Attached files
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of February
29, 2016, between Empire Global Corp., a Delaware corporation (the "Company"),
an unaffiliated private investor, a New York limited liability company
("Purchaser").
RECITALS
A. The Company and the Purchaser are executing and delivering this Agreement in
reliance upon the exemption from securities registration provided by
Section 4(a)(2) of the Securities Act of 1933, as amended; and
B. Purchaser wishes to purchase from the Company, and the Company wishes to
sell and issue to the Purchaser, upon the terms and conditions stated in
this Agreement:
(i) a Convertible Promissory Note, in the form attached hereto as Exhibit A,
(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, in
principal amounts as follows:(ii) a Warrant to Purchase Shares of
Common Stock, each substantially in the form attached hereto as Exhibit
B (the "Warrant"), (iii) a Registration Rights Agreement, in the form
attached hereto as Exhibit C (the "Registration Rights Agreement"),
(iv) a Guaranty substantially in the form attached hereto at Exhibit D
(the "Guaranty"), and (v) an irrevocable reserve letter signed by the
Company and its transfer agent substantially in the form attached
hereto at Exhibit E (the "Reserve Letter" and, collectively with the
Note, Warrant, Registration Rights Agreement and Guaranty, 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, the "Transaction
Documents"); and
a. Six hundred thousand ($600,000) payable on the Closing Date; and
b. One hundred fifty thousand ($150,000) payable no later than 30 days
after the Closing Date.
(ii) a Warrant to purchase an amount of Shares of Common Stock of the Company
equal to 25% of the principal amount of each Note substantially in the
form attached hereto as Exhibit B (the "Warrant"); and
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Purchaser agree as
follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
for all purposes of this Agreement, the following terms have the meanings
set forth in this Section 1.1:
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"Acquiring Person" shall have the meaning ascribed to such term in Section 4.5.
"Action" shall have the meaning ascribed to such term in Section 3.1(m).
"Affiliate" means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 405 under the
Securities Act.
"Board of Directors" means the board of directors of the Company.
"Business Day" means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
"Closing" means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.
"Closing Date" means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchaser's obligations to fund the Note and
(ii) the Company's obligations to deliver the Securities, in each case, have
been satisfied or waived, but in no event later than February 29, 2016.
"Common Stock" means the common stock of the Company and any other class of
securities into which such securities may hereafter be reclassified or changed.
"Common Stock Equivalents" means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
"Company Counsel" means Julian L. Doyle, LLB, Beard Winter, LLP.
"Company's Knowledge" means the actual knowledge of the executive officers (as
defined in Rule 405 under the Securities Act) of the Company, after due inquiry.
"Consents" shall have the meaning ascribed to such term in Section 3.1(e).
"Control" (including the terms "controlling", "controlled by" or "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Conversion Shares" means all shares of Common Stock issuable upon conversion of
all or any portion of the Note.
"Effective Date" means the date on which the initial Registration Statement is
declared effective by the SEC.
"Effectiveness Deadline" means the date on which the initial Registration
Statement is required to be declared effective by the SEC under the terms of the
Registration Rights Agreement.
"Evaluation Date" shall have the meaning ascribed to such term in
Section 3.1(s).
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"Excepted Issuance" means the issuance of any of the Company's securities
including Common Stock or Common Stock Equivalents at a price that is higher
than the Per Share Purchase Price as such term is defined herein and that are
not issued as a consequence of any of the Company's existing Agreements as of
the Closing Date and a Fundamental Transaction as defined in the Note.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Fundamental Transaction" shall have the meaning ascribed to in the Note,
paragraph 2.1(c).
"GAAP" shall have the meaning ascribed to such term in Section 3.1(g).
"Indebtedness" means (x) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Company's consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(z) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP.
"Insider" means each director, executive officer, other officer of the Company
participating in the offering, any beneficial owner of 20% or more of the
Company's outstanding voting equity securities, calculated on the basis of
voting power, and any promoter connected with the Company in any capacity on the
date hereof.
"Intellectual Property Rights" means the rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or required for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have could have a Material Adverse Effect.
"Liens" means a lien, charge, pledge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.
"Material Adverse Effect" means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.
"Material Contract" or "Material Permit" means any contract, instrument or other
agreement to which the Company or any Subsidiary is a party or by which it is
bound which is material to the business of the Company and its Subsidiaries,
taken as a whole, including those that have been filed or were required to have
been filed as an exhibit to the SEC Filings pursuant to Item 601(b)(4) or
Item 601(b)(10) of Regulation S-K.
"Per Share Purchase Price" equals $0.85, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement.
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"Person" means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
"Registration Statement" has the meaning set forth in the Registration Rights
Agreement which registers the sale of the Shares, the Warrants and the Warrant
Shares to the Purchaser.
"Registrable Shares" means any Notes, Conversion Shares, Shares, Warrants or
Warrant Shares issued to the Purchaser under this Agreement that have not been
registered.
"Rule 144" means Rule 144 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
purpose and effect as such Rule.
"Rule 424" means Rule 424 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
purpose and effect as such Rule.
