Exhibit10.1
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES SUBSCRIBED FOR HEREUNDER HAVE NOT BEEN REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED ("THE ACT"), OR THE SECURITIES COMMISSION OF ANY STATE
UNDER ANY STATE SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER REGULATION S ("REGULATION S") PROMULGATED UNDER THE ACT.
THE SECURITIES MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNTS OR BENEFIT OF, U.S. PERSONS (AS SUCH TERM IS
DEFINED IN REGULATION S) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE
PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND THOSE LAWS. NO HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY BE
CONDUCTED UNLESS IN ACCORDANCE WITH THE ACT.
March __, 1998
ITEX Corporation
00000 XX Xxxxxxxxx Xx., Xxxxx 000
Xxxxxxxx, XX 00000
Gentlemen:
1. Purchase and Sale. ITEX Corporation, a Nevada corporation (the
"Company"), has offered for sale outside the United States, pursuant to
Regulation S ("Regulation S") of the United States Securities Act of 1933, as
amended (the "Act"), shares of its convertible Series A Preferred Stock with the
rights and privileges set forth in the resolutions attached as Exhibit A to this
Agreement (the "Series A Preferred Stock"), having an aggregate value of up to
$4,500,000, at the purchase price of $100.00 per Share, (the "Offering"). The
undersigned purchaser (the "Purchaser") hereby tenders this subscription and
applies for the purchase of that number of shares of Series A Preferred Stock as
set forth below such Purchaser's name on the signature page hereof (the
"Shares"). Upon acceptance by the Company of subscriptions to purchase 45,000
shares (with an aggregate purchase price of $4,500,000) a closing shall be held
on or before March 15, 1998. Together with this Subscription Agreement, the
Purchaser is delivering to the Company the full amount of the purchase price for
the Shares by wire transfer to the escrow agent designated by the parties
("Escrow Agent") against delivery by the Company of the certificates
representing the Shares. Time is of the essence in connection with this
Subscription Agreement.
2. Use of Proceeds. The Company intends to use the proceeds of this
offering, net of costs and fees, for the purposes set forth in Exhibit B hereto.
3. Representations and Warranties of Purchaser. In order to induce the
Company to accept his subscription, the Purchaser hereby represents and warrants
to, and covenants with, the Company as follows:
a. (i) The Purchaser is not a U.S. person as that term is
defined under Regulation S;
(ii) At the time the offer was made and the buy order
for the Series A Preferred Stock was originated, Purchaser was outside
the United States* and is outside of the United States as of the date
of the execution and delivery of this Agreement;
(iii) Purchaser is purchasing the Series A Preferred
Stock for its own account and not on behalf of any U.S. person or any
other person, and the transaction has not been and will not be
pre-arranged with a purchaser in the United States or as part of a
scheme or plan to evade the Registration Provisions of the Act and
Purchaser is acquiring the Series A Preferred Stock for investment
purposes and not with a view towards distribution and has no present
arrangement or intention to sell the Series A Preferred Stock or the
common stock issuable upon conversion of the Series A Preferred Stock;
(iv) The Purchaser represents and warrants and hereby
agrees that all offers and sales of the Series A Preferred Stock or of
the common stock issuable upon conversion thereof (collectively, the
"Securities") prior to the expiration of a period commencing on the
date hereof and ending 40 days after the date of closing (the
"Restricted Period") shall only be made in compliance with, and the
Purchaser shall take all reasonable efforts to ensure 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 that all offers and sales after the expiration of
the Restricted Period in the United States or to U.S. person shall be
made only pursuant to such a registration or to such exemption from
registration;
(v) The Purchaser represents and warrants and hereby
agrees that during the Restricted Period, the Purchaser shall not take
a short position or engage in hedging transaction directly or
indirectly with regard to the Securities;
(vi) The Purchaser acknowledges and agrees that the
Securities have not been registered under the Act and may not be
offered or sold in the United States or to U.S. Persons unless the
Securities are registered under the Act or an exemption from the
registration requirements of the Act is available.
(vii) The Purchaser is not an officer, director or
"affiliate" (as that term is defined in Rule 405 under the Act) of the
Company.
b. (i) The Purchaser has received and carefully reviewed
the Company's latest Annual Report to shareholders and its most recent
Annual Report on Form 10-K, as amended and its subsequent Quarterly
Reports on Form 10-Q and Reports on Form 8-K
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* See Appendix A atached hereto for definitions of "U.S.person"
and "United States" under Regulation S.
