EXHIBIT 4.2
FORM OF SUBSCRIPTION AGREEMENT
February 11, 2000
Integral Systems, Inc.
0000 Xxxxxxxxxxxx Xxx, Xxxxx X
Xxxxxx, Xxxxxxxx 00000
Ladies/Gentlemen:
1. Subscription; Purchase and Closing; Purchase Price Adjustment.
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1.1 The undersigned ("Subscriber"), intending to be legally bound
hereby, subscribes for and agrees to purchase the number of shares (the
"Shares") of the Common Stock, par value $.01 per share (the "Common Stock"), of
Integral Systems, Inc., a Maryland corporation (the "Company"), indicated on the
signature page hereto, at a price of $31.00 per share (the "Purchase Price") and
upon the terms and conditions set forth in this subscription agreement (this
"Agreement").
1.2 The Shares subscribed for hereby shall not be deemed owned by
Subscriber, nor shall Subscriber be deemed a holder of securities of the
Company, until this subscription has been accepted by the Company and the
Purchase Price for the Shares subscribed for has been paid. Subscriber
understands and agrees that the Company reserves the right to reject this
subscription for the Shares in whole or in part, in its sole discretion, at any
time through the Closing Date (as that term is defined in Section 1.5). This
subscription is subject to allotment. If subscription for the Shares is
oversubscribed, the Company will determine which subscriptions shall be
accepted, in whole or in part.
1.3 In the event of rejection of this subscription, or in the event the
sale of the Shares is not consummated for any reason (in which event this
Agreement shall be deemed to be rejected), this Agreement shall have no force or
effect.
1.4 Subscriber hereby agrees to deliver the Purchase Price required to
purchase the number of Shares subscribed for hereunder, as that amount may be
reduced pursuant to Section 1.2 hereof, on the Closing Date set by the Company
pursuant to Section 1.5 hereof.
1.5 The closing of the transactions contemplated herein (the "Closing")
shall take place at such time as the Company and ING Barings LLC, Xxxxx &
Company Incorporated and Xxxxxx, Xxxxxxx & Xxxxx, Inc., as co-placement agents
(together, the "Placement Agents"), shall determine. The Placement Agents shall
establish and inform Subscriber of the closing date for such subscription (the
"Closing Date") and the date upon which the Purchase Price shall be delivered to
the Company.
1.6 Payment of the full Purchase Price for the Shares to be purchased
shall be made on the Closing Date by wire transfer of immediately available
funds or at such other time and by such other means as the Company shall
approve. The Company or the Placement Agents will notify Subscriber as to
payment instructions. Upon the Closing Date, certificates representing the
Shares purchased by Subscriber will be delivered by the Company to Subscriber.
2. Representations, Warranties and Agreements of Subscriber. Subscriber
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hereby represents and warrants to the Company and hereby covenants and agrees
with the Company as follows:
(a) Subscriber has full power and authority to enter into this
Agreement and to perform its obligations hereunder. All requisite action on the
part of Subscriber necessary for the authorization, execution, delivery and
performance of Subscriber's obligations under this Agreement and for the
purchase of the Shares has been taken, and this Agreement, when executed by a
duly authorized officer of Subscriber, will be a valid and binding agreement of
Subscriber, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization or
other similar laws and legal and equitable principles limiting or affecting the
rights of creditors generally and/or (ii) general principles of equity,
regardless of whether considered in a proceeding in equity or at law, and except
as rights to indemnification hereunder may be limited by federal or state
securities laws.
(b) Subscriber has carefully read this Agreement and, to the extent
Subscriber believes necessary, has discussed with Subscriber's counsel and other
professional advisor(s) the representations, warranties, covenants and
agreements which Subscriber makes by signing it, and any applicable limitations
upon Subscriber's transfer of the Shares issuable thereunder. Subscriber
acknowledges that Subscriber has not relied upon the legal counsel or
accountants for the Company regarding the transactions contemplated by this
Agreement, and Subscriber has been advised to engage separate legal counsel and
accountants to represent Subscriber's individual interest and advise Subscriber
regarding the structure of, and risks associated with, such transactions.
