STOCK PURCHASE
AGREEMENT
This Stock Purchase Agreement
(“Agreement”) is made and entered into as of this 18
th
day of
December, 2007, by and among In Veritas Medical Diagnostic, Inc., a Colorado
corporation having its principal offices at the Green House, Beechwood Business
Park North, Inverness, Scotland 1V2 3BL (the “Seller”), Medical Diagnostic
Innovations Ltd. a corporation organized under the laws of England and Wales
having its principal office at 3
rd
Floor, 14 South
Molton Street, London W1K 5QP, United Kingdom (the “Purchaser”), IVMD (UK)
Limited, a corporation organized under the laws of England and Wales having its
principal office at Unit 2, Taurus Business Park, Europa Boulevard, Westbrook,
Warrington, WA5 5YT, United Kingdom (“IVMD UK”) and Jopejo Limited, a
corporation organized under the laws of England and Wales having its principal
office at Unit 2, Taurus Business Park, Europa Boulevard, Westbrook, Warrington,
WA5 5YT, United Kingdom (“Jopejo” IVMD UK and Jopejo are sometimes collectively
referred to hereinafter as the “Subsidiaries”).
W I T N E S S E T
H
:
WHEREAS,
Seller owns 19,609 shares of common stock, par value £1.00 per share
and 221,091 shares of cumulative redeemable preferred stock, par value £1.00 per
share of IVMD UK (the “IVMD UK Shares”) and 83,353 shares of common stock, par
value £0.05 per share of Jopejo (the “Jopejo Shares” and collectively with the
IVMD UK Shares, the “Shares”), which Shares constitute 100% of the issued and
outstanding shares of capital stock of each of the Subsidiaries;
and
WHEREAS,
the Seller desires to sell to the Purchaser, and the Purchaser desires to
purchase from the Seller, the Shares for the purchase price and upon the terms
and conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE
I
SALE AND
PURCHASE OF SHARES
1.1
Sale and Purchase of
Shares
.
Upon the
terms and subject to the conditions contained herein, on the Closing Date the
Seller shall sell, assign, transfer, convey and deliver to the Purchaser, and
the Purchaser shall purchase from the Seller, all of the
Shares.
ARTICLE
II
PURCHASE
PRICE AND PAYMENT
2.1
Amount of Purchase
Price
. The purchase price (the “Purchase Price”) to be paid by Purchaser
for the Shares is Six Hundred and Sixty Five Thousand, Eight Hundred and Seventy
Two Dollars ($665,872), of which Twenty Six Thousand, Five Hundred Dollars
($26,500) has been previously advanced by, or on behalf of the Purchaser to
defray certain costs incurred by the Seller in connection with the preparation
and filing of the Form 10-QSB for the quarter ended April 30, 2007
2.2
Payment of Purchase
Price
.
On the
Closing Date, the Purchaser shall pay balance of the Purchase Price to the
Seller, which shall be paid by the delivery to Seller of a certified or bank
cashier's check, payable to the order of the Seller or, at the Seller’s option,
by wire transfer of immediately available funds into accounts designated by the
Seller.
ARTICLE
III
CLOSING
AND TERMINATION
3.1
Closing
Date
.
Subject
to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof
(or the waiver thereof by the party entitled to waive that condition), the
closing of the sale and purchase of the Shares provided for in Section 1.1
hereof (the "Closing") shall take place at the offices of Sichenzia Ross
Friedman Ference LLP located at 61 Broadway, 32
nd
Floor, New York,
New York 10006 (or at such other place as the parties may designate in writing)
on such date as the Seller and the Purchaser may designate. The date
on which the Closing shall be held is referred to in this Agreement as the
"Closing Date".
3.2
Termination of
Agreement
.
This
Agreement may be terminated prior to the Closing as follows:
(a)
At the
election of the Seller or the Purchaser after March 15, 2007, if the Closing
shall not have occurred by the close of business on such date, provided that the
terminating party is not in default of any of its obligations
hereunder;
(b)
by mutual
written consent of the Seller and the Purchaser; or
(c)
by the
Seller or the Purchaser if there shall be in effect a final nonappealable order
of a governmental body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
it being agreed that the parties hereto shall promptly appeal any adverse
determination which is not nonappealable (and pursue such appeal with reasonable
diligence).
3.3
Procedure Upon
Termination
.
In the
event of termination and abandonment by the Purchaser or the Seller, or both,
pursuant to Section 3.2 hereof, written notice thereof shall forthwith be given
to the other party or parties, and this Agreement shall terminate, and the
purchase of the Shares hereunder shall be abandoned, without further action by
the Purchaser or the Seller.
3.4
Effect of
Termination
.
