Medipattern Announces Offer for Settlement of Debt and Corporate Restructuring
March 13 2013 - 10:04AM
Marketwired Canada
Attention: Business/Financial Editors
The Medipattern Corporation ("Medipattern" or the "Company") (TSX VENTURE:MKI),
today announced it has received an offer for the settlement of approximately
$5,673,876.36 (the "Indebtedness"), which includes principal and interest owning
to certain holders (the "Lenders") of notes issued by the Company in December
2012 (the "2012 Notes"), March 2011 (the "2011 Notes") and May 2010 (the "2010
Notes", together with the 2012 Notes and the 2011 Notes, the "Notes").
The 2012 Notes are secured by a general security agreement (the "General
Security Agreement"), pursuant to which the Company granted the holders a
security interest over all of the assets and intellectual property of the
Company. The 2011 Notes are secured by a technology security agreement (the
"Technology Security Agreement"), pursuant to which the Company granted the
holders a security interest over certain intellectual property of the Company.
On February 17, 2013, the collateral agent under the General Security Agreement
and Technology Security Agreement, on behalf of the holders of 2012 Notes,
delivered a written demand to the Company for the full redemption of the 2012
Notes, including all accrued interest in connection therewith. Also on February
17, 2013, the collateral agent, on behalf of the holders of the 2011 Notes and
the 2010 Notes, delivered written notice to the Company that an Event of Default
(as defined in the 2011 Notes and 2010 Notes respectively) had occurred and
declared the principal amount and all accrued and unpaid interest in connection
therewith immediately due and payable. As part of the demand for payment under
the Notes, the Lenders postponed enforcing their rights under the Notes, the
General Security Agreement and the Technology Security Agreement for a period of
thirty days in hopes of reaching a negotiated settlement with the Company of all
Indebtedness.
The Company and the Lenders have entered into a memorandum of understanding (the
"MOU") in respect of the settlement of all outstanding Indebtedness owed by the
Company to the Lenders (the "Debt Settlement").
The principal terms of the MOU are as follows:
(a) The Company shall establish a wholly-owned subsidiary ("Newco") to be
incorporated under the laws of the state of Delaware, United States, or such
other state as the parties shall agree;
(b) The board of directors of Newco shall consist of a minimum of three
members, with no fewer than two members to be appointed by the collateral
agent and one member appointed by the Company;
(c) Following the establishment of Newco, the Company shall effect a
transfer to Newco of the entirety of its operations and all of its assets
relating to its "Visualize: Vascular(TM)" and "B-CAD(R)" product/service
offerings and the commercial rights associated therewith;
(d) For regulatory purposes, the Company shall maintain an office for Newco
in such a location and for the necessary period of time that it takes to
provide for a seamless transfer of all FDA, ISO, QSR and related approvals
and certifications necessary to operate the "Visualize: Vascular" and "B-
CAD" businesses;
(e) Transfer to Newco all of the Indebtedness owed to the Lenders pursuant
to the Notes, including the New Notes (as defined below), all additional
accrued interest and any other costs or fees owing to the Lenders;
(f) The Company and Newco will enter into a royalty agreement(s) relating to
the "Visualize: Vascular" and "B-CAD" businesses, with the principal terms
as outlined below:
"Visualize: Vascular" Royalty
(i) Newco shall pay to the Company a royalty (the "Visualize Royalty")
equal to:
(1) $1.00 per paid scan over 5,000 paid scans per month; and
(2) $1.50 per paid scan over 15,000 paid scans per month;
(ii) Newco shall be granted a perpetual option to purchase the Visualize
Royalty (the "Visualize Purchase Option"). The Visualize Purchase Option
may not be exercised by Newco prior to the date that is eighteen months
from the closing of the restructuring transactions set forth in this
Agreement (the "Visualize Purchase Option Start Date");
(iii) If Newco exercises the Visualize Purchase Option prior to the date
that is six (6) months from the Visualize Purchase Option Start Date,
then the purchase price for the Visualize Royalty paid by Newco, shall
be equal to the greater of three times (3x) the aggregate sum of all
royalty payments for the previous twelve (12) month period or
$1,000,000; and
(iv) Following the date that is six (6) months from the Visualize
Purchase Option Start Date, the purchase price for the Visualize Royalty
paid by Newco, shall be equal to three times (3x) the aggregate sum of
all royalty payments for the previous twelve (12) month period.
