EXHIBIT 1(a)
OFFSHORE DEBENTURE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Debenture Securities Subscription Agreement is executed
in reliance upon the transaction exemption afforded by Regulation S ("Regulation
S") as promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended ("1933 ACT").
This Agreement has been executed by the undersigned in connection with
the private placement of Eight Percent (8%) Non-Voting Subordinated Convertible
Debentures of
NOISE CANCELLATION TECHNOLOGIES, INC.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
National Association of Securities Dealers Automated Quotation System Symbol
("NCTI") a corporation organized under the laws of Delaware, United States of
America (hereinafter referred as the "ISSUER") The undersigned
NAME: WILLORA COMPANY, LTD.
ADDRESS: c/o Betuvo A.G.
Xxxxxxxxxxxx 00
Xxxxxxxx 0000
Xxx, Xxxxxxxxxxx
a Corporation organized under the laws of The Bahamas, a non USA Jurisdiction
(hereinafter referred to as the "HOLDER") hereby represents and warrants to,
and agrees with ISSUER as follows:
1. Agreement to Subscribe; Purchase Price; Warrants; Indemnity.
a. Subscription. The undersigned hereby subscribes for and agrees to
purchase on the First Closing Date (as defined in Paragraph 7) thirty (30)
of the ISSUER's Eight Percent (8%) Non-Voting Subordinated Convertible
Debentures in the principal amount of Fifty Thousand (USD $50,000.00)
United States Dollars each, in the form of the Debenture attached as
Exhibit A hereto (singly a "Debenture", and collectively the "Debentures")
for the aggregate purchase price of one million five hundred thousand (USD
$1,500,000) United States Dollars including all discounts, fees and
commissions, payable in United States Dollars.
The undersigned also hereby subscribes for and agrees to purchase on the
Second Closing Date (as defined in Paragraph 7) an additional ten (10)
Debentures for the aggregate purchase price of five hundred thousand (USD
$500,000) United States Dollars including all discounts, fees and
commissions, payable in United States Dollars.
b. Form of Payment. HOLDER shall pay the total consideration by delivering
good funds by wire transfer in United States Dollars in the amounts and on
or before the dates specified in Paragraph 7 into the escrow account of the
escrow agent (the "Escrow Agent") as follows:
For Credit To:
Xxxxxxxx Xxxxxxxx, Esq.
Xxxxxxxxx, Xxxx & Brandeis, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
c. Warrants. On the First Closing Date (as defined in Paragraph 7), upon
receipt of the purchase price then payable hereunder, the Issuer will grant
to the Holder a warrant to purchase, at the Holder's option, at any time
during the two (2) year period commencing on the First Closing Date
seventy-five thousand (75,000) shares of common stock of the Issuer
("Common Stock") at an exercise price equal to the closing bid of the
Common Stock on the First Closing Date, subject to the further terms and
conditions set forth in the form of Warrant attached as Exhibit B hereto.
On the Second Closing Date (as defined in Paragraph 7), upon receipt of the
purchase price then payable hereunder, the Issuer will grant to the Holder
a warrant to purchase, at Holder's option, at any time during the two (2)
year period commencing on the Second Closing Date twenty-five thousand
(25,000) shares of Common Stock at an exercise price equal to the closing
bid of the Common Stock on the Second Closing Date subject to the further
terms and conditions set forth in the form of warrant attached as Exhibit B
hereto. The warrant issued on the First Closing Date is hereinafter
described at the "First Warrant", the warrant issued on the Second Closing
Date is hereinafter described as the "Second Warrant", collectively the
First Warrant and the Second Warrant are hereinafter described as the
"Warrants" and the shares of Common Stock issuable upon the exercise of the
Warrants are hereinafter described as the "Warrant Shares".
d. Indemnity. Holder shall defend, indemnify and hold Issuer harmless from
any and all claims, demands, suits or proceedings instituted or made by any
third party upon or against Issuer for placement fees, commissions or other
compensation or consideration claimed to be owing or payable to such third
party under or as a result of the transactions contemplated by this
Subscription Agreement including any and all losses, costs, damages or
expenses suffered by Issuer as a result thereof. Issuer represents and
warrants that Xxxxxxxx Capital Investments, Inc. and Xxxxxxxxx Xxxxxxx and
Co., Inc. are the only finders or placements agents with whom Issuer has
had any agreement or understanding with respect to the issuance and sale of
Debentures and that any and all of such agreements or understandings
terminated on or before January 15, 1997, and no monies are due or are to
become due thereunder.
