Current Report — Form 8-K Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 8-K Current Report HTML 420K
2: EX-3.1 Articles of Incorporation/Organization or By-Laws HTML 9K
3: EX-4.1 Instrument Defining the Rights of Security Holders HTML 10K
4: EX-4.2 Instrument Defining the Rights of Security Holders HTML 7K
5: EX-4.3 Instrument Defining the Rights of Security Holders HTML 93K
6: EX-4.4 Instrument Defining the Rights of Security Holders HTML 93K
7: EX-10.3 Material Contract HTML 260K
8: EX-10.4 Material Contract HTML 113K
9: EX-10.5 Material Contract HTML 248K
10: EX-10.6 Material Contract HTML 134K
11: EX-23.1 Consent of Experts or Counsel HTML 9K
12: EX-23.2 Consent of Experts or Counsel HTML 9K
13: EX-99.1 Miscellaneous Exhibit HTML 122K
14: EX-99.2 Miscellaneous Exhibit HTML 93K
15: EX-99.3 Miscellaneous Exhibit HTML 216K
Complete,
sign and deliver the Subscription Agreement included in this Subscription
Booklet (fill
out and sign on page S-1).
2.
Complete,
sign and deliver the Confidential Purchaser Questionnaire included
in this
Confidential Subscription Booklet and attached hereto as Exhibit
B(fill
out (pages 1-5) and sign on page 5).
3.
Deliver
payment in the aggregate amount of your
subscription.
Delivery
of the completed subscription documents described above and checks for
subscription amounts made out to “Continental
Stock Transfer & Trust Company, as Agent for Pace Health Management Systems,
Inc.”
should
be delivered directly to:
Subscription
amounts may also be sent by wire transfer of immediately available funds
to:
Bank
Name:
JP
Morgan Chase
ABA
#:
021000021
Acct
#:
530-062054
Acct.
Name:
Continental
Stock Transfer & Trust Company, as Agent for
Pace
Health Management Systems, Inc.
THE
COMPANY MAY ACCEPT OR REJECT SUBSCRIPTIONS IN ITS SOLE DISCRETION. THE OFFERING
IS AVAILABLE ONLY TO “ACCREDITED INVESTORS” AS DEFINED UNDER REGULATION D UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. In the event that a subscription offer
is not accepted by the Company, the subscription funds shall be returned to
the
subscriber, without interest or deduction thereon.
PACE
HEALTH MANAGEMENT SYSTEMS, INC.
SUBSCRIPTION
AGREEMENT
The
undersigned (hereinafter “Subscriber”)
hereby
confirms his/her/its subscription for the purchase of Units, each Unit to
consist of: (1) 100 shares of Series B Convertible Preferred Stock of Pace
Health Management Systems, Inc., an Iowa corporation (the “Company”),
(2) a
common stock purchase warrant entitling the holder to purchase up to 10,000
shares of Common Stock of the Company at an exercise price equal to $0.30 per
share and (3) a common stock purchase warrant entitling the holder to purchase
up to 3,320 shares of Common Stock of the Company at an exercise price equal
to
$2.50 per share. (“Units”)
of
Series B Convertible Preferred Stock, par value $0.01 per share (the
“Preferred
Stock”)
of
Pace Health Management Systems, Inc., on the terms described below:
Capitalized
terms used and not otherwise defined herein shall have the respective meanings
set forth in the Private Placement Memorandum of the Company, dated as of
January 16, 2007, and its attachments thereto (the “Memorandum”).
The
Units and the underlying common stock are sometimes referred to herein as the
“Securities.”
In
connection with this subscription, Subscriber and the Company agree as
follows:
1.Purchase
and Sale of the Units.
(a) The
Company hereby agrees to issue and to sell to Subscriber, and Subscriber hereby
agrees to purchase from the Company, such number of Units at a price of One
Thousand Dollars ($1,000.00) per Unit (the “Unit
Price”)
and
for the aggregate subscription amount set forth on the signature page hereto.
The Subscriber understands that this subscription is not binding upon the
Company until the Company accepts it. The Subscriber acknowledges and
understands that acceptance of this Subscription will be made only by a duly
authorized representative of the Company executing and mailing or otherwise
delivering to the Subscriber at the Subscriber’s address set forth herein, a
counterpart copy of the signature page to this Subscription Agreement indicating
the Company’s acceptance of this Subscription. The Company and Maxim Group LLC
(the “Placement
Agent”)
reserve the right, in their sole discretion for any reason whatsoever, to accept
or reject this subscription in whole or in part. Following the acceptance of
this Subscription Agreement by the Company, and the receipt and acceptance
by
the Company of subscriptions to the Minimum Offering (defined below), the
Company shall instruct its transfer agent to issue and deliver to Subscriber
(i)
a share certificate evidencing the applicable number of Shares subscribed for
hereunder against payment in U.S. Dollars of the Purchase Price (as defined
below), (ii) a Common Stock purchase warrant exercisable at $0.30 per share,
and
(iii) a Common Stock purchase warrant exercisable at $2.50 per share. If this
subscription is rejected, the Company and the Subscriber shall thereafter have
no further rights or obligations to each other under or in connection with
this
Subscription Agreement. If this subscription is not accepted by the Company
on
or before the last day of the Offering Period, this subscription shall be deemed
rejected.
(b) Subscriber
has hereby delivered and paid concurrently herewith the aggregate purchase
price
for the Units set forth on the signature page hereof in an amount required
to
purchase and pay for the Units subscribed for hereunder (the “Purchase
Price”),
which
amount has been paid in U.S. Dollars by wire transfer or check, subject to
collection, to the order of “Continental Stock Transfer & Trust Company -
Pace Health Management Systems, Inc. Escrow Account.”
(c) Subscriber
understands and acknowledges that this subscription is part of a private
placement by the Company of up to $15,000,000 of Units, which offering is being
made on a “best efforts” basis, for a minimum of 10,000 Units (the “Minimum
Offering”)
and a
maximum of 15,000 Units (the “Maximum
Offering”).
Subscriber understands that payments hereunder as to the Minimum Offering will
be held in a non-interest bearing escrow account established by the Company
with
Continental Stock Transfer & Trust Company as escrow agent, and will be
released to the Company if subscriptions for the Minimum Offering are received
and accepted by the Company within the Offering Period (as described in the
Memorandum), including any extended period. If subscriptions for the Minimum
Offering are not received and accepted by the Company within the Offering Period
(including any extended period), the funds held in such escrow account will
be
promptly returned to the subscribers in full without interest or deduction.
If
the Company or the Placement Agent rejects all or a portion of any subscription,
a check will be promptly mailed to the subscriber for all, or the appropriate
portion of, the amount submitted with such subscriber’s subscription, without
interest or deduction. All subscriptions received after subscriptions for the
Minimum Offering have been received and accepted by the Company and the
Placement Agent will be deposited in such escrow account until accepted by
the
Company and the Placement Agent, whereupon such subscription proceeds will
be
released by the escrow agent to the Company.
2.Representations
and Warranties of Subscriber.
Subscriber represents and warrants to the Company and the Placement Agent as
follows:
(a) Subscriber
is an “accredited investor” as defined by Rule 501 under the Securities Act of
1933, as amended (the “Act”),
and
Subscriber is capable of evaluating the merits and risks of Subscriber’s
investment in the Units and has the ability and capacity to protect Subscriber’s
interests.
