UNITED STATES

 

 

SECURITIES AND EXCHANGE COMMISSION

 

 

Washington, D.C. 20549

 

 

 

 

 

SCHEDULE 13D

 

 

Under the Securities Exchange Act of 1934
(Amendment No.     )*

 

RESTORGENEX CORPORATION

(Name of Issuer)

 


 

Common Stock, par value $0.001 per share

(Title of Class of Securities)

 

76132G105

(CUSIP Number)

 


 

Sol J. Barer, Ph.D.
c/o RestorGenex Corporation
2150 E. Lake Cook Road, Suite 750
Buffalo Grove, Illinois 60089
(805) 229-1829

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

August 9, 2013

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedules, including all exhibits.  See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes)

 



 

CUSIP No.   76132G105

SCHEDULE 13D

 

 

 

1

Name of Reporting Persons:
Sol J. Barer, Ph.D.

 

 

2

Check the Appropriate Box if a Member of a Group

 

 

(a)

 o

 

 

(b)

 o

 

 

3

SEC Use Only

 

 

4

Source of Funds
PF

 

 

5

Check Box if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)  o

 

 

6

Citizenship or Place of Organization
United States of America

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With:

7

Sole Voting Power
1,398,371(1)

 

8

Shared Voting Power
-0-

 

9

Sole Dispositive Power
1,398,371(1)

 

10

Shared Dispositive Power
-0-

 

 

11

Aggregate Amount Beneficially Owned by Each Reporting Person
1,398,371(1)

 

 

12

Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares  o

 

 

13

Percent of Class Represented by Amount in Row (11)
7.4%

 

 

14

Type of Reporting Person:
IN

 


(1)                                 Consists of:  (a) 1,011,072 shares of common stock held directly by Dr. Barer; (b) 355,699 shares of common stock issuable upon the exercise of outstanding warrants; and (c) 31,600 shares issuable upon the exercise of outstanding options which are currently exercisable or will become exercisable within 60 days hereof.

 

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EXPLANATORY NOTE

 

All share and per share amounts have been adjusted to reflect the one-for-100 reverse split of outstanding common stock effective March 7, 2014.

 

Item 1.

Security and Issuer.

 

This Statement of Beneficial Ownership on Schedule 13D (this “Schedule 13D”) relates to the common stock, par value $0.001 per share (the “Common Stock”), of RestorGenex Corporation, a Nevada corporation, formerly known as Stratus Media Group, Inc.  (the “Company”).   The address of the principal executive offices of the Company is 2150 E. Lake Cook Road, Suite 750, Buffalo Grove, Illinois 60089.

 

Item 2.

Identity and Background.

 

(a)                                 This Schedule 13D is being filed by Sol J. Barer, Ph.D.

 

(b)                                 Dr. Barer’s business address is c/o RestorGenex Corporation, 2150 E. Lake Cook Road, Suite 750, Buffalo Grove, Illinois 60089.

 

(c)                                  Dr. Barer is currently the Chairman of the Board of Directors of the Company. He also serves as Chairman of the Board of InspireMD, Inc., Medgenics, Inc., Centrexion Corporation, Cerecor, Inc., ContraFect Corporation and Edge Therapeutics, Inc., and as a member of the board of directors of Teva Pharamceutical Industries Ltd., Amicus Therapeutics, Inc. and Aegerion Pharmaceuticals, Inc.

 

(d)                                 Dr. Barer has not been convicted in a criminal proceeding in the past five years.

 

(e)                                  In the past five years, Dr. Barer has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or a finding of any violation with respect to such laws.

 

(f)                                   Dr. Barer is a citizen of the United States of America.

 

Item 3.

Source and Amount of Funds or Other Consideration.

 

From August 9, 2013 to March 19, 2014, Dr. Barer loaned the Company an aggregate of $1,050,000 and received in exchange from the Company secured convertible promissory notes in the aggregate principal amount of $1,050,000 (collectively, the “Convertible Bridge Notes”), on such dates and in such principal amounts as follows:

 

·                                          On August 9, 2013, Dr. Barer received a Convertible Bridge Note in the principal amount of $500,000.

 

·                                          On December 19, 2013, Dr. Barer received a Convertible Bridge Note in the

 

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principal amount of $150,000.

 

·                                          On February 4, 2014, Dr. Barer received a Convertible Bridge Note in the principal amount of $150,000.

