OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
FOR PROMISSORY NOTE CONVERTIBLE INTO COMMON SHARES
This Offshore Securities Subscription Agreement (the "Agreement") is
executed in reliance upon the transaction exemption afforded by
Regulation S ("Regulation S") under the Securities Act of 1933, as
amended (the "Securities Act'), as promulgated by the Securities and
Exchange Commission (the "SEC").
This Agreement has been executed by the undersigned in connection
with the issuance of a Promissory Note ("Securities") convertible into
shares of common stock ("Common Stock") of
XXXXXX XXXXXX HOLDING CORPORATION
= = = = = = = = = = = = = = = = = = = = = = = = = = =
00000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
National Association of Securities Automated Quotation System Symbol
("CRTM"), a corporation organized under the laws of Texas, United States
of America (the "Issuer").
The undersigned:
NAME:
ADDRESS:
a non "U.S. person" (the "Subscriber"),
hereby represents and warrants to, and agrees with, the Issuer as
follows:
1. The Offering.
a. The Securities. The undersigned hereby subscribes for a
Promissory Note convertible, in whole or in part, into 1,066,666
shares of Common Stock at a Conversion Price of $0.9375 per share of
Common Stock payable in United States Dollars, representing a total
consideration of One Million and No/100 Dollars ($1,000,000) (the
"Subscription Proceeds").
b. Form of Payment. Subscriber shall pay the Subscription
Proceeds due upon issuance of the Note by delivering good funds by
wire transfer in United States Dollars on or before May 15, 1997
into the escrow account as follows:
(the "Offering Escrow Account")
2. Subscriber Representations; Access to Information; Independent
Investigation.
a. Offshore Transaction. Subscriber represents and warrants to
Issuer as follows:
(i) Neither Subscriber nor any person or entity for whom
Subscriber is acting as fiduciary is a U. S. person. A U.S.
person means any 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 a foreign entity located in
the United States;
(6) any non-discretionary account or similar account
(other than 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 an 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 Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as
defined in Rule 501(a) under the Securities Act) who
are not natural persons, estates or trusts.
(ii) At the time the buy order was originated, Subscriber
was outside the United States and is outside of the United
States as of the date of the execution and delivery of
this Agreement. No offer to purchase Securities was made
in the United States.
(iii) Subscriber is purchasing the Securities for its own
account or for the account of beneficiaries for whom
Subscriber has full investment discretion with respect to
the Securities and whom Subscriber has full authority to
bind so that each such beneficiary is bound hereby as if
such beneficiary were a direct Subscriber hereunder and
all representations, warranties and agreements herein were
made directly by such beneficiary. Subscriber is not
purchasing the Securities on behalf of any U.S. person and
the sale has not been prearranged with a purchaser in the
United States.
(iv) Each distributor participating in the offering of
the Securities, if any, has agreed in writing that all
offers and sales of the Securities prior to the expiration
of a period commencing on the date of the Closing of the
purchase and sale of the Securities subscribed for
hereunder and ending 40 days thereafter shall only be made
(A) in compliance with the safe harbor contained in
Regulation S; (B) pursuant to registration of the
Securities under the Securities Act; or (C) pursuant to an
exemption from registration.
(v) Subscriber represents, warrants and hereby agrees
that all offers and sales of the Securities shall only be
made (A) in compliance with the safe harbor contained in
Regulation S; (B) pursuant to a registration of securities
under the Securities Act; or (C) pursuant to an exemption
from such registration.
(vi) The Offering Documents (as defined herein) received
by Subscriber include statements to the effect that the
Securities have not been registered under the Securities
Act and may not be offered or sold in the United States,
to U.S. persons or for the account or benefit of a U.S.
person (other than distributors as defined in Regulation
S) unless the Securities are registered under the
Securities Act or an exemption from the registration
requirements is available.
(vii) Subscriber acknowledges that the purchase of the
Securities involves a high degree of risk and acknowledges
further that it can bear the economic risk of the purchase
of such Securities, including the total loss of its
investment. Subscriber 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 Securities and that the offer and
sale of such Securities will not violate the laws of its
domicile jurisdiction.
(viii) Subscriber understands that the Securities are
being offered and sold to it in reliance on a specific
exemption from the registration requirements of federal
and state securities laws and that Issuer is relying upon
the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of
Subscriber set forth herein to determine the applicability
of such exemptions and the suitability of Subscriber to
acquire the Securities.
