SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 24, 2014
Endeavor IP, Inc.
(Exact name of registrant as specified in its charter)
| Nevada |
000-55094 |
45-2563323 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 140 Broadway, 46th Floor, New York, NY |
10005 |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: 646-560-3200
|
___________________________________________________
(Former name or former address, if changed since
last report) |
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] |
Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425) |
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| [ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Typenex
On July 16, 2014, we entered into a securities purchase agreement
(“SPA”) with Typenex Co-Investments, LLC, a Utah limited liability company (“Typenex”), under which we
issued to Typenex an 8% Secured Convertible Promissory Note (the “Promissory Note”) in the amount of $279,000. The
Promissory Note includes an original issue discount of $25,000 (“OID”), plus an additional $4,000 (“Transaction
Expense Amount”) to cover Typenex’s due diligence and legal fees in connection therewith. The principal
amount will be paid to Typenex in five (5) tranches of an initial amount under the Promissory Note of $100,000 and four (4) additional
amounts of $37,500, with each of the additional amounts represented by Investor Notes The initial $100,000 in cash has been paid
to the Company.
The Typenex Notes are convertible into common stock, at the option
of Typenex, at a price of $0.06 per share subject to adjustment in the case of a default, dilutive issuance, installment payment
in stock, reorganization or recapitalization. In the event the Company elects to prepay all or any portion of the Typenex Notes,
the Company is required to pay to Typenex an amount in cash equal to 125% of the outstanding balance of the Typenex Notes, plus
accrued interest and any other amounts owing. There are significant penalties in the event of a default, which includes the failure
to issue stock in a conversion.
Concurrently with the Securities Purchase Agreement, we also issued
to Typenex a warrant (the “Warrant”) to purchase common stock equal to $139,500.00 divided by the Market Price (as
defined in the Promissory Note) as of July 16, 2014), subject to adjustment as more fully set forth in the warrant agreement. The
warrant also contains a cashless exercise provision. The warrant is for a term of five (5) years.
The foregoing description of the SPA, the Promissory Note, the Investor
Note, the Warrant and the Security Agreement does not purport to be complete and is qualified in its entirety by reference to the
complete text of the foregoing documents, which are filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 hereto, as well as the other
Transaction Documents (as such term is defined in the Agreement), all of which are incorporated herein by this reference.
Union Capital
On June 24, 2014, we entered into a securities purchase agreement
(the “Union SPA”) with Union Capital, LLC (“Union”), pursuant to which we will sell two 8% convertible
notes of the Company in the aggregate principal amount of $40,000.00 (with the first note (the “Union First Note”)
being in the amount of $20,000 and the second note (the “Union Second Note”) being in the amount of $20,000 convertible
into shares of our common stock, $0.0001 par value per share, upon the terms and subject to the limitations and conditions set
forth in such note.)
We issued the Union First Note to Union pursuant to which Union
funded $20,000 at closing. We also issued the Union Second Note, in exchange for which Union issued to us an offsetting note (the
“Union Note”), to secure funding under the Union Second Note. The term of the Union First Note and the Union Second
Note is one year, upon which the outstanding principal amount is payable. The amount funded plus accrued interest under the Union
First Note and Union Second Note is convertible into common stock at any time after the requisite rule 144 holding period, at the
holder’s option, at a conversion price equal to 55% of the lowest closing bid price in the 10 trading days previous to the
conversion. In the event we redeem the note in full, we are required to pay off all principal, interest and any other amounts owing
multiplied by 140% if prepaid during the period commencing on the issue date through 180 days thereafter. There shall be no redemption
after the 180th day the note has been issued. In the event of default, the amount of principal and interest not paid when due bear
default interest at the rate of 16% per annum and the note becomes immediately due and payable. There are also monetary penalties
for failure to deliver conversion shares.
The foregoing description of the Union SPA, the Union First Note,
the Union Second Note and the Union Note does not purport to be complete and is qualified in its entirety by reference to the complete
text of the foregoing documents, which are filed as Exhibits 10.6, 10.7, 10.8 and 10.9 hereto, all of which are incorporated herein
by this reference.
Adar Bays
On June 24, 2014, we entered into a securities purchase agreement
(the “Adar SPA”) with Adar Bays, LLC (“Adar”), pursuant to which we will sell two 8% convertible notes
of the Company in the aggregate principal amount of $70,000.00 (with the first note (the “Adar First Note”) being in
the amount of $35,000 and the second note (the “Adar Second Note”) being in the amount of $35,000 convertible into
shares of our common stock, $0.0001 par value per share, upon the terms and subject to the limitations and conditions set forth
in such note).
We issued the Adar First Note to Union pursuant to which Adar funded
$35,000 at closing. We also issued the Adar Second Note, in exchange for which Adar issued to us an offsetting note (the “Adar
Note”), to secure funding under the Adar Second Note. The term of the Adar First Note and the Adar Second Note is one year,
upon which the outstanding principal amount is payable. The amount funded plus accrued interest under the Adar First Note and Adar
Second Note is convertible into common stock at any time after the requisite rule 144 holding period, at the holder’s option,
at a conversion price equal to 55% of the lowest closing bid price in the 10 trading days previous to the conversion. In the event
we redeem the note in full, we are required to pay off all principal, interest and any other amounts owing multiplied by 140% if
prepaid during the period commencing on the issue date through 180 days thereafter. There shall be no redemption after the 180th
day the note has been issued. In the event of default, the amount of principal and interest not paid when due bear default interest
at the rate of 16% per annum and the note becomes immediately due and payable. There are also monetary penalties for failure to
deliver conversion shares.
The foregoing description of the Adar SPA, the Adar First Note,
the Adar Second Note and the Adar Note does not purport to be complete and is qualified in its entirety by reference to the complete
text of the foregoing documents, which are filed as Exhibits 10.10, 10.11, 10.12 and 10.13 hereto, all of which are incorporated
herein by this reference.
KBM Worldwide
On July 9, 2014, we entered into a securities purchase agreement
(the “KBM SPA”) with KBM Worldwide, Inc. (“KBM”) pursuant to which we borrowed $42,500 under the terms
of a convertible promissory note (the “KBM Note”).
Interest under the convertible promissory note is 8% per annum,
and the principal and all accrued but unpaid interest is due on April 14, 2015. The note is convertible at any time following 180
days after the issuance date at KBM’s option into shares of our common stock at a variable conversion price of 58% of the
lowest average three day market price of our common stock during the 10 trading days prior to the notice of conversion, subject
to adjustment as described in the note.
During the first 180 days following the date of the note we have
the right to prepay the principal and accrued but unpaid interest due under the note, together with any other amounts we may owe
the holder under the terms of the note, at a graduating premium ranging from 112% to 140%. After this initial 180 day period, we
do not have a right to prepay the note.
There are significant penalties in the event of a default, which
includes the failure to issue stock in a conversion.
The foregoing description of KBM SPA and the KBM Note does not purport
to be complete and is qualified in its entirety by reference to the complete text of the foregoing documents, which are filed as
Exhibits 10.14 and 10.15 hereto, all of which are incorporated herein by this reference.
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.03 - CREATION OF A DIRECT FINANCIAL OBLIGATION
The information provided in Item 1.01 of this Current Report on
Form 8-K is incorporated herein by reference.
SECTION 3 - SECURITIES AND TRADING MARKETS
ITEM 3.02 - UNREGISTERED SALES OF EQUITY SECURITIES
The information provided in Item 1.01 of this Current Report on
Form 8-K is incorporated herein by reference.
The above securities were issued pursuant to the exemption from
registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D promulgated
thereunder. The investors represented to us that they are accredited investors. We believe that the investors had adequate information
about us as well as the opportunity to ask questions and receive responses from our management.
Section 9 – Financial
Statements and Exhibits
Item 9.01 Financial Statements
and Exhibits
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Endeavor IP, Inc.
| /s/ Ravinder Dhat |
Ravinder Dhat
Chief Operating Officer |
|
| Date:
August 1, 2014 |
Securities
Purchase Agreement
This
Securities Purchase Agreement (this “Agreement”), dated
as of July 16, 2014, is entered into by and between Endeavor IP, Inc., a Nevada
corporation (“Company”), and Typenex Co-Investment, LLC, a Utah limited
liability company, its successors and/or assigns (“Investor”).
A. Company
and Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by the rules and regulations promulgated by the United States Securities and Exchange Commission (the “SEC”) under
the Securities Act of 1933, as amended (the “1933 Act”).
B. Investor
desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement (i) a Secured
Convertible Promissory Note, in the form attached hereto as Exhibit A, in the original principal amount of $279,000.00
(the “Note”), convertible into shares of common stock, $0.0001 par value per share, of Company (the “Common
Stock”), upon the terms and subject to the limitations and conditions set forth in such Note, and (ii) a Warrant to Purchase
Common Stock, in the form attached hereto as Exhibit B (the “Warrant”).
C. This
Agreement, the Note, the Warrant, the Security Agreement (as defined below), the Investor Notes (as defined below), and all other
certificates, documents, agreements, resolutions and instruments delivered to any party under or in connection with this Agreement,
as the same may be amended from time to time, are collectively referred to herein as the “Transaction Documents”.
D. For
purposes of this Agreement: “Conversion Shares” means all shares of Common Stock issuable upon conversion of all or
any portion of the Note; “Warrant Shares” means all shares of Common Stock issuable upon the exercise of or pursuant
to the Warrant; and “Securities” means the Note, the Conversion Shares, the Warrant and the Warrant Shares.
NOW,
THEREFORE, Company and Investor hereby agree as follows:
1.
Purchase and Sale of Securities.
1.1.
Purchase of Securities. Company shall issue and sell to Investor and Investor agrees to purchase from Company the Note
and the Warrant. In consideration thereof, Investor shall pay (i) the amount designated as the initial cash purchase price on
Investor’s signature page to this Agreement (the “Initial Cash Purchase Price”), and (ii) issue to Company the
Investor Notes (the sum of the initial principal amount of the Investor Notes, together with the Initial Cash Purchase Price,
the “Purchase Price”). The Purchase Price and the OID (as defined herein) are allocated to the Tranches (as defined
in the Note) of the Note and to the Warrant as set forth in the table attached hereto as Exhibit C.
1.2.
Form of Payment. On the Closing Date, (i) Investor shall pay the Purchase Price to Company by delivering the following
at the Closing: (A) the Initial Cash Purchase Price, which shall be delivered by wire transfer of immediately available funds
to Company, in accordance with Company’s written wiring instructions; (B) Investor Note #1 in the principal amount of $37,500.00
duly executed and substantially in the form attached hereto as Exhibit D (“Investor Note #1”); (C) Investor
Note #2 in the principal amount of $37,500.00 duly executed and substantially in the form attached hereto as Exhibit D
(“Investor Note #2”); (D) Investor Note #3 in the principal amount of $37,500.00 duly executed and substantially in
the form attached hereto as Exhibit D (“Investor Note #3”); and (E) Investor Note #4 in the principal amount
of $37,500.00 duly executed and substantially in the form attached hereto as Exhibit D (“Investor Note #4”,
and together with Investor Note #1, Investor Note #2 and Investor Note #3, the “Investor Notes”); and (ii) Company
shall deliver the duly executed Note and Warrant on behalf of Company, to Investor, against delivery of such Purchase Price.
1.3.
Closing Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below,
the date and time of the issuance and sale of the Securities pursuant to this Agreement (the “Closing Date”) shall
be 5:00 p.m., Eastern Time on or about July 16, 2014, or such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at the offices of Investor unless otherwise
agreed upon by the parties.
1.4.
Collateral for the Note. The Note shall be secured by the collateral set forth in that certain Security Agreement attached
hereto as Exhibit E listing all of the Investor Notes as security for Company’s obligations under the Transaction
Documents (the “Security Agreement”).
1.5.
Collateral for Investor Notes. Initially, none of the Investor Notes will be secured, but all or any of the Investor Notes
may become secured subsequent to the Closing by such collateral and at such time as determined by Investor in its sole discretion.
In the event Investor desires to secure any of the Investor Notes, Company shall timely execute any and all amendments and documents
and take such other measures requested by Investor that are necessary or advisable in order to properly secure the applicable
Investor Notes.
1.6.
Original Issue Discount; Transaction Expenses. The Note carries an original issue discount of $25,000.00 (the “OID”).
In addition, Company agrees to pay $4,000.00 to Investor to cover Investor’s legal fees, accounting costs, due diligence,
monitoring and other transaction costs incurred in connection with the purchase and sale of the Securities (the “Transaction
Expense Amount”), all of which amount is included in the initial principal balance of this Note. The Purchase Price, therefore,
shall be $250,000.00, computed as follows: $279,000.00 original principal balance, less the OID, less the Transaction Expense
Amount. The Initial Cash Purchase Price shall be the Purchase Price less the sum of the initial principal amounts of the Investor
Notes. The OID and the Transaction Expense Amount allocated to the Initial Cash Purchase Price are set forth on Exhibit C.
2.
Investor’s Representations and Warranties. Investor represents and warrants to Company that: (i) this Agreement has
been duly and validly authorized; (ii) this Agreement constitutes a valid and binding agreement of Investor enforceable in accordance
with its terms; (iii) Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D
of the 1933 Act, and (iv) this Agreement and the Investor Notes have been duly executed and delivered on behalf of Investor.
3.
Representations and Warranties of Company. Company represents and warrants to Investor that: (i) Company is a corporation
duly organized, validly existing and in good standing under the laws of its state of incorporation and has the requisite corporate
power to own its properties and to carry on its business as now being conducted; (ii) Company is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it
makes such qualification necessary; (iii) Company has registered its Common Stock under Section 12(g) of the Securities Exchange
Act of 1934, as amended (the “1934 Act”), and is obligated to file reports pursuant to Section 13 or Section 15(d)
of the 1934 Act; (iv) each of the Transaction Documents and the transactions contemplated hereby and thereby, have been duly and
validly authorized by Company; (v) this Agreement, the Note, the Security Agreement, the Warrant, and the other Transaction Documents
have been duly executed and delivered by Company and constitute the valid and binding obligations of Company enforceable in accordance
with their terms, subject as to enforceability only to general principles of equity and to bankruptcy, insolvency, moratorium,
and other similar laws affecting the enforcement of creditors’ rights generally; (vi) the execution and delivery of the
Transaction Documents by Company, the issuance of Securities in accordance with the terms hereof, and the consummation by Company
of the other transactions contemplated by the Transaction Documents do not and will not conflict with or result in a breach by
Company of any of the terms or provisions of, or constitute a default under (a) Company’s formation documents or bylaws,
each as currently in effect, (b) any indenture, mortgage, deed of trust, or other material agreement or instrument to which Company
is a party or by which it or any of its properties or assets are bound, including any listing agreement for the Common Stock,
or (c) to Company’s knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction
over Company or any of Company’s properties or assets; (vii) no further authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders or any lender
of Company is required to be obtained by Company for the issuance of the Securities to Investor; (viii) none of Company’s
filings with the SEC contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which
they were made, not misleading; (ix) Company has filed all reports, schedules, forms, statements and other documents required
to be filed by Company with the SEC under the 1934 Act on a timely basis or has received a valid extension of such time of filing
and has filed any such report, schedule, form, statement or other document prior to the expiration of any such extension; (x)
Company is not, nor has it ever been, a “Shell Company,” as such type of “issuer” is described in Rule
144(i)(1) under the 1933 Act; (xi) Company has taken no action which would give rise to any claim by any person or entity for
a brokerage commission, placement agent or finder’s fees or similar payments by Investor relating to the Note or the transactions
contemplated hereby; (xii) except for such fees arising as a result of any agreement or arrangement entered into by Investor without
the knowledge of Company (an “Investor’s Fee”), Investor shall have no obligation with respect to such fees
or with respect to any claims made by or on behalf of other persons for fees of a type contemplated in this subsection that may
be due in connection with the transactions contemplated hereby and Company shall indemnify and hold harmless each of Investor,
Investor’s employees, officers, directors, stockholders, managers, agents, and partners, and their respective affiliates,
from and against all claims, losses, damages, costs (including the costs of preparation and attorneys’ fees) and expenses
suffered in respect of any such claimed or existing fees (other than an Investor’s Fee, if any), and (xiii) when issued,
each of the Securities (including, without limitation, the Conversion Shares and the Warrant Shares), will be validly issued,
fully paid for and non-assessable, free and clear of all liens, claims, charges and encumbrances.
4.
Company Covenants. Until all of Company’s obligations hereunder are paid and performed in full, or within the timeframes
otherwise specifically set forth below, Company shall comply with the following covenants: (i) from the date hereof until the
date that is six (6) months after all the Conversion Shares and the Warrant Shares either have been sold by Investor, or may permanently
be sold by Investor without any restrictions pursuant to Rule 144, Company shall timely make all filings required to be made by
it under the 1933 Act, the 1934 Act, Rule 144 or any United States securities laws and regulations thereof applicable to Company
or by the rules and regulations of its principal trading market, and such filings shall conform to the requirements of applicable
laws, regulations and government agencies, and, unless such filings are publicly available on the SEC’s EDGAR system (via
the SEC’s web site at no additional charge), Company shall provide a copy thereof to Investor promptly after such filings;
(ii) so long as Investor beneficially owns any of the Securities and for at least twenty (20) Trading Days thereafter, Company
shall file all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and shall take
all reasonable action under its control to ensure that adequate current public information with respect to Company, as required
in accordance with Rule 144, is publicly available, and shall not terminate its status as an issuer required to file reports under
the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; (iii) the Common Stock
shall be listed or quoted for trading on any of (a) the NYSE Amex, (b) the New York Stock Exchange, (c) the Nasdaq Global Market,
(d) the Nasdaq Capital Market, (e) the OTC Bulletin Board, (f) the OTCQX, or (g) the OTCQB; (iv) when issued, each of the Securities
(including, without limitation, the Conversion Shares and the Warrant Shares), will be validly issued, fully paid for and non-assessable,
free and clear of all liens, claims, charges and encumbrances, (v) Company shall use the net proceeds received hereunder for working
capital and general corporate purposes only; provided, however, Company will not use such proceeds to pay fees payable to any
broker or finder relating to the offer and sale of the Securities unless such broker, finder, or other party is a registered investment
adviser or registered broker-dealer and such fees are paid in full compliance with all applicable laws and regulations; and (vi)
from and after the date hereof and until all of Company’s obligations hereunder and the Note are paid and performed in full,
Company shall not transfer, assign, sell, pledge, hypothecate or otherwise alienate or encumber the Investor Notes in any way
without the prior written consent of Investor.
5.
Conditions to Company’s Obligation to Sell. The obligation of Company hereunder to issue and sell the Securities
to Investor at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions:
5.1.
Investor shall have executed this Agreement and the Investor Notes, and delivered the same to Company.
5.2.
Investor shall have delivered the Initial Cash Purchase Price in accordance with Section 1.2 above.
6.
Conditions to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the Securities
at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that
these conditions are for Investor’s sole benefit and may be waived by Investor at any time in its sole discretion:
6.1.
Company shall have executed this Agreement and delivered the same to Investor.
6.2.
Company shall have delivered to Investor the duly executed Note and Warrant in accordance with Section 1.2 above.
6.3.
The Irrevocable Letter of Instructions to Transfer Agent shall have been delivered to and acknowledged in writing by Company’s
transfer agent (the “Transfer Agent”) substantially in the form attached hereto as Exhibit F.
6.4.
Company shall have delivered to Investor a fully executed Secretary’s Certificate evidencing Company’s approval of
the Transaction Documents substantially in the form attached hereto as Exhibit G.
6.5.
Company shall have delivered to Investor a fully executed Share Issuance resolution to be delivered to the Transfer Agent substantially
in the form attached hereto as Exhibit H.
6.6.
Company shall have delivered to Investor fully executed copies of the Security Agreement and all other Transaction Documents required
to be executed by Company herein or therein.
7.
Reservation of Shares. At all times during which the Note is convertible or the Warrant is exercisable, Company will reserve
from its authorized and unissued Common Stock to provide for the issuance of Common Stock upon the full conversion of the Note
and full exercise of the Warrant. Company will at all times reserve at least (i) two and one half (2.5) times the higher of (1)
the Outstanding Balance (as defined in and determined pursuant to the Note) divided by the Lender Conversion Price (as defined
in and determined pursuant to the Note), and (2) the Outstanding Balance divided by the Market Price (as defined in and determined
pursuant to the Note), plus (ii) two and one half (2.5) times the number of Warrant Shares (as determined pursuant to the Warrant)
deliverable upon full exercise of the Warrant (the “Share Reserve”), but in any event not less than 19,000,000 shares
of Common Stock shall be reserved at all times for such purpose (the “Transfer Agent Reserve”). Company further agrees
that it will cause the Transfer Agent to immediately add shares of Common Stock to the Transfer Agent Reserve in increments of
2,500,000 shares as and when requested by Investor in writing from time to time, provided that such incremental increases do not
cause the Transfer Agent Reserve to exceed the Share Reserve. In furtherance thereof, from and after the date hereof and until
such time that the Note has been paid in full and the Warrant exercised in full, Company shall require the Transfer Agent to reserve
for the purpose of issuance of Conversion Shares under the Note and Warrant Shares under the Warrant, a number of shares of Common
Stock equal to the Transfer Agent Reserve. Company shall further require the Transfer Agent to hold such shares of Common Stock
exclusively for the benefit of Investor and to issue such shares to Investor promptly upon Investor’s delivery of a conversion
notice under the Note or a Notice of Exercise under the Warrant. Finally, Company shall require the Transfer Agent to issue shares
of Common Stock pursuant to the Note and the Warrant to Investor out of its authorized and unissued shares, and not the Transfer
Agent Reserve, to the extent shares of Common Stock have been authorized, but not issued, and are not included in the Transfer
Agent Reserve. The Transfer Agent shall only issue shares out of the Transfer Agent Reserve to the extent there are no other authorized
shares available for issuance and then only with Investor’s written consent.
8.
Miscellaneous. The provisions set forth in this Section 8 shall apply to this Agreement, as well as all other Transaction
Documents as if these terms were fully set forth therein.
8.1.
Cross Default. Any Event of Default (as defined in the Note) by Company under the Note shall be deemed a default under
this Agreement, and any default by Company under this Agreement will be deemed an Event of Default under the Note.
8.2.
Governing Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah
for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict
of laws. Each party consents to and expressly agrees that venue for Arbitration (as defined in Exhibit I) of any dispute
arising out of or relating to any Transaction Document or the relationship of the parties or their affiliates shall be in Salt
Lake County or Utah County, Utah; provided, however, that notwithstanding anything herein to the contrary, enforcement of Investor’s
rights under the Security Agreement will occur in accordance with the Uniform Commercial Code of the applicable state(s) under
the Security Agreement and enforcement of Company’s rights over the Collateral will occur in accordance with the laws of
the state in which the Collateral is located). Without modifying the parties obligations to resolve disputes hereunder pursuant
to the Arbitration Provisions (as defined below), for any litigation arising in connection with any of the Transaction Documents,
each party hereto hereby (a) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal
court sitting in Salt Lake County, Utah, (b) expressly submits to the venue of any such court for the purposes hereof, and (c)
waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim or
objection to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or
proceeding is improper.
8.3.
Arbitration of Claims. The parties shall submit all Claims (as defined in Exhibit I) arising under this Agreement
or any other Transaction Document or other agreements between the parties and their affiliates to binding arbitration pursuant
to the arbitration provisions set forth in Exhibit I attached hereto (the “Arbitration Provisions”). The parties
hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable
from all other provisions of this Agreement. Any capitalized term not defined in the Arbitration Provisions shall have the meaning
set forth in this Agreement. By executing this Agreement, Company represents, warrants and covenants that Company has reviewed
the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands
that the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees
to the terms and limitations set forth in the Arbitration Provisions, and that Company will not take a position contrary to the
foregoing representations. Company acknowledges and agrees that Investor may rely upon the foregoing representations and covenants
of Company regarding the Arbitration Provisions.
8.4.
Counterparts. Each Transaction Document may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another
party’s executed counterpart of a Transaction Document (or such party’s signature page thereof) will be deemed to
be an executed original thereof.
8.5.
Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
8.6.
Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
8.7.
Entire Agreement; Amendments. This Agreement and the instruments and exhibits referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein,
neither Company nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision
of this Agreement may be waived or amended other than by an instrument in writing signed by the parties hereto.
8.8.
Notices. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall
be deemed effectively given on the earliest of: (a) the date delivered, if delivered by personal delivery as against written receipt
therefor or by email to an executive officer, or by facsimile (with successful transmission confirmation), (b) the earlier of
the date delivered or the third Trading Day after deposit, postage prepaid, in the United States Postal Service by certified mail,
or (c) the earlier of the date delivered or the third Trading Day after mailing by express courier, with delivery costs and fees
prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other
addresses as such party may designate by five (5) calendar days’ advance written notice similarly given to each of the other
parties hereto):
If
to Company:
Endeavor
IP, Inc.
Attn:
Ravinder Dhat
140
Broadway, 46th Floor
New
York, New York 10005
With
a copy to (which copy shall not constitute notice):
Sichenzia
Ross Friedman Ference LLP
Attn:
_________________
61
Broadway, 32nd Floor
New
York, New York 10006
If
to Investor:
Typenex
Co-Investment, LLC
Attn:
John Fife
303
East Wacker Drive, Suite 1200
Chicago,
Illinois 60601
With
a copy to (which copy shall not constitute notice):
Hansen
Black Anderson Ashcraft PLLC
Attn:
Jonathan K. Hansen
2940
West Maple Loop, Suite 103
Lehi,
Utah 84043
8.9.
Successors and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be
performed by Investor hereunder may be assigned by Investor to a third party, including its financing sources, in whole or in
part, without the need to obtain Company’s consent thereto. Company may not assign its rights or obligations under this
Agreement or delegate its duties hereunder without the prior written consent of Investor.
8.10.
Survival. The representations and warranties of Company and the agreements and covenants set forth in this Agreement shall
survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of Investor. Company agrees
to indemnify and hold harmless Investor and all its officers, directors, employees, attorneys, and agents for loss or damage arising
as a result of or related to any breach or alleged breach by Company of any of its representations, warranties and covenants set
forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they
are incurred.
8.11.
Publicity. Company and Investor shall have the right to review a reasonable period of time before issuance of any press
releases by the other party with respect to the transactions contemplated hereby.
8.12.
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
8.13.
Investor’s Rights and Remedies Cumulative; Liquidated Damages. All rights, remedies, and powers conferred in this
Agreement and the Transaction Documents are cumulative and not exclusive of any other rights or remedies, and shall be in addition
to every other right, power, and remedy that Investor may have, whether specifically granted in this Agreement or any other Transaction
Document, or existing at law, in equity, or by statute, and any and all such rights and remedies may be exercised from time to
time and as often and in such order as Investor may deem expedient. The parties acknowledge and agree that upon Company’s
failure to comply with the provisions of the Transaction Documents, Investor’s damages would be uncertain and difficult
(if not impossible) to accurately estimate because of the parties’ inability to predict future interest rates and future
share prices, Investor’s increased risk, and the uncertainty of the availability of a suitable substitute investment opportunity
for Investor, among other reasons. Accordingly, any fees, charges, and default interest due under the Note, the Warrant, and the
other Transaction Documents are intended by the parties to be, and shall be deemed, liquidated damages (under Company’s
and Investor’s expectations that any such liquidated damages will tack back to the Closing Date for purposes of determining
the holding period under Rule 144). The parties agree that such liquidated damages are a reasonable estimate of Investor’s
actual damages and not a penalty, and shall not be deemed in any way to limit any other right or remedy Investor may have hereunder,
at law or in equity. The parties acknowledge and agree that under the circumstances existing at the time this Agreement is entered
into, such liquidated damages are fair and reasonable and are not penalties. All fees, charges, and default interest provided
for in the Transaction Documents are agreed to by the parties to be based upon the obligations and the risks assumed by the parties
as of the Closing Date and are consistent with investments of this type. The liquidated damages provisions of the Transaction
Documents shall not limit or preclude a party from pursuing any other remedy available at law or in equity; provided, however,
that the liquidated damages provided for in the Transaction Documents are intended to be in lieu of actual damages.
8.14.
Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement or the other Transaction Documents,
if at any time Investor shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance
would cause Investor (together with its affiliates) to beneficially own a number of shares exceeding the Maximum Percentage (as
defined in the Note), then Company must not issue to Investor the shares that would cause Investor to exceed the Maximum Percentage.
The shares of Common Stock issuable to Investor that would cause the Maximum Percentage to be exceeded are referred to herein
as the “Ownership Limitation Shares”. Company will reserve the Ownership Limitation Shares for the exclusive benefit
of Investor. From time to time, Investor may notify Company in writing of the number of the Ownership Limitation Shares that may
be issued to Investor without causing Investor to exceed the Maximum Percentage. Upon receipt of such notice, Company shall be
unconditionally obligated to immediately issue such designated shares to Investor, with a corresponding reduction in the number
of the Ownership Limitation Shares. For purposes of this Section, beneficial ownership of Common Stock will be determined under
Section 13(d) of the 1934 Act.
8.15.
Attorneys’ Fees and Cost of Collection. In the event of any arbitration or action at law or in equity to enforce
or interpret the terms of this Agreement or any of the other Transaction Documents, the parties agree that the prevailing party
shall be entitled to an additional award of the full amount of the attorneys’ fees, deposition costs, and expenses paid
by such prevailing party in connection with arbitration or litigation without reduction or apportionment based upon the individual
claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair an arbitrator’s or a court’s
power to award fees and expenses for frivolous or bad faith pleading. If (a) the Note or Warrant is placed in the hands of
an attorney for collection or enforcement prior to commencing arbitration or legal proceedings, or is collected or enforced through
any arbitration or legal proceeding, or Investor otherwise takes action to collect amounts due under the Note or to enforce the
provisions of the Note or the Warrant; or (b) there occurs any bankruptcy, reorganization, receivership of Company or other
proceedings affecting Company’s creditors’ rights and involving a claim under the Note or the Warrant; then Company
shall pay the costs incurred by Investor for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees, expenses, deposition costs, and disbursements.
8.16.
Waiver. No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by
the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any
other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing
waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in
writing.
8.17.
Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND
THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE
PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW
OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY
WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.
8.18.
Time of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and
the other Transaction Documents.
[Remainder
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, the undersigned Investor and Company have caused this Agreement to be duly executed as of the date first above
written.
SUBSCRIPTION
AMOUNT:
Principal
Amount of Note: $279,000.00
Initial
Cash Purchase Price: $100,000.00
INVESTOR:
Typenex
Co-Investment, LLC
By:
Red Cliffs Investments, Inc., its Manager
By:
/s/ John M. Fife
John
M. Fife, President
COMPANY:
Endeavor
IP, Inc.
By: /s/
Ravinder Dhat
Printed
Name: Ravinder Dhat
Title:
Chief Executive Officer
ATTACHED
EXHIBITS:
| Exhibit C | Allocation
of Purchase Price |
| Exhibit D | Form
of Investor Note |
| Exhibit E | Security
Agreement |
| Exhibit F | Irrevocable
Transfer Agent Instructions |
| Exhibit G | Secretary’s
Certificate |
| Exhibit H | Share
Issuance Resolution |
| Exhibit I | Arbitration
Provisions |
Exhibit
I
ARBITRATION
PROVISIONS
1. Dispute
Resolution. For purposes of this Exhibit I, the term “Claims” means any disputes, claims, demands, causes
of action, liabilities, damages, losses, or controversies whatsoever arising from related to or connected with the transactions
contemplated in the Transaction Documents and any communications between the parties related thereto, including without limitation
any claims of mutual mistake, mistake, fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel,
unconscionability, failure of condition precedent, rescission, and any statutory claims, tort claims, contract claims, or claims
to void, invalidate or terminate the Agreement or any of the other Transaction Documents. The term “Claims” specifically
excludes enforcement of Investor’s rights and remedies against the personal property described in the Security Agreement
under the applicable provisions of the Uniform Commercial Code. The parties hereby agree that the arbitration provisions set forth
in this Exhibit I (“Arbitration Provisions”) are binding on the parties hereto and are severable from all other
provisions in the Transaction Documents. As a result, any attempt to rescind the Agreement or declare the Agreement or any other
Transaction Document invalid or unenforceable for any reason is subject to these Arbitration Provisions. These Arbitration Provisions
shall also survive any termination or expiration of the Agreement.
2. Arbitration.
Except as otherwise provided herein, all Claims must be submitted to arbitration (“Arbitration”) to be conducted in
Salt Lake County, Utah or Utah County, Utah and pursuant to the terms set forth in these Arbitration Provisions. The parties agree
that the award of the arbitrator shall be final and binding upon the parties; shall be the sole and exclusive remedy between them
regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator; and shall promptly be payable
in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any costs or fees, including
without limitation attorneys’ fees, incident to enforcing the arbitrator’s award shall, to the maximum extent permitted
by law, be charged against the party resisting such enforcement. The award shall include Default Interest (as defined in the Note)
both before and after the award. Judgment upon the award of the arbitrator will be entered and enforced by a state court sitting
in Salt Lake County, Utah. The parties hereby incorporate herein the provisions and procedures set forth in the Utah Uniform Arbitration
Act, U.C.A. § 78B-11-101 et seq. (as amended or superseded from time to time, the “Arbitration Act”). Pursuant
to Section 78B-11-105 of the Arbitration Act, in the event of conflict between the terms of these Arbitration Provisions and the
provisions of the Arbitration Act, the terms of these Arbitration Provisions shall control.
3. Arbitration
Proceedings. Arbitration between the parties will be subject to the following procedures:
3.1 Pursuant
to Section 110 of the Arbitration Act, the parties agree that a party may initiate Arbitration by giving written notice to the
other party (“Arbitration Notice”) in the same manner that notice is permitted under Section 8.8 of the Agreement;
provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed initiated as of the
date that the Arbitration Notice is deemed delivered under Section 8.8 of the Agreement (the “Service Date”). After
the Service Date, information may be delivered, and notices may be given, by email or fax pursuant to Section 8.8 of the Agreement
or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy, the remedies sought,
and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent with the
Utah Rules of Civil Procedure.
3.2
Within ten (10) calendar days after the Service Date, Investor shall select and submit to Company the names of three arbitrators
that are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com) (such
three designated persons hereunder are referred to herein as the “Proposed Arbitrators”). For the avoidance of doubt,
each Proposed Arbitrator must be qualified as a “neutral” with Utah ADR Services. Within ten (10) calendar days after
Investor has submitted to Company the names of the Proposed Arbitrators, Company must select, by written notice to Investor, one
(1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Company fails
to select one of the Proposed Arbitrators in writing within such 10-day period, then Investor may select the arbitrator from the
Proposed Arbitrators by providing written notice of such selection to Company. If Investor fails to identify the Proposed Arbitrators
within the time period required above, then Company may at any time prior to Investor designating the Proposed Arbitrators, select
the names of three arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Service by written
notice to Investor. Investor may then, within ten (10) calendar days after Company has submitted notice of its selected arbitrators
to Investor, select, by written notice to Company, one (1) of the selected arbitrators to act as the arbitrator for the parties
under these Arbitration Provisions. If Investor fails to select in writing and within such 10-day period one of the three arbitrators
selected by Company, then Company may select the arbitrator from its three previously selected arbitrators by providing written
notice of such selection to Investor. Subject to Paragraph 3.12 below, the cost of the arbitrator must be paid equally by both
parties; provided, however, that if one party refuses or fails to pay its portion of the arbitrator fee, then the other party
can advance such unpaid amount (subject to the accrual of Default Interest thereupon), with such amount added to or subtracted
from, as applicable, the award granted by the arbitrator. If Utah ADR Services ceases to exist or to provide a list of neutrals,
then the arbitrator shall be selected under the then prevailing rules of the American Arbitration Association. The date that the
selected arbitrator agrees in writing to serve as the arbitrator hereunder is referred to herein as the “Arbitration Commencement
Date”.
