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EXHIBIT 4.1
HIE, INC.
REVISED SUBSCRIPTION AGREEMENT
SUBSCRIBER:
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SECURITIES SUBSCRIBED FOR: _____ Shares of 8.5% Series B Cumulative
Convertible Exchangeable Preferred Stock,
no par value
AGGREGATE PURCHASE PRICE: $
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THE SECURITIES ISSUED HEREUNDER HAVE NOT BEEN REGISTERED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY OTHER SECURITIES AUTHORITIES IN ANY COUNTRY. THEY
ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION D
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF THOSE SECURITIES LAWS.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES DESCRIBED HEREIN BY OR TO
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY U.S. OR OTHER
SECURITIES AUTHORITIES, NOR HAVE SUCH AUTHORITIES REVIEWED OR DETERMINED THE
ACCURACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SUBSCRIPTION OF THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. INVESTORS
MUST RELY ON THEIR OWN ANALYSIS OF THE SUBSCRIPTION AND ASSESSMENT OF THE
BUSINESS, TAX, AND OTHER RISKS INVOLVED.
SUBSCRIPTION AGREEMENT, dated as of ___________, 1999 (the
"Agreement"), by and between HIE, Inc., a Georgia corporation (the "Company"),
and ________________ [NAME OF INVESTOR], a ___________________ [STATE WHETHER AN
INDIVIDUAL OR ENTITY, AND IF ENTITY, PLEASE DESCRIBE] (the "Investor").
W I T N E S S E T H:
The Company desires to sell, and the Investor desires to buy, an
aggregate of __________ shares (the "Shares") of the Company's 8.5% Series B
Cumulative Convertible Exchangeable
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Preferred Stock, no par value (the "Series B Preferred Stock"), at a purchase
price of $10.00 per Share.
The Company is described in its Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, its Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999, its Proxy Statement for its 1999 Annual Meeting of
Shareholders, and its Confidential Private Placement Memorandum and exhibits
thereto dated August 14, 1999, as supplemented and amended on September 14, 1999
(as so supplemented and amended, the "Memorandum") (collectively, the
"Disclosure Documents"), each of which has been provided to the Investor.
NOW, THEREFORE, the parties hereto agree as follows:
1. Subscription.
(a) Subject to the terms and conditions of this Agreement, the
Investor agrees to subscribe, and the Company agrees to issue to the Investor,
the number of shares of Series B Preferred Stock as set forth above. The Series
B Preferred Stock, the shares of the Company's common stock, par value $.01 per
share, together with associated preferred stock purchase rights (the "Common
Stock"), into which it may be converted, and the subordinated notes for which it
may be exchanged (the "Convertible Debentures") are sometimes referred to
collectively herein as the "Securities".
(b) The Investor agrees to deliver to American Fronteer Financial
Corporation, as placement agent ("AFFC"), (i) $_________ , representing the
aggregate purchase price of the Shares (the "Purchase Price"), by wire transfer
or by the Investor's check and (ii) a completed and duly executed Accredited
Investor Questionnaire, in the form attached to the Memorandum. Funds shall be
deposited in escrow and shall be released only upon satisfactory evidence of
completion of all conditions referred to herein.
(c) The minimum purchase for any Investor is 2,500 Shares.
(d) The Investor hereby acknowledges and agrees that this Agreement
is irrevocable and that, except as provided under applicable state securities
laws, the Investor is not entitled to cancel, terminate, or revoke this
Agreement, and this Agreement shall survive the death or disability of the
Investor and shall be binding upon and inure to the benefit of the Investor's
heirs, executors, administrators, successors, legal representatives, and
assigns. If the Investor is more than one person, the obligations of such
Investors hereunder shall be joint and several, and the agreements,
representations, warranties, and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and each such person's
heirs, executors, administrators, successors, legal representatives, and
assigns.
(e) The Investor acknowledges that this subscription shall not be
effective until accepted by the Company. The Investor hereby confirms that the
Company has full right in its sole discretion to accept or reject the
subscription of the Investor, provided that, if the Company decides to reject
such subscription, the Company must do so promptly and in writing.
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In the case of a rejection, any payments and copies of all executed subscription
documents (including this Agreement) will be promptly returned to the Investor
(without interest).
2. Closing. The closing (the "Closing") of the purchase and sale of the
Shares subscribed for hereby (the "Offering") shall occur on or about September
24, 1999 or, if AFFC elects in its sole discretion, and gives two days prior
written notice to the Company, such earlier date on which the closing conditions
specified in Sections 10 and 11 of this Agreement shall have been satisfied or
waived, or, if the subscription period is extended as set forth below, such
later date as shall be mutually agreed to by the Company and the placement agent
(any such date, the "Closing Date"). At the Closing, the Company will deliver to
the Investor: (a) one executed copy of this Agreement; (b) a stock certificate
representing the Investor's ownership of the Shares subscribed for hereby; and
(c) such other certificates, instruments, and documents as are otherwise set
forth herein or contemplated hereby.
