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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 5, 1996
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NOVATEK INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 0-22096 84-1074891
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1340 Neptune Drive, Boynton Beach, Florida 33426
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (407) 736-6659
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N/A
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(Former name or former address, if changed since last report.)
PLEASE ADDRESS ALL CORRESPONDENCE TO: Frank J. Cooney, President
Novatek International, Inc.
1340 Neptune Drive
Boynton Beach, Florida 33426
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT;
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 5, 1996 a merger was effected between Novatek International, Inc.
("Company"), its wholly-owned subsidiary Novatek International Holdings, Inc.,
("Holdings"), Medical Products, Inc. ("MPI") and its shareholders The Celentano
Limited Partnership & Pickeral Cove Trust ("Shareholders"). As a result of this
merger, the business of MPI will be conducted by Holdings as a wholly-owned
subsidiary of the Company.
The consideration for the merger was as follows:
1. The Company issued 2,002,638 shares of its common stock to The Celentano
Limited Partnership and 2,002,637 shares of its common stock to Pickeral
Cove Trust in exchange for all of the outstanding shares (7,500 shares of
common stock) of MPI.
2. The Company issued 3,453,125 shares of its common stock, $125,000 in short
term notes and paid $1,300,000 to New England Diagnostics Corporation
("NED") and MPI previously paid $950,000 to NED which resulted in payment
in full of the balance due to NED of a promissory note in the original face
amount of $30,000,000 owing from MPI to NED. The $3,000,000 note
previously issued by the Company to MPI was cancelled. NED assigned the
shares to Rudolf Baboun ("Baboun").
3. The Company issued a $36,000,000 face amount, 9% convertible debenture
convertible into 7,200,000 shares of the Company's common stock to NED as
consideration for NED acquiring for the Company certain sales contracts for
products for which MPI holds a license to distribute. This debenture has
been placed in escrow pending the performance by NED of its obligation to
acquire these certain sales contracts.
4. The Company issued to Joseph Roberts & Co. 1,000,000 shares of its common
stock for its assistance in arranging the merger.
5. The Company has agreed to issue 1,000,000 shares of its common stock and
paid $250,000 to four consultants to further the Company's interests in
Honduras, Costa Rica and Colombia.
Prior to the issuance of the common shares set forth above, the Company had
issued and outstanding 2,674,498 shares of its common stock. In addition, in
order to facilitate this transaction, the Company, after giving effect to the
merger, issued convertible notes payable in the amount of $2,354,000
convertible into the Company's common stock at $2.50 per share. After the
issuance of the 9,458,400 shares of common stock set forth above, the Company
has issued and outstanding 12,132,898 shares of its common stock, of which
Baboun owns 3,453,125 shares, or 28.5%, The Celentano Limited Partnership owns
2,002,638 shares, or 16.5% and Pickeral Cove Trust owns 2,002,637 shares, or
16.5%. Should NED convert its 9% debenture into 7,200,000 shares, the Company
would have issued and
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outstanding 19,332,898 shares of common stock, of which NED would own
7,200,000 shares, or 37.2%.
A more detailed description of this transaction is set forth in the Agreement
and Plan of Merger, Amendment to Agreement and Plan of Merger, 9% Convertible
Debenture and Escrow Agreement, documents included as exhibits to this filing.
Medical Products, Inc. is a Florida corporation incorporated on November 3,
1995. The only business conducted by MPI from its incorporation through the
Merger was to enter into the License Agreement, as Licensee, with NED. The
Company, through Holdings, is now the Licensee of this License Agreement. The
License Agreement grants the exclusive license to distribute twelve (12)
specified medical diagnostic tests in South America and the Bahamas. For a more
detailed description of the Company's rights and obligations, see the License
Agreement included as an exhibit to this filing.
ITEM 5. OTHER EVENTS
Effective February 28, 1996, Brigitte U. Cooney resigned as Secretary and a
Director of the Company and Theodore B. Thomas resigned as Vice President,
Treasurer and a Director of the Company. The Company's President, Frank J.
Cooney, will serve as Treasurer and the Company's Assistant Secretary, Larry
Schone, will serve as Secretary.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) and (b) - Financial Statements of Businesses Acquired and Pro Forma
Financial Information - to be filed by amendment.
(c) Exhibits
2.0 Agreement and Plan of Merger dated December 29, 1995
2.1 Amendment to Agreement and Plan of Merger dated February 28, 1996
4.0 $36,000,000, 9% Convertible Debenture due January 1, 2001
4.1 Escrow Agreement for 9% Convertible Debenture
10.0 License Agreement between New England Diagnostics Corporation and
Medical Products, Inc.
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SIGNATURE
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.
Date: March 19, 1996 Novatek International, Inc.
(Registrant)
By /s/ Frank J. Cooney
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Frank J. Cooney, President
Principal Executive Officer
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is made as of December 29,
1995, among MEDICAL PRODUCTS, INC., a Florida, USA, corporation ("Med Pro" or
the "Company"), its shareholders, THE CELENTANO LIMITED PARTNERSHIP & PICKERAL
COVE TRUST, as agent for the shareholders of the Company (the "Shareholders"),
NOVATEK INTERNATIONAL, INC., a Colorado corporation ("Novatek"), and a Florida
corporation to be formed as a wholly-owned subsidiary of Novatek ("Acquisition
Co.").
RECITALS:
A. The authorized capital stock of the Company consists of 7,500 shares
of voting common stock, $1.00 par value per share (the "Company Stock"), of
which 7,500 shares (collectively the "Company Shares") are issued and
outstanding. The Shareholders own all of the Company Shares.
B. The authorized capital stock of Acquisition Co. will consist of 7,500
shares of common stock, $1.00 par value (the "Acquisition Co. Stock"), of which
100 shares (the "Acquisition Co. Shares") shall be issued and outstanding.
Novatek will own all of the Acquisition Co. Shares.
C. The parties desire that the Company be acquired through a merger (the
"Merger") of the Company into Acquisition Co. subject to and upon the terms and
conditions set forth herein.
D. It is the intent of the parties that the consummation of the various
transactions contemplated herein will qualify as a "reorganization", as such
term is defined at Section 368(a)(1)(A) of the Internal Revenue Code of 1986.
E. The Company has acquired an exclusive license from New England
Diagnostics (NED) for the sum of $30 million, to market and distribute
diagnostic devices in all of the countries of South America and in the Bahamas.
The payment of the $30 million was made in the form of a note (NED Note).
F. The Company has entered into an agreement with NED to acquire
contracts which provide for the sale of $100,000,000 of medical diagnostic
devices to government of Brazil in consideration of the sum of $36 million. The
amount to be due to NED upon the assignment of the contracts shall be referred
to as the "NED Contingent Obligation".
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G. At Closing, post-merger Acquisition Co., as the surviving corporation,
shall with NED approval restructure the NED Note and the NED Contingent
Obligation as provided in Section 1.3.1 below.
In consideration of the premises and for other good and valuable
considerations, the parties hereto intending to be legally bound agree as
follows:
1. THE MERGER
1.1 PARTIES, SURVIVOR, EFFECT
1.1.1 Pursuant to the terms and conditions of this Agreement, the
Company shall be merged with and into Acquisition Co. wherein Acquisition Co.
shall be the surviving corporation. The name of Acquisition Co. shall, to the
extent possible, be changed to "NOVATEK INTERNATIONAL HOLDINGS, INC."
concurrently with or immediately after the Merger. The Merger shall be
consummated pursuant to and shall have the effect provided by the Florida
General Corporation Act (the "FGCA").
1.2 The Merger shall be effective upon filing Articles of Merger with the
State of Florida. Such Articles of Merger shall be in substantially the form
attached hereto as Exhibit 1.1.2.
1.3 TOTAL PURCHASE PRICE / MERGER CONSIDERATION
1.3.1 PURCHASE PRICE; The "Total Purchase Price" for the Company
Shares and in consideration of the merger, in restructuring the NED Note, and
satisfying the NED Contingent Obligation (sometimes also herein called the
"Merger Consideration") shall be $72,000,000 (U.S.). consisting of and payable
as follows:
(a) Upon the execution of this Agreement, a non-refundable
deposit in the form of a ninety (90) day $3,000,000 convertible note,
convertible into 1.2 million shares of Novatek common stock is to be delivered
to the Company or its assigns. In the event there is no closing, the Company
shall deliver to Novatek on or before April 3, 1996, 8.4% of the issued and
outstanding common stock of the Company in consideration of the issuance of this
non-refundable deposit. At Closing, Novatek shall cause the Company to transfer
the convertible note to NED, in satisfaction of $3,000,000 of the principal
balance due under the NED Note.
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(b) At Closing, $3,000,00 in immediately available funds shall
be paid to NED or its assigns in satisfaction of $3,000,000 of the principal
balance due under the NED note;
(c) At Closing, Novatek will transfer to NED, in satisfaction of
$24,000,000 of the principal balance due under the NED Note, four million eight
hundred thousand shares of Novatek unregistered common stock, valued at 5
dollars per share, representing $24,000,000 of the Merger Consideration to be
paid under this Agreement. In the event that the principal balance of the NED
Note should be less than $24,000,000, after taking into consideration the
transfers under subsections (a) and (b) of this Section 1.3.1 (hereinafter
referred to as the "NED Calculated Principal Balance"), then the number of
shares of Novatek stock transferred under this subsection (c) shall be adjusted
by determining the difference between 24,000,000 and the NED Calculated
Principal Balance and dividing such difference by 5. This adjustment shall be
hereinafter referred to as the "NED Note Stock Adjustment".
(d) At Closing, Novatek will transfer to the Shareholders or
their assigns 1,200,000 shares of Novatek unregistered common stock valued at 5
dollars per share, representing $6,000,000 of Merger Consideration. However,
should there be a decrease in the number of shares of Novatek stock issued to
NED under subsection (c) of this Section 1.3.1 due to an NED Note Stock
Adjustment, then the amount of stock transferred to the Shareholders under this
provision shall be increased by the same number of shares.
(e) At Closing, in satisfaction of the NED Contingent
Obligation, Novatek will execute and deliver in favor of NED, fully earned and
non-cancelable Convertible Debentures in the aggregate principal amount of
$36,000,000 ("Debentures"). The Debentures shall bear interest payable
quarterly at the rate of 9% per annum and shall be due on January 1, 2001;
provided, however, that principal payments in reduction of the Debentures must
be made annually to the extent net profits of Novatek exceed $4,000,000 after
taxes. The Debentures shall be convertible at Holder's option into Novatek
unregistered Common Stock at the lesser of $5.00 per share, or the NASDAQ bid
price of the Novatek Common Stock on the date of conversion by NED. The
Debentures may be prepaid by Novatek at any time on thirty (30) days notice to
NED during which time NED may elect to convert the Debenture to Novatek Common
Stock. The Debentures may be converted to Preferred Stock of Novatek on terms
agreeable to Company and Novatek's Board of Directors. In the event the Company
has not, by the Closing Date, entered into a final agreement (the "Brazil
Agreement") pursuant to which the Company (or its successor) would provide
$100,000,000 of medical diagnostic devices (sometimes called "Products") to the
Government of Brazil, the $36 million dollar Debenture, which otherwise would
have been included in the Total Purchase Price and issued to NED at Closing may
be retained by Novatek in an escrow reasonably acceptable to NED, and will be
delivered to NED upon the execution and delivery of the Brazil Agreement; and If
NED elects to convert the Debenture into the common stock of Novatek, to the
extent the bid price of Novatek common stock sold on the NASDAQ exchange shall
be less than
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an average of $5.00 per share for the 10 trading days preceding the Closing
Date, the number of shares of Novatek common stock to be issued and delivered to
NED at Closing pursuant to the Note or the Debentures shall be adjusted as
provided in Section 1.3.2 below.
1.3.2 PRICE ADJUSTMENT. In the event that shares of Novatek
common stock do not trade at an average Bid price (based on closing prices) of
at least $5.00 per share during the ten (10) days prior to Closing, then Novatek
shall issue additional shares of Novatek unregistered common stock to NED to the
extent necessary to result in a total valuation of $66,000,000 when such average
Bid price is multiplied by the number of total shares received by NED (including
the additional shares provided for herein).
1.3.3 CONSIDERATION. The Total Purchase Price includes, without
adjustment, all assets and liabilities of the Company on the balance sheets of
December 31, 1995.
1.3.4 REGISTRATION UNDER SECURITIES ACT OF 1933.
(a) Novatek agrees that if, at any time subsequent to
January 1, 1996, but prior to January 1, 2002, NED or the Shareholders, requests
that Novatek file, under the Securities Act of 1933 (the "Act"), a registration
statement under the Act covering all or any of the Novatek Common Stock owned by
NED or the Shareholders (whether from conversion of the Note or the Debentures
or otherwise), Novatek (i) will promptly notify NED and the Shareholders that
such registration statement will be filed and that the Novatek unregistered
Common Stock which are then held, and/or may be acquired upon the conversion of
the Note or Debenture by NED, the Shareholders and any other shareholders will
be included in such registration statement, (ii) will cause such registration
statement to cover all Novatek Common Stock which it has been so requested to
include, (iii) will use its best efforts to cause such registration statement to
become effective as soon as practicable and (iv) will take all other action
reasonably necessary under any Federal or state law or regulation of any
governmental authority to permit all Novatek Common Stock which it has been so
requested to include in such registration statement to be sold or otherwise
disposed of, and will maintain for nine months such compliance with each such
Federal and state law and regulation of any governmental authority for NED and
the Shareholders to effect the proposed sale or other disposition; provided,
however, that in no event shall Novatek be obligated to qualify to do business
in any jurisdiction where it is not so qualified or to take any action that
would subject it to tax or to service of process in any jurisdiction where it is
not subject thereto. Notwithstanding anything contained in this Section to the
contrary, Novatek shall have no obligation to register the Novatek Common Stock
as provided in this Section more than twice.
