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EXHIBIT 2(c)
ACQUISITION AGREEMENT
This Acquisition Agreement ("Agreement") is made the 24th day of May,
1996, by and among UNIVERSAL MEDICAL SYSTEMS, INC., a Nevada corporation, whose
principal office is located at 00000 Xxxx Xxxxxxxxx Xxxxx 000, Xxxxxxxxxx,
Xxxxxxx 00000 ("UMSI"), LIFE SCIENCES, INC., a Connecticut corporation,
BIOMETRIX, INC., a Connecticut corporation, and BIOMETRIX, INC., a New Hampshire
corporation, whose address is 00 Xxxxx Xxxx Xxxx, #000, Xxxxxxxxx, Xxxxxxxxxxx
00000 (hereinafter sometimes collectively referred to as "LSI"), and XXXXXXX
XXXXXXX, whose address is 00 Xxxxx Xxxx Xxxx, #000, Xxxxxxxxx, Xxxxxxxxxxx 00000
(hereinafter sometimes referred to as "ASRICAN" OR "SHAREHOLDER").
RECITALS:
WHEREAS: Asrican is the owner of record of all of the issued and
outstanding shares of common stock of LSI, and LSI has no issued or outstanding
shares of preferred stock or other securities;
WHEREAS: UMSI is a corporation duly organized and in good standing under
the laws of the State of Nevada;
WHEREAS: Life Sciences, Inc. is a corporation duly organized and in good
standing under the laws of the State of Connecticut;
WHEREAS: Biometrix, Inc., a Connecticut corporation, is a corporation
duly organized and in good standing under the laws of the State of Connecticut;
WHEREAS: Biometrix, Inc., a New Hampshire corporation, is a corporation
duly organized and in good standing under the laws of the State of New
Hampshire;
WHEREAS: The parties hereto desire to effect an acquisition by UMSI of
Life Sciences, Inc., Biometrix, Inc., a Connecticut corporation, and Biometrix,
Inc., a New Hampshire corporation, whereby Life Sciences, Inc., Biometrix, Inc.,
a Connecticut corporation, and Biometrix, Inc., a New Hampshire corporation,
will become wholly owned subsidiary corporations of UMSI;
WHEREAS: The parties hereto desire that this transaction constitute a
stock-for-stock tax-free exchange, a type B reorganization, as defined by
Section 368(1)(A through G) of the Internal Revenue Code.
In consideration of the above premises, for the consideration set forth
below, and subject to the terms and conditions set forth below, the parties
agree as follows:
Section I. Exchange of Stock. On the closing date, as defined below,
the Shareholder shall deliver to UMSI certificates representing all of the
issued and outstanding shares of LSI, duly endorsed. In exchange, UMSI shall
deliver to the Shareholders, at closing, certificates representing Six Hundred
Thirty-Seven Thousand (637,000) shares of Series "E" Convertible Preferred Stock
of UMSI. In addition, at closing, UMSI shall deliver to LSI for further delivery
to Xx. Xxxx Xxxxxxx a certificate representing Six Thousand Five Hundred (6,500)
shares of Series "E" Convertible Preferred Stock of UMSI and UMSI shall
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deliver to LSI for further delivery to Xx. Xxxxx Xxxxxx a certificate
representing Six Thousand Five Hundred (6,500) shares of Series "E" Convertible
Preferred Stock.
Section II. Approval by Shareholder(s) of LSI.
By execution of this Agreement below, LSI and Asrican confirm and
acknowledge that this Agreement has been approved and adopted by the holder, or
holders, of all the issued and outstanding shares of stock of LSI.
Section III. Approval by Boards of Directors of UMSI and LSI. By
execution of this Agreement below, the respective officers of UMSI and LSI
acknowledge, confirm and verify that this Agreement has been approved by the
Boards of Directors of UMSI and LSI.
Section IV. Closing. The closing of the exchange of shares of stock,
and acquisition of LSI by UMSI, shall take place on July 1, 1996, at the offices
of LSI, or other mutually agreeable location, subject to extension or change by
agreement of the parties.
Section V. Warranties and Covenants of LSI and Shareholder. LSI and
the Shareholders jointly and severally represent, warrant, and covenant as
follows:
(a) Asrican (Shareholder) is the owner of record of all the
issued and outstanding shares of stock of LSI.
(b) As of the date of this Agreement, except for the shares of
common stock issued to Shareholder, LSI has not issued any shares of preferred
stock, options, warrants or any other rights to securities of LSI to any other
party.
(c) Life Sciences, Inc. is duly incorporated and authorized to
do business under the laws of the State of Connecticut.
(d) Biometrix, Inc., a Connecticut corporation, is duly
incorporated and authorized to business under the laws of the State of
Connecticut.
(e) Biometrix, Inc., a New Hampshire corporation, is duly
incorporated and authorized to do business under the laws of the State of New
Hampshire.
