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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 11, 1996
Raytel Medical Corporation
(Exact name of registrant as specified in charter)
Delaware 0-27186 94-2787342
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2755 Campus Drive, Suite 200, San Mateo, CA 94403
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 349-0800
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DEPOSITION OF ASSETS.
(a) Pursuant to the Agreement for the Purchase and Sale of Assets dated
May 28, 1996 (the "Agreement"), by and between the registrant, its wholly owned
subsidiary, Raytel Cardiac Services, Inc., a Delaware corporation, and Cardio
Data Services, Inc. ("CDS"), a Delaware corporation and wholly-owned subsidiary
of UM Equity Corp., a Delaware corporation, the registrant acquired certain
assets and assumed certain liabilities of CDS effective June 11, 1996 for a
negotiated purchase price of approximately $14,000,000 (the "Purchase Price").
The Purchase Price was paid in cash from the registrant's available cash and
short-term investments and a line of credit with Bank of Boston Connecticut and
ING Capital. The entire Purchase Price was paid upon the closing of the
transaction, subject to an adjustment in the Purchase Price for an increase or
decrease in the amount of net assumed liabilities determined with reference to
the closing statement to be prepared within 30 days after the closing.
Before the acquisition, there was no material relationship between CDS and
the registrant or any of its affiliates, any director or officer of the
registrant, or any associate of any such director or officer.
(b) CDS is engaged in the business of clinical trans-telephonic pacemaker
monitoring, cardiac event detection and Holter monitoring, and the registrant
intends to continue such business.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) It is impracticable to provide the audited financial statements of CDS
for the periods required at the date of this report. The registrant intends to
file such financial statements as soon as they become available and in any event
not later than August 25, 1996.
(b) It is impracticable to provide the pro forma financial information
required pursuant to Article 11 of Regulation S-X at the date of this report.
The registrant intends to file such pro forma financial information as soon as
it becomes available and in any event not later than August 25, 1996.
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(c) The following exhibits are attached and filed herewith:
2.1(1) Agreement for the Purchase and Sale of Assets dated May 28,
1996 by and between the Registrant, Raytel Cardiac Services, Inc. and
Cardio Data Services, Inc.
2.2 Agreement and Covenant Not to Compete dated June 11, 1996 between
the Registrant and UM Equity Corp.
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(1) Other exhibits to the Agreement not filed herewith are identified in
the Agreement. The registrant will furnish supplementally any omitted
exhibit to the Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RAYTEL MEDICAL CORPORATION
Dated: June 24, 1996 By: E. PAYSON SMITH, JR.
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E. Payson Smith, Jr.
Senior Vice President, Chief Financial
Officer and Secretary
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INDEX TO EXHIBITS
Exhibit Description
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2.1 Agreement for the Purchase and Sale of Assets dated May 28, 1996
by and between the Registrant, Raytel Cardiac Services, Inc. and
Cardio Data Services, Inc.
2.2 Agreement and Covenant Not to Compete dated June 11, 1996 between
the Registrant and UM Equity Corp.
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AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is made and entered into as of May 28, 1996, by and between
CARDIO DATA SERVICES, INC., a Delaware corporation ("Seller"), a wholly owned
subsidiary of UM Equity Corp., a Delaware corporation ("UM Equity"), which is a
wholly owned subsidiary of UM Holdings, Ltd., a New Jersey corporation
("Parent") and RAYTEL CARDIAC SERVICES, INC., a Delaware corporation ("Buyer"),
a wholly owned subsidiary of Raytel Medical Corporation, a Delaware corporation
("RMC").
RECITALS
A. WHEREAS, Seller owns certain assets used in connection with the
conduct of the business of clinical trans-telephonic pacemaker monitoring,
cardiac event detection and Holter monitoring (the "Business") with its
principal place of operations and its headquarters located at 56 Haddon Avenue,
Haddonfield, NJ, and
B. WHEREAS, Seller desires to sell, assign, transfer and convey the
assets of the Business set forth in the exhibits hereto, to Buyer, and Buyer
desires to purchase for cash those specific assets of the Business from Seller,
and the assumption by Buyer of certain specific liabilities of Seller, as set
forth in the exhibits hereto, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises, mutual covenants,
representations, warranties and conditions contained herein, the parties hereby
agree as follows:
AGREEMENT
ARTICLE I
PURCHASE AND SALE OF THE ASSETS;
ASSUMPTION OF LIABILITIES
1.1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions of
this Agreement, Seller agrees to sell, transfer, convey, assign and deliver to
Buyer, and Buyer agrees to purchase from Seller, on the date of Closing, the
following items of tangible and intangible assets and properties (hereinafter
collectively referred to as the "Assets"):
(a) The furniture, fixtures, leasehold improvements, supplies, and
general office equipment; the telephones, telephone switches, and telephone
numbers; the
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transmitters, monitors and facsimile equipment on loan to customers, health care
providers, and representatives, or independent contractors; and the other
tangible assets and properties of, or pertaining to, the Business, set forth in
"Exhibit 1.1(a)" of this Agreement;
(b) The accounting records, files, books, and work papers pertaining
to the Business, and the databases, computer hardware, computer software and
related documentation, including source code and systems documentation, set
forth in "Exhibit 1.1(b)" of this Agreement;
(c) The leasehold interests for the premises in which the Business is
located in Boston, Massachusetts, as set forth in "Exhibit 1.1(c)" of this
Agreement;
(d) The contracts, leases and other agreements listed on Exhibit
1.1(d), to the extent assignable;
(e) All marketing materials and customer, client, account, physician
and patient lists of the Business;
(f) The trademarks, tradenames, service marks, service names,
goodwill and/or other intangible assets of the Business set forth in "Exhibit
1.1(f)" of this Agreement;
(g) The patient records for Seller's pacemaker patients;
(h) All transferable licenses, permits and authorizations relating to
the Business as set forth in "Exhibit 1.1(h)" to this Agreement;
(i) All prepaid expenses related to the Business as of the Closing as
set forth on the Closing Statement (as hereafter defined).
1.2. ASSETS. All of the foregoing assets, properties and businesses to be
transferred hereunder are sometimes referred to herein as the "Assets."
1.3. EXCLUDED ASSETS. Notwithstanding anything herein to the contrary,
Seller hereby retains all of its right, title and interest in and to, and there
shall be excluded from the sale, assignment or transfer to Buyer hereunder,
whether or not related to the Business, all of the assets of Seller which are
not specifically described in sections 1.1(a) through (i) above; without
limiting the foregoing, specifically excluded from the Assets
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are: (a) cash and cash equivalents, (b) bank accounts and certificates of
deposit, (c) accounts receivable, (d) insurance policies and (e) tax refunds,
other rebates, refunds or credits due, if any, relating to any period prior to
the Closing.
1.4. LIABILITIES.
(a) ASSUMED LIABILITIES. Subject to the terms and conditions of this
Agreement, Buyer agrees to assume on the Closing Date (as hereinafter defined),
and shall thereafter be responsible for paying and satisfying to the extent not
discharged prior to the Closing Date, the following liabilities and obligations
of Seller (the "Assumed Liabilities"):
(1) accrued vacation and sick pay of Seller's current employees;
(2) accrued accounts payable and accrued expenses of Seller as
of the Closing, as set forth on the Closing Statement;
(3) all contractual liabilities and obligations of Seller under
the contracts, agreements and leases included in the Assets and arising from and
after the Closing Date.
(b) EXCLUDED LIABILITIES. Except as specifically provided herein,
Buyer shall not assume or become liable for any of Seller's debts, obligations
or liabilities, known or unknown, fixed or contingent, arising in any way out of
Seller's use of the Assets or the conduct of any trade, practice or business on
the premises previously occupied by the Business on or before the Closing Date,
including, without limitation:
(1) salary, bonus, or other compensation which shall have
accrued to Seller's employees for any period prior to the Closing (all such
salary, bonuses and other compensation payable by Seller to be excluded from
accrued expenses in the determination of Net Assumed Liabilities pursuant to
Section 2.5 below);
(2) any obligations or liabilities arising under any pension
plan, defined benefit plan, defined contribution plan, profit sharing plan,
retirement plan, deferred compensation arrangement, welfare plans and other
similar plans for any current employee, whether or not such employee accepts
employment with Buyer prior to the Closing Date;
(3) payroll taxes and unemployment insurance plans for any
current employee, whether or not such employee accepts employment with Buyer
prior to
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the Closing Date;
(4) any federal, state, or local taxes, including, but not
limited to, income or franchise taxes or similar taxes based upon or measured by
revenue, income, profit or gain from the transfer of the Assets or the operation
of the Business prior to the Closing, any secured or unsecured personal property
taxes, or other local, state, or federal tax;
(5) any and all environmental liabilities or liabilities arising
out of the use or disposal of petroleum or petroleum products or any hazardous
substance or hazardous waste by Seller, or claims by Medicare, Medicaid, the
Health Care Finance Administration, any insurance company, managed care
organization or other health care claims paying or claims processing
intermediary (as those terms are defined by applicable federal, state and local
law) relating to the acts or omissions of the Seller.
