EXHIBIT 4.1
SUBSCRIPTION AGREEMENT
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ENERGY BIOSYSTEMS CORPORATION
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7,500,000 SHARES OF COMMON STOCK
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To: Energy BioSystems Corporation
This Subscription Agreement (this "Subscription Agreement" or the "Agreement")
is made between Energy BioSystems Corporation, a Delaware corporation in the
development stage, (the "Company"), and the undersigned prospective purchaser
who is subscribing hereby for shares (the "Shares") of the Company's Common
Stock, $.001 par value ("Common Stock"). This subscription is submitted to you
in accordance with and subject to the terms and conditions described in this
Subscription Agreement and the Confidential Private Placement Memorandum dated
April 16, 1999, as amended by Supplement dated May 26, 1999 to Confidential
Private Placement Memorandum (as it may be supplemented or updated from time to
time, the "Memorandum"), relating to the offering (the "Offering") of 7,500,000
Shares. The closing of the Offering is subject to stockholder approval. The
purchase price per Share is as set forth in the Memorandum.
In consideration of the Company's agreement to sell Shares to the undersigned
upon the terms and conditions summarized in the Memorandum, the undersigned
agrees and represents as follows:
A. SUBSCRIPTION
(1) The undersigned hereby irrevocably subscribes for and agrees to
purchase the number of Shares indicated on the signature page hereto
at a purchase price per Share as set forth in the Memorandum. The
minimum subscription is $100,000, provided that the Company may, in
its sole discretion, accept subscriptions for less than such amount.
The undersigned encloses herewith a check payable to "Energy
BioSystems Corporation--Escrow Account" for the full amount of the
purchase price of the Shares for which the undersigned is subscribing
(the "Payment"). The undersigned hereby acknowledges that the actual
number of Shares which the undersigned will receive will be equal to
the amount of the undersigned's subscription divided by the Purchase
Price for the Shares as defined in the Memorandum.
(2) The undersigned understands that all payments by check of the
subscription amount provided in Paragraph (1) above shall be delivered
to SAMCO Capital Markets, Inc. (the "Placement Agent") and,
thereafter, such payment will be deposited as soon as practicable for
the undersigned's benefit in a non-interest bearing escrow account.
The payment (or, in the case of rejection of a portion of the
undersigned's subscription, the part of the
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payment relating to such rejected portion) will be returned
promptly, without interest, if the undersigned's subscription is
rejected in whole or in part. The Placement Agent and the Company
expect to hold a closing of the Offering (the "Closing") at any
time after subscriptions for 1,000,000 Shares have been accepted
and the stockholders of the Company have approved the Offering at a
duly called meeting. Upon receipt by the Company of the requisite
payment for all Shares to be purchased by the subscribers whose
subscriptions are accepted (each, a "Purchaser" and, collectively,
the "Purchasers") at the Closing, the Shares so purchased will be
issued in the name of each Purchaser, and the name of such
Purchaser will be registered on the books of the Company as the
record owner of such Shares. The Company will issue to each
Purchaser the stock certificates representing the Shares purchased.
The Shares may not be transferred prior to the Closing.
(3) The undersigned hereby acknowledges receipt of a copy of the
Memorandum, and hereby agrees to be bound thereby upon the (i)
execution and delivery to the Company, in care of the Placement Agent,
of the signature page to this Subscription Agreement, and (ii)
acceptance at the Closing by the Company of the undersigned's
subscription (the "Subscription").
(4) The undersigned agrees that the Company may, in its sole and absolute
discretion, reduce the undersigned's subscription to any amount of
Shares that in the aggregate does not exceed the amount of Shares
hereby applied for without any prior notice to or further consent by
the undersigned. The undersigned hereby irrevocably constitutes and
appoints the Placement Agent and each officer of the Placement Agent,
each of the foregoing acting singly, in each case with full power of
substitution, the true and lawful agent and attorney-in-fact of the
undersigned, with full power and authority in the undersigned's name,
place and stead, to amend this Subscription Agreement and the
Questionnaire, including in each case the undersigned's signature page
thereto, to effect any of the foregoing provisions of this Paragraph
(4).
(5) The undersigned acknowledges that (i) the issuance of the Shares is
subject to the approval of the stockholders of the Company at a duly
called meeting; (ii) the Company cannot assure the undersigned that it
will be able to obtain favorable votes from the required number of
stockholders at the meeting; and (iii) in the event that the Company
does not obtain the required stockholder approval, the Company will
refund the undersigned's subscription without interest. The Company
agrees that it will submit the Offering to its stockholders for
approval at the 1999 Meeting of Stockholders of the Company which is
anticipated to be held on or before May 31, 1999. Upon approval of
the Offering by stockholders owning a majority of the outstanding
shares entitled to vote at the meeting, and assuming that subscription
for the minimum amount required have been received, the Company may
conduct a closing on the Offering.
