Document:

Unassociated Document

 

EXHIBIT 10.42

	
  

WARRANT PURCHASE AGREEMENT

by and between

DIGITAL DOMAIN MEDIA GROUP, INC.

(the “Company”)

and

COMVEST CAPITAL II LP

(“Purchaser”)

June 30, 2011

	
  

  

  

  

WARRANT PURCHASE AGREEMENT

This Warrant Purchase Agreement (the “Agreement”) is made and entered into as of June 30, 2011, by and between Digital Domain Media Group, Inc., a Florida corporation (the “Company”), and Comvest Capital II LP (“Purchaser”).

WITNESSETH:

WHEREAS, upon the closing of the transactions contemplated herein, Purchaser will acquire all of the rights of LPB under a certain Amended and Restated Lydian Promissory Note, dated as of September 30, 2010, as amended to date (the “Term Note”); and

WHEREAS, upon the closing of the transactions contemplated herein, Purchaser will enter into a Credit Agreement with the Company (the “Credit Agreement”); and

WHEREAS, it is a condition precedent to Purchaser’s acquisition of LPB’s interest in the Term Note and Purchaser’s entering into the Credit Agreement that the Company enter into this Agreement;

NOW, THEREFORE, for and in consideration of the mutual covenants and promises herein contained, as well as for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, contract and agree as follows:

 

ARTICLE I. PURCHASE AND SALE OF WARRANTS

Section 1.1.     Sale and Issuance. The Company shall sell and issue to Purchaser at the Closing (as hereinafter defined) a warrant (“Warrant”) to purchase a number of shares of its Common Stock, $0.01 par value (“Common Stock”) equal to two percent of the Company’s fully diluted Common Stock outstanding. The Warrant shall be in the form of Exhibit A attached hereto and incorporated herein. All shares of Common Stock to be purchased pursuant to the Warrant shall have the rights, privileges and preferences as set forth in the Company’s Articles of Incorporation (the “Certificate”). The shares of Common Stock or Other Securities into which the Warrant will be exercisable upon payment of the purchase price as set forth in the Warrant are referred to herein as the “Warrant Shares.”

Section 1.2.     Purchase. Subject to the terms and conditions set forth herein, for and in consideration of the sale and issuance of the Warrant, Purchaser hereby agrees to enter into the Credit Agreement.

  

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ARTICLE II. CLOSING DATE; DELIVERY

Section 2.1.     Closing Date. The closing (“Closing”) of the purchase and sale of the Warrant hereunder shall be held simultaneously with the closing of the transactions contemplated by the Credit Agreement (the “Closing Date”) or at such other time and place upon which the Company and Purchaser shall agree.

Section 2.2.     Delivery. At the Closing, the Company will deliver to Purchaser the duly executed Warrant registered in the name of Purchaser, together with delivery by the Company of such other documents, certificates and opinions of counsel as may be required to be delivered by the Company to Purchaser as a condition to Purchaser’s consummation of this Agreement.

ARTICLE III. REPRESENTATIONS AND WARRANTIES

Section 3.1.     Representations and Warranties of the Company. In order to induce Purchaser to enter into this Agreement and to extend the loans contemplated by the Credit Agreement, the Company hereby represents and warrants to Purchaser and each subsequent holder of Warrants, as follows:

(a)     Organization and Standing; Certificate and By-Laws. The Company is a corporation legally incorporated, duly organized, validly existing, and in good standing under the laws of the State of Florida. The Company has all requisite corporate power and authority to own and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted. The Company is qualified to do business as a foreign corporation and is in good standing in all jurisdictions in which the Company owns or leases property or in which the failure to be so qualified would have a material adverse affect on the Company’s business as currently conducted. The Company has furnished Purchaser with a true, correct and complete copy of its Certificate and By-Laws, containing all amendments through the Closing Date.

(b)    Corporate Power. The Company has, and will have at the Closing and at all times during which the Warrant is exercisable, all requisite corporate power and authority to execute and deliver this Agreement, to sell and issue the Warrant hereunder, to issue the Warrant Shares upon exercise of the Warrant and to carry out and perform its obligations under the terms of this Agreement and the Warrant.