"SEC" means the U.S. Securities and Exchange
"SEC Filings" shall have the meaning ascribed to such term in Section 3.1(f).
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Shares" means the shares of Common Stock issued or issuable to Purchaser
pursuant to this Agreement.
"Short Sales" means all "short sales" as defined in Rule 200 of Regulation SHO
under the Exchange Act.
"Subsidiary" means any subsidiary of the Company as set forth on
Schedule 3.1(a), and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the date hereof.
"Trading Day" means a day on which the principal Trading Market is open for
trading.
"Trading Market" means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Markets, LLC
(or any successors to any of the foregoing).
"Transfer Agent" means Signature Stock Transfer, Inc the current transfer agent
of the Company, with a mailing address of 2632 Coachlight Court Plano, TX 75075
and a facsimile number of (972) 612-4122 and any successor transfer agent of the
Company.
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"Warrants" means, collectively, the Common Stock purchase warrants delivered to
the Purchaser at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be exercisable after the six month anniversary of the date of
issuance until the third anniversary of the date of issuance, in the form of
Exhibit B attached hereto.
"Warrant Shares" means the shares of Common Stock issuable upon exercise of the
Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. On the Closing Date, upon the terms and subject to the conditions
set forth herein, substantially concurrent with the execution and delivery
of this Agreement by the parties hereto, the Company agrees to sell, and
the Purchaser agrees to purchase, the Note and Warrants. Purchaser shall
deliver to the Company, via wire transfer, or a certified check of
immediately available funds, equal to $750,000 (the "Purchase Price") and
the Company shall deliver to Purchaser the Note and a Warrant as determined
pursuant to Section 2.2(a), and the Company and Purchaser shall deliver the
other items set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the covenants and conditions set forth in Sections 2.2 and
2.3, the Closing shall occur at such location as the parties shall mutually
agree.
2.2 Deliveries.
(a) On or prior to the Closing Date, the Company shall deliver or cause to
be delivered to Purchaser the following:
(i) this Agreement duly executed by the Company;
(ii) a signed original of the Note in the form of Exhibit A in the
principal amount of $600,000 attached hereto;
(iii) a Warrant registered in the name of Purchaser to purchase up to
130,435 shares, in the form of Exhibit B attached hereto;
(iv) a signed copy of the Registration Rights Agreement in the form
of Exhibit C attached hereto (the "Registration Rights
Agreement");
(v) a signed copy of the Guaranty in the form of Exhibit D attached
hereto (the "Guaranty"); and
(vi) a copy of the irrevocable instructions to the Company's transfer
agent instructing to reserve shares in amounts as specified in
this Agreement in the form of Exhibit E attached hereto (the
"Reserve Letter").
(b) On a date that is no later than 30 days after the Closing Date, the
Company shall deliver or cause to be delivered to Purchaser the
following:
(i) a signed original of the Note in the form of Exhibit A in the
principal amount of $150,000 attached hereto;
(ii) a Warrant registered in the name of Purchaser to purchase up to
32,609 Shares of Common Stock of the Company, in the form of Exhibit B
attached hereto;
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The Agreement collectively with the Note, Warrant, Registration Rights Agreement
and Guaranty, 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, the "Transaction Documents".)
(c) On or prior to the Closing Date, Purchaser shall deliver or cause to
be delivered to the Company the following:
(i) this Agreement duly executed by Purchaser; and
(ii) payment of $600,000 of immediately available funds.
(d) On a date that is no later than 30 days after the Closing Date,
Purchaser shall deliver or cause to be delivered to the Company a
payment of $150,000 of immediately available funds.
2.3 Closing Conditions
(a) The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met:
(i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchaser contained herein
(unless as of a specific date therein in which case they shall
be accurate as of such date);
(ii) all obligations, covenants and agreements of Purchaser required
to be performed at or prior to the Closing Date except the
obligations set forth in Section 2.2(d) shall have been
performed; and
(iii) the delivery by Purchaser of the items set forth in
Section 2.2(c) of this Agreement.
(b) The respective obligations of the Purchaser in connection with the
Closing are subject to the following conditions being met:
(i) the accuracy in all material respects when made and on the
Closing Date of the representations and warranties of the
Company contained herein (unless as of a specific date therein);
(ii) all obligations, covenants and agreements of the Company
required to be performed at or prior to the Closing Date except
the obligations set forth in Section 2.2(b) shall have been
performed;
(iii) the delivery by the Company of the items set forth in
Section 2.2(a) of this Agreement;
(iv) there shall have been no Material Adverse Effect with respect to
the Company since the date hereof; and
(v) from the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the SEC or the Company's
principal Trading Market, and, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there
have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in,
any financial market which, in each case, in the reasonable
judgment of Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Closing.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that, except as set forth in the
schedules delivered herewith (collectively, the "Disclosure Schedules"):
(a) Organization, Good Standing and Qualification. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to
carry on its business as now conducted and to own or lease its
properties. Each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not had and
could not reasonably be expected to have a Material Adverse Effect.
The Company's Subsidiaries are listed on Schedule 3.1(a) hereto.