3.3 An
answer and any counterclaims to the Arbitration Notice, which must be pleaded consistent with the Utah Rules of Civil Procedure,
shall be required to be delivered to the other party within twenty (20) calendar days after the Service Date. Upon request, the
arbitrator is hereby instructed to render a default award, consistent with the relief requested in the Arbitration Notice, against
a party that fails to submit an answer within such time period.
3.4 The
party that delivers the Arbitration Notice to the other party shall have the option to also commence legal proceedings with any
state court sitting in Salt Lake County, Utah (“Litigation Proceedings”), subject to the following: (i) the complaint
in the Litigation Proceedings is to be substantially similar to the claims set forth in the Arbitration Notice, provided that
an additional cause of action to compel arbitration will also be included therein, (ii) so long as the other party files an answer
to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice, the Litigation Proceedings will be stayed
pending an award of the arbitrator hereunder, (iii) if the other party fails to file an answer in the Litigation Proceedings or
an answer in the Arbitration Proceedings, then the party initiating Arbitration shall be entitled to a default judgment consistent
with the relief requested, to be entered in the Litigation Proceedings, and (iv) any legal or procedural issue arising under the
Arbitration Act that requires a decision of a court of competent jurisdiction may be determined in the Litigation Proceedings.
Any award of the arbitrator may be entered in such Litigation Proceedings pursuant to the Arbitration Act.
3.5 Pursuant
to Section 118(8) of the Arbitration Act, the parties agree that discovery shall be conducted in accordance with the Utah Rules
of Civil Procedure; provided, however, that incorporation of such rules will in no event supersede the Arbitration Provisions
set forth herein, including without limitation the time limitation set forth in Paragraph 3.9 below, and the following:
(a) Discovery
will only be allowed if the likely benefits of the proposed discovery outweigh the burden or expense, and the discovery sought
is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded in the Arbitration.
The party seeking discovery shall always have the burden of showing that all of the standards and limitations set forth in these
Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited as follows:
(i) To
facts directly connected with the transactions contemplated by the Agreement.
(ii) To
facts and information that cannot be obtained from another source that is more convenient, less burdensome or less expensive.
(c) No
party shall be allowed (a) more than fifteen (15) interrogatories (including discrete subparts), (b) more than fifteen (15) requests
for admission (including discrete subparts), (c) more than ten (10) document requests (including discrete subparts), or (d) more
than three depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition.
3.6 Any
party submitting any written discovery requests, including interrogatories, requests for production, subpoenas to a party or a
third party, or requests for admissions, must prepay the estimated attorneys’ fees and costs, as determined by the arbitrator,
before the responding party has any obligation to produce or respond.
(a) All
discovery requests must be submitted in writing to the arbitrator and the other party before issuing or serving such discovery
requests. The party issuing the written discovery requests must include with such discovery requests a detailed explanation of
how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Utah Rules of Civil Procedure.
Any party will then be allowed, within ten (10) calendar days of receiving the proposed discovery requests, to submit to the arbitrator
an estimate of the attorneys’ fees and costs associated with responding to such written discovery requests and a written
challenge to each applicable discovery request. After receipt of an estimate of attorneys’ fees and costs and/or challenge(s)
to one or more discovery requests, the arbitrator will make a finding as to the likely attorneys’ fees and costs associated
with responding to the discovery requests and issue an order that (A) requires the requesting party to prepay the attorneys’
fees and costs associated with responding to the discovery requests, and (B) requires the responding party to respond to the discovery
requests as limited by the arbitrator within a certain period of time after receiving payment from the requesting party. If a
party entitled to submit an estimate of attorneys’ fees and costs and/or a challenge to discovery requests fails to do so
within such 10-day period, the arbitrator will make a finding that (A) there are no attorneys’ fees or costs associated
with responding to such discovery requests, and (B) the responding party must respond to such discovery requests (as may be limited
by the arbitrator) within a certain period of time as determined by the arbitrator.
(b) In
order to allow a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth
in these Arbitration Provisions and the Utah Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If
a discovery request does not satisfy any of the standards set forth in these Arbitration Provisions or the Utah Rules of Civil
Procedure, the arbitrator may modify such discovery request to satisfy the applicable standards, or strike such discovery request
in whole or in part.
(c) Discovery
deadlines will be set forth in a scheduling order issued by the arbitrator. The parties hereby authorize and direct the arbitrator
to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the arbitration proceedings
to be efficient and expeditious.
3.7 Each
party may submit expert reports (and rebuttals thereto), provided that such reports must be submitted by the deadlines established
by the arbitrator. Expert reports must contain the following: (a) a complete statement of all opinions the expert will offer at
trial and the basis and reasons for them; (b) the expert’s name and qualifications, including a list of all publications
within the preceding 10 years, and a list of any other cases in which the expert has testified at trial or in a deposition or
prepared a report within the preceding 10 years; and (c) the compensation to be paid for the expert’s study and testimony.
The parties are entitled to depose any other party’s expert witness one time for no more than 4 hours. An expert may not
testify in a party’s case-in-chief concerning any matter not fairly disclosed in the expert report.
3.8 All
information disclosed by either party during the Arbitration process (including without limitation information disclosed during
the discovery process) shall be considered confidential in nature. Each party agrees not to disclose any confidential information
received from the other party during the discovery process unless (i) prior to or after the time of disclosure such information
becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party, (ii)
such information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified
the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent
jurisdiction prior to disclosure; or (iii) disclosed to the receiving party’s agents, representatives and legal counsel
on a need to know basis who each agree in writing not to disclose such information to any third party. Pursuant to Section 118(5)
of the Arbitration Act, the arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure
of privileged information and confidential information upon the written request of either party.
3.9 The
parties hereby authorize and direct the arbitrator to take such actions and make such rulings as may be necessary to carry out
the parties’ intent for the arbitration proceedings to be efficient and expeditious. Pursuant to Section 120 of the Arbitration
Act, the parties hereby agree that an award of the arbitrator must be made within 150 days after the Arbitration Commencement
Date. The arbitrator is hereby authorized and directed to hold a scheduling conference within ten (10) calendar days after the
Arbitration Commencement Date in order to establish a scheduling order with various binding deadlines for discovery, expert testimony,
and the submission of documents by the parties to enable the arbitrator to render a decision prior to the end of such 150-day
period. The Utah Rules of Evidence will apply to any final hearing before the arbitrator.
3.10 The
arbitrator shall have the right to award or include in the arbitrator’s award any relief which the arbitrator deems proper
under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator
may not award exemplary or punitive damages.
3.11 If
any part of these Arbitration Provisions is found to violate applicable law or to be illegal, then such provision shall be modified
to the minimum extent necessary to make such provision enforceable under applicable law.
3.12 The
arbitrator is hereby directed to require the losing party to (i) pay the full amount of the costs and fees of the arbitrator,
and (ii) reimburse the prevailing party the reasonable attorneys’ fees, arbitrator costs, deposition costs, and other discovery
costs incurred by the prevailing party.
[Remainder
of page intentionally left blank]
SECURED
CONVERTIBLE PROMISSORY NOTE
| Effective Date: July 16, 2014 |
U.S. $279,000.00 |
FOR
VALUE RECEIVED, Endeavor IP, Inc., a Nevada corporation (“Borrower”),
promises to pay to Typenex Co-Investment, LLC, a Utah limited liability company,
or its successors or assigns (“Lender”), $279,000.00 and any interest, fees, charges, and late fees on the
date that is seventeen (17) months after the Purchase Price Date (as defined below) (the “Maturity Date”) in
accordance with the terms set forth herein and to pay interest on the Outstanding Balance (as defined below) (including all Tranches
(as defined below), both Conversion Eligible Tranches (as defined below) and Subsequent Tranches (as defined below) that have
not yet become Conversion Eligible Tranches) at the rate of eight percent (8%) per annum from the Purchase Price Date until the
same is paid in full. This Secured Convertible Promissory Note (this “Note”) is issued and made effective as
of July 16, 2014 (the “Effective Date”). For purposes hereof, the “Outstanding Balance”
of this Note means, as of any date of determination, the Purchase Price (as defined below), as reduced or increased, as the case
may be, pursuant to the terms hereof for redemption, conversion, offset, or otherwise, plus any original issue discount (“OID”),
the Transaction Expense Amount (as defined below), accrued but unpaid interest, collection and enforcements costs (including attorneys’
fees) incurred by Lender, transfer, stamp, issuance and similar taxes and fees related to Conversions (as defined below), and
any other fees or charges (including without limitation late charges) incurred under this Note. This Note is issued pursuant to
that certain Securities Purchase Agreement dated July 16, 2014, as the same may be amended from time to time (the “Purchase
Agreement”), by and between Borrower and Lender. All interest calculations hereunder shall be computed on the basis
of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance
with the terms of this Note. Certain capitalized terms used herein but not otherwise defined shall have the meaning ascribed thereto
in the Purchase Agreement. Certain other capitalized terms used herein are defined in Attachment 1 attached hereto and
incorporated herein by this reference.
This
Note carries an OID of $25,000.00. In addition, Borrower agrees to pay $4,000.00 to Lender to cover Lender’s legal fees,
accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this
Note (the “Transaction Expense Amount”), all of which amount is included in the initial principal balance of
this Note. The purchase price for this Note and the Warrant (as defined in the Purchase Agreement) shall be $250,000.00 (the “Purchase
Price”), computed as follows: $279,000.00 original principal balance, less the OID, less the Transaction Expense Amount.
The Purchase Price shall be payable by delivery to Borrower at Closing of the Investor Notes, and a wire transfer of immediately
available funds in the amount of the Initial Cash Purchase Price (as defined in the Purchase Agreement). For purposes hereof,
the term “Purchase Price Date” means the date the Initial Cash Purchase Price is delivered by Lender to Borrower.
Notwithstanding
any other provision contained in this Note, the conversion by Lender of any portion of the Outstanding Balance shall only be exercisable
in five (5) tranches (each, a “Tranche”), consisting of (i) an initial Tranche in an amount equal to $114,000.00
and any interest, costs, fees or charges accrued thereon or added thereto under the terms of this Note and the other Transaction
Documents (as defined in the Purchase Agreement) (the “Initial Tranche”), and (ii) four (4) additional
Tranches, each in the amount of $41,250.00, plus any interest, costs, fees or charges accrued thereon or added thereto under the
terms of this Note and the other Transaction Documents (each, a “Subsequent Tranche”). The Initial Tranche
shall correspond to the Initial Cash Purchase Price, the OID and the Transaction Expense Amount, and may be converted any time
subsequent to the Purchase Price Date. The first Subsequent the second Subsequent the Investor Notes costs, fees or charges.
1.
Payment; Prepayment. Provided there is an Outstanding Balance, on each Installment Date (as defined below), Borrower shall
pay to Lender an amount equal to the Installment Amount (as defined below) due on such Installment Date in accordance with Section 8.
All payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares (as defined below),
as provided for herein, and delivered to Lender at the address furnished to Borrower for that purpose. All payments shall be applied
first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid interest, and thereafter,
to (d) principal. Notwithstanding the foregoing, so long as Borrower has not received a Lender Conversion Notice (as defined below)
or an Installment Notice (as defined below) from Lender where the applicable Conversion Shares have not yet been delivered and
so long as no Event of Default has occurred since the Effective Date (whether declared by Lender or undeclared), then Borrower
shall have the right, exercisable on not less than five (5) Trading Days prior written notice to Lender to prepay the Outstanding
Balance of this Note, in full, in accordance with this Section 1. Any notice of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to Lender at its registered address and shall state: (y) that Borrower is exercising its
right to prepay this Note, and (z) the date of prepayment, which shall be not less than five (5) Trading Days from the date of
the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), Borrower
shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of Lender as may be specified by
Lender in writing to Borrower. If Borrower exercises its right to prepay this Note, Borrower shall make payment to Lender of an
amount in cash (the “Optional Prepayment Amount”) equal to 125% (the “Prepayment Premium”)
multiplied by the then Outstanding Balance of this Note. In the event Borrower delivers the Optional Prepayment Amount to Lender
prior to the Optional Prepayment Date or without delivering an Optional Prepayment Notice to Lender as set forth herein without
Lender’s prior written consent, the Optional Prepayment Amount shall not be deemed to have been paid to Lender until the
Optional Prepayment Date. Moreover, in such event the Optional Prepayment Liquidated Damages Amount will automatically be added
to the Outstanding Balance of this Note on the day Borrower delivers the Optional Prepayment Amount to Lender. In addition, if
Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to Lender within two (2) Trading
Days following the Optional Prepayment Date, Borrower shall forever forfeit its right to prepay this Note pursuant to this section.
2.
Security. This Note is secured by that certain Security Agreement of even date herewith, as the same may be amended from
time to time (the “Security Agreement”), executed by Borrower in favor of Lender encumbering the Investor Notes,
as more specifically set forth in the Security Agreement, all the terms and conditions of which are hereby incorporated into and
made a part of this Note.
3.
Lender Optional Conversion.
3.1.
Lender Conversion Price. Subject to adjustment as set forth in this Note, the conversion price for each Lender Conversion
(as defined below) shall be $0.06 (the “Lender Conversion Price”).
3.2.
Lender Conversions. Lender has the right at any time after the Purchase Price Date until the Outstanding Balance has been
paid in full, including without limitation (i) until any Optional Prepayment Date (even if Lender has received an Optional Prepayment
Notice) or at any time thereafter with respect to any amount that is not prepaid, and (ii) during or after any Fundamental Default
Measuring Period, at its election, to convert (each instance of conversion is referred to herein as a “Lender Conversion”)
all or any part of the Outstanding Balance into shares (“Lender Conversion Shares”) of fully paid and
non-assessable common stock, $0.0001 par value per share (“Common Stock”), of Borrower as per the following
conversion formula: the number of Lender Conversion Shares equals the amount being converted (the “Conversion Amount”)
divided by the Lender Conversion Price. Conversion notices in the form attached hereto as Exhibit A (each, a “Lender
Conversion Notice”) may be effectively delivered to Borrower by any method of Lender’s choice (including but not
limited to facsimile, email, mail, overnight courier, or personal delivery), and all Lender Conversions shall be cashless and
not require further payment from Lender. Borrower shall deliver the Lender Conversion Shares from any Lender Conversion to Lender
in accordance with Section 9 below within three (3) Trading Days of Lender’s delivery of the Lender Conversion Notice
to Borrower.
3.3.
Application to Installments. Notwithstanding anything to the contrary herein, including without limitation Section 8 hereof,
Lender may, in its sole discretion, apply all or any portion of any Lender Conversion toward any Installment Conversion (as defined
below), even if such Installment Conversion is pending, as determined in Lender’s sole discretion, by delivering written
notice of such election (which notice may be included as part of the applicable Lender Conversion Notice) to Borrower at any date
on or prior to the applicable Installment Date. In such event, Borrower may not elect to allocate such portion of the Installment
Amount being paid pursuant to this Section 3.3 in the manner prescribed in Section 8.3; rather, Borrower must reduce the applicable
Installment Amount by the Conversion Amount described in this Section 3.3.
4.
Defaults and Remedies.
4.1.
Defaults. The following are events of default under this Note (each, an “Event of Default”): (i) Borrower
shall fail to pay any principal when due and payable (or payable by Conversion) hereunder; or (ii) Borrower shall fail to deliver
any Lender Conversion Shares in accordance with the terms hereof; or (iii) Borrower shall fail to deliver any Installment Conversion
Shares (as defined below) or True-Up Shares (as defined below) in accordance with the terms hereof; or (iv) Borrower shall fail
to pay any interest, fees, charges, or any other amount when due and payable (or payable by Conversion) hereunder; or (v) a receiver,
trustee or other similar official shall be appointed over Borrower or a material part of its assets and such appointment shall
remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (vi) Borrower shall
become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any; or (vii) Borrower shall make a general assignment for the benefit of creditors; or (viii) Borrower
shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); or (ix) an involuntary
proceeding shall be commenced or filed against Borrower; or (x) Borrower shall become delinquent in its filing requirements as
a fully-reporting issuer registered with the SEC; or (xi) Borrower shall default or otherwise fail to observe or perform any material
covenant, obligation, condition or agreement of Borrower contained herein or in any other Transaction Document, other than those
specifically set forth in this Section 4.1; or (xii) Borrower shall fail to timely file all required quarterly and annual reports
and any other filings that are necessary to enable Lender to sell Conversion Shares or True-Up Shares pursuant to Rule 144, provided
that in the event Borrower is unable to make such filings in a timely manner due to any event outside of its reasonable control,
it shall have an additional five (5) days from the date such filings were due to cure any deficient filings; or (xiii) any representation,
warranty or other statement made or furnished by or on behalf of Borrower to Lender herein, in any Transaction Document, or otherwise
in connection with the issuance of this Note shall be false, incorrect, incomplete or misleading in any material respect when
made or furnished; or (xiv) the occurrence of a Fundamental Transaction without Lender’s prior written consent; or (xv)
Borrower shall fail to maintain the Share Reserve as required under the Purchase Agreement; or (xvi) any money judgment, writ
or similar process shall be entered or filed against Borrower or any subsidiary of Borrower or any of its property or other assets
for more than $100,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) calendar days unless otherwise
consented to by Lender; or (xvii) Borrower’s Common Stock is not DTC Eligible.
4.2.
Remedies. Upon the occurrence of any Event of Default, Borrower shall within one (1) Trading Day deliver written notice
thereof via facsimile, email or reputable overnight courier (with next day delivery specified) (an “Event of Default
Notice”) to Lender. At any time and from time to time after the earlier of Lender’s receipt of an Event of Default
Notice and Lender becoming aware of the occurrence of any Event of Default, Lender may accelerate this Note by written notice
to Borrower, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default Amount (as defined
hereafter). Notwithstanding the foregoing, at any time following the occurrence of any Event of Default, Lender may, at its option,
elect to increase the Outstanding Balance by applying the Default Effect (as defined below) (subject to the limitation set forth
below) via written notice to Borrower without accelerating the Outstanding Balance, in which event the Outstanding Balance shall
be increased as of the date of the occurrence of the applicable Event of Default pursuant to the Default Effect, but the Outstanding
Balance shall not be immediately due and payable unless so declared by Lender (for the avoidance of doubt, if Lender elects to
apply the Default Effect pursuant to this sentence, it shall reserve the right to declare Outstanding Balance immediately due
and payable at any time and no such election by Lender shall be deemed to be a waiver of its right to declare the Outstanding
Balance immediately due and payable as set forth herein unless otherwise agreed to by Lender in writing). For purposes hereof,
the “Default Effect” is calculated by multiplying the Conversion Eligible Outstanding Balance as of the date
the applicable Event of Default occurred by (i) 15% for each occurrence of any Major Default, or (ii) 5% for each occurrence of
any Minor Default, and then adding the resulting product to the Outstanding Balance as of the date the applicable Event of Default
occurred, with the sum of the foregoing then becoming the Outstanding Balance under this Note as of the date the applicable Event
of Default occurred; provided that the Default Effect may only be applied two (2) times hereunder with respect to Major Defaults
and two (2) times hereunder with respect to Minor Defaults; and provided further that the Default Effect shall not apply to any
Event of Default pursuant to Section 4.1(ii) hereof. Notwithstanding the foregoing, upon the occurrence of any Event of Default
described in clauses (v), (vi), (vii), (viii) or (ix) of Section 4.1, the Outstanding Balance as of the date of acceleration shall
become immediately and automatically due and payable in cash at the Mandatory Default Amount, without any written notice required
by Lender. The “Mandatory Default Amount” means the greater of (i) the Outstanding Balance (including all Tranches,
both Conversion Eligible Tranches and Subsequent Tranches that have not yet become Conversion Eligible Tranches) divided by the
Installment Conversion Price (as defined below) on the date the Mandatory Default Amount is demanded, multiplied by the volume
weighted average price (the “VWAP”) on the date the Mandatory Default Amount is demanded, or (ii) the Default
Effect. At any time following the occurrence of any Event of Default, upon written notice given by Lender to Borrower, interest
shall accrue on the Outstanding Balance beginning on the date the applicable Event of Default occurred at an interest rate equal
to the lesser of 22% per annum or the maximum rate permitted under applicable law (“Default Interest”); provided,
however, that no Default Interest shall accrue during the Fundamental Default Measuring Period (as defined below). Additionally,
following the occurrence of any Event of Default, Borrower may, at its option, pay any Lender Conversion in cash instead of Lender
Conversion Shares by paying to Lender on or before the applicable Delivery Date (as defined below) a cash amount equal to the
number of Lender Conversion Shares set forth in the applicable Lender Conversion Notice multiplied by the highest intra-day trading
price of the Common Stock that occurs during the period beginning on the date the applicable Event of Default occurred and ending
on the date of the applicable Lender Conversion Notice. In connection with acceleration described herein, Lender need not provide,
and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and Lender may immediately and without
expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it
under applicable law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and Lender
shall have all rights as a holder of the Note until such time, if any, as Lender receives full payment pursuant to this Section
4.2. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. Nothing
herein shall limit Lender’s right to pursue any other remedies available to it at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver Conversion
Shares upon Conversion of the Notes as required pursuant to the terms hereof.
4.3.
Fundamental Default Remedies. Notwithstanding anything to the contrary herein, in addition to all other remedies set forth
herein, after giving effect to the Lender Offset Right (as defined below), which shall occur automatically upon the occurrence
of any Fundamental Default, the Fundamental Liquidated Damages Amount shall be added to the Outstanding Balance upon Lender’s
delivery to Borrower of a notice (which notice Lender may deliver to Borrower at any time following the occurrence of a Fundamental
Default) setting forth its election to declare a Fundamental Default and the Fundamental Liquidated Damages Amount that will be
added to the Outstanding Balance.
4.4.
Certain Additional Rights. Notwithstanding anything to the contrary herein, in the event Borrower fails to make any payment
or otherwise to deliver any Conversion Shares as and when required under this Note, then (i) the Lender Conversion Price for all
Lender Conversions occurring after the date of such failure to pay shall equal the lower of the Lender Conversion Price applicable
to any Lender Conversion and the Market Price as of any applicable date of Conversion, and (ii) the true-up provisions of Section
11 below shall apply to all Lender Conversions that occur after the date of such failure to pay, provided that all references
to the “Installment Notice” in Section 11 shall be replaced with references to a “Lender Conversion Notice”
for purposes of this Section 4.4, all references to “Installment Conversion Shares” in Section 11 shall be replaced
with references to “Lender Conversion Shares” for purposes of this Section 4.4, and all references to the “Installment
Conversion Price” in Section 11 shall be replaced with references to the “Lender Conversion Price” for purposes
of this Section 4.4.
4.5.
Cross Default. A breach or default by Borrower of any covenant or other term or condition contained in any Other Agreements
(as defined below) shall, at the option of Lender, be considered an Event of Default under this Note, in which event Lender shall
be entitled (but in no event required) to apply all rights and remedies of Lender under the terms of this Note. “Other
Agreements” means, collectively, (a) all existing and future agreements and instruments between, among or by Borrower
(or an affiliate), on the one hand, and Lender (or an affiliate), on the other hand, and (b) any financing agreement or a material
agreement that affects Borrower’s ongoing business operations. For the avoidance of doubt, all existing and future loan
transactions between Borrower and Lender and their respective affiliates will be cross-defaulted with each other loan transaction
and with all other existing and future debt of Borrower to Lender.
5.
Unconditional Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable
obligation of Borrower not subject to offset (except as set forth in Section 20 below), deduction or counterclaim of any kind.
Borrower hereby waives any rights of offset it now has or may have hereafter against Lender, its successors and assigns, and agrees
to make the payments or conversions called for herein in accordance with the terms of this Note.
6.
Waiver. No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the
party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other
provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing
waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in
writing.
7.
Rights Upon Issuance of Securities.
7.1.
Subsequent Equity Sales. Except with respect to Excluded Securities, if Borrower or any subsidiary thereof, as applicable,
at any time this Note is outstanding, shall sell or issue any Common Stock to Lender or any third party for a price that is less
than the then effective Lender Conversion Price, then such Lender Conversion Price shall be automatically reduced and only reduced
to equal such lower issuance price. Except with respect to Excluded Securities, if Borrower or any subsidiary thereof, as applicable,
at any time this Note is outstanding, shall sell or grant any option to any party to purchase, or sell or grant any right to reprice,
or issue any Common Stock, preferred shares convertible into Common Stock, or debt, warrants, options or other instruments or
securities to Lender or any third party which are convertible into or exercisable for shares of Common Stock (together herein
referred to as “Equity Securities”), including without limitation any Deemed Issuance (as defined herein),
at an effective price per share less than the then effective Lender Conversion Price (such issuance, together with any sale of
Common Stock, is referred to herein as a “Dilutive Issuance”), then, the Lender Conversion Price shall be automatically
reduced and only reduced to equal such lower effective price per share. If the holder of any Equity Securities so issued shall
at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options, or rights per share which are issued in connection with such Dilutive Issuance, be
entitled to receive shares of Common Stock at an effective price per share that is less than the Lender Conversion Price, such
issuance shall be deemed to have occurred for less than the Lender Conversion Price on the date of such Dilutive Issuance, and
the then effective Lender Conversion Price shall be reduced and only reduced to equal such lower effective price per share. Such
adjustments described above to the Lender Conversion Price shall be permanent (subject to additional adjustments under this section),
and shall be made whenever such Common Stock or Equity Securities are issued. Borrower shall notify Lender, in writing, no later
than the Trading Day following the issuance of any Common Stock or Equity Securities subject to this Section 7.1, indicating therein
the applicable issuance price, or applicable reset price, exchange price, conversion price, or other pricing terms (such notice,
the “Dilutive Issuance Notice”). For purposes of clarification, whether or not Borrower provides a Dilutive
Issuance Notice pursuant to this Section 7.1, upon the occurrence of any Dilutive Issuance, on the date of such Dilutive Issuance
the Lender Conversion Price shall be lowered to equal the applicable effective price per share regardless of whether Borrower
or Lender accurately refers to such lower effective price per share in any Installment Notice or Lender Conversion Notice.
7.2.
Adjustment of Lender Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision hereof,
if Borrower at any time on or after the Effective Date subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Lender Conversion Price in
effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision hereof, if Borrower
at any time on or after the Effective Date combines (by combination, reverse stock split or otherwise) one or more classes of
its outstanding shares of Common Stock into a smaller number of shares, the Lender Conversion Price in effect immediately prior
to such combination will be proportionately increased. Any adjustment pursuant to this Section 7.2 shall become effective immediately
after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 7.2 occurs
during the period that a Lender Conversion Price is calculated hereunder, then the calculation of such Lender Conversion Price
shall be adjusted appropriately to reflect such event.
7.3.
Other Events. In the event that Borrower (or any subsidiary) shall take any action to which the provisions hereof are not
strictly applicable, or, if applicable, would not operate to protect Lender from dilution or if any event occurs of the type contemplated
by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or other rights with equity features), then Borrower’s board
of directors shall in good faith determine and implement an appropriate adjustment in the Lender Conversion Price so as to protect
the rights of Lender, provided that no such adjustment pursuant to this Section 7.3 will increase the Lender Conversion Price
as otherwise determined pursuant to this Section 7, provided further that if Lender does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then Borrower’s board of directors and Lender shall agree, in
good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding and whose fees and expenses shall be borne by Borrower.
8.
Borrower Installments.
8.1.
Installment Conversion Price. Subject to the adjustments set forth herein, the conversion price for each Installment Conversion
(the “Installment Conversion Price”) shall be the lesser of (i) the Lender Conversion Price, and (ii) 60% (the
“Conversion Factor”) of the lowest Closing Bid Price in the fifteen (15) Trading Days immediately preceding
the applicable Conversion (the “Market Price”), provided that if at any time the lowest Closing Bid Price in
the fifteen (15) Trading Days immediately preceding any date of measurement is below $0.01, then in such event the then-current
Conversion Factor shall be reduced to 55% for all future Conversions (subject to other reductions set forth in this section).
Additionally, if at any time after the Effective Date, the Conversion Shares are not DTC Eligible, then the then-current Conversion
Factor will automatically be reduced by 5% for all future Conversions. Finally, in addition to the Default Effects, if any Major
Default occurs after the Effective Date, the Conversion Factor shall automatically be reduced for all future Conversions by an
additional 5% for each of the first three (3) Major Defaults that occur after the Effective Date (for the avoidance of doubt,
each occurrence of any Major Default shall be deemed to be a separate occurrence for purposes of the foregoing reductions in Conversion
Factor, even if the same Major Default occurs three (3) separate times). For example, the first time the Conversion Shares are
not DTC Eligible, the Conversion Factor for future Conversions thereafter will be reduced from 60% to 55% for purposes of this
example. If, thereafter, there are three (3) separate occurrences of a Major Default pursuant to Section 4.1(iii), then for purposes
of this example the Conversion Factor would be reduced by 5% for the first such occurrence, and so on for each of the second and
third occurrences of such Major Default.
8.2.
Installment Conversions. Beginning on the date that is six (6) months after the Purchase Price Date and on the same day
of each month thereafter until the Maturity Date (each, an “Installment Date”), Borrower shall pay to Lender
the applicable Installment Amount due on such date, subject to the provisions of this Section 8. Payments of each Installment
Amount may be made (a) in cash, or (b) by converting such Installment Amount into shares of Common Stock (“Installment
Conversion Shares”, and together with the Lender Conversion Shares, the “Conversion Shares”) in accordance
with this Section 8 (each an “Installment Conversion”, and together with Lender Conversions, a “Conversion”)
per the following formula: the number of Installment Conversion Shares equals the portion of the applicable Installment Amount
being converted divided by the Installment Conversion Price, or (c) by any combination of the foregoing, so long as the cash is
delivered to Lender on the applicable Installment Date and the Installment Conversion Shares are delivered to Lender on or before
the applicable Delivery Date. Notwithstanding the foregoing, Borrower will not be entitled to elect an Installment Conversion
with respect to any portion of any applicable Installment Amount and shall be required to pay the entire amount of such Installment
Amount in cash if on the applicable Installment Notice Due Date (defined below) there is an Equity Conditions Failure (as defined
below), and such failure is not waived in writing by Lender. Moreover, in the event Borrower desires to pay all or any portion
of any Installment Amount in cash, it must notify Lender in writing of such election and the portion of the applicable Installment
Amount it elects to pay in cash not more than twenty-five (25) or less than fifteen (15) Trading Days prior to the applicable
Installment Date. If Borrower fails to so notify Lender, it shall not be permitted to elect to pay any portion of such Installment
Amount in cash unless otherwise agreed to by Lender in writing or proposed by Lender in an Installment Notice delivered by Lender
to Borrower. Notwithstanding the foregoing or anything to the contrary herein, Borrower shall only be obligated to deliver Installment
Amounts with respect to Tranches that have become Conversion Eligible Tranches and shall have no obligation to pay to Lender any
Installment Amount with respect to any Tranche that has not become a Conversion Eligible Tranche. In furtherance thereof, in the
event Borrower has repaid all Conversion Eligible Tranches pursuant to the terms of this Note, it shall have no further obligations
to deliver any Installment Amount to Lender unless and until any Subsequent Tranche that was not previously a Conversion Eligible
Tranche becomes a Conversion Eligible Tranche pursuant to the terms of this Note. Notwithstanding that failure to repay this Note
in full by the Maturity Date is an Event of Default, the Installment Dates shall continue after the Maturity Date pursuant to
this Section 8 until the Outstanding Balance is repaid in full, provided that Lender shall, in Lender’s sole discretion,
determine the Installment Amount for each Installment Date after the Maturity Date.
8.3.
Allocation of Installment Amounts. Subject to Section 8.2 regarding an Equity Conditions Failure, for each Installment
Date (each, an “Installment Notice Due Date”), Borrower may elect to allocate the payment of the applicable
Installment Amount between cash and via an Installment Conversion, by email or fax delivery of a notice to Lender substantially
in the form attached hereto as Exhibit B (each, an “Installment Notice”), provided, that to be effective,
each applicable Installment Notice must be received by Lender not more than twenty-five (25) or less than fifteen (15) Trading
Days prior to the applicable Installment Notice Due Date. If Lender has not received an Installment Notice within such time period,
then Lender may prepare the Installment Notice and deliver the same to Borrower by fax or email. Following its receipt of such
Installment Notice, Borrower may either ratify Lender’s proposed allocation in the applicable Installment Notice or elect
to change the allocation by written notice to Lender by email or fax on or before 12:00 p.m. New York time on the applicable Installment
Date, so long as the sum of the cash payments and the amount of Installment Conversions equal the applicable Installment Amount,
provided that Lender must approve any increase to the portion of the Installment Amount payable in cash. If Borrower fails to
notify Lender of its election to change the allocation prior to the deadline set forth in the previous sentence (and seek approval
to increase the amount payable in cash), it shall be deemed to have ratified and accepted the allocation set forth in the applicable
Installment Notice prepared by Lender. If neither Borrower nor Lender prepare and deliver to the other party an Installment Notice
as outlined above, then Borrower shall be deemed to have elected that the entire Installment Amount be converted via an Installment
Conversion. Borrower acknowledges and agrees that regardless of which party prepares the applicable Installment Notice, the amounts
and calculations set forth thereon are subject to correction or adjustment because of error, mistake, or any adjustment resulting
from an Event of Default or other adjustment permitted under the Transaction Documents (an “Adjustment”). Furthermore,
no error or mistake in the preparation of such notices, or failure to apply any Adjustment that could have been applied prior
to the preparation of an Installment Notice may be deemed a waiver of Lender’s right to enforce the terms of any Note, even
if such error, mistake, or failure to include an Adjustment arises from Lender’s own calculation. Borrower shall deliver
the Installment Conversion Shares from any Installment Conversion to Lender in accordance with Section 9 below on or before each
applicable Installment Date.
9.
Method of Conversion Share Delivery. On or before the close of business on the third (3rd) Trading Day following
the Installment Date or the third (3rd) Trading Day following the date of delivery of a Lender Conversion Notice, as
applicable (the “Delivery Date”), Borrower shall deliver or cause to be delivered to Lender or its broker (as
designated in the Lender Conversion Notice), via reputable overnight courier, a certificate or certificates representing the aggregate
number of Conversion Shares to which Lender shall be entitled, registered in the name of Lender or its designee. For the avoidance
of doubt, Borrower has not met its obligation to deliver Conversion Shares by the Delivery Date unless Lender or its broker, as
applicable, has actually received the certificate representing the applicable Conversion Shares no later than the close of business
on the relevant Delivery Date pursuant to the terms set forth above.
10.
