-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M6zGqZRB7c8AeKDSK6LCj9S3eQCSB1L48YC4ukMD6Rja7hj3MJF0dnSAIvgvsN5A rvHW50bo8owwzf3omB3fKQ== 0000950168-97-000191.txt : 19970128 0000950168-97-000191.hdr.sgml : 19970128 ACCESSION NUMBER: 0000950168-97-000191 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970110 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 19970127 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INTERNATIONAL PETROLEUM CORP /NV/ CENTRAL INDEX KEY: 0000799119 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 133130236 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14905 FILM NUMBER: 97511371 BUSINESS ADDRESS: STREET 1: 444 MADISON AVE STE 3203 CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129563333 MAIL ADDRESS: STREET 1: 444 MADISON AVE STE 3203 CITY: NEW YORK STATE: NY ZIP: 10022 8-K 1 AMERICAN INTERNATIONAL PETROLEUM CORP. 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event Reported) January 10, 1997 AMERICAN INTERNATIONAL PETROLEUM CORPORATION (Exact name of registrant as specified in its charter) Nevada No. 0-14905 13-3130236 - ----------------- ------------- ------------- (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) incorporation or organization) 444 MADISON AVENUE, SUITE 3203, NEW YORK, NEW YORK 10022 - -------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) (212)688-3333 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of businesses acquired - N/A (b) Pro forma financial information - N/A (c) Exhibits 4.1 Form of 9% Series C Convertible Subordinated Redeemable Debenture due January 10, 2000. 4.2 Form of Subscription Agreement used in connection with the offering of Registrants debentures, the form of which is attached hereto as Exhibit 4.1. 4.3 Form of Regulation S Subscription Agreement for Common Stock. ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S (a) (i) On January 10, 1997, the registrant sold 9% Convertible Subordinated Redeemable Debenture Due January 10, 2000. The total principal amount of the Debenture was $200,000. (ii) On January 14, 1997 the Registrant sold 653,000 shares of its common stock for gross proceeds of $150,000. (b) Non-U.S. Persons only were permitted to purchase the Debentures and Common Stock. The placement agent for the Debentures was Zazoff & Associates. The Common Stock was placed directly by the Registrant. (c) The Registrant received net proceeds of $180,000 and $150,000 from sale of the Debentures and the Common Stock, respectively. (d) The Offerings were made pursuant to a safe harbor from registration under Regulation S to Non-U.S. Persons only. (e) The 9% Series C Debentures, which are redeemable by the Company in part or in full prior to conversion, are convertible on February 24, 1997 into shares of the Company's Common Stock at the lower of (i) 70% of the average closing bid price of the Company's Common Stock for five business days prior to the date of conversion or (ii) 75% of the average closing bid price of the Company's Common Stock for the five business days prior to the date of Subscription. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 24, 1997 AMERICAN INTERNATIONAL PETROLEUM CORPORATION By: /s/ Denis J. Fitzpatrick Denis J. Fitzpatrick Chief Financial Officer 3 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 4.1 Form of 9% Series C Convertible Subordinated Redeemable Debenture due January 9, 2000. 4.2 Form of Subscription Agreement used in connection with the offering of Registrant's debenture, the form of which is attached here to as Exhibit 4.1. 4.3 Form of Registration S Subscription Agreement for Common Stock. 4 EX-4 2 EXHIBIT 4.1 EXHIBIT 4.1 FORM OF DEBENTURE THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE ACT) EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS. No.____________________ US $____________ AMERICAN INTERNATIONAL PETROLEUM CORPORATION 9% SERIES C CONVERTIBLE SUBORDINATED REDEEMABLE DEBENTURE DUE JANUARY 9, 2000 THIS DEBENTURE is one of a duly authorized issue of Debentures of American International Petroleum Corp., a corporation duly organized and existing under the laws of the State of Nevada (the "Company") designated as its 9% Series C Convertible Subordinated Redeemable Debentures Due January 9, 2000, in an aggregate principal amount not exceeding ________________________ (U.S. $_____________). FOR VALUE RECEIVED, the Company promises to pay to __________________________, whose address is _____________________________________, the registered holder hereof and its successors and assigns (the "Holder"), the principal sum of _______________________ Dollars (US $________________) on January 9, 2000 (the "Maturity Date"), and to pay interest on the principal sum outstanding, at the rate of 9% per annum due and payable quarterly in arrears commencing January 9, 1997. 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 January 7, 1997 between the Company and the Holder (the "Subscription Agreement"). The principal of, and interest on, this Debenture are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder hereof from time to time. The Company 1 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: 1. The Debentures are issuable in denominations of Twenty-Five Thousand Dollars (US$25,000) and integral multiples thereof. The Debentures are exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holders surrendering the same but not less than U.S. $25,000. No service charge will be made for such registration or transfer or exchange, except that transferee shall pay any tax or other governmental charges payable in connection therewith. 