EXHIBIT 4.1
FORM OF
REGULATION D
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
▇▇▇▇▇▇ HEALTHCARE, INC.
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter "Agreement")
has been executed by the undersigned in connection with the purchase in a
private placement pursuant to Section 4(2) of the SECURITIES ACT of Securities,
as amended (the "SECURITIES ACT") of up to 2,500 shares of certain convertible
preferred securities (hereinafter the "Preferred"), convertible into shares of
common stock, par value .01 per share (hereinafter "Common Stock"), and certain
Common Stock purchase warrants (hereinafter called "Warrants), from ▇▇▇▇▇▇
Healthcare, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇, a
Company organized under the laws of Texas (hereinafter the "Company" or
"Seller") by _____________________, organized under the laws of the ________,
(hereinafter "Buyer"). Such shares of Common Stock issuable upon conversion of
the Preferred and exercise of the Warrants are referred to hereinafter
collectively as the "Shares". Seller and Buyer (hereinafter collectively the
"parties") each hereby represents, warrants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE:
(i) Buyer hereby subscribes for _______ shares of Series A
Convertible Preferred Stock, par value $0.10 per share as set out
in the Statement of Designation attached as Exhibit A, attached,
to, and forming an integral part of this agreement at a purchase
price per share of $1,000 USD for a total aggregate consideration
of $_____________ USD;
(ii) Buyer will receive Warrants to purchase ________ shares
substantially in the form attached as Exhibit B to and forming an
integral part of this Agreement. The Warrants will be issued in
the following amounts and exercise prices:
25% exercisable @ the closing bid price of the Common
Stock on the Closing Date (as hereinafter defined)
on the Nasdaq SmallCap Market or any such other
exchange or quotation system on which the Common
Stock is then listed (the "Closing Bid Price");
25% @ 115% of the Closing Bid Price;
25% @ 120% of the Closing Bid Price; and
25% @ 135% of the Closing Bid Price.
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The Warrants will expire five (5) years after the Closing
Date.
(iii) Buyer shall on or before the Closing execute a copy
of the Registration Rights Agreement (the "Registration
Rights Agreement") substantially in the form attached as
Exhibit "C" to and forming an integral part of this
Agreement;
(iv) The Company shall within thirty (30) days Closing
Date, file a registration statement under the Securities
Act covering the registration of all the Buyer's Shares
issuable upon conversion of the Preferred, and the
exercise of the Warrants ("Registrable Securities").
2. BUYER'S REPRESENTATIONS
Buyer represents and warrants as follows:
(i) Authorization: Such Buyer has full power and authority to
enter into this Agreement and the Registration Rights Agreement,
(collectively, the "Transaction Documents") and that the Transaction
Documents, when executed and delivered will constitute a valid and
legally binding obligation of Buyer in accordance with their terms,
subject to (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws now or hereafter in effect
relating to creditors' rights and (B) that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought.
(ii) Purchase Entirely for Own Account: This Agreement is made by
Seller in reliance upon Buyer's representation to the Company, which by
such Buyer's execution of this Agreement Buyer hereby confirms, that the
Preferred and Warrants to be purchased by Buyer and the Common Stock
issuable upon conversion and exercise thereof (collectively, the
"Securities") will be acquired for investment for Buyers own account,
not a nominee as agent, and not with a view to the resale or
distribution of any part thereof. By execution of this Agreement, Buyer
further represents that Buyer does not have any contract, undertaking,
agreement or arrangement with any person, to sell, transfer or grant
participation to such person or to any third person, with respect to any
of the Securities.
(iii) Buyer is not a company, syndicate, partnership or other
form of incorporation entity or company created solely to permit the
purchase of the Securities by a group of individuals whose individual
share in the aggregate acquisition cost of the Securities is less than
$150,000 and Buyer is not purchasing the Securities as a result of an
advertisement of the Securities, including an advertisement in printed
media of general and regular paid circulation, radio or television.
