UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Debut Broadcasting Corporation, Inc.
-----------------------------------
(Name of Issuer)
Common Stock, par value $0.003 per share
----------------------------------
(Title of Class of Securities)
24276 P 101
-----------------------------
(CUSIP Number)
Ronald E. Heineman
4525 Bells Lane, Suite 137
Cincinnati, OH 45244
513-602-3268
------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
September 8, 2010
-----------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of Sections 240.13d-1(e),
240.13d-1(f) or 240.13d-1(g) check the following box /_/.
Note: Schedules filed in paper format shall include a signed
original and five copies are to be sent. See Section 240.13d-7 for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided
in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).
CUSIP No. 24276 P 101
1 NAME OF REPORTING PERSONS
Diversified Support Systems, LLC
EIN 51-0462658
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / / (b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS Not applicable.
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)/_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION Diversified is an
Ohio limited liability company.
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER: Not applicable.
8 SHARED VOTING POWER: Not applicable.
9 SOLE DISPOSITIVE POWER: Not applicable.
10 SHARED DISPOSITIVE POWER: Not applicable.
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
7,240,000, assuming full exercise of current right to buy
7,240,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18%
14 TYPE OF REPORTING PERSON OO
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, $.003 par value per
share, of Debut Broadcasting Corporation, Inc. Debut's principal
executive offices are located at 1025 16th Ave. South, Suite 102,
Nasheville, TN.
The reporting person owns no Debut capital stock. Diversified is
deemed beneficial owner of 7,240,000 shares of Debut's common stock
as a result of its right to purchase such shares pursuant to a
Convertible Promissory Note it holds from Debut dated September 21,
2009. The original holder of the Note was River Falls Financial
Services, LLC. Diversified purchased the Note from River Falls
pursuant to a Note Purchase Agreement as of September 8, 2010.Under
a Participation Agreement entered into in connection with the Note
Purchase Agreement (i) River Falls retained a 50% interest in the
Note and share purchase rights thereunder, and (ii) the parties and
Debut agreed that the aggregate number of shares purchasable under
the Note was reduced to 14,480,000. The transaction in which the
Note was issued by Debut was reported on Form 8-K by Debut on
September 25, 2009. The Note is attached as Exhibit 7.1. Mr.
Heineman is not currently a record owner or beneficial owner of
Debut common stock. However, were Diversified to exercise its
purchase rights and own Debut common stock, Mr. Heineman would be
deemed a beneficial owner of such shares pursuant to his authority
to vote and divest such shares on behalf of Diversified.
Item 2. Identity and background.
Diversified Support Systems, LLC is an Ohio limited liability
company with a principal address at 4524 Bells Lane, Suite 137,
Cincinnati, OH 45244. The principal business activity of
Diversified is to serve as a holding company for various
investments. Ron Heineman's principal business address is
Diversified's address. Mr. Heineman's principal employment is as
CEO and Chairman of Debut at the foregoing address. Mr. Heineman
also provides human resources consulting, management, merger and
acquisition and restructuring services to a variety of enterprises,
sometimes in the course of which he serves as an officer of the
client. Mr. Heineman is manager of Diversified.
Item 3. Source and amount of funds or other consideration.
Not applicable. As described above in Item 1, the reporting person
owns no shares of Debut common stock. If Diversified subsequently
makes purchases of Debut common stock, pursuant to its rights under
the Note or otherwise, it will amend this report to as required.
Item 4. Purpose of transaction.
The reporting person has made no purchase of Debut common stock;
accordingly, there is no purpose for having purchased the
securities. Diversified entered into the transaction with River
Falls with the expectation of earning interest income on the Note.
Although Diversified does not anticipate exercising its right to
purchase shares under the Note in the foreseeable future, when and
if Diversified determines it would be in its best economic interest
to purchase Debut shares, it would likely do so.
Item 5. Interest in Securities of the Issuer.
(a) Assuming complete exercise of its conversion/option rights,
Diversified would own 7,240,000 shares, or 18% of the Debut
common stock. Upon any such exercise Mr. Heineman would be
deemed a beneficial owner of such shares, as would River Falls
3
Financial Services, LLC, owing to Mr. Heineman's position as
manager of each of Diversified and River Falls. Were River
Falls and Diversified to each fully exercise their purchase
rights under the Note, each of River Falls, Diversified and
Mr. Heineman would be deemed beneficial owners of an aggregate
of 14,480,000 shares, or 30.4% of the then outstanding Debut
common stock.
(b) Not applicable, as neither reporting person owns any shares.
(c) Neither reporting person has engaged in a transaction in the
class of securities reported in the past 60 days.
(d) Not applicable, no such securities are owned.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
In connection with the Note Purchase Agreement and Participation
Agreement Diversified issued River Falls a Promissory Note in
payment of the purchase price and pledged the Note back to River
Falls to secure payment of the purchase price.
Item 7. Materials to be filed as Exhibits.
