<PAGE> 1
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 REPORTED) SEPTEMBER 30, 1996
------------------
RAILAMERICA, INC.
-----------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE
--------
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-20618 65-0328006
----------------------- ---------------------------------
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
RAILAMERICA, INC.
301 YAMATO ROAD, SUITE 1190
BOCA RATON, FLORIDA 33431 33431
--------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 994-6015
--------------
<PAGE> 2
ITEM 5. OTHER EVENTS
PRIVATE PLACEMENT OF COMMON STOCK.
Pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended, the Company has completed a private placement of 1,250,000 shares of
its Common Stock, par value $.001 per share ("Common Stock"), at a purchase
price per share of $3.60 (aggregate proceeds of $4.5 million) (the "Private
Placement Offering"). Certain registration rights were granted to the
subscribers to the Private Placement Offering pursuant to the Subscription
Agreements dated September 30, 1996.
First London Securities Corporation served as the exclusive placement agent in
the Private Placement Offering and received the following compensation: (i) a
placement fee equal to 5% of the gross proceeds raised; (ii) a nonaccountable
expense fee equal to 1% of the gross proceeds raised; and (iii) warrants to
purchase 125,000 shares of Common Stock, at an exercise price of $4.60 per
share.
The foregoing is qualified in its entirety by the Exhibits attached hereto.
- 2 -
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
--------
<S> <C>
10.1 Letter of Engagement between the Company and First London Securities
Corporation dated September 13, 1996.
10.2 Form of Subscription Agreement.
</TABLE>
- 3 -
<PAGE> 4
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.
RAILAMERICA, INC.
Date: As of September 30, 1996 By: /s/ Gary O. Marino
-------------------------------------
Gary O. Marino, Chairman of the Board
and Chief Executive Officer
- 4 -
<PAGE> 1
EXHIBIT 10.1
FIRST LONDON SECURITIES CORPORATION
Dallas - New York - Toronto
2600 State Street - Dallas, Texas 75204
214-220-0693 Voice Member NASD - SIPC
800-226-0699
214-220-0693 Fax
CONFIDENTIAL
September 13, 1996
Board of Directors
RailAmerica, Inc.
301 Yamato Road
Suite 1190
Boca Raton, Florida 33431
Attention: Mr. Gary O. Marino, Chairman of the Board, President, and CEO
Gentlemen:
This letter outlines the terms upon which First London Securities
Corporation ("FLSC" or the "Agent") proposes to be engaged by RailAmerica,
Inc. (the "Company") to act as the exclusive agent (except as otherwise
provided herein) in connection with the placement of securities (the
"Offering") for the Company. It is currently contemplated that the Offering,
subject to satisfactory completion of our due diligence, will be structured as
an offering of common stock in the range of 250,000 and 1,250,000 shares, at a
negotiated discount to the then current market price. The Agent will conduct
all sales and solicitation efforts of the Offering to institutional and
accreditated individual investors. The anticipated completion of the Offering
is expected by September 30, 1996.
1. The Company, with the Agent's assistance, will prepare a
Confidential Offering Memorandum (the "Memorandum"). The
Company represents that the Memorandum will not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading. Additionally,
representatives of the Company shall be available at reasonable
times to answer questions of, and to provide additional
information to, any potential investors.
<PAGE> 2
Board or Directors
RailAmerica, Inc.
301 Yamato Road
Suite 1190
Boca Raton, Florida 33431
09/13/96
Page 2
2. The Agent agrees to use its best efforts to complete the
private placement of securities contemplated here. The terms of
the Offering shall be subject to mutual agreement of the
Company and each investor in the Offering. The Agent will
contact potential investors, assist in the negotiation and the
structuring of the investment in the Company, and provide
related services that may facilitate the successful completion
of the Offering. The Agent will conduct all sales and
solicitation efforts in a manner consistent with your intent
that the Offering be an exempt transaction pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "Act").
The Company shall advise use of those states in which the
securities have been qualified or exempted under the
appropriate securities laws.
3. As compensation for its services under this Agreement, the
Agent will receive a placement fee equal to five percent of
the gross proceeds raised on behalf of the Company (the
"Placement Fee") and a unaccountable expense fee equal to one
percent of the gross proceeds raised on behalf of the Company
(the "Expense Fee"). Payment of such Placement Fee and the
Expense Fee shall be subject to and a condition of the closing
of the Offering. If more than one closing is required to
complete the Offering, only the pro rata portion of the
Placement and Expense Fees applicable to each closing shall be
payable at such closing. In addition, at the initial closing
and any subsequent closings, the Company agrees to issue to its
Agent one year warrants to purchase additional Securities of
the Company equal to 10% of the total number of Securities
placed by the Agent as a purchase price per Security equal to
115% of the market bid price of the Securities at the time of
the pricing of the Offering.
Upon the execution of this agreement by the Company, the Company
agrees to pay FLSC a unaccountable expense advance of $5,000.00,
to be deducted from the Expense Fee at closing. In addition,
whether or not the Offering is completed, the Company agrees to
reimburse the Agent for its out-of-pocket expenses including
fees and expenses of our counsel, if any, in connection with
the Offering. Agent will not incur any reimbursable expenses
in excess of $1,000.00 without prior written approval from the
Company. If the Offering is completed, such expenses will
be deducted from the Expense Fee.
4. The Company represents and warrants that no person or
organization other than FLSC is, as a result of any action by
the Company, entitled to compensation for
<PAGE> 3
Board of Directors
RailAmerica, Inc.
301 Yamato Road
Suite 1190
Boca Raton, Florida 33431
09/13/96
Page 3
services as a finder, broker, placement agent, or investment
banker in connection with the Offering.
