EXHIBIT 4.14.1
EPIXTAR CORP.
SECURITIES PURCHASE AGREEMENT
JULY 15, 2005
TABLE OF CONTENTS
PAGE
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1. Agreement to Sell and Purchase.........................................................................1
2. Fees...................................................................................................1
3. Closing, Delivery and Payment; Certain Closing Conditions..............................................1
3.1 Closing.......................................................................................1
3.2 Delivery......................................................................................1
4. Representations and Warranties of the Company..........................................................2
4.1 Organization, Good Standing and Qualification.................................................2
4.2 Subsidiaries..................................................................................2
4.3 Capitalization; Voting Rights.................................................................2
4.4 Authorization; Binding Obligations............................................................3
4.5 Liabilities...................................................................................3
4.6 Agreements; Action............................................................................3
4.7 Obligations to Related Parties................................................................4
4.8 Changes.......................................................................................4
4.9 Title to Properties and Assets; Liens, Etc....................................................5
4.10 Intellectual Property.........................................................................6
4.11 Compliance with Other Instruments.............................................................6
4.12 Litigation....................................................................................6
4.13 Tax Returns and Payments......................................................................6
4.14 Employees.....................................................................................7
4.15 Registration Rights and Voting Rights.........................................................7
4.16 Compliance with Laws; Permits.................................................................7
4.17 Environmental and Safety Laws.................................................................7
4.18 Valid Offering................................................................................8
4.19 Full Disclosure...............................................................................8
4.20 Insurance.....................................................................................8
4.21 SEC Reports...................................................................................8
4.22 Listing.......................................................................................8
4.23 No Integrated Offering........................................................................8
4.24 Stop Transfer.................................................................................9
4.25 Dilution......................................................................................9
4.26 Patriot Act...................................................................................9
5. Representations and Warranties of the Purchaser........................................................9
5.1 No Shorting...................................................................................9
5.2 Requisite Power and Authority.................................................................9
5.3 Investment Representations...................................................................10
5.4 Purchaser Bears Economic Risk................................................................10
5.5 Acquisition for Own Account..................................................................10
5.6 Purchaser Can Protect Its Interest...........................................................10
5.7 Accredited Investor..........................................................................10
5.8 Legends......................................................................................10
6. Covenants of the Company..............................................................................11
6.1 Stop-Orders..................................................................................11
6.2 Listing......................................................................................11
6.3 Market Regulations...........................................................................11
6.4 Reporting Requirements.......................................................................11
6.5 Use of Funds.................................................................................12
6.6 Access to Facilities.........................................................................12
6.7 Taxes........................................................................................12
6.8 Insurance....................................................................................13
6.9 Intellectual Property........................................................................13
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6.10 Properties...................................................................................13
6.11 Confidentiality..............................................................................14
6.12 Required Approvals...........................................................................14
6.13 Reissuance of Securities.....................................................................14
6.14 Opinion......................................................................................15
6.15 Margin Stock.................................................................................15
7. Covenants of the Purchaser............................................................................15
7.1 Confidentiality..............................................................................15
7.2 Non-Public Information.......................................................................15
7.3 Limitation on Acquisition of Common Stock of the Company.....................................15
8. Covenants of the Company and Purchaser Regarding Indemnification......................................15
8.1 Company Indemnification......................................................................15
8.2 Purchaser's Indemnification..................................................................16
9. Conversion of Convertible Note........................................................................16
9.1 Mechanics of Conversion......................................................................16
10. Registration Rights...................................................................................17
10.1 Registration Rights Granted..................................................................17
10.2 Offering Restrictions........................................................................17
11. Miscellaneous.........................................................................................17
11.1 Governing Law................................................................................17
11.2 Survival.....................................................................................18
11.3 Successors...................................................................................18
11.4 Entire Agreement.............................................................................18
11.5 Severability.................................................................................18
11.6 Amendment and Waiver.........................................................................18
11.7 Delays or Omissions..........................................................................18
11.8 Notices......................................................................................19
11.9 Titles and Subtitles.........................................................................20
11.10 Facsimile Signatures; Counterparts...........................................................20
11.11 Broker's Fees................................................................................20
11.12 Construction.................................................................................20
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LIST OF EXHIBITS
Form of Convertible Term Note Exhibit A
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of July 15, 2005 by and between EPIXTAR CORP., a Florida
corporation (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 Six Million Two
Hundred Thousand Dollars ($6,200,000) (as amended, modified, restated or
supplemented from time to time, the "Note"), which Note is convertible into
shares of the Company's common stock, $0.001 par value per share ("Common
Stock"), at the fixed conversion price set forth in the Note ("Fixed Conversion
Price");
WHEREAS, Purchaser desires to purchase the Note on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Note 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:
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
$6,200,000 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) subject to certain
extensions pursuant to the terms thereof. Collectively, the Note and Common
Stock issuable in payment of the Note and upon conversion of the Note are
referred to as the "Securities."
