EXHIBIT 4.13.2
EPIXTAR CORP.
VOXX CORPORATION
SECURITIES PURCHASE AGREEMENT
APRIL 29, 2005
TABLE OF CONTENTS
PAGE
1. Agreement to Sell and Purchase...........................................................................2
2. Fees and Option..............................................................ERROR! BOOKMARK NOT DEFINED.
3. Closing, Delivery and Payment............................................................................3
3.1 Closing.......................................................................................3
3.2 Delivery......................................................................................3
4. Representations and Warranties of the Company............................................................3
4.1 Organization, Good Standing and Qualification.................................................3
4.2 Subsidiaries..................................................................................4
4.3 Capitalization; Voting Rights.................................................................4
4.4 Authorization; Binding Obligations............................................................5
4.5 Liabilities...................................................................................6
4.6 Agreements; Action............................................................................6
4.7 Obligations to Related Parties................................................................6
4.8 Changes.......................................................................................7
4.9 Title to Properties and Assets; Liens, Etc....................................................8
4.10 Intellectual Property.........................................................................9
4.11 Compliance with Other Instruments.............................................................9
4.12 Litigation...................................................................................10
4.13 Tax Returns and Payments.....................................................................10
4.14 Employees....................................................................................10
4.15 Registration Rights and Voting Rights........................................................11
4.16 Compliance with Laws; Permits................................................................11
4.17 Environmental and Safety Laws................................................................11
4.18 Valid Offering...............................................................................12
4.19 Full Disclosure..............................................................................12
4.20 Insurance....................................................................................12
4.21 SEC Reports..................................................................................12
4.22 Listing......................................................................................13
4.23 No Integrated Offering.......................................................................13
4.24 Stop Transfer................................................................................13
4.25 Dilution.....................................................................................13
4.26 Patriot Act..................................................................................12
5. Representations and Warranties of the Purchaser.........................................................14
5.1 No Shorting..................................................................................14
5.2 Requisite Power and Authority................................................................14
5.3 Investment Representations...................................................................14
5.4 Purchaser Bears Economic Risk................................................................15
5.5 Acquisition for Own Account..................................................................15
5.6 Purchaser Can Protect Its Interest...........................................................15
5.7 Accredited Investor..........................................................................15
5.8 Legends......................................................................................15
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6. Covenants of the Company................................................................................17
6.1 Stop-Orders..................................................................................17
6.2 Listing......................................................................................17
6.3 Market Regulations...........................................................................17
6.4 Reporting Requirements.......................................................................17
6.5 Use of Funds.................................................................................18
6.6 Access to Facilities.........................................................................18
6.7 Taxes........................................................................................18
6.8 Insurance....................................................................................18
6.9 Intellectual Property........................................................................19
6.10 Properties...................................................................................19
6.11 Confidentiality..............................................................................20
6.12 Required Approvals...........................................................................20
6.13 Reissuance of Securities.....................................................................22
6.14 Opinion......................................................................................22
6.15 Margin Stock.................................................................................21
6.16 Foreign Security.............................................................................21
6.17 Right of First Refusal.......................................................................21
6.18 Voxx Common Stock............................................................................21
7. Covenants of the Purchaser..............................................................................24
7.1 Confidentiality..............................................................................24
7.2 Non-Public Information.......................................................................24
7.3 Limitation on Acquisition of Common Stock....................................................23
8. Covenants of the Company and Purchaser Regarding Indemnification........................................24
8.1 Company Indemnification......................................................................24
8.2 Purchaser's Indemnification..................................................................25
9. Conversion of Convertible Note..........................................................................25
9.1 Mechanics of Conversion......................................................................25
10. Registration Rights.....................................................................................26
10.1 Registration Rights Granted..................................................................26
10.2 Offering Restrictions........................................................................26
11. Miscellaneous...........................................................................................27
11.1 Governing Law................................................................................27
11.2 Survival.....................................................................................28
11.3 Successors...................................................................................28
11.4 Entire Agreement.............................................................................28
11.5 Severability.................................................................................28
11.6 Amendment and Waiver.........................................................................28
11.7 Delays or Omissions..........................................................................29
11.8 Notices......................................................................................29
11.9 Attorneys' Fees..............................................................................30
11.10 Titles and Subtitles.........................................................................30
11.11 Facsimile Signatures; Counterparts...........................................................30
11.12 Broker's Fees................................................................................30
11.13 Construction.................................................................................30
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LIST OF EXHIBITS
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Form of Convertible Term Note....................................................................... Exhibit A
Form of Option...................................................................................... Exhibit B-1
Form of Warrant Exhibit B-2
Form of Opinion..................................................................................... Exhibit C
Form of Escrow Agreement............................................................................ Exhibit D
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of April 29, 2005 by and among EPIXTAR CORP., a Florida
corporation ("EPXR"), VOXX CORPORATION, a Florida corporation ("VOXX") (EPXR and
VOXX, collectively, the "Company"), and Laurus Master Fund, Ltd., a Cayman
Islands company (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale to the Purchaser of a
Convertible Term Note in the aggregate principal amount of Five Million Five
Hundred Thousand Dollars ($5,500,000) (as amended, modified or supplemented from
time to time, the "Note"), which Note is convertible into shares of either
EPXR's common stock, $0.001 par value per share ("EPXR Common Stock") or VOXX's
common stock, $0.001 par value per share ("VOXX Common Stock" and, together with
the EPXR Common Stock, "Common Stock"), at the fixed conversion price set forth
in the Note ("Fixed Conversion Price");
WHEREAS, the Company wishes to issue a warrant to the Purchaser to
purchase up to 229,187 shares of VOXX's Common Stock (subject to adjustment as
set forth therein) in connection with Purchaser's purchase of the Note (as
amended, modified or supplemented from time to time, the "Warrant");
WHEREAS, the Company wishes to issue an option to the Purchaser to
purchase up to 3,274,094 shares of VOXX's Common Stock (subject to adjustment as
set forth therein) in connection with Purchaser's purchase of the Note (as
amended, modified or supplemented from time to time, the "Option");
WHEREAS, Purchaser desires to purchase the Note, the Warrant and the
Option on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Note, the Warrant
and Option to Purchaser on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Agreement to Sell and Purchase. Pursuant to the terms and
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 3), the Company agrees to sell to the Purchaser, and the Purchaser
hereby agrees to purchase from the Company, a Note in the aggregate principal
amount of $5,500,000 convertible in accordance with the terms thereof into
shares of the Company's Common Stock in accordance with the terms of the Note
and this Agreement. The Note purchased on the Closing Date shall be known as the
"Offering." A form of the Note is annexed hereto as Exhibit A. The Note will
mature on the Maturity Date (as defined in the Note). Collectively, the Note,
the Warrant and the Option and Common Stock issuable in payment of the Note,
upon conversion of the Note and upon exercise of the Warrant and the Option are
referred to as the "Securities."
2. Fees and Option. On the Closing Date:
(a) VOXX will issue and deliver to the Purchaser an Option to
purchase up to 3,274,094 shares of VOXX Common Stock pursuant to
Section 1 hereof. The Option must be delivered on the Closing Date. A
form of the Option is annexed hereto as Exhibit B-1. All the
representations, covenants, warranties, undertakings, and
indemnification, and other rights made or granted to or for the benefit
of the Purchaser by the Company are hereby also made and granted in
respect of the Option and shares of VOXX Common Stock issuable upon
exercise of the Option (the "Option Shares").
(b) The Company will issue and deliver to the Purchaser a
Warrant to purchase up to 229,187 shares of VOXX Common Stock pursuant
to Section 1 hereof. The Warrant must be delivered on the Closing Date.
A form of the Warrant is annexed hereto as Exhibit B-2. All the
representations, covenants, warranties, undertakings, and
indemnification, and other rights made or granted to or for the benefit
of the Purchaser by the Company are hereby also made and granted in
respect of the Option and shares of the VOXX's Common Stock issuable
upon exercise of the Warrant (the "Warrant Shares").
(c) Subject to the terms of Section 2(d) below, the Company
shall pay to Laurus Capital Management, LLC, the manager of the
Purchaser, a closing payment in an amount equal to three and one-half
percent (3.50%) of the aggregate principal amount of the Note. The
foregoing fee is referred to herein as the "Closing Payment."
(d) The Company shall reimburse the Purchaser for its
reasonable expenses for services rendered to the Purchaser in
preparation of this Agreement and the Related Agreements (as
hereinafter defined), and expenses incurred in connection with the
Purchaser's due diligence review of the Company and all related
matters. Amounts required to be paid under this Section 2(d), to the
extent not yet paid, shall be paid by the Company on the Closing Date.
The total amount to be paid by the Company pursuant to this clause (c)
shall be $30,000.
(e) The Closing Payment, the expenses referred to in clause
(c) of this Section 2 (net of deposits previously paid by the Company)
shall be paid at closing out of funds held pursuant to a Funds Escrow
Agreement of even date herewith among the Company, Purchaser, and an
Escrow Agent (the "Funds Escrow Agreement") and a disbursement letter
(the "Disbursement Letter").
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3. Closing, Delivery and Payment; Certain Closing Conditions.
3.1 Closing. Subject to the terms and conditions herein, the
closing of the transactions contemplated hereby (the "Closing"), shall take
place on the date hereof, at such time or place as the Company and Purchaser may
mutually agree (such date is hereinafter referred to as the "Closing Date").
