SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 1, 1997
CURTIS MATHES HOLDING CORPORATION
(Exact name of Registrant as specified in its charter)
Texas 2-93668-FW 75-1975147
(State of incorporation) Commission File Number (IRS Employer
Identification No.)
10911 Petal Street, 75238
Dallas, Texas (Zip Code)
(Address of principal executive offices)
(214) 503-8880
(Registrant's telephone number, including area code)
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ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
In May of 1997 Registrant placed $1,050,000 of its Series K
Preferred Stock for cash pursuant to the exemption from registration
provided by Securities and Exchange Commission ("SEC") Rule 903.
Registrant paid aggregate fees of $65,625 pursuant to the transactions.
All Series K Preferred Stock placements were made with various accredited
investors in offshore transactions as defined in Rule 903. In accordance
with the terms and conditions of the Series K Certificate of Designation,
Series K Preferred Stock is convertible into shares of Registrant's $.01
par value Common Stock at various times. (A copy of the Certificate of
Designation for Registrant's Series K Preferred Stock showing terms of
conversion is filed herewith, as reflected in the Exhibit Index of this
Form 8-K.)
There are currently 35,091,532 shares of Registrant's Common Stock
outstanding.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Curtis Mathes Holding Corporation
(Registrant)
By: /s/ F. Shelton Richardson, Jr.
F. Shelton Richardson, Jr.
Vice President - Chief Financial Officer
(Principal Financial and Duly Authorized
Officer)
Date: May 16, 1997
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CURTIS MATHES HOLDING CORPORATION
EXHIBIT INDEX
Exhibit Sequential
Number Description of Exhibits Page
4.1 Articles of Incorporation of the Company, as amended (filed
as Exhibit "4.1" to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 1996 and
incorporated herein by reference.) N/A
4.2 Bylaws of the Company, as amended (filed as Exhibit "3(ii)"
to the Company's annual report on Form 10-K for the fiscal
year ended June 30, 1994 and incorporated herein by
reference.) N/A
4.3 Form of Common Stock Certificate of the Company (filed as
Exhibit "4.2" to the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1994 and incorporated
herein by reference.) N/A
4.4* Series K Preferred Stock terms and conditions. 4
4.5* Form of subscription agreement for Series K Preferred Stock. 8
* Filed herewith.
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CURTIS MATHES HOLDING CORPORATION
(the "Corporation")
CERTIFICATE OF DESIGNATION
FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO
THE 10% CONVERTIBLE PREFERRED STOCK - SERIES K
SECTION 1. DESIGNATION
The designation of the series of Preferred Shares fixed by this
resolution shall be "10% Convertible Preferred Stock - Series K"
(hereinafter referred to as the "Preferred Shares").
SECTION 2. TERMS
Total Face Value: Minimum: $1,000,000
Maximum: $1,500,000
Each Preferred Share: $100,000
Number of Preferred Shares: 15 (Maximum Offering)
Interest: 10% per annum, payable quarterly in arrears
in cash or common stock (subject to
Regulation S) at the arithmetic average of
the closing bid prices for each of the five
trading days prior to interest due date.
SECTION 3. CONVERSION RIGHTS
A. Right to Convert. One-half of the Preferred Shares and the
accrued interest thereon may be converted at the option of the holder
thereof at any time from and after the forty-fifth (45) day and one-half
of said Preferred Shares and accrued interest thereon on or after the
sixtieth (60th) day following the date of issuance thereof, and without
the payment of any additional consideration thereof, into that number of
fully paid, nonassessable and DTC eligible shares of Common Stock, $0.01
par value per share, of the Corporation (the "Common Stock") as is
determined by the following Conversion Price Definition for each
Preferred Shares that is converted:
B. Conversion Price. The Preferred Shares may be converted (on
or after their effective conversion dates as set forth above) into the
Company's common stock as defined as follows:
The Floating Strike Price shall be:
Eighty percent (80%) of the arithmetic average
of the closing bid prices for each of the five
trading days prior to the exercise date of any
such conversion.
C. Repurchase Option. In the event that the arithmetic closing
bid price for any five consecutive trading day period subsequent to the
closing of the transaction is 50% or less than the arithmetic average of
the closing bid prices for the five trading day period immediately prior
to said closing date, the Company may make a call to repurchase for cash
in immediately available federal funds at 115% of par (face value) plus
accrued interest all those Preferred Shares which have not been
previously converted.
