Prism Medical Announces Sale of UK Operations - Seite 2

The Purchase Agreement contains customary representations, warranties and indemnities given by the Company. In addition to the cash consideration, £314,000, or C$575,000, is to be placed in escrow for two years as security for the Company's indemnity and warranty obligations. The Company is entitled to certain additional "earn out" payments. If the sold UK operations achieve certain target earnings and turnover in the current fiscal year the Company will be entitled to receive up to an additional £500,000. The Company will also be entitled to additional consideration based on future sales by Prism UK into North America, Central and South America and Japan for the 3 years following closing of the transaction. The Company has also agreed not to compete with Prism UK in the UK, Europe and the Middle East for a period of 3 years from closing of the transaction.

As required pursuant to the rules of the TSX Venture Exchange (the "TSXV"), the sale has been approved by the holders of a majority of the Company's outstanding shares pursuant to written consents. The Company has received consent from holders of approximately 67% of its outstanding shares. The TSXV has confirmed its final acceptance of the transaction. The Company retained Clearwater Corporate Finance LLP to assist with the sale process. Clearwater is entitled to a success fee equal to 1.0% of the gross purchase consideration.

In conjunction with this transaction, the Company has renegotiated its senior credit facilities. The key terms such as covenants, interest rates and margin ratios have remained unchanged. However, the overall credit limits decreased due to the lower asset base going forward. The Company's operating line has decreased from C$17.5 million to C$10 million and its acquisition line has decreased from C$27.5 million to C$10 million.

During the past year the Company's North American operations have materially improved. Management believes that there are significant growth opportunities within the expanding North American health care industry both through organic growth and acquisitions that offer the potential to significantly increase shareholder value, while remaining consistent with Prism Medical's key growth strategies of vertical integration, product diversification and the application of relevant knowledge by its service oriented personnel.