3. Expiration of the Subscription Period.
(a) The subscription period will expire on September 22, 1999, unless
(i) the Company elects, in its sole discretion, to terminate the Offering
earlier, (ii) AFFC elects an earlier Closing Date as set forth in Section 2, or
(iii) extended by mutual agreement of the Company and AFFC for an additional
period not to exceed five calendar days from September 22, 1999 (each an
"Expiration Date").
(b) If the Offering is terminated by the Company pursuant to Section
3(a)(i) or if the closing conditions specified in Sections 10 and 11 of this
Agreement are not satisfied by the applicable Expiration Date, the Offering will
be terminated and the Company will not issue the Shares, the Company will not be
entitled to payment of the Purchase Price for the Shares, and all escrowed funds
representing the Purchase Price will be returned to the Investor[s] without
interest.
4. Placement Agent. The Series B Preferred Stock is being offered and
sold by the Company with the assistance of AFFC acting as the exclusive
placement agent. As a part of its fees for such services, AFFC will receive
substantial compensation in the form of cash.
5. Representations and Warranties by the Investor. The Investor hereby
represents and warrants to the Company that:
(a) It is an "accredited investor" as that term is defined in Rule
501(a) under the Act.
(b) The information contained in the Investor's Accredited Investor
Questionnaire is true and complete.
(c) It has received and read the Disclosure Documents and has
evaluated the risks of investing in the Company.
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(d) It has been given the opportunity to ask questions of, and
receive answers from, the Company concerning the terms and conditions of the
Offering, and to obtain additional information necessary to verify the accuracy
of the information contained in the Disclosure Documents or such other
information as it desired in order to evaluate its investment in the Shares.
(e) In making the decision to purchase the Shares herein subscribed
for, it has relied solely upon the Disclosure Documents, the representations,
warranties, agreements, undertakings, and acknowledgments of the Company in this
Agreement and independent investigations made by such Investor.
(f) It understands that an investment in the Company involves
certain risks and the Investor has taken full cognizance of and understands such
risks, including those set forth in the Disclosure Documents, the Risk Factors
section of the Memorandum, and the footnotes to the Company's financial
statements in its 10-K and 10-Q.
(g) It understands that none of the Securities has been registered
under the Act, and agrees that none of the Securities may be sold, offered for
sale, transferred, pledged, hypothecated, or otherwise disposed of except in
compliance with the Act and subject to the terms of this Agreement.
(h) It understands that no federal or state agency has made any
finding or determination as to the fairness of the investment in, or any
recommendation or endorsement of, the Shares.
(i) The Securities herein subscribed for are being acquired by the
Investor in good faith solely for the account of the Investor, for investment
purposes, and not with a view of subdivision, distribution, or resale.
(j) The Investor understands that the Securities are "restricted
securities" within the meaning of the Act, and certificates representing the
Securities are legended with certain restrictions on the resale of the
Securities and that the Securities may not be resold without a valid exemption
from registration under the Act, or until a registration statement is filed with
respect thereto under the Act. Accordingly, the Investor is aware that there are
legal and practical limits on its ability to sell or dispose of the Securities,
and therefore that the Investor must bear the economic risk of the investment
for an indefinite period of time. The Investor has adequate means of providing
for the Investor's current needs and possible personal contingencies and has
need for only limited liquidity of this investment. The Investor's commitment to
illiquid investments is reasonable in relation to the Investor's net worth.
(k) If the Investor is not a natural person, that (i) the individual
executing this Agreement has appropriate authority to act on behalf of the
Investor and (ii) the Investor is not an Investment Company, as defined under
the Investment Company Act of 1940, as amended. If the Investor is a natural
person, that he is a citizen of the United States of America, is at least 21
years old, and has the mental capacity to execute, deliver, and perform this
Agreement. This Agreement has been duly executed and delivered by and on behalf
of the Investor and constitutes
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the valid and binding agreement of the Investor enforceable against the Investor
in accordance with its terms.
(l) The Investor has not distributed the Memorandum to any person,
other than his investor representative or advisors, and no person other than the
Investor and his investor representative or advisors have used the Memorandum.
(m) The Investor certifies that (i) the social security or Federal
taxpayer identification number shown on the signature page of this Agreement is
true and complete and (ii) the Investor is not subject to backup withholding
either because the Investor has not been notified that he is subject to backup
withholding as a result of a failure to report all interest or dividends, or the
Internal Revenue Service has notified the Investor that he is no longer subject
to backup withholding.
(n) The Investor understands that the Securities are being
offered and sold hereby in reliance on specific exemptions from the registration
requirements of the Act and that the Company is relying on the foregoing
representations, warranties, agreements, undertakings, and acknowledgments in
determining the availability of such exemptions and the Investor's suitability
as the purchaser of the Securities.
6. Representations and Warranties of the Company. The Company
represents and warrants to the Investor that:
(a) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Georgia, with
requisite power and authority to own its properties and conduct its business as
described in the Disclosure Documents, and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the business conducted by it or the nature of the properties owned
or leased by it makes such qualification necessary for the conduct of its
business as described in the Disclosure Documents, except where the failure to
be so qualified would not have a material adverse effect on the Company.