The Company must notify the Buyer of its repurchase election by
FAX or other written communication within two (2) trading days after the
occurrence of the above event and must complete its repurchase within ten
(10) trading days of such notice.
However, upon notification of the above call, the Buyer may
elect to convert its previously unconverted Preferred Shares in
accordance with the Conversion Terms set forth above. If Buyer elects to
so convert, Buyer must so advise Seller of its election by FAX or other
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written communication within twenty-four (24) hours of receipt of
Seller's call notification as provided above.
D. Subordination. The Convertible Preferred Shares shall bear
subordinated liquidation distribution rights to those of secured
creditors, but shall be senior to those of common stock.
E. Registration. In the event that the SEC terminates or modifies
Regulation S from its present format, and such modifications apply to the
present transaction(s), the investors shall have the right to demand
registration of its converted securities pursuant to Regulation D, with
an S-3 filing.
F. Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Shares. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall round up to the nearest whole share. In the case of a
dispute as to the calculation of the Conversion Rate the Corporation's
calculation shall be deemed conclusive absent manifest error. In order
to convert Preferred Shares into full shares of Common Stock, the holder
shall surrender the certificate or certificates therefor, duly endorsed,
by either overnight courier or 2-day courier, to the office of the
Corporation for the Preferred Shares, and shall give written notice to
the Corporation at such office that he elects to convert the same, the
number of shares of Preferred Shares so converted and a calculation of
the Conversion Rate (with an advance copy of the certificate(s) and the
notice by facsimile); provided, however, that the Corporation shall not
be obligated to deliver certificates evidencing the shares of Common
Stock issuable upon such conversion unless certificates evidencing such
Preferred Shares are delivered to the Corporation as provided above, or
the holder notifies the Corporation that such certificates have been
lost, stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates.
The Corporation shall use reasonable efforts to cause to be
issued and delivered within three (3) business days after delivery to the
Corporation of such Preferred Shares, or after such agreement and
indemnification, to such holder of Stock at the address of the holder on
the stock books of the Corporation, a certificate or certificates for the
number of shares of Common Stock to which he shall be entitled as
aforesaid. The date on which notice of conversion is given (the "Date of
Conversion") shall be deemed to be the date set forth in such notice of
conversion provided the original Preferred Shares to be converted are
received by the Corporation within five (5) business days thereafter and
the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date. If
the original Preferred Shares to be converted are not received by the
Corporation within five (5) business days after the Conversion, the
notice of conversion shall become null and void.
SECTION 4. CORPORATE EVENTS
A. Notices of Record Date. In the event of (i) any declaration by
the Corporation of a record date of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than cash dividend) or other
distribution or (ii) any capital reorganization of the Corporation, any
reclassification or recapitalization of the Capital stock of the
Corporation, any merger or consolidation of the Corporation, and any
transfer of all or substantially all of the assets of the Corporation to
any other Corporation, or any other entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation,
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the Corporation shall mail to each holder of Preferred Shares at least 20
days prior to the record date specified therein, a notice specifying (A)
the date on which any such record is to be declared for the purpose of
such dividend or distribution and a description of such dividend or
distribution, (B) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective, and (C) the
time, if any, that is to be fixed, as to when the holders of record of
Common Stock (or other securities) will receive for securities or other
property deliverable upon such reorganization, reclassification,
transfer, consolidation, merger, dissolution or winding up.
B. Corporate Changes. The Closing Bid Price used to determine the
Conversion Price shall be appropriately adjusted to reflect, as deemed
equitable and appropriate by the Corporation, any stock dividend, stock
split or share combination of the Common Stock. In the event of a
merger, reorganization, recapitalization or similar event of or with
respect to the Company (a "Corporate Change") (other than a Corporate
Change in which all or substantially all of the consideration received by
the holders of the Company's equity securities upon such Corporate Change
consists of cash or assets other than securities issued by the acquiring
entity or any affiliate thereof), the Preferred Shares shall be assumed
by the acquiring entity and thereafter to be convertible into such class
and type or securities as the Holder would have received had the Holder
converted this immediately prior to such Corporate Change, as
appropriately adjusted to equitably reflect the conversion price and any
stock dividend, stock split or share combination of the common stock
after such corporate event.
SECTION 5. RESERVATION OF STOCK ISSUABLE UPON CONVERSION
The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of the shares of the Stock, such number of
its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all then outstanding Preferred Shares; and if at
any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding
shares of the Stock, the Corporation will take such corporate action as
may be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
SECTION 6. VOTING RIGHTS
The Holders of the Preferred Shares will not have any voting rights
except as set forth below or as otherwise from time to time required by
law.
