Exhibit 10.7

 

THE SECURITIES REPRESENTED HEREBY HAVE NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTEDUNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. LENDERS SHOULD BE AWARETHAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESESECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFEROR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

GEL PROPERTIES, LLC

SECURED PROMISSORY NOTE

GEL BACK END SECURITY NOTE **[_]**OF 4

 

May 24, 2013

 

1. 	Principal and Interest

 

FOR VALUE RECEIVED, GEL Properties, LLC, aDelaware Limited Liability Company (the “Company”) hereby absolutely and unconditionally promises to pay to Red GiantEntertainment, Inc. (the “Lender”), or order, the principal amount of Seventy Five thousand dollars ($75,000) no laterthan [_______] 24, 2014, unless the Lender does not meet the “current information requirements” required under Rule144 of the Securities Act of 1933, as amended, in which case the Company may declare the offsetting note issued by the Lender onthe same date herewith to be in Default (as defined in that note) and cross cancel its payment obligations under this Note as wellas the Lenders payment obligations under the offsetting note. This Note shall bear simple interest at the rate of 6%.

 

2. 	Repayments and Prepayments; Security.

 

a. 	All principal under this Note shall be due and payableno later than [_______] 24, 2014, unless the Lender does not meet the “current information requirements” required underRule 144 of the Securities Act of 1933, as amended, in which case the Company may declare the offsetting note issued by the Lenderon the same date herewith to be in Default (as defined in that note) and cross cancel its payment obligations under this Note aswell as the Lenders payment obligations under the offsetting note.

 

b. 	The Company may pay this Note at anytime.

 

c. 	This Note shall be secured by a $75,000cash value interest in a life insurance policy assigned to the Company by its member, Aryeh Goldstein. The Company may exchangethis collateral for other collateral with an appraised value of at least $75,000.00. The Company may not effect any conversionsunder the Lender Note until it has made full cash payment for the portion of the Lender Note being converted.

 

3. 	Events of Default; Acceleration.

 

a. 	The principal amount of this Note issubject to prepayment in whole or in part upon the occurrence and during the continuance of any of the following events (each,an “Event of Default”): the initiation of any bankruptcy, insolvency, moratorium, receivership or reorganization byor against the Company, or a general assignment of assets by the Company for the benefit of creditors. Upon the occurrence of anyEvent of Default, the entire unpaid principal balance of this Note and all of the unpaid interest accrued thereon shall be immediatelydue and payable. The Company may offset amounts due to the Lender under this Note by similar amounts that may be due to the Companyby the Lender resulting from a promissory note issued by the Lender to the Company on even date herewith.

 

b. 	No remedy herein conferred upon theLender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and in addition to every otherremedy hereunder, now or hereafter existing at law or in equity or otherwise.

 

4. 	Notices.

 

a. All notices, reports and other communicationsrequired or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnightdelivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed(i) if to a Lender, at such Lender’s address as the Lender shall have furnished the Company in writing and (ii) if to theCompany at such address as the Company shall have furnished the Lender(s) in writing).

 

b. 	Each such notice, report or other communicationshall for all purposes under this Note be treated as effective or having been given when delivered if delivered personally or,if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptaclefor the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by electronic communication with confirmation,upon the delivery of electronic communication.

 

5. 	Miscellaneous.

 

a. 	Neither this Note nor any provisionshereof may be changed, waived, discharged or terminated orally, but only by a signed statement in writing.

 

b. 	No failure or delay by the Lender toexercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power orprivilege preclude any other right, power or privilege. The provisions of this Note are severable and if any one provision hereofshall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity or unenforceability shall affectonly such provision in such jurisdiction. This Note expresses the entire understanding of the parties with respect to the transactionscontemplated hereby. The Company and every endorser and guarantor of this Note regardless of the time, order or place of signinghereby waives presentment, demand, protest and notice of every kind, and assents to any extension or postponement of the time forpayment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of anyother party or person primarily or secondarily liable.

 

 

c. 	If Lender retains an attorney for collectionof this Note, or if any suit or proceeding is brought for the recovery of all, or any part of, or for protection of the indebtednessrespected by this Note, then the Company agrees to pay all costs and expenses of the suit or proceeding, or any appeal thereof,incurred by the Lender, including without limitation, reasonable attorneys’ fees.

 

d. 	This Note shall for all purposes begoverned by, and construed in accordance with the laws of the State of New York (without reference to conflict of laws).

 

e. 	This Note shall be binding upon theCompany’s successors and assigns, and shall inure to the benefit of the Lender’s successors and assigns.

 

IN WITNESS WHEREOF, the Company has causedthis Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written.

 

 

GEL PROPERTIES, LLC

 

 

By:

 

Title: Member