Exhibit 2.9
Agreement by an among Unilabs Group Limited,
Health Strategies Limited and
Medical Diagnostic Management, Inc.,
dated as of May 23, 1997
AGREEMENT
AGREEMENT, dated as of the 23rd of May, 1997, by and among UNILABS GROUP
LIMITED, a British Virgin Islands corporation with an address' at Road Town,
Pasea Estate, P.O. Box 3149, Tortola, British Virgin Islands (hereinafter
referred to as "UGL"), HEALTH STRATEGIES LIMITED, a Jersey corporation with an
address at 00 Xxxx Xxxxxx, Xx. Xxxxxx, Xxxxxx, Xxxxxxx Xxxxxxx (hereinafter
referred to as "HSL") and MEDICAL DIAGNOSTIC MANAGEMENT INC., a New Jersey
corporation with offices at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
(hereinafter referred to a "MDM"),
WHEREAS, UGL owns 50 Class B ordinary shares, without par value (the "MISE
Shares"), of MISE S.A., a British Virgin Islands corporation (hereinafter
referred to as "MISE"); and
WHEREAS, HSL wishes to acquire from UGL ail of UGL's right and title in and
to the MISE Shares; and
WHEREAS, MISE owns the right (the "European Flights") to utilize the MDM
Concept and the MDM Software (as such terms are hereinafter defined) throughout
certain jurisdictions in Europe (the "Territory"), and
WHEREAS, MDM wishes to acquire the European Rights presently possessed by
MISE; and
WHEREAS, following its acquisition of the MISE Shares, HSL, as the sole
shareholder of MISE, is willing to cause MISE to assign the European Rights to
MDM; and
WHEREAS, in consideration of the assignment to MDM of the European Rights,
MDM is willing to issue shares of its Series C Preferred Stock to UGL and to pay
to UGL commissions based upon sales of MDM in the Territory,
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
1. Sale of MISE Shares. UGL hereby sells, assigns, transfers and delivers
to HSL, and HSL hereby purchases from UGL, all of UGL's right, title and
interest in and to the MISE Shares. In furtherance thereof, UGL is delivering to
HSL simultaneously herewith a certificate evidencing the MISE Shares registered
in the name of UGL, in form for transfer and with stock powers executed by UGL
annexed thereto, and with all signatures guaranteed, receipt of which by HSL is
hereby acknowledged.
2. Agreement With Respect to the Assignment of the European Rights. HSL
undertakes and agrees to cause MISE to assign to MDM all of MISE's right to
utilize the MDM Concept and the MDM Software in the Territory consisting of the
jurisdictions listed on Exhibit A
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hereto. As used herein, the term "MDM Concept" shall mean the business concept
developed by MDM and utilized by it in the United States, under which MDM
arranges for, and furnishes administrative services in connection with, the
provision of certain medical diagnostic services on a reduced-fee basis for
employers, unions, insurance companies, third party benefit administrators and
other entities and organizations which offer health benefits to eligible
persons. As used herein, the term "MDM Software" shall mean certain proprietary
computer software applications programs developed by MDM and used by it in the
United States in connection with the implementation of the MDM Concept and the
operation of its business.
3. Consideration for MISE Shares. The aggregate consideration for the sale
of the MISE Shares to HSL shall consist of the following:
3.1 The issuance by MDM to UGL of 30 shares of Series C Preferred
Stock of MDM ("Series C Shares), having a liquidation preference of
$100,000 per share and such other relative rights, preferences and
limitations as are set forth in the Certificate of Amendment of the
Certificate of Incorporation of MDM, a copy of which is affixed hereto as
Exhibit B, evidenced by a certificate therefor, registered in the name of
UGL, which MDM agrees to deliver to UGL within thirty (30) days from and
after the date hereof.
