EXHIBIT 10.77
33772.00002:091997:SCM:2
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT is executed in reliance
upon the transaction "safe harbor" afforded by Regulation S ("Regulation S") as
promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended (the "Act").
Polyphase Corporation, a Nevada corporation (the "Company"), has offered
for sale outside the United States (as that term is defined in Regulation S),
and the undersigned purchaser (the "Purchaser") hereby tenders this subscription
and applies for the purchase of Seven Thousand Five Hundred (7,500) shares of
Series F 6% Convertible Preferred Stock (the "Convertible Preferred Stock") of
the Company which has the relative rights and privileges set forth in that
certain Certificate of Designations, Preferences and Relative Participating or
Optional or other Special Rights and Qualifications, Limitations or Restrictions
(herein called the "Certificate of Designations") in the form annexed hereto as
Exhibit "1", (together with the shares of the Company's Common Stock issuable
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upon conversion of the Convertible Preferred Stock [the "Shares"]) and a Warrant
to Purchase 500,000 shares of Common Stock of the Company at an exercise price
of $1.50 per share exercisable over a five-year period in the form annexed
hereto as Exhibit "2" (the "Warrant") at a purchase price per Share of $1.50
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(the "Offering"). Together with this Subscription Agreement, the Purchaser is
delivering to the Escrow Agent by wire transfer the full amount of the purchase
price for the Shares and the Warrant for which it is subscribing pursuant hereto
($750,000) against delivery of certificate(s) representing the Convertible
Preferred Stock and the Warrant (the shares of Convertible Preferred Stock and
the Warrant are sometimes collectively referred to herein as the "Securities").
Time is of the essence in connection with this Subscription Agreement.
The parties to this Offshore Securities Subscription Agreement (the
"Agreement") hereby agree as follows:
1. Representations and Warranties of Purchaser. In order to induce the
Company to accept this subscription, the Purchaser hereby represents and
warrants to, and covenants with, the Company as follows:
A. Offshore Transaction.
(i) The Purchaser is not a "U.S. person" as that term is defined
under Regulation S.
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(ii) At the time the buy order for the Securities was originated,
Purchaser was outside the United States and is outside the United States as
of the date of the execution and delivery of this Agreement.
(iii) Purchaser is purchasing the Securities for its own account
and not on behalf of any U.S. person or any other person, and the
transaction has not been prearranged with a purchaser in the United States
(see Appendix A attached hereto for definitions of "U.S. person" and
"United States" under Regulation S) and Purchaser is acquiring the
Securities for investment purposes and not with a view towards distribution
and has no present arrangement or intention to sell the Securities or the
Common Stock issuable upon conversion of the Convertible Preferred Stock or
upon exercise of the Warrant.
(iv) The Purchaser represents and warrants and hereby agrees that
all offers and sales of the Securities prior to the expiration of a period
commencing on the date hereof and ending 40 days thereafter (the
"Restricted Period") shall only be made in compliance with the safe harbor
provisions contained in Regulation S, with which Purchaser is familiar, or
pursuant to the registration of such securities under the Act or pursuant
to an exemption from registration under the Act, and the Purchaser shall
not take a short position directly or indirectly with respect to the
Company's common stock during the Restricted Period, and that all offers
and sales after the expiration of the Restricted Period in the United
States or to a U.S. person shall be made only pursuant to such a
registration or to such exemption from registration.
(v) The Purchaser acknowledges and agrees that the Convertible
Preferred Stock and/or the Warrant have not been registered under the Act
and may not be offered or sold in the United States or to U.S. persons
unless the Securities or the Shares are registered under the Act or an
exemption from the registration requirements of the Act is available.
(vi) The Purchaser is not an officer, director of "affiliate" (as
that term is defined in Rule 405 under the Act) of the Company.