(b) Subscriber
understands that the Securities are not presently registered, but Subscriber
is
entitled to certain rights with respect to the registration of the common stock
underlying the Units (see Section 6 below). Subscriber understands that the
Securities will not be registered under the Act on the ground that the issuance
thereof is exempt under Section 4(2) of the Act as a transaction by an issuer
not involving any public offering and that, in the view of the Commission,
the
statutory basis for the exemption claimed would not be present if any of the
representations and warranties of Subscriber contained in this Subscription
Agreement or those of other purchasers of the Securities are untrue or,
notwithstanding the Subscriber’s representations and warranties, the Subscriber
currently has in mind acquiring any of the Securities for resale upon the
occurrence or non-occurrence of some predetermined event.
(c) Subscriber
is purchasing the Securities subscribed for hereby for investment purposes
and
not with a view to distribution or resale, nor with the intention of selling,
transferring or otherwise disposing of all or any part thereof for any
particular price, or at any particular time, or upon the happening of any
particular event or circumstance, except selling, transferring, or disposing
the
Securities made in full compliance with all applicable provisions of the Act,
the rules and regulations promulgated by the United States Securities and
Exchange Commission (the “SEC”)
thereunder, and applicable state securities laws; and that an investment in
the
Securities is not a liquid investment.
(d) Subscriber
acknowledges that there exists no public market for the Securities, that no
such
public market may develop in the future and as a result, Subscriber acknowledges
that the Securities must be held indefinitely unless subsequently registered
under the Act or unless an exemption from such registration is available.
Subscriber is aware of the provisions of Rule 144 promulgated under the Act
which permit resales of common stock purchased in a private placement subject
to
certain limitations and
to
the
satisfaction of certain conditions provided for thereunder, including, among
other things, the existence of a public market for the common stock, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being effected through a “broker’s transaction” or
in transactions directly with a “market maker” and the number of shares of
common stock being sold during any three-month period not exceeding specified
limitations.
(e) Subscriber
acknowledges that Subscriber has had the opportunity to ask questions of, and
receive answers from, each of the Company and ConMed, Inc., a Maryland
corporation (“ConMed”),
or
any authorized person acting on behalf of such entity concerning such entity
and
its business and to obtain any additional information, to the extent possessed
by the Company and ConMed (or to the extent it could have been acquired by
the
Company or ConMed without unreasonable effort or expense) necessary to verify
the accuracy of the information received by Subscriber. In connection therewith,
Subscriber acknowledges that Subscriber has had the opportunity to discuss
each
of the Company’s and ConMed’s business, management and financial affairs with
such entity’s management or any authorized person acting on its behalf.
Subscriber has received and reviewed the Memorandum and all the information
concerning the Company, ConMed and the Units, both written and oral, that
Subscriber desires. Without limiting the generality of the foregoing, Subscriber
has been furnished with or has had the opportunity to acquire, and to review:
all information, both written and oral, that Subscriber desires with respect
to
each of the Company’s and ConMed’s business, management, financial affairs and
prospects. In determining whether to make this investment, Subscriber has relied
solely on (i) Subscriber’s own knowledge and understanding of the Company,
ConMed and the business of each such entity based upon Subscriber’s own due
diligence investigations and the information furnished pursuant to this
paragraph, and (ii) the information described in subparagraph 2(g) below.
Subscriber understands that no person has been authorized to give any
information or to make any representations which were not contained in the
Memorandum and Subscriber has not relied on any other representations or
information.
(f) Subscriber
has all requisite legal and other power and authority to execute and deliver
this Subscription Agreement and to carry out and perform Subscriber’s
obligations under the terms of this Subscription Agreement. This Subscription
Agreement constitutes a valid and legally binding obligation of Subscriber,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other general principals
of
equity, whether such enforcement is considered in a proceeding in equity or
law.
(g) Subscriber
has carefully considered and has discussed with the Subscriber’s legal, tax,
accounting and financial advisors, to the extent the Subscriber has deemed
necessary, the suitability of this investment and the transactions contemplated
by this Subscription Agreement for the Subscriber’s particular federal, state,
local and foreign tax and financial situation and has independently determined
that this investment and the transactions contemplated by this Subscription
Agreement are a suitable investment for the Subscriber. Subscriber has relied
solely on such advisors and not on any statements or representations of the
Company or any of its agents. Subscriber understands that Subscriber (and not
the Company) shall be responsible for Subscriber’s own tax liability that may
arise as a result of this investment or the transactions contemplated by this
Subscription Agreement.
(h) This
Subscription Agreement and the Confidential Purchaser Questionnaire accompanying
this Subscription Agreement do not contain any untrue statement of a material
fact or omit any material fact concerning Subscriber.
(i) There
are
no actions, suits, proceedings or investigations pending against Subscriber
or
Subscriber’s assets before any court or governmental agency (nor, to
Subscriber’s knowledge, is there any threat thereof) which would impair in any
way Subscriber’s ability to enter into and fully perform Subscriber’s
commitments and obligations under this Subscription Agreement or the
transactions contemplated hereby.
(j) The
execution, delivery and performance of and compliance with this Subscription
Agreement and the issuance of the Securities will not result in any violation
of, or conflict with, or constitute a default under, any of Subscriber’s
articles of incorporation or by-laws, if applicable, or any agreement to which
Subscriber is a party or by which it is bound, nor result in the creation of
any
mortgage, pledge, lien, encumbrance or charge against any of the assets or
properties of Subscriber or the Securities.
(k) Subscriber
acknowledges that an investment in the Securities is speculative and involves
a
high degree of risk and that Subscriber can bear the economic risk of the
purchase of the Securities, including a total loss of his/her/its
investment.
(l) Subscriber
acknowledges that he/she/it has carefully reviewed and considered the risk
factors discussed in the “Risk Factors” section of the Memorandum.
(m) Subscriber
recognizes that no federal, state or foreign agency has recommended or endorsed
the purchase of the Securities.
(n) Subscriber
is aware that the Securities are and will be, when issued, “restricted
securities” as that term is defined in Rule 144 of the general rules and
regulations under the Act.
(o) Subscriber
understands that any and all certificates representing the Securities and any
and all securities issued in replacement thereof or in exchange therefor shall
bear the following legend or one substantially similar thereto, which Subscriber
has read and understands:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS
WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS
AVAILABLE.”
(p) In
addition, the certificates representing the Securities, and any and all
securities issued in replacement thereof or in exchange therefor, shall bear
such legend as may be required by the securities laws of the jurisdiction in
which Subscriber resides.
(q) Because
of the legal restrictions imposed on resale, Subscriber understands that the
Company shall have the right to note stop-transfer instructions in its stock
transfer records, and Subscriber has been informed of the Company’s intention to
do so. Any sales, transfers, or other
dispositions
of the Securities by Subscriber, if any, will be made in compliance with the
Act
and all applicable rules and regulations promulgated thereunder.
(r) Subscriber
acknowledges that Subscriber has such knowledge and experience in financial
and
business matters that Subscriber is capable of evaluating the merits and risks
of an investment in the Securities and of making an informed investment decision
with respect thereto.
(s) Subscriber
represents that: (i) Subscriber is able to bear the economic risks of an
investment in the Securities and to afford a complete loss of the investment,
and (ii) (A) Subscriber could be reasonably assumed to have the ability and
capacity to protect his/her/its interests in connection with this subscription;
or (B) Subscriber has a pre-existing personal or business relationship with
either the Company or any affiliate thereof of such duration and nature as
would
enable a reasonably prudent purchaser to be aware of the character, business
acumen and general business and financial circumstances of the Company or such
affiliate and is otherwise personally qualified to evaluate and assess the
risks, nature and other aspects of this subscription.