(c) DEFENSES AND CLAIMS. Nothing herein shall be deemed to deprive
Buyer of any defenses, set-offs or counterclaims (the "Defenses and Claims")
which Seller may have had or which Buyer shall have with respect to any of the
liabilities assumed pursuant to Section 1.4(a) above. Effective as of the
Closing, Seller agrees to assign, transfer and convey to Buyer all Defenses and
Claims and agrees to cooperate with Buyer to maintain, secure, perfect and
enforce such Defenses and Claims, including the execution of any documents, the
giving of any testimony or the taking of any such other action as is reasonably
requested by Buyer in connection with such Defenses and Claims.
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1. PURCHASE PRICE. In consideration for the purchase of the Assets and
the covenant not to compete set forth in section 8 hereof or delivered hereunder
(the "Covenant Not to Compete"), Buyer shall pay:
(a) to Seller at the Closing the sum of Two Million Dollars
($2,000,000);
(b) assume the Assumed Liabilities, as provided in section 1.4(a)
hereof; and
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(c) pay to UM Equity Corp. the sum of $12,000,000 (together with the
payment specified in subparagraph (a), the "Purchase Price")
2.2. PAYMENT OF PURCHASE PRICE. Subject to the terms and conditions set
forth herein, the Purchase Price shall be paid on the Closing Date, by wire
transfer of federal funds to accounts designated by Seller and UM Equity at
least two (2) business days prior to the Closing Date. The parties agree to
comply with the provisions of Section 1060 of the Internal Revenue Code of 1986,
as amended.
2.3 INTENTIONALLY DELETED.
2.4. PRORATIONS. There shall be prorated between Buyer and Seller, based
on the Closing Date of this Agreement, the amounts paid, or to be paid, by or
for the Business to a third party, on the basis of 365 day year, or thirty-day
month, as the case may be, for the following:
(a) All personal property taxes, real property taxes, federal, state
and local taxes levied or assessed against the Business or any of the Assets
described in this Agreement for the current year based on the amount shown on
the latest available bill for such item.
(b) Charges accruing on any service or other contracts shown on
Exhibit 1.1(d) to this Agreement.
2.5. PURCHASE PRICE ADJUSTMENT. For purposes of this Section 2.5, the term
"Net Assumed Liabilities" refers to the result of Seller's (i) accounts payable,
PLUS (ii) accrued expenses LESS (iii) inventories, LESS (iv) prepaid items, in
each case as of the Closing Date. The Purchase Price shall be adjusted as
follows:
(a) REDUCTION IN PURCHASE PRICE. The Purchase Price shall be reduced
by the amount that the Net Assumed Liabilities exceed Two Hundred Forty-Eight
Thousand Dollars ($248,000).
(b) INCREASE IN PURCHASE PRICE. The Purchase Price shall be
increased by the amount that the Net Assumed Liabilities are less than Two
Hundred Forty-Eight Thousand Dollars ($248,000).
(c) CLOSING STATEMENT. For purposes of establishing the amount of the
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Purchase Price Adjustment, Seller shall prepare and deliver to Buyer, within
thirty (30) days after the Closing, a statement as of the Closing Date (the
"Closing Statement"), which shall set forth, as of the Closing, the Net Assumed
Liabilities and shall calculate any resultant Purchase Price Adjustment. The
Closing Statement will be derived from the internal books and records of Seller
in accordance with and consistent with Seller's accounting practices. Transfer
taxes arising in connection with the Closing which are to be paid by Seller
shall not, however, be included in the Closing Statement. Buyer shall give
Seller and its representatives full access to the premises, systems, books and
records of the Business in order to prepare the Closing Statement and to
calculate the Purchase Price Adjustment. Buyer shall have thirty (30) business
days after receipt of such Closing Statement and proposed Purchase Price
Adjustment in which to give Seller written notice of any objection thereto
(which notice shall specify the factual basis for such objection and the amount
at issue).
(d) DISPUTE RESOLUTION. If Buyer timely objects (as provided in
subparagraph (c) above) to such Closing Statement and Purchase Price Adjustment,
then Seller and Buyer shall promptly meet and attempt in good faith to agree on
the Purchase Price Adjustment. Any disputes with respect to the such Closing
Statement which are not resolved by Seller and Buyer and their respective
accountants within ninety (90) days after the Closing shall, upon written
request by either Seller or Buyer, be referred, for final resolution, to such
firm of independent certified public accountants as Seller and Buyer shall
jointly designate. In the event that the parties are unable to agree upon such
designated accounting firm, Arthur Andersen shall choose an independent
certified public accounting firm, of national recognition, to perform such
services. Each party shall, with twenty (20) days after such submission of such
dispute, deliver to such firm the information such party wishes to have
considered by such firm in making its determination. Such firm shall present
its determination and resolution of such disputes with thirty (30) business days
after the submission of such dispute to the firm. Seller and Buyer agree that
the determination and resolution by such firm shall be binding and conclusive
among the parties. The fees of the accounting firm selected to resolve such
disputes shall be borne one-half by Seller and one-half by Buyer. Failure to
timely object to the proposed Closing Statement and Purchase Price Adjustment
shall prevent Buyer from asserting any claim inconsistent with the amounts set
forth therein. If Buyer does not object to the proposed Closing Statement and
Purchase Price Adjustment prior to the close of business on the thirtieth (30)
business day following the delivery thereof, such proposed Closing Statement and
Purchase Price Adjustment shall be deemed final and binding on both parties and
shall constitute the Purchase Price Adjustment for all purposes of this
Agreement.
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(e) SETTLEMENT. If the Purchase Price Adjustment results in an
increase in the Purchase Price, Buyer shall pay such amount by wire transfer
immediately from immediately available funds to the account designated by Seller
and such amount shall bear interest from the Closing Date to the date of Payment
at the rate of one percent per month. If the Purchase Price Adjustment results
in an decrease in the Purchase Price, Seller shall pay such amount by wire
transfer immediately from immediately available funds to the account designated
by Buyer and such amount shall bear interest from the Closing Date to the date
of Payment at the rate of one percent per month.
2.6. SALES TAXES. Buyer and Seller agree that Seller shall be obligated to
pay all of the sales, use and other like taxes arising out of the sale of the
Assets to Buyer under the terms of this Agreement, and that Seller shall be
responsible for the remittance of the sales taxes arising out of the sale of the
Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTEES
3.1. REPRESENTATIONS AND WARRANTIES.
(a) SELLER'S REPRESENTATIONS AND WARRANTIES. Seller, UM Equity and
Parent hereby jointly and severally represent and warrant to Buyer, on the date
hereof, as follows:
(1) STANDING. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware; further,
UM Equity is a corporation organized, validly existing and in good standing
under the laws of the State of Delaware; and finally, Parent is a corporation
organized, validly existing and in good standing under the laws of the State of
New Jersey.
(2) SUBSIDIARIES. Seller does not own any equity interest,
directly or indirectly, in any corporation, partnership, joint venture or other
entity which is engaged in any aspect of the Business.
(3) CORPORATE AUTHORITY. Seller has all necessary corporate
power and authority to own or lease its properties and to carry on its business
as now being conducted. Seller is duly qualified to do business and in good
standing in each state or jurisdiction wherein the nature of the business
conducted or the character of the property owned or leased makes such
qualification necessary, except in those jurisdictions where the failure to
qualify would not have a material and adverse affect on
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the Business or the Assets of Seller.
(4) AUTHORIZATION. Seller has full corporate power and
authority to enter into this Agreement and each of the other transaction
documents to which it is a party and to carry out the transactions contemplated
hereby and thereby. The Board of Directors and sole shareholder of Seller has
taken all action required by law, Seller's Certificate of Incorporation and
Bylaws, or otherwise, to authorize the execution and delivery of this Agreement
and such other transaction documents and the consummation of the transactions
contemplated hereby and thereby, and this Agreement and such other transaction
documents constitute the valid and binding obligation of Seller, enforceable in
accordance with their respective terms, except as enforceability may be limited
by (i) applicable bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting creditors' rights generally and (ii) general principles
of equity, regardless of whether asserted in a proceeding in equity or at law.
