Exhibit 4.4
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of August 01, 2013, is entered into by
and between RED GIANT ENTERTAINMENT, INC., 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 12% Secured
Convertible Debenture of the Company (each, a "Debenture"), on the terms and
conditions referred to herein; and
WHEREAS, the Company's obligations to repay the Debentures will be
guaranteed by a guarantor named therein (the "Pledgor") and, pursuant to a
Pledge Agreement (the "Pledge Agreement") executed by the Pledgor and
acknowledged by the Company, secured by a pledge of certain shares of the
Company's Common Stock (the "Pledged Shares"), as to which Pledged Shares the
Pledgor is the registered and beneficial owner;
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 $166,000.00 (the
"Aggregate Loan Amount").
(ii) The obligation to repay the loan from the Lender shall be evidenced by
the Company's issuance of the Debenture, which shall be shall be in the form of
ANNEX I annexed hereto. The Debenture will be guaranteed by the Pledgor and
secured by the pledge of the Pledged Shares under the terms of the Pledge
Agreement, which Pledge Agreement shall be substantially in the form of ANNEX II
hereto (the "Pledge Agreement"), which the Company will acknowledge.
(iii) The loan to be made by the Lender and the issuance of the Debenture
to the Lender 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.
"Certificates" means the Debenture each duly executed by the Company and
issued on the Closing Date 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).
"Escrow Agent" means Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP.
"Holder" means the Person holding the relevant Securities at the relevant
time.
"Last Audited Date" means December 31, 2011.
"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.
"Lender's Allocable Share" means the fraction, of which the numerator is
the Lender's Loan Amount and the denominator is the Aggregate Loan Amount.
"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 Over the Counter Bulletin Board or
such other market on which the Common Stock is principally traded at the
relevant time, but shall not included the pink sheets."
"Registrable Securities" means the Shares which have been claimed by the
Holder as contemplated by the Pledge Agreement, unless such shares can then be
sold by the Holder without volume or other restrictions or limit.
"Registration Rights Provisions" means the piggy-back
registration rights contemplated by the terms of this Agreement, including, but
not necessarily limited to, Section 4(g) hereof, and of the other Transaction
Agreements.
"Registration Statement" means an effective registration statement covering
the Registrable Securities.
"Securities" means the Debenture, and the Shares.
"Shares" means the shares of common stock underlying the Debenture.
"State of Incorporation" means Nevada.
"Trading Day" means any day during which the Principal Trading Market shall
be open for business.
"Transfer Agent" means, at any time, the transfer agent for the Company's
Common Stock.
"Transaction Agreements" means this Purchase Agreement, the Debenture, the
Escrow Agreement, and the Pledge Agreement, and includes all ancillary documents
referred to in those agreements.
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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 to the Escrow Agent no
later than the date prior to the Closing Date.
(ii) No later than the Closing Date, 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.
D. METHOD OF PAYMENT. Payment of the Loan Amount shall be made by wire
transfer of funds from the Escrow Agent.
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. Intentionally Omitted.
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
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forth herein in order to determine the availability of such exemptions and the
eligibility of the Lender to acquire the Securities.
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 of its officers, directors, employees. attorneys or agents,
except as specifically set forth herein.
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 III hereto:
A. RIGHTS OF OTHERS AFFECTING THE TRANSACTIONS. There are no preemptive
rights of any shareholder of the Company, as such, to acquire the Debentures. 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
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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 Company has registered its stock and
is obligated to file reports pursuant to Section 12 or Section 15(d) of the
Securities and Exchange Act of 1934, as amended (the "1934 Act"). The Common
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 900,000,000
shares of Common Stock, $.0001 par value per share, of which approximately
434,922,000 shares are outstanding as of the date hereto.
(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 III, 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 III.
(iii) All issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable. The Company
has sufficient authorized and unissued shares of Common Stock as may be
necessary to effect the issuance of the Shares on the Closing Date.