(t) Subscriber
further represents that the address of Subscriber set forth below is his/her
principal residence (or, if Subscriber is a company, partnership or other
entity, the address of its principal place of business); that Subscriber is
purchasing the Securities for Subscriber’s own account and not, in whole or in
part, for the account of any other person; Subscriber is purchasing the
Securities for investment and not with a view to the resale or distribution
thereof; and that Subscriber has not formed any entity, and is not an entity
formed, for the purpose of purchasing the Securities.
(u) Subscriber
understands that the Company and the Placement Agent shall have the
unconditional right to accept or reject this subscription, in whole or in part,
for any reason or without a specific reason, in the sole and absolute discretion
of the Company (even after receipt and clearance of Subscriber’s funds). This
Subscription Agreement is not binding upon the Company until accepted in writing
by an authorized officer of the Company. In the event that this subscription
is
rejected, then Subscriber’s subscription funds (to the extent of such rejection)
will be promptly returned in full without interest thereon or deduction
therefrom.
(v) Subscriber
has not been furnished with any oral representation or oral information in
connection with the offering of the Securities that is not contained in, or
is
in any way contrary to or inconsistent with, statements made in the Memorandum
and this Subscription Agreement.
(w) Subscriber
represents that Subscriber is not subscribing for the Securities 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 the
Internet, television or radio or presented at any seminar or meeting or any
public announcement or filing of or by the Company.
(x) Subscriber
has carefully read this Subscription Agreement and the Memorandum, and
Subscriber has accurately completed the Confidential Purchaser Questionnaire
which accompanies this Subscription Agreement.
(y) No
representations or warranties have been made to Subscriber by the Company,
or
any officer, employee, agent, affiliate or subsidiary of the Company, other
than
the representations of the Company contained herein, and in subscribing for
the
Securities the Subscriber is not relying upon any representations other than
those contained in the Memorandum or in this Subscription Agreement.
(z) Subscriber
represents and warrants, to the best of Subscriber’s knowledge, that other than
the Placement Agent, no finder, broker, agent, financial advisor or other
intermediary, nor any purchaser representative or any broker-dealer acting
as a
broker, is entitled to any compensation in connection with the transactions
contemplated by this Subscription Agreement.
(aa) Subscriber
represents and warrants that Subscriber has: (i) not distributed or reproduced
the Memorandum, in whole or in part, at any time, without the prior written
consent of the Company and the Placement Agent, (ii) kept confidential and
non-public the existence of the Memorandum and the information contained therein
or made available in connection with any further investigation of the Company,
and Subscriber has not used such information for the Subscriber’s personal
benefit (other than in connection with this subscription), nor has disclosed
such information to any third party for any reason, notwithstanding that the
Subscriber’s subscription may not be accepted by the Company, and (iii)
refrained and shall refrain from trading in the publicly-traded securities
of
the Company for so long as such recipient has been in possession of the material
non-public information contained in the Memorandum.
(bb) If
the
Subscriber is a corporation, partnership, limited liability company, trust,
or
other entity, the person executing this Subscription Agreement hereby represents
and warrants that the above representations and warranties shall be deemed
to
have been made on behalf of such entity and the Subscriber has made the same
after due inquiry to determine the truthfulness of such representations and
warranties.
(cc) If
the
Subscriber is a corporation, partnership, limited liability company, trust,
or
other entity, it represents that: (i) it is duly organized, validly existing
and
in good standing in its jurisdiction of incorporation or organization and has
all requisite power and authority to execute and deliver this Subscription
Agreement and purchase the Shares as provided herein; (ii) its purchase of
the
Shares will not result in any violation of, or conflict with, any term or
provision of the charter, By-Laws or other organizational documents of
Subscriber or any other instrument or agreement to which the Subscriber is
a
party or is subject; (iii) the execution and delivery of this Subscription
Agreement and Subscriber’s purchase of the Shares has been duly authorized by
all necessary action on behalf of the Subscriber; and (iv) all of the documents
relating to the Subscriber’s subscription to the Shares have been duly executed
and delivered on behalf of the Subscriber and constitute a legal, valid and
binding agreement of the Subscriber.
(dd) The
Subscriber acknowledges that if he or she is a registered representative of
an
NASD member firm, he or she must give such firm the notice required by the
NASD
Rules of Fair Practice, receipt of which must be acknowledged by such
firm.
(ee) The
Subscriber understands that all information regarding the Offering is
confidential and represents that it will not be used for any purpose other
than
in connection with his, her or its consideration of a purchase of the Securities
and agrees to treat it in a confidential manner. The Subscriber has not, during
the last thirty (30) days prior to the date hereof, directly or indirectly,
nor
has any party acting on behalf of or pursuant to any understanding with such
Subscriber, effected or agreed to effect any short sale, whether or not against
the box, established any “put equivalent position” (as defined in Rule
16(a)-1(h) under the Exchange Act) with respect to any security of the Company,
granted any other right (including, without limitation, any put or call option)
with respect to any security of the Company or with respect to any security
that
includes, relates to, or derives any significant part of its value from any
security of the Company or otherwise sought to hedge its positioning of the
Company’s Securities. For purposes of this Section 2(ee), short sales and
hedging activities include, without limitation, all types of direct and indirect
stock pledges, forward sale contracts, options, puts, calls,
short
sales,
swaps, and similar arrangements (including on a total return basis), and sales
and other transactions through non-U.S. broker-dealers or foreign regulated
brokers having the effect of hedging the securities or investment made under
this Agreement. The Subscriber acknowledges and agrees that in order to enforce
the foregoing covenant, the Company may impose stop-transfer instructions with
respect to any shares Preferred Stock or the common stock underlying such shares
or any other securities exchangeable, convertible or exercisable for shares
of
Preferred Stock.
(ff) Subscriber
represents and warrants that he/she/it will have no open position in the
Company’s
common stock at the time a Registration Statement is filed with the SEC
to
register the Securities (the “Registration Statement”) and is aware of the
following Telephone Interpretation in the SEC Manual of Publicly Available
Telephone Interpretations (July 1997):
A.65.
Section 5
An
issuer
filed a Form S-3 registration statement for a secondary offering of common
stock
which is not yet effective. One of the selling shareholders wanted to do a
short
sale of common stock “against the box” and cover the short sale with registered
shares after the effective date. The issuer was advised that the short sale
could not be made before the registration statement becomes effective, because
the shares underlying the short sale are deemed to be sold at the time such
sale
is made. There would, therefore, be a violation of section 5 if the shares
were
effectively sold prior to the effective date.
(gg) Subscriber
acknowledges that it will execute and deliver to the Company a completed selling
stockholder questionnaire in connection with the filing of the Registration
Statement, prior to the filing thereof.
(hh) Subscriber
represents and warrants that he/she/it has complied with all applicable
provisions of the Act, the rules and regulations promulgated by the SEC
thereunder, including Regulation M and applicable state securities laws, and
will comply at the time of sale pursuant to the Registration
Statement
(ii) The
Subscriber acknowledges that the Placement Agent (including any of its members,
managers, employees, agents or representatives) has not made any representations
or warranties to the Subscriber concerning the Company or any subsidiary and
their respective businesses, condition (financial or otherwise) or
prospects.
