<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.__)*
Telegen Corporation
----------------------------------------------
(Name of Issuer)
Common Stock, no par value
----------------------------------------------
(Title of Class of Securities)
879412 5
----------------------------------------------
(CUSIP Number)
Christopher M. Wells
Coudert Brothers
----------------------------------------------
1114 Avenue of the Americas
New York, New York 10036-7703
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 9, 1997
----------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosure
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 6 Pages
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP NO. 879412 5
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Elara Ltd.
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
3 SEC Use Only
4 Source of Funds*
WC
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) |_|
6 Citizenship or Place of Organization
British Virgin Islands
7 Sole Voting Power
Number of 1,125,000
Shares
Beneficially 8 Shared Voting Power
Owned By -0-
Each
Reporting 9 Sole Dispositive Power
Person 1,125,000
With
10 Shared Dispositive Power
-0-
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,125,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* |_|
13 Percent of Class Represented By Amount in Row (11)
17.6%
14 Type of Reporting Person*
CO
Page 2 of 6 Pages
<PAGE>
<PAGE>
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D relates to shares of common stock, no par
value (the "Common Stock"), of Telegen Corporation, a California corporation
(the "Issuer"). The principal executive offices of the Issuer are located at 101
Saginaw Drive, Redwood City, California 94063.
ITEM 2. IDENTITY AND BACKGROUND
This statement on Schedule 13D is being filed by Elara Ltd. ("Elara"), a
British Virgin Islands corporation which is an offshore investment fund
("Elara"). The address of the principal business and principal office of Elara
is P.O. Box 438, Tropic Isle Building, Wickhams Cay, Road Town, British Virgin
Islands. The following is a list of the officers and directors of Elara:
Clive Harris is a director of Elara. The principal business address of
Mr. Harris is Harbour Centre, 4th floor, PO Box 61 GT North Church Street, Grand
Cayman, BWI. The present principal occupation or employment of Mr. Harris is
partner of Paul Harris & Company, a Cayman Islands firm of Chartered
Accountants, and Managing Director of International Management Services Ltd. The
principal business address of International Management Services Ltd. is Harbour
Centre, 4th floor, PO Box 61 GT North Church Street, Grand Cayman, BWI. Mr.
Harris is a citizen of the United Kingdom.
Martin Lang is a director of Elara. The principal business address of
Mr. Lang is Harbour Centre, 4th floor, PO Box 61 GT North Church Street, Grand
Cayman, BWI. The present principal occupation or employment of Mr. Lang is
Company Manager of International Management Services Ltd. The principal business
address of International Management Services Ltd. is Harbour Centre, 4th floor,
PO Box 61 GT North Church Street, Grand Cayman, BWI. Mr. Lang is a citizen of
the United Kingdom.
The voting and disposition of securities held by Elara is controlled by
Geoffrey Tirman, who is the sole shareholder of the investment advisor to Elara.
The principal business address of Mr. Tirman is 16101 La Grande Drive, Suite
100, Little Rock, Arkansas 72211. The present principal occupation or employment
of Mr. Tirman is the Chief Executive Officer of Talisman Capital, Inc., a
Delaware corporation which acts as investment adviser to U.S. and offshore
investment funds. The business address of Talisman Capital, Inc. is 16101 La
Grande Drive, Suite 100, Little Rock, Arkansas 72211.
During the last five years, none of Elara, Mr. Harris, Mr. Lang or Mr.
Tirman have been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) and none of Elara, Mr. Harris, Mr. Lang or
Mr. Tirman are a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction resulting in a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Elara has acquired 375,000 Units of the Issuer (the "Units") at a
purchase price of $2.00 per Unit. Each Unit consists of (i) one share of Common
Stock, (ii) a warrant to purchase one share of Common Stock at an exercise price
of $0.01 per share and (iii) a warrant to purchase one share of Common Stock at
an exercise price of $4.00 per share (together, the "Warrants"). Elara holds
375,000 shares of Common Stock and may exercise the Warrants to acquire, in the
aggregate, 750,000 shares of
Page 3 of 6 Pages
<PAGE>
<PAGE>
Common Stock. On October 16, 1997, Elara exercised 375,000 Warrants to purchase
375,000 shares of Common Stock at $0.01 per share. All of the 1,125,000 shares
of Common Stock deemed beneficially owned by Elara pursuant to the acquisition
of the Units were purchased with the working capital of Elara consisting of
$753,750.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the acquisition by Elara of the Units is for investment.