(b) The Company has all requisite power and authority to issue,
sell, and deliver the Shares in accordance with and upon the terms and
conditions set forth in this Agreement; and all corporate action required to be
taken by the Company for the due and proper authorization, issuance, sale, and
delivery of the Shares has been validly and sufficiently taken. The shares of
Common Stock issuable upon conversion of the Series B Preferred Stock when
issued in accordance with its terms will be duly authorized, validly issued,
fully paid, and nonassessable.
(c) The Company is not in violation of any provision of its Articles
of Incorporation or Bylaws or in default in the performance of any material
obligation contained in any material agreement, indenture, or other instrument.
The performance by the Company of its obligations under this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach of the Articles of Incorporation or Bylaws of the Company, or
any material agreement, indenture, or other instrument to which the Company is a
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party or by which it is bound, or (assuming the accuracy of the Investor's
representations and warranties herein) any law, rule, administrative regulation,
or decree of any court or governmental authority having jurisdiction over the
Company or its properties, or result in the creation or imposition of any
material lien, charge, claim, or encumbrance upon any property or asset of the
Company. Except as required by the Act and applicable state securities or blue
sky laws and except for the filing of the Amended and Restated Articles of
Incorporation with the Secretary of State of the State of Georgia, no consent,
approval, authorization, or order of any court or governmental authority is
required in connection with the consummation of the transactions contemplated by
this Agreement. The rights granted to the Investor hereunder do not in any way
conflict with and are not inconsistent with any rights granted to the holders of
the Company's securities or debt instruments.
(d) The Common Stock and the Convertible Debentures issuable
upon conversion or exchange of the Series B Preferred Stock, as the case may be,
upon such issuance, will conform to the description thereof contained in the
Disclosure Documents. Except as described in the Disclosure Documents, there are
no preemptive rights or other rights to subscribe for or to purchase, or any
restrictions upon the voting or transfer of, any shares of Common Stock pursuant
to the Company's Articles of Incorporation or Bylaws or any agreement or other
instrument to which the Company is a party. Except as set forth in the
Memorandum, neither the Offering nor the sale of the Shares as contemplated in
this Agreement gives rise to any rights for or relating to the registration of
any of the Securities.
(e) The Company has full right, power, and authority to enter into
this Agreement and this Agreement has been duly authorized, executed, and
delivered by the Company and (assuming the accuracy of the Investor's
representations and warranties herein) constitutes the legal, valid, and binding
agreement of the Company enforceable against the Company in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
(f) Except as set forth in the Disclosure Documents, there are no
actions, suits, or proceedings pending before or by any court or governmental
agency or authority, or any arbitrator, that seek to restrain or prohibit the
consummation of the transactions contemplated hereby or that might reasonably be
expected to result in any material adverse change in the financial condition,
business, or results of operations of the Company and, to the best of the
Company's knowledge, no such action, suit, or proceeding has been threatened.
(g) The Company is not in violation of any law, ordinance,
governmental rule or regulation, or court decree to which it may be subject and
the Company has not failed to obtain any license, permit, franchise, or other
governmental authorization necessary to the ownership of its property or to the
conduct of its business, which violation or failure to obtain is likely to have
a material adverse effect on the financial condition, business, or results of
operations of the Company.
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7. Covenants of the Investor.
(a) The Investor will not sell or otherwise dispose of any
Securities, unless:
(i) the Investor shall have advised the Company in writing that
it intends to dispose of such Securities in a manner to be described in such
advice, and counsel reasonably acceptable to the Company shall have delivered to
the Company an opinion reasonably acceptable to the Company and its counsel that
registration is not required under the Act or under any applicable securities
laws of any jurisdiction; or
(ii) a registration statement on an appropriate form under the
Act, or a post-effective amendment to such registration statement, covering the
proposed sale or other disposition of such Securities shall be in effect under
the Act and such Securities or the proposed sale or other disposition thereof
shall have been registered or qualified under applicable securities laws of any
jurisdiction.
The Investor acknowledges and agrees that the certificates representing
the Securities shall bear the following legend (unless subsequently registered
under the Act):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED,
ASSIGNED, OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES
LAWS THAT HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE
SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING
OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER
COUNSEL REASONABLY ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED
DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE
SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR
SECURITIES LAWS."
The Investor also acknowledges that the Company may place a stop
transfer order against the transfer of any of the Securities, if necessary in
the Company's reasonable judgment, in order to assure compliance by the Investor
with the terms of this Agreement.
(b) The Investor will not engage in any activity that would
jeopardize the status of the Offering as an exempt transaction under the Act or
under the laws of any state in which the Offering is made.
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(c) The Investor acknowledges that the representations, warranties,
agreements, undertakings, and acknowledgments are made by the Investor with the
intent that they be relied upon by the Company in determining whether to issue
the Securities.
