<SEC-DOCUMENT>0001080319-15-000009.txt : 20150624
<SEC-HEADER>0001080319-15-000009.hdr.sgml : 20150624
<ACCEPTANCE-DATETIME>20150624082346
ACCESSION NUMBER: 0001080319-15-000009
CONFORMED SUBMISSION TYPE: 8-K/A
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20150617
ITEM INFORMATION: Entry into a Material Definitive Agreement
ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION: Unregistered Sales of Equity Securities
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20150624
DATE AS OF CHANGE: 20150624
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: EMPIRE GLOBAL CORP.
CENTRAL INDEX KEY: 0001080319
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 000000000
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-50045
FILM NUMBER: 15948282
BUSINESS ADDRESS:
STREET 1: 130 ADELAIDE STREET, WEST
STREET 2: SUITE 701
CITY: TORONTO
STATE: A6
ZIP: M5H 2K4
BUSINESS PHONE: 647-229-0136
MAIL ADDRESS:
STREET 1: 130 ADELAIDE STREET, WEST
STREET 2: SUITE 701
CITY: TORONTO
STATE: A6
ZIP: M5H 2K4
FORMER COMPANY:
FORMER CONFORMED NAME: TRADESTREAM GLOBAL CORP.
DATE OF NAME CHANGE: 20050727
FORMER COMPANY:
FORMER CONFORMED NAME: VIANET TECHNOLOGY GROUP LTD
DATE OF NAME CHANGE: 20050707
FORMER COMPANY:
FORMER CONFORMED NAME: PENDER INTERNATIONAL INC
DATE OF NAME CHANGE: 19990223
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K/A
<SEQUENCE>1
<FILENAME>emgl150618-8ka.txt
<DESCRIPTION>CONVERTIBLE PROMIISSORY NOTE JUNE 2015
<TEXT>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 8-K/a
CURRENT REPORT Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest reported event): June 17, 2015
EMPIRE GLOBAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 0 - 50045 33-0823179
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
130 Adelaide Street West, Suite 701
Toronto, Ontario M5H 2K4, Canada
(Address of principal executive offices)
(647) 229-0136
(Registrant's telephone number)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registration under any of
the following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Explanatory Note.
This Amendment to form 8-K (this "Amendment") amends the Current Report on
form 8-K filed on June 22, 2015 the "Orginal Filing")
The Company is filing this Amendment to cure a clerical error in the Original
Filing which includes the addition of two missing exhibits number 2.4 and 2.5
and to properly identify the SEC Item numbers 2.03, 3.02 and 9.01 which were not
indicated due to a technical promblem. Niether of these corrections are
material.
<PAGE>
Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On June 17, 2015 (the "Effective Date"), Empire Global Corp. (the "Company")
entered into a Securities Purchase Agreement with Typenex Co-Investment, LLC
(the "Investor"), for the sale of a 9.1% Original Issue Discount ("OID")
convertible note (the "Note") with a principal amount of $330,000 (the "Maturity
Amount") bearing interest at a rate of 10% per annum due 21 months after the
issue date. The Note is convertible into shares of common stock of the Company
at a fixed price of $1.00 per share subject to adjustment if the Company issues
additional shares at a price below the conversion price (the "Conversion
Option").
In consideration for the Note the Investor will deliver to the Company a cash
amount of $100,000 (the "Initial Cash Purchase Price") and two (2) $100,000 8%
notes (the "Investor Notes") for a total commitment of $300,000. The financing
closed on June 18, 2015 (the "Closing Date"). On the Closing Date the Company
received the Initial Cash Purchase Price of $100,000 and paid an OID of $10,000
plus $5,000 for due diligence and legal fees as well as $8,000 in commission to
the Company's placement agent related to the transaction (the "Fees").
The Company will make a total of 15 installment payments beginning 180 days from
the Closing Date. The Company may prepay the note at an amount equal to 125% of
the outstanding principal and unpaid interest.
In the event of a default, the Note may be accelerated by the Investor. The
outstanding balance is immediately due and payable at an interest rate of the
lesser of 22% per annum (or the maximum rate permitted by law) applied to the
outstanding balance.
Item 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION
The total proceeds the Company received from this offering was $115,000, less
the original issue discount of $10,000 plus the Fees of $13,000. As of the date
of the Note, the Company is obligated on the Note issued to the Investor in
connection with the offering. The Note is a debt obligation arising other than
in the ordinary course of business, which constitutes a direct financial
obligation of the Company.
Item 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
In addition, the Company issued to the Investor a warrant to purchase 50% of the
Maturity Amount or approximately 165,000 shares of the Company's common stock,
subject to adjustment in the event of a cashless exercise, as defined in the
warrant. The warrant is exercisable at $1.00 per share (the "Exercise Price")
for a period of three years on a cash or cashless basis. If the Company at any
time while the warrant is outstanding sells or otherwise disposes of any
securities, including any common stock issued under the Note, at an effective
price per share less than the Exercise Price then the Exercise Price will be
reduced to such price provided that the number of shares of common stock
issuable under the warrant may not exceed a number of shares equal to three (3)
times the number of shares of common stock issuable under the warrant as of the
Effective Date.
The Company will make automatic installment payments equal to the sum of all
accrued but unpaid interest and principal amount equal to approximately
$22,000 monthly beginning 180 days (six (6) months) after the Closing Date.
Payments of each installment amount may be made in cash or by converting such
installment amount into common stock. The conversion price for each installment
<PAGE>
conversion will be the lesser of (i) $1.00, and (ii) 70% (the "Conversion
Factor") of the average of the three lowest closing bid prices in the 20 trading
days immediately preceding the applicable conversion (the "Market Price"),
provided that if at any time the average of the three lowest closing bid prices
in the 20 trading days immediately preceding any date of measurement is below
$0.40, then in such event the then-current Conversion Factor will be reduced to
60% for all future conversions.
The Investor may, in its discretion, apply the Conversion Option to an
installment conversion.
If the Company elects to make a payment installment in Common shares, then on
the date that is 20 trading days following the Installment Date (the "True-up
Date"), if the installment conversion price on that date is less than the
installment conversion price used in the applicable installment notice the
Company will deliver additional shares to the Investor. These additional shares
will be equal to the difference between the number of shares that would be
delivered to the Investor at the time of the true-up date and the amount
originally delivered.
Additionally, in order to elect to make installment payments in common shares
the Company must maintain Equity Conditions which include:
- that no events of default have occurred;
- on the instalment or true-up date the average (and median) daily Dollar
Volume of the Company's common stock for the previous 20 trading days must
be greater than $5,000;
- the 10 day average VWAP (Volume Weighted Average Price) of the Company's
common stock must be greater than $0.10; and
- the Company's common stock must be DWAC eligible.
Except with regards to securities issued under an approved stock plan of the
Company, if, at any time that the Note is outstanding, the Company sells or
issues any of its securities to the Investor or a third party for a price that
is less than the Optional Conversion, then such Optional Conversion will
automatically be reduced to such lower issuance price.
The Investor is prohibited from owning more than 4.99% of the Company's
outstanding shares pursuant to the Note and warrants, unless the market
capitalization of the Company's common stock is less than $10,000,000, in which
case the Investor is prohibited from owning more than 9.99% of the Company's
outstanding shares.
In addition, Empire State Financial Inc. ("ESFI") of Long Island, NY served as
placement agent for the Company in the Transaction. The Company paid commissions
of $8,000 to ESFI and will issue an amount of Common Shares of the Company equal
to 6% of the aggregate Initial Cash Purchase price based upon the price of the
Common Stock as offered in the Transaction.
The Company claims an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Act") for the private placement of
these securities pursuant to Section 4(2) of the Act and/or Regulation D
promulgated there under since, among other things, the transaction did not
involve a public offering, the Investor is an accredited investor, with access
to information about the Company and their investment, the Investor took the
securities for investment and not resale, and the Company took appropriate
measures to restrict the transfer of the securities.
<PAGE>
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Description of Exhibit
2.1 Securities Purchase Agreement by and among the Company and
Typenex Co-Investment, LLC, dated June 17, 2015
2.2 Convertible Promissory Note issued to Typenex Co-Investment, LLC
2.3 Form of Warrant to Purchase Shares of Common Stock issued to
Typenex Co-Investment, LLC
2.4 Form of Investor Note
2.5 Security Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: June 23, 2015. EMPIRE GLOBAL CORP.
Per: /s/ MICHELE CIAVARELLA, B.SC
------------------------------
MICHELE CIAVARELLA
Chairman of the Board
Chief Executive Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>2
<FILENAME>emgl150618-ex21.txt
<DESCRIPTION>SECURITIES PURCHASE AGREEMENT
<TEXT>
EXHIBIT 2.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 17,
2015, is entered into by and between EMPIRE GLOBAL CORP., a Delaware corporation
("Company"), and TYPENEX CO-INVESTMENT, LLC, a Utah limited liability company,
its successors and/or assigns ("Investor").
A. Company and Investor are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the rules
and regulations promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act").
B. Investor desires to purchase and Company desires to issue and sell, upon
the terms and conditions set forth in this Agreement (i) a Secured
Convertible Promissory Note, in the form attached hereto as Exhibit A, in
the original principal amount of $335,000.00 (the "Note"), convertible
into shares of common stock, $0.0001 par value per share, of Company (the
"Common Stock"), upon the terms and subject to the limitations and
conditions set forth in such Note, and (ii) three (3) Warrants to Purchase
Shares of Common Stock, each substantially in the form attached hereto as
Exhibit B (each, a "Warrant", and collectively, the "Warrants").
C. This Agreement, the Note, the Warrants, the Security Agreement (as defined
below), the Investor Notes (as defined below), and all other certificates,
documents, agreements, resolutions and instruments delivered to any party
under or in connection with this Agreement, as the same may be amended
from time to time, are collectively referred to herein as the "Transaction
Documents".
D. For purposes of this Agreement: "Conversion Shares" means all shares of
Common Stock issuable upon conversion of all or any portion of the Note;
"Warrant Shares" means all shares of Common Stock issuable upon the
exercise of or pursuant to the Warrants; and "Securities" means the Note,
the Conversion Shares, the Warrants and the Warrant Shares.
NOW, THEREFORE, in consideration of the above recitals and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Company and Investor hereby agree as follows:
1. Purchase and Sale of Securities.
1.1. Purchase of Securities. Company shall issue and sell to Investor and
Investor agrees to purchase from Company the Note and the Warrants. In
consideration thereof, Investor shall pay (i) the amount designated as the
initial cash purchase price on Investor's signature page to this Agreement
(the "Initial Cash Purchase Price"), and (ii) issue to Company the
Investor Notes (the sum of the initial principal amount of the Investor
Notes, together with the Initial Cash Purchase Price, the "Purchase
Price"). The Purchase Price, the OID (as defined below), and the
Transaction Expense Amount (as defined below) are allocated to the
Tranches (as defined in the Note) of the Note and to the Warrants as set
forth in the table attached hereto as Exhibit C. For the avoidance of
doubt, the Initial Cash Purchase Price constitutes payment in full for the
Initial Tranche (as defined in the Note) and Warrant #1 to Purchase Shares
of Common Stock.
<PAGE>
1.2. Form of Payment. On the Closing Date, (i) Investor shall pay the Purchase
Price to Company by delivering the following at the Closing: (A) the
Initial Cash Purchase Price, which shall be delivered by wire transfer of
immediately available funds to Company, in accordance with Company's
written wiring instructions; (B) Investor Note #1 in the principal amount
of $100,000.00 duly executed and substantially in the form attached hereto
as Exhibit D ("Investor Note #1"); and (C) Investor Note #2 in the
principal amount of $100,000.00 duly executed and substantially in the
form attached hereto as Exhibit D ("Investor Note #2", and together with
Investor Note #1, the "Investor Notes"); and (ii) Company shall deliver
the duly executed Note and Warrants on behalf of Company, to Investor,
against delivery of such Purchase Price.
1.3. Closing Date. Subject to the satisfaction (or written waiver) of the
conditions set forth in Section 5 and Section 6 below, the date and time
of the issuance and sale of the Securities pursuant to this Agreement (the
"Closing Date") shall be 5:00 p.m., Eastern Time on or about June 17,
2015, or such other mutually agreed upon time. The closing of the
transactions contemplated by this Agreement (the "Closing") shall occur on
the Closing Date by means of the exchange by express courier and email of
.pdf documents, but shall be deemed to have occurred at the offices of
Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.
1.4. Collateral for the Note. The Note shall be secured by the collateral set
forth in that certain Security Agreement attached hereto as Exhibit E
listing the Investor Notes as security for Company's obligations under the
Transaction Documents (the "Security Agreement").
1.5. Collateral for Investor Notes. Initially, none of the Investor Notes will
be secured, but all or any of the Investor Notes may become secured
subsequent to the Closing by such collateral and at such time as
determined by Investor in its sole discretion. In the event Investor
desires to secure any of the Investor Notes, Company shall timely execute
any and all amendments and documents and take such other measures
requested by Investor that are necessary or advisable in order to properly
secure the applicable Investor Notes.
1.6. Original Issue Discount; Transaction Expenses. The Note carries an
original issue discount of $30,000.00 (the "OID"). In addition, Company
agrees to pay $5,000.00 to Investor to cover Investor's legal fees,
accounting costs, due diligence, monitoring and other transaction costs
incurred in connection with the purchase and sale of the Securities (the
"Transaction Expense Amount"), all of which amount is included in the
initial principal balance of the Note. The Purchase Price, therefore,
shall be $300,000.00, computed as follows: $335,000.00 original principal
balance, less the OID, less the Transaction Expense Amount. The Initial
Cash Purchase Price shall be the Purchase Price less the sum of the
initial principal amounts of the Investor Notes. The portion of the OID
and the Transaction Expense Amount allocated to the Initial Cash Purchase
Price are set forth on Exhibit C.
2. Investor's Representations and Warranties. Investor represents and
warrants to Company that: (i) this Agreement has been duly and validly
authorized; (ii) this Agreement constitutes a valid and binding agreement
of Investor enforceable in accordance with its terms; (iii) Investor is an
"accredited investor" as that term is defined in Rule 501(a) of
Regulation D of the 1933 Act; and (iv) this Agreement and the Investor
Notes have been duly executed and delivered on behalf of Investor.
<PAGE>
3. Representations and Warranties of Company. Company represents and warrants
to Investor that: (i) Company is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation
and has the requisite corporate power to own its properties and to carry
on its business as now being conducted; (ii) Company is duly qualified as
a foreign corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property owned
by it makes such qualification necessary; (iii) Company has registered its
Common Stock under Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and is obligated to file reports pursuant to
Section 13 or Section 15(d) of the 1934 Act; (iv) each of the Transaction
Documents and the transactions contemplated hereby and thereby, have been
duly and validly authorized by Company; (v) this Agreement, the Note, the
Security Agreement, the Warrants, and the other Transaction Documents have
been duly executed and delivered by Company and constitute the valid and
binding obligations of Company enforceable in accordance with their terms,
subject as to enforceability only to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally; (vi) the execution and
delivery of the Transaction Documents by Company, the issuance of
Securities in accordance with the terms hereof, and the consummation by
Company of the other transactions contemplated by the Transaction
Documents do not and will not conflict with or result in a breach by
Company of any of the terms or provisions of, or constitute a default
under (a) Company's formation documents or bylaws, each as currently in
effect, (b) any indenture, mortgage, deed of trust, or other material
agreement or instrument to which Company is a party or by which it or any
of its properties or assets are bound, including any listing agreement for
the Common Stock, or (c) any existing applicable law, rule, or regulation
or any applicable decree, judgment, or order of any court, United States
federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over Company or any of Company's
properties or assets; (vii) no further authorization, approval or consent
of any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders or any
lender of Company is required to be obtained by Company for the issuance
of the Securities to Investor; (viii) none of Company's filings with the
SEC contained, at the time they were filed, any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; (ix) Company has
filed all reports, schedules, forms, statements and other documents
required to be filed by Company with the SEC under the 1934 Act on a
timely basis or has received a valid extension of such time of filing and
has filed any such report, schedule, form, statement or other document
prior to the expiration of any such extension; (x) Company has not
consummated any financing transaction that has not been disclosed in a
periodic filing with the SEC under the 1934 Act; (xi) Company is not, nor
has it ever been, a "Shell Company," as such type of "issuer" is described
in Rule 144(i)(1) under the 1933 Act or is in compliance with
Rule 144(i)(2) under the 1933 Act; (xii) with respect to any commissions,
placement agent or finder's fees or similar payments that will or would
become due and owing by Company to any person or entity as a result of
this Agreement or the transactions contemplated hereby ("Broker Fees"),
any such Broker Fees will be made in full compliance with all applicable
laws and regulations and only to a person or entity that is a registered
investment adviser or registered broker-dealer; (xiii) Investor shall have
no obligation with respect to any Broker Fees or with respect to any
claims made by or on behalf of other persons for fees of a type
<PAGE>
contemplated in this subsection that may be due in connection with the
transactions contemplated hereby and Company shall indemnify and hold
harmless each of Investor, Investor's employees, officers, directors,
stockholders, managers, members, agents, and partners, and their
respective affiliates, from and against all claims, losses, damages,
costs (including the costs of preparation and attorneys' fees) and
expenses suffered in respect of any such claimed or existing Broker Fees;
(xiv) when issued, the Conversion Shares and the Warrant Shares will be
duly authorized, validly issued, fully paid for and non-assessable, free
and clear of all liens, claims, charges and encumbrances; (xv) neither
Investor nor any of its officers, directors, members, managers, employees,
agents or representatives has made any representations or warranties to
Company or any of its officers, directors, employees, agents or
representatives except as expressly set forth in the Transaction Documents
and, in making its decision to enter into the transactions contemplated by
the Transaction Documents, Company is not relying on any representation,
warranty, covenant or promise of Investor or its officers, directors,
stockholders, managers, members, employees, agents or representatives
other than as set forth in the Transaction Documents; and (xvi) Company
has performed due diligence and background research on Investor and its
affiliates including, without limitation, John M. Fife, and, to its
satisfaction, has made inquiries with respect to all matters Company may
consider relevant to the undertakings and relationships contemplated by
the Transaction Documents including, among other things, the following:
http://investing.businessweek.com/research/stocks/people/person.asp?person
Id=7505107&ticker=UAHC;SEC Civil Case No. 07-C-0347 (N.D. Ill.); SEC Civil
Action No. 07-CV-347 (N.D. Ill.); and FINRA Case #2011029203701. Company,
being aware of the matters described in subsection (xvi) above,
acknowledges and agrees that such matters, or any similar matters, have no
bearing on the transactions contemplated by the Transaction Documents and
covenants and agrees it will not use any such information as a defense to
performance of its obligations under the Transaction Documents or in any
attempt to avoid, modify or reduce such obligations.
4. Company Covenants. Until all of Company's obligations under all of the
Transaction Documents are paid and performed in full, or within the
timeframes otherwise specifically set forth below, Company shall comply
with the following covenants: (i) so long as Investor beneficially owns
any of the Securities and for at least twenty (20) Trading Days
thereafter, Company shall timely file on the applicable deadline all
reports required to be filed with the SEC pursuant to Sections 13 or
15(d) of the 1934 Act, and shall take all reasonable action under its
control to ensure that adequate current public information with respect to
Company, as required in accordance with Rule 144 of the 1933 Act, is
publicly available, and shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination; (ii) the
Common Stock shall be listed or quoted for trading on any of (a) NYSE,
(b) NASDAQ, (c) OTCQX, or (d) OTCQB; (iii) when issued, the Conversion
Shares and the Warrant Shares will be duly authorized, validly issued,
fully paid for and non-assessable, free and clear of all liens, claims,
charges and encumbrances; (iv) Company shall use the net proceeds received
hereunder for working capital and general corporate purposes only and
shall not pay such proceeds to any other party pursuant to any financing
transaction effected prior to the date hereof; (v) trading in Company's
Common Stock shall not be suspended, halted, chilled, frozen, reach zero
bid or otherwise cease on the Company's principal trading market;
(vi) Company shall not transfer, assign, sell, pledge, hypothecate or
otherwise alienate or encumber the Investor Notes in any way without the
<PAGE>
prior written consent of Investor; and (vii) Company shall not have at any
given time more than two (2) Variable Security Holders (as defined below),
excluding Investor, without Investor's prior written consent. For purposes
hereof, the term "Variable Security Holder" means any holder of any
Company securities that are convertible into Common Stock (including
without limitation convertible debt, warrants or convertible preferred
stock) with a conversion price that varies with the market price of the
Common Stock.
5. Conditions to Company's Obligation to Sell. The obligation of Company
hereunder to issue and sell the Securities to Investor at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions:
5.1. Investor shall have executed this Agreement and the Investor Notes and
delivered the same to Company.
5.2. Investor shall have delivered the Initial Cash Purchase Price to Company
in accordance with Section 1.2 above.
6. Conditions to Investor's Obligation to Purchase. The obligation of
Investor hereunder to purchase the Securities at the Closing is subject to
the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for Investor's sole benefit
and may be waived by Investor at any time in its sole discretion:
6.1. Company shall have executed this Agreement and delivered the same to
Investor.
6.2. Company shall have delivered to Investor the duly executed Note and
Warrants in accordance with Section 1.2 above.
6.3. Company shall have delivered to Investor a fully executed Irrevocable
Letter of Instructions to Transfer Agent substantially in the form
attached hereto as Exhibit F acknowledged and agreed to in writing by
Company's transfer agent (the "Transfer Agent").
6.4. Company shall have delivered to Investor a fully executed Secretary's
Certificate substantially in the form attached hereto as Exhibit G
evidencing Company's approval of the Transaction Documents.
6.5. Company shall have delivered to Investor a fully executed Share Issuance
Resolution substantially in the form attached hereto as Exhibit H to be
delivered to the Transfer Agent.
6.6. Company shall have delivered to Investor fully executed copies of the
Security Agreement and all other Transaction Documents required to be
executed by Company herein or therein.
7. Reservation of Shares. At all times during which the Note is convertible
or the Warrants are exercisable, Company will reserve from its authorized
and unissued Common Stock to provide for the issuance of Common Stock upon
the full conversion of the Note and full exercise of the Warrants at least
(i) three (3) times the quotient obtained by dividing the Outstanding
Balance (as defined in the Note) by the Installment Conversion Price (as
defined in the Note), plus (ii) three (3) times the number of Warrant
Shares (as determined pursuant to the Warrants) deliverable upon full
exercise of the Warrants (the "Share Reserve"), but in any event not less
than 750,000 shares of Common Stock shall be reserved at all times for
<PAGE>
such purpose (the "Transfer Agent Reserve"). Company further agrees that
it will cause the Transfer Agent to immediately add shares of Common Stock
to the Transfer Agent Reserve in increments of 250,000 shares as and when
requested by Investor in writing from time to time, provided that such
incremental increases do not cause the Transfer Agent Reserve to exceed
the Share Reserve. In furtherance thereof, from and after the date hereof
and until such time that the Note has been paid in full and the Warrants
exercised in full, Company shall require the Transfer Agent to reserve for
the purpose of issuance of Conversion Shares under the Note and Warrant
Shares under the Warrants, a number of shares of Common Stock equal to the
Transfer Agent Reserve. Company shall further require the Transfer Agent
to hold such shares of Common Stock exclusively for the benefit of
Investor and to issue such shares to Investor promptly upon Investor's
delivery of a conversion notice under the Note or a notice of exercise
under any Warrant. Finally, Company shall require the Transfer Agent to
issue shares of Common Stock pursuant to the Note and the Warrants to
Investor out of its authorized and unissued shares, and not the Transfer
Agent Reserve, to the extent shares of Common Stock have been authorized,
but not issued, and are not included in the Transfer Agent Reserve. The
Transfer Agent shall only issue shares out of the Transfer Agent Reserve
to the extent there are no other authorized shares available for issuance
and then only with Investor's written consent.