 

  

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(c)     Authorization. All corporate action necessary for the authorization, execution, delivery and performance of this Agreement by the Company, the authorization, sale, issuance and delivery of the Warrant and (upon exercise of the Warrant) the Warrant Shares and the performance of all of the Company’s obligations hereunder and Warrant have been taken. This Agreement and the Warrant each constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, except as may be limited by insolvency, bankruptcy, moratorium or other laws affecting the rights of creditors in general. The Warrant Shares have been duly and validly reserved and, when issued in compliance with the provisions of this Agreement and the Warrant, the Warrant Shares will be validly issued, fully paid and nonassessable and will have the rights, preferences and privileges set forth in the Certificate. Upon issuance upon exercise of the Warrant, the Warrant Shares will be free of any liens, claims or encumbrances, other than any liens, claims or encumbrances created by or imposed upon the holders thereof through no action of the Company; provided, however, that the Warrant Shares will be subject to restrictions on transfer under state and federal securities laws. The Warrant Shares are not subject to any preemptive rights or rights of first refusal.

(d)     Capitalization. The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, of which 15,090,213 shares are issued and outstanding as of the date hereof and 25,000,000 shares of Series A Preferred Stock, none of which are outstanding on the date hereof. The outstanding shares have been duly authorized and validly issued, and are fully paid and nonassessable. All outstanding securities of the Company were issued in compliance with applicable federal and state securities laws. The Company has reserved sufficient shares of Common Stock for issuance upon exercise of the Warrant. Other than the Warrant and except as specifically described on Schedule 1, the Company does not have any outstanding capital stock or securities convertible into or exchangeable for any shares of its capital stock, or any outstanding rights (either preemptive or other) to subscribe for or to purchase, or any outstanding rights or options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any outstanding calls, commitments or claims of any character relating to, any capital stock or any stock or securities convertible into or exchangeable for any capital stock of the Company. Except as provided in the Warrant or in those securities, rights of subscription, options, commitments, calls, rights or claims described on Schedule 1 , the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any convertible securities, rights or options of the type described in the preceding sentence. Other than as described on Schedule 1, the Company is not a party to any agreement (except as set forth in this Agreement) restricting the transfer of any shares of the Company’s capital stock.

(i)      Offering. The offer, sale and issuance of the Warrants, and the issuance of the Warrant Shares upon exercise of the Warrants, constitute transactions exempt from the registration and prospectus delivery requirements of the federal Securities Act of 1933 (the “Securities Act”) and Chapter 517, Florida Statutes.

  

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Section 3.2.     Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to the Company as follows:

(a)      Investment Intent. Purchaser is acquiring the Warrant for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Purchaser understands and agrees that the Warrant and (upon exercise of the Warrant) the Warrant Shares have not been registered under the Securities Act or any applicable state securities laws. Purchaser acknowledges that restrictive legends in substantially the following format will be placed on the Warrant Share certificates:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SHARES UNDER THAT ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE TRANSFERRING SHAREHOLDER OBTAINS AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION THEREUNDER IS AVAILABLE.

(b)      Organization and Standing. Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

(c)      Authorization; No Consents. Purchaser has taken all actions necessary to authorize it to execute, deliver and perform all of its obligations under this Agreement.

(d)      Due Diligence; Opportunity to Question. Purchaser has had an opportunity to ask questions of and receive answers from the Company, and obtain and review all additional information and documents reasonably deemed necessary by Purchaser, concerning the terms and conditions of the investment in the Warrant and Warrant Shares, as well as the affairs of the Company.

(e)       Investor Status. Purchaser (a) is an “accredited investor,” as that term is defined in Rule 501(a) of Regulation D under the Securities Act, and (b) is a “qualified institutional buyer” as such term is defined in Rule 144A of the Securities Act.

  

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ARTICLE IV. CONDITIONS TO CLOSING

Section 4.1.     Purchaser’s Conditions. Purchaser’s obligations to purchase the Warrant at the Closing are subject to the fulfillment of the following conditions, the waiver of which shall not be effective against Purchaser unless specifically consented to in writing:

(a)     Representations and Warranties Correct. The representations and warranties made by the Company in Section 3.1 hereof shall be true and correct when made, and shall be true and correct on the Closing Date.

(b)     Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all respects.

