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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 and Exchange Act of 1934
Date of Report (Date of earliest event eported) December 30, 1997
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HALIS, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 0-16288 58-1366235
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
9040 Roswell Road, Suite 470, Atlanta, Georgia 30350
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 641-5555
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(Former name or former address, if changed since last report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
4.1 - Form of 4% Convertible Debenture
4.2 - Form of Common Stock Purchase Warrant Certificate
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On December 30, 1997, HALIS, Inc., a Georgia corporation (the
"Company") received funds from the sale of a 4% Convertible Debenture dated
December 23, 1997 in the principal amount of $200,000 to Tradewinds
Investments, Ltd., a Bahamas corporation, pursuant to a Convertible Debenture
Subscription Agreement dated December 23, 1997. In addition, on January 7,
1998, the Company received funds from the sale of a 4% Convertible Debenture
dated December 24, 1998 in the principal amount of $100,000 to GEM SINGAPORE
PTE LIMITED, a Nevis, West Indies corporation ("GEM Singapore"), pursuant to a
Convertible Debenture Subscription Agreement dated December 19, 1997. The
Debentures shall hereinafter be collectively referred to as the "Debentures."
In addition, the Company issued a total of 450,000 warrants (the "Warrants") to
purchase shares of the Company's common stock, $.01 par value per share (the
"Common Stock") to non-U.S. Persons. The Warrants were distributed as follows:
250,000 to Tradewinds Investments, Ltd., 100,000 to Ms. Kalpana Anant Joshi in
India, and 100,000 to GEM Singapore. The Debentures and the Warrants were
issued to non-U.S. Persons with the assistance of GEM Advisors, Inc. acting as a
placement agent. The consideration received by the Company for the Debentures
and the Warrants was $300,000 in cash less certain expenses, including payments
of $2,500 in fees to the escrow agent and 9% of the aggregate proceeds to GEM
Advisors, Inc. as compensation for its services.
The Debentures are convertible into shares of Common Stock, the number
of which is calculated in accordance with the following formula:
Number of Shares issued upon Conversion = Principal (+ Interest, if
applicable)/Conversion Price, where
Principal = The Principal amount of the Debenture,
Interest = Principal x (N/365) x .04, where
N = the number of days between the date hereof and the Conversion Date
for the Debenture, and
Conversion Price = the lesser of (x) 100% of the average Closing Bid
Price, as that term is defined below, of the Shares for the ten (10) trading
days immediately preceding the date of the sale (the "Fixed Conversion Price"),
or (y) 65% of the average Closing Bid Price, as that term is defined below, of
the Shares for the ten (10) trading days immediately preceding the day prior to
the Conversion Date (the "Variable Conversion Price"). The Fixed Conversion
Price of the Debentures is approximately $.61.
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For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price on the market as reported by the OTC Bulletin Board or
NASDAQ's National Market System or Small Capitalization System (NASDAQ) or
American Exchange Emerging Company Marketplace or if then traded on a different
national securities exchange, the closing sales price on the principal national
securities exchange on which it is so traded and if not available, the mean of
the daily high and low sales prices on such securities exchange on which it is
traded.
In the event that the Market Price of the Common Stock increases by
more than thirty percent (30%) above the original Fixed Conversion Price, the
holders shall have the right to receive in the form of an adjustment to the
original Fixed Conversion Price fifty percent (50%) of the amount in excess of
thirty percent (30%), and no more of such excess. In such event, the original
Fixed Conversion Price shall be adjusted to be:
C
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[(C/F) + (1.3)]/2
where: C= the bid price of the Common Stock at the time of
conversion;
and
F= the original Fixed Conversion Price
Each Warrant issued to Tradewinds Investments, Ltd. entitles the
holder thereof to purchase one share of Common Stock at exercise price of $.60
per share. Each Warrant issued to Mrs. Joshi and GEM Singapore also entitles
the holder thereof to purchase one share of Common Stock at an exercise price
of $.60 per share.
The offers and sales of the Debentures and the Warrants were made
pursuant to a claim of exemption under Rules 901 and 903 of Regulation S
promulgated by the Securities and Exchange Commission or, alternatively, under
Section 4(2) of the Securities Act of 1933, as amended. The sales of the
Debentures and the Warrants were made in "offshore transactions" (as defined in
Regulation S) and no "directed selling efforts" (as defined in Regulation S)
were made by the Company or any of its affiliates. The purchasers of the
Debentures and the Warrants (the "Purchasers") are entities organized under the
laws of jurisdictions other than the United States and therefore are not "U.S.
Persons" (as defined in Regulation S). Moreover, the Purchasers represented and
warranted, among other things, that at the time of the offers and sales they
were located outside the United States, and that neither the Purchasers nor any
of their affiliates had engaged in any "directed selling efforts" (as defined
in Regulation S). Appropriate legends were affixed to the Debentures and the
certificates for the Warrants. In addition, the Company did not use any general
advertisement or solicitation in connection with the offer or sale of the
Debentures or Warrants to the Purchasers and the Purchasers represented and
warranted that they were purchasing the Debentures and Warrants for investment
only and not with a view to distribution.
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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 hereunto duly authorized.
HALIS, INC.