8. OFAC; Patriot Act.
8.1. OFAC Certification. Company certifies that (i) it is not acting on behalf
of any person, group, entity, or nation named by any Executive Order or
the United States Treasury Department, through its Office of Foreign
Assets Control ("OFAC") or otherwise, as a terrorist, "Specially
Designated Nation", "Blocked Person", or other banned or blocked person,
entity, nation, or transaction pursuant to any law, order, rule or
regulation that is enforced or administered by OFAC or another department
of the United States government, and (ii) Company is not engaged in this
transaction on behalf of, or instigating or facilitating this transaction
on behalf of, any such person, group, entity or nation.
8.2. Foreign Corrupt Practices. Neither Company, nor any of its subsidiaries,
nor any director, officer, agent, employee or other person acting on
behalf of Company or any subsidiary has, in the course of his actions for,
or on behalf of, Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
8.3. Patriot Act. Company shall not (i) be or become subject at any time to any
law, regulation, or list of any government agency (including, without
limitation, the OFAC) that prohibits or limits Investor from making any
advance or extension of credit to Company or from otherwise conducting
business with Company, or (ii) fail to provide documentary and other
evidence of Company's identity as may be requested by Investor at any time
to enable Investor to verify Company's identity or to comply with any
applicable law or regulation, including, without limitation, Section 326
of the USA Patriot Act of 2001, 31 U.S.C. Section 5318. Company shall
comply with all requirements of law relating to money laundering,
anti-terrorism, trade embargos and economic sanctions, now or hereafter in
<PAGE>
effect. Upon Investor's request from time to time, Company shall certify
in writing to Investor that Company's representations, warranties and
obligations under this Section 8.3 remain true and correct and have not
been breached. Company shall immediately notify Investor in writing if any
of such representations, warranties or covenants are no longer true or
have been breached or if Company has a reasonable basis to believe that
they may no longer be true or have been breached. In connection with such
an event, Company shall comply with all requirements of law and directives
of governmental authorities and, at Investor's request, provide to
Investor copies of all notices, reports and other communications exchanged
with, or received from, governmental authorities relating to such an
event. Company shall also reimburse Investor any expense incurred by
Investor in evaluating the effect of such an event on the loan secured
hereby, in obtaining any necessary license from governmental authorities
as may be necessary for Investor to enforce its rights under the
Transaction Documents, and in complying with all requirements of law
applicable to Investor as the result of the existence of such an event and
for any penalties or fines imposed upon Investor as a result thereof.
9. Miscellaneous. The provisions set forth in this Section 9 shall apply to
this Agreement, as well as all other Transaction Documents as if these
terms were fully set forth therein.
9.1. Original Signature Pages. Each party agrees to deliver its original
signature pages to the Transaction Documents to the other party within
five (5) Trading Days of the date hereof. Notwithstanding the foregoing,
the Transaction Documents shall be fully effective upon exchange of
electronic signature pages by the parties and payment of the Initial
Cash Purchase Price by Investor. For the avoidance of doubt, the failure
by either party to deliver its original signature pages to the other party
shall not affect in any way the validity or effectiveness of any of the
Transaction Documents, provided that such failure to deliver original
signatures shall be a breach of the party's obligations hereunder.
9.2. Arbitration of Claims. The parties shall submit all Claims (as defined in
Exhibit I) arising under this Agreement or any other Transaction Document
or other agreements between the parties and their affiliates to binding
arbitration pursuant to the arbitration provisions set forth in Exhibit I
attached hereto (the "Arbitration Provisions"). The parties hereby
acknowledge and agree that the Arbitration Provisions are unconditionally
binding on the parties hereto and are severable from all other provisions
of this Agreement. By executing this Agreement, Company represents,
warrants and covenants that Company has reviewed the Arbitration
Provisions carefully, consulted with legal counsel about such provisions
(or waived its right to do so), understands that the Arbitration
Provisions are intended to allow for the expeditious and efficient
resolution of any dispute hereunder, agrees to the terms and limitations
set forth in the Arbitration Provisions, and that Company will not take a
position contrary to the foregoing representations. Company acknowledges
and agrees that Investor may rely upon the foregoing representations and
covenants of Company regarding the Arbitration Provisions.
9.3. Governing Law; Venue. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Utah for contracts to be
wholly performed in such state and without giving effect to the principles
thereof regarding the conflict of laws. Each party consents to and
expressly agrees that exclusive venue for arbitration of any dispute
arising out of or relating to any Transaction Document or the relationship
of the parties or their affiliates shall be in Salt Lake County or Utah
<PAGE>
County, Utah; provided, however, that notwithstanding anything herein to
the contrary, enforcement of Investor's rights under the Security
Agreement will occur in accordance with the Uniform Commercial Code of the
applicable state(s) under the Security Agreement and enforcement of
Company's rights over the Collateral will occur in accordance with the
laws of the state in which the Collateral is located. Without modifying
the parties obligations to resolve disputes hereunder pursuant to the
Arbitration Provisions, for any litigation arising in connection with any
of the Transaction Documents, each party hereto hereby (i) consents to and
expressly submits to the exclusive personal jurisdiction of any state or
federal court sitting in Salt Lake County, Utah, (ii) expressly submits to
the exclusive venue of any such court for the purposes hereof, and (iii)
waives any claim of improper venue and any claim or objection that such
courts are an inconvenient forum or any other claim or objection to the
bringing of any such proceeding in such jurisdictions or to any claim that
such venue of the suit, action or proceeding is improper.
9.4. Calculation Disputes. Notwithstanding the Arbitration Provisions, in the
case of a dispute as to any determination or arithmetic calculation under
the Transaction Documents, including without limitation, calculating the
Outstanding Balance, Warrant Shares, Exercise Shares (as defined in the
Warrants), Delivery Shares (as defined in the Warrants), Lender Conversion
Price (as defined in the Note), Lender Conversion Shares (as defined in
the Note), Installment Conversion Price, Installment Conversion Shares (as
defined in the Note), Conversion Factor (as defined in the Note), Market
Price (as defined in the Note), or VWAP (as defined in the Note) (each, a
"Calculation"), Company or Investor (as the case may be) shall submit any
disputed Calculation via email or facsimile with confirmation of receipt
(i) within two (2) Trading Days after receipt of the applicable notice
giving rise to such dispute to Company or Investor (as the case may be) or
(ii) if no notice gave rise to such dispute, at any time after Investor
learned of the circumstances giving rise to such dispute. If Investor and
Company are unable to agree upon such Calculation within two (2) Trading
Days of such disputed Calculation being submitted to Company or Investor
(as the case may be), then Investor shall, within two (2) Trading Days,
submit via email or facsimile the disputed Calculation to Unkar Systems
Inc. ("Unkar Systems"). Company shall cause Unkar Systems to perform the
Calculation and notify Company and Investor of the results no later than
ten (10) Trading Days from the time it receives such disputed Calculation.
Unkar Systems' determination of the disputed Calculation shall be binding
upon all parties absent demonstrable error. Unkar Systems' fee for
performing such Calculation shall be paid by the incorrect party, or if
both parties are incorrect, by the party whose Calculation is furthest
from the correct Calculation as determined by Unkar Systems. In the event
Company is the losing party, no extension of the Delivery Date (as defined
in the Note) shall be granted and Company shall incur all effects for
failing to deliver the applicable shares in a timely manner as set forth
in the Transaction Documents. Notwithstanding the foregoing, Investor may,
in its sole discretion, designate an independent, reputable investment
bank or accounting firm other than Unkar Systems to resolve any such
dispute and in such event, all references to "Unkar Systems" herein will
be replaced with references to such independent, reputable investment bank
or accounting firm so designated by Investor.
9.5. Counterparts. Each Transaction Document may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument. The parties hereto confirm that
any electronic copy of another party's executed counterpart of a
Transaction Document (or such party's signature page thereof) will be
deemed to be an executed original thereof.
<PAGE>
9.6. Headings. The headings of this Agreement are for convenience of reference
only and shall not form part of, or affect the interpretation of, this
Agreement.
9.7. Severability. In the event that any provision of this Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform to such statute or rule
of law. Any provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof.
9.8. Entire Agreement. This Agreement, together with the other Transaction
Documents, contains the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set
forth herein or therein, neither Company nor Investor makes any
representation, warranty, covenant or undertaking with respect to such
matters.
9.9. No Reliance. Company acknowledges and agrees that neither Investor nor any
of its officers, directors, members, managers, representatives or agents
has made any representations or warranties to Company or any of its
officers, directors, representatives, agents or employees except as
expressly set forth in the Transaction Documents and, in making its
decision to enter into the transactions contemplated by the Transaction
Documents, Company is not relying on any representation, warranty,
covenant or promise of Investor or its officers, directors, members,
managers, agents or representatives other than as set forth in the
Transaction Documents.
9.10. Amendments. No provision of this Agreement may be waived or amended other
than by an instrument in writing signed by the parties hereto.
9.11. Notices. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of: (i) the date delivered, if delivered
by personal delivery as against written receipt therefor or by email to an
executive officer, or by facsimile (with successful transmission
confirmation), (ii) the earlier of the date delivered or the third Trading
Day after deposit, postage prepaid, in the United States Postal Service by
certified mail, or (iii) the earlier of the date delivered or the third
Trading Day after mailing by express courier, with delivery costs and fees
prepaid, in each case, addressed to each of the other parties thereunto
entitled at the following addresses (or at such other addresses as such
party may designate by five (5) calendar days' advance written notice
similarly given to each of the other parties hereto):
If to Company:
Empire Global Corp.
Attn: Michele Ciavarella
671 Westburne Drive
Concord, Ontario L4K 4Z1 Canada
With a copy to (which copy shall not constitute notice):
Beard Winter LLP
Attn: Julian L. Doyle
Suite 701, 130 Adelaide St. W.
Toronto, Ontario, Canada M5H 2K4
<PAGE>
If to Investor:
Typenex Co-Investment, LLC
Attn: John Fife
303 East Wacker Drive, Suite 1040
Chicago, Illinois 60601
With a copy to (which copy shall not constitute notice):
Hansen Black Anderson Ashcraft PLLC
Attn: Jonathan K. Hansen
3051 West Maple Loop Drive, Suite 325
Lehi, Utah 84043
9.12. Successors and Assigns. This Agreement or any of the severable rights and
obligations inuring to the benefit of or to be performed by Investor
hereunder may be assigned by Investor to a third party, including its
financing sources, in whole or in part, without the need to obtain
Company's consent thereto. Company may not assign its rights or
obligations under this Agreement or delegate its duties hereunder without
the prior written consent of Investor.
9.13. Survival. The representations and warranties of Company and the
agreements and covenants set forth in this Agreement shall survive the
Closing hereunder notwithstanding any due diligence investigation
conducted by or on behalf of Investor. Company agrees to indemnify and
hold harmless Investor and all its officers, directors, employees,
attorneys, and agents for loss or damage arising as a result of or
related to any breach or alleged breach by Company of any of its
representations, warranties and covenants set forth in this Agreement or
any of its covenants and obligations under this Agreement, including
advancement of expenses as they are incurred.
9.14. Further Assurances. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
9.15. Investor's Rights and Remedies Cumulative; Liquidated Damages. All
rights, remedies, and powers conferred in this Agreement and the
Transaction Documents are cumulative and not exclusive of any other
rights or remedies, and shall be in addition to every other right, power,
and remedy that Investor may have, whether specifically granted in this
Agreement or any other Transaction Document, or existing at law, in
equity, or by statute, and any and all such rights and remedies may be
exercised from time to time and as often and in such order as Investor
may deem expedient. The parties acknowledge and agree that upon Company's
failure to comply with the provisions of the Transaction Documents,
Investor's damages would be uncertain and difficult (if not impossible)
to accurately estimate because of the parties' inability to predict
future interest rates and future share prices, Investor's increased risk,
and the uncertainty of the availability of a suitable substitute
investment opportunity for Investor, among other reasons. Accordingly,
any fees, charges, and default interest due under the Note, the Warrants,
and the other Transaction Documents are intended by the parties to be,
and shall be deemed, liquidated damages (under Company's and Investor's
expectations that any such liquidated damages will tack back to the
<PAGE>
Closing Date for purposes of determining the holding period under
Rule 144 under the 1933 Act). The parties agree that such liquidated
damages are a reasonable estimate of Investor's actual damages and not a
penalty, and shall not be deemed in any way to limit any other right or
remedy Investor may have hereunder, at law or in equity. The parties
acknowledge and agree that under the circumstances existing at the time
this Agreement is entered into, such liquidated damages are fair and
reasonable and are not penalties. All fees, charges, and default interest
provided for in the Transaction Documents are agreed to by the parties to
be based upon the obligations and the risks assumed by the parties as of
the Closing Date and are consistent with investments of this type. The
liquidated damages provisions of the Transaction Documents shall not
limit or preclude a party from pursuing any other remedy available at law
or in equity; provided, however, that the liquidated damages provided for
in the Transaction Documents are intended to be in lieu of actual
damages.
9.16. Ownership Limitation. Notwithstanding anything to the contrary contained
in this Agreement or the other Transaction Documents, if at any time
Investor shall or would be issued shares of Common Stock under any of the
Transaction Documents, but such issuance would cause Investor (together
with its affiliates) to beneficially own a number of shares exceeding the
Maximum Percentage (as defined in the Note), then Company must not issue
to Investor the shares that would cause Investor to exceed the Maximum
Percentage. The shares of Common Stock issuable to Investor that would
cause the Maximum Percentage to be exceeded are referred to herein as the
"Ownership Limitation Shares". Company will reserve the Ownership
Limitation Shares for the exclusive benefit of Investor. From time to
time, Investor may notify Company in writing of the number of the
Ownership Limitation Shares that may be issued to Investor without
causing Investor to exceed the Maximum Percentage. Upon receipt of such
notice, Company shall be unconditionally obligated to immediately issue
such designated shares to Investor, with a corresponding reduction in the
number of the Ownership Limitation Shares. For purposes of this Section,
beneficial ownership of Common Stock will be determined under
Section 13(d) of the 1934 Act.
9.17. Attorneys' Fees and Cost of Collection. In the event of any arbitration
or action at law or in equity to enforce or interpret the terms of this
Agreement or any of the other Transaction Documents, the parties agree
that the party who is awarded the most money shall be deemed the
prevailing party for all purposes and shall therefore be entitled to an
additional award of the full amount of the attorneys' fees, deposition
costs, and expenses paid by such prevailing party in connection with
arbitration or litigation without reduction or apportionment based upon
the individual claims or defenses giving rise to the fees and expenses.
Nothing herein shall restrict or impair an arbitrator's or a court's
power to award fees and expenses for frivolous or bad faith pleading. If
(i) the Note or any Warrant is placed in the hands of an attorney for
collection or enforcement prior to commencing arbitration or legal
proceedings, or is collected or enforced through any arbitration or legal
proceeding, or Investor otherwise takes action to collect amounts due
under the Note or to enforce the provisions of the Note or any Warrant;
or (ii) there occurs any bankruptcy, reorganization, receivership of
Company or other proceedings affecting Company's creditors' rights and
involving a claim under the Note or any Warrant; then Company shall pay
the costs incurred by Investor for such collection, enforcement or
action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation,
attorneys' fees, expenses, deposition costs, and disbursements.
<PAGE>
9.18. Waiver. No waiver of any provision of this Agreement shall be effective
unless it is in the form of a writing signed by the party granting the
waiver. No waiver of any provision or consent to any prohibited action
shall constitute a waiver of any other provision or consent to any other
prohibited action, whether or not similar. No waiver or consent shall
constitute a continuing waiver or consent or commit a party to provide a
waiver or consent in the future except to the extent specifically set
forth in writing.
9.19. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY
AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR
THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER
EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER
COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER,
EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND
VOLUNTARILY WAIVING SUCH PARTY'S RIGHT TO DEMAND TRIAL BY JURY.
9.20. Time is of the Essence. Time is expressly made of the essence with
respect to each and every provision of this Agreement and the other
Transaction Documents.
IN WITNESS WHEREOF, the undersigned Investor and Company have caused this
Agreement to be duly executed as of the date first above written.
SUBSCRIPTION AMOUNT:
Principal Amount of Note: $335,000.00
Initial Cash Purchase Price: $100,000.00
INVESTOR:
TYPENEX CO-INVESTMENT, LLC
By: Red Cliffs Investments, Inc., its Manager
By: /s/ John Fife
------------------------
John M. Fife, President
COMPANY:
EMPIRE GLOBAL CORP.
By: /s/ Michele Ciavarella
-----------------------
Printed Name: Michele Ciavarella, B.Sc.
Title: Chairman and CEO
ATTACHED EXHIBITS:
Exhibit A Note
Exhibit B Form of Warrant
Exhibit C Allocation of Purchase Price
Exhibit D Form of Investor Note
Exhibit E Security Agreement
Exhibit F Irrevocable Transfer Agent Instructions
Exhibit G Secretary's Certificate
Exhibit H Share Issuance Resolution
Exhibit I Arbitration Provisions
<PAGE>
EXHIBIT I
ARBITRATION PROVISIONS
1. Dispute Resolution. For purposes of this Exhibit I, the term "Claims"
means any disputes, claims, demands, causes of action, liabilities,
damages, losses, or controversies whatsoever arising from related to or
connected with the transactions contemplated in the Transaction Documents
and any communications between the parties related thereto, including
without limitation any claims of mutual mistake, mistake, fraud,
misrepresentation, failure of formation, failure of consideration,
promissory estoppel, unconscionability, failure of condition precedent,
rescission, and any statutory claims, tort claims, contract claims, or
claims to void, invalidate or terminate the Agreement or any of the other
Transaction Documents. The term "Claims" specifically excludes a dispute
over Calculations and enforcement of Investor's rights and remedies
against the personal property described in the Security Agreement under
the applicable provisions of the Uniform Commercial Code. The parties
hereby agree that the arbitration provisions set forth in this Exhibit I
("Arbitration Provisions") are binding on the parties hereto and are
severable from all other provisions in the Transaction Documents. As a
result, any attempt to rescind the Agreement or declare the Agreement or
any other Transaction Document invalid or unenforceable for any reason is
subject to these Arbitration Provisions. These Arbitration Provisions
shall also survive any termination or expiration of the Agreement. Any
capitalized term not defined in these Arbitration Provisions shall have
the meaning set forth in the Agreement.
2. Arbitration. Except as otherwise provided herein, all Claims must be
submitted to arbitration ("Arbitration") to be conducted exclusively in
Salt Lake County, Utah or Utah County, Utah and pursuant to the terms set
forth in these Arbitration Provisions. The parties agree that the award of
the arbitrator (the "Arbitration Award") shall be final and binding upon
the parties (subject to the appear right set forth in Section 4 below);
shall be the sole and exclusive remedy between them regarding any Claims,
counterclaims, issues, or accountings presented or pleaded to the
arbitrator; and shall promptly be payable in United States dollars free of
any tax, deduction or offset (with respect to monetary awards). Any costs
or fees, including without limitation attorneys' fees, incident to
enforcing the arbitrator's award shall, to the maximum extent permitted by
law, be charged against the party resisting such enforcement. The award
shall include Default Interest (as defined in the Note) both before and
after the award. Judgment upon the award of the arbitrator will be entered
and enforced by a state court sitting in Salt Lake County, Utah. The
parties hereby incorporate herein the provisions and procedures set forth
in the Utah Uniform Arbitration Act, U.C.A. ss 78B-11-101 et seq. (as
amended or superseded from time to time, the "Arbitration Act"). Pursuant
to Section 105 of the Arbitration Act, in the event of conflict between
the terms of these Arbitration Provisions and the provisions of the
Arbitration Act, the terms of these Arbitration Provisions shall control.
3. Arbitration Proceedings. Arbitration between the parties will be subject
to the following procedures:
3.1 Pursuant to Section 110 of the Arbitration Act, the parties agree that a
party may initiate Arbitration by giving written notice to the other party
("Arbitration Notice") in the same manner that notice is permitted under
Section 9.11 of the Agreement; provided, however, that the Arbitration
Notice may not be given by email or fax. Arbitration will be deemed
initiated as of the date that the Arbitration Notice is deemed delivered
under Section 9.11 of the Agreement (the "Service Date"). After the
Service Date, information may be delivered, and notices may be given, by
email or fax pursuant to Section 9.11 of the Agreement or any other method
permitted thereunder. The Arbitration Notice must describe the nature of
the controversy, the remedies sought, and the election to commence
Arbitration proceedings. All Claims in the Arbitration Notice must be
pleaded consistent with the Utah Rules of Civil Procedure.
3.2 Within ten (10) calendar days after the Service Date, Investor shall
select and submit to Company the names of three (3) arbitrators that are
designated as "neutrals" or qualified arbitrators by Utah ADR Services
(http://www.utahadrservices.com) (such three (3) designated persons
hereunder are referred to herein as the "Proposed Arbitrators"). For the
avoidance of doubt, each Proposed Arbitrator must be qualified as a
"neutral" with Utah ADR Services. Within ten (10) calendar days after
Investor has submitted to Company the names of the Proposed Arbitrators,
Company must select, by written notice to Investor, one (1) of the
Proposed Arbitrators to act as the arbitrator for the parties under these
Arbitration Provisions. If Company fails to select one of the Proposed
Arbitrators in writing within such 10-day period, then Investor may select
the arbitrator from the Proposed Arbitrators by providing written notice
of such selection to Company. If Investor fails to identify the Proposed
Arbitrators within the time period required above, then Company may at any
time prior to Investor designating the Proposed Arbitrators, select the
names of three (3) arbitrators that are designated as "neutrals" or
qualified arbitrators by Utah ADR Service by written notice to Investor.
Investor may then, within ten (10) calendar days after Company has
submitted notice of its selected arbitrators to Investor, select, by
written notice to Company, one (1) of the selected arbitrators to act as
the arbitrator for the parties under these Arbitration Provisions. If
Investor fails to select in writing and within such 10-day period one of
the three (3) arbitrators selected by Company, then Company may select the
arbitrator from its three (3) previously selected arbitrators by providing
written notice of such selection to Investor. Subject to Paragraph 3.12
below, the cost of the arbitrator must be paid equally by both parties;
provided, however, that if one party refuses or fails to pay its portion
of the arbitrator fee, then the other party can advance such unpaid amount
(subject to the accrual of Default Interest thereupon), with such amount
added to or subtracted from, as applicable, the award granted by the
arbitrator. If Utah ADR Services ceases to exist or to provide a list of
neutrals, then the arbitrator shall be selected under the then prevailing
rules of the American Arbitration Association. The date that the selected
arbitrator agrees in writing to serve as the arbitrator hereunder is
referred to herein as the "Arbitration Commencement Date".
