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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 REPORTED) JANUARY 15, 1997
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RAILAMERICA, INC.
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(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-20618 65-0328006
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(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
RAILAMERICA, INC.
301 YAMATO ROAD, SUITE 1190
BOCA RATON, FLORIDA 33431 33431
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 994-6015
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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 1,670,000 shares of
its Common Stock, par value $.001 per share ("Common Stock"), at a purchase
price per share of $4.50 (aggregate proceeds of $7,515,000) (the "Private
Placement Offering"). Certain registration rights were granted to the
subscribers to the Private Placement Offering pursuant to the Subscription
Agreements dated January 15, 1997.
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 on behalf of the
Company; (ii) a management fee equal to 1% of the gross proceeds raised on
behalf of the Company; and (iii) warrants to purchase 167,000 shares of Common
Stock, at an exercise price of $5.75 per share.
The foregoing is qualified in its entirety by the Exhibits attached hereto.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
EXHIBITS
10.1 Letter of Engagement between the Company and First London
Securities Corporation.
10.2 Form of Subscription Agreement.
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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.
RAILAMERICA, INC.
Date: As of January 15, 1997 By:/s/ Gary O. Marino
---------------------------------------
Gary O. Marino, Chairman of the Board,
President, Chief Executive Officer and
Treasurer
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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
December 16, 1996
Board of Directors
RailAmerica, Inc.
301 Yamato Road, Suite 1190
Boca Raton, FL 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 private 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 to 1,500,000 shares, at a discount to
current market pricing. The Agent will conduct all sales and solicitation
efforts of the Offering will be made only to accredited investors. The
anticipated completion of the Offering is expected by January 7, 1997.
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 to answer questions
of, and to provide additional information to, any potential investors.
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 us 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 management
fee equal to one percent of the gross proceeds raised on behalf of the
Company (the "Management Fee"). Payment of such Placement Fee and the
Management 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 Management
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 at a purchase price per Security
equal to 115% of the market bid price of the Securities at
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Board of Directors
RailAmerica, Inc.
301 Yamato Road, Suite 1190
Boca Raton, FL 33431
Page 2
the time of the pricing of the Offering.
Upon the execution of this agreement by the Company, the
Company agrees to pay FLSC a non-accountable expense allowance
of $5,000.00. 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.
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 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, damages, 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 such 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 and 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 event 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 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.
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Board of Directors
RailAmerica, Inc.
301 Yamato Road, Suite 1190
Boca Raton, FL 33431
Page 3
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
allowance 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 December 24, 1996.
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
Managing 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
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EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
RailAmerica, Inc.
301 Yamato Road
Suite 1190
Boca Raton, FL 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 December __, 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
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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, June
30, 1996 and September 30, 1996. The September 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, September 6, 1996, September 12, 1996, September 30, 1996 and
October 11, 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 obligations 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 operations of any material phase of Issuer's
business now conducted by it or its subsidiaries;
Subscription Agreement
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(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 September 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 September 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 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
Subscription Agreement
3
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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 disbursements of any counsel, experts, or consultants employed by an
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
Subscription Agreement
4
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Offering Holder. It shall by 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 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 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 all 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.
6. 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
December 31, 1996 (the "Closing Date"), at such time as Issuer and Subscriber
shall mutually agree. The Company may, in its sole discretion, extend the
Closing Date to a date on or before January 7, 1996.
Subscription Agreement
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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 advisors
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
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.
Subscription Agreement
6
<PAGE> 7
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 maters 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 to a purchase
of the Shares.
7.10. The undersigned acknowledged that each certificate representing
the Shares shall be stamped for 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 EACH 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) and 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 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
SUBSCRIPTION AGREEMENT
7
<PAGE> 8
which the Company, the Placement Agent, or such officer, director or control
person has not otherwise been reimbursed (including attorney's 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. The 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 acknowledgements 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 connection
with the 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
SUBSCRIPTION AGREEMENT
8
<PAGE> 9
respects on an 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 SOLE 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 THE 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 THE SECURITIES ACT
OF 1933, AS EMENDED, 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.
SUBSCRIPTION AGREEMENT
9
<PAGE> 10
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.
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.
SUBSCRIPTION AGREEMENT
10
<PAGE> 11
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
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.
Subscription Agreement
11
<PAGE> 12
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 THE 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
PERMITTED 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;
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,
Subscription Agreement
12
<PAGE> 13
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
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 (204)220-0693
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 practicable. Unless an
aggregate of 250,0000 Shares are subscribed for and purchased, no Shares will
be sold and all subscription for Shares will be returned, without interest or
deduction.
Subscription Instructions
1
<PAGE> 15
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
$____________.
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<S> <C>
__________________________________________________________ If other than individual check one and indicate capacity
Name of Subscriber (Print) of signatory under the signature:
__________________________________________________________ [ ] Trust
Name of Joint Subscriber (if any) (Print) [ ] Estate
[ ] Uniform Gifts to Minors Act of State of _____________
__________________________________________________________ [ ] Attorney-in-fact
Signature of Subscriber [ ] Corporation
[ ] Other _______________________________________________
__________________________________________________________
Signature of Joint Subscriber (if any)
If Joint Ownership, check one:
__________________________________________________________
Capacity of Signatory (if applicable) [ ] Joint Tenants with Right of Survivorship
[ ] Tenants in Common
__________________________________________________________ [ ] Tenants by the Entirety
Social Security Number or Taxpayer identification Number [ ] Community by Property
__________________________________________________________ Backup Withholding Statement:
Residence Address Please check this box only if the investor is subject to:
__________________________________________________________ [ ] Backup Withholding
City State Zip Code
Telephone ( )___________________________________________ Foreign Person:
Please check this box only if the investor is a:
[ ] Nonresident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate.
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Subscription Instructions
1
<PAGE> 16
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
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:
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Subscription Instructions
2
