FORM OF SUBSCRIPTION AGREEMENT

 

THIS SUBSCRIPTION AGREEMENT (this “Agreement”) is dated as of
________________________________, 2012, by and between Wizard World, Inc., a
Delaware corporation (the “Company”), and the subscribers identified on Schedule
1 hereto (collectively, the “Subscribers” and each, a “Subscriber”).

 

WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
D”), as promulgated by the U.S. Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “1933 Act”);

 

WHEREAS, the parties hereto desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the
Subscribers, as provided herein, and the Subscribers, in the aggregate, shall
purchase up to $2,000,000 of shares of Series A Cumulative Convertible Preferred
Stock of the Company, par value $0.0001 per share (“Preferred Stock”), at a
purchase price (the “Purchase Price”) equal to one hundred dollars ($100) per
share, which Preferred Stock shall be convertible into shares of the Company’s
common stock, $0.0001 par value per share (the “Common Stock”), subject to the
rights and preferences described in the Certificate of Designation, as amended,
annexed hereto as Exhibit A (“Certificate of Designation”), and Series A common
stock purchase warrants (the “Warrants”) in the form attached hereto as Exhibit
B, to purchase shares of Common Stock (the “Warrant Shares”) (the “Offering”).
The Preferred Stock, shares of Common Stock issuable upon conversion of the
Preferred Stock (the “Shares”), the Warrants and the Warrant Shares are
collectively referred to herein as the “Securities”;

 

WHEREAS, the minimum subscription amount is $100,000. The Company may, in its
sole discretion, accept subscriptions from Subscribers for lesser amounts;

 

WHEREAS, the Company may, in its sole discretion, increase the amount of the
Offering by an additional $400,000;

 

WHEREAS, the Offering is set to expire on March 31, 2012 (the “Offering
Period”). The Company may, in its sole discretion, with or without notice to the
Subscribers, extend the Offering Period by an additional period not to exceed
sixty (60) days; and

 

WHEREAS, the aggregate proceeds of the sale of the Preferred Stock and the
Warrants contemplated hereby (“Purchase Price”) shall be held in escrow by
VStock Transfer, LLC (the “Escrow Agent”) pursuant to the terms of an Escrow
Agreement to be executed by the parties hereto substantially in the form
attached hereto as Exhibit C (the “Escrow Agreement”).

 

NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement, the Company and each of the Subscribers hereby
agree as follows:

 

 

 

 

1.    Closing.

 

(a)          Closing. Subject to the satisfaction or waiver of the terms and
conditions of this Agreement and the term sheet of even date herewith related to
the Offering, on the “Closing Date,” the Subscribers shall purchase, and the
Company shall sell to such Subscribers in accordance with Schedule 1 hereto, the
Preferred Stock and the Warrants as described in Section 2 below. The date the
Escrow Agent releases the funds received from one or more Subscribers to the
Company and releases the escrow documents to the parties hereto in accordance
with the provisions of the Escrow Agreement shall be the Closing Date with
respect to such released funds and Escrow Documents, and such releases are
referred to herein as the “Closing.” The parties hereto may agree to have more
than one Closing once funds are deposited into the escrow account, in which case
the first Closing shall be referred to herein as the “Initial Closing”).

 

(b)          Time Effective Clauses. All time effective clauses not specifically
related to an actual Closing Date shall be deemed to have commenced as of the
Initial Closing Date, if more than one Closing, or the Closing Date, if only one
Closing.

 

2.     Series A Preferred Stock and Series A Warrant.

 

(a)          Series A Preferred Stock. On the Closing Date, each Subscriber
shall purchase and the Company shall sell to each such Subscriber, the number of
shares of Preferred Stock designated on such Subscriber’s signature page hereto
for such Subscriber’s Purchase Price indicated thereon.

 

(b)          Series A Warrants. On the Closing Date, the Company shall issue and
deliver the Warrants to the Subscribers as follows: (i) one Warrant shall be
issued for each Two Dollars ($2.00) of Purchase Price paid by a Subscriber on
the Closing Date. The exercise price to acquire a Warrant Share upon exercise of
a Warrant shall be $0.60, subject to amendment as described in the Warrants. The
Warrants shall be exercisable until five (5) years after the Closing Date.

 

3.     Payment and Allocation of Purchase Price. In consideration of the
issuance of the Preferred Stock and Warrants on the Closing Date, each
Subscriber shall pay to or for the benefit of the Company such Subscriber’s
Purchase Price, as set forth on the signature pages hereto. The number of
Warrant Shares eligible for purchase by each such Subscriber is set forth on the
signature pages hereto. The Purchase Price will be allocated among the
components of the Preferred Stock and Warrants so that each component of same
will be fully paid and non-assessable.

 

4.     Subscriber Representations and Warranties. Each of the Subscribers,
severally but not jointly, hereby represents and warrants to, and agrees with
the Company that, with respect only to such Subscriber:

 

(a)          Organization and Standing of Subscriber. If Subscriber is an
entity, Subscriber is duly formed, validly existing and in good standing under
the laws of the jurisdiction of its formation. If the Subscriber is a natural
person, Subscriber has the legal capacity and power to enter into the
Transaction Documents (as defined herein).

 

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(b)          Authorization and Power. Such Subscriber has the requisite power
and authority to enter into and perform this Agreement and the other Transaction
Documents and to purchase the Preferred Stock and Warrants being sold to such
Subscriber hereunder. The execution, delivery and performance of this Agreement
and the other Transaction Documents by such Subscriber, and the consummation by
such Subscriber of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary action, and no further consent or authorization
of Subscriber or its board of directors, manager(s), trustee, stockholders,
partners, members or beneficiaries, as applicable, is required. This Agreement
and the other Transaction Documents have been duly authorized, executed and
delivered by such Subscriber and constitutes, or shall constitute, when executed
and delivered, a valid and binding obligation of such Subscriber, enforceable
against Subscriber in accordance with the terms thereof.

 

(c)          No Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation by such
Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Subscriber’s
charter documents, bylaws or other organizational documents, if applicable; (ii)
conflict with nor constitute a default (or an event which with notice or lapse
of time or both would become a default) under any agreement to which such
Subscriber is a party; or (iii) result in a violation of any law, rule or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to such Subscriber or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
Material Adverse Effect on Subscriber). Such Subscriber is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for such Subscriber
to execute, deliver or perform any of such Subscriber’s obligations under this
Agreement and the other Transaction Documents, nor to purchase the Securities in
accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Subscriber is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

 

(d)          Information on Company. Such Subscriber has been furnished with or
has had access to the EDGAR Website of the Commission to the Company’s filings
made with the Commission through the tenth (10th) business day preceding the
Closing Date (hereinafter collectively referred to as the “Reports”). Such
Subscriber is not deemed to have any knowledge of any information not included
in the Reports, unless such information is delivered in the manner described in
the next sentence. In addition, such Subscriber may have received in writing
from the Company such other information concerning its operations, financial
condition and other matters as such Subscriber has requested in writing,
identified thereon as OTHER WRITTEN INFORMATION (such other information is
collectively, the “Other Written Information”), and considered all factors such
Subscriber deems material in deciding on the advisability of investing in the
Securities.

 

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(e)          Information on Subscriber. Such Subscriber is, and will be at the
time of the conversion of the Preferred Stock and exercise of the Warrants, an
“accredited investor,” as such term is defined in Regulation D promulgated by
the Commission under the 1933 Act, is experienced in investments and business
matters, has made investments of a speculative nature and has purchased
securities of United States publicly-owned companies in private placements in
the past and, with its representatives, has such knowledge and experience in
financial, tax and other business matters as to enable such Subscriber to
utilize the information made available by the Company to evaluate the merits and
risks of, and to make an informed investment decision with respect to, the
proposed purchase, which such Subscriber hereby agrees represents a speculative
investment. Such Subscriber has the authority and is duly and legally qualified
to purchase and own the Securities. Such Subscriber is able to bear the risk of
such investment for an indefinite period and to afford a complete loss thereof.
The information set forth on Schedule 1 hereto regarding such Subscriber is
accurate.

 

(f)          Purchase of Preferred Stock and Warrants. On the Closing Date, such
Subscriber will purchase the Preferred Stock and Warrants as principal for its
own account for investment only and not with a view toward, or for resale in
connection with, the public sale or any distribution thereof.

 

(g)          Compliance with Securities Act. Such Subscriber understands and
agrees that the Securities have not been registered under the 1933 Act or any
applicable state securities laws by reason of their issuance in a transaction
that does not require registration under the 1933 Act (based in part on the
accuracy of the representations and warranties of Subscriber contained herein),
and that such Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration. In any event, and subject to
compliance with applicable securities laws, Subscriber may enter into lawful
hedging transactions in the course of hedging the position they assume and the
Subscriber may also enter into lawful short positions or other derivative
transactions relating to the Securities, or interests in the Securities, and
deliver the Securities, or interests in the Securities, to close out their short
or other positions or otherwise settle other transactions, or loan or pledge the
Securities, or interests in the Securities, to third parties who in turn may
dispose of these Securities.

 

(h)          Conversion Shares and Warrant Shares Legend. The Conversion Shares
and Warrant Shares shall bear the following or similar legend:

 

“THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER AND
REASONABLY APPROVED BY THE COMPANY), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

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(i)          Preferred Stock and Warrants Legend. The Preferred Stock and
Warrants shall bear the following legend:

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE OR EXERCISABLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER AND
REASONABLY APPROVED BY THE COMPANY), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

(j)          Communication of Offer. The offer to sell the Securities was
directly communicated to such Subscriber by the Company. At no time was such
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of general
advertising or solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer.

 

(k)          Restricted Securities. Such Subscriber understands that the
Securities have not been registered under the 1933 Act and such Subscriber shall
not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any
of the Securities unless pursuant to an effective registration statement under
the 1933 Act, or unless an exemption from registration is available.
Notwithstanding anything to the contrary contained in this Agreement, such
Subscriber may transfer (without restriction and without the need for an opinion
of counsel as permitted under applicable law) the Securities: (i) to such
Subscriber’s Affiliates (as defined below), provided that each such Affiliate is
an “accredited investor,” as such term is defined under Regulation D, and such
Affiliate agrees in writing to be bound by the terms and conditions of this
Agreement; (ii) to such Subscriber’s Immediate Family (as defined below),
provided the Immediate Family member agrees in writing to be bound by the terms
and conditions of this Agreement; (iii) to an inter vivos or testamentary trust
(or other entity) in which the Securities are to be passed to Subscriber’s
designated beneficiaries; or (iv) by will or by the laws of descent or
distribution. For the purposes of this Agreement, an “Affiliate” of any person
or entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity. Without limiting the foregoing, each Subsidiary (as defined herein) is
an Affiliate of the Company. For purposes of this definition, “control” means
the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this Agreement, “Immediate Family” means any child,
stepchild, parent, stepparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law.

 

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(l)          No Governmental Review. Such Subscriber understands that no United
States federal or state agency or any other governmental or state agency has
passed on or made recommendations or endorsement of the Securities or the
suitability of the investment in the Securities, nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.

 

(m)          Independent Decision. The decision of such Subscriber to purchase
Securities has been made by such Subscriber independently of any other
Subscriber 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 which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
other Subscriber (or any other Person) relating to or arising from any such
information, materials, statements or opinions.

 

(n)          Correctness of Representations. Subscriber represents that the
foregoing representations and warranties are true and correct as of the date
hereof and, unless Subscriber otherwise notifies the Company in writing prior to
the Closing Date, shall be true and correct as of the Closing Date.

 

(o)          Survival. The foregoing representations and warranties shall
survive the Closing Date.

 

5.    Company Representations and Warranties. Except as set forth in the
Schedules hereto, the Company represents and warrants to and agrees with each
Subscriber that:

 

(a)          Due Incorporation. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own its properties and to carry on its
business as presently conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect (as defined herein). For
purposes of this Agreement, a “Material Adverse Effect” shall mean a material
adverse effect on the financial condition, results of operations, prospects,
properties or business of the Company and its Subsidiaries taken as a whole. For
purposes of this Agreement, “Subsidiary” means, with respect to any entity at
any date, any direct or indirect corporation, limited or general partnership,
limited liability company, trust, estate, association, joint venture or other
business entity of which (A) more than 30% of (i) the outstanding capital stock
having (in the absence of contingencies) ordinary voting power to elect a
majority of the board of directors or other managing body of such entity, (ii)
in the case of a partnership or limited liability company, the interest in the
capital or profits of such partnership or limited liability company or (iii) in
the case of a trust, estate, association, joint venture or other entity, the
beneficial interest in such trust, estate, association or other entity business
is, at the time of determination, owned or controlled directly or indirectly
through one or more intermediaries, by such entity, or (B) is under the actual
control of the Company. As of the Closing Date, all of the Company’s
Subsidiaries and the Company’s other ownership interests therein are set forth
on Schedule 5(a). The Company represents that it owns all of the equity of the
Subsidiaries and rights to receive equity of the Subsidiaries set forth on
Schedule 5(a), free and clear of all liens, encumbrances and claims, except as
set forth on Schedule 5(a). No person or entity other than the Company has the
right to receive any equity interest in the Subsidiaries. Except as set forth on
Schedule 5(a), the Company further represents that neither the Company nor the
Subsidiaries have been known by any other names for the five (5) years preceding
the date of this Agreement.

