Ex-10.44
Regulation S Securities Purchase Agreement by and between
the Company and certain foreign investors
EXHIBIT 10.44
REGULATION S SECURITIES PURCHASE AGREEMENT
This Regulation S Securities Purchase Agreement (the "Agreement") is
entered into as of the date set forth below by and between the person whose name
is set forth on the signature page hereof (referred to herein as the "Investor")
and Telegen Corporation, a California corporation, (the "Company") whose address
is 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000, in connection
with the purchase by Investor of the number of shares of common stock, no par
value, (the "Shares") of the Company set forth opposite the Investor's name on
the signature page of this Agreement. Up to 500,000 Shares of common stock of
the Company are being offered hereby to the Investor and other persons.
The offer and sale of the Shares is being made in compliance with and in
reliance upon the provisions of Regulation S ("Regulation S") under the United
States Securities Act of 1933, as amended (the "Act"). The Company has retained
the services of Pacific West Securities, Inc. ("Pac West") as its agent to
assist the Company in this offering. Pac West is a "distributor" as that term is
defined in Regulation S.
NOW THEREFORE, in consideration of the representations, warranties and
covenants contained herein and for other good and valuable consideration the
parties hereto agree as follows:
1. ISSUANCE AND SALE OF THE SHARES.
1.1 The Company hereby agrees to sell to the Investor and the
Investor agrees to purchase from the Company the number of Shares set forth on
the signature page of this Agreement (the "Signature Page") at the aggregate
purchase price (the "Purchase Price") also set forth on the Signature Page. The
Investor has previously agreed to purchase the Shares, has executed a
Subscription Agreement with respect thereto and has paid the Purchase Price. The
Purchase Price has been deposited in an escrow account maintained at Preferred
Bank, Los Angeles, California. The Purchase Price will not be released to the
Company and the purchase of the Shares will not be consummated until (1) the
confirmation of the Company's Plan of Reorganization ("Plan of Reorganization")
as filed with the U.S. Bankruptcy Court for the Northern District of California
(the "Court") on April 21, 2000 in the case entitled In Re Telegen Corporation
(Case No. 98-34876-DM-11) and (2) a registration statement covering all of the
Shares sold under this Agreement has been declared effective by the Securities
and Exchange Commission. The purpose of the Agreement is to ratify and confirm
the purchase of the Shares by the Investor on the terms and conditions set forth
herein and to restate and reconfirm the representations and warranties
previously made by the Company and the Investor.
1.2 ADVISOR. The Investor hereby acknowledges that the Company has
retained the services of Pac West in connection with the offer and sale of the
Shares and that for its services in connection therewith Pac West will be paid
fees as set forth in the Disclosure Documents.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor as follows:
2.1 BUSINESS OF THE COMPANY. The Company is a development stage
company which is engaged in the business described in the Private Placement
Memorandum of the Company dated March 30, 2000 and the Plan of Reorganization
filed April 21, 2000.
The documents referred to in the previous paragraph (collectively the
"Disclosure Documents")
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contain a complete description of the business of the Company, the management of
the Company, including compensation, the principal shareholders of the Company
and risk factors involved in the purchase of Shares.
2.2 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER. The Company is
duly incorporated, validly existing and in good standing under the laws of the
state of California and has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as the same is now
being conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of its properties or the nature of its activities make such qualification
necessary except where the failure to be so qualified and in good standing would
not have a material adverse effect on its business, operations or financial
condition. The Company has the requisite corporate power and authority to
execute, deliver and perform this Agreement and to sell, issue and deliver the
Shares.
2.3 AUTHORIZATION OF AGREEMENT.
(a) The execution and delivery by the Company of this
Agreement, the performance of its obligations hereunder and the sale, issuance
and delivery of the Shares will, upon confirmation of the Plan of Reorganization
be duly authorized or ratified by all requisite corporate action of the Company
and will not violate any provision of United States law, any order of any court
or other agency of government, the Company's Articles of Incorporation or Bylaws
or any provision of any indenture, agreement or other instrument to which the
Company or any of its properties or assets is bound, or conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument or result in the
creation or imposition of any lien, charge, restriction, claim or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company.
(b) The Shares have been duly authorized and, when paid for
and issued in accordance with this Agreement and the Plan of Reorganization upon
its confirmation by the Court, will be validly issued, fully paid and
nonassessable shares of common stock of the Company free and clear of all liens,
charges, restrictions, claims and encumbrances imposed by or through the Company
and not subject to any pre-emptive right of stockholders of the Company or to
any right in favor of any person.