5. The Company agrees to indemnify and hold harmless the Agent and
each person, if any, who controls the Agent within the meaning
of the Securities Act of 1933, as amended, against any lawsuits,
claims, damages or liabilities (or actions or proceedings in
respect thereof) to which the Agent or such controlling person
may become subject related to or arising out of our engagement
hereunder including, without limitation, the use and content of
the Memorandum, and will reimburse the Agent and each such
controlling person for all legal and other expenses incurred in
connection with investigating or defending any such lawsuit,
claim, damage, liability, action or proceeding whether or not
in connection with pending or threatened litigation in which
the Agent or any of its directors, officers, agents, employees
and controlling persons is a party; provided, however, that the
Company will not be liable in any case (except cases arising
out of the use or content of the Memorandum) for losses,
claims, damages, liabilities or expenses that a court of
competent jurisdiction shall have found in a final judgment to
have arisen primarily from the gross negligence or willful
misconduct of the Agent or the party claiming a right to
indemnification. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
In case any proceeding shall be instituted involving any person
in respect to whom indemnity may be sought, such person (the
"indemnified party") shall promptly notify the Company, and the
Company, upon the request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party
to represent the indemnified party and any others the Company
may designate in such proceedings and shall pay as incurred the
fees and expenses of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense, except that
the Company shall pay as incurred the fees and expenses of
counsel retained by the indemnified party in the vent that (i)
the Company and the indemnified party shall have mutually
agreed to the retention of such counsel or, (ii) the named
parties to any such proceeding including both the Company and
the indemnified party and representation of both parties by the
same counsel would be inappropriate, in the reasonable opinion
of the indemnified party, due to actual or potential differing
interests between them. The Company shall not be liable
<PAGE> 4
Board of Directors
RailAmerica, Inc.
301 Yamato Road
Suite 1190
Boca Raton, Florida 33431
09/13/96
Page 4
for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, the Company agrees to
indemnify the indemnified party to the extent set forth in this
letter.
Delivered herewith are two identical copies of this letter. If the
foregoing accurately reflects our mutual agreement with respect to the matters
set forth herein, please confirm your agreement to the foregoing by signing
both of the enclosed copies of this letter and returning to us one executed
copy of this letter via overnight express delivery and effecting, by
wire-transfer or certified check, payment of the non-accountable expense
advance in accordance with Section 3 hereof. This letter shall expire and be
null and void unless it has been executed by you and delivered to us on or
prior to September 17, 1996.
Acceptance of this letter by the Company is subject to approval by the
Company's Board of Directors.
We appreciate the opportunity to work with you and we look forward to a
successful transaction as a continuation of our mutually beneficial
relationship.
FIRST LONDON SECURITIES CORPORATION
By: /s/ Jesse B. Shelmire, IV
-----------------------------
Jesse B. Shelmire, IV
Director, Investment Banking
Agreed to and Accepted as of the
date first above written:
RAILAMERICA, INC.
By: /s/ Gary O. Marino
-----------------------------
Mr. Gary O. Marino
Chairman of the Board, President and CEO
<PAGE> 1
EXHIBIT 10.2
EXHIBIT A
SUBSCRIPTION AGREEMENT
RailAmerica, Inc.
301 Yamato Road
Suite 1190
Boca Raton, Florida 33431
Ladies and Gentlemen:
The undersigned ("Subscriber") hereby tenders this Subscription Agreement
("Agreement") in accordance with and subject to the terms and conditions set
forth herein and the Confidential Private Placement Memorandum dated September
___, 1996 (the "Memorandum").
1. Subscription.
1.1 The undersigned hereby irrevocably subscribes for and agrees to purchase
the number of shares of Common Stock (the "Shares") indicated on the signature
page hereto at the purchase price per share set forth on such signature page.
The undersigned encloses herewith a check or money order payable to First
London Securities Corporation (the "Placement Agent") (or has made payment by
wire transfer of funds in accordance with instructions from the Placement
Agent) in the full amount of the purchase price of the Shares for which the
undersigned is subscribing (the "Payment").
1.2 The undersigned understands that all Payments by check or money order as
provided in Section 1.1 above shall be delivered to the Placement Agent and,
thereafter, such Payment will be held for the undersigned's benefit by the
Placement Agent, but the undersigned will not earn interest on any funds so
held, as described in the Memorandum. The Placement Agent and the Company may
hold an initial closing of the Offering (the "Initial Closing") after
subscriptions for the minimum number of Shares identified in the Memorandum
have been accepted, on the basis described in the Memorandum. The Company may
hold additional interim closings after the Initial Closing. Any such interim
closings together with the Initial Closing are each hereinafter referred to as
an "Additional Closing" and shall occur on one or more dates each hereinafter
referred to as an "Additional Closing Date." Upon receipt by the Company of
the requisite payment for all Shares to be purchased by the subscribers whose
subscriptions are accepted (each, a "Purchaser") at the Additional Closing
Dates and subject to the satisfaction of certain conditions, the Shares so
purchased will be issued in the name of each such Purchaser, and the name of
such Purchaser will be registered on the stock transfer books of the Company as
the record owner of such Shares. The Company will issue to each Investor a
stock certificate for the Shares purchased.
1.3 The undersigned hereby agrees to be bound hereby upon (i) execution and
delivery to the Company, in care of the Placement Agent, of the signature page
to this Subscription Agreement and (ii) acceptance on the Initial Closing Date
or an Additional Closing Date, as the case may be, by the Company of the
undersigned's subscription (the "Subscription").
1.4 The undersigned agrees that the Company may, in its sole and absolute
discretion, reduce the undersigned's subscription to any number of shares of
Common Stock that in the aggregate does not exceed the number of Shares of
Common Stock hereby applied for without any prior notice to or further consent
by the undersigned. The undersigned hereby irrevocably constitutes and
appoints the Placement Agent and each officer of the Placement Agent, each of
the foregoing acting singly, in each case with full power of substitution, the
true and lawful agent and attorney-in-fact of the undersigned, with full power
and authority in the undersigned's name, place and stead to amend this
Subscription Agreement, including, in each case, the undersigned's signature
page thereto, to effect any of the foregoing provisions of this Section 1.4.
Subscription Agreement
1
<PAGE> 2
EXHIBIT A
2. Offering Material.
2.1 Subscriber represents and warrants that it is in receipt of and that it
has carefully read and understands the following items:
(a) the Memorandum;
(b) Annual Reports to the Securities and Exchange Commission on Form
10-KSB of the Issuer for its fiscal years ended December 31, 1994 and 1995.
The Form 10-KSB for the fiscal year ended December 31, 1995 is hereinafter
referred to as the "Form 10-KSB;"
(c) Quarterly Reports to the Securities and Exchange Commission on
Form 10-QSB of Issuer for the quarters ended March 31, 1996 and June 30, 1996.
The June 30, 1996 Form 10-QSB is hereinafter referred to as the "Form 10-QSB";
(d) The Company's Current Reports on Form 8-K filed January 12, 1996
and September 12, 1996 (the "Form 8-Ks").
