FORM OF
SUBSCRIPTION AGREEMENT
Sedona Corporation
000 Xxxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Gentlemen:
Subject to the terms and conditions hereof, the undersigned
hereby irrevocably subscribes for units (the
"Units") as specified in Appendix A at a price of $100,000 per
Unit, which is payable as described in Section 3 hereof.
Each Unit consists of (i) 50,000 shares of the Common Stock,
par value $.001 per share (the "Common Stock") of Sedona
Corporation, a Pennsylvania corporation, and (ii) a warrant to
acquire 44,444 shares of Common Stock at an exercise price
of $2.25 per share (the "Warrant"). The undersigned
acknowledges that the Units, if issued by the Company, will be
subject to restrictions on transfer pursuant to the Securities
Act, state law and this Agreement.
1. Acceptance of Subscription and Issuance of Units. It is
understood and agreed that the Company shall have the sole
right, at its complete discretion, to accept or reject this
subscription, in whole or in part, for any reason and that the
same shall be deemed to be accepted by the Company only when
it is signed by a duly authorized officer of the Company and
delivered to the undersigned at or prior to any Closing
referred to in Section 2 hereof. Notwithstanding anything in
this Agreement to the contrary, the Company shall have no
obligation to issue any of the Units to any person who is a
resident of a jurisdiction in which the issuance of Units to
him would constitute a violation of the securities, "blue sky"
or other similar laws of such jurisdiction (collectively
referred to as the "State Securities Laws").
2. Closing. Upon receipt and acceptance by the Company
hereof, a closing (the "Closing") shall promptly take place
at the offices of the Company or other place as determined by
the Company and the subscription proceeds received herewith
shall be paid over to the Company and certificates
representing the Common Stock portion of the Unit, along with
Warrant certificates representing the Warrant portion of the
Unit, will be delivered to the undersigned.
3. Payment for Units. Payment for the Units shall be
received by the Company from the undersigned by cash, wire
transfer, cashier's check, bank draft or postal money order
payable in United States dollars, in an amount as set forth in
Appendix A hereto upon execution of this Subscription
Agreement. The Company shall deliver or arrange for delivery
of certificates representing the Common Stock portion of the
Unit, along with Warrant certificates representing the Warrant
portion of the Unit, sold to the undersigned at Closing.
4. Additional Shares of Common Stock. The Company agrees
to issue additional shares of Common Stock to the undersigned
in accordance with the following provisions: On the date that
is six (6) months from the date of Closing, the Company will
compute the average closing price of the Common Stock for the
prior twenty (20) trading days (the "Average Closing Price").
In the event that the Average Closing Price is less than $2.00
per share, the Company will then issue additional shares of
Common Stock to the undersigned such that the additional
shares of Common Stock, when added to the original number of
shares of Common Stock acquired by the undersigned through the
purchase of the Units hereunder, and then multiplied by the
Average Closing Price will equal dollar amount indicated in
Appendix A. Notwithstanding the foregoing, for purposes of
determining the number of additional shares of Common Stock to
be issued to the undersigned, if any, the Average Closing
Price shall never be lower than $1.50. To the extent that the
actual Average Closing Price is below $1.50, for purposes of
computing the number of additional shares of Common Stock to
be issued to the undersigned, the Average Closing Price shall
be deemed to be $1.50.
5. Registration Rights. In connection with the issuance
of the Units, the Company will include the shares of the
Common Stock portion of the Units, along with the shares of
Common Stock underlying the Warrant, on a pre-effective
amendment to its registration statement on Form S-3 (File No.
333-71457) which was filed with the United States Securities
and Exchange Commission on January 29, 1999. The Company will
use its reasonable best efforts to cause such registration
statement to be declared effective within thirty (30) days of
the Closing.
6. The Warrants. The following is a description of the
Warrant component of the Unit:
a. The Warrants are exercisable at any time at an
exercise price of $2.25 per share. The Warrants expire
on March 15, 2002. The Warrants provides the Company with a
call provision such that the Warrant may be called (and
thereby redeemed by the Company) at an increasing stock price
of $6.00 for the first third of the Warrant, $8.00 for the
second third of the Warrant and $10.00 for the final third of
the Warrants. . In the event the Company elects to call for
the exercise of any of the Warrants, the holder shall have up
to 30 days to exercise those Warrants that are subject
to the call, after which time any such 'called' Warrants, if
not exercised, will become canceled on the books of
the Company. A form of the Warrants is attached to this
Subscription Agreement as Appendix B. The undersigned is
directed to the form of Warrants for a more complete
description of the terms thereof.