(e)     Consummation of Credit Agreement. The Company shall have satisfied all conditions precedent to the obligation of Purchaser to advance funds under the Credit Agreement in compliance with all applicable laws, without recourse to any provision in the Credit Agreement permitting waiver by Purchaser or the Company, of any term, condition, obligation, covenant or other requirement without the prior written consent of Purchaser.

(f)      Other Acquisitions. Purchaser shall have acquired the Term Note on terms acceptable to Purchaser in its sole discretion.

Section 4.2.     Company’s Conditions. The Company’s obligation to sell and issue the Warrants at the Closing is, at the option of the Company, subject to the fulfillment as of the Closing Date of the following conditions:

(a)     Representations. The representations made by Purchaser in Section 3.2 hereof shall be true and correct when made, and shall be true and correct on the Closing Date.

(b)     Closing of Credit Agreement. The loan contemplated by the Credit Agreement shall have been consummated in accordance with the terms of such Credit Agreement.

ARTICLE V. AFFIRMATIVE COVENANTS OF THE COMPANY

Section 5.1.     Financial Information. The Company will mail to each holder of any of the Warrants or Warrant Shares:

  

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(a)     Reports. If the Company is not subject to the requirements of Section 13 or 15(d) of the Exchange Act, the Company shall mail within five days after it would have been required to file with the Commission, financial statements, including notes thereto (and with respect to annual reports, an auditor’s report by a firm of established national reputation), and a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” both comparable to that which the Company would have been required to include in such annual or quarterly reports, information, documents or other reports if the Company were subject to the requirements of Section 13 or 15(d) of the Exchange Act.

Section 5.2.      Rule 144 Reporting. The Company agrees that from and after the date it registers any class of its securities under Section 12(b) or 12(g) of the Exchange Act, it shall:

(a)     Make and keep “adequate public information” available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after the date hereof;

(b)     File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c)      So long as Purchaser owns any Warrant Shares, furnish to Purchaser promptly upon request a written statement by the Company as to its compliance with the reporting requirements (i) necessary to cause “adequate public information” to be available under Rule 144, and (ii) of the Securities Act and Exchange Act.

Section 5.3.     Piggyback Registration Rights.

(a)     Right to Piggyback. If at any time the Company proposes to file a registration statement under the Securities Act with respect to any underwritten offering of any securities of the Company, other than a registration statement on Form S-4 or S-8 (or any substitute form for comparable purposes that may be adopted by the Commission) or a registration statement filed in connection with an exchange offer or an offering of securities solely to the Company’s existing security holders (a “Piggyback Registration”), the Company shall in each case give written notice of such proposed filing to each holder of Registrable Shares as soon as practicable, but in no event less than 30 days before the anticipated filing date, and shall include in such registration statement all Registrable Shares with respect to which the Company has received a written request for inclusion therein within 15 days after the Company’s notice is received. “Registrable Shares” means at any time any shares of Common Stock owned by the holders of the Warrant, whether acquired on the date hereof or hereafter acquired; provided, however, that Registrable Shares shall not include any shares the sale of which has been registered pursuant to a registration statement filed under the Securities Act which has been declared effective.

  

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(b)     Priority in Piggyback Registrations. If the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in a Piggyback Registration exceeds the number which can be sold in such offering, the Company shall include in such registration (i) first, the securities the Company proposes to sell, if any, and (ii) second, the Registrable Shares requested to be included in such registration, pro rata among the holders of other securities requested to be included on the basis of the then number of Registrable Shares and other securities requested to be included by each holder of such securities.

(c)     Each holder of Registrable Shares hereby agrees that he, she or it will not sell or otherwise transfer or dispose of any Registrable Shares or other securities of the Company held by such holder for a period of time specified by the Company and its underwriter (not to exceed 180 days) following the effective date of a registration statement. Each Holder agrees to execute an agreement relating to such restriction upon the request of the Company or its underwriter, which agreement shall be in writing in a form satisfactory to the Company and such underwriter. The Company may impose stop-transfer instructions with respect to the Registrable Shares or other securities subject to the foregoing restriction until the end of such “lockup” period.

(d)     Notwithstanding anything to the contrary contained herein, this Section 5.3 shall not apply, and the Purchaser and/or holder of Registrable Shares shall have no registration rights, with respect to an initial public offering of the Company’s common stock.