 

·                                          On March 19, 2014, Dr. Barer received a Convertible Bridge Note in the principal amount of $250,000.

 

By virtue of his loans to the Company, Dr. Barer purchased the Convertible Bridge Notes for face amount and used personal funds to purchase them.

 

On June 6, 2014, pursuant to the terms of the Convertible Bridge Notes, the Company issued to Dr. Barer upon automatic conversion of the four Convertible Bridge Notes, in accordance with their respective terms, 552,738 shares of Common Stock and warrants to purchase 355,699 shares of Common Stock at an exercise price of $2.00 per share.  The warrant is immediately exercisable and expires on June 5, 2018.

 

On July 24, 2014, the Company granted Dr. Barer options to purchase 123,287 shares of Common Stock at an exercise price equal to $3.92 per share in consideration for his service as Chairman of the Board of Directors of the Company.  This option vests in quarterly installments for three years following the date of grant, commencing on the last day of the calendar quarter in which the grant date occurs. This option expires on July 23, 2024.

 

On January 1, 2014, the Company granted Dr. Barer options to purchase 33,163 shares of Common Stock at an exercise price equal to $3.00 per share in consideration for his service as Chairman of the Board of the Company. This option vests in quarterly installments for three years following the date of grant, commencing on the last day of the calendar quarter in which the grant date occurs. This option expires on December 31, 2023.

 

The foregoing descriptions of the options, warrant and Convertible Bridge Notes are just summaries of the material terms thereof and do not purport to be complete and are qualified in their entirety by reference to the full text of the form of option agreement, warrant and Convertible Bridge Notes, which are filed as Exhibits 99.1, 99.2, 99.3, 99.4, 99.5 and 99.6, respectively, to this Schedule 13D, and are incorporated by reference herein.

 

Item 4.

Purpose of Transaction.

 

Dr. Barer acquired the shares of Common Stock reported in this Schedule 13D for investment purposes and not for the purpose of obtaining control of the Company. Dr. Barer is the Chairman of the Board of Directors of the Company, and therefore would be deemed to be a control person with respect to the Company. Depending upon market conditions and other factors that Dr. Barer may deem material to his investment decision, he may exercise warrants or options or make additional purchases of Common Stock from time to time, or dispose of any or all of the shares of Common Stock held by him at any time, either in the open market or in private transactions.

 

Subject to the foregoing, and except for actions which may be considered and discussed,

 

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taken or proposed to be taken by the Company’s Board of Directors, of which Dr. Barer is Chairman, Dr. Barer has no current plans or proposals which relate to or would result in (a) the acquisition by any person of additional securities of the Company or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer of or material amount of assets of the Company or any of its subsidiaries; (d) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company’s business or corporate structure; (g) changes in the Company’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (j) any action similar to any of those enumerated above.

 

 

Item 5.

Interest in Securities of the Issuer.

 

(a)                                 As of December 8, 2014, Dr. Barer beneficially owned 1,398,371 shares of Common Stock (including 355,699 shares of Common Stock issuable upon the exercise of warrants and 31,600 shares of Common Stock issuable upon the exercise of stock options, in each case which are currently exercisable or will become exercisable within 60 days hereof), which represents 7.4% of the outstanding shares of Common Stock of the Company. This percentage is based upon 18,605,625 shares of Common Stock outstanding as of November 10, 2014 plus the shares of Common Stock that would be issued upon the exercise of such warrants and stock options.

 

(b)                                 Dr. Barer has sole voting and dispositive power with respect to all of the shares of Common Stock that he beneficially owns.

 

(c)                                  Dr. Barer effected no transactions in the Company’s Common Stock or other equity securities during the last 60 days.

 

(d)                                 Not applicable.

 

(e)                                  Not applicable.

 

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

 

The response to Item 3 of this Schedule 13D is incorporated herein by reference.

 

Dr. Barer is not currently a party to any contract, arrangement, understanding or relationship (legal or otherwise) with respect to any securities of the Company, other than the agreement evidencing his outstanding warrant and the agreements evidencing his outstanding

 

5



 

stock options.

 

The warrant and form of the option agreement governing Dr. Barer’s stock options are being filed as Exhibit 99.1 and Exhibit 99.2, respectively, to this Schedule 13D and are incorporated herein by this reference.

 

The former Convertible Bridge Notes are being filed as Exhibit 99.3, Exhibit 99.4, Exhibit 99.5 and Exhibit 99.6 to this Schedule 13D and are incorporated herein by this reference.

