LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of May 3, 2006, is entered into by and
between NEW WORLD ENTERTAINMENT CORP., a Nevada corporation (the "Company"), and
each individual or entity named on a signature page hereto (as used herein, each
such signatory is referred to as the "Lender" or a "Lender") (each agreement
with a Lender being deemed a separate and independent agreement between the
Company and such Lender, except that each Lender acknowledges and consents to
the rights granted to each other Lender [each, an "Other Lender"] under such
agreement and the Transaction Agreements, as defined below, referred to
therein).
W I T N E S S E T H:
WHEREAS, the Company and each of the Lenders are executing and delivering
this Agreement in accordance with and in reliance upon the exemption from
securities registration for offers and sales to accredited investors afforded,
inter alia, by Rule 506 under Regulation D ("Regulation D") as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the
1933 Act; and
WHEREAS, each Lender wishes to lend funds to the Company, subject to and
upon the terms and conditions of this Agreement and acceptance of this Agreement
by the Company, the repayment of which will be represented by Promissory Notes
of the Company (each, a "Note"), on the terms and conditions referred to herein;
and
WHEREAS, in connection with the loan to be made by each Lender, the Company
has agreed to issue the Issued Shares (as those terms are defined below) to the
Lender; and
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) Subject to the terms and conditions of this Agreement and the
other Transaction Agreements, each Lender hereby agrees to loan to the Company
the principal amount specified on the Lender's signature page hereof (the "Loan
Amount"). The aggregate Loan Amount of all Lenders shall be $3,250,000.00 (the
"Aggregate Loan Amount").
(ii) The obligation to repay the loan from the Lender shall be
evidenced by the Company's issuance of the Notes, which shall be shall be in the
form of Annex I annexed hereto.
(iii) The loans to be made by the Lenders and the issuance of the
Notes to the Lenders and the other transactions contemplated hereby are
sometimes referred to herein and in the other Transaction Agreements as the
purchase and sale of the Securities (as defined below), and are referred to
collectively as the "Transactions."
b. Certain Definitions. As used herein, each of the following terms has
the meaning set forth below, unless the context otherwise requires:
"Affiliate" means, with respect to a specific Person referred to in the
relevant provision, another Person who or which controls or is controlled by or
is under common control with such specified Person.
"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.
"Certificates" means the Notes, each duly executed by the Company and
issued on the Closing Date, and stock certificates in the amount of 10,833,333
shares of common stock, $0.001 par value (the "Common Stock"), of the Company
issued by the Company within 15 Business Days of obtaining Shareholder Approval
as prepaid interest on the Note pursuant to the terms of the Transaction
Agreements in the name of the Lender.
"Closing Date" means the date of the closing of the Transactions, as
provided herein. "Company Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act
(as defined below).
"Holder" means the Person holding the relevant Securities at the relevant
time.
"Issued Shares" means stock certificates in the amount of 10,833,333 shares
of Common Stock of the Company issued by the Company within 15 Business Days of
obtaining Shareholder Approval as prepaid interest on the Note pursuant to the
terms of the Transaction Agreements in the name of the Lender.
"Last Audited Date" means December 31, 2005.
"Lender Control Person" means each director, executive officer, promoter,
and such other Persons as may be deemed in control of the Lender pursuant to
Rule 405 under the 1933 Act or Section 20 of the 1934 Act.
"Material Adverse Effect" means an event or combination of events, which
individually or in the aggregate, would reasonably be expected to (w) adversely
affect the legality, validity or enforceability of the Securities or any of the
Transaction Agreements, (x) have or result in a material adverse effect on the
results of operations, assets, prospects, or condition (financial or otherwise)
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of the Company and its subsidiaries, taken as a whole, (y) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Agreements or the transactions contemplated thereby, or (z)
materially and adversely affect the value of the rights granted to the Lender in
the Transaction Agreements. "Person" means any living person or any entity, such
as, but not necessarily limited to, a corporation, partnership or trust.
"Principal Trading Market" means the Grey Market or such other market on
which the Common Stock is principally traded at the relevant time."
"Securities" means the Note and stock certificates in the amount of
10,833,333 shares of Common Stock of the Company issued by the Company within 15
Business Days of obtaining Shareholder Approval as prepaid interest on the Note
pursuant to the terms of the Transaction Agreements in the name of the Lender.
