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MEDICAL DEVICE ALLIANCE INC.
EXHIBIT 10.04
FORM OF
CONVERTIBLE DEBENTURE OFFERING
MEDICAL DEVICE ALLIANCE INC.
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FOR ACCREDITED INVESTORS ONLY
MEDICAL DEVICE ALLIANCE, INC.
$3,570,000 CONVERTIBLE DEBENTURE OFFERING
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (the "Agreement") is by and between ________
____________________________________________ (the "Holder") and MEDICAL DEVICE
ALLIANCE, INC., A NEVADA CORPORATION (the "Company").
RECITALS:
WHEREAS:
A. The Holder agrees to purchase a Convertible Debenture, convertible
into the Company's Common Stock, $.001 par value per share (the "Common Stock")
on the terms set forth below in connection with the Company's $3,570,000
Convertible Debenture Offering (the "Offering"), which is limited to Accredited
Holders only; and
B. The Company and the Holder wish to enter into this Agreement to
reflect the other terms of the investment.
AGREEMENT
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. INVESTMENT. The Holder hereby agrees to purchase __________________
_________________________________ ($______________) in principal amount of
Convertible Debentures, convertible into shares of the Common Stock of the
Company (the "Debenture Shares") at a price of SEVEN DOLLARS ($7.00) (the
"Conversion Price") per share, payable in cash, or good funds (the "Purchase
Price"). In the event the Company should at any time, or from time to time after
the date of issuance hereof, fix a record date for the effectuation of a split
or subdivision of the outstanding shares of the Common Stock or the
determination of holders of the Common Stock entitled to receive a dividend or
other distribution payable in additional shares of the Common Stock, or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly additional shares of the Common Stock
(hereinafter referred to as the "Common Stock Equivalents") without payment of
any consideration by such holder for the additional shares of the Common Stock
(or the Common Stock Equivalents issuable upon conversion or exercise thereof)
then, as of such record date (or the date of such dividend distribution, split
or subdivision if no record date is fixed), the Conversion Price shall be
appropriately decreased so that the number of Debenture Shares issuable upon
conversion of this Debenture shall be increased in proportion to such increase
of outstanding shares. If the number of shares of the Common Stock outstanding
at any time after the date hereof is decreased by a combination of the
outstanding shares of the Common Stock, then, following the record date of such
combination, the Conversion Price shall be appropriately increased so that the
number of
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shares of the Common Stock issuable on conversion hereof shall be decreased in
proportion to such decrease in outstanding shares.
2. ADDITIONAL CONVERTIBLE DEBENTURES AVAILABLE UNDER OFFERING. In the
sole discretion of the Company, the Company may sell up to an additional One
Million Four Hundred Seventy Thousand Dollars ($1,470,000) of Convertible
Debentures under the Offering.
3. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company hereby makes
the following representations and warranties to the Holder which shall also be
true and correct at the closing of the Offering of Convertible Debentures
hereunder (the "Closing"), and which shall survive the Closing:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada and has all necessary corporate powers to own its properties, and to
carry on its business as now owned and operated by it, and is qualified to do
intrastate business, and is in good standing in Nevada and in all other
jurisdictions in which the nature of the Company's business, or of its
properties, makes such qualification necessary, except jurisdictions where
failure to so qualify would not have a material adverse effect on the business
of the Company.
3.2 CAPITAL STRUCTURE. The authorized number of shares of the Company
is Fifty Million (50,000,000) shares of Common Stock, of which approximately Six
Million Eight Hundred Thousand (6,800,000) shares were, as of September 30,
1997, issued and outstanding, together with options, conversion rights or other
rights to acquire approximately Five Hundred Seventy Thousand (570,000) shares.