To the extent that under Texas law the vote of the holders of the
Preferred Shares, voting separately as a class, is required to authorize
a given action of the Corporation, the affirmative vote or consent of the
holders of at least a majority of the outstanding Preferred Shares shall
constitute the approval of such action by the class. To the extent that
under Texas law the holders of the Preferred Shares are entitled to vote
on a matter with holders of Common Stock, voting together as one class,
each Preferred Shares shall be entitled to a number of votes equal to the
number of shares of Common stock into which it is then convertible using
the record date for the taking of such vote of stockholders as the date
as of which the Conversion Price is calculated. Holders of the Preferred
Shares shall be entitled to notice of all shareholder meetings or written
consents with respect to which they would be entitled to vote, which
notice would be provided pursuant to the Corporation's bylaws and
applicable statutes.
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SECTION 7. PROTECTIVE PROVISIONS
So long as the Preferred Shares are outstanding, the Corporation
shall not take any action that would impair the rights of the holders of
the Preferred Shares set forth herein and shall not without first
obtaining the approval (by vote or written consent, as provided by law)
of the holders of at least a majority in aggregate principal amount of
the Preferred Shares then outstanding.
A. Alter or change the rights, preferences or privileges of the
Preferred Shares or any other Senior Securities so as to affect adversely
the Preferred Shares;
B. Create any new class or series of stock having a preference
over the Preferred Shares with respect to Distributions (as defined in
Section 5 above), except secured borrowings, without the express written
permission of the purchasers of the Preferred Shares for a period of not
to exceed 90 days from the date of Closing.
C. Do any act or thing which would result in taxation of the
holders of Preferred Shares under Section 305 of the Internal Revenue
Code of 1986, as amended (or any comparable provision of the Internal
Revenue Code as hereafter from time to time amended).
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OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
CURTIS MATHES HOLDING CORPORATION
10 % CONVERTIBLE PREFERRED STOCK - SERIES K
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the
sale of certain Securities designated as 10% Convertible Preferred Stock
- - Series K (hereinafter the "Preferred Shares"), which are convertible
into shares of common stock (hereinafter the "Common Shares") of Curtis
Mathes Holding Corporation, (the "Corporation").
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
A. Buyer hereby subscribes for $100,000 Convertible
Preferred Shares (the "Preferred Stock") convertible into Common Shares
of the Seller in accordance with the terms set forth in the Certificate
of Designation attached as Exhibit A to this Agreement, at $100,000 per
Share for an aggregate purchase price of $ (
Dollars) payable in United States Dollars;
B. Buyer shall pay the purchase price by delivering same day funds
in United States Dollars to the Escrow Agent set forth in Section 4
herein, to be delivered to the order of Seller upon delivery of the
Shares set forth in Section 5 herein by the Seller to said Escrow Agent;
and
C. This Agreement has been executed in connection with an offering
(the "Offering") by Seller of Preferred Shares convertible into Common
Shares pursuant to Regulation S ("Regulation S") as promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
2. BUYER'S REPRESENTATIONS
Buyer represents and warrants to Seller as follows:
A. Buyer is not a "U.S. Person" as defined by Rule 902 of
Regulation S, (See Exhibit B) was not organized under the laws of any
U.S. jurisdiction, and was not formed for the purpose of investing in
securities not registered under the Securities Act;
B. Buyer is not a "distributor" as defined by Rule 902 of
Regulation S (See "Exhibit B");
C. At the time the purchase order for this transaction was
originated, the Buyer was physically outside of the United States and
that such purchase order was not the result of directed selling efforts
by the Corporation in the United States;
D. No offer to purchase the Preferred Shares was made by the Buyer
while in the United States;
E. Buyer is purchasing the Preferred Shares for its own account
for investment purposes and not with a view towards distribution.
F. All subsequent offers and sales of the Preferred Shares will be
made (I) outside the United States in compliance with Rule 903 or Rule
904 of Regulation S, (ii) pursuant to registration of the Shares under
the Securities Act, or (iii) pursuant to an exemption from such
registration. Buyer understands the conditions of the exemption from
registration afforded by Section 4(1) of the Securities Act and
acknowledges that there can be no assurance that it will be able to rely
on such exemption. In any case Buyer will not resell the Shares to U.S.
