SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event Reported) December 9, 1996
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada No. 0-14905 13-3130236
- ----------------- ------------- -------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation
or organization)
444 MADISON AVENUE, SUITE 3203, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
(212)688-3333
(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
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Item 7. Financial Statements and Exhibits
(a) Financial Statements of businesses acquired - N/A
(b) Pro forma financial information - N/A
(c) Exhibits
4.1 Form of 9% Series B Convertible Subordinated Redeemable
Debenture due December 9, 2000.
4.2 Form of Subscription Agreement used in connection with the
offering of Registrants debentures, the form of which is
attached hereto as Exhibit 4.1.
Item 9. Sales of Equity Securities Pursuant to Regulation S
(a) On December 9, 1996, the registrant sold 9% Series B Convertible
Subordinated Redeemable Debenture Due December 9, 2000. The total
Principal amount of the debentures was $150,000.
(b) Non-U.S. Persons only were permitted to purchase the
debentures. The placement agent for the offering was VenGua
Capital Markets.
(c) The total offering price was $150,000, from which the Registrant
received net proceeds after commissions and expenses of $135,000.
(d) The Offering was made pursuant to a safe harbor from registration under
Regulation S to Non-US persons only.
(e) The unpaid principal balance of the Debenture may be converted
by the Holder commencing 45 days after the closing of the
Debenture Offering into shares of the Registrant's Common Stock
at a conversion price for each share of Common Stock equal to
the lower of (1) 75% of the average closing bid price of the
Common Stock for five business days immediately preceding the
date of conversion or (2) 75% of the closing bid price of the
Common Stock for the five business days immediately preceding
the date of subscription. The Registrant may redeem the
debenture in whole or in part at any time prior to conversion
by paying to the Holder in cash the then-outstanding principal
balance of the Debenture, accrued interest to date, plus a
premium on said principal.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 24, 1996
AMERICAN INTERNATIONAL
PETROLEUM CORPORATION
By: /s/ Denis J. Fitzpatrick
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Denis J. Fitzpatrick
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1 Form of 9% Series B Convertible Subordinated Redeemable
Debenture due December 9, 2000.
4.2 Form of Subscription Agreement used in connection with the
offering of Registrant's debenture, the form of
which is attached here to as Exhibit 4.1.
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EXHIBIT 4.1
FORM OF DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE ACT) OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE
ACT) EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.
No. US $150,000
AMERICAN INTERNATIONAL PETROLEUM CORP.
9% SERIES B CONVERTIBLE SUBORDINATED REDEEMABLE DEBENTURE
DUE DECEMBER 9, 2000
THIS DEBENTURE is one of a duly authorized issue of Debentures of
American International Petroleum Corp., a corporation duly organized and
existing under the laws of the State of Nevada (the "Company") designated as its
9% Series B Convertible Subordinated Redeemable Debentures Due December 9 ,
2000, in an aggregate principal amount not exceeding One Hundred Fifty Thousand
Dollars (U.S. $150,000).
FOR VALUE RECEIVED, the Company promises to pay to ___________ the
registered holder hereof and its successors and assigns (the "Holder"), the
principal sum of One Hundred Fifty Thousand Dollars (US $150,000) on December 9,
2000 (the "Maturity Date"), and to pay interest on the principal sum
outstanding, at the rate of 9% per annum due and payable quarterly in arrears
commencing December 9, 1996. Accrual of interest shall commence on the date
hereof and shall continue until payment in full of the outstanding principal sum
has been made or duly provided for.
