Schedule 14A


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NameSchedule 14A
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Important Notice Regarding

the Availability of

Proxy Materials for the

Stockholder Meeting to Be

Held on Thursday, November 3,

2016
This proxy statement is available at

www.proxyvote.com

 

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Table of Contents

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND RELATED MATTERS

 

Why am I receiving these materials? What is the purpose of the Special Meeting?
The Company sent you this proxy statement and the proxy card on behalf of the Board of Directors, which is soliciting a proxy from you to vote your shares at the Special Meeting. This proxy statement contains information designed to assist you in voting your shares.
On September 7, 2016, the Company and the Investor entered into the Purchase Agreement, pursuant to which the Company has agreed to sell to the Investor, and the Investor has agreed to purchase from the Company, 16,129,033 shares of Common Stock for an aggregate purchase price of $25 million, reflecting a purchase price per share of $1.55 (rounded up to the nearest whole share).  In connection with the Purchase Agreement, the Company also entered into the Note Exchange Agreement with Lewis C. Pell, one of the Company’s Class I directors, pursuant to which, among other things, all the outstanding principal amount of and accrued interest on the promissory notes made by the Company and purchased by Mr. Pell will be exchanged for shares of Common Stock, at a price per share of $1.67.  Assuming the closing of the Note Exchange Agreement occurs on November 3, 2016, Mr. Pell will be issued 17,688,423 shares of Common Stock thereunder.  In connection with the entry into the Purchase Agreement and Note Exchange Agreement, Mr. Pell and the Investor entered into a voting agreement on September 7, 2016 and, immediately prior to the closing of the Purchase Agreement, the Company, the Investor and Mr. Pell will enter into a registration rights agreement (collectively, with the transactions contemplated thereunder and under the Purchase Agreement and the Note Exchange Agreement, the “Proposed Transaction”). As described in more detail below, in accordance with the terms of the Purchase Agreement and applicable rules, regulations and guidance of The NASDAQ Stock Market LLC (“NASDAQ”), the Company is calling the Special Meeting to consider and vote on the proposals to approve the issuances of shares of Common Stock in connection with the Proposed Transaction.
At the Special Meeting, holders of our Common Stock will be asked to consider and vote on the following proposals:



 

1.

To consider and vote on a proposal to approve the issuance of 16,129,033 shares of Common Stock to the Investor,  at a purchase price per share of $1.55, on the terms and subject to the conditions set forth in the Purchase Agreement.



 

2.

To consider and vote on a proposal to approve the exchange of all the outstanding principal amount of and accrued interest on the promissory notes made by the Company and purchased by Mr. Pell for shares of Common Stock, at a price per share of $1.67, on the terms and subject to the conditions set forth in the Note Exchange Agreement, between the Company and Mr. Pell.  Assuming the closing of the Note Exchange Agreement occurs on November 3, 2016, Mr. Pell will be issued 17,688,423 shares of Common Stock thereunder.



 

3.

To approve the adjournment, if necessary or appropriate, of the Special Meeting to solicit additional proxies in favor of the foregoing proposals, if there are not sufficient votes to approve the proposals.

How does the Board recommend that I vote?
The Board unanimously recommends that the Company’s stockholders vote “FOR” Proposals 1, 2 and 3.
Why is the Company seeking approval of the Proposed Transaction?

 