In consideration of Holder's indemnification undertaking, on the First
Closing Date (as defined in Paragraph 7), upon receipt of the purchase price
then payable hereunder, the Issuer will pay the Holder a payment of one hundred
fifty thousand (USD$150,000) United States Dollars and on the Second Closing
Date (as so defined) upon receipt of the purchase price then payable hereunder,
the Issuer will pay the Holder a payment of fifty thousand (USD$50,000) United
States Dollars (respectively the "First Indemnity Payment" and the "Second
Indemnity Payment" and collectively the "Indemnity Payments"). Payment of the
Indemnity Payments in each instance may, at Issuer's option, be made in cash or
by delivery of shares of Common Stock, the number of shares delivered to be
based on one hundred percent (100%) of the closing bid of the Common Stock on
the applicable Closing Date. Shares of Common Stock delivered by the Issuer to
the Holder in payment of Indemnity Payments are hereafter described as
"Indemnity Shares".
2. HOLDER Representations; Access to Information; Independent
Investigation.
a. Offshore Transaction. HOLDER understands, represents and warrants to and
agrees with ISSUER (all such representations and warranties also being made
to and for the benefit of any transfer agent of Issuer employed for that
purpose) as follows:
(i) Neither the HOLDER nor any person or entity for whom the HOLDER is
acting as fiduciary is a U.S. person or an affiliate of the Issuer. A U.S.
person means one of the following:
(1) any natural person resident in the United States of America;
(2) any partnership or corporation organized or incorporated under the laws
of the United States;
(3) any estate of which any executor or administrator is a U.S. person;
(4) any trust of which any trustee is a U.S. person;
(5) any agency or branch of foreign entity located in the United States;
(6) any non-discretionary account or similar (other that an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a
U.S. person;
(7) any discretionary account or similar account (other than as estate or
trust held by a dealer or other fiduciary organized, incorporated, or (if
an individual) resident in the United States; and
(8) 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 1933 Act. (Whenever such term is
used herein, it shall have the meaning given in Regulation S.)
ii) At the time the purchase hereunder was originated, HOLDER was not a
U.S. person and was not a U.S. Person as of the date of the execution and
delivery of this agreement and will not be a U.S. person on the First
Closing Date, the Second Closing Date and the dates on which the Holder
exercises the Warrants in whole or in part. No offer to purchase the
Debentures or acquire the Warrants was made in the United States.
(iii) HOLDER is purchasing the Debentures and acquiring the Warrants for
its own account or for the account of beneficiaries each of whom has
entered into an Offshore Debenture Securities Subscription Agreement with
the HOLDER in a form similar to this Agreement with the effect such that
all representations, warranties and agreements herein were made directly by
such beneficiary.
(iv) HOLDER agrees that all offers and sales of Debentures or the shares of
Common Stock of the Issuer issuable upon conversion of the Debentures (the
"Conversion Shares") or the Warrants or the Indemnity Shares prior to the
expiration of a period commencing on the date of the applicable closing of
the offering of Debentures and ending 40 days thereafter (the "Restricted
Period") shall only be made in compliance with the safe harbor contained in
Regulation S, pursuant to registration of Securities under the 1933 Act or
pursuant to an exemption from registration. The Holder further agrees that
with respect to the Warrants and the Warrant Shares, the Warrants may not
be exercised within the United States and the Warrant Shares may not be
delivered within the United States upon exercise other than pursuant to the
safe harbor contained in Regulation S, pursuant to registration of
Securities under the 1933 Act or pursuant to an exemption from
registration.
(v) HOLDER represents and warrants and hereby agrees that all offers and
sales of the Debentures, the Conversion Shares, the Warrants, the Warrant
Shares and the Indemnity Shares after the Restricted Period applicable
thereto shall be made only pursuant to registration under the 1933 Act or
pursuant to an exemption from registration.
(vi) All offering documents received by HOLDER include statements to the
effect that none of the Debentures, the Conversion Shares, the Warrants,
the Warrant Shares or the Indemnity Shares have been registered under the
1933 Act and may not be offered or sold in the United States or to U.S.
Persons or for the account or benefit of a U.S. person (other than
distributors as defined in Regulation S) during the Restricted Period
applicable thereto unless such Debentures, Conversion Shares, Warrants,
Warrant Shares and Indemnity Shares are registered under the 1933 Act or
any exemption from the registration requirements is available.
