THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT") AND RULE 504 OF REGULATION D PROMULGATED
THEREUNDER. THIS SECURITIES PURCHASE AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO
SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION OR ANY AGENCY
REVIEWED OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DISCLOSURE STATEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ACCORDINGLY, INVESTORS
MUST RELY UPON THEIR OWN EXAMINATION OF THIS OFFERING AND THE COMPANY IN MAKING
AN INVESTMENT DECISION. THIS OFFERING IS MADE IN RELIANCE ON AN EXEMPTION FROM
REGISTRATION WITH THE COMMISSION PROVIDED BY SECTION 3(b) OF THE 1933 ACT, AND
RULE 504 OF REGULATION D PROMULGATED THEREUNDER BY THE COMMISSION.
SECURITIES PURCHASE AGREEMENT
VOXCOM HOLDINGS, INC.
THIS AGREEMENT is made this 18th day of June, 1998, between VOXCOM
HOLDINGS, INC., NASDAQ Symbol "VXCH" (the "Company"), a Nevada corporation, with
its principal office at 0000 Xxxxxxx Xxxx, Xxxxxx Xxxxx-Xxxx, Xxxxxx, XX 00000,
and CARMAX INVESTMENTS LTD. (the "Purchaser"), with its principal office at c/o
Thomson Kernaghan & Co., Ltd., 000 Xxx Xx., Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0.
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement:
"Closing Date" means the date agreed to by the parties for the delivery of
the Debenture to the Purchaser against a wire transfer of the funds to the
Company.
"Closing" means the completion of the purchase and sale of the Common Stock
on the Closing Date.
"Common Stock" means the Common Stock of the Company $0.0001 par value.
"Conversion Shares" means the shares of Common Stock issuable upon the
conversion of the Debentures in accordance with their terms, subject to the
provisions hereof.
"Debenture(s)" means the 5% Convertible Debenture issued by the Company,
which which will be convertible into shares of Common, upon the terms and
subject to the conditions of the Debentures and which will be substantially in
the form annexed hereto as Exhibit 1.
2. Authorization and Sale of the Debenture.
2.1 Authorization. Subject to the terms and conditions of this Agreement,
the Company has authorized the execution and delivery of one or more Debentures
in the aggregate principal amount of Four Hundred Thousand Dollars ($400,000;
the "Purchase Price").
2.2 Agreement to Execute and Deliver the Agreement and the Debenture. The
Purchaser will pay such sum to the Company, in reliance upon the representations
and warranties of the Company contained in this Agreement, and upon the terms
and conditions hereinafter set forth.
2.3 Time and Place of Closing. The Closing shall be held at the offices of
Xxxxxxx & Xxxxxx, Esqs., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Escrow
Agent") on the Closing Date.
2.4 Payment and Delivery. Upon the execution of this Agreement, the
following shall occur:
(a) Purchaser shall remit by wire transfer to the Escrow Agent, pursuant to
instructions provided below, on or before the Closing Date, the Purchase Price
to be held in escrow, subject to the provisions of this Agreement and the escrow
instructions set forth in Exhibit 2 hereto (the "Escrow Instructions"), the
terms of which are incorporated herein as if set forth herein in full.
(b) The Company shall deliver or cause to be delivered to the Escrow Agent
or its designee one or more duly executed Debentures in the aggregate principal
amount of the Purchase Price to be held in escrow, subject to the provisions of
this Agreement and the Escrow Instructions. The Company shall also cause to be
delivered to
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the Escrow Agent the legal opinion required pursuant to the terms of Section
3.17 hereof to be executed and delivered to the Purchaser (the "Opinion").
(c) The Purchaser shall wire the Purchase Price to the Escrow Agent, as
follows:
The Bank of New York
ABA #000000000
For the Account of
Xxxxxxx & Prager, Esq. - Master Escrow Account
Account #[To be provided by the Escrow Agent to Purchaser]
Reference: Voxcom Holdings, Inc. Debenture Transaction
Section 2.5. Closing. At the Closing, as contemplated by the Escrow
Instructions, the Purchase Price will disbursed as provided therein and the
Escrow Agent shall release the Debentures and the Opinion to the Purchaser.
