Exhibit 4.12.2
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement") made as of the date set forth
on the signature page hereof among Epixtar Corp., a Florida corporation having a
place of business at 00000 Xxxxxxxx Xxxx., Xxxxx 000, Xxxxx, Xxxxxxx 00000
("Epixtar"), Voxx Corporation, a Florida corporation and a wholly-owned
subsidiary of the Company having a place of business at 00000 Xxxxxxxx Xxxx.,
Xxxxx 000, Xxxxx, Xxxxxxx 00000 ("Voxx"; Voxx and Epixtar are individually and
collectively referred to herein as the "Company"), and the undersigned (the
"Subscriber").
W I T N E S S E T H:
WHEREAS, the Company desires to sell up to an aggregate of one hundred
twenty (120) units (the "Units"), with each Unit consisting of: (i) one (1)
$100,000 Joint 5% Unsecured Subordinated Convertible Promissory Note due May
2007 (collectively, the "Notes"); (ii) the right to receive in the future, as
described in the Notes, Common Stock Purchase Warrants of Epixtar (collectively,
the "Epixtar Warrants"), and/or (iii) the right to receive in the future, as
described in the Notes, Common Stock Purchase Warrants of Voxx (collectively,
the "Voxx Warrants" and together with the Notes, the Epixtar Warrants, the
shares of common stock, par value $.001 per share (the "Epixtar Common Stock"),
of Epixtar underlying the Epixtar Warrants (the "Epixtar Warrant Shares"), and
the shares of common stock, par value $.001 (the "Voxx Common Stock"), of Voxx
underlying the Voxx Warrants (the "Voxx Warrant Shares" and together with the
Epixtar Warrant Shares, the "Warrant Shares"), the "Unit Securities");
WHEREAS, the Company has the option, in its sole discretion, to sell up
to an additional eighteen (18) Units to cover over-subscriptions, if any; and
WHEREAS, in addition to the 138 Units, the Company shall have the right
to issue additional Units to the holders of the Company's 8% Convertible
Promissory Notes due 2005; and
WHEREAS, the Company is offering (the "Offering") the Units to a
limited number of "accredited investors" (as that term is defined by Rule 501(a)
of Regulation D ("Regulation D") of the Securities Act of 1933, as amended (the
"Act")); and
WHEREAS, the Subscriber desires to purchase the number of Units set
forth on the signature page hereof on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the promises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
ARTICLE I.
SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY SUBSCRIBER
1.1. Subject to the terms and conditions hereinafter set forth
(including Section 1.18 hereof), Subscriber hereby subscribes for and agrees to
purchase from the Company, and the Company agrees to sell to Subscriber, the
number of Units as is set forth upon the signature page hereof against payment
made by personal or business check, or money order made payable to "American
Stock Transfer & Trust Company" (the "Escrow Agent"), F/B/O Epixtar Corp. and
Voxx Corporation, at the address set forth in Section 3.1, contemporaneously
with the execution and delivery of this Agreement. Subscriber may also pay by
wire transfer of immediately available funds to:
X.X. Xxxxxx Xxxxx
00 Xxxxx Xxxxxx
Xxx Xxxx, XX
A/C # 323-212069
ABA # 021 000 021
American Stock Transfer & Trust Company
As Agent for EPIXTAR CORP. and VOXX CORPORATION
The principal amount of the Notes (in the form attached hereto) to be issued to
the Subscriber in connection with its purchase of Units will be delivered by the
Company to Subscriber within 10 days following the applicable Closing (as
defined in Section 3.1) relating to the purchase and sale of Units by
Subscriber.
1.2. The Subscriber recognizes that the purchase of the Units involves
a high degree of risk including, but not limited to, the following: (i) an
investment in the Company is highly speculative, and only investors who can
afford the loss of their entire investment should consider investing in the
Company and the Units; (ii) the Subscriber may not be able to liquidate his, her
or its investment; (iii) transferability of the Unit Securities is extremely
limited; and (iv) in the event of a disposition of the Unit Securities, the
Subscriber could sustain the loss of his, her or its entire investment.
1.3. The Subscriber represents that the Subscriber is an "accredited
investor", as indicated by the Subscriber's responses to the questions contained
in ARTICLE VII hereof. If the Subscriber is a natural person, the Subscriber has
reached the age of majority in the state or other jurisdiction in which the
Subscriber resides. In addition, the Subscriber represents that the Subscriber
has adequate means of providing for the Subscriber's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Unit Securities for an indefinite period of time, has no need for
liquidity in such investment and, at the present time, could afford a complete
loss of such investment.
1.4. The Subscriber hereby acknowledges and represents that (i) the
Subscriber has prior investment experience, including investment in securities
which are non-listed, unregistered and/or not traded on the Nasdaq National or
SmallCap Market, a national stock exchange or on the National Association of
Securities Dealers, Inc. (the "NASD") automated quotation system for actively
traded stocks ("Nasdaq"), or the Subscriber has employed the services of an
investment advisor, attorney and/or accountant to read all of the documents
furnished or made available by the Company to the Subscriber and to all other
prospective purchasers of Units and to evaluate the merits and risks of such an
investment on the Subscriber's behalf; (ii) the Subscriber recognizes the highly
speculative nature of this investment; and (iii) the Subscriber is able to bear
the economic risk which the Subscriber hereby assumes.
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1.5. The Subscriber hereby acknowledges that it has been furnished
with, or has had an opportunity to acquire and carefully review, (i) Epixtar's
Annual Report on Form 10-KSB for the year ended December 31, 2003, as amended
(the "10-KSB"), (ii) Epixtar's Quarterly Report on Form 10-Q, for the periods
ended March 31, 2004 and June 30, 2004 (collectively, the "10-Qs"), (iii)
Epixtar's Registration Statement on Form S-1 filed with the United States
Securities and Exchange Commission (the "SEC" or the "Commission") on June 18,
2004 (the "S-1" and together with the 10-KSB and the 10-Qs, the "SEC
Documents"), and (iv) the Confidential Term Sheet describing the terms of the
Offering (the "Confidential Term Sheet"). The Subscriber further represents that
the Subscriber has been furnished by the Company during the course of this
transaction with all information regarding the Company which the Subscriber,
his, her or its investment advisor, attorney and/or accountant has requested or
desired to know, has been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other representatives of the
Company concerning the terms and conditions of the Offering, and has received
any additional information which the Subscriber has requested. The SEC
Documents, this Agreement, and the Confidential Term Sheet are collectively
referred to herein as the "Offering Documents."
1.6. (a) The Subscriber has relied solely upon the information provided
by the Company in making the Subscriber's decision to invest in the Units. The
Subscriber is familiar with and understands the terms of the Offering, including
the rights to which the Subscriber is entitled under this Agreement and the
Notes (it being acknowledged that the Notes detail when and if the Epixtar
Warrants and/or the Voxx Warrants will be issued to the holders of Notes). The
Subscriber has been furnished with and has carefully read the Offering
Documents. In evaluating the suitability of an investment in the Company, the
Subscriber has not relied upon any representation or other information (whether
oral or written) from the Company, or any agent, employee or affiliate of the
Company or any other third party other than as set forth in the Offering
Documents and the results of Subscriber's own independent investigation. To the
extent necessary, the Subscriber has retained, at his/her/its sole expense, and
relied upon appropriate professional advice regarding the investment, tax and
legal merits and consequences of this Agreement and the purchase of the Units
hereunder.
(b) The Subscriber represents that no Units were offered or sold to
it by means of any form of general solicitation or general advertising, and in
connection therewith the Subscriber did not: (A) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio whether
closed circuit, or generally available; or (B) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.
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1.7. The Subscriber hereby represents that the Subscriber, either by
reason of the Subscriber's business or financial experience or the business or
financial experience of the Subscriber's professional advisors (who are
unaffiliated with, and who are not compensated by, the Company or any affiliate
or selling agent of the Company, including Maxim Group LLC (the "Placement
Agent") or any selected dealers, directly or indirectly), has the capacity to
protect the Subscriber's own interests in connection with the transaction
contemplated hereby. The Subscriber acknowledges that the Placement Agent is
acting as placement agent for the Units being offered hereby and will be
compensated by the Company for acting in such capacity. The Subscriber further
acknowledges that the Placement Agent has acted solely as agent of the Company
in connection with the offering of the Units by the Company, that the
information and data provided to the Subscriber in connection with the
transactions contemplated hereby have not been subjected to independent
verification by the Placement Agent, and that the Placement Agent makes no
representation or warranty with respect to the accuracy or completeness of such
information, data or other related disclosure material.
1.8. The Subscriber hereby acknowledges that the Offering has not been
reviewed by the SEC or any state securities regulatory authority or other
governmental body or agency, since the Offering is intended to be exempt from
the registration requirements of Section 5 of the Act pursuant to Regulation D
promulgated under the Act. The Subscriber shall not sell or otherwise transfer
the Unit Securities unless they are registered under the Act or unless an
exemption from such registration is available. The Subscriber understands that
if required by the laws or regulations or any applicable jurisdictions, the
Offering contemplated hereby will be submitted to the appropriate authorities of
such state(s) for registration of exemption therefrom.
1.9. The Subscriber understands that the Units have not been registered
under the Act by reason of a claimed exemption under the provisions of the Act
which depends, in part, upon the Subscriber's investment intention. In this
connection, the Subscriber hereby represents that the Subscriber is purchasing
the Units for the Subscriber's own account for investment purposes only and not
with a view toward the resale or distribution to others and has no contract,
undertaking, agreement or other arrangement, in existence or contemplated, to
sell, pledge, assign or otherwise transfer the Units to any other person. The
Subscriber, if an entity, also represents that it was not formed for the purpose
of purchasing the Units.
1.10. The Subscriber understands that Rule 144 promulgated under the
Act ("Rule 144") requires, among other conditions, a one-year holding period
prior to the resale (in limited amounts) of securities acquired in a non-public
offering without having to satisfy the registration requirements under the Act.
The Subscriber understands and hereby acknowledges that the Company is under no
obligation to register any of the Unit Securities under the Act or any state
securities or "blue sky" laws or to assist the Subscriber in obtaining an
exemption from various registration requirements, other than as set forth in
ARTICLE V herein. The Subscriber agrees to hold the Company and its directors,
officers, employees, controlling persons and agents (including the Placement
Agent and its managers, members, officers, directors, employees, counsel,
controlling persons and agents) and their respective heirs, representatives,
successors and assigns harmless from and to indemnify them against all
liabilities, costs and expenses incurred by them as a result of (i) any
misrepresentation made by the Subscriber contained in this Agreement (including
the Confidential Investor Questionnaire contained in ARTICLE VII herein), (ii)
any sale or distribution by the Subscriber in violation of the Act or any
applicable state securities or "blue sky" laws or (iii) any untrue statement of
a material fact made by the Subscriber and contained herein.
