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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): DECEMBER 31, 1999
HIE, INC.
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(Exact name of registrant as specified in its charter)
GEORGIA 0-27056 58-2112366
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
1850 PARKWAY PLACE, SUITE 1100, MARIETTA, GEORGIA 30067
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 423-8450
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
(a) On December 31, 1999, HIE, Inc. ("HIE" or the "Company") entered
into an amended and restated loan and security agreement with Silicon Valley
Bank (the "Bank"), which provides for a revolving line of credit up to
$3,000,000 subject to certain borrowing base limitations described in the
agreement. The revolving line of credit matures on December 31, 2000, bears
interest at the Bank's prime rate and is secured by cash. The Amended and
Restated Loan and Security Agreement dated December 31, 1999 is attached as an
exhibit to this Current Report on Form 8-K.
(b) On January 26, 2000, HIE, Inc. issued a news release reporting
results for the fiscal fourth quarter and year ended December 31, 1999. The news
release is attached as an exhibit to this Current Report on Form 8-K, and the
information contained in such press release is hereby incorporated by reference
into this report.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
10.1 Non-negotiable Convertible Term Note issued December 21, 1999
by HIE, Inc. to Cybear, Inc.
10.2 Stock Purchase Warrant issued December 21, 1999 by HIE, Inc.
to Cybear, Inc.
10.3 Registration Rights Agreement dated December 21, 1999 between
HIE, Inc. and Cybear, Inc.
10.4 Amended and Restated Loan and Security Agreement dated
December 31, 1999 between HIE, Inc. and Silicon Valley Bank.
99 Press Release of HIE dated January 26, 2000, reporting fourth
quarter and year-end 1999 results.
</TABLE>
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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 thereunto duly authorized.
HIE, Inc.
By: /s/ Joseph A. Blankenship
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Joseph A. Blankenship
Senior Vice President - Finance,
Chief Financial Officer,
Treasurer and Secretary
Date: January 27, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
10.1 Non-negotiable Convertible Term Note issued December 21, 1999
by HIE, Inc. to Cybear, Inc.
10.2 Stock Purchase Warrant issued December 21, 1999 by HIE, Inc.
to Cybear, Inc.
10.3 Registration Rights Agreement dated December 21, 1999 between
HIE, Inc. and Cybear, Inc.
10.4 Amended and Restated Loan and Security Agreement dated
December 31, 1999 between HIE, Inc. and Silicon Valley Bank.
99 Press Release of HIE dated January 26, 2000, reporting fourth
quarter and year-end 1999 results.
</TABLE>
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EXHIBIT 10.1
NON-NEGOTIABLE
CONVERTIBLE TERM NOTE
$3,000,000.00 December 21, 1999
Atlanta, Georgia
FOR VALUE RECEIVED, HIE, INC., a Georgia corporation ("Maker"),
promises to pay to the order of CYBEAR, INC., a Delaware corporation
("Holder"), in lawful money of the United States of America, the sum of THREE
MILLION AND NO/100 DOLLARS ($3,000,000.00), together with interest thereon, in
immediately available funds as directed by Holder, as hereinafter set forth:
1. Definitions. In addition to the words and phrases defined
elsewhere in this Non-Negotiable Convertible Term Note (this "Note"), each of
the following words and phrases shall have the meaning ascribed to it in this
Section 1:
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as
amended from time to time.
"Business Day" shall mean a day on which banks are required to be open
for business in Atlanta, Georgia and Miami, Florida.
"Default" shall mean the occurrence of any event or condition which,
after satisfaction of any requirement for the giving of notice or the lapse of
time, or both, would become an Event of Default.
"Loan" shall mean the $3,000,000 term loan evidenced by this Note.
"Maturity Date" shall mean December 21, 2000.
"Person" shall mean any individual, corporation, natural person, firm,
joint venture, partnership, trust, limited liability company, unincorporated
organization, government or any department or agency of any government.
"Purchase Agreement" shall mean that certain Convertible Note and
Warrant Purchase Agreement, dated as of December 21, 1999, by and between the
Maker and the Holder, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Solvent" shall mean, as to any Person, that such Person (a) has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage, (b) is able to pay its debts
as they mature and (c) owns property whose fair salable value is greater than
the amount required to pay its indebtedness.
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"Transaction Documents" shall have the meaning given to such term in
the Purchase Agreement.
2. Maturity. The indebtedness evidenced hereby shall mature on the
Maturity Date, on which date the entire unpaid principal balance hereof,
together with accrued and unpaid interest thereon, shall become due and
payable.
3. Interest.
(a) The outstanding principal balance of the Loan shall
bear interest at a rate per annum equal to seven and eight-tenths
percent (7.8%) from and including the date of disbursement of such
funds to (but not including) the day on which the principal balance of
the Loan has been repaid in its entirety.
(b) Accrued interest shall be due and payable on the first
Business Day of each calendar quarter for the preceding calendar
quarter, commencing January 3, 2000. All unpaid principal and accrued
but unpaid interest shall be due and payable in full on the Maturity
Date, on the date of any prepayment or on the date of any conversion
contemplated under Section 6 below.
(c) Interest hereunder shall be calculated on the basis of
a 365-day year and the actual number of days elapsed.
4. Payments. Payments of both principal and interest shall be made
in lawful money of the United States of America in immediately available funds
at Holder's principal office or elsewhere as directed by Holder in writing,
without offset, deduction or counterclaim.
5. Prepayment. Upon at least ten (10) Business Days' prior written
notice to Holder (and subject to the Holder's conversion rights set forth in
Section 6 below), Maker may, at its option, prepay the Loan prior to the
Maturity Date, in whole (but not in part), on the date specified in such
notice, without premium or penalty. Such prepayment shall be accompanied by all
accrued and unpaid interest.
6. Right of Conversion by Holder.
(a) Conversion. The Holder may, at its option, as of either the
Maturity Date or on the date specified by the Maker as the date of prepayment
pursuant to Section 5 above (either such date, the "Conversion Date"), convert
this Note, in whole but not in part, into such number of fully paid and
nonassessable whole shares of the Maker's common stock, par value $0.01 per
share (the "Common Stock"), as may be determined by dividing the aggregate
outstanding principal amount of this Note by $3.19 (the "Conversion
Price")(which is the average price per share of the Common Stock for the ten
trading days prior to the date hereof), by surrender to the Maker, at the
address for the Maker specified in the Purchase Agreement, of this Note and an
executed Notice of Conversion in the form attached hereto as Exhibit A, duly
completed and
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executed on behalf of the Holder, no later than three (3) Business Days prior
to such Conversion Date.
(b) Adjustment Upon Changes in Common Stock. The number of shares of
Common Stock issuable upon conversion of this Note and the Conversion Price per
share of such shares shall be adjusted by the Maker proportionately to reflect
changes in the capitalization of the Maker as a result of any recapitalization,
reclassification, stock dividend, stock split, combination of shares, exchange
of shares or any other change in the Maker's capital structure which affects
holders of Common Stock generally. All adjustments described herein shall be
reflected on the Maker's stock ledger and the Holder shall receive written
notice thereof.
(c) Merger, Sale of Assets, etc. If, prior to the Maturity Date,
there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for in
Section 6(b) hereof), (ii) a merger or consolidation of the Maker with or into
another corporation in which the Maker is not the surviving entity, or a
reverse triangular merger in which the Maker is the surviving entity but the
shares of the Maker's capital stock outstanding immediately prior to the merger
are converted by virtue of the merger into other property, whether in the form
of securities, cash or otherwise, or (iii) a sale or transfer of the Maker's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation, sale or
transfer, lawful provision shall be made so that the holder of this Note shall
thereafter be entitled to receive upon conversion of this Note on the Maturity
Date, the number of shares of stock or other securities or property of the
successor corporation resulting from such reorganization, merger,
consolidation, sale or transfer that a holder of the shares deliverable upon
conversion of this Note would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Note had been
converted immediately before such reorganization, merger, consolidation, sale
or transfer, all subject to further adjustment for other future events as
provided in Section 6(b). The foregoing provision of this Section 6(c) shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the exercise of this Note. If the per share
consideration payable to the holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then
the value of such consideration shall be determined in good faith by the
Maker's Board of Directors. In all events, appropriate adjustments (as
determined in good faith by the Maker's Board of Directors) shall be made in
the application of the provisions of this Note with respect to the rights and
interests of the Holder after the transaction, to the end that the provisions
of this Note shall be applied after that event, as nearly as reasonably may be,
in relation to any shares or other property deliverable after that event upon
conversion of this Note.
(d) If, upon conversion of this Note, the Holder would be entitled
to acquire a fractional share of the Common Stock, such fractional share would
be disregarded, the number of shares issuable shall be rounded down to the next
lowest number of shares and the Holder shall be entitled to receive from the
Maker a cash payment equal to the product of the per share Conversion Price
multiplied by such fraction rounded to the nearest penny.
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7. Events of Default; Remedies. (a) The occurrence of any of the
following events or conditions shall constitute an Event of Default hereunder:
(i) Payment. Maker shall fail to make any payment of
principal when due and payable, or any payment of interest on the Loan when due
and payable, and such failure to pay interest shall continue for a period of
ten (10) days;
(ii) Misrepresentations. If Maker shall make any
representation or warranty in this Note, the Purchase Agreement, or in any
other Transaction Document which proves to have been untrue or misleading in
any material respect when made or furnished and which continues to be untrue or
misleading in any material respect.
(iii) Covenants. If Maker shall default in the observance or
performance of any covenant or agreement contained in Note (other than a
payment default), the Purchase Agreement or any other Transaction Document and
such default shall continue for a period of thirty (30) days or more after the
earlier of (y) notice from Holder to Maker or (z) the date such default first
becomes known to any officer of Maker.
(iv) Voluntary Bankruptcy. If Maker shall: (a) file a
voluntary petition or assignment in bankruptcy or a voluntary petition or
assignment or answer seeking liquidation, reorganization, arrangement,
readjustment of its debts, or any other relief under the Bankruptcy Code, or
under any other act or law pertaining to insolvency or debtor relief, whether
State, Federal, or foreign, now or hereafter existing; (b) enter into any
agreement indicating consent to, approval of, or acquiescence in, any such
petition or proceeding; (c) apply for or permit the appointment, by consent or
acquiescence, of a receiver, custodian or trustee of Maker or for all or a
substantial part of its property; (d) make an assignment for the benefit of
creditors; or (e) be unable or shall fail to pay its debts generally as such
debts become due, admit in writing its inability or failure to pay its debts
generally as such debts become due, or otherwise cease to be Solvent.
