Document:

ex102.htm

Exhibit 10.2

 

TRANSITION AGREEMENT

This Transition Agreement (the “Agreement”) dated this 17th day of August, 2011, by and between Hampton Roads Bankshares, Inc., (the “Company” and,  collectively with Bank of Hampton Roads and Shore Bank, the “Bank”) and John A. B. Davies, Jr. (“Davies”) provides:

R E C I T A L S

 

A.    The Bank employed Davies as President and Chief Executive Officer of the Company under an Employment Agreement dated July 13, 2009 (“Employment Agreement”).

B.    Davies tendered his resignation to the Bank on August 12, 2011 effective September 11, 2011 so he could return to his career as a bank consultant.

C.    Under the Employment Agreement, Davies was to provide the Bank with two years of consulting services upon the end of his employment.  Due to the progress the Bank has already made during Davies’ direction and Davies’ desire to focus more on consulting with other banks in the Southeast needing assistance, the Bank and Davies desire to shorten his obligation to one year.

D.    The parties to this Agreement desire to amend and clarify the obligations of the Bank and Davies following his resignation.

NOW, THEREFORE, in consideration of payments provided hereunder and the following mutual promises and agreements, the sufficiency of which is acknowledged by Davies and the Bank, the parties agree as follows:

 

  

  

  

1.   Employment.

(a)           Effective August 12, 2011, Davies ceased acting as President and CEO of the Company and will serve as a full-time employee until September 11, 2011, carrying out such duties as shall be delegated to him by the Bank and otherwise assisting with the Bank’s management transition.  His compensation and benefits for his employment will remain as provided in Sections 4 and 5 of the Employment Agreement through September 11, 2011.  Davies’ employment will end on September 11, 2011.

(b)           On the next payroll date following September 11, 2011, the Bank will pay Davies any accrued but unused vacation leave.

(c)           As soon as practical, Davies will return all Bank property in his possession except for his Bank automobile, including but not limited to all items specified in Section 10 of the Employment Agreement as well as his Bank credit card and cell phone.

(d)           Davies will be eligible to purchase continuation of insurance coverage following September 11, 2011 as provided under COBRA.

(e)           Except as provided in Section 1(a), Davies resigns, effective immediately, from any and all positions with the Bank and any other related companies, subsidiaries, or affiliates.

2.   Agreement Not to File Administrative Charges or Lawsuits.

By executing this Agreement, Davies and the Bank agree never to file a lawsuit in any court or any administrative charge or complaint concerning Davies’ employment with the Bank, the circumstances surrounding the end of Davies’ employment or claims released in Paragraph 3 of this Agreement except as may be necessary to enforce the terms hereof.

 

  

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3.   Complete Mutual Release.

(a)           Davies knowingly and voluntarily agrees to release the Bank, and any other related companies, subsidiaries, or affiliates, its current and former employees, owners, officers, agents, independent contractors and directors of any of them (“Released Parties”) from all claims or demands Davies may have based on his employment with the Bank and the circumstances that surrounded the end of his employment.  This release includes, but is not limited to, a release of any claims or rights Davies may have under the Employment Agreement or Title VII of the Civil Rights Act of 1964, and the amendments thereto embodied in the Civil Rights Act of 1991; the Employment Retirement Income Security Act of 1974, as amended, the National Labor Relations Act, as amended, the Americans with Disabilities Act, the Occupational Safety and Health Act, as amended, or any other federal, state or local statutes or regulations regulating Davies’ employment by the Bank.  This release also includes a release of any state or federal common law, public policy, contract or tort claims Davies may have based upon his employment by the Board or the circumstances that surrounded the end of his employment.  This release covers both claims that Davies knows about and those that Davies may not know about that occurred on or before the execution of this Agreement.