8. Covenants of the Company. The Company covenants with the Investor
that:
(a) The Company will apply the net proceeds from the sale of the
Shares to corporate purposes as more fully described in the Memorandum.
(b) The Company will, so long as the Investor shall be the holder of
any Securities, furnish to the Investor, as soon as practicable after the end of
each fiscal year, an annual report with respect to such year (including
financial statements audited by independent public accountants) and, as soon as
practicable after the end of each quarterly period (other than the last
quarterly period) of each fiscal year, a statement (which need not be audited),
of the results of operations of the Company for such period, and, to the extent
not otherwise furnished, promptly upon the filing thereof, copies of all reports
filed by the Company with the Commission pursuant to the Securities and Exchange
Act of 1934, as amended (the "Exchange Act").
(c) The Company shall at all times keep in reserve the number of
shares of its Common Stock issuable from time to time upon the conversion of all
outstanding shares of Series B Preferred Stock.
(d) Neither the Company nor any of its officers, directors, or
employees will engage in any activity that would jeopardize the status of the
Offering as an exempt transaction under the Act or under the laws of any state
in which the Offering is made.
(e) The Company acknowledges that the representations, warranties,
agreements, undertakings, and acknowledgments are made by the Company with the
intent that they be relied upon by the Investor in determining whether to
subscribe for the Shares.
9. Registration Rights. The Company grants the Investor such
registration rights with respect to shares of the Common Stock issuable upon
conversion of the Series B Preferred Stock as are outlined in Annex I to this
Agreement.
10. Conditions to Obligations of the Investor. The obligations of the
Investor under this Agreement are subject to the accuracy of the representations
and warranties of the Company made in Section 6 hereof in all material respects,
and to the performance by the Company of its other obligations under this
Agreement to be performed at or prior to the Closing.
11. Conditions to Obligations of the Company. The obligations of the
Company under this Agreement are subject to the accuracy of the representations
and warranties of the Investor made in Section 5 hereof, and the performance by
the Investor of its other obligations under this Agreement to be performed at or
prior to the Closing.
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12. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, if it ceases to be
required to file such reports, it will, upon the request of the Investor, make
publicly available other information that fulfills the information requirements
set forth in Rule 144(c)(2)), and it will take such further action as the
Investor may reasonably request, all to the extent required from time to time to
enable the Investor to sell the Common Stock issuable upon conversion of the
Series B Preferred Stock without registration under the Act within the
limitation of the exemptions provided by (a) Rule 144 under the Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of the Investor, the
Company will deliver to it a written statement as to whether the Company has
complied with such information disclosure and other requirements.
13. Amendment of the Terms of the Offering or of the Securities.
(a) The Company expressly reserves the right to amend at any time
before the issuance of the Series B Preferred Stock the terms of this Agreement
or the conditions that apply to the Series B Preferred Stock so that they comply
with the requirements under the rules of the NASD or the Commission. The
Investor shall be given written notice of any such amendment.
(b) In the event that a material amendment, as reasonably
determined by the Company, is made pursuant to this Section, the Investor shall
have no more than two days from receipt of such notice to notify the Company, in
writing, of its decision not to continue as a subscriber of the Series B
Preferred Stock. If after two days the Investor has not expressed its decision
in writing to the Company, it will be automatically understood that the
obligations of the Investor under this Agreement shall remain in full force and
effect.
14. Liability of the Company. The Company shall not be liable to the
Investor, for any reason, if the Series B Preferred Stock is not issued due to
(a) a fortuitous event or force majeure or (b) the amendment of the terms and
conditions of this Agreement or the Series B Preferred Stock pursuant to Section
13 of this Agreement. Therefore, the damages caused to the Investor as a result
of any of the aforementioned events shall not be compensated.
15. Expenses. The Company agrees that it will pay all costs and
expenses incurred in connection with the Offering.
16. Notices.
(a) Any notice required to be given or delivered to the Investor
shall be mailed first class, postage prepaid, return receipt requested, or hand
delivered to the Investor's address shown on the signature page hereof or sent
by facsimile to the Investor.
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(b) Any notice required to be given or delivered to the Company
shall be mailed first class, postage prepaid, return receipt requested, to:
HIE, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
Chief Financial Officer
17. Survival of Representations and Warranties. All representations,
warranties, and agreements hereunder shall survive execution of this Agreement
and delivery of the Securities.
18. Governing Law. This Agreement and the rights and obligations of the
parties shall be governed by and construed in accordance with the laws of the
State of Georgia applicable to contracts made and to be performed wholly within
that State.
