THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED ( the "SECURITIES ACT"). THE SECURITIES MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S.
PERSON ( OTHER THAN DISTRIBUTOR ), UNLESS THE SECURITIES ARE REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE. THE AVAILABILITY OF ANY SUCH EXEMPTION MUST BE ESTABLISHED TO THE
SATISFACTION OF THE CLIENT.
OFFSHORE
CONSULTING AND SECURITIES SUBSCRIPTION AGREEMENT
This Consulting and Offshore Securities Subscription Agreement ( this
"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
("Securities Act")
This Agreement has been executed with an effective date of the 2nd day of
December 1996 by the undersigned in connection with the parties herein and their
desires to enter into a offshore Consulting and Client agreement as set out
hereafter.
BRIA COMMUNICATIONS CORPORATION
147 17 NUPORT AVENUE
NEPONSIT, NY 11964
a corporation organized under the laws of the State of New Jersey, United States
of America (hereinafter referred to as the "Client")
The undersigned: The China Connection
The Ave Sark
Channel Islands GY9 OSB
a corporation organized under the laws of the Isle of Man, (hereinafter referred
to as the "Consultant"), which hereby represents and warrants to, and agrees
with Client as follows:
WHEREAS, Consultant is familiar with business conditions and contacts in
the Clients Industry in China, England and Europe.
WHEREAS, Consultant desires to enter into this written agreement for one
(1) year to serve as a Consultant to Client for the purpose of introducing
Client to persons and entities for potential acquisitions, Joint Ventures,
Partnerships, or other business alliances in China, England and Europe.
1. Agreement to Compensation & Subscribe.
Client shall compensate Consultant in the following manner.
a. Client shall compensate Consultant Three Hundred Thirty Three Thousand
Three Hundred Thirty Three (333,333) shares of Clients Common Stock,
Pursuant to Regulation S of the Securities Act of 1933. Payment of the
shares shall be made immediately with the formal of this agreement for
services previously performed.
b. All shares of stock that are issued to Consultant under this Agreement
shall, when issued, be validly issued, fully paid and nonassessable.
Consultant may terminate this Agreement if the following occurs:
c. Payments due under this Agreement are not timely made.
d. Consultant makes a bona fide decision to terminate its business and
liquidate its assets.
e. An unanticipated material change in either the market, Client or
Consultant makes continued performance under this Agreement
unreasonable.
f. Breach of any provision of this Agreement.
g. Notwithstanding the termination of this Agreement, Consultant shall be
entitled to receipt of all compensation owed pursuant to Sections 1(a)
up to the time of termination of this Agreement.
Client may terminate this Agreement under the following conditions:
h. Consultant fail to follow Client's reasonable instructions. Client
must advise Consultant that his actions or in actions are unacceptable
and give Consultant thirty (30) days for which to comply. If
Consultant fails to comply within thirty (30) days, Consultant may be
terminated hereunder by Client's service of notice of termination to
Consultant.
i. If, in the judgment of the Board of Directors of Client, Consultant's
actions of conduct would make it unreasonable to require Client to
retain Consultant. Such acts include, and are in the nature of,
dishonesty, illegal activities, activities harmful to the reputation
of the Client, and activities which create civil or criminal liability
for the Client.
j. Notwithstanding the termination of this Agreement, Consultant shall be
entitled to receipt of all compensation owed pursuant to Sections 1(a)
up to the time of termination of this Agreement.
2. CONSULTANT Representations: In order to induce CLIENT to accept this
Subscription, CONSULTANT represents and warrants to and covenants with CLIENT as
follows:
a. Offshore Transaction.