Collectively, the Form 10-KSB, the Form 10-QSB and the Form 8-Ks are
referred to herein as the "Public Reports."
3. Conditions to Subscriber's Obligations.
3.1 The obligation of the Subscriber to close the transactions
contemplated by this Agreement (the "Transaction") is subject to the
satisfaction on or prior to the date of the Closing (as hereinafter defined) of
the following conditions set forth in Sections 3.2 through 3.3 hereof.
3.2 The representations and warranties made by Issuer herein shall be
true in all material respects on and as of the Closing Date with the same
effect as if they had been made on and as of the Closing Date.
3.3 All proceedings to be taken in connection with the Transaction are to
be consummated at or prior to the Closing, and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Subscriber and
its counsel, and the Subscriber and its counsel shall have received copies of
all documents and information which it may have reasonably requested in
connection with the Transaction and of all corporate proceedings in connection
therewith, in form and substance reasonably satisfactory to Subscriber and its
counsel.
4. Representations and Warranties; Covenants; Survival.
4.1 The Issuer represents and warrants that, at the date of this
Agreement:
(a) Issuer is a corporation duly organized and validly existing and
in good standing under the laws of the State of Delaware, entitled to own its
property of a material nature and to carry on its business of a material nature
as and in places where such property is now owned or operated and such business
is conducted;
(b) Each of the subsidiaries of Issuer is a corporation duly
organized and validly existing and in good standing under the laws of the State
of their respective incorporation, entitled to own their respective properties
of a material nature and to carry on their respective businesses of a material
nature in places where such properties are now owned or operated and such
businesses are conducted, and, except as disclosed in the Public Reports, there
is no action or proceeding pending or to Issuer's best knowledge threatened,
brought by or before any federal or state agency having jurisdiction over the
operations of a material nature of Issuer which threatens in any material
respect the continued operation of any material phase of Issuer's business now
conducted by it or its subsidiaries;
Subscription Agreement
2
<PAGE> 3
EXHIBIT A
(c) Issuer has furnished the Subscriber with its certified consolidated
financial statements as of December 31, 1995, contained in the Form 10-KSB, and
its unaudited financial statements as of June 30, 1996, contained in the Form
10-QSB, and all such financial statements, including the notes contained
therein, fairly present the consolidated financial position of Issuer at the
date thereof and the results of its consolidated operations for the periods
purported to be covered thereby. Such financial statements have been prepared
in conformity with generally accepted accounting principles consistently
applied with prior periods subject to any comments and notes contained therein.
Since June 30, 1996, there has been no material adverse change in the
financial condition of the Issuer from the financial condition stated in such
financial statements subject to changes occurring in the ordinary course of its
business or to changes reflected in the Form 10-QSB;
(d) Issuer, by appropriate and required corporate action, has duly
authorized the execution of this Agreement, the issuance and delivery of the
Common Stock. Such shares of Common Stock are not subject to preemptive or
other rights of any stockholders and when issued in accordance with the terms
of this Agreement, the shares of Common Stock will be validly issued, fully
paid and nonassessable;
(e) Performance of this Agreement and compliance with the provisions
hereof will not violate any provision of any applicable law or of the
Certificate of Incorporation or By-Laws of Issuer, or of any of its
subsidiaries, and will not conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon, any of the
properties or assets of a material nature of Issuer, or of any of its
subsidiaries, pursuant to the terms of any indenture, mortgage, deed of trust
or other agreement of instrument binding upon Issuer, or any of its
subsidiaries.
5. Transfer and Registration Rights
5.1 Subscriber acknowledges that it is acquiring the Common Stock for its
own account and for the purpose of investment and not with a view to any
distribution or resale thereof within the meaning of the Act and any applicable
state or other securities laws ("State Acts"). The Subscriber further agrees
that it will not sell, assign or transfer any of the Common Stock in violation
of the Act or State Acts and acknowledges that, in taking unregistered
securities, it must continue to bear the economic risk of its investment for an
indefinite period of time because of the fact that such Common Stock has not
been registered under the Act or State Acts and further realizes that such
Common Stock cannot be sold unless it is subsequently registered under the Act
and State Acts or an exemption from such registration is available. The
Subscriber further recognizes that the Issuer is not assuming any obligation to
register such Common Stock except as set forth herein. The Subscriber also
acknowledges that appropriate legends reflecting the status of the Common Stock
under the Act and State Acts may be placed on the face of the certificates for
such Common Stock at the time of their transfer and delivery to the holder
thereof.
5.2 The Common Stock issued pursuant to this Agreement may not be
transferred except in a transaction which is in compliance with the Act and
State Acts. Except as provided hereafter with respect to registration of Common
Stock, it shall be a condition to any such transfer that the Issuer shall be
furnished with an opinion of counsel to the holder of such Common Stock,
reasonably satisfactory to the Issuer, to the effect that the proposed transfer
would be in compliance with the Act and State Acts.
5.3 Five months after the date of this Agreement, the Issuer shall use its
best efforts to prepare and file with the SEC on one occasion, a registration
statement and such other documents as may be necessary in the opinion of both
counsel for the Issuer and counsel for the holder or holders of Common Stock
representing a majority of such securities (a "Majority Holder"), in order to
comply with the provisions of the Act so as to permit, commencing six months
after the date of this Agreement, the registered resale of the Common Stock for
eighteen (18) consecutive months by each and every holder of the Common Stock
who desires to register the resale of their shares of Common Stock. Four and
one-half months after the date of this Agreement, the Issuer shall give each
holder of the Common Stock notice at the address of such holder appearing on
the register and transfer records of Issuer of the
Subscription Agreement
3
<PAGE> 4
EXHIBIT A
Issuer's intention to register the resale of the Common Stock. The obligations
of the Issuer to give such notice shall be limited to the Subscriber and any
entity which at the time the Common Stock may have been transferred was
controlled by the Subscriber, in control of the Subscriber, or otherwise
affiliated with the Subscriber which entities, together with the Subscriber,
are hereafter referred to as "Offering Holders."
5.4 The obligations of the Issuer identified in this Section 5 shall be
suspended and tolled for such period of time (the "Registration Suspension
Period") as is necessary so that under no circumstances shall the registered
resale of Common Stock by the holders commence within ninety days after the
commencement of an underwritten primary public offering of the Issuer's equity
securities (a "Public Offering"). The Subscriber acknowledges and agrees that
during the Registration Suspension Period it shall not resell the Common Stock.