(b) Novatek agrees that if at any time subsequent to
January 1, 1996, but prior to January 1, 2002, the Board of Directors of Novatek
shall authorize the filing of a registration statement
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(any such registration statement being hereinafter called a "Subsequent
Registration Statement") under the Act in connection with the proposed offer
of any of its securities by it or any of its shareholders, Novatek (i) will
promptly notify NED and the Shareholders that such Subsequent Registration
Statement will be filed and that the Novatek Common Stock then held, and/or
which may be acquired upon the exercise of the Note or Debentures by NED and
the Shareholders, will, at NED's and/or the Shareholders' request, received
within twenty (20) days of such notice, be included in such Subsequent
Registration Statement, (ii) will use its best efforts to cause such
Subsequent Registration Statement to become effective as soon as practicable,
and (iii) will take all other action reasonably necessary under any Federal
or state law or regulation of any governmental authority to permit all
Novatek Common Stock which it has been so requested to include in such
Subsequent Registration Statement to be sold or otherwise disposed of, and
will maintain for nine months such compliance with each such Federal and
state law and regulation of any governmental authority for NED and the
Shareholders to effect the proposed sale or other disposition.
Notwithstanding the above, the registration rights provided herein will not
apply to a Subsequent Registration Statement filed by the Company relating
solely to: (i) securities to be issued by the Company in connection with the
acquisition of stock or assets of another corporation, or the merger or
consolidation of another corporation by or with Novatek, or (ii) securities
to be offered to officers or employees of the company, and each registration
right shall be subject to then existing market conditions and the consent of
the underwriters, if any. Notwithstanding anything contained in this Section
to the contrary, the right of NED and the Shareholders to be included in such
Subsequent Registration Statement may not be exercised more than five (5)
times. In no event shall Novatek be obligated to qualify to do business in
any jurisdiction where it is not so qualified or to take any action that
would subject it to tax or the service of process in any state where it is
not subject thereto.
(c) Whenever Novatek is required pursuant to the provisions
of this Section to use its best efforts to take action pursuant to any Federal
or state law or regulation of governmental authority to permit the sale or other
disposition of Novatek Common Stock which are then held and/or which may be
acquired upon the exercise of the Notes or Debenture or otherwise, Novatek shall
(i) furnish each holder of any Novatek Common Stock and each underwriter of
Novatek Common Stock with such copies of the Prospectus, including the
preliminary prospectus, conforming to the Act (and such other documents as each
such holder or each such underwriter may reasonably request) in order to
facilitate the sale or distribution of the Novatek Common Stock, (ii) use its
best efforts to register or qualify the Novatek Common Stock covered by the
registration statement or post-effective amendment, as the case may be, under
the blue sky laws (to the extent applicable) of such jurisdiction or
jurisdictions as NED, the Shareholders and each underwriter shall have
reasonably requested; provided, however, that in no event shall Novatek be
obligated to qualify to do business in any jurisdiction where it is not so
qualified or to take any action that would subject it to tax or the service of
process in any state where it is not subject thereto.
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(d) Novatek shall pay all expenses, disbursements and fees
(including, but not limited to, printing costs, filing fees, underwriting
discounts or commissions, other underwriting expenses, transfer taxes, and legal
and accounting fees incurred of a Registration or a Subsequent Registration
pursuant to this Section; except, however, NED and/or the Shareholders shall pay
all brokerage commissions relating to the sale or exchange of their Novatek
Common Stock.
(e) Novatek will indemnify NED and the Shareholders
substantially to the same extent as Novatek shall indemnify the underwriters and
NED and the Shareholders will indemnify Novatek in a manner reasonably
requested by Novatek with respect to information therein provided by NED and the
Shareholders.
1.4 GENERAL MERGER PROVISIONS
1.4.1 ACTIONS AUTOMATIC
All conversions, cancellations and other actions provided
for in this Article shall occur automatically upon the effectiveness of the
Merger, by virtue of the Merger and without any action on the part of the
holders of the Company Shares. Upon the effective date of the Merger, all of
the Company Shares shall be deemed canceled and Acquisition Co. shall have paid
or delivered the Purchase Price required to be paid or delivered as provided in
Section 1.3.1 and in Section 8.3(a).
1.4.2 CONVERSION OF COMPANY SHARES
All Company Shares issued and outstanding immediately before
the Merger shall be converted in the aggregate into the right to receive the
Purchase Price.
1.5 ARTICLES OF INCORPORATION, BYLAWS, DIRECTORS AND OFFICERS
1.5.1 The Articles of Incorporation of Acquisition Co. in effect
immediately prior to the Merger shall remain the Articles of Incorporation of
Acquisition Co. after the Merger, unless and until amended as provided herein,
therein and by law.
1.5.2 The by-laws of Acquisition Co. in effect immediately prior
to the Merger shall remain the by-laws of Acquisition Co. after the Merger
unless and until as amended as provided therein or by law.
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1.5.3 After the Merger, the persons listed in Schedule 1.5.3 shall
be the officers and directors of Acquisition Co. as set forth next to their
respective names until the respective successors have been elected and
qualified.
2. REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDERS AND THE COMPANY
Shareholders and the Company, jointly and severally, make the following
representations and warranties to each of Acquisition Co. and Novatek.
2.1 TITLE TO SHARES
2.1.1 As identified in Schedule 2.1, Shareholders are the owners,
beneficially and of record, of all Company Shares as set out in Schedule 2.1.
free and clear of all liens, encumbrances, security agreements, claims, charges,
restrictions, options, shareholder's agreements or other interests, excepting a
debt of $30 million dollars, owed to New England Diagnostics, in consideration
of the transfer of the exclusive license (see license agreement) and a $1
million note, both obligations will be paid in full from the proceeds of the
closing of this transaction. In addition to these debts, there is a
contingent liability of $36 million dollars that will be assumed by Novatek
as of the closing.
2.1.2 Shareholders have full power to vote their Company Shares
and to surrender their Company Shares as contemplated by this Agreement without
obtaining the consent or approval of any other Stock other than the person,
entity or government authority. Shareholders do not own any Company Stock other
than the Company Shares identified in Schedule 2.1.
2.1.3 Shareholders owns 100% of all issued and outstanding capital
stock of the Company, which issued and outstanding capital stock consists solely
of the Company Shares.
2.1.4 Shareholders agree to vote in favor of the Merger.
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3. MEED PRO CORPORATE STATUS
3.1 ORGANIZATION AND STANDING
The Company is a corporation duly organized, validly existing and in
good standing under the laws of Florida. The Company has all necessary corporate
powers to own its properties and to operate its businesses as now owned and
operated. Neither the ownership of the Company's properties nor the nature of
the Company's business require the Company to be qualified in any other
jurisdictions.
3.2 CAPITALIZATION OF THE COMPANY
The authorized capital stock of the Company consists of 7,500
shares of voting common stock, $1.00 par value, of which 7,500 shares are issued
and outstanding. The Company Shares are validly issued, fully paid and
nonassessable and such shares have been so issued in full compliance with all
federal and state securities laws. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating the Company to issue or to transfer from or otherwise
issue any additional shares of Company Stock or any other treasury capital
stock. No Company Stock has been issued in violation of any preemptive rights
and no Company Stock has been purchased, sold or otherwise transferred in
violation of any applicable law or any buy-sell or other shareholder agreement.
3.3 FINANCIAL STATEMENTS
For purposes of this Agreement, "Financial Statements" means the
Balance Sheet, Income Statement, Statement of Cash Flow, and other financial
reports of the Company as of and for the 12 month period ending December 31,
1995. The Financial Statements, true and correct copies of which will be
delivered by Company to Acquisition Co., have been prepared in accordance with
generally accepted accounting principles consistently followed by the Company
throughout the periods indicated and fairly present the financial position of
the Company as of the respective dates of the balance sheet included in the
Financial Statements and the results of its operations for the respective
periods indicated.
3.4 ABSENCE OF CERTAIN CHANGES
As to the Company, since December 31, 1995,
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(a) there has not been any event or condition of any character
that has or might reasonably have a material and adverse effect on the financial
condition, business, assets or prospects of any of the foregoing corporations.
(b) the Company has operated only in the ordinary course of
business; and
(c) the Company has not paid or declared any dividends on the
Company Stock or purchased or otherwise acquired or issued any further shares of
Company Stock or granted any options or other rights to purchase same.
3.5 TAXES
Within the times and in the manner prescribed by law, the Company has
filed all tax returns required to be filed by it, and has paid all taxes,
assessments and penalties due and payable. There are no present disputes as to
taxes of any nature payable by the Company nor any tax liens whether existing or
inchoate in any of the assets of the Company. There shall be no taxes owing by
the Company for periods prior to January 1, 1996. Shareholders shall be solely
liable for all such taxes for periods prior to such date.
3.6 DEBTS AND CONTINGENT LIABILITIES
The Company has no debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, by guarantee or otherwise, and whether
due or to become due, nor does there exist any situation or fact known by
Shareholders which involve potential liability of the Company that is not
reflected or reserved against in the Financial Statements.
3.7 CONTRACTS
Schedule 3.7 contains an accurate listing of all contracts, licenses,
agreements or other legally binding commitments of the Company in existence on
the date hereof, separated according to the following categories:
(a) employment contracts, contracts exceeding $10,000 for
services of independent contractors and other employee benefit and/or employee
remuneration plans, arrangements, contracts or agreements, including pension and
stock option plans;
(b) contracts including licenses relating to Devices, patents,
trademarks, trade names, copyrights, know-how, trade secrets and similar
matters,
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(c) all notes, loan or credit contracts and instruments or
documents related to security for debt, including but not limited to Indentures,
mortgages, pledges, conditional sales and other title retention contracts;
(d) contracts and policies relating to insurance security for
debt, including but not limited to, indentures, mortgages, pledges, conditional
sales and other title retention contracts;
(e) contracts and policies relating to insurance whose coverage
exceeds $10,000, including without limitation, title insurance and all
occurrence-based policies regardless of when issued;
(f) sales agency, sales representation and distributorship
contracts";
(g) leases for real property, buildings or equipment.
All items listed in Schedule 3.7 are in full force with no default
thereunder known by the Company or Shareholders, and, to the Company's or
Shareholders' knowledge, no facts or conditions exist which, if continued, would
result in a default thereunder. No item listed on Schedule 3.7 shall be
affected in any manner by a change in control of the Company.
3.8 CASH AND BANK ACCOUNTS; POWERS OF ATTORNEY
Schedule 3.8 contains an accurate listing of:
(a) all banks in which the Company has an account or safe
deposit box and the names of all persons authorized to draw thereon or to have
access thereto as well as all money market funds in which the Company
participates; and
(b) the names of all persons, if any, holding general or special
powers of attorney from the Company, together with a summary statement of the
terms thereof.
3.9 RECEIVABLES
Schedule 3.9 is an accurate schedule of the Company's accounts and
notes receivables as of the date set out in such Schedule, together with an
accurate aging of such receivables. All such receivables are, to the Company's
and Shareholders' knowledge, fully collectible.
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3.10 INVENTORY
All items of inventory of the Company are of a quality and quantity
useable and saleable by the Company in the ordinary course of business. No
items of such inventory are held by the Company on consignment from others.
3.11 TANGIBLE PERSONAL PROPERTY
Schedule 3.11 contains an accurate schedule describing, specifying,
and giving the location of, and providing an indication of whether the property
is owned or leased, for all personal property (excluding inventories, but
including leasehold improvements on real property) owned, leased by or used by
the Company in connection with its business. All such personal property is, to
the Company's and Shareholder's knowledge, in good working order and such
personal property constitutes all the personal property necessary to conduct the
business of Company as such business is currently conducted.
3.12 LICENSES, PATENTS, TRADEMARKS, TRADENAMES AND OTHER INTANGIBLE RIGHTS
Schedule 3.12 contains an accurate listing of all licenses,
trademarks, tradenames, copyrights, patents and other similar intangible rights
and applications relating thereto, involving the Devices or other products or
business of the Company that are presently used by or held in the name of the
Company. Such Schedule includes an indication as to whether or not the items
listed thereon are evidenced by an appropriate copyright, patent, or other form
of registration and indicates the unexpired term of each item listed thereon.
To the Company's and Shareholders' knowledge, the Company conducts its
businesses without conflict or infringement with valid patents, trademarks,
tradenames, copyrights and other similar intangible rights of others.
3.13 TITLE TO ASSETS
Regarding the assets owned, leased or used by the Company:
(a) the Company has good and marketable title to all assets or
interests in assets owned by it or used in its businesses, free and clear of
mortgages, security interests, liens, pledges, charges, encumbrances, equities,
claims, easements, rights-of-way, covenants, conditions or restrictions except
for those disclosed in the Financial Statements, and the lien of current taxes
not yet due and payable; and
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(b) all licenses and permits possessed by the Company as of the
date hereof shall remain in full force and effect upon the Closing of the
Merger.