In the
event that this Agreement is validly terminated as provided herein, then each of
the parties shall be relieved of their duties and obligations arising under this
Agreement after the date of such termination and such termination shall be
without liability to the Purchaser, the Seller or each of the Subsidiaries;
provided, however, that the obligations of the parties set forth in Section 10.4
hereof shall survive any such termination and shall be enforceable hereunder;
provided, further, however, that nothing in this Section 3.4 shall relieve the
Purchaser or the Seller of any liability for a breach of this
Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE SELLER AND THE SUBSIDIARIES
The Seller and the Subsidiaries hereby
jointly and severally represent and warrant to the Purchaser that:
4.1.
Organization and Good
Standing
. The Seller and each of the Subsidiaries, are corporations duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their incorporation. The Seller and each of the
Subsidiaries, are not required to be qualified to transact business in any other
jurisdiction where the failure to do so would reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
this Agreement, (ii) a material adverse effect on the results of operations,
assets, business or financial condition of the Seller and each of the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Seller’s and each of the Subsidiaries, ability to perform in any material
respect on a timely basis their obligations under this Agreement (any of (i),
(ii) or (iii), a “
Material Adverse
Effect
”).
4.2.
Authority
.
(a) The
Seller and each of the Subsidiaries, have full power and authority (corporate
and otherwise) to carry on their business and have all permits and licenses that
are necessary to the conduct of their business or to the ownership, lease or
operation of their properties and assets.
(b) The
execution of this Agreement and the delivery hereof to the Purchaser and the
sale contemplated herein have been, or will be prior to Closing, duly authorized
by the Board of Directors of the Seller and each of the Subsidiaries, having
full power and authority to authorize such actions.
(c) Subject
to any consents required under Section 4.5 below, the Seller and each of the
Subsidiaries have the full legal right, power and authority to execute, deliver
and carry out the terms and provisions of this Agreement; and this Agreement has
been duly and validly executed and delivered on behalf of the Seller and each of
the Subsidiaries and constitute a valid and binding obligation of the Seller and
each of the Subsidiaries, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights and subject to
general principles of equity that restrict the availability of equitable
remedies
.
(d) Neither
the execution and delivery of this Agreement, the consummation of the
transactions herein contemplated, nor compliance with the terms of this
Agreement will violate, conflict with, result in a breach of, or constitute a
default under any statute, regulation, indenture, mortgage, loan agreement, or
other agreement or instrument to which the Seller and each of the Subsidiaries
are parties or by which each or any of them is bound, any charter,
regulation, or bylaw provision of the Seller and each of the Subsidiaries or any
decree, order, or rule of any court or governmental authority or arbitrator that
is binding on the Seller or each of the Subsidiaries, in any way.
4.3.
Shares
.
(a) The
authorized capital stock of the Seller consists of 500,000,000 shares of common
stock, par value $0.001 per share and 50,000, 000 shares of preferred stock of
which 86,048,474 shares of common stock and 34,343,662 shares of designated as
Series A Preferred stock are issued and outstanding. Other than set forth in the
SEC Reports, there are no authorized or outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, convertible securities or
other agreements or arrangements of any character or nature whatever under which
the Seller is or may become obligated to issue, assign or transfer
any shares of capital stock of the Seller.
(b) The
authorized capital stock of IVMD UK consists of 19,609 shares of common stock,
par value £1.00 per share, of which 19,609 shares are outstanding.
The shares of IVMD UK are duly authorized, validly issued, fully paid and
non-assessable
(c) The
authorized capital stock of Jopejo Limited consists of 2,000,020 shares of
common stock, par value £0.05 per share, of which 83,353 shares are outstanding.
The shares of Jopejo are duly authorized, validly issued, fully paid and
non-assessable
(d) Upon
the delivery to Purchaser on the Closing Date of the certificates representing
the Shares, Purchaser will have good, legal, valid, marketable and indefeasible
title to the then issued and outstanding shares of capital stock of each of the
Subsidiaries, free and clear of any liens, pledges, encumbrances, charges,
agreements, options, claims or other arrangements or restrictions of any
kind.
4.4.
Consents
. Except for
the approval of the shareholders of the Seller, no consents or approvals of any
public body or authority and no consents or waivers from other parties to
leases, licenses, franchises, permits, indentures, agreements or other
instruments are (i) required for the lawful consummation of the
transactions contemplated hereby, or (ii) necessary in order that the
Business can be conducted by the Purchaser in the same manner after the Closing
as heretofore conducted by the Seller or each of the Subsidiaries nor will the
consummation of the transactions contemplated hereby result in creating,
accelerating or increasing any liability of the Seller or each of the
Subsidiaries.
4.5.
SEC Reports; Financial
Statements
. The Seller has filed all reports, schedules,
forms, statements and other documents required to be filed by the Seller under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Seller was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“
SEC Reports
”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when filed, 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 the light of the circumstances under which they were made, not
misleading. Such financial statements comply in all material respects
with applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“
GAAP
”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Seller and its consolidated Subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
4.6.