B. Information Available; Purchaser Status.
(i) The purchaser has received and carefully reviewed the
Company's most recent Annual Report on Form 10-K, its subsequent Quarterly
Reports on Form 10-Q, and its Current Reports on Form 8-K (collectively,
the "SEC Reports"), and a
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copy of the Certificate of Designations for the Convertible Preferred Stock
in the form attached hereto as Exhibit "1".
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(ii) The Purchaser has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the Company
and the Offering, and all such questions, if any, have been answered to the
full satisfaction of the Purchaser.
(iii) The Purchaser is an "accredited investor" (as defined in
Rule 501 under the Act) and has such knowledge and expertise in financial
and business matters that the Purchaser is capable of evaluating the merits
and risks involved in an investment in the Securities and acknowledges that
an investment in the Securities entails a number of very significant risks
and funds should only be invested by persons able to withstand the total
loss of their investment.
(iv) Except as set forth in this Agreement, no representations or
warranties have been made to the Purchaser by the Company or any agent,
employee or affiliate of the Company and in entering into this transaction
the Purchaser is not relying upon any information, other than that
contained in this Agreement, the SEC Reports and the results of independent
investigation by the Purchaser.
(v) The Purchaser understands that the Securities are being
offered and sold to the Purchaser in reliance on specific exemptions from
the registration requirements of the United States Federal and State
securities laws and that the Company is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to determine the
applicability of such exemptions and the suitability of the Purchaser to
acquire the Securities, and the Purchaser acknowledges that it is
Purchaser's responsibility to satisfy itself as to the full observance by
this Offering and the sale of the Securities to Purchaser of the laws of
any jurisdiction outside the United States and Purchaser has done so.
(vi) The Purchaser has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder; and this
Agreement is a legally binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms.
(vii) Purchaser understands that in the view of the SEC the
statutory basis for the exemption claimed for the
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transaction would not be present if the Offering, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the Act and Purchaser confirms that its purchase
of the Securities is not part of any such plan or scheme. Purchaser is
acquiring the Securities for investment purposes and has no present
intention to sell the Securities or the Shares issuable upon conversion or
exercise thereof in the United States or to a U.S. person or for the
account or benefit of a U.S. person.
2. Representations of the Company. The Company represents and warrants:
A. The Company is a "Reporting issuer" (as defined by Rule 902(l) of
Regulation S). The Company is in full compliance, to the extent
applicable, with all reporting obligations under either Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
B. Offshore Transaction.
(i) The Company has not offered the Convertible Preferred Stock
or the Warrant to any person in the United States or to any "U.S. person"
(as that term is defined in Regulation S.)
(ii) At the time the buy order was received, the Company and/or
its agents reasonably believed that the purchasers in the Offering were
outside of the United States and were not U.S. persons.
(iii) The Company reasonably believes that the purchase of the
Convertible Preferred Stock and the Warrant pursuant to the Offering has
not been prearranged with a purchaser in the United States.
C. In connection with the Offering, neither the Company nor any of its
agents has engaged in any "directed selling efforts" (as that term is defined in
Rule 902(b)(1) of Regulation S) nor has the Company or any of its agents
conducted any general solicitation relating to the Offering to persons residing
within the United States or to U.S. persons.
D. The execution, delivery and performance of this Agreement by the
Company and the performance of its obligations hereunder do not and will not
constitute a breach or violation of any of the terms and provisions of, or
constitute a default under or conflict with or violate any provision of (i) the
Company's Articles of
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Incorporation, as amended, or Bylaws, as amended, (ii) any indenture, mortgage,
deed of trust, agreement or other instrument to which the Company is a party or
by which it or any of its property is bound, (iii) any applicable statute of
regulation, (iv) or any judgment, decree or order of any court or governmental
body having jurisdiction over the Company or any of the Company's property.
E. The Company is a corporation duly organized, validly existing and in
good standing under the law of its jurisdiction of incorporation and is duly
qualified as a foreign corporation in all jurisdictions where the failure to be
so qualified would have a materially adverse effect on its business, taken as a
whole.