(v) Involuntary Bankruptcy. If there occurs (a) a filing
or issuance against Maker of an involuntary petition in bankruptcy or seeking
liquidation, reorganization, arrangement, readjustment of its debts or any
other relief under the Bankruptcy Code, or under any other act or law
pertaining to insolvency or debtor relief, whether State, Federal or foreign,
now or hereafter existing and either an order for relief is rendered in respect
thereof or such filing or issuance is not discharged or withdrawn within sixty
(60) days; (b) the involuntary appointment of a receiver, liquidator, custodian
or trustee of Maker or for all or a substantial part of its property and such
appointment is not discharged or withdrawn within sixty (60) days; or (c) the
issuance of a warrant of attachment, execution or similar process against all
or any substantial part of the property of Maker.
(vi) Suspension of Business. The dissolution of Maker or
the suspension of the transaction of the usual business of Maker.
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(b) Upon the occurrence and during the continuance of an Event of
Default, the entire unpaid balance of the principal debt, additional loans or
advances, and all other sums paid by Holder to or on behalf of Maker pursuant
to the terms of this Note shall at the option of Holder become immediately due
and payable without further notice or demand; and Holder may forthwith exercise
the remedies available to Holder at law and in equity; and one or more
executions may forthwith issue on any judgment or judgments obtained by virtue
thereof; and no failure on the part of Holder to exercise any of Holder's
rights hereunder shall be deemed a waiver of any such rights or of any default.
8. Software License. In connection with this Note and the Purchase
Agreement, the Maker and the Holder have entered into that certain HIE Master
License Agreement, dated as of December 21, 1999 (as amended, restated,
supplemented or otherwise modified from time to time, the "Software License
Agreement"), which provides, among other things, that if (i) the Holder does
not exercise its right to convert the principal amount of the Loan evidenced by
this Note into Common Stock pursuant to Section 6 hereof, and (ii) the Maker
shall fail to pay the principal amount owing hereunder on the Maturity Date,
and such failure shall continue for a period of thirty (30) days, the Holder
shall be granted a license to use and distribute certain software as more fully
described therein. Upon the Holder's written election to accept such license,
all of the Maker's obligations hereunder, including its obligation to repay the
principal and to pay all accrued and unpaid interest, shall automatically and
without further action terminate, and the Maker shall have no further
obligations hereunder.
9. Waiver. Maker hereby waives diligence, demand, presentment for
payment, notice of non-payment, protest, notice of dishonor, and notice of
protest and specifically consents to and waives notice of any renewals or
extensions of this Note, whether made to or in favor of Maker or any other
person or persons and hereby waives any defense by reason of extension of time
for payment or other indulgence (unless in writing signed by Holder) granted by
Holder.
10. Collection Expenses. If this Note is placed in the hands of an
attorney at law for collection by reason of default on the part of Maker, Maker
hereby agrees to pay to Holder, in addition to the sums stated above, the
reasonable costs of collection, including a reasonable sum as an attorney's
fee, whether or not suit is brought and, if suit is brought, at the trial and
appellate levels.
11. Modifications. No change, amendment, modification, consent or
waiver with respect to this Note shall be effective unless the same shall be in
writing and signed by the Maker and the Holder.
12. Severance. If any provision of this Note is held to be invalid
or unenforceable by a court of competent jurisdiction, the other provisions of
this Note shall remain in full force and effect and shall be liberally
construed in favor of Holder.
13. Time of the Essence. Time is of the essence with respect to all
of Maker's obligations and agreements under this Note.
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14. Successors and Assigns. This Note and all the provisions,
conditions, promises, and covenants hereof shall be binding in accordance with
the terms thereof upon Maker, its successors and assigns. Whenever used herein,
the word "Maker" shall be deemed to include the successors and assigns of
Maker, and the word "Holder" shall be deemed to include the successors and
assigns of Holder. This Note may not be assigned or otherwise transferred by
the Holder without the prior written consent of the Maker, nor may it be
assigned or otherwise transferred by the Maker without the prior written
consent of the Holder, and any purported assignment in contravention of such
prohibition, unless consented to in writing by the Maker or the Holder, as
applicable, shall be void.
15. NON-NEGOTIABILITY. THIS NOTE IS NON-NEGOTIABLE.
16. GOVERNING LAW; JURISDICTION. THIS NOTE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. MAKER HEREBY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA AND OF
ANY GEORGIA STATE COURT SITTING IN ATLANTA, GEORGIA FOR THE PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS NOTE; AND (B) IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, NOTHING HEREIN SHALL LIMIT THE RIGHT OF HOLDER TO BRING PROCEEDINGS
AGAINST MAKER IN THE COURTS OF ANY OTHER JURISDICTION WITHIN THE UNITED STATES
OF AMERICA.
17. WAIVER OF JURY TRIAL. AFTER REVIEWING THIS PROVISION
SPECIFICALLY WITH ITS RESPECTIVE COUNSEL, EACH OF MAKER AND HOLDER HEREBY
KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR ARISING
OUT OF, UNDER, IN CONNECTION WITH, OR RELATING TO THIS NOTE, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF MAKER OR HOLDER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR HOLDER TO MAKE THE LOAN TO MAKER.
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[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Maker has caused this Note to be executed under
seal the day and year first above written.
"MAKER"
HIE, INC.
By:
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Name: Robert I Murrie
Title: President
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EXHIBIT A
CONVERSION NOTICE
(To Be Signed Only Upon Conversion of Note)
TO: HIE, INC.
The undersigned, the holder of the foregoing Note, hereby surrenders
such Note for conversion into [__________] shares of Common Stock of HIE, Inc.,
and requests that the certificates for such shares be issued in the name of,
and delivered to, __________________________, whose address is
_____________________________________________.
Dated:
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CYBEAR, INC.
By:
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Its:
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(Address)
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EXHIBIT 10.2
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR THE LAWS OF ANY STATE, AND THIS WARRANT HAS BEEN ISSUED OR
SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT AND
PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNTIL (I) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY RECEIVES
AN OPINION OF COUNSEL IN A FORM ACCEPTABLE TO THE COMPANY STATING THAT
REGISTRATION UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED OFFER, SALE OR TRANSFER.
HIE, INC.
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STOCK PURCHASE WARRANT
COMMON STOCK
Par Value $.01 Per Share
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THIS STOCK PURCHASE WARRANT (the "Warrant") is issued this 21st day of
December, 1999, by HIE, INC., a Georgia corporation (the "Company"), to CYBEAR,
INC., a Delaware corporation ("Cybear," which, together with any permitted
assignee or transferee hereunder, is hereinafter referred to collectively as
"Holder" or "Holders").
1. Issuance of Warrant. For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company hereby
grants to Holder the right to purchase 47,022 shares of the Company's common
stock, $.01 par value per share (the "Common Stock"), at the purchase price per
share (the "Exercise Price") set forth herein. The shares of Common Stock
issuable upon exercise of this Warrant are hereinafter referred to as the
"Warrant Shares." The number of Warrant Shares and the Exercise Price are
subject to adjustment as provided in Section 9 below.
2. Term. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable by Holder in whole or in part at any time and from
time to time from the date hereof until 5:00 p.m. Atlanta, Georgia time on
December 21, 2004 (the "Expiration Date") and shall be void thereafter.
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3. Price. The Exercise Price per share for which the Warrant Shares
may be purchased pursuant to the terms of this Warrant shall be $3.19 per
share, as adjusted from time to time pursuant to Section 9 hereof.
4. Exercise of Warrant.
(a) Exercise. This Warrant may be exercised by the Holder
hereof (but only on the conditions hereinafter set forth) as to all or any
increment or increments of One Thousand (1,000) Warrant Shares by surrender of
this Warrant and the Notice of Exercise attached hereto as Exhibit A, duly
completed and executed on behalf of the Holder, at the office of the Company,
1850 Parkway Place, 11th Floor, Marietta, Georgia 30067, or at such other
address as the Company shall designate in a written notice to the Holder
hereof, together with a check acceptable and payable to the Company in the
amount of the Exercise Price times the number of Warrant Shares being purchased
pursuant to such exercise.
(b) Cashless Exercise. In lieu of exercising the Warrant
by payment of the Exercise Price in cash pursuant to Section 4(a) above, the
Holder shall have the right to require the Company to convert the Warrant, in
whole or in part and at any time or times (the "Conversion Right"), into
Warrant Shares, by surrender to the Company of this Warrant and the Notice of
Exercise attached hereto as Exhibit A, duly completed and executed by the
Holder to evidence the exercise of the Conversion Right. Upon exercise of the
Conversion Right, the Company shall deliver to the Holder (without payment by
the Holder of any cash in respect of the Exercise Price) a certificate(s)
representing that number of Warrant Shares which is equal to the quotient
obtained by dividing (x) the value of the number of Warrants being converted at
the date the Conversion Right is exercised (determined by subtracting (A) the
aggregate Exercise Price for all such Warrants immediately prior to the
exercise of the Conversion Right from (B) the aggregate Fair Market Value
(determined on the basis of the Fair Market Value per share of Common Stock
multiplied by that number of Warrant Shares purchasable upon exercise of such
Warrants immediately prior to the exercise of the Conversion Right)), by (y)
the Fair Market Value per share of Common Stock on the date of exercise of the
Conversion Right. For purposes of this calculation, the Fair Market Value per
share of Common Stock shall be (i) if a public market for the Company's Common
Stock exists at the time of such exercise, the average of the closing bid and
asked prices of the Common Stock quoted in the Over-The-Counter Market Summary
or the last reported sales price of the Common Stock or the closing price
quoted on the Nasdaq National Market or on any exchange on which the Common
Stock is listed, whichever is applicable, as published in The Wall Street
Journal for the five (5) trading days prior to the date of determination of
Fair Market Value; or (ii) if there is no public market for the Company's
Common Stock, determined by the Company's Board of Directors in good faith. Any
references in this Warrant to the "exercise" of any Warrants, and the use of
the term "exercise" herein, shall be deemed to include (without limitation) any
exercise of the Conversion Right.
(c) Delivery of Stock Certificates. Upon exercise of this
Warrant as aforesaid, the person entitled to receive the Warrant Shares
issuable upon such exercise shall be treated for
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all purposes as the holder of record of such shares as of the close of business
on the date of exercise. As promptly as practicable on or after such date, and
in any event within ten (10) days thereafter, the Company shall execute and
deliver to the Holder of this Warrant a certificate or certificates for the
total number of whole Warrant Shares for which this Warrant is being exercised
(net of any Warrant Shares applied upon exercise of the Conversion Right), in
such names and denominations as are requested by such Holder. If this Warrant
shall be exercised with respect to less than all of the Warrant Shares, the
Company, at its expense, will issue to the Holder a new Warrant covering the
number of Warrant Shares with respect to which this Warrant shall not have been
exercised, which new Warrant shall be identical to this Warrant except for the
number of shares remaining subject to the Warrant. If, upon exercise of this
Warrant, the Holder would be entitled to acquire a fractional share of the
Company's Common Stock, such fractional share shall be disregarded and the
number of shares subject to this Warrant shall be rounded down to the next
lower number of shares and the Holder shall be entitled to receive from the
Company a cash payment equal to the product of the per share Exercise Price
multiplied by such fraction rounded to the nearest penny.