Elara may consider making additional purchases of the Common Stock of the Issuer
in open-market or private transactions, the extent of which purchases would
depend upon prevailing market and other conditions. Elara may, in the future,
exercise all or a portion of the remaining Warrants which it holds and/or may
cause all or a portion of the shares of Common Stock which it holds to be sold
in open-market or private transactions, depending upon prevailing market
conditions and in accordance with the lock-up provisions of the Subscription
Agreement (Exhibit A hereto and incorporated herein by reference). Mr. Tirman
and Elara intend to monitor closely the actions of management and the board of
directors of the Issuer, and may seek to take a more active role in, or seek
changes in or to influence, management of the Issuer.
Except as indicated above, Elara has no plans or proposals which relate
to or would result in any of the events, actions or conditions specified in
paragraphs (a) through (j) of Item 4 of this statement on Schedule 13-D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) This statement on Schedule 13D relates to 1,125,000 shares of Common
Stock deemed beneficially owned by Elara, which constitute approximately
17.6% of the issued and outstanding shares of Common Stock of the
Issuer.
(b) Elara has sole voting and dispositive power with respect to 1,125,000
shares of Common Stock.
(c) Effective as of October 9, 1997, Elara acquired 375,000 Units consisting
of 375,000 shares of Common Stock and the Warrants to acquire 750,000
shares of Common Stock in a private transaction with the Issuer at a
purchase price of $2.00 per Unit. 375,000 of the Warrants with an
exercise price of $0.01 per share were exercised by Elara on October 16,
1997. 375,000 of the Warrants may be exercised at an exercise price of
$4.00 per share, giving Elara beneficial ownership of, in the aggregate,
1,125,000 shares of Common Stock. The exercise of the Warrants may take
place from the date of acquisition of the Units by Elara until October
7, 2001.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Page 4 of 6 Pages
<PAGE>
<PAGE>
As discussed in Item 2 above, Elara owns 375,000 Units consisting of
Common Stock and Warrants to acquire an aggregate of 1,125,000 shares of Common
Stock as described in Item 5 above. Except as set forth above, there exist no
contracts, arrangements, understandings or relationships (legal or otherwise)
between the persons named in Item 2 and any persons with respect to any
securities of the Issuer, including but not limited to transfer or voting of any
securities, finders' fees, joint ventures, loan or option agreements, put or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A: Subscription Agreement
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 20, 1997
ELARA LTD.
By: /s/ Martin Lang
------------------------------
Name: Martin Lang
Title: Director
Page 5 of 6 Pages
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit Exhibit Name Page
A Subscription Agreement 7
Page 6 of 6 Pages
<PAGE>
<PAGE>
SUBSCRIPTION AGREEMENT
-------------------------
TELEGEN CORPORATION
-------------------------
500,000 UNITS
OF ONE SHARE OF COMMON STOCK NO PAR VALUE AND
ONE WARRANT TO PURCHASE ONE SHARE OF COMMON STOCK AT A $0.01 EXERCISE PRICE,
AND ONE WARRANT TO PURCHASE ONE SHARE OF COMMON STOCK AT A $4.00 EXERCISE PRICE
OF TELEGEN CORPORATION
$100,000 MINIMUM INVESTMENT
-------------------------
To: Telegen Corporation
This Subscription Agreement is made by and between Telegen Corporation,
a California corporation (the "Company"), and the undersigned prospective
purchaser who is subscribing hereby for that number of units (the "Units"), each
unit consisting of (i) one share of the Company's Common Stock, no par value,
(ii) a warrant to purchase one share of the Company's Common Stock at a $0.01
per share exercise price (each, a "$0.01 Warrant"), and (iii) a warrant to
purchase one share of the Company's Common Stock at a $4.00 per share exercise
price (each, a "$4.00 Warrant," the $0.01 Warrants and the $4.00 Warrants are
collectively the "Warrants") specified on the signature page hereto. The
purchase price per Unit (the "Purchase Price") is $2.00. This subscription is
submitted to you in accordance with and subject to the terms and conditions
described in this Subscription Agreement, relating to an offering (the
"Offering") of up to 500,000 Units.