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(iv) Buyer understands that the Securities may not be sold,
transferred or otherwise disposed of without registration under the
Securities Act or an exemption therefrom.
(v) INFORMATION ON COMPANY. Buyer has been furnished with and has
read the Company's Forms 10-KSB, 10-QSB, 8-K reports, and proxy or
information statements filed subsequent thereto, (collectively, with
exhibits thereto, hereinafter referred to as the "Reports"). In
addition, the Buyer has received from the Company such other information
concerning its operations, financial condition and other matters as the
Buyer has requested, and considered all factors the Buyer deems material
in deciding on the advisability of investing in the Securities (such
information in writing is collectively, the "Other Written
Information").
(vi) INFORMATION ON BUYER. The Buyer is an "accredited investor",
as such term is defined in Regulation D promulgated by the Commission
under the Act, is experienced in investments and business matters, has
made investments of a speculative nature and has purchased securities of
United States publicly-owned companies in the past and, with its
representatives, has such knowledge and experience in financial, tax and
other business matters as to enable the Buyer to utilize the information
made available by the Company to evaluate the merits and risks of and to
make an informed investment decision with respect to the proposed
purchase, which represents a speculative investment. The Buyer has the
authority and is duly and legally qualified to purchase and own the
Securities.
(vii) NO MARKET MANIPULATION; SHORT SALES. Neither the Buyer, nor
its Affiliates have taken, and will not take, directly or indirectly,
any action designed to, or that might reasonably be expected to, cause
or result in a manipulation of the price of the Company Shares,
including making, or causing to be made, any short sales of the
Company's Common Stock.
3. SELLER'S REPRESENTATIONS
Seller represents and warrants as follows:
(i) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas, and
has all requisite corporate power and authority to carry on its business
as now conducted and as currently proposed to be conducted. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material
adverse effect on the business or the properties of the Company and its
subsidiaries taken as a whole. To its knowledge, the Company is not the
subject of any pending, threatened or contemplated investigation or
administrative or legal proceedings by the Internal Revenue Service, the
taxing authorities of any State of
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local jurisdiction, or the Commission, or any State Securities
Commission, or any other governmental entity.
(ii) Seller has not conducted any general solicitation or general
advertising with respect to any of the Securities offered hereby.
(iii) The Statement of Designation, when executed and delivered
pursuant to the terms of this Agreement, will have been duly authorized
and executed and the Preferred, when issued and delivered will be fully
paid and non assessable constitute valid and legally binding obligations
of the Company in accordance with their terms, subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
(iv) The Shares, when issued and delivered upon conversion of the
Preferred or exercise of the Warrants in accordance with their terms,
will be duly and validly authorized and issued fully paid and non
assessable and will not subject the Buyers thereof to personal liability
by reason of being such Buyers. There are no preemptive rights of any
shareholder of Seller with respect to the Shares contained in Seller's
Articles of Incorporation or any agreement to which Seller is a party.
The Shares, when issued and delivered upon conversion will be
"restricted securities" as defined in Rule 144(a)(3) of the Securities
Act and as such will bear the following restrictive legend:
(a) The securities evidenced hereby have not been
registered under the Securities Act of 1933, as amended
(the "Securities Act"), or under any applicable state
securities laws, and they cannot be offered for sale,
sold, transferred, pledged or otherwise hypothecated
except in accordance with the registration requirements of
the Securities Act and such state laws or upon delivery to
the Corporation of an opinion of legal counsel
satisfactory to the Corporation that an exemption from
registration is available.
(v) The Transaction Documents, including the Statement of
Designation and Warrants, have been duly authorized, validly executed
and delivered on behalf of Seller and each is a valid and binding
agreement of Seller in accordance with its terms and subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws new or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance and
injunctive and
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other forms of equitable relief may be subject to equitable deficiencies
and to the discretion of the court before which any proceedings
thereafter may be brought.