B. REPRESENTATIONS, WARRANTIES AND VOTING AGREEMENT
The undersigned hereby represents and warrants to, and agrees with, the Company
and the Placement Agent as follows:
(1) The undersigned has been furnished with and has carefully read the
Memorandum (including the Attachments thereto) and this Agreement and
is familiar with and understands
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the terms of the Offering. The undersigned has carefully
considered and has, to the extent the undersigned believes such
discussion necessary, discussed with the undersigned's professional
legal, tax, accounting and financial advisors the suitability of an
investment in the Shares for the undersigned's particular tax and
financial situation and has determined that the Shares being
subscribed for by the undersigned are a suitable investment for the
undersigned.
(2) The undersigned acknowledges that (i) the undersigned has had the
right to request copies of any documents, records, and books
pertaining to this investment and (ii) any such documents, records and
books which the undersigned requested have been made available for
inspection by the undersigned, the undersigned's attorney, accountant
or adviser(s).
(3) The undersigned and/or the undersigned's adviser(s) has/have had a
reasonable opportunity to ask questions of and receive answers from a
person or persons acting on behalf of the Company concerning the
Offering and all such questions have been answered to the full
satisfaction of the undersigned.
(4) The undersigned is not subscribing for Shares as a result of or
subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or
meeting.
(5) If the undersigned is a natural person, the undersigned has reached
the age of majority in the state in which the undersigned resides, has
adequate means of providing for the undersigned's current financial
needs and contingencies, is able to bear the substantial economic
risks of an investment in the Shares for an indefinite period of time,
has no need for liquidity in such investment and, at the present time,
could afford a complete loss of such investment.
(6) The undersigned or the undersigned's purchaser representative, as the
case may be, has had such knowledge and experience in financial, tax
and business matters so as to enable the undersigned to utilize the
information made available to the undersigned in connection with the
Offering to evaluate the merits and risks of an investment in the
Shares and to make an informed investment decision with respect
thereto.
(7) The undersigned will not sell or otherwise transfer the Shares without
registration under the Securities Act of 1933, as amended (the
"Securities Act"), or applicable state securities laws or an exemption
therefrom. None of the Shares have been registered under the
Securities Act or under the securities laws of any state. The
undersigned represents that the undersigned is purchasing the Shares
for the undersigned's own account, for investment and not with a view
toward resale or distribution. The undersigned has not offered or
sold the Shares being acquired nor does the undersigned have any
present intention of selling, distributing or otherwise disposing of
such Shares either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or non-occurrence
of any predetermined event or circumstances in violation of the
Securities Act. The undersigned is aware that there is currently no
market for the Shares. The undersigned is aware that an exemption
from the registration requirements of the Securities Act pursuant to
Rule 144 promulgated thereunder is not presently available; and the
Company has no obligation to register the Shares subscribed for
hereunder, except as provided in Paragraph D hereof, or
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to make available an exemption from the registration requirements
pursuant to such Rule 144 or any successor rule for resale of the
Shares.
(8) The undersigned recognizes that investment in the Shares involves
substantial risks, including loss of the entire amount of such
investment. Further, the undersigned has carefully read and
considered the matters set forth under the caption "Risk Factors" in
the Memorandum, and has taken full cognizance of and understands all
of the risks related to the purchase of the Shares.
(9) The undersigned acknowledges that the certificate representing the
Shares shall be stamped or otherwise imprinted with a legend
substantially in the following form:
"The Shares represented hereby have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and
neither the Shares nor any interest therein may be offered, sold,
transferred, pledged or otherwise disposed of except pursuant to an
effective registration under such act and such laws, which, in the
opinion of counsel for the holder, which counsel and opinion are
reasonably satisfactory to counsel for this corporation, is
available."
(10) If this Subscription Agreement is executed and delivered on behalf of
a partnership, corporation, trust or estate: (i) such partnership,
corporation, trust or estate has the full legal right and power and
all authority and approval required (a) to execute and deliver, or
authorize execution and delivery of, this Subscription Agreement and
all other instruments executed and delivered by or on behalf of such
partnership, corporation, trust or estate in connection with the
purchase of its Shares, (b) to delegate authority pursuant to power of
attorney and (c) to purchase and hold such Shares; (ii) the signature
of the party signing on behalf of such partnership, corporation, trust
or estate is binding upon such partnership, corporation, trust or
estate; and (iii) such partnership, corporation or trust has not been
formed for the specific purpose of acquiring such Shares, unless each
beneficial owner of such entity is qualified as an accredited investor
within the meaning of Rule 501(a) of Regulation D promulgated under
the Securities Act and has submitted information substantiating such
individual qualification.
(11) If the undersigned is a retirement plan or is investing on behalf of a
retirement plan, the undersigned acknowledges that investment in the
Shares poses additional risks including the inability to use losses
generated by an investment in the Shares to offset taxable income.