Section 5.4.      Preemptive Rights. Until the date that the Company completes an initial public offering of its Common Stock, if the Company offers (other than in a public offering) Common Stock, Options or Convertible Securities (each as defined in the Warrant), but specifically excluding Excluded Issuances (as defined in the Warrant), Holder shall have the right to participate in such offering. At least 10 business days prior to the closing of such an offering, the Company shall notify the Purchaser of the terms of such offering and, if Purchaser delivers written notice to the Company of its agreement to participate in such offering within 5 business days of receipt of such notice, Purchaser shall be entitled and obligated to acquire its pro-rata share of such offered securities. Purchaser’s pro-rata share shall equal its percentage ownership interest in the Company (the calculation of which shall be made assuming all of Purchaser’s Options and Convertible Securities had been exercised in full).

  

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ARTICLE XI. MISCELLANEOUS

Section 6.1.     Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE OF FLORIDA.

Section 6.2.     Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by Purchaser and the closing of the transactions contemplated hereby.

Section 6.3.     Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

Section 6.4.     Entire Agreement, Amendment. This Agreement and the other documents delivered pursuant hereto at the Closing constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.

Section 6.5.     Notices, etc. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to Purchaser, at: 525 Okeechobee Blvd., Suite 1050, West Palm Beach, Fl 33401 with a copy to Haynes and Boone, LLP, 1221 McKinney, Suite 2100, Houston, Texas 77010, Attention: Artie Howard, or at such other address as Purchaser shall have furnished to the Company in writing, or (b) if to any other holder of any Warrants or Shares, at such address as such holder shall have furnished the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder of such Warrants or Shares who has so furnished an address to the Company, or (c) if to the Company, to 8881 South US Highway 1 Port St. Lucie, Florida 34952 and addressed to the attention of the Corporate Secretary, or at such other address as the Company shall have furnished to Purchaser, with a copy to Eavenson & Kairalla, P.L., 2000 PGA Boulevard, Suite 2000, Palm Beach Gardens, Florida 33408, Attention: Bradley B. Eavenson.

  

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Section 6.6.     Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any holder of any Shares, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Except as provided in Section 6.4 hereof, any waiver, permit, consent or approval of any kind or character on the part of any holder of any breach or default under this Agreement, or any waiver on the part of any holder of any provisions or conditions of this agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any holder, shall be cumulative and not alternative.

Section 6.7.      Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which together shall constitute one agreement.

Section 6.8.     Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.

Section 6.9.     Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not considered in construing or interpreting this Agreement.

Section 6.10.   Specific Performance. The Company acknowledges that any breaches of the agreements and covenants contained in of this Agreement would cause irreparable injury to Purchaser for which Purchaser would have no adequate remedy at law. In addition to any other remedy that Purchaser may be entitled to, the parties agree that Purchaser shall be entitled to the remedy of specific performance.

  

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The foregoing Agreement is hereby executed as of the date first above written.

	  	
DIGITAL DOMAIN MEDIA GROUP, INC.

	  	  	  
	  	
By

	
/s/ John Textor

	  	  	
Name: John Textor

	  	  	
Title: CEO

Signature Page to

Warrant Purchase Agreement

  

  

  

	  	
COMVEST CAPITAL II, L.P.,

	  	  	  
	  	
By:

	
ComVest Capital II Partners L.P.,

	  	  	
its General Partner

	  	  	  
	  	
By:

	
ComVest Capital II Partners UGP, LLC,

	  	  	
its General Partner

	  	  	  
	  	
By:

	
/s/ Robert O’Sullivan

	  	
Name: Robert O’Sullivan

	  	
Title: Managing Partner

Signature Page to

Warrant Purchase AgreementUnassociated Document

 

EXHIBIT 10.43

 

	
COMVEST PROMISSORY NOTE

	  	  
	  	
Palm Beach County, Florida

	
U.S. $12,000,000.00

	
June 30, 2011

 