By: /s/ Larry Fisher
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Larry Fisher, Executive Vice President
Dated: January 12, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<S> <C>
4.1 Form of 4% Convertible Debenture
4.2 Form of Common Stock Purchase Warrant Certificate
</TABLE>
<PAGE> 1
EXHIBIT 4.1
THIS DEBENTURE AND THE COMMON STOCK ("SHARES") ISSUABLE UPON CONVERSION OF THIS
DEBENTURE (COLLECTIVELY THE "SECURITIES") HAVE NOT BEEN REGISTERED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES COMMISSION OF
ANY STATE UNDER ANY STATE SECURITIES LAW. THEY ARE BEING OFFERED AND SOLD
PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S ("REGULATION S")
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN
REGULATION S) DURING THE RESTRICTED PERIOD, AND THEREAFTER ONLY IF THESE
SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Debenture Certificate No. U.S. $
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HALIS, INC.
4% CONVERTIBLE DEBENTURE DUE DECEMBER ___, 2000
FOR VALUE RECEIVED, HALIS, Inc., a Georgia corporation (the
"Company"), promises to pay to _________________ ("Purchaser"), or any
subsequent registered holder hereof (the "Holder"), the principal sum of U.S.
Dollars (U.S. $___________ ), together with interest on the principal sum
outstanding at the rate of four (4%) percent per annum, payable in U.S. Dollars,
under the terms and conditions set forth below. Accrual of interest on this
Debenture shall commence on the date hereof and shall continue to accrue until
the Maturity Date or if earlier, the Conversion Date or Redemption Date, as the
case may be. This Debenture is being issued pursuant to the Regulation S
Subscription Agreement between the Holder and the Company ("Subscription
Agreement"), and this Debenture is subject to all of the terms and conditions
thereof, all of which are hereby incorporated by reference.
SECTION 1. PAYMENT OF DEBENTURE. Subject to all of the terms and
conditions hereof, including the automatic conversion of the entire unconverted
principal amount at the Maturity Date as provided in Section 1 hereof, the
Company shall pay to the Holder the entire principal amount hereof and all
interest accrued thereon on December __, 2000 (the "Maturity Date"). All
interest or principal shall be paid to the person and at the address in whose
name this Debenture is registered on the records of the Company on the business
day immediately preceding the applicable payment date. As provided herein, the
principal and interest due hereunder may be converted into or redeemed for
shares of Common Stock, par value of $.01 per share, of the Company ("Shares"),
and such Shares shall be in the name of and forwarded to the person and
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at the address in whose name this Debenture is registered on the business day
immediately preceding the issuance date.
SECTION 2. SALE. TRANSFER OR EXCHANGE. This Debenture may be
transferred, exchanged or converted only in compliance with the Act, including
Regulation S and any applicable state securities laws. Any Holder of this
Debenture, by acceptance hereof, agrees to the representations, warranties and
covenants herein and in the Subscription Agreement. Prior to due presentment to
the Company for transfer of this Debenture, the Company and any agent of the
Company may treat the person in whose name this Debenture is duly recorded on
the Company's records as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes.
SECTION 3. HOLDER CONVERSION.
A. Right to Convert; Conversion Rate. The Holder of this Debenture
shall be entitled to convert the entire principal amount of this Debenture at
any time during the period beginning forty-five (45) days after the date hereof
and prior to the Maturity Date into that number of Shares calculated in
accordance with the following formula:
Number of Shares issued upon Conversion = Principal (+ Interest, if
applicable)/Conversion Price, where
Principal = The Principal amount of the Debenture, Interest =
Principal x (N/365) x .04, where N = the number of days between the
date hereof and the Conversion Date for the Debenture, and
Conversion Price = the lesser of (x) 100% of the average Closing Bid
Price, as that term is defined below, of the Shares for the ten (10) trading
days immediately preceding the date hereof (the "Fixed Conversion Price"), or
(y) 65% of the average Closing Bid Price, as that term is defined below, of the
Shares for the ten (10) trading days immediately preceding the day prior to the
Conversion Date (the "Variable Conversion Price").
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price on the market as reported by the OTC Bulletin Board or
NASDAQ's National Market System or Small Capitalization System (NASDAQ) or
American Exchange Emerging Company Marketplace or if then traded on a different
national securities exchange, the closing sales price on the principal national
securities exchange on which it is so traded and if not available, the mean of
the daily high and low sales prices on such securities exchange on which it is
traded.
B. Mechanics of Conversion. In order to convert the Debenture into
Shares, the Holder shall (i) fax a copy of an executed notice of conversion
("Notice of Conversion") to the Company at the office of the Company, which
notice shall specify that the Debenture shall be converted and shall contain a
calculation of the number of Shares to be issued in connection with the
conversion, and (ii) surrender the original Debenture to a common courier for
delivery to the office of the Company; provided, however, that the Company
shall not be obligated to issue certificates evidencing the Shares issuable
upon such conversion unless either the original
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Debenture is delivered to the Company, or the Holder notifies the Company that
such Debenture has been lost, stolen or destroyed and the Holder has complied
with Section 3.D. below. Upon receipt by the Company of a facsimile copy of a
Notice of Conversion, the Company shall immediately send, via facsimile,
confirmation of receipt of the Notice of Conversion to Holder which shall
specify that the Notice of Conversion has been received and the name of a
contact person at the Company whom the Holder should contact regarding
information related to the conversion. In the case of a dispute as to the
calculation of the Conversion Price or any other issues related thereto, the
Company shall promptly issue the number of Shares that are not disputed. The
Company shall submit the disputed calculations to its independent auditors
within two (2) business days of receipt of Holder's Notice of Conversion. The
Company shall cause the auditors to perform the calculations and notify the
Company and Holder of the results no later than five (5) business days from the
time such accountant receives the disputed calculations. The auditor's
calculation shall be deemed conclusive absent manifest error.