Books and
Records
. The books and records of the Seller and each of the
Subsidiaries are complete and correct in all material respects and have been
maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. True and
complete copies of all available minute books and all stock record books of each
of the Subsidiaries will be delivered to Purchaser at Closing.
4.7.
Absence of Undisclosed
Liabilities
. Except as and to the extent reflected or reserved
against the financial statements included in the most recent SEC Report, there
are no liabilities or obligations of the Seller and each of the Subsidiaries of
any kind whatsoever, whether accrued, fixed, absolute, contingent, determined or
determinable, and including without limitation (i) liabilities to former,
retired or active employees of the Seller or each of the Subsidiaries under any
pension, health and welfare benefit plan, vacation plan or other plan of the
Seller or each of the Subsidiaries, (ii) tax liabilities incurred in
respect of or measured by income for any period prior to the close of business
on the, or arising out of transactions entered into, or any state of facts
existing, on or prior to said date, and (iii) contingent liabilities in the
nature of an endorsement, guarantee, indemnity or warranty, and there is no
condition, situation or circumstance existing or which has existed that would
reasonably be expected to result in any material liability of the Seller or each
of the Subsidiaries, other than liabilities and contingent liabilities incurred
in the ordinary course of business since the most recent SEC Report consistent
with the Seller’s recent customary business practice, none of which would
reasonably be expected to have a Material Adverse Effect.
4.8
Taxes
. The
Seller and each of the Subsidiaries have timely filed all federal, state, local
and foreign returns, estimates, information statements and reports (“Returns”)
relating to Taxes required to be filed by the Seller and each of the
Subsidiaries with any Tax authority. All such Returns are true,
correct and complete in all material respects. The Seller and each of
the Subsidiaries have paid all Taxes shown to be due on such
Returns. The Seller and each of the Subsidiaries are currently not
the beneficiary of any extensions of time within which to file any Returns. No
claim has ever been made by an authority in a jurisdiction where the Seller and
each of the Subsidiaries do not file tax returns that the Seller or each of the
Subsidiaries is or may be subject to taxation by that
jurisdiction. There are no claims or encumbrances on any of the
Seller’s or the Subsidiaries assets that arose in connection with any failure
(or alleged failure) to pay any tax.
4.9
Contracts.
Except
as would not have a material adverse effect on the Subsidiaries or their
obligations, (i) all contracts, agreements and commitments of the
Subsidiaries are valid, binding and in full force and effect, and
(ii) neither of the Subsidiaries nor, to the Seller’s knowledge, any other
party to any such contract, agreement, or commitment has materially breached any
provision thereof or is in default thereunder. The sale of the Shares
by the Seller in accordance with this Agreement will not result in the
termination of any contract, agreement or commitment of the Subsidiaries, and
immediately after the Closing, each such contract, agreement or commitment will
continue in full force and effect without the imposition or acceleration of any
burdensome condition or other obligation on the Subsidiaries resulting from the
sale of the Shares by the Seller. True and complete copies of all
contracts of the Subsidiaries will be delivered to Purchaser at
Closing.
4.12.
Compliance With the
Law
. The Seller and each of the Subsidiaries is not in
material violation of any applicable federal, state, local or foreign law,
regulation or order or any other, decree or requirement of any governmental,
regulatory or administrative agency or authority or court or other tribunal
(including, but not limited to, any law, regulation order or requirement
relating to securities, properties, business, products, manufacturing processes,
advertising, sales or employment practices, terms and conditions of employment,
occupational safety, health and welfare, conditions of occupied premises,
product safety and liability, civil rights, or environmental protection,
including, but not limited to, those related to waste management, air pollution
control, waste water treatment or noise abatement). The Subsidiaries
have not been and are not now charged with, or to the knowledge of the Seller or
the Subsidiaries under investigation with respect to, any violation of any
applicable law, regulation, order or requirement relating to any of the
foregoing, nor, to the knowledge of Seller or the Subsidiaries, are there any
circumstances that would reasonably be expected to give rise to any such
violation. The Subsidiaries have filed all reports required to be
filed with any governmental, regulatory or administrative agency or
authority.
4.13.
Litigation; Pending Labor
Disputes
. Except as would not have a material adverse effect
on the Seller, there are no legal, administrative, arbitration or other
proceedings or governmental investigations pending or, to the knowledge of
Seller or the Subsidiaries, threatened, against the Seller or the Subsidiaries,
relating to the business of the Subsidiaries or their properties (including
leased property), or the transactions contemplated by this Agreement, nor is
there any basis known to the Seller or the Subsidiaries for any such
action. There are no judgments, decrees or orders of any court, or
any governmental department, commission, board, agency or instrumentality
binding upon Seller or the Subsidiaries relating to the business of each of the
Subsidiaries the effect of which is to prohibit any business practice or the
acquisition of any property or the conduct of any business by the Subsidiaries
or which limit or control or otherwise adversely affect its method or manner of
doing business.