The interest so payable will be paid to the person in whose name this Debenture
(or one or more predecessor Debentures) is registered on the records of the
Company regarding registration and transfers of the Debentures (the "Debenture
Register"); provided, however, that the Company's obligation to a transferee of
this Debenture arises only if such transfer, sale or other disposition is made
in accordance with the terms and conditions of the Offshore Securities
Subscription Agreement dated as of December 9, 1996 between the Company and the
Holder (the "Subscription Agreement"). The principal of, and interest on, this
Debenture are payable in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts, at the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder hereof from time to time. The Company will
pay the outstanding principal
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of and all accrued and unpaid interest due upon this Debenture on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder
of this Debenture as of the tenth (10th) day prior to the Maturity Date by check
or on the Maturity Date by wire transfer and addressed to such Holder at the
last address appearing on the Debenture Register. The forwarding of such check
shall constitute a payment of outstanding principal and interest hereunder and
shall satisfy and discharge the liability for principal and interest on this
Debenture to the extent of the sum represented by such check plus any amounts so
deducted.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Twenty-Five Thousand
Dollars (US$25,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same but
not less than U.S. $25,000. No service charge will be made for such registration
or transfer or exchange, except that transferee shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged in the U.S.
only in compliance with the Securities Act of 1933, as amended (the "Act") and
applicable state securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected or bound by notice to the
contrary. Any holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, is also
required to give the Company (i) written confirmation that it is not a U.S.
Person and the Debenture is not being converted on behalf of a U.S. Person
("Notice of Conversion") or (ii) an opinion of U.S. counsel to the effect that
the Debenture and shares of common stock issuable upon conversion or transfer
thereof have been registered under the 1933 Act or are exempt from such
registration. In the event a Notice of Conversion or opinion of counsel is not
provided the Holder hereof will not be entitled to exercise the right to convert
or transfer the Debentures.
4. (a) The Holder of this Debenture is entitled, at its option, at any
time commencing 45 days after closing of the Offering hereof, by delivery of the
notice of conversion to convert all or any amount remaining of the original
principal amount of this Debenture into shares of common stock, $0.08 par value
per share, of the Company (the "Common Stock"), at a
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conversion price for each share of Common Stock equal to the lower of (x) 75% of
the average closing bid price of the Common Stock for the five (5) business days
immediately preceding the date of receipt by the Company of notice of conversion
or (y) 75% of the average of the closing bid price of the Common Stock for the
five (5) business days immediately preceding the date of Subscription by the
Holder accepted by the Company ("Initial Conversion Shares") as reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
(the "Conversion Price"). To the extent that the calculation in (x) above
requires the Company to issue more shares than the calculation in (y) above the
number of excess shares shall be referred to herein as the "Additional
Conversion Shares". Such conversion shall be effectuated by surrendering the
Debentures to be converted (with a copy, by facsimile or courier, to the Company
) to the Escrow Agent (as defined in Subscription Agreement) with the form of
conversion notice attached hereto as Exhibit I, executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion (as above provided) hereof, and accompanied by proper
assignment hereof in blank. Accrued but unpaid interest shall be subject to
conversion. No fractional shares or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded to
the nearest whole share. The transferee or issuee shall execute such investment
representations or other documents as are respectively required by counsel in
order to ascertain the available registration exemption. The date on which
notice of conversion is given shall be deemed to be the date on which the Holder
has delivered this Debenture, with the assignment and conversion notice duly
executed, to the Escrow Agent, or, if earlier, the date set forth in such notice
of conversion if the Debenture is received by the Company and Escrow Agent
within five (5) business days thereafter. The transferee or issuee shall execute
such investment representations or other documents as are reasonably required by
counsel in order to ascertain the available registration exemption.
(b) Notwithstanding the provisions of paragraph 4(a) hereof,
the Company may redeem any or all of the Debentures after issue hereof and prior
to conversion by paying to the Holder in cash 133% of the then outstanding
principal balance of the Debenture plus accrued interest to such date, and shall
be less any amounts required by law to be deducted or withheld. Such payment
shall be made by delivering immediately available funds in United States Dollars
by wire transfer to the Holder, or if no wiring instructions have been provided
to the company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the forwarding
of such check shall constitute payment of principal and interest hereunder and
shall satisfy and discharge the liability for principal and interest on this
Debenture to the extent of the sum represented by such wire or check plus any
amount so deducted.
Such payment also to be made by the Company within 2 business days of receipt
of a conversion notice by the Company from the Investor.