3.Representations
and Warranties of the Company.
The
Company represents and warrants to Subscriber as follows:
(a) The
Company is duly organized and validly exists as a corporation in good standing
under the laws of the State of Iowa.
(b) The
Company has all such corporate power and authority to enter into, deliver and
perform this Subscription Agreement.
(c) All
necessary corporate action has been duly and validly taken by the Company to
authorize the execution, delivery and performance of this Subscription Agreement
by the Company, and the issuance and sale of the Securities to be sold by the
Company pursuant to this Subscription Agreement. This Subscription Agreement
has
been duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by
bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and by general equitable
principles.
(d) In
addition to the foregoing, Subscriber shall be entitled to rely on all of the
representations, warranties and covenants made by the Company to the Placement
Agent in that certain Placement Agency Agreement, as the same may be amended,
entered into between the Placement Agent and the Company in connection with
the
Offering as if such representations, warranties and covenants were made directly
to the Subscriber.
4.Condition
to Obligations of Subscriber.
The
Subscriber’s obligations hereunder are subject to the closing of the
transactions contemplated by the Stock Purchase Agreement, and the Company
owning all of the issued and outstanding common stock of ConMed.
5.Indemnification.
Subscriber agrees to indemnify and hold harmless the Company, the Placement
Agent, and their respective officers, directors, employees, shareholders,
agents, attorneys, representatives and affiliates, and any person acting for
or
on behalf of the Company or the Placement Agent, from and against any and all
damage, loss, liability, cost and expense (including reasonable attorneys’ fees
and disbursements) which any of them may incur by reason of the failure by
Subscriber to fulfill any of the terms and conditions of this Subscription
Agreement, or by reason of any breach of the representations and warranties
made
by Subscriber herein, or in any other document provided by Subscriber to the
Company in connection with this investment. All representations, warranties
and
covenants of each of Subscriber and the Company contained herein shall survive
the acceptance of this subscription and the Closings.
6.Registration
Rights.
(a) In
consideration of the investment in the Units described in this Subscription
Agreement and the Memorandum, the Company hereby grants to the Subscriber,
and
Subscriber hereby agrees to and accepts from the Company, the registration
rights set forth in the Registration Rights Agreement, substantially in the
form
attached hereto as Exhibit
A
(the
“Registration
Rights Agreement”).
(b) In
connection with the exercise by Subscriber of the registration rights set forth
in the Registration Rights Agreement, and with respect to the Securities held
by
such Subscriber, Subscriber hereby covenants that, prior to filing a
Registration Statement or Prospectus (each as defined in Registration Rights
Agreement) or any amendments or supplements thereto, Subscriber shall promptly
and truthfully complete and execute a selling security-holder questionnaire
provided by the Company, and provide any and all such other material information
as the Company may require in order to prepare and file such Registration
Statement, Prospectus or any amendment or supplement thereto.
7.Covenants.
Subscriber hereby agrees to
vote all
shares of the Company voting stock over which Subscriber has voting control
in
favor of any resolution presented to the shareholders of the Company with
respect to Plan of Recapitalization (as defined in the Memorandum).
8.Miscellaneous.
(a) Subscriber
agrees not to transfer or assign this Subscription Agreement or any of
Subscriber’s interest herein and further agrees that the transfer or assignment
of the Securities acquired pursuant hereto shall be made only in accordance
with
all applicable laws.
(b) Subscriber
agrees that Subscriber cannot cancel, terminate, or revoke this Subscription
Agreement or any agreement of Subscriber made hereunder, and this Subscription
Agreement shall survive the death or legal disability of Subscriber and shall
be
binding upon Subscriber’s heirs, executors, administrators, successors, and
permitted assigns.
(c) Subscriber
has read and has accurately completed this entire Subscription
Agreement.
(d) This
Subscription Agreement, together with the Memorandum, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended or waived only by a written instrument signed by all
parties.
(e) Subscriber
acknowledges that it has been advised and has had the opportunity to consult
with Subscriber’s own attorney regarding this subscription and Subscriber has
done so to the extent that Subscriber deems appropriate.
(f) Any
notice or other document required or permitted to be given or delivered to
the
parties hereto shall be in writing and sent: (i) by fax if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), or (ii) by registered or certified mail
with
return receipt requested (postage prepaid) or (iii) by a recognized overnight
delivery service (with charges prepaid).
(g) Failure
of the Company to exercise any right or remedy under this Subscription Agreement
or any other agreement between the Company and the Subscriber, or otherwise,
or
any delay by the Company in exercising such right or remedy, will not operate
as
a waiver thereof. No waiver by the Company will be effective unless and until
it
is in writing and signed by the Company.
(h) This
Subscription Agreement shall be enforced, governed and construed in all respects
in accordance with the laws of the State of New York, as such laws are applied
by the New York courts except with respect to the conflicts of law provisions
thereof, and shall be binding upon the Subscriber and the Subscriber’s heirs,
estate, legal representatives, successors and permitted assigns and shall inure
to the benefit of the Company, and its successors and assigns.
(i) Any
legal
suit, action or proceeding arising out of or relating to this Subscription
Agreement or the transactions contemplated hereby shall be instituted
exclusively in New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York. The parties hereto
hereby: (i) waive any objection which they may now have or hereafter have to
the
venue of any such suit, action or proceeding, and (ii) irrevocably consent
to
the jurisdiction of the New York Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding. The parties further agree to accept and acknowledge
service of any and all process which may be served in any such suit, action
or
proceeding in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York and agree that
service of process upon a party which is mailed by certified mail to such
party’s address shall be deemed in every respect effective service of process
upon such party in any such suit, action or proceeding.
(j) If
any
provision of this Subscription Agreement is held to be invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
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 provisions hereof.
(k) The
parties understand and agree that money damages would not be a sufficient remedy
for any breach of this Subscription Agreement by the Company or the Subscriber
and that the party against which such breach is committed shall be entitled
to
equitable relief, including an injunction and specific performance, as a remedy
for any such breach, without the necessity of establishing irreparable harm
or
posting a bond therefor. Such remedies shall not be deemed to be the exclusive
remedies for a breach by either party of this Subscription Agreement but shall
be in addition to all other remedies available at law or equity to the party
against which such breach is committed.
(l) All
pronouns and any variations thereof used herein shall be deemed to refer to
the
masculine, feminine, singular or plural, as identity of the person or persons
may require.
(m) This
Subscription Agreement may be executed in counterparts and by facsimile, each
of
which shall be deemed an original, but all of which shall constitute one and
the
same instrument.
Signature
Page for Individuals:
IN
WITNESS WHEREOF, Subscriber has caused this Subscription Agreement to be
executed as of the date indicated below.
$___________________________________
___________________________________
Purchase
Price
Number
of Units
____________________________________
___________________________________
Print
or Type Name
Print
or Type Name (Joint-owner)
____________________________________
___________________________________
Signature
Signature
(Joint-owner)
____________________________________
___________________________________
Date
Date
(Joint-owner)
____________________________________
___________________________________
Social
Security Number
Social
Security Number (Joint-owner)
____________________________________
___________________________________
____________________________________
___________________________________
Address
Address
(Joint-owner)
_______
Joint Tenancy
______
Tenants in Common
Signature
Page for Partnerships, Corporations or Other Entities:
IN
WITNESS WHEREOF, Subscriber has caused this Subscription Agreement to be
executed as of the date indicated below.