(b)           The Bank hereby knowingly and voluntarily releases and forever discharges Davies from all liabilities, claims, demands, rights of action or causes of action the Bank had, has or may have against Davies, including, but not limited to, any claims or demands based upon or relating to Davies’ employment with the Bank or the circumstances that surrounded the end of that employment.  This release covers both claims that the Bank knows about and those claims it may not know about.

(c)           Notwithstanding the foregoing, the Bank and Davies agree that nothing in this release shall be construed to prohibit the exercise of any rights by either party that such party may not waive as a matter of law.

 

  

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4.           No Admission of Liability.

    This Agreement and the payments and performances hereunder shall not be construed to be an admission of liability, an admission of the truth of any fact, or a declaration against interest on the part of the Bank or Davies.

5.           Non-Disparagement

(a)    Davies agrees not to make any derogatory statement with regard to the performance, character, or reputation of the Released Parties or assert that any of them has acted improperly or unlawfully with respect to Davies or any other employee of the Bank.  Nothing contained herein shall limit Davies’ communications with his counsel or, to the extent necessary to respond to inquiries initiated by regulators of the Bank or any of its related companies, subsidiaries, or affiliates, his communications with such regulators.

(b)    The Bank agrees not to make any derogatory statement with regard to the performance, character or reputation of Davies or assert that Davies has acted improperly or unlawfully with respect to the Bank or any other employee of the Bank.  For purposes of this paragraph 5(b) only, the Bank means members of the Board and the Bank’s executive officers.  Nothing contained herein shall limit the Bank’s communications with its regulators, counsel or accountants.

(c)    The restrictions in this paragraph 5 will not apply if Davies or one of the individuals restricted under paragraph 5(b) have been compelled to provide testimony or information.  In the event that one of the individuals to whom these restrictions apply gains any knowledge that he or she will be required to give testimony or information regarding the other party, that individual will provide the other party with prompt written notice of the upcoming testimony.

  

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6.           Restrictive Covenants.

Anything herein to the contrary notwithstanding, Davies and the Bank agree that Davies’ obligations under Sections 10, 11, and 12 of the Employment Agreement will survive the termination of his employment, will not be superseded by this Agreement and are hereby incorporated by reference.  Davies and the Bank further agree that the obligations under Sections 11 and 12 of the Employment Agreement will be extended through September 11, 2013. In consideration thereof and the other provisions of this Transition Agreement, the Bank shall pay   one hundred and ten thousand dollars ($110,000) to Davies (“the Restrictive Covenant Payment”).  The Restrictive Covenant Payment will be paid to Davies as follows:  (a) ten thousand dollars ($10,000) upon execution of this Agreement; and (b) four payments of twenty-five thousand dollars ($25,000) each payable on or before each of November 16, 2011, February 16, 2012, May 16, 2012 and August 16, 2012.  If Davies violates the provisions of 10, 11 or 12 of the Employment Agreement, no further payment will be made pursuant to this Section 6 and any payment previously made pursuant to this Section 6 shall be immediately returned by Davies to the Bank.

7.           Consulting Agreement.

Davies and the Bank agree to enter into the Consulting Agreement attached hereto as Exhibit 1.

8.           Entire Agreement.

This is the entire agreement between Davies and the Bank related to the end of Davies’ employment.  Neither party has made any promises to the other except for those as set forth in this Agreement.  This Agreement is the product of mutual negotiations between the parties.  Each party has reviewed this Agreement.  The meaning, effect and terms of this Agreement have been fully explained to the parties and the terms therefore shall be governed by its express language.

 

  

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9.           Litigation Assistance.