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1.11. The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Unit Securities substantially as
set forth below, that such Unit Securities have not been registered under the
Act or any state securities or "blue sky" laws and setting forth or referring to
the restrictions on transferability and sale thereof contained in this
Agreement. The Subscriber is aware that the Company will make a notation in its
appropriate records with respect to the restrictions on the transferability of
the Unit Securities.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
1.12. The Subscriber agrees to supply the Company, within five (5) days
after the Subscriber receives the request therefor from the Company, with such
additional information concerning the Subscriber as the Company deems necessary
or advisable.
1.13. The Subscriber hereby represents that the address of the
Subscriber furnished by Subscriber on the signature page hereof is the
Subscriber's principal residence, if Subscriber is an individual, or its
principal business address, if it is a corporation or other entity.
1.14. The Subscriber represents that the Subscriber has full power and
authority (corporate, statutory and otherwise) to execute, deliver, and perform
this Agreement and to purchase the Units. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms.
1.15. If the Subscriber is a corporation, partnership, limited
liability company, trust, employee benefit plan, individual retirement account,
Xxxxx Plan, or other entity (a) it is authorized and qualified to become an
investor in the Company and the person signing this Agreement on behalf of such
entity has been duly authorized by such entity to do so and (b) it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
1.16. The Subscriber acknowledges that if he or she is a Registered
Representative of an NASD member firm, he or she must give such firm the notice
required by the NASD Rules of Fair Practice, receipt of which must be
acknowledged by such firm in Section 7.4 below.
1.17. The Subscriber acknowledges and agrees that it shall not be
entitled to seek any remedies with respect to the Offering from any party other
than the Company.
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1.18. The Subscriber understands, acknowledges and agrees with the
Company that this subscription (the "Subscription") may be rejected, in whole or
in part, by the Company, in the sole and absolute discretion of the Company, at
any time before the applicable Closing with respect to the Units subscribed for
by the Subscriber, notwithstanding prior receipt by the Subscriber of notice of
acceptance of the Subscriber's Subscription.
1.19. The Subscriber understands, acknowledges and agrees with the
Company that, except as otherwise set forth herein, the subscription hereunder
is irrevocable by the Subscriber, that, except as required by law, the
Subscriber is not entitled to cancel, terminate or revoke this Agreement or any
agreements of the Subscriber hereunder and that this Agreement and such other
agreements shall survive the death or disability of the Subscriber and shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and permitted assigns. If the
Subscriber is more than one person, the obligations of the Subscriber hereunder
shall be joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his/her heirs, executors, administrators, successors,
legal representatives and permitted assigns.
1.20. The Subscriber understands, acknowledges and agrees with the
Company that the Offering is intended to be exempt from registration under the
Act by virtue of Section 4(2) of the Act and the provisions of Regulation D
thereunder, and/or the provisions of Regulation S which is in part dependent
upon the truth, completeness and accuracy of the statements made by the
Subscriber.
1.21. The Subscriber understands, acknowledges and agrees with the
Company that there can be no assurance that the Subscriber will be able to sell
or dispose of the Unit Securities. It is understood that in order not to
jeopardize the Offering's exempt status under Section 4(2) of the Act and
Regulation D, as well as Regulation S, any transferee may, at a minimum, be
required to fulfill the investor suitability requirements thereunder.
1.22. The Subscriber understands that all information regarding the
Offering is confidential and represents that it will not be used for any purpose
other than in connection with his, her or its consideration of a purchase of the
Units and agrees to treat it in a confidential manner. The Subscriber has not,
during the last thirty (30) days prior to the date hereof, directly or
indirectly, nor has any party acting on behalf of or pursuant to any
understanding with such Subscriber, effected or agreed to effect any short sale,
whether or not against the box, established any "put equivalent position" (as
defined in Rule 16(a)-1(h) under the Exchange Act) with respect to Epixtar
Common Stock granted any other right (including, without limitation, any put or
call option) with respect to the Epixtar Common Stock or with respect to any
security that includes, relates to, or derives any significant part of its value
from the Epixtar Common Stock or otherwise sought to hedge its position in
Epixtar's securities. For the purposes of this Section 1.22, short sales and
hedging activities include, without limitation, all types of direct and indirect
stock pledges, forward sale contracts, options, puts, calls, short sales, swaps,
and similar arrangements (including on a total return basis), and sales and
other transactions through non-U.S. broker-dealers or foreign regulated brokers
having the effect of hedging the securities or investment made under this
Agreement. The Subscriber acknowledges and agrees that in order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to any shares of Epixtar Common Stock or securities exchangeable,
convertible or exercisable for shares of Epixtar Common Stock.
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1.23. The Subscriber acknowledges that the information contained in the
Offering Documents or otherwise made available to the Subscriber is confidential
and non-public and agrees that all such information shall be kept in confidence
by the Subscriber and neither be used by the Subscriber for the Subscriber's
personal benefit (other than in connection with this Subscription) nor disclosed
to any third party for any reason, notwithstanding that the Subscriber's
Subscription may not be accepted by the Company; provided, however, that this
obligation shall not apply to any such information that (i) is part of the
public knowledge or literature and readily accessible as of the date hereof,
(ii) becomes part of the public knowledge or literature and readily accessible
by publication (except as a result of a breach of this provision), or (iii) is
received from third parties (except third parties who disclose such information
in violation of any confidentiality agreements or obligations, including,
without limitation, any subscription or other similar agreement entered into
with the Company).
1.24. If the Subscriber is purchasing the Units in a fiduciary capacity
for another person or entity, including without limitation a corporation,
partnership, trust or any other entity, the Subscriber has been duly authorized
and empowered to execute this Agreement and all other subscription documents,
and such other person fulfills all the requirements for purchase of the Units as
such requirements are set forth herein, concurs in the purchase of the Units and
agrees to be bound by the obligations, representations, warranties and covenants
contained herein. Upon request of the Company, the Subscriber will provide true,
complete and current copies of all relevant documents creating the Subscriber,
authorizing its investment in the Company and/or evidencing the satisfaction of
the foregoing.
1.25. No authorization, approval, consent or license of any person is
required to be obtained for the purchase of the Units by the Subscriber, other
than those that have been obtained and are in full force and effect. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, result in any violation of or
constitute a default under any material agreement or other instrument to which
the Subscriber is a party or by which the Subscriber or any of its properties
are bound, or to the best of the Subscriber's knowledge, any permit, franchise,
judgment, order, decree, statute, rule or regulation to which the Subscriber or
any of its businesses or properties is subject.
1.26. The representations, warranties and agreements of the Subscriber
contained herein and in any other writing delivered in connection with the
transactions contemplated hereby shall be true and correct in all respects on
and as of the Closing Date of the sale of the Units to the Subscriber as if made
on and as of such date and shall survive the execution and delivery of this
Agreement and the purchase of the Units.
1.27. The Subscriber acknowledges that the Placement Agent (including
any of its members, managers, employees, agents or representatives) has not made
any representations or warranties to the Subscriber concerning the Company and
its subsidiaries and their respective businesses, condition (financial or
otherwise) or prospects.
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1.28. The Placement Agent shall be entitled to rely upon the
representations, warranties and covenants of the Subscriber set forth in this
Agreement.
1.29. The Subscriber understands that (i) the Offering is not
contingent upon the sale of any minimum principal amount of Units, and the
Company may close on the Subscriber's Subscription upon receipt of a properly
executed copy of this Agreement from the Subscriber and the purchase price for
the number of Units being purchased by the Subscriber and (ii) that the Company
is under no obligation to, and there can be no assurance that, the Company will
receive or accept subscriptions for the aggregate number of Units that may be
sold by the Company pursuant to the Offering.
ARTICLE II.
REPRESENTATIONS BY AND COVENANTS OF THE COMPANY
Each of Epixtar and Voxx hereby represents and warrants to the
Subscriber that, except as set forth in the Schedules hereto:
2.1. Corporate Organization. Each of Epixtar and Voxx is a corporation
duly organized, validly existing and in good standing under the laws of Florida,
and each of Epixtar and Voxx has the requisite corporate power and authority to
own or lease its properties and to carry on its business as now being conducted.
Each of Epixtar and Voxx is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the property
owned or leased by it or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or in good standing could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. For purposes of
this Agreement, "Material Adverse Effect" shall mean, as to any entity, any
material adverse effect on the business, operations, conditions (financial or
otherwise), assets, results of operations or prospects of the Company and its
subsidiaries as a whole.
2.2. Capitalization; Organizational Documents; Subsidiaries.
(a) The authorized capital stock of Epixtar consists of 60,000,000
shares of capital stock, of which (i) 50,000,000 are classified as Epixtar
Common Stock, and (ii) 10,000,000 are classified as "blank check" preferred
stock, par value $.001 per share, of which, 250,000 are designated as Series A
Convertible Preferred Stock. As of the date hereof and as of the Initial Closing
(as defined in Section 3.1), 11,554,119 shares of Epixtar Common Stock, 16,700
shares of Series A Convertible Preferred Stock and no other shares of capital
stock of Epixtar are or will be issued and outstanding. All of the outstanding
shares of capital stock have been duly and validly issued and are fully paid and
nonassessable and have been issued in accordance with all applicable federal and
state securities laws. No shares of capital stock are subject to preemptive
rights or any other similar rights or any liens suffered or permitted by
Epixtar. Except as disclosed in the SEC Documents and each other report or
filing made with the SEC since January 1, 2004 (collectively, the "SEC
Filings"), and except as disclosed in the Confidential Term Sheet, and except
for the Unit Securities, as of the date hereof, there are no outstanding
options, warrants, scrips, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of Epixtar, or contracts, commitments, understandings or
arrangements by which Epixtar is or may become bound to issue additional shares
of capital stock. There are no preemptive rights or rights of first refusal or
similar rights which are binding on Epixtar permitting any person to subscribe
for or purchase from Epixtar shares of its capital stock pursuant to any
provision of law, the Epixtar Certificate of Incorporation (as defined below) or
the Epixtar By-laws (as defined below) or by agreement or otherwise. Except as
set forth on Schedule 2.2(a), there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
any of the Unit Securities. Epixtar has made available to the Subscriber true
and correct copies of Epixtar's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "Epixtar Certificate of Incorporation"), and
Epixtar's By-laws, as in effect on the date hereof (the "Epixtar By-laws"). The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
Epixtar are as set forth in the Certificate of Incorporation, and all such
designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable against Epixtar and in
accordance with all applicable laws, rules and regulations. Except as set forth
on Schedule 2.2(a), no person holds any right to require Epixtar to register any
securities of Epixtar under the Act or to participate in any such registration.
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(b) The authorized capital stock of Voxx consists solely of
50,000,000 shares of Voxx Common Stock and 250,000 shares of preferred stock,
of which 10,000,000 shares OF VOXX Common Stock are issued and outstanding and
all of which are owned by Epixtar, free and clear of any restrictions on
transfer and any taxes, claims, liens, pledges, options, security interests,
purchase rights, preemptive rights, trusts, encumbrances or other rights or
interests of any other person. Except for the proposed issuance of Units
pursuant to the Offering, there are no outstanding options, warrants, scrips,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of Voxx, or contracts, commitments, understandings or arrangements by
which Voxx is or may become bound to issue additional shares of capital stock.