FOR VALUE RECEIVED, the undersigned, Digital Domain Media Group, Inc., a Florida corporation (formerly known as Digital Domain Holdings Corporation, a Florida corporation) (the “Borrower”) hereby promises to pay to the order of Comvest Capital II, LP, a Delaware limited liability company (“Comvest”) the aggregate principal amount of the Existing Lydian Note (as defined below) in the principal amount of Twelve Million Dollars (U.S. $12,000,000.00), together with interest accrued on the unpaid principal amount of this Note plus all fees, expenses and other costs as provided for in that certain Second Amended and Restated Loan Agreement, dated as of November 24, 2010, among the Borrower, Comvest, as administrative agent (the “Administrative Agent”), Comvest, as a lender, PBC Digital Holdings, LLC, a Delaware limited liability company, as a lender (“PBC Digital”) and PBC MGPEF DDH, LLC, a Delaware limited liability company, as a lender (“PBC Macquarie”) (as amended by that certain First Amendment to Second Amended and Restated Loan Agreement and Agreement of even date herewith, and as further amended, restated, supplemented, or modified from time to time, the “Loan Agreement”).  All capitalized terms not otherwise defined herein shall have the meanings and definitions set forth in the Loan Agreement.  This Note is the Comvest Note referred to in, and is entitled to the benefits and conditions of, the Loan Agreement.

 

1.           Amended and Restated Note.  This Note amends, restates, reduces and replaces in its entirety, but is not a novation of, that certain Amended and Restated Lydian Promissory Note dated September 30, 2010 (the “Existing Lydian Note”) given by the Borrower to Lydian in the principal amount of Twelve Million Dollars ($12,000,000).

 

2.           Payment of Principal and Interest.  The Borrower promises to pay principal and interest on all amounts due and owing hereunder and pursuant to the Loan Agreement from the date hereof until all such amounts due and owing are paid in full, payable at the interest rate and at the time(s) as set forth in the Loan Agreement.  All payments of principal and interest made by Borrower with respect to this Note shall be paid to Comvest by wire transfer of immediately available funds to such account as Comvest shall so direct or by certified check.  Any payments received after 3:00 PM (Delaware time) on the date when due shall be deemed received on the following Business Day.  All payments made with respect to this Note shall be made in United States Dollars.

 

3.           Prepayment.  This Note is subject to the prepayment provisions set forth in Section 2.03 of the Loan Agreement.

 

4.           Late Charge.  If any amounts due and owing under the Existing Lydian Note are not paid within ten (10) calendar days of the date when due, the Borrower shall pay Comvest a “late charge” in the amount of five percent (5%) of the amount of the payment that is past due.

 

 

 

 

 

5.           Event of Default.  Upon the occurrence and during the continuance of an Event of Default as set forth in the Loan Agreement, Comvest shall have the rights and remedies that are set forth in the Loan Agreement and the other Loan Documents.  Upon the occurrence and  during the continuance of an Event of Default, the Borrower shall pay to Comvest interest on any overdue payment of principal, interest, charges and premiums at a rate per annum equal at all times to twenty-four percent (24%) per annum if the Event of Default was a Monetary Default or six percent (6%) per annum above the rate per annum required to be paid hereunder if the Event of Default was a Non-monetary Default, from the date the same shall become due and payable until the date paid.

 

6.           Secured Note.  This Note is secured by the Collateral as set forth in the Collateral Documents.

 

7.           Maximum Interest Rate. In no event shall the interest rate payable with respect to this Note exceed the maximum rate of interest permitted to be charged under applicable law (the “Maximum Interest Rate”).  If the amount of interest payable for the account of Comvest exceeds the Maximum Interest Rate, the amount of interest payable for Comvest’s account on such interest payment date shall automatically be reduced to the Maximum Interest Rate.

 

8.           Amendments, Etc.  No amendment or waiver of any provision of this Note, and no consent to any departure by the Borrower herefrom, shall in any event be effective unless the same shall be in writing and signed by Comvest, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

9.           Expenses.  The Borrower hereby agrees upon demand to pay to Comvest the amount of any and all reasonable fees and expenses in accordance with the terms set forth in the Loan Agreement.

 

10.         Waivers; Remedies.

 

(a)           The Borrower hereby waives all applicable exemption rights, whether under any state constitution, homestead laws or otherwise, as well as any presentment for payment, demand, notice of dishonor and protest of this Note.