3.14 LABOR MATTERS
There are no pending or threatened labor disputes, strikes or work
stoppages affecting the business of the Company. The Company has not
experienced any labor disputes, strikes or work stoppages.
3.15 EMPLOYEE BENEFIT PLANS
The Company has no benefit plans, defined contribution plans, welfare
plans, compensation plans or multiemployer plans.
3.16 COMPLIANCE WITH LAWS
The Company is in material compliance with all applicable federal,
state or local statutes, laws and regulations affecting its properties or the
operation of its business. The Company 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.
3.17 NO CONFLICT WITH OTHER INSTRUMENTS
The execution and delivery of this Agreement has been duly authorized
and the consummation by the Shareholders and Company of the transactions
contemplated hereby and the change in control of the Company will not:
(a) require any consent, authorization or approval of any
person, entity or government authority;
(b) violate or constitute a default under the Articles of
Incorporation or Bylaws of the Company or any note, indenture, mortgage, deed of
trust or other contract, agreement or commitment of the Shareholders or the
Company; or
(c) result in the creation or imposition of any lien, charge or
encumbrance upon the property of the Company or cause the acceleration of any
indebtedness of the Company.
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(d) adversely affect any license, permit or agreement necessary
for the conduct of the business of Company.
3.18 LITIGATION
Except as disclosed on Schedule 3.18, there are no suits,
arbitrations, or legal, administrative or other proceedings or governmental
investigations pending, or to the knowledge of Shareholders and all officers and
directors of the Company, threatened against or affecting the businesses, assets
or financial condition of the Company.
3.19 PREPAYMENT OF OUTSTANDING DEBT
All outstanding debt of the Company will be retired and paid off from
the proceeds of the transaction.
3.20 PRODUCT LIABILITY/WARRANTY CLAIMS
(a) Schedule 3.20 is an accurate list showing all liability
experience of the Company through the date hereof. Such Schedule identifies the
date of each liability claim, the name of the product involved, the amount
claimed as damages, the nature of the injury or other loss and the current
status of the claim. Such Schedule also includes a description of all insurance
policies respecting liability coverage against which claims for recovery have
been made by the Company during the periods covered. Other than as described in
such Schedule, during the periods of time covered by such Schedule there has
been no claim, notice of claim, demand, investigation or other indication in
writing or otherwise received by the Company of any of such corporations
respecting death, personal injury, damage to property or other loss or dangerous
condition that has or was claimed to be related to or caused by the Company.
(b) The Company shall make available to Acquisition Co. and
Novatek all of the Company's claims files which files completely and accurately
represent all of the claims received by the Company for the time period
indicated in Section 3.20(a) above.
3.21 THE SOLE DIRECTOR AND OFFICER
The sole director and officer of Medical Products, Inc., since its
incorporation and as of this date, is Vincent Celentano Sr.
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4. NOVATEK'S REPRESENTATIONS AND WARRANTIES
Novatek represents and warrants to Company and Shareholders as follows:
4.1 ORGANIZATION AND STANDING
Novatek is a corporation duly organized, validly existing and in good
standing under the laws of the state of Colorado. Novatek has all necessary
corporate powers to own its properties and to operate its business as now owned
and operated. Neither the ownership of Novatek's properties nor the nature of
its business require Novatek to be qualified in any jurisdictions other than the
State of Colorado or the State of Florida. Novatek is authorized to do business
in the state of Florida.
4.2 CAPITALIZATION
4.2.1 NOVATEK STOCK. The authorized capital stock of Novatek, at the
effective date of the Merger, shall consist of 250,000,000 shares of common
stock, no par value ("Novatek Common Stock"), of which 2,674,498 shares are
issued and outstanding ("Novatek Common Shares"), and 10,000,000 shares of
preferred stock ("Preferred Stock"), of which 5,000 have been designated Series
A 10% cumulative convertible preferred shares, convertible at the rate of one
share of Preferred Stock to 333 shares of Novatek convertible Common Stock, of
which 1,887 shares of Preferred Stock are, and shall at Closing be, issued and
outstanding. The Novatek Common Shares are validly issued, fully paid and
nonassessable and such Common Shares have been so issued in full compliance with
all federal and state securities laws. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating Novatek to issue or to transfer from or otherwise issue
any additional shares of Novatek Common Stock or Preferred Stock (collectively,
the "Novatek Stock") or any other treasury capital stock other than (a)
1,287,550 warrants to purchase Novatek Common Stock, with an exercise price of
$6.75 per share; and (b) 75,000 underwriter warrants to purchase Novatek Common
Stock, with an exercise price of $5.40 per share. Each member of the Board of
Directors has an option to purchase 5,000 shares at $5.00 per share. Holders of
preferred stock, have waived accrued dividends.
4.2.2 NO FURTHER STOCK ISSUANCE. Novatek shall not, prior to Closing
and the final payment of the Total Purchase Price, issue any additional shares
of Novatek Stock, or any option, warrants, units or other instruments or rights
convertible into Novatek Stock, except that Novatek may issue:
(a) a convertible bridge note for $3,000,000, convertible into
1,200,000 shares of Novatek Common Stock, may be issued at or prior to Closing;
14
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(b) at Closing, 1,000,000 shares of Novatek unregistered Common
Stock may be issued to Joseph Roberts & Co. ("Underwriter");
(c) an option to purchase up to 450,000 shares of Novatek
unregistered common stock at $7.00 per share to Rubert W. Roberts, Jr.
4.2.3 STOCK ISSUANCE GENERALLY. No Novatek Stock has been issued in
violation of any preemptive rights and no Novatek Stock has been purchased, sold
or otherwise transferred in violation of any state or federal laws or any buy-
sell or other shareholder agreement to the knowledge of Novatek or its Board of
Directors or its underwriters.
4.3 TAXES
Within the times and in the manner prescribed by law, Novatek has
filed all federal, state and local tax returns required to be filed and has paid
all taxes, assessments and penalties due and payable, if any.
There are no present disputes as to taxes of any nature payable by the
Company nor any tax liens whether existing or inchoate in any of the assets of
Novatek. There shall be no Federal or state taxes owing by Novatek for periods
prior to January 1, 1996.
4.4 DEBTS AND LIABILITIES
Other than as shown on Schedule 4.4, Novatek has no debt, liability,
or obligation of any nature, whether accrued, absolute, contingent, by guarantee
or otherwise, and whether due or to become due.
4.5 NO DELINQUENCY IN FILINGS WITH SEC
Novatek is current in its filings with the Securities and Exchange
Commission and any applicable state agency regulating securities.
4.6 CURRENT BOARD OF DIRECTORS AND OFFICERS
Novatek's Board of Directors, immediately prior to the date of
Closing, consists of the following individuals: See A. In addition, as of that
date, Novatek's Officers shall consist of the following individuals holding the
following offices: See B.
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A: Frank J. Cooney B: President - Frank J. Cooney
Brigitte U. Cooney Vice-President/Treasurer - Theodore B. Thomas
Theodore B. Thomas Secretary - Brigitte U. Cooney
Howard Korer
Richard Ernest
4.7 NO CONFLICT WITH OTHER INSTRUMENTS
The execution and delivery of this Agreement has been duly authorized
and the consummation by Novatek of the transactions contemplated hereby will
not:
(a) require any consent, authorization or approval of any
person, entity or government authority other than the Board of Directors
and, if necessary, shareholders of Novatek;
(b) violate or constitute a default under the Articles of
Incorporation or Bylaws of Novatek (if applicable) or any note, indenture,
mortgage, deed of trust or other contract, agreement or commitment of
Novatek (if applicable); or
(c) result in the creation or imposition of any lien, charge or
encumbrance upon the property of Novatek (if applicable), or cause the
acceleration of any indebtedness of Novatek (if applicable).
4.8 SECURITIES COMPLIANCE. Novatek represents and warrants that it has
filed on a timely basis all periodic reports and filings required to be filed
under Section 13(d) of the Securities Exchange Act, has delivered to
Shareholders true and complete copies of all such filings or reports filed
within the 12 months prior to the date hereof, and will deliver true and
complete copies of all reports and filings by Novatek or its shareholders
hereafter through the Closing.
5. SHAREHOLDERS' AND COMPANY'S
OBLIGATIONS PRIOR TO CLOSING
The Company and Shareholders jointly and severally covenant from the date
of this Agreement until the Closing Date:
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5.1 ACCESS TO FACILITIES AND TO INFORMATION
Acquisition Co. and its representatives shall be afforded full access
to all facilities, properties, books, accounts, records, contracts and documents
of or relating to the Company or the Shareholders. The Shareholders or Company
shall furnish to Acquisition Co. and its representatives all data and
information concerning the business, finances and properties of the Company
that Acquisition Co. may request.
5.2 CONDUCT OF THE COMPANY'S BUSINESSES
From January 3, 1996 and to the Closing Date, the Company has and
will:
(a) conduct its business in the ordinary and usual course
and in substantially the same manner as heretofore conducted;
(b) not make any contract or commitment or incur an
obligation otherwise than in the ordinary course of business or make
any contract or commitment for capital expenditures;
(c) not declare or pay any dividends on the Company Stock;
(d) not purchase or otherwise acquire or issue any further
shares of Company Stock or grant any options or other rights to
purchase the same;
(e) not change its articles of incorporation, bylaws,
banking arrangements and account signatories and powers of attorney;
(f) not incur any indebtedness or liabilities except in the
ordinary course of business;
(g) not sell, mortgage or alienate any property;
(h) not lend or agree to lend any funds; and
(i) not increase salaries, declare bonuses, increase
benefits or modify any collective bargaining agreement.
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5.3 PRESERVATION OF BUSINESS AND RELATIONSHIPS
The Company and Shareholders shall use their best efforts to
preserve the Company's business organization intact, to make available to
Acquisition Co. the present officers and employees of the Company and to
preserve the Company's present relationships with suppliers, customers and
others having business relationships with it.
5.4 MAINTENANCE OF INSURANCE
The Company shall continue to carry its existing
insurance, subject to renewal of policies by the insurance
companies at rates reasonably similar to current rates, and to
variations and amounts required by the ordinary operations of its
business.
5.5 CONSENTS
If consents are necessary or desirable in Acquisition Co.'s
opinion to facilitate any objective as respects the Company or its future
operations after the Closing Date, the Shareholders and the Company shall use
reasonable efforts to obtain any such consents.
5.6 LOANS
The Company shall incur no loans.
5.7 ACTIONS TO EFFECT THE MERGER
On or before the Closing Date, the Company and the
Shareholders will take all actions necessary to approve and effect the
Merger, including voting in favor of the Merger at any meeting of
Shareholders, and executing and filing Articles of Merger and such other
documents and certificates as may be necessary or appropriate.
6. CONDITIONS PRECEDENT TO NOVATEK'S AND
ACQUISITION CO.'S PERFORMANCE
The obligations of Novatek and Acquisition Co. are subject to the
satisfaction on or before the Closing Date of all of the following conditions:
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6.1 ACCURACY OF SHAREHOLDERS' AND COMPANY'S REPRESENTATIONS AND
WARRANTIES
Except as otherwise permitted by this Agreement, all
representations and warranties of the Shareholders and the Company in this
Agreement or in any other writing that shall have been delivered to Novatek
or Acquisition Co. by them under this Agreement shall be true on and as of
the Closing Date.
6.2 COMPLIANCE BY SHAREHOLDERS AND COMPANY
The Shareholders and the Company shall have complied with all
provisions of this Agreement on or before the Closing Date.
6.3 NO MATERIAL ADVERSE CHANGE
During the period from December 31, 1995 to the Closing Date,
there shall not have been any material adverse change in the financial
condition or the results of operations of the Company and the Company shall
not have sustained any material loss or damage to its assets or business,
whether or not insured.
6.4 OPINION OF COUNSEL
Novatek shall have received from counsel for Shareholders and
the Company an opinion dated the Closing Date, in form and substance
satisfactory to Novatek.
6.5 THIRD PARTY ACTION
There shall not have been instituted or threatened by any
governmental unit or agency or any other person or entity or agency any
action, proceeding, investigation or objection challenging the Merger or the
transaction contemplated hereby and no such action, proceeding, investigation
or objection shall be imminent.
6.6 APPROVAL OF DOCUMENTATION
The form and substance of all certificates, instruments,
opinions, and other documents delivered or deliverable to Novatek under this
Agreement shall be satisfactory in all reasonable respects to Novatek and its
counsel.
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6.7 BOARD AND SHAREHOLDER APPROVAL
Novatek's and Acquisition Co.'s Board of Directors and, if
necessary, shareholders shall have approved this Agreement and the
transactions provided for herein.
6.8 OTHER AGREEMENTS
The delivery of such other agreements, certificates,
instruments, opinions and other documents as shall be reasonably requested by
Novatek or its counsel.
6.9 BRAZIL AGREEMENT/OTHER CONTINGENCIES
The Company's consummation of the Brazil Agreement shall not
be a condition precedent to the Closing; it being agreed, however, that if
the Brazil Agreement is not fully executed by the Closing Date, the $36
million dollar consideration (part of the purchase price) in an agreed form,
shall instead be retained by Novatek in an escrow for the benefit of NED, and
shall be released to NED upon the execution of the Brazil Agreement.