(f) LSI has the power and authority to carry on its business as
currently conducted, and holds, or is duly licensed under, all patents,
trademarks, trade names, copy-rights, licenses, processes, and formulas
necessary for the operation of its business as currently conducted, free and
clear of all liens, encumbrances, and claims of any kind.
(g) The balance sheet and income statement of LSI attached as
Exhibit "A" and incorporated herein by this reference, fully and accurately
reflect respectively the financial condition of the corporation as of December
31, 1995, and the operations of the corporation for the period ending December
31, 1995.
(h) No transactions, other than in the ordinary and usual
course of business, have been engaged in by LSI from December 31, 1995, to the
date of this Agreement, and there has been no material adverse change in the
financial or operating condition of LSI since December 31, 1995.
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(i) As of the date of this Agreement LSI is not, and as of the
closing date LSI will not be, in default under any contract or agreement, or
under the order or decree of any court. To the best knowledge of the
Shareholders there are no actions or proceedings pending or threatened against
LSI as of the date of this Agreement, and neither the execution and delivery of
this Agreement nor the consummation of the transaction contemplated in this
Agreement will conflict with, result in the breach of, or accelerate the
performance required by any contract or agreement to which LSI or any of the
Shareholders is now a party.
(j) There are no dividends declared and unpaid on any of the
shares of stock of LSI.
(k) LSI is not a party to any contract or agreement, and is not
subject to any other restriction, materially and adversely affecting its
business, property, or assets.
(l) LSI has good and marketable title to all assets reflected
on the balance sheet included in Exhibit "A", which assets are "as is" and
"where is".
(m) Attached as Exhibit "B", and incorporated herein by this
reference, is an accurate list of all insurance policies in effect with respect
to the business and property of LSI as of the date of this Agreement. Insurance,
or comparable coverage, shall be kept in effect until the closing date.
(n) Attached as Exhibit "C", and incorporated herein by this
reference, is an accurate list of every lease to which LSI is a party, together
with the terms of each lease.
(o) Attached as Exhibit "D", and incorporated herein by this
reference, is an accurate list of accounts and notes receivable by LSI as of the
date of this Agreement.
(p) Attached as Exhibit "E", and incorporated herein by this
reference, is an accurate itemization of the liabilities of LSI as of the date
of this Agreement.
(q) The Shareholder, officers and directors of LSI have
informed UMSI of the on-going cash flow needs of LSI in order that UMSI can
include these cash flow needs in plans for funding the on-going operations of
LSI.
(r) LSI and Asrican have been fully released from any
non-compete agreement which they, or any of them, may have entered into
previously with a corporation known as Healthwatch.
Section VI. Interim Operations; Additional Covenants of LSI and
Shareholders.
LSI and the Shareholder represent, warrant, and covenant that LSI will
not enter into any transaction, prior to the closing date, other than in the
ordinary course of business, and that LSI and the Shareholder will take any
action that is necessary to insure that LSI will not enter into any such
transactions, and in particular will not, without the prior written consent of
UMSI:
(a) Create or incur any indebtedness other than unsecured
current liabilities incurred in the ordinary course of business;
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(b) Grant or permit to arise any mortgage, security interest,
lien, or encumbrance of any kind;
(c) Sell or otherwise dispose of any of its assets other than
merchandise inventories sold in the ordinary course of business;
(d) Declare or pay any dividends, or repurchase or redeem any
of its shares, or establish a sinking fund or other reserve for such purpose;
(e) Issue, sell, or grant options for the sale of any of its
shares, whether or not previously authorized or issued;
(f) Expend any funds for capital additions or improvements
other than ordinary expenditures for maintenance, repairs, and replacements;
(g) Acquire an interest in any other business enterprise,
whether for cash or in exchange for the stock or other securities of LSI; or
(h) Increase the compensation paid to any of its officers,
directors, or employees above the level paid on the date of this Agreement or
agree to pay to any of its officers, directors or employees any bonus, severance
pay, or pension, whether under an existing compensation or deferred compensation
plan, or otherwise.
Section VII. Covenants of UMSI as to Stock. UMSI represents, covenants,
and warrants as follows:
(a) As of the date of this Agreement, UMSI is authorized to
issue, in the aggregate, twenty-five million (25,000,000) shares of common
stock, with a par value of $.001 per share, of which not more than seven million
five hundred thousand (7,500,000) shares are issued and outstanding. As of the
date of this Agreement, UMSI is authorized to issue, in the aggregate, ten
million (10,000,000) shares of preferred stock, with a par value of $.001 per
share, of which not more than three million five hundred thousand (3,500,000)
shares are issued and outstanding.