(5) EFFECT OF THIS AGREEMENT. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby nor compliance by Seller with any of the provisions hereof will violate,
breach or, with the giving of notice or passage of time, constitute an event of
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any agreement or other
instrument or obligation which have been assigned by Seller to Buyer, or by
which any of the Assets may be bound, except for the requirement of consent or
waiver to such transactions by the other party to the agreement or instrument,
and except for such violations, breaches or defaults (or rights of termination,
cancellation or acceleration) which taken as a whole are not material to the
Business, Assets or financial condition of Seller. Except for this Agreement,
Seller has no binding commitment as of the date of this Agreement and will have
none as of the Closing Date to sell the Business or the Assets.
(6) TITLE TO ASSETS. Seller has good and marketable title to
all Assets, except to those covered by equipment leases identified in Exhibit
1.1(a) or Exhibit 1.1(d) hereto (the "Leased Assets"), as to which Seller has
valid and subsisting leasehold interests. All of the Assets are free and clear
of restrictions on or conditions to transfer or assignment, and free and clear
of mortgages, liens, pledges, encumbrances, claims, conditions or restrictions,
except: (A) those for current taxes not yet due and payable, or the validity of
which is being contested in good faith by appropriate proceedings; and (B) liens
imposed by law, such as materialmen's, mechanics', workers', repairmen's,
employees', carriers', vendors', warehousemen's, and other like liens arising in
the ordinary course of business in respect of obligations that are not yet due
and payable and
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that do not, individually or in the aggregate, materially interfere with the
conduct of the Business.
(7) FINANCIAL STATEMENTS. Seller has hereby delivered to Buyer
its audited financial statements for the year ended December 31, 1995, and its
financial statements for the two years ended December 31, 1994 and 1993,
respectively, in an unaudited form, and for the four (4) month period ended
April 30, 1996 in an unaudited form (the "Financial Statements"), and represents
and warrants to the best knowledge of Seller that the Financial Statements
fairly reflect in all material respects the financial condition of the Seller on
their respective dates. To the best knowledge of the Seller, after diligent
inquiry, the Financial Statements present fairly in all material respects the
revenues and the results of the operations of the Seller for the periods
covered, in accordance with the books and records of the Seller, and determined
in accordance with generally accepted accounting principles consistently
applied, as of the respective date of each statement, subject in the case of the
unaudited statements to any year end audit adjustments and the lack of financial
disclosures required pursuant to generally accepted accounting principles.
(8) BOOKS OF ACCOUNT. To the knowledge of Seller, the books,
records and accounts of Seller accurately and fairly reflect, in reasonable
detail, the transactions and the assets and liabilities of Seller with respect
to the Seller Business. Seller has not engaged in any transaction with respect
to the Business, maintained any bank account for the Business or used any of the
funds of Seller in the conduct of the Business except for transactions, bank
accounts and funds which have been and are reflected in the normally maintained
books and records of Seller.
(9) STATUS REGARDING LEASES. Seller is not in default under any
lease agreement to be assigned to Buyer under the terms of this Agreement and
that said lease agreements are the only lease agreements pertaining to such
leased space. To the knowledge of Seller, neither the operations of the
Business on any of such leased real property, nor any improvements thereon,
violate in any material respect any applicable building code, zoning
requirement, or any statute applicable to such real property.
(10) COMPLIANCE WITH APPLICABLE LAWS. Neither Seller nor UM
Equity nor Parent has received notice of any violation of any law or order,
writ, injunction or decree of any court or Federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or instrumentality
(including without limitation applicable laws and regulations regarding
government contracting, bribery and other prohibited foreign and domestic
payment practices, environmental protection, equal employment opportunity, civil
rights, and occupational safety and health).
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(11) LITIGATION AND INVESTIGATIONS. Except as set for in Exhibit
3.1(a)(11), Seller warrants that there are no lawsuits, proceedings, claims or
governmental investigations pending, or known to be threatened or contemplated,
against Seller or the Assets or the Business, at law or in equity, or before or
by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that are known to Seller, UM Equity or
Parent, which, if determined adversely, could have a material adverse effect on
the Assets or the Business or the ability of Buyer to carry on the Business
following the Closing Date. Without limiting the generality of the foregoing,
there are no such claims or proceedings pending or threatened which assert
claims for product liability or malpractice arising out of the operations of the
Business, except as set forth in said Exhibit.
(12) LICENSES AND GOVERNMENT AUTHORIZATIONS. Seller has all
licenses, permits, and authorizations known by Seller to be necessary for the
conduct of Seller's Business as currently conducted, and for the operation of
the properties currently operated by Seller on its own account or on behalf of
others pursuant to leases or similar arrangements, and no suspension or
cancellation of any such license, permit, or authorization is pending or known
to be threatened, except for such licenses, permits, and authorizations the
failure of which to obtain would not have a material and adverse effect on the
Business or the Assets.
(13) GENERAL CONSENTS AND FILINGS. All consents, authorizations,
registrations, qualifications, or filings with any federal or state governmental
authority on the part of Seller, known by Seller to be required in connection
with the consummation of the transactions contemplated herein, are listed on
Exhibit 3.1(a)(13) hereto.
(14) SUBSTANTIAL CONTRACTS AND OBLIGATIONS. Except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application referring to, or affecting enforcement of, creditors'
rights, and by general equitable principles, to the best knowledge of Seller,
all substantial contracts are valid and binding upon Seller and the other
parties thereto, and are in full force and effect. Neither Seller nor any other
party to a substantial contract is known to be in violation of the terms thereof
or in default thereunder, and Seller knows of no facts which upon notice or with
the passage of time would cause Seller or any other party thereto to be in
default thereunder, where such violation or default would have a material and
adverse effect on the conduct and operation of the Business.
(15) LAWSUITS OR CLAIMS. Seller has complied with and is not in
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violation of any applicable federal, state, or local statutes, laws or
regulations affecting the Business, except for such violations that would not
have a material and adverse effect on the Business or the Assets, and has
disclosed any and all knowledge regarding any legal actions or other
proceedings, in whatever stage or form, pending, or to its knowledge threatened
or affecting the Business or the Assets.
(16) LOSS, DAMAGE OR DESTRUCTION. Seller is not aware of any
damage, destruction or loss, whether or not covered by insurance, materially and
adversely affecting the Assets or the Business.
(17) EMPLOYEES. Seller hereby warrants that attached hereto and
marked "Exhibit 3.1(a)(17)" is a true and complete list of all persons (except
William Boyle) employed (the "Employees") by Seller in Seller's Business
showing their names, social security numbers, positions or job classifications,
and salaries. To the knowledge of Seller:
(A) no Employee is obligated under any contract or
agreement, or subject to any judgment, decree or order of any court or
administrative agency that would conflict with such employee's obligation to use
his or her best efforts to promote the interests of Seller or Buyer (assuming
such employee's employment by Buyer after the Closing) or with Buyer's conduct
of the Business, as contemplated by this Agreement;
(B) no Employee is in violation of any term of any
employment agreement, non-competition agreement, or any other contract or
agreement relating to the relationship of any such employee with Seller or any
previous employer; and
(C) there are no pending or threatened suits or
administrative actions brought by any current Employee or former Employee
alleging any violation of federal, state or local law protecting such Employee
in their right to employment, wrongful termination of employment, failure to
maintain a safe work place, or similar causes of action, including but not
limited to Title VII of the U.S.C.A.
(18) LABOR DIFFICULTIES. None of Seller's employees are
represented by unions. There is no unfair labor practice complaint pending
before the National Labor Relations Board (the "NLRB") or overtly threatened
against or affecting
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Seller or the Business. There is no labor strike, dispute, slowdown or stoppage
pending or overtly threatened against or affecting Seller.
(19) SERVICE CONTRACTS. Seller hereby warrants that attached
hereto and marked "Exhibit 1.1(d)" is a true and complete list of all leases,
service and other contracts pertaining to the Business on which Seller is
obligated, showing (A) the names of the parties to each such contract; (B) the
services rendered (or to be rendered) under each such contract; (C) the
compensation payable by Seller under each such contract; and (D) the term and
expiration date of each such contract.
(20) ABSENCE OF LIENS. At or prior to the Closing, Buyer shall
have received a UCC search report dated as of a date not more than twenty-five
(25) days before the Closing Date issued by the Secretary of State of New
Jersey, Massachusetts and New York indicating that there are no filings under
the Uniform Commercial Code on file with such Secretary of State which name
Seller as debtor or otherwise indicating any lien on the Assets, except for the
leases to be assumed by Buyer hereunder and liens as to which UCC Termination
Statements have been obtained from lienholders subject only to payment of
specified dollar amounts at the Closing.
