SELLING RESTRICTIONS
The Shares have not been and will not be registered under the United
States Securities Act of 1933, as amended (the "Securities Act"), or with
any securities regulatory authority of any state or territory within the
jurisdiction of the United States, and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons,
except in accordance with Regulation S under the Securities Act. The
Shares will be placed in accordance with Rule 903 of Regulation S (as
provided below) under the Securities Act and in compliance with the
offering restrictions requirement of Regulation S. (Terms used herein
have the meanings given to them by Regulation S.) Each person that
purchases a share in this Issue will receive a share certificate bearing a
legend substantially to the following effect:
"THE SHARES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES
ACT), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE
OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE
OFFERED AND SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT. TERMS USED ABOVE HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S AS PROMULGATED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION."
An offer or sale of Shares within the United States except as
described above, may violate the registration requirements of the
Securities Act. The U.S. Securities and Exchange Commission (the "SEC")
has recently amended Regulation S to change the holding period for resales
back into the United States from forty (40) days to one (1) year.
Securities sold under Regulation S are now classified as "restricted
securities" subject to the resale restrictions of Rule 144. As a result,
unless the Shares acquired in this Issue are registered with the SEC for
resale, purchasers of Shares may not resell their Shares into the United
States or to United States persons except in accordance with the volume
limitations, manner of sale, and filing requirements of Rule 144 after the
one (1) year holding period. As a result, the Company has agreed to file
a Form S-3 registration statement with the SEC covering the Shares sold
hereunder as soon as practicable after the close of this Issue. The
effect of such registration, when it is declared effective by the SEC,
will be to remove all restrictions on resales into the U.S. by purchasers
in the Issue other than a prospectus delivery requirement. There can be
no assurance as to how quickly the SEC will exercise its discretionary
authority to register the Shares. In the Company's prior registration of
Shares that had been previously issued in a Regulation S offering, the
registration statement was declared effective as soon as 35 days after the
close of the Issue and as long as 120 days after the closing. While the
Company will make its best efforts to effect a prompt registration of the
Shares for resale, the recent advent of "Plain English" review of
registration statements by the SEC has delayed the registration process
for many issuers by an additional thirty (30) days or more.
Generally speaking, in the absence of an effective registration with
the SEC, purchasers of the Shares may sell these "restricted securities"
into the U.S. only under Rule 144. In general, under Rule 144 as
currently in effect, an "affiliate" of the Company, or any person who has
beneficially owned shares which are "restricted securities" for at least
one year, is entitled to sell within any three-month period a number of
shares that does not exceed the greater of: (i) one percent (1%) of the
then outstanding shares of Common Stock of the Company, or (ii) the
average weekly trading volume of the Common Stock during the four calendar
weeks preceding a sale by such person. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. Under Rule
144(k), however, a person who is not, and for the three months prior to
the sale of such shares has not been, an "affiliate" of the Company is
free to sell shares which are "restricted securities" which have been held
by non-affiliates for at least two years without regard to the limitations
contained in Rule 144.
Kestrel and CIBC ("Seller") (i) will not offer or sell any Shares in
the United Kingdom, by means of any document, other than to persons whose
ordinary business it is to buy or sell shares or debentures, whether as
principal or agent (or in circumstances which do not constitute an offer
to the public within the meaning of the Companies Act 1985); (ii) has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Shares in, from or otherwise involving the United Kingdom; and (iii) has
only issued or passed on and will only issue or pass on in the United
Kingdom this document or any other document received by it in connection
with the issue of the Shares to a person who is of a kind described in
Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988 or is a person to whom the
document may otherwise lawfully be issued and passed on.
Further, Seller will comply with all applicable securities laws and
regulations in each jurisdiction in which it offers, sells or delivers
Shares and will ensure that no obligations are imposed on the Company in
any such jurisdiction as a result of any of the foregoing actions. Seller
will obtain any consent, approval or permission required of it for the
offer, sale or delivery by it of Shares under the laws and regulations in
force in any jurisdiction to which it is subject or in or from which it
makes any offer, sale or delivery. No one is authorized to make any
representation or use any information in connection with the issue,
subscription and sale of the Shares that is inconsistent with that
contained in this document.
The purchase of shares is subject to completion, execution and
satisfactory review of the Offshore Securities Subscription Agreement
attached hereto.
In addition to the purchase price, purchasers of Shares in this Issue
may be required to pay stamp taxes and other charges in accordance with
the laws and practices of the country of purchase.
