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EXHIBIT 4.4
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 $__________
AMERICAN INTERNATIONAL PETROLEUM CORP.
10% CONVERTIBLE SUBORDINATED (REDEEMABLE) DEBENTURE
DUE APRIL 1, 1998
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 10% Convertible Subordinated Redeemable Debentures Due April 1, 1998, in an
aggregate principal amount not exceeding One Million Five Hundred Thousand
Dollars (U.S. $1,500,000).
FOR VALUE RECEIVED, the Company promises to pay to
______________________ the registered holder hereof and its successors and
assigns (the "Holder"), the principal sum of ______________________ Dollars (US
$_________) on April 1, 1998 (the "Maturity Date"), and to pay interest on the
principal sum outstanding, at the rate of 10% per annum due and payable
quarterly in arrears commencing July 1, 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 __________________ between the Company and
________________________________ (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
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to time. The Company will pay the outstanding principal 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:
I. The Debentures are issuable in denominations of One Hundred
Thousand Dollars (US$100,000) 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.
I. 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.
II. 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
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will not be entitled to exercise the right to convert or transfer the
Debentures.
III. (a) The Holder of this Debenture is entitled, at its
option, at any time commencing 45 days after closing of the Offering hereof to
convert all or any amount over $25,000 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 conversion price for each share or Common
Stock equal to the lower of (x) 65% 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) 65% 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"). The number of Shares issued under (y) above shall be referred to as
(the "Initial Conversion Shares") 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 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 135% 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
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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 15 days of receipt of a conversion notice
by the Company from the Investor.
(c) Notwithstanding the provisions of paragraph 4(a)
hereof, at any time on and after 120 days from the date of the issuance of the
Debentures, if the average of the closing bid price for the Company's common
shares for 5 consecutive trading days shall be in excess of US $1.50 as
reported on NASDAQ, the Company may, at its sole option, exercised by five days
prior written notice thereof to the holder require the Holders of the
Debentures to convert that portion of the principal amount of the Debentures,
not previously converted in accordance with the procedures set forth in Section
4(a) hereof, except that for purposes of Section 4(a)(i) the conversion date
shall be the date specified in the Company's notice to Holder.
IV. 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.
V. 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 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
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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
(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
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(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, 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
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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.
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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:________________________________________________________________
Title:___________________________
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EXHIBIT I
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.
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OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of
___________, 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 10% Convertible 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.
VI. Agreement To Subscribe; Purchase Price.
(a) Subscription. The undersigned Buyer hereby
subscribes for and agrees to purchase the Seller's 10% Convertible Debentures
substantially in the form of the Debentures attached as Exhibit A hereto and
having an aggregate original principal amount of up to U.S. $1,500,000 (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
Debentures shall be __________________________ United States Dollars (U.S.
$___________) (the "Purchase Price"), which shall be payable pursuant to
paragraph C herein by delivering immediately available funds in United States
Dollars by wire transfer to the designated depository Barry B. Globerman, Esq.,
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
___________, 1996, or such earlier or later date as is mutually agreed to in
writing by Buyer and Seller.
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VII. 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;
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(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 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
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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 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
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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.
VIII. 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).
(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.
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(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.
(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
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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.
IX. 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.
X. Irrevocable Treasury Orders and Transfer Agent Instructions.
(a) Irrevocable Treasury Orders. Upon issuance of the
Debentures, the Company will issue to the Escrow Agent Irrevocable Treasury
Orders in the form of Exhibit B hereto which shall be submitted to the
Company's transfer agent upon conversion of the Debentures pursuant to the
Escrow Agreement attached hereto as Exhibit C. The Common Stock to be issued
upon conversion shall not have any restrictive legend other than any Additional
Conversion Shares.
(b) Debentures. Upon the conversion of the Debentures,
the holder thereof shall submit such Debenture together with a notice of
conversion to the Escrow Agent, and Seller and the Escrow Agent shall instruct
Seller's 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.
(c) Common Stock to be Issued Without Restrictive Legend.
Upon the conversion of any Debenture up to the total of the "Initial Conversion
Amount" (as defined in the Debenture) and 40 days after the issuance of any
"Additional Conversion Amount" (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
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Certificates up to the total of the "Initial Conversion Amount" (as defined in
the Debenture) and 40 days after the "Additional Conversion Amount" (as defined
in the Debenture) 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 Initial Conversion Shares and Additional Conversion 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 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.
XI. Registration. If upon conversion of Debentures effected by
the Buyer pursuant to the terms of this Agreement the Company fails to issue
certificates for shares of Common Stock issuable upon such conversion (the
"Underlying Shares") to the Buyer bearing no restrictive legend (after the
applicable Restrictive Period of the Initial Conversion Shares or Additional
Conversion Shares, if any) for any reason other than the Company's reasonable
good faith belief that the representations and warranties made by the Buyer in
this Agreement or the Notice of Conversion were untrue when made, or if the
restricted period under Regulation S is extended, or if Additional Conversion
Amount Shares are required to be issued, 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 Additional Conversion Shares
issuable upon conversion of the Debentures 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 Exchange 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 Exchange 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 by the Buyer of
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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.
XII. Delivery Instructions. The Debentures being purchased
hereunder shall be delivered to the Escrow Agent at such time and place as
shall be mutually agreed by Seller and Buyer.
XIII. 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 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.
XIV. 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.
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(b) Delivery of the Debentures to the Escrow Agent.
XV. 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.
XVI. 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.
XVII. Miscellaneous.
(a) Except as specifically referenced herein or in the
Distribution Agreement, 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.
(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
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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.
AMOUNT SUBSCRIBED FOR
$_______________________________________________
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as
of the date first set forth above.
Official Signatory of Seller:
American International Petroleum Corp.
By:___________________________________________________________________________
Title:________________________________________________________________________
Accepted this ____ day of March, 1996
Official Signatory of Buyer:
__________________________________________
By:_________________________________________________
Title:______________________________________________
Address of Buyer:
____________________________________________________
____________________________________________________
____________________________________________________
Fax No.:____________________________________________
Tel No.:____________________________________________
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EXHIBIT 4.4 - SCHEDULE A
SCHEDULE OF HOLDERS
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
10% CONVERTIBLE SUBORDINATED REDEEMABLE DEBENTURES
HOLDER COUNTRY AMOUNT
- ------ ------- ------
Rachel Shtern Israel $ 250,000
Madison Trading Switzerland $ 100,000
Pokaras, Inc. Switzerland $ 300,000
Shalom Steinberg Israel $ 200,000
RBB Bank AG Austria $ 650,000
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