        Davies agrees that, unless compelled by law, Davies will not, directly or indirectly, assist any person or entity in connection with any potential or actual litigation against the Bank or any other of the Released Parties described in Paragraph 3 hereof.  To the extent that the Bank is involved in any litigation related to issues that occurred during Davies’ previous consulting engagement or employment with the Bank and about which Davies had knowledge, Davies agrees to voluntarily testify on behalf of the Bank and to make himself reasonably available to the Bank’s counsel to share Davies’ factual knowledge of the events.  The Bank shall reimburse Davies for his out-of-pocket expenses incurred in providing such testimony or assistance.  In addition, to the full extent permitted and in the manner prescribed by the Virginia Stock Corporation Act and any other applicable law, the Bank shall indemnify Davies from and against all liabilities incurred by him in connection with or resulting from any action, suit or proceeding in which he is or was a party by reason of the fact that he is or was an officer of the Bank or in connection with his previous consulting engagement.

10.           Invalid Provisions.

The invalidity or unenforceability of any particular provision of this Agreement will not affect the validity or enforceability of any other provisions hereof, and this Agreement will be construed in all respects as if such invalid or unenforceable provision were omitted.

11.           Successorship.

It is the intention of the parties that the provisions hereof be binding upon the parties and their respective employees, affiliates, agents, heirs, successors and assigns forever.  Davies’ obligations under this Agreement shall inure to the benefit of any successors or assigns of the Bank.  Davies specifically acknowledges that in the event of a sale of all or substantially all of the assets or stock of the Bank, or any other event or transaction resulting in a change of ownership or control of the Bank’s business, the rights and obligations of the Bank hereunder shall inure to the benefit of any transferee, purchaser, or future owners of the Bank’s business.  The Bank and Davies agree that no party to this Agreement shall be permitted to assign any portion thereof, with the sole exception that the Bank shall be permitted to assign this Agreement in connection with a transaction described in the preceding sentence.

 

  

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12.           Governing Law and Venue.

The construction and interpretation of this Agreement shall at all times and in all respects be governed by the laws of the Commonwealth of Virginia without giving effect to any conflict of laws provisions thereof.  Davies agrees that any action brought to enforce or to test the enforceability of any provision of this Agreement, shall be brought in either the United States District Court for the Eastern District of Virginia, Norfolk Division, or the Circuit Court for the City of Norfolk, Virginia.

13.           Regulatory Requirements.

Notwithstanding anything in this Agreement to the contrary, the Bank shall not be required to make any payment under this Agreement to the extent such payment is prohibited by the Board of Governors of the Federal Reserve System pursuant to the terms of regulations presently found at 12 C.F.R. part 359 or to the extent that any required governmental approval of the payment is not received or such payment is specifically prohibited by any state or federal statutes or regulations thereunder; any provisions of this Agreement in violation of the foregoing are null and void ab initio, and any payment made in violation of the foregoing shall be immediately returned by Davies to the Bank.  The parties agree that they are unaware of any such prohibition or required governmental approval.

 

 

  

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	8-17-11	 	 	 	 
	
DATE

	 	/s/John A.B. Davies, Jr.	 
	 	 	JOHN A. B. DAVIES, JR.	 
	 	 	 	 
	 	 	 	 

	 	    HAMPTON ROADS BANKSHARES, INC.	 
	8-17-11	 	 	 	 
	
DATE

	 	/s/Henry P. Custis, Jr.	 
	 	  

By: 

	Henry P. Custis, Jr.	 
	 	Its:	Chairman	 
	 	 	 	 

 

 

 

 

  

  

  

Exhibit 1

 

CONSULTING AGREEMENT

THIS AGREEMENT (“AGREEMENT”) is made as of August 17, 2011 and is effective as of September 12, 2011 (the “Effective Date”), by and between Hampton Roads Bankshares, Inc. (collectively, with Bank of Hampton Roads and Shore Bank, the “Bank”) and John A.B. Davies, Jr. (the “Consultant”).

WHEREAS, the Consultant possesses certain valuable knowledge, professional skills and expertise which will contribute to the success of the business of the Bank and its affiliates; and

WHEREAS, it is the desire of the Bank and the Consultant to have the Consultant serve as an independent contractor in a consulting capacity to the Bank; and

WHEREAS, the Bank and the Consultant desire to set forth, in writing, the terms and conditions of their agreements and understandings;

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

Section 1.                                                   Services; Term.