Section 3. General Representations and Warranties of the Company. At the
Closing, the Company will represent and warrant to, and covenant with, the
Purchaser that the following are true and correct as of the Closing Date (and
the release of the Debentures to the Purchaser shall constitute the Company's
making such representations and warranties):
3.1 Organization; Qualification. The Company is a corporation duly
organized and validly existing under the laws of the State of Nevada and is in
good standing under such laws. The Company has all requisite corporate power and
authority to own, lease and operate its properties and assets, and to carry on
its business as presently conducted. The Company is qualified to do business as
a foreign corporation in each jurisdiction in which the ownership of its
property or the nature of its business requires such qualification, except where
failure to so qualify would not have a material adverse effect on the Company.
3.2 Capitalization. The authorized capital stock of the Company consists of
(i) 25,000,000 shares of Common Stock, $0.0001 par value per share, of which
approximately 6,550,771 had been issued as of June 15, 1998 and (ii) 50,000,000
shares of Preferred Stock, $0.0001 par value per share, including (x) 80,000
shares of Series A, having an issue price of $800,000, all of which are
outstanding and (y) 350,000 shares of Series B, none of which are outstanding as
of the date hereof or will be outstanding as of the Closing Date. All issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. The Company has sufficient authorized and
unissued shares of Common Stock as may be reasonably necessary to effect the
conversion of the Debentures. The Conversion Shares have been duly authorized
and, when issued upon conversion of, or as interest on, the Debentures in
accordance with its terms will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability by
reason of being such holder.
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3.3 Authorization. The Company has all requisite corporate right, power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and shareholders necessary for (i) the authorization,
execution, delivery and performance of this Agreement by the Company, (ii) the
authorization, sale, issuance and delivery of the Debentures and the issuance of
the Conversion Shares by the Company and (iii) the performance of the Company's
obligations hereunder and under the Debentures has been taken. This Agreement
has been duly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy as they may apply to the indemnification provisions set forth in Section
7.2 of this Agreement. Upon issuance and delivery pursuant to this Agreement,
the Debentures will be validly issued, fully paid and nonassessable and will be
free of any liens or encumbrances except for those imposed by or on behalf of
the Purchaser, its creditors or agents.
3.4 No Conflict. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit, under, any
provision of the Articles of Incorporation, and any amendments thereto, Bylaws,
Stockholders Agreements and any amendments thereto of the Company or any
material mortgage, indenture, lease or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree statute, law, ordinance,
rule or regulation applicable to the Company, its properties or assets.
3.5 Eligibility of Company Under Rule 504(a). The Company is not subject to
the reporting requirements of Sections 13 or 15(d) of the Securities Exchange
Act, is not an investment company or a developmental stage company that either
has no specific business plan or purpose or has indicated that its business plan
is to engage in a merger or acquisition with an unidentified company or
companies, or other entity or person.
3.6 Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally) that has not been
publicly disclosed by the Company or disclosed in writing to the Purchaser which
could reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or in the earnings, business affairs, properties or
assets of the Company, or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations pursuant
to this Agreement.
3.7 Absence of Undisclosed Liabilities. The Company has no material
liabilities or obligations, absolute or contingent (individually or in the
aggregate), except as
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set forth in the Company's Form 10SB filed with the SEC on May 15, 1998 (the
"Reports") or as incurred in the ordinary course of business after the date of
the Reports.
3.8 Governmental Consent, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Common Stock, or the
consummation of any other transaction contemplated hereby, except the filing
with the Commission of Form D. A copy of such filed Form D will be promptly sent
to Purchaser's attorney.
3.9 Material Contracts. Except as set forth in the Reports, the agreements
to which the Company is a party described in the Reports are valid agreements,
in full force and effect, the Company is not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements, and, to the Company's knowledge, the other contracting party or
parties thereto are not in material breach or material default (with or without
notice or lapse of time, or both) under any of such agreements.
