<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the Quarterly period ended March 31, 1998; or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from ____________________
to ___________________.
Commission File Number: 0-27186
RAYTEL MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2787342
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2755 CAMPUS DRIVE, SUITE 200, SAN MATEO, CALIFORNIA 94403
(Address of principal executive offices) (Zip code)
(650) 349-0800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING AS OF APRIL 30, 1998
----- ---------------------------------------
<S> <C>
COMMON STOCK
($.001 PAR VALUE) 8,910,605
</TABLE>
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RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1998 and September 30, 1997...............................3
Condensed Consolidated Statements of Operations
for the three months and the six months ended
March 31, 1998 and 1997 ............................................4
Condensed Consolidated Statements of Cash Flows
for the six months ended March 31, 1998 and 1997....................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders .................12
Item 6. Exhibits and Reports on Form 8-K.....................................12
SIGNATURE.....................................................................14
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND SEPTEMBER 30, 1997
(000'S OMITTED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1998 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,860 $ 7,873
Receivables, net 35,265 30,345
Prepaid expenses and other 3,951 3,970
--------- ---------
Total current assets 47,076 42,188
Property and equipment, less accumulated
depreciation and amortization 19,901 19,712
Intangible assets, less accumulated
amortization 56,319 57,486
Other 39 35
--------- ---------
Total assets $ 123,335 $ 119,421
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and
capital lease obligations $ 2,061 $ 1,893
Accounts payable 3,554 5,110
Accrued liabilities 9,774 10,794
--------- ---------
Total current liabilities 15,389 17,797
Long-term debt and capital lease obligations, net
of current portion 38,292 34,461
Deferred liabilities 1,366 1,163
Minority interest in consolidated entities 3,753 4,101
--------- ---------
Total liabilities 58,800 57,522
--------- ---------
Stockholders' equity:
Common stock 9 9
Additional paid-in capital 61,492 61,261
Common stock to be issued 916 943
Retained earnings 4,017 1,097
--------- ---------
66,434 63,310
Less treasury stock, at cost (1,899) (1,411)
--------- ---------
Total stockholders' equity 64,535 61,899
--------- ---------
Total liabilities and stockholders' equity $ 123,335 $ 119,421
========= =========
</TABLE>
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RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
(000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Pacing, CEDS and Holter $ 11,610 $ 11,802 $ 22,962 $ 23,971
Diagnostic imaging service 5,053 4,309 9,344 8,833
Heart center, practice management
and other 10,488 4,325 20,709 8,284
-------- -------- -------- --------
Total revenues 27,151 20,436 53,015 41,088
-------- -------- -------- --------
Costs and expenses:
Operating costs 12,471 8,127 24,819 16,364
Selling, general and administrative 8,882 7,439 17,116 15,107
Depreciation and amortization 2,171 1,462 4,324 2,943
-------- -------- -------- --------
Total costs and expenses 23,524 17,028 46,259 34,414
-------- -------- -------- --------
Operating income 3,627 3,408 6,756 6,674
Interest expense 780 104 1,509 252
Other expense (income) (128) (2,591) (198) (2,676)
Minority interest 318 78 578 180
-------- -------- -------- --------
Income before income taxes 2,657 5,817 4,867 8,918
Provision for income taxes 1,063 2,327 1,947 3,567
-------- -------- -------- --------
Net income $ 1,594 $ 3,490 $ 2,920 $ 5,351
======== ======== ======== ========
Net income per share:
Basic $ .18 $ .41 $ .33 $ .64
======== ======== ======== ========
Diluted $ .17 $ .39 $ .31 $ .60
======== ======== ======== ========
Weighted average shares:
Basic 8,919 8,411 8,919 8,370
======== ======== ======== ========
Diluted 9,401 8,933 9,470 8,945
======== ======== ======== ========
</TABLE>
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RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
(000'S OMITTED)
<TABLE>
<CAPTION>
MARCH 31,
-----------------------
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,920 $ 5,351
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 4,324 2,943
Minority interest 578 180
Other, net 187 (531)
Changes in operating accounts:
Receivables, net (4,920) (2,780)
Prepaid expenses and other 19 (699)
Accounts payable (1,556) (476)
Accrued liabilities and other (1,120) 456
------- -------
Net cash provided by operating activities 432 4,444
------- -------
Cash flows from investing activities:
Capital expenditures (3,077) (1,890)
Purchase of physician practice -- (427)
Other, net (265) 579
------- -------
Net cash used in investing activities (3,342) (1,738)
------- -------
Cash flows from financing activities:
Repurchase of company stock (488) (469)
Income distributions to noncontrolling investors (865) (614)
Proceeds from (paydown) of line of credit 4,830 (1,671)
Principal repayments of debt (841) (1,226)
Other, net 261 322
------- -------
Net cash provided by (used in) financing activities 2,897 (3,658)
------- -------
Net decrease in cash and cash equivalents (13) (952)
Cash and cash equivalents at beginning of period 7,873 5,737
------- -------
Cash and cash equivalents at end of period $ 7,860 $ 4,785
======= =======
</TABLE>
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The accompanying unaudited condensed consolidated financial statements of
Raytel Medical Corporation (the "Company") have been prepared in accordance with
the instructions to Form 10-Q and do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
three months and six months ended March 31, 1998 are not necessarily indicative
of results that may be expected for the year ending September 30, 1998. For
further information, refer to the consolidated financial statements and notes
included in the Company's Annual Report on Form 10-K for the year ended
September 30, 1997.
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 128, Earnings Per Share. The adoption of this accounting standard
did not effect previously reported earnings per share.
For the three months and six months ended March 31, 1998 and 1997, basic and
diluted earnings per share are calculated as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
--------------------- --------------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
(000's omitted, except per share amounts)
BASIC EARNINGS PER SHARE:
Net income $1,594 $3,490 $2,920 $5,351
====== ====== ====== ======
Weighted average shares outstanding 8,919 8,411 8,919 8,370
====== ====== ====== ======
Per share $ .18 $ .41 $ .33 $ .64
====== ====== ====== ======
DILUTED EARNINGS PER SHARE:
Net income $1,594 $3,490 $2,920 $5,351
====== ====== ====== ======
Weighted average shares outstanding 8,919 8,411 8,919 8,370
Shares to be issued 132 136 132 134
Options 310 286 363 342
Warrants 40 100 56 99
------ ------ ------ ------
9,401 8,933 9,470 8,945
====== ====== ====== ======
Per share $ .17 $ .39 $ .31 $ .60
====== ====== ====== ======
</TABLE>
Certain options to purchase shares of common stock were outstanding during
the three months and six months ended March 31, 1998 and 1997, but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common shares
for the period.
The options outstanding and their exercise prices are as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
----------------------- ------------------------
1998 1997 1998 1997
------ ------ ------ -----
<S> <C> <C> <C> <C>
Options outstanding 109,725 557,162 55,313 553,644
Range of exercise prices $10.50 - $13.50 $11.25 - $13.50 $10.50 - $13.50 $11.25 - $13.50
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion and analysis includes a number of forward-looking
statements which reflect the Company's current views with respect to future
events and financial performance. These forward-looking statements are subject
to certain risks and uncertainties, including those discussed under "Business
Environment and Future Results" and elsewhere in this Item, that could cause
actual results to differ materially from historical results or those
anticipated. In this Item, the words "anticipates," "believes," "expects,"
"intends," "future" and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof.
OVERVIEW
The Company generates the majority of its revenues from the provision of
transtelephonic monitoring services for cardiac pacemaker patients ("Pacing"),
cardiac event detection services ("CEDS") and Holter, diagnostic imaging
services and cardiac catheterization procedures.
Following the Company's initial public offering in December 1995, the
Company has entered into a series of transactions which have expanded its heart
center and physician practice management businesses. As a result, revenue is
also being provided from: Raytel Heart Center at Granada Hills ("RHCGH")
beginning on February 1, 1996; the management of Southeast Texas Cardiology
Associates II P.A. ("SETCA") beginning on September 18, 1996; the management of
Comprehensive Cardiology Consultants, a Medical Group, Inc. ("CCMG") beginning
on November 1, 1996; and Cardiovascular Ventures, Inc. ("CVI") beginning on
August 15, 1997, which included the multi-specialty medical practice, Heart and
Family Health Institute ("HFHI").
The Company's investments in two ventures ("Ventures") that operated four
of the consolidated diagnostic imaging centers terminated during fiscal 1997.
Revenues contributed by these ventures were $245,000 and $1,038,000 for the
three months and six months ended March 31, 1997, respectively.
Under certain practice management contracts, revenues are recognized
pursuant to long-term arrangements with physician groups under which the Company
provides the physician group with a full range of services, including, but not
limited to, office space, specialized clinical and procedural facilities,
medical equipment, data processing and medical record keeping, billing and
collection procedures and services, non-physician licensed personnel, such as
nurses and technicians, as well as office staff and administrative personnel. In
the case of SETCA and CCMG, the Company's practice management revenues are
derived from the physician groups' revenues, generally as a purchased service,
except for certain physician compensation and employment benefits, which are
paid by the physician group on a priority basis. Under the above management
services arrangements, the Company's practice management revenues represent
approximately 52.0% and 62.0% of the revenues of the physician groups for the
three months ended March 31, 1998 and 1997, respectively and approximately 53.6%
and 56.1% for the six months ended March 31, 1998 and 1997, respectively. For
HFHI, the Company recognizes 100% of all medical revenue as the physicians are
employees of the Company.
On August 15, 1997, the Company acquired the stock of CVI, of New Orleans,
Louisiana. CVI manages, owns and operates cardiovascular diagnostic facilities
in Texas, Louisiana, Maryland and Florida and owns and manages a physician
clinic in Florida. Total consideration for the transaction consisted of cash and
transaction costs of approximately $16,980,000 and 500,000 shares of Raytel
Common Stock. The contingent promissory notes in the aggregate principal amount
of $820,000 were cancelled in accordance with the terms of the agreement.
On October 9, 1997, the Company announced it had entered into an agreement
with The Baptist Hospital of Southeast Texas to develop a Raytel Heart Center at
the hospital. Under the agreement, Raytel will manage the heart center, which
will provide a range of cardiovascular services, including diagnostic,
therapeutic and patient wellness programs. Among other duties, Raytel will be
responsible for the day-to-day operations of the heart center, including
administrative support, information systems management and public relations
activities. The Company expects to begin operations at Baptist Hospital during
its third quarter of fiscal 1998.
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In September 1996, the Company received a favorable administrative decision
related to a billing dispute with a New York Medicare carrier whereby it was
entitled to receive approximately $4.0 million. The time period for the
Healthcare Finance Administration ("HCFA") and the Social Security
Administration to file an appeal expired on February 10, 1997. After accounting
for administrative costs and reimbursements due to Medtronic under the terms of
the acquisition of CardioCare and a separate provision against the value of a
non-operating asset, the Company recognized other income of $2,510,000 pretax in
its second fiscal quarter ending March 31, 1997, with a positive after tax
effect of $1,506,000 or $.17 per share (the "Decision").
RESULTS OF OPERATIONS
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,
1997.
The operations of CVI are included in the Company's Condensed Consolidated
Statements of Operations since August 15, 1997, the effective date of the
Company's acquisition of CVI. Accordingly, such results are included in the
three month period ended March 31, 1998, but are not included in the three month
period ended March 31, 1997.
Revenues. Pacing, CEDS and Holter revenues decreased by $192,000, or 1.6%,
from $11,802,000 for the three months ended March 31, 1997 to $11,610,000 for
the three months ended March 31, 1998, due primarily to a slight decrease in
CEDS revenue partially offset by a slight increase in Pacing revenue. Diagnostic
imaging service revenues increased by $744,000, or 17.3%, from $4,309,000 for
the three months ended March 31, 1997 to $5,053,000 for the three months ended
March 31, 1998, due primarily to increases in revenues at certain centers due to
an increase in volume, partially offset by decreased revenues due to the
termination of a venture on June 30, 1997. Heart Center, practice management and
other revenues increased by $6,163,000, or 142.5%, from $4,325,000 for the three
months ended March 31, 1997 to $10,488,000 for the three months ended March 31,
1998 due primarily to the inclusion of revenues from CVI.