(c) Subscriber understands that, as a publicly traded company, the
Company files with the Securities and Exchange Commission (the "SEC") various
reports, including quarterly and annual financial statements, annual reports to
stockholders, and proxy statements and that all of such reports statements and
information are available to the public, including Subscriber, from the SEC and
directly from the Company. Subscriber acknowledges that the Company has
delivered to Subscriber within a reasonable time prior to the execution of this
Subscription Agreement a copy of the following: (i) an Executive Summary dated
January 24, 2000; (ii) the Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1999; (iii) the Company's Quarterly Report on Form 10-
QSB for the fiscal quarter ended June 30, 1999; (iv) Amendment No. 1 to the
Company's Registration Statement on Form S-3 (Registration No. 333-82499) filed
with the SEC on July 28, 1999; (v) the Company's definitive proxy statement
filed with the SEC on March 23, 1999 and an amendment thereto filed with the SEC
on April 12, 1999 relating to its 1999 Annual Meeting of Stockholders; (vi) the
Company's press releases since September 30, 1999; and (vii) such other
documents as
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Subscriber (and Subscriber's attorney, accountant and/or other advisors) deemed
pertinent in order for Subscriber to make an informed investment decision (the
documents identified in clauses (i) through (vii) herein are collectively
referred to herein as the "Documents"). The Documents contain "forward-looking
statements" about business strategies, market potential, future financial
performance and other matters. These forward-looking statements are predictions.
No assurances can be given that the future results indicated, whether expressed
or implied, will be achieved. Subscriber acknowledges and agrees that the
inclusion of forward-looking statements in the Documents should not be regarded
as a representation by the Company or any other person that these estimates will
be realized, and actual results may vary materially.
Subscriber further acknowledges that Subscriber is entering into this
Agreement solely on the basis of information contained in the Documents and not
on the basis of any information, representations or agreements made by any other
person, and that no representations or warranties of any nature have been made
to Subscriber with respect to the ultimate economic consequences or tax
consequences of Subscriber's investment in the Company. Subscriber acknowledges
that any forecasted financial data, if any, which may have been given to
Subscriber is for illustration purposes only and no assurance is given that
actual results will correspond with the results contemplated in any such data.
(d) Subscriber acknowledges that Subscriber has had the opportunity to
ask questions of, and receive answers from, or obtain additional information
from, the executive officers of the Company concerning the financial and other
affairs of the Company and the terms and conditions of its investment hereunder,
and, to the extent deemed necessary, Subscriber has asked such questions and
received satisfactory answers and desires to invest in the Company. In
evaluating the suitability of an investment in the Company, the Subscriber has
not relied upon any representations or other information (whether oral or
written) other than as set forth in this Agreement or as contained in any
documents delivered or answers given in writing by the Company to questions
furnished to the Company. Subscriber has been advised and acknowledges that no
federal or state agency has made any finding or determination as to the fairness
or merits of an investment in the Company and that no such agency has made any
recommendation or endorsement whatsoever with respect to such an investment.
(e) Subscriber is an "accredited investor" as that term is defined in
Rule 501 of Regulation D promulgated by the SEC under the Securities Act of
1933, as amended (the "Securities Act"). For this purpose, Subscriber
understands that an "accredited investor" includes:
(i) any individual who: (A) has a net worth (with spouse) in
excess of $1 million; or (B) has had an individual income in excess of
$200,000 (or joint income with spouse in excess of $300,000) in each of the
two most recent years and who reasonably expects the same income level for
the current year; or (C) who is an executive officer or director of the
Company;
(ii) any entity in which all of the equity owners or partners are
"accredited investors;" or
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(iii) any corporation or partnership with total assets in excess
of $5,000,000 that was not formed for the specific purpose of purchasing
the securities subscribed hereunder; or
(iv) any investment company registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), or a
business development company as defined in Section 2(a)(48) of the
Investment Company Act.
(f) Subscriber considers himself/herself/itself to be a sophisticated
investor in companies similarly situated to the Company, and Subscriber has
substantial knowledge and experience in financial and business matters
(including, without limitation, knowledge of finance, securities and
investments, generally, and experience and skill in investments based on actual
participation) such that Subscriber is capable of evaluating the merits and
risks of the prospective investment in the Company.