3.2 Delivery. Pursuant to the Funds Escrow Agreement in the
form attached hereto as Exhibit C, at the Closing on the Closing Date, the
Company will deliver to the Purchaser, among other things, a Note in the form
attached as Exhibit A representing the aggregate principal amount of $5,500,000
and Option in the form attached as Exhibit B-1 in the Purchaser's name
representing an aggregate amount of 3,274,094 Option Shares and a Warrant in
form attached as Exhibit B-2 in the Purchaser's name representing an aggregate
amount of 229,187 Warrant Shares and the Purchaser will deliver to the Company,
among other things, the amounts set forth in the Disbursement Letter by
certified funds or wire transfer.
3.3 Sands Documents. The Purchaser shall be satisfied with the
terms and conditions of each Sands Document (as defined in the Intercreditor
Agreement (as defined below)) and all agreements related thereto.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows (which representations and
warranties are supplemented by the Company's filings under the Securities
Exchange Act of 1934 (collectively, the "Exchange Act Filings"), copies of which
have been provided to the Purchaser):
4.1 Organization, Good Standing and Qualification. Each of the
Company and each of its Subsidiaries is a corporation, partnership or limited
liability company, as the case may be, duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of the
Company and each of its Subsidiaries has the corporate power and authority to
own and operate its properties and assets, to execute and deliver (i) this
Agreement, (ii) the Note, the Warrant and the Option to be issued in connection
with this Agreement, (iii) the Master Security Agreement dated as of the date
hereof between the Company, certain Subsidiaries of the Company and the
Purchaser (as amended, modified or supplemented from time to time, the "Master
Security Agreement"), (iv) the EPXR Registration Rights Agreement relating to
the Securities dated as of the date hereof between EPXR and the Purchaser, (v)
the VOXX Registration Rights Agreement relating to the Securities dated as of
the date hereof between VOXX and the Purchaser, (vi) the Guaranty dated as of
the date hereof made by the Company and certain Subsidiaries of the Company (as
amended, modified or supplemented from time to time, the "Guaranty"), (vii) the
Stock Pledge Agreement dated as of the date hereof among the Company, certain
Subsidiaries of the Company and the Purchaser (as amended, modified or
supplemented from time to time, the "Stock Pledge Agreement"), (viii) the Escrow
Agreement dated as of the date hereof among the Company, the Purchaser and the
escrow agent referred to therein, (ix) the Intercreditor and Collateral Agency
Agreement dated as of the date hereof between the Purchaser and and the Sands
Creditors referred to therein, and acknowledged and agreed to by the Company (as
amended, modified or supplemented from time to time, the "Intercreditor
Agreement"), (x) the Foreign Documentation (as defined below) and (xi) all other
agreements related to this Agreement and the Note and referred to herein (the
preceding clauses (ii) through (xi), collectively, the "Related Agreements"), to
issue and sell the Note and the shares of Common Stock issuable upon conversion
of the Note (the "Note Shares"), to issue and sell the Option and the Option
Shares, to issue and sell the Warrant and the Warrant Shares, and to carry out
the provisions of this Agreement and the Related Agreements and to carry on its
business as presently conducted. Each of the Company and each of its
Subsidiaries is duly qualified and is authorized to do business and is in good
standing as a foreign corporation, partnership or limited liability company, as
the case may be, in all jurisdictions in which the nature of its activities and
of its properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so has not, or could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, assets, liabilities, condition (financial or
otherwise), properties, operations or prospects of the Company and it
Subsidiaries, taken individually and as a whole (a "Material Adverse Effect").
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4.2 Subsidiaries. Each direct and indirect Subsidiary of the
Company, the direct owner of such Subsidiary and its percentage ownership
thereof, is set forth on Schedule 4.2. No Immaterial Subsidiary owns any assets
(other than immaterial assets) or has any significant operations. For the
purpose of this Agreement, (x) a "Subsidiary" of any person or entity means (i)
a corporation or other entity whose shares of stock or other ownership interests
having ordinary voting power (other than stock or other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other persons or entities
performing similar functions for such person or entity, are owned, directly or
indirectly, by such person or entity or (ii) a corporation or other entity in
which such person or entity owns, directly or indirectly, more than 50% of the
equity interests at such time and (y) the "Immaterial Subsidiaries" shall mean,
collectively, Epixtar Communications Corp., a Florida corporation, Epixtar
Prepaid Communications Corp., a Delaware corporation, Epixtar Solutions Corp., a
Delaware corporation, IMS International, Inc., a Phillippines corporation,
Epixtar International Contact Centers, Ltd., a Mauritius corporation, Epixtar
Information Technology Private, Ltd., a Calcutta corporation, Epixtar
International Contact Center Group, Ltd., a Bermuda corporation, and each
Subsidiary of the Company that is not a Credit Party and does not own any assets
(other than immaterial assets) or have any significant operations.
4.3 Capitalization; Voting Rights.
(a) The authorized capital stock of EPXR, as of the date
hereof consists of 60,000,000 shares, of which 50,000,000 are shares of
EPXR Common Stock, par value $0.001 per share, 12,150,356 shares of
which are issued and outstanding, and 10,000,000 are shares of
preferred stock, par value $0.001 per share of which 16,500 shares of
preferred stock are issued and outstanding. The authorized capital
stock of VOXX, as of the date hereof consists of 50,250,000 shares, of
which 50,000,000 are shares of VOXX Common Stock, par value $.001 per
share, 6,900,000 shares of which are issued and outstanding, and
250,000 are shares of preferred stock, par value $.001 per share of
which 0 shares of preferred stock are issued and outstanding. The
authorized capital stock of each Subsidiary of EPXR (other than VOXX)
is set forth on Schedule 4.3.
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(b) Except as disclosed on Schedule 4.3, other than: (i) the
shares reserved for issuance under the Company's stock option plans;
and (ii) shares which may be granted pursuant to this Agreement and the
Related Agreements, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements, or arrangements or
agreements of any kind for the purchase or acquisition from the Company
of any of its securities. Except as disclosed on Schedule 4.3, neither
the offer, issuance or sale of any of the Note, the Warrant or the
Option, or the issuance of any of the Note Shares, the Warrant Shares
or Option Shares, nor the consummation of any transaction contemplated
hereby will result in a change in the price or number of any securities
of the Company outstanding, under anti-dilution or other similar
provisions contained in or affecting any such securities.
(c) All issued and outstanding shares of the Company's Common
Stock: (i) have been duly authorized and validly issued and are fully
paid and nonassessable; and (ii) were issued in compliance with all
applicable state and federal laws concerning the issuance of
securities.
(d) The rights, preferences, privileges and restrictions of
the shares of the Common Stock are as stated in the Company's
Certificate of Incorporation (the "Charter"). The Note Shares, the
Warrant Shares and Option Shares have been duly and validly reserved
for issuance. When issued in compliance with the provisions of this
Agreement and the Company's Charter, the Securities will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances; provided, however, that the Securities may be subject to
restrictions on transfer under state and/or federal securities laws as
set forth herein or as otherwise required by such laws at the time a
transfer is proposed.
4.4 Authorization; Binding Obligations. All corporate,
partnership or limited liability company, as the case may be, action on the part
of the Company and each of its Subsidiaries (including the respective officers
and directors) necessary for the authorization of this Agreement and the Related
Agreements, the performance of all obligations of the Company and its
Subsidiaries hereunder and under the other Related Agreements at the Closing
and, the authorization, sale, issuance and delivery of the Note, the Warrant and
the Option has been taken or will be taken prior to the Closing. This Agreement
and the Related Agreements, when executed and delivered and to the extent it is
a party thereto, will be valid and binding obligations of each of the Company
and each of its Subsidiaries, enforceable against each such entity in accordance
with their terms, except:
(a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and
(b) general principles of equity that restrict the
availability of equitable or legal remedies.
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The sale of the Note and the subsequent conversion of the Note into Note Shares
are not and will not be subject to any preemptive rights or rights of first
refusal that have not been properly waived or complied with. Neither the
issuance of the Warrant nor the Option nor the subsequent exercise of the
Warrant for Warrant Shares nor the subsequent exercise of the Option for Option
Shares are not and will not be subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with.
4.5 Liabilities. Neither the Company nor any of its
Subsidiaries has any contingent liabilities, except current liabilities incurred
in the ordinary course of business and liabilities disclosed in any Exchange Act
Filings.
4.6 Agreements; Action. Except as set forth on Schedule 4.6 or
as disclosed in any Exchange Act Filings:
(a) there are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees
to which the Company or any of its Subsidiaries is a party or by which
it is bound which may involve: (i) obligations (contingent or
otherwise) of, or payments to, the Company in excess of $50,000 (other
than obligations of, or payments to, the Company arising from
agreements entered into in the ordinary course of business); or (ii)
the transfer or license of any patent, copyright, trade secret or other
proprietary right to or from the Company (other than licenses arising
from the purchase of "off the shelf" or other standard products); or
(iii) provisions restricting the development, manufacture or
distribution of the Company's products or services; or (iv)
indemnification by the Company with respect to infringements of
proprietary rights.