(a)           The Bank and the Consultant agree that the Bank shall require, and Consultant shall provide, 1,000 hours of service as an independent contractor in a consulting capacity to the Bank from the Effective Date through September 11, 2012 (the “Term”).  During the Term, Consultant agrees upon reasonable notice to perform those services reasonably requested of him in writing by the Chairman of the Board or the Chief Executive Officer of the Bank. The type of services he may be requested to perform are described in Exhibit A.

(b)           The Bank and Consultant agree that Consultant shall furnish services as an independent contractor and not as an employee of the Bank.  Consultant has no power or authority to act for, represent, or bind the Bank in any matter, including but not limited to, entering into contracts or agreements.  As an independent contractor, Consultant will have no supervisory or management level control over Bank employees.  Consultant acknowledges that, as an independent contractor, the compensation that he receives shall not be considered “wages” for purposes of income tax withholding, FICA, and unemployment taxes.  Consultant further acknowledges that he is solely responsible for any tax liability arising from payments made under this Agreement, and he agrees to indemnify the Bank from any and all liability that may be assessed against the Bank for his failure to pay taxes on such compensation.

  

  

  

(c)           The Consultant acknowledges that he is entering into this Agreement of his own free will and that he has had the benefit of the advice of, and is relying solely upon the advice of, independent counsel of his own choice.

Section 2.                                Compensation.

(a)           As compensation for the services to be rendered by the Consultant in accordance with Section 1(a) above, the Consultant shall receive an amount equal to $41,667.00 per month for twelve consecutive months beginning October 12, 2011, subject to adjustment based on the number of hours of service performed during the prior month at an hourly rate of $500, not to exceed a total of $500,000 during the Term.

(b)           The Bank shall reimburse Consultant for reasonable and customary expenses incurred by Consultant in connection with the performance of services rendered pursuant to this Agreement, subject to approval by the Bank in advance.  In order to receive reimbursement for expenses, Consultant shall submit timely records and receipts of said expenses to the Bank.

(c)           During the Term, the Bank shall provide Consultant with the use of a vehicle.

(d)           If Consultant refuses or is unable to provide services under Section 1(a) such that he will not provide 1,000 hours of services during the Term, the Bank may terminate this Agreement and no further compensation will be paid under this Agreement.

Section 3.                                Confidentiality.

Consultant covenants and agrees that any and all information concerning the customers, businesses and services of the Bank and its related companies, subsidiaries, and affiliates of which he has knowledge or access as a result of this Agreement, shall be deemed confidential in nature and shall not, without prior written consent of the Bank, be directly or indirectly used, disseminated, disclosed or published by Consultant to third parties other than in connection with the usual conduct of the business of the Bank.  Such information shall expressly include, but shall not be limited to, information concerning the trade secrets, business operations, business records, employee information, customer lists or other customer information of the Bank and its related companies, subsidiaries, and affiliates.  In construing this provision it is agreed that it shall be interpreted broadly so as to provide the Bank with the maximum protection.  This Section 3 shall not be applicable to any information which, through no misconduct or negligence of Consultant, has previously been disclosed to the public by anyone other than Consultant.

Section 4.                                Regulatory Requirements.

Notwithstanding anything in this Agreement to the contrary, the Bank shall not be required to make any payment under this Agreement to the extent such payment is prohibited by the Board of Governors of the Federal Reserve System pursuant to the terms of those regulations presently found at 12 C.F.R. part 359 or to the extent that any required governmental approval of the payment is not received or such payment is specifically prohibited by any state or federal statutes or regulations thereunder; any provisions of this Agreement in violation of the foregoing are null and void ab initio, and any payment made in violation of the foregoing shall be immediately returned by Consultant to the Bank.  The parties agree that they are unaware of any such prohibition or required governmental approval.

  

  

  

Section 5.                                   Invalid Provisions.