In consideration of the Company's agreement to sell the Shares to the
undersigned on the terms and conditions summarized herein, the undersigned
agrees and represents as follows:
I. SUBSCRIPTION.
(A) The undersigned hereby irrevocably subscribes for and agrees to
purchase the number of the Shares indicated on the signature page hereto at a
purchase price of $2.00 per Unit. The undersigned agrees to wire transfer funds
or deliver a check made out to "Telegen Corporation" in an amount equal to the
aggregate purchase price for the Units (the "Payment") to an escrow account
established by the Company's Placement Agent as of the date hereof.
<PAGE>
<PAGE>
(B) The undersigned understands that the Payment (or, in the case of
rejection of a portion of the undersigned's subscription, the part of the
Payment relating to such rejected portion) will be returned promptly, without
interest or deduction, if the undersigned's subscription is rejected in whole or
in part. The Company, if it accepts this subscription, or part thereof and
receipt by the Company of the Payment, will promptly provide written notice to
the undersigned of receipt and acceptance of such subscription or part thereof.
Subject to the acceptance by the Company of the subscription, or part thereof,
the Company shall cause to be issued to the undersigned with reasonable
promptness the number of Units represented by the accepted portion of the
subscription.
(C) The undersigned hereby agrees to be bound hereby upon (i) execution
and delivery to the Company of the signature page to this Subscription
Agreement, (ii) acceptance by the Company of the undersigned's subscription (the
"Subscription") and (iii) the form of the Warrants attached hereto as Exhibit A
and Exhibit B, respectively, which specifies the rights afforded to each Warrant
(the "Warrant Agreement"). This Agreement and the Warrant Agreement shall
constitute the Unit Agreements.
II. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED.
The undersigned hereby represents and warrants to and agrees with the
Company as follows:
(A) Authorization; Residence Address. This Agreement constitutes the
undersigned's valid and legally binding obligation, enforceable in accordance
with its terms. The undersigned's residence address is as set forth on the
signature page hereto.
(B) Purchase Entirely for Own Account. This Agreement is made with the
undersigned in reliance upon the undersigned's representation to the Company,
which by the undersigned's execution of this Agreement the undersigned hereby
confirms, that the Units will be acquired for investment for the undersigned's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the undersigned has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the undersigned further represents that
the undersigned does not presently have any contract, undertaking, agreement, or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any portion of the Units. The
undersigned represents that it has full power and authority to enter into this
Agreement.
(C) Qualified Investor. The undersigned represents and warrants that it
is an "Accredited Investor" as that term is defined in Rule 501(a) promulgated
pursuant to the Securities Act of 1933, as amended (the "Act"). The undersigned
also represents and warrants that it either has a pre-existing business or
personal relationship with the Company or any of its officers, directors, or
controlling persons, or by reason of the undersigned's business or financial
experience or the business or financial experience of the undersigned's
professional advisors who
2
<PAGE>
<PAGE>
are unaffiliated with and who are not compensated by the Company, directly or
indirectly could be reasonably assumed to have the capacity to evaluate the
merits and risks of an investment in the Company and to protect the
undersigned's own interests in connection with these transactions.
(D) Disclosure of Information. The undersigned understands that the
Company is a public reporting Company under the 1934 Act and that it is current
on its reporting requirements and that such reports represent all the
information the undersigned considers necessary or appropriate for deciding
whether to acquire the Units, and that in particular, the undersigned has been
furnished with and has carefully read the Company's Annual Report or Form 10-K
dated March 31, 1997, amended on April 9 and April 30, 1997, the Proxy Statement
delivered to the Company's Shareholders dated July 9, 1997, Quarterly Report on
Form 10-Q dated May 15, 1997, the Quarterly Report on Form 10-Q dated August 14,
1997, Current Reports on Form 8-K dated January 15,1997 (amended March 14,
1997), January 21, 1997, February 7, 1997, March 25, 1997, May 9, 1997, May 19,
1997, July 8, 1997, and August 11, 1997, the Company's press releases dated
August 7, 1997 and August 19, 1997 and the Company's disclosure regarding its
common stock subscription offering in August 1997 (the "Disclosure Documents").