3.2 The payment to UGL by MDM of commissions ("Commissions") in
amounts equal to five percent (5%) of the Net Sales (as hereinafter
defined) of MDM (or, if it conducts business in the Territory through an
affiliated entity ("European Subsidiary"), the Net Sales of the European
Subsidiary) during the period of seven (7) years from and after the date
hereof attributable to customers in the Territory. (The entity through
which the MDM Concept is implemented in the Territory, whether it be MDM or
the European Subsidiary is hereinafter referred to as "MDM Europe.")
Commissions shall be payable to UGL by MDM on the last business day of
January, April, July and October with respect to Net Sales recognized
during the immediately preceding calendar quarter. As used herein, the term
"Net Sales" shall mean the sales of MDM Europe derived from the Territory,
net of any fees collected by MDM Europe and, in turn, paid by MDM Europe to
providers of health care services, and any discounts and disallowances. MDM
shall use its best efforts to introduce and implement the MDM Concept in
the Territory, either directly or through a European Subsidiary.
3.3 For a period of ninety (90) months from and after the date hereof,
UGL shall have the right, during normal business hours and upon no less
than ten (10) days' prior written notice given to MDM, to have its
employees, representatives or designees ("UGL Auditors") examine at the
offices where MDM Europe's financial books and records with respect to its
business in the Territory are regularly maintained, those books and records
of MDM Europe relating to its sales ("Sales Records") which are reasonably
necessary to verify the amount of Commissions paid or payable to UGL under
Section 3.2 hereof and the amounts of Net Sales of MDM Europe on which they
are based. The cost of such examination shall be borne by UGI; provided,
however, if such examination determines that the Net Sales have been
understated by MDM Europe by more than 10%, and such determination is
upheld after prompt review by an independent auditor selected jointly by
MDM and the UGL Auditor, the costs and expenses of
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such audit and subsequent review shall be borne by MDM.
4. Representations, Warranties and Agreements.
4.1 UGL represents and warrants to and agrees with HSL and MDM that:
4.1.1 Subject to the Agreement between HSL and UGL, dated 14
September 1996, (I) it is the record and beneficial owner of the MISE
Shares, free and clear of all liens, claims, charges and encumbrances
of any nature whatsoever, and (II) all of the MISE Shares are duly and
validly issued, fully-paid and nonassessable. The MISE Shares are
hereby assigned, transferred and delivered to HSL pursuant hereto, and
good marketable title thereto, free and clear of all liens, claims,
charges and encumbrances of any nature whatsoever, are hereby passed
to, and vested in, HSL.
4.1.2 UGL has full right, power and authority to execute and
deliver this Agreement, transfer, assign and deliver to HSL the MISE
Shares and consurnmate the transactions contemplated hereby.
4.1.3 UGL is not subject to any restrictions or agreements which
prohibit, or would be violated by, the execution of this Agreement or
the consummation of the transactions contemplated hereby, and no
consent or approval of any person, including, without limitation, any
governmental agency, court or tribunal, is required to consummate the
transactions contemplated hereby.
