Nevada
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000-51770
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87-0733770
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(State of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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(d)
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Exhibits.
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Exhibit No.
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Description
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10.1
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Note Modification Purchase Agreement of Convertible Notes dated April 13, 2012.
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CMG HOLDINGS, INC.
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Date: June 1, 2012
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/s/ JAMES ENNIS
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Name: James Ennis
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Its: Chief Financial Officer
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A.
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The LENDER made a loan to the BORROWER in the principal amount of $725,000.00 as evidenced by Note Purchase Agreement and Convertible Note dated April 1, 2010 (“Note 1”).
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B.
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The LENDER made a loan to the BORROWER in the principal amount of $125,000.00 as evidenced by Note Purchase Agreement and Convertible Note dated April 23, 2010 (“Note 2”).
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C.
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The LENDER made a loan to the BORROWER in the principal amount of $100,000.00 as evidenced by Note Purchase Agreement and Convertible Note dated June 1, 2010 (“Note 3”).
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D.
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The LENDER made a loan to the BORROWER in the principal amount of $50,000.00 as evidenced by a Note Purchase Agreement and Convertible Note dated June 18, 2010 (“Note 4”).
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E.
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The LENDER made a loan to the BORROWER in the principal amount of $75,000.00 as evidenced by a Note Purchase Agreement and Convertible Note dated June 30, 2010, (“Note 5”).
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F.
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As of March 1, 2012 the aggregate principal amount of the above Notes is $1,075,000.00, which has been disbursed to BORROWER in its entirety, which is due and payable along with accrued interest, penalties and fees as of the date hereof.
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G.
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As security for the above referenced Notes, LENDER has been granted a Security Interest in certain assets of BORROWER as described in various Uniform Commercial Code Financing Statements filed in conjunction with the Notes in question
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H.
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PURCHASER and BORROWER have entered into a “Master Agreement”, a copy of which is attached hereto as Exhibit A and made a part hereof, whereby PURCHASER and BORROWER have agreed that, in exchange for the share exchange and “spin out” described in said agreement, PURCHASER will arrange for the release of the obligations of BORROWER under the Notes described above by way of a novation or other form of release of such obligation (the “Release”). The Release will include a termination of any security interest on any assets of BORROWER.
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I.
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In furtherance of its obligations under the Master Agreement, PURCHASER wishes to purchase the above Notes from LENDER, in their entirety, on or before the Closing Date provided for herein. All Parties hereto acknowledge that there have been no representations, warranties or guarantees made by any party as to the value, collectablity or condition of the Notes other than the representations herein that detail the amounts, dates and security granted under the notes and that LENDER holds and possesses the notes, free and clear of any and all liens and encumberances, and has the authority to deliver same to PURCHASER at the consumation of this transaction. Accordingly, PURCHASER agrees to purchase said Notes in their “As Is” condition subject to the further provisions of this agreement.
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J.
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The Parties wish to modify the maturity dates of the Notes set forth above to May 31, 2012, and provide for additional extensions of the maturity dates as may be requested by BORROWER or PUCHASER.
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K.
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NOW, THEREFORE, for full and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:
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1)
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The facts set forth above are true and accurate in each respect.
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2)
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PURHASE PRICE
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(a)
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Upon execution of this agreement, PURCHASER shall deliver to LENDER, to an account of the LENDER’s choice, the sum of $112,500.00 (ONE HUNDRED TWELVE THOUSAND FIVE HUNDRED DOLLARS) as an Option Payment to secure PURCHASER’S right to purchase the Notes described herein. In the event that this agreement is not consummated, through the fault of LENDER or LENDER’S failure or refusal to perform as provided for in this agreement, said funds shall be returned to PURCHASER. In the event that this transaction is consummated, said funds shall be credited toward the Purchase Price payable by PURCHASER hereunder.
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(b)
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On or before the “closing date” or such other time which shall be mutually agreed to by the parties. PURCHASER shall deliver to LENDER the sum of $1,387,500.00 (ONE MILLION THREE HUNDRED AND EIGHTY SEVEN THOUSAND FIVE HUNDRED DOLLARS) in the form of cash, cashier’s check or wire transfer in the total amount or, alternatively, $1,000,000 in the form of cash, cashier’s check or wire transfer and, $387,500.00 (THREE HUNDRED AND EIGHTY SEVEN THOUSAND FIVE HUNDRED DOLLARS) in the form of 968,750 (NINE HUNDRED AND SIXTY-EIGHT THOUSAND SEVEN HUNDRED FIFTY) shares of restricted common stock in PURCHASER, AudioEye Acquisition Corp. (“AEAC”) Said shares shall be exchanged, on a one for one basis, for shares in AUDIOEYE, INC, subsequent to the successful completion of the Spin-Out and share exchange contemplated by the “Master Agreement” attached hereto as Exhibit A. If shares are issued, said shares shall be restricted only by standard 144 rules and there shall be no other restictions placed on said shares.
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(c)
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No-Shop. The LENDER, BORROWER and PURCHASER acknowledge that all PARTIES hereto have invested substantial time and resources and incurred substantial expenses to date in negotiating and drafting this agreement, the Master Agreement, and other underlying documents and agreements. Accordingly, for a period from the date hereof until the expiration of the Option Term (s) or extensions thereof, which shall be May 31, 2012 (or July 31, 2012 if extended pursuant to paragraph 4 (b) hereof), LENDER and BORROWER directly or indirectly, through any officer, director, employee, agent or representative, will not (a) solicit, initiate, encourage or accept offers or proposals from, or negotiate with any person other than the PURCHASER for (i) the sale of all or any assets of BORROWER as they pertain to Audio Eye, Inc or (ii) the sale, trarnsfer, hypothication or encumberamce of the Notes held by LENDER as described herein; or (b) furnish to any person any information with respect thereto.
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(d)
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Alternate Funding. In lieu of PURCHASER purchasing the notes dierectly from LENDER, PURCHASER may cause third parties to purchase or satisfy the Notes, on the terms set forth herein, in exchange for securities issued by Audioeye, Inc.
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3)
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CLOSING DATE
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4)
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NOTE MODIFICATION
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5)
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The term “the Notes’ shall mean collectively and the Notes 1 through 5 referenced in Paragraphs A through E hereof.
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6)
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The term “the Note” shall mean the Convertible Note and Note Purchase Agreement as modified herein unless the context clearly indicates or dictates a contrary meaning.
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7)
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Both BORROWER and LENDER ratify and confirm all of the liabilities, rights and obligations under the original Note Purchase Agreements and Convertible Notes and agree that, except as expressly modified in this Agreement, the Note Purchase Agreements and Convertible Notes shall continue in full force and effect as set forth therein or provided for by governing law. The Parties agree that this Agreement shall not be construed as an agreement to extinguish the original obligations or rights under the Notes and shall not constitute a negation or novation as to the rights or obligations of the Parties pursuant to the Notes other than as modified herein.
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8)
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Organization and Qualification; Representations and Warranties
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9)
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This Agreement may not be amended, changed, modified, altered or terminated without, in each instance, the prior written consent of all Parties hereto.
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10)
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This Agreement shall be construed in accordance with and governed by the Laws of the State of Delaware. In the event that any action is commenced to enforce or interpret this agreement, the prevailing party in any such action shall be entitled to recover its attorney’s fees and costs incurred, including costs and fees on appeal, whether suit be brought or not. Venue of any proceeding to enforce or interpret this agreement shall be the courts of New Castle County Delaware.
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