In addition, the Company has authorized Twenty Million (20,000,000) shares of
Preferred Stock, of which approximately Two Million Six Hundred Fifty Seven
Thousand Eighty Five (2,657,085) shares were, as of September 30, 1997, issued
and outstanding. The Debenture Shares to be issued to the Holder shall be
validly issued, fully paid and non-assessable, and will be issued pursuant to
applicable exemptions from the registration provisions of all federal and state
securities laws. Except for the shares subject to options or conversion rights
as set forth above, there are no other outstanding subscriptions, options,
rights, warrants, securities of any nature obligating the Company to issue or to
transfer any additional shares or securities of any nature.
3.3 DEBTS AND LIABILITIES. The Company has no debts, liabilities or
obligations, whether accrued, absolute, contingent or otherwise, of a material
nature, except for such liabilities and obligations incurred in the ordinary
course of business, or incurred in connection with or as a result of the
transactions contemplated by this Agreement.
3.4 COMPLIANCE WITH LAWS.
(a) To the best of the Company's knowledge, the Company has
complied in all material respects with, and the Company has not been cited for
any violation of, federal, state or local environmental protection laws and/or
regulations, including specifically, without limitation, all laws and
regulations related to the sale of its products by the Company to state or local
or federal
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government purchasers or contracts to those governmental agencies, and the
Company has not received notice of any past, present or future events which
would reasonably be expected to give rise to any liability for failure to comply
with any federal, state, or local laws or regulations now in force relating to
the protection of the environment.
(b) The Company has not, at any time, operated or provided for
any of its employees, any pension or profit sharing, or similar retirement plan,
or any employer welfare or benefit plan qualified pursuant to the Internal
Revenue Code of 1986, or subject to the Employee Retirement Income Security Act
of 1974, except employee health insurance plans.
(c) To the best of the Company's knowledge, the Company has
complied with, and the Company has received no notice of non-compliance with,
all requirements of the Occupational Safety and Health Act and regulations
promulgated under this legislation, orders, judgments and decrees of any
tribunal pursuant to this legislation applicable to its business or assets,
except for possible instances of non-compliance which would not have a material
adverse effect on its operations.
(d) To the best of the Company's knowledge, the Company is not,
and has not received notice from any governmental agency that it is currently in
violation of any other applicable federal, state or local statute, law or
regulation (including, without limitation, any applicable building, or other
law, ordinance, or regulation) affecting its assets or the operation of its
business, except for possible instances of non-compliance which individually
would not be expected to have a material adverse effect on the business of the
Company.
(e) To the best of the Company's knowledge, it has not caused or
created any environmental discharge of any toxic or hazardous waste, is not
aware of any asbestos in its facilities, and has not violated any law dealing
with the environment, or toxic or hazardous waste.
(f) To the best of the Company's knowledge, the Company and all
of the products which it manufactures, marshals, sells, licenses, imports or
distributes have been at all times and continue to be in substantial compliance
with the Food, Drug and Cosmetic Act and all regulations promulgated thereunder
by the U.S. Food and Drug Administration.
(g) Subject to the truth and accuracy of the representations of
the Holder set forth in Section 4 hereof, the offer, sale and issuance of the
Convertible Debentures, the Debenture Shares are exempt from the registration
requirements of the Act. The Company has complied with all applicable state
"blue sky" or securities laws in connection with the offer, sale and issuance of
the Convertible Debentures as contemplated by this Agreement.
3.5 LITIGATION. The Company has no knowledge of any governmental
investigation against the Company, other than routine government contract
audits. To the best of the Company's knowledge, the Company is not in violation
or infringement of any intellectual property rights, or registrations or
applications therefor, of any other person or business, however, the Company has
been notified that an alleged patent infringement suit has been filed against
the Company and its wholly-owned subsidiary, LySonix, Inc. The suit was filed by
Mentor Corporation (Nasdaq: MNTR), a
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medical and surgical device company that develops and markets silicone-based
products to specialty medical markets. Mentor has been trying to develop a
device for ultrasound assisted lipoplasty since 1995 and, to date, has few
commercial sales. The Company believes that the suit filed by Xxxxxx is without
merit and substance, however, the Company takes all legal matters seriously and
has retained patent litigation counsel to aggressively pursue a successful
conclusion to this matter and to take any other legal action necessary to defend
any of the Company's patents. The Company's Management has extensive experience
in protecting intellectual and proprietary medical device patents. Management is
very optimistic regarding the outcome of this suit. The Company has also been
notified of a product liability claim filed against its wholly owned subsidiary,
LySonix, Inc., which, in the opinion of the Company's counsel, is covered under
the Company's standard product liability insurance policy. Other than as
disclosed above, the Company knows of no suit, action, arbitration, or legal,
administrative, or other proceeding or pending investigation to which the
Company is a party to or, to the Company's knowledge, is threatened against the
Company or its business, assets or financial condition.