(12) The information contained in the Questionnaire delivered by the
undersigned in connection with this Agreement (the "Questionnaire") is
complete and accurate in all respects. The undersigned shall
indemnify and hold harmless the Company, the Placement Agent and each
officer, director or control person of any such entity, who is or may
be a party or is or may be threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of or
arising from any actual or alleged misrepresentation or misstatement
of facts or omission to represent or state facts made or alleged to
have been made by the undersigned to the Company, the Placement Agent
(or any agent or representative of any of them) or omitted or alleged
to have been omitted by the undersigned, concerning the undersigned or
the undersigned's authority to invest or financial position in
connection with the Offering, including, without limitation, any such
misrepresentation, misstatement of omission
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contained in the Subscription Agreement or any other document
submitted by the undersigned, against losses, liabilities and
expenses for which the Company, the Placement Agent, or any
officer, director or control person of any such entity has not
otherwise been reimbursed (including attorney's fees, judgments,
fines and amounts paid in settlement) actually and reasonably
incurred by the Company, the Placement Agent, or such officer,
director or control person in connection with such action, suit or
proceeding.
(13) The undersigned agrees that it will vote all of its shares of voting
capital stock of the Company owned by it in favor of the Offering and
the issuance of Company Common Stock in connection with the Offering
at the 1999 Meeting of Stockholders of the Company anticipated to be
held on or before May 31, 1999, as described.
C. UNDERSTANDINGS.
The undersigned understands, acknowledges and agrees with the Company and
the Placement Agent as follows:
(1) This Subscription may be rejected, in whole or in part, by the Company
or the Placement Agent, in the sole and absolute discretion of either
of them, at any time before the Closing, notwithstanding prior receipt
by the undersigned of notice of acceptance of the undersigned's
Subscription. The Company may terminate this Offering at any time in
its sole discretion. The execution of this Agreement or solicitation
of the investment contemplated hereby shall create no obligation of
the Company to accept any subscription or complete the Offering.
(2) Except as set forth in Section C(1) above, 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 this Agreement or any
agreements of the undersigned hereunder and that this Agreement and
such other agreements 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; provided, however, that the
Company has received commitment and funds for the minimum amount
required for closing as described in the Memorandum. 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 acknowledges 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.
(3) No federal or state agency has made any finding or determination as to
the accuracy or adequacy of the Memorandum or as to the fairness of
the terms of this offering for investment nor any recommendation or
endorsement of the Shares.
(4) The Offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon
the truth, completeness and accuracy of the statements made by the
undersigned herein and in the Questionnaire.
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(5) There is no public or other market for the Shares and no such public
or other market may ever develop. There can be no assurance that the
undersigned will be able to sell or dispose of the Shares. It is
understood that in order not to jeopardize the Offering's exempt
status under Section 4(2) of the Securities Act and Regulation D, any
transferee may, at a minimum, be required to fulfill the investor
suitability requirements thereunder.
(6) The undersigned acknowledges that the information contained in the
Memorandum is confidential and non-public and agrees that all such
information shall be kept in confidence by the undersigned and neither
used for the undersigned's personal benefit (other than in connection
with this subscription) nor disclosed to any third party for any
reason; provided, however, that this confidentiality obligation shall
not apply to any such information that (i) is part of the public
knowledge or literature and readily accessible at the date hereof,
(ii) becomes part of the public knowledge or literature and readily
accessible by publication (except as a result of a breach of this
provision) or (iii) is received from third parties (except third
parties who disclose such information in violation of any
confidentiality agreements or obligations, including, without
limitation, any Subscription Agreement entered into with the Company).
(7) The undersigned acknowledges that the foregoing restrictions on the
undersigned's use and disclosure of any such confidential, non-public
information contained in the Memorandum restricts the undersigned from
trading in the Company's securities to the extent such trading is
based on such confidential, non-public information.
(8) The representations, warranties and agreements of the undersigned
contained herein and in any other writing delivered in connection with
the transactions contemplated hereby shall be true and correct in all
respects on and as of the sale of the Shares as if made on and as of
such date and shall survive the execution and delivery of this
agreement and the purchase of the Shares.
(9) Insofar as indemnification for liabilities under the Securities Act
may be permitted to directors, officers or controlling persons of the
Company, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in such Act and is therefore unenforceable
to such extent.
(10) 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 OFFERED HEREBY HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE MEMORANDUM OR
THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
(11) THE SHARES OFFERED HEREBY MAY NOT BE TRANSFERRED, RESOLD OR OTHERWISE
DISPOSED OF EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
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(12) For Residents of Arkansas:
THE SHARES OFFERED HEREBY ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION
UNDER SECTION 23-42-504(a)(14) OF THE ARKANSAS SECURITIES ACT AND
SECTION 4(2) OF THE SECURITIES ACT OF 1933. A REGISTRATION STATEMENT
RELATING TO THESE SHARES HAS NOT BEEN FILED WITH THE ARKANSAS
SECURITIES DEPARTMENT OR WITH THE SECURITIES AND EXCHANGE COMMISSION.