2.4 VALIDITY. This Agreement has been executed and delivered by the
Company, subject to confirmation by the Court of the Plan of Reorganization and
constitutes the legal, valid and binding obligation of the Company enforceable
in accordance with its terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and subject to general principles of
equity. No approval, consent, authorization, order of or filing with any court
or governmental authority is required in connection with the sale of the Shares
to the Investor except for confirmation of the Plan of Reorganization by the
Court, registration of the Shares under the Act and as may be required under the
Act and the jurisdictions in which the Shares are offered and sold.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor, knowing
that the Company will rely thereon, represents to the Company that:
3.1 RISK FACTORS. The Investor understands that the Shares offered
hereby are highly speculative and involve a high degree of risk. The Investor
acknowledges that he or she has carefully reviewed and considered, along with
other matters referred to herein, the risk factors set forth herein and in the
Disclosure Materials delivered to the Investor.
3.2 OFFSHORE TRANSACTION. The Investor represents and warrants to
the Company that:
(a) the Investor is not a U.S. Person as that term is
defined in Rule 902(o) of Regulation S and is a resident of the jurisdiction set
forth on the Signature Page;
(b) the Shares were not offered to the Investor in the
United States;
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(c) at the time of the execution of this Agreement and the
time of any offer to the Investor to purchase the Shares hereunder, the Investor
was physically outside the United States;
(d) the Investor is purchasing the Shares for his or her own
account and not on behalf of or for the benefit of any U.S. Person and the sale
and resale of the Shares have not been prearranged with any U.S. Person or buyer
in the United States; and
(e) the Investor is not an underwriter, dealer, distributor
or other person who is participating, pursuant to a contractual arrangement, in
the distribution of the Shares offered or sold in reliance on Regulation S.
3.3 INDEPENDENT INVESTIGATION. The Investor in subscribing for the
Shares hereunder has relied solely upon an independent investigation made by the
Investor or his or her representatives, if any, and has, prior to the date
hereof been given access to and the opportunity to speak with and ask questions
of representatives of the Company and to examine all books, records and all
material contracts and documents of the Company. In making his or her investment
decision to purchase the Shares the Investor is not relying on any oral or
written representations or assurances from the Company or any other person other
than as set forth in this Agreement.
3.4 ECONOMIC RISK. The Investor understands and acknowledges that an
investment in the Shares involves a high degree of risk, including, without
limitation, limitations on the liquidity of the Shares and the Investor is
willing the accept such investment risks. The Investor represents that the
Investor is able to bear the economic risk of an investment in the Shares
including a possible total loss of his or her investment. In making this
statement the Investor hereby represents and warrants to the Company that the
Investor has adequate means of providing for the Investor's current needs and
contingencies, can afford to hold the Shares for an indefinite period, and as of
the date of signing this Agreement has no present need for liquidity of the
Shares.
3.5 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Investor
understands that no United States federal or state agency or similar agency of
any other country has reviewed, approved, passed upon or made any recommendation
or endorsement of the Company or the subscription for the Shares.
3.6 NO DIRECTED SELLING EFFORTS IN REGARD TO THIS TRANSACTION. To
the knowledge of the Investor, without any independent investigation, neither
the Company nor any person acting for the Company has conducted any "directed
selling efforts" in the United States as such term is defined in Rule 902(b) of
Regulation S, which in general, means any activity taken for the purpose of, or
that could reasonably be expected to have the effect of, conditioning the market
in the United States for any of the Shares being offered in reliance on
Regulation S. Such activity includes, without limitation, the mailing of printed
material to Investors residing in the United States, the holding of promotional
seminars in the United States, and the placement of advertisements with radio or
television stations broadcasting in the United States or in publications for the
general circulation in the United States that refer to the offering of the
Shares in reliance on Regulation S.
3.7 COMPANY'S RELIANCE ON REPRESENTATIONS OF THE INVESTOR. The
Investor understands that the Shares are being offered and sold to him or her in
reliance upon specific exemptions from the registration requirements of U.S.
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgements and understandings
of the Investor set forth herein in order to determine the applicability of such
exemptions and the suitability of the Investor to acquire the Shares.
3.8 SHARES REGISTERED UNDER THE ACT. The Investor understands that
the Shares will be registered under the Act within 180 days following
confirmation of the Plan of Reorganization.
3.9 NO PUBLIC SOLICITATION. The Investor knows of no public
solicitation or advertisement of an offer in connection with the proposed
issuance and sale of the Shares.
3.10 INVESTMENT INTENT. The Investor is acquiring the Shares for his
or her own account (or a trust account
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if such Investor is a trustee) for investment and not as a nominee or with a
view to the resale or distribution thereof. The Investor represents and warrants
to the Company, as of the date of this Agreement, that the Investor has no
present plan or intention to sell the Shares in the United States at any
predetermined time and has made no predetermined arrangements to sell the
Shares.
3.11 INVESTOR NOT TO SELL OR TRANSFER SHARES IN VIOLATION OF THE
SECURITIES LAWS. The Investor covenants that he, she or it will not knowingly
make any sale, transfer or other disposition of the Shares in violation of the
Act (including Regulation S), the Exchange Act, any applicable State Acts or the
rules and regulations of the Securities and Exchange Commission or of any state
securities commissions or similar state authorities promulgated under any of the
foregoing.
