Document:

Exhibit 10.1 Drawdown Note

Exhibit 10.1

CONVERTIBLE 

DRAWDOWN NOTE

AMENDMENT NO. 1

 

Up to $1,750,000

January 19, 2012

 

FOR VALUE RECEIVED, the undersigned, North Springs Resources Corp., a Nevada corporation (the “Maker”), hereby promises to pay to the order of Kazuo Holdings, Inc. or its successors or assigns (the “Payee”), the unpaid principal balance of the Drawdowns (as defined below), together with interest thereon which shall accrue at a rate equal to ten percent (10%) per annum.  All payments on this Drawdown Promissory Note (this “Note”) shall be due and payable in lawful money of the United States of America.

WHEREAS, on December 21, 2011 the Maker and the Payee entered into that certain Convertible Drawdown Note (the “Original Note”) under which the Maker could request Drawdowns totaling an aggregate of $1,000,000;

WHEREAS, the Maker has received a total of $630,000 in Drawdowns as of January 19, 2012;

WHEREAS, the Maker and Payee now wish to increase the amount available to be drawn down as set forth in the Original Note to the amount set forth in this Note.

1.   Purpose of Note. This Note evidences, and is given in consideration of, a loan in the principal amount of up to one million seven hundred fifty thousand dollars ($1,750,000). This is a revolving credit facility and unless extended or renewed shall be payable in full on the Maturity Date (defined below).

 

2.   Drawdown Requests. The principal of this Note may be drawndown from time to time prior to the Maturity Date (as defined below), upon written request from Maker to Payee (each, a “Drawdown Request”), which Drawdown Request must state the amount to be drawndown, and must not be an amount less than fifty thousand dollars ($50,000). Payee shall fund each Drawdown Request within five (5) Business Days (as defined below) after receipt of a Drawdown Request; provided, however, that the maximum amount of drawdowns collectively under this Note is one million seven hundred fifty thousand dollars ($1,750,000).  

 

3.   Terms of Drawdown Requests. Maker and Payee agree that Maker may request up to one million seven hundred fifty thousand dollars ($1,750,000) for general working capital.

 

4.   Interest Rate. Interest shall accrue on the outstanding principal balance hereof, up to and including the maximum amount available under this Note, at an annual rate of ten percent (10%).  Notwithstanding anything to the contrary herein, the liability of Maker for payment of interest under this Note shall not exceed the maximum amount permitted by law, and if any payment by Maker includes interest in excess of such maximum amount, Payee shall apply such excess to the reduction of principal or, if none is due, such excess shall be refunded to Maker. Interest shall be computed on the basis of a 360-day year.

 

5.   Maturity Date. All outstanding principal and accrued interest hereunder shall be due and payable on the twelve (12) month anniversary date hereof (the “Maturity Date”).

6.   Prepayment. This Note may be prepaid, in whole or in part, at any time or times without premium or penalty. All amounts prepaid by Maker to Payee shall be available for re-advancement. 

 

7.   Events of Default. Each of the following shall constitute an “Event of Default” hereunder:

Maker fails to make any payment of principal or interest when due under this Note;

 

Maker (i) applies for or consents to the appointment of a receiver, trustee or liquidator of itself or any of its property, (ii) admits in writing its inability to pay debts as they mature, (iii) makes a general assignment for the benefit of creditors, (iv) is adjudicated bankrupt or insolvent, (v) files a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (vi) takes any action for the purpose of effecting any of the foregoing:

 

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Any order, judgment or decree is entered by any court of competent jurisdiction (i) approving a petition seeking reorganization of Maker or all or a substantial part of the assets of Maker, or (ii) appointing a receiver, sequester, trustee or liquidator of Maker or any of its property, and such order, judgment or decree continues unstayed and in effect for a period of sixty (60) days or more.

 

8.   Remedies Upon Default. Upon the occurrence of any Event of Default (a) the entire unpaid principal balance hereunder plus all interest accrued thereon shall, at the option of Payee, become due and payable immediately without presentment, demand, notice of nonpayment, protest, notice of protest or other notice of dishonor, all of which are hereby expressly waived by Maker.

