OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
XXXXXX XXXXXX HOLDING CORPORATION
10 % CONVERTIBLE PREFERRED STOCK - SERIES K
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the
sale of certain Securities designated as 10% Convertible Preferred Stock
- Series K (hereinafter the "Preferred Shares"), which are convertible
into shares of common stock (hereinafter the "Common Shares") of Xxxxxx
Xxxxxx Holding Corporation, (the "Corporation").
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
A. Buyer hereby subscribes for $100,000 Convertible
Preferred Shares (the "Preferred Stock") convertible into Common Shares
of the Seller in accordance with the terms set forth in the Certificate
of Designation attached as Exhibit A to this Agreement, at $100,000 per
Share for an aggregate purchase price of $ (
Dollars) payable in United States Dollars;
B. Buyer shall pay the purchase price by delivering same day funds
in United States Dollars to the Escrow Agent set forth in Section 4
herein, to be delivered to the order of Seller upon delivery of the
Shares set forth in Section 5 herein by the Seller to said Escrow Agent;
and
C. This Agreement has been executed in connection with an offering
(the "Offering") by Seller of Preferred Shares convertible into Common
Shares pursuant to Regulation S ("Regulation S") as promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
2. BUYER'S REPRESENTATIONS
Buyer represents and warrants to Seller as follows:
A. Buyer is not a "U.S. Person" as defined by Rule 902 of
Regulation S, (See Exhibit B) was not organized under the laws of any
U.S. jurisdiction, and was not formed for the purpose of investing in
securities not registered under the Securities Act;
B. Buyer is not a "distributor" as defined by Rule 902 of
Regulation S (See "Exhibit B");
C. At the time the purchase order for this transaction was
originated, the Buyer was physically outside of the United States and
that such purchase order was not the result of directed selling efforts
by the Corporation in the United States;
D. No offer to purchase the Preferred Shares was made by the Buyer
while in the United States;
E. Buyer is purchasing the Preferred Shares for its own account
for investment purposes and not with a view towards distribution.
F. All subsequent offers and sales of the Preferred Shares will be
made (I) outside the United States in compliance with Rule 903 or Rule
904 of Regulation S, (ii) pursuant to registration of the Shares under
the Securities Act, or (iii) pursuant to an exemption from such
registration. Buyer understands the conditions of the exemption from
registration afforded by Section 4(1) of the Securities Act and
acknowledges that there can be no assurance that it will be able to rely
on such exemption. In any case Buyer will not resell the Shares to U.S.
Persons or within the United States until after the end of the forty (40)
day period commencing on the Closing Date of the Offering (as defined
below in Section 4) (the "Restricted Period");
G. Buyer agrees that, at all times after the execution of this
Agreement by Buyer and prior to the expiration of the Restricted Period,
it will keep its purchase of the Preferred Shares confidential, except as
required by law and except as necessary in the ordinary course of Buyer's
business;
H. Buyer understands that the Preferred Shares are being offered
and sold to it in reliance on specific provisions of United States
Federal and State securities laws and that Seller is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Buyer set forth herein in order to
determine the applicability of such provisions. Accordingly, Buyer
agrees to notify Seller of any events which would cause the
representations and warranties of Buyer to be untrue or breached at any
time after the execution of this Agreement by Buyer and prior to the
expiration of the Restricted Period;
I. This Agreement has been duly authorized, validly executed, and
delivered on behalf of Buyer and is a valid and binding agreement
enforceable in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally;
J. Any offering documents received by Buyer include statements to
the effect that the Preferred Shares have not been registered under the
Securities Act and may not be offered or sold in the United States or to
U.S. Persons during the Restricted Period.
K. Buyer, in making the decision to purchase the Preferred Shares
subscribed for, has relied upon independent investigations made by it and
has not relied on any information or representations made by third
parties. Notwithstanding, the Buyer has relied upon the accurateness and
completeness of the companies public filings and press releases; and
L. Buyer has not taken any action that would cause Seller to be
subject to any claim for commission or other fee or remuneration by any
broker, finder, or other person and Buyer indemnifies Seller against any
such claim caused by the actions of Buyer or any of its employees or
agents.