4.2 MDM represents and warrants to, and agrees with UGL that
4.2.1 The authorized capital stock of MDM consists of 10,000,000
shares of Common Stock, including 400,000 shares designated as Class B
Common Stock; and 250,000 shares of Preferred Stock, including 50,000
shares designated an Series A Convertible Preferred Stock, 20,000
shares designated as Series B Preferred Stock and 30 shares designated
as Series C Preferred Stock. As of the date hereof, there are no
shares of capital stock of MDM issued and outstanding, except for
2,044,386 shares of MDM Common Stock, 388,000 shares of Class B Common
Stock and 9,531 shares of Series B Preferred Stock;
4.2.2 MDM has delivered to UGL (I) the unaudited balance sheets
of MDM as at December 31, 1993, 1994, 1995 and 1996 and the related
unaudited statements of income and expense for each of the fiscal
years then ended and (II) the unaudited interim balance sheet of MDM
as at March 31, 1997 and the related unaudited statement of income and
expense for the three-month period then ended. All such financial
statements present fairly the financial position of MDM at such dates
and the results of its operations for such periods, and to the
knowledge of MDM, there are no material modifications required to be
made to such financial statements in order for them to be in
conformity with generally accepted accounting principles (promulgated
by the United States Financial Accounting Standards Board) applied on
a consistent
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basis throughout the periods covered. As of March 31, 1997, MDM did
not have liabilities of any nature, kind or description, whether
absolute, accrued, liquidated, unliquidated, contingent or otherwise,
and whether due or to become due, which were not reflected on the
balance sheet as at March 31, 1997, as a liability or by reserves
therefor to the full extent thereof, except for liabilities under the
leases listed on Exhibit C hereto;
4.2.3 It has full right, power and authority to execute and
deliver this Agreement, issue and deliver to UGL the Series C Shares
and consummate the transactions contemplated hereby;
4.2.4 It is not subject to any restrictions or agreements which
prohibit, or would be violated by, the execution of this Agreement or
the consummation of the transactions contemplated hereby, and no
consent or approval of any person, including, without limitation, any
governmental agency, court or tribunal, is required to consummate the
transactions contemplated hereby; and
4.2.5 From and after the date hereof, it shall not issue (I) any
shares of its authorized and unissued shares of Series A Convertible
Preferred Stock or (II) any class or series of its capital stock to
which the Series C Preferred Stock is subordinated.
4.3 HSL represents and warrants to, and agrees with UGL and MDM that
4.3.1 It has full right, power and authority to execute and
deliver this Agreement, and consummate the transactions contemplated
hereby; and
4.3.2 It is not subject to any restrictions or agreements which
prohibit, or would be violated by, the execution of this Agreement or
the consummation of the transactions contemplated hereby, and no
consent or approval of any person, including, without limitation, any
governmental agency, court or tribunal, is required to consummate the
transactions contemplated hereby.
5. Notices. All notices or other communications provided for herein shall
be in writing and if not delivered in person, shall be deemed to have been
delivered when sent via prepaid courier service, return receipt requested, and
addressed to the respective parties at their addresses herein above set forth or
to such other address as either such party may have designated by notice given
as aforesaid.
6. Miscellaneous.
6.1 This Agreement may not be modified, amended or terminated except
by a written agreement signed by all of the parties hereto.
6.2 If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to
such provision and shall not
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in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if
any such invalid or unenforceable provision were not contained herein.
6.3 Except as otherwise expressly provided herein, this Agreement
shall be binding upon and inure to the benefit of each of the parties
hereto, and its successors and assigns.
6.4 Each party hereto shall cooperate and shall take such further
action and shall execute and deliver such further documents as may be
reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement.
6.5 This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed one original.
6.6 This Agreement shall be governed by and construed in accordance
with the laws of Switzerland. The parties hereby agree to submit any
disputes arising with respect to or in connection with this Agreement to be
finally decided by one or more arbitrators in accordance with the Rules of
Arbitration of the Chamber of Commerce and Industry of Geneva. The
arbitration proceedings shall be conducted in English and the arbitration
shall take place in Geneva.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
Signed sealed and delivered by )
UNILABS GROUP LIMITED )
By: By:
--------------------------------- ----------------------------------
Name: Xxxxxx Xxxxx Name:
Title: Director Title:
Signed sealed and delivered by )
HEALTH STRATEGIES LIMITED )
By:
----------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Diretor
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Signed sealed and delivered by )
MEDICAL DIAGNOSTIC MANAGEMENT, INC. )
By:
----------------------------------
Xxxxxx X. Xxxxx
Chairman of the Board
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EXHIBIT A
INCLUDED EUROPEAN JURISDICATIONS
Pursuant to Section 2
Austria
Belgium
France
Germany
Greece
Holland
Ireland
Italy
Portugal
Russia
Scandinavia
Spain
Switzerland
Turkey
United Kingdom
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EXHIBIT B
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MEDICAL DIAGNOSTIC MANAGEMENT INC.
