<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 5, 1997
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Date of Report (date of earliest event reported)
MUSIC TONES LTD.
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Exact name of Registrant as Specified in its Charter
Colorado 0-28154 84-1337504
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State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
430 Ansin Boulevard, Suite G, Hallandale, Florida 33009
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Address of Principal Executive Offices, Including Zip Code
(954) 455-0110
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Registrant's Telephone Number, Including Area Code
12416 East Amherst Circle, Aurora, Colorado 80014
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Former Address, if Changed Since Last Report
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On March 5, 1997, Music Tones Ltd. (the "Company") completed the
acquisition of 100% of the outstanding common stock of Simplex Medical
Systems, Inc. ("Simplex") in exchange for 3,453,000 shares of the Company's
Common Stock (46.04% of the shares now outstanding). In connection with
the closing of this transaction, several current shareholders submitted for
cancellation a total of 31,953,000 shares of common stock. As a result,
after the acquisition of Simplex there are a total of 7,500,000 shares
outstanding.
The stock issuances were made pursuant to a Share Exchange Agreement
("Agreement") between the Company and Simplex. The terms of the Agreement
were the result of negotiations between the managements of the Company and
Simplex. However, the Board of Directors did not obtain any independent
"fairness" opinion or other evaluation regarding the terms of the
Agreement, due to the cost of obtaining such opinions or evaluations.
The foregoing summary of the Agreement is qualified by reference to
the complete text of the Agreement, together with the schedules thereto,
which is filed as Exhibit 10 hereto, and is incorporated herein by this
reference.
As a result of the transaction with Simplex and the issuance of the
3,453,000 shares of the Company's Common Stock, following are those persons
known by the Company to own 5% or more of the Company's Voting Stock and
the number of shares held by all directors and executive officers of the
Company as a group:
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF OUTSTANDING
NAME AND ADDRESS VOTING SHARES VOTING SHARES
<S> <C> <C>
Henry B. Schur 1,042,500<FN1> 13.9%
2160 Poinciana Drive
Hallandale, FL 33009
John E. Trafton 878,000 11.7%
285 Sunrise Drive, Apt. 16
Key Biscayne, FL 33149
All Directors and Officers 1,920,500<FN1> 25.6%
of the Company as a Group
(4 persons)
___________________
<FN>
<FN1>
Includes 862,500 shares held of record by Mr. Schur's wife, 80,000 shares
held by Mr. Schur's daughter and 100,000 shares held in trust for Mr.
Schur's daughter.
</FN>
</TABLE>
Effective on the closing of the acquisition, the Company's officers
and directors were as follows:
Richard Lucibella - President
John E. Trafton, Ph.D. - Vice President
Nicholas G. Levandoski, Ph.D. - Vice President - Research &
Development, Secretary,
Treasurer and Director
Henry B. Schur - Vice President - Marketing and
Director
ITEM 2. ACQUISITION OF DISPOSITION OF ASSETS
As described in Item 1 of this Report, on March 5, 1997, the Company
acquired all of the issued and outstanding common stock of Simplex Medical
Systems, Inc. in exchange for shares of the Company's Common Stock.
Simplex is a development-stage bio-tech company engaged in the
development, marketing and manufacturing of diagnostic products, biologic
products for blood banking, bulk pharmaceuticals, and specialty and
agricultural chemicals.
Simplex has applied for patents to acquire rights to certain
technologies and inventions for non-invasive diagnostic products,
specifically devices for detection of human immunodeficiency virus (HIV),
hepatitis B and other diseases. Based on research, Simplex believes that
the non-invasive collection and analysis of biological fluids, specifically
the device for collection of saliva, is expected to replace many test
regimes for diagnostic products that are presently in use.
Based on the most recent available unaudited financial statements, as
of October 31, 1996, Simplex had total assets of approximately $534,000 and
total liabilities of approximately $231,000 resulting in shareholders'
equity of approximately $303,000. During the ten months ended October 31,
1996, Simplex had revenues of approximately $22,000 and a net loss of
approximately $281,000.
ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS.