 

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(b)          Outstanding Stock. All issued and outstanding shares of capital
stock and equity interests in the Company have been duly authorized and validly
issued and are fully paid and non-assessable.

 

(c)          Authority; Enforceability. This Agreement, the Preferred Stock,
Warrants, the Escrow Agreement, and any other agreements delivered or required
to be delivered together with or pursuant to this Agreement or in connection
herewith (collectively, the “Transaction Documents”) have been duly authorized,
executed and delivered by the Company and/or the Subsidiaries, as the case may
be, and are valid and binding agreements of the Company and/or the Subsidiaries,
as the case may be, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity. The Company and/or the
Subsidiaries, as the case may be, have full corporate power and authority
necessary to enter into and deliver the Transaction Documents and to perform
their obligations thereunder.

 

(d)          Capitalization and Additional Issuances. The authorized and
outstanding capital stock of the Company and the Subsidiaries on a fully diluted
basis and all outstanding rights to acquire or receive, directly or indirectly,
any equity of the Company and/or the Subsidiaries as of the date of this
Agreement and the Closing Date (not including the Securities) are set forth on
Schedule 5(d). Except as set forth on Schedule 5(d), there are no options,
warrants or rights to subscribe to securities, rights, understandings or
obligations convertible into or exchangeable for or granting any right to
subscribe for any shares of capital stock or other equity interest of the
Company or any of the Subsidiaries. The only officer, director, employee and
consultant stock option or stock incentive plan or similar plan currently in
effect or contemplated by the Company is described on Schedule 5(d). There are
no outstanding agreements or preemptive or similar rights affecting the
Company’s Common Stock or equity.

 

(e)          Consents. No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction over the
Company, the Subsidiaries or any of their Affiliates, any Principal Market as
defined in Section 9(b) or the Company’s stockholders is required for the
execution by the Company of the Transaction Documents and compliance and
performance by the Company and the Subsidiaries of their respective obligations
under the Transaction Documents, including, without limitation, the issuance and
sale of the Securities. The Transaction Documents and the Company’s performance
of its obligations thereunder have been unanimously approved by the Company’s
board of directors in accordance with the Company’s Certificate of Incorporation
and applicable law. Any such qualifications and filings will, in the case of
qualifications, be effective upon Closing, and will, in the case of filings, be
made within the time prescribed by law.

 

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(f)          No Violation or Conflict. Conditioned upon the representations and
warranties of Subscriber in Section 4 hereof being materially true and correct,
neither the issuance nor the sale of the Securities nor the performance of the
Company’s obligations under this Agreement and the other Transaction Documents
by the Company, will:

 

(i)          violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse of time or
both would be reasonably likely to constitute a default) under (A) the
certificate of incorporation or bylaws of the Company, (B) to the Company’s
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company or any of its Affiliates, (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject or (D) the terms of any
“lock-up” or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party, except the violation,
conflict, breach or default of which would not have a Material Adverse Effect;
or

 

(ii)         result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company or any of
its Affiliates, except in favor of each Subscriber as described herein; or

 

(iii)        except as set forth in Schedule 5(f) hereto, result in the
activation of any anti-dilution rights or a reset or repricing of any debt,
equity or security instrument of any creditor or equity holder of the Company,
or the holder of the right to receive any debt, equity or security instrument of
the Company, nor result in the acceleration of the due date of any obligation of
the Company; or

 

(iv)        except as set forth in Schedule 5(f) hereto, result in the
triggering of any piggy-back or other registration rights of any person or
entity holding securities of the Company or having the right to receive
securities of the Company.

 

(g)          The Securities. The Securities upon issuance:

 

(i)          are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, subject only to restrictions upon transfer under
the 1933 Act and any applicable state securities laws;

 

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(ii)         have been, or will be, duly and validly authorized and on the dates
of issuance of the Preferred Stock and Warrants, the Conversion Shares upon
conversion of the Preferred Stock, and the Warrant Shares upon exercise of the
Warrants, such Preferred Stock, Warrants, Conversion Shares and Warrant Shares
will be duly and validly issued, fully paid and non-assessable and if registered
pursuant to the 1933 Act and resold pursuant to an effective registration
statement or an exemption from registration, will be free trading, unrestricted
and unlegended;

 

(iii)        will not have been issued or sold in violation of any preemptive or
other similar rights of the holders of any securities of the Company or rights
to acquire securities or debt of the Company;

 

(iv)        will not subject the holders thereof to personal liability by reason
of being such holders; and

 

(v)         conditioned upon the representations and warranties of the
Subscribers as set forth in Section 4 hereof being materially true and correct,
will not result in a violation of Section 5 under the 1933 Act.

 

(h)          Litigation. There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates that would affect the execution by the Company or the
complete and timely performance by the Company of its obligations under the
Transaction Documents. Except as disclosed in the Reports, there is no pending
or, to the best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates which
litigation if adversely determined would have a Material Adverse Effect.

 

(i)          No Market Manipulation. The Company and its Affiliates have not
taken, and will not take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Securities or affect the price at which the Securities may be issued or
resold.

 

(j)          Information Concerning Company. The Reports and Other Written
Information contain all material information relating to the Company and its
operations and financial condition as of their respective dates which
information is required to be disclosed therein. Since September 30, 2010, and
except as disclosed in the Reports or modified in the Reports and Other Written
Information or in the Schedules hereto, there has been no Material Adverse
Effect relating to the Company’s business, financial condition or affairs. The
Reports and Other Written Information including the financial statements
included therein do not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, taken as a whole, not misleading in light of the
circumstances and when made.

 

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(k)          Solvency. Based on the consolidated financial condition of the
Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, and subject
to the assumption of continuing as a going concern, (i) the Company’s fair
saleable value of its assets exceeds the amount that will be required to be paid
on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature; (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business for
the current fiscal year as now conducted and as proposed to be conducted,
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).

 

(l)          Defaults. The Company is not in violation of its certificate of
incorporation or bylaws. The Company is (i) not in default under or in violation
of any other material agreement or instrument to which it is a party or by which
it or any of its properties are bound or affected, which default or violation
would have a Material Adverse Effect, (ii) not in default with respect to any
order of any court, arbitrator or governmental body or subject to or party to
any order of any court or governmental authority arising out of any action, suit
or proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters which default would
have a Material Adverse Effect, or (iii) not in violation of any statute, rule
or regulation of any governmental authority which violation would have a
Material Adverse Effect.

 

(m)          No Integrated Offering. Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security of the Company nor solicited
any offers to buy any security of the Company under circumstances that would
cause the offer of the Securities pursuant to this Agreement to be integrated
with prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of the Pink Sheets. No prior offering will impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder. Neither the Company nor any of its
Affiliates will take any action or suffer any inaction or conduct any offering
other than the transactions contemplated hereby that may be integrated with the
offer or issuance of the Securities or that would impair the exemptions relied
upon in this Offering or the Company’s ability to timely comply with its
obligations hereunder.

 

(n)          No General Solicitation. Neither the Company, nor any of its
Affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 1933 Act) in connection with the offer or sale
of the Securities.

 

10

 

 

(o)          No Undisclosed Liabilities. The Company has no liabilities or
obligations which are material, individually or in the aggregate, other than
those incurred in the ordinary course of the Company’s business since September
30, 2010, and which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect, except as disclosed in the Reports
or in Schedule 5(o).

 

(p)          No Undisclosed Events or Circumstances. Since September 30, 2010,
except as disclosed in the Reports, no event or circumstance has occurred or
exists with respect to the Company or its businesses, properties, operations or
financial condition, that, 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 in the Reports.

 

(q)          Dilution. The Company’s executive officers and directors understand
the nature of the Securities being sold hereby and recognize that the issuance
of the Securities will have a potential dilutive effect on the equity holdings
of other holders of the Company’s equity or rights to receive equity of the
Company. The board of directors of the Company has concluded, in its good faith
business judgment, that the issuance of the Securities is in the best interests
of the Company. The Company specifically acknowledges that its obligation to
issue the Conversion Shares upon conversion of the Preferred Stock and the
Warrant Shares upon exercise of the Warrants is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other stockholders of the Company or parties entitled to receive
equity of the Company.

 

(r)          No Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers
previously and presently employed by the Company, including, but not limited to,
disputes or conflicts over payment owed to such accountants and lawyers, nor
have there been any such disagreements during the two years prior to the Closing
Date.

 

(s)          Investment Company. Neither the Company nor any Affiliate of the
Company is an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

 

(t)          Foreign Corrupt Practices. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

 

11

 

 

(u)          Reporting Company/Shell Company. The Company is a publicly-held
company. As of the Closing Date, the Company is not a “shell company” but is a
“former shell company” as those terms are employed in Rule 144 under the 1933
Act.

 

(v)         Listing. The Company’s Common Stock is quoted on the Pink Sheets
(“Pink Sheets”) under the symbol “WIZD”. The Company has not received any
pending oral or written notice that its Common Stock is not eligible nor will
become ineligible for quotation on the Pink Sheets nor that its Common Stock
does not meet all requirements for the continuation of such quotation.

 

(w)          DTC Status. The Company’s transfer agent is a participant in, and
the Common Stock is or shall be eligible for transfer pursuant to, the
Depository Trust Company Automated Securities Transfer Program. The name,
address, telephone number, fax number, contact person and email address of the
Company transfer agent is set forth on Schedule 5(w) hereto.

 

(x)          Company Predecessor and Subsidiaries. The Company makes each of the
representations contained in Sections 5(a), (b), (c), (d), (e), (f), (h), (j),
(k), (l), (o), (p), (r), (s) and (t) of this Agreement, as same relate or could
be applicable to each Subsidiary. All representations made by or relating to the
Company of a historical or prospective nature and all undertakings described in
Section 9 shall relate, apply and refer to the Company and the Subsidiaries and
their predecessors and successors.

 

(y)          Correctness of Representations. The Company represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects, and, unless the Company otherwise notifies the
Subscribers prior to the Closing Date, shall be true and correct in all material
respects as of the Closing Date; provided that if such representation or
warranty is made as of a different date, such representation or warranty shall
be true as of such date.

 

(z)          Survival. The foregoing representations and warranties shall
survive the Closing Date.

 

6.    Regulation D Offering. The offer and issuance of the Securities to the
Subscribers is being made pursuant to an exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder.

 

7.    Broker’s Commission/Finder’s Fee. The Company on the one hand, and each
Subscriber (for such Subscriber only) on the other hand, agrees to indemnify the
other against and hold the other harmless from any and all liabilities to any
Persons claiming brokerage commissions or similar fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby and
arising out of such party’s actions. Except for Network 1 Financial Securities,
Inc., the Company represents that to the best of its knowledge there are no
parties entitled to receive fees, commissions, finder’s fees, due diligence fees
or similar payments in connection with the Offering. Anything in this Agreement
to the contrary notwithstanding, each Subscriber is providing indemnification
only for such Subscriber’s own actions and not for any action of any other
Subscriber. The liability of the Company and each Subscriber’s liability
hereunder is several and not joint.

 

12

 

 

8.    Legal Fees. The Company shall pay to Lucosky Brookman LP a cash fee
(“Legal Fees”) as reimbursement for services rendered in connection with the
transactions described in the Transaction Documents. The Legal Fees will be
payable out of funds held pursuant to the Escrow Agreement. Lucosky Brookman LP
will be reimbursed at Closing or Initial Closing, as the case may be, by the
Company for all lien searches, filing fees and reasonable printing and shipping
costs for the closing statements to be delivered to the Subscribers.