(vii) HOLDER acknowledges that the purchase of the Debentures, the Warrant
Shares and Fee Shares involves a high degree of risk and further
acknowledges that it can bear the economic risk of the purchase of the
Debentures, the Warrant Shares and Fee Shares, including the total loss of
its investment. HOLDER acknowledges that it has obtained the advice of
competent legal counsel in its domicile jurisdiction that it is qualified
under the laws of its domicile to purchase the Debentures acquire the
Warrants and purchase the Warrant Shares and Fee Shares offered hereunder
and that the offer and sale of said Debentures, Conversion Shares,
Warrants, Warrant Shares and Fee Shares will not violate the laws of its
domicile jurisdiction.
(viii) HOLDER understands that the Debentures and the Warrants are being
offered and sold to it and the Conversion Shares, the Warrant Shares and
the Indemnity Shares will be issued to it in reliance on specific
exemptions from the registration requirements of United States Federal and
State securities laws and that the ISSUER is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments
and understandings of HOLDER set forth herein in order to determine the
applicability of such exemptions and the suitability of HOLDER to acquire
the Debentures, the Warrants and the Indemnity Shares.
(ix) HOLDER is sufficiently experienced in financial and business matters
to be capable of evaluating the merits and risks of its investments, and to
make an informed decision relating thereto.
(x) In evaluating its investment, HOLDER has consulted its own investment
and/or legal and/or tax advisors.
(xi) HOLDER understands that in the view of the United States Securities
and Exchange Commission (the "SEC") the statutory basis for the exemption
claimed for this transaction would not be present if the offering of
Debentures and Warrants and the issuance of the Conversion Shares, the
Warrant Shares and the Indemnity Shares, although in technical compliance
with Regulation S, is part of a plan or scheme to evade to registration
provisions of the 1933 ACT. HOLDER is acquiring the Debentures, Conversion
Shares, Warrants, Warrant Shares and Indemnity Shares for investment
purposes and has no present intention to sell the Debentures, Conversion
Shares, Warrants, Warrant Shares or Indemnity Shares in the United States
or to a U.S. Person or for the account or benefit of a U.S. Person either
now or promptly after the expiration of the Restricted Period applicable
thereto.
(xii) HOLDER represents and warrants that, except in connection with its
normal trading activities, neither it nor any of its affiliates or
intermediaries will directly or indirectly maintain any short position in
Debentures or Common Stock of the ISSUER at any time when HOLDER directly
or indirectly owns or holds any of the Debentures, Warrants or Common Stock
of the Issuer.
(xiii) HOLDER has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
organization.
(xiv) This Offshore Debenture Securities Subscription Agreement has been
duly authorized, executed and delivered by HOLDER and is a valid and
binding agreement enforceable in accordance with its terms, subject to the
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
and similar laws of general applicability relating to or affecting
creditor's rights generally and to general principles of equity; and HOLDER
has full corporate power and authority necessary to enter into to this
Offshore Debenture Securities Subscription Agreement and to perform its
obligations hereunder.
(xv) No consent, approval, authorization, or order of any court,
governmental agency or body, or arbitrator having jurisdiction over the
HOLDER is required for execution of this Offshore Debenture Securities
Subscription Agreement, including without limitation, the purchase of the
Debentures, the Warrant Shares or the Indemnity Shares, or the performance
of the HOLDER's obligations hereunder.
(xvi) The HOLDER acknowledges that, in making the decision to purchase the
Debentures, acquire the Warrants and Conversion Shares and purchase the
Warrant Shares and the Indemnity Shares, it has relied or will rely, as the
case may be, solely upon independent investigation made by it and not upon
any representations made the ISSUER with respect to the ISSUER or the
Debentures, the Warrants, the Conversion Shares, the Warrant Shares or the
Indemnity Shares, other than those representations set forth in Section 3
hereof.
(xvii) The HOLDER is aware that the Debentures, the Warrants, the
Conversion Shares, the Warrant Shares and the Indemnity Shares have not
been and will not be registered under the 1933 Act and may only be offered
or sold pursuant to registration under the 1933 Act or an available
exemption therefrom.