Conversion Delays. If Borrower fails to deliver Conversion Shares or True-Up Shares in accordance with the timeframes stated
in Sections 3, 8, 9, or 11, as applicable, Lender, at any time prior to selling all of those Conversion Shares or True-Up Shares,
as applicable, may rescind in whole or in part that particular Conversion attributable to the unsold Conversion Shares or True-Up
Shares, with a corresponding increase to the Outstanding Balance (any returned Conversion Amount will tack back to the Purchase
Price Date for purposes of determining the holding period under Rule 144). In addition, for each Lender Conversion, in the event
that Lender Conversion Shares are not delivered by the fourth Trading Day (inclusive of the day of the Lender Conversion), a late
fee equal to the greater of $500.00 per day and 2% of the applicable Lender Conversion Share Value rounded to the nearest multiple
of $100.00 (but in any event the cumulative amount of such late fees for each Lender Conversion shall not exceed 200% of the applicable
Lender Conversion Share Value) will be assessed for each day after the third Trading Day (inclusive of the day of the Lender Conversion)
until Lender Conversion Share delivery is made; and such late fee will be added to the Outstanding Balance (such fees, the “Conversion
Delay Late Fees”). For illustration purposes only, if Lender delivers a Lender Conversion Notice to Borrower pursuant
to which Borrower is required to deliver 100,000 Lender Conversion Shares to Lender and on the Delivery Date such Lender Conversion
Shares have a Lender Conversion Share Value of $20,000.00 (assuming a Closing Sale Price on the Delivery Date of $0.20 per share
of Common Stock), then in such event a Conversion Delay Late Fee in the amount of $500.00 per day (the greater of $500.00 per
day and $20,000.00 multiplied by 2%, which is $400.00) would be added to the Outstanding Balance of the Note until such Lender
Conversion Shares are delivered to Lender. For purposes of this example, if the Lender Conversion Shares are delivered to Lender
twenty (20) days after the applicable Delivery Date, the total Conversion Delay Late Fees that would be added to the Outstanding
Balance would be $10,000.00 (20 days multiplied by $500.00 per day). If the Lender Conversion Shares are delivered to Lender one
hundred (100) days after the applicable Delivery Date, the total Conversion Delay Late Fees that would be added to the Outstanding
Balance would be $40,000.00 (100 days multiplied by $500.00 per day, but capped at 200% of the Lender Conversion Share Value).
11.
True-Up. On the date that is twenty-three (23) Trading Days (a “True-Up Date”) from each date Borrower
delivers Free Trading (as defined below) Installment Conversion Shares to Lender, there shall be a true-up where Borrower shall
deliver to Lender additional Installment Conversion Shares (“True-Up Shares”) if the Installment Conversion
Price as of the True-Up Date is less than the Installment Conversion Price used in the applicable Installment Notice. In such
event, Borrower shall deliver to Lender within three (3) Trading Days of the True-Up Date (the “True-Up Share Delivery
Date”) a number of True-Up Shares equal to the difference between the number of Installment Conversion Shares that would
have been delivered to Lender on the True-Up Date based on the Installment Conversion Price as of the True-Up Date and the number
of Installment Conversion Shares originally delivered to Lender pursuant to the applicable Installment Notice. For the avoidance
of doubt, if the Installment Conversion Price as of the True-Up Date is higher than the Installment Conversion Price set forth
in the applicable Installment Notice, then Borrower shall have no obligation to deliver True-Up Shares to Lender, nor shall Lender
have any obligation to return any excess Installment Conversion Shares to Borrower under any circumstance. For the convenience
of Borrower only, Lender may, in its sole discretion, deliver to Borrower a notice (pursuant to a form of notice substantially
in the form attached hereto as Exhibit C) informing Borrower of the number of True-Up Shares it is obligated to deliver
to Lender as of any given True-Up Date, provided that if Lender does not deliver any such notice Borrower shall not be relieved
of its obligation to deliver True-Up Shares pursuant to this Section 11. Notwithstanding the foregoing, if Borrower fails to deliver
any required True-Up Shares on or before any applicable True-Up Share Delivery Date, then in such event the Outstanding Balance
of this Note will automatically increase (under Lender’s and Borrower’s expectations that any such increase will tack
back to the Purchase Price Date for purposes of determining the holding period under Rule 144) by a sum equal to the number of
True-Up Shares deliverable as of the applicable True-Up Date multiplied by the Market Price for the Common Stock as of the applicable
True-Up Date.
12.
Ownership Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents,
if at any time Lender shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance
would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 4.99% of the number of shares
of Common Stock outstanding on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the
“Maximum Percentage”), then Borrower must not issue to Lender shares of the Common Stock which would exceed
the Maximum Percentage. For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section
13(d) of the 1934 Act. The shares of Common Stock issuable to Lender that would cause the Maximum Percentage to be exceeded are
referred to herein as the “Ownership Limitation Shares”. Borrower will reserve the Ownership
Limitation Shares for the exclusive benefit of Lender. From time to time, Lender may notify Borrower in writing of the number
of the Ownership Limitation Shares that may be issued to Lender without causing Lender to exceed the Maximum Percentage. Upon
receipt of such notice, Borrower shall be unconditionally obligated to immediately issue such designated shares to Lender, with
a corresponding reduction in the number of the Ownership Limitation Shares. Notwithstanding the forgoing, the term “4.99%”
above shall be replaced with “9.99%” at such time as the Market Capitalization of the Common Stock is less than $10,000,000.00.
Notwithstanding any other provision contained herein, if the term “4.99%” is replaced with “9.99%” pursuant
to the preceding sentence, such increase to “9.99%” shall remain at 9.99% until increased, decreased or waived by
Lender as set forth below. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to
itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement
is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.
13.
Payment of Collection Costs. If this Note is placed in the hands of an attorney for collection or enforcement prior to
commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Lender
otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note, then Borrower shall pay
the costs incurred by Lender for such collection, enforcement or action including, without limitation, attorneys’ fees and
disbursements. Borrower also agrees to pay for any costs, fees or charges of its transfer agent that are charged to Lender pursuant
to any Conversion or issuance of shares pursuant to this Note.
14.
Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the
right to have any such opinion provided by its counsel. Lender also has the right to have any such opinion provided by Borrower’s
counsel.
15.
Governing Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that
would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase
Agreement to determine the proper venue for any disputes are incorporated herein by this reference.
16.
Resolution of Disputes.
16.1.
Arbitration of Disputes. By its acceptance of this Note, each party agrees to be bound by the Arbitration Provisions set
forth as an Exhibit to the Purchase Agreement.
16.2.
Calculation of Disputes. Notwithstanding the Arbitration Provisions, in the case of a dispute as to any arithmetic calculation
hereunder, including without limitation calculating the Outstanding Balance, Lender Conversion Price, Lender Conversion Shares
to be delivered, Installment Conversion Price, Installment Conversion Shares to be delivered, the Market Price, or the VWAP (collectively,
“Calculations”), Borrower or Lender (as the case may be) shall submit the disputed determinations or arithmetic
calculations (as the case may be) via facsimile or email with confirmation of receipt (a) within two (2) Trading Days after
receipt of the applicable notice giving rise to such dispute to Borrower or Lender (as the case may be) or (b) if no notice
gave rise to such dispute, at any time after Lender learned of the circumstances giving rise to such dispute. If Lender and Borrower
are unable to agree upon such determination or calculation within two (2) Trading Days of such disputed determination or
arithmetic calculation (as the case may be) being submitted to Borrower or Lender (as the case may be), then Borrower shall, within
two (2) Trading Days, submit via facsimile the disputed Calculation to an independent, reputable investment bank or accounting
firm selected by Lender. Borrower shall cause the investment bank or accounting firm to perform the determinations or calculations
(as the case may be) and notify Borrower and Lender of the results no later than ten (10) Trading Days from the time it receives
such disputed determinations or calculations (as the case may be). Such investment bank’s or accounting firm’s determination
or calculation with respect to the disputes set forth in this Section 16.2 (as the case may be) shall be binding upon all parties
absent demonstrable error. The investment banker’s or accounting firm’s fee for performing such Calculation shall
be paid by the incorrect party, or if both parties are incorrect, by the party whose Calculation is furthest from the correct
Calculation as determined by the investment banker or accounting firm. In the event Borrower is the losing party, no extension
of the Delivery Date shall be granted and Borrower shall incur all effects for failing to deliver the applicable Conversion Shares
in a timely manner as set forth in this Note.
17.
Cancellation. After repayment or conversion of the entire Outstanding Balance (including without limitation delivery of
True-Up Shares pursuant to the payment of the final Installment Amount, if applicable), this Note shall be deemed paid in full,
shall automatically be deemed canceled, and shall not be reissued.
18.
Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.
19.
Assignments. Borrower may not assign this Note without the prior written consent of Lender. This Note and any shares of
Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by Lender without the consent of
Borrower.
20.
Offset Rights. Notwithstanding anything to the contrary herein or in any of the other Transaction Documents, (a) the parties
hereto acknowledge and agree that Lender maintains a right of offset pursuant to the terms of the Investor Notes that, under certain
circumstances, permits Lender to deduct amounts owed by Borrower under this Note from amounts otherwise owed by Lender under the
Investor Notes (the “Lender Offset Right”), and (b) in the event of the occurrence of any Investor Note Default
(as defined in the Investor Notes, or any other note issued by the initial Lender in connection with the Purchase Agreement),
or at any other time, Borrower shall be entitled to deduct and offset any amount owing by the initial Lender under the Investor
Notes, from any amount owed by Borrower under this Note (the “Borrower Offset Right”). In the event that Borrower’s
exercise of the Borrower Offset Right results in the full satisfaction of Borrower’s obligations under this Note, Lender
shall return the original Note to Borrower marked “cancelled” or, in the event this Note has been lost, stolen or
destroyed, a lost note affidavit in a form reasonably acceptable to Borrower. For the avoidance of doubt, Borrower shall not incur
any Prepayment Premium set forth in Section 1 hereof with respect to any portions of this Note that are satisfied by way of a
Borrower Offset Right.
21.
Time of the Essence. Time is expressly made of the essence with respect to each and every provision of this Note and the
documents and instruments entered into in connection herewith.
22.
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with the subsection of the Purchase Agreement titled “Notices.”
23.
Liquidated Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions
of this Note, Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the
parties’ inability to predict future interest rates, future share prices, future trading volumes and other relevant factors.
Accordingly, Lender and Borrower agree that any fees, balance adjustments, default interest or other charges assessed under this
Note are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Lender’s
and Borrower’s expectations that any such liquidated damages will tack back to the Closing Date for purposes of determining
the holding period under Rule 144).
[Remainder
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Effective Date.
BORROWER:
Endeavor
IP, Inc.
By:
/s/ Ravinder Dhat
Name:
Ravinder Dhat
Title:
Chief Executive Officer
ACKNOWLEDGED,
ACCEPTED AND AGREED:
LENDER:
Typenex
Co-Investment, LLC
By:
Red Cliffs Investments, Inc., its Manager
By: /s/
Joh M. Fife
John
M. Fife, President
ATTACHMENT
1
DEFINITIONS
For
purposes of this Note, the following terms shall have the following meanings:
A1.
“Adjusted Outstanding Balance” means the Outstanding Balance of this Note as of the date the applicable Fundamental
Default occurred less any Conversion Delay Late Fees included in such Outstanding Balance.
A2.
“Approved Stock Plan” means any stock option plan which has been approved by the board of directors of Borrower,
pursuant to which Borrower’s securities may be issued to any employee, officer or director for services provided to Borrower.
A3.
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on its principal market, as reported by Bloomberg,
or, if its principal market begins to operate on an extended hours basis and does not designate the closing bid price or the closing
trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m.,
New York time, as reported by Bloomberg, or, if its principal market is not the principal securities exchange or trading market
for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported
for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such
security as reported in “OTC Pink” by Pink OTC Markets Inc. (formerly Pink Sheets LLC), and any successor thereto.
If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market
value as mutually determined by Lender and Borrower. If Lender and Borrower are unable to agree upon the fair market value of
such security, then such dispute shall be resolved in accordance with the procedures in Section 16.2. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such
period.
A4.
“Conversion Eligible Outstanding Balance” means the Outstanding Balance of this Note less the sum of the outstanding
balances of each Subsequent Tranche that has not yet become a Conversion Eligible Tranche (i.e., Lender has not yet paid the outstanding
balance of the Investor Note that corresponds to such Subsequent Tranche).
A5.
“Deemed Issuance” means an issuance of Common Stock that shall be deemed to have occurred on the latest possible
permitted date pursuant to the terms hereof or any applicable Warrant in the event Borrower fails to deliver Conversion Shares
as and when required pursuant to Sections 3 or 8 of the Note or Warrant Shares (as defined in the Purchase Agreement) as and when
required pursuant to the Warrant. For the avoidance of doubt, if Borrower has elected or is deemed under Section 8.3 to have elected
to pay an Installment Amount in Installment Conversion Shares and fails to deliver such Installment Conversion Shares, such failure
shall be considered a Deemed Issuance hereunder even if an Equity Conditions Failure exists at that time or other relevant date
of determination.
A6.
“DTC” means the Depository Trust Company.
A7.
“DTC Eligible” means, with respect to the Common Stock, that such Common Stock is eligible to be deposited
in certificate form at the DTC, cleared and converted into electronic shares by the DTC and held in the name of the clearing firm
servicing Lender’s brokerage firm for the benefit of Lender.
A8.
“Equity Conditions Failure” means that any of the following conditions has not been satisfied during any applicable
Equity Conditions Measuring Period (as defined below): (i) with respect to the applicable date of determination all of the
Conversion Shares are freely tradable under Rule 144 or without the need for registration under any applicable federal or state
securities laws (in each case, disregarding any limitation on conversion of this Note); (ii) on each day during the period
beginning one month prior to the applicable date of determination and ending on and including the applicable date of determination
(the “Equity Conditions Measuring Period”), the Common Stock is listed or designated for quotation (as applicable)
on any of The New York Stock Exchange, NYSE Amex, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market, the OTC Bulletin Board, the OTCQX or the OTCQB (each, an “Eligible Market”) and shall not have been
suspended from trading on any such Eligible Market (other than suspensions of not more than two (2) Trading Days and occurring
prior to the applicable date of determination due to business announcements by Borrower); (iii) on each day during the Equity
Conditions Measuring Period, Borrower shall have delivered all shares of Common Stock issuable upon conversion of this Note on
a timely basis as set forth in Section 9 hereof and all other shares of capital stock required to be delivered by Borrower
on a timely basis as set forth in the other Transaction Documents; (iv) any shares of Common Stock to be issued in connection
with the event requiring determination may be issued in full without violating Section 12 hereof (Lender acknowledges that
Borrower shall be entitled to assume that this condition has been met for all purposes hereunder absent written notice from Lender);
(v) any shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without
violating the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation
(as applicable); (vi) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed
or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vii) Borrower
shall have no knowledge of any fact that would reasonably be expected to cause any of the Conversion Shares to not be freely tradable
without the need for registration under any applicable state securities laws (in each case, disregarding any limitation on conversion
of this Note); (viii) on each day during the Equity Conditions Measuring Period, Borrower otherwise shall have been in material
compliance with each, and shall not have breached any, term, provision, covenant, representation or warranty of any Transaction
Document; (ix) without limiting clause (viii) above, on each day during the Equity Conditions Measuring Period, there shall
not have occurred an Event of Default or an event that with the passage of time or giving of notice would constitute an Event
of Default; (x) on each Installment Notice Due Date and each Installment Date, the average and median daily dollar volume of the
Common Stock on its principal market for the previous twenty (20) Trading Days shall be greater than $10,000.00; (xi) the ten
(10) day average VWAP of the Common Stock is greater than $0.01, and (xii) the Common Stock shall be DTC Eligible as of each applicable
Installment Notice Due Date, Installment Date or other date of determination.
A9.
“Excluded Securities” means any shares of Common Stock, options, or convertible securities (i) issued or issuable
in connection with any Approved Stock Plan; provided that the option term, exercise price or similar provisions of any
issuances pursuant to such Approved Stock Plan are not amended, modified or changed on or after the Purchase Price Date, or (ii)
granted to any officers or directors of Company, but only if such grants are not for the purpose of raising capital.
A10.
“Free Trading” means that (a) the shares or certificate(s) representing the applicable shares of Common Stock
have been cleared and approved for public resale by the compliance departments of Lender’s brokerage firm and the clearing
firm servicing such brokerage, and (b) such shares are held in the name of the clearing firm servicing Lender’s brokerage
firm and have been deposited into such clearing firm’s account for the benefit of Lender.
A11.
“Fundamental Default” means that Borrower either fails to pay the entire Outstanding Balance to Lender on or
before the Maturity Date or fails to pay the Mandatory Default Amount within three (3) Trading Days of the date Lender delivers
any notice of acceleration to Borrower pursuant to Section 4.2 of this Note.
A12.
“Fundamental Default Conversion Value” means the Adjusted Outstanding Balance multiplied by the highest Fundamental
Default Ratio that occurs during the Fundamental Default Measuring Period.
A13.
“Fundamental Default Measuring Period” means a number of months equal to the Outstanding Balance as of the
date the Fundamental Default occurred divided by the Installment Amount, with such number being rounded up to the next whole month;
provided, however, that if Borrower repays the entire Outstanding Balance prior to the conclusion of the Fundamental Default
Measuring Period, the Fundamental Measuring Period shall end on the date of repayment. For illustration purposes only, if the
Outstanding Balance were equal to $125,000 as of the date a Fundamental Default occurred and if the Installment Amount were $28,500,
then the Fundamental Default Measuring Period would equal five (5) months calculated as follows: $125,000/$28,500 equals 4.386,
rounded up to five (5).
A14.
“Fundamental Default Ratio” means a ratio that will be calculated on each Trading Day during the Fundamental
Default Measuring Period by dividing the Closing Sale Price for the Common Stock on a given Trading Day by the Lender Conversion
Price (as adjusted pursuant to the terms hereof) in effect for such Trading Day.
A15.
“Fundamental Liquidated Damages Amount” means the greater of (i) (a) the quotient of the Outstanding Balance
on the date the Fundamental Default occurred divided by the then-current Conversion Factor, minus (b) the Outstanding Balance
on the date the Fundamental Default occurred, or (ii) the Fundamental Default Conversion Value.
A16.
“Fundamental Transaction” means that (y) (i) Borrower or any of its subsidiaries shall, directly or indirectly,
in one or more related transactions, consolidate or merge with or into (whether or not Borrower or any of its subsidiaries is
the surviving corporation) any other person or entity, or (ii) Borrower or any of its subsidiaries shall, directly or indirectly,
in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other person or entity, or (iii) Borrower or any of its subsidiaries shall,
directly or indirectly, in one or more related transactions, allow any other person or entity to make a purchase, tender or exchange
offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of Borrower (not including any
shares of voting stock of Borrower held by the person or persons making or party to, or associated or affiliated with the persons
or entities making or party to, such purchase, tender or exchange offer), or (iv) Borrower or any of its subsidiaries shall,
directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other
person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock of Borrower
(not including any shares of voting stock of Borrower held by the other persons or entities making or party to, or associated
or affiliated with the other persons or entities making or party to, such stock or share purchase agreement or other business
combination), or (v) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions,
reorganize, recapitalize or reclassify the Common Stock, other than an increase in the number of authorized shares of Borrower’s
Common Stock, or (z) any “person” or “group” (as these terms are used for purposes of Sections 13(d)
and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented
by issued and outstanding voting stock of Borrower.
A17.
“Installment Amount” means $23,250.00 ($279,000.00 ÷ 12), plus the sum of any accrued and unpaid interest
that has been added to the lowest-numbered then-current Conversion Eligible Tranche as of the applicable Installment Date and
accrued, and unpaid late charges that have been added to the lowest-numbered then-current Conversion Eligible Tranche, if any,
under this Note as of the applicable Installment Date, and any other amounts accruing or owing to Lender under this Note as of
such Installment Date; provided, however, that, if the remaining amount owing under all then-existing Conversion Eligible
Tranches or otherwise with respect to this Note as of the applicable Installment Date is less than the Installment Amount set
forth above, then the Installment Amount for such Installment Date (and only such Installment Amount) shall be reduced (and only
reduced) by the amount necessary to cause such Installment Amount to equal such outstanding amount.
A18.
“Lender Conversion Share Value” means the product of the number of Lender Conversion Shares deliverable
pursuant to any Lender Conversion multiplied by the Closing Sale Price of the Common Stock on the Delivery Date for such Lender
Conversion.
A19.
“Major Default” means any Event of Default occurring under Sections 4.1(i), (iii), (iv), (x), (xii), or (xv)
of this Note.
A20.
“Market Capitalization of the Common Stock” shall mean the product equal to (a) the average VWAP of the Common
Stock for the immediately preceding fifteen (15) Trading Days, multiplied by (b) the aggregate number of outstanding shares of
Common Stock as reported on Borrower’s most recently filed Form 10-Q or Form 10-K.
A21.
“Minor Default” means any Event of Default that is not a Major Default or a Fundamental Default.
A22.
“Optional Prepayment Liquidated Damages Amount” means an amount equal to the difference between (a) the product
of (i) the number of shares of Common Stock obtained by dividing (1) the applicable Optional Prepayment Amount by (2) the Lender
Conversion Price as of the date Borrower delivered the applicable Optional Prepayment Amount to Lender, multiplied by (ii) the
Closing Sale Price of the Common Stock on the date Borrower delivered the applicable Optional Prepayment Amount to Lender, and
(b) the applicable Optional Prepayment Amount paid by Borrower to Lender. For illustration purposes only, if the applicable Optional
Prepayment Amount were $50,000.00, the Lender Conversion Price as of the date the Optional Prepayment Amount was paid to Lender
was equal to $0.75 per share of Common Stock, and the Closing Sale Price of a share of Common Stock as of such date was equal
to $1.00, then the Optional Prepayment Liquidated Damages Amount would equal $16,666.67 computed as follows: (a) $66,666.67 (calculated
as (i)(1) $50,000.00 divided by (2) $0.75 multiplied by (ii) $1.00) minus (b) $50,000.00.
A23.
“Trading Day” shall mean any day on which the Common Stock is traded or tradeable for any period on the Common
Stock’s principal market, or on the principal securities exchange or other securities market on which the Common Stock is
then being traded.
EXHIBIT
A
Typenex
Co-Investment, LLC
303
East Wacker Drive, Suite 1200
Chicago,
Illinois 60601
Endeavor
IP, Inc. Date: __________________
Attn:
Ravinder Dhat
140
Broadway, 46th Floor
New
York, New York 10005
LENDER
CONVERSION NOTICE
The
above-captioned Lender hereby gives notice to Endeavor IP, Inc., a Nevada corporation (the “Borrower”), pursuant
to that certain Secured Convertible Promissory Note made by Borrower in favor of Lender on July 16, 2014 (the “Note”),
that Lender elects to convert the portion of the Note balance set forth below into fully paid and non-assessable shares of Common
Stock of Borrower as of the date of conversion specified below. Said conversion shall be based on the Lender Conversion Price
set forth below. In the event of a conflict between this Lender Conversion Notice and the Note, the Note shall govern, or, in
the alternative, at the election of Lender in its sole discretion, Lender may provide a new form of Lender Conversion Notice to
conform to the Note. Capitalized terms used in this notice without definition shall have the meanings given to them in the Note.
A. Date
of Conversion: ____________
B. Lender
Conversion #: ____________
C. Conversion
Amount: ____________
| D. | Lender
Conversion Price: _______________ |
| E. | Lender
Conversion Shares: _______________ (C divided by D) |
| F. | Remaining
Outstanding Balance of Note: ____________* |
| G. | Remaining
balance of Investor Notes: ____________* |
H.
Outstanding Balance of Note net of balance of Investor Notes: ____________* (F minus G)
*
Subject to adjustments for corrections, defaults, interest and other adjustments permitted by the Transaction Documents (as defined
in the Purchase Agreement), the terms of which shall control in the event of any dispute between the terms of this Lender Conversion
Notice and such Transaction Documents.
The
Conversion Amount converted hereunder shall be deducted from the following Conversion Eligible Tranche(s):
| Conversion
Amount |
Tranche
No. |
| |
|
| |
|
| |
|
$_________________
of the Conversion Amount converted hereunder shall be deducted from the Installment Amount(s) relating to the following Installment
Date(s): __________________________________________.
So
that DTC processing can begin, please deliver, via reputable overnight courier, a certificate representing DTC Eligible Lender
Conversion Shares to:
Name:
_____________________________________
Address: _____________________________________
To
the extent the Lender Conversion Shares are not DTC Eligible, please deliver, via reputable overnight courier, a certificate representing
the non-DTC Eligible Lender Conversion Shares to the party at the address set forth above.
Sincerely,
Lender:
Typenex
Co-Investment, LLC
By:
Red Cliffs Investments, Inc., its Manager
By:
John
M. Fife, President
EXHIBIT
B
Endeavor
IP, Inc.
140
Broadway, 46th Floor
New
York, New York 10005
Typenex
Co-Investment, LLC Date: _____________
Attn:
John Fife
303
E. Wacker Dr., Suite 1200
Chicago,
IL 60601
INSTALLMENT
NOTICE
The
above-captioned Borrower hereby gives notice to Typenex Co-Investment, LLC, a Utah limited liability company (the “Lender”),
pursuant to that certain Secured Convertible Promissory Note made by Borrower in favor of Lender on July 16, 2014 (the “Note”),
of certain Borrower elections and certifications related to payment of the Installment Amount of $_________________ due on ___________,
201_ (the “Installment Date”). In the event of a conflict between this Installment Notice and the Note, the
Note shall govern, or, in the alternative, at the election of Lender in its sole discretion, Lender may provide a new form of
Installment Notice to conform to the Note. Capitalized terms used in this notice without definition shall have the meanings given
to them in the Note.
INSTALLMENT
CONVERSION AND CERTIFICATIONS
AS
OF THE INSTALLMENT DATE
| A. | Installment
Date: ____________, 201_ |
B. Installment
Amount: ____________
| C. | Portion
of Installment Amount Borrower elected to pay in cash: ____________ |
| D. | Portion
of Installment Amount to be converted into Common Stock: ____________ (B minus C) |
| E. | Installment
Conversion Price: _______________ (lower of (i) Lender Conversion Price in effect and
(ii) Market Price as of Installment Date) |
| F. | Installment
Conversion Shares: _______________ (D divided by E) |
| G. | Remaining
Outstanding Balance of Note: ____________ * |
| H. | Remaining
balance of Investor Notes: ____________* |
| I. | Outstanding
Balance of Note net of balance of Investor Notes: ____________ (G minus H)* |
*
Subject to adjustments for corrections, defaults, interest and other adjustments permitted by the Transaction Documents (as defined
in the Purchase Agreement), the terms of which shall control in the event of any dispute between the terms of this Installment
Notice and such Transaction Documents.
| B. | EQUITY
CONDITIONS CERTIFICATION |
| 1. | Market
Capitalization of the Common Stock:________________ |
(Check
One)
| 2. | _________
Borrower herby certifies that no Equity Conditions Failure exists as of the Installment
Date. |
| 3. | _________
Borrower hereby gives notice that an Equity Conditions Failure has occurred and requests
a waiver from Lender with respect thereto. The Equity Conditions Failure is as follows: |
Sincerely,
Borrower:
Endeavor
IP, Inc.
By:
Name:
Title:
EXHIBIT
C
Typenex
Co-Investment, LLC
303
East Wacker Drive, Suite 1200
Chicago,
Illinois 60601
Endeavor
IP, Inc. Date: __________________
Attn:
_________________
140
Broadway, 46th Floor
New
York, New York 10005
TRUE-UP
NOTICE
The
above-captioned Lender hereby gives notice to Endeavor IP, Inc., a Nevada corporation (the “Borrower”),
pursuant to that certain Secured Convertible Promissory Note made by Borrower in favor of Lender on July 16, 2014 (the “Note”),
of True-Up Conversion Shares related to _____________, 201_ (the “Installment Date”). In the event of a conflict
between this True-Up Notice and the Note, the Note shall govern, or, in the alternative, at the election of Lender in its sole
discretion, Lender may provide a new form of True-Up Notice to conform to the Note. Capitalized terms used in this notice without
definition shall have the meanings given to them in the Note.
TRUE-UP
CONVERSION SHARES AND CERTIFICATIONS
AS
OF THE TRUE-UP DATE
| 1. | TRUE-UP
CONVERSION SHARES |
| A. | Installment
Date: ____________, 201_ |
| B. | True-Up
Date: ____________, 201_ |
| C. | _____________
Portion of Installment Amount converted into Common Stock: |
| D. | True-Up
Conversion Price: _______________ (lower of (i) Lender Conversion Price in effect and
(ii) Market Price as of True-Up Date) |
| E. | True-Up
Conversion Shares: _______________ (C divided by D) |
| F. | Installment
Conversion Shares delivered: ________________ |
| G. | True-Up
Conversion Shares to be delivered: ________________ (only applicable if E minus F is
greater than zero) |
| 2. | EQUITY
CONDITIONS CERTIFICATION (Section to be completed by Borrower) |
| A. | Market
Capitalization of the Common Stock:________________ |
(Check
One)
| B. | _________
Borrower herby certifies that no Equity Conditions Failure exists as of the applicable
True-Up Date. |
| C. | _________
Borrower hereby gives notice that an Equity Conditions Failure has occurred and requests
a waiver from Lender with respect thereto. The Equity Conditions Failure is as follows: |
Sincerely,
Lender:
Typenex
Co-Investment, LLC
By:
Red Cliffs Investments, Inc., its Manager
By:
John
M. Fife, President
ACKNOWLEDGED
AND CERTIFIED BY:
Borrower:
Endeavor
IP, Inc.
By:
Name:
Title:
THIS
NOTE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE ALIENATED OR ENCUMBERED WITHOUT THE PRIOR WRITTEN
CONSENT OF INVESTOR.
$ |
State
of ______
_____________,
2014 |
INVESTOR
NOTE #1
FOR
VALUE RECEIVED, ________________, a ______________________ (“Investor”),
hereby promises to pay to Endeavor IP, Inc., a Nevada corporation (“Company”,
and together with Investor, the “Parties”), the principal sum of $___________ together with all accrued and
unpaid interest thereon, fees incurred or other amounts owing hereunder, all as set forth below in this Investor Note #1 (this
“Note”). This Note is issued pursuant to that certain Securities Purchase Agreement of even date herewith,
entered into by and between Investor and Company (as the same may be amended from time to time, the “Purchase Agreement”),
pursuant to which Company issued to Investor that certain Secured Convertible Promissory Note in the principal amount of $_________________
(as the same may be amended from time to time, the “Company Note”) convertible into shares of Company’s
Common Stock. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Purchase
Agreement.
1.
Principal and Interest. Interest shall accrue on the unpaid principal balance and any unpaid late fees or other fees under
this Note at a rate of eight percent (8.0%) per annum until the full amount of the principal and fees has been paid. Interest
shall be computed on the basis of a 365-day year for the actual number of days elapsed. Notwithstanding any provision to the contrary
herein, in no event shall the applicable interest rate at any time exceed the maximum interest rate allowed under applicable law,
as provided in Section 12 below. The entire unpaid principal balance and all accrued and unpaid interest, if any, under this Note,
shall be due and payable on the date that is seventeen (17) months from the date hereof (the “Investor Note Maturity
Date”); provided, however, that Investor may elect, in its sole discretion, to extend the Investor Note Maturity
Date for up to thirty (30) days by delivering written notice of such election to Company at any time prior to the Investor Note
Maturity Date.
2.
Payment. Unless prepaid, all principal and accrued interest under this Note is payable in one lump sum on the Investor
Note Maturity Date. All payments of interest and principal shall be (i) in lawful money of the United States of America, and (ii)
in the form of immediately available funds. All payments shall be applied first to costs of collection, if any, then to accrued
and unpaid interest, and thereafter to principal. Payment of principal and interest hereunder shall be delivered to Company at
the address furnished to Investor for that purpose.
3.
Prepayment by Investor. Investor may, in its sole and absolute discretion, pay, without penalty, all or any portion of
the outstanding balance along with any accrued but unpaid interest on this Note at any time prior to the Investor Note Maturity
Date.
4.
Security; Collateral. Investor may, in its sole discretion, designate collateral (the “Collateral”)
as it deems fit, as security for Investor’s obligations hereunder, which Collateral may be, but is not required to be, real
property, a letter of credit with a financial institution determined by Investor in its sole discretion, or pledged membership
interests, provided that the net fair market value of the Collateral (net of any outstanding monetary liens) shall not be less
than the principal balance of this Note as of the date of any such designation. Upon Investor’s designation of Collateral,
each of Investor and Company shall timely execute any and all documents necessary or advisable in order to properly grant a security
interest upon the Collateral in favor of Company.
5.
Release. Company covenants and agrees that in the event that this Note is secured by Collateral, Company shall timely execute
any and all documents necessary or advisable in order to release such security interest and Collateral to Investor, or Investor’s
designee, upon the earlier of (i) the date this Note is paid in full and (ii) the date that is six (6) months and three (3) days
following the date such Collateral is given as security for this Note, or such later date as determined in the sole discretion
of Investor (the “Release Date”). For avoidance of doubt, as of the date hereof, there is no collateral securing
this Note, and after the Release Date, as applicable, there shall be no collateral securing this Note.
6.
Right of Offset. Notwithstanding anything to the contrary herein or in any of the other Transaction Documents, in the event
(i) of the occurrence of any Event of Default (as defined in the Company Note) under the Company Note or any other note issued
by Company in connection with the Purchase Agreement, (ii) Investor applies a Default Effect (as defined in the Company Note)
under the Company Note, (iii) the Outstanding Balance is automatically increased to the Mandatory Default Amount under the Company
Note, (iv) the Company Note is accelerated for any reason, or (v) of a breach of any material term, condition, representation,
warranty, covenant or obligation of Company under any Transaction Document; Investor shall be entitled to deduct and offset any
amount owing by Company under the Company Note from any amount owed by Investor under this Note (the “Investor Offset
Right”), provided that if any of the foregoing events occur and Investor has not yet exercised the Investor Offset Right,
the Investor Offset Right shall be automatically exercised on the date that is thirty (30) days prior to the Investor Note Maturity
Date. In the event that Investor’s exercise of the Investor Offset Right under this Section 6 results in the full satisfaction
of Investor’s obligations under this Note, then Company shall return this Note to Investor for cancellation or, in the event
this Note has been lost, stolen or destroyed, Company shall provide Investor with a lost note affidavit in a form reasonably acceptable
to Investor.
7.
Default. If any of the events specified below shall occur (each, an “Investor Note Default”) Company
may declare the unpaid principal balance under this Note, together with all accrued and unpaid interest thereon, fees incurred
or other amounts owing hereunder immediately due and payable, by notice in writing to Investor. If any default, other than a Payment
Default (as defined below), is curable, then the default may be cured (and no Investor Note Default will have occurred) if Investor,
after receiving written notice from Company demanding cure of such default, either (a) cures the default within fifteen (15) days
of the receipt of such notice, or (b) if the cure requires more than fifteen (15) days, immediately initiates steps that Company
deems in Company’s reasonable discretion to be sufficient to cure the default and thereafter diligently continues and completes
all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. Each of the following events
shall constitute an Investor Note Default:
7.1.
Failure to Pay. Investor’s failure to make any payment when due and payable under this Note (a “Payment
Default”);
7.2.
