As filed with the Securities and Exchange Commission on April 23, 1999
REGISTRATION NO. 333-76491
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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S-3/A
Amendment #1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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MEDICAL INDUSTRIES OF AMERICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-0158479
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1903 SOUTH CONGRESS AVENUE, SUITE 400
BOYNTON BEACH, FL 33426
(561) 737-2227
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
Michael F. Morrell
Chief Executive Officer
Medical Industries of America, Inc.
1903 S. Congress Avenue, Suite 400
Boynton Beach, FL 33426
(561) 737-2227
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Please send copies of all communications to:
E. Nicholas Davis III, Esq.
Medical Industries of America, Inc.
1903 S. Congress Avenue, Suite 400
Boynton Beach, FL 33426
(561) 737-2227
Approximate date of commencement of proposed sale to the public: From time to
time after the effectiveness of the Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement under the earlier effective
registration statement for the same offering. [ ]
If this form is a post effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1)
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<S> <C> <C> <C>
Common Stock -- $0.0025 par value per share 14,900,528 $.96875 $14,434,887
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(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(c) under the Securities Act. The maximum price per
share information is based on the average of the high and the low sale prices of
the Registrant's common stock, $0.0025 par value per share, reported on the
NASDAQ Small Cap Exchange on April 15, 1999, less maximum shares upon conversion
at market price.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS SUBJECT TO COMPLETION
APRIL 16, 1999
AMENDED
MEDICAL INDUSTRIES OF AMERICA, INC.
COMMON STOCK
14,900,528 SHARES
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Medical Industries of America, Inc. is registering 3,320,910 shares of
common stock listed on page 16 under this prospectus. The Company is also
registering 11,579,618 shares of common stock underlying stock options, warrants
and convertible debentures.
BEFORE PURCHASING SHARES OF OUR COMMON STOCK YOU SHOULD CAREFULLY REVIEW
THE RISK FACTORS SECTION OF THIS PROSPECTUS WHICH BEGINS ON PAGE 1.
Our common stock is listed on the NASDAQ Small Cap Market ("NASDAQ") with
the ticker symbol: "MIOA." On April 15, 1999, the closing price of one share of
our common stock on the NASDAQ was $.96875.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is , 1999
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WE HAVE NOT AUTHORIZED ANY PERSON TO PROVIDE INFORMATION OR MAKE ANY
REPRESENTATION ABOUT THIS OFFERING THAT IS NOT IN THIS PROSPECTUS. PROSPECTIVE
INVESTORS SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. THIS
PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS PROHIBITED.
INFORMATION IN THIS PROSPECTUS IS CORRECT ONLY AS OF ITS DATE, REGARDLESS OF
WHEN ANY LATER OFFER OR SALE OCCURS.
TABLE OF CONTENTS
PAGE
RISK FACTORS.................................................................1
THE COMPANY.................................................................10
USE OF PROCEEDS.............................................................16
SELLING SHAREHOLDERS........................................................16
PLAN OF DISTRIBUTION........................................................19
AVAILABLE INFORMATION.......................................................19
VALIDITY OF COMMON STOCK....................................................19
Our principal executive offices are located at 1903 South Congress Avenue,
Suite 400, Boynton Beach, FL 33426 and our telephone number is (561) 737-2227.
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RISK FACTORS
GENERAL
The health care industry in general and the medical ancillary
service business in particular is subject to extensive federal, state and local
regulation relating to licensure, conduct of operations, ownership of
facilities, environment rules, pricing and reimbursement policies. Although the
Company believes that its current operations comply with applicable regulations,
the Company believes that the health care industry will continue to change,
requiring it to modify its agreements and operations from time to time. While
the Company believes it will be able to structure its agreements and operations
in accordance with applicable law, there can be no assurance that the subsequent
adoption of laws or interpretations of existing laws will not regulate, restrict
or otherwise adversely affect the Company's business.
HISTORY OF LOSSES; ACCUMULATED DEFICIT. To date the Company has been
unable to generate revenue sufficient to be profitable. Consequently, the
Company has sustained substantial losses. Net losses for the years ended
December 31, 1997 and 1998, were $1,526,152 and $6,359,990, respectively.
Accumulated deficit for the years ended December 31, 1997 and 1998, were
$(21,937,441) and $(28,297,431), respectively. There can be no assurance that
the Company will ever achieve the level of revenues needed to be profitable in
the future or, if profitability is achieved, that it will be sustained.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING. The Company's
capital requirements in connection with its business plans will be significant.
The Company believes that net proceeds of future anticipated securities
offerings, and giving effect to revenues which are projected to be realized from
operations, should be sufficient to fund ongoing operations and its business
plan. Notwithstanding, there is no assurance that such anticipated offering will
be undertaken, and if undertaken, will be successful or that such proceeds
derived therefrom, will in fact be sufficient to fund operations and meet the
needs of the Company's business plans. To the extent that the Company undertakes
such financings or uses capital stock as consideration, the Company's
shareholders will experience future ownership dilution.
RISKS OF GROWTH AND EXPANSION. The Company's aggressive growth strategy
will result in significant additional demands on its infrastructure, and will
place a significant strain on the Company's management, administrative,
operational, financial and technical resources, and increased demands on its
systems and controls. There can be no assurance that the Company's resources
will be adequate to support future operations and growth. The inability to
continue to upgrade the operating and financial control systems, the emergence
of unexpected expansion difficulties or failure to manage the Company's proposed
expansion properly could have a material adverse effect on the Company's
business, financial condition and results of operations.
The laws and regulations applicable to financial arrangements in the
health care
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industry are complex and may be subject to varying interpretations. This section
summarizes the principal federal and state statutes and regulations which are
applicable to the Company's business.
AIR AMBULANCE OPERATIONS. The Company's air ambulance business subjects it
to significant federal and international government regulations relating to
airline safety, capital requirements, maintenance, scheduling, etc. Due to the
nature of aircraft operations, applicable regulations and Company policy, the
Company incurs substantial expenses associated with the maintenance of its
aircraft fleet. Although the Company believes that its current operations comply
with applicable regulations, there can be no assurance that the subsequent
adoption of laws or interpretations of existing laws will not regulate, restrict
or otherwise adversely affect the Company's business.
DEPENDENCE UPON MANAGEMENT. The Company will be dependent to a significant
extent on the continued efforts and abilities of its Chairman, Michael F.
Morrell. Notwithstanding its ownership of a one million dollar key-man life
insurance policy on Mr. Morrell, if the Company were to lose the services of Mr.
Morrell before a qualified replacement could be obtained, its business could be
adversely affected.
POTENTIAL LIABILITY AND INSURANCE. The Company, because it operates in the
healthcare industry, is subject to substantial potential liability resulting
from a variety of possible causes, including breach of numerous healthcare laws,
malpractice, and product liability. While the Company currently is not a party
to any regulatory action or material litigation, if any actions or lawsuits in
the future are brought against the Company, such actions or lawsuits may have a
materially adverse effect on the Company even if such lawsuits are without
merit. The Company attempts to minimize its potential liability through
effective case supervision and personnel recruitment procedures. The Company
also carries a variety of insurance policies including policies insuring against
certain negligent acts, although there can be no assurance that such insurance
policies will adequately cover the Company's losses resulting from liability, or
that the Company will continue to qualify for, or be able to afford or obtain,
insurance in the future.
THIRD-PARTY REIMBURSEMENT. The Company's services are purchased by
patients and medical institutions which provide healthcare services to their
patients. Such institutions or patients typically bill or seek reimbursement
from various third-party payors such as Medicare, Medicaid, other governmental
programs and private insurance carriers for the charges associated with the
provided healthcare services. The Company believes that its market success will
ultimately depend largely upon obtaining favorable coverage and reimbursement
policies from such programs and carriers.
GOVERNMENT REGULATION. The healthcare industry is subject to extensive
federal and state government regulation. In addition to the referral and
reimbursement regulations, regulations include certificate of need, licensure of
healthcare facilities, services and equipment and restrictions on physician
investments in healthcare entities to which they refer patients. Although the
Company believes that its current operations comply with applicable regulations,
there can be no assurance that the subsequent adoption of laws or
interpretations
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of existing laws will not regulate, restrict or otherwise adversely affect the
Company's business.
DEPENDENCE ON RELATIONSHIPS WITH PHYSICIAN PARTNERS; RISKS OF CONFLICTS OF
INTEREST AND DISPUTES. The Company's business depends upon, among other things,
the efforts and success of the physicians who refer patients and provide
services to the Company's businesses and the strength of the Company's
relationships with such physicians. The Company's business, financial condition
and results of operations could be adversely affected by the failure of these
physicians to refer patients, maintain the quality of medical care or otherwise
adhere to required professional guidelines.
DEPENDENCE ON PHYSICIAN REFERRALS. The Company's rehabilitation, sleep and
pain businesses are dependent upon revenues received as a result of referrals
made by physicians. There can be no guarantee that any physician will choose to
refer patients to the Company. In addition, physicians affiliated with the
Company are not required to refer patients. In the event that, for any reason,
physicians do not use the ancillary medical service businesses operated by the
Company, such loss of patients could have a material adverse effect on the
business, financial condition and results of operation of the Company.
Furthermore, it is possible that third-party payors may refuse to approve
referrals to ancillary medical care facilities owned by the Company, but rather
require that such referrals be made to other facilities. Such a requirement
could have a material adverse effect on the business, financial condition and
results of the operations of the Company.
Further, the Company's physical rehabilitation companies derive a
significant portion of their revenue from Medicare patients. Recent adjustments
to Medicare's allowances with respect to rehabilitation services have
significantly limited the amount of revenues that the Company may derive from
services rendered to Medicare patients. There is no assurance that future
changes to Medicare's reimbursement policy will not have a significant adverse
effect on revenues derived from these sources.
MEDICARE AND MEDICARE FRAUD AND ABUSE. Federal law prohibits the offer,
payment, solicitation or receipt of any form of remuneration in return for, or
in order to induce: (i) the referral of a person in connection with the
provisions if medical services; (ii) the furnishing or arranging for the
furnishing of items or services reimbursable under Medicare and Medicaid
programs; and (iii) the purchase, lease, order, arranging or recommending of any
items or service reimbursable under Medicare or Medicaid (the "Anti-Kickback
Law"). Pursuant to the Anti-Kickback Law, the federal government has announced a
policy of increased scrutiny of joint ventures and other transactions among
health care providers in an effort to reduce potential fraud and abuse relating
to Medicare costs. The applicability of this provisions to many business
transactions in the health care industry will be subject to continuing judicial
and regulatory interpretation. Although the Company believes operations and
structure do not violate the Anti-Kickback Law, there can be no assurance that
its activities will not be challenged by regulatory authorities. If such
challenge were successful, it could have a material adverse effect on the
business, financial condition and results of operations of the Company.
Noncompliance with the Anti-Kickback Law can result in exclusion from Medicare
and Medicaid programs and civil and criminal penalties.
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LEGISLATIVE DEVELOPMENTS. In addition, proposed legislation regarding
health care reform has been introduced before many state legislatures. Any such
reforms at the federal or state level could significantly alter patient-provider
relationships. State and federal agency rule-making addressing these issues is
also expected. No predictions can be made as to whether future health care
reform legislation, similar legislation or rule-making will be enacted or, if
enacted, its effect on the Company. Any federal or state legislation prohibiting
investment interests in, or contracting with, the Company by physicians or
health care providers for which there is not statutory exception or safe harbor
would have a material adverse effect on the Company business, financial
condition and results of operations.
MANAGED CARE. There can be no assurance that the Company will be able to
obtain managed care contracts. The future inability of the Company to obtain
managed care contracts in its markets could have a material adverse effect on
its business, financial condition or results of operation. In addition, federal
and state legislative proposals have been introduced that could substantially
increase the number of Medicare and Medicaid recipients enrolled in HMOs and
other managed care plans. The Company will derive a substantial portion of its
revenue from Medicare and Medicaid. In the event such proposals are adopted,
there can be no assurance that the Company will be able to obtain contracts from
HMOs and other managed care plans serving Medicare and Medicaid enrollees.
Failure to obtain such contracts could have a material adverse effect on the
business, financial condition and results of operations of the Company.
LICENSES. Although the Company's cardiac catheterization services
generally are not subject to health care licensing requirements (it contracts
directly with hospitals), the Company must adhere to the same standards as the
hospitals it contracts with, including standards for sanitation, safety and
personnel qualifications. The Company is also required to register its X-ray
equipment and pay annual registration fees to state radiation control agencies.
The Company believes that its cardiac catheterization operations are in
compliance with applicable registration and hospital license requirements.
RISK WITH RESPECT TO COMPUTER TECHNOLOGIES AND YEAR 2000 COMPLIANCE. The
Company is aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. Many existing computer programs
use only two digits to identify a year in the date field. The issue is whether
such code exists in mission-critical applications and if that code will produce
accurate information with relation to date-sensitive calculations after the turn
of the century. The Company is assessing the extent of the necessary
modifications to its computer software and anticipates that the cost of such
modifications will not be material to the Company. Because of the many
uncertainties associated with the year 2000 compliance issues, and because the
Company's assessments are necessarily based on information from third-party
vendors, payors and suppliers, there can be no assurance that the Company's
assessment is correct as to either the materiality or the effect of such
compliance.
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OMNIBUS BUDGET RECONCILIATION ACT OF 1993
On August 10, 1993, President Clinton signed into law the Omnibus Budget
Reconciliation Act of 1993 ("OBRA `93") which contained numerous provisions that
significantly affect health care providers who participate in the Medicare and
Medicaid programs. The principal impact of OBRA `93 in the health care area is
(i) to expand the existing prohibition against the referral of patients to
entities with which the referring physician has a financial relationship
(self-referral), and (ii) to curtail the cost of the Medicare program by
limiting reimbursement.
MEDICARE AND MEDICAID FRAUD AND ABUSE
The Anti-Kickback Law prohibits the offer, payment, solicitation or
receipt of any form of remuneration in return for, or in order to induce: (i)
the referral of a person; (ii) the furnishing or arranging for the furnishing of
items or services reimbursable under Medicare or Medicaid programs; or (iii) the
purchase, lease or order or arranging or recommending purchasing, leasing or
ordering of any item or service reimbursable under Medicare or Medicaid.
Pursuant to the Anti-Kickback Law, the federal government has announced a policy
of increased scrutiny of joint ventures and other transactions among health care
providers in an effort to reduce potential fraud and abuse relating to Medicare
costs. The applicability of these provisions to many business transactions in
the health care industry has not yet been subject to judicial and regulatory
interpretation. Noncompliance with the Anti-Kickback Law can result in exclusion
from Medicare and Medicaid programs and civil and criminal penalties. Several of
the Company's subsidiaries currently derive a significant portion of their
revenues from Medicare or Medicaid payments.
Significant prohibitions against physician referrals have been enacted by
Congress. These prohibitions, commonly known as "Stark II" amended prior
physician self-referral legislation known as "Stark I" by substantially
enlarging the field of physician-owned or physician-interested entities to which
the referral prohibitions apply. Stark II prohibits a physician from referring
Medicare or Medicaid patients to an entity providing "designated health
services" in which the physician has an ownership or investment interest, or
with which the physician has entered into a compensation arrangement, unless a
statutory exemption applies. The designated health services include, for
example, prosthetic devices, clinical laboratory services, radiology (such as
ultrasound, MRI and CT), home health, physical and occupational therapy,
prescription drugs and inpatient and outpatient hospital services. The penalties
for violating Stark II include a prohibition on payment by these government
programs and civil penalties of as much as $15,000 for each referral violation
and $100,000 for participation in a "circumvention scheme." To the extent that
the Company or any subsidiary is deemed to be subject to the prohibitions
contained in Stark II, the Company believes its activities fall within the
permissible activities defined in Stark II.
While several of the Company's subsidiaries receive referrals with respect
to certain of these designated healthcare services, the Company does not provide
any compensation or financial incentive for such referrals and further believes
that it is in full compliance with Stark as well as state law requirements. Any
fees paid are intended by the Company to be consistent
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with fair market value in arm's-length transactions for the nature and amount of
services rendered and therefore, would not constitute unlawful remuneration
under Anti-Kickback Law and regulations. For these reasons, among others, the
Company does not believe that fees payable would be viewed as remuneration for
referring and influencing referrals of patients or services covered by such
programs as prohibited by statute. If the Company is deemed to be in a position
to make, influence or receive referrals from or to physicians, the operations of
the Company could be subject to scrutiny under federal and state anti-kickback
and anti-referral laws.
In Florida, which does not prohibit the corporate practice of medicine,
the Company through a wholly owned subsidiary, owns practices and employs
physicians. Thus, with respect to such practices, the Company is a provider of
services and would be capable of receiving referrals from other physicians
affiliated with the Company in those markets. In these circumstances, the
Company either will not accept referrals involving designated health services
from other physicians affiliated with the Company, or will form group practices
comprised of Company practices in that market.
In addition, the Company also believes that the methods used to acquire
the assets of existing practices and ancillary services do not violate
anti-kickback and anti-referral laws and regulations. Specifically, the Company
believes the consideration paid by the Company to physicians to acquire such
assets is consistent with fair market value in arm's-length transactions and not
intended to induce the referral of patients. Should this or any other Company
practice be deemed to constitute an arrangement designed to induce the referral
of Medicare or Medicaid patients, then such could be viewed as possibly
violating anti-kickback and anti-referral laws and regulations. A determination
of liability under any such laws could have a material adverse effect on the
Company's business, financial condition or results of operations.
FEE-SPLITTING; CORPORATE PRACTICE OF MEDICINE
The laws of many states prohibit physicians from splitting fees with
non-physicians (or other physicians) and prohibit non-physician entities from
practicing medicine. These laws vary from state to state and are enforced by the
courts and by regulatory authorities with broad discretion. Although the Company
believes its operations are in material compliance with existing applicable
laws, the Company's business operations have not been the subject of judicial or
regulatory interpretation; thus, there can be no assurance that review of the
Company's business by courts or regulatory authorities will not result in
determinations that could adversely affect the operations of the Company or that
the health care regulatory environment will not change so as to restrict the
Company's existing operations or their expansion. In addition, the regulatory
framework of certain jurisdictions may limit the Company's expansion into such
jurisdictions if the Company is unable to modify its operational structure to
conform with such regulatory framework.
A determination in any state that the Company is engaged in the corporate
practice of medicine or any unlawful fee-splitting arrangement could render any
management agreement between the Company and a practice located in such state
unenforceable or subject to
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modification, which could have a material adverse effect on the Company. There
can be no assurance that regulatory authorities or other parties will not assert
that the Company or a practice is engaged in the corporate practice of medicine
in such states or that the management fees paid to the Company by the managed
practices constitute unlawful fee-splitting or the corporate practice of
medicine. If such a claim were asserted successfully, the Company could be
subject to civil and criminal penalties, managed physicians could have
restrictions imposed upon their licenses to practice medicine, and the Company
or the managed practices could be required to restructure their contractual
arrangements. Such results or the inability of the Company or the managed
practices to restructure their relationships to comply with such prohibitions
could have a material adverse effect on the Company's financial condition and
results of operations.
CHANGES IN PAYMENT FOR MEDICAL SERVICES
The Company believes that trends in cost containment in the health care
industry will continue to result in a reduction in per-patient revenue for
Company practices. The federal government has implemented, through the Medicare
program, the RBRVS payment methodology for physician services. The RBRVS is a
fee schedule that, except for certain geographical and other adjustments, pays
similarly situated physicians the same amount for the same services. The RBRVS
is adjusted each year and is subject to increases or decreases at the discretion
of Congress. To date, the implementation of RBRVS has reduced payment rates for
certain procedures historically performed by Company physicians. There can be no
assurance that any reduced operating margins could be recouped by the Company
through cost reductions, increased volume, introduction of additional procedures
or otherwise.
Rates paid by non-governmental insurers, including those that provide
Medicare supplemental insurance, are based on established physician, ambulatory
surgery center and hospital charges, and are generally higher than Medicare
payment rates. A change in the makeup of the patient mix of Company practices as
well as the medical practices under Company management that results in a
decrease in patients covered by private insurance or a shift by private payors
to RBRVS or similar payment structures could adversely affect the Company's
business, financial condition or results of operations.
FLORIDA PATIENT SELF-REFERRAL ACT OF 1992
During its 1992 session, the Florida Legislature passed into law the
Patient Self-Referral Act of 1992 ("Self-Referral Act"). The Self-Referral Act
is far broader than OBRA since it is applicable to all types of health care
services and to all patients (not just Medicare and Medicaid beneficiaries).
Under the Self-Referral Act, "designated health services" are defined as
clinical laboratory, physical therapy, comprehensive rehabilitative, diagnostic-
imaging and radiation therapy services. The Company plans to purchase and
operate facilities that provide some or all of these designated health services.
All health care products and services not enumerated above, are classified as
"other health services."
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Under the Self-Referral Act, a physician is prohibited from referring a
patient for designated health services to an entity in which the physician is an
investor.
The Self-Referral Act also prohibits the referral by a physician of a
patient for other health services to an entity in which that physician is an
investor, unless the ownership of the entity meets one of two tests:
The physician's investment interest is in the registered securities of a
publicly traded corporation whose shares are traded on a national exchange or
over-the-counter market and which has net equity at the end of its most recent
fiscal quarter in excess of $50,000,000, or
For entities that do not qualify under the first test, no more than 50% of
the value of the investment interests in the entity may be held by investors who
are in a position to make referrals to the entity, and the terms under which an
investment interest is offered must be the same for referring investors and
non-referring investors. In addition, the terms under which an investment
interest is offered may not be related to the investor's volume of referrals to
the entity. Finally, the investor must not be required to make referrals or be
in the position to make referrals to the entity as a condition for becoming or
remaining an investor.
Entities that meet either test must also meet two additional tests. First,
the entity may not lend to or guarantee a loan to an investor who is in a
position to make referrals if the investor uses any part of that loan to obtain
the investment interest. Second, distributions of profits and losses to
investors must be directly proportional to their capital investment.
The Self-Referral Act also imposes certain disclosure obligations on the
Company and referring physicians. Under the Self-Referral Act, a physician may
not refer a patient to an entity in which he or she is an investor unless,
before doing so, the patient is given a written statement disclosing, among
other things, the physician's investment interest in the entity to which the
referral is made. The Self-Referral Act also imposes disclosure obligations on
the entities to which physicians refer patients.
Since the Company plans to purchase and operate facilities that provide
some or all of the "designated health services" and intends to network its
medical services, the Self Referral Act, and OBRA will have a significant
adverse impact on the Company's proposed plan of operations and may necessitate
(i) a change in the way the Company acquires its clinical care facilities, (ii)
a change in the corporate structure (i.e., a spin-off of the clinical care
companies coupled with an initial public offering in order to qualify for the
federal and state "Safe Harbor Standards"), (iii) a secondary offering for the
Company (in order to qualify for the federal and state "Safe Harbor Standards,"
or (iv) a merger with a company with substantially more assets than the Company
(in order to qualify for the "Safe Harbor" standards).
CERTIFICATE OF NEED
Some states, including Florida, require a "certificate of need" ("CON")
prior to the acquisition of medical equipment or provision of cardiac
catheterization services by hospitals.
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In Florida, a certificate of need is required for cardiac catheterization
services only if the hospital wishes to provide such services to in-patients.
Typically, obtaining a CON approval is a costly and lengthy process, and may
involve adversarial proceedings brought by competing facilities. The hospital or
health care provider, rather than the Company, must apply for and obtain the
CON, where required. As a result, the Company is unable to control or accurately
predict whether and how many potential customers will obtain CONs. The Company's
ability to provide cardiac catheterization services to hospitals and health care
providers is dependent upon those entities obtaining a CON for such services.
PROFESSIONAL LIABILITY INSURANCE
The Company currently maintains general and professional liability
insurance for its operations in the single limit amount and aggregate annual
limit amount of $5,000,000. There is no assurance that any potential claims will
or will not exceed this limit. While the Company's Mobile Labs are at a
customer's facility, they operate only under the direction of licensed
physicians on the customer's staff who direct the procedures, supervise the
Company's nurses and technologists, and interpret the results of the
examinations. The Company requires the users of the Mobile Labs to carry medical
malpractice insurance to cover the physicians using the Company's Mobile Labs.
COMPETITION
The health care industry in general, and the market for medical ancillary
services is highly competitive.
The Company competes with companies that are larger in size than the
Company and have access to considerably greater financial resources than the
Company. The Company competes by providing more personalized care to the
patients they serve as well as providing patient transportation and
pharmaceutical delivery.
In the interventional pain business segment, there are thousands of small
pain treatment centers, clinics and facilities. Only a portion of these
locations is accredited and follows standards for multi-disciplinary procedures.
In the sleep lab business segment, there are no clear market leaders or
major competition. Most of the independents are either labs in hospitals or
physicians interested in sleep that have started labs as an adjunct to their
local practice.
The air ambulance business segment has numerous smaller competitors with
short-range aircraft, but has limited competitors with aircraft capability of
performing international and, in particular, trans-Atlantic flights. Medjet in
Alabama, Kalitta in Detroit, and Sky Service in Toronto are the biggest
competitors in the international market.
In the pain rehabilitation business segment, there are numerous
competitors larger in size than the Company and which have access to
considerably greater financial resources than the Company.
9
<PAGE>
Pharmacy Care Specialists Inc. competes directly in the sale and delivery
of prescription drugs to individuals living in adult living facilities ("ALFs").
There are numerous competitors larger in size than the Company which have access
to considerably greater financial resources. The Company relies on reputation
and service to market its services.
MARKETING
The Company markets each of the services in various methods, including
customer and physician referrals, reputation in the community and third parties.
YGHN relies upon community reputation, customer referral, physician and
other medical resource referrals.
Ivanhoe relies upon physician referrals for its customer base. In
addition, the Company has in place a three-tier service system that enters local
communities and utilizes a screening program and an in-home lab program.
Global relies upon independent brokers, personal contacts and physician
referrals to approach new customers. The Company also staffs exhibit booths at
major industry-specific conventions to attract hospital groups, insurance
companies, assistance companies and managed care organizations.
Heart Labs relies heavily on referrals to perform high-tech procedures.
Most of the marketing for its Mobile Labs is based on the Company's reputation
in the medical community.
EMPLOYEES
As of March 12, 1999, the Company employed 300 persons, of which 195 are
full time. The Company's ability to provide its services is dependent upon the
Company recruiting, hiring and retaining qualified technical personnel. To date,
the Company has been able to recruit and retain sufficient qualified personnel.
None of the Company's employees is represented by a labor union. The Company has
not experienced any work stoppages and considers its relations with its
employees to be good.
THE COMPANY
GENERAL
The Company is in the business of developing integrated medical delivery
services by providing diversified medical technologies, physical and pain
rehabilitation, occupational and speech therapy, sleep apnea, diagnostic and
treatment services, pharmaceutical services and international air ambulance
transport.
The complete management team of the Company has been in place now for less
than
10
<PAGE>
two years. We decided that it was in the best interest of the Company and our
shareholders to re-evaluate the Company's direction, and, accordingly,
discontinue certain operations in 1998 and focus our attention on the
subsidiaries we felt could grow with profitable margins. These included the
pharmacy business, the pain and rehabilitation business, the sleep business, and
the air ambulance business.
During 1998 it became very clear to us that, in order for the Company to
obtain significant profit levels, utilization of technology and the Internet was
necessary. A significant amount of administrative and duplicative costs are
incurred in each and every aspect of healthcare activities. There are over 30
billion transactions annually in healthcare and only 10% are electronic.
Accordingly, we identified and entered into a Definitive Agreement with American
Enterprise Solutions, Inc. and signed letters of intent with Med Ventures, Inc.
and CyberCare, Inc. These acquisitions will significantly expand our ability to
address the healthcare issues facing society. The combination of these
companies, together with MIOA's existing operations, will generate revenue in
excess of $100,000,000 and give us a significant advantage in healthcare e
commerce by increasing shareholder value, profitability, and position us to
expand our operations in future years.
The Company intends to change the name of the Company to more closely
reflect our refocused company - around which each of our diversified medical
businesses will function as a support mechanism. Each of the diversified medical
businesses will support the further development and implementation of digital
information technology - this technology will make each of the businesses more
efficient. Digital technology will have a profound effect on our enterprises.
The Company is embarking upon an entirely new, but overdue, approach to the
delivery of quality healthcare in this country. We expect to emerge as an
innovator meeting the global trend toward fully digitized, fully integrated
medical services.
PENDING ACQUISITIONS
AESI. The Company and American Enterprise Solutions, Inc. ("AESI") have
entered into a Stock Exchange Agreement whereby upon the closing, AESI will
become a wholly-owned subsidiary of MIOA. The Exchange Agreement provides that
each shareholder of AESI will receive four (4) shares of MIOA's common stock for
each share of AESI stock they own. It is anticipated, based upon the number of
shares presently outstanding and pending acquisitions, that the shareholders of
AESI will own approximately 50 percent of MIOA.
AESI is a Florida corporation that designs, develops, implements and is in
the process of operating internet multi-media healthcare networks called
"Community Health Information Utilities" ("CHIUs"). These internet-base
utilities will allow for the electronic connecting of all healthcare-trading
partners. The healthcare trading partners include doctors, hospitals, consumers,
patients, employers, governments, managed-care companies, insurance companies
and all other providers and organizations. AESI also develops, manages and owns
community healthcare delivery systems, called "Community Health Enterprises"
("CHEs"). The CHEs are healthcare enterprises that create a single-source
delivery system by incorporating and integrating all healthcare delivery
services into single-source delivery system. At the core of each enterprise is a
CHIU.
11
<PAGE>
The CHIU is designed to provide, over the internet, clinical pathways and
quality assurance applications and systems to maximize the flow of patient data
and increase the ability of the physician, hospital, ancillary service and
diagnostic center to service the patient. It is believed that the integration of
the entire healthcare delivery system, through the use of these technologies,
will create substantial reductions in healthcare costs and provide improved
profits over existing healthcare models.