(E) Investment Experience. The undersigned is an investor in securities
of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has directly, or
indirectly through its agents, advisors or other persons on which it relies,
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Stock. The
undersigned also represents it has not been organized for the purpose of
acquiring the Units. The undersigned further represents that it has had an
opportunity to review the Unit Agreements and ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Units.
(F) Restricted Securities. The undersigned understands that the shares
of Common Stock, the Warrants, and the shares of Common Stock issuable upon
conversion thereof will be characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such shares may be resold without registration under the
Act, only in certain limited circumstances.
(G) Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the undersigned further agrees not to make any
disposition of all or any portion of the Stock unless and until:
(a) There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
3
<PAGE>
<PAGE>
(b) (i) The undersigned shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
the undersigned shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration under the Act.
(H) Responsibility for Tax Consequences. The undersigned has had an
opportunity to review the federal, state, local, and foreign tax consequences of
this investment and the transactions contemplated by the Unit Agreements
(including any tax consequences that may result now or in the future under
recently enacted tax legislation) and has had the opportunity to consult with
his tax advisors, if any, regarding such consequences. The undersigned
acknowledges that he is not relying on any statements or representations of the
Company or any of its agents in regard to such tax consequences and understands
that he (and not the Company) shall be responsible for his own tax liability
that may arise as a result of this investment or the transactions contemplated
by the Unit Agreements. The undersigned acknowledges that the Company has no
obligation in regard to the future conduct of its business to act or refrain
from acting in any manner, regardless of the loss of any tax benefit to Investor
in connection with the purchase, ownership, or sale of the Units or Common Stock
issuable upon conversion thereof, which may result from such action or inaction.
(I) Legends. It is understood that the Units and the shares of Common
Stock issuable upon conversion thereof and any securities issued in respect
thereof or exchange therefor may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations or by
the laws of any other state or jurisdiction.
(c) Lock-Up legends as specified under Section IV(B) of this
Agreement.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(A) SEC Documents. The Company has made available to the undersigned a
true and complete copy of the Disclosure Documents. As of their respective
filing dates, the Company has made all necessary filings with the Securities and
Exchange Commission ("SEC"), the Company's SEC Documents (as defined below)
comply in all material respects with the requirements of the Securities Exchange
Act of 1934 or the Securities Act of 1933, as amended,
4
<PAGE>
<PAGE>
and none of the Company's SEC Documents contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading. For purposes of this section, the
SEC Documents shall mean the Disclosure Documents, except for Exhibits G and H
thereto.
(B) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has all requisite corporate power and authority to carry on its
respective businesses as now conducted. The Company is qualified as a foreign
corporation in any jurisdiction in which a failure to so qualify would have a
material adverse effect on the Company.
(C) Power, Authorization and Validity.
(a) The Company has the corporate power and authority to execute
and deliver, and to consummate the transactions contemplated by the Unit
Agreements to which it is or will be a party and to perform its obligations
under each of them. This Subscription has been duly and validly approved and
authorized by the Company. The execution and deliver of, and the consummation of
the transactions contemplated by, each of the Unit Agreements to which the
Company is or will be a party has been duly authorized by all necessary
corporate action on the part of the Company.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental entity, is required
by or with respect to the Company in connection with the execution and delivery
of, and the consummation by it of the transactions contemplated by any of the
Unit Agreements to which the Company is or will be a party, except for causing
the Registration Statement to be declared effective by the SEC.
(c) Each of the Unit Agreements to which the Company is or will be
a party has been, or upon its execution and delivery by the Company will have
been, duly executed and delivered by it, and constitutes or will constitute upon
its execution and delivery, a valid and binding obligation of the Company,
enforceable in accordance with its terms.
(D) No Violation of Existing Agreements. Neither the execution and
delivery of the Unit Agreements nor the consummation of the transactions
contemplated hereby or thereby will conflict with, or result in a material
breach or violation of, any provision of the Articles of Incorporation or Bylaws
of the Company, as currently in effect, any material instrument or contract to
which the Company is a party or by which any such party is bound, or any
federal, state or local judgment, writ, decree, order, statute, rule or
regulation applicable to any such person. Neither the execution and delivery of
the Unit Agreements, nor the consummation of the transactions contemplated
hereby or thereby will directly have a material adverse effect on the Company.
