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Exhibit 10.1

 

NEW JERSEY MINING COmpany

CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT

 

THIS CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT (the "Agreement") is made as
of February __, 2020 (the "Effective Date") by and among New Jersey Mining
Company, an Idaho corporation (the "Company"), and the persons and entities
named on the Schedule of Purchasers attached hereto (individually, a "Purchaser"
and collectively, the "Purchasers").

RECITAL

To provide the Company with financing for its acquisition of the Ward Land-East
(as defined in Section 3.8 below), the Purchasers are willing to loan to the
Company in one or more disbursements up to an aggregate amount of Eight Hundred
Eighty Five Thousand and 00/100 Dollars ($885,000.00), subject to the terms and
conditions specified herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, the Company and each
Purchaser, intending to be legally bound, hereby agree as follows:

1.AMOUNT AND TERMS OF THE LOAN. 

1.1The Loan.  Subject to the terms of this Agreement, each Purchaser agrees to
lend to the Company at the Closing (as hereinafter defined) the amount set forth
opposite such Purchaser's name on the Schedule of Purchasers attached to this
Agreement (each, a "Loan Amount") against the issuance and delivery by the
Company of a convertible promissory note for such amount, in substantially the
form attached hereto as EXHIBIT A (each, a "Note" and collectively, the
"Notes").  The aggregate principal amount to be loaned to the Company under the
Notes is Eight Hundred Eighty-Five Thousand and 00/100 Dollars ($885,000.00).  

1.2Purpose of Loan.  The primary purpose of the loan is to allow the Company to
acquire approximately 368 acres of real property located in Shoshone County,
Idaho, including the patented mining claims (with both surface and mineral
rights) relating to said real property (the "Ward Land-East"). Loan proceeds in
excess of the purchase price for the Ward Land-East will be used by the Company
as working capital to benefit the Ward Land-East or to acquire additional real
property.    

1.3Security. Payment and performance of the Notes will be secured by a single
real estate mortgage in substantially the form attached hereto as EXHIBIT B (the
"Security Instrument").  The Security Instrument will encumber Ward Land-East
and other unencumbered real property currently owned by the Company also located
in Shoshone County, Idaho).  Each Purchaser will be a mortgagee under the
Security Instrument.  The Purchasers holding Notes with an aggregate unpaid
principal balance that exceeds fifty percent (50%) of the outstanding principal
balances of all Notes shall appoint one Purchaser to act as the agent under  

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the Security Interest (the "Agent") to take such actions as Agent deems
appropriate, and to exercise such powers as are delegated to Agent by the terms
of, and pursuant to, the Security Instrument and together with such powers as
are incidental thereto.

2.Closing and Delivery. 

2.1Closing.  The closing of the sale and purchase of the Notes (the "Closing")
shall be held on the Effective Date, or at such other time as the Company and
Purchasers may mutually agree (such date is hereinafter referred to as the
"Closing Date"). 

2.2Subsequent Sales of Notes.  At any time on or before the thirtieth (30th) day
following the Closing, the Company may sell Notes representing up to the balance
of the authorized principal amount not sold at the Closing (the "Additional
Purchasers").  All such sales made at any additional closings (each an
"Additional Closing") shall be made on the terms and conditions set forth in
this Agreement and (i) the representations and warranties of the Company set
forth in Section 3 hereof shall speak as of the Closing and the Company shall
have no obligation to update any disclosure related thereto, and (ii) the
representations and warranties of the Additional Purchasers in Section 4 hereof
shall speak as of such Additional Closing.  This Agreement, including without
limitation, the Schedule of Purchasers, may be amended by the Company without
the consent of Purchasers to include any Additional Purchasers upon the
execution by such Additional Purchasers of a counterpart signature page hereto.
 Any Notes sold pursuant to this Section 2.2 shall be deemed to be "Notes," for
all purposes under this Agreement and any Additional Purchasers thereof shall be
deemed to be "Purchasers" for all purposes under this Agreement. 

2.3Delivery.  At the Closing and each Additional Closing (i) each Purchaser
shall deliver to the Company a check or wire transfer funds in the amount of
such Purchaser's Loan Amount; and (ii) the Company shall issue and deliver to
each Purchaser a Note in favor of such Purchaser payable in the principal amount
of such Purchaser's Loan Amount. 

3.REPRESENTATIONS, WARRANTIES OF THE COMPANY. 

The Company hereby represents and warrants to each Purchaser as of the Closing
as follows:

3.1Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Idaho.  The Company has the requisite corporate power to own and
operate its properties and assets and to carry on its business as now conducted
and as proposed to be conducted.  The Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business. 

3.2Corporate Power.  The Company has all requisite corporate power to execute
and deliver this Agreement, to issue each Note and to execute and deliver the
Security Instrument (collectively, the "Loan Documents") and to carry out and
perform its obligations under the terms of the Loan Documents.   