(g) Subscriber's current address and, if Subscriber is an entity, the
address of the office or offices of Subscriber where the investment decision
with respect to this Agreement was made, are as set forth on the signature page
hereto. If Subscriber is an entity which does not meet the classification set
forth under Section 2(e)(iii) or Section 2(e)(iv) above, each of Subscriber's
equity owners and/or partners has the same state of residence as the state in
which the office or offices of Subscriber are located where the investment
decision with respect to this Agreement was made, and none of Subscriber's
equity owners and/or partners has any present intention of moving from such
state of residency.
(h) Subscriber has been advised and acknowledges that the issuance of
the Shares will not be registered under the Securities Act, in reliance upon the
exemption(s) from registration promulgated thereunder, and, therefore, are
"restricted securities." Subscriber also acknowledges that the issuance of the
Shares will not be registered under the securities laws of any state.
Consequently, Subscriber agrees that the Shares cannot be resold unless they are
registered under the Securities Act and applicable state securities laws, or
unless an exemption from such registration requirements is available.
Subscriber has been advised and acknowledges that the Company is under no
obligation to take any action necessary in order to make available any exemption
for the transfer of the Shares without registration.
(i) Subscriber is purchasing the Shares solely for Subscriber's own
account and not as nominee for, representative of, or otherwise on behalf of,
any other person. Subscriber is purchasing the Shares with the intention of
holding the Shares for investment, with no present intention of participating
directly or indirectly in a subsequent public distribution of the Shares unless
registered under the Securities Act and applicable state securities laws, or
unless an exemption from such registration requirements is available. Subscriber
shall not make any sale, transfer or other disposition of the Shares in
violation of state or federal law.
(j) Subscriber has been advised that there is no assurance than an
active market for the Shares will continue in the future. Subscriber is aware
that Subscriber's investment in the Company is speculative and involves a high
degree of risk of loss arising from,
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among other things, substantial market, operational, competitive and other
risks, and, having made Subscriber's own evaluation of the risks associated with
this investment, Subscriber is aware and Subscriber has been advised that
Subscriber must bear the economic risks of a purchase of the Shares
indefinitely.
(k) Subscriber acknowledges that the Shares were not offered to
Subscriber by means of any form of general or public solicitation or general
advertising, or publicly disseminated advertisements or sales literature,
including, without limitation, (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which
Subscriber was invited by any of the foregoing means of communication.
(l) Subscriber understands and agrees that the Company, and all
current and future stockholders of the Company, are relying on the agreements
and representations contained herein.
(m) In connection with the purchase of the Shares by Subscriber,
Subscriber has not paid and will not pay, and has no knowledge of the payment
of, any commission or other direct or indirect remuneration to any person or
entity for soliciting or otherwise coordinating the purchase of the Shares,
except for fees paid to the Placement Agents.
(n) Subscriber has been advised and agrees that there will be placed
on any certificates representing the Shares, or any substitution(s) thereof, a
legend stating in substance the following (and including any restrictions or
conditions that may be required by any applicable state law), and Subscriber has
been advised and further agrees that the Company will refuse to permit the
transfer of the Shares out of Subscriber's name in the absence of compliance
with the terms of such legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
any state securities laws and may not be sold, pledged,
transferred, assigned or otherwise disposed of except in
accordance with such Act and the rules and regulations thereunder
and in accordance with applicable state securities laws. The
Company will transfer such shares only upon receipt of evidence
satisfactory to the Company, which may include an opinion of
counsel, that the registration provisions of such Act have been
compiled with or that such registration is not required and that
such transfer will not violate any applicable state securities
laws."
(o) Subscriber is aware that the Company may offer and sell additional
shares of Common Stock in the future, thereby diluting Subscriber's percentage
equity ownership of the Company.
(p) Subscriber is familiar with Regulation M promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), a copy of
which is attached
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hereto as Exhibit A, and is in full compliance with the provisions thereof with
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respect to the transactions contemplated hereby.