As a result of the foregoing factors, total revenues increased by
$6,715,000, or 32.9%, from $20,436,000 for the three months ended March 31, 1997
to $27,151,000 for the three months ended March 31, 1998.
Operating Expenses. Operating costs and selling, general and administrative
expenses increased by $5,787,000, or 37.2%, from $15,566,000 for the three
months ended March 31, 1997 to $21,353,000 for the three months ended March 31,
1998 due primarily to the inclusion of costs and expenses from CVI. Operating
costs and selling, general and administrative expenses as a percentage of total
revenues increased from 76.2% for the three months ended March 31, 1997 to 78.6%
for the three months ended March 31, 1998. At RHCGH, operating expenses were
slightly in excess of revenues for the three month periods ended March 31, 1998
and 1997.
Depreciation and Amortization. Depreciation and amortization expense
increased by $709,000, from $1,462,000 for the three months ended March 31, 1997
to $2,171,000 for the three months ended March 31, 1998, due primarily to the
inclusion of CVI, and increased as a percentage of revenues from 7.2% for the
three months ended March 31, 1997 to 8.0% for the three months ended March 31,
1998.
Operating Income. As a result of the foregoing factors, operating income
increased by $219,000, or 6.4%, from $3,408,000 for the three months ended March
31, 1997 to $3,627,000 for the three months ended March 31, 1998.
Interest Expense. Interest expense increased by $676,000, or 650.0%, from
$104,000 for the three months ended March 31, 1997 to $780,000 for the three
months ended March 31, 1998 due primarily to an increase in debt due to the CVI
acquisition.
Other expense (income). Other income decreased by $2,463,000, from
$2,591,000 for the three months ended March 31, 1997 to $128,000 for the three
months ended March 31, 1998 due primarily to the Decision.
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Minority interest. Minority interest increased by $240,000, or 307.7%, from
$78,000 for the three months ended March 31, 1997 to $318,000 for the three
months ended March 31, 1998 due primarily to the inclusion of CVI.
Income Taxes. The provision for income taxes decreased by $1,264,000, or
54.3%, from $2,327,000 for the three months ended March 31, 1997 to $1,063,000
for the three months ended March 31, 1998 as a result of decreased taxable
income.
Net Income. As a result of the foregoing factors, net income decreased by
$1,896,000, or 54.3%, from $3,490,000 for the three months ended March 31, 1997
to $1,594,000 for the three months ended March 31, 1998.
Six Months Ended March 31, 1998 Compared to Six Months Ended March 31,
1997.
The operations of CVI are included in the Company's Condensed Consolidated
Statements of Operations since August 15, 1997, the effective date of the
Company's acquisition of CVI. Accordingly, such results are included in the six
month period ended March 31, 1998, but are not included in the six month period
ended March 31, 1997. The results of operations from the management service
agreement with CCMG are included in the Company's Condensed Consolidated
Statements of Operations since November 1, 1996, the effective date of the
agreement. Accordingly, such results are included in the six month period ended
March 31, 1998, but are only included for five months of the six month period
ended March 31, 1997.
Revenues. Pacing, CEDS and Holter revenues decreased by $1,009,000, or
4.2%, from $23,971,000 for the six months ended March 31, 1997 to $22,962,000
for the six months ended March 31, 1998, due primarily to lower reimbursement
rates for Pacing during the October 1 to December 31, 1997 time period and from
CEDS due to a combination of competitive pressures and lower reimbursement
rates. Diagnostic imaging service revenues increased by $511,000, or 5.8%, from
$8,833,000 for the six months ended March 31, 1997 to $9,344,000 for the six
months ended March 31, 1998, due primarily to increases in revenues at certain
centers due to an increase in volume, partially offset by decreased revenues due
to the termination of two Ventures in fiscal 1997. Heart Center, practice
management and other revenues increased by $12,425,000, or 150.0%, from
$8,284,000 for the six months ended March 31, 1997 to $20,709,000 for the six
months ended March 31, 1998 due primarily to the inclusion of revenues from CVI.
As a result of the foregoing factors, total revenues increased by
$11,927,000, or 29.0%, from $41,088,000 for the six months ended March 31, 1997
to $53,015,000 for the six months ended March 31, 1998.
Operating Expenses. Operating costs and selling, general and administrative
expenses increased by $10,464,000, or 33.2%, from $31,471,000 for the six months
ended March 31, 1997 to $41,935,000 for the six months ended March 31, 1998, due
primarily to inclusion of costs and expenses from CVI. Operating costs and
selling, general and administrative expenses as a percentage of total revenues
increased from 76.6% for the six months ended March 31, 1997 to 79.1% for the
six months ended March 31, 1998. At RHCGH, operating expenses were slightly in
excess of revenues for the six month periods ended March 31, 1998 and 1997.
Depreciation and Amortization. Depreciation and amortization expense
increased by $1,381,000, from $2,943,000 for the six months ended March 31, 1997
to $4,324,000 for the six months ended March 31, 1998, due primarily to the
inclusion of CVI, and increased as a percentage of revenues from 7.2% for the
six months ended March 31, 1997 to 8.2% for the six months ended March 31, 1998.
Operating Income. As a result of the foregoing factors, operating income
increased by $82,000, or 1.2%, from $6,674,000 for the six months ended March
31, 1997 to $6,756,000 for the six months ended March 31, 1998.
Interest Expense. Interest expense increased by $1,257,000, or 498.8%, from
$252,000 for the six months ended March 31, 1997 to $1,509,000 for the six
months ended March 31, 1998 due primarily to an increase in debt due to the CVI
acquisition.
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Other expense (income). Other income decreased by $2,478,000 from
$2,676,000 for the six months ended March 31, 1997 to $198,000 for the six
months ended March 31, 1998 due primarily to the Decision.
Minority interest. Minority interest increased by $398,000, or 221.1%, from
$180,000 for the six months ended March 31, 1997 to $578,000 for the six months
ended March 31, 1998 due primarily to the inclusion of CVI.
Income Taxes. The provision for income taxes decreased by $1,620,000, or
45.4%, from $3,567,000 for the six months ended March 31, 1997 to $1,947,000 for
the six months ended March 31, 1998 as a result of decreased taxable income.
Net Income. As a result of the foregoing factors, net income decreased by
$2,431,000, or 45.4%, from $5,351,000 for the six months ended March 31, 1997 to
$2,920,000 for the six months ended March 31, 1998.
BUSINESS ENVIRONMENT AND FUTURE RESULTS
The Company's future operating results may be affected by various trends in
the healthcare industry as well as by a variety of other factors, some of which
are beyond the Company's control.
The healthcare industry is undergoing significant change as third-party
payors attempt to control the cost, utilization and delivery of healthcare
services. Substantially all of the Company's revenues are derived from Medicare,
HMOs, and commercial insurers and other third-party payors. Both government and
private payment sources have instituted cost containment measures designed to
limit payments made to healthcare providers, by reducing reimbursement rates,
limiting services covered, increasing utilization review of services,
negotiating prospective or discounted contract pricing, adopting capitation
strategies and seeking competitive bids. Although the Company's total revenues
have increased in each of the last three fiscal years, revenue of the Company's
Pacing operations during that period has been negatively impacted by Medicare
reimbursement rate reductions in certain geographic areas. Additional
reimbursement rate reductions applicable to the Company's Pacing procedures
became effective on January 1, 1996 and January 1, 1997. These reductions had a
negative effect on the Company's operating results for fiscal 1997 and the first
quarter of fiscal 1998. The Company's Pacing operations have been favorably
impacted since January 1, 1998 due to an increase in Medicare reimbursement
rates effective on that date. The Company cannot predict with any certainty
whether or when additional reductions or changes in Medicare or other
third-party reimbursement rates or policies will be implemented. There can be no
assurance that future changes, if any, will not adversely affect the amounts or
types of services that may be reimbursed to the Company, or that future
reimbursement of any service offered by the Company will be sufficient to cover
the costs and overhead allocated to such service.
From time to time Congress considers legislation to reduce Medicare and
Medicaid expenditures. Future legislation of this type could have a material
adverse effect on the Company's business, financial condition and operating
results. Governmental agencies promulgate regulations which mandate changes in
the method of delivering services which could have a material adverse effect on
the Company's business.
A key element of the Company's long-range strategy is the development and
operation of integrated heart centers and the acquisition of cardiac healthcare
providers specializing in cardiology related services and the assets of
physician practices and other businesses related to its current operations. The
success of the Company's existing and future heart centers and physician
practices will depend upon several factors, including the Company's ability to:
obtain and operate in compliance with appropriate licenses; control costs and
realize operating efficiencies; educate patients, referring physicians and
third-party payors about the benefits of such heart centers; and provide
cost-effective services that meet or exceed existing standards of care.
An element of the Company's strategy is to expand, in part, through
acquisitions and investments in complementary healthcare businesses. The
implementation of this strategy may place significant strain on the Company's
administrative, operational and financial resources and increase demands on its
systems and controls. There can be no assurances that businesses acquired by the
Company, either recently or in the future, will be
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integrated successfully and profitably into the Company's operations, that
suitable acquisition or investment opportunities will be identified, or that any
such transactions can be consummated.
Providers of healthcare services are subject to numerous federal, state and
local laws and regulations that govern various aspects of their business. There
can be no assurance that the Company will be able to obtain regulatory approvals
that may be required to expand its services or that new laws or regulations will
not be enacted or adopted that will have a material adverse effect on the
Company's business, financial condition or operating results.
The healthcare businesses in which the Company is engaged are highly
competitive. The Company expects competition to increase as a result of ongoing
consolidations and cost-containment pressures, among other factors.
The trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarterly variations in the Company's operating
results, shortfalls in such operating results from levels forecasted by
securities analysts and other events or factors. In addition, the stock market
has, from time to time, experienced extreme price and volume fluctuations that
have particularly affected the market prices of companies in the healthcare
service industries and that have often been unrelated to the operating
performance of the affected companies. Announcements of changes in reimbursement
policies of third-party payors, legislative or regulatory developments, economic
news and other external factors may have a significant impact on the market
price of healthcare stocks.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity was materially improved as a result of the
completion of the initial public offering of its Common Stock in December 1995
and its receipt of $20,400,000 in net proceeds therefrom. The Company acquired
certain assets and assumed certain liabilities of CDS in June 1996 for cash in
the amount of $14,254,000, SETCA in September 1996 for cash in the amount of
$4,010,000 and CCMG in November 1996 for cash in the amount of $427,000 and
acquired the stock of CVI in August 1997 for cash and transaction costs in the
amount of $16,980,000. At March 31, 1998, the Company had working capital of
$31,687,000, compared to $24,391,000 at September 30, 1997. At March 31, 1998,
the Company had cash and temporary cash investments of $7,860,000. At March 31,
1998, $30,791,000 was outstanding under the Company's line of credit.
The Company batch-bills Medicare insurance carriers for most cardiac
testing services performed during the first five months of each calendar year.
This practice results in a temporary build-up of accounts receivable during the
Company's second and third fiscal quarters and the collection of these
receivables primarily during the subsequent fourth fiscal quarter.
The Company has a revolving line of credit with two banks in the amount of
$45,000,000 to fund working capital needs, future acquisitions, equipment
purchases and other business needs. Amounts outstanding under the line of credit
bear interest based on a defined formula and are subject to certain covenants.
The line of credit expires in August 1999 at which time any outstanding balance
will be converted to a five-year term loan.