3.10 Litigation. Except as disclosed in the Reports, there is no action,
proceeding or investigation pending, or to the Company's knowledge threatened,
against the Company which might result, either individually or in the aggregate,
in any material adverse change in the business, prospects, conditions, affairs
or operations of the Company. The Company is not a party to 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 currently pending or which the Company currently
intends to initiate.
3.11 Title to Assets. Except as set forth in the Reports, the Company has
good and marketable title to all properties and material assets described in the
Reports as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than such as are not material to
the business of the Company.
3.12 Subsidiaries. Except as disclosed in the Reports and the financial
statements, the Company does not presently own or control, directly or
indirectly, any interest in any other corporation, partnership, association or
other business entity.
3.13 Required Governmental Permits. The Company is in possession of and
operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the conduct of its business, all of which are
valid and in full force and effect.
3.14 Other Outstanding Securities. Except as disclosed in the Reports,
there are no other material outstanding debt or equity securities presently
convertible into Common Stock.
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3.15 No Other Offerings. Except for sales of Common Stock under SEC Rule
504 not exceeding, in the aggregate, gross sales prices of $600,000 the Company
has not sold any securities within the twelve month period prior to the date the
Common Stock was first offered in reliance on any exemption under Section 3(b)
of the 1933 Act or in violation of Section 5(a) of the 1933 Act.
3.16 Legal Opinion. Purchaser shall, upon the Closing, receive an opinion
letter from counsel to the Company, and the Company represents that it will
obtain such an opinion from counsel substantially to the effect that:
(i) To the knowledge of such counsel, the Company is duly incorporated
and validly existing under the laws and jurisdiction of its incorporation.
The Company and/or its subsidiaries are duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions where the
Company and/or its subsidiaries owns or leases properties, maintains
employees or conducts business, except for jurisdictions in which the
failure to so qualify would not have a material adverse effect on the
Company, and has all requisite corporate power and authority to own its
properties and conduct its business.
(ii) To the knowledge of such counsel, and based upon representations
made to the Company, except as disclosed in the Reports, there is no
action, proceeding or investigation pending, threatened against the Company
which might reasonably result, either individually or in the aggregate, in
any material adverse change in the business, conditions, affairs or
operations of the Company.
(iii) To the knowledge of such counsel, and based upon representations
made to the Company, except as disclosed in the Reports, the Company is not
a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality.
(iv) To the knowledge of such counsel, and based upon representations
made to the Company, except as disclosed in the Reports, there is no
material action, suit, proceeding or investigation by the Company currently
pending or which the Company currently intends to initiate.
(v) To the knowledge of such counsel, all issued and outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable.
(vi) The Debentures have been duly authorized, executed and delivered
by the Company and constitute the Company's binding and enforceable
obligations in accordance with their terms.
-6-
(vii) This Agreement and the issuance of the Conversion Shares have
been duly approved by all required corporate action and that, upon payment
of the consideration by the Purchaser in the manner specified in this
Agreement, all such securities, upon delivery, shall be validly issued and
outstanding, fully paid and nonassessable.
(viii) The authorized capital stock of the Company consists of (x)
25,000,000 shares of Common Stock, $0.0001 par value per share, of which
approximately 6,550,771 had been issued as of the Closing Date, and (y)
50,000,000 shares of Preferred Stock, $0.0001 par value per share,
including (1) 80,000 shares of Series A, having an issue price of $800,000,
all of which are outstanding and (2) 350,000 shares of Series B, none of
which are outstanding as of the Closing Date.
(ix) The Company has the requisite corporate power and authority to
enter into this Agreement and to sell and deliver the Debentures and the
Conversion Shares described in this Agreement or in the Debentures; this
Agreement has been duly and validly authorized by all necessary corporate
action by the Company to the knowledge of such counsel, no approval of any
governmental or other body is required for the execution and delivery of
this Agreement by the Company or the consummation of the transactions
contemplated thereby; this Agreement has been duly and validly executed and
delivered by and on behalf of the Company, as is a valid and binding
agreement of the Company, enforceable in accordance with its terms, except
as enforceability may be limited by general equitable principles,
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other laws affecting creditors rights generally.