(b) Authorization. The Company has full power and authority and has taken
all requisite action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization,
execution and delivery of the Transaction Documents, (ii) the
authorization of the performance of all obligations of the Company
hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Shares. The Transaction
Documents constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors' rights generally and to general
equitable principles and except as rights to indemnity and
contribution may be limited by state or federal securities laws or
public policy.
(c) Capitalization. Schedule 3.1(b) sets forth, as of the date hereof (a)
the authorized capital stock of the Company; (b) the number of shares
of capital stock issued and outstanding; (c) the number of shares of
capital stock issuable pursuant to the Company's stock plans; and (d)
the number of shares of capital stock issuable and reserved for
issuance pursuant to securities (other than the Shares) exercisable
for, or convertible into or exchangeable for any shares of capital
stock of the Company. All of the issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of pre-emptive rights and
were issued in compliance with applicable state and federal securities
law and any rights of third parties. In addition except as described
on Schedule 3.1(b):
(i) all of the issued and outstanding shares of capital stock of
each Subsidiary have been duly authorized and validly issued
and are fully paid, nonassessable and free of pre-emptive
rights, were issued in compliance with applicable state and
federal securities law and any rights of third parties and are
owned by the Company, beneficially and of record, subject to no
lien, encumbrance or other adverse claim.
(ii) no Person is entitled to pre-emptive or similar statutory or
contractual rights with respect to any securities of the
Company.
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(iii) there are no outstanding warrants, options, convertible
securities or other rights, agreements or arrangements of any
character under which the Company or any of its Subsidiaries is
or may be obligated to issue any equity securities of any kind
and except as contemplated by this Agreement, neither the
Company nor any of its Subsidiaries is currently in
negotiations for the issuance of any equity securities of any
kind.
(iv) and except for the Registration Rights Agreement, there are no
voting agreements, buy-sell agreements, option or right of
first purchase agreements or other agreements of any kind among
the Company and any of the security holders of the Company
relating to the securities of the Company held by them.
(v) and except as provided in the Registration Rights Agreement, no
Person has the right to require the Company to register any
securities of the Company under the Securities Act, whether on
a demand basis or in connection with the registration of
securities of the Company for its own account or for the
account of any other Person.
(vi) the issuance and sale of the Shares hereunder will not obligate
the Company to issue shares of Common Stock or other securities
to any other Person (other than the Purchaser) and will not
result in the adjustment of the exercise, conversion, exchange
or reset price of any outstanding security.
The Company does not have outstanding stockholder purchase rights or "poison
pill" or any similar arrangement in effect giving any Person the right to
purchase any equity interest in the Company upon the occurrence of certain
events.
(d) Valid Issuance. The Shares have been duly and validly authorized and,
when issued and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and shall be free and clear of
all encumbrances and restrictions (other than those created by the
Purchaser), except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws.
(e) Consents. The authorization, execution, delivery and performance of
the Transaction Documents and the offer, issuance and sale of the
Shares require no consent of, action by or in respect of, or filing
with, any Person, governmental body, agency, or official other than
filings that have been made pursuant to applicable state securities
laws and post-sale filings pursuant to applicable state and federal
securities laws which the Company undertakes to file within the
applicable time periods. Subject to the accuracy of the
representations and warranties of each Purchaser set forth in
Section 3.2 hereof, the Company has taken all action necessary to
exempt (i) the issuance and sale of the Shares and (ii) the other
transactions contemplated by the Transaction Documents from the
provisions of any stockholder rights plan or other "poison pill"
arrangement, any anti-takeover, business combination or control share
law or statute binding on the Company or to which the Company or any
of its assets and properties may be subject and any provision of the
Company's Certificate of Incorporation or Bylaws that is or could
reasonably be expected to become applicable to the Purchaser as a
result of the transactions contemplated hereby, including without
limitation, the issuance of the Shares and the ownership, disposition
or voting of the Shares by the Purchaser or the exercise of any right
granted to the Purchaser pursuant to this Agreement or the other
Transaction Documents.
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(f) SEC Filings. The Company has made available to the Purchaser through
the EDGAR system, true and complete copies of the Company's most
recent Annual Report on Form 10-K for the fiscal year ended
December 31, 2014, as amended (the "10-K"), and all other reports
filed by the Company pursuant to the Exchange Act since the filing of
the 10-K and prior to the date hereof (each, as amended prior to the
date hereof, collectively, the "SEC Filings"). The SEC Filings are
the only filings required of the Company pursuant to the Exchange Act
for such period. The Company and its Subsidiaries are engaged in all
material respects only in the business described in the SEC Filings
and the SEC Filings contain a complete and accurate description in all
material respects of the business of the Company and its Subsidiaries,
taken as a whole.