Exhibit 7.1 Convertible Promissory Note
Exhibit 7.2 Note Purchase Agreement
Exhibit 7.3 Participation Agreement
Exhibit 7.4 Promissory Note from Diversified to River Falls
Exhibit 7.5 Pledge Agreement from Diversified to River Falls
Signature
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: November 19, 2010
DIVERSIFIED SUPPORT SERVICES, LLC
BY: /s/ Ronald E. Heineman
----------------------------
Ronald E. Heineman, Manager
4
EXHIBIT 7.1
CONVERTIBLE PROMISSORY NOTE
$1,500,000 September 21, 2009
This Convertible Promissory Note is made by Debut Broadcasting
Corporation, Inc., a Nevada corporation (the "Maker") for the
benefit of River Falls Financial Services, LLC, Kentucky limited
liability company ("Holder").
1. PAYMENT.
Maker hereby promises to pay to Holder, or assigns, the unpaid
principal amount of the advances made by Holder to Maker and
interest accrued at an annual rate of twelve percent (12%), not
later than July 31, 2010 (the "Maturity Date"). Maker may request
loans in any increment by giving Holder notice specifying the date
of such loan, whereupon Holder shall promptly make such advance if
Holder approves such advance, which approval shall not be
unreasonably withheld. The aggregate amount of such loans shall not
exceed $1,500,000. Holder shall keep a schedule of all advances
hereunder attached to this Note, which schedule shall become an
amendment hereto and be incorporated herein, as revised from time to
time. Maker shall pay interest monthly on the first business day of
each month for the interest accrued on outstanding advances during
the previous month. The parties acknowledge that the balance
hereunder is $300,000 as of the date hereof.
Presentment, demand and protest, and notices of protest,
dishonor, and non-payment of this Note and all notices of every kind
are hereby waived.
No single or partial exercise of any power hereunder shall
preclude the other or further exercise thereof or the exercise of
any other power. No delay or omission on the part of the holder
hereof in exercising any right hereunder shall operate as a waiver
of such right or of any other right under this Note.
Maker shall have the right to prepay this note without penalty or
charge of any kind, provided that Holder shall have five business
days after receipt of such prepayment to either accept such
prepayment or exercise its conversion rights under Section 2 as to
all or a portion or all of such prepayment.
2. CONVERSION, PURCHASE.
2.1 Conversion. The holder of this Note will have the right
to convert all or any part of the outstanding unpaid principal and
interest on this Note (the "Unpaid Balance") into shares
("Conversion Shares") of the Maker's common stock, $0.003 par value
per share ("Common Shares"), at a price of $0.05 per share.
To convert this Note pursuant to this Section 2, the holder of
this Note shall surrender this Note, duly endorsed, to the
principal offices of the Maker or any transfer agent for its
securities (as the case may be), together with a written notice (the
"Conversion Notice") to the Maker of the holder's election to
convert, specifying the amount of the Unpaid Balance to be so
converted. At its expense, the Maker shall, as soon as practicable
thereafter, issue and deliver to such holder at such principal
office, a certificate (or certificates, as directed by Holder)
evidencing the issuance of the Conversion Shares (bearing such
legends as may be required by applicable state and federal
securities laws in the opinion of legal counsel of the Maker), and
a replacement Note representing any portion of the Unpaid Balance
not so converted. In the event of any conversion of this Note, such
conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender and delivery of
both this Note and the corresponding Conversion Notice, and the
holder of this Note entitled to receive the Conversion Shares upon
such conversion shall be treated for all purposes as the record
holder of such securities on such date. All Conversion Shares issued
upon conversion of this Note shall be duly authorized, fully-paid
and non-assessable.
1
2.2 Purchase Option. Maker acknowledges that it is the
intention of the parties that Holder have the right to acquire
a total of 30,000,000 Common Shares for $1,500,000, and that at any
time Holder shall have the option (the "Option") to purchase Common
Shares by first, conversion in accordance with Section 2.1, above,
and second, purchase of shares for $.05 cash ("Option Shares"). The
Option shall expire upon the later of July 31, 2011, or the purchase
by Holder of 30,000,000 Common Shares under this Note, whichever
occurs first.
3. MAKER REPRESENTATIONS
Maker represents and warrants to Holder as follows:
3.1 SEC Reports. The Maker's reports (and financial
statements included therein) filed with the U.S. Securities and
Exchange Commission ("SEC Reports") from January 1, 2008 through the
date hereof (the "Reporting Period") are accurate in all material
respects and comply in all material respects with the SEC's
information reporting requirements with respect to such reports.
The Maker has filed all SEC Reports due during the Reporting Period.
3.2 Disclosure. None of this Agreement or any Schedule,
Exhibit or certificate attached hereto or delivered in accordance
with the terms hereof or any document or statement in writing which
has been supplied by or on behalf of the Maker to Holder or its
agents and advisors in connection with the transactions contemplated
by this Agreement contains any untrue statement of a material fact,
or omits any statement of a material fact necessary in order to make
the statements contained herein or therein not misleading. There
has been no material adverse change in the Maker's financial
condition, business or prospects since March 31, 2009, other than
such changes as may affect the radio broadcasting industry generally
and as is evidenced by the Maker's balance sheet as at June 1, 2009
provided to counsel to Holder.
