Exhibit 4.1
SUBSCRIPTION AGREEMENT
IN VIVO MEDICAL DIAGNOSTICS, INC
The undersigned (the "Subscriber") hereby subscribes for a $250,000 unit of
securities (the "Unit") of In Vivo Medical Diagnostics, Inc., a Colorado
corporation (the "Company"). The Unit is comprised of (i) a $250,000 principal
amount convertible 8% promissory note (the "Note") and (ii) 60,096 shares of the
common stock, $.001 par value, of the Company ("Common Stock").
The Common Stock included in the Unit or issuable upon conversion of the
Note shall be registered for public sale with the Securities and Exchange
Commission (the "Commission"), in accordance with the terms set forth in the
registration rights agreement (the "Registration Agreement"), entered into
between the holder of the Note (the "Holder") and the Company of even date.
The undersigned agrees to pay the aggregate subscription price of $250,000
for the Unit being purchased hereunder. The entire purchase price is due and
payable upon the submission of this Subscription Agreement, and shall be payable
by wire transfer to the order of the Company.
The Company has the right to reject this subscription in whole or in part.
The undersigned acknowledges that the Unit being purchased hereunder will
not be registered under the Securities Act of 1933 (the "Act"), or the
securities laws of any state, that absent an exemption from registration
contained in those laws, the Unit, Note and Common Stock require registration,
and that the Company's reliance upon such exemption is based upon the
undersigned's representations, warranties, and agreements contained in this
Subscription Agreement, the Note and the Registration Rights Agreement
(collectively, the "Subscription Documents").
1. The undersigned represents, warrants, and agrees as follows:
a. The undersigned agrees that this Subscription Agreement is and
shall be irrevocable.
b. The undersigned has carefully read the Company's filings with the
Securities and Exchange Commission, as required pursuant to the Securities
and Exchange Act of 1934, which are available on the Internet at
www.sec.gov (collectively, the "Disclosure Materials"), all of which the
undersigned acknowledges have been provided to the undersigned. The
undersigned has been given the opportunity to ask questions of, and receive
answers from, the Company concerning the terms and conditions of this
Offering and the Disclosure Materials and to obtain such additional
information, to the extent the Company possesses such information or can
acquire it without unreasonable effort or expense, necessary to verify the
accuracy of same as the undersigned reasonably desires in order to evaluate
the investment. The undersigned understands the Disclosure Materials, and
the undersigned has had the opportunity to discuss any questions regarding
any of the Disclosure Materials with his counsel or other advisor.
Notwithstanding the foregoing, the only information upon which the
undersigned has relied is that set forth in the Disclosure Materials. The
undersigned has received no representations or warranties from the Company,
its employees, agents or attorneys in making this investment decision other
than as set forth in the Disclosure Materials. The undersigned does not
desire to receive any further information.
c. The undersigned is aware that the purchase of the Units is a
speculative investment involving a high degree of risk, that there is no
guarantee that the undersigned will realize any gain from this investment,
and that the undersigned could lose the total amount of this investment.
The undersigned has specifically reviewed the section in the Disclosure
Materials entitled "Risk Factors."
d. The undersigned understands that no federal or state agency has
made any finding or determination regarding the fairness of the Unit for
investment, or any recommendation or endorsement of the Unit.
e. The undersigned is purchasing the Units for the undersigned's own
account, with the intention of holding the Units with no present intention
of dividing or allowing others to participate in this investment or of
reselling or otherwise participating, directly or indirectly, in a
distribution of the Units or the securities underlying the Units, and shall
not make any sale, transfer, or pledge thereof without registration under
the Act and any applicable securities laws of any state or unless an
exemption from registration is available under those laws.
f. The undersigned represents that if an individual, he has adequate
means of providing for his or her current needs and personal and family
contingencies and has no need for liquidity in this investment in the
Units. The undersigned has no reason to anticipate any material change in
his or her personal financial condition for the foreseeable future.
g. The undersigned is financially able to bear the economic risk of
this investment, including the ability to hold the Units indefinitely, or
to afford a complete loss of his investment in the Units.
h. The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to the undersigned's net worth, and the undersigned's
investment in the Units will not cause such overall commitment to become
excessive. The undersigned understands that the statutory basis on which
the Units are being sold to the undersigned and others would not be
available if the undersigned's present intention were to hold the Units for
a fixed period or until the occurrence of a certain event. The undersigned
realizes that in the view of the Commission, a purchase now with a present
intent to resell by reason of a foreseeable specific contingency or any
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anticipated change in the market value, or in the condition of the Company,
or that of the industry in which the business of the Company is engaged or
in connection with a contemplated liquidation, or settlement of any loan
obtained by the undersigned for the acquisition of the Units, and for which
such Units may be pledged as security or as donations to religious or
charitable institutions for the purpose of securing a deduction on an
income tax return, would, in fact, represent a purchase with an intent
inconsistent with the undersigned's representations to the Company, and the
Commission would then regard such sale as a sale for which the exemption
from registration is not available. The undersigned will not pledge,
transfer or assign this Subscription Agreement.