7. CONDITIONS PRECEDENT TO SHAREHOLDERS'
AND COMPANY'S PERFORMANCE
The obligations of the Shareholders and the Company hereunder are
subject to the satisfaction on or before the Closing Date of all the
following conditions:
7.1 ACCURACY OF NOVATEK'S REPRESENTATIONS AND WARRANTIES
Except as otherwise permitted by this Agreement, all
representations and warranties by Novatek in this Agreement or in any other
writing that shall have been delivered to any Shareholder or the Company by
Novatek under this Agreement shall be true on and as of the Closing Date.
7.2 COMPLIANCE
Novatek and Acquisition Co. shall have complied with all
provisions of this Agreement on or before the Closing Date.
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7.3 THIRD PARTY ACTION
There shall not have been instituted or threatened by any
governmental unit or agency or any other person or entity or agency any
action, proceeding, investigation or objection challenging the Merger or the
transaction contemplated hereby and no such action, proceeding, investigation
or objection shall be imminent.
7.4 APPROVAL OF DOCUMENTATION
The form and substance of all certificates, instruments,
opinions, and other documents delivered or deliverable to the Company or
Shareholders under this Agreement shall be satisfactory in all reasonable
respects to the Company, the Shareholders and their counsel.
7.5 OPINION OF COUNSEL
The Shareholders shall have received from counsel for Novatek
and Acquisition Co. an opinion letter dated the Closing Date in form and
substance satisfactory to Shareholders. Such opinion letter shall include,
among other things, opinions regarding the free transferability of the
Novatek Common Stock to be issued to Shareholders, and to the effect that no
approval of Novatek's shareholders is required to enter into this Agreement
or to pay the non-refundable $3,000,000 convertible note.
7.6 OTHER AGREEMENTS
The delivery of such other agreements, certificates,
instruments, opinions and other documents as shall be reasonably requested by
the Company's or Shareholders' counsel.
7.7 NOVATEK AND ACQUISITION CO. CAPITALIZATION
The outstanding capital stock of Novatek shall be as reflected
in Section 4.2. No Novatek Stock shall be issued or outstanding except as
reflected in Section 4.2, and no instruments or rights convertible into
Novatek Stock shall be issued or outstanding except as permitted in Section
4.2.2. Acquisition Co. shall have an authorized capitalization of 7,500
shares of common stock, all of the outstanding shares of which shall be owned
by Novatek.
7.8 BOARD AND SHAREHOLDER APPROVAL
The Company's, Novatek's and Acquisition Co.'s Board of
Directors and, if necessary, shareholders, shall have approved this
Agreement, the stock options or convertible notes provided for
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herein, and the transactions provided for herein, including the consummation
of the Merger and the payment of the Total Purchase Price.
7.9 OTHER CONTINGENCIES
(a) The due date of all loans made by affiliates of
Novatek to Novatek shall be extended until a date not earlier than one year
from the Closing, and estoppel certificates from each creditor-affiliate
shall be provided to Shareholders and shall be in form and substance
reasonably satisfactory to Shareholders;
(b) Novatek shall not have issued any warrants, options
or rights convertible into Novatek Stock except as permitted in Section 4.2.2.
(c) At the time of Closing, Novatek Common Stock shall
be traded on the NASDAQ small cap stock market, and no stop orders shall
exist with respect to any such Stock in any jurisdiction.
(d) The beneficial owners of Novatek Common Stock who
have agreed not to sell their shares shall extend such agreement to a date
not earlier than one year from the Closing, and evidence of such agreements
shall be provided to NED and the Shareholders and shall be in form and
substance reasonably acceptable to NED and the Shareholders. The terms of
this lock up shall be the same terms as existing on the lock up under the
secondary offering completed April 28, 1995.
(e) If the Brazil Agreement is not entered into by the
Closing Date, an escrow agreement providing for the retention in escrow for
the benefit of NED consideration in an agreed form valued at $36 million
dollars, pending consummation of the Brazil Agreement, shall be executed and
delivered in form and substance reasonably satisfactory to NED.
(f) The Convertible Note and Debentures, in form and
substance acceptable to the Shareholders, shall be executed and delivered at
Closing.
8. CLOSING
8.1 CLOSING DATE AND PLACE
The parties will use their best efforts to close the
transactions provided for herein on February 20, 1996. However, Novatek or
Shareholders may, by notice to the other parties, extend the
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day for Closing one or more times. In no event, however, shall the day for
Closing ("Closing Date") be extended beyond February 29, 1996.
The closing ("Closing") shall be held at the offices of
Shareholders in the Bahamas, or at such other place as Shareholders may
designate, commencing at 10:00 a.m., local time at the place of Closing.
8.2 SHAREHOLDERS' AND COMPANY'S CLOSING OBLIGATIONS
Subject to the satisfaction of all conditions precedent to
Shareholders' and Company's obligations, Shareholders or the Company, as the
case may be, shall deliver to Novatek at the Closing:
(a) stock certificates representing all of
the Company Shares;
(b) a letter agreement executed by Shareholders
substantially in the form of Exhibit 8.2(b) regarding Shareholders'
investment intent with respect to the Novatek Common Shares acquired by
Shareholders, except with respect to such Shares which shall be freely
transferable;
(c) certificates, dated as of the Closing Date, signed
by the Company's President and Secretary and Shareholders certifying in such
detail as Acquisition Co. may reasonably request that all of the
representations and warranties contained herein are true on and as of the
Closing Date, that Shareholders and the Company have complied with all
provisions of this Agreement and that all of the conditions set forth herein
as a prerequisite to Closing have been satisfied in full;
(d) such further certificates, instruments, opinion, and
other documents as shall be reasonably requested by Acquisition Co.'s
counsel; and
(e) certified copies of the Company's resolutions
authorizing the Merger.
8.3 CLOSING OBLIGATIONS OF NOVATEK
Subject to the satisfaction of all conditions precedent to
Novatek's obligations, at Closing Novatek shall issue and deliver:
(a) certificates for the 1.2 million Novatek Common
Shares required to be delivered under Section 1.3.1 (a) with
respect to the Purchase Price;
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(b) in respect of the NED Note and NED
Contingent Obligation as provided in Section 1.3.1,
the Convertible Note and Debentures in form and
substance acceptable to NED and the Shareholders;
(c) immediately available funds in the
amount of $3,000,000 representing the cash portion
of the Total Purchase Price payable to NED under
Section 1.3.1;
(d) such further certificates, instruments,
opinions, and other documents as shall be
reasonably requested by the Company's or
Shareholders' counsel including documents duly
authorized and executed to accomplish the matters
set forth in Section 7.7 hereof;
(e) certified copy of Novatek's and
Acquisition Co.'s Board and, if necessary,
Shareholder resolutions authorizing the Merger and
all related transactions described
herein;
(f) an opinion of counsel in form and
substance satisfactory to the Company and
Shareholders.
(g) certificates, dated as of the Closing
Date, signed by Novatek's and Acquisition Co.'s
President and Secretary certifying in such detail
as Shareholders may reasonably request that all of
the representations and warranties contained
herein are true on and as of the Closing Date,
that Novatek and Acquisition Co. have complied
with all provisions of this Agreement and that all
of the conditions set forth herein as a
prerequisite to closing have been satisfied in
full;
(h) evidence reasonably satisfactory to
Shareholders to the effect that the conditions identified
in Section 7.9 (a) and (d), including estoppels from
creditors.
9. EXAMINATION PERIOD AND TERMINATION
At the date hereof, neither Shareholders nor Novatek has had an
opportunity to make an investigation or analysis of the business, assets,
liabilities, properties and affairs of Novatek or of the Company,
respectively, or of the exhibits, schedules, information and other documents
to be delivered hereafter pursuant to this Agreement and relating to
Novatek's or the Company's assets, liabilities, equities, commitments,
properties and businesses. The parties shall complete the preparation of all
such exhibits, schedules, information and documents, and shall deliver the
same by February 20, 1996. The parties shall have seven days from the date
of their respective receipt of the last of such exhibits, schedules,
information and other documents, in which to investigate, ascertain and
verify, all of the facts,
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manner which it may choose, the business and affairs of the Company or
Novatek, as the case may be. If in Shareholders' or Novatek's good faith
judgment there is any material breach of any warranty contained in this
Agreement or misrepresentation, or failure of the other parties to perform
any of their commitments, covenants or conditions contained in this
Agreement, or if there exists any material error, misstatement or omission
with regard to any part thereof or if Shareholders or Novatek, respectively,
in its sole judgment, is not satisfied with the results of its investigation
or the contents of any of the exhibits, schedules, information or other
documents, or with the results of its examination of the business and
condition (financial or otherwise) of the Company or of Novatek, as the case
may be, either such party may terminate this Agreement at any time prior to
the end of such period by written notice to the other parties.
10. MISCELLANEOUS
10.1 SURVIVAL OF COVENANTS
(a) All covenants, agreements, warranties, representations
and undertakings of Shareholders and the Company contained herein or in any
document delivered hereunder shall, except as provided in Section 9, (i)
continue and survive the consummation of the transactions and remain in full
force and effect thereafter and (ii) not be affected by any preclosing
investigation or examination of the subject matter thereof made by another
party hereto or its representatives.
(b) All covenants, agreements, warranties, representations
and undertakings of Novatek or Acquisition Co. contained herein or in any
document delivered hereunder shall, except as provided in Section 9, (i)
continue and survive the consummation of the transactions and remain in full
force and effect thereafter and (ii) not be affected by any preclosing
investigation or examination of the subject matter thereof made by another
party hereto or its representatives.
10.2 EXHIBITS AND SCHEDULES
Each Exhibit and Schedule referred to herein is hereby
incorporated into this Agreement by reference to the same extent as if set
forth in full herein. The Exhibits and Schedules incorporated herein by
reference need not be physically attached hereto so long as such Exhibits and
Schedules are (i) appropriately identified as such on their face and (ii)
signed or initialed by the parties or their designated representative for
such purpose. Exhibits or schedules not prepared or delivered on the date
hereof shall be prepared and delivered as provided in Section 9.
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10.3 FINDER'S FEES
The parties each represent to the others that no broker brought
about or participated in the transactions except for Underwriter, to whom
Novatek owes certain compensation as agreed between Novatek and Underwriter.
Each party agrees to indemnify and hold harmless the other parties against
any loss, liability, damage, cost, claim or expense incurred by reason of any
brokerage, commission or finder's fees alleged to be payable because of any
act, commission, or statement of the indemnifying party. The Company and
Shareholders have no obligation to compensate Underwriter or any finders with
respect to the Merger or any of the transactions contemplated herein.
10.4 EXPENSES
Each of the parties shall pay all costs and expenses incurred
or to be incurred by it in negotiating and preparing this Agreement and in
closing and carrying out the transactions.
10.5 ATTORNEYS' FEES
The parties hereto shall bear the cost of their own attorneys
and related expenses in resolving disputes arising out of this Agreement and
the various agreements contemplated herein.
10.6 NOTICES
Any notice, request or demand hereunder may be given or
furnished to or served upon a party by certified or registered mail, return
receipt requested, express overnight delivery or telecopier. Notice shall be
deemed given three (3) days after notice is deposited with the U.S. Mail, the
next day following timely deposit with an express overnight delivery service
and at the time of telecopier transmission if receipt is promptly confirmed.
Notices should be addressed or sent as follows:
If to Shareholders: Celentano Limited Partnership
C/O Vincent Celentano, Sr.
987 Hillsboro Mile
Hillsboro Beach, FL 33062
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Pickeral Cove Trust
C/O Atty. Victor Rocha
Dadeland Tower North
9200 Dade Boulevard
Suite 700
Miami, Florida, USA 33156
If to the Company: Medical Products, Inc.
987 Hillsboro Mile
Hillsboro Beach, FL 33062
If to Acquisition Co.: Mr. Frank J. Cooney
1340 Neptune Drive
Boynton Beach, FL 33426
If to Novatek: Mr. Frank J.Cooney, President
1340 Neptune Drive
Boynton Beach, FL 33426
or such other address as a party shall specify in a notice pursuant to this
Section.
10.7 CONSTRUCTION OF CERTAIN TERMS
The locative adverbs "herein", "hereunder", "hereto", etc.,
whenever used in this Agreement, refer to this Agreement in its entirety and
not any specific section hereof.
10.8 GOVERNING LAW
This Agreement shall be governed by the law of the
State of Florida.
10.9 NO THIRD PARTY BENEFICIARIES
Shareholders, the Company, Novatek and Acquisition Co. agree that
there are no third party beneficiaries of the provisions of this Agreement
and none of the provisions hereof shall be deemed to inure to the benefit of
any person not a party hereto.
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10.10 HEADINGS
The table of contents and captions contained in this Agreement
shall not affect the interpretation of this Agreement.
10.11 REQUIRED PARTIES
This Agreement shall not become effective until executed by
each of the Shareholders, the Company, Novatek and Acquisition Co.
10.12 COUNTERPARTS
This Agreement may be executed in several counterparts, each
of which shall be an original and all of which shall constitute but one and
the same Agreement.