(g) Financial Statements. The financial statements included in each SEC
Filings comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing (or to the extent corrected
by a subsequent restatement) and present fairly, in all material
respects, the consolidated financial position of the Company as of the
dates shown and its consolidated results of operations and cash flows
for the periods shown, and such financial statements have been
prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis ("GAAP") (except
as may be disclosed therein or in the notes thereto, and, in the case
of quarterly financial statements, as permitted by Form 10-Q under the
Exchange Act). Except as set forth in the financial statements of the
Company included in the SEC Filings filed prior to the date hereof or
as described on Schedule 3.1(g), neither the Company nor any of its
Subsidiaries has incurred any liabilities, contingent or otherwise,
except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such
financial statements, none of which, individually or in the aggregate,
have had or could reasonably be expected to have a Material Adverse
Effect.
(h) Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes only and
shall not use such proceeds: (a) for the redemption of any Common
Stock or Common Stock Equivalents, (b) for the settlement of any
outstanding litigation, (c) for the repayment of any officers,
directors, affiliates or related party claims other than the
reimbursement of expenses incurred in the ordinary course of business;
or (c) in violation of the "FCPA" (means the Foreign Corrupt Practices
Act) or applicable regulations.
(i) No Material Adverse Change. Except as identified and described in the
SEC Filings or as described on Schedule 3.1(i), there has not been:
(i) any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that
reflected in the financial statements included in the Company's
Quarterly Report on 10-Q for the period ended
September 30, 2015, except for changes in the ordinary course
of business which have not had and could not reasonably be
expected to have a Material Adverse Effect, individually or in
the aggregate;
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(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the
capital stock of the Company, or any redemption or repurchase
of any securities of the Company;
(iii) any material damage, destruction or loss, whether or not
covered by insurance to any assets or properties of the Company
or its Subsidiaries;
(iv) any waiver, not in the ordinary course of business, by the
Company or any Subsidiary of a material right or of a material
debt owed to it;
(v) any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company or a Subsidiary,
except in the ordinary course of business and which is not
material to the assets, properties, financial condition,
operating results or business of the Company and its
Subsidiaries taken as a whole (as such business is presently
conducted and as it is presently proposed to be conducted);
(vi) any violation or default on or notice of violation or default
on any indenture, loan or credit agreement or any other
agreement or instrument to which the Company is a party or by
which it or any of its properties are bound;
(vii) any change or amendment to the Company's Certificate of
Incorporation or Bylaws, or material change to any Material
Contract by which the Company or any Subsidiary is bound or to
which any of their respective assets or properties is subject;
(viii) any material labor difficulties or labor union organizing
activities with respect to employees of the Company or any
Subsidiary;
(ix) any violation or breach of any material term of any employment
contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any
other contract or agreement or any restrictive covenant in
favor of any third party, and the continued employment of all
employees and executive officers does not subject the Company
or any of its subsidiaries to any liability with respect to the
foregoing matter;
(x) any material transaction entered into by the Company or a
Subsidiary other than in the ordinary course of business; or;
(xi) any other event, judgement, violation of law or condition of
any character that has had or could reasonably be expected to
have a Material Adverse Effect.
(j) No Conflict, Breach, Violation or Default. The authorization,
execution, delivery and performance of the Transaction Documents by
the Company and the authorization, issuance and sale of the Shares
will not (i) conflict with or result in a breach or violation of (a)
any of the terms and provisions of, or constitute a default under the
Company's Articles of Incorporation or the Company's Bylaws, both as
in effect on the date hereof (true and complete copies of which have
been made available to the Purchaser through the EDGAR system), or (b)
any statute, rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the
Company, any Subsidiary or any of their respective assets or
properties, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, result in the creation of any lien, encumbrance or
other adverse claim upon any of the properties or assets of the
Company or any Subsidiary or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse
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of time or both) of, any Material Contract, in the case of (i)(b) and
(ii) above, except for any such conflicts, violations, defaults or
adverse claims that could not reasonably be expected to result in a
Material Adverse Effect, individually or in the aggregate.
(k) Title to Properties. Except as disclosed in the SEC Filings, the
Company and each Subsidiary has good and marketable title to all real
properties and all other properties and assets owned by it, in each
case free from liens, encumbrances and defects that would materially
affect the value thereof or materially interfere with the use made or
currently planned to be made thereof by them; and except as disclosed
in the SEC Filings, the Company and each Subsidiary holds any leased
real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or
currently planned to be made thereof by them.
(l) Certificates, Authorities and Permits. The Company and each
Subsidiary possess adequate certificates, authorities or permits
issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by it, the lack of which could not
reasonably be expected to result in a Material Adverse Effect,
individually or in the aggregate, and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company or such
Subsidiary, could reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate.
(m) Litigation. Except as described on Schedule 3.1(m), there are no
pending actions, suits or proceedings against or affecting the
Company, its Subsidiaries or any of its or their properties; and no
such actions, suits or proceedings have been threatened in writing or,
to the Company's Knowledge, orally. Neither the Company nor any
Subsidiary, nor any director or officer thereof in his capacity as
such, is or since January 1, 2013 has been the subject of any action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not
been, and to the Company's Knowledge, there is not pending or
threatened, any investigation by the SEC involving the Company or any
current or former director or officer of the Company. The SEC has not
issued any stop order or other order suspending the effectiveness of
any registration statement filed by the Company or any Subsidiary
under the Securities Act or the Exchange Act.
