OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER (THE 1933
ACT ), AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES (AS DEFINED IN REGULATION S OF THE
1933 ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS (AS DEFINED IN REGULATION S OF THE
1933 ACT) EXCEPT PURSUANT TO REGISTRATION UNDER OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT.
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as
March___, 1997 (the Agreement ), is executed in reliance upon
the exemption from registration afforded by Regulation S
( Regulation S ) as promulgated by the Securities and Exchange
Commission ( SEC ), under the 1933 Act. Capitalized terms
used herein and not defined shall have the meanings given to
them in Regulation S.
This Agreement has been executed by the undersigned
__________________________________________as Purchaser in
connection with the private placement of 8.0% Cumulative
Convertible Debentures of TRANS ENERGY, INC., a corporation
organized under the laws of the State of Nevada (herein-after
referred to as Seller or Company ). Purchaser hereby
represents and warrants to, and agrees with Seller:
1. Agreement To Subscribe: Purchase Price.
a) Subscription. The undersigned Purchaser hereby
subscribes for and agrees to purchase _________________
the Sellers 8.0% Cumulative Convertible Debentures having
an aggregate principal amount of U.S. $1,500,000 (singly,
a Debenture", and collectively, the "Debentures").
(b) Form of Payment. Purchaser shall pay the total
consideration by delivering good funds by wire transfer
in United States Dollars on or before March ____, 1997,
into the escrow account as follows:
First Union Bank of Connecticut
Stamford Executive Office
000 Xxxx Xxxxxx, X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
ABA # 000000000
Swift # XXXXXX00XXX
Account: 00000-0000000-0
Account Name: Xxxxxx X. XxXxxxx, Esquire - Trustee Account
(c) Closing. Subject to the satisfaction of the
conditions set forth in Sections 7 and 8 hereof, the closing
of the transactions contemplated by this Agreement shall occur
from time to time on or before March____, 1997 or such earlier
or later date as is mutually agreed to in writing by Purchaser
and Seller.
2. Purchaser Representations; Access to Information.
(a) Offshore Transaction. In connection with the
purchase and sale of the Debentures, Purchaser represents and
warrants to, and covenants and agrees with Seller as follows:
(i) Purchaser is not organized under the laws
of any jurisdiction within the United States, was
not formed by a U.S. Person (as defined in Section
902(o) of Regulation S) for the purpose of
investing in Regulation S securities, is not owned
by a U.S. Person and is not otherwise a U.S.
Person as that term is defined under Regulation S
( Regulation S ) promulgated under the 1933 Act and
the true and correct residence or office address
and telephone number of the Purchaser is set forth
on the subscription page hereof. Schedule 1 hereto
sets forth the statutory definition of U.S.
Person . The Purchaser is not an officer, director
or affiliate (as that term is defined in Rule 405
under the 0000 Xxx) of the Company or an
underwriter or dealer (as such terms are
defined in the federal securities laws of the
United States) and the purchase of the Debentures
by Purchaser is not a transaction (or any element
of a series of transactions) that is part of any
plan or scheme to evade the registration provisions
of the 1933 Act.
(ii) At the time the buy order was
originated, Purchaser was outside the United States
and is outside of the United States as of the date
of the execution and delivery of this Agreement;
(iii) No offer to purchase the Debentures
or the common stock of Seller issuable upon
conversion of the Debentures (collectively, the
Securities ), was made by Purchaser in the United
States;
(iv) The Purchaser is purchasing the
Shares for its own account (and/or) for the account
of other non U.S. persons who are outside of the
United States and for whom the undersigned has
discretionary authority), for investment, and not
for the benefit or account of any U.S. person or
with a view toward the resale or distribution
thereof, and the sale has not been pre-arranged
with a purchaser in the United States. For the
purposes of this Subscription Agreement the term
Purchaser shall mean the undersigned, and, if
applicable, any non U.S. person for whom the
undersigned is signing this Subscription Agreement
pursuant to discretionary authority granted to the
undersigned.
(v) The Purchaser in not purchasing the
Shares with the present intention of distributing
the Shares on behalf of the Company or a
distributor as defined in Regulation S, or any
of their affiliates, in the United States or to a
U.S. person.
(vi) The Purchaser represents and
warrants and hereby agrees that all offers and
sales of the Debentures by the Purchaser in the
United States or to U.S. persons or otherwise
whether prior to the expiration or after the
expiration of the Restricted Period (as defined
below) shall be made only pursuant to a
registration of the Common Stock issuable upon
conversion of the Debentures (the Shares ) under
the 1933 Act or an exemption from registration,
including those available under Regulation S. In
this regard, the Purchaser acknowledges that the
Company will not allow a transfer of the Shares in
the United States or to a U.S. person unless the
Shares have either been registered under the 1933
Act or Regulation S or another applicable exemption
from the registration provisions of the 1933 Act is
available and, if applicable, unless applicable
U.S. state securities laws or foreign securities
laws, as the case may be, are complied with.
(vii) The Purchaser acknowledges that the
Shares cannot be sold by it in the United States as
part of a distribution (as such term is defined
in the federal securities laws of the United
States).
(viii) Purchaser is qualified to purchase
the Debentures under the laws of its jurisdiction
of residence, and the offer and sale of the
Securities will not violate the securities or other
laws of such jurisdiction;
(ix) The Purchaser does not have a short
position in the Shares or otherwise have a hedge
against the risk of purchasing the Shares and will
not have a short position in the Common Stock of
the Company or otherwise hedge the risk of holding
the Shares at any time prior to the expiration of
the Restricted Period.
(x) All offers and sales of any of the
Securities by Purchaser prior to the end of the
Restricted Period (as hereinafter defined) shall be
made in compliance with any applicable securities
laws of any applicable jurisdiction and in
accordance with Rule 903 and 904, as applicable, of
Regulation S or pursuant to registration of
securities under the 1933 Act or pursuant to an
exemption from registration. In any case, none of
the Debentures have been or will be offered or sold
by Purchaser to, or for the account or benefit of,
a U.S. Person or within the United States until
after the end of the forty (40) day period
commencing on the date of closing of the offering
of the Securities(the Restricted Period ), which
in no event shall be later than ___________, 1997,
when this offering shall be closed to all
Purchasers;
(xi) The transactions contemplated by
this Agreement (a) have not been and will not be
pre-arranged by Purchaser with a purchaser located
in the United States or a purchaser which is a U.S.