The Company's long-term capital requirements will depend on numerous
factors, including the rate at which the Company develops and opens new heart
centers or acquires existing heart centers, physician practices or other
businesses, if any. The Company believes that its cash and cash equivalent
balances, together with amounts available from bank borrowings and cash
generated by its operating activities, will be adequate to meet the Company's
anticipated needs for working capital and capital expenditures through fiscal
1998.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Company's annual meeting of stockholders was held on March 5, 1998.
b. The following persons nominated by management were elected to serve as
directors:
<TABLE>
<CAPTION>
Shares
------------------------
Name For Withheld
---- --- --------
<S> <C> <C>
Gene I. Miller 6,889,286 21,361
Albert J. Henry 6,889,286 21,361
David Wertheimer, M.D. 6,889,286 21,361
</TABLE>
The following directors remained in office; Richard F. Bader, F. David
Rollo, M.D., Thomas J. Fogarty, M.D, and Allan Zinberg.
Subsequently, on March 20, 1998, Albert J. Henry submitted his resignation
to devote more time to his venture capital fund and other businesses. There
was no disagreement between the Company and the director on any matter
relating to the Company's operations, policies or practices. No replacement
had been named as of the date of this filing.
c. The following additional matters voted upon at the meeting and the results
of the voting were as follows:
1. To ratify the appointment of Arthur Andersen LLP as the
independent accountants of the Company for the fiscal year ending
September 30, 1998.
<TABLE>
<CAPTION>
Shares
----------------------------------
For Against Abstain
------- ------- -------
<S> <C> <C>
6,890,358 1,779 18,510
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS:
The following exhibits are filed as a part of this Report:
<TABLE>
<CAPTION>
Exhibit
Number Title
------ -----
<S> <C>
10.53 Employment Agreement dated as of March 1,
1998 between Swapan Sen and the Registrant
10.54 Employment Agreement dated as of March 1,
1998 between F. David Rollo, M.D. and the
Registrant
</TABLE>
12
<PAGE> 13
<TABLE>
<S> <C>
10.55 Employment Agreement dated as of March 1,
1998 between Michael O. Kokesh and the
Registrant
27 Financial data schedule
</TABLE>
b. REPORTS ON FORM 8-K:
The Company filed no reports on Form 8-K during the quarter ended
March 31, 1998.
13
<PAGE> 14
SIGNATURE
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 thereunto duly authorized.
RAYTEL MEDICAL CORPORATION
Dated: May 11, 1998 By: /s/ E. Payson Smith, Jr.
--------------------------------
E. Payson Smith, Jr.
Senior Vice President and
Chief Financial Officer
(duly authorized officer and
principal financial officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Title
------ -----
<S> <C>
10.53 Employment Agreement dated as of March 1,
1998 between Swapan Sen and the Registrant
10.54 Employment Agreement dated as of March 1,
1998 between F. David Rollo, M.D. and the
Registrant
10.55 Employment Agreement dated as of March 1,
1998 between Michael O. Kokesh and the
Registrant
27 Financial data schedule
</TABLE>
<PAGE> 1
Exhibit 10.53
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated March 1, 1998 (the "Effective
Date"), is made and entered into by and between RAYTEL MEDICAL CORPORATION, a
Delaware corporation (the "Company"), and Swapan Sen (the "Employee").
RECITALS
A. The Company desires to continue the employment of the Employee as
its Senior Vice President and as the President and General Manager of Raytel
Imaging Holdings, Inc., a Delaware corporation ("RIH") and its subsidiary
corporations, affiliated medical groups and joint venture interests in various
imaging centers, and as the Company's President and General Manager of Raytel
Cardiovascular Labs, Inc., a Delaware corporation ("RCL") and its subsidiary
corporations, and the Employee desires to accept such continued employment. The
employment of the Employee by the Company pursuant to this Agreement is
hereinafter sometimes referred to as the "Employment": and
B. The Company and the Employee hereby enter into this Agreement
setting forth each and all of the terms and conditions of the Employment.
NOW THEREFORE, in consideration of the premises and the agreements,
representations and warranties, contained in this Agreement, the Company and the
Employee hereby agree as follows:
1. Duties Term and Exclusive Employment.
1.1 Duties and Responsibilities. Within the limitations
established by the Company's Bylaws, the Employee shall have each and all of the
duties and responsibilities of the Company's President and general manager of
RIH and RCL. As such, the Employee shall have responsibility and authority with
respect to the operations of the Company's diagnostic imaging centers and heart
center programs, subject to the direction of the Company's Chief Operating
Officer.
1.2 Term of Employment. The Employment hereunder shall begin
on the Effective Date and, unless earlier terminated as provided in Paragraph 3
hereof, the Employment shall continue until midnight on the first anniversary of
the Effective Date. The Employment shall be extended automatically for
additional one (1) year terms upon each anniversary of the Effective Date,
beginning on February 1, 1999, unless either party gives written notice to the
other at least thirty (30) days prior to the expiration of
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<PAGE> 2
the initial term (or, if applicable, any extended term) of his or its election
not to extend the Employment for the subsequent term.
1.3 No Other Employment or Business Activities. During the
term of the Employment, the Employee shall diligently and conscientiously devote
all of his working time and attention to discharging his duties to the Company
and shall not, without the express prior written consent of the Board of
Directors of the Company, render to any other person, corporation, partnership,
firm, company, joint venture or other entity any services of any kind for
compensation or engage in any other activity that would in any manner whatsoever
interfere with the performance of the Employee's duties on behalf of the
Company. The foregoing notwithstanding, nothing herein shall prevent the
Employee from engaging in charitable activities or activities of professional
associations, from managing any personal investments on his own personal time,
provided that such investments are not otherwise competitive with the Company.
2. Compensation. In full and complete consideration for the Employment
and each and all of the services to be rendered to the Company, and any
subsidiary of affiliate of the Company, by the Employee, the Employee shall
receive compensation as follows, except as otherwise provided in Paragraph 3
hereof:
2.1 Base Salary. The Employee shall receive from the Company a
base salary, at the initial rate of One Hundred Seventy Thousand Thirty-two and
48/100 Dollars ($170,032.48) per year, payable in periodic installments in
accordance with the Company's payroll policy as in effect from time to time. The
base salary will be reviewed at least annually during the continuation of the
Employment and may be increased (but not decreased) by the Company in the sole
discretion of the Chief Executive Officer and the Chief Operating Officer based
upon such factors as the Chief Executive Officer and the Chief Operating Officer
deems relevant, including the financial condition and operating results of RIH
and RCL. From each salary payment the Company will withhold any pay to the
proper governmental authorities any and all amounts required by law to be
withheld for federal income tax, state income tax, federal social security tax,
state disability insurance premiums, and any and all other amounts required by
law to be withheld from the Employee's salary. The Company will also deduct from
the Employee's salary payments those sums, if any, authorized by the Employee in
writing and approved by the Company. The Company will make payments and
contribution, such as unemployment insurance premiums, workers' compensation
insurance premiums and the employer's portion of federal social security tax,
which are required by law to be made by the Company for the Employee's benefit
without any deduction from the Employee's salary payments.
2.2 Bonus Awards. The Employee will be eligible for
consideration for incentive compensation ("Bonus Awards"), although no Bonus
Awards are required to be paid hereunder. All Bonus Awards shall be determined
by the Company's Chief
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<PAGE> 3
Executive Officer and the Chief Operating Officer in its sole discretion for
such fiscal periods as it shall determine and based upon such factors as it
deems relevant. Each Bonus award will be deemed to be earned at the end of the
applicable fiscal period and will be paid to the Employee within ninety (90)
days following the end of the fiscal period for which such award is made;
provided, however, that if, prior to the end of any such fiscal period, (i) the
Employment is terminated as a result of the Employee's death or disability; (ii)
the Company terminated the Employment other than For Cause pursuant to Paragraph
3.2 hereof; (iii) the Employment is terminated by the Company giving notice
pursuant to Paragraph 1.2 hereof; or (iv) the Employee terminates the Employment
for Good Reason pursuant to Paragraph 3.4 hereof, in each case, the Employee
shall be entitled to receive a prorated Bonus Award determined by multiplying
the amount of the Bonus Award, if any, that the Employee would have received had
the Employee been employed for the full fiscal period by a fraction, the
numerator of which is the number of full months of Employment completed during
the fiscal period and the denominator of which is the number of months in the
fiscal period. Any such prorated bonus award will be paid to the Employee within
ninety (90) days following the end of the fiscal period for which such award in
made.
2.3 Deferred Compensation Plan. The Employee shall be entitled
to participate in the Company's Deferred Compensation Plan so long as it is
available generally to senior executives of the Company, and in any successor
plan which may be adopted and in effect from time to time during the Employment.
2.4 Stock Options. The Employee is presently the holder of
stock options granted under the Company's 1990 Stock Option Plan, which options
are subject to separate written Option Agreements. No such Option Agreement
constitutes an agreement of employment, and no provision of any such Option
Agreement shall operate to extend the term of the Employment hereunder. During
the Employment, the Employee will be eligible for the grant of additional
options at the sole discretion of the Company's Board of Directors based upon
such factors as it deems relevant.
2.5 Vacation. The Employee shall be entitled to paid vacation
in accordance with the Company's vacation policy for senior executives, as in
effect from time to time.
2.6 Automobile Allowance. The Employee shall be entitled to
the payment of a monthly allowance for automobile expenses throughout the term
of the Employment, in the same amount and in accordance with the arrangements
currently in effect, or to such alternate automobile allowance of comparable
economic value as may be in effect from time to time.
2.7 Insurance and Other Benefits. The Employee shall be
entitled to participate in any life, medical, dental and/or disability insurance
plans, together with
-3-
<PAGE> 4
nay supplemental insurance plans, as my be offered by the Company to its
executive employees from time to time during the Employment. The Employee shall
be eligible to participate in any other fringe benefits as may be provided by
the Company to its executives, generally, during the Employment.
3. Termination of Employment. The Employment may be terminated prior to
the end of the term specified in Paragraph 1.2 hereof upon the occurrence of any
of the following:
3.1 Death and Disability. The Employment shall automatically
terminate upon the death of the Employee. The Company shall have the right, but
not the obligation, to terminate the Employment at any time following
determination of the Employee's total disability (as defined pursuant to the
Company's long-term disability insurance plan covering the Employee if any such
plan is then in effect, or otherwise as determined by the Company's Board of
Directors). In the event of the Employee's total disability, the Employee's base
salary pursuant to Paragraph 2.1 hereof, shall be continued for the lesser of:
(i) the duration of the Employee's total disability, or (ii) the waiting period
determined in the Company's long-term disability policy then in effect or (iii)
one (1) year if no such policy is then in effect. In the event of the Employee's
death or total disability, the Employee or his estate shall be entitled to
receive: (A) the Employee's base salary through the date of termination of the
Employment (as extended, in the case of total disability), plus, (B) any Bonus
Award earned by the Employee as of the date of termination of the Employment
pursuant to Paragraph 2.2 hereof but not yet paid, plus, (C) any other benefits
to which the Employee is entitled pursuant to the plans described in Paragraphs
2.3 and 2.7 hereof. In the event of a partial disability that prevents the
Employee from effectively performing his duties and responsibilities hereunder,
the parties will attempt, in good faith, to negotiate a basis upon which the
Employee may continue as an employee of the Company in a reduced capacity and at
appropriately reduced compensation. If no such arrangement is agreed upon, the
Company may elect to treat the Employee's disability as a total disability for
purposes of this Paragraph 3.1.
3.2 Termination of Employment by the Company "For Cause". The
Company shall have the unrestricted right, but not the obligation, to terminate
the Employment at any time "For Cause" in the event of the Employee's: (i)
willful and repeated neglect of his duties hereunder (other than as a result of
a physical disability not related to substance abuse), (ii) conviction of a
crime involving moral turpitude, (iii) commission of any act of fraud or
dishonesty against the Company, or (iv) breach of the Employee's obligations
hereunder or under the Proprietary Information and Inventions Agreement which,
if curable, is not cured within ten (10) days following notice thereof by the
Company. The decisions to terminate the Employment For Cause, to take other
action or to take no action in response to such occurrence shall be in the sole
and exclusive discretion of the Company. Upon any termination of the Employment
by the
-4-
<PAGE> 5
Company For Cause, the Employee shall be entitled to receive: (A) the Employee's
base salary through the date of such termination, plus (B) any bonus Award
earned by the Employee as of the date of termination of the Employment pursuant
to Paragraph 2.2 hereof but not yet paid, plus any other benefits to which the
Employee is entitled pursuant to the plans described in Paragraphs 2.3 and 2.7
hereof.