(ix) Subscriber is sufficiently experienced in financial
and business matters as 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, Subscriber has
consulted its own investment and/or legal and/or tax
advisors.
(xi) Subscriber understands that, in he view of the SEC,
the statutory basis for the exemption claimed for this
transaction would not be present if the offering of the
Securities, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the
registration provision of the Securities Act. Subscriber
is acquiring the Securities for investment proposes and
has no present intention to sell such Securities in the
United States, to a U.S. person or for the account or
benefit of a U.S. person. Subscriber hereby confirms that
the purpose of including the Subscriber Representation
Letter (Appendix "A" hereto) to facilitate the transfer of
the certificates representing the Securities into street
name is to enable Subscriber to comply with the
requirements of certain offshore portfolio management
regulations and the security requirements of offshore
lenders for margin loans.
(xii) Subscriber is not an underwriter of, or dealer in,
the Securities. Subscriber is not participating, pursuant
to a contractual agreement, in the distribution of the
Securities.
(xiii) Subscriber represents and warrants that neither it
nor any of its affiliates will directly or indirectly
maintain any short position in Common Stock of Issuer
during the forty day (40) transaction restriction period.
If Subscriber is purchasing the Securities subscribed for hereby in
a representative or fiduciary capacity, the representations and
warranties in this Agreement shall be deemed to have been made on behalf
of the person or persons for whom Subscriber is so purchasing.
The foregoing representations and warranties are true and accurate
as of the date hereof, shall be true and accurate as of the date of the
acceptance by Issuer of Subscriber's subscription and shall survive
thereafter. If Subscriber has knowledge, prior to the acceptance of this
Agreement by Issuer, that any such representation and warranty shall not
be true and accurate in any respect then Subscriber, prior to such
acceptance, will give written notice of such fact to Issuer specifying
which representation and warranty is not true and accurate and the
reasons therefor.
b. Current Public Information. Subscriber acknowledges that he,
she or it has been furnished with or has acquired copies of Issuer's
most recent Annual Report on Form 10-K and any form 10-Q or form 8-K
filed thereafter (collectively, the "SEC Filings") and other
publicly available documents, together with attachments thereto, as
same may be supplemented (together with the SEC Filings, the
"Offering Documents"). Subscriber has reviewed the Offering
Documents.
c. Independent Investigation: Access. Subscriber acknowledges
that, in making the decision to purchase the Securities subscribed
for, Subscriber has relied upon independent investigations made by
it and its purchase representatives, if any, and Subscriber and such
representatives, if any, have, prior to any sale to Subscriber, 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 of Securities 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 of
Securities. Subscriber 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 Securities which have been
requested. Subscriber and its advisors, if any, have received
complete satisfactory answers to any such inquiries.
d. No Government Recommendation or Approval. Subscriber
understands that no federal or state agency has made or will make
any finding or determination relating to the fairness for public
investment in the Securities or has passed or made, or will pass on
or make, any recommendation or endorsement of the Securities.
e. Entity Purchases. If Subscriber is a partnership, corporation
or trust, the person executing this 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 Agreement.
(ii) He or she is duly authorized (if the undersigned is a
trust, by the trust agreement) to make this investment and to
enter into and execute this Agreement on behalf of such entity.
3. Issuer Representations.
Issuer represents and warrants to the Subscriber as follows:
a. Reporting Company Status. Issuer is a reporting issuer as
defined by Rule 902 of Regulations S. Issuer is in full compliance
with all reporting obligations under Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
b. Offshore Transaction. Issuer has not offered these Securities
to any person in the United States or to any U.S. person or for the
account or benefit of any U.S. person. At the time the buy order
was originated, Issuer and/or its agent reasonably believed that
Subscriber was outside of the United States and was not a U.S.
person. Issuer and/or its agent reasonably believe that the
transaction has not been prearranged with a Subscriber in the United
States.