(21) COVENANTS NOT TO COMPETE. Seller is not a party or
otherwise subject to any contract containing covenants by which Seller agrees
not to compete in any geographic area, line of business, or with any person or
business entity, which in any way relates to the Business.
(22) TAX RETURNS. Seller warrants that it has filed with the
appropriate state and federal governmental agencies all material tax returns and
tax reports required to be filed by it and which pertain to the operations of
the Business and that such returns have been lawfully filed and in all material
respects are true and accurate.
(23) ENVIRONMENTAL COMPLIANCE. To the best knowledge of Seller
and the knowledge of UM Equity and the Parent, there are no conditions,
circumstances, activities, practices, incidents, actions or plans, in each case
relating to the acts or omissions of Seller or the conduct by Seller of the
Business, which pose a significant hazard to human health or the environment,
whether or not in compliance with law, existing on any real property presently
leased, operated or controlled by Seller and used in connection with the
Business, and there has been no production, use, presence, treatment, storage,
transportation, disposal, release or threatened release by Seller of any
petroleum, petroleum products or any substance classified as "hazardous" under
an
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applicable federal, state or local law or regulation, other than those materials
used in the ordinary course of the operation of the Business, or which to
Seller's knowledge is likely to give rise to any common law or legal liability
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or waste as a
result of Seller's operation of the Business prior to the Closing Date.
(A) To the knowledge of Seller and UM Equity and the
Parent, Seller has obtained all permits, licenses and other authorizations which
are required with respect to the operation of the Business prior to the Closing
Date (the "Environmental Permits") under applicable federal, state, local and
foreign laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes (the "Environmental
Laws").
(B) To the knowledge of Seller and UM Equity and the
Parent, Seller is in compliance with all terms and conditions of the
Environmental Permits and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder except for such
violations that would not have a material and adverse effect on the Business or
the Assets.
(C) There is no civil, criminal, or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter pending or, to the knowledge of Seller and UM Equity and
the Parent, threatened against Seller or the Business relating in any way to the
Environmental Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
(24) DISCLOSURE. No representation or warranty by Seller in this
Agreement contains, or as of the Closing will contain, any untrue statement of a
material fact, or omits, or as of the Closing will omit, to state a material
fact necessary to make the statements not misleading in light of the
circumstances under which they were made;
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provided, however, that if any party to this Agreement becomes aware prior to
the Closing Date (by investigation or otherwise) of any such misstatements or
omissions, that party promptly will notify the other parties of such discovery
as soon as practicable.
(25) INSURANCE. Exhibit 3.1(a)(25) hereto sets forth the
insurance covering the Assets and the Business which have been maintained by the
Seller over the three year period preceding the date hereof. At or prior to the
Closing, the Seller shall provide to the Buyer certificates of insurance
providing evidence of the policies which are currently in force.
(26) FRINGE BENEFIT PLANS. Except as described in Exhibit
3.1(a)(26), Seller has no bonus, deferred compensation, pension, profit-sharing,
retirement, stock purchase, stock option or any other fringe benefit plan,
arrangement or practices, whether formal or informal under which any Employee is
eligible for benefits, and Seller has not entered into any commitment to create
any additional such plan or arrangement.
(27) PENSION BENEFIT PLANS.
(A) Except as set forth in Exhibit 3.1(a)(26) to this
Agreement, Seller is not a party to, does not participate in and is not
obligated to contribute to any "employee welfare benefit plan" as such term is
defined in Section 3(l) of ERISA, and Seller is not a party to, does not
participate in and is not obligated to contribute to any employee pension
benefit plan, as such term is defined in Section 3(2) of ERISA, including any
pension, profit-sharing, retirement, savings, bonus, thrift or stock bonus plan.
Except as set forth in said Exhibit, Seller is not a party to, a participant in
or obligated to contribute to any other deferred compensation, incentive,
vacation, severance pay, group insurance, stock option or other stock-related
employee benefit, or other plan (whether or not written) or arrangement or
understanding of any kind whatsoever providing employee benefits for any or all
of the current or former employees or agents of Seller.
(B) Except as set forth in "Exhibit 3.1(a)(26)" to this
Agreement, there are no "employee pension benefit plans", as defined in Section
3(2) of ERISA, (i) in respect of which Seller is an "employer" or a "substantial
employer," as defined in Sections 3(5) and 4001(a)(2), respectively, of ERISA,
(ii) with respect to which Seller is a "party in interest" within the meaning of
Section 3(14) of ERISA, or (iii) with respect to which Seller is assuming any
liability or will be liable to make contributions to or for the payment of
benefits. Seller is not a party to, and none of its operations is or has ever
been covered by, (i) any "multi-employer plan" as such term is
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defined in Section 3(37) or Section 4001(a)(3) of ERISA or (ii) any other
pension or retirement payment arrangement, whether or not written, involving a
past or unfunded future cost to Seller, whether or not such plan or arrangement
is covered by ERISA.
(28) INTANGIBLE PROPERTY. Seller owns and as of the Closing will own,
the entire right, title and interest in and to all of the trademarks, trademark
registrations and applications, service marks, service names, and commercial
names set forth in "Exhibit 1.1(f)" to this Agreement, (the "Seller Intangible
Property"). To the knowledge of Seller: (i) none of the Seller Intangible
Property is being infringed by others; and (ii) the conduct of the Business does
not infringe any patent, copyright, trademark, trade secret, trade name or
commercial name, registered or unregistered, or other intellectual property
rights of third parties, including present or former employees of the Business
or former employers of such persons, and no claims are pending or have been made
to such effect.
(29) ADVERSE CHANGES. Since the date of the most recent financial
statement referred to in Section 3.1(a)(7) above, there has been no material
adverse change in the Assets or the Business.
3.2. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby represents and
warrants to Seller that:
(a) ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) AUTHORIZATION. Buyer has full corporate power and authority to
enter into this Agreement and each of the other Transaction Documents to which
it is a party and to carry out the transactions contemplated hereby and thereby.
The Board of Directors of Buyer has taken all action required by law, Buyer's
Certificate of Incorporation and Bylaws, or otherwise, to authorize the
execution and delivery of this Agreement and such other Transaction Documents
and the consummation of the transactions contemplated hereby and thereby, and
this Agreement and such other Transaction Documents constitute the valid and
binding obligation of Buyer, enforceable in accordance with their respective
terms, except as enforceability may be limited by (i) applicable bankruptcy,
insolvency, moratorium, reorganization and other similar laws affecting
creditors' rights generally and (ii) general principles of equity, regardless of
whether asserted in a proceeding in equity or at law.
(c) LITIGATION. There are no actions, suits, proceedings or
investigations, at law or in equity, pending before any court, arbitrator or
governmental
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board or body, or pending or, to the knowledge of Buyer, threatened, against or
affecting Buyer which may adversely affect the ability of Buyer to perform its
obligations under this Agreement.
(d) GENERAL CONSENTS AND FILINGS. All consents, authorizations,
registrations, qualifications, or filings with any federal or state governmental
authority on the part of Buyer, known by Buyer to be required in connection with
the consummation of the transactions contemplated herein, shall have been
obtained prior to and be effective as of the Closing Date.
(e) WARRANTIES ON CLOSING DATE. No representation or warranty by
Buyer in this Agreement contains, or as of the Closing will contain, any untrue
statement of a material fact, or omits, or as of the Closing will omit, to state
a material fact necessary to make the statements not misleading in light of the
circumstances under which they were made; provided, however, that if any party
to this Agreement becomes aware prior to the Closing Date (by investigation or
otherwise) of any such misstatements or omissions, that party promptly will
notify the other parties of such discovery as soon as practicable.
3.3. NO BROKER OR AGENT. Each party represents and warrants to the other
that it has retained no finder, agent or broker in regard to this transaction.
Each party shall pay any fee due to any broker, finder, agent or other person or
entity contracted by that party in regard to this transaction and shall
indemnify and hold harmless the other party therefrom.
3.4. OBLIGATIONS AFTER CLOSING. From time to time after the Closing, the
parties shall, at the reasonable request of the other, and without further
consideration, execute and deliver or cause to be executed and delivered such
instruments, and take such other actions, as may reasonably be requested in
order fully to transfer and perfect title to the Assets and to effectuate the
transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS
4.1. COVENANTS OF SELLER. Seller hereby covenants that:
(a) ADVICE OF CHANGES. Seller will promptly notify Buyer in writing
of:
(1) any event occurring subsequent to the date of this Agreement
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that would render any representation or warranty of Seller or UM Equity or
Parent contained in this Agreement, if made on or as of the date of that event
or the Closing Date, untrue or inaccurate in any material respect and
(2) any known or reasonably anticipated material adverse change
in the Business occurring after the date of this Agreement.