2. The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of the United States income tax or other applicable laws at the time of such payments. 3. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged in the U.S. only in compliance with the Securities Act of 1933, as amended (the "Act") and applicable state securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any holder of this Debenture, electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Debenture, is also required to give the Company (i) written confirmation that it is not a U.S. Person and the Debenture is not being converted on behalf of a U.S. Person ("Notice of Conversion") or (ii) an opinion of U.S. counsel to the effect that the Debenture and shares of common stock issuable upon conversion or transfer thereof have been registered under the 1933 Act or are exempt from such registration. In the event a Notice of Conversion or opinion of counsel is not provided the Holder hereof will not be entitled to exercise the right to convert or transfer the Debentures. 4. (a) The Holder of this Debenture is entitled, at its option, at any time commencing 45 days after closing of the Offering hereof, by delivery of the notice of conversion to convert all or any amount remaining of the original principal amount of this Debenture into shares of common stock, $0.08 par value per share, of the Company (the "Common Stock"), at 2 a conversion price for each share of Common Stock equal to the lower of (x) 70% of the average closing bid price of the Common Stock for the five (5) business days immediately preceding the date of receipt by the Company of notice of conversion or (y) 75% of the average of the closing bid price of the Common Stock for the five (5) business days immediately preceding the date of Subscription by the Holder accepted by the Company as reported by the National Association of Securities Dealers Automated Quotation System ("NASDAQ") (the "Conversion Price") ("Conversion Shares"). Such conversion shall be effectuated by surrendering the Debentures to be converted 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 Seller, or, if earlier, the date set forth in such notice of conversion if the Debenture is received by the Company 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 upon five days notice any or all of the Debentures after issue hereof and prior to conversion by paying to the Holder in cash 125% of the then outstanding principal balance of the Debenture plus accrued interest to such date, and shall be less any amounts required by law to be deducted or withheld. Such payment shall be made by delivering immediately available funds in United States Dollars by wire transfer to the Holder, or if no wiring instructions have been provided to the company, by cashier's or certified check to the last address of Holder appearing on the Debenture Register. The wiring of such funds or the forwarding of such check shall constitute payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such wire or check plus any amount so deducted. Such payment also to be made by the Company within 2 business days of receipt of a conversion notice by the Company from the Investor. 5. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin currency, herein prescribed. 6. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent 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. 3 7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees, which may be incurred by the Holder in converting and/or collecting any amount due under this Debenture. 8. If one or more of the following described "Events of Default" shall occur and continue for 30 days: (a) The Company shall default in the payment of principal or interest on this Debenture; or (b) Any of the representations or warranties made by the Company herein, in the Subscription Agreement, or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Debenture or the Subscription Agreement shall be false or misleading in any material respect at the time made; or (c) The Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of the Company under this Debenture [and such failure shall continue uncured for a period of thirty (30) days after notice from the Holder of such failure]; or (d) The Company shall (1) become insolvent; (2) admit in writing its liability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or (e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or (f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days thereafter; or (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 4 (h) Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within thirty (30) days after such instruction of the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; or (i) The Company shall have its Common Stock delisted from the over-the-counter market. Then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. 9. (a) This Debenture represents a general unsecured obligation of the Company. No recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. (b) The rights of any Holder to receive the principal sum or any part thereof, and to receive the interest due on this Debenture is and shall remain subordinate in priority to the payment of the principal of and interest on (i) all future obligations and guarantees of the Issuer for money borrowed from any bank, trust company, 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 5 (the "Loan Agreement") or any indebtedness incurred to refinance such obligations; (v) other indebtedness of the Corporation existing on the date of this Debenture; and (vi) trade payables incurred in the ordinary course of business of the Corporation or its subsidiaries. 