C. Interest. Upon receipt of the Notice of Conversion, the Company
shall, at its option, either pay all interest accrued on the Debenture through
the Conversion Date in U.S. Dollars, or shall issue Shares in full satisfaction
of the accrued interest. The number of Shares to be issued shall be determined
pursuant to the formula described in Section 3.A. The Company shall notify the
Holder of its decision within two (2) business days following its receipt of
the Notice of Conversion.
D. Lost or Stolen Debentures. Upon receipt by the Company of evidence
of the loss, theft, destruction or mutilation of this Debenture, and (in case
of loss, theft or destruction) indemnity or security reasonably satisfactory to
the Company, and upon surrender and cancellation of the Debenture, if
mutilated, the Company shall execute and deliver a new Debenture of like tenor
and date without charge to Holder.
E. Delivery of Shares upon Conversion. The transfer agent or the
Company (as applicable) shall, no later than the close of business on the fifth
(5th) business day after delivery to the Company of the Debenture to be
converted (or after provision for security or indemnification, if required),
issue a certificate for the number of Shares to which the Holder shall be
entitled as aforesaid and surrender such original certificate to a common
courier for either overnight or (if delivery is outside the United States, then
two (2) day delivery) to the Holder at the address of the Holder on the books
of the Company.
F. No Fractional Shares. No fractional Shares shall be issued upon
conversion of this Debenture. If any conversion of the Debenture would create a
fractional share or a right to acquire a fractional share, such fractional
shares, on an aggregate basis, shall be disregarded and the number of Shares
issuable upon conversion shall be, on an aggregate basis, the next lower number
of whole shares.
G. Date of Conversion. The date on which conversion occurs (the
"Conversion Date") shall be deemed to be the date (utilizing Atlanta, Georgia
time) the Notice of Conversion is faxed to the Company, and, provided, that the
original Debenture is surrendered by depositing such Debenture with a common
courier, as provided above, and received by the Company within three
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(3) business days from the Conversion Date. The person or persons entitled to
receive the Shares issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Shares on the Conversion Date.
If the original Debenture is not received by the Company within three (3)
business days after the Conversion Date, the Notice of Conversion, at the
Company's option, may be declared null and void.
SECTION 4. AUTOMATIC CONVERSION. If the Debenture has not been
converted prior to the Maturity Date pursuant to Section 2 above, the entire
principal amount of the Debenture shall be automatically converted into Shares
on and as of such date. The number of Shares into which the Debenture shall be
converted shall be calculated in accordance with the formula in Section 3.A.
above as if the Maturity Date were the Conversion Date of the Debenture. All
interest accrued on the Debenture through the Maturity Date shall be satisfied,
at the Company's option, either through the issuance of Shares pursuant to the
formula set forth in Section 3.A. or by payment thereof by the Company to the
Holder in U.S. Dollars. The Company shall notify the Holder of such election
within two (2) business days after the Maturity Date. The Company shall
promptly deliver the Shares and, if applicable, the interest payment, within
five (5) business days following receipt of this Debenture from the Holder.
SECTION 5. RESERVATION OF SHARES ISSUABLE UPON CONVERSION OR
REDEMPTION. The Company shall at all times reserve and keep available out of
its unissued Shares, solely for the purpose of effecting the conversion or
redemption of the entire principal amount of this Debenture, such number of its
Shares as shall from time to time be sufficient to effect the conversion or
redemption of this Debenture; and if at any time the number of authorized but
unissued Shares shall not be sufficient to effect the conversion or redemption
of this Debenture, the Company will immediately take such corporate action as
may be necessary to increase its authorized but unissued Shares to such number
of shares as shall be sufficient for such purpose. If such action shall not be
taken within sixty (60) days after notice from the Holder, then the Company
shall only at the option of the Holder deliver full payment in U.S. Dollars of
the outstanding principal amount of this Debenture and all accrued interest
thereon to the Holder within thirty (30) days following the expiration of such
sixty (60) day period.
SECTION 6. ADJUSTMENT TO CONVERSION PRICE.
A. Performance Adjustments to Original Fixed Conversion Price. In the
event that the Market Price of the Common Stock increases by more than thirty
percent (30%) above the original Fixed Conversion Price, the holders shall have
the right to receive in the form of an adjustment to the original Fixed
Conversion Price fifty percent (50%) of the amount in excess of thirty percent
(30%), and no more of such excess. In such event, the original Fixed Conversion
Price shall be adjusted to be:
C
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[(C/F) + (1.3)]/2
Where: C = the bid price of the Common Stock at the time of
conversion; and
F = the original Fixed Conversion Price
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B. Adjustment to Fixed Conversion Price Due to Stock Split, Stock
Dividend, Etc. If at any time when the Debenture is issued and outstanding, the
number of outstanding Shares is increased by a stock split, stock dividend, or
other similar event, the Fixed Conversion Price shall be proportionately
reduced, or if the number of outstanding Shares is decreased by a combination
or reclassification of shares, or other similar event, the Fixed Conversion
Price shall be proportionately increased.
