Exhibit 4.12


 


THE SECURITIES OFFERED
HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)


 


 


US $75,000.00 


RED GIANT ENTERTAINMENT, INC.


6% CONVERTIBLE REDEEMABLE SECURED NOTE


DUE MAY 24, 2015


BACK END NOTE [_] OF 4


 


FOR
VALUE RECEIVED, Red Giant Entertainment, Inc. (the “Company”) promises to pay to the order of GEL Properties, LLC and
its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of Seventy Five
Thousand dollars exactly (U.S. $75,000.00) on May 24, 2015 ("Maturity Date") and to pay interest on the principal
amount outstanding hereunder at the rate of 6% per annum commencing on May 24, 2013 (the “Funding Date”) In repaying
this amount, the Company acknowledges that it has received a total of $75,000 from the Holder, less $3,750 in legal fees and $7,500
in third party due diligence fees, all of which were paid by the Holder, for a total of $63,750.00. The interest will be paid to
the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note.
The principal of, and interest on, this Note are payable at 16192 Coastal Highway, Lewes, DE, 19958, initially,
and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The
Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any
amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder
at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment
of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the
sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph
4(b) herein.


 


This Note is subject
to the following additional provisions:


 


1.This Note is exchangeable
for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering
the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or
other governmental charges payable in connection therewith.




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2.The Company shall
be entitled to withhold from all payments any amounts required to be withheld under applicable laws.


 


3.This Note may
be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable
state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment
for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered
on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company
nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right
of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective
transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice
of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of
such Notice of Conversion shall be the Conversion Date.


 


4.(a)The Holder
of this Note is entitled, at its option, at any time after the requisite rule 144 holding period, and after full cash payment for
the shares convertible hereunder, to convert all or any amount of the principal face amount of this Note then outstanding
into shares of the Company's common stock (the "Common Stock") without restrictive legend of any nature, at a
conversion price ("Conversion Price") for each share of Common Stock equal to 70% of the lowest closing bid price
of the Common Stock as reported on the National Quotations Bureau Pink Sheets on which the Company’s shares are traded or
any exchange upon which the Common Stock may be traded in the future ("Exchange"), for any of the five trading
days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered
by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the
Holder wishes to included the same day closing price). If the shares have not been delivered within 3 business days, the Notice
of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the
Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such shares of
Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to
convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued but unpaid interest
shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but
the number of shares issuable shall be rounded to the nearest whole share.


 


(b)Interest on any
unpaid principal balance of this Note shall be paid at the rate of 6% per annum. Interest shall be paid by the Company in Common
Stock ("Interest Shares"). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares
based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion
of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.




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(c)At any time the
Company shall have the option to redeem this Note and pay to the Holder 150% of the unpaid principal amount of this Note, in full.
The Company shall give the Holder 5 days written notice and the Holder during such 5 days shall have the option to convert this
Note or any part thereof into shares of Common Stock at the Conversion Price set forth in paragraph 4(a) of this Note.


 


(d)Upon (i) a transfer
of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions,
(ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii)
any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity
(other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii)
being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this
Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election
of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid
interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.


 


(e)In case of any
Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made
so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into
the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could
have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such
Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders
of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person
or entity acting in good faith.


 


5.No provision of
this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


6.The Company hereby
expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice
of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and to be owing hereto.


 


7.The Company agrees
to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting
any amount due under this Note.




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8.If one or more
of the following described "Events of Default" shall occur:


 


(a)The Company shall
default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or


 


(b)Any of the representations
or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall be false or misleading
in any respect; or


 


(c)The Company shall
fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under
this Note; or


 


(d)The Company shall
(1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for
the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or


 


(e)A trustee, liquidator
or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall
not be discharged within thirty (30) days after such appointment; or


 


(f)Any governmental
agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company; or


 


(g)One or more money
judgments, writs or warrants of attachment, or similar process, in excess of ten thousand dollars ($10,000) in the aggregate, shall
be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or
unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder;
or


 


(h)Bankruptcy, reorganization,
insolvency or liquidation proceedings, or other proceedings for relief under any bankruptcy law or any law for the relief of debtors
shall be instituted voluntarily by or involuntarily against the Company; or


 


(i)The Company shall
have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then
trading in the Common Stock shall be suspended for more than 5 consecutive days;


 


(j)If a majority
of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board; or




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(k)The Company shall
not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of
its receipt of a Notice of Conversion; or


 


(l)The Company shall
cease to be “current” in its filings with the Securities and Exchange Commission; or


 


(m)The Company shall
fail to replenish the transfer agent reserve set forth in Section 12; or


 


(n)The Company’s
Common Stock has a closing bid price of less than $0.007 per share for at least 5 consecutive trading days; or


 


(o)The dollar trading
volume of the Company’s Common Stock is less than twenty five thousand dollars ($25,000.00) in any 5 consecutive trading
days.