(x) To the knowledge of such counsel, and based upon representations
made by the Company, the execution, delivery and performance of the
agreements by the Company and the performance of its obligations thereunder
do not and will not constitute a breach or violation of any of the terms
and provisions of, or constitute a default under or conflict with or
violate any provision of (i) the Company's Articles of Incorporation or
By-Laws, each as currently in effect, (ii) any indenture, mortgage, deed of
trust, agreement or other instrument to which the Company is a party or by
which it or any of its property is bound, (iii) any applicable statute or
regulation or as other, or (iv) any judgment, decree or order or any court
or governmental body having jurisdiction over the Company or any of its
property.
3.17 Dilution. The number of shares of Common Stock issuable upon
conversion of the Debentures may increase substantially in certain
circumstances, including, but not necessarily limited to, the circumstance
wherein the trading price of the Common Stock declines prior to the conversion
of the Debentures. The Company's executive officers and directors have studied
and fully understand the nature of the securities being sold hereby and
recognize that they have a potential dilutive effect. The board of directors of
the
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Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges
that its obligation to issue the Conversion Shares upon conversion of the
Debentures 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.
Section 4. Representations, Warranties and Covenants of the Purchaser. The
Purchaser represents and warrants to, and covenants with, the Company that the
following are true and correct as of the date hereof and as of the Closing Date.
4.1 Authority. The Purchaser's signatory has all right, power, authority
and capacity to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser and will constitute the legal, valid and binding
obligations of the Purchaser, enforceable in accordance with its terms, subject
to laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies, and to limitations of public policy as they may apply
to the indemnification provisions set forth in Section 7.2 of this Agreement.
4.2 Investment Experience. Purchaser is an "accredited investor" as defined
in Rule 501(a) under the Securities Act. Purchaser is aware of the Company's
business affairs and financial condition and has had access to and has acquired
sufficient information about the Company, including the Reports to reach an
informed and knowledgeable decision to acquire the Debentures and the Conversion
Shares. Purchaser has such business and financial experience as is required to
give it the capacity to protect its own interests in connection with such
purchase.
4.3 Investment Intent. Without limiting its ability to resell the Common
Stock pursuant to an effective registration statement, Purchaser represents that
it is purchasing the Debentures and the Conversion Shares for its own account as
principal for investment purposes. Purchaser understands that its acquisition of
the Debentures and the Conversion Shares has not been registered under the
Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of Purchaser's investment intent as
expressed herein. Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchaser or otherwise acquire or take a pledge of) the Debentures and the
Conversion Shares except in compliance with the Securities Act and any
applicable state securities laws, and the rules and regulations promulgated
thereunder.
4.4 No Legal, Tax or Investment Advice. Purchaser understands that nothing
in this Agreement or any other materials presented to Purchaser in connection
with
-8-
the purchase and sale of the Debentures and the Conversion Shares constitutes
legal, tax or investment advice. Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with such purchase.
4.5 Purchaser Review. Purchaser hereby represents and warrants that the
Purchaser has carefully examined the Reports, and the financial statements
contained therein. The Purchaser acknowledges that the Company has made
available to the Purchaser all documents and information that it has requested
relating to the Company and has provided answers to all of its questions
concerning the Company and the Common Stock. Nothing stated in the previous two
sentences, however, shall be deemed to affect the representations and warranties
of the Company contained in this Agreement.
4.6 Certain Risks. The Purchaser recognizes that the purchase of the
Debentures and the Conversion Shares involves a high degree of risk in that:
(i) an investment in the Company is highly speculative and only
investors who can afford the loss of their entire investment should
consider investing in the Company and the Debentures and the Conversion
Shares;
(ii) a Purchaser may not be able to liquidate its investment;
(iii) transferability of the Debentures and the Conversion Shares is
extremely limited;
(iv) in the event of disposition, Purchaser could sustain the loss of
its entire investment;
(v) no return on investment, whether through distributions,
appreciation, transferability or otherwise, and no performance by, through
or of the Company, has been promised, assured, represented or warranted by
the Company, or by any director, officer, employee, agent or representative
thereof;
(vii) the Common Stock is presently quoted and traded on the
NASDAQ/OTC Bulletin Board;
(viii) the price of the Common Stock has been arbitrarily determined
by the Company and bears no relationship to the book value of the Company
or other recognized criteria of value;
(ix) although this Offering is being made pursuant to Rule 504(b)(1)
of Regulation D of the 1933 Act, purchasers of the Common Stock, may have
certain restrictions placed upon the resale of their securities by a
particular state. Certificates or instruments representing the securities
issued hereunder will not bear a restricted
-9-
legend in that it is the Company's belief that purchasers will be permitted
to resell the securities without registration under the Act pursuant to
Rule 502(d).