MEDICAL DIAGNOSTIC MANAGEMENT INC., a corporation organized and existing
under the laws of the State of New Jersey, does hereby execute the following
Certificate of Amendment of its Certificate of Incorporation pursuant to the
provisions of Sections 14A:9-2(2) and 14A:7-2(4) of the New Jersey Business
Corporation Act
1. The name of the corporation is MEDICAL DIAGNOSTIC MANAGEMENT INC,
(the "Corporation").
2. The certificate of incorporation of the Corporation was filed in
the office of the Secretary of State of New Jersey on May 12, 1989, and
Certificates of Amendment thereof were so filed on September 28, 1990,
March 20, 1992, November 14, 1994 and October 18, 1995.
3. The following resolutions creating a series of Preferred Stock and
determining the designation, number of shares, relative rights, preferences
and limitations of such series were duly adopted by the Executive Committee
of the Board of Directors of the Corporation as of the day of May, 1997,
under the authority vested in the Board by the Certificate of incorporation
of the Corporation, as amended, pursuant to Sections 14A:7-2(2) and
14A:7-2(3) of the New Jersey Business Corporation Act:
RESOLVED, that pursuant to the authority granted to the Board of
Directors of the corporation by Article SECOND of the Certificate of
Incorporation of the Corporation, the Board of Directors hereby authorizes
the creation of a series of Preferred Stork consisting of up to 30 shares
and designated as series C Preferred Stock out of the 250,000 shares Of
Preferred Stock authorized by said Certificate of Incorporation; and
RESOLVED, that the designation and the number of shares of Series C
Preferred Stock and the relative rights, preferences, and limitations of
the shares of Series C Preferred stock be, and they hereby are, as follows:
1. Designation and Number of Shares. Of the 250,000 shares of
Preferred Stock authorized by of incorporation, 30 shares are hereby
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designated as Series C Preferred Stock (the "Series C Stock").
2. Dividends and Distributions. The holders of Series C Stock shall be
entitled to receive dividends when, as and if declared by the Board of
Directors out of funds legally available therefor.
3. Voting Rights. The holders of Series C Stock shall have no right to
vote for the election of directors of the Corporation and no right to
vote on any matter presented to the shareholders for their vote or
approval.
4. Redemption. The shares of Series C Stock are redeemable upon the
following terms and conditions, subject, in any event, to the
limitations contained in the New Jersey Business Corporation Act:
(a) The Corporation may, at its option, at any time it may
lawfully do so from and after its issuance, redeem for cash all,
or from time to time, any part of the Series C Stock, in each
case, at a Redemption Price per share determined in accordance
with paragraph (b) below, plus an amount equal to all declared
but unpaid dividends thereon. Subject to the foregoing, the
timing of any such redemption of Series C Stock under this
paragraph (a), the number of shares to be redeemed and the
selection of holders whose shares are to be redeemed shall be
determined by the Corporation, in its sole discretion.