9.   Remedies Cumulative. No right or remedy conferred upon or reserved to Payee under this Note, or now or hereafter existing at law or in equity or by statute or other legislative enactment, is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and concurrent, and shall be in addition to every other such right or remedy, and may be pursued singly, concurrently, successively or otherwise, at the sole discretion of Payee, and shall not be exhausted by any one exercise thereof but may be exercised as often as occasion therefore shall occur. 

10.   Conversion Option.   The entire principal amount of this Note and any accrued interest may be converted into shares of the Maker’s common stock by election of the Payee at any time during the term of this Note.  The number of shares to be issued upon conversion hereof shall be determined as of the date of receipt of a Conversion Notice by the Maker from the Payee by dividing i) the entire principal amount of this Note plus any accrued interest by (ii) the average of the previous five (5) days closing market price of the Maker’s common stock (iii) less 25%, rounded up to the nearest whole share.  

Upon conversion of this Note pursuant to this Section 10, the Payee shall surrender this Note.  At its expense, the Maker will, as soon as practicable thereafter, issue and deliver to such Payee a certificate or certificates for the number of shares to which such Payee is entitled upon such conversion, together with any other securities and property to which the Payee is entitled upon such conversion under the terms of this Note, including a check payable to the Payee for any accrued interest due.  Upon conversion of this Note, the Maker will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount being converted including without limitation the obligation to pay such portion of the Principal amount and accrued interest.  

11.   Miscellaneous.

 

a. Waivers, Amendments, etc. The provisions of this Note may from time to time be amended, modified or waived, only if such amendment, modification or waiver is in a writing signed by Maker and Payee. No failure or delay on the part of Payee in exercising any power or right under this Note shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right.

 

b. Notices. All notices and other communications required or permitted to be given under or in connection with this Note shall be in writing and shall be deemed given if delivered personally or by facsimile transmission (receipt verified), express courier service (signature required), or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice; provided that notices of a change of address shall be only upon receipt thereof):

If to Payee:

 

Kazuo Holdings, Inc.

c/o Gray & Co.

P.O. Box 832-0816

World Trade Centre 

Panama City, Panama

  

If to Maker:

 

North Springs Resources Corp.

200 S Virginia, 8th Floor

Reno, Nevada 89501

Phone: (775) 398-3078

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c.   Severability. Any provision of this Note which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Note or affecting the validity or enforceability of such provision in any other jurisdiction.

 

d.   Governing Law. This Note shall be governed by the internal laws of the State of Nevada without giving effect to it principles of conflicts of law.

e.   Successors and Assigns. This Note shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, administrators, successors and permitted assigns.

 

IN WITNESS WHEREOF, Maker has executed this Note as of the day and year first above written.

 

MAKER: North Springs Resources Corp.

 

/s/ Harry Lappa            

By: Harry Lappa

Its: President

PAYEE: Kazuo Holdings, Inc.

___________________

By: 

Its: 

3Exhibit 10.17

VR HOLDINGS, INC.

SUBSCRIPTION AGREEMENT

VR Holdings, Inc.

1615 Chester Road

Chester, Maryland 21619

Re:

Offering of Common Shares of VR Holdings, Inc. in connection with a merger with Litigation Dynamics, Inc.

Gentlemen:

1.

Subscription.  The undersigned hereby exchanges 100,000 shares of the common stock of Litigation Dynamics, Inc., a Texas corporation, par value $0.01 per share, for 17,500,000 shares of the common stock, par value $0.000001 per share (the “Common Shares”) in VR Holdings, Inc., a Delaware corporation (the “Company”) pursuant to that certain Plan and Agreement of Triangular Merger between VR Holdings, Inc., VRH Merger Sub, Inc. and Litigation Dynamics, Inc. dated November 21, 2011 (the “Plan of Merger”), and in accordance with the terms of this Subscription Agreement, and the private placement materials relating to the offering (the “Offering”) of the Common Shares (the Plan of Merger and such private placement materials, including all financial statements, exhibits and schedules contained therein or attached thereto, and any amendments and supplements thereto, is hereinafter referred to as the “Placement Memorandum”).  Any capitalized terms used herein shall have the same meaning as used in the Placement Memorandum.  The undersigned has received a copy of the Placement Memorandum.  The Common Shares are being offered by the Company.

2.