 

9.    Covenants of the Company. The Company covenants and agrees with the
Subscribers as follows:

 

(a)          Stop Orders. Subject to the prior notice requirement described in
Section 9(n) hereof, the Company will advise the Subscribers, within twenty-four
(24) hours after it receives notice of issuance by the Commission, any state
securities commission or any other regulatory authority of any stop order or of
any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose. The Company will not issue any stop transfer
order or other order impeding the sale, resale or delivery of any of the
Securities, except as may be required by any applicable federal or state
securities laws, provided at least five (5) business days prior notice of such
instruction is given to the Subscribers.

 

(b)          Listing/Quotation. The Company shall promptly secure the quotation
or listing of the Conversion Shares and Warrant Shares upon each national
securities exchange, or automated quotation system upon which the Company’s
Common Stock is quoted or listed and upon which such Conversion Shares and
Warrant Shares are or become eligible for quotation or listing (subject to
official notice of issuance) and shall maintain same so long as any Preferred
Stock and Warrants are outstanding. The Company will maintain the quotation or
listing of its Common Stock on the NYSE Amex Equities, Nasdaq Capital Market,
Nasdaq Global Market, Nasdaq Global Select Market, Pink Sheets, Over-the-Counter
Bulletin Board, OTC Markets or New York Stock Exchange (whichever of the
foregoing is at the time the principal trading exchange or market for the Common
Stock) (the “Principal Market”), and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Principal Market, as applicable. Subject to the limitation set forth in
Section 9(n) hereof, the Company will provide the Subscribers with copies of all
notices it receives notifying the Company of the threatened and actual delisting
of the Common Stock from any Principal Market. As of the date of this Agreement
and the Closing Date, the Pink Sheets is the Principal Market.

 

(c)          Market Regulations. If required, the Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscribers and promptly provide copies
thereof to the Subscribers.

 

13

 

 

(d)          Filing Requirements. As of the date hereof, the Company represents
and warrants that it is a “voluntary filer” under the 1934 Act and, the Company
covenants that, by March 31, 2012, the Company will have filed all reports under
Section 13 of the 1934 Act that it would have been required to file thereunder
had its Common Stock been registered under Section 12 of the 1934 Act since
January 1, 2011. The Company covenants and agrees to cause its Common Stock to
be registered under Section 12(g) of the 1934 Act on or before March 31, 2012.
Commencing on the date of such registration and continuing until the last to
occur of (i) all the Conversion Shares have been resold or transferred by the
Subscribers pursuant to a registration statement or pursuant to Rule
144(b)(1)(i), and (ii) none of the Preferred Stock and Warrants are outstanding
(the date of such latest occurrence being the “End Date”), the Company will (A)
comply in all respects with its reporting and filing obligations under the 1934
Act and timely file all reports required to be filed by it thereunder, and (B)
take no action to cause the deregistration of its Common Stock from Section
12(g) of the 1934 Act or the termination or suspension of such registration or
the Company’s reporting and filing obligations thereunder. From the date of this
Agreement and continuing until the End Date, the Company will continue the
listing or quotation of the Common Stock on a Principal Market and will comply
in all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Principal Market. The Company agrees to timely file a
Form D with respect to the Securities if required under Regulation D and to
provide a copy thereof to each Subscriber promptly after such filing.

 

(e)          Use of Proceeds. The proceeds of the Offering will be substantially
employed by the Company for the purposes set forth on Schedule 9(e) hereto.
Except as described on Schedule 9(e), the Purchase Price may not and will not be
used for accrued and unpaid officer and director salaries, nor payment of
financing related debt nor redemption of outstanding notes or equity instruments
of the Company nor non-trade payables outstanding on the Closing Date.

 

(f)          Reservation. Prior to the Closing or Initial Closing, as the case
may be, the Company undertakes to reserve on behalf of the Subscribers from its
authorized but unissued Common Stock, a number of shares of Common Stock equal
to 150% of the amount of Common Stock necessary to allow the Subscribers to be
able to convert all of the Preferred Stock and 100% of the amount of Warrant
Shares issuable upon exercise of the Warrants (“Required Reservation”). Failure
to have sufficient shares reserved pursuant to this Section 9(f) at any time
prior to the End Date shall be a material default of the Company’s obligations
under this Agreement and an Event of Default as employed in the Certificate of
Designation. Without waiving the foregoing requirement, if at any time the
Preferred Stock and Warrants are outstanding the Company has reserved on behalf
of the Subscribers less than 125% of the amount necessary for full conversion of
the outstanding Preferred Stock and dividends accrued on such Preferred Stock at
the conversion price in effect on every such date and 100% of the Warrant Shares
issuable upon exercise of outstanding Warrants (“Minimum Required Reservation”),
the Company will promptly reserve the Minimum Required Reservation, or if there
are insufficient authorized and available shares of Common Stock to do reserve
the Minimum Required Reservation, the Company will take all action necessary to
increase its authorized capital to be able to fully satisfy its reservation
requirements hereunder, including the filing of a preliminary proxy with the
Commission not later than fifteen (15) days after the first day the Company has
reserved less than the Minimum Required Reservation. The Company agrees to
provide notice to the Subscribers not later than five days after the date the
Company has less than the Minimum Required Reservation reserved on behalf of the
Subscribers.

 

14

 

 

(g)          DTC Program. At all times that Preferred Stock or Warrants are
outstanding, the Company will employ as the transfer agent for the Common Stock,
Conversion Shares and Warrant Shares a participant in the Depository Trust
Company Automated Securities Transfer Program.

 

(h)          Taxes. From the date of this Agreement and until the End Date, the
Company will promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or business of the Company;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that the Company
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefore.

 

(i)          Insurance. As reasonably necessary as determined by the Company,
from the date of this Agreement and until the End Date, the Company will keep
its assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company’s line of business and
location, in amounts and to the extent and in the manner customary for companies
in similar businesses similarly situated and located and to the extent available
on commercially reasonable terms.

 

(j)          Books and Records. From the date of this Agreement and until the
End Date, the Company will keep true records and books of account in which full,
true and correct entries in all material respects will be made of all dealings
or transactions in relation to its business and affairs in accordance with
United States generally accepted accounting principles (“GAAP”) applied on a
consistent basis.

 

(k)          Governmental Authorities. From the date of this Agreement and until
the End Date, the Company shall duly observe and conform in all material
respects to all valid requirements of governmental authorities relating to the
conduct of its business or to its properties or assets.

 

(l)          Intellectual Property. From the date of this Agreement and until
the End Date, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business, unless it is sold for value. Schedule
9(l) hereto identifies all of the intellectual property owned by the Company and
the Subsidiaries, which schedule includes, but is not limited to, patents,
patents pending, patent applications, trademarks, tradenames, service marks and
copyrights.

 

15

 

 

(m)          Properties. From the date of this Agreement and until the End Date,
the Company will keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
necessary and proper repairs, renewals, replacements, additions and improvements
thereto as the Company shall reasonably determine; and the Company will at all
times comply with each provision of all leases and claims to which it is a party
or under which it occupies or has rights to property if the breach of such
provision could reasonably be expected to have a Material Adverse Effect. The
Company will not abandon any of its assets, except for those assets which have
negligible or marginal value , are obsolete or for which it is prudent to do so
under the circumstances as reasonably determined by the Company.

 

(n)          Confidentiality/Public Announcement. From the date of this
Agreement until the End Date, the Company agrees that except in connection with
a Form 8-K, Form 10-Q, Form 10-K and the registration statement or statements
regarding the Subscribers’ Securities or in correspondence with the Commission
regarding same, it will not disclose publicly or privately the identity of a
Subscriber unless expressly agreed to in writing by such Subscriber or only to
the extent required by law and then only upon not less than two (2) business
days prior notice to such Subscriber. In any event and subject to the foregoing,
the Company undertakes to file a Form 8-K describing the Offering no later than
the fourth (4th) day of the Closing Date. Prior to the filing of such Form 8-K,
a draft in the final form will be provided for Subscribers’ review and approval.
In the Form 8-K, the Company will specifically disclose the amount of Common
Stock outstanding immediately after the Closing. Upon delivery by the Company to
the Subscribers after the Closing Date of any notice or information, in writing,
electronically or otherwise, and while Preferred Stock, Conversion Shares or
Warrants are held by the Subscribers, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
nonpublic information relating to the Company or the Subsidiaries, the Company
shall, within four (4) days after any such delivery, publicly disclose such
material, nonpublic information on a Report on Form 8-K. In the event that the
Company believes that a notice or communication to the Subscribers contains
material, nonpublic information relating to the Company or the Subsidiaries,
except as required to be delivered in connection with this Agreement, the
Company shall so indicate to the Subscribers prior to delivery of such notice or
information. A Subscriber will be granted five (5) days to notify the Company
that such Subscriber elects not to receive such information. In the case that a
Subscriber elects not to receive such information, the Company will not deliver
such information to such Subscriber. In the absence of any such Company
indication, the Subscribers shall be allowed to presume that all matters
relating to such notice and information do not constitute material, nonpublic
information relating to the Company or the Subsidiaries.

 

(o)          Non-Public Information. The Company covenants and agrees that
except for the Reports, Other Written Information and schedules and exhibits to
this Agreement and the Transaction Documents, which information the Company
undertakes to publicly disclose on the Form 8-K described in Section 9(n) above,
neither it nor any other person acting on its behalf will at any time provide
any Subscriber or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto such
Subscriber, its agent or counsel shall have agreed in writing to accept such
information as described in Section 9(n) above. The Company understands and
confirms that the Subscribers shall be relying on the foregoing representations
in effecting transactions in securities of the Company. The Company agrees that
any information known to Subscriber required to be make public by the Company
but not made public by the Company, not already made public by the Company may
be made public and disclosed by the Subscriber.

 

16

 

 

(p)          Negative Covenants. So long as Preferred Stock is outstanding,
without the unanimous consent of all of the Subscribers, the Company will not
and will not permit any of its Subsidiaries to directly or indirectly:

 

(i)          create, incur, assume or suffer to exist any pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
security title, mortgage, security deed or deed of trust, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Uniform Commercial
Code or comparable law of any jurisdiction) (each, a “Lien”) upon any of its
property, whether now owned or hereafter acquired, except for: (a) Liens imposed
by law for taxes that are not yet due or are being contested in good faith and
for which adequate reserves have been established in accordance with GAAP; (b)
carriers,’ warehousemen’s, mechanic’s, material men’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than thirty (30) days or that
are being contested in good faith and by appropriate proceedings; (c) pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations; (d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business; (e) Liens created with respect to the financing of the purchase of new
property in the ordinary course of the Company’s business up to the amount of
the purchase price of such property; and (f) easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the affected
property (each of (a) through (f) hereof, a “Permitted Lien”);

 

(ii)         amend its certificate of incorporation, bylaws or its charter
documents so as to materially and adversely affect any rights of the
Subscribers; provided that an increase in the amount of authorized shares will
not be deemed adverse to the rights of the Subscribers;

 

(iii)        repay, repurchase or offer to repay, repurchase or otherwise
acquire or make any dividend or distribution in respect of any of its Common
Stock, preferred stock, or other equity securities other than to the extent
permitted or required under the Transaction Documents;

 

17

 

 

(iv)        engage in any transactions with any officer, director, employee or
any Affiliate of the Company, including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $100,000, other than (i) for payment of salary or fees for
services rendered, pursuant to and on the terms of a written contract in effect
at least one (1) business day prior to the Closing Date, a copy of which has
been provided to the Subscriber at least one (1) business day prior to the
Closing Date, (ii) reimbursement for authorized expenses incurred on behalf of
the Company or its Affiliates, (iii) for other employee benefits, including
stock option agreements under any stock option plan of the Company disclosed in
the Reports or (iv) other transactions disclosed in the Reports; or

 

(v)         pay or redeem any financing related debt or past due obligations or
securities outstanding as of the Closing Date, or past due obligations, except
with respect to vendor obligations, which in management’s good faith, reasonable
judgment must be paid to avoid disruption of the Company’s businesses.