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3.3Authorization.  All corporate action on the part of the Company, its
directors and its shareholders necessary for the authorization of the Loan
Documents and the execution, delivery and performance of all obligations of the
Company under the Loan Documents, including the issuance and delivery of the
Notes and the reservation of the equity securities issuable upon conversion of
the Notes (collectively, the "Conversion Securities") has been taken or will be
taken prior to the issuance of such Conversion Securities.  The Loan Documents,
when executed and delivered by the Company, shall constitute valid and binding
obligations of the Company enforceable in accordance with their terms, subject
to laws of general application relating to bankruptcy, insolvency, the relief of
debtors and, with respect to rights to indemnity, subject to federal and state
securities laws.  The Conversion Securities, when issued in compliance with the
provisions of the Loan Documents will be validly issued, fully paid and
nonassessable and free of any liens or encumbrances and issued in compliance
with all applicable federal and securities laws. 

3.4Governmental Consents.  All consents, approvals, orders, or authorizations
of, or registrations, qualifications, designations, declarations, or filings
with, any governmental authority, required on the part of the Company in
connection with the valid execution and delivery of this Agreement, the offer,
sale or issuance of the Notes and the Conversion Securities issuable upon
conversion of the Notes or the consummation of any other transaction
contemplated hereby shall have been obtained and will be effective at such time
as required by such governmental authority.  

3.5Compliance with Laws.  To its knowledge, the Company is not in violation of
any applicable statute, rule, regulation, order or restriction of any domestic
or foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties, which violation
would materially and adversely affect the business, assets, liabilities,
financial condition or operations of the Company.   

3.6Compliance with Other Instruments.  The Company is not in violation or
default of any term of its articles of incorporation or bylaws, or of any
provision of any mortgage, indenture or contract to which it is a party and by
which it is bound or of any judgment, decree, order or writ, other than such
violations that would not individually or in the aggregate have a material
adverse effect on the Company. The execution, delivery and performance of the
Loan Documents, and the consummation of the transactions contemplated by the
Loan Documents will not result in any such violation or be in conflict with, or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, decree, order or writ or
an event that results in the creation of any lien, charge or encumbrance upon
any assets of the Company or the suspension, revocation, impairment, forfeiture,
or nonrenewal of any material permit, license, authorization or approval
applicable to the Company, its business or operations or any of its assets or
properties.  The sale of the Notes and the subsequent issuance of the Conversion
Securities are not and will not be subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with. 

3.7Offering.  Assuming the accuracy of the representations and warranties of the
Purchasers contained in Section 4 hereof, the offer, issue, and sale of the
Notes and the Conversion Securities (collectively, the "Securities") are and
will be exempt from the  

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registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Act"), and have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit, or
qualification requirements of all applicable state securities laws.

3.8Use of Proceeds.  The Company shall use the proceeds of sale and issuance of
the Notes for the acquisition of approximately 368 acres of patented mining
claims with both surface and mineral rights, commonly known as the "Ward
Land-East", which real property is legally described in the Security Instrument.
 The proceeds of sale and issuance of the Notes in excess of the purchase price
for the Ward Land-East shall be used by the Company as working capital to
benefit the Ward Land-East or to acquire additional real property.    

4.REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. 

4.1Purchase for Own Account.  Each Purchaser represents that it is acquiring the
Securities solely for its own account and beneficial interest for investment and
not for sale or with a view to distribution of the Securities or any part
thereof, has no present intention of selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing the
same, and does not presently have reason to anticipate a change in such
intention. 

4.2Information and Sophistication.  Without lessening or obviating the
representations and warranties of the Company set forth in Section 3, each
Purchaser hereby: (i) acknowledges that it has received all the information it
has requested from the Company and it considers necessary or appropriate for
deciding whether to acquire the Securities, (ii) represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities and to obtain any
additional information necessary to verify the accuracy of the information given
the Purchaser and (iii) further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment. 

4.3Ability to Bear Economic Risk.  Each Purchaser acknowledges that investment
in the Securities involves a high degree of risk, and represents that it is
able, without materially impairing its financial condition, to hold the
Securities for an indefinite period of time and to suffer a complete loss of its
investment. 

4.4Further Limitations on Disposition.  Without in any way limiting the
representations set forth above, each Purchaser further agrees not to make any
disposition of all or any portion of the Securities unless and until: 

(a)There is then in effect a Registration Statement under the Act covering such
proposed disposition and such disposition is made in accordance with such
Registration Statement; or 

(b)The Purchaser shall have notified the Company of the proposed disposition and
shall have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and if reasonably requested by the
Company, such Purchaser shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require registration under the Act or any  

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applicable state securities laws, provided that no such opinion shall be
required for dispositions in compliance with Rule 144, except in unusual
circumstances.

