THIS DOCUMENT IS A COPY OF THE SCHEDULE 13D FILED ON DECEMBER 11, 1996.
United States
Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
CARDIOTRONICS SYSTEMS, INCORPORATED
(Name of Issuer)
COMMON, SERIES C CONVERTIBLE PREFERRED,
SERIES D CONVERTIBLE PREFERRED, AND
SERIES E CONVERTIBLE PREFERRED
(Title of Class of Securities)
141 601 401
(CUSIP Number)
PAUL W. HESS, GENERAL COUNSEL
BALLARD MEDICAL PRODUCTS
12050 LONE PEAK PARKWAY
DRAPER, UTAH 84020
(Name, Address and Telephone Number
of Person Authorized to Receive Notice and Communications)
DECEMBER 10, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with the
statement [ ]. (A fee is not required only if the
reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has
filed no amendment subsequent thereto reporting beneficial
ownership of five percent or less of such class.) (See Rule
13d-7.)
NOTE: Six copies of this statement, including all exhibits
should be filed with the Commission. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect
to the subject class of securities, and for any subsequent
amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section
18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act
(however, see the Notes).
1. NAME OF REPORTING PERSON. S.S. OR I.R.S.
IDENTIFICATION NO. OF ABOVE PERSON
Ballard Acquisition Corporation, a wholly-owned
subsidiary of Ballard Medical Products
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
00 Capital contribution of cash by Ballard Medical
Products, a Utah corporation
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7. SOLE VOTING POWER
Common 213,256
Series C Preferred 2,499,422
Series D Preferred 2,119,828
Series E Preferred 6,680,172
8. SHARED VOTING POWER
None
9. SOLE DISPOSITIVE POWER
Common 213,256
Series C Preferred 2,499,422
Series D Preferred 2,119,828
Series E Preferred 6,680,172
10. SHARED DISPOSITIVE POWER
None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON.
Common 213,256
Series C Preferred 2,499,422
Series D Preferred 2,119,828
Series E Preferred 6,680,172
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES * [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Common 44.7%
Series C Preferred 90.4074%
Series D Preferred 100%
Series E Preferred 100%
14. TYPE OF REPORTING PERSON*
C0
Item 1. This Schedule 13D relates to the following classes
of equity securities of the issuer, Cardiotronics
Systems, Incorporated ("Cardiotronics"):
Common Stock; Series C Convertible Preferred
Stock; Series D Convertible Preferred Stock and
Series E Convertible Preferred Stock
The principal officers of Cardiotronics are as
follows:
President Ronald R. Bromfield
1809 Sienna Canyon Drive
Encinitas, CA 92024
Vice President, Tim J. Way
Quality Assurance 2066 Fairhope Loop
And Secretary Vista, CA 92083
Vice President, Scott P. Youngstrom
Finance and Admin., 208 East Glaucus
and Treasurer Leucadia, CA 92024
Item 2. Ballard Acquisition Corporation ("BAC") is a
Colorado corporation. It was incorporated
December 2, 1996. Its principal business and
office address is as follows:
Ballard Acquisition Corporation
12050 Lone Peak Parkway
Draper, Utah 84020
BAC is a wholly-owned subsidiary of Ballard
Medical Products, a Utah corporation ("BMP").
During the last five years, neither BAC nor BMP
has been convicted in any criminal proceeding.
During the last five years, neither BAC nor BMP
has been a party to any civil proceeding of a
judicial or administrative body of competent
jurisdiction where as a result of such proceeding
either entity became subject to a judgment, decree
or final order enjoining future violations of, or
prohibiting or mandating activities subject to,
federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Effective December 10, 1996, BAC entered into
Stock Purchase Agreements for the purchase of the
shares of capital stock of Cardiotronics shown in
the cover page of this Schedule 13D. The
effective purchase price is $3.75 per share of
Common Stock or equivalent thereof.
The source of funds used and to be used in making
the purchases is a capital contribution to BAC by
BMP, from BMP's cash reserves.
Item 4. The purpose of the acquisition of Cardiotronics'
shares by BAC is to acquire eventually 100% of all
classes of outstanding shares of Cardiotronics.
BAC intends to convert a sufficient portion of the
Cardiotronics convertible preferred stock into
common stock, to enable BAC to effect a merger of
BAC into Cardiotronics, with Cardiotronics as the
surviving corporation pursuant to Section
7-111-104 of the Colorado Business Corporation Act
(the "Act"). That law allows a parent corporation
owning at least 90% of the outstanding shares of
each class of a subsidiary corporation to effect
such a merger without seeking the approval of the
shareholders of the subsidiary corporation (here,
Cardiotronics).