(d) Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of this Warrant, provided that such certificates for such Warrant
Shares are issued in the name of Cybear. The Company shall not be required to
pay any tax or taxes which may be payable in respect of any other transfer
involved in the issue of any certificates for Warrant Shares and the Company
shall not be required to issue or deliver such certificates for Warrant Shares
unless or until the person or persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
5. Covenants and Conditions. The above provisions are subject to
the following:
(a) The Holder of this Warrant and any transferee hereof
or of the Warrant Shares issuable upon exercise of this Warrant, by their
acceptance hereof or thereof, hereby (i) acknowledge that this Warrant has
been, and any Warrant Shares issuable upon exercise hereof will be, acquired
for investment purposes and not with a view to distribution or resale and (ii)
understand and agree that this Warrant and the Warrant Shares issuable upon the
exercise hereof, have not been registered under the Securities Act or any
applicable state securities laws ("Blue Sky Laws"), and may not be sold,
pledged, hypothecated or otherwise transferred without (A) an effective
registration statement for such Warrant under the Securities Act and such
applicable Blue Sky Laws, or (B) an opinion of counsel reasonably satisfactory
to the Company that registration is not required under the Securities Act or
under any applicable Blue Sky Laws. Transfer of the Warrant Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as the Warrant. Each Warrant and each certificate representing such
Warrant Shares shall bear substantially the following legend (with such changes
therein as may be appropriate to reflect whether such legend refers to a
Warrant or Warrant Shares):
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON THE EXERCISE HEREOF HAVE NOT BEEN
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REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE LAWS OF ANY
STATE, AND THIS WARRANT HAS BEEN ISSUED OR SOLD IN
RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE
SECURITIES ACT AND PARAGRAPH (13) OF CODE SECTION
10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973. THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
THE EXERCISE HEREOF MAY NOT BE OFFERED FOR SALE,
SOLD OR TRANSFERRED UNTIL (I) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY
RECEIVES AN OPINION OF COUNSEL IN A FORM ACCEPTABLE
TO THE COMPANY STATING THAT REGISTRATION UNDER THE
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED OFFER, SALE OR TRANSFER.
(b) The Holder and the Company agree to execute such
documents and instruments as counsel for the Company reasonably deems necessary
to effect the compliance of the issuance of the Warrant and any Warrant Shares
with applicable federal and state securities laws, including compliance with
applicable exemptions from the registration requirements of such laws.
(c) The Company covenants and agrees that all Warrant
Shares which may be issued upon exercise of this Warrant will, upon issuance
and payment therefor, be legally and validly issued and outstanding, fully paid
and nonassessable. The Company shall at all times reserve and keep available
for issuance upon the exercise of this Warrant such number of authorized shares
of Common Stock as will be sufficient to permit the exercise in full of this
Warrant.
6. Registration Rights. The nonpublic Warrant Shares issuable upon
exercise of this Warrant are entitled to certain registration rights upon the
terms and conditions set forth in a Registration Rights Agreement, dated as of
December 21, 1999 between the Company and Cybear.
7. Transfer. Subject to the restrictions set forth in Section 5 of
this Warrant, Holder may transfer or assign this Warrant. Upon a transfer in
accordance with this Section 7, the Company at its expense (excluding any
applicable transfer taxes) shall execute and deliver, in lieu of and in
replacement of this Warrant, Warrants identical in form to this Warrant and in
such denominations as the transferring Holder shall request; provided that, any
such transferee, by acceptance hereof, agrees to assume all of the obligations
of Holder and be bound by all of the terms and provisions of this Warrant.
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<PAGE> 5
8. Warrant Holder Not Shareholder. This Warrant does not confer
upon the Holder, as such, any right whatsoever as a shareholder of the Company.
9. Adjustment Upon Changes in Company Common Stock. The number of
shares of Common Stock subject to this Warrant and the Exercise Price per share
of such shares shall be adjusted by the Company proportionately to reflect
changes in the capitalization of the Company as a result of any
recapitalization, reclassification, stock dividend, stock split, combination of
shares, exchange of shares or any other change in the Company's capital
structure which affects holders of Common Stock generally. All adjustments
described herein shall be reflected on the Company's stock warrant ledger and
the Holder shall receive written notice thereof.
10. Merger, Sale of Assets, etc. If at any time while this Warrant,
or any portion thereof, is outstanding and unexpired, there shall be (a) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for in Section 9 hereof), (b) a merger
or consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, or (c) a sale or transfer of the Company's properties and assets as,
or substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of
stock or other securities or property of the successor corporation resulting
from such reorganization, merger, consolidation, sale or transfer that a holder
of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Warrant had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment for other future events as provided in Section 9. The foregoing
provision of this Section 10 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per share consideration payable to the holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustments (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction,
to the end that the provisions of this Warrant shall be applied after that
event, as nearly as reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of this Warrant.
11. Certain Distributions. If the Company shall, at any time or from
time to time, fix a record date for the distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of evidences of
indebtedness, assets or other property (other than regularly scheduled cash
dividends or cash distributions payable out of consolidated earnings or earned
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<PAGE> 6
surplus or dividends payable in capital stock) or subscription rights, options
or warrants, then the Exercise Price shall be reduced to the price determined
by multiplying the Exercise Price in effect immediately prior to such record
date by a fraction (which shall in no event be less than zero), the numerator
of which shall be the fair market value per share of Common Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company) of the portion of the assets, evidences of
indebtedness, other property, subscription rights or warrants so to be
distributed applicable to one share of Common Stock and the denominator of
which shall be such fair market value per share of Common Stock. Any such
adjustment shall become effective immediately after the record date for such
distribution. Such adjustment shall be made successively whenever such a record
date is fixed. In the event that such distribution is not so made, the Exercise
Price shall be adjusted to the Exercise Price in effect immediately prior to
such record date (subject to any other applicable adjustment).
12. Notice of Certain Events. In case:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of capital
stock of any class, or to receive any other rights; or
(b) of any capital reorganization, any reclassification of
shares of capital stock of the Company (other than a subdivision or combination
of outstanding shares of Common Stock to which Section 9 applies), or any
consolidation or merger of the Company or the sale or transfer of all or
substantially all of the assets of the Company; or
(c) of any voluntary dissolution, liquidation, or winding
up of the Company;
then the Company shall mail (at least ten (10) days prior to the applicable
date referred to in subclause (x) or in subclause (y) below, as the case may
be), to the Holder at the address set forth in the Company's stock records, a
notice stating that (x) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights are to be determined, or (y)
the date on which such reclassification, capital reorganization, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and, if applicable, the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, capital reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up.
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<PAGE> 7
IN WITNESS WHEREOF, HIE, Inc. has caused this Warrant to be executed
by its duly authorized officer on the date first above written.
HIE, INC.
By:
-------------------------------------
Name: Robert I. Murrie
Title: President
Accepted:
CYBEAR, INC.
By:
----------------------------------------
Name: Jack S. Greenman
Title:Executive Vice President and
Chief Financial Officer
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<PAGE> 8
EXHIBIT A
NOTICE OF EXERCISE
To: HIE, INC.
The undersigned, the holder of the foregoing Warrant, and pursuant to
the terms hereof, hereby elects to exercise rights represented by said Warrant
for, and to purchase thereunder, _________ shares of the Company's Common Stock
covered by said Warrant, and tenders herewith payment of the purchase price in
full for such shares by:
_____ (a) cash in the amount of $__________, through the
delivery of a certified or official bank check; or
_____ (b) exercising the Conversion Right provided under
Section 4(b) of the Warrant by the surrender of said
Warrant.
The undersigned hereby requests that certificates for such shares (or
any other securities or other property issuable upon such exercise) be issued
in the name of and delivered to the undersigned at the address set forth below.
--------------------------------------------
Name
Date:
----------------- --------------------------------------------
Signature
Address:
--------------------------------------------
--------------------------------------------
--------------------------------------------
<PAGE> 1
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (as amended, supplemented or
modified from time to time, the "Registration Rights Agreement") is made as of
the 21st day of December 1999, by and between HIE, INC., a Georgia corporation
(the "Company"), and Cybear, Inc. a Delaware corporation ("Cybear").
WITNESSETH:
WHEREAS, the Company and Cybear have entered into that certain
Convertible Note and Warrant Purchase Agreement, dated as of the 21st day of
December, 1999 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to
sell and issue to Cybear a convertible promissory note in the aggregate
principal amount of $3,000,000 (the "Note"), such Note to be convertible into
common stock, $.01 par value per share (the "Common Stock") of the Company as
specified in such Note;
WHEREAS, pursuant to the Purchase Agreement, the Company also has
agreed to issue and sell to Cybear a warrant (the "Warrant") to purchase 47,022
shares of the Company's Common Stock; and
WHEREAS, in order to induce Cybear to enter into the Purchase
Agreement, the Company has agreed to provide Cybear with certain rights with
respect to the registration of the Common Stock to be issued to Cybear pursuant
to Cybear's conversion of the Note and Cybear's exercise of the Warrant. Shares
of Common Stock issued upon such conversion or exercise may be referred to
herein as "Registrable Securities."
NOW, THEREFORE, in consideration of the premises, the terms and
conditions herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under direct or indirect common control
with such Person. For purposes of this definition, a Person shall be
deemed to control another Person if such first Person possesses
directly or indirectly the power to (i) vote 10% or more of the
securities having ordinary voting power for the selection of directors
of such Person or (ii) direct, or cause the direction of, the
management and policies of the second Person, whether through the
ownership of voting securities, by contract or otherwise.
"COMMISSION" shall mean the Securities and Exchange Commission and any
successor federal agency having similar powers.
<PAGE> 2
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"HOLDERS" shall mean Cybear, and all other Persons holding Registrable
Securities so long as Cybear or such other Person holds Registrable
Securities. Unless otherwise provided in this Agreement, in each
instance that a Holder is required to request or consent to or
otherwise approve an action, such Holder will be deemed to have
requested or consented to or otherwise approved such action if the
Holders of a majority-in-interest of the Registrable Securities so
request, consent or otherwise approve.
"PERSON" this term shall be interpreted broadly to include any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, company,
institution, entity, party, or government (whether national, federal,
state, county, city, municipal, or otherwise, including, without
limitation, any instrumentality, division, agency, body, or department
of any of the foregoing).
"REGISTER," "REGISTERED," AND "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance
with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
Section 2. Piggyback Registration.