Management believes, although no assurance can be given, the acquisition
of AESI will catapult the Company into the healthcare internet business allowing
the Company to utilize the benefits of advanced internet technologies to improve
the quality of healthcare services while increasing profitability. It is
anticipated that the internet will provide the Company and its clients the
opportunity to reduce costs and provide additional profit centers. The Company's
strategic plan in respect to the use of the internet along with its new
proprietary technologies is to re-empower patients and doctors in the management
of their healthcare.
The closing of the contemplated transaction is conditioned upon completion
of satisfactory due diligence and unqualified audits and regulatory and
shareholder approval. Accordingly, no assurance can be given that the
acquisition will be completed or, if completed, that the combined companies will
be successful.
MED VENTURES. On December 21, 1998 and modified in April 1999, the Company
entered into a formal letter of intent to acquire privately held Med Ventures,
Inc. ("Med Ventures") headquartered in Columbia, South Carolina. Med Ventures
was organized in 1996 and currently owns, operates and manages pulmonary
clinics, multi-specialty clinics, a medical management company, and a
Telemedicine center. Med Ventures has represented to the Company that its
current annual revenues run rate is approximately $12,000,000 with estimated
income before taxes of approximately $1,500,000.
It is anticipated that upon closing Ronald Mills, Sr., current CEO and
President of Med Ventures, will be appointed to the board of the Company. Prior
to founding Med Ventures in 1995, Mr. Mills was founder and CEO of Extracare
Medical Services, a regional pediatric high-tech homecare company which was
acquired in 1994 by American Home Patient Centers. Mr. Mills is a former
Chairman of the Health Industry Distributors Association, a Washington, DC-based
association which represents medical distributors and providers throughout the
world. The Company believes that, aside from bringing to the Company a well-run
organization with significant profit potential, the Company will gain the proven
leadership and experience in healthcare management of Mr. Mills and the Med
Ventures management team. Management believes that the formulation of the new
management team, along with the technology and systems approach to medical
technology management which is being acquired through this acquisition, will
position the Company as an emerging leader in the medical ancillary service
business.
The amended letter of intent provides that the Company will acquire all of
the issued and outstanding stock of Med Ventures in accordance with the tax-free
reorganization rules and regulations. The purchase price for the stock shall
equal: the consolidated net taxable
12
<PAGE>
income of Med Ventures for its fiscal year, as defined, utilizing generally
accepted accounting principles ("Income") multiplied by four (4); and the
resulting product shall be reduced by the Company's consolidated liabilities
(excluding trade payables). The Company shall pay 50 percent of the purchase
price at closing and 25 percent per year for each of the first two (2) years
following the closing, provided Med Ventures meets certain earnings targets. In
the event the income amount is not realized, the payments will be adjusted
downward. The Purchase Price shall be paid in restricted common stock of the
Company which shall be valued for these purposes at $.75 per share.
The acquisition of Med Ventures is conditioned upon: (i) the parties
entering into a mutually agreeable purchase agreement, and (ii) completion of
satisfactory due diligence and unqualified audits, as necessary. Accordingly, no
assurance can be given that this acquisition will be completed or, if completed,
that Med Ventures will be profitable.
CYBERCARE. On March 31, 1998, the Company and CyberCare, Inc.
("CyberCare") entered into a letter of intent whereby the Company will acquire
all the issues and outstanding common stock of CyberCare. The terms of the
letter of intent provide that the CyberCare shareholders will receive one (1)
share of the Company's common stock for each share of stock they own in
CyberCare. There are presently approximately 6,700,000 shares of capital stock
of CyberCare issued and outstanding. The Company's common stock was valued for
purposes of this acquisition at $1.50 per share. Additional shares will be
issued if such market value is not maintained at certain times.
CyberCare is an Internet-based solution and interactive system that
provides products and services to support remote delivery of care, patient
monitoring and education to the U.S. healthcare market. CyberCare's patented
routing technology, product and business strategy create the opportunity to
capture a significant share of the growing market for remote interactive
healthcare delivery.
CyberCare's product offering includes two major components: (i) a
portable, computer-based system, assembled from off-the-shelf components and
interfaced through the Company's proprietary software, called the Personal Care
Management System (PCMS); and (ii) network services that operate in a routed
TCP/IP environment (the Internet protocol), delivering audio and video two-way
interaction between patients and providers. In addition, the system offers
automatic collection, transmission and storage of vital sign data (e.g., blood
pressure, heart rate, blood-oxygen level, lung function, weight and blood
glucose levels, etc.) and patient records. An operating prototype of the system
has been successfully clinically tested for over six months.
CyberCare will receive revenues from the sale of its PCMS device and
monthly recurring network access fees. Other potential sources of revenues,
which are not forecasted in the Company's financial projections, are clinical
drug studies, advertising, and database management services to support direct
marketing activities.
CyberCare's initial product system has been targeted specifically for the
high-cost, chronically ill patient (e.g., congestive heart failure, chronic
obstructive pulmonary disease,
13
<PAGE>
diabetes, asthma, etc.) population. These patients represent less than 1% of the
U.S. population (approximately 2.2 million people out of the total population of
270 million) but cost the U.S. healthcare system approximately 30% of total
healthcare costs. Preventive services for this patient population represent an
untapped market segment estimated to be greater than $4 billion in the U.S.
alone.
The most important issues facing the providers and payers responsible for
the care management of these chronically ill patients today are reducing costs,
increasing provider productivity and improving the quality of care. The average
targeted chronically ill patient costs the payers (insurance companies, HMOs,
Medicare and Medicaid) $70,000 to $100,000 annually. These costs are due to
patients cycling repeatedly through the health care system and consuming a
disproportionate share of medical resources (emergency room visits, hospital
rooms, lab tests, medications, convalescent homes, and frequent doctor visits).
This cycle is due to four primary causes: (i) undetected clinical deterioration;
(ii) improper use of prescribed medications; (iii) inadequate patient education;
and (iv) social isolation.
Independent studies now show that increasing patient and provider
interaction using telecommunication-based products and services to support
remote delivery of care, patient monitoring and education can reduce overall
per-member/per-month medical costs for the chronically ill patient population by
30%.1 This represents a potential net cost savings to payers of $37 billion to
$57 billion annually. CyberCare has created an internet-based healthcare
delivery system for these high-cost, chronically ill patients that will
dramatically improve patient health while significantly reducing per-patient
costs.
CyberCare has two patented routing applications filed covering key aspects
of the systems, including the Internet application for delivery of care
management services. Five additional claims are being prepared for an additional
patent application. In addition, copyright applications are also being filed to
protect CyberCare's proprietary software.
Other electronic distribution systems have been developed and sold to
segments of this market. However, all the current competition is made up of
small companies with technologies that do not utilize the Internet TCP/IP
protocol. The competition's products can support only point-to-point
transmissions between a patient and a provider; they do not support the
following functions offered as part of CyberCare's system: intelligent routing,
mixed protocol access, multi-point audio and video, automated collection and
logging of vital sign data, and data storage.
CyberCare plans to modularize and adapt its product offering to include
components and proprietary software which can be used with off-the-shelf IBM
compatible PCs. This approach will allow the Company to offer access to its
remote interactive health care delivery network at a reduced cost. The reduction
in cost will allow other secondary markets to open (i.e., approximately 5
million additional U.S. patients with acute illness, long-term health
conditions, permanent disability, or terminal illness). CyberCare plans to offer
these "modular" systems during the third calendar quarter of 2000.
- ------------------
1 The Remington Report, "Tele-home care in a managed care setting," Barry K.
Baines, MD
14
<PAGE>
CyberCare's CEO, John Haines, has over twenty years of senior-level
experience in the telecommunications and healthcare industries. Experienced
senior executives in computer science and engineering, sales and marketing,
regulatory and quality assurance, and finance are working with CyberCare.
The closing of the CyberCare transaction is conditioned upon: (i) the
parties entering into a mutually agreeable acquisition agreement; (ii)
completion of satisfactory due diligence and audits; and (iii) Board of
Directors approval.
15
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from this offering. All shares
are being registered for the benefit of shareholders and option, warrant and
securities holders.
SELLING SHAREHOLDERS
The selling shareholders acquired their shares of our common stock from us
in exchange for an equity interest in businesses that the Company acquired,
private securities offerings, or other transactions, and many of them are active
in the management of one of our subsidiaries. The Company has agreed with each
of the selling shareholders and pursuant to terms of various agreements that the
Company would register a portion or all of their shares upon their request or
upon a registration. Registration of these shares does not necessarily mean that
the selling shareholders will sell all or any of the shares.
In addition, we are also registering shares of common stock underlying
stock options, warrants and convertible debentures.
In addition, one or more of the selling shareholders may donate or
transfer as gifts some or all of their shares, or may transfer their shares for
no value to other beneficial owners. The selling shareholders will include these
donees or transferees as selling shareholders in a prospectus supplement if the
donees or transferees wish to use this prospectus to re-offer the shares.
The shares listed below represent all of the shares that each selling
shareholder currently beneficially owns, the number of shares each of them may
offer and the number of shares each of them will own after the offering assuming
they sell all of the shares and that they acquire no additional shares before
the completion of this offering.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED AND OWNERSHIP OWNED AND OWNERSHIP
SELLING PERCENTAGE PRIOR TO SHARES BEING PERCENTAGE AFTER
SHAREHOLDER OFFERING OFFERED OFFERING
---------------- ---------------------- --------------- ----------------------
<S> <C> <C> <C>
Dominion Capital Fund 52,219 52,219 52,219*
- --------------------------------------------------------------------------------------------------------
Dr. A. Razzak Tai 400,000 400,000 400,000
- --------------------------------------------------------------------------------------------------------
E. Nicholas Davis - Family Trust 300,000 100,000 300,000
- --------------------------------------------------------------------------------------------------------
Eve Kobrin 100,000 100,000 100,000*
- --------------------------------------------------------------------------------------------------------
George Slade/Linda Slade 60,750 60,750 60,750*
- --------------------------------------------------------------------------------------------------------
Glen Barber 30,375 30,375 30,375*
- --------------------------------------------------------------------------------------------------------
Kathy Wikle 133,954 133,954 133,954*
- --------------------------------------------------------------------------------------------------------
Linda Moore 100,000 100,000 100,000*
- --------------------------------------------------------------------------------------------------------
Michael Morrell 1,925,000 1,000,000 1,925,000
- --------------------------------------------------------------------------------------------------------
Paul Pershes 1,783,333 1,000,000 1,783,333
- --------------------------------------------------------------------------------------------------------
Ron Mills 133,954 133,954 133,954*
- --------------------------------------------------------------------------------------------------------
Sovereign Partners Limited
Partnership 169,908 169,908 169,908*
- --------------------------------------------------------------------------------------------------------
Zakeni Limited 39,750 39,750 39,750*
- --------------------------------------------------------------------------------------------------------
</TABLE>
*Percentage ownership is less than 1%.
16
<PAGE>
HOLDER OF STOCK OPTIONS, WARRANTS AND
CONVERTIBLE SECURITIES UNDERLYING SHARES BEING REGISTERED
------------------------------------- ----------------------------------
Ben Adler 25,000*
- -------------------------------------------------------------------------------
Dr. Sheila Nagar 25,000*
- -------------------------------------------------------------------------------
Eugene Friedman 25,000*
- -------------------------------------------------------------------------------
Howard Schraub 25,000*
- -------------------------------------------------------------------------------
Julian Herskowitz 12,500*
- -------------------------------------------------------------------------------
Philip Gaines 25,000*
- -------------------------------------------------------------------------------
Ronald Nash 50,000*
- -------------------------------------------------------------------------------
Stanley Katz 12,500*
- -------------------------------------------------------------------------------
Alan Gibstein 15,000*
- -------------------------------------------------------------------------------
Cindy & Neil Doljin 15,000*
- -------------------------------------------------------------------------------
James Copeland/ Leslie Investments 20,000*
- -------------------------------------------------------------------------------
Jeff Levine 20,000*
- -------------------------------------------------------------------------------
Marvin D. Taylor 10,000*
- -------------------------------------------------------------------------------
Norman Swenson 10,000*
- -------------------------------------------------------------------------------
Quintin Villa 10,000*
- -------------------------------------------------------------------------------
Rona Gibstein 5,000*
- -------------------------------------------------------------------------------
Elliot Smith 5,334*
- -------------------------------------------------------------------------------
Gregg Smith 2,940*
- -------------------------------------------------------------------------------
Ken Rickel 3,226*
- -------------------------------------------------------------------------------
Patricia Oppito 11,500*
- -------------------------------------------------------------------------------
Roni Rogan 2,000*
- -------------------------------------------------------------------------------
Raquel Schraub 4,000*
- -------------------------------------------------------------------------------
Ronald Nash 11,000*
- -------------------------------------------------------------------------------
Alexander Gancia 48,000*
- -------------------------------------------------------------------------------
Corporate Builders 144,000*
- -------------------------------------------------------------------------------
Rene Eichenberger 48,000*
- -------------------------------------------------------------------------------
Mirkin & Woolf 100,000*
- -------------------------------------------------------------------------------
J.W. Genesis Financial Services Capital Markets 100,000*
- -------------------------------------------------------------------------------
Sands Brothers & Co., LTD. 500,000*
- -------------------------------------------------------------------------------
Southeast Research Partners 150,000*
- -------------------------------------------------------------------------------
Dominion Capital Fund 50,010*
- -------------------------------------------------------------------------------
Sovereign Partners Limited Partnership 174,990*
- -------------------------------------------------------------------------------
Zakeni Limited 75,000*
- -------------------------------------------------------------------------------
Isaac Winehouse 125,000*
- -------------------------------------------------------------------------------
Sholom Weiss 125,000*
- -------------------------------------------------------------------------------
State Street Securities 350,000*
- -------------------------------------------------------------------------------
Dominion Capital Fund 495,263*
- -------------------------------------------------------------------------------
Sovereign Partners Limited Partnership 1,841,196*
- -------------------------------------------------------------------------------
Zakeni Limited 848,159*
- -------------------------------------------------------------------------------
Jean Johnstone 10,000*
- -------------------------------------------------------------------------------
Robert Segarra 50,000*
- -------------------------------------------------------------------------------
Michael F. Morrell 130,000*
- -------------------------------------------------------------------------------
Michael & Linda Morrell 50,000*
- -------------------------------------------------------------------------------
Dr. David Vastola 60,000*
- -------------------------------------------------------------------------------
Paul C. Pershes 50,000*
- -------------------------------------------------------------------------------
Gail Pershes 30,000*
- -------------------------------------------------------------------------------
Dr. Martin Heilbraun 20,000*
- -------------------------------------------------------------------------------
Juan Cocuy 40,000*
- -------------------------------------------------------------------------------
Dana Pusateri 100,000*
- -------------------------------------------------------------------------------
Theodore Orlando 20,000*
- -------------------------------------------------------------------------------
Richard Hoffman 60,000*
- -------------------------------------------------------------------------------
Robert Wasserman 20,000*
- -------------------------------------------------------------------------------
Dr. Aldo Berti 50,000*
- -------------------------------------------------------------------------------
Thomas Crane 110,000*
- -------------------------------------------------------------------------------
Eric Conn 80,000*
- -------------------------------------------------------------------------------
Terry Lazar 120,000*
- -------------------------------------------------------------------------------
Arthur & Sheryl Kobrin 20,000*
- -------------------------------------------------------------------------------
Dr. Ira Wendroff 20,000*
- -------------------------------------------------------------------------------
Eugene Friedman 100,000*
- -------------------------------------------------------------------------------
Steven Siegelaub 100,000*
- -------------------------------------------------------------------------------
Steven Daiagi 200,000*
- -------------------------------------------------------------------------------
Turkhill, Ltd. 1,000,000*
- -------------------------------------------------------------------------------
Amexcorp, Ltd. 1,000,000*
- -------------------------------------------------------------------------------
Danvers Investments Corp. 600,000*
- -------------------------------------------------------------------------------
Advantage List & Marketing 20,000*
- -------------------------------------------------------------------------------
Michael F. Morrell 65,000*
- -------------------------------------------------------------------------------
Michael & Linda Morrell 25,000*
- -------------------------------------------------------------------------------
Dr. David Vastola 30,000*
- -------------------------------------------------------------------------------
Paul C. Pershes 25,000*
- -------------------------------------------------------------------------------
Gail Pershes 15,000*
- -------------------------------------------------------------------------------
Dr. Martin Heilbraun 10,000*
- -------------------------------------------------------------------------------
Juan Cocuy 20,000*
- -------------------------------------------------------------------------------
Dana Pusateri 50,000*
- -------------------------------------------------------------------------------
Theodore Orlando 10,000*
- -------------------------------------------------------------------------------
Richard Hoffman 30,000*
- -------------------------------------------------------------------------------
Robert Wasserman 10,000*
- -------------------------------------------------------------------------------
Dr. Aldo Berti 25,000*
- -------------------------------------------------------------------------------
Thomas Crane 55,000*
- -------------------------------------------------------------------------------
17
<PAGE>
- -------------------------------------------------------------------------------
Eric Conn 40,000*
- -------------------------------------------------------------------------------
Terry Lazar 60,000*
- -------------------------------------------------------------------------------
Arthur & Sheryl Kobrin 10,000*
- -------------------------------------------------------------------------------
Dr. Ira Wendroff 10,000*
- -------------------------------------------------------------------------------
Eugene Friedman 50,000*
- -------------------------------------------------------------------------------
Steven Siegelaub 50,000*
- -------------------------------------------------------------------------------
Steven Daiagi 100,000*
- -------------------------------------------------------------------------------
Turkhill, Ltd. 500,000*
- -------------------------------------------------------------------------------
Amexcorp, Ltd. 500,000*
- -------------------------------------------------------------------------------
Danvers Investments Corp. 300,000*
- -------------------------------------------------------------------------------
Advantage List & Marketing Corp. 10,000*
- -------------------------------------------------------------------------------
*Exhibit attached
18
<PAGE>
PLAN OF DISTRIBUTION
The Company is registering the shares on behalf of the selling
shareholders, option, warrant and convertible security holders. "Selling
shareholders," as used in this prospectus, includes donees and pledgees selling
shares received from a named selling shareholder after the date of this
prospectus. The selling shareholders may offer their shares of our common stock
at various times in one or more of the following transactions:
o in the over-the-counter market o in connection with the writing
of non-traded and exchange-traded
o in private transactions other call options, in hedge transactions
than in the over-the-counter market and in settlement of other
transactions in standardized or
o in connection with short sales over-the-counter options
of the shares of our common stock
o in a combination of any of
o by pledge to secure debts and the other five transactions listed
other obligations here
The selling shareholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices.
The selling shareholders may use broker-dealers to sell their shares. If
this happens, broker-dealers will either receive discounts or commissions from
the selling shareholders, or they will receive commissions from purchasers of
shares for whom they acted as agents.
Selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of that rule.
AVAILABLE INFORMATION
The Company files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any document the
Company files with the SEC at the SEC's public reference rooms in Washington,
DC, New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's Website at
"http://www.sec.gov." Our common stock is listed on the NASDAQ Small Cap Market
under the symbol "MIOA."
VALIDITY OF COMMON STOCK
For the purpose of this offering, Mirkin & Woolf, P.A., is providing an
opinion on the validity of the shares.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the estimated amounts of expenses to be
borne by us in connection with the offering described in this Registration
Statement. None of the expenses will be borne by the security holders.
Securities and Exchange Commission
Registration Fee............................................... $ 3,118
Legal Fees and Expenses.......................................... $ 2,500
Accounting Fees and Expenses..................................... $ 1,500
Miscellaneous Expenses........................................... $ 3,000
Total Expenses............................................. $ 10,118
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850(1) of the Florida Business Corporation Act, as amended
(the "Florida Act"), provides that, in general, a Florida corporation may
indemnify any person who was or is a party to any proceeding (other than an
action by, or in the right of, the corporation), by reason of the fact that he
is or was a director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful.
In the case of proceedings by or in the right of the corporation, Section
607.0850(2) of the Florida Act provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation against expenses and amounts paid in settlement actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof, provided that such person acted in
good faith an in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation, except that no indemnification shall be
made in respect of any claims as to which such person is adjudged liable unless
a court of competent jurisdiction determines upon application that such person
is fairly and reasonably entitled to indemnity.
Section 607.0850 further provides that to the extent a director, officer,
employee or agent of a corporation is successful on the merits or in the defense
of any proceeding referred to in subsections (1) or (2) of Section 607.0850 or
in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses actually and reasonably incurred by him in connection
therewith; that the corporation may advance such expenses; that indemnification
provided for by Section 607.0850 shall not be deemed exclusive of any other
rights to which
II-1
<PAGE>
the indemnified party may be entitled; and that the corporation may purchase and
maintain insurance on behalf of such person against any liability asserted
against him or incurred by him in any such capacity or arising out of his status
as such, whether or not the corporation would have the power to indemnify him
against such liabilities under such Section 607.0850.
Section 607.0850 of the Florida Act further provides that, in general,
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judgment or other final
adjudication establishes that such person's actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless such person had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which such person derived an improper personal
benefit; (iii) in the case of a director, a circumstance under which the
director has voted for or assented to a distribution made in violation of the
Florida Act or the corporation's articles of incorporation; or (iv) willful
misconduct or a conscious disregard for the best interests of the corporation in
a proceeding by or in the right of the corporation to procure a judgment in
favor or in a proceeding by or in the right of a shareholder.
The Company's Articles of Incorporation and Bylaws provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by Florida law.
The Company has purchased liability insurance policies covering certain
directors and officers in certain circumstances.
ITEM 16. EXHIBITS
NUMBER DESCRIPTION OF EXHIBIT LOCATION
4 Warrant, Option & Other Agreements Page II-6
5 Opinion and Consent of Counsel Page II-8
23.1 Consent of Independent Public Page II-9
Accountants
23.2 Consent of Independent Public Page II-10
Accountants
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement (other than as provided
in the proviso and instructions to Item 512(a) of Regulation S-K) (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the
"Securities Act"); (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; and (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such officer, director or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boynton Beach, State of Florida, on April 23, 1999.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ PAUL C. PERSHES
Paul C. Pershes, President
Date: April 23, 1999
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following persons in the indicated capacities on April 23, 1999.
APRIL 23, 1999 /s/ MICHAEL F. MORRELL
Michael F. Morrell
Chief Executive Officer & Director
APRIL 23, 1999 /s/ PAUL C. PERSHES
Paul C. Pershes
Director
APRIL 23, 1999 /s/ THEODORE J. ORLANDO
Theodore J. Orlando
Director
APRIL 23, 1999 /s/ GLEN BARBER
Glen Barber
Director
APRIL 23, 1999 /s/ TERRY LAZAR
Terry Lazar
Director
APRIL 23, 1999 /s/ LINDA MOORE
Linda Moore
Senior Vice President
APRIL 23, 1999 /s/ ARTHUR KOBRIN
Arthur Kobrin
Chief Financial Officer
APRIL 23, 1999 /s/ DANA PUSATERI
Dana Pusateri
Director
APRIL 23, 1999 /s/LOUIS R. CAPECE, JR.
Louis R. Capece, Jr.
Director
II-4
<PAGE>
EXHIBIT INDEX
NUMBER TITLE OF EXHIBIT PAGE
---------------- ----
4 Warrant, Option & Other Agreements II-6
5 Opinion and Consent of Counsel II-8
23.1 Consent of Independent Public Accountants II-9
23.2 Consent of Independent Public Accountants II-10
II-5
EXHIBIT 4
WARRANT & OPTION AGREEMENTS
4.1 Warrant Agreement:
o Ben Adler
o Dr. Sheila Nagar
o Eugene Friedman
o Howard Schraub
o Julian Herskowitz
o Philip Gaines
o Ronald Nash
o Stanley Katz
4.2 Warrant Agreement:
o Alan Gibstein
o Cindy & Neil Doljin
o James Copeland/Leslie Inestments
o Jeff Levine
o Marvin D. Taylor
o Norman Swenson
o Quintin Villa
o Rona Gibstein
4.3 Warrant Agreement:
o Elliot Smith
o Gregg Smith
o Ken Rickel
o Patricia Oppito
o Roni Rogan
o Raquel Schraub
o Ronald Nash
4.4 Warrant Agreement:
o Alexander Gancia
o Corporate Builders, LP
o Rene Eichenberger
4.5 Warrant Agreement - Mirkin & Woolf, P.A.
4.6 Warrant Agreement - J.W. Genesis Financial Services Capital Markets
4.7 Warrant Agreement - Sands Brothers & Co.
4.8 Warrant Agreement - Southeast Research Partners
4.9 Warrant Agreement:
o Dominion Capital Fund
o Sovereign Partners Limited Partnership
o Zakeni Limited
4.10 Warrant Agreement - Isaac Winehouse
4.11 Warrant Agreement - Sholom Weiss
4.12 Option Agreement - State Street
4.13 Debenture Agreement (for Underlying Shares):
o Dominion Capital Fund
o Sovereign Partners Limited Partnership
o Zakeni Limited
4.14 Option Agreement - Jean Johnstone
4.15 Consulting Agreement - Robert Segarra
II-6
<PAGE>
4.16 Debenture Agreement (for Underlying Shares)-
o Michael F. Morrell
o Michael & Linda Morrell
o Dr. David Vastola
o Paul C. Pershes
o Gail Pershes
o Dr. Martin Heilbraun
o Juan Cocuy
o Dana Pusateri
o Theodore Orlando
o Richard Hoffman
o Robert Wasserman
o Dr. Aldo Berti
o Thomas Crane
o Eric Conn
o Terry Lazar
o Arthur & Sheryl Kobrin
o Dr. Ira Wendroff
o Eugene Friedman
o Steven Siegelaub
o Steven Daiagi
o Turkhill, Ltd.
o Amexcorp, Ltd.
o Danvers Investments Corp.
o Advantage List & Marketing Corp.
4.17 Warrant Agreement -
o Michael F. Morrell
o Michael & Linda Morrell
o Dr. David Vastola
o Paul C. Pershes
o Gail Pershes
o Dr. Martin Heilbraun
o Juan Cocuy
o Dana Pusateri
o Theodore Orlando
o Richard Hoffman
o Robert Wasserman
o Dr. Aldo Berti
o Thomas Crane
o Eric Conn
o Terry Lazar
o Arthur & Sheryl Kobrin
o Dr. Ira Wendroff
o Eugene Friedman
o Steven Siegelaub
o Steven Daiagi
o Turkhill, Ltd.
o Amexcorp, Ltd.
o Danvers Investments Corp.
o Advantage List & Marketing Corp.
II-7
<PAGE>
EXHIBIT 4.1
COMMON STOCK PURCHASE WARRANT
COMMON STOCK PURCHASE WARRANT issued this 16 day of September, 1997 by MEDICAL
INDUSTRIES OF AMERICA, INC., a Florida corporation (the "Company"), in favor of
Philip Gaines (the "Holder").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of the initial
Holder investing in the Company pursuant to the terms of that Confidential
Private Placement Memorandum dated June 1, 1997 (the "Memorandum") and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder the right to purchase twenty
five thousand (25,000) shares of the Company's Common Stock, no par value (the
"Shares"). Reference is hereby made to the Memorandum for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Company and the holder.
This Warrant shall be exercisable at any time and from time to time
beginning on the date hereof, expiring on September 16, 2000.
2. EXERCISE PRICE. Subject to the terms of paragraph 4(c), the exercise
price per share for which all or any of the Shares may be purchased pursuant to
the terms of this Warrant is one dollar and twenty-five cents ($1.25) (the
"Exercise Price").
3. EXERCISE. This Warrant may be exercised by the Holder hereof as to
all or in increments of one hundred (100) Shares (or the balance of the Shares
if less than such number), upon delivery of written notice of intent to exercise
in the form attached hereto as Exhibit "A" to the Company at the following
address: 1903 South Congress Avenue, Suite 400, Boynton Beach, Florida 33426, or
such other address as the Company shall designate in a written notice to the
Holder hereof, together with this Warrant and a check payable to the Company for
the aggregate Exercise Price of the Shares so purchased. Upon exercise of this
Warrant as aforesaid, the Company shall, as promptly as practicable, and in any
event within fifteen (15) days thereafter, execute and deliver to the Holder of
this Warrant a certificate or certificates for the total number of whole Shares
for which this Warrant is being exercised. If this Warrant shall be exercised
with respect to less than all of the Shares, the Holder shall be entitled to
receive a new Warrant covering the number of Shares in respect of which this
Warrant shall not have been exercised, which new Warrant shall in all other
respects be identical to this Warrant. The Company covenants and agrees that it
will pay when due any and all state and federal issue taxes which may be payable
in respect to the issuance
-1-
<PAGE>
of this Warrant or the issuance of anyShares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws (the "Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such Warrant
under the Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel, which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under the Securities
Act or under any applicable Blue Sky Laws. Transfer of the Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as the Warrant and the certificates representing such Shares shall
bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAW SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (II) IN THE OPNION OF COUNSEL ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAW IS
NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.
The Holder agrees to execute such other documents and instruments as counsel for
the Company reasonably deems necessary to effect the compliance of the issuance
of this Warrant and any Shares issued upon exercise hereof with applicable
federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Company shall at all
times reserve and keep available for issuance upon the exercise of this Warrant
such number of authorized but unissued shares of Class B Common Stock as will be
sufficient to permit the exercise in full of this Warrant.
5. TRANSFER OF WARRANT. This Warrant may not be transferred, in whole
or in part. In the event of the death or final determination of legal incapacity
of the Holder during such time as the Holder shall possess the Warrant granted
hereunder, the personal representative of the Holder may, for a period of ninety
-2-
<PAGE>
(90) days following the date of death or final determination of legal
incapacity, exercise the Warrant to the extent that the Holder was entitled to
exercise the Warrant on such date. Any person so desiring to exercise the
Warrant shall be required, as a condition to the exercise of the Warrant, to
furnish to the Company such documentation as the Company shall deem necessary to
evidence the authority of such person to exercise the Warrant on behalf of the
Holder.
6. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization, combination of
shares of the Company, or other similar event occurring after the date hereof,
then the Holder exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Holder would have received if this Warrant had been exercised immediately prior
to such stock split, stock dividend, recapitalization, combination of shares, or
other similar event. If any adjustment under this paragraph 6(a) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 6(a), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company or other similar event occurring
after the date hereof, as a result of which shares of common stock shall be
changed into the same or a different number of shares of the same or another
class or classes of securities of the Company or another entity, then the Holder
exercising this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such merger,
consolidation, exchange of shares, separation, reorganization or liquidation or
other similar event. If any adjustment under this paragraph 6(b) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of Shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 6(b), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the
-3-
<PAGE>
method by which such adjustment was calculated.
7. ADDITIONAL NOTICES TO WARRANT HOLDERS. In addition to any other
notice required hereunder, the Company shall provide the Holder with a copy of
any notice that the Company is required to provide those persons holding shares
of the Company's Common Stock, no par value, on the same date such persons
receive such notice.
8. LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this paragraph 8 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrant, shall constitute an original contractual obligation on the part of the
Company.
IN WITNESS WHEREOF, the Company has executed this Stock Purchase
Warrant as of the date first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ PAUL C. PERSHES
Paul C. Pershes, President
<PAGE>
EXHIBIT 4.2
COMMON STOCK PURCHASE WARRANT
COMMON STOCK PURCHASE WARRANT issued this ____ day of _________, 1998 by MEDICAL
INDUSTRIES OF AMERICA, INC., a Florida corporation (the "Company"), in favor of
_____________ (the "Holder").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of the initial
Holder investing in the Company pursuant to the terms of that Confidential
Private Placement Memorandum dated April 20, 1998, as amended (the "Memorandum")
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company hereby grants to Holder the right to
purchase fifteen thousand (15,000) shares of the Company's Common Stock, no par
value (the "Shares"). Reference is hereby made to the Memorandum for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Company and the holder.
This Warrant shall be exercisable at any time and from time to time
beginning on the date hereof, expiring on ________, ____.
2. EXERCISE PRICE. Subject to the terms of Section 4(c), the exercise
price per share for which all or any of the Shares may be purchased pursuant to
the terms of this Warrant is one dollar and fifth cents ($1.50) (the "Exercise
Price").
3. EXERCISE. This Warrant may be exercised by the Holder hereof as to
all or in increments of one hundred (100) Shares (or the balance of the Shares
if less than such number), upon delivery of written notice of intent to exercise
in the form attached hereto as Exhibit "A" to the Company at the following
address: 1903 South Congress Avenue, Suite 400, Boynton Beach, Florida 33426 or
such other address as the Company shall designate in a written notice to the
Holder hereof, together with this Warrant and a check payable to the Company for
the aggregate Exercise Price of the Shares so purchased. In lieu of such check,
all or part of the payment due upon exercise of this Warrant may be made by
surrender by such holder to the Company of any of the Company's 10% Senior
Subordinated Debentures (the "Debentures"), and the Debentures so surrendered
shall be credited against such payment in an amount equal to the applicable
principal amount thereof and accrued interest to the date of surrender. Upon
exercise of this Warrant as aforesaid, the Company shall, as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute and
deliver to the Holder of this Warrant a certificate or certificates for the
total number of whole Shares for which this Warrant is being exercised.
<PAGE>
If this Warrant shall be exercised with respect to less than all of the Shares,
the Holder shall be entitled to receive a new Warrant covering the number of
Shares in respect of which this Warrant shall not have been exercised, which new
Warrant shall in all other respects be identical to this Warrant. The Company
covenants and agrees that it will pay when due any and all state and federal
issue taxes which may be payable in respect to the issuance of this Warrant or
the issuance of any Shares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws (the "Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such Warrant
under the Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel, which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under the Securities
Act or under any applicable Blue Sky Laws. Transfer of the Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as the Warrant and the certificates representing such Shares shall
bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAW SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (II) IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAW IS
NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.
The Holder agrees to execute such other documents and instruments as counsel for
the Company reasonably deems necessary to effect the compliance of the issuance
of this Warrant and any Shares issued upon exercise hereof with applicable
federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of this Warrant will, upon
D-2
<PAGE>
issuance and payment therefor, be legally and validly issued and outstanding,
fully paid and nonassessable, free from all taxes, liens, charges and preemptive
rights, if any, with respect thereto or to the issuance thereof. The Company
shall at all times reserve and keep available for issuance upon the exercise of
this Warrant such number of authorized but unissued shares of Class B Common
Stock as will be sufficient to permit the exercise in full of this Warrant.
5. TRANSFER OF WARRANT. This Warrant may not be transferred, in whole
or in part. In the event of the death or final determination of legal incapacity
of the Holder during such time as the Holder shall possess the Warrant granted
hereunder, the personal representative of the Holder may, for a period of ninety
(90) days following the date of death or final determination of legal
incapacity, exercise the Warrant to the extent that the Holder was entitled to
exercise the Warrant on such date. Any person so desiring to exercise the
Warrant shall be required, as a condition to the exercise of the Warrant, to
furnish to the Company such documentation as the Company shall deem necessary to
evidence the authority of such person to exercise the Warrant on behalf of the
Holder.
6. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization, combination of
shares of the Company, or other similar event occurring after the date hereof,
then the Holder exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Holder would have received if this Warrant had been exercised immediately prior
to such stock split, stock dividend, recapitalization, combination of shares, or
other similar event. If any adjustment under this Section 6(a) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 6(a), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company or other similar event occurring
after the date hereof, as a
D-3
<PAGE>
result of which shares of common stock shall be changed into the same or a
different number of shares of the same or another class or classes of securities
of the Company or another entity, then the Holder exercising this Warrant shall
receive, for the aggregate price paid upon such exercise, the aggregate number
and class of shares which such Holder would have received if this Warrant had
been exercised immediately prior to such merger, consolidation, exchange of
shares, separation, reorganization or liquidation, or other similar event. If
any adjustment under this paragraph 6(b) would create a fractional share of
common stock or a right to acquire a fractional share of common stock, such
fractional share shall be disregarded and the number of shares subject to this
Warrant shall be the next higher number of Shares, rounding all fractions
upward. Whenever there shall be an adjustment pursuant to this Section 6(b), the
Company shall forthwith notify the Holder of such adjustment, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated.
7. DEMAND REGISTRATION. Within ninety (90) days of the Termination Date
(as such term is defined in the Memorandum) (the "Filing Period"), the Company
shall prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement under the Securities Act covering all of
the Shares and shall use its best efforts to cause such registration statement
to become effective within one hundred fifty (150) days of the Termination Date
(the "Demand Registration Period").
The obligation of the Company under this Section 7 shall be limited to one
registration statement. The Company shall pay the expenses described in Section
11 for the registration statement filed pursuant to this Section 7 which becomes
effective, except for underwriting discounts and commissions and transfer taxes,
which expenses shall be borne by the Holder.
8. INCIDENTAL REGISTRATION RIGHTS. At any time commencing on the date
hereof and expiring upon the declaration of effectiveness of the registration
statement referred to Section 7 hereof, if the Company shall determine to
proceed with the actual preparation and filing of a registration statement under
the Securities Act in connection with the proposed offer and sale of any of its
securities by it or any of its security holders (other than a registration
statement on Form S-4, S-8 or other limited purpose form), the Company will give
written notice of its determination to the Holder. Upon the written request from
Holder, within twenty (20) days thereafter, the Company will, except as herein
provided, cause all the Shares to be included in
D-4
<PAGE>
such registration statement, all to the extent requisite to permit the sale or
other disposition thereof by Holder; PROVIDED, HOWEVER, that nothing herein
shall prevent the Company from, at any time, abandoning or delaying any
registration. If any registration pursuant to this Section 8 shall be
underwritten in whole or in part, the Company shall require that the Shares
requested for inclusion pursuant to this Section 8 be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters.
Notwithstanding the foregoing, if the managing underwriter determines and
advises in writing that the inclusion of all the Shares proposed to be included
in the underwritten public offering, together with any other issued and
outstanding securities proposed to be included therein by holders of securities
other than Holder, would interfere with the successful marketing of such
securities, then the number of such Shares that the managing underwriter
believes may be sold in such underwritten public offering shall be allocated for
inclusion in the registration statement in the following order of priority: (i)
the securities being offered by the Company; and (ii) the number of Shares then
owned by Holder. The Shares that are excluded from the underwritten public
offering shall be withheld from the market by Holder for a period, not to exceed
180 days, that the managing underwriter determines as necessary in order to
effect the underwritten public offering. To the extent that Shares requested for
inclusion pursuant to this Section 8 are excluded from a registration statement
pursuant to this provision, the Company shall file a new registration statement
covering such excluded Shares and shall use its best efforts to cause such
registration statement to become effective upon the expiration of the period,
not to exceed 180 days, that the excluded Shares are to be withheld from the
market pursuant to this Section 8. Notwithstanding anything contained herein,
the Company shall not request nor require the Holder to "lockup" any of the
Shares that may be requested or required by an underwriter of an underwritten
public offering of the Company's securities during the period commencing with
the effectiveness of the registration statement referenced in Section 7 hereof
through and including a period of one hundred eighty (180) days thereafter.
The Company shall pay the expenses described in Section 11 for registration
statements filed pursuant to this Section 8.
9. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 7 or 8 to effect the registration of Shares under the
Securities Act, the Company will:
D-5
<PAGE>
(a) prepare and file with the Commission a registration
statement with respect to such securities, and use its best efforts to cause
such registration statement to become and, with respect to Sections 7 and 8,
remain effective until the earlier of (i) the date that all of the Shares have
been sold pursuant to the registration statement, (ii) the date Holder receive
an opinion of counsel reasonably acceptable to it that the Shares may be sold
under the provisions of Rule 144(K) promulgated by the Commission or (iii) the
eighteen month anniversary of the effective date of the registration statement
(the "Effective Period");
(b) prepare and file with the Commission such amendments to
such registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for the
Effective Period as may be reasonably necessary to effect the sale of such
securities;
(c) furnish to Holder and to the underwriters of the
securities being registered, such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such other
documents as Holder and such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the Shares
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as Holder may reasonably request in writing within
twenty (20) days following the original filing of such registration statement,
except that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) notify Holder, promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(f) notify Holder promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(g) prepare and file with the Commission, promptly upon the
request of Holder of a majority of the Shares covered thereby, any amendments or
supplements to such registration statement or prospectus which, in the opinion
of counsel for Holder (and concurred in by counsel for the Company), is required
under the Securities Act or the rules and regulations thereunder in connection
with the distribution of the Shares by Holder;
D-6
<PAGE>
(h) prepare and promptly file with the Commission and promptly
notify Holder of the filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at any time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; and
(i) advise Holder, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
10. FAILURE TO TIMELY FILE REGISTRATION STATEMENT. Anything contained
in this Warrant to the contrary notwithstanding, in the event the Company fails
to either (i) file such demand registration statement with the Commission prior
to the expiration of the Filing Period or (ii) cause such demand registration
statement to become effective prior to the expiration of the Demand Registration
Period (except when the Company is proceeding in good faith to cause the
registration statement to become effective in a timely manner and the failure to
become effective is due solely to delays at the Securities and Exchange
Commission which are outside of the Company's control), in addition to any other
rights and privileges of Holder, the Company shall reduce the exercise price of
the Warrants by five percent (5%) of the original exercise price for each full
month the effectiveness of the registration Statement is delayed beyond Demand
Registration Period, not to exceed a total reduction of the exercise price of
thirty percent (30%).
11. EXPENSES.
(a) With respect to the registration requested pursuant to
Section 7 hereof, and with respect to an inclusion of Shares in a registration
statement pursuant to Section 8 hereof, all fees, costs and expenses of and
incidental to such registration, inclusion and public offering (as specified in
Section (b) below) in connection therewith shall be borne by the Company;
PROVIDED, HOWEVER, that Holder shall bear its share of
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the underwriting discount and commissions and transfer taxes, and Holder shall
be responsible for the payment of its own legal fees.
(b) The fees, costs and expenses of registration to be borne
by the Company as provided in Section 11(a) above shall include, without
limitation, all registration, filing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered and qualified (except as provided in Section 11(a) above). Fees and
disbursements of counsel and accountants for Holder not expressly included above
shall be borne by Holder.
12. ADDITIONAL NOTICES TO WARRANT HOLDER. In addition to any other
notice required hereunder, the Company shall provide the Holder with a copy of
any notice that the Company is required to provide those persons holding shares
of the Company's Common Stock, no par value, on the same date such persons
receive such notice.
13. LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this Section 13 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrant, shall constitute an original contractual obligation on the part of the
Company.
14. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the state of Florida.
IN WITNESS WHEREOF, the Company has executed this Common Stock Purchase
Warrant as of the date first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /S/ LINDA MOORE
Name: LINDA MOORE
Title: SENIOR VICE PRESIDENT
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EXHIBIT 4.3
COMMON STOCK PURCHASE WARRANT
COMMON STOCK PURCHASE WARRANT issued this 30 day of September, 1997 by MEDICAL
INDUSTRIES OF AMERICA, INC. a Florida corporation (the "Company"), in favor of
Ronald S. Nash (the "Holder").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of brokerage
commissions due Nash, Weiss & Co. ("NWC") pursuant to the terms of that
Confidential Private Placement Memorandum dated June 1, 1997 and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder, as assignee of NWC, the right
to purchase eleven thousand (11,000) shares of the Company's Common Stock, no
par value (the "Shares").
This Warrant shall be exercisable at any time and from time to time
beginning on the date hereof, expiring on September 30, 2000.
2. EXERCISE PRICE. Subject to the terms of paragraph 4(c), the exercise
price per share for which all or any of the Shares may be purchased pursuant to
the terms of this Warrant is one dollar and twenty-five cents ($1.25) (the
"Exercise Price").
3. EXERCISE. This Warrant may be exercised by the Holder hereof as to
all or in increments of one hundred (100) Shares (or the balance of the Shares
if less than such number), upon delivery of written notice of intent to exercise
in the form attached hereto as Exhibit "A" to the Company at the following
address: 1903 South Congress Avenue, Suite 400, Boynton Beach, Florida 33426 or
such other address as the Company shall designate in a written notice to the
Holder hereof, together with this Warrant and a check payable to the Company for
the aggregate Exercise Price of the Shares so purchased. Upon exercise of this
Warrant as aforesaid, the Company shall, as promptly as practicable, and in any
event within fifteen (15) days thereafter, execute and deliver to the Holder of
this Warrant a certificate or certificates for the total number of whole Shares
for which this Warrant is being exercised. If this Warrant shall be exercised
with respect to less than all of the Shares, the Holder shall be entitled to
receive a new Warrant covering the number of Shares in respect of which this
Warrant shall not have been exercised, which new Warrant shall in all other
respects be identical to this Warrant. The Company covenants and agrees that it
will pay when due any and all state and federal issue taxes which may be payable
in respect of the issuance of this Warrant or the issuance of any Shares upon
exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
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(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws (the "Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such Warrant
under the Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel, which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under the Securities
Act or under any applicable Blue Sky Laws. Transfer of the Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as the Warrant and the certificates representing such Shares shall
bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAW SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (II) IN THE OPNION OF COUNSEL ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAW IS
NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.
The Holder agrees to execute such other documents and instruments as counsel for
the Company reasonably deems necessary to effect the compliance of the issuance
of this Warrant and any Shares issued upon exercise hereof with applicable
federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Company shall at all
times reserve and keep available for issuance upon the exercise of this Warrant
such number of authorized but unissued shares of Class B Common Stock as will be
sufficient to permit the exercise in full of this Warrant.
5. TRANSFER OF WARRANT. This Warrant may not be transferred, in whole
or in part. In the event of the death or final determination of legal incapacity
of the Holder during such time as the Holder shall possess the Warrant granted
hereunder, the personal representative of the Holder may, for a period of ninety
(90) days following the date of death or final determination of legal
incapacity, exercise the Warrant to the extent that the Holder was entitled to
exercise the Warrant on such date. Any
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person so desiring to exercise the Warrant shall be required, as a condition to
the exercise of the Warrant, to furnish to the Company such documentation as the
Company shall deem necessary to evidence the authority of such person to
exercise the Warrant on behalf of the Holder.
6. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization, combination of
shares of the Company, or other similar event occurring after the date hereof,
then the Holder exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Holder would have received if this Warrant had been exercised immediately prior
to such stock split, stock dividend, recapitalization, combination of shares, or
other similar event. If any adjustment under this paragraph 6(a) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 6(a), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company or other similar event occurring
after the date hereof, as a result of which shares of common stock shall be
changed into the same or a different number of shares of the same or another
class or classes of securities of the Company or another entity, then the Holder
exercising this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such merger,
consolidation, exchange of shares, separation, reorganization or liquidation, or
other similar event. If any adjustment under this paragraph 6(b) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of Shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 6(b), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
7. ADDITIONAL NOTICES TO WARRANT HOLDERS. In addition to
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any other notice required hereunder, the Company shall provide the Holder with a
copy of any notice that the Company is required to provide those persons holding
shares of the Company's Common Stock, no par value, on the same date such
persons receive such notice.
8. LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this paragraph 8 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrant, shall constitute an original contractual obligation on the part of the
Company.
IN WITNESS WHEREOF, the Company has executed this Stock Purchase
Warrant as of the date first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ PAUL C. PERSHES
Paul C. Pershes, President
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EXHIBIT 4.4
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAW. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE
SECURITIES WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
MEDICAL INDUSTRIES OF AMERICA, INC.
COMMON STOCK PURCHASE WARRANT
MEDICAL INDUSTRIES OF AMERICA, INC., a Florida corporation (the "Company"),
hereby agrees that, for value received, Rene Eichenberger, a Florida
professional association, or its assigns, is entitled, subject to the terms set
forth below, to purchase from the Company at any time or from time to time
before 4:30 p.m., Florida time, on October 1, 1999 forty eight thousand (48,000)
shares of the no par value common stock of the Company, at an exercise price of
$.50 per share, subject to adjustment as provided herein.
1. EXERCISE OF WARRANT. The purchase rights granted by this Warrant shall be
exercised (in minimum quantities of 100 shares) by the holder surrendering this
Warrant with the form of exercise document attached hereto duly executed by such
holder, to the Company at its principal office, accompanied by a check payable
to the order of the Company for the purchase price payable in respect of the
shares being purchased. If less than all of the shares purchasable hereunder are
purchased, the Company will, upon such exercise, execute and deliver to the
holder hereof a new Warrant (dated the date hereof) evidencing the number of
shares not so purchased. As soon as practicable after the exercise of this
Warrant and payment of the purchase price, the Company will cause to be issued
in the name of and delivered to the holder hereof, or as such holder may direct,
a certificate or certificates representing the shares purchased upon such
exercise. The Company may require that such certificate or certificates contain
on the face thereof a legend substantially as follows:
"The transfer of the shares represented by this certificate is
restricted pursuant to the terms of a Common Stock Purchase Warrant
dated February 11, 1998 issued by Medical Industries of America, Inc.,
a copy of which is available for inspection at the offices of Medical
Industries of America, Inc. Transfer may not be made except in
accordance with the terms of the Common Stock Purchase Warrant. In
addition, no sale, offer to sell or transfer of the shares
represented by this certificate shall be made unless a Registration
Statement under the Securities Act of 1933, as amended (the "Act"),
with respect to such shares is then in effect or an exemption from the
registration requirements of the Act is then in fact applicable to such
shares."
<PAGE>
2. NEGOTIABILITY AND TRANSFER. This Warrant is issued upon the following terms,
to which each holder hereof consents and agrees:
(a) Until this Warrant is duly transferred on the books of the Company,
the Company may treat the registered holder of this Warrant as the absolute
owner hereof for all purposes without being affected by any notice to the
contrary.
(b) Each successive holder of this Warrant, or of any portion of the
rights represented thereby, shall be bound by the terms and conditions set forth
herein.
3. ANTI-DILUTION ADJUSTMENTS. If the Company shall at any time hereafter
subdivide or combine its outstanding shares of common stock, or declare a
dividend payable in common stock, the exercise price hereof in effect
immediately prior to the subdivision, combination or record date for such
dividend payable in common stock shall forthwith be proportionately increased,
in the case of combination, or proportionately decreased, in the case of
subdivision or declaration of a dividend payable in common stock, and the number
of shares purchasable upon exercise of this Warrant immediately preceding such
event shall be changed to the number determined by dividing the then current
exercise price by the exercise price as adjusted after such subdivision,
combination or dividend payable in common stock and against the number of shares
purchasable upon the exercise of this Warrant immediately preceding such event,
so as to achieve an exercise price and number of shares purchasable after such
event proportional to such exercise price and number of shares purchasable
immediately preceding such event.
No fractional shares are to be issued upon the exercise of the Warrant, but the
Company shall pay a cash adjustment in respect of any fraction of a share which
would otherwise be issuable in an amount equal to the same fraction of the
market price per share of common stock on the day of exercise as determined in
good faith by the Company.
In case of any capital reorganization or any reclassification of the common
stock of the Company, or in the case of any consolidation with or merger of the
Company into or with another entity or the sale of all or substantially all of
its assets to another entity, which is effected in such a manner that the
holders of common stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for common stock, then, as a part of such
reorganization, reclassification, consolidation, merger or sale, as the case may
be, lawful provision shall be made so that the holder of the Warrant shall have
the right
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thereafter to receive, upon the exercise hereof, the kind and amount of shares
of stock or other securities or property which the holder would have been
entitled to receive if, immediately prior to such reorganization,
reclassification, consolidation, merger or sale, the holder had held the number
of shares which were then purchasable upon the exercise of the Warrant. In any
such case, appropriate adjustment (as determined in good faith by the Board of
Directors of the Company) shall be made in the application of the provisions set
forth herein with respect to the rights and interest thereafter of the holder of
the Warrant, to the end that the provisions set forth herein (including
provisions with respect to adjustments of the exercise price) shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other property thereafter deliverable upon the exercise of the Warrant.
When any adjustment is required to be made in the exercise price, initial or
adjusted, the Company shall forthwith determine the new exercise price, and (a)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the new exercise price, and (b) cause a copy of such
statement to be mailed to the holder of the Warrant as of a date within ten (10)
days after the date when the circumstances giving rise to the adjustment
occurred.
4. REGISTRATION RIGHTS. Prior to making any disposition of the Warrant or of any
shares purchased upon exercise of the Warrant, the holder will give written
notice to the Company describing briefly the manner of any such proposed
disposition. The holder will not make any such disposition until (i) the Company
has notified him that, in the opinion of its counsel, registration under the Act
is not required with respect to such disposition, or (ii) a Registration
Statement covering the proposed distribution has been filed by the Company and
has become effective. The Company agrees that, upon receipt of written notice
from the holder hereof with respect to such proposed distribution, it will use
its best efforts, in consultation with the holder's counsel, to ascertain as
promptly as possible whether or not registration is required, and will advise
the holder promptly with respect thereto, and the holder will cooperate in
providing the Company with information necessary to make such determination.
If, at any time prior to the expiration of three (3) years from the date hereof,
the Company shall propose to file any Registration Statement (other than on
Forms S-4, S-8 or any other similarly inappropriate form of Registration
Statement) under the Act covering a public offering of the Company's securities,
it will notify the holder hereof at least thirty (30) days prior to each such
filing and will include in the Registration Statement (to the extent permitted
by applicable regulation), the shares purchased by the holder or purchasable by
the holder upon the exercise
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of the Warrant to the extent requested by the holder hereof. Notwithstanding the
foregoing, the number of shares of the holder of the Warrant proposed to be
registered thereby shall be reduced pro rata with any other selling shareholder
(other than the Company) upon the reasonable request of the managing underwriter
of such offering. If the Registration Statement filed pursuant to such thirty
(30) day notice has not become effective within six (6) months following the
date such notice is given to the holder hereof, the Company must again notify
such holder in the manner provided above.
At any time prior to the expiration of three (3) years from the date hereof, and
provided that a registration statement on Form S-3 (or its equivalent) is then
available to the Company, and on a one-time basis only, if the holder of the
Warrant and/or the shares acquired upon exercise of the Warrant requests the
registration of the shares on Form S-3 (or its equivalent), the Company shall
promptly thereafter use its best efforts to effect the registration under the
Act of all such shares which such holder requests in writing to be so
registered, and in a manner corresponding to the methods of distribution
described in such holder's request.
All expenses of any such registrations referred to in this Section 4 shall be
borne by the Company.
Upon effectiveness of a Registration Statement which includes common stock
purchased or purchasable upon the exercise of this Warrant in accordance with a
valid demand under this Section 4, the rights under this Warrant of the holders
to make another such demand shall terminate. Each purchaser or transferee of a
portion of this Warrant is responsible to determine whether his or her demand
rights under this paragraph have been terminated by such an exercise. Any
Warrants issued upon transfers subsequent to such an exercise shall have all of
the demand registration provisions under this Section 4 deleted.
The Company will mail to each record holder, at the last known post office
address, written notice of any exercise of the rights granted under this
paragraph 4, by certified or registered mail, return receipt requested, and each
holder shall have twenty (20) days from the date of deposit of such notice in
the U.S. Mail to notify the Company in writing whether such holder wishes to
join in such exercise.
The Company will furnish the holder hereof with a reasonable number of copies of
any prospectus included in such filings and will amend or supplement the same as
required during the period of required use thereof. The Company will maintain,
at its expense, the effectiveness of any Registration Statement filed by the
Company, whether or not at the request of the holder hereof, for at least six
(6) months following the effective date thereof.
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In the case of the filing of any Registration Statement, and to the extent
permissible under the Act and controlling precedent thereunder, the Company and
the holder hereof shall provide cross indemnification agreements to each other
in customary scope covering the accuracy and completeness of the information
furnished by each.
The holder of the Warrant agrees to cooperate with the Company in the
preparation and filing of any such Registration Statement, and in the furnishing
of information concerning the holder for inclusion therein, or in any efforts by
the Company to establish that the proposed sale is exempt under the Act as to
any proposed distribution.
5. RIGHT TO CONVERT.
(a) The holder of this Warrant shall have the right to require the
Company to convert this Warrant (the "Conversion Right") at any time prior to
its expiration, into common stock as provided for in this Section 5. Upon
exercise of the Conversion Right, the Company shall deliver to the holder
(without payment by the holder of any exercise price) that number of shares of
common stock equal to the quotient obtained by dividing (x) the value of the
Warrant at the time the Conversion Right is exercised (determined by subtracting
the exercise price for one Warrant share in effect immediately prior to the
exercise of the Conversion Right from the Fair Market Value (as determined
below) for one Warrant share immediately prior to the exercise of the Conversion
Right) by (y) the Fair Market Value of one share of common stock immediately
prior to the exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the holder, at any time or
from time to time, prior to its expiration, on any business day, by delivering a
written notice (the "Conversion Notice") to the Company at the offices of the
Company exercising the Conversion Right and specifying (i) the total number of
shares of common stock the holder will purchase pursuant to such conversion, and
(ii) a place and a date not less than five (5) nor more than twenty (20)
business days from the date of the Conversion Notice for the closing of such
purchase.
(c) At any closing under Section 5(b) hereof, (i) the holder will
surrender the Warrant, (ii) the Company will deliver to the holder a certificate
or certificates for the number of shares of common stock issuable upon such
conversion, together with cash in lieu of any fraction of a share, and (iii) the
Company will deliver to the holder a new Warrant representing the number of
shares, if any, with respect to which the Warrant shall not have been converted.
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(d) "Fair Market Value" of a share of common stock as of a particular
date (the "Determination Date") shall mean:
(i) If the Company's common stock is traded on an exchange or
is quoted on The Nasdaq National Market or The Nasdaq SmallCap Market, then the
average closing or last sale prices, respectively, reported for the ten (10)
business days immediately preceding the Determination Date.
(ii) If the Company's common stock is not traded on an exchange or
on The Nasdaq National Market or The Nasdaq SmallCap Market, but is traded in
the over-the-counter market, then the average of the closing bid and asked
prices reported for the ten (10) business days immediately preceding the
Determination Date.
(iii) If the Company's common stock is not publicly traded and there
has been a bona fide sale for cash on an arm's-length basis within forty-five
(45) days prior to the Determination Date of such common stock by the Company
privately to one or more investors unaffiliated with the Company (a "Qualifying
Sale"), then the most recent such sales price; and
(iv) If the Company's common stock is not publicly traded and there
has been no Qualifying Sale, then the appraised fair market value of such stock
as determined by mutual agreement of the Company and the holder of the Warrant;
if the parties cannot agree on such valuation, then each of the Company and the
holder shall select an arbitrator and such arbitrators shall select a third, and
such three arbitrators shall determine (in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, such expenses to be
borne equally by the parties) the fair market value (without any discount for
lack of marketability or minority interest) of a share of common stock of the
Company.
6. NOTICES. The Company shall mail to the registered holder of the Warrant, at
his or her last known post office address appearing on the books of the Company,
not less than fifteen (15) days prior to the date on which (a) a record will be
taken for the purpose of determining the holders of common stock entitled to
dividends (other than cash dividends) or subscription rights, or (b) a record
will be taken (or in lieu thereof, the transfer books will be closed) for the
purpose of determining the holders of common stock entitled to notice of and to
vote at a meeting of shareholders at which any capital reorganization,
reclassification of common stock, consolidation, merger, dissolution,
liquidation, winding up or sale of substantially all of the Company's assets
shall be considered and acted upon.
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7. RESERVATION OF COMMON STOCK. A number of shares of common stock sufficient to
provide for the exercise of the Warrant and the shares of common stock included
therein upon the basis herein set forth shall at all times be reserved for the
exercise hereof.