(iv) As of the Closing Date, the Securities shall have been duly authorized
by all necessary corporate action on the part of the Company, and, when issued
on the Closing Date.
D. TRANSACTION AGREEMENTS AND STOCK. 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 Debentures,
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.
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E. NON-CONTRAVENTION. 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 Debentures, 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 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. 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. Since June 6, 2012, the Company has timely filed all requisite
forms, reports and exhibits thereto required to be filed by the Company with the
SEC.
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
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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. Except as disclosed in the Company's SEC
Documents, 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, 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
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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
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
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(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. INTENTIONALLY OMITTED.
O. DILUTION. The Shares may have a dilutive effect on the ownership
interests of the other shareholders (and Persons having the right to become
shareholders) of the Company. The Company's executive officers and directors
have studied and fully understand the nature of the Securities being sold hereby
and recognize that they have such a potential dilutive effect. The board of
directors of the Company has concluded, in its good faith business judgment,
that such issuance is in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue the Shares upon
conversion of the Debenture is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company, and the Company will honor such obligations,
including honoring every Conversion Notice, unless the Company is subject to an
injunction (which injunction was not sought by the Company) prohibiting the
Company from doing so.
P. RECOGNITION OF PLEDGE AGREEMENT AND PLEDGED SHARES. The Company
acknowledges that the execution and delivery of the Pledge Agreement, and the
fulfillment o f the terms thereof, is a condition to the closing of the
Transactions. The Company will recognize the terms of the Pledge Agreement and,
as provided therein, the transfer of the Pledged Shares to the Lenders and will
take no position or give the Transfer Agent any instructions which would be
inconsistent with the rights of the Lenders to have the Pledged Shares
transferred to the Lenders in accordance with the terms of the Pledge Agreement.
Q. FEES TO BROKERS AND OTHERS. Except for payment of the fees to a
broker/dealer registered with the SEC which is a member of the Financial
Industry Regulatory Authority ("FINRA") as set forth in Annex IV to this
Agreement, payment of which is the sole responsibility of the Company, the
Company has taken no action which would give rise to any claim by any Person for
brokerage commission or similar payments by Lender relating to this Agreement or
the transactions contemplated hereby. The Company shall indemnify and hold
harmless each of Lender, its employees, officers, directors, agents, and
partners, and their respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees, as and when
incurred.
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R. 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) and the Escrow Agent 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, except as provided in the Registration Rights Provisions or otherwise
included in an effective registration statement, the Shares 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
(other than pursuant to the Registration Rights Provisions) 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 Shares have been registered under the 1933 Act, as
contemplated by the Registration Rights Provisions 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.
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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.
D. REPORTING STATUS. So long as the Lender beneficially owns any of the
Securities and for at least twenty (20) Trading 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 (including, without limitation, all Registrable
Securities) on the Principal Trading Market 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
applicable to it at least through the date which is sixty (60) days after the
later of the date on which all of the Debentures have been converted or been
paid in full.
E. USE OF PROCEEDS. The Company's use the proceeds is described on ANNEX
IV.
F. INTENTIONALLY OMITTED.
G. PIGGY-BACK REGISTRATION RIGHTS; RULE 144.
(i) The Holder shall have piggy-back registration rights with respect to
the Registrable Securities. If the Company participates (whether voluntarily or
by reason of an obligation to a third party) in the registration of any shares
of the Company's stock (other than a registration on Form S-8 or on Form S-4),
the Company shall give written notice thereof to the Holder and the Holder shall
have the right, exercisable within ten (10) Trading Days after receipt of such
notice, to demand inclusion of all or a portion of the Holder's Registrable
Securities in such registration statement. The Company undertakes to register at
least 300% of the shares issuable upon conversion of the Debenture to account
for market price fluctuations. If the Holder exercises such election, the
Registrable Securities so designated shall be included in the registration
statement (without any holdbacks) at no cost or expense to the Holder (other
than any commissions, if any, relating to the sale of Holder's shares). Each
Holder's rights under this Section 4(g)(i) shall expire at such time as such
Holder can sell all of such Holder's remaining Registrable Securities under Rule
144 (as defined below) without volume or other restrictions or limitations.