The Company intends to hold a special shareholders meeting on March
28, 1997, at which time shareholders will be asked to approve a change of
the Company's name to Simplex Medical Systems, Inc.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The financial
statements required by Rule 3-05(b) of Regulation S-X for Simplex Medical
Systems, Inc. are not yet available, and will be filed by amendment on or
before May 19, 1997.
(b) PROFORMA FINANCIAL INFORMATION. The pro forma financial
information required by Article 11 of Regulation S-X is not yet available,
and will be filed by amendment on or before May 19, 1997.
(c) EXHIBITS.
Exhibit 10 Share Exchange Agreement between Music Tones
Ltd. and Simplex Medical Systems, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, hereunto duly authorized.
MUSIC TONES LTD.
Dated: March 14, 1997 By/s/ Nicholas G. Levandoski
Nicholas G. Levandoski, PhD
Director
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is made this 5th day of March 1997, by
and between Music Tones Ltd., a Colorado corporation ("MTL"), and Simplex
Medical Systems, Inc., a Florida corporation ("Simplex").
WHEREAS, MTL desires to acquire all of the issued and outstanding
shares of common stock of Simplex in exchange for an aggregate of 3,453,000
authorized but unissued restricted shares of the common stock, $.0001 par
value, of MTL (the "Common Stock") the "Exchange Offer"); and
WHEREAS, Simplex desires to assist MTL in a business combination
which will result in the shareholders of Simplex owning approximately
46.04% of the then issued and outstanding shares of MTL's Common Stock, and
MTL holding 100% of the issued and outstanding shares of Simplex's common
stock; and
WHEREAS, the share exchange contemplated hereby will result in the
Simplex shareholders tendering all of the outstanding common stock of
Simplex to MTL in exchange solely for the Common Stock and no other
consideration, which the parties hereto intend to treat as a reorganization
under I.R.C. Section 368(a)(1)(B).
NOW, THEREFORE, in consideration of the mutual promises, covenants,
and representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
EXCHANGE OF SECURITIES
1.1 Issuance of Shares. Subject to all of the terms and conditions
of this Agreement, MTL agrees to offer one (1) share of Common Stock for
each share of Simplex common stock issued and outstanding, or a total of
3,453,000 shares of MTL's Common Stock. The Common Stock will be issued
directly to the shareholders of Simplex which accept the Exchange Offer.
1.2 Exemption from Registration. The parties hereto intend that the
Common Stock to be issued by MTL to Simplex shareholders shall be exempt
from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), pursuant to Section 4(2) of the Act and the rules and
regulations promulgated thereunder.
1.3 Investment Intent. Prior to the consummation of the Exchange
Offer, the shareholders of Simplex accepting the Exchange Offer shall
execute Letters of Acceptance and such other documents containing, among
other things, representations and warranties relating to investment intent
and investor status, restrictions on transferability and restrictive
legends such that the counsel for both MTL and Simplex shall be satisfied
that the exchange of shares as contemplated by this Agreement shall be
exempt from the registration requirements of the Act and any applicable
state blue sky laws.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SIMPLEX
Except as disclosed in Schedule 2 which is attached hereto and
incorporated herein by reference, Simplex hereby represents and warrants to
MTL that:
2.1 Organization. Simplex is a corporation duly organized, validly
existing, and in good standing under the laws of Florida, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in
good standing in each of the jurisdictions where its business requires
qualification.
2.2 Capital. The authorized capital stock of Simplex consists of
10,000,000 shares of Common Stock, $.0001 par value, of which 3,453,000 are
currently issued and outstanding, and 1,000,000 shares of Preferred Stock,
$.0001 par value, of which no shares are currently issued and outstanding.
All of the issued and outstanding shares of Simplex are duly authorized,
validly issued, fully paid, and nonassessable. There are no outstanding
subscriptions, options, rights, warrants, debentures, instruments, con-
vertible securities, or other agreements or commitments obligating Simplex
to issue or to transfer from treasury any additional shares of its capital
stock of any class.