(b) The six hundred fifty thousand (637,000) shares of Series
"E" Convertible Preferred Stock of UMSI to be issued to the Shareholder in
exchange for all of the issued and outstanding shares of common stock of LSI and
the thirteen thousand (13,000) shares of Series "E" Convertible Preferred Stock
to be issued to Xx. Xxxx Xxxxxxx and Xx. Xxxxx Xxxxxx (6,500 shares each) shall
include the following rights and privileges:
(i) Each share of preferred stock shall have a stated
value of $1.00, but shall have no guaranteed dividend or interest.
(ii) The holders of preferred stock shall have the same
voting rights at all meetings of shareholders of UMSI as the holders of common
shares of stock of UMSI.
(iii) The preferred shares of stock may be converted to
shares of common stock of UMSI when any one of the following events occurs:
A. At any time after the common shares of stock
of UMSI are trading at $6.00 per share over ten (10) consecutive trading days.
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B. UMSI authorizes the conversion of the
preferred shares of stock to common shares of stock.
C. Six (6) months following the closing date,
all remaining shares of preferred stock, not already converted to shares of
common stock of UMSI, automatically shall be converted to shares of common stock
of UMSI.
D. In all cases, the number of shares of UMSI
common stock to be issued pursuant to the above described conversion options
shall be determined based upon the average bid price for shares of common stock
of UMSI over the ten (10) trading days prior to the conversion date. For
example, if the average bid price over the ten (10) trading days prior to the
conversion date is $1.00 per share then each share of preferred stock would be
converted into one (1) share of common stock; if the average bid price is $3.00
per share then three shares of preferred stock would be converted into one (1)
share of common stock.
(c) Each certificate representing a share of preferred stock of
UMSI to be issued pursuant to this Agreement shall bear on its face a legend in
substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares have been
acquired for investment and may not be sold, transferred or
assigned in the absence of an effective registration statement for
these shares under the Securities Act of 1933 or an opinion of the
Company's legal counsel that registration is not required under
such Act."
Section VIII. Conditions Precedent to Obligations of UMSI. The
obligations of UMSI under this Agreement are subject to the following
conditions:
(a) There shall be tendered for exchange by the Shareholder at
the closing, certificates representing all of the issued and outstanding shares
of stock of LSI in a form approved by counsel for UMSI.
(b) The representations of LSI and the Shareholder contained
herein shall be true as of the closing date, and LSI and the Shareholder shall
execute and deliver to UMSI a certificate to that effect in form and substance
satisfactory to counsel for UMSI.
(c) All directors and officers of LSI shall tender their
resignations effective as of the closing date.
(d) Neither the inventories nor operating assets of LSI shall
have been substantially damaged or destroyed.
(e) UMSI shall have received an opinion of legal counsel to
UMSI, satisfactory in form and substance to UMSI, to the effect that (i) all
necessary corporate proceedings of UMSI and LSI have been duly taken to
authorize and enable the exchange of the shares as provided for herein, (ii) the
delivery of the shares of preferred stock of UMSI to the Shareholders of LSI in
exchange for their shares of all issued and outstanding
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stock of LSI being delivered to UMSI pursuant to this Agreement is exempted from
the registration requirements under the Securities Act of 1933, as amended, by
reason of the applicability of Section 4(2) of the Act, Regulation D promulgated
under Section 3(b) of the Act, or any other exemption provided for under the
Act, and (iii) the transactions herein provided for will not result in the
recognition of taxable gain to the Shareholders of LSI upon the transfer of
their stock in LSI in exchange solely for stock of UMSI, nor in the recognition
of taxable gain to UMSI, or its shareholders upon said transfer, by reason of
the transaction qualifying as a tax-free reorganization under the Internal
Revenue Code.
Section IX. Investment Intent. Each of the Shareholders represents that
the shares of stock of UMSI being acquired by him or her under this Agreement
are being acquired for investment purposes only, and not with a view to
reselling the same or dividing participation with others. Each Shareholder
represents that he or she has no present intent to resell or otherwise dispose
of all or any part of such shares.
Section X. Access to Records and Information.
(a) UMSI, and its counsel, accountants, engineers, and other
representatives, shall have the right at all times during ordinary business
hours to inspect all of the properties, books, and records of LSI, and the
Shareholders shall cooperate with and furnish to UMSI and its representatives,
all such information and documents with respect to the affairs of LSI as UMSI or
its representatives may reasonably request.
(b) The Shareholder, and his counsel, accountants, engineers,
and other representatives, shall have the right at all times during ordinary
business hours to inspect all of the properties, books, and records of UMSI, and
UMSI shall cooperate with and furnish to the Shareholder and his
representatives, all such information and documents with respect to the affairs
of UMSI as the Shareholder or his representatives may reasonably request.