10.13 SIGNATURE BY TELECOPIER
Counterpart copies of this Agreement may be signed by all
parties and exchanged by telecopier. Counterpart copies so signed and
exchanged shall be fully binding. Counterpart originals of this Agreement
may concurrently be manually signed by all parties and shall be exchanged by
U. S. Mail or express service at the earliest possible date.
10.14 REORGANIZATION
The Merger is intended to constitute a "reorganization" as
such term is defined at IRC Section 368(a)(1).
10.15 PLAN OF MERGER
Sections 1.1 through 1.4 of this Agreement and such other
provisions as may be required by the laws of the state of Florida shall
constitute the Agreement and Plan of Merger between the Company and
Acquisition Co. for the purposes of the FGCA. The remaining terms of this
Agreement are agreements of the parties hereto among themselves.
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IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
SHAREHOLDERS:
CELENTANO LIMITED PARTNERSHIP
By: /s/ Vincent D. Celentano
------------------------------------
Title: President of Middlebury Enter-
prises, Inc. General Partner
--------------------------------
PICKERAL COVE TRUST
By: /s/ William Trainor
------------------------------------
Title: Trustee
--------------------------------
MEDICAL PRODUCTS, INC.
By: /s/ Vincent D. Celentano
------------------------------------
Title: President
--------------------------------
ACQUISITION CO.
By: /s/ Frank J. Cooney
------------------------------------
Title: President
--------------------------------
NOVATEK INTERNATIONAL, INC.
By: /s/ Frank J. Cooney
------------------------------------
Title: President
--------------------------------
29
<PAGE>
Schedule to Agreement and Plan of Merger ("Agreement") dated as of December
29, 1995 among Medical Products, Inc., ("Med Pro" or the "Company"), its
shareholders, The Celentano Limited Partnership & Pickeral Cove Trust, (the
"Shareholders"), Novatek International, Inc., a Colorado corporation
("Novatek"), and a Florida corporation to be formed as a wholly-owned
subsidiary of Novatek ("Acquisition Co.")
The contents of or disclosures in any Schedule to this Agreement are, to the
extent relevant, hereby made a part of the Agreement and of all other
Schedules to the Agreement, regardless of whether any particular Schedule is
expressly incorporated by reference in and made a part of any other Schedule.
In addition, copies of each of the documents or materials referred to in or
attached to any Schedule to this Agreement (or made available to or obtained
by a party) have been provided to the party to whom delivery is to be made
and the existence and content thereof are deemed to be part of such Schedule.
Capitalized terms used in any Schedule without definition shall have the
meanings given to such terms in the Agreement.
SCHEDULE 1.5.3
OFFICERS AND DIRECTORS OF POST-MERGER ACQUISITION CO.
SEE INCUMBENCY CERTIFICATE DELIVERED AT CLOSING
<PAGE>
Schedule to Agreement and Plan of Merger ("Agreement") dated as of December
29, 1995 among Medical Products, Inc., ("Med Pro" or the "Company"), its
shareholders, The Celentano Limited Partnership & Pickeral Cove Trust, (the
"Shareholders"), Novatek International, Inc., a Colorado corporation
("Novatek"), and a Florida corporation to be formed as a wholly-owned
subsidiary of Novatek ("Acquisition Co.")
The contents of or disclosures in any Schedule to this Agreement are, to the
extent relevant, hereby made a part of the Agreement and of all other
Schedules to the Agreement, regardless of whether any particular Schedule is
expressly incorporated by reference in and made a part of any other Schedule.
In addition, copies of each of the documents or materials referred to in or
attached to any Schedule to this Agreement (or made available to or obtained
by a party) have been provided to the party to whom delivery is to be made
and the existence and content thereof are deemed to be part of such Schedule.
Capitalized terms used in any Schedule without definition shall have the
meanings given to such terms in the Agreement.
SCHEDULE 2.1
OWNERSHIP OF COMPANY SHARES OF MED PRO
Celentano Limited Partnership - 3750 Shares
Pickeral Cove Trust - 3750 Shares
OTHER MED PRO DEBTS
-Approximately $929,000 in the aggregate
of convertible promissory notes issued by
Med Pro pursuant to a Joseph Roberts & Co.
underwritten private placement, copies of each of
which have been provided by Med Pro.
-$200,000 Med Pro Note to One Up Investments, a
copy of which has been provided by Med Pro.
-$50,000 Med Pro Note to T. Arnone, a copy of which
has been provided by Med Pro.
-$97,759.91 Med Pro Note to Vincent Celentano, a
copy of which has been provided by Med Pro.
<PAGE>
Schedule to Agreement and Plan of Merger ("Agreement") dated as of December
29, 1995 among Medical Products, Inc., ("Med Pro", or the "Company"), its
shareholders, The Celentano Limited Partnership & Pickeral Cove Trust, (the
"Shareholders") , Novatek International, Inc., a Colorado corporation
("Novatek"), and a Florida corporation to be formed as a wholly-owned
subsidiary of Novatek ("Acquisition Co.")
The contents of or disclosures in any Schedule to this Agreement are, to the
extent relevant, hereby made a part of the Agreement and of all other
Schedules to the Agreement, regardless of whether any particular Schedule is
expressly incorporated by reference in and made a part of any other Schedule.
In addition, copies of each of the documents or materials referred to in or
attached to any Schedule to this Agreement (or made available to or obtained
by a party) have been provided to the party to whom delivery is to be made
and the existence and content thereof are deemed to be part of such Schedule.
Capitalized terms used in any Schedule without definition shall have the
meanings given to such terms in the Agreement.
SCHEDULE 4.4
NOVATEK DEBTS AND LIABILITIES
NOVATEK INTERNATIONAL, INC.
SCHEDULE OF LIABILITIES
AS OF JANUARY 31, 1996
Trade Accounts Payable $102,264.12
Customer Deposits 2,500.00
Accrued Salaries and Wages 13,000.00
Accrued Vacation Pay 12,000.00
Employment Agreement 51,667.00
Loan Payable - 91 Chevy Pickup 3,372.03
Loan Payable - 93 Isuzu Pickup 2,002.68
Mortgage Payable - Suzanne L. Sauve 155,000.00
Mortgage Payable - Point Fourteen Corp. 240,000.00
CONTINGENT LIABILITIES
Weitz Co. Case No. CL 95-6282 AG PB Cty
Thomas Kelaher Case No. CL 95-3844 AO PB Cty
Ian Yap Case No. CL 95-3844 AO PB Cty
Preferred Restoration Case No. CL 93-7986 AD PB Cty
OTHER LIABILITIES
liabilities incurred in the ordinary course of business (excluding known
construction claims) since January 31, 1996
<PAGE>
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This Amendment to Agreement and Plan of Merger ("Amendment") is made
this 28th day of February, 1996, among MEDICAL PRODUCTS, INC. ("MPI"), its
shareholders, THE CELENTANO LIMITED PARTNERSHIP & PICKERAL COVE TRUST
("Shareholders"), NOVATEK INTERNATIONAL, INC. ("Novatek") and NOVATEK
INTERNATIONAL HOLDINGS, INC. ("Holdings").
RECITALS
Whereas, the parties hereto did execute that AGREEMENT AND PLAN OF
MERGER effective as of December 29, 1995 identified as execution version "B"
("Agreement"); and
Whereas, Novatek agreed to pay as consideration for the purchase of the
outstanding shares of MPI and for the satisfaction of the Promissory Note
("Note") dated November 30, 1995, due from MPI to New England Diagnostics
("NED") the sum of Three Million ($3,000,000) dollars and to issue Seven
Million Two Hundred Thousand ($7,200,000) shares of unregistered Novatek
common stock in the aggregate; and
Whereas, the satisfaction of the amounts due to NED under the Note, not
satisfied in cash, was to be in the unregistered common stock of Novatek at
an approximate value equal to the market value of the Novatek stock at date
of closing; and
Whereas, to effectuate the agreement between MPI and NED and to bring
the Agreement and Plan of Merger and distribution of the consideration agreed
to by Novatek in line with the agreement of MPI and NED, the parties desire
to amend the Agreement; and
Whereas, the Agreement and Plan of Merger called for Novatek to issue to
MPI a Three Million ($3,000,000) Dollar convertible Note which Novatek was to
cause MPI to transfer to NED at closing. The Convertible Note has been
issued and delivered to MPI but not delivered to NED at the date of signing
of this Amendment.
In consideration of the premises and for other good and valuable
considerations, the parties hereto intending to be legally bound, agreed to
amend the Agreement and Plan of Merger as follows:
1. Section 1.3.1(a) shall be amended by deleting it in its
entirety. Novatek and MPI hereby agree that the Convertible Note
which was issued pursuant to Section 1.3.1(a) and delivered to
MPI is hereby cancelled in consideration of the remaining
Amendments to the Agreement and Plan of Merger contained herein.
<PAGE>
2. Novatek agrees to assume the Note at closing and make payment of
the Note on the terms contained herein.
3. Section 1.3.1(b) of the Agreement is amended by deleting it in its
entirety.
4. Paragraph 1.3.1(c) of the Agreement is amended by deleting it in
its entirety and replacing it with the following:
(c) At Closing, final payment of the remaining balance of
the Note ($950,000 having previously been paid to NED)
shall occur by Novatek delivering to NED and/or its
assigns, an amount of cash equal to One Million Four
Hundred Twenty Five Thousand Dollars ($1,425,000) of
immediately available funds and Three Million Four
Hundred Fifty-Three Thousand One Hundred Twenty-Five
(3,453,125) shares of Novatek unregistered common
stock.
5. Paragraph 1.3.1(d) of the Agreement is amended by deleting it in
its entirety and replacing it with the following:
(d) At closing, Novatek will transfer to the Shareholders
or their assigns Four Million Five Thousand Two Hundred
and Seventy-Five (4,005,275) shares of Novatek
unregistered common stock.
6. Section 1.3.1 (e) of the Agreement shall not be amended by the
provisions for consideration above. It is the intention of the parties that
Novatek will assume the NED Contingent Obligation, as defined in the
Agreement and Plan of Merger, and issue the convertible debenture described
therein in escrow for the satisfaction of the NED Contingent Obligation.
7. Section 2.1 of the Agreement is amended to make reference to and
disclose the existence of certain obligations of Med Pro as identified in
Schedule 2.1 to the Agreement.
8. Sections 3.5, 3.6, 3.7, 3.8,, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14,
3.15, 3.16, 3.17 (b), 3.19 and 3.20 of the Agreement are hereby deleted.
9. Section 3.17 (c) of the Agreement is amended to insert at the
beginning of such subsection, the following words: "Except as contemplated
or provided in the Med Pro notes identified in Schedule 2.1 to the
Agreement, . . ."
10. Section 3.2 of the Agreement is amended to insert, at the beginning
of the third sentence therein, the following words:
2
<PAGE>
"Except as contemplated or provided in the Med Pro notes identified in
Schedule 2.1 to the Agreement, . . ."
11. Med Pro represents and warrants to Novatek and Acquisition Co.
that, pursuant to and as provided in a License Agreement dated November 30,
1995 between NED and Med Pro, Med Pro has acquired from NED an exclusive
license (the "License") to market and distribute certain diagnostic devices
described therein in all of the Countries of South America and in the
Bahamas. Subject to the payment of the consideration due to NED for the
License as provided in the Agreement, the License is held by Med Pro and is
effective and in good standing. Novatek and Acquisition Co. acknowledge and
agree that Med Pro sublicensed or assigned to Novatek the portion of the
License as it relates to the Bahamas, and that Novatek sublicensed or
assigned to Rupert W. Roberts such portion of the License as it relates to
the Bahamas.
12. Section 4.3 of the Agreement is deleted.
13. Section 4.7 (c) of the Agreement is amended to insert, at the
beginning of such subsection, the following words: "Except as contemplated
or provided in the Med Pro notes identified in Schedule 2.1 to the
Agreement, . . ."
14. Section 4.6 of the Agreement is amended to reflect that the
officers and directors of Novatek and Acquisition Co. are as identified in
Incumbency Certificates delivered simultaneously with the execution hereof.
15. Except as herein modified, the Agreement and Plan of Merger shall
remain in full force and effect. Capitalized terms used in this Amendment
without definition shall have the meanings given to such terms in the
Agreement.
16. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original but all of which together shall constitute
one agreement. Counterpart copies of this Amendment may be signed by all
parties and exchanged by telecopier. Counterpart copies so signed and
exchanged shall be fully binding.
[the remainder of this page is intentionally left blank]
3
<PAGE>
[counterpart signature page to
Amendment to Agreement and Plan of Merger]
IN WITNESS WHEREOF, the parties have executed this Amendment.
SHAREHOLDERS:
CELENTANO LIMITED PARTNERSHIP
MIDDLEBURY ENTERPRISES, INC., its
sole general partner
By: /s/ Vince Celentano
---------------------------------
Vince Celentano
Its: President
--------------------------------
PICKERAL COVE TRUST
By: /s/ Vincent Celentano
---------------------------------
Title: Agent/Proxyholder
------------------------------
MEDICAL PRODUCTS, INC.
By: /s/ Vincent Celentano
---------------------------------
Title: President
------------------------------
NOVATEK INTERNATIONAL HOLDINGS, INC.
By: /s/ Frank J. Cooney
---------------------------------
Title: /s/ President
------------------------------
NOVATEK INTERNATIONAL, INC.