3.3 An answer and any counterclaims to the Arbitration Notice, which must be
pleaded consistent with the Utah Rules of Civil Procedure, shall be
required to be delivered to the other party within twenty (20) calendar
days after the Service Date. Upon request, the arbitrator is hereby
instructed to render a default award, consistent with the relief requested
in the Arbitration Notice, against a party that fails to submit an answer
within such time period.
3.4 The party that delivers the Arbitration Notice to the other party shall
have the option to also commence concurrent legal proceedings with any
state court sitting in Salt Lake County, Utah ("Litigation Proceedings"),
subject to the following: (i) the complaint in the Litigation Proceedings
is to be substantially similar to the claims set forth in the Arbitration
Notice, provided that an additional cause of action to compel arbitration
will also be included therein, (ii) so long as the other party files an
answer to the complaint in the Litigation Proceedings and an answer to the
Arbitration Notice, the Litigation Proceedings will be stayed pending an
Arbitration Award hereunder, (iii) if the other party fails to file an
answer in the Litigation Proceedings or an answer in the Arbitration
Proceedings, then the party initiating Arbitration shall be entitled to a
default judgment consistent with the relief requested, to be entered in
the Litigation Proceedings, and (iv) any legal or procedural issue arising
under the Arbitration Act that requires a decision of a court of competent
jurisdiction may be determined in the Litigation Proceedings. Any award of
the arbitrator may be entered in such Litigation Proceedings pursuant to
the Arbitration Act.
3.5 Pursuant to Section 118(8) of the Arbitration Act, the parties agree that
discovery shall be conducted in accordance with the Utah Rules of Civil
Procedure; provided, however, that incorporation of such rules will in no
event supersede the Arbitration Provisions set forth herein, including
without limitation the time limitation set forth in Paragraph 3.9 below,
and the following:
a. Discovery will only be allowed if the likely benefits of the proposed
discovery outweigh the burden or expense, and the discovery sought is
likely to reveal information that will satisfy a specific element of a
claim or defense already pleaded in the Arbitration. The party seeking
discovery shall always have the burden of showing that all of the
standards and limitations set forth in these Arbitration Provisions are
satisfied. The scope of discovery in the Arbitration proceedings shall
also be limited as follows:
(i) To facts directly connected with the transactions contemplated by
the Agreement.
(ii) To facts and information that cannot be obtained from another
source that is more convenient, less burdensome or less
expensive.
b. No party shall be allowed (i) more than fifteen (15) interrogatories
(including discrete subparts), (ii) more than fifteen (15) requests for
admission (including discrete subparts), (iii) more than ten (10)
document requests (including discrete subparts), or (iv) more than
three depositions (excluding expert depositions) for a maximum of seven
(7) hours per deposition.
3.6 Any party submitting any written discovery requests, including
interrogatories, requests for production, subpoenas to a party or a third
party, or requests for admissions, must prepay the estimated attorneys'
fees and costs, as determined by the arbitrator, before the responding
party has any obligation to produce or respond.
(a) All discovery requests must be submitted in writing to the
arbitrator and the other party before issuing or serving such
discovery requests. The party issuing the written discovery requests
must include with such discovery requests a detailed explanation of
how the proposed discovery requests satisfy the requirements of
these Arbitration Provisions and the Utah Rules of Civil Procedure.
Any party will then be allowed, within ten (10) calendar days of
receiving the proposed discovery requests, to submit to the
arbitrator an estimate of the attorneys' fees and costs associated
with responding to such written discovery requests and a written
challenge to each applicable discovery request. After receipt of an
estimate of attorneys' fees and costs and/or challenge(s) to one or
more discovery requests, the arbitrator will make a finding as to
the likely attorneys' fees and costs associated with responding to
the discovery requests and issue an order that (A) requires the
requesting party to prepay the attorneys' fees and costs associated
with responding to the discovery requests, and (B) requires the
responding party to respond to the discovery requests as limited by
the arbitrator within a certain period of time after receiving
payment from the requesting party. If a party entitled to submit an
estimate of attorneys' fees and costs and/or a challenge to
discovery requests fails to do so within such 10-day period, the
arbitrator will make a finding that (A) there are no attorneys' fees
or costs associated with responding to such discovery requests, and
(B) the responding party must respond to such discovery requests (as
may be limited by the arbitrator) within a certain period of time as
determined by the arbitrator.
(b) In order to allow a written discovery request, the arbitrator must
find that the discovery request satisfies the standards set forth in
these Arbitration Provisions and the Utah Rules of Civil Procedure.
The arbitrator must strictly enforce these standards. If a discovery
request does not satisfy any of the standards set forth in these
Arbitration Provisions or the Utah Rules of Civil Procedure, the
arbitrator may modify such discovery request to satisfy the
applicable standards, or strike such discovery request in whole or
in part.
(c) Discovery deadlines will be set forth in a scheduling order issued
by the arbitrator. The parties hereby authorize and direct the
arbitrator to take such actions and make such rulings as may be
necessary to carry out the parties' intent for the arbitration
proceedings to be efficient and expeditious.
3.7 Each party may submit expert reports (and rebuttals thereto), provided
that such reports must be submitted by the deadlines established by the
arbitrator. Expert reports must contain the following: (a) a complete
statement of all opinions the expert will offer at trial and the basis and
reasons for them; (b) the expert's name and qualifications, including a
list of all publications within the preceding 10 years, and a list of any
other cases in which the expert has testified at trial or in a deposition
or prepared a report within the preceding 10 years; and (c) the
compensation to be paid for the expert's report and testimony. The
parties are entitled to depose any other party's expert witness one time
for no more than 4 hours. An expert may not testify in a party's
case-in-chief concerning any matter not fairly disclosed in the expert
report.
3.8 All information disclosed by either party during the Arbitration process
(including without limitation information disclosed during the discovery
process) shall be considered confidential in nature. Each party agrees not
to disclose any confidential information received from the other party
during the discovery process unless (i) prior to or after the time of
disclosure such information becomes public knowledge or part of the public
domain, not as a result of any inaction or action of the receiving party,
(ii) such information is required by a court order, subpoena or similar
legal duress to be disclosed if such receiving party has notified the
other party thereof in writing and given it a reasonable opportunity to
obtain a protective order from a court of competent jurisdiction prior to
disclosure; or (iii) disclosed to the receiving party's agents,
representatives and legal counsel on a need to know basis who each agree
in writing not to disclose such information to any third party. Pursuant
to Section 118(5) of the Arbitration Act, the arbitrator is hereby
authorized and directed to issue a protective order to prevent the
disclosure of privileged information and confidential information upon the
written request of either party.
3.9 The parties hereby authorize and direct the arbitrator to take such
actions and make such rulings as may be necessary to carry out the
parties' intent for the arbitration proceedings to be efficient and
expeditious. Pursuant to Section 120 of the Arbitration Act, the parties
hereby agree that an Arbitration Award must be made within 150 days after
the Arbitration Commencement Date. The arbitrator is hereby authorized and
directed to hold a scheduling conference within ten (10) calendar days
after the Arbitration Commencement Date in order to establish a scheduling
order with various binding deadlines for discovery, expert testimony, and
the submission of documents by the parties to enable the arbitrator to
render a decision prior to the end of such 150-day period. The Utah Rules
of Evidence will apply to any final hearing before the arbitrator.
3.10 The arbitrator shall have the right to award or include in the Arbitration
Award any relief which the arbitrator deems proper under the
circumstances, including, without limitation, specific performance and
injunctive relief, provided that the arbitrator may not award exemplary or
punitive damages.
3.11 If any part of these Arbitration Provisions is found to violate applicable
law or to be illegal, then such provision shall be modified to the minimum
extent necessary to make such provision enforceable under applicable law.
3.12 The arbitrator is hereby directed to require the losing party to (i) pay
the full amount of any unpaid costs and fees of the arbitrator, and (ii)
reimburse the prevailing party the reasonable attorneys' fees, arbitrator
costs, deposition costs, and other discovery costs incurred by the
prevailing party.
4. Appeals.
4.1 Following the entry of the Arbitration Award, either party (the
"Appellant") shall have a period of thirty (30) days in which to notify
the other party (the "Appellee"), in writing, that it elects to appeal
(the "Appeal") the Arbitration Award (such notice, an "Appeal Notice").
The date the Appellant delivers an Appeal Notice to the Appellee is
referred to herein as the "Appeal Date". The Appeal Notice must be
delivered to the Appellee in accordance with the provisions of Paragraph
3.1 above with respect to delivery of an Arbitration Notice and must
describe the nature of the appeal and the remedies sought. In addition,
together with its delivery of an Appeal Notice to the Appellee, the
Appellant must also pay for (and provide proof of such payment to the
Appellee together with its delivery of the Appeal Notice) a bond in the
amount of 110% of the sum it owes to the Appellee as a result of the
final decision made by the arbitrators that it is appealing. In the
event neither party delivers an Appeal Notice to the other within the
deadline prescribed in this Paragraph 4.1, each party shall lose its
right to appeal and the decision of the arbitrator shall be final.
4.2 In the event an Appellant delivers an Appeal Notice to the Appellee in
compliance with the provisions of Paragraph 4.1 above, the following
provisions shall apply with respect to the Appeal:
(a) The Appeal will be heard by a three (3) person arbitration panel (the
"Appeal Panel"). Within ten (10) calendar days after the Appeal Date,
the Appellee shall select and submit to the Appellant the names of
five (5) arbitrators that are designated as "neutrals" or qualified
arbitrators by Utah ADR Services (http://www.utahadrservices.com)
(such five designated persons hereunder are referred to herein as the
"Proposed Appeal Arbitrators"). For the avoidance of doubt, each
Proposed Appeal Arbitrator must be qualified as a "neutral" with Utah
ADR Services. Within ten (10) calendar days after the Appellee has
submitted to the Appellant the names of the Proposed Appeal
Arbitrators, the Appellant must select, by written notice to the
Appellee, three (3) of the Proposed Appeal Arbitrators to act as the
members of the Appeal Panel. If the Appellant fails to select three
(3) of the Proposed Appeal Arbitrators in writing within such 10-day
period, then the Appellee may select such three (3) arbitrators from
the Proposed Appeal Arbitrators by providing written notice of such
selection to the Appellant. If the Appellee fails to identify the
Proposed Appeal Arbitrators within the time period required above,
then the Appellant may at any time prior to the Appellee designating
the Proposed Appeal Arbitrators, select the names of the five (5)
Proposed Appeal Arbitrators. The Appellee may then, within ten (10)
calendar days after the Appellant has submitted notice of its
Proposed Appeal Arbitrators to the Appellee, select, by written
notice to the Appellant, three (3) of the Proposed Appeal Arbitrators
to serve on the Appeal Panel. If the Appellee fails to select in
writing and within such 10-day period the three (3) members of the
Appeal Panel, then the Appellant may select such three (3) members of
the Appeal Panel by providing written notice of such selection to the
Appellee. After the three (3) members of the Appeal Panel are
selected, the Appellee shall designate in writing to the Appellant
the name of one of such three (3) arbitrators to serve as the lead
arbitrator. Subject to Paragraph 4.2(d) below, the cost of the Appeal
Panel must be paid entirely by the Appellant. If Utah ADR Services
ceases to exist or to provide a list of neutrals, then the
arbitrators shall be selected under the then prevailing rules of the
American Arbitration Association. The date that all three (3)
selected arbitrators agree in writing to serve as the arbitrators
hereunder is referred to herein as the "Appeal Commencement Date".
(b) Within seven (7) days of the Appeal Commencement Date, Appellant
shall deliver to the Appeal Panel and to Appellee a memorandum in
support of appeal describing in detail its basis and arguments for
appealing the Arbitration Award (the "Memorandum in Support"). Within
seven (7) days of Appellant's delivery of the Memorandum in Support,
Appellee shall deliver to the Appeal Panel and to Appellant a
memorandum in opposition to the Memorandum in Support (the
"Memorandum in Opposition"). Within seven (7) days of Appellee's
delivery of the Memorandum in Opposition, Appellant shall deliver to
the Appeal Panel and to Appellee a reply memorandum to the Memorandum
in Opposition.
(c) The parties hereby agree that the Appeal must be heard by the Appeal
Panel within thirty (30) calendar days of the Appeal Commencement
Date and that the Appeal Panel's Arbitration Award must be made
within thirty (30) days after the Appeal is heard, and in any event
within sixty (60) days of the Appeal Commencement Date. The Utah
Rules of Evidence will apply to any final hearing before the Appeal
Panel.
(d) The Appeal Panel is hereby directed to require the losing party to
(i) pay the full amount of any unpaid costs and fees of the Appeal
Panel, and (ii) reimburse the prevailing party the reasonable
attorneys' fees, arbitrator costs, deposition costs, and other
discovery costs incurred by the prevailing party.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.2
<SEQUENCE>3
<FILENAME>emgl150618-ex22.txt
<DESCRIPTION>SECURED CONVERTIBLE NOTE
<TEXT>
EXHIBIT 2.2
SECURED CONVERTIBLE PROMISSORY NOTE
Effective Date: June 17, 2015 U.S. $335,000.00
FOR VALUE RECEIVED, EMPIRE GLOBAL CORP., a Delaware corporation ("Borrower"),
promises to pay to TYPENEX CO-INVESTMENT, LLC, a Utah limited liability company,
or its successors or assigns ("Lender"), $335,000.00 and any interest, fees,
charges, and late fees on the date that is twenty (20) months after the Purchase
Price Date (the "Maturity Date") in accordance with the terms set forth herein
and to pay interest on the Outstanding Balance (including all Tranches (as
defined below), both Conversion Eligible Tranches (as defined below) and
Subsequent Tranches (as defined below) that have not yet become Conversion
Eligible Tranches) at the rate of ten percent (10%) per annum from the Purchase
Price Date until the same is paid in full. This Secured Convertible Promissory
Note (this "Note") is issued and made effective as of June 17, 2015 (the
"Effective Date"). This Note is issued pursuant to that certain Securities
Purchase Agreement dated June 17, 2015, as the same may be amended from time to
time, by and between Borrower and Lender (the "Purchase Agreement"). All
interest calculations hereunder shall be computed on the basis of a 360-day
year comprised of twelve (12) thirty (30) day months, shall compound daily and
shall be payable in accordance with the terms of this Note. Certain capitalized
terms used herein are defined in Attachment 1 attached hereto and incorporated
herein by this reference.
This Note carries an OID of $30,000.00. In addition, Borrower agrees to pay
$5,000.00 to Lender to cover Lender's legal fees, accounting costs, due
diligence, monitoring and other transaction costs incurred in connection with
the purchase and sale of this Note (the "Transaction Expense Amount"), all of
which amount is included in the initial principal balance of this Note. The
purchase price for this Note and the Warrants (as defined in the Purchase
Agreement) shall be $300,000.00 (the "Purchase Price"), computed as follows:
$335,000.00 original principal balance, less the OID, less the Transaction
Expense Amount. The Purchase Price shall be payable by delivery to Borrower at
Closing of the Investor Notes (as defined in the Purchase Agreement) and a wire
transfer of immediately available funds in the amount of the Initial Cash
Purchase Price (as defined in the Purchase Agreement).This Note shall be
comprised of three (3) tranches (each, a "Tranche"), consisting of (i) an
initial Tranche in an amount equal to $115,000.00 and any interest, costs, fees
or charges accrued thereon or added thereto under the terms of this Note and the
other Transaction Documents (as defined in the Purchase Agreement) (the "Initial
Tranche"), and (ii) two (2) additional Tranches, each in the amount of
$110,000.00, plus any interest, costs, fees or charges accrued thereon or added
thereto under the terms of this Note and the other Transaction Documents (each,
a "Subsequent Tranche"). The Initial Tranche shall correspond to the Initial
Cash Purchase Price, $10,000.00 of the OID and the Transaction Expense Amount,
and may be converted any time subsequent to the Purchase Price Date. The first
Subsequent Tranche shall correspond to Investor Note #1 and $10,000.00 of the
OID and the second Subsequent Tranche shall correspond to Investor Note #2 and
$10,000.00 of the OID. Lender's right to convert any portion of any of the
Subsequent Tranches is conditioned upon Lender's payment in full of the Investor
Note corresponding to such Subsequent Tranche (upon the satisfaction of such
condition, such Subsequent Tranche becomes a "Conversion Eligible Tranche"). In
the event Lender exercises its Lender Offset Right (as defined below) with
respect to a portion of an Investor Note and pays in full the remaining
outstanding balance of such Investor Note, the Subsequent Tranche that
corresponds to such Investor Note shall be deemed to be a Conversion Eligible
Tranche only for the portion of such Tranche that was paid for in cash by Lender
and the portion of such Investor Note that was offset pursuant to Lender's
exercise of the Lender Offset Right shall not be included in the applicable
Conversion Eligible Tranche. For the avoidance of doubt, subject to the other
<PAGE>
terms and conditions hereof, the Initial Tranche shall be deemed a Conversion
ligible Tranche as of the Purchase Price Date for all purposes hereunder and may
be converted in whole or in part at any time subsequent to the Purchase Price
Date, and each Subsequent Tranche that becomes a Conversion Eligible Tranche may
be converted in whole or in part at any time subsequent to the first date on
which such Subsequent Tranche becomes a Conversion Eligible Tranche. For all
purposes hereunder, Conversion Eligible Tranches shall be converted (or
redeemed, as applicable) in order of the lowest-numbered Conversion Eligible
Tranche and Conversion Eligible Tranches may be converted (or redeemed, as
applicable) in one or more separate Conversions (as defined below), as
determined in Lender's sole discretion. At all times hereunder, the aggregate
amount of any costs, fees or charges incurred by or assessable against Borrower
hereunder, including, without limitation, any fees, charges or premiums incurred
in connection with an Event of Default (as defined below), shall be added to the
lowest-numbered then-current Conversion Eligible Tranche.
1. Payment; Prepayment. Provided there is an Outstanding Balance, on each
Installment Date (as defined below), Borrower shall pay to Lender an
amount equal to the Installment Amount (as defined below) due on such
Installment Date in accordance with Section 8. All payments owing
hereunder shall be in lawful money of the United States of America or
Conversion Shares (as defined below), as provided for herein, and
delivered to Lender at the address furnished to Borrower for that
purpose. All payments shall be applied first to (a) costs of collection,
if any, then to (b) fees and charges, if any, then to (c) accrued and
unpaid interest, and thereafter, to (d) principal. Notwithstanding the
foregoing, so long as Borrower has not received a Lender Conversion Notice
(as defined below) or an Installment Notice (as defined below) from Lender
where the applicable Conversion Shares have not yet been delivered and so
long as no Event of Default has occurred since the Effective Date (whether
declared by Lender or undeclared), then Borrower shall have the right,
exercisable on not less than five (5) Trading Days prior written notice to
Lender to prepay the Outstanding Balance of this Note, in full, in
accordance with this Section 1. Any notice of prepayment hereunder (an
"Optional Prepayment Notice") shall be delivered to Lender at its
registered address and shall state: (i) that Borrower is exercising its
right to prepay this Note, and (ii) the date of prepayment, which shall be
not less than five (5) Trading Days from the date of the Optional
Prepayment Notice. On the date fixed for prepayment (the "Optional
Prepayment Date"), Borrower shall make payment of the Optional Prepayment
Amount (as defined below) to or upon the order of Lender as may be
specified by Lender in writing to Borrower. If Borrower exercises its
right to prepay this Note, Borrower shall make payment to Lender of an
amount in cash equal to 125% (the "Prepayment Premium" multiplied by the
then Outstanding Balance of this Note (the "Optional Prepayment Amount").
In the event Borrower delivers the Optional Prepayment Amount to Lender
prior to the Optional Prepayment Date or without delivering an Optional
Prepayment Notice to Lender as set forth herein without Lender's prior
written consent, the Optional Prepayment Amount shall not be deemed to
have been paid to Lender until the Optional Prepayment Date. Moreover, in
such event the Optional Prepayment Liquidated Damages Amount will
automatically be added to the Outstanding Balance of this Note on the day
Borrower delivers the Optional Prepayment Amount to Lender. In the event
Borrower delivers the Optional Prepayment Amount without an Optional
Prepayment Notice, then the Optional Prepayment Date will be deemed to be
the date that is five (5) Trading Days from the date that the Optional
Prepayment Amount was delivered to Lender. In addition, if Borrower
delivers an Optional Prepayment Notice and fails to pay the Optional
Prepayment Amount due to Lender within two (2) Trading Days following the
Optional Prepayment Date, Borrower shall forever forfeit its right to
prepay this Note.
<PAGE>
2. Security. This Note is secured by that certain Security Agreement of even
date herewith, as the same may be amended from time to time (the "Security
Agreement"), executed by Borrower in favor of Lender encumbering the
Investor Notes, as more specifically set forth in the Security Agreement,
all the terms and conditions of which are hereby incorporated into and
made a part of this Note.
3. Lender Optional Conversion.
3.1. Lender Conversion Price. Subject to adjustment as set forth in this Note,
the conversion price for each Lender Conversion (as defined below) shall
be $1.00 (the "Lender Conversion Price"). However, in the event the Market
Capitalization falls below $10,000,000.00 at any time, then in such event
(a) the Lender Conversion Price for all Lender Conversions occurring after
the first date of such occurrence shall equal the lower of the Lender
Conversion Price and the Market Price as of any applicable date of
Conversion, and (b) the true-up provisions of Section 11 below shall apply
to all Lender Conversions that occur after the first date the Market
Capitalization falls below $10,000,000.00, provided that all references to
the "Installment Notice" in Section 11 shall be replaced with references
to a "Lender Conversion Notice" for purposes of this Section 3.1, all
references to "Installment Conversion Shares" in Section 11 shall be
replaced with references to "Lender Conversion Shares" for purposes of
this Section 3.1, and all references to the "Installment Conversion Price"
in Section 11 shall be replaced with references to the "Lender Conversion
Price" for purposes of this Section 3.1.
3.2. Lender Conversions. Lender has the right at any time after the Purchase
Price Date until the Outstanding Balance has been paid in full, including
without limitation (a) until any Optional Prepayment Date (even if Lender
has received an Optional Prepayment Notice) or at any time thereafter with
respect to any amount that is not prepaid, and (b) during or after any
Fundamental Default Measuring Period, at its election, to convert (each
instance of conversion is referred to herein as a "Lender Conversion") all
or any part of the Outstanding Balance into shares ("Lender Conversion
Shares") of fully paid and non-assessable common stock, $0.0001 par value
per share ("Common Stock"), of Borrower as per the following conversion
formula: the number of Lender Conversion Shares equals the amount being
converted (the "Conversion Amount") divided by the Lender Conversion
Price. Conversion notices in the form attached hereto as Exhibit A (each,
a "Lender Conversion Notice") may be effectively delivered to Borrower by
any method of Lender's choice (including but not limited to facsimile,
email, mail, overnight courier, or personal delivery), and all Lender
Conversions shall be cashless and not require further payment from Lender.
Borrower shall deliver the Lender Conversion Shares from any Lender
Conversion to Lender in accordance with Section 9 below.
3.3. Application to Installments. Notwithstanding anything to the contrary
herein, including without limitation Section 8 hereof, Lender may, in its
sole discretion, apply all or any portion of any Lender Conversion toward
any Installment Conversion (as defined below), even if such Installment
Conversion is pending, as determined in Lender's sole discretion, by
delivering written notice of such election (which notice may be included
as part of the applicable Lender Conversion Notice) to Borrower at any
date on or prior to the applicable Installment Date. In such event,
Borrower may not elect to allocate such portion of the Installment Amount
being paid pursuant to this Section 3.3 in the manner prescribed in
Section 8.3; rather, Borrower must reduce the applicable Installment
Amount by the Conversion Amount described in this Section 3.3.