Also effective December 10, 1996, Cardiotronics
entered into a Merger Agreement with BMP and BAC,
pursuant to which BAC intends to effect this
"short-form" merger within the next 60 days. This
will include the giving to remaining shareholders
of Cardiotronics the right to dissent, pursuant to
Section 7-113-101, et. seq. of the Act.
Immediately following the execution and closing
under the Stock Purchase Agreements, certain
directors and executive officers of Cardiotronics
resigned their positions. The following directors
resigned:
Ronald R. Bromfield
Bruno T. Bisceglia, Jr.
Richard B. Emmitt
Elizabeth H. Weatherman
David L. Schlotterbeck
BMP and BAC intend to ask the remaining directors,
Robert S. Grimes and Tim J. Way to appoint the
following replacement directors, to fill the
vacancies created by the above-mentioned
resignations:
Dale H. Ballard
Harold R. ("Butch") Wolcott
E. Martin Chamberlain, Jr.
Kenneth R. Sorenson
Paul W. Hess
All of these replacement directors are executive
officers of BMP.
Upon consummation of the merger, it is intended
that the securities of Cardiotronics will be
delisted from NASDAQ and that registration of
Cardiotronics stock will be terminated.
Item 5. BAC owns, beneficially and of record, all of the
shares of capital stock of Cardiotronics listed in
box 7 of the cover page to this Schedule 13D. All
of said shares were acquired on December 10, 1996.
BMP owns directly no shares of Cardiotronics.
Item 6. BMP and BAC are both parties to the Merger
Agreement with Cardiotronics.
Item 7. The following exhibits are filed herewith:
Exhibit 1 Stock Purchase Agreement
Exhibit 2 Stock Purchase Agreement with
SO-CAL Partners
Exhibit 3 Merger Agreement
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
state is true, complete and correct.
Date: December 10, 1996 BALLARD ACQUISITION
CORPORATION
a Colorado corporation
By: Kenneth R. Sorenson
Its: Treasurer
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is
made and entered into as of the time on December 10, 1996
which all parties hereto have executed and delivered this
Agreement ("Closing Time"), by and among the undersigned
selling stockholders (individually, "Seller" or
collectively, "Sellers"), Ballard Acquisition Corporation, a
Colorado corporation, all of whose capital stock is owned
directly by Ballard Medical Products ("Buyer"), and Ballard
Medical Products, a Utah corporation ("Ballard Medical"),
with respect to the following facts:
A. Sellers own shares of the outstanding common stock
and preferred stock of Cardiotronics Systems, Inc., a
Colorado corporation (the "Company"), as set forth on
Exhibit A.
B. Sellers desire to sell all of their respective
shares of stock of the Company (the "Shares") to Buyer, and
Buyer is willing to purchase the Shares from each Seller,
all upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants contained herein, the
parties hereto agree as follows:
1. PURCHASE AND SALE OF STOCK. At the Closing Time,
each Seller hereby sells to Buyer, and Buyer hereby
purchases from each Seller, the number of Shares set forth
on Exhibit A, at an effective price of Three Dollars and
Seventy-Five Cents ($3.75) per share of Common Stock
(assuming conversion of all shares of Preferred Stock), as
more specifically set forth on Exhibit A ("Purchase
Price"). The Purchase Price shall be paid to each Seller by
cashier's check or wire transfer in accordance with the
schedule set forth on Exhibit A. Concurrently herewith,
each Seller shall deliver to Buyer the certificate
representing the Shares together with a duly executed
irrevocable stock power with signature guaranteed.
Execution of this Agreement by Sellers, Buyer and Ballard
Medical hereby acknowledges receipt of the certificate and
irrevocable stock power.
2. REPRESENTATIONS AND WARRANTIES OF SELLER. Each
Seller, severally and not jointly, hereby represents and
warrants to Company, Buyer and Ballard Medical that:
2.1 Seller has full power and authority to
execute and deliver this Agreement and to perform his or its
obligations hereunder. This Agreement has been duly
executed and delivered by Seller and constitutes the valid
and binding obligation of Seller, enforceable against Seller
in accordance with its terms.
2.2 The execution and delivery of this Agreement
and the performance by Seller of his or its obligations
hereunder will not conflict with, violate or constitute a
default (with or without the giving of notice, lapse of time
or both) under (i) if Seller is a corporation, its
certificate or articles of incorporation, bylaws or similar
organizational documents, (ii) if Seller is a partnership,
its partnership agreement or similar organizational
documents, (iii) if Seller is a trust, its trust agreement
or similar organizational documents, or (iv) any note,
mortgage, lease agreement, bond, indenture, instrument, license,
franchise or permit, order, judgment, writ or decree, which conflict,
violation or default will, in the case of this clause, have
a material adverse effect on Company's business, the
transactions contemplated by the Merger Agreement by and
among Company, Buyer and Ballard Medical ("Merger
Agreement") or Seller's ability to perform
his or its obligations hereunder.