[SIGNATURES CONTAINED ON NEXT PAGE]
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IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
The terms of the foregoing including IF THE PURCHASER IS ONE OR MORE
the subscription described therein are INDIVIDUALS (ALL INDIVIDUALS MUST
agreed to and accepted this ____ day SIGN):
of ___________, 1999:
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HIE, INC. (Type or print name of beneficial
owner)
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Signature of prospective purchaser
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Chief --------------------------------------
Financial Officer Social Security Number
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(Type or print name of additional
purchaser)
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Signature of spouse, joint tenant,
tenant in common, or other signature,
if required
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Social Security Number
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Address
IF PURCHASER IS A CORPORATION,
PARTNERSHIP OR OTHER ENTITY:
--------------------------------------
(Name of Entity - Please Print)
--------------------------------------
Taxpayer Identification Number
--------------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
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REVISED ANNEX I
REGISTRATION RIGHTS
Holders of the Series B Preferred Stock (the "Holders") will be granted
registration rights, as described below, for the shares of Common Stock
underlying the Series B Preferred Stock.
1. Shelf Registration by the Company. The Company agrees to file
with the Securities and Exchange Commission (the "Commission"), no later than
the date of the filing by the Company of its quarterly report on Form 10-Q for
the fiscal quarter ended September 30, 1999, a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to
resales by the Holders of the underlying shares of the Company's Common Stock
issued to such Holders upon conversion of the Series B Preferred Stock (such
underlying shares of Common Stock referred to herein as the "Underlying
Shares"). The registration provided by this Section shall be effected by the
filing of a Registration Statement on Form S-3 or such other form as the Company
in its sole discretion determines to be available and appropriate for the
registration of resales of the Underlying Shares by the Holders, which shall
provide for sales to be made on a continuous basis pursuant to Rule 415 under
the Securities Act (or any similar rule that may be adopted by the Commission)
in accordance with the intended method or methods of disposition designated by
the Holders; provided, however, that not more than one underwritten offering
shall be made pursuant to such registration statement. The Company agrees to
keep the registration statement filed pursuant to this Section 1 effective and
current for a period to expire upon the earlier of (a) one year following the
date of initial issuance of the Series B Preferred Stock or (b) the date that
all of the Underlying Shares covered by the registration statement have been
sold by the Holders.
2. Piggyback Registration.
(a) If the Company shall propose the registration under the
Securities Act of an offering of any of its Common Stock to be sold for cash,
whether or not for its own account, pursuant to a firm commitment underwritten
offering (other than a registration relating to either (1) a dividend
reinvestment, stock option, stock purchase or similar plan, (2) a transaction
pursuant to Rule 145 under the Securities Act, or (3) a merger, consolidation or
reorganization), the Company, on each such occasion, shall as promptly as
practicable but in no event later than ten (10) days prior to the proposed
filing date of the registration statement give written notice (the "Notice") to
the Holders of its intention to effect such registration, and the Holders shall
be entitled, on each such occasion, to request to have all or a portion of the
Underlying Shares included in such registration statement. Upon the written
request of the Holders that the Company include any Underlying Shares in such
registration statement (which request shall state the number of the Underlying
Shares for which registration is sought), given within ten (10) days after the
giving of the Company's Notice, the Company shall use its reasonable efforts to
cause such Underlying Shares to be so included in the offering covered by such
registration statement, subject to the limitations hereinafter set forth.
Subject to the provisions of Section 2(b), a Holder
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may request registration of some or all of its Underlying Shares pursuant to
this Section 2(a) on not more than two occasions.
(b) The registration of some or all of such Underlying Shares
pursuant to this Section 2 may be conditioned or restricted if, in the case of a
registration statement which also includes shares to be sold for the account of
the Company in an underwritten offering, in the judgment of the managing
underwriter of such proposed offering, inclusion thereof in such registration
statement will have an adverse impact on the marketing of the securities to be
offered by the Company (provided that such conditions or restrictions apply on a
proportional basis not only to the Underlying Shares but also to all other
securities to be included other than those to be offered for the Company's own
account). If such managing underwriter shall require that the number of
Underlying Shares to be offered by the Holders be reduced or eliminated, the
Holder shall have the right to withdraw its request for registration pursuant to
this Section 2, and such request shall not be counted for purposes of
determining, pursuant to Section 2(a), the number of registration requests which
a Holder is entitled to make.
(c) The Company shall not be obligated to honor any request by
a Holder under this Section 2 if (i) the Holder could then sell under Rule 144
promulgated under the Securities Act the number of Underlying Shares the Holder
proposes to have registered under Section 2 or (ii) the request is made more
than two years following the date of initial issuance by the Company of the
Series B Preferred Stock.
3. Registration Procedures and Obligations.
(a) If and whenever the Company is obligated by the provisions
of this Annex to effect the registration of any Underlying Shares under the
Securities Act, the Company shall:
(i) Prepare and file with the Commission a
registration statement with respect to such securities on such
form as the Company deems appropriate and is permitted or
qualified to use and shall use all reasonable efforts to cause
such registration statement to become and remain effective as
provided herein; provided, that in the case of any
registration pursuant to Section 2, such preparation and
filing may be delayed in the sole discretion of the Company,
without prejudice to the rights of the Holders pursuant to
Section 2.