<PAGE>
4. Defaults and Remedies.
4.1. Defaults. The following are events of default under this Note (each, an
"Event of Default"): (a) Borrower shall fail to pay any principal,
interest, fees, charges, or any other amount when due and payable
hereunder; or (b) Borrower shall fail to deliver any Lender Conversion
Shares in accordance with the terms hereof; or (c) Borrower shall fail
to deliver any Installment Conversion Shares (as defined below) or True-Up
Shares (as defined below) in accordance with the terms hereof; or (d) a
receiver, trustee or other similar official shall be appointed over
Borrower or a material part of its assets and such appointment shall
remain uncontested for twenty (20) days or shall not be dismissed or
discharged within sixty (60) days; or (e) Borrower shall become insolvent
or generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any; or
(f) Borrower shall make a general assignment for the benefit of creditors;
or (g) Borrower shall file a petition for relief under any bankruptcy,
insolvency or similar law (domestic or foreign); or (h) an involuntary
proceeding shall be commenced or filed against Borrower; or (i) Borrower
shall default or otherwise fail to observe or perform any covenant,
obligation, condition or agreement of Borrower contained herein or in any
other Transaction Document, other than those specifically set forth in
this Section 4.1 and Section 4 of the Purchase Agreement; or (j) any
representation, warranty or other statement made or furnished by or on
behalf of Borrower to Lender herein, in any Transaction Document, or
otherwise in connection with the issuance of this Note shall be false,
incorrect, incomplete or misleading in any material respect when made or
furnished; or (k) the occurrence of a Fundamental Transaction without
Lender's prior written consent; or (l) Borrower shall fail to maintain the
Share Reserve as required under the Purchase Agreement; or (m) Borrower
effectuates a reverse split of its Common Stock without twenty (20)
Trading Days prior written notice to Lender; or (n) any money judgment,
writ or similar process shall be entered or filed against Borrower or any
subsidiary of Borrower or any of its property or other assets for more
than $100,000.00, and shall remain unvacated, unbonded or unstayed for a
period of twenty (20) calendar days unless otherwise consented to by
Lender; or (o) Borrower shall fail to deliver to Lender original signature
pages to all Transaction Documents within five (5) Trading Days of the
Purchase Price Date; or (p) Borrower shall fail to be DWAC Eligible; or
(q) Borrower shall fail to observe or perform any covenant set forth in
Section 4 of the Purchase Agreement.
4.2. Remedies. Upon the occurrence of any Event of Default, Borrower shall
within one (1) Trading Day deliver written notice thereof via facsimile,
email or reputable overnight courier (with next day delivery specified)
(an "Event of Default Notice") to Lender. At any time and from time to
time after the earlier of Lender's receipt of an Event of Default Notice
and Lender becoming aware of the occurrence of any Event of Default,
Lender may accelerate this Note by written notice to Borrower, with the
Outstanding Balance becoming immediately due and payable in cash at the
Mandatory Default Amount. Notwithstanding the foregoing, at any time
following the occurrence of any Event of Default, Lender may, at its
option, elect to increase the Outstanding Balance by applying the Default
Effect (subject to the limitation set forth below) via written notice to
Borrower without accelerating the Outstanding Balance, in which event the
Outstanding Balance shall be increased as of the date of the occurrence of
the applicable Event of Default pursuant to the Default Effect, but the
Outstanding Balance shall not be immediately due and payable unless so
declared by Lender (for the avoidance of doubt, if Lender elects to apply
<PAGE>
the Default Effect pursuant to this sentence, it shall reserve the right
to declare the Outstanding Balance immediately due and payable at any time
and no such election by Lender shall be deemed to be a waiver of its right
to declare the Outstanding Balance immediately due and payable as set
forth herein unless otherwise agreed to by Lender in writing).
Notwithstanding the foregoing, upon the occurrence of any Event of Default
described in clauses (d), (e), (f), (g) or (h) of Section 4.1, the
Outstanding Balance as of the date of acceleration shall become
immediately and automatically due and payable in cash at the Mandatory
Default Amount, without any written notice required by Lender. At any time
following the occurrence of any Event of Default, upon written notice
given by Lender to Borrower, interest shall accrue on the Outstanding
Balance beginning on the date the applicable Event of Default occurred at
an interest rate equal to the lesser of 22% per annum or the maximum rate
permitted under applicable law ("Default Interest"); provided, however,
that no Default Interest shall accrue during the Fundamental Default
Measuring Period. Additionally, following the occurrence of any Event of
Default, Borrower may, at its option, pay any Lender Conversion in cash
instead of Lender Conversion Shares by paying to Lender on or before the
applicable Delivery Date (as defined below) a cash amount equal to the
number of Lender Conversion Shares set forth in the applicable Lender
Conversion Notice multiplied by the highest intra-day trading price of the
Common Stock that occurs during the period beginning on the date the
applicable Event of Default occurred and ending on the date of the
applicable Lender Conversion Notice. In connection with acceleration
described herein, Lender need not provide, and Borrower hereby waives, any
presentment, demand, protest or other notice of any kind, and Lender may
immediately and without expiration of any grace period enforce any and all
of its rights and remedies hereunder and all other remedies available to
it under applicable law. Such acceleration may be rescinded and annulled
by Lender at any time prior to payment hereunder and Lender shall have all
rights as a holder of the Note until such time, if any, as Lender receives
full payment pursuant to this Section 4.2. No such rescission or annulment
shall affect any subsequent Event of Default or impair any right
consequent thereon. Nothing herein shall limit Lender's right to pursue
any other remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to Borrower's failure to timely deliver Conversion Shares upon
Conversion of the Notes as required pursuant to the terms hereof.
4.3. Fundamental Default Remedies. Notwithstanding anything to the contrary
herein, in addition to all other remedies set forth herein, after giving
effect to the Lender Offset Right (as defined below), which shall occur
automatically upon the occurrence of any Fundamental Default, the
Fundamental Liquidated Damages Amount shall be added to the Outstanding
Balance upon Lender's delivery to Borrower of a notice (which notice
Lender may deliver to Borrower at any time following the occurrence of a
Fundamental Default) setting forth its election to declare a Fundamental
Default and the Fundamental Liquidated Damages Amount that will be added
to the Outstanding Balance.
4.4. Certain Additional Rights. Notwithstanding anything to the contrary
herein, in the event Borrower fails to make any payment or otherwise to
deliver any Conversion Shares as and when required under this Note, then
(a) the Lender Conversion Price for all Lender Conversions occurring after
the date of such failure to pay shall equal the lower of the Lender
Conversion Price and the Market Price as of any applicable date of
Conversion, and (b) the true-up provisions of Section 11 below shall apply
to all Lender Conversions that occur after the date of such failure to
<PAGE>
pay, provided that all references to the "Installment Notice" in
Section 11 shall be replaced with references to a "Lender Conversion
Notice" for purposes of this Section 4.4, all references to "Installment
Conversion Shares" in Section 11 shall be replaced with references to
"Lender Conversion Shares" for purposes of this Section 4.4, and all
references to the "Installment Conversion Price" in Section 11 shall be
replaced with references to the "Lender Conversion Price" for purposes of
this Section 4.4. For the avoidance of doubt, Lender's exercise of the
rights granted to it pursuant to this Section 4.4 shall not relieve
Borrower of its obligation to continue paying the Installment Amount on
all future Installment Dates.
4.5. Cross Default. A breach or default by Borrower of any covenant or other
term or condition contained in any Other Agreements shall, at the option
of Lender, be considered an Event of Default under this Note, in which
event Lender shall be entitled (but in no event required) to apply all
rights and remedies of Lender under the terms of this Note.
5. Unconditional Obligation; No Offset. Borrower acknowledges that this Note
is an unconditional, valid, binding and enforceable obligation of Borrower
not subject to offset (except as set forth in Section 20 below), deduction
or counterclaim of any kind. Borrower hereby waives any rights of offset
it now has or may have hereafter against Lender, its successors and
assigns, and agrees to make the payments or Conversions called for herein
in accordance with the terms of this Note.
6. Waiver. No waiver of any provision of this Note shall be effective unless
it is in the form of a writing signed by the party granting the waiver. No
waiver of any provision or consent to any prohibited action shall
constitute a waiver of any other provision or consent to any other
prohibited action, whether or not similar. No waiver or consent shall
constitute a continuing waiver or consent or commit a party to provide a
waiver or consent in the future except to the extent specifically set
forth in writing.
7. Rights Upon Issuance of Securities.
7.1. Subsequent Equity Sales. Except with respect to Excluded Securities, if
Borrower or any subsidiary thereof, as applicable, at any time this Note
is outstanding, shall sell, issue or grant any Common Stock, option to
purchase Common Stock, right to reprice, preferred shares convertible into
Common Stock, or debt, warrants, options or other instruments or
securities to Lender or any third party which are convertible into or
exercisable for shares of Common Stock (collectively, the "Equity
Securities"), including without limitation any Deemed Issuance, at an
effective price per share less than the then effective Lender Conversion
Price (such issuance is referred to herein as a "Dilutive Issuance"),
then, the Lender Conversion Price shall be automatically reduced and only
reduced to equal such lower effective price per share. If the holder of
any Equity Securities so issued shall at any time, whether by operation of
purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options, or
rights per share which are issued in connection with such Dilutive
Issuance, be entitled to receive shares of Common Stock at an effective
price per share that is less than the Lender Conversion Price, such
issuance shall be deemed to have occurred for less than the Lender
Conversion Price on the date of such Dilutive Issuance, and the then
effective Lender Conversion Price shall be reduced and only reduced to
equal such lower effective price per share. Such adjustments described
<PAGE>
above to the Lender Conversion Price shall be permanent (subject to
additional adjustments under this section), and shall be made whenever
such Equity Securities are issued. Borrower shall notify Lender, in
writing, no later than the Trading Day following the issuance of any
Equity Securities subject to this Section 7.1, indicating therein the
applicable issuance price, or applicable reset price, exchange price,
conversion price, or other pricing terms (such notice, the "Dilutive
Issuance Notice"). For purposes of clarification, whether or not Borrower
provides a Dilutive Issuance Notice pursuant to this Section 7.1, upon
the occurrence of any Dilutive Issuance, on the date of such Dilutive
Issuance the Lender Conversion Price shall be lowered to equal the
applicable effective price per share regardless of whether Borrower or
Lender accurately refers to such lower effective price per share in any
Installment Notice or Lender Conversion Notice.
7.2. Adjustment of Lender Conversion Price upon Subdivision or Combination of
Common Stock. Without limiting any provision hereof, if Borrower at any
time on or after the Effective Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the
Lender Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced. Without limiting any provision hereof, if
Borrower at any time on or after the Effective Date combines (by
combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Lender Conversion Price in effect immediately prior to such combination
will be proportionately increased. Any adjustment pursuant to this Section
7.2 shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under
this Section 7.2 occurs during the period that a Lender Conversion Price
is calculated hereunder, then the calculation of such Lender Conversion
Price shall be adjusted appropriately to reflect such event.
7.3. Other Events. In the event that Borrower (or any subsidiary) shall take
any action to which the provisions hereof are not strictly applicable, or,
if applicable, would not operate to protect Lender from dilution or if any
event occurs of the type contemplated by the provisions of this Section 7
but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then Borrower's board of
directors shall in good faith determine and implement an appropriate
adjustment in the Lender Conversion Price so as to protect the rights of
Lender, provided that no such adjustment pursuant to this Section 7.3 will
increase the Lender Conversion Price as otherwise determined pursuant to
this Section 7, provided further that if Lender does not accept such
adjustments as appropriately protecting its interests hereunder against
such dilution, then Borrower's board of directors and Lender shall agree,
in good faith, upon an independent investment bank of nationally
recognized standing to make such appropriate adjustments, whose
determination shall be final and binding and whose fees and expenses shall
be borne by Borrower.
8. Borrower Installments.
8.1. Installment Conversion Price. Subject to the adjustments set forth herein,
the conversion price for each Installment Conversion (the "Installment
Conversion Price") shall be the lesser of (a) the Lender Conversion Price,
and (b) the Market Price.
<PAGE>
8.2. Installment Conversions. Beginning on the date that is six (6) months
after the Purchase Price Date and on the same day of each month thereafter
until the Maturity Date (each, an "Installment Date"), if paying in cash,
Borrower shall pay to Lender the applicable Installment Amount due on such
date subject to the provisions of this Section 8, and if paying in
Installment Conversion Shares (as defined below), Borrower shall deliver
such Installment Conversion Shares on or before the Delivery Date.
Payments of each Installment Amount may be made (a) in cash; provided,
however, that in the event Lender has paid off all or any portion of any
Investor Note (such amount that is prepaid, the "Investor Note Prepayment
Amount"), Borrower may not pay any portion of any Installment Amount in
cash for a period of ninety (90) days following the date Investor
delivered the applicable Investor Note Prepayment Amount to Borrower (the
"Standstill Period") and any payment in cash of any Installment Amount
made during the Standstill Period shall be deemed to be a prepayment
pursuant to Section 1 above and shall be subject to the Prepayment Premium
provided in such section, or (b) by converting such Installment Amount
into shares of Common Stock ("Installment Conversion Shares", and together
with the Lender Conversion Shares, the "Conversion Shares") in accordance
with this Section 8 (each an "Installment Conversion") per the following
formula: the number of Installment Conversion Shares equals the portion of
the applicable Installment Amount being converted divided by the
Installment Conversion Price, or (c) by any combination of the foregoing,
so long as the cash is delivered to Lender on the applicable Installment
Date and the Installment Conversion Shares are delivered to Lender on or
before the applicable Delivery Date. Notwithstanding the foregoing,
Borrower will not be entitled to elect an Installment Conversion with
respect to any portion of any applicable Installment Amount and shall be
required to pay the entire amount of such Installment Amount in cash if on
the applicable Installment Date there is an Equity Conditions Failure, and
such failure is not waived in writing by Lender. Moreover, in the event
Borrower desires to pay all or any portion of any Installment Amount in
cash, it must notify Lender in writing of such election and the portion of
the applicable Installment Amount it elects to pay in cash not more than
twenty-five (25) or less than fifteen (15) Trading Days prior to the
applicable Installment Date. If Borrower fails to so notify Lender, it
shall not be permitted to elect to pay any portion of such Installment
Amount in cash unless otherwise agreed to by Lender in writing or proposed
by Lender in an Installment Notice delivered by Lender to Borrower.
Notwithstanding the foregoing or anything to the contrary herein, Borrower
shall only be obligated to deliver Installment Amounts with respect to
Tranches that have become Conversion Eligible Tranches and shall have no
obligation to pay to Lender any Installment Amount with respect to any
Tranche that has not become a Conversion Eligible Tranche. In furtherance
thereof, in the event Borrower has repaid all Conversion Eligible Tranches
pursuant to the terms of this Note, it shall have no further obligations
to deliver any Installment Amount to Lender unless and until any
Subsequent Tranche that was not previously a Conversion Eligible Tranche
becomes a Conversion Eligible Tranche pursuant to the terms of this Note.
Notwithstanding that failure to repay this Note in full by the Maturity
Date is an Event of Default, the Installment Dates shall continue after
the Maturity Date pursuant to this Section 8 until the Outstanding Balance
is repaid in full, provided that Lender shall, in Lender's sole
discretion, determine the Installment Amount for each Installment Date
after the Maturity Date.
8.3. Allocation of Installment Amounts. Subject to Section 8.2 regarding an
Equity Conditions Failure, for each Installment Date, Borrower may elect
to allocate the amount of the applicable Installment Amount between cash
<PAGE>
and via an Installment Conversion, by email or fax delivery of a notice to
Lender substantially in the form attached hereto as Exhibit B (each, an
"Installment Notice"), provided, that to be effective, each applicable
Installment Notice must be received by Lender not more than twenty-five
(25) or less than fifteen (15) Trading Days prior to the applicable
Installment Date. If Lender has not received an Installment Notice within
such time period, then Lender may prepare the Installment Notice and
deliver the same to Borrower by fax or email. Following its receipt of
such Installment Notice, Borrower may either ratify Lender's proposed
allocation in the applicable Installment Notice or elect to change the
allocation by written notice to Lender by email or fax on or before
12:00 p.m. New York time on the applicable Installment Date, so long as
the sum of the cash payments and the amount of Installment Conversions
equal the applicable Installment Amount, provided that Lender must
approve any increase to the portion of the Installment Amount payable in
cash. If Borrower fails to notify Lender of its election to change the
allocation prior to the deadline set forth in the previous sentence (and
seek approval to increase the amount payable in cash), it shall be deemed
to have ratified and accepted the allocation set forth in the applicable
Installment Notice prepared by Lender. If neither Borrower nor Lender
prepare and deliver to the other party an Installment Notice as outlined
above, then Borrower shall be deemed to have elected that the entire
Installment Amount be converted via an Installment Conversion. Borrower
acknowledges and agrees that regardless of which party prepares the
applicable Installment Notice, the amounts and calculations set forth
thereon are subject to correction or adjustment because of error, mistake,
or any adjustment resulting from an Event of Default or other adjustment
permitted under the Transaction Documents (an "Adjustment"). Furthermore,
no error or mistake in the preparation of such notices, or failure to
apply any Adjustment that could have been applied prior to the preparation
of an Installment Notice may be deemed a waiver of Lender's right to
enforce the terms of any Note, even if such error, mistake, or failure to
include an Adjustment arises from Lender's own calculation. Borrower shall
deliver the Installment Conversion Shares from any Installment Conversion
to Lender in accordance with Section 9 below on or before each applicable
Delivery Date.
9. Method of Conversion Share Delivery. On or before the close of business on
the third (3rd) Trading Day following the Installment Date or the third
(3rd) Trading Day following the date of delivery of a Lender Conversion
Notice, as applicable (the "Delivery Date"), Borrower shall, provided it
is DWAC Eligible at such time, deliver or cause its transfer agent to
deliver the applicable Conversion Shares electronically via DWAC to the
account designated by Lender in the applicable Lender Conversion Notice or
Installment Notice. If Borrower is not DWAC Eligible, it shall deliver to
Lender or its broker (as designated in the Lender Conversion Notice or
Installment Notice, as applicable), via reputable overnight courier, a
certificate representing the number of shares of Common Stock equal to the
number of Conversion Shares to which Lender shall be entitled, registered
in the name of Lender or its designee. For the avoidance of doubt,
Borrower has not met its obligation to deliver Conversion Shares by the
Delivery Date unless Lender or its broker, as applicable, has actually
received the certificate representing the applicable Conversion Shares no
later than the close of business on the relevant Delivery Date pursuant to
the terms set forth above.
10. Conversion Delays. If Borrower fails to deliver Conversion Shares or
True-Up Shares in accordance with the timeframes stated in Sections 9 or
11, as applicable, Lender, at any time prior to selling all of those
<PAGE>
Conversion Shares or True-Up Shares, as applicable, may rescind in whole
or in part that particular Conversion attributable to the unsold
Conversion Shares or True-Up Shares, with a corresponding increase to the
Outstanding Balance (any returned amount will tack back to the Purchase
Price Date for purposes of determining the holding period under Rule 144
under the Securities Act of 1933, as amended ("Rule 144")). In addition,
for each Lender Conversion, in the event that Lender Conversion Shares are
not delivered by the fourth Trading Day (inclusive of the day of the
Lender Conversion), a late fee equal to the greater of (a) $500.00 and
(b) 2% of the applicable Lender Conversion Share Value rounded to the
nearest multiple of $100.00 (but in any event the cumulative amount of
such late fees for each Lender Conversion shall not exceed 200% of the
applicable Lender Conversion Share Value) will be assessed for each day
after the third Trading Day (inclusive of the day of the Lender
Conversion) until Lender Conversion Share delivery is made; and such late
fee will be added to the Outstanding Balance (such fees, the "Conversion
Delay Late Fees"). For illustration purposes only, if Lender delivers a
Lender Conversion Notice to Borrower pursuant to which Borrower is
required to deliver 100,000 Lender Conversion Shares to Lender and on the
Delivery Date such Lender Conversion Shares have a Lender Conversion Share
Value of $20,000.00 (assuming a Closing Trade Price on the Delivery Date
of $0.20 per share of Common Stock), then in such event a Conversion Delay
Late Fee in the amount of $500.00 per day (the greater of $500.00 per day
and $20,000.00 multiplied by 2%, which is $400.00) would be added to the
Outstanding Balance of the Note until such Lender Conversion Shares are
delivered to Lender. For purposes of this example, if the Lender
Conversion Shares are delivered to Lender twenty (20) days after the
applicable Delivery Date, the total Conversion Delay Late Fees that would
be added to the Outstanding Balance would be $10,000.00 (20 days
multiplied by $500.00 per day). If the Lender Conversion Shares are
delivered to Lender one hundred (100) days after the applicable Delivery
Date, the total Conversion Delay Late Fees that would be added to the
Outstanding Balance would be $40,000.00 (100 days multiplied by $500.00
per day, but capped at 200% of the Lender Conversion Share Value).
11. True-Up. On the date that is twenty (20) Trading Days (a "True-Up Date")
from each date that the Installment Conversion Shares delivered by
Borrower to Lender become Free Trading, there shall be a true-up where
Borrower shall deliver to Lender additional Installment Conversion Shares
("True-Up Shares") if the Installment Conversion Price as of the True-Up
Date is less than the Installment Conversion Price used in the applicable
Installment Notice. In such event, Borrower shall deliver to Lender within
three (3) Trading Days of the True-Up Date (the "True-Up Share Delivery
Date") a number of True-Up Shares equal to the difference between the
number of Installment Conversion Shares that would have been delivered to
Lender on the True-Up Date based on the Installment Conversion Price as of
the True-Up Date and the number of Installment Conversion Shares
originally delivered to Lender pursuant to the applicable Installment
Notice. For the avoidance of doubt, if the Installment Conversion Price as
of the True-Up Date is higher than the Installment Conversion Price set
forth in the applicable Installment Notice, then Borrower shall have no
obligation to deliver True-Up Shares to Lender, nor shall Lender have any
obligation to return any excess Installment Conversion Shares to Borrower
under any circumstance. For the convenience of Borrower only, Lender may,
in its sole discretion, deliver to Borrower a notice (pursuant to a form
of notice substantially in the form attached hereto as Exhibit C)
informing Borrower of the number of True-Up Shares it is obligated to
deliver to Lender as of any given True-Up Date, provided that if Lender
does not deliver any such notice, Borrower shall not be relieved of its
<PAGE>
obligation to deliver True-Up Shares pursuant to this Section 11.
Notwithstanding the foregoing, if Borrower fails to deliver any required
True-Up Shares on or before any applicable True-Up Share Delivery Date,
then in such event the Outstanding Balance of this Note will automatically
increase by a sum equal to the number of True-Up Shares deliverable as of
the applicable True-Up Date multiplied by the Market Price for the Common
Stock as of the applicable True-Up Date (under Lender's and Borrower's
expectations that any such increase will tack back to the Purchase Price
Date for purposes of determining the holding period under Rule 144).