2.3 No consent or approval by, notice to or
registration with, any governmental or administrative
authority or board or third party is required on the part of
Seller in connection with the execution and delivery by Seller of
this Agreement or the performance by Seller of his or its
obligations hereunder, except for consents, approvals, notices or
registrations that will not individually, or in the
aggregate, have a material adverse effect on Company's business,
the transactions contemplated by the Merger Agreement or Seller's
ability to perform his or its obligations hereunder.
2.4 As of the Closing Time, Seller's only
ownership of, or interest in, Company common stock or
preferred stock or any other equity securities of Company
consists solely of the interests described in Exhibit A hereto
(the "Securities"). The undersigned has good title to the
Securities, and such Securities are owned by the undersigned
free and clear of any lien, claim, charge, encumbrance, security
interest, title defect or other restriction (other than
restrictions on transfer imposed by federal or state securities
laws).
2.5 To the knowledge of Seller, the Securities
acquired by Seller from Company were issued and sold to
Seller in compliance with the registration requirements of
the Securities Act of 1933, as amended ("Securities Act"),
and applicable state securities laws. The Securities are
not subject to any voting trust or voting agreement.
2.6 Seller has discussed the tax consequences of
this Agreement with his or its counsel or tax advisor to the
extent Seller deemed necessary.
3. REPRESENTATIONS AND WARRANTIES OF BUYER AND
BALLARD MEDICAL. Buyer and Ballard Medical hereby represent
and warrant to each Seller as follows:
3.1 Corporate Organization; Due Authorization and
Validity of Agreement. Buyer is a corporation duly
organized, validly existing and in good standing under the
laws of Colorado, and Ballard Medical is a corporation duly
organized, validly existing and in good standing under the
laws of Utah. Both Buyer and Ballard Medical have all
requisite corporate power and authority to enter into this
Agreement and the Merger Agreement and to carry out its
obligations under this Agreement and the Merger Agreement.
The execution and delivery of this Agreement by Buyer and
Ballard Medical and the performance of the obligations of
Buyer and Ballard Medical hereunder have been duly
authorized by all necessary corporate action by the
respective Board of Directors of Buyer and Ballard Medical,
and no other corporate proceedings on the part of Buyer or
Ballard Medical are necessary to authorize such execution,
delivery and performance. This Agreement has been duly
executed by Buyer and Ballard Medical and constitutes their
legal, valid and binding obligation, enforceable against Buyer
and Ballard Medical in accordance with its terms.
3.2 No Conflict or Violation. The execution,
delivery and performance by Buyer and Ballard Medical of
this Agreement do not and will not violate or conflict with
any provision of the charter documents or by-laws of Buyer
or Ballard Medical and do not and will not violate any
provision of law, or any order, judgment or decree of any
court or other governmental or regulatory authority, nor
violate nor will result in a breach of or constitute (with
due notice or lapse of time or both) a default under any
contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument
to which Buyer or Ballard Medical is a party or by which
it is bound or to which any of its properties or assets is
subject, which conflict, violation or default will, in the
case of this clause, have a material adverse effect on Buyer's
or Ballard Medical's business, the transactions contemplated by the
Merger Agreement or Buyer's or Ballard Medical's ability to
perform their respective obligations hereunder.
3.3 Investment Intent. The Shares will be
acquired hereunder solely for the account of Buyer for
investment purposes only and not with a view to or for sale
in connection with any distribution of the securities of the
Company and will not be sold or transferred by Buyer except
in compliance with the Securities Act and applicable state
law.
4. RESIGNATION OF DIRECTORS. As of the Closing Time,
each Seller who is a director of the Company shall submit
his resignation from the board of directors of Company;
provided, however, that Robert S. Grimes and Tim J. Way shall not
submit their resignations and shall remain on the board of
directors.
5. FURTHER ASSURANCES. Each of the parties hereto
agrees to use its best efforts at its own expense to take,
or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
6. INDEMNIFICATION. The parties shall indemnify each
other as set forth below:
6.1 Indemnification by Seller. Each Seller,
severally and not jointly, shall indemnify, defend and hold
harmless Buyer, the Company, and Ballard Medical from and
against all claims, losses, damages, liabilities and
expenses (including without limitation attorneys' fees,
settlement costs and any legal or other expenses for
investigation or defending any actions or threatened
actions) asserted against, imposed upon or incurred by
Buyer, the Company, or Ballard Medical in connection with,
on account of, or as a result of (i) any misrepresentations
or breach of any of the representations and warranties made
by such Seller herein, or (ii) the breach of any agreement
or obligation of such Seller contained herein.