(c)Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by such Purchaser to a partner (or retired partner) or member (or retired
member) of such Purchaser in accordance with partnership or limited liability
company interests, or transfers by gift, will or intestate succession to any
spouse or lineal descendants or ancestors, if all transferees agree in writing
to be subject to the terms hereof to the same extent as if they were Purchasers
hereunder. 

4.5Accredited Investor Status.  The information in the Confidential Investor
Questionnaire attached hereto in EXHIBIT C is accurate and true in all respects,
and the Purchaser is an "accredited investor" as such term is defined in Rule
501 under the Act. 

4.6Legends.  The Purchaser understands that the Conversion Securities issuable
upon conversion of the Notes may be notated with one or all of the following
legends: 

(a)"THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE
COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS." 

(b)Any legend set forth in, or required by, the other Loan Documents. 

(c)Any legend required by the securities laws of any state to the extent such
laws are applicable to the Shares represented by the certificate, instrument, or
book-entry so legended. 

5.FURTHER AGREEMENTS. 

5.1"Market Stand-Off" Agreement.  Each Purchaser agrees that such Purchaser
shall not sell, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any Common Stock (or other securities) of the Company
held by such Purchaser (other than those included in the registration) during
the one hundred eighty (180) day period following the effective date of the
Company's first firm commitment underwritten public offering of its Common Stock
registered under the Securities Act (or such longer period as the underwriters
or the Company shall request in order to facilitate compliance with FINRA Rule
2711 or NYSE Member Rule 472 or any successor or similar rule or regulation),
provided that all officers and directors of the Company are bound by and have
entered into similar agreements.  Each Purchaser agrees to execute and deliver
such other agreements as may be reasonably requested by the Company or the  

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underwriters that are consistent with the Purchaser's obligations under Section
5.1 or that are necessary to give further effect to this Section 5.1.  In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, each Purchaser shall
provide, within ten (10) days of such request, such information as may be
required by the Company or such representative in connection with the completion
of any public offering of the Company's securities pursuant to a registration
statement filed under the Act.  The obligations described in this Section 5.1
shall not apply to a registration relating solely to employee benefit plans on
Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or
a registration relating solely to a transaction on Form S-4 or similar forms
that may be promulgated in the future.

5.2Further Assurances.  Each Purchaser agrees and covenants that at any time and
from time to time it will promptly execute and deliver to the Company such
further instruments and documents and take such further action as the Company
may reasonably require in order to carry out the full intent and purpose of this
Agreement and to comply with state or federal securities laws or other
regulatory approvals. 

6.MISCELLANEOUS. 

6.1Binding Agreement.  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.  Nothing in this Agreement, expressed or implied, is intended to confer
upon any third party any rights, remedies, obligations, or liabilities under or
by reason of this Agreement, except as expressly provided in this Agreement. 

6.2Governing Law.  This Agreement shall be governed by and construed under the
laws of the state of Idaho as applied to agreements among Idaho residents, made
and to be performed entirely within the state of Idaho, without giving effect to
conflicts of laws principles. 

6.3Counterparts.  This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf or any electronic
signature complying with the U.S. federal ESIGN Act of 2000, e.g.,
www.docusign.com) or other transmission method and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and
effective for all purposes.  

6.4Titles and Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. 

6.5Notices.  All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) three (3) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.  All communications shall be sent to the
Company at the address on the signature page below, and to Purchaser at the
addresses set forth on the Schedule of Purchasers attached hereto  

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or at such other addresses as the Company or Purchaser may designate by ten (10)
days advance written notice to the other parties hereto.

6.6Modification; Waiver.  No modification or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective only upon the
written consent of the Company and the holders of the Notes representing a
majority of the aggregate principal amount of all Notes then outstanding (the
"Requisite Holders").  Any provision of the Notes may be amended or waived by
the written consent of the Company and the Requisite Holders. 

6.7Expenses.  The Company and each Purchaser shall each bear its respective
expenses and legal fees incurred with respect to this Agreement and the
transactions contemplated herein. 

6.8Delays or Omissions.  It is agreed that no delay or omission to exercise any
right, power or remedy accruing to each Purchaser, upon any breach or default of
the Company under the Loan Documents shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach or default,
or any acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring.  It is further agreed that any waiver, permit, consent or approval of
any kind or character by Purchaser of any breach or default under this
Agreement, or any waiver by any Purchaser of any provisions or conditions of
this Agreement must be in writing and shall be effective only to the extent
specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to the Purchaser, shall be cumulative
and not alternative. 

6.9Purchaser's Finder’s Fees. Each Purchaser agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finder’s or broker’s fee arising out of this transaction (and
the costs and expenses of defending against such liability or asserted
liability) for which such Purchaser or any of its officers, employees or
representatives is responsible. 

6.10Attorneys’ Fees. If any action at law or in equity (including, arbitration)
is necessary to enforce or interpret the terms of any of the Transaction
Agreements, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled. 