7. Representations and Warranties of the Company. As of a
Closing, the Company represents and warrants to the
undersigned that:
(a) The Company is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth
of Pennsylvania, with full power and authority to conduct its
business as it is currently being conducted and to own
its assets; and has secured any other authorizations,
approvals, permits and orders required by law for the conduct
by the Company of its business as it is currently being
conducted;
(b) The Company has duly authorized the issuance and
sale of the Units upon the terms of their offer by all
requisite corporate action.
(c) The Common Stock portion of the Unit, and the Common
Stock issued in connection with the exercise of the Warrant,
if any, when issued and paid for, will represent validly
authorized, duly issued and fully paid and nonassessable
shares of Common Stock, and the issuance thereof will not
conflict with the Company's Articles of Incorporation or
Bylaws nor with any outstanding warrant, option, call,
preemptive right or commitment of any type relating to the
Company's capital stock.
(d) No representation or warranty by the Company in this
Agreement, and no statement by an officer of the Company
contained in any document, certificate or other writing
furnished to the undersigned in connection with the
transactions contemplated hereby, when taken as a whole,
contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements herein or
therein not misleading in light of the circumstances in which
they are made.
8. Representations, Warranties and Covenants of the
Undersigned. The undersigned hereby represents and warrants
to and covenants with the Company and each officer, director,
and agent of the Company that:
(a) General
(i) The undersigned has all requisite authority to enter
into this Agreement and to perform all the obligations
required to be performed by the undersigned hereunder; and
(ii) The undersigned is a resident of the state set forth
on the signature page hereto and is not acquiring the Units as
an agent or otherwise for any other person.
(b) Information Concerning the Company
(i) The undersigned has received or has had access to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, and its Quarterly Reports on Form 10-Q for
the three months ended March 31, 1999 and for the three and
six months ended June 30, 1999 and Definitive Proxy Materials.
The undersigned has not been furnished any offering literature
other than the foregoing and has relied only on the
information contained therein.
(ii) The undersigned has been given the opportunity to
ask questions and to obtain any information necessary to make
an informed investment decision with respect to the Units and
has been furnished all such information so requested.
(iii) The undersigned understands that, unless he
notifies the Company in writing to the contrary at or before
Closing, all the undersigned's representations and warranties
contained in this Agreement will be deemed to have been
reaffirmed and confirmed as of Closing, taking into account
all information received by the undersigned.
(iv) The undersigned understands that the purchase of the
Units involves elements of substantial risks.
(v) The undersigned understands that no federal or state
agency has passed upon the Units or made any finding or
determination concerning the fairness or advisability of this
investment.
(vi) The undersigned understands that estimates,
projections and certain other information are forward looking
statements which, by their nature, involve significant
elements of subjective judgment and analysis that may or may
not be correct; that there can be no assurance that such
projections or goals will be attained.
(c) Status of Undersigned
(i) The undersigned has such knowledge, skill and
experience in business, financial and investment matters so
that he is capable of evaluating the merits and risks of an
investment in the Units. To the extent necessary, the
undersigned has retained, at his own expense, and relied upon,
appropriate professional advice regarding the investment, tax
and legal merits and consequences of this Agreement and owning
the Units.
(ii) The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The
undersigned agrees to furnish any additional information
requested to assure compliance with applicable federal and
state securities laws in connection with the purchase and sale
of the Units. The undersigned acknowledges that he has
completed the Confidential Purchase Questionnaire and
Accredited Investor Certificate which are attached as Appendix
C and that the information contained therein is complete and
accurate as of the date thereof and is hereby affirmed as of
the date hereof.
(d) Transfer Restrictions
(i) The undersigned is acquiring the Units solely for
his own beneficial account, for investment purposes, and not
with a view to, any distribution of the Units. The
undersigned understands that the Units, when issued, were not
registered under the Securities Act nor any State Securities
Laws by reason of specific exemptions under the provisions
thereof which depend in part upon the investment intent of the
undersigned and of the other representations made by the
undersigned in this Agreement. The undersigned understands
that the Company is relying upon the representations and
agreements contained in this Agreement (and any supplemental
information) for the purpose of determining whether this
transaction meets the requirements for such exemptions.
(ii) The undersigned understands that the Units are
"restricted securities" under applicable federal securities
laws and that the Securities Act and the rules of the
Securities and Exchange Commission (the "Commission") provide
in substance that the undersigned may dispose of the Units (or
any portion of the Units) only pursuant to an effective
registration statement under the Securities Act or an
exemption therefrom.