C. Adjustment to Variable Conversion Price. If, at any time when the
Debenture is issued, the number of outstanding Shares is increased or
decreased, as the case may be, by a stock split, stock dividend, combination,
reclassification, or other similar event, which event shall have taken place
during the reference period for determination of the Conversion Price for any
conversion or redemption of the Debentures, then the Variable Conversion Price
shall be calculated giving appropriate effect to the stock split, stock
dividend, combination, reclassification or other similar event for all ten (10)
trading days immediately preceding the date prior to Conversion Date,
Redemption Date, or Maturity Date, as the case may be.
D. Adjustment Due to Merger, Consolidation. Etc. If at any time when
the Debenture is issued, there shall be any merger, consolidation, exchange of
shares, recapitalization, reorganization, or other similar event, as a result
of which Shares shall be changed into the same or a different number of shares
of another class or classes of stock or securities of the Company or another
entity or there is a sale of all or substantially all the Company's assets,
then the Holder shall thereafter have the right to receive upon conversion or
redemption of the Debenture, upon the basis and upon the terms and conditions
specified herein and in lieu of the Shares immediately theretofore issuable
upon conversion or redemption, such Common Stock, securities and/or other
assets which the holder would have been entitled to receive in such transaction
had the Debenture been converted and redeemed immediately prior to such
transaction, and in such case appropriate provisions shall be made with respect
to the rights and interests of the Holders to the end that the provisions
hereof (including, without limitation provisions for adjustment of the
Conversion Price and of the number of Shares issuable upon conversion or
redemption of the Debenture) shall thereafter be applicable, as nearly as may
be practicable in relation to any securities thereafter deliverable upon the
exercise hereof. The Company shall not effect any transaction described in this
subsection 6.C. unless it first gives not less than fifteen (15) days prior
notice of such merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event (during which time the Holder shall be
entitled to convert its Debentures into Shares).
SECTION 7. EXERCISE. The Holder hereof acknowledges that the Debenture
has been issued pursuant to Regulation S promulgated under the Act and neither
the Debenture nor the Shares have been registered under the Act or under any
state securities law. This Debenture may not be exercised by or on behalf of
any U.S. Person unless the Shares are registered under the Act or an exemption
from such registration is available. As required by Regulation S, at the time
of any exercise hereof, the Holder must deliver to the Company a written
certification that the Holder is not a U.S. Person and the Debenture is not
being exercised on behalf of a U.S. Person,
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or a written opinion of counsel, which opinion is satisfactory to the Company,
to the effect that the Debenture and the Shares delivered upon the exercise of
the Debenture have been registered under the Act or are exempt from
registration thereunder.
This Debenture may not be exercised within the United States and the
Shares may not be delivered within the United States upon exercise, other than
in connection with offerings deemed to meet the definition of Offshore
Transactions pursuant to paragraph (i)(3) of Rule 902 of Regulation S, unless
registered under the Act or an exemption from such registration is available.
In this regard, as a condition of the issuance of Shares upon the conversion or
redemption of the Debenture, the Holder shall execute and deliver to the
Company such representations, warranties, and covenants, that may be required
by applicable federal and state securities law, or that the Company determines
is reasonably necessary in connection with the issuance of such Shares. In
addition, the certificates representing the Shares shall contain such legends,
or restrictive legends, or be subject to such stop transfer instructions, as
shall be required by applicable Federal or state securities laws, or as shall
be reasonably required by the Company or its transfer agent.
It is the intent of Holder that upon the conversion of the Debenture
by Holder pursuant to Section 3, the issuance of the Shares to Holder would be
pursuant to Regulation S. If on the Conversion Date the issuance of the Shares
by the Company to the Holder would have qualified under Regulation S as in
effect on the date hereof but does not qualify thereunder on such date because
of an amendment to Regulation S promulgated after the date hereof, the Company
shall use its best efforts to register the Shares under the Act for resale by
the Holder, unless with the good faith cooperation of Holder the Shares may be
issued to Holder in a transaction exempt from registration (e.g., pursuant to
Section 4(2), Section 4(6) or Regulation D). Such registration shall be at the
cost and expense of the Company. Except as specifically described in this
paragraph, the Company shall have no obligation whatsoever to register the
Debentures or the Shares under the Act.
SECTION 8. NO VOTING RIGHTS. Except as specifically provided herein,
this Debenture shall not entitle the Holder hereof to any of the rights of a
stockholder of the Company, including without limitation, the right to vote, to
receive dividends and other distributions, or to receive any notice of, or to
attend, meetings of stockholders or any other proceedings of the Company.
SECTION 9. STATUS OF REDEEMED OR CONVERTED DEBENTURES. Upon the first
to occur of the Conversion Date, Redemption Date, or Maturity Date, as the case
may be, this Debenture shall no longer be deemed to be outstanding and all
rights hereof, shall forthwith terminate as of such date except only the right
of the Holder hereof to receive Shares in exchange for such Debenture and, if
applicable, a cash payment of any accrued interest.