(ii) Furnish to the Holders at a reasonable time
prior to the filing thereof with the Commission a copy of the
registration statement in the form in which the Company
proposes to file the same; not later than one day prior to the
filing thereof, a copy of any amendment (including any
post-effective amendment) to such registration statement; and
promptly following the effectiveness thereof, a conformed copy
of the registration statement as declared effective by the
Commission and of each post-effective amendment thereto,
including financial statements and all exhibits and reports
incorporated therein by reference.
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(iii) Furnish to the Holders such number of copies of
such registration statement, each amendment thereto, the
prospectus included in such registration statement (including
each preliminary prospectus), each supplement thereto and such
other documents as they may reasonably request in order to
facilitate the disposition of the Underlying Shares owned by
them.
(iv) Use all reasonable efforts to register and
qualify the Underlying Shares covered by the registration
statement under such other securities laws of such
jurisdictions as shall be reasonably requested by the Holders
and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Holders to
consummate the disposition of the Underlying Shares owned by
the Holders in such jurisdictions; provided, however, that the
Company shall not be required in connection therewith or as a
condition thereto to qualify to transact business or to file a
general consent to service of process in any such states or
jurisdictions, or to maintain the effectiveness of any such
registration or qualification for any period during which it
is not required to maintain the effectiveness of the related
registration statement under the Securities Act.
(v) Promptly notify the Holders of the happening of
any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the
statements therein not misleading and, at the request of the
Holders, and subject to the further provisions of Section
4(b), the Company will prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the
purchasers of such Underlying Shares, such prospectus will not
contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not
misleading.
(vi) Enter into such customary agreements in form and
substance satisfactory to the Company and take such other
customary actions as may be reasonably requested in order to
expedite or facilitate the disposition of such Underlying
Shares.
(vii) Make reasonably available for inspection by the
Holders pursuant to such registration statement and any
attorney or accountant retained by the Holders, all financial
and other records, pertinent corporate documents and
properties of the Company, and use all reasonable efforts to
cause the officers, directors, employees and independent
accountants of the Company to supply all information
reasonably requested by the Holders, its attorney or its
accountant in connection with such registration statement, in
each case as and to the extent necessary to permit the Holders
to conduct a reasonable investigation within the meaning of
the Securities Act. To minimize disruption and expense to the
Company during the course of the registration process, the
Holders and any transferee(s) of the Holders hereunder shall,
to the extent practicable, coordinate investigation and due
diligence efforts hereunder and, to the extent practicable,
will act through a single set of counsel and a single set of
accountants and will
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enter into confidentiality agreements with the Company in form
and substance reasonably satisfactory to the Company and the
Holders prior to receiving any confidential or proprietary
information of the Company.
(viii) Promptly notify the Holders of the following
events and (if requested by the Holders) confirm such
notification in writing: (w) the filing of the prospectus or
any prospectus supplement and the registration statement and
any amendment or post-effective amendment thereto and, with
respect to the registration statement or any post-effective
amendment thereto, the declaration of the effectiveness of
such documents, (x) any requests by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information, (y) the issuance or
threat of issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or
the initiation of any proceedings for that purpose, and (z)
the receipt by the Company of any notification with respect to
the suspension of the qualification of the Underlying Shares
for sale in any jurisdiction or the initiation or threat of
initiation of any proceeding for such purpose.
(ix) Cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing
the Underlying Shares to be sold and not bearing any
restrictive legends, and enable such Underlying Shares to be
in such lots and registered in such names as the Holders may
request at least two (2) business days prior to any delivery
of the Underlying Shares to the purchaser.
(x) Prior to the effectiveness of the registration
statement and any post-effective amendment thereto, (A) make
such representations and warranties to the Holders and the
underwriters, if any, with respect to the Underlying Shares
and the registration statement as are customarily made by
issuers in similar underwritten offerings; (B) deliver such
documents and certificates as may be reasonably requested (1)
by the Holders, and (2) by the underwriters, if any, to
evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; and (C) obtain
opinions of counsel to the Company (which counsel and which
opinions shall be reasonably satisfactory to the underwriters,
if any), covering the matters customarily covered in opinions
requested in underwritten offerings.
(xi) Otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and
make generally available to its security holders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than forty-five (45) days after the
end of any fiscal quarter (or ninety (90) days, if such fiscal
quarter end is a fiscal year end) beginning with the first
fiscal quarter of the Company commencing after the effective
date of the registration statement.
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16
(b) The Company's obligations with respect to and compliance
with the registration statement provisions set forth herein shall be
expressly conditioned upon the Holder's compliance with the following:
(i) the Holders shall cooperate with the Company in
connection with the preparation of the registration statement,
and for so long as the Company is obligated to keep the
registration statement effective, shall provide to the
Company, in writing, for use in the registration statement,
all such information regarding the Holders and the plan(s) of
distribution of the Underlying Shares as may be necessary to
enable the Company to prepare the registration statement and
prospectus covering the Underlying Shares, to maintain the
currency and effectiveness thereof and otherwise to comply
with all applicable requirements of law in connection
therewith.