4. PROTECTIVE PROVISIONS.
4.1 Operating Covenants. Until the Note is paid in full,
Maker shall not, and shall cause its subsidiaries to not, without
the consent of Holder (which consent shall not be unreasonably with
held) (i) issue or sell (or agree to issue or sell, whether through
a warrant, option or otherwise) any capital stock (other than such
as are outstanding on the date hereof), (ii) grant a license to any
person affiliated with the Maker or any insider of the Maker for any
Maker proprietary technology, (iii) sell any material asset other
than in the ordinary course of business, (iv) purchase any capital
equipment for any amount in excess of $10,000 other than in the
ordinary course of business, (v) repurchase or redeem any capital
stock of the Maker, (vi) make any distributions on its capital
stock, (vii) make any material change in the nature of its business,
(viii) incur or satisfy any material debt or contractual
obligations, other than in the ordinary course of business, (ix)
enter into any transaction with any officer or director, or any
affiliate, associate or relative of any officer or director, of the
Maker except with the approval of the disinterested members of the
Board of Directors, or (x) effect a recapitalization, stock
dividend, reverse stock split, or similar such event.
4.2 Reservation of Common Stock. The Maker has taken all
necessary action to authorize the issuance of this Note, and has
taken (or will take) all action and will obtain all governmental
consents and approvals necessary to authorize the issuance of the
shares of common stock hereunder, and covenants that it will at all
times keep available solely for issuance hereunder sufficient shares
of common stock.
4.3 Information Rights. Until the Note is paid in full,
the Maker shall grant to Holder and its agents access during normal
business hours to all key employees, properties, books, accounts,
records, contracts and documents of or relating to the Maker and
furnish or cause to be furnished to Holder and their representatives
all reasonably available data, information and analysis concerning
the business, finances and properties of the Maker and its
subsidiaries that Holder may reasonably request.
2
4.4 Registration Rights. Maker shall register the
Conversion Shares and Option Shares which are not publicly tradable
without limit under Rule 144 under the Securities Act of 1933 (the
"Act"), as amended, pursuant to any other registration of securities
it effects from the date hereof until the anniversary date hereof
and cause such registration statement to remain effective for a
period of not less than six months after becoming effective. Maker
shall use its best efforts to be at all times in compliance with the
public information requirements under Rule 144(c) from the date
hereof through the date all holding periods for Conversion Shares
and Option Shares under Rule 144 have been satisfied.
5. DEFAULT.
(a) Upon the occurrence of any of the following events (herein
called "Events of Default"):
(i) Maker shall fail to pay the principal or interest of
this Note when due;
(ii) Maker shall breach any term, provision, representation,
warranty, or covenant under this Note, or any security agreement
executed by Maker and Holder concurrently herewith;
(iii) Any guarantor hereof shall breach any term, provision,
representation, warranty or covenant under their guaranty or
related security agreement;
(iv) (A) Maker shall commence any proceeding or other action
relating to it in bankruptcy or seek reorganization, arrangement,
readjustment of its debts, receivership, dissolution,
liquidation, winding-up, composition or any other relief under
any bankruptcy law, or under any other insolvency,
reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or
law, of any jurisdiction, domestic or foreign, now or hereafter
existing; or (B) Maker shall admit the material allegations of
any petition or pleading in connection with any such proceeding;
or (C) Maker shall apply for, or consent or acquiesce to, the
appointment of a receiver, conservator, trustee or similar
officer for it or for all or a substantial part of its property;
or (D) Maker shall make a general assignment for the benefit of
creditors;
(v) (A) The commencement of any proceedings or the taking
of any other action against Maker in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts,
liquidation, dissolution, arrangement, composition, or any other
relief under any bankruptcy law or any other similar act or law
of any jurisdiction, domestic or foreign, now or hereafter
existing and the continuance of any of such events for sixty
(60) days undismissed, unbonded or undischarged; or (B) the
appointment of a receiver, conservator, trustee or similar
officer for Maker for any of its property and the continuance of
any of such events for sixty (60) days undismissed, unbonded or
undischarged;
(vi) Maker shall fail to comply with any of its obligations
under this Note, other than payment;
(vii) Maker shall default with respect to any indebtedness
for borrowed money (other than under this Note) if either (a)
the effect of such default is to allow the creditor to
accelerate the maturity of such indebtedness (giving effect to
any applicable grace periods) or (b) the holder of such
indebtedness declares Maker to be in default (giving effect to
any applicable grace periods);
3
(viii) Any judgment or judgments against Maker or any
attachment, levy or execution against any of its properties for
any amount in excess of $20,000 in the aggregate shall remain
unpaid, or shall not be released, discharged, dismissed, stayed
or fully bonded for a period of thirty (30) days or more after
its entry, issue or levy, as the case may be; or
(ix) Holder deems itself insecure and in good faith
believes the prospect of repayment has become impaired; then,
and in any such event, Holder, at its option and without any
written notice to Maker, may declare the entire principal
amount of this Note then outstanding immediately due and
payable, and interest at the default rate shall accrue
thereafter, and the same shall forthwith become immediately
due and payable without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived. If the
Note is not paid in full upon acceleration, as required
above, interest shall accrue on the outstanding principal of and
interest on this Note from and including the date of the Event
of Default to but not including the date of payment at a rate
equal to the lesser of eighteen percent (18%) per annum or the
maximum interest rate permitted by applicable law.