 

(q)          Offering Restrictions. Subject to the consent of a Majority in
Interest of the Subscribers, for so long as the Preferred Stock and Warrants are
outstanding, the Company will not enter into or exercise any Equity Line of
Credit (as defined herein) or similar agreement, nor issue nor agree to issue
any floating or Variable Priced Equity Linked Instruments (as defined herein)
nor any of the foregoing or equity with price reset rights (collectively, the
“Variable Rate Restrictions”). For purposes hereof, “Equity Line of Credit”
shall include any transaction involving a written agreement between the Company
and an investor or underwriter whereby the Company has the right to “put” its
securities to the investor or underwriter over an agreed period of time and at a
price formula, and “Variable Priced Equity Linked Instruments” shall include:
(A) any debt or equity securities which are convertible into, exercisable or
exchangeable for, or carry the right to receive additional shares of Common
Stock either (1) at any conversion, exercise or exchange rate or other price
that is based upon and/or varies with the trading prices of or quotations for
Common Stock at any time after the initial issuance of such debt or equity
security or (2) with a fixed conversion, exercise or exchange price that is
subject to being reset at some future date at any time after the initial
issuance of such debt or equity security due to a change in the market price of
the Company’s Common Stock since date of initial issuance, and (B) any
amortizing convertible security which amortizes prior to its maturity date,
where the Company is required or has the option to (or any investor in such
transaction has the option to require the Company to) make such amortization
payments in shares of Common Stock which are valued at a price that is based
upon and/or varies with the trading prices of or quotations for Common Stock at
any time after the initial issuance of such debt or equity security (whether or
not such payments in stock are subject to certain equity conditions).

 

(r)          Seniority. Except for Permitted Liens, for so long as the Preferred
Stock is outstanding, without written consent of the Subscribers, the Company
and Subsidiaries shall not grant nor allow any security interest to be taken in
any assets of the Company or any Subsidiary or any Subsidiary’s assets; nor
issue or amend any debt, equity or other instrument which would give the holder
thereof directly or indirectly, a right in any equity of the Company or any
Subsidiary or any right to payment equal to or superior to any right of the
Subscribers as holders of the Preferred Stock in or to such equity or payment,
nor issue or incur any debt not in the ordinary course of business in an amount
greater than $500,000.

 

18

 

 

(s)          Notices. For so long as the Subscribers hold any Preferred Stock or
Warrants, the Company will maintain a United States address and United States
fax number for notice purposes under the Transaction Documents.

 

(t)          Transactions with Insiders. So long as the Preferred Stock and
Warrants are outstanding, without consent of a Majority in Interest of the
Subscribers, the Company shall not, and shall cause each of its Subsidiaries not
to, enter into, materially amend, materially modify or materially supplement, or
permit any Subsidiary to enter into, materially amend, materially modify or
materially supplement, any agreement, transaction, commitment, or arrangement
relating to the sale, transfer or assignment of any of the Company’s tangible or
intangible assets with any of its Insiders (as defined below) (or any persons
who were Insiders at any time during the previous two (2) years), or any
Affiliates (as defined below) thereof, or with any individual related by blood,
marriage, or adoption to any such individual. “Affiliate,” for purposes of this
Section 9(t), means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. “Control” or “Controls”
for purposes of the Transaction Documents means that a person or entity has the
power, direct or indirect, to conduct or govern the policies of another person
or entity. For purposes hereof, “Insiders” shall mean any officer, director or
manager of the Company, including, but not limited to, the Company’s president,
chief executive officer, chief financial officer and chief operations officer,
and any of their Affiliates or family members.

 

(u)          Stock Splits. For so long as the Preferred Stock and Warrants are
outstanding, the Company will not enter into any stock splits without the
consent of the Subscribers.

 

(v)         Notice of Event of Default. The Company agrees to notify Subscriber
of the occurrence of an Event of Default (as defined and employed in the
Transaction Documents) not later than ten (10) days after any of the Company’s
officers or directors becomes aware of such Event of Default.

 

10.   Covenants of the Company Regarding Indemnification.

 

(a)          The Company agrees to indemnify, hold harmless, reimburse and
defend the Subscribers, the Subscribers’ officers, directors, agents, counsel,
Affiliates, members, managers, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Subscribers or any such person which results, arises out of or is based upon (i)
any material misrepresentation by Company or breach of any representation or
warranty by Company in this Agreement or in any Exhibits or Schedules attached
hereto in any Transaction Document, or other agreement delivered pursuant hereto
or in connection herewith, now or after the date hereof; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance by
the Company of any covenant or undertaking to be performed by the Company
hereunder, or any other agreement entered into by the Company and Subscribers
relating hereto.

 

19

 

 

(b)          In no event shall the liability of the Subscribers or permitted
successor hereunder or under any Transaction Document or other agreement
delivered in connection herewith be greater in amount than the dollar amount of
the net proceeds actually received by such Subscriber or successor upon the sale
of Registrable Securities (as defined herein).

 

11.  Protective Provisions.

 

(a)          Favored Nations Provision. Other than in connection with (i) full
or partial consideration in connection with a strategic merger, acquisition,
consolidation or purchase of substantially all of the securities or assets of a
corporation or other entity, so long as such issuances are not for the purpose
of raising capital and which holders of such securities or debt are not at any
time granted registration rights, (ii) the Company’s issuance of securities in
connection with strategic license agreements and other partnering arrangements,
so long as such issuances are not for the purpose of raising capital and which
holders of such securities or debt are not at any time granted registration
rights, (iii) the Company’s issuance of Common Stock or the issuances or grants
of options to purchase Common Stock to employees, directors, and consultants,
pursuant to plans described on Schedule 5(d) , (iv) securities upon the exercise
or exchange of or conversion of any securities exercisable or exchangeable for
or convertible into shares of Common Stock issued and outstanding on the date of
this Agreement on the terms disclosed in the Reports and which securities are
also described on Schedule 11(a), and (v) as a result of the exercise of
Warrants or conversion of Preferred Stock which are granted or issued pursuant
to this Agreement on the unamended terms in effect on the Closing Date
(collectively, the foregoing (i) through (v) are “Excepted Issuances”), if at
any time the Preferred Stock or Warrants are outstanding, the Company shall
agree to or issue (the “Lower Price Issuance”) any Common Stock or securities
convertible into or exercisable for shares of Common Stock (or modify any of the
foregoing which may be outstanding) to any Person at a price per share or
conversion or exercise price per share which shall be less than the Conversion
Price in effect at such time or the Warrant exercise price in effect at such
time, as applicable, without the unanimous consent of all of the Subscribers,
then the Conversion Price and Warrant exercise price, as applicable, shall
automatically be reduced to such other lower price. The average Conversion Price
of the Conversion Shares and average exercise price in relation to the Warrant
Shares shall be calculated separately for the Conversion Shares and Warrant
Shares. Common Stock issued or issuable by the Company for no consideration or
for consideration that cannot be determined at the time of issue will be deemed
issuable or to have been issued for $0.0001 per share of Common Stock. For
purposes of the issuance and adjustments described in this paragraph, the
issuance of any security of the Company carrying the right to convert such
security into shares of Common Stock or any warrant, right or option to purchase
Common Stock shall result in the issuance of the additional shares of Common
Stock upon the sooner of (A) the agreement to or (B) actual issuance of such
convertible security, warrant, right or options and again at any time upon any
subsequent issuances of shares of Common Stock upon exercise of such conversion
or purchase rights if such issuance is at a price lower than the Conversion
Price or Warrant exercise price, as applicable, in effect upon such issuance.
The rights of the Subscribers set forth in this Section 12 are in addition to
any other rights the Subscribers have pursuant to this Agreement, the Preferred
Stock, Warrants or any other Transaction Document.

 

20

 

 

(b)          Right of First Refusal. Until one (1) year following the Closing
Date, the Subscribers shall be given not less than fifteen (15) days prior
written notice of any proposed sale by the Company of its common stock or other
securities or equity linked debt obligations (“Other Offering”), except in
connection with the Excepted Issuances. If the Subscribers elect to exercise
their rights pursuant to this Section 12(b), the Subscribers shall have the
right during the fifteen (15) days following receipt of the notice, to purchase
in the aggregate up to all of such offered common stock, debt or other
securities in accordance with the terms and conditions set forth in the notice
of sale, relative to each other in proportion to the amount of Preferred Stock
issued to them on the Closing Date. Subscribers who participate in such Other
Offering shall be entitled at their option to purchase, in proportion to each
other, the amount of such Other Offering that could have been purchased by
Subscribers who do not exercise their rights hereunder until up to the entire
Other Offering is purchased by the Subscribers. In the event such terms and
conditions are modified during the notice period, Subscribers shall be given
prompt notice of such modification and shall have the right during the fifteen
(15) days following the notice of modification to exercise such right.

 

(c)          Maximum Exercise of Rights. Notwithstanding the foregoing, in the
event the exercise of the rights described in Section 12(a) and Section 12(b)
would or could result in the issuance of an amount of Common Stock of the
Company that would exceed the maximum amount that may be issued to a Subscriber
as described in Section 2D of the Certificate of Designation and Section 9 of
the Warrant, then the issuance of such additional shares of Common Stock of the
Company to such Subscriber will be deferred in whole or in part until such time
as such Subscriber is able to beneficially own such Common Stock without
exceeding the applicable maximum amount set forth and such Subscriber notifies
the Company accordingly.

 

12.  Miscellaneous.

 

(a)          Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice in accordance with this Section 12(a). Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile with
accurate confirmation generated by the transmitting facsimile machine at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received, or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be: (i)
if to the Company, to: Wizard World, Inc., 1350 Avenue of the Americas, 2nd
Floor, New York, NY 10019, Attn: Michael Mathews, facsimile: (212) 707-8180,
with a copy by fax only to (which shall not constitute notice): Lucosky Brookman
LLP, 33 Wood Avenue South, 6th Floor, Iselin, NJ 10019, Attn: Joseph M. Lucosky,
Esq., facsimile: (732) 395-4401, and (ii) if to a Subscriber, to: the addresses
and fax numbers indicated on Schedule 1 hereto.

 

21

 

 

(b)          Entire Agreement; Assignment. This Agreement and other documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by all parties. Neither the Company nor the Subscribers
has relied on any representations not contained or referred to in this Agreement
or the other Transaction Documents. No right or obligation of the Company shall
be assigned without prior notice to and the written consent of the Subscribers.

 

(c)          Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile transmission, PDF, electronic signature
or other similar electronic means with the same force and effect as if such
signature page were an original thereof.

 

(d)          Law Governing this Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws thereof or any other State. Any action
brought by any party hereto against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state and county of New York. The
parties to this Agreement hereby irrevocably waive any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. The
parties executing this Agreement and other agreements referred to herein or
delivered in connection herewith on behalf of the Company agree to submit to the
in personam jurisdiction of such courts and hereby irrevocably waive trial by
jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in connection
with this Agreement or any other Transaction Document by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by
law.

 

22

 

 

(e)          Specific Enforcement, Consent to Jurisdiction. The Company and each
Subscriber hereby irrevocably waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction in New York of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Nothing in this Section shall affect or limit any right
to serve process in any other manner permitted by law. Subject to Section 12(d)
hereof, the Company and the Subscribers acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
seek an injunction or injunctions to prevent or cure breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which any of them may be entitled
by law or equity.

 

(f)          Damages. In the event the Subscriber is entitled to receive any
liquidated or other damages pursuant to the Transactions Documents, the
Subscriber may elect to receive the greater of actual damages or such liquidated
damages. In the event the Subscriber is granted rights under different sections
of the Transaction Documents relating to the same subject matter or which may be
exercised contemporaneously, or pursuant to which damages or remedies are
different, Subscriber is granted the right in Subscriber’s absolute discretion
to proceed under such section as Subscriber elects.

 

(g)          Maximum Payments. Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest or dividends required to be paid or other charges hereunder exceed the
maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Company to the Subscribers and thus
refunded to the Company. The Company agrees that it may not and actually waives
any right to challenge the effectiveness or applicability of this Section 12(g).

 

(h)          Calendar Days. All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated. The terms “business
days” and “trading days” shall mean days that the New York Stock Exchange is
open for trading for three or more hours. Time periods shall be determined as if
the relevant action, calculation or time period were occurring in New York City.
Any deadline that falls on a non-business day in any of the Transaction
Documents shall be automatically extended to the next business day and interest,
if any, shall be calculated and payable through such extended period.

 

(i)          Captions; Certain Definitions. The captions of the various sections
and paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement. As used in this Agreement the term “person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.

 

23

 

 

(j)          Consent. As used in this Agreement and the other Transaction
Documents and any other agreement delivered in connection herewith, “Consent of
the Subscribers” or similar language means the consent of holders of not less
than seventy percent (70%) of the outstanding Preferred Stock on the date
consent is requested (such Subscribers being a “Majority in Interest”). A
Majority in Interest may consent to take or forebear from any action permitted
under or in connection with the Transaction Documents, modify any Transaction
Documents or waive any default or requirement applicable to the Company, the
Subsidiaries or the Subscribers under the Transaction Documents, provided the
effect of such action does not waive any accrued interest or damages and further
provided that the relative rights of the Subscribers to each other remains
unchanged.