Person, and (b) are not and will not be part of a
plan or scheme by Purchaser, to evade the
registration provisions of the 1933 Act;
(xii) Purchaser understands that the
Securities are not registered under the 1933 Act
and are being offered and sold to it in reliance on
specific exclusions from the registration
requirements of Federal and State securities laws,
and that Seller is relying upon the truth and
accuracy of the representations, warranties,
agreements, acknowledgments and understandings of
Purchaser set forth herein in order to determine
the applicability of such exclusions and the
suitability of Purchaser to acquire the Debentures.
Purchaser represents that Purchaser has reviewed
and understands the conditions to this Offer set
forth on Schedule 2 hereof regarding sales pursuant
to Regulation S.
(xiii) Purchaser shall take all reasonable
steps to ensure its compliance with Regulation S
and shall promptly send to each purchaser who acts
as a distributor, dealer or a person receiving a
selling concession, fee or other remuneration in
respect of any of the Securities, who purchases
prior to the expiration of the Restricted Period
referred to in subparagraph (v) above, a
confirmation or other notice to the purchaser
stating that the purchaser is subject to the same
restrictions on offers and sales as Purchaser
pursuant to Section 203.903(c)(3)(iv) of
Regulation S. If at any time after the expiration
of the restricted period the Purchaser wishes to
transfer or attempts to transfer the Shares to a
U.S. person, the Purchaser agrees to notify the
Company if at such time, it is either an
underwriter , dealer , distributor , or an
affiliate of the Company (as such terms are
defined in the federal securities laws of the
United States or the regulations promulgated
thereunder, including, but not limited to,
Regulation S), or if such transfer is being made as
part of a plan or scheme to evade the registration
provisions of the 1933 Act.
(xiv) Purchaser has not conducted and
shall not conduct any directed selling efforts as
that term is defined in Rule 902(b) of Regulation
S; nor has Purchaser conducted any general
solicitation relating to the offer and sale of any
of the Securities in the United States or
elsewhere;
(xv) This Agreement has been duly
authorized, validly executed and delivered on
behalf of Purchaser and is a valid and binding
agreement in accordance with its terms, subject to
general principals of equity and to bankruptcy or
other laws affecting the enforcement of creditors
rights generally;
(xvi) The execution and delivery of this
Agreement and the consummation of the purchase of
the Securities, and the transactions contemplated
by the Agreement do not and will not conflict with
or result in a breach by the Purchaser of any of
the terms or provisions of, or constitute a default
under, the articles of incorporation or by-laws(or
similar constitutive documents) of the Purchaser,
or any indenture, mortgage, deed of trust, or other
material agreement or instrument to which Purchaser
is a party or by which it or any of its properties
or assets are bound, or any existing applicable
law, rule, or regulation of the United States or
any State thereof or any applicable decrees,
judgment, or order of any Federal or State court,
Federal or State regulatory body, administrative
agency or other governmental body having
jurisdiction over the Purchaser or any of its
properties or assets
(xvii) All invitations, offers and sales of
or in respect of any of the Debentures or Shares,
by Purchaser and any distribution by Purchaser of
any documents relating to any offer by it of any of
the Debentures or Shares will be in compliance with
applicable laws and regulations and will be made in
such a manner that no prospectus need be filed and
no other filing need be made by Seller with any
regulatory authority or stock exchange in any
country or any political subdivision of any
country;
(xviii) Purchaser will not make any offer or
sale of the Debentures or Shares by any means which
would not comply with the laws and regulation of
the territory in which such offer or sale takes
place or to which such offer or sale is subject or
which would in connection with any such offer or
sale impose upon Seller any obligation to satisfy
any public filing or registration requirement or
provide or publish any information of any kind
whatsoever or otherwise undertake or become
obligated to do any act; and
(xix) Neither the Purchaser nor any
of its affiliates has entered, has the intention of
entering, or will during the Restricted Period
enter into any put option, short position or other
similar instrument or position with respect to any
of the Securities or securities of the same class
as the Securities.
(xx) Purchaser represents and warrants that it
is an accredited investor as that term is defined
in Regulation D.
(b) No Government Recommendation or Approval.
Purchaser understands that no Federal or State or foreign
government agency has passed on or made any recommendation or
endorsement of the Debentures.
(c) Current Public Information. Purchaser
acknowledges that it and its advisors, if any, have had access
to or have been furnished with all materials relating to the
business, finances and operations of Seller and all materials
relating to the offer and sale of the Debentures which have
been requested by Purchaser. Purchaser further acknowledges
that it and its advisors, if any, have received complete and
satisfactory answers to such inquiries. Purchaser
acknowledges it has reviewed Schedule 2 which sets forth the
risks associated with the securities and investments pursuant
to Regulation S. Seller acknowledges that notwithstanding its
familiarity with current public information of the Company,
there are numerous risk factors concerning an investment in
securities of the Company.
(d) Purchaser s Sophistication. Purchaser
acknowledges that the purchase of the Debentures involves a
high degree of risk, including the total loss of Purchaser s
investment. Purchaser has such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of purchasing the Debentures.
(e) Tax Status. Purchaser is not a 10-percent
Shareholder (as defined in Section 871(h)(3)(B) of the U.S.
Internal Revenue Code) of Seller.
(f) Limits on Amount of Conversion and Ownership.
Other than the Mandatory Conversion provisions contained in
this Agreement, in no event shall the Purchaser be entitled to
convert that amount of Debentures in excess of that amount
upon conversion of which the sum of (1) the number of shares
of Common Stock beneficially owned by the Purchaser and its
affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the
unconverted portion of the Debentures), and (2) the number of
shares of Common Stock issuable upon the conversion of the
Debentures with respect to which the determination of this
proviso is being made, would result in beneficial ownership by
the Purchaser and its affiliates of more than 4.9% of the
outstanding shares of Common Stock of the Company. For
purposes of this provision to the immediately preceding
sentence, beneficial ownership shall be determined in
accordance with Section 13 (d) of the Securities Exchange Act
of 1934, as amended, and Regulation 13 D-G thereunder, except
as otherwise provided in clause (1) of such provision.