SECTION 10. EVENTS OF DEFAULT. (i) Upon the occurrence of and during
the continuation of an Event of Default (as defined below), the Company shall
pay to the Holder an amount equal to the sum of (x) the unpaid principal amount
of this Debenture plus (y) the accrued and unpaid interest on the unpaid
principal amount of this Debenture to the date of payment, and such amounts
shall immediately become due and payable, all without demand, presentment, or
notice, all of which hereby are expressly waived, together with all costs,
including, without limitation,
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reasonable legal fees and expenses of collection, and the Holder shall be
entitled to exercise all other rights and remedies available at law or equity.
If the Company fails to pay any amounts due pursuant to this Section
10 within five (5) business days of such amounts being due and payable, then
the Holder shall have the right at any time, so long as the Company remains in
default, to require the Company, upon written notice, to immediately issue, in
lieu of such amounts, the number of Shares equal to the amounts owned divided
by the Conversion Price then in effect.
The Company shall be required promptly upon its knowledge of an Event
of Default hereunder to give notice of such Event of Default to the Holder
hereof.
An "Event of Default" shall mean the following:
A. Conversion. If the Company fails to issue Shares to Holder upon
conversion of this Debenture by the Holder in accordance with the terms of this
Debenture, fails to transfer any certificate for Shares issued to the Holder
upon conversion of this Debenture and when required by this Debenture or fails
to remove any restrictive legend on any certificate or any stop transfer order
on any Shares issued to the Holder upon conversion of this Debenture as and
when required in accordance with applicable law and by this Debenture or any
Subscription Agreement by and by and between Company and Holder, and any such
failure shall continue uncured for five (5) business days;
B. Breach of Covenant. If the Company breaches any material term or
condition of this Debenture (other than as specifically provided in subsection
10.A. hereof), or any Subscription Agreement by and between Company and Holder
(including, subject to Section 5 hereof, the failure to have enough Shares
available for issuance upon conversion), and the breach of which would have a
material adverse effect on the Company or the prospects of the Company or a
material adverse effect on the Holder or the rights of the Holder with respect
to this Debenture or the Shares issuable upon conversion of this Debenture, and
such breach continues for a period of five (5) business days after written
notice thereof to the Company from the Holder;
C. Breach of Representations and Warranties. Any representation or
warranty of the Company made herein or in any agreement, statement or
certificate given in writing pursuant hereto or in connection herewith
(including, without limitation, any Subscription Agreement by and between
Company and Holder), shall be false or misleading in any material respect when
made and the breach of which would have a material adverse effect on the
Company or the prospects of the Company or a material adverse effect on the
Holder or the rights of the Holder with respect to this Debenture or the Shares
issuable upon conversion of this Debenture.
D. Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceeding for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by the Company, or an involuntary
case is commenced against the Company and the petition is not dismissed within
sixty (60) days.
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SECTION 11. GOVERNING LAW. This Debenture shall be governed by and
construed in accordance with the laws of the United States and the State of
Georgia without giving effect to the principles of conflicts of laws.
SECTION 12. BUSINESS DAY DEFINITION. For purposes hereof, the term
"business day" shall mean any day on which banks are generally open for
business in the State of Georgia, USA excluding any Saturday and Sunday.
SECTION 13. NOTICES. Any notices or other communication required or
permitted to be given hereunder shall be given as provided herein or delivered
against receipt, if to (i) the Company at 9040 Roswell Road, Suite 470,
Atlanta, Georgia 30350, Attn.: Paul W. Harrison, Chief Executive Officer,
Telephone No. (770) 641-5555, Telecopy No. (770) 641-5558; or (ii) the Holder
of this Debenture, to such holder at (or to such other address as the party
shall have furnished in writing as its new address in accordance with the
provisions of this Section 13). Any notice or other communication may be made
by facsimile and delivery shall be deemed given, except as otherwise required
herein, at the time of transmission of said facsimile. Any notice given on a
day that is not a business day shall be effective upon the next business day.
SECTION 14. WAIVER OF ANY BREACH TO BE IN WRITING. Any waiver by the
Company or the Holder hereof of a breach of any provision of the Debenture
shall not operate as, or be construed to be a waiver of any breach of such
provision or any breach of any other provision of the Debenture. The failure of
the Company or the Holder hereof to insist upon strict adherence to any term of
the Debenture on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any term of the Debenture. Any waiver must be in writing.
SECTION 15. UNENFORCEABLE PROVISIONS. If any provision of this
Debenture is invalid, illegal or unenforceable, the balance of this Debenture
shall remain in effect, and if any provision is applicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons and
circumstances.
SECTION 16. WITHHOLDING. Company shall be entitled to withhold all
payments of principal and interest on this Debenture for any amounts required
to be withheld under the applicable provisions of the Internal Revenue Code of
the United States of America, or other applicable laws, at the time of such
payments. Holder shall, prior to any transfer hereof, deliver to the Company, a
fully completed Form W-8 for such transferee if required under applicable law.
The Holder shall pay any other taxes, charges or levies in connection with the
issuance and transfer thereof.
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IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by an officer hereunto duly authorized.
HALIS, INC.