(xviii) The HOLDER: (A) will not, during the Restricted Period applicable
thereto, offer to sell the Debentures, the Warrants, the Conversion Shares,
the Warrant Shares or the Indemnity Shares in the United States, to a U.S.
person or for the account or benefit of a U.S. person or other than in
accordance with Rule 903 or 904 or Regulation S; and
(B) will, after the expiration of the Restricted Period applicable thereto,
offer, sell, pledge, or otherwise transfer the Debentures, the Warrants,
the Conversion Shares, the Warrant Shares or the Indemnity Shares only
pursuant to registration under the 1933 Act or an available exemption
therefrom and, in any case, in accordance with applicable United States
federal and state and foreign securities laws.
(xix) None of the HOLDER, its affiliates or any person acting on behalf of
the HOLDER or any such affiliate has engaged, or will engage, in any
Directed Selling Efforts with respect to the Debentures, the Warrants, the
Conversion Shares, the Warrant Shares or the Indemnity Shares or any
distribution by any Distributor, with respect to any of the same.
(Distributor for the purposes herein shall mean any underwriter, dealer or
other person who participates, pursuant to a contractual arrangement, in
the distribution of the Debentures, the Warrants, the Conversion Shares,
the Warrant Shares or the Indemnity Shares being offered or sold hereunder
in reliance on Regulation S.)
(xxi) The transactions contemplated by this Offshore Debenture Securities
Subscription Agreement:
(A) have not been pre-arranged with a purchaser located in the United
States or who is a U.S. person; and
(B) are not part of a plan or scheme to evade registration provisions of
the Act.
(xxii) The following are all put options and short positions or other
similar instruments that the HOLDER has entered, or has the intention
of entering into (except in connection with its normal trading
activities) with respect to the Debentures or the Common Stock of
Issuer:
None
(xxiii) If the HOLDER offers and sells the Debentures, the Warrants,
the Conversion Shares, the Warrant Shares or the Indemnity Shares
during or after the Restricted Period applicable thereto, then it will
do so only; in accordance with the provisions of Regulation S;
pursuant to registration of the Debentures, the Warrants, the
Conversion Shares, the Warrant Shares or the Indemnity Shares under
the 1933 Act; or pursuant to an available exemption from the
registration requirements of the 1933 Act.
If HOLDER is purchasing the Debentures, the Warrants, the Conversion
Shares, the Warrant Shares or the Indemnity Shares subscribed for
hereby in representative or fiduciary capacity, the representations and
warranties in this Offshore Securities Subscription Agreement shall be
deemed to have been made on behalf of the person or persons to whom
HOLDER is so purchasing.
The foregoing representations and warranties are true and accurate as
of the date hereof, shall be true and accurate as to the date of the
acceptance by the ISSUER of HOLDER's subscription, and shall survive
thereafter. If HOLDER has knowledge, prior to the acceptance of the
Offshore Debenture Securities Subscription Agreement by the ISSUER, or
prior to the Escrow Agent's delivery of the Debentures to the HOLDER,
or prior to the Issuer's delivery of the Conversion Shares or the
Warrant Shares to the Holder, that any such representations and
warranties shall not be true and accurate in any respect, the HOLDER,
prior to such acceptance or delivery, will give written notice of such
fact to the ISSUER specifying which representations and warranties are
not true and accurate and the reasons therefor and the ISSUER shall
have the right to prohibit delivery of the Debentures, Warrants,
Conversion Shares, Warrant Shares or Indemnity Shares, as the case may
be.
b. Current Public Information. HOLDER acknowledges that HOLDER has
been furnished with or has acquired copies of the ISSUER's most recent
Annual Report on Form 10-K and any Form 10-Q filed thereafter
(collectively the "SEC Filings"), and other publicly available
documents.
c. Independent Investigation; Access. HOLDER acknowledges that HOLDER
in making the decision to purchase the Debentures subscribed for and
acquire the Warrants, has relied upon independent investigations made
by it and its HOLDERS representatives, if any, and HOLDER and such
representatives, if any, have, prior to any sale to it, been given
access and the opportunity to examine all material books and records
of the ISSUER, all material contracts and documents relating to this
offering and an opportunity to ask questions of, and to receive
answers from ISSUER or any person acting on its behalf concerning the
terms and conditions of this offering. HOLDER and its advisors, if
any, have been furnished with access to all publicly available
materials relating to the business, finances and operation of the
ISSUER and materials relating to the offer and sale of the Debentures,
the Warrants, the Conversion Shares, the Warrant Shares and the
Indemnity Shares which have been requested. HOLDER and is advisors, if
any, have received complete and satisfactory answers to any such
inquiries.