4.8 No Registration, Review or Approval. The Purchaser acknowledges and
understand that the limited private offering and sale of the Debentures and the
Conversion Shares pursuant to this Agreement has not been reviewed or approved
by the SEC or by any state securities commission, authority or agency, and is
issued pursuant to an exemption under the 1933 Act and has not been registered
under the securities or "blue sky" laws, rules or regulations of any state. The
Purchaser acknowledges, understands and agrees that the Debentures and the
Conversion Shares are being offered and sold hereunder pursuant to (i) a private
placement exemption to the registration provisions of the Act pursuant to
Section 3(b) of such Act and Regulation D promulgated under such Act, and (ii) a
similar exemption to the registration provisions of applicable state securities
laws.
4.9 Additional Information. In addition to this Agreement, the Company
will, upon request, provide prospective investors with additional information
concerning the Company, its business and this Offering. No additional sales
material has been authorized to be used in connection with the offer and sale of
the Common Stock described herein.
4.10 Purchaser's Representations. No principals, officers, directors or
shareholders of Purchaser have ever been the subject of a criminal indictment,
injunctive action or other disciplinary action brought by a governmental agency
or is currently under investigation by any governmental agency or body.
4.11 Short Sales. So long as the Company is in compliance in all material
respects with its obligations to the Buyer under this Agreement and the other
Transaction Agreements, and so long as the Buyer owns any of the Debentures, the
Buyer will not engage in any open market Short Sales of the Common Stock, other
than upon conversions of the Debentures. As used herein, "Short Sale" has the
meaning provided in Rule 3b-3 under the 1934 Act.
Section 5. Conditions to the Purchaser's Obligation to Purchase. The
Company understands that the Purchaser's obligation to purchase the Debentures
is conditioned upon:
(a) Acceptance by Purchaser of this Agreement for the purchase of the
Debentures, as evidenced by the execution of this Agreement by its
authorized officers;
(b) Delivery of the Debentures into Escrow;
(c) Delivery of the Opinion, as contemplated by this Agreement.
Section 6. Conditions to Company's Obligation to Sell. Purchaser
understands that the Company's obligation to sell the Debentures is conditioned
upon:
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(a) The receipt and acceptance by the Company of this Agreement for
the Debentures as evidenced by execution of this Subscription Agreement by
the Company;
(b) Delivery into escrow by Purchaser of good funds as payment in full
for the Purchase Price of the Debentures.
Section 7. Compliance with the Securities Act.
7.1 Underwriter. The Company understands that the Purchaser disclaims being
an "underwriter" (as such term is defined under the Securities Act and the rules
and regulations promulgated thereunder (an "Underwriter")).
7.2 Indemnification. Each of the Company and the Purchaser agrees to
indemnify the other and to hold the other harmless from and against any and all
losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with the
breach by the indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
Section 8. Legal Fees and Expenses. Except for the portion of the Escrow
Agent's fees specified in the Escrow Instructions, each of the parties shall pay
its own fees and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with this Agreement
and the transactions contemplated hereby.
Section 9. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first class
registered or certified airmail, postage prepaid, and shall be deemed given when
so mailed:
(a) if to the Company, to
VOXCOM HOLDINGS, INC.