2.3 Subsidiaries. Simplex does not have any subsidiaries or own any
interest in any other enterprise (whether or not such enterprise is a
corporation) except as set forth on Schedule 2.
2.4 Directors and Officers. Schedule 2 contains the names and
titles of all directors and officers of Simplex as of the date of this
Agreement.
2.5 Financial Statements. Simplex has delivered to MTL its unaudited
financial statements as of October 31, 1996 (the "Financial Statements").
The Financial Statements are complete and correct in all material respects
and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated,
however, the financials are not presented in accordance with generally
accepted accounting principles. The Financial Statements accurately set
out and describe the financial condition of the Company as of October 31,
1996.
2.6 Absence of Changes. Since October 31, 1996, except for changes
in the ordinary course of business which have not in the aggregate been
materially adverse, to the best of Simplex's knowledge, Simplex has
conducted its business only in the ordinary course and has not experienced
or suffered any material adverse change in the condition (financial or
otherwise), results of operations, properties, business or prospects of
Simplex or waived or surrendered any claim or right of material value.
2.7 Absence of Undisclosed Liabilities. Neither Simplex nor any of
its properties or assets are subject to any material liabilities or
obligations of any nature, whether absolute, accrued, contingent or
otherwise and whether due or to become due, that are not reflected in the
financial statements presented to MTL or have otherwise been disclosed to
MTL.
2.8 Tax Returns. Within the times and in the manner prescribed by
law, Simplex has filed all federal, state and local tax returns required by
law, or has filed extensions which have not yet expired, and has paid all
taxes, assessments and penalties due and payable.
2.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, MTL
and/or its attorneys shall have the opportunity to meet with accountants
and attorneys to discuss the financial condition of Simplex. Simplex shall
make available to MTL and/or its attorneys all books and records of
Simplex.
2.10 Patents, Trade Names and Rights. Schedule 2 sets forth a
complete and accurate schedule of (i) all patent applications; (ii) all
registered trademarks and service marks and all trademark and service mark
applications, including country of filing, filing number, date of issue and
expiration date used in the business of Simplex; and (iii) all registered
copyrights of property owned by Simplex. Except as set forth in such
schedule, to Simplex's knowledge, no third party has asserted, or
threatened to assert against Simplex or any of its officers or directors
any conflicting rights to any such intellectual property and Simplex has no
knowledge of facts that Simplex believes could reasonably be expected to
give rise to such a claim.
2.11 Compliance with Laws. Simplex has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and
regulations (including, without limitation, any applicable building, zoning
or other law, ordinance or regulation) affecting its properties or the
operation of its business, except for matters which would not have a
material affect on Simplex or its properties.
2.12 Litigation. Except as set forth in Schedule 2, Simplex is not
a party to any suit, action, arbitration or legal, administrative or other
proceeding, or governmental investigation pending or, to the best knowledge
of Simplex, threatened against or affecting Simplex or its business,
assets or financial condition, except for matters which would not have a
material affect on Simplex or its properties. Simplex is not in default
with respect to any order, writ, injunction or decree of any federal,
state, local or foreign court, department, agency or instrumentality
applicable to it. Simplex is not engaged in any lawsuit to recover any
material amount of monies due to it.
2.13 Authority. Simplex has full corporate power and authority to
enter into this Agreement. The board of directors of Simplex has taken all
action required to authorize the execution and delivery of this Agreement
by or on behalf of Simplex and the performance of the obligations of
Simplex under this Agreement. No other corporate proceedings on the part
of Simplex are necessary to authorize the execution and delivery of this
Agreement by Simplex in the performance of its obligations under this
Agreement. This Agreement is, when executed and delivered by Simplex, and
will be a valid and binding agreement of Simplex, enforceable against
Simplex in accordance with its terms, except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium
and similar laws relating to creditors' rights generally.