Subscriber represents that the foregoing representations and
warranties are true and correct as of the date hereof and, unless Subscriber
otherwise notifies the Company prior to the Closing Date, shall be true and
correct as of the Closing Date. The foregoing representations and warranties
shall survive the Closing Date.
3. Representations of the Company. As used in this Section 3, the following
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capitalized terms shall have the meanings set forth below:
"Contract" means any agreement, indenture, lease, sublease, license,
sublicense, promissory note, evidence of indebtedness, insurance policy,
annuity, mortgage, restriction, commitment, obligation or other contract,
agreement or instrument (whether written or oral).
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Material Adverse Change" or "Material Adverse Effect" means, with
respect to any Person, any change or effect that is materially adverse to the
financial condition, business, prospects or results of operations of such
Person.
"Person(s)" means any individual, sole proprietorship, partnership, joint
venture, trust, limited liability company, incorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
Subscriber is subscribing for the Shares based upon the following
representations and warranties of the Company, which the Company hereby confirms
by accepting this subscription:
(a) Organization. The Company is a corporation duly organized,
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validly existing and in good standing under the laws of the State of Maryland
and has the corporate power to own and/or lease its properties and to conduct
its business in the places where such properties are now owned, leased or
operated or such business is presently conducted. The Company is duly qualified
and licensed as a foreign corporation in additional jurisdictions in which it
owns or leases real property or in which its operations or activities would
otherwise require such qualification, except where such failure to qualify would
not have a Material Adverse Effect on the Company.
(b) Authorization. The execution, delivery and performance of this
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Agreement by the Company has been duly and validly authorized and approved by
its Board of Directors, and this Agreement, when executed by a duly authorized
officer of this Company, will be a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization or
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other similar laws and legal and equitable principles limiting or affecting the
rights of creditors generally and/or (ii) general principles of equity,
regardless of whether considered in a proceeding in equity or at law, and except
as rights to indemnification hereunder may be limited by federal or state
securities laws.
(c) Capitalization. The authorized capital stock of the Company
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consists of 40,000,000 shares of Common Stock, $.01 par value per share. All
issued and outstanding shares of capital stock of the Company have been, and as
of the Closing Date will be, duly authorized and validly issued and are fully
paid and non-assessable. As of the date hereof, 7,250,326 shares of Common
Stock are issued and outstanding. The Company has a Stock Option Plan, pursuant
to which the Company has issued options to acquire up to an aggregate of 767,810
shares of Common Stock to its officers, directors, other employees and non-
employee consultants. As of the date hereof, 408,660 of such options are
exercisable under this plan.
(d) No Violations; Defaults. The execution and delivery of this
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Agreement and the consummation of the transactions contemplated by this
Agreement will not (i) violate, result (with the lapse of time or giving of
notice, or both) in a violation of, conflict with, or constitute a default
under, or permit the termination or acceleration of the maturity of any material
indebtedness or material obligation of the Company; (ii) violate, result (with
the lapse of time or giving of notice, or both) in a violation of, conflict with
or constitute a default under, any material term of, or permit the termination
of, any material note, mortgage, indenture, license, agreement, contract,
arrangement, understanding or other instrument to which the Company is a party,
or by which it is bound, or the Articles of Incorporation or By Laws of the
Company; or (iii) violate any statute, law, rule, regulation or ordinance known
to the Company, or any judgment, decree, order regulation or rule of any court,
tribunal, administrative or governmental agency, body or entity to which the
Company or its properties are subject.
(e) Validity of Securities. The Shares, when issued, sold and
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delivered in accordance with the terms and conditions hereof, will be duly
authorized, validly issued, fully paid and non-assessable, and the delivery to
Subscriber of the Shares delivered pursuant to this Agreement shall vest in it
good title thereto, free of any and all liens, options, encumbrances, charges,
third-party rights or claims of any nature whatsoever except for restrictions on
transfers set forth herein or imposed by law.
(f) Disclosure. The Company is aware of no facts which lead it to
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believe that the Documents, as of their respective dates, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) Material Changes. Except as set forth in the Documents, or as
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otherwise contemplated herein, since September 30, 1999, there has been no
Material Adverse Change in the Company, and there has not been (i) any direct or
indirect redemption, purchase or other acquisition by the Company of any shares
of the Common Stock, or (ii) declaration, setting aside or payment of any
dividend or other distribution by the Company with respect of the Common Stock.