d. No Government Recommendation or Approval. HOLDER understands that
no United States federal or state agency or non-United States
governmental agency has made or will make any finding or determination
relating to the fairness for public investment of the Debentures, the
Warrants, the Conversion Shares, the Warrant Shares or the Indemnity
Shares, or has passed or made, or will pass on or make, or will pass
on or make, any recommendation or endorsement of any of such
securities.
e. Entity Purchase. If HOLDER is a partnership, corporation or trust,
the person executing this Offshore Securities Subscription Agreement
on its behalf represents and warrants that;
(i) He or she has made due inquiry to determine the truthfulness of
the representations and warranties made pursuant to this Offshore
Securities Subscription Agreement; and
(ii) He or she is duly authorized (if the undersigned is a trust, by
the trust agreements) to make this investment and to enter into and
execute this Offshore Securities Subscription Agreement on behalf of
such entity.
(f) Legend: The HOLDER understands that until such time as the
applicable restricted period under Regulation S has expired, the
Debentures, the Warrants, the Conversion Shares, the Warrant Shares
and the Indemnity Shares may bear a restrictive legend in
substantially the following form or such other form as ISSUER may
reasonably deem necessary or appropriate (and a stop-transfer order
may be placed against the transfer of the certificates for such
securities).
THE DEBENTURE [WARRANT] REPRESENTED BY THIS CERTIFICATE AND THE
SECURITIES ISSUABLE UPON CONVERSION [EXERCISE] HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE DEBENTURE
[WARRANT] HAS BEEN ACQUIRED FOR INVESTMENT AND NEITHER THE DEBENTURE
[WARRANT] NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE DEBENTURES [WARRANTS] OR SUCH
SECURITIES, AS THE CASE MAY BE, UNDER THE SECURITIES ACT, 1933, AS
AMENDED, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY
SUCH SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE
STATE SECURITIES LAWS.
3. ISSUER Representations
The ISSUER relying on the truth and accuracy of the foregoing
representations and warranties of the HOLDER and without independent
investigation with respect thereto, represents and warrants to the
HOLDER as follows:
a. Reporting Company Status. The ISSUER is a reporting issuer as defined by
rule 902 of Regulation S and will use its best efforts to maintain its status as
such a reporting issuer.
b. Offshore Transaction. The ISSUER has not offered the Debentures or the
Warrants or the Indemnity Shares to any person in the United States or to any
U.S. person or for the account or benefit of any U.S. person.
c. No Directed Selling Efforts. In regard to this transaction, ISSUER has
not conducted any "directed selling efforts" as that term is defined in rule 902
of Regulation S nor has ISSUER conducted any general solicitation relating to
the offer and sale of the within Debentures, Warrants and Indemnity Shares to
U.S. persons resident within the United States or elsewhere.
d. Securities. The Debentures, the Warrants, the Conversion Shares, the
Warrant Shares and the Indemnity Shares, when issued and delivered, will be duly
and validly authorized and issued, fully paid and non-assessable.
e. Subscription Agreement. The Offshore Debenture Securities Subscription
Agreement, when acknowledged by the signature of an officer of the Issuer, has
been duly authorized, validly executed and delivered on behalf of the ISSUER and
is a valid and binding agreement in accordance with its terms.
f. Non-contravention. The execution and delivery of the Offshore Debenture
Securities Subscription Agreement and the consummation of the issuance of the
Debentures, the Warrants, the Conversion Shares, the Warrant Shares and the
Indemnity Shares, and the transactions contemplated by the Offshore Debentures
Securities Subscription Agreement do not and will not conflict with or result in
a breach by the ISSUER of any of the terms or provisions, of, or constitute a
default under, the certificate of incorporation or by-laws of the ISSUER, or any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the ISSUER is a party or by which it or any of its properties or assets
are bound, or any existing applicable law, rule, or regulation or any applicable
decrees, judgment or order of any court, Federal or State regulatory body,
administrative agency or other governmental body having jurisdiction over the
ISSUER or any of its properties or assets.