(b) ABSENCE OF CHANGES. Except as set forth in "Exhibit 4.1(b)" to
this Agreement there has not been, since May 1, 1996, and as of the Closing
Date, there will not be:
(1) any change in the Assets, financial condition, accounting
methods or operations of the Seller or the Business, except changes in the
ordinary course of business which have not been, either in any single case or in
the aggregate, materially adverse to the Seller or the Business;
(2) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Assets or the Seller;
(3) any waiver by the Seller or UM Equity or Parent of valuable
rights or of debts owed to it (including, but not limited to, accounts
receivable) which, taken as a whole, are material to the business or financial
condition of Seller;
(4) any loans made by Seller to its employees or agents other
than advances of expenses made in the ordinary course of business or consistent
with prudent past practices as to kind and amount;
(5) other than in accordance with obligations, agreements or
commitments in effect on or before the Closing Date and disclosed to Buyer, any
increase in the compensation payable by Seller to any employee or agent or any
declaration, payment, commitment or obligation of any kind for the payment by
Seller of any bonus, additional compensation or salary, or retirement,
termination or severance benefits to employees or agent; provided that Seller
may grant annual raises in the ordinary course consistent with past practices;
or
(6) any other event or condition of any character which
materially and adversely has affected or can be reasonably anticipated to
materially and adversely affect the condition, affairs or operations of the
Seller or the Business.
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(c) IMPLEMENTATION OF REPRESENTATIONS AND WARRANTIES. Seller shall
use its best efforts to render accurate as of the Closing its representations
and warranties contained in this Agreement, and shall refrain from taking any
action which would render inaccurate as of the Closing any of such
representations and warranties.
(d) COMMUNICATIONS AND PUBLIC ANNOUNCEMENTS. Between the date hereof
and the Closing, Seller shall not furnish any communication to, or otherwise
communicate with, the public with respect to the transactions contemplated by
this Agreement, except to the extent necessary to obtain consents and approvals
required in order to transfer the Assets, without the prior approval of Buyer as
to the content thereof, which approval shall not be unreasonably withheld or
delayed by Buyer and which shall not be withheld or delayed where such
communication is required by applicable law or is required as a condition of any
regulatory approval sought by Seller. No such communication or public
announcement shall disclose the amount of the Purchase Price unless, in the
opinion of Seller's counsel, such disclosure is required by applicable law. It
is anticipated that Seller and Buyer will make a joint announcement of the
transactions contemplated by this Agreement. The foregoing provisions do not
limit the ability of the Seller to discuss with, or disclose to, its employees
this transaction.
(e) ASSISTANCE IN TRANSFERRING ASSETS AND BUSINESS. Seller shall use
reasonable efforts to assist Buyer in planning for and accomplishing the orderly
transition and transfer of the Assets to Buyer as provided herein and shall take
all steps as may be reasonably requested by Buyer in furtherance thereof,
including the continuation of services to patients and customers of Seller.
Seller will also cooperate in the preparation of any required financial
statements, the cost thereof to be borne by Buyer.
(f) ACCESS. Between the date hereof and the Closing or the
termination of this Agreement, whichever shall first occur:
(1) Seller shall afford representatives of Buyer and its agents
reasonable access during normal business hours to the offices, personnel and
representatives (including independent accountants) of Seller and to such of the
financial, contractual and other records of Seller as shall be reasonably
necessary for Buyer's investigation of the Seller Business, which investigations
will be conducted in a manner which will not unreasonably interfere with the
normal conduct of the Business;
(2) Buyer and its representatives shall have the right to
contact third parties who have material contractual relationships with Seller in
order to investigate the status of such relationships, however, Buyer shall not
contact any third parties without
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the prior approval of the Seller and in a manner reasonably satisfactory to
Seller, which approval shall not be unreasonably withheld;
(3) Seller shall promptly provide to representatives of Buyer
and its agents such financial and operating data of Seller and such other
information with respect to the Assets and the Business as such persons shall,
from time to time, reasonably request.
(g) OTHER TRANSACTIONS. So long as this Agreement has not been
terminated in accordance with its terms, Seller will not, directly or indirectly
through any officer, director, employee, agent or otherwise, take any action to
solicit, initiate, seek, encourage or support any inquiry, proposal or offer
from, furnish any information to, or participate in any negotiations with, any
corporation, partnership, person or other entity or group (other than Buyer and
its officers, employees and agents) regarding any acquisition of any capital
stock or other securities of Seller, any merger or consolidation with or
involving Seller or any acquisition of any material portion of the assets of
Seller.
(h) THIRD PARTY CONSENTS. Seller shall use its best efforts to
obtain the written consent of each person, organization or governmental
authority whose consent or approval shall be required or advisable in order to
permit it to transfer the Assets hereunder; however, should Buyer elect to
proceed with the Closing notwithstanding Seller's failure to obtain any of the
written consents required or advisable hereunder, then the Seller shall have no
further liability or obligation with respect thereto.
(i) RISK OF LOSS. All risk of loss, damage or destruction to the
Assets shall be borne by Seller until the Closing Date as provided herein.
4.2. COVENANTS OF BUYER. Buyer hereby covenants that:
(a) ADVICE OF CHANGES. Buyer will promptly notify Seller in writing
of (i) any event occurring subsequent to the date of this Agreement that would
render any representation or warranty of Buyer contained in this Agreement, if
made on or as of the date of that event or the Closing Date, untrue or
inaccurate in any material respect, and (ii) any material adverse change in the
business or prospects of the business of the Buyer.
(b) IMPLEMENTATION OF REPRESENTATIONS AND WARRANTIES. Buyer shall
use its best efforts to render accurate as of the Closing Date its
representations and warranties contained in this Agreement, and shall refrain
from taking any action which would render inaccurate as of the Closing Date any
of such representations or warranties.
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(c) COMMUNICATIONS AND PUBLIC ANNOUNCEMENTS. Between the date hereof
and the Closing Date, Buyer shall not furnish any communication to, or otherwise
communicate with, the public with respect to the transactions contemplated by
this Agreement, except to the extent necessary to obtain consents and approvals
required in order to transfer the Assets, without the prior approval of Seller
as to the content thereof, which approval shall not be unreasonably withheld or
delayed by Seller and which shall not be withheld or delayed where such
communication is required by applicable law or is required as a condition of any
regulatory approval sought by Buyer. No such communication or public
announcement shall disclose the amount of the Purchase Price unless, in the
opinion of Buyer's counsel, such disclosure is required by applicable law. It
is anticipated that Seller and Buyer will make a joint announcement of the
transactions contemplated by this Agreement.
(d) THIRD PARTY CONSENTS. Buyer shall use reasonable efforts to
assist the Seller in obtaining the written consent and approvals of each person,
organization or governmental authority whose consent or approval shall be
required or advisable in order to permit it to transfer the Assets hereunder.
(e) EMPLOYEES. Buyer shall offer to employ all of Seller's current
employees (except for William Boyle), at a salary at least equal to such
employees' current respective salaries and with benefits of equivalent value to
those currently offered by the Seller. The Seller will encourage its employees
to accept such offers of employment, it being recognized that the employees are
employees "at will" and Seller cannot control the individual decisions of the
employees.
(f) COLLECTION OF ACCOUNTS RECEIVABLE. At the Closing, or as soon
thereafter as shall be practicable, Seller shall deliver to Buyer a list of its
accounts receivable as of the Closing Date. Buyer agrees to use its best
efforts, during the six month period following the Closing, to collect, on
behalf of and for the account of Seller, such accounts receivable as
expeditiously as possible. Any payments which Buyer receives which are made in
the name of the Seller shall be immediately delivered to the Seller. Any
payments which are received in the name of Buyer shall be transmitted to the
Seller on a weekly basis. It is agreed that all payments received from an
account debtor shall be applied against the receivables of such debtor in the
same order as booked, except in the event the account debtor otherwise specifies
in writing. Nothing contained herein shall obligate Buyer to institute
litigation in an effort to collect the accounts receivable, nor shall Seller be
prevented from taking any action to collect the accounts receivable. Such
collection services will be provided without charge during the first month, and
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thereafter the Seller shall pay to the Buyer a fee with respect to such
services, at the rate of $15,000 per month. Seller may terminate this
arrangement at any time upon 15 days prior notice, in which case the Seller will
be able to utilize Buyer's computer system, at no charge, as necessary in
connection with its collection activities.