(b) No course of dealing or delay on the part of Holder in
exercising any right hereunder shall operate as a waiver or
otherwise prejudice its rights under this Note. No remedy conferred
hereby shall be exclusive of any other remedy referred to herein or
now or hereafter available at law, in equity, by statute or
otherwise.
(c) In the event this Note is turned over to an attorney for
collection or Holder otherwise seeks advice of an attorney in
connection with the exercise of its rights hereunder upon the
occurrence of an Event of Default, Maker agrees to pay all
reasonable costs of collection, including reasonable attorney's fees
and expenses and all out of pocket expenses incurred in connection
with such collection efforts, which amounts may, at Holder's option,
be added to the principal hereof.
(d) No right or remedy herein conferred upon or reserved to the
Holder is intended to be exclusive of any other right or remedy, and
every right and remedy shall to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion
or employment of any other appropriate right or remedy. No delay or
omission of the Holder to exercise any right or power accruing upon
any Event of Default occurring and continuing as aforesaid shall
impair any such right or power or shall be construed to be a waiver
of any such Event of Default or an acquiescence therein; and every
power and remedy given by this Note or by law may be exercised from
time to time, and as often as shall be deemed expedient, by the
Holder.
6. Governing Law. This Note shall be governed by and construed
in accordance with the domestic laws of the Commonwealth of Kentucky.
7. Amendments and Waivers. No amendment of any provision of
this Note shall be valid unless the same shall be in writing and
signed by Holder and Maker.
8. Severability. Any term or provision of this Note that is
invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other
jurisdiction.
9. Construction. The parties have participated jointly in the
negotiation and drafting of this Note. In the event an ambiguity or
question of intent or interpretation arises, this Note shall be
construed as if drafted jointly by the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Note.
4
10. Venue, Jurisdiction. The parties hereby irrevocably submit
to the exclusive jurisdiction and venue of any state or federal
court sitting in Jefferson County, Kentucky in any action or
proceeding arising out of or relating to this Agreement, and the
parties hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such State or
federal Court. The parties hereby irrevocably waive, to the
fullest extent they may do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding. The parties hereby
consent and agree that the summons and complaint and any other
process which may be served in any such action or proceeding may be
served by mailing (by registered or certified mail) or delivering a
copy of such process to the party's registered agent in its state of
organization. The parties agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner
provided by law.
IN WITNESS WHEREOF, the parties have caused this Note to be
issued as of the date above.
DEBUT BROADCASTING CORPORATION, INC.
BY: /s/ Steven Ludwig
Steven Ludwig, President
/s/ Robert Marquitz
Robert Marquitz, Chairman
RIVER FALLS FINANCIAL SERVICES, LLC
By /s/ Ron Heineman
Ron Heineman, Co - Manager
5
EXHIBIT 7.2
NOTE PURCHASE AGREEMENT
-----------------------
AGREEMENT dated as of September 8, 2010, by and between Diversified
Support Systems, LLC (the "Purchaser"), and River Falls Financial
Services, LLC (the "Seller").
In consideration of the mutual covenants herein contained, and
other valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Sale of Note. Seller hereby sells to Purchaser, and Purchaser
hereby purchases from Seller, the Convertible Promissory Note
dated July 31, 2009 (the "Note") of Debut Broadcasting
Corporation, Inc. (the "Company") to Seller at a purchase
price equal to $362,000 (the "Purchase Price"). The Purchase
Price shall be paid in accordance with the Note executed and
delivered by Purchaser at the closing. Seller shall retain
a one-half interest in the Note pursuant to the Participation
Agreement between the parties the date hereof.
2. Representations of Seller. Seller represents and warrants to
Purchaser as follows:
(a) Seller holds good title to the Note, free of any adverse
claims or restrictions on transfer. The amount due on the
Note as of the date hereof is $724,000, consisting of
$650,000 principal and $74,000 accrued interest.
(b) Neither the execution and delivery of this Agreement,
Amendment No. 1 to Voting Agreement among Seller, Company
and certain other parties, the Amended Unconditional
Guaranties of certain affiliates of the Company to
Purchaser, nor the sale of the Note contemplated hereby
will constitute a default under or violate any term or
provision of any agreement to which Seller or the Company
is a party.
3. Miscellaneous.
(a) Waiver. A party's failure to insist on compliance or
enforcement of any provision of this Agreement, shall
not affect the validity or enforceability or constitute a
waiver of future enforcement of that provision or of any
other provision of this Agreement by that party or any
other party.
(b) Governing Law. This Agreement shall in all respects be
subject to, and governed by, the internal laws of the
state of Ohio.
(c) Severability. The invalidity or unenforceability of
any provision in the Agreement shall not in any way
affect the validity or enforceability of any other
provision and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision
had never been in the Agreement.