0000 Xxxxxxx Xxxx, Xxxxxx Xxxxx-Xxxx
Xxxxxx, XX 00000
Attn: Secretary
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Glast, Xxxxxxxx & Xxxxxx
00000 Xxxx Xx., Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
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Telecopier No.: (000) 000-0000
or to such other person at such other place as the Company shall designate to
the Purchaser in writing;
(b) if to the Purchaser, to:
CARMAX INVESTMENTS LTD.
c/o Thomson Kernaghan & Co., Ltd.
000 Xxx Xx.
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attn: Xxxx Xxxxxxxxx
Telephone No.: (416) 860 - 6130
Telecopier No.: (416) 367 - 8055
with a copy to:
Xxxxxxx & Prager
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
or at such other address or addresses as may have been furnished to the Company
in writing; or
(c) if to any transferee or transferees of a Purchaser, at such
address or addresses as shall have been furnished to the Company at the
time of the transfer or transfers, or at such other address or addresses as
may have been furnished by such transferee or transferees to the Company in
writing.
Section 10. Use of Proceeds. The net proceeds to the Company from the sale
of the Debentures offered hereby by the Company are estimated to be $400,000,
assuming the sale of the maximum Debentures, before deducting offering expenses
and fees as contemplated by the Escrow Instructions. It is presently anticipated
that the estimated net proceeds will be used by the Company to reimburse Xxxxx
Xxxxxx, directly or indirectly, for costs incurred by the Company in connection
with the Federal Trade Commission litigation and advanced by him. Any funds
remaining thereafter shall be applied to working capital, including rent,
utilities and other general corporate purposes. Pending use of the net proceeds,
the funds will be invested in short-term interest-bearing securities or their
equivalent.
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Section 11. Transfer Agent Instructions.
11.1. Instructions. Promptly following the delivery by the Purchaser of the
Purchase Price in accordance with this Agreement, the Company will irrevocably
instruct its transfer agent to issue Common Stock from time to time upon
conversion of the Debentures in such amounts as specified from time to time by
the Company to the transfer agent, registered in the name of the Purchaser or
its nominee and in such denominations to be specified by the Purchaser in
connection with each conversion of the Debentures. The Company warrants that no
instruction other than such instructions referred to in this Section 11 will be
given by the Company to the transfer agent and that the Conversion Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and applicable law. Nothing in this
Section 11 shall affect in any way the Purchaser's obligations and agreement to
comply with all applicable securities laws upon resale of the Debentures and the
Conversion Shares. .
11.2 Conversion Exercise. (i) The Company will permit the Purchaser to
exercise its right to convert the Debentures by telecopying or delivering an
executed and completed Notice of Conversion to the Company with a copy to the
transfer agent and delivering, within five (5) business days thereafter, the
original Debentures being converted to the Company by express courier, .
(ii) The term "Conversion Date" means, with respect to any conversion
elected by the holder of the Debentures, the date specified in the Notice of
Conversion, provided the copy of the Notice of Conversion is telecopied to or
otherwise delivered to the Company in accordance with the provisions hereof so
that is received by the Company on or before such specified date.
(iii) The Company shall, at its expense, take all actions and use all means
necessary and diligent to cause its transfer agent to transmit the certificates
representing the Conversion Shares issuable upon conversion of any Debentures
(together with any portion of the Debentures not being so converted) to the
Purchaser via express courier, by electronic transfer or otherwise, within three
(3) business days (such third business day, the "Delivery Date") after (A) the
business day on which the Company has received both of the Notice of Conversion
(by facsimile or other delivery) and the original Debentures being converted
(and if the same are not delivered to the Company on the same date, the date of
delivery of the second of such items) or (B) the date an interest payment on the
Debentures, which the Company has elected to pay by the issuance of Common
Stock, as contemplated by the Debentures, was due.