Dated: December __, 1997 By:
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Title:
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EXHIBIT 4.2
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT
("COMMON STOCK") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), OR ANY STATE SECURITIES LAW. THESE WARRANTS AND THE COMMON
STOCK ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER
REGULATION S ("REGULATION S") PROMULGATED UNDER THE ACT. NEITHER THE WARRANTS
NOR COMMON STOCK MAY BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S) DURING THE
RESTRICTED PERIOD, AND THEREAFTER ONLY IF THESE SECURITIES ARE REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES OR
TRANSFERS ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
WARRANT CERTIFICATE _______COMMON STOCK PURCHASE WARRANTS
HALIS, INC.
COMMON STOCK PURCHASE WARRANTS
(These Warrants will be void if not exercised
by the Termination Date specified below.)
1. Warrants. Subject to the terms and conditions hereof, this
certifies _________________ that with an address of is the owner of ____________
Common Stock Purchase Warrants (the "Warrants") of HALIS, Inc., a Georgia
corporation (the "Company"). Each Warrant entitles the holder hereof to purchase
from the Company at any time prior to 6:00 p.m., Atlanta, Georgia time on
December __, 2002 (the "Termination Date"), one fully paid and non-assessable
share of the Company's Common Stock, par value $.01 per share (the "Common
Stock"), subject to adjustment as provided in Section 7 hereof.
2. Exercise Price. The Warrants shall be exercised by delivery
to the Company (prior to the Termination Date) of the exercise price for each
share of Common Stock being purchased hereunder (the "Exercise Price"), this
Certificate, the written certification or written opinion described in paragraph
3.a., and the completed Election To Purchase Form which is attached hereto. The
Exercise Price shall be US$______ per share of Common Stock. The Exercise Price
shall be subject to adjustment as provided in Section 7 hereof. The Exercise
Price is payable either in cash or by certified check or bank draft payable to
the order of the Company.
<PAGE> 2
3. Exercise.
a. Prior to exercising a Warrant, the holder of this Warrant
Certificate is required to give a written certification that such holder is not
a U.S. Person (as that term is defined in Rule 902(o) of Regulation S, a copy
of which is attached hereto as Exhibit "A") and the Warrant is not being
exercised on behalf of a U.S. Person, or a written opinion of counsel, in form
and substance satisfactory to the Company, to the effect that the Warrant and
the Common Stock delivered upon exercise thereof have been registered under the
Act or are exempt from registration thereunder.
b. Upon the surrender of this Certificate, provision of the
written certification or written opinion described in paragraph 3.a., and
payment of the Exercise Price as aforesaid, the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of
the registered holder of this Warrant and in such name or names as the
registered holder may designate, a certificate or certificates for the number
of full shares of Common Stock so purchased upon the exercise of any Warrant.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a
holder of record of such Common Stock on and as of the date of the delivery to
the Company of this Certificate and payment of the Exercise Price as aforesaid.
If, however, at the date of surrender of this Certificate, provision of the
written certification or written opinion described in paragraph 3.a., and
payment of such Exercise Price, the transfer books for the Common Stock
purchasable upon the exercise of any Warrant shall be closed, the certificates
for the Common Stock in respect to which any such Warrant are then exercised
shall be issued and the owner of such Common Stock shall become a record owner
of such Common Stock on and as of the next date on which such books shall be
opened, and until such date the Company shall be under no duty to deliver any
certificate for such Common Stock.
c. The holder hereof acknowledges that the Company will
implement procedures to ensure that the Warrant may not be exercised within the
United States and that the Common Stock delivered upon exercise thereof may not
be delivered within the United States, other than in connection with Offshore
Transactions as defined in Regulation S, unless registered under the Act or an
exemption from such registration is available.
d. It is the intent of holder hereof that upon the exercise
of this Warrant, the issuance of the Shares would be pursuant to Regulation S.
If on the date of exercise the issuance of the Shares by the Company to the
holder would have qualified under Regulation S as in effect on the date hereof
but does not qualify on such exercise date because of an amendment to
Regulation S promulgated after the date hereof, the Company shall use its best
efforts to register the Shares under the Act for resale by the holder, unless
with the good faith cooperation of holder the Shares may be issued to the
holder in a transaction exempt from registration (e.g., pursuant to Section
4(2), Section 4(6), Regulation D). Such registration shall be at the cost and
expense of the Company.
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4. Partial Exercise. The rights of purchase represented by the
Warrants shall be exercisable, at the election of the registered holder hereof,
either as an entirety, or from time to time for any part of the Common Stock
specified herein and, in the event that the Warrants are exercised with respect
to less than all of the Common Stock specified herein at any time prior to the
Termination Date, a new Certificate will be issued to such registered holder
for the remaining number of Warrants not so exercised.
5. Termination Date. All of the Warrants must be exercised in
accordance with the terms hereof prior to the Termination Date. At and after
the Termination Date any and all unexercised rights hereunder shall become null
and void and all such unexercised Warrants shall without any action on behalf
of the Company become null and void.
6. Lost, Mutilated Certificate. In case this Common Stock Purchase
Warrant Certificate shall become mutilated, lost, stolen or destroyed, the
Company shall issue in exchange and substitution for and upon cancellation of
the mutilated certificate, or in lieu of and in substitution for the
Certificate lost, stolen, or destroyed, a new Certificate of like tenor and
representing an equivalent right or interest, but only upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction of such
certificate and indemnity, if requested, also satisfactory to the Company.