(a) If the Company proposes to register any Common Stock to be
issued by it or held by any other person in a public offering under the
Securities Act, on a form and in a manner which would permit registration of
Common Stock for sale to the public under the Securities Act (specifically
excluding any registration by the Company in connection with (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, acquisition or
exchange offer on Form S-4 or any successor form), on each such occasion, the
Company 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 Registrable Securities included in such
registration statement. Upon the written request of the Holders that the Company
include any Registrable Securities in such registration statement (which request
shall state the number of Registrable Securities for which registration is
sought), given within ten (10) days after the giving of the Company's Notice,
the Company, subject to the rights of holders of the outstanding securities of
the Company having superior registration rights, shall use its reasonable
efforts to cause such Registrable Securities to be so included in the offering
covered by such registration statement, subject to the limitations hereinafter
set forth. Any registration statement filed by the Company may be withdrawn at
any time at the discretion of the Company.
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<PAGE> 3
(b) The registration of some or all of such Registrable
Securities pursuant to this Section 2 may be conditioned or reduced 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. The amount of Registrable Securities to
be offered for the accounts of all Holders requesting to be included may reduced
proportionately to the extent necessary to reduce the total amount of securities
to be included in the offering to the amount recommended by such managing
underwriter (which may be zero, if recommended by such managing underwriter);
provided, however, that any such reduction shall be applied first to any shares
proposed to be sold by management of the Company in such underwritten offering.
(c) The Company shall not be obligated to honor any request by
a Holder under this Section 2 if the Holder could then sell under Rule 144
promulgated under the Securities Act the number of Registrable Securities the
Holder proposes to have registered under Section 2, provided that the Company
shall take reasonable actions to assist Holder in effecting sales pursuant to
Rule 144.
Section 3. Registration Procedures and Obligations.
(a) If and whenever the Company is obligated hereunder to
effect the registration of any Registrable Securities 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 effective as soon a
practicable and to keep such registration effective until the
earlier of (A) the date when all Registrable Securities
covered by the registration statement have been sold or (B)
ninety (90) days from the effective date of the registration
statement plus any period during which the Holders of
Registrable Securities are obligated to refrain from selling
pursuant to Section 4(b) hereof; provided, that the
preparation and filing of the registration statement 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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<PAGE> 4
(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 Registrable Securities owned
by them.
(iv) Use all reasonable efforts to register and
qualify the Registrable Securities 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 Registrable Securities 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 Registrable Securities, 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 Registrable
Securities.
(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 shall, to the extent practicable, coordinate
investigation and due diligence efforts hereunder
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<PAGE> 5
and, to the extent practicable, will act through a single set
of counsel and a single set of accountants and will 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 Registrable
Securities 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 Registrable Securities to be sold and not bearing any
restrictive legends, and enable such Registrable Securities 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 Registrable Securities 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 Registrable
Securities 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 an earnings
statement satisfying the provisions of Section 11(a) of the
Securities Act, no later than forty-five (45) days after the
end of any twelve-month period (or no later than ninety (90)
days, if such twelve-month period is a fiscal year) beginning
with the first month of the fiscal quarter of the Company
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<PAGE> 6
commencing after the effective date of the registration
statement, which statements shall cover such twelve-month
periods.
(xii) Use all reasonable efforts to list the
Registrable Securities on the Nasdaq Stock Market (or other
exchange on which the common stock of the Company is then
traded) and to maintain such listing throughout the effective
period of the registration statement. The Company shall pay
all fees and expenses of such listing.
(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 Registrable Securities as may be necessary
to enable the Company to prepare the registration statement
and prospectus covering the Registrable Securities, 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 Registrable Securities, 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: (A)
not engage in any stabilization activity in connection with
the securities of the Company in contravention of the rules
comprising Regulation M; (B) distribute the Registrable
Securities solely in the manner described in the registration
statement; (C) cause to be furnished to each broker through
whom the Registrable Securities 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 (D) 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
Registrable Securities pursuant to Section 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 Registrable Securities, and all transfer
taxes and other similar expenses of the sale of the Registrable Securities.
-6-
<PAGE> 7
Section 4. Holdback Agreements.
(a) Notwithstanding any provision herein 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
any Registrable Securities 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 such earlier date that
the Company notifies the Holders that such period has ended) (the "Offering
Restricted Period").
(b) Notwithstanding anything set forth herein to the contrary,
if the registration statement filed by the Company pursuant to Section 2 hereof
is a shelf registration statement, 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 Registrable Securities under such
shelf registration statement, 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 Registrable Securities 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 2 to keep a shelf registration
statement filed pursuant to Section 2 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 Registrable Securities have been disposed of.
Section 5. Indemnification and Contribution.
(a) By the Company. In connection with the registration under
the Securities Act of the Registrable Securities, 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
-7-
<PAGE> 8
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 Registrable Securities 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 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 Agreement; 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 Agreement; 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 Registrable
Securities 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 any Holder
who is also a director of such Holder shall be imputed to such Holder (and its
other controlling persons).
(b) By the Holder(s). In connection with the registration
under the Securities Act of the Registrable Securities of the Holder(s) pursuant
to this Agreement, the Holder(s) receiving the Registrable Securities 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
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<PAGE> 9
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 by such indemnifying party in connection with the sale of
the Registrable Securities 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
hereto.
(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).
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<PAGE> 10
(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, 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.
Section 6. Available Information. The Company shall take such
reasonable action and file such information, documents and reports as shall be
required by the Commission as a condition to the availability of Rule 144 and
Rule 144A promulgated under the Securities Act, or any successor provisions.
Section 7. Amendments and Waivers. Any provision of this Registration
Rights Agreement may be amended, supplemented, waived, discharged or terminated
by a written instrument signed by the Company and the Holders of not less than a
majority of the aggregate outstanding Registrable Securities, voting as a single
group.
Section 8. Specific Performance. The parties agree that irreparable
damage will result in the event that the obligations of the Company under this
Registration Rights Agreement are not specifically enforced, and that any
damages available at law for a breach of any such obligations would be
inadequate. Therefore, the Holders of the Registrable Securities shall have the
right to specific performance by the Company of the provisions of this
Registration Rights Agreement, and appropriate injunctive relief may be applied
for and granted in connection therewith. The Company hereby irrevocably waives,
to the extent that it may do so under applicable law, any defense based on the
adequacy of a remedy at law which may be asserted as a bar to the remedy of
specific performance in any action brought against the Company for specific
performance of this Registration Rights Agreement by the Holders of Registrable
Securities. Such remedies and all other remedies provided for in this
Registration Rights Agreement shall, however, be cumulative and not exclusive
and shall be in addition to any other remedies which may be available under this
Registration Rights Agreement.
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<PAGE> 11
Section 9. Notices.
(a) Any notice or demand to be given or made by the Holders of
Registrable Securities to or on the Company pursuant to this Registration Rights
Agreement shall be sufficiently given or made if sent by registered mail, return
receipt requested, postage prepaid, addressed to the Company at 1850 Parkway
Place, Suite 1100, Marietta, Georgia 30067-8274, Attention: President.
(b) Any notice to be given by the Company to the Holders of Registrable
Securities shall be sufficiently given or made if sent by registered mail,
return receipt requested, postage prepaid, addressed to such holder as such
Holder's name and address shall appear on the warrant register or the register
for the Common Stock, as the case may be.
Section 10. Binding Effect. This Registration Rights Agreement shall be
binding upon and inure to the sole and exclusive benefit of the Company, its
successors and assigns, and the registered Holders from time to time of the
Registrable Securities.
Section 11. Counterparts. This Registration Rights Agreement may be
executed in one or more separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
Section 12. Georgia Law. THIS REGISTRATION RIGHTS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
[Remainder of page intentionally left blank]
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<PAGE> 12
IN WITNESS WHEREOF the parties hereto have caused this Registration
Rights Agreement to be duly executed and delivered by their proper and duly
authorized officers, as of the date and year first above written.
HIE, INC.
By:
---------------------------------
Robert I. Murrie
President
CYBEAR, INC.
By:
---------------------------------
Name: Jack S. Greenman
Title:Executive Vice President and
Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.4
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BETWEEN
SILICON VALLEY BANK
AND
HIE, INC.
F/K/A HEALTHDYNE INFORMATION ENTERPRISES, INC.
- --------------------------------------------------------------------------------
<PAGE> 2
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into
as of December 31, 1999, by and between HIE, INC., formerly known as Healthdyne
Information Enterprises, Inc., a Georgia corporation ("Borrower") whose address
is 1850 Parkway Place, Suite 1100, Marietta, Georgia 30067 and SILICON VALLEY
BANK, a California-chartered bank ("Bank") with a loan production office located
at 3343 Peachtree Road, N.E., Suite 312, Atlanta, Georgia 30326.
RECITALS
Borrower is indebted to Bank pursuant to, among other documents, a Loan
and Security Agreement dated August 3, 1998 by and between Borrower and Bank, as
amended by that certain Loan Modification Agreement dated November 13, 1998
between Borrower and Bank, that certain Second Loan Modification Agreement dated
May 13, 1999 between Borrower and Bank, that certain Third Loan Modification
Agreement dated August 2, 1999 between Borrower and Bank, that certain Fourth
Loan Modification Agreement dated as of September 30, 1999, that Fifth Loan
Modification Agreement dated as of November 30, 1999 between Borrower and Bank
(the "Loan Agreement"), and a Promissory Note in the principal amount of
$5,000,000 dated August 3, 1998, as amended by that certain Amended and Restated
Promissory Note dated May 13, 1999, that certain Amended and Restated Promissory
Note dated August 2, 1999, that certain Amended and Restate Promissory Note
dated September 30, 1999, that certain Amended and Restate Promissory Note dated
November 30, 1999 (the "Note"). The Loan Agreement and Note provide for, among
other things, a line of credit in the original principal amount of Five Million
Dollars ($5,000,000).
Borrower wishes to obtain additional credit from time to time from
Bank, and Bank desires to extend such additional credit to Borrower and the
parties desire to make such amendments to and modifications of the Loan
Agreement as contained herein. This Agreement sets forth the terms on which Bank
will advance credit to Borrower, and Borrower will repay the amounts owing to
Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1. Definitions. As used in this Agreement, the following
terms shall have the following definitions:
"ADVANCE" OR "ADVANCES" means a loan advance under
the Revolving Line.
"AFFILIATE" means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person, any Person that
controls or is controlled by or is under common control with such Person, and
each of such Person's senior executive officers, directors,
<PAGE> 3
partners and, for any Person that is a limited liability company, such Persons,
managers and members.
"BANK EXPENSES" means all reasonable costs or
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the preparation, negotiation, administration, and enforcement of
the Loan Documents; and Bank's reasonable attorneys' fees and expenses incurred
in amending, enforcing or defending the Loan Documents, (including fees and
expenses of appeal or review, or those incurred in any Insolvency Proceeding)
whether or not suit is brought.