(g) The undersigned acknowledges that each
certificate representing the Debentures unless registered
pursuant to the Registration Rights Agreement, shall be
stamped or otherwise imprinted with a legend
substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE
MAY NOT BE OFFERED OR SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) IF AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
NOTWITHSTANDING THE FOREGOING, THE COMMON
STOCK INTO WHICH THE SECURITIES EVIDENCED BY
THIS CERTIFICATE ARE CONVERTIBLE ARE ALSO
SUBJECT TO THE REGISTRATION RIGHTS SET FORTH
IN EACH OF THAT CERTAIN SUBSCRIPTION AGREEMENT
AND REGISTRATION RIGHTS AGREEMENT BY AND
BETWEEN THE HOLDER HEREOF AND THE COMPANY, A
COPY OF EACH IS ON FILE AT THE COMPANY S
PRINCIPAL EXECUTIVE OFFICE.
3. Seller Representations.
(a) Reporting Company Status. Seller is a
Reporting Issuer as defined by Rule 902 of Regulation S.
Seller has registered its Common Stock, $0.01 par value per
share (the Common Stock ), pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the Exchange
Act ), and the Common Stock is listed and trades on the Nasdaq
National Market ( NASDAQ ). Seller has filed all material
required to be filed pursuant to all reporting obligations
under either Section 13(a) or 15(d) of the Exchange Act for a
period of at least twelve (12) months immediately preceding
the offer or sale of the Securities (or for such shorter
period that Seller has been required to file such material).
(b) Current Public Information. Seller has either
furnished Purchaser with copies of its most recent reports
filed under the Exchange Act referred to in Section 2(c)
above, and other publicly available documents or Purchaser has
had access thereto.
(c) Offshore Transaction. Seller has not offered
any of the Securities to any person in the United States, any
identifiable groups of U.S. Citizens abroad, or to any U.S.
Person, as such terms are used in Regulation S.
(i) At the time the buy order was
originated, Seller and/or its agents reasonably
believed the Purchaser was outside of the United
States and was not a U.S. person, based on the
representations of Purchaser.
(ii) Seller and/or its agents reasonably
believe that the transaction has not been pre-
arranged with a buyer in the United States, based
on the representations of Purchaser.
(iii) No offer to buy or sell the
Debentures was or will be made by Seller to any
person in the United States.
(iv) The sale of the Debentures by Seller
pursuant to this Agreement will be made in
accordance with the provisions and requirements of
Regulation S provided that the representations and
warranties of Purchaser in Section 2(a) hereof are
true and correct.
(v) The transactions contemplated by
this Agreement (a) have not been and will not be
pre-arranged by Seller with a purchaser located in
the United States or a purchaser which is a U.S.
Person, and (b) are not and will not be part of a
plan or scheme by Seller to evade the registration
provisions of the 1933 Act.
(d) No Directed Selling Efforts. In regard to this
transaction, Seller has not conducted any directed selling
efforts as that term is defined in Rule 902 of Regulation S
nor has Seller conducted any general solicitation relating to
the offer and sale of any of the Securities in the United
States or elsewhere.
(e) Concerning the Securities. The issuance,
sale and delivery of the Debentures have been duly authorized
by all required corporate action on the part of Seller, and
when issued, sold and delivered in accordance with the terms
hereof and thereof for the consideration expressed herein and
therein, will be duly and validly issued and enforceable in
accordance with their terms, subject to the laws of bankruptcy
and creditors rights generally. The Common Stock issuable
upon conversion of the Debentures has been duly and validly
reserved for issuance and, upon issuance in accordance with
the terms of the Debentures, shall be duly and validly issued,
fully paid, and non-assessable and will not subject the
holders thereof, if such persons are non-U.S. persons, to
personal liability by reason of being such holders. There are
no pre-emptive rights of any shareholder of Seller.
(f) Authority to Enter Agreement. 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 principals of
equity and to bankruptcy or other laws affecting the
enforcement of creditors rights generally.
(g) Non-contravention. The execution and delivery
of this Agreement and the consummation of the issuance of the
Debentures, 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
by-laws of Seller, or any indenture, mortgage, deed of trust,
or other material agreement or instrument to which Seller is
a party or by which it or any of its properties or assets are
bound, or any existing applicable law, rule, or regulation of
the United States or any State thereof or any applicable
decree, judgment, or order of any Federal or State court,
Federal or State regulatory body, administrative agency or
other United States governmental body having jurisdiction over
Seller or any of its properties or assets.
(h) Approvals. 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
Debentures and the Common Stock issuable upon conversion
thereof to persons who are a non-U.S. Person, as contemplated
by this Agreement.
(i) Filings. Seller undertakes and agrees pursuant
to the sale of its securities under Regulation S to make all
necessary filings in connection with the sale of its
securities as required by the laws and regulations of the
United States, including Form 8-K and mandatory NASDAQ
notification. Seller further agrees, with respect to the
filing of Form 8-K, that it will only identify Purchaser as an
accredited investor as that term is defined in Regulation D
and will not disclose Purchaser s name in Form 8-K or
otherwise unless such disclosure is required by law.
4. Exemption: Reliance on Representations.
Purchaser understands that the offer and sale of the
Securities are not being registered under the 1933 Act.
Seller and Purchaser are relying on the rules governing offers
and sales made outside the United States pursuant to
Regulation S.
5. Terms of Conversion.
(a) Debentures. Upon the Company s receipt of a
facsimile or original of Purchaser s signed Notice of
Conversion, the Company shall instruct its transfer agent to
issue one or more Certificates representing that number of
shares of Common Stock into which the Debentures are
convertible in accordance with the provisions regarding
conversion set forth in Exhibit A hereto. The Seller s
transfer agent or attorney shall act as Registrar and shall
maintain an appropriate ledger containing the necessary
information with respect to each Debenture.
(b) Conversion Date. Such conversion shall be
effectuated by surrendering to the Company, or its attorney,
the Debentures to be converted together with a facsimile or
original of the signed Notice of Conversion which evidences
Purchaser s intention to convert those Debentures indicated
and a facsimile or original of a signed Purchaser
Representation Letter (See Exhibit B attached hereto). The
date on which the Notice of Conversion is effective
( Conversion Date ) shall be deemed to be the date on which
the Purchaser has delivered to the Company the original
Debentures to be converted, a facsimile or original of the
signed Notice of Conversion and a facsimile or original of a
signed Purchaser Representation Letter. The Company shall
have delivered per the Purchaser s instructions, the shares of
Common Stock, without restrictive legend or stop transfer
instructions, within 3 business days of receipt of the
Conversion Date.