 

Item 7.

Material to be Filed as Exhibits.

 

Exhibit

 

Description

99.1

 

Warrant, dated June 6, 2014, issued by RestorGenex Corporation to Sol J. Barer, Ph.D. (filed herewith).

 

 

 

99.2

 

Form of Stock Option Agreement (incorporated by reference to Exhibit 10.11 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2014 (SEC File No. 0-24477)).

 

 

 

99.3

 

Secured Convertible Promissory Note, dated August 9, 2013, in the principal amount of $500,000 issued by Stratus Media Group, Inc. to Sol J. Barer, Ph.D. (filed herewith).

 

 

 

99.4

 

Secured Convertible Promissory Note, dated December 19, 2013, in the principal amount of $150,000 issued by Stratus Media Group, Inc. to Sol J. Barer, Ph.D. (incorporated by reference to Exhibit 4.2 to the Company’s current report on Form 8-K as filed with the Securities and Exchange Commission on December 27, 2013 (SEC File No. 0-24477)).

 

 

 

99.5

 

Secured Convertible Promissory Note, dated February 4, 2014, in the principal amount of $150,000 issued by Stratus Media Group, Inc. to Sol J. Barer, Ph.D. (incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K as filed with the Securities and Exchange Commission on February 7, 2014 (SEC File No. 0-24477)).

 

 

 

99.6

 

Secured Convertible Promissory Note, dated March 19, 2014, in the principal amount of $250,000 issued by Stratus Media Group, Inc. to Sol J. Barer, Ph.D. (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K as filed with the Securities and Exchange Commission on March 21, 2014 (SEC File No. 0-24477)).

 

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SIGNATURE

 

After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Date: December 12, 2014.

 

 

 

 

 

/s/ Sol J. Barer, Ph.D.

 

Sol J. Barer, Ph.D.

 

 

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SCHEDULE 13D

Exhibit Index

 

Exhibit
No.

 

Description

 

Method of Filing

99.1

 

Warrant, dated June 6, 2014, issued by RestorGenex Corporation to Sol J. Barer, Ph.D.

 

Filed herewith

 

 

 

 

 

99.2

 

Form of Stock Option Agreement

 

Incorporated by reference to Exhibit 10.11 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2014 (SEC File No. 0-24477)

 

 

 

 

 

99.3

 

Secured Convertible Promissory Note, dated August 9, 2013, in the principal amount of $500,000 issued by Stratus Media Group, Inc. to Sol J. Barer, Ph.D.

 

Filed herewith

 

 

 

 

 

99.4

 

Secured Convertible Promissory Note, dated December 19, 2013, in the principal amount of $150,000 issued by Stratus Media Group, Inc. to Sol J. Barer, Ph.D.

 

Incorporated by reference to Exhibit 4.2 to the Company’s current report on Form 8-K as filed with the Securities and Exchange Commission on December 27, 2013 (SEC File No. 0-24477)

 

 

 

 

 

99.5

 

Secured Convertible Promissory Note, dated February 4, 2014, in the principal amount of $150,000 issued by Stratus Media Group, Inc. to Sol J. Barer, Ph.D.

 

Incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K as filed with the Securities and Exchange Commission on February 7, 2014 (SEC File No. 0-24477)

 

 

 

 

 

99.6

 

Secured Convertible Promissory Note, dated March 19, 2014, in the principal amount of $250,000 issued by Stratus Media Group, Inc. to Sol J. Barer, Ph.D.

 

Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K as filed with the Securities and Exchange Commission on March 21, 2014 (SEC File No. 0-24477)

 

8


Exhibit 99.1

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

RESTORGENEX CORPORATION

 

Warrant Shares: 355,699

Initial Exercise Date: June 6, 2014

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Sol J. Barer (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the four (4) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from RestorGenex Corporation, a Nevada corporation (the “Company”), up to 355,699 shares (the “Warrant Shares”) of common stock, par value $0.001 per share (the “Common Stock”), of the Company.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 1(b).

 

Section 1.                                           Exercise.

 

a)                                     Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto; and, within three (3) trading days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 1(d) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the

 

1



 

Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) trading days of the date the final Notice of Exercise is delivered to the Company.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases.  The Company shall deliver any objection to any Notice of Exercise Form within four (4) business days of receipt of such notice.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b)                                     Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $2.00, subject to adjustment hereunder (the “Exercise Price”).

 

c)                                      Mechanics of Exercise.