NEITHER THE DEPARTMENT NOR THE COMMISSION HAS PASSED UPON THE VALUE OF
THE SHARES OFFERED HEREBY, MADE ANY RECOMMENDATIONS AS TO THEIR
PURCHASE, APPROVED OR DISAPPROVED THE OFFERING, OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
(13) For Residents of California:
THE SALE OF THE SHARES WHICH ARE THE SUBJECT OF THIS SUBSCRIPTION
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SHARES OR THE
PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SHARES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
SUBSCRIPTION AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
(14) For Residents of Connecticut:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER SECTION 36-485 OF THE
CONNECTICUT UNIFORM SECURITIES ACT AND THEREFORE CANNOT BE RESOLD
UNLESS THEY ARE REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THE SHARES OFFERED HEREBY HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE BANKING COMMISSIONER OF THE STATE OF
CONNECTICUT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(15) For Residents of Florida:
THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FLORIDA
SECURITIES ACT (THE "FLORIDA ACT") AND WILL BE OFFERED AND SOLD
PURSUANT TO AN EXEMPTION UNDER SECTION 517.061 OF THE FLORIDA ACT.
ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE
OF ANY OF THE SHARES WITHIN THREE DAYS AFTER THE FIRST TENDER OF
CONSIDERATION IS MADE BY SUCH PURCHASER TO THE COMPANIES, AN AGENT OF
THE COMPANIES, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE
AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER,
WHICHEVER OCCURS LATER.
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(16) For Residents of Georgia:
THE UNDERSIGNED ACKNOWLEDGES AND UNDERSTANDS (i) THAT THE SHARES
SUBSCRIBED FOR HEREBY WILL BE ISSUED OR SOLD IN RELIANCE ON PARAGRAPH
13 OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT
UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND (ii) THAT THE CERTIFICATES REPRESENTING THE SHARES
SUBSCRIBED FOR HEREBY WILL CONTAIN A LEGEND TO SUCH EFFECT.
(17) For Residents of Missouri:
THE UNDERSIGNED ACKNOWLEDGES AND UNDERSTANDS (i) THAT THE SHARES
SUBSCRIBED FOR HEREBY ARE NOT REGISTERED UNDER THE MISSOURI UNIFORM
SECURITIES ACT AND MAY BE DISPOSED OF ONLY THROUGH A LICENSED
BROKER-DEALER AND (ii) THAT IT IS A FELONY TO SELL SHARES IN
VIOLATION OF THE MISSOURI SECURITIES ACT.
(18) For Residents of New York:
THIS PRIVATE OFFERING MEMORANDUM HAS NOT BEEN REVIEWED BY THE ATTORNEY
GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE
STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS
OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(19) For Residents of Pennsylvania:
EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SHARES BEING OFFERED
HEREBY AGREES NOT TO SELL THESE SHARES FOR A PERIOD OF TWELVE MONTHS
AFTER THE DATE OF PURCHASE. UNDER PROVISION OF THE PENNSYLVANIA
SECURITIES ACT OF 1972, EACH PENNSYLVANIA RESIDENT SHALL HAVE THE
RIGHT TO WITHDRAW HIS OR HER ACCEPTANCE WITHOUT INCURRING ANY
LIABILITY TO THE ISSUER WITHIN TWO BUSINESS DAYS FROM THE DATE OF
RECEIPT BY THE COMPANY OF THIS SUBSCRIPTION AGREEMENT. TO ACCOMPLISH
THIS WITHDRAWAL A SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO
THE ISSUER AT THE ADDRESS SET FORTH IN THE TEXT HEREOF, INDICATING HIS
OR HER INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE SENT
AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS
DAY. IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE
THE TIME WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY (IN PERSON
OR BY TELEPHONE, TO THE ISSUER AT THE NUMBER LISTED IN THE TEXT
HEREOF), A WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED
SHOULD BE REQUESTED.
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D. REGISTRATION RIGHTS.
(1) REGISTRATION OF COMMON SHARES. Within sixty days from the Closing
Date, the Company shall use its reasonable best efforts to prepare for
filing with the Commission, and cause to be declared effective, a
"shelf" registration statement (the "Shelf Registration") pursuant to
Rule 415 under the Securities Act providing for the sale by the
Purchasers of the shares of Common Stock included in the Offering.
The Company shall use its reasonable best efforts to cause the
registration statement to be declared effective as soon as practicable
after it has been filed with the Commission. The Company agrees to
use its reasonable best efforts to keep such Shelf Registration
continuously effective for a period ending on the earliest of (a) the
fifth anniversary of the effective date of such Shelf Registration,
(b) the date on which all such Common Stock covered thereby have been
sold thereunder, or (c) the date upon which all such Common Stock are
freely transferable without restriction under the Securities Act. For
the purpose of this Agreement, "reasonable best efforts" shall mean
the best efforts of the Company consistent with sound and reasonable
business practices and judgment.