Breaches of Covenants. Investor’s failure to observe or perform any other covenant, obligation, condition or agreement
contained in this Note;
7.3.
Representations and Warranties. If any representation, warranty, certificate, or other statement (financial or otherwise)
made or furnished by or on behalf of Investor to Company in writing in connection with this Note or any of the other Transaction
Documents, or as an inducement to Company to enter into the Purchase Agreement, shall be false or misleading in any material respect
when made or furnished; and
7.4.
Involuntary Bankruptcy. If any involuntary petition is filed under any bankruptcy or similar law or rule against Investor,
and such petition is not dismissed within sixty (60) days, or a receiver, trustee, liquidator, assignee, custodian, sequestrator
or other similar official is appointed to take possession of any of the assets or properties of Investor.
8.
Binding Effect; Assignment. This Note shall be binding on the Parties and their respective heirs, successors, and assigns;
provided, however, that neither party shall assign any of its rights hereunder without the prior written consent
of the other party, except that Investor may assign this Note to any of its Affiliates without the prior written consent of Company
and, furthermore, Company agrees that it shall not unreasonably withhold, condition or delay its consent to any other assignment
of this Note by Investor.
9.
Governing Law. This Note shall be governed by and interpreted in accordance with the laws of the State of Utah for contracts
to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.
10.
Purchase Agreement; Arbitration of Disputes. By acceptance of this Note, each party agrees to be bound by the applicable
terms, conditions and general provisions of the Purchase Agreement and the other Transaction Documents, including without limitation
the Arbitration Provisions attached as an Exhibit to the Purchase Agreement.
11.
Customer Identification–USA Patriot Act Notice. Company hereby notifies Investor that pursuant to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), and Company’s
policies and practices, Company is required to obtain, verify and record certain information and documentation that identifies
Investor, which information includes the name and address of Investor and such other information that will allow Company to identify
Investor in accordance with the Act.
12.
Lawful Interest. It being the intention of Company and Investor to comply with all applicable laws with regard to the interest
charged hereunder, it is agreed that, notwithstanding any provision to the contrary in this Note or any of the other Transaction
Documents, no such provision, including without limitation any provision of this Note providing for the payment of interest or
other charges, shall require the payment or permit the collection of any amount in excess of the maximum amount of interest permitted
by law to be charged for the use or detention, or the forbearance in the collection, of all or any portion of the indebtedness
evidenced by this Note or by any extension or renewal hereof (“Excess Interest”). If any Excess Interest is
provided for, or is adjudicated to be provided for, in this Note, then in such event:
12.1.
the provisions of this Section 12 shall govern and control;
12.2.
Investor shall not be obligated to pay any Excess Interest;
12.3.
any Excess Interest that Company may have received hereunder shall, at the option of Company, be (i) applied as a credit against
the principal balance due under this Note or the accrued and unpaid interest thereon not to exceed the maximum amount permitted
by law, or both, (ii) refunded to Investor, or (iii) any combination of the foregoing;
12.4.
the applicable interest rate or rates shall be automatically subject to reduction to the maximum lawful rate allowed to be contracted
for in writing under the applicable governing usury laws, and this Note and the Transaction Documents shall be deemed to have
been, and shall be, reformed and modified to reflect such reduction in such interest rate or rates; and
12.5.
Investor shall not have any action or remedy against Company for any damages whatsoever or any defense to enforcement of this
Note or arising out of the payment or collection of any Excess Interest.
13.
Pronouns. Regardless of their form, all words used in this Note shall be deemed singular or plural and shall have the gender
as required by the text.
14.
Headings. The various headings used in this Note as headings for sections or otherwise are for convenience and reference
only and shall not be used in interpreting the text of the section in which they appear and shall not limit or otherwise affect
the meanings thereof.
15.
Time of Essence. Time is of the essence with this Note.
16.
Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve
the objective of the Parties to the fullest extent permitted by law and the balance of this Note shall remain in full force and
effect.
17.
Attorneys’ Fees. If any arbitration or action at law or in equity is necessary to enforce this Note or to collect
payment under this Note, Company shall be entitled to recover reasonable attorneys’ fees directly related to such enforcement
or collection actions.
18.
Amendments and Waivers; Remedies. No failure or delay on the part of either party hereto in exercising any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be available to either party hereto at law, in equity or
otherwise. Any amendment, supplement or modification of or to any provision of this Note, any waiver of any provision of this
Note, and any consent to any departure by either party from the terms of any provision of this Note, shall be effective (i) only
if it is made or given in writing and signed by Investor and Company and (ii) only in the specific instance and for the specific
purpose for which made or given.
19.
Notices. Unless otherwise provided for herein, all notices, requests, demands, claims and other communications hereunder
shall be given in accordance with the subsection of the Purchase Agreement titled “Notices.” Either party may change
the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by providing notice
thereof in the manner set forth in the Purchase Agreement.
20.
Final Note. This Note, together with the other Transaction Documents, contains the complete understanding and agreement
of Investor and Company and supersedes all prior representations, warranties, agreements, arrangements, understandings, and negotiations
of Investor and Company with respect to the subject matter of the Transaction Documents. THIS NOTE, TOGETHER WITH THE OTHER TRANSACTION
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, the Parties have executed this Note as of the date set forth above.
INVESTOR:
________________________
By:
By:
ACKNOWLEDGED,
ACCEPTED AND AGREED:
COMPANY:
Endeavor
IP, Inc.
By:
Name:
Title:
THIS
WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ENDEAVOR IP, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
ENDEAVOR
IP, INC.
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
1.
Issuance. In consideration of good and valuable consideration as set forth in the Purchase Agreement (defined below), including
without limitation the Initial Cash Purchase Price (as defined in the Purchase Agreement), the receipt and sufficiency of which
are hereby acknowledged by Endeavor IP, Inc., a Nevada corporation (“Company”);
Typenex Co-Investment, LLC, a Utah limited liability company, its successors and/or
registered assigns (“Investor”), is hereby granted the right to purchase at any time on or after the Issue
Date (as defined below) until the date which is the last calendar day of the month in which the fifth anniversary of the Issue
Date occurs (the “Expiration Date”), a number of fully paid and non-assessable shares (the “Warrant
Shares”) of Company’s common stock, par value $0.0001 per share (the “Common Stock”), equal
to $139,500.00 divided by the Market Price (as defined in the Note, as of the Issue Date), as such number may be adjusted from
time to time pursuant to the terms and conditions of this Warrant to Purchase Shares of Common Stock (this “Warrant”).
This Warrant is being issued pursuant to the terms of that certain Securities Purchase Agreement dated July 16, 2014, to which
Company and Investor are parties (as the same may be amended from time to time, the “Purchase Agreement”).
Unless
otherwise indicated herein, capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Purchase
Agreement.
This
Warrant was originally issued to Investor on July 16, 2014 (the “Issue Date”).
2.
Exercise of Warrant.
2.1.
General.
(a)
This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Issue Date and ending on the
Expiration Date. Such exercise shall be effectuated by submitting to Company (either by delivery to Company or by email or facsimile
transmission) a completed and duly executed Notice of Exercise substantially in the form attached to this Warrant as Exhibit
A (the “Notice of Exercise”). The date such Notice of Exercise is either faxed, emailed or delivered to
Company shall be the “Exercise Date,” provided that, if such exercise represents the full exercise of the outstanding
balance of the Warrant, Investor shall tender this Warrant to Company within five (5) Trading Days thereafter, but only if the
Warrant Shares to be delivered pursuant to the Notice of Exercise have been delivered to Investor as of such date. The Notice
of Exercise shall be executed by Investor and shall indicate (i) the number of Delivery Shares (as defined below) to be issued
pursuant to such exercise, and (ii) if applicable (as provided below), whether the exercise is a cashless exercise.
For
purposes of this Warrant, the term “Trading Day” means any day during which the principal market on which the
Common Stock is traded (the “Principal Market”) shall be open for business.
(b)
Notwithstanding any other provision contained herein or in any other Transaction Document to the contrary, at any time prior to
the Expiration Date, Investor may elect a “cashless” exercise of this Warrant for any Warrant Shares whereby Investor
shall be entitled to receive a number of shares of Common Stock equal to (i) the excess of the Current Market Value (as defined
below) over the aggregate Exercise Price of the Exercise Shares (as defined below), divided by (ii) the Adjusted Price of the
Common Stock (as defined below).
For
the purposes of this Warrant, the following terms shall have the following meanings:
“Adjusted
Price of the Common Stock” shall mean the lower of (i) the Conversion Price (as defined in the Note), as such Conversion
Price may be adjusted from time to time pursuant to the terms of the Note (solely for the purpose of determining the then-current
Conversion Price under this definition of “Adjusted Price of the Common Stock,” each cashless exercise of this Warrant
shall be deemed a conversion under the Note), and (ii) the Market Price (as defined in the Note), without regard to whether the
Note remains outstanding or has been fully repaid, cancelled or otherwise retired, on any relevant Exercise Date.
“Current
Market Value” shall mean an amount equal to the Market Price of the Common Stock (as defined below), multiplied by the
number of Exercise Shares specified in the applicable Notice of Exercise.
“Closing
Price” shall mean the 4:00 P.M. last sale price of the Common Stock on the Principal Market on the relevant Trading
Day(s), as reported by Bloomberg LP (or if that service is not then reporting the relevant information regarding the Common Stock,
a comparable reporting service of national reputation selected by Investor and reasonably acceptable to Company) (“Bloomberg”)
for the relevant date.
“Delivery
Shares” means those shares of Common Stock issuable and deliverable upon the exercise of this Warrant.
“Exercise
Price” shall mean $0.06 per share of Common Stock, as the same may be adjusted from time to time pursuant to the terms
and conditions of this Warrant.
“Exercise
Shares” shall mean those Warrant Shares subject to an exercise of the Warrant by Investor. By way of illustration only
and without limiting the foregoing, if (i) the Warrant is initially exercisable for 4,180,000 Warrant Shares and Investor has
not previously exercised the Warrant, and (ii) Investor were to make a cashless exercise with respect to 5,000 Warrant Shares
pursuant to which 6,000 Delivery Shares would be issuable to Investor, then (1) the Warrant shall be deemed to have been exercised
with respect to 5,000 Exercise Shares, (2) the Warrant would remain exercisable for 4,175,000 Warrant Shares, and (3) the Warrant
shall be deemed to have been exercised with respect to 6,000 Delivery Shares.
“Market
Price of the Common Stock” shall mean the higher of: (i) the Closing Price of the Common Stock on the Issue Date; and
(ii) the VWAP (as defined below) of the Common Stock for the Trading Day that is two (2) Trading Days prior to the Exercise Date.
“Note”
shall mean that certain Secured Convertible Promissory Note issued by Company to Investor pursuant to the Purchase Agreement,
as the same may be amended from time to time, and including any promissory note(s) that replace or are exchanged for such referenced
promissory note.
“Transaction
Documents” or “Transaction Document” shall have the meaning set forth in the Purchase Agreement.
“VWAP”
shall mean the volume-weighted average price of the Common Stock on the Principal Market for a particular Trading Day or set of
Trading Days, as the case may be, as reported by Bloomberg.
(c)
If the Notice of Exercise form elects a “cash” exercise (or if the cashless exercise referred to in the immediately
preceding subsection (b) is not available in accordance with the terms hereof), the Exercise Price per share of Common Stock for
the Delivery Shares shall be payable, at the election of Investor, in cash or by certified or official bank check or by wire transfer
in accordance with instructions provided by Company at the request of Investor.
(d)
Upon the appropriate payment to Company, if any, of the Exercise Price for the Delivery Shares, Company shall promptly, but in
no case later than the date that is three (3) Trading Days following the date the Exercise Price is paid to Company (or with respect
to a “cashless exercise,” the date that is three (3) Trading Days following the Exercise Date) (the “Delivery
Date”), provided that the Common Stock is then DTC Eligible (as defined in the Note), deliver or cause Company’s
Transfer Agent (as defined in the Note) to deliver to Investor or its broker (as designated in the Notice of Exercise), via reputable
overnight courier, a certificate, registered in the name of Investor or its designee, representing DTC Eligible Common Stock equal
to the applicable number of Delivery Shares. If the Common Stock is not DTC Eligible at such time, such shall constitute a breach
of this Warrant (and thus an Event of Default under the Note), and Company shall instead, on or before the applicable date set
forth above in this subsection, issue and deliver to Investor or its broker (as designated in the Notice of Exercise), via reputable
overnight courier, a certificate, registered in the name of Investor or its designee, representing the applicable number of Delivery
Shares. For the avoidance of doubt, Company has not met its obligation to deliver Delivery Shares within the required timeframe
set forth above unless Investor or its broker, as applicable, has actually received the certificate representing the applicable
Delivery Shares no later than the close of business on the latest possible delivery date pursuant to the terms set forth above.
(e)
If Delivery Shares are delivered later than as required under subsection (d) immediately above, Company agrees to pay, in addition
to all other remedies available to Investor in the Transaction Documents, a late charge equal to the greater of (i) $500.00 and
(ii) 2% of the product of (1) the sum of the number of shares of Common Stock not issued to Investor on a timely basis and
to which Investor is entitled multiplied by (2) the closing bid price of the Common Stock on the Trading Day immediately
preceding the last possible date which Company could have issued such shares of Common Stock to Investor without violating this
Warrant, per Trading Day until such Delivery Shares are delivered (the “Late Fees”). Company shall pay any
Late Fees incurred under this subsection in immediately available funds upon demand; provided, however, that, at the option
of Investor (without notice to Company), such amount owed may be added to the principal amount of the Note. Furthermore, in addition
to any other remedies which may be available to Investor, in the event that Company fails for any reason to effect delivery of
the Delivery Shares as required under subsection (d) immediately above, Investor may revoke all or part of the relevant Warrant
exercise by delivery of a notice to such effect to Company, whereupon Company and Investor shall each be restored to their respective
positions immediately prior to the exercise of the relevant portion of this Warrant, except that the Late Fees described above
shall be payable through the date notice of revocation or rescission is given to Company. Finally, as liquidated damages in the
event Company fails to deliver any Delivery Shares to Investor for a period of ninety (90) days from the Delivery Date, Investor
may elect, in its sole discretion, to stop the accumulation of the Late Fees as of such date and require Company to pay to Investor
a cash amount equal to (i) the total amount of all Late Fees that have accumulated prior to the date of Investor’s election,
plus (ii) the product of the number of Delivery Shares deliverable to Investor on such date if it were to exercise this Warrant
with respect to the remaining number of Exercise Shares as of such date multiplied by the closing price of the Common Stock on
the Delivery Date (the “Cash Settlement Amount”). At such time that Investor makes an election to require Company
to pay to it the Cash Settlement Amount, such obligation of Company shall be a valid and binding obligation of Company and shall
for all purposes be deemed to be a debt obligation of Company owed to Investor as of the date it makes such election. Upon Company’s
payment of the Cash Settlement Amount to Investor, the Warrant shall be deemed to have been satisfied and Investor shall return
the original Warrant to Company for cancellation. In addition, and for the avoidance of doubt, even if Company could not deliver
the number of Delivery Shares deliverable to Investor if it were to exercise this Warrant with respect to the remaining number
of Exercise Shares on the date of repayment due to the provisions of Section 2.2, the provisions of Section 2.2 will not apply
with respect to Company’s payment of the Cash Settlement Amount.
(f)
Investor shall be deemed to be the holder of the Delivery Shares issuable to it in accordance with the provisions of this Section
2.1 on the Exercise Date.
2.2.
Ownership Limitation. Notwithstanding anything to the contrary contained in this Warrant or the other Transaction Documents,
if at any time Investor shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance
would cause Investor (together with its affiliates) to own a number of shares exceeding 4.99% of the number of shares of Common
Stock outstanding on such date (the “Maximum Percentage”), Company must not issue to Investor shares of the
Common Stock which would exceed the Maximum Percentage. The shares of Common Stock issuable to Investor that would cause the Maximum
Percentage to be exceeded are referred to herein as the “Ownership Limitation Shares”. Company
will reserve the Ownership Limitation Shares for the exclusive benefit of Investor. From time to time, Investor may notify Company
in writing of the number of the Ownership Limitation Shares that may be issued to Investor without causing Investor to exceed
the Maximum Percentage. Upon receipt of such notice, Company shall be unconditionally obligated to immediately issue such designated
shares to Investor, with a corresponding reduction in the number of the Ownership Limitation Shares. Notwithstanding the forgoing,
the term “4.99%” above shall be replaced with “9.99%” at such time as the Market Capitalization of the
Common Stock is less than $10,000,000.00. Notwithstanding any other provision contained herein, if the term “4.99%”
is replaced with “9.99%” pursuant to the preceding sentence, such change to “9.99%” shall be permanent.
For purposes of this Warrant, the term “Market Capitalization of the Common Stock” shall mean the product equal
to (A) the average VWAP (as defined in the Note) of the Common Stock for the immediately preceding fifteen (15) Trading Days,
multiplied by (B) the aggregate number of outstanding shares of Common Stock as reported on Company’s most recently filed
Form 10-Q or Form 10-K. By written notice to Company, Investor may increase, decrease or waive the Maximum Percentage as to itself
but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is
enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Investor.
3.
Mutilation or Loss of Warrant. Upon receipt by Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification,
and (in the case of mutilation) upon surrender and cancellation of this Warrant, Company will execute and deliver to Investor
a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.
4.
Rights of Investor. Investor shall not, by virtue of this Warrant alone, be entitled to any rights of a stockholder in
Company, either at law or in equity, and the rights of Investor with respect to or arising under this Warrant are limited to those
expressed in this Warrant and are not enforceable against Company except to the extent set forth herein.
5.
Protection Against Dilution and Other Adjustments.
5.1.
Capital Adjustments. If Company shall at any time prior to the expiration of this Warrant subdivide the Common Stock, by
split-up or stock split, or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock as a dividend,
the number of Warrant Shares issuable upon the exercise of this Warrant shall forthwith be automatically increased proportionately
in the case of a subdivision, split or stock dividend, or proportionately decreased in the case of a combination. Appropriate
adjustments shall also be made to the Exercise Price, Conversion Price (in the event of a cashless exercise), and other applicable
amounts, but the aggregate purchase price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted)
shall remain the same. Any adjustment under this Section 5.1 shall become effective automatically at the close of business
on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that
no record date is fixed, upon the making of such dividend.
5.2.
Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or change
in the capital stock of Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 5.1
above), then Company shall make appropriate provision so that Investor shall have the right at any time prior to the expiration
of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change
by a holder of the same number of shares of Common Stock as were purchasable by Investor immediately prior to such reclassification,
reorganization, or change. In any such case appropriate provisions shall be made with respect to the rights and interest of Investor
so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property
deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per Warrant Share payable hereunder,
provided the aggregate purchase price shall remain the same.
5.3.
Subsequent Equity Sales. If Company or any subsidiary thereof, as applicable, at any time and from time to time while this
Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose
of, sell or issue (or announce any offer, sale, grant or any option to purchase or other disposition of) any Common Stock (including
any Common Stock issued under the Note, whether upon any type of conversion or any Deemed Issuance (as defined in the Note)),
preferred shares convertible into Common Stock, or debt, warrants, options or other instruments or securities which are convertible
into or exercisable for shares of Common Stock (together herein referred to as “Equity Securities”), at an
effective price per share less than the Exercise Price (such lower price, the “Base Share Price” and such issuance
collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Equity Securities so issued shall
at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options, or rights per share which are issued in connection with such issuance, be entitled
to receive shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be
deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then (a) the Exercise Price shall
be reduced and only reduced to equal the Base Share Price, and (b) the number of Warrant Shares issuable upon the exercise of
this Warrant shall be increased to an amount equal to the number of Warrant Shares Investor could purchase hereunder for an aggregate
Exercise Price, as reduced pursuant to subsection (a) above, equal to the aggregate Exercise Price payable immediately prior to
such reduction in Exercise Price, provided that the increase in the number of Exercise Shares issuable under to this Warrant made
pursuant to this Section 5.3 shall not at any time exceed a number equal to three (3) times the number of Exercise Shares issuable
under this Warrant as of the Issue Date (for the avoidance of doubt, the foregoing cap on the number of Exercise Shares issuable
hereunder shall only apply to adjustments made pursuant to this Section 5.3 and shall not apply to adjustments made pursuant to
Sections 5.1, 5.2 or any other section of this Warrant). Such adjustments shall be made whenever such Common Stock or Equity Securities
are issued. Company shall notify Investor, in writing, no later than the Trading Day following the issuance of any Common Stock
or Equity Securities subject to this Section 5.3, indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price, or other pricing terms (such notice, the “Dilutive Issuance Notice”).
For purposes of clarification, whether or not Company provides a Dilutive Issuance Notice pursuant to this Section 5.3, upon the
occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance, Investor is entitled to receive the increased number
of Warrant Shares provided for in subsection (b) above at an Exercise Price equal to the Base Share Price regardless of whether
Investor accurately refers to the Base Share Price in the Notice of Exercise. Additionally, following the occurrence of a Dilutive
Issuance, all references in this Warrant to “Warrant Shares” shall be a reference to the Warrant Shares as increased
pursuant to subsection (b) above, and all references in this Warrant to “Exercise Price” shall be a reference to the
Exercise Price as reduced pursuant to subsection (a) above, as the same may occur from time to time hereunder.
5.4.
Notice of Adjustment. Without limiting any other provision contained herein, when any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of this Warrant, or in the Exercise Price, pursuant to the terms hereof,
Company shall promptly notify Investor of such event and of the number of Warrant Shares or other securities or property thereafter
purchasable upon exercise of this Warrant.
5.5.
Exceptions to Adjustment. Notwithstanding the provisions of Sections 5.3 and 5.4, no adjustment to the Exercise Price shall
be effected as a result of an Excepted Issuance. “Excepted Issuances” shall mean, collectively, (a) Company’s
issuance of securities in connection with strategic license agreements and other partnering arrangements so long as any such issuances
are not for the purpose of raising capital and in which holders of such securities or debt are not at any time granted registration
rights, and (b) Company’s issuance of Common Stock or the issuance or grant of options to purchase Common Stock to employees,
directors, officers and consultants, authorized by Company’s board of directors pursuant to plans or agreements which are
authorized, constituted or in effect as of the Issue Date.
6.
Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on
the exercise of this Warrant, Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee
to compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including
a statement of (a) the consideration received or receivable by Company for any additional shares of Common Stock issued or sold
or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c)
the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately
prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. Company will forthwith mail
a copy of each such certificate to Investor and any Warrant Agent (as defined below) appointed pursuant to Section 8 hereof. Nothing
in this Section 6 shall be deemed to limit any other provision contained herein.
7.
Transfer to Comply with the Securities Act. This Warrant, and the Warrant Shares, have not been registered under the 1933
Act. None of the Warrant Shares may be sold, transferred, pledged or hypothecated without (a) an effective registration statement
under the 1933 Act relating to such security or (b) an opinion of counsel reasonably satisfactory to Company that registration
is not required under the 1933 Act; provided, however, that the foregoing restrictions on transfer shall not apply to the
transfer of any security to an affiliate of Investor. Until such time as registration has occurred under the 1933 Act, each certificate
for this Warrant and any Warrant Shares shall contain a legend, in form and substance satisfactory to counsel for Company, setting
forth the restrictions on transfer contained in this Section 7; provided, however, that Company acknowledges and agrees
that any such legend shall be removed from all certificates for DTC Eligible Common Stock delivered hereunder as such Common Stock
is cleared and converted into electronic shares by the DTC (as defined in the Note), and nothing contained herein shall be interpreted
to the contrary. Any such transfer shall be accompanied by a transferor assignment substantially in the form attached to this
Warrant as Exhibit B (the “Transferor Assignment”), executed by the transferor and the transferee and
submitted to Company. Upon receipt of the duly executed Transferor Assignment, Company shall register the transferee thereon as
the new holder on the books and records of Company and such transferee shall be deemed a “registered holder” or “registered
assign” for all purposes hereunder, and shall have all the rights of Investor.
8.
Warrant Agent. Company may, by written notice to Investor, appoint an agent (a “Warrant Agent”) for
the purpose of issuing shares of Common Stock on the exercise of this Warrant pursuant hereto, exchanging this Warrant pursuant
hereto, and replacing this Warrant pursuant hereto, or any of the foregoing, and thereafter any such issuance, exchange or replacement,
as the case may be, shall be made at such office by such Warrant Agent.
9.
Transfer on Company’s Books. Until this Warrant is transferred on the books of Company, Company may treat Investor
as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.
10.
Notices. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled “Notices”
in the Purchase Agreement, the terms of which are incorporated herein by reference.
11.
Supplements and Amendments; Whole Agreement. This Warrant may be amended or supplemented only by an instrument in writing
signed by the parties hereto. This Warrant, together with the Purchase Agreement and all the other Transaction Documents, taken
together, contain the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there
are no representations, warranties, agreements or understandings with respect to the subject matter hereof and thereof other than
as expressly contained herein and therein.
12.
Governing Law. This Warrant shall be governed by and interpreted in accordance with the laws of the State of Utah, without
giving effect to the principles thereof regarding the conflict of laws.
13.
Waiver of Jury Trial. COMPANY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS WARRANT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY.
THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE
OR REGULATION. FURTHER, COMPANY ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY JURY.
14.
Purchase Agreement; Arbitration of Disputes. This Warrant is subject to the terms, conditions and general provisions of
the Purchase Agreement and the other Transaction Documents, including without limitation the Arbitration Provisions set forth
as an Exhibit to the Purchase Agreement.
15.
Remedies. The remedies at law of Investor under this Warrant in the event of any default or threatened default by Company
in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and, without limiting
any other remedies available to Investor in the Transaction Documents, at law or equity, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
16.
Counterparts. This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Signatures delivered
via facsimile or email shall be considered original signatures for all purposes hereof.
17.
Attorneys’ Fees. In the event of any arbitration, litigation or dispute arising from this Warrant, the parties agree
that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled
to an additional award of the full amount of the attorneys’ fees and expenses paid by said prevailing party in connection
with arbitration or litigation without reduction or apportionment based upon the individual claims or defenses giving rise
to the fees and expenses. Nothing herein shall restrict or impair an arbitrator’s or a court’s power to award
fees and expenses for frivolous or bad faith pleading.
18.
Severability. Whenever possible, each provision of this Warrant shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such
provision shall be modified to achieve the objective of the parties to the fullest extent permitted and such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this Warrant or the validity or enforceability of this Warrant
in any other jurisdiction.
19.
Time of the Essence. Time is expressly made of the essence with respect to each and every provision of this Warrant.
20.
Descriptive Headings. Descriptive headings of the sections of this Warrant are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions hereof.
[Remainder
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, Company has caused this Warrant to be duly executed by an officer thereunto duly authorized as of the Issue Date.
COMPANY:
Endeavor
IP, Inc.
By:
Printed
Name:
Title:
EXHIBIT
A
NOTICE
OF EXERCISE OF WARRANT
TO: ENDEAVOR
IP, INC.
ATTN:
_______________
VIA
FAX TO: ( )______________
The
undersigned hereby irrevocably elects to exercise the right, represented by the Warrant to Purchase Shares of Common Stock dated
as of July 16, 2014 (the “Warrant”), to purchase shares of the common stock, $0.0001 par value (“Common
Stock”), of ENDEAVOR IP, INC., and tenders herewith payment in accordance with Section 2 of the Warrant, as follows:
_______ CASH:
$__________________________ = (Exercise Price x Delivery Shares)
_____ Payment
is being made by:
_____
enclosed check
_____ wire
transfer
_____ other
_______ CASHLESS
EXERCISE:
Net
number of Delivery Shares to be issued to Investor: ______*
*
based on: Current Market Value - (Exercise Price x Exercise Shares)
Adjusted
Price of the Common Stock
Where:
Market
Price of the Common Stock [“MP”] = $____________
Exercise
Shares = _____________
Current
Market Value [MP x Exercise Shares] = $________
Exercise
Price = $____________
Adjusted
Price of the Common Stock = $____________
Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to them in the Warrant.
It
is the intention of Investor to comply with the provisions of Section 2.2 of the Warrant regarding certain limits on Investor’s
right to receive shares thereunder. Investor believes this exercise complies with the provisions of such Section 2.2. Nonetheless,
to the extent that, pursuant to the exercise effected hereby, Investor would receive more shares of Common Stock than permitted
under Section 2.2, Company shall not be obligated and shall not issue to Investor such excess shares until such time, if ever,
that Investor could receive such excess shares without violating, and in full compliance with, Section 2.2 of the Warrant.
As
contemplated by the Warrant, this Notice of Exercise is being sent by facsimile to the fax number and officer indicated above.
If
this Notice of Exercise represents the full exercise of the outstanding balance of the Warrant, Investor will surrender (or cause
to be surrendered) the Warrant to Company at the address indicated above by express courier within five (5) Trading Days after
the Warrant Shares to be delivered pursuant to this Notice of Exercise have been delivered to Investor.
So
that DTC processing can begin, please deliver, via reputable overnight courier, a certificate representing DTC Eligible Common
Stock equal in number to the Delivery Shares to:
Name:
______________________________________
Address:
_____________________________________
_____________________________________
To
the extent the Delivery Shares are not DTC Eligible, please deliver a certificate representing non-DTC Eligible Common Stock equal
in number to the Delivery Shares to the party and address set forth immediately above.
Dated: _____________________
___________________________
[Name
of Investor]
By:________________________
EXHIBIT
B
FORM
OF TRANSFEROR ENDORSEMENT
(To
be signed only on transfer of the Warrant)
For
value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees”
the right represented by the Warrant to Purchase Shares of Common Stock dated as of July 16, 2014 (the “Warrant”)
to purchase the percentage and number of shares of common stock, $0.0001 par value (“Common Stock”), of ENDEAVOR
IP, INC. specified under the headings “Percentage Transferred” and “Number Transferred,” respectively,
opposite the name(s) of such person(s), and appoints each such person attorney-in-fact to transfer the undersigned’s respective
right on the books of ENDEAVOR IP, INC. with full power of substitution.
Transferees Percentage
Transferred Number Transferred
Dated:___________,
______
______________________________
[Transferor
Name must conform to the name of Investor as specified on the face of the Warrant]
By:
___________________________
Name:
_________________________
Signed
in the presence of:
_________________________
(Name)
ACCEPTED
AND AGREED:
_________________________
[TRANSFEREE]
By:
_______________________
Name:
_____________________
Security
Agreement
This
Security Agreement (this “Agreement”), dated
as of July 16, 2014, is executed by Endeavor IP, Inc., a Nevada 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 $279,000.00 (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 the 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:
1.
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.
“Intellectual
Property” means all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses (software or
otherwise), information, know-how, inventions, discoveries, published and unpublished works of authorship, processes, any and
all other proprietary rights, and all rights corresponding to all of the foregoing throughout the world, now owned and existing
or hereafter arising, created or acquired.
“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.
2.
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”).
3.
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 Nevada and New York) 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.
4.
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 Nevada 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.
5.
Additional Covenants. Debtor hereby agrees:
5.1.
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;
5.2.
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;
5.3.
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;
5.4.
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;
5.5.
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;
5.6.
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
5.7.
not to, directly or indirectly, allow, grant or suffer to exist any Lien upon any of the Collateral, other than Permitted Liens.
6.
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, including without limitation bringing suit in Secured Party’s own name to enforce any Intellectual Property;
(d) endorse Debtor’s name on all applications, documents, papers and instruments necessary or desirable for Secured Party
in the use of any Intellectual Property; (e) grant or issue any exclusive or non-exclusive license under any Intellectual Property
to any person or entity; (f) assign, pledge, sell, convey or otherwise transfer title in or dispose of any Intellectual Property
to any person or entity; (g) cause the Commissioner of Patents and Trademarks, United States Patent and Trademark Office (or as
appropriate, such equivalent agency in foreign countries) to issue any and all patents and related rights and applications to
Secured Party as the assignee of Debtor’s entire interest therein; (h) file a copy of this Agreement with any governmental
agency, body or authority, including without limitation the United States Patent and Trademark Office and, if applicable, the
United States Copyright Office or Library of Congress, at the sole cost and expense of Debtor; (i) insure, process and preserve
the Collateral; (j) pay any indebtedness of Debtor relating to the Collateral; (k) 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 (l) 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 (g) 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.
7.
Default and Remedies.
7.1.
Default. Debtor shall be deemed in default under this Agreement upon the occurrence of an Event of Default (as defined
in the Note).
7.2.
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.
7.3.
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.
7.4.
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.
7.5.
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:
(a)
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;
(b)
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
(c)
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.
8.
Miscellaneous.
8.1.
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.
8.2.
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.
8.3.
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.
8.4.
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.
8.5.
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.
8.6.
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.
8.7.
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.
8.8.
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.
8.9.
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.
8.10.
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.
8.11.
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.
8.12.
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.
8.13.
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.
8.14.
Time of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement.
[Remainder
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, Secured Party and Debtor have caused this Agreement to be executed as of the day and year first above written.
SECURED
PARTY:
Typenex
Co-Investment, LLC
By:
Red Cliffs Investments, Inc., its Manager
By: /s/
John Fife
John
M. Fife, President
DEBTOR:
Endeavor
IP, Inc.
By:
/s/ Ravinder Dhat
Name:
Ravinder Dhat
Title:
Chief Executive Officer
SCHEDULE
A
TO
SECURITY AGREEMENT
Those
certain Investor Notes (comprised of Investor Note #1, Investor Note #2, Investor #3 and Investor Note #4) issued by Secured Party
in favor of Debtor on July 16, 2014, in the initial principal amounts of $37,500.00 each, and any and all claims, rights and interests
in any of the above and all substitutions for, additions and accessions to and proceeds thereof.
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT
(the “Agreement”), dated
as of June 24,
2014, by and
between Endeavor IP,
Inc., a Nevada
corporation, with headquarters
located at 140 Broadway,
46th Floor, New York,
NY 10005 (the
“Company”), and UNION
CAPITAL, LLC,
a New York
limited liability company,
with its address
at 338 Crown
Street, Brooklyn, NY 11225
(the “Buyer”).
WHEREAS:
A.
The Company and
the Buyer are
executing and delivering
this Agreement in reliance
upon the exemption
from securities registration
afforded by the
rules and regulations
as promulgated by the
United States Securities
and Exchange Commission
(the “SEC”) under the
Securities Act of
1933, as amended
(the “1933 Act”);
B.
Buyer desires to
purchase and the
Company desires to
issue and sell,
upon the terms and
conditions set forth
in this Agreement
two 8% convertible
notes of the
Company, in the forms
attached hereto as
Exhibit A and
B in the
aggregate principal amount
of $40,000.00 (with the
first note being
in the amount
of $20,000.00 and
the second note
being in the
amount of $20,000.00 (together
with any note(s)
issued in replacement
thereof, the “Note”),
convertible into shares of common
stock, $0.001 par
value per share,
of the Company
(the “Common Stock”), upon
the terms and subject
to the limitations
and conditions set
forth in such
Note. The first of
the two notes
(the “First Note”)
shall be paid
for by the
Buyer as set
forth herein. The second note (the
“Second Note”) shall initially be paid for by the issuance of an offsetting
$20,000.00
secured note issued
to the Company
by the Buyer
(“Buyer Note”), provided
that prior to conversion
of the Second
Note, the Buyer
must have paid
off the Buyer
Note in cash such
that the Second
Note may not
be converted until
it has been
paid for in
cash.