3.6 NO UNDISCLOSED LIABILITIES. There are no liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
and whether due or to become due (including, without limitation, any liability
for taxes and interest, penalties and other charges payable with respect to any
such liability or obligation) which individually or in the aggregate are
material to the condition (financial or otherwise) of the Company, or prospects
of the Company, which are not incurred in the ordinary course of business.
3.7 FULL AND CORRECT DISCLOSURE. No representation or warranty made
by the Company contained in this Agreement or other information provided, and to
be provided by the Company in any other writing furnished pursuant hereto
contains or will contain an untrue statement of a material fact or fails or will
fail to state a material fact required to be stated herein or therein necessary
to make the statements and facts contained herein or therein, in light of the
circumstances which they were or are made, not false nor misleading.
3.8 CONFLICT OF INTEREST. All purchasing transactions relating to the
Company have been at market prices since inception. The Company has entered into
certain distribution agreements, both as distributor and supplier, and other
agreements with certain other companies in which officers or directors of the
Company or affiliates of officers or directors of the Company have, either
directly or indirectly, a beneficial interest.
3.9 NON-CONTRAVENTION. The execution and delivery of the Agreement by
the Company, and the consummations of the transactions contemplated hereby, does
not conflict with any material terms or provisions of any contract, agreement or
indenture to which the Company is a party, or by which the Company or any of its
properties is subject, or the Company's Certificate of Incorporation and ByLaws,
each as amended to date.
3.10 AUTHORITY; BINDING EFFECT. The Company has obtained all
necessary authorizations and approvals from its Board of Directors and
stockholders, if any, required for the execution and delivery of this Agreement
and the consummations of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and constitutes the
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legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its terms.
3.11 OTHER PURCHASERS. No other purchaser of Convertible Debentures
in connection with the Company's $3,570,000 Convertible Debenture Stock Offering
has been permitted, nor will any be permitted, to enter into an Investment
Agreement containing terms and conditions more favorable to such purchaser than
those contained in this Agreement.
4. COVENANTS OF THE COMPANY. The Company hereby makes the following
covenants, intending to be bound hereby after the Closing.
4.1 The Company agrees to make and keep public information regarding
the Company available as those terms are understood and defined in Rule 144
promulgated under the Act ("Rule 144"), at all times from and after ninety (90)
days following the date of the Company's initial public offering, and to file
with the SEC in a timely manner all reports and other documents required of the
Company under the Act and the Securities Exchange Act of 1934 (the "1934 Act"),
at any time after it has become subject to such reporting requirements.
4.2 The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, for the purpose of complying
with the terms of Section 1 of this Agreement, such number of its duly
authorized shares of Common Stock as shall be sufficient to issue, from time to
time, the Debenture Shares to the Holder pursuant to, and in accordance with,
the terms of Section 1 hereof. If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient for the Company to issue
additional shares of Common Stock to the Holder pursuant to, and in accordance
with, the terms of Section 1 hereof, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
5. HOLDER'S REPRESENTATIONS. The Holder hereby makes the following
representations to the Company which shall also be true and correct at the
Closing and which shall survive the Closing:
5.1 The Holder represents and warrants that the Holder is an
"Accredited Holder" within the meaning of Regulation D promulgated under the
Act, and as more specifically described in Exhibit A hereto.