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(collectively, the "SEC Reports"), and the certified copy of the
Certificate of Designation for the Series A Preferred Stock;
(ii) The Purchaser understands, agrees and acknowledges
that the Company intends to issue an additional 20,000 shares of its
Series A Preferred Stock in a separate offshore offering concurrent
herewith;
(iii) 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;
(iv) The Purchaser is (a) an "accredited investor" (as
that term is defined in Rule 501(a) of the Act), (b) has such knowledge
and expertise in financial and business matters, (c) is capable of
evaluating the merits and risks involved in an investment in the
Securities, (d) 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, and (e) is able to withstand the total loss of the
investment;
(v) 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;
(vi) The Purchaser understands that the Securities are
being offered and sold in part 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;
(vii) 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;
(viii) Purchaser understands that in the view of the
Securities and Exchange Commission (the "Commission") the statutory
basis for the exemption claimed for the 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 1933 Act and Purchaser confirms that its purchase is
not part of any such plan or scheme. Purchaser is acquiring the
Securities for investment purposes and has no present intention
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to sell the Securities in the United States or to a U.S. person or for
the account or benefit of a U.S. Persons; and
(ix) In connection with the Offering neither the
Purchaser nor any of its agents has engaged in any "directed selling
efforts" (as that term is defined in Regulation S) nor has the
Purchaser or to the best of its knowledge any of its agents conducted
any general solicitation relating to the Offering to persons residing
within the United States or to U.S. persons.
3. Representations of the Company. The Company represents and warrants:
a. The Company is a Reporting Issuer as defined by rule 902 of
Regulation S. The Company has filed all material required to be filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") during the twelve months
immediately preceding the date hereof. The common stock is approved for
quotation on the NASDAQ Small Cap market.
b. Offshore Transaction.
(i) The Company has not offered the Series A Preferred
Stock 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 offer was made and the buy order
was received, the Company and/or its agents reasonably believed that
the purchaser in the Offering were outside of the United States and
were not U.S. persons; and
(iii) The Company reasonably believes that the purchase
of the Series A Preferred Stock pursuant to the Offering has not been
pre-arranged 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 Regulation S) nor has the Company or, to the best of
its knowledge, 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 Certificate of Incorporation
or By-laws, (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 or regulation,
(iv) or any judgment, decree or order of any court or governmental body
having jurisdiction over the Company or any of its property.
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e. The Company is a corporation duly organized, validly existing
and in good standing under the laws of Nevada 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 Securities and the transactions
contemplated by this Agreement are within the Company's corporate
powers and have been duly authorized by all necessary corporate action
on behalf of the Company.
g. Except as disclosed in the SEC Reports, or as set forth on a
schedule attached hereto, 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. 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 Series A Preferred stock 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 Certification of Incorporation
or Bylaws 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.
i. None of the Company's filings with the Commission since
January 1, 1997 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.
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 filed with the Commission.
k. The authorized capital stock of Company consists of
45,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, of which 65,000 shares are designated as Series A Preferred
Stock. As of February 20, 1998, (i) 7,438,567 shares of Common Stock
were issued and outstanding, (ii) options (the "Options") to purchase
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3,445,730 shares of Common Stock were issued and outstanding and (iii)
warrants (the "Warrants") to purchase 1,467,848 shares of Common Stock
were issued and outstanding or required to be issued (not including
50,000 warrants to be issued in connection with the Offering). Except
for the shares of Series A Preferred Stock, the Options and the
Warrants, there are outstanding no securities of the Company, any
subsidiary or any third person convertible into or exercisable or
exchangeable for shares of Common Stock. There are no outstanding
obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of Common Stock or any Options
or Warrants.
l. 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.
m. There is no action pending for delisting of the Common Stock
nor is the Company aware of any threatened action relating thereto.
4. Resales.
a. Purchaser acknowledges and agrees that the Securities may and
will only be resold (i) in compliance with Regulation S; (ii) purchase
to a Registration Statement under the Act; or (iii) pursuant to an
exemption from registration under the Act.
b. Purchaser further acknowledges and agrees that with respect
to 50% of the shares of Common Stock issuable upon conversion of the
Series A Preferred Stock, it will not offer, sell or otherwise transfer
such shares until 75 days after the closing hereunder and issuance of
the Shares.
5. Acceptance of Subscriptions. 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 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 Series A Preferred
Stock subscribed for.
6. Covenants of the Company. For so long as any Series A Preferred
Stock held by the Purchaser remain outstanding, the Company covenants and agrees
with the Purchaser that:
(a) It will 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 Series A Preferred Stock.
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(b) It will use its best efforts to maintain the listing of its
Common Stock on the NASDAQ Small Cap Market.