(c) Common Stock to be Issued Without Restrictive
Legend. Upon the conversion of any Debentures and upon
receipt by the Company or its attorney of those items referred
to in Section 5(b) Seller shall instruct Seller s transfer
agent to issue Stock Certificates without restrictive legend
or stop transfer instructions in the name of Purchaser (or its
nominee) and in such denominations to be specified at
conversion representing the number of shares of Common Stock
issuable upon such conversion, as applicable. Seller warrants
that no instructions, other than these instructions, have been
given or will be given to the transfer agent and that the
Common Stock shall otherwise be freely transferable on the
books and records of Seller.
(d) At anytime forty-five (45) days ofter issuance,
Holder is entitled, at its option to convert the Debentures
into Common Stock of the Company at the lesser of (i) 80% of
the 5 day average daily closing bid price, as reported by
NASDAQ, or whatever primary exchange the Company s Common
Stock may be traded on, for the 5 trading days immediately
preceding the Closing Date, or (ii) 75% the 5 day average
daily closing bid price, as reported by NASDAQ, or whatever
primary exchange the Company s Common Stock may be traded on,
for the five trading days immediately preceding the applicable
Conversion Date (the Conversion Price ). No fractional Shares
or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded
up or down, as the case may be, to the nearest whole share.
The Debentures are subject to a mandatory, 36 month conversion
feature at the end of which all Debentures outstanding will be
automatically converted, upon the terms set forth in this
section ( Mandatory Conversion Date ).
(e) Nothing contained in this Subscription Agreement shall be
deemed to establish or require the payment of interest to the
Purchaser at a rate in excess of the maximum rate permitted by
governing law. In the event that the rate of interest
required to be paid exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid
thereunder shall be automatically reduced to the maximum rate
permitted under the governing law and such excess shall be
returned with reasonable promptness by the Purchaser to the
Company.
(f) It shall be the Company s responsibility to take all
necessary actions and to bear all such costs to issue the
Certificate of Common Stock as provided herein, including the
responsibility and cost for delivery of an opinion letter to
the transfer agent, if so required. The person in whose name
the certificate of Common Stock is to be registered shall be
treated as a shareholder of record on and after the conversion
date. Upon surrender of any Debentures that are to be
converted in part, the Company shall issue to the Purchaser a
new Debenture equal to the unconverted amount, if so requested
by Purchaser.
(g) In the event the Common Stock is not delivered per the
written instructions of the Purchaser, within 10 (ten)
business days after the Conversion Date, then in such event
the Company shall pay to Purchaser one percent (1%) in cash,
of the dollar value of the Debentures being converted per each
day after the tenth business day following the Conversion Date
that the Common Stock is not delivered ( Conversion Default
Penalty ).
To the extent that the failure of the Company to issue the
Common Stock pursuant to this Section 5 is due to the
unavailability of authorized but unissued shares of Common
Stock, the provisions of this Section 5(g) shall not apply but
instead the provisions of Section 5(h) shall apply.
The Company shall make any payments incurred under this
Section 5(g) in immediately available funds within three (3)
business days from the date of issuance of the applicable
Common Stock. Nothing herein shall limit a Purchaser s right
to pursue actual damages for the Company s failure to issue
and deliver Common Stock to the Purchaser within ten (10)
business days after the Conversion Date.
(h) The Company shall at all times reserve and have
available all Common Stock necessary to meet conversion of the
Debentures by all Purchasers of the entire amount of
Debentures then outstanding. If, at any time Purchaser
submits a Notice of Conversion and the Company does not have
sufficient authorized but unissued shares of Common Stock
available to effect, in full, a conversion of the Debentures
(a Conversion Default , the date of such default being
referred to herein as the Conversion Default Date ), the
Company shall issue to the Purchaser all of the shares of
Common Stock which are available, and the Notice of Conversion
as to any Debentures requested to be converted but not
converted (the Unconverted Debentures ), upon Purchaser s
sole option, may be deemed null and void. The Company shall
provide notice of such Conversion Default ( Notice of
Conversion Default ) to all existing Purchasers of outstanding
Debentures, by facsimile, within one (1) business day of such
default (with the original delivered by overnight or two day
courier), and the Purchaser shall give notice to the Company
by facsimile within five business days of receipt of the
original Notice of Conversion Default (with the original
delivered by overnight or two day courier) of its election to
either nullify or confirm the Notice of Conversion.
The Company agrees to pay to all Purchasers of
outstanding Debentures payments for a Conversion Default
( Conversion Default Payments ) in the amount of (N/365) x
(.24) x the initial issuance price of the outstanding and/or
tendered but not converted Debentures held by each Purchaser
where N = the number of days from the Conversion Default Date
to the date (the Authorization Date ) that the Company
authorizes a sufficient number of shares of Common Stock to
effect conversion of all remaining Debentures. The Company
shall send notice ( Authorization Notice ) to each Purchaser
of outstanding Debentures that additional shares of Common
Stock have been authorized, the Authorization Date and the
amount of Purchaser s accrued Conversion Default Payments.
The accrued Conversion Default shall be paid in cash or shall
be convertible into Common Stock at the Conversion Rate, at
the Purchaser s option, payable as follows: (i) in the event
Purchaser elects to take such payment in cash, cash payments
shall be made to such Purchaser of outstanding Debentures by
the fifth day of the following calendar month, or (ii) in the
event Purchaser elects to take such payment in stock, the
Purchaser may convert such payment amount into Common Stock
at the conversion rate set forth in section 5(d) at anytime
after the 5th day of the calendar month following the month in
which the Authorization Notice was received, until the
expiration of the mandatory 36 month conversion period.
Nothing herein shall limit the Purchaser s right to pursue
actual damages for the Company s failure to maintain a
sufficient number of authorized shares of Common Stock.
6. Delivery Instructions. The Debenture being
purchased hereunder shall be delivered to the Purchaser at
such time and place as shall be mutually agreed by Seller and
Purchaser.
7. Conditions To Seller s Obligation to Sell.
Seller s obligation to sell the Debentures is conditioned
upon:
(a) The receipt and acceptance by Purchaser of this
Agreement as evidenced by execution of this Agreement by
Purchaser.