(b) Since December 31, 2004, neither the Company nor any of
its Subsidiaries has: (i) declared or paid any dividends, or authorized
or made any distribution upon or with respect to any class or series of
its capital stock; (ii) incurred any indebtedness for money borrowed or
any other liabilities (other than ordinary course obligations)
individually in excess of $50,000 or, in the case of indebtedness
and/or liabilities individually less than $50,000, in excess of
$100,000 in the aggregate; (iii) made any loans or advances to any
person not in excess, individually or in the aggregate, of $100,000,
other than ordinary course advances for travel expenses; or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its inventory in the ordinary course of business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting
the individual minimum dollar amounts of such subsections.
4.7 Obligations to Related Parties. Except as set forth on
Schedule 4.7, there are no obligations of the Company or any of its Subsidiaries
to officers, directors, stockholders or employees of the Company or any of its
Subsidiaries other than:
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(a) for payment of salary for services rendered and for bonus
payments;
(b) reimbursement for reasonable expenses incurred on behalf
of the Company and its Subsidiaries;
(c) for other standard employee benefits made generally
available to all employees (including stock option agreements
outstanding under any stock option plan approved by the Board of
Directors of the Company); and
(d) obligations listed in the Company's financial statements
or disclosed in any of its Exchange Act Filings.
Except as described above or set forth on Schedule 4.7, none of the officers,
directors or, to the best of the Company's knowledge, key employees or
stockholders of the Company or any members of their immediate families, are
indebted to the Company, individually or in the aggregate, in excess of $50,000
or have any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company, other
than passive investments in publicly traded companies (representing less than
one percent (1%) of such company) which may compete with the Company. Except as
described above, no officer, director or stockholder, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company and no agreements, understandings or proposed
transactions are contemplated between the Company and any such person. Except as
set forth on Schedule 4.7, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
4.8 Changes. Since December 31, 2004, except as disclosed in
any Exchange Act Filing or in any Schedule to this Agreement (including Schedule
4.8) or to any of the Related Agreements, there has not been:
(a) any change in the business, assets, liabilities, condition
(financial or otherwise), properties, operations or prospects of the
Company or any of its Subsidiaries, which individually or in the
aggregate has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(b) any resignation or termination of any officer, key
employee or group of employees of the Company or any of its
Subsidiaries;
(c) any material change, except in the ordinary course of
business, in the contingent obligations of the Company or any of its
Subsidiaries by way of guaranty, endorsement, indemnity, warranty or
otherwise;
(d) any damage, destruction or loss, whether or not covered by
insurance, has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(e) any waiver by the Company or any of its Subsidiaries of a
valuable right or of a material debt owed to it;
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(f) any direct or indirect loans made by the Company or any of
its Subsidiaries to any stockholder, employee, officer or director of
the Company or any of its Subsidiaries, other than advances made in the
ordinary course of business;
(g) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder of the
Company or any of its Subsidiaries;
(h) any declaration or payment of any dividend or other
distribution of the assets of the Company or any of its Subsidiaries;
(i) any labor organization activity related to the Company or
any of its Subsidiaries;
(j) any debt, obligation or liability incurred, assumed or
guaranteed by the Company or any of its Subsidiaries, except those for
immaterial amounts and for current liabilities incurred in the ordinary
course of business;
(k) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets owned
by the Company or any of its Subsidiaries;
(l) any change in any material agreement to which the Company
or any of its Subsidiaries is a party or by which either the Company or
any of its Subsidiaries is bound which either individually or in the
aggregate has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(m) any other event or condition of any character that, either
individually or in the aggregate, has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect; or
(n) any arrangement or commitment by the Company or any of its
Subsidiaries to do any of the acts described in subsection (a) through
(m) above.
4.9 Title to Properties and Assets; Liens, Etc. Except as set
forth on Schedule 4.9, each of the Company and each of its Subsidiaries has good
and marketable title to its properties and assets, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than:
(a) those resulting from taxes which have not yet become
delinquent;
(b) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially
impair the operations of the Company or any of its Subsidiaries; and
(c) those that have otherwise arisen in the ordinary course of
business.
All facilities, machinery, equipment, fixtures, vehicles and other properties
owned, leased or used by the Company and its Subsidiaries are in good operating
condition and repair and are reasonably fit and usable for the purposes for
which they are being used. Except as set forth on Schedule 4.9, the Company and
its Subsidiaries are in compliance with all material terms of each lease to
which it is a party or is otherwise bound.
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4.10 Intellectual Property.
(a) Each of the Company and each of its Subsidiaries owns or
possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information
and other proprietary rights and processes necessary for its business
as now conducted and to the Company's knowledge, as presently proposed
to be conducted (the "Intellectual Property"), without any known
infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing
proprietary rights, nor is the Company or any of its Subsidiaries bound
by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary
rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or
standard products.
(b) Neither the Company nor any of its Subsidiaries has
received any communications alleging that the Company or any of its
Subsidiaries has violated any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary
rights of any other person or entity, nor is the Company or any of its
Subsidiaries aware of any basis therefor.
(c) The Company does not believe it is or will be necessary to
utilize any inventions, trade secrets or proprietary information of any
of its employees made prior to their employment by the Company or any
of its Subsidiaries, except for inventions, trade secrets or
proprietary information that have been rightfully assigned to the
Company or any of its Subsidiaries.
4.11 Compliance with Other Instruments. Neither the Company
nor any of its Subsidiaries is in violation or default of (x) any term of its
Certificate of Incorporation or Bylaws, (y) any term of the Sands Documents (as
defined in the Intercreditor Agreement) or (z) of any provision of any
indebtedness, mortgage, indenture, contract, agreement or instrument to which it
is party or by which it is bound or of any judgment, decree, order or writ,
which violation or default, in the case of this clause (z), has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. The execution, delivery and performance of and
compliance with this Agreement and the Related Agreements to which it is a
party, and the issuance and sale of the Note by the Company and the other
Securities by the Company each pursuant hereto and thereto, will not, with or
without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term or
provision, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company or any of its
Subsidiaries or the suspension, revocation, impairment, forfeiture or nonrenewal
of any permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.
9
4.12 Litigation. Except as set forth on Schedule 4.12 hereto,
there is no action, suit, proceeding or investigation pending or, to the
Company's knowledge, currently threatened against the Company or any of its
Subsidiaries that prevents the Company or any of its Subsidiaries from entering
into this Agreement or the other Related Agreements, or from consummating the
transactions contemplated hereby or thereby, or which has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect or any change in the current equity ownership of the
Company or any of its Subsidiaries, nor is the Company aware that there is any
basis to assert any of the foregoing. Neither the Company nor any of its
Subsidiaries is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company or any of its Subsidiaries currently pending or which the Company or any
of its Subsidiaries intends to initiate.
4.13 Tax Returns and Payments. Each of the Company and each of
its Subsidiaries has timely filed all tax returns (federal, state and local)
required to be filed by it. All taxes shown to be due and payable on such
returns, any assessments imposed, and all other taxes due and payable by the
Company or any of its Subsidiaries on or before the Closing, have been paid or
will be paid prior to the time they become delinquent. Except as set forth on
Schedule 4.13, neither the Company nor any of its Subsidiaries has been advised:
(a) that any of its returns, federal, state or other, have
been or are being audited as of the date hereof; or
(b) of any deficiency in assessment or proposed judgment to
its federal, state or other taxes.
The Company has no knowledge of any liability of any tax to be imposed upon its
properties or assets as of the date of this Agreement that is not adequately
provided for.
4.14 Employees. Except as set forth on Schedule 4.14, neither
the Company nor any of its Subsidiaries has any collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or, to the Company's knowledge, threatened with respect to the Company or any of
its Subsidiaries. Except as disclosed in the Exchange Act Filings or on Schedule
4.14, neither the Company nor any of its Subsidiaries is a party to or bound by
any currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement. To the Company's knowledge, no employee
of the Company or any of its Subsidiaries, nor any consultant with whom the
Company or any of its Subsidiaries has contracted, is in violation of any term
of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company or any of its Subsidiaries because of the nature of
the business to be conducted by the Company or any of its Subsidiaries; and to
the Company's knowledge the continued employment by the Company or any of its
Subsidiaries of its present employees, and the performance of the Company's and
its Subsidiaries' contracts with its independent contractors, will not result in
any such violation. Neither the Company nor any of its Subsidiaries is aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or any of its Subsidiaries. Neither
the Company nor any of its Subsidiaries has received any notice alleging that
any such violation has occurred. Except for employees who have a current
effective employment agreement with the Company or any of its Subsidiaries, and
the Company's CEO, no employee of the Company or any of its Subsidiaries has
been granted the right to continued employment by the Company or any of its
Subsidiaries or to any material compensation following termination of employment
with the Company or any of its Subsidiaries. Except as set forth on Schedule
4.14, the Company is not aware that any officer, key employee or group of
employees intends to terminate his, her or their employment with the Company or
any of its Subsidiaries, nor does the Company or any of its Subsidiaries have a
present intention to terminate the employment of any officer, key employee or
group of employees.
10
4.15 Registration Rights and Voting Rights. Except as set
forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, neither
the Company nor any of its Subsidiaries is presently under any obligation, and
neither the Company nor any of its Subsidiaries has granted any rights, to
register any of the Company's or its Subsidiaries' presently outstanding
securities or any of its securities that may hereafter be issued. Except as set
forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, to the
Company's knowledge, no stockholder of the Company or any of its Subsidiaries
has entered into any agreement with respect to the voting of equity securities
of the Company or any of its Subsidiaries.