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(h) No Commissions. In connection with the purchase of the Shares
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hereunder, the Company has agreed to pay the Placement Agents a placement fee
and certain expenses relating to the transactions contemplated hereunder.
Except for such placement fee and expenses, the Company has not incurred any
other obligation for any finder's or broker's or agent's fees or commissions in
connection with the sale of the Shares.
(i) Consents/Approvals. No consent, approval, waiver or other action
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by any Person under any Contract to which the Company is a party, or by which
any of its properties or assets are bound, is required or necessary for the
execution, delivery or performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby, except for such consents,
approvals or waivers that have been obtained or except where the failure to
obtain such consents, filings, authorizations, approvals or waivers or make such
filings would not have a Material Adverse Effect on the Company.
(j) SEC Reports and NASDAQ Compliance. Since September 30, 1998, the
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Company has made, in a timely fashion, all filings (as amended, the "SEC
Reports") required to be made by it under the Exchange Act. The SEC Reports,
when filed, complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act and the securities laws, rules and
regulations of any state and pursuant to the requirements of applicable law.
The Company will use its best efforts to ensure its continued inclusion in, and
the continued eligibility of the Common Stock for trading on, the NASDAQ
National Market under all currently effective and currently proposed inclusion
requirements prior to and after the Closing.
(k) Financial Statements. Each of the balance sheets included in the
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Documents (including any related notes and schedules) fairly presents in all
material respects the financial position of the Company as of its date, and each
of the other financial statements included in the Documents (including any
related notes and schedules) fairly presents in all material respects the
results of operations or other information therein of the Company for the
periods or as of the dates therein set forth in accordance with GAAP
consistently applied during the periods involved (except that the interim
reports are subject to normal recording adjustments which might be required as a
result of year-end audit and except as otherwise stated therein).
The Company represents that the foregoing representations and
warranties are true and correct as of the date hereof and, unless the Company
otherwise notifies Subscriber prior to the Closing Date, shall be true and
correct as of the Closing Date. The foregoing representations and warranties
shall survive the Closing Date.
4. Registration Rights.
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4.1 Registration of Shares. As soon as practicable, but in any event no
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later than 30 days after the Closing Date, the Company will file a registration
statement (the "Registration Statement") under the Securities Act with respect
to all of the Shares (collectively, the "Subject Stock"), and the Company shall
use its best efforts to cause such Registration Statement to become effective as
soon as practicable after filing; provided, however, that in the event that the
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Company shall determine in good faith that complying with the foregoing 30-day
period would
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cause undue burden or expense to the Company, the Company shall, in its sole
discretion, have the option of extending such 30-day period for up to an
additional 30 days by giving notice to Subscriber 5 days prior to the expiration
of such 30-day period. In connection therewith, each holder of Shares (each, a
"Holder") will provide in a timely manner all such information and materials
pertaining to it as may be required in order to permit the Company to comply
with all applicable requirements of the SEC and to obtain the acceleration of
the effective date of the Registration Statement. In connection with such
registration, the Company shall:
(a) keep the Registration Statement effective until the earliest of
(i) when each Holder has sold its Subject Stock, (ii) two years following the
effective date of the Registration Statement, or (iii) the date all of the
Shares may be sold without volume limitations under Rule 144 under the
Securities Act of 1933);
(b) as expeditiously as possible furnish to each Holder such
reasonable numbers of copies of the prospectus as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Subject Stock;
(c) as expeditiously as possible use its best efforts to register or
qualify the Subject Stock under the securities or blue sky laws of such states
as Subscriber shall reasonably request, provided, however, that the Company
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shall not be required in connection with this paragraph (c) to qualify as a
foreign corporation or execute a general consent to service of process in any
jurisdiction;
(d) pay all costs and expenses incident to registration hereunder,
except as set forth in Section 4.2.