g. Prior Share Issues Under Regulation S. The ISSUER has not issued any
securities under Regulation S subsequent to December 31, 1996 except for any
securities which may be issued in connection with ISSUER's current financing
activities and securities issued as an adjustment to prior sales under
Regulation S. For purposes of this and the subsequent paragraph "Issuer's
current financing activities" are limited to the ISSUER's efforts to issue and
sell up to four million dollars ($4,000,000) aggregate principal amount of the
Debentures (including the Debentures being sold hereunder).
h. Subsequent Share Issues Under Regulation S/ or Regulation D. The ISSUER
will not issue any securities under Regulation S until sixty (60) days after the
Second Closing Date; provided, however, that if the Second Closing Date has not
occurred within one hundred twenty (120) days of the First Closing Date, the
prohibition against any such issuance of securities shall terminate on such one
hundred twentieth (120th) day. The Issuer will not issue any Securities under
Regulation S during the period beginning on the date on which the prohibition
specified in the preceding sentence terminates and ending one hundred eighty
(180) days after the First Closing Date unless it shall have first delivered to
the Holder, at least five (5) business days prior to the closing of such issue
of securities, written notice describing the proposed issue of securities under
Regulation S, including the terms and conditions thereof, and providing the
Holder an option during such five (5) day period to purchase all but not part of
the securities to be issued on the same terms.
If the Issuer Issues any Common Stock or other securities convertible into
Common Stock under Regulation D promulgated under the 1933 Act ("Regulation D")
while the Holder holds unpaid or unconverted Debentures (the "Outstanding
Debentures") the Issuer on the date of such issuance under Regulation D (" the
Regulation D Closing Date") shall either.
(i) reserve on its books an additional two million five hundred thousand
(2,500,000) shares of Common Stock for use in connection with the conversion of
the Outstanding Debentures, or (ii) purchase the Outstanding Debentures from the
Holder at a price which will give the Holder a return on its investment in the
Outstanding Debentures equivalent to that which the Holder would realize if the
Holder converted the Outstanding Debenture and sold the Conversion Shares
received therefrom at the closing bid price of the Common Stock on the
Regulation D Closing Date.
The foregoing right of first refusal in the event of certain issues of
securities under Regulation S and obligations of the Issuer in the event of
certain issues of Securities under Regulation D, shall not apply to any
transaction involving issuances of securities in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the payment for services, the
acquisitions of a business, product or license by the Issuer or to any issuance
of securities by a subsidiary of the Issuer. Neither the foregoing restriction
nor right of first refusal shall apply to any securities which may be issued in
connection with ISSUER's current financing activities and securities issued as
an adjustment to prior sales under Regulation S or Regulation D, as the case may
be.
i. Filings. The Issuer 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 all
appropriate jurisdictions.
j. Attached hereto as Exhibit C is a true and correct table dated as of the
First Closing Date, setting forth the total authorized shares of Common Stock of
the Issuer, the number of such shares that are issued and outstanding and the
number of such shares that are reserved for issuance upon the exercise of
warrants and options to purchase shares of Common Stock of the Issuer.
4. Expiration of Restricted Period.
The transaction restriction in connection with this offshore offer and sale
restricts the HOLDER from offering and selling to U.S. persons or for the
account or benefit of an U.S. person for a forty (40) day period. The rules do
not require the placement of a restrictive legend on the share certificate
issued pursuant to conversion of the Debentures. Rule 903 (c) (2) governs the
forty (40) day transaction restriction. In the event that two or more sequential
closings are provided for, each separate closing shall be deemed to be a
separate offering under Regulation S and the forty (40) day restriction period
shall begin for each transaction separately on the date the Debentures covered
thereunder are delivered to the HOLDER and payment is made to the ISSUER for
that specific transaction. Paragraphs (m)(1)(2) and (3) or Rule 902 sets forth
additional requirements with respect to the exercise of the Warrants and the
issuance of the Warrant Shares. Title to the Debentures and the Conversion
Shares may be transferred by HOLDER to other Non United States persons or
entities in accordance with Regulation S.
5. Exemption: Reliance on Representations.
HOLDER understands that the offer and sale of the Debentures, the Warrants,
the Conversion Shares, the Warrant Shares and the Indemnity Shares are not being
and will not be registered under the 1933 Act. ISSUER is relying on the rules
governing offers and sales made outside the United States pursuant to Regulation
S. Rules 901 through 904 of Regulation S govern this transaction. ISSUER
acknowledges that the HOLDER may resell the foregoing securities outside of the
United States to non U.S. Persons in reliance of Regulation S at the same or a
different price than the purchase price hereunder, and that the HOLDER is under
no obligation to purchase or retain any of the foregoing securities for its own
accounts provided all offers and sales by HOLDERS are made in accordance with
Regulation S and this Agreement.