6.2 Indemnification by Buyer and Ballard Medical.
Buyer and Ballard Medical, jointly and severally, shall
indemnify, defend and hold harmless each Seller from and
against all claims, losses, damages, liabilities and
expenses (including without limitation attorneys' fees,
settlement costs and any legal or other expenses for
investigation or defending any actions or threatened
actions) asserted against, imposed upon or incurred by such
Seller in connection with, on account of, or as a result of
(i) any misrepresentations or breach of any of the
representations and warranties made by Buyer or Ballard Medical
herein, or (ii) the breach of any covenant, agreement or
obligation of Buyer or Ballard Medical contained herein.
7. LOANS, EMPLOYMENT AND INTERESTS.
7.1 Except for the loans set forth on Exhibit B
hereto ("Loans") and the employment agreements set forth on
Exhibit C hereto ("Employment Agreement"), neither the
Company nor any of its subsidiaries is indebted to any
Seller, and, except for the Loans (and interest accrued in
respect thereof) and Employment Agreement, no Seller shall
make any claim against the Company or any of its
subsidiaries for any other indebtedness or obligation. The
principal and accrued interest owed under the Loans as of
the date hereof by the Company to each Seller are as set
forth on Exhibit B. Except for its rights pursuant to the
terms of the Loans and Employment Agreements and any rights
which each Seller has pursuant to the terms of the
Securities, each Seller acknowledges that it owns no rights
or interest in any of the assets of the Company or any of
its subsidiaries.
7.2 Effective upon the Closing Time, each Seller,
severally and not jointly, irrevocably, unconditionally and
completely releases and forever discharges Company, Buyer and
Ballard Medical, and their officers and directors, from any
claim, controversy, demand, right, obligation, liability,
and cause of action of every kind and nature (collectively,
a "Claim") arising out of or relating to Seller's ownership
interest in Company; provided, however, that this release shall not
relate to (i) any Claim of Seller arising out of or relating
to a breach of this Agreement, (ii) any Claim of Seller
under any Loans not paid in full in cash on the Closing
Time, (iii) any Claim of Seller under any Employment
Agreements, or (iv) if Seller is an officer or director of
Company or any subsidiary of Company, any Claim to
indemnification under (1) any agreement between Seller and
Company or any such subsidiary, (2) Company's or such
subsidiary's certificate of incorporation or bylaws, or (3)
any insurance policy maintained by or on behalf of Company
or any such subsidiary.
8. MISCELLANEOUS.
8.1 NOTICES. All notices or other communications
required or permitted hereunder shall be given in writing
and shall be deemed sufficient if delivered by hand,
telecopied, or mailed by registered or certified mail,
postage prepaid (return receipt requested), to each Seller
at the address set forth on Exhibit A, to Buyer and Ballard
Medical to Ballard Medical Products, Dale H. Ballard,
President, 12050 Lone Peak Parkway, Draper, Utah 84020,
with a copy to Paul Hess, Esq., 12050 Lone Peak Parkway,
Draper, Utah 84020, or such other address as shall be
furnished in writing by such party, and any such notice or
communication shall be effective and be deemed to have been
given as of the date so delivered or telecopied or three
days after the date so mailed; provided, however, that any
notice or communication changing any of the addresses set
forth above shall be effective and deemed given only upon
its receipt.
8.2 ASSIGNMENT. Neither this Agreement nor any
of the rights, interests, or obligations hereunder may be
assigned by any of the parties hereto without the prior
written consent of the other parties.
8.3 PARTIES BOUND AND BENEFITTED. This Agreement
and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.4 ENTIRE AGREEMENT. This Agreement together
with the other agreements referred to herein embodies the
entire agreement and understanding of the parties with
respect to the transactions contemplated hereby and
supersedes all prior written or oral commitments,
arrangements or understandings with respect thereto. There
are no restrictions, agreements, promises, warranties,
covenants or undertakings with respect to the transactions
contemplated hereby other than those expressly set forth
herein.
8.5 ATTORNEYS' FEES. In any legal proceeding
arising out of this Agreement, including with respect to any
instrument, document or agreement made under or in
connection with this Agreement, the prevailing party shall
be entitled to recover its costs and attorneys' fees.