4.2 Holder's Fees. Each Holder shall pay any and all underwriters'
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discounts, brokerage fees and transfer taxes incident to the sale of the Subject
Stock sold by such Holder pursuant to this Section and the fees and expenses of
its counsel.
5. Indemnification.
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5.1 Indemnification Generally. The Company shall indemnify Subscriber
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from and against any and all losses, damages, liabilities, claims, charges,
actions, proceedings, demands, judgments, settlement costs and expenses of any
nature whatsoever (including, without limitation, attorneys' fees and expenses)
or deficiencies resulting from any material breach of a representation, warranty
or covenant by the Company and all claims, charges, actions or proceedings
incident to or arising out of the foregoing.
5.2 Indemnification Relating to Registration Rights.
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(a) With respect to any registration, qualification or compliance
effected or to be effected pursuant to Section 4 of this Agreement, the Company
shall indemnify each Holder of the Shares which are included or are to be
included therein, each of such Holder's directors and officers, each underwriter
(as defined in the Securities Act) of the Shares sold by such
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Holder (if any), and each Person who controls (within the meaning of the
Securities Act) any such Holder or underwriter (a "Controlling Person") from and
against all losses, damages, liabilities, claims, charges, actions, proceedings,
demands, judgments, settlement costs and expenses of any nature whatsoever
(including, without limitation, attorneys' fees and expenses) or deficiencies of
any such Holder or any such underwriter or Controlling Person concerning:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make a statement
therein, in the light of the circumstances under which it was made, not
misleading; or
(iii) any violation by the Company of the Securities Act or any
rule or regulation promulgated thereunder applicable to the Company, or of any
blue sky or other state securities laws or any rule or regulation promulgated
thereunder applicable to the Company,
in each case, relating to any action or inaction required of the Company in
connection with any such registration, qualification or compliance, and subject
to Section 5.3 below will reimburse each such Person entitled to indemnity under
this Section for all legal and other expenses reasonably incurred in connection
with investigating or defending any such loss, damage, liability, claim, charge,
action, proceeding, demand, judgment, settlement or deficiency; provided,
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however, that the foregoing indemnity and reimbursement obligation shall not be
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applicable to the extent that any such matter arises out of or is based on any
untrue statement (or alleged untrue statement) or omission (or alleged omission)
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of such Holder or by or on behalf of such an
underwriter specifically for use in such prospectus, offering circular or other
document.
(b) With respect to any registration, qualification or compliance
effected or to be effected pursuant to this Agreement, each Holder of the Shares
which are included or are to be included therein, shall indemnify the Company
from and against all losses, damages, liabilities, claims, charges, actions,
proceedings, demands, judgments, settlement costs and expenses of any nature
whatsoever (including, without limitation, attorneys' fees and expenses) or
deficiencies of the Company concerning:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance;
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(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein, in the light of the circumstances under which it was made, not
misleading; or
(iii) any violation by such Holder of the Securities Act or any
rule or regulation promulgated thereunder applicable to the Company or such
Holder or of any blue sky or other state securities laws or any rule or
regulation promulgated thereunder applicable to the Company or such Holder,
in each case, relating to any action or inaction required of such Holder in
connection with any such registration, qualification or compliance, and subject
to Section 5.3 below will reimburse the Company for all legal and other expenses
reasonably incurred in connection with investigating or defending any such loss,
damage, liability, claim, charge, action, proceeding, demand, judgement,
settlement or deficiency; provided, however, that, the obligation of the Holder
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hereunder shall be limited to an amount equal to the proceeds to the Holder of
the Shares sold as contemplated hereunder.