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be valid and enforceable to the fullest extent permitted by law without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 6.                                    Governing Law.

Except where preempted by federal law, this Agreement shall be subject to and construed in accordance with the laws of the Commonwealth of Virginia.

Section 7.                                    Captions.

The captions used in this Agreement are intended for descriptive and reference purposes only and are not intended to affect the meaning of any Section hereunder.

Section 8.                                     Section 409A.

This Agreement is intended to comply with Section 409A to the extent Section 409A is applicable.  This Agreement shall be interpreted and administered accordingly.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the 17th day of August, 2011.

 

	 	HAMPTON ROADS BANKSHARES, INC.	 
	 	 	 	 
	
                                        

	
By: 

	                                                                  	 
	John A.B. Davies, Jr.	 	Henry P. Custis, Jr.	 
	 	 	Chairman	 
	 	 	 	 

  

  

  

EXHIBIT A

	
·  

	
Continue to work with the various existing advisory boards (including Richmond, Norfolk, and Outer Banks) and such other advisory boards as may be established in the future;

	
·  

	
Work on business development matters with prospective bank customers;

	
·  

	
Provide assistance with existing bank customers with whom Consultant has had a significant relationship over the past two years;

	
·  

	
Provide guidance and history on some of the major troubled loans and loan relationships which Consultant has dealt with over the last two years.

	
·  

	
Attend various bank business functions;

	
·  

	
Assist the Board and management with establishing and refining significant policies and procedures;

	
·  

	
Provide bank history on matters of importance occurring during the last two years;

	
·  

	
Provide such analysis as may be reasonably requested by the Board of Directors or management of the Bank on a periodic basis; and

	
·  

	
Cooperate with the Bank in furthering its best interests.atomic8kex1011081811.htm

Exhibit 10.11

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF THIS NOTE, WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

8% REVOLVING CREDIT NOTE

 

	$500,000 	 July 13, 2011

                                                                                                                     

FOR VALUE RECEIVED, the undersigned, ATOMIC PAINTBALL, INC., a Texas corporation (the “Company”), hereby promises to pay to the order of J.H. BRECH, LLC, a limited liability company, or its assigns (collectively, the “Noteholder”), in lawful money of the United States of America, and in immediately payable funds, the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00), or such lesser amount as shall equal the aggregate unpaid principal amount of all funds advanced the Company by the Noteholder in accordance with the terms of this Note, on the date and in the amounts stated herein, and to pay interest on the unpaid principal amount of this Note, in like money and funds, on the dates specified herein.  Such advances shall be in the discretion of the Noteholder and in increments in the ordinary course of $10,000.00.  The Company may, from time to time, borrow, repay and reborrow under the terms of this Note up to but not exceeding the principal amount of this Note upon delivery to the Noteholder of a request of such advance of the proceeds of this Note.  The amounts previously advanced to the Company by the Noteholder as set forth on Schedule A annexed to this Note which remains outstanding as of the date of this Note shall represent amounts advanced to the Company to date by the Noteholder under this Note, and shall be included in the sums due the Noteholder by the Company hereunder.

The principal hereof outstanding and any unpaid accrued interest thereon shall be due and payable on the date which is the earlier of (i) three years from the date of this Note, or (ii) the date on which the Company receives at least $1.5 million in gross proceeds through one or a series of transactions (the “Maturity Date”).  This Note shall bear interest on the unpaid principal balance from time to time outstanding, until paid, at the rate of eight percent (8%) per annum.  Interest shall be payable semi-annually on June 30 and December 31 of each year commencing June 30, 2011.  Payment of all amounts due hereunder shall be made at the address of the Noteholder set forth below.

The Company hereby authorizes the Noteholder to endorse on the Schedule annexed to this Note the amount and type of all revolving credit loans made to the Company, all renewals and payments of principal amounts in respect of such revolving credit loans, and the outstanding principal amount of all revolving credit loans; provided, however, that the failure to make such notation with respect to any revolving credit loan or payment shall not limit or otherwise affect the obligation of the Company under this Note.