6. Transfer Agent Instructions
a. Debenture. Upon the conversion of the Debentures, the HOLDER thereof
shall submit such Debentures to ISSUER and ISSUER shall, instruct ISSUER's
Transfer Agent to issue one or more certificates representing that number of
shares of Common Stock into which the Debenture or Debentures are convertible in
accordance with the provisions regarding conversion set forth in Exhibit A.
b. Warrants. Upon the exercise of the Warrants, the HOLDER thereof shall
submit such Warrants and the purchase price in immediately available New York,
New York funds to ISSUER and ISSUER shall, instruct ISSUER's Transfer Agent to
issue one or more certificates representing that number of shares of Common
Stock issuable upon the exercise of such Warrants in accordance with the
provisions regarding exercise set forth in Exhibit B.
c. Legend on Indemnity Share Certificates. Upon the First Closing Date and
the Second Closing Date (as defined in Paragraph 7) ISSUER's Transfer Agent will
be instructed to issue one or more share certificates representing the Indemnity
Shares deliverable on the Closing Date in question in the name of the Holder in
such denominations to be specified at or before the Closing Date in question.
All of such share certificates will bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against the transfer
of such certificates).
THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE COMMON STOCK HAS BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE COMMON STOCK, UNDER THE SECURITIES ACT,
1933, AS AMENDED, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE SECURITIES LAWS.
d. No Legends on Other Certificates. Upon conversion of any Debenture or
exercise of any Warrant in conformance with the terms and conditions of this
Agreement and Exhibit A or B hereto, as the case may be, and in compliance with
Regulation S, ISSUER's Transfer Agent will be instructed to issue one or more
share certificates representing Conversion Shares or Warrant Shares, as the case
may be, in the names of HOLDERS or "Street Names" to be specified prior to
conversion or exercise in such denominations to be specified at conversion or
exercise representing the number of shares of Common Stock issuable upon such
conversion or exercise. Provided conversion of a Debenture has occurred after
the expiration of the Restricted Period applicable to such Debenture and in
conformance with the terms and conditions of Exhibit A hereto and compliance
with Regulation S, share certificates issuable upon conversion will be issued
without legend. Provided exercise of a Warrant has occurred after expiration of
the Restricted Period applicable to such Warrant and in conformance with the
terms and conditions of Exhibit B hereto and in compliance with Regulation S
share certificates issuable upon exercise will be issued without legend. ISSUER
further warrants that no stop transfer instructions other than a stop transfer
for the Debentures and the Warrants for 40 days to U.S. persons or instructions
other than instructions to issue the Conversion Shares and the Warrant Shares
have been given to the Transfer Agent and that the Conversion Shares and the
Warrant Shares, when issued upon conversion or exercise after the expiration of
the Restricted Period applicable to the Debenture or Warrant in question in
accordance with the terms of the Debenture or Warrant, shall be freely
transferable on the books and records of the ISSUER subject to compliance with
applicable securities laws. Nothing in this paragraph shall affect in any way
HOLDER's obligations and agreements set forth in paragraph 2 hereof to comply
with all applicable securities laws upon the sale or other disposition of the
Conversion Shares or the Warrant Shares.
7. Closing Dates.
This Agreement shall be effective from the date of execution by the HOLDER.
Closing with respect to the purchase of thirty (30) Debentures shall be effected
through delivery of funds, Debentures, Warrants and Indemnity Shares to the
designated Escrow Agent and shall be completed on January 27, 1997, or such
other mutually agreed to date (the "First Closing Date"). Closing with respect
to the purchase of an additional ten (10) Debentures shall be effected through
delivery of funds, Debentures, Warrants and Indemnity Shares to the designated
Escrow Agent and shall be completed within five (5) days of the date on which
Holder has converted Debentures in an aggregate principal amount of seven
hundred fifty thousand (USD$750,000) United States Dollars or more, or such
other mutually agreed to date (the "Second Closing Date"). In each instance,
HOLDER shall forthwith deliver the necessary funds as indicated in Paragraph 1.