C.
The Buyer wishes
to purchase, upon
the terms and
conditions stated in
this Agreement, such principal
amount of Note
as is set
forth immediately below
its name on
the signature pages hereto;
and
NOW
THEREFORE, the Company
and the Buyer
severally (and not
jointly) hereby agree as
follows:
1.
Purchase and Sale
of Note.
a.
Purchase of Note.
On each Closing
Date (as defined
below), the Company shall
issue and sell
to the Buyer
and the Buyer
agrees to purchase
from the Company such
principal amount of
Note as is
set forth immediately
below the Buyer’s
name on the signature
pages hereto.
b.
Form of Payment.
On the Closing
Date (as defined
below), (i)
the Buyer shall pay
the purchase price
for the Note
to be issued
and sold to
it at the
Closing (as defined below)
(the “Purchase Price”)
by wire transfer
of immediately available
funds to the Company,
in accordance with
the Company’s written
wiring instructions, against
delivery of the Note
in the principal
amount equal to
the Purchase Price
as is set
forth immediately below
the Buyer’s name on
the signature pages
hereto, and (ii) the
Company shall deliver
such duly executed Note on behalf of the Company, to the Buyer, against delivery
of such Purchase Price.
c.
Closing Date. The
date and time
of the first
issuance and sale
of the Note pursuant
to this Agreement
(the “Closing Date”)
shall be on
or about June
24, 2014, or such
other mutually agreed
upon time. The
closing of the
transactions contemplated by
this Agreement (the “Closing”)
shall occur on the
Closing Date at
such location as
may be agreed
to by the parties.
Subsequent Closings shall
occur when the
Buyer Note is
repaid. The Closing
of the Second Note
shall be on or
before the dates
specified in the
Buyer Note.
2.
Buyer’s Representations and Warranties. The Buyer
represents and warrants to
the Company that:
a.
Investment Purpose. As
of the date
hereof, the Buyer
is purchasing the Note
and the shares
of Common Stock
issuable upon conversion
of or otherwise pursuant
to the Note,
such shares of
Common Stock being
collectively referred to
herein as the “Conversion
Shares” and, collectively with
the Note, the
“Securities”) for its own
account and not with
a present view
towards the public
sale or distribution
thereof, except pursuant
to sales registered or
exempted from registration
under the 1933
Act; provided, however,
that by making the
representations herein, the
Buyer does not
agree to hold
any of the
Securities for any minimum
or other specific
term and reserves
the right to
dispose of the Securities
at any time
in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.
b.
Accredited Investor Status.
The Buyer is
an “accredited investor”
as that term
is defined in
Rule 501(a) of
Regulation D (an
“Accredited Investor”).
c.
Reliance on Exemptions.
The Buyer understands
that the Securities are
being offered and
sold to it
in reliance upon
specific exemptions from
the registration requirements of United States
federal and state securities
laws and that the
Company is relying upon
the truth and
accuracy of, and
the Buyer’s compliance
with, the representations, warranties,
agreements, acknowledgments and
understandings of the Buyer
set forth herein
in order to determine
the availability of
such exemptions and
the eligibility of
the Buyer to
acquire the Securities.
d.
Information. The Buyer
and its advisors,
if any, have
been, and for so
long as the
Note remain outstanding
will continue to
be, furnished with
all materials relating to
the business, finances
and operations of
the Company and
materials relating to
the offer and sale
of the Securities
which have been
requested by the
Buyer or its
advisors. The Buyer
and its advisors, if
any, have been,
and for so
long as the
Note remain outstanding
will continue to
be, afforded the opportunity
to ask questions of
the Company. Notwithstanding
the foregoing, the Company has
not disclosed to
the Buyer any
material nonpublic information
and will not disclose such information
unless such information is disclosed to
the public prior to or
promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted
by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s
right to rely on the Company’s representations
and warranties contained in Section 3
below. The Buyer understands
that its investment
in the Securities
involves a significant degree of risk. The Buyer is not aware of any facts
that may constitute a breach of any of the Company's representations and warranties made herein.
e.
Governmental Review. The
Buyer understands that
no United States federal
or state agency
or any other
government or governmental
agency has passed
upon or made any
recommendation or endorsement
of the Securities.
f.
Transfer or Re-sale.
The Buyer understands
that (i)
the sale or
re- sale of
the Securities has
not been and
is not being
registered under the
1933 Act or
any applicable state securities
laws, and the
Securities may not
be transferred unless
(a) the Securities are
sold pursuant to
an effective registration
statement under the
1933 Act, (b)
the Buyer shall have delivered to
the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance
and scope customary for opinions
of counsel in comparable transactions
to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration,
which opinion shall be accepted by the Company, (c) the Securities are sold or transferred
to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”))
of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance
with this Section 2(f) and who is an Accredited Investor, (d)
the Securities are sold pursuant to Rule 144, or (e) the Securities are sold
pursuant to Regulation S
under the 1933
Act (or a
successor rule) (“Regulation
S”), and the
Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion
of counsel that shall be in form, substance and scope customary for opinions of
counsel in corporate transactions, which opinion
shall be accepted by the
Company; (ii) any sale of such
Securities made in reliance on Rule
144 may be
made only in
accordance with the terms
of said Rule and
further, if said Rule is not
applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in
the 1933 Act) may require
compliance with some other exemption
under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other person is
under any obligation
to register such
Securities under the
1933 Act or
any state securities laws or
to comply with the terms and conditions
of any exemption thereunder (in each case).
Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may
be pledged as
collateral in connection
with a bona
fide margin account or
other lending arrangement.
g.
Legends. The Buyer
understands that the
Note and, until
such time as the
Conversion Shares have
been registered under
the 1933 Act
may be sold
pursuant to Rule 144
or Regulation S
without any restriction
as to the
number of securities
as of a
particular date that can
then be immediately
sold, the Conversion
Shares may bear
a restrictive legend
in substantially the following
form (and a
stop-transfer order may
be placed against
transfer of the certificates
for such Securities):
“NEITHER
THE ISSUANCE AND
SALE OF THE
SECURITIES REPRESENTED BY
THIS CERTIFICATE NOR
THE SECURITIES INTO
WHICH THESE
SECURITIES ARE EXERCISABLE
HAVE BEEN
REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
UNLESS SOLD PURSUANT TO
RULE 144
OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The
legend set forth
above shall be
removed and the
Company shall issue
a certificate without such
legend to the
holder of any
Security upon which
it is stamped,
if, unless otherwise required
by applicable state
securities laws, (a)
such Security is
registered for sale
under an effective registration
statement filed under
the 1933 Act
or otherwise may
be sold pursuant
to Rule 144 or
Regulation S without
any restriction as
to the number
of securities as
of a particular date
that can then
be immediately sold,
or (b) such
holder provides the
Company with an
opinion of counsel, in
form, substance and
scope customary for
opinions of counsel
in comparable transactions, to
the effect that
a public sale
or transfer of such
Security may be
made without registration under
the 1933 Act,
which opinion shall
be accepted by
the Company so
that the sale or transfer is
effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s)
from which the
legend has been
removed, in compliance
with applicable prospectus delivery
requirements, if any. In the event that the Company does not accept the opinion of counsel
provided by the
Buyer with respect
to the transfer
of Securities pursuant
to an exemption from registration,
such as Rule 144 or Regulation S, within 2 business days, it will be considered an Event of Default under the Note.
h.
Authorization; Enforcement. This
Agreement has been
duly and validly authorized.
This Agreement has
been duly executed
and delivered on
behalf of the Buyer,
and this Agreement
constitutes a valid
and binding agreement
of the Buyer
enforceable in accordance with its
terms.
i.
Residency. The Buyer
is a resident
of the jurisdiction
set forth immediately below the
Buyer’s name on
the signature pages
hereto.
3.
Representations and Warranties of the Company. The Company represents and
warrants to the
Buyer that:
a.
Organization and Qualification.
The Company and
each of its subsidiaries,
if any, is
a corporation duly
organized, validly existing
and in good
standing under the laws
of the jurisdiction
in which it
is incorporated, with
full power and
authority (corporate and other)
to own, lease,
use and operate
its properties and
to carry on
its business as
and where now owned,
leased, used, operated
and conducted.
b.
Authorization; Enforcement. (i)
The Company has
all requisite corporate power
and authority to
enter into and
perform this Agreement,
the Note and
to consummate the transactions
contemplated hereby and thereby
and to issue
the Securities, in accordance
with the terms
hereof and thereof,
(ii) the execution
and delivery of
this Agreement, the Note
by the Company
and the consummation
by it of
the transactions contemplated
hereby and thereby (including
without limitation, the
issuance of the
Note and the
issuance and reservation for
issuance of the
Conversion Shares issuable
upon conversion or
exercise thereof) have been duly
authorized by the Company’s Board
of Directors and no further consent or authorization
of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered
by the Company by its authorized representative, and such authorized
representative is the true and
official representative with authority to sign
this Agreement and the
other documents executed in connection
herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company
of the Note, each of such instruments will constitute, a legal, valid and binding obligation
of the Company
enforceable against the
Company in accordance
with its terms.
c.
Issuance of Shares.
The Conversion Shares
are duly authorized and
reserved for issuance
and, upon conversion
of the Note
in accordance with
its respective terms, will
be validly issued,
fully paid and
non-assessable, and free
from all taxes,
liens, claims and encumbrances
with respect to
the issue thereof
and shall not
be subject to
preemptive rights or other
similar rights of
shareholders of the
Company and will
not impose personal
liability upon the holder
thereof.
d.
Acknowledgment of Dilution.
The Company understands
and acknowledges the potentially dilutive
effect to the
Common Stock upon
the issuance of
the Conversion Shares upon
conversion of the
Note. The Company
further acknowledges that
its obligation to issue Conversion
Shares upon conversion
of the Note
in accordance with
this Agreement, the Note
is absolute and
unconditional regardless of
the dilutive effect
that such issuance may
have on the
ownership interests of
other shareholders of
the Company.
e.
No Conflicts. The
execution, delivery and
performance of this Agreement,
the Note by
the Company and
the consummation by
the Company of
the transactions contemplated hereby
and thereby (including,
without limitation, the issuance
and reservation for issuance
of the Conversion
Shares) will not
(i) conflict with
or result in
a violation of
any provision of the
Certificate of Incorporation
or By-laws, or
(ii) violate or
conflict with, or
result in a breach
of any provision
of, or constitute
a default (or
an event which with
notice or lapse
of time or both
could become a
default) under, or
give to others
any rights of
termination, amendment, acceleration or
cancellation of, any
agreement, indenture, patent,
patent license or instrument
to which the
Company or any
of its subsidiaries
is a party,
or (iii) result
in a violation of
any law, rule,
regulation, order, judgment
or decree (including
federal and state
securities laws and regulations
and regulations of any self-regulatory organizations
to which the Company or
its securities are subject) applicable to the Company or any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations
as would not, individually or in the aggregate, have a material adverse effect). All consents, authorizations,
orders, filings and
registrations which the
Company is required
to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The Company is not
in violation of
the listing requirements of
the OTCQB marketplace (the “OTCQB”)
and does not reasonably anticipate that the Common Stock will be delisted by the OTCQB in the foreseeable future, nor are the
Company’s securities “chilled” by DTC. The Company and its subsidiaries
are unaware of any facts
or circumstances which might give
rise to any of
the foregoing.
f.
Absence of Litigation.
Except as disclosed
in the Company’s public
filings, there is no
action, suit, claim,
proceeding, inquiry or
investigation before or
by any court, public
board, government agency,
self-regulatory organization or body
pending or, to
the knowledge of the
Company or any
of its subsidiaries,
threatened against or
affecting the Company or
any of its
subsidiaries, or their
officers or directors
in their capacity
as such, that could
have a material
adverse effect. Schedule
3(f) contains a
complete list and
summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the
Company or any of its subsidiaries, without regard to whether it would have a material adverse effect. The Company and its subsidiaries
are unaware of any facts or circumstances which might
give rise to any
of the foregoing.
g.
Acknowledgment Regarding Buyer’
Purchase of Securities.
The Company acknowledges and agrees
that the Buyer
is acting solely
in the capacity
of arm’s length purchasers
with respect to this
Agreement and the
transactions contemplated hereby.
The Company further acknowledges
that the Buyer
is not acting
as a financial
advisor or fiduciary
of the Company (or
in any similar
capacity) with respect
to this Agreement
and the transactions contemplated
hereby and any
statement made by
the Buyer or
any of its
respective representatives or agents
in connection with
this Agreement and
the transactions contemplated hereby
is not advice or
a recommendation and is
merely incidental to the
Buyer’ purchase of the Securities.
The Company further represents to the Buyer that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the
Company and its representatives.
h.
No Integrated Offering. Neither
the Company, nor any of
its affiliates, nor any
person acting on
its or their
behalf, has directly
or indirectly made
any offers or sales
in any security
or solicited any
offers to buy
any security under
circumstances that would require registration
under the 1933
Act of the
issuance of the
Securities to the
Buyer. The issuance of
the Securities to
the Buyer will
not be integrated
with any other
issuance of the Company’s
securities (past, current
or future) for
purposes of any
shareholder approval provisions applicable
to the Company
or its securities.
i.
Title to Property.
The Company and
its subsidiaries have
good and marketable title
in fee simple
to all real
property and good
and marketable title
to all personal property
owned by them
which is material
to the business
of the Company
and its subsidiaries,
in each case free
and clear of
all liens, encumbrances
and defects except
such as are
described in Schedule 3(i)
or such as
would not have
a material adverse
effect. Any real
property and facilities held
under lease by
the Company and
its subsidiaries are
held by them
under valid, subsisting and
enforceable leases with
such exceptions as
would not have
a material adverse effect.
j.
Breach of Representations
and Warranties by
the Company. If
the Company breaches any
of the representations
or warranties set
forth in this
Section 3, and
in addition to any
other remedies available
to the Buyer
pursuant to this
Agreement, it will
be considered an Event
of default under
the Note.
4.
COVENANTS.
a.
Expenses. At the
Closing, the Company
shall reimburse Buyer
for expenses incurred by
them in connection
with the negotiation,
preparation, execution, delivery and performance
of this Agreement
and the other
agreements to be
executed in connection herewith
(“Documents”), including, without limitation,
reasonable attorneys’ and
consultants’ fees and expenses,
transfer agent fees,
fees for stock
quotation services, fees
relating to any amendments
or modifications of
the Documents or
any consents or
waivers of provisions
in the Documents, fees
for the preparation
of opinions of counsel,
escrow fees, and
costs of restructuring the transactions
contemplated by the Documents. When possible, the Company must pay these fees directly,
otherwise the Company must make immediate
payment for reimbursement to the Buyer for all fees and expenses immediately upon written
notice by the Buyer or the submission of an invoice by the Buyer. The Company’s obligation with respect to this
transaction is to
reimburse Buyer’s expenses
shall be $1,500
in legal fees
(and similar amounts for the Second Note) which shall be deduced from each Note
when cash funded.
b.
Listing. The Company
shall promptly secure
the listing of
the Conversion Shares upon
each national securities
exchange or automated
quotation system, if
any, upon which shares
of Common Stock
are then listed
(subject to official
notice of issuance)
and, so long as
the Buyer owns
any of the
Securities, shall maintain,
so long as
any other shares
of Common Stock shall
be so listed,
such listing of
all Conversion Shares
from time to
time issuable upon conversion
of the Note.
The Company will
obtain and, so long
as the Buyer
owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCQB or any
equivalent replacement market, the
Nasdaq stock market
(“Nasdaq”), the New York
Stock Exchange (“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in all respects with
the Company’s reporting, filing and
other obligations under the bylaws or
rules of the Financial
Industry Regulatory Authority
(“FINRA”) and such
exchanges, as applicable. The Company
shall promptly provide to the Buyer copies of any notices it receives from the OTCQB and any
other markets on
which the Common
Stock is then
listed regarding the
continued eligibility of the Common
Stock for listing on such
markets.
c.
Corporate Existence. So
long as the
Buyer beneficially owns
any Note, the
Company shall maintain
its corporate existence
and shall not
sell all or
substantially all of the Company’s
assets, except in
the event of
a merger or
consolidation or sale
of all or substantially
all of the Company’s assets, where
the surviving or successor entity
in such transaction (i) assumes the
Company’s obligations hereunder
and under the
agreements and instruments entered
into in connection
herewith and (ii)
is a publicly
traded corporation whose Common
Stock is listed for
trading on the
OTCQB, Nasdaq, NYSE
or AMEX.
d.
No Integration. The
Company shall not
make any offers
or sales of any
security (other than
the Securities) under
circumstances that would
require registration of the
Securities being offered
or sold hereunder
under the 1933
Act or cause
the offering of
the Securities to be
integrated with any
other offering of
securities by the
Company for the
purpose of any stockholder
approval provision applicable to
the Company or
its securities.
e.
Breach of Covenants.
If the Company
breaches any of
the covenants set forth in
this Section 4, and
in addition to any
other remedies available to
the Buyer pursuant to
this Agreement, it
will be considered
an event of
default under the
Note.
5.
Governing Law; Miscellaneous.
a.
Governing Law. This
Agreement shall be
governed by and construed
in accordance with
the laws of
the State of
New York without
regard to principles
of conflicts of laws.
Any action brought
by either party
against the other
concerning the transactions contemplated
by this Agreement
shall be brought
only in the
state courts of
New York or in
the federal courts
located in the
state and county
of New York.
The parties to
this Agreement hereby irrevocably
waive any objection
to jurisdiction and
venue of any
action instituted hereunder and
shall not assert
any defense based
on lack of
jurisdiction or venue
or based upon forum non conveniens. The Company and Buyer waive trial by jury. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and costs. In the event
that any provision
of this Agreement
or any other
agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute
or rule of law, then such provision
shall be deemed inoperative
to the extent
that it may
conflict therewith and
shall be deemed modified
to conform with
such statute or
rule of law. Any
such provision which
may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision
of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any
suit, action or proceeding in connection with this Agreement or any other Transaction Document 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.
b.
Counterparts; Signatures by
Facsimile. This Agreement
may be executed in one
or more counterparts, each of
which shall be deemed an original
but all of which shall constitute
one and the
same agreement and
shall become effective
when counterparts have been
signed by each
party and delivered
to the other
party. This Agreement,
once executed by
a party, may be
delivered to the
other party hereto
by facsimile transmission
of a copy
of this Agreement bearing
the signature of
the party so
delivering this Agreement.
c.
Headings. The headings
of this Agreement
are for convenience
of reference only and
shall not form
part of, or
affect the interpretation
of, this Agreement.
d.
Severability. In the
event that any
provision of this
Agreement is invalid or
unenforceable under any
applicable statute or
rule of law,
then such provision
shall be deemed inoperative
to the extent
that it may
conflict therewith and
shall be deemed
modified to conform with
such statute or
rule of law.
Any provision hereof
which may prove
invalid or unenforceable under
any law shall
not affect the
validity or enforceability
of any other
provision hereof.
e.
Entire Agreement; Amendments.
This Agreement and
the instruments referenced herein
contain the entire
understanding of the
parties with respect
to the matters covered
herein and therein
and, except as
specifically set forth
herein or therein,
neither the Company nor
the Buyer makes
any representation, warranty,
covenant or undertaking
with respect to such
matters. No provision
of this Agreement
may be waived
or amended other
than by an instrument
in writing signed
by the majority
in interest of
the Buyer.
f.
Notices. All notices,
demands, requests, consents,
approvals, and other communications
required or permitted
hereunder shall be
in writing and,
unless otherwise specified herein, shall
be (i) personally
served, (ii) deposited
in the mail,
registered or certified, return
receipt requested, postage
prepaid, (iii) delivered
by reputable air
courier service with charges
prepaid, or (iv)
transmitted by hand
delivery, telegram, or
facsimile, addressed as
set forth below or
to such other
address as such
party shall have
specified most recently
by written notice. Any
notice or other
communication required or
permitted to be
given hereunder shall
be deemed effective (a)
upon hand delivery
or delivery by
facsimile, with accurate
confirmation generated by the transmitting
facsimile machine, at
the address or
number designated below
(if delivered on a business day during normal business hours where such notice is to be received), or the
first business day
following such delivery
(if delivered other
than on a
business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier
service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses
for such communications shall be:
If
to the Company,
to: Endeavor IP, Inc.
140
Broadway 46th Floor New York,
NY 10005
Attn:
Ravinder Dhat, CEO
If
to the Buyer:
UNION
CAPITAL, LLC
338
Crown Street
Brooklyn,
NY 11225
Attn:
Yakov Borenstein
Each
party shall provide
notice to the
other party of
any change in
address.
g.
Successors and Assigns.
This Agreement shall
be binding upon
and inure to the benefit of the parties and their successors
and assigns. Neither the Company nor the
Buyer shall assign
this Agreement or
any rights or
obligations hereunder without
the prior written consent
of the other.
Notwithstanding the foregoing,
the Buyer may
assign its rights hereunder
to any person
that purchases Securities
in a private
transaction from the
Buyer or to any
of its “affiliates,”
as that term
is defined under
the 1934 Act,
without the consent
of the Company.
h.
Third Party Beneficiaries.
This Agreement is intended
for the benefit of
the parties hereto
and their respective
permitted successors and
assigns, and is
not for the benefit
of, nor may
any provision hereof
be enforced by,
any other person.
i.
Survival. The representations
and warranties of the
Company and the agreements
and covenants set
forth in this
Agreement shall survive
the closing hereunder notwithstanding
any due diligence investigation
conducted by or
on behalf of
the Buyer. The Company
agrees to indemnify
and hold harmless
the Buyer and
all their officers,
directors, employees and agents
for loss or
damage arising as
a result of
or related to
any breach or
alleged breach by the
Company of any
of its representations,
warranties and covenants
set forth in
this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they
are incurred.
j.
Further Assurances. Each
party shall do
and perform, or
cause to be done
and performed, all
such further acts
and things, and
shall execute and
deliver all such other
agreements, certificates, instruments and
documents, as the
other party may
reasonably request in order
to carry out
the intent and
accomplish the purposes
of this Agreement
and the consummation of
the transactions contemplated
hereby.
k.
No Strict Construction.
The language used in
this Agreement will be
deemed to be
the language chosen
by the parties
to express their
mutual intent, and
no rules of strict
construction will be
applied against any
party.
l.
Remedies. The Company
acknowledges that a
breach by it
of its obligations hereunder
will cause irreparable
harm to the
Buyer by vitiating
the intent and
purpose of the transaction
contemplated hereby. Accordingly, the
Company acknowledges that
the remedy at law
for a breach
of its obligations
under this Agreement
will be inadequate
and agrees, in the
event of a
breach or threatened
breach by the
Company of the
provisions of this Agreement,
that the Buyer
shall be entitled,
in addition to
all other available
remedies at law
or in equity, and
in addition to
the penalties assessable
herein, to an
injunction or injunctions restraining,
preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity
of showing economic loss and without any bond or other
security being required.
IN
WITNESS WHEREOF,
the undersigned Buyer
and the Company
have caused this Agreement
to be duly
executed as of
the date first
above written.
Endeavor
IP, Inc.
By:
/s/ Ravinder Dhat
Ravinder
Dhat
Chief
Executive Officer
UNION
CAPITAL, LLC.
By:
/s/ Yakov Borenstein
Name:
Yakov Borenstein
Title:
Manager
| AGGREGATE
SUBSCRIPTION AMOUNT: |
|
| Aggregate
Principal Amount of
Note: |
$40,000.00 |
| Aggregate
Purchase Price: |
|
| Note
1: $20,000.00 less
$1,500.00 in legal
fees and
$1,600.00 in third
party fees |
| Note
2: $20,000.00 less
$1,500.00 in legal
fees and $1,600.00
in third party
fees |
EXHIBIT
A
144
NOTE – $20,000
EXHIBIT
B
BACK
END NOTE 1
$20,000
THIS
NOTE AND THE
COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS
NOTE HAVE NOT BEEN
AND WILL NOT
BE REGISTERED WITH THE
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF
ANY STATE PURSUANT TO
AN EXEMPTION FROM REGISTRATION
PROVIDED UNDER THE SECURITIES
ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER (THE
"1933 ACT”)
US
$20,000.00
ENDEAVOR
IP, INC.
8%
CONVERTIBLE REDEEMABLE NOTE DUE
JUNE 24, 2015
FOR
VALUE RECEIVED, Endeavor
IP, Inc. (the
“Company”) promises to
pay to the order
of UNION CAPITAL,
LLC and its
authorized successors and
permitted assigns ("Holder"),
the aggregate principal
face amount of
Twenty Thousand Dollars
exactly (U.S. $20,000.00) on
June 24, 2015 ("Maturity Date") and
to pay interest on the principal amount
outstanding here- under at the
rate of 8% per
annum commencing on
June 24, 2014.
The interest will
be paid to
the Holder in whose
name this Note
is registered on
the records of
the Company regarding
registration and transfers
of this Note.
The principal of,
and interest on,
this Note are
payable at 338 Crown
Street, Brooklyn, NY 11225,
initially, and if changed,
last appearing on the
records of the
Company as designated
in writing by
the Holder hereof
from time to
time. The Company will pay
each interest payment
and the outstanding
principal due upon
this Note before
or on the
Maturity Date, less
any amounts required
by law to
be deducted or withheld,
to the Holder
of this Note by check or wire transfer addressed to such Holder at the last
address appearing on the records of the
Company. The forwarding
of such check
or wire transfer shall
constitute a payment of
outstanding principal hereunder
and shall satisfy
and discharge the
liability for principal
on this Note to
the extent of
the sum represented
by such check
or wire transfer. Interest shall
be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This
Note is subject
to the following
additional provisions:
1.
This Note is
exchangeable for an
equal aggregate principal
amount of Notes of
different authorized denominations,
as requested by
the Holder surrendering
the same.
No
service charge will
be made for
such registration or
transfer or exchange,
except that Holder shall
pay any tax
or other governmental
charges payable in
connection therewith.
2.
The Company shall
be entitled to
withhold from all
payments any amounts required
to be withheld
under applicable laws.
3.
This Note may
be transferred or
exchanged only in
compliance with the Securities
Act of 1933,
as amended ("Act"),
and applicable state securities
laws. Any attempted transfer
to a non-qualifying
party shall be
treated by the
Company as void.
Prior to due
presentment for transfer
of this Note,
the Company and
any agent of
the Company may
treat the person in
whose name this
Note is duly
registered on the
Company's records as
the owner hereof
for all other purposes,
whether or not
this Note be
overdue, and neither
the Company nor
any such agent shall
be affected or
bound by notice
to the contrary.
Any Holder of
this Note electing
to exercise the right
of conversion set
forth in Section
4(a) hereof, in
addition to the
requirements set forth in
Section 4(a), and
any prospective transferee
of this Note,
also is required
to give the Company
written confirmation that
this Note is
being converted ("Notice
of Conversion") in
the form annexed hereto as
Exhibit A. The
date of receipt
(including receipt by
telecopy) of such Notice
of Conversion shall be the Conversion
Date.
4.
(a) The Holder
of this Note
is entitled, at
its option, at
any time after 180
days, to convert all or any amount of
the principal face amount of this Note
then outstanding into shares of the Company's
common stock (the
"Common Stock") without
restrictive legend of any nature,
at a price
("Conversion Price") for
each share of
Common Stock equal
to 55% of
the lowest trading bid
price of the
Common Stock as
reported on the
OTCQB marketplace which the Company’s
shares are traded or
any market upon which
the Common Stock may
be traded in the future
("Exchange"), for the
ten prior trading
days including the
day upon which
a Notice of Conversion
is received by the
Company (provided such Notice
of Conversion is delivered by fax or
other electronic method
of communication to
the Company after
4 P.M. Eastern
Standard or Daylight Savings
Time if the
Holder wishes to
include the same
day closing price).
If the shares have
not been delivered
within 3 business
days, the Notice
of Conversion may
be rescinded. Such conversion
shall be effectuated
by the Company
delivering the shares
of Common Stock
to the Holder within
3 business days
of receipt by
the Company of
the Notice of
Conversion. Once the Holder has received
such shares of Common Stock,
the Holder shall surrender this Note
to the Company, executed
by the Holder
evidencing such Holder's
intention to convert
this Note or a
specified portion hereof,
and accompanied by
proper assignment hereof in
blank. Accrued, but unpaid interest shall be subject to conversion. No fractional
shares or scrip representing frac- tions of shares will be issued on conversion, but the number of shares issuable shall be rounded
to the nearest whole share. In the event the Company experiences a DTC “Chill” on its shares, the conversion price
shall be decreased to 45% instead of 55% while that “Chill” is in effect.
(b)
Interest on any
unpaid principal balance
of this Note
shall be paid
at the rate of
8% per annum.
Interest shall be
paid by the
Company in Common
Stock ("Interest Shares"). Holder
may, at any
time, send in
a Notice of
Conversion to the
Company for Interest Shares
based on the
formula provided in
Section 4(a) above.
The dollar amount
converted into Interest Shares shall
be all or
a portion of
the accrued interest
calculated on the
unpaid principal balance of
this Note to
the date of
such notice.
(c)
The Notes may
be prepaid at
140% of the
face amount plus
any accrued interest. This
Note may not
be prepaid after
the 180th day. Such
redemption must be
closed and funded within
3 days of
giving notice of
redemption of the
right to redeem
shall be null
and void.
(d)
Upon (i) a
transfer of all
or substantially all
of the assets
of the Company to
any person in
a single transaction
or series of
related transactions, (ii)
a reclassification, capital reorganization
or other change or
exchange of outstanding
shares of the
Common Stock, other than
a forward or
reverse stock split
or stock dividend,
or (iii) any
consolidation or merger
of the Company with
or into another
person or entity
in which the
Company is not
the surviving entity (other
than a merger
which is effected
solely to change
the jurisdiction of
incorporation of the Company
and results in
a reclassification, conversion
or exchange of
outstanding shares of Common
Stock solely into
shares of Common
Stock) (each of
items (i), (ii)
and (iii) being
referred to as
a "Sale Event"),
then, in each
case, the Company
shall, upon request
of the Holder, redeem this Note in
cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of
the Holder, such Holder may convert the un- paid principal amount
of this Note
(together with the amount
of accrued but
unpaid interest) into shares of
Common Stock immediately prior
to such Sale Event
at the Conversion
Price.
(e)
In case of any Sale
Event (not to include
a sale of all or
substantially all of the Company’s
assets) in connection
with which this
Note is not
redeemed or converted,
the Company shall cause
effective provision to
be made so
that the Holder
of this Note
shall have the right
thereafter, by converting
this Note, to
purchase or convert
this Note into
the kind and number
of shares of
stock or other
securities or property
(including cash) receivable
upon such reclassification, capital reorganization
or other change,
consolidation or merger
by a holder
of the number of
shares of Common
Stock that could
have been purchased
upon exercise of
the Note and at
the same Conversion
Price, as defined
in this Note,
immediately prior to
such Sale Event. The
foregoing provisions shall
similarly apply to
successive Sale Events.
If the consideration
received by the
holders of Common
Stock is other
than cash, the
value shall be
as deter- mined by the Board
of Directors of the Company or successor
person or entity acting in
good faith.
5.
No provision of
this Note shall
alter or impair
the obligation of
the Company, which
is absolute and
unconditional, to pay
the principal of,
and interest on,
this Note at the
time, place, and
rate, and in
the form, herein
prescribed.
6.
The Company hereby
expressly waives demand
and presentment for
payment, notice of
non-payment, protest, notice
of protest, notice
of dishonor, notice
of acceleration or intent
to accelerate, and
diligence in taking
any action to
collect amounts called
for hereunder and shall
be directly and
primarily liable for
the payment of
all sums owing
and to be
owing hereto.
7.
The Company agrees
to pay all
costs and expenses,
including reasonable attorneys' fees and
expenses, which may
be incurred by
the Holder in
collecting any amount
due under this Note.
8.
If one or
more of the
following described "Events
of Default" shall occur:
(a)
The Company shall
default in the
payment of principal
or interest on
this Note or any
other note issued
to the Holder
by the Company;
or
(b)
Any of the
representations or warranties
made by the
Company herein or in
any certificate or
financial or other
written statements heretofore
or hereafter furnished
by or on behalf
of the Company
in connection with
the execution and
delivery of this
Note, or the
Securities Purchase Agreement
under which this
note was issued
shall be false
or misleading in
any respect; or
(c)
The Company shall
fail to perform
or observe, in
any respect, any
covenant, term, provision,
condition, agreement or obligation
of the Company
under this Note
or any other note
issued to the
Holder; or
(d)
The Company shall
(1) become insolvent;
(2) admit in
writing its inability to
pay its debts
generally as they
mature; (3) make
an assignment for
the benefit of
creditors or commence proceedings
for its dissolution;
(4) apply for
or consent to
the appointment of
a trustee, liquidator
or receiver for
its or for
a substantial part
of its property
or business; (5)
file a petition
for bankruptcy relief,
consent to the
filing of such
petition or have
filed against it
an involuntary petition
for bankruptcy relief,
all under federal
or state laws
as applicable; or
(e)
A trustee, liquidator
or receiver shall
be appointed for
the Company or
for a substantial part of
its property or
business without its consent
and shall not
be discharged with- in
sixty (60) days
after such appointment;
or
(f)
Any governmental agency or any
court of competent
jurisdiction at the
in- stance of any
governmental agency shall
assume custody or
control of the
whole or any
substantial portion of
the properties or
assets of the
Company; or
(g)
One or more money judgments, writs or warrants of attachment, or
similar process, in excess
of fifty
thousand dollars ($50,000)
in the aggregate,
shall be entered
or filed against
the Company or
any of its
properties or other
assets and shall
remain unpaid, unvacated, unbonded
or unstayed for
a period of
fifteen (15) days
or in any
event later than
five (5) days prior
to the date
of any proposed
sale thereunder; or
(h)
The Company shall
have defaulted on
or breached any
term of any
other note of similar
debt instrument into
which the Company
has entered and
failed to cure
such de- fault within
the appropriate grace
period; or
(i)
The Company shall
have its Common
Stock delisted from
a market (including
the OTCQB marketplace)
or, if the
Common Stock trades
on an exchange,
then trading in the
Common Stock shall
be suspended for
more than 10
consecutive days;
(j)
If a majority
of the members
of the Board
of Directors of
the Company on the
date hereof are
no longer serving
as members of
the Board;
(k)
The Company shall
not deliver to
the Holder the
Common Stock pursuant to
paragraph 4 herein
without restrictive legend
within 3 business
days of its
receipt of a
Notice of Conversion; or
(l)
The Company shall
not replenish the
reserve set forth
in Section 12,
with- in 3 business
days of the
request of the
Holder; or
(m)
The Company shall
not be “current”
in its filings
with the Securities
and Exchange Commission; or
(n)
The Company shall
lose the “bid”
price for its
stock and a
market (including the
OTCBB marketplace or
other exchange)
Then,
or at any
time thereafter, unless
cured within 5
days, and in
each and every
such case, un- less
such Event of
Default shall have
been waived in
writing by the
Holder (which waiver
shall not be deemed
to be a
waiver of any
subsequent default) at
the option of
the Holder and
in the Holder's sole
discretion, the Holder
may consider this
Note immediately due
and payable, with- out
presentment, demand, protest
or (further) notice
of any kind
(other than notice
of acceleration), all
of which are
hereby expressly waived,
anything herein or
in any note
or other instruments
contained to the
contrary notwithstanding, and
the Holder may
immediately, and without expiration
of any period
of grace, enforce
any and all
of the Holder's rights
and remedies provided
herein or any
other rights or
remedies afforded by
law. Upon an
Event of Default,
interest shall accrue at a default interest rate of 16% per annum or, if such
rate is usurious or not permit- ted by
current law, then
at the highest
rate of interest
permitted by law.