3.3 Other Termination of Employment by the Company. The
Company may terminate the Employment hereunder at any time for any reason.
However, if the Employment is terminated by the Company for any reason other
than pursuant to Paragraphs 3.1 or 3.2 hereof (including a termination pursuant
to notice given under Section 1.2 hereof), the Employee shall be entitled to
receive his base salary through the date of termination of the Employment, plus
an amount (the "Severance Payment") equal to his then current base salary for a
period of twenty-four (24) months following the date of termination (the
"Severance Period"). The Severance Payment shall be paid in periodic
installments during the Severance Period, in accordance with the Company's
payroll policy as in effect from time to time, and shall be in lieu of any other
severance pay or other benefit to which the Employee might otherwise be
entitled. In addition, in the event of such a termination, the Company will, to
the extent its plans permit, continue to provide to the Employee coverage under
its life, medical, dental and/or disability plans, as in effect on the date of
termination, during the Severance Period. In the event that the Company may not
continue to provide the benefit of any such plans, the Severance Payment shall
be increased by an amount equal to the Employee's cost of providing such
discontinued coverage for himself and his dependents during the Severance
Period, assuming, where applicable, the timely compliance by the Employee with
any notification procedure required in order to obtain continuation coverage at
group rates. The Employee shall also be entitled, upon any such termination, to
receive: (A) any Bonus Award earned by the Employee as of the date of
termination of the Employment pursuant to Paragraph 2.2 hereof but not yet paid,
plus, (B) any other benefits to which the Employee is entitled pursuant to the
plans described in paragraphs 2.3 and 2.7 hereof.
3.4 Termination of Employment by the Employee for "Good
Reason". The Employee shall have the right to terminate the Employment at any
time for "Good Reason" in the event that, other than pursuant to Paragraphs 3.1
or 3.2 hereof, the Company, without the Employee's prior written consent, (i)
materially alters or reduces the Employee's duties, responsibilities and status
with the Company from those which exist as of the Effective Date; (ii) assigns
the Employee duties which are inconsistent with the Employee's position as Vice
President and General Manager of the Company; (iii) materially breaches the
terms of this Agreement in respect to the payment of compensation or benefits or
in any other material respect and such breach is not cured within ten (10) days
after notice thereof; (iv) requires the Employee , as a condition to the
Employment, to be based more than one hundred (100) miles form the location
where he is based as of the Effective Date; or (v) required the Employee , as a
condition to the
-5-
<PAGE> 6
Employment, to perform illegal or fraudulent acts or omissions. If the Employee
voluntarily terminates the Employment for Good Reason pursuant to this Paragraph
3.4, the Employee shall be entitled to receive the payments and other benefits
specified in paragraph 3.3 hereof with respect to a termination be the Company
other than For Cause.
3.5 Termination of Employment by the Employee Without "Good
Reason". Upon any voluntary termination of the Employment by the Employee, other
than for Good Reason pursuant to Paragraph 3.4 hereof, the Employee shall be
entitled to receive (i) the Employee's base salary through the date of such
termination, plus (ii) any Bonus award earned by the Employee as of the date of
termination of the Employment pursuant to Paragraph 2.2 hereof but not yet paid,
plus (iii) any other benefits to which the Employee is entitled pursuant to the
plans described in Paragraphs 2.3 and 2.7 hereof.
4. Expenses. The Company will reimburse the Employee for those
customary, ordinary and necessary business expenses incurred by him in the
performance of his duties and activities on behalf of the Company. Such expenses
will be reimbursed upon presentation by the Employee of appropriate
documentation to substantiate such expenses pursuant to the policies and
procedures of the Company governing reimbursement of business expenses to its
executives.
5. Conflicts of Interest. The Employee covenants, warrants and
represents to the Company that he has the full right and authority to enter into
the Employment and this Agreement, that he has no agreement, duty, commitment or
responsibility of any kind or nature whatsoever with or to any other person,
corporation, partnership, firm, company, joint venture or other entity which
would conflict in any manner whatsoever with any of his duties, obligations or
responsibilities to the Company pursuant to the Employment and/or this
Agreement. As a condition of the Employment and of the Company's entering into
this Agreement, the Company requires that the Employee not, and the Employee
hereby specifically agrees, covenants, warrants and represents that during the
Employment he will not, without the Company's express prior written consent,
accept any employment, contractual or other relationship of any kind or nature
whatsoever or engage in any association or dealing of any kind or nature
whatsoever with any person, corporation, partnership, firm, company, joint
venture, or other entity in competition with any actual or proposed business of
the Company; provided that nothing herein shall prohibit Employee from owning up
to five percent (5%) of the outstanding shares of any class of equity securities
of a corporation engaged in any such prohibited activity whose securities are
listed on a national securities exchange or quoted daily in the over-the-counter
listings of The Wall Street Journal.
6. Duties of the Employee After Any Notice of Termination of the
Employment. Following any notice of termination of the Employment, the Employee
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<PAGE> 7
shall fully cooperate with the Company in all matters relating to the winding up
of the Employee's work on behalf of the Company and the orderly transfer of all
pending work and of the Employee's duties and responsibilities to such other
person or persons as may be designated by the Company in its sole discretion.
Upon any termination of the Employment, the Employee will immediately deliver to
the Company any and all of the Company's property of any kind or nature
whatsoever in the Employee's possession, custody or control, including, without
limitation any and all Confidential Information as that term is defined in the
Proprietary Information and Inventions Agreement.
7. No Solicitation. During the Employment and for two (2) years
following any termination of the Employment, the Employee will not, without
having received prior written permission of the Company's Chief Executive
Officer and the Chief Operating Officer to do so, directly or indirectly, on his
own behalf or in the service of others, interfere with or raid the officers,
employees, consultants, agents and/or independent contractors of the Company or
in any manner attempt to persuade any such person to discontinue any
relationship with the Company. The Employee and the Company confirm that this
Paragraph 7 is reasonable and necessary for the protection of the trade secrets
and proprietary information of the Company.
8. Arbitration. Except as otherwise expressly provided in this
Agreement, any and all controversies, disputes and/or claims in any manner
arising out of or relating to this Agreement or the Employment shall be settled
solely be arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Such arbitration proceeding shall take place
in the state and county of the Company's office where the Employee is based.
Judgment on any decision rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Each party shall bear its own attorney's fees and
expenses and other costs in any arbitration proceeding. All administrative fees
and the fee of the arbitrator shall be borne by the parties equally. Except as
otherwise expressly provided in this Agreement, the arbitration provisions set
forth above in this Paragraph 8 are intended by the Employee and by the Company
to be absolutely exclusive for all purposes whatsoever, and applicable to each
and every controversy, dispute and/or claim in any manner arising out o f or
relating to this Agreement, and the Employment, the meaning, application and/or
interpretation of this Agreement, any breach or claimed breach thereof and/or
any voluntary or involuntary termination of this Agreement with or without
cause, including, without limitation, any such controversy, dispute and/or claim
which, if pursued through any state or federal court or administrative agency,
would arise at law, in equity and/or pursuant to statutory, regulatory and/or
common law rules, regardless of whether such dispute, controversy and/or claim
would arise in and/or from contract, tort or any other legal and/or equitable
theory or basis. Notwithstanding anything to the contrary contained in this
Paragraph 8, the Company shall at all times have and retain the full, complete
and unrestricted right to immediate and permanent injunctive and other relief as
provided in Paragraph 9 below.
-7-
<PAGE> 8
9. The Company's Right to Immediate Injunctive Relief. The Employee
recognizes, acknowledges and agrees that any breach or any threatened breach of
any Paragraph, term, provision or covenant of any of Paragraphs 1.4, 5, 6, 7 or
8 of this Agreement or of the Proprietary Information and Inventions Agreement
would cause irreparable injury to the Company which could not be adequately
compensable in monetary damages and that the remedy at law for any such breach
will be entirely insufficient and inadequate to protect the Company's legitimate
interests. Therefore, the Employee specifically recognizes, acknowledges and
agrees that the Company shall at any and all times be and remain fully entitled
to seek and obtain immediate temporary, preliminary and permanent injunctive
relief for any such breach or threatened breach from any court of competent
jurisdiction. The prevailing party in any action instituted pursuant to this
paragraph 8 shall be entitled to recover form the other party its reasonable
attorneys' fees and other expenses incurred in such litigation.
10. Survival of Certain Provisions of this Agreement. Except as may
otherwise be provided herein, each and all of the terms provisions and covenants
of each of paragraphs 1,4, 6, 7, 8, 9, 10 and 11 of this Agreement shall, for
any and all purposes whatsoever, survive any termination oft he Employment,
regardless of whether such termination is by the Employee, the Company, by
expiration or otherwise.
11. General.
11.1 Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of and be binding upon the Company, the Employee and
each and all of their respective heirs, legal representatives, successors and
assigns. The duties, responsibilities and obligations of the Employee under this
Agreement shall be personal and not assignable or delegable by the Employee in
nay manner whatsoever to any person, corporation, partnerships, firm, company,
joint venture or other entity. The Employee may not assign, transfer, convey,
mortgage, pledge or in any other manner encumber the compensation or other
benefits to be received by him or nay rights which he may have pursuant to the
terms and provisions of this Agreement.
11.2 Waiver. No waiver of nay breach of any warranty,
representation, agreement, promise, covenant, paragraph, term or provision of
this Agreement shall be deemed to be a waiver of any proceeding or succeeding
breach of the same or any other warranty, representation, agreement, promise,
covenant, paragraph, term and/or provision of this Agreement. No extension of
the time for the performance of any obligation or other act required or
permitted by this Agreement shall be deemed to be an extension of the time of
the performance of any other obligation or any other act required or permitted
by this Agreement.
11.3 Sole and Entire Agreement. This Agreement, and the other
agreements referred to herein, including the Company's benefit plans, are the
sole,
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<PAGE> 9
complete and entire contract, agreement and understanding between the Company
and the Employee concerning the Employment, the terms and conditions of the
Employment, the duration of the Employment, the termination of the Employment
and the compensation and benefits to be paid and provided by the Company to the
Employee pursuant to the Employment. Except as otherwise provided herein, the
Agreement supersedes any and all prior contracts, agreements, plans, agreements
in principle, correspondence, letters of intent, understandings, and
negotiations, whether oral or written, concerning the Employment, the terms and
conditions of the Employment, the duration of the Employment, the termination of
the Employment and the compensation and benefits to be paid by the Company to
the Employee pursuant to the Employment.
11.4 Amendments. No amendment, modification, waiver, or
consent relating to this Agreement will be effective unless and until it is
embodied in a written document signed by the Company and by the Employee.
11.5 Originals. The Agreement may be executed by the Company
and by the Employee in counterparts, each of which shall be deemed an original
and which together shall constitute one instrument.
11.6 Headings. Each and all of the headings contained in this
Agreement are for reference purposes only and shall not in any manner whatsoever
affect the construction or interpretation of this Agreement or be deemed a part
of this Agreement for any purpose whatsoever.
11.7 Savings Provision. To the extent that any provisions of
this Agreement or any Paragraph, term, provision, sentence, phrase, clause or
word of this Agreement shall be found to be illegal or unenforceable for any
reason, such Paragraph, term, provision, sentence, phrase, clause or word shall
be modified or deleted in such a manner as to make this Agreement, as so
modified, legal and enforceable under applicable laws. The remainder of this
Agreement shall continue in full force and effect.
11.8 Applicable Law. This Agreement and each and every
provision of this Agreement shall be interpreted solely pursuant to the internal
laws of the State of California without regard to any conflicts of law
principles thereof.