4.14
Broker
. Neither
the Seller nor the Subsidiaries have retained any broker in connection with any
transaction contemplated by this Agreement. Purchaser and the Seller
shall not be obligated to pay any fee or commission associated with the
retention or engagement by the Seller of any broker in connection with any
transaction contemplated by this Agreement.
4.15.
Disclosure
. All
statements contained in any contract, schedule, closing certificate, opinion, or
other closing document delivered by or on behalf of the Seller or each of the
Subsidiaries pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed representations and warranties by the Seller and the
Seller herein. No statement, representation or warranty by the Seller
or each of the Subsidiaries in this Agreement or in any contract, schedule,
closing certificate, opinion, or other closing document furnished or to be
furnished to the Purchaser pursuant hereto or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading or necessary in order to provide a prospective purchaser of the
business the Subsidiaries with full and fair disclosure concerning the Seller,
and the Subsidiaries’ affairs.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
5.1
Organization and Good
Standing
.
The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation.
5.2
Authority
.
(a) The
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been, or will prior to Closing be, duly
and validly approved and acknowledged by all necessary corporate action on the
part of the Purchaser.
(b) The
execution of this Agreement and the delivery hereof to the Seller and the
purchase contemplated herein have been, or will be prior to Closing, duly
authorized by the Purchaser’s Board of Directors having full power and authority
to authorize such actions.
5.3
Conflicts; Consents of Third
Parties
.
(a)
The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated, and the compliance with the provisions and
terms of this Agreement, are not prohibited by the Articles of Incorporation or
Bylaws of the Purchaser and will not violate, conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, any
court order, indenture, mortgage, loan agreement, or other agreement or
instrument to which the Purchaser is a party or by which it is
bound.
(b)
No
consent, waiver, approval, order, permit or authorization of, or declaration or
filing with, or notification to, any person or governmental body is required on
the part of the Purchaser in connection with the execution and delivery of this
Agreement or the Purchaser Documents or the compliance by Purchaser with any of
the provisions hereof or thereof.
5.4
Litigation
.
There are
no Legal Proceedings pending or, to the best knowledge of the Purchaser,
threatened that are reasonably likely to prohibit or restrain the ability of the
Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby.
5.5
Broker
.
The
Purchaser has not retained any broker in connection with any transaction
contemplated by this Agreement. Seller shall not be obligated to pay
any fee or commission associated with the retention or engagement by the
Purchaser of any broker in connection with any transaction contemplated by this
Agreement.
ARTICLE
VI
COVENANTS
6.1
Access to
Information
.
The
Seller and the Subsidiaries agree that, prior to the Closing Date, the Purchaser
shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the properties, businesses and operations of the Seller
and the Subsidiaries and such examination of the books, records and financial
condition of the Seller and the Subsidiaries as it reasonably requests and to
make extracts and copies of such books and records. Any such
investigation and examination shall be conducted during regular business hours
and under reasonable circumstances, and the Seller shall cooperate, and shall
cause the Seller and the Subsidiaries to cooperate, fully therein. No
investigation by the Purchaser prior to or after the date of this Agreement
shall diminish or obviate any of the representations, warranties, covenants or
agreements of the Seller contained in this Agreement or the Seller
Documents. In order that the Purchaser may have full opportunity to
make such physical, business, accounting and legal review, examination or
investigation as it may reasonably request of the affairs of the Seller and the
Subsidiaries, the Seller shall cause the officers, employees, consultants,
agents, accountants, attorneys and other representatives of the Seller and the
Subsidiaries to cooperate fully with such representatives in connection with
such review and examination.
6.2
Consents
.
The
Seller and the each of the Subsidiaries shall use their best efforts, and the
Purchaser shall cooperate with the Seller and the Subsidiaries to obtain at the
earliest practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including, without limitation, the
consents and approvals referred to in Section 4.4 hereof.
6.3
Preferred
Stock
Each of
the Seller, Purchaser and Subsidiaries shall take all action necessary to secure
the cancellation of all or substantially all of the outstanding shares of Series
A Preferred Stock of Seller at the Closing.
6.4
Royalty Participation
Agreements
(a) Upon
the Closing, IVMD (UK) shall assume the obligation to pay an aggregate of ten
(10%) percent of the royalty payments received from the sale of the prothrombin
blood clotting measuring device (the “PT Device”) on a pro rata basis to the PT
Note Holders set forth on Schedule 6.4(b) pursuant to certain Royalty
Participation Agreements (the “Royalty Agreements”) entered into among the
Seller and the PT Note Holders, up to a maximum of an aggregate of One Million
Three Hundred and Fifty Thousand ($1,350,000) Dollars (the “Maximum
Payment”).