8. MISCELLANEOUS. Whenever reference is made herein to the issue or sale of
shares of common stock, the terms "common stock" or "shares" shall include any
stock of any class of the Company other than preferred stock that has a fixed
limit on dividends and a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
The Company will not, by amendment of its Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Company, but will, at all times in good faith,
assist, insofar as it is able, in the carrying out of all provisions hereof and
in the taking of all other action which may be necessary in order to protect the
rights of the holder hereof against dilution.
Upon written request of the holder of this Warrant, the Company will promptly
provide such holder with a then current written list of the names and addresses
of all holders of warrants originally issued under the terms of, and concurrent
with, this Warrant.
The representations, warranties and agreements herein contained shall survive
the exercise of this Warrant. References to the "holder of" include the
immediate holder of shares purchased on the exercise of this Warrant, and the
word "holder" shall include the plural thereof. This Warrant shall be
interpreted under the laws of the State of Florida.
All shares or other securities issued upon the exercise of the Warrant shall be
validly issued, fully paid and non-assessable, and the Company will pay all
taxes in respect of the issuer hereof.
Notwithstanding anything contained herein to the contrary, the holder of this
Warrant shall not be deemed a shareholder of the Company for any purpose
whatsoever until and unless this Warrant is duly exercised or converted.
IN WITNESS WHEREOF, this Warrant has been duly executed by Medical Industries of
America, as of the 11th day of February 1998.
MEDICAL INDUSTRIES OF AMERICA, INC.
By:/s/ PAUL C. PERSHES
Paul C. Pershes, President
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EXHIBIT 4.5
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAW. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE
SECURITIES WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
MEDICAL INDUSTRIES OF AMERICA, INC.
COMMON STOCK PURCHASE WARRANT
MEDICAL INDUSTRIES OF AMERICA, INC., a Florida corporation (the "Company"),
hereby agrees that, for value received, MIRKIN & WOOLF, P.A., a Florida
professional association, or its assigns, is entitled, subject to the terms set
forth below, to purchase from the Company at any time or from time to time
before 4:30 p.m., Florida time, on February 11, 2001 one hundred thousand
(100,000) shares of the no par value common stock of the Company, at an exercise
price of $1.50 per share, subject to adjustment as provided herein.
1. EXERCISE OF WARRANT. The purchase rights granted by this Warrant shall be
exercised (in minimum quantities of 100 shares) by the holder surrendering this
Warrant with the form of exercise document attached hereto duly executed by such
holder, to the Company at its principal office, accompanied by a check payable
to the order of the Company for the purchase price payable in respect of the
shares being purchased. If less than all of the shares purchasable hereunder are
purchased, the Company will, upon such exercise, execute and deliver to the
holder hereof a new Warrant (dated the date hereof) evidencing the number of
shares not so purchased. As soon as practicable after the exercise of this
Warrant and payment of the purchase price, the Company will cause to be issued
in the name of and delivered to the holder hereof, or as such holder may direct,
a certificate or certificates representing the shares purchased upon such
exercise. The Company may require that such certificate or certificates contain
on the face thereof a legend substantially as follows:
"The transfer of the shares represented by this certificate is
restricted pursuant to the terms of a Common Stock Purchase Warrant
dated February 11, 1998 issued by Medical Industries of America, Inc.,
a copy of which is available for inspection at the offices of Medical
Industries of America, Inc. Transfer may not be made except in
accordance with the terms of the Common Stock Purchase Warrant. In
addition, no sale, offer to sell or transfer of the shares represented
by this certificate shall be made unless a Registration Statement under
the Securities Act of 1933, as amended (the "Act"), with respect to
such shares is then in effect or an exemption from the registration
requirements of the Act is then in fact applicable to such shares."
<PAGE>
2. NEGOTIABILITY AND TRANSFER. This Warrant is issued upon the following terms,
to which each holder hereof consents and agrees:
(a) Until this Warrant is duly transferred on the books of the Company,
the Company may treat the registered holder of this Warrant as the absolute
owner hereof for all purposes without being affected by any notice to the
contrary.
(b) Each successive holder of this Warrant, or of any portion of the
rights represented thereby, shall be bound by the terms and conditions set forth
herein.
3. ANTI-DILUTION ADJUSTMENTS. If the Company shall at any time hereafter
subdivide or combine its outstanding shares of common stock, or declare a
dividend payable in common stock, the exercise price hereof in effect
immediately prior to the subdivision, combination or record date for such
dividend payable in common stock shall forthwith be proportionately increased,
in the case of combination, or proportionately decreased, in the case of
subdivision or declaration of a dividend payable in common stock, and the number
of shares purchasable upon exercise of this Warrant immediately preceding such
event shall be changed to the number determined by dividing the then current
exercise price by the exercise price as adjusted after such subdivision,
combination or dividend payable in common stock and against the number of shares
purchasable upon the exercise of this Warrant immediately preceding such event,
so as to achieve an exercise price and number of shares purchasable after such
event proportional to such exercise price and number of shares purchasable
immediately preceding such event.
No fractional shares are to be issued upon the exercise of the Warrant, but the
Company shall pay a cash adjustment in respect of any fraction of a share which
would otherwise be issuable in an amount equal to the same fraction of the
market price per share of common stock on the day of exercise as determined in
good faith by the Company.
In case of any capital reorganization or any reclassification of the common
stock of the Company, or in the case of any consolidation with or merger of the
Company into or with another entity or the sale of all or substantially all of
its assets to another entity, which is effected in such a manner that the
holders of common stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for common stock, then, as a part of such
reorganization, reclassification, consolidation, merger or sale, as the case may
be, lawful provision shall be made so that the holder of the Warrant shall have
the right
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<PAGE>
thereafter to receive, upon the exercise hereof, the kind and amount
of shares of stock or other securities or property which the holder would have
been entitled to receive if, immediately prior to such reorganization,
reclassification, consolidation, merger or sale, the holder had held the number
of shares which were then purchasable upon the exercise of the Warrant. In any
such case, appropriate adjustment (as determined in good faith by the Board of
Directors of the Company) shall be made in the application of the provisions set
forth herein with respect to the rights and interest thereafter of the holder of
the Warrant, to the end that the provisions set forth herein (including
provisions with respect to adjustments of the exercise price) shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other property thereafter deliverable upon the exercise of the Warrant.
When any adjustment is required to be made in the exercise price, initial or
adjusted, the Company shall forthwith determine the new exercise price, and (a)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the new exercise price, and (b) cause a copy of such
statement to be mailed to the holder of the Warrant as of a date within ten (10)
days after the date when the circumstances giving rise to the adjustment
occurred.
4. REGISTRATION RIGHTS. Prior to making any disposition of the Warrant or of any
shares purchased upon exercise of the Warrant, the holder will give written
notice to the Company describing briefly the manner of any such proposed
disposition. The holder will not make any such disposition until (i) the Company
has notified him that, in the opinion of its counsel, registration under the Act
is not required with respect to such disposition, or (ii) a Registration
Statement covering the proposed distribution has been filed by the Company and
has become effective. The Company agrees that, upon receipt of written notice
from the holder hereof with respect to such proposed distribution, it will use
its best efforts, in consultation with the holder's counsel, to ascertain as
promptly as possible whether or not registration is required, and will advise
the holder promptly with respect thereto, and the holder will cooperate in
providing the Company with information necessary to make such determination.
If, at any time prior to the expiration of three (3) years from the date hereof,
the Company shall propose to file any Registration Statement (other than on
Forms S-4, S-8 or any other similarly inappropriate form of Registration
Statement) under the Act covering a public offering of the Company's securities,
it will notify the holder hereof at least thirty (30) days prior to each such
filing and will include in the Registration Statement (to the extent permitted
by applicable regulation), the shares purchased by the holder or purchasable by
the holder upon the exercise of the Warrant to the extent requested by the
holder hereof. Notwithstanding the foregoing, the number of shares of the holder
of the Warrant proposed to be registered thereby shall be reduced pro rata with
any other selling shareholder (other than the Company) upon the reasonable
request of the managing underwriter of such offering. If the Registration
Statement filed pursuant to such thirty (30) day notice has not become effective
within six (6) months following the date such notice is given to the holder
hereof, the Company must again notify such holder in the manner provided above.
-3-
<PAGE>
At any time prior to the expiration of three (3) years from the date hereof, and
provided that a registration statement on Form S-3 (or its equivalent) is then
available to the Company, and on a one-time basis only, if the holder of the
Warrant and/or the shares acquired upon exercise of the Warrant requests the
registration of the shares on Form S-3 (or its equivalent), the Company shall
promptly thereafter use its best efforts to effect the registration under the
Act of all such shares which such holder requests in writing to be so
registered, and in a manner corresponding to the methods of distribution
described in such holder's request.
All expenses of any such registrations referred to in this Section 4 shall be
borne by the Company.
Upon effectiveness of a Registration Statement which includes common stock
purchased or purchasable upon the exercise of this Warrant in accordance with a
valid demand under this Section 4, the rights under this Warrant of the holders
to make another such demand shall terminate. Each purchaser or transferee of a
portion of this Warrant is responsible to determine whether his or her demand
rights under this paragraph have been terminated by such an exercise. Any
Warrants issued upon transfers subsequent to such an exercise shall have all of
the demand registration provisions under this Section 4 deleted.
The Company will mail to each record holder, at the last known post office
address, written notice of any exercise of the rights granted under this
paragraph 4, by certified or registered mail, return receipt requested, and each
holder shall have twenty (20) days from the date of deposit of such notice in
the U.S. Mail to notify the Company in writing whether such holder wishes to
join in such exercise.
The Company will furnish the holder hereof with a reasonable number of copies of
any prospectus included in such filings and will amend or supplement the same as
required during the period of required use thereof. The Company will maintain,
at its expense, the effectiveness of any Registration Statement filed by the
Company, whether or not at the request of the holder hereof, for at least six
(6) months following the effective date thereof.
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<PAGE>
In the case of the filing of any Registration Statement, and to the extent
permissible under the Act and controlling precedent thereunder, the Company and
the holder hereof shall provide cross indemnification agreements to each other
in customary scope covering the accuracy and completeness of the information
furnished by each.
The holder of the Warrant agrees to cooperate with the Company in the
preparation and filing of any such Registration Statement, and in the furnishing
of information concerning the holder for inclusion therein, or in any efforts by
the Company to establish that the proposed sale is exempt under the Act as to
any proposed distribution.
5. RIGHT TO CONVERT.
(a) The holder of this Warrant shall have the right to require the
Company to convert this Warrant (the "Conversion Right") at any time prior to
its expiration, into common stock as provided for in this Section 5. Upon
exercise of the Conversion Right, the Company shall deliver to the holder
(without payment by the holder of any exercise price) that number of shares of
common stock equal to the quotient obtained by dividing (x) the value of the
Warrant at the time the Conversion Right is exercised (determined by subtracting
the exercise price for one Warrant share in effect immediately prior to the
exercise of the Conversion Right from the Fair Market Value (as determined
below) for one Warrant share immediately prior to the exercise of the Conversion
Right) by (y) the Fair Market Value of one share of common stock immediately
prior to the exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the holder, at any time or
from time to time, prior to its expiration, on any business day, by delivering a
written notice (the "Conversion Notice") to the Company at the offices of the
Company exercising the Conversion Right and specifying (i) the total number of
shares of common stock the holder will purchase pursuant to such conversion, and
(ii) a place and a date not less than five (5) nor more than twenty (20)
business days from the date of the Conversion Notice for the closing of such
purchase.
(c) At any closing under Section 5(b) hereof, (i) the holder will
surrender the Warrant, (ii) the Company will deliver to the holder a certificate
or certificates for the number of shares of common stock issuable upon such
conversion, together with cash in lieu of any fraction of a share, and (iii) the
Company will deliver to the holder a new Warrant representing the number of
shares, if any, with respect to which the Warrant shall not have been converted.
-5-
<PAGE>
(d) "Fair Market Value" of a share of common stock as of a particular
date (the "Determination Date") shall mean:
(i) If the Company's common stock is traded on an exchange or
is quoted on The Nasdaq National Market or The Nasdaq SmallCap Market, then the
average closing or last sale prices, respectively, reported for the ten (10)
business days immediately preceding the Determination Date.
(ii) If the Company's common stock is not traded on an exchange or
on The Nasdaq National Market or The Nasdaq SmallCap Market, but is traded in
the over-the-counter market, then the average of the closing bid and asked
prices reported for the ten (10) business days immediately preceding the
Determination Date.
(iii) If the Company's common stock is not publicly traded and there
has been a bona fide sale for cash on an arm's-length basis within forty-five
(45) days prior to the Determination Date of such common stock by the Company
privately to one or more investors unaffiliated with the Company (a "Qualifying
Sale"), then the most recent such sales price; and
(iv) If the Company's common stock is not publicly traded and there
has been no Qualifying Sale, then the appraised fair market value of such stock
as determined by mutual agreement of the Company and the holder of the Warrant;
if the parties cannot agree on such valuation, then each of the Company and the
holder shall select an arbitrator and such arbitrators shall select a third, and
such three arbitrators shall determine (in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, such expenses to be
borne equally by the parties) the fair market value (without any discount for
lack of marketability or minority interest) of a share of common stock of the
Company.
6. NOTICES. The Company shall mail to the registered holder of the Warrant, at
his or her last known post office address appearing on the books of the Company,
not less than fifteen (15) days prior to the date on which (a) a record will be
taken for the purpose of determining the holders of common stock entitled to
dividends (other than cash dividends) or subscription rights, or (b) a record
will be taken (or in lieu thereof, the transfer books will be closed) for the
purpose of determining the holders of common stock entitled to notice of and to
vote at a meeting of shareholders at which any capital reorganization,
reclassification of common stock, consolidation, merger, dissolution,
liquidation, winding up or sale of substantially all of the Company's assets
shall be considered and acted upon.
-6-
<PAGE>
7. RESERVATION OF COMMON STOCK. A number of shares of common stock sufficient to
provide for the exercise of the Warrant and the shares of common stock included
therein upon the basis herein set forth shall at all times be reserved for the
exercise hereof.
8. MISCELLANEOUS. Whenever reference is made herein to the issue or sale of
shares of common stock, the terms "common stock" or "shares" shall include any
stock of any class of the Company other than preferred stock that has a fixed
limit on dividends and a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
The Company will not, by amendment of its Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Company, but will, at all times in good faith,
assist, insofar as it is able, in the carrying out of all provisions hereof and
in the taking of all other action which may be necessary in order to protect the
rights of the holder hereof against dilution.
Upon written request of the holder of this Warrant, the Company will promptly
provide such holder with a then current written list of the names and addresses
of all holders of warrants originally issued under the terms of, and concurrent
with, this Warrant.
The representations, warranties and agreements herein contained shall survive
the exercise of this Warrant. References to the "holder of" include the
immediate holder of shares purchased on the exercise of this Warrant, and the
word "holder" shall include the plural thereof. This Warrant shall be
interpreted under the laws of the State of Florida.
All shares or other securities issued upon the exercise of the Warrant shall be
validly issued, fully paid and non-assessable, and the Company will pay all
taxes in respect of the issuer hereof.
Notwithstanding anything contained herein to the contrary, the holder of this
Warrant shall not be deemed a shareholder of the Company for any purpose
whatsoever until and unless this Warrant is duly exercised or converted.
IN WITNESS WHEREOF, this Warrant has been duly executed by Medical Industries of
America, as of the 11th day of February, 1998.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ PAUL C. PERSHES
Paul C. Pershes, President
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<PAGE>
EXHIBIT 4.6
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND
HAS BEEN ISSUED IN RELIANCE UPON REGULATION D PROMULGATED UNDER THE SECURITIES
ACT. THIS WARRANT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN
OFFER TO BUY THE WARRANT IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL.
THIS WARRANT MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND UNDER PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS.
NO. 4
COMMON STOCK PURCHASE WARRANT
To Purchase 100,000 Shares of Common Stock of
MEDICAL INDUSTRIES OF AMERICA, INC.
THIS CERTIFIES that, for value received, J.W. GENESIS
FINANCIAL SERVICES CAPITAL MARKETS (the "Investor"), is entitled, upon the terms
and subject to the conditions hereinafter set forth, from July 30, 1998 (the
"Issuance Date"), on or prior to July 29, 2001 (the "Termination Date") but not
thereafter, to subscribe for and purchase from MEDICAL INDUSTRIES OF AMERICA,
INC., a corporation incorporated in the State of Florida (the "Company"), One
Hundred Thousand (100,000) shares (the "Warrant Shares") of Common Stock, no par
value per share of the Company (the "Common Stock"). The purchase price of one
share of Common Stock (the "Exercise Price") under this Warrant shall be
US$2.50. The Exercise Price and the number of shares for which the Warrant is
exercisable shall be subject to adjustment as provided herein. This Warrant is
being issued in connection with the 6% Convertible Debenture Subscription
Agreement dated on or about July 30, 1998 (the "Agreement"), and is subject to
its terms and conditions. In the event of any conflict between the terms of this
Warrant and the Agreement, the Agreement shall control.
1. TITLE OF WARRANT. Prior to the expiration hereof and
subject to compliance with applicable laws, this Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.
<PAGE>
2. AUTHORIZATION OF SHARES. The Company covenants that all
shares of Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights represented by
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).
3. EXERCISE OF WARRANT. Exercise of the purchase rights
represented by this Warrant may be made at any time after the Issuance Date and
before the close of business on the Termination Date, or such earlier date on
which this Warrant may terminate as provided in this Warrant, by the surrender
of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at
the office of the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered holder hereof at the
address of such holder appearing on the books of the Company) and upon payment
of the Exercise Price of the shares thereby purchased; whereupon the holder of
this Warrant shall be entitled to receive a certificate for the number of shares
of Common Stock so purchased. Certificates for Warrant Shares purchased
hereunder shall be delivered to the holder hereof within three (3) business days
after the date on which this Warrant shall have been exercised as aforesaid.
Payment of the Exercise Price of the shares may be by certified check or
cashier's check or by wire transfer to an account designated by the Company in
an amount equal to the Exercise Price multiplied by the number of Warrant
Shares.
4. NO FRACTIONAL SHARES OR SCRIP/RESTRICTIONS ON EXERCISE. No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for
shares of Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued in
the name of the holder of this Warrant or in such name or names as may be
directed by the holder of this Warrant; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that upon any transfer
involved in the issuance or delivery of any certificates for shares of Common
Stock, the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6. CLOSING OF BOOKS. The Company will not close its
shareholder books or records in any manner which prevents the timely exercise of
this Warrant for a period of time in excess of five (5) trading days per year.
7. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does
not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company prior to the exercise thereof. Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
so purchased shall be and be deemed to be issued to such holder as the record
owner of such shares as of the close of business on the later of the date of
such surrender or payment.
2
<PAGE>
8. ASSIGNMENT AND TRANSFER OF WARRANT. Subject to compliance
with applicable law, this Warrant may be assigned by the surrender of this
Warrant and the Assignment Form annexed hereto duly executed at the office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered holder hereof at the address of such
holder appearing on the books of the Company).
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The
Company represents and warrants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant certificate or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon surrender and cancellation of such
Warrant or stock certificate, if mutilated, the Company will make and deliver a
new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a legal holiday.
11. EFFECT OF CERTAIN EVENTS. If at any time the Company
proposes (i) to sell or otherwise convey all or substantially all of its assets
or (ii) to effect a transaction (by merger or otherwise) in which more than 50%
of the voting power of the Company is disposed of (collectively, a "Sale or
Merger Transaction"), in which the consideration to be received by the Company
or its shareholders consists solely of cash, or in case the Company shall at any
time effect a sale or merger transaction in which the consideration to be
received by the Company or its shareholders consists in part of consideration
other than cash, the holder of this Warrant shall have the right thereafter to
purchase, by exercise of this Warrant and payment of the aggregate Exercise
Price in effect immediately prior to such action, the kind and amount of shares
and other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this Warrant
been exercised immediately prior thereto.
12. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following:
<PAGE>
In case the Company shall (i) declare or pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) issue any shares of its capital
stock in a reclassification of the Common Stock, then the number of Warrant
Shares purchasable upon exercise of this Warrant immediately prior thereto shall
be adjusted so that the holder of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the holder of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per such Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at
any time during the term of this Warrant, reduce the then current Exercise Price
to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.
14. NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall promptly mail by registered or certified mail, return receipt
requested, to the holder of this Warrant notice of such adjustment or
adjustments setting forth the number of Warrant Shares (and other securities or
property) purchasable upon the exercise of this Warrant and the Exercise Price
of such Warrant Shares (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such notice, in
absence of manifest error, shall be conclusive evidence of the correctness of
such adjustment.
15. AUTHORIZED SHARES. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable action within its control as may be
necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the NASDAQ Small Cap Stock Market or any domestic securities exchange upon which
the Common Stock may be listed.
<PAGE>
16. "PIGGY-BACK" REGISTRATION. In addition to the terms of the
Registration Rights Agreement of even date herewith, and to the extent the
Warrant Shares are not previously registered pursuant to the Registration Rights
Agreement, the Company agrees that the Warrant Shares shall be included in the
Registration Statement to be filed by the Company pursuant to the Agreement and
the aforementioned Registration Rights Agreement. In addition to the
aforementioned, and the terms of the Registration Rights Agreement, the Holders
of this Warrant shall have the right to include all Warrant Shares as part of
any registration of securities filed by the Company (other than in connection
with a transaction contemplated by Rule 145(a) promulgated under the Act or
pursuant to Form S-8) and must be notified in writing of such filing; PROVIDED,
HOWEVER, that the holder of this Warrant agrees it shall not have any piggy-back
registration rights pursuant to this Warrant if the Warrant Shares may be sold
in the United States pursuant to the provisions of Rule 144 without limitation.
The Holder shall have five (5) business days after receipt of the aforementioned
notice form the Company to notify the Company in writing as to whether the
Company is to include Holder or not include Holder as part of the registration;
PROVIDED, HOWEVER, that if any registration pursuant to this Section shall be
underwritten, in whole or in part, the Company may require that the Registrable
Securities requested for inclusion pursuant to this Section be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If in the good faith judgment of the underwriter
evidenced in writing of such offering only a limited number of Registrable
Securities should be included in such offering, or no such shares should be
included, the Holder, and all other selling stockholders, shall be limited to
registering such proportion of their respective shares as shall equal the
proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. Those Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section (and all other
Registrable Securities held by the selling stockholders) shall be withheld from
the market by the Holders thereof for a period, not to exceed ninety (90) days,
which the underwriter may reasonably determine is necessary in order to effect
such underwritten offering. All registration expenses incurred by the Company in
complying with this Warrant shall be paid by the Company, exclusive of
underwriting discounts, commissions and legal fees and expenses for counsel to
the holders of the Warrants.
17. MISCELLANEOUS.
(a) ISSUE DATE; JURISDICTION. The provisions of this Warrant
shall be construed and shall be given effect in all respects as if it had been
issued and delivered by the Company on the date hereof. This Warrant shall be
binding upon any successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of Florida without regard to its conflict
of law, principles or rules. This Warrant will be construed and enforced in
accordance with and governed by the laws of the state of Florida, except for
matters arising under the Securities Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction of the State
of Florida in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on FORUM NON CONVENIENS, to the bringing of any such proceeding
in such jurisdictions. Each party hereby agrees that if another party to this
Warrant obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the courts of any
state or country having jurisdiction over the party against whom such judgment
was obtained, and each party hereby waives any defenses available to it under
local law and agrees to the enforcement of such a judgment. Each party to this
Warrant irrevocably consents to the service of process in any such proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law.
<PAGE>
(b) RESTRICTIONS. The holder hereof acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant, if not registered, or
if no exemption from registration exists, will have restrictions upon resale
imposed by state and federal securities laws. Each certificate representing the
Warrant Shares (if not registered, or if no exemption from registration exists)
issued to the Holder upon exercise will bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISITERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE
BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION".
(c) MODIFICATION AND WAIVER. This Warrant and any provisions
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof by the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: July 23, 1998
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ PAUL C. PERSHES
Name: Paul C. Pershes, President
Title: President
<PAGE>
EXHIBIT 4.7
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAW. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE
SECURITIES WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
MEDICAL INDUSTRIES OF AMERICA, INC.
COMMON STOCK PURCHASE WARRANT
MEDICAL INDUSTRIES OF AMERICA, INC., a Florida corporation (the "Company"),
hereby agrees that, for value received, SANDS BROTHERS & CO., LTD., or its
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company at any time or from time to time before 4:30 p.m., Florida time, on
September 30, 2003 five hundred thousand (500,000) shares of the common stock of
the Company, at an exercise price of $0.625 per share, subject to adjustment as
provided herein.
1. EXERCISE OF WARRANT. The purchase rights granted by this Warrant shall be
exercised (in minimum quantities of 100 shares) by the holder surrendering this
Warrant with the form of exercise document attached hereto duly executed by such
holder, to the Company at its principal office, accompanied by a check payable
to the order of the Company for the purchase price payable in respect of the
shares being purchased. If less than all of the shares purchasable hereunder are
purchased, the Company will, upon such exercise, execute and deliver to the
holder hereof a new Warrant (dated the date hereof) evidencing the number of
shares not so purchased. As soon as practicable after the exercise of this
Warrant and payment of the purchase price, the Company will cause to be issued
in the name of and delivered to the holder hereof, or as such holder may direct,
a certificate or certificates representing the shares purchased upon such
exercise. The Company may require that such certificate or certificates contain
on the face thereof a legend substantially as follows:
"The transfer of the shares represented by this certificate is
restricted pursuant to the terms of a Common Stock Purchase Warrant
dated September 30, 1998 issued by Medical Industries of America, Inc.,
a copy of which is available for inspection at the offices of Medical
Industries of America, Inc. Transfer may not be made except in
accordance with the terms of the Common Stock Purchase Warrant. In
addition, no sale, offer to sell or transfer of the shares represented
by this certificate shall be made unless a Registration Statement under
the Securities Act of 1933, as amended (the "Act"), with respect to
such shares is then in effect or an exemption from the registration
requirements of the Act is then in fact applicable to such shares."
<PAGE>
2. NEGOTIABILITY AND TRANSFER. This Warrant is issued upon the following terms,
to which each holder hereof consents and agrees:
(a) Until this Warrant is duly transferred on the books of the Company,
the Company may treat the registered holder of this Warrant as the absolute
owner hereof for all purposes without being affected by any notice to the
contrary.
(b) Each successive holder of this Warrant, or of any portion of the
rights represented thereby, shall be bound by the terms and conditions set forth
herein.
3. ANTI-DILUTION ADJUSTMENTS. If the Company shall at any time hereafter
subdivide or combine its outstanding shares of common stock, or declare a
dividend payable in common stock, the exercise price hereof in effect
immediately prior to the subdivision, combination or record date for such
dividend payable in common stock shall forthwith be proportionately increased,
in the case of combination, or proportionately decreased, in the case of
subdivision or declaration of a dividend payable in common stock, and the number
of shares purchasable upon exercise of this Warrant immediately preceding such
event shall be changed to the number determined by dividing the then current
exercise price by the exercise price as adjusted after such subdivision,
combination or dividend payable in common stock and against the number of shares
purchasable upon the exercise of this Warrant immediately preceding such event,
so as to achieve an exercise price and number of shares purchasable after such
event proportional to such exercise price and number of shares purchasable
immediately preceding such event.
No fractional shares are to be issued upon the exercise of the Warrant, but the
Company shall pay a cash adjustment in respect of any fraction of a share which
would otherwise be issuable in an amount equal to the same fraction of the
market price per share of common stock on the day of exercise as determined in
good faith by the Company.
In case of any capital reorganization or any reclassification of the common
stock of the Company, or in the case of any consolidation with or merger of the
Company into or with another entity or the sale of all or substantially all of
its assets to another entity, which is effected in such a manner that the
holders of common stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for common stock, then, as a part of such
reorganization, reclassification, consolidation, merger or sale, as the case may
be, lawful provision shall be made so that the holder of the Warrant shall have
the right thereafter to receive, upon the exercise hereof, the kind and amount
of shares of stock or other securities or property which the holder would have
been entitled to receive if, immediately prior to such reorganization,
reclassification, consolidation, merger or sale, the holder had held the number
of shares which were then purchasable upon the exercise of the Warrant. In any
such case, appropriate adjustment (as determined in good faith by the Board of
Directors of the Company) shall be made in the application of the provisions set
forth herein with respect to the rights and interest thereafter of the holder of
the Warrant, to the end that the provisions set forth herein (including
provisions with respect to adjustments of the exercise price) shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other property thereafter deliverable upon the exercise of the Warrant.
-2-
<PAGE>
When any adjustment is required to be made in the exercise price, initial or
adjusted, the Company shall forthwith determine the new exercise price, and (a)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the new exercise price, and (b) cause a copy of such
statement to be mailed to the holder of the Warrant as of a date within ten (10)
days after the date when the circumstances giving rise to the adjustment
occurred.
4. REGISTRATION RIGHTS. Prior to making any disposition of the Warrant or of any
shares purchased upon exercise of the Warrant, the holder will give written
notice to the Company describing briefly the manner of any such proposed
disposition. The holder will not make any such disposition until (i) the Company
has notified him that, in the opinion of its counsel, registration under the Act
is not required with respect to such disposition, or (ii) a Registration
Statement covering the proposed distribution has been filed by the Company and
has become effective. The Company agrees that, upon receipt of written notice
from the holder hereof with respect to such proposed distribution, it will use
its best efforts, in consultation with the holder's counsel, to ascertain as
promptly as possible whether or not registration is required, and will advise
the holder promptly with respect thereto, and the holder will cooperate in
providing the Company with information necessary to make such determination.