(b) The Redemption Price for each share of Series C Stock
shall be the product of $100,000.00 and the applicable percentage
set forth below:
Calendar Year of Applicable
Redemption Percentage
1998 100%
1999 105%
2000 110%
2001 115%
2002 and thereafter 120%
5. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, the holders of Series C
Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation legally available for distribution to its
shareholders, an amount equal to $100,000.00 per share of Series C
Stock, plus an amount equal to all declared but unpaid dividends
thereon, and no more, after prior payment
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of the full preferential amount to the holders of the Series B
Preferred Stock but before any payment or other distribution shall be
made to the holders of Common Stock, Class B Common Stock or any other
class or series of the Corporation's Common Stock (the Common Stock,
Class B Common Stock or such other class or series of the
Corporation's Common Stock being hereinafter together referred to as
"Junior Shares"). In the event that the assets of the Corporation
legally available for distribution to shareholders is not sufficient
to permit the payment of the full preferential amounts to the holders
of Series C Stock and to the holders of any other series of Preferred
Stock of the Corporation then outstanding which rank pari pasu with
the Series C Stock ("Pari Pasu Shares"), then all of such assets shall
be distributed as between the holders of the Series C Stock and the
holders of such Pari Pasu Shares in the same proportion as their
respective per share preferential amounts bear to the sum of the per
share preferential amounts of the Series C Stock and the Pari Pasu
Shares. In the event that the assets of the Corporation legally
available for distribution to the holders of Series C Stock is not
sufficient to permit the payment of the full preferential amount as
aforesaid, then all of the assets of the Corporation available for
distribution to such holders shall be distributed to them on a pro
rata basis in accordance with their respective holdings of Series C
Stock. Following the payment in full to the holders of the Series C
Stock, the Pari Pasu Shares and any Junior Shares which are entitled
to preferential distributions of the respective preferential amounts
to which they are entitled out of the assets of the Corporation
legally available therefor, the remainder of the assets of the
Corporation legally available therefor may be distributed to the
holders of the Common Stock and Class B Common Stock on a pro rata
basis. A merger or consolidation of the Corporation with or into any
other corporation, a share exchange involving the Corporation, or a
sale, lease, exchange of transfer of all or any part of the assets of
the Corporation shall not result in the liquidation of the
Corporation, and the distribution of its assets to its shareholders
shall not be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of corporation for purposes of this
paragraph.
6. Conversion.
(a) In the event that the Corporation offers and sells any shares of
Common Stock in a public offering registered under the Securities Act
of 1933, as amended (such public offering being hereinafter referred
to as the "Conversion Event", all shares of Series C Stock then out.
standing shall be converted into shares of Common Stock of the
Corporation ("Conversion Shares"), so that upon such conversion, the
holders of Series C Stock, as a group. shall hold, in the aggregate, a
number of Conversion Shares having an aggregate value equal to the
lesser of,. 0 fifteen percent (15%) of the
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aggregate value of the shares of Common Stock of the Corporation
outstanding after giving effect to the issuance shares in, or in
connection with, such public offering, valued based upon the public
offering price of each share of Common Stock being so issued and sold
("Public Offering Price") and (ii) $5,000.000. In furtherance of the
foregoing, each share of Series C Stock outstanding at the time the
Conversion Event occurs shall automatically, without any action on the
part of any holder thereof, be converted into that number of fully
paid and nonassessable shares of Common Stock of the Corporation
("Conversion Rate") obtained by dividing the product of (x) 0.17647
and (y) the number of shares of the Corporation's Common Stock
outstanding immediately following the Conversion Event (but before the
issuance of any Conversion Shares), by the number of shares of Series
C Stock then outstanding; provided, however, that in no event shall
the aggregate value of the Conversion Shares, valued at the Public
Offering Price, exceed $5,000,000.00; and provided further, that the
Conversion Rate is subject to adjustment in accordance with
subparagraph (b) hereof.
