Prism Medical Ltd. Agrees to Be Acquired by Handicare Group AB - Seite 2

In addition to shareholder and court approvals, the Arrangement is subject to other closing conditions customary in transactions of this nature. The Arrangement is not subject to a financing condition. Directors, senior executive officers and certain shareholders of Prism Medical, who together hold an aggregate of approximately 36% of the issued and outstanding Prism Medical Shares (calculated on a non-diluted basis), have entered into a voting agreement with Handicare and agreed to vote their Prism Medical Shares in favour of the Arrangement at the Prism Medical Meeting.

Under the Arrangement, each holder of Prism Medical Shares will receive $12.50 in cash per Prism Medical Share and each outstanding stock option of Prism Medical will be cancelled at the effective time of the Arrangement in exchange for a cash payment equal to the amount by which the consideration per Prism Medical Share payable pursuant to the Arrangement exceeds the exercise price of such option. The Arrangement Agreement also includes a non-solicitation covenant on the part of Prism Medical, subject to customary "fiduciary out" provisions that entitle Prism Medical to consider and accept a superior proposal and a right in favour of Handicare to match any superior proposal. If the Arrangement Agreement is terminated in certain circumstances, including if Prism Medical enters into an agreement with respect to a superior proposal or if the Board of Directors of Prism Medical (the "Board") withdraws or modifies its recommendation with respect to the Arrangement, Handicare will be entitled to a termination fee of $2,250,000. Full details of the Arrangement will be included in an information circular to be mailed to Prism Medical shareholders in accordance with applicable securities laws.

The Board, after consultation with its financial and legal advisors, unanimously recommends that Prism Medical shareholders vote in favour of the Arrangement. The Board has also received a fairness opinion from Canaccord Genuity Corp. in connection with the Arrangement to the effect that, as of the date of such opinion, and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by Prism Medical's shareholders pursuant to the Arrangement is fair from a financial point of view.