 

i.                  Delivery of Certificates Upon Exercise.  Certificates for the Warrant Shares purchased or exercised hereunder shall be transmitted by the Company’s transfer agent to the Holder by crediting the account of the Holder’s broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale without volume or manner-of-sale limitations pursuant to Rule 144 under the Securities Act of 1933, as amended, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within five (5) trading days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required), and payment of the aggregate Exercise Price as set forth above (the “Warrant Share Delivery Date”).  This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company.  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 1(c)(v) prior to the issuance of such shares, have been paid.

 

ii.               Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a

 

2



 

Holder and upon surrender of this Warrant, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.            Rescission Rights.  If the Company fails to cause the Company’s transfer agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 1(c)(i) by the Warrant Share Delivery Date, then, the Holder will have the right to rescind such exercise.

 

iv.           No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

v.              Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder, and such other documentation as the Company may require regarding the investor status of the assignee, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

vi.           Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

d)                                     Cashless Exercise.  If there is no effective registration statement at the time this Warrant is exercised, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A)  =  Fair Market Value of one share of Common Stock on the Trading Day immediately preceding the date on which Holder elects to exercise this

 

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Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B)  =  the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X)  =  the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

“Fair Market Value” means:

 

a)                                     If traded on a national securities exchange, the Fair Market Value shall be deemed to be the closing price of the Common Stock of the Company on such exchange on the trading day ending immediately prior to the applicable date of valuation;

 

b)                                     If actively traded over-the-counter, the Fair Market Value shall be deemed to be the closing bid price on the trading day ending immediately prior to the applicable date of valuation; and

 

c)                                      If there is no active public market, the Fair Market Value shall be the value thereof, as agreed upon by the Company and the Holder; provided, however, that if the Company and the Holder cannot agree on such value, such value shall be determined by an independent valuation firm experienced in valuing businesses such as the Company and jointly selected in good faith by the Company and the Holder.  Fees and expenses of the valuation firm shall be paid for by the Company.

 

Section 2.                                           Certain Adjustments.

 

a)                                     Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 2(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

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b)                                     Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person or group of persons whereby such other person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction.  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 2(b) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is

 

5



 

exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

 

c)                                      Calculations. All calculations under this Section 2 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 2, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

d)                                     Notice to Holder.

 

i.                  Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 2, the Company shall promptly send to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii.               Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be sent to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least twenty (20) calendar

 

6



 

days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to send such notice or any defect therein or in the sending thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.

 

Section 3.                                           Transfer of Warrant.

 

a)                                     Transferability.  Subject to compliance with any applicable securities laws and the reasonable conditions and documentation required by the Company, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)                                     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 3(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)                                      Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name

 

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of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 4.                                           Miscellaneous.

 

a)                                     No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1(a).

 

b)                                     Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)                                      Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a business day, then, such action may be taken or such right may be exercised on the next succeeding business day.

 

d)                                     Authorized Shares.  The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the trading market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to

 

8



 

avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)                                      Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of this Warrant (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Warrant), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.

 

f)                                       Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g)                                      Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting

 

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any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)                                     Notices.  Any notice, request or other document required or permitted to be given or delivered hereunder shall be deemed sufficient if in writing and sent by overnight courier or registered or certified mail, return receipt requested, or delivered by hand against written receipt therefor, addressed as follows:

 

if to the Company, at:

 

RestorGenex Corporation

1800 Century Park East, 6th Floor

Los Angeles, CA 90067

Attn:  Tim Boris, General Counsel

 

if to the Holder, at the Holder’s address as reflected in the Company’s records.

 

i)                                         Limitation of Liability.  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)                                        Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)                                     Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)                                         Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)                                 Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)                                     Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

 

RESTORGENEX CORPORATION

 

 

 

 

 

By:

Stephen M. Simes

 

Name:

Stephen M. Simes

 

Title:

Chief Executive Officer

 

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NOTICE OF EXERCISE

 

TO:         RESTORGENEX CORPORATION

 

(1)   The undersigned hereby elects to purchase                  Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and

 

(2)   Payment shall take the form of (check applicable box):

 

o in lawful money of the United States; or

 

o [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 1(d), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 1(d).

 

(3)   Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

 

 

(4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:

 

Signature of Authorized Signatory of Investing Entity:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Date:

 

 



 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [        ] all of or [              ] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

 

 

whose address is

 

 

.