5
<PAGE>
<PAGE>
(E) Financial Statements. The unaudited financial statements of the
Company included in its Form 10-Q for the quarterly period ending June 30, 1997,
as filed with the Securities and Exchange Commission, have been prepared in
accordance with GAAP and present fairly the financial policies of the Company as
of such date and the results of operations, equity transactions and changes in
financial position of the Company for the periods indicated, except as may be
indicated therein or in the notes thereto.
IV. UNDERSTANDINGS.
The undersigned understands, acknowledges and agrees with the Company
as follows:
(A) This Subscription may be rejected, in whole or in part, by the
Company, in its sole and absolute discretion, notwithstanding prior receipt by
the undersigned of notice of acceptance of the undersigned's Subscription.
(B) The undersigned hereby acknowledges and agrees that the
Subscription hereunder is irrevocable by the undersigned; that, except as
required by law, the undersigned is not entitled to cancel, terminate, or revoke
the Unit Agreements or any agreements of the undersigned hereunder or
thereunder, and that the Unit Agreement shall survive the death or disability of
the undersigned and shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors, legal
representatives, and permitted assigns. If the undersigned is more than one
person, the obligations of the undersigned hereunder shall be joint and several
and the agreements, representations, warranties, and acknowledgements herein
contained shall be deemed to be made by and be binding upon each such person and
his/her heirs, executors, administrators, successors, legal representatives and
permitted assigns.
(C) California Corporate Securities Law. THE SALE OF THE SECURITIES
THAT IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH
SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF
SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE
IS SO EXEMPT.
(D) IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
6
<PAGE>
<PAGE>
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
V. REGISTRATION RIGHTS AND LOCK-UP AGREEMENT.
(A) The undersigned will be entitled to registration rights as follows:
(i) the Company shall prepare and file, within thirty (30) days of the date
hereof, a registration statement on Form S-3 or any other Form that is available
to the Company at that time (the "Registration Statement") covering the resale
of the Common Stock purchased hereunder and the issuance of Common Stock upon
exercise of the Warrants under the Unit Agreements. The Company further agrees
to use its best efforts to cause the Registration Statement to be declared
effective by the Securities and Exchange Commission within ninety (90) days
after the initial filing of the Registration Statement. The Company shall pay
all expenses of such registration and shall maintain the effectiveness of such
Registration Statement for so long as the Common Stock sold hereunder and Common
Stock issuable under the Warrants cannot be freely resold pursuant to Rule 144.
(B) The undersigned understands, acknowledges and agrees that the
Common Stock purchased hereunder and the Common Stock issuable upon exercise of
the Warrants will be subject to certain lock-up restrictions (the "Locked Common
Stock"). The Locked Common Stock shall be divided into four equal groups (each a
"Locked Common Stock Group"). Each Locked Common Stock Group will be subject to
a lock-up period commencing on the effective date of this Subscription Agreement
and continuing until January 1, 1998, April 1, 1998, July 1, 1998, and September
1, 1998, respectively (each a "Lock-Up Period"). During the Lock-Up Period for
each respective Locked Common Stock Group, the undersigned will not, without the
prior written consent of the Company, offer, sell, contract to sell, pledge,
grant any option to sell, or otherwise dispose of, directly or indirectly any
issued or issuable Common Stock with respect thereto.
Notwithstanding this lock-up provision, if the holder of the Locked
Common Stock is an individual, he or she may transfer shares of Common Stock on
death by gift, will, or intestacy, to his or her immediate family or to a trust
the beneficiaries of which are exclusively a member or members of such holder's
immediate family; provided, however, that in any such case it shall be a
condition to any such transfer that any such transferee execute an agreement
stating that the transferee is receiving and holding such Common Stock subject
to the provisions of this Agreement, and there shall be no further transfer of
such Common Stock except in accordance with this Agreement.
