Warnex to merge with Diagnos

DORVAL, QC, May 5, 2014 /CNW/ - Warnex Inc. (TSXV: WNX.H) ("Warnex") is pleased to announce that it has entered into a binding letter of agreement with DIAGNOS Inc. ("Diagnos") (TSXV: ADK) (the "Letter of Agreement") pursuant to which Warnex will merge with a wholly-owned subsidiary of Diagnos (the "Transaction").

"In the fourth quarter, we successfully terminated the long-term lease for our Laval facility, allowing us to aggressively pursue strategic options for our remaining assets," commented Warnex's Chairman, Michael Singer. "After a lengthy review of all of our available options, including a return of our cash to shareholders, we determined that the best opportunity for shareholders is to participate in the future upside of Diagnos. We are impressed by Diagnos' advanced, innovative technologies and their significant commercial potential."

As a condition to entering into a definitive agreement (the "Definitive Agreement"), Persistence Capital Partners, L.P., Canada's leading private equity firm in the healthcare industry, which holds approximately 52% of the issued and outstanding shares of Warnex, will enter into a lock-up agreement pursuant to which it will agree to vote its shares in favour of the Transaction. Under the terms of the Letter of Agreement, the Definitive Agreement will provide that the Transaction will be subject to certain closing conditions including, without limitation, (i) receipt of all necessary approvals and consents, including but not limited to, the approval of the TSX Venture Exchange; and (ii) approval by the requisite majority of the shareholders of Warnex at a special meeting of shareholders, and such other closing conditions customary for transactions of this nature as may be specified in the Definitive Agreement.

Upon the closing of the Transaction, shareholders of Warnex will receive one common share of Diagnos for each common share of Warnex held. For the purposes of the Transaction, each of the Diagnos common shares and the Warnex common shares have been attributed a value of $0.08 per share. Each shareholder of Warnex and of Diagnos will, upon the closing of the Transaction, also be entitled to receive an additional half-warrant for each Warnex common share or Diagnos common share held. Each whole warrant will be exercisable into one common share of Diagnos at an exercise price of $0.10 per share for a period of twelve months following the closing of the Transaction. The current holders of Warnex warrants will receive one warrant of Diagnos for each warrant of Warnex held.

The valuation of Warnex common shares will be subject to final adjustment based upon the final net cash attributable to Warnex. It is expected that, upon closing of the Transaction, the securityholders of Warnex will hold, in the aggregate, common shares and warrants of Diagnos representing approximately 27.96% of the issued and outstanding shares of Diagnos on a fully-diluted basis and the shareholders of Diagnos will hold, in the aggregate, common shares of Diagnos representing approximately 72.04% of the issued and outstanding shares of Diagnos on a fully-diluted basis.

The Letter of Agreement can be terminated in certain circumstances including, without limitation, (i) if either party is not satisfied with the results of its due diligence investigation, (ii) if the board of directors of Warnex does not obtain a favourable fairness opinion by its financial advisors in respect of the Transaction; or (iii) if the parties fail to enter into a Definitive Agreement on or before May 30, 2014 (or such other date as the parties may agree to).

CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this news release are forward-looking and are subject to numerous risks and uncertainties, known and unknown. For further information identifying known risks and uncertainties, relating to financial resources, liquidity risk, volatility of share price and other important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the heading Risks and Uncertainties in Warnex's most recent Management's Discussion and Analysis, which can be found at www.sedar.com. Consequently, actual results may differ materially from the anticipated results expressed in these forward-looking statements. The Transaction is subject to the negotiation of a definitive agreement and other conditions described in this press release, including approval of the shareholders of Warnex. There is no assurance that the Transaction will be completed as proposed or at all. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: Warnex Inc.

Michael Singer, Chairman of the Board of Directors, Warnex Inc., Tel: [phone], [email protected]