 

 

 

 

 

 

Dated:

                            ,

 

 

Holder’s Signature:

 

 

 

Holder’s Address:

 

 

 

 

 

 

 

Signature Guaranteed:

 

 

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 


Exhibit 99.3

 

NEITHER THIS NOTE, NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH NOTE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES STATUTE OR SOME OTHER EXCEPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Stratus Media Group, Inc.

 

SECURED CONVERTIBLE PROMISSORY NOTE

 

This SECURED CONVERTIBLE PROMISSORY NOTE (“Note”), dated as of August 6, 2013, is entered into by Stratus Media Group, Inc., a Nevada corporation (the “Company”) and Sol Barer (the “Lender”).

 

1.                                      Principal and Interest.  The Company, for value received, hereby promises to pay to the order of Sol Barer (the “Holder”), in lawful money of the United States, the principal amount of $500,000, together with interest accrued on the unpaid principal of this Note at the per annum rate of seven percent (7%) commencing on the date hereof.  Accrued interest made under this Note shall be payable via the issuance of the Company’s common stock or via cash at the Company’s option, and shall be payable on the Maturity Date.

 

Subject to Section 2 hereof, this Note is due and payable (a) on the date (the “Applicable Maturity Date”) that is twelve months from the date hereof, or (b) on demand by written notice following an Event of Default (as defined below).  Subject to Section 2 hereof, the Company shall, on the Applicable Maturity Date or, if earlier, within one (1) business day of receipt of the written notice referred to in the immediately preceding sentence (the “Payment Date”), pay the outstanding principal and all accrued and unpaid interest on this Note, as of the Applicable Maturity Date or the Payment Date, as applicable.

 

2.                                      Conversion and Prepayment.  The outstanding principal amount of this Note and any accrued but unpaid interest hereon shall be convertible and redeemable as follows:

 

(a)                                 Mandatory Conversion.  In the event of the closing by the Company of a Qualified Financing (as defined below) on or before the Applicable Maturity Date, the Holder shall have the obligation to convert (the “Maturity Conversion”) all of the then-outstanding principal of this Note, together with any accrued and unpaid interest thereon, on a dollar-for-dollar basis into the securities being issued and sold in the Qualified Financing (“Conversion Securities”) at a conversion price equal to 50% of the purchase price per share or unit of the Conversion Securities paid in the Qualified Financing and otherwise on the terms and conditions of the Qualified Financing.  The Company shall give the Holder at least three days’ notice (the “Financing Notice”) of the anticipated closing of a Qualified Financing, and any such conversion

 



 

shall take place concurrently with the closing thereof.  A “Qualified Financing” shall mean the closing of one or more investments (excluding the conversion of the Investor Notes) in which either the Company or Stratus Media Group, Inc. receives gross proceeds totaling at least $10,000,000 in exchange for equity securities.  In the event that this Note is converted in accordance with this Section 2(a), then the Holder shall become party to a securities purchase agreement, in customary form, and all related agreements, along with the investors participating in such Qualified Financing.  Alternatively, Holder may elect to convert the Note and any accrued but unpaid interest into the common stock of Company at the price of $0.04.  Notwithstanding the foregoing, in lieu of the Mandatory Conversion, the Company shall have the right to prepay this Note, in which case the Company shall give notice of such payment or prepayment (the “Payment Notice”) and prepay the Note together with all accrued interest within three business days from the date of the Payment Notice.

 

(b)                                 Mechanics and Effect of Conversion.  Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Company or any transfer agent of the Company.  At its expense, the Company will, as soon as practicable thereafter, issue and deliver to the Holder, at such principal office, a certificate or certificates for the number of securities to which such Holder is entitled upon such conversion, together with any other securities and property to which the Holder is entitled upon such conversion under the terms of this Note.

 

3.                                      Security Agreement.

 

(a)                                 For purposes of the Note, “Collateral” means all of the Company’s right, title and interest in, to and under all personal property and other assets, whether now owned by or owing to, or hereafter acquired by or arising in favor of the Company (including under any trade names, styles or derivations thereof) and whether owned or consigned by or to, or leased from or to, the Company, and regardless of where located, and any and all proceeds or products of (or additions or accessories to) any of the foregoing.