12. Ownership Limitation. Notwithstanding anything to the contrary contained
in this Note or the other Transaction Documents, if at any time Lender
shall or would be issued shares of Common Stock under any of the
Transaction Documents, but such issuance would cause Lender (together with
its affiliates) to beneficially own a number of shares exceeding 4.99% of
the number of shares of Common Stock outstanding on such date (including
for such purpose the shares of Common Stock issuable upon such issuance)
(the "Maximum Percentage"), then Borrower must not issue to Lender shares
of Common Stock which would exceed the Maximum Percentage. For purposes of
this section, beneficial ownership of Common Stock will be determined
pursuant to Section 13(d) of the 1934 Act. The shares of Common Stock
issuable to Lender that would cause the Maximum Percentage to be exceeded
are referred to herein as the "Ownership Limitation Shares". Borrower will
reserve the Ownership Limitation Shares for the exclusive benefit of
Lender. From time to time, Lender may notify Borrower in writing of the
number of the Ownership Limitation Shares that may be issued to Lender
without causing Lender to exceed the Maximum Percentage. Upon receipt of
such notice, Borrower shall be unconditionally obligated to immediately
issue such designated shares to Lender, with a corresponding reduction in
the number of the Ownership Limitation Shares. Notwithstanding the
forgoing, the term "4.99%" above shall be replaced with "9.99%" at such
time as the Market Capitalization is less than $10,000,000.00.
Notwithstanding any other provision contained herein, if the term "4.99%"
is replaced with "9.99%" pursuant to the preceding sentence, such increase
to "9.99%" shall remain at 9.99% until increased, decreased or waived by
Lender as set forth below. By written notice to Borrower, Lender may
increase, decrease or waive the Maximum Percentage as to itself but any
such waiver will not be effective until the 61st day after delivery there
of. The foregoing 61-day notice requirement is enforceable, unconditional
and non-waivable and shall apply to all affiliates and assigns of Lender.
13. Payment of Collection Costs. If this Note is placed in the hands of an
attorney for collection or enforcement prior to commencing arbitration or
legal proceedings, or is collected or enforced through any arbitration or
legal proceeding, or Lender otherwise takes action to collect amounts due
under this Note or to enforce the provisions of this Note, then Borrower
shall pay the costs incurred by Lender for such collection, enforcement or
action including, without limitation, attorneys' fees and disbursements.
Borrower also agrees to pay for any costs, fees or charges of its transfer
agent that are charged to Lender pursuant to any Conversion or issuance of
shares pursuant to this Note.
14. Opinion of Counsel. In the event that an opinion of counsel is needed for
any matter related to this Note, Lender has the right to have any such
opinion provided by its counsel. Lender also has the right to have any
such opinion provided by Borrower's counsel.
15. Governing Law. This Note shall be construed and enforced in accordance
with, and all questions concerning the construction, validity,
<PAGE>
interpretation and performance of this Note shall be governed by, the
internal laws of the State of Utah, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Utah or
any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of Utah. The provisions set forth
in the Purchase Agreement to determine the proper venue for any disputes
are incorporated herein by this reference.
16. Resolution of Disputes.
16.1. Arbitration of Disputes. By its acceptance of this Note, each party agrees
to be bound by the Arbitration Provisions (as defined in the Purchase
Agreement) set forth as an exhibit to the Purchase Agreement.
16.2. Calculation Disputes. Notwithstanding the Arbitration Provisions, in the
case of a dispute as to any Calculation (as defined in the Purchase
Agreement), such dispute will be resolved in the manner set forth in the
Purchase Agreement.
17. Cancellation. After repayment or conversion of the entire Outstanding
Balance (including without limitation delivery of True-Up Shares pursuant
to the payment of the final Installment Amount, if applicable), this Note
shall be deemed paid in full, shall automatically be deemed canceled, and
shall not be reissued.
18. Amendments. The prior written consent of both parties hereto shall be
required for any change or amendment to this Note.
19. Assignments. Borrower may not assign this Note without the prior written
consent of Lender. This Note and any shares of Common Stock issued upon
conversion of this Note may be offered, sold, assigned or transferred by
Lender without the consent of Borrower.
20. Offset Rights. Notwithstanding anything to the contrary herein or in any
of the other Transaction Documents, (a) the parties hereto acknowledge and
agree that Lender maintains a right of offset pursuant to the terms of the
Investor Notes that, under certain circumstances, permits Lender to deduct
amounts owed by Borrower under this Note from amounts otherwise owed by
Lender under the Investor Notes (the "Lender Offset Right"), and (b) at
any time Borrower shall be entitled to deduct and offset any amount owing
by the initial Lender under the Investor Notes from any amount owed by
Borrower under this Note (the "Borrower Offset Right"). In order to
exercise the Borrower Offset Right, Borrower must deliver to Lender (a) a
completed and signed Borrower Offset Right Notice in the form attached
hereto as Exhibit D, (b) the original Investor Note being offset marked
"cancelled" or, in the event the applicable Investor Note has been lost,
stolen or destroyed, a lost note affidavit in a form reasonably acceptable
to Lender, and (c) a check payable to Lender in the amount of $250.00. In
the event that Borrower's exercise of the Borrower Offset Right results in
the full satisfaction of Borrower's obligations under this Note, Lender
shall return the original Note to Borrower marked "cancelled" or, in the
event this Note has been lost, stolen or destroyed, a lost note affidavit
in a form reasonably acceptable to Borrower. For the avoidance of doubt,
Borrower shall not incur any Prepayment Premium set forth in Section 1
hereof with respect to any portions of this Note that are satisfied by way
of a Borrower Offset Right.
21. Time is of the Essence. Time is expressly made of the essence with respect
to each and every provision of this Note and the documents and instruments
entered into in connection herewith.
<PAGE>
22. Notices. Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with
the subsection of the Purchase Agreement titled "Notices."
23. Liquidated Damages. Lender and Borrower agree that in the event Borrower
fails to comply with any of the terms or provisions of this Note, Lender's
damages would be uncertain and difficult (if not impossible) to accurately
estimate because of the parties' inability to predict future interest
rates, future share prices, future trading volumes and other relevant
factors. Accordingly, Lender and Borrower agree that any fees, balance
adjustments, Default Interest or other charges assessed under this Note
are not penalties but instead are intended by the parties to be, and shall
be deemed, liquidated damages (under Lender's and Borrower's expectations
that any such liquidated damages will tack back to the Purchase Price Date
for purposes of determining the holding period under Rule 144).
24. Waiver of Jury Trial. EACH OF LENDER AND BORROWER IRREVOCABLY WAIVES ANY
AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR
THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER
EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER
COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER,
EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND
VOLUNTARILY WAIVING SUCH PARTY'S RIGHT TO DEMAND TRIAL BY JURY.
25. Par Value Adjustments. If at any time Lender delivers a Conversion Notice
to Borrower and as of such date the Conversion Price is less than the Par
Value, then the Conversion Amount and the Outstanding Balance will each be
deemed to have increased immediately prior to the delivery of the
Conversion Notice in an amount equal to the Par Value Adjustment Amount
(the "Par Value Adjustment"). The number of Conversion Shares deliverable
pursuant to any relevant Conversion Notice following a Par Value
Adjustment shall be equal to (a) the Adjusted Conversion Amount, divided
by (b) the Par Value. Lender and Borrower also agree that the Par Value
Adjustment shall occur automatically and without further action by Lender.
In the event of a Par Value Adjustment, Lender will use a Conversion
Notice in substantially the form attached hereto as Exhibit E.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the
Effective Date.
BORROWER:
EMPIRE GLOBAL CORP.
By: /s/ Michele Ciavarella
------------------------------
Name: Michele Ciavarella, B.Sc.
Title: Chairman and CEO
ACKNOWLEDGED, ACCEPTED AND AGREED:
LENDER:
TYPENEX CO-INVESTMENT, LLC
By: Red Cliffs Investments, Inc., its Manager
By: /s/ John Fife
------------------------------
John M. Fife, President
<PAGE>
ATTACHMENT 1
DEFINITIONS
For purposes of this Note, the following terms shall have the following
meanings:
A1. "Adjusted Conversion Amount" means, with respect to any given Conversion
Amount subject to a Par Value Adjustment, the sum of the Conversion
Amount plus the Par Value Adjustment Amount.
A2. "Adjusted Outstanding Balance" means the Outstanding Balance of this Note
as of the date the applicable Fundamental Default occurred less any
Conversion Delay Late Fees included in such Outstanding Balance.
A3. "Approved Stock Plan" means any stock option plan which has been approved
by the board of directors of Borrower and is in effect as of the Purchase
Price Date, pursuant to which Borrower's securities may be issued to any
employee, officer or director for services provided to Borrower.
A4. "Bloomberg" means Bloomberg L.P. (or if that service is not then
reporting the relevant information regarding the Common Stock, a
comparable reporting service of national reputation selected by Lender
and reasonably satisfactory to Borrower).
A5. "Closing Bid Price" and "Closing Trade Price" means the last closing bid
price and last closing trade price, respectively, for the Common Stock on
its principal market, as reported by Bloomberg, or, if its principal
market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price (as the case
may be) then the last bid price or last trade price, respectively, of the
Common Stock prior to 4:00:00 p.m., New York time, as reported by
Bloomberg, or, if its principal market is not the principal securities
exchange or trading market for the Common Stock, the last closing bid
price or last trade price, respectively, of the Common Stock on the
principal securities exchange or trading market where the Common Stock is
listed or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price, respectively, of
the Common Stock in the over-the-counter market on the electronic
bulletin board for the Common Stock as reported by Bloomberg, or, if no
closing bid price or last trade price, respectively, is reported for the
Common Stock by Bloomberg, the average of the bid prices, or the ask
prices, respectively, of any market makers for the Common Stock as
reported by OTC Markets Group, Inc., and any successor thereto. If the
Closing Bid Price or the Closing Trade Price cannot be calculated for the
Common Stock on a particular date on any of the foregoing bases, the
Closing Bid Price or the Closing Trade Price (as the case may be) of the
Common Stock on such date shall be the fair market value as mutually
determined by Lender and Borrower. If Lender and Borrower are unable to
agree upon the fair market value of the Common Stock, then such dispute
shall be resolved in accordance with the procedures in Section 16.2. All
such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction
during such period.
A6. "Conversion" means a Lender Conversion under Section 3 or an Installment
Conversion under Section 8.
A7. "Conversion Eligible Outstanding Balance" means the Outstanding Balance
of this Note less the sum of each Subsequent Tranche that has not yet
become a Conversion Eligible Tranche (i.e., Lender has not yet paid the
outstanding balance of the Investor Note that corresponds to such
Subsequent Tranche).
A8. "Conversion Factor" means 70%, subject to the following adjustments. If
at any time the lowest Closing Bid Price in the twenty (20) Trading Days
immediately preceding any date of measurement is below $0.40, then in
such event the then-current Conversion Factor shall be reduced by 10% for
all future Conversions (subject to other reductions set forth in this
section). Additionally, if at any time after the Effective Date, Borrower
is not DWAC Eligible, then the then-current Conversion Factor will
automatically be reduced by 5% for all future Conversions. If at any time
after the Effective Date, the Conversion Shares are not DTC Eligible,
then the then-current Conversion Factor will automatically be reduced by
an additional 5% for all future Conversions. Finally, in addition to the
Default Effect, if any Major Default occurs after the Effective Date, the
Conversion Factor shall automatically be reduced for all future
Conversions by an additional 5% for each of the first three (3) Major
Defaults that occur after the Effective Date (for the avoidance of doubt,
each occurrence of any Major Default shall be deemed to be a separate
occurrence for purposes of the foregoing reductions in Conversion Factor,
even if the same Major Default occurs three (3) separate times). For
example, the first time Borrower is not DWAC Eligible, the Conversion
Factor for future Conversions thereafter will be reduced from 70% to 65%
for purposes of this example. Following such event, the first time the
Conversion Shares are no longer DTC Eligible, the Conversion Factor for
future Conversions thereafter will be reduced from 65% to 60% for
purposes of this example. If, thereafter, there are three (3) separate
occurrences of a Major Default pursuant to Section 4.1(c), then for
purposes of this example the Conversion Factor would be reduced by 5% for
the first such occurrence, and so on for each of the second and third
occurrences of such Major Default.
A9. "Deemed Issuance" means an issuance of Common Stock that shall be deemed
to have occurred on the latest possible permitted date pursuant to the
terms hereof or any applicable Warrant in the event Borrower fails to
deliver Conversion Shares as and when required pursuant to Section 9 of
the Note or Warrant Shares (as defined in the Purchase Agreement) as and
when required pursuant to the Warrants. For the avoidance of doubt, if
Borrower has elected or is deemed under Section 8.3 to have elected to
pay an Installment Amount in Installment Conversion Shares and fails to
deliver such Installment Conversion Shares, such failure shall be
considered a Deemed Issuance hereunder even if an Equity Conditions
Failure exists at that time or other relevant date of determination.
A10. "Default Effect" means multiplying the Conversion Eligible Outstanding
Balance as of the date the applicable Event of Default occurred by (a)
15% for each occurrence of any Major Default, or (b) 5% for each
occurrence of any Minor Default, and then adding the resulting product to
the Outstanding Balance as of the date the applicable Event of Default
occurred, with the sum of the foregoing then becoming the Outstanding
Balance under this Note as of the date the applicable Event of Default
occurred; provided that the Default Effect may only be applied three (3)
times hereunder with respect to Major Defaults and three (3) times
hereunder with respect to Minor Defaults; and provided further that the
Default Effect shall not apply to any Event of Default pursuant to
Section 4.1(b) hereof.
A11. "DTC" means the Depository Trust Company.
A12. "DTC Eligible" means, with respect to the Common Stock, that such Common
Stock is eligible to be deposited in certificate form at the DTC, cleared
and converted into electronic shares by the DTC and held in the name of
the clearing firm servicing Lender's brokerage firm for the benefit of
Lender.
A13. "DTC/FAST Program" means the DTC's Fast Automated Securities Transfer
program.
A14. "DWAC" means the DTC's Deposit/Withdrawal at Custodian system.
A15. "DWAC Eligible" means that (a) Borrower's Common Stock is eligible at DTC
for full services pursuant to DTC's operational arrangements, including
without limitation transfer through DTC's DWAC system, (b) Borrower has
been approved (without revocation) by the DTC's underwriting department,
(c) Borrower's transfer agent is approved as an agent in the DTC/FAST
Program, (d) the Conversion Shares are otherwise eligible for delivery
via DWAC; (e) Borrower has previously delivered all Conversion Shares to
Lender via DWAC; and (f) Borrower's transfer agent does not have a policy
prohibiting or limiting delivery of the Conversion Shares via DWAC.
A16. "Equity Conditions Failure" means that any of the following conditions
has not been satisfied during any applicable Equity Conditions Measuring
Period (as defined below): (a) with respect to the applicable date of
determination all of the Conversion Shares would be freely tradable under
Rule 144 or without the need for registration under any applicable
federal or state securities laws (in each case, disregarding any
limitation on conversion of this Note); (b) on each day during the period
beginning one month prior to the applicable date of determination and
ending on and including the applicable date of determination (the "Equity
Conditions Measuring Period"), the Common Stock is listed or designated
for quotation (as applicable) on any of NYSE, NASDAQ, OTCQX, or OTCQB
(each, an "Eligible Market") and shall not have been suspended from
trading on any such Eligible Market (other than suspensions of not more
than two (2) Trading Days and occurring prior to the applicable date of
determination due to business announcements by Borrower); (c) on each day
during the Equity Conditions Measuring Period, Borrower shall have
delivered all shares of Common Stock issuable upon conversion of this
Note on a timely basis as set forth in Section 9 hereof and all other
shares of capital stock required to be delivered by Borrower on a timely
basis as set forth in the other Transaction Documents; (d) any shares of
Common Stock to be issued in connection with the event requiring
determination may be issued in full without violating Section 12 hereof
(Lender acknowledges that Borrower shall be entitled to assume that this
condition has been met for all purposes hereunder absent written notice
from Lender); (e) any shares of Common Stock to be issued in connection
with the event requiring determination may be issued in full without
violating the rules or regulations of the Eligible Market on which the
Common Stock is then listed or designated for quotation (as applicable);
(f) on each day during the Equity Conditions Measuring Period, no public
announcement of a pending, proposed or intended Fundamental Transaction
shall have occurred which has not been abandoned, terminated or
consummated; (g) Borrower shall have no knowledge of any fact that would
reasonably be expected to cause any of the Conversion Shares to not be
freely tradable without the need for registration under any applicable
state securities laws (in each case, disregarding any limitation on
conversion of this Note); (h) on each day during the Equity Conditions
Measuring Period, Borrower otherwise shall have been in material
compliance with each, and shall not have breached any, term, provision,
covenant, representation or warranty of any Transaction Document;
(i) without limiting clause (j) above, on each day during the Equity
Conditions Measuring Period, there shall not have occurred an Event of
Default or an event that with the passage of time or giving of notice
would constitute an Event of Default; (k) on each Installment Date, the
average and median daily dollar volume of the Common Stock on its
principal market for the previous twenty (20) Trading Days shall be
greater than $5,000.00; (l) the ten (10) day average VWAP of the Common
Stock is greater than $0.10, and (m) the Common Stock shall be DWAC
Eligible as of each applicable Installment Date or other date of
determination.
A17. "Excluded Securities" means any shares of Common Stock, options, or
convertible securities issued or issuable in connection with any Approved
Stock Plan; provided that the option term, exercise price or similar
provisions of any issuances pursuant to such Approved Stock Plan are not
amended, modified or changed on or after the Purchase Price Date.
A18. "Free Trading" means that (a) the shares or certificate(s) representing
the applicable shares of Common Stock have been cleared and approved for
public resale by the compliance departments of Lender's brokerage firm
and the clearing firm servicing such brokerage, and (b) such shares are
held in the name of the clearing firm servicing Lender's brokerage firm
and have been deposited into such clearing firm's account for the benefit
of Lender.
A19. "Fundamental Default" means that Borrower either fails to pay the entire
Outstanding Balance to Lender on or before the Maturity Date or fails to
pay the Mandatory Default Amount within three (3) Trading Days of the
date Lender delivers any notice of acceleration to Borrower pursuant to
Section 4.2 of this Note.
A20. "Fundamental Default Conversion Value" means the Adjusted Outstanding
Balance multiplied by the highest Fundamental Default Ratio that occurs
during the Fundamental Default Measuring Period.
A21. "Fundamental Default Measuring Period" means a number of months equal to
the Outstanding Balance as of the date the Fundamental Default occurred
divided by the Installment Amount, with such number being rounded up to
the next whole month; provided, however, that if Borrower repays the
entire Outstanding Balance prior to the conclusion of the Fundamental
Default Measuring Period, the Fundamental Default Measuring Period shall
end on the date of repayment. For illustration purposes only, if the
Outstanding Balance were equal to $125,000.00 as of the date a
Fundamental Default occurred and if the Installment Amount were
$28,500.00, then the Fundamental Default Measuring Period would equal
five (5) months calculated as follows: $125,000.00/$28,500.00 equals
4.386, rounded up to five (5).
A22. "Fundamental Default Ratio" means a ratio that will be calculated on each
Trading Day during the Fundamental Default Measuring Period by dividing
the Closing Trade Price for the Common Stock on a given Trading Day by
the Lender Conversion Price (as adjusted pursuant to the terms hereof) in
effect for such Trading Day.
A23. "Fundamental Liquidated Damages Amount" means the greater of (a) (i) the
quotient of the Outstanding Balance on the date the Fundamental Default
occurred divided by the then-current Conversion Factor, minus (ii) the
Outstanding Balance on the date the Fundamental Default occurred, or
(b) the Fundamental Default Conversion Value.
A24. "Fundamental Transaction" means that (a) (i) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related
transactions, consolidate or merge with or into (whether or not Borrower
or any of its subsidiaries is the surviving corporation) any other person
or entity, or (ii) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, sell, lease, license,
assign, transfer, convey or otherwise dispose of all or substantially all
of its respective properties or assets to any other person or entity, or
(iii) Borrower or any of its subsidiaries shall, directly or indirectly,
in one or more related transactions, allow any other person or entity to
make a purchase, tender or exchange offer that is accepted by the holders
of more than 50% of the outstanding shares of voting stock of Borrower
(not including any shares of voting stock of Borrower held by the person
or persons making or party to, or associated or affiliated with the
persons or entities making or party to, such purchase, tender or exchange
offer), or (iv) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, consummate a stock or
share purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with any other person or entity whereby such other
person or entity acquires more than 50% of the outstanding shares of
voting stock of Borrower (not including any shares of voting stock of
Borrower held by the other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or
party to, such stock or share purchase agreement or other business
combination), or (v) Borrower or any of its subsidiaries shall, directly
or indirectly, in one or more related transactions, reorganize,
recapitalize or reclassify the Common Stock, other than an increase in
the number of authorized shares of Borrower's Common Stock, or (b) any
"person" or "group" (as these terms are used for purposes of
Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations
promulgated thereunder) is or shall become the "beneficial owner" (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50%
of the aggregate ordinary voting power represented by issued and
outstanding voting stock of Borrower.
A25. "Installment Amount" means $22,333.33 ($335,000.00 / 15), plus the sum of
any accrued and unpaid interest on all Conversion Eligible Tranches as of
the applicable Installment Date, and accrued and unpaid late charges, if
any, under this Note as of the applicable Installment Date, and any other
amounts accruing or owing to Lender under this Note as of such
Installment Date; provided, however, that, if the remaining amount owing
under all then-existing Conversion Eligible Tranches or otherwise with
respect to this Note as of the applicable Installment Date is less than
the Installment Amount set forth above, then the Installment Amount for
such Installment Date (and only such Installment Amount) shall be reduced
(and only reduced) by the amount necessary to cause such Installment
Amount to equal such outstanding amount.
A26. "Lender Conversion Share Value" means the product of the number of Lender
Conversion Shares deliverable pursuant to any Lender Conversion
multiplied by the Closing Trade Price of the Common Stock on the Delivery
Date for such Lender Conversion.
A27. "Major Default" means any Event of Default occurring under
Sections 4.1(a) (payments), 4.1(c) (delivery of Installment Conversion
Shares or True-Up Shares), 4.1(l) (Share Reserve), or 4.1(q) (breach of
certain covenants) of this Note.
A28. "Mandatory Default Amount" means the greater of (a) the Outstanding
Balance (including all Tranches, both Conversion Eligible Tranches and
Subsequent Tranches that have not yet become Conversion Eligible
Tranches) divided by the Installment Conversion Price on the date the
Mandatory Default Amount is demanded, multiplied by the VWAP on the date
the Mandatory Default Amount is demanded, or (b) the Outstanding Balance
following the application of the Default Effect.
A29. "Market Capitalization" means the product equal to (a) the average VWAP
of the Common Stock for the immediately preceding fifteen (15) Trading
Days, multiplied by (b) the aggregate number of outstanding shares of
Common Stock as reported on Borrower's most recently filed Form 10-Q or
Form 10-K.
A30. "Market Price" means the Conversion Factor multiplied by the lowest
Closing Bid Price in the twenty (20) Trading Days immediately preceding
the applicable Conversion.
A31. "Minor Default" means any Event of Default that is not a Major Default or
a Fundamental Default.
A32. "OID" means an original issue discount.