(2) REGISTRATION PROCEDURES. In connection with the Company's obligations
with respect to the Shelf Registration, the Company shall use its
reasonable best efforts to effect the registration in furtherance of
the sale of the Common Stock by the holders thereof in accordance with
the intended method or methods of distribution thereof described in
the Shelf Registration. In connection therewith, the Company shall,
as promptly as may be practicable:
(a) prepare and file with the Commission a registration
statement with respect to the Common Stock on any form for which the
Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the disposition of
the Common Stock in accordance with the intended method or methods of
disposition thereof;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the applicable period specified in Paragraph
(1) above;
(c) furnish to each Purchaser which is selling Common Stock a
copy of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto but excluding all
documents incorporated by reference therein unless specifically so
requested by such Purchaser) and such reasonable number of copies of
the prospectus included in such registration statement (including each
preliminary prospectus) as such Purchaser may reasonably request;
(d) use reasonable best efforts to register or qualify the
Common Stock under such other securities laws or blue sky laws of such
jurisdictions as the Purchasers shall reasonably request, and take any
and all such actions as may be reasonably necessary or advisable to
enable the Purchasers to consummate the disposition in such
jurisdictions of such Common Stock;
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(e) notify each Purchaser, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the period that the Company is required to keep the
registration statement effective, of the happening of any event as a
result of which the prospectus included in such registration statement
(as then in effect) contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. As promptly
as practicable following any such occurrence, the Company shall
prepare and furnish to each Purchaser a reasonable number of copies of
a supplement or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to subsequent purchasers of the
Securities, such prospectus shall meet the requirements of the
Securities Act and relevant state securities laws, provided that such
obligation on the part of the Company shall be suspended for such
period of time as the Company considers reasonably necessary and in
its best interest due to circumstances then existing (but not more
than 30 days in any 180-day period). Each Purchaser shall furnish to
the Company such information regarding each such Purchaser and its
proposed method of distribution of the Securities as the Company may
from time to time request and as shall be required by law to effect
and maintain the registration of such Securities under the Securities
Act and any state securities laws;
(f) advise each Purchaser, promptly after receiving notice
thereof, of any stop order issued or threatened by the Commission and
use its reasonable best efforts to take all actions required to
prevent the entry of such stop order, or to remove it if entered;
(g) use its reasonable best efforts to cause all Common Stock
including in such registration statement to be listed, by the date of
the first sale of Common Stock pursuant to such registration
statement, on each securities exchange on which the Common Stock of
the Company is then listed or proposed to be listed;
(h) furnish to each Purchaser on the effective date of such
registration statement a signed counterpart, addressed to the
Purchasers, of (i) an opinion of counsel representing the Company and
reasonably satisfactory to such Purchasers that the registration
statement (including each amendment or supplement thereto and
prospectus included therein) complies as to form in all material
respects with the requirements of the Securities Act and the
applicable rules and regulations thereunder, and (ii) a "comfort"
letter from the independent public accountants retained by the
Company, stating that they are independent public accountants within
the meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements of the Company included or
incorporated by reference in the registration statement or the
prospectus, or any amendment or supplement thereof, comply as to form
in all material respects with the applicable accounting requirements
of the Securities Act and the published rules and regulations
thereunder, and covering such other financial matters of the type
customarily covered by such letters;
(i) otherwise use its reasonable best efforts to comply with the
provisions of the Securities Act with respect to the disposition of
all of the Common Stock covered by such registration statement in
accordance with the intended methods of disposition by the Purchasers
thereof set forth in such registration statement and to make generally
available to its security holders, as soon as reasonably practicable,
an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder.
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(3) EXPENSES. All expenses incident to the Company's performance of or
compliance with the provisions of this Section D (including, without
limitation, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, fees and expenses
incurred in connection with the listing of the Common Stock to be
registered on each securities exchange on which similar securities
issued by the Company are then listed, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and
disbursements of one counsel for the Purchasers and fees and
disbursements of all independent certified public accountants and
other persons retained by the Company) will be borne by the Company.
Notwithstanding the foregoing, the Purchasers shall pay any and all
underwriting fees, discounts or commissions attributable to the sale
of Common Stock.
(4) INDEMNIFICATION.
(a) Upon the registration of Common Stock pursuant to Section D(1) of
this Agreement, and in consideration of the agreements of the
Purchasers contained herein, the Company shall, and it hereby
agrees to, indemnify and hold harmless, to the extent permitted
by law, each of the Purchasers which holds Common Stock to be
included in such registration, its officers and directors, each
underwriter of such Common Stock, if any, and each person who
controls such person (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees and expenses) to which such
Purchaser, its officers, directors, each underwriter, or such
controlling persons may become subject, insofar as such losses,
claims, damages, liabilities and expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of material fact contained in any such
registration statement, any prospectus or preliminary prospectus
contained therein or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each such Purchaser,
each such underwriter and each such controlling person for any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability or action; except (i) insofar as the same arise out of
or are based upon an untrue statement or omission or alleged
omission so made based upon information furnished by such
Purchaser, underwriter or controlling person in writing
specifically for use in such registration statement or prospectus
or (ii) insofar as the same are caused by such Purchaser's or
such underwriter's failure to deliver a copy of such registration
statement or prospectus or any amendments or supplements thereto
after the Company has furnished such Purchaser or such
underwriter with a sufficient number of copies of the same; and
provided, however, that the foregoing indemnity and reimbursement
obligation shall not be applicable to the extent that any such
loss, claim, damage, liability or action arises out of or is
based on any untrue statement or omission made in: (i) a
preliminary prospectus, which untrue statement or omission is
corrected in the final prospectus and such final prospectus is
made available to such Purchaser in accordance with the
requirements of Rule 424 under the Securities Act; or (ii) any
prospectus, which untrue statement or omission is corrected in a
prospectus supplement or amended prospectus and such prospectus
supplement or amended prospectus is made available to such
Purchaser prior to the sale of Common Stock which gave rise to
such loss, claim, damage, liability or expense.