(iii) The undersigned acknowledges that the Company has
the right in its sole and absolute discretion to abandon this
private placement at any time prior to the completion of the
offering and to return the previously paid subscription price
of the Units without deduction or interest thereon, to the
respective subscribers.
(iv) The undersigned has not used any person as a
"Purchaser Representative" within the meaning of Regulation D
to represent it in determining whether it should purchase the
Units.
(v) The undersigned agrees and covenants to execute such
further agreements, instrument or documents as the Company may
in its discretion deem necessary or desirable.
9. Conditions to Obligations of the Undersigned and the
Company. The obligations of the undersigned
to purchase and pay for the number of Units specified herein
and of the Company to sell the Units are subject to the
satisfaction at or prior to a Closing of the following
conditions precedent: the representations and warranties of
the Company contained in Section 4 hereof and of the
undersigned contained in Section 5 hereof shall be true and
correct on and as of Closing in all respects with the same
effect as though such representations and warranties had been
made on and as of the date of Closing.
10. Obligations Irrevocable. The obligations of the
undersigned hereunder shall be irrevocable, except
with the consent of the Company.
11. Legend.
(a) Each certificate representing the Common Stock
portion of the Unit along with each Warrant certificate
representing the Warrant portion of the Unit (sold pursuant to
this Agreement) will be imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), NOR ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER
UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH
SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL,
SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER
APPLICABLE SECURITIES LAWS IS NOT REQUIRED."
(b) Each such certificate shall also bear such other
legends as may be required by the applicable State Securities
Laws.
12. Brokers. Subscriber has not entered into any agreement
to pay any broker's or finder's fee to any Person with respect
to this Agreement or the transactions contemplated hereby.
13. Waiver, Amendment. Neither this Agreement nor any
provisions hereof shall be modified, changed, discharged or
terminated except by an instrument in writing, signed by the
party against whom any waiver, change, discharge or
termination is sought.
14. Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by either the Company
or the undersigned without the prior written consent of
the other party.
15. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania.
16. Section and Other Headings. The section and other
headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or
interpretation of this Agreement.
17. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
together shall be deemed to be one and the same agreement.
18. Notices. All notices and other communications provided
for herein shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by registered
or certified mail, return receipt requested, postage prepaid:
(a) If to the Company, to it at the following address:
Sedona Corporation
000 Xxxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Chief Financial Officer
(b) If to the undersigned, to him at the address set
forth on the signature page hereto;
or at such other address as either party shall have specified
by notice in writing to the other.
19. Binding Effect. The provisions of this Agreement shall
be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, legal representatives,
successors and assigns.
20. Survival. All representations, warranties and covenants
contained in this Agreement shall survive (i) the acceptance
of the subscription by the Company, (ii) changes in the
transactions, documents and instruments which are not material
or which are to the benefit of the undersigned, and (iii) the
death or disability of the undersigned.
21. Notification of Changes. The undersigned hereby
covenants and agrees to notify the Company upon
the occurrence of any event prior to a Closing of the purchase
of the Shares pursuant to this Agreement which would
cause any representation, warranty, or covenant of the
undersigned contained in this Agreement to be false or
incorrect.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement this day of
1999.
INVESTOR:
Signature
Print Name
Number and Street
City, State and Zip
Subscriber's Social Security
or Tax Identification Number
Signature of Co-owner if applicable
If Joint Ownership, check one (all parties must sign above):
( ) Joint Tenants with ( ) Tenants in Common
Right of Survivorship
( ) Community Property
If Fiduciary or Corporation, check one:
( ) Trust ( ) Estate ( ) Power of Attorney
( ) Corporation
SEDONA CORPORATION
Subscription accepted as of the _______
day of ____________, 1999.
By:
Xxxxx Xxxxxx, President
APPENDIX A
CONSIDERATION TO BE DELIVERED
Number of Units Amount to be Paid
$
Appendix B
Form of the Warrants
Number: WCXXXX_____
**XX,XXX** Shares
SEDONA CORPORATION
Incorporated under the laws of the Commonwealth of
Pennsylvania
COMMON STOCK PURCHASE WARRANTS
This Certifies that ___________________ (the "holder") is the
owner of XX,XXX Common Stock Purchase Warrants (the
"Warrants"), each Warrant giving the holder the right to
purchase one (1) fully paid and non-assessable share of
Common Stock, $.001 par value, of SEDONA Corporation (the
"Company") at any time through March 15, 2002, (the
"expiration date") at an exercise price of $2.25 per Warrant.