IN
WITNESS WHEREOF, the Company has caused this Subscription Agreement to be
executed, and the foregoing subscription accepted, as of the date indicated
below, as to _______ Units.
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of January ___, 2007 among Pace Health Management
Systems, Inc., an Iowa corporation (the “Company”),
and
the several purchasers signatory hereto (each such purchaser is a “Purchaser”
and
collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the
date hereof between the Company and each Purchaser (the “Purchase
Agreement”).
The
Company and each Purchaser hereby agrees as follows:
1.Definitions.Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase Agreement.
As
used in this Agreement, the following terms shall have the following
meanings:
“Advice”
shall
have the meaning set forth in Section 6(d).
“Effectiveness
Date”
means,
with respect to the initial Registration Statement required to be filed
hereunder, June 1, 2007 and, with respect to any additional Registration
Statements which may be required pursuant to Section 3(c), the 90th
calendar
day following the date on which the Company first knows, or reasonably should
have known, that such additional Registration Statement is required hereunder;
provided,
however,
that in
the event the Company is notified by the Commission that one of the above
Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such Registration Statement
shall be the fifth Trading Day following the date on which the Company is so
notified if such date precedes the dates required above.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2(a).
“Event”
shall
have the meaning set forth in Section 2(b).
“Event
Date”
shall
have the meaning set forth in Section 2(b).
“Filing
Date”
means,
with respect to the initial Registration Statement required hereunder, April1,2007 and, with respect to any additional Registration Statements which may
be
required pursuant to Section 3(c), the 30th
calendar
day following the earlier of: (i) the date on which the Company first knows,
or
reasonably should have known that such additional Registration Statement is
required hereunder and (ii) the date any such additional Registration Statement
is permitted to be filed with the Commission.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Losses”
shall
have the meaning set forth in Section 5(a).
“Plan
of Distribution”
shall
have the meaning set forth in Section 2(a).
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities”
means,
as of the date in question, (i) all of the shares of Common Stock issuable
upon
conversion in full of the shares of Preferred Stock, (ii) all Warrant Shares,
(iii) any additional shares issuable in connection with any anti-dilution
provisions associated with the Preferred Stock and Warrants (in each case,
without giving effect to any limitations on conversion set forth in the
Certificate of Designation or limitations on exercise set forth in the Warrant)
and (iv) any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
foregoing.
“Registration
Statement”
means
the registration statements required to be filed hereunder and any additional
registration statements contemplated by Section 3(c), including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.
“Selling
Shareholder Questionnaire”
shall
have the meaning set forth in Section 3(a).
2.Shelf
Registration
(a) On
or
prior to each Filing Date, the Company shall prepare and file with the
Commission a “Shelf” Registration Statement covering the resale of the
Registrable Securities on such Filing Date for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement shall be
on
Form S-3 (except if the Company is not then eligible to register for resale
the
Registrable Securities on Form S-3, in which case such registration shall be
on
another appropriate form in accordance herewith) and shall contain (unless
otherwise directed by at least an 85% majority in interest of the Holders)
substantially the “Plan
of Distribution”
attached hereto as Annex
A.
Subject
to the terms of this Agreement, the Company shall use its best efforts to cause
a Registration Statement to be declared effective under the Securities Act
as
promptly as possible after the filing thereof, but in any event prior to the
applicable Effectiveness Date, and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities Act until
all
Registrable Securities covered by such Registration Statement have been sold,
or
may be sold without volume restrictions pursuant to Rule 144(k), as determined
by the counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Company’s transfer agent and the
affected Holders (the “Effectiveness
Period”).
The
Company shall telephonically request effectiveness of a Registration Statement
as of 5:00 pm Eastern time on a Trading Day. The Company shall immediately
notify the Holders via facsimile of the effectiveness of a Registration
Statement on the same Trading Day that the Company telephonically confirms
effectiveness with the Commission, which shall be the date requested for
effectiveness of a Registration Statement. The Company shall, by 9:30 am Eastern
time on the second Trading Day after the Effective Date (as defined in the
Purchase Agreement), file a final Prospectus with the Commission as required
by
Rule 424. Failure to so notify the Holder within two Trading Days of such
notification of effectiveness or failure to file a final Prospectus as aforesaid
shall be deemed an Event under Section 2(b). All selling shareholders included
on the applicable Registration Statement shall be given notice of the
effectiveness of such Registration Statement substantially at the same
time.
(b) If:
(i) a
Registration Statement is not filed on or prior to the 15th
day
following its Filing Date (if the Company files a Registration Statement without
affording the Holders the opportunity to review and comment on the same as
required by Section 3(a) herein, the Company shall be deemed to not have
satisfied this clause (i)), or (ii) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 461 promulgated
under the Securities Act, within five Trading Days of the date that the Company
is notified (orally or in writing, whichever is earlier) by the Commission
that
a Registration Statement will not be “reviewed,” or not subject to further
review, or (iii) prior to the 30th
day
following its Effectiveness Date, the Company fails to file a pre-effective
amendment and otherwise respond in writing to comments made by
the
Commission
in respect of such Registration Statement within 15 calendar days after the
receipt of comments by or notice from the Commission that such amendment is
required in order for a Registration Statement to be declared effective, or
(iv)
a Registration Statement filed or required to be filed hereunder is not declared
effective by the Commission by its Effectiveness Date, or (v) after the
Effectiveness Date, a Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities for which it is required
to be effective, or the Holders are otherwise not permitted to utilize the
Prospectus therein to resell such Registrable Securities for more than 20
consecutive calendar days or more than an aggregate of 30 calendar days during
any 12-month period (which need not be consecutive calendar days) (any such
failure or breach being referred to as an “Event”,
and
for purposes of clause (i) or (iv) the date on which such Event occurs, or
for
purposes of clause (ii) the date on which such five Trading Day period is
exceeded, or for purposes of clause (iii) the date which such 15 calendar day
period is exceeded, or for purposes of clause (v) the date on which such 20
or
30 calendar day period, as applicable, is exceeded being referred to as
“Event
Date”),
then
in addition to any other rights the Holders may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of
each
such Event Date (if the applicable Event shall not have been cured by such
date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as partial liquidated damages and not as a penalty, equal to
1.0% of the aggregate purchase price paid by such Holder pursuant to the
Purchase Agreement for any Registrable Securities then held by such Holder
and
not then registered for resale pursuant to an effective Registration Statement
(calculated as calculated as if all convertible securities had been fully
converted). The parties agree that (1) in no event shall the Company be liable
for liquidated damages under this Agreement in excess of 1.0% of the aggregate
Subscription Amount of the Holders in any 30-day period and (2) the maximum
aggregate liquidated damages payable to a Holder under this Agreement shall
be
10.0% of the aggregate Subscription Amount paid by such Holder pursuant to
the
Purchase Agreement. Notwithstanding anything herein to the contrary and subject
to the payment of liquidated damages as set forth above, in the event the
Commission determines any Registration Statement filed pursuant hereto
constitutes a primary offering of securities by the Company and/or requires
any
Holder to be named as an underwriter, or otherwise restricts the number of
Registrable Securities that can be registered in a given Registration Statement
citing the percentage of Registrable Securities to be registered as compared
to
the then-current public float or market capital of the Company (“SEC
Caused Event”),
Holders understand and agree that the Company may reduce, on a pro-rata basis,
the total number of Registrable Securities to be registered on behalf of each
such Holder. Notwithstanding anything herein to the contrary, the Company will
not be liable for liquidated damages under this Agreement with respect to any
Warrants or Warrant Shares. In the event of such reduction, the affected Holders
shall have demand registration rights during the term of the Effectiveness
Period and the Holders acknowledge and agree the provisions of this paragraph
may apply to more than one Registration Statement and that the Commission may
limit or condition any subsequent Registration Statement. If the Company fails
to pay any partial liquidated damages pursuant to this Section in full within
seven days after the date payable, the Company will
pay
interest thereon at a rate of 18% per annum (or such lesser maximum amount
that
is permitted to be paid by applicable law) to the Holder, accruing daily from
the date such partial liquidated damages are due until such amounts, plus all
such interest thereon, are paid in full. The partial liquidated damages pursuant
to the terms hereof shall apply on a daily pro-rata basis for any portion of
a
month prior to the cure of an Event.