There are no preemptive rights or rights of first refusal or similar rights
which are binding on Voxx permitting any person to subscribe for or purchase
from Voxx shares of its capital stock pursuant to any provision of law, the
Certificate of Incorporation of Voxx as amended and in effect on the date hereof
(the "Voxx Certificate of Incorporation"), the By-laws of Voxx as in effect on
the date hereof (the "Voxx By-laws") or by agreement or otherwise.
(c) Upon issuance of the Units and payment of the purchase price
therefor in accordance with the terms of this Agreement, the Notes will be duly
authorized, validly issued, fully paid and nonassessable, and free and clear of
any restrictions on transfer and any taxes, claims, liens, pledges, options,
security interests, purchase rights, preemptive rights, trusts, encumbrances or
other rights or interests of any other person (other than any restrictions under
the Act). The Epixtar Warrants and the Voxx Warrants, when issued in accordance
with the terms of the Notes, will be duly authorized, validly issued, fully paid
and non-assessable, and free and clear of any restrictions on transfer and any
taxes, claims, liens, pledges, options, security interests, purchase rights,
preemptive rights, trusts, encumbrances or other rights or interests of any
other person (other than any restrictions under the Act). The Warrant Shares,
when issued upon due exercise of the Epixtar Warrants or the Voxx Warrants,
respectively, will be duly authorized, validly issued, fully paid and
non-assessable, and free and clear of any restrictions on transfer and any
taxes, claims, liens, pledges, options, security interests, purchase rights,
preemptive rights, trusts, encumbrances or other rights or interests of any
other person (other than any restrictions under the Act). A sufficient number of
authorized but unissued shares of Epixtar Common Stock and Voxx Common Stock
shall be reserved for issuance upon conversion of the Notes and exercise of the
Epixtar Warrants and Voxx Warrants.
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(d) Each subsidiary of Epixtar (the "Subsidiaries") has been duly
organized, is validly existing and in good standing under the laws of the
jurisdiction of its organization, has the power and authority to own its
properties and to conduct its business and is duly qualified and authorized to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or the nature of its properties requires such
qualification or authorization, except where the failure to be so qualified or
authorized and in good standing could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. All of the issued
and outstanding capital stock of Voxx and each other Subsidiary is owned,
directly or indirectly, by Epixtar, in each case, free and clear of any liens,
and has been duly authorized and validly issued, and is non-assessable. Except
for the Subsidiaries and Voxx, Epixtar does not presently own or control,
directly or indirectly, any interest in any other subsidiary, corporation,
association or other business entity. The Company is not a party to any joint
venture, partnership or similar arrangement.
2.3. Authorization; Enforcement. (a) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the subscription agreements with the other Subscribers, the
Notes, the other Unit Securities and any other documents to be entered into in
connection with the Offering (collectively, the "Offering Agreements") and to
issue, sell and perform its obligations with respect to the Offering Agreements
in accordance with the terms hereof and thereof, (b) the execution and delivery
of the Offering Agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors of Epixtar and Voxx and no further consent or authorization
is required by the Company, the Board of Directors of Epixar or Voxx or either
of their respective stockholders, and (c) this Agreement has been duly executed
and delivered by the Company and the other Offering Agreements, when executed
and delivered by the Company, will be duly executed and delivered by the
Company. No other corporate proceedings on the part of the Company are necessary
to approve and authorize the execution and delivery of this Agreement or the
other Offering Agreements and the issuance of the Unit Securities. This
Agreement constitutes, and the other Offering Agreements, when executed and
delivered by the Company, will constitute, valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.
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2.4. No Conflicts. The execution, delivery and performance of this
Agreement and the other Offering Agreements by the Company, and the consummation
by the Company of the transactions contemplated hereby and thereby, will not (a)
result in a violation of the Epixtar Certificate of Incorporation, the Epixtar
By-laws, the Voxx Certificate of Incorporation, the Voxx By-laws or the
certificate of incorporation, by-laws or other organizational documents of any
Subsidiary, or (b) violate or conflict with, or result in a breach of, any
provision of, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any lien on or against any of the properties of Epixtar, Voxx or any
Subsidiary pursuant to, any note, bond, mortgage, agreement, license, indenture
or instrument to which Epixtar, Voxx or any Subsidiary is a party, or result in
a violation of any statute, law, rule, regulation, writ, injunction, order,
judgment or decree applicable to Epixtar, Voxx or any Subsidiary or by which any
property or asset of Epixtar, Voxx or any Subsidiary is bound or affected,
except where such violation, conflict, breach or other consequence would not
have a Material Adverse Effect. Except as disclosed in the SEC Filings, neither
Epixtar, Voxx nor any Subsidiary is in violation of any term of or in default
under its certificate of incorporation, by-laws or other organizational
documents or in violation of any material term of, or in default under, any
material contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable to
Epixtar, Voxx or any Subsidiary. Except as specifically contemplated by this
Agreement, neither Epixtar nor Voxx is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement in accordance with the terms hereof, other than (i) filings pursuant
to federal and state securities laws in connection with the sale of the Units
and (ii) the registration of the Registrable Securities (as defined in Section
5.1(h)) with the SEC and filings pursuant to state securities laws. All
consents, authorizations, orders, filings and registrations that Epixtar or Voxx
is required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof, other than those which are required to
be made after the Closing and which will be duly made on a timely basis.
2.5. SEC Documents; Financial Statements.
(a) Epixtar has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (all of the foregoing, and all other documents and
registration statements heretofore filed by Epixtar with the SEC being
hereinafter referred to as the "SEC Filed Documents"). None of the SEC Filed
Documents, at the time they were filed with the SEC (except those SEC Filed
Documents that were subsequently amended), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of Epixtar included (or incorporated by
reference) in the SEC Filed Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC or other applicable rules and regulations with respect
thereto (except those SEC Filed Documents that were subsequently amended). Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements or the
notes thereto, or (b) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company and its
Subsidiaries as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). As of the date hereof, Epixtar has, on a
timely basis, made all filings required to be made by Epixtar with the SEC.
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(b) Except as set forth in the SEC Filings, neither Epixtar, Voxx
nor any Subsidiary has incurred any material liabilities of any kind, whether
accrued, absolute, contingent or otherwise or entered into any material
transactions except in the ordinary course of business. The other historical
financial and statistical information with respect to the Company included in
the SEC Filed Documents presents fairly in all material respects the information
shown therein on a basis consistent with the audited and unaudited financial
statements of the Company included in the SEC Filed Documents. The Company does
not know of any facts, circumstances or conditions materially adversely
affecting its operations, earnings or prospects which have not been fully
disclosed in the Offering Documents.
(c) Xxxxxxx Xxxxxxxx & Xxxxxx, LLP has expressed its opinion with
respect to the audited financial statements which form a part of Epixtar's
Annual Report on Form 10-KSB for the year ended December 31, 2003, and are
independent accountants as required by the Act and the rules and regulations
thereunder.
2.6. Securities Law Exemption. Assuming the truth and accuracy of the
Subscriber's representations and warranties in this Agreement and the truth and
accuracy of each of the other Subscribers' representations and warranties set
forth in the subscription agreements executed by such other Subscribers, the
offer, sale and issuance of the Units as contemplated by this Agreement and the
other subscription agreements are exempt from the registration requirements of
the Act and applicable state securities laws, and neither Epixtar, Voxx nor any
authorized agent acting on its behalf has taken or will take any action
hereafter that would cause the loss of such exemption.
2.7. Litigation.
(a) Except as set forth in the SEC Filings, all actions, suits,
arbitrations or other proceedings or, to the Company's best knowledge,
investigations pending or threatened against the Company or any Subsidiary that
would have a Material Adverse Effect on the Company, are disclosed in the SEC
Filings. There is no action, suit, proceeding or, to the Company's knowledge,
investigation that questions this Agreement or the right of the Company to
execute, deliver and perform its obligations hereunder or under any of the other
Offering Agreements.
(b) There are no actions, proceedings, claims or investigations
before or by any court or governmental authority (or any state of facts which
management of the Company has concluded could give rise thereto) pending or, to
the best knowledge of the Company, threatened, against the Company's or any
Subsidiary's officers or directors which, if determined adversely to such
officer or director, could have a Material Adverse Effect or adversely affect
the transactions contemplated by this Agreement or the enforceability thereof or
which are required to be disclosed to the Subscriber and the other subscribers
of the Units under the Act, the Exchange Act or any SEC rules or regulations
promulgated thereunder or are material to an investor's evaluation of the
Company.
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2.8. Intellectual Property. Except as set forth in the SEC Filings,
each of the Company and the Subsidiaries owns or possesses adequate and
enforceable rights to use all material patents, patent applications, trademarks,
service marks, trade names, logos, corporate names, copyrights, trade secrets,
processes, mask works, licenses, inventions, formulations, technology and
know-how and other intangible property used or proposed to be used in the
conduct of its business as described in or contemplated by the SEC Filings (the
"Proprietary Rights"). Except as set forth in the SEC Filings, each of the
Company or the Subsidiaries or the entities from whom the Company or the
Subsidiaries has acquired rights has taken all necessary action to protect all
of the Proprietary Rights. Except as set forth in the SEC Filings, neither the
Company nor any Subsidiary has received any notice of, and there are not any
facts known to the Company or any Subsidiary which indicate the existence of (i)
any infringement or misappropriation by any third party of any of the
Proprietary Rights, (ii) any claim by a third party contesting the validity of
any of the Proprietary Rights or (iii) any infringement, misappropriation or
violation by the Company or any Subsidiary or any of their employees of any
Proprietary Rights of third parties. To the best of the Company's knowledge,
neither the Company, the Subsidiaries nor any of their employees has infringed,
misappropriated or otherwise violated any Proprietary Rights of any third
parties. To the Company's best knowledge, neither the Proprietary Rights,
products or services currently sold by the Company or any Subsidiary or
currently under development by the Company or any Subsidiary nor the conduct of
the Company's or any Subsidiary's business as currently contemplated infringe,
illicit, copy, misappropriate or violate any intellectual property rights of any
third party. Except as set forth in the SEC Filings, the Company is not aware
that any of its or any Subsidiary's employees are 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 the use of the employee's best efforts to
promote the interests of the Company or that would conflict with the Company's
or any Subsidiary's business as currently conducted or as proposed to be
conducted. To the Company's best knowledge, neither the execution nor delivery
of this Agreement, nor the carrying on of the Company's or any Subsidiary's
business by the employees of the Company or any Subsidiary, nor the conduct of
the Company's or any Subsidiary's business, as currently conducted or as
proposed to be conducted, will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any such employee is now obligated.
2.9. Title to Property and Assets. Each of the Company and the
Subsidiaries has good and marketable title to or, in the case of leases and
licenses, has valid and subsisting leasehold interests or licenses in, all of
its properties and assets (whether real or personal, tangible or intangible)
free and clear of any liens or other encumbrances, except for liens or other
encumbrances that do not, individually or in the aggregate, have a Material
Adverse Effect. With respect to property leased by the Company or any
Subsidiary, each of the Company and the Subsidiaries, as the case may be, has a
valid leasehold interest in such property pursuant to leases which are in full
force and effect, and each of the Company and the Subsidiaries, as the case may
be, is in compliance in all material respects with the provisions of such
leases.