(i) CONSULTANT is not a U.S. person* as defined in Rule 902(o) of
Regulation S;
(ii) At the time the securities were subscribed for, paid for and
received, CONSULTANT was outside the United States* and is
outside the United States as of the date of the execution and
delivery of this Agreement;
(iii)CONSULTANT is purchasing the securities for its own account (
and/or for the account of other non-U.S. persons who are outside
the United States ) and not on behalf of any U.S. person and
CONSULTANT represents and warrants that this purchase has not
been pre-arranged with a purchaser in the United States;
(iv) To the best knowledge of CONSULTANT, each distributor
participating in the offering of the securities, if any, has
agreed in writing that all offers and sales of the securities
prior to the expiration of a period commencing as described in
Rule 902(m) of Regulation S ( the "Restricted Period") shall only
be made in compliance with the safe harbor contained in
Regulation S, pursuant to registration of the securities under
the Securities Act of Pursuant to an exemption from registration
thereunder.
(v) CONSULTANT represents and warrants and hereby agrees that all
offers and sales of the securities by CONSULTANT in the United
States or to U.S. persons, or otherwise, whether prior to the
expiration or after the expiration of the Restricted Period shall
only be pursuant to registration of exemption from registration
thereunder.
(vi) All offering documents received by CONSULTANT state that the
securities have not been registered under the Securities Act and
may not be offered of sold in the United States or to U.S.
Persons ( other than distributors as defined in Regulation S)
during the Restricted Period unless the securities are registered
under the Securities Act of an exemption from the registration
requirements of the Securities Act is available.
(vii)CONSULTANT understands that the purchase of the securities
involves a high degree of risk and represents that it can bear
the economic risk of the purchase of the securities, including
the total loss of its investment.
(viii) CONSULTANT understands that the securities are being offered
and issued to it in reliance on specific exemptions from the
registration requirements of federal and state securities laws
and that the CLIENT is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of CONSULTANT set forth herein in order to
determine the applicability of such exemptions and the
suitability of CONSULTANT to acquire the securities.
(ix) CONSULTANT is sufficiently experienced in financial and business
matters to be capable of evaluating the merits and risks of
purchasing the securities, and to make an informed decision
relating thereto. (x) In evaluating its investment, CONSULTANT
has consulted its own investment and/or legal and/or tax
advisors.
(xi) CONSULTANT understands that the exemption claimed under this
offer and sale would not be present if the purchase of
securities, although in technical compliance with Regulation S,
is part of a plan or scheme to evade the registration provisions
of the Securities Act and CONSULTANT confirms that its purchase
is not part of any such plan or scheme.
(xii)CONSULTANT is acquiring the securities for investment purpose
and has no present intention to sell the securities in the United
States to a U.S. person or for the account or benefit of a
"distribution" as such term is defined by the federal securities
laws of the United States.
(xiii) CONSULTANT is not an "underwriter" of, or "dealer" in, the
securities ( as those terms are defined in Section 2 of the
Securities Act) and CONSULTANT understands that the securities
cannot be sold in the United States as part of a "distribution"
as such term is defined by the federal securities laws of the
United States.
(xiv)CONSULTANT is not a "distributor" as defined in Rule 902(c) of
Regulation S and is not purchasing the securities with the
present intent of "distributing" the securities in the United
States or to a U.S. person, either on behalf of CLIENT, a
"distributor", or any of their affiliates. However, if CONSULTANT
should be deemed a distributor, prior to reselling the securities
during the Restricted Period, the CONSULTANT will notify the new
purchaser that such new purchaser is subject to the restrictions
of Regulation S during the Restricted Period.
(xv) If CONSULTANT is purchasing the securities subscribed for hereby
in a representative or fiduciary capacity the representations and
warranties in this Agreement shall be deemed to have been made on
behalf of the person or persons for whom CONSULTANT is so
purchasing.
(xvi)CONSULTANT, and any person for whom CONSULTANT is representing
or acting on behalf of in purchasing the securities, is not an
officer, director, or "affiliate" (as defined in Rule 405
promulgated under the Securities Act) of the CLIENT.
(xvii) If at any time after the expiration of the Restricted Period
the CONSULTANT wishes to transfer or attempt to transfer the
securities to a U.S. person, then CONSULTANT agrees to notify the
CLIENT, if at such time CONSULTANT is either an "underwriter,"
"dealer," "distributor," or if such transfer is being made as
part of a plan or scheme to evade the registration requirements
of the Securities Act.