 

(b)                                 To secure the prompt and complete payment, performance and observance of all of the obligations of the Company to the Holder pursuant to the Note (including, without limitation, the Company’s obligation to timely pay the principal amount of the Note, all fees and all other amounts payable by the Company to the Holder hereunder or in connection therewith, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined), the Company hereby pledges, assigns, transfers, hypothecates, and sets over to the Holder, and hereby grants to the Holder a continuing security interest in, all of the Company’s right, title and interest in, to and under the Collateral, until such Obligations are paid in full and agreed to file and perfect such security interest on behalf of Holder.

 

4.                                      No Usury.  This Note is hereby expressly limited so that in no event whatsoever, whether by reason of deferment or advancement of loan proceeds, acceleration of maturity of the loan evidenced hereby, or otherwise, shall the amount paid or agreed to be paid to the Holder hereunder for the loan, use, forbearance or detention of money exceed the maximum interest rate permitted by the laws of the State of California.  If at any time the performance of any provision involves a payment exceeding the limit of the price that may be validly charged for the loan, use,

 

2



 

forbearance or detention of money under applicable law, then automatically and retroactively, ipso facto, the obligation to be performed shall be reduced to such limit, it being the specific intent of the Company and the Holder hereof that all payments under this Note are to be credited first to interest as permitted by law, but not in excess of (i) the agreed rate of interest hereunder, or (ii) that permitted by law, whichever is the lesser, and the balance toward the reduction of principal.

 

5.                                      Attorneys’ Fees.  If the indebtedness represented by this Note or any part hereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal and interest payable hereunder, reasonable attorneys’ fees and costs incurred by the Holder, as well as any and all interest that has accrued on the outstanding principal after the commencement of bankruptcy, receivership or other judicial proceedings.

 

6.                                      Transfer.  The rights and obligations of the Company and the Holder of this Note will be binding upon and inure to the benefit of the successors, assigns, heirs, administrators and transferees of the parties hereto.

 

7.                                      Notices.  Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given if delivered as described in the Notices section of the Note Purchase Agreement and to the appropriate addresses listed therein.

 

8.                                      Event of Default.

 

(a)                                 General.  If an Event of Default (as defined below) occurs, the Holder may, by notice to the Company, declare the principal amount then outstanding of, and the accrued interest on, this Note to be immediately due and payable.

 

(b)                                 Definition.  For purposes of this Note, an “Event of Default” is any of the following occurrences:

 

(i)                                     The Company shall fail to pay the outstanding principal and all accrued and unpaid interest under this Note on the Applicable Maturity Date; or

 

(ii)                                  If the Company shall (i) file, or consent by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for the benefit of its creditors, (iii) consent to the appointment of a custodian, receiver, trustee (or other officer with similar powers) of itself or of any substantial part of its property, (iv) be adjudicated insolvent, or (v) take corporate action for the purpose of any of the foregoing; or

 

(iii)                               If a court or governmental authority of competent jurisdiction shall enter an order appointing, without consent by the Company, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or if an order for relief shall be entered in any case or proceeding for liquidation or reorganization or otherwise to take advantage of any bankruptcy or insolvency law of any

 

3



 

jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company, or if any petition for any such relief shall be filed against the Company and such petition shall not be dismissed without thirty (30) days; or

 

(iv)                              The Company shall take any corporate action authorizing, or in furtherance of, any of the foregoing; or

 

(c)                                  Remedies on Default, etc.  In case any one or more Events of Default shall occur and be continuing, the Holder may proceed to protect and enforce its rights by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein, in the Note Purchase Agreement, or in the Security Agreement, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.  In case of a default in the payment of any principal or interest on this Note, the Company will pay to the Holder such further amount as shall be sufficient to cover the cost and expenses of collection, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.  No right, power or remedy conferred by this Note and the Note Purchase Agreement upon the Holder shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise.

 

9.                                      Waivers and Amendments.  The Company hereby waives presentment, demand for performance, notice of non-performance, protest, notice of protest and notice of dishonor.  No delay on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or any other right.  Any term of this Note may be amended or waived with the written consent of the Company and the Holder.

 

10.                               Governing Law.  This Note is being delivered in, and shall be governed by and construed in accordance with, the laws of the State of California, without regard to conflicts of laws provisions thereof.

 

[Remainder of Page Intentionally Blank]

 

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STRATUS MEDIA GROUP, INC.,

 

A Nevada corporation

 

 

 

 

 

By:

/s/ Jerold Rubinstein

 

 

Jerold Rubinstein

ACCEPTED AND AGREED TO:

 

Chief Executive Officer

 

 

 

 

By:

/s/ Sol Barer

 

 

Name:

Sol Barer

 

 

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