2.14 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by Simplex of its obligations
under this Agreement, nor the consummation of the transactions contemplated
under this Agreement will to the best of Simplex's knowledge: (a)
materially violate any provision of Simplex's articles of incorporation or
bylaws; (b) with or without the giving of notice or the passage of time, or
both, violate, or be in conflict with, or constitute a material default
under, or cause or permit the termination or the acceleration of the
maturity of, any debt, contract, agreement or obligation of Simplex, or
require the payment of any prepayment or other penalties; (c) require
notice to, or the consent of, any party to any agreement or commitment,
lease or license, to which Simplex is bound; (d) result in the creation or
imposition of any security interest, lien, or other encumbrance upon any
material property or assets of Simplex; or (e) violate any statute or law
or any judgment, decree, order, regulation or rule of any court or
governmental authority to which Simplex is bound or subject.
2.15 Full Disclosure. None of the representations and warranties
made by Simplex herein, or in any schedule, exhibit or certificate
furnished or to be furnished in connection with this Agreement by Simplex,
or on its behalf, contains or will contain any untrue statement of material
fact.
2.16 Assets. Simplex has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any
material liens or encumbrances.
2.17 Material Contracts and Obligations. Attached hereto on Schedule
2 is a list of all agreements, contracts, indebtedness, liabilities and
other obligations to which Simplex is a party or by which it is bound that
are material to the conduct and operations of its business and properties,
which provide for payments to or by the Company in excess of $10,000; or
which involve transactions or proposed transactions between the Company and
its officers and directors. Copies of such agreements and contracts and
documentation evidencing such liabilities and other obligations have been
made available for inspection by MTL and its counsel. All of such
agreements and contracts are valid, binding and in full force and effect in
all material respects, assuming due execution by the other parties to such
agreements and contracts.
2.18 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by Simplex in
connection with: (a) the execution and delivery by Simplex of this
Agreement; (b) the performance by Simplex of its obligations under this
Agreement; or (c) the consummation by Simplex of the transactions
contemplated under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF MTL
Except as disclosed in Schedule 3 which is attached hereto and
incorporated herein by reference, MTL represents and warrants to Simplex
that:
3.1 Organization. MTL is a corporation duly organized, valid
existing, and in good standing under the laws of Colorado, has all
necessary corporate powers to own properties and to carry on business, and
it is not now conducting any business, except to the extent to which the
effecting of the transaction contemplated by this Agreement constitutes
doing business.
3.2 Capitalization. The authorized capital stock of MTL consists of
100,000,000 shares of $.0001 par value Common Stock of which 36,000,000
shares of Common Stock are currently issued and outstanding, and 10,000,000
shares of $.01 par value Preferred Stock, of which no shares are issued and
outstanding. All of the issued and outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating MTL to issue or
to transfer from treasury any additional shares of its capital stock of any
class. Prior to Closing, MTL shall cancel 31,953,000 shares of common
stock which are currently outstanding which will reduce the number of
shares outstanding at Closing to 4,047,000 shares. After the Closing,
there will be a total of 7,500,000 shares outstanding.
3.3 Subsidiaries. MTL does not presently have any subsidiaries or
own any interest in any other enterprise (whether or not such enterprise is
a corporation).
3.4 Directors and Officers. Schedule 3 contains the names and
titles of all directors and officers of MTL as of the date of this
Agreement.
3.5 Financial Statements. MTL has delivered to Simplex its audited
balance sheet and statements of operations and cash flows as of and for the
period ended March 22, 1996, and its unaudited financial statements as of
and for the period ended September 30, 1996 (the "Financial Statements").
The Financial Statements are complete and correct in all material respects
and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated.
The Financial Statements accurately set out and describe the financial
condition and operating results of the Company as of the dates, and for the
periods, indicated therein. As of the Closing, the total liabilities of
MTL shall be zero except for the costs of this transaction which shall not
exceed $10,000.
3.6 Absence of Changes. Since September 30, 1996, except for
changes in the ordinary course of business which have not in the aggregate
been materially adverse, to the best of MTL's knowledge, MTL has not
experienced or suffered any material adverse change in its condition
(financial or otherwise), results of operations, properties, business or
prospects or waived or surrendered any claim or right of material value.
3.7 Absence of Undisclosed Liabilities. To the best of MTL's
knowledge, neither MTL nor any of its properties or assets are subject to
any liabilities or obligations of any nature, whether absolute, accrued,
contingent or otherwise and whether due or to become due, that are not
reflected in the financial statements presented to Simplex.