F. The execution, delivery and performance of this Agreement and the
consummation of the issuance of the Convertible Preferred Stock and the Warrant
and the transactions contemplated by this Agreement are within the Company's
corporate powers and have been duly authorized by all necessary corporate and
stockholder action on behalf of the Company.
G. There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or, to the
knowledge of the Company, threatened, against or affecting the Company, or any
of its properties, which might result in any material adverse change in the
condition (financial or otherwise) or in the earnings, business affairs or
business prospects of the Company, or which might materially and adversely
affect the properties or assets thereof.
H. Except as set forth on Schedule H annexed hereto, the Company is not
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it or its property may be bound; and neither the execution, nor the
delivery by the Company, nor the performance by the Company of its obligations
under, this Agreement or, the Convertible Preferred Stock or the Warrant will
conflict with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or imposition
of any lien or charge on any assets or properties of the Company under, any
material indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company is a party or by which it is bound or any
statute or the Articles of Incorporation, as amended, or Bylaws, as amended, of
the Company, or any decree, judgment, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or its
properties.
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I. None of the Company's filings with the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statement therein in light of the
circumstances under which they were made, not misleading. The Company has timely
filed all requisite forms, reports and exhibits thereto with the SEC.
J. There has been no material adverse change in the financial condition,
earnings, business affairs or business prospects of the Company since the date
of the Company's most recent Quarterly Report on Form 10-Q, if applicable, filed
with the SEC.
K. As of the date hereof, the conduct of the business of the Company
complies in all material respects with all statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto. The Company
has not received notice of any alleged violation of any statute, law,
regulation, ordinance, rule, judgment, order or decree from any governmental
authority which would materially adversely affect the business of the Company.
L. There is no fact known to the Company (other than general economic
conditions known to the public generally) that has not been disclosed in writing
to the Purchaser that (i) could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise) or in the earnings,
business affairs, business prospects, properties or assets of the Company or
(ii) could reasonably be excepted to materially and adversely affect the ability
of the Company to perform its obligations pursuant to this Agreement and the
Convertible Preferred Stock and the Warrant.
M. The Company will not engage in any similar offering of its securities
pursuant to Regulation S for a period of 180 days from the date of the Closing
of this transaction unless the Purchaser has been previously offered such
Securities in writing on the same terms and has refused to take up the offer
within ten (10) days.
N. There is no action pending for de-listing of the Company's Common
Stock from the American Stock Exchange, Inc. nor is the Company aware of any
threatened action relating thereto.
3. Acceptance of Subscription. The Purchaser understands that this
subscription is not binding upon the Company until the Company accepts it, which
acceptance is at the sole discretion of the Company and is to be evidenced by
the Company's execution of this Agreement where indicated. This Agreement shall
be null and void if the Company does not accept it as aforesaid. Upon
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acceptance by the Company and receipt of the total purchase price, the Company
will issue one or more certificates for the full number of shares of Convertible
Preferred Stock and the Warrant subscribed for.
4. Covenants of the Company. For so long as any Convertible Preferred
Stock or the Warrant held by the Purchaser remain outstanding, the Company
covenants and agrees with the Purchaser that the Company will:
(i) reserve from its authorized but unissued shares of Common
Stock a sufficient number of shares of Common Stock to permit the
conversion in full of the outstanding Convertible Preferred Stock and
exercise in full of the Warrant.
(ii) maintain the listing of its Common Stock on the American
Stock Exchange, Inc.
(iii) not issue stock transfer instructions to its transfer agent
with respect to and will not place a restrictive legend on the certificates
representing shares of Common Stock issued upon (x) conversion of the
Convertible Preferred Stock or (y) exercise of the Warrant.