By: /s/ Frank J. Cooney
---------------------------------
Title: President
------------------------------
4
<PAGE>
ACKNOWLEDGEMENT AND ACCEPTANCE
NEW ENGLAND DIAGNOSTICS CORPORATION does hereby acknowledge the terms of
the Amendment to the Agreement and Plan of Merger and consents to the
assumption of the NED Note, as defined therein, and consents to the
assumption of the debt by NOVATEK INTERNATIONAL, INC. from its subsidiary,
NOVATEK INTERNATIONAL HOLDINGS, INC. immediately subsequent to the completion
of the Agreement and Plan of Merger and payment of the same on the terms and
conditions contained herein.
NEW ENGLAND DIAGNOSTICS CORPORATION
By: /s/ Karen Losordo
-------------------------------
Karen Losordo, Authorized Agent
5
<PAGE>
Schedule to Agreement and Plan of Merger ("Agreement") dated as of December 29,
1995 among Medical Products, Inc., ("Med Pro" or the "Company"), its
shareholders, The Celentano Limited Partnership & Pickeral Cove Trust, (the
"Shareholders"), Novatek International, Inc., a Colorado corporation
("Novatek"), and a Florida corporation to be formed as a wholly-owned
subsidiary of Novatek ("Acquisition Co.")
The contents of or disclosures in any Schedule to this Agreement are, to the
extent relevant, hereby made a part of the Agreement and of all other
Schedules to the Agreement, regardless of whether any particular Schedule is
expressly incorporated by reference in and made a part of any other Schedule.
In addition, copies of each of the documents or materials referred to in or
attached to any Schedule to this Agreement (or made available to or obtained
by a party) have been provided to the party to whom delivery is to be made
and the existence and content thereof are deemed to be part of such Schedule.
Capitalized terms used in any Schedule without definition shall have the
meanings given to such terms in the Agreement.
SCHEDULE 1.5.3
OFFICERS AND DIRECTORS OF POST-MERGER ACQUISITION CO.
SEE INCUMBENCY CERTIFICATE DELIVERED AT CLOSING
<PAGE>
Schedule to Agreement and Plan of Merger ("Agreement") dated as of December
29, 1995 among Medical Products, Inc., ("Med Pro" or the "Company"), its
shareholders, The Celentano Limited Partnership & Pickeral Cove Trust, (the
"Shareholders"), Novatek International, Inc., a Colorado corporation
("Novatek"), and a Florida corporation to be formed as a wholly-owned
subsidiary of Novatek ("Acquisition Co.")
The contents of or disclosures in any Schedule to this Agreement are, to the
extent relevant, hereby made a part of the Agreement and of all other
Schedules to the Agreement, regardless of whether any particular Schedule is
expressly incorporated by reference in and made a part of any other Schedule.
In addition, copies of each of the documents or materials referred to in or
attached to any Schedule to this Agreement (or made available to or obtained
by a party) have been provided to the party to whom delivery is to be made
and the existence and content thereof are deemed to be part of such Schedule.
Capitalized terms used in any Schedule without definition shall have the
meanings given to such terms in the Agreement.
SCHEDULE 2.1
OWNERSHIP OF COMPANY SHARES OF MED PRO
Celentano Limited Partnership - 3750 Shares
Pickeral Cove Trust - 3750 Shares
OTHER MED PRO DEBTS
* Approximately $929,000 in the aggregate of convertible
promissory notes issued by Med Pro pursuant to a Joseph
Roberts & Co. underwritten private placement, copies of
each of which have been provided by Med Pro.
* $200,000 Med Pro Note to One Up Investments, a copy of
which has been provided by Med Pro.
* $50,000 Med Pro Note to T. Arnone, a copy of which has
been provided by Med Pro.
* $97,759.91 Med Pro Note to Vincent Celentano, a copy of
which has been provided by Med Pro.
<PAGE>
Schedule to Agreement and Plan of Merger ("Agreement") dated as of December
29, 1995 among Medical Products, Inc., ("Med Pro" or the "Company"), its
shareholders, The Celentano Limited Partnership & Pickeral Cove Trust, (the
"Shareholders"), Novatek International, Inc., a Colorado corporation
("Novatek"), and a Florida corporation to be formed as a wholly-owned
subsidiary of Novatek ("Acquisition Co.")
The contents of or disclosures in any Schedule to this Agreement are, to the
extent relevant, hereby made a part of the Agreement and of all other
Schedules to the Agreement, regardless of whether any particular Schedule is
expressly incorporated by reference in and made a part of any other Schedule.
In addition, copies of each of the documents or materials referred to in or
attached to any Schedule to this Agreement (or made available to or obtained
by a party) have been provided to the party to whom delivery is to be made
and the existence and content thereof are deemed to be part of such Schedule.
Capitalized terms used in any Schedule without definition shall have the
meanings given to such terms in the Agreement.
SCHEDULE 4.4
NOVATEK DEBTS AND LIABILITIES
NOVATEK INTERNATIONAL, INC.
SCHEDULE OF LIABILITIES
AS OF JANUARY 31, 1996
Trade Accounts Payable $102,264.12
Customer Deposits 2,500.00
Accrued Salaries and Wages 13,000.00
Accrued Vacation Pay 12,000.00
Employment Agreement 51,667.00
Loan Payable - 91 Chevy Pickup 3,372.03
Loan Payable - 93 Isuzu Pickup 2,002.68
Mortgage Payable - Suzanne L. Sauve 155,000.00
Mortgage Payable - Point Fourteen Corp. 240,000.00
CONTINGENT LIABILITIES
Weitz Co. Case No. CL 95-6282 AG PB Cty
Thomas Kelaher Case No. CL 95-3844 AO PB Cty
Ian Yap Case No. CL 95-3844 AO PB Cty
Preferred Restoration Case No. CL 93-7986 AD PB Cty
OTHER LIABILITIES
liabilities incurred in the ordinary course of business (excluding
known construction claims) since January 31, 1996
<PAGE>
NOVATEK INTERNATIONAL, INC.
9% CONVERTIBLE DEBENTURE
DUE JANUARY 1, 2001
$36,000,000 February 29, 1996
Debenture No. ___
FOR VALUE RECEIVED, NOVATEK INTERNATIONAL, INC., a Colorado corporation
(the "Company"), hereby promises to pay to NEW ENGLAND DIAGNOSTICS, INC., or
registered assigns ("Holder"), the principal sum of THIRTY SIX MILLION
DOLLARS ($36,000,000.00) on January 1, 2001 (herein called the "Payment
Date"), plus interest on said principal sum calculated at the rate of nine
percent (9%) per annum, from the date hereof until payment of said principal
sum has been made or duly provided for. The principal and interest payable
hereunder will be paid on the Payment Date to the person in whose name this
Debenture is registered with the Company at the Payment Date. The principal
of and interest on this Debenture are payable at the offices of the Company
in _________________; provided, that principal and interest may be paid, at
the option of the Company, by check mailed to the person entitled thereto at
his or its address last appearing on the Company records.
The principal amount of this Debenture, together with interest thereon
and all other sums due pursuant to this Debenture shall be due and payable as
follows:
(a) On March 31, June 30, September 30, and December 31 of each
calendar year, commencing March 31, 1996, the Company shall pay the amount of
interest accrued on the unpaid principal balance of this Debenture to the
Holder; and
(b) Within seventy-five days after the expiration of each calendar
year hereafter, commencing with the expiration of 1996, the Board of
Directors of the Company shall calculate the annual net operating income of
the Company after taxes ("Net Operating Income") as of the end of the
immediately preceding calendar year in accordance with generally applicable
accounting practices, applied in a manner consistent with the Company's past
accounting practices.
(c) Provided the annual Net Operating Income of the Company for
the immediately preceding calendar year exceeds $4,000,000 as determined in
such calculation, within thirty (30) days after each such calculation is
made, the Company shall make an annual principal payment hereunder equal to
the amount by which the annual Net Operating Income for the preceding year
exceeds $4,000,000.
(d) To the extent not sooner paid or satisfied, on the Payment
Date of January 1, 2001, the Company shall make a final
<PAGE>
payment of all outstanding principal together with all accrued and unpaid
interest hereunder.
The Holder is entitled, at its option and at any time prior to 5:00 p.m.
eastern time on the Payment Date, to convert the principal amount of this
Debenture or any portion of the principal amount hereof into up to 7,200,000
shares of unregistered Common Stock of the Company, at the "Conversion Price"
equal to the lesser of (i) $5.00 of the principal amount of this Debenture
then outstanding for each share of Common Stock, or (ii) the NASDAQ bid price
(based on the closing price) of the Company's Common Stock on the Conversion
Date (defined below). As to conversion of the entire principal balance
due hereunder, in the event that shares of the Company's Common Stock do not
trade at a bid price of at least $5.00 per share on the Conversion Date,
then, upon conversion of the entire balance hereunder the Company shall issue
to Holder additional shares of the Company's unregistered Common Stock to the
extent necessary to result in a total valuation of Common Stock issued
hereunder of $36,000,000 when such Conversion Date closing bid price is
multiplied by the number of total shares of Common Stock issued to Holder.
The Conversion Price is subject to such additional adjustments, if any, as
may be required by the provisions of this Debenture.
The Holder's election to convert all or a portion of the principal
hereof into Common Stock shall be effectuated upon surrender of the
original of this instrument to the Company at its office or agency in
Colorado, with written notice to the Company that the Holder elects to
convert this Debenture or a specified portion hereof, for the Conversion
Price, specifying the name or names in which the shares of Common Stock
deliverable upon such conversion shall be registered, with the address and
taxpayer identification number of such persons. The "Conversion Date" shall
be the Business Day on which the Company receives this instrument together
with Holder's written notice as provided above, or if such receipt occurs on
other than a Business Day, then on the next following Business Day. A
Business Day shall be a day on which trading takes place on NASDAQ. The
Conversion Price shall be determined as of the close of trading on the
Conversion Date.
After thirty (30) days prior written notice to the Holder, the Company
may prepay the balance evidenced hereunder at any time without penalty.
Within the thirty (30) day notice period prior to the date of prepayment, the
Holder may elect to convert the balance of this Debenture, or the portion
hereof being prepaid (if less than the entire balance), into the Company's
Common Stock based on the Conversion Price.
If the Holder elects to convert less than the total principal amount
outstanding hereunder on a Conversion Date, the Company shall issue a
replacement Debenture to the Holder on the same terms as this instrument but
evidencing the reduced, remaining principal balance hereunder after allowance
for the conversion of a portion
2
<PAGE>
of the original principal balance hereof, and after allowance for other
principal reductions or prepayments made hereunder.
Subject to the Holder's and the Company's mutual agreement as to
conversion price and terms, Holder may propose to the Company that Holder
convert the principal balance hereof into shares of the Company's Preferred
Stock instead of Common Stock. The Company's and Holder's failure to reach
mutual agreement as to the terms of such conversion into Preferred Stock
shall not cause a waiver of Holder's conversion rights otherwise provided for
herein with respect to Common Stock.
As provided below, the Conversion Price is subject to adjustment in
certain events ("Conversion Price Adjustments"). Subject to the foregoing,
no Conversion Price Adjustment is to be made upon any conversion for
dividends on securities or for interest accrued hereon. No fractions of
shares or scrip representing fractions of shares will be issued on
conversion, but an adjustment in cash based on the Conversion Price will be
made for any fractional interest.
If, at any time subsequent to the date hereof but prior to January 1,
2002, Holder (among other parties) requests that the Company file a
registration statement under the Securities Act of 1933 (the "Act") covering
all or any of the Company's Common Stock then held or thereafter acquired by
(among other parties) Holder, the Company (1) will promptly notify Holder
that such registration statement will be filed and that, among other shares,
the Company's unregistered Common Stock which are then held or may
thereafter be acquired upon the conversion of this Debenture by the Holder
will be included in such registration statement, (2) will cause such
registration statement to cover all Common Stock which it has been so
requested to include by Holder or other parties holding registration rights,
(3) will use its best efforts to cause such registration statement to become
effective as soon as practicable, and (4) will take all other action
reasonably necessary under any federal or state law or regulation of any
governmental authority to permit all Common Stock which it has been so
requested to include in such registration statement to be sold or otherwise
disposed of, and will maintain for nine months such compliance with each such
federal and state law and regulation of any governmental authority for Holder
and other shareholders to effect a proposed sale or other disposition;
provided, however, that in no event shall the Company be obligated to qualify
to do business in any jurisdiction where it is not so qualified or to take
any action that would subject it to tax or to service of process in any
jurisdiction where it is not subject thereto. Notwithstanding anything
contained herein or in any other agreement to the contrary, the Company shall
have no obligation to register its Common Stock as provided herein more than
twice.