With respect to the Locked Common Stock, all shares of Common Stock
issued shall be stamped or imprinted with a legend in substantially the
following form, except that the Lock-Up Period in the legend below shall
correspond to the applicable Lock-Up Period for each Locked Common Stock Group:
7
<PAGE>
<PAGE>
THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO A LOCK-UP PROVISION UNTIL [JANUARY
1, 1998/APRIL 1, 1998/JULY 1, 1998/SEPTEMBER 1, 1998] SUBJECT
TO THE TERMS AND CONDITIONS OF A SUBSCRIPTION AGREEMENT, A
COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE CORPORATION.
The holder of the Locked Common Stock further understands that the
disposition of any of the Locked Common Stock in contravention of the lock-up
provision herein shall be voidable by the Company and that the Company will have
the right to do all things necessary to void such transfer.
The Company agrees that upon termination of the respective Lock-Up
Periods, the terms and conditions set forth in this subsection shall cease with
respect to the applicable Locked Common Stock Group. The Company also agrees
that upon a Change of Control (as defined below), the terms and conditions set
forth in this subsection shall cease with respect to all of the Locked Common
Stock Groups. A Change of Control shall mean a consolidation or merger of the
Company with or into any other corporation, or any entity or person, or exchange
substantially all of the outstanding stock of the Corporation for shares of
another entity or property, in which, after any such transaction, the prior
shareholders of the Company hold less than fifty percent (50%) of the voting
shares of the continuing or surviving entity.
VI. MISCELLANEOUS.
(A) Neither this Subscription Agreement nor any provision hereof shall
be waived, modified, changed, discharged, terminated, revoked, or canceled,
except by an instrument in writing effecting the same signed by the Company and
a majority in interest of the holders of the Common Stock purchased pursuant to
this Subscription offering.
(B) Failure of the Company to exercise any right or remedy under this
Subscription Agreement or any other agreement between the Company and the
undersigned, or otherwise, or delay by the Company in exercising such right or
remedy, will not operate as a waiver thereof. No waiver by the Company will be
effective unless and until it is in writing and signed by the Company.
(C) This Subscription Agreement shall be enforced, governed, and
construed in all respects in accordance with the laws of the State of
California, and shall be binding upon the undersigned, the undersigned's heirs,
estate, legal representatives, successors and assigns and shall inure to the
benefit of the Company, its successors, and assigns. Any provision hereof that
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
8
<PAGE>
<PAGE>
(D) This Subscription Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties hereto.
(E) This Subscription Agreement and the signature pages hereto may be
signed in counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
VII. SIGNATURES.
THE COMPANY
By:
-------------------------------------------------
Warren M. Dillard, Chief Executive Officer
THE PURCHASER
The signature page for the purchaser of Units under this Subscription Agreement
is contained as part of the Subscription Package and is entitled "Signature
Page."
9
<PAGE>
<PAGE>
SIGNATURE PAGE INSTRUCTIONS
Each individual investor should then complete all requested information
on page A-1. Investors purchasing through an estate planning, family, or
retirement trust should complete all requested information on page B-1.
Investors purchasing through an Individual Retirement Account should complete
all requested information on page C-1. Investors purchasing as a corporation
should complete all requested information on page D-1.
If you have any questions concerning the form of investment entity or
the correct signature page to use, please contact the individual identified in
Section III of the Subscription Instructions. All documents should then be
returned to Wilson, Sonsini, Goodrich & Rosati at the address identified in the
Subscription Instructions.
10
<PAGE>
<PAGE>
TELEGEN CORPORATION
INDIVIDUAL SIGNATURE PAGE
Your signature on this Individual Signature Page evidences your
agreement to be bound by the SUBSCRIPTION AGREEMENT.
The undersigned investor, hereby subscribes to ___________________Units
(each unit consisting of one share of Common Stock and Warrants for one share of
Common Stock at an exercise price of $0.01 per share and one share of Common
Stock at an exercise price of $4.00 per share) of Telegen Corporation subject to
the terms and conditions of this Subscription Agreement at a purchase price of
$2.00 per Unit (as defined in the Subscription Agreement) for an aggregate
purchase price of $_______________ (the "Funds"). Stock certificates for the
Common Stock and Warrant agreements purchased hereunder will be delivered to the
undersigned as soon as practicable after receipt of the Funds and acceptance of
this Subscription Agreement by the Company.