Representations and Warranties.  The undersigned represents and warrants as follows:

(a)

The undersigned is an Accredited Investor as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

(b)

The undersigned has received information provided to him in writing by the Company, or information from books and records of the Company, as specified below.  The undersigned understands that all documents, records and books pertaining to this investment have been made available for inspection by him, his attorney and/or his accountant and/or his “Purchaser Representative” as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and that the books and records of the Company will be available, upon reasonable notice, for inspection by the undersigned during reasonable business hours at the Company’s principal place of business.  The undersigned and/or his advisers have had a reasonable opportunity to ask questions of and receive answers from the Company, or a person or persons acting on its behalf, concerning the Offering, and all such questions have been answered to the full satisfaction of the undersigned.  No oral representations have been made and, to the extent oral information has been furnished to the undersigned or his advisers in connection with the Offering, such information was consistent with all written information furnished.

(c)

Specifically, the undersigned was provided with access to the Company’s filings with the Securities and Exchange Commission, including the following:

(i)

The Company’s registration statement on Form S-1 filed pursuant to the Securities Act.

(ii)

The annual report to stockholders for the most recent fiscal year, any definitive proxy statement or information statement filed in connection with that annual report, and, if requested by the undersigned in writing, a copy of the Company’s most recent Form 10-K pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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(iii)

The information contained in an annual report on Form 10-K pursuant to the Exchange Act.

(iv)

The information contained in any reports or documents required to be filed by the Company under Sections 13(a), 14(a), 14(c), and 15(d) of the Exchange Act since the distribution or filing of the reports specified above.

(v)

A brief description of the securities being offered, the terms of the Offering, and any material changes in the Company’s affairs that are not disclosed in the documents furnished.

(d)

The undersigned (i) has adequate means of providing for his current needs and possible personal contingencies, (ii) has no need for liquidity in this investment, (iii) is able to bear the substantial economic risks of an investment in the Common Shares for an indefinite period, and (iv) at the present time, could afford a complete loss of such investment.

(e)

The undersigned recognizes that the Company has a limited financial and operating history and no history of profitable operations, and that the Common Shares as an investment involve special risks, including those disclosed to the undersigned by the Company.

(f)

The undersigned understands that the Common Shares have not been nor will be registered under the Securities Act or the securities laws of any state, in reliance upon an exemption therefrom for non-public offerings.  The undersigned understands that the Common Shares must be held indefinitely unless they are subsequently registered, or an exemption from such registration is available.  The undersigned further understands that the Company is under no obligation to register the Common Shares on his behalf or to assist him in complying with any exemption from registration.

(g)

The Common Shares are being purchased solely for his own account for investment and not for the account of any other person and not for distribution, assignment, or resale to others and no other person has a direct or indirect beneficial interest in the Common Shares.  The undersigned or his advisers have such knowledge and experience in financial, tax, and business matters to enable him to utilize the information, made available to him in connection with the Offering of the Common Shares to evaluate the merits and risks of the prospective investment and to make an informed investment decision with respect thereto.

(h)

The undersigned realizes that he may not be able to sell or dispose of his Common Shares as there will be no public market.  In addition, the undersigned understands that his right to transfer the Common Shares will be subject to restrictions against transfer unless the transfer is not in violation of the Securities Act, and the securities laws of any state (including investor suitability standards), and the Company consents to such transfer.  The undersigned also acknowledges that he shall be responsible for compliance with all conditions on transfer imposed by the Securities Act, or the securities law of any state and for any expenses incurred in connection with such a proposed transfer.

(i)

The undersigned, if a corporation, partnership, trust, or other entity, is authorized and otherwise duly qualified to purchase and hold the Common Shares, such entity has its principal place of business as set forth on the signature page hereof, and such entity has not been formed for the specific purpose of acquiring the Common Shares.

(j)

All information which the undersigned has provided to the Company concerning his personal situation, his financial position, and his knowledge of financial and business matters, or, in the case of a corporation, partnership, trust or other entity, the knowledge of financial and business matters of the person making the investment decision on behalf of such entity, is correct and complete as of the date set forth at the end hereof, and if there should be any adverse change in such information prior to his subscription being accepted, he will immediately provide the Company with such information.

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(k)

The undersigned, if he is an individual, is a citizen of the United States of America, and is at least 21 years of age.