In the event
of a breach of Section 8(k) the
penalty shall be $250 per day the shares
are not issued beginning on the 4th day after the conversion notice was
delivered to the Company. This penalty shall increase to $500 per
day beginning on
the 10th day. The
penalty for a
breach of Section
8(n) shall be
an in- crease of the outstanding principal amounts by 20%.
In case of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note
is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.
If
the Holder shall
commence an action
or proceeding to
enforce any provisions
of this Note,
including, without limitation,
engaging an attorney,
then if the
Holder prevails in
such action, the Holder
shall be reimbursed
by the Company
for its attorneys’
fees and other
costs and expenses incurred
in the investigation,
preparation and prosecution
of such action
or proceeding.
9.
In case any
provision of this
Note is held
by a court
of competent jurisdiction
to be excessive
in scope or
otherwise invalid or
unenforceable, such provision
shall be adjusted
rather than voided,
if possible, so
that it is
enforceable to the
maximum extent possible, and
the validity and
enforceability of the
remaining provisions of
this Note will
not in any
way be affected or
impaired thereby.
10.
Neither this Note
nor any term
hereof may be
amended, waived, dis- charged
or terminated other
than by a
written instrument signed
by the Company
and the Holder.
11.
The Company represents
that it is
not a “shell”
issuer and has never
been a “shell” issuer
or that if it
previously has been
a “shell” issuer
that at least
12 months have
passed since the Company
has reported form
10 type information
indicating it is
no longer a
“shell issuer. Further.
The Company will
instruct its counsel
to either (i)
write a 144-
3(a(9) opinion to
al- low for salability
of the conversion
shares or (ii)
accept such opinion
from Holder’s counsel.
12.
The Company shall
issue irrevocable transfer
agent instructions reserving 2,700,000
shares of its
Common Stock for
conversions under this
Note (the “Share
Reserve”). The reserve shall be
replenished as needed
to allow for
conversions of this
Note. Upon full conversion
of this Note,
any shares remaining in
the Share Reserve shall
be cancelled. The Company
shall pay all
costs associated with
issuing and delivering
the shares.
13.
The Company will
give the Holder
direct notice of
any corporate actions, including
but not limited
to name changes,
stock splits, recapitalizations
etc. This notice
shall be given to
the Holder as
soon as possible
under law.
14.
This Note shall
be governed by
and construed in
accordance with the
laws of New York
applicable to contracts
made and wholly
to be performed
within the State
of New York
and shall be
binding upon the
successors and assigns
of each party
hereto. The Holder
and the Company hereby
mutually waive trial
by jury and
consent to exclusive
jurisdiction and venue in
the courts of
the State of
New York. This
Agreement may be
executed in counterparts,
and the facsimile transmission of an
executed counterpart to
this Agreement shall
be effective as
an original.
IN
WITNESS WHEREOF, the
Company has caused
this Note to
be duly executed
by an officer
thereunto duly authorized.
Dated: June
24, 2014
ENDEAVOR
IP, INC
By: /s/
Ravinder Dhat
Ravinder
Dhat, Chief Executive
Officer
EXHIBIT
A
NOTICE
OF CONVERSION
(To
be Executed by
the Registered Holder
in order to
Convert the Note)
The
undersigned hereby irrevocably elects to
convert $______ of the above Note
into___________Shares of Common
Stock of Endeavor
IP, Inc. (“Shares”)
according to the conditions set
forth in such
Note, as of
the date written
below.
If
Shares are to
be issued in
the name of
a person other
than the undersigned,
the undersigned will pay
all transfer and
other taxes and
charges payable with
respect thereto.
Date
of Conversion:
Applicable
Conversion Price:
Signature:
[Print Name
of Holder and
Title of Signer]
Address:
SSN
or EIN:
Shares are
to be registered
in the following
name:
Name:
Address:
Tel:
Fax:
SSN or EIN:
Shares are
to be sent
or delivered to
the following account:
Account
Name:
Address:
THIS
NOTE AND THE
COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS
NOTE HAVE NOT BEEN
AND WILL NOT
BE REGISTERED WITH THE
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF
ANY STATE PURSUANT TO
AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES
ACT OF 1933, AS
AMENDED, AND THE
RULES AND REGULATIONS
PROMULGATED THEREUNDER (THE
"1933 ACT”)
US
$20,000.00
ENDEAVOR
IP, INC.
8%
CONVERTIBLE REDEEMABLE NOTE DUE
JUNE 24, 2015
BACK
END NOTE
FOR
VALUE RECEIVED, Endeavor
IP, Inc. (the
“Company”) promises to
pay to the order
of UNION CAPITAL,
LLC and its
authorized successors and
permitted assigns ("Hold-
er"), the aggregate
principal face amount
of Twenty Thousand
Dollars exactly (U.S.
$20,000.00) on June 24, 2015 ("Maturity
Date") and to pay interest on the
principal amount outstanding here- under at
the rate of 8%
per annum commencing
on June 24,
2014. The interest
will be paid
to the Holder in
whose name this
Note is registered
on the records
of the Company
regarding registration and
transfers of this
Note. The principal
of, and interest
on, this Note
are payable at
338 Crown Street, Brooklyn,
NY 11225, initially, and
if changed, last appearing
on the records of
the Company as
designated in writing
by the Holder
hereof from time
to time. The
Company will pay each
interest payment and
the outstanding principal
due upon this
Note before or
on the Maturity
Date, less any
amounts required by
law to be
deducted or withheld, to
the Holder of
this Note by check or wire transfer addressed to such Holder at the last address appearing on the records
of the Company.
The forwarding of
such check or
wire transfer shall constitute
a payment of outstanding
principal hereunder and
shall satisfy and
discharge the liability
for principal on this
Note to the
extent of the
sum represented by
such check or
wire transfer. Interest shall be
payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This
Note is subject
to the following
additional provisions:
1.
This Note is
exchangeable for an
equal aggregate principal
amount of Notes of
different authorized denominations,
as requested by
the Holder surrendering
the same.
No
service charge will
be made for
such registration or
transfer or exchange,
except that Holder shall
pay any tax
or other governmental
charges payable in
connection therewith.
2.
The Company shall
be entitled to
withhold from all
payments any amounts required
to be withheld
under applicable laws.
3.
This Note may
be transferred or
exchanged only in
compliance with the Securities
Act of 1933,
as amended ("Act"),
and applicable state securities
laws. Any attempted transfer
to a non-qualifying
party shall be
treated by the
Company as void.
Prior to due
presentment for transfer
of this Note,
the Company and
any agent of
the Company may
treat the person in
whose name this
Note is duly
registered on the
Company's records as
the owner hereof
for all other purposes,
whether or not
this Note be
overdue, and neither
the Company nor
any such agent shall
be affected or
bound by notice
to the contrary.
Any Holder of
this Note electing
to exercise the right
of conversion set
forth in Section
4(a) hereof, in
addition to the
requirements set forth in
Section 4(a), and
any prospective transferee
of this Note,
also is required
to give the Company
written confirmation that
this Note is
being converted ("Notice
of Conversion") in
the form annexed hereto as
Exhibit A. The
date of receipt
(including receipt by
telecopy) of such Notice
of Conversion shall be the Conversion
Date.
4.
(a) The Holder
of this Note
is entitled, at
its option, at
any time after 180
days, to convert all or any amount of
the principal face amount of this Note
then outstanding into shares of the Company's
common stock (the
"Common Stock") without
restrictive legend of any nature,
at a price
("Conversion Price") for
each share of
Common Stock equal
to 55% of
the lowest trading bid
price of the
Common Stock as
reported on the
OTCQB marketplace which the Company’s
shares are traded or
any market upon which
the Common Stock may
be traded in the future
("Exchange"), for the
ten prior trading
days including the
day upon which
a Notice of Conversion
is received by the
Company (provided such Notice
of Conversion is delivered by fax or
other electronic method
of communication to
the Company after
4 P.M. Eastern
Standard or Daylight Savings
Time if the
Holder wishes to
include the same
day closing price).
If the shares have
not been delivered
within 3 business
days, the Notice
of Conversion may
be rescinded. Such conversion
shall be effectuated
by the Company
delivering the shares
of Common Stock
to the Holder within
3 business days
of receipt by
the Company of
the Notice of
Conversion. Once the Holder has received
such shares of Common Stock,
the Holder shall surrender this Note
to the Company, executed
by the Holder
evidencing such Holder's
intention to convert
this Note or a
specified portion hereof,
and accompanied by
proper assignment hereof in
blank. Accrued, but unpaid interest shall be subject to conversion. No fractional
shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded
to the nearest whole share. In the event the Company experiences a DTC “Chill” on its shares, the conversion price
shall be decreased to 45% instead of 55% while that “Chill” is in effect.
(b)
Interest on any
unpaid principal balance
of this Note
shall be paid
at the rate of
8% per annum.
Interest shall be
paid by the
Company in Common
Stock ("Interest Shares"). The
Holder may, at
any time, send
in a Notice
of Conversion to
the Company for
Interest Shares based on
the formula provided
in Section 4(a)
above. The dollar amount
converted into Interest Shares
shall be all
or a portion
of the accrued
interest calculated on
the unpaid principal
balance of this
Note to the
date of such
notice.
(c)
This Note may
not be prepaid,
except that if
the $20,000 Rule
144 convertible redeemable note
issued by the
Company of even
date herewith is
redeemed by the Company
within 6 months
of the issuance
date of such
Note, all obligations
of the Company
under this Note and
all obligations of
the Holder under
the Holder issued
Back End Note
will be
automatically be deemed
satisfied and this
Note and the
Holder issued Back
End Note will
be automatically be
deemed cancelled and
of no further
force or effect.
(d)
Upon (i) a
transfer of all
or substantially all
of the assets
of the Company to
any person in
a single transaction
or series of
related transactions, (ii)
a reclassification, capital reorganization
or other change or
exchange of outstanding
shares of the
Common Stock, other than
a forward or
reverse stock split
or stock dividend,
or (iii) any
consolidation or merger
of the Company with
or into another
person or entity
in which the
Company is not
the surviving entity (other
than a merger
which is effected
solely to change
the jurisdiction of
incorporation of the Company
and results in
a reclassification, conversion
or exchange of
outstanding shares of Common
Stock solely into
shares of Common
Stock) (each of
items (i), (ii)
and (iii) being
referred to as
a "Sale Event"),
then, in each
case, the Company
shall, upon request
of the Holder, redeem this Note in
cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of
the Holder, such Holder may convert the unpaid principal amount
of this Note
(together with the amount
of accrued but
unpaid interest) into shares of
Common Stock immediately prior
to such Sale Event
at the Conversion
Price.
(e)
In case of any Sale
Event (not to include a
sale of all or substantially
all of the Company’s
assets) in connection
with which this
Note is not
redeemed or converted,
the Company shall cause
effective provision to
be made so
that the Holder
of this Note
shall have the right
thereafter, by converting
this Note, to
purchase or convert
this Note into
the kind and number
of shares of
stock or other
securities or property
(including cash) receivable
upon such reclassification, capital reorganization
or other change,
consolidation or merger
by a holder
of the number of
shares of Common
Stock that could
have been purchased
upon exercise of
the Note and at
the same Conversion
Price, as defined
in this Note,
immediately prior to
such Sale Event. The
foregoing provisions shall
similarly apply to
successive Sale Events.
If the consideration
received by the
holders of Common
Stock is other
than cash, the
value shall be
as deter- mined by the Board
of Directors of the Company or successor
person or entity acting in
good faith.
5.
No provision of
this Note shall
alter or impair
the obligation of
the Company, which
is absolute and
unconditional, to pay
the principal of,
and interest on,
this Note at the
time, place, and
rate, and in
the form, herein
prescribed.
6.
The Company hereby
expressly waives demand
and presentment for
pay- ment, notice of
non-payment, protest, notice
of protest, notice
of dishonor, notice
of acceleration or intent
to accelerate, and
diligence in taking
any action to
collect amounts called
for hereunder and shall
be directly and
primarily liable for
the payment of
all sums owing
and to be
owing hereto.
7.
The Company agrees
to pay all
costs and expenses,
including reasonable attorneys' fees and
expenses, which may
be incurred by
the Holder in
collecting any amount
due under this Note.
8.
If one or
more of the
following described "Events
of Default" shall occur:
(a)
The Company shall
default in the
payment of principal
or interest on
this Note or any
other note issued
to the Holder
by the Company;
or
(b)
Any of the
representations or warranties
made by the
Company herein or in
any certificate or
financial or other
written statements heretofore
or hereafter furnished
by or on behalf
of the Company
in connection with
the execution and
delivery of this
Note shall be false
or misleading in
any respect; or
(c)
The Company shall
fail to perform
or observe, in
any respect, any
covenant, term, provision,
condition, agreement or obligation
of the Company
under this Note
or any other note
issued to the
Holder and not
cure such breach
within 10 days;
or
(d)
The Company shall
(1) become insolvent;
(2) admit in
writing its inability to
pay its debts
generally as they
mature; (3) make
an assignment for
the benefit of
creditors or commence proceedings
for its dissolution;
(4) apply for
or consent to
the appointment of
a trustee, liquidator
or receiver for
its or for
a substantial part
of its property
or business; (5)
file a petition
for bankruptcy relief,
consent to the
filing of such
petition or have
filed against it
an involuntary petition
for bankruptcy relief,
all under federal
or state laws
as applicable; or
(e)
A trustee, liquidator
or receiver shall
be appointed for
the Company or
for a substantial part of
its property or
business without its consent
and shall not
be discharged with- in
sixty (60) days
after such appointment;
or
(f)
Any governmental agency or any
court of competent
jurisdiction at the
in- stance of any
governmental agency shall
assume custody or
control of the
whole or any
substantial portion of
the properties or
assets of the
Company; or
(g)
One or more money judgments, writs or warrants of attachment, or
similar process, in excess
of one hundred
thousand dollars ($100,000)
in the aggregate,
shall be entered or
filed against the
Company or any
of its properties
or other assets
and shall remain
unpaid, unvacated, unbonded
or unstayed for
a period of
fifteen (15) days
or in any
event later than
five (5) days prior
to the date
of any proposed
sale thereunder; or
(h)
The Company shall
have defaulted on
or breached any
term of any
other note of similar
debt instrument into
which the Company
has entered and
failed to cure
such de- fault within
the appropriate grace
period; or
(i)
The Company shall
have its Common
Stock delisted from
a market (including
the OTCQB marketplace)
or, if the
Common Stock trades
on an exchange,
then trading in the
Common Stock shall
be suspended for
more than 10
consecutive days;
(j)
Intentionally Deleted;
(k)
The Company shall
not deliver to
the Holder the
Common Stock pursuant to
paragraph 4 herein
without restrictive legend
within 3 business
days of its
receipt of a
Notice of Conversion; or
(l)
The Company shall
not replenish the
reserve set forth
in Section 12,
with- in 5 business
days of the
request of the
Holder ; or
(m)
The Company’s Common Stock
has a closing
bid price of
less than $0.02 per
share for at
least 5 consecutive
trading days; or
(n)
The aggregate dollar
trading volume of
the Company’s Common
Stock is less than
fifty thousand dollars
($50,000.00) in any
5 consecutive trading
days; or
(o)
The Company shall
cease to be
“current” in its
filings with the
Securities and Exchange Commission;
or.
(p)
The Company shall
lose the “bid”
price for its
stock and a
market (including the OTCBB
marketplace or other
exchange)
Then,
or at any
time thereafter, unless
cured (except for
8(m) and 8(n)
which are incurable
de- faults, the sole
remedy of which
is to allow
the Holder to
cancel both this
Note and the
Holder Issued Note, and
in each and
every such case,
unless such Event
of Default shall
have been waived in
writing by the
Holder (which waiver
shall not be
deemed to be
a waiver of
any subsequent default)
at the option
of the Holder
and in the
Holder's sole discretion,
the Holder may consider this
Note immediately due
and payable, without
presentment, demand, protest
or (further) notice
of any kind
(other than notice
of acceleration), all
of which are
hereby expressly waived, anything
herein or in
any note or
other instruments contained
to the contrary
notwithstanding, and the Holder may immediately,
and without expiration of any
period of grace, en- force any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by
law. Upon an Event
of Default, interest
shall be accrue
at a default interest
rate of 16% per
annum or, if
such rate is
usurious or not
permitted by current
law, then at
the highest rate of
interest permitted by
law. Further, if the
Note becomes due
and payable, the
Holder may use the outstanding principal and interest due under the Note to
offset any payment obligations it may have to
the Company. In the
event of a breach of
8(k) the penalty shall
be $250 per day
the shares are not
issued beginning on
the 4th day after
the conversion notice
was delivered to
the Company. This penalty shall
increase to $500 per
day beginning on
the 10th day. Once cash
funded, the penalty for a breach of Section 8(p) shall be an increase of the outstanding principal amounts by 20%. Once cash funded,
in the event of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is
not paid at maturity, the out- standing principal due under this Note shall increase
by 10%.
If
the Holder shall
commence an action
or proceeding to
enforce any provisions
of this Note,
including, without limitation,
engaging an attorney,
then, if the
Holder prevails in
such action, the Holder
shall be reimbursed
by the Company
for its attorneys’
fees and other
costs and expenses incurred
in the investigation,
preparation and prosecution
of such action
or proceeding.
9.
In case any
provision of this
Note is held
by a court
of competent jurisdiction
to be excessive
in scope or
otherwise invalid or
unenforceable, such provision
shall be adjusted
rather than voided,
if possible, so
that it is
enforceable to the
maximum extent possible, and
the validity and
enforceability of the
remaining provisions of
this Note will
not in any
way be affected or
impaired thereby.
10.
Neither this Note
nor any term
hereof may be
amended, waived, discharged
or terminated other
than by a
written instrument signed
by the Company
and the Holder.
11.
The Company represents
that it is
not a “shell”
issuer and has never
been a “shell” issuer
or that if it
previously has been
a “shell” issuer
that at least
12 months have
passed since the Company
has reported form
10 type information
indicating it is
no longer a
“shell issuer. Further.
The Company will
instruct its counsel
to either (i)
write a “144-
3(a)(9)” opinion to allow
for salability of
the conversion shares
or (ii) accept
such opinion from
Holder’s counsel.
12.
Prior to cash
funding of this
Note, The Company
will issue irrevocable transfer
agent instructions reserving 3x
the number of
shares of Common
Stock necessary to
al- low the holder
to convert this
note based on
the discounted conversion
price set forth
in Section 4(a) herewith.
The reserve shall
be replenished as
needed to allow
for conversions of
this Note. Upon full
conversion of this
Note, the reserve
representing this Note
shall be cancelled.
The Company will pay
all transfer agent
costs associated with
issuing and delivering
the shares.
13.
The Company will
give the Holder
direct notice of
any corporate actions including
but not limited
to name changes,
stock splits, recapitalizations
etc. This notice
shall be given to
the Holder as
soon as possible
under law.
14.
This Note shall
be governed by
and construed in
accordance with the
laws of New York
applicable to contracts
made and wholly
to be performed
within the State
of New York
and shall be
binding upon the
successors and assigns
of each party
hereto. The Holder
and the Company hereby
mutually waive trial
by jury and
consent to exclusive
jurisdiction and venue in
the courts of
the State of
New York. This
Agreement may be
executed in counterparts,
and the facsimile transmission of
an executed counterpart
to this Agreement
shall be effective
as an original.
IN
WITNESS WHEREOF, the
Company has caused
this Note to
be duly executed
by an officer
thereunto duly authorized.
Dated:
June 24, 2014
ENDEAVOR
IP, INC.
By: /s/
Ravinder Dhat
Title:
C.E.O.
EXHIBIT
A
NOTICE
OF CONVERSION
(To
be Executed by
the Registered Holder
in order to
Convert the Note)
The
undersigned hereby irrevocably elects to
convert $ _________________ of the
above Note into ________________ Shares
of Common Stock
of Endeavor IP,
Inc. (“Shares”) according
to the conditions set
forth in such
Note, as of
the date written
below.
If
Shares are to
be issued in
the name of
a person other
than the undersigned,
the undersigned will pay
all transfer and
other taxes and
charges payable with
respect thereto.
Date
of Conversion
Applicable
Conversion Price
Signature:
[Print Name
of Holder and
Title of Signer]
Address:
SSN
or EIN:
Shares are
to be registered
in the following
name:
Name:
Address:
Tel:
Fax:
SSN or EIN
Shares are
to be sent
or delivered to
the following account:
Account
Name:
Address:
THIS
NOTE HAS NOT
BEEN REGISTERED UNDER
THE SECURITIES ACT
OF 1933, AS AMENDED
(THE "ACT"), OR
UNDER THE SECURITIES
LAWS OF CERTAIN
STATES. THESE SECURITIES ARE
SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE
AND MAY NOT
BE TRANSFERRED OR
RESOLD EXCEPT AS
PERMITTED UNDER
THE ACT AND
THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION
THEREFROM. LENDERS SHOULD
BE AWARE THAT THEY MAY BE REQUIRED
TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
UNION CAPITAL,
LLC
COLLATERALIZED SECURED
PROMISSORY NOTE
BACK
END NOTE
| $20,000.00 |
Brooklyn,
NY |
| |
June
24, 2014 |
1.
Principal and Interest
FOR
VALUE RECEIVED, Union
Capital, LLC, a
New York Limited
Liability Company (the "Company")
hereby absolutely and
unconditionally promises to
pay to Endeavor
IP, Inc (the “Lender"),
or order, the
principal amount of
Twenty Thousand Dollars
($20,000) no later
than February 24, 2015, unless the Lender does
not meet the “current information requirements” required under
Rule 144 of
the Securities Act
of 1933, as
amended, in which
case the Company
may declare the offsetting
note issued by
the Lender on
the same date
herewith to be
in Default (as
defined in that note)
and cross cancel
its payment obligations
under this Note
as well as
the Lenders payment obligations
under the offsetting note. This Full
Recourse Note shall bear
simple interest at the
rate of 8%.
2.
Repayments and Prepayments;
Security.
a.
All principal under
this Note shall
be due and
payable no later
than February 24, 2015,
unless the Lender
does not meet
the “current information
requirements” required under Rule 144
of the Securities
Act of 1933,
as amended, in
which case the
Company may declare
the offsetting note issued
by the Lender
on the same
date herewith to
be in Default
(as defined in
that note) and cross
cancel its payment
obligations under this
Note as well
as the Lenders
payment obligations under the offsetting
note.
b.
The Company may
pay this Note
at any time.
This note may
not be assigned by
the Lender, except
by operation of
law.
c.
This Note shall
initially be secured
by the pledge
of the $20,000.00
8% convertible promissory note issued
to the Company
by the Lender
on even date
herewith (the “Lender Note”).
The Company may exchange
this collateral for
other collateral with
an appraised value
of at least
$20,000.00, by
providing 3 days
prior written notice
to the Lender.
If the Lender
does not object
to the substitution
of collateral in
that 3 day
period, such substitution
of collateral shall
be deemed to
have been accepted
by the Lender.
All collateral shall be retained by New Venture Attorneys, P.C., which shall
act as the escrow agent for the collateral for the benefit of the Lender. The Company may not effect any conversions under the
Lender Note until it has made full cash payment for the portion of the Lender Note being converted.
__________
Lender Initials
to Acceptance of
bolded section above.
3.
Events of Default;
Acceleration.
a.
The principal amount
of this Note
is subject to
prepayment in whole
or in part
upon the occurrence and
during the continuance
of any of
the following events
(each, an “Event
of Default”): the initiation of
any bankruptcy, insolvency,
moratorium, receivership or reorganization
by or against
the Company, or
a general assignment
of assets by
the Company for
the benefit of creditors.
Upon the occurrence
of any Event
of Default, the
entire unpaid principal
balance of this Note
and all of
the unpaid interest accrued
thereon shall be
immediately due and
payable. The Company may
offset amounts due to the Lender
under this Note by similar
amounts that may be due to
the Company by
the Lender resulting
from breaches under
the Lender Note.
b.
No remedy herein
conferred upon the
Lender is intended
to be exclusive
of any other remedy
and each and
every remedy shall
be cumulative and
in addition to
every other remedy hereunder,
now or hereafter
existing at law
or in equity
or otherwise. The
Company accepts and agrees
that this Note
is a full
recourse note and
that the Holder
may exercise any
and all remedies available
to it under
law.
4.
Notices.
a.
All notices, reports and
other communications required
or permitted hereunder
shall be in writing
and may be
delivered in person,
by telecopy with
written confirmation, overnight delivery
service or U.S.
mail, in which
event it may
be mailed by
first-class, certified or
registered, postage prepaid, addressed (i)
if to a
Lender, at such
Lender’s address as
the Lender shall
have furnished the Company
in writing and
(ii) if to
the Company at
such address as
the Company shall have
furnished the Lender(s)
in writing.
b.Each
such notice, report
or other communication
shall for all
purposes under this Note
be treated as
effective or having
been given when
delivered if delivered
personally or, if
sent by mail, at
the earlier of
its receipt or
72 hours after
the same has
been deposited in
a regularly maintained receptacle
for the deposit
of the United
States mail, addressed
and mailed as
aforesaid, or, if sent
by electronic communication
with confirmation, upon
the delivery of
electronic communication.
5.
Miscellaneous.
a.
Neither this Note
nor any provisions
hereof may be
changed, waived, discharged
or terminated orally, but only
by a signed
statement in writing.
b.
No failure or
delay by the
Lender to exercise
any right hereunder
shall operate as
a waiver thereof, nor
shall any single
or partial exercise
of any right,
power or privilege
preclude any other right,
power or privilege.
The provisions of
this Note are
severable and if
any one provision hereof
shall be held
invalid or unenforceable
in whole or
in part in
any jurisdiction, such
invalidity or unenforceability shall affect
only such provision
in such jurisdiction.
This Note expresses
the entire understanding of the
parties with respect
to the transactions
contemplated hereby. The Company
and every endorser and guarantor of this Note regardless of the time, order or place of signing hereby waives
presentment, demand, protest and notice
of every kind, and assents to any
extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or secondarily liable.
c.
If Lender retains an attorney
for collection of this Note, or
if any suit or
proceeding is brought for the recovery
of all, or
any part of,
or for protection
of the indebtedness
respected by this Note,
then the Company
agrees to pay
all costs and
expenses of the
suit or proceeding,
or any appeal thereof,
incurred by the
Lender, including without
limitation, reasonable attorneys'
fees.
d.
This Note shall
for all purposes
be governed by,
and construed in
accordance with the laws
of the State
of New York
(without reference to
conflict of laws).
e.
This Note shall
be binding upon
the Company's successors
and assigns, and
shall inure to the
benefit of the
Lender's successors and
assigns.
IN
WITNESS WHEREOF, the
Company has caused
this Note to
be executed by
its duly authorized officer
to take effect
as of the
date first hereinabove
written.
UNION CAPITAL,
LLC
By:
/s/ Authorized Signatory
Title:
APPROVED:
Endeavor
IP, Inc.
By: /s/
Ravinder Dhat
Title: C.E.O.
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 24, 2014, by and between Endeavor IP,
Inc., a Nevada corporation, with headquarters located at 140 Broadway, 46th Floor, New York, NY 10005 (the “Company”),
and ADAR BAYS, LLC, a New York limited liability company, with its address at 3411 Indian Creek Drive, Suite 403, Miami
Beach, FL 33140 (the “Buyer”).
WHEREAS:
A.
The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933 Act”);
B.
Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement
two 8% convertible notes of the Company, in the forms attached hereto as Exhibit A and B in the aggregate principal amount of
$70,000.00 (with the first note being in the amount of $35,000.00 and the second note being in the amount of
$35,000.00
(together with any note(s) issued in replacement thereof, the “Note”), convertible into shares of common stock, $0.001
par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions
set forth in such Note. The first of the two notes (the “First Note”) shall be paid for by the Buyer as set forth
herein. The second note (the “Second Note”) shall initially be paid for by the issuance of an offsetting
$35,000.00
secured note issued to the Company by the Buyer (“Buyer Note”), provided that prior to conversion of the Second Note,
the Buyer must have paid off the Buyer Note in cash such that the Second Note may not be converted until it has been paid for
in cash.
C.
The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set
forth immediately below its name on the signature pages hereto; and
NOW
THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:
1.
Purchase and Sale of Note.
a.
Purchase of Note. On each Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer
agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on
the signature pages hereto.
b.
Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be
issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available
funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the
principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto,
and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase
Price.
c.
Closing Date. The date and time of the first issuance and sale of the Note pursuant to this Agreement (the “Closing
Date”) shall be on or about June 24, 2014, or such other mutually agreed upon time. The closing of the transactions contemplated
by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.
Subsequent Closings shall occur when the Buyer Note is repaid. The Closing of the Second Note shall be on or before the dates
specified in the Buyer Note.
2.
Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company that:
a.
Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Note, such shares of Common Stock being collectively referred to herein as the “Conversion
Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act;
provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.
b.
Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D (an “Accredited Investor”).
c.
Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of the Buyer to acquire the Securities.
d.
Information. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue
to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any,
have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the
Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will
not
disclose
such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer.
Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives
shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section
3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware
of any facts that may constitute a breach of any of the Company's representations and warranties made herein.
e.
Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the Securities.
f.
Transfer or Re-sale. The Buyer understands that (i) the sale or re- sale of the Securities has not been and is not being
registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to
the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions
of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred
to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”))
of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the
1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of
the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions,
which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only
in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined
in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement.
g.
Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the
1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates for such Securities):
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I)
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE SECURITIES.”
The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such
holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act,
which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with
respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, within 2 business
days, it will be considered an Event of Default under the Note.
h.
Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed
and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms.
i.
Residency. The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature
pages hereto.
3.
Representations and Warranties of the Company. The Company represents and warrants to the Buyer that:
a.
Organization and Qualification. The Company and each of its subsidiaries, if any, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate
and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated
and conducted.
b.
Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this
Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance
with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation
by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance
and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized
by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative,
and such authorized representative is the true and official representative with authority to sign this Agreement and the other
documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution
and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
c.
Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note
in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights
of shareholders of the Company and will not impose personal liability upon the holder thereof.
d.
Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock
upon the issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
e.
No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for
issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of
Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default
(or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company
or any of its subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws
and
regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable
to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound
or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a material adverse effect). All consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date
hereof. The Company is not in violation of the listing requirements of the OTCQB marketplace (the “OTCQB”) and does
not reasonably anticipate that the Common Stock will be delisted by the OTCQB in the foreseeable future, nor are the Company’s
securities “chilled” by DTC. The Company and its subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing.
f.
Absence of Litigation. Except as disclosed in the Company’s public filings, there is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company or any of its subsidiaries,
or their officers or directors in their capacity as such, that could have a material adverse effect. Schedule 3(f) contains a
complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting
the Company or any of its subsidiaries, without regard to whether it would have a material adverse effect. The Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.
g.
Acknowledgment Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting
solely in the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby.
The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of
its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice
or a recommendation and is merely incidental to the Buyer’ purchase of the Securities. The Company further represents to
the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of
the Company and its representatives.
h.
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances
that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities
to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes
of any shareholder approval provisions applicable to the Company or its securities.
i.
Title to Property. The Company and its subsidiaries have good and marketable title in fee simple to all real property and
good and marketable title to all personal
property
owned by them which is material to the business of the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(i) or such as would not have a material adverse effect. Any
real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as would not have a material adverse effect.
j.
Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties
set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will
be considered an Event of default under the Note.
a.
Expenses. At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith
(“Documents”), including, without limitation, reasonable attorneys’ and consultants’ fees and expenses,
transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any
consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of
restructuring the transactions contemplated by the Documents. When possible, the Company must pay these fees directly, otherwise
the Company must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice
by the Buyer or the submission of an invoice by the Buyer. The Company’s obligation with respect to this transaction is
to reimburse Buyer’s expenses shall be $1,750 in legal fees (and similar amounts for the Second Note) which shall be deduced
from each Note when cash funded.
b.
Listing. The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange
or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance)
and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain
and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCQB or any
equivalent replacement market, the Nasdaq stock market (“Nasdaq”), the New York Stock Exchange (“NYSE”),
or the American Stock Exchange (“AMEX”) and will comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such
exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCQB and
any other markets on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing
on such markets.
c.
Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence
and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or
sale of all or
substantially
all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading on the OTCQB, Nasdaq, NYSE or AMEX.
d.
No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of
the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.
e.
Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other
remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under the Note.
| 5. | Governing
Law; Miscellaneous. |
a.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county
of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The
Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid
or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document 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.
b.
Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
c.
Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
d.
Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision hereof.
e.
Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither
the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision
of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.
f.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:
If
to the Company, to: Endeavor IP, Inc.
140
Broadway 46th Floor New York, NY 10005
Attn:
Ravinder Dhat, CEO
If
to the Buyer:
ADAR
BAYS, LLC
3411
Indian Creek Drive, Suite 403 Miami Beach, FL 33140
Attn:
Samuel Eisenberg
Each
party shall provide notice to the other party of any change in address.
g.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other. Notwithstanding the foregoing, the Buyer may assign its rights hereunder to any person that
purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined
under the 1934 Act, without the consent of the Company.
h.
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
i.
Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement
shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The
Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and
covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses
as they are incurred.
j.
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
k.
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.
l.
Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other
available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity
of showing economic loss and without any bond or other security being required.
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above
written.
Endeavor
IP, Inc.
By:
/s/ Ravinder Dhat
Ravinder
Dhat
Chief
Executive Officer
ADAR
BAYS, LLC.
By:
/s/ Samuel Eisenberg
Name:
Samuel Eisenberg
Title:
Manager
AGGREGATE
SUBSCRIPTION AMOUNT:
Aggregate
Principal Amount of Note: $70,000.00 Aggregate Purchase Price:
Note
1: $35,000.00 less $1,750.00 in legal fees and $1,750 in third party fees Note 2: $35,000.00 less $1,500.00 in legal fees and
$1,750 in third party fees.
EXHIBIT
A 144 NOTE - $35,000
EXHIBIT
B BACK END NOTE 1
$35,000
THIS
NOTE AND THE
COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS
NOTE HAVE NOT BEEN
AND WILL NOT
BE REGISTERED WITH THE
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF
ANY STATE PURSUANT TO
AN EXEMPTION FROM REGISTRATION
PROVIDED UNDER THE SECURITIES
ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER (THE
"1933 ACT”)
US
$35,000.00
ENDEAVOR
IP, INC.
8%
CONVERTIBLE REDEEMABLE NOTE DUE
JUNE 24, 2015
FOR
VALUE RECEIVED, Endeavor
IP, Inc. (the
“Company”) promises to
pay to the order
of ADAR BAYS,
LLC and its
authorized successors and
permitted assigns ("Holder"),
the aggregate principal
face amount of
Thirty Five Thousand
Dollars exactly (U.S.