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2.10. Compliance with Laws. Except as set forth in the SEC Filings,
each of the Company and the Subsidiaries is and has been in compliance in all
material respects with all laws, rules, regulations, orders, judgments or
decrees that are applicable to it, the conduct of its business as presently
conducted and as proposed to be conducted, and the ownership of its property and
assets (including, without limitation, all Environmental Laws (as defined
below), laws related to occupational safety, health, wage and hour, and
employment discrimination) and laws related to the Federal Trade Commission (the
"FTC"), and neither the Company nor any Subsidiary is aware of any state of
facts, events, conditions or occurrences which may now or hereafter constitute
or result in a violation of any of such laws, rules, regulations, orders,
judgments or decrees or which may give rise to the assertion of any such
violation, except where such violation or violations do not have a Material
Adverse Effect. All required reports and filings with governmental authorities
have been properly made as and when required, except where the failure to report
or file would not, individually or in the aggregate, have a Material Adverse
Effect. The Company has entered into a Stipulated Preliminary Injunction with
the FTC on or about November 21, 2003 and is in compliance in all material
respects with the provisions of such agreement with the FTC. In addition, the
Company and the Subsidiaries are in compliance in all material respects with the
provisions of the Xxxxxxxx-Xxxxx Act of 2002. "Environmental Laws" means all
federal, state, local and foreign laws, ordinances, treaties, rules,
regulations, guidelines and permit conditions relating to contamination or
pollution of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) or the protection of human health and
worker safety, including, without limitation, laws and regulations relating to
transportation, storage, use, manufacture, disposal or release of, or exposure
of employees or others to, Hazardous Materials (as defined below) or emissions,
discharges, releases or threatened releases of Hazardous Materials. "Hazardous
Materials" means any substance that has been designated by any governmental
entity or by applicable Environmental Laws to be radioactive, toxic, hazardous
or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, urea formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the Resource Conservation and Recovery Act of 1976,
as amended, and the regulations promulgated pursuant to Environmental Laws, but
excluding office and janitorial supplies maintained in accordance with
Environmental Laws.
2.11. Licenses and Permits.
(a) Each of the Company and the Subsidiaries has obtained and
maintains all federal, state, local and foreign licenses, permits, consents,
approvals, registrations, authorizations and qualifications required to be
maintained in connection with the operations of the Company and the Subsidiaries
as presently conducted and as proposed to be conducted, except where the failure
to obtain or maintain such licenses, permits, consents, approvals,
registrations, authorizations and qualifications could not have a Material
Adverse Effect. Neither the Company nor any Subsidiary is in default in any
material respect under any of such licenses, permits, consents, approvals,
registrations, memberships, authorizations and qualifications.
14
(b) To the best of the Company's knowledge, the conduct of its and
its Subsidiaries' business as presently and proposed to be conducted is not
presently subject to continuing oversight, supervision, regulation or
examination by any governmental official or body of the United States or any
other jurisdiction wherein the Company or its Subsidiaries conducts or proposes
to conduct such business, except as described in the SEC Filings and except such
regulation as is applicable to commercial enterprises generally.
2.12. Changes. Since December 31, 2003, except as set forth in the SEC
Filings, each of the Company and its Subsidiaries has operated its business in
the ordinary course of business and, to the best knowledge of the Company, there
has not been, or the Company has not (as the case may be):
(a) any Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by
insurance, which would have a Material Adverse Effect;
(c) any waiver or compromise by the Company or any Subsidiary of a
valuable right or of a material debt owed it;
(d)sold, encumbered, assigned or transferred any material assets or
properties of the Company or any Subsidiary, other than in the ordinary course
of business;
(e) incurred any liability, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, other than (i) in the ordinary
course of business or (ii) liabilities that are not, individually or in the
aggregate, material to the business, operations, condition (financial or
otherwise), assets, results of operations or prospects of the Company or any
Subsidiary;
(f) created, incurred, assumed or guaranteed any indebtedness or
subjected any of its assets to any lien or encumbrance, except for indebtedness,
liens or encumbrances that are not, individually or in the aggregate, material
to the business, operations, condition (financial or otherwise), assets, results
of operations or prospects of the Company or any Subsidiary;
(g) declared, set aside or paid any dividends or made any other
distributions in cash or property on the Company's or any Subsidiary's capital
stock;
(h) directly or indirectly redeemed, purchased or otherwise acquired
any shares of capital stock of the Company or any Subsidiary;
(i) suffered any resignation or termination of employment of any key
officers or employees;
(j) except in the ordinary course of business, materially increased
the compensation payable or to become payable by the Company or any Subsidiary
to any of its officers, employees or directors or materially increased any
bonus, insurance, pension or other employee benefit plan, payment or arrangement
made by the Company or any Subsidiary for or with any such officers, employees
or directors;
15
(k) made any direct or indirect loan to any stockholder, employee,
officer or director of the Company or any Subsidiary, other than advances made
in the ordinary course of business;
(l) changed any agreement to which it is a party which would have a
Material Adverse Effect; or
(m) entered into any agreement or commitment to do any of the things
described in this Section 2.12.
2.13. Employee Benefit Plans. All "employee benefit plans," as such
term is defined in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which the Company or any Subsidiary has any liability or
obligation, contingent or otherwise, comply in all material respects and have
been maintained and administered in material compliance with ERISA, the Internal
Revenue Code of 1986, as amended (the "Code"), and all other statutes, orders
and governmental rules and regulations applicable to such employee benefit
plans. To the Company's best knowledge, neither the Company nor any Subsidiary
has incurred any liability pursuant to ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in ERISA),
and no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by the
Company or any Subsidiary, or in the imposition of any lien on any of the
rights, properties or assets of the Company or any Subsidiary pursuant to ERISA
or to such penalty or excise tax provisions of the Code. Neither the Company nor
any Subsidiary maintains or contributes to, nor has it maintained or contributed
to, any "multiemployer plan," as such term is defined in ERISA.
2.14. Taxes. Each of the Company and its Subsidiaries has timely filed
all tax returns and reports (federal, state and local) required to be filed and
these returns and reports are true and correct in all material respects. Each of
the Company and the Subsidiaries has paid all taxes and other assessments shown
to be due on such returns or reports. Neither the Internal Revenue Service nor
any state or local taxing authority has, during the past three (3) years,
examined or informed the Company or any Subsidiary that it is in the process of
examining any such tax returns and reports. The provision for taxes of the
Company and its Subsidiaries, as shown on the financial statements included in
the most recent SEC Filings, is adequate for taxes due or accrued as of the date
thereof and since that date each of the Company and the Subsidiaries has
provided adequate accruals in accordance with generally accepted accounting
principals in its financial statements for any taxes incurred that have not been
paid, whether or not shown as being due on any tax returns. Neither the Company
nor any Subsidiary has elected, pursuant to the Code, to be treated as a
collapsible corporation pursuant to Section 341(f) of the Code, nor has it made
any other elections pursuant to the Code (other than elections that relate
solely to methods of accounting, depreciation or amortization) that would have a
Material Adverse Effect.
16
2.15. Insurance. Each of the Company and its Subsidiaries has in full
force and effect fire, casualty and liability insurance policies, with extended
coverage, sufficient in amount (subject to reasonable deductibles) to allow the
Company and its Subsidiaries to replace any of its properties that might be
damaged or destroyed to the extent and in the manner customary for companies in
similar business similarly situated.
2.16. Employees.
(a) Neither the Company nor any Subsidiary has any collective
bargaining agreements with any of its employees. There is no labor union
organizing activity pending or, to the Company's best knowledge, threatened with
respect to the Company or any Subsidiary. To the Company's best knowledge, no
officer or key employee intends to terminate their employment with the Company
or any Subsidiary, nor does the Company or any Subsidiary have a present
intention to terminate the employment of any of the foregoing. All material
employment arrangements existing or proposed to exist with the Company's or any
Subsidiary's officers and prospective officers have been fully disclosed in the
SEC Filings, provided that, with respect to arrangements with prospective
officers, definitive employment agreements have not yet been executed and such
arrangements are subject to change based on any further negotiation with such
prospective officers.
(b) To the best knowledge of the Company, none of the Company's
full-time employees has entered into any non-competition, non-disclosure,
confidentiality or other similar agreement with any party other than the Company
or any Subsidiary, such employee is neither in violation thereof nor is expected
to be in violation thereof as a result of the business conducted or expected to
be conducted by the Company or any Subsidiary as described in the SEC Filings or
such person's performance of his or her obligations to the Company or any
Subsidiary; and neither the Company nor any Subsidiary has received notice that
any consultant or scientific advisor of the Company or any Subsidiary is in
violation of any non-competition, non-disclosure, confidentiality or similar
agreement.
2.17. Material Contracts. All contracts, agreements, instruments,
leases, licenses, arrangements, understandings or other documents to which each
of the Company or any Subsidiary is a party or by which it may be bound which
are required to be filed as exhibits to the SEC Filed Documents have been so
filed (the "Material Contracts"). The Material Contracts that have been filed as
exhibits are complete and correct copies of the contracts, agreements,
instruments, leases, licenses, arrangement, understanding or other documents of
which they purport to be copies. The Material Contracts are valid and in full
force and effect as to the Company and the Subsidiaries, and, to the Company's
best knowledge, to the other parties thereto. Except as otherwise disclosed in
the SEC Filings, neither the Company nor any Subsidiary is in violation of, or
default under (and there does not exist any event or condition which, after
notice or lapse of time or both, would constitute such a default under), the
Material Contracts, except to the extent that such violations or defaults,
individually or in the aggregate, could not reasonably be expected to (a) affect
the validity of this Agreement or the other Offering Documents, (b) have a
Material Adverse Effect, or (c) impair the ability of the Company or any
Subsidiary to perform fully on a timely basis any material obligation which the
Company or any Subsidiary has or will have under this Agreement or any other
Offering Documents. To the Company's best knowledge, except as set forth in the
SEC Filings, none of the other parties to any Material Contract are in violation
of or default under any Material Contract in any material respect. Neither the
Company nor any Subsidiary has received any notice of cancellation or any
written communication threatening cancellation of any Material Contract by any
other party thereto. Neither the Company nor any Subsidiary is a party to and is
bound by any contract, agreement or instrument, or subject to any restriction
under its certificate of incorporation, by-laws or other governing documents
that would have a Material Adverse Effect.
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2.18. Customers and Suppliers. Except as set forth in the SEC Filings,
no customer or supplier that was material to Epixtar, Voxx or the Subsidiaries
during the previous twenty-four (24) months has terminated, materially reduced
or threatened to terminate or material reduce its purchases from or provision of
products or services to Epixtar, Voxx or the Subsidiaries.