4.16 Compliance with Laws; Permits. Neither the Company nor
any of its Subsidiaries is in violation of any applicable statute, rule,
regulation, order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties which has had, or could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement or any
other Related Agreement and the issuance of any of the Securities, except such
as has been duly and validly obtained or filed, or with respect to any filings
that must be made after the Closing, as will be filed in a timely manner. Each
of the Company and its Subsidiaries has all material franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
4.17 Environmental and Safety Laws. Neither the Company nor
any of its Subsidiaries is in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and to
its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation. Except as set forth on
Schedule 4.17, no Hazardous Materials (as defined below) are used or have been
used, stored, or disposed of by the Company or any of its Subsidiaries or, to
the Company's knowledge, by any other person or entity on any property owned,
leased or used by the Company or any of its Subsidiaries. For the purposes of
the preceding sentence, "Hazardous Materials" shall mean:
11
(a) materials which are listed or otherwise defined as
"hazardous" or "toxic" under any applicable local, state, federal
and/or foreign laws and regulations that govern the existence and/or
remedy of contamination on property, the protection of the environment
from contamination, the control of hazardous wastes, or other
activities involving hazardous substances, including building
materials; or
(b) any petroleum products or nuclear materials.
4.18 Valid Offering. Assuming the accuracy of the
representations and warranties of the Purchaser contained in this Agreement, the
offer, sale and issuance of the Securities will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws.
4.19 Full Disclosure. Each of the Company and each of its
Subsidiaries has provided the Purchaser with all information requested by the
Purchaser in connection with its decision to purchase the Note, the Warrant and
the Option, including all information the Company and its Subsidiaries believe
is reasonably necessary to make such investment decision. Neither this
Agreement, the Related Agreements, the exhibits and schedules hereto and thereto
nor any other document delivered by the Company or any of its Subsidiaries to
Purchaser or its attorneys or agents in connection herewith or therewith or with
the transactions contemplated hereby or thereby, contain any untrue statement of
a material fact nor omit to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances in which
they are made, not misleading. Any financial projections and other estimates
provided to the Purchaser by the Company or any of its Subsidiaries were based
on the Company's and its Subsidiaries' experience in the industry and on
assumptions of fact and opinion as to future events which the Company or any of
its Subsidiaries, at the date of the issuance of such projections or estimates,
believed to be reasonable.
4.20 Insurance. Each of the Company and each of its
Subsidiaries has general commercial, product liability, fire and casualty
insurance policies with coverages which the Company believes are customary for
companies similarly situated to the Company and its Subsidiaries in the same or
similar business.
4.21 SEC Reports. Except as set forth on Schedule 4.21, the
Company has filed all proxy statements, reports and other documents required to
be filed by it under the Securities Xxxxxxxx Xxx 0000, as amended (the "Exchange
Act"). The Company has furnished the Purchaser with copies of: (i) its Annual
Reports on Form 10-KSB for its fiscal year ended December 31, 2004, (ii) its
Quarterly Report on Form 10-QSB for its fiscal quarter ended September 30, 2004
and (iii) the Form 8-K filings which it has made during the fiscal year 2005 to
date (collectively, the "SEC Reports"). Except as set forth on Schedule 4.21,
each SEC Report was, at the time of its filing, in substantial compliance with
the requirements of its respective form and none of the SEC Reports, nor the
financial statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
12
4.22 Listing. EPXR's Common Stock is listed for trading on the
National Association of Securities Dealers Over the Counter Bulletin Board
("NASD OTCBB") and satisfies all requirements for the continuation of such
trading. EPXR has not received any notice that EPXR's Common Stock will not be
eligible to be traded on the NASD OTCBB or that EPXR's Common Stock does not
meet all requirements for such trading.
4.23 No Integrated Offering. Neither the Company, nor any of
its Subsidiaries or affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would cause the offering
of the Securities pursuant to this Agreement or any of the Related Agreements to
be integrated with prior offerings by the Company (other than in connection with
that certain offering made by the Company to the Sands Creditors (as defined in
the Intercreditor Agreement) pursuant to that certain Securities Purchase
Agreement, dated as of the date hereof (as amended, modified or supplemented
from time to time, the "Sands Securities Purchase Agreement") and the Related
Agreements referred to in the Sands Securities Purchase Agreement) for purposes
of the Securities Act which would prevent the Company from selling the
Securities pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its affiliates or Subsidiaries take any action or steps that would cause the
offering of the Securities to be integrated with other offerings.
4.24 Stop Transfer. The Securities are restricted securities
as of the date of this Agreement. Neither the Company nor any of its
Subsidiaries will issue any stop transfer order or other order impeding the sale
and delivery of any of the Securities at such time as the Securities are
registered for public sale or an exemption from registration is available,
except as required by state and federal securities laws.
4.25 Dilution. The Company specifically acknowledges that its
obligation to issue the shares of Common Stock upon conversion of the Note and
exercise of the Warrant and the Option is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.
4.26 Patriot Act. The Company certifies that, to the best of
Company's knowledge, neither the Company nor any of its Subsidiaries has been
designated, and is not owned or controlled, by a "suspected terrorist" as
defined in Executive Order 13224. The Company hereby acknowledges that the
Purchaser seeks to comply with all applicable laws concerning money laundering
and related activities. In furtherance of those efforts, the Company hereby
represents, warrants and agrees that: (i) none of the cash or property that the
Company or any of its Subsidiaries will pay or will contribute to the Purchaser
has been or shall be derived from, or related to, any activity that is deemed
criminal under United States law; and (ii) no contribution or payment by the
Company or any of its Subsidiaries to the Purchaser, to the extent that they are
within the Company's and/or its Subsidiaries' control shall cause the Purchaser
to be in violation of the United States Bank Secrecy Act, the United States
International Money Laundering Control Act of 1986 or the United States
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001. The Company shall promptly notify the Purchaser if any of these
representations ceases to be true and accurate regarding the Company or any of
its Subsidiaries. The Company agrees to provide the Purchaser any additional
information regarding the Company or any of its Subsidiaries that the Purchaser
deems necessary or convenient to ensure compliance with all applicable laws
concerning money laundering and similar activities. The Company understands and
agrees that if at any time it is discovered that any of the foregoing
representations are incorrect, or if otherwise required by applicable law or
regulation related to money laundering similar activities, the Purchaser may
undertake appropriate actions to ensure compliance with applicable law or
regulation, including but not limited to segregation and/or redemption of the
Purchaser's investment in the Company. The Company further understands that the
Purchaser may release confidential information about the Company and its
Subsidiaries and, if applicable, any underlying beneficial owners, to proper
authorities if the Purchaser, in its sole discretion, determines that it is in
the best interests of the Purchaser in light of relevant rules and regulations
under the laws set forth in subsection (ii) above.
13
5. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows (such representations
and warranties do not lessen or obviate the representations and warranties of
the Company set forth in this Agreement):
5.1 No Shorting. The Purchaser or any of its affiliates and
investment partners has not, will not and will not cause any person or entity,
directly or indirectly, to engage in "short sales" of the Company's Common Stock
as long as the Note shall be outstanding.
5.2 Requisite Power and Authority. The Purchaser has all
necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and the Related Agreements and to carry out their
provisions. All corporate action on Purchaser's part required for the lawful
execution and delivery of this Agreement and the Related Agreements have been or
will be effectively taken prior to the Closing. Upon their execution and
delivery, this Agreement and the Related Agreements will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except:
(a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and
(b) as limited by general principles of equity that restrict
the availability of equitable and legal remedies.
5.3 Investment Representations. Purchaser understands that the
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Purchaser's representations
contained in the Agreement, including, without limitation, that the Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act"). The Purchaser confirms that it
has received or has had full access to all the information it considers
necessary or appropriate to make an informed investment decision with respect to
the Note, the Warrant and the Option to be purchased by it under this Agreement
and the Note Shares, the Warrant Shares and the Option Shares acquired by it
upon the conversion of the Note and the exercise of the Warrant and the Option,
respectively. The Purchaser further confirms that it has had an opportunity to
ask questions and receive answers from the Company regarding the Company's and
its Subsidiaries' business, management and financial affairs and the terms and
conditions of the Offering, the Note, the Option, the Warrant and the Securities
and to obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Purchaser or to which the
Purchaser had access.
14
5.4 Purchaser Bears Economic Risk. The Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and
has the capacity to protect its own interests. The Purchaser must bear the
economic risk of this investment until the Securities are sold pursuant to: (i)
an effective registration statement under the Securities Act; or (ii) an
exemption from registration is available with respect to such sale.
5.5 Acquisition for Own Account. The Purchaser is acquiring
the Note, the Warrant and the Option and the Note Shares, the Warrant Shares and
the Option Shares for the Purchaser's own account for investment only, and not
as a nominee or agent and not with a view towards or for resale in connection
with their distribution.
5.6 Purchaser Can Protect Its Interest. The Purchaser
represents that by reason of its, or of its management's, business and financial
experience, the Purchaser has the capacity to evaluate the merits and risks of
its investment in the Note, the Option, the Warrant and the Securities and to
protect its own interests in connection with the transactions contemplated in
this Agreement and the Related Agreements. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement or the Related Agreements.
