PROMISSORY NOTE PURCHASE AGREEMENT
This Promissory Note Purchase Agreement (this “ Agreement ”) is made as of the 27th day of January, 2012 by and among rVue Holdings, Inc., a Nevada corporation (the “ Company ”), and each of the investors listed on Exhibit A attached to this Agreement (each an “ Investor ” and together, the “ Investors ”), and each of the Prior Investors listed on Exhibit H attached to this Agreement (each a “Prior Investor” and together, the “Prior Investors”).
The Company previously issued an aggregate principal amount of $285,000 in secured convertible notes (“Old Notes”) to the Prior Investors. The Company now desires to cancel the Old Notes and sell and issue an aggregate principal amount of up to One Million Two Hundred Seventy Five Thousand Dollars ($1,275,000) in secured convertible promissory notes, and each Investor and Prior Investor desires to purchase, a secured convertible promissory note, in substantially the form attached hereto as Exhibit B (each, a “ Note ” and together, the “ Notes ”), which shall be convertible on the terms stated therein into equity securities of the Company, upon the terms and subject to the conditions set forth in this Agreement (the “ Offering ”). The Notes and the equity securities issuable upon conversion thereof are collectively referred to herein as the “ Securities ”. The Prior Investors have agreed to cancel and tender the Old Notes to the Company in consideration for Notes to be issued hereunder in the amounts set forth on Exhibit H attached hereto.
In consideration of the mutual promises contained herein and other good and valuable consideration, receipt of which is hereby acknowledged, the parties to this Agreement agree as follows:
1. Purchase and Sale of Notes .
(a) Sale and Issuance of Notes . Subject to the terms and conditions of this Agreement, each Investor agrees to purchase at the Closing (as defined herein), and the Company agrees to sell and issue to each Investor at the Closing, a Note in the principal amount set forth opposite such Investor’s name on Exhibit A for a purchase price equal to such amount (the “ Purchase Price ”)
(b) Closings . The purchase and sale of the Notes (the “ Closing ”) shall take place at the principal offices of the Company, 100 N.E. 3 rd Avenue, Suite 200, Ft. Lauderdale, Florida 33301, on the date hereof, or at such other place, time or date as the Company may decide in its sole discretion.
(c) Company Deliverables . At the Closing, the Company shall deliver to each Investor (i) a Note duly executed by Company and registered in the name of each of the Investors and each of the Prior Investors, in substantially the form attached hereto as Exhibit B (the “ Note ”) (ii) a counterpart signature page to this Agreement, (iii) a counterpart signature page to the Security Agreement in substantially the form attached hereto as Exhibit C (the “ Security Agreement ”) and (iv) a Warrant to purchase shares of the Company’s common stock, $.001 par value, the number issuable of which shall be calculated by multiplying the Purchase Price times 2.5, for a term of 5 years exercisable at $.20, executed by the Company and registered in the name of the Investor in substantially the form attached hereto as Exhibit D (the “ Warrant ”); (iv) copies of the Old Notes, duly cancelled .
(d) Investor Deliverables . At the Closing, each Investor shall deliver to the Company (i) a wire transfer to a bank designated by the Company equal to the Purchase Price, (ii) a counterpart signature page to this Agreement, (iii) a counterpart signature page to the Security Agreement, (iv) a counterpart signature page to the Collateral Agent Agreement in substantially the form attached hereto as Exhibit E ( the “ Collateral Agreement) , and (v) a completed and signed Accredited Investor Declaration the form of which is attached hereto as Exhibit F , (“ Accredited Investor Declaration ”). The Prior Investors shall tender (i) the Old Notes duly cancelled, (ii) a counterpart signature page to this Agreement, (iii) a counterpart signature page to the Security Agreement, (iv) a counterpart signature page to the Collateral Agent Agreement and (v) a completed and signed Accredited Investor Declaration. This Agreement, the Notes, the Warrants, the Security Agreement, the Collateral Agreement and the Accredited Investor Declaration are hereinafter referred to as the “ Transaction Documents ”.
(e) Notes Pari Passu . All Notes shall rank pari passu among themselves. Each Investor acknowledges and agrees that all payments on the Notes shall be made on a pro-rata basis, in accordance with each Investor’s Pro-Rata Share (as defined below) at the time of payment. If, despite the provisions of this Section 1(e), any Investor shall receive any payment on its Note in excess of its Pro-Rata Share to which it is then entitled in accordance with this Agreement, such Investor shall hold such excess payment in trust for the benefit of the Investors entitled thereto and promptly pay over or deliver such excess payment to the other Investors for application in accordance with this Section 1(e) . For the purposes of this Agreement, the “ Pro- Rata Share ” of an Investor means the proportion which the unpaid principal amount due under the Note held by that Investor bears to the aggregate unpaid principal amount due under the Notes held by all the Investors; provided, however, that any portion of any Investor’s obligations under a Note converted to equity shall not be considered outstanding for these purposes.