10. The Holder of this Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the Shares of Common Stock issuable upon exercise thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky law or similar laws relating to the sale of securities. 11. In case any provision of this Debenture is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Debenture will not in any way be affected or impaired thereby. 12. This Debenture and the agreements referred to in this Debenture constitute the full and entire understanding and agreement between the Company and the Holder with respect to the subject hereof. Neither this Debenture nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder. 13. This Debenture shall be governed by and construed in accordance with the laws of New York. Holder hereby waives trial by jury and consents to exclusive jurisdiction and venue in the State of New York. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: , 1997 AMERICAN INTERNATIONAL PETROLEUM CORP. By:______________________________________ Denis J. Fitzpatrick, Vice President 6 EXHIBIT I "NOTICE OF CONVERSION" FOLLOWS (ONE PAGE) 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:_______________________________________________________________________ _______________________________________________________________________________ _____________________________________________________________________ * This original Debenture and Notice of Conversion must be received by the Company by the fifth business date following the Date of Conversion. EX-4 3 EXHIBIT 4.2 EXHIBIT 4.2 - ------------------------------------------------------------------------------- AMERICAN INTERNATIONAL PETROLEUM CORPORATION REGULATION S SUBSCRIPTION AGREEMENT - ------------------------------------------------------------------------------- OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of January 7, 1997 (the "Agreement"), is executed in reliance upon the exemption from registration afforded by Regulation S ("Regulation S") as promulgated by the Securities and Exchange Commission ("SEC"), under the Securities Act of 1933, as amended. Capitalized terms used herein and not defined shall have the meanings given to them in Regulation S. This Agreement has been executed by the undersigned "Buyer" in connection with the private placement of 9% Series C Convertible Subordinated Redeemable Debentures of American International Petroleum Corp., a corporation organized under the laws of the State of Nevada, with its principal executive offices located at 444 Madison Avenue, Suite 3203, New York, New York 10022 (hereinafter referred to as "Seller"). Buyer hereby represents and warrants to, and agrees with Seller: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S OF THE 1933 ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S OF THE 1933 ACT) EXCEPT PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT. 1. Agreement To Subscribe; Purchase Price. (a) SUBSCRIPTION. The undersigned Buyer hereby subscribes for and agrees to purchase the Seller's 9% Series C Convertible Subordinated Redeemable 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. $__________ (singly, a "Debenture," and collectively, the "Debentures"), at an aggregate purchase price as set forth in subsection 1(b) herein. (b) PAYMENT. The aggregate Purchase Price for the Debentures shall be ____________________ United States Dollars (U.S. $_____________) (the "Purchase Price"). Such sale and purchase shall take place upon payment of the Purchase Price for the Debenture, by cashier's check, certified check or electronic transfer of funds versus delivery of the Debenture through Buyer's counsel Sommer & Schneider LLP. 2 (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 $25,000 but all payments hereunder, in any event must be completed on or before January 7, 1997, or such earlier or later date as is mutually agreed to in writing by Buyer and Seller. 2. Buyer Representations and Covenants; Access to Information. OFFSHORE TRANSACTION. In connection with the purchase and sale of the Debentures, Buyer represents and warrants to, and covenants and agrees with Seller as follows: (i) Buyer is not a natural person and is not organized under the laws of any jurisdiction within the United States, was not formed by a U.S. Person (as defined in Section 902(o) of Regulation S) for the purpose of investing in Regulation S securities and is not otherwise a U.S. Person. Buyer is not, and on the closing date will not be, an affiliate of Seller; (ii) At the time the buy order was originated, Buyer was outside the United States and is outside of the United States as of the date of the execution and delivery of this Agreement; (iii) No offer to purchase the Debentures or the common stock of Seller issuable upon conversion of the Debentures (collectively, the "Securities"), was made by Buyer in the United States; (iv) Buyer is purchasing the Securities for its own account and Buyer is qualified to purchase the Securities under the laws of its jurisdiction of residence, and the offer and sale of the Securities will not violate the securities or other laws of such jurisdiction; (v) All offers and sales of any of the Securities by Buyer prior to the end of the Restricted Period (as hereinafter defined) shall be made in compliance with any applicable securities laws of any applicable jurisdiction and in accordance with Rule 903 and Rule 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 3 Buyer to Seller and thereafter only pursuant to a Registration Statement or an applicable exemption from the registration provisions