(vi) The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement do not
and will not conflict with or result in a breach by Seller of any of the
terms or provisions of, or constitute default under, the Articles of
Incorporation (or charter) or by-laws of Seller, or any indenture,
mortgage, deed of trust or other material agreement or instrument to
which Seller is a party or by which it or any of its proprietors or
agents are bound, or any existing applicable decree, judgment or order
of any court, federal or state regulatory body, administrative agency or
governmental body having jurisdiction over Seller or any of its
properties or assets.
(vii) No authorization, approval or consent of or filing with any
federal, state or local governmental body of the United States, is
legally required for the issuance and sale of the Preferred and
(provided no commission or other remuneration is paid or given directly
or indirectly by Seller for soliciting such conversion) the issuance of
the Shares upon conversion of the Preferred in accordance with their
terms, as contemplated by this Agreement, except the filing of a Form D
and Form 8-K with the Commission.
(viii) To the best of the Company's knowledge, after reasonable
investigation, the information contained in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1996, and Quarterly
Report on Form 10-QSB for the quarter ended September 30, 1997 as filed
with the Commission does not contain any untrue statement of material
fact or omit any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made
not misleading. Since September 30, 1997 and except as set forth on
Schedule 1 hereto, there has been no material adverse development in the
business, properties, operations, financial condition or results of
operations of Seller.
(ix) Seller will issue one or more certificates representing the
Preferred in the name of Buyer in such denominations to be specified by
Buyer prior to closing and will issue one or more certificates
representing the Shares in such denominations to be specified by the
Buyer upon conversion of the Preferred. Seller further warrants that the
Preferred and the Shares shall be transferable on the books and records
of Seller as and to the extent provided in the Transaction Documents,
subject to compliance with Federal and States securities laws.
(x) The Company is not involved in any litigation which if
determined adversely to the Company, could reasonably be expected to
have a material adverse effect upon the Company's financial position.
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(xi) The Company is eligible to register with the Securities and
Exchange Commission, the Common Stock for resale on Form S-3.
(xii) No other entities currently hold registration rights except
as listed:
Maxxim Medical Inc.;
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇;
▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and
▇.▇. (Skip) ▇▇▇▇▇.
4. RESERVATION OF SHARES
The Company shall at all times have authorized, and reserved for
the purpose of issuance sufficient number of shares of Common Stock to
provide for the full conversion of the outstanding Preferred Shares and
issuance of the Conversion Shares in connection therewith (based on the
conversion price of the Preferred Shares in effect from time to time)
and the full exercise of the Warrants and the issuance of the Warrant
Shares in connection therewith (based upon the exercise price of the
Warrants in effect from time to time). The Company shall not reduce the
number of shares of Common Stock reserved for issuance upon conversion
of the Preferred or exercise of the Warrants without the consent of each
Buyer, which consent will not be unreasonably withheld. The Company
shall use its best efforts at all times to maintain the number of shares
of Common Stock so reserved for issuance at no less than 1-1/2 times the
number that is then actually issuable upon full conversion of the
Preferred and full exercise of the Warrants (based on the conversion
price of the Preferred or exercise price of the Warrants in effect from
time to time). If at any time the number of shares of Common Stock
authorized and reserved for issuance is below the number of Conversion
Shares and Warrant Shares issued and issuable upon conversion of the
Preferred and exercise of the Warrants (based on the conversion price of
the Preferred and exercise price of the Warrants then in effect), the
Company will promptly take all corporate action necessary to authorize
and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders.