5.3 Indemnification Procedures. Each Person entitled to indemnification under
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this Section (an "Indemnified Party") shall give written notice as promptly as
reasonably practicable to each party required to provide indemnification under
this Section (an "Indemnifying Party") of any action commenced against or by it
in respect of which indemnity may be sought hereunder, but failure to so notify
an Indemnifying Party shall not relieve such Indemnifying Party from any
liability that it may have otherwise than on account of this indemnity agreement
so long as such failure shall not have materially prejudiced the position of the
Indemnifying Party. Upon such notification, (i) the Indemnifying Party shall
assume the defense of such action if it is a claim brought by a third party,
(ii) the Indemnified Party shall, at the Indemnifying Party's expense and
reasonable request, cooperate with the Indemnifying Party in any such defense
and shall make available to the Indemnifying Party at the Indemnifying Party's
expense all those persons and documents (excluding attorney/client work product
materials) reasonably requested by the Indemnifying Party in defense of any such
action and (iii) after such assumption the Indemnified Party shall not be
entitled to reimbursement of any expenses incurred by it in connection with such
action except as described below. In any such action, any Indemnified Party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless (x) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
contrary or (y) the named parties in any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing or conflicting interests between them. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent (which shall not be unreasonably withheld
or delayed by such Indemnifying Party), but if settled with such consent or if
there be final judgment for the plaintiff, the Indemnifying Party shall
indemnify the Indemnified Party from and against any loss, damage or liability
by reason of such settlement or judgment.
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6. Use of Proceeds. Subscriber acknowledges that the Company intends to use
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the proceeds of the private placement contemplated hereunder for general
corporate purposes, including, without limitation, potential acquisitions.
Subscriber acknowledges that some or all of the proceeds of the private
placement contemplated hereunder may be used for acquisitions by the Company,
and Subscriber is aware that the Company is in the process of actively looking
for potential acquisition candidates. Subscriber acknowledges that the Company
may not be able to find any attractive or suitable candidates for acquisition
and that the Company may not be able to negotiate suitable terms for the
acquisition of any potential candidates. Subscriber acknowledges that any
acquisition by the Company and subsequent integration of the acquired business
into the Company involves the risks described herein and in the Documents.
7. Miscellaneous.
-------------
7.1 Neither this Agreement nor any provisions hereof shall be modified,
discharged or terminated except by an instrument in writing signed by the party
against whom any such waiver, change, discharge or termination is sought to be
enforced.
7.2 Any notice, demand or other communication which any party hereby may
be required or may elect to give to anyone interested hereunder shall be deemed
effectively given (a) three business days after deposit, postage prepaid, in a
United States mail letter box, registered or certified mail, return receipt
requested, addressed to such address as may be given herein, (b) one business
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt, at such address, or (c)
upon personal delivery to the party to be notified at such address. The
Company's address for notices is set forth on the first page hereof, and the
Subscriber's address for notices is set forth on the signature page.
7.3 This Agreement may be executed through the use of separate signature
pages or in any number of counterparts, and each of such counterparts shall, for
all purposes, constitute one agreement binding on all the parties,
notwithstanding that all parties are not signatories to the same counterpart.
7.4 Except as otherwise provided herein, the agreement shall be binding
upon and inure to the benefit of the parties and their successors, legal
representatives and assigns.
7.5 This Agreement (including the Exhibits attached hereto) contains the
entire agreement of the parties, and there are no representations, covenants or
other agreements except as stated or referred to herein.
7.6 This Agreement is not transferable or assignable by Subscriber except
as may be provided herein.
7.7 This Agreement shall be governed by and construed in accordance with
the law of the State of New York applicable to agreements made and to be
performed in that State.
12
IN WITNESS WHEREOF, the parties hereto have caused this Subscription
Agreement to be duly executed and delivered as of the date set forth below.
NAME OF SUBSCRIBER: ADDRESS FOR NOTICES (Please Print):
_______________________ ____________________________________
____________________________________
SIGNATURE: ____________________________________
Attention:__________________________
By:____________________ Telecopy:___________________________
Name:__________________
Title:_________________ Tax Identification #:_______________
Exact Name to appear on Stock Certificate: ____________________________________
Number of Shares Subscribed For: ____________________________________
Price = $_____ (must be a whole
number of shares)
Aggregate Purchase Price (see Section 1.1):____________________________________
The Investor hereby provides the following additional information:
(a) Excluding the shares of Common Stock subscribed for above, set forth
below is the number of shares of Common Stock and options rights or warrants of
Integral Systems, Inc. ("Options" and together with the Common Stock,
"Securities") which Subscriber beneficially owns or of which Subscriber is the
------------ ----
record owner on the date hereof. Please refer to the definition of beneficial
----------
ownership on Exhibit B attached hereto. If none, please so state.