of the 1933 Act; (vi) The transactions contemplated by this Agreement (a) have not been and will not be pre-arranged by Buyer with a purchaser located in the United States or a purchaser which is a U.S. Person, and (b) are not and will not be part of a plan or scheme by Buyer, to evade the registration provisions of the 1933 Act; (vii) Buyer understands that the Securities are not registered under the 1933 Act and are being offered and sold to it in reliance on specific exclusions from the registration requirements of Federal and State securities laws, and that Seller is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth 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 (c)(2)(iv) of Rule 901 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 4 default under, the articles of incorporation or by-laws (or similar constitutive documents) of Buyer or any indenture, mortgage, deed of trust, or other material agreement or instrument to which Buyer is a party or by which it or any of its properties or assets are bound, or any existing applicable law, rule or regulation of the United States or any State thereof or any applicable decree, judgment or order of any Federal or State court, Federal or State regulatory body, administrative agency or other United States governmental body having jurisdiction over Buyer or any of its properties or assets; (xii) All invitation, offers and sales of or in respect of, any of the Securities, by Buyer and any distribution by Buyer of any documents relating to any offer by it of any of the Securities will be in compliance with applicable laws and regulations and will be made in such a manner that no prospectus need be filed and no other filing need be made by Seller with any regulatory authority or stock exchange in any country or any political sub-division of any country; (xiii) Buyer will not make any offer or sale of the Securities by any means which would not comply with the laws and regulations of the territory in which such offer or sale takes place or to which such offer or sale is subject or which would in connection with any such offer or sale impose upon Seller any obligation to satisfy any public filing or registration requirement or provide or publish any information of any kind whatsoever or otherwise undertake or become obligated to do any act; and (xiv) Neither the Buyer nor any of its affiliates has entered, has the intention of entering, or will during the Restricted Period enter into any put option, short position or other similar instrument or position with respect to any of the Securities or securities of the same class as the Securities. (xv) The Buyer (or others for whom it is contracting hereunder) has been advised to consult its own legal and tax advisors with respect to applicable resale restrictions and applicable tax considerations and it (or others for whom it is contracting hereunder) is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions and applicable tax legislation. (xvi) NO GOVERNMENT RECOMMENDATION OR APPROVAL. Buyer understands that no Federal or State or foreign government agency has passed on or made any recommendation or endorsement of the Securities. (xvii) CURRENT PUBLIC INFORMATION. Buyer acknowledges that it and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of Seller and all materials relating to the 5 offer and sale of the Securities which have been requested by Buyer, all of which contain a legend as required under Section 10 hereof. Buyer further acknowledges that it and its advisors, if any, have received complete and satisfactory answers to such inquiries. (xviii) BUYER'S SOPHISTICATION. Buyer acknowledges that the purchase of the Securities involves a high degree of risk, including the total loss of Buyer's investment. Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of purchasing the Securities. Buyer understands that the Securities are not being registered under the 1933 Act, and therefore Buyer must bear the economic risk of this investment for an indefinite period of time. (xix) TAX STATUS. Buyer is not a "10-percent Shareholder" (as defined in Section 871(h)(3)(B) of the U.S. Internal Revenue Code) of Seller. 3. Seller Representations and Covenants. (a) REPORTING COMPANY STATUS. Seller is a "Reporting Issuer" as defined by Rule 902 of Regulation S. Seller has registered its common stock, $.08 par value per share (the "Common Stock"), pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Common Stock is listed and trades on NASDAQ NMS. 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. (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. 6 (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 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 7 having jurisdiction over Seller or any of its properties or assets. (h) APPROVALS. Seller is not aware of any authorization, approval or consent of any U.S. governmental body which is legally required for the issuance and sale of the Debentures and the Common Stock issuable upon conversion thereof to persons who are non-U.S. Persons, as contemplated by this Agreement. Seller is relying entirely upon Buyer and Distributor with respect to foreign consents and approvals. 4. Exemption; Reliance on Representations. Buyer understands that the offer and sale of the Securities are not being registered under the 1933 Act. Seller and Buyer are relying on the rules governing offers and sales made outside the United States pursuant to Regulation S. 5. Transfer Agent Instructions. (a) DEBENTURES. Upon the conversion of the Debentures, the holder thereof shall submit such Debenture together with a notice of conversion to the Seller, and Seller 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. (b) 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 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. 