2.19. Disclosure. This Agreement, the Schedules and Exhibits hereto
(including, without limitation, the Offering Documents) and all other documents
delivered to the Subscriber in connection herewith at the Closing, do not
contain any untrue statement of a material fact, or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. There are no facts that,
individually or in the aggregate, would have a Material Adverse Effect that have
not been disclosed in the Offering Documents, this Agreement (including the
Schedules and Exhibits hereto), the SEC Filings or any other documents delivered
to the Subscriber in connection herewith or therewith at the Closing.
2.20. No Integrated Offering. Neither the Company, the Subsidiaries nor
any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited any
offers to buy any security under circumstances that would require registration
under the Act of the issuance of the Units to the Subscriber and the other
subscribers for the Units. The issuance of the Units to the Subscriber and the
other subscribers for the Units will not be integrated with any past issuance of
the Company's securities for purposes of the Act. Except as set forth in the SEC
Filings, Epixtar has not sold or issued any shares of Epixtar Common Stock,
convertible notes or warrants during the past six months, including sales
pursuant to Rule 144A, Regulation D or Regulation S under the Act, other than
shares issued pursuant to employee benefit plans, if any.
2.21. Offering Documents.
(a) Each of the Offering Documents has been diligently prepared by
the Company, in conjunction with its legal counsel, and is in compliance, in all
material respects, with Regulation D, the Act and the requirements of all other
rules and regulations of the SEC relating to offerings of the type contemplated
by the Offering, and the applicable securities laws and the rules and
regulations of those jurisdictions wherein the Units are to be offered and sold.
The Units will be offered and sold pursuant to the registration exemption
provided by Rule 506 under Regulation D and Section 4(2) and/or Section 4(6) of
the Act as a transaction not involving a public offering and the requirements of
any other applicable state securities laws and the respective rules and
regulations thereunder in those jurisdictions in which the Units are being
offered for sale. The Offering Documents describe all material aspects,
including attendant risks, of an investment in the Company. Neither the Company
nor any Subsidiary has taken nor will it take any action which conflicts with
the conditions and requirements of, or which would make unavailable with respect
to the Offering, the exemption(s) from registration available pursuant to
Regulation D or Section 4(2) and/or Section 4(6) of the Act and knows of no
reason why any such exemption would be otherwise unavailable to it. None of the
Company, the Subsidiaries or their predecessors or affiliates has been subject
to any order, judgment or decree of any court of competent jurisdiction
temporarily, preliminarily or permanently enjoining such persons for failing to
comply with Section 503 of Regulation D.
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(b) None of the statements, documents, certificates or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not misleading.
There is no fact which the Company has not disclosed to the Subscriber in
writing and of which the Company is aware which has or could have a Material
Adverse Effect.
(c) Neither the Company nor any Subsidiary has distributed and will
not distribute prior to the Closing Date any offering material in connection
with the Offering other than the Offering Documents or any amendment or
supplement thereto.
2.22. Finders. Except for the amounts due and owing to the Placement
Agent pursuant to the Placement Agency Agreement referred to in Section 6.11(b)
of this Agreement, the Company is not obligated to pay a finder's or origination
fee or similar fee in connection with the Offering and agrees to indemnify the
Subscriber from any such claim made by any other person.
2.23. Transfer Taxes. On the applicable Closing Date, all stock
transfer or other taxes (other than income taxes) which are required to be paid
in connection with the sale and transfer of the Units to be sold to the
Subscriber hereunder will be, or will have been, fully paid or provided for by
the Company and all laws imposing such taxes will be or will have been complied
with.
2.24. Contributions. Neither the Company nor any Subsidiary has
directly or indirectly, (i) made any unlawful contribution to any candidate for
public office, or failed to disclose fully where required by law any
contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
2.25. Investment Company. The Company is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.
2.26. Related Party Transactions. No transaction has occurred between
or among the Company or any Subsidiaries and any of their affiliates, officers
or directors or any affiliate or affiliates of any such officer or director that
is required to be described in the SEC Filings that is not so described.
2.27. Books and Records. The books, records and accounts of the Company
and the Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and the Subsidiaries, all to the extent required by
generally accepted accounting principles.
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2.28 Internal Controls. The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Epixtar has established disclosure
controls and procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for
Epixtar and designed such disclosure controls and procedures to ensure that
material information relating to Epixtar, including Voxx and the Subsidiaries,
is made known to the certifying officers by others within those entities,
particularly during the period in which Epixtar's most recently filed period
report under the 1934 Act, as the case may be, is being prepared. Epixtar's
certifying officers have evaluated the effectiveness of its controls and
procedures as of a date within 90 days prior to the filing date of the most
recently filed periodic report under the 1934 Act (such date, the "Evaluation
Date"). Epixtar presented in its most recently filed periodic report under the
1934 Act the conclusions of the certifying officers about the effectiveness of
the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in Epixtar's internal controls (as such term is defined in Item 307(b)
of Regulation S-K) or, to Epixtar's knowledge, in other factors that could
significantly affect Epixtar's internal controls. Epixtar maintains and will
continue to maintain a standard system of accounting established and
administered in accordance with GAAP and the applicable requirements of the 1934
Act.
ARTICLE III.
TERMS OF SUBSCRIPTION
3.1. The minimum subscription by any single Subscriber shall be one
Unit (i.e. $100,000); provided that the Company reserves the right to accept, at
the discretion of the Company and the Placement Agent, subscriptions for
fractional Units. The Offering shall terminate at 11:59 p.m. New York City time
on October 31, 2004 (subject to extension at the Company's or the Placement
Agent's discretion without notice to Subscriber for up to 60 days) or such other
date on which all of the Units are sold. The Offering is not contingent upon the
sale of any minimum number of Units. The Company may close on the Subscriber's
Subscription or the subscription of any other subscriber for Units upon receipt
of a properly executed copy of this Agreement from the Subscriber or such other
subscriber and the purchase price for the number of Units being purchased by the
Subscriber or such other subscriber. The initial closing of the purchase and
sale of Units pursuant to the Offering shall be referred to herein as the
"Initial Closing". The Company may conduct additional closings (each, an
"Additional Closing"; each Additional Closing and the Initial Closing are
referred to herein as a "Closing") until all of the Units, including those
subject to the over-allotment option, are sold (the date of each such Closing,
the "Closing Date").
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3.2. Pending the sale of the Units, all funds paid hereunder shall be
deposited by the Company in escrow with the Escrow Agent, having a branch at 00
Xxxxxx Xxxx, Xxx Xxxx, XX 00000.
3.3. The Subscriber hereby authorizes and directs the Company to
deliver the Unit Securities comprising the Notes to be issued to the Subscriber
pursuant to this Agreement to the residential or business address indicated on
the signature page hereto.
3.4. The Subscriber hereby authorizes and directs the Company to
return, without interest, any funds for unaccepted subscriptions (including any
subscriptions that were not accepted as a result of the termination of the
Offering) to the same account from which the funds were drawn, including any
customer account maintained with the Placement Agent.
3.5. The Company's agreement with each Subscriber is a separate
agreement and the sale of Units to each Subscriber is a separate sale.
ARTICLE IV.
CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBER
4.1. The Subscriber's obligation to purchase Units at the Closing is
subject to the fulfillment on or prior to the Closing of the following
conditions, which conditions may be waived at the option of the Subscriber to
the extent permitted by law:
(a) Representations and Warranties Correct. The representations and
warranties made by the Company in ARTICLE II hereof shall be true and correct in
all material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.
(b) Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to such purchase shall
have been performed or complied with in all material respects.
(c) No Legal Order Pending. There shall not then be in effect any
legal or other order enjoining or restraining the transactions contemplated by
this Agreement.
(d) No Law Prohibiting or Restricting Such Sale. There shall not be
in effect any law, rule or regulation prohibiting or restricting such sale or
requiring any consent or approval of any person which shall not have been
obtained to issue the Unit Securities (except as otherwise provided in this
Agreement).
(e) Legal Opinion. Each Investor shall have received a legal opinion
from the Company's counsel covering such matters as reasonably requested by the
Placement Agent.
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ARTICLE V.
REGISTRATION RIGHTS
5.1. As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" shall mean, with respect to any Person (as defined
below), any other Person controlling, controlled by or under direct or indirect
common control with such Person (for the purposes of this definition "control,"
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing).
(b) "Business Day" shall mean a day Monday through Friday on which
banks are generally open for business in New York.
(c) "Holders" shall mean the Subscriber, all other subscribers for
the Units, and any Person holding Registrable Securities (including, without
limitation, the Placement Agent with respect to the shares of Epixtar Common
Stock and Voxx Common Stock issuable upon exercise of the warrants to be issued
to the Placement Agent as described in the Confidential Term Sheet (the
"Placement Agent Warrants")) or any Person to whom the rights under ARTICLE V
have been transferred in accordance with Section 5.10 hereof.
(d) "Person" shall mean any person, individual, corporation, limited
liability company, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
(e) The terms "register," "registered" and "registration" refer to
the registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
(f) "Registrable Epixtar Securities" shall mean (i) the shares of
Epixtar Common Stock issuable upon conversion of the Notes, (ii) the shares of
Epixtar Common Stock issuable upon exercise of the Epixtar Warrants, (iii) the
shares of Epixtar Common Stock issuable upon exercise of the Placement Agent
Warrants, (iv) any additional shares of Epixtar Common Stock issuable upon
adjustment to the conversion or exercise price of the securities referenced in
clauses (i) through (iii) above (the "Additional Epixtar Shares"), and (v) any
other securities issued or issuable with respect to or in exchange of any of the
securities referenced in clauses (i), (ii), (iii) or (iv) above; provided,
however, that securities shall only be treated as Registrable Epixtar Securities
if and only for so long as they (A) have not been disposed of pursuant to a
registration statement declared effective by the Commission; (B) have not been
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Act so that all transfer restrictions and restrictive
legends with respect thereto are removed upon the consummation of such sale; (C)
are held by a Holder or a permitted transferee pursuant to Section 5.10; or (D)
have not become eligible for sale pursuant to Rule 144(k) (or any successor
thereto) under the Act.
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(g) "Registrable Voxx Securities" shall mean (i) the shares of Voxx
Common Stock issuable upon conversion of the Notes, (ii) the shares of Voxx
Common Stock issuable upon exercise of the Voxx Warrants, (iii) the shares of
Voxx Common Stock issuable upon exercise of the Placement Agent Warrants, (iv)
any additional shares of Voxx Common Stock issuable upon adjustment to the
conversion or exercise price of the securities referenced in clauses (i) through
(iii) above (the "Additional Voxx Shares" and together with the Additional
Epixtar Shares, the "Additional Shares"), and (v) any other securities issued or
issuable with respect to or in exchange of any of the securities referenced in
clauses (i), (ii), (iii) or (iv) above; provided, however, that securities shall
only be treated as Registrable Voxx Securities if and only for so long as they
(A) have not been disposed of pursuant to a registration statement declared
effective by the Commission; (B) have not been sold in a transaction exempt from
the registration and prospectus delivery requirements of the Act so that all
transfer restrictions and restrictive legends with respect thereto are removed
upon the consummation of such sale; (C) are held by a Holder or a permitted
transferee pursuant to Section 5.10; or (D) have not become eligible for sale
pursuant to Rule 144(k) (or any successor thereto) under the Act.