These Warrants provide the Company with a call provision
such that these Warrants may be called (and thereby redeemed
by the Company) at an increasing stock price of $6.00
for the first third of the Warrants, $8.00 for the second
third of the Warrants and $10.00 for the final third of the
Warrants.
In the event the Company elects to call for the exercise of
any of the warrants, the holder shall have up to 30 days to
exercise those warrants that are subject to the call, after
which time any such 'called' warrants, if not exercised, will
become canceled on the books of the Company.
As of Midnight of the exercise date, any unexercised Warrants
issued herein will automatically and without notice terminate
and become null and void, unless extended by action of the
Board of Directors. Any exercise of these Warrants shall be
in writing, addressed to the Secretary of the Corporation at
its principal place of business, using the form attached
hereto, and shall be accompanied by payment in full by check.
In the event, at the time of exercise of the Warrants, there
does not exist a Registration Statement on an appropriate Form
under the Securities Act of 1933, as amended (the "Act"),
which Registration Statement shall have become effective and
shall be current with respect to the underlying shares being
purchased, and in the opinion of counsel to the Company such
underlying shares will upon issuance be "restricted"
securities within the meaning of Rule 144 under the Act, you
will represent and warrant to the Company (i) that, upon
exercise of the Warrants, you are purchasing the underlying
shares for investment only and not with a view to the resale
or distribution thereof and (ii) that any subsequent resale or
distribution of any such underlying shares shall be made
either pursuant to (x) a Registration Statement on an
appropriate Form under the Act, which Registration Statement
shall have become effective and shall be current with respect
to the underlying shares being sold, or (y) a specific
exemption from the registration requirements of the Act, but
in claiming such exemption, you shall, prior to any offer for
sale or sales of such underlying shares, obtain a favorable
written opinion from counsel for, or approved by the Company,
as to the applicability of such exemption.
In Witness Whereof, the said Corporation has caused this
Certificate to be signed by its authorized officers, and its
Corporate Seal, to be hereunto affixed this __th day of
______, 1999.
__________________________________________________
Secretary/President
(Apply Corporate Seal)
APPENDIX C
CONFIDENTIAL PURCHASER QUESTIONNAIRE
SEDONA CORPORATION
(A Pennsylvania corporation)
Sedona Corporation
000 Xxxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Gentlemen:
The information contained herein is being furnished to you in
order for you to determine whether the undersigned's
Subscription Agreement to purchase Units ("Units") consisting
of (i) shares of the Common Stock, par value $.001 per share
(the "Common Stock") of Sedona Corporation, a Pennsylvania
corporation, and (ii) warrants to acquire shares of Common
Stock at an exercise price of $2.25 per share from SEDONA
CORPORATION (the "Company"), may be accepted by you in light
of the requirements of Section 4(2) of the Securities Act of
1933, as amended (the "Act") and Regulation D promulgated
thereunder, and an exemption contained in the securities
laws of certain states. The undersigned prospective investor
(the "Investor") understands that the information is
needed in order to satisfy various suitability requirements,
including the requirement that you must have reasonable
grounds to believe that the Investor is an "Accredited
Investor," as defined in Rule 501 of Regulation D (which in
the case of a partnership investor, requires each partner to
be an Accredited Investor), and that the Investor has
knowledge and experience in financial and business affairs
such that the Investor is capable of evaluating the merits
and risks of the proposed investment. The Investor
understands that (a) you will rely on the information
contained herein for purposes of such determination, (b) the
Units distributed in connection therewith are issued under the
Act in reliance upon the exemption from registration afforded
by Section 4(2) of the Act and Regulation D promulgated
thereunder and under the securities laws of any state in
reliance upon a similar exemption and (d) this Questionnaire
is not an offer of Shares or any other securities.
The Investor understands that, although this Questionnaire and
the responses provided herein will be kept confidential, you
may need to present it to such parties as you deem advisable
in order to establish the applicability under any federal or
state securities laws of an exemption from registration.
In accordance with the foregoing, the following
representations and information are hereby made and
furnished:
(Please answer all questions. If the answer to any question
is "None" or "Not Applicable," please so state. Each partner
of a partnership Investor must submit a completed
Questionnaire.)
Full Name:
Age:
Occupation:
Citizenship:
Number of Dependents:
Residential Address:
Street
Telephone
City State
Zip Code
Business Address:
Firm Name
Street
Telephone
City State
Zip Code
Please indicate your preferred mailing address:
( ) Residential ( ) Business
1. (a) Was your individual net income (that is,
not including the income of your spouse) in excess of $200,000
in 1997 and 1998?