(l)

Compliance with Regulation D.  Pursuant to Regulation D under the Securities Act, the undersigned understands and agrees that the following restrictions and limitations are applicable to his purchase, resales, hypothecations or other transfers of the Common Shares:

(i)

The undersigned agrees that the Common Shares shall not be sold, pledged, hypothecated or otherwise transferred unless the Common Shares are registered under the Securities Act, and the securities laws of any state, or are exempt therefrom;

(ii)

A legend in substantially the following form has been or will be placed on any certificate(s) or other document(s) evidencing the Common Shares:

THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE.  WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAW OF ANY STATE, OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.

(iii)

Stop transfer instructions to the transfer agent of the Common Shares have been or will be placed with respect to the Common Shares so as to restrict the resale, pledge, hypothecation or other transfer thereof, subject to the further items hereof, including the provisions of the legend set forth in subparagraph (ii) above;

(iv)

The legend and stop transfer instructions described in subparagraphs (ii) and (iii) above will be placed with respect to any new certificate(s) or other document(s) issued upon presentment by the undersigned of certificate(s) or other document(s) for transfer; and

(v)

The undersigned acknowledges that he will be responsible for compliance with all conditions on transfer imposed by any federal or state securities statute and securities law administrator and for any expenses incurred by the Company for legal or accounting services in connection with reviewing such a proposed transfer and/or issuing opinions in connection therewith.

(m)

The undersigned acknowledges that _________________________________ (complete if applicable) has acted as his “Purchaser Representative” as defined in Regulation D promulgated under the Securities Act, and (i) that he can bear the economic risk of this investment; (ii) he has relied upon the advice of such Purchaser Representative as to the merits of an investment in the Company and the suitability of such investment for the undersigned; and (iii) such Purchaser Representative has confirmed to him, in writing, any past, present or future material relationship, actual or contemplated, between such Purchaser Representative or its Affiliates and the Company, or its Affiliates.

(n)

The undersigned understands that neither the Securities and Exchange Commission nor the securities commission of any state has made any finding or determination relating to the fairness for public investment in the Common Shares and that the Securities and Exchange Commission as well as the securities commission of any state will not recommend or endorse any offering of securities.

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(o)

The undersigned understands that:

(i)

No assurances are or have been made regarding any economic advantages (including tax) which may inure to the benefit of the undersigned;

(ii)

No assurances are or have been made concerning the distribution of profits to the Company’s investors; and

(iii)

He is aware that this subscription is independent of any other subscription for the Common Shares.

(p)

The undersigned acknowledges and is aware that it never has been represented, guaranteed, or warranted to him by the Company, its directors, officers, agents or employees, or any other person, expressly or by implication, as to any of the following:

(i)

The approximate or exact length of time that he will be required to remain as an owner of his Common Shares;

(ii)

The percentage of profit and/or amount of or type of consideration, profit or loss to be realized, if any, as a result of this investment; or

(iii)

That the limited past performance or experience on the part of the Company, or any future projections will in any way indicate the predictable results of the ownership of the Common Shares or of the overall financial performance of the Company.

(q)

The undersigned acknowledges that the Company has made available to him or his Purchaser Representative, if any, or other personal advisers the opportunity to obtain additional information to verify the accuracy of the information furnished to him and to evaluate the merits and risks of this investment.

(r)

The undersigned confirms that he has consulted with his Purchaser Representative, if any, or other personal advisers and that said Purchaser Representative or other advisers have analyzed the information furnished to him and the documents relating thereto on his behalf and have advised him of the business and financial aspects and consequences of and liabilities associated with his investment in the Common Shares.  The undersigned represents that he has made other risk capital investments or other investments of a speculative nature, and by reason of his business and financial experience and of the business and financial experience of those persons he has retained to advise him with respect to investments of this nature.  In reaching the conclusion that he desires to acquire the Common Shares, the undersigned has carefully evaluated his financial resources and investments and acknowledges that he is able to bear the economic risks of this investment.

(s)

The undersigned acknowledges that all information made available to him and/or his Purchaser Representative, if any, and/or personal advisers in connection with his investment in the Common Shares, including the information furnished to him is and shall remain confidential in all respects and may not be reproduced, distributed or used for any other purpose without the prior written consent of the Company.

