DIGITALFX INTERNATIONAL, INC. SERIES A 12% CUMULATIVE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
DIGITALFX
INTERNATIONAL, INC.
SERIES
A 12% CUMULATIVE CONVERTIBLE PREFERRED STOCK
PURCHASE
AGREEMENT
THIS
SERIES A 12% CUMULATIVE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this
“Agreement”),
is made as of December 22, 2008 (the “Effective
Date”), by and among DigitalFX International, Inc., a Florida
corporation, (the “Company”),
and ▇▇▇▇▇▇▇ ▇▇▇▇ (the “Investor”).
WHEREAS, the Company wishes to
issue and sell to the Investor (i) up to an aggregate of 2,000,000 shares (the
“Preferred
Shares”) of the Company’s Series A 12% Cumulative Convertible Preferred
Stock, par value $0.01 per share (the “Series A
Preferred Stock”), and (ii) a stock purchase warrant to purchase a number
of shares of Series A Preferred Stock (the “Series A
Warrant”) equal to 50% of the Preferred Shares; and
WHEREAS, Investor wishes to
purchase the Preferred Shares and the Series A Warrant on the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, in
consideration of the premises, representations, warranties and the mutual
covenants contained in this Agreement, the parties agree as
follows:
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1.
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AUTHORIZATION AND SALE
OF PREFERRED SHARES
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1.1 Issuance,
Sale and Delivery of the Preferred Shares and Series A Warrant at the
Closing. At the
Closing (as defined in Section 1.2 hereof), on the terms and subject to the
conditions of this Agreement, the Company shall issue and sell to Investor, and
Investor shall purchase from the Company, (i) that number of Preferred Shares
set forth opposite the name of Investor under the heading “Number of Preferred
Shares to be Purchased” on Exhibit A hereto, at
a price of $1 per share (the “Price Per
Share”) for the aggregate purchase price set forth opposite the name of
such Investor under the heading “Aggregate Purchase Price for Preferred Shares”
on Exhibit A
hereto, and (ii) the Series A Warrant to purchase shares of Series A Preferred
Stock in substantially the form attached hereto as Exhibit B,
exercisable for up to 50% of the Preferred Shares at an exercise price per share
equal to $1 Per Share.
1.2 Closing. The Closing shall
take place at the offices of the Company, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ #▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, at such date and time as may be agreed upon between the
Company and the Investor (such closing being called the “Closing” and such date and time
being called the “Closing
Date”). At the Closing, the Company shall issue and deliver to
Investor (i) a stock certificate or certificates in definitive form, registered
in the name of Investor, representing the Preferred Shares being purchased by
him at the Closing, and (ii) the Series A Warrant in substantially the form
attached hereto as Exhibit B, duly
executed by an authorized officer of the Company.
As
payment in full for the Preferred Shares and Series A Warrant being purchased
under this Agreement, and against delivery of the stock certificate or
certificates and Series A Warrant therefor as aforesaid, on the Closing Date,
Investor shall pay and/or deliver to the Company by wire transfer or by such
other method as may be reasonably acceptable to the Company (including, without
limitation, the cancellation of indebtedness), (i) immediately
available funds, and/or (ii) a promissory note or other evidence of indebtedness
for cancellation, as applicable, in the amount and as set forth opposite the
name of such Investor under the heading “Aggregate Purchase Price for Preferred
Shares” on Exhibit
A. All amounts shall be paid to the account of the Company as shall have
been designated in writing a reasonable time in advance to the Investor by the
Company.
The
Company acknowledges that the Investor advanced the sum of $700,000 as a
prepayment under this Agreement, and that the balance owed on account of the
Preferred Shares is $1,300,000.
Kall acknowledges that the preferred
stock issued under this agreement cannot be converted into common stock prior to
the receipt of the AMEX approval, which is expected to be obtained based on the
application for additional listings that was filed on December 15,
2008.
1.3 Articles
of Amendment of Articles of Incorporation. The Company has
authorized the number of shares of Series A Preferred Stock having the rights,
preferences, privileges and restrictions set forth in the Articles of Amendment
of Articles of Incorporation (the “Articles of
Amendment”), which, in the form attached hereto as Exhibit C, shall be
adopted and filed with the Secretary of State of the State of Florida on or
before the Closing.
