances for
which indemnification is provided under this paragraph, then, in each such case,
the relevant Investor shall contribute to the aggregate losses, claims, damages
or liabilities to which it may be subject (after any contributions from others)
up to the amount of the Purchase Price, and the Company shall be responsible for
the remaining portion thereof; provided, that in any such case, no person guilty
of a fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
ARTICLE V
NOTICES
Any notice, request, instruction, or other document required by the terms of
this Agreement, or deemed by any of the Parties hereto to be desirable, to be
given to any other party hereto shall be in writing and shall be given by
personal delivery, overnight delivery, mailed by registered or certified mail,
postage prepaid, with return receipt requested, or sent by facsimile
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transmission to the addresses of the Parties set forth below each Party's
signature on this Agreement. The persons and addresses set forth below each
Party's signature on this Agreement may be changed from time to time by a notice
sent as aforesaid. If notice is given by personal delivery or overnight delivery
in accordance with the provisions of this Article, such notice shall be
conclusively deemed given at the time of such delivery provided a receipt is
obtained from the recipient. If notice is given by mail in accordance with the
provisions of this Article, such notice shall be conclusively deemed given upon
receipt and delivery or refusal. If notice is given by facsimile transmission in
accordance with the provisions of this Article, such notice shall be
conclusively deemed given at the time of delivery if during business hours and
if not during business hours, at the next business day after delivery, provided
a confirmation is obtained by the sender.
ARTICLE VI
MISCELLANEOUS
(a) This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the state of Florida applicable to contracts made
and to be performed entirely therein, without giving effect to the rules of
conflicts of law. The Parties agree that the courts of the County of Lake, State
of Florida, shall have sole and exclusive jurisdiction and venue for the
resolution of all disputes arising under the terms of this Agreement and the
transactions contemplated herein.
(b) This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors and assigns.
(c) This Agreement and the Escrow Agreement represent the entire agreement
between the Parties relating to the subject matter hereof, superseding any and
all prior to contemporaneous oral and prior written agreements and
understandings. This Agreement may not be modified or amended nor may any right
be waived except by a writing signed by the party against whom the modification
or waiver is sought to be enforced.
(d) The warranties, representations, and covenants of the Company and the
Investor contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing.
(e) The captions and headings contained herein are solely for convenience of
reference and do not constitute a part of this Agreement.
(f) Each of the attachments hereto is hereby incorporated herein as if each of
such attachments were fully set forth herein in its entirety. Each of such
attachments is hereby expressly made a part of this Agreement.
(g) The terms of this Agreement may only be amended or modified by the written
agreement of the Parties.
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(h) This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. The Parties agree that this Agreement may be executed by
facsimile signatures and such signatures shall be deemed originals.
(i) All Parties to this Agreement have been given the opportunity to consult
with counsel of their choice regarding their rights under this Agreement.
(j) The term "days," as used in this Agreement and in all documents contained in
this package, refers to calendar days unless otherwise clearly indicated.
IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have
executed this Agreement to be effective as of December 23, 2014.
COMPANY:
Red Giant Entertainment, Inc.,
a Nevada corporation
/s/ Xxxxx X. Xxxxxx
---------------------------------
By: Xxxxx X. Xxxxxx
Its: President
Address: 000 X. Xxx 00, Xxxxx 000
Xxxxxxxx, XX 00000
INVESTOR:
/s/ Xxxxx X. Xxxxxx
---------------------------------
By: Xxxxx X. Xxxxxx
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