(n) Compliance with OTCQB Requirements. The Common Stock is quoted on the
OTCQB, a public marketplace operated by OTC Markets Group Inc. (the
"OTCQB"), and the Company has taken no action designed to remove, or
likely to have the effect of removing, the Common Stock from quotation
of the Common Stock from the OTCQB, nor has the Company received any
notification that the SEC, the OTCQB or the Financial Industry
Regulatory Authority, Inc. ("FINRA") is contemplating terminating such
quotation. The Company will take all action reasonably necessary to
continue the listing and trading of its Common Stock on a OTCQB Market
or better and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of
the OTCQB Market or better.
11
(o) No Directed Selling Efforts or General Solicitation. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the
Shares.
(p) Private Placement. Subject to the accuracy of the representations and
warranties in Section 3.2, the offer and sale of the Shares to the
Purchaser as contemplated hereby is exempt from the registration
requirements of the Securities Act.
(q) Shell Company Status. The Company is not an issuer identified in
Rule 144(i)(1). The Company is in compliance with the requirements of
Rule 144(i)(2) and filed its "Form 10 information" more than a year
prior to the date hereof.
(r) Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any of their respective
current or former stockholders, directors, officers, employees, agents
or other Persons acting on behalf of the Company or any Subsidiary,
has on behalf of the Company or any Subsidiary or in connection with
their respective businesses: (a) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (b) made any direct or indirect
unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; (d) made any
false or fictitious entries on the books and records of the Company or
any Subsidiary; or (e) made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of any nature.
(s) Transactions with Affiliates and Employees. Neither the Company nor
any of its Subsidiaries nor, to the Company's Knowledge, any of their
respective current or former stockholders, directors, officers,
employees, agents or other Persons acting on behalf of the Company or
any Subsidiary, on behalf of the Company or any Subsidiary or in
connection with their respective businesses is presently or have been
a party to any contract or transaction of any nature which (a) in each
case creates an Indebtedness and (b) have not been disclosed in
SEC Filings.
(t) Internal Controls. The Company is in material compliance with the
provisions of the Sarbanes-Oxley Act of 2002 currently applicable to
the Company. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company, including
the Subsidiaries, is made known to the certifying officers by others
within those entities, particularly during the period in which the
12
Company's most recently filed periodic report under the Exchange Act,
as the case may be, is being prepared. The Company has established
internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance
regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP.
The Company's certifying officers have evaluated the effectiveness of
the Company's disclosure controls and procedures and the Company's
internal control over financial reporting (collectively, "internal
controls") as of the end of the period covered by the most recently
filed periodic report under the Exchange Act (such date, the
"Evaluation Date"). The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the
certifying officers about the effectiveness of such internal controls
based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no significant changes in the
Company's internal controls or, to the Company's Knowledge, in other
factors that could significantly affect the Company's internal
controls. The Company maintains and will continue to maintain a
standard system of accounting established and administered in
accordance with GAAP and the applicable requirements of the Exchange
Act.
(u) Disclosures. Neither the Company nor any Person acting on its behalf
has provided the Purchaser or their agents or counsel with any
information that constitutes or might constitute material, non-public
information, other than the terms of the transactions contemplated
hereby. All press releases together with other public disclosures
included in SEC Filings disseminated by the Company over the twelve
months preceding this Agreement taken as a whole together with all
written materials furnished by or on behalf of the Company and
delivered to the Purchaser in connection with the transactions
contemplated by the Transaction Documents do not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
(v) Taxes. There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of
the Company or any Subsidiary know of no basis for any such claim. The
Company has filed or will file all tax returns required by taxing
authority of any jurisdiction and has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods
subsequent to the periods to which any United States federal, state
and local income and all foreign income and franchise tax returns,
reports or declarations apply.
(w) Assets of Foreign Assets Control. Neither the Company or any
Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC").
(x) Money Laundering. The operations of the Company and its Subsidiaries
are and have been conducted at all times in compliance with applicable
financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations
thereunder (collectively, the "Money Laundering Laws"), and no action,
13
suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any
Subsidiary with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company or any Subsidiary, threatened.
3.2 Representations and Warranties of the Purchaser. Purchaser, for itself and
for no other, hereby represents and warrants as of the date hereof and as
of the Closing Date to the Company as follows (unless as of a specific date
therein):
(a) Organization; Authority. Purchaser is either an individual or an
entity duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate
the transactions contemplated by this Agreement and otherwise to carry
out its obligations hereunder and thereunder. The execution and
delivery of this Agreement and performance by Purchaser of the
transactions contemplated by this Agreement have been duly authorized
by all necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of Purchaser. Each
Transaction Document to which it is a party has been duly executed by
Purchaser, and when delivered by Purchaser in accordance with the
terms hereof, will constitute the valid and legally binding obligation
of Purchaser, enforceable against it in accordance with its terms,
except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies
and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.
(b) Understandings or Arrangements. Purchaser is acquiring the Securities
as principal for its own account and has no direct or indirect
arrangement or understandings with any other persons to distribute or
regarding the distribution of such Securities (this representation and
warranty not limiting Purchaser's right to sell the Securities
pursuant to the Registration Statement or otherwise in compliance with
applicable federal and state securities laws).