11.9 Construction. The language of this Agreement and of each
and every paragraph, term and provisions of this Agreement shall, in all cases,
for any and all purposes, and in any and all circumstances whatsoever be
construed as a whole, according to its fair meaning, not strictly for or against
the Employee or the Company, and with no regard whatsoever to the identity or
status of any person or persons who drafted all or any portion of this
Agreement.
-9-
<PAGE> 10
11.10 Notices. Any notices to be given pursuant to this
Agreement by either party to the other party may be effected by personal
delivery or by registered or certified mail, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the addresses
stated below, but each party may change its or his address by written notice to
the other in accordance with this Paragraph 11.10. Notices delivered personally
shall be deemed received on the date of delivery. Notices delivered by mail
shall be deemed received on the third business day after the mailing thereof.
Mailed notices to the Employee shall be addressed as follows:
Swapan Sen
63 Bunning Drive
Voorhees, New Jersey 08043
Mailed notices to the Company shall be addressed as follows:
Raytel Medical Corporation
2755 Campus Drive, Suite 200
San Mateo, California 94403-2515
Attention: Chief Executive Officer
IN WITNESS THEREOF, the Company and the Employee have each duly
executed this Agreement as of the date first set forth above.
RAYTEL MEDICAL CORPORATION EMPLOYEE
By: /s /Richard F. Bader /s/ Swapan Sen
---------------------------- -----------------------
Richard F. Bader Swapan Sen
Its: Chairman and Chief Executive Officer
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<PAGE> 1
Exhibit 10.54
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated March 1, 1998 (the "Effective
Date"), is made and entered into by and between RAYTEL MEDICAL CORPORATION, a
Delaware corporation (the "Company"), and F. David Rollo (the "Employee").
RECITALS
A. The Company desires to continue the employment of the Employee as
its Senior Vice President and Executive Medical Director and its subsidiary
corporations, affiliated medical groups and joint venture interests in various
imaging centers, heart programs and diagnostic cardiac catheterization
laboratories, and the Employee desires to accept such continued employment. The
employment of the Employee by the Company pursuant to this Agreement is
hereinafter sometimes referred to as the "Employment"; and
B. The Company and the Employee hereby enter into this Agreement
setting forth each and all of the terms and conditions of the Employment.
NOW THEREFORE, in consideration of the premises and the agreements,
representations and warranties, contained in this Agreement, the Company and the
Employee hereby agree as follows:
1. Duties Term and Exclusive Employment.
1.1 Duties and Responsibilities. Within the limitations
established by the Company's Bylaws, the Employee shall have each and all of the
duties and responsibilities of the Company's Senior Vice President and Executive
Medical Director. As such, the Employee shall have responsibility and authority
with respect to the operations of the Company's contract research organization,
clinical aspects of the heart centers and physician practice management
services, subject to the direction of the Company's Chief Executive Officer.
1.2 Term of Employment. The Employment hereunder shall begin
on the Effective Date and, unless earlier terminated as provided in Paragraph 3
hereof, the Employment shall continue until midnight on the first anniversary of
the Effective Date. The Employment shall be extended automatically for
additional one (1) year terms upon each anniversary of the Effective Date,
beginning on March 1, 1999, unless either party gives written notice to the
other at least thirty (30) days prior to the expiration of the initial term (or,
if applicable, any extended term) of his or its election not to extend the
Employment for the subsequent term.
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1.3 No Other Employment or Business Activities. During the
term of the Employment, the Employee shall diligently and conscientiously devote
all of his working time and attention to discharging his duties to the Company
and shall not, without the express prior written consent of the Board of
Directors of the Company, render to any other person, corporation, partnership,
firm, company, joint venture or other entity any services of any kind for
compensation or engage in any other activity that would in any manner whatsoever
interfere with the performance of the Employee's duties on behalf of the
Company. The foregoing notwithstanding, nothing herein shall prevent the
Employee from engaging in charitable activities or activities of professional
associations, from managing any personal investments on his own personal time,
provided that such investments are not otherwise competitive with the Company.
1.4 Proprietary Information and Inventions Agreement. The
Employee acknowledges his obligations under the Employment Agreement Regarding
Proprietary Information and Inventions of even date herewith, attached hereto as
Appendix A (the "Proprietary Information and Inventions Agreement"), and agrees
to be bound by the provisions thereof.
1.5 Indemnity Agreement. The parties acknowledge their
respective obligations under the Indemnity Agreement of even date herewith,
attached hereto as Appendix B (the "Indemnity Agreement"), and agree to be bound
by the provisions thereof.
2. Compensation. In full and complete consideration for the Employment
and each and all of the services to be rendered to the Company, and any
subsidiary of affiliate of the Company, by the Employee, the Employee shall
receive compensation as follows, except as otherwise provided in Paragraph 3
hereof:
2.1 Base Salary. The Employee shall receive from the Company a
base salary, at the initial rate of Two Hundred Fifty Thousand Dollars
($250,000) per year, payable in periodic installments in accordance with the
Company's payroll policy as in effect from time to time. The base salary will be
reviewed at least annually during the continuation of the Employment and may be
increased (but not decreased) by the Company in the sole discretion of the Chief
Executive Officer based upon such factors as the Chief Executive Officer deems
relevant, including the clinical programs of the heart centers and physician
practice management services. From each salary payment the Company will withhold
any pay to the proper governmental authorities any and all amounts required by
law to be withheld for federal income tax, state income tax, federal social
security tax, state disability insurance premiums, and any and all other amounts
required by law to be withheld from the Employee's salary. The Company will also
deduct from the Employee's salary payments those sums, if any, authorized by the
Employee in writing and approved by the Company. The Company will make payments
and contribution, such as unemployment insurance premiums, workers' compensation
insurance premiums and the employer's portion of federal social security tax,
which are
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required by law to be made by the Company for the Employee's benefit without any
deduction from the Employee's salary payments.
2.2 Bonus Awards. The Employee will be eligible for
consideration for incentive compensation ("Bonus Awards"), although no Bonus
Awards are required to be paid hereunder. All Bonus Awards shall be determined
by the Company's Chief Executive Officer in its sole discretion for such fiscal
periods as it shall determine and based upon such factors as it deems relevant.
Each Bonus award will be deemed to be earned at the end of the applicable fiscal
period and will be paid to the Employee within ninety (90) days following the
end of the fiscal period for which such award is made; provided, however, that
if, prior to the end of any such fiscal period, (i) the Employment is terminated
as a result of the Employee's death or disability; (ii) the Company terminated
the Employment other than For Cause pursuant to Paragraph 3.2 hereof; (iii) the
Employment is terminated by the Company giving notice pursuant to Paragraph 1.2
hereof; or (iv) the Employee terminates the Employment for Good Reason pursuant
to Paragraph 3.4 hereof, in each case, the Employee shall be entitled to receive
a prorated Bonus Award determined by multiplying the amount of the Bonus Award,
if any, that the Employee would have received had the Employee been employed for
the full fiscal period by a fraction, the numerator of which is the number of
full months of Employment completed during the fiscal period and the denominator
of which is the number of months in the fiscal period. Any such prorated bonus
award will be paid to the Employee within ninety (90) days following the end of
the fiscal period for which such award in made.
2.3 Deferred Compensation Plan. The Employee shall be entitled
to participate in the Company's Deferred Compensation Plan so long as it is
available generally to senior executives of the Company, and in any successor
plan which may be adopted and in effect from time to time during the Employment.
2.4 Stock Options. The Employee is presently the holder of
stock options granted under the Company's 1990 Stock Option Plan, which options
are subject to separate written Option Agreements. No such Option Agreement
constitutes an agreement of employment, and no provision of any such Option
Agreement shall operate to extend the term of the Employment hereunder. During
the Employment, the Employee will be eligible for the grant of additional
options at the sole discretion of the Company's Board of Directors based upon
such factors as it deems relevant.
2.5 Vacation. The Employee shall be entitled to paid vacation
in accordance with the Company's vacation policy for senior executives, as in
effect from time to time.
2.6 Automobile Allowance. The Employee shall be entitled to
the payment of a monthly allowance for automobile expenses throughout the term
of the Employment, in the same amount and in accordance with the arrangements
currently in
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effect, or to such alternate automobile allowance of comparable economic value
as may be in effect from time to time.
2.7 Insurance and Other Benefits. The Employee shall be
entitled to participate in any life, medical, dental and/or disability insurance
plans, together with nay supplemental insurance plans, as my be offered by the
Company to its executive employees from time to time during the Employment. The
Employee shall be eligible to participate in any other fringe benefits as may be
provided by the Company to its executives, generally, during the Employment.
3. Termination of Employment. The Employment may be terminated prior to
the end of the term specified in Paragraph 1.2 hereof upon the occurrence of any
of the following:
3.1 Death and Disability. The Employment shall automatically
terminate upon the death of the Employee. The Company shall have the right, but
not the obligation, to terminate the Employment at any time following
determination of the Employee's total disability (as defined pursuant to the
Company's long-term disability insurance plan covering the Employee if any such
plan is then in effect, or otherwise as determined by the Company's Board of
Directors). In the event of the Employee's total disability, the Employee's base
salary pursuant to Paragraph 2.1 hereof, shall be continued for the lesser of:
(i) the duration of the Employee's total disability, or (ii) the waiting period
determined in the Company's long-term disability policy then in effect or (iii)
one (1) year if no such policy is then in effect. In the event of the Employee's
death or total disability, the Employee or his estate shall be entitled to
receive: (A) the Employee's base salary through the date of termination of the
Employment (as extended, in the case of total disability), plus, (B) any Bonus
Award earned by the Employee as of the date of termination of the Employment
pursuant to Paragraph 2.2 hereof but not yet paid, plus, (C) any other benefits
to which the Employee is entitled pursuant to the plans described in Paragraphs
2.3 and 2.7 hereof. In the event of a partial disability that prevents the
Employee from effectively performing his duties and responsibilities hereunder,
the parties will attempt, in good faith, to negotiate a basis upon which the
Employee may continue as an employee of the Company in a reduced capacity and at
appropriately reduced compensation. If no such arrangement is agreed upon, the
Company may elect to treat the Employee's disability as a total disability for
purposes of this Paragraph 3.1.
3.2 Termination of Employment by the Company "For Cause". The
Company shall have the unrestricted right, but not the obligation, to terminate
the Employment at any time "For Cause" in the event of the Employee's: (i)
willful and repeated neglect of his duties hereunder (other than as a result of
a physical disability not related to substance abuse), (ii) conviction of a
crime involving moral turpitude, (iii) commission of any act of fraud or
dishonesty against the Company, or (iv) breach of the Employee's obligations
hereunder or under the Proprietary Information and Inventions Agreement which,
if curable, is not cured within ten (10) days following
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notice thereof by the Company. The decisions to terminate the Employment For
Cause, to take other action or to take no action in response to such occurrence
shall be in the sole and exclusive discretion of the Company. Upon any
termination of the Employment by the Company For Cause, the Employee shall be
entitled to receive: (A) the Employee's base salary through the date of such
termination, plus (B) any bonus Award earned by the Employee as of the date of
termination of the Employment pursuant to Paragraph 2.2 hereof but not yet paid,
plus any other benefits to which the Employee is entitled pursuant to the plans
described in Paragraphs 2.3 and 2.7 hereof.
3.3 Other Termination of Employment by the Company. The
Company may terminate the Employment hereunder at any time for any reason.