5.2 The Holder is, by reason of the Holder's business or financial
experience, or by reason of the business or financial experience of the Holder's
professional adviser, who is not affiliated with and is not compensated directly
or indirectly by the Company, or any affiliate or selling agent of the Company,
is capable of evaluating the merits and risks of the purchase of the Shares and
of protecting the Holder's own interests in connection with the investment
contemplated herein.
5.3 The Holder acknowledges that it has received and carefully
reviewed a copy of the Company's Terms for $3,570,000 Convertible Debenture
Offering (the "Terms"), a copy of which is attached hereto as Exhibit "B" and
the form of Convertible Debenture attached hereto as Exhibit
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"C". The Terms, the form of Convertible Debenture and this Agreement are
hereinafter collectively referred to as the "Materials," and the Holder further
acknowledges that it has read all of the disclosures set forth in the Materials.
The Holder has had the opportunity to ask questions and receive answers from the
Company concerning the terms and conditions of the offering described in the
Materials and by the Company. The Holder recognizes that the Company has a
limited operating history and is a speculative venture, and that if the Holder
invests therein, the Holder may lose the entire amount of its investment. The
Holder acknowledges that its representatives and the Holder have been provided
with the opportunity to obtain any additional information necessary to verify
the accuracy of all information provided to the Holder in the Materials.
5.4 In deciding whether to acquire the Convertible Debenture, the
Holder has relied exclusively upon consultations with its legal, financial and
tax advisers with respect to the nature of the investment and the information
provided by the Company in the Materials and this Agreement. None of the
Holder's advisors are affiliated with, or compensated directly or indirectly by,
the Company or any affiliate or selling agent of the Company.
5.5 The Holder understands that neither the Department of
Corporations of the State of Nevada, nor the SEC, nor any other governmental
agency having jurisdiction over the sale and issuance of the Convertible
Debentures will make any finding or determination relating to the
appropriateness for investment of the Convertible Debentures offered by the
Company and that none of them has or will recommend or endorse the Convertible
Debentures.
5.6 The Holder represents that the Convertible Debentures are
purchased for its own account for investment and are not being purchased with a
view to the resale or distribution thereof, and that the Holder has no present
intention of distributing or reselling any portion of the Convertible
Debentures. The Holder acknowledges that it has been informed by the Company
that the Convertible Debentures, and the Debenture Shares, to be issued and
delivered have not been registered under the Act and that the Convertible
Debenture and Debenture Shares must be held indefinitely unless subsequently
registered under the Act or an exemption for such registration is available. The
Holder acknowledges that, other than as may be set forth in the Materials, the
Company has no obligation to register the Convertible Debenture or the Debenture
Shares under the Act. The Holder also acknowledges that it is fully aware of the
restrictions on disposing of the Convertible Debenture and the Debenture Shares
resulting from the provisions of the Act and the General Rules and Regulations
of the SEC thereunder. The Holder further understands that the Convertible
Debentures are not qualified under Nevada Law on the ground that the sale
thereof is exempt under the applicable provisions of Nevada Law.
5.7 The Holder understands that the Convertible Debentures will not
be freely transferable and its ability to transfer the Debenture Shares is also
restricted.
5.8 The Holder recognizes that there is not a public market for the
Convertible Debentures and that there is no assurance that there will be such a
market for these securities. The Holder understands that it may have to hold the
Debenture Shares indefinitely due to the lack of such a market.
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5.9 The Holder recognizes that no escrow or minimum amount has been
established for the sale of the Convertible Debentures and that the proceeds
will be immediately received by the Company. The Holder recognizes that the
Company's inability to raise such funds, or additional funds, promptly may
significantly and adversely affect the Company's ability to achieve its
financial objectives, although the Company believes it could maintain its
current operations.