 

(b)          No failure on the part of Comvest to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

 

11.         Assignment.  This Note may be assigned  in accordance with the assignment provisions set forth in the Loan Agreement.

 

12.         Severability.  The provisions of this Note shall be severable and the invalidity or unenforceability of any one or more of the provisions of this Note shall not affect the validity and enforceability of the other provisions.

 

 

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13.         No Setoffs.  No indebtedness evidenced by this Note shall be deemed to have been setoff or shall be setoff or compensated by all or part of any claim, cause of action, counterclaim or cross-claim, whether liquidated or unliquidated, which the Borrower may have or claim to have against Comvest.  Furthermore, in respect to the present indebtedness of, or any  future indebtedness incurred by, the Borrower to Comvest, the Borrower waives, to the fullest extent permitted by law, the benefits of any applicable law, regulation or procedure that substantially provides that, if (i) cross-demands for money have existed between persons at any point in time and (ii) neither demand was barred by the applicable statute of limitations and (iii) an action is thereafter commenced by one such person, then the other may assert in his answer the defense of payment in that the two demands are compensated so far as they equal each other, notwithstanding that an independent action asserting the claim would at the time of filing the answer be barred by the applicable statute of limitations.

 

14.         Loss, Theft, Destruction or Mutilation of Note.  In the event of the loss, theft or destruction of this Note, upon Comvest’s written request, accompanied by an indemnification and/or security reasonably satisfactory to the Borrower, or in the event of the mutilation of this Note, upon Comvest’s surrender to the Borrower of the mutilated Note, the Borrower shall execute and deliver to Comvest (or any party that Comvest designates), as the case may be, a new promissory note in form and content identical to this Note in lieu of the lost, stolen, destroyed or mutilated Note.

 

15.         Unconditional Payment.  If any payment received by Comvest hereunder shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief law, then the obligation to make such payment shall survive any cancellation or satisfaction of this Note or return thereof to the Borrower and shall not be discharged or satisfied with any prior payment thereof or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment shall be immediately due and payable upon demand.  No release of any security for this Note or any party liable for payment of this Note shall release or affect the liability of the Borrower or any other party who may become liable for payment of all or any part of the indebtedness evidenced by this Note.  Comvest may release any guarantor, surety or indemnitor of this Note from liability, in every instance without the consent of the Borrower hereunder and without waiving any rights which Comvest may have hereunder or under any of the other Loan Documents or under applicable law or in equity.

 

16.         Relationship of Parties.  THE RELATIONSHIP BETWEEN THE BORROWER AND COMVEST IS, AND AT ALL TIMES SHALL REMAIN, SOLELY THAT OF DEBTOR AND CREDITOR, AND SHALL NOT BE, OR BE CONSTRUED TO BE, A JOINT VENTURE, EQUITY VENTURE, PARTNERSHIP OR OTHER RELATIONSHIP OF ANY NATURE.

 

17.         Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.

 

(a)           This Note shall be governed by, and construed in accordance with, the laws of the State of Delaware without regard to conflict of law principles that may cause the laws of another jurisdiction to apply.

 

 

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(b)          The Borrower hereby irrevocably consents to the exclusive jurisdiction of any state court located within the State of Delaware or the United States District Court for Delaware, in connection with any action or proceeding arising out of or relating to this Note or  any document or instrument delivered pursuant to this Note or otherwise.  In any such litigation, the Borrower waives, to the fullest extent it may effectively do so, personal service of any summons, complaint or other process and agrees that the service thereof may be made by certified or registered mail directed to the Borrower, at the Borrower’s address set forth on the signature page hereto.  The Borrower hereby waives, to the fullest extent it may effectively do so, the defenses of forum non conveniens and improper venue.

 

(c)          The Borrower irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Note, or the actions of Comvest in the negotiation, administration, performance or enforcement thereof.

 

[signature page attached hereto]

 

 

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IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

 

BORROWER:

 

	
Digital Domain Media Group, Inc. (f/k/a Digital

	
Domain Holdings Corporation)

	  
	
By:

	
/s/ John Textor

	
Name : John Textor

	
Title : CEO

	
Address: 8881 South US Highway 1

	
 Port St. Lucie, FL 34952

 

Signature Page to

Comvest Promissory Note

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