M. Buyer is an "Accredited Investor" as defined in Rule 502 of
Regulation D.
N. Buyer understands that the Corporation makes no representation
regarding the fulfillment on the future of any reporting requirements
under the Exchange Act (as hereinafter defined), or the dissemination to
the public of any current information concerning the Corporation. Other
than as described herein, Buyer understands and hereby acknowledges that
except for the registration rights described herein, the Corporation is
under no obligation to register the Preferred Shares or the Conversion
Shares under the Securities Act.
O. Buyer acknowledges receipt and review of the Disclosure
Materials and the exhibits hereto, and hereby represents that Buyer has
been furnished by the Corporation during the course of this transaction
with all information regarding the Corporation which the Buyer has
requested or desired to know; that all documents which could be
reasonably provided have been made available for inspection and review;
and that such information and documents have, in Buyer's opinion,
afforded Buyer with all of the same information that would be provided in
a registration statement filed under the Securities Act; that Buyer has
been afforded the opportunity to ask questions of and receive answers
form duly authorized officers or other representatives of the Corporation
concerning the terms and conditions of the Offering, and any additional
information which Buyer has requested.
P. Buyer acknowledges that it has directly or through Seller's
agent, __________ negotiated the terms of the Preferred Shares with the
Corporation.
Q. Buyer agrees to hold the Corporation and its directors,
officers and controlling persons and their respective heirs,
representatives, successors and assigns harmless and to indemnify them
against all liabilities, costs and expenses incurred by them as a result
of any misrepresentation made by Buyer contained herein or any sale or
distribution by the Buyer in violation of applicable federal and state
securities laws.
R. Seller did not attempt to, and did not induce Buyer to purchase
the subject Preferred Shares.
3. SELLER'S REPRESENTATIONS
Seller represents and warrants to Buyer as follows:
A. Seller is a "Domestic Issuer" and a "Reporting Issuer," as such
terms are defined by Rule 902 of Regulation S. Seller has registered its
common stock pursuant to Section 12(b) or (g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") is in full compliance with
all reporting requirements of either Section 13(a) or 15(d) of the
Exchange Act, and Seller's common stock trades on the NASDAQ Stock Market
under the symbol CRTM;
B. Seller has furnished Buyer with copies of Seller's most recent
Annual Report, on Form 10-K filed with the Securities and Exchange
Commission and all forms 10-Q and 8-K filed thereafter;
C. Seller has not offered the Preferred Shares to any person in
the United States, any identifiable group of U.S. citizens abroad, or to
any U.S. Person;
D. At the time the buy order was originated, Seller and/or its
agents reasonably believed Buyer was outside the United States and was
not a U.S. Person;
E. Seller and/or its agents reasonably believe that the sale of
the Preferred Shares has not been prearranged with a Buyer in the United
States;
F. Seller has not conducted any "directed selling efforts" with
respect to the Preferred Shares nor has Seller conducted any general
solicitation (as that term is used in Regulation D under the Securities
Act) with respect to the Preferred Shares;
G. The Preferred Shares when issued and delivered will be duly and
validly authorized and issued, fully-paid and nonassessable and will not
subject the holders thereof to personal liability by reason of being such
holders. There are no preemptive rights of any shareholder of Seller
with respect to the Preferred Shares;
H. This Agreement has been duly authorized, validly executed and
delivered on behalf of Seller and is a valid and binding agreement in
accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;
I. The execution and delivery of this Agreement and the
consummation of the issuance of the Shares and the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by Seller of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or bylaws of
Seller, or any indenture, mortgage, deed of trust or other material
agreement or instrument to which Seller is a part of by which it or any
of its properties or assets are bound, or any existing applicable decree,
judgment or order of any court, Federal or State regulatory body,
administrative agency or other governmental body having jurisdiction over
Seller or any of its properties or assets;
J. Seller is not aware of any authorization, approval or consent
of any governmental body which is legally required for the issuance and
sale of the Preferred Shares as contemplated by this Agreement;
K. Within two full business days of receipt by the Corporation of
a properly executed request for conversion accompanied by the Preferred
Shares to be converted, Seller will deliver to its transfer agent its
directive and authorization to execute the conversion and to issue to
Buyer the common stock shares so authorized. The Seller acknowledges
that a delay in issuance of its authorization and directive for the
conversion could result in economic loss to the Buyer. Therefore, as
compensation to the Buyer for such loss, in the event that the Seller
fails to deliver said authorization and directive within three full
business days, the Seller agrees to pay liquidated damages to the Buyer
for late issuance of said authorization and directive in the amount of
$500 per day for each day of delay after three days, up to a maximum of
$10,000 per conversion request. Nothing herein shall create a liability
to the Seller for actions or delays of the transfer agent once the
authorization and directive have been delivered to it by the Seller. Any
liquidated damages due Buyer will be paid within seven (7) days of
issuance of the shares resulting from the conversion.