8 6. 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 to be delivered to the Buyer at least ten copies of the Prospectus and shall cause such registration statement to remain effective until the earlier of (i) the sale by the Buyer of all Underlying Shares registered or (ii) nine months after the effective date of such registration statement. In the event the Company undertakes to file a Registration Statement on Form S-3 in connection with the Common Stock, upon the effectiveness of such Registration, Buyer shall have the option to sell the Common Stock pursuant thereto. The foregoing shall not in any way limit Buyer's rights in connection with the Common Stock pursuant to Regulation S. 7. Delivery Instructions. The Debentures being purchased hereunder shall be delivered to the Buyer at such time and place as shall be mutually agreed by Seller and Buyer. 8. Conditions To Seller's Obligation To Sell. Seller's obligation to sell the Debentures is conditioned upon: (a) The receipt and acceptance by Seller of this Agreement as executed by Buyer. 9 (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. 9. Conditions To Buyer's Obligation To Purchase. Buyer's obligation to purchase the Debentures is conditioned upon: (a) The confirmation of receipt and acceptance by Seller of this Agreement as evidenced by execution of this Agreement by the duly authorized officer of Seller. (b) Delivery of the Debentures to the Buyer or its designated representative. 10. Offering Materials. All offering materials and documents used in connection with offers and sales of the Securities prior to the expiration of the Restricted Period referred to in Section 2(a)(v) hereof shall include statements to the effect that the Securities have not been registered under the 1933 Act or applicable state securities laws, and that neither Buyer, nor any direct or indirect purchaser of the Securities from Buyer, may directly or indirectly offer or sell the Securities in the United States or to U.S. Persons (other than distributors) unless the 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 10 or sale of the Securities, (2) in the underwriting section of any prospectus or offering circular used in connection with the offer or sale of the Securities, and (3) in any advertisement made or issued by Seller, Buyer, any other distributor, any of their respective affiliates, or any person acting on behalf of any of the foregoing. 11. No Shareholder Approval. Seller hereby agrees that from the Closing Date until the issuance of Common Stock upon the conversion of the Debentures, Seller will not take any action which would require Seller to seek shareholder approval of such issuance unless such shareholder approval is required by law or regulatory body (including but not limited to the NASDAQ Stock Market, Inc.) as a result of the issuance of the Securities hereunder. 12. Miscellaneous. (a) Except as specifically referenced herein 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 states that, other than what is set forth in the Seller's most recent reports, as amended, filed under the Exchange Act, Seller makes no further representations or warranty with respect to Seller, its finances, assets, business prospects or otherwise. Buyer will advise each purchaser, if any, and potential purchaser of the Securities, of the foregoing sentence, and that such purchaser is relying on its own investigation with respect to all such matters, and that such purchaser will be given access to any and all documents and Seller personnel as it may reasonably request for such investigation. (d) All representations and warranties contained in this Agreement by Seller and Buyer shall survive the closing of the transactions contemplated by this Agreement. 11 (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 $______________________ IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date first set forth above. Accepted this 7th day of January, 1997, as evidenced by the Parties' authorized signatures below: Official Signatory of Seller: American International Petroleum Corp. By:_________________________ Title: Vice President ---------------------- Official Signatory of Buyer: ____________________________ By:____________________________________ Title:_________________________________ Address of Buyer: _________________________________ _________________________________ _________________________________ Fax No.:_________________________ Tel No.:_________________________ 12 EX-4 4 EXHIBIT 4.3 EXHIBIT 4.3 OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT is executed in reliance upon the transaction exemption afforded by Regulation S ("Regulation S") as promulgated by the Securities and Exchange Commission ("SEC"), under the Securities Act of 1933, as amended ("1933 Act"). THIS AGREEMENT has been executed by the undersigned in connection with the private placement of shares of Common Stock (hereinafter referred to as the "Shares") of AMERICAN INTERNATIONAL PETROLEUM CORPORATION (hereinafter referred to as "AIPN") located at 444 Madison Avenue, Suite 3203, New York, New York 10022: a corporation organized under the laws of Nevada, United States of America (hereinafter referred to as "Seller" or "Company". the undersigned,_____________________________ a corporation organized under the laws of _____________________ jurisdiction (hereinafter referred to as "Purchaser"), hereby represents and warrants to, and agrees with Seller as follows: 1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE a. The undersigned hereby subscribes for ___________ Shares of Common Stock of AIPN for an aggregate amount of $____________ (US). b. Form of Payment. Purchaser shall pay the purchase price by delivering immediately available funds in United States Dollars __________________________________ _________________________________________ as Escrow Agent, by delivery of securities versus payment. 