Fees. On the Closing Date, the Company shall reimburse the Purchaser
for its reasonable expenses (including attorney's fees) for services rendered to
the Purchaser in preparation of this Agreement and the Related Agreements (as
hereinafter defined). The expenses referred to in this Section 2 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 between the Company and Purchaser (the
"Disbursement Letter"). In addition, the Company shall pay to Laurus Capital
Management, L.L.C., the manager of the Purchaser, a closing payment in an amount
equal to four percent (4%) of the aggregate principal amount of the Note, which
such payments shall be made simultaneously with each drawdown of the Note in an
amount equal to four percent (4%) of the drawdown amount so advanced by the
Purchaser to the Company.
CLOSING, DELIVERY AND PAYMENT; CERTAIN CLOSING CONDITIONS.
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").
Delivery. Pursuant to the Funds Escrow Agreement, 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 $6,200,000 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.
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Preferred Stock. On the Closing Date, as additional consideration for
the purchase of the Note, the Company shall issue and deliver, and shall cause
certain Subsidiaries of the Company to issue and deliver, to the Purchaser 1,000
shares of Series B Preferred Stock of the Company and 1000 shares of Series A
Preferred Stock of each such Subsidiary, in each case, with a par value $0.001
per share.
Irrevocable Proxies. On the Closing Date, as additional consideration
for the purchase of the Note, the Company shall cause Trans Voice LLC, Xxxxxxx
Xxxxxxxxx and Xxxxx Xxxxxx to issue and deliver to the Purchaser an irrevocable
proxy relating to its/his rights as a shareholder of the Company.
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):
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 to be issued in connection with this Agreement, (iii) the
Registration Rights Agreement relating to the Securities dated as of the date
hereof between the Company and the Purchaser, (iv) the Reaffirmation and
Ratification Agreement 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 "Reaffirmation Agreement"), (v) the Escrow Agreement dated as
of the date hereof among the Company, the Purchaser and the escrow agent
referred to therein, and (vi) all other documents, instruments and agreements
related to this Agreement and the Note (the preceding clauses (ii) through (v),
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")
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").
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.
Capitalization; Voting Rights.
The authorized capital stock of the Company, as of the date hereof
consists of 60,000,000 shares, of which 50,000,000 are shares of 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 Series A 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 each Subsidiary of the
Company is set forth on Schedule 4.3.
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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 the
Note, or the issuance of any of the Note 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.
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.
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 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.
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 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:
as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
general principles of equity that restrict the availability of
equitable or legal remedies.
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.
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.
Agreements; Action. Except as set forth on Schedule 4.6 or as disclosed
in any Exchange Act Filings:
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.
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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.
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.
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:
for payment of salary for services rendered and for bonus payments;
reimbursement for reasonable expenses incurred on behalf of the
Company and its Subsidiaries;
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
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.
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:
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;
any resignation or termination of any officer, key employee or group
of employees of the Company or any of its Subsidiaries;
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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;
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;
any waiver by the Company or any of its Subsidiaries of a valuable
right or of a material debt owed to it;
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;
any material change in any compensation arrangement or agreement with
any employee, officer, director or stockholder of the Company or any of its
Subsidiaries;
any declaration or payment of any dividend or other distribution of
the assets of the Company or any of its Subsidiaries;
any labor organization activity related to the Company or any of its
Subsidiaries;
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;
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;
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;
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
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.
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:
those resulting from taxes which have not yet become delinquent;
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
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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Intellectual Property.
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.
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.
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.