1.4 Conversion
Shares. Shares of Common
Stock issuable upon conversion of the Preferred Shares and any shares of Series
A Preferred Stock issuable upon exercise of the Series A Warrant (the “Warrant
Shares”) are referred to herein as the “Conversion
Shares.”
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2.
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REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
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The
Company represents and warrants to Investor that:
2.1 Organization
and Standing; Qualifications. The Company is a
corporation validly existing and in good standing under the laws of the State of
Florida. The Company has all requisite power and authority to own and
operate its properties and assets, and to carry on its business as conducted and
as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify could, singly or in the aggregate, have a material adverse
effect on the business, assets, liabilities, financial condition or results of
operations of the Company as presently conducted or proposed to be
conducted.
2.2 Corporate
Power. The Company has
all requisite power and authority to execute and deliver this Agreement, to sell
and issue the Preferred Shares and Series A Warrant hereunder, to issue the
Warrant Shares upon exercise of the Series A Warrant, to issue the Conversion
Shares and to carry out and perform its obligations under the terms of this
Agreement.
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2.3 Authorization.
2.3.1 All
corporate action on the part of the Company, its officers, directors and
stockholders, necessary for (i) the authorization, execution and delivery of the
Agreement by the Company, (ii) the authorization, sale, issuance and delivery of
the Preferred Shares, Series A Warrant, Warrant Shares and the Conversion
Shares, (iii) the filing of the Articles of Amendment, and (iv) the performance
of all of the Company’s obligations under the Agreement has been taken, or will
be taken prior to the Closing. The Agreement has been duly and
validly executed and delivered by the Company and constitutes the valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors’ rights generally.
2.3.2 The
Preferred Shares and Warrant Shares, when sold, issued and delivered in
compliance with the provisions of this Agreement or the Series A Warrant, as
applicable, will be duly and validly issued, fully paid and nonassessable and
shall have the rights, preferences, privileges and restrictions described in the
Articles of Amendment, and shall be free of any liens, preemptive or similar
rights, encumbrances or restrictions on transfer; provided, however, that the
Preferred Shares and Warrant Shares may be subject to restrictions on transfer
under state and/or federal securities laws. The Conversion Shares
have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Articles of Amendment, will be duly and validly
issued, fully paid, and nonassessable and shall be free of any liens, preemptive
or similar rights, encumbrances or restrictions on transfer; provided, however,
that the Conversion Shares may be subject to restrictions on transfer under
state and/or federal securities laws.
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3.
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REPRESENTATIONS AND
WARRANTIES OF THE INVESTOR
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Investor
hereby represents and warrants to the Company with respect to the purchase of
the Preferred Shares and Series A Warrant as follows:
3.1 Experience.
Investor acknowledges that he is able to bear the economic risk of his
investment, and has such knowledge and experience in financial or business
matters that he is capable of evaluating the merits and risks of the investment
in the Preferred Shares, Series A Warrant, Warrant Shares and the Conversion
Shares and is able to bear the economic risk of his investment in the Preferred
Shares, Warrant Shares and Conversion Shares for an indefinite period of
time.
3.2 Disclosure
of Information.
Investor further represents that he has had an opportunity to ask questions of
and receive answers from the Company regarding the terms and conditions of the
offering of the Preferred Shares and Series A Warrant, and the business,
prospects, properties and financial condition of the Company.
3.3 Investment. Investor
is acquiring the Preferred Shares, Series A Warrant, Warrant Shares and the
Conversion Shares for investment for its own account, not as a nominee or agent,
and not with the view to, or for resale in connection with, any distribution
thereof. It understands that the Preferred Shares and Series A
Warrant have not been, and the Warrant Shares and Conversion Shares will not be,
(except for specific registration rights that may be granted to Investor),
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act, the availability of which depends
upon, among other things, the bona fide nature of the investment intent and the
accuracy of Investor’s representations as expressed herein.