(h) "Registrable Securities" shall mean each of the Registrable
Epixtar Securities and the Registrable Voxx Securities.
(i) "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 5.2 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration,
including the fees of legal counsel for the Holders up to $10,000.
(j) "Registration Period" shall have the meaning ascribed to such
term in Section 5.2(e).
(k) "Registration Statement" shall mean any registration statement
of the Company filed under the Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.
(l) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and, except
to the extent set forth in the definition of Registration Expenses, all fees and
expenses of legal counsel for any Holder.
5.2. Registration Statements.
23
(a) Initial Epixtar Registration. Subject to the terms herein,
Epixtar will, as soon as practicable but not later than sixty (60) days
following the final Closing (the sixtieth (60th) day following the final Closing
is referred to as the "Initial Epixtar Filing Date"), (1) file with the SEC a
registration statement under the Act on the appropriate form or amend a
previously filed registration statement to allow the resale of Registrable
Epixtar Securities consisting solely of the shares of Epixtar Common Stock
issuable upon conversion of the Notes issued pursuant to the Closings under
Section 7.1(a) of the Notes (based upon a conversion price of $1.00), and use
its best efforts to have such Registration Statement declared effective by the
SEC prior to the date which is 90 days after the earlier to occur of (a) the
Initial Epixtar Filing Date or (b) the date of filing of such Registration
Statement with the SEC; and (2) cause such Registration Statement to remain
effective (the "Initial Epixtar Registration Period") until the earlier of (i)
such date as the holders of the Registrable Epixtar Securities have completed
the distribution described in such Registration Statement or (ii) at such time
that all such shares have become eligible for sale pursuant to Rule 144(k) (or
any successor thereto) under the Act. To the extent permissible, such
Registration Statement also shall cover, to the extent allowable under the Act
and the rules promulgated thereunder (including Rule 416 under the Act), such
indeterminate number of additional shares of Epixtar Common Stock resulting from
stock splits, stock dividends or similar transactions with respect to such
Registrable Epixtar Securities. If a registration statement covering such
Registrable Epixtar Securities is not filed with the SEC on or prior to the
Initial Epixtar Filing Date, then the conversion price of the Notes will
immediately be reduced, in accordance with the terms of the Notes, by five
percent (5%) of the then effective conversion price of the Notes. In addition,
for each additional 30-day period (or partial period, as the case may be)
following the Initial Epixtar Filing Date that such Registration Statement is
not filed with the SEC, the then effective conversion price of the Notes will be
reduced, in accordance with the terms of the Notes, by an additional five
percent (5%). Such reduction to the conversion price of the Notes shall be in
partial compensation to the Holders, and shall not constitute the Holders'
exclusive remedies for such events and the Holders shall have the remedy of
specific performance.
(b) Subsequent Epixtar Registration. Subject to the terms herein,
Epixtar will, as soon as practicable but not later than sixty (60) days
following the one year anniversary date of the Initial Closing (the sixtieth
(60th) day following the one year anniversary date of the Initial Closing is
referred to as the "Subsequent Epixtar Filing Date"), (1) file with the SEC a
registration statement under the Act on the appropriate form or amend a
previously filed registration statement to allow the resale of Registrable
Epixtar Securities consisting of all of the shares of Epixtar Common Stock then
issuable upon conversion of the Notes (to the extent not previously covered by
the Registration Statement referred to in Section 5.2(a) above) and the exercise
of the Epixtar Warrants and the Placement Agent Warrants, and use its best
efforts to have such Registration Statement declared effective by the SEC prior
to the date which is 90 days after the earlier to occur of (a) the Subsequent
Epixtar Filing Date or (b) the date of filing of such Registration Statement
with the SEC; and (2) cause such Registration Statement to remain effective (the
"Subsequent Epixtar Registration Period" and together with the Initial Epixtar
Registration Period, the "Epixtar Registration Period") until the earlier of (i)
such date as the holders of the Registrable Epixtar Securities have completed
the distribution described in such Registration Statement or (ii) at such time
that all such shares have become eligible for sale pursuant to Rule 144(k) (or
any successor thereto) under the Act. To the extent permissible, such
Registration Statement also shall cover, to the extent allowable under the Act
and the rules promulgated thereunder (including Rule 416 under the Act), such
indeterminate number of additional shares of Epixtar Common Stock resulting from
stock splits, stock dividends or similar transactions with respect to such
Registrable Epixtar Securities. If a registration statement covering such
Registrable Epixtar Securities is not filed with the SEC on or prior to the
Subsequent Epixtar Filing Date, then the conversion price of the Notes and the
exercise price of the Epixtar Warrants and Placement Agent Warrants will
immediately be reduced, in accordance with the terms of the Notes, the Epixtar
Warrants and the Placement Agent Warrants, as the case may be, by five percent
(5%) of its then effective conversion or exercise price. In addition, for each
additional 30-day period (or partial period, as the case may be) following the
Subsequent Epixtar Filing Date that such Registration Statement is not filed
with the SEC, the then effective conversion price of the Notes and exercise
price of the Epixtar Warrants and Placement Agent Warrants will be reduced, in
accordance with the terms of the Notes, the Epixtar Warrants and the Placement
Agent Warrants, as the case may be, by an additional five percent (5%). Such
reduction to the conversion price of the Notes and exercise price of the Epixtar
Warrants and Placement Agent Warrants shall be in partial compensation to the
Holders, and shall not constitute the Holders' exclusive remedies for such
events and the Holders shall have the remedy of specific performance.
24
(c) Additional Epixtar Shares. In the event Epixtar is obligated to
issue Additional Epixtar Shares, Epixtar shall use its best efforts to promptly
prepare and file with the SEC one or more Registration Statements, on such form
of registration statement as is then available to effect a registration for
resale of such additional shares of Epixtar Common Stock) covering the resale of
the Additional Epixtar Shares, but only to the extent the Additional Epixtar
Shares are not at the time covered by an effective Registration Statement. To
the extent permissible, such Registration Statement also shall cover, to the
extent allowable under the Act and the rules promulgated thereunder (including
Rule 416 under the Act), such indeterminate number of additional shares of
Epixtar Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Additional Epixtar Shares. A Registration
Statement covering the Additional Epixtar Shares shall be filed by the Company
with the SEC as promptly as possible, but in no event later than thirty (30)
days following the transaction resulting in the adjustment to the number of
shares of Epixtar Common Stock issuable upon conversion of the Notes or exercise
of the Epixtar Warrants or Placement Agent Warrants and use its best efforts to
have such Registration Statement declared effective by the SEC prior to the date
which is 90 days after the date of filing of such Registration Statement with
the SEC. The Company shall cause such Registration Statement to remain effective
for the applicable Epixtar Registration Period.
(d) Voxx IPO Registration. Subject to the terms herein, if Voxx
consummates an initial public offering of Voxx Common Stock, then Voxx will, as
soon as practicable but not later than one hundred eighty (180) days following
the completion of the initial public offering of Voxx Common Stock (unless the
market or exchange on which Voxx Common Stock is then traded or listed requires
a longer period, in which case such longer period shall apply) (the one hundred
eightieth (180th) day following the completion of the initial public offering
(or such longer period if required by the market or exchange on which Voxx
Common Stock is then traded or listed) is referred to as "Voxx IPO Filing
Date"), (1) file with the SEC a registration statement under the Act on the
appropriate form or amend a previously filed registration statement to allow the
resale of Registrable Voxx Securities, and use its best efforts to have such
Registration Statement declared effective by the SEC prior to the date which is
90 days after the earlier to occur of (a) the Voxx IPO Filing Date or (b) the
date of filing of such Registration Statement with the SEC; and (2) cause such
Registration Statement to remain effective (the "Voxx IPO Registration Period")
until the earlier of (i) such date as the holders of Registrable Voxx Securities
have completed the distribution described in such Registration Statement or (ii)
at such time that all such shares have become eligible for sale pursuant to Rule
144(k) (or any successor thereto) under the Act. To the extent permissible, such
Registration Statement also shall cover, to the extent allowable under the Act
and the rules promulgated thereunder (including Rule 416 under the Act), such
indeterminate number of additional shares of Voxx Common Stock resulting from
stock splits, stock dividends or similar transactions with respect to such
Registrable Voxx Securities.
25
(e) Voxx Spin-Off Registration. Subject to the terms herein, if Voxx
effects a pro rata distribution to Epixtar's stockholders of a percentage (such
percentage to be agreed upon by Epixtar and the Placement Agent) of the shares
of Voxx Common Stock (the "Voxx Spin-Off"), then Voxx will register for resale
on a Form S-1 Registration Statement or such other appropriate form to be filed
with the SEC the shares of Voxx Common Stock distributed to the stockholders of
Epixtar in the Voxx Spin-Off and Voxx shall also include in such Registration
Statement all of the Voxx Registrable Securities. Voxx shall (1) use its best
efforts to have such Registration Statement declared effective by the SEC prior
to the date which is 90 days after the date of filing of such Registration
Statement with the SEC; and (2) cause such Registration Statement to remain
effective (the "Voxx Spin-Off Registration Period" and together with the Voxx
IPO Registration Period and the Epixtar Registration Period, the "Registration
Period") until the earlier of (i) such date as the holders of Registrable Voxx
Securities have completed the distribution described in such Registration
Statement or (ii) at such time that all such shares have become eligible for
sale pursuant to Rule 144(k) (or any successor thereto) under the Act. To the
extent permissible, such Registration Statement also shall cover, to the extent
allowable under the Act and the rules promulgated thereunder (including Rule 416
under the Act), such indeterminate number of additional shares of Voxx Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to such Registrable Voxx Securities.
(f) Additional Voxx Shares. In the event Voxx is obligated to issue
Additional Voxx Shares, Voxx shall use its best efforts to promptly prepare and
file with the SEC one or more Registration Statements, on such form of
registration statement as is then available to effect a registration for resale
of such additional shares of Voxx Common Stock) covering the resale of the
Additional Voxx Shares, but only to the extent the Additional Voxx Shares are
not at the time covered by an effective Registration Statement. To the extent
permissible, such Registration Statement also shall cover, to the extent
allowable under the Act and the rules promulgated thereunder (including Rule 416
under the Act), such indeterminate number of additional shares of Voxx Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Additional Voxx Shares. A Registration Statement covering the
Additional Voxx Shares shall be filed by Voxx with the SEC as promptly as
possible, but in no event earlier than the date of consummation of the initial
public offering of Voxx Common Stock or Voxx Spin-Off, as the case may be, or,
following such date of consummation, later than thirty (30) days following the
transaction resulting in the adjustment to the number of shares of Voxx Common
Stock issuable upon conversion of the Notes or exercise of the Voxx Warrants or
Placement Agent Warrants and use its best efforts to have such Registration
Statement declared effective by the SEC prior to the date which is 90 days after
the date of filing of such Registration Statement with the SEC. The Company
shall cause such Registration Statement to remain effective for the applicable
Voxx Registration Period.