(b) Delivery into the closing depository of good
funds by Purchaser as payment in full of the purchase price of
the Debentures.
8. Conditions To Purchaser s Obligation To Purchase.
Purchaser s obligation to purchase the Debentures is
conditioned upon:
(a) The receipt and acceptance by Seller of this
Agreement as evidenced by execution of this Agreement by the
duly authorized officer of Seller.
(b) Delivery of the Debentures as described herein.
9. Offering Materials. All offering materials and
documents used in connection with offers and sales of the
Debentures prior to the expiration of the Restricted Period
referred to in Section 2(a)(v) hereof shall include statements
to the effect that the Debentures have not been registered
under the 1933 Act or applicable state securities laws, and
that neither Purchaser, nor any direct or indirect purchaser
of the Debentures from Purchaser, may directly or indirectly
offer or sell the Debentures in the United States or to U.S.
Persons (other than distributors) unless the Debentures are
registered under the 1933 Act and any applicable state
securities laws, or any exemption from the registration
requirements of the 1933 Act or such state securities laws is
available. Such statements shall appear (1) on the cover of
any prospectus or offering circular used in connection with
the offer or sale of the Debentures, (2) in the underwriting
section of any prospectus or offering circular used in
connection with the offer or sale of the Debentures, and (3)
in any advertisement made or issued by Seller, Purchaser, any
other distributor, any of their respective affiliates, or any
person acting on behalf of any of the foregoing.
10. No Shareholder Approval. Seller hereby agrees that
after the Closing Date it will take all appropriate action to
authorize the issuance of Common Stock upon the conversion of
the Debentures and that no shareholder approval is required
for such action. If an opinion of counsel is required,
Company shall arrange for such an opinion to be provided at
Company s sole cost and expense.
11. Change in Regulation S.
(a) During the thirty-six month period following
issuance of the Debentures, if there is any change in
Regulation S that would restrict the conversion of the
Debentures into Common Stock according to the terms and
conditions set forth in this Agreement, then in such event
Purchaser may notify the Company in writing that Purchaser
holds at least 50% of the Debentures remaining to be converted
and demands that the Company file a registration statement
under the 1933 Act covering the registration of all the
Purchaser s Common Stock issuable upon conversion
( Registrable Securities ). Upon receipt of such notice, the
Company shall, effect as soon as practicable, and in any event
within 60 days of the receipt of such request, the
registration under the 1933 Act of all Registrable Securities
which the Purchaser requests ( a Demand Registration ). All
such action required by the Company to complete the
registration shall be done as soon as possible at the
Company s sole cost and expense.
(b) If the Purchaser initiating the registration request
hereunder ( Initiating Purchaser ) intends to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of
their request made pursuant to this Section 11 and the Company
shall include such information in the written notice referred
to in subsection 11(a). In such event, the right of any
Purchaser to include his Registrable Securities in such
registration shall be conditioned upon such Purchaser s
participation in such underwriting and the inclusion of such
Purchaser s Registrable Securities in the underwriting. All
Purchasers proposing to distribute their Common Stock through
such underwriting shall, together with the Company enter into
an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by
a majority in interest of the Initiating Purchasers, and
reasonably acceptable to the Company; provided that no
Purchaser shall be required to make any representations other
than with respect to its ownership of Registered Securities
and its intended method of distribution. The Company shall
only be obligated to take such action if the owners of at
least 50% of the outstanding dollar amount of the Debentures
requests such registration.
(c) The Company is not obligated to effect a demand
registration under this Section 11 if in the written opinion
of counsel to the Company reasonably acceptable to the person
or persons from whom written request for registration has been
received (and satisfactory to the Company s transfer agent to
permit the transfer) that registration under the 1933 Act is
not required for the immediate public transfer of the
Registrable Securities pursuant to Rule 144 or other
applicable provisions.
(d) The Company represents that it is eligible to effect
the registration contemplated hereof on Form S-3 or SB-2 and
will continue to take such actions as are necessary to
maintain such eligibility.
(e) If the Company is not eligible to effect a
Registration under form X-0, XX-0 or comparable form at the
time of a Demand Registration under the terms of Section 11(a)
of this Agreement, then the Company shall pay to all
Purchasers of outstanding Debentures a penalty equal to 2%
payable in cash or stock at the Company s option, for each 30
day period beyond 60 days of the receipt of a request for a
Demand Registration until such registration is complete. If,
on the date (the Conversion Eligibility Date ) that the
Debentures become eligible for conversion into Common Stock,
the Common Stock is not listed on the National Market System
or National Stock Exchange, then the Company shall pay to all
Purchasers of outstanding Debentures that are eligible for
immediate conversion a penalty equal to the amount of the
Conversion Default Penalty for each day beyond the Conversion
Eligibility Date until such listing is complete.
(f) If (but without any obligation to do so) the Company
proposes to register (including for this purpose a
registration effected by the Company for shareholders other
than the Purchaser) any of its Common Stock under the 1933
Act in connection with the public offering of such securities
(other than a registration relating solely to the sale of
securities to participants in a Company stock plan or a
registration of Form S-4 promulgated under the 1933 Act or any
successor or similar form registering stock issuable upon a
reclassification, upon a business combination involving an
exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company
shall, at such time, promptly give each Purchaser written
notice of such registration. Upon the written request of each
Purchaser given by fax within ten (10) days after mailing of
such notice by the Company, which request shall state the
intended method of disposition of such shares by such
Purchaser, the Company shall cause to be registered under the
1933 Act all of the Registrable Securities that each such
Purchaser has requested to be registered (a Piggyback
Registration ).
12. Arbitration. The parties shall resolve any dispute
arising hereunder before a panel of three arbitrators selected
pursuant to and run in accordance with the rules of the
American Arbitration Association. The arbitration shall be
held in New York, New York. Each party shall bear their own
attorney's fees and costs of such arbitration. Disputes under
this Agreement as well as all of the terms and conditions of
this Agreement shall be governed in accordance with and by the
laws of the State of Nevada.
13. Right of First Refusal.
The Purchaser is hereby given a pro-rata right of first
refusal on any Regulation S offering involving the Company
during the next 6 months. Purchaser shall have 5 business
days from the date the Company sends a facsimile copy of the
Subscription Agreement to the Purchaser in which to accept by
signing the Subscription Agreement and faxing it to the
Company.