The undersigned represents that (i) he or she has read and understands
this Subscription Agreement and the Warrant Agreement (as defined in the
Subscription Agreement), (ii) the representations and warranties made by the
undersigned in the Subscription Agreement are true, and (iii) he or she will
telephone the Company immediately if any material change in any of the
representations and warranties contained in the Subscription Agreement occurs
before the acceptance of his or her subscription and will promptly send the
Company written confirmation of such change.
SECTION 1. FORM OF OWNERSHIP. The purchaser wishes to take title to the Shares
with the following form of ownership:
______ Individual, as separate property.
______ Individual Joint Tenants With Right of Survivorship
(Both parties must sign below).
______ Tenants in Common (Both parties must sign below).
______ Husband and Wife, as Community Property. (One signature
required if interest held in one name--i.e., managing
spouse, and two signatures required if interest held
in both names).
SECTION 2. TITLE.
Please indicate exactly how you wish the name of the holder to appear
on the certificate representing the Shares:
- --------------------------------------------------------------------------------
A-1
<PAGE>
<PAGE>
SECTION 3. SIGNATURES.
Signatory 1 (Individual) Signatory 2 (Individual)
Name:
------------------------ ------------------------
Signature:
------------------------ ------------------------
Social Security Number:
------------------------ ------------------------
Residence Address:
------------------------ ------------------------
------------------------ ------------------------
Mailing Address:
------------------------ ------------------------
Home Phone:
------------------------ ------------------------
Work Phone:
------------------------ ------------------------
Date:
------------------------ ------------------------
A-2
<PAGE>
<PAGE>
TELEGEN CORPORATION
TRUST SIGNATURE PAGE
Your signature on this Trust Signature Page evidences the agreement by
the Trustee(s), on behalf of the Trust, to be bound by the SUBSCRIPTION
AGREEMENT.
(A) The undersigned investor, hereby subscribes to _________________
Units (each unit consisting of one share of Common Stock and Warrants for one
share of Common Stock at an exercise price of $0.01 per share and one share of
Common Stock at an exercise price of $4.00 per share) of Telegen Corporation
subject to the terms and conditions of this Subscription Agreement at a purchase
price of $2.00 per Unit (as defined in the Subscription Agreement) for an
aggregate purchase price of $ _______________ (the "Funds"). Stock certificates
for the Common Stock and Warrant Agreements purchased hereunder will be
delivered to the undersigned as soon as practicable after receipt of the Funds
and acceptance of this Subscription Agreement by the Company.
(B) The undersigned trustees represent that (a) the representations and
warranties made by the undersigned and contained in the Subscription Agreement
are accurate, and (b) the Trust will notify the Company (contact by telephone at
the number contained on page iii hereof) immediately if any material change in
any of the representations and warranties occurs before the acceptance of the
Trust's subscription and will promptly send the Company written confirmation of
such change.
(C) The undersigned trustee(s) hereby certify that they have read and
understand this Subscription Agreement and the Warrant Agreement (as defined in
the Subscription Agreement).
(D) The undersigned trustees hereby represent and warrant that the
persons signing this Subscription Agreement on behalf of the Trust are duly
authorized to acquire the Shares and sign this Subscription Agreement on behalf
of the Trust and, further, that the undersigned Trust has all requisite
authority to purchase such Shares and enter into this Subscription Agreement.
Please Type or Print the Exact Legal Title of Trust as follows: Trustee's name,
as trustee for [Name of Grantor] under Agreement [or Declaration] of Trust dated
[Date of Trust Formation]
Title:
--------------------------------------------------------------------------
Name of Name of
Trustee: Trustee:
------------------------------ -------------------------------
(Please Type or Print) (Please Type or Print)
By: By:
----------------------------------- ------------------------------------
(Signature of Trustee) (Signature of Trustee)
Date: Date:
--------------------------------- ----------------------------------
B-1
<PAGE>
<PAGE>
TELEGEN CORPORATION
IRA SIGNATURE PAGE
The signature of the Custodian on this IRA Signature Page evidences the
agreement of the Custodian to be bound by the SUBSCRIPTION AGREEMENT.