The Subscriber further agrees that it shall, upon request, enter into an
agreement with the underwriter of a Public Offering, pursuant to which the
Subscriber shall agree not to resell the Common Stock during the Registration
Suspension Period.
5.5 If and whenever the Issuer is required by the provisions of this
Agreement to use its best efforts to effect the registration of the Common
Stock under the Act for the account of an Offering Holder, the Issuer will, as
promptly as possible:
(a) prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the requirements of the Act and the rules and regulations promulgated by
the SEC thereunder relating to the sale or other disposition of the securities
covered by such registration statement;
(c) furnish to each Offering Holder such numbers of copies of a
prospectus, including a preliminary prospectus, complying with the requirements
of the Act, and such other documents as such Offering Holder may reasonably
request in order to facilitate the public sale or other disposition of the
securities owned by such Offering Holder, but such Offering Holder shall not be
entitled to use any selling materials other than a prospectus and such other
materials as may be approved by the Issuer, which approval will not be
unreasonably withheld; and
(d) use its best efforts to register or qualify the securities
covered by such registration statement under the State Acts as any Offering
Holder shall reasonably request, and do any and all such other acts and things
as may be necessary or advisable to enable such Offering Holder to consummate
the public sale or other disposition of the securities owned by such Offering
Holder in such states; provided, however, that the Issuer shall not be
obligated to register or qualify such securities in any jurisdiction in which
such registration or qualification would require the Issuer to qualify as a
foreign corporation or file any general consent to service of process where it
is not then so qualified or has not theretofore so consented.
5.6 Except as provided below in this Section 5.6, the expenses incurred
by the Issuer in connection with action taken by the Issuer to comply with this
Section 5, including, without limitation, all registration and filing fees,
printing and delivery expenses, accounting fees, fees and disbursements of
counsel, consultant and expert fees, premiums for liability insurance, if
Issuer chooses to obtain such insurance, obtained in connection with a
registration statement filed to effect such compliance and all expenses,
including counsel fees, of complying with State Acts, shall be paid by the
Issuer, provided, however, that all such expenses in connection with any
amendment or supplement to any registration statement filed by the Issuer
hereunder or the related prospectus which is required to be filed more than
nine months after the effective date of such registration statement because any
one or more Offering Holders or any underwriter of any such Offering Holder's
securities has not effected the disposition of the securities required to be
registered shall be paid by such one or more Offering Holders pro rata or, in
the case of two or more, in accordance with the respective market values of
such securities. All fees and
Subscription Agreement
4
<PAGE> 5
EXHIBIT A
disbursements of any counsel, experts, or consultants employed by any Offering
Holder shall be borne by such Offering Holder. The Issuer shall not be
obligated in any way in connection with any registration pursuant to this
Section 5 for any selling commissions or discounts payable by any Offering
Holder to any underwriter of securities to be sold by such Offering Holder. It
shall be a condition precedent to the obligation of the Issuer to take any
action pursuant to this Section 5 that the Issuer shall have received an
undertaking satisfactory to it from each Offering Holder to pay all expenses
required to be borne by such Offering Holder and to furnish or cause to be
furnished to the Issuer specifically for use in the preparation of the
registration statement and prospectus written information concerning the
securities held by such Offering Holder and also concerning any underwriter of
such securities and the intended method of disposition thereof and any
additional information or documentation as the Issuer shall reasonably request
and as may be required by administrators of the Act or State Acts in connection
with the action to be taken by the Issuer hereunder pursuant to such
registration.
5.7 In the event of any registration of Offering Holders' securities
under the Act pursuant to this Section 5, the Issuer will indemnify and hold
harmless each Offering Holder, its officers, directors and each underwriter of
such securities, and any person who controls such Offering Holder or
underwriter within the meaning of Section 15 of the Act, against all claims,
actions, losses, damages, liabilities and expenses, joint or several, to which
any of such persons may become subject under the Act or otherwise, insofar as
such losses, claims, damages, liabilities, or actions arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse such Offering Holder, its officers,
directors and each underwriter of such securities, and each such controlling
person or entity for any legal and any other expenses reasonably incurred by
such Offering Holder, such underwriter, or such controlling person or entity in
connection with investigating or defending any such loss, action, claim,
damage, liability, or action; provided, however, that the Issuer will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or its based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus or said prospectus, or said
amendment of supplement in reliance upon and in conformity with written
information furnished to the Issuer through an instrument duly executed by such
Offering Holder or such underwriter specifically for use in the preparation
thereof.
5.8 In the event of any registration of any securities under the Act
pursuant to this Section 5, each Offering Holder will, or will furnish the
written undertaking of such other person or entity as shall be acceptable to
the Issuer to, indemnify and hold harmless the Issuer, its officers, directors
and any person who controls such Issuer within the meaning of Section 15 of the
Act, against any losses, claims, damages, liabilities, or actions, joint or
several, to which the Issuer, its officers, directors, or such controlling
person or entity may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities, or actions arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the Act, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent and only to the extent that any such loss, claim,
damage, liability, or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus or said prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the issuer through an instrument duly executed by such
Offering Holder or any underwriter of such Offering Holder's securities
specifically for use in the preparation thereof.
8. Closing.
6.1 The closing of the sale of Common Stock ("Closing") to Subscriber shall
take place at the offices of the Placement Agent, on or before September 30,
1996 (the "Closing Date"), at such time
Subscription Agreement
5
<PAGE> 6
EXHIBIT A
as Issuer and Subscriber shall mutually agree. The Company may, in its sole
discretion, extend the Closing Date to a date on or before October 31, 1996.
7. Subscriber Representations. The undersigned hereby represents and warrants
to and agrees with the Company and the Placement Agent as follows:
7.1 The undersigned has been furnished with and has carefully read the
Memorandum and is familiar with and understands the terms of the offering
described in the Memorandum (the "Offering"). With respect to individual or
partnership tax and other economic considerations involved in this investment,
the undersigned is not relying on the Company or the Placement Agent (or any
agent or representative of any of them). The undersigned has carefully
considered and has, to the extent the undersigned believes such discussion
necessary, discussed with the undersigned's professional legal, tax, accounting
and financial advisers the suitability of an investment in the Common Stock for
the undersigned's particular tax and financial situation and has determined
that the Common Stock being subscribed for by the undersigned are a suitable
investment for the undersigned.