(a) Not
less
than five Trading Days prior to the filing of each Registration Statement and
not less than one Trading Day prior to the filing of any related Prospectus
or
any amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), the Company
shall, (i) furnish to each Holder copies of all such documents proposed to
be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders, and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to each Holder to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith, provided that, the Company
is
notified of such objection in writing no later than 5 Trading Days after the
Holders have been so furnished copies of a Registration Statement or 1 Trading
Day after the Holders have been so furnished copies of any related Prospectus
or
amendment or supplement thereto. Each Holder agrees to furnish to the Company
a
completed Questionnaire in the form attached to this Agreement as Annex B (a
“Selling
Shareholder Questionnaire”)
not
less than two Trading Days prior to the Filing Date or by the end of the fourth
Trading Day following the date on which such Holder receives draft materials
in
accordance with this Section.
(b)(i) Prepare
and
file with the Commission such amendments, including post-effective amendments,
to a Registration Statement and the Prospectus used in connection therewith
as
may be necessary to keep a Registration Statement continuously effective as
to
the applicable Registrable Securities for the Effectiveness Period and prepare
and file with the Commission such additional Registration Statements in order
to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement (subject to the terms of this Agreement), and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible to any comments received from the Commission
with respect to a Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Holders true and complete copies
of
all correspondence from and to the Commission relating to a Registration
Statement (provided that the Company may excise any information
contained
therein which would constitute material non-public information as to any Holder
which has not executed a confidentiality agreement with the Company); and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in accordance
(subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement
as
so amended or in such Prospectus as so supplemented.
(c) If
during
the Effectiveness Period, the number of Registrable Securities at any time
exceeds the number of shares of Common Stock then registered in a Registration
Statement, then the Company shall file as soon as reasonably practicable but
in
any case prior to the applicable Filing Date, an additional Registration
Statement covering the resale by the Holders of not less than 100% of the number
of such Registrable Securities.
(d) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (vi) hereof, shall also be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than 1 Trading Day prior to such filing) and (if requested
by
any such Person) confirm such notice in writing no later than one Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a “review” of
such Registration Statement and whenever the Commission comments in writing
on
such Registration Statement; and (C) with respect to a Registration Statement
or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or
for
additional information; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of
the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any
Proceeding for such purpose; (v) of the occurrence of any event or passage
of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus,
as
the case may be, it will not contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading; and (vi) the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes
may
be material and that, in the determination of the
Company,
makes it not in the best interest of the Company to allow continued availability
of a Registration Statement or Prospectus; provided that any and all of such
information shall remain confidential to each Holder until such information
otherwise becomes public, unless disclosure by a Holder is required by law;
provided,
further,
that
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.
(e) Use
its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of
(i) any order suspending the effectiveness of a Registration Statement, or
(ii)
any suspension of the qualification (or exemption from qualification) of any
of
the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
(f) Furnish
to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(g) Subject
to the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except
after
the giving of any notice pursuant to Section 3(d).
(h) The
Company shall effect a filing with respect to the public offering contemplated
by the Registration Statement (an “Issuer
Filing”)
with
the National Association of Securities Dealers, Inc. (“NASD”)
Corporate Financing Department pursuant to NASD Rule 2710(b)(4) within one
Trading Day of the date that the Registration Statement is first filed with
the
Commission and pay the filing fee required by such Issuer Filing. The Company
shall use commercially reasonable efforts to pursue the Issuer Filing until
the
NASD issues a letter confirming that it does not object to the terms of the
offering contemplated by the Registration Statement.
(i) Prior
to
any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale
by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any
jurisdiction
where
it
is not then so qualified, subject the Company to any material tax in any such
jurisdiction where it is not then so subject or file a general consent to
service of process in any such jurisdiction.
(j) If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be
in
such denominations and registered in such names as any such Holders may
request.
(k) Upon
the
occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement
or
amendment, including a post-effective amendment, to a Registration Statement
or
a supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an 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, in light of the circumstances under which they were made,
not misleading. If
the
Company notifies the Holders in accordance with clauses (iii) through (vi)
of
Section 3(d) above to suspend the use of any Prospectus until the requisite
changes to such Prospectus have been made, then the Holders shall suspend use
of
such Prospectus. The Company will use its best efforts to ensure that the use
of
the Prospectus may be resumed as promptly as is practicable. The Company shall
be entitled to exercise its right under this Section 3(k) to suspend the
availability of a Registration Statement and Prospectus, subject to the payment
of partial liquidated damages pursuant to Section 2(b), for a period not to
exceed 60 calendar days (which need not be consecutive days) in any 12 month
period.
(l) Comply
with all applicable rules and regulations of the Commission.
(m) The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by
such
Holder and, if required by the Commission, the natural persons thereof that
have
voting and dispositive control over the Shares. During any periods that the
Company is unable to meet its obligations hereunder with respect to the
registration of the Registrable Securities solely because any Holder fails
to
furnish such information within three Trading Days of the Company’s request, any
liquidated damages that are accruing at such time as to such Holder only shall
be tolled and any Event that may otherwise occur solely because of such delay
shall be suspended as to such Holder only, until such information is delivered
to the Company.
4.Registration
Expenses.
All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with any
Trading Market on which the Common Stock is then listed for trading, (B) in
compliance with applicable state securities or Blue Sky laws reasonably agreed
to by the Company in writing (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing that may be required to be made by any broker through which a
Holder intends to make sales of Registrable Securities with NASD Regulation,
Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving no
more
than a customary brokerage commission in connection with such sale, (ii)
printing expenses of the Company (including, without limitation, expenses of
printing certificates for Registrable Securities, (iii) messenger, telephone
and
delivery expenses of the Company, (iv) fees and disbursements of counsel for
the
Company, (v) Securities Act liability insurance, if the Company so desires
such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated
by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of any Holder or, except
to
the extent provided for in the Transaction Documents, any legal fees or other
costs of the Holders.
5.Indemnification
(a)Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, members, partners, agents,
brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin
call
of Common Stock), investment advisors and employees (and any other Persons
with
a functionally equivalent role of a Person holding such titles, notwithstanding
a lack of such title or any other title) of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities
Act
or Section 20 of the Exchange Act) and the officers, directors, members,
shareholders, partners, agents and employees (and any other Persons with a
functionally equivalent role of a Person holding such titles, notwithstanding
a
lack of such title or any other title) of each such controlling Person, to
the
fullest extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, reasonable
attorneys’ fees) and expenses (collectively, “Losses”),
as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any
amendment
or supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to
be
stated therein or necessary to make the statements therein (in the case of
any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, or (2) any violation
or alleged violation by the Company of the Securities Act, Exchange Act or
any
state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent,
but only to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in a Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for this
purpose) or (ii) in the case of an occurrence of an event of the type specified
in Section 3(d)(iii)-(vi), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder
of
the Advice contemplated in Section 6(d). The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding arising
from
or in connection with the transactions contemplated by this Agreement of which
the Company is aware.