5.7 Accredited Investor. Purchaser represents that it is an
accredited investor within the meaning of Section 501(a)(3) of Regulation D
under the Securities Act.
5.8 Legends.
(a) The Note shall bear substantially the following
legend:
"THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS.
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO EPIXTAR CORP. AND/OR VOXX
CORPORATION, AS APPLICABLE, THAT SUCH REGISTRATION IS NOT
REQUIRED."
15
(b) The Note Shares, the Warrant Shares and the Option Shares,
if not issued by DWAC system (as hereinafter defined), shall bear a
legend which shall be in substantially the following form until such
shares are covered by an effective registration statement filed with
the SEC:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS. THESE SHARES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES
ACT AND APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO EPIXTAR CORP. AND/OR VOXX
CORPORATION, AS APPLICABLE, THAT SUCH REGISTRATION IS NOT
REQUIRED."
(c) The Option shall bear substantially the following legend:
"THIS OPTION AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THIS OPTION AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS OPTION MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS OPTION OR THE UNDERLYING SHARES OF COMMON
STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VOXX
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."
(d) The Warrant shall bear substantially the following legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE COMMON SHARES 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 OR THE UNDERLYING SHARES OF
COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VOXX
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."
16
6. Covenants of the Company. The Company covenants and agrees with the
Purchaser as follows:
6.1 Stop-Orders. The Company will advise the Purchaser,
promptly after it receives notice of issuance by the Securities and Exchange
Commission (the "SEC"), any state securities commission or any other regulatory
authority of any stop order or of any order preventing or suspending any
offering of any securities of the Company, or of the suspension of the
qualification of the Common Stock of the Company for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purpose.
6.2 Listing. (a) EPXR shall promptly secure the listing of the
shares of EPXR Common Stock issuable upon conversion of the Note on the
Principal Market (as defined below) (subject to official notice of issuance) and
shall maintain such listing so long as any other shares of EPXR Common Stock
shall be so listed. EPXR will maintain the listing of EPXR Common Stock on the
Principal Market, and will comply in all material respects with EPXR's
reporting, filing and other obligations under the bylaws or rules of the
National Association of Securities Dealers ("NASD") and such exchanges, as
applicable.
(b) Concurrently with the consummation of an initial public
offering of the VOXX Common Stock, VOXX shall promptly secure the listing of the
shares of VOXX Common Stock issuable upon conversion of the Note and upon the
exercise of the Option and the Warrant on the Principal Market (subject to
official notice of issuance) and shall maintain such listing so long as any
other shares of EPXR Common Stock shall be so listed. EPXR will maintain the
listing of EPXR Common Stock on the Principal Market, and will comply in all
material respects with EPXR's reporting, filing and other obligations under the
bylaws or rules of the National Association of Securities Dealers ("NASD") and
such exchanges, as applicable.
(c) For purposes hereof, the term "Principal Market" means the
NASD Over The Counter Bulletin Board, NASDAQ SmallCap Market, NASDAQ National
Markets System, American Stock Exchange or New York Stock Exchange (whichever of
the foregoing is at the time the principal trading exchange or market for the
respective Common Stock).
6.3 Market Regulations. The Company shall notify the SEC, NASD
and applicable state authorities, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities to the
Purchaser and promptly provide copies thereof to the Purchaser.
6.4 Reporting Requirements. The Company will timely file with
the SEC all reports required to be filed pursuant to the Exchange Act and
refrain from terminating its status as an issuer required by the Exchange Act to
file reports thereunder even if the Exchange Act or the rules or regulations
thereunder would permit such termination.
17
6.5 Use of Funds. The Company agrees that it will use the
proceeds of the sale of the Note, the Warrant and the Option (x) for general
working capital purposes and (y) for the development and acquisition of certain
contact centers in the Phillipines.
6.6 Access to Facilities. Each of the Company and each of its
Subsidiaries will permit any representatives designated by the Purchaser (or any
successor of the Purchaser), upon reasonable notice and during normal business
hours, at such person's expense and accompanied by a representative of the
Company, to:
(a) visit and inspect any of the properties of the Company or
any of its Subsidiaries;
(b) examine the corporate and financial records of the Company
or any of its Subsidiaries (unless such examination is not permitted by
federal, state or local law or by contract) and make copies thereof or
extracts therefrom; and
(c) discuss the affairs, finances and accounts of the Company
or any of its Subsidiaries with the directors, officers and independent
accountants of the Company or any of its Subsidiaries.
Notwithstanding the foregoing, neither the Company nor any of its Subsidiaries
will provide any material, non-public information to the Purchaser unless the
Purchaser signs a confidentiality agreement and otherwise complies with
Regulation FD, under the federal securities laws.
6.7 Taxes. Each of the Company and each of its Subsidiaries
will promptly pay and discharge, or cause to be paid and discharged, when due
and payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company and its
Subsidiaries; provided, however, that any such tax, assessment, charge or levy
need not be paid if the validity thereof shall currently be contested in good
faith by appropriate proceedings and if the Company and/or such Subsidiary shall
have set aside on its books adequate reserves with respect thereto, and
provided, further, that the Company and its Subsidiaries will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security therefor.
18
6.8 Insurance. Each of the Company and its Subsidiaries will
keep its assets which are of an insurable character insured by financially sound
and reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in similar business similarly situated
as the Company and its Subsidiaries; and the Company and its Subsidiaries will
maintain, with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and property to the extent and in the
manner which the Company reasonably believes is customary for companies in
similar business similarly situated as the Company and its Subsidiaries and to
the extent available on commercially reasonable terms. The Company, and each of
its Subsidiaries will jointly and severally bear the full risk of loss from any
loss of any nature whatsoever with respect to the assets pledged to the
Purchaser as security for its obligations hereunder and under the Related
Agreements. At the Company's and each of its Subsidiaries' joint and several
cost and expense in amounts and with carriers reasonably acceptable to
Purchaser, the Company and each of its Subsidiaries shall (i) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to the Company's or the
respective Subsidiary's including business interruption insurance; (ii) maintain
a bond in such amounts as is customary in the case of companies engaged in
businesses similar to the Company's or the respective Subsidiary's insuring
against larceny, embezzlement or other criminal misappropriation of insured's
officers and employees who may either singly or jointly with others at any time
have access to the assets or funds of the Company or any of its Subsidiaries
either directly or through governmental authority to draw upon such funds or to
direct generally the disposition of such assets; (iii) maintain public and
product liability insurance against claims for personal injury, death or
property damage suffered by others; (iv) maintain all such worker's compensation
or similar insurance as may be required under the laws of any state or
jurisdiction in which the Company or the respective Subsidiary is engaged in
business; and (v) furnish Purchaser with (x) copies of all policies and evidence
of the maintenance of such policies at least thirty (30) days before any
expiration date, (y) excepting the Company's workers' compensation policy,
endorsements to such policies naming Purchaser as "co-insured" or "additional
insured" and appropriate loss payable endorsements in form and substance
satisfactory to Purchaser, naming Purchaser as loss payee, and (z) evidence that
as to Purchaser the insurance coverage shall not be impaired or invalidated by
any act or neglect of the Company or any Subsidiary and the insurer will provide
Purchaser with at least thirty (30) days notice prior to cancellation. The
Company and each Subsidiary shall instruct the insurance carriers that in the
event of any loss thereunder, the carriers shall make payment for such loss to
the Company and/or the Subsidiary and Purchaser jointly. In the event that as of
the date of receipt of each loss recovery upon any such insurance, the Purchaser
has not declared an event of default with respect to this Agreement or any of
the Related Agreements, then the Company and/or such Subsidiary shall be
permitted to direct the application of such loss recovery proceeds toward
investment in property, plant and equipment that would comprise "Collateral"
secured by Purchaser's security interest pursuant to its security agreement,
with any surplus funds to be applied toward payment of the obligations of the
Company to Purchaser. In the event that Purchaser has properly declared an event
of default with respect to this Agreement or any of the Related Agreements, then
all loss recoveries received by Purchaser upon any such insurance thereafter may
be applied to the obligations of the Company hereunder and under the Related
Agreements, in such order as the Purchaser may determine. Any surplus (following
satisfaction of all Company obligations to Purchaser) shall be paid by Purchaser
to the Company or applied as may be otherwise required by law. Any deficiency
thereon shall be paid by the Company or the Subsidiary, as applicable, to
Purchaser, on demand.
6.9 Intellectual Property. Each of the Company and each of its
Subsidiaries shall maintain in full force and effect its existence, rights and
franchises and all licenses and other rights to use Intellectual Property owned
or possessed by it and reasonably deemed to be necessary to the conduct of its
business.
6.10 Properties. Each of the Company and each of its
Subsidiaries will keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and improvements
thereto; and each of the Company and each of its Subsidiaries will at all times
comply with each provision of all leases to which it is a party or under which
it occupies property if the breach of such provision could, either individually
or in the aggregate, reasonably be expected tohave a Material Adverse Effect.
19
6.11 Confidentiality. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Purchaser, unless expressly agreed to by the Purchaser or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement. Notwithstanding the foregoing, the Company may
disclose Purchaser's identity and the terms of this Agreement to its current and
prospective debt and equity financing sources.