7. Adjustments. Subject and pursuant to the provisions of this Section
7, the Exercise Price and number of shares of Common Stock subject to the
Warrants shall be subject to adjustment from time to time only as set forth
hereinafter:
a. In case the Company shall declare a Common Stock dividend on the
Common Stock, then the Exercise Price shall be proportionately decreased as of
the close of business on the date of record of said Common Stock dividend in
proportion to such increase of outstanding shares of Common Stock.
b. If the Company shall at any time subdivide its outstanding
Common Stock by recapitalization, reclassification or split-up thereof, the
Exercise Price immediately prior to such subdivision shall be proportionately
decreased, and, if the Company shall at any time combine the outstanding shares
of Common Stock by recapitalization, reclassification, or combination thereof,
the Exercise Price immediately prior to such combination shall be
proportionately increased. Any such adjustment to the Exercise Price shall
become effective at the close of business on the record date for such
subdivision or combination. The Exercise Price shall be proportionately
increased or decreased, as the case may be, in proportion to such increase or
decrease, as the case may be, of outstanding shares of Common Stock.
c. Upon any adjustment of the Exercise Price as hereinabove
provided, the number of shares of Common Stock issuable upon exercise of the
Warrants remaining unexercised immediately prior to any such adjustment, shall
be changed to the number of shares determined by dividing (i) the Exercise
Price payable for the purchase of all shares of Common Stock issuable upon
exercise of all of the Warrants remaining unexercised immediately prior to
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<PAGE> 4
such adjustment of the Exercise Price by (ii) the Exercise Price per share of
Common Stock in effect immediately after such adjustment. Pursuant to this
formula, the total sum payable to the Company upon the exercise of the Warrants
remaining unexercised immediately prior to such adjustment shall remain
constant.
d. (i) If any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the Company
with another corporation, person, or entity, or the sale of all or
substantially all of its assets to another corporation, person, or entity,
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities, cash, property, or assets with respect to or in
exchange for Common Stock, and provided no election is made by the Company
pursuant to subsection (ii) hereof, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the Company or
such successor or purchasing corporation, person, or entity, as the case may
be, shall agree that the registered holder of the Warrants shall have the right
thereafter and until the Termination Date to exercise such Warrants for the
kind and amount of stock, securities, cash, property, or assets receivable upon
such reorganization, reclassification, consolidation, merger, or sale by a
holder of the number of shares of Common Stock for the purchase of which such
Warrants might have been exercised immediately prior to such reorganization,
reclassification, consolidation, merger or sale, subject to such subsequent
adjustments which shall be equivalent or nearly equivalent as may be
practicable to the adjustments provided for in this Section 7.
e. Whenever the Exercise Price and number of shares of Common
Stock subject to this Warrant Certificate is adjusted as herein provided, the
Company shall promptly mail to the registered holder of this Warrant
Certificate a statement signed by an officer of the Company setting forth the
adjusted Exercise Price and the number of shares of Common Stock subject to
this Warrant Certificate, determined as so provided.
f. This form of Certificate need not be changed because of
any adjustment which is required pursuant to this Section 7. However, the
Company may at any time in its sole discretion (which shall be conclusive) make
any change in the form of this Certificate that the Company may deem
appropriate and that does not affect the substance hereof; and any Certificate
thereafter issued, whether in exchange or substitution for this Certificate or
otherwise, may be in the form as so changed.
8. Reservation.
a. There has been reserved, and the Company shall at all
times keep reserved out of the authorized and unissued shares of Common Stock,
a number of shares of Common Stock sufficient to provide for the exercise of
the right of purchase represented by the Warrants. The Company agrees that all
shares of Common Stock issued upon exercise of the Warrants shall be, at the
time of delivery of the Certificates for such Common Stock, validly issued and
outstanding, fully paid and non-assessable.
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<PAGE> 5
b. Notwithstanding Subparagraph 8.a or 8.c hereof, if there
shall at the time of any exercise of this Warrant not be sufficient authorized
shares of Common Stock to provide for such exercise of this Warrant, the
Company shall upon receipt of appropriate instructions from the holder of this
Warrant issue to the holder of this Warrant that number of shares of Common
Stock as determined by the following formula:
Number of Shares Issuable = Bid Price - $Exercise Price x Number of
Warrants/Bid Price
For purposes of the above formula, the "Bid Price" shall mean the average
closing bid price for the Common Stock on the market as reported by the OTC
Bulletin Board (or other trading market, if applicable) for the ten trading
days immediately prior to the date of exercise of this Warrant.
In connection with such issuance by the Company, no exercise price
shall be payable by the holder of this Warrant and notwithstanding anything
else contained herein, this Warrant shall be deemed to have been exercised in
full and shall be null and void upon issuance of such shares of Common Stock.
Therefore, by way of example, if the holder exercises the Warrant at
an exercise price of $.50 and if the Company does not then have sufficient
authorized shares of Common Stock available, and if the Bid Price is $1.00, the
Company would issue .50 shares of Common Stock to the holder of the Warrant in
full satisfaction of the Warrant at no cost to the holder.
c. Notwithstanding Subparagraph 8.a or 8.b hereof, if there
shall at the time of any exercise of this Warrant not be sufficient authorized
shares of Common Stock to provide for such exercise of this Warrant, the
Company shall upon receipt of appropriate instructions from the holder of this
Warrant, immediately take such corporate action as may be necessary to increase
its authorized but unissued Shares to such number of shares as shall be
sufficient for such exercise.
