OFFSHORE CONVERTIBLE SECURITIES SUBSCRIPTION AGREEMENT
Electrosource, Inc./Buyer
November _, 1995
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER
(THE "1933 ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES (AS DEFINED IN REGULATION S OF THE 1933 ACT) OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN
REGULATION S OF THE 1933 ACT) EXCEPT PURSUANT TO REGISTRATION
UNDER OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
1933 ACT.
THIS OFFSHORE CONVERTIBLE SECURITIES SUBSCRIPTION AGREEMENT
(hereinafter the "Agreement") has been executed by the
undersigned in connection with the sale of Convertible Debentures
(hereinafter the "Debentures"), convertible into shares of common
stock (hereinafter the "Shares") of Electrosource, Inc. (XXXX),
0000 X Xxxxxxxx Xxxxx, Xxxxxx, Xxxxx, 00000, a corporation
organized under the laws of Delaware (hereinafter "Seller") to
[Buyer], located [Address], a corporation organized under the
laws of [area of incorporation] (hereinafter "Buyer"). Seller
and Buyer (hereinafter collectively the "parties") each hereby
represents, warrants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
(i) Buyer hereby subscribes for [written amount of
dollars] (#) U.S. principal amount of Debentures,
convertible into shares of XXXX common stock in accordance
with the terms set forth in the form of Debenture attached
as Exhibit A to this Agreement.
(ii) Buyer shall pay the purchase price by delivering
same day funds in United States Dollars to an escrow agent
or as otherwise agreed between the parties, to be delivered
to the order of Seller upon Delivery of the Debentures.
(iii) This Agreement has been executed in
connection with an offering (the "Offering") by Seller of
the Debentures pursuant to Regulation S ("Regulation S")
promulgated under the Securities Act of 1933, as amended
(the "Securities Act"). Buyer will be notified of the date
of the conclusion of the Offering.
2. BUYER'S REPRESENTATIONS
Buyer represents and warrants to Seller as follows:
(i) Buyer is not a "U.S. Person" as defined by
Rule 902 of Regulation S, was not organized under the
laws of any U.S. jurisdiction, and was not formed for
the purpose of investing in securities not registered
under the Securities Act;
(ii) At the time the buy order for this
transaction was originated, Buyer was outside the
United States;
(iii) No offer to purchase the Debentures was
made in the United States;
(iv) Buyer is either (a) purchasing the Debentures
for its own account for investment purposes and not
with a view towards distribution, or (b) acting as
agent for a principal that has made the representations
contained in Exhibit B hereto;
(v) All subsequent offers and sales of the
Debentures or the Shares will be made (a) outside the
United States in compliance with Rule 903 or Rule 904
of Regulation S, (b) pursuant to registration of the
Debentures or the Shares, respectively, under the
Securities Act, or (c) pursuant to an exemption from
such registration. Buyer understands the conditions of
the exemption from registration afforded by Section
4(1) of the Securities Act and acknowledges that there
can be no assurance that it will be able to rely on
such exemption. In any case, Buyer will not resell the
Debentures or the Shares to U.S. Persons or within the
United States until after the end of the forty (40) day
period commencing on the date of completion of the
Offering (as defined above) (the "Restricted Period");
(vi) Buyer agrees not to enter into any short
sales with respect to the common stock of Seller at any
time after the execution of this Agreement by Buyer and
prior to the expiration of the Restricted Period.
Buyer further agrees that, at all times after the
execution of this Agreement by Buyer and prior to the
expiration of the Restricted Period, it will keep its
purchase of the Debentures confidential, except as
required by law and except as necessary in the ordinary
course of Buyer's business;
(vii) Buyer understands that the Debentures
are being offered and sold to it in reliance on
specific provisions of federal and state securities
laws and that Seller is relying upon the truth and
accuracy of the representations, warranties,
agreements, acknowledgments and understandings of Buyer
set forth herein in order to determine the
applicability of such provisions. Accordingly, Buyer
agrees to notify Seller of any events which would cause
the representations and warranties of Buyer to be
untrue or breached at any time after the execution of
this Agreement by Buyer and prior to the expiration of
the Restricted Period;
(viii) This Agreement has been duly authorized,
validly executed, and delivered on behalf of Buyer and
is a valid and binding agreement enforceable in
accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights
generally;
(ix) Any offering documents received by Buyer
include statements to the effect that neither the
Debentures nor the Shares have been registered under
the Securities Act and such securities may not be
offered or sold in the United States or to U.S. Persons
during the Restricted Period;
(x) Buyer, in making the decision to purchase the
Debentures subscribed for, has relied upon independent
investigations made by it and has not relied on any
information or representations made by third parties;
(xi) In the event of resale of the Debentures or
the Shares during the Restricted Period, Buyer shall
provide a written confirmation or other written notice
to any distributor, dealer, or person receiving a
selling concession, fee, or other remuneration in
respect of the Debentures or the Shares stating that
such purchaser is subject to the same restrictions on
offers and sales that apply to the undersigned, and
shall require that any such purchaser shall provide
such written confirmation or other notice upon resale
during the Restricted Period; and
(xii) Buyer has not taken any action that
would cause Seller to be subject to any claim for
commission or other fee or remuneration by any broker,
finder, or other person and Buyer hereby indemnifies
Seller against any such claim caused by the actions of
Buyer or any of its employees or agents.