L. Upon conversion of the Preferred Shares, Seller will issue one
or more certificates representing the Common Shares in the name of the
Buyer without restrictive legend, except as may otherwise be required by
applicable law, rule or regulation, and in DTC eligible form, in such
denominations to be specified by the Buyer prior to conversion provided
Buyer represents to Seller that resale of the Shares will be made only in
compliance with applicable securities laws. Seller further warrants that
no instructions other than these instructions, and instructions for a
"stop transfer" until the end of the Restricted Period, have been given
to the transfer agent and also warrants that the Shares shall otherwise
be freely transferable on the books and records of Seller subject to
compliance with Federal and State securities laws. Seller will notify
the transfer agent of the Closing Date or Closing Dates of the Offering
and of the date of expiration of the Restricted Period or Periods.
Nothing in this section shall affect in any way Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of
the Shares;
M. Seller has not taken and will take no action that will affect
in any way the running of the Restricted Period or the ability of Buyer
to freely resell the Shares in accordance with applicable securities laws
and this Agreement;
N. Seller will comply with all applicable securities with respect
to the sale of the Shares, including but not limited to the filing of all
reports required to be filed in connection therewith the Securities and
Exchange Commission or any stock exchange of the NASDAQ stock market or
any other regulatory authority; and
O. Seller nor agents of the Seller have purchased any common
shares of the Seller in open market transactions on the NASDAQ stock
market for the 30 days immediately preceding the date of this agreement.
4. ESCROW AGENT; WIRING INSTRUCTIONS; DELIVERY INSTRUCTIONS; AGENT
A. ___________________ (the "Escrow Agent") will act as Escrow
Agent for this transaction;
B. The Escrow agent will collect funds in the amount as set forth
in Section 1 herein from the Buyer and Preferred Share Certificates from
the Seller as set forth in Section 5 herein;
C. The Escrow Agent shall release funds to Seller via wire
transfer pursuant to Seller's instructions and release the certificate(s)
to Buyer via private overnight mail service pursuant to Buyer's
instructions in Section 4 herein, once all material has been received.
D. Seller's Escrow Agent's wiring instructions are:
For Credit to the Account of:
Reference:
E. Buyer's instructions for delivery of the certificate are as
follows:
F. _________________ shall serve as agent (the "Agent") in the
transaction contemplated by this Agreement. Agent's fee is solely the
responsibility of the Seller and Seller expressly agrees to pay Agent
said fee as such is agreed upon between the Seller and the Agent.
Neither the Seller nor the Agent has any recourse of any kind whatsoever
against the Buyer for any monies owed the Agent by the Seller or for any
monies paid by the Seller to the Agent. Seller expressly indemnifies
Buyer against any monies owed the Agent.
G. Seller agrees to compensate Escrow Agent in the amount of one-
quarter of one percent (.0025) of gross funds raised. Seller agrees to
pay Escrow Agent directly from the proceeds of the sale of the Preferred
Shares.
5. CONDITIONS TO CLOSING
A. Buyer understands that Seller's obligation to sell the
Preferred Shares is conditioned upon delivery into escrow by Buyer of the
amount set forth in Section 1 herein.