5. No provision of this Debenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin
currency, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent
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to accelerate, bringing of suit and diligence in taking any action to collect
amounts called for hereunder and shall be directly and primarily liable for the
payment of all sums owing and to be owing hereon, regardless of and without any
notice, diligence, act or omission as or with respect to the collection of any
amount called for hereunder.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
8. If one or more of the following described "Events of Default" shall
occur and continue for 30 days:
(a) The Company shall default in the payment of principal
or interest on this Debenture; or
(b) Any of the representations or warranties made by the
Company herein, in the Subscription Agreement, or in
any certificate or financial or other written
statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the
execution and delivery of this Debenture or the
Subscription Agreement shall be false or misleading
in any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any
material respect, any other covenant, term,
provision, condition, agreement or obligation of the
Company under this Debenture [and such failure shall
continue uncured for a period of thirty (30) days
after notice from the Holder of such failure]; or
(d) The Company shall (1) become insolvent; (2) admit in
writing its liability to pay its debts generally as
they mature; (3) make an assignment for the benefit
of creditors or commence proceedings for its
dissolution; or (4) apply for or consent to the
appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or
business; or
(e) A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business without its consent and shall
not be discharged within thirty (30) days after such
appointment; or
(f) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental
agency shall assume custody or control of the whole
or any substantial portion of the properties or
assets of the Company and shall not be dismissed
within thirty (30) days thereafter; or
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(g) Any money judgment, writ or warrant of attachment, or
similar process in excess of One Hundred Thousand
($100,000) Dollars in the aggregate shall be entered
or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated,
unbonded or unstayed for a period of fifteen (15)
days or in any event later than five (5) days prior
to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed within thirty (30) days after such
instruction of the Company shall by any action or
answer approve of, consent to, or acquiesce in any
such proceedings or admit the material allegations
of, or default in answering a petition filed in any
such proceeding; or
(i) The Company shall have its Common Stock delisted from
the over-the- counter market.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
(further) notice of any kind (other than notice of acceleration), all of which
are hereby expressly waived, anything herein or in any note or other instruments
contained to the contrary notwithstanding, and the Holder may immediately, and
without expiration of any period of grace, enforce any and all of the Holder's
rights and remedies provided herein or any other rights or remedies afforded by
law.
9.
(a) This Debenture represents a general unsecured obligation
of the Company. No recourse shall be had for the payment of
the principal of, or the interest on, this Debenture, or for
any claim based hereon, or otherwise in respect hereof,
against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any
successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
(b) The rights of any Holder to receive the principal sum or
any part thereof, and to receive the interest due on this
Debenture is and shall remain subordinate in priority to the
payment of the principal of and interest on (i) all future
obligations and guarantees of the Issuer for money borrowed
from any bank, trust company,
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insurance company or other financial institution engaged in
the business of lending money, for which the Issuer is at the
time of determination responsible or liable as obligor or
guarantor; (ii) all existing or future obligations of the
Corporation secured by a lien, mortgage, pledge or other
encumbrance against real or personal property (including
common stock of the Corporation or any of its subsidiaries) of
the Corporation; (iii) any modifications, renewals, extensions
or refunding of the foregoing, except for any of such
obligations of the Corporation the payment of which is made
expressly subordinate and junior to this Debenture; (iv)
indebtedness under the MG Trade Finance Corp. ("MGTF") loan
agreement (the "Loan Agreement") or any indebtedness incurred
to refinance such obligations; (v) other indebtedness of the
Corporation existing on the date of this Debenture; and (vi)
trade payables incurred in the ordinary course of business of
the Corporation or its subsidiaries.
10. The Holder of this Debenture, by acceptance hereof, agrees that
this Debenture is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Debenture or the Shares of Common Stock
issuable upon exercise thereof except under circumstances which will not result
in a violation of the Act or any applicable state Blue Sky law or similar laws
relating to the sale of securities.
11. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
12. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
13. This Debenture shall be governed by and construed in accordance
with the laws of New York. Holder hereby waives trial by jury and consents to
exclusive jurisdiction and venue in the State of New York.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: _______________
AMERICAN INTERNATIONAL PETROLEUM CORP.