Persons or within the United States until after the end of the forty (40)
day period commencing on the Closing Date of the Offering (as defined
below in Section 4) (the "Restricted Period");
G. Buyer agrees that, at all times after the execution of this
Agreement by Buyer and prior to the expiration of the Restricted Period,
it will keep its purchase of the Preferred Shares confidential, except as
required by law and except as necessary in the ordinary course of Buyer's
business;
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H. Buyer understands that the Preferred Shares are being offered
and sold to it in reliance on specific provisions of United States
Federal and State securities laws and that Seller is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Buyer set forth herein in order to
determine the applicability of such provisions. Accordingly, Buyer
agrees to notify Seller of any events which would cause the
representations and warranties of Buyer to be untrue or breached at any
time after the execution of this Agreement by Buyer and prior to the
expiration of the Restricted Period;
I. This Agreement has been duly authorized, validly executed, and
delivered on behalf of Buyer and is a valid and binding agreement
enforceable in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally;
J. Any offering documents received by Buyer include statements to
the effect that the Preferred Shares have not been registered under the
Securities Act and may not be offered or sold in the United States or to
U.S. Persons during the Restricted Period.
K. Buyer, in making the decision to purchase the Preferred Shares
subscribed for, has relied upon independent investigations made by it and
has not relied on any information or representations made by third
parties. Notwithstanding, the Buyer has relied upon the accurateness and
completeness of the companies public filings and press releases; and
L. Buyer has not taken any action that would cause Seller to be
subject to any claim for commission or other fee or remuneration by any
broker, finder, or other person and Buyer indemnifies Seller against any
such claim caused by the actions of Buyer or any of its employees or
agents.
M. Buyer is an "Accredited Investor" as defined in Rule 502 of
Regulation D.
N. Buyer understands that the Corporation makes no representation
regarding the fulfillment on the future of any reporting requirements
under the Exchange Act (as hereinafter defined), or the dissemination to
the public of any current information concerning the Corporation. Other
than as described herein, Buyer understands and hereby acknowledges that
except for the registration rights described herein, the Corporation is
under no obligation to register the Preferred Shares or the Conversion
Shares under the Securities Act.
O. Buyer acknowledges receipt and review of the Disclosure
Materials and the exhibits hereto, and hereby represents that Buyer has
been furnished by the Corporation during the course of this transaction
with all information regarding the Corporation which the Buyer has
requested or desired to know; that all documents which could be
reasonably provided have been made available for inspection and review;
and that such information and documents have, in Buyer's opinion,
afforded Buyer with all of the same information that would be provided in
a registration statement filed under the Securities Act; that Buyer has
been afforded the opportunity to ask questions of and receive answers
form duly authorized officers or other representatives of the Corporation
concerning the terms and conditions of the Offering, and any additional
information which Buyer has requested.
P. Buyer acknowledges that it has directly or through Seller's
agent, __________ negotiated the terms of the Preferred Shares with the
Corporation.
Q. Buyer agrees to hold the Corporation and its directors,
officers and controlling persons and their respective heirs,
representatives, successors and assigns harmless and to indemnify them
<PAGE>
against all liabilities, costs and expenses incurred by them as a result
of any misrepresentation made by Buyer contained herein or any sale or
distribution by the Buyer in violation of applicable federal and state
securities laws.
R. Seller did not attempt to, and did not induce Buyer to purchase
the subject Preferred Shares.