B. Seller understands that Buyer's obligation to purchase the
Preferred Shares is conditioned upon delivery of certificate(s)
representing the Preferred Shares as described in Section 5 herein, and
provision of an opinion of counsel as provided in Subsection D (ii)
herein below.
C. For this transaction to close, Buyer must:
(i) Wire funds to the Escrow Agent, in the amount of US
dollars ($________________) no later than 72 hours after
receipt by Escrow Agent of the executed Subscription
Agreement.
(ii) Deliver a signed Offshore Securities Subscription
Agreement; and,
(iii) Deliver a signed closing instructions/hold harmless
letter addressed to the Escrow Agent, attached hereto as
Exhibit C.
D. For this transaction to close, Seller must:
(I) Deliver to the Escrow Agent the Certificate of
Designation.
(ii) Deliver to the Escrow Agent an opinion letter from
Seller's counsel stating that, among other things, (a) the
Company is duly incorporated and validly existing; (b)
this Agreement, the issuance of the Preferred Shares, and
the issuance of the Common Stock upon conversion of the
Preferred Shares up to the number of shares of common
stock currently authorized in the Seller's Certificate of
Incorporation, have been duly approved by all required
corporate action, and that all such securities, up to the
number of shares of common stock currently authorized in
the Seller's Certificate of Incorporation, upon due
issuance, shall be validly issued and outstanding, fully
paid and nonassessable, and in each case, having the
rights, preferences and privileges set forth in the
Certificate of Incorporation and the respective
Certificates of Designations; (c) this Agreement is a
valid and binding obligation of the Company, enforceable
in accordance with its terms, except as enforceability of
any indemnification provisions may be limited by
principles of public policy, and subject to laws of
general application relating to bankruptcy, insolvency and
the relief of debtors and rules of laws governing specific
performance and other equitable remedies;
(iii) Deliver to the Escrow Agent a signed Offshore
Securities Subscription Agreement which shall be signed
after execution of such Subscription Agreement by Buyer;
and
(iv) Deliver to the Escrow Agent a signed closing
instructions/hold harmless letter addressed to the Escrow
Agent, attached hereto as Exhibit D.
6. CLOSING
The Preferred Shares certificate shall be delivered to Buyer and the
funds therefore shall be delivered to Seller on or before ______, 1997
(the "Closing Date") or at such time to be mutually agreed.
7. GOVERNING LAW; INTERPRETATION AND ARBITRATION
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Texas. Facsimile signatures of this
Agreement shall be binding on all parties hereto. All terms used herein
that are defined in Regulation S under the Securities Act shall have the
meanings set forth therein.
The Buyer shall have the right, in lieu of litigation, to resolve
any dispute arising hereunder before a panel of three arbitrators
selected pursuant to and in accordance with the rules of the American
Arbitration Association. The Arbitration shall be held in Dallas, Texas.
The prevailing party shall be entitled to an award of reasonable
attorneys' fees and expenses.
8. ENTIRE AGREEMENT; AMENDMENT
This Agreement, the Certificate of Designation, 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 thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein. Except as expressly
provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
9. NOTICES; ETC.
Any notice, demand or request required or permitted to be given by
either the Seller or the Buyer pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally
or by facsimile, with a hard copy to follow by two day courier addressed
to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying
the other in writing.
10. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each
of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
11. SEVERABILITY
In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, enforceable
or void, this Agreement shall continue in full force and effect without
said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any
party.
12. TITLES AND SUBTITLES
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above, as confirmed by signatory below. Facsimile signatures of
this agreement shall be binding on all parties hereto.
Official Signatory of Buyer: Official Signatory of Seller:
____________________________ XXXXXX XXXXXX HOLDING CORPORATION
____________________________ 00000 Xxxxx Xxxxxx
____________________________ Xxxxxx, Xxxxx 00000
____________________________
By: _______________________ By:___________________________
Title: _______________________ Authorized Signatory
By Order of the Board