i. The undersigned represents that the funds provided for this
investment are either separate property of the undersigned, community
property over which the undersigned has the right of control, or are
otherwise funds as to which the undersigned has the sole right of
management. The undersigned is purchasing the Units with the funds of the
undersigned and not with the funds of any other person, firm, or entity and
is acquiring the Units for the undersigned's account. No person other than
the undersigned has any beneficial interest in the Units being purchased
hereunder.
j. The address shown under the undersigned's signature at the end of
this Subscription Agreement is the undersigned's principal residence if he
or she is an individual, or its principal business address if it is a
corporation or other entity.
l. The undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Units.
m. The undersigned acknowledges that the certificates for the
securities comprising the Unit which the undersigned will receive will
contain a legend substantially as follows:
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THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
TRANSFERRED, MADE SUBJECT TO A SECURITY INTEREST, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AS AMENDED, OR EVIDENCE
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT.
The undersigned further acknowledges that a stop transfer order will
be placed upon the certificates for the securities in accordance with the
Act. The undersigned further acknowledges that the Company is under no
obligation to aid the undersigned in obtaining any exemption from
registration requirements.
n. The undersigned represents that he is an "accredited investor" as
that term is defined under the Act.
2. The undersigned expressly acknowledges and agrees that the Company is
relying upon the undersigned's representations contained in the Subscription
Documents.
3. The Company has been duly and validly incorporated and is validly
existing and in good standing as a corporation under the laws of the State of
Colorado. The Company represents that it has all requisite power and authority,
and all necessary authorizations, approvals and orders required as of the date
hereof to own its properties and conduct its business as described in the
Disclosure Materials and to enter into this Subscription Agreement and to be
bound by the provisions and conditions hereof.
4. The Company covenants and agrees that the proceeds of the subscription
are to be used for general corporate purposes.
5. Except as otherwise specifically provided for hereunder, no party shall
be deemed to have waived any of his or its rights hereunder or under any other
agreement, instrument or papers signed by any of them with respect to the
subject matter hereof unless such waiver is in writing and signed by the party
waiving said right. Except as otherwise specifically provided for hereunder, no
delay or omission by any party in exercising any right with respect to the
subject matter hereof shall operate as a waiver of such right or of any such
other right. A waiver on any one occasion with respect to the subject matter
hereof shall not be construed as a bar to, or waiver of, any right or remedy on
any future occasion. All rights and remedies with respect to the subject matter
hereof, whether evidenced hereby or by any other agreement, instrument, or
paper, will be cumulative, and may be exercised separately or concurrently.
6. The parties have not made any representations or warranties with respect
to the subject matter hereof not set forth herein, and this Subscription
Agreement, together with any instruments or documents executed simultaneously
herewith in connection with this offering, constitutes the entire agreement
between them with respect to the subject matter hereof. All understandings and
agreements heretofore had between the parties with respect to the subject matter
hereof are merged in this Subscription Agreement and any such instruments and
documents, which alone fully and completely expresses their agreement.
7. This Subscription Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Subscription Agreement.
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8. The parties agree to execute any and all such other further instruments
and documents, and to take any and all such further actions reasonably required
to effectuate this Subscription Agreement and the intent and purposes hereof.
9. This Subscription Agreement shall be governed by and construed
in accordance with the laws of the State of New York and the
undersigned hereby consents to the jurisdiction of the courts of the
State of New York and the United States District Courts situated
therein.consents to the jurisdiction of the courts of the State of New
York and the United States District Courts situated therein.
10. The Company agrees to pay the legal fees of the undersigned up to the
amount of $15,000 to Sichenzia Ross Friedman Ference LLP in connection with the
preparation of the Subscription Documents.
11. (a) Simultaneously with the execution and delivery of this Agreement by
the undersigned, the undersigned shall promptly cause a wire transfer of
immediately available funds (U.S. dollars) in an amount representing the
purchase price set forth on the signature page hereof to be paid to the
non-interest bearing escrow account of Sichenzia Ross Friedman Ference, LLP (the
"Escrow Agent"), set forth on Schedule I affixed hereto (the aggregate amounts
being held in escrow by the Escrow Agent with respect to the Closing are
referred to herein as the "Escrow Amount"). The Escrow Agent shall hold the
Escrow Amount with respect to the Closing in escrow until the Escrow Agent
receives written instructions (the "Escrow Release Instructions") from the
Company and the Subscriber authorizing the release of the Escrow Amount in
accordance with the written instructions delivered to the Escrow Agent. If the
Escrow Agent has not received the Escrow Release Instructions on or before
December 24, 2004, the Escrow Agent shall return to the Subscriber the portion
of the Escrow Amount, with respect to the Closing, that the Subscriber delivered
to the Escrow Agent, but only to the extent of the funds actually received by
the Escrow Agent pursuant to this Agreement.
(b) The Company and the Subscriber acknowledge and agree for the
benefit of the Escrow Agent (which shall be deemed to be a third party
beneficiary of this Section 11) as follows:
(1) The Escrow Agent (i) is not responsible for the performance
by the Company or the Subscriber of this Agreement or any of the
Subscription Documents or for determining or compelling compliance
therewith, (ii) is only responsible for (A) holding the Escrow Amount
in escrow pending receipt of the Escrow Release Instructions and (B)
disbursing the Escrow Amount in accordance with the Escrow Release
Instructions, each of the responsibilities of the Escrow Agent in
clause (A) and (B) is ministerial in nature, and no implied duties or
obligations of any kind shall be read into this Agreement against or
on the part of the Escrow Agent (collectively, the " Escrow Agent's
Duties"), (iii) shall not be obligated to take any legal or other
action hereunder which might in its judgment involve or cause it to
incur any expense or liability unless it shall have been furnished
with indemnification acceptable to it, in its sole discretion, (iv)
may rely on and shall be protected in acting or refraining from acting
upon any written notice, instruction (including, without limitation,
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wire transfer instructions, whether incorporated herein or provided in
a separate written instruction), instrument, statement, certificate,
request or other document furnished to it hereunder and believed by it
to be genuine and to have been signed or presented by the proper
person, and shall have no responsibility for making inquiry as to, or
for determining, the genuineness, accuracy or validity thereof, or of
the authority of the person signing or presenting the same, and (v)
may consult counsel satisfactory to it, and the written opinion or
advice of such counsel in any instance shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with the
opinion or advice of such counsel. Documents and written materials
referred to in this Section 11 include, without limitation, e-mail and
other electronic transmissions capable of being printed, whether or
not they are in fact printed; and any such e-mail or other electronic
transmission may be deemed and treated by the Escrow Agent as having
been signed or presented by a person if it bears, as sender, the
person's e-mail address.
(2) The Escrow Agent shall not be liable to anyone for any action
taken or omitted to be taken by it hereunder, except in the case of
the Escrow Agent's gross negligence or willful misconduct in breach of
the Escrow Agent's Duties. IN NO EVENT SHALL THE ESCROW AGENT BE
LIABLE FOR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGE OR LOSS
(INCLUDING BUT NOT LIMITED TO LOST PROFITS) WHATSOEVER, EVEN IF THE
ESCROW AGENT HAS BEEN INFORMED OF THE LIKELIHOOD OF SUCH LOSS OR
DAMAGE AND REGARDLESS OF THE FORM OF ACTION.
(3) The Company and the Subscriber hereby indemnify and hold
harmless the Escrow Agent from and against, any and all loss,
liability, cost, damage and expense, including, without limitation,
reasonable counsel fees and expenses, which the Escrow Agent may
suffer or incur by reason of any action, claim or proceeding brought
against the Escrow Agent arising out of or relating to the performance
of the Escrow Agent's Duties, unless such action, claim or proceeding
is the result of the willful misconduct, bad faith or gross negligence
of the Escrow Agent.
(4) The Escrow Agent has acted as legal counsel to the Subscriber
in connection with this Agreement and the other Subscription
Documents, is merely acting as a stakeholder under this Agreement and
is, therefore, hereby authorized to continue acting as legal counsel
to the Subscriber including, without limitation, with regard to any
dispute arising out of this Agreement, the Subscription Documents or
any other matter. Each of the Company and the Subscriber hereby
expressly consent to permit the Escrow Agent to represent the
Subscriber in connection with all matters relating to this Agreement,
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including, without limitation, with regard to any dispute arising out
of the Subscription Documents or any other matter, and hereby waives
any conflict of interest or appearance of conflict or impropriety with
respect to such representation. Each of the Company and the Subscriber
has consulted with its own counsel specifically about this Section 11
to the extent they deemed necessary, and has entered into this
Agreement after being satisfied with such advice.
EXECUTION BY SUBSCRIBER
NITE CAPITAL, L.P.
By: /s/
---------------------------------
Accepted this day of December, 2004, on behalf of In Vivo Medical Diagnostics,
Inc.,
By: /s/
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SCHEDULE I
Re: Wiring Instructions for Sichenzia Ross Friedman Ference LLP
Wire to: [omitted]
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