3. SELLER'S REPRESENTATIONS
Seller represents and warrants to Buyer as follows:
A. Seller is a "Domestic Issuer" and a "Reporting Issuer," as such
terms are defined by Rule 902 of Regulation S. Seller has registered its
common stock pursuant to Section 12(b) or (g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") is in full compliance with
all reporting requirements of either Section 13(a) or 15(d) of the
Exchange Act, and Seller's common stock trades on the NASDAQ Stock Market
under the symbol CRTM;
B. Seller has furnished Buyer with copies of Seller's most recent
Annual Report, on Form 10-K filed with the Securities and Exchange
Commission and all forms 10-Q and 8-K filed thereafter;
C. Seller has not offered the Preferred Shares to any person in
the United States, any identifiable group of U.S. citizens abroad, or to
any U.S. Person;
D. At the time the buy order was originated, Seller and/or its
agents reasonably believed Buyer was outside the United States and was
not a U.S. Person;
E. Seller and/or its agents reasonably believe that the sale of
the Preferred Shares has not been prearranged with a Buyer in the United
States;
F. Seller has not conducted any "directed selling efforts" with
respect to the Preferred Shares nor has Seller conducted any general
solicitation (as that term is used in Regulation D under the Securities
Act) with respect to the Preferred Shares;
G. The Preferred Shares when issued and delivered will be duly and
validly authorized and issued, fully-paid and nonassessable and will not
subject the holders thereof to personal liability by reason of being such
holders. There are no preemptive rights of any shareholder of Seller
with respect to the Preferred Shares;
H. This Agreement has been duly authorized, validly executed and
delivered on behalf of Seller and is a valid and binding agreement in
accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;
I. The execution and delivery of this Agreement and the
consummation of the issuance of the Shares and the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by Seller of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or bylaws of
Seller, or any indenture, mortgage, deed of trust or other material
agreement or instrument to which Seller is a part of by which it or any
of its properties or assets are bound, or any existing applicable decree,
judgment or order of any court, Federal or State regulatory body,
administrative agency or other governmental body having jurisdiction over
Seller or any of its properties or assets;
J. Seller is not aware of any authorization, approval or consent
of any governmental body which is legally required for the issuance and
sale of the Preferred Shares as contemplated by this Agreement;
K. Within two full business days of receipt by the Corporation of
a properly executed request for conversion accompanied by the Preferred
Shares to be converted, Seller will deliver to its transfer agent its
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directive and authorization to execute the conversion and to issue to
Buyer the common stock shares so authorized. The Seller acknowledges
that a delay in issuance of its authorization and directive for the
conversion could result in economic loss to the Buyer. Therefore, as
compensation to the Buyer for such loss, in the event that the Seller
fails to deliver said authorization and directive within three full
business days, the Seller agrees to pay liquidated damages to the Buyer
for late issuance of said authorization and directive in the amount of
$500 per day for each day of delay after three days, up to a maximum of
$10,000 per conversion request. Nothing herein shall create a liability
to the Seller for actions or delays of the transfer agent once the
authorization and directive have been delivered to it by the Seller. Any
liquidated damages due Buyer will be paid within seven (7) days of
issuance of the shares resulting from the conversion.
L. Upon conversion of the Preferred Shares, Seller will issue one
or more certificates representing the Common Shares in the name of the
Buyer without restrictive legend, except as may otherwise be required by
applicable law, rule or regulation, and in DTC eligible form, in such
denominations to be specified by the Buyer prior to conversion provided
Buyer represents to Seller that resale of the Shares will be made only in
compliance with applicable securities laws. Seller further warrants that
no instructions other than these instructions, and instructions for a
"stop transfer" until the end of the Restricted Period, have been given
to the transfer agent and also warrants that the Shares shall otherwise
be freely transferable on the books and records of Seller subject to
compliance with Federal and State securities laws. Seller will notify
the transfer agent of the Closing Date or Closing Dates of the Offering
and of the date of expiration of the Restricted Period or Periods.
Nothing in this section shall affect in any way Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of
the Shares;
M. Seller has not taken and will take no action that will affect
in any way the running of the Restricted Period or the ability of Buyer
to freely resell the Shares in accordance with applicable securities laws
and this Agreement;
N. Seller will comply with all applicable securities with respect
to the sale of the Shares, including but not limited to the filing of all
reports required to be filed in connection therewith the Securities and
Exchange Commission or any stock exchange of the NASDAQ stock market or
any other regulatory authority; and
O. Seller nor agents of the Seller have purchased any common
shares of the Seller in open market transactions on the NASDAQ stock
market for the 30 days immediately preceding the date of this agreement.
4. ESCROW AGENT; WIRING INSTRUCTIONS; DELIVERY INSTRUCTIONS; AGENT
A. ___________________ (the "Escrow Agent") will act as Escrow
Agent for this transaction;
B. The Escrow agent will collect funds in the amount as set forth
in Section 1 herein from the Buyer and Preferred Share Certificates from
the Seller as set forth in Section 5 herein;
C. The Escrow Agent shall release funds to Seller via wire
transfer pursuant to Seller's instructions and release the certificate(s)
to Buyer via private overnight mail service pursuant to Buyer's
instructions in Section 4 herein, once all material has been received.
D. Seller's Escrow Agent's wiring instructions are:
For Credit to the Account of:
Reference:
E. Buyer's instructions for delivery of the certificate are as
follows:
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F. _________________ shall serve as agent (the "Agent") in the
transaction contemplated by this Agreement. Agent's fee is solely the
responsibility of the Seller and Seller expressly agrees to pay Agent
said fee as such is agreed upon between the Seller and the Agent.