3.8 Tax Returns. Within the times and in the manner prescribed by
law, MTL has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments and penalties due and payable.
3.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein,
Simplex shall have the opportunity to meet with MTL's accountants and
attorneys to discuss the financial condition of MTL. MTL shall make avail-
able to Simplex all books and records of MTL.
3.10 Trade Names and Rights. MTL does not use any trademark,
service mark, trade name, or copyright in its business, or own any
trademarks, trademark registrations or applications, trade names, service
marks, copyrights, copyright registrations or applications.
3.11 Compliance with Laws. To the best of MTL's knowledge, MTL has
complied with, and is not in violation of, applicable federal, state or
local statutes, laws and regulations (including, without limitation, any
applicable building, zoning, or other law, ordinance, or regulation)
affecting its properties or the operation of its business.
3.12 Litigation. MTL is not a party to any suit, action, arbi-
tration, or legal, administrative, or other proceeding, or governmental
investigation pending or, to the best knowledge of MTL, threatened against
or affecting MTL or its business, assets, or financial condition. MTL is
not in default with respect to any order, writ, injunction, or decree of
any federal, state, local, or foreign court, department agency, or
instrumentality. MTL is not engaged in any legal action to recover moneys
due to it.
3.13 No Prior or Pending Investigation. MTL is not aware of any
prior or pending investigations or legal proceedings by the SEC, any state
securities regulatory agency, or any other governmental agency regarding
MTL or any officers or directors of MTL or any shareholders or controlling
persons of such shareholders.
3.14 Authority. MTL has full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The Board of Directors of MTL has taken all action required to
authorize the execution and delivery of this Agreement by or on behalf of
MTL, the performance of the obligations of MTL under this Agreement and the
consummation by MTL of the transactions contemplated under this Agreement.
No other corporate proceedings on the part of MTL are necessary to
authorize the execution and delivery of this Agreement by MTL in the
performance of its obligations under this Agreement. This Agreement is,
and when executed and delivered by MTL, will be a valid and binding
agreement of MTL, enforceable against MTL in accordance with its terms,
except as such enforceability may be limited by general principles of
equity, bankruptcy, insolvency, moratorium and similar laws relating to
creditors rights generally.
3.15 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by MTL of its obligations under
this Agreement, nor the consummation of the transactions contemplated under
this Agreement will, to the best of MTL's knowledge: (a) violate any
provision of MTL's articles of incorporation or bylaws; (b) with or without
the giving of notice or the passage of time, or both, violate, or be in
conflict with, or constitute a default under, or cause or permit the
termination or the acceleration of the maturity of, any debt, contract,
agreement or obligation of MTL, or require the payment of any prepayment or
other penalties; (c) require notice to, or the consent of, any party to any
agreement or commitment, lease or license, to which MTL is bound; (d)
result in the creation or imposition of any security interest, lien or
other encumbrance upon any property or assets of MTL; or (e) violate any
statute or law or any judgment, decree, order, regulation or rule of any
court or governmental authority to which MTL is bound or subject.
3.16 Validity of MTL Shares. The shares of MTL Common Stock to be
delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable.
3.17 Full Disclosure. None of the representations and warranties
made by MTL herein, or in any exhibit, certificate or memorandum furnished
or to be furnished by MTL, or on its behalf, contains or will contain any
untrue statement of material fact, or omit any material fact the omission
of which would be misleading.
3.18 Assets. MTL does not have any assets.
3.19 Material Contracts and Obligations. MTL has no material
contracts to which it is a party or by which it is bound.
3.20 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by MTL in
connection with: (a) the execution and delivery by MTL of its obligations
under this Agreement; (b) the performance by MTL of its obligations under
this Agreement; or (c) the consummation by MTL of the transactions
contemplated by this Agreement.
3.21 Real Property. MTL does not own, use or claim any interest in
any real property, including without limitation any license, leasehold or
any similar interest in real property.