A33. "Optional Prepayment Liquidated Damages Amount" means an amount equal to
the difference between (a) the product of (i) the number of shares of
Common Stock obtained by dividing (1) the applicable Optional Prepayment
Amount by (2) the Lender Conversion Price as of the date Borrower
delivered the applicable Optional Prepayment Amount to Lender, multiplied
by (ii) the Closing Trade Price of the Common Stock on the date Borrower
delivered the applicable Optional Prepayment Amount to Lender, and
(b) the applicable Optional Prepayment Amount paid by Borrower to Lender.
For illustration purposes only, if the applicable Optional Prepayment
Amount were $50,000.00, the Lender Conversion Price as of the date the
Optional Prepayment Amount was paid to Lender was equal to $0.75 per
share of Common Stock, and the Closing Trade Price of a share of Common
Stock as of such date was equal to $1.00, then the Optional Prepayment
Liquidated Damages Amount would equal $16,666.67 computed as follows:
(a) $66,666.67 (calculated as (i) (1) $50,000.00 divided by (2) $0.75
multiplied by (ii) $1.00) minus (b) $50,000.00.
A34. "Other Agreements" means, collectively, (a) all existing and future
agreements and instruments between, among or by Borrower (or an
affiliate), on the one hand, and Lender (or an affiliate), on the other
hand, and (b) any financing agreement or a material agreement that
affects Borrower's ongoing business operations.
A35. "Outstanding Balance" means as of any date of determination, the Purchase
Price, as reduced or increased, as the case may be, pursuant to the terms
hereof for payment, Conversion, offset, or otherwise, plus the OID, the
Transaction Expense Amount, accrued but unpaid interest, collection and
enforcements costs (including attorneys' fees) incurred by Lender,
transfer, stamp, issuance and similar taxes and fees related to
Conversions, and any other fees or charges (including without limitation
Conversion Delay Late Fees) incurred under this Note.
A36. "Par Value" means the par value of the Common Stock on any relevant date
of determination. The Par Value as of the Effective Date is $0.0001.
A37. "Par Value Adjustment Amount" means an amount added to both the
Conversion Amount and the Outstanding Balance pursuant to Section 25,
calculated as follows: (a) the number of Conversion Shares deliverable
under a particular Conversion Notice (prior to any Par Value Adjustment)
multiplied by the Par Value, less (b) the Conversion Amount (prior to any
Par Value Adjustment). For illustration purposes only, if for a given
Conversion, the Conversion Amount was $20,000, the Conversion Price was
$0.0008 and the Par Value was $0.001 then the Par Value Adjustment Amount
would be $5,000.00 (25,000,000 Conversion Shares ($20,000.00/$0.0008)
multiplied by the Par Value of $0.001 ($25,000.00) minus the Conversion
Amount of $20,000.00 equals $5,000.00).
A38. "Purchase Price Date" means the date the Initial Cash Purchase Price is
delivered by Lender to Borrower.
A39. "Trading Day" means any day on which the Common Stock is traded or
tradable for any period on the Common Stock's principal market, or on the
principal securities exchange or other securities market on which the
Common Stock is then being traded.
A40. "VWAP" means the volume weighted average price of the Common stock on the
principal market for a particular Trading Day or set of Trading Days, as
the case may be, as reported by Bloomberg.
EXHIBIT A
Typenex Co-Investment, LLC
303 East Wacker Drive, Suite 1040
Chicago, Illinois 60601
Empire Global Corp. Date:
-------------
Attn: Michele Ciavarella, CEO
671 Westburne Drive
Concord, Ontario L4K 4Z1
Canada
LENDER CONVERSION NOTICE
The above-captioned Lender hereby gives notice to Empire Global Corp., a
Delaware corporation (the "Borrower"), pursuant to that certain Secured
Convertible Promissory Note made by Borrower in favor of Lender on June 17, 2015
(the "Note"), that Lender elects to convert the portion of the Note balance set
forth below into fully paid and non-assessable shares of Common Stock of
Borrower as of the date of conversion specified below. Said conversion shall be
based on the Lender Conversion Price set forth below. In the event of a conflict
between this Lender Conversion Notice and the Note, the Note shall govern, or,
in the alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Lender Conversion Notice to conform to the Note.
Capitalized terms used in this notice without definition shall have the meanings
given to them in the Note.
A. Date of Conversion:
---------------------
B. Lender Conversion #:
--------------------
C. Conversion Amount:
----------------------
D. Lender Conversion Price:
----------------
E. Lender Conversion Shares: (C divided by D)
---------------
F. Remaining Outstanding Balance of Note: *
-------------
G. Remaining Balance of Investor Notes: *
---------------
H. Outstanding Balance of Note
Net of Balance of Investor Notes: * (F minus G)
---------------
* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Lender Conversion Notice and such Transaction Documents.
The Conversion Amount converted hereunder shall be deducted from the following
Conversion Eligible Tranche(s):
Conversion Amount Tranche No.
----------------- ----------
Additionally, $ of the Conversion Amount converted hereunder shall
---------------
be deducted from the Installment Amount(s) relating to the following Installment
Date(s): .
----------------------------------------
Please transfer the Lender Conversion Shares electronically (via DWAC) to the
following account:
Broker:
----------------------------------------
Address:
----------------------------------------
----------------------------------------
DTC#:
------------------------------------------
Account #:
-------------------------------------
Account Name:
-----------------------------------
To the extent the Lender Conversion Shares are not able to be delivered to
Lender electronically via the DWAC system, deliver all such certificated shares
to Lender via reputable overnight courier after receipt of this Lender
Conversion Notice (by facsimile transmission or otherwise) to:
----------------------------------------
----------------------------------------
----------------------------------------
Sincerely,
Lender:
TYPENEX CO-INVESTMENT, LLC
By: Red Cliffs Investments, Inc., its Manager
By:
----------------------------
John M. Fife, President
EXHIBIT B
Empire Global Corp.
671 Westburne Drive
Concord, Ontario L4K 4Z1
Canada
Typenex Co-Investment, LLC Date:
--------------
Attn: John Fife
303 East Wacker Drive, Suite 1040
Chicago, Illinois 60601
INSTALLMENT NOTICE
The above-captioned Borrower hereby gives notice to Typenex Co-Investment, LLC,
a Utah limited liability company (the "Lender"), pursuant to that certain
Secured Convertible Promissory Note made by Borrower in favor of Lender on
June 17, 2015 (the "Note"), of certain Borrower elections and certifications
related to payment of the Installment Amount of $ due on ,
----------- ----------
201 (the "Installment Date"). In the event of a conflict between this
--
Installment Notice and the Note, the Note shall govern, or, in the alternative,
at the election of Lender in its sole discretion, Lender may provide a new form
of Installment Notice to conform to the Note. Capitalized terms used in this
notice without definition shall have the meanings given to them in the Note.
INSTALLMENT CONVERSION AND CERTIFICATIONS
AS OF THE INSTALLMENT DATE
A. INSTALLMENT CONVERSION
A. Installment Date: , 201
-------------- --
B. Installment Amount:
-------------------
C. Portion of Installment Amount to be Paid in Cash:
-------------------
D. Portion of Installment Amount to be Converted
into Common Stock: (B minus C)
--------------
E. Installment Conversion Price: (lower of (i) Lender Conversion
------------- Price in effect and (ii) Market
Price as of Installment Date)
F. Installment Conversion Shares: (D divided by E)
-------------
G. Remaining Outstanding Balance of Note: *
-------------
H. Remaining Balance of Investor Notes: *
-------------
I. Outstanding Balance of Note Net of
Balance of Investor Notes: (G minus H)*
-------------
* Subject to adjustments for corrections, defaults, interest and other
ajustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Installment Notice and such Transaction Documents.
B. EQUITY CONDITIONS CERTIFICATION
1. Market Capitalization:
-------------------
(Check One)
2. Borrower herby certifies that no Equity Conditions Failure exists as of
-- the Installment Date.
3. Borrower hereby gives notice that an Equity Conditions Failure has
-- occurred and requests a waiver from Lender with respect thereto. The
Equity Conditions Failure is as follows:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sincerely,
Borrower:
EMPIRE GLOBAL CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT C
Typenex Co-Investment, LLC
303 East Wacker Drive, Suite 1040
Chicago, Illinois 60601
Empire Global Corp. Date:
-------------
Attn: Michele Ciavarella, CEO
671 Westburne Drive
Concord, Ontario L4K 4Z1
Canada
TRUE-UP NOTICE
The above-captioned Lender hereby gives notice to Empire Global Corp., a
Delaware corporation (the "Borrower"), pursuant to that certain Secured
Convertible Promissory Note made by Borrower in favor of Lender on June 17, 2015
(the "Note"), of True-Up Conversion Shares related to , 201 (the
------------- --
"Installment Date"). In the event of a conflict between this True-Up Notice and
the Note, the Note shall govern, or, in the alternative, at the election of
Lender in its sole discretion, Lender may provide a new form of True-Up Notice
to conform to the Note. Capitalized terms used in this notice without definition
shall have the meanings given to them in the Note.
TRUE-UP CONVERSION SHARES AND CERTIFICATIONS
AS OF THE TRUE-UP DATE
1. TRUE-UP CONVERSION SHARES
A. Installment Date: , 201
-------------- --
B. True-Up Date: , 201
-------------- --
C. Portion of Installment Amount Converted into Common Stock:
----------------
D. True-Up Conversion Price: (lower of (i) Lender Conversion
---------------- Price in effect and (ii) Market
Price as of True-Up Date)
E. True-Up Conversion Shares: (C divided by D)
---------------
F. Installment Conversion Shares Delivered:
----------------
G. True-Up Conversion Shares to be Delivered: (only applicable
-------------- if E minus F is
greater than zero)
2. EQUITY CONDITIONS CERTIFICATION (Section to be completed by Borrower)
A. Market Capitalization:
(Check One)
B. Borrower herby certifies that no Equity Conditions Failure exists as of
-- the applicable True-Up Date.
C. Borrower hereby gives notice that an Equity Conditions Failure has
-- occurred and requests a waiver from Lender with respect thereto. The
Equity Conditions Failure is as follows:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sincerely,
Lender:
TYPENEX CO-INVESTMENT, LLC
By: Red Cliffs Investments, Inc., its Manager
By:
----------------------------
John M. Fife, President
ACKNOWLEDGED AND CERTIFIED BY:
Borrower:
EMPIRE GLOBAL CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT D
Empire Global Corp.
671 Westburne Drive
Concord, Ontario L4K 4Z1
Canada
Typenex Co-Investment, LLC Date:
--------------
Attn: John Fife
303 East Wacker Drive, Suite 1040
Chicago, Illinois 60601
NOTICE OF EXERCISE
OF BORROWER OFFSET RIGHT
The above-captioned Borrower hereby gives notice to Typenex Co-Investment, LLC,
a Utah limited liability company (the "Lender"), pursuant to that certain
Secured Convertible Promissory Note made by Borrower in favor of Lender on
June 17, 2015 (the "Note"), of Borrower's election to exercise the Borrower
Offset Right as set forth below. In the event of a conflict between this Notice
of Exercise of Borrower Offset Right and the Note, the Note shall govern.
Capitalized terms used in this notice without definition shall have the meanings
given to them in the Note.
A. Effective Date of Offset: , 201
-------------- --
B. Amount of Offset:
---------------
C. Investor Note(s) Being Offset:
---------------
* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Notice of Exercise of Borrower Offset Right and such
Transaction Documents.
Sincerely,
Borrower:
EMPIRE GLOBAL CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT E
Typenex Co-Investment, LLC
303 East Wacker Drive, Suite 1040
Chicago, Illinois 60601
Empire Global Corp. Date:
-------------
Attn: Michele Ciavarella, CEO
671 Westburne Drive
Concord, Ontario L4K 4Z1
Canada
LENDER CONVERSION NOTICE
The above-captioned Lender hereby gives notice to Empire Global Corp., a
Delaware corporation (the "Borrower"), pursuant to that certain Secured
Convertible Promissory Note made by Borrower in favor of Lender on June 17, 2015
(the "Note"), that Lender elects to convert the portion of the Note balance set
forth below into fully paid and non-assessable shares of Common Stock of
Borrower as of the date of conversion specified below. Said conversion shall be
based on the Conversion Price set forth below. In the event of a conflict
between this Conversion Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Conversion Notice to conform to the Note. Capitalized
terms used in this notice without definition shall have the meanings given to
them in the Note.
A. Date of Conversion:
---------------
B. Lender Conversion #:
--------------
C. Conversion Amount:
---------------
D. Par Value Adjustment Amount:
---------------
E. Adjusted Conversion Amount: (C plus D)
---------------
F. Lender Conversion Price: (Par Value)
---------------
G. Lender Conversion Shares: (E divided by F)
---------------
H. Remaining Outstanding Balance of Note: *
---------------
G. Remaining Balance of Investor Notes: *
---------------
H. Outstanding Balance of Note Net of
Balance of Investor Notes: (F minus G)*
-------------
* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Lender Conversion Notice and such Transaction Documents.
The Conversion Amount converted hereunder shall be deducted from the following
Conversion Eligible Tranche(s):
Conversion Amount Tranche No.
----------------- ----------
Additionally, $ of the Conversion Amount converted hereunder shall
---------------
be deducted from the Installment Amount(s) relating to the following Installment
Date(s): .
----------------------------------------
Please transfer the Lender Conversion Shares electronically (via DWAC) to the
following account:
Broker:
----------------------------------------
Address:
----------------------------------------
----------------------------------------
DTC#:
------------------------------------------
Account #:
-------------------------------------
Account Name:
-----------------------------------
To the extent the Lender Conversion Shares are not able to be delivered to
Lender electronically via the DWAC system, deliver all such certificated shares
to Lender via reputable overnight courier after receipt of this Lender
Conversion Notice (by facsimile transmission or otherwise) to:
----------------------------------------
----------------------------------------
----------------------------------------
Sincerely,
Lender:
TYPENEX CO-INVESTMENT, LLC
By: Red Cliffs Investments, Inc., its Manager
By:
----------------------------
John M. Fife, President
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.3
<SEQUENCE>4
<FILENAME>emgl150618-ex23.txt
<DESCRIPTION>FORM OF WARRANT
<TEXT>
EXHIBIT 2.3
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SUCH ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO EMPIRE
GLOBAL CORP. THAT SUCH REGISTRATION IS NOT REQUIRED.
EMPIRE GLOBAL CORP.
WARRANT #1 TO PURCHASE SHARES OF COMMON STOCK
1. Issuance. In consideration of good and valuable consideration as set forth
in the Purchase Agreement (as defined below), including without limitation
the Initial Cash Purchase Price (as defined in the Purchase Agreement),
the receipt and sufficiency of which are hereby acknowledged by EMPIRE
GLOBAL CORP., a Delaware corporation ("Company"); TYPENEX CO-INVESTMENT,
LLC, a Utah limited liability company, its successors and/or registered
assigns ("Investor"), is hereby granted the right to purchase at any time
on or after the Issue Date (as defined below) until the date which is the
last calendar day of the month in which the fifth anniversary of the Issue
Date occurs (the "Expiration Date"), a number of fully paid and
non-assessable shares (the "Warrant Shares") of Company's common stock,
par value $0.0001 per share (the "Common Stock"), equal to $57,500.00
divided by the Market Price (as defined in the Note, as of the Issue
Date), as such number may be adjusted from time to time pursuant to the
terms and conditions of this Warrant #1 to Purchase Shares of Common Stock
(this "Warrant"). This Warrant is being issued pursuant to the terms of
that certain Securities Purchase Agreement dated June 17, 2015, to which
Company and Investor are parties (as the same may be amended from time to
time, the "Purchase Agreement").
Unless otherwise indicated herein, capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Purchase Agreement.
This Warrant was issued to Investor on June 17, 2015 (the "Issue Date").
For the avoidance of doubt, the Initial Cash Purchase Price constitutes
payment in full for this Warrant.
2. Exercise of Warrant.
2.1. General.
(a) This Warrant is exercisable in whole or in part at any time and from
time to time commencing on the Issue Date and ending on the
Expiration Date. Such exercise shall be effectuated by submitting to
Company (either by delivery to Company or by email or facsimile
transmission) a completed and duly executed Notice of Exercise
substantially in the form attached to this Warrant as Exhibit A (the
"Notice of Exercise"). The date a Notice of Exercise is either faxed,
emailed or delivered to Company shall be the "Exercise Date,"
provided that, if such exercise represents the full exercise of the
outstanding balance of this Warrant, Investor shall tender this
Warrant to Company within five (5) Trading Days thereafter, but only
if the Delivery Shares (as defined below) to be delivered pursuant to
the Notice of Exercise have been delivered to Investor as of such
date. The Notice of Exercise shall be executed by Investor and shall
indicate (i) the number of Delivery Shares to be issued pursuant to
such exercise, and (ii) if applicable (as provided below), whether
the exercise is a cashless exercise.
<PAGE>
For purposes of this Warrant, the term "Trading Day" means any day
during which the principal market on which the Common Stock is traded
(the "Principal Market") shall be open for business.
(b) Notwithstanding any other provision contained herein or in any other
Transaction Document to the contrary, at any time prior to the
Expiration Date, Investor may elect a "cashless" exercise of this
Warrant for any Warrant Shares whereby Investor shall be entitled to
receive a number of shares of Common Stock equal to (i) the excess of
the Current Market Value (as defined below) over the aggregate
Exercise Price of the Exercise Shares (as defined below), divided by
(ii) the Adjusted Price (as defined below) of the Common Stock.
For the purposes of this Warrant, the following terms shall have the following
meanings:
"Adjusted Price" shall mean the lower of (i) the Lender Conversion Price (as
defined in the Note), as such Lender Conversion Price may be adjusted from time
to time pursuant to the terms of the Note (solely for the purpose of determining
the then-current Lender Conversion Price under this definition of "Adjusted
Price," each cashless exercise of this Warrant shall be deemed a conversion
under the Note), and (ii) the Market Price (as defined in the Note), without
regard to whether the Note remains outstanding or has been fully repaid,
cancelled or otherwise retired, on any relevant Exercise Date.
"Current Market Value" shall mean an amount equal to the Trade Price (as defined
below) of the Common Stock, multiplied by the number of Exercise Shares
specified in the applicable Notice of Exercise.
"Closing Price" shall mean the 4:00 P.M. last sale price of the Common Stock on
the Principal Market on the relevant Trading Day(s), as reported by
Bloomberg L.P. (or if that service is not then reporting the relevant
information regarding the Common Stock, a comparable reporting service of
national reputation selected by Investor and reasonably acceptable to Company)
("Bloomberg") for the relevant date.
"Delivery Shares" means those shares of Common Stock issuable and deliverable
upon the exercise of this Warrant.
"Exercise Price" shall mean $1.00 per share of Common Stock, as the same may be
adjusted from time to time pursuant to the terms and conditions of this Warrant.
"Exercise Shares" shall mean those Warrant Shares subject to an exercise of this
Warrant by Investor. By way of illustration only and without limiting the
foregoing, if (i) this Warrant is initially exercisable for 4,180,000 Warrant
Shares and Investor has not previously exercised this Warrant, and (ii) Investor
were to make a cashless exercise with respect to 5,000 Warrant Shares pursuant
to which 6,000 Delivery Shares would be issuable to Investor, then (1) this
Warrant shall be deemed to have been exercised with respect to 5,000 Exercise
Shares, (2) this Warrant would remain exercisable for 4,175,000 Warrant Shares,
and (3) this Warrant shall be deemed to have been exercised with respect to
6,000 Delivery Shares.
"Note" shall mean that certain Secured Convertible Promissory Note issued by
Company to Investor pursuant to the Purchase Agreement, as the same may be
amended from time to time, and including any promissory note(s) that replace or
are exchanged for such referenced promissory note.
"Trade Price" shall mean the higher of: (i) the Closing Price of the Common
<PAGE>
Stock on the Issue Date; and (ii) the VWAP (as defined below) of the Common
Stock for the Trading Day that is two (2) Trading Days prior to the Exercise
Date.
"Transaction Documents" or "Transaction Document" shall have the meaning set
forth in the Purchase Agreement.
"VWAP" shall mean the volume-weighted average price of the Common Stock on the
Principal Market for a particular Trading Day or set of Trading Days, as the
case may be, as reported by Bloomberg.
(c) If the Notice of Exercise form elects a "cash" exercise (or if the
cashless exercise referred to in the immediately preceding
subsection (b) is not available in accordance with the terms hereof),
the Exercise Price per share of Common Stock for the Delivery Shares
shall be payable, at the election of Investor, in cash or by
certified or official bank check or by wire transfer in accordance
with instructions provided by Company at the request of Investor.
(d) Upon the appropriate payment to Company, if any, of the Exercise
Price for the Delivery Shares, Company shall promptly, but in no case
later than the date that is three (3) Trading Days following the date
the Exercise Price is paid to Company (or with respect to a "cashless
exercise," the date that is three (3) Trading Days following the
Exercise Date) (the "Delivery Date"), deliver or cause Company's
Transfer Agent to deliver the applicable Delivery Shares
electronically via the Deposit/Withdrawal at Custodian ("DWAC")
system to the account designated by Investor on the Notice of
Exercise. If for any reason Company is not able to so deliver the
Delivery Shares via the DWAC system, notwithstanding its best efforts
to do so, such shall constitute a breach of this Warrant (and thus an
Event of Default under the Note), and Company shall instead, on or
before the applicable date set forth above in this subsection, issue
and deliver to Investor or its broker (as designated in the Notice of
Exercise), via reputable overnight courier, a certificate, registered
in the name of Investor or its designee, representing the applicable
number of Delivery Shares. For the avoidance of doubt, Company has
not met its obligation to deliver Delivery Shares within the required
timeframe set forth above unless Investor or its broker, as
applicable, has actually received the Delivery Shares (whether
electronically or in certificated form) no later than the close of
business on the latest possible delivery date pursuant to the terms
set forth above.
(e) If Delivery Shares are delivered later than as required under
subsection (d) immediately above, Company agrees to pay, in addition
to all other remedies available to Investor in the Transaction
Documents, a late charge equal to the greater of (i) $500.00 and
(ii) 2% of the product of (1) the sum of the number of shares of
Common Stock not issued to Investor on a timely basis and to which
Investor is entitled multiplied by (2) the closing bid price of the
Common Stock on the Trading Day immediately preceding the last
possible date which Company could have issued such shares of Common
Stock to Investor without violating this Warrant, per Trading Day
until such Delivery Shares are delivered (the "Late Fees"). Company
shall pay any Late Fees incurred under this subsection in immediately
available funds upon demand; provided, however, that, at the option
of Investor (without notice to Company), such amount owed may be
added to the principal amount of the Note. Furthermore, in addition
<PAGE>
to any other remedies which may be available to Investor, in the
event that Company fails for any reason to effect delivery of the
Delivery Shares as required under subsection (d) immediately above,
Investor may revoke all or part of the relevant Warrant exercise by
delivery of a notice to such effect to Company, whereupon Company and
Investor shall each be restored to their respective positions
immediately prior to the exercise of the relevant portion of this
Warrant, except that the Late Fees described above shall be payable
through the date notice of revocation or rescission is given to
Company. Finally, as liquidated damages in the event Company fails to
deliver any Delivery Shares to Investor for a period of ninety (90)
days from the Delivery Date, Investor may elect, in its sole
discretion, to stop the accumulation of the Late Fees as of such date
and require Company to pay to Investor a cash amount equal to (i) the
total amount of all Late Fees that have accumulated prior to the date
of Investor's election, plus (ii) the product of the number of
Delivery Shares deliverable to Investor on such date if it were to
exercise this Warrant with respect to the remaining number of
Exercise Shares as of such date multiplied by the Closing Price of
the Common Stock on the Delivery Date (the "Cash Settlement Amount").