$35,000.00) on June 24,
2015 ("Maturity Date")
and to pay
interest on the
principal amount outstanding
hereunder at the
rate of 8%
per annum commencing
on June 24,
2014. The interest
will be paid
to the Holder in
whose name this
Note is registered
on the records
of the Company
regarding registration and
transfers of this
Note. The principal of,
and interest on,
this Note are
payable at 3411 Indian
Creek Drive, Suite 403, Miami Beach,
FL 33140, initially, and if changed,
last appearing on the records
of the Company
as designated in
writing by the
Holder hereof from time
to time. The Company
will pay each
interest payment and
the outstanding principal
due upon this
Note before or on the Maturity Date, less any amounts required by law to
be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address
appearing on the records of the Company. The forwarding of
such check or wire transfer shall constitute a payment of outstanding principal
hereunder and shall satisfy and discharge
the liability for principal on this Note
to the extent of the sum represented
by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This
Note is subject
to the following
additional provisions:
1.
This Note is
exchangeable for an
equal aggregate principal
amount of Notes of
different authorized denominations,
as requested by
the Holder surrendering
the same.
No
service charge will
be made for
such registration or
transfer or exchange,
except that Holder shall
pay any tax
or other governmental
charges payable in
connection therewith.
2.
The Company
shall be entitled
to withhold from
all payments any
amounts required to be
withheld under applicable
laws.
3.
This Note may
be transferred or
exchanged only in
compliance with the Securities
Act of 1933,
as amended ("Act"),
and applicable state securities
laws. Any attempted transfer
to a non-qualifying
party shall be
treated by the
Company as void.
Prior to due
presentment for transfer
of this Note,
the Company and
any agent of
the Company may
treat the person in
whose name this
Note is duly
registered on the
Company's records as
the owner hereof
for all other purposes,
whether or not this
Note be overdue,
and neither the
Company nor any
such agent shall be
affected or bound
by notice to
the contrary. Any
Holder of this
Note electing to exercise
the right of
conversion set forth
in Section 4(a)
hereof, in addition
to the requirements set
forth in Section
4(a), and any
prospective transferee of
this Note, also
is required to
give the Company written
confirmation that this Note
is being converted
("Notice of Conversion")
in the form annexed
hereto as Exhibit
A. The date
of receipt (including
receipt by telecopy)
of such Notice of Conversion shall
be the Conversion Date.
4.
(a) The Holder
of this Note
is entitled, at
its option, at
any time after 180
days, to convert all or any amount of
the principal face amount of this Note
then outstanding into shares of the
Company's common stock
(the "Common Stock")
without restrictive legend
of any nature, at
a price ("Conversion
Price") for each
share of Common
Stock equal to
55% of the lowest
trading bid price
of the Common
Stock as reported
on the OTCQB
marketplace which the Company’s
shares are traded or
any market upon which
the Common Stock may
be traded in the future
("Exchange"), for the
ten prior trading days
including the day
upon which a
Notice of Conversion is
received by the Company
(provided such Notice of Conversion is
delivered by fax or other electronic
method of communication
to the Company
after 4 P.M.
Eastern Standard or Daylight
Savings Time if
the Holder wishes
to include the
same day closing
price). If the
shares have not been
delivered within 3
business days, the
Notice of Conversion
may be rescinded. Such
conversion shall be
effectuated by the
Company delivering the
shares of Common
Stock to the Holder within
3 business days
of receipt by
the Company of
the Notice of
Conversion. Once the Holder has received
such shares of Common Stock,
the Holder shall surrender this Note
to the Company, executed by
the Holder evidencing
such Holder's intention
to convert this
Note or a specified
portion hereof, and
accompanied by proper
assignment hereof in blank. Accrued,
but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued
on conversion, but the number of shares issuable shall be rounded to the nearest whole share. In the event the Company experiences
a DTC “Chill” on its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill”
is in effect.
(b)
Interest on any unpaid principal balance of this Note shall be paid at the
rate of 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest
Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into
Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance
of this Note
to the date
of such notice.
(c)
The Notes may
be prepaid at
140% of the
face amount plus
any accrued interest. This Note may
not be prepaid after
the 180th day. Such
redemption must be closed
with- in 3 days
of the notice
of redemption or
it shall be
of no effect
and the Company
shall lose the right
to prepay the
Note.
(d)
Upon (i) a
transfer of all
or substantially all
of the assets
of the Company to
any person in
a single transaction
or series of
related transactions, (ii)
a reclassification, capital reorganization
or other change
or exchange of
outstanding shares of
the Common Stock,
other than a forward
or reverse stock
split or stock
dividend, or (iii)
any consolidation or
merger of the Company
with or into
another person or
entity in which
the Company is
not the surviving
entity (other than a
merger which is
effected solely to
change the jurisdiction
of incorporation of
the Company and results
in a reclassification,
conversion or exchange
of outstanding shares
of Common Stock solely
into shares of
Common Stock) (each
of items (i),
(ii) and (iii)
being referred to
as a "Sale
Event"), then, in
each case, the
Company shall, upon
request of the
Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of
redemption, or at the election of the Holder, such Holder may convert the unpaid principal
amount of this
Note (together with
the amount of accrued
but unpaid interest)
into shares of Common Stock
immediately prior to
such Sale Event at
the Conversion Price.
(e)
In case of any Sale
Event (not to include
a sale of all or
substantially all of the Company’s
assets) in connection
with which this
Note is not
redeemed or converted,
the Company shall cause
effective provision to
be made so
that the Holder
of this Note
shall have the right
thereafter, by converting
this Note, to
purchase or convert
this Note into
the kind and number
of shares of
stock or other
securities or property
(including cash) receivable
upon such reclassification, capital
reorganization or other
change, consolidation or
merger by a
holder of the number
of shares of
Common Stock that
could have been
purchased upon exercise
of the Note and
at the same
Conversion Price, as
defined in this
Note, immediately prior
to such Sale Event.
The foregoing provisions shall similarly apply to
successive Sale Events. If the consideration
received by the
holders of Common
Stock is other
than cash, the
value shall be
as deter- mined by the Board
of Directors of the Company or
successor person or entity acting in
good faith.
5.
No provision of
this Note shall
alter or impair
the obligation of
the Company, which
is absolute and
unconditional, to pay
the principal of,
and interest on,
this Note at the
time, place, and
rate, and in
the form, herein
prescribed.
6.
The Company hereby
expressly waives demand
and presentment for
payment, notice of
non-payment, protest, notice
of protest, notice
of dishonor, notice
of acceleration or intent
to accelerate, and
diligence in taking
any action to
collect amounts called
for hereunder and shall
be directly and
primarily liable for
the payment of
all sums owing
and to be
owing hereto.
| 7. | The
Company agrees
to pay
all costs
and expenses,
including reasonable |
attorneys'
fees and expenses,
which may be
incurred by the
Holder in collecting
any amount due under
this Note.
| 8. | If
one or
more of
the following
described "Events
of Default"
shall occur: |
(a)
The Company shall
default in the
payment of principal
or interest on
this Note or any
other note issued
to the Holder
by the Company;
or
(b)
Any of the
representations or warranties
made by the
Company herein or in
any certificate or
financial or other
written statements heretofore
or hereafter furnished
by or on behalf
of the Company
in connection with
the execution and
delivery of this
Note, or the
Securities Purchase Agreement
under which this
note was issued
shall be false
or misleading in
any respect; or
(c)
The Company shall
fail to perform
or observe, in
any respect, any
covenant, term, provision,
condition, agreement or
obligation of the
Company under this
Note or any other
note issued to
the Holder; or
(d)
The Company shall
(1) become insolvent;
(2) admit in
writing its inability to
pay its debts
generally as they
mature; (3) make
an assignment for
the benefit of
creditors or commence proceedings
for its dissolution;
(4) apply for
or consent to
the appointment of
a trustee, liquidator
or receiver for
its or for
a substantial part
of its property
or business; (5)
file a petition
for bankruptcy relief,
consent to the
filing of such
petition or have
filed against it
an involuntary petition
for bankruptcy relief,
all under federal
or state laws
as applicable; or
(e)
A trustee, liquidator
or receiver shall
be appointed for
the Company or
for a substantial part of
its property or
business without its consent
and shall not
be discharged with- in
sixty (60) days
after such appointment;
or
(f)
Any governmental agency or
any court of
competent jurisdiction at
the in- stance of
any governmental agency
shall assume custody
or control of
the whole or
any substantial portion
of the properties
or assets of
the Company; or
(g)
One or more money judgments, writs or warrants of attachment, or
similar process, in excess
of fifty
thousand dollars ($50,000)
in the aggregate,
shall be entered
or filed against
the Company or
any of its
properties or other
assets and shall
remain unpaid, unvacated, unbonded
or unstayed for
a period of
fifteen (15) days
or in any
event later than
five (5) days prior
to the date
of any proposed
sale thereunder; or
(h)
The Company shall
have defaulted on
or breached any
term of any
other note of similar
debt instrument into
which the Company
has entered and
failed to cure
such de- fault within
the appropriate grace
period; or
(i)
The Company shall
have its Common
Stock delisted from
a market (including
the OTCQB marketplace)
or, if the
Common Stock trades
on an exchange,
then trading in the Common
Stock shall be
suspended for more
than 10 consecutive
days;
(j)
If a majority
of the members
of the Board
of Directors of
the Company on the
date hereof are
no longer serving
as members of
the Board;
(k)
The Company shall
not deliver to
the Holder the
Common Stock pursuant to
paragraph 4 herein
without restrictive legend
within 3 business
days of its
receipt of a
Notice of Conversion; or
(l)
The Company shall
not replenish the
reserve set forth
in Section 12,
with- in 3 business
days of the
request of the
Holder; or
(m)
The Company shall
not be “current”
in its filings
with the Securities
and Exchange Commission; or
(n)
The Company shall
lose the “bid”
price for its
stock and a
market (including the
OTCBB marketplace or
other exchange)
Then,
or at any
time thereafter, unless
cured within 5
days, and in
each and every
such case, unless
such Event of
Default shall have
been waived in
writing by the
Holder (which waiver
shall not be deemed
to be a
waiver of any
subsequent default) at
the option of
the Holder and
in the Holder's sole
discretion, the Holder
may consider this
Note immediately due
and payable, with- out
presentment, demand, protest
or (further) notice
of any kind
(other than notice
of acceleration), all
of which are
hereby expressly waived,
anything herein or
in any note
or other instruments
contained to the
contrary notwithstanding, and
the Holder may
immediately, and without expiration
of any period
of grace, enforce
any and all
of the Holder's rights
and remedies provided
herein or any
other rights or
remedies afforded by
law. Upon an
Event of Default,
interest shall accrue at a default interest rate of 16% per annum or, if such
rate is usurious or not permitted by
current law, then
at the highest
rate of interest
permitted by law.
In the event
of a breach of Section 8(k) the
penalty shall be $250 per day the shares are not
issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall increase to
$500 per day beginning
on the 10th day. The
penalty for a
breach of Section
8(n) shall be
an increase of the outstanding principal amounts by 20%.
In case of a breach of Section 8(i), the out- standing principal due under this Note shall increase by 50%. If this Note
is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.
If
the Holder shall
commence an action
or proceeding to
enforce any provisions
of this Note,
including, without limitation,
engaging an attorney,
then if the
Holder prevails in
such action, the Holder
shall be reimbursed
by the Company
for its attorneys’
fees and other
costs and expenses incurred
in the investigation,
preparation and prosecution
of such action
or proceeding.
9.
In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible,
and the validity and enforceability of the remaining provisions of this Note will not in any way
be affected or impaired thereby.
10.
Neither this Note
nor any term
hereof may be
amended, waived, discharged
or terminated other
than by a
written instrument signed
by the Company
and the Holder.
11.
The Company represents
that it is
not a “shell”
issuer and has
never been a “shell”
issuer or that
if it previously
has been a
“shell” issuer that
at least 12
months have passed since
the Company has
reported form 10
type information indicating
it is no
longer a “shell
issuer. Further. The
Company will instruct
its counsel to
either (i) write
a 144- 3(a(9)
opinion to allow
for salability of
the conversion shares
or (ii) accept
such opinion from
Holder’s counsel.
12. The Company shall
issue irrevocable transfer agent instructions reserving
5,000,000 shares of its Common Stock for conversions under this Note (the “Share Reserve”).
The reserve shall be replenished as needed to allow for conversions of this Note. Upon full
conversion of this Note, any
shares remaining in the Share
Reserve shall be cancelled.
The Company shall pay all costs associated with issuing and delivering the shares.
13.
The Company will
give the Holder
direct notice of
any corporate actions, including
but not limited
to name changes,
stock splits, recapitalizations
etc. This notice
shall be given to
the Holder as
soon as possible
under law.
14.
This Note shall
be governed by
and construed in
accordance with the
laws of New York
applicable to contracts
made and wholly
to be performed
within the State
of New
York and shall
be binding upon
the successors and
assigns of each
party hereto. The
Holder and the Company
hereby mutually waive
trial by jury
and consent to
exclusive jurisdiction and
venue in the courts
of the State
of New York.
This Agreement may
be executed in
counterparts, and the facsimile
transmission of an
executed counterpart to
this Agreement shall
be effective as
an original.
IN
WITNESS WHEREOF, the
Company has caused
this Note to
be duly executed
by an officer
thereunto duly authorized.
Dated:
June 24, 2014
ENDEAVOR
IP, INC
By: /s/
Ravinder Dhat
Ravinder
Dhat, Chief Executive
Officer
EXHIBIT
A
NOTICE
OF CONVERSION
(To
be Executed by
the Registered Holder
in order to
Convert the Note)
The
undersigned hereby irrevocably elects to
convert $ _____________ of the
above Note into _____________Shares
of Common Stock of
Endeavor IP, Inc.
(“Shares”) according to
the conditions set forth
in such Note,
as of the
date written below.
If
Shares are to
be issued in
the name of
a person other
than the undersigned,
the undersigned will pay
all transfer and
other taxes and
charges payable with
respect thereto.
Date
of Conversion: ___________________
Applicable
Conversion Price: ___________________
Signature:___________________
[Print
Name of Holder
and Title of
Signer]
Address:
___________________
___________________
SSN
or EIN:___________________
Shares
are to be
registered in the
following name: ___________________
Name:
___________________
Address: ___________________
Tel:___________________
Fax: ___________________
SSN or EIN:
___________________
Shares
are to be
sent or delivered
to the following
account:
Account
Name: ___________________
Address:
___________________
THIS
NOTE AND THE
COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS
NOTE HAVE NOT BEEN
AND WILL NOT
BE REGISTERED WITH THE
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF
ANY STATE PURSUANT TO
AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES
ACT OF 1933, AS
AMENDED, AND THE
RULES AND REGULATIONS
PROMULGATED THEREUNDER (THE
"1933 ACT”)
US
$35,000.00
ENDEAVOR
IP, INC.
8%
CONVERTIBLE REDEEMABLE NOTE DUE
JUNE 24, 2015
BACK
END NOTE
FOR
VALUE RECEIVED, Endeavor
IP, Inc. (the
“Company”) promises to
pay to the order
of ADAR BAYS,
LLC and its
authorized successors and
permitted assigns ("Holder"),
the aggregate principal
face amount of
Thirty Five Thousand
Five Hundred Dollars
exactly (U.S. $35,000.00) on
June 24, 2015
("Maturity Date") and
to pay interest
on the principal
amount out- standing hereunder
at the rate
of 8% per
annum commencing on
June 24, 2014.
The interest will be
paid to the
Holder in whose
name this Note
is registered on
the records of
the Company regarding
registration and transfers
of this Note.
The principal of,
and interest on,
this Note are payable at 3411 Indian
Creek Drive, Suite 403, Miami Beach, FL 33140, initially, and if changed, last
appearing on the
records of the Company
as designated in
writing by the
Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this
Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by
check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of
such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the
liability for principal on this Note to the extent of the sum represented by such check
or wire transfer. Interest
shall be payable
in Common Stock
(as defined below)
pursuant to paragraph 4(b) herein.
This
Note is subject
to the following
additional provisions:
1.
This Note is
exchangeable for an
equal aggregate principal
amount of Notes of
different authorized denominations,
as requested by
the Holder surrendering
the same. No service
charge will be
made for such
registration or transfer
or exchange, except
that Holder shall pay
any tax or
other governmental charges
payable in connection
therewith.
2.
The Company shall
be entitled to
withhold from all
payments any amounts required
to be withheld
under applicable laws.
3.
This Note may
be transferred or
exchanged only in
compliance with the Securities
Act of 1933,
as amended ("Act"),
and applicable state
securities laws. Any
attempted transfer to a
non-qualifying party shall
be treated by
the Company as
void. Prior to
due presentment for
transfer of this
Note, the Company
and any agent
of the Company
may treat the
person in whose name
this Note is
duly registered on
the Company's records
as the owner
hereof for all other
purposes, whether or
not this Note
be overdue, and
neither the Company
nor any such agent
shall be affected
or bound by
notice to the
contrary. Any Holder
of this Note
electing to exercise the
right of conversion
set forth in
Section 4(a) hereof,
in addition to
the requirements set forth
in Section 4(a),
and any prospective
transferee of this
Note, also is
required to give
the Company written confirmation
that this Note
is being converted
("Notice of Conversion")
in the form annexed
hereto as Exhibit
A. The date
of receipt (including receipt
by telecopy) of
such Notice of Conversion shall be
the Conversion Date.
4.
(a) The Holder
of this Note
is entitled, at
its option, at
any time after 180
days, to convert all or any amount of
the principal face amount of this Note
then outstanding into shares of the
Company's common stock
(the "Common Stock")
without restrictive legend
of any nature, at
a price ("Conversion
Price") for each
share of Common
Stock equal to
55% of the lowest
trading bid price
of the Common
Stock as reported
on the OTCQB
marketplace which the Company’s
shares are traded or
any market upon which
the Common Stock may
be traded in the future
("Exchange"), for the
ten prior trading
days including the
day upon which
a Notice of Conversion
is received by the
Company (provided such Notice
of Conversion is delivered by fax or
other electronic method
of communication to
the Company after
4 P.M. Eastern
Standard or Daylight Savings
Time if the
Holder wishes to
include the same
day closing price).
If the shares have
not been delivered
within 3 business
days, the Notice
of Conversion may
be rescinded. Such conversion
shall be effectuated
by the Company
delivering the shares
of Common Stock
to the Holder within 3
business days of
receipt by the
Company of the
Notice of Conversion.
Once the Holder has received such shares
of Common Stock, the Holder shall
surrender this Note to the Company,
executed by the
Holder evidencing such
Holder's intention to
convert this Note
or a specified portion
hereof, and accompanied
by proper assignment hereof
in blank. Accrued, but unpaid
interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share. In the event the Company experiences a DTC “Chill”
on its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill” is in effect.
(b)
Interest on any
unpaid principal balance
of this Note
shall be paid
at the rate of
8% per annum.
Interest shall be
paid by the
Company in Common
Stock ("Interest Shares"). The
Holder may, at
any time, send
in a Notice
of Conversion to
the Company for
Interest Shares based on the
formula provided in Section 4(a)
above. The dollar amount
converted into Interest Shares shall
be all or
a portion of
the accrued interest
calculated on the
unpaid principal balance
of this Note
to the date
of such notice.
(c)
This Note may
not be prepaid,
except that if
the $35,000 Rule
144 convertible redeemable note issued
by the Company
of even date
herewith is redeemed
by the Company within
6 months of
the issuance date
of such Note,
all obligations of
the Company under this
Note and all
obligations of the
Holder under the
Holder issued Back
End Note will
be automatically be
deemed satisfied and
this Note and
the Holder issued
Back End Note
will be automatically
be deemed cancelled
and of no
further force or
effect.
(d)
Upon (i) a
transfer of all
or substantially all
of the assets
of the Company to
any person in
a single transaction
or series of
related transactions, (ii)
a reclassification, capital reorganization
or other change
or exchange of
outstanding shares of
the Common Stock,
other than a forward
or reverse stock
split or stock
dividend, or (iii)
any consolidation or
merger of the Company
with or into
another person or
entity in which
the Company is
not the surviving
entity (other than a
merger which is
effected solely to
change the jurisdiction
of incorporation of
the Company and results
in a reclassification,
conversion or exchange
of outstanding shares
of Common Stock solely
into shares of
Common Stock) (each
of items (i),
(ii) and (iii)
being re-ferred to
as a "Sale
Event"), then, in
each case, the
Company shall, upon
request of the
Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of
redemption, or at the election of the Holder, such Holder may convert the unpaid principal
amount of this
Note (together with
the amount of accrued
but unpaid interest)
into shares of Common Stock
immediately prior to
such Sale Event at
the Conversion Price.
(e)
In case of any
Sale Event (not to
include a sale of all
or substantially all of the
Company’s assets) in
connection with which
this Note is
not redeemed or
converted, the Company shall
cause effective provision
to be made
so that the
Holder of this
Note shall have the
right thereafter, by
converting this Note,
to purchase or
convert this Note
into the kind
and number of shares
of stock or
other securities or
property (including cash)
receivable upon such reclassification,
capital reorganization or
other change, consolidation
or merger by a
holder of the number
of shares of
Common Stock that
could have been
purchased upon exercise
of the Note and
at the same
Conversion Price, as
defined in this
Note, immediately prior
to such Sale Event.
The foregoing provisions
shall similarly apply
to successive Sale
Events. If the
consideration received by
the holders of
Common Stock is
other than cash,
the value shall
be as deter- mined by
the Board of Directors of the
Company or successor person or
entity acting in good faith.
5.
No provision of
this Note shall
alter or impair
the obligation of
the Company, which
is absolute and
unconditional, to pay
the principal of,
and interest on,
this Note at the
time, place, and
rate, and in
the form, herein
prescribed.
6.
The Company hereby
expressly waives demand
and presentment for
payment, notice of
non-payment, protest, notice
of protest, notice
of dishonor, notice
of acceleration or intent
to accelerate, and
diligence in taking
any action to
collect amounts called
for hereunder and shall
be directly and
primarily liable for
the payment of
all sums owing
and to be
owing hereto.
7.
The Company agrees
to pay all
costs and expenses,
including reasonable attorneys' fees
and expenses, which
may be incurred
by the Holder
in collecting any
amount due under this
Note.
| 8. | If
one or
more of
the following
described "Events
of Default"
shall occur: |
(a)
The Company shall
default in the
payment of principal
or interest on
this Note or any
other note issued
to the Holder
by the Company;
or
(b)
Any of the
representations or warranties
made by the
Company herein or in
any certificate or
financial or other
written statements heretofore
or hereafter furnished
by or on behalf
of the Company
in connection with
the execution and
delivery of this
Note shall be false
or misleading in
any respect; or
(c)
The Company shall
fail to perform
or observe, in
any respect, any
covenant, term, provision,
condition, agreement or
obligation of the
Company under this
Note or any other
note issued to
the Holder and
not cure such
breach within 10
days; or
(d)
The Company shall
(1) become insolvent;
(2) admit in
writing its inability to
pay its debts
generally as they
mature; (3) make
an assignment for
the benefit of
creditors or commence proceedings
for its dissolution;
(4) apply for
or consent to
the appointment of
a trustee, liquidator
or receiver for
its or for
a substantial part
of its property
or business; (5)
file a petition
for bankruptcy relief,
consent to the
filing of such
petition or have
filed against it
an involuntary petition
for bankruptcy relief,
all under federal
or state laws
as applicable; or
(e)
A trustee, liquidator
or receiver shall
be appointed for
the Company or
for a substantial part of
its property or
business without its consent
and shall not
be discharged with- in
sixty (60) days
after such appointment;
or
(f)
Any governmental agency or
any court of
competent jurisdiction at
the in- stance of
any governmental agency
shall assume custody
or control of
the whole or
any substantial portion
of the properties
or assets of
the Company; or
(g)
One or more money judgments, writs or warrants of attachment, or
similar process, in excess
of one hundred
thousand dollars ($100,000)
in the aggregate,
shall be entered or
filed against the
Company or any
of its properties
or other assets
and shall remain
unpaid, unvacated, unbonded
or unstayed for
a period of
fifteen (15) days
or in any
event later than
five (5) days prior
to the date
of any proposed
sale thereunder; or
(h)
The Company shall
have defaulted on
or breached any
term of any
other note of similar
debt instrument into
which the Company
has entered and
failed to cure
such de- fault within
the appropriate grace
period; or
4
(i)
The Company shall
have its Common
Stock delisted from
a market (including
the OTCQB marketplace)
or, if the
Common Stock trades
on an exchange,
then trading in the
Common Stock shall
be suspended for
more than 10
consecutive days;
| (j) | Intentionally
Deleted; |
(k)
The Company shall
not deliver to
the Holder the
Common Stock pursuant to
paragraph 4 herein
without restrictive legend
within 3 business
days of its
receipt of a
Notice of Conversion; or
(l)
The Company shall
not replenish the
reserve set forth
in Section 12,
with- in 5 business
days of the
request of the
Holder ; or
(m)
The Company Common
Stock has a
bid price of
less than $0.02
per share for at
least 5 consecutive
trading days; or
(n)
The aggregate dollar
trading volume of
the Company’s Common
Stock is less than
fifty thousand dollars
($50,000.00) in any
5 consecutive trading
days; or
(o)
The Company shall
cease to be
“current” in its
filings with the
Securities and Exchange Commission;
or.
(p)
The Company shall
lose the “bid”
price for its
stock and a
market (including the OTCBB
marketplace or other
exchange)
Then,
or at any
time thereafter, unless
cured (except for
8(m) and 8(n)
which are incurable
de- faults, the sole
remedy of which
is to allow
the Holder to
cancel both this
Note and the
Holder Issued Note, and
in each and
every such case,
unless such Event
of Default shall
have been waived in
writing by the
Holder (which waiver
shall not be
deemed to be
a waiver of
any subsequent default)
at the option
of the Holder
and in the
Holder's sole discretion,
the Holder may consider this
Note immediately due
and payable, without
presentment, demand, protest
or (fur- ther) notice
of any kind
(other than notice
of acceleration), all
of which are
hereby expressly waived, anything herein or
in any note or other instruments contained to
the contrary notwithstanding, and the Holder may
immediately, and without expiration of
any period of grace, en- force any and
all of the Holder's rights and remedies provided herein or any other rights or remedies afforded
by law. Upon an
Event of Default,
interest shall be
accrue at a default
interest rate of 16%
per annum or,
if such rate
is usurious or
not permitted by
current law, then
at the highest rate
of interest permitted
by law. Further, if
the Note becomes due
and payable, the
Holder may use the outstanding principal and interest due under the Note to
offset any payment obligations it may have to
the Company. In the
event of a breach of
8(k) the penalty shall
be $250 per day
the shares are not issued beginning on
the 4th day after the conversion notice
was delivered to the Company. This penalty
shall increase to
$500 per day beginning
on the 10th day.
Once cash funded, the penalty for a breach of Section 8(p) shall be an increase of the outstanding principal amounts
by 20%. Once cash funded, in the event of a breach of Section 8(i), the outstanding
principal due under this Note shall increase by 50%. If this Note is not paid at maturity,
the outstanding principal due under this Note shall increase by 10%.
If
the Holder shall
commence an action
or proceeding to
enforce any provisions
of this Note,
including, without limitation,
engaging an attorney,
then, if the
Holder prevails in
such action, the Holder
shall be reimbursed
by the Company
for its attorneys’
fees and other
costs and expenses incurred
in the investigation,
preparation and prosecution
of such action
or proceeding.
9.
In case any
provision of this
Note is held
by a court
of competent jurisdiction
to be excessive
in scope or
otherwise invalid or
unenforceable, such provision
shall be adjusted
rather than voided,
if possible, so
that it is
enforceable to the
maximum extent possible, and
the validity and
enforceability of the
remaining provisions of
this Note will
not in any
way be affected or
impaired thereby.
10.
Neither this Note
nor any term
hereof may be
amended, waived, discharged
or terminated other
than by a
written instrument signed
by the Company
and the Holder.
11.
The Company represents
that it is
not a “shell”
issuer and has
never been a “shell”
issuer or that
if it previously
has been a
“shell” issuer that
at least 12
months have passed
since the Company
has reported form
10 type information
indicating it is
no longer a
“shell issuer. Further.
The Company will
instruct its counsel
to either (i)
write a “144-
3(a)(9)” opinion to allow
for salability of
the conversion shares
or (ii) accept
such opinion from Holder’s
counsel.
12.
Prior to cash
funding of this
Note, The Company
will issue irrevocable transfer
agent instructions reserving 3x
the number of
shares of Common
Stock necessary to
allow the holder
to convert this
note based on
the discounted conversion
price set forth
in Section 4(a) herewith.
The reserve shall
be replenished as
needed to allow
for conversions of
this Note. Upon full
conversion of this
Note, the reserve
representing this Note
shall be cancelled.
The Company will pay
all transfer agent
costs associated with issuing
and delivering the
shares.
13.
The Company will
give the Holder
direct notice of
any corporate actions including
but not limited
to name changes,
stock splits, recapitalizations
etc. This notice
shall be given to
the Holder as
soon as possible
under law.
14.
This Note shall
be governed by
and construed in
accordance with the
laws of New York
applicable to contracts
made and wholly
to be performed
within the State
of New
York and shall
be binding upon
the successors and
assigns of each
party hereto. The
Holder and the Company
hereby mutually waive
trial by jury
and consent to
exclusive jurisdiction and
venue in the courts
of the State
of New York.
This Agreement may
be executed in
counterparts, and the facsimile
transmission of an
executed counterpart to
this Agreement shall
be effective as
an original.
IN
WITNESS WHEREOF, the
Company has caused
this Note to
be duly executed
by an officer
thereunto duly authorized.
Dated:
June 24, 2014
ENDEAVOR
IP, INC
By: /s/
Ravinder Dhat
Ravinder
Dhat, Chief Executive
Officer
EXHIBIT
A
NOTICE
OF CONVERSION
(To
be Executed by
the Registered Holder
in order to
Convert the Note)
The
undersigned hereby irrevocably elects to
convert $ _____________ of the
above Note into _____________Shares
of Common Stock of
Endeavor IP, Inc.
(“Shares”) according to
the conditions set forth
in such Note,
as of the
date written below.
If
Shares are to
be issued in
the name of
a person other
than the undersigned,
the undersigned will pay
all transfer and
other taxes and
charges payable with
respect thereto.
Date
of Conversion: ___________________
Applicable
Conversion Price: ___________________
Signature:___________________
[Print
Name of Holder
and Title of
Signer]
Address:
___________________
___________________
SSN
or EIN:___________________
Shares
are to be
registered in the
following name: ___________________
Name:
___________________
Address: ___________________
Tel:___________________
Fax: ___________________
SSN or EIN:
___________________
Shares
are to be
sent or delivered
to the following
account:
Account
Name: ___________________
Address:
___________________
THIS
NOTE HAS NOT
BEEN REGISTERED UNDER
THE SECURITIES ACT
OF 1933, AS AMENDED
(THE "ACT"), OR
UNDER THE SECURITIES
LAWS OF CERTAIN
STATES. THESE SECURITIES ARE
SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE
AND MAY NOT
BE TRANSFERRED OR
RESOLD EXCEPT AS
PERMITTED UNDER THE
ACT AND THE
APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM.
LENDERS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT
THAT ANY PROPOSED TRANSFER
OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
ADAR
BAYS, LLC
COLLATERALIZED
SECURED PROMISSORY NOTE
BACK
END NOTE
$35,000.00 Miami,
FL
June
24, 2014
FOR
VALUE RECEIVED, Adar
Bays, LLC, a
Florida Limited Liability
Company (the "Company") hereby
absolutely and unconditionally
promises to pay
to Endeavor IP,
Inc (the “Lender"), or
order, the principal
amount of Thirty
Five Thousand Dollars
($35,000) no later
than February 24, 2015, unless the Lender does
not meet the “current information requirements” required under
Rule 144 of
the Securities Act
of 1933, as
amended, in which
case the Company
may declare the offsetting
note issued by
the Lender on
the same date
herewith to be
in Default (as
defined in that note)
and cross cancel
its payment obligations
under this Note
as well as
the Lenders payment obligations
under the offsetting
note. This Full Recourse
Note shall bear
simple interest at
the rate of 8%.
| 2. | Repayments
and Prepayments;
Security. |
a.
All principal
under this Note
shall be due
and payable no
later than February 24,
2015, unless the
Lender does not
meet the “current
information requirements” required
under Rule 144 of
the Securities Act
of 1933, as
amended, in which
case the Company
may declare the offsetting
note issued by
the Lender on
the same date
herewith to be
in Default (as
defined in that note)
and cross cancel
its payment obligations
under this Note
as well as
the Lenders payment obligations
under the offsetting
note.
b.
The Company may
pay this Note
at any time.
This note may
not be assigned by
the Lender, except
by operation of
law.
c.
This Note shall
initially be secured
by the pledge
of the $35,000.00
8% convertible promissory note
issued to the
Company by the
Lender on even
date herewith (the
“Lender
Note”). The Company
may exchange
this collateral for
other collateral with
an appraised value
of at least
$35,000.00, by
providing 3 days
prior written notice
to the Lender.
If the Lender
does not object
to the substitution
of collateral in
that 3 day
period, such substitution of
collateral shall be
deemed to have
been accepted by
the Lender. All
collateral shall be retained
by New Venture
Attorneys, P.C., which
shall act as
the escrow agent
for the collateral for
the benefit of
the Lender. The
Company may not
effect any conversions
under the Lender Note
until it has
made full cash payment
for the portion
of the Lender Note
being converted.
______
Lender
Initials to Acceptance of bolded
section above.
| 3. | Events
of Default;
Acceleration. |
a.
The principal amount
of this Note
is subject to
prepayment in whole
or in part
upon the occurrence and
during the continuance
of any of
the following events
(each, an “Event
of Default”): the initiation
of any bankruptcy,
insolvency, moratorium, receivership
or reorganization by or
against the Company,
or a general
assignment of assets
by the Company
for the benefit
of creditors. Upon the
occurrence of any
Event of Default,
the entire unpaid
principal balance of
this Note and all
of the unpaid
interest accrued thereon shall
be immediately due
and payable. The Company
may offset amounts due
to the Lender under this
Note by similar amounts that
may be due to the
Company by the
Lender resulting from
breaches under the
Lender Note.
b.
No remedy herein
conferred upon the
Lender is intended
to be exclusive
of any other remedy
and each and
every remedy shall
be cumulative and
in addition to
every other remedy hereunder,
now or hereafter
existing at law
or in equity
or otherwise. The
Company accepts and agrees
that this Note
is a full
recourse note and
that the Holder
may exercise any
and all remedies available
to it under
law.
a.
All notices, reports
and other communications
required or permitted
hereunder shall be in
writing and may
be delivered in
person, by telecopy
with written confirmation,
overnight delivery service or U.S.
mail, in which
event it may
be mailed by
first-class, certified or
registered, postage prepaid, addressed (i)
if to a
Lender, at such
Lender’s address as
the Lender shall
have furnished the Company
in writing and
(ii) if to
the Company at
such address as
the Company shall have
furnished the Lender(s)
in writing.
b.