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3.4 Accredited
Investor. Investor
is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
3.5 Legends.
It is understood that the certificates evidencing the Preferred Shares, Warrant
Shares and the Conversion Shares may bear one or all of the following
legends:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.”
Any other
legend required by the securities laws of the State of Nevada.
3.6 Authorization. The
execution, delivery and performance by Investor of the Agreement have been duly
authorized by all requisite action of Investor. The Agreement, when
executed and delivered by Investor, shall constitute a valid and legally binding
obligation of Investor, enforceable in accordance with its terms except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally.
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4.
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INVESTOR’S CONDITIONS
TO CLOSING
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Investor’s
obligation to purchase the Preferred Shares and Series A Warrant at the Closing
is, at the option of Investor, subject to the fulfillment of the following
conditions on or before the Closing:
4.1 Representations
and Warranties True and Correct. The
representations and warranties made by the Company in Section 2 hereof
shall be true and correct as of the Closing, with the same effect as if made as
of the Closing.
4.2 Covenants. All
covenants, agreements and conditions contained in this Agreement to be performed
by the Company on or prior to the Closing shall have been performed or complied
with.
4.3 Articles
of Amendment. Prior
to the Closing, the Company shall have prepared and executed the Articles of
Amendment in the form set forth in Exhibit
C. The Articles of Amendment shall have been filed with and
accepted by the Secretary of State of the State of Florida and shall have become
effective.
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5.
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COMPANY’S CONDITIONS
TO CLOSING
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The
Company’s obligation to sell and issue any Preferred Shares or the Series A
Warrant at the Closing to Investor is, at the option of the Company, subject to
the fulfillment of the following conditions as of the Closing:
5.1 Representations
and Warranties True and Correct. The representations and
warranties made by Investor in Section 3 hereof
shall be true and correct when made, and shall be true and correct at the
Closing.
5.2 Covenants. All
covenants, agreements and conditions contained in this Agreement to be performed
by Investor on or prior to the Closing shall have been performed or complied
with.
5.3 Articles
of Amendment. The
Secretary of State of the State of Florida shall have accepted the Articles of
Amendment for filing.
5.4 Purchase
Price Paid. Investor
shall have delivered to the Company the purchase price for the Preferred Shares
set forth in Exhibit A
hereto.
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6.
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COVENANTS.
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6.1 Reserve
for Conversion Shares. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, for the purpose of effecting the conversion of
the Preferred Shares and Warrant Shares and otherwise complying with the terms
of this Agreement, such number of its duly authorized shares of Common Stock as
shall be sufficient to effect the conversion of the Preferred Shares and Warrant
Shares from time to time outstanding or otherwise to comply with the terms of
this Agreement. If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of the
Preferred Shares and Warrant Shares or otherwise to comply with the terms of
this Agreement, the Company will forthwith take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes. The
Company will obtain any authorization, consent, approval or other action by or
make any filing with any court or governmental authority that may be required
under applicable state securities laws in connection with the issuance of shares
of Common Stock upon conversion of the Preferred Shares and Warrant
Shares.
6.2 Further
Assurances. The
Company shall cure promptly any defects in the creation and issuance of the
Preferred Shares, Warrant Shares and the Conversion Shares, and in the execution
and delivery of the Agreements. The Company, at its expense, shall
execute and deliver promptly to the Investor upon request all such other and
further documents, agreements and instruments as may be reasonably necessary to
permit the Company to comply with its covenants and agreements herein, and shall
make any recordings, file any notices and obtain any consents as may be
necessary or appropriate in connection therewith.
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6.3 Regulation
D Filings. The
Company shall file on a timely basis all notices of sale required to be filed
with the Securities and Exchange Commission pursuant to Regulation D under the
Securities Act of 1933, as amended (the “Securities
Act”), with respect to the transactions contemplated by this
Agreement.
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7.
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MISCELLANEOUS
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7.1 Closing. Investor
expressly acknowledges and agrees that immediately following the Closing,
Investor shall have deemed his conditions to closing identified in Section 4 hereof to
have been satisfied or waived.