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5.3. Piggyback Registrations. (a) If, at any time prior to the end of
the applicable Registration Period, the Company proposes to register under the
Act, for its own account or the account of others, any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents) and a
Registration Statement covering the Registrable Securities is not then
effective, the Company shall send to the Holders written notice of its intention
to register such equity securities, and if, within 30 days after the date of
such notice, a Holder shall so request in writing, the Company shall include in
such registration all or any part of the applicable Registrable Securities such
Holder requests to be registered. Notwithstanding the foregoing, in the event
that, in connection with any underwritten public offering, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Epixtar Common Stock or Voxx Common Stock, as the case may be, which may be
included in such registration because, in such underwriter(s)' judgment,
marketing or other factors dictate such limitation is necessary to facilitate
public distribution, then the Company shall be obligated to include in such
registration only such limited portion of the applicable Registrable Securities
with respect to which the Holder has requested inclusion hereunder as the
underwriter shall permit; provided, however, that (i) after giving effect to the
immediately preceding proviso, any such exclusion of Registrable Securities
shall be made pro rata among the Holders seeking to include Registrable
Securities and the holders of other securities having the contractual right to
inclusion of their securities in such registration by reason of demand
registration rights, in proportion to the number of Registrable Securities or
other securities, as applicable, sought to be included by each such Holder or
other holder, and (ii) no such reduction shall reduce the amount of applicable
Registrable Securities included in the registration below twenty-five (25%) of
the total amount of securities included in such registration. No right to
registration of any Registrable Securities under this Section 5.3 shall be
construed to limit any registration required under ARTICLE V hereof. If an
offering in connection with which the Holder is entitled to registration under
this Section 5.3 is an underwritten offering, then each Holder whose Registrable
Securities are included in such registration statement shall, unless otherwise
agreed by the Company, offer and sell such Registrable Securities in an
underwritten offering using the same underwriter or underwriters and, subject to
the provisions of this Agreement, on the same terms and conditions as other
shares of Epixtar Common Stock or Voxx Common Stock, as the case may be,
included in such underwritten offering. The number of requests by the Holders
permitted by this Section 5.3 shall be unlimited. Notwithstanding the foregoing,
this Section 5.3 shall not apply in the event there is an effective Registration
Statement of the Company, with a current prospectus available, providing for the
resale of all of the Registrable Securities of the Holders.
(b) The Company shall have the right to terminate or withdraw any
registration contemplated under this Section 5.3 prior to the effectiveness of
such registration, whether or not any Holder of Registrable Securities has
elected to include securities in such registration.
5.4. Registration Expenses. All Registration Expenses incurred in
connection with any registration, qualification, exemption or compliance
pursuant to Section 5.2 and Section 5.3 shall be borne by the Company. All
Selling Expenses relating to the sale of securities registered by or on behalf
of Holders shall be borne by such Holders.
5.5. Registration Procedures. In the case of the registration,
qualification, exemption or compliance effected by the Company pursuant to this
Agreement, the Company shall, upon reasonable request, inform each Holder as to
the status of such registration, qualification, exemption and compliance. At its
expense the Company shall:
(a) use its best efforts to keep such registration, and any
qualification, exemption or compliance under state or federal securities laws
which the Company determines to obtain, continuously effective until the
termination of the Registration Period; and
27
(b) advise the Holders as soon as practicable:
(i) when such Registration Statement or any amendment thereto
has been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to such Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such Registration Statement or the initiation of
any proceedings for such purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in such Registration Statement or the prospectus so that, as of such
date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;
(c) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time;
(d) furnish to each Holder, without charge, at least one copy of
such Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference) in the form filed with
the Commission;
(e) during the applicable Registration Period, deliver to each
Holder, without charge, as many copies of the prospectus included in such
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use, consistent with the
provisions hereof, of the prospectus or any amendment or supplement thereto by
each of the selling Holders of Registrable Securities in connection with the
offering and sale of the Registrable Securities covered by the prospectus or any
amendment or supplement thereto. In addition, upon the reasonable request of the
Holder and subject in all cases to confidentiality protections reasonably
acceptable to the Company, the Company will meet with a Holder or a
representative thereof at the Company's headquarters to discuss all information
relevant for disclosure in such registration statement covering the Registrable
Securities, and will otherwise cooperate with any Holder conducting an
investigation for the purpose of reducing or eliminating such Holder's exposure
to liability under the Act, including the reasonable production of information
at the Company's headquarters;
28
(f) prior to any public offering of Registrable Securities pursuant
to any Registration Statement, register or qualify or obtain an exemption for
offer and sale under the securities or blue sky laws of such jurisdictions as
any such Holders reasonably request in writing, provided that the Company shall
not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction, and do any and
all other acts or things reasonably necessary or advisable to enable the offer
and sale in such jurisdictions of the Registrable Securities covered by such
Registration Statement;
(g) cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to any Registration Statement free of any restrictive legends to the
extent not required at such time and in such denominations and registered in
such names as Holders may request at least five (5) business days prior to sales
of Registrable Securities pursuant to such registration statement;
(h) upon the occurrence of any event contemplated by Section
5.5(b)(v) above, the Company shall promptly prepare a post-effective amendment
to such Registration Statement or a supplement to the related prospectus, or
file any other required document so that, as thereafter promptly delivered to
purchasers of the Registrable Securities included therein, the prospectus will
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(i) use its best efforts to comply with all applicable rules and
regulations of the SEC, and use its best efforts to make generally available to
the Holders not later than 45 days (or 90 days if the fiscal quarter is the
fourth fiscal quarter) after the end of its fiscal quarter in which the first
anniversary date of the effective date of such Registration Statement occurs, an
earnings statement satisfying the provisions of Section 11(a) of the Act.
5.6. No Right To Enjoin. The Holders shall have no right to take any
action to restrain, enjoin or otherwise delay any registration pursuant to this
ARTICLE V as a result of any controversy that may arise with respect to the
interpretation or implementation of this Agreement.
5.7. Indemnification.
(a) To the extent permitted by law, the Company shall indemnify each
Holder, each underwriter of the Registrable Securities and each person
controlling such Holder within the meaning of Section 15 of the Act, with
respect to which any registration, qualification or compliance has been effected
pursuant to this Agreement, against all claims, losses, damages and liabilities
(or action in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened (subject to Section 5.7(c)
below), arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in such Registration Statement, or any
amendment or supplement thereof, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in light of the circumstances in which
they were made, and will reimburse each Holder, each underwriter of the
Registrable Securities and each person controlling such Holder, for reasonable
legal and other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action as incurred;
provided that the Company will not be liable in any such case to the extent that
any untrue statement or omission or allegation thereof is made in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such Holder and stated to be specifically for use in preparation of
such Registration Statement, prospectus or offering circular; provided, further,
that the Company will not be liable in any such case where the claim, loss,
damage or liability arises out of or is related to the failure of the Holder to
comply with the covenants and agreements contained in this Agreement respecting
sales of Registrable Securities.
29
(b) Each Holder will severally, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter of the Registrable Securities and
each person who controls the Company within the meaning of Section 15 of the
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 5.7(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus or offering
circular, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, and will reimburse the Company, such
directors and officers, each underwriter of the Registrable Securities and each
person controlling the Company for reasonable legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action as incurred, in each case to the
extent, but only to the extent, that such untrue statement or omission or
allegation thereof is made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder and stated
to be specifically for use in preparation of such registration statement,
prospectus or offering circular; provided that the indemnity shall not apply to
the extent that such claim, loss, damage or liability results from the fact that
a current copy of the prospectus was not made available to the Holder and such
current copy of the prospectus would have cured the defect giving rise to such
loss, claim, damage or liability. Notwithstanding the foregoing, in no event
shall a Holder be liable for any such claims, losses, damages or liabilities in
excess of the net proceeds received by such Holder in the offering, except in
the event of fraud by such Holder.
(c) Each party entitled to indemnification under this Section 5.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless such failure
is materially prejudicial to the Indemnifying Party in defending such claim or
litigation. An Indemnifying Party shall not be liable for any settlement of an
action or claim effected without its written consent (which consent will not be
unreasonably withheld).
30
(d) If the indemnification provided for in this Section 5.7 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, in no event shall a Holder
be liable for any such claims, losses, damages or liabilities pursuant to this
paragraph 5.7(d) in excess of the net proceeds received by such Holder in the
Offering, except in the event of fraud by such Holder.
5.8. Obligations of Holders.
(a) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event requiring the preparation of a supplement
or amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement contemplated by either of Section 5.2 or Section 5.3
until its receipt of copies of the supplemented or amended prospectus from the
Company, such prospectus to be forwarded promptly to the Subscriber by the
Company, and, if so directed by the Company, each Holder shall deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice.
(b) Each Holder shall suspend, upon request of the Company, any
disposition of Registrable Securities pursuant to a registration statement
contemplated by either of Section 5.2 or Section 5.3 during (i) any period not
to exceed two 30-day periods within any one 12-month period the Company requires
in connection with a primary underwritten offering of equity securities and (ii)
any period, not to exceed one 45-day period within any one 12-month period, when
the Company determines in good faith that offers and sales pursuant thereto
should not be made by reason of the presence of material undisclosed
circumstances or developments with respect to which the disclosure that would be
required in such a prospectus is premature, would have an adverse effect on the
Company or is otherwise inadvisable.
31
(c) As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may reasonably
request in writing or as shall be required in connection with any registration,
qualification or compliance referred to in this ARTICLE V.
(d) Each Holder hereby covenants with the Company not to make any
sale of the Registrable Securities without effectively causing the prospectus
delivery requirements under the Act to be satisfied.
(e) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to a Registration Statement described in this ARTICLE V
are not transferable on the books of the Company unless the stock certificate
submitted to the transfer agent evidencing such Registrable Securities is
accompanied by a certificate reasonably satisfactory to the Company to the
effect that (i) the Registrable Securities have been sold in accordance with
such Registration Statement and (ii) the requirement of delivering a current
prospectus has been satisfied.
(f) Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to a Registration Statement which would
constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
(g) At the end of the period during which the Company is obligated
to keep a Registration Statement current and effective as described above, the
Holders of Registrable Securities included in such Registration Statement shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its intention to remove from registration the
shares covered by such Registration Statement which remain unsold, and such
Holders shall notify the Company of the number of shares registered which remain
unsold immediately upon receipt of such notice from the Company.
5.9. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which at any time
permit the sale of the Registrable Securities to the public without
registration, the Company shall use its reasonable best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) so long as a Holder owns any unregistered Registrable
Securities, furnish to such Holder, upon any reasonable request, a written
statement by the Company as to its compliance with Rule 144 under the Act, and
of the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as such Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without registration.
5.10. Assignment of Rights. The rights to cause the Company to register
Registrable Securities granted to the Holders by the Company under this ARTICLE
V may be assigned in full by a Holder in connection with a transfer by such
Holder of its Registrable Securities, provided, however, that (i) such transfer
may otherwise be effected in accordance with applicable securities laws; (ii)
such Holder gives prior written notice to the Company; and (iii) such transferee
agrees to comply with the terms and provisions of this Agreement, and such
transfer is otherwise in compliance with this Agreement. Except as specifically
permitted by this Section 5.10, the rights of a Holder with respect to
Registrable Securities as set out herein shall not be transferable to any other
Person, and any attempted transfer shall cause all rights of such Holder therein
to be forfeited.