7.2 The undersigned acknowledges that all documents, records and books
pertaining to this investment which the undersigned has requested (including,
without limitation, the Memorandum) have been made available for inspection by
the undersigned and the undersigned's attorney, accountant or other adviser(s).
7.3 The undersigned and/or the undersigned's advisor(s) has/have had a
reasonable opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the Offering and all such
questions have been answered to the full satisfaction of the undersigned.
7.4 The undersigned is not subscribing for shares of Common Stock as a
result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or meeting.
7.5 The undersigned is an "accredited investor," within the meaning of
Rule 501(a) of Regulation D under the Securities Act of 1933. The undersigned,
by reason of the undersigned's business or financial experience or the business
or financial experience of the undersigned's professional advisers who are
unaffiliated with and who are not compensated by the Company or the Placement
Agent or any affiliate of either of them, directly or indirectly, can be
reasonably assumed to have the capacity to protect its interests in connection
with an investment in the shares of Common Stock.
7.6 If the undersigned is a natural person, the undersigned has adequate
means of providing for the undersigned's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the shares of Common Stock for an indefinite period of time, has no need for
liquidity in such investment and, at the present time, could afford a complete
loss of such investment.
7.7 The undersigned or the undersigned's purchaser representative, as the
case may be, has such knowledge and experience in financial, tax and business
matters so as to enable the undersigned to utilize the information made
available to the undersigned in connection with the Offering to evaluate the
merits and risks of an investment in the Common Stock and to make an informed
investment decision with respect thereto.
7.8 The undersigned acknowledges the Shares of Common Stock herein
submitted for are nonregistered under the Securities Act and under the
securities laws of any state. The undersigned will not sell, transfer or
otherwise dispose of the Shares unless they are registered under the Securities
Act and any applicable state securities laws or pursuant to available
exemptions from such registration, provided that the seller delivers to the
Company an opinion of counsel satisfactory to the Company confirming the
availability of such exemption. The undersigned represents that the
undersigned is purchasing the Common Stock for the undersigned's own account,
for investment and not with a view to resale or distribution except in
compliance with the Securities Act and the restrictions contained in the
Subscription Agreement
6
<PAGE> 7
EXHIBIT A
immediately preceding sentence. The undersigned has not offered or sold any
portion of the Shares of Common Stock being acquired nor does the undersigned
have any present intention of selling, distributing or otherwise disposing of
the shares of Common Stock either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or nonoccurrence of any
predetermined event or circumstance in violation of the Securities Act.
7.9 The undersigned recognizes that investment in the Shares involves
substantial risks, including loss of the entire amount of such investment.
Further, the undersigned has carefully read and considered the matters set
forth under the captions "Notice to Investors" and "Risk Factors" in the
Memorandum, and has taken full cognizance of and understands all of the risks
related to a purchase of the Shares.
7.10 The undersigned acknowledges that each certificate representing the
Shares shall be stamped or otherwise imprinted with a legend substantially in
the following form:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR
UNDER APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AVAILABLE EXEMPTIONS FROM SUCH
REGISTRATION, PROVIDED THAT THE SELLER DELIVERS
TO THE COMPANY AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY CONFIRMING THE
AVAILABILITY OF SUCH EXEMPTION. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR
AN INDEFINITE PERIOD OF TIME.
7.11 The undersigned acknowledges and agrees that it shall not be entitled
to seek any remedies with respect to the Offering from any party other than the
Company or the Placement Agent.
7.12 If this Subscription Agreement is executed and delivered on behalf
of a partnership, corporation, trust or estate: (i) such partnership,
corporation, trust or estate has the full legal right and power and all
authority and approval required (a) to execute and deliver, or authorize
execution and delivery of, this Subscription Agreement and all other
instruments executed and delivered by or on behalf of such partnership,
corporation, trust or estate in connection with the purchase of the Shares, (b)
to delegate authority pursuant to a power of attorney and (c) to purchase and
hold such Shares; (ii) the signature of the party signing on behalf of such
partnership, corporation, trust or estate is binding upon such partnership,
corporation, trust or estate; and (iii) such partnership, corporation or trust
has not been formed for the specific purpose of acquiring the Shares, unless
each beneficial owner of such entity is qualified as an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Securities Act
("Regulation "D") and has submitted information substantiating such individual
qualification.
7.13 If the undersigned is a retirement plan or is investing on behalf of
a retirement plan, the undersigned acknowledges that investment in the Shares
poses risks in addition to those associated with other investments, including
the inability to use losses generated by an investment in the Shares to offset
taxable income.
7.14 The undersigned shall indemnify and hold harmless the Company and the
Placement Agent and each officer, director or control person of any such
entity, who is or may be a party or is or may be threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of or arising from
any
Subscription Agreement
7
<PAGE> 8
EXHIBIT A
actual or alleged misrepresentations or misstatement of facts or omission
to represent or state facts made or alleged to have been made by the
undersigned to the Company or the Placement Agent (or any agent or
representative of either of them) or omitted or alleged to have been omitted by
the undersigned, concerning the undersigned or the undersigned's authority to
invest or financial position in connection with the Offering, including,
without limitation, any such misrepresentation, misstatement or omission
contained in the Questionnaire or any other document submitted by the
undersigned, against losses, liabilities and expenses actually and reasonably
incurred by the Company, the Placement Agent or any officer, director or
control person of any such entity in connection with such action, suit or
proceeding for which the Company, the Placement Agent, or such officer,
director or control person has not otherwise been reimbursed (including
attorneys' fees, judgments, fines and amounts paid in settlement).
8. Understandings
The undersigned understands, acknowledges and agrees with the Company and
the Placement Agent as follows:
8.1 This Subscription may be rejected, in whole or in part, by the
Company, in its sole and absolute discretion, at any time before an Interim
Closing Date or the Final Closing Date, as the case may be, notwithstanding
prior receipt by the undersigned of notice of acceptance of the undersigned's
Subscription.