1
(d) Assignment. This Agreement, together with any amendments
to it, shall be binding upon and shall inure to the
benefit of the parties and their respective successors,
assigns, heirs, and personal representatives.
(e) Amendments. This Agreement may be amended at any time by
mutual consent of the parties, with any such amendment to
be invalid unless in writing, signed by the parties
hereto.
(f) Entire Agreement. This Agreement contains the entire
agreement and understanding by and between the Purchaser
and Sellers with respect to the matters covered herein,
and no representations, promises, agreements, or
understandings, written or oral, relating to the purchase
of shares by Purchasers from Seller, not contained in
this Agreement, including without limitation those
provided in the Mutual Purchase Agreement dated July 26,
1986, shall be of any force or effect.
IN WITNESS WHEREOF, Seller and Purchasers have duly executed this
Agreement as of the day and year first above written.
SELLER:
RIVER FALLS FINANCIAL SERVICES, LLC
BY: /s/ Ronald E. Heineman
--------------------------
Ronald E. Heineman
PURCHASER:
DIVERSIFIED SUPPORT SYSTEMS, LLC
BY: /s/ Ronald E. Heineman
--------------------------
Ronald E. Heineman
EXHIBIT 7.3
PARTICIPATION AGREEMENT
Participation Agreement dated as of September 8, 2010, between
River Falls Financial Services, LLC ("Participant") and Diversified
Support Systems, LLC ("Lender") and joined in by Debut Broadcasting
Corporation, Inc. ("Borrower").
WITNESSETH
WHEREAS, Participant entered into a loan transaction with
Borrower on August 5, 2009, which loan is evidenced by a
Convertible Promissory Note (the "Note"), guaranties of certain
Borrower subsidiaries and related loan documents (hereinafter
referred to as the "Documents"), pursuant to which transaction
Lender has made a loan of $724,000 to Borrower (the "Loan"); and
WHEREAS, Participant is selling the Loan to Lender on the date
hereof, in connection therewith Lender becoming the "Holder" under
the Note;
WHEREAS, Participant desires to retain a one-half interest in
the Note,
NOW, THEREFORE, IT IS AGREED:
1. The parties agree to share in the Loan 50% each
("Participation Percentage"). No further loans shall be made
pursuant to the Note. A party's Participating Percentage shall be
commensurately reduced (and the other party's increased) if they
exercise their conversion privilege under Section 2.1 of the Note.
2. A. Each party shall initially own a one-half interest
in the Loan, in accordance with their respective Participation
Percentages, and in all documents, instruments and collateral
issued by the Borrower to Lender, and in all payments made thereon
and in any recoveries or distributions in connection therewith.
B. Any payments on the Note, in whole or in part, or
recoveries ("Collections") shall be paid to the parties in relation
to their Participating Percentage.
C. All Collections received shall be applied first
to the payment of all costs and expenses incurred in effecting
such Collections (including, without limitation, any costs,
expenses, attorney's fees and charges relating to the Loan, with
the balance being paid to the parties.
D. Section 2.2 of the Note is hereby amended to reduce
the number of Option Shares to 14,480,000, 7,240,000 for each of
Lender and Participant.
3. Lender shall service and enforce the Loan and in so
doing shall exercise due care. Neither Lender, not its officers,
employees and attorneys shall be liable except for bad faith or
gross misconduct.
4. Promptly within fifteen (15) days upon final clearance
of any payments received by Lender on account of the Loan,
Lender shall (except as modified in Paragraph 2 above) distribute
the same to the Participant in accordance with its Participation
Percentage.
Promptly upon receipt of any financial statements, notices or
communications or reports of the Borrower, Lender shall forward
copies of same to the Participant.
5. Lender shall act as principal for itself and as
agent for the Participant in all matters dealing with the service
of the Loan, and as trustee solely for purposes of collecting and
distributing the amounts received by it. Lender's records shall,
at all times, reflect the participation of the Participant
in accordance with its Participation Percentage.
6. Lender shall give Participant prompt written notice of
any of the following:
A. Consent to or permit any substitution, withdrawal
or release of any collateral or other security securing the
payment of the Loan except in accordance with the terms of the
Note and Agreements and other related documents.
B. Amend or modify the terms of the Documents.
Lender shall take such appropriate legal action for the enforcement
thereof as Lender deems advisable in its sole discretion, upon
notice to the Participant.
7. All expenses including, but not limited to, counsel fees
and court costs paid or incurred by Lender in any such action
shall be borne by the parties hereto in proportion to their
respective Participation Percentage and Lender Percentage, at the
time of default in consideration of the participation interest.
Payment shall be made by the Participant within five (5) days
after receipt of notice from Lender of its pro rata share. Any such
payment not made shall accrue interest at the interest rate
applicable to the loan. Said payment and interest shall be deducted
by Lender from the next payment(s) due said Participant hereunder
or out of any recoveries.
8. Lender shall have full and complete authorization and
shall not be liable to the Participants for any action taken or
suggested by it hereunder in good faith and in accordance with the
option of counsel provided it has complied with the requirement of
notice hereunder.