Section XI. Employment of Xxxxxxx Xxxxxxx, Repayment of Advances,
Royalty Agreement and Funds to Cover Expenses of Connecticut Office. UMSI agrees
that the following actions will be taken following the closing:
(a) Xxxxxxx Xxxxxxx ("Xxxxxxx") will be elected a director of
LSI and will be appointed President of LSI for a term of three (3) years.
(b) UMSI shall reimburse Asrican the total sum of Two Hundred
Fifty-Two Thousand and No/100 Dollars ($252,000) for advances made previously by
Asrican to LSI, which sum will be paid to Asrican in installments of Seven
Thousand and No/100 Dollars ($7,000) each month during the three (3) year period
commencing on the date of closing. Payment of this total sum, plus the $50,000
sum described in Section XIV below, is the total amount which UMSI, or LSI, will
reimburse to Asrican for advances or loans he may have made previously to LSI.
(c) Ascrican shall be entitled to a royalty on all LSI sales as
follows:
(i) Five percent (5%) of the first one million in sales,
with a minimum guarantee of $5,000 per month for the first six (6) months
following closing.
(ii) Seven and a half percent (7.5%) of the second
million in sales.
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(iii) Ten percent (10%) of sales over three million
dollars ($3,000,000).
(iv) The above royalty will be paid for sales made during
the thirty-six (36) months following the date of closing; thereafter, a royalty
of five percent (5%) will be paid on all LSI sales for an additional period of
five (5) years.
(v) The terms of the royalty described above will
incorporated into a separate royalty agreement to be executed by LSI and
Ascrican and approved by UMSI.
(d) Following closing, UMSI agrees to make funds available, as
may be necessary, to cover the operating costs of the LSI office in Connecticut,
which funds shall be up to Five Thousand and No/100 Dollars ($5,000) per month.
Section XII. LSI Debt. LSI and the Shareholder agree that as of the
date of closing the only indebtedness of LSI will be debt to vendors and banks
not to exceed in the aggregate the sum of $160,000. LSI and the Shareholder also
agree that as of the date of closing there will no indebtedness or other
obligations of LSI to Xx. Xxxx Xxxxxxx and Xx. Xxxxx Xxxxxx, except delivery of
the share certificates referenced above.
Section XIII. Advances by UMSI Prior to Closing. UMSI may, but shall not
be required to, make advances or loans of funds to or for the benefit of LSI
prior to the date of closing upon terms and conditions satisfactory to UMSI and
its legal counsel.
Section XIV. Payment to Asrican (Shareholder). Upon execution of this
Agreement by all parties, UMSI shall pay to Asrican (Shareholder) the sum of
Fifty Thousand and No/100 Dollars ($50,000), which sum shall represent partial
reimbursement to Asrican of funds loaned or advanced by Asrican to LSI. In the
event this transaction is not closed on July 1, 1996, or other closing date as
extended by agreement of all the parties, due to a breach of any of the
warranties or covenants of LSI or Shareholder as set forth herein, then Asrican
and LSI shall repay immediately to UMSI the $50,000 payment described in this
Section XIV as well as any and all advances as described in Section XIII.
Section XV. Notices. All notices required or permitted to be given
under this Agreement shall be deemed duly given when delivered personally or
sent by registered or certified mail, postage prepaid, properly addressed to the
party to receive such notice, at the addresses specified above.
Section XVI. Entire Agreement. This Agreement constitutes the entire
agreement between the parties; there are no agreements, warranties, or
representations, express or implied, except those expressly set forth herein.
All agreements, representations, and warranties contained in this Agreement
shall apply as of the closing date and shall survive the closing of this
Agreement.
Section XVII. Modification. This Agreement may not be amended or
modified, except by written agreement of the parties.
Section XVIII. Binding Effect. This Agreement shall bind and inure to the
benefit of the parties and their heirs, legal representatives, successors, and
assigns.
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Section XIX. Governing Law. This agreement shall be construed under and
governed by the laws of the State of Florida, which is the state in which the
principal office of UMSI is located.
Section XX. Counterparts. This agreement may be executed in multiple
counterparts and on facsimile paper and by facsimile transmission as necessary.
When each of the parties has signed and delivered at least one such counterpart,
each counterpart will be deemed an original and, when taken together with the
other signed counterparts, shall constitute one fully executed copy of this
Agreement, which shall be binding upon and effective as to the parties according
to its terms.
IN WITNESS WHEREOF, this Agreement has been executed in one or more
duplicate original counter-parts as of the date first above written.
UNIVERSAL MEDICAL SYSTEMS, INC.
By: /s/Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Chairman & CEO
LIFE SCIENCES, INC.
By: /s/Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, President
BIOMETRIX, INC., a Connecticut corporation,
By: /s/Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, President
BIOMETRIX, INC., a New Hampshire corporation,
By: /s/Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, President
SHAREHOLDER:
/s/Xxxxxxx Xxxxxxx
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XXXXXXX XXXXXXX