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
securities to U.S. persons residing within the United States or
elsewhere.
d. The Common Stock. The Common Stock, when issued and delivered
upon conversion of the Securities, will be duly and validly
authorized and issued, fully paid and non-assessable and will not
subject the holders thereof to any liability solely by reason of
being such holders.
e. Subscription Agreement. This Agreement, when acknowledged by
the signature of an officer of Issuer, has been duly authorized,
validly executed and delivered on behalf of Issuer and is a valid
and binding agreement in accordance with its terms.
f. Non-contravention. Except as otherwise disclosed by the
Issuer, the execution and delivery of this Agreement, the
consummation of the issuance of the Securities and the transactions
contemplated hereunder do not and will not conflict with or result
in a breach by Issuer of any of the terms or provisions of, or
constitute a default under, the certificate of incorporation or by-
laws of Issuer (or any equivalent documents thereto) or any
indenture, mortgage, deed of trust or other material agreement or
instrument to which 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, judgments or orders of any
court, federal or state regulatory body, administrative agency or
other governmental body having jurisdictions over Issuer or any of
its properties or assets.
g. Securities Law Compliance. With respect to the Company's
actions, the offer and the sale of Securities shall conform in all
respects with the requirements of Regulation S and with the
requirements of all other published rules and regulations of the SEC
currently in effect relating to "private offerings" to non-residents
of the United States of the type contemplated herein. Neither the
offer, sale of delivery of the Securities in conformity with the
terms hereof will violate Section 5 of the Securities Act, as
presently in effect.
4. Expiration of Restricted Period. The transaction restriction in
connection with this offshore offer and sale restricts the Subscriber
from offering and selling to U.S. persons or for the account or benefit
of a U.S. person for a forty (40) day period. Rule 903(c)(2) governs the
forty (40) day transaction restriction. In the event that multiple
subscriptions are accepted by Issuer, each separate subscription
agreement 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 payment is made to Issuer for that
specific transaction. Title to the Securities may be transferred by
Subscriber to other non-United States persons or entities in accordance
with Regulation S.
5. Exemption: Reliance on Representation. Subscriber understands that
the offer and sale of the Securities is not being registered under the
Securities Act. Issuer is relying on the rules governing offers and
sales made outside the United States pursuant to Regulation S. Rules 901
though 903 of Regulation S govern this transaction.
6. Transfer Agent Instructions.
a. Legends on Certificates. The transaction restriction in
connection with this offshore offer and sale restricts Subscriber
from offering and selling to U.S. persons, or for the account or
benefit of a U.S. person, for a forty (40) day period. The rules do
not require the placement of such a restrictive legend on the
Securities and the transfer agent is hereby instructed to see that
such legend, if any, is attached to the share certificate by means
of stapling. Such legend shall be in the precise form of Appendix
"B" hereto. Rule 903(c)(2) governs the forty day transaction
restriction.
b. Subscriber Representation Letter. Issuer agrees to accept a
Subscriber Representation Letter from the Subscriber, or assigns, in
form of Appendix "A" hereto as sole and sufficient evidence that
Subscriber, or assigns, has complied with applicable securities laws
and upon receipt of such a letter shall promptly instruct its
transfer agent to transfer the Common Stock into "Street Name" upon
conversion of the Securities, if so requested by Subscriber, as
expeditiously as practical after receipt of the certificates and the
Subscriber Representation Letter; provided, Issuer shall not be
required to deliver such instructions if it knows, or reasonably
believes, any of the representations made in the Subscriber
Representation Letter are false.
7. Transfer Agent Instructions. Issuer's transfer agent will be
instructed upon conversion of the Securities to issue one or more share
certificates representing Common Stock in the names of qualified
purchasers to be specified. All of the Common Stock so issued by the
transfer agent will be issued pursuant to Regulation S. Issuer warrants
further that no instructions have been given to the transfer agent and
that the Common Stock shall be freely transferable on the books and
records of Issuer subject to compliance with applicable securities laws
and the terms of this Agreement.
8. Closing Date and Escrow Agent. The date of the issuance of the
Securities in the name of Subscriber (the "Closing") shall be the date
upon which the Company issues the Note, or such mutually agreed date
thereafter as the parties shall determine. Closing shall be effectuated
following delivery of funds to (the "Escrow Agent"), to the account
designated in Section 1c hereof. Subscriber instructs the Escrow Agent
and gives the Escrow Agent its good and sufficient authority to release
funds from the Offering Escrow Account to Issuer and all other necessary
parties including, without limitation, the payment of all placement agent
fees and commissions, facilitation fees in connection with the purchase
of Securities and expenses of the offering of Securities contemplated by
the Offering Documents. Subscriber agrees that the Escrow Agent, in its
capacity as Escrow Agent, has no liability as a result of any fraudulent
or unlawful conduct of any other party and agrees to hold the Escrow
Agent harmless.