7.2 Governing
Law. This
Agreement shall be governed in all respects by the internal laws of the State of
Nevada, without giving effect to principles of conflicts of law. Each
party hereto irrevocably and unconditionally (i) agrees that any action, suit or
claim brought hereunder must be brought in the courts of the United States in
the State of Nevada or the state courts of the State of Nevada which shall serve
as the exclusive jurisdiction and venue for any and all disputes arising out of
and/or relating to this Agreement; (ii) consents to the jurisdiction of any such
court in any such suit, action or proceeding; and (iii) waives any objection
which such party may have to the laying of venue of any such suit, action or
proceeding in any such court.
7.3 Successors
and Assigns. Except
as otherwise provided herein, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties hereto (including to any transferee of any
Preferred Shares, Warrant Shares or Conversion Shares that is an affiliate of
Investor). Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided in this
Agreement.
7.4 Amendment. Any
provision of this Agreement may be amended, waived, modified, discharged or
terminated only with the written consent of the Company and
Investor. Any amendment or waiver affected in accordance with this
Section 7.4
shall be binding upon the Company and Investor, and their respective successors
and assigns.
7.5 Notices.
All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given (a) upon personal delivery to the party to be notified,
(b) five (5) days after deposit in the United States mail, by registered or
certified mail, postage prepaid and properly addressed to the party to be
notified as set forth in the Company records, or (c) when received if
transmitted by telecopy (to be followed by U.S. mail), electronic or digital
transmission method. In each case notice shall be sent to the
addresses set forth on the Company’s records or at such other address as a party
may designate by ten (10) days’ advance written notice to the other parties
hereto.
7.6 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one and the same instrument.
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7.7 Severability. In
the event that any provision of this Agreement becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision.
7.8 Titles
and Subtitles. The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
7.9 Survival of
Agreement. All
covenants and agreements made in this Agreement shall survive the execution and
delivery hereof and the issuance, sale and delivery of the Preferred Shares and
Series A Warrant, and the issuance and delivery of the Warrant Shares and/or
Conversion Shares. For the avoidance of doubt, the representations
and warranties made in this Agreement shall not survive the execution and
delivery hereof.
7.11 Attorneys'
Fees. If
any action at law or in equity (including arbitration) is necessary to enforce
or interpret the terms of any of the Agreements, the prevailing party shall be
entitled to reasonable attorney’s fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
7.12 Facsimile
Signatures. This
Agreement may be executed and delivered by facsimile or PDF copy and, upon such
delivery, the facsimile or PDF copy will be deemed to have the same effect as if
the original signature had been delivered to the other party. Each
Investor agrees to deliver to the Company the original signature copy as soon as
practicable following the Closing. The failure to deliver the
original signature copy and/or the nonreceipt of the original signature copy
shall have no effect upon the binding and enforceable nature of this
Agreement.
7.13 Entire
Agreement. This
Agreement, together with the Exhibits hereto, the certificates, documents,
instruments and writings that are delivered pursuant hereto and each of the
other Agreements, constitutes the entire agreement and understanding of the
parties hereto in respect of its subject matters and supersedes all prior
understandings, agreements, or representations by or among the parties hereto,
written or oral, to the extent they relate in any way to the subject matter
hereof or the transactions contemplated hereby.
[Signature
Pages Follow]
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Company
Signature Page to
IN WITNESS WHEREOF, the
parties have executed this Series A 12% Cumulative Convertible Preferred Stock
Purchase Agreement on the day and year first set forth above.
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DigitalFX
International, Inc.
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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By:
▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title:
President
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Investor
Signature Page to
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By: ▇▇▇▇▇▇▇
▇▇▇▇
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EXHIBIT
A
SCHEDULE
OF INVESTORS
Closing
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Investor
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Number of Preferred
Shares
To Be Purchased
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Aggregate Purchase Price
For Preferred Shares
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▇▇▇▇▇▇▇
▇▇▇▇
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2,000,000 | $ | 2,000,000 | * | ||||
* $700,000
previously received by the Company prior to the Closing Date, the receipt of
which is hereby acknowledged by the Company.
EXHIBIT
B
STOCK
PURCHASE WARRANT
EXHIBIT
C
ARTICLES
OF AMENDMENT OF ARTICLES OF INCORPORATION
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