(xviii) Neither the CONSULTANT nor any affiliate of CONSULTANT has a
short position in the common stock of the CLIENT, nor will have a
short position in the common stock of CLIENT at any time prior to
the expiration of the Restricted Period.
CONSULTANT represents to CLIENT that the foregoing representations,
warranties, agreements and covenants are true and accurate as of the date
hereof, shall be true and accurate as of the date of the acceptance by the
CLIENT of CONSULTANT's subscription, and shall survive thereafter. If at any
time CONSULTANT knows, should reasonably know or has reason to believe, that any
such representations and warranties were not true and accurate when made,
CONSULTANT shall provide written notice of such fact to the CLIENT specifying
which representation and warranties are not true and accurate and the reasons
therefore.
CONSULTANT agrees to fully indemnify, defend and hold harmless CLIENT, its
officers, directors, employees, agents and attorneys from and against any and
all losses, claims, damages, liabilities and expenses, including reasonable
attorney's fees and expenses, which may result from a breach of CONSULTANT's
representations, warranties and agreements contained herein.
b. Current Public Information. CONSULTANT acknowledges that CONSULTANT has
been furnished with or has acquired copies of the CLIENT's most recent Form
10-KSB and Form 10-QSB filed with the SEC, and all Current Reports on Form
8-K filed thereafter, if any, ( collectively, the "SEC Filings").
c. Independent Investigation; Access. CONSULTANT acknowledges that
CONSULTANT, in making the decision to purchase the securities:
(i) has relied upon the information contained in the SEC Filings, and this
Offshore Subscription Agreement, and has not relied on upon any other
representations, oral or written.
(ii) CONSULTANT and its representatives have had the opportunity to conduct
independent investigations and have been given reasonable access and
opportunity to examine the books and records of CLIENT, including all
material contracts and documents relating to the CLIENT and this
offering.
(iii)CONSULTANT and its representatives have had a reasonable opportunity
to ask questions of, and to receive answers in writing from CLIENT or
any officer of CLIENT acting on its behalf concerning this offering.
d. No Government Recommendation or Approval. CONSULTANT understands that no
federal or state agency has passed on or made any finding or. determination
relating to the fairness for public investment in the securities, nor has
any such agency passed or made, or will pass on or make, any recommendation
or endorsement of the securities.
e. Entity Purchases. If CONSULTANT is a partnership, corporation or trust,
then the individual executing this Agreement on its behalf of the
CONSULTANT represents and warrants that:
(i) He or she has made due inquiry to determine the truthfulness of the
representations, warranties, agreements, covenants and acknowledgments
made pursuant to this Agreement.
(ii) He or she is duly authorized to make this investment and to enter into
and execute this Agreement on behalf of such entity.
3. CLIENT Representations.
a. Reporting Company Status. CLIENT is a "reporting CLIENT" as that term is
defined in Rule 902(o) of Regulation S.
b. Offshore Transaction.
(i) CLIENT will not offer the securities to any person in the United
States and not a U.S. person or for the account or benefit of any U.S.
person.
(ii) At the time the buy orders for the securities were originated, the
CLIENT reasonably believed that the CONSULTANT was outside the United
States and was not a U.S. person.
(iii)The CLIENT has no reason to believe that the purchase of the
securities has been pre-arranged with a purchaser in the United
States.
c. No Directed Selling Efforts. In regard to this transaction, CLIENT
has not conducted any "directed selling efforts" as that term is
defined in Rule 902(b) of Regulation S nor has CLIENT conducted any
general solicitation relating to the offer and sale of the securities
to persons residing in the United States or elsewhere.
4. Restricted Period; Legend. The transaction restriction in connection with the
offshore offer and sale restrict CONSULTANT from offering or selling the
securities in the United States, commencing upon completion of this offering.