If, at any time prior to the expiration of three (3) years from the date hereof,
the Company shall propose to file any Registration Statement (other than on
Forms S-4, S-8 or any other similarly inappropriate form of Registration
Statement) under the Act covering a public offering of the Company's securities,
it will notify the holder hereof at least thirty (30) days prior to each such
filing and will include in the Registration Statement (to the extent permitted
by applicable regulation), the shares purchased by the holder or purchasable by
the holder upon the exercise of the Warrant to the extent requested by the
holder hereof. Notwithstanding the foregoing, the number of shares of the holder
of the Warrant proposed to be registered thereby shall be reduced pro rata with
any other selling shareholder (other than the Company) upon the reasonable
request of the managing underwriter of such offering. If the Registration
Statement filed pursuant to such thirty (30) day notice has not become effective
within six (6) months following the date such notice is given to the holder
hereof, the Company must again notify such holder in the manner provided above.
-3-
<PAGE>
At any time prior to the expiration of five (5) years from the date hereof, and
provided that a registration statement on Form S-3 (or its equivalent) is then
available to the Company, and on a one-time basis only, if the holder of the
Warrant and/or the shares acquired upon exercise of the Warrant requests the
registration of the shares on Form S-3 (or its equivalent), the Company shall
promptly thereafter use its best efforts to effect the registration under the
Act of all such shares which such holder requests in writing to be so
registered, and in a manner corresponding to the methods of distribution
described in such holder's request.
All expenses of any such registrations referred to in this Section 4 shall be
borne by the Company.
Upon effectiveness of a Registration Statement which includes common stock
purchased or purchasable upon the exercise of this Warrant in accordance with a
valid demand under this Section 4, the rights under this Warrant of the holders
to make another such demand shall terminate. Each purchaser or transferee of a
portion of this Warrant is responsible to determine whether his or her demand
rights under this paragraph have been terminated by such an exercise. Any
Warrants issued upon transfers subsequent to such an exercise shall have all of
the demand registration provisions under this Section 4 deleted.
The Company will mail to each record holder, at the last known post office
address, written notice of any exercise of the rights granted under this
paragraph 4, by certified or registered mail, return receipt requested, and each
holder shall have twenty (20) days from the date of deposit of such notice in
the U.S. Mail to notify the Company in writing whether such holder wishes to
join in such exercise.
The Company will furnish the holder hereof with a reasonable number of copies of
any prospectus included in such filings and will amend or supplement the same as
required during the period of required use thereof. The Company will maintain,
at its expense, the effectiveness of any Registration Statement filed by the
Company, whether or not at the request of the holder hereof, for at least six
(6) months following the effective date thereof.
In the case of the filing of any Registration Statement, and to the extent
permissible under the Act and controlling precedent thereunder, the Company and
the holder hereof shall provide cross indemnification agreements to each other
in customary scope covering the accuracy and completeness of the information
furnished by each.
-4-
<PAGE>
The holder of the Warrant agrees to cooperate with the Company in the
preparation and filing of any such Registration Statement, and in the furnishing
of information concerning the holder for inclusion therein, or in any efforts by
the Company to establish that the proposed sale is exempt under the Act as to
any proposed distribution.
5. NOTICES. The Company shall mail to the registered holder of the Warrant, at
his or her last known post office address appearing on the books of the Company,
not less than fifteen (15) days prior to the date on which (a) a record will be
taken for the purpose of determining the holders of common stock entitled to
dividends (other than cash dividends) or subscription rights, or (b) a record
will be taken (or in lieu thereof, the transfer books will be closed) for the
purpose of determining the holders of common stock entitled to notice of and to
vote at a meeting of shareholders at which any capital reorganization,
reclassification of common stock, consolidation, merger, dissolution,
liquidation, winding up or sale of substantially all of the Company's assets
shall be considered and acted upon.
6. RESERVATION OF COMMON STOCK. A number of shares of common stock sufficient to
provide for the exercise of the Warrant and the shares of common stock included
therein upon the basis herein set forth shall at all times be reserved for the
exercise hereof.
7. MISCELLANEOUS. Whenever reference is made herein to the issue or sale of
shares of common stock, the terms "common stock" or "shares" shall include any
stock of any class of the Company other than preferred stock that has a fixed
limit on dividends and a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
The Company will not, by amendment of its Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Company, but will, at all times in good faith,
assist, insofar as it is able, in the carrying out of all provisions hereof and
in the taking of all other action which may be necessary in order to protect the
rights of the holder hereof against dilution.
Upon written request of the holder of this Warrant, the Company will promptly
provide such holder with a then current written list of the names and addresses
of all holders of warrants originally issued under the terms of, and concurrent
with, this Warrant.
-5-
<PAGE>
The representations, warranties and agreements herein contained shall survive
the exercise of this Warrant. References to the "holder of" include the
immediate holder of shares purchased on the exercise of this Warrant, and the
word "holder" shall include the plural thereof. This Warrant shall be
interpreted under the laws of the State of Florida.
All shares or other securities issued upon the exercise of the Warrant shall be
validly issued, fully paid and non-assessable, and the Company will pay all
taxes in respect of the issuer hereof.
Notwithstanding anything contained herein to the contrary, the holder of this
Warrant shall not be deemed a shareholder of the Company for any purpose
whatsoever until and unless this Warrant is duly exercised or converted.
IN WITNESS WHEREOF, this Warrant has been duly executed by Medical Industries of
America, as of the 30th day of September 1998.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ MICHAEL F. MORRELL
Name: MICHAEL F. MORRELL
Title: CEO
-6-
<PAGE>
EXHIBIT 4.8
THE REGISTERED HOLDER OF THIS WARRANT, BY ITS
ACEPTANCE HEREOF, AGREES THAT IT WILL NOT
SELL, TRANSFER OR ASSIGN THIS WARRANT
EXCEPT AS HEREIN PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME, NOVEMBER 30, 2002
WARRANT
FOR THE PURCHASE OF
150,000 SHARES OF COMMON STOCK
OF
MEDICAL INDUSTRIES OF AMERICA, INC.
1. WARRANT.
THIS CERTIFIES THAT, in consideration of $10.00 and other good and
valuable consideration, duly paid by or on behalf of Southeast Research
Partners, Inc. ("Holder"), as registered owner of this Warrant, to Medical
Industries of America, Inc. ("Company"), Holder is entitled, at any time or from
time to time at or after December 1, 1998 ("Commencement Date"), and at or
before 5:00 p.m., Eastern Time November 30, 2002 ("Expiration Date"), but not
thereafter, to subscribe for, purchase and receive, in whole or in part, up to
One Hundred Fifty Thousand (150,000) shares of Common Stock of the Company,
without par value ("Common Stock"). If the Expiration Date is a day on which
banking institutions are authorized by law to close, then this Warrant may be
exercised on the next succeeding day which is not such a day in accordance with
the terms herein. During the period ending on the Expiration Date, the Company
agrees not to take any action that would terminate the Warrant. This Warrant is
initially exercisable at $2.00 per share of Common Stock purchased; provided,
however, that upon the occurrence of any of the events specified in Section 6
hereof, the rights granted by this Warrant, including the exercise price and the
number of shares of Common Stock to be received upon such exercise, shall be
adjusted as therein specified. The term "Exercise Price" shall mean the initial
exercise price or the adjusted exercise price, depending on the context, of a
share of Common Stock. The term "Securities" shall mean the shares of Common
Stock issuable upon exercise of this Warrant.
2. EXERCISE.
2.1 EXERCISE FORM. In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased. If the subscription rights represented hereby shall
not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
2.2 LEGEND. Each certificate for Securities purchased under this
Warrant shall bear a legend as follows, unless such Securities have been
registered under the Securities Act of 1933, as amended ("Act"):
<PAGE>
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act") or
applicable state law. The securities may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act and applicable state law."
2.3 INTENTIONALLY OMITTED
3. TRANSFER.
3.1 GENERAL RESTRICTIONS. The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone except upon compliance with, or pursuant to
exemptions from, applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form attached
hereto duly executed and completed, together with this Warrant and payment of
all transfer taxes, if any, payable in connection therewith. The Company shall
immediately transfer this Warrant on the books of the Company and shall execute
and deliver a new Warrant or Warrants of like tenor to the appropriate
assignee(s) expressly evidencing the right to purchase the aggregate number of
shares of Common Stock purchasable hereunder or such portion of such number as
shall be contemplated by any such assignment.
3.2 RESTRICTIONS IMPOSED BY THE SECURITIES ACT. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (i)
the Company has received the opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the Act,
and applicable state law, the availability of which is established to the
reasonable satisfaction of the Company, or (ii) a registration statement
relating to such Securities has been filed by the Company and declared effective
by the Securities and Exchange Commission and compliance with applicable state
law.
4. NEW WARRANTS TO BE ISSUED.
4.1 PARTIAL EXERCISE OR TRANSFER. Subject to the restrictions in
Section 3 hereof, this Warrant may be exercised or assigned in whole or in part.
In the event of the exercise or assignment hereof in part only, upon surrender
of this Warrant for cancellation, together with the duly executed exercise or
assignment form and funds sufficient to pay any Exercise Price and/or transfer
tax, the Company shall cause to be delivered to the Holder without charge a new
Warrant of like tenor to this Warrant in the name of the Holder evidencing the
right of the Holder to purchase the aggregate number of shares of Common Stock
and Warrants purchasable hereunder as to which this Warrant has not been
exercised or assigned.
4.2 LOST CERTIFICATE. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of reasonably satisfactory indemnification, the Company shall execute and
deliver a new Warrant of like tenor and date. Any such new Warrant executed and
delivered as a result of such loss, theft, mutilation or destruction shall
constitute a substitute contractual obligation on the part of the Company.
2
<PAGE>
5. REGISTRATION RIGHTS.
5.1 "PIGGY-BACK" REGISTRATION.
5.1.1 GRANT OF RIGHT. The Holders of this Warrant shall have
the right for a period of seven years from the Commencement Date to include all
or any part of this Warrant and the shares of Common Stock underlying this
Warrant (collectively, the "Registrable Securities") as part of any registration
of securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8 or
any equivalent form); provided, however, that if, in the written opinion of the
Company's managing underwriter or underwriters, if any, for such offering (the
"Underwriter"), the inclusion of the Registrable Securities, when added to the
securities being registered by the Company or the selling stockholder(s), will
exceed the maximum amount of the Company's securities which can be marketed (i)
at a price reasonably related to their then current market value, or (ii)
without materially and adversely affecting the entire offering, the Company
shall nevertheless register all or any portion of the Registrable Securities
required to be so registered but such Registrable Securities shall not be sold
by the Holders until 90 days after the registration statement for such offering
has become effective; and provided further that, if any securities are
registered for sale on behalf of other stockholders in such offering and such
stockholders have not agreed to defer such sale until the expiration of such 90
day period, the number of securities to be sold by all stockholders in such
public offering during such 90 day period shall be apportioned pro rata among
all such selling stockholders, including all holders of the Registrable
Securities, according to the total amount of securities of the Company proposed
to be sold by said selling stockholders, including all holders of the
Registrable Securities.
5.1.2 TERMS. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, including any filing fees
payable to the National Association of Securities Dealers, Inc., but the Holders
shall pay any and all underwriting commissions and the expenses of any legal
counsel selected by the Holders to represent them in connection with the sale of
the Registrable Securities. In the event of such a proposed registration, the
Company shall furnish the then Holders of outstanding Registrable Securities
with not less than thirty days written notice prior to the proposed date of
filing of such registration statement. Such notice to the Holders shall continue
to be given for each registration statement filed by the Company until such time
as all of the Registrable Securities have been sold by the Holder. The holders
of the Registrable Securities shall exercise the "piggy-back" rights provided
for herein by giving written notice, within twenty days of the receipt of the
Company's notice of its intention to file a registration statement. The Company
shall cause any registration statement filed pursuant to the above "piggyback"
rights to remain effective until all Registrable Securities thereunder have been
sold, or are freely saleable, without restriction, under an exemption from the
registration requirements. Nothing contained in this Warrant shall be construed
as requiring any Holder to exercise this Warrant or any part thereof prior to
the initial filing of any registration statement or the effectiveness thereof.
3
<PAGE>
5.2 GENERAL TERMS
5.2.1 INDEMNIFICATION.
(a) The Company shall indemnify the Holder(s) of the
Registrable Securities to be sold pursuant to any registration statement
hereunder and any underwriter or person deemed to be an underwriter under the
Act and each person, if any, who controls such Holders or underwriters or
persons deemed to be underwriters within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from such registration statement. The Holder(s) of the Registrable Securities to
be sold pursuant to such registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, against all
loss, claim, damage, expense or liability (including all reasonable attorneys'
fees and other expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may become subject under
the Act, the Exchange Act or otherwise, arising from information furnished by or
on behalf of such Holders, in writing, for specific inclusion in such
registration statement.
(b) If any action is brought against a party hereto,
("Indemnified Party") in respect of which indemnity may be sought against the
other party ("Indemnifying Party"), such Indemnified Party shall promptly notify
Indemnifying Party in writing of the institution of such action and Indemnifying
Party shall assume the defense of such action, including the employment and fees
of counsel reasonably satisfactory to the Indemnified Party. Such Indemnified
Party shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the employment of such counsel shall have been
authorized in writing by Indemnifying Party in connection with the defense of
such action, or (ii) Indemnifying Party shall not have employed counsel to
defend such action, or (iii) such Indemnified Party shall have been advised by
counsel that there may be one or more legal defenses available to it which may
result in a conflict between the Indemnified Party and Indemnifying Party (in
which case Indemnifying Party shall not have the right to direct the defense of
such action on behalf of the Indemnified Party), in any of which events, the
reasonable fees and expenses of not more than one additional firm of attorneys
designated in writing by the Indemnified Party shall be borne by Indemnifying
Party. Notwithstanding anything to the contrary contained herein, if Indemnified
Party shall assume the defense of such action as provided above, Indemnifying
Party shall not be liable for any settlement of any such action effected without
its written consent.
(c) If the indemnification or reimbursement provided
for hereunder is finally judicially determined by a court of competent
jurisdiction to be unavailable to an Indemnified Party (other than as a
consequence of a final judicial determination of willful misconduct, bad faith
or gross negligence of such Indemnified Party), then Indemnifying Party agrees,
in lieu of indemnifying such Indemnified Party, to contribute to the amount paid
or payable by such Indemnified Party (i) in such proportion as is appropriate to
reflect the relative benefits received, or sought to be received, by
Indemnifying Party on the one hand and by such Indemnified Party on the other or
(ii) if (but only if) the allocation provided in clause (i) of this sentence is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in such clause (i) but also the
relative fault of Indemnifying Party and of such Indemnified Party; provided,
however, that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the underlying shares of Common
Stock.
4
<PAGE>
(d) The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
5.2.2 EXERCISE OF WARRANTS. Nothing contained in this Warrant
shall be construed as requiring the Holder(s) to exercise their Warrants prior
to or after the initial filing of any registration statement or the
effectiveness thereof.
5.2.3 DOCUMENTS DELIVERED TO HOLDERS. The Company shall
furnish to each Holder participating in any of the foregoing offerings and to
each Underwriter of any such offering, if any, a signed counterpart, addressed
to such Holder or Underwriter, of (i) an opinion of counsel to the Company,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the date
of the closing under any underwriting agreement related thereto), and (ii) a
"cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. Such investigation shall include access
to books, records and properties and opportunities to discuss the business of
the Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder shall
reasonably request.
6. ADJUSTMENTS
6.1 ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES. The
Exercise Price and the number of shares of Common Stock underlying this Warrant
shall be subject to adjustment from time to time as hereinafter set forth:
6.1.1 STOCK DIVIDENDS - RECAPITALIZATION, RECLASSIFICATION,
SPLIT-UPS. If, after the date hereof, and subject to the provisions of Section
6.2 below, the number of outstanding shares of Common Stock is increased by a
stock dividend on the Common Stock payable in shares of Common Stock or by a
split-up, recapitalization or reclassification of shares of Common Stock or
other similar event, then, on the effective date thereof, the number of shares
of Common Stock issuable on exercise of this Warrant shall be increased in
proportion to such increase in outstanding shares.
5
<PAGE>
6.1.2 AGGREGATION OF SHARES. If after the date hereof, and
subject to the provisions of Section 6.3, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, upon the effective date
thereof, the number of shares of Common Stock issuable on exercise of this
Warrant shall be decreased in proportion to such decrease in outstanding shares.
6.1.3 ADJUSTMENTS IN EXERCISE PRICE. Whenever the number of
shares of Common Stock purchasable upon the exercise of this Warrant is
adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted
(to the nearest cent) by multiplying such Exercise Price immediately prior to
such adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.
6.1.4 REPLACEMENT OF SECURITIES UPON REORGANIZATION, ETC. In
case of any reclassification or reorganization of the outstanding shares of
Common Stock other than a change covered by Section 6.1.1 hereof or which solely
affects the par value of such shares of Common Stock, or in the case of any
merger or consolidation of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or in the case of any sale or
conveyance to another corporation or entity of the property of the Company as an
entirety or substantially as an entirety in connection with which the Company is
dissolved, the Holder of this Warrant shall have the right thereafter (until the
expiration of the right of exercise of this Warrant) to receive upon the
exercise hereof, for the same aggregate Exercise Price payable hereunder
immediately prior to such event, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or other transfer, by a Holder of the number of shares of Common Stock
of the Company obtainable upon exercise of this Warrant immediately prior to
such event; and if any reclassification also results in a change in shares of
Common Stock covered by Sections 6.1.1 or 6.1.2, then such adjustment shall be
made pursuant to Sections 6.1.1, 6.1.2, 6.1.3 and this Section 6.1.4. The
provisions of this Section 6.1.4 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
6.1.5 CHANGES IN FORM OF WARRANT. This form of Warrant need
not be changed because of any change pursuant to this Section, and Warrants
issued after such change may state the same Exercise Price and the same number
of shares of Common Stock and Warrants as are stated in the Warrants initially
issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Warrants reflecting a required or permissive change shall not be deemed
to waive any rights to a prior adjustment or the computation thereof.
6.2 ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of this Warrant, nor shall it be required to issue scrip or
pay cash in lieu of any fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
6
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7. RESERVATION AND LISTING. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder.
As long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon exercise of the
Warrants to be listed (subject to official notice of issuance) on all securities
exchanges (or, if applicable on Nasdaq) on which the Common Stock is then listed
and/or quoted.
8. CERTAIN NOTICE REQUIREMENTS.
8.1 HOLDER'S RIGHT TO RECEIVE NOTICE. Nothing herein shall be construed
as conferring upon the Holders the right to vote or consent or to receive notice
as a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days prior to
the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of the closing of the transfer books, as
the case may be.
8.2 EVENTS REQUIRING NOTICE. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution, or (ii)
the Company shall offer to all the holders of its Common Stock any additional
shares of capital stock of the Company or securities convertible into or
exchangeable for shares of capital stock of the Company, or any option, right or
warrant to subscribe therefor, or (iii) a merger or reorganization in which the
Company is not the surviving party, or (iv) a dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property, assets and
business shall be proposed.
8.3 NOTICE OF CHANGE IN EXERCISE PRICE. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send notice to the Holders of such event and change ("Price Notice").
The Price Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company's President and Chief Financial Officer.
7
<PAGE>
8.4 TRANSMITTAL OF NOTICES. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, or overnight private
mail courier, return receipt requested, postage prepaid and properly addressed
as follows: (i) if to the registered Holder of this Warrant, to the address of
such Holder as shown on the books of the Company, or (ii) if to the Company, to
its principal executive office.
9. MISCELLANEOUS.
9.1 HEADINGS. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.
9.2 ENTIRE AGREEMENT. This Warrant (together with the other agreements
and documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
9.3 BINDING EFFECT. This Warrant shall inure solely to the benefit of
and shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.
9.4 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Warrant shall be
governed by and construed and enforced in accordance with the law of the State
of New York, without giving effect to conflict of laws. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Warrant shall be brought and enforced in the courts
of the State of New York or of the United States of America for the Southern
District of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum. Any
process or summons to be served upon the Company may be served by transmitting a
copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
9.5 WAIVER, ETC. The failure of the Company or the Holder to at any
time enforce any of the provisions of this Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Warrant or any provision hereof or the right of the Company or
any Holder to thereafter enforce each and every provision of this Warrant. No
waiver of any breach, non-compliance or non-fulfillment of any of the provisions
of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach,
8
<PAGE>
non-compliance or non-fulfillment shall be construed or deemed to be a waiver of
any other or subsequent breach, non-compliance or non-fulfillment.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the 1st day of December, 1997.
Medical Industries of America, Inc.
By: /s/ PAUL C. PERSHES
Name: Paul C. Pershes
Title: President
9
<PAGE>
EXHIBIT 4.9
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND
HAS BEEN ISSUED IN RELIANCE UPON REGULATION D PROMULGATED UNDER THE SECURITIES
ACT. THIS WARRANT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN
OFFER TO BUY THE WARRANT IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL.
THIS WARRANT MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND UNDER PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS.
NO. 2
COMMON STOCK PURCHASE WARRANT
To Purchase 50,010 Shares of Common Stock of
MEDICAL INDUSTRIES OF AMERICA, INC.
THIS CERTIFIES that, for value received, DOMINION CAPITAL
FUND, LTD. (the "Investor"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, from July 30, 1998 (the "Issuance Date"), on
or prior to July 29, 2001 (the "Termination Date") but not thereafter, to
subscribe for and purchase from MEDICAL INDUSTRIES OF AMERICA, INC., a
corporation incorporated in the State of Florida (the "Company"), Fifty Thousand
Ten (50,010) shares (the "Warrant Shares") of Common Stock, no par value per
share of the Company (the "Common Stock"). The purchase price of one share of
Common Stock (the "Exercise Price") under this Warrant shall be US$2.50. The
Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. This Warrant is being issued
in connection with the 6% Convertible Debenture Subscription Agreement dated on
or about July 30, 1998 (the "Agreement"), and is subject to its terms and
conditions. In the event of any conflict between the terms of this Warrant and
the Agreement, the Agreement shall control.
1. TITLE OF WARRANT. Prior to the expiration hereof and
subject to compliance with applicable laws, this Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.
<PAGE>
2. AUTHORIZATION OF SHARES. The Company covenants that all
shares of Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights represented by
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).
3. EXERCISE OF WARRANT. Exercise of the purchase rights
represented by this Warrant may be made at any time after the Issuance Date and
before the close of business on the Termination Date, or such earlier date on
which this Warrant may terminate as provided in this Warrant, by the surrender
of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at
the office of the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered holder hereof at the
address of such holder appearing on the books of the Company) and upon payment
of the Exercise Price of the shares thereby purchased; whereupon the holder of
this Warrant shall be entitled to receive a certificate for the number of shares
of Common Stock so purchased. Certificates for Warrant Shares purchased
hereunder shall be delivered to the holder hereof within three (3) business days
after the date on which this Warrant shall have been exercised as aforesaid.
Payment of the Exercise Price of the shares may be by certified check or
cashier's check or by wire transfer to an account designated by the Company in
an amount equal to the Exercise Price multiplied by the number of Warrant
Shares.
4. NO FRACTIONAL SHARES OR SCRIP/RESTRICTIONS ON EXERCISE. No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for
shares of Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued in
the name of the holder of this Warrant or in such name or names as may be
directed by the holder of this Warrant; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that upon any transfer
involved in the issuance or delivery of any certificates for shares of Common
Stock, the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6. CLOSING OF BOOKS. The Company will not close its
shareholder books or records in any manner which prevents the timely exercise of
this Warrant for a period of time in excess of five (5) trading days per year.
7. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does
not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company prior to the exercise thereof. Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
so purchased shall be and be deemed to be issued to such holder as the record
owner of such shares as of the close of business on the later of the date of
such surrender or payment.
2
<PAGE>
8. ASSIGNMENT AND TRANSFER OF WARRANT. Subject to compliance
with applicable law, this Warrant may be assigned by the surrender of this
Warrant and the Assignment Form annexed hereto duly executed at the office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered holder hereof at the address of such
holder appearing on the books of the Company).
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The
Company represents and warrants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant certificate or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon surrender and cancellation of such
Warrant or stock certificate, if mutilated, the Company will make and deliver a
new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a legal holiday.
11. EFFECT OF CERTAIN EVENTS. If at any time the Company
proposes (i) to sell or otherwise convey all or substantially all of its assets
or (ii) to effect a transaction (by merger or otherwise) in which more than 50%
of the voting power of the Company is disposed of (collectively, a "Sale or
Merger Transaction"), in which the consideration to be received by the Company
or its shareholders consists solely of cash, or in case the Company shall at any
time effect a sale or merger transaction in which the consideration to be
received by the Company or its shareholders consists in part of consideration
other than cash, the holder of this Warrant shall have the right thereafter to
purchase, by exercise of this Warrant and payment of the aggregate Exercise
Price in effect immediately prior to such action, the kind and amount of shares
and other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this Warrant
been exercised immediately prior thereto.
12. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following:
<PAGE>
In case the Company shall (i) declare or pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) issue any shares of its capital
stock in a reclassification of the Common Stock, then the number of Warrant
Shares purchasable upon exercise of this Warrant immediately prior thereto shall
be adjusted so that the holder of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the holder of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per such Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at
any time during the term of this Warrant, reduce the then current Exercise Price
to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.
14. NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall promptly mail by registered or certified mail, return receipt
requested, to the holder of this Warrant notice of such adjustment or
adjustments setting forth the number of Warrant Shares (and other securities or
property) purchasable upon the exercise of this Warrant and the Exercise Price
of such Warrant Shares (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such notice, in
absence of manifest error, shall be conclusive evidence of the correctness of
such adjustment.
15. AUTHORIZED SHARES. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable action within its control as may be
necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the NASDAQ Small Cap Stock Market or any domestic securities exchange upon which
the Common Stock may be listed.
16. "PIGGY-BACK" REGISTRATION. In addition to the terms of the
Registration Rights Agreement of even date herewith, and to the extent the
Warrant Shares are not previously registered pursuant to the Registration Rights
Agreement, the Company agrees that the Warrant Shares shall be included in the
Registration Statement to be filed by the Company pursuant to the Agreement and
the aforementioned Registration Rights Agreement. In addition to the
aforementioned, and the terms of the Registration Rights Agreement, the Holders
of this Warrant shall have the right to include all Warrant Shares as part of
any registration of securities filed by
<PAGE>
the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Act or pursuant to Form S-8) and must be notified
in writing of such filing; PROVIDED, HOWEVER, that the holder of this Warrant
agrees it shall not have any piggy-back registration rights pursuant to this
Warrant if the Warrant Shares may be sold in the United States pursuant to the
provisions of Rule 144 without limitation. The Holder shall have five (5)
business days after receipt of the aforementioned notice form the Company to
notify the Company in writing as to whether the Company is to include Holder or
not include Holder as part of the registration; PROVIDED, HOWEVER, that if any
registration pursuant to this Section shall be underwritten, in whole or in
part, the Company may require that the Registrable Securities requested for
inclusion pursuant to this Section be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. If in the good faith judgment of the underwriter evidenced in
writing of such offering only a limited number of Registrable Securities should
be included in such offering, or no such shares should be included, the Holder,
and all other selling stockholders, shall be limited to registering such
proportion of their respective shares as shall equal the proportion that the
number of shares of selling stockholders permitted to be registered by the
underwriter in such offering bears to the total number of all shares then held
by all selling stockholders desiring to participate in such offering. Those
Registrable Securities which are excluded from an underwritten offering pursuant
to the foregoing provisions of this Section (and all other Registrable
Securities held by the selling stockholders) shall be withheld from the market
by the Holders thereof for a period, not to exceed ninety (90) days, which the
underwriter may reasonably determine is necessary in order to effect such
underwritten offering. All registration expenses incurred by the Company in
complying with this Warrant shall be paid by the Company, exclusive of
underwriting discounts, commissions and legal fees and expenses for counsel to
the holders of the Warrants.
17. MISCELLANEOUS.
(a) ISSUE DATE; JURISDICTION. The provisions of this Warrant
shall be construed and shall be given effect in all respects as if it had been
issued and delivered by the Company on the date hereof. This Warrant shall be
binding upon any successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of Florida without regard to its conflict
of law, principles or rules. This Warrant will be construed and enforced in
accordance with and governed by the laws of the state of Florida, except for
matters arising under the Securities Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction of the State
of Florida in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on FORUM NON CONVENIENS, to the bringing of any such proceeding
in such jurisdictions. Each party hereby agrees that if another party to this
Warrant obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the courts of any
state or country having jurisdiction over the party against whom such judgment
was obtained, and each party hereby waives any defenses available to it under
local law and agrees to the enforcement of such a judgment. Each party to this
Warrant irrevocably consents to the service of process in any such proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law.
<PAGE>
(b) RESTRICTIONS. The holder hereof acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant, if not registered, or
if no exemption from registration exists, will have restrictions upon resale
imposed by state and federal securities laws. Each certificate representing the
Warrant Shares (if not registered, or if no exemption from registration exists)
issued to the Holder upon exercise will bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISITERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE
BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAW,
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION".
(c) MODIFICATION AND WAIVER. This Warrant and any provisions
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof by the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: July 23, 1998
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ PAUL C. PERSHES
Name: Paul C. Pershes, President
Title: President
<PAGE>
EXHIBIT 4.10
COMMON STOCK PURCHASE WARRANT
COMMON STOCK PURCHASE WARRANT issued this 8 day of November, 1997 by MEDICAL
INDUSTRIES OF AMERICA, INC., a Florida corporation (the "Company"), in favor of
Isaac Winehouse (the "Holder").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder the right to purchase one
hundred twenty five thousand (125,000) shares of the Company's Common Stock, no
par value (the "Shares").
This Warrant shall be exercisable at any time and from time to time
beginning on the date hereof, expiring on November 8, 1999.
2. EXERCISE PRICE. Subject to the terms of paragraph 4(c), the exercise
price per share for which all or any of the Shares may be purchased pursuant to
the terms of this Warrant is three dollars ($3.00) (the "Exercise Price").