Yes _______ No_______
(b) Do you anticipate that your individual net
income will exceed $200,000 in 1999?
Yes _______ No_______
(c) Was your joint income (that is, including your
income and the income of your spouse) in excess of $300,000 in
1997 and 1998?
Yes _______ No_______
(d) Do you anticipate that your joint income will
exceed $300,000 in 1999?
Yes _______ No_______
2. Is your current net worth (including your primary
residence) in excess of $1,000,000?
Yes _______ No_______
3. Please describe your experience as an investor
(including amount invested) in securities, particularly
investments in nonmarketable and tax-incentive securities such
as real estate, equipment leasing, or oil and gas.
4. Have you invested in other private placements of
securities?
Yes _______ No_______
If yes, please list and describe:
I understand that the Company will be relying on the accuracy
and completeness of my responses to the foregoing questions
and the Investor represents and warrants to the Company as
follows:
(i) The answers to the above questions are complete
and correct and may be relied upon by the Company in
determining whether the Investor is an Accredited Investor and
whether the offering is exempt from registration under the
Act, and any other exemption provided by applicable state
securities law;
(ii) I will notify the Company immediately of any
material change in any statement made herein occurring prior
to the closing of any purchase by me of the Shares; and
(iii) I have sufficient knowledge and experience in
financial matters to evaluate the merits and risks of the
prospective investment, and am able to bear the economic risk
of the investment and currently could afford a complete loss
of such investment.
IN WITNESS WHEREOF, the Investor has executed this
Confidential Purchaser Questionnaire this _____ day of
_____________, 1999, and declares that it is truthful and
correct.
(Check One)
____ Individual(s)* X
Signature of Prospective Investor
____ Trust**
Print Investor Name
and Title (if applicable)
____ Partnership *** X
Signature of Prospective Co-Investor
____ Corporation ****
Print Co-Investor Name
and Title (if applicable)
__________________
* For unmarried individuals, please provide a signed
Confidential Purchaser Questionnaire for each individual.
** If a custodian, trustee or agent, please include
trust, agency or other agreement and a certificate authorizing
investment and as to legal existence of the trust.
*** If a partnership, please provide a certified
copy of partnership agreement and any amendments. If a
limited partnership, please provide, in addition, a
certificate of limited partnership as currently in effect.
**** If a corporation, please include articles of
incorporation and bylaws as amended and currently in effect,
certified corporate resolution or other document authorizing
investment, certificate of incumbency of officers and
certified or audited financial statements for the preceding
three fiscal years.
ACCREDITED INVESTOR CERTIFICATE
The undersigned Investor hereby certifies that he is an
Accredited Investor as that term is defined in Regulation D
adopted pursuant to the Securities Act of 1933 (the "Act").
The specific category(s) of Accredited Investor applicable to
the undersigned is checked below.
_____ a. an individual whose individual
net worth, or joint net worth with that individual's spouse,
exceeds $1,000,000 (including the value of homes, home
furnishings and personal automobiles);
_____ b. an individual who had an
individual income in excess of $200,000 in 1997 and 1998 or
joint income with that person's spouse in excess of $300,000
in each of those years and who reasonably expects to reach the
same income level in 1999. For purposes of this offering,
individual income shall equal adjusted gross income, as
reported in the investor's federal income tax return, less any
income attributable to a spouse or to property owned by the
spouse, and as may be further adjusted in accordance with the
rules, regulations, and releases of the Commission;
_____ c. a bank as defined in Section
3(a)(2) of the Securities Act of 1933, as amended (the "Act"),
or a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Act, whether acting in
its individual or fiduciary capacity; an insurance company as
defined in Section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 (the "1940
Act") or a business development company as defined in Section
2(a)(48) of the 1940 Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958; or an employee benefit plan within the meaning of Title
I of the Employee Retirement Income Security Act of 1974
("ERISA"), if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of ERISA, which is
either a bank, savings and loan association, insurance company
or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or if a
self-directed plan, with investment decisions made solely by
persons that are accredited investors;
_____ d. a private business development
company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940;
_____ e. an organization described in
Section 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the Shares, with
total assets in excess of $5,000,000;
_____ f. an individual who is a
director or executive officer of the Company; or
_____ g. an entity in which all of the
equity owners are accredited investors as set forth above.
IN WITNESS WHEREOF, the undersigned has executed this
Accredited Investor Certificate this day of
, 1999.
Signature
Printed Name