5. Conversion. For the purposes of conversion, the Convertible Preferred
Stock shall be valued at its Liquidation Preference of $100 per share ("Value")
and, if converted, the Convertible Preferred Stock shall be converted into such
number of Common Shares of the Company, $0.01 par value (the "Conversion
Shares"), as is obtained by dividing the aggregate value of the shares of
Convertible Preferred Stock being so converted by the "Conversion Price." For
purposes of this Part 5, this "Conversion Price" means seventy-five percent
(75%) of the average daily closing bid price of Common Shares as reported on the
American Stock Exchange, Inc. at 4:00 p.m. EST for the period of five (5)
consecutive trading days immediately preceding the date of the conversion of the
Convertible Preferred Stock in respect of which such Conversion Price is
determined./1/ Any holder of Convertible Preferred Stock (an "Eligible Holder")
may at any time commencing 41 days after the issuance of any Convertible
Preferred Stock convert any whole number of shares of Convertible Preferred
Stock in accordance with this Part 5.
A. The conversion right provided by the above paragraph may be
exercised only by an Eligible Holder of Convertible Preferred Stock, in whole or
in part, by the surrender of the share
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/1/ The number of Conversion Shares so determined shall be rounded
upward to the nearest whole number of shares.
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certificate or share certificates representing the Convertible Preferred Stock
to be converted at the principal office of the Company (or at such other place
as the Company may designate in a written notice sent to the holder by first-
class mail, postage prepaid, at its address shown on the books of the Company)
against delivery of that number of whole Common Shares as shall be computed by
dividing (1) the aggregate value of the Convertible Preferred Stock so
surrendered, if any, by (2) the Conversion Price. Each Convertible Preferred
Stock Share certificate surrendered for conversion shall be endorsed by its
holder. In the event of any exercise of the conversion right of the Convertible
Preferred Stock Shares granted herein (i) share certificates representing the
Common Shares purchased by virtue of such exercise shall be delivered to such
holder within five (5) days of notice of conversion free of restrictive legend
or stop transfer orders, and (ii) unless the Convertible Preferred Stock Shares
have been fully converted, a new share certificate representing the Convertible
Preferred Stock Shares not so converted, if any, shall also be delivered to such
holder within five (5) days of notice of conversion, or carried on the Company's
ledger, at holder's option. Any Eligible Holder may exercise its right to
convert the Convertible Preferred Stock Shares by telecopying an executed and
completed Notice of Conversion to the Company, and within 72 hours thereafter,
delivering the original Notice of Conversion and the certificate representing
the Convertible Preferred Stock Shares to the Company by express courier. Each
date on which a telecopied Notice of Conversion is received by the Company in
accordance with the provisions hereof shall be deemed a Conversion Date. Unless
another form of transfer is requested by the Holder, the Company will transmit
the Common Shares certificates issuable upon conversion of any Convertible
Preferred Stock Shares (together with the certificates representing the
Convertible Preferred Stock Shares not so converted) to the Eligible Holder via
express courier within three business days after the Conversion Date if the
Company has received the original Notice of Conversion and Convertible Preferred
Stock Shares certificate being so converted by such date.
B. All Common Shares which may be issued upon conversion of
Convertible Preferred Stock Shares will, upon issuance, be duly issued, fully
paid and nonaccessible and free from all taxes, liens, and charges with respect
to the issue thereof. At all times that any Convertible Preferred Stock Shares
are outstanding, the Company shall have authorized, and shall have reserved for
the purpose of issuances upon such conversion, a sufficient number of Common
Shares to provide for the conversion into Common Shares of all Convertible
Preferred Stock Shares then outstanding at the then effective Conversion Price.
Without limiting the generality of the foregoing, if, at any time, the
Conversion Price is decreased, the number of Common Shares
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authorized and reserved for issuance upon the conversion of the Convertible
Preferred Stock Shares shall be proportionately increased.