6.11Entire Agreement.  This Agreement and the Exhibits hereto constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and no party shall be liable or bound to any other party in
any manner by any representations, warranties, covenants and agreements except
as specifically set forth herein. 

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this CONVERTIBLE PROMISSORY NOTE
PURCHASE AGREEMENT as of the date first written above.

 

COMPANY:

 

NEW JERSEY MINING COMPANY

 

 

By: 

Name: 

Title: 

Address:

New Jersey Mining Company

Attn: John Swallow

201 N.  3rd Street

Coeur d'Alene, Idaho 83814

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{S1942939; 9 }

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IN WITNESS WHEREOF, the parties have executed this CONVERTIBLE PROMISSORY NOTE
PURCHASE AGREEMENT as of the date first written above.

 

PURCHASER:

 

 

 

(Entity name, if applicable)

 

 

By: 

Name: 

Title: 

 

Address:

 

 

 

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{S1942939; 9 }

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SCHEDULE OF PURCHASERS

 

Name and Address

Loan Amount

 

 

 

 

 

 

 

 

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{S1942939; 9 }

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EXHIBIT A

FORM OF CONVERTIBLE PROMISSORY NOTE

 

PLEASE SEE ATTACHED.

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EXHIBIT B

FORM OF SECURITY INSTRUMENT

(REAL ESTATE MORTGAGE)

 

PLEASE SEE ATTACHED.

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EXHIBIT C

CONFIDENTIAL INVESTOR QUESTIONNAIRE

 

 

Investor Information

Name of Investor/Purchaser (Print):

 

 

Name of Joint Investor (if any) (Print):

Signature (and title, if applicable) of Investor:

 

 

Signature (and title, if applicable) of Joint Investor (if any):

 

Social Security or Tax Identification Number of Investor:

Social Security or Tax Identification of Joint Investor (if any):

Mailing Address:

 

 

 

Residence Address (if other than mailing address):

 

Telephone and Facsimile Numbers (including Area Code):

Email addresses:

Accreditation:

The investor and any joint investor each represents and warrants that it is an
accredited investor pursuant to one or more of the following categories (mark
applicable categories):

 

o  a.

A director or executive officer of New Jersey Mining Company (the "Company").

o  b.

A natural person whose individual net worth (total tangible assets as currently
valued, less total liabilities) or joint net worth with spouse at time of
purchase exceeds $1,000,000.  

For these purposes, "total tangible assets" excludes the individual's primary
residence.   

For these purposes, "total liabilities" excludes any related indebtedness
secured by the primary residence up to its fair market value but includes the
amount of any such indebtedness in excess of that value.  If the amount of debt
secured by the primary residence increased in the 60 days preceding the
accredited investor determination, other than in connection with the acquisition
of the residence, the amount of such increase must be included as a liability. 

o  c.

A natural person who had an individual income in excess of $200,000 in each of
two most recent years, or joint income with spouse in excess of $300,000 in each
of those years, and has a reasonable expectation of reaching same level of
income in current year.

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o  d.

A corporation, limited liability company, partnership, tax-exempt organization
(under Section 501(c)(3) of Internal Revenue Code of 1986, as amended) or
Massachusetts or similar business trust (i) not formed for specific purpose of
acquiring Securities and (ii) having total assets in excess of $5,000,000.

o  e.

An entity which falls within one of following categories of institutional
accredited investors, set forth in 501(a) of Regulation D under Securities Act
of 1933, as amended ("Securities Act") [if you have marked this category, also
mark which of following items describes the entity:]

 

o 1.

A bank as defined in Section 3(a)(2) of Securities Act, or any savings and loan
association or other institution as defined in Section 3(a)(5)(A) of Securities
Act whether acting in its individual or a fiduciary capacity.

 

o 2.

A broker/dealer registered pursuant to Section 15 of Securities Exchange Act of
1934.

 

o 3.

An insurance company as defined in Section 2(13) of Securities Act.

 

o 4.

An investment company registered under Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that act.

 

o 5.

A Small Business Investment Company licensed by U.S. Small Business
Administration under Section 301(c) or (d) of Small Business Investment Act of
1958.

 

o 6.

Any plan established and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political subdivisions for
benefit of its employees, if such plan has total assets in excess of $5,000,000.

 

o 7.

Any private business development company as defined in Section 202(a)(22) of
Investment Advisers Act of 1940.

 

o 8.

An employee benefit plan within meaning of Employee Retirement Income Security
Act of 1974, if investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such act, which is either a bank, savings and loan association,
insurance company or registered investment adviser, or if 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.

 

o 9.

A trust, with total assets in excess of $5,000,000, not formed for specific
purpose of acquiring Securities offered, whose purchase is directed by
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

o  f.

An entity in which all equity owners are accredited investors.

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