8.2 Except as set forth in paragraph 8.1 above, the undersigned hereby
acknowledges and agrees that the Subscription hereunder is irrevocable by the
undersigned, that, except as required by law, the undersigned is not entitled
to cancel, terminate or revoke this Subscription Agreement or any agreements of
the undersigned hereunder and that this Subscription Agreement and such other
agreements shall survive the death or disability of the undersigned and shall
be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns. If the undersigned is more than one person, the obligations of the
undersigned hereunder shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and his/her heirs,
executors, administrators, successors, legal representatives and permitted
assigns.
8.3 No Federal or state agency has made any findings or determination as
to the accuracy or adequacy of the Memorandum or as to the fairness of the
terms of this Offering for investment nor any recommendations or endorsement of
the Shares of Common Stock.
8.4 The Offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the undersigned
herein and in the Questionnaire.
8.5 There can be no assurance that the undersigned will be able to sell or
dispose of the Shares. It is understood that in order not to jeopardize the
Offering's exempt status under Section 4(2) of the Securities Act and
Regulation D, any transferee may, at a minimum, be required to fulfill the
investor suitability requirements thereunder.
8.6 The Placement Agent will receive compensation in connection with the
Offering but is not guaranteeing or assuming responsibility for the operation
or possible liability of the Company, including, without limitation, compliance
by the Company with the agreements entered into in connection with the
Offering, and none of them will supervise or participate in the operation or
management of the Company.
8.7 The undersigned acknowledges that the information contained in the
Memorandum is confidential and nonpublic and agrees that all such information
shall be kept in confidence by the undersigned and neither used by the
undersigned for the undersigned's personal benefit (other than in
Subscription Agreement
8
<PAGE> 9
EXHIBIT A
connection with this Subscription), nor disclosed to any third party for any
reason; provided, however, that this obligation shall not apply to any such
information that (i) is part of the public knowledge or literature and readily
accessible at the date hereof, (ii) becomes a part of the public knowledge or
literature and readily accessible by publication (except as a result of a
breach of this provision) or (iii) is received from third parties (except third
parties who disclose such information in violation of any confidentiality
agreements or obligations, including, without limitation, any Subscription
Agreement entered into with the Company).
8.8 The representations, warranties and agreements of the undersigned
contained herein and in any other writing delivered in connection with the
transactions contemplated hereby shall be true and correct in all respects on
and as of the date of the sale of the Shares as if made on and as of such date
and shall survive the execution and delivery of this Subscription Agreement and
the purchase of the Shares.
8.9 IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION ON REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE
ADEQUACY OF THE MEMORANDUM OR THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
8.10 The offering and sale of the Shares is intended to be exempt from
registration under the securities laws of certain U.S. states. A purchaser
residing in one or more of the following states shall note the language set
forth below, which is required to be included in this Agreement by the
securities laws of those states. The purchaser must note that there are
restrictions on transfer of all Shares.
ALL STATES: THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE
ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED
THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT,
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
ALABAMA: THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER
THE ALABAMA SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS NOT BEEN FILED WITH THE ALABAMA SECURITIES COMMISSION. THE
COMMISSION DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR
DOES IT PASS
ARIZONA: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES ACT OF ANY JURISDICTION BY REASON OF
SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE
OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER
Subscription Agreement
9
<PAGE> 10
EXHIBIT A
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, IF
SUCH REGISTRATION IS AVAILABLE.
CONNECTICUT: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 36-485 OF
THE CONNECTICUT UNIFORM SECURITIES ACT, AND THEREFORE, CANNOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENEMY UNLESS SUBSEQUENTLY
REGISTERED UNDER THE ACT OF 1933, AS AMENDED, OR THE SECURITIES ACT OF THIS
STATE, IF SUCH REGISTRATION IS REQUESTED, OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
FLORIDA: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA
SECURITIES ACT IN RELIANCE UPON EXEMPTION PROVISIONS CONTAINED THEREIN. ANY
SALE MADE PURSUANT TO SUCH EXEMPTION PROVISIONS IS VOIDABLE BY THE PURCHASER
WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY THE
PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER OR AN ESCROW AGENT. A
WITHDRAWAL WITHIN SUCH THREE DAY PERIOD WILL BE WITHOUT ANY FURTHER LIABILITY
TO ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A
LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS SET FORTH IN THIS MEMORANDUM,
INDICATING HIS INTENTION TO WITHDRAW.
SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE
AFOREMENTIONED THIRD BUSINESS DAY. IT IS ADVISABLE TO SEND SUCH LETTER BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND
ALSO TO EVIDENCE THE TIME IT WAS MAILED. IF THE REQUEST IS MADE ORALLY, IN
PERSON OR BY THE TELEPHONE, TO AN OFFICER OF THE COMPANY, A WRITTEN
CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS INVOLVED FOR AN INDEFINITE PERIOD OF TIME.
ILLINOIS: THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECRETARY OF THE STATE OF ILLINOIS OR THE STATE OF ILLINOIS NOR HAS THE
SECRETARY OF THE STATE OF ILLINOIS OR THE STATE OF ILLINOIS PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS CONFIDENTIAL PRIVATE OFFERING MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INDIANA: THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
MAINE: THESE SECURITIES ARE BEING SOLD PURSUANT TO AN EXEMPTION FROM
REGISTRATION WITH THE BANK SUPERINTENDENT OF THE MAINE REVISED STATUTES. THESE
SECURITIES MAY BE DEEMED RESTRICTED SECURITIES AND AS SUCH THE HOLDER MAY NOT
BE ABLE TO RESELL THE SECURITIES UNLESS PURSUANT TO REGISTRATION UNDER THE
STATE OR FEDERAL SECURITIES LAWS OR UNLESS AN EXEMPTION UNDER SUCH LAWS EXISTS.
Subscription Agreement
10
<PAGE> 11
EXHIBIT A
MASSACHUSETTS: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE MASSACHUSETTS UNIFORM SECURITIES ACT, BY REASON
OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE
OFFERING THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE MASSACHUSETTS SECURITIES ACT, IF SUCH REGISTRATION
IS AVAILABLE.
MINNESOTA: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
MINNESOTA SECURITIES AND REAL ESTATE DIVISION NOR HAS THE DIVISION PASSED UPON
THE ACCURACY OR THE ADEQUACY OF THIS PRIVATE OFFERING MEMORANDUM ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES REPRESENTED BY THIS PRIVATE OFFERING MEMORANDUM HAVE NOT BEEN
REGISTERED UNDER CHAPTER 80A OF THE MINNESOTA SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO REGISTRATION, OR
AN EXEMPTION THEREFROM.