(b) The
parties agree that in the event that IVMD (UK) sells or otherwise disposes of
its rights to receive royalty payments in respect of sales of the PT Device, the
PT Note Holders shall receive an aggregate of ten (10%) percent, on a
pro rata basis, of any cash consideration received by IVMD (UK) in connection
with any such sale or disposition, less any royalty payments paid by IVMD
(UK) to the PT Note Holders pursuant to Section 6.4(a) above but in
no event shall any payment pursuant to this Section 6.4(b) exceed the Maximum
Payment.
(c) If a
majority interest in either Purchaser or IVMD UK is sold within three (3) years
of the date of this Agreement for a purchase price as set forth below before the
obligations to make payments to the PT Note Holders pursuant to Sections 6.4(a)
and 6.4(b) above are fully satisfied, then in such event all outstanding amounts
owed to the PT Note Holders shall be payable as set forth below, on a pro rata
basis, reduced by payments previously made to the PT Note Holders pursuant to
this Section 6.4 of the Agreement:
|
Purchase price of Purchaser of
IVMD UK or MDI
|
Payment to PT Note
Holders
|
|
Less
than $2,000,000
|
Nil
|
|
$2,000,000
- $3,000,000
|
$200,000
|
|
$3,000,000
- $4,000,000
|
$300,000
|
|
$4,000,000
- $5,000,000
|
$450,000
|
|
$5,000,000
-$8,000,000
|
$600,000
|
|
$8,000,000
-$10,000,000
|
$800,000
|
|
$10,000,000
- $13,000,000
|
$900,000
|
|
In
excess of $13,000,000
|
$1,350,000
|
(d) The parties hereby agree that IVMD
(UK) hereby assumes the obligation to make the payments set forth in this
Section 6.4 of this Agreement and shall not undertake or assume any other
obligation of Seller to the PT Note Holders pursuant to the Royalty
Agreements.
6.5
Security
Interest
The
Seller shall take all actions necessary to have any mortgages, liens and
security interests of in any and all of the property of the Subsidiaries
irrevocably released and terminated, and agrees to promptly obtain any and all
mortgage releases in respect of any mortgages or deeds of trust encumbering any
real property of each of the Subsidiaries and to obtain the consent of any such
parties to the filing of Uniform Commercial Code ("
UCC
") termination statements
with respect to any UCC financing statements filed against the
Subsidiaries.
6.6
Other
Actions
.
(a) Each
of the Seller, the Subsidiaries and the Purchaser shall use its best efforts to
(i) take all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement and (ii) cause the fulfillment at the earliest
practicable date of all of the conditions to their respective obligations to
consummate the transactions contemplated by this Agreement.
(b) The
Seller shall write off or otherwise agree to forego all amounts due to it from
each of the Subsidiaries on intercompany accounts or otherwise, in recognition
of the fact that (i) the Purchaser is buying the Subsidiaries which have
material third party net liabilities; and (ii) that the amounts shown as
receivable on intercompany accounts are reasonably regarded as irrecoverable and
have therefore been fully provided against in the books of the
Seller.
6.7
Publicity
.
None of
the Seller, the Subsidiaries nor the Purchaser shall issue any press release or
public announcement concerning this Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Purchaser or the Seller, disclosure is otherwise required by
applicable Law or by the applicable rules of any stock exchange on which the
Seller lists securities, provided that, to the extent required by applicable
law, the party intending to make such release shall use its best efforts
consistent with such applicable law to consult with the other party with respect
to the text thereof.
ARTICLE
VII
CONDITIONS
TO CLOSING
7.1
Conditions Precedent to
Obligations of Purchaser
.
The
obligation of the Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by the
Purchaser in whole or in part to the extent permitted by applicable
law):
(a)
all
representations and warranties of the Seller and the Subsidiaries contained
herein shall be true and correct as of the date hereof;
(b)
all
representations and warranties of the Seller and the Subsidiaries contained
herein qualified as to materiality shall be true and correct, and the
representations and warranties of the Seller and the Subsidiaries contained
herein not qualified as to materiality shall be true and correct in all material
respects, at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that
time;
(c)
the
Seller and the Subsidiaries shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing
Date;
(d)
the
Purchaser shall have been furnished with certificates (dated the Closing Date
and in form and substance reasonably satisfactory to the Purchaser) executed by
the Seller and the Subsidiaries certifying as to the fulfillment of the
conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof;
(e)
Certificates
representing 100% of the Shares shall have been, or shall at the Closing be,
validly delivered and transferred to the Purchaser, free and clear of any and
all Liens;
(f)
The RPA
Note Holders shall have each entered into a Cancellation of Royalty
Participation Agreement and a Royalty Participation Agreement in compliance with
Section 6.4 of this Agreement in the forms attached hereto as Exhibits A and B,
respectively.