ARTICLE 4
COVENANTS
4.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized
representatives, full access during normal business hours and upon
reasonable advance written notice to all of each party's properties, books,
contracts, commitments, and records for the purpose of examining the same.
Each party shall furnish the other party with all information concerning
each party's affairs as the other party may reasonably request. If the
transaction contemplated hereby is not completed, all documents received by
each party and/or its attorneys and accountants, auditors or other
authorized representatives shall be returned to the other party who
provided same upon request. The parties hereto, their directors,
employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public, without the prior written consent of the party to which the
confidential information pertains. Each party shall take such steps as are
necessary to prevent disclosure of such information to unauthorized third
parties.
4.2 Conduct of Business. Prior to the Closing, MTL and Simplex
shall each conduct its business in the normal course, and shall not sell,
pledge, or assign any assets, without the prior written approval of the
other party, except in the regular course of business. Neither MTL nor
Simplex shall amend its Articles of Incorporation or Bylaws, declare
dividends, redeem or sell stock or other securities, incur additional or
newly-funded liabilities, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less than its stated amount, pay more on any liability than
its stated amount, or enter into any other transaction other than in the
regular course of business except as otherwise contemplated herein.
ARTICLE 5
CONDITIONS PRECEDENT TO MTL'S PERFORMANCE
5.1 Conditions. The obligations of MTL hereunder shall be subject
to the satisfaction, at or before the Closing, of all the conditions set
forth in this Article 5. MTL may waive any or all of these conditions in
whole or in part without prior notice; provided, however, that no such
waiver of a condition shall constitute a waiver by MTL of any other
condition of or any of MTL's other rights or remedies, at law or in equity,
if Simplex shall be in default of any of their representations, warranties,
or covenants under this Agreement.
5.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by Simplex in this
Agreement or in any written statement that shall be delivered to MTL by
Simplex under this Agreement shall be true and accurate on and as of the
Closing Date as though made at that time.
5.3 Performance. Simplex shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the Closing
Date.
5.4 Acceptance by Simplex Shareholders. The holders of not less
than 90% of the issued and outstanding shares of common stock of Simplex
shall have agreed to exchange their shares for shares of MTL Common Stock.
5.5 Absence of Litigation. No action, suit, or proceeding before
any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation, shall
have been instituted or threatened against Simplex on or before the Closing
Date.
5.6 Officer's Certificate. Simplex shall have delivered to MTL a
certificate, dated the Closing Date, and signed by the Chief Executive
Officer of Simplex, certifying that each of the conditions specified in
Sections 5.2 through 5.6 hereof have been fulfilled.
ARTICLE 6
CONDITIONS PRECEDENT TO SIMPLEX'S PERFORMANCE
6.1 Conditions. Simplex's obligations hereunder shall be subject to
the satisfaction, at or before the Closing, of all the conditions set forth
in this Article 6. Simplex may waive any or all of these conditions in
whole or in part without prior notice; provided, however, that no such
waiver of a condition shall constitute a waiver by Simplex of any other
condition of or any of Simplex's rights or remedies, at law or in equity,
if MTL shall be in default of any of its representations, warranties, or
covenants under this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by MTL in this Agreement
or in any written statement that shall be delivered to Simplex by MTL under
this Agreement shall be true and accurate on and as of the Closing Date as
though made at that time.
6.3 Performance. MTL shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement
to be performed or complied with by them, on or before the Closing Date.
6.4 Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against MTL on or before the Closing Date.
6.5 Directors MTL. Effective on the Closing, MTL shall have fixed
the size of its Board of Directors at two (2) persons, and such Board of
Directors shall include Nicholas G. Levandoski, Ph.D. and Henry B. Schur.
The current Officers and Directors of MTL shall have submitted their
resignations as Officers and Directors of MTL effective on the Closing of
this transaction.