NEW HAMPSHIRE: NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN
APPLICATION FOR A LICENSE HAS BEEN FILED UNDER THIS CHAPTER WITH THE STATE OF
NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A
PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE
SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE
AND NOT MISLEADING NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR
EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY
OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS
UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER,
OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
NEW JERSEY: THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE BUREAU
OF SECURITIES OF THE STATE OF NEW JERSEY, NOR HAS THE BUREAU PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING THE FILING OF THE WITHIN OFFERING DOES NOT
CONSTITUTE APPROVAL OF THE ISSUE OR THE SALE THEREOF BY THE BUREAU OF
SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PENNSYLVANIA: RESIDENTS OF THE COMMONWEALTH OF PENNSYLVANIA CAN ONLY TRANSFER
THESE SECURITIES IN ACCORDANCE WITH THE PROVISIONS OF SECTION 203(D) OF THE
PENNSYLVANIA SECURITIES ACT AND ARE SUBJECT TO THE FOLLOWING CONDITIONS:
A. EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES BEING
OFFERED HEREBY AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD OF 12 MONTHS
AFTER THE DATE OF PURCHASE.
B. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE PENNSYLVANIA
SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THEY ARE SO REGISTERED
OR AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE ACT BECOME AVAILABLE.
EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES BEING OFFERED
HAS THE RIGHT, PURSUANT TO SECTION 207 OF THE PENNSYLVANIA SECURITIES ACT OF
1972, TO WITHDRAW HIS SUBSCRIPTION FOR THE SECURITIES AND RECEIVE A FULL
Subscription Agreement
11
<PAGE> 12
EXHIBIT A
REFUND OF ALL MONIES PAID, WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY
THE ISSUER OF HIS WRITTEN BINDING CONTRACT PURCHASE. WITHDRAWAL WILL BE
WITHOUT ANY FURTHER LIABILITY TO SUCH PERSON. TO ACCOMPLISH THIS WITHDRAWAL, A
SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS
SET FORTH IN THIS MEMORANDUM, INDICATING HIS INTENTION TO WITHDRAW.
SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF
THE AFOREMENTIONED SECOND BUSINESS DAY. IT IS ADVISABLE TO SEND SUCH LETTER BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND TO
EVIDENCE THE TIME WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY, IN PERSON
OR BY TELEPHONE, TO THE COMPANY, A WRITTEN CONFIRMATION THAT THE REQUEST TO
WITHDRAW HAS BEEN RECEIVED SHOULD BE REQUESTED.
SOUTH CAROLINA THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION
UNDER THE SOUTH CAROLINA UNIFORM SECURITIES ACT. A REGISTRATION STATEMENT
RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE SOUTH CAROLINA
SECURITIES COMMISSIONER THE COMMISSIONER DOES NOT RECOMMEND OR ENDORSE THE
PURCHASE OF ANY SECURITIES NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS
OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TENNESSEE: THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISK OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
UTAH: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNIFORM SECURITIES
ACT AND, THEREFORE, CANNOT BE RESOLD OR TRANSFERRED UNLESS THEY ARE SO
REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
WASHINGTON: IN MAILING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR
OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS
OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE
NOT BEEN REVIEWED OR RECOMMENDED BY ANY FEDERAL SECURITIES COMMISSION OR
REGULATORY AUTHORITY OR BY THE WASHINGTON ADMINISTRATOR OF SECURITIES.
FURTHERMORE THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE. THE SECURITIES ARE SUBJECT TO RESTRICTION ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMIITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE SECURITIES
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
9. Miscellaneous.
9.1 Except as set forth elsewhere herein, any notice or demand to be given
or served in connection herewith shall be deemed to be sufficiently given or
served for all purposes by being sent as registered or certified mail, return
receipt requested, postage prepaid, in the case of Issuer, addressed to it at
the address set forth above;
Subscription Agreement
12
<PAGE> 13
EXHIBIT A
Attention: Gary O. Marino
Chief Executive Officer
and in the case of Subscriber to the address for correspondence set forth on
the Questionnaire.
9.2 This Subscription Agreement shall be enforced, governed and construed
in all respects in accordance with the laws of the State of Florida, as such
laws are applied by Florida courts to agreements entered into and to be
performed in Florida by and between residents of Florida, and shall be binding
upon the undersigned, the undersigned's heirs, estate, legal representatives,
successors and assigns and shall inure to the benefit of the Company, the
Placement Agent, and their respective successors and assigns. If any provision
of this Subscription Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed to be modified to
conform with such statute or rule of law. Any provision hereof that may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
9.3 Except as provided in Section 9.4, this Agreement shall be binding
upon and inure to the benefit of the Issuer, and Subscriber and their
successors and assigns.
9.4 The rights provided under Section 4.2 are not assignable except to a
party who is defined in Section 5.3 as an "Offering Holder."
9.5 In any action, proceeding or counterclaim brought to enforce any of
the provisions without of this Agreement or to recover damages, costs and
expenses in connection with any breach of the Agreement, the prevailing party
shall be entitled to be reimbursed by the opposing party for all of the
prevailing party's attorneys' fees, costs and other out-of-pocket expenses
incurred in connection with such action, proceeding or counterclaim.
10. Signature. The signature of this Subscription Agreement is contained as
part of the applicable Subscription Package, entitled "Signature Page."
Subscription Agreement
13
<PAGE> 14
EXHIBIT B
SUBSCRIPTION AGREEMENT GENERAL INSTRUCTIONS
GENERAL INSTRUCTIONS
These Subscription Documents contain all documents necessary to subscribe
for Shares ("Shares") of Common Stock, par value $.001 per Share ("Common
Stock"), of RailAmerica, Inc., a Delaware corporation (the "Company").
You may subscribe for Shares by completing the Subscription Agreement in
the following manner:
1. On line(a) state the number of Shares you wish to purchase.
2. On line (b) state the total cost of the Shares you wish to purchase.
To obtain the cost, multiply the number of Shares you desire to purchase by the
purchase price per Share set forth.
3. Please complete the detailed investment and other representations in
the Subscription Agreement to evidence your suitability for an investment in
the Company. All purchasers must complete and sign the Subscription Agreement.