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We are required to seek approval of the Proposed Transaction pursuant to the terms of the Purchase Agreement. In addition, the Company’s Common Stock is listed on NASDAQ and, as a result, the Company is subject to certain NASDAQ listing rules and regulations. NASDAQ Rule 5635(b) requires stockholder approval prior to any issuance of securities when the issuance will result in a change of control of the Company, which NASDAQ deems to occur when, as a result of the issuance, an investor owns, or has the right to acquire, 20% or more of the outstanding shares of our Common Stock or voting power and such ownership would be the single largest ownership position in the Company. In exchange for the Investor’s $25 million investment in the Company, the Investor will receive 16,129,033 shares of our Common Stock at the closing of the Purchase Agreement, representing approximately 60.76% of our Common Stock outstanding prior to the issuance, and in exchange for the cancellation of the indebtedness held by Mr. Pell,  Mr. Pell will receive 17,688,423 shares of our Common Stock (assuming the closing of the Note Exchange Agreement occurs on November 3, 2016), representing approximately 66.64% of our Common Stock outstanding prior to the issuance.  The foregoing calculations assume that 26,544,299 shares of Common Stock are issued and outstanding, which is the number of shares issued and outstanding as of the record date.  After giving effect to the Proposed Transaction, the shares issued to the Investor pursuant to the Purchase Agreement will represent 26.72% of the Company’s issued and outstanding shares of Common Stock, and the shares issued to Mr. Pell pursuant to the Note Exchange Agreement will represent 29.30% of the Company’s issued and outstanding shares of Common Stock (assuming, in each case, that the closing of the Proposed Transaction occurs on November 3, 2016 and based in part on the number of shares of Common Stock outstanding as of the record date). Accordingly, we must obtain stockholder approval of the issuance of the shares pursuant to the Proposed Transaction.
Who is the Investor?
The Investor is the largest pure play medical device fund in Israel. The Investor focuses on global investments in mature companies that might serve as a platform to Israeli companies to create leading growing specialty medical device companies. The Investor manages over $250 million invested in medical devices.
Who are the Accelmed Directors?
In connection with the entry into the Purchase Agreement, Mr. Pell and the Investor entered into a voting agreement (the “Voting Agreement”), pursuant to which, among other things, the parties thereto have agreed to vote any shares of Common Stock controlled or owned by them as directed by the terms of the Voting Agreement.  Each of Mr. Pell and the Investor has agreed to vote their shares of Common Stock for the other party’s nominees to the Board and each of Mr. Pell and the Investor are entitled to nominate two directors.  The nominees of the Investor, collectively referred to herein as the “Accelmed Directors,” are expected to be appointed as members of the Board upon the closing of the Proposed Transaction. The initial nominees of Mr. Pell are Mr. Pell and Howard Zauberman, who are each current directors, and the Accelmed Directors are Dr. Uri Geiger and Mr. Nachum Shamir.
Dr. Uri Geiger.  Age 48.  Dr. Geiger is Managing Partner of Accelmed, a private equity investment firm he co-founded in 2009 that is focused on medical device companies.  Prior to that, Dr. Geiger served as the CEO of Exalenz Bioscience Ltd., a medical technology company, from May 2006 until December 2008. Prior to that, Dr. Geiger co-founded and was the CEO of GalayOr Networks, a developer of optical components from 2001 until 2003. Dr. Geiger has also served as the founding partner of Dragon Variation Fund, one of Israel’s first hedge funds, since 2000. Prior to returning to Israel in 1999, he gained a broad understanding and experience in capital markets working on Wall Street. Dr. Geiger was formerly an adjunct professor at Tel Aviv University’s Recanati School of Business where he lectured on private equity and venture capital and authored the books “Startup Companies and Venture Capital” and “From Concept to Wall Street”.   Dr. Geiger previously served on the board of directors of EndoChoice Holdings Inc. from January 2014 until March 2016.  Dr. Geiger earned his doctorate from New York’s Columbia University Center for Law & Economics, with a concentration in global equity markets.  Dr. Geiger also served as a major (Ret.) in the Israeli Air force.

 