3. EXERCISE. This Warrant may be exercised by the Holder hereof as to
all or in increments of one hundred (100) Shares (or the balance of the Shares
if less than such number), upon delivery of written notice of intent to exercise
in the form attached hereto as Exhibit "A" to the Company at the following
address: 1903 South Congress Avenue, Suite 400, Boynton Beach, Florida 33426 or
such other address as the Company shall designate in a written notice to the
Holder hereof, together with this Warrant and a check payable to the Company for
the aggregate Exercise Price of the Shares so purchased. Upon exercise of this
Warrant as aforesaid, the Company shall, as promptly as practicable, and in any
event within fifteen (15) days thereafter, execute and deliver to the Holder of
this Warrant a certificate or certificates for the total number of whole Shares
for which this Warrant is being exercised. If this Warrant shall be exercised
with respect to less than all of the Shares, the Holder shall be entitled to
receive a new Warrant covering the number of Shares in respect of which this
Warrant shall not have been exercised, which new Warrant shall in all other
respects be identical to this Warrant. The Company covenants and agrees that it
will pay when due any and all state and federal issue taxes which may be payable
in respect of the issuance of this Warrant or the issuance of any Shares upon
exercise of this Warrant.
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<PAGE>
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws (the "Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such Warrant
under the Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel, which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under the Securities
Act or under any applicable Blue Sky Laws. Transfer of the Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as the Warrant and the certificates representing such Shares shall
bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAW SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (II) IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAW IS
NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.
The Holder agrees to execute such other documents and instruments as counsel for
the Company reasonably deems necessary to effect the compliance of the issuance
of this Warrant and any Shares issued upon exercise hereof with applicable
federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Company shall at all
times reserve and keep available for issuance upon the exercise of this Warrant
such number of authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant.
-2-
<PAGE>
5. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization, combination of
shares of the Company, or other similar event occurring after the date hereof,
then the Holder exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Holder would have received if this Warrant had been exercised immediately prior
to such stock split, stock dividend, recapitalization, combination of shares, or
other similar event. If any adjustment under this paragraph 5(a) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 5(a), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company or other similar event occurring
after the date hereof, as a result of which shares of common stock shall be
changed into the same or a different number of shares of the same or another
class or classes of securities of the Company or another entity, then the Holder
exercising this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such merger,
consolidation, exchange of shares, separation, reorganization or liquidation, or
other similar event. If any adjustment under this paragraph 5(b) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of Shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 5(b), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
6. ADDITIONAL NOTICES TO WARRANT HOLDERS. In addition to any other
notice required hereunder, the Company shall provide the Holder with a copy of
any notice that the Company is required to provide those persons holding shares
of the Company's Common Stock, no par value, on the same date such persons
receive such notice.
7. LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this paragraph 7 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrant, shall constitute an original contractual obligation on the part of the
Company.
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<PAGE>
IN WITNESS WHEREOF, the Company has executed this Stock Purchase
Warrant as of the date first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ PAUL C. PERSHES
Paul C. Pershes, President
-4-
<PAGE>
EXHIBIT 4.11
COMMON STOCK PURCHASE WARRANT
COMMON STOCK PURCHASE WARRANT issued this 8 day of November, 1997 by MEDICAL
INDUSTRIES OF AMERICA, INC., a Florida corporation (the "Company"), in favor of
Sholom Weiss (the "Holder").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder the right to purchase one
hundred twenty five thousand (125,000) shares of the Company's Common Stock, no
par value (the "Shares").
This Warrant shall be exercisable at any time and from time to time
beginning on the date hereof, expiring on November 8, 1999.
2. EXERCISE PRICE. Subject to the terms of paragraph 4(c), the exercise
price per share for which all or any of the Shares may be purchased pursuant to
the terms of this Warrant is three dollars ($3.99) (the "Exercise Price").
3. EXERCISE. This Warrant may be exercised by the Holder hereof as to all
or in increments of one hundred (100) Shares (or the balance of the Shares if
less than such number), upon delivery of written notice of intent to exercise in
the form attached hereto as Exhibit "A" to the Company at the following address:
1903 South Congress Avenue, Suite 400, Boynton Beach, Florida 33426 or such
other address as the Company shall designate in a written notice to the Holder
hereof, together with this Warrant and a check payable to the Company for the
aggregate Exercise Price of the Shares so purchased. Upon exercise of this
Warrant as aforesaid, the Company shall, as promptly as practicable, and in any
event within fifteen (15) days thereafter, execute and deliver to the Holder of
this Warrant a certificate or certificates for the total number of whole Shares
for which this Warrant is being exercised. If this Warrant shall be exercised
with respect to less than all of the Shares, the Holder shall be entitled to
receive a new Warrant covering the number of Shares in respect of which this
Warrant shall not have been exercised, which new Warrant shall in all other
respects be identical to this Warrant. The Company covenants and agrees that it
will pay when due any and all state and federal issue taxes which may be payable
in respect to the issuance of this Warrant or the issuance of any Shares upon
exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered under
the Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws (the "Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such Warrant
under the Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel, which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under the Securities
Act or under any applicable Blue Sky Laws. Transfer of the Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as the Warrant and the certificates representing such Shares shall
bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES
LAW SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE ACT
OR SUCH APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN CONNECTION WITH
THE PROPOSED TRANSFER.
The Holder agrees to execute such other documents and instruments as counsel for
the Company reasonably deems necessary to effect the compliance of the issuance
of this Warrant and any Shares issued upon exercise hereof with applicable
federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment therefor,
be legally and validly issued and outstanding, fully paid and nonassessable,
free from all taxes, liens, charges and preemptive rights, if any, with respect
thereto or to the issuance thereof. The Company shall at all times reserve and
keep available for issuance upon the exercise of this Warrant such number of
authorized but unissued shares of Class B Common Stock as will be sufficient to
permit the exercise in full of this Warrant.
5. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization, combination of
shares of the Company, or other similar event occurring after the date hereof,
then the Holder exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Holder would have received if this Warrant had been exercised immediately prior
to such stock split, stock dividend, recapitalization, combination of shares, or
other similar event. If any adjustment under this paragraph 5(a) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 5(a), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company or other similar event occurring
after the date hereof, as a result of which shares of common stock shall be
changed into the same or a different number of shares of the same or another
class or classes of securities of the Company or another entity, then the Holder
exercising this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such merger,
consolidation, exchange of shares, separation, reorganization or liquidation or
other similar event. If any adjustment under this paragraph 5(b) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of Shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this paragraph 6(b), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
6. ADDITIONAL NOTICES TO WARRANT HOLDERS. In addition to any other notice
required hereunder, the Company shall provide the Holder with a copy of any
notice that the Company is required to provide those persons holding shares of
the Company's Common Stock, no par value, on the same date such persons receive
such notice.
7. LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this paragraph 7 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrant, shall constitute an original contractual obligation on the part of the
Company.
IN WITNESS WHEREOF, the Company has executed this Stock Purchase Warrant
as of the date first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /S/ PAUL C. PERSHES
Paul C. Pershes, President
<PAGE>
EXHIBIT 4.12
MEDICAL INDUSTRIES OF AMERICA, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
AMENDED
AGREEMENT, dated this 18th day of June, 1997 by Medical Industries of
America, Inc. (the "Company") in favor of State Street Securities, Inc. (the
"Optionee").
WHEREAS, pursuant to a Fee Agreement, dated June 18, 1997 (the "Fee
Agreement") between the Company and the Optionee, the Company has agreed to
issue to the Optionee options to purchase shares of common stock of the Company,
as consideration of investment banking services already or to be provided;
NOW, THEREFORE, the Company, by its execution hereof, and the Optionee, by
its acceptance hereof, agree as follows:
1. The Optionee is granted the option to purchase from the Company,
subject to the terms and conditions set forth in this agreement, all or any part
of 350,000 shares of the Company's Common Stock, no par value (the "Common
Stock") of the Company at the following purchase prices: 100,000 shares at
$1.50, 100,000 shares at $2.00, 75,000 shares at $2.50 and 75,000 shares at
$3.50. All of such options to purchase such shares shall be treated as
non-qualified stock options.
2. This option shall be immediately exercisable, in whole or in part. This
option shall terminate on December 31, 2002, and any shares not purchased on or
before such date may not thereafter be purchased hereunder.
3. Shares purchased pursuant to this Agreement shall be paid for in full
in cash at the time of purchase. Upon receipt of payment the Company shall,
without stock transfer tax to the Optionee or other person entitled to exercise
the option, deliver to the person exercising the option a certificate or
certificated for such shares. It shall be a condition to the performance of the
Company's obligation to issue or transfer Common Stock upon exercise of this
option that the holder of the option pay, or make provision satisfactory to the
Company for the payment of, any taxes (other than stock transfer taxes) which
the Company is obligated to collect with respect to the issue or transfer of
Common Stock upon exercise.
4. The Optionee shall have no rights as a stockholder with respect to any
shares issuable or transferable upon exercise hereof until the date of exercise
and the exercise price is paid. Except as otherwise expressly provided herein,
or in the fee agreement mentioned above no adjustment shall be made for
dividends or other rights for which the records date is prior to the date such
stock certificate is issued.
5. This option is not transferable or assignable otherwise than as
consented to in writing by the Company, except to officers, directors or
shareholders of the Company.
6. The number of shares deliverable upon the exercise thereafter of this
option shall be increased proportionately, based on any stock split or dividend,
as the case may be, without change in the aggregate purchase price or per share
price. All adjustments for the fiscal year shall be made as of the day such
action necessitating such adjustment becomes effective.
7. In case the Company is merged or consolidated with another corporation,
or in case the property or stock of the Company is acquired by another
corporation, or in the case of a separation, reorganization, or liquidation of
the Company, the Board of Directors of the Company, or the Board of Directors of
any corporation assuming the obligations of the Company hereunder, shall either
(I) make appropriate provisions for the protection of this option by the
substitution on an equitable basis of appropriate stock of the Company, or
appropriate stock of the merged, consolidated, or otherwise reorganized
corporation, or (II) give written notice to the Optionee that this option must
be exercised prior to the later of 60 days after the date of such notice and the
effective date of such merger, consolidation or other transaction or this option
will be terminated.
8. The Optionee is entitled to certain piggy-back registration rights with
respect to the shares issuable hereunder as well as potential demand
registration rights set forth in the Fee Agreement.
9. The Company shall not be obligated to sell or issue any shares of
Common Stock in any manner in contravention of the Securities Act of 1933, as
amended, or any federal and state securities laws. The Board of Directors may,
at any time, require as a condition to the exercise of this option that the
shares issuable upon exercise of this option be acquired for investment purposes
only and that the certificate therefore contain a legend restricting transfer.
The Company represents and warrants that the shares underlying the
options received by the Company are duly authorized, fully paid for and
non-assessable and said shares shall be legally and validly issued and
non-assessable.
10. All notices hereunder shall be in writing, and if to the Company,
shall be delivered personally to the Secretary of the Company or mailed to it's
principal office, addressed to the attention of the Secretary, and if to the
Optionee, shall be delivered personally to the Secretary of the Optionee or
mailed to its principal office, addressed to the attention of the Secretary.
Such address may be changed at any time by notice from one party to the other.
11. This agreement shall bind and inure to the benefit of the parties
hereto and the successors and assigns of the Company and the successors of the
Optionee.
12. This Agreement shall be governed and construed in accordance with the
laws of the State of Florida, without giving effect to rules governing the
conflict of laws.
IN WITNESS WHEREOF, the Company has executed this Agreement as of the day
and year first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By:/S/ PAUL C. PERSHES
Paul C. Pershes, President
EXHIBIT 4.12 - PART 2
MODIFICATION AGREEMENT
AGREEMENT dated the 19th day of June 1997 by and between Medical
Industries of America (hereinafter referred to as the "Company") and State
Street Securities, Inc. (hereinafter referred to as the "Optionee").
WHEREAS, the Company and Optionee have entered into a certain
Non-Qualified Stock Option Agreement dated June 18, 1997 by and between the
Company and Optionee whereby pursuant to a certain fee Agreement dated June 18,
1997 by and between the Company and State Street Securities, Inc., the Company
had agreed to issue to the Optionee options to purchase shares of common stock
of the Company;
WHEREAS, the parties desire to amend the above referenced agreement in
order to change the exercise price of certain options granted under the above
stated agreement;
NOW, in consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby covenant
and agree as follows:
Paragraph 1 of the Non-Qualified Stock Option Agreement by and between
the Company and Optionee dated June 18, 1997 shall now read as follows:
1. The Optionee is granted the option to purchase form the Company,
subject to the terms and conditions set forth in this agreement, all or
any part of 350,000 shares of the Company's Common Stock, no par value
(the "Common Stock") of the Company at the following purchase prices:
100,000 shares at $ 1.50, 100,000 shares at $ 2.00, and 150,000 shares
at $ 2.50. All of such options to purchase such shares shall be treated
as non-qualified stock options.
IN WITNESS WHEREOF, the parties have affixed their signatures to this
Agreement on the date above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /S/ PAUL C. PERSHES
Paul C. Pershes, President
State Street Securities, Inc.
By: /S/ EDWARD GIBSTEIN
Edward Gibstein, President
<PAGE>
EXHIBIT 4.13
NO. 3 $1,750,000 USD
MEDICAL INDUSTRIES OF AMERICA, INC.
CONVERTIBLE A DEBENTURE DUE JULY 29, 2001
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND
HAS BEEN ISSUED IN RELIANCE UPON REGULATION D PROMULGATED UNDER THE SECURITIES
ACT. THIS DEBENTURE SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF
AN OFFER TO BUY THE DEBENTURE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THIS DEBENTURE MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND UNDER PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS.
THIS CONVERTIBLE A DEBENTURE is one of a duly authorized issue of
Convertible A Debentures of Medical Industries of America, Inc., a corporation
duly organized and existing under the laws of the State of Florida (the
"ISSUER"), issued on July 30, 1998 (the "Issuance Date"), and designated as its
Convertible A Debenture due July 29, 2001, in an aggregate face amount not
exceeding Three Million (USD$3,000,000) Dollars.
This Debenture has been issued under the terms and provisions of the
6% Convertible Debenture Subscription Agreement dated as of July 30, 1998
between the ISSUER and HOLDER (the "Agreement") and shall be subject to all of
the terms and conditions and entitled to all of the benefits thereof.
FOR VALUE RECEIVED, the ISSUER promises to pay to
SOVEREIGN PARTNERS LIMITED PARTNERSHIP
the registered holder hereof or its registered assigns, if any (the
"HOLDER"), the principal sum of:
ONE MILLION SEVEN HUNDRED FIFTY THOUSAND
United States Dollars,
on July 29, 2001 (the "Maturity Date"), and to pay interest, as outlined below,
at the rate of six (6%) percent per annum on the principal sum outstanding for
the term of this Debenture. Accrual of interest shall commence on the date
hereof. Interest shall be payable by the ISSUER, at its option, in cash or in
that number of shares of common stock of the Company (the "Common Stock") (at a
price per share calculated pursuant to the conversion formula contained below),
semiannually commencing January 29, 1999, and every six months thereafter that
this Debenture remains outstanding; provided, however, that any shares of Common
Stock so delivered must be either (i) registered at such time for resale under
the Securities Act, or (ii) otherwise resalable under the Securities Act without
restriction to limitation under Rule 144. The interest so payable will be paid
to the person in whose name this Debenture (or one or more predecessor
Debentures) is registered on the records of the ISSUER regarding registration
and transfers of the Debenture (the "Debenture Register"), provided, however,
that the ISSUER'S obligation to a transferee of this Debenture arises only if
such transfer, sale or other disposition is made in accordance with the terms
and conditions contained in the Agreement. The principal of this Debenture is
payable as provided below in shares of Common Stock at any time prior to the
Maturity Date, or upon Redemption or the HOLDER exercising its conversion rights
set forth below. In the event this Debenture is outstanding on the Maturity Date
it shall automatically be converted into freely tradable shares of Common Stock
(as set forth above) as if the HOLDER voluntarily elected such conversion in
accordance with the procedures, terms and conditions set forth in this
Debenture, PROVIDED, that (i) the Common Stock is listed on the Nasdaq Small Cap
Stock Market, (ii) the closing bid price of the Common Stock is greater than One
($1.00) Dollar for the ten (10) Trading Days immediately preceding the Maturity
Date, (iii) there has not been any suspension in the trading of the Common Stock
on the Nasdaq Small Cap Stock Market during the thirty (30) Trading Days
immediately preceding the Maturity Date, and the (iv) the ISSUER has been in
compliance in all material respects with the terms and conditions of this
Debenture and the Agreement. In the event all of the aforementioned conditions
are not satisfied, or the ISSUER is not able to issue freely tradable shares of
Common Stock as set forth above, the ISSUER agrees to pay to the HOLDER, in
cash, within three (3) Trading Days of the Maturity Date, the dollar value of
the number of shares of Common Stock issuable to the HOLDER as if the HOLDER had
exercised its conversion rights on the Maturity Date, multiplied by the closing
bid price of the Common Stock on the Maturity Date. Principal and interest are
payable at the address last appearing on the Debenture Register as designated in
writing by the HOLDER hereof from time to time.
The Debenture is subject to the following additional provisions:
1. The Debenture is exchangeable for like Debentures in equal
aggregate principal amount of authorized denominations, as requested by the
HOLDER surrendering the same. No service charge will be made for such
registration or transfer or exchange, although the HOLDER shall be responsible
for its own expenses associated with complying with the restrictions on transfer
of the Debenture in the Agreement.
2. The ISSUER shall be entitled to withhold from all payments of
principal of this Debenture any amounts required to be withheld under the
applicable provisions of the U.S. Internal Revenue Code of 1986, as amended, or
other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment
representations of the original HOLDER hereof and may be transferred or
exchanged in the United States only in compliance with the Securities Act and
applicable state securities laws and in compliance with the restrictions on
transfer provided in the Agreement. Prior to the due presentment for such
transfer of this Debenture, the ISSUER and any agent of the ISSUER may treat the
person in whose name this Debenture is duly registered on the Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
all other purposes, whether or not this Debenture is overdue, and neither the
ISSUER nor any such agent shall be affected by notice to the contrary. The
transferee shall be bound, as the original HOLDER by the same representations
and terms described herein and under the Agreement.
4. The HOLDER is entitled, at its option, at any time after the
Issuance Date, to convert this Debenture, in whole or in part, in accordance
with the following terms and conditions:
(a) The HOLDER may exercise its right to convert the Debenture
by telecopying an executed and completed notice of conversion (the "Notice
of Conversion") to the ISSUER and delivering the original Notice of
Conversion and the original Debenture to the ISSUER by express courier.
Each business date on which a Notice of Conversion is telecopied to and
received by the ISSUER in accordance with the provisions hereof shall be
deemed a "Conversion Date". The ISSUER will transmit the certificates
representing shares of Common Stock issuable upon conversion of the
Debenture (together with the certificates representing the Debenture not
so converted) to the HOLDER via express courier, by electronic transfer
(if applicable) or otherwise within three business days after the
Conversion Date if the ISSUER has received the original Notice of
Conversion and Debenture being so converted by such date. In addition to
any other remedies which may be available to the HOLDER, in the event that
the ISSUER fails to effect delivery of such shares of Common Stock within
such three business day period, the HOLDER will be entitled to revoke the
Notice of Conversion by delivering a notice to such effect to the ISSUER
whereupon the ISSUER and the HOLDER shall each be restored to their
respective positions immediately prior to delivery of the Notice of
Conversion. The Notice of Conversion and Debenture representing the
portion of the Debenture converted shall be delivered as follows:
To the ISSUER: Medical Industries of America, Inc.
1903 South Congress Avenue, Suite 400
Boynton Beach, Florida 33426
Attention: Michael F, Morrell
Facsimile: (561) 737-2227
Telephone: (561) 737-5008
In the event that the Common Stock issuable upon conversion of the
Debenture is not delivered, within three (3) business days of receipt by
the ISSUER of a valid Notice of Conversion and the Debenture to be
converted, the ISSUER shall pay to the HOLDER, in immediately available
funds, upon demand, as liquidated damages for such failure and not as a
penalty, for each $100,000 principal amount of Debenture sought to be
converted, $500 for each of the first ten (10) days and $1,000 per day
thereafter that the shares of Common Stock are not delivered, which
liquidated damages shall run from the fourth business day after the
Conversion Date up until the time that either the Conversion Notice is
revoked or the Common Stock is delivered, at which time such liquidated
damages shall cease. Any and all payments required pursuant to this
paragraph shall be payable only in cash immediately.
(b) The HOLDER may, at its sole option convert this Debenture
into that number of shares of fully paid and nonassessable shares of
Common Stock which is to be derived from dividing the Conversion Amount by
the Conversion Price. However, the HOLDER may convert a maximum of twenty
percent (20%) of the aggregate of the three Purchase Prices (as defined in
the Agreement) per calendar month at any time after the Issuance Date,
which conversion right shall be cumulative. For purposes of this
Debenture, the Conversion Amount shall mean the principal dollar amount of
the Debenture being converted. The Conversion Price shall be equal to the
lesser of: (i) US$2.00, or (ii) in the event the average closing bid
prices of the Common Stock for the five Trading Day period ending on the
Trading Day immediately preceding the Conversion Date is below US$2.50 the
Conversion Price shall be equal to eighty two and one half percent (82.5%)
of the average of the three lowest closing bid prices of the Common Stock
during the twenty two (22) Trading Days immediately preceding the
Conversion Date. The closing bid price shall be deemed to be the reported
last bid price regular was as reported by Bloomberg LP or if unavailable,
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any national securities exchange, the closing bid
price as reported by NASDAQ or such other system then in use, or, if the
Common Stock is not quoted by any such organization, the closing bid price
in the over-the-counter market as furnished by the principal national
securities exchange on which the Common Stock is traded.
Notwithstanding the aforementioned, the minimum Conversion Price
shall be $1.00 per share (the "Floor Price"). If at any time after the
Effective Date of the Registration Statement (as defined in the
Registration Rights Agreement entered into between the ISSUER and the
HOLDER on July 23, 1998) the average closing bid price of the Common Stock
is below US$1.00 during any ten (10) consecutive Trading Days, the ISSUER
agrees to pay to the HOLDER (pro rated daily), in cash, as liquidated
damages, and not as a penalty, two percent (2%) of the principal amount of
the Debenture then outstanding for every month that it remains below the
Floor Price. These liquidated damages shall be paid to the HOLDER by
certified funds, on the third (3rd) Trading Day after the aforementioned
ten (10) Trading Day Period, and such liquidated damages shall be payable
every thirty (30) days thereafter until the average closing bid prices of
the Common Stock is at least US$1.26 for five consecutive Trading Days. In
the event, at any time after the Effective Date (as defined in the
Agreement) the closing bid price of the Common Stock is lower than the
Floor Price for a period of ninety (90) consecutive calendar days, the
Floor Price restriction described above shall be removed.
(c) The number of shares of Common Stock issuable upon the
conversion of the Debenture and the Conversion Price shall be subject to
adjustment as follows:
(i) In case the ISSUER shall (A) pay a dividend on
Common Stock in Common Stock or securities convertible into,
exchangeable for or otherwise entitling a holder thereof to receive
Common Stock, (B) declare a dividend payable in cash on its Common
Stock and at substantially the same time offer its shareholder a
right to purchase new Common Stock (or securities convertible into,
exchangeable for or otherwise entitling a holder thereof to receive
Common Stock) from proceeds of such dividend (all Common Stock so
issued shall be deemed to have been issued as a stock dividend), (C)
subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, (D) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, or
(E) issue by reclassification of its Common Stock any shares of
Common Stock of the ISSUER, the Conversion Price shall be adjusted
so that the holders of this Debenture shall be entitled to receive
after the happening of any of the events described above that number
and kind of shares of Common Stock as the holders would have
received had such Debenture been converted immediately prior to the
happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subdivision shall become effective
immediately after the close of business on the record date in the
case of a stock dividend and shall become effective immediately
after the close of business on the record date in the case of a
stock split, subdivision, combination or reclassification.
(ii) Any adjustment required to be made by this
paragraph 4(c) will not have to be made if such adjustment would not
require an increase or decrease in one (1%) percent or more in the
number of shares of Common Stock issuable upon conversion of this
Debenture.
(iii) Whenever the Conversion Price of this Debenture is
adjusted, as herein provided, such adjustment shall be effected (to
the nearest cent) by multiplying such Conversion Price immediately
prior to such adjustment by a fraction of which the numerator shall
be the number of shares of Common Stock issuable upon the exercise
of each share of Debenture immediately prior to such adjustment, and
of which the denominator shall be the number of shares of Common
Stock issuable immediately thereafter.
(d) In the case of any (i) consolidation or merger of the
ISSUER into any entity (other than a consolidation or merger that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the ISSUER), (ii) sale, transfer,
lease or conveyance of all or substantially all of the assets of the
ISSUER as an entirety or substantially as an entirety, or (iii)
reclassification, capital reorganization or change of the Common Stock
(other than solely a change in par value, or from par value to no par
value), in each case as a result of which shares of Common Stock shall be
converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each holder of a Debenture
then outstanding shall have the right thereafter to convert such share
only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale, transfer, capital
reorganization or reclassification by a holder of the number of shares of
Common Stock of the ISSUER into which such Debenture would have been
converted immediately prior to such consolidation, merger, sale, transfer,
capital reorganization or reclassification, assuming such holder of Common
Stock of the ISSUER (A) is not an entity with which the ISSUER
consolidated or into which such sale or transfer was made, as the case may
be ("constituent entity"), or an affiliate of the constituent entity, and
(B) failed to exercise his or her rights of election, if any, as to the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the ISSUER held immediately prior to such consolidation,
merger, sale or transfer by other than a constituent entity or an
affiliate thereof and in respect of which the ISSUER merged into the
ISSUER or to which such rights or election shall not have been exercised
("non-electing share"), then for the purpose of this paragraph (4)(d) the
kind and amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall
be deemed to be the kind and amount so receivable per share by a majority
of the non-electing shares). If necessary, appropriate adjustment shall be
made in the application of the provision set forth herein with respect to
the rights and interest thereafter of the HOLDERS, to the end that the
provisions set forth herein shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, in relation to any shares of
stock or other securities or property thereafter deliverable on the
conversion of this Debenture. The above provisions shall similarly apply
to successive consolidations, mergers, sales, transfers, capital
reorganizations and reclassifications. The ISSUER shall not effect any
such consolidation, merger, sale or transfer unless prior to or
simultaneously with the consummation thereof the successor issuer or
entity (if other than the ISSUER) resulting from such consolidation,
merger, sale or transfer shall assume, by written instrument, the
obligation to deliver to the HOLDER such shares of Common Stock,
securities or assets as, in accordance with the foregoing provisions, such
HOLDER may be entitled to receive under this paragraph.
(e) The ISSUER will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the ISSUER, but will at all times in good faith assist in the carrying out
of all the provisions of this Debenture and in taking of all such action
as may be necessary or appropriate in order to protect the conversion
rights of the HOLDERS against impairment.
5. No provision of this Debenture shall alter or impair the
obligation of the ISSUER, which is absolute and unconditional, upon an Event of
Default (as defined below), to pay the principal of, and interest on this
Debenture at the place, time, and rate, and in the coin or currency herein
prescribed.
6. The ISSUER hereby expressly waives demand and presentment for
payment, notice on nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
7. If one or more of the following described "Events of Default"
shall occur,
(a) Any of the representations or warranties made by the
ISSUER herein, or in the Agreement (including all Exhibits annexed
thereto) shall have been incorrect when made in any material respect; or
(b) The ISSUER shall breach, fail to perform, or observe in
any material respect any covenant, term, provision, condition, agreement
or obligation of the ISSUER under this Debenture, the Escrow Agreement,
the Registration Rights Agreement, and the Agreement, between the parties
of even date herewith; or
(c) A trustee, liquidator or receiver shall be appointed for
the ISSUER or for a substantial part of its property or business without
its consent and shall not be discharged within thirty (30) days after such
appointment; or
(d) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of the
properties or assets of the ISSUER and shall not be dismissed within
thirty (30) calendar days thereafter; or
(e) Bankruptcy reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy law or
any law for the relief of debtors shall be instituted by or against the
Issuer and, if instituted against the ISSUER, ISSUER shall by any action
or answer approve of, consent to or acquiesce in any such proceedings or
admit the material allegations of, or default in answering a petition
filed in any such proceeding or such proceedings shall not be dismissed
within thirty (30) days thereafter; or
(f) The Common Stock is delisted from trading on the NASDAQ
Small Cap Market, or the Company has received notice of final action
concerning delisting from the NASDAQ Small Cap Stock Market; or
(g) The effectiveness of the Registration Statement including
the shares of Common Stock underlying this Debenture has been suspended
for a period of five (5) business days;
(h) The ISSUER shall have failed to pay interest when due
hereunder; or
(i) The ISSUER shall have failed to timely deliver shares of
Common Stock issuable upon conversion of the Debentures and/or exercise of
the Warrants issued by the Company pursuant to the Agreement.
Then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been waived in writing by the HOLDER
(which waiver shall not be deemed to be a waiver of any subsequent default), at
the option of the HOLDER, and in the HOLDER'S sole discretion, the HOLDER may
consider this Debenture immediately due and payable in cash, at the equivalent
dollar value of the number of shares of Common Stock issuable upon conversion
(assuming a Conversion Date as of the date of such notice from the HOLDER)
multiplied by the closing bid price of the Common Stock on the Trading Day
immediately preceding such notice from the HOLDER, without presentment, demand
protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and HOLDER may immediately, and without expiration of any
period of grace, enforce any and all of the HOLDER'S rights and remedies
provided herein or any other rights or remedies afforded by law. It is agreed
that in the event of such action, such HOLDER shall be entitled to receive all
reasonable fees, costs and expenses incurred, including without limitation such
reasonable fees and expenses of attorneys.
8. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
9. In addition to the terms of the Registration Rights Agreement of
even date herewith, and to the extent the Registrable Securities are not
previously registered pursuant to the Registration Rights Agreement, the HOLDER
shall have the right to include all of the shares of Common Stock underlying
this Debenture (the "Registrable Securities") as part of any registration of
securities filed by the ISSUER(other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8)
and must be notified in writing of such filing; provided, HOWEVER, that the
HOLDER agrees it shall not have any piggy-back registration rights pursuant to
this Debenture if the shares of Common Stock underlying this Debenture may be
sold in the United States pursuant to the provisions of Rule 144 without
limitation. HOLDER shall have five (5) business days after receipt of the
aforementioned notice from the ISSUER, to notify the ISSUER in writing as to
whether the ISSUER is to include HOLDER or not include HOLDER as part of the
registration; PROVIDED, HOWEVER, that if any registration pursuant to this
paragraph shall be underwritten, in whole or in part, the Company may require
that the Registrable Securities requested for inclusion pursuant to this
paragraph be included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters. If in the good
faith judgment of the underwriter evidenced in writing of such offering only a
limited number of Registrable Securities should be included in such offering, or
no such shares should be included, the HOLDER, and all other selling
stockholders, shall be limited to registering such proportion of their
respective shares as shall equal the proportion that the number of shares of
selling stockholders permitted to be registered by the underwriter in such
offering bears to the total number of all shares then held by all selling
stockholders desiring to participate in such offering. Those Registrable
Securities which are excluded from an underwritten offering pursuant to the
foregoing provisions of this paragraph (and all other Registrable Securities
held by the selling stockholders) shall be withheld from the market by the
HOLDERS thereof for a period, not to exceed ninety (90) days, which the
underwriter may reasonably determine is necessary in order to effect such
underwritten offering. The ISSUER shall have the right to terminate or withdraw
any registration initiated by it under this Debenture prior to the effectiveness
of such registration whether or not any HOLDER elected to include securities in
such registration. All registration expenses incurred by the ISSUER in complying
with this Debenture shall be paid by the ISSUER, exclusive of underwriting
discounts, commissions and legal fees and expenses for counsel to the HOLDERS of
this Debenture.
10. This Debenture, together with all documents referenced herein,
embody the full and entire understanding and agreement between the ISSUER and
HOLDER with respect to the subject matter hereof and supersedes all prior oral
or written agreements and understandings relating to the subject matter hereof.
Neither this Debenture nor any terms hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the ISSUER and the
HOLDER. Any capitalized terms shall have the same meaning as given in the
Agreement. In the event of any inconsistencies between this Debenture and the
Agreement, the Agreement shall control. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Debenture or
the Agreement (including all Exhibits annexed thereto) shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Debenture.
11. This Debenture will be construed and enforced in accordance with
and governed by the laws of the State of Florida, except for matters arising
under the Act, without reference to principles of conflicts of law. Each of the
parties consents to the jurisdiction of the State of Florida in connection with
any dispute arising under this Debenture and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on FORUM
NON CONVENIENS, to the bringing of any such proceeding in such jurisdictions.
Each party hereby agrees that if the other party to this Debenture obtains a
judgment against it in such a proceeding, the party which obtained such judgment
may enforce same by summary judgment in the courts of any state or country
having jurisdiction over the party against whom such judgment was obtained, and
each party hereby waives any defenses available to it under local law and agrees
to the enforcement of such a judgment. Each party to this Debenture irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party
at its address set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law
12. The convertibility of this Debenture shall be restricted such
that that portion of the Debenture which, if otherwise converted, would result
in HOLDER being deemed the beneficial owner, in accordance with the provisions
of Rule 13d-3 of the 1934 Act, of 4.99% or more of the then issued and
outstanding Common Stock, shall not be convertible until the HOLDER is not
deemed a beneficial owner of 4.99% or more of the then issued and outstanding
Common Stock.
13. The ISSUER shall have the right to redeem this Debenture, in
whole or in part, in cash, at the Redemption Price (as defined below, utilizing
a Redemption Percentage of one hundred fifteen percent (115%)) at any time the
closing bid price of the Common Stock is less than the Floor Price, by
thereafter providing five (5) business days prior written notice (the
"Redemption Notice") to the HOLDER. The ISSUER shall also have the right to
redeem this Debenture if the closing bid price of the Common Stock is not less
than the Floor Price, in whole or in part, in cash at the Redemption Price (as
defined below), by thereafter providing the Redemption Notice to the HOLDER,
utilizing a Redemption Percentage as follows: (i) at any time during the period
commencing on the Issuance Date, and terminating on the one hundred eightieth
(180th) day after the Issuance Date, the Redemption Percentage shall be one
hundred seven percent (107%); (ii) from the one hundred eighty first (181st) day
after the Issuance Date through and including the three hundred and sixty fourth
day after the Issuance Date the Redemption Percentage shall be one hundred
fifteen percent (115%); and (iii) any time after the three hundred sixty fifth
(365th) day after the Issuance Date, the Redemption Percentage shall be one
hundred twenty percent (120%). The ISSUER shall wire transfer the appropriate
amount of funds into an escrow account to complete the redemption which shall be
on the fifth business day after the Redemption Notice was served upon the HOLDER
(the "Redemption Date"). On the date the Redemption Notice was served upon the
HOLDER, the HOLDER'S right to convert the Debentures shall terminate and be
canceled immediately.
The Redemption Notice shall set forth (i) the Redemption Date, (ii)
the redemption price, which shall be equal to a percentage (the "Redemption
Percentage") of the aggregate principal amount of the Debenture being redeemed,
plus all accrued and unpaid interest (the "Redemption Price"), (iii) a statement
that interest on the Debenture being redeemed will cease to accrue on such
Redemption Date, and (iv) a statement of or reference to the conversion right
set forth in this Debenture (including that the right to give a notice of
conversion in respect of any shares to be redeemed shall terminate on the
Redemption Date). The Redemption Notice shall be irrevocable, and it shall be
mailed, postage prepaid, at least seven (7) business days prior to the
Redemption Date to the HOLDER at their address as the same shall appear on the
books of the Company. If fewer than all of the principal amount of the
Debentures owned by the HOLDER are then to be redeemed, the notice shall specify
the amount thereof that is to be redeemed and, if practicable, the numbers of
the certificates representing such Debenture.
At any time up to the date immediately prior to the date the
Redemption Notice was served upon the HOLDER, and subject to the exception at
the end of this paragraph, the HOLDER shall have the right to convert this
Debenture into Common Stock as more fully provided hereof. Unless so converted,
at the close of business on the Redemption Date, subject to the satisfaction of
each of the conditions described herein, the portion of this Debenture being
redeemed shall be automatically canceled and converted into a right to receive
the Redemption Price, and all rights of the Debenture, including the right to
conversion shall cease without further action. Immediately following the
Redemption Date, provided that the ISSUER has satisfy each of the conditions set
forth herein, the HOLDER shall surrender their original Debenture at the office
of the ISSUER, and the ISSUER shall issue to the HOLDER a new Debenture
Certificate for the principal amount that remains outstanding, if any.
Notwithstanding the aforementioned, in the event the Floor Price is removed
pursuant to Section 4(b) above, the Company shall be permitted to exercise its
right to redeem that portion of this Debenture which is the subject of a
Conversion Notice by sending the Holder a notice of its intention to redeem that
portion being converted along with a Redemption Notice within twenty four hours
after receipt of the faxed Conversion Notice. In such case the redemption
provisions set forth herein shall then apply.
The Redemption Price shall be adjusted proportionally upon any
adjustment of the Conversion Price under the terms hereof in the event of any
stock dividend, stock split, combination of shares or similar event.
The ISSUER shall not be entitled to send any Redemption Notice and
begin the redemption procedure hereunder unless it has:
(i) the full amount of the Redemption Price in cash, available
in a demand or other immediately available account in a bank or similar
financial institution;
(ii) immediately available credit facilities, in the full
amount of the Redemption Price with a bank or similar financial
institution; or
(iii) a combination of the items set forth in (a) and (b)
above, aggregating the full amount of the Redemption Price.
Upon delivery of the Redemption Notice, the ISSUER and the HOLDER
shall agree on reasonable arrangements for a closing of the redemption of this
Debenture.
In the event the ISSUER does not wire transfer the appropriate
amount of funds into the escrow account on or before the Redemption Date, or
shall otherwise fail to comply with the redemption provisions set forth herein,
then it shall have waived its right to redeem this Debenture at any time, and
the Holder may utilize its conversion right granted hereunder.
In the event the ISSUER fails to (i) pay liquidated damages as set
forth in Section 4(b) above, or (ii) fails to comply with the Redemption
provisions set forth herein as they pertain to a Redemption due to the closing
bid price of the Common Stock falling below the Floor Price as set forth herein,
then the HOLDER, at its sole option, may convert up to fifteen percent (15%) of
its outstanding principal Debenture per calendar month, which shall be
cumulative, without regard to the Floor Price limitations set forth above, until
such time as the ISSUER pays the liquidated damages and/or Redemption Price due,
or until the average closing bid prices of the Common Stock is at least US$1.05
for five consecutive Trading Days.
14. In the event the closing bid price of the Common Stock is
greater than US$5.00 (the "Strike Price") per share for twenty two (22)
consecutive trading days (the "Call Period"), and a registration statement,
including the shares of Common Stock underlying this Debenture, has been
declared effective by the Securities and Exchange Commission, and remains
effective during the period commencing on the first trading day of the Call
Period and ending on the Call Date (as defined below), the ISSUER shall have the
right to "Call" this Debenture, in whole or in part, thereby forcing conversion
by the HOLDER. The Strike Price shall be adjusted proportionately to reflect any
adjustments due to the payment of a stock dividend, stock split, combination of
shares or any other similar event. The ISSUER may exercise its right to Call by
telecopying written notice (the "Call Notice") to the HOLDER within three (3)
trading days after the Call Period.
Once the ISSUER has exercised its right to Call by giving written
notice to the Holder it shall be deemed irrevocable. Each trading day on which
the Call Notice is telecopied to, and received by, the HOLDER shall be deemed a
Conversion Date for the purposes of completing this Call and calculating the
number of shares of Common Stock to be issued upon conversion. The ISSUER will
transmit the certificates representing shares of Common Stock issuable pursuant
to the Call (together with the certificates representing the principal amount of
the Debenture not Called, if any) to the HOLDER via express courier, by
electronic transfer or otherwise within five (5) trading days after the Call
Notice was served upon the HOLDER (the "Call Date").
The Call Notice shall set forth (i) a calculation referencing the
conversion formula contained herein showing the number of shares of Common Stock
being issued pursuant to this Call, (ii) a calculation referencing all accrued
and unpaid interest which shall be payable by the ISSUER on or before the Call
Date, and (iii) a statement that interest on the Debenture being Called will
cease to accrue on such Call Date. If fewer than all of the principal amount of
the Debentures owned by the HOLDER are then to be Called, the Call Notice shall
specify the amount thereof that is to be Called and, if practicable, the numbers
of the certificate representing such Debenture.
The portion of this Debenture being Called shall be automatically
canceled and converted into a right to receive the shares of Common Stock, and
all rights of this Debenture, including the right to conversion shall cease
without further action. Immediately following the Call Date, the HOLDER shall
surrender their original Debenture being called at the office of the ISSUER, and
the ISSUER shall issue to the HOLDER a new Debenture Certificate for the
principal amount that remains outstanding, if any.
The number of shares of Common Stock issuable upon the Call of the
Debenture shall be adjusted proportionately to reflect any adjustments due to
the payment of a stock dividend, stock split, combination of shares or any other
similar event.
Any Call pursuant to this Section shall not be deemed to affect or
otherwise reduce the HOLDER'S Conversion rights set forth in this Debenture.
IN WITNESS WHEREOF, the ISSUER has caused this Convertible A
Debenture to be duly executed by an officer thereunto duly authorized.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /S/ PAUL C. PERSHES
Name: Paul C. Pershes, President
Title: President
Dated: July 23, 1998
<PAGE>
EXHIBIT 4.14
OPTION
FOR VALUE RECEIVED, HEART LABS OF AMERICA, INC. (the "Grantor") hereby
grants to JEAN JOHNSTONE (the "Holder") or her assigns the right but not the
obligation to purchase up to 200,000 shares (the "Shares") of its common stock,
for the purchase price of $1.00 per share (the "Purchase Price").
This option shall expire at 5:00 p.m. on the 7th day of June, 2001.
The Holder may exercise this option by giving written notice to the
Grantor of such intention, and by tendering a check drawn on a United States
bank to the Grantor. Grantor shall deliver to the Holder the Shares purchased
within 5 business days of receipt of payment to the Grantor.
Except for an initial public offering, the Holder shall have the right,
subject to prior exercise, to "piggyback" the stock underlying the Option (the
"Stock") on each Registration Statement for the sale of Stock filed by the
Grantor (except Registration Statements on Form S-4, S-8 and other inappropriate
forms), all at the Grantor's cost and expense (except commissions or discounts
and attorney's fees and costs of the Selling Stockholders). The Company shall
give the Holder four weeks notice of the filing of any Registration Statement.
The Company shall keep any Registration Statement onto which the Holder has
"piggybacked" the Shares effective for a period of 90 days from the date on
which the Holder is first entitled to sell all of the Shares thereunder.
Dated: June 7, 1998
HEART LABS OF AMERICA, INC.
By: /S/ NORMAN BIRMINGHAM
President
<PAGE>
EXHIBIT 4.15
CONSULTANT AGREEMENT
THE CONSULTING AGREEMENT is made as of the 27th day of January, 1997, by
and between CARDIAC CONSULTING, INC., a Florida corporation, with principal
offices at 116 First Lane, Greenacres, Florida 33463 ("Consultant") and MEDICAL
INDUSTRIES OF AMERICA, INC., ("MIOA"), a Florida corporation with principal
offices located at 1903 S. Congress Avenue, Suite 400, Boynton Beach, Florida
33426.
WHEREAS, Consultant and Client wish to enter into an agreement under which
Consultant will provide advice as to the operation and expansion of the business
of cardiac catherization mobile laboratories.
NOW, THEREFORE, for the mutual promises and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. INFORMATION TO BE FURNISHED BY MIOA. MIOA shall furnish Consultant with
its basic plans to expand its business of cardiac catherizations within the
southeastern portion of the United States.
2. SERVICES PROVIDED AND TO BE PROVIDED BY CONSULTANT. Consultant will
solicit and visit doctors and hospitals within the geographic area to ascertain
if a particular site can generate sufficient business to support a catherization
laboratory.
3. COMPENSATION FOR SERVICES. As consideration for Consultant to enter
into this agreement and provide services described above, Consultant shall
receive a consulting fee of One Hundred fifty Thousand ($150,000) Dollars
payable in registered common shares. In addition to the compensation above set
forth, Consultant shall be entitled to be promptly reimbursed for all expenses
incurred by Consultant for such things as travel and other expenses relating to
the performance of his services under this agreement.
4. TERM AND TERMINATION. This Agreement shall become effective as of April
1, 1997, and shall remain in effect for a period of three (3) years unless
terminated as herein provided.
5. RELATIONSHIP OF PARTIES. This Agreement shall not constitute an
employer/employee relationship. It is the intention of each party that the
Consultant shall be an independent contractor, and not an employee of MIOA.
Consultant shall not have the authority to act as the agent of MIOA, except when
such authority is specifically delegated to Consultant herein or by any officer
of MIOA, in writing.
6. WITHDRAWAL BY CONSULTANT OR MIOA. Either party shall be entitled to
withdraw from further performance under this Agreement without penalties or
refund of compensation fees as described in Item 3 in the event that the other
party does not perform pursuant to this Agreement. In the event of such a breach
by the Consultant, MIOA may terminate this Agreement by written notice to
Consultant, MIOA. Any other termination must be by mutual consent of Consultant
and Client.
7. REPRESENTATION AND WARRANTIES.
A. Consultant represents and warrants that it will use reasonable
care in performing the services required to be provided under
this Agreement and will devote at its time and attention so as
to expand the Cardiac Catherization of MIOA in a profitable
and expeditious manner.
B. MIOA represents and warrants that, prior to providing the
Consultant with any non-public information regarding its
business or operations, it will advise the Consultant that
such information is non-public.
8. MIOA's Additional Representation and Warranties. MIOA warrants and represents
the following:
A. That it is a corporation in good standing in its state of
incorporation and in every other state in which it is now doing
business.
B. That the execution of this Agreement by the signatory hereto is
within the power of such signatory.
C. The execution and delivery by MIOA of this Agreement does not, and
the performance by MIOA of its obligations hereunder will not,
violate any provision of its Certificate of Incorporation or by-laws
or violate any agreement, instrument law, ordinance, regulation,
order, arbitration award, judgment, or degree to which MIOA is a
party.
9. Indemnification. MIOA is to indemnify and hold the Consultant harmless from
and against any and all losses, claims, damages, liabilities and expenses
whatsoever, joint or several, as incurred, to which Consultant may become
subject arising out of performance of operations contemplated hereunder. MIOA
will not be liable under the foregoing indemnification provision to the extend
that any loss, claim, damage, liability or expense is found in a final judgment
by a court to have resulted from Consultants fraud, willful misconduct or gross
negligence.
MIOA agrees to notify the consultant promptly of the assertion against it or any
other person of any claim or the commencement of any action or proceeding
relating to any activity or transaction or transaction contemplated by the
Agreement.
10. MISCELLANEOUS.
A. This Agreement shall be interpreted and construed in accordance with
the laws of the State of Florida. The parties agree that
jurisdiction and venue of any dispute arising hereunder shall be in
Palm Beach County, Florida.
B. Neither party may assign its rights or duties under this Agreement
without the prior written consent of the other party.
C. This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof. The terms of this Agreement
may be altered only by written agreement between the parties.
D. The failure of either party to object to, or take affirmative action
with respect to any conduct of the other which is in violation of
the terms of the Agreement shall not be construed as a waiver of the
violation or breach, or of any future similar violation or breach.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its duly authorized officer, or as to an individual party, has
executed this Agreement in his own hand, as of the date first written above.
AGREED TO AND ACCEPTED,
CARDIAC CONSULTING, INC.
BY: /S/ ROBERT SEGARRA
ROBERT SEGARRA, PRESIDENT
MEDICAL INDUSTRIES OF AMERICA, INC.
BY: /S/ MICHAEL F. MORRELL
MICHAEL F. MORRELL
CHIEF EXECUTIVE OFFICER
<PAGE>
EXHIBIT 4.16
NO. ___ $__________ USD
MEDICAL INDUSTRIES OF AMERICA, INC.
CONVERTIBLE COLLATERIALIZED DEBENTURE DUE ______________, 2002
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND
HAS BEEN ISSUED IN RELIANCE UPON REGULATION D PROMULGATED UNDER THE SECURITIES
ACT. THIS DEBENTURE SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF
AN OFFER TO BUY THE DEBENTURE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THIS DEBENTURE MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND UNDER PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS.
THIS CONVERTIBLE COLLATERIALIZED DEBENTURE is one of a duly
authorized issue of Convertible Collaterialized Debentures of Medical Industries
of America, Inc., a corporation duly organized and existing under the laws of
the State of Florida (the "ISSUER"), issued on ____________, 1999 (the "Issuance
Date"), and designated as its Convertible Collaterialized Debenture due
____________, 2002, in an aggregate face amount not exceeding Two Million
Dollars (USD $2,000,000.00).
This Debenture has been issued under the terms and provisions of the
12% Convertible Collaterialized Debenture Subscription Agreement dated as of
________, 1999 between the ISSUER and HOLDER (the "Agreement") and Private
Placement Memorandum dated January 19, 1999, as amended (the "Memorandum") and
shall be subject to all of the terms and conditions and entitled to all
of the benefits thereof.
FOR VALUE RECEIVED, the ISSUER promises to pay to:
_______________________________________________________
the registered holder hereof or its registered assigns, if any (the "HOLDER"),
the principal sum of: ______________________ United States Dollars ($_______),
on _____________, 2002 (the "Maturity Date"), and to pay interest, as outlined
below, at the rate of twelve percent (12%) per annum on the principal sum
outstanding for the term of this Debenture. Accrual of interest shall commence
on the date hereof. Interest shall be payable by the ISSUER, in cash,
semi-annually commencing ____________, 1999 and every six (6) months thereafter
that this Convertible Collaterialized Debenture remains outstanding. The
interest so payable will be paid to the person in whose name this Debenture (or
one or more predecessor Debentures) is registered on the records of the ISSUER
regarding registration and transfers of the Debenture (the "Debenture
Register"); PROVIDED, HOWEVER, that the ISSUER'S obligation to a transferee of
this Debenture arises only if such transfer, sale or other disposition is made
in accordance with the terms and conditions contained in the Agreement. The
principal of this Debenture is payable as provided below at any time prior to
the Maturity Date, or upon Redemption or upon the HOLDER exercising its
conversion rights set forth below. In the event this Debenture is not paid in
full within thirty (30) days of its Maturity Date, it may, at the election of
the HOLDER, be either (i) converted into freely tradable shares of Common Stock
in that number of shares of Common Stock (at a price per share calculated
pursuant to the conversion formula contained below) or (ii) exchanged for the
Collateral (as set forth below). In the event this Debenture is not paid as
provided above and the ISSUER is not able to issue freely tradable shares of
Common Stock or deliver the Collateral as provided herein, the ISSUER agrees to
pay to the HOLDER, in cash, within three (3) trading days of receiving written
notice from the HOLDER, the dollar value of the number of shares of Common Stock
issuable to the HOLDER as if the HOLDER had exercised its conversion rights on
the Maturity Date. Principal and interest are payable at the address last
appearing on the Debenture Register as designated in writing by the HOLDER
hereof from time to time.
The Debenture is subject to the following additional provisions:
1. The Debenture is exchangeable for like Debentures in equal
aggregate principal amount of authorized denominations, as requested by the
HOLDER surrendering the same. No service charge will be made for such
registration or transfer or exchange, although the HOLDER shall be responsible
for its own expenses associated with complying with the restrictions on transfer
of the Debenture in the Agreement.
2. The ISSUER shall be entitled to withhold from all payments of
principal of this Debenture any amounts required to be withheld under the
applicable provisions of the U.S. Internal Revenue Code of 1986, as amended, or
other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment
repre-sentations of the original HOLDER hereof and may be transferred or
exchanged in the United States only in compliance with the Securities Act and
applicable state securities laws and in compliance with the restrictions on
transfer provided in the Agreement. Prior to the due presentment for such
transfer of this Debenture, the ISSUER and any agent of the ISSUER may treat the
person in whose name this Debenture is duly registered on the Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
all other purposes, whether or not this Debenture is overdue, and neither the
ISSUER nor any such agent shall be affected by notice to the contrary. The
transferee shall be bound, as the original HOLDER, by the same representations
and terms described herein and under the Agreement.
4. The HOLDER is entitled, at its option, at any time after the
Issuance Date, to convert this Debenture, in whole or in part in accordance with
the following terms and conditions:
(a) The HOLDER may exercise its right to convert the Debenture
by telecopying an executed and completed notice of conversion in the form
attached hereto as Exhibit C-1 (the "Notice of Conversion") to the ISSUER
and delivering the original Notice of Conversion and the original
Debenture to the ISSUER by express courier. Each business date on which a
Notice of Conversion is telecopied to and received by the ISSUER in
accordance with the provisions hereof shall be deemed a "Conversion Date."
The ISSUER will transmit the certificates representing shares of Common
Stock issuable upon conversion of the Debenture (together with the
certificates representing the Debenture not to converted) to the HOLDER
via express courier, by electronic transfer (if applicable) or otherwise
within ten (10) business days after the Conversion Date if the ISSUER has
received the original Notice of Conversion and Debenture being so
converted by such date. In addition to any other remedies which may be
available to the HOLDER, in the event that the ISSUER fails to effect
delivery of such shares of Common Stock within such ten (10)-business-day
period, the HOLDER will be entitled to revoke the Notice of Conversion by
delivering a notice to such effect to the ISSUER, whereupon the ISSUER and
the HOLDER shall each be restored to their respective positions
immediately prior to delivery of the Notice of Conversion. The Notice of
Conversion and Debenture representing the portion of the Debenture
converted shall be delivered as follows:
To the ISSUER: Medical Industries of America, Inc.
1903 South Congress Avenue, Suite 400
Boynton Beach, Florida 33426
Attention: Michael F. Morrell, CEO
Telephone: (561) 737-2227
Facsimile: (561) 265-2869
In the event that the Common Stock issuable upon conversion of the
Debenture is not delivered, within ten (10) business days of receipt by
the ISSUER of a valid Notice of Conversion and the Debenture to be
converted, the ISSUER shall pay to the HOLDER, in immediately available
funds, upon demand, as liquidated damages for such failure and not as a
penalty, for each $10,000.00 principal amount of Debenture sought to be
converted, $50.00 for each of the first ten (10) days and $100.00 per day
thereafter that the shares of Common Stock are not delivered, which
liquidated damages shall run from the tenth (10th) business day after the
Conversion Date up until the time that either the Conversion Notice is
revoked or the Common Stock is delivered, at which time such liquidated
damages shall cease. Any liquidated damage amounts and all payments
required pursuant to this paragraph shall be payable only in readily
available funds immediately.
(b) The HOLDER may, at its sole option, convert this Debenture
into that number of shares of fully paid and nonassessable shares of
Common Stock which is to be derived from dividing the Conversion Amount by
the Conversion Price. For purposes of this Debenture, the Conversion
Amount shall mean the principal dollar amount of the Debenture being
converted. The Conversion Price shall be equal to the lesser of: (i) USD
$0.50 or (ii) the average of the three lowest closing bid prices of the
Common Stock during the twenty-two (22) trading days immediately preceding
the Conversion Date. The closing bid price shall be deemed to be the
reported last bid price regular way as reported by Bloomberg LP, or, if
unavailable, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange, the
closing bid price as reported by NASDAQ or such other system then in use,
or, if the Common Stock is not quoted by any such organization, the
closing bid price in the over-the-counter market as furnished by the
principal national securities exchange on which the Common Stock is
traded.
If at any time after the Effective Date of the Registration
Statement (as defined in the Registration Rights Agreement entered into
between the ISSUER and the HOLDER on __________________) the average
closing bid price of the Common Stock is below USD $0.50 (the "Floor
Price") during any ten (10) consecutive trading days, the ISSUER agrees to
pay to the HOLDER (prorated daily), in cash, as liquidated damages, and
not as a penalty, two percent (2%) of the principal amount of the
Debenture then outstanding for every month that it remains below the Floor
Price. These liquidated damages shall be paid to the HOLDER by certified
funds, on the third (3rd) trading day after the aforementioned ten
(10)-trading-day period, and such liquidated damages shall be payable
every thirty (30) days thereafter until the average closing bid price of
the Common Stock is at least USD $0.50 for five (5) consecutive trading
days.
(c) The number of shares of Common Stock issuable upon the
conversion of this Debenture and the Conversion Price shall be subject to
adjustment as follows:
(i) In case the ISSUER shall (A) pay a dividend on
Common Stock in Common Stock or securities convertible into,
exchangeable for, or otherwise entitling a holder thereof to receive
Common Stock, (B) declare a dividend payable in cash on its Common
Stock and at substantially the same time offer its shareholder a
right to purchase new Common Stock (or securities convertible into,
exchangeable for, or otherwise entitling a holder thereof to receive
Common Stock) from proceeds of such dividend (all Common Stock so
issued shall be deemed to have been issued as a stock dividend), (C)
subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, (D) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, or
(E) issue by reclassification of its Common Stock any shares of
Common Stock of the ISSUER, the Conversion Price shall be adjusted
so that the HOLDERS of this Debenture shall be entitled to receive
after the happening of any of the events described above that number
and kind of shares of Common Stock as the holders would have
received had such Debenture been converted immediately prior to the
happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subdivision shall become effective
immediately after the close of business on the record date in the
case of a stock dividend and shall become effective immediately
after the close of business on the record date in the case of a
stock split, subdivision, combination or reclassification.
(ii) Any adjustment required to be made by this
paragraph 4(c) will not have to be made if such adjustment would not
require an increase or decrease in one percent (1%) or more in the
number of shares of Common Stock issuable upon conversion of this
Debenture.
(iii) Whenever the Conversion Price of this Debenture is
adjusted, as herein provided, such adjustment shall be effected (to
the nearest cent) by multiplying such Conversion Price immediately
prior to such adjustment by a fraction of which the numerator shall
be the number of shares of Common Stock issuable upon the exercise
of each share of Debenture immediately prior to such adjustment, and
of which the denominator shall be the number of shares of Common
Stock issuable immediately thereafter.
(d) On the date of any (i) consolidation or merger of the
ISSUER into any entity (other than a consolidation or merger that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the ISSUER), (ii) sale, transfer,
lease or conveyance of all or substantially all of the assets of the
ISSUER as an entirety or substantially as an entirety, or (iii)
reclassification, capital reorganization or change of the Common Stock
(other than solely a change in par value, or from par value to no par
value), in each case as a result of which shares of Common Stock shall be
converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each holder of a Debenture
then outstanding shall have the right thereafter to convert such share
only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale, transfer, capital
reorganization or reclassification by a holder of the number of shares of
Common Stock of the ISSUER into which such Debenture would have been
converted immediately prior to such consolidation, merger, sale, transfer,
capital reorganization or reclassification, assuming such holder of Common
Stock of the ISSUER (A) is not an entity with which the ISSUER
consolidated or into which such sale or transfer was made, as the case may
be (the "constituent entity"), or an affiliate of the constituent entity,
and (B) failed to exercise his or her rights of election, if any, as to
the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer (PROVIDED, that, if the kind
or amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the ISSUER held immediately prior to such consolidation,
merger, sale or transfer by other than a constituent entity or an
affiliate thereof and in respect of which the ISSUER merged into the
ISSUER or to which such rights or election shall not have been exercised
(the "non-electing share"), then for the purpose of this paragraph (4)(d)
the kind and amount of securities, cash or other property receivable upon
such consolidation, merger, sale or transfer by each non-electing share
shall be deemed to be the kind and amount so receivable per share by a
majority of the non-electing shares). If necessary, appropriate adjustment
shall be made in the application of the provision set forth herein with
respect to the rights and interest thereafter of the HOLDERS, to the end
that the provisions set forth herein shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares
of stock or other securities or property thereafter deliverable on the
conversion of this Debenture. The above provisions shall similarly apply
to successive consolidations, mergers, sales, transfers, capital
reorganizations and reclassifications. The ISSUER shall not effect any
such consolidation, merger, sale or transfer unless prior to or
simultaneously with the consummation thereof the successor issuer or
entity (if other than the ISSUER) resulting from such consolidation,
merger, sale or transfer shall assume, by written instrument, the
obligation to deliver to the HOLDER such shares of Common Stock,
securities or assets as, in accordance with the foregoing provisions, such
HOLDER may be entitled to receive under this paragraph.