2. ACCEPTANCE OF SUBSCRIPTION a. This subscription may be accepted or rejected by the Company at its sole discretion. b. This subscription shall be deemed accepted only when this Agreement is signed by the Company in the space provided on the signature page hereof. c. If the Company receives subscriptions from multiple subscribers, it has no obligation to accept subscriptions in the order received. 3. PURCHASER REPRESENTATIONS AND WARRANTIES a. Offshore Transaction. Purchaser hereby represents and warrants to Seller as of the date hereof and as of the Closing Date as follows: (i) If the Purchaser is a corporation, it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and if the Purchaser is a partnership or other organization, it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. (ii) (a) If the Purchaser is a corporation, the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action, (b) if the Purchaser is a partnership or other organization, the other governing documents to enter into this agreement and to consummate the transactions contemplated hereby and all necessary consents and approvals required by the partnership agreement or other governing documents have been obtained, and (c) this Agreement constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally. (iii) The Purchaser did not receive any offer to purchase the Shares in the United States. This Agreement has not been executed by the Purchaser in the United States. (iv) The Purchaser is not a "U.S. person," as defined by Rule 902(o) of Regulation S (a "U.S. Person"), promulgated under the Securities Act of 1933, as amended (the "1933 Act") and as set forth in Schedule A attached hereto, and is not acquiring the Shares, directly or indirectly, for the account or benefit of any U.S. Person. (v) The Purchaser (a) has received a copy of the Disclosure Documents (as hereinafter defined) and has carefully reviewed and understands the Disclosure Documents and this Agreement and (b) understand that, except as set forth in the Disclosure Documents and in this Agreement, no representations or warranties have been made to the Purchaser by the Company or by any distributor, or by any of their officers, directors, employees, agents or affiliates, and (c) agrees that, in connections with the purchase of the Shares, it is not relying upon any information concerning the Company, other than (i) that contained in the Disclosure documents and in this Agreement and (ii) on the results of its own independent investigations. The term "Disclosure Documents" shall mean (a) the company's latest Annual report to Shareholders on Form 10- K (without exhibits), (b) the Company's Quarterly Reports on Form 10-Q and Form 8-K thereafter, and (c) copies of the Company's significant press releases issued after said Annual Reports. 2 (vi) The Purchaser understands that (a) no governmental authority has passed upon the accuracy or completeness of the Disclosure Documents or has made any finding or determination concerning the appropriateness or suitability of an investment in the Shares and (b) no governmental authority has recommended or endorsed, or will recommend or endorse, the investment in the Shares. (vii) The Purchaser is not purchasing the Shares with a view to the distribution thereof within the meaning of the 1933 Act. (vii) The Purchaser will not engage in any transaction or series of transaction that, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration requirements of the 1933 act with respect to the Shares. (ix) All subsequent offers and sales of the Shares by Purchaser shall be made in compliance with Regulation S under the Securities Act, pursuant to registration under the Securities Act or pursuant to an exemption from such registration. In any case, the Shares shall not be resold to U.S. persons or within the United States during the period of forty (40) days commencing on the date of Closing or the purchase of the Shares. (x) Purchaser understands that the Shares are being offered and sold to it in reliance of specific exemptions from the registration requirements of Federal and State securities laws and that the Seller is relying upon the truth and accuracy of the representations, warranties, agreements acknowledgements and understandings of Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of Purchaser to acquire the Shares. (xi) Purchaser agrees to indemnify and hold the Company, the Distributor, their respective officers, directors and shareholders or any other person who may be deemed to control the Company or the Distributor harmless from any loss, liability, claim, damage or expense, arising out of the inaccuracy of any of Purchaser's representations, warranties or statements or the breach of any of the agreements contained herein. 4. LIMITATION ON TRANSFER AND CERTAIN COVENANTS. a. The Purchaser acknowledges that (i) the Shares have not been registered under the 1933 Act in reliance on provisions of Rule 903 or Rule 904 of Regulation S, nor have the Shares been registered or qualified for sale under the laws of any other jurisdiction (either within or outside of the United States) and (ii) the Company has no obligations hereunder or any current intention to effect any such registration or qualification. 