(g)
there
shall not have been or occurred any Material Adverse Change;
(h)
the
Seller and the Subsidiaries shall have obtained all consents and waivers
referred to in Section 4.4 hereof, in a form reasonably satisfactory to the
Purchaser, with respect to the transactions contemplated by this Agreement and
the Seller Documents; and
(i)
no Legal
Proceedings shall have been instituted or threatened or claim or demand made
against the Seller and the Subsidiaries, or the Purchaser seeking to restrain or
prohibit or to obtain substantial damages with respect to the consummation of
the transactions contemplated hereby, and there shall not be in effect any order
by a governmental body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated
hereby.
7.2
Conditions Precedent to
Obligations of the Seller and the Subsidiaries.
The
obligations of the Seller and the Subsidiaries to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions (any or all of which may
be waived by the Seller and the Seller in whole or in part to the extent
permitted by applicable law):
(a)
all
representations and warranties of the Purchaser contained herein shall be true
and correct as of the date hereof;
(b)
all
representations and warranties of the Purchaser contained herein qualified as to
materiality shall be true and correct, and all representations and warranties of
the Purchaser contained herein not qualified as to materiality shall be true and
correct in all material respects, at and as of the Closing Date with the same
effect as though those representations and warranties had been made again at and
as of that date;
(c)
the
Purchaser shall have performed and complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by Purchaser on or prior to the Closing Date;
(d)
the
Seller shall have been furnished with certificates (dated the Closing Date and
in form and substance reasonably satisfactory to the Seller) executed by the
Chief Executive Officer of the Purchaser certifying as to the fulfillment of the
conditions specified in Sections 7.2(a), 7.2(b) and 7.2(c); and
(e)
The RPA
Note Holders shall have each entered into a Cancellation of Royalty
Participation Agreement and a Royalty Participation Agreement in compliance with
Section 6.4 of this Agreement in the forms attached hereto as Exhibits A and B,
respectively.
(f)
no Legal
Proceedings shall have been instituted or threatened or claim or demand made
against the Seller, the Subsidiaries, or the Purchaser seeking to restrain or
prohibit or to obtain substantial damages with respect to the consummation of
the transactions contemplated hereby, and there shall not be in effect any Order
by a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated
hereby.
ARTICLE
VIII
DOCUMENTS
TO BE DELIVERED
8.1
Documents to be Delivered by
the Seller.
At the
Closing, the Seller shall deliver, or cause to be delivered, to the Purchaser
the following:
(a)
stock
certificates representing the Shares, duly endorsed in blank or accompanied by
stock transfer powers and with all requisite stock transfer tax stamps
attached;
(b)
copies of
all consents and waivers referred to in Section 7.1(g) hereof;
(c)
all
financial records of the Subsidiaries including the books and records of
original entry for accounting;
(d)
the
entirety of the book containing all of the minutes of the Board of Directors and
Shareholders for the life of the Subsidiaries but not less than the previous two
years;
(e)
copies of
all regulatory filings which were required to be filed in the United Kingdom for
the establishment and maintenance of a corporation in that state for at least
the last two years;
(f)
any and
all information about the business of the Subsidiaries including but not limited
to copies of the original tax returns filed that substantiate the amount of
previous losses;
(g)
fully
executed signature cards placing the new officers on all of the Subsidiaries
bank accounts and brokerage accounts and removing the current signers,
and
(h)
Delivery
of all corporate checking, savings and other account information including
checks, debit cards (if any), check books, deposit slips, bank and brokerage
account statements and agreements, and
(i)
All
passwords necessary to access any and all Subsidiaries accounts, including but
not limited, to Business Wire, corporate websites, online banking and brokerage
accounts, company software and hardware, where applicable, and
(j)
such
other documents as the Purchaser shall reasonably request.
8.2
Documents to be Delivered by
the Purchaser
.
At the
Closing, the Purchaser shall deliver to the Seller the following:
(a)
the
Purchase Price;
(b) the
certificates referred to in Section 7.2(d) hereof;
(c) such
other documents as the Seller shall reasonably request.
ARTICLE
IX
INDEMNIFICATION
9.1
Indemnification
.
(a)
Subject
to Section 9.2 hereof, the Seller hereby agrees to indemnify and hold the
Purchaser, the Subsidiaries, and their respective directors, officers,
employees, Affiliates, agents, successors and assigns (collectively, the
"Purchaser Indemnified Parties") harmless from and against:
(i)
any an
all liabilities of the Subsidiaries of every kind, nature, and description,
absolute or contingent, existing as against the Subsidiaries prior to and
including the Closing Date or thereafter coming into being or arising by reason
of any state of facts existing, or any transaction entered into, on or prior to
the Closing Date;
(ii)
subject
to Section 10.3, any and all losses, liabilities, obligations, damages, costs
and expenses based upon, attributable to or resulting from the failure of any
representation or warranty of the Seller set forth in Section 4 hereof, or any
representation or warranty contained in any certificate delivered by or on
behalf of the Seller pursuant to this Agreement, to be true and correct in all
respects as of the date made;
(iii)
any and
all losses, liabilities, obligations, damages, costs and expenses based upon,
attributable to or resulting from the breach of any covenant or other agreement
on the part of the Seller under this Agreement;
(iv)
any and
all notices, actions, suits, proceedings, claims, demands, assessments,
judgments, costs, penalties and expenses, including attorneys' and other
professionals' fees and disbursements (collectively, "Expenses") incident to any
and all losses, liabilities, obligations, damages, costs and expenses with
respect to which indemnification is provided hereunder (collectively,
"Losses").