The Company further agrees that if at any time subsequent to January 1,
1996, but prior to January 1, 2002, the Board of
3
<PAGE>
Directors of the Company shall authorize the filing of a registration
statement (any such registration statement being hereinafter called a
"Subsequent Registration Statement") under the Act in connection with the
proposed offer of any of its securities by it or any of its shareholders, the
Company (A) will promptly notify Holder and other shareholders that such
Subsequent Registration Statement will be filed and that the Company's Common
Stock then held or which thereafter may be acquired upon the exercise of the
conversion right contained in this Debenture by Holder will, at Holder's
request received within twenty (20) days of such notice, be included in such
Subsequent Registration Statement, (B) will use its best efforts to cause
such Subsequent Registration Statement to become effective as soon as
practicable, and (C) will take all other action reasonably necessary under
any federal or state law or regulation of any governmental authority to
permit all Common Stock which it has been so requested to include in such
Subsequent Registration Statement to be sold or otherwise disposed of, and
will maintain for nine months such compliance with each such federal and
state law and regulation of any governmental authority for Holder to effect a
proposed sale or other disposition. Notwithstanding the above, the
registration rights provided herein will not apply to a Subsequent
Registration Statement filed by the Company relating solely to: (i)
securities to be issued by the Company in connection with the acquisition of
stock or assets of another corporation, or the merger or consolidation of
another corporation by or with the Company, or (ii) securities to be offered
to officers or employees of the Company, and each registration right shall be
subject to then existing market conditions and the consent of the
underwriters, if any. Notwithstanding anything contained herein to the
contrary, the right of Holder to be included in such Subsequent Registration
Statement may not be exercised more than five (5) times. In no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not so qualified or to take any action that would subject it to
tax or the service of process in any state where it is not subject thereto.
Whenever the Company is required pursuant to the provisions of this
Debenture to use its best efforts to take action pursuant to any federal or
state law or regulation of governmental authority to permit the sale or other
disposition of Company Common Stock which are then held or which thereafter
may be acquired upon the exercise of the conversion rights contained in this
Debenture, the Company shall (x) furnish each holder of any Company Common
Stock and each underwriter of such Common Stock with copies of the
Prospectus, including the preliminary prospectus, conforming to the Act (and
such other documents as each such holder or each such underwriter may
reasonably request) in order to facilitate the sale or distribution of the
Common Stock, (y) use its best efforts to register or qualify the Common
Stock covered by the registration statement or post-effective amendment, as
the case may be, under the blue sky laws (to the extent applicable) of such
jurisdiction or jurisdictions as Holder or other shareholders and each
4
<PAGE>
underwriter shall have reasonably requested; provided, however, that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not so qualified or to take any action that would
subject it to tax or the service of process in any state where it is not
subject thereto.
The Company shall pay all expenses, disbursements and fees (including,
but not limited to, printing costs, filing fees, underwriting discounts or
commissions, other underwriting expenses, transfer taxes, and legal and
accounting fees incurred of a Registration or a Subsequent Registration
pursuant to the terms hereof; except, however, Holder or any shareholders
shall pay all brokerage commissions relating to the sale or exchange of their
Common Stock.
In the case of (A) any reclassification or any change in the outstanding
shares of the Common Stock issuable upon conversion of this Debenture (other
than a change in par value, or from par value to no par value, or from no par
value to par value) or as a result of a subdivision or combination of such
shares, (B) any consolidation or merger of the Company with or into another
corporation, or (C) any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, the
Holder shall have the right thereafter to convert this Debenture into the
kind and amount of shares of stock and other securities and property
receivable by the Company or its successor upon such reclassification,
change, sale or conveyance, which conversion shall result in Holder's being
issued the number of shares of Common Stock of the Company (or its successor)
into which this Debenture might have been converted immediately prior to such
reclassification, change, sale or conveyance. The same shall apply to
successive reclassifications and changes of shares of the Common Stock and
to successive consolidations, mergers, sales or conveyances. The
Conversion Price shall also be subject to adjustment if the shares of Common
Stock of the Company are subdivided or combined. If the Company subdivides
its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision shall be
proportionately reduced; conversely, if the outstanding shares of Common
Stock of the Company are combined into a smaller number of shares the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased. The Conversion Price of this Debenture
shall also be subject to adjustment if the Company at any time prior to
conversion of this Debenture shall sell shares of Common Stock or securities
convertible into Common Stock for a price per share less than the Conversion
Price at such time. The Company, however, shall not be required to give
effect of any adjustment in the Conversion Price unless and until the net
effect of one or more adjustments shall have resulted in a change of the
Conversion Price of at least $.10. When the cumulative net effect of more
than one adjustment so determined shall be to change the actual Conversion
Price by at
5
<PAGE>
least $.l0, such effect in the actual Conversion Price shall thereupon be
given effect.
If any payment of interest or principal is not paid when due, or if the
Company breaches or defaults in the performance of any of its obligations
hereunder, the Holder may, at its option, declare the entire principal sum
hereof, together with all accrued interest, to be immediately due and
payable; and Holder shall be entitled to pursue any and all rights and
remedies provided by applicable law or in equity, all of which shall be
cumulative and may be exercised successively or concurrently at the sole
discretion of Holder. Without limiting the foregoing, in the event Holder
elects to convert this Debenture into shares of Common Stock as provided
above, and the Company fails to consummate such conversion, in addition to
other rights and remedies available to Holder, Holder shall have the right to
injunctive relief and to specific enforcement of the terms hereof. No delay
in exercising or failure to exercise any rights or remedies to which Holder
may be entitled upon a default hereunder shall constitute a waiver of any of
Holder's rights or remedies, nor shall any single or partial exercise of any
right or remedy by Holder preclude any other or further exercise of that or
any other right or remedy. The Company agrees to pay Holder, on demand,
reasonable attorneys' and paralegals' fees and expenses for the services of
counsel employed after default to collect the sums evidenced by this
Debenture.
If this Debenture is not timely paid as provided above, from and after
default and until paid in full, the outstanding principal of this Debenture
shall bear interest at the highest rate of interest allowable under
applicable law. Holder and the Company intend to comply at all times with
applicable usury laws, and nothing herein contained, nor any transaction
related hereto, shall be construed or so operate to require the Company or
any other person liable for repayment of this Debenture, to pay interest at a
greater rate than the maximum rate of interest allowable under law.
Time is of the essence for the performance and observance of each
requirement and obligation of the Company under this Debenture.
The Company and each surety, guarantor or co-maker waives demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
dishonor, default, acceleration, maturity, compromise, settlement, extension,
and all other notices, and diligence in collecting this Debenture.
In the event any one or more of the provisions contained in this
Debenture shall for any reason be held to be invalid, illegal or
unenforceable, such invalid, illegal or unenforceable provisions shall not
affect any other provision of this Debenture, and this Debenture shall be
construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
6
<PAGE>
This Debenture is to be construed by and enforced in accordance with
the laws of the State of Colorado, exclusive of its choice of laws principles.
THE COMPANY AND HOLDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
DEBENTURE OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' EXECUTION, DELIVERY AND ACCEPTANCE OF THIS
DEBENTURE.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, attested to and delivered under its corporate seal as of
February 29, 1996.
NOVATEK INTERNATIONAL, INC. a
Colorado corporation
By /s/ Frank J. Cooney
------------------------------
President
ATTEST:
By /s/ Lionel Rolle
---------------------------
Witness
/s/ Matt Allen
---------------------------
Witness
Rev. Dr. Stanley B. Pinder, J.P.
7
<PAGE>
ESCROW AGREEMENT
ESCROW AGREEMENT ("Agreement") dated February ___, 1996 among NOVATEK
INTERNATIONAL, INC., a Colorado corporation ("NII"), NOVATEK INTERNATIONAL
HOLDINGS, INC., a Florida corporation ("NIH"), NEW ENGLAND DIAGNOSTICS
CORPORATION, a Cayman Islands corporation ("NED"), and Joseph Roberts & Co.,
Inc. ("Escrow Agent").
PRELIMINARY STATEMENT
NII and, among other parties, Medical Products, Inc., a Florida corporation
("MPI"), entered into a certain Agreement and Plan of Merger dated as of
December 29, 1995 (the "Plan of Merger"). Capitalized terms used in this
Agreement without definition shall have the meanings given to such terms in the
Plan of Merger.
The parties to the Plan of Merger agreed that, at closing, MPI would be
merged with and into Novatek International Holdings, Inc., a Florida corporation
("NIH"), a wholly-owned subsidiary of NII (the "Merger"). A portion of the
Merger Consideration is in the form of a $36,000,000 9% Convertible Debenture
due January 1, 2001 (the "Debenture"), issued by NII in favor of NED in
satisfaction of the NED Contingent Obligations. As provided in the Plan of
Merger, if the Brazil Agreement is not executed and delivered by the Closing,
the Debenture will be delivered into an escrow and held in such escrow for the
benefit of NED pending completion and full execution and delivery of the Brazil
Agreement. As of the date hereof, which is the Closing Date under the Plan of
Merger, the Brazil Contract has not been finally executed and delivered, and
NII, NED and Escrow Agent have therefor agreed to establish an escrow for
the purpose of holding the Debenture as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which is hereby mutually
acknowledged, the parties agree as follows:
1. An escrow is hereby established pursuant to the terms hereof and Escrow
Agent is hereby appointed as escrow agent to administer such escrow and
consummate the transactions described herein. Escrow Agent accepts such
appointment and agrees to perform in accordance with the terms hereof.
2. On the date hereof ("Escrow Commencement Date"), NII shall deliver to
Escrow Agent, and Escrow Agent shall receive and hold pursuant to this
Agreement, the original Debenture executed by NII. A specimen of the Debenture
is attached as Exhibit "A" hereto.
3. Escrow Agent shall hold the Debenture in escrow until the "Escrow
Termination Date", which shall mean the earlier of (a) 5:00
<PAGE>
p.m., eastern time, on September 30, 1996 or (b) the date on which the
"Condition" is satisfied.
4. As used herein, the "Condition" shall mean receipt by Escrow Agent,
prior to the Escrow Termination Date, of the following: (a) an fully executed
copy of the Brazil Agreement, in the form substantially similar to the specimen
attached as Exhibit "B", and certified as being true and correct by NED and NIH;
and (b) written authorization from NII to release the Debenture to NED.
5. (a) If the Condition is not satisfied by 5:00 p.m. eastern time on
September 30, 1996, Escrow Agent shall terminate this escrow by delivering the
original Debenture to NII by overnight courier for delivery on the following
business day, with written notice of such delivery being provided to NIH and
NED. In such instance, the original Debenture shall be cancelled and
destroyed by NII, and shall be a nullity; and the Merger Consideration shall be
deemed to exclude the Debenture and the value and rights evidenced therein.
Once such delivery to NII is consummated as provided herein, this Agreement
shall be terminated.
(b) If the Condition is satisfied prior to 5:00 p.m. eastern time on
September 30, 1996, Escrow Agent shall consummate this escrow by delivering the
Debenture to NED by overnight courier for delivery the next business day, with
written notice of such delivery being provided to NII and NIH. NED agrees to
provide NII, NIH and Escrow Agent with an acknowledgement of delivery and
receipt with respect to he Debenture so delivered. Once such delivery and
receipt is consummated as provided herein, this Agreement shall be terminated.
6. Notwithstanding the Closing of the Merger, and the creation of the
escrow provided for in this Agreement, and the execution and delivery of the
Debenture into escrow as provided herein, NED acknowledges and agrees that
the Debenture is not, and shall not be deemed to be, executed and delivered in
favor of NED or owned or held by NED, unless and until the Condition is timely
satisfied and the Debenture is released from escrow and delivered to NED as
provided in Section 5 (b) above.
7. Escrow Agent shall promptly notify NII, NIH and NED, and promptly
forward to such parties copies, of all inquiries, demands or other
communications, if any, which Escrow Agent may receive during the term of this
Agreement concerning the Debenture or in respect of the duties and obligations
of Escrow Agent.
8. Each of NII, NIH, NED and Escrow Agent, respectively, represents and
warrants that the execution, delivery and performance of this Agreement has
been duly authorized and does not violate or conflict with any agreement,
statute, regulation, order, judgment or writ that is binding upon the
representing party or its assets.
2
<PAGE>
9. Escrow Agent shall not in any way be bound by or affected by any notice
or modification or cancellation of this Agreement unless in writing, signed by
all parties hereto, nor shall it be bound by any modification thereof unless the
same shall be satisfactory to it. Escrow Agent shall be entitled to rely upon
any judgment, certification, demand or other writing without being required to
determine the authenticity or correctness of any facts stated therein or the
propriety or validity of the service thereof, or the jurisdiction of the court
issuing judgment and order.
10. Escrow Agent may act in reliance upon any document, instrument or
signature believed by it to be genuine and may assume that any person purporting
to give any notice or instructions in accordance with the provisions hereof has
been duly authorized to do so. In performance of its duties hereunder, Escrow
Agent will exercise the same degree of care and will give the same attention to
the performance of its obligations hereunder as if the services were being
performed for Escrow Agent itself. Escrow Agent may act relative to its duties
hereunder in reliance upon advice of counsel and shall not be liable for any
mistake of fact or error of judgment or for any acts or admissions unless caused
by its willful misconduct or negligence.
11. This Agreement sets forth exclusively Escrow Agent's duties with
respect to the Debenture and any and all matters pertinent hereto.
Notwithstanding references in this Agreement to the Plan of Merger in connection
with defined terms or otherwise, Escrow Agent shall not refer to and shall not
be bound by the provisions of any other agreement, including the Plan of Merger,
other than this Agreement.
12. Escrow Agent may at any time resign by giving written notice of its
resignation to all parties. The effective date of such resignation shall be
specified in the notice delivered by Escrow Agent. At the option of NII, NIH or
NED, the effective date of resignation may be postponed to a date not more than
sixty (60) days from the date of delivery of Escrow Agent's notice of
resignation.