(b) The Conversion Rate shall be subject to adjustment from time to
time, calculated as follows, except that no adjustments to the
Conversion Rate shall be made until cumulative adjustments would
affect the Conversion Rate by one or more Conversion Shares:
(i) If the Corporation changes its Common Stock into the
same or a different number of shares of any other class or
classes of stocks, whether by recapitalization, reclassification
or otherwise (unless otherwise provided for in subparagraph
(b)(iii)), then the Conversion Rate in effect immediately prior
to such action shall be adjusted so that each holder of Series C
Stock thereafter converted may receive the number and class or
series of shares of capital stock of the Corporation which such
holder would have owned immediately following such action if such
shares of Series C had been converted immediately prior to such
action;
(ii) If the Corporation: (A) issues rights or warrants
entitling holders of its Common Stock to subscribe for, or
purchase shares of its Common Stock or securities convertible
into its Common Stock; or (B) distributes to the holders of its
Common Stock any of its assets or debt securities or any rights
or warrants to purchase debt securities, assets or other
securities of the Corporation, then, in either case, the
Conversion Rate immediately prior to such action shall be
adjusted so that each holder of Series C Stock thereafter
converted may receive the number of rights, warrants, assets or
debt securities to which such holder would have been entitled
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immediately following such action if such Series C Stock had been
converted immediately prior to such action;
(iii) If the Corporation shall consolidate with or merge
into any other corporation or transfer all of substantially all
of its properties and assets as an entirety to any person, then
upon consummation of such transaction, each share of Series C
Stock shall automatically be corrected into the kind and amount
of securities cash or other assets to which the holder of such
share would have been entitled immediately after such
consolidation, merger or transfer if such share of Series C Stock
had been converted immediately prior to the effective date of
such transaction;
(iv) In the case of any adjustment in the Conversion Rate
occasioned by the events referred to in subparagraph (b)(i) or
(b)(iii) hereof, appropriate adjustments shall be made in the
application of the provisions of this paragraph with respect to
the rights of the holders of Series C Stock after such event to
the end that the provisions of this paragraph (including the
provisions relating to the adjustment of the Conversion Rate)
shall be applicable after the event as nearly equivalent as
practicable; and
(v) Adjustments shall become effective immediately after the
record date in the case of a distribution and immediately after
the effective date in the case of (i) a change in the
Corporation's Common Stock or (ii) a consolidation or merger of
the Corporation.
(c) The Corporation shall not be required to issue fractions of shares
of its Common Stock upon the conversion of the Series C Stock, and the
number of shares of its Common Stock to be issued shall be rounded to
the nearest whole share.
(d) Within fifteen (15) days following the occurrence of a Conversion
Event, the Corporation shall give written notice thereof to each
holder of Series C Stock. Upon receipt of such notice, each such
holder shall surrender the certificate or certificates theretofore
representing outstanding shares of Series C Stock at the offices of
the Corporation, and each such holder shall upon such surrender,
receive in exchange therefor, a certificate representing the number of
full Conversion Shares into which the shares of Series C Stock
theretofore represented by the certificate or certificates so
surrendered shall have been converted in accordance with subparagraph
(a) hereof. Any certificate surrendered for conversion shall be duty
endorsed.
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(e) The Corporation shall at ail times reserve and keep available out
of its authorized but unissued shares of Common Stock. solely for the
purpose of effecting the conversion of the shares of Series C Stock,
such number of shares of its Common stock as shall from time to time
be sufficient to effect the conversion of all of the outstanding
shares of Series C Stock; and if, at any time, the number of
authorized but unissued shares of the Corporation's Common Stock shall
net be sufficient to effect the conversion of all then outstanding
shares of Series C Stock, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of
shams as shall be sufficient for such purpose.
4. The foregoing resolutions were duty adopted by the unanimous
written consent of the Executive Committee of the Board of Directors of the
Corporation, dated as of the ______ day of May, 1997, pursuant to Section
14A:6-7. 1. (5) of the New Jersey Business Corporation Act.
5. The Certificate of Incorporation is hereby amended so that the
designation and number of shares of Series C Preferred Stock and the
relative rights, preferences and limitations thereof are as stated in the
foregoing resolutions.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of its Certificate of incorporation to be signed by Xxxxxx X. Xxxxx,
its Chairman of the Board, and attested by Xxxxxx X. Gold, its Secretary, on
this __ day of May, 1997.
MEDICAL DIAGNOSTIC MANAGEMENT INC.
By
--------------------------------------
Xxxxxx Xxxxx
Chairman of the Board
ATTEST:
-------------------------------------
Secretary
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EXHIBIT C
LIABILITIES UNDER LEASES AS AT MARCH 31,1997
Pursuant to Section 4.2.2
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Lease for Toyota 4Runner
Canon Copier Lease
Postage Meter Lease