However, if the Employment is terminated by the Company for any reason other
than pursuant to Paragraphs 3.1 or 3.2 hereof (including a termination pursuant
to notice given under Section 1.2 hereof), the Employee shall be entitled to
receive his base salary through the date of termination of the Employment, plus
an amount (the "Severance Payment") equal to his then current base salary for a
period of twelve (12) months following the date of termination (the "Severance
Period"). The Severance Payment shall be paid in periodic installments during
the Severance Period, in accordance with the Company's payroll policy as in
effect from time to time, and shall be in lieu of any other severance pay or
other benefit to which the Employee might otherwise be entitled. In addition, in
the event of such a termination, the Company will, to the extent its plans
permit, continue to provide to the Employee coverage under its life, medical,
dental and/or disability plans, as in effect on the date of termination, during
the Severance Period. In the event that the Company may not continue to provide
the benefit of any such plans, the Severance Payment shall be increased by an
amount equal to the Employee's cost of providing such discontinued coverage for
himself and his dependents during the Severance Period, assuming, where
applicable, the timely compliance by the Employee with any notification
procedure required in order to obtain continuation coverage at group rates. The
Employee shall also be entitled, upon any such termination, to receive: (A) any
Bonus Award earned by the Employee as of the date of termination of the
Employment pursuant to Paragraph 2.2 hereof but not yet paid, plus, (B) any
other benefits to which the Employee is entitled pursuant to the plans described
in paragraphs 2.3 and 2.7 hereof.
3.4 Termination of Employment by the Employee for "Good
Reason". The Employee shall have the right to terminate the Employment at any
time for "Good Reason" in the event that, other than pursuant to Paragraphs 3.1
or 3.2 hereof, the Company, without the Employee's prior written consent, (i)
materially alters or reduces the Employee's duties, responsibilities and status
with the Company from those which exist as of the Effective Date; (ii)
materially breaches the terms of this Agreement in respect to the payment of
compensation or benefits or in any other material respect and such breach is not
cured within ten (10) days after notice thereof; (iii) requires the Employee ,
as a condition to the Employment, to be based more than one hundred (100) miles
form the location where he is based as of the Effective Date; or (iv) required
the Employee , as a condition to the Employment, to perform illegal or
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<PAGE> 6
fraudulent acts or omissions. If the Employee voluntarily terminates the
Employment for Good Reason pursuant to this Paragraph 3.4, the Employee shall be
entitled to receive the payments and other benefits specified in paragraph 3.3
hereof with respect to a termination be the Company other than For Cause.
3.5 Termination of Employment by the Employee Without "Good
Reason". Upon any voluntary termination of the Employment by the Employee, other
than for Good Reason pursuant to Paragraph 3.4 hereof, the Employee shall be
entitled to receive (i) the Employee's base salary through the date of such
termination, plus (ii) any Bonus award earned by the Employee as of the date of
termination of the Employment pursuant to Paragraph 2.2 hereof but not yet paid,
plus (iii) any other benefits to which the Employee is entitled pursuant to the
plans described in Paragraphs 2.3 and 2.7 hereof.
4. Expenses. The Company will reimburse the Employee for those
customary, ordinary and necessary business expenses incurred by him in the
performance of his duties and activities on behalf of the Company. Such expenses
will be reimbursed upon presentation by the Employee of appropriate
documentation to substantiate such expenses pursuant to the policies and
procedures of the Company governing reimbursement of business expenses to its
executives.
5. Conflicts of Interest. The Employee covenants, warrants and
represents to the Company that he has the full right and authority to enter into
the Employment and this Agreement, that he has no agreement, duty, commitment or
responsibility of any kind or nature whatsoever with or to any other person,
corporation, partnership, firm, company, joint venture or other entity which
would conflict in any manner whatsoever with any of his duties, obligations or
responsibilities to the Company pursuant to the Employment and/or this
Agreement. As a condition of the Employment and of the Company's entering into
this Agreement, the Company requires that the Employee not, and the Employee
hereby specifically agrees, covenants, warrants and represents that during the
Employment he will not, without the Company's express prior written consent,
accept any employment, contractual or other relationship of any kind or nature
whatsoever or engage in any association or dealing of any kind or nature
whatsoever with any person, corporation, partnership, firm, company, joint
venture, or other entity in competition with any actual or proposed business of
the Company; provided that nothing herein shall prohibit Employee from owning up
to five percent (5%) of the outstanding shares of any class of equity securities
of a corporation engaged in any such prohibited activity whose securities are
listed on a national securities exchange or quoted daily in the over-the-counter
listings of The Wall Street Journal.
6. Duties of the Employee After Any Notice of Termination of the
Employment. Following any notice of termination of the Employment, the Employee
shall fully cooperate with the Company in all matters relating to the winding up
of the Employee's work on behalf of the Company and the orderly transfer of all
pending work and of the Employee's duties and responsibilities to such other
person or persons
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as may be designated by the Company in its sole discretion. Upon any termination
of the Employment, the Employee will immediately deliver to the Company any and
all of the Company's property of any kind or nature whatsoever in the Employee's
possession, custody or control, including, without limitation any and all
Confidential Information as that term is defined in the Proprietary Information
and Inventions Agreement.
7. No Solicitation. During the Employment and for two (2) years
following any termination of the Employment, the Employee will not, without
having received prior written permission of the Company's Chief Executive
Officer to do so, directly or indirectly, on his own behalf or in the service of
others, interfere with or raid the officers, employees, consultants, agents
and/or independent contractors of the Company or in any manner attempt to
persuade any such person to discontinue any relationship with the Company. The
Employee and the Company confirm that this Paragraph 7 is reasonable and
necessary for the protection of the trade secrets and proprietary information of
the Company.
8. Arbitration. Except as otherwise expressly provided in this
Agreement, any and all controversies, disputes and/or claims in any manner
arising out of or relating to this Agreement or the Employment shall be settled
solely be arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Such arbitration proceeding shall take place
in the state and county of the Company's office where the Employee is based.
Judgment on any decision rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Each party shall bear its own attorney's fees and
expenses and other costs in any arbitration proceeding. All administrative fees
and the fee of the arbitrator shall be borne by the parties equally. Except as
otherwise expressly provided in this Agreement, the arbitration provisions set
forth above in this Paragraph 8 are intended by the Employee and by the Company
to be absolutely exclusive for all purposes whatsoever, and applicable to each
and every controversy, dispute and/or claim in any manner arising out o f or
relating to this Agreement, and the Employment, the meaning, application and/or
interpretation of this Agreement, any breach or claimed breach thereof and/or
any voluntary or involuntary termination of this Agreement with or without
cause, including, without limitation, any such controversy, dispute and/or claim
which, if pursued through any state or federal court or administrative agency,
would arise at law, in equity and/or pursuant to statutory, regulatory and/or
common law rules, regardless of whether such dispute, controversy and/or claim
would arise in and/or from contract, tort or any other legal and/or equitable
theory or basis. Notwithstanding anything to the contrary contained in this
Paragraph 8, the Company shall at all times have and retain the full, complete
and unrestricted right to immediate and permanent injunctive and other relief as
provided in Paragraph 9 below.
9. The Company's Right to Immediate Injunctive Relief. The Employee
recognizes, acknowledges and agrees that any breach or any threatened breach of
any Paragraph, term, provision or covenant of any of Paragraphs 1.4, 5, 6, 7 or
8 of this
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Agreement or of the Proprietary Information and Inventions Agreement would cause
irreparable injury to the Company which could not be adequately compensable in
monetary damages and that the remedy at law for any such breach will be entirely
insufficient and inadequate to protect the Company's legitimate interests.
Therefore, the Employee specifically recognizes, acknowledges and agrees that
the Company shall at any and all times be and remain fully entitled to seek and
obtain immediate temporary, preliminary and permanent injunctive relief for any
such breach or threatened breach from any court of competent jurisdiction. The
prevailing party in any action instituted pursuant to this paragraph 8 shall be
entitled to recover form the other party its reasonable attorneys' fees and
other expenses incurred in such litigation.
10. Survival of Certain Provisions of this Agreement. Except as may
otherwise be provided herein, each and all of the terms provisions and covenants
of each of paragraphs 1,4, 6, 7, 8, 9, 10 and 11 of this Agreement shall, for
any and all purposes whatsoever, survive any termination of the Employment,
regardless of whether such termination is by the Employee, the Company, by
expiration or otherwise.
11. General.
11.1 Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of and be binding upon the Company, the Employee and
each and all of their respective heirs, legal representatives, successors and
assigns. The duties, responsibilities and obligations of the Employee under this
Agreement shall be personal and not assignable or delegable by the Employee in
nay manner whatsoever to any person, corporation, partnerships, firm, company,
joint venture or other entity. The Employee may not assign, transfer, convey,
mortgage, pledge or in any other manner encumber the compensation or other
benefits to be received by him or nay rights which he may have pursuant to the
terms and provisions of this Agreement.
11.2 Waiver. No waiver of nay breach of any warranty,
representation, agreement, promise, covenant, paragraph, term or provision of
this Agreement shall be deemed to be a waiver of any proceeding or succeeding
breach of the same or any other warranty, representation, agreement, promise,
covenant, paragraph, term and/or provision of this Agreement. No extension of
the time for the performance of any obligation or other act required or
permitted by this Agreement shall be deemed to be an extension of the time of
the performance of any other obligation or any other act required or permitted
by this Agreement.
11.3 Sole and Entire Agreement. This Agreement, and the other
agreements referred to herein, including the Company's benefit plans, are the
sole, complete and entire contract, agreement and understanding between the
Company and the Employee concerning the Employment, the terms and conditions of
the Employment, the duration of the Employment, the termination of the
Employment and the compensation and benefits to be paid and provided by the
Company to the
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Employee pursuant to the Employment. Except as otherwise provided herein, the
Agreement supersedes any and all prior contracts, agreements, plans, agreements
in principle, correspondence, letters of intent, understandings, and
negotiations, whether oral or written, concerning the Employment, the terms and
conditions of the Employment, the duration of the Employment, the termination of
the Employment and the compensation and benefits to be paid by the Company to
the Employee pursuant to the Employment.
11.4 Amendments. No amendment, modification, waiver, or
consent relating to this Agreement will be effective unless and until it is
embodied in a written document signed by the Company and by the Employee.
11.5 Originals. The Agreement may be executed by the Company
and by the Employee in counterparts, each of which shall be deemed an original
and which together shall constitute one instrument.
11.6 Headings. Each and all of the headings contained in this
Agreement are for reference purposes only and shall not in any manner whatsoever
affect the construction or interpretation of this Agreement or be deemed a part
of this Agreement for any purpose whatsoever.
11.7 Savings Provision. To the extent that any provisions of
this Agreement or any Paragraph, term, provision, sentence, phrase, clause or
word of this Agreement shall be found to be illegal or unenforceable for any
reason, such Paragraph, term, provision, sentence, phrase, clause or word shall
be modified or deleted in such a manner as to make this Agreement, as so
modified, legal and enforceable under applicable laws. The remainder of this
Agreement shall continue in full force and effect.
11.8 Applicable Law. This Agreement and each and every
provision of this Agreement shall be interpreted solely pursuant to the internal
laws of the State of California without regard to any conflicts of law
principles thereof.
11.9 Construction. The language of this Agreement and of each
and every paragraph, term and provisions of this Agreement shall, in all cases,
for any and all purposes, and in any and all circumstances whatsoever be
construed as a whole, according to its fair meaning, not strictly for or against
the Employee or the Company, and with no regard whatsoever to the identity or
status of any person or persons who drafted all or any portion of this
Agreement.
11.10 Notices. Any notices to be given pursuant to this
Agreement by either party to the other party may be effected by personal
delivery or by registered or certified mail, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the addresses
stated below, but each party may change its or his address by written notice to
the other in accordance with this Paragraph 11.10.
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Notices delivered personally shall be deemed received on the date of delivery.
Notices delivered by mail shall be deemed received on the third business day
after the mailing thereof.
Mailed notices to the Employee shall be addressed as follows:
F. David Rollo, M.D.
15735 Peach Hill Road
Saratoga, CA 95070
Mailed notices to the Company shall be addressed as follows:
Raytel Medical Corporation
2755 Campus Drive, Suite 200
San Mateo, California 94403-2515
Attention: Chief Executive Officer
IN WITNESS THEREOF, the Company and the Employee have each duly
executed this Agreement as of the date first set forth above.
RAYTEL MEDICAL CORPORATION EMPLOYEE
By: : /s/ Richard F. Bader /s/ F. David Rollo, M.D.
------------------------------------ -----------------------------
Richard F. Bader F. David Rollo, M.D.