 


Then, or at any time
thereafter, unless cured (except for 8(l) 8(m) and 8(n)) which are incurable defaults), and in each and every such case, unless
such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent
default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and
payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which
are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a default
interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest
permitted by law. Further, if the Note becomes due and payable, the Holder may use the outstanding principal and interest due under
the Note to offset any payment obligations it may have to the Company. In the event of a breach of 8(j) the penalty shall be $250
per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company.
This penalty shall increase to $500 per day beginning on the 10th day.


 


Specifically with
respect to an Event of Default occurring as a result of a breach of item 8(k), the Holder has the right (but not the obligation)
to advance fees to the Company’s auditors and attorneys necessary to allow the Company to become “current” in
its filings with the Securities and Exchange Commission. Such advances shall be advanced against other amounts due by the Company
(e.g. other $20k notes etc), except that the discount shall be doubled.


 


If the Holder shall
commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then
the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.


 




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9.In case any provision
of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such
provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.


 


10.Neither this
Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company
and the Holder.


 


11.The Company represents
that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a
“shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating
it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion
to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.


 


12.As a condition
of funding the Note, the Company will issue irrevocable transfer agent instructions reserving 21,500,000 shares of Common Stock
for conversion under this Note. The reserve shall be replenished as needed to allow for conversions of this Note. Upon full conversion
of this Note, the reserve representing this Note shall be cancelled. From this reserve, the Holder may send a Conversion Notice
to the Company, and the Company will duly pass to its transfer agent, a conversion for a tranche of shares to be converted (Tranche
Conversion”) This/these Tranche Conversion(s) may be actually transferred by the transfer agent to the Holder, or via DWAC
to the Holder’s designated Broker-Dealer(s) to be held in street name FBO the Holder, yet unconverted on the books and records
of the Company in a Creditor in Possession Escrow. (“CPE”) When the CPE is active, by having shares therein, the Holder
must submit daily transaction journals, on days that there were a sale, in the Company’s securities (“Runs”)
to the Company to calculate the price of conversion (“Basis”) of any conversion and the amount and date thereunder.


 


13.This Note shall
be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within
the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby
mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement
may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective
as an original.


 


14. The terms of the cash
payments to the Company by the Holder for the issuance of this Note, and the guarantee and collateralization of those payment obligations
is set forth in a $75,000 Secured Promissory Note issued to the Company by the Holder on even date herewith.


 


15.The Company will
give the Holder direct notice of any corporate actions including but not limited to name changes, stock splits, recapitalizations
etc. This notice shall be given to the Holder as soon as possible under law. The Company will email such notices to Goldy@pisc.us.




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IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed by an officer thereunto duly authorized.


 


 


Dated: 5/24/13


 


 





RED GIANT ENTERTAINMENT, INC.


 


By: /s/ Benny R. Powell


 


Title: CEO


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




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EXHIBIT A


 


 


NOTICE OF CONVERSION


 


(To be Executed by the Registered Holder
in order to Convert the Note)


 


The undersigned hereby
irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Red Giant Entertainment,
Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.


 


If Shares are to be
issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable
with respect thereto.


 


Date of Conversion:                                                                                                             


Applicable Conversion Price:                                                                                               


Signature:                                                                                                                            


[Print Name of Holder and Title of Signer]


Address:                                                                                                                             


______________________________________________________________________


 


SSN or EIN:                                                  


Shares are to be registered in the following name:                                                                 


 


Name:                                                                                                                                 


Address:                                                                                                                             


Tel:                                                               


Fax:                                                              


SSN or EIN:                                                


 


Shares are to be sent or delivered to the following account:


 


Account Name:                                                                                                                 


Address:                                                                                                                           


 


 


 






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