8.6 HEADINGS. The section headings herein are
for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect
any of the provisions hereof.
8.7 SEVERABILITY. If any one or more of the
provisions of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement
shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
8.8 COUNTERPARTS; FACSIMILE SIGNATURES. This
Agreement may be executed in two or more counterparts, any
of which counterparts may be executed by facsimile
signatures, all of which shall be considered one and the
same agreement and each of which shall be deemed an
original.
8.9 INDEPENDENT COUNSEL. The parties hereto each
acknowledge that they have been represented by, or have been
given the opportunity to be represented by, independent
counsel of their choosing.
8.10 SURVIVAL OF PROVISIONS. The respective
representations, warranties, covenants and agreements of
each of the parties to this Agreement shall survive the
Closing Time and the consummation of the transactions
contemplated by this Agreement.
8.11 PUBLICITY. Neither Seller, Buyer nor Ballard
Medical shall, or shall permit any of its subsidiaries or
affiliates to, issue or cause the publication of any press
release or other announcement with respect to this Agreement
or the transactions contemplated hereby without the consent
of the other parties, which consent shall not be
unreasonably withheld.
Notwithstanding the foregoing, in the event any such press
release or announcement is required by law or stock exchange
regulation to be made by the party proposing to issue the
same, consent shall not be required but such party shall use
its best efforts to consult in good faith with the other
parties prior to the issuance of any such press release or
announcement.
Exhibit A
SELLERS
SHAREHOLDER SHARES PURCHASE PRICE
Elizabeth H. 2,000,000 shares of $9,375,000.00
Weatherman Series C Preferred Stock
Warburg, Pincus (convertible into 500,000
Investors, L.P. shares of Common Stock);
466 Lexington Ave.
New York, NY 10017 1,319,828 shares of
Series D Preferred Stock
(convertible into 329,957
shares of Common Stock);
6,680,172 shares of
Series E Preferred Stock
(convertible into
1,670,043 shares of
Common Stock)
Vertical Fund 45,578 shares of Common $1,359,375.00
Associates, L.P. Stock;
18 Bank Street
Summit, NJ 07901 467,689 shares of Series
C Preferred Stock
(convertible into 116,922
shares of Common
Stock);
800,000 shares of Series
D Preferred Stock
(convertible into 200,000
shares of Common
Stock)
Robert S. Grimes 1,250 shares of Common $4,687.50
5966 La Place Court Stock
Carlsbad, CA 92008
Bruno Bisceglia, Jr. 20,500 shares of Common $76,875.00
5966 La Place Court Stock
Carlsbad, CA 92008
Tim J. Way 22,500 shares of Common $84,375.00
5966 La Place Court Stock
Carlsbad, CA 92008
Stephen D. Baska 18,167 shares of Series C $17,032.50
c/o Vertical Fund Preferred Stock
Associates, L.P. (convertible into 4,542
18 Bank Street shares of Common Stock)
Summit, NJ 07901
Paula Peterson- 13,566 shares of Series C $12,716.25
Runnells Preferred Stock
c/o Vertical Fund (convertible into 3,391
Associates, L.P. shares of Common Stock)
18 Bank Street
Summit, NJ 07901
TOTAL 2,914,683 shares of $10,930,061.75
Common Stock
Wire Instructions:
Warburg, Pincus Investors, L.P.
Chase Manhattan Bank
270 Park Avenue
NY, NY 10017
ABA # 021-000-021
For credit to Warburg, Pincus Investors, L.P.
Account # 144-0-45515
Vertical Fund Associates, L.P.
(Proceeds of Series D Preferred Stock: $750,000.00)
Citibank
New York, NY
ABA # 021000089
For the account of Morgan Stanley & Co., Inc.
Account No. 38890774
for further credit to the account of Vertical Fund
Associates Sub-Account
Account No. 038-03197
Vertical Fund Associates, L.P.
(Proceeds of Series C Preferred Stock and Common Stock:
$609,375.00)
Citibank
New York, NY
ABA # 021000089
For the account of Morgan Stanley & Co., Inc.
Account No. 38890774
for further credit to the account of Vertical Fund
Associates, L.P.
Account No. 038-03195
Stephen Baska:
Chase Manhattan Bank, NA
ABA number 021000021
For the account of United States Trust Company of New York
Account number 920-1-073195
For further credit to the account of Stephen D. Baska
Account number 6186122
Paula Peterson-Runnells:
Northern Trust Co., Chicago, IL
ABA number 071000152
For the account of Piper Jaffray, Inc.