9. Conditions to Issuer's Obligation to Sell. Issuer reserves the
right, in its complete discretion, to reject this Agreement prior to
execution by Issuer. Subscriber understands that Issuer's obligation to
sell the Securities subscribed for hereunder is conditioned upon:
a. the receipt and acceptance by Issuer of this Agreement for all
Securities as evidenced by execution of this Agreement by the
President, any Vice President or any Director of Issuer. The
acceptance of funds by Issuer shall be deemed to be constructive
acceptance of this Agreement. Subscriber understands that this
Agreement is irrevocable; and
b. delivery to the Escrow Agent by Subscriber of good funds, as
payment in full for the purchase of the Securities subscribed for,
all fees and commissions.
10. Conditions to Subscriber's Obligation to Purchase. Issuer
understands that Subscriber's obligation to purchase the Securities
subscribed for hereunder is conditioned upon:
a. execution and delivery of this Agreement; and
b. delivery of Securities.
11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ITS CHOICE OF LAW
PRINCIPLES.
12. Entire Agreement. This Agreement, along with the Escrow Agreement
among the Escrow Agent, the Company and the Subscriber, the Revolving
Credit Agreement, and the Convertible Revolving Credit note 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 Agreement may be amended only by a writing executed by
all parties hereto.
13. Full Name and Address of Subscriber for Registration Purposes:
NAME:
ADDRESS: _________________________________________
_________________________________________
_________________________________________
Tel. No. _________________________________________
Fax No. _________________________________________
Contact
Name: _________________________________________
14. Delivery Instructions (if different from Registration Name):
NAME: ________________________________________
ADDRESS: ________________________________________
________________________________________
Tel. No. _________________________________________
Fax No. _________________________________________
Contact
Name: _________________________________________
Special
Instructions: _________________________________________
15. Issuer's Acceptance based upon Subscriber Representations. Issuer
is accepting this subscription based upon and in reliance upon the
representations and warranties of Subscriber contained, herein including,
without limitation, those contained in sections 2 a(v), (vi), (xi) and
(xii) and this Agreement would not be accepted by Issuer in the absence
of such representations and warranties.
IN WITNESS WHEREOF, the undersigned has executed this Offshore
Securities Subscription Agreement as of the 13TH day of May, 1997.
Amount Subscribed for:
$1,000,000
_________________________________
(Signature of Subscriber)
_________________________________
(Name Typed or Printed)
_________________________________
(Title)
Type of Ownership:
(Check one)
Natural Persons
_____ Individual
_____ Joint tenants with
rights of survivorship
_____ Tenants in common
_____ Tenants by the entirety
Entities
_____ Corporation
_____ Partnership
_____ Trust
_____ Estate
_____ Other (specify) ____________________
Accepted as of the _______ day of May, 1997
By:________________________________________
XXXXXX XXXXXX HOLDING CORPORATION
APPENDIX "A"
SUBSCRIBER REPRESENTATION LETTER
Dear Sirs:
The undersigned _____________________________, purchased on May
_____ 1997, a Convertible Revolving Credit Note ("Securities") of XXXXXX
XXXXXX HOLDING CORPORATION (the "Company") with a conversion price of
$0.9375 per share. In connection with such purchase, the undersigned,
has heretofore 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 Common Stock be transferred into "Street Name" of
__________________________.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Securities 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 ("Regulation S") promulgated under the United States
Securities Act of 1933 (the "Securities Act"), and it has purchased the
Securities 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 Common Stock shall be
made pursuant to an effective registration statement under the Securities
Act, or pursuant to an 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 Securities;
and
(6) The undersigned purchased Securities with investment intent and
presently has no interest to sell, dispose of or otherwise transfer the
Common Stock. The purpose for this request is to facilitate the
management of the undersigned's investment accounts.
(7) The representations and warranties of the undersigned contained in
the Subscription Agreement are true and correct in all respects on and as
of the date hereof as though made on and as of the date hereof.
Dated this _______ day of the month of _____________, 199____.
__________________________ __________________________
____________________
Official Signature of Subscriber Title Country of
Execution
APPENDIX "B"
"The Securities covered hereby have not been registered under the
Securities Act of 1933, as amended (the "Act") and may not be offered or
sold within the United States or to or for the account or the benefit of
U.S. persons (i) as part of a distribution at any time or (ii) otherwise
until June 26, 1997 except, in either case, in accordance with Regulation
S under the Act. Terms used above have the meaning given to them by
Regulation S."