(c) Restricted Securities. Such Purchaser understands that the Shares are
characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited
circumstances.
(d) Legends. It is understood that, except as provided below,
certificates evidencing the Shares may bear the following or any
similar legend:
"The securities represented hereby have not been registered with the
Securities and Exchange Commission or the securities commission of any
state in reliance upon an exemption from registration under the
Securities Act of 1933, as amended, and, accordingly, may not be
transferred unless (i) such securities have been registered for sale
pursuant to the Securities Act of 1933, as amended, (ii) such
13
securities may be sold pursuant to Rule 144, or (iii) the Company has
received an opinion of counsel reasonably satisfactory to it that such
transfer may lawfully be made without registration under the
Securities Act of 1933, as amended."
(e) Purchaser Status. At the time Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it
exercises any Warrants, it will be either: (i) an "Accredited
Purchaser" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
(a)(8) under the Securities Act or (ii) a "qualified institutional
buyer" as defined in Rule 144A(a) under the Securities Act.
(f) Experience of Purchaser. Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the
merits and risks of the prospective investment in the Securities, and
has so evaluated the merits and risks of such investment. Purchaser
is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such
investment. The Purchaser understands that nothing in this Agreement,
the Warrant, the Registration Rights Agreement or any other materials
presented to the Purchaser in connection with the purchase and sale of
the Securities constitutes legal, tax or investment advice. The
Purchaser has consulted such legal, tax and investment advisors and
made such investigation as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of
Securities.
(g) Certain Transactions. Other than consummating the transactions
contemplated hereunder, Purchaser has not, nor has any Person acting
on behalf of or pursuant to any understanding with Purchaser, directly
or indirectly executed any purchases or sales, including Short Sales,
of the securities of the Company during the period commencing as of
the time that Purchaser first received a term sheet (written or oral)
from the Company or any other Person representing the Company setting
forth the material terms of the transactions contemplated hereunder
and ending immediately prior to the execution hereof.
(h) No Trading Market for Warrants. The Purchaser understands that there
is no established public trading market for the Warrants and that the
Company does not expect such a market to develop. In addition, the
Company does not intend to apply for listing the Warrants on any
securities exchange. Without an active market, the liquidity of the
Warrants will be limited.
The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not modify, amend or affect Purchaser's right to rely on the
Company's representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated hereby.
15
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Warrant Shares. If all or any portion of a Warrant is exercised at a time
when there is an effective registration statement to cover the issuance or
resale of the Warrant Shares or if the Warrant is exercised via cashless
exercise, the Warrant Shares issued pursuant to any such exercise shall be
issued free of all legends. If at any time following the date hereof the
Registration Statement (or any subsequent registration statement
registering the sale or resale of the Warrant Shares) is not effective or
is not otherwise available for the sale or resale of the Warrant Shares,
the Company shall immediately notify the holders of the Warrants in writing
that such registration statement is not then effective and thereafter shall
promptly notify such holders when the registration statement is effective
again and available for the sale or resale of the Warrant Shares (it being
understood and agreed that the foregoing shall not limit the ability of the
Company to issue, or Purchaser to sell, any of the Warrant Shares in
compliance with applicable federal and state securities laws). The Company
shall use best efforts to file a registration statement (including the
Registration Statement) registering the issuance or resale of the Warrant
Shares effective during the term of the Warrants.
4.2 Furnishing of Information. Until the earliest of the time that (i) no
Purchaser owns Securities or (ii) the Warrants have expired, the Company
covenants use all reasonable efforts to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act, if the Company is subject to the reporting requirements of
the Exchange Act.
4.3 Integration. The Company shall not sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any
Trading Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained
before the closing of such subsequent transaction.
4.4 Securities Laws Disclosure; Publicity. The Company shall (a) by 9:00 a.m.
(New York City time) on the Trading Day immediately following the date
hereof or as soon as practicable thereafter, issue a press release
disclosing the material terms of the transactions contemplated hereby, and
(b) file a Current Report on Form 8-K, including the Transaction Documents
as exhibits thereto, with the SEC within the time required by the Exchange
Act. From and after the issuance of such press release, the Company
represents to the Purchaser that it shall have publicly disclosed all
material, non-public information delivered to Purchaser by the Company or
any of its Subsidiaries, or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the
Transaction Documents. The Company and Purchaser shall consult with each
other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor Purchaser shall issue any
such press release nor otherwise make any such public statement without the
prior consent of the Company, with respect to any press release of
Purchaser, or without the prior consent of Purchaser, with respect to any
press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party with prior
notice of such public statement or communication. Notwithstanding the
16
foregoing, the Company shall not publicly disclose the name of Purchaser,
or include the name of Purchaser in any filing with the SEC or any
regulatory agency or Trading Market, without the prior written consent of
Purchaser, except (a) as required by federal securities law in connection
with the filing of final Transaction Documents (including signature pages
thereto) with the SEC and (b) to the extent such disclosure is required by
law or Trading Market regulations.