Neither the Seller nor the Agent has any recourse of any kind whatsoever
against the Buyer for any monies owed the Agent by the Seller or for any
monies paid by the Seller to the Agent. Seller expressly indemnifies
Buyer against any monies owed the Agent.
G. Seller agrees to compensate Escrow Agent in the amount of one-
quarter of one percent (.0025) of gross funds raised. Seller agrees to
pay Escrow Agent directly from the proceeds of the sale of the Preferred
Shares.
5. CONDITIONS TO CLOSING
A. Buyer understands that Seller's obligation to sell the
Preferred Shares is conditioned upon delivery into escrow by Buyer of the
amount set forth in Section 1 herein.
B. Seller understands that Buyer's obligation to purchase the
Preferred Shares is conditioned upon delivery of certificate(s)
representing the Preferred Shares as described in Section 5 herein, and
provision of an opinion of counsel as provided in Subsection D (ii)
herein below.
C. For this transaction to close, Buyer must:
(i) Wire funds to the Escrow Agent, in the amount of US
dollars ($________________) no later than 72 hours after
receipt by Escrow Agent of the executed Subscription
Agreement.
(ii) Deliver a signed Offshore Securities Subscription
Agreement; and,
(iii) Deliver a signed closing instructions/hold harmless
letter addressed to the Escrow Agent, attached hereto as
Exhibit C.
D. For this transaction to close, Seller must:
(I) Deliver to the Escrow Agent the Certificate of
Designation.
(ii) Deliver to the Escrow Agent an opinion letter from
Seller's counsel stating that, among other things, (a) the
Company is duly incorporated and validly existing; (b)
this Agreement, the issuance of the Preferred Shares, and
the issuance of the Common Stock upon conversion of the
Preferred Shares up to the number of shares of common
stock currently authorized in the Seller's Certificate of
Incorporation, have been duly approved by all required
corporate action, and that all such securities, up to the
number of shares of common stock currently authorized in
the Seller's Certificate of Incorporation, upon due
issuance, shall be validly issued and outstanding, fully
paid and nonassessable, and in each case, having the
rights, preferences and privileges set forth in the
Certificate of Incorporation and the respective
Certificates of Designations; (c) this Agreement is a
valid and binding obligation of the Company, enforceable
in accordance with its terms, except as enforceability of
any indemnification provisions may be limited by
principles of public policy, and subject to laws of
general application relating to bankruptcy, insolvency and
the relief of debtors and rules of laws governing specific
performance and other equitable remedies;
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(iii) Deliver to the Escrow Agent a signed Offshore
Securities Subscription Agreement which shall be signed
after execution of such Subscription Agreement by Buyer;
and
(iv) Deliver to the Escrow Agent a signed closing
instructions/hold harmless letter addressed to the Escrow
Agent, attached hereto as Exhibit D.
6. CLOSING
The Preferred Shares certificate shall be delivered to Buyer and the
funds therefore shall be delivered to Seller on or before ______, 1997
(the "Closing Date") or at such time to be mutually agreed.
7. GOVERNING LAW; INTERPRETATION AND ARBITRATION
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Texas. Facsimile signatures of this
Agreement shall be binding on all parties hereto. All terms used herein
that are defined in Regulation S under the Securities Act shall have the
meanings set forth therein.
The Buyer shall have the right, in lieu of litigation, to resolve
any dispute arising hereunder before a panel of three arbitrators
selected pursuant to and in accordance with the rules of the American
Arbitration Association. The Arbitration shall be held in Dallas, Texas.
The prevailing party shall be entitled to an award of reasonable
attorneys' fees and expenses.
8. ENTIRE AGREEMENT; AMENDMENT
This Agreement, the Certificate of Designation, and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein. Except as expressly
provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
9. NOTICES; ETC.
Any notice, demand or request required or permitted to be given by
either the Seller or the Buyer pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally
or by facsimile, with a hard copy to follow by two day courier addressed
to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying
the other in writing.
10. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each
of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
11. SEVERABILITY
In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, enforceable
or void, this Agreement shall continue in full force and effect without
said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any
party.
<PAGE>
12. TITLES AND SUBTITLES
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above, as confirmed by signatory below. Facsimile signatures of
this agreement shall be binding on all parties hereto.
Official Signatory of Buyer: Official Signatory of Seller:
____________________________ CURTIS MATHES HOLDING CORPORATION
____________________________ 10911 Petal Street
____________________________ Dallas, Texas 75238
____________________________
By: _______________________ By:___________________________
Title: _______________________ Authorized Signatory
By Order of the Board