"BORROWER'S BOOKS" means all of Borrower's books and
records including, without limitation: ledgers; records concerning Borrower's
assets or liabilities, the Collateral, business operations or financial
condition; and all computer programs, or tape files, and the equipment,
containing such information.
"BORROWING BASE" means an amount equal to the lesser
of the following: (i) the Revolving Line of Credit, or (ii) one hundred percent
(100%) of the amount of Treasury Bills on deposit or assigned by Borrower with
or to the Bank, based upon the current market value of the Treasury Bills.
"BUSINESS DAY" means any day that is not a Saturday,
Sunday, or other day on which banks in the State of Georgia are authorized or
required to close.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Georgia Uniform Commercial Code.
"COLLATERAL" means the property described on Exhibit
A attached hereto.
"CONTINGENT OBLIGATION" means, as applied to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to (i) any indebtedness, lease, dividend, letter of credit
or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted or
sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (ii) any obligations with respect to
undrawn letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall
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<PAGE> 4
not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.
"CREDIT EXTENSION" means each Advance, or any other
extension of credit by Bank for the benefit of Borrower hereunder.
"ERISA" means the Employment Retirement Income
Security Act of 1974, as amended, and the regulations thereunder.
"GAAP" means generally accepted accounting principles
as in effect in the United States from time to time.
"INDEBTEDNESS" means (a) all indebtedness for
borrowed money or the deferred purchase price of property or services, including
without limitation reimbursement and other obligations with respect to surety
bonds and letters of credit, (b) all obligations evidenced by notes, bonds,
debentures or similar instruments, (c) all capital lease obligations and (d) all
Contingent Obligations.
"INSOLVENCY PROCEEDING" means any proceeding
commenced by or against any person or entity under any provision of the United
States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.
"INVESTMENT" means any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"LETTER OF CREDIT" means a letter of credit or
similar undertaking issued by Bank pursuant to Section 2.1.2.
"LETTER OF CREDIT RESERVE" has the meaning set forth
in Section 2.1.2.
"LIEN" means any mortgage, lien, deed of trust,
charge, pledge, security interest or other encumbrance.
"LOAN DOCUMENTS" means, collectively, this Agreement,
any note or notes executed by Borrower, and any other present or future
agreement entered into by Borrower for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse
effect on (i) the business operations or condition (financial or otherwise) of
Borrower and its Subsidiaries taken
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<PAGE> 5
as a whole or (ii) the ability of Borrower to repay the Obligations or
otherwise perform its obligations under the Loan Documents.
"MATURITY DATE" means the Revolving Maturity Date.
"NEGOTIABLE COLLATERAL" means all of Borrower's
present and future letters of credit of which it is a beneficiary, notes,
drafts, instruments, securities, documents of title, and chattel paper.
"OBLIGATIONS" means all debt, principal, interest,
Bank Expenses and other amounts owed to Bank by Borrower pursuant to this
Agreement or any other agreement, whether absolute or contingent, due or to
become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.
"PAYMENT DATE" means the first calendar day of each
month commencing on the first such date after the Closing Date and ending on the
Revolving Maturity Date.
"PERSON" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"PRIME RATE" means the variable rate of interest, per
annum, most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.
"RESPONSIBLE OFFICER" means each of the Chief
Executive Officer, the President, the Chief Financial Officer and the Controller
of Borrower.
"REVOLVING LINE OF CREDIT" means a credit extension
of up to Three Million Dollars ($3,000,000).
"REVOLVING LINE MATURITY DATE" means December 31,
2000.
"SCHEDULE" means the schedule of exceptions attached
hereto, if any.
"SUBORDINATED DEBT" means debt incurred by Borrower
subordinated to Borrower's indebtedness owed to Bank, and which is reflected in
a written agreement a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" means with respect to any Person,
corporation, partnership, company association, joint venture, or any other
business entity of which more than fifty percent (50%) of the voting stock or
other equity interests is owned or controlled, directly or indirectly, by such
Person or one or more Affiliates of such Person.
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<PAGE> 6
1.1.1. Accounting and Other Terms. All accounting
terms not specifically defined herein shall be construed in accordance with GAAP
and all calculations and determinations made hereunder shall be made in
accordance with GAAP. When used herein, the term "financial statements" shall
include the notes and schedules thereto. The terms "including"/"includes" shall
always be read as meaning "including (or includes) without limitation", when
used herein or in any other Loan Document.
2. LOAN AND TERMS OF PAYMENT
2.1. Credit Extensions. Borrower promises to pay to the
order of Bank, in lawful money of the United States of America, the aggregate
unpaid principal amount of all Credit Extensions made by Bank to Borrower
hereunder. Borrower shall also pay interest on the unpaid principal amount of
such Advances at rates in accordance with the terms hereof.
2.1.1. Revolving Line of Credit.
(a) Subject to and upon the terms and conditions
of this Agreement, Bank agrees to make Advances to Borrower in an aggregate
outstanding amount not to exceed the Borrowing Base minus the face amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit). Subject to the terms and conditions of this Agreement, amounts borrowed
pursuant to this Section 2.1 may be repaid and reborrowed at any time during the
term of this Agreement.
(b) Whenever Borrower desires an Advance,
Borrower will notify Bank by facsimile transmission or telephone no later than
3:00 p.m. Atlanta, Georgia time, on the Business Day that the Advance is to be
made. Each such notification shall be promptly confirmed by a Payment/Advance
Form in substantially the form of Exhibit B hereto. Bank is authorized to make
Advances under this Agreement, based upon instructions received from a
Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Bank's discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank shall be entitled to
rely on any telephonic notice given by a person who Bank reasonably believes to
be a Responsible Officer or a designee thereof, and Borrower shall indemnify and
hold Bank harmless for any damages or loss suffered by Bank as a result of such
reliance. Bank will credit the amount of Advances made under this Section 2.1 to
Borrower's deposit account.
(a) The Revolving Line of Credit shall terminate
on the Revolving Maturity Date, at which time all Advances under this Section
2.1 and other amounts due under this Agreement (except as otherwise expressly
specified herein) shall be immediately due and payable.
2.1.2. Letters of Credit.
(a) Subject to the terms and conditions
of this Agreement, Bank agrees to issue or cause to be issued Letters of Credit
for the account of Borrower in an
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<PAGE> 7
aggregate outstanding face amount not to exceed the Borrowing Base, minus the
then outstanding principal balance of the Advances; provided that the face
amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve) shall not in any case exceed
Three Million Dollars ($3,000,000). Each Letter of Credit shall have an expire
date no later than the Revolving Maturity Date. All Letters of Credit shall be,
in form and substance, acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank's form of standard Application and
Letter of Credit Agreement.
(b) The obligation of Borrower to
immediately reimburse Bank for drawings made under Letters of Credit shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement and such Letters of Credit, under
all circumstances whatsoever. Borrower shall indemnify, defend, protect, and
hold Bank harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys' fees, arising out of or in connection with any
Letters of Credit.
(c) Borrower may request that Bank
issue a Letter of Credit payable in a currency other than United States Dollars.
If a demand for payment is made under any such Letter of Credit, Bank shall
treat such demand as an Advance to Borrower of the equivalent of the amount
thereof (plus cable charges) in United States currency at the then prevailing
rate of exchange in San Francisco, California, for sales of that other currency
for cable transfer to the country of which it is the currency.
(d) Upon the issuance of any letter of
credit payable in a currency other than United States Dollars, Bank shall create
a reserve under the Revolving Line of Credit for letters of credit against
fluctuations in currency exchange rates, in an amount equal to ten percent (10%)
of the face amount of such letter of credit. The amount of such reserve may be
amended by Bank from time to time to account for fluctuations in the exchange
rate. The availability of funds under the Revolving Line of Credit shall be
reduced by the amount of such reserve for so long as such letter of credit
remains outstanding.
2.2. Overadvances. If, at any time or for any reason, the
amount of Obligations owed by Borrower to Bank pursuant to Section 2.1.1 and
2.1.2 of this Agreement is greater than the Borrowing Base, Borrower shall
immediately pay to Bank, in cash, the amount of such excess.
2.3. Interest Rates, Payments, and Calculations.
(a) Interest Rate. Except as set forth in
Section 2.3(b), any Advances shall bear interest, on the average daily balance
thereof, at a per annum rate equal to the Prime Rate.
(b) Default Rate. All Obligations shall bear
interest, from and after the occurrence of an Event of Default, at a rate equal
to five (5) percentage points above the interest rate applicable immediately
prior to the occurrence of the Event of Default.
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<PAGE> 8
(c) Payments. Interest hereunder shall be due
and payable on each Payment Date. Borrower hereby authorizes Bank to debit any
accounts with Bank, including, without limitation, Account Number _____________
for payments of principal and interest due on the Obligations and any other
amounts owing by Borrower to Bank. Bank will notify Borrower of all debits which
Bank has made against Borrower's accounts. Any such debits against Borrower's
accounts in no way shall be deemed a set-off.
(d) Computation. In the event the Prime Rate is
changed from time to time hereafter, the applicable rate of interest hereunder
shall be increased or decreased effective as of 12:01 a.m. on the day the Prime
Rate is changed, by an amount equal to such change in the Prime Rate. All
interest chargeable under the Loan Documents shall be computed on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed.
2.4. Crediting Payments. Prior to the occurrence of an
Event of Default, Bank shall credit a wire transfer of funds, check or other
item of payment to such deposit account or Obligation as Borrower specifies.
After the occurrence of an Event of Default, the receipt by Bank of any wire
transfer of funds, check, or other item of payment, whether directed to
Borrower's deposit account with Bank or to the Obligations or otherwise, shall
be immediately applied to conditionally reduce Obligations, but shall not be
considered a payment in respect of the Obligations unless such payment is of
immediately available federal funds or unless and until such check or other item
of payment is honored when presented for payment. Notwithstanding anything to
the contrary contained herein, any wire transfer or payment received by Bank
after 12:00 noon Pacific time shall be deemed to have been received by Bank as
of the opening of business on the immediately following Business Day. Whenever
any payment to Bank under the Loan Documents would otherwise be due (except by
reason of acceleration) on a date that is not a Business Day, such payment shall
instead be due on the next Business Day, and additional fees or interest, as the
case may be, shall accrue and be payable for the period of such extension.
2.5. Fees. Borrower shall pay to Bank the following:
(a) Facility Fee. A Facility Fee equal to
one-half of one percent (.5%) of the $3,000,000 Revolving Line of Credit
($15,000) shall be due on the Closing Date. Such Facility Fee shall be fully
earned and non-refundable when paid.
(b) Bank Expenses. Upon demand from Bank,
including, without limitation, upon the date hereof, all Bank Expenses incurred
through the date hereof, including reasonable attorneys' fees and expenses and,
after the date hereof, all Bank Expenses, including reasonable attorneys' fees
and expenses, as and when they become due.