14. Miscellaneous.
(a) Except as specifically referenced herein, this
Agreement constitutes the entire contract between the parties,
and neither party shall be liable or bound to the other in any
manner by any warranties, representations or covenants except
as specifically set forth herein. Any previous agreement
among the parties related to the transactions described herein
is superseded hereby. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto, and
their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this
Agreements, except as expressly provided herein.
(b) Seller makes no representations or warranty
with respect to Seller, its finances, assets, business
prospects, except as otherwise set forth herein, in any public
information in general and in any documentation furnished to
Purchaser by Seller. Purchaser will advise each purchaser, if
any, and potential purchaser of the Debentures, of the
foregoing sentence, and that such purchaser is relying on its
own investigation with respect to all such matters, and that
such purchaser will be given access to any and all documents
and Seller personnel as it may reasonably request for such
investigation.
(c) All representations and warranties contained in
this Agreement by Seller and Purchaser shall survive the
closing the transactions contemplated by this Agreement.
(d) This Agreement shall be construed in accordance
with the internal laws of the State of Nevada, and shall be
binding upon the successors and assigns of each party hereto.
This Agreement may be executed in counterparts, and the
facsimile transmission of an executed counterpart to this
Agreement shall be effective as an original. Wherever used,
the singular number shall include the plural, and the plural
the singular, and the use of any gender shall be applicable to
all genders.
[Balance of this page intentionally left blank.]
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.
Official Signatory of Seller:
TRANS ENERGY, INC.
By:
Xxxxx Xxxxxx
Title: President
Official Signatory of Purchaser:
By:
Title:
______________________________
Country of Execution
Address of Purchaser:
Phone __________________________
Fax_____________________________
Exhibit A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert
the Debentures.)
The undersigned hereby irrevocably elects, as of
______________, 199_ to convert $_________________ of the
Debentures into Shares of Common Stock of
______________________ (the Company ) according to the
conditions set forth in the Subscription Agreement dated
_____________, 199_.
The undersigned represents that it is not a U.S. Person
as defined in Regulation S promulgated under the Securities
Act of 1933, as amended, and is not converting the Debentures
on behalf of any U.S. Person.
Date of Conversion*_________________________________________
Applicable Conversion Price_________________________________
Signature___________________________________________________
[Name]
Address_____________________________________________________
____________________________________________________________
Phone______________________ Fax___________________________
Please call me at ________________ if you need to confirm this
facsimile Notice of Conversion.
EXHIBIT B
PURCHASE R REPRESENTATION LETTER
Dear Sirs:
The undersigned__________________, has purchased on
_______________, 1997, ______________ Convertible Debentures
of ______________________________ (the Company ) in the
amount of $________________, (the Debentures ). In
connection with such purchase, the undersigned, has executed
and delivered a subscription agreement ( Subscription
Agreement ) of your design. As the forty (40) day transaction
restriction period has expired, the undersigned hereby
requests that the Debentures be transferred into Street Name
of __________________________.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Debentures was made to it
outside of the United States and the undersigned was, at the
time the Subscription Agreement was executed and delivered,
and is now, outside the United States;
(2) It is not a U.S. Person (as such term is defined in
Section 902(a) of Regulation S promulgated under the United
States Securities Act of 1933 (the Securities Act ); and it
has purchased the Debentures for its own account and not for
the account or benefit of any U.S. person;
(3) All offers and sales by the undersigned of the Debentures
shall be made pursuant to an effective registration statement
under the Securities Act or pursuant to and exemption from, or
in a transaction not subject to the registration requirements
of, the Securities Act;
(4) It is familiar with and understands the terms, conditions
and requirements contained in Regulation S and definitions of
U.S. persons contained in Regulation S;
(5) The undersigned has not engaged in any directed selling
efforts (as such term is defined in Regulation S) with
respect to the Debentures or the Common Stock that is issuable
upon conversion; and
(6) The undersigned purchased its Debentures with investment
intent and at the time of the purchase of said Debentures had
no interest to sell, dispose of or otherwise transfer the
Debentures. The purpose for this request is to facilitate the
management of the undersigned s investment accounts.
(7) The undersigned has not entered into any short sales with
respect to the common stock of Seller during the Restricted
Period;
(8) Limits on Amount of Conversion and Ownership. Other than
the Mandatory Conversion provisions contained in the
Subscription Agreement which are not limited by the following,
in no other event shall the Purchaser be entitled to convert
that amount of Dentures in excess of that amount upon
conversion of which the sum of (1) the number of shares of
Common Stock beneficially owned by the Purchaser and its
affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the
unconverted portion of the Debentures), and (2) the number of
shares of Common Stock issuable upon the conversion of the
Debentures with respect to which the determination of this
proviso is being made, would result in beneficial ownership by
the Purchaser and its affiliates of more than 4.9% of the
outstanding shares of Common Stock of the Company. For
purposes of this provision to the immediately preceding
sentence, beneficial ownership shall be determined in
accordance with Section 13 (d) of the Securities Exchange Act
of 1934, as amended, and Regulation 13 D-G thereunder, except
as otherwise provided in clause (1) of such provision.
Dated this ___ day of the month of ___________________, 199.
By:
_____________________________
Official Signature of Purchaser
Title
Schedule 1
U.S. Person.
(1) U.S. person means:
(I) Any natural person resident in the United
States.
(ii) Any partnership or corporation organized
or incorporated under the laws of the United States;
(iii) Any estate of which any executor or
administrator is a U.S. person;
(iv) Any trust of which any trustee is a U.S.
person;
(v) Any agency or branch of a foreign entity
located in the United States;
(vi) Any non-discretionary account or similar
account (other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated or (if an individual)
resident in the United States; and
(vii) Any partnership or corporation
if: (A) organized or incorporated under the laws of any
foreign jurisdiction; and (B) formed by a U.S. person
principally for the purpose of investing in securities not
registered under the Securities Act of 1933, unless it is
organized or incorporated, and owned, by accredited investors
(as defined in Rule 501(a)) who are not natural persons,
estates or trust.
(2) Notwithstanding paragraph (o) (1) of this rule,
any discretionary account or similar account (other than an
estate or trust) held for the benefit or account of a non-U.S.
person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United
States shall not be deemed a U.S. person .