(b)
Subject
to Section 9.2, Purchaser hereby agrees to indemnify and hold the Seller, its
affiliates, agents, successors and assigns (collectively, the "Seller
Indemnified Parties") harmless from and against:
(i)
any and
all Losses based upon, attributable to or resulting from the failure of any
representation or warranty of the Purchaser set forth in Section 5 hereof, or
any representation or warranty contained in any certificate delivered by or on
behalf of the Purchaser pursuant to this Agreement, to be true and correct as of
the date made;
(ii)
any and
all Losses based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of the Purchaser under this Agreement or
arising from the ownership or operation of the Subsidiaries from and after the
Closing Date; and
(iii)
any and
all Expenses incident to the foregoing.
9.2
Limitations
on Indemnification for Breaches of Representations and Warranties.
(a) An
indemnifying party shall not have any liability under Section 9.1(a)(i), Section
9.1(a)(ii) or Section 9.1(b)(i) hereof unless the aggregate amount of Losses and
Expenses to the indemnified parties finally determined to arise thereunder based
upon, attributable to or resulting from the failure of any representation or
warranty to be true and correct, other than the representations and warranties
set forth in Sections 4.3 and 4.11 hereof, exceeds $10,000 (the “Basket”) and,
in such event, the indemnifying party shall be required to pay the entire amount
of such Losses and Expenses in excess of $10,000 (the
“Deductible”).
9.3
Indemnification
Procedures
.
(a)
In the
event that any Legal Proceedings shall be instituted or that any claim or demand
("Claim") shall be asserted by any Person in respect of which payment may be
sought under Section 9.1 hereof (regardless of the Basket or the Deductible
referred to above), the indemnified party shall reasonably and promptly cause
written notice of the assertion of any Claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying
party. The indemnifying party shall have the right, at its sole
option and expense, to be represented by counsel of its choice, which must be
reasonably satisfactory to the indemnified party, and to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Losses
indemnified against hereunder. If the indemnifying party elects to
defend against, negotiate, settle or otherwise deal with any Claim which relates
to any Losses indemnified against hereunder, it shall within five (5) days (or
sooner, if the nature of the Claim so requires) notify the indemnified party of
its intent to do so. If the indemnifying party elects not to defend
against, negotiate, settle or otherwise deal with any Claim which relates to any
Losses indemnified against hereunder, fails to notify the indemnified party of
its election as herein provided or contests its obligation to indemnify the
indemnified party for such Losses under this Agreement, the indemnified party
may defend against, negotiate, settle or otherwise deal with such
Claim. If the indemnified party defends any Claim, then the
indemnifying party shall reimburse the indemnified party for the Expenses of
defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified party
may participate, at his or its own expense, in the defense of such Claim;
provided, however, that such indemnified party shall be entitled to participate
in any such defense with separate counsel at the expense of the indemnifying
party if (i) so requested by the indemnifying party to participate or (ii) in
the reasonable opinion of counsel to the indemnified party, a conflict or
potential conflict exists between the indemnified party and the indemnifying
party that would make such separate representation advisable; and provided,
further, that the indemnifying party shall not be required to pay for more than
one such counsel for all indemnified parties in connection with any
Claim. The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such
Claim.
(b)
After any
final judgment or award shall have been rendered by a court, arbitration board
or administrative agency of competent jurisdiction and the expiration of the
time in which to appeal therefrom, or a settlement shall have been consummated,
or the indemnified party and the indemnifying party shall have arrived at a
mutually binding agreement with respect to a Claim hereunder, the indemnified
party shall forward to the indemnifying party notice of any sums due and owing
by the indemnifying party pursuant to this Agreement with respect to such matter
and the indemnifying party shall be required to pay all of the sums so due and
owing to the indemnified party by wire transfer of immediately available funds
within 10 business days after the date of such notice.
(c)
The
failure of the indemnified party to give reasonably prompt notice of any Claim
shall not release, waive or otherwise affect the indemnifying party's
obligations with respect thereto except to the extent that the indemnifying
party can demonstrate actual loss and prejudice as a result of such
failure.