4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that Purchaser is an
"Acquiring Person" under any control share acquisition, business
combination, poison pill (including any distribution under a rights
agreement) or similar anti-takeover plan or arrangement in effect or
hereafter adopted by the Company, or that Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities under the Transaction Documents or under any other
agreement between the Company and Purchaser.
4.6 Indemnification of Purchaser. Subject to the provisions of this
Section 4.6, the Company will indemnify and hold Purchaser and its
directors, officers, shareholders, members, partners, employees and agents
(and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other
title), each Person who controls Purchaser (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, shareholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any
other title) of such controlling persons (each, a "Purchaser Party")
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that Purchaser Party may suffer or incur as a result
of or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the
other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of
Purchaser Party, with respect to any of the transactions contemplated by
the Transaction Documents (unless such action is based upon a breach of
Purchaser Party's representations, warranties or covenants under the
Transaction Documents or any agreements or understandings Purchaser Party
may have with any such stockholder or any violations by Purchaser Party of
state or federal securities laws or any conduct by Purchaser Party which
constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the
right to assume the defense thereof with counsel of its own choosing
reasonably acceptable to the Purchaser Party. Purchaser Party shall have
the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at
the expense of Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing,
(ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of Purchaser Party, in
17
which case the Company shall be responsible for the reasonable fees and
expenses of no more than one such separate counsel. The Company will not
be liable to Purchaser Party under this Agreement (y) for any settlement by
a Purchaser Party effected without the Company's prior written consent,
which shall not be unreasonably withheld or delayed; or (z) to the extent,
but only to the extent that a loss, claim, damage or liability is
attributable to Purchaser Party's breach of any of the representations,
warranties, covenants or agreements made by Purchaser Party in this
Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.6 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and
when bills are received or are incurred. The indemnity agreements
contained herein shall be in addition to any cause of action or similar
right of Purchaser Party against the Company or others, and (y) any
liabilities the Company may be subject to pursuant to law. The Company
further agrees to indemnify the Purchaser against all actions, suits,
proceedings, claims, expenses, loss, damages, costs, charges and
liabilities whatsoever which may arise as a result of the payment of the
principal amounts made by the Purchaser in instalments set forth in
Section 2.2(c) and Section 2.2(d).
4.7 Limitations of the Guaranty. Purchaser covenants and agrees that the
Guaranty shall be contestable and restricted as to the rights of the
Purchaser to make any claim for remedy on the Guaranty until such time
that the covenants and conditions of the Purchaser set forth in Sections
2.2 and 2.3 have been satisfied. Notwithstanding the foregoing sentence
and notwithstanding anything contained in this Agreement to the contrary,
the Purchaser expressly acknowledges and agrees that the Purchaser waives
its right to make a claim for remedy under the Guaranty unless all of the
principal amounts due under this Agreement are paid in full to the
Company. The Company covenants and agrees that the Guaranty shall have
full force and effect upon payment of the principal amounts in full by the
Purchaser to the Company.
4.8 Certain Transactions and Confidentiality. Purchaser covenants that neither
it nor any Affiliate acting on its behalf or pursuant to any understanding
with it will execute any purchases or sales, including Short Sales of any
of the Company's securities during the period commencing with the execution
of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced pursuant to any
press release as described in Section 4.4. Purchaser covenants that until
such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company pursuant to any press release as described in
Section 4.4, Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the
Disclosure Schedules. Notwithstanding the foregoing and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in effecting
transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are publicly announced pursuant
to any press release as described in Section 4.4, (ii) no Purchaser shall
be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities laws
from and after the time that the transactions contemplated by this
Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.4 and (iii) no Purchaser shall have any
duty of confidentiality to the Company or its Subsidiaries after the
issuance of any press release as described in Section 4.4.
18
4.9 Certain Proceedings Involving Company Officer. Company has provided and
Purchaser has performed due diligence and background research on Company
and its affiliates including, without limitation, Michele Ciavarella, and,
to their satisfaction, have made inquiries with respect to all matters they
may consider relevant to the undertakings and relationships contemplated by
the Transaction Documents including, among other things, the following:
- https://www.osc.gov.on.ca/en/Proceedings_soa_20041221
_firestar-capital.htm;
- https://www.osc.gov.on.ca/en/Proceedings_oth_20130221_firestar.htm;
- Her Majesty the Queen vrs. Michael Ciavarella (Case #PR029008).
The Parties, being aware of the matters described in this Section 4.9,
acknowledge and agree that such matters, or any similar matters, have been
resolved and have no bearing on the transactions contemplated by the Transaction
Documents. The Parties covenant and agree they 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.
4.10 Independent Evaluation. In entering into this Agreement, the Company and
the Purchaser acknowledge and affirm that:
(i) each party has relied and will rely solely on the terms of this
Agreement and upon their own independent analysis, evaluation and
investigation of, and judgment with respect to, the business,
economic, legal, tax or other consequences of the transactions
contemplated hereby;
(ii) each party is acting solely at arm's length with respect to the
Transaction Documents and the transactions contemplated thereby; and
(iii) neither party is acting as an advisor or fiduciary to the other party
with respect to the Transaction Documents and the transactions
contemplated thereby.