6.12 Required Approvals. For so long as twenty-five percent
(25%) of the principal amount of the Note is outstanding, EPXR, without the
prior written consent of the Purchaser, shall not, and shall not permit any of
its Subsidiaries to:
(a) (i) directly or indirectly declare or pay any dividends,
other than (w) dividends paid to the Company or to any Credit Party (as
defined below), (x) dividends paid by EPXR in an aggregate amount not
to exceed $200,000 in any fiscal year of EPXR, and (y) dividends paid
to holders of EPXR Common Stock solely to the extent that such
dividends are paid in EPXR Common Stock, (ii) issue any preferred stock
that is manditorily redeemable prior to the six month anniversary of
the Maturity Date (as defined in the Note), (iii) redeem any of its
preferred stock or other equity interests, or (iv) issue any equity
interests of Voxx (or any securities convertible or exercisable into
equity interests of Voxx), or agree to issue any equity interests of
Voxx (or any securities convertible or exercisable into equity
interests of Voxx) (x) prior to the consummation of, or in connection
with, an initial public offering of the Voxx Common Stock (other than
(i) issuances to the Laurus Creditors (as defined in the Intercreditor
Agreement) that are contemplated by the Laurus Documents (as defined in
the Intercreditor Agreement), (ii) issuances to the Sands Creditors (as
defined in the Intercreditor Agreement) that are contemplated by the
Sands Documents (as defined in the Intercreditor Agreement) or (iii)
issuances to the investors in respect of the Bridge Loan Indebtedness
(as defined below) in accordance with the terms set forth in Section
6.12(e)(i)(v) below);
(b) liquidate, dissolve or effect a material reorganization,
other than the liquidation or dissolution of Immaterial Subsidiaries
(it being understood that in no event shall (i) EPXR and Voxx merge or
(ii) EPXR or Voxx dissolve, liquidate or merge with any other person or
entity (unless EPXR or Voxx, as the case may be, is the surviving
entity));
(c) become subject to (including, without limitation, by way
of amendment to or modification of) any agreement or instrument which
by its terms would (under any circumstances) restrict EPXR's or any of
its Subsidiaries' right to perform the provisions of this Agreement,
any Related Agreement or any of the agreements contemplated hereby or
thereby;
(d) materially alter or change the scope of the business of
EPXR and its Subsidiaries taken as a whole;
20
(e) (i) create, incur, assume or suffer to exist any
indebtedness (exclusive of trade debt and debt incurred to finance the
purchase of equipment (not in excess of five percent (5%) per annum of
the fair market value of EPXR's assets) whether secured or unsecured
other than (v) indebtedness consisting of unsecured bridge loans in an
aggregate principal amount not to exceed $5,000,000 at any time
outstanding ("Bridge Loan Indebtedness"), which bridge loans shall by
their terms (I) require either (a) the repayment thereof from the
proceeds of an initial public offering of the VOXX Common Stock or (b)
the conversion thereof into VOXX Common Stock in connection with (but
not prior to the VOXX IPO Date (as defined in the Note)) an initial
public offering of the VOXX Common Stock at a conversion price no less
than 70% of the price of the VOXX Common Stock in connection with the
such initial public offering thereof and (II) may provide for the
issuance of warrants to the investors with respect to such Bridge Loan
Indebtedness and issuance of warrants to the selling agent with respect
to such Bridge Loan Indebtedness, in each case so long as such warrants
are not exercisable prior to the VOXX IPO Date (as defined in the Note)
and are not exercisable at a price per share of Voxx Common Stock less
than or equal to $2.23 (as adjusted proportionately for any stock
splits, combinations or similar events), (w) lease obligations
(capitalized or otherwise) incurred by the Company or any of its
Subsidiaries in the ordinary course of business, (x) the Sands
Obligations (as defined in the Intercreditor Agreement) and the Laurus
Obligations (as defined in the Intercreditor Agreement), (y)
indebtedness set forth on Schedule 6.12(e) attached hereto and made a
part hereof and any refinancings or replacements thereof on terms no
less favorable to the Purchaser than the indebtedness being refinanced
or replaced, and (z) any debt incurred in connection with the purchase
of assets in the ordinary course of business, or any refinancings or
replacements thereof on terms no less favorable to the Purchaser than
the indebtedness being refinanced or replaced; (ii) cancel any debt
owing to it in excess of $50,000 in the aggregate during any 12 month
period; (iii) assume, guarantee, endorse or otherwise become directly
or contingently liable in connection with any obligations of any other
Person, except the endorsement of negotiable instruments by EPXR for
deposit or collection or similar transactions in the ordinary course of
business or guarantees of indebtedness otherwise permitted to be
outstanding pursuant to this clause (e);
(f) create or acquire any Subsidiary after the date hereof
unless (i) such Subsidiary is a wholly-owned Subsidiary of EPXR and
(ii) such Subsidiary becomes party to the Master Security Agreement,
the Stock Pledge Agreement, the Subsidiary Guaranty (in each case,
either by executing a counterpart thereof or an assumption or joinder
agreement in respect thereof) and/or, if requested by the Purchaser
with respect to entities located outside of the United States, the
foreign equivalent of any such agreement or guaranty (it being
understood that the terms and conditions of any such foreign equivalent
shall be satisfactory to the Purchaser), and, to the extent required by
the Purchaser, satisfies each condition of this Agreement and the
Related Agreements as if such Subsidiary were a Subsidiary of EPXR on
the Closing Date; and
(g) (i) make, or permit any of its Subsidiaries which are
Credit Parties to make, any investments in, or any loans or advances
to, any Subsidiary of EPXR which is not a Credit Party, other than, so
long as no Event of Default (as defined in the Note) has occurred and
is continuing, immaterial investments, loans and/or advances made in
the ordinary course of business or (ii) transfer, or permit any
Subsidiary of EPXR which is a Credit Party to transfer, assets to any
Subsidiary of EPXR which is not a Credit Party, other than, so long as
no Event of Default has occurred and is continuing, immaterial asset
transfers made in the ordinary course of business.
21
For the purposes of this Agreement, "Credit Party" shall mean (x) EPXR
and each Subsidiary of EPXR organized in the United States of America that is
party to the Master Security Agreement, the Stock Pledge Agreement and the
Subsidiary Guaranty and (y) Epixtar Phillippines IT-Enabled Services
Corporation, a corporation organized under the laws of the Phillippines
("Epixtar Phillippines") and each other wholly-owned Subsidiary of the Company
that is organized outside of the United States of America that has executed the
Foreign Documentation referred to in Section 6.16 (it being understood and
agreed that an Immaterial Subsidiary shall be deemed a Credit Party for purposes
of this definition following the execution by such Immaterial Subsidiary of an
assumption or joinder agreement with respect to the Master Security Agreement,
the Subsidiary Guaranty and the Stock Pledge Agreement).
6.13 Reissuance of Securities. The Company agrees to reissue
certificates representing the Securities without the legends set forth in
Section 5.7 above at such time as:
(a) the holder thereof is permitted to dispose of such
Securities pursuant to Rule 144(k) under the Securities Act; or
(b) upon resale subject to an effective registration statement
after such Securities are registered under the Securities Act.
The Company agrees to cooperate with the Purchaser in connection with all
resales pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions
necessary to allow such resales provided the Company and its counsel receive
reasonably requested representations from the selling Purchaser and broker, if
any.
6.14 Opinion. On the Closing Date, the Company will deliver to
the Purchaser an opinion acceptable to the Purchaser from the Company's external
legal counsel. The Company will provide, at the Company's expense, such other
legal opinions in the future as are deemed reasonably necessary by the Purchaser
(and acceptable to the Purchaser) in connection with the conversion of the Note
and exercise of the Option and the Warrant.
6.15 Margin Stock. The Company will not permit any of the
proceeds of the Note, the Warrant or the Option to be used directly or
indirectly to "purchase" or "carry" "margin stock" or to repay indebtedness
incurred to "purchase" or "carry" "margin stock" within the respective meanings
of each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect.
22
6.16 Foreign Security. No later than 20 days following the
Closing Date hereunder, the Company shall cause Epixtar Phillippines, each other
applicable Subsidiary of the Company and any other third party requested by the
Purchaser to enter into such security and guaranty documentation governed by
laws of the Phillippines as is requested by the Purchaser, with such
documentation to be in form and substance satisfactory to the Purchaser. No
later than 60 days following a request by the Purchaser, the Company shall cause
each Subsidiary organized in a jurisdiction outside of the United States
(collectively, the "Foreign Subsidiaries"), other than an Immaterial Subsidiary,
to execute such guaranty and security documentation governed by the jurisdiction
of organization of such Subsidiary (the "Foreign Documentation") as the
Purchaser deems necessary or desirable. All such Foreign Documentation shall be
in form and substance satisfactory to the Purchaser, and the Company agrees to
cause the respective Foreign Subsidiary to deliver all such other documentation
as is requested by the Purchaser in connection with the execution and delivery
of such Foreign Documentation (including, without limitation, an opinion of
counsel satisfactory to the Purchaser). Furthermore, it is hereby agreed that
the Company shall not permit any equity interests of any Foreign Subsidiary (or
any parent thereof) to be transferred to any person or other entity that is not
a Credit Party until such time as the Foreign Subsidiaries have become party to
the Foreign Documentation required to be entered into pursuant to this Section
6.16. The Company shall reimburse the Purchaser for any and all legal fees and
other expenses incurred by the Purchaser in connection with the preparation,
execution, negotiation and delivery of the Foreign Documentation.