By:______________________________________
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EXHIBIT I
"NOTICE OF CONVERSION" FOLLOWS
(One Page)
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NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $______________ of
the above Debenture No. ___ into Shares of Common Stock of American
International Petroleum Corp. (the "Company") according to the conditions set
forth in such Debenture, as of the date written below.
The undersigned represents that it is not a U.S. Person as defined in
Regulation S promulgated under the Securities Act of 1933, as amended, and is
not converting the Debenture on behalf of any U.S. Person and the
representations contained in the Subscription Agreement are true. If Shares are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
Date of Conversion*
Applicable Conversion Price
Signature
[Print Name of Holder and Title of Signer]
Address:
Medallion Signature Guaranty
* This original Debenture and Notice of Conversion must be received by the
Company by the fifth business date following the Date of Conversion.
EXHIBIT 4.2
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of December 9,
1996 (the "Agreement"), is executed in reliance upon the exemption from
registration afforded by Regulation S ("Regulation S") as promulgated by the
Securities and Exchange Commission ("SEC"), under the Securities Act of 1933, as
amended. Capitalized terms used herein and not defined shall have the meanings
given to them in Regulation S.
This Agreement has been executed by the undersigned "Buyer" in
connection with the private placement of 9% Series B Convertible Subordinated
Redeemable Debentures of American International Petroleum Corp., a corporation
organized under the laws of the State of Nevada, with its principal executive
offices located at 444 Madison Avenue, Suite 3203, New York, New York 10022
(hereinafter referred to as "Seller"). Buyer hereby represents and warrants to,
and agrees with Seller:
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.
1. Agreement To Subscribe; Purchase Price.
(a) Subscription. The undersigned Buyer hereby subscribes for
and agrees to purchase the Seller's 9% Series B Convertible Subordinated
Redeemable Debenture substantially in the form of the Debentures attached as
Exhibit A hereto and having an aggregate original principal amount of up to U.S.
$150,000 (singly, a "Debenture," and collectively, the "Debentures"), at an
aggregate purchase price as set forth in subsection (b) herein.
(b) Payment. The aggregate Purchase Price for the portion of
the Debentures purchased by Buyer shall be One Hundred Fifty Thousand United
States Dollars (U.S. $150,000) (the "Purchase Price") which shall be payable
pursuant to paragraph 1(c) herein by delivering immediately available funds in
United States Dollars by wire transfer to the designated depository
_______________ as Escrow Agent ("Escrow Agent") for closing by delivery of
securities versus payment.
(c) Closing. Subject to the satisfaction of the conditions set
forth in Sections 7 and 8 hereof, payments of the Purchase Price may be made
from time to time in denominations of not less than $100,000 but all payments
hereunder, in any event must be completed on or before _____________, or such
earlier or later date as is mutually agreed to in writing by Buyer and Seller.
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2. Buyer Representations and Covenants; Access to Information.
Offshore Transaction. In connection with the purchase and
sale of the Debentures, Buyer represents and warrants to, and covenants and
agrees with Seller as follows:
(i) Buyer is not a natural person and is not
organized under the laws of any jurisdiction within the
United States, was not formed by a U.S. Person (as defined
in Section 902(o) of Regulation S) for the purpose of
investing in Regulation S securities and is not otherwise a
U.S. Person. Buyer is not, and on the closing date will not
be, an affiliate of Seller;
(ii) At the time the buy order was originated, Buyer
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) No offer to purchase the Debentures or the
common stock of Seller issuable upon conversion of the
Debentures (collectively, the "Securities"), was made by
Buyer in the United States;
(iv) Buyer is purchasing the Securities for its own
account and Buyer is qualified to purchase the Securities
under the laws of its jurisdiction of residence, and the
offer and sale of the Securities will not violate the
securities or other laws of such jurisdiction;
(v) All offers and sales of any of the Securities by
Buyer prior to the end of the Restricted Period (as
hereinafter defined) shall be made in compliance with any
applicable securities laws of any applicable jurisdiction
and in accordance with Rule 903 and 904, as applicable, of
Regulation S or pursuant to registration of securities under
the 1933 Act or pursuant to an exemption from registration.