11.3 Delay in Delivery. The Company understands that a delay in the
issuance of the Conversion Shares beyond the Delivery Date could result in
economic loss to the Purchaser. As compensation to the Purchaser for such loss,
the Company agrees to pay late payments to the Purchaser for late issuance of
Conversion Shares in accordance with
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the following schedule (where "No. Business Days Late" is defined as the number
of business days beyond two (2) business days from the Delivery Date):
Late Payment For Each $10,000
of Principal of Debentures
No. Business Days Late Amount Being Converted
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each Business
Day Late beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Purchaser's right to
pursue actual damages for the Company's failure to issue and deliver the Common
Stock to the Purchaser. Furthermore, in addition to any other remedies which may
be available to the Purchaser, in the event that the Company fails for any
reason to effect delivery of such shares of Common Stock within two (2) business
days after the Delivery Date, the Purchaser will be entitled to revoke the
relevant Notice of Conversion by delivering a notice to such effect to the
Company whereupon the Company and the Purchaser shall each be restored to their
respective positions immediately prior to delivery of such Notice of Conversion.
11.4 Buy In. If, by the relevant Delivery Date, the Company fails for any
reason to deliver the Conversion Shares to be issued upon conversion of a
Debenture and after such Delivery Date, the holder of the Debenture being
converted (a "Converting Holder") purchases, in an open market transaction or
otherwise, shares of Common Stock (the "Covering Shares") in order to make
delivery in satisfaction of a sale of Common Stock by the Converting Holder (the
"Sold Shares"), which delivery such Converting Holder anticipated to make using
the Conversion Shares to be issued upon such conversion (a "Buy- In"), the
Company shall pay to the Converting Holder, in addition to all other amounts
contemplated in other provisions of this Agreement or the Debentures, and not in
lieu thereof, the Buy-In Adjustment Amount (as defined below). The "Buy-In
Adjustment Amount" is the amount equal to the excess, if any, of (x) the
Converting Holder's total purchase price (including brokerage commissions, if
any) for the Covering Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Converting Holder
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from the sale of the Sold Shares. The Company shall pay the Buy-In Adjustment
Amount to the Company in immediately available funds immediately upon demand by
the Converting Holder. By way of illustration and not in limitation of the
foregoing, if the Converting Holder purchases shares of Common Stock having a
total purchase price (including brokerage commissions) of $11,000 to cover a
Buy-In with respect to shares of Common Stock it sold for net proceeds of
$10,000, the Buy-In Adjustment Amount which Company will be required to pay to
the Converting Holder will be $1,000.
11.5 DTC. In lieu of delivering physical certificates representing the
Common Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of the Purchaser and its compliance with the
provisions contained in this paragraph, the Company shall use its best efforts
to cause its transfer agent to electronically transmit the Common Stock issuable
upon conversion to the Purchaser by crediting the account of Purchaser's Prime
Broker with DTC through its Deposit Withdrawal Agent Commission system.
11.6 Transfer Agent Contact. The Company will authorize its transfer agent
to give information relating to the Company directly to the Purchaser or the
Purchaser's representatives upon the request of the Purchaser or any such
representative. The Company will provide the Purchaser with a copy of the
authorization so given to the transfer agent.
Section 12. Miscellaneous.
12.1 Listing. The Company will use its best efforts to maintain the listing
of its Common Stock on the NASDAQ/OTC Bulletin Board or the NASDAQ/SmallCap
Market, National Market System, American Stock Exchange or New York Stock
Exchange.
12.2 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement or any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
12.3 Amendments. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and by Purchaser.
12.4 Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
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12.5 Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
12.6 Governing Law/Jurisdiction. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York for contracts
to be wholly performed in such state and without giving effect to the principles
thereof regarding the conflict of laws. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions. To the extent determined by such court, the
Company shall reimburse the Purchaser for any reasonable legal fees and
disbursements incurred by the Purchaser in enforcement of or protection of any
of its rights under this Agreement.
12.7 Counterparts/Facsimile. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party. In lieu of the original, a facsimile transmission
or copy of the original shall be as effective and enforceable as the original.
12.8 Publicity. The Purchaser shall not issue any press releases or
otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the Company,
except as may be required by applicable law or regulation.
12.9 Survival. The representations and warranties in this Agreement shall
survive Closing.
[Balance of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized representatives the day and year first above
written.
VOXCOM HOLDINGS, INC.
By: Xxxxxx X. XxXxxxxx
----------------------------
Officer
CARMAX INVESTMENTS LTD..
By: Xxxx Xxxxxxxxx
----------------------------
Officer
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