4.3. OTHER AGREEMENTS OF THE PARTIES. (a) NON-COMPETITION AGREEMENT. At
the Closing, UM Equity and Buyer shall enter into a Covenant Not to Compete, in
form and substance satisfactory to each party, pursuant to which UM Equity shall
agree not to compete with the Buyer, in the manner and to the extent provided
therein.
(b) LEASE. UMRE Corp., which is an affiliate of Seller, shall at
Closing enter into a lease of office space at 56 Haddon Avenue, Haddonfield, New
Jersey, which lease shall be in form and substance satisfactory to each party.
Such lease shall pertain to approximately 13,000 square feet of space, and shall
provide for a rental, during the initial year, of $219,000. The initial term of
the lease will be for one year, renewable annually with the mutual consent of
the parties, and with either party having the right, after the initial term, to
terminate the lease upon six months prior written notice.
(c) PREMIER RESEARCH WORLDWIDE, LTD. Buyer agrees that it will
continue to provide services to Seller's affiliate, Premier Research Worldwide,
Ltd., on the same basis and at the same pricing, as currently is in effect
between Seller and such affiliate with respect to presently existing research
contracts. Services with respect to future research contracts will be
negotiated on a case-by-case basis.
(d) TRANSITION SERVICES. Seller will provide the services of William
Boyle, on an as-requested basis during the six month period following the
Closing, to assist in the coordination of the integration of the Assets and the
Business into the business of the Buyer. Such services will be provided at no
charge to the Buyer during the two month period following the Closing Date,
which two month period will be extended to the extent Mr. Boyle takes vacation
days during such period. Buyer agrees to pay Seller at the rate of $100 per
hour for Mr. Boyle's services after the initial two month period (as so
extended). Mr. Boyle will remain an employee of Seller, who will be solely
responsible for his compensation and related payroll taxes and benefits.
(e) COMPUTER SERVICES. Buyer agrees to provide to Parent, and Parent
agrees to purchase from Buyer, computer services of the nature of those
heretofore provided by Seller, on terms substantially similar to those presently
existing between Seller and Parent. Such services shall continue indefinitely
until six months after either party shall have provided written notice of
termination to the other, which notice may be given at any time after the first
anniversary of the Closing.
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(f) BOOKS AND RECORDS. Included within the Assets are the books,
records and files described on Exhibit 1.1(a) hereto and Seller's pacemaker
patient records. Buyer shall preserve such books, records and files for a
period of five years after the Closing, and in the event the Buyer at any time
after the end of such five year period determines to destroy all or any portion
of said books, records and files, it shall first notify Parent of such decision
and provide Parent the opportunity to obtain possession thereof. Seller and
Parent shall at all times have immediate and unrestricted access to such books,
records and files, upon reasonable notice and for any reasonable purpose of
Seller. Seller likewise shall provide to Buyer immediate and unrestricted
access to all other books, records and files, including patient files, of the
Seller relating to the Business which are retained by the Seller, upon
reasonable notice and for any legitimate business purpose of Buyer. Seller
shall preserve its cardiac event detection and holter monitoring patient records
for a period of five years after the Closing, and in the event the Seller at any
time after the end of such five year period determines to no longer maintain all
or any portion of such records, it shall first notify Buyer of such decision and
provide Buyer the opportunity to obtain possession thereof. Buyer will maintain
the confidentiality of all patient records and not use the same except to
respond to (i) third party claims, (ii) governmental or third party payor
inquiries, investigations or proceedings, or (iii) physician or patient
inquiries.
4.4. TERMINATION. (a) This Agreement may be terminated, and the purchase
and sale of the Assets abandoned, at any time by the mutual written consent of
the parties expressed by action of their respective Boards of Directors.
(b) This Agreement shall automatically terminate if the Closing
hereunder shall not have been consummated on or before June 30, 1996, unless the
parties shall have agreed in writing to extend such date.
(c) Buyer shall also be able to terminate this Agreement in the event
that (i) it determines that, in the course of its due diligence review of the
books, records, contracts, documents and other materials requested from Seller,
Seller's Business is not in substantial compliance with all federal, state and
local statutes, regulations and rules applicable to the Business, including but
not limited to Title XVIII of the Social Security Act, codified at 42 U.S.C.A.
sections 1395-1395cc and Medicare regulations codified at 42 C.F.R. Parts 405-
424, and 482-498, (ii) Seller's representations and warranties contained herein
are materially incorrect or (iii) the Assets and Business are materially not as
represented by Seller.
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(d) The parties hereto shall have no liability to the others for any
failure to close hereunder, unless a party willfully and intentionally, without
excuse, refuses to proceed to Closing hereunder. In such event, the non-
breaching party shall be entitled to receive as liquidated damages an amount
equal to $1,400,000.
ARTICLE V
CLOSING CONDITIONS
5.1. CLOSING CONDITIONS.
(a) SELLER'S CONDITIONS. Seller's obligations hereunder at Closing
are specifically conditioned on the following:
(1) ACCURACY OF REPRESENTATIONS AND WARRANTIES; ETC. All of the
representations and warranties made by Buyer in this Agreement shall be true in
all material respects as of the Closing with the same force and effect as though
such representations and warranties had been made as of the Closing, except as
affected by transactions contemplated by this Agreement; all of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Buyer at or before the Closing shall have been duly complied with and performed;
and Seller shall receive a certification of the Buyer, dated the Closing Date
and executed by the Chairman, President or any Vice President of the Buyer, to
each such effect.
(2) APPROVAL OF SALE. All authorizations, consents and
approvals of all federal, state, and local governmental agencies and authorities
required to be obtained in order to permit the consummation of the transactions
contemplated by this Agreement, if any, shall have been obtained.
(3) CONSENTS OBTAINED. Seller shall have received consent or
approval of each person or organization whose consent or approval shall be
required in order to permit Seller to consummate the transactions contemplated
hereby or in order to avoid any breach or termination of any material contract,
agreement or lease included in the
Assets.
(4) NO LITIGATION. There shall be no litigation pending which
has
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been brought for the purpose of enjoining the purchase and sale of the Assets or
any part thereof or any other transaction contemplated by this Agreement or
which would have the effect, if successful, of imposing a material liability
upon Seller, UM Equity or Parent, or any of their officers or directors, because
of such purchase and sale or any such transaction.
(5) NON-COMPETITION COVENANT. The non-competition agreement
referred to in paragraph 4.3(a) shall have been executed and delivered by the
parties thereto.
(6) LEASE. The lease referred to in paragraph 4.3(b) above
shall have been executed and delivered by the parties thereto.
(7) PAYMENT. The payment of the Purchase Price, in accordance
with the provisions of paragraph 2.2 above, shall have been made to the Seller
and UM Equity.
(8) ASSUMPTION AGREEMENT. An assumption agreement, in form and
substance satisfactory to Seller, pursuant to which the Buyer confirms its
assumption of liabilities and obligations as provided herein, shall have been
executed and delivered by the Buyer.
(b) BUYER'S CONDITIONS. The obligations of Buyer hereunder at
Closing shall be subject to satisfaction of the following conditions:
(1) ACCURACY OF REPRESENTATIONS AND WARRANTIES; ETC. All of the
representations and warranties made by Seller in this Agreement shall be true in
all material respects as of the Closing, with the same force and effect as
though such representations and warranties had been made as of the Closing,
except as affected by transactions contemplated by this Agreement; all of the
terms, covenants and conditions of this Agreement to be complied with and
performed by Seller, UM Equity or Parent, or their respective affiliates, at or
before the Closing shall have been duly complied with and performed; and Buyer
shall have received a certification of the Seller, dated the Closing Date and
executed by the President and Chief Executive Officer of the Seller, to each
such effect.
(2) APPROVAL OF SALE. All authorization, consents and approvals
of all federal, state, and local governmental agencies and authorities required
to be obtained in order to permit the consummation of the transactions
contemplated by this
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Agreement shall have been obtained, it being agreed that Seller shall have no
liability to the Buyer in the event that the Buyer chooses to proceed with
closing notwithstanding the failure to obtain any such authorization, consent or
approval.
(3) CONSENTS OBTAINED. The consent or approval of each person
or organization whose consent or approval shall be required in order to permit
Seller to consummate the transactions contemplated hereby or in order to avoid
any breach or termination of any contract, agreement or lease included in the
Assets shall have been obtained, it being agreed that the Seller shall have no
liability in the event the Buyer chooses to proceed with closing notwithstanding
the failure to obtain any such consent or approval.