In any case, none of the Securities have been or will be
encumbered, offered, sold or otherwise transferred by Buyer
to, or for the account or benefit of, a U.S. Person or
within the United States until after the end of the forty
(40) day period commencing on the later of (x) the date of
closing of the offering of the Securities or (y) the date of
the first offer of the Securities to persons other than
distributors (the "Restricted Period"), as calculated
pursuant to Regulation S and certified by Buyer to Seller
and thereafter only pursuant to a Registration Statement or
an applicable exemption from the registration provision of
the 1933 Act;
(vi) The transactions contemplated by this Agreement
(a) have not been and will not be pre-arranged by Buyer with
a purchaser located in the United States or a purchaser
which is a U.S. Person, and (b) are not and will not be part
of a plan or scheme by Buyer, to evade the registration
provisions of the 1933 Act;
(vii) Buyer understands that the Securities are not
registered under the 1933 Act and are being offered and sold
to it in reliance on specific exclusions from the
registration requirements 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
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herein in order to determine the applicability of
such exclusions and the suitability of Buyer and any
purchaser from Buyer to acquire the Securities;
(viii) Buyer shall take all reasonable steps to
ensure its compliance with Regulation S and shall promptly
send to each purchaser who acts as a distributor, dealer or
a person receiving a selling concession, fee or other
remuneration in respect of any of the Securities, who
purchases prior to the expiration of the Restricted Period
referred to in subparagraph (v) above, a confirmation or
other notice to the purchaser stating that the purchaser is
subject to the same restrictions on offers and sales as
Buyer pursuant to Section 109(c)(2)(iv) of Regulation S;
(ix) Buyer has not conducted or permitted and shall
not conduct or permit on its behalf any "directed selling
efforts" as that term is defined in Rule 902(b) of
Regulation S; nor has Buyer conducted any general
solicitation relating to the offer and sale of any of the
Securities in the United States or elsewhere;
(x) Buyer has the full right, power and authority to
enter into this Agreement and to consummate the transaction
contemplated herein. This Agreement has been duly
authorized, validly executed and delivered on behalf of
Buyer 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;
(xi) The execution and delivery of this Agreement
and the consummation of the purchase of the Securities, and
the transactions contemplated by this Agreement do not and
will not conflict with or result in a breach by Buyer of any
of the terms of provisions of, or constitute a default
under, the articles of incorporation or by-laws (or similar
constitutive documents) of Buyer or any indenture, mortgage,
deed of trust, or other material agreement or instrument to
which Buyer is a party or by which it or any of its
properties or assets are bound, or any existing applicable
law, rule or regulation of the United States or any State
thereof or any applicable decree, judgment or order of any
Federal or State court, Federal or State regulatory body,
administrative agency or other United States governmental
body having jurisdiction over Buyer or any of its properties
or assets;
(xii) All invitation, offers and sales of or in
respect of, any of the Securities, by Buyer and any
distribution by Buyer of any documents relating to any offer
by it of any of the Securities will be in compliance with
applicable laws and regulations and will be made in such a
manner that no prospectus need be filed and no other filing
need be made by Seller with any regulatory authority or
stock exchange in any country or any political sub-division
of any country;
(xiii) Buyer will not make any offer or sale of the
Securities by any means which would not comply with the laws
and regulations of the territory in which such offer or sale
takes place or to which such offer or sale is subject or
which would in connection with any such offer or sale impose
upon Seller any obligation to satisfy any public filing or
registration requirement or provide or
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publish any information of any kind whatsoever or
otherwise undertake or become obligated to do any act; and
(xiv) Neither the Buyer nor any of its affiliates
has entered, has the intention of entering, or will during
the Restricted Period enter into any put option, short
position or other similar instrument or position with
respect to any of the Securities or securities of the same
class as the Securities.
(xv) the Buyer (or others for whom it is contracting
hereunder) has been advised to consult its own legal and tax
advisors with respect to applicable resale restrictions and
applicable tax considerations and it (or others for whom it
is contracting hereunder) is solely responsible (and the
Company is not in any way responsible) for compliance with
applicable resale restrictions and applicable tax
legislation.