5.10 The Holder represents that it possesses such knowledge and
experience in business and financial matters that it is capable of evaluating
the merits and risks of its investment in the Convertible Debentures. The Holder
also has the degree of sophistication in these matters necessary to understand
(1) the financial and operational information provided to it relating to the
Company, and (2) the potential risk of losing all or a portion of its investment
in the Convertible Debentures. The Holder represents that it is able to bear the
economic risk of a loss of its investment in the securities, that it has funds
adequate to meet personal needs and contingencies and that it has no need for
liquidity of the investment in the Convertible Debentures.
5.11 The Holder recognizes that "stop transfer" instructions will be
issued against its Debenture Shares and that the following legend will be placed
on the Debenture Shares issued:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED SOLELY FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
6. REGISTRATION RIGHTS.
6.1 For the period commencing with the issuance of the Convertible
Debentures and terminating one years after the Effective Date as defined below,
if at any time the Company shall propose to register any of its shares for sale
or disposition for its own account for cash under the Act in a public offering,
including an initial public offering (the "IPO") under an S-1 registration
statement other than a registration relating to its employee benefit plans, the
Company shall:
(a) Promptly give to the Holder at least thirty (30) days'
written notice prior to the filing thereof (which shall include, if then
determined, the proposed date on which the registration statement is to be
filed, the proposed price and registration price per share, the number of shares
proposed to be included in such registration, the identity of any proposed
selling stockholders and a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue sky or
other state securities laws); and
(b) Subject to Section 6.2 below, include in such registration
(and any related qualification under blue sky laws or other compliance), and in
any underwriting involved therein, a portion of the Holder's Shares (as
hereinafter defined) which are specified in a written request, or requests, made
by the Holder within ten (10) days after receipt of such written notice from the
Company by the Holder.
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The rights of the Holder to registration pursuant to this Section 6.1
shall be conditioned upon the Holder's participation in any underwriting
relating to the Company's registered public offering. The Holder shall (together
with the Company) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company. The Company will use
its best efforts to include the Holder's Shares in such registration statement.
Notwithstanding any provision of this Section 6.1, if the underwriter, in its
sole discretion, determines that marketing factors require a limitation of the
number of securities to be underwritten, or that the registration statement be
limited to shares offered by the Company only, the underwriter may exclude some
or all of the Holder's Shares for which the Holder seeks registration from
inclusion in the registration and underwriting, which reduction shall be pro
rata among the Holder, the Company, and any other shareholder whose shares are
sought to be included in the registration. The Company will bear the expenses of
such registration, except for an underwriting commission or discount and the
expenses of special counsel for the Holder.
6.2 In addition, from time to time, the Company will register the
Holder's Shares, at its expense, on registration statements or Form S-3 after
the date upon which the Company meets the requirements to register Holder's
Shares on a Form S-3.
6.3 DEFINITIONS. For purposes of this Section 6:
6.3.1 The terms "register", "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document; and
6.3.2 The term "Holder's Shares" means any Common Stock issued
upon conversion of the Convertible Debenture held by the Holder and purchased in
this Offering; and
6.3.3 The term "Effective Date" shall mean the date the
effectiveness of the Company's registration on Form S-1 for an initial public
offering (IPO) is declared effective by the SEC.
6.4 INDEMNIFICATION. In the event any Holder's Shares are included in
a registration statement under this Section 6:
6.4.1 To the extent permitted by law, the Company will indemnify
and hold harmless the Holder, and its partners, against any losses, claims,
damages or liabilities (joint or several) to which it may become subject under
the Act, the 1934 Act, or other federal or state law, insofar as such losses,
claims, damages or liabilities (or action in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or
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regulation promulgated under the Act, the 1934 Act or any state securities law.
The Company will reimburse the Holder, and its partners, for any legal or other
expense actually incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action. Notwithstanding the
preceding, the indemnity agreement contained in this Section 6.4.1 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon a Violation which occurs
solely in reliance upon or in conformity with written information furnished
expressly for use in connection with such registration by the Holder.