3. SELLER'S REPRESENTATIONS
Seller represents and warrants to Buyer as follows:
(i) Seller is a "Domestic Issuer" and a
"Reporting Issuer," as such terms are defined by Rule
902 of Regulation S. Seller has registered its common
stock pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is in full compliance with all
reporting requirements of either Section 13(a) or 15(d)
of the Exchange Act, and Seller's common stock trades
on the NASDAQ Small Cap Market;
(ii) Seller has furnished Buyer with copies of
Seller's most recent Annual Report on its Form 10-K
filed with the Securities and Exchange Commission and
all Forms 10-Q and 8K filed thereafter;
(iii) Seller has not offered the Debentures to
any person in the United States, any identifiable group
of U.S. citizens abroad, or to any U.S. Person;
(iv) At the time the buy order was originated,
Seller reasonably believed Buyer was outside the United
States and was not a U.S. Person;
(v) Seller reasonably believes that the sale of
Debentures has not been prearranged with a Buyer in the
United States.
(vi) Seller has not conducted any "directed
selling efforts" with respect to the Debentures nor has
Seller conducted any general solicitation (as that term
is used in Regulation D under the Securities Act) with
respect to any of its securities;
(vii) The Debentures and the Shares when
issued and delivered will be duly and validly
authorized and issued, fully-paid and nonassessable and
will not subject the holders thereof to personal
liability by reason of being such holders. There are
no preemptive rights of any shareholder of Seller with
respect to the Debentures or the Shares;
(viii) This Agreement has been duly authorized,
validly executed and delivered on behalf of Seller and
is a valid and binding agreement in accordance with its
terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of
creditors' rights generally;
(ix) The execution and delivery of this Agreement
and the consummation of the issuance of the Debentures
and the Shares and the transactions contemplated by
this Agreement do not and will not conflict with or
result in a breach by Seller of any of the terms or
provisions of, or constitute a default under, the
articles of incorporation or bylaws of Seller, or any
indenture, mortgage, deed of trust or other material
agreement or instrument to which Seller is a party or
by which it or any of its properties or assets are
bound, or any existing applicable decree, judgment or
order of any court, Federal or State regulatory body,
administrative agency or other governmental body having
jurisdiction over Seller or any of its properties or
assets;
(x) Seller is not aware of any authorization,
approval or consent of any governmental body which is
legally required for the issuance and sale of the
Debentures as contemplated by this Agreement;
(xi) Seller will issue one or more certificates
representing the Debentures in the name of Buyer and in
such denominations to be specified by Buyer prior to
closing. Upon conversion of the Debentures, Seller
will issue one or more certificates representing
theShares in the name of Buyer without a restrictive
legend and in such denominations to be specified by
Buyer prior to conversion. Seller further warrants
that no instructions other than these instructions, and
instructions for a "stop transfer" until the end of the
Restricted Period, have been given to the transfer
agent and also warrants that the Debentures and the
Shares shall otherwise be freely transferable by the
Buyer on the books and records of Seller subject to
compliance with Federal and State securities laws.
Seller will notify the transfer agent of the date of
completion of the Offering and of the date of
expiration of the Restricted Period. Nothing in this
section shall affect in any way Buyer's obligations and
agreement to comply with all applicable securities laws
upon resale of the Debentures or the Shares;
(xii) Seller has taken and will take no action
that will affect in any way the running of the
Restricted Period or the ability of Buyer to freely
resell the Debentures or the Shares in accordance with
applicable securities laws and this Agreement; and
(xiii) Seller will comply with all applicable
securities laws with respect to the sale of the
Debentures and the Shares, including but not limited to
the filing of all reports required to be filed in
connection therewith with the Securities and Exchange
Commission or any stock exchange or the NASDAQ stock
market or any other regulatory authority.
4. CLOSING. Debenture certificates shall be delivered to
Buyer and the funds therefor shall be delivered to Seller on
Friday, November 3, 1995 or at such time to be mutually
agreed.
5. CONDITIONS TO CLOSING.
(i) Buyer understands that Seller's obligation to
sell the Debentures is conditioned upon delivery into
escrow or otherwise as agreed between Buyer and Seller
by Buyer of the amount set forth in Section 1 hereof.
(ii) Seller understands that Buyer's obligation to
purchase the Debentures is conditioned upon delivery of
certificate(s) representing Debentures as described
herein and provision of an opinion of counsel
confirming the matters et out in Section 3(i), (vii),
(viii), (ix), and (x) above.
6. GOVERNING LAW; INTERPRETATION. This Agreement shall be
governed by and interpreted in accordance with the laws of
the State of New York. Facsimile signatures of this
Agreement shall be binding on all parties hereto. All terms
used herein that are defined in Regulation S under the
Securities Act shall have the meanings set forth therein.
IN WITNESS WHEREOF, this Agreement was duly executed on the
date first written above.
Official Signatory of Buyer:
Official Signatory of Seller:
Electrosource, Inc.