Rules 903(c)(2) and 902(m) govern the forty (40) day Restricted Period. In the
event that multiple subscriptions are accepted by the CLIENT, the forty (40) day
Restricted Period shall begin only after the closing with respect to the final
subscription accepted by CLIENT. CONSULTANT understands that the CLIENT will
instruct its transfer agent to place a stop transfer order with respect to the
certificates representing the securities and that such certificates will bear a
legend in substantially the following form:
The shares represented by this certificate have been
issued pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended ("Act"), and have
not been registered under the Act. These shares may not
be offered or sold within the United States or to, or
for the account of, a "U.S. person" (as that term is
defined in Regulation S) until after January 10th, 1997
[the 40th day following completion of the, offering].
Prior to the transfer of any shares represented by this
certificate, and prior to the removal of the legend on
this certificate, the holder of such shares shall be
required to deliver an opinion of the holder's legal
counsel to Bria Communications Corporation, its legal
counsel and its transfer agent (which opinion must be
in form and substance satisfactory to Bria
Communications Corporation) stating that the transfer
may be accomplished without registration under the
Securities Act and all applicable state securities
laws. Stop transfer instructions will also be placed on
the books of Bria Communications Corporation and its
transfer agent to effectuate the forgoing restrictions.
5. Exemption; Reliance on Representations. CONSULTANT understands that the
securities have not been registered under the 1933 Act and that CLIENT is
relying on the rules governing offers and sales made outside the United States
pursuant to Regulation S and the representations, warranties and agreements of
CONSULTANT made herein.
6. Transfer Agent Instructions. CLIENT's Transfer Agent will be instructed to
issue one or more share certificates representing the securities with the
restrictive legend set forth in Section 4 in the name of the CONSULTANT and will
be advised that the securities have been issued pursuant to Regulation S. CLIENT
warrants that no stop transfer instructions, other than the instructions in
Section 4 and the legend set forth therein, have been or will be given to the
transfer agent.
7. Governing Law. CONSULTANT and CLIENT:
(i) agree that notwithstanding that this agreement was executed by
CONSULTANT outside the United States, any legal suit, action or
proceeding arising out of or relating to this Agreement shall be
instituted in the United Stated District Court for the District of New
York or the Third Judicial District in and for New York County, New
York, U.S.A.;
(ii) waive any objection that they may now or hereafter have to the venue
or any such suit, action or proceeding;
(iii)irrevocably consent to the jurisdiction of the United States District
Court for the District of New York or the Third Judicial District in
and for New York County, New York, U.S.A., in any such suit, action or
proceeding;
(iv) agree to accept and acknowledge service of any and all process served
in any suit, action or proceeding in the United States District Court
for the District of New York or the Third Judicial District in and for
New York County, New York, U.S.A., and also agree that service of
process upon them mailed by certified or registered mail to the person
and place specified in Section 9, shall be deemed, in every respect,
effective service of process upon them in any such suit, action or
proceeding; and
(v) agree that this Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York.
8. Entire Agreement. This Agreement constitutes the entire agreement between
CONSULTANT and CLIENT with respect to the subject matter hereof and supersedes
any and all prior or contemporaneous representations, warrants, agreement and
understandings in connection herewith. This Agreement may be amended only by a
writing executed by CONSULTANT and CLIENT.
9. Notices. All notices or other communications hereunder shall be in writing
and shall be deemed to have been duly given when delivered personally, or if
mailed, by certified or registered mail, return receipt requested, postage
prepaid, on the earlier of receipt or seven days after the date on which such
notice or communication is so mailed to CLIENT or CONSULTANT at:
If to CLIENT:
Bria Communications Corporation
147 17 Nuport Avenue
Neponsit, New York 11964
If to CONSULTANT:
The China Connection
The Ave Sark
Channel Islands GY9 OSB
IN WITNESS WHEREOF, this Agreement was duly executed as follows:
Accepted this 9th day of January,1997.
By: /s/Phil Croshaw
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Mr. Phil Croshaw, Official Signatory of CONSULTANT
Accepted this 9th day of the month of January, 1997.
Bria Communications Corporation
By:/s/ Richard Lifschutz
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President: Richard Lifschutz