(xvi) No Government Recommendation or Approval.
Buyer understands that no Federal or State or foreign
government agency has passed on or made any recommendation
or endorsement of the Securities.
(xvii) Current Public Information. Buyer
acknowledges that it and its advisors, if any, have been
furnished with all materials relating to the business,
finances and operations of Seller and all materials relating
to the offer and sale of the Securities which have been
requested by Buyer, all of which contain a legend as
required under Section 10 hereof. Buyer further acknowledges
that it and its advisors, if any, have received complete and
satisfactory answers to such inquiries.
(xviii) Buyer's Sophistication. Buyer acknowledges
that the purchase of the Securities involves a high degree
of risk, including the total loss of Buyer's investment.
Buyer has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits
and risks of purchasing the Securities. Buyer understands
that the Securities are not being registered under the 1933
Act, and therefore Buyer must bear the economic risk of this
investment for an indefinite period of time.
(xix) Tax Status. Buyer is not a "10-percent
Shareholder" (as defined in Section 871(h)(3)(B) of the U.S.
Internal Revenue Code) of Seller.
3. Seller Representations and Covenants.
(a) Reporting Company Status. Seller is a "Reporting Issuer"
as defined by Rule 902 of Regulation S. Seller has registered its Common Stock,
$.08 par value per share (the "Common Stock"), pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Common
Stock is listed and trades on NASDAQ. Seller has filed all material required to
be filed pursuant to all reporting obligations under either Section 13(a) or
15(d) of the Exchange Act for a period of at least twelve (12) months
immediately preceding the offer or sale of the Securities (or for such shorter
period that Seller has been required to file such material).
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(b) Current Public Information. Seller has furnished Buyer
with copies of its most recent reports, as amended, filed under the Exchange Act
referred to in Section 2(xvii) above, and other publicly available documents
requested by Buyer.
(c) Offshore Transaction. Seller has not offered any of the
Securities to any person in the United States, any identifiable groups of U.S.
citizens abroad, or to any U.S. Person, as such terms are used in Regulation S.
(i) At the time the buy order was originated, Seller
and/or its agents reasonably believe the Buyer was outside
of the United States and was not a U.S. person, based on the
representations of Buyer.
(ii) Seller and/or its agents reasonably believe
that the transaction has not been pre-arranged with a buyer
in the United States, based on the representations of Buyer.
(iii) No offer to buy or sell the Securities was or
will be made by Seller to any person in the United States.
(iv) The sale of the Securities by Seller pursuant
to this Agreement will be made in accordance with the
provisions and requirements of Regulation S provided that
the representations and warranties of Buyer in Section 2
hereof are true and correct.
(v) The transactions contemplated by this Agreement
(a) have not been and will not be pre-arranged by Seller
with a purchaser located in the United States or a purchaser
which is a U.S. Person, and (b) are not and will not be part
of a plan or scheme by Seller to evade the registration
provisions of the 1933 Act.
(d) No Directed Selling Efforts. In regard to this
transaction, Seller has not conducted any "directed selling efforts" as that
term is defined in Rule 902 of Regulation S nor has Seller conducted any general
solicitation relating to the offer and sale of any of the Securities in the
United States or elsewhere.
(e) Concerning the Securities. The issuance, sale and delivery
of the Debentures have been duly authorized by all required corporate action on
the part of Seller, and when issued, sold and delivered in accordance with the
terms hereof and thereof for the consideration expressed herein and therein,
will be duly and validly issued, fully paid and non-assessable. The Common Stock
issuable upon conversion of the Debenture has been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Debentures,
shall be duly and validly issued, fully paid, and non-assessable and will not
subject the holders thereof, if such persons are non-U.S. persons, to personal
liability by reason of being such holders.
There are no pre-emptive rights of any shareholder of Seller.
(f) Subscription Agreement. 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.