 

(k)          Severability. In the event that any term or provision of this
Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability: (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.

 

(l)          Successor Laws. References in the Transaction Documents to laws,
rules, regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms. A successor
rule to Rule 144(b)(1)(i) shall include any rule that would be available to a
non-Affiliate of the Company for the sale of Common Stock not subject to volume
restrictions and after a six month holding period.

 

(m)          Maximum Liability. In no event shall the liability of the
Subscribers or permitted assign hereunder or under any Transaction Document or
other agreement delivered in connection herewith be greater in amount than the
dollar amount of the net proceeds actually received by such Subscriber or
successor upon the sale of Conversion Shares.

 

(n)          Independent Nature of Subscribers. The Company acknowledges that
the obligations of each Subscriber under the Transaction Documents are several
and not joint with the obligations of any other Subscriber, and no Subscriber
shall be responsible in any way for the performance of the obligations of any
other Subscriber under the Transaction Documents. The Company acknowledges that
each Subscriber has represented that the decision of each Subscriber to purchase
Securities has been made by such Subscriber independently of any other
Subscriber 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 which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
other Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions. The Company acknowledges that
nothing contained in any Transaction Document, and no action taken by any
Subscriber pursuant hereto or thereto shall be deemed to constitute the
Subscribers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Subscribers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. The Company acknowledges that it has
elected to provide all Subscribers with the same terms and Transaction Documents
for the convenience of the Company and not because Company was required or
requested to do so by the Subscribers. The Company acknowledges that such
procedure with respect to the Transaction Documents in no way creates a
presumption that the Subscribers are in any way acting in concert or as a group
with respect to the Transaction Documents or the transactions contemplated
thereby.

 

24

 

 

(o)          Equal Treatment. No consideration shall be offered or paid to any
person to amend or consent to a waiver or modification of any provision of the
Transaction Documents unless the same consideration is also offered and paid to
all the Subscribers and their permitted successors and assigns.

 

(p)          Adjustments. The conversion price, Warrant exercise price, amount
of Conversion Shares and Warrant Shares, trading volume amounts, price/volume
amounts and similar figures in the Transaction Documents shall be equitably
adjusted and as otherwise described in this Agreement, the Certificate of
Designation and Warrants.

 

[-SIGNATURE PAGES FOLLOW-]

 

25

 

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

 

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

 

  WIZARD WORLD INC.   a Delaware corporation           By:       Name: John
Macaluso     Title: Chief Executive Officer               Dated:       , 2012

 

    PURCHASE   PREFERRED     SUBSCRIBER   PRICE   STOCK   WARRANTS              
Name of Subscriber:                                         Address:            
                            Fax No.:                           Taxpayer ID# (if
applicable):                           or Social Security #                    
      (Signature)             By:            

 

26

 

 

LIST OF EXHIBITS AND SCHEDULES

 

  Exhibit A Certificate of Designations   Exhibit B Form of Series A Warrant  
Exhibit C Escrow Agreement   Schedule 1 List of Subscribers   Schedule 5(a)
Subsidiaries   Schedule 5(d) Capitalization and Additional Issuances   Schedule
5(f) Violations and Conflicts   Schedule 5(o) Undisclosed Liabilities   Schedule
5(w) Transfer Agent   Schedule 9(e) Use of Proceeds   Schedule 9(l) Intellectual
Property   Schedule 11(a) Excepted Issuances

 

27

 

  

EXHIBIT A

 

CERTIFICATE OF DESIGNATIONS

 

See Current Report on Form 8-K, filed on March 30, 2012.

 

28

 

 

EXHIBIT B

 

FORM OF SERIES A WARRANT

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
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 CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

WIZARD WORLD, Inc.

 

Form of Senior Convertible Debenture

 

US$____________________ Issue Date: December 9, 2011

 

This Senior Convertible Debenture (the “Debenture”) is duly authorized and
issued by Wizard World, Inc., a Delaware corporation (the “Company”), having its
principal executive office at 1350 Avenue of the Americas, 2nd Floor, New York,
NY 10019.

 

FOR VALUE RECEIVED, the Company, promises to pay to the order of _______________
_______________located at _______________________________________________, and
or its registered assigns (the “Payee” or the “Holder”), the principal sum of
________________ Thousand United States Dollars (US$_____________) (the
“Principal Amount”) by February 28, 2012 (the “Maturity Date”) unless it is
converted into Private Placement Securities (as defined herein) after the
Company undertakes the Qualified Offering (as defined herein), and to pay
interest on the Principal Amount at a rate of six percent (6%) per annum in one
lump sum payable on the Maturity Date. In addition to any conversion
contemplated hereby, the Company will issue to Holder, in consideration hereof,
__________________ Common Shares (as defined below) on the date hereof.

 

This Debenture is subject to the following provisions:

 

A. “Qualified Offering” means one or more private placement offerings by the
Company of a minimum amount in the aggregate of Five Hundred Thousand United
States Dollars (US$500,000) of Series A Convertible Preferred Shares (the
“Private Placement Securities”) convertible into Common Shares (as defined
below) of the Company pursuant to the terms and conditions contained in the
private placement offering documentation to be entered into at the time of the
offering.

 

B. “Business Days” means any day except Saturday, Sunday and any day which shall
be a federal legal holiday in the United States or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.

 

30

 

 

C. “Existing Series A Convertible Preferred Shares” means the Company’s Series A
Convertible Preferred Shares in existence as of the date hereof.

 

1.            Voluntary Conversion. At any time between the original Issue Date
and the Maturity Date unless previously repaid by the Company or converted into
Private Placement Securities pursuant to Section 2 herein, this Debenture may be
convertible into (i) shares of common stock or (ii) into Existing Series A
Convertible Preferred Shares, in each case, at the option of the Holder, in
whole or in part (subject to any limitations on conversion).  The Holder shall
effect conversions by delivering to the Company the form of Notice of Conversion
attached hereto as Exhibit A (a “Notice of Conversion”), specifying therein the
Principal Amount and interest of this Debenture to be converted and the date on
which such conversion is to be effected (a “Conversion Date”). If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the
date that such Notice of Conversion is provided hereunder. To effect conversions
hereunder, the Holder shall not be required to physically surrender this
Debenture to the Company unless the entire Principal Amount of this Debenture
plus all accrued and unpaid interest thereon has been so converted. Conversions
hereunder shall have the effect of lowering the outstanding Principal Amount of
this Debenture in an amount equal to the applicable conversion amount. The
Company shall maintain records showing the Principal Amount converted and the
date of such conversions. The Holder and any assignee, by acceptance of this
Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and
unconverted Principal Amount of this Debenture may be less than the amount
stated on the face hereof.

 

A.           Conversion Price. On any Conversion Date, the Debenture is
convertible into (i) shares of the Company’s common stock (the “Common Shares”)
at a conversion price of US$0.40 per share or (ii) Existing Series A Convertible
Preferred Shares at a conversion price of US$1.00 per share.

 

B.           Mechanism of Conversion.

 

i.    Conversion Shares Issuable Upon Conversion of Principal Amount. The number
of Common Shares or Existing Series A Convertible Preferred Shares issuable upon
a conversion hereunder shall be determined by the quotient obtained by dividing
the outstanding principal amount of this Debenture (or any portion thereof) to
be converted by the Conversion Price.

 

ii.   Delivery of Certificate Upon Conversion. In the event of any conversion of
this Debenture in accordance with and subject to the terms and conditions
hereof, (i) certificates for the Common Shares or Existing Series A Convertible
Preferred Shares shall be dated the Conversion Date and delivered to the Holder
hereof within a reasonable time, not exceeding five (5) Business Days after any
Conversion Date, or, (ii) at the request of the Holder, shares shall be issued
and delivered to the Depository Trust Company (“DTC”) account on the Holder’s
behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) within a
reasonable time, not exceeding five (5) Business Days after such conversion. The
Holder hereof shall be deemed for all purpose to be the holder of the Common
Shares or Existing Series A Convertible Preferred Shares so purchased as of the
date of such conversion. If certificated shares are issued, the Company will
deliver or cause to be delivered to the Holder a certificate or certificates
representing the number of Common Shares or Existing Series A Convertible
Preferred Shares being acquired upon the conversion of this Debenture.
Notwithstanding the foregoing to the contrary, the Company or its transfer agent
shall only be obligated to issue and deliver the shares to DTC on a holder’s
behalf via DWAC provided that (i) such exercise is in connection with a
registration statement under the Securities Act providing for the resale of
Common Shares or Existing Series A Convertible Preferred Shares or the Common
Shares or Existing Series A Convertible Preferred Shares are otherwise exempt
from registration and may be issued without a restrictive legend and (ii) the
Holder and its transfer agent are participating in DTC through the DWAC system.
The Holder shall deliver this original Debenture, or an indemnification
undertaking with respect to such Debenture in the case of its loss, theft or
destruction, at such time that this Debenture is fully exercised.

 

31

 

 

iii.    Failure to Deliver Certificate. If in the case of any Notice of
Conversion such certificate or certificates are not delivered to or as directed
by the Holder by the tenth (10th) Business Day after a Conversion Date, the
Holder shall be entitled by written notice to the Company at any time on or
before its receipt of such certificate or certificates thereafter, to rescind
such conversion, in which event the Company shall immediately return the
certificates representing the principal amount of this Debenture tendered for
conversion.

 

iv.    Reservation of Shares Issuable Upon Conversion. The Company covenants
that it will at all times reserve and keep available out of its authorized and
unissued Common Shares and Existing Series A Convertible Preferred Shares solely
for the purpose of issuance upon any conversion of this Debenture and payment of
interest on this Debenture each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the Holder,
not less than 100% of the Common Shares and Existing Series A Convertible
Preferred Shares as shall be issuable upon the conversion of the Principal
Amount and payment of interest hereunder. The Company covenants that all Common
Shares and Existing Series A Convertible Preferred Shares that shall be so
issuable shall, upon issue, be duly and validly authorized, issued, and fully
paid, nonassessible.

 

v.      Fractional Shares. Upon a conversion hereunder, the Company shall not be
required to issue stock certificates representing fractions of Common Shares or
Existing Series A Convertible Preferred Shares, but may if otherwise permitted,
make a cash payment in respect of any final fraction of a share based on the
closing bid price of the Company’s Common Shares or Existing Series A
Convertible Preferred Shares as quoted by Bloomberg on the day prior to the
Company’s receipt of the Conversion Notice. If the Company elects not, or is
unable, to make such cash payment, the Holder shall be entitled to receive, in
lieu of the financial fraction of a share, one whole Common Share.

 

vi.    Transfer Taxes. The issuance of certificates for Common Shares or
Existing Series A Convertible Preferred Shares upon conversion of this Debenture
shall be made without charge to the Holder hereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon conversion in a name other than that of the Holder
of this Debenture so converted and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

 

32

 

 

2.            Mandatory Conversion upon the Subsequent Qualified Offering.

 

A.           Mandatory Conversion Mechanism.

 

i.        If the Company undertakes a Qualified Offering prior to the Maturity
Date, the Company will deliver to the Holder a notice (the “Offering Notice”),
stating the price and other terms and conditions thereof not later than five (5)
Business Days prior to the closing date of the Qualified Offering.

 

ii.      Upon the closing of the Qualified Offering or prior to the close upon
mutual agreement by the parties, the Debenture will automatically be converted
into an equal amount of Private Placement Securities.

 

B.           Registration Rights. In the event that the Debenture is converted
into the Private Placement Securities, the Holder shall have the same
registration rights with respect to the Private Placement Securities as
investors in the Qualified Offering.

 

3.           Adjustment of Conversion Price. The Conversion Price shall be
subject to adjustment from time to time as set forth in this Section 3. The
Company shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 3 in accordance with the notice
provisions set forth in Section 6D. If at any time the Company shall:

 

A.           make or issue or set a record date for the holders of the Common
Shares for the purpose of entitling them to receive a dividend payable in, or
other distribution of, Common Shares,

 

B.           subdivide its outstanding Common Shares into a larger number of
Common Shares, or

 

C.           combine its outstanding Common Shares into a smaller number of
Common Shares,

 

then (1) the number of Common Shares for which this Debenture is convertible
immediately after the occurrence of any such event shall be adjusted to equal
the number of Common Shares which a record holder of the same number of Common
Shares for which this Debenture is exercisable immediately prior to the
occurrence of such event would own or be entitled to receive after the happening
of such event, and (2) the Conversion Price then in effect shall be adjusted to
equal (A) the Conversion Price then in effect multiplied by the number of Common
Shares for which this Debenture is exercisable immediately prior to the
adjustment divided by (B) the number of Common Shares for which this Debenture
is exercisable immediately after such adjustment.