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(ii) With a view to making available to the Holder the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit Holder to sell securities of the Company to the
public without registration (collectively, "Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act; and
(c) furnish to the Holder so long as such party owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) if not available on the SEC's XXXXX system, a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company and (iii) such other information as may be
reasonably requested to permit the Holder to sell such securities pursuant to
Rule 144 without registration; and
(d) at the request of any Holder then holding Registrable Securities, give
the Transfer Agent instructions (supported by an opinion of Company counsel, if
required or requested by the Transfer Agent) to the effect that, upon the
Transfer Agent's receipt from such Holder of
(i) a certificate (a "Rule 144 Certificate") certifying (A) that the
Holder's holding period (as determined in accordance with the
provisions of Rule 144) for the Shares which the Holder proposes to
sell (the "Securities Being Sold") is not less than (6) months and (B)
as to such other matters as may be appropriate in accordance with Rule
144 under the Securities Act, and
(ii) an opinion of counsel acceptable to the Lender that, based on the
Rule 144 Certificate, Securities Being Sold may be sold pursuant to the
provisions of Rule 144, even in the absence of an effective
registration statement,
the Transfer Agent is to effect the transfer of the Securities Being Sold and
issue to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the Transfer Agent's books and records (except to the extent any such
legend or restriction results from facts other than the identity of the relevant
Holder, as the seller or transferor thereof, or the status, including any
relevant legends or restrictions, of the shares of the Securities Being Sold
while held by the Lender). If the Transfer Agent reasonably requires any
additional documentation at the time of the transfer, the Company shall deliver
13
or cause to be delivered all such reasonable additional documentation as may be
necessary to effectuate the issuance of an unlegended certificate.
(iii) Notwithstanding the foregoing, if at any time or from time to time
after the date of effectiveness of the registration statement, the Company
notifies the Holder in writing of the existence of a Potential Material Event
(as defined below), the Holder shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until the Holder receives written notice from the
Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided, however,
that the Company may not so suspend such right other than during a Permitted
Suspension Period. The term "Potential Material Event" means any of the
following: (i) the possession by the Company of material information not ripe
for disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the registration statement would be
detrimental to the business and affairs of the Company; or (ii) any material
engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading absent
the inclusion of such information.
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. 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
Current Report on Form 8-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 two (2) Trading Days 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,
14
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 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.
15
5. TRANSFER AGENT INSTRUCTIONS.
A. The Company warrants that, with respect to the Securities, other than
the stop transfer instructions to give effect to Section 4(a) hereof, it will
give its transfer agent no instructions inconsistent with instructions to issue
Common Stock from time to time upon the conversion of the Debenture in such
amounts as specified from time to time by the Company to the transfer agent,
bearing the restrictive legend specified in Section 4(b) of this Agreement prior
to registration of the Shares under the 1933 Act, registered in the name of the
Lender or its nominee and in such denominations to be specified by the Holder in
connection with each conversion. Except as so provided, the Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the other Transaction Agreements.
Nothing in this Section shall affect in any way the Lender's obligations and
agreement to comply with all applicable securities laws upon resale of the
Securities. If the Lender provides the Company with an opinion of counsel
reasonably satisfactory to the Company that registration of a resale by the
Lender of any of the Securities in accordance with clause (1)(B) of Section 4(a)
of this Agreement is not required under the 1933 Act, the Company shall (except
as provided in clause (2) of Section 4(a) of this Agreement) permit the transfer
of the Securities promptly instruct the Company's transfer agent to issue one or
more certificates for Common Stock without legend in such name and in such
denominations as specified by the Lender.