(b)Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons (and any other Persons with a functionally equivalent
role of a Person holding such titles, notwithstanding a lack of such title
or
any other title, to the fullest extent permitted by applicable law, from and
against all Losses, as incurred, to the extent arising out of or based solely
upon: (x) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus,
or
any form of prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion
in
such Registration Statement or such Prospectus or (ii) to the extent that such
information relates to such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in a Registration Statement (it being understood
that the Holder has approved Annex A hereto for this purpose), such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or (iii)
in
the case of an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified
such
Holder in writing that the Prospectus is outdated or defective and prior to
the
receipt by such Holder of the Advice contemplated in Section 6(d). In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such Holder upon the sale
of
the Registrable Securities giving rise to such indemnification
obligation.
(c)Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to
the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist
if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from
all
liability on claims that are the subject matter of such Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in
a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party; provided, that the
Indemnified
Party shall promptly reimburse the Indemnifying Party for that portion of such
fees and expenses applicable to such actions for which such Indemnified Party
is
judicially determined to be not entitled to indemnification
hereunder.
(d)Contribution.
If the
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses,
then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in this Agreement, any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its
terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which
the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud
by
such Holder.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
6.Miscellaneous
(a)Remedies.
In the
event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary
damages
would not provide adequate compensation for any losses incurred by reason of
a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect
of
such breach, it shall not assert or shall waive the defense that a remedy at
law
would be adequate.
(b)No
Piggyback on Registrations.
Except
as set forth on Schedule
6(b)
attached
hereto, neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of the Company
in any Registration Statement other than the Registrable Securities. The Company
shall not file any other registration statements until there is an effective
Registration Statement(s) pursuant to which the Holders are permitted to utilize
a Prospectus to resell all Registrable Securities or such Registrable Securities
may be resold by the Holders pursuant to Rule 144(k), provided that this Section
6(b) shall not prohibit the Company from filing amendments to registration
statements filed prior to the date of this Agreement.
(c)Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement.
(d)Discontinued
Disposition.
Each
Holder agrees by its acquisition of Registrable Securities that, upon receipt
of
a notice from the Company of the occurrence of any event of the kind described
in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until
it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use its best efforts
to ensure that the use of the Prospectus may be resumed as promptly as it
practicable. The Company agrees and acknowledges that any periods during which
the Holder is required to discontinue the disposition of the Registrable
Securities hereunder shall be subject to the provisions of Section
2(b).
(e)Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under
the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with the stock option or other employee benefit plans, then the
Company shall send to each Holder a written notice of such determination and,
if
within fifteen days after the date of such notice, any such Holder shall so
request in writing, the Company shall include in such registration statement
all
or any part of such Registrable Securities such Holder requests to be
registered; provided,
however,
that,
the Company shall not be required to register any Registrable Securities
pursuant to this
Section
6(e) that are eligible for resale pursuant to Rule 144(k) promulgated under
the
Securities Act or that are the subject of a then effective Registration
Statement.
(f)Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and Holders holding at least 67% of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent
to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of all of the
Registrable Securities to which such waiver or consent relates; provided,
however,
that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(g)Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be delivered as set forth in the Purchase Agreement.
(h)Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of all of the Holders of the
then-outstanding Registrable Securities. Each Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted under the
Purchase Agreement.
(i)No
Inconsistent Agreements.
Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof,
nor
shall the Company or any of its Subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities, that would
have the effect of impairing the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. Except as set forth on
Schedule
6(i),
neither
the Company nor any of its subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
(j)Execution
and Counterparts.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
(k)Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of
the
Purchase Agreement.
(l)Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any other remedies
provided by law.
(m)Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(n)Headings.
The
headings in this Agreement are for convenience only, do not constitute a part
of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(o)Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible
in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at
any
closing, and no action taken by any Holder pursuant hereto or thereto, shall
be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled
to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to
be
joined as an additional party in any proceeding for such purpose.
********************
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
PACE
HEALTH MANAGEMENT SYSTEMS, INC.
By:__________________________________________
Name:
Title:
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
[SIGNATURE
PAGE OF HOLDERS TO PACE RRA]
Name
of
Holder: __________________________
Signature
of Authorized Signatory of Holder:
__________________________
Name
of
Authorized Signatory: _________________________
Title
of
Authorized Signatory: __________________________
[SIGNATURE
PAGES CONTINUE]
ANNEX
A
Plan
of Distribution
Each
Selling Stockholder (the “Selling
Stockholders”)
of the
common stock and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their shares of common stock on
the
OTC Bulletin Board or any other stock exchange, market or trading facility
on
which the shares are traded or in private transactions. These sales may be
at
fixed or negotiated prices. A Selling Stockholder may use any one or more of
the
following methods when selling shares:
·
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
·
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
·
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
·
an
exchange distribution in accordance with the rules of the applicable
exchange;
·
privately
negotiated transactions;
·
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
·
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
·
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
·
a
combination of any such methods of sale;
or
·
any
other method permitted pursuant to applicable
law.
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities
Act”),
if
available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage
commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction
a
markup or markdown in compliance with NASDR IM-2440.
In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In
no
event shall any broker-dealer receive fees, commissions and markups which,
in
the aggregate, would exceed eight percent (8%).
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under
the
Securities Act may be sold under Rule 144 rather than under this prospectus.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the Selling Stockholders.
We
agreed
to keep this prospectus effective until the earlier of (i) the date on which
the
shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the shares
have been sold pursuant to this prospectus or Rule 144 under the Securities
Act
or any other rule of similar effect. The resale shares will be sold only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale shares may not
be
sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged
in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including
by
compliance with Rule 172 under the Securities Act).
Annex
B
PACE
HEALTH MANAGEMENT SYSTEMS, INC.
Selling
Securityholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the “Registrable
Securities”)
of
Pace Health Management Systems, Inc., an Iowa corporation (the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”)
a
registration statement (the “Registration
Statement”)
for
the registration and resale under Rule 415 of the Securities Act of 1933, as
amended (the “Securities
Act”),
of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement (the “Registration
Rights Agreement”)
to
which this document is annexed. A copy of the Registration Rights Agreement
is
available from the Company upon request at the address set forth below. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling
Securityholder”)
of
Registrable Securities hereby elects to include the Registrable Securities
owned
by it in the Registration Statement.
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
1.Name.
(a)
Full
Legal Name of Selling Securityholder
(b)
Full
Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities are
held:
(c)
Full
Legal Name of Natural Control Person (which means a natural person
who
directly or indirectly alone or with others has power to vote or
dispose
of the securities covered by the
questionnaire):
2.
Address for Notices to Selling Securityholder:
Telephone:
Fax:
Contact
Person:
3.
Broker-Dealer Status:
(a)
Are
you a broker-dealer?
Yes o
No
o
(b)
If
“yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the
Company.
Yes o No
o
Note:If
no,
the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.
(c)
Are
you an affiliate of a
broker-dealer?