9. Fractional Shares. The Company shall not issue any fractional
shares of Common Stock pursuant to any exercise of any Warrant and shall pay
cash to the holder of any Warrant in lieu of any such fractional shares.
10. No Right. The holder of any Warrants shall not be entitled to
any of the rights of a shareholder of the Company prior to the date of issuance
of the Common Stock by the Company pursuant to an exercise of any Warrant.
11. Securities Laws. As a condition to the issuance of any Common
Stock pursuant to the Warrants, the holder of such Common Stock shall execute
and deliver such representations, warranties, and covenants, that may be
required by applicable federal and state securities law, or that the Company
determines is reasonably necessary in connection with the issuance of such
Common Stock. In addition, the certificates representing the Common Stock shall
contain such legends, or restrictive legends, or shall be subject to such stop
transfer instructions, as shall be
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<PAGE> 6
required by applicable Federal or state securities laws including Regulation S
or as shall be reasonably required by the Company or its transfer agent.
12. Applicable Law. The Warrants and this Certificate shall be deemed
to be a contract made under the laws of the United States and the State of
Georgia and for all purposes shall be construed in accordance with the laws
thereof regardless of its choice of law rules.
IN WITNESS WHEREOF, HALIS, Inc., has executed and delivered this
Warrant Certificate as of the date written below.
HALIS, INC.
By:
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Title:
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Dated: December __, 1997
Exhibit A
REGULATION S
RULES GOVERNING OFFERS AND SALES MADE OUTSIDE THE
UNITED STATES WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933
Rule 902. Definitions.
As used in Regulation S, the following terms shall have the
meanings indicated:
* * *
(o) U.S. Person.
(1) "U.S. Person" means:
(i) Any natural person resident in the
United States;
(ii) Any partnership or corporation
organized or incorporated under the laws of the
United States;
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<PAGE> 7
(iii) Any estate of which any executor or
administrator is a U.S.A. person;
(iv) Any trust of which any trustee is
a U.S. person;
(v) Any agency or branch of a foreign
entity located in the United States.
(vi) Any non-discretionary account or
similar account (other than an estate or trust) held
by a dealer or other fiduciary for the benefit or
account of a U.S. person;
(vii) Any discretionary account or similar
account (other than an estate or trust) held by a
dealer or other fiduciary organized, incorporated,
or (if an individual) resident in the United States;
and
(viii) Any partnership or corporation if:
(a) organized or incorporated under the laws of any
foreign jurisdiction; and (b) formed by a U.S.
person principally for the purpose of investing in
securities not registered under the Act, unless it
is organized or incorporated, and owned, by
accredited investors (as defined in Rule 501(a)) who
are not natural persons, estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this rule, any
discretionary account or similar account (other than an estate or
trust) held for the benefit or account of a non-U.S. person by a
dealer or other professional fiduciary organized, incorporated, or (if
an individual) resident in the United States shall not be deemed a
"U.S. person."
(3) Notwithstanding paragraph (o)(1), any estate of
which any professional fiduciary acting as executor or administrator
is a U.S. person shall not be deemed a U.S. person if:
(i) As executor or administrator of the estate
who is not a U.S. person has sole or shared investment discretion with
respect to the assets of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1), any trust of which
any professional fiduciary acting as trustee is a U.S. person shall
not be deemed a U.S. person if a trustee who is not a U.S. person has
sole or shared investment discretion with respect to the trust assets,
and no beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person.
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(5) Notwithstanding paragraph (o)(1), an employee benefit
plan established and administered in accordance with the law of a
country other than the United States and customary practices and
documentation of such country shall not be deemed a U.S. person.
(6) Notwithstanding paragraph (o)(1), any agency or
branch of a U.S. person located outside the United States shall not be
deemed a "U.S. person" if:.
(i) The agency or branch operates for valid
business reasons; and
(ii) The agency or branch is engaged in the business
of insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the
jurisdiction where located.
(7) The International Monetary Fund, the International
Bank for Reconstruction and Development, the Inter-American Development
Bank, the Asian Development Bank, the African Development Bank, the
United Nations, and their agencies, affiliates and person plans, and
any other similar international organizations, their agencies,
affiliates and pension plans shall not be deemed "U.S. persons."
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HALIS, INC.
9040 Roswell Road, Suite 420
Atlanta, Georgia 30350
Attn: Paul W. Harrison
Chief Executive Officer
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the attached Warrant Certificate of the
Company. The undersigned desires to purchase shares of Common Stock provided
for therein and tenders herewith full payment of the Exercise Price for the
shares of Common Stock being purchased, all in accordance with the Certificate.
The undersigned requests that a Certificate representing such shares of Common
Stock shall be issued to and registered in the name of, and delivered to, the
undersigned at the following address: ____________________________________. If
said number of shares of Common Stock shall not be all the shares purchasable
under the Certificate, then a new Common Stock Purchase Warrant Certificate for
the balance remaining of the shares of Common Stock purchasable shall be issued
to and registered in the name of, and delivered to, the undersigned at the
address set forth above.
Dated: Signature:
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