3.12 INVESTOR'S POWER AND AUTHORITY. The Investor has the full power
and authority to execute, deliver and perform this Agreement. This Agreement
when executed and delivered by the Investor will constitute a valid and legally
binding obligation of the Investor enforceable in accordance with its terms.
3.13 NO TAX ADVICE FROM COMPANY OR ITS AGENTS. The Investor has had
an opportunity to review the foreign, U.S. federal, state and local tax
consequences of this investment (and the transactions contemplated by this
Agreement) with his, her or its own tax advisor. The Investor is relying solely
on such advisors and not on any statements or representations of the Company or
any of its agents and understands that the Investor (and not the Company) shall
be responsible for the Investor's own tax liability that may arise as a result
of this investment or the transactions contemplated by this Agreement.
3.14 NO LEGAL ADVICE FROM COMPANY OR ITS AGENTS. The Investor
acknowledges that he, she or it has had the opportunity to review this Agreement
(and the transactions contemplated by this Agreement) with his, her or its own
legal counsel. The Investor in relying solely on such counsel and not on any
statements or representations of the Company or any of its agents for legal
advice with respect to this investment or the transactions contemplated by this
Agreement except for the representations, warranties and covenants as set forth
herein.
3.15 NO SHORT SALES OR HEDGING TRANSACTIONS DURING THE DISTRIBUTION
COMPLIANCE PERIOD (AS DEFINED IN REGULATION S). Neither the Investor nor any of
his, her or its affiliates will, directly or indirectly hold or maintain any
short position in or engage in hedging transactions with respect to the common
stock of the Company or any other securities of the Company.
4. INDEMNIFICATION
4.1 INDEMNITY OF INVESTOR. The Investor agrees to indemnify and hold
harmless the Company and its officers and directors from any and all losses
which arise as a result of (a) the inaccuracy or breach of any representation or
warranty made herein by such Investor, or (b) any breach or failure of the
Investor to perform any of the covenants or agreements set forth herein.
4.2 INDEMNIFICATION PROCEDURE. Any indemnified party shall not be
liable under this indemnity agreement with respect to any claim made against an
indemnified party unless such indemnifying party shall be notified in writing of
the nature of the claim within a reasonable time after the assertion thereof.
The failure to so notify such indemnifying party shall not relieve it from any
liability which it may have otherwise then on account of this indemnity
agreement. An indemnifying party shall be entitled to participate at its own
expense in the defense of such claim or if it so elects within a reasonable time
after receipt such notice to assume the defense of such claim which defense
shall be conducted by counsel chosen by it and reasonably satisfactory to the
indemnified party, defendant or defendants in any suit so brought; provided,
however, the indemnifying party shall not be entitled to assume the defense of
such claim if such indemnified party reasonably objects to such assumption on
the ground that there may be legal defenses available to such indemnified party
different from or in addition to those available to such indemnifying party. In
the event that the indemnifying party elects to assume the defense of any such
suit and retains such counsel the indemnified party defendant or defendants
shall bear the fees and expenses of any additional counsel thereafter retained
by such indemnified party. However, in the event that the parties to any such
action (including impleaded parties) include the
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Company or controlling persons thereof and the Investor and representation of
all parties would be inappropriate due to actual or potential differing
interests among them, then the Investor shall have the right to obtain separate
counsel and the Company shall reimburse the Investor for the reasonable fees and
expenses of such counsel.
5. MISCELLANEOUS
5.1 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery hereof.
5.2 PARTIES IN INTEREST. All representations, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective heirs, executors,
administrators, successors and assigns of the parties hereto. Except as
otherwise expressly provided herein, nothing in this Agreement is intended to
confer upon any other person any rights or remedies hereunder.
5.3 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or telexed or
faxed to the addresses or telephone numbers set forth on the Signature Page.
5.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of California.
5.5 ENTIRE AGREEMENT. This Agreement constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof.
5.6 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but taken together shall constitute
one and the same instrument.
5.7 AMENDMENTS. This Agreement may be amended or modified, or any
provision hereof may be waived, only pursuant to a written instrument executed
by all of the parties hereto.
5.8 SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by a judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement this day of
, 2000. ---
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Investor: (if an individual) Investor (other than an individual investing for his own account)
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(Signature) (Printed name of Investor)
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(Printed name of Investor)
By:
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(Signature of joint holder, if applicable) (Signature of authorized officer or other representative)
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(Printed name of joint holder, if applicable) (Printed name and title of signatory)
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Investor's Permanent Address: Investor's Telephone Number, including country code:
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Investor's country of citizenship: Investor's fax number, including country code:
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If this agreement is being executed
other than in the jurisdiction set forth
above, indicate such location:
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Number of Purchased Shares:
------------------------------------ TELEGEN CORPORATION
Total Purchase Price:
------------------------------------ By:
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