3 b. The Purchaser covenants and agrees that is will not sell the Shares to a U.S. Person, or for the account or benefit of a U.S. Person, prior to the expiration of a period of 40 days following the Closing date ("Restricted Period"). c. The Purchaser acknowledges that the certificates evidencing the Shares will bear the following legend: "These shares have been issued pursuant to Regulation S as an exemption to the registration provisions under the Securities Act of 1933, as amended. These shares cannot be transferred, offered or sold in the U.S. or to U.S. person (as defined in Regulation S) until after _________, 1997 (Forty-one days after issuance)." The Company covenants and agrees that following expiration of the Restricted Period it will advise the transfer agent for the Common Stock, upon the request of a recordholder of the Shares, that the foregoing legend can be removed from the certificate for the Shares. d. The Purchaser represents and warrants to the Company that, as of the date hereof and as of the closing Date, neither it nor any of its affiliates has, and covenants that during the restricted Period neither it nor any of its affiliates will establish or maintain, any short position (including any short call position or any long put position) with respect to the common Stock of the Company, and that no such person or entity is a party to, nor shall it enter into during the Restricted Period, any contract or arrangement having the effect of eliminating or substantially diminishing the risk of ownership of the Shares. 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date, that: a. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. b. The execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action and this Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' right generally. c. The execution, delivery and performance of this Agreement does and will not (i) violate any provision of the Company's Certificate of Incorporation or By-laws, (ii) violate or breach any material contract or agreement to which the Company is a party, (iii) result in the creation of any lien, security interest, charge or encumbrance on any property or 4 assets of the Company, or (iv) require the authorization, consent or approval of any court or any administrative or governmental body pursuant to any law, statute, rule or regulation to which the Company is subject to any order, judgment or decree by which the Company is bound. d. When issued in accordance with the terms of this Agreement, the Shares: (i) except for the Regulation S legend provided in this Agreement, will be free and clear of any restrictions, liens, claims or other encumbrances by the Company (other than those that may arise by reason of any action or inaction of the Purchaser); (ii) will be duly authorized, validly issued, fully paid an nonassessable; (iii) will not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Company; and (iv) will not subject the holders thereof to personal liability to the Company solely by reason of their ownership of such Shares. e. The Company is a "Reporting Issuer" as defined by Rule 901(1) of Regulation S. The Company is in full compliance, to the extent applicable, with all reporting obligations under either Section 12(b), 12(g) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Common Stock trades on NASDAQ National Market System and its trading symbol is "AIPN"". f. Seller has not offered the securities which are the subject of this transaction to any person in the United States, any identifiable groups of U.S. citizens abroad, or to any U.S. person as that term is defined in Regulation S. g. At the time the buy order was originated, Seller and/or its agents reasonably believed Purchaser was outside of the United States and was not a U.S. person. h. Seller and/or its agents reasonably believe that the transaction has not been pre- arranged with a buyer in the United States. i. In regard to this transaction, Seller has not conducted any "direct 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 the securities which are the subject of this transaction to person resident within the United States or elsewhere. Each of the foregoing representations and warranties shall survive the Closing. 5 6. REMEDIES. In the event of a breach by the Purchaser of any of the representations, warranties or covenants contained in this Agreement, and without limitation of any other remedy available to the Company at law or in equity, the Company shall have the right and the option to rescind the sale of the Shares to the Purchaser. In such case, the amount payable to the Purchaser upon rescission will be the aggregate Purchase Price, less all expenses, costs and damages incurred by the Company, and whereupon the Company shall have no further liability or obligation to the Purchaser under this agreement or otherwise. 7. ASSIGNABILITY. Neither this Agreement, nor the rights or obligations of either party hereunder, may be transferred or assigned without the prior written consent of the other party (which may be withheld for any reason in the sole discretion of the party required to provide such consent) and any purported transfer or assignment not so consented to shall be void. This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 8. ENTIRE AGREEMENTS. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter of hereof, and there are no representations, warranties, covenants or other agreements of either party except as stated herein. 