Its: Chairman and Chief Executive Officer
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Exhibit 10.55
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated March 1, 1998 (the "Effective
Date"), is made and entered into by and between RAYTEL MEDICAL CORPORATION, a
Delaware corporation (the "Company"), and Michael Kokesh (the "Employee").
RECITALS
A. The Company desires to continue the employment of the Employee as
its Vice President, General Counsel and Secretary and its subsidiary
corporations, affiliated medical groups and joint venture interests in various
imaging centers, heart programs and diagnostic cardiac catheterization
laboratories, and the Employee desires to accept such continued employment. The
employment of the Employee by the Company pursuant to this Agreement is
hereinafter sometimes referred to as the "Employment"; and
B. The Company and the Employee hereby enter into this Agreement
setting forth each and all of the terms and conditions of the Employment.
NOW THEREFORE, in consideration of the premises and the agreements,
representations and warranties, contained in this Agreement, the Company and the
Employee hereby agree as follows:
1. Duties Term and Exclusive Employment.
1.1 Duties and Responsibilities. Within the limitations
established by the Company's Bylaws, the Employee shall have each and all of the
duties and responsibilities of the Company's Vice President, General Counsel and
Secretary. As such, the Employee shall have responsibility and authority with
respect to the legal affairs of the Company, subject to the direction of the
Company's Chief Executive Officer.
1.2 Term of Employment. The Employment hereunder shall begin
on the Effective Date and, unless earlier terminated as provided in Paragraph 3
hereof, the Employment shall continue until midnight on the first anniversary of
the Effective Date. The Employment shall be extended automatically for
additional one (1) year terms upon each anniversary of the Effective Date,
beginning on March 1, 1999, unless either party gives written notice to the
other at least thirty (30) days prior to the expiration of the initial term (or,
if applicable, any extended term) of his or its election not to extend the
Employment for the subsequent term.
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1.3 No Other Employment or Business Activities. During the
term of the Employment, the Employee shall diligently and conscientiously devote
all of his working time and attention to discharging his duties to the Company
and shall not, without the express prior written consent of the Board of
Directors of the Company, render to any other person, corporation, partnership,
firm, company, joint venture or other entity any services of any kind for
compensation or engage in any other activity that would in any manner whatsoever
interfere with the performance of the Employee's duties on behalf of the
Company. The foregoing notwithstanding, nothing herein shall prevent the
Employee from engaging in charitable activities or activities of professional
associations, from managing any personal investments on his own personal time,
provided that such investments are not otherwise competitive with the Company.
1.4 Proprietary Information and Inventions Agreement. The
Employee acknowledges his obligations under the Employment Agreement Regarding
Proprietary Information and Inventions of even date herewith, attached hereto as
Appendix A (the "Proprietary Information and Inventions Agreement"), and agrees
to be bound by the provisions thereof.
1.5 Indemnity Agreement. The parties acknowledge their
respective obligations under the Indemnity Agreement of even date herewith,
attached hereto as Appendix B (the "Indemnity Agreement"), and agree to be bound
by the provisions thereof.
2. Compensation. In full and complete consideration for the Employment
and each and all of the services to be rendered to the Company, and any
subsidiary of affiliate of the Company, by the Employee, the Employee shall
receive compensation as follows, except as otherwise provided in Paragraph 3
hereof:
2.1 Base Salary. The Employee shall receive from the Company a
base salary, at the initial rate of One Hundred Fifty Thousand and 00/100
Dollars ($150,000.00) per year, payable in periodic installments in accordance
with the Company's payroll policy as in effect from time to time. The base
salary will be reviewed at least annually during the continuation of the
Employment and may be increased (but not decreased) by the Company in the sole
discretion of the Chief Executive Officer based upon such factors as the Chief
Executive Officer deems relevant, including the clinical programs of the heart
centers and physician practice management services. From each salary payment the
Company will withhold any pay to the proper governmental authorities any and all
amounts required by law to be withheld for federal income tax, state income tax,
federal social security tax, state disability insurance premiums, and any and
all other amounts required by law to be withheld from the Employee's salary. The
Company will also deduct from the Employee's salary payments those sums, if any,
authorized by the Employee in writing and approved by the Company. The Company
will make payments and contribution, such as unemployment
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insurance premiums, workers' compensation insurance premiums and the employer's
portion of federal social security tax, which are required by law to be made by
the Company for the Employee's benefit without any deduction from the Employee's
salary payments.
2.2 Bonus Awards. The Employee will be eligible for
consideration for incentive compensation ("Bonus Awards"), although no Bonus
Awards are required to be paid hereunder. All Bonus Awards shall be determined
by the Company's Chief Executive Officer in its sole discretion for such fiscal
periods as it shall determine and based upon such factors as it deems relevant.
Each Bonus award will be deemed to be earned at the end of the applicable fiscal
period and will be paid to the Employee within ninety (90) days following the
end of the fiscal period for which such award is made; provided, however, that
if, prior to the end of any such fiscal period, (i) the Employment is terminated
as a result of the Employee's death or disability; (ii) the Company terminated
the Employment other than For Cause pursuant to Paragraph 3.2 hereof; (iii) the
Employment is terminated by the Company giving notice pursuant to Paragraph 1.2
hereof; or (iv) the Employee terminates the Employment for Good Reason pursuant
to Paragraph 3.4 hereof, in each case, the Employee shall be entitled to receive
a prorated Bonus Award determined by multiplying the amount of the Bonus Award,
if any, that the Employee would have received had the Employee been employed for
the full fiscal period by a fraction, the numerator of which is the number of
full months of Employment completed during the fiscal period and the denominator
of which is the number of months in the fiscal period. Any such prorated bonus
award will be paid to the Employee within ninety (90) days following the end of
the fiscal period for which such award in made.
2.3 Deferred Compensation Plan. The Employee shall be entitled
to participate in the Company's Deferred Compensation Plan so long as it is
available generally to senior executives of the Company, and in any successor
plan which may be adopted and in effect from time to time during the Employment.
2.4 Stock Options. The Employee is presently the holder of
stock options granted under the Company's 1990 Stock Option Plan, which options
are subject to separate written Option Agreements. No such Option Agreement
constitutes an agreement of employment, and no provision of any such Option
Agreement shall operate to extend the term of the Employment hereunder. During
the Employment, the Employee will be eligible for the grant of additional
options at the sole discretion of the Company's Board of Directors based upon
such factors as it deems relevant.
2.5 Vacation. The Employee shall be entitled to paid vacation
in accordance with the Company's vacation policy for senior executives, as in
effect from time to time.
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2.6 Automobile Allowance. The Employee shall be entitled to
the payment of a monthly allowance for automobile expenses throughout the term
of the Employment, in the same amount and in accordance with the arrangements
currently in effect, or to such alternate automobile allowance of comparable
economic value as may be in effect from time to time.
2.7 Insurance and Other Benefits. The Employee shall be
entitled to participate in any life, medical, dental and/or disability insurance
plans, together with nay supplemental insurance plans, as my be offered by the
Company to its executive employees from time to time during the Employment. The
Employee shall be eligible to participate in any other fringe benefits as may be
provided by the Company to its executives, generally, during the Employment.
3. Termination of Employment. The Employment may be terminated prior to
the end of the term specified in Paragraph 1.2 hereof upon the occurrence of any
of the following:
3.1 Death and Disability. The Employment shall automatically
terminate upon the death of the Employee. The Company shall have the right, but
not the obligation, to terminate the Employment at any time following
determination of the Employee's total disability (as defined pursuant to the
Company's long-term disability insurance plan covering the Employee if any such
plan is then in effect, or otherwise as determined by the Company's Board of
Directors). In the event of the Employee's total disability, the Employee's base
salary pursuant to Paragraph 2.1 hereof, shall be continued for the lesser of:
(i) the duration of the Employee's total disability, or (ii) the waiting period
determined in the Company's long-term disability policy then in effect or (iii)
one (1) year if no such policy is then in effect. In the event of the Employee's
death or total disability, the Employee or his estate shall be entitled to
receive: (A) the Employee's base salary through the date of termination of the
Employment (as extended, in the case of total disability), plus, (B) any Bonus
Award earned by the Employee as of the date of termination of the Employment
pursuant to Paragraph 2.2 hereof but not yet paid, plus, (C) any other benefits
to which the Employee is entitled pursuant to the plans described in Paragraphs
2.3 and 2.7 hereof. In the event of a partial disability that prevents the
Employee from effectively performing his duties and responsibilities hereunder,
the parties will attempt, in good faith, to negotiate a basis upon which the
Employee may continue as an employee of the Company in a reduced capacity and at
appropriately reduced compensation. If no such arrangement is agreed upon, the
Company may elect to treat the Employee's disability as a total disability for
purposes of this Paragraph 3.1.
3.2 Termination of Employment by the Company "For Cause". The
Company shall have the unrestricted right, but not the obligation, to terminate
the Employment at any time "For Cause" in the event of the Employee's: (i)
willful and
-4-
<PAGE> 5
repeated neglect of his duties hereunder (other than as a result of a physical
disability not related to substance abuse), (ii) conviction of a crime involving
moral turpitude, (iii) commission of any act of fraud or dishonesty against the
Company, or (iv) breach of the Employee's obligations hereunder or under the
Proprietary Information and Inventions Agreement which, if curable, is not cured
within ten (10) days following notice thereof by the Company. The decisions to
terminate the Employment For Cause, to take other action or to take no action in
response to such occurrence shall be in the sole and exclusive discretion of the
Company. Upon any termination of the Employment by the Company For Cause, the
Employee shall be entitled to receive: (A) the Employee's base salary through
the date of such termination, plus (B) any bonus Award earned by the Employee as
of the date of termination of the Employment pursuant to Paragraph 2.2 hereof
but not yet paid, plus any other benefits to which the Employee is entitled
pursuant to the plans described in Paragraphs 2.3 and 2.7 hereof.
3.3 Other Termination of Employment by the Company. The
Company may terminate the Employment hereunder at any time for any reason.
However, if the Employment is terminated by the Company for any reason other
than pursuant to Sections 3.1 or 3.2 hereof (including a termination pursuant to
notice given under Section 1.2 hereof), the Employee shall be entitled to
receive his base salary through the date of termination of the Employment, plus
an amount (the "Severance Payment") equal to his then current base salary for a
period of twelve (12) months following the date of termination (the "Severance
Period") to the extent Employee has not found another position with a base
salary equal to or greater than the Base Salary specified above in Section 2.1,
and the Employer will make up the difference to the extent the base salary is
less than the Severance Payment during the Severance Period. The Severance
Payment shall be paid in periodic installments during the Severance Period, in
accordance with the Company's payroll policy as in effect from time to time, and
shall be in lieu of any other severance pay or other benefit to which the
Employee might otherwise be entitled. In addition, in the event of such a
termination, the Company will, to the extent its plans permit, continue to
provide to the Employee coverage under its life, medical, dental and/or
disability plans, as in effect on the date of termination, during the Severance
Period. In the event that the Company may not continue to provide the benefit of
any such plans, the Severance Payment shall be increased by an amount equal to
the Employee's cost of providing such discontinued coverage for himself and his
dependents during the Severance Period, assuming, where applicable, the timely
compliance by the Employee with any notification procedure required in order to
obtain continuation coverage at group rates. The Employee shall also be
entitled, upon any such termination, to receive: (A) any Bonus Award earned by
the Employee as of the date of termination of the Employment pursuant to
Paragraph 2.2 hereof but not yet paid, plus, (B) any other benefits to which the
Employee is entitled pursuant to the plans described in paragraphs 2.3 and 2.7
hereof.