(ii) During such time as the Holders may be engaged in
a distribution of the Underlying Shares, the Holders shall
comply with Regulation M promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
pursuant thereto, shall, among other things: (w) not engage in
any stabilization activity in connection with the securities
of the Company in contravention of the rules comprising
Regulation M; (x) distribute the Underlying Shares solely in
the manner described in the registration statement; (y) cause
to be furnished to each broker through whom the Underlying
Shares may be offered, or to the offeree if an offer is not
made through a broker, such copies of the prospectus and any
amendment or supplement thereto and documents incorporated by
reference therein as may be required by law; and (z) not bid
for or purchase any securities of the Company or attempt to
induce any person to purchase any securities of the Company
other than as permitted under the Exchange Act.
(c) The Company shall bear the expenses of registration of the
Underlying Shares pursuant to Sections 1 and 2; provided, however, that each of
the Holders shall be responsible for the fees and expenses of its own counsel,
its own accountants and other experts retained by it with respect to such
registration and resales, all underwriting discounts or brokerage fees or
commissions relating to the sale of the Underlying Shares, and all transfer
taxes and other similar expenses of the sale of the Underlying Shares.
4. Holdback Agreements.
(a) Notwithstanding any provision of this Agreement to the
contrary, in the event the Company notifies the Holders, in writing and no later
than ten (10) days prior to the proposed filing date that the Company intends to
file a registration statement in connection with an underwritten offering of any
of its capital stock, the Holders shall refrain from selling or otherwise
distributing, except in accordance with the provisions of Section 2 hereunder,
any Underlying Shares within the period beginning up to seven days prior to the
effective date of such registration statement (or on such later date that the
Company notifies the Holders, in writing, that such period has begun) and ending
up to 120 days after such effective date (or on
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such earlier date that the Company notifies the Holders that such period has
ended) (the "Offering Restricted Period"). In the event the Holder's Underlying
Shares are not included in such a registered underwritten offering pursuant to
Section 2 hereof, the Company's obligation under Section 1 to keep the
registration statement filed pursuant to Section 1 current and effective shall
be extended for a number of days equal to the Offering Restricted Period, or, if
earlier, until the date on which all of the Underlying Shares have been disposed
of.
(b) Notwithstanding anything set forth herein to the contrary,
each of the Holders agrees that it will give the Company prior oral notice,
directed to its Chief Executive Officer or its Chief Financial Officer,
confirmed immediately in writing by facsimile transmission, of its intention to
sell any Underlying Shares under the shelf registration statement to be filed by
the Company pursuant to Section 1 hereof, which notice shall be given not less
than two (2) days in advance of any such proposed sale. In the event that the
Company thereafter informs the Holders that there exist bona fide financing,
acquisition or other plans of the Company or other matters which would require
disclosure by the Company of information, the premature disclosure of any of
which would adversely affect or otherwise be detrimental to the Company, or that
the Company desires to amend the registration statement or to supplement the
prospectus in order to disclose material information required to be disclosed in
the prospectus in order to correct an untrue statement of a material fact or to
disclose an omitted fact that is required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, the Holders shall refrain from selling Underlying Shares until the
earlier to occur of the date (x) the Company notifies the Holders that it has
filed with the Commission an amendment or supplement to the prospectus included
in the shelf registration statement, or (y) the Company notifies the Holders
that the potentially disclosable event no longer exists and that the prospectus
included in the shelf registration statement does not contain an untrue
statement of material fact or omit to state any fact necessary to make the
statements therein not misleading (each of which is a "Disclosure Restricted
Period"). The Company's obligation under Section 1 to keep the registration
statement filed pursuant to Section 1 current and effective shall be extended
for a number of days equal to the Disclosure Restricted Period, or, if earlier,
until the date on which all of the Underlying Shares have been disposed of.