"B-CAD" Royalty
(i) Newco shall pay to the Company a royalty (the "B-CAD Royalty") equal
to $150.00 per B-CAD license sold;
(ii) Newco shall be granted a perpetual option to purchase the B-CAD
Royalty (the "B-CAD Purchase Option"). The B-CAD Purchase Option may not
be exercised by Newco prior to the date that is eighteen (18) months
from the closing of the restructuring transactions set forth in this
Agreement (the "B-CAD Purchase Option Start Date");
(iii) If Newco exercises the B-CAD Purchase Option prior to the date
that is six (6) months from the B-CAD Purchase Option Start Date, then
the purchase price for the B-CAD Royalty paid by Newco, shall be equal
to the greater of three times (3x) the aggregate sum of all royalty
payments for the previous twelve (12) month period or $150,000; and
(iv) Following the date that is six (6) months from the B-CAD Purchase
Option Start Date, the purchase price for the B-CAD Royalty paid by
Newco, shall be equal to three times (3x) the aggregate sum of all
royalty payments for the previous twelve (12) month period.
(g) Upon completion of all of the above referenced transactions and any
others necessary to give full effect to the intent of the parties pursuant
to the MOU (the "Closing"), the Lenders shall enter into full and final
releases with the Company in respect of the total Indebtedness owing to the
Lenders in exchange for the issuance of shares of Newco, such number of
shares to be determined by the board of directors of Newco in relation to
the proportionate amount of the total Indebtedness being settled by each
Lender; and
(h) Following Closing, the collateral agent will seek new partners and
additional funding, through the issuance of additional equity of Newco, to
ensure the long term viability of Newco.
Pursuant to the terms of the MOU, the Company received $154,000 under the term
debt facility (the "Facility") announced on November 7, 2012. Medipattern issued
$154,000 of secured notes under the Facility (the "New Notes"). The New Notes
mature on June 30, 2013, and will bear interest at the rate of 6% per annum,
calculated monthly and payable at maturity. The New Notes are secured by the
General Security Agreement and are subject to certain redemption and repayment
rights. The New Notes will be repaid as part of the Debt Settlement.
The New Notes are subject to a four month and one day resale restriction. The
securities offered in the placement have not been and will not be registered
under the United States Securities Act of 1933, as amended, (the "U.S.
Securities Act"), and may not be offered or sold within the United States or to,
or for the account or benefit of U.S. persons except in certain transactions
exempt from the registration requirements of the U.S. Securities Act.
The Corporation also announced the resignation of one of its directors, Howard
Rosen. Mr. Rosen has advised Medipattern that he has decided to spend more time
focusing on his other business pursuits. At this time, the Board of Directors
would like to express its gratitude to Mr. Rosen for his time and efforts over
the many years he has served as a director of Medipattern.
About the Medipattern Corporation:
Medipattern(R) is an award-winning leader in the development and
commercialization of healthcare solutions that positively impact people's lives
through the prevention of disease and analysis of medical images and data.
Medipattern's Knowledge-based Informatics (MKI) platform enables delivery of
these streamlined solutions. Medipattern mHealth uses patented prevention
technologies to engage, coach and monitor people in achieving their personalized
goals. Medipattern iaHealth uses patented pattern recognition technology to
analyze medical data to aid medical practitioners in the assessment of disease
and critical anatomy. For more information, please visit the Company's website:
www.medipattern.com.
Medipattern(R) is registered trademarks of The Medipattern Corporation.
Visualize:Vascular(TM) is a registered trademark of Medipattern.
Forward-looking statements
This document contains forward-looking statements relating to Medipattern's
performance, operations, or business environment. These statements are based on
what we believe are reasonable assumptions given currently available information
and our understanding of Medipattern's current activities. We have tried,
whenever possible, to identify these forward-looking statements using words such
as "anticipates," "believes," "estimates," "expects," "plans," "intends,"
"potential", and similar expressions. Forward-looking statements are not
guarantees of future performance and involve risks and uncertainties that are
difficult to predict or control. A number of factors could cause actual outcomes
and results to differ materially from those expressed in forward-looking
statements. These factors include but are not limited to those set forth in the
Company's corporate filings, (posted at www.sedar.com). These factors should be
considered carefully, and readers should not place undue reliance on
Medipattern's forward-looking statements. In addition, these forward-looking
statements relate to the date on which they are made. The Company disclaims any
intention or obligation to update or revise any forward-looking statements for
any reason. Readers should not rely on forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
The Medipattern Corporation
Jeff Collins
CEO
(416) 744-0009 ext. 224
jcollins@medipattern.com
www.medipattern.com
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