Account number 89643
for further credit to the account of Paula P. Runnells
account number 120-629922-565
Exhibit B
LOANS
PAYEE OBLIGATION OUTSTANDING BALANCE
Warburg, Pincus March 19, 1996 $458,947.44
Investors, L.P. Demand Note
466 Lexington
Avenue, New York, NY December 27, 1995 $465,910.38
10017 Demand Note
Wire Instructions: November 15, 1995 $469,391.85
Demand Note
Chase Manhattan
Bank, 270 Park October 30, 1995 $931,772.23
Avenue, New York, NY Demand Note
10017
ABA #021000021 Total $2,326,021.90
For credit to
Warburg, Pincus
Investors, L.P.
Account
#144-0-45515
Vertical Fund March 19, 1996 $66,524.78
Associates, L.P. Demand Note
18 Bank Street
Summit, NJ 07901 December 28, 1995 $67,521.76
Demand Note
Wire
Instructions: November 15, 1995 $68,038.71
Demand Note
Citibank
New York, NY October 30, 1995 $135,061.10
ABA #021000089 Demand Note
For the account of Total $337,146.35
Morgan Stanley &
Co., Inc.
Account #38890774
for further credit
to the account
of Vertical Fund
Associates, L.P.
Account
#038-03195
Exhibit C
EMPLOYMENT AGREEMENTS
Employee Title
Bruno Bisceglia V.P. - Key Accounts
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is
made and entered into as of the time on December 10, 1996
which all parties hereto have executed and delivered this
Agreement ("Closing Time"), by and among SO-CAL PARTNERS,
L.P., a Georgia limited partnership ("Seller"), Ballard
Acquisition Corporation, a Colorado corporation, all of
whose capital stock is owned directly by Ballard Medical
Products ("Buyer"), and Ballard Medical Products, a Utah
corporation ("Ballard"), with respect to the following
facts:
A. Seller owns 123,428 shares of the outstanding
Common Stock of Cardiotronics Systems, Inc., a Colorado
corporation (the "Company").
B. Seller desires to sell all of its shares of Common
Stock of the Company (the "Shares") to Buyer, and Buyer is
willing to purchase the Shares from Seller, all upon the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants contained herein, the
parties hereto agree as follows:
1. PURCHASE AND SALE OF STOCK. At the Closing Time,
Seller hereby sells to Buyer, and Buyer hereby purchases
from Seller, all of its Shares at an effective price of
Three Dollars and Seventy-Five Cents ($3.75) per share
("Purchase Price"). The Purchase Price shall be paid to
Seller by cashier's check in the amount of One Thousand
Dollars ($1,000.00) and execution and delivery of a
promissory note in favor of Seller in the amount of
$461,855.00, with terms and conditions satisfactory to Buyer
and Seller ("Promissory Note"). Concurrently herewith,
Seller shall deliver to Buyer the certificate representing
the Shares together with a duly executed irrevocable stock
power with signature guaranteed. Execution of this
Agreement by Seller, Buyer and Ballard Medical hereby
acknowledges receipt of the Promissory Note, certificate and
irrevocable stock power.
2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
hereby represents and warrants to Company, Buyer and Ballard
Medical that:
2.1 Seller has full power and authority to
execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement has been duly
executed and delivered by Seller and constitutes the valid
and binding obligation of Seller, enforceable against Seller
in accordance with its terms.
2.2 The execution and delivery of this Agreement
and the performance by Seller of its obligations hereunder
will not conflict with, violate or constitute a default
(with or without the giving of notice, lapse of time or
both) under its partnership agreement or similar
organizational documents or any note, mortgage, lease
agreement, bond, indenture, instrument, license, franchise
or permit, order, judgment, writ or decree, which conflict,
violation or default will, in the case of this clause, have
a material adverse effect on Company's business, the
transactions contemplated by the Merger Agreement by and
among Company, Buyer and Ballard Medical ("Merger
Agreement") or Seller's ability to perform its obligations
hereunder.
2.3 No consent or approval by, notice to or
registration with, any governmental or administrative
authority or board or third party is required on the part of
Seller in connection with the execution and delivery by
Seller of this Agreement or the performance by Seller of its
obligations hereunder, except for consents, approvals,
notices or registrations that will not individually, or in
the aggregate, have a material adverse effect on Company's
business, the transactions contemplated by the Merger
Agreement or Seller's ability to perform its obligations
hereunder.
2.4 As of the Closing Time, Seller's only
ownership of, or interest in, Company common stock or
preferred stock or any other equity securities of Company
consists solely of 123,428 Shares of Common Stock (the
"Securities"). The undersigned has good title to the
Securities, and such Securities are owned by the undersigned
free and clear of any lien, claim, charge, encumbrance,
security interest, title defect or other restriction (other
than restrictions on transfer imposed by federal or state
securities laws).