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 and Collateral Agency Agreement dated as of April 29, 2005 among
the Purchaser and the Sands Creditors referred to therein, and acknowledged and
agreed to by the Company and certain of its Subsidiaries, 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.
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.
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:
6
that any of its returns, federal, state or other, have been or are
being audited as of the date hereof; or
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.
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.
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.
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.
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:
7
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
any petroleum products or nuclear materials.
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.
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, 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.
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.
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 March 31, 2005 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.
Listing. The 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. The Company
has not received any notice that the Common Stock will not be eligible to be
traded on the NASD OTCBB or that the Common Stock does not meet all requirements
for such trading.
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 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.
8
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.
Dilution. The Company specifically acknowledges that its obligation to
issue the shares of Common Stock upon conversion of the Note 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.
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.
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):
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.
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:
as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
as limited by general principles of equity that restrict the
availability of equitable and legal remedies.
9
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 to be purchased by it under this Agreement and the Note Shares acquired
by it upon the conversion of the Note. 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 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.
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.
Acquisition for Own Account. The Purchaser is acquiring the Note and
the Note 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.
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 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.
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.
Legends.
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. THAT SUCH REGISTRATION IS NOT
REQUIRED."
THE NOTE 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. THAT SUCH
REGISTRATION IS NOT REQUIRED."
10
COVENANTS OF THE COMPANY. THE COMPANY COVENANTS AND AGREES WITH THE
PURCHASER AS FOLLOWS:
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.
Listing.
The Company shall promptly secure the listing of the shares of 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 Common Stock shall be so
listed. The Company will maintain the listing of Common Stock on the
Principal Market, and will comply in all material respects with the
Company's reporting, filing and other obligations under the bylaws or rules
of the National Association of Securities Dealers ("NASD") and such
exchanges, as applicable.
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 Common Stock).
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.
Reporting Requirements. The Company shall 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. The Company will deliver, or cause to be delivered, to
the Purchaser each of the following, which shall be in form and detail
acceptable to the Purchaser:
As soon as available, and in any event within ninety (90) days after
the end of each fiscal year of the Company, each of the Company's and each
of its Subsidiaries' audited financial statements with a report of
independent certified public accountants of recognized standing selected by
the Company and acceptable to the Purchaser (the "Accountants"), which
annual financial statements shall be without qualification and shall
include each of the Company's and each of its Subsidiaries' balance sheet
as at the end of such fiscal year and the related statements of each of the
Company's and each of its Subsidiaries' income, retained earnings and cash
flows for the fiscal year then ended, prepared on a consolidating and
consolidated basis to include the Company, each Subsidiary of the Company
and each of their respective affiliates, all in reasonable detail and
prepared in accordance with GAAP, together with (i) if and when available,
copies of any management letters prepared by the Accountants; and (ii) a
certificate of the Company's President, Chief Executive Officer or Chief
Financial Officer stating that such financial statements have been prepared
in accordance with GAAP and whether or not such officer has knowledge of
the occurrence of any Event of Default (as defined in the Note) and, if so,
stating in reasonable detail the facts with respect thereto;
As soon as available and in any event within forty five (45) days
after the end of each fiscal quarter of the Company, an unaudited/internal
balance sheet and statements of income, retained earnings and cash flows of
the Company and each of its Subsidiaries as at the end of and for such
quarter and for the year to date period then ended, prepared on a
consolidating and consolidated basis to include all the Company, each
Subsidiary of the Company and each of their respective affiliates, in
reasonable detail and stating in comparative form the figures for the
corresponding date and periods in the previous year, all prepared in
accordance with GAAP, subject to year-end adjustments and accompanied by a
certificate of the Company's President, Chief Executive Officer or Chief
Financial Officer, stating (i) that such financial statements have been
prepared in accordance with GAAP, subject to year-end audit adjustments,
and (ii) whether or not such officer has knowledge of the occurrence of any
Event of Default (as defined in the Note) not theretofore reported and
remedied and, if so, stating in reasonable detail the facts with respect
thereto;
11
As soon as available and in any event within fifteen (15) days after
the end of each calendar month, an unaudited/internal balance sheet and
statements of income, retained earnings and cash flows of each of the
Company and its Subsidiaries as at the end of and for such month and for
the year to date period then ended, prepared on a consolidating and
consolidated basis to include the Company, each Subsidiary of the Company