8. Conditions to the Issuer's Obligations to Sell.
ISSUER shall have the right to reject any given Offshore Debenture
Securities Subscription Agreement which is tendered to the ISSUER, but only for
the reason that the ISSUER reasonably believes any representations and
warranties of such HOLDER to be untrue and in such event ISSUER shall provide
HOLDER written notice of such rejection and the reason therefor and shall
provide reasonable opportunity for a response to such stated reason. HOLDER
understands that ISSUER's obligation to sell the Debentures and issue the
Warrants and Fee Shares is conditioned upon:
(i) The receipt and acceptance by ISSUER of the Offshore Debenture
Securities Subscription Agreement for all of the Debentures as evidence by
execution of this Agreement by the ISSUER or ISSUER's duly authorized agent.
HOLDER understands this Offshore Debenture Securities Subscription Agreement is
irrevocable.
(ii) Delivery into the designated Escrow Agent by HOLDER of good funds as
payment in full for the purchase of the Debentures in accordance with Paragraphs
1 and 7 above.
(iii) The representations and warranties of HOLDER shall be true and
correct in all material respects as of the date when made and as of the First
and Second Closing Dates as though made at those times (except those that speak
as of specific date) and the HOLDER shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
to be performed, satisfied or complied with by the HOLDER at or prior to the
First Closing Date and the Second Closing Date.
9. Covenant of ISSUER.
ISSUER hereby covenants and agrees until such time as HOLDER has converted
One Hundred Percent (100%) of the Debentures into Common Stock, ISSUER shall not
repurchase its shares of Common Stock or otherwise enter into any transaction
which would cause a decrease in the number of its shares of Common Stock issued
and outstanding (other than transactions that similarly decrease the number of
shares of Common Stock that the Debentures are convertible into).
10. Confidentiality.
The parties hereto agree to maintain the confidentiality of this Agreement
and not to disclose to any person or entity information concerning the
transaction contemplated hereby unless required by law to do so.
11. Conditions to HOLDER's Obligation to Purchase.
ISSUER understands that HOLDER's obligation to purchase the Debentures is
conditioned upon delivery of the Debentures as described herein and the absence
of any event or circumstance that could reasonably be expected to have a
material adverse effect on the financial condition of the ISSUER, or the market
price of the ISSUER's Common Stock.
12. Governing Law
This Agreement shall be governed by and construed under the laws of the
State of Delaware and of the United States of America without regard to its
choice of law principles.
13. Entire Agreement
This Offshore Debenture Securities Subscription Agreement constitutes the
entire agreement among the parties hereof with respect to the subject matter
hereof and supersedes any and all prior or contemporaneous representations,
warranties, agreements and understandings in connection therewith. This Offshore
Debenture Securities Subscription Agreement may be amended only by a writing
executed by all parties 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.
14. Issuer's Undertaking
The ISSUER agrees to pay all costs and expenses, including reasonable
attorneys' fees and disbursements, which may be incurred by the HOLDER if the
HOLDER has to initiate legal proceedings to enforce its rights under this
Agreement, the Debenture or the Warrant.
15. Full Name and Address of HOLDER for Registration Purposes:
NAME: ________________________________
ADDRESS ________________________________
Tel No. ________________________________
Fax. No. ________________________________
Contact Name: ________________________________
16. Delivery Instructions: (if different from Registration Name):
NAME: ______________________________________________________
ADDRESS: ______________________________________________________
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Tel. No. ______________________________________________________
Fax. No. ______________________________________________________
Contact Name: ______________________________________________________
Special
Instructions ______________________________________________________
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IN WITNESS WHEREOF, this Offshore Debenture Securities Subscription
Agreement was duly executed or the date first written below.
Dated this 31st day of the month of January, 1997.
Company Name: WILLORA COMPANY, LTD.
By: /s/
Name (Printed): __________________________
Title: __________________________
Country of Execution __________________________
Accepted this 31st day of the month of January, 1997.
NOISE CANCELLATION TECHNOLOGIES, INC.
By: /s/ XXXXXXX X. XXXXXXX
Official Signatory of Issuer
I have the full authority to bind NOISE CANCELLATION TECHNOLOGIES,
INC.____________________(initial)
Name(Printed): Xxxxxxx X. Xxxxxxx
Title: Senior Vice-President and Chief Financial Officer