6.4.2 To the extent permitted by law, the Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, and any underwriter, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, controlling person, or underwriter may become subject,
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs solely in reliance upon written information
furnished by the Holder and expressly for use in connection with such
registration. The Holder will reimburse any legal or other expense reasonably
incurred by the Company or any such director, officer, controlling person or
underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action. Notwithstanding the preceding, the indemnity
agreement contained in this Section 6.4.2 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld.
6.4.3 Promptly after receipt by an indemnified party under this
Section 6.4 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6.4, deliver to
the indemnifying party a written notice of the commencement thereof. Following
receipt of such notice, the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 6.4. However, the
omission so to deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section 6.4.
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6.4.4 The obligations of the Company under this Section 6.4 shall
survive the completing of any offering of the Holder's Shares in a registration
statement under this Section 6.
6.5 DELAY. The Holders shall have no right to take any action to
restrain, enjoin or otherwise delay any registration as a result of any
controversy that may arise with respect to the interpretation or implementation
of this undertaking.
6.6 TRANSFER OF REGISTRATION RIGHTS. The rights granted to the Holder
hereunder to cause the Company to register securities pursuant to the terms
hereof may be assigned to a transferee or assignee in connection with any
permitted transfer or assignment of any of the Holder's Shares (including,
without limitation, any transfers or assignments effected by operation of law),
but excluding any transferee who purchases the Company's Common Shares which
have been otherwise registered.
7. TRANSFER OF CONVERTIBLE DEBENTURES.
With respect to any offer, sale or other disposition of the
Convertible Debentures (or of any securities issued upon conversion of this
Debenture other than pursuant to Section 6.6 above), the Holder will give
written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of such Xxxxxx's counsel, to the effect
that such offer, sale or other distribution may be effected without registration
or qualification (under any federal or state law then in effect). Promptly upon
receiving such written notice, the Company shall notify such Holder whether such
Holder may sell or otherwise dispose of the Convertible Debentures, all in
accordance with the terms of the notice delivered to the Company.
8. GENERAL PROVISIONS.
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the parties hereto contained in this Agreement will survive
the Closing, are material and have been or will be relied upon by the other
parties.
8.2 NO THIRD PARTIES BENEFITED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
the Company and the Holder in connection with the obligations under this
Agreement. This Agreement is made for the sole protection of the Company and the
Holder. No other person shall have any rights of any nature hereunder or by
reason hereof.
8.3 BINDING EFFECT. This Agreement shall bind, and shall inure to the
benefit of, the Company and the Holder, and their respective heirs, successors,
personal representatives and assigns.
8.4 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and any party hereto or thereto may execute any
counterpart, each of which when executed and delivered will be deemed to be an
original and all of which counterparts of this Agreement taken together will be
deemed to be but one and the same instrument. The execution of this Agreement by
any party hereto will not become effective until counterparts hereof or thereof,
as the
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case may be, have been executed by all the parties hereto or thereto, and
transmitted by facsimile copy with overnight delivery of manually executed
copies.
8.5 PRIOR AGREEMENTS; AMENDMENTS; CONSENTS. This Agreement contains
the entire agreement between the Holder and the Company in regards to the
$3,570,000 Convertible Debenture Offering, and all prior negotiations,
understandings and agreements with regards to the Offering are superseded by
this Agreement. No amendment, modification, supplement, termination or waiver of
any provision of this Agreement, and no consent to any departure by the Company
therefrom, shall be effective unless in writing and signed by the Holder, and
then only in the specific instance and for the specific purpose given.
"Including" as used herein means "including, but not limited to."
8.6 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Nevada.
8.7 SEVERABILITY OF PROVISIONS; CONFLICT. Any provision in this
Agreement that is held to be inoperative, unenforceable or invalid shall be
inoperative, unenforceable or invalid without affecting the remaining
provisions, and to this end the provisions of this Agreement are declared to be
severable. In the event of a conflict between this Agreement and the Materials
as defined herein, the terms of this Agreement shall prevail.