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<PAGE> 9
2.6. Additional Costs. In case any law, regulation, treaty
or official directive or the interpretation or application thereof by any court
or any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(a) subjects Bank to any tax with respect to
payments of principal or interest or any other amounts payable hereunder by
Borrower or otherwise with respect to the transactions contemplated hereby
(except for taxes on the overall net income of Bank imposed by the United States
of America or any political subdivision thereof);
(b) imposes, modifies or deems applicable any
deposit insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with
respect to its performance under this Agreement, and the result of any of the
foregoing is to increase the cost to Bank, reduce the income receivable by Bank
or impose any expense upon Bank with respect to any loans, Bank shall notify
Borrower thereof. Borrower agrees to pay to Bank the amount of such increase in
cost, reduction in income or additional expense as and when such cost, reduction
or expense is incurred or determined, upon presentation by Bank of a statement
of the amount and setting forth Bank's calculation thereof, all in reasonable
detail, which statement shall be deemed true and correct absent manifest error.
2.7. Term.
(a) Except as otherwise set forth herein, this
Agreement shall become effective on the Closing Date and, subject to Section
12.7, shall continue in full force and effect for a term ending on the Revolving
Maturity Date. Notwithstanding the foregoing, Bank shall have the right to
terminate its obligation to make Credit Extensions under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination of this Agreement, Bank's lien
on the Collateral shall remain in effect for so long as any Obligations are
outstanding.
(b) At such time as (i) the Bank is no longer
obligated under this Agreement (whether by the terms hereof or as a result of a
release of such obligations by Borrower) to make any further Credit Extensions,
and (ii) all obligations have been indefeasibly paid and satisfied in full, this
Agreement and the Loan Documents shall terminate and Bank shall release or cause
to be released, at the Borrower's cost and expense, all Liens granted by
Borrower to Bank under the Loan Documents as security for any of the
Obligations; provided, however, that any and all indemnity obligations of
Borrower arising under this Agreement or any other Loan Documents shall survive
the termination of this Agreement or such other Loan Documents.
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<PAGE> 10
3. CONDITIONS OF LOANS
3.1. Conditions Precedent to Initial Credit Extension. The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower
with respect to articles, bylaws, incumbency and resolutions authorizing the
execution and delivery of this Agreement;
(c) payment of the fees and Bank Expenses then
due specified in Section 2.5 hereof;
(d) Certificate of Foreign Qualification (if
applicable);
(e) such other documents, and completion of such
other matters, as Bank may reasonably deem necessary or appropriate; and
(f) execution and delivery of each Loan Document
by Borrower.
3.2. Conditions Precedent to all Credit Extensions. The
obligation of Bank to make each Credit Extension, including the initial Credit
Extension, is further subject to the following conditions:
(a) timely receipt by Bank of the Payment/
Advance Form as provided in Section 2.1; and
(b) the representations and warranties
contained in Section 5 shall be true and correct in all material respects on and
as of the date of such Payment/Advance Form and on the effective date of each
Credit Extension as though made at and as of each such date, and no Event of
Default shall have occurred and be continuing, or would result from such Credit
Extension. The making of each Credit Extension shall be deemed to be a
representation and warranty by Borrower on the date of such Credit Extension as
to the accuracy of the facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1. Grant of Security Interest. Borrower grants to Bank a
continuing security interest in the property described in Exhibit A attached
hereto (the "Collateral") in order to secure prompt repayment of any and all
obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Agreement, as amended from time to time, and
any other agreements entered into between Bank and Borrower (the "Loan
Documents"). Such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in
-9-
<PAGE> 11
Collateral acquired after the date hereof. Borrower acknowledges that Bank may
place a hold on the deposit account pledged as Collateral.
4.2. Delivery of Additional Documentation Required.
Borrower shall from time to time execute and deliver to Bank, at the request of
Bank, all Negotiable Collateral, all financing statements and other documents
that Bank may reasonably request, in form satisfactory to Bank, to perfect and
continue perfected Bank's security interests in the Collateral and in order to
fully consummate all of the transactions contemplated under the Loan Documents.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1. Due Organization and Qualification. Borrower and each
Subsidiary is a corporation duly existing and in good standing under the laws of
its state of incorporation and qualified and licensed to do business in, and is
in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified.
5.2. Due Authorization; No Conflict. The execution,
delivery, and performance of the Loan Documents are within the powers of
Borrower and any Subsidiary that is a party thereto, have been duly authorized,
and are not in conflict with nor constitute a breach of any provision contained
in the Articles/Certificate of Incorporation or Bylaws of Borrower or any
Subsidiary, nor will they constitute an event of default under any material
agreement to which either Borrower or any Subsidiary is a party or by which
either Borrower or any Subsidiary is bound. Neither Borrower nor any Subsidiary
is in default under any agreement to which they are a party or by which they are
bound, which default could have a Material Adverse Effect.
5.3. No Prior Encumbrances. Borrower and its Subsidiaries
have good and indefeasible title to the Collateral, free and clear of Liens.
5.4. Name; Location of Chief Executive Office. Except as
disclosed in the Schedule, neither Borrower nor any Subsidiary has done business
and will without at least thirty (30) days prior written notice to Bank do
business under any name other than that specified on the signature page hereof.
The chief executive office of Borrower is located at the address indicated in
Section 10 hereof. The principal business addresses of each of the Subsidiaries
are located in the Schedule 5.7 hereof.
5.5. Litigation. Except as set forth in the Schedule,
there are no actions or proceedings pending, or, to Borrower's knowledge,
threatened by or against Borrower or any Subsidiary before any court or
administrative agency in which an adverse decision could have a Material Adverse
Effect or a material adverse effect on the interest of Borrower or any
Subsidiary or Bank's security interest in the Collateral
-10-
<PAGE> 12
5.6. No Material Adverse Change in Financial Statements.
All consolidated financial statements related to Borrower and any Subsidiary
that have been delivered by Borrower to Bank, fairly present in all material
respects Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Bank on or about the Closing Date.
5.7. Solvency. The fair saleable value (including goodwill
minus disposition costs) of the assets of Borrower and its Subsidiaries exceeds
the fair value of their liabilities; the Borrower is not left with unreasonably
small capital after the transactions contemplated by this Agreement; and
Borrower and each Subsidiary are able to pay their debts (including trade debts)
as they mature.
5.8. Regulatory Compliance. Borrower and each Subsidiary
has met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from the failure
of Borrower or any Subsidiary to comply with ERISA that is reasonably likely to
result in their incurring any liability that could have a Material Adverse
Effect. Neither Borrower nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940. Neither Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System). Borrower and each Subsidiary have complied with all the
provisions of the Federal Fair Labor Standards Act. Borrower and each Subsidiary
have not violated any statutes, laws, ordinances or rules applicable to it,
violation of which could have a Material Adverse Effect.
5.9. Environmental Condition. None of Borrower's or any
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of the properties
or assets of Borrower or any Subsidiary have ever been designated or identified
in any manner pursuant to any environmental protection statute as a hazardous
waste or hazardous substance disposal site, or a candidate for closure pursuant
to any environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the release, or other disposition of hazardous waste or
hazardous substances into the environment.
-11-
<PAGE> 13
5.10. Taxes. Borrower and each Subsidiary have filed or
caused to be filed all tax returns required to be filed on a timely basis, and
have paid, or have made adequate provision for the payment of, all taxes
reflected therein.
5.11. Subsidiaries. Neither Borrower nor any Subsidiary
owns any stock, partnership interest or other equity securities of any Person.
5.12. Government Consents. Borrower and each Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of the business of Borrower and its
Subsidiaries as currently conducted.
5.13. Full Disclosure. No representation, warranty or other
statement made by Borrower or any Subsidiary in any certificate or written
statement furnished to Bank contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained in such certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
a Credit Extension hereunder, Borrower shall do all of the following:
6.1. Good Standing. Borrower shall maintain its and each
of its Subsidiaries' corporate existence and good standing in their jurisdiction
of incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
6.2. Government Compliance. Borrower shall meet, and
shall cause each Subsidiary to meet, the minimum funding requirements of ERISA
with respect to any employee benefit plans subject to ERISA. Borrower shall
comply, and shall cause each Subsidiary to comply, with all statutes, laws,
ordinances and government rules and regulations to which it is subject,
noncompliance with which could have a Material Adverse Effect or a material
adverse effect on the Collateral or the priority of Bank's Lien on the
Collateral.
6.3. Taxes. Borrower shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law, and
will execute and deliver to Bank, on demand, appropriate certificates attesting
to the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary
-12-
<PAGE> 14
has made such payments or deposits; provided that Borrower or a Subsidiary need
not make any payment if the amount or validity of such payment is (i) contested
in good faith by appropriate proceedings , (ii) is reserved against (to the
extent required by GAAP) by Borrower and (iii) no lien other than a Permitted
Lien results.
6.4. Principal Depository. Borrower and each Subsidiary
shall maintain its principal depository and operating accounts with Bank.
6.5. Further Assurances. At any time and from time to time
Borrower or a Subsidiary shall execute and deliver such further instruments and
take such further action as may reasonably be requested by Bank to effect the
purposes of this Agreement.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any Credit Extension
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Bank may have any commitment to make any Advances,
neither Borrower nor any of its Subsidiaries will do any of the following,
without prior written Bank approval:
7.1. Changes in Business, Ownership, or Management,
Business Locations.
Engage in any business other than the businesses currently engaged in
by Borrower or a Subsidiary and any business substantially similar or related
thereto (or incidental thereto). Borrower will not, without at least thirty (30)
days prior written notification to Bank, relocate its chief executive office or
add any new offices or business locations, other than remote offices for
employees which do not include any material assets.
7.2. Compliance. Become an "investment company" or a
company controlled by an "investment company," within the meaning of the
Investment Company Act of 1940, or become principally engaged in, or undertake
as one of its important activities, the business of extending credit for the
purpose of purchasing or carrying margin stock, or use the proceeds of any
Advance for such purpose; fail to meet the minimum funding requirements of
ERISA; permit a Reportable Event or Prohibited Transaction, as defined in ERISA,
to occur; fail to comply with the Federal Fair Labor Standards Act or violate
any other law or regulation, which violation could have a Material Adverse
Effect or a material adverse effect on the Collateral or the priority of Bank's
Lien on the Collateral; or permit any of its Subsidiaries to do any of the
foregoing.
7.3. Subordinated Debt. Make or permit any payment on any
Subordinated Debt, except under the terms of the Subordinated Debt, or amend any
provision in any document relating to the Subordinated Debt, without Bank's
prior written consent.
7.4. Collateral Value.
Permit the value of the Collateral to be less than the amount of the
Borrowing Base.
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<PAGE> 15
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1. Payment Default. If Borrower fails to pay, when due,
any of the Obligations.