6.17 Financing Right of First Refusal.
(a) The Company hereby grants to the Purchaser a right of
first refusal to provide any Bridge Loan Indebtedness to be issued by the
Company and/or any of its Subsidiaries, subject to the following terms and
conditions. From and after the date hereof, prior to the incurrence of any
Bridge Loan Indebtedness, the Company and/or any Subsidiary of the Company, as
the case may be, shall notify the Purchaser of its intention to enter into such
Bridge Loan Indebtedness. In connection therewith, the Company and/or the
applicable Subsidiary thereof shall submit a fully executed term sheet (a
"Proposed Term Sheet") to the Purchaser setting forth the terms, conditions and
pricing of any such Bridge Loan Indebtedness (such financing to be negotiated on
"arm's length" terms and the terms thereof to be negotiated in good faith)
proposed to be entered into by the Company and/or such Subsidiary. The Purchaser
shall have the right, but not the obligation, to deliver its own proposed term
sheet (the "Purchaser Term Sheet") setting forth the terms and conditions upon
which the Purchaser would be willing to provide such Bridge Loan Indebtedness to
the Company and/or such Subsidiary. The Purchaser Term Sheet shall contain terms
no less favorable to the Company and/or such Subsidiary than those outlined in
Proposed Term Sheet. The Purchaser shall deliver such Purchaser Term Sheet
within five business days of receipt of each such Proposed Term Sheet. If the
provisions of the Purchaser Term Sheet are at least as favorable to the Company
and/or such Subsidiary, as the case may be, as the provisions of the Proposed
Term Sheet, the Company and/or such Subsidiary shall enter into and consummate
the Bridge Loan Indebtedness transaction outlined in the Purchaser Term Sheet.
(b) The Company will not, and will not permit its Subsidiaries
to, agree, directly or indirectly, to any restriction with any person or entity
which limits the ability of the Purchaser to consummate a Bridge Loan
Indebtedness transaction or any other additional financing with the Company or
any of its Subsidiaries.
23
6.18 Issuance of Voxx Common Stock. Notwithstanding anything
to the contrary contained in this Agreement, EPXR and Voxx hereby agree that it
shall not (or shall not permit, as the case may be) any share of Voxx Common
Stock (or any securities convertible or exercisable into shares of Voxx Common
Stock) to be issued, or agree to issue any share of Voxx Common Stock (or any
securities convertible or exercisable into shares of Voxx Common Stock), in any
case, at a price less than or equal to $2.23 per share.
7. Covenants of the Purchaser. The Purchaser covenants and agrees with
the Company as follows:
7.1 Confidentiality. The Purchaser agrees that it will not
disclose, and will not include in any public announcement, the name of the
Company, unless expressly agreed to by the Company or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.
7.2 Non-Public Information. The Purchaser agrees not to effect
any sales in the shares of the Company's Common Stock while in possession of
material, non-public information regarding the Company if such sales would
violate applicable securities law.
7.3 Limitation on Acquisition of Common Stock of the Company.
Notwithstanding anything to the contrary contained in this Agreement, any
Ancillary Agreement or any document, instrument or agreement entered into in
connection with any other transactions between the Purchaser and the Company,
the Purchaser may not acquire stock in the Company (including, without
limitation, pursuant to a contract to purchase, by exercising an option or
warrant, by converting any other security or instrument, by acquiring or
exercising any other right to acquire, shares of stock or other security
convertible into shares of stock in the Company, or otherwise, and such
contracts, options, warrants, conversion or other rights shall not be
enforceable or exercisable) to the extent such stock acquisition would cause any
interest (including any original issue discount) payable by the Company to
Laurus not to qualify as "portfolio interest" within the meaning of Section
881(c)(2) of the Code, by reason of Section 881(c)(3) of the Code, taking into
account the constructive ownership rules under Section 871(h)(3)(C) of the Code
(the "Stock Acquisition Limitation"). The Stock Acquisition Limitation shall
automatically become null and void without any notice to the Company upon the
earlier to occur of either (a) the Company's delivery to the Purchaser of a
Notice of Redemption (as defined in the Note) or (b) the existence of an Event
of Default (as defined in the Note) at a time when the average closing price of
the Company's common stock as reported by Bloomberg, L.P. on the Principal
Market for the immediately preceding five trading days is greater than or equal
to 150% of the Fixed Conversion Price (as defined in the Note).
8. Covenants of the Company and Purchaser Regarding Indemnification.
8.1 Company Indemnification. The Company agrees to indemnify,
hold harmless, reimburse and defend the Purchaser, each of the Purchaser's
officers, directors, agents, affiliates, control persons, and principal
shareholders, against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Purchaser which results, arises out of or is based upon: (i) any
misrepresentation by the Company or any of its Subsidiaries or breach of any
warranty by the Company or any of its Subsidiaries in this Agreement, any
Related Agreement or in any exhibits or schedules attached hereto or thereto; or
(ii) any breach or default in performance by Company or any of its Subsidiaries
of any covenant or undertaking to be performed by Company or any of its
Subsidiaries hereunder, under any other Related Agreement or any other agreement
entered into by the Company and/or any of its Subsidiaries and Purchaser
relating hereto or thereto.
24
8.2 Purchaser's Indemnification. Purchaser agrees to
indemnify, hold harmless, reimburse and defend the Company and each of the
Company's officers, directors, agents, affiliates, control persons and principal
shareholders, at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company which results, arises out of or is based
upon: (i) any misrepresentation by Purchaser or breach of any warranty by
Purchaser in this Agreement or in any exhibits or schedules attached hereto or
any Related Agreement; or (ii) any breach or default in performance by Purchaser
of any covenant or undertaking to be performed by Purchaser hereunder, or any
other agreement entered into by the Company and Purchaser relating hereto.
9. Conversion of Convertible Note.
9.1 Mechanics of Conversion.
(a) Provided the Purchaser has notified the Company of the
Purchaser's intention to sell the Note Shares and the Note Shares are
included in an effective registration statement or are otherwise exempt
from registration when sold: (i) upon the conversion of the Note or
part thereof, the Company shall, at its own cost and expense, take all
necessary action (including the issuance of an opinion of counsel
reasonably acceptable to the Purchaser following a request by the
Purchaser) to assure that the Company's transfer agent shall issue
shares of the Company's Common Stock in the name of the Purchaser (or
its nominee) or such other persons as designated by the Purchaser in
accordance with Section 9.1(b) hereof and in such denominations to be
specified representing the number of Note Shares issuable upon such
conversion; and (ii) the Company warrants that no instructions other
than these instructions have been or will be given to the transfer
agent of the Company's Common Stock and that after the Effectiveness
Date (as defined in the respective Registration Rights Agreement) the
Note Shares issued will be freely transferable subject to the
prospectus delivery requirements of the Securities Act and the
provisions of this Agreement, and will not contain a legend restricting
the resale or transferability of the Note Shares.
(b) Purchaser will give notice of its decision to exercise its
right to convert the Note or part thereof by telecopying or otherwise
delivering an executed and completed notice of the number of shares to
be converted to the Company (the "Notice of Conversion"). The Purchaser
will not be required to surrender the Note until the Purchaser receives
a credit to the account of the Purchaser's prime broker through the
DWAC system (as defined below), representing the Note Shares or until
the Note has been fully satisfied. Each date on which a Notice of
Conversion is telecopied or delivered to the Company in accordance with
the provisions hereof shall be deemed a "Conversion Date." Pursuant to
the terms of the Notice of Conversion, the Company will issue
instructions to the transfer agent accompanied by an opinion of counsel
within one (1) business day of the date of the delivery to the Company
of the Notice of Conversion and shall cause the transfer agent to
transmit the certificates representing the Conversion Shares to the
Purchaser by crediting the account of the Purchaser's prime broker with
the Depository Trust Company ("DTC") through its Deposit Withdrawal
Agent Commission ("DWAC") system within three (3) business days after
receipt by the Company of the Notice of Conversion (the "Delivery
Date").
25
(c) The Company understands that a delay in the delivery of
the Note Shares in the form required pursuant to Section 9 hereof
beyond the Delivery Date could result in economic loss to the
Purchaser. In the event that the Company fails to direct its transfer
agent to deliver the Note Shares to the Purchaser via the DWAC system
within the time frame set forth in Section 9.1(b) above and the Note
Shares are not delivered to the Purchaser by the Delivery Date, as
compensation to the Purchaser for such loss, the Company agrees to pay
late payments to the Purchaser for late issuance of the Note Shares in
the form required pursuant to Section 9 hereof upon conversion of the
Note in the amount equal to the greater of: (i) $500 per business day
after the Delivery Date; or (ii) the Purchaser's actual damages from
such delayed delivery. Notwithstanding the foregoing, the Company will
not owe the Purchaser any late payments if the delay in the delivery of
the Note Shares beyond the Delivery Date is solely out of the control
of the Company and the Company is actively trying to cure the cause of
the delay. The Company shall pay any payments incurred under this
Section in immediately available funds upon demand and, in the case of
actual damages, accompanied by reasonable documentation of the amount
of such damages. Such documentation shall show the number of shares of
Common Stock the Purchaser is forced to purchase (in an open market
transaction) which the Purchaser anticipated receiving upon such
conversion, and shall be calculated as the amount by which (A) the
Purchaser's total purchase price (including customary brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (B) the aggregate principal and/or interest amount of the Note,
for which such Conversion Notice was not timely honored.