9. AMENDMENTS. No provision of this Agreement shall be waived, discharged or amended, except by an instrument in writing signed by the party against whom any such waiver, modification, discharge or amendment is sought. 10. WAIVERS. No waiver by either party of any default with respect to any provision, condition or requirements of this Agreement shall be deemed to be a waiver of any future default with respect to the same provision, condition or requirement, or a waiver of any other provision, condition or requirement hereof. No delay or omission of either party to exercise any right hereunder shall in any manner impair the exercise of such right at any future time. 11. APPLICABLE LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of New York without regard to the conflicts of laws principles thereof. 6 12. SEVERABILITY. Each provision of this Agreement shall be considered severable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, or contrary to existing or future applicable law, such invalidity shall not impair the operation of or affect those provisions of this Agreement which are valid. In such case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable law, and in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provision. 13. FAX SIGNATURES AND COUNTERPARTS. This Agreement may be executed in any number of counterparts, including counterparts transmitted by telecopier or FAX, any one of which shall constitute an original of this Agreement. When counterparts of facsimile copies have been executed by all parties, they shall have the same effect as the signature to each counterpart or copy were upon the same documents and copies of such documents shall be deemed valid as originals. The parties agree that all such signatures amy be transferred to a single document upon the request of any party. 14. NOTICES Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery or delivery by telecopy or facsimile at the address or number designated below (if delivery on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: If to the Company: American International Petroleum Corporation 444 Madison Avenue, Suite 3203 New York, NY 10022 If to the Purchaser, as set forth on the signature page hereof. Either party hereto may from time to time change its address for notices under this Section 15 by giving at least 10 days written notice of such changed address to the other party hereto. 7 15. HEADINGS. The headings herein are for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect the interpretation of any of the provisions hereof. 16. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns, and is not for the benefit of, nor may any provisions hereof be enforced by, any other person. 17. FEES AND EXPENSES. Each party shall pay for the fees and expenses of its own advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution and delivery and performance of this Agreement. 18. CONSENT TO JURISDICTION. Each of the Company and the Purchaser (i) hereby irrevocably submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York of any New York State Court sitting in New York City for the purposes of any suit, action or proceeding rising out of or relating to this Agreement and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Purchaser consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in the paragraph shall affect or limit any right to serve process in any other manner permitted by law. 8 IN WITNESS WHEREOF, the undersigned has caused this Offshore Securities Subscription Agreement to be executed by a duly authorized officer: ________________________________________ Name of Purchaser (Please Print or Type) By:_____________________________ NAME: TITLE Date:___________________ ________________________ ________________________ ________________________ Business Address ________________________ ____________________ Telephone Number Facsimile Number ACCEPTED: AMERICAN INTERNATIONAL PETROLEUM CORPORATION By:____________________________________ NAME: TITLE: 9 SCHEDULE A CATEGORIES OF U.S. PERSONS 1.) Any natural person resident in the United States; 2.) Any partnership or corporation organized or incorporated under the laws of the United States; 3.) Any estate of which any executor or administrator is a U.S. person; 4.) Any trust of which any trustee is a U.S. person; 5.) Any agency or branch of a foreign entity located in the U.S.; 6.) Any non-discretionary account or similar account (other than estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; 7.) Any partnership or corporation if; (A) organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a U.S. person principally for the purpose of investment in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501[a]) who are not natural persons, estates or trusts. 8.) Any employee benefit plan established and administered in accordance with the law of a country other than the United States and customary practices and documentation of such country shall not be deemed a U.S. person. 9.) Any agency or branch of a U.S. person located outside the United States shall not be deemed a "U.S. person" if: the agency or branch operates for valid business reasons; and the agency or branch is engaged in the business of insurance or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located. 10.) The International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United States, and their agencies, affiliates and pension plans, and any other similar international organizations, their agencies, affiliates and pension plans shall not be deemed "U.S. person." 10 -----END PRIVACY-ENHANCED MESSAGE-----