(e) The ISSUER will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the ISSUER, but will at all times in good faith assist in the carrying out
of all the provisions of this paragraph and in taking of all such action
as may be necessary or appropriate in order to protect the conversion
rights of the HOLDERS against impairment.
5. No provision of this Debenture shall alter or impair the
obligation of the ISSUER, which is absolute and unconditional, upon an Event of
Default (as defined below), to pay the principal of, and interest on, this
Debenture at the place, time, and rate, and in the coin or currency herein
prescribed.
6. The ISSUER hereby expressly waives demand and presentment for
payment, notice on nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
7. The ISSUER has delivered to Mirkin & Woolf, P.A. (the "PLEDGEE")
to hold, in trust, for the HOLDER in accordance with that certain Pledge
Agreement attached hereto as Exhibit A, original stock certificates evidencing
683,000 shares of freely tradable Westmark Group Holding, Inc. (NASDAQ:WGHI)
common shares (the "Collateral") as collateral for the payment of the
Debentures. The parties acknowledge and agree that the Collateral is intended as
additional security for this Debenture, and, accordingly, the PLEDGEE will hold
the Collateral in trust pursuant to the Pledge Agreement and not sell, transfer
or encumber such Collateral (except for the collateral assignment thereof or as
provided in the Pledge Agreement), nor shall the ISSUER have or exercise voting
or other shareholder rights with respect thereto, if an Event of Default occurs.
The Collateral shall be covered by and subject to the terms of the Pledge
Agreement, and upon the occurrence of an Event of Default, the HOLDER shall be
entitled to the rights set forth therein.
Notwithstanding the foregoing, the Collateral may be, at the request
of the ISSUER, sold and the proceeds received therefrom delivered to the ISSUER
after deducting expenses incurred from such sale(s) and after setting aside such
amount as necessary to pay the principal face value of the outstanding
Debentures together with accrued interest through the Maturity Date. The
Collateral may also be substituted for collateral of equal or greater value on
the date of such substitution upon approval of the HOLDERS owning at least 51%
of the principal face value of the Debentures outstanding.
8. This Debenture is accompanied by a Warrant which entitles the
HOLDER to purchase at anytime during the three (3) year period commencing with
the date of its issuance __________ shares of the ISSUER'S Common Stock. The
strike price of the Warrant is equal to the lesser of (i) USD $0.50 or (ii) the
average of the three (3) lowest closing bids of the Issuer's Common Stock during
the twenty-two (22) trading days immediately preceding the purchase date. Such
price will be adjusted for stock splits, combinations, etc. The rights, duties
and obligations of the parties in respect to the Warrant shall be governed by
the Common Stock Warrant Purchase executed by the parties of even date herewith.
9. The ISSUER will reserve from the proceeds received from the sale
of this Debenture and place in a separate account which shall not be commingled
with any other funds of the ISSUER an amount equal to six (6) months interest in
respect to this Debenture.
10. If one or more of the following described "Event of Default"
shall occur:
(a) Any of the representations or warranties made by the
ISSUER herein, in the Agreement or the Memorandum (including all Exhibits
annexed to the Memorandum) shall have been incorrect when made in any
material respect; or
(b) Except for the payment to pay interest which is addresed
in (g) below, the ISSUER shall breach, fail to perform, or observe in any
material respect any covenant, term, provision, condition, agreement or
obligation of the ISSUER under this Debenture, the Pledge Agreement, the
Registration Rights Agreement, and the Agreement, between the parties of
even date herewith and such default is not cured within thirty (30) days
of the ISSUER'S receipt of a notice from the HOLDER in respect to such
default; or
(c) A trustee, liquidator or receiver shall be appointed for
the ISSUER or for a substantial part of its property or business without
its consent and shall not be discharged within thirty (30) days after such
appointment; or
(d) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of the
properties or assets of the ISSUER and shall not be dismissed within
thirty (30) calendar days thereafter; or
(e) Bankruptcy reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy law or
any law for the relief of debtors shall be instituted by or against the
ISSUER and, if instituted against the ISSUER, ISSUER shall by any action
or answer approve of, consent to, or acquiesce in any such proceedings or
admit the material allegations of, or default in, answering a petition
filed in any such proceeding or such proceedings shall not be dismissed
within thirty (30) days thereafter; or
(f) The ISSUER shall have failed to pay interest on two (2)
consecutive due dates.
Then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been waived in writing by the HOLDER
(which waiver shall not be deemed to be a waiver of any subsequent default), at
the option of the HOLDER, and in the HOLDER'S sole discretion, the HOLDER may
consider this Debenture immediately due and payable in cash, at the equivalent
dollar value of the number of shares of Common Stock issuable upon conversion by
the HOLDER (assuming a Conversion Date as of the date of such notice from the
HOLDER) multiplied by the closing bid price of the Common Stock on the trading
day immediately preceding such notice from the HOLDER, without presentment,
demand protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and HOLDER may immediately, and without expiration of any
period of grace, enforce any and all of the HOLDER'S rights and remedies
provided herein or any other rights or remedies afforded by law. It is agreed
that, in the event of such action, such HOLDER shall be entitled to receive all
reasonable fees, costs and expenses incurred, including without limitation such
reasonable fees and expenses of attorneys.
11. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
12. In addition to the terms of the Registration Rights Agreement of
even date herewith, and to the extent the Registrable Securities are not
previously registered pursuant to the Registration Rights Agreement, the HOLDER
shall have the right to include all of the shares of Common Stock underlying
this Debenture (the "Registrable Securities") as part of any registration of
securities filed by the ISSUER (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-4 or
other applicable form) and must be notified in writing of such filing; PROVIDED,
HOWEVER, that the HOLDER agrees it shall not have any piggy-back registration
rights pursuant to this Debenture if the shares of Common Stock underlying this
Debenture may be sold in the United States pursuant to the provisions of Rule
144 without limitation. HOLDER shall have five (5) business days after receipt
of the aforementioned notice from the ISSUER to notify the ISSUER in writing as
to whether the ISSUER is to include HOLDER or not include HOLDER as part of the
registration; provided, HOWEVER, that, if any registration pursuant to this
paragraph shall be underwritten, in whole or in part, the Company may require
that the Registrable Securities requested for inclusion pursuant to this
paragraph be included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters. If in the good
faith judgment of the underwriter evidenced in writing of such offering only a
limited number of Registrable Securities should be included in such offering, or
no such shares should be included, the HOLDER, and all other selling
stockholders, shall be limited to registering such proportion of their
respective shares as shall equal the proportion that the number of shares of
selling stockholders permitted to be registered by the underwriter in such
offering bears to the total number of all shares then held by all selling
stockholders desiring to participate in such offering. Those Registrable
Securities which are excluded from an underwritten offering pursuant to the
foregoing provisions of this paragraph (and all other Registrable Securities
held by the selling stockholders) shall be withheld from the market by the
HOLDERS thereof for a period, not to exceed ninety (90) days, which the
underwriter may reasonably determine is necessary in order to effect such
underwritten offering. The ISSUER shall have the right to terminate or withdraw
any registration initiated by it under this Debenture prior to the effectiveness
of such registration whether or not any HOLDER elected to include securities in
such registration. All registration expenses incurred by the ISSUER in complying
with this Debenture shall be paid by the ISSUER, exclusive of underwriting
discounts, commissions and legal fees and expenses for counsel to the HOLDERS of
this Debenture.
13. This Debenture, together with the Memorandum and all documents
annexed thereto and referenced therein, embodies the full and entire
understanding and agreement between the ISSUER and HOLDER with respect to the
subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. Neither this Debenture nor
any terms hereof may be amended, waived, discharged or terminated other than by
a written instrument signed by the ISSUER and the HOLDER. Any capitalized terms
shall have the same meaning as given in the Agreement. In the event of any
inconsistencies between this Debenture and the Agreement, the Agreement shall
control. No statement, representation, warranty, covenant or agreement of any
kind not expressly set forth in this Debenture, the Agreement or the Memorandum
(including all Exhibits annexed thereto) shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Debenture.
14. This Debenture will be construed and enforced in accordance with
and governed by the laws of the State of Florida, except for matters arising
under the Act, without reference to principles of conflicts of law. Each of the
parties consents to the jurisdiction of the Circuit Court serving Palm Beach
County, Florida in connection with any dispute arising under this Debenture and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on FORUM NON CONVENIENS, to the bringing of any such
proceeding in such jurisdictions. Each party hereby agrees that, if the other
party to this Debenture obtains a judgment against it in such a proceeding, the
party which obtained such judgment may enforce same by summary judgment in the
courts of any state or country having jurisdiction over the party against whom
such judgment was obtained, and each party hereby waives any defenses available
to it under local law and agrees to the enforcement of such a judgment. Each
party to this Debenture irrevocably consents to the service of process in any
such proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to such party at its address set forth herein. Nothing
herein shall affect the right of any party to serve process in any other manner
permitted by law.
15. The ISSUER shall have the right to convert this Debenture, in
whole or in part, into that number of fully paid and nonassessable shares of
Common Stock which is derived by dividing the Conversion Amount by the
Conversion Price in the event the average closing bid prices for the Common
Stock for any ten (10) consecutive trading days exceed USD $1.50. For these
purposes, the Conversion Amount shall mean the principal dollar amount together
with accrued interest of this Debenture being converted. The ISSUER may exercise
its right to cause conversion by telecopying, if possible, an executed notice of
conversion to the HOLDER and delivering the original notice of conversion and
the requisite number of fully paid and nonassessable shares of Common Stock to
the HOLDER by express courier. The HOLDER upon receipt of the Common Stock shall
be required to effect immediate delivery of this Debenture to the ISSUER. To the
extent that less than the entire principal dollar amount is converted and this
Debenture is returned to the ISSUER, the ISSUER shall issue the HOLDER a new
Debenture certificate. Notwithstanding the HOLDER'S failure to effect delivery
to the ISSUER as provided herein, this Debenture upon receipt of the Conversion
Notice and Common Stock shall be immediately adjusted to reflect the principal
dollar amount, if any, which remains outstanding and which remains subject to
the provisions of this Agreement.
The number of shares of Common Stock issuable upon the conversion of
this Debenture and the Conversion Price set forth in this Section shall be
subject to the same adjustments as set forth in 4(c)(i), (ii) and (iii) and
4(d).
16. The ISSUER shall have the right to redeem this Debenture, in
whole or in part, in cash, at the Redemption Price (as defined below, utilizing
a Redemption Percentage of one hundred fifteen percent (115%)) at any time the
closing bid price of the Common Stock is less than the Floor Price, by
thereafter providing five (5) business days' prior written notice (the
"Redemption Notice") to the HOLDER. The ISSUER shall also have the right to
redeem this Debenture if the closing bid price of the Common Stock is not less
than the Floor Price, in whole or in part, in cash at the Redemption Price (as
defined below), by thereafter providing the Redemption Notice to the HOLDER,
utilizing a Redemption Percentage as follows: (i) at any time during the period
commencing on the Issuance Date, and terminating on the one hundred eightieth
(180th) day after the Issuance Date, the Redemption Percentage shall be one
hundred ten percent (110%); (ii) from the one hundred eighty-first (181st) day
after the Issuance Date through and including the three hundred and sixty-fourth
(364th) day after the Issuance Date, the Redemption Percentage shall be one
hundred eight percent (113%); and (iii) any time after the three hundred
sixty-fifth (365th) day after the Issuance Date but prior to the Maturity Date,
the Redemption Percentage shall be one hundred five percent (116%). The ISSUER
shall wire transfer the appropriate amount of funds into an escrow account to
complete the redemption which shall be on the fifth (5th) business day after the
Redemption Notice was served upon the HOLDER (the "Redemption Date"). On the
date the Redemption Notice was served upon the HOLDER, the HOLDER'S right to
convert the Debentures shall terminate and be canceled immediately.
The Redemption Notice shall set forth (i) the Redemption Date, (ii)
the redemption price, which shall be equal to a percentage (the "Redemption
Percentage") of the aggregate principal amount of the Debenture being redeemed,
plus all accrued and unpaid interest (the "Redemption Price"), (iii) a statement
that interest on the portion of the Debenture being redeemed will cease to
accrue on such Redemption Date, and (iv) a statement of or reference to the
conversion right set forth in this Debenture (including that the right to give a
notice of conversion in respect of any shares to be redeemed shall terminate on
the Redemption Date). The Redemption Notice shall be irrevocable, and it shall
be mailed, postage prepaid, at least seven (7) business days prior to the
Redemption Date to the HOLDER at their address as the same shall appear on the
books of the Company. If fewer than all of the principal amount of the
Debentures owned by the HOLDER are then to be redeemed, the notice shall specify
the amount thereof that is to be redeemed and, if practicable, the numbers of
the certificates representing such Debenture.
At any time up to the date immediately prior to the date the
Redemption Notice was served upon the HOLDER, the HOLDER shall have the right to
convert this Debenture into Common Stock as more fully provided hereof. Unless
so converted, at the close of business on the Redemption Date, subject to the
satisfaction of each of the conditions described herein, the portion of this
Debenture being redeemed shall be automatically canceled and converted into a
right to receive the Redemption Price, and all rights of the Debentures,
including the right to conversion, shall cease without further action.
Immediately following the Redemption Date, provided that the ISSUER has
satisfied each of the conditions set forth herein, the HOLDER shall surrender
their original Debenture at the office of the ISSUER, and the ISSUER shall issue
to the HOLDER a new Debenture Certificate for the principal amount that remains
outstanding, if any.
The Redemption Price shall be adjusted proportionally upon any
adjustment of the Conversion Price under the terms hereof in the event of any
stock dividend, stock split, combination of shares or similar event.
The ISSUER shall not be entitled to send any Redemption Notice and
begin the redemption procedure hereunder unless it has:
(a) The full amount of the Redemption Price in cash, available
in a demand or other immediately available account in a bank or similar
financial institution;
(b) Immediately available credit facilities, in the full
amount of the Redemption Price with a bank or similar financial
institution; or
(c) A combination of the items set forth in (a) and (b) above,
aggregating the full amount of the Redemption Price.
Upon delivery of the Redemption Notice, the ISSUER and the HOLDER
shall agree on reasonable arrangements for a closing of the redemption of this
Debenture.
In the event the ISSUER does not wire transfer the appropriate
amount of funds into the escrow account on or before the Redemption Date, or
shall otherwise fail to comply with the redemption provisions set forth herein,
then it shall have waived its right to redeem this Debenture at any time.
In the event the ISSUER fails to pay liquidated damages as set forth
in Section 4(b) above, then the HOLDER, at its sole option, may convert up to
fifteen percent (15%) of its outstanding principal Debenture per calendar month,
without regard to the Floor Price limitations set forth above, until such time
as the ISSUER pays the liquidated damages, or until the average closing bid
price of the Common Stock is at least the conversion price of this Debenture for
five (5) consecutive trading days.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /S/ PAUL C. PERSHES
Name: Paul C. Pershes
Title: President
<PAGE>
EXHIBIT 4.17
NO: __
COMMON STOCK PURCHASE WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND
HAS BEEN ISSUED IN RELIANCE UPON REGULATION D PROMULGATED UNDER THE SECURITIES
ACT. THIS WARRANT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN
OFFER TO BUY THE WARRANT IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL.
THIS WARRANT MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND UNDER PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS.
COMMON STOCK PURCHASE WARRANT issued this _____ day of ________, 1999 by MEDICAL
INDUSTRIES OF AMERICA, INC., a Florida corporation (the "Company"), in favor
of______________________________________, (the "Holder").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of the Holder
investing in the Company's 12% Convertible Collateralized Debenture dated
_________________, 1999 (the "Debenture") and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company hereby grants to Holder the right to purchase __________________ ( )
shares of the Company's Common Stock, $.0025 par value (the "Shares"). Reference
is hereby made to the Subscription Agreement for the Debenture and the Debenture
for a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Company and the Holder.
This Warrant shall be exercisable at any time and from time to time
beginning on the date hereof, expiring on _________________, 2002.
2. EXERCISE PRICE. Subject to the terms of Section 4(c), the exercise
price per share for which all or any of the Shares may be purchase pursuant to
the terms of this Warrant is equal to the lesser of (i) USD $0.50 or (ii) the
average of the three (3) lowest closing bids of the Issuer's Common Stock during
the twenty-two (22) trading days immediately preceding the purchase date. Such
price will be adjusted for stock splits, combinations, etc., (the "Exercise
Price").
3. EXERCISE. This Warrant may be exercised by the Holder hereof as to all
or in increments of one hundred (100) Shares (or the balance of the Shares if
less than such number), upon delivery of written notice of intent to exercise in
the form attached hereto as Exhibit "D-1" to the Company at the following
address: 1903 South Congress Avenue, Suite 400, Boynton Beach, Florida 33426 or
such other address as the Company shall designate in a written notice to the
Holder hereof, together with this Warrant and a check payable to the Company for
the aggregate Exercise Price of the Shares so purchased. In lieu of such check,
all or part of the payment due upon exercise of this Warrant may be made by
surrender by such Holder to the Company of all or any portion of the Debenture,
and the portion of the Debenture so surrendered shall be credited against such
payment in an amount equal to the applicable principal amount thereof and
accrued interest to the date of surrender. Upon exercise of this Warrant as
aforesaid, the Company shall, as promptly as practicable, and in any event
within fifteen (15) days thereafter, execute and deliver to the Holder of this
Warrant a certificate or certificates for the total number of whole Shares for
which this Warrant is being exercised. If this Warrant shall be exercised with
respect to less than all of the Shares, the Holder shall be entitled to receive
a new Warrant covering the number of Shares in respect of which this Warrant
shall not have been exercised, which new Warrant shall in all other respects be
identical to this Warrant. The Company covenants and agrees that it will pay
when due any and all state and federal issue taxes which may be payable in
respect of the issuance of this Warrant or the issuance of any Shares upon
exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered under
the Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws (the "Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such Warrant
under the Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel, which opinion of counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under the Securities
Act or under any applicable Blue Sky Laws. Transfer of the Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as the Warrant and the certificates representing such Shares shall
bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES
LAW SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE ACT
OR SUCH APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN CONNECTION WITH
THE PROPOSED TRANSFER.
The Holder agrees to execute such other documents and instruments as counsel for
the Company reasonably deems necessary to effect the compliance of the issuance
of this Warrant and any Shares issued upon exercise hereof with applicable
federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment therefor,
be legally and validly issued and outstanding, fully paid and nonassessable,
free from all taxes, liens, charges and preemptive rights, if any, with respect
thereto or to the issuance thereof. The Company shall at all times reserve and
keep available for issuance upon the exercise of this Warrant such number of
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of this Warrant.
5. TRANSFER OF WARRANT. This Warrant may not be transferred, in whole or
in part. In the event of the death or final determination of legal incapacity of
the Holder during such time as the Holder shall possess the Warrant granted
hereunder, the personal representative of the Holder may, for a period of ninety
(90) days following the date of death or final determination of legal
incapacity, exercise the Warrant to the extent that the Holder was entitled to
exercise the Warrant on such date. Any person so desiring to exercise the
Warrant shall be required, as a condition to the exercise of the Warrant, to
furnish to the Company such documentation as the Company shall deem necessary to
evidence the authority of such person to exercise the Warrant on behalf of the
Holder.
6. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization, combination of
shares of the Company, or other similar event occurring after the date hereof,
then the Holder exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Holder would have received if this Warrant had been exercised immediately prior
to such stock split, stock dividend, re-capitalization, combination of shares,
or other similar event. If any adjustment under this Section 6(a) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this Section 6(a), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company or other similar event occurring
after the date hereof, as a result of which shares of common stock shall be
changed into the same or a different number of shares of the same or another
class or classes of securities of the Company or another entity, then the Holder
exercising this Warrant shall receive, from the aggregate price paid upon such
exercise, the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such merger,
consolidation, exchange of shares, separation, reorganization or liquidation, or
other similar event. If any adjustment under this Section 6(b) would create a
fractional share of common stock or a right to acquire a fractional share of
common stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of Shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this Section 6(b), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
7. DEMAND REGISTRATION. Within ninety (90) days of an Event of Default (as
such term is defined in the Debenture) (the "Filing Period"), the Company shall
prepare and file with the Securities and Exchange Commission (the "Commission")
a registration statement under the Securities Act covering all of the Shares and
shall use its best efforts to cause such registration statement to become
effective within one hundred fifty (150) days of the date of an Event of Default
(the "Demand Registration Period"). The obligation of the Company under this
Section 7 shall be limited to one registration statement. The Company shall pay
the expenses described in Section 11 for the registration statement filed
pursuant to this Section 7 which becomes effective, except for underwriting
discounts and commissions and transfer taxes, which expenses shall be borne by
the Holder.
8. INCIDENTAL REGISTRATION RIGHTS. At any time commencing on the date
hereof and expiring upon the declaration of effectiveness of the registration
statement referred to in Section 7 hereof, if the Company shall determine to
proceed with the actual preparation and filing of a registration statement under
the Securities Act in connection with the proposed offer and sale of any of its
securities by it or any of its security holders (other than a registration
statement on Form S-4, S-8 or other limited purpose form), the Company will give
written notice of its determination to the Holder. Upon the written request form
Holder, within twenty (20) days thereafter, the Company will, except as herein
provided, cause all the Shares to be included in such registration statement,
all to the extent requisite to permit the sale or other disposition thereof by
Holder; PROVIDED, HOWEVER, that nothing herein shall prevent the Company from,
at any time, abandoning or delaying any registration. If any registration
pursuant to this Section 8 shall be underwritten in whole or in part, the
Company shall require that the Shares requested for inclusion pursuant to this
Section 8 be included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters.
Notwithstanding the foregoing, if the managing underwriter determines and
advises in writing that the inclusion of all the Shares proposed to be included
in the underwritten public offering, together with any other issued and
outstanding securities proposed to be included therein by holders of securities
other than Holder, would interfere with the successful marketing of such
securities, then the number of such Shares that the managing underwriter
believes may be sold in such underwritten public offering shall be allocated for
inclusion in the registration statement in the following order of priority: (i)
the securities being offered by the company; and (ii) the number of Shares then
owned by Holder. The Shares that are excluded form the underwritten public
offering shall be withheld from the market by Holder for a period, not to exceed
180 days, that the managing underwriter determines as necessary in order to
effect the underwritten public offering. To the extent the Shares requested for
inclusion pursuant to this Section 8 are excluded from a registration statement
pursuant to this provision, the Company shall file a new registration statement
covering such excluded Shares and shall use its best efforts to cause such
registration statement to become effective upon the expiration of the period,
not to exceed 180 days, that the excluded Shares are to be withheld from the
market pursuant to this Section 8. Notwithstanding anything contained herein,
the Company shall not request nor require the Holder to "lockup" any of the
Shares that may be requested or required by an underwriter of an underwritten
public offering of the Company's securities during the period commencing with
the effectiveness of the registration statement referenced in Section 7 hereof
through and including a period of one hundred eighty (180) days thereafter.
The Company shall pay the expenses described in Section 11 for registration
statements filed pursuant to this Section 8.
9. REGISTRATION PROCEDURES. If and whenever the Company is required by the
provisions of Section 7 or 8 to effect the registration of Shares under the
Securities Act, the Company will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and, with respect to Sections 7 and 8, remain
effective until the earlier of (i) the date that all of the Shares have been
sold pursuant to the registration statement, (ii) the date Holder receives an
opinion of counsel reasonably acceptable to it that the Shares may be sold under
the provisions of Rule 144 (K) promulgated by the Commission or (iii) the
eighteen month anniversary of the effective date of the registration statement
(the "Effective Period");
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for the Effective
Period as may be reasonably necessary to effect the sale of such securities;
(c) furnish to Holder and to the underwriters of the securities
being registered, such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
Holder and such underwriters may reasonably request in order to facilitate the
public
(d) use its best efforts to register or qualify the Shares covered
by such registration statement under such state securities or Blue Sky laws of
such jurisdictions as Holder may reasonably request in writing within twenty
(20) days following the original filing of such registration statement, except
that the Company shall not for any purpose be required to execute a general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) notify Holder, promptly after it shall receive notice thereof,
of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(f) notify Holder promptly of any request by the Commission for the
amending or supplementing of such registration statement or prospectus or for
additional information;
(g) prepare and file with the Commission, promptly upon the request
of Holder of a majority of the Shares covered thereby, any amendments or
supplements to such registration statement or prospectus which, in the opinion
of counsel for Holder (and concurred in by counsel for the Company), is required
under the Securities Act or the rules and regulations thereunder in connection
with the distribution of the Shares by Holder;
(h) prepare and promptly file with the Commission and promptly
notify Holder of the filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at any time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; and
(i) advise Holder, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
10. FAILURE TO TIMELY FILE REGISTRATION STATEMENT. Anything contained in
this Warrant to the contrary notwithstanding, in the event the Company fails to
either (i) file such demand registration statement with the Commission prior to
the expiration of the Filing Period, or (ii) cause such demand registration
statement to become effective prior to the expiration of the Demand Registration
Period (except when the Company is proceeding in good faith to cause the
registration statement to become effective in a timely manner and the failure to
become effective is due solely to delays at the Securities and Exchange
Commission which are outside of the Company's control), in addition to any other
rights and privileges of Holder, the Company shall reduce the exercise price of
the Warrants by five percent (5) of the original exercise price for each full
month the effectiveness of the registration Statement is delayed beyond Demand
Registration Period, not to exceed a total reduction of the exercise price of
thirty percent (30%).
11. EXPENSES.
(a) With respect to the registration requested pursuant to Section 7
hereof, and with respect to an inclusion of Shares in a registration statement
pursuant to Section 8 hereof, all fees, costs and expenses of and incidental to
such registration, inclusion an public offering (as specified in Section (b)
below) in connection therewith shall be borne by the Company; PROVIDED, HOWEVER,
that Holder shall bear its share of the underwriting discount and commissions
and transfer taxes, and Holder shall be responsible for the payment of its own
legal fees.
(b) The fees, cost and expenses of registration to be borne by the
Company as provided in Section 11(a) above shall include, without limitation,
all registration, filing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or Blue Sky
laws of any jurisdictions in which the securities to be offered are to be
registered and qualified (except as provided in Section 11(a) above). Fees and
disbursements of counsel and accountants for Holder not expressly included above
shall be borne by Holder.
12. ADDITIONAL NOTICES TO WARRANT HOLDER. In addition to any other notice
required hereunder, the Company shall provide the Holder with a copy of any
notice that the Company is required to provide those persons holding shares of
the Company's Common Stock, no par value, on the same date such persons receive
such notice.
13. LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this Section 13 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrant, shall constitute an original contractual obligation on the part of the
Company.
14. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the Company has executed this Common Stock Purchase
Warrant as of the date first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By: /s/ PAUL C. PERSHES
Name: Paul C. Pershes
Title: President
<PAGE>
EXHIBIT 5
OPINION AND CONSENT OF COUNSEL
MIRKIN & WOOLF, P.A.
South Trust Center - Suite 580
1700 Palm Beach Lakes Blvd.
West Palm Beach, Florida 33401
Phone 561-687-4460
Fax 561-687-3447
April 15, 1999
Medical Industries of America, Inc.
1903 South Congress Avenue, Suite 400
Boynton Beach, FL 33426
Re: MEDICAL INDUSTRIES OF AMERICA, INC.
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-3 (the "Registration Statement"), filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, for the
registration of 8,650,518 shares of Common Stock, $.0025 par value (the
"Shares"), of Medical Industries of America, Inc., a Florida corporation (the
"Company").
We have acted as counsel for the Company in connection with its issuance
and sale of the Shares. For purposes of this opinion, I have examined and relied
upon such documents, records, certificates and other instruments as I have
deemed necessary.
We express no opinion as to the applicability of compliance with or effect
of Federal law or the law of any jurisdiction other than the corporate laws of
the State of Florida.
Based on the foregoing, I am of the opinion that the Shares have been duly
authorized, validly issued, fully paid and non-assessable.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement and to the use of my name therein and in the related
prospectus under the caption "Validity of Common Stock".
It is understood that this opinion is to be used only in connection with
the offer and sale of the Shares while the Registration Statement is in effect.
Very truly yours,
/s/ Marc Woolf, Esq.
MIRKIN & WOOLF, P.A.
II-8
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated March 26, 1999 accompanying the
consolidated financial statements of Medical Industries of America, Inc. and
subsidiaries included in Form 10-KSB for the year ended December 31, 1998, which
is incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in the Registration Statement of the aforementioned
report and to the use of our name as it appears under the caption "Experts."
/s/ Grant Thornton LLP
GRANT THORNTON LLP
Fort Lauderdale, Florida
April 15, 1999
II-9
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated March 26, 1999, accompanying the financial
statements of Medical Industries of America, Inc. contained in the Registration
Statement on Form S-3. We consent to the use of the aforementioned report in the
Registration Statement, and to the use of our name as it appears under the
caption "Experts."
/s/ Grant Thornton LLP
GRANT THORNTON LLP
Fort Lauderdale, Florida
April 15, 1999
II-10