32
5.11. Listing of Shares. The Company shall use best efforts to cause
all Registrable Securities covered by a Registration Statement to be listed on
each securities exchange, interdealer quotation system or other market on which
similar securities issued by the Company are then listed.
5.12. Waivers. With the written consent of the Company and the Holders
holding at least a majority of the Registrable Securities that are then
outstanding, any provision of this ARTICLE V may be waived (either generally or
in a particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely) or amended. Upon the effectuation of
each such waiver or amendment, the Company shall promptly give written notice
thereof to the Holders, if any, who have not previously received notice thereof
or consented thereto in writing.
5.13. Agreement to Lock-Up. If the Company elects to conduct an initial
public offering of Voxx Common Stock, the Subscriber shall, and by execution of
this Agreement hereby agrees to, execute the same lock-up agreement that is
executed by officers and directors of Voxx pursuant to which the holders of the
Notes and Voxx Warrants agree not to sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any securities of Voxx (or instruments
exercisable into securities of Voxx) for a period of time following the
consummation of the initial public offering of Voxx Common Stock to be
determined by the Company and the Placement Agent. This Section 5.13 shall be
binding upon any transferee of the Notes or the Voxx Warrants.
ARTICLE VI.
MISCELLANEOUS
6.1. Notices. Any notice or other communication to the Company given
hereunder shall be deemed sufficient if in writing and sent by registered or
certified mail, return receipt requested, or delivered by hand against written
receipt therefore. Notices shall be deemed to have been given or delivered on
the date of mailing, except notices of change of address, which shall be deemed
to have been given or delivered when received.
The address for such notices and communications shall be as follows:
If to the Company:
Epixtar Corp.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Secretary of the Company
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx XxXxxxxxxx, Esq.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
If to a Subscriber:
To the address set forth under such Subscriber's name on the
signature pages hereto.
33
6.2. Except as provided in Section 5.12 above, this Agreement shall not
be changed, modified or amended except by a writing signed by the parties to be
charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
6.3. Subject to the provisions of Section 5.10 and Section 6.13, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and assigns.
This Agreement sets forth the entire agreement and understanding between the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among them.
6.4. Upon the execution and delivery of this Agreement by the
Subscriber, this Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Units as herein provided; subject, however, to
the right hereby reserved to the Company to revoke this subscription in
accordance with Section 1.18.
6.5. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. IN
THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE EXCLUSIVE FORUMS FOR
RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT ARE EITHER THE
SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE
FEDERAL COURTS FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE
PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE
TO SAID VENUE.
34
6.6. The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
6.7. It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
6.8. The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
6.9. This Agreement may be executed in two or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
6.10. (a) The Subscriber agrees not to issue any public statement with
respect to the Subscriber's investment or proposed investment in the Company or
the terms of any agreement or covenant between them and the Company without the
Company's prior written consent, except such disclosures as may be required
under applicable law or under any applicable order, rule or regulation.
(b) The Company agrees not to disclose the names, addresses or any
other information about the Subscriber, except as required by law and to satisfy
its obligations under ARTICLE V.
6.11. (a) The Subscriber represents and warrants that it has not
engaged, consented to nor authorized any broker, finder or intermediary to act
on its behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. The Subscriber
hereby agrees to indemnify and hold harmless the Company from and against all
fees, commissions or other payments owing to any such person or firm acting on
behalf of the Subscriber hereunder.
(b) The Company has engaged, consented to and authorized the
Placement Agent to act as a agent for the Company in connection with the
transactions contemplated by this Agreement. The Company shall pay the Placement
Agent a commission and reimburse the Placement Agent's expenses in accordance
with the Placement Agency Agreement between the Company and the Placement Agent,
and the Company shall indemnify and hold harmless the Subscriber from and
against all fees, commissions or other payments owing by the Company to the
Placement Agent or any other person or firm acting on behalf of the Company
hereunder.
6.12. Nothing in this Agreement shall create or be deemed to create any
rights in any person or entity not a party to this Agreement, except (a) for the
holders of Registrable Securities and (b) for the Placement Agent pursuant to
ARTICLE V herein.
35
6.13. The Company acknowledges and agrees that irreparable damage would
occur in the event that any of the provisions of ARTICLE V of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached and that such damage would not be compensable in money damages and that
it would be extremely difficult or impracticable to measure the resultant
damages. Accordingly, the Subscriber shall be entitled to an injunction or
injunctions with respect to the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, in addition to any other remedy to
which it may be entitled at law or in equity, and the Company expressly waives
any defense that a remedy in damages would be adequate and expressly waives any
requirement in an action for specific performance for the posting of a bond by
the Subscriber bringing such action.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
36
ARTICLE VII.
CONFIDENTIAL INVESTOR QUESTIONNAIRE
7.1. The Subscriber represents and warrants that he, she or it comes
within one category marked below, and that for any category marked, he, she or
it has truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL except as otherwise required by law.
The undersigned agrees to furnish any additional information which the Company
deems necessary in order to verify the answers set forth below.
Category A ___ The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint net
worth with his or her spouse, presently exceeds $1,000,000.
Explanation. In calculating net worth you may
include equity in personal property and real
estate, including your principal residence,
cash, short-term investments, stock and
securities. Equity in personal property and real
estate should be based on the fair market value
of such property less debt secured by such
property.
Category B ___ The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of $200,000 in
each of the two most recent years, or joint income with his or
her spouse in excess of $300,000 in each of those years (in each
case including foreign income, tax exempt income and full amount
of capital gains and losses but excluding any income of other
family members and any unrealized capital appreciation) and has
a reasonable expectation of reaching the same income level in
the current year.
Category C ___ The undersigned is a director or executive officer of the
Company which is issuing and selling the Securities.
Category D ___ The undersigned is a bank; a savings and loan association;
insurance company; registered investment company; registered
business development company; licensed small business investment
company ("SBIC"); or employee benefit plan within the meaning of
Title 1 of ERISA and (a) the investment decision is made by a
plan fiduciary which is either a bank, savings and loan
association, insurance company or registered investment advisor,
or (b) the plan has total assets in excess of $5,000,000 or (c)
is a self directed plan with investment decisions made solely by
persons that are accredited investors. (describe entity)
----------------------------------------------------------------
37
----------------------------------------------------------------
Category E ___ The undersigned is a private business development company as
defined in section 202(a)(22) of the Investment Advisors Act of
1940. (describe entity)
----------------------------------------------------------------
Category F ___ The undersigned is either a corporation, partnership,
Massachusetts business trust, or non-profit organization within
the meaning of Section 501(c)(3) of the Internal Revenue Code,
in each case not formed for the specific purpose of acquiring
the Securities and with total assets in excess of
$5,000,000.(describe entity)
----------------------------------------------------------------
Category G ___ The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Securities, where the purchase is directed by a "sophisticated
investor" as defined in Regulation 506(b)(2)(ii) under the Act.
----------------------------------------------------------------
Category H ___ The undersigned is an entity (other than a trust) in which all
of the equity owners are "accredited investors" within one or
more of the above categories. If relying upon this Category
alone, each equity owner must complete a separate copy of this
Agreement. (describe entity)
----------------------------------------------------------------
Category I ___ The undersigned is not within any of the categories above and
is therefore not an accredited investor.
The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Closing Date in the event that the representations and
warranties in this Agreement shall cease to be true, accurate and complete.
7.2. SUITABILITY (please answer each question)
(a) For an individual Subscriber, please describe your current
employment, including the company by which you are employed and its principal
business:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(b) For an individual Subscriber, please describe any college
or graduate degrees held by you:
-----------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
38
(c) For all Subscribers, please state whether you have you
participated in other private placements before:
YES_______ NO_______
(d) If your answer to question (d) above was "YES", please indicate
frequency of such prior participation in private placements of:
Public Private Public or Private Marketing
Companies Companies or Outsourcing Companies
--------- --------- ------------------------
Frequently
-------------- ------------- -------------
Occasionally
-------------- ------------- -------------
Never
-------------- ------------- -------------
(e) For individual Subscribers, do you expect your current level of
income to significantly decrease in the foreseeable future:
YES_______ NO_______
(f) For trust, corporate, partnership and other institutional
Subscribers, do you expect your total assets to significantly decrease in the
foreseeable future:
YES_______ NO_______
(g) For all Subscribers, do you have any other investments or
contingent liabilities which you reasonably anticipate could cause you to need
sudden cash requirements in excess of cash readily available to you:
YES_______ NO_______
39
(h) For all Subscribers, are you familiar with the risk aspects and
the non-liquidity of investments such as the securities for which you seek to
subscribe?
YES_______ NO_______
(i) For all Subscribers, do you understand that there is no
guarantee of financial return on this investment and that you run the risk of
losing your entire investment?
YES_______ NO_______
7.3. MANNER IN WHICH TITLE IS TO BE HELD (circle one)
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of
Survivorship (both parties must sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(g) Trust*
(h) Other
*If Securities are being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.
40
7.4. NASD AFFILIATION.
Are you affiliated or associated with an NASD member firm (please check one):
Yes _________ No __________
If Yes, please describe:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
*If Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
__________________________________
Name of NASD Member Firm
By: ______________________________
Authorized Officer
Date: ____________________________
7.5. The undersigned is informed of the significance to the Company of
the foregoing representations and answers contained in the Confidential Investor
Questionnaire contained in this Section 7 and such answers have been provided
under the assumption that the Company will rely on them.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
41
[SIGNATURE PAGE]
X $100,000 = "PURCHASE PRICE"
__________________________________________
Number of Units Subscribed For by Subscriber
________________________________ _____________________________________
Signature Signature (if purchasing jointly)
________________________________ _____________________________________
Name Typed or Printed Name Typed or Printed
________________________________ _____________________________________
Entity Name Entity Name
________________________________ _____________________________________
Address Address
________________________________ _____________________________________
City, State and Zip Code City, State and Zip Code
________________________________ _____________________________________
Telephone-Business Telephone--Business
________________________________ _____________________________________
Telephone-Residence Telephone--Residence
________________________________ _____________________________________
Facsimile-Business Facsimile--Business
________________________________ _____________________________________
Facsimile-Residence Facsimile--Residence
________________________________ _____________________________________
Tax ID # or Social Security # Tax ID # or Social Security #
Name in which securities should be issued: _____________________________________
Dated:__________ , 2004
This Subscription Agreement is agreed to and accepted as of __________________ ,
2004.
EPIXTAR CORP.
By:__________________________________
Name:
Title:
42
CERTIFICATE OF SIGNATORY
(To be completed if Securities are
being subscribed for by an entity)
I,____________________________, am the____________________________ of
__________________________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Subscription Agreement and to purchase
and hold the Securities, and certify further that the Subscription Agreement has
been duly and validly executed on behalf of the Entity and constitutes a legal
and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ________ day of
_________________,______.
_________________________________
(Signature)
43