9. Any notice required hereunder shall be sent via
electronic mail to a designated representative of each party. In
the event consent is required hereunder then the failure of a party
to respond in writing to Lender within five (5) days of the date of
notification shall be deemed consent to the action.
10. This agreement has been entered into in Ohio, and shall
be construed in accordance with and governed by the laws of the
state of Ohio.
11. This agreement may be executed in any number of
counterparts at one time or at different times, all of which taken
together shall constitute one and the same instrument, and any
of the parties hereto may execute this agreement by signing any
such counterpart, and this agreement shall be deemed executed as
of the date first above written.
12. This agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and
assigns.
2
13. This agreement embodies the entire agreement and
understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals the day and the year first above written.
DIVERSIFIED SUPPORT SYSTEMS, LLC
BY: /s/ Ronald E. Heineman
------------------------
Ronald E. Heineman
TITLE: Manager
RIVER FALLS FINANCIAL SERVICES, LLC
BY: /s/ Ronald E. Heineman
------------------------
Ronald E. Heineman
TITLE: Manager
And joined in by
DEBUT BROADCASTING CORPORATION, INC.
BY: /s/ Sariah Hopkins
-------------------------
Sariah Hopkins
TITLE: CFO
EXHIBIT 7.4
PROMISSORY NOTE
---------------
$362,000 September 8, 2010
This Promissory Note is made by Diversified Support Systems, LLC,
an Ohio corporation (the "Maker") for the benefit of River Falls
Financial Services, LLC, Kentucky limited liability company
("Holder"). Maker hereby promises to pay to Holder, or assigns,
$362,000 and interest accrued at an annual rate of three percent
(3%), as follows: $3,495.50 payable monthly on the 8th day of each
month commencing October 8, 2010, with the balance of the principal
and accrued interest being payable on September 8, 2015. In
addition, if Maker receives payments on the promissory note between
Holder and Debut Broadcasting Corporation, Inc. ("Debut") dated
July 31, 2009 (the "Debut Note") transferred from Holder to Maker
the date hereof, or receives consideration on the sale of Debut
stock received in connection with its conversion and option rights
under the Debut Note, 75% of such amounts shall be promptly paid by
Maker to Holder in partial satisfaction of this Note.
Notwithstanding the foregoing, if a transaction occurs with
respect to Debut resulting in Maker no longer being an affiliate of
Debut, Maker shall use commercially reasonable efforts to cause
Debut to pay Maker sufficient proceeds in connection with such
transaction (e.g. in respect of Maker's and its affiliates equity
or debt holdings in Debut) to satisfy this Note, whereupon Maker
shall prepay this Note.
Presentment, demand and protest, and notices of protest, dishonor,
and non-payment of this Note and all notices of every kind are
hereby waived.
No single or partial exercise of any power hereunder shall
preclude the other or further exercise thereof or the exercise of
any other power. No delay or omission on the part of the holder
hereof in exercising any right hereunder shall operate as a waiver
of such right or of any other right under this Note. Maker shall
have the right to prepay this note without penalty or charge of any
kind.
This Note shall be governed by and construed in accordance with the
domestic laws of the Commonwealth of Kentucky.
Maker hereby irrevocably submits to the exclusive jurisdiction and
venue of any state or federal court sitting in Jefferson County,
Kentucky in any action or proceeding arising out of or relating to
this Note, and irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such
State or federal Court. Maker hereby irrevocably waives, to the
fullest extent he may do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding. Maker hereby
consents and agrees that the summons and complaint and any other
process which may be served in any such action or proceeding may be
served by mailing (by registered or certified mail) or delivering
a copy of such process to Maker's registered agent in its state of
organization. Maker agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner
provided by law.
IN WITNESS WHEREOF, the parties have caused this Note to be issued
as of the date above.
DIVERSIFIED SUPPORT SYSTEMS, LLC
By: /s/ Ron Heineman
--------------------------
Ron Heineman, Manager
EXHIBIT 7.5
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of this is made by Diversified
Support Systems, LLC (the "Pledgor"), with an address at 4524
Bells Lane, Suite 137, Cincinnati, OH, 45244 in favor of River
Falls Financial Services, LLC (the "Secured Party"), with an
address at 11921 Brinley Ave., Louisville, KY 40243.
1. Pledge. In order to induce the Secured Party to extend the
Obligations (as defined below), the Pledgor hereby grants a
security interest in and pledges to the Secured Party all of the
Pledgor's right, title and interest in and to the Convertible
Promissory Note from Debut Broadcasting Corporation, Inc. dated
July 1, 2009 to Secured Party (the "Debut Note"), together with all
additions, substitutions, replacements and proceeds and all income,
interest, dividends and other distributions thereon, including
without limitation shares of Debut capital stock received upon
exercise of certain conversion and option rights under the Debut
Note (the "Collateral"). If the Collateral shall ever include
certificated securities, such certificates shall be delivered to
the Secured Party accompanied by duly executed blank stock powers
or assignments as applicable. The Pledgor hereby authorizes the
transfer of possession of all certificates, instruments, documents
and other evidence of the Collateral to the Secured Party.