1.           PAYMENTS.

(a)           Payment of all amounts due hereunder shall be made at the address of the Noteholder set forth below.  In the event that the date for the payment of any amount payable under this Note falls due on a Saturday, Sunday or public holiday under the laws of the State of Texas, the time for payment of such amount shall be extended to the next succeeding business day and interest shall continue to accrue on any principal amount so effected until the payment thereof on such extended due date.

(b)           All payments received on account of this Note shall be applied to the reduction of the unpaid principal balance of this Note.  Interest shall be computed on the basis of a year of 360 days, for the actual number of days elapsed.

 

 

  

  

  

(c)           If payment of the outstanding principal amount of this Note, together with all accrued unpaid interest thereon at the applicable rate of interest (as set forth herein), is not made on the Maturity Date, then interest shall accrue on the outstanding principal amount due under this Note and on any unpaid accrued interest due on this date of the payment in full of such amounts (including from and after the date of the entry of judgment in favor of the Noteholder in an action to collect this Note) at an annual rate equal to the lesser of 18% or the maximum rate of interest permitted by applicable law.

(d)           At the sole discretion of the Company, interest due hereunder may be paid in shares of the Company’s Common Stock (the “Interest Shares”), which shall be valued as follows:

(i)           if the Company’s Common Stock is not listed for trading on an exchange or quoted for trading on the OTC Bulletin Board or the Pink Sheets, Interest Shares shall be valued at the greater of $0.50 per share or the fair market value as determined in good faith by the Company based upon the most recent arms-length transaction, or

(ii)           if the Company’s is listed for trading on an exchange or quoted for trading on the OTC Bulletin Board or the Pink Sheets, Interest Shares shall be valued at the greater of (A) the closing price of the Common Stock as reported on the Company’s primary market on the trading day immediately preceding the date the interest payment is due and payable, or (B) $0.50 per share.

2.           PREPAYMENT.  This Note may be prepaid, in whole or in part, without penalty with five days prior written notice to the Noteholder.

3.           DEFAULT.  If any of the following events (each an “Event of Default”) shall occur:

(a)           The Company fails to pay the principal or interest accrued on, or any other amount at any time owing under, the Note as and when the same becomes due and payable and such default is not cured within 10 business days after notice of the occurrence of such default; or

(b)           The Company defaults in the due observance or performance of or breach any of its covenants contained in this Note and such default is not cured within 10 business days after notice of the occurrence of such default; or

(c)           The Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, trustee or similar official of or for itself or of or for all or a substantial part of its property, (ii) make an assignment for the benefit of its creditors, (iii) commence a voluntary case under the Federal Bankruptcy Code, as now or hereafter in effect (the “Code”), (iv) file a petition seeking to take advantage of any other bankruptcy, insolvency, moratorium, reorganization or other similar law of any jurisdiction (“Other Laws”), (v) acquiesce as to, or fail to controvert in a timely or appropriate manner, an involuntary case filed against the Company under the Code, or (vi) take any corporate action in furtherance of any of the foregoing; or

(d)           A proceeding or involuntary case shall be commenced, without the application or consent of the Company in any court of competent jurisdiction (i) under the Code, (ii) seeking liquidation, reorganization, dissolution, winding up or composition or readjustment of its debts under any Other Laws, or (iii) seeking the appointment of a trustee, receive or similar official for it or for all or any substantial part of its assets, and any such proceeding or case shall continue undismissed, or unstayed and in effect, for a period of 90 days; or

(e)           A final judgment for the payment of money shall be rendered by a court of competent jurisdiction against the Company, and the Company shall not discharge the same, or procure a stay of execution thereof within 30 days from the date of entry thereof and within such 30 day period or such longer period during which execution of such judgment shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal, and such judgment, together with all other judgments against the Company (including all subsidiaries), shall exceed in the aggregate $50,000 in excess of any insurance as to the subject matter of such judgments, as to which coverage has not been declined or the underlying claim rejected by the applicable insurer; or