6.6 Officers of MTL. Effective on the Closing, MTL shall have
elected the following new Officers of MTL:
Richard Lucibella - President
John E. Trafton, Ph.D. - Vice President
Nicholas G. Levandoski, Ph.D. - Vice President - Research &
Development, Secretary and
Treasurer
Henry B. Schur - Vice President - Marketing
6.7 Cancellation of MTL Shares. On or before the Closing date, MTL
shall have canceled a total of 31,953,000 shares of its Common Stock which
are currently issued and outstanding.
6.8 Acceptance by Simplex Shareholders. The holders of an aggregate
of not less than 90% of the issued and outstanding shares of common stock
of Simplex shall have agreed to exchange their shares for shares of MTL
Common Stock.
6.9 Officers' Certificate. MTL shall have delivered to Simplex a
certificate, dated the Closing Date and signed by the President of MTL
certifying that each of the conditions specified in Sections 6.2 through
6.8 have been fulfilled.
ARTICLE 7
CLOSING
7.1 Closing. The Closing of this transaction shall be held at the
offices of Krys Boyle Freedman Scott & Sawyer, P.C., 600 Seventeenth
Street, Suite 2700 South Tower, Denver, Colorado 80202, or such other place
as shall be mutually agreed upon, on such date as shall be mutually agreed
upon by the parties. At the Closing:
(a) Simplex shall deliver Letters of Acceptance by the share-
holders of Simplex accepting the Exchange Offer ("Accepting Shareholders")
to MTL.
(b) Each Accepting Shareholder shall receive a certificate or
certificates representing the number of shares of MTL Common Stock for
which the shares of Simplex common stock shall have been exchanged.
(c) MTL shall deliver an officer's certificate, as described
in Section 6.8 hereof, dated the Closing Date, that all representations,
warranties, covenants and conditions set forth in this Agreement on behalf
of MTL are true and correct as of, or have been fully performed and
complied with by, the Closing Date.
(d) MTL shall deliver a signed Consent and/or Minutes of the
Directors of MTL approving this Agreement and each matter to be approved by
the Directors of MTL under this Agreement.
(e) Simplex shall deliver an officer's certificate, as
described in Section 5.6 hereof, dated the Closing Date, that all
representations, warranties, covenants and conditions set forth in this
Agreement on behalf of Simplex are true and correct as of, or have been
fully performed and complied with by, the Closing Date.
(f) Simplex shall deliver a signed Consent or Minutes of the
Directors of Simplex approving this Agreement and each matter to be
approved by the Directors of Simplex under this Agreement.
(g) Krys Boyle Freedman Scott & Sawyer, P.C. will pay its
legal fees in connection with this transaction out of the $10,000 which was
wired into its trust account by Simplex and any balance will be paid to
Bleu Ridge Consultants to cover its costs in connection with this
transaction.
ARTICLE 8
MISCELLANEOUS
8.1 Captions and Headings. The Article and paragraph headings
throughout this Agreement are for convenience and reference only, and shall
in no way be deemed to define, limit, or add to the meaning of any
provision of this Agreement.
8.2 No Oral Change. This Agreement and any provision hereof, may
not be waived, changed, modified, or discharged orally, but it can be
changed by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, or discharge is sought.
8.3 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the
party against whom such waiver is charged; and (i) the failure of any party
to insist in any one or more cases upon the performance of any of the
provisions, covenants, or conditions of this Agreement or to exercise any
option herein contained shall not be construed as a waiver or relinquish-
ment for the future of any such provisions, covenants, or conditions, (ii)
the acceptance of performance of anything required by this Agreement to be
performed with knowledge of the breach or failure of a covenant, condition,
or provision hereof shall not be deemed a waiver of such breach or failure,
and (iii) no waiver by any party of one breach by another party shall be
construed as a waiver with respect to any other or subsequent breach.
8.4 Time of Essence. Time is of the essence of this Agreement and
of each and every provision hereof.
8.5 Entire Agreement. This Agreement contains the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings.
8.6 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of Colorado, except to the extent its
conflict of laws provisions would apply the laws of another jurisdiction.
8.7 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given on the date of service if served personally on the
party to whom notice is to be given, or on the third day after mailing if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly addressed as
follows:
MTL:
Music Tones Ltd.