and each of their respective affiliates, in reasonable detail and stating
in comparative form the figures for the corresponding date and periods in
the previous year, all prepared in accordance with GAAP, subject to
year-end adjustments and accompanied by a certificate of the Company's
President, Chief Executive Officer or Chief Financial Officer, stating (i)
that such financial statements have been prepared in accordance with GAAP,
subject to year-end audit adjustments, and (ii) whether or not such officer
has knowledge of the occurrence of any Event of Default (as defined in the
Note) not theretofore reported and remedied and, if so, stating in
reasonable detail the facts with respect thereto;
Promptly after (i) the filing thereof, copies of the Company's most
recent registration statements and annual, quarterly, monthly or other
regular reports which the Company files with the Securities and Exchange
Commission (the "SEC"), and (ii) the issuance thereof, copies of such
financial statements, reports and proxy statements as the Company shall
send to its stockholders; and
No later than Tuesday of each week, updated weekly cash flow
projections of the Company and its Subsidiaries for the six month period
commencing on Monday of such week which shall show projected cash receipts
and cash disbursements on a weekly basis with such projections to be
prepared on a reasonable basis and in good faith and to be based upon
assumptions believed by the Company to be reasonable at the time furnished.
The Company shall deliver, or cause the applicable Subsidiary of the
Company to deliver, such other information as the Purchaser shall
reasonably request.
Use of Funds. The Company agrees that it will use the proceeds of the
sale of the Note (x) for general working capital purposes and (y) for the
development and acquisition of certain contact centers in the Philippines.
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), at any and all times, at the Company's expense, to:
visit and inspect any of the properties of the Company or any of its
Subsidiaries;
examine the corporate and financial records of the Company or any of
its Subsidiaries and make copies thereof or extracts therefrom; and
discuss the affairs, finances and accounts of the Company or any of
its Subsidiaries with the directors, officers, employees and independent
accountants of the Company or any of its Subsidiaries.
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.
12
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.
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.
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 to have a Material Adverse Effect.
13
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.
Required Approvals. The Company, without the prior written consent of
the Purchaser, shall not, and shall not permit any of its Subsidiaries to:
(i) directly or indirectly declare or pay any dividends, (ii) issue
any preferred stock (other than the issuance of preferred stock to the
Purchaser) or (iii) redeem any of its preferred stock or other equity
interests;
liquidate, dissolve or effect a reorganization;
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 the Company'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;
alter or change the scope of the business of the Company and its
Subsidiaries taken as a whole;
(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 the Company's assets) whether secured or unsecured other than (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 the Company 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);
create or acquire any Subsidiary after the date hereof;
make, or permit any of its Subsidiaries to make, any investments in,
or any loans or advances to, any Subsidiary of the Company; and
enter into any contract or agreement that is material to its business
or operations or involves an amount equal to or greater than $100,000.
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:
the holder thereof is permitted to dispose of such Securities pursuant
to Rule 144(k) under the Securities Act; or
14
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.
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.
Margin Stock. The Company will not permit any of the proceeds of the
Note 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.
Covenants of the Purchaser. The Purchaser covenants and agrees with the
Company as follows:
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.
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.
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).
COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION.
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.
15
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.
CONVERSION OF CONVERTIBLE NOTE.
Mechanics of Conversion.
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.
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").
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.
16
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.
REGISTRATION RIGHTS.
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.
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.
MISCELLANEOUS.
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.
17
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.
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.
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.
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.
Amendment and Waiver.
This Agreement may be amended or modified only upon the written
consent of the Company and the Purchaser.
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.
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.
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.
18
Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given:
upon personal delivery to the party to be notified;
when sent by confirmed facsimile if sent during normal business hours
of the recipient, if not, then on the next business day;
three (3) business days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or
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.
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
Facsimile: 000-000-0000
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
and:
19
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx X. Xxxxxxxx, Esq.
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.
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.
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.
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.
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]
20
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: By:
---------------------------------------------------- ---------------------------------------------------
Name: Name:
-------------------------------------------------- --------------------------------------------------
Title: Title:
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21
EXHIBIT A
FORM OF CONVERTIBLE NOTE
22
