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.
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
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
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
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 ]
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/ Xxxx Xxxx
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Xxxx X. Xxxx, President
DEBTOR:
Empire Global Corp.
By: /s/ Xxxxxxx Xxxxxxxxxx
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Name: Xxxxxxx Xxxxxxxxxx, X.Xx.
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.