(c) After the expiration of the Restricted Period, it will
cancel the stop transfer instructions previously given to its transfer
agent with respect to and will not place a restrictive legend on the
certificates representing shares of Common Stock issued upon conversion
of the Series A Preferred Stock.
7. Registration. If upon conversion of Series A Preferred Stock
effected by the Purchaser pursuant to the terms of this Agreement an the terms
of the Series A Preferred Stock the Company fails to issue certificates for
shares of Common Stock issuable upon such conversion (the "Underlying Shares")
to the Purchaser bearing no restrictive legend for any reason other than 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, 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 Series A Preferred Stock under the Act
and relevant Blue Sky laws as promptly as is practicable, pursuant to the terms
of the Registration Rights Agreement attached hereto as Exhibit C.
8. Indemnification.
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 losses, 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.
9. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
mailed by certified or registered mail, return receipt requested, postage
prepaid, as follows: If to the Purchaser, to the address set forth on the
signature page of this Agreement and if to the Company, to ITEX Corporation,
00000 XX Xxxxxxxxx Xx., Xxxxx 000, Xxxxxxxx, Xxxxxx 00000 or to such other
address as the Company or the Purchaser shall have designated to the other by
like notice.
10. Restricted Period; Legend. The transaction restriction in
connection with this offshore offer and sale restrict Purchaser from offering
and selling the Series A Preferred Stock 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 understands and agrees that the Company will
instruct its transfer agent to place a stop transfer order on the Securities
which shall be effective to prohibit transfers of the Securities to U.S. persons
or for the account or benefit of U.S. persons during the Restricted Period.
Purchase further understands and agrees, with respect
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to the certificates representing the Series A Preferred Stock, 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 ("Act"), and have not been registered under
the Act or the securities commission of any state under state securities law.
These shares may not be offered, sold or otherwise transferred within the United
States or to, or for the account of a "U.S. Person" (as that term is defined in
Regulation S) unless the shares are registered under the Act and applicable
state securities laws, or such offers, sales and transfers are made pursuant to
available exemptions from the registration requirements of the Act and those
laws." Following the expiration of the Restricted Period, the Company will, at
the request of the Purchaser, cause its transfer agent to issue certificates
within 5 days representing the Series A Preferred Stock or the common stock as
may be applicable without any restrictive legend or stop transfer instructions.
11. Miscellaneous.
(a) Except as specifically referenced herein, this Agreement
constitutes the entire contract between the parties, and neither party
shall be liable or bound to the other in any manner by any warranties,
representations or covenants except as specifically set forth herein.
Any previous agreement among the parties related to the transactions
described herein is superseded hereby. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto. Nothing in
this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
(b) Buyer is an independent contractor, and is not the agent of
Seller. Buyer is not authorized to bind Seller, or to make any
representations or warranties on behalf of Seller.
(c) Seller makes no representations or warranty with respect to
Seller, its finances, assets, business prospects or otherwise. Buyer
will advise each purchaser, if any, and potential purchaser of the
Securities, of the foregoing sentence, and that such purchaser is
relying on its own investigation with respect to all such matters, and
that such purchaser will be given access to any and all documents and
Seller personnel as it may reasonably request for such investigation.
(d) All representations and warranties contained in this
Agreement by Seller and Buyer shall survive the closing of the
transactions contemplated by this Agreement.
(e) This Agreement shall be construed in accordance with the
laws of Oregon applicable to contracts made and wholly to be performed
within the State of Oregon and shall be binding upon the successors and
assigns of each party hereto. Subject to Section 10(f), buyer and
Seller hereby waive trial by jury and consent to exclusive jurisdiction
and venue in the State of New York. This Agreement may be executed in
counterparts, and the facsimile transmission of an executed counterpart
to this Agreement shall be effective as an original.
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(f) Any controversy or claim relating to this Agreement
("Arbitrable Dispute") shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association (the "AAA") as such rules may be modified herein or as
otherwise agreed by the parties in controversy. The forum for
arbitration shall be New York, New York. Buyer and Seller agree to
submit to the jurisdiction of the New York Courts for purposes of
confirming any award.
12. Escrow Agent. Company and Buyer hereby appoint the Escrow Agent to
receive the proceeds of the sale of the Shares (the "Funds") and the
certificates representing the Shares (hereinafter referred to together as the
"Escrowed Property"), and to hold and disburse the Escrowed Property in
accordance with the terms of this Agreement and Escrow Agent accepts such
appointment on the following terms and conditions:
(a) It is specifically understood and agreed that the only
obligation of Escrow Agent hereunder is to disburse the Escrowed
Property pursuant to the terms hereof, and Escrow Agent shall have no
obligation to Company, Buyer or any other party whatsoever, including
but not limited to any party claiming by or through Company or Buyer
upon such disbursement.