(A) The undersigned investor, hereby subscribes ______________ to Units
(each unit consisting of one share of Common Stock and Warrants for one share of
Common Stock at an exercise price of $0.01 per share and one share of Common
Stock at an exercise price of $4.00 per share) of Telegen Corporation subject to
the terms and conditions of this Subscription Agreement at a purchase price of
$2.00 per Unit (as defined in the Subscription Agreement) for an aggregate
purchase price of $ ___________ (the "Funds"). Stock certificates for the Common
Stock and Warrant Agreements purchased hereunder will be delivered to the
undersigned as soon as practicable after receipt of the Funds and acceptance of
this Subscription Agreement by the Company.
(B) The undersigned purchaser represents that (a) the representations
and warranties made by the undersigned and contained in the Subscription
Agreement are accurate and (b) the purchaser will notify the Company (contact by
telephone at the number contained on page iii hereof) immediately if any
material change in any of the representations and warranties occurs before the
acceptance of the purchaser's Subscription and will promptly send the Company
written confirmation of such change.
(C) The undersigned Custodian and purchaser hereby certify that they
have read and understand this Subscription Agreement and the Warrant Agreement
(as defined in the Subscription Agreement).
(D) The undersigned Custodian hereby represents and warrants that the
persons signing this Subscription Agreement on behalf of the Custodian are duly
authorized to sign this Subscription Agreement on behalf of the Custodian and,
further, that the undersigned Custodian has all requisite authority to purchase
such Shares and enter into this Subscription Agreement on behalf of the
undersigned purchaser.
Please Type or Print the Exact Legal Title of Trust as follows: Custodian's
name, as Custodian for Individual Retirement Account of [Name of Purchaser].
Title:
--------------------------------------------------------------------------
Name of Name of
Custodian: Purchaser:
---------------------------- -----------------------------
(Please Type or Print) (Please Type or Print)
Title:
--------------------------------
By: By:
----------------------------------- ------------------------------------
(Authorized Signature) (Signature of Purchaser)
Date: Date:
--------------------------------- ----------------------------------
C-1
<PAGE>
<PAGE>
TELEGEN CORPORATION
CORPORATION SIGNATURE PAGE
Your signature on this Corporation Signature Page evidences the
agreement by the officer(s), on behalf of the corporation, to be bound by the
SUBSCRIPTION AGREEMENT.
(A) The undersigned investor, hereby subscribes to 750,000 Units (each
unit consisting of one share of Common Stock and Warrants for one share of
Common Stock at an exercise price of $0.01 per share and one share of Common
Stock at an exercise price of $4.00 per share) of Telegen Corporation subject to
the terms and conditions of this Subscription Agreement at a purchase price of
$2.00 per Unit (as defined in the Subscription Agreement) for an aggregate
purchase price of $ ____________ (the "Funds"). Stock certificates for the
Common Stock and Warrant Agreements purchased hereunder will be delivered to the
undersigned as soon as practicable after receipt of the Funds and acceptance of
this Subscription Agreement by the Company.
(B) The undersigned officers represent that (a) the representations and
warranties made by the undersigned and contained in the Subscription Agreement
are accurate, and (b) the Corporation will notify the Company (contact by
telephone at the number contained on page iii hereof) immediately if any
material change in any of the representations and warranties occurs before the
acceptance of the corporation's subscription and will promptly send the Company
written confirmation of such change.
(C) The undersigned officer(s) hereby certify that they have read and
understand this Subscription Agreement and the Warrant Agreement (as defined in
the Subscription Agreement).
(D) The undersigned officers hereby represent and warrant that the
persons signing this Subscription Agreement on behalf of the Corporation are
duly authorized to acquire the Shares and sign this Subscription Agreement on
behalf of the Corporation and, further, that the undersigned Corporation has all
requisite authority to purchase such Shares and enter into this Subscription
Agreement.
D-1
<PAGE>
<PAGE>
Please Type or Print the Exact Legal Title of Trust as follows: Custodian's
name, as Custodian for Individual Retirement Account of [Name of Purchaser].
Name of
Corporation:
--------------------------------------------------------------------
Address of
Principal Offices:
--------------------------------------------------------------
Authorized Authorized
Officer: Officer:
----------------------------- ------------------------------
(Please Type or Print) (Please Type or Print)
By: By:
---------------------------------- -----------------------------------
(Signature of Authorized Officer) (Signature of Authorized Officer)
Date: Date:
-------------------------------- ---------------------------------
D-2
<PAGE>