(f) Individual Sales . The Company’s agreement with each of the Investors is a separate agreement, and the sale of the Note to each of the Investors is a separate sale.
2. Representations and Warranties of the Company . The Company hereby represents and warrants to the Investors that as of the Closing:
(a) Organization, Good Standing and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, the Security Agreement and the Notes, to issue and sell the Securities, to carry out the provisions of this Agreement, the Security Agreement, and the Notes, and to carry on its business as presently conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in every jurisdiction in which the failure to so qualify would have a material adverse effect on its business, assets, results of operation, prospects, condition (financial or otherwise) or liabilities.
(b) Subsidiaries . Except for those subsidiaries set forth on Exhibit G , the Company does not own or control, directly or indirectly, any equity security or other interest of any other corporation, limited partnership or other business entity. The Company is not a participant in any joint venture, partnership or similar arrangement.
(c) Authorization; Binding Obligations . All corporate action on the part of the Company, its directors, officers and shareholders necessary for the authorization of this Agreement, the Security Agreement, and the Notes, and the performance of all obligations of the Company hereunder and thereunder has been duly taken and has not been revoked. This Agreement, the Security Agreement, and the Notes, when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (ii) as limited by general principles of equity.
(d) Litigation . There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, threatened against the Company that questions the validity of this Agreement, the Security Agreement, and the Notes or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or, to the Company’s knowledge, threatened or any basis therefor known by the Company involving the prior employment of any of the Company’s employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers.
(e) Old Notes Cancelled. At Closing the Old Notes issued to the Prior Investors listed on Exhibit H will be cancelled, and the Prior Investors will be issued new Notes, in the form attached hereto as Exhibit B in the amounts set forth on Exhibit H . The form and substance of the new Notes to be issued to the Prior Investors shall be identical to Exhibit B except for the name of the holder and the amount.
(f) Conversion Price and Warrant Price Adjustment. The Company will use its best efforts to raise an additional $1.5 million in common equity within 180 days of the first Closing hereunder. If at that time the Company is unable to raise such capital, (i) the Note shall thereafter be amended to reflect that the Conversion Price set forth in Section 3 thereof shall be reduced from $.20 to $.10 without further action, and (ii) the Warrant shall thereafter be amended to reflect that the Warrant Price set forth therein shall be reduced from $.20 to $.10 without further action.
3. Representations and Warranties of the Investors . Each Investor hereby represents and warrants to the Company, on its own behalf and not with respect to any other Investor, severally and not jointly, that as of the Closing:
(a) Organization and Good Standing; Requisite Power and Authority . To the extent that the Investor is an entity, the Investor is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Investor has all requisite power and authority to execute and deliver the Transaction Documents and to carry out their respective provisions. All actions on the Investor’s part required for the lawful execution and delivery of the Transaction Documents have been taken and the Investor has its principal place of business at the address set forth on the signature page hereof and has not been formed for the specific purpose of acquiring the Note. Upon their execution and delivery, the Transaction Documents will constitute a valid and binding obligation of the Investor, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, and (ii) as limited by general principles of equity.
(b) Investment Representations . The Investor understands that the Securities have not been registered under the United States Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time (the “ Securities Act ”). The Investor also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon the Investor’s representations contained in this Agreement.
(c) Investor Bears Economic Risk . The Investor has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. The Investor is aware that an investment in the Securities is highly speculative and subject to substantial risks. The Investor is capable of bearing the high degree of economic risk and burdens of this investment, including but not limited to the complete loss of all contributed capital, the lack of a public market and limited transferability of the Note, which may make the liquidation of this investment impossible for the indefinite future. The financial condition of the Investor is such that the Investor is under no present or contemplated future need to dispose of any portion of the Securities to satisfy any existing or contemplated undertaking, need or indebtedness. The Investor acknowledges that the Investor must bear the economic risk of this investment indefinitely unless the Securities are registered pursuant to the Securities Act, or an exemption from registration is available. The Investor understands that the Company has no present intention of registering the Securities. The Investor also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow the Investor to transfer all or any portion of the Securities under