6. Registration. If upon conversion of Convertible Preferred Stock or the
exercise of the Warrant effected by the Purchaser pursuant to the terms of this
Agreement and the terms of the Convertible Preferred Stock and/or the Warrant
the Company fails to issue certificates for shares of Common Stock issuable upon
such conversion or exercise (the "Underlying Shares") to the Purchaser bearing
no restrictive legend for any reason other than (i) the Company's reasonable
good faith belief that the representations and warranties made by the Purchaser
in this Agreement or the Notice of Conversion were untrue when made, or (ii) the
inability of the Company to lawfully issue such Common Stock due to a change in
SEC regulations, then the Company shall be required, at the request of the
Purchaser and at the Company's expense, to effect the registration of the
Underlying Shares issuable upon conversion of the Convertible Preferred Stock
and/or the exercise of the Warrant under the Act and relevant Blue Sky laws as
promptly as is practicable. The Company and the Purchaser shall cooperate in
good faith in connection with the furnishing of information required for such
registration and the taking of such other actions as may be legally or
commercially necessary in order to effect such registration. In such case, the
Company shall file a registration statement within 45 days of Purchaser's demand
therefor and shall use its best efforts to cause such registration statement to
become effective as soon as practicable thereafter. Such best efforts shall
include, but not be limited to, promptly responding to all comments received
from the staff of the SEC with respect to such registration statement and
promptly preparing and filing amendments to such registration statement which
are responsive to the comments received from the staff of the SEC. Once declared
effective by the SEC the Company shall cause such registration statement to
remain effective until the earlier of (i) the sale by the Purchaser of all
Underlying Shares registered or (ii) 180 days after the effective date of such
registration statement. In the event the Company fails to issue Common Stock to
the Purchaser in accordance with paragraph 6, the current twenty-five percent
(25%) discount provided in the Conversion Price shall increase by two percent
(2%) and such discount shall continue to increase by two percent (2%) for each
thirty (30) day period thereafter until the Registration Statement is declared
effective by the SEC, or until the discount reached is fifty-one percent (51%),
and additional shares of Common Stock shall be issued to the Purchaser in
accordance with such additional discounts.
7. Indemnification.
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A. The Purchaser agrees to indemnify the Company and hold it
harmless from and against any and all losses, damages, liabilities, costs
and expenses which it may sustain or incur in connection with the breach by
the Purchaser of any representation, warranty or covenant made by it
herein.
B. The Company agrees to indemnify the Purchaser and hold it
harmless from and against any and all leases, damages, liabilities, costs
and expenses which it may sustain or incur in connection with the breach by
the Company of any representation, warranty or covenant made by it herein.
8. Assignment. Neither this Agreement nor any of the rights of the
Purchaser hereunder may be transferred or assigned by the Purchaser.
9. Modification; Applicable Law; Successors. This Agreement (i) may only
be modified by a written instrument executed by the Purchaser and the Company;
(ii) sets forth the entire agreement of the Purchaser and the Company with
respect to the subject matter hereof; (iii) shall be governed by the laws of
Texas applicable to contracts made and to be wholly performed therein; and (iv)
shall inure to the benefit of, and be binding upon the Company and the Purchaser
and their respective heirs, legal representatives, successors and permitted
assigns.
10. Gender. Unless the context otherwise requires, all personal pronouns
used in this Agreement, whether in the masculine, feminine or neuter gender,
shall include all other genders.
11. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
by facsimile or telecopy transmission confirmed by machine (followed within 24
hours by mail confirmation) or mailed by certified or registered mail, return
receipt requested, postage prepaid, as follows: if to Purchaser, to the address
set forth on the signature page of this Agreement and if to the Company, to
Polyphase Corporation, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or
to such other address as the Company or the Purchaser shall have designated to
the other by like notice.
12. Restricted Period; Legend. The transaction restriction in connection
with this offshore offer and sale restrict Purchaser from offering and selling
the Securities to U.S. persons or for the account or benefit of a U.S. person
for the Restricted Period. Rule 903(c)(2) governs the Restricted Period.