2.5 To the knowledge of Seller, the Securities
acquired by Seller from Company were issued and sold to
Seller in compliance with the registration requirements of
the Securities Act of 1933, as amended ("Securities Act"),
and applicable state securities laws. The Securities are
not subject to any voting trust or voting agreement.
2.6 Seller has discussed the tax consequences of
this Agreement with his or its counsel or tax advisor to the
extent Seller deemed necessary.
3. REPRESENTATIONS AND WARRANTIES OF BUYER AND
BALLARD MEDICAL. Buyer and Ballard Medical hereby represent
and warrant to Seller as follows:
3.1 CORPORATE ORGANIZATION; DUE AUTHORIZATION AND
VALIDITY OF AGREEMENT. Buyer is a corporation duly
organized, validly existing and in good standing under the
laws of Colorado, and Ballard Medical is a corporation duly
organized, validly existing and in good standing under the
laws of Utah. Both Buyer and Ballard Medical have all
requisite corporate power and authority to enter into this
Agreement and the Merger Agreement and to carry out its
obligations under this Agreement and the Merger Agreement.
The execution and delivery of this Agreement by Buyer and
Ballard Medical and the performance of the obligations of
Buyer and Ballard Medical hereunder have been duly
authorized by all necessary corporate action by the
respective Board of Directors of Buyer and Ballard Medical,
and no other corporate proceedings on the part of Buyer or
Ballard Medical are necessary to authorize such execution,
delivery and performance. This Agreement has been duly
executed by Buyer and Ballard Medical and constitutes their
legal, valid and binding obligation, enforceable against
Buyer and Ballard Medical in accordance with its terms.
3.2 NO CONFLICT OR VIOLATION. The execution,
delivery and performance by Buyer and Ballard Medical of
this Agreement do not and will not violate or conflict with
any provision of the charter documents or by-laws of Buyer
or Ballard Medical and do not and will not violate any
provision of law, or any order, judgment or decree of any
court or other governmental or regulatory authority, nor
violate nor will result in a breach of or constitute (with
due notice or lapse of time or both) a default under any
contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument
to which Buyer or Ballard Medical is a party or by which it
is bound or to which any of its properties or assets is
subject, which conflict, violation or default will, in the
case of this clause, have a material adverse effect on
Buyer's or Ballard Medical's business, the transactions
contemplated by the Merger Agreement or Buyer's or Ballard
Medical's ability to perform their respective obligations
hereunder.
3.3 INVESTMENT INTENT. The Shares will be
acquired hereunder solely for the account of Buyer for
investment purposes only and not with a view to or for sale
in connection with any distribution of the securities of the
Company and will not be sold or transferred by Buyer except
in compliance with the Securities Act and applicable state
law.
4. RESIGNATION OF DIRECTORS. As of the Closing
Time, Richard B. Emmitt shall submit his resignation from
the board of directors of Company.
5. FURTHER ASSURANCES. Each of the parties hereto
agrees to use its best efforts at its own expense to take,
or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement.
6. INDEMNIFICATION. The parties shall indemnify each
other as set forth below:
6.1 INDEMNIFICATION BY SELLER. Seller shall
indemnify, defend and hold harmless Buyer, the Company, and
Ballard Medical from and against all claims, losses,
damages, liabilities and expenses (including without
limitation attorneys' fees, settlement costs and any legal
or other expenses for investigation or defending any actions
or threatened actions) asserted against, imposed upon or
incurred by Buyer, the Company, or Ballard Medical in
connection with, on account of, or as a result of (i) any
misrepresentations or breach of any of the representations
and warranties made by Seller herein, or (ii) the breach of
any agreement or obligation of Seller contained herein.
6.2 INDEMNIFICATION BY BUYER AND BALLARD MEDICAL.
Buyer and Ballard Medical, jointly and severally, shall
indemnify, defend and hold harmless Seller from and against
all claims, losses, damages, liabilities and expenses
(including without limitation attorneys' fees, settlement
costs and any legal or other expenses for investigation or
defending any actions or threatened actions) asserted
against, imposed upon or incurred by Seller in connection
with, on account of, or as a result of (i) any
misrepresentations or breach of any of the representations
and warranties made by Buyer or Ballard Medical herein, or
(ii) the breach of any covenant, agreement or obligation of
Buyer or Ballard Medical contained herein.