Each such notice,
report or other
communication shall for
all purposes under
this Note be treated
as effective or
having been given
when delivered if
delivered personally or,
if sent by mail,
at the earlier
of its receipt
or 72 hours
after the same
has been deposited
in a regularly maintained
receptacle for the
deposit of the
United States mail,
addressed and mailed
as aforesaid, or, if
sent by electronic
communication with confirmation,
upon the delivery
of electronic communication.
a. Neither this Note
nor any provisions
hereof may be
changed, waived, discharged
or terminated orally, but only
by a signed
statement in writing.
b.
No failure or
delay by the
Lender to exercise
any right hereunder
shall operate as
a waiver thereof, nor
shall any single
or partial exercise
of any right,
power or privilege
preclude any other right,
power or privilege.
The provisions of
this Note are
severable and if
any one provision hereof
shall be held
invalid or unenforceable
in whole or
in part in
any jurisdiction, such
invalidity or unenforceability shall
affect only such
provision in such
jurisdiction. This Note
expresses the entire understanding
of the parties with
respect to the
transactions contemplated hereby.
The Company and every endorser and guarantor of this Note regardless of the time, order or place of signing hereby waives
presentment, demand, protest and notice
of every kind, and assents to any
extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or secondarily liable.
c.
If Lender retains
an attorney for collection of this
Note, or if any
suit or proceeding is brought for
the recovery of
all, or any
part of, or
for protection of
the indebtedness respected
by this Note, then
the Company agrees
to pay all
costs and expenses
of the suit
or proceeding, or
any appeal thereof, incurred
by the Lender,
including without limitation,
reasonable attorneys' fees.
d.
This Note shall
for all purposes
be governed by,
and construed in
accordance with the laws
of the State
of New York
(without reference to
conflict of laws).
e.
This Note shall
be binding upon
the Company's successors
and assigns, and
shall inure to the
benefit of the
Lender's successors and
assigns.
IN
WITNESS WHEREOF, the
Company has caused
this Note to
be executed by
its duly authorized officer
to take effect
as of the
date first hereinabove
written.
ADAR
BAYS, LLC
By:
/s/ Authorized Signatory
Title:
APPROVED:
Endeavor
IP, Inc.
By: /s/
Ravinder Dhat
Title:
Chief Executive Officer
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of July 9, 2014, by and between ENDEAVOR IP, INC.,
a Nevada corporation, with headquarters located at 140 Broadway - 46th Floor, New York, NY 10005 (the "Company"),
and KBM WORLDWIDE, INC., a New York corporation, with its address at 80 Cuttermill Road, Suite 410, Great Neck, NY 11021
(the "Buyer").
WHEREAS:
A.
The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 Act");
B.
Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement
an 8% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $42,500.00
(together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance
with the terms thereof, the "Note"), convertible into shares of common stock, $0.0001 par value per share, of the Company
(the "Common Stock"), upon the terms and subject to the limitations and conditions set forth in such Note.
C.
The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set
forth immediately below its name on the signature pages hereto; and
NOW
THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:
| 1. | Purchase
and Sale of Note. |
a.
Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees
to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer's name on the signature
pages hereto.
b.
Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be
issued and sold to it at the Closing (as defined below) (the "Purchase Price") by wire transfer of immediately available
funds to the Company, in accordance with the Company's written wiring instructions, against delivery of the Note in the principal
amount equal to the Purchase Price as is set forth immediately below the Buyer's name on the signature pages hereto, and (ii)
the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.
c.
Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section
7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the "Closing Date") shall
be 12:00 noon, Eastern Standard Time on or about July 14, 2014, or such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the "Closing") shall occur on the Closing Date at such location as may be agreed to
by the parties.
2.
Buyer's Representations and Warranties. The Buyer represents and warrants to the Company that:
a.
Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any,
as are issuable (i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of
the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement,
such shares of Common Stock being collectively referred to herein as the "Conversion Shares" and, collectively with
the Note, the "Securities") for its own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that
by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act.
b.
Accredited Investor Status. The Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D (an "Accredited Investor").
c.
Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings
of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire
the Securities.
d.
Information. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue
to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any,
have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the
Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will
not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure
to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives
shall modify, amend or affect Buyer's right to rely on the Company's representations and warranties contained in Section 3 below.
The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any
facts that may constitute a breach of any of the Company's representations and warranties made herein.
e.
Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the Securities.
f.
Transfer or Re-sale. The Buyer understands that (i) the sale or re- sale of the Securities has not been and is not being
registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to
the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions
of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred
to an "affiliate" (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) ("Rule 144"))
of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the
1933 Act (or a successor rule) ("Regulation S"), and the Buyer shall have delivered to the Company, at the cost of the
Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions,
which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only
in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined
in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the
Securities
may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.
g.
Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the
1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates for such Securities):
"NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I)
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE SECURITIES."
The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such
holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act,
which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with
respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline,
it will be considered an Event of Default pursuant to Section 3.2 of the Note.
h.
Authorization: Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed
and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms.
i.
Residency. The Buyer is a resident of the jurisdiction set forth immediately below the Buyer's name on the signature pages
hereto.
3.
Representations and Warranties of the Company. The Company
represents and warrants to the Buyer that:
a.
Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power
and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the
jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business
conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not have
a Material Adverse Effect. "Material Adverse Effect" means any material adverse effect on the business, operations,
assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be entered into in connection herewith. "Subsidiaries" means
any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly,
any equity or other ownership interest.
b. Authorization;
Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement,
the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with
the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the
consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the
Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof)
have been duly authorized by the Company's Board of Directors and no further consent or authorization of the Company, its
Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company
by its authorized representative, and such authorized representative is the true and official representative with authority
to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv)
this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will
constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its
terms.
c.
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of: (i) 200,000,000 authorized
shares of Common Stock, $0.0001 par value per share, of which 44,086,726 shares are issued and outstanding; and (ii) 25,000,000
authorized shares of Preferred Stock, $0.0001 par value per share, of which no shares are issued and outstanding; no shares are
reserved for issuance pursuant to the Company's stock option plans, no shares are reserved for issuance pursuant to securities
(other than the Note and one (1) prior convertible promissory note(s) in favor of the Buyer:
(a)
prior convertible promissory note in favor of the Buyer dated June 13, 2014 in the amount of $68,000.00 for which 15,500,000 shares
of Common Stock are presently reserved)
exercisable
for, or convertible into or exchangeable for shares of Common Stock and 30,000,000 shares are reserved for issuance upon conversion
of the Note. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully
paid and non assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights
of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company.
As of the effective date of this Agreement,
(i)
there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible
into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries,
(ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale
of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained
in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the
issuance of the Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof ("Certificate oflncorporation"), the Company's By laws,
as in effect on the date hereof (the "By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer
with a written update of this representation signed by the Company's Chief Executive on behalf of the Company as of the Closing
Date.
d.
Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note
in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights
or
other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.
e.
Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock
upon the issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
f.
No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for
issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of
Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default
(or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset
of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents
and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time
or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries
has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which
any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any,
are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law,
ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under
the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court, governmental agency, regulatory agency, selfregulatory organization or
stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the
Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue
the Conversion Shares upon conversion of the
Note.
All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. If the Company is listed on the OTCBB, the Company is
not in violation of the listing requirements of the Over-the-Counter Bulletin Board (the "OTCBB") and does not reasonably
anticipate that the Common Stock will be delisted by the OTCBB in the foreseeable future. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the foregoing.
g.
SEC Documents: Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being
hereinafter referred to herein as the "SEC Documents"). Upon written request the Company will deliver to the Buyer true
and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods
involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the
Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to April 30, 2014, and
(ii)
obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material
to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934
Act.
h.
Absence of Certain Changes. Since April 30, 2014, there has been no material adverse change and no material adverse development
in the assets, liabilities,
business,
properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any
of its Subsidiaries.
i.
Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to
the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard
to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
j
. Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights
to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications,
service marks, service names, trade names and copyrights ("Intellectual Property") necessary to enable it to conduct
its business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any
person pertaining to, or proceeding pending, or to the Company's knowledge threatened, which challenges the right of the Company
or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and,
as presently contemplated to be operated in the future); to the best of the Company's knowledge, the Company's or its Subsidiaries'
current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any
person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and
each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual
Property.
k.
No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company's officers
has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party
to any contract or agreement which in the judgment of the Company's officers has or is expected to have a Material Adverse Effect.
1.
Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other
tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that
the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside
on
its
books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. 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 know of no basis for any such claim. The Company has not executed a waiver with
respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None
of the Company's tax returns is presently being audited by any taxing authority.
m.
Certain Transactions. Except for arm's length transactions pursuant to which the Company or any of its Subsidiaries makes
payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain
from third parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees
of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from, or otheiwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.
n.
Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otheiwise in connection with the transactions contemplated hereby
is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event
or circwnstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company's
reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the
1933 Act).
o.
Acknowledgment Regarding Buyer' Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely
in the capacity of arm's length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation
and is merely incidental to the Buyer' purchase of the Securities. The Company further represents to the Buyer that the Company's
decision to enter
into
this Agreement has been based solely on the independent evaluation of the Company and its representatives.
p.
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances
that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities
to the Buyer will not be integrated with any other issuance of the Company's securities (past, current or future) for purposes
of any shareholder approval provisions applicable to the Company or its securities.
q.
No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions,
transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.
r.
Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its business as it is now being conducted (collectively, the "Company Permits"),
and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of
the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of
the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Since April 30, 2014, neither the Company nor any of its Subsidiaries
has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse
Effect.
(i)
There are, to the Company's knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company,
no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal,
state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of
the foregoing, nor is any action pending or, to the Company's knowledge, threatened in connection with any of the foregoing. The
term "Environmental Laws" means all federal, state, local or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws
relating
to em1ss10ns, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances
or wastes (collectively, "Hazardous Materials") into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans
or regulations issued, entered, promulgated or approved thereunder.
(ii)
Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained
on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials
were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during
the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the
Company's or any of its Subsidiaries' business.
(iii)
There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.
t.
Title to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would
not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.
u.
Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written
request the Company will provide to the Buyer true and correct copies of all policies relating to directors' and officers' liability
coverage, errors and omissions coverage, and commercial general liability coverage.
v.
Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company's board of directors, 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 generally accepted accounting principles 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.
w.
Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee
or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the
Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or
employee.
x.
Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i&, its
assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they
become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company
would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take
any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature.
The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving
effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might
issue a qualified opinion in respect of its current fiscal year.
y.
No Investment Companv. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement
will not be an "investment company" required to be registered under the Investment Company Act of 1940 (an "Investment
Company"). The Company is not controlled by an Investment Company.
z.
Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties
set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will
be considered an Event of default under Section 3.4 of the Note.
a.
Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6
and 7 of this Agreement.
b.
Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable
closing pursuant to this Agreement under applicable securities or "blue sky" laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or
prior to the Closing Date.
c.
Use of Proceeds.
The Company shall use the proceeds for general working capital purposes.
d. [INTENTIONALLY
DELETED].
e.
Expenses. At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith
("Documents"), including, without limitation, reasonable attorneys' and consultants' fees and expenses, transfer agent
fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or
waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring
the transactions contemplated by the Documents. When possible, the Company must pay these fees directly, otherwise the Company
must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer
or the submission of an invoice by the Buyer. The Company's obligation with respect to this transaction is to reimburse Buyer'
expenses shall be $3,000.
f.
Financial Information. Upon written request the Company agrees to send or make available the following reports to the Buyer
until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a
copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one
(1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously
with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company
makes available or gives to such shareholders.
h.
Listing. The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange
or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance)
and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of
Common
Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company
will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the
OTCBB or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink Sheets electronic
quotation system) and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws
or rules of the Financial Industry Regulatory Authority ("FINRA") and such exchanges, as applicable. The Company shall
promptly provide to the Buyer copies of any notices it receives from the OTCBB and any other exchanges or electronic quotation
systems on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such exchanges
and quotation systems.
i.
Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence
and shall not sell all or substantially all of the Company's assets, except in the event of a merger or consolidation or sale
of all or substantially all of the Company's assets, where the surviving or successor entity in such transaction (i) assumes the
Company's obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly
traded corporation whose Common Stock is listed for trading on the Pink Sheets, OTCQX, OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or
AMEX.
j.
No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of
the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.
k.
Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other
remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.4 of the
Note.
1. Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, the Company shall comply with the
reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934
Act.
m.
Trading Activities. Neither the Buyer nor its affiliates has an open short position in the common stock of the Company
and the Buyer agree that it shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging transactions
with respect to the common stock of the Company.
5.
Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates,
registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by
the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the "Irrevocable Transfer Agent
Instructions"). In the event that the Borrower proposes to replace its transfer agent, the Borrower shall provide, prior
to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. Prior to registration of the Conversion
Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction
as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof
(in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which
the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular
date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise
be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii)
it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically
or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant
to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer
agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw
any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion
of or otherwise pursuant to the Note as and when required by the Note and this Agreement. Nothing in this Section shall affect
in any way the Buyer's obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery
requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the cost of the Buyer, with (i) an
opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public
sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected
or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit
the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates,
free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions
of this Section, that the Buyer shall be entitled, in addition to all other available
remedies,
to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without
any bond or other security being required.
6.
Conditions to the Company's Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the
Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto,
provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion:
a.
The Buyer shall have executed this Agreement and delivered the same to the Company.
b.
The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
c.
The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date),
and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.
d.
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this
Agreement.
7.
Conditions to The Buyer's Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note at the Closing
is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions
are for the Buyer's sole benefit and may be waived by the Buyer at any time in its sole discretion:
a.
The Company shall have executed this Agreement and delivered
the same to the Buyer.
b. The Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance
with Section l (b) above.
c.
The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest of the Buyer, shall
have been delivered to and acknowledged in writing by the Company's Transfer Agent.
d.
The representations and warranties of the Company shall be true and correct in all material respects as of the date when made
and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific
date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.
The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including,
but not limited to certificates with respect to the Company's Certificate of lncorporation, By-laws and Board of Directors' resolutions
relating to the transactions contemplated hereby.
e.
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this
Agreement.
f.
No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but
not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934
Act reporting obligations.
g.
The Conversion Shares shall have been authorized for quotation on the OTCBB and trading in the Common Stock on the OTCBB shall
not have been suspended by the SEC or the OTCBB.
h.
The Buyer shall have received an officer's certificate described in Section 3(c) above, dated as of the Closing Date.
| 8. | Governing
Law: Miscellaneous. |
a.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county
of Nassau. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The
Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection
herewith
is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision
which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision
of any agreement. Each party· hereby irrevocably waives personal service of process and consents to process being served
in any suit, action or proceeding in connection with this Agreement or any other Transaction Document 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.
b.
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party.
c.
Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
d.
Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision hereof.
e.
Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither
the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision
of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.
f.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation
generated
by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day following such delivery (if delivered other than
on a business day during normal business hours where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If
to the Company, to: ENDEAVOR IP, INC.
140
Broadway - 46th Floor New York, NY 10005
Attn:
RAVINDER DHAT, Chief Executive Officer
facsimile:
[enter fax number]
With
a copy by fax only to (which copy shall not constitute notice): [enter name of law firm]
Attn:
[attorney name] [enter address line 1] [enter city, state, zip]
facsimile:
[enter fax number]
If
to the Buyer:
KBM
WORLDWIDE, INC.
80
Cuttermill Road - Suite 410 Great Neck, NY 11021
Attn:
Seth Kramer, President e-mail: info@kwbmlaw.com
With
a copy by fax only to (which copy shall not constitute notice): Naidich Wurman Birnbaum & Maday LLP
Att:
Judah A. Eisner, Esq.
Attn:
Bernard S. Feldman, Esq. facsimile: 516-466-3555
e-mail:
dyork@nwbmlaw.com
Each
party shall provide notice to the other party of any change in address.
g.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder
to any person that purchases Securities in a private transaction
from
the Buyer or to any of its "affiliates," as that term is defined under the 1934 Act, without the consent of the Company.
h.
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
i.
Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement
shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The
Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and
covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses
as they are incurred.
j.
Publicitv.
The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC,
OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, OTCBB (or other
applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall
be provided with a copy thereof and be given an opportunity to comment thereon).
k.
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
1.
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.
m.
Remedies. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose
of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions
of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition
to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement
and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond
or other security being required.
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above
written.
ENDEAVOR
IP, INC.
By: /s/
Ravinder Dhat
RAVINDER
DHAT
Chief
Executive Officer
KBM
WORLDWIDE, INC.
By:
/s/ Seth Kramer
Name:
Seth Kramer
Title:
President
80
Cuttermill Road - Suite 410 Great Neck, NY 11021
| AGGREGATE
SUBSCRIPTION AMOUNT: |
|
| Aggregate
Principal Amount of Note: |
$42,500.00 |
| Aggregate
Purchase Price: |
$42,500.00 |
|
|
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Principal
Amount: $42,500.00 Purchase Price: $42,500.00
Issue
Date: July 9, 2014
CONVERTIBLE
PROMISSORY NOTE
FOR
VALUE RECEIVED, ENDEAVOR IP, INC., a Nevada corporation (hereinafter called the "Borrower"), hereby promises to
pay to the order of KBM WORLDWIDE, INC., a New York corporation, or registered assigns (the "Holder") the sum of
$42,500.00 together with any interest as set forth herein, on April 14, 2015 (the "Maturity Date"), and to pay
interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the "Interest Rate") per annum
from the date hereof (the "Issue Date") until the same becomes due and payable, whether at maturity or upon
acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly
set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate
of twenty two percent (22%) per annum from the due date thereof until the same is paid ("Default Interest").
Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year
and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.0001 par
value per share (the "Common Stock") in accordance with the terms hereof) shall be made in lawful money of the
United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by
written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a
business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on
such date. As used in this Note, the term "business day" shall mean any day other than a Saturday, Sunday or a day
on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain
closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain
Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the "Purchase
Agreement").
This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The
following terms shall apply to this Note:
ARTICLE
I. CONVERSION RIGHTS
1.1
Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which
is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the
date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of
the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount
of this Note into fully paid and non assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any
shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified
at the conversion price (the "Conversion Price") determined as provided herein (a "Conversion"); provided,
however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this
Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of
the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion
or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion
of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso
to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Regulations 13D-G thereunder, except as otherwise provided
in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder
upon, at the election of the Holder, not less than 61 days' prior notice to the Borrower, and the provisions of the conversion
limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified
in
such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined
by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in
the notice of conversion, in the form attached hereto as Exhibit A (the ''Notice of Conversion"), delivered to the Borrower
by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail
(or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New
York time on such conversion date (the "Conversion Date"). The term "Conversion Amount" means, with respect
to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at
the Holder's option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note
to the Conversion Date, plus
(3)
at the Holder's option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2)
plus (4) at the Holder's option, any amounts owed to the Holder pursuant to Sections 1.3 and l .4(g) hereof.
(a)
Calculation of Conversion Price. The conversion price
(the "Conversion Price") shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments
for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower's securities or the securities
of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar
events). The "Variable Conversion Price" shall mean 58% multiplied by the Market Price (as defined herein) (representing
a discount rate of 42%). "Market Price" means the average of the lowest three (3) Trading Prices (as defined below)
for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion
Date. "Trading Price" means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin
Board, Pink Sheets electronic quotation system or applicable trading market (the "OTC") as reported by a reliable reporting
service ("Reporting Service") designated by the Holder (i.e. Bloomberg) or, if the OTC is not the principal trading
market for such security, the closing bid price of such security on the principal securities exchange or trading market where
such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the
average of the closing bid prices of any market makers for such security that are listed in the "pink sheets". If the
Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the
fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted
for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. "Trading
Day" shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange
or other securities market on which the Common Stock is then being traded.
(b)
Conversion Price During Major Announcements. Notwithstanding
anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends
to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation
and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person,
group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the Borrower's Common Stock
(or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the
"Announcement Date"), then the Conversion Price shall, effective upon the Announcement Date and continuing through the
Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which would have
been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect.
From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section
1.2(a). For purposes hereof, "Adjusted Conversion Price Termination Date" shall mean, with respect to any proposed transaction
or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the
date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above)
consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme)
which caused this Section 1.2(b) to become operative.
1.3
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all
times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note
(based on the Conversion Price of the Notes in effect from time to time)(the "Reserved Amount"). The Reserved Amount
shall be increased from time to time in accordance with the Borrower's obligations hereunder. The Borrower represents that upon
issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue
any securities or make any change to its capital structure which would change the number of shares of Common Stock into which
the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision
so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive
rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer
agent to issue certificates for the Common Stock issuable upon conversion of this Note, and
(ii)
agrees that its issuance of this Note shall constitute full authority
to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates
for shares of Common Stock in accordance with the terms and conditions of this Note.
If,
at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of
the Note.
(a)
Mechanics of Conversion. Subject to Section 1.1, this
Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by
(A)
submitting to the Borrower a Notice of Conversion (by facsimile,
e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time)
and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.
(b)
Surrender of Note Upon Conversion. Notwithstanding anything
to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required
to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The
Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of
this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima
facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of
this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this
Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like
tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the
aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge
and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and
unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.
(c)
Payment of Taxes. The Borrower shall not be required to pay
any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other
securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower
shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons
(other than the Holder or the custodian in whose street name such shares are to be held for the Holder's account) requesting the
issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the
Borrower that such tax has been paid.
(d)
Delivery of Common Stock Upon Conversion. Upon receipt
by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice
of Conversion meeting the requirements for conversion as provided
in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline")
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof and the Purchase Agreement.
(e)
Obligation of Borrower to Deliver Common Stock. Upon
receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock
issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall
be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with
respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock
or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of
Conversion as provided herein, the Borrower's obligation to issue and deliver the certificates for Common Stock shall be absolute
and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect
to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay
in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of
any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.
The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is
received by the Borrower before 6:00 p.m., New York, New York time, on such date.
(f)
Delivery of Common Stock by Electronic Transfer. In
lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower
is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program,
upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower
shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to
the Holder by crediting the account of Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC")
system.
(g)
Failure to Deliver Common Stock Prior to Deadline. Without
in any way limiting the Holder's right to pursue other remedies, including actual damages and/or equitable relief, the
parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other
than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower
shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common
Stock through willful or deliberate hindrances on the
part
of the Borrower. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued
or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which
it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance
with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the
terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from
a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly
the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.
1.5
Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred
unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the
Act (or a successor rule) ("Rule 144") or (iv) such shares are transferred to an "affiliate" (as defined in
Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who
is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and
subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of
this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number
of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable
upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant
to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in
the following form, as appropriate:
"NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL
BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or
(ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder
under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not
accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section
3.2 of the Note.
| 1.6 | Effect
of Certain Events. |
(a)
Effect of Merger, Consolidation, Etc. At the option of the
Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the
Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed
of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below)
or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article
III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such
transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof.
"Person" shall mean any individual, corporation, limited liability company, partnership, association, trust or other
entity or organization.
(b)
Ad justment Due to Merger. Consolidation. Etc. If, at any
time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation,
exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the
Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of
the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower
other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have
the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu
of the shares of Common Stock immediately theretofore issuable upon conversion, such stock,
securities
or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately
prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate
provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion
of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter
deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless
(a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days
prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date,
the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or
sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring
entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall
similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c)
Adjustment Due to Distribution. If the Borrower shall declare
or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a stock repurchase, by
way of return of capital or otherwise (including any dividend or distribution to the Borrower's shareholders in cash or shares
(or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"), then the Holder
of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled
to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares
of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date
for the determination of shareholders entitled to such Distribution.
(d)
Notice of Adjustments . Upon the occurrence of each adjustment
or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense,
shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall,
upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment
or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount,
if any, of other securities or property which at the time would be received upon conversion of the Note.
1.7
Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market
on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant
to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock
that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is
then traded (the "Maximum Share Amount"), which shall be 4.99% of the total shares outstanding on the Closing Date (as
defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations,
capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share
Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of
any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or
any of its securities on the Borrower's ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu
of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.
1.8
Status as Shareholder. Upon submission of a Notice of
Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance
would exceed such Holder's allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares
of Common Stock and (ii) the Holder's rights as a Holder of such converted portion of this Note shall cease and terminate, excepting
only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available
at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding
the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day
after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the
Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain
the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as
practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect
that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including,
without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby
for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect
to subsequent conversions determined in accordance with Section 1.3) for the Borrower's failure to convert this Note.
1.9
Prepayment. Notwithstanding anything to the contrary contained
in this Note, at any time during the period beginning on the Issue Date and ending on the date which is thirty
(30)
days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written
notice to the Holder of the Note to prepay the outstanding
Note
(principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an "Optional
Prepayment Notice") shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the
Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading
Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the "Optional Prepayment Date"),
the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified
by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower
exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Optional
Prepayment Amount") equal to 112%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus
(x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y)
Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment
Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever
forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on the date which is thirty-one (31)
days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date, the Borrower shall have
the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined
below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one
(1)
business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall
make payment to the Holder of an amount in cash (the "Second Optional Prepayment Amount") equal to 117%, multiplied
by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid
principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in
clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower
delivers an Optional Prepayment Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within
two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note
pursuant to this Section 1.9.
Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on the date which is sixty-one (61)
days following the Issue Date
and
ending on the date which is ninety (90) days following the Issue Date, the Borrower shall have the right, exercisable on not
less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and
accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the
Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional
Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount
(as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1)
business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower
shall make payment to the Holder of an amount in cash (the "Third Optional Prepayment Amount") equal to 122%,
multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest
on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the
amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g)
hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Third Optional Prepayment Amount due to
the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever
forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is ninety-one (91) day from
the Issue Date and ending one hundred twenty (120) days following the Issue Date, the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note,
and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice.
On the Optional Prepayment Date, the Borrower shall make payment of the Fourth Optional Prepayment Amount (as defined below) to
or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the
Optional Prepayment Date. Ifthe Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the "Fourth Optional Prepayment Amount") equal to 127%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment
Notice and fails to pay the Fourth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred twenty-one
(121) day from the Issue Date and ending one hundred fifty (150) days following the Issue Date, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note
(principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fifth Optional Prepayment Amount (as defined below)
to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to
the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the "Fifth Optional Prepayment Amount") equal to 132%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z)
any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. Ifthe Borrower delivers an Optional Prepayment Notice
and fails to pay the Fifth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the
Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred fifty-one
(151) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note
(principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Sixth Optional Prepayment Amount (as defined below)
to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to
the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the "Sixth Optional Prepayment Amount") equal to 140%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z)
any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. Ifthe Borrower delivers an Optional Prepayment Notice
and fails to pay the Sixth Optional Prepayment Amount due to the Holder of the Note within two (2)
business
days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this
Section 1.9.
After
the expiration of one hundred eighty (180) following the date of the Note, the Borrower shall have no right of prepayment.
ARTICLE
II. CERTAIN COVENANTS
2.1
Distributions on Capital Stock. So long as the Borrower
shall have any obligation under this Note, the Borrower shall not without the Holder's written consent (a) pay, declare or set
apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital
stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or
indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions
pursuant to any shareholders' rights plan which is approved by a majority of the Borrower's disinterested directors.
2.2
Restriction on Stock Repurchases. So long as the Borrower
shall have any obligation under this Note, the Borrower shall not without the Holder's written consent redeem, repurchase or
otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series
ofrelated transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any
such shares.
2.3
Borrowings. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder's written consent, (a) create, incur, assume guarantee, endorse, contingently
agree to purchase or otherwise become liable upon the obligation of any other person, firm, partnership, joint venture or corporation,
except by the endorsement of negotiable instruments for deposit or collection, or (b) suffer to exist any liability for borrowed
money, except any borrowings that does not render the Borrower a "Shell" company as defined in Rule 12b-2 under the
Securities Exchange Act of 1934.
2.4
Sale of Assets. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder's written consent, sell, lease or otherwise dispose of any significant
portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned
on a specified use of the proceeds of disposition.
2.5
Advances and Loans. So long as the Borrower shall have
any obligation under this Note, the Borrower shall not, without the Holder's written consent, lend money, give credit or make
advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries
and affiliates of the Borrower, except
loans,
credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior
to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.
ARTICLE
III. EVENTS OF DEFAULT
Ifany
of the following events of default (each, an "Event of Default") shall occur: 3.1 Failure to Pay Principal or
Interest. The Borrower fails to pay the principal
hereof
or interest thereon when due on this Note, whether at maturity, upon acceleration or
otherwise.
3.2
Conversion and the Shares. The Borrower fails to issue
shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon
exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or
cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock
issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs
its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically
or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs,
delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions
in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend
to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement,
statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder
shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer
agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a
balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower's
transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty
eight (48) hours of a demand from the Holder.
3.3
Breach of Covenants. The Borrower breaches any material covenant
or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase
Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.
3.4
Breach of Representations and Warranties. Any representation
or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in
connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect
when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder
with respect to this Note or the Purchase Agreement.
3.5
Receiver or Trustee. The Borrower or any subsidiary of
the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.
3.6
Judgments. Any money judgment, writ or similar process shall
be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than
$50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty
(20)
days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
3.7
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Borrower or any subsidiary of the Borrower.
3.8
Delisting of Common Stock. The Borrower shall fail to maintain
the listing of the Common Stock on at least one of the OTC (which specifically includes the Pink Sheets electronic quotation system)
or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or
the American Stock Exchange.
3.9
Failure to Comply with the Exchange Act. The Borrower shall
fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting
requirements of the Exchange Act.
3.10
Liquidation. Any dissolution, liquidation, or winding up
of Borrower or any substantial portion of its business.
3.11
Cessation of Operations. Any cessation of operations by Borrower
or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure
of the Borrower's ability to continue as a "going concern" shall not be an admission that the Borrower cannot pay its
debts as they become due.
3.12
Maintenance of Assets. The failure by Borrower to maintain
any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business
(whether now or in the future).
3.13
Financial Statement Restatement. The restatement of any financial
statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until
this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement,
have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.14
Reverse Splits. The Borrower effectuates a reverse split
of its Common Stock without written notice to the Holder once information regarding the reverse split is made publicly available
.
3.15
Replacement of Transfer Agent. In the event that the Borrower
proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully
executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including
but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor
transfer agent to Borrower and the Borrower.
3.16
Cross-Default. Notwithstanding anything to the contrary contained
in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or
condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall,
at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall
be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other
Agreements by reason of a default under said Other Agreement or hereunder. "Other Agreements" means, collectively, all
agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate
of the Holder, including, without limitation, promissory notes; provided, however, the term "Other Agreements" shall
not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other
loan transaction and with all other existing and future debt of Borrower to the Holder.
Upon
the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable
and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the
Default
Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2,
THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS
OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the
occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section
1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of
written notice to the Borrower by such Holders (the "Default Notice"), and upon the occurrence of an Event of
Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon
at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower
shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal
amount of this Note to the date of payment (the "Mandatory Prepayment Date") plus (y) Default Interest, if any, on
the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and
l .4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to
in clauses (x), (y) and (z) shall collectively be known as the "Default Sum") or (ii) the "parity value"
of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon
conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately
preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of determining the lowest applicable
Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which
case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common
Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the
Mandatory Prepayment Date (the "Default Amount") and all other amounts payable hereunder shall immediately become
due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all
costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise
all other rights and remedies available at law or in equity.
If
the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then
in effect.
ARTICLE
IV. MISCELLANEOUS
4.1
Failure or Indulgence Not Waiver. No failure or delay
on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any
other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
4.2
Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered
by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or
(b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If
to the Borrower, to: ENDEAVOR IP, INC.
140
Broadway - 46th Floor New York, NY 10005
Attn:
RAVINDER DHAT, Chief Executive Officer facsimile:
With
a copy by fax only to (which copy shall not constitute notice): [enter name of law firm]
Attn:
[attorney name] [enter address line 1] [enter city, state, zip]
facsimile:
[enter fax number]
If
to the Holder:
KBM
WORLDWIDE, INC.
80
Cuttermill Road - Suite 410
Great
Neck, NY 11021 Attn: Seth Kramer, President
e-mail:
info@kbmworldwidc .com
With
a copy by fax only to (which copy shall not constitute notice): Naidich Wurman Birnbaum & Maday, LLP
Att:
Judah A. Eisner, Esq.
Attn:
Bernard S. Feldman, Esq. facsimile: 516-466-3555
e-mail:
dyork@nwbmlaw.com
4.3
Amendments. This Note and any provision hereof may only be
amended by an instrument in writing signed by the Borrower and the Holder. The term ''Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as
originally executed, or if later amended or supplemented, then as so amended or supplemented.
4.4
Assignability. This Note shall be binding upon the Borrower
and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee
of this Note must be an "accredited investor" (as defined in Rule 50l(a) of the 1933 Act). Notwithstanding anything
in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other
lending arrangement.
4.5
Cost of Collection. If default is made in the payment
of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys' fees.
4.6
Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by
either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts
of New York or in the federal courts located in the state and county of Nassau. The parties to this Note hereby irrevocably waive
any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction
or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be
entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note
or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of any agreement. Each party hereby
irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document 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.
4.7
Certain Amounts. Whenever pursuant to this Note the Borrower
is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that
time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual
damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid
by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the
opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this
Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that
such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash
payment without the opportunity to convert this Note into shares of Common Stock.
4.8
Purchase Agreement. By its acceptance of this Note, each
party agrees to be bound by the applicable terms of the Purchase Agreement.
4.9
Notice of Corporate Events. Except as otherwise provided
below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts
this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower's shareholders
(and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record
of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution,
any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization)
any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders
who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of
the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder,
at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution,
right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other
event to the extent known at such time. The Borrower shall make a public announcement of any
event
requmng notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance
with the terms of this Section 4.9.
4.10
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.
IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this July 9, 2014.
ENDEAVOR
IP, INC.
By:
/s/ Ravinder Dhat
RAVINDER
DHAT
Chief
Executive Officer
EXHIBIT
A - NOTICE OF CONVERSION
The
undersigned hereby elects to convert $_______________ principal amount of the Note (defined below) into that number of shares of Common Stock
to be issued pursuant to the conversion of the Note ("Common Stock") as set forth below, of ENDEAVOR IP, INC., a Nevada
corporation (the "Borrower") according to the conditions of the convertible note of the Borrower dated as of July 9,
2014 (the "Note"), as of the date written below. No fee will be charged to the Holder for any conversion, except for
transfer taxes, if any.
Box
Checked as to applicable instructions :
[
] The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account
of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system ("DWAC Transfer").
Name
of DTC Prime Broker: Account Number:
[
] The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
set forth below (which numbers are based on the Holder's calculation attached hereto) in the name(s) specified immediately below
or, if additional space is necessary, on an attachment hereto:
KBM
WORLDWIDE, INC.
80
Cuttermill Road - Suite 410 Great Neck, NY 11021 Attention: Certificate Delivery
e-mail:
info@kbmworldwide.com
Date
of Conversion:
Applicable
Conversion Price: $ _____________
Number
of Shares of Common Stock to be Issued
Pursuant
to Conversion of the Notes: _____________
Amount
of Principal Balance Due remaining
Under
the Note after this conversion: _____________
KBM WORLDWIDE, INC.
By: ____________
Name:
Seth Kramer Title: President Date: