Exhibit 2.1
RESTATED CAPITAL STOCK EXCHANGE AGREEMENT
THIS RESTATED AGREEMENT is made as of this 21st day of April, 2005, by and
among UNITED DIAGNOSTIC, INC., a Delaware corporation ("Parent"), SPO Medical
Equipment Ltd., an Israeli company ("Sub"), and the persons and entities whose
names, addresses and signatures are set forth on the Signature Pages to this
Agreement (the "Shareholders" and collectively with Parent and Sub, the
"Parties"). Certain capitalized and other terms used in this Agreement are
defined in Annex A hereto and are used herein with the meanings ascribed to them
therein.
WHEREAS, the Parties entered into a Capital Stock Exchange Agreement
effective as of February 28, 2005 (the "First Agreement") and wish to restate
the terms in accordance with this Agreement;
WHEREAS, Parent currently has (a) 50 million shares of Common Stock, par
value $.01 per share ("Parent Common Stock") authorized, of which 659,709 shares
are outstanding as of the date hereof (on a fully diluted basis) and (b) 2
million shares of Preferred Stock, par value $.01 per share ("Parent Preferred
Stock") authorized, of which no shares are outstanding as of the date hereof;
the issued and outstanding shares of Parent Common Stock collectively represent
all of Parent's issued and outstanding capital stock (the "Parent Stock"); and
WHEREAS, Sub currently has thirty million shares of NIS1 par value per
share of ordinary shares ("Sub Common Stock") authorized, of which 3,210,032
shares are outstanding as of the date hereof (on a fully diluted basis); the
issued and outstanding shares of Sub Common Stock represent all of Sub's issued
and outstanding capital stock (the "Sub Stock"); and
WHEREAS, as of the date hereof the Shareholders own the number of shares
of Sub Common Stock set forth opposite their name on the Signature pages to this
Agreement and are the only holders of Sub Stock; and
WHEREAS, Parent, Sub and the Shareholders believe that it is desirable and
in their mutual best interests that Parent acquire 100% of the issued and
outstanding Sub Stock for a consideration consisting of 5,937,381 shares of
Parent Common Stock (including shares underlying fully vested penny option to
acquire 168,275 shares of Parent to be issued to Israel Sarrusi forthwith
subsequent to Closing) acquired upon the other terms and conditions set forth
herein, which upon consummation of such exchange would make Sub a wholly owned
subsidiary of Parent; and
WHEREAS, it the intention of the Parties that: (i) Parent shall acquire
100% of the Sub Common Stock in exchange solely for the amount of Parent Common
Stock set forth herein; (ii) said exchange of shares shall qualify as a tax-free
reorganization under Section 368(a)(1)(B) of the Code; and (iii) said exchange
shall qualify as a transaction in securities exempt from registration or
qualification under the Securities Act of 1933, as amended and in effect on the
date of this Agreement (the "1933 Act"), and under the applicable securities
laws of the states or jurisdictions where the Shareholders reside;
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements the "Parties agree as follows:
A. RESTATEMENT
It is hereby agreed that the rights and obligations of the Parties in the First
Agreement shall continue and henceforth be governed solely by the terms and
conditions contained in this Agreement.
ARTICLE I
THE TRANSACTION
1.1 The Transaction. On the Closing Date, and at the Closing Time, as defined
herein, subject in all instances to each of the terms, conditions, provisions
and limitations contained in this Agreement the Shareholders shall exchange each
of their shares of Sub Common Stock with Parent for newly issued treasury shares
of Parent Common Stock in the amount listed beside each Shareholders name on the
Signature pages (5,937,381 in the aggregate including options to acquire such
shares). The events set forth in this foregoing Section 1.1 shall be referred to
herein as the "Transaction").
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1.2 Exchange of the Sub Common Stock. Subject to the terms of this Agreement and
in reliance on the representations and warranties of Parent, the Shareholders
shall exchange, sell, assign, and transfer to Parent at the closing of this
Agreement (the "Closing"), free and clear of all liens and encumbrances, and
Parent, subject to the terms of the Agreement and upon the basis of the
covenants, warranties and representations of Sub and the Shareholders set forth
herein, shall accept from the Shareholders at the Closing, all shares of the Sub
Common Stock issued and outstanding as of the Closing.
1.3 Consideration. Subject to the terms of this Agreement and in reliance on the
representations and warranties of Sub and the Shareholders, Parent shall deliver
to the Shareholders, at the Closing, the Parent Common Stock to which the
Shareholders are entitled under this Agreement (the "Consideration"), free and
clear of all liens and encumbrances, which the Shareholders shall accept based
upon the covenants, warranties and representations of Parent set forth herein.
The Consideration shall be distributed among the Shareholders in accordance with
the Signature Pages to this Agreement.
1.4 Tax Treatment. The exchange described herein is intended to comply with
Section 368(a)(1)(B) of the Code, and all applicable regulations thereunder. In
order to ensure compliance with said provisions, the Parties agree to take
whatever steps may be necessary, including, but not limited to, the amendment of
this Agreement.
1.5 At Closing Michael Braunold, Pauline Dorfman and Sidney Braun shall be
appointed to the board of directors of Parent and at or before the Closing
Marvin Feigenbaum ("Feigenbaum")shall resign as a board member of Parent.
Subsequent to closing the board shall consist of three members.
1.6 Closing. The Closing hereunder shall take place at the offices of Parent or
at such other place as the Parties may agree upon, no later than April 30, 2005,
on a date to be set by the Parties. The date and time on which the closing
occurs shall be the Closing Date and Closing Time, respectively.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
Where a representation contained in this Agreement is qualified by the
phrase "to the best of a party's knowledge" (or words of similar import), such
expression means that, after having conducted a reasonable due diligence review,
the Party believes the statement to be true, accurate, and complete in all
material respects. Except as otherwise indicated in the Schedules annexed hereto
(which Schedules shall be arranged in paragraphs corresponding to the numbered
and letter paragraphs contained herein and which have been previously provided
to Sub and the Shareholders) or in the Parent's SEC Documents (as defined in
Section 3.15 below), Parent represents and warrants to Sub and the Shareholders,
as follows:
2.1 Due Authorization. This Agreement has been duly and validly executed and
delivered by Parent and, to the extent necessary, the stockholders of Parent,
and constitutes a valid and binding Agreement of Parent enforceable in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to or affecting
creditors generally. Parent has all requisite corporate power and authority to
enter into this Agreement and to carry out the Transaction, and its doing so has
been duly and sufficiently authorized by its Board of Directors.
2.2 Absence of Breach; No Consents. The execution, delivery, and performance of
this Agreement, and the performance by Parent of its obligations hereunder, do
not, nor will with the giving of notice or passage of time or both, conflict
with, result in termination of, contravene, constitute a default under, give to
others any rights of termination or cancellation of, or accelerate the
performance required by or maturity of, result in the creation of any lien or
loss of any rights, or result in a material breach of, or default under, any
material indenture, loan, credit agreement, mortgage, deed of trust, note, bond,
franchise, lease, contract or any other agreement or instrument binding upon
Parent or a Subsidiary, or to which Parent or a Subsidiary is subject.
2.3 Valid Issuance of Stock.
2.3.1 The Consideration, when issued as provided in this Agreement, will
be duly authorized, validly issued, fully paid and non-assessable.
2.3.2 Based in part on the representations made by the Shareholders in
Article 3 hereof, the offer and sale of the Consideration solely to the
Shareholders in accordance with this Agreement will be exempt from the
registration and prospectus delivery requirements of the 1933 Act.
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2.4 Disclosure. To the best of Parent's knowledge, no representation, warranty
or statement by Parent in this Agreement, or in any exhibit, schedule, statement
or certificate furnished to Sub or the Shareholders pursuant to this Agreement,
when read as a whole, contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements made herein, in light
of the circumstances under which they were made, not misleading.
2.5 Options or Warrants. There are no existing options, warrants, calls, or
commitments of the Parent of any character relating to the authorized and
unissued Parent stock.
2.6 Title and Related Matters. To the best of Parent's knowledge, no third party
has any right to, and the Parent has not received any notice of infringement of
or conflict with asserted rights of others with respect to the Parent or any
material portion of its current properties, assets, or rights.
2.7 Litigation and Proceedings. To the best of Parent's knowledge, there are no
actions, suits, or proceedings pending or threatened by or against the Parent or
affecting the Parent or its properties.
2.8 Compliance With Laws and Regulations. To the best of its knowledge the
Parent has complied with all applicable statutes and regulations of any federal,
state, or other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of the Parent or except to the
extent that noncompliance would not result in the occurrence of any material
liability for the Parent.
2.9 Contracts. There are no material contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which the Parent is a party
or by which it or any of its assets, products, technology, or properties are
bound.
2.10 Material Contract Defaults. The Parent is not in default in any material
respect under the terms of any outstanding material contract, agreement, lease,
or other commitment.
2.11 Reporting Requirements of the Parent. The Parent is subject to the
reporting and filing requirements of the Securities Exchange Act of 1934 ("the
Exchange Act") including (1) the periodic reporting requirements and (2) the
Proxy Rules set forth thereunder.
(a) The Parent has filed all reports required to be filed by it with the
SEC pursuant to the Exchange Act. The SEC Reports complied, at the time of
filing, in all material respects with the applicable requirements of the
Exchange Act. None of the SEC Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent superseded by an SEC Report filed subsequently
and prior to the date hereof. Parent has filed with the SEC and delivered to SPO
The Company 's annual report on Form 10-K for the year ended December 31, 2003
("Annual Report") and the quarterly report for the three months ended September
30, 2004. As of Closing, there shall not be any change in the business, assets,
liabilities, financial condition, results of operations or prospects of the
Parent from the Annual Report and the Quarterly report which would have a
Material Adverse Effect on the Parent.
(b) The financial statements of the Parent made part of the SEC Reports
have been prepared in accordance with US generally accepted accounting
principles. All financial statements made part of the SEC Reports present fairly
the consolidated financial position of the Parent as of their respective dates
and the consolidated results of its operations and its cash flows for the
periods presented therein subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments that have not been and are
not expected to be material in amount.
2.12 Due Diligence. Parent understand that the only representations being made
to it under this Agreement are those expressly set forth in Article III and that
in entering into and consummating the Transaction they have relied only on such
written representations of Sub made herein and are taking the Sub Common Stock
being transferred to them in the Transaction on an "as-is" basis. Parent further
acknowledge that Sub shall not be responsible for the truth and accuracy of any
other information which Parent have obtained or may hereafter obtain in the
course of any due diligence investigations that Parent may have independently
conducted.
Except as set forth above, Parent is making no representations or
warranties to Sub or the Shareholders of any kind or nature.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUB AND THE SHAREHOLDERS
Except as otherwise indicated in the Schedules (which Schedules shall be
arranged in paragraphs corresponding to the numbered and letter paragraphs
contained herein and which have previously been provided to Parent) annexed
hereto, Sub and the Shareholders, jointly and severally (except as otherwise
noted), represent and warrant to Parent as follows:
3.1 Organization and Qualification. Sub is a corporation duly organized, validly
existing and in good standing under the laws of Israel and has the requisite
corporate power and authority to carry on its business as it is now being
conducted. Sub is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of the properties
owned or leased by it, or the nature of its activities, is such that
qualification as a foreign corporation in that jurisdiction is required by law.
3.2 Due Authorization. This Agreement has been duly and validly executed and
delivered by Sub and its Shareholders and constitutes a valid and binding
Agreement enforceable in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to or affecting creditors generally. Sub has all requisite corporate
power and authority to enter into this Agreement and to carry out the
Transaction contemplated hereby, and its doing so has been duly and sufficiently
authorized by all necessary corporate or other action of Sub or any of the
Shareholders.
3.3 Capitalization. Sub is authorized by its Certificate of Incorporation to
issue:
30 million shares of NIS 1 par value per share ordinary shares of which
3,119,054 (at the time of Closing) are duly and validly issued and outstanding,
fully paid, and non-assessable and there exists an option with one party to
acquire 90,978 shares of the Sub for a price of NIS 0.01 per share (the
"Option").
Other than as set forth above, Sub does not have any authority to issue any
other capital stock or other security. There are no outstanding options,
contracts, commitments, warrants, preemptive rights, agreements or any rights of
any character affecting or relating in any manner to the issuance of any Sub
capital stock or other securities or entitling any person or entity to acquire
Sub capital stock or other securities of Sub, and no authorization therefore has
been given. There are no outstanding contractual or other rights or obligations
to or of Sub, any Shareholder or any other Person to repurchase redeem or
otherwise acquire any outstanding shares or other equity interest of Sub or
restricting the ability to vote or transfer such shares or other equity
interest.
3.4 Sub Stock Ownership. The Sub Common Stock consists of an aggregate of 30
million shares of NIS 1 par value per share common stock, all of which
(excluding the Option) is owned, beneficially and of record, by the Shareholders
in the respective amounts set forth on the Signature pages to this Agreement.
The representations hereafter made in this section 3.4 are made individually by
each Shareholder only: Each of the Shareholders has good, absolute, and
marketable title to such Shareholder's Sub Common Stock. The Shareholders have
the complete and unrestricted right, power and authority to sell, transfer and
assign their Sub Common Stock pursuant to this Agreement. The delivery of the
Sub Common Stock to Parent as herein contemplated will vest in Parent good,
absolute and marketable title to all of the issued and outstanding shares of the
Sub Common Stock, free and clear of all liens, claims, encumbrances, and
restrictions of every kind, except those restrictions imposed by applicable
securities laws.
3.6 Absence of Breach; No Consents. The execution, delivery, and performance of
this Agreement, and the performance by Sub and the Shareholders of their
obligations hereunder, do not nor will with the giving of notice or passage of
time or both:
3.6.1 conflict with or result in a breach of any of the provisions of
Sub's Articles of Association;
3.6.2 contravene any law, ordinance, rule, or regulation of any State or
Commonwealth or political subdivision of either or of the United States, or
contravene any order, writ, judgment, injunction, decree, determination, or
award of any court or other authority having jurisdiction, or cause the
suspension or revocation of any authorization, consent, approval, or license,
presently in effect, which affects or binds, Sub or any of its Shareholders or
any of its or their material properties, except in any such case where such
contravention will not have a Material Adverse Effect;
3.6.3 except as set forth in Schedule 3.6, conflict with, result in
termination of, contravene, constitute a default under, give to others any
rights of termination or cancellation of, or accelerate the performance required
by or maturity of, result in the creation of any lien or loss of any rights, or
result in a material breach of or default under any material indenture, loan,
credit agreement, mortgage, deed of trust, note, bond, franchise, lease,
contract or any other agreement or instrument binding upon Sub, or to which the
property or business of Sub is subject; or
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3.6.4 except as set forth in the Schedule 3.6, require the authorization,
consent, approval, or license of, or the submission of any notice, report or
other filing with, any third party, including any governmental agency.
3.7 Investment Representations.
3.7.1 Acquisition for Own Account. The Consideration to be received by the
Shareholders hereunder, will be acquired for investment for each such
Shareholder's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof, and each Shareholder has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
3.7.2 Each Shareholder is either an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the 1933 Act or has such
knowledge and experience in financial and business matters that such Shareholder
is capable of evaluating the merits and risks of taking and holding the
Consideration such Shareholder shall receive hereunder.
3.7.3 Restricted Securities. The Shareholders understand the Consideration
is characterized as "restricted securities" under the 1933 Act inasmuch as it is
being acquired from Parent in a transaction not involving a public offering and
that under the 1933 Act and applicable regulations thereunder such securities
may be resold without registration under the 1933 Act only in certain limited
circumstances. In this connection, the Shareholders represent that they are
familiar with Rule 144 promulgated under the 1933 Act, and understand the resale
limitations imposed thereby and by the 1933 Act.
3.7.4 Legend. The Shareholders understand that the certificates
representing Consideration, when delivered to the Shareholders, may have
appropriate orders restricting transfer placed against them on the records of
the transfer agent for such securities, and may have placed upon them the
following, or similar legend:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933. THEY MAY
NOT BE TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS THE TRANSFEROR FIRST SATISFIES THE ISSUER THAT THE PROPOSED
TRANSFER, IN THE MANNER PROPOSED, DOES NOT VIOLATE THE REGISTRATION
REQUIREMENTS OF SAID ACT.
Each Shareholder agrees not to attempt any transfer of any such securities
without first complying with the substance of said legend, and agrees that an
opinion of counsel, a no-action letter of the SEC, or equivalent evidence may be
required for removal of the legend.
3.7.5 Additional Representations. Each Shareholder acknowledges that the
Consideration has not been registered under the 1933 Act and that such
securities may not be resold unless it is subsequently registered or an
exemption form such registration is available. In addition, each Shareholder
acknowledges that (a) such Shareholder has been granted the opportunity to ask
questions of, and receive answers from, representatives of Parent concerning
Parent and the terms and conditions of the acquisition of the Consideration and
to obtain any additional information such Shareholder deems necessary; (b) such
Shareholder's knowledge and experience in financial business matters is such
that such Shareholder is capable of evaluating the merits and risks of the
investment in the Consideration; and (c) such Shareholder has carefully reviewed
the terms and provisions of this Agreement and has evaluated the restrictions
and obligations contained herein.
3.8 Disclosure. To the best of Sub's and the Shareholders' knowledge, no
representation, warranty or statement by them in this Agreement, or in any
exhibit, schedule, statement or certificate furnished to Parent pursuant to this
Agreement, when read as a whole, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements made
herein, in light of the circumstances under which they were made, not
misleading.
3.9 Articles of Incorporation; Bylaws; Minute Books. True and complete copies of
the Articles of Association and Certificate of Incorporation (or comparable
organizational documents) of Sub, as amended to and including the date hereof,
have been delivered to Parent. Sub is not in violation of any provision of its
Articles of Association and Certificate of Incorporation (or comparable
organizational documents). Sub's minute books, stock books and stock transfer
records, true and complete copies of which have been delivered to Parent,
contain true and complete records of all issuances and transfers of capital
stock of Sub, and contain a materially complete summary of all meetings,
consents, proceedings and other formal actions of directors and stockholders
since February 1998.
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3.10 Taxes.
3.10.1 Since 1998, Sub and its Subsidiaries have filed all Tax Returns, as
defined below, which they are required to file under all applicable laws; all
such Tax Returns are true and accurate and have been prepared in compliance with
all applicable laws; each of Sub and each of its Subsidiaries has paid all
Taxes, as defined below, due and owing by it (whether or not such Taxes are
required to be shown on a Tax Return) and has withheld and paid over to the
appropriate taxing authorities all Taxes which it is required to withhold from
amounts paid or owing by it to any employee, stockholder, creditor or other
third party.
3.10.2 No claim has been made by a taxing authority in a jurisdiction
where neither Sub nor any Subsidiary does not file Tax Returns that such
corporation is or may be subject to taxation by the jurisdiction. There are no
foreign, federal, state or local tax audits or administrative or judicial
proceedings pending or being conducted with respect to Taxes of Sub or any of
its Subsidiaries; no information related to Tax matters has been requested by
any foreign, federal, state or local taxing authority. To the best of Sub's
knowledge, there are no material unresolved questions or claims concerning the
Tax liability of Sub or any of its Subsidiaries.
3.10.3 Sub has not (a) waived any statute of limitations; (b) agreed to
any extension of the period for assessment or collection; or (c) executed or
filed any power of attorney with respect to any Taxes, which waiver, agreement
or power of attorney is currently in force.
3.11 Litigation.
3.11.1 To the best of the knowledge of Sub, no investigation or review by
any governmental entity with respect to Sub or any of its Subsidiaries is
pending or threatened, nor has any governmental entity indicated to Parent an
intention to conduct the same, and
3.11.2 there is no action, suit, or proceeding pending or, to the best
knowledge of Parent, threatened against or affecting Sub or its Subsidiaries at
law or in equity, or before any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality.
3.12 Employees. There are no collective bargaining, bonus, profit sharing,
compensation, or other plans, agreements, trusts, funds, or arrangements
maintained by Sub or any Subsidiary of Sub for the benefit of its directors,
officers, or employees, and there are no employment, consulting, severance, or
indemnification arrangements, agreements or understandings between Sub or any of
its Subsidiaries, on the one hand, and any current or former directors,
officers, or other employees (or Affiliates thereof) of Sub or any of its
Subsidiaries, on the other hand. Sub is not, and following the Closing will not
be, bound by any express or implied contract or agreement to employ, directly or
as a consultant or otherwise, any person for any specific period of time or
until any specific age.
3.14 Labor Matters. There are no activities or controversies, including, without
limitation, any labor organizing activities, election petitions or proceedings,
proceedings preparatory thereto, unfair labor practice complaints, labor strikes
or disputes pending or, to the best of the knowledge of Sub, threatened, between
Sub or any of its Subsidiaries and any of its or their employees.
3.15 Due Diligence. Sub and the Shareholders understand that the only
representations being made to them under this Agreement are those expressly set
forth in Article II and that in entering into and consummating the Transaction
they have relied only on such written representations of Parent made herein and
are taking the Parent Common Stock being issued to them in the Transaction on an
"as-is" basis. Sub and the Shareholders further acknowledge that Parent shall
not be responsible for the truth and accuracy of any other information which Sub
or the Shareholders have obtained or may hereafter obtain in the course of any
due diligence investigations that Sub or the Shareholders may have independently
conducted. Without limiting the generality of the foregoing, the Sub also had
the opportunity to obtain and to review the Parent's filings on EDGAR listed on
Schedule 3.15 (collectively, the "Company's SEC Documents").
ARTICLE IV
PARENT'S COVENANTS
4.1 Affirmative Covenants. Subject to the terms and conditions hereunder, from
the date hereof through the Closing Date, Parent shall use its reasonable
efforts to take every action reasonably required in order to satisfy the
conditions to closing set forth in this Agreement and otherwise to ensure the
prompt and expedient consummation of the Transaction, and will exert all
reasonable efforts to cause the Transaction to be consummated, provided in all
instances that the representations and warranties of Sub and the Shareholders in
this Agreement are and remain true and accurate and that the covenants and
agreements of Sub and the Shareholders in this Agreement are honored.
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4.2 Access and Information. Parent shall afford to Sub and the Shareholders, and
their accountants, counsel and other representatives, reasonable access during
normal business hours throughout the period prior to the Closing to all of
Parent's properties, books, contracts, commitments, records (including, but not
limited to, tax returns), and personnel.
4.3 Cooperation. Parent will use its reasonable efforts to cooperate with Sub
and its Shareholders and their counsel, accountants and agents in carrying out
the transactions contemplated by this Agreement and in delivering all documents
and instruments deemed reasonably necessary or useful by Sub or its
Shareholders. Without limiting the generality of the foregoing, Parent and its
authorized representatives agree to cooperate fully with Sub or its Shareholders
and to execute and deliver or cause to be executed and delivered at all
reasonable times and places such additional instruments and documents as Sub or
its Shareholders may reasonably request for purposes of carrying out the intent
and purpose of this Agreement, including without limitation, in connection with
the preparation and filing of any filings required under any Federal, state,
county, local or municipal law relating to the Transaction contemplated herein.
4.4 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by Parent in connection with this Agreement and the
Transaction contemplated hereby, including, without limitation, all fees and
disbursements of counsel and auditors in connection with the preparation and
filing of all SEC Documents, all past due fees and disbursements of the Parent's
transfer agent, all fees of Vintage Filings in connection with the filing of SEC
Documents, all fees and disbursements of counsel to the Parent in connection
with the preparation, negotiation and consummation of this Agreement and related
agreements and fees and expenses of LeAnn DeRita in connection with the
preparation and filing of the SEC Documents, shall be paid by Sub.
4.5 Updating of Exhibits and Disclosure Documents. Parent shall notify Sub of
any changes, additions or events which may cause any change in or addition to
any Schedules delivered by it under this Agreement, promptly after the
occurrence of the same and at the Closing by the delivery of updates of all
Schedules. No notification made pursuant to this Section shall be deemed to cure
any breach of any representation or warranty made in this Agreement unless Sub
and the Shareholders specifically agree thereto in writing. Nor shall any such
notification be considered to constitute or give rise to a waiver by Sub or the
Shareholders of any condition set forth in this Agreement.
ARTICLE V
COVENANTS OF SUB AND THE SHAREHOLDERS
5.1 Affirmative Covenants. From the date hereof through the Closing Date, Sub
and the Shareholders will take every action reasonably required of it to satisfy
the conditions to closing set forth in this Agreement and otherwise to ensure
the prompt and expedient consummation of the Transaction, and will exert all
reasonable efforts to cause the Transaction to be consummated, provided in all
instances that the representations and warranties of Parent in this Agreement
are and remain true and accurate and that the covenants and agreements of Parent
in this Agreement are honored.
5.2 Access and Information. Sub and the Shareholders shall afford to Parent and
to Parent's accountants, counsel and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to all
of Sub's properties, books, contracts, commitments, records (including, but not
limited to, tax returns), and personnel.
5.3 Cooperation. Sub and its Shareholders will cooperate with Parent and its
counsel, accountants and agents in every way in carrying out the transactions
contemplated by this Agreement and in delivering all documents and instruments
deemed reasonably necessary or useful by Parent. Without limiting the generality
of the foregoing, Sub and its Shareholders agree to cooperate fully with Parent
and its authorized representatives and to execute and deliver or cause to be
executed and delivered at all reasonable times and places such additional
instruments and documents as Parent may reasonably request for purposes of
carrying out the intent and purpose of this Agreement, including without
limitation, in connection with the preparation and filing of any filings
required under any Federal, state, county, local or municipal law relating to
the Transaction contemplated herein.
5.4 Expenses. Except as set forth herein, whether or not the Transaction is
consummated, all costs and expenses incurred by Sub and the Shareholders in
connection with this Agreement and the Transaction shall be paid by them.
5.5 Updating of Exhibits and Disclosure Documents. Sub or the Shareholders shall
notify Parent of any changes, additions, or events which may cause any change in
or addition to any Schedules delivered by them under this Agreement promptly
after the occurrence of the same and again at the Closing by delivery of
appropriate updates to Parent. No such notification made pursuant to this
Section shall be deemed to cure any breach of any representation or warranty
made in this Agreement unless Parent specifically agree thereto in writing. Nor
shall any such notification be considered to constitute or give rise to a waiver
by Parent of any condition set forth in this Agreement.
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Obligation of Sub and the Shareholders. The obligation of Sub
and the Shareholders to effect the Transaction shall be subject to the
fulfillment at or prior to the Closing of the following conditions, unless Sub
and the Shareholders shall waive such fulfillment:
6.1.1 This Agreement and the transactions contemplated hereby shall have
received all approvals, consents, authorizations, and waivers from governmental
and other regulatory agencies and other third parties (including lenders,
holders of debt securities, and lessors) required to consummate the Transaction;
6.1.2 There shall not be in effect a preliminary or permanent injunction
or other order by any federal or state court which prohibits the consummation of
the Transaction;
6.1.3 Parent shall have performed in all material respects each of its
agreements and obligations contained in this Agreement and required to be
performed on or prior to the Closing and shall have complied with all material
requirements, rules, and regulations of all regulatory authorities having
jurisdiction relating to the Transaction;
6.1.4 The representations and warranties of Parent set forth in this
Agreement shall be true in all material respects as of the date of this
Agreement and, except in such respects as, in the reasonable judgment of Sub and
the Shareholders, do not materially and adversely affect the business or
condition (financial or otherwise) of Parent, as of the Closing Time as if made
as of such time; and
6.1.5 Sub and the Shareholders shall have received, on and as of the
Closing Date, such closing documents and instruments Sub and the Shareholders
shall reasonably request, in each case reasonably satisfactory in form and
substance to Sub and the Shareholders' and their counsel.
6.1.6 Feigenbaum and David Sterling shall provide to Sub and the
Shareholders, on and as of the Closing Date, a waiver of all claims against
Parent including any debt owed to them, in form satisfactory to the parties.
Such waiver shall not include a waiver of any rights under this Agreement or the
documents and agreements delivered to Parent and Feigenbaum and David Sterling
in connection with this Agreement.
6.2 Conditions to Obligation of Parent. The obligation of Parent to effect the
Transaction shall be subject to the fulfillment at or prior to the Closing of
the following conditions, unless the Parent shall waive such fulfillment:
6.2.1 This Agreement and the Transaction shall have received all
approvals, consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders, holders of debt
securities, lessors, and stockholders) required by law to consummate the
Transaction;
6.2.2 There shall not be in effect a preliminary or permanent injunction
or other order by any federal or state authority which prohibits the
consummation of the Transaction.
6.2.3 Sub and the Shareholders shall have performed in all material
respects their agreements and obligations contained in this Agreement required
to be performed on or prior to the Closing;
6.2.4 No material adverse change shall, in the reasonable judgment of
Parent, have taken place in the business or condition (financial or otherwise)
of Sub, other than those that result from the changes permitted by, and
transactions contemplated by, this Agreement;
6.2.5 The representations and warranties of Sub and the Shareholders set
forth in this Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as, in the reasonable judgment of
Parent, do not materially and adversely affect the business or condition
(financial or otherwise) of Sub, as of the Closing Date as if made as of such
time;
6.2.6 Parent shall have received, on and as of the Closing Date, such
closing documents and instruments as Parent shall reasonably request, in each
case reasonably satisfactory in form and substance to Parent and its counsel;
and
8
6.2.7 Parent shall have received, free and clear of all liens, pledges or
encumbrances, all of the issued and outstanding shares of the capital stock of
Sub.
6.2.8 All of the bills to Parent of the vendors set forth on Schedule
6.2.8 shall have been paid in full.
6.2.9 At Closing Parent shall receive financing in an amount not less than
$200,000 and Parent shall have (a) entered into a Consulting Agreement with
Feigenbaum in the form set forth as Exhibit A attached hereto (the "Consulting
Agreement"), (b) paid to Feigenbaum the entire $100,000 consulting fee payable
to Marvin Feigenbaum pursuant to the first sentence of Section 4 of the
Consulting Agreement and (c) obtained and have in full force and effect, the
officers and directors errors and omissions liability policy covering officers
and directors of the Parent required under Section 4(a) of the Consulting
Agreement.
ARTICLE VII
TERMINATION, AMENDMENT, WAIVER
7.1 Termination. This Agreement and the Transaction may be terminated at any
time prior to the Closing, whether before or after any approval by stockholders:
7.1.1 By mutual consent of the Parent, Sub and the Shareholders;
7.1.2 By Sub and the Shareholders, upon written notice to Parent, if the
conditions set forth in Section 6.1 were not, or cannot reasonably be, satisfied
on or before April 30, 2005 unless the failure of any such condition is the
result of the material breach of this Agreement by Sub or the Shareholders;
7.1.3 By Parent, upon written notice to Sub and the Shareholders, if the
conditions set forth in Section 6.2 were not, or cannot reasonably be, satisfied
on or before April 30, 2005 unless the failure of any such condition is the
result of the material breach of this Agreement by Parent;
7.1.4 By Sub and the Shareholders, if there was a material breach in any
representation, warranty, covenant, agreement or obligation of Parent hereunder
and such breach (provided it is curable and Parent promptly commences its effort
to cure) shall not have been remedied on or before April 30, 2005; or
7.1.5 By Parent, if there was a material breach in any representation,
warranty, covenant, agreement or obligation of Sub or a Shareholder hereunder
and such breach (provided it is curable and Sub and the Shareholders promptly
commences its effort to cure) shall not have been remedied on or before April
30, 2005.
7.1.6 Effect of Termination. If this Agreement is terminated pursuant to
this Section 7.1, such termination shall be without liability of any Party, or
any shareholder, member, partner, director, officer, employee, agent, consultant
or representative of such Party, to any other Parties to this Agreement.
7.2 Amendment. This Agreement may be amended in a writing signed by the Parties
hereto at any time, but after the Transaction has been approved by the
stockholders of Parent, no amendment shall be made which materially and
adversely affects the rights of Parent or its stockholders without the further
approval of such stockholders.
7.3 Waiver. At any time prior to the Closing Date, any Party, and in the case of
Parent or Sub by action taken by their respective Boards of Directors, may:
7.3.1 extend the time for the performance of any of the obligations or
other acts of the other Parties hereto;
7.3.2 waive any inaccuracies in the representations and warranties of the
other Parties contained herein or in any document delivered pursuant hereto; or
7.3.3 waive compliance by the other Parties with any of the agreements or
conditions contained herein.
Any agreement on the part of a Party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such Party.
9
ARTICLE VIII
GENERAL PROVISIONS
8.1 Arbitration. In the event that there shall be a dispute, controversy or
claim arising out of, relating to or in connection with this Agreement, the
Transaction, any document referred to herein or related to the subject matter
hereof, the Parties agrees that such dispute shall be submitted to binding
arbitration in New York City, under the auspices of, and pursuant to the rules
of, the American Arbitration Association as then in effect, or such other
procedures as the Parties may agree to at the time, before a tribunal of three
arbitrators, one of which shall be selected by each of the Parties to the
dispute and the third of which shall be selected by the two arbitrators so
selected. Any award issued as a result of such arbitration shall be final and
binding between the Parties, and shall be enforceable by any court having
jurisdiction over the Party against whom enforcement is sought.
8.2 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally, faxed, mailed by registered
or certified mail (return receipt requested) or delivered by independent next
business day delivery service to the Parties at the following addresses (or at
such other address for a Party as shall be specified by like notice given at
least five (5) business days prior thereto:
If to Parent:
124 West 60th Street, Apt 33L
New York, New York 10023
With a copy to:
Darren Ofsink, Esq.
Guzov Ofsink Flink, 14th Floor
New York, New York 10022
Facsimile: 212-688-7273
If to Sub:
3 Gavish St, Kfar Saba
Israel
Att: Michel Braunold
Facsimile: 972-9-764-4851
With a copy to:
Aboudi & Brounstein, Law Offices
3 Gavish St. Kfar Saba
Israel
Facsimile: 972-9-764-4834
If to any Shareholder, to the address set forth for such Shareholder on the
Signature Pages to this Agreement.
Any such notice or communication shall be deemed to have been given (a) if by
personal delivery, on the day after such delivery; (b) if by certified or
registered mail, on the tenth day after the mailing thereof; (c) if by next-day
or overnight deliver, on the day delivered; or (d) if by fax, on the next day
following the day on which such fax was sent, provided that a copy is also sent
by certified or registered mail.
8.3 Interpretation. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4 Miscellaneous. This Agreement:
10
8.4.1 constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, between the Parties, with
respect to the subject matter hereof, except as specifically provided otherwise
or referred to herein, so that no such external or separate agreements relating
to the subject matter of this Agreement shall have any effect or be binding,
unless the same is referred to specifically in this Agreement or is executed by
the Parties after the date hereof;
8.4.2 is not intended to confer upon any other person, other than to the
Parties hereto and their respective heirs, successors and permitted assigns, any
rights or remedies hereunder;
8.4.3 shall not be assigned by operation of law or otherwise;
8.4.4 shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of New York,
without regard to the principles of conflict of laws; and
8.4.5 shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors, assigns, heirs and legal
representatives;
8.5 Counterparts. This Agreement may be executed in two or more counterparts,
including by facsimile, which together shall constitute a single agreement.
8.6 Severability. If any provision, including any phrase, sentence, clause,
section or subsection, of this Agreement is invalid, inoperative or
unenforceable for any reason, such provision shall be valid and enforceable to
the fullest extent permitted by law and such circumstances shall not have the
effect of rendering such provision in question invalid, inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision herein contained invalid, inoperative or unenforceable to any extent
whatsoever.
8.7 Survival. All representations and warranties of each of the parties shall
survive the transactions contemplated herein and shall remain operative and in
full force and effect, regardless of any investigations at any time made by or
on behalf of any party hereto, for a period of one (1) year after the Closing
Date.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be signed on the date first written above by their respective officers thereunto
duly authorized.
UNITED DIAGNOSTIC, INC. SPO MEDICAL EQUIPMENT LTD.
By: /s/ Marvin Feigenbaum By: /s/ Michael Braunold
--------------------- --------------------
Marvin Feigenbaum Michael Braunold
Chief Executive Officer Chief Executive Officer
11
Signature Page for Shareholders
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Name of Shareholder Address Number of Shares of Sub Number of Shares of Parent
Common Stock Being Common
Exchanged By Shareholder Stock To Be Issued to
Shareholder In Exchange
for Sub Common Stock
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Western Negev Initiative P.O.B. 573, Neve Dekalim 176,846 327,100
Centre Ind. Area, D.N. Hof Azza,
Israel 79779
/s/ Dov Henoch
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
D.N. Hof Azza, Israel 758,055 1,402,124
/s/ Israel Sarussi 79792
- ------------------------
Israel Sarussi
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
D.N. Hof Azza, Israel 63,300 117,082
/s/ Dov Henoch 79792
- ------------------------
Dov Henoch
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Brounstein - Aboudi Adv. 3 Hagavish St., Kfar Saba, 151,620 280,441
Trustees Israel 44641
/s/ Gerald Brounstein
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
TRBMS Investments Inc. 3535 Bathurst St., 2nd 137,500 254,325
floor, North York,
/s/ Ontario, Canada
- ------------------------ M6A 2C7
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Concinnity Corporation 21 Dundas Square 135,000 249,700
Ste. 711, Toronto,
/s/ M. Kaiser Ontario, Canada
- ------------------------ M5B 1B8
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Name of Shareholder Address Number of Shares of Sub Number of Shares of Parent
Common Stock Being Common
Exchanged By Shareholder Stock To Be Issued to
Shareholder In Exchange
for Sub Common Stock
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
933745 Ontario Inc. 41 Sultana Ave. 138,000 255,249
Toronto, Ont., Canada
/s/ M6A 1T2
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
732498 Ontario Inc. 530 Wilson Ave., 4th 138,000 255,249
floor, Downsview, Ontario,
/s/ S. Jacobs Canada
- ------------------------ M3H 5Y9
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
517 Jarvis Ave., Far 135,070 249,830
/s/ Seth Rosenblatt Seth Rockaway, NY, USA
Rosenblatt
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
703 Carlyle St., Woodmere, 135,500 250,625
/s/ Aaron Fischman NY, USA
- ------------------------
Aaron Fischman
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Ephod Management Group 445 Central Av. A2R 135,000 249,700
Cedarhurst, NY, USA
/s/ Seth Rosenblatt 11516-2001
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Choshen Israel Group 445 Central Ave. 137,000 253,400
Cedarhurst, NY, USA
/s/Aaron Fischman 11516
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
533 Hicksville Rd., Far 123,500 228,430
/s/ Shelly Freedman Rockaway, NY, USA
- ------------------------
Shelly Freedman
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
13
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Name of Shareholder Address Number of Shares of Sub Number of Shares of Parent
Common Stock Being Common
Exchanged By Shareholder Stock To Be Issued to
Shareholder In Exchange
for Sub Common Stock
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Directives International Inc. 230 Fifth Ave., 137,500 254,325
9th floor
/s/ Morris Abboudi New York, NY
- ------------------------ USA 10001
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Jorlee Holdings Ltd. 21 Dundas Square 146,575 271,110
Ste. 700
/s/Sheldon Barris Toronto, Ont.
- ------------------------ Canada M5B 1B8
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
/s/ Jeff Dorfman 16 Ambassador Place, 146,575 271,110
- ------------------------ Toronto, Ontario, Canada
Jeff Dorfman
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
/s/ Larry Katz 626 EAB Plaza, Uniondale, 146,576 271,112
- ------------------------ NY, USA
Larry Katz
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
711129 Ontario Ltd. 124 Dufferin St. 25,000 46,241
Hamilton, Ont. Canada
/s/ Ira Jacobs L8S 3N6
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Tower Capital Corp 140 Cidermill Ave., 31,134 57,586
Concord, Ont. Canada L4K
/s/ Josh Frankel 4K5
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Double D Venture Fund L.P. 1 New York Plaza 121,303 224,366
NY NY
/s/ Philip Braginsky
- ------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Total 3,119,054* 5,769,106**
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
* Excludes 90,978 options which Israel Sarrusi holds in Sub
("Option").
** Excludes168,275 fully vested penny options to be issued to Israel
Sarrusi forthwith subsequent to Closing in exchange for Option.
14
Annex A
"1933 Act" means the Securities Act of 1933, as amended, as of the Closing Date.
"Affiliate" of a Person means a Person that directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with the first Person. "Control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract, as trustee or executor,
or otherwise. For purposes of this Agreement, each of the Shareholders and each
member of each Shareholder's immediate family shall be deemed to be an Affiliate
of Sub.
"Closing" is defined in Section 1.2.
"Closing Date" is defined in Section 1.5.
"Closing Time" is defined in Section 1.5.
"Code" means the Internal Revenue Code of 1986, as amended, and related rules
and regulations thereunder.
"Common Stock" is defined in the recitals to this Agreement.
"Consideration" is defined in Section 1.3.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting principles
"IRS" means the Internal Revenue Service.
"Liabilities" means obligations, whether known or unknown, contingent or
absolute, recorded on its books or not, arising or resulting in any way from
facts, events, agreements, obligations or occurrences that existed or transpired
at a prior point in time, or resulted from the passage of time.
"Material Adverse Effect" or "Material Adverse Change" means with respect to any
Person, any event, change, circumstance or effect that is or is reasonably
likely to be materially adverse to (a) the business, financial condition or
results of operations of such Person and its Subsidiaries taken as a whole; or
(b) the ability of such entity to consummate the Transaction contemplated by
this Agreement.
"Pension Plan" shall mean a pension plan or employee pension benefit plan, as
defined in Section 3(2) of ERISA and regulations adopted under ERISA or such
other law, modifying, amending, interpreting, or otherwise affecting the
application of such provision, either in general or as applied to the nature or
circumstances of a particular entity that is a party to, or is affected by or is
involved in the Transaction and with respect to which entity the use of the term
in this Agreement, or in the particular location in this Agreement, is relevant.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group.
"Plans" is defined in Section 3.13.1.
"Related Persons" is defined in Section3.13.1.
"SEC" means the Securities and Exchange Commission.
"Shareholders" is defined in the recitals to this Agreement.
"Sub Common Stock" is defined in the recitals to this Agreement.
15
"Sub Preferred Stock" is defined in the recitals to this Agreement.
"Sub Stock" is defined in the recitals to this Agreement.
"Subsidiary" means each corporation or other Person in which a Person owns or
controls, directly or indirectly, capital stock or other equity interests
representing more than 50% of the outstanding voting stock or other equity
interests.
"Tax" or "Taxes" means federal, state, county, local, foreign or other income,
gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, estimated and other taxes of any
kind whatsoever (including, without limitation, deficiencies, penalties,
additions to tax and interest attributable thereto) whether disputed or not.
"Tax Return" means any return, information report or filing with respect to
Taxes, including any schedules attached thereto and including any amendment
thereof.
"Transaction" is defined in Section 1.1.
"Welfare Plan" means a welfare plan or an employee welfare benefit plan as
defined in Section 3(1) of ERISA and regulations adopted under ERISA or such
other law, modifying, amending, interpreting, or otherwise affecting the
application of such provision, either in general or as applied to the nature or
circumstances of a particular entity that is a party to, or is affected by or is
involved in the Transaction and with respect to which entity the use of the term
in this Agreement, or in the particular location in this Agreement, is relevant.
16