7. LOANS, EMPLOYMENT AND INTERESTS.
7.1 Neither the Company nor any of its
subsidiaries is indebted to Seller, and Seller shall not
make any claim against the Company or any of its
subsidiaries for any indebtedness or obligation. Seller
acknowledges that it owns no rights or interest in any of
the assets of the Company or any of its subsidiaries.
7.2 Effective upon the Closing Time, Seller
irrevocably, unconditionally and completely releases and
forever discharges Company, Buyer and Ballard Medical, and
their officers and directors, from any claim, controversy,
demand, right, obligation, liability, and cause of action of
every kind and nature (collectively, a "Claim") arising out
of or relating to Seller's ownership interest in Company;
PROVIDED, HOWEVER, that this release shall not relate to any
Claim of Seller arising out of or relating to a breach of
this Agreement.
8. MISCELLANEOUS.
8.1 NOTICES. All notices or other communications
required or permitted hereunder shall be given in writing
and shall be deemed sufficient if delivered by hand,
telecopied, or mailed by registered or certified mail,
postage prepaid (return receipt requested), to Seller at SO-
CAL PARTNERS, L.P., c/o Theodore Holstein, M.D., 2259
Warmouth Street, San Pedro, CA 90732, to Buyer and Ballard
Medical, to Ballard Medical Products, Dale H. Ballard,
President, 12050 Lone Peak Parkway, Draper, Utah 84020, with
a copy to Paul Hess, Esq., 12050 Lone Peak Parkway, Draper,
Utah 84020, or such other address as shall be furnished in
writing by such party, and any such notice or communication
shall be effective and be deemed to have been given as of
the date so delivered or telecopied or three days after the
date so mailed; PROVIDED, HOWEVER, that any notice or
communication changing any of the addresses set forth above
shall be effective and deemed given only upon its receipt.
8.2 ASSIGNMENT. Neither this Agreement nor any
of the rights, interests, or obligations hereunder may be
assigned by any of the parties hereto without the prior
written consent of the other parties.
8.3 PARTIES BOUND AND BENEFITTED. This Agreement
and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.4 ENTIRE AGREEMENT. This Agreement together
with the other agreements referred to herein embodies the
entire agreement and understanding of the parties with
respect to the transactions contemplated hereby and
supersedes all prior written or oral commitments,
arrangements or understandings with respect thereto. There
are no restrictions, agreements, promises, warranties,
covenants or undertakings with respect to the transactions
contemplated hereby other than those expressly set forth
herein.
8.5 ATTORNEYS' FEES. In any legal proceeding
arising out of this Agreement, including with respect to any
instrument, document or agreement made under or in
connection with this Agreement, the prevailing party shall
be entitled to recover its costs and attorneys' fees.
8.6 HEADINGS. The section headings herein are
for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise
affect any of the provisions hereof.
8.7 SEVERABILITY. If any one or more of the
provisions of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement
shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
8.8 COUNTERPARTS; FACSIMILE SIGNATURES. This
Agreement may be executed in two or more counterparts, any
of which counterparts may be executed by facsimile
signatures, all of which shall be considered one and the
same agreement and each of which shall be deemed an
original.
8.9 INDEPENDENT COUNSEL. The parties hereto each
acknowledge that they have been represented by, or have been
given the opportunity to be represented by, independent
counsel of their choosing.
8.10 SURVIVAL OF PROVISIONS. The respective
representations, warranties, covenants and agreements of
each of the parties to this Agreement shall survive the
Closing Time and the consummation of the transactions
contemplated by this Agreement.
8.11 PUBLICITY. Neither Seller, Buyer nor Ballard
Medical shall, or shall permit any of its subsidiaries or
affiliates to, issue or cause the publication of any press
release or other announcement with respect to this Agreement
or the transactions contemplated hereby without the consent
of the other parties, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, in
the event any such press release or announcement is required
by law or stock exchange regulation to be made by the party
proposing to issue the same, consent shall not be required
but such party shall use its best efforts to consult in good
faith with the other parties prior to the issuance of any
such press release or announcement.
IN WITNESS WHEREOF, the parties hereto executed this
Agreement as of the time, day and year first above written.
SO-CAL PARTNERS, L.P. BALLARD MEDICAL PRODUCTS
By: Theodore Holstein, By: Dale H. Ballard,
General Partner President
BALLARD ACQUISITION
CORPORATION
By: Dale H. Ballard,
President
MERGER AGREEMENT
This Merger Agreement (hereinafter called this
"Agreement"), dated as of the 10th day of December, 1996
("Closing Date") by and among Ballard Medical Products, a
Utah corporation ("Ballard"), Ballard Acquisition
Corporation, a Colorado corporation, all of whose capital
stock is owned