-11-
(b) In connection with any registration statement under which Common
Stock are registered under the Securities Act and pursuant to
which a Purchaser offers and sells Common Stock, each such
Purchaser shall, and it hereby agrees to, indemnify and hold
harmless, to the extent permitted by law, each of the Company,
its officers and directors, and each person who controls the
Company (within the meaning of the Securities Act) and, if the
offering is an underwritten offering, the underwriters, against
all losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees and expenses) to which the Company,
its officers and directors, underwriters, or controlling persons
may become subject, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of material fact contained in any such registration
statement, any prospectus or preliminary prospectus contained
therein or any amendment or supplement thereto, or any omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading and will reimburse the Company and each such officer,
director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action, insofar as (i) the same arise out of or are
based upon any untrue statement or omission or alleged omission
so made based upon information furnished by such Purchaser or
controlling person of such Purchaser, in writing specifically for
use in such registration statement or prospectus or (ii) the same
are caused by such Purchaser's failure to deliver a copy of such
registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such
Purchaser with a sufficient number of copies of the same and
provided, further, that the liability of each Purchaser under
this Paragraph 4(b) shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to
the proportion that the public offering price of Common Stock
sold by such Purchaser under such registration statement bears to
the total public offering price of all securities sold
thereunder, but not to exceed the amount of the proceeds received
by such Purchaser from the sale of the Common Stock covered by
such registration statement.
(c) Any person entitled to indemnification hereunder will (i) give
prompt notice to the indemnifying party of any claim with respect
to which it seeks indemnification (but the failure to give such
notice will not affect the right to indemnification hereunder,
unless the indemnifying party is materially prejudiced by such
failure) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such
indemnified and indemnifying parties with respect to such claim,
permit such indemnifying party to assume the defense of such
claim with counsel selected by the indemnifying party and
reasonably satisfactory to the indemnified party. If such
defense is not assumed by the indemnifying party or if the
indemnifying party is not permitted to assume such defense then
(x) the indemnified party shall select counsel, which counsel
must be reasonably satisfactory to the indemnifying party and (y)
the indemnifying party will not be subject to any liability for
any settlement made without its consent (which consent will not
be unreasonably withheld). No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such
-12-
indemnified party of a release from all liability in respect
of such claim or litigation. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the
reasonably judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim,
in which case the indemnifying party shall be obligated to pay
the fees and expenses of one additional counsel, who must be
reasonably satisfactory to the indemnifying party.
(d) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Paragraph 4(a) or
Paragraph 4(b) are unavailable or are insufficient to hold
harmless an indemnified party in respect of any losses, claims,
damages, liabilities or expenses (or actions in respect thereof)
referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying
party and the indemnified party as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied
by such indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The parties
hereto agree that it would not be just and equitable if
contribution pursuant to this Paragraph 4(d) were determined by
pro rata allocation (even if the Purchasers or any underwriters
or all of them were treated as one entity for such purpose) or by
any other method of allocation which does not take into account
the equitable considerations referred to in this Paragraph 4(d).
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnification and contribution obligations and each other
provision set forth in this Paragraph 4 shall remain in full
force and effect regardless of any investigation made by or on
behalf of the Company, any Purchaser, any officer or employee of
the Company or such Purchaser, any underwriter, any officer or
employee of such underwriter, or any controlling person of any of
the foregoing and shall survive the transfer and registration of
Common Stock by such Purchaser.
(5) RULE 144 REPORTING. With a view to making available to Purchasers the
benefits of Rule 144 promulgated by the Commission under the
Securities Act, the Company agrees to use its reasonable best efforts
to:
(a) make and keep adequate current public information with respect to
the Company available, as those terms are used in Rule 144 under
the Securities Act, at all times after the Final Closing Date;
-13-
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) furnish to Purchasers promptly upon request a written statement
by the Company as to its compliance with the reporting
requirements of Rule 144 and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents of the Company as any Purchaser may
reasonably request in order to permit such Purchaser to avail
itself of any rule or regulation of the Commission allowing such
Purchaser to sell its Common Stock without registration.
(6) AMENDMENTS AND WAIVERS. Any provision of this Section D may be
amended or waived if, but only if, in the case of an amendment, such
amendment is in writing and is signed by the Company and the
Purchasers who are the holders of a majority of the Common Stock or,
in the case of a waiver, such waiver is in writing and is signed by
the party to be charged with having granted such waiver. No failure
or delay by the Company or any Purchaser in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
E. MISCELLANEOUS
(1) All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, singular or plural, as the identity
of the person or persons may require.