5. Indemnification and Contribution.
(a) By the Company. In connection with the registration under
the Securities Act of the Underlying Shares pursuant to this Annex, the Company
shall indemnify and hold harmless the Holder(s) and each other person, if any,
who controls any of the Holder(s) within the meaning of Section 15 of the
Securities Act ("controlling persons"), against any expenses, losses, claims,
damages, liabilities or costs (including without limitation court costs and
attorneys' fees), joint or several (or actions in respect thereof) ("Losses"),
to which each such indemnified party may become subject, under the Securities
Act or otherwise, but only to the extent such Losses arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which the Underlying Shares were registered under the Securities Act, in any
preliminary prospectus (if used prior to the effective date of such registration
statement) or in any final Prospectus or in any post-effective amendment or
supplement thereto (if used during the period the Company is required to keep
the registration statement effective) (the "Disclosure
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Documents"), or (ii) any omission or alleged omission to state in any of the
Disclosure Documents a material fact required to be stated therein or necessary
to make the statements made therein not misleading, or (iii) any violation of
any federal or state securities laws or rules or regulations thereunder
committed by the Company in connection with the performance of its obligations
under this Annex; and the Company will reimburse each such indemnified party for
all legal and other expenses reasonably incurred by such party in investigating
or defending against any such claims, whether or not resulting in any liability,
or in connection with any investigation or proceeding by any governmental agency
or instrumentality with respect to any offering of securities pursuant to this
Annex; provided, however, that the Company shall not be liable to an indemnified
party or any other Holder(s) or controlling person of any other Holder(s) in any
such case to the extent that any such Losses arise out of or are based upon (i)
an untrue statement or omission or alleged omission (x) made in any such
Disclosure Documents in reliance upon and in conformity with written information
furnished to the Company by such indemnified party for use therein, or (y) made
in any preliminary prospectus if a copy of the final prospectus was not
delivered to the person alleging any loss, claim, damage or liability for which
Losses arise at or prior to the written confirmation of the sale of the
Underlying Shares to such person and the untrue statement or omission concerned
had been corrected in such final Prospectus and copies thereof had timely been
delivered by the Company to such indemnified party, or (z) made in any
prospectus used by such indemnified party if a court of competent jurisdiction
finally determines that at the time of such use such indemnified party had
actual knowledge of such untrue statement or omission; or (ii) the use of any
prospectus after such time as the Company has advised such indemnified party in
writing that the filing of a post-effective amendment or supplement thereto is
required, except the Prospectus as so amended or supplemented, or the use of any
prospectus after such time as the obligation of the Company to keep the same
current and effective has expired. In determining the actual knowledge of an
indemnified party for purposes of clause (i)(z) above, the actual knowledge
(without any requirement of due inquiry) of a controlling person of the
Holder(s) who is also a director of the Company shall be imputed to the
Holder(s) (and its other controlling persons).
(b) By the Holder(s). In connection with the registration
under the Securities Act of the Underlying Shares of the Holder(s) pursuant to
this Annex, the Holder(s) receiving the Underlying Shares shall, severally,
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed such registration statement and each other person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, and each other Holder(s) and each controlling person of such Holder(s)
against any Losses to which such indemnified party may become subject under the
Securities Act or otherwise, but only to the extent such Losses arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any of the Disclosure Documents or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company by such indemnifying party for use therein; (ii) the
use by such indemnifying party of any prospectus after such time as the Company
has advised such indemnifying party in writing that the filing of a
post-effective amendment or supplement thereto is required, except the
prospectus as so amended or supplemented, or after such time as the obligation
of the Company to keep the registration statement effective and current has
expired, or (iii) any information given or representation made
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by such indemnifying party in connection with the sale of the Underlying Shares
which is not contained in and not in conformity with the prospectus (as amended
or supplemented at the time of the giving of such information or making of such
representation); and such indemnifying party shall reimburse each such
indemnified party for all legal and other expenses reasonably incurred by such
party in investigating or defending against any such claims, whether or not
resulting in any liability, or in connection with any investigation or
proceeding by any governmental agency or instrumentality relating to any such
claims with respect to any offering of securities pursuant to this Annex.
(c) Actions Commenced. If a third party commences any action
or proceeding against an indemnified party related to any of the matters subject
to indemnification under subsections (a) or (b) hereof, such indemnified party
shall promptly give notice to the indemnifying party in writing of the
commencement thereof, but failure so to give notice shall not relieve the
indemnifying party from any liability which it may have hereunder unless the
indemnifying party is prejudiced thereby.
The indemnifying party shall be entitled to control the
defense or prosecution of such claim or demand in the name of the indemnified
party, with counsel satisfactory to the indemnified party, if it notifies the
indemnified party in writing of its intention to do so within 20 days of its
receipt of the notice from the indemnified party without prejudice, however, to
the right of the indemnified party to participate therein through counsel of its
own choosing, which participation shall be at the indemnified party's expense
unless (i) the indemnified party shall have been advised by its counsel that use
of the same counsel to represent both the indemnifying party and the indemnified
party would represent a conflict of interest (which shall be deemed to include
any case where there may be a legal defense or claim available to the
indemnified party which is different from or additional to those available to
the indemnifying party), in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party,
or (ii) the indemnifying party shall fail vigorously to defend or prosecute such
claim or demand within a reasonable time. Whether or not the indemnifying party
chooses to defend or prosecute such claim, the parties hereto shall cooperate in
the prosecution or defense of such claim and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be requested in connection therewith. The
indemnifying party shall not, in the defense of such claim or any litigation
resulting therefrom, consent to entry of any judgment against the indemnified
party (or settle any claim involving an admission of fault on the part of the
indemnified party), except with the consent of the indemnified party (which
consent shall not be unreasonably withheld).
(d) Contribution. If the indemnification provided for in
subsections (a) or (b) is unavailable to or insufficient to hold the indemnified
party harmless under subsections (a) or (b) above in respect of any Losses
referred to therein for any reason other than as specified therein, then the
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and such indemnified party on the other in connection with the statements
or omissions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to,
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among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by (or omitted to be supplied by) the Company or the
Holder(s) and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by an indemnified party as a result of the Losses referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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