8.2. Material Adverse Change. If there (i) occurs a
material adverse change in the business, operations, or condition (financial or
otherwise) of the Borrower or any Subsidiary, or (ii) is a material impairment
of the prospect of repayment of any portion of the Obligations or (iii) is a
material impairment of the value or priority of Bank's security interests in the
Collateral;
8.3. Attachment. If any material portion of Borrower's or
any Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any trustee,
receiver or person acting in a similar capacity and such attachment, seizure,
writ or distress warrant or levy has not been removed, discharged or rescinded
within ten (10) days, or if Borrower or any Subsidiary is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs, or if a judgment or other claim becomes a
lien or encumbrance upon any material portion of Borrower's or any Subsidiaries'
assets, or if a notice of lien, levy, or assessment is filed of record with
respect to any of Borrower's or any Subsidiaries' assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within ten (10) days after Borrower or any Subsidiary receives notice thereof,
provided that none of the foregoing shall constitute an Event of Default where
such action or event is stayed or an adequate bond has been posted pending a
good faith contest by Borrower or any Subsidiary (provided that no Credit
Extensions will be required to be made during such cure period);
8.4. Insolvency. If Borrower or any Subsidiary becomes
insolvent, or if an Insolvency Proceeding is commenced by Borrower or any
Subsidiary, or if an Insolvency Proceeding is commenced against Borrower or any
Subsidiary and is not dismissed or stayed within 30 days (provided that no
Advances will be made prior to the dismissal of such Insolvency Proceeding);
8.5. Other Agreements. If there is a default (which
remains uncured after a thirty (30) day grace period) in any agreement to which
Borrower or any Subsidiary is a party with a third party or parties resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of Fifty Thousand
Dollars ($50,000) or that could have a Material Adverse Effect;
8.6. Subordinated Debt. If Borrower or any Subsidiary
makes any payment on account of Subordinated Debt, except to the extent such
payment is allowed under any subordination agreement entered into with Bank;
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<PAGE> 16
8.7. Judgments. If a judgment or judgments for the
payment of money in an amount, individually or in the aggregate, of at least
Fifty Thousand Dollars ($50,000) shall be rendered against Borrower or any
Subsidiary and shall remain unsatisfied and unstayed for a period of ten (10)
days (provided that no Credit Extensions will be made prior to the satisfaction
or stay of such judgment); or
8.8. Misrepresentations. If any material misrepresentation
or material misstatement exists now or hereafter in any warranty or
representation set forth herein or in any certificate or writing delivered to
Bank by Borrower or any Subsidiary or any Person acting on Borrower's or any
Subsidiaries' behalf pursuant to this Agreement or to induce Bank to enter into
this Agreement or any other Loan Document.
8.9. Decrease in Market Value of Collateral. If the market
value of the Collateral falls below the amount of the Borrowing Base.
9. BANK'S RIGHTS AND REMEDIES
9.1. Rights and Remedies. Upon the occurrence and during
the continuance of an Event of Default, Bank may, at its election, without
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable (provided that upon the occurrence of an Event of Default
described in Section 8 all Obligations shall become immediately due and payable
without any action by Bank);
(b) Cease advancing money or extending credit to
or for the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Bank;
(c) Without notice to or demand upon
Borrower, make such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower agrees
to make the Collateral available to Bank, as Bank may designate.
(d) Without notice to Borrower, set off and
apply to the Obligations any and all (i) balances and deposits of Borrower or
any Subsidiary held by Bank, or (ii) indebtedness at any time owing to or for
the credit or the account of Borrower or any Subsidiary held by Bank; and
(e) Any deficiency that exists after disposition
of the Collateral as provided above will be paid immediately by Borrower.
9.2. Bank Expenses. If Borrower fails to pay any amounts
or furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following: (a) make payment of the same or any part thereof; and (b) set up such
reserves under the Revolving Line of Credit as Bank deems
-15-
<PAGE> 17
necessary to protect Bank from the exposure created by such failure. Any amounts
so paid or deposited by Bank shall constitute Bank Expenses, shall be
immediately due and payable, and shall bear interest at the then applicable rate
hereinabove provided, and shall be secured by the Collateral. Any payments made
by Bank shall not constitute an agreement by Bank to make similar payments in
the future or a waiver by Bank of any Event of Default under this Agreement.
9.3. Remedies Cumulative. Bank's rights and remedies under
this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Bank shall have all other rights and remedies not expressly set
forth herein as provided under the Code, by law, or in equity. No exercise by
Bank of one right or remedy shall be deemed an election, and no waiver by Bank
of any Event of Default on Borrower's part shall be deemed a continuing waiver.
No delay by Bank shall constitute a waiver, election, or acquiescence by it. No
waiver by Bank shall be effective unless made in a written document signed on
behalf of Bank and then shall be effective only in the specific instance and for
the specific purpose for which it was given.
9.4. Demand; Protest. Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees at any time held by Bank on which Borrower may in any way
be liable.
10. NOTICES
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses
set forth below:
If to Borrower: HIE, Inc.
1850 Parkway Place, Suite 1100
Marietta, Georgia 30067
Attn: Mr. Robert Murrie
FAX: (770) 423-8440
If to Bank Silicon Valley Bank
3343 Peachtree Road, N.E.
East Tower, Suite 312
Atlanta, Georgia 30326
Attn.: Ms. Angela Hart
FAX: (404) 261-2202
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<PAGE> 18
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE
The Loan Documents shall be governed by, and construed in accordance
with, the internal laws of the State of Georgia, without regard to principles of
conflicts of law. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER
AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OR ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS
AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THE BORROWER AND THE BANK ALSO AGREE THAT ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR TO ENFORCE ANY JUDGMENT OBTAINED AGAINST THE BORROWER IN CONNECTION WITH THIS
AGREEMENT OR SUCH OTHER LOAN DOCUMENT, MAY BE BROUGHT BY THE BANK OR BORROWER IN
ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF THE STATE IN WHICH BANK'S
ADDRESS SHOWN IN SECTION 10 ABOVE IS LOCATED, OR IN ANY OTHER COURT TO THE
JURISDICTION OF WHICH SUCH BORROWER OR ANY OF ITS PROPERTY IS OR MAY BE SUBJECT.
EACH OF THE BORROWER AND THE BANK IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
AFORESAID STATE AND FEDERAL COURTS, AND IRREVOCABLY WAIVES ANY PRESENT OR FUTURE
OBJECTION TO VENUE IN ANY SUCH COURT, AND ANY PRESENT OR FUTURE CLAIM THAT ANY
SUCH COURT IS AN INCONVENIENT FORUM, IN CONNECTION WITH ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
12. GENERAL PROVISIONS
12.1. Successors and Assigns. This Agreement shall bind
and inure to the benefit of the respective successors and permitted assigns of
each of the parties; provided, however, that neither this Agreement nor any
rights hereunder may be assigned by Borrower without Bank's prior written
consent, which consent may be granted or withheld in Bank's sole discretion.
Bank shall have the right without the consent of or notice to Borrower to sell,
transfer, negotiate, or grant participation in all or any part of, or any
interest in, Bank's obligations, rights and benefits hereunder.
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<PAGE> 19
12.2. Indemnification. Borrower shall indemnify, defend,
protect and hold harmless Bank and its officers, employees, and agents against:
(a) all obligations, demands, claims, and liabilities claimed or asserted by any
other party in connection with the transactions contemplated by the Loan
Documents; and (b) all losses or Bank Expenses in any way suffered, incurred, or
paid by Bank as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrower whether under the Loan
Documents, or otherwise (including without limitation reasonable attorneys fees
and expenses), except for losses caused by Bank's gross negligence or willful
misconduct.
12.3. Time of Essence. Time is of the essence for the
performance of all obligations set forth in this Agreement.
12.4. Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
12.5. Amendments in Writing, Integration. This Agreement
cannot be amended or terminated except by a writing signed by Borrower and Bank.
All prior agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the subject matter of
this Agreement, if any, are merged into this Agreement and the Loan Documents.
12.6. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.
12.7. Survival. All covenants, representations and
warranties made in this Agreement shall continue in full force and effect so
long as any Obligations remain outstanding. The obligations of Borrower to
indemnify Bank with respect to the expenses, damages, losses, costs and
liabilities described in Section 12.2 shall survive until all applicable statute
of limitations periods with respect to actions that may be brought against Bank
have run.
12.8. Hold Collateral. Borrower agrees that, until all
outstanding Obligations under this Agreement have been paid in full, Bank may
refuse to release the Collateral to any party, including Borrower and/or
Pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
HIE, INC., f/k/a Healthdyne Information
Enterprises, Inc.
By:
----------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL]
SILICON VALLEY BANK
By:
----------------------------------------
Title:
-------------------------------------
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<PAGE> 20
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest
in and to the following investment property of other assets (whether now owned
or hereafter acquired or dreated and whether held directly or as a security
entitlement, securities account, commodity contract, or a commodity account
maintained with any securities intermediary or commodity intermediary):
United States Treasury Bills maturing _____________ on deposit or
assigned by Borrower with or to the Bank (the "Pledged Assets"), including any
such Pledged Assets acquired or maintained in connection with Bank's Investment
Products and Services Group and/or made, acquired or maintained pursuant to any
Directed Investment Disclosure Notice and Agreement or similar agreement entered
into between Borrower and Bank, together with all Borrower's books relating to
the foregoing and any and all claims, rights and interests in any of the above
and all substitutions for, additions and accessions to and products and proceeds
thereof in whatever form including deposit accounts, accounts, general
intangibles, cash, instruments, documents and financial assets.
<PAGE> 21
EXHIBIT B
---------
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., E.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:
-------------------
FAX#: ( ) TIME:
--- ------------ -------------------
FROM: HIE, INC.
------------------------------------------------------------------------
BORROWER'S NAME
FROM:
------------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
------------------------------------------------------------------------
AUTHORIZED SIGNATURE
PHONE:
------------------------------------------------------------------------
FROM ACCOUNT #
----------------------------------------------------------------
TO ACCOUNT #
--------------------------------------------------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
PRINCIPAL INCREASE (ADVANCE) $
-------------------------
PRINCIPAL PAYMENT (ONLY) $
-------------------------
INTEREST PAYMENT (ONLY) $
-------------------------
PRINCIPAL AND INTEREST (PAYMENT) $
-------------------------
OTHER INSTRUCTIONS:
---------------------------------------------------------
All representations and warranties of Borrower stated in the Loan and
Security Agreement are true, correct and complete in all material respects as of
the date of the telephone request for and Advance confirmed by this Advance
Request; provided, however, that those representations and warranties expressly
referring to another date shall be true, correct and complete in all material
respects as of such date.
