Item 1.01 Entry into Material Definitive Agreement.
Madison Technologies Inc. (the "Company") entered into a second amendment (the
"Second Amendment") dated as of May 23, 2022 to that certain Stock Acquisition
Agreement dated as of October 20, 2021, by and among the Company, Top Dog
Productions, Inc.("Top Dog"), Jay Blumenfield and Anthony Marsh (the "Original
Agreement", and, as amended by that certain Amendment dated December 19, 2021
among the same parties, the "Agreement"; and all defined terms used herein,
unless otherwise defined, are used as defined in the Agreement). The Second
Amendment provides that the Purchase Price shall be 25,000,000 shares of Common
Stock, subject to ratable adjustment in the event of any stock split (reverse or
forward), stock dividend or other similar action from and after the date of the
Agreement. It also provides that in the event Top Dog has not repaid the Company
in full all of the obligations it owes under any intercompany loan or advance
agreements by December 31, 2023, all Holdback Shares shall be cancelled and not
released. The Second Amendment also revises the Milestone for the release of the
Milestone Shares to the Transferors to a single Milestone: that Top Dog achieves
earnings before interest, taxes, depreciation and amortization (as determined by
the Company's accounting firm) of at least $3,500,000 for the 2024 calendar
year. In connection therewith, the Company has agreed to not liquidate or merge
Top Dog into the Company prior to the earlier of a Milestone Failure or December
31, 2024, and to have what would be a Milestone Failure be deemed a Milestone
Success in the event that the Company's failure to make a permitted loan under
the Loan Agreement directly results in the Milestone Failure. The Second
Amendment changes the date on which the Financial Statements must be delivered
to May 31, 2022, and adds the required delivery of the 2021 audited financial
statements and March 31, 2022 unaudited financial statements. The Second
Amendment extends the period for closing to occur from ninety (90) days to two
hundred and thirty-eight (238) days following the date of the Original
Agreement. The Second Amendment revises the calculation of the value of the
Acquiror Shares for purposes of the indemnity to the average closing price of
the Common Stock for the ten trading day period ending on the trading day
immediately before the cancellation.
The foregoing description of the Second Amendment does not purport to be a
complete description of the terms of the Second Amendment and is qualified in
its entirety by referenced to the fully text of such agreement, a copy of which
is attached hereto as Exhibit 10.1.
The Company entered into an amended and restated secured loan and security
Agreement ("Loan Agreement") dated as of May 23, 2022 with Top Dog Productions,
Inc., as the borrower (the "Borrower") under such Loan Agreement. At the time
the Company amended and restated, the Company had lent to the Borrower $507,500
which remained outstanding under the Loan Agreement. The Loan Agreement replaces
the Company's original commitment to lend and now provides that the Company will
make further disbursements of a Loan to the Borrower in an aggregate principal
amount (including the amounts already outstanding ) not to exceed $1,757,500.
Subject to all conditions precedent being met on or prior to such time, up to
$500,000 of such commitment shall be borrowed on and after June 15, 2022 but on
or before June 20,2022. The Borrower may borrow up to $750,000 in the remaining
commitment on and after January 14, 2023, but prior to December 30, 2023. All
unpaid principal and unpaid interest matures on December 31, 2023. Interest
accrues on the outstanding principal under the Note at 5%; provided, however,
that interest will accrue at 24% per annum from the date of the occurrence of an
Event of Default until the principal is paid. Any accrued and unpaid interest
shall be payable on March 9 and September 9 of each year and on the date any
principal of the loan is prepaid on the amount of such principal so prepaid. The
Borrower may repay the principal of the loan at any time. Any principal that is
repaid may not be reborrowed.
The loan is secured by all assets of the Borrower. The loan is no longer
guaranteed by the owners of the Borrower.
The foregoing description of the Loan Agreement does not purport to be a
complete description of the terms of the Loan Agreement and is qualified in its
entirety by referenced to the fully text of such agreement, a copy of which is
attached hereto as Exhibit 10.2.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
10.1 Second Amendment to Stock Acquisition Agreement, dated May 23,
2022, by and among Madison Technologies Inc., Top Dog Productions,
Inc., Jay Blumenfield, and Anthony Marsh.
10.2 Amended and Restated Secured Loan and Security Agreement, dated
May 23, 2022, by and between Madison Technologies Inc. and Top Dog
Productions, Inc.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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