(3) Notwithstanding paragraph (o) (1), any estate
of which any professional fiduciary acting as executor or
administrator is a U.S. person shall not be deemed a U.S.
person if:
(i) An executor or administrator of the estate
who is not a U.S. person has sole or shared investment
discretion with respect to the assets of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o) (1), any trust of
which any professional fiduciary acting as trustee is a U.S.
person shall not be deemed a U.S. person if a trustee who is
not a U.S. person has sole or shared investment discretion
with respect to the trust assets, and no beneficiary of the
trust (and no settlor if the trust is revocable) is a U.S.
person.
(5) Notwithstanding paragraph (o) (1), an employee
benefit plan established and administered in accordance with
the law of a country other than the United States and
customary practices and documentation of such country shall
not be deemed a U.S. person.
(6) Notwithstanding paragraph (o) (1), any agency
or branch of a U.S. person located outside the United States
shall not be deemed a U.S. person if:
(i) The agency or branch operates for valid
business reasons; and
(ii) The agency or branch is engaged in the
business of insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the
jurisdiction where located.
(7) The International Monetary Fund, the
International Bank for Reconstruction and Development, the
Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and
pension plans shall not be deemed U.S. person .
SCHEDULE 2
TERMS OF A REGULATION S OFFERING;
INVESTOR SUITABILITY STANDARDS; AND
INVESTOR UNDERTAKINGS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE
A HIGH DEGREE OF RISK, INCLUDING THE RISK THAT THE COMPANY
WILL REQUIRE SUBSTANTIAL ADDITIONAL EQUITY AND DEBT FINANCING
TO IMPLEMENT ITS PROPOSED BUSINESS PLAN, AND SHOULD NOT BE
PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE
INVESTMENT. SEE RISK FACTORS ON SCHEDULE 2.
THE SECURITIES ARE BEING OFFERED HEREBY OUTSIDE THE
UNITED STATES IN RELIANCE ON REGULATION S UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES
ACT ).
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE SECURITIES ACT OR WITH ANY SECURITIES
REGULATORY AUTHORITY OF ANY JURISDICTION. THE SECURITIES SOLD
HEREUNDER MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR
TO UNITED STATES PERSONS DURING THE RESTRICTED PERIOD SET
FORTH IN SECTION 903 OF REGULATION S UNLESS THE SECURITIES ARE
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE,
INCLUDING THOSE AVAILABLE UNDER REGULATION S.
THE SECURITIES ARE BEING OFFERED WITHOUT REGISTRATION UNDER
THE SECURITIES ACT IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION AFFORDED BY REGULATION S PROMULGATED THEREUNDER.
THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT. THE SECURITIES MAY NOT BE OFFERED, SOLD
OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF
AMERICA ( U.S. ) OR TO OR FOR THE BENEFIT OR ACCOUNT OF U.S.
PERSONS UNLESS THE SECURITIES ARE REGISTERED UNDER THE
SECURITIES ACT, OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE. THE SALE,
TRANSFER OR OTHER DISPOSITION OF ANY SECURITIES PURCHASED
PURSUANT HERETO IS RESTRICTED BY APPLICABLE FEDERAL AND STATE
SECURITIES LAWS.
THE DOCUMENT RELATING TO THE SALE OF THE SECURITIES HAVE NOT
BEEN REVIEWED, APPROVED OR DISAPPROVED, NOR HAS THE ACCURACY
OR ADEQUACY OF THE INFORMATION SET FORTH HEREIN BEEN PASSED
UPON, BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
OR SECURITIES ADMINISTRATOR OF ANY OTHER JURISDICTION. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMPANY HAS AGREED TO MAKE AVAILABLE, PRIOR TO THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREIN, TO ALL
OFFEREES OF SECURITIES OR THEIR REPRESENTATIVE(S) BOTH, THE
OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE ANSWERS FROM, THE
COMPANY CONCERNING THE TERMS AND CONDITIONS OF THIS OFFERING
AND TO OBTAIN ANY ADDITIONAL INFORMATION WHICH AN INVESTOR
DEEMS APPROPRIATE TO EVALUATE THE SECURITIES OFFERED HEREBY.
IN CONNECTION WITH SUCH INQUIRY, ANY DOCUMENTS WHICH ANY
OFFEREE WISHES TO REVIEW WILL BE MADE AVAILABLE FOR INSPECTION
AND COPYING OR PROVIDED, UPON REQUEST, SUBJECT TO THE
OFFEREE S AGREEMENT TO MAINTAIN SUCH INFORMATION IN CONFIDENCE
AND TO RETURN THE SAME TO THE COMPANY IF THE RECIPIENT DOES
NOT PURCHASE THE SECURITIES OFFERED HEREUNDER. ANY SUCH
INQUIRIES OR REQUESTS FOR ADDITIONAL INFORMATION OR DOCUMENTS
SHOULD BE MADE IN WRITING TO THE COMPANY, ADDRESSED AS
FOLLOWS:
NO PERSON HAS BEEN AUTHORIZED TO MAKE REPRESENTATION, OR GIVE
ANY INFORMATION, WITH RESPECT TO THESE SECURITIES, EXCEPT IN
ACCORDANCE WITH THE INFORMATION CONTAINED HEREIN AND IF MADE
OR GIVEN SUCH REPRESENTATIONS CANNOT BE CONSTRUED AS GIVEN BY
THE COMPANY OR THE PLACEMENT AGENT. NEITHER THIS MEMORANDUM
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE AFFAIRS OF THE COMPANY AFTER THE DATE HEREOF.
THE PRICE OF THE SECURITIES TO WHICH THIS MEMORANDUM RELATES
AND THE TERMS OF CONVERSION OF THE DEBENTURE INTO SHARES OF
COMMON STOCK OF THE COMPANY HAVE BEEN DETERMINED BY THE
COMPANY AND IS ARBITRARY IN THAT IT DOES NOT NECESSARILY BEAR
ANY RELATIONSHIP TO THE ASSETS, BOOK VALUE OR POTENTIAL
EARNINGS OF THE COMPANY OR ANY OTHER RECOGNIZED CRITERIA OF
VALUE.
THIS AGREEMENT SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY S FORM 10-K FOR THE YEAR ENDED ________________ AND
THE REPORT PREPARED BY THE PUBLIC ACCOUNTANT FOR THE COMPANY
AND THE SUBSEQUENT QUARTERLY REPORT OF THE COMPANY ON FORM 10-
Q.