 

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(t)

The undersigned acknowledges that the Offering of the Common Shares will be on a “best efforts” basis through various authorized selling agents of the Company.  The undersigned further acknowledges that the proceeds from the subscriptions for the Common Shares will be immediately available for use by the Company without the imposition of any escrow or any requirement that a minimum number of the Common Shares be sold before such proceeds will be made available for use by the Company.  Therefore, all of the earlier investors will be more at risk with respect to the success of the Company than those investors who invest later in the Offering, inasmuch as the Company may not raise
sufficient proceeds from the Offering to implement its business plan as described in the Placement Memorandum.  The Company may sell less than the total number of Common Shares offered.

3.

Indemnification.  The undersigned agrees to indemnify and hold harmless the Company and its Affiliates from and against all damages, losses, costs, and expenses (including reasonable attorneys’ fees) which they may incur by reason of the failure of the undersigned to fulfill any of the terms or conditions of this subscription, or by reason of any breach of the representations and warranties made by the undersigned herein, or in any document provided by the undersigned to the Company.

4.

Limitation on Transfer of the Common Shares.  The undersigned acknowledges that he is aware that there are substantial restrictions on the transferability of the Common Shares.  Since the Common Shares will not be, and since the undersigned has no right to require that they be, registered under the Securities Act, or the securities laws of any state, the Common Shares may not be, and the undersigned agrees that they shall not be, sold or transferred except pursuant to an effective registration statement or an exemption from such registration statement under said statutes.  The undersigned also acknowledges that he will be responsible for compliance with all conditions on transfer imposed by any federal or state securities statute and securities law administrator and for any expenses incurred by the Company for legal or accounting services in connection with reviewing such a proposed transfer and/or issuing opinions in connection therewith.

5.

Survival.  The foregoing representations, warranties and undertakings are made with the intent that they may be relied upon in determining the undersigned’s suitability as an investor in the Company and the undersigned hereby agrees that such representations and warranties shall survive his purchase of the Common Shares.  The undersigned hereby acknowledges and agrees that he is not entitled to cancel, terminate or revoke this Subscription Agreement, or any agreements hereunder, and that this Subscription Agreement and such agreements shall survive (a) changes in the transactions, documents, and instruments previously furnished to the undersigned which are not materially adverse, and (b) the undersigned’s death or disability.

6.

Notices.  All notices or other communications given or made hereunder shall be in writing and shall be delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, to the undersigned or to the Company at the respective addresses set forth herein.

7.

Miscellaneous.

(a)

The undersigned agrees not to transfer or assign this Subscription Agreement, or any of the undersigned’s interest herein, and further agrees that the transfer or assignment of the Common Shares shall be made only in accordance with all applicable laws.

(b)

The undersigned agrees that the undersigned may not cancel, terminate, or revoke this Subscription Agreement or any agreement of the undersigned made hereunder and that this Subscription Agreement shall survive the death or disability of the undersigned and shall be binding upon the undersigned’s heirs, executors, administrators, successors, and assigns.

(c)

Notwithstanding any of the representations, warranties, acknowledgments, or agreements made herein by the undersigned, the undersigned does not thereby or in any other manner waive any rights granted to the undersigned under federal or state securities laws.

(d)

Words of any gender used in this Subscription Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.  In addition, the pronouns used in this Subscription Agreement shall be understood and construed to apply whether the party referred to is an individual, partnership, joint venture, corporation or an individual or individuals doing business under a firm or trade name, and the masculine, feminine and neuter pronouns shall each include the other and may be used interchangeably with the same meaning.

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(e)

This Subscription Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by all parties.

(f)

Notwithstanding anything herein contained to the contrary, in the event of any conflict between the terms of this Subscription Agreement or the Placement Memorandum, the terms of the Placement Memorandum shall control.

(g)

This Subscription Agreement shall be enforced, governed, and construed in all respects in accordance with the laws of the State of Maryland and all obligations hereunder shall be deemed performable in Chester, Maryland.

(h)

Within 10 days after receipt of a written request from the Company, the undersigned agrees to provide such information and to execute and deliver such documents as reasonably may be necessary to comply with any and all laws and ordinances to which the Company is subject.

IN WITNESS WHEREOF, I have executed this Subscription Agreement as of the 20th day of January, 2012.

J. MICHAEL MOORE

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