-5-
<PAGE> 6
3.4 Termination of Employment by the Employee for "Good
Reason". The Employee shall have the right to terminate the Employment at any
time for "Good Reason" in the event that, other than pursuant to Paragraphs 3.1
or 3.2 hereof, the Company, without the Employee's prior written consent, (i)
materially alters or reduces the Employee's duties, responsibilities and status
with the Company from those which exist as of the Effective Date; (ii)
materially breaches the terms of this Agreement in respect to the payment of
compensation or benefits or in any other material respect and such breach is not
cured within ten (10) days after notice thereof; (iii) requires the Employee ,
as a condition to the Employment, to be based more than one hundred (100) miles
form the location where he is based as of the Effective Date; or (iv) required
the Employee , as a condition to the Employment, to perform illegal or
fraudulent acts or omissions. If the Employee voluntarily terminates the
Employment for Good Reason pursuant to this Paragraph 3.4, the Employee shall be
entitled to receive the payments and other benefits specified in paragraph 3.3
hereof with respect to a termination by the Company other than For Cause.
3.5 Termination of Employment by the Employee Without "Good
Reason". Upon any voluntary termination of the Employment by the Employee, other
than for Good Reason pursuant to Paragraph 3.4 hereof, the Employee shall be
entitled to receive (i) the Employee's base salary through the date of such
termination, plus (ii) any Bonus award earned by the Employee as of the date of
termination of the Employment pursuant to Paragraph 2.2 hereof but not yet paid,
plus (iii) any other benefits to which the Employee is entitled pursuant to the
plans described in Paragraphs 2.3 and 2.7 hereof through the date of
termination.
4. Expenses. The Company will reimburse the Employee for those
customary, ordinary and necessary business expenses incurred by him in the
performance of his duties and activities on behalf of the Company. Such expenses
will be reimbursed upon presentation by the Employee of appropriate
documentation to substantiate such expenses pursuant to the policies and
procedures of the Company governing reimbursement of business expenses to its
executives.
5. Conflicts of Interest. The Employee covenants, warrants and
represents to the Company that he has the full right and authority to enter into
the Employment and this Agreement, that he has no agreement, duty, commitment or
responsibility of any kind or nature whatsoever with or to any other person,
corporation, partnership, firm, company, joint venture or other entity which
would conflict in any manner whatsoever with any of his duties, obligations or
responsibilities to the Company pursuant to the Employment and/or this
Agreement. As a condition of the Employment and of the Company's entering into
this Agreement, the Company requires that the Employee not, and the Employee
hereby specifically agrees, covenants, warrants and represents that during the
Employment he will not, without the Company's express prior written consent,
accept any employment, contractual or other relationship of any kind or nature
-6-
<PAGE> 7
whatsoever or engage in any association or dealing of any kind or nature
whatsoever with any person, corporation, partnership, firm, company, joint
venture, or other entity in competition with any actual or proposed business of
the Company; provided that nothing herein shall prohibit Employee from owning up
to five percent (5%) of the outstanding shares of any class of equity securities
of a corporation engaged in any such prohibited activity whose securities are
listed on a national securities exchange or quoted daily in the over-the-counter
listings of The Wall Street Journal.
6. Duties of the Employee After Any Notice of Termination of the
Employment. Following any notice of termination of the Employment, the Employee
shall fully cooperate with the Company in all matters relating to the winding up
of the Employee's work on behalf of the Company and the orderly transfer of all
pending work and of the Employee's duties and responsibilities to such other
person or persons as may be designated by the Company in its sole discretion.
Upon any termination of the Employment, the Employee will immediately deliver to
the Company any and all of the Company's property of any kind or nature
whatsoever in the Employee's possession, custody or control, including, without
limitation any and all Confidential Information as that term is defined in the
Proprietary Information and Inventions Agreement.
7. No Solicitation. During the Employment and for two (2) years
following any termination of the Employment, the Employee will not, without
having received prior written permission of the Company's Chief Executive
Officer to do so, directly or indirectly, on his own behalf or in the service of
others, interfere with or raid the officers, employees, consultants, agents
and/or independent contractors of the Company or in any manner attempt to
persuade any such person to discontinue any relationship with the Company. The
Employee and the Company confirm that this Paragraph 7 is reasonable and
necessary for the protection of the trade secrets and proprietary information of
the Company.
8. Arbitration. Except as otherwise expressly provided in this
Agreement, any and all controversies, disputes and/or claims in any manner
arising out of or relating to this Agreement or the Employment shall be settled
solely be arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Such arbitration proceeding shall take place
in the state and county of the Company's office where the Employee is based.
Judgment on any decision rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Each party shall bear its own attorney's fees and
expenses and other costs in any arbitration proceeding. All administrative fees
and the fee of the arbitrator shall be borne by the parties equally. Except as
otherwise expressly provided in this Agreement, the arbitration provisions set
forth above in this Paragraph 8 are intended by the Employee and by the Company
to be absolutely exclusive for all purposes whatsoever, and applicable to each
and every controversy, dispute and/or claim in any manner arising out o f or
relating to this Agreement, and the Employment, the meaning, application and/or
interpretation of this
-7-
<PAGE> 8
Agreement, any breach or claimed breach thereof and/or any voluntary or
involuntary termination of this Agreement with or without cause, including,
without limitation, any such controversy, dispute and/or claim which, if pursued
through any state or federal court or administrative agency, would arise at law,
in equity and/or pursuant to statutory, regulatory and/or common law rules,
regardless of whether such dispute, controversy and/or claim would arise in
and/or from contract, tort or any other legal and/or equitable theory or basis.
Notwithstanding anything to the contrary contained in this Paragraph 8, the
Company shall at all times have and retain the full, complete and unrestricted
right to immediate and permanent injunctive and other relief as provided in
Paragraph 9 below.
9. The Company's Right to Immediate Injunctive Relief. The Employee
recognizes, acknowledges and agrees that any breach or any threatened breach of
any Paragraph, term, provision or covenant of any of Paragraphs 1.4, 5, 6, 7 or
8 of this Agreement or of the Proprietary Information and Inventions Agreement
would cause irreparable injury to the Company which could not be adequately
compensable in monetary damages and that the remedy at law for any such breach
will be entirely insufficient and inadequate to protect the Company's legitimate
interests. Therefore, the Employee specifically recognizes, acknowledges and
agrees that the Company shall at any and all times be and remain fully entitled
to seek and obtain immediate temporary, preliminary and permanent injunctive
relief for any such breach or threatened breach from any court of competent
jurisdiction. The prevailing party in any action instituted pursuant to this
paragraph 8 shall be entitled to recover form the other party its reasonable
attorneys' fees and other expenses incurred in such litigation.
10. Survival of Certain Provisions of this Agreement. Except as may
otherwise be provided herein, each and all of the terms provisions and covenants
of each of paragraphs 1.4, 6, 7, 8, 9, 10 and 11 of this Agreement shall, for
any and all purposes whatsoever, survive any termination of the Employment,
regardless of whether such termination is by the Employee, the Company, by
expiration or otherwise.
11. General.
11.1 Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of and be binding upon the Company, the Employee and
each and all of their respective heirs, legal representatives, successors and
assigns. The duties, responsibilities and obligations of the Employee under this
Agreement shall be personal and not assignable or delegable by the Employee in
nay manner whatsoever to any person, corporation, partnerships, firm, company,
joint venture or other entity. The Employee may not assign, transfer, convey,
mortgage, pledge or in any other manner encumber the compensation or other
benefits to be received by him or nay rights which he may have pursuant to the
terms and provisions of this Agreement.
-8-
<PAGE> 9
11.2 Waiver. No waiver of nay breach of any warranty,
representation, agreement, promise, covenant, paragraph, term or provision of
this Agreement shall be deemed to be a waiver of any proceeding or succeeding
breach of the same or any other warranty, representation, agreement, promise,
covenant, paragraph, term and/or provision of this Agreement. No extension of
the time for the performance of any obligation or other act required or
permitted by this Agreement shall be deemed to be an extension of the time of
the performance of any other obligation or any other act required or permitted
by this Agreement.
11.3 Sole and Entire Agreement. This Agreement, and the other
agreements referred to herein, including the Company's benefit plans, are the
sole, complete and entire contract, agreement and understanding between the
Company and the Employee concerning the Employment, the terms and conditions of
the Employment, the duration of the Employment, the termination of the
Employment and the compensation and benefits to be paid and provided by the
Company to the Employee pursuant to the Employment. Except as otherwise provided
herein, the Agreement supersedes any and all prior contracts, agreements, plans,
agreements in principle, correspondence, letters of intent, understandings, and
negotiations, whether oral or written, concerning the Employment, the terms and
conditions of the Employment, the duration of the Employment, the termination of
the Employment and the compensation and benefits to be paid by the Company to
the Employee pursuant to the Employment.
11.4 Amendments. No amendment, modification, waiver, or
consent relating to this Agreement will be effective unless and until it is
embodied in a written document signed by the Company and by the Employee.
11.5 Originals. The Agreement may be executed by the Company
and by the Employee in counterparts, each of which shall be deemed an original
and which together shall constitute one instrument.
11.6 Headings. Each and all of the headings contained in this
Agreement are for reference purposes only and shall not in any manner whatsoever
affect the construction or interpretation of this Agreement or be deemed a part
of this Agreement for any purpose whatsoever.
11.7 Savings Provision. To the extent that any provisions of
this Agreement or any Paragraph, term, provision, sentence, phrase, clause or
word of this Agreement shall be found to be illegal or unenforceable for any
reason, such Paragraph, term, provision, sentence, phrase, clause or word shall
be modified or deleted in such a manner as to make this Agreement, as so
modified, legal and enforceable under applicable laws. The remainder of this
Agreement shall continue in full force and effect.
-9-
<PAGE> 10
11.8 Applicable Law. This Agreement and each and every
provision of this Agreement shall be interpreted solely pursuant to the internal
laws of the State of California without regard to any conflicts of law
principles thereof.
11.9 Construction. The language of this Agreement and of each
and every paragraph, term and provisions of this Agreement shall, in all cases,
for any and all purposes, and in any and all circumstances whatsoever be
construed as a whole, according to its fair meaning, not strictly for or against
the Employee or the Company, and with no regard whatsoever to the identity or
status of any person or persons who drafted all or any portion of this
Agreement.
11.10 Notices. Any notices to be given pursuant to this
Agreement by either party to the other party may be effected by personal
delivery or by registered or certified mail, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the addresses
stated below, but each party may change its or his address by written notice to
the other in accordance with this Paragraph 11.10. Notices delivered personally
shall be deemed received on the date of delivery. Notices delivered by mail
shall be deemed received on the third business day after the mailing thereof.
Mailed notices to the Employee shall be addressed as follows:
Michael Kokesh
160 San Anselmo Avenue
San Francisco, CA 94127
Mailed notices to the Company shall be addressed as follows:
Raytel Medical Corporation
2755 Campus Drive, Suite 200
San Mateo, California 94403-2515
Attention: Chief Executive Officer
IN WITNESS THEREOF, the Company and the Employee have each duly
executed this Agreement as of the date first set forth above.
RAYTEL MEDICAL CORPORATION EMPLOYEE
By: /s/ Richard F. Bader /s/ Michael O. Kokesh
---------------------------- -------------------------
Richard F. Bader Michael O. Kokesh
Its: Chairman and Chief Executive Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RAYTEL
MEDICAL CORPORATION AND SUBSIDIARIES FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 7,860
<SECURITIES> 0
<RECEIVABLES> 35,265<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 47,076
<PP&E> 38,670
<DEPRECIATION> (18,769)
<TOTAL-ASSETS> 123,335
<CURRENT-LIABILITIES> 15,389
<BONDS> 0
0
0
<COMMON> 9
<OTHER-SE> 64,526
<TOTAL-LIABILITY-AND-EQUITY> 123,335
<SALES> 0
<TOTAL-REVENUES> 53,015
<CGS> 0
<TOTAL-COSTS> 46,259
<OTHER-EXPENSES> 380
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 1,509
<INCOME-PRETAX> 4,867
<INCOME-TAX> 1,947
<INCOME-CONTINUING> 2,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,920
<EPS-PRIMARY> .33
<EPS-DILUTED> .31
<FN>
<F1>REPRESENTS NET RECEIVABLES.
<F2>INCLUDED IN TOTAL COSTS.
</FN>
</TABLE>