"Shareholder Approval" means shareholder approval amounting to, in the
aggregate, at least 50% of the issued and outstanding Common Stock, authorizing
the Company to increase its authorized capital stock from 75,000,000 shares of
Common Stock to 500,000,000 shares of Common Stock.
"State of Incorporation" means Nevada.
"Transaction Agreements" means this Loan Agreement, the Promissory Notes,
the Security Agreement, the Collateral Agent Agreement, the Registration Rights
Agreement and the Placement Agent Agreement, and includes all ancillary
documents referred to in those agreements.
c. Form of Payment; Delivery of Certificates.
(i) The Lender shall pay the Loan Amount by delivering immediately
available good funds in United States Dollars pursuant to the wire instructions
set forth in the Disbursement Memorandum, a copy of which is annexed hereto as
Exhibit A, no later than the date prior to the Closing Date.
(ii) Within 15 Business Days of obtaining Shareholder Approval, the
Company shall deliver the Certificates, each duly executed on behalf of the
Company and issued in the name of the Lender, to the Lender.
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d. Method of Payment. Payment of the Loan Amount shall be made by wire
transfer of funds to:
Bank:
Branch Address:
Account Name:
Account No.:
ABA No.:
2. LENDER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Lender represents and warrants to, and covenants and agrees with,
the Company as follows:
a. Without limiting Lender's right to sell the Securities pursuant to
an effective registration statement or otherwise in compliance with the 1933
Act, the Lender is purchasing the Securities for its own account for investment
only and not with a view towards the public sale or distribution thereof and not
with a view to or for sale in connection with any distribution thereof.
b. The Lender is (i) an "accredited investor" as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its Affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and to evaluate the merits and risks of an investment in the
Securities, and (iv) able to afford the entire loss of its investment in the
Securities.
c. All subsequent offers and sales of the Securities by the Lender
shall be made pursuant to registration of the relevant Securities under the 1933
Act or pursuant to an exemption from registration.
d. The Lender understands that the Securities are being offered and
sold to it in reliance on specific exemptions from the registration requirements
of the 1933 Act and state securities laws and that the Company is relying upon
the truth and accuracy of, and the Lender's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Lender set forth herein in order to determine the availability of such
exemptions and the eligibility of the Lender to acquire the Securities.
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e. The Lender and its advisors, if any, have been furnished with or
have been given access to all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by the Lender, including those set forth on
in any annex attached hereto. The Lender and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its management and
have received complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Lender has also had the
opportunity to obtain and to review the Company's filings on XXXXX.
f. The Lender understands that its investment in the Securities
involves a high degree of risk. g. The Lender hereby represents that, in
connection with its purchase of the Securities, it has not relied on any
statement or representation by the Company or any finders or any of their
respective officers, directors and employees or any of their respective
attorneys or agents.
h. The Lender understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
i. This Agreement and the other Transaction Agreements to which the
Lender is a party, and the transactions contemplated thereby, have been duly and
validly authorized, executed and delivered on behalf of the Lender and are valid
and binding agreements of the Lender enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to
the Lender as of the date hereof and as of the Closing Date that, except as
otherwise provided in Annex V hereto or in the Company's SEC Documents:
a. Rights of Others Affecting the Transactions. There are no
preemptive rights of any shareholder of the Company, as such, to acquire the
Notes. No party other than a Lender or an Other Lender has a currently
exercisable right of first refusal, which would be applicable to any or all of
the transactions contemplated by the Transaction Agreements.
b. Status. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation and
has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have or result in a Material Adverse Effect. The Common
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Stock is quoted on the Principal Trading Market. The Company has received no
notice, either oral or written, with respect to the continued eligibility of the
Common Stock for such quotation on the Principal Trading Market, and the Company
has maintained all requirements on its part for the continuation of such
quotation.
c. Authorized Shares.
(i) The authorized capital stock of the Company consists of 75,000,000
shares of Common Stock, $.001 par value per share, of which approximately
71,400,000 are outstanding as of April 20, 2006. In connection with this Loan
Agreement and Transaction Agreements, the Company shall use its best efforts to
obtain requisite Shareholder Approval.
(ii) As of the date hereof and as of the Closing Date, (1) there are no
outstanding securities which are convertible into shares of Common Stock,
whether such conversion is currently exercisable or exercisable only upon some
future date or the occurrence of some event in the future and (2) the Company
has not issued any warrants or other rights to acquire shares of the Common
Stock other than those referred to in the Company's SEC Documents. If any such
securities are listed on Annex VI, the number or amount of each such outstanding
convertible security and the conversion terms thereof or of each such warrant or
other right and the terms of its exercise are set forth in said Annex VI.
(iii) All issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable.
d. Transaction Agreements and Stock. Subject to Shareholder Approval,
this Agreement and each of the other Transaction Agreements, and the
transactions contemplated thereby, have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and
this Agreement is, and the Notes, and each of the other Transaction Agreements,
when executed and delivered by the Company, will be, valid and binding
agreements of the Company enforceable in accordance with their respective terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally.
e. Non-contravention. Subject to Shareholder Approval, the execution
and delivery of this Agreement and each of the other Transaction Agreements by
the Company, the issuance of the Securities, and the consummation by the Company
of the other transactions contemplated by this Agreement, the Notes, and the
other Transaction Agreements do not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of, or constitute a
default under (i) the certificate of incorporation or by-laws of the Company,
each as currently in effect, (ii) any indenture, mortgage, deed of trust, or
other material agreement or instrument to which the Company is a party or by
which it or any of its properties or assets are bound, including any listing
agreement for the Common Stock except as herein set forth, or (iii) to its
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knowledge, any existing applicable law, rule, or regulation or any applicable
decree, judgment, or order of any court, United States federal or state
regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets, except such
conflict, breach or default which would not have or result in a Material Adverse
Effect.
f. Approvals. With the exception of Shareholder Approval, no
authorization, approval or consent of any court, governmental body, regulatory
agency, self-regulatory organization, or stock exchange or market or the
shareholders of the Company is required to be obtained by the Company for the
issuance and sale of the Securities to the Lender as contemplated by this
Agreement, except such authorizations, approvals and consents that have been
obtained.
g. Filings. None of the Company's SEC Documents contained, at the time
they were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein in light of the circumstances under which they were made, not
misleading.
h. Absence of Certain Changes. Since the Last Audited Date, there has
been no material adverse change and no Material Adverse Effect, except as
disclosed in the Company's SEC Documents. Since the Last Audited Date, except as
provided in the Company's SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or other
property to shareholders with respect to its capital stock, or purchased or
redeemed, or made any agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible assets, or
canceled any debts owed to the Company by any third party or claims of the
Company against any third party, except in the ordinary course of business
consistent with past practices; (v) waived any rights of material value, whether
or not in the ordinary course of business, or suffered the loss of any material
amount of existing business; (vi) made any increases in employee compensation,
except in the ordinary course of business consistent with past practices; or
(vii) experienced any material problems with labor or management in connection
with the terms and conditions of their employment.
i. Full Disclosure. To the best of the Company's knowledge, there is
no fact known to the Company (other than general economic conditions known to
the public generally or as disclosed in the Company's SEC Documents) that has
not been disclosed in writing to the Lender that would reasonably be expected to
have or result in a Material Adverse Effect.
j. Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company, threatened against or affecting the Company
before or by any governmental authority or nongovernmental department,
commission, board, bureau, agency or instrumentality or any other person,
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wherein an unfavorable decision, ruling or finding would have a Material Adverse
Effect or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, any of the
Transaction Agreements. The Company is not aware of any valid basis for any such
claim that (either individually or in the aggregate with all other such events
and circumstances) could reasonably be expected to have a Material Adverse
Effect. There are no outstanding or unsatisfied judgments, orders, decrees,
writs, injunctions or stipulations to which the Company is a party or by which
it or any of its properties is bound, that involve the transaction contemplated
herein or that, alone or in the aggregate, could reasonably be expect to have a
Material Adverse Effect.
k. Absence of Events of Default. Except as set forth in Section 3(e)
hereof, (i) neither the Company nor any of its subsidiaries is in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any material indenture, mortgage, deed of trust or other
material agreement to which it is a party or by which its property is bound, and
(ii) no Event of Default (or its equivalent term), as defined in the respective
agreement to which the Company or its subsidiary is a party, and no event which,
with the giving of notice or the passage of time or both, would become an Event
of Default (or its equivalent term) (as so defined in such agreement), has
occurred and is continuing, which would have a Material Adverse Effect.
l. Absence of Certain Company Control Person Actions or Events. To the
Company's knowledge, none of the following has occurred during the past five (5)
years with respect to a Company Control Person:
(1) A petition under the federal bankruptcy laws or any state insolvency
law was filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such Company Control
Person, or any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business association
of which he was an executive officer at or within two years before the time of
such filing;
(2) Such Company Control Person was convicted in a criminal proceeding or
is a named subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:
(i) acting, as an investment advisor, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance
company, as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, any
8
other Person regulated by the Commodity Futures Trading Commission
("CFTC") or engaging in or continuing any conduct or practice in
connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws;
(4) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than 60 days the
right of such Company Control Person to engage in any activity described in
paragraph (3) of this item, or to be associated with Persons engaged in any such
activity; or
(5) Such Company Control Person was found by a court of competent
jurisdiction in a civil action or by the CFTC or SEC to have violated any
federal or state securities law, and the judgment in such civil action or
finding by the CFTC or SEC has not been subsequently reversed, suspended, or
vacated.
m. No Undisclosed Liabilities or Events. To the best of the Company's
knowledge, the Company has no liabilities or obligations other than those
disclosed in the Transaction Agreements or the Company's SEC Documents or those
incurred in the ordinary course of the Company's business since the Last Audited
Date, or which individually or in the aggregate, do not or would not have a
Material Adverse Effect. No event or circumstances has occurred or exists with
respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under consideration by the Board of Directors or the executive officers of
the Company which proposal would (x) change the articles or certificate of
incorporation or other charter document or by-laws of the Company, each as
currently in effect, with or without shareholder approval, which change would
reduce or otherwise adversely affect the rights and powers of the shareholders
of the Common Stock or (y) materially or substantially change the business,
assets or capital of the Company, including its interests in subsidiaries.
n. No Integrated Offering. Neither the Company nor any of its
Affiliates nor any Person acting on its or their behalf has, directly or
indirectly, at any time since November 1, 2005, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.
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o. Confirmation. The Company confirms that all statements of the
Company contained herein shall survive acceptance of this Agreement by the
Lender. The Company agrees that, if any events occur or circumstances exist
prior to the Closing Date or the release of the Loan Amount to the Company which
would make any of the Company's representations, warranties, agreements or other
information set forth herein materially untrue or materially inaccurate as of
such date, the Company shall immediately notify the Lender (directly or through
its counsel, if any) in writing prior to such date of such fact, specifying
which representation, warranty or covenant is affected and the reasons therefor.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Lender acknowledges that (1) the
Securities have not been and are not being registered under the provisions of
the 1933 Act, and have not been and are not being registered under the 1933 Act,
and may not be transferred unless (A) subsequently registered thereunder or (B)
the Lender shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities under circumstances in which the
seller, or the Person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other Person is under any
obligation to register the Securities under the 1933 Act or to comply with the
terms and conditions of any exemption thereunder.
b. Restrictive Legend. The Lender acknowledges and agrees that, until
such time as the relevant Notes have been registered under the 1933 Act, and
sold in accordance with an effective Registration Statement or otherwise in
accordance with another effective registration statement, the certificates and
other instruments representing any of the Securities shall bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of any such Securities):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
c. Filings. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Securities to the Lender under any
United States laws and regulations applicable to the Company, or by any domestic
securities exchange or trading market, and to provide a copy thereof to the
Lender promptly after such filing.
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d. Reporting Status. So long as the Lender beneficially owns any of
the Securities and for at least twenty (20) days thereafter, the Company shall
file all reports required to be filed with the SEC pursuant to Section 13 or
15(d) of the 1934 Act, shall take all reasonable action under its control to
ensure that adequate current public information with respect to the Company, as
required in accordance with Rule 144(c)(2) of the 1933 Act, is publicly
available, and shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination. The Company will take all reasonable
action under its control to maintain the continued listing and quotation and
trading of its Common Stock on the Principal Trading Market or a listing on the
NASDAQ/Small Cap or National Markets and, to the extent applicable to it, will
comply in all material respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the Principal Trading Market and/or
the National Association of Securities Dealers, Inc., as the case may be,
applicable to it at least through the date which is sixty (60) days after the
date on which all of the Notes have been paid in full.
e. Use of Proceeds. The Company will use 100% of the proceeds received
hereunder to finance the acquisition of 75% of the assets of Telton Limited
(Nevis), a privately owned corporation organized under the laws of Antigua, and
G-Cash (Gibraltar), a privately owned corporation organized under the laws of
Antigua, as disclosed in the Arrangement Agreement entered into on April 6,
2006.
f. Intentionally Omitted
g. Intentionally Omitted
h. Intentionally Omitted
i. Publicity, Filings, Releases, Etc. Each of the parties agrees that
it will not disseminate any information relating to the Transaction Agreements
or the transactions contemplated thereby, including issuing any press releases,
holding any press conferences or other forums, or filing any reports
(collectively, "Publicity"), without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof; provided that the
Company will not disseminate any information relating to the Transaction
Agreements or the transactions contemplated thereby until the Company discloses
the details of the financing transaction contemplated herein by filing a Current
Report on Form 8-K containing full disclosure and audited financial statements,
as required by the applicable SEC rules and regulations. Neither party will
include in any such Publicity any statement or statements or other material to
which the other party reasonably objects, unless in the reasonable opinion of
counsel to the party proposing such statement, such statement is legally
required to be included. In furtherance of the foregoing, the Company will
provide to the Lender drafts of the applicable text of the first filing of a
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Current Report on Form 8-K or a Quarterly or Annual Report on Form 10-Q or 10-K
intended to be made with the SEC which refers to the Transaction Agreements or
the transactions contemplated thereby as soon as practicable (but at least one
business day before such filing will be made) will not include in such filing
any statement or statements or other material to which the other party
reasonably objects, unless in the reasonable opinion of counsel to the party
proposing such statement, such statement is legally required to be included.
Notwithstanding the foregoing, each of the parties hereby consents to the
inclusion of the text of the Transaction Agreements in filings made with the SEC
as well as any descriptive text accompanying or part of such filing which is
accurate and reasonably determined by the Company's counsel to be legally
required. Notwithstanding, but subject to, the foregoing provisions of this
Section 4(i), the Company will, after the Closing Date, promptly issue a press
release and file a Current Report on Form 8-K or, if appropriate, a quarterly or
annual report on the appropriate form, referring to the transactions
contemplated by the Transaction Agreements.
j. Independent Nature of Lenders' Obligations and Rights. The
obligations of each Lender under the Transaction Agreements are several and not
joint with the obligations of any other Lender, and no Lender shall be
responsible in any way for the performance of the obligations of any Other
Lender under any one or more of the Transaction Agreements. The decision of each
Lender or Other Lender to purchase Securities pursuant to the Transaction
Agreements has been made by such Lender independently of any Other Lender.
Nothing contained herein or in any Transaction Agreement, and no action taken by
any Lender pursuant thereto, shall be deemed to constitute any two or more
Lenders as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Lenders are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Agreements. Each Lender acknowledges that no
Other Lender has acted as agent for such Lender in connection with making its
investment hereunder and that no Lender will be acting as agent of such Other
Lender in connection with monitoring its investment in the Securities or
enforcing its rights under the Transaction Agreements. Each Lender shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Agreements, and it shall not be necessary for any Other Lender to be
joined as an additional party in any proceeding for such purpose. The Company
acknowledges that each of the Lenders has been provided with the same
Transaction Agreements for the purpose of closing a transaction with multiple
Lenders and not because it was required or requested to do so by any Lender.
k. Equal Treatment of Lenders. No consideration shall be offered or
paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Agreements unless the same consideration is
also offered to all of the parties to the Transaction Agreements.
l. Independent Investment Decision. No Lender has agreed to act with
any Other Lender for the purpose of acquiring, holding, voting or disposing of
the Securities purchased hereunder for purposes of Section 13(d) under the 1934
Act, and each Lender is acting independently with respect to its investment in
the Securities. The decision of each Lender to purchase Securities pursuant to
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this Agreement has been made by such Lender independently of any other purchase
and independently of any information, materials, statements or opinions as to
the business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or
its subsidiaries which may have made or given by any Other Lender or by any
agent or employee of any Other Lender, and no Lender or any of its agents or
employees shall have any liability to any Other Lender (or any other person)
relating to or arising from any such information, materials, statements or
opinions.
5. Intentionally Omitted
6. CLOSING DATE.
a. The Closing Date shall occur on or before May 4, 2006; provided that on
or prior to such date, each of the conditions contemplated by Sections 7 and 8
hereof shall have either been satisfied or been waived by the party in whose
favor such conditions run.
b. The closing of the Transactions shall occur on the Closing Date at the
offices of the Lender and shall take place no later than 7:00 P.M., New York
time, on such day or such other time as is mutually agreed upon by the Company
and the Lender.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Lender understands that the Company's obligation to sell the Notes to
the Lender pursuant to this Agreement on the Closing Date is conditioned upon:
a. The execution and delivery of this Agreement by the Lender;
b. Delivery by the Lender good funds as payment in full of an amount equal
to the Loan Amount in accordance with this Agreement;
c. The accuracy on such Closing Date of the representations and warranties
of the Lender contained in this Agreement, each as if made on such date, and the
performance by the Lender on or before such date of all covenants and agreements
of the Lender required to be performed on or before such date; and
d. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.
13
8. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.
The Company understands that the Lender's obligation to purchase the Notes
and the Issued Shares on the Closing Date is conditioned upon:
a. The execution and delivery of this Agreement and the other Transaction
Agreements by the Company and the Shareholders; provided that, the Security
Agreement and Collateral Agent Agreement shall be executed among the Company,
the Shareholders, the Lenders and the Collateral Agent, as defined in applicable
agreements, within thirty (30) Business Days of the Closing date, such that the
execution and delivery of the Security Agreement and the Collateral Agent
Agreement shall be considered as a post Closing item and shall not be a
condition of the Lender's obligation to purchase the Notes and the Issued Shares
on the Closing Date;
b. Delivery by the Company of the Notes in accordance with this Agreement;
c. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;
d. With the exception of Shareholder Approval, there shall not be in effect
any law, rule or regulation prohibiting or restricting the transactions
contemplated hereby, or requiring any consent or approval which shall not have
been obtained; and
e. From and after the date hereof to and including the Closing Date, each
of the following conditions will remain in effect: (i) the trading of the Common
Stock, if any, shall not have been suspended by the SEC or on the Principal
Trading Market; (ii) trading in securities generally on the Principal Trading
Market shall not have been suspended or limited; (iii) no minimum prices shall
been established for securities traded on the Principal Trading Market; and (iv)
there shall not have been any material adverse change in any financial market.
14
9. INDEMNIFICATION AND REIMBURSEMENT.
a. (i) The Company agrees to indemnify and hold harmless the Lender and its
officers, directors, employees, and agents, and each Lender Control Person from
and against any losses, claims, damages, liabilities or expenses incurred
(collectively, "Damages"), joint or several, and any action in respect thereof
to which the Lender, its partners, Affiliates, officers, directors, employees,
and duly authorized agents, and any such Lender Control Person becomes subject
to, resulting from, arising out of or relating to any misrepresentation, breach
of warranty or nonfulfillment of or failure to perform any covenant or agreement
on the part of Company contained in this Agreement, as such Damages are
incurred, except to the extent such Damages result primarily from Lender's
failure to perform any covenant or agreement contained in this Agreement or the
Lender's or its officer's, director's, employee's, agent's or Lender Control
Person's gross negligence, recklessness or bad faith in performing its
obligations under this Agreement.
(ii) The Company hereby agrees that, if the Lender, other than by
reason of its gross negligence, illegal or willful misconduct (in each case, as
determined by a non-appealable judgment to such effect), (x) becomes involved in
any capacity in any action, proceeding or investigation brought by any
shareholder of the Company, in connection with or as a result of the
consummation of the transactions contemplated by this Agreement or the other
Transaction Agreements, or if the Lender is impleaded in any such action,
proceeding or investigation by any Person, or (y) becomes involved in any
capacity in any action, proceeding or investigation brought by the SEC, any
self-regulatory organization or other body having jurisdiction, against or
involving the Company or in connection with or as a result of the consummation
of the transactions contemplated by this Agreement or the other Transaction
Agreements, or (z) is impleaded in any such action, proceeding or investigation
by any Person, then in any such case, the Company shall indemnify, defend and
hold harmless the Lender from and against and in respect of all losses, claims,
liabilities, damages or expenses resulting from, imposed upon or incurred by the
Lender, directly or indirectly, and reimburse such Lender for its reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, as such expenses are incurred.
The indemnification and reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Affiliates of the
Lender who are actually named in such action, proceeding or investigation, and
partners, directors, agents, employees and Lender Control Persons (if any), as
the case may be, of the Lender and any such Affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Lender, any such Affiliate and any such
Person. The Company also agrees that neither the Lender nor any such Affiliate,
partner, director, agent, employee or Lender Control Person shall have any
liability to the Company or any Person asserting claims on behalf of or in right
of the Company in connection with or as a result of the consummation of this
Agreement or the other Transaction Agreements, except as may be expressly and
specifically provided in or contemplated by this Agreement.
15
b. All claims for indemnification by any Indemnified Party (as defined
below) under this Section shall be asserted and resolved as follows:
(i) In the event any claim or demand in respect of which any Person
claiming indemnification under any provision of this Section (an "Indemnified
Party") might seek indemnity under paragraph (a) of this Section is asserted
against or sought to be collected from such Indemnified Party by a Person other
than a party hereto or an Affiliate thereof (a "Third Party Claim"), the
Indemnified Party shall deliver a written notification, enclosing a copy of all
papers served, if any, and specifying the nature of and basis for such Third
Party Claim and for the Indemnified Party's claim for indemnification that is
being asserted under any provision of this Section against any Person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been prejudiced by such failure of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party
as soon as practicable within the period ending thirty (30) calendar days
following receipt by the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its liability to the
Indemnified Party under this Section and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third
Party Claim. The following provisions shall also apply.
(x) If the Indemnifying Party notifies the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to
this paragraph (b) of this Section, then the Indemnifying Party shall
have the right to defend, with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which
proceedings shall be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any
relief other than the payment of monetary damages or that provides for
the payment of monetary damages as to which the Indemnified Party
shall not be indemnified in full pursuant to paragraph (a) of this
Section). The Indemnifying Party shall have full control of such
defense and proceedings, including any compromise or settlement
thereof; provided, however, that the Indemnified Party may, at the
sole cost and expense of the Indemnified Party, at any time prior to
the Indemnifying Party's delivery of the notice referred to in the
first sentence of this subparagraph (x), file any motion, answer or
other pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate protect its
interests; and provided further, that if requested by the Indemnifying
16
Party, the Indemnified Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third Party Claim that the Indemnifying Party
elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this subparagraph (x), and
except as provided in the preceding sentence, the Indemnified Party
shall bear its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the Indemnified Party
may take over the control of the defense or settlement of a Third
Party Claim at any time if it irrevocably waives its right to
indemnity under paragraph (a) of this Section with respect to such
Third Party Claim.
(y) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to
defend the Third Party Claim pursuant to paragraph (b) of this
Section, or if the Indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the Third Party Claim,
or if the Indemnifying Party fails to give any notice whatsoever
within the Dispute Period, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the Indemnifying
Party, the Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted by the Indemnified Party in a
reasonable manner and in good faith or will be settled at the
discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably withheld).
The Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; provided,
however, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnified Party and its
counsel in contesting any Third Party Claim which the Indemnified
Party is contesting. Notwithstanding the foregoing provisions of this
subparagraph (y), if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability or the amount of its liability hereunder
to the Indemnified Party with respect to such Third Party Claim and if
such dispute is resolved in favor of the Indemnifying Party in the
manner provided in subparagraph(z) below, the Indemnifying Party will
not be required to bear the costs and expenses of the Indemnified
Party's defense pursuant to this subparagraph (y) or of the
Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this
subparagraph (y), and the Indemnifying Party shall bear its own costs
and expenses with respect to such participation.
17
(z) If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability or the amount of its liability to the
Indemnified Party with respect to the Third Party Claim under
paragraph (a) of this Section or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party with
respect to such Third Party Claim, the amount of Damages specified in
the Claim Notice shall be conclusively deemed a liability of the
Indemnifying Party under paragraph (a) of this Section and the
Indemnifying Party shall pay the amount of such Damages to the
Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party shall
proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty
(30) days after the Claim Notice, the Indemnifying Party shall be
entitled to institute such legal action as it deems appropriate.
(ii) In the event any Indemnified Party should have a claim under
paragraph (a) of this Section against the Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall deliver a written
notification of a claim for indemnity under paragraph (a) of this Section
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably ascertainable, the estimated amount, determined in good
faith, of such claim (an "Indemnity Notice") with reasonable promptness to the
Indemnifying Party. The failure by any Indemnified Party to give the Indemnity
Notice shall not impair such party's rights hereunder except to the extent that
the Indemnifying Party demonstrates that it has been irreparably prejudiced
thereby. If the Indemnifying Party notifies the Indemnified Party that it does
not dispute the claim or the amount of the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim or the amount of the claim
described in such Indemnity Notice, the amount of Damages specified in the
Indemnity Notice will be conclusively deemed a liability of the Indemnifying
Party under paragraph (a) of this Section and the Indemnifying Party shall pay
the amount of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that it the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.
c. The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar rights of the indemnified party against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to.
10. JURY TRIAL WAIVER. The Company and the Lender hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out or in connection
with the Transaction Agreements.
18
11. GOVERNING LAW: MISCELLANEOUS.
a. (i) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the exclusive jurisdiction of
the federal courts whose districts encompass any part of the County of New York
or the state courts of the State of New York sitting in the County of New York
in connection with any dispute arising under this Agreement or any of the other
Transaction Agreements and hereby waives, 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 jurisdictions or to any claim that
such venue of the suit, action or proceeding is improper. To the extent
determined by such court, the Company shall reimburse the Lender for any
reasonable legal fees and disbursements incurred by the Lender in enforcement of
or protection of any of its rights under any of the Transaction Agreements.
Nothing in this Section shall affect or limit any right to serve process in any
other manner permitted by law.
(ii) The Company and the Lender acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement or
the other Transaction Agreements were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and the other Transaction
Agreements and to enforce specifically the terms and provisions hereof and
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the masculine, feminine
or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original.
19
g. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
h. If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
j. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
12. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of
(a) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(b) the fifth business day after deposit, postage prepaid, in the United
States Postal Service by registered or certified mail, or
(c) the third business day after mailing by domestic or international
express courier, with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) day's advance written notice similarly given to each of the other
parties hereto):
COMPANY: New World Entertainment Corp.
0000 Xxxx Xxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx
T (000) 000-0000
F _______________
20
with a copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
T (000) 000-0000
F (000) 000-0000
LENDER: At the address set forth on the signature page of this
Agreement. with a copy to:
Global Developments Inc.
c/o 000-000 X. Xxxxxxxx Xx.
Xxxxxxxxx, XX X0X 0X0
Attn: Xxxx Xxxxxx
555 Holdings LLC
c/o 000-000 X. Xxxxxxxx Xx.
Xxxxxxxxx, XX X0X 0X0
Attn: Xxxx Xxxxxx
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the
Lender's representations and warranties herein shall survive the execution and
delivery of this Agreement and the delivery of the Certificates and the payment
of the Loan Amount, and shall inure to the benefit of the Lender and the Company
and their respective successors and assigns.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
21
IN WITNESS WHEREOF, with respect to the Loan Amount specified below, this
Agreement has been duly executed by the Lender and the Company as of the date
set first above written.
AGGREGATE PRINCIPAL AMOUNT OF NOTES: $3,250,000
----------
LENDER: LENDER:
------ ------
Global Developments Inc. 555 Holdings LLC
c/o 000-000 X. Xxxxxxxx Xx. c/o 000-000 X. Xxxxxxxx Xx.
Xxxxxxxxx, XX X0X 0X0 Xxxxxxxxx, XX X0X 0X0
Telephone No. (000) 000-0000 Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000 Telecopier No. (000) 000-0000
Global Developments Inc. 555 Holdings LLC
By: _________________________________ By: ________________________
Xxxx Xxxxxx, Director Xxxx Xxxxxx
Title: _____________________
Nevada Nevada
Jurisdiction of Incorporation Jurisdiction of Incorporation
or Organization or Organization
COMPANY
NEW WORLD ENTERTAINMENT CORP.
By: _________________________________
Xxxxxxxx Xxxxxx
President and Director
22
ANNEX I FORM OF NOTE
ANNEX V COMPANY DISCLOSURE MATERIALS
23
EXHIBIT A