At such time that Investor makes an election to require Company to
pay to it the Cash Settlement Amount, such obligation of Company
shall be a valid and binding obligation of Company and shall for all
purposes be deemed to be a debt obligation of Company owed to
Investor as of the date it makes such election. Upon Company's
payment of the Cash Settlement Amount to Investor, this Warrant shall
be deemed to have been satisfied and Investor shall return the
original Warrant to Company for cancellation. In addition, and for
the avoidance of doubt, even if Company could not deliver the number
of Delivery Shares deliverable to Investor if it were to exercise
this Warrant with respect to the remaining number of Exercise Shares
on the date of repayment due to the provisions of Section 2.2, the
provisions of Section 2.2 will not apply with respect to Company's
payment of the Cash Settlement Amount.
(f) Investor shall be deemed to be the holder of the Delivery Shares
issuable to it in accordance with the provisions of this Section 2.1
on the Exercise Date.
2.2. Ownership Limitation. Notwithstanding anything to the contrary contained
in this Warrant or the other Transaction Documents, if at any time
Investor shall or would be issued shares of Common Stock under any of the
Transaction Documents, but such issuance would cause Investor (together
with its affiliates) to own a number of shares exceeding 4.99% of the
number of shares of Common Stock outstanding on such date (the "Maximum
Percentage"), Company must not issue to Investor shares of Common Stock
which would exceed the Maximum Percentage. The shares of Common Stock
issuable to Investor that would cause the Maximum Percentage to be
exceeded are referred to herein as the "Ownership Limitation Shares".
Company will reserve the Ownership Limitation Shares for the exclusive
benefit of Investor. From time to time, Investor may notify Company in
writing of the number of the Ownership Limitation Shares that may be
issued to Investor without causing Investor to exceed the Maximum
Percentage. Upon receipt of such notice, Company shall be unconditionally
obligated to immediately issue such designated shares to Investor, with a
corresponding reduction in the number of the Ownership Limitation Shares.
Notwithstanding the forgoing, the term "4.99%" above shall be replaced
with "9.99%" at such time as the Market Capitalization of the Common Stock
is less than $10,000,000.00. Notwithstanding any other provision contained
<PAGE>
herein, if the term "4.99%" is replaced with "9.99%" pursuant to the
preceding sentence, such change to "9.99%" shall be permanent. For
purposes of this Warrant, the term "Market Capitalization of the Common
Stock" shall mean the product equal to (A) the average VWAP of the Common
Stock for the immediately preceding fifteen (15) Trading Days, multiplied
by (B) the aggregate number of outstanding shares of Common Stock as
reported on Company's most recently filed Form 10-Q or Form 10-K. By
written notice to Company, Investor may increase, decrease or waive the
Maximum Percentage as to itself but any such waiver will not be effective
until the 61st day after delivery thereof. The foregoing 61-day notice
requirement is enforceable, unconditional and non-waivable and shall apply
to all affiliates and assigns of Investor.
3. Mutilation or Loss of Warrant. Upon receipt by Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation)
upon surrender and cancellation of this Warrant, Company will execute and
deliver to Investor a new Warrant of like tenor and date and any such
lost, stolen, destroyed or mutilated Warrant shall thereupon become void.
4. Rights of Investor. Investor shall not, by virtue of this Warrant alone,
be entitled to any rights of a stockholder in Company, either at law or in
equity, and the rights of Investor with respect to or arising under this
Warrant are limited to those expressed in this Warrant and are not
enforceable against Company except to the extent set forth herein.
5. Protection Against Dilution and Other Adjustments.
5.1. Capital Adjustments. If Company shall at any time prior to the expiration
of this Warrant subdivide the Common Stock, by split up or stock split, or
otherwise, or combine its Common Stock, or issue additional shares of its
Common Stock as a dividend, the number of Warrant Shares issuable upon the
exercise of this Warrant shall forthwith be automatically increased
proportionately in the case of a subdivision, split or stock dividend, or
proportionately decreased in the case of a combination. Appropriate
adjustments shall also be made to the Exercise Price, Lender Conversion
Price (in the event of a cashless exercise), and other applicable amounts,
but the aggregate purchase price payable for the total number of Warrant
Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 5.1 shall become effective automatically
at the close of business on the date the subdivision or combination
becomes effective, or as of the record date of such dividend, or in the
event that no record date is fixed, upon the making of such dividend.
5.2. Reclassification, Reorganization and Consolidation. In case of any
reclassification, capital reorganization, or change in the capital stock
of Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 5.1 above), then Company shall make
appropriate provision so that Investor shall have the right at any time
prior to the expiration of this Warrant to purchase, at a total price
equal to that payable upon the exercise of this Warrant, the kind and
amount of shares of stock and other securities and property receivable in
connection with such reclassification, reorganization, or change by a
holder of the same number of shares of Common Stock as were purchasable by
Investor immediately prior to such reclassification, reorganization, or
change. In any such case appropriate provisions shall be made with respect
to the rights and interest of Investor so that the provisions hereof shall
thereafter be applicable with respect to any shares of stock or other
securities and property deliverable upon exercise hereof, and appropriate
<PAGE>
adjustments shall be made to the purchase price per Warrant Share payable
hereunder, provided the aggregate purchase price shall remain the same.
5.3. Subsequent Equity Sales. If Company or any subsidiary thereof, as
applicable, at any time and from time to time while this Warrant is
outstanding, shall sell or grant any option to purchase, or sell or grant
any right to reprice, or otherwise dispose of, sell or issue (or announce
any offer, sale, grant or any option to purchase or other disposition of)
any Common Stock (including any Common Stock issued under the Note,
whether upon any type of conversion or any Deemed Issuance (as defined in
the Note)), preferred shares convertible into Common Stock, or debt,
warrants, options or other instruments or securities which are convertible
into or exercisable for shares of Common Stock (together herein referred
to as "Equity Securities"), at an effective price per share less than the
Exercise Price (such lower price, the "Base Share Price" and such issuance
collectively, a "Dilutive Issuance") (if the holder of the Common Stock or
Equity Securities so issued shall at any time, whether by operation of
purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options, or
rights per share which are issued in connection with such issuance, be
entitled to receive shares of Common Stock at an effective price per share
that is less than the Exercise Price, such issuance shall be deemed to
have occurred for less than the Exercise Price on such date of the
Dilutive Issuance), then (a) the Exercise Price shall be reduced and only
reduced to equal the Base Share Price, and (b) the number of Warrant
Shares issuable upon the exercise of this Warrant shall be increased to an
amount equal to the number of Warrant Shares Investor could purchase
hereunder for an aggregate Exercise Price, as reduced pursuant to
subsection (a) above, equal to the aggregate Exercise Price payable
immediately prior to such reduction in Exercise Price, provided that the
increase in the number of Exercise Shares issuable under to this Warrant
made pursuant to this Section 5.3 shall not at any time exceed a number
equal to three (3) times the number of Exercise Shares issuable under this
Warrant as of the Issue Date (for the avoidance of doubt, the foregoing
cap on the number of Exercise Shares issuable hereunder shall only apply
to adjustments made pursuant to this Section 5.3 and shall not apply to
adjustments made pursuant to Sections 5.1, 5.2 or any other section of
this Warrant). Such adjustments shall be made whenever such Common Stock
or Equity Securities are issued. Company shall notify Investor, in
writing, no later than the Trading Day following the issuance of any
Common Stock or Equity Securities subject to this Section 5.3, indicating
therein the applicable issuance price, or applicable reset price, exchange
price, conversion price, or other pricing terms (such notice, the
"Dilutive Issuance Notice"). For purposes of clarification, whether or not
Company provides a Dilutive Issuance Notice pursuant to this Section 5.3,
upon the occurrence of any Dilutive Issuance, after the date of such
Dilutive Issuance, Investor is entitled to receive the increased number of
Warrant Shares provided for in subsection (b) above at an Exercise Price
equal to the Base Share Price regardless of whether Investor accurately
refers to the Base Share Price in the Notice of Exercise. Additionally,
following the occurrence of a Dilutive Issuance, all references in this
Warrant to "Warrant Shares" shall be a reference to the Warrant Shares as
increased pursuant to subsection (b) above, and all references in this
Warrant to "Exercise Price" shall be a reference to the Exercise Price as
reduced pursuant to subsection (a) above, as the same may occur from time
to time hereunder.
5.4. Notice of Adjustment. Without limiting any other provision contained
herein, when any adjustment is required to be made in the number or kind
of shares purchasable upon exercise of this Warrant, or in the Exercise
Price, pursuant to the terms hereof, Company shall promptly notify
<PAGE>
Investor of such event and of the number of Warrant Shares or other
securities or property thereafter purchasable upon exercise of this
Warrant.
5.5. Exceptions to Adjustment. Notwithstanding the provisions of Sections 5.3
and 5.4, no adjustment to the Exercise Price shall be effected as a result
of an Excepted Issuance. "Excepted Issuances" shall mean, collectively,
(a) Company's issuance of securities in connection with strategic license
agreements and other partnering arrangements so long as any such issuances
are not for the purpose of raising capital and in which holders of such
securities or debt are not at any time granted registration rights, and
(b) Company's issuance of Common Stock or the issuance or grant of options
to purchase Common Stock to employees, directors, officers and
consultants, authorized by Company's board of directors pursuant to plans
or agreements which are authorized, constituted or in effect as of the
Issue Date.
6. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock issuable on the exercise of
this Warrant, Company at its expense will promptly cause its Chief
Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by
Company for any additional shares of Common Stock issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the Exercise Price and
the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment
and as adjusted or readjusted as provided in this Warrant. Company will
forthwith mail a copy of each such certificate to Investor and any Warrant
Agent (as defined below) appointed pursuant to Section 8 hereof. Nothing
in this Section 6 shall be deemed to limit any other provision contained
herein.
7. Transfer to Comply with the Securities Act. This Warrant, and the Warrant
Shares, have not been registered under the 1933 Act. None of the Warrant
Shares may be sold, transferred, pledged or hypothecated without (a) an
effective registration statement under the 1933 Act relating to such
security or (b) an opinion of counsel reasonably satisfactory to Company
that registration is not required under the 1933 Act; provided, however,
that the foregoing restrictions on transfer shall not apply to the
transfer of any security to an affiliate of Investor. Until such time as
registration has occurred under the 1933 Act, each certificate for this
Warrant and any Warrant Shares shall contain a legend, in form and
substance satisfactory to counsel for Company, setting forth the
restrictions on transfer contained in this Section 7. Any such transfer
shall be accompanied by a transferor assignment substantially in the form
attached to this Warrant as Exhibit B (the "Transferor Assignment"),
executed by the transferor and the transferee and submitted to Company.
Upon receipt of the duly executed Transferor Assignment, Company shall
register the transferee thereon as the new holder on the books and records
of Company and such transferee shall be deemed a "registered holder" or
"registered assign" for all purposes hereunder, and shall have all the
rights of Investor.
8. Warrant Agent. Company may, by written notice to Investor, appoint an
agent (a "Warrant Agent") for the purpose of issuing shares of Common
Stock on the exercise of this Warrant pursuant hereto, exchanging this
<PAGE>
Warrant pursuant hereto, and replacing this Warrant pursuant hereto, or
any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such
Warrant Agent.
9. Transfer on Company's Books. Until this Warrant is transferred on the
books of Company, Company may treat Investor as the absolute owner hereof
for all purposes, notwithstanding any notice to the contrary.
10. Notices. Any notice required or permitted hereunder shall be given in the
manner provided in the subsection titled "Notices" in the Purchase
Agreement, the terms of which are incorporated herein by reference.
11. Supplements and Amendments; Whole Agreement. This Warrant may be amended
or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant, together with the Purchase Agreement and all the
other Transaction Documents, taken together, contain the full
understanding of the parties hereto with respect to the subject matter
hereof and thereof and there are no representations, warranties,
agreements or understandings with respect to the subject matter hereof
and thereof other than as expressly contained herein and therein.
12. Purchase Agreement; Arbitration of Disputes; Calculation Disputes. This
Warrant is subject to the terms, conditions and general provisions of the
Purchase Agreement and the other Transaction Documents, including without
limitation the Arbitration Provisions set forth as an exhibit to the
Purchase Agreement. In addition, notwithstanding the Arbitration
Provisions, in the case of a dispute as to any Calculation, such dispute
will be resolved in the manner set forth in the Purchase Agreement.
13. Governing Law. This Warrant shall be governed by and interpreted in
accordance with the laws of the State of Utah, without giving effect to
the principles thereof regarding the conflict of laws.
14. Waiver of Jury Trial. COMPANY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY
HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR IN ANY WAY RELATED TO THIS WARRANT OR THE RELATIONSHIPS OF THE PARTIES
HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO
DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE,
LAW, RULE OR REGULATION. FURTHER, COMPANY ACKNOWLEDGES THAT IT IS
KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY JURY.
15. Remedies. The remedies at law of Investor under this Warrant in the event
of any default or threatened default by Company in the performance of or
compliance with any of the terms of this Warrant are not and will not be
adequate and, without limiting any other remedies available to Investor in
the Transaction Documents, at law or equity, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for
the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
16. Counterparts. This Warrant may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and
the same instrument. Signatures delivered via facsimile or email shall be
considered original signatures for all purposes hereof.
17. Attorneys' Fees. In the event of any arbitration, litigation or dispute
arising from this Warrant, the parties agree that the party who is awarded
the most money shall be deemed the prevailing party for all purposes and
<PAGE>
shall therefore be entitled to an additional award of the full amount of
the attorneys' fees and expenses paid by said prevailing party in
connection with arbitration or litigation without reduction or
apportionment based upon the individual claims or defenses giving rise to
the fees and expenses. Nothing herein shall restrict or impair an
arbitrator's or a court's power to award fees and expenses for frivolous
or bad faith pleading.
18. Severability. Whenever possible, each provision of this Warrant shall be
interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be invalid or
unenforceable in any jurisdiction, such provision shall be modified to
achieve the objective of the parties to the fullest extent permitted and
such invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Warrant or the validity or
enforceability of this Warrant in any other jurisdiction.
19. Time is of the Essence. Time is expressly made of the essence with respect
to each and every provision of this Warrant.
20. Descriptive Headings. Descriptive headings of the sections of this Warrant
are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, Company has caused this Warrant to be duly executed by an
officer thereunto duly authorized as of the Issue Date.
COMPANY:
EMPIRE GLOBAL CORP.
By: /s/ Michele Ciavarella
------------------------------------
Printed Name: Michele Ciavarella, B.Sc.
Title: Chairman and CEO
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE OF WARRANT
TO: EMPIRE GLOBAL CORP.
ATTN:
-----------------------
VIA FAX TO: ( ) EMAIL:
------------ -------------------------------
The undersigned hereby irrevocably elects to exercise the right, represented
by the Warrant #1 to Purchase Shares of Common Stock dated as of June 17,
2015 (the "Warrant"), to purchase shares of the common stock, $0.0001 par
value ("Common Stock"), of EMPIRE GLOBAL CORP., and tenders herewith payment
in accordance with Section 2 of the Warrant, as follows:
CASH: $ = (Exercise Price x Delivery Shares)
--- ----------------------------
Payment is being made by:
---
enclosed check
------
wire transfer
------
other
------
CASHLESS EXERCISE:
Net number of Delivery Shares to be issued to Investor: *
---------
* based on: Current Market Value - (Exercise Price x Exercise Shares)
---------------------------------------------------------
Adjusted Price
Where:
Trade Price ["TP"] = $
---------------
Exercise Shares =
---------------
Current Market Value [TP x Exercise Shares] = $
---------------
Exercise Price = $
---------------
Adjusted Price = $
---------------
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Warrant.
It is the intention of Investor to comply with the provisions of Section 2.2 of
the Warrant regarding certain limits on Investor's right to receive shares
thereunder. Investor believes this exercise complies with the provisions of such
Section 2.2. Nonetheless, to the extent that, pursuant to the exercise effected
hereby, Investor would receive more shares of Common Stock than permitted under
Section 2.2, Company shall not be obligated and shall not issue to Investor such
excess shares until such time, if ever, that Investor could receive such excess
shares without violating, and in full compliance with, Section 2.2 of the
Warrant.
As contemplated by the Warrant, this Notice of Exercise is being sent by email
or by facsimile to the fax number and officer indicated above.
If this Notice of Exercise represents the full exercise of the outstanding
balance of the Warrant, Investor will surrender (or cause to be surrendered)
the Warrant to Company at the address indicated above by express courier within
five (5) Trading Days after the Warrant Shares to be delivered pursuant to this
Notice of Exercise have been delivered to Investor.
To the extent the Delivery Shares are not able to be delivered to Investor via
the DWAC system, please deliver certificates representing the Delivery Shares to
Investor via reputable overnight courier after receipt of this Notice of
Exercise (by facsimile transmission or otherwise) to:
--------------------------------
--------------------------------
--------------------------------
Dated:
-------------------
---------------------------
[Name of Investor]
By:
------------------------
EXHIBIT B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of the Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
the person(s) named below under the heading "Transferees" the right represented
by the Warrant #1 to Purchase Shares of Common Stock dated as of June 17, 2015
(the "Warrant") to purchase the percentage and number of shares of common stock,
$0.0001 par value ("Common Stock"), of EMPIRE GLOBAL CORP. specified under the
headings "Percentage Transferred" and "Number Transferred," respectively,
opposite the name(s) of such person(s), and appoints each such person
attorney-in-fact to transfer the undersigned's respective right on the books of
EMPIRE GLOBAL CORP. with full power of substitution.
Transferees Percentage Transferred Number Transferred
----------------- ---------------------- ------------------
Dated: ,
----------- ------
-------------------------------
[Transferor Name must conform to the name of Investor as specified on the face
of the Warrant]
By:
-----------------------------
Name:
---------------------------
Signed in the presence of:
---------------------------
(Name)
ACCEPTED AND AGREED:
---------------------------
[TRANSFEREE]
By:
------------------------
Name:
----------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.4
<SEQUENCE>5
<FILENAME>emgl150618-ex24.txt
<DESCRIPTION>FORM OF INVESTOR NOT
<TEXT>
EXHIBIT 2.4
THIS NOTE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE ALIENATED OR ENCUMBERED WITHOUT THE PRIOR WRITTEN CONSENT OF INVESTOR.
State of Utah
$100,000.00 June 17, 2015
INVESTOR NOTE #1
FOR VALUE RECEIVED, Typenex Co-Investment, LLC, a Utah limited liability company
("Investor"), hereby promises to pay to Empire Global Corp., a Delaware
corporation ("Company", and together with Investor, the "Parties"), the
principal sum of $100,000.00 together with all accrued and unpaid interest
thereon, fees incurred or other amounts owing hereunder, all as set forth below
in this Investor Note #1 (this "Note"). This Note is issued pursuant to that
certain Securities Purchase Agreement of even date herewith, entered into by and
between Investor and Company (as the same may be amended from time to time, the
"Purchase Agreement"), pursuant to which Company issued to Investor that certain
Secured Convertible Promissory Note in the principal amount of $335,000.00 (as
the same may be amended from time to time, the "Company Note") convertible into
shares of Company's Common Stock. All capitalized terms used but not otherwise
defined herein shall have the meanings ascribed thereto in the Purchase
Agreement.
Principal and Interest. Interest shall accrue on the unpaid principal balance
and any unpaid late fees or other fees under this Note at a rate of eight
percent (8%) per annum until the full amount of the principal and fees has been
paid. Interest shall be computed on the basis of a 365-day year for the actual
number of days elapsed. Notwithstanding any provision to the contrary herein, in
no event shall the applicable interest rate at any time exceed the maximum
interest rate allowed under applicable law, as provided in Section 12 below. The
entire unpaid principal balance and all accrued and unpaid interest, if any,
under this Note, shall be due and payable on the date that is twenty (20) months
from the date hereof (the "Investor Note Maturity Date"); provided, however,
that Investor may elect, in its sole discretion, to extend the Investor Note
Maturity Date for up to thirty (30) days by delivering written notice of such
election to Company at any time prior to the Investor Note Maturity Date.
Payment. Unless prepaid, all principal and accrued interest under this Note is
payable in one lump sum on the Investor Note Maturity Date. All payments of
interest and principal shall be (i) in lawful money of the United States of
America, and (ii) in the form of immediately available funds. All payments shall
be applied first to costs of collection, if any, then to accrued and unpaid
interest, and thereafter to principal. Payment of principal and interest
hereunder shall be delivered to Company at the address furnished to Investor for
that purpose.
Prepayment by Investor. Investor may, with Company's consent, pay, without
penalty, all or any portion of the outstanding balance along with any accrued
but unpaid interest on this Note at any time prior to the Investor Note Maturity
Date.
Security; Collateral. Investor may, in its sole discretion, designate collateral
(the "Collateral") as it deems fit, as security for Investor's obligations
hereunder, which Collateral may be, but is not required to be, real property, a
letter of credit with a financial institution determined by Investor in its sole
discretion, or pledged membership interests, provided that the net fair market
value of the Collateral (net of any outstanding monetary liens) shall not be
less than the principal balance of this Note as of the date of any such
designation. Upon Investor's designation of Collateral, each of Investor and
<PAGE>
Company shall timely execute any and all documents necessary or advisable in
order to properly grant a security interest upon the Collateral in favor of
Company.
Release. Company covenants and agrees that in the event that this Note is
secured by Collateral, Company shall timely execute any and all documents
necessary or advisable in order to release such security interest and Collateral
to Investor, or Investor's designee, upon the earlier of (i) the date this Note
is paid in full and (ii) the date that is six (6) months and three (3) days
following the date such Collateral is given as security for this Note, or such
later date as determined in the sole discretion of Investor (the "Release
Date"). For the avoidance of doubt, as of the date hereof, there is no
collateral securing this Note, and after the Release Date, as applicable, there
shall be no collateral securing this Note.
Right of Offset. Notwithstanding anything to the contrary herein or in any of
the other Transaction Documents, in the event (i) of the occurrence of any Event
of Default (as defined in the Company Note) under the Company Note or any other
note issued by Company in connection with the Purchase Agreement, (ii) Investor
applies a Default Effect (as defined in the Company Note) under the Company
Note, (iii) the Outstanding Balance is automatically increased to the Mandatory
Default Amount under the Company Note, (iv) the Company Note is accelerated for
any reason, or (v) of a breach of any material term, condition, representation,
warranty, covenant or obligation of Company under any Transaction Document;
Investor shall be entitled to deduct and offset any amount owing by Company
under the Company Note from any amount owed by Investor under this Note (the
"Investor Offset Right"), provided that if any of the foregoing events occur and
Investor has not yet exercised the Investor Offset Right, the Investor Offset
Right shall be automatically exercised on the date that is thirty (30) days
prior to the Investor Note Maturity Date (an "Automatic Offset"). Other than
with respect to an Automatic Offset, Investor may only elect to exercise the
Investor Offset Right by delivering to Company an offset notice in a form
substantially similar to Exhibit D to the Company Note or another form of
Investor's choosing. In the event that Investor's exercise of the Investor
Offset Right under this Section 6 results in the full satisfaction of
Investor's obligations under this Note, then Company shall return this Note to
Investor for cancellation or, in the event this Note has been lost, stolen or
destroyed, Company shall provide Investor with a lost note affidavit in a form
reasonably acceptable to Investor.