12146 East Amherst Circle
Aurora, Colorado 80014
with a copy to:
Jon D. Sawyer, Esq.
Krys Boyle Freedman Scott & Sawyer, P.C.
600 Seventeenth Street, Suite 2700 South Tower
Denver, Colorado 80202
Simplex:
Simplex Medical Systems, Inc.
c/o Joel Marcus
676 West Prospect Road
Fort Lauderdale, Florida 33309
8.8 Binding Effect. This Agreement shall inure to and be binding
upon the heirs, executors, personal representatives, successors and assigns
of each of the parties to this Agreement.
8.9 Mutual Cooperation. The parties hereto shall cooperate with
each other to achieve the purpose of this Agreement, and shall execute such
other and further documents and take such other and further actions as may
be necessary or convenient to effect the transaction described herein.
8.10 Brokers. The parties hereto represent and agree that no broker
has brought about the aforementioned transaction and no finder's fee has
been paid or is payable by any party. Each of the parties hereto shall
indemnify and hold the other harmless against any and all claims, losses,
liabilities or expenses which may be asserted against it as a result of its
dealings, arrangements or agreements with any broker or person, except as
described in this paragraph.
8.11 Announcements. MTL and Simplex will consult and cooperate with
each other as to the timing and content of any announcements of the
transactions contemplated hereby to the general public or to employees,
customers or suppliers.
8.12 Expenses. MTL and Simplex will pay their own legal, accounting
and any other out-of-pocket expenses reasonably incurred in connection with
this transaction, whether or not the transaction contemplated hereby is
consummated.
8.13 Exhibits. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided for hereinabove, including
any items referenced therein or required to be attached thereto. Any
material changes to the Exhibits shall be immediately disclosed to the
other party.
AGREED TO AND ACCEPTED as of the date first above written.
MUSIC TONES LTD. SIMPLEX MEDICAL SYSTEMS, INC.
By: /s/ Daniel C. Steinberg By: /s/ Nicholas Levandoski
Daniel C. Steinberg, President Dr. Nicholas Levandoski, Director
<PAGE>
SCHEDULE 2
SIMPLEX MEDICAL SYSTEMS, INC.
("Simplex")
2.3 Subsidiaries:
Analyte Diagnostics, Inc., a Florida corporation (100% owned by
Simplex)
2.4 Directors and Officers of Simplex:
John E. Trafton, Ph.D. - President and Director
Nicholas G. Levandoski, Ph.D. - Vice President - Research and
Development and Director
Henry B. Schur - Vice President of Marketing and
Director
Sheldon Nassberg, M.D. - Director
2.10 Patents, Tradenames, Etc.:
Patents Pending:
(1) Saliva Collector (Biological Fluids Collector)
Serial No. PCT/US95/05889
Serial No. 08/501,417
(2) Disposable Dental Etcher
Serial No. 08/746737
(3) Formulation For Non-Invasive Extraction of Interstitial
Fluids, Test Kit and Method For Analysis (Number not available)
(4) Improved Sample Collection, Dispensing, Testing & Storage
Device For Saliva
Serial No. 08/537,519
Registered Trademarks: Simplex - Serial No. 751098,680
Neemodex - Serial No. 75/074,621
Airbrator (filed for)
2.12 Litigation:
Simplex is a defendant in two law suits which are described in the
letter dated February 24, 1997, from Lewis J. Levey to Joel Marcus.
2.17 Material Contracts of Simplex:
a) Business Lease dated September 1, 1995, between Ansin Partners,
Inc. and Analyte Diagnostics, Inc. for office space in Hallandale, Florida.
Monthly rent is approximately $1,600, and lease expires August 31, 1997,
with option to renew for two years.
b) Business Lease dated August 27, 1996, between Ansin Partners,
Inc. for office space in Hallandale, Florida. Monthly rent is
approximately $850 and lease expires on September 30, 1997 (although lease
has a typo and says expiration date is September 30, 1996).
<PAGE>
SCHEDULE 3
MUSIC TONES LTD.
("MTL")
3.2 Directors and Officers of MTL:
Daniel C. Steinberg - President and Director