(b) Escrow Agent shall not be under any duty to give the
Escrowed Property any greater degree of care than it gives its own
similar property, and it shall have no liability hereunder, whether for
negligence or otherwise, except for the intentional breach of its
duties hereunder. Escrow Agent shall have no duties or responsibilities
except those as expressly set forth herein, and no implied duties or
obligations may be read into this Agreement against the Escrow Agent.
(c) Escrow Agent may consult with counsel and shall be fully
protected, indemnified and held harmless with respect to any action
taken or omitted by Escrow Agent in good faith on advice of counsel.
(d) Escrow Agent makes no representation as to the validity,
value, genuineness or collectability of the Funds or of the Preferred
Stock or any other document or instrument held by or delivered to
Escrow Agent.
(e) Company and Buyer hereby unconditionally agree to indemnify
the Escrow Agent and hold it harmless from and against any and all
taxes (except those taxes duly payable by Escrow Agent as a result of
the compensation derived by Escrow Agent hereunder, but including any
other federal, state and local taxes of any kind and other governmental
charges), expenses, damages, actions, suits or other charges incurred
by or brought or assessed against Escrow Agent:
(i) for anything done or omitted by Escrow Agent in the
performance of its duties hereunder; or
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(ii) on account of its acting in its capacity as Escrow
Agent or stakeholder hereunder, except as a result of its intentional
breach of its duties under this Agreement.
(f) The agreements contained herein shall survive any
termination of this Agreement and the duties of the Escrow Agent
hereunder.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the Purchaser has executed this Offshore Securities
Subscription Agreement on the date set forth below.
SIGNATURE PAGE
----------------------------------- ------------------------------------
Print Name Print Name(s)
----------------------------------- ------------------------------------
Signature Signature(s)
----------------------------- ------------------------------------
Print Name and Title of
Person Signing
Date: , 1998
--------------
Number of Shares of Series A
Preferred Stock Subscribed for: ------------------
Purchase Price per Share: $100.00 U.S.
Total Purchase Price (Number of
Shares subscribed for multiplied
by $100 U.S. (Purchase Price per Share)): $ U.S.
-----------------
ITEX CORPORATION
By:
-------------------------------------------
Accepted this day of , 1998
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(Please print information below
exactly as you wish it to appear in
the records of the Company)
------------------------------------ ----------------------------------------
Name and capacity in which Taxpayer I.D. Number
subscription is made or other I.D. Number
Address:
------------------------------------
Number and Street
------------------------------------
City State Zip Code
Please indicate form of ownership (if applicable):
------------------------------------ ----------------------------------------
Tenants-In-Common Joint Tenants with Right of Survivorship
(Both Parties must sign above) (Both Parties must sign above)
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APPENDIX "A"
Pursuant to Rule 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 breach of a foreign entity located in the United
States;
(vi) Any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized, incorporated
or (if an individual) resident in the United States; and
(vii) Any partnership or corporation if (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B) formed by a
U.S. person principally for the purpose of investing in securities not
registered under the Securities Act of 1933, unless it is organized or
incorporated and owned, by accredited investors (as defined in Rule 501(a)) who
are not natural persons, estates or trusts.
(1) 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."
(2) Notwithstanding paragraph (o)(1), any estate of which
any professional fiduciary acting as executor or administrator is a U.S.
person shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is not
a U.S. person has sole or shared investment discretion with respect to
the corpus of the estate; and
(ii) The estate is governed by foreign law.
(3) Notwithstanding paragraph (o)(1), any trust of which
any professional fiduciary acting as trustee is a U.S. person shall not be
deemed a U.S. person if a trustee who is not a U.S. person has sole or shared
investment discretion with respect to the trust assets, and no beneficiary
of the trust (and no settlor if the trust is revocable) is a U.S. person.
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(4) Notwithstanding paragraph (o)(1), an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. person.
(5) Notwithstanding paragraph (o)(1), any agency or branch of a
U.S. person located outside the United States shall not be deemed a "U.S.
person" if:
(i) The agency or branch operates for valid business reasons;
and
(ii) The agency or branch is engaged in the business of
insurance or banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(6) 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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EXHIBIT A
to
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
DESIGNATIONS OF SERIES A PREFERRED STOCK
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EXHIBIT B
to
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
USE OF PROCEEDS
The proceeds from the Offering, net of costs and fees, shall be used by the
Company to acquire the remaining 50% of the outstanding stock of Barter Exchange
International Corporation, a Nevada corporation.
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