5. LISTING
The Company shall timely secure the listing of the Shares upon
The Nasdaq SmallCap Market or such national securities exchange or
automated quotation system, if any, upon which shares of Common Stock
are then listed (subject to official notice of issuance). The Company
will use its commercially practicable best efforts to maintain the
listing and trading of its Common Stock on The Nasdaq SmallCap Market or
other national securities exchange or automated quotation system and
will comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of The Nasdaq SmallCap
Market or such exchanges or
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quotation systems, as applicable. The Company shall promptly provide to
the Buyer copies of any notices it receives regarding the continued
eligibility of the Common Stock for listing on The Nasdaq SmallCap
Market or other principal exchange or quotation system on which the
Common Stock is then listed or traded.
i. CORPORATE EXISTENCE. So long as a Buyer beneficially owns any
Preferred or Warrants, the Company shall maintain its corporate
existence in good standing under the laws of the jurisdiction in which
it is incorporated and shall not sell all or substantially all of the
Company's assets, except in the event of a merger or consolidation or
sale of all or substantially all of the Company's assets where the
surviving or successor entity in such transaction assumes the Company's
obligations hereunder and under the agreements and instruments entered
into in connection herewith.
ii. COMPLIANCE WITH LAW. The Company will conduct its business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business (including without
limitation, all applicable local, state and federal environmental laws
and regulations), except where the failure to comply with such laws,
rules or regulations would not have a material adverse effect.
iii. INSURANCE. The Company shall maintain liability, casualty
and other insurance (subject to customary deductions and retentions)
with responsible insurance companies against such risk of the types and
in the amounts customarily maintained by companies of comparable size to
the Company.
5(A). INSTRUCTIONS TO TRANSFER AGENT
The Company shall on the date the registration statement
registering the Common Stock underlying the Preferred and Warrants is
declared effective by the Securities and Exchange Commission, instruct
their Transfer Agent to issue, upon receipt by the Company of a Notice
of Conversion from the Buyer, the required number of shares of Common
Stock, subject to the Notice of Conversion.
6. CLOSING
The Preferred and Warrants shall be delivered to Buyer and the funds
therefor shall be delivered to Seller on the __th day of _______, 1998
(the "Closing"), or at such time to be mutually agreed.
At the closing, Seller shall execute the appropriate copies of the
Transaction Documents (the "Seller's Closing Documents") and deliver the
executed documents to Hechter and Associates, counsel for Buyer, with
instructions to hold the documents in trust and not to release the
documents to Buyer until advised to do so by Seller. Buyer shall execute
the appropriate copies of the Transactions Documents (the "Buyer's
Closing Documents") and deliver the executed documents to ▇▇▇▇▇▇ &
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▇▇▇▇▇▇, L.L.P. counsel for Seller, with instructions to hold the
documents in trust and not to release the documents to Seller until
advised to do so by Buyer.
Immediately after Buyer has confirmed that its counsel has received the
Seller's Closing Documents executed by Seller, then Buyer shall pay to
Seller the aggregate purchase price of the Preferred for which Buyer
subscribed (the "Purchase Price"). Buyer shall pay the Purchase Price,
less all appropriate legal fees and commissions by wire transfer of
immediately available funds in accordance with the following
instructions:
Bank Name:
ABA #:
Credit:
Account #:
On the banking day that Seller has confirmed that its counsel has
received the Buyer's Closing Documents and is credited with having
received the Purchase Price (the "Closing Date"), Seller shall advise
Buyer. Immediately thereafter, Seller shall advise Hechter and
Associates to release the Seller's Closing Documents to Buyer and Buyer
shall advise ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. to release the Buyer's Closing
Documents to Seller. The transaction Documents shall not be deemed to
have been delivered except in accordance with the procedures described
in this Section 6.
If the Closing does not occur before _________, 1998 then either party
may terminate this Agreement immediately upon written notice to the
other party and all Transaction Documents shall be returned to the
appropriate parties and will be deemed to be null and void.
7. CONDITIONS TO CLOSING
(i) Buyer understands that Seller's obligation to sell the
Preferred and Warrants is conditioned upon the receipt in immediately
available funds of the amount set forth in Paragraph 1 hereof.