(4) NO LITIGATION. There shall be no litigation pending which
has been brought for the purpose of enjoining the purchase and sale of the
Assets or any part thereof or any other transaction contemplated by this
Agreement or which would have the effect, if successful, of imposing a material
liability upon Buyer, or any of their officers or directors, because of such
purchase and sale or any such transaction.
(5) DOCUMENTATION. All documentation to be delivered by Seller
at Closing shall be in a form reasonably acceptable to Buyer as to form and
content.
(6) ASSIGNMENTS. All steps necessary to assure proper transfer
of all assignable permits and licenses relating to the Business, including but
not limited to assignable environmental permits and business licenses, shall
have been taken.
(7) NO ADVERSE EVENT. No other event has occurred which, either
singly or in the aggregate, has or may have a material and adverse effect on the
Assets or the Business.
(8) NON-COMPETITION AGREEMENT. The non-competition agreement
referred to in paragraph 4.3(a) shall have been executed and delivered by the
parties thereto.
(9) LEASE. The lease referred to in paragraph 4.3(b) above
shall have been executed and delivered by the parties thereto.
(10) EMPLOYEE COVENANTS. Seller shall have assigned to the Buyer
its rights under any outstanding non-competition, confidentiality or similar
covenant or agreements which it may have received from its current employees.
(11) BILL OF SALE. A bill of sale, and such other instruments of
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assignment as may be appropriate, in form and substance satisfactory to the
Buyer, shall have been delivered to the Buyer, evidencing the transfer of the
Assets to the Buyer hereunder.
ARTICLE VI
CLOSING
6.1. CLOSING. The consummation of the purchase and sale of the Assets
hereunder (the "Closing") shall take place on such date as the parties shall
mutually agree in writing (the "Closing Date"), but in no event later than June
30, 1996. The Closing shall take place at a location mutually agreed upon by
Buyer and Seller.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTEES
AND INDEMNIFICATION
7.1. SURVIVAL. The representations and warranties of the parties contained
in this Agreement or in any certificate or instrument delivered pursuant hereto
shall survive the Closing Date for the period in which a claim with respect
thereto may be made, in accordance with the provisions of paragraph 7.3 hereto.
7.2. INDEMNITY.
(a) BY SELLER. Upon and following the Closing, and subject to the
limitations set forth in paragraph 7.3 hereto, Seller and its parent company,
UM Equity, and Parent, shall jointly and severally indemnify, defend, protect
and hold Buyer harmless from, and against, any and all claims, demands and
liabilities (including but not limited to claims or liabilities relating to
environmental damage or claims by Medicare, Medicaid, Health Care Finance
Administration (including but not limited to Title XVIII of the Social Security
Act, codified at 42 U.S.C.A. sections 1395-1395cc and Medicare regulations
codified at 42 C.F.R. Parts 405-424, and 482-498), any insurance company,
managed care organization or other health care claims paying or claims
processing intermediary), including reasonable attorney's fees, arising from or
on account of:
(1) any breach by Seller of this Agreement;
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(2) any liability of Seller not assumed by Buyer herein or in
any instrument delivered hereunder;
(3) any inaccuracy to, misrepresentation in or breach of any of
the warranties, representations, covenants or agreements made by Seller herein;
and
(4) Seller's use of the Assets, operation of the Business and
use and occupation of any premises in which the Business is located prior to the
Closing, including, without limitation, any and all amounts payable to local,
state or federal tax authorities, claims made by creditors of Seller and
liability claims made with respect to the conduct of the Business by Seller
prior to the Closing, except for liabilities expressly assumed herein by Buyer.
(b) BY BUYER. Buyer shall indemnify, defend, protect, and hold
Seller harmless from and against any and all claims, demands and liabilities,
including reasonable attorneys' fees, arising from or on account of (1) Buyer's
use of the Assets or Buyer's operation of any business using the Assets or the
use and occupation of the premises in which the Business is located on or after
the Closing, (2) any breach by Buyer of this Agreement; (3) any liability of
Seller assumed by Buyer herein or in any instrument delivered hereunder; and (4)
any inaccuracy to, misrepresentation in or breach of any of the warranties,
representations, covenants or agreements made by Buyer herein.
7.3. LIMITS TO INDEMNITY. Notwithstanding the provisions of this Article
VII, or any other provisions set forth in this Agreement or in any document
delivered hereunder:
(a) Any claim for indemnification made pursuant to paragraph 7.2(a)
above must be made in writing to Seller during the six month period following
the Closing Date, unless and to the extent that such claim relates to a claim or
liability relating to environmental damage or claims by Medicare, Medicaid or
the Health Care Finance Administration or any insurance company, managed care
organization or other health care claims paying or claims processing
intermediary (collectively, "Environmental or Medicare Claims"), which
Environmental or Medicare Claims must be made, if at all, in writing within
three years following the Closing Date. Buyer shall have no right to make a
claim for indemnity after the end of the applicable period.
(b) Buyer shall be entitled to indemnification from Seller, UM Equity
and Parent (1) only in the event that all such claims exceed $25,000, and then
only with respect to the excess above $25,000 and (2) only in an amount, in the
aggregate not exceeding $1,400,000, unless and to the extent that a claim is an
Environmental or
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Medicare Claim, in which case such parties' aggregate liability for all such
Environmental or Medicare Claims shall not exceed, in the aggregate,
$14,000,000, reduced by any liability of such parties for all other claims
hereunder.
7.4 RESPONSE TO MEDICARE CLAIMS. In the event that Buyer receives a
Medicare Claim (or inquiry which could result in a Medicare Claim), as to which
Buyer has the right to indemnity, Buyer will immediately notify Seller thereof
and Seller will have sole right to respond to and defend such Claim or inquiry.
ARTICLE VIII
COVENANT NOT TO COMPETE
8.1 COVENANT NOT TO COMPETE.
(a) Seller and Parent covenant and agree that they will not, nor will
they permit any affiliate to:
(1) during the five year period following the Closing, engage,
directly or indirectly, as owner, partner, stockholder, joint venturer
consultant, or in any other capacity whatsoever become financially interested,
in any business providing clinical transtelephonic pacemaker monitoring, cardiac
event detection, Holter monitoring, defibrillator monitoring or other clinical
transtelephonic cardiac monitoring or cardiac testing services (the "Restricted
Services") anywhere in the United States; or
(2) during the two year period following the Closing, directly
or indirectly, without the prior consent of Buyer, solicit the services of any
of Seller's employees who have been employed by Buyer as of the Closing Date.
(b) The provisions of subparagraph (a) above shall not pertain to or
restrict Seller or Parent from:
(1) owning up to 5% of the capital stock of any corporation
whose stock is publicly traded; or
(2) continuing the present activities of Premier Research
Worldwide, Ltd., or its successor, which, among other things, provides various
Restricted Services to pharmaceutical companies, or Life Extension Institute,
Inc. (also known as
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Executive Health Group), or its successor, which among other things provides
various Restricted Services in connection with physical examinations and other
related activities; or
(3) the hiring of any employee who has left the employ of the
Buyer for a period of at least six months.
(c) Seller, UM Equity and Parent agree that the time period provided
for, and the geographical area encompassed by, the covenants contained in this
Section 8.1 are necessary and reasonable in order to protect Buyer in the
conduct of the business and the utilization of the Assets, including the
goodwill relating to the Business acquired by virtue of this Agreement.
(d) If any court having jurisdiction at any time hereafter shall hold
any provision or clause of this Section 8.1 to be unreasonable as to its scope,
territory or term, and if such court in its judgment or decree shall declare or
determine a lesser scope, territory or term which such court deems to be
reasonable, then such scope, territory or term, as the case may be, shall be
deemed automatically to have been reduced or modified to conform to that
declared or determined by such court to be reasonable.
(e) It is expressly agreed that monetary damages would be inadequate
to compensate Buyer for any breach by Seller, UM Equity or Parent of the
covenants set forth in this Section 8.1 and, accordingly, that in the event of
any breach or threatened breach by Seller, UM Equity or Parent of any such
covenant, Buyer will be entitled to seek and obtain preliminary and permanent
injunctive relief in any court of competent jurisdiction, in addition to any
other remedies at law or in equity to which Buyer may be entitled.
ARTICLE IX
GENERAL PROVISIONS
9.1.
(a) AMENDMENTS. No amendments or additions to this Agreement shall
be binding unless in writing and signed by both parties.