2. Obligations Secured. The Collateral secures payment to
the Secured Party of all amounts owing to Secured Party from
Pledgor pursuant to the Promissory Note from Pledgor to Secured
Party the date hereof (hereinafter referred to collectively as the
"Obligations").
3. Representations and Warranties. The Pledgor represents
and warrants to the Secured Party as follows:
3.1. There are no restrictions on the pledge or transfer
of any of the Collateral, other than restrictions referenced on the
face of any certificates evidencing the Collateral.
3.2. The Pledgor is the legal owner of the Collateral,
which is registered in the name of the Pledgor, the Custodian (as
hereinafter defined) or a nominee.
3.3. The Collateral is free and clear of any security
interests, pledges, liens, encumbrances, charges, agreements,
claims or other arrangements or restrictions of any kind, except as
referenced in Section 3.1 above; and the Pledgor will not incur,
create, assume or permit to exist any pledge, security interest,
lien, charge or other encumbrance of any nature whatsoever on any
of the Collateral or assign, pledge or otherwise encumber any right
to receive income from the Collateral.
3.4. The Pledgor has the right to transfer the Collateral
free of any encumbrances and the Pledgor will defend the Pledgor's
title to the Collateral against the claims of all persons, and any
registration with, or consent or approval of, or other action by,
any federal, state or other governmental authority or regulatory
body which was or is necessary for the validity of the pledge of
and grant of the security interest in the Collateral has been
obtained.
3.5. The pledge of and grant of the security interest in
the Collateral is effective to vest in the Secured Party a valid
and perfected first priority security interest, superior to the
rights of any other person, in and to the Collateral as set forth
herein.
1
4. Default.
4.1. Upon the occurrence of any of the following events
(each an "Event of Default"): (i) any default under the Note, (ii)
the failure by the Pledgor to perform any of its obligations under
this Pledge Agreement, (iii) the falsity, inaccuracy or material
breach by the Pledgor of any written warranty, representation or
statement made or furnished to the Secured Party by or on behalf of
the Pledgor, or (iv) the failure of the Secured Party to have a
perfected first priority security interest in the Collateral, then
the Secured Party is authorized in its discretion to declare any or
all of the Obligations to be immediately due and payable without
demand or notice, which are expressly waived, and may exercise any
one or more of the rights and remedies granted pursuant to this
Pledge Agreement or given to a secured party under the Uniform
Commercial Code of the applicable state, as it may be amended from
time to time, or otherwise at law or in equity, including without
limitation the right to sell or otherwise dispose of the Collateral.
4.2. (a) At any bona fide public sale the Secured Party
shall be free to purchase all or any part of the Collateral. Any
such sale may be on cash or credit. The Secured Party shall be
authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral for
their own account in compliance with Regulation D of the Securities
Act of 1933 or any other applicable exemption available under such
Act. The Secured Party will not be obligated to make any sale if
it determines not to do so, regardless of the fact that notice of
the sale may have been given. The Secured Party may adjourn any
sale and sell at the time and place to which the sale is adjourned.
If the Collateral is customarily sold on a recognized market or
threatens to decline speedily in value, the Secured Party may sell
such Collateral at any time without giving prior notice to
the Pledgor. Whenever notice is otherwise required by law to be
sent by the Secured Party to the Pledgor of any sale or other
disposition of the Collateral, five days written notice sent to the
Pledgor at the notice address specified below will be reasonable.
(b) The Pledgor recognizes that the Secured Party
may be unable to effect or cause to be effected a public sale of
the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Act"), so that the Secured
Party may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree,
among other things, to acquire the Collateral for their own
account, for investment and without a view to the distribution or
resale thereof. The Pledgor understands that private sales so made
may be at prices and on other terms less favorable to the seller
than if the Collateral were sold at public sales, and agrees that
the Secured Party has no obligation to delay or agree to delay the
sale of any of the Collateral for the period of time necessary to
permit the issuer of the securities which are part of the
Collateral (even if the issuer would agree), to register such
securities for sale under the Act. The Pledgor agrees that private
sales made under the foregoing circumstances shall be deemed to
have been made in a commercially reasonable manner.
4.3. The net proceeds arising from the disposition of the
Collateral after deducting expenses incurred by the Secured Party
will be applied to the Obligation. If any excess remains after the
discharge of the Obligations, the same will be paid to the Pledgor.
2
5. Voting Rights and Transfer. Prior to the occurrence of
any Event of Default, the Pledgor will have the right to exercise
all voting rights with respect to the Collateral. At any time
after the occurrence of any such Event of Default, the Secured
Party may transfer any or all of the Collateral into its name or
that of its nominee and may exercise all voting rights with
respect to the Collateral, but no such transfer shall constitute a
taking of such Collateral in satisfaction of any or all of the
Obligations unless the Secured Party expressly so indicates by
letter mailed or delivered to the Pledgor.