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Nachum (Homi) Shamir. Age 62.  Mr. Shamir currently serves as the President and Chief Executive Officer of Luminex Corporation, a publically traded biotechnology company based in Austin, Texas, a position he has held since October 2014.  Prior to joining Luminex, Mr. Shamir was the President, Chief Executive Officer and Director of Given Imaging Ltd. (“Given”), a developer, manufacturer and marketer of diagnostic products for the visualization and detection of disorders of the gastrointestinal tract which was acquired by Covidien PLC in early 2014.  Mr. Shamir held this position from April 2006 to June 2014.  Mr. Shamir currently serves on the board of directors of Luminex Corporation and has been serving in such position since October 2014. Mr. Shamir previously served on the board of directors of Given from April 2006 to June 2014.  Mr.  Shamir holds a Bachelor of Science from the Hebrew University of Jerusalem and a Masters of Public Administration from Harvard University.
What will happen if the Company’s stockholders do not approve the Proposed Transaction?
If the Company’s stockholders do not approve the Proposed Transaction, then the issuance of shares of Common Stock to the Investor pursuant to the Purchase Agreement and the exchange of Mr. Pell’s outstanding promissory notes for shares of Common Stock pursuant to the Note Exchange Agreement will not become effective. Pursuant to the Purchase Agreement, the Company will also be required to pay a termination fee of $500,000 to the Investor if the Company’s stockholders do not approve the Proposed Transaction by December 22, 2016.  If the Company is required to pay this $500,000 termination fee, then the Company will not be required to reimburse the Investor’s fees and expenses that would otherwise be required to be reimbursed if the Purchase Agreement is terminated under certain other circumstances or if the Proposed Transaction is consummated (up to a $400,000 cap).
Who is Entitled to Vote at the Special Meeting?
Our stockholders of record at the close of business on September 23, 2016 will be entitled to notice of and to vote at the Special Meeting or any adjournment or postponement of the Special Meeting. As of the record date, 26,544,299 shares of our Common Stock were issued and outstanding. Each share of our Common Stock is entitled to one vote on each matter to be voted on at the Special Meeting.
How Do I Vote My Shares?
Your vote is important. Whether you hold shares directly as a stockholder of record or beneficially in “street name” (through a broker, bank or other nominee), you may vote your shares without attending the Special Meeting. You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your broker or nominee.
If you are a stockholder whose shares are registered in your name, you may vote your shares in person at the meeting by attending the Special Meeting or by completing, signing, dating and mailing the enclosed proxy card in the envelope provided.
If your shares are held in street name, you will receive a separate voting instruction form from your broker or bank. Please follow the voting instructions on the enclosed voting instruction form to vote by Internet, telephone, or by mail.

 

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The deadline for voting by telephone or on the Internet is 11:59 p.m., Eastern Daylight Time, on Wednesday, October 26, 2016. Please see the enclosed proxy card or the voting instruction form your bank, broker or other holder of record provided to you for more information on your options for voting.
If you return your signed proxy card or use the Internet or telephone voting before the Special Meeting, the named proxies will vote your shares as you direct.

        

What Does It Mean If I Get More Than One Proxy Card?
It means you hold shares registered in more than one account. Sign and return all proxy cards to ensure that all your shares are voted.
How Many Shares Must Be Present to Hold the Special Meeting?
The presence at the Special Meeting, in person or by proxy, of the holders of one-third of all of the issued and outstanding shares of our Common Stock as of the record date will constitute a quorum for the transaction of business at the Special Meeting. In general, shares of Common Stock represented by a properly signed and returned proxy card marked “FOR,” “AGAINST” or “ABSTAIN” with respect to at least one proposal will be counted as shares present and entitled to vote at the Special Meeting for purposes of determining a quorum. The Special Meeting may be adjourned to any other time and any other place by the stockholders present or represented at the meeting and entitled to vote even when such stockholders do not constitute a quorum. It is not necessary to send a new notice of meeting to the stockholders in conjunction with an adjournment of the meeting for 30 days or less if the time and place of the adjourned meeting are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, our Company may transact any business which might have been transacted at the original meeting.
What Vote is Required for Each Proposal?
The affirmative vote of a majority of the votes cast by the holders of the Company’s Common Stock at the Special Meeting is required to approve Proposals 1, 2 and 3. All votes will be tabulated by the inspector of election appointed for the Special Meeting. Abstentions and “broker non-votes” with respect to Proposals 1, 2 or 3 will not be counted as votes cast on such Proposal. Accordingly, abstentions and “broker non-votes” will have no effect on the outcome of the voting on Proposals 1, 2 or 3.
A “broker non-vote” is a proxy returned by a broker on behalf of its beneficial owner customer with respect to shares held in a fiduciary capacity (generally referred to as being held in “street name”) that are not voted on a particular matter because voting instructions have not been received by the broker from the customer and the broker does not have discretionary voting power for that particular matter.  Because none of the proposals to be considered at the meeting is considered to be “discretionary” under applicable stock exchange rules, it is not anticipated that there will be any “broker non-votes” at the Special Meeting.
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