BANK USE ONLY:
TELEPHONE REQUEST:
-----------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
- -------------------------------------------------------------------------------
Authorized Requester
-----------------------------------
Authorized Signature (Bank)
Phone #
----------------------------
<PAGE> 22
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Healthdyne Information Enterprises, Inc. Bank: Silicon Valley Bank
Commitment Amount: $3,000,000
BALANCES
- -------------------------------------------------------------------------------
1. Maximum Loan Amount $3,000,000
2. Present balance of Treasury Bills on deposit $
3. Total Funds Available [Lesser of #1 or #2] $
4. Present balance owing on Line of Credit_______ $
5. RESERVE POSITION (#3 minus #4) $________
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Silicon Valley Bank.
COMMENTS:
HIE, INC., f/k/a Healthdyne Information Enterprises, Inc. BANK USE ONLY
Rec'd By:
------------
BY: Auth. Signer
------------------------------- Date:
Authorized Signer ----------------
Verified:
------------
Auth. Signer
Date:
----------------
---------------------
<PAGE> 1
EXHIBIT 99
[HIE LOGO] THE INTEGRATION SOLUTIONS COMPANY
NEWS RELEASE
<TABLE>
<S> <C>
Press Contact: Sara Herrmann
Manager, Corporate Communications
FOR IMMEDIATE RELEASE (770) 423-8572
[email protected]
Investor Relations Contact: Denise Jones
Investor Relations Specialist
(770) 423-8515
[email protected]
</TABLE>
HIE REPORTS FOURTH QUARTER AND YEAR-END 1999 RESULTS
Guidance on Expected 2000 Revenues and Profits
MARIETTA, GA, JANUARY 26, 2000 -HIE Inc. (NASDAQ: HDIE) today reported
results for the fiscal fourth quarter and year ended December 31, 1999.
For the fourth quarter 1999, total revenue was $6.5 million, resulting
in a net loss of $236,000 or $0.01 per share for the quarter (excluding the
provision for doubtful accounts, discussed below), which is consistent with the
range of analysts' expectations of a net loss of $0.01 to breakeven. This loss
was primarily due to lower than expected quarterly service revenue attributed to
Y2K-related implementation slowdowns.
For the year 1999, total revenue was $25.3 million. Software revenue
was $7 million, down 44 percent from 1998, and service revenue was $18.3
million, up 54 percent from 1998 (excluding consulting revenue attributable to a
business unit sold on December 31, 1998). The net loss for the year was $3.3
million, or $0.13 per share, excluding the provision for doubtful accounts.
The Company recorded a provision for doubtful accounts of $4.7 million
in the fourth quarter. This provision substantially arises from an unpaid
balance related to a single distributor, and will result in an additional loss
per share of $0.19 for the quarter. Including the provision, the net loss for
the fourth quarter was $5.0 million, or $0.20 per share, and the net loss for
the year was $8.5 million, or $0.34 per share.
"Healthcare organizations' increasing interest in enterprise-wide
master person indexing projects was evidenced in the fourth quarter by EMerge(R)
contracts with Wake Forest University Baptist Medical Center and Cybear, Inc.,"
said Robert Murrie, HIE president and CEO.
--MORE--
<PAGE> 2
HIE ANNOUNCES FOURTH QUARTER AND YEAR-END 1999 RESULTS
Fourth quarter 1999 service revenue reflected an increase of 22
percent, versus fourth quarter 1998 service revenue (excluding consulting
revenue attributable to a business unit sold on December 31, 1998). Service
backlog rose to $9.3 million as of December 31, 1999, compared to $9.1 million
on September 30, 1999. "Although we are pleased by the year-over-year increase
in service revenue, fourth quarter service revenue was below our expectations
due to customers' preparations for Y2K, particularly during the latter part of
the quarter. Since customers were trying to stabilize their IT environments for
year-end, requests for our services were frequently deferred to 2000. Looking
forward, however, we expect our service revenue to remain strong," said Murrie.
The Company had record cash collections in the fourth quarter with cash
receipts over $9 million. Cash collections were up over 50 percent compared to
average quarterly cash collections for the first three quarters of 1999. The
cash balance at December 31, 1999 was approximately $5.6 million, versus $2.0
million at September 30, 1999. The Company entered into a one-year, $3 million
cash-secured line of credit agreement with Silicon Valley Bank effective on
December 31, 1999. The new line of credit replaced the Company's previous line
with Silicon Valley Bank, which was secured by all of the company's assets.
On December 21, 1999, HIE granted a non-exclusive license to its
Cloverleaf(R) and EMerge software to Cybear, Inc. (NASDAQ: CYBA), an
Internet-based portal and provider of healthcare communications and applications
and a majority-owned subsidiary of Andrx Corporation (NASDAQ: ADRX), a leading
international distributor of generic drugs. In addition, the two companies
entered into a convertible note and warrant purchase agreement dated December
21, 1999. Under the terms of the agreement, Cybear provided a $3 million working
capital loan to HIE. This loan bears interest at 7.8 percent payable quarterly
and matures on December 21, 2000, unless Cybear chooses to convert that loan
into HIE Common Stock at $3.19 per share on that date. In addition, HIE granted
Cybear a warrant to purchase 47,022 shares of HIE Common Stock at any time on or
before December 21, 2004, at an exercise price of $3.19 per share.
HIE also announced that it expects to return to profitability in the
year 2000. "Based on currently available information, we are comfortable with
the current range of analysts' estimates of our revenues and earnings for 2000,"
said Murrie. "I believe the company is well positioned for the new millennium."
--MORE--
<PAGE> 3
HIE ANNOUNCES FOURTH QUARTER AND YEAR-END 1999 RESULTS
HIE management will discuss quarterly and year-end 1999 results at a
conference call scheduled today at 10:30 a.m. EST. Contact Denise Jones at (770)
423-8515 to register for the conference call. The conference call dial in number
is (712) 257-2272; the password is "HIE." For those not available at this time,
a playback number has been set up. The playback will be available at (402)
220-9677 from January 26 at noon EST through January 28 at 5 p.m. EST.
ABOUT HIE
HIE helps enterprises rapidly integrate their existing and new
applications, using the Company's market leading software tools and strategic
and tactical integration services. The Company's products are used in more than
1,200 sites worldwide, including those in the healthcare, financial services and
banking industries. HIE is headquartered in Marietta, Georgia, with offices in
Dallas, Columbus, and Essen, Germany. For more information, visit HIE's web site
at http://www.hie.com.
(Financial Tables To Follow)
-- MORE --
<PAGE> 4
HIE ANNOUNCES FOURTH QUARTER AND YEAR-END 1999 RESULTS
HIE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------- -----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software $ 2,443 $ 4,198 $ 6,982 $ 12,432
Services and other 4,065 3,918 18,333 14,752
-------- -------- -------- --------
Total revenue 6,508 8,116 25,315 27,184
-------- -------- -------- --------
Cost of revenue:
Software 407 251 1,343 852
Services and other 2,472 2,078 10,193 7,102
-------- -------- -------- --------
Total cost of revenue 2,879 2,329 11,536 7,954
-------- -------- -------- --------
Gross profit 3,629 5,787 13,779 19,230
-------- -------- -------- --------
Operating expenses:
Sales and marketing 1,717 1,890 6,969 6,672
Research and development 833 1,034 4,047 3,882
General and administrative 1,134 1,580 5,545 5,747
Provision for doubtful accounts 4,745 150 5,195 270
Merger costs -- -- -- 1,060
-------- -------- -------- --------
Total operating expenses 8,429 4,654 21,756 17,631
-------- -------- -------- --------
Operating income (loss) (4,800) 1,133 (7,977) 1,599
Interest expense, net (181) (34) (496) (101)
-------- -------- -------- --------
Income (loss) before income taxes (4,981) 1,099 (8,473) 1,498
Income taxes -- 144 -- --
-------- -------- -------- --------
Net income (loss) (4,981) 1,243 (8,473) 1,498
======== ======== ======== ========
Accretion of preferred stock (17) -- (17) --
Preferred stock dividends (14) -- (14) --
-------- -------- -------- --------
Net income (loss) attributable to
common shareholders $ (5,012) $ 1,243 $ (8,504) $ 1,498
======== ======== ======== ========
Shares used in the calculation
of net income (loss) per share:
Basic 25,462 24,584 25,346 24,031
======== ======== ======== ========
Diluted (1) 25,462 25,445 25,346 24,867
======== ======== ======== ========
Net income (loss) per share of
common stock:
Basic $ (0.20) $ 0.05 $ (0.34) $ 0.06
======== ======== ======== ========
Diluted (1) $ (0.20) $ 0.05 $ (0.34) $ 0.06
======== ======== ======== ========
</TABLE>
(1) Common stock equivalents are excluded from the earnings (loss) per
share calculation for the quarter and year ended December 31, 1999
because the effect would be anti-dilutive.
--MORE--
<PAGE> 5
HIE ANNOUNCES FOURTH QUARTER AND YEAR-END 1999 RESULTS
HIE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,609 $ 3,167
Trade accounts receivable, net 6,662 12,996
Other current assets 1,421 1,854
------- -------
Total current assets 13,692 18,017
Intangibles 10,578 11,087
Other assets 2,997 2,431
------- -------
Total assets $27,267 $31,535
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt and capital lease obligations $ 6,332 $ 2,911
Other current liabilities 7,567 7,684
------- -------
Total current liabilities 13,899 10,595
Other liabilities 254 642
Redeemable preferred stock 348 --
Shareholders' equity 12,766 20,298
------- -------
Total liabilities and shareholders' equity $27,267 $31,535
======= =======
</TABLE>
This press release includes forward-looking statements in addition to historical
information. The words "expect," "anticipate,""intend," "plan," "believe,"
"seek," "estimate" and similar expressions are intended to identify such
forward-looking statements; however, this press release also contains other
forward-looking statements. These include statements relating to management's
current expectations regarding HIE's performance during 2000. The Company
cautions that there are various important factors that could cause actual
results to differ materially from those indicated in the forward-looking
statements; accordingly, there can be no assurance that such indicated results
will be realized. Among the important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements are
competitive pressures, changes in relationships with significant distributors or
customers, unanticipated problems with the collectibility of outstanding
accounts receivable, changes in the mix of software and service revenue, the mix
of direct and indirect sales, sales timing, changes in pricing policies,
undetected errors or bugs in the software, delays in the product development,
lower-than-expected demand for the Company's software tools or services,
business conditions in the healthcare and other complementary markets, the
Company's ability to modify its software for use in non-healthcare industries,
risks associated with general economic conditions and the risk factors detailed
from time to time in the Company's periodic reports and registration statements
filed with Securities and Exchange Commission, including the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 . By making these
forward-looking statements, the Company does not undertake to update them in any
manner except as may be required by the Company's disclosure obligations in
filings it makes with the Securities and Exchange Commission under the Federal
securities laws.
"HIE," "Cloverleaf" and "EMerge" are trademarks of HIE, Inc.
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