(ii) Seller understands that Buyer's obligation to purchase the
Preferred and Warrants, is conditioned upon delivery of certificate(s)
representing the Preferred and Warrants as described in Exhibits A and B
herein and receipt of an opinion of Seller's counsel, satisfactory to
Buyer's Counsel.
8. RESTRICTIONS ON FUTURE FINANCINGS
The Issuer will not enter into another equity financing that (a)
would cause additional Common Stock issued in such equity financing to
become freely tradable before 90 days after the Closing Date or, (b)
would effect the orderly process of the registration statement
associated with this transaction being declared effective, unless
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(i) 85% of the Preferred Stock has been converted or, (ii) the Purchaser
gives written approval for additional financings.
9. GOVERNING LAW: INTERPRETATION AND DISPUTES.
This Agreement shall be governed by and construed under the laws of the
State of Texas and the laws applicable therein without regard to its
choice of law principles.
10. ARBITRATION
All disputes arising under this Agreement (other than claims in equity)
shall be resolved by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Arbitration
shall be by a single arbitrator experienced in the matters at issue and
selected by the Company and the Buyer in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. If the
Company and Purchaser cannot agree on an arbitrator within twenty (20)
days, then the arbitrator shall be appointed by the American Arbitration
Association. The arbitration shall be held in such place in New York,
New York as may be specified by the arbitrator (or any place agreed to
by the Company, the Buyer and the arbitrator). The decision of the
arbitrator shall be final and binding as to any matters submitted under
this Agreement, provided, however, if necessary, such decision and
satisfaction procedure may be enforced by either the Company or the
Buyer in any court of record having jurisdiction over the subject matter
or over any of the parties to this Agreement. All reasonable out of
pocket costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys fees) shall be
borne by the party against which the decision is rendered, or, if no
decision is rendered, such costs and expenses shall be borne equally by
the Company as one party and the Buyer as the other party. If the
arbitrator's decision is a compromise, the determination of which party
or parties bears the costs and expenses incurred in connection with any
such arbitration proceeding shall be made by the arbitrator on the basis
of the arbitrator's assessment of the relative merits of the parties'
positions.
11. CONFIDENTIALITY.
The parties hereto agree to maintain the confidentiality of this
Agreement and not to disclose to any person or entity information
concerning the transaction contemplated hereby unless required by law to
do so.
12. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement among the parties hereof
with respect to the subject matter hereof and supersedes any and all
prior contemporaneous representations, warranties, agreements and
understandings in connection therewith. This Agreement may be amended
only by a writing executed by all parties hereto.
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This Agreement may be executed in counterparts and the facsimile
transmission of an executed counterpart to this Agreement shall be
effective as an original.
13. NOTICES
All notices or other communications to be given or made hereunder must
be in writing and will be delivered personally or mailed, by registered
or certified mail, or sent by facsimile, to the undersigned, at the
address set forth in this Agreement, with copies to such persons, at
such addresses, as are set forth in this Agreement.
15. FULL NAME AND ADDRESS OF BUYER
FOR REGISTRATION PURPOSES:
NAME:_________________________________________
ADDRESS:______________________________________
______________________________________
______________________________________
TEL. No.:_____________________________________
Fax. No.:_____________________________________
CONTACT
NAME:_________________________________________
16. DELIVERY INSTRUCTIONS: (IF DIFFERENT FROM
REGISTRATION NAME):
NAME:_________________________________________
ADDRESS:______________________________________
______________________________________
TEL. No.:_____________________________________
FAX. No.:_____________________________________
CONTACT
NAME:_________________________________________
SPECIAL
INSTRUCTIONS:_________________________________
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IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written below
Dated this ____day of the month of _________, 1998.
NAME: ______________________________
______________________________
BY: ______________________________
TITLE: ______________________________
▇▇▇▇▇▇ HEALTHCARE, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇
BY:____________________________________
I have the full authority to bind ▇▇▇▇▇▇ HEALTHCARE, INC.
_____(initial)
NAME: ____________________________
TITLE: ____________________________
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