(2) Except as set forth in Section A(4) herein, neither this Agreement nor
any provision hereof shall be waived, modified, changed, discharged,
terminated, revoked or canceled except by an instrument in writing
signed by the party effecting the same against whom any change,
discharge or termination is sought.
(3) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested,
addressed: (i) if to the Company, to Energy BioSystems Corporation,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇. ▇▇▇▇▇, III, or (ii) if to the undersigned, to the address for
correspondence set forth in the Subscription Agreement, or at such
other address as may have been specified by written notice given in
accordance with this Paragraph (3).
(4) Failure of the Company to exercise any right or remedy under this
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.
(5) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Texas, as such
laws are applied by the Texas courts to agreements entered into and to
be performed in Texas by and between residents of Texas, 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
-14-
successors and assigns. If any provision of this Subscription
Agreement is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed modified to
conform with such statute or rule of law. Any provision hereof
that may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provisions hereof.
(6) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and may be amended
only by writing executed by both parties hereto.
(7) Each party hereto has had the opportunity to review this Agreement
with its separate legal counsel.
F. SIGNATURE
The signature of this Agreement is contained as part of the applicable
subscription package, entitled "Signature Page".
-15-
ENERGY BIOSYSTEMS CORPORATION
REVISED SIGNATURE PAGE
The undersigned hereby subscribes for the number of Shares as set forth below.
1. Dated: ____________________, 19___
2. Number of Shares subscribed for: ____________________
3. Fill in A if you elect to purchase the Shares at $2.00 per Share with the
Warrants.
Fill in B if you elect to purchase the Shares at $1.80 per Share without
any Warrants.
A. Aggregate purchase price for number of Shares (with Warrants)
subscribed for, at $2.00 per Share
$____________________
B. Aggregate purchase price for number of Shares (without Warrants)
subscribed for, at $1.80 per Share
$____________________
---------------------------------------- --------------------------------------
Signature of Subscriber Taxpayer Identification or Social
(and title, if applicable) Security Number
---------------------------------------- --------------------------------------
Signature of Joint Purchaser Taxpayer Identification or Social
(if any) Security Number
---------------------------------------- --------------------------------------
Name and Residence Address Mailing Address
(Post Office Address Not Acceptable) (if different from Residence Address)
---------------------------------------- --------------------------------------
Name (please print as name will appear Name (please print)
on certificate)
---------------------------------------- --------------------------------------
Number and Street Number and Street
---------------------------------------- --------------------------------------
City State Zip Code City State Zip Code
ACCEPTED BY: ENERGY BIOSYSTEMS CORPORATION
Dated: By:
---------------------------------- -----------------------------------
President and CEO
PURCHASER QUESTIONNAIRE
Energy BioSystems
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Re: Purchase of Shares of Common Stock
Ladies & Gentlemen:
The information contained herein is being furnished to Energy
BioSystems Corporation, a Delaware corporation, (the "Company") in connection
with the purchase of Common Stock of the Company by the undersigned to assure
the Company that the undersigned will meet the suitability standards for
potential investors for purposes of federal and state securities laws, and to
assure that the offer and sale of such securities by the Company may be made to
the undersigned without registration under the Securities Act of 1933, as
amended (the "Act"), and applicable state securities laws.
The undersigned represents to the Company that (i) the information and
representations contained herein are complete and accurate and may be relied
upon by the Company and (ii) the undersigned will notify the Company immediately
of any material change in any of such information occurring prior to the closing
of the purchase of the Securities by the undersigned. All information furnished
is for the sole use of the Company and their counsel and will be held in
confidence, except that this Questionnaire may be furnished to such parties as
is necessary to establish compliance with federal or state securities laws.
PLEASE COMPLETE ALL OF THE FOLLOWING QUESTIONS (1-10), SIGN AND DATE AND RETURN
TO THE CORPORATION.
-2-
ALL INFORMATION WILL BE TREATED CONFIDENTIALLY
1. Name of Entity or Individual: ___________________________________________
Business Address: _______________________________________________________
City:__________________ State: ______________________ Zip: ______________
Telephone:
Taxpayer Identification No. or Social Security No.: _____________________
2. (ANSWER ONLY IF AN INDIVIDUAL)
(a) Principal Residence Address: _______________________________________
City:__________________ State: ___________________ Zip: _____________
Telephone:_____________
Communications should be sent to (check one)
___________ business address or ______________ home address.
(b) Date of Birth: _______ U.S. Citizen: Yes ______ No _______
College: _______________ Degree: ___________ Year: _________
Graduate School: __________ Degree: _______ Year: __________
Other Education: ___________________________________________________
(c) Employment and Nature of Business: _________________________________
____________________________________________________________________
Position and Duties: _______________________________________________
____________________________________________________________________
Any other Prior Occupations or Duties during Past Five Years:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
-3-
(d) Income from all sources before this investment is in excess of
$ ______________ (exclusive of any income attributable to your spouse)
for each of the undersigned's two previous tax years and estimated to
be in excess of $ ______________ (exclusive of any income attributable
to your spouse) for the undersigned's current tax year.