(b) WAIVER. Buyer, on the one hand, and Seller, on the other hand,
may, by written notice to the other:
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(1) waive any of the conditions to its obligations hereunder or
extend the time for the performance of any obligation or action of the other;
(2) waive any inaccuracies in the representations of the other
contained in this Agreement or in any documents delivered pursuant to this
Agreement;
(3) waive compliance with any of the covenants of the other
contained in this Agreement; or
(4) waive or modify performance of any of the obligations of the
other.
No action taken pursuant to this Agreement, including without limitation
any investigation by or on behalf of either party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any representations,
warranty, condition or agreement contained herein. Waiver of the breach of any
one or more provisions of this Agreement shall not be deemed or construed to be
a waiver of other breaches or subsequent breaches of the same provision.
(c) APPLICABLE LAW. This Agreement shall be governed in all
respects, whether as to validity, construction, capacity, performance or
otherwise, by the laws of the State of Delaware.
(d) BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and personal representatives. No party may assign or transfer
any rights or obligations under this Agreement without the prior written consent
of the other party, which consent shall not be unreasonably withheld or delayed;
provided however, that
(1) Buyer may assign its rights under this Agreement to any
majority-owned subsidiary of Buyer, provided that Buyer or its parent
corporation guarantees the obligations of such subsidiary hereunder; and
(2) any party may assign its rights under this Agreement to any
successor through any merger or consolidation, or purchaser of all or
substantially all of such party's stock or assets.
(e) EXPENSES. The parties shall each be responsible for accounting,
legal, and other professional fees, or other costs or expenses which are related
to the transactions contemplated herein, whether or not such transactions are
consummated. It
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is understood that Seller shall not be responsible for any auditing expenses
except in connection with the delivery of its audited financial statements for
1995.
(f) NOTICES. All notices and other communications provided for in
this Agreement shall be given or made by telex, telecopy, telegraph, cable,
certified or registered mail (return receipt requested), or delivered personally
or by a nationally recognized overnight courier service to the address set forth
below (or such other address as may be designated by any method permitted by
this Paragraph 9). All such communications shall be deemed to have been duly
given when transmitted by telex or telecopier (if a copy thereof is also mailed
to the recipient, certified or registered mail, postage paid), or personally
delivered or delivered by cable, telegraph, or nationally overnight courier
service, or five (5) calendar days after mailing, postage prepaid, to the
address set forth below.
IF TO SELLER: UM Holdings, Ltd.
56 Haddon Avenue
Haddonfield, New Jersey 08033
Attn: Art Hicks
Chief Financial Officer
Cardio Data Services, Inc.
56 Haddon Avenue
Haddonfield, New Jersey 08033
Attn: William Boyle, President
IF TO BUYER: Raytel Cardiac Services, Inc.
2755 Campus Drive, Suite 200
San Mateo, California 94403
Attn: Richard F. Bader
Chairman and Chief Executive Officer
(g) PARAGRAPH HEADINGS. The paragraph headings used in this
Agreement are included solely for the convenience of the parties and shall not
affect or be used in connection with the interpretation of this Agreement.
(h) SEVERABILITY. In the event any provision or portion of a
provision of this Agreement is held to be invalid, void or unenforceable, the
rest of the Agreement shall, nonetheless, remain in full force and effect and
shall in no way be affected, impaired, or invalidated.
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(i) ENTIRE AGREEMENT. This instrument constitutes the entire
agreement between the parties and supersedes all prior understandings, previous
negotiations, and any memoranda or understanding with respect to the subject
matter hereof, except for the letter dated April ____, 1996, by and between the
Seller and Buyer regarding confidentiality of certain information, which
continues in full force and effect.
(j) NO STRICT CONSTRUCTION. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
(k) COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument when each
party has signed one such counterpart.
(l) TIME OF THE ESSENCE. Time is of the essence in this Agreement.
(m) EXHIBITS. All exhibits attached to this Agreement are
incorporated herein by reference.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SELLER: BUYER:
CARDIO DATA SERVICES, INC. RAYTEL CARDIAC SERVICES, INC.
a Delaware corporation a Delaware corporation
By: ______________________________ By: _________________________________
William E. Boyle Richard F. Bader
Its: President and Chief Executive Officer Its: Chairman and Chief Executive
Officer
UM EQUITY, INC.
a Delaware corporation
By: ______________________________
Arthur W. Hicks, Jr.
Its: Vice President and Chief Financial Officer
UM HOLDINGS, LTD
a New Jersey corporation
By: ______________________________
Arthur W. Hicks, Jr.
Its: Vice President and Chief Financial Officer
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AGREEMENT AND COVENANT NOT TO COMPETE
AGREEMENT, dated as of June 11, 1996, between UM EQUITY CORP., a Delaware
corporation ("UM Equity"), parent company of Cardio Data Services, Inc., a
Delaware corporation ("CDS"), and a wholly owned subsidiary of UM Holdings,
Ltd., a New Jersey corporation ("UM Holdings"), and RAYTEL CARDIAC SERVICES,
INC., a Delaware corporation ("Raytel") and a wholly owned subsidiary of Raytel
Medical Corporation, a Delaware corporation ("RMC") (collectively UM Equity,
CDS, UM Holdings, Raytel and RMC are referred to as the "Parties").
W I T N E S S E T H:
WHEREAS, on the date hereof, pursuant to a certain Agreement for the
Purchase and Sale of Assets, dated May 28, 1996, by and among the Parties (the
"Purchase Agreement"), Raytel acquired substantially all the assets of CDS (the
"Assets") used in connection with the conduct of its business of clinical
transtelephonic pacemaker monitoring, cardiac event detection and Holter
monitoring (the "Business"), and assumed certain specified liabilities of CDS
relating thereto; and
WHEREAS, it is a condition precedent to the effectuation of such
acquisition that UM Equity executes and delivers this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. UM Equity shall not, during the five year period following the date
hereof, engage, directly or indirectly, as owner, partner, stockholder, joint
venturer consultant, or in any other capacity whatsoever become financially
interested, in any business providing clinical transtelephonic pacemaker
monitoring, cardiac event detection, Holter monitoring, defibrillator monitoring
or other clinical transtelephonic cardiac monitoring or cardiac testing services
(the "Restricted Services") anywhere in the United States.
2. The provisions of Paragraph 1 above shall not pertain to or restrict
UM Equity from:
(a) owning up to 5% of the capital stock of any corporation whose
stock is publicly traded; or
(b) continuing the present activities of Premier Research Worldwide,
Ltd., or its successor, which, among other things, provides
various Restricted Services to pharmaceutical companies, or Life
Extension Institute, Inc. (also known as Executive Health Group),
or its successor, which among other things provides various
Restricted Services in connection with physical examinations and
other related activities.
3. UM Equity agrees that the time period provided for, and the
geographical area encompassed by, the covenant contained in Paragraph 1 are
necessary and reasonable in order to protect Raytel in the conduct of the
business and the utilization of the Assets, including the goodwill relating to
the Business acquired by virtue of the Purchase Agreement.
<PAGE>
4. If any court having jurisdiction at any time hereafter shall hold any
provision or clause of this Agreement to be unreasonable as to its scope,
territory or term, and if such court in its judgment or decree shall declare or
determine a lesser scope, territory or term which such court deems to be
reasonable, then such scope, territory or term, as the case may be, shall be
deemed automatically to have been reduced or modified to conform to that
declared or determined by such court to be reasonable.
5. It is expressly agreed that monetary damages would be inadequate to
compensate Raytel for any breach by UM Equity of the covenants set forth in this
Agreement and, accordingly, that in the event of any breach or threatened breach
by UM Equity of any such covenant, Raytel will be entitled to seek and obtain
preliminary and permanent injunctive relief in any court of competent
jurisdiction, in addition to any other remedies at law or in equity to which
Raytel may be entitled.
6. This Agreement shall be construed and enforced in accordance with the
laws of the State of New Jersey, and without the aid of any canon, custom or
rule of law requiring construction against draftsmen.
7. This Agreement and the Purchase Agreement together contain the entire
agreement between the parties with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements, and understandings,
inducements or conditions, express or implied, oral or written. This Agreement
may not be changed or altered, except by an agreement, in writing, signed by the
party against whom enforcement of any waiver, change or modification, extension
or discharge is sought.
8. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
indicates is appropriate.
IN WITNESS WHEREOF, Raytel Cardiac Services, Inc. and UM Equity have
executed this Agreement the day and year first above written.
RAYTEL CARDIAC SERVICES, INC.,
a Delaware corporation
By: ______________________________
UM EQUITY CORP., a Delaware corporation
By: _______________________________
Arthur Hicks, Vice President & CFO