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(g) Non-contravention. The execution and delivery of this
Agreement and the consummation of the issuance of the Securities 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 by-laws 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 law, rule or regulation of the United States
or any State thereof or any applicable decree, judgment or order of any Federal
or State court, Federal or State regulatory body, administrative agency or other
United States governmental body having jurisdiction over Seller or any of its
properties or assets.
(h) Approvals. Seller is not aware of any authorization,
approval or consent of any U.S. governmental body which is legally required for
the issuance and sale of the Debentures and the Common Stock issuable upon
conversion thereof to persons who are non-U.S. Persons, as contemplated by this
Agreement. Seller is relying entirely upon Buyer and Distributor with respect to
foreign consents and approvals.
4. Exemption; Reliance on Representations. Buyer understands that
the offer and sale of the Securities are not being registered under the 1933
Act. Seller and Buyer are relying on the rules governing offers and sales made
outside the United States pursuant to Regulation S.
5. Transfer Agent Instructions.
(a) Debentures. Upon the conversion of the Debentures, the
holder thereof shall submit such Debenture together with a notice of conversion
to the Seller and the Seller shall instruct its transfer agent to issue one or
more Certificates representing that number of shares of Common Stock into which
the Debenture or Debentures are convertible in accordance with the provisions
regarding conversion set forth in Exhibit A hereto. The Seller shall act as
Debenture Registrar and shall maintain an appropriate ledger containing the
necessary information with respect to each Debenture.
(b) Common Stock to be Issued Without Restrictive Legend. Upon
the conversion of any Debenture up to the total of the "Conversion Amount" (as
defined in the Debenture) and 40 days after the issuance of any "Interest
Shares" (as defined in the Debenture) by a person who is a non-U.S. Person,
Seller shall instruct Seller's transfer agent to issue Stock Certificates up to
the total of the "Conversion Amount" (as defined in the Debenture) and 40 days
after the "Interest Shares" (as defined in the Debenture), if any, without
restrictive legend in the name of Buyer upon receipt of an opinion of Buyer's
Counsel to remove such legend (or its nominee (being a non-U.S. person) or such
non- U.S. Persons as may be designated by Buyer prior to the closing) and in
such denominations to be specified at conversion representing the number of
shares of Common Stock issuable upon such conversion, as applicable. Seller
warrants that no instructions other than these instructions and instructions to
impose a "stop transfer" instruction with respect to the certificates until the
end of the respective Restricted Period of the Conversion Shares and Interest
Shares, if any, have been given or will be given to the transfer agent and that
the Common Stock shall otherwise be freely transferable on the books and records
of Seller. Nothing in the this Section 5, however, shall affect in any way
Buyer's or such nominee's obligations and agreements to comply with all
applicable securities laws upon resale of the Securities.
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6. Registration. If upon conversion of the Debentures effected by the
Buyer pursuant to the terms of this agreement or payment of interest pursuant to
the Debenture the Company fails to issue certificates for shares of Common Stock
issuable upon such conversion (the "Underlying Shares") or the Interest Shares,
if any, to the Buyer bearing no restrictive legend (after the applicable
restrictive Period of the Conversion Shares or Interest Shares) for any reason
other than the Company's reasonable good faith belief that the representations
and warranties made by the Buyer in the Agreement or the Notice of Conversion
were untrue when made, or if the restricted period under Regulation S is
extended, then the Company shall be required, at the request of the Buyer and at
the Company's expense, to effect the registration of the Underlying Shares
and/or Interest Shares issuable upon conversion of the Debentures and payment of
interest under the Act and relevant Blue Sky laws as promptly as is practicable.
The Company and the Buyer 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. The Company shall file such a registration statement within
30 days of buyer'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 Securities and Exchange commission,
providing Buyer's counsel with a contemporaneous copy of all written
communications from and to the staff of the Securities and Commission 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 Securities and Commission. Once declared
effective by the Securities and Exchange Commission, the Company shall cause
such registration statement to remain effective until the earlier of (i) the
sale of the Buyer of all Underlying Shares registered or (ii) 120 days after the
effective date of such registration statement. In the event the Company
undertakes to file a Registration Statement on Form S-3 in connection with the
Common Stock, upon the effectiveness of such Registration, Buyer shall have the
option to sell the Common Stock pursuant thereto. The foregoing shall not in any
way limit Buyer's rights in connection with the Common Stock pursuant to
Regulation S.