 

33

 

 

4.            Holder’s Representations and Warranties. The Holder represents and
warrants that:

 

A.           Restrictions on Transfer or Resale. The Holder understands that (i)
the Debenture, any Common Shares upon conversion of the Debenture, and the
Private Placement Securities are not being registered under the Securities Act
of 1933 or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) the Debenture, any Common Shares or the
Private Placement Securities are subsequently registered thereunder, or (B)
Holder shall have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration; and (ii) neither the Company nor any other party is under any
obligation to register the Debenture or the Common Shares under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder, provided however that Holders shall have the same
registration rights with respect to the Private Placement Debenture as investors
in the Qualified Offering in the event that the Debentures are converted into
the Private Placement Securities in the Qualified Offering; (iii) Holder is
acquiring the Debenture, the Common Share and the Private Placement Securities
for its own account and not with a view towards, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act, and (iv) Holder does not presently
have any agreement or understanding, directly or indirectly, with any party to
distribute any of the securities.

 

B.           Accredited Investor Status. Holder is an “accredited investor” as
that term is defined in Rule 501(a) of Regulation D.

 

C.           Reliance on Exemptions. The Holder understands that the Debenture,
any Common Shares upon voluntary conversion, and any Private Placement
Securities acquired in the Qualified Offering are being offered and sold to it
in reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and Holder’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
Holder set forth herein in order to determine the availability of such
exemptions and the eligibility of Holder to acquire the securities.

 

D.           Information. Holder and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the securities that have
been requested by Holder. Holder and its advisors, if any, have been afforded
the opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by Holder or its advisors, if any,
or its representatives shall modify, amend or affect Holder’s right to rely on
the Company’s representations and warranties contained herein. Holder
understands that its investment in the Debenture, any Common Shares upon
voluntary conversion and any Private Placement Securities acquired in the
Qualified Offering involve a high degree of risk and is able to afford a
complete loss of such investment. Holder has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the securities.

 

E.           No Governmental Review. Holder 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 or the
fairness or suitability of the investment in the securities nor have such
authorities passed upon or endorsed the merits of the offering of the
securities.

F.           Legend. This Debenture, all certificates representing Common Shares
upon voluntary conversion and the Private Placement Securities acquired in the
Qualified Offering shall be stamped or imprinted with a legend in substantially
the following form:

 

34

 

 

Neither the issuance and sale of the securities represented by this Certificate
nor the securities into which these securities are exercisable have been
registered under the securities Act of 1933, as amended, or Applicable state
securities laws. The securities may not be offered for sale, sold, transferred
or assigned (i) in the absence of (A) an effective registration statement for
the securities under the securities Act of 1933, as amended, or (B) an opinion
of counsel, in a generally acceptable form, that registration is not required
under said Act or (II) unless sold pursuant to Rule 144 or Rule 144 A under said
Act. Notwithstanding the foregoing, the securities may be pledged in connection
with a bona fide margin account or other loan or financing arrangement secured
by the securities.

 

5.            Events of Default

 

A.           The term “Event of Default” shall mean any of the events set forth
in this Section 5A (the term “Company” for this purpose shall include all
subsidiaries of the Company):

 

i.             Non-Payment of Obligations. The Company shall default in the
payment of the Principal Amount of this Debenture as and when the same shall
become due and payable, whether by acceleration or otherwise.

 

ii.           Non-Performance of Covenants. The Company shall default in the due
observance or performance of any covenant set forth herein, which default shall
continue uncured for thirty (30) days after notice thereof.

 

iii.          Bankruptcy, Insolvency, etc. The Company shall:

 

(a)          admit in writing its inability to pay its debts as they become due;

 

(b)          apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Company or any of its
property, or make a general assignment for the benefit of creditors;

 

(c)          in the absence of such application, consent or acquiesce in, permit
or suffer to exist the appointment of a trustee, receiver, sequestrator or other
custodian for the Company or for any part of its property and that is not
dismissed within sixty days;

 

(d)          permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Company, and, if such case or proceeding is not
commenced by the Company or converted to a voluntary case, such case or
proceeding is consented to or acquiesced in by the Company or results in the
entry of an order for relief; or

 

35

 

 

(e)          take any corporate or other action authorizing any of the
foregoing.

 

B.           Action if Bankruptcy. If any Event of Default described in clauses
(iii)(a) through (d) of Section 5A shall occur, the Principal Amount of this
Debenture and all other obligations hereunder shall automatically be and become
immediately due and payable, without notice or demand.

 

C.           Action if Other Event of Default. If any Event of Default (other
than any Event of Default described in clauses (iii)(a) through (d) of Section
5A shall occur for any reason, whether voluntary or involuntary, and be
continuing, for 30 days after notice, the Holder may, upon notice to the
Company, declare all or any portion of the outstanding principal amount of the
Debenture, to be due and payable and any or all other obligations hereunder to
be due and payable, whereupon the full unpaid principal amount hereof, and any
and all other such obligations which shall be so declared due and payable shall
be and become immediately due and payable, without further notice, demand, or
presentment.

 

6.            Miscellaneous.

 

A.           Parties in Interest. All covenants, agreements and undertakings in
this Debenture binding upon the Company or the Holder shall bind and inure to
the benefit of the successors and permitted assigns of the Company and the
Holder, respectively, whether so expressed or not.

 

B.           Governing Law. This Debenture shall be governed by the laws of the
State of New York as applied to contracts entered into and to be performed
entirely within the State of New York.

 

C.           Waiver of Jury Trial. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS NOTE OR ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN
CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE PAYEE OR THE COMPANY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE’S PURCHASING THIS NOTE.

 

D.           Notices.

 

i.            Any notice pursuant to this Debenture to be given or made (i) by
the Holder to or upon the Company or (ii) by the Company to or upon the Holder,
shall be sufficiently given or made if sent by certified or registered mail,
postage prepaid, addressed (until another address is sent by the Company or the
Holder to the other party) as follows:

 

To the Company:Wizard World, Inc.

1350 Avenue of the Americas, 2nd Floor,

New York, NY 10019

Attn: Gareb Shamus

 

36

 

 

  To the Holder: __________________     __________________    
__________________     Attn: ______________

 

E.           No Waiver. No delay in exercising any right hereunder shall be
deemed a waiver thereof, and no waiver shall be deemed to have any application
to any future default or exercise of rights hereunder.

 

F.           Modification and Severability. If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Debenture, but this Debenture shall be construed as if such
unenforceable provision had never been contained herein.

 

[-signature page follows-]

IN WITNESS WHEREOF, this Debenture has been executed and delivered on the date
specified above.

 

  WIZARD WORLD, INC.       By:     Name: Michael Mathews   Title: Executive
Chairman       By:     Name:   Title:

 

37

 

 

Exhibit A TO WARRANT

 

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert principal under the Senior Convertible
Debenture, dated December 9, 2011 (the “Debenture”), issued by Wizard World,
Inc., a Delaware corporation (the “Company”), in favor of the undersigned, due
on February 28, 2012 if not previously repaid by the Company or converted into
Private Placement Debenture pursuant to a Qualified Offering, into shares of
common stock (the “Common Shares”) of the Company according to the conditions
contained in the Debenture, as of the date written below.  If the Common Shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested by
the Company in accordance therewith. No fee will be charged to the undersigned
for any conversion, except for such transfer taxes, if any.

 

The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
Common Shares.  

 

Conversion calculations:

 

Date to Effect Conversion: ___________________________________________________

 

Principal Amount of Debenture to be Converted: _________________________________

 

Number of Common Shares to be issued: _______________________________________

 

  Signature:           Name:           Address:              

 

38

 

 

BLUE SKY LEGENDS

 

NASAA LEGEND

 

IN MAKING AN INVESTMENT DECISION, SUBSCRIBERS MUST RELY ON THEIR OWN EXAMINATION
OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES OFFERED HEREBY HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

 

NOTICE TO RESIDENTS OF ALL STATES

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH
LAWS. THE SECURITIES ARE SUBJECT IN VARIOUS STATES TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR
ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS
CONFIDENTIAL TERM SHEET. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

IN WITNESS WHEREOF, the Subscriber and the Company have caused this Subscription
Agreement to be duly executed as of the date first above written.

 

SUBSCRIBER:

 

By:   (signature)   Name:   (print name)   Title:      

  

 

39

 

 

EXHIBIT C 

ESCROW AGREEMENT

 

This ESCROW AGREEMENT (this “Agreement”) made as of the 26th day of January,
2012, by and between Wizard World, Inc. (the “Issuer”) whose address and other
information appear on the Information Sheet (as defined herein) attached to this
Agreement, and VStock Transfer, LLC, 77 Spruce Street, Suite 201, Cedarhurst, NY
11516 (the “Escrow Agent”).

 

WITNESSETH:

 

WHEREAS, the Issuer proposes to sell up to $2,000,000 (the “Offering Amount”) of
the Issuer’s shares of Series A Cumulative Convertible Preferred Stock (the
“Securities”) to certain investors (the subscribers of the Securities pursuant
to this offering are hereinafter referred to as “Investors”), in a private
offering to accredited investors on a “best efforts” basis (the “Offering”);

 

WHEREAS, the Issuer proposes to establish an escrow account (the “Escrow
Account”), to which subscription monies which are received by the Escrow Agent
from the Issuer in connection with the Offering are to be credited, and the
Escrow Agent is willing to establish the Escrow Account on the terms and subject
to the conditions hereinafter set forth; and

 

WHEREAS, the Escrow Agent has agreed to establish a special bank account at
Citibank, N.A. (the “Bank”) into which the subscription monies, which are
received by the Escrow Agent from the Issuer and credited to the Escrow Account,
are to be deposited.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto hereby agree as follows:

 

1. Information Sheet. Each capitalized term not otherwise defined in this
Agreement shall have the meaning set forth for such term on the information
sheet which is attached to this Agreement as Exhibit A and is incorporated by
reference herein and made a part hereof (the “Information Sheet”).

 

2. Establishment of the Bank Account.

 

2.1 The Escrow Agent shall establish a non-interest-bearing bank account at the
branch of Bank selected by the Escrow Agent, and bearing the designation set
forth on the Information Sheet (heretofore defined as the “Bank Account”). The
purpose of the Bank Account is for (a) the deposit of all subscription monies
(checks or wire transfers) which are received by the Issuer from prospective
purchasers of the Securities and are delivered by the Issuer to the Escrow
Agent, (b) the holding of amounts of subscription monies which are collected
through the banking system and (c) the disbursement of collected funds, all as
described herein.

 

2.2 On or before the date of the initial deposit in the Bank Account pursuant to
this Agreement, the Issuer shall notify the Escrow Agent in writing of the date
of the commencement of the Offering (the “Effective Date”), and the Escrow Agent
shall not be required to accept any amounts for credit to the Escrow Account or
for deposit in the Bank Account prior to its receipt of such notification.

 

40

 

 

2.3 The “Offering Period,” which shall be deemed to commence on the Effective
Date, shall consist of the number of calendar days or business days set forth on
the Information Sheet. The Offering Period shall be extended at the Issuer’s
discretion (an “Extension Period”) only if the Escrow Agent shall have received
written notice thereof prior to the expiration of the Offering Period. The
Extension Period, which shall be deemed to commence on the next calendar day
following the expiration of the Offering Period, shall consist of the number of
calendar days or business days set forth on the Information Sheet. The last day
of the Offering Period, or the last day of the Extension Period (if the Escrow
Agent has received written notice thereof as herein above provided), is referred
to herein as the “Termination Date”. Except as provided in Section 4.2 hereof,
after the Termination Date, the Issuer shall not deposit, and the Escrow Agent
shall not accept, any additional amounts representing payments by prospective
purchasers.

 

3. Deposits to the Bank Account.

 

3.1 The Issuer shall promptly deliver to the Escrow Agent all monies which it
receives from prospective purchasers of the Securities, which monies shall be in
the form of checks or wire transfers, provided, however, that “Cashiers” checks
and “Money Orders” must be in amounts greater than $10,000. Cashiers checks or
Money Orders in amounts less than $10,000 shall be rejected by the Escrow Agent.
Upon the Escrow Agent’s receipt of such monies, they shall be credited to the
Escrow Account. All checks delivered to the Escrow Agent shall be made payable
to “Wizard World, Inc.” Any check payable other than to the Escrow Agent as
required hereby shall be returned to the prospective purchaser, or if the Escrow
Agent has insufficient information to do so, then to the Issuer (together with
any Subscription Information, as defined below or other documents delivered
therewith) by noon of the next business day following receipt of such check by
the Escrow Agent, and such check shall be deemed not to have been delivered to
the Escrow Agent pursuant to the terms of this Agreement.