Default. If any of the events specified below shall occur (each, an "Investor
Note Default") Company may declare the unpaid principal balance under this Note,
together with all accrued and unpaid interest thereon, fees incurred or other
amounts owing hereunder immediately due and payable, by notice in writing to
Investor. If any default, other than a Payment Default (as defined below), is
curable, then the default may be cured (and no Investor Note Default will have
occurred) if Investor, after receiving written notice from Company demanding
cure of such default, either (i) cures the default within fifteen (15) days of
the receipt of such notice, or (ii) if the cure requires more than fifteen (15)
days, immediately initiates steps that Company deems in Company's reasonable
discretion to be sufficient to cure the default and thereafter diligently
continues and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical. Each of the following events shall
constitute an Investor Note Default:
Failure to Pay. Investor's failure to make any payment when due and payable
under this Note (a "Payment Default");
Breaches of Covenants. Investor's failure to observe or perform any other
covenant, obligation, condition or agreement contained in this Note;
<PAGE>
Representations and Warranties. If any representation, warranty, certificate, or
other statement (financial or otherwise) made or furnished by or on behalf of
Investor to Company in writing in connection with this Note or any of the other
Transaction Documents, or as an inducement to Company to enter into the Purchase
Agreement, shall be false or misleading in any material respect when made or
furnished; and
Involuntary Bankruptcy. If any involuntary petition is filed under any
bankruptcy or similar law or rule against Investor, and such petition is not
dismissed within sixty (60) days, or a receiver, trustee, liquidator, assignee,
custodian, sequestrator or other similar official is appointed to take
possession of any of the assets or properties of Investor.
Binding Effect; Assignment. This Note shall be binding on the Parties and their
respective heirs, successors, and assigns; provided, however, that neither Party
shall assign any of its rights hereunder without the prior written consent of
the other Party, except that Investor may assign this Note to any of its
Affiliates without the prior written consent of Company and, furthermore,
Company agrees that it shall not unreasonably withhold, condition or delay its
consent to any other assignment of this Note by Investor.
Governing Law. This Note shall be governed by and interpreted in accordance with
the laws of the State of Utah for contracts to be wholly performed in such state
and without giving effect to the principles thereof regarding the conflict of
laws.
Purchase Agreement; Arbitration of Disputes. By acceptance of this Note, each
Party agrees to be bound by the applicable terms, conditions and general
provisions of the Purchase Agreement and the other Transaction Documents,
including without limitation the Arbitration Provisions attached as an exhibit
to the Purchase Agreement.
Customer Identification-USA Patriot Act Notice. Company hereby notifies Investor
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56, signed into law October 26, 2001) (the "Act"), and Company's policies
and practices, Company is required to obtain, verify and record certain
information and documentation that identifies Investor, which information
includes the name and address of Investor and such other information that will
allow Company to identify Investor in accordance with the Act.
Lawful Interest. It being the intention of Company and Investor to comply with
all applicable laws with regard to the interest charged hereunder, it is agreed
that, notwithstanding any provision to the contrary in this Note or any of the
other Transaction Documents, no such provision, including without limitation any
provision of this Note providing for the payment of interest or other charges,
shall require the payment or permit the collection of any amount in excess of
the maximum amount of interest permitted by law to be charged for the use or
detention, or the forbearance in the collection, of all or any portion of the
indebtedness evidenced by this Note or by any extension or renewal hereof
("Excess Interest"). If any Excess Interest is provided for, or is adjudicated
to be provided for, in this Note, then in such event:
- the provisions of this Section 12 shall govern and control;
- Investor shall not be obligated to pay any Excess Interest;
- any Excess Interest that Company may have received hereunder shall, at the
option of Company, be (i) applied as a credit against the principal balance
due under this Note or the accrued and unpaid interest thereon not to exceed
the maximum amount permitted by law, or both, (ii) refunded to Investor, or
(iii) any combination of the foregoing;
<PAGE>
- the applicable interest rate or rates shall be automatically subject to
reduction to the maximum lawful rate allowed to be contracted for in writing
under the applicable governing usury laws, and this Note and the Transaction
Documents shall be deemed to have been, and shall be, reformed and modified
to reflect such reduction in such interest rate or rates; and
- Investor shall not have any action or remedy against Company for any damages
whatsoever or any defense to enforcement of this Note or arising out of the
payment or collection of any Excess Interest.
Pronouns. Regardless of their form, all words used in this Note shall be deemed
singular or plural and shall have the gender as required by the text.
Headings. The various headings used in this Note as headings for sections or
otherwise are for convenience and reference only and shall not be used in
interpreting the text of the section in which they appear and shall not limit or
otherwise affect the meanings thereof.
Time is of Essence. Time is of the essence with this Note.
Severability. If any part of this Note is construed to be in violation of any
law, such part shall be modified to achieve the objective of the Parties to the
fullest extent permitted by law and the balance of this Note shall remain in
full force and effect.
Attorneys' Fees. If any arbitration or action at law or in equity is necessary
to enforce this Note or to collect payment under this Note, Company shall be
entitled to recover reasonable attorneys' fees directly related to such
enforcement or collection actions.
Amendments and Waivers; Remedies. No failure or delay on the part of either
Party hereto in exercising any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to either
Party hereto at law, in equity or otherwise. Any amendment, supplement or
modification of or to any provision of this Note, any waiver of any provision of
this Note, and any consent to any departure by either Party from the terms of
any provision of this Note, shall be effective (i) only if it is made or given
in writing and signed by Investor and Company and (ii) only in the specific
instance and for the specific purpose for which made or given.
Notices. Unless otherwise provided for herein, all notices, requests, demands,
claims and other communications hereunder shall be given in accordance with the
subsection of the Purchase Agreement titled "Notices." Either Party may change
the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by providing notice thereof in the manner set
forth in the Purchase Agreement.
Final Note. This Note, together with the other Transaction Documents, contains
the complete understanding and agreement of Investor and Company and supersedes
all prior representations, warranties, agreements, arrangements, understandings,
and negotiations of Investor and Company with respect to the subject matter of
the Transaction Documents. THIS NOTE, TOGETHER WITH THE OTHER TRANSACTION
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
[ SINGNATURE PAGE TO FOLLOW ]
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Note as of the date set forth
above.
INVESTOR:
Typenex Co-Investment, LLC
Typenex Co-Investment, LLC
By: Red Cliffs Investments, Inc., its Manager
By:
---------------------------------
John M. Fife, President
ACKNOWLEDGED, ACCEPTED AND AGREED:
COMPANY:
Empire Global Corp.
By:
---------------------------------
Name: Michele Ciavarella, B.Sc.
Title: Chairman and CEO
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.5
<SEQUENCE>6
<FILENAME>emgl150618-ex25.txt
<DESCRIPTION>SECURITY AGREEMENT
<TEXT>
Exhibit 2.5
Security Agreement
This Security Agreement (this "Agreement"), dated as of June 17, 2015, is
executed by Empire Global Corp., a Delaware corporation ("Debtor"), in favor of
Typenex Co-Investment, LLC, a Utah limited liability company ("Secured Party").
A. Debtor has issued to Secured Party a certain Secured Convertible
Promissory Note of even date herewith, as may be amended from time to
time, in the original face amount of $335,000.00 (the "Note").
B. In order to induce Secured Party to extend the credit evidenced by the
Note, Debtor has agreed to enter into this Agreement and to grant Secured
Party a security interest in the Collateral (as defined below).
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:
Definitions and Interpretation. When used in this Agreement, the following terms
have the following respective meanings:
"Collateral" has the meaning given to that term in Section 2 hereof.
"Lien" shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such
property or the income therefrom, including, without limitation, the interest of
a vendor or lessor under a conditional sale agreement, capital lease or other
title retention agreement, or any agreement to provide any of the foregoing, and
the filing of any financing statement or similar instrument under the UCC or
comparable law of any jurisdiction.
"Obligations" means (a) all loans, advances, future advances, debts, liabilities
and obligations, howsoever arising, owed by Debtor to Secured Party or any
affiliate of Secured Party of every kind and description, now existing or
hereafter arising, whether created by the Note, this Agreement, that certain
Securities Purchase Agreement of even date herewith, entered into by and between
Debtor and Secured Party (the "Purchase Agreement"), any other Transaction
Documents (as defined in the Purchase Agreement), any modification or amendment
to any of the foregoing, guaranty of payment or other contract or by a
quasi-contract, tort, statute or other operation of law, whether incurred or
owed directly to Secured Party or as an affiliate of Secured Party or acquired
by Secured Party or an affiliate of Secured Party by purchase, pledge or
otherwise, (b) all costs and expenses, including attorneys' fees, incurred by
Secured Party or any affiliate of Secured Party in connection with the Note or
in connection with the collection or enforcement of any portion of the
indebtedness, liabilities or obligations described in the foregoing clause (a),
(c) the payment of all other sums, with interest thereon, advanced in accordance
herewith to protect the security of this Agreement, and (d) the performance of
the covenants and agreements of Debtor contained in this Agreement and all other
Transaction Documents.
"Permitted Liens" means (a) Liens for taxes not yet delinquent or Liens for
taxes being contested in good faith and by appropriate proceedings for which
adequate reserves have been established, and (b) Liens in favor of Secured Party
under this Agreement or arising under the other Transaction Documents.
"UCC" means the Uniform Commercial Code as in effect in the state whose laws
would govern the security interest in, including without limitation the
perfection thereof, and foreclosure of the applicable Collateral.
<PAGE>
Unless otherwise defined herein, all terms defined in the UCC have the
respective meanings given to those terms in the UCC.
Grant of Security Interest. As security for the Obligations, Debtor hereby
pledges to Secured Party and grants to Secured Party a security interest in all
right, title, interest, claims and demands of Debtor in and to the property
described in Schedule A hereto, and all replacements, proceeds, products, and
accessions thereof (collectively, the "Collateral").
Authorization to File Financing Statements. Debtor hereby irrevocably authorizes
Secured Party at any time and from time to time to file in any filing office in
any Uniform Commercial Code jurisdiction or other jurisdiction of Debtor or its
subsidiaries (including without limitation Delaware) any financing statements or
documents having a similar effect and amendments thereto that provide any other
information required by the Uniform Commercial Code (or similar law of any
non-United States jurisdiction, if applicable) of such state or jurisdiction for
the sufficiency or filing office acceptance of any financing statement or
amendment, including whether Debtor is an organization, the type of organization
and any organization identification number issued to Debtor. Debtor agrees to
furnish any such information to Secured Party promptly upon Secured Party's
request.
General Representations and Warranties. Debtor represents and warrants to
Secured Party that (a) Debtor is the owner of the Collateral and that no other
person has any right, title, claim or interest (by way of Lien or otherwise) in,
against or to the Collateral, other than Permitted Liens, and (b) upon the
filing of UCC-1 financing statements with the Delaware Secretary of State,
Secured Party shall have a perfected first-position security interest in the
Collateral to the extent that a security interest in the Collateral can be
perfected by such filing, except for Permitted Liens.
Additional Covenants. Debtor hereby agrees:
- to perform all acts that may be necessary to maintain, preserve, protect and
perfect in the Collateral, the Lien granted to Secured Party therein, and
the perfection and priority of such Lien, except for Permitted Liens;
- to procure, execute (including endorse, as applicable), and deliver from
time to time any endorsements, assignments, financing statements,
certificates of title, and all other instruments, documents and/or writings
reasonably deemed necessary or appropriate by Secured Party to perfect,
maintain and protect Secured Party's Lien hereunder and the priority
thereof;
- to provide at least fifteen (15) days prior written notice to Secured Party
of any of the following events: (a) any changes or alterations of Debtor's
name, (b) any changes with respect to Debtor's address or principal place of
business, or (c) the formation of any subsidiaries of Debtor;
- upon the occurrence of an Event of Default (as defined in the Note) under
the Note and, thereafter, at Secured Party's request, to endorse (up to the
outstanding amount under such promissory notes at the time of Secured
Party's request), assign and deliver any promissory notes included in the
Collateral to Secured Party, accompanied by such instruments of transfer or
assignment duly executed in blank as Secured Party may from time to time
specify;
- to the extent the Collateral is not delivered to Secured Party pursuant to
this Agreement, to keep the Collateral at the principal office of Debtor
(unless otherwise agreed to by Secured Party in writing), and not to
relocate the Collateral to any other locations without the prior written
consent of Secured Party;
- not to sell or otherwise dispose, or offer to sell or otherwise dispose, of
the Collateral or any interest therein (other than inventory in the ordinary
course of business); and
- not to, directly or indirectly, allow, grant or suffer to exist any Lien
upon any of the Collateral, other than Permitted Liens.
Authorized Action by Secured Party. Debtor hereby irrevocably appoints Secured
Party as its attorney-in-fact (which appointment is coupled with an interest)
and agrees that Secured Party may perform (but Secured Party shall not be
obligated to and shall incur no liability to Debtor or any third party for
failure so to do) any act which Debtor is obligated by this Agreement to
perform, and to exercise such rights and powers as Debtor might exercise with
respect to the Collateral, including the right to (a) collect by legal
proceedings or otherwise and endorse, receive and receipt for all dividends,
interest, payments, proceeds and other sums and property now or hereafter
payable on or on account of the Collateral; (b) enter into any extension,
reorganization, deposit, merger, consolidation or other agreement pertaining to,
or deposit, surrender, accept, hold or apply other property in exchange for the
Collateral; (c) make any compromise or settlement, and take any action Secured
Party deems advisable, with respect to the Collateral; (d) file a copy of this
Agreement with any governmental agency, body or authority, at the sole cost and
expense of Debtor; (e) insure, process and preserve the Collateral; (f) pay any
indebtedness of Debtor relating to the Collateral; (g) execute and file UCC
financing statements and other documents, certificates, instruments and
agreements with respect to the Collateral or as otherwise required or permitted
hereunder; and (h) take any and all appropriate action and execute any and all
documents and instruments that may be necessary or useful to accomplish the
purposes of this Agreement; provided, however, that Secured Party shall not
exercise any such powers granted pursuant to clauses (a) through (c) above prior
to the occurrence of an Event of Default and shall only exercise such powers
during the continuance of an Event of Default. The powers conferred on Secured
Party under this Section 6 are solely to protect its interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. Secured Party
shall be accountable only for the amounts that it actually receives as a result
of the exercise of such powers, and neither Secured Party nor any of its
stockholders, directors, officers, managers, employees or agents shall be
responsible to Debtor for any act or failure to act, except with respect to
Secured Party's own gross negligence or willful misconduct. Nothing in this
Section 6 shall be deemed an authorization for Debtor to take any action that it
is otherwise expressly prohibited from undertaking by way of other provision of
this Agreement.
Default and Remedies.
Default. Debtor shall be deemed in default under this Agreement upon the
occurrence of an Event of Default (as defined in the Note).
Remedies. Upon the occurrence of any such Event of Default, Secured Party shall
have the rights of a secured creditor under the UCC, all rights granted by this
Agreement and by law, including, without limiting the foregoing, (a) the right
to require Debtor to assemble the Collateral and make it available to Secured
Party at a place to be designated by Secured Party, and (b) the right to take
possession of the Collateral, and for that purpose Secured Party may enter upon
premises on which the Collateral may be situated and remove the Collateral
therefrom. Debtor hereby agrees that fifteen (15) days' notice of a public sale
of any Collateral or notice of the date after which a private sale of any
Collateral may take place is reasonable. In addition, Debtor waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of
any of Secured Party's rights and remedies hereunder, including, without
<PAGE>
limitation, Secured Party's right following an Event of Default to take
immediate possession of Collateral and to exercise Secured Party's rights and
remedies with respect thereto. Secured Party may also have a receiver appointed
to take charge of all or any portion of the Collateral and to exercise all
rights of Secured Party under this Agreement. Secured Party may exercise any of
its rights under this Section 7.2 without demand or notice of any kind. The
remedies in this Agreement, including without limitation this Section 7.2, are
in addition to, not in limitation of, any other right, power, privilege, or
remedy, either in law, in equity, or otherwise, to which Secured Party may be
entitled. No failure or delay on the part of Secured party in exercising any
right, power, or remedy will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right hereunder. All of Secured Party's rights and
remedies, whether evidenced by this Agreement or by any other agreement,
instrument or document shall be cumulative and may be exercised singularly or
concurrently.
Standards for Exercising Rights and Remedies. To the extent that applicable law
imposes duties on Secured Party to exercise remedies in a commercially
reasonable manner, Debtor acknowledges and agrees that it is not commercially
unreasonable for Secured Party (a) to fail to incur expenses reasonably deemed
significant by Secured Party to prepare Collateral for disposition, (b) to fail
to obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (c) to fail to exercise collection remedies against account
debtors or other persons obligated on Collateral or to fail to remove liens or
encumbrances on or any adverse claims against Collateral, (d) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as Debtor, for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral is of a
specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure Secured Party against risks of loss, collection or
disposition of Collateral or to provide to Secured Party a guaranteed return
from the collection or disposition of Collateral, or (l) to the extent deemed
appropriate by Secured Party, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist Secured Party
in the collection or disposition of any of the Collateral. Debtor acknowledges
that the purpose of this Section is to provide non-exhaustive indications of
what actions or omissions by Secured Party would fulfill Secured Party's duties
under the UCC in Secured Party's exercise of remedies against the Collateral and
that other actions or omissions by Secured Party shall not be deemed to fail to
fulfill such duties solely on account of not being indicated in this Section.
Without limitation upon the foregoing, nothing contained in this Section shall
be construed to grant any rights to Debtor or to impose any duties on Secured
Party that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section.
Marshalling. Secured Party shall not be required to marshal any present or
future Collateral for, or other assurances of payment of, the Obligations or to
resort to such Collateral or other assurances of payment in any particular
<PAGE>
order, and all of its rights and remedies hereunder and in respect of such
Collateral and other assurances of payment shall be cumulative and in addition
to all other rights and remedies, however existing or arising. To the extent
that it lawfully may, Debtor hereby agrees that it will not invoke any law
relating to the marshalling of Collateral which might cause delay in or impede
the enforcement of Secured Party's rights and remedies under this Agreement or
under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, Debtor hereby irrevocably waives the benefits of
all such laws.
Application of Collateral Proceeds. The proceeds and/or avails of the
Collateral, or any part thereof, and the proceeds and the avails of any remedy
hereunder (as well as any other amounts of any kind held by Secured Party at the
time of, or received by Secured Party after, the occurrence of an Event of
Default) shall be paid to and applied as follows:
First, to the payment of reasonable costs and expenses, including all amounts
expended to preserve the value of the Collateral, of foreclosure or suit, if
any, and of such sale and the exercise of any other rights or remedies, and of
all proper fees, expenses, liability and advances, including reasonable legal
expenses and attorneys' fees, incurred or made hereunder by Secured Party;
Second, to the payment to Secured Party of the amount then owing or unpaid on
the Note (to be applied first to accrued interest and second to outstanding
principal) and all amounts owed under any of the other Transaction Documents;
and
Third, to the payment of the surplus, if any, to Debtor, its successors and
assigns, or to whosoever may be lawfully entitled to receive the same.
In the absence of final payment and satisfaction in full of all of the
Obligations, Debtor shall remain liable for any deficiency.
Miscellaneous.
Notices. Any notice required or permitted hereunder shall be given in the manner
provided in the subsection titled "Notices" in the Purchase Agreement, the terms
of which are incorporated herein by this reference.
Non-waiver. No failure or delay on Secured Party's part in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right.
Amendments and Waivers. This Agreement may not be amended or modified, nor may
any of its terms be waived, except by written instruments signed by Debtor and
Secured Party. Each waiver or consent under any provision hereof shall be
effective only in the specific instances for the purpose for which given.
Assignment. This Agreement shall be binding upon and inure to the benefit of
Secured Party and Debtor and their respective successors and assigns; provided,
however, that Debtor may not sell, assign or delegate rights and obligations
hereunder without the prior written consent of Secured Party.
Cumulative Rights, etc. The rights, powers and remedies of Secured Party under
this Agreement shall be in addition to all rights, powers and remedies given to
Secured Party by virtue of any applicable law, rule or regulation of any
governmental authority, or the Note, all of which rights, powers, and remedies
<PAGE>
shall be cumulative and may be exercised successively or concurrently without
impairing Secured Party's rights hereunder. Debtor waives any right to require
Secured Party to proceed against any person or entity or to exhaust any
Collateral or to pursue any remedy in Secured Party's power.
Partial Invalidity. If any part of this Agreement is construed to be in
violation of any law, such part shall be modified to achieve the objective of
the parties to the fullest extent permitted and the balance of this Agreement
shall remain in full force and effect.
Expenses. Debtor shall pay on demand all reasonable fees and expenses, including
reasonable attorneys' fees and expenses, incurred by Secured Party in connection
with the custody, preservation or sale of, or other realization on, any of the
Collateral or the enforcement or attempt to enforce any of the Obligations which
are not performed as and when required by this Agreement.
Entire Agreement. This Agreement and the other Transaction Documents, taken
together, constitute and contain the entire agreement of Debtor and Secured
Party with respect to this particular matter and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter
hereof.
Governing Law. Except as otherwise specifically set forth herein, the parties
expressly agree that this Agreement shall be governed solely by the laws of the
State of Utah, without giving effect to the principles thereof regarding the
conflict of laws; provided, however, that enforcement of Secured Party's rights
and remedies against the Collateral as provided herein will be subject to the
UCC.
Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND
ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF
THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS
TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE,
LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT IT IS
KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY JURY.
Purchase Agreement; Arbitration of Disputes. By executing this Agreement, each
party agrees to be bound by the terms, conditions and general provisions of the
Purchase Agreement and the other Transaction Documents, including without
limitation the Arbitration Provisions (as defined in the Purchase Agreement) set
forth as an exhibit to the Purchase Agreement.
Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original and all of which together shall constitute one
instrument. Any electronic copy of a party's executed counterpart will be deemed
to be an executed original.
Termination of Security Interest. Upon the payment in full of all Obligations,
the security interest granted herein shall terminate and all rights to the
Collateral shall revert to Debtor. Upon such termination, Secured Party hereby
authorizes Debtor to file any UCC termination statements necessary to effect
such termination and Secured Party will execute and deliver to Debtor any
additional documents or instruments as Debtor shall reasonably request to
evidence such termination.
Time is of the Essence. Time is expressly made of the essence with respect to
each and every provision of this Agreement.
[ SIGNATURE PAGE TO FOLLOW ]
<PAGE>
IN WITNESS WHEREOF, Secured Party and Debtor have caused this Agreement to be
executed as of the day and year first above written.
SECURED PARTY:
Typenex Co-Investment, LLC
By: Red Cliffs Investments, Inc., its Manager
By: /s/ John Fife
----------------------------------
John M. Fife, President
DEBTOR:
Empire Global Corp.
By: /s/ Michele Ciavarella
----------------------------------
Name: Michele Ciavarella, B.Sc.
Title: Chairman and CEO
SCHEDULE A
TO SECURITY AGREEMENT
Those certain Investor Notes (comprised of Investor Note #1 and Investor
Note #2) issued by Secured Party in favor of Debtor on June 17, 2015, each in
the initial principal amount of $100,000.00, and any and all claims, rights and
interests in any of the above and all substitutions for, additions and
accessions to and proceeds thereof.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>