7. Delivery Instructions. The Debentures being purchased
hereunder shall be delivered to the Buyer at such time and place as shall be
mutually agreed by Seller and Buyer.
8. Conditions To Seller's Obligation To Sell. Seller's
obligation to sell the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as
executed by Buyer.
(b) Delivery into the closing depository of good funds by
Buyer as payment in full of the purchase price of the Debentures.
(c) All of the representations and warranties of the
Subscriber contained in this Agreement shall be true and correct on the Payment
Date with the same force and effect as if made on and as of the Payment Date.
The Subscriber shall have performed or complied with all agreements and
satisfied all conditions on its part to be performed, complied with or satisfied
at or prior to the Payment Date.
(d) No order asserting that the transactions contemplated by
this Agreement are subject to the registration requirements of the Act shall
have been issued, and no proceedings for
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that purpose shall have been commenced or shall be pending or, to the knowledge
of the Company, be contemplated. No stop order suspending the sale of the
Debentures shall have been issued, and no proceedings for that purpose shall
have been commenced or shall be pending or, to the knowledge of the Company, be
contemplated.
(e) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency that would prevent the issuance of the Debentures. No
injunction, restraining order or order of any nature by a federal or state court
of competent jurisdiction shall have been issued that would prevent the issuance
of the Debentures.
9.Conditions To Buyer's Obligation To Purchase. Buyer's
obligation to purchase the Debentures is conditioned upon:
(a) The confirmation of receipt and acceptance by Seller of
this Agreement as evidenced by execution of this Agreement by the duly
authorized officer of Seller.
(b) Delivery of the Debentures to the Buyer.
10. Offering Materials. All offering materials and documents used
in connection with offers and sales of the Securities prior to the expiration of
the Restricted Period referred to in Section 2(a)(v) hereof shall include
statements to the effect that the Securities have not been registered under the
1933 Act or applicable state securities laws, and that neither Buyer, nor any
direct or indirect purchaser of the Securities from Buyer, may directly or
indirectly offer or sell the Securities in the United States or to U.S. Persons
(other than distributors) unless that Securities are registered under the 1933
Act any applicable state securities laws, or any exemption from the registration
requirements of the 1933 Act or such state securities laws is available. Such
statements shall appear (1) on the cover of any prospectus or offering circular
used in connection with the offer or sale of the Securities, (2) in the
underwriting section of any prospectus or offering circular used in connection
with the offer or sale of the Securities, and (3) in any advertisement made or
issued by Seller, Buyer, any other distributor, any of their respective
affiliates, or any person acting on behalf of any of the foregoing.
11. No Shareholder Approval. Seller hereby agrees that from the
Closing Date until the issuance of Common Stock upon the conversion of the
Debentures, Seller will not take any action which would require Seller to seek
shareholder approval of such issuance unless such shareholder approval is
required by law or regulatory body (including but not limited to the NASDAQ
Stock Market, Inc.) as a result of the issuance of the Securities hereunder.
12. 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 impled, 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.
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(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 New York applicable to contracts made and wholly to be performed within
the State of New York and shall be binding upon the successors and assigns of
each party hereto. Buyer hereby waives trial by jury and consents 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.
(f) Buyer agrees to indemnify and hold Seller harmless from
any and all claims, damages and liabilities arising from Buyer's breach of its
representations and/or covenants set forth herein.
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first set forth above.
Accepted this _________________, 1996, as evidenced by the Parties'
authorized signatures below:
AMOUNT SUBSCRIBED FOR
$________________________________
Official Signatory of Buyer:
American International Petroleum Corp.
By:
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Title:
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Address of Buyer:
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Fax No.:
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Tel No.:
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Accepted this ____ day of _______, 1996
Official Signatory of Seller:
American International Petroleum Corp.
By:
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Title:
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