 

3.2 Promptly after receiving subscription monies as described in Section 3.1,
the Escrow Agent shall deposit the same into the Bank Account. Amounts of monies
so deposited are hereinafter referred to as “Escrow Amounts”. The Escrow Agent
shall cause the Bank to process all Escrow Amounts for collection through the
banking system. Simultaneously with each deposit to the Escrow Account, the
Issuer shall inform the Escrow Agent in writing of the name and address of the
prospective purchaser, the amount of Securities subscribed for by such purchase,
and the aggregate dollar amount of such subscription (collectively, the
“Subscription Information”).

 

3.3 The Escrow Agent shall not be required to accept for credit to the Escrow
Account or for deposit into the Bank Account checks which are not accompanied by
the appropriate Subscription Information, which at minimum shall include the
name, address, tax identification number and the number of shares subscribed
for. Wire transfers representing payments by prospective purchasers shall not be
deemed deposited in the Escrow Account until the Escrow Agent has received in
writing the Subscription Information required with respect to such payments.

 

41

 

3.4 The Escrow Agent shall not be required to accept in the Escrow Account any
amounts representing payments by prospective purchasers, whether by check or
wire, except during the Escrow Agent’s regular business hours.

 

3.5 Only those Escrow Amounts, which have been deposited in the Bank Account and
which have cleared the banking system and have been collected by the Escrow
Agent, are herein referred to as the “Fund.”

 

3.6 If the Offering is terminated before the Termination Date, the Escrow Agent
shall refund any portion of the Fund prior to disbursement of the Fund in
accordance with Article 4 hereof upon instructions in writing signed by the
Issuer.

 

4. Disbursement from the Bank Account.

 

4.1 Subject to Section 4.2 below, if at any time up to the close of regular
banking hours on the Termination Date, the Escrow Agent determines that the
amount in the Fund represents the sale of the Offering Amount, the Escrow Agent
shall promptly notify the Issuer of such fact in writing. Upon full satisfaction
of the conditions contained in Exhibit A attached hereto, the Escrow Agent shall
promptly disburse the Fund, by drawing checks on the Bank Account in accordance
with instructions in writing signed by both the Issuer and the placement agent
in accordance with Exhibit A, as to the disbursement of the Fund, promptly after
it receives such instructions.

 

4.2 This Section 4.2 applies only if a Collection Period has been provided for
by the appropriate indication on the Information Sheet. If the Escrow Agent or
the Issuer has on hand at the close of business on the Termination Date any
uncollected amounts which when added to the Fund would raise the amount in the
Fund to the Offering Amount and result in the Fund representing the sale of the
Offering Amount, the Collection Period (consisting of the number of business
days set forth on the Information Sheet) shall be utilized to allow such
uncollected amounts to clear the banking system. During the Collection Period,
the Issuer shall not deposit, and the Escrow Agent shall not accept, any
additional amounts; provided, however, that such amounts as were received by the
Issuer by the close of business on the Termination Date may be deposited with
the Escrow Agent by noon of the next business day following the Termination
Date. If at the close of business on the last day of the Collection Period an
amount sufficient to raise the amount in the Fund to represent the sale of the
Offering Amount shall not have cleared the banking system, the Escrow Agent
shall promptly notify the Issuer in writing of such fact and shall promptly
return all amounts then in the Fund, and any amounts which thereafter clear the
banking system, to the prospective purchasers as provided in Section 4.1 hereof.

 

4.3 Upon disbursement of the Fund pursuant to the terms of this Article 4, the
Escrow Agent shall be relieved of further obligations and released from all
liability under this Agreement. It is expressly agreed and understood that in no
event shall the aggregate amount of payments made by the Escrow Agent exceed the
amount of the Fund.

 

42

 

5. Rights, Duties and Responsibilities of Escrow Agent. It is understood and
agreed that the duties of the Escrow Agent are purely ministerial in nature, and
that:

 

5.1 The Escrow Agent shall notify the Issuer, on a daily basis, of the Escrow
Amounts which have been deposited in the Bank Account and of the amounts,
constituting the Fund, which have cleared the banking system and have been
collected by the Escrow Agent.

 

5.2 The Escrow Agent shall not be responsible for the performance by the Issuer
of its respective obligations under this Agreement.

 

5.3 The Escrow Agent shall not be required to accept from the Issuer any
Subscription Information pertaining to prospective purchasers unless such
Subscription Information is accompanied by checks or wire transfers meeting the
requirements of Section 3.1, nor shall the Escrow Agent be required to keep
records of any information with respect to payments deposited by the Issuer
except as to the amount of such payments; however, the Escrow Agent shall notify
the Issuer within a reasonable time of any discrepancy between the amount set
forth in any Subscription Information and the amount delivered to the Escrow
Agent therewith. Such amount need not be accepted for deposit in the Escrow
Account until such discrepancy has been resolved.

 

5.4 The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder. The Escrow Agent, within a
reasonable time, shall return to the Issuer any check received which is
dishonored, together with the Subscription Information, if any, which
accompanied such check.

 

5.5 If the Escrow Agent is uncertain as to its duties or rights hereunder or
shall receive instructions with respect to the Bank Account, the Escrow Amounts
or the Fund which, in its sole determination, are in conflict either with other
instructions received by it or with any provision of this Agreement, it shall be
entitled to hold the Escrow Amounts, the Fund, or a portion thereof, in the Bank
Account pending the resolution of such uncertainty to the Escrow Agent’s sole
satisfaction, by final judgment of a court or courts of competent jurisdiction
or otherwise.

 

5.6 The Escrow Agent shall not be liable for any action taken or omitted
hereunder, or for the misconduct of any employee, agent or attorney appointed by
it, except in the case of willful misconduct or gross negligence. The Escrow
Agent shall be entitled to consult with counsel of its own choosing and shall
not be liable for any action taken, suffered or omitted by it in accordance with
the advice of such counsel.

 

5.7 The Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Escrow Amounts, the Fund or
any part thereof or to file any financing statement under the Uniform Commercial
Code with respect to the Fund or any part thereof.

 

43

 

 

6. Amendment; Resignation or Removal of Escrow Agent. This Agreement may be
altered or amended only with the written consent of the Issuer and the Escrow
Agent. The Escrow Agent may resign and be discharged from its duties hereunder
at any time by giving written notice of such resignation to the Issuer
specifying a date when such resignation shall take effect and upon delivery of
the Fund to the successor escrow agent designated by the Issuer in writing. Such
successor Escrow Agent shall become the Escrow Agent hereunder upon the
resignation date specified in such notice. If the Company fails to designate a
successor Escrow Agent within thirty (30) days after such notice, then the
resigning Escrow Agent shall promptly refund the amount in the Fund to each
prospective purchaser, without interest thereon or deduction. The Escrow Agent
shall continue to serve until its successor accepts the escrow and receives the
Fund. The Company shall have the right at any time to remove the Escrow Agent
and substitute a new escrow agent by giving notice thereof to the Escrow Agent
then acting. Upon its resignation and delivery of the Fund as set forth in this
Section 6, the Escrow Agent shall be discharged of and from any and all further
obligations arising in connection with the escrow contemplated by this
Agreement. Without limiting the provisions of Section 8 hereof, the resigning
Escrow Agent shall be entitled to be reimbursed by the Issuer for any expenses
incurred in connection with its resignation, transfer of the Fund to a successor
escrow agent or distribution of the Fund pursuant to this Section 6.

 

7. Representations and Warranties. The Issuer hereby represents and warrants to
the Escrow Agent that:

 

7.1 No party other than the parties hereto and the prospective purchasers have,
or shall have, any lien, claim or security interest in the Escrow Amounts or the
Fund or any part thereof.

7.2 No financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Escrow Amounts or the Fund or any part thereof.

 

7.3 The Subscription Information submitted with each deposit shall, at the time
of submission and at the time of the disbursement of the Fund, be deemed a
representation and warranty that such deposit represents a bona fide payment by
the purchaser described therein for the amount of Securities set forth in such
Subscription Information.

 

7.4 All of the information contained in the Information Sheet is, as of the date
hereof, and will be, at the time of any disbursement of the Fund, true and
correct.

 

7.5 Reasonable controls have been established and required due diligence
performed to comply with “Know Your Customer” regulations, USA Patriot Act,
Office of Foreign Asset Control (OFAC) regulations and the Bank Secrecy Act.

 

8. Fees and Expenses. The Escrow Agent shall be entitled to the Escrow Agent
Fees set forth on the Information Sheet, payable as and when stated therein. In
addition, the Issuer agrees to reimburse the Escrow Agent for any reasonable
expenses incurred in connection with this Agreement, including, but not limited
to, reasonable counsel fees.

 

44

 

9. Indemnification and Contribution.

 

9.1 The Issuer (the “Indemnitor”) agrees to indemnify the Escrow Agent and its
officers, directors, employees, agents and shareholders (collectively referred
to as the “Indemnitees”) against, and hold them harmless of and from, any and
all loss, liability, cost, damage and expense, including without limitation,
reasonable counsel fees, which the Indemnitees may suffer or incur by reason of
any action, claim or proceeding brought against the Indemnitees arising out of
or relating in any way to this Agreement or any transaction to which this
Agreement relates, unless such action, claim or proceeding is the result of the
willful misconduct or gross negligence of the Indemnitees.

 

9.2 If the indemnification provided for in Section 9.1 is applicable, but for
any reason is held to be unavailable, the Indemnitor shall contribute such
amounts as are just and equitable to pay, or to reimburse the Indemnitees for,
the aggregate of any and all losses, liabilities, costs, damages and expenses,
including counsel fees, actually incurred by the Indemnitees as a result of or
in connection with, and any amount paid in settlement of, any action, claim or
proceeding arising out of or relating in any way to any actions or omissions of
the Indemnitor.

 

9.3 The provisions of this Article 9 shall survive any termination of this
Agreement, whether by disbursement of the Fund, resignation of the Escrow Agent
or otherwise.

 

10. Termination of Agreement. This Agreement shall terminate on the final
disposition of the Fund pursuant to Section 4, provided that the rights of the
Escrow Agent and the obligations of the other parties hereto under Section 9
shall survive the termination hereof and the resignation or removal of the
Escrow Agent.

 

11. Governing Law and Assignment. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, without
regard to the conflicts of laws principles thereof, and shall be binding, upon
the parties hereto and their respective successors and assigns; provided,
however, that any assignment or transfer by any party of its rights under this
Agreement or with respect to the Escrow Amounts or the Fund shall be void as
against the Escrow Agent unless (a) written notice thereof shall be given to the
Escrow Agent; and (b) the Escrow Agent shall have consented in writing to such
assignment or transfer.

 

12. Notices. All notices required to be given in connection with this Agreement
shall be sent by registered or certified mail, return receipt requested, or by
hand delivery with receipt acknowledged, or by the Express Mail service offered
by the United States Postal Service, and addressed, if to the Issuer, at its
respective address set forth on the Information Sheet, and if to the Escrow
Agent, at its address set forth above, to the attention of the Trust Department.

 

13. Severability. If any provision of this Agreement or the application thereof
to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.

 

45

 

14. Execution in Several Counterparts. This Agreement may be executed in several
counterparts or by separate instruments and by facsimile transmission, and all
of such counterparts and instruments shall constitute one agreement, binding on
all of the parties hereto.

 

15. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings (written or oral) of the parties in
connection therewith.

 

[-signature page follows-]

 

46

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.

 

 

VSTOCK TRANSFER, LLC

 

 

 

By: /s/ Yoel Goldfeder                                 

Name: Yoel Goldfeder

Title: Chief Executive Officer

 

 

 WIZARD WORLD, INC.

 

 

 

By: /s/ Michael Mathews                            

Name: Michael Mathews

Title: Executive Chairman

 

47

 

 

 

 

EXHIBIT A

ESCROW AGREEMENT INFORMATION SHEET

 

1.The Issuer

 

Name: Wizard World, Inc.