THIS OFFERING IS SUBJECT TO WITHDRAWAL, CANCELLATION OR
MODIFICATION BY THE COMPANY WITHOUT NOTICE, BUT PRIOR TO BEING
SIGNED BY THE COMPANY. THE COMPANY RESERVES THE RIGHT, IN ITS
SOLE DISCRETION, TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN
PART FOR ANY REASON OR TO ALLOT TO ANY SUBSCRIBER LESS THAN
THE NUMBER OF SECURITIES SUBSCRIBED FOR, BUT SUCH REJECTION
MUST BE DONE PRIOR TO THE COMPANY SIGNING THE SUBSCRIPTION
AGREEMENT.
IT IS THE RESPONSIBILITY OF ANY PERSON WISHING TO PURCHASE THE
SECURITIES TO SATISFY HIMSELF AS TO THE FULL OBSERVANCE OF THE
LAWS OF ANY RELEVANT TERRITORY OUTSIDE THE U.S. IN CONNECTION
WITH ANY SUCH PURCHASES, INCLUDING OBTAINING ANY REQUIRED
GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER
APPLICABLE FORMALITIES.
JURISDICTIONAL NOTICES
NOTICE OF RESIDENTS OF ALL JURISDICTIONS:
THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT. THE SECURITIES MAY NOT BE OFFERED, SOLD
OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE U.S. OR TO OR FOR
THE ACCOUNT OF U.S. PERSONS UNLESS THE SECURITIES ARE
REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE,
INCLUDING THOSE AVAILABLE UNDER REGULATION S. THE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, OR SECURITIES COMMISSION IN ANY
JURISDICTION OR ANY REGULATORY AUTHORITY, NOR HAS ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF
THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE INFORMATION
OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FOR GREAT BRITAIN RESIDENTS ONLY:
NO PERSON MAY OFFER OR SELL THESE SECURITIES IN GREAT BRITAIN
BY MEANS OF ANY DOCUMENT EXCEPT TO PERSON WHOSE ORDINARY
BUSINESS IT IS TO BUY OR SELL SECURITIES, WHETHER AS PRINCIPAL
OR AGENT (EXCEPT IN CIRCUMSTANCES WHICH DO NOT CONSTITUTE AN
OFFER TO THE PUBLIC WITHIN THE MEANING OF THE COMPANIES ACT OF
1985 OF GREAT BRITAIN) AND, UNLESS SUCH PERSON IS A PERSON
PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF GREAT BRITAIN,
IT WILL NOT DISTRIBUTE THIS OFFERING CIRCULAR AND ANY OTHER
OFFERING MATERIAL IN RESPECT OF ANY PROPOSED OFFER OF SALE OF
THESE SECURITIES IN OR FROM GREAT BRITAIN OTHER THAN TO
PERSONS WHOSE BUSINESS INVOLVES THE ACQUISITION AND DISPOSAL,
OR THE HOLDING, OF SECURITIES, WHETHER AS PRINCIPAL OR AS
AGENT.
GENERAL CONDITIONS OF REGULATION S
The securities being offered hereby are being sold
pursuant to an exemption under the Securities Act in
accordance with Regulation S. In accordance with Regulation
S, the offer and/or sale of Securities must be made in an
offshore transaction and no direct selling efforts may be
made in the U.S.. The transaction restrictions require
that, during the restricted period: (I) each distributor
selling Securities to a distributor, dealer or a person
receiving a selling concession confirm to the purchaser that
the purchase is subject to the same restrictions on offers and
sales that apply to a distributor and (ii) offers and sales
of the Securities not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than a
distributor).
AVAILABLE INFORMATION
The Company is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended, and in
accordance therewith, files reports, proxy statements and
other information with the Securities and Exchange Commission
(the Commission ). Such reports, proxy statements and other
information filed by the Company may be inspected and coped at
the public reference facilities maintained by the Commission
at 000 Xxxxx Xxxxxx, X.X., Xxxx 0000, Xxxxxxxxxx, X.X. 00000,
and at its New York Regional Office, 0 Xxxxx Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 and at its Chicago Regional Office, Suite
1400, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000.
Copies of such material may also be obtained from the Public
Reference Section of the Commission at 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, at prescribed rates. The Company will
furnish its stockholders with annual reports containing
audited financial statements and such other periodic reports
as the Company deems appropriate or as may be required by law.
TERMS OF THE OFFERING
Investor Suitability Standards
(i) The Purchaser is not a U.S. person as that term is
defined under Regulation S;
(ii) To the best knowledge of the Purchaser, each
distributor participating in this offering, if any, has agreed
in writing that all offers and sales of the Securities prior
to the expiration of the 40-day Restricted Period shall only
be made in compliance with the safe harbor provisions
contained in Regulation S, or pursuant to an applicable
exemption from registration under the Securities Act.
(iii) The Purchaser represents and warrants and
hereby agrees that all offers and sales of the Securities
prior to the expiration of the Restricted Period (see General
Conditions of Regulations S ) shall only be made in compliance
with the safe harbor provisions contained in Regulation S, or
pursuant to registration of securities under the Securities
Act or pursuant to an exemption from registration under the
Securities Act, and that all offers and sales after the
expiration of the Restricted Period (see General Conditions
of Regulations S ) shall be made only pursuant to such a
registration or to such exemption from registration.
(iv) All offering documents received by the Purchaser
include statements to the effect that the Securities have not
been registered under the Act and may not be offered or sold
in the United States or to U.S. Persons during the Restricted
Period (see General Conditions of Regulations S ) unless the
Securities are registered under the Act or an exemption from
the registration requirements of the Act is available.
ADDITIONAL INFORMATION
Each investor may make inquiries of appropriate members
of management of the Company with respect to the Company s
business or any other matters set forth herein, and may obtain
any additional information which such person deems to be
necessary in order to verify the accuracy of the information
to the extent that the Company possesses such information or
can acquire it without unreasonable effort or expense. In
connection with such inquiry, any documents which any Investor
wishes to review will be made available for inspection and
copying or provided, upon request, subject to the Investor s
agreement to maintain such information in confidence and to
return the same to the Company if the recipient does not
purchase the securities offered hereunder. Any such inquiries
or requests for additional information or documents should be
made in writing to the Company.