ARTICLE
X
MISCELLANEOUS
10.1
Payment of Sales, Use or
Similar Taxes
.
All
sales, use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
the transactions contemplated by this Agreement shall be borne by the
Seller.
10.2
Survival of Representations
and Warranties
.
The
parties hereto hereby agree that the representations and warranties contained in
this Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
and the Closing hereunder, regardless of any investigation made by the parties
hereto; provided, however, that any claims or actions with respect thereto
(other than claims for indemnifications with respect to the representation and
warranties contained in Sections 4.3 and 4.11, which shall survive for periods
coterminous with any applicable statutes of limitation) shall terminate unless
within twelve (12) months after the Closing Date written notice of such claims
is given to the Sellers or such actions are commenced.
10.3
Expenses
.
Except as
otherwise provided in this Agreement, the Seller, Subsidiaries and the Purchaser
shall each bear its own expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby.
10.4
Specific
Performance
.
The
Seller and the Subsidiaries acknowledge and agree that the breach of this
Agreement would cause irreparable damage to the Purchaser and that the Purchaser
will not have an adequate remedy at law. Therefore, the obligations
of the Seller and the Subsidiaries under this Agreement, including, without
limitation, the Seller’s obligation to sell the Shares to the Purchaser, shall
be enforceable by a decree of specific performance issued by any court of
competent jurisdiction, and appropriate injunctive relief may be applied for and
granted in connection therewith. Such remedies shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
10.5
Further
Assurances
.
The
Seller and the Purchaser each agrees to execute and deliver such other documents
or agreements and to take such other action as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby.
10.6
Submission to Jurisdiction;
Consent to Service of Process
.
(a)
The
parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of
any federal or state court located within the state of Colorado over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto may be
heard and determined in such courts. The parties hereby irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of venue of any such dispute
brought in such court or any defense of inconvenient forum for the maintenance
of such dispute. Each of the parties hereto agrees that a judgment in
any such dispute may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
(b)
Each of
the parties hereto hereby consents to process being served by any party to this
Agreement in any suit, action or proceeding by the mailing of a copy thereof in
accordance with the provisions of Section 10.10.
10.7
Entire Agreement; Amendments
and Waivers
.
This Agreement (including the schedules
and exhibits hereto) represents the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought. No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by
law.
10.8
Governing
Law
. This Agreement shall be governed by and construed in
accordance with the laws of the state of Colorado.
10.9
Headings
.
The
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this
Agreement.
10.10
Notices
.
All
notices and other communications under this Agreement shall be in writing and
shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, to the parties (and shall also be transmitted by
facsimile to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice given to the
other party pursuant to this provision):
Medical
Diagnostics Innovations, Inc.
3
rd
Floor, 14 South
Molton Street
London
W1K 5QP
United
Kingdom
Copy
to:
Unit 2,
Taurus Business Park
Europa
Boulevard
Westbrook,
Warrington
WA5 5YT,
United Kingdom
Copy
to:
Unit 2,
Taurus Business Park
Europa
Boulevard
Westbrook,
Warrington
WA5 5YT,
United Kingdom
Copy
to:
In
Veritas Medical Diagnostics, Inc.
The Green
House
Beechwood
Business Park North
Inverness,
Scotland IV1 3BL
Copy
to:
Richard
Friedman, Esq.
Sichenzia
Ross Friedman Ference LLP
61
Broadway
New York,
New York 10006
Phone: (212)
930-9700
Facsimile:
(212) 930-9725
10.11
Severability
.
If any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
10.12
Binding Effect;
Assignment
.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement except as provided
below. No assignment of this Agreement or of any rights or
obligations hereunder may be made by either the Seller or the Purchaser (by
operation of law or otherwise) without the prior written consent of the other
parties hereto and any attempted assignment without the required consents shall
be void; provided, however, that the Purchaser may assign this Agreement and any
or all rights or obligations hereunder (including, without limitation, the
Purchaser's rights to purchase the Shares and the Purchaser's rights to seek
indemnification hereunder) to any Affiliate of the Purchaser; provided, further,
that notwithstanding any such assignment or delegation, the Purchaser shall
continue to be bound by all the terms of this Agreement. Upon any
such permitted assignment, the references in this Agreement to the Purchaser
shall also apply to any such assignee unless the context otherwise
requires.
[Signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
In Veritas Medical Diagnostics,
Inc.
By:
/s/ Martin
Thorp
_______________
Name: Martin Thorp
Title: Chief Financial
Officer
IVMD (UK) Limited
By:
/s/ Martin
Thorp
_______________
Name:
Martin Thorp
Title:
Director
Jopejo Limited
By:
/s/ Martin
Thorp
________________
Name:
Martin Thorp
Title:
Director
Medical Diagnostic Innovations
Ltd.
By:
/s/ Robert
Galvin
_________________
Name:
Robert Galvin
Title:
Director