4. Sign and state your address, telephone number and social security or
other taxpayer identification number on the lines provided on the signature
page to the Subscription Agreement, have your signature acknowledged by a
notary public and deliver the completed Subscription Agreement to the Company
with payment of the entire purchase price of the Shares subscribed for.
Payment should be made in United States Dollars, in cash or by check, bank
draft or postal or express money order payable to "RailAmerica, Inc." or by
wire transfer to an account to be designated by the Company. The Subscription
Agreement Signature Page must be completed and signed by each investor and all
signatures must be acknowledged by a notary public. Send all documents and
payments to:
First London Securities Corporation
2600 State Street
Dallas, Texas 75204
Attention: Jesse B. Shelmire, IV
Managing Director
THE COMPLETED SUBSCRIPTION AGREEMENT SHOULD BE RETURNED IN ITS ENTIRETY TO
THE PLACEMENT AGENT DESIGNATED ABOVE.
ACCEPTANCE OF DELIVERY
ALL QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF
RECEIPT) AND ACCEPTANCE OF THE COMPLETED SUBSCRIPTION AGREEMENT WILL BE
DETERMINED BY THE COMPANY, WHICH DETERMINATION WILL BE FINAL AND BINDING. THE
COMPANY RESERVES THE ABSOLUTE RIGHT TO REJECT ANY COMPLETED SUBSCRIPTION
AGREEMENT, IN ITS SOLE AND ABSOLUTE DISCRETION. THE COMPANY ALSO RESERVES THE
RIGHT TO WAIVE ANY IRREGULARITIES IN, OR CONDITIONS OF, THE SUBMISSION OF
COMPLETED SUBSCRIPTION AGREEMENTS, AND THE COMPANY'S INTERPRETATION OF THE
TERMS AND CONDITIONS FOR THE PURCHASE OF SHARES (INCLUDING THESE INSTRUCTIONS)
SHALL BE FINAL AND BINDING. THE COMPANY SHALL BE UNDER NO DUTY TO GIVE ANY
NOTIFICATION OF IRREGULARITIES IN CONNECTION WITH ANY ATTEMPTED SUBSCRIPTION
FOR SHARES OR INCUR ANY LIABILITY FOR FAILURE TO GIVE SUCH NOTIFICATION. UNTIL
SUCH IRREGULARITIES HAVE BEEN CURED OR WAIVED, NO SUBSCRIPTION FOR SHARES SHALL
BE DEEMED TO HAVE BEEN MADE. ANY SUBSCRIPTION AGREEMENT THAT IS NOT PROPERLY
COMPLETED AND AS TO WHICH DEFECTS HAVE NOT BEEN CURED OR WAIVED WILL BE
RETURNED BY THE COMPANY TO THE SUBSCRIBER AS SOON AS
Subscription Instructions
1
<PAGE> 15
EXHIBIT B
PRACTICABLE. UNLESS AN AGGREGATE OF 250,000 SHARES ARE SUBSCRIBED FOR AND
PURCHASED, NO SHARES WILL BE SOLD AND ALL SUBSCRIPTIONS FOR SHARES WILL BE
RETURNED, WITHOUT INTEREST OR DEDUCTION.
Subscription Instructions
2
<PAGE> 16
EXHIBIT B
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
PLEASE PRINT OR TYPE, USE INK ONLY.
(ALL PARTIES MUST SIGN)
THE UNDERSIGNED INVESTOR HEREBY CERTIFIES THAT HE (I) HAS RECEIVED AND
RELIED SOLELY UPON THE OFFERING DOCUMENTS, (II) AGREES TO ALL THE TERMS AND
CONDITIONS OF THIS SUBSCRIPTION AGREEMENT (III) MEETS THE SUITABILITY STANDARDS
SET FORTH IN THIS SUBSCRIPTION AGREEMENT AND (IV) IS A RESIDENT OF THE STATE OR
FOREIGN JURISDICTION INDICATED BELOW.
(A) THE UNDERSIGNED IRREVOCABLY SUBSCRIBES FOR ______ SHARES OF COMMON STOCK.
(B) THE TOTAL COST OF THE SHARES SUBSCRIBED FOR, AT $______ PER SHARE, IS
$__________.
<TABLE>
<S> <C>
If other than individual check one and indicate
- ------------------------------------------- capacity of signatory under the signature:
Name of Subscriber (Print)
- ------------------------------------------- / / Trust
Name of Joint Subscriber (if any) (Print) / / Estate
/ / Uniform Gifts to Minors Act of State of ___
/ / Attorney-in-fact
- ------------------------------------------- / / Corporation
Signature of Subscriber / / Other
If Joint Ownership, check one:
- -------------------------------------------
Signature of Joint Subscriber (if any) / / Joint Tenants with Right of Survivorship
/ / Tenants in Common
- ------------------------------------------- / / Tenants by the Entirety
Capacity of Signatory (if applicable) / / Community by Property
- ------------------------------------------- Backup Withholding Statement:
Social Security or Taxpayer identification Please check this box only if the investor is subject
Number to:
/ /
- ------------------------------------------- Backup Withholding
Residence Address
Foreign Person:
- ------------------------------------------- Please check this box only if the investor is a:
City State Zip Code / /
nonresident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate.
Telephone ( )
-------------------------------------
</TABLE>
The investor agrees to the terms of this Subscription Agreement and, as
required by the Regulations pursuant to the Internal Revenue Code, certifies
under penalty of perjury that (1) the Social Security Number or Taxpayer
Identification Number and address provided above is correct, (2) the investor
is not subject to backup withholding (unless the Backup Withholding Statement
box is checked) either because he has not been notified that he is subject to
backup withholding as a result of a failure to report all interest or dividends
or because the Internal Revenue Service has notified him that he is no longer
Subscription Instructions
1
<PAGE> 17
EXHIBIT B
subject to backup withholding and (3) the investor (unless the Foreign Person
box above is checked) is not a nonresident alien, foreign partnership, foreign
trust or foreign estate.
THE SUBSCRIPTION FOR ___ SHARES OF RAILAMERICA, INC. BY THE ABOVE NAMED
SUBSCRIBER(S) IS ACCEPTED THIS ____ DAY OF _________ 1996.
RAILAMERICA, INC.
By:
----------------------------------------
Subscription Instructions
2