Nothing contained herein or in any document referred to herein or delivered in
connection herewith shall be deemed to establish or require the payment of a
rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest or dividends required to
be paid or other charges hereunder exceed the maximum amount permitted by such
law, any payments in excess of such maximum shall be credited against amounts
owed by the Company to a Purchaser and thus refunded to the Company.
10. Registration Rights.
10.1 Registration Rights Granted. The Company hereby grants
registration rights to the Purchaser pursuant to a Registration Rights Agreement
dated as of even date herewith between the Company and the Purchaser.
26
10.2 Offering Restrictions. Except as previously disclosed in
the SEC Reports or in the Exchange Act Filings, or stock or stock options
granted to employees or directors of the Company (these exceptions hereinafter
referred to as the "Excepted Issuances"), neither the Company nor any of its
Subsidiaries will issue any securities with a continuously variable/floating
conversion feature which are or could be (by conversion or registration)
free-trading securities (i.e. common stock subject to a registration statement)
prior to the full repayment or conversion of the Note (together with all accrued
and unpaid interest and fees related thereto) (the "Exclusion Period"), provided
that a securities with a variable/floating rate conversion feature that is not
less than the Fixed Conversion Price (as defined in the Note) shall be
permitted.
11. Miscellaneous.
11.1 Governing Law. THIS AGREEMENT AND EACH RELATED 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. EXCEPT AS SET FORTH
BELOW IN THIS SECTION 11.1, ANY AND ALL DISPUTES, CONTROVERSIES AND CLAIMS THAT
THE COMPANY OR ANY OF ITS SUBSIDIARIES MAY ASSERT AGAINST THE PURCHASER ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED AGREEMENT SHALL BE
DETERMINED EXCLUSIVELY BY ARBITRATION (EACH SUCH ARBITRATION, AN "ARBITRATION")
IN NEW YORK CITY BEFORE A PANEL OF THREE NEUTRAL ARBITRATORS AGREED TO BY THE
PURCHASER AND THE COMPANY (COLLECTIVELY, THE "ARBITRATORS") IN ACCORDANCE WITH
AND PURSUANT TO THE THEN EXISTING COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. THE COMPANY (ON ITS BEHALF AND ON BEHALF OF ITS
SUBSIDIARIES) HEREBY IRREVOCABLY WAIVES ANY RIGHT TO ASSERT SUCH CLAIMS IN ANY
OTHER FORUM. THE ARBITRATORS SHALL HAVE THE POWER IN THEIR DISCRETION TO AWARD
SPECIFIC PERFORMANCE OR INJUNCTIVE RELIEF (BUT SHALL NOT HAVE THE POWER TO
RENDER ANY INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES) AND REASONABLE ATTORNEYS'
FEES AND EXPENSES TO ANY PARTY IN ANY ARBITRATION. THE ARBITRATORS MAY NOT
CHANGE, MODIFY OR ALTER ANY EXPRESS CONDITION, TERM OR PROVISION OF THIS
AGREEMENT OR OF ANY RELATED AGREEMENT NOR SHALL THEY HAVE THE POWER TO RENDER
ANY AWARD AGAINST THE PURCHASER THAT WOULD HAVE SUCH EFFECT. EACH ARBITRATION
AWARD SHALL BE FINAL AND BINDING UPON THE PARTIES SUBJECT THERETO AND JUDGMENT
MAY BE ENTERED THEREON IN ANY COURT OF COMPETENT JURISDICTION. THE SERVICE OF
ANY NOTICE, PROCESS, MOTION OR OTHER DOCUMENT IN CONNECTION WITH AN ARBITRATION
OR FOR THE ENFORCEMENT OF ANY ARBITRATION AWARD MAY BE MADE IN THE SAME MANNER
AS COMMUNICATIONS MAY BE GIVEN UNDER SECTION 11.8 HEREOF. NOTWITHSTANDING THE
FOREGOING, THE PROVISIONS OF THIS SECTION 11.1 NOR ANY OTHER PROVISION CONTAINED
IN THIS AGREEMENT OR IN ANY RELATED AGREEMENT SHALL LIMIT IN ANY MANNER
WHATSOEVER THE PURCHASER'S RIGHT TO COMMENCE AN ACTION AGAINST OR IN CONNECTION
WITH THE COMPANY, ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE PROPERTIES IN ANY
COURT OF COMPETENT JURISDICTION OR OTHERWISE UTILIZE JUDICIAL PROCESS IN
CONNECTION WITH OR ARISING OUT OF THE PURCHASER'S RIGHTS AND REMEDIES UNDER THIS
AGREEMENT AND/OR ANY RELATED AGREEMENT OR OTHERWISE (ANY SUCH ACTION, A "COURT
ACTION"). COURT ACTIONS MAY BE BROUGHT BY THE PURCHASER IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION AND THE COMPANY (ON ITS BEHALF AND ON BEHALF OF
ITS SUBSIDIARIES) IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH STATE AND
FEDERAL COURTS AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE OF INCONVENIENT FORUM
OR LACK OF PERSONAL JURISDICTION IN SUCH FORUM OR RIGHT OF REMOVAL OR RIGHT TO
JURY TRIAL UNDER ANY APPLICABLE LAW OR DECISION OR OTHERWISE. SERVICE OF ANY
NOTICE, PROCESS, MOTION OR OTHER DOCUMENT IN CONNECTION WITH A COURT ACTION MAY
BE MADE IN THE SAME MANNER AS COMMUNICATIONS MAY BE GIVEN UNDER SECTION 11.8. IN
ADDITION, THE PURCHASER MAY SERVE PROCESS IN ANY OTHER MANNER PERMITTED UNDER
APPLICABLE LAW. IN THE EVENT THAT ANY PROVISION OF THIS AGREEMENT OR ANY RELATED
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 THIS AGREEMENT OR ANY RELATED
AGREEMENT.
27
11.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby to the extent provided
therein. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
11.3 Successors. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, heirs, executors and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of the Securities from time to time, other than the holders of Common
Stock which has been sold by the Purchaser pursuant to Rule 144 or an effective
registration statement. Purchaser may not assign its rights hereunder to a
competitor of the Company.
11.4 Entire Agreement. This Agreement, the Related Agreements,
the exhibits and schedules hereto and thereto and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
28
11.5 Severability. In case any provision of the Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
11.6 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and the Purchaser.
(b) The obligations of the Company and the rights of the
Purchaser under this Agreement may be waived only with the written
consent of the Purchaser.
(c) The obligations of the Purchaser and the rights of the
Company under this Agreement may be waived only with the written
consent of the Company.
11.7 Delays or Omissions. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement or the
Related Agreements, shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement or the Related
Agreements, by law or otherwise afforded to any party, shall be cumulative and
not alternative.
11.8 Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified;
(b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day;
(c) three (3) business days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid; or
(d) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written
verification of receipt.
All communications shall be sent as follows:
If to the Company, to: Epixtar Corp.
Voxx Corporation
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
Facsimile: 000-000-0000
29
with a copy to:
Xxxxxxx XxXxxxxxxx, Esq.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
If to the Purchaser, to: Laurus Master Fund, Ltd.
c/o M&C Corporate Services Limited
X.X. Xxx 000 XX
Xxxxxx Xxxxx
Xxxxxx Xxxx
South Church Street
Grand Cayman, Cayman Islands
Facsimile: 000-000-0000
with a copy to:
Xxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
or at such other address as the Company or the Purchaser may designate by
written notice to the other parties hereto given in accordance herewith.
11.9 Attorneys' Fees. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including, without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
11.10 Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
11.11 Facsimile Signatures; Counterparts. This Agreement may
be executed by facsimile signatures and in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
11.12 Broker's Fees. Except as set forth on Schedule 11.12
hereof, each party hereto represents and warrants that no agent, broker,
investment banker, person or firm acting on behalf of or under the authority of
such party hereto is or will be entitled to any broker's or finder's fee or any
other commission directly or indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify each other
party for any claims, losses or expenses incurred by such other party as a
result of the representation in this Section 11.12 being untrue.
30
11.13 Construction. Each party acknowledges that its legal
counsel participated in the preparation of this Agreement and the Related
Agreements and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Agreement to favor any party against the other.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
31
IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER:
EPIXTAR CORP. LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Xxxxxxxx By: /s/ Authorized Officer
-------------------------- ---------------------------
Name: Xxxxx Xxxxxxxx Name:
-------------------------- ---------------------------
Title: CEO Title:
-------------------------- ---------------------------
VOXX CORPORATION
By: /s/ Xxxxx Xxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxx
--------------------------
Title: CEO
--------------------------
32
EXHIBIT A
FORM OF CONVERTIBLE NOTE
X-0
XXXXXXX X-0
FORM OF OPTION
B-1
EXHIBIT B-2
FORM OF WARRANT
X-0
XXXXXXX X
XXXX XX XXXXXX XXXXXXXXX
X-0