B. The Company will authorize the Transfer Agent to give information
relating to the Company directly to the Holder or the Holder's representatives
upon the request of the Holder or any such representative, to the extent such
information relates to (i) the status of shares of Common Stock issued or
claimed to be issued to the Holder in connection with a Notice of Exercise or
transfer of Pledged Shares to the Holder, or (ii) the aggregate number of
outstanding shares of Common Stock of all shareholders (as a group, and not
individually) as of a current or other specified date. At the request of the
Holder, the Company will provide the Holder with a copy of the authorization so
given to the Transfer Agent.
6. CLOSING DATE.
A. The Closing Date shall occur on the date which is the first Trading Day
after 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 Escrow Agent and shall take place no later than 3:00 P.M., New
York time, on such day or such other time as is mutually agreed upon by the
Company and the Lender.
C. Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the Escrow Funds to the Company and to
others and to release the other Escrow Property on the Closing Date upon
satisfaction of the conditions set forth in Sections 7 and 8 hereof.
16
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Lender understands that the Company's obligation to sell the Debentures
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.
8. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.
The Company understands that the Lender's obligation to purchase the
Debentures on the Closing Date is conditioned upon:
A. The execution and delivery of this Agreement and the other Transaction
Agreements by the Company;
B. Delivery by the Company of the Pledged Shares with medallion guarantee
stock powers in accordance with the Pledge Agreement;
C. The execution and delivery of the Pledge Agreement by the Pledgor,
together with an opinion of Pledgor's counsel substantially to the effect set
forth in ANNEX V attached hereto;
D. 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;
00
X. Xx the Closing Date, the Lender shall have received an opinion of
counsel for the Company, dated the Closing Date, in form, scope and substance
reasonably satisfactory to the Lender, substantially to the effect set forth in
ANNEX V attached hereto;
F. 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
G. 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 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.
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
18
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.
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
19
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 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
20
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.
(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
21
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.
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
22
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.
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 Trading Day after deposit, postage prepaid, in the United
States Postal Service by registered or certified mail, or
23
(c) the third Trading 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: Red Giant Entertainment, Inc.
000 X. Xxx. 00, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
T 000-000-0000
F 000-000-0000
with a copy to:
Xxxxx Xxxxxx, Esq.
Xxxxxx & Yap, APC
00000 Xxxx Xxxxxx
Xxxxxx, XX 00000
LENDER: At the address set forth on the signature page of this Agreement.
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
00 Xxxxxxxx, 00xx xxx.
Xxx Xxxx, XX 00000
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.]
24
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.
LOAN AMOUNT: $166,000.00
LENDER:
Printed Name of Lender
Telephone No. By: /s/ Xxxx Xxxxxx, - WHC Capital LLC
------------------------------------
Telecopier No. (Signature of Authorized Person)
Xxxx Xxxxxx, Member
Delaware ------------------------------------
------------------------------------ Printed Name and Title
Jurisdiction of Incorporation
or Organization
COMPANY
RED GIANT ENTERTAINMENT, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
(Signature of Authorized Person)
/s/ Xxxxx X. Xxxxxx/CEO
------------------------------------
Printed Name and Title
25
ANNEX I FORM OF DEBENTURE
ANNEX II PLEDGE AND SECURITY AGREEMENT
ANNEX III COMPANY DISCLOSURE MATERIALS
ANNEX IV USE OF PROCEEDS
ANNEX V OPINION OF COUNSEL OF COMPANY
ANNEX VI ESCROW AGREEMENT
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ANNEX IV USE OF PROCEEDS
Description Amount
1. Four comics, 36 pages each at $750 a page $108,000.00
2. Auditor $ 2,000.00
3. Xxxxx Xxxx $ 200.00
4. Xxxxxx and Yap $ 20,000.00
5. Xxxxx invoice $ 624.75
6. Broker $ 12,500.00
7. WHC legal $ 3,500.00
8. Other working capital $ 19,175.25
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Total $166,000.00
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