8.8 ATTORNEY'S FEES. In the event that any action, proceeding, or
arbitration is instituted by or against any of the parties in order to enforce
any of the terms or provisions hereof, to construe the rights of the parties
hereunder, then the prevailing party shall be entitled to recover all costs
thereof and reasonable attorneys' fees as part of the judgment, whether or not
such action is prosecuted to judgment.
8.9 CONFIDENTIALITY. The Holder acknowledges and agrees that the
non-public information it has received and will receive about the Company and
the Company's financial performance is confidential, and agrees to use all
reasonable efforts to maintain the confidentiality thereof. Any Confidentiality
Agreement between the Holder and the Company, including the foregoing, is hereby
modified, only to the extent necessary, to permit the Holder to exercise and
protect its rights under this Agreement, or as a shareholder of the Company.
9. NOTICES. Any notice or demand to the Company under this Agreement may
be given and shall conclusively be deemed and considered to have been given and
received upon the date shown to have been received on any postal receipt or
independent courier receipt at the address of the Company appearing on the
records of the Holder, but actual written notice (including by telefax, hand
delivery, Federal Express, or other means), however given or received, shall
always be effective. For the purposes hereof, the addresses of the Company and
the Holder (until notice of a change thereof is given as provided in this
Section 9. shall be as follows:
If to Holder: At the address set forth on the signature page hereof
If to the Company: MEDICAL DEVICE ALLIANCE, INC.
0000 Xxxxxx Xxxxxx Xxxxxxx Xxxxx 0000
Page -12-
13
Las Vegas, NV. 89109
Attn: Chairman of the Board
SIGNATURES ON NEXT PAGE
IN WITNESS WHEREOF, the parties have signed this Agreement as of
______________, 1997 at Las Vegas, Nevada.
"HOLDER"
________________________________________
Signed
By: ____________________________________
Printed Name
Title:__________________________________
Address:
________________________________________
________________________________________
Tax I.D. or Social Security Number:
________________________________________
THIS AGREEMENT IS ONLY EFFECTIVE
WHEN ACCEPTED IN WRITING BY THE COMPANY
"COMPANY"
MEDICAL DEVICE ALLIANCE, INC.
A NEVADA CORPORATION
Dated: _______________, 1997 By: ___________________________________
Its: ________________________________
Page -13-
14
LIST OF EXHIBITS
TO
INVESTMENT AGREEMENT
EXHIBIT A - DEFINITION OF AN "ACCREDITED HOLDER"
EXHIBIT B - TERMS FOR $3,570,000 CONVERTIBLE DEBENTURE
OFFERING (THE OFFERING")
EXHIBIT C - FORM OF CONVERTIBLE DEBENTURE
Page -14-
15
EXHIBIT A TO INVESTMENT AGREEMENT
DEFINITION OF ACCREDITED HOLDER
REGULATION D
To be eligible to purchase the Convertible Debentures, prospective investors
must meet the Accredited Investor requirements described below.
Under Regulation D an "Accredited Investor" shall mean any person who comes
within any of the following categories, or who the issuer reasonably believes
comes within any of the following categories at the time of the sale of the
securities to that person:
(1) any bank as defined in section 3(a)(2) of the Act, or any savings and loan
association or other institution as defined in section 3(a)(5)(A) of the
Securities Act of 1991 whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934; 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; 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;
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
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made
solely by persons that are accredited Holders;
(2) any private business development company as defined in section 202(a)(22)
of the Investment Advisors Act of 1940;
(3) any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000;
(4) any director, executive officer or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or
general partner of that issuer;
(5) any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $1,000,000;
(6) any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(7) any trust with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Section
230.506(b)(2)(ii);
(8) any entity in which all of the equity owners are accredited Investors.
Page -15-
16
EXHIBIT B
TO INVESTMENT AGREEMENT
TERMS FOR $3,570,000 CONVERTIBLE DEBENTURE OFFERING
CONFIDENTIAL
Page -16-
17
EXHIBIT C
TO INVESTMENT AGREEMENT
FORM OF CONVERTIBLE DEBENTURE
CONFIDENTIAL
Page -17-