(a) Prior to the effective date of resignation, the Debenture and any
other property then held by Escrow Agent hereunder shall be delivered by Escrow
Agent to a successor escrow agent as may be designated in writing by both NII
and NED whereupon the obligations of Escrow Agent hereunder shall cease and
terminate.
(b) Failing NII's and NED's written designation of a successor escrow
agent, Escrow Agent's sole responsibility shall be to retain and keep safely the
Debenture and follow the directions of the final order or judgment of a court of
competent jurisdiction, or Escrow Agent may file an interpleader action and
deliver the Debenture to a court of competent jurisdiction in Broward County,
Florida, in which case Escrow Agent shall be
3
<PAGE>
discharged of its duties and obligations hereunder. Escrow Agent is authorized
to file such a interpleader action at any time when conflicting or inconsistent
claims or positions are asserted against Escrow Agent or with respect to the
Debenture or any property held by Escrow Agent hereunder.
(c) Upon Escrow Agent's resignation or termination of this Agreement
for any reason other than the occurrence of the Condition prior to the end of
the Escrow Termination Date, Escrow Agent will reasonably cooperate with the
parties and will provide to the parties such services as may be necessary for an
orderly takeover of Escrow Agent's responsibilities hereunder and for an orderly
transfer of the Debenture as provided herein.
13. Nothing contained in this Agreement shall be deemed to obligate Escrow
Agent to deliver the Debenture or any other property unless the same shall at
first been received by Escrow Agent pursuant to this Agreement.
14. Escrow Agent's duties with respect to the delivery of the Debenture or
any property shall be fully performed by mailing the Debenture or such property,
uninsured, by nationally recognized overnight delivery service, to the
respective addresses identified herein for notice purposes.
15. Any notices, certifications or other communications required or
permitted to be given, made or sent under this Agreement shall be in writing,
signed by the party giving or making such notice, and such notices and any
deliveries shall be delivered by nationally recognized overnight delivery
service to the applicable parties at their respective addresses set forth as
follows:
Novatek International, Inc.
1340 Neptune Drive
Boynton Beach, Florida 33426
Attn: Mr. Frank Cooney
Novatek International Holdings, Inc.
1340 Neptune Drive
Boynton Beach, Florida 33426
Attn: Mr. Frank Cooney
New England Diagnostics Notice to: Joseph Roberts & Co. Inc.
----------------------- 1900 NW Corporate Blvd.
4 Butternut Ln. Suite 400
----------------------- Boca Raton, Fla.
Hingham, MA Attn: Joseph DeSanto
-----------------------
Attn: Karen Losordo
-----------------------
-----------------------
4
<PAGE>
Any party shall have the right to change an address for notice or delivery
purposes by giving notice of such change sent in accordance with the notice
provisions hereof.
16. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance therefrom. Furthermore,
in lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as a part of this Agreement provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.
17. This Agreement shall be governed by and construed according to the laws
of the State of Florida, exclusive of its choice of laws principles.
18. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and no other party shall have any rights to enforce or require
performance of the any of the provisions of this Agreement. This Agreement
shall not be assignable by NED without the prior written consent of NII and NIH.
19. This Agreement may no be modified or amended, and no term or provision
hereof may be waived, except by written instrument signed by the parties hereto.
20. This Agreement may be signed in counterparts, each of which shall be
deemed an original document, but all of which shall constitute a single
document. This Agreement shall be effective and binding when signed on behalf
of NED, NII, NIH and Escrow Agent and transmitted to each party by telecopy.
21. In the event of litigation in connection with this Agreement between
Agent and Lender, all attorneys' and paralegals' fees and disbursements, court
costs and related charges shall be borne by the non-prevailing party.
22. This Agreement has been duly authorized, executed and delivered by
Escrow Agent, NII, NIH and NED and constitutes a legal, valid and binding
obligation of each party in accordance with its terms.
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
authorized, executed and delivered as of the date first written above.
NOVATEK INTERNATIONAL, INC.,
a Colorado corporation
By: /s/ Frank J. Cooney
----------------------------
Name: Frank J. Cooney
--------------------------
Title: President
-------------------------
NOVATEK INTERNATIONAL HOLDINGS,
INC., a Florida corporation
By: /s/ Frank J. Cooney
----------------------------
Name: Frank J. Cooney
--------------------------
Title: President
-------------------------
NEW ENGLAND DIAGNOSTICS
CORPORATION, a Cayman Islands
corporation
By: /s/ Karen Losordo
----------------------------
Name: Karen Losordo
--------------------------
Title: President
-------------------------
Joseph Roberts & Co., Inc.
("Escrow Agent"),
20 N. Clark St.
Suite #2410
Chicago, IL 60602
-------------------------------
By: /s/ Joseph F. DeSanto
----------------------------
Name: Joseph F. DeSanto
--------------------------
Title: C.O.O.
-------------------------
6
<PAGE>
LICENSE AGREEMENT
THIS LICENSE AGREEMENT made and entered into this 30th day of November,
1995, by and between NEW ENGLAND DIAGNOSTICS, with offices at 4 Butternut Lane,
Hingham, Mass. 02043 hereinafter referred to as "NED"
AND
MEDICAL PRODUCTS, INC., a Florida Corporation, with offices at 987 Hillsboro
Mile, Hillsboro Beach, Fl, 33062 hereinafter referred to as "MEDPRO"
RECITALS
WHEREAS, World Wide Diagnostics, Ltd., (WWD) a Bahamian medical supply
firm, acquired and transferred certain technology to NED for royalties, and
other valuable consideration; and
WHEREAS, NED acquired the exclusive license and distribution rights from
Universal Health Watch, Inc. (UHW) for Canada, Mexico, Central America, South
America, the Bahamas, the Brittish West Indies, Jamaica, Haiti, The Dominican
Republic, Bermuda, and Aruba. The NED agreement with UHW for the NED license
territories required that NED provide start up funds, arrange equipment leases
for laboratory equipment for UHW, negotiate contracts for UHW, and transfer the
technology acquired from WWD with the provision that UHW pay the royalties
required directly to WWD, and grant NED the exclusive license to market,
distribute and sell all of the diagnostic devices manufactured or caused to be
manufactured now or in the term of this license by UHW; and
1
<PAGE>
WHEREAS, MEDPRO is a medical marketing and distribution company that was
organized for the purpose of marketing, distributing and selling medical
diagnostic devices as set forth in the attached exhibit "A" and desires to
obtain an exclusive marketing, distribution and sales license for South America
and the Bahamas; and
WHEREAS, the parties hereto desire to enter into this agreement whereby
MEDPRO shall have the exclusive license to market, distribute and sell the
medical diagnostic devices listed in the attached "A" in all of the countries
located in "SOUTH AMERICA", and in the "BAHAMAS" the "LICENSE AREA"; and
NOW THEREFORE, for valuable consideration and the mutual promises contained
herein, the parties agree as follows:
SECTION 1. SCOPE AND TERM OF LICENSE
1.1 LICENSE. NED hereby, subject to the terms and conditions set forth herein,
grants to MEDPRO an exclusive license to market, sell and distribute the
MEDICAL DIAGNOSTIC DEVICES referenced in the attached exhibit "A" in all of
the countries located in South America and in the Bahamas.
1.2 IMPROVEMENTS. NED hereby grants to MEDPRO, for no additional
consideration, an exclusive license to any Improvements for UHW's products
licensed to NED. The parties agree to disclose to each other any
Improvements to any diagnostic test kit or other product designed,
manufactured or created by UHW or its employees, consultants or
contractors, of which either party becomes aware of at any time during the
term of this Agreement.
1.3 TERM OF LICENSE. The term of this license shall be for ten (10) years from
the date of the settlement of this agreement.
2
<PAGE>
1.4 MINIMUM SALES REQUIREMENTS. The minimum orders required to maintain the
exclusive rights in this agreement are:
a. $500,000 (US) per year for the term of the license for the Bahamas.
b. $100,000,000 (US) for South America.
c. The effective date for the minimum performance begins on July 1, 1996,
and continues through each and every 12 month period thereafter for
the term of the license.
SECTION II - CONSIDERATION TO BE PAID FOR LICENSE
2.1 CONSIDERATION. A payment of thirty ($30,000,000) million dollars (US)
which shall be paid as follows:
(a) Upon the execution of this agreement, a secured note in the amount of
thirty million dollars ($30,000,000), (see note) secured by the license
that is the subject of this agreement and all of the equity interest in
MEDPRO.
SECTION III - REPRESENTATIONS AND WARRANTIES
3.1 WARRANTIES AND REPRESENTATIONS. NED represents and warrants to MEDPRO as of
the date of this Agreement the following:
(a) TITLE. NED has the power to grant the rights contained in this
agreement.
(b) COMPLIANCE. In all respects material to NED and its products, NED is
not in violation of any law or regulation, or under any order of any
court or governmental agency.
(d) AUTHORIZED ACTION. The execution of this Agreement between these
parties has been performed by an officer and director who is so
authorized, and this Agreement constitutes a valid and binding
obligation of NED.
3
<PAGE>
(e) COMMERCIALLY VIABLE PRODUCTS. NED represents that, to the best of its
knowledge and belief, its products are commercially viable, suitable
for the diagnostic purposes intended with a highly degree of accuracy
in their diagnostic results and there is no reason known to NED why
these products delivered under this agreement, should not be permitted
or, if approval is required, approved, by any government or regulatory
agency within the Licensed Area.
SECTION IV - OTHER RESPONSIBILITIES
4.1 NED RESPOSIBILITIES shall be solely responsible for providing the products
in compliance with the terms and conditions of specific purchase order
agreements between the parties. All products are to be delivered FOB an
east coast port of the United States of America.
4.2 MEDPRO RESPONSIBILITIES. MEDPRO shall be responsible for developing a
market for the products within the Licensed Area, at MEDPRO's expense.
SECTION V - CONFIDENTIAL INFORMATION
5.1 CONFIDENTIAL INFORMATION. The term "Confidential Information" shall mean
and include all information shared between the parties regarding the
patents, improvements, know-how and propriety rights of and for the HIV
Test Kit and for any other product that is the subject of this Agreement,
and also including the business plans, finances, investors, licensees,
officers, directors, and other propriety and business information relating
to the parties and to this agreement, which Confidential Information the
parties agree and represent to keep confidential and to not disclose to any
other parties without the consent of the other party, unless such
information becomes part of the public domain, or is otherwise becomes
known to third parties without fault by non-owning party hereunder.
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<PAGE>
SECTION VI - CONDITIONS OF CLOSING
6.1 CONDITIONS OF CLOSING. The parties obligations under this agreement are
conditions upon the following:
(a) TRUE REPRESENTATIONS. That all representations made by the parties in
this Agreement are true and correct in all material respects as of the
date of this agreement.
SECTION VII - MISCELLANEOUS PROVISIONS
7.1 ENTIRE AGREEMENT. This Agreement (including the schedules and annexes
hereto) and the documents delivered pursuant hereto constitute the entire
agreement and understanding between the parties and supersede any prior
agreement and understanding relating to the subject matter of this
agreement. This Agreement may be modified or amended only by a duly
authorized written instrument executed by the parties hereto.
7.2 DEFAULT. MEDPRO has an obligation to make the minimum order in any given
year, as described in Section 2.1 above. If these obligations are not
completed on schedule, NED shall have the right to put MEDPRO on notice of
its default. If MEDPRO fails to cure the default by ordering sufficient
quantities within 30 days from the date of notice, then NED shall have the
right to deem that the exclusivity of the rights granted to MEDPRO
hereunder are terminated and that this Agreement converts to a non-
exclusive right in MEDPRO to market, sell and distribute within the
Licensed Area.
7.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts.
7.4 NOTICES. Any notice or communication required or permitted hereunder shall
be sufficiently given if sent by first class mail, postage prepaid, return
receipt to the parties at such address as the parties may designate in
writing.
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<PAGE>
7.5 SURVIVORSHIP. All warranties, covenants, representations and guarantees
shall survive this Agreement. The parties hereto in executing and in
carrying out the provisions of this Agreement are relying solely on the
representations, contained herein or upon the writings and documents
delivered pursuant to provisions of this Agreement.
7.6 DISPUTES. Any disputes between the parties shall be settled by
Arbitration. The Arbitrator shall be selected from a known established
board of Arbitrators.
7.7 GOVERNING LAW. The laws of the State of Florida, USA, shall govern the
enforcement of this agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
NEW ENGLAND DIAGNOSTICS, INC.
By: /s/ Karen Losordo
---------------------------
Karen Losordo, President
MEDICAL PRODUCTS, INC.
By: /s/ Vincent Celentano
---------------------------
Vincent Celentano, Chairman
6
<PAGE>
EXHIBIT "A"
WHOLESALE PRICES/DIAGNOSTIC DEVICES
Cholera - 24 hour test $ 2.00 per test
Cholera - Quix assay - rapid test 12.00 per test
Group A strep - Quix 5.60 per test
Syphilis test 1.25 per test
Gonorrhea test 1.50 per test
Glucose (diabetes) test .80 per test
Hepatitis A + B 14.40 per test
HIV I - peptide test 1.00 per test
HIV I & II test 5.50 per test
HIV I & II Quix test (I piece - 3 step cassette) 8.50 per test
Diphtheria test 15.00 per test
Pregnancy (Quix Rapid) test 1.00 per test
PRICES EFFECTIVE AS OF JANUARY 1, 1996