Yes o No
o
(d)
If
you are an affiliate of a broker-dealer, do you certify that you
bought
the Registrable Securities in the ordinary course of business, and
at the
time of the purchase of the Registrable Securities to be resold,
you had
no agreements or understandings, directly or indirectly, with any
person
to distribute the Registrable
Securities?
Yes o No
o
Note:
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
4.
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.
Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.
(a)
Type
and Amount of other securities beneficially owned by the Selling
Securityholder:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
State
any
exceptions here:
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus
and
any
amendments or supplements thereto.
The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
Dated:
______________________________________
Beneficial
Owner:________________________________
By:
__________________________________________
Name:
Title:
PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:
EXHIBIT
B
CONFIDENTIAL
PURCHASER QUESTIONNAIRE
PACE
HEALTH MANAGEMENT SYSTEMS, INC.
THIS
QUESTIONNAIRE MUST BE ANSWERED FULLY AND RETURNED ALONG WITH YOUR COMPLETED
SUBSCRIPTION AGREEMENT IN CONNECTION WITH YOUR PROSPECTIVE PURCHASE OF
SECURITIES FROM PACE HEALTH MANAGEMENT SYSTEMS, INC. (THE “COMPANY”).
THE
INFORMATION SUPPLIED IN THIS QUESTIONNAIRE WILL BE HELD IN STRICT CONFIDENCE.
NO
INFORMATION WILL BE DISCLOSED EXCEPT TO THE EXTENT THAT SUCH DISCLOSURE IS
REQUIRED BY LAW OR REGULATION, OTHERWISE DEMANDED BY PROPER LEGAL PROCESS OR
IN
LITIGATION INVOLVING THE COMPANY.
Capitalized
terms used herein without definition shall have the respective meanings given
such terms as set forth in the Subscription Agreement between Pace Health
Management Systems, Inc. and the subscriber signatory thereto (the “Subscription
Agreement”)
or in
the Company’s Confidential Private Placement Memorandum, dated as of January 16,2007 (as amended or supplemented, and together with all exhibits attached
thereto, the “Memorandum”).
(1)
The
undersigned represents and warrants that he, she or it comes within
at
least one category marked below, and that for any category marked,
he, she
or it has truthfully set forth, where applicable, the factual basis
or
reason the undersigned comes within that category. The undersigned
agrees
to furnish any additional information which the Company deems neces-sary
in order to verify the answers set forth
below.
Category
A ___
The
undersigned is an individual (not a partnership, corporation, etc.)
whose
individual net worth, or joint net worth with his or her spouse,
presently
exceeds $1,000,000.
Explanation.
In calculating net worth you may include equity in personal property and real
estate, including your principal residence, cash, short-term investments, stock
and securities. Equity in personal property and real estate should be based
on
the fair market value of such property less debt secured by such
property.
Category
B ___
The
undersigned is an individual (not a partnership, corporation, etc.)
who
had an income in excess of $200,000 in each of the two most recent
years,
or joint income with his or her spouse in excess of $300,000 in each
of
those years (in each case including foreign income, tax exempt income
and
full amount of capital gains and losses but excluding any income
of other
family members and any unrealized capital appreciation) and has a
reasonable expectation of reaching the same income level in the current
year.
Category
C ___
The
undersigned is a director or executive officer of the Company which
is
issuing and selling the
Securities.
Category
D ___
The
undersigned is a bank, as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended (the “Act”); a savings and loan
associa-tion or other institution as defined in Section 3(a)(5)(A) of
the Act, whether acting in its individual or fiduciary capacity;
any
insurance company as defined in Section 2(13) of the Act; any
investment company registered under the Investment Company Act of
1940 or
a business development company as defined in Section 2(a)(48) of that
Act; any 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; any plan established and maintained
by a
state, its political subdivisions, or any agency or instrumentality
of a
state or its political subdivisions, for the benefit of its employees,
if
such plan has total assets in excess of $5,000,000; any employee
benefit
plan within the meaning of the Employee Retirement Income Security
Act of
1974 if the investment decision is made by a plan fiduciary, as defined
in
Section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor,
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 (describe
entity).
The
undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of
Section 501(c)(3) of the Internal Revenue Code, in each case not
formed for the specific purpose of acquiring the Securities and with
total
assets in excess of $5,000,000 (describe
entity)
The
undersigned is a trust with total assets in excess of $5,000,000,
not
formed for the specific purpose of acquiring the Securities, where
the
purchase is directed by a “sophisticated investor” as defined in
Regulation 506(b)(2)(ii) under the
Act.
Category
H ___
The
undersigned is an entity in which all of the equity owners are “accredited
investors” within one or more of the above categories. If relying upon
this Category alone, each equity owner must complete a separate copy
of
this Purchaser Questionnaire (describe entity). If the entity is
a trust,
a copy the trust documents must be provided and in the case of a
revocable
trust, the grantor must provide a copy of the Purchaser
Questionnaire.
The
undersigned agrees that the undersigned will notify the Company at any time
on
or prior to the applicable Closing (as defined in the Memorandum) in the event
that the representations and warranties in this Purchaser Questionnaire shall
cease to be true, accurate and complete.
(2)
Suitability
(please answer each question)
(a)
For
an individual, please describe your current employment, including
the
company by which you are employed and its principal
business:
For
all subscribers, please state whether you have you participated in
other
private
placements
before:
YES
NO
(e)
If
your answer to question (d) page #3 was “YES”, please indicate frequency
of such prior participation in private
placements
of:
Public
Companies
Private
Companies
Frequently
Occasionally
Never
(f)
For
individuals, do you expect your current level of income to significantly
decrease in the foreseeable future?
YES
NO
(g)
For
trust, corporate, partnership and other institutional subscribers,
do you
expect your total assets to significantly decrease in the foreseeable
future?
YES
NO
(h)
For
all subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need
sudden
cash requirements in excess of cash readily available to
you?
YES
NO
(i)
For
all subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the Securities for which you
seek to
purchase?
YES
NO
(j)
For
all subscribers, do you understand that there is no guarantee of
financial
return on this investment and that you run the risk of losing your
entire
investment?
YES
NO
(3)
Manner
in which title is to be held: (circle
one)
(a)
Individual
Ownership
(b)
Community
Property
(c)
Joint
Tenant with Right of Survivorship (both parties must
sign)
(d)
Partnership
(e)
Tenants
in Common
(f)
Company
(g)
Trust
(h)
Other
(4)
NASD
Affiliation.
Are
you
affiliated or associated with an NASD member firm (please check
one):
*If
subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The
undersigned NASD member firm acknowledges receipt of the notice required by
the
NASD Conduct Rules.
_________________________________
Name
of
NASD Member Firm
By:
______________________________
Authorized
Officer
Date:
_____________________________
The
undersigned has been informed of the significance to the Company of the
foregoing representations and answers contained in this Confidential Purchaser
Questionnaire and such representations and answers have been provided with
the
understanding that the Company and the Placement Agent will rely on them.
Individual
Date:________________________
______________________________
Name
of Individual
(Please
type or print)
_______________________________
Signature
of Individual
_______________________________
Name
of Joint Owner
(Please
type or print)
_______________________________
Signature
(Joint Owner)
Partnership,
Corporation or
Other
Entity
Date:
_______________________
_______________________________
Print
or Type Entity Name
By:____________________________
Print
or Type Name
Title:
_______________________________
Signature
Title:
__________________________
_______________________________
Signature
(other authorized signatory)
Dates Referenced Herein and Documents Incorporated by Reference