Purchaser under-stands that the Company will instruct its transfer agent to
place a stop transfer order (which shall be effective to prohibit
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transfers to U.S. persons or for the account or benefit of U.S. persons solely
during the Restricted Period) with respect to the certificates representing the
Convertible Preferred Stock and that such certificates will bear the following
legend:
"The shares represented by this certificate have been issued pursuant to
Regulation S promulgated under the Securities Act of 1933, as amended (the
'Act'), and have not been registered under the Act. These shares may not
be offered or sold within the United States or to, or for the account of a
'U.S. person' (as that term is defined in Regulation S) until after the
40th day following completion of the offering. After such date, this
legend shall have no further effect."
Following the expiration of the Restricted Period, the Company will, at the
request of the Purchaser, cause its transfer agent to issue certificates
representing the Convertible Preferred Stock or the common stock issued upon
conversion (or exercise of the Warrant) as may be applicable without any
restrictive legend or stop transfer instructions.
13. Costs and Expenses. Contemporaneously with the execution of this
Agreement, the Company shall pay to Purchaser a due diligence fee of $11,250 to
reimburse Purchaser for its costs and expenses of its due diligence
investigation and analysis of the Company and the transaction contemplated by
this Agreement. The Company shall pay on demand all out-of-pocket expenses
incurred by Purchaser, including reasonable fees and disbursements of counsel
for the Purchaser. The Company shall also bear its own cost, expenses and fees
incurred or assumed by the Company in the preparation or execution of this
Agreement and in complying with the terms and conditions hereof including the
execution, delivery and/or filing of any and all documents or instruments
referred to herein.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of September ___, 1997.
BLACK SEA INVESTMENTS, LTD.,
a Turks and Caicos Islands corporation
By:
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Name:
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Title:
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Exact name(s) in which ownership of securities is to be registered:
Black Sea Investments, Ltd.
Principal place of business: ▇/▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Federal Tax ID Number: None
Original Number of Shares of Series G 6% Convertible Preferred Stock Purchased:
7,500 shares for the amount of $750,000
AGREED AND ACCEPTED this ____ day of September, 1997
POLYPHASE CORPORATION
By:
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Name:
-----------------------------------------
Title:
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APPENDIX "A"
Pursuant to Rules 902(o) and (p) of Regulation S, the terms "U.S Person"
and "United States" are defined as follows:
(o) 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 for the benefit or
account of a U.S. person;
(vii) 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
(viii) 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 trusts.
(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) of this rule, any estate of which any
professional fiduciary acting as executor or
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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 corpus of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1) of this rule, 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) of this rule, 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) of this rule, 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, any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. persons."
(p) United States. "United States" means the United States of America, its
territories and possessions, any State of the United States, and the District of
Columbia.
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SCHEDULE H
Description of defaults in performance or observance of material obligations,
agreements, covenants or conditions under Section 2H.
Secured Promissory Note in the amount of $2,500,000 dated January 17, 1997,
issued by Polyphase Corporation in favor of S & W Enterprises, L.L.C.
12% Senior Convertible Debentures in principal amounts totalling $4,000,000 and
$1,500,000, dated July 5, 1994 and December 1, 1995, respectively, issued
by Polyphase Corporation in favor of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Convertible Fund, Inc.
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ World Income Fund, Inc.
Deed of Trust Note in the original principal amount of $1,000,000, dated May 25,
1994, issued by Polyphase Corporation in favor of Comerica Bank-Texas.
Note Purchase Agreement, Warrant Purchase Agreement and Senior Subordinated Note
in the Principal amount of $13,000,000, dated May 5, 1995 between Overhill
Farms, Inc. and Rice Partners II, L.P.
Loan and Security Agreement, Secured Promissory Note in the principal amount of
$2,000,000, Secured Promissory Note in the principal amount of $4,000,00,
dated May 5, 1995 between Overhill Farms, Inc. and Finova Capital
Corporation.
Intecreditor and Subordination Agreement, dated May 5, 1995, among Finova
Capital Corporation, Rice Partners II, L.P. and Overhill Farms, Inc.
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