Address: 1350 Avenue of the Americas, 2nd Floor, New York, NY 10019

Telephone: (646) 801-5572

 

2.The Securities

 

Series A Cumulative Convertible Preferred Stock

 

3.Conditions Required for Disbursement of the Escrow Account

 

(i)Receipt of funds in an amount equal to the Investor’s Purchase Price (as
defined in the Subscription Agreement) per the terms of any Subscription
Agreement (a “Subscription Agreement”);

 

(ii)Receipt of Series A Cumulative Convertible Preferred Stock certificate(s)
(the “Certificate(s)”) per the terms of such Subscription Agreement referenced
in item (i) above; and

 

(iii)Receipt of written notice from both (1) Network 1 Financial Securities,
Inc. and (2) the Issuer, to disburse the funds.

 

4.Plan of Distribution of the Securities

 

Initial Offering Period: March 31, 2012

Extension Period, if any: 60 calendar days

 

5.Title of Escrow Account

 

“Wizard World, Inc.”

 

6.Escrow Agent Fees and Charges

 

The Escrow Agent shall be paid a fee of $2,500 as follows:

 

$500 upon execution of this Agreement; and

$2,000 upon closing.

 

The distribution/bank charges are as follows:

 

·         $10.00 per check ·         $25.00 per check returned (bounced) check
·         $25.00 per wire ·         $50.00 lost check replacement fee

 

 

48

 

 

SCHEDULE 1

 

Subscriber Name   Amount ($)                                                    
                                                                   

 

49

 

 

SCHEDULE 5(a)

 

SUBSIDIARIES

  

Name of Subsidiary  Ownership Interests        Kick the Can Corp., a Nevada
corporation   100%        Wizard World Digital, Inc., a Nevada corporation 
 100%        Kicking the Can, LLC   100%        Wizard Conventions , Inc.   100%

 

No exception to the Company’s representation that it owns all of the equity of
the Subsidiaries and rights to receive equity of the Subsidiaries, free and
clear of all liens, encumbrances and claims.

 

Wizard World, Inc. was formerly known as GoEnergy, Inc.

 

Kick the Can Corp. is doing business in New York under the assumed name ‘Wizard
World.’

 

50

 

 

SCHEDULE 5(d)

 

CAPITALIZATION

 

Wizard World, Inc.

 

1.Authorized and Outstanding Stock:

 

(a)Preferred Stock, par value $0.0001 per share – 50,000,000 authorized and
15,510 Series A Convertible Preferred outstanding; and

(b)Common Stock, par value $0.0001 per share – 80,000,000 shares authorized and
34,687,735 outstanding pre-dilution.

 

2.Outstanding rights to acquire or receive, directly or indirectly, any equity
of the Company (e.g., options, warrants or rights to subscribe to securities,
rights, understandings or obligations convertible into or exchangeable for or
granting any right to subscribe for any shares of capital stock or other equity
interest of the Company):

 

·Warrants dated November 5, 2010, issued in connection with the Bridge Notes
exercisable for an aggregate of 500,000 shares of common stock at an exercise
price of $.60 per share;

·An aggregate of 9,760 Series A Convertible Preferred Stock issued December 6,
2010 convertible into an aggregate of 24,400 shares of common stock at a
conversion price of $0.40 per share;

·An aggregate of 487,964 Series A Warrants dated December 6, 2010, exercisable
for an aggregate of 813,273 shares of common stock at an exercise price of $.60
per share;

·An aggregate of 5,750 Series A Convertible Preferred Stock issued April 18,
2011, convertible into an aggregate of 14,375 shares of common stock at a
conversion price of $0.40 per share;

An aggregate of 287,500 Series A Warrants dated April 16, 2011, exercisable into
an aggregate of 479,167 shares of common stock at an exercise price of $0.60 per
share.

·Convertible promissory notes with a face amount or $453,150, convertible into
common stock at a conversion price of $0.60 per share;

·Warrants issued in connection with the convertible promissory notes exercisable
for an aggregate 377,624 shares of common stock at an exercise price of $0.60
per share;

·Senior Convertible Debentures with a face amount of $325,000, convertible into
common stock at a conversion price of $0.40 per share;

·Warrants issued in connection with the convertible promissory notes exercisable
for an aggregate 406,250 shares of common stock at an exercise price of $0.60
per share;

 

51

 

 

See also Item 3 below.

 

3.Officer, director, employee and consultant stock option or stock incentive
plan or similar plan:

 

Officer, director, employee and consultant stock option

 

·Non-qualified stock options pursuant to which each of three consultants was
granted 1,000,000 stock options exercisable at $0.40 per share;

·Non-qualified stock options issued to each director, except for Chairman
Michael Mathews, to purchase up to 150,000 shares of the Company’s common stock
at an exercise price per share equal to the closing price of the Company’s
Common Stock on the execution date of a director agreement entered into between
the Company and such director; and

·Company committed to award consultants 945,000 shares of common stock.

 

Stock incentive plan or similar plan

 

·2011 Incentive Stock and Award Plan

 

52

 

 

SCHEDULE 5(f)

 

ANTIDILUTION AND REGISTRATION RIGHTS

 

1.Triggered anti-dilution rights/reset/repricing:

 

·Warrants dated November 5, 2010, issued in connection with the Bridge Notes;
exercisable for an aggregate of 500,000 shares at an exercise price of $0.60 per
share;

·An aggregate of 9,760 Series A Convertible Preferred Stock issued December 6,
2010, convertible into an aggregate of 24,400 shares of common stock at a
conversion price of $0.40 per share;

·An aggregate of 487,964 Series A Warrants dated December 6, 2010, exercisable
for an aggregate of 813,273 shares of common stock at an exercise price of $0.60
per share;

·An aggregate of 5,750 Series A Convertible Preferred Stock issued April 18,
2011, convertible into an aggregate of 14,375 shares of common stock at a
conversion price of $0.40 per share;

·An aggregate of 287,500 Series A Warrants dated April 16, 2011, exercisable
into an aggregate of 479,167 shares of common stock at an exercise price of
$0.60 per share;

·Convertible promissory notes with a face amount or $453,150, convertible into
common stock at a conversion price of $0.60 per share;

·Warrants issued in connection with the convertible promissory notes exercisable
for an aggregate 406,250 shares of common stock at an exercise price of $0.60
per share;

·Non-qualified stock options pursuant to which each of three consultants was
granted 1,000,000 stock options exercisable at $0.40 per share; and

·Non-qualified stock options issued to each director, except for Chairman
Michael Mathews, to purchase up to 150,000 shares of the Company’s common stock
at an exercise price per share equal to the closing price of the Company’s
Common Stock on the execution date of a director agreement entered into between
the Company and such director.

 

2.Triggered registration rights:

 

·Warrants dated November 5, 2010, issued in connection with the Bridge Notes;
exercisable for an aggregate of 500,000 shares at an exercise price of $0.60 per
share;

·An aggregate of 9,760 Series A Convertible Preferred Stock issued December 6,
2010, convertible into an aggregate of 24,400 shares of common stock at a
conversion price of $0.40 per share;

·An aggregate of 487,964 Series A Warrants dated December 6, 2010, exercisable
for an aggregate of 813,273 shares of common stock at an exercise price of $0.60
per share;

 

53

 

 

·An aggregate of 5,750 Series A Convertible Preferred Stock issued April 18,
2011, convertible at a conversion price of $0.40 per share;

·Series A Warrants dated April 16, 2011, exercisable into an aggregate of
479,167 shares of common stock at an exercise price of $0.60 per share;

·Convertible promissory notes with a face amount or $453,150, convertible into
common stock at a conversion price of $0.60 per share;

·Warrants issued in connection with the convertible promissory notes exercisable
for an aggregate 406,250 shares of common stock at an exercise price of $0.60
per share;

·Non-qualified stock options pursuant to which each of three consultants was
granted 1,000,000 stock options exercisable at $0.40 per share; and

·Non-qualified stock options issued to each director, except for Chairman
Michael Mathews, to purchase up to 150,000 shares of the Company’s common stock
at an exercise price per share equal to the closing price of the Company’s
Common Stock on the execution date of a director agreement entered into between
the Company and such director.

 

54

 

 

SCHEDULE 5(o)

 

UNDISCLOSED LIABILITIES

 

None.

 

55

 

 

SCHEDULE 5(w)

 

TRANSFER AGENT

 

VStock Transfer, LLC

77 Spruce Street, Suite 201

Cedarhurst, New York 11516

Attn: Yoel Goldfeder, Esq.

Chief Executive Officer

 

Phone: (212) 828-8436

Facsimile: (646) 536-3179

Email: yoel@vstocktransfer.com

 

56

 

 

SCHEDULE 9(e)

 

USE OF PROCEEDS

 

All proceeds will be used for working capital and general corporate purposes.

 

57

 

 

SCHEDULE 9(l)

 

INTELLECTUAL PROPERTY

 

Wizard World, Inc.

 

·Website www.wizardworld.com

·Wizard World Digital newsletter

·www.pop-fi.com

·Flash game

·Android and iPhone apps

·Integration with iPad

 

Kick the Can Corp.

 

·Domain name www.wizardworld.com;

·License to use a subscriber database granted to Kick the Can Corp. by Wizard
Entertainment (d/b/a Gareb Shamus Enterprises, Inc.), the licensor; and

·The following comic conventions:

 

1. Atlanta Comic Convention, including, without limitation, the assignment of
the Memorandum, dated January 1, 2010, by and between Kick the Can Corp. and Wes
Tillander; and ‘Atlanta Comic Convention’ (non-exclusive).     2. Big Apple
Comic Convention, including, without limitation, the assignment of the
Memorandum, dated April 1, 2009, by and between Kick the Can Corp. and Big Apple
Tables, LLC; ‘Big Apple Con’; www.bigapplecon.com; and mail and email lists
(non-exclusive).     3. Cincinnati Comic Convention, including, without
limitation, the assignment of the Memorandum, dated January 4, 2010, by and
between Kick the Can Corp. and Marc Ballard; and ‘Cincinnati Comic Con’
(non-exclusive).     4. Connecticut Comic Convention, including, without
limitation, the assignment of the Memorandum, dated May 2010, by and among Kick
the Can Corp. and Alternative Universe, Mitchell Hallock, Erik Yaeko and Jay
Claus; ‘ComiConn’ (non-exclusive); and mail and email lists (non-exclusive).    
5. Nashville Comic Convention, including, without limitation, the assignment of
the Memorandum, dated January 4, 2010, by and between Kick the Can Corp. and
Marc Ballard; and ‘Nashville Comic Con’ (non-exclusive).     6. New England
Comic Convention, including, without limitation, the assignment of the
Memorandum, dated November 16, 2009, by and between Kick the Can Corp. and
Harrisons Limited (Harrisons); ‘New England Comic Con’; and ‘NECC’.

 

58

 

 

7. North Coast Comic Convention, including, without limitation, the assignment
of the Memorandum, dated January 2010, by and between Kick the Can Corp. and
Roger Priebe; ‘North Coast Comic Con’ (non-exclusive); and mail and email lists
(non-exclusive).     8. Toronto Comic Convention, including, without limitation,
the assignment of the Memorandum, dated June 2009, by and among Kick the Can
Corp., Peter Dixon and Paradise Conventions; ‘Paradise Toronto Comicon’; and
www.torontocomicon.com.     9. New Orleans Comic Convention, including, without
limitation, the assignment of a Memorandum or agreement from Ronnie Prudhomme to
Kick the Can Corp.; ‘Nola’; Nola Comic Con marks (non-exclusive); and mail and
email lists (non-exclusive).     10. Winnipeg (Central Canada) Comic Convention,
including, without limitation, the assignment of a Memorandum or agreement from
Michael Damien Paille to Kick the Can Corp.; ‘Central Canada Comic Con’; C4
marks (non-exclusive); and mail and email lists ((non-exclusive).

 

Kick the Can Corp. may acquire, if not already owned, the following comic
conventions:

 

11. Houston Comic Convention, including, without limitation, the assignment of a
Memorandum or agreement from Robert Quijano to Kick the Can Corp.; ‘Houston
Comic Con’ (non-exclusive); and mail and email lists ((non-exclusive).     12.
Mid-Ohio Comic Convention, including, without limitation, the assignment of a
Memorandum or agreement from CGC Holdings LLC; ‘Mid-Ohio-Con’; and Ohio
Comic-Con marks     13. Austin Comic Convention     14. Anaheim Comic Convention
    15. Miami Comic Convention     16. Philadelphia Comic Convention     17.
Chicago Comic Convention     18. Los Angeles Comic Convention

 

Wizard World Digital, Inc.

 

Wizard World Girls

 

59

 

 

SCHEDULE 11(a)

 

See Schedule 5(d) hereof

 

60