--------- ---------
Number of Shares: ___________ (excluding the Shares subscribed for above)
Number of Options: ___________
Please indicate by an asterisk (*) above if Subscriber disclaims "beneficial
----------
ownership" of any of the above listed Securities, and indicate in response to
---------
question (b) below who has beneficial ownership.
(b) If Subscriber disclaims "beneficial ownership" in question (a), please
--------------------
furnish the following information with respect to the person(s) other than
Subscriber who is the beneficial owner(s) of the Securities in question. If not
applicable, please check box: [_]
Name of Beneficial Owner:_____________________________________
Relationship to Subscriber: __________________________________
Number of Securities Beneficially Owned:______________________
13
NAME OF SUBSCRIBER:________________________
(c) Are any of the Securities listed in response to question (a) the
subject of a voting agreement, contract or other arrangement whereby others have
voting control over, or any other interest in, any of Subscriber's Securities?
Yes No
If the answer is "Yes," please give details:
(d) Please describe each position, office or other material relationship
which the Subscriber has had with the Company or any of its affiliates,
including any subsidiary of the Company, within the past three years. Please
include a description of any loans or other indebtedness, and any contracts or
other arrangements or transactions involving a material amount, payable by
Subscriber to the Company or any of its affiliates, including its subsidiaries,
or by the Company or any of its affiliates, including its subsidiaries, to
Subscriber. "Affiliates" of the Company include its directors and executive
officers, and any other person controlling or controlled by the Company. If
none, please so state.
Answer:
(e) Please provide the name and address of other person(s), if any, to
whom any proxy statements, registration statements (including notice of
effectiveness thereof), prospectuses or similar documents and information should
be delivered by the Company on behalf of Subscriber in the future, with respect
to Subscriber's shares:
______________________ ________________________
______________________ ________________________
______________________ ________________________
(f) Please advise of special stock certificate delivery requirements for
closing, if any:
(g) Please advise if a NASD member has placed with you the Shares being
purchased hereunder: (Name of Member:)_______________________________________
==============================================================================
ACCEPTED: INTEGRAL SYSTEMS, INC.
By:__________________________________________
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
14
EXHIBIT A
Copy of Regulation M
EXHIBIT B
Explanation of "BENEFICIAL OWNERSHIP"
Securities that are subject to a power to vote or dispose are deemed
beneficially owned by the person who holds such power, directly or indirectly.
This means that the same securities may be deemed beneficially owned by more
than one person, if such power is shared. In addition, the beneficial ownership
rules provide that shares which may be acquired upon exercise of an option or
warrant, or which may be acquired upon the termination of a trust, discretionary
account or similar arrangement, which can be effected within a period of 60 days
from the date of determination, are deemed to be "beneficially" owned.
Furthermore, shares that are subject to rights or powers even though such rights
or powers to acquire are not exercisable within the 60-day period may also be
deemed to be beneficially owned if the rights or powers were acquired "with the
purpose or effect of changing or influencing the control of the issuer or in
connection with or as a participant in any transaction having such purpose or
effect."
In determining whether securities are "beneficially owned," benefits which
are substantially equivalent to those of ownership by virtue of any contract,
understanding, relationship, agreement or other arrangement should cause the
securities to be listed as "beneficially owned."
Thus, for example, securities held for a person's benefit in the name of
others or in the name of any estate or trust in which such person may be
interested should also be listed. Securities held by a person's spouse,
children or other members of such person's family who are such person's
dependents or who live in such person's household should be listed as
"beneficially owned" unless such person does not enjoy benefits equivalent to
those of ownership with respect to such securities.
If a person has a proprietary or beneficial interest in a controlled
corporation, partnership, personal holding company, trust or estate which owns
of record or beneficially any securities, such person should state the amount of
such securities owned by such controlled corporation, partnership, personal
holding company, trust or estate in lieu of allocating such person's proprietary
interest, and by note or otherwise, please indicate that. In any case, the name
of the controlled corporation, partnership, personal holding company, or estate
must be stated.
In all cases the nature of the beneficial ownership should be stated.