 

 

  

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(f)           The liquidation or dissolution of the Company or any vote in favor thereof by the board of directors and stockholders of the Company; or

(g)           An attachment or garnishment is levied against the assets of the Company involving an amount in excess of $50,000 and the lien created by such levy is not vacated, bonded or stayed within 10 business days after such lien has attached to such assets; or

(h)           The Company defaults in the payment (regardless of amount) when due of the principal of, interest on, or any other liability on account of, any indebtedness of the Company(other than the Note) having an unpaid principal amount in excess of $50,000, or a default occurs in the performance or observance by the Company of any covenant or condition (other than for the payment of money) contained in any note (other than this Note) or agreement evidencing or pertaining to any such indebtedness, which causes the maturity of such indebtedness to be accelerated or permits the holder or holders of such indebtedness to declare the same to be due prior to the stated maturity thereof, or

(i)           The Company sells all or substantially all of its assets or merges or is consolidated with another corporation in which the Company is not the surviving corporation, or the accounting acquiror in the event of a reverse merger; or

(j)           A Change of Control of the Company occurs.  For the purpose of this Note, a “Change of Control” shall mean a change in control (a) as set forth in Section 280G of the Internal Revenue Code or (b) of a nature that would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, such a change in control shall be deemed to have occurred at such time as:

i.           any "person", other than the Noteholder becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's outstanding securities then having the right to vote at elections of directors; or,

ii.           the individuals who at the date of this Note constitute the Board of Directors cease for any reason to constitute a majority thereof unless the election, or nomination for election, of each new director was approved by a vote of at least two thirds of the directors then in office who were directors at the date of this Note

then, and in any such event, the Noteholder may by written notice to the Company declare the entire unpaid principal amount of this Note outstanding together with accrued interest thereon due and payable, and the same shall, unless such default be cured within 20 business days after such notice, forthwith become due and payable upon the expiration of such 20 day period, without presentment, demand, protest, or other notice of any kind, all of which are expressly waived.

4.           SUITS FOR ENFORCEMENT AND REMEDIES.  If any one or more Events of Default shall occur, the Noteholder may proceed to (i) protect and enforce Noteholder’s rights either by suit in equity or by action at law, or both, whether for the specific performance of any covenant, condition or agreement contained in this Note or in any agreement or document referred to herein or in aid of the exercise of any power granted in this Note or in any agreement or document referred to herein, (ii) enforce the payment of this Note, or (iii) enforce any other legal or equitable right of the Noteholder. No right or remedy herein or in any other agreement or instrument conferred upon the Noteholder is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.

 

 

  

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5.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company covenants and agrees that for so long as any portion of the indebtedness evidenced by this Note, whether principal, accrued and unpaid interest or any other amount at any time due hereunder, remains unpaid, the Company will:

(a)           Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises and to comply in all material respects with all laws, regulations and orders of each governmental authority having jurisdiction over the Company;

(c)           Promptly following the occurrence of an Event of Default furnish to the Noteholder a written statement of the Company’s President or Chief Financial Officer setting forth the details of such Event of Default and the action which the Company proposes to take with respect thereto;

(d)           At all times maintain true and complete records and books of account in which all of the financial transactions of the Company are duly recorded in conformance with U.S. generally accepted accounting principles;

(e)           Maintain the registration of the Company’s Common Stock under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”), and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports and other filings required to be filed by the Company after the date hereof pursuant to the Exchange Act.

(f)           In the event the Company should issue the Noteholder Interest Shares, for as long as the Noteholder owns any Interest Shares, the Company will take such further action as any holder of Interest Shares may reasonably request, to the extent required from time to time to enable such holder to sell such Interest Shares without registration under the Act, including without limitation, within the requirements of the exemption provided by Rule 144.