6. Dividends and Interest. The Pledgor will have the right
to receive all cash dividends and interest declared and paid on the
Collateral prior to the occurrence of any Event of Default. In the
event any additional shares are issued to the Pledgor as a stock
dividend or in lieu of interest on any of the Collateral, as a
result of any split of any of the Collateral, by reclassification
or otherwise, any certificates evidencing any such additional
shares will be immediately delivered to the Secured Party and such
shares will be subject to this Pledge Agreement and a part of the
Collateral to the same extent as the original Collateral. At any
time after the occurrence of an Event of Default, the Secured Party
shall be entitled to receive all cash or stock dividends and
interest declared or paid on the Collateral, all of which shall be
subject to the Secured Party's rights under Section 4 above.
7. Further Assurances. At any time and from time to time,
upon demand of the Secured Party, the Pledgor will give, execute,
file and record any notice, financing statement, continuation
statement, instrument, document or agreement that the Secured Party
may consider necessary or desirable to create, preserve, continue,
perfect or validate any security interest granted hereunder or to
enable the Secured Party to exercise or enforce its rights
hereunder with respect to such security interest. Without limiting
the generality of the foregoing, the Pledgor hereby irrevocably
appoints the Secured Party as the Pledgor's attorney-in-fact to do
all acts and things in the Pledgor's name that the Secured Party
may deem necessary or desirable. The Secured Party is authorized
to file financing statements, continuation statements and other
documents under the Uniform Commercial Code relating to the
Collateral without the signature of the Pledgor, naming the Pledgor
as debtor and the Secured Party as secured party.
8. Notices. All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder
must be in writing and will be effective upon receipt if delivered
personally to the Pledgor or the Secured Party, or if sent by
facsimile transmission with confirmation of delivery, or by
nationally recognized overnight courier service, to the address set
forth above or to such other address as either the Pledgor or the
Secured Party may give to the other in writing for such purpose.
9. Preservation of Rights. No delay or omission on the part
of the Secured Party to exercise any right or power arising
hereunder will impair any such right or power or be considered
a waiver of any such right or power or any acquiescence therein,
nor will the action or inaction of the Secured Party impair any
right or power arising hereunder. The Secured Party's rights and
remedies hereunder are cumulative and not exclusive of any other
rights or remedies which the Secured Party may have under other
agreements, at law or in equity.
3
10. Illegality. In case any one or more of the provisions
contained in this Pledge Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
11. Changes in Writing. No modification, amendment or waiver
of any provision of this Pledge Agreement nor consent to any
departure by the Pledgor therefrom, will in any event be effective
unless the same is in writing and signed by the Secured Party, and
then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice
to or demand on the Pledgor in any case will entitle the Pledgor to
any other or further notice or demand in the same, similar or other
circumstance.
12. Entire Agreement. This Pledge Agreement (including the
documents and instruments referred to herein) constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, between the Pledgor and the
Secured Party with respect to the subject matter hereof.
13. Successors and Assigns. This Pledge Agreement will be
binding upon and inure to the benefit of the Pledgor and the
Secured Party and their respective heirs, executors,
administrators, successors and assigns; provided, however, that the
Pledgor may not assign this Pledge Agreement in whole or in part
without the prior written consent of the Secured Party and the
Secured Party at any time may assign this Pledge Agreement in whole
or in part.
14. Interpretation. In this Pledge Agreement, unless the
Secured Party and the Pledgor otherwise agree in writing, the
singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; the
word "or" shall be deemed to include "and/or", the words
"including", "includes" and "include" shall be deemed to be
followed by the words "without limitation." Section headings
in this Pledge Agreement are included for convenience of reference
only and shall not constitute a part of this Pledge Agreement for
any other purpose. If this Pledge Agreement is executed by more
than one party as Pledgor, the obligations of such persons
or entities will be joint and several.
15. Governing Law and Jurisdiction. This Pledge Agreement
has been delivered to and accepted by the Secured Party and will be
deemed to be made in the commonwealth of Kentucky. The Pledgor
hereby irrevocably consents to the exclusive jurisdiction of any
state or federal court sitting in Jefferson County Kentucky,
and consents that all service of process be sent by nationally
recognized overnight courier service directed to the Pledgor at the
Pledgor's address set forth herein and service so made will be
deemed to be completed on the business day after deposit with such
courier; provided that nothing contained in this Pledge Agreement
will prevent the Secured Party from bringing any action, enforcing
any award or judgment or exercising any rights against the Pledgor
individually, against any security or against any property of the
Pledgor within any other county, state or other foreign or domestic
jurisdiction. The Secured Party and the Pledgor agree that the
venue provided above is the most convenient forum for both the
Secured Party and the Pledgor. The Pledgor waives any objection to
venue and any objection based on a more convenient forum in any
action instituted under this Pledge Agreement.
4
The Pledgor acknowledges that it has read and understood all the
provisions of this Pledge Agreement, including the waiver of jury
trial, and has been advised by counsel as necessary or appropriate.
WITNESS the due execution hereof as a document under seal, as of
the date first written above.
DIVERSIFIED SUPPORT SYSTEMS, LLC
BY: /s/ Ronald E. Heineman
------------------------
TITLE: Manager
RIVER FALLS FINANCIAL SERVICES, LLC
BY: /s/ Ronald E. Heineman
------------------------
Ronald E. Heineman
TITLE: Manager
5