(e) The undersigned's personal net worth (excluding the proposed
investment in the Shares) is in excess of $ ___________.
(f) The undersigned understands the full nature and risk of this
investment.
___ Yes ___ No
(g) The undersigned believes the undersigned can afford the complete loss
of the investment. ___ Yes ___ No
(h) This investment constitutes less than ten percent (10%) of the
undersigned's net worth. ___ Yes ___ No
3. (ANSWER ONLY IF A CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY)
(a) Form of Organization: ______________________________________________
(b) Jurisdiction of Incorporation or Formation: ________________________
(c) Address of principal place of business:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
(d) Date of Incorporation or Formation: ________________________________
(e) Nature of Business: ________________________________________________
____________________________________________________________________
(f) Names of Directors if a Corporation, of Partners (together with the
address of each Partner) if a Partnership, of Trustees if a Trust, of
Joint Venturers if a Joint Venture:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
-4-
(g) The persons named in Section 3(f) above understand the full nature and
risk of this investment. ___ Yes ___ No
(h) The undersigned can afford the complete loss of the investment.
___ Yes ___ No
(i) The undersigned's net income before this investment is in excess of
$_____________ for the undersigned's two previous tax years and
estimated to be in excess of $___________ for the undersigned's
current tax year.
(j) The undersigned's total assets (excluding the proposed investment in
the Shares) is in excess of $_______________.
(k) Was the undersigned formed or organized for the specific purpose of
acquiring the Shares? ___ Yes ___ No
4. The undersigned is an experienced and sophisticated investor. ___ Yes
___ No
5. The undersigned has invested in excess of $___________ over the past
five years.
6. Please state below the types of investments the undersigned has made in the
past five years, with particular attention to investments in nonmarketable
investments. Include amount invested in each type of investment.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
7. Please state below any additional information which the undersigned thinks
qualifies the undersigned to evaluate the merits and risks of this
investment.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
8. The undersigned will have an attorney, accountant, or other consultant
review this investment as the undersigned may require for a full
understanding of the investment and the risk involved.
___ Yes ___ No
9. The undersigned will have a representative, who has such knowledge and
experience in business and financial matters and is capable of evaluating
the merits and risks of this investment, make the investment decision on
behalf of the undersigned with respect to the Shares.
___ Yes ___ No
10. The undersigned (or in the case of a corporation, partnership, trust or
other entity, either such entity or each person named in Section 3(f)
hereof) is an "accredited investor", as such term is defined by Regulation
D ("Regulation D") promulgated under the Act within the meaning of one of
the categories described in Schedule I attached thereto.
___ Yes ___ No
-5-
Please specify the category or categories of qualification:
_________________________________________________________________________
Name:
----------------------------------
Dated: ___________, 1999 By:
------------------------------------
Title:
---------------------------------
---------------------------------------
(Please Type or Print Name)
NAME OF PARTNERSHIP, CORPORATION,
TRUST, ESTATE OR OTHER ENTITY
(IF APPLICABLE):
-----------------------------------
TITLE OF PERSON SIGNING ON
BEHALF OF SUCH ENTITY:
-----------------------------------
-6-
SCHEDULE I
An "accredited investor" includes ANY of the following:
(a) An individual with net worth (including principal residence) or,
together with his or her spouse, JOINT net worth in EXCESS of $1,000,000;
(b) An individual who had an income in EXCESS of $200,000 for each of
the two most recent years or joint income with such individual's spouse in
excess of $300,000 in each of those years AND who reasonably expects to
reach the same income level in the current year;
(c) Any of certain institutional investors, including:
(1) a state or national bank as defined in 3(a)(2) of the Act,
or savings and loan association or other institution defined in
section 3(a)(5) of the Act (whether acting in an individual or
fiduciary capacity);
(2) an insurance company as defined in section 2(13) of the Act;
(3) an investment company registered under the Investment
Company Act of 1940;
(4) a business development company as defined in section 2(a)48
of the Act;
(5) a Small Business Investment Company licensed by the U.S.
Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958;
(6) an ERISA employee benefit plan where (i) the investment
decision is made by a plan fiduciary which is a bank, insurance
company or registered investment advisor, OR (ii) the employee benefit
plan has total assets IN EXCESS OF $5,000,000 or, if a self-directed
plan, with investment decisions made solely by persons that are
accredited investors;
(7) an Internal Revenue Code 501(c)(3) organization, a
corporation, a Massachusetts or similar business trust or partnership,
not formed for the specific purpose of purchasing the Shares, with
total assets IN EXCESS OF $5,000,000;
(d) Any director, executive officer or general partner of the issuer
of the Shares being offered or sold or any director, executive officer,
or general partner of a general partner of that issuer;
(e) Any legal entity (corporation, partnership, etc.) WHOLLY owned by
persons or entities who are themselves accredited investors.
(f) A trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Shares offered, whose purchase is
directed by a "sophisticated person" as defined by Regulation D.
-7-