6.           RESTRICTIONS ON INTEREST SHARES.  The Interest Shares may not be offered, sold or otherwise transferred unless (i) they first shall have been registered under the Act and applicable state securities laws or (ii) the Company shall have been furnished with an opinion of legal counsel (in form, substance and scope reasonably acceptable to the Company) to the effect that such sale or transfer is exempt from the registration requirements of the Act.  Each certificate for Interest Shares that have not been so registered and that has not been sold pursuant to an exemption that permits removal of the applicable legend, shall bear a legend substantially in the following form, as appropriate:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS”

Upon the request of a holder of a certificate representing any Interest Shares, the Company shall remove the foregoing legend from the certificate or issue to such Holder a new certificate therefor free of any transfer legend, if (i) with such request, the Company shall have received an opinion of counsel, reasonably satisfactory to the Company in form, substance and scope, to the effect that any such legend may be removed from such certificate or (ii) a registration statement under the Act covering such securities is in effect.

6.                      NOTICES.  All notices required to be given to any of the parties hereunder shall be in writing and shall be deemed to have been sufficiently given for all purposes when presented personally to such party, sent by telecopier (with the original timely mailed), or sent by registered, certified or express mail, return receipt requested, to such party at its address set forth below:

 

 

  

4

  

 

	If to the Company to:  	Atomic Paintball, Inc. 
	 	2600 E. Southlake Boulevard 
	 	Suite 120-366 
	 	Southlake, TX  76092 
	 	Telecopier No.:  (817) 491-4955 
	 	Attn:  Don Mark Dominey, Chief Executive Officer 
	 	 
	If to the Noteholder to: 	J. H. BRECH, LLC 
	 	2600 E. Southlake Boulevard 
	 	Suite 120-366 
	 	Southlake, TX  76092 
	 	Telecopier No.:  (817) 491-4955 
	 	Attn:  Harry McMillan 

 

or hereafter given to the other party hereto pursuant to the provisions of this Note.

7.           EXCLUSIVE JURISDICTION AND VENUE.  The Parties agree that the courts of the County of Tarrant, State of Texas shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Note and the transactions contemplated herein.   The Parties further that, in the event of litigation arising out of or in connection with this Note in this court, they will not contest or challenge the jurisdiction or venue of this court.

8.           GOVERNING LAW.  This Note shall be governed by and construed and interpreted in accordance with the laws of the State of Texas applicable to contracts made and to be performed entirely therein, without giving effect to the rules and conflicts of law.

9.           CONFORMITY WITH LAW.  It is the intention of the Company and of the Noteholder to conform strictly to applicable usury and similar laws.  Accordingly, notwithstanding anything to the contrary in this Note, it is agreed that the aggregate of all charges which constitute interest under applicable usury and similar laws that are contract for, chargeable or receivable under or in respect of this Note, shall under no circumstances exceed the maximum amount of interest permitted by such laws, and any excess, whether occasioned by acceleration or maturity of this Note or otherwise, shall be canceled automatically, and if theretofore paid, shall be either refunded to the Company or credited on the principal amount of this Note.

IN WITNESS WHEREOF, the Company has signed and sealed this Note and delivered it in the State of Texas as of July 13, 2011.

 

 

	 	 
COMPANY:

	 	 
	 	 
ATOMIC PAINTBALL, INC.

	 	 
	 	 
	 	 
By:/s/ Don Mark Dominey

	 	   Don Mark Dominey, CEO 

 

      

 

 

  

5

  

 

 

SCHEDULE A

TO REVOLVING CREDIT NOTE

	
Date Made, 

Renewed or Paid

 

	
Type of Loan

 

	
Amount of Principal 

Renewed or Paid

	
Unpaid Principal 

Balance of Revolving 

Credit Note

	
Name of Person 

Making Notation

	
7/13/11

 

	
Revolver

	  	
$46,845.68

	
Christy McMillan

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