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by Purchaser, as to
Purchaser's obligations hereunder only and without any effect whatsoever on
the obligations between the Company, by written notice to the Company, if
the Closing has not been consummated on or before February 29, 2016.
5.2 Fees and Expenses. The Company consents to the application by the
Purchaser of $15,000 of the loan proceeds at closing to be paid to
Purchaser's counsel or to reimburse Purchaser for attorneys' fees and costs
incurred in connection with this transaction. There are no brokerage or
finder's fees or commissions, except as expressly set forth herein and in
the Transaction Documents to the contrary, each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay commissions on closing to JH Darbie &
Co., Inc. and all Transfer Agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the
Purchaser.
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5.3 Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and shall supersede,
cancel and replace all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have
been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile number set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the
signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
(2nd) Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages
attached hereto.
5.5 Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in
the case of an amendment, by the Company and the Purchaser. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any
party to exercise any right hereunder in any manner impair the exercise of
any such right.
5.6 Headings. The headings herein are for convenience only, do not constitute
a part of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof.
5.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Purchaser (other than by
merger). Purchaser may assign any or all of its rights under this
Agreement to any Person to whom Purchaser assigns or transfers any
Securities, provided that such transferee agrees in writing to be bound,
with respect to the transferred Securities, by the provisions of the
Transaction Documents that apply to Purchaser.
5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns
and is not for the benefit of, nor may any provision hereof be enforced by,
any other Person, except as otherwise set forth in Section 4.6.
5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated
by this Agreement and any other Transaction Documents (whether brought
20
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, Borough of
Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in
any other manner permitted by law. If either party shall commence an
action, suit or proceeding to enforce any provisions of the Transaction
Documents, then, in addition to the obligations of the Company under
Section 4.6, the prevailing party in such action, suit or proceeding shall
be reimbursed by the other party for its reasonable attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding. IN ANY ACTION, SUIT, OR
PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER
PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
5.10 Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Securities.
5.11 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed
by each party and delivered to each other party, it being understood that
the parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of
a ".pdf" format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or ".pdf"
signature page were an original thereof.
5.12 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their commercially reasonable efforts to find and
employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
21
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the
other Transaction Documents, whenever Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein
provided, then Purchaser may rescind or withdraw, in its sole discretion
from time to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its future
actions and rights; provided, however, that in the case of a rescission of
an exercise of a Warrant, the applicable Purchaser shall be required to
return any shares of Common Stock subject to any such rescinded exercise
notice concurrently with the return to Purchaser of the aggregate exercise
price paid to the Company for such shares and the restoration of
Purchaser's right to acquire such shares pursuant to Purchaser's Warrant
(including, issuance of a replacement warrant certificate evidencing such
restored right).
5.14 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and
substitution therefor, a new certificate or instrument, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction. The applicant for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
(including customary indemnity) associated with the issuance of such
replacement Securities.
5.15 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, Purchaser and the
Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not
to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to Purchaser pursuant to any Transaction Document or Purchaser
enforces or exercises its rights thereunder, and such payment or payments
or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other
Person under any law (including, without limitation, any bankruptcy law,
state or federal law, common law or equitable cause of action), then to
the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
5.17 [Intentionally omitted.]
5.18 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such
right may be exercised on the next succeeding Business Day.
22
5.19 Construction. The parties agree that each of them and/or their respective
counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto. In addition, each and every reference to share prices
and shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur
after the date of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
EMPIRE GLOBAL CORP. (the "Company")
Attn.: Michele Ciavarella, CEO
Suite 701 - 130 Adelaide Street, West
Toronto, Ontario, Canada M5H 2K4
By:___________________________
Michele Ciavarella, CEO
PURCHASER ("Purchaser")
By:___________________________
Its Managing Member
Counsel for the Company:
Julian L. Doyle, LLB Beard Winter, LLP
Facsimile: (416) 593-7760
Email: ceo.emgl@emglcorp.com,
Counsel for Purchaser:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
23
EXHIBIT A
CONVERTIBLE PROMISSORY NOTE
EXHIBIT B
FORM OF WARRANT
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
EXHIBIT D
GUARANTY OF CONFIDA UNION IMPRESSA
EXHIBIT E
TRANSFER AGENT RESERVE LETTER
SCHEDULE 3.1
DISCLOSURE SCHEDULES
Schedule 3.1(a) - Company Subsidiaries
Multigioco Srl. (Italy)
Rifa Srl. (Italy)
Schedule 3.1(b) - Capitalization Table
Authorized Shares: 80,000,000
Outstanding: 23,971,088
Shares in DTC Public Float: 2,122,177
Warrants Outstanding: 30,700
Fully Diluted: 24,001,788
Shareholders of record: 310
Schedule 3.1(g) - Contingent Liabilities
None
Schedule 3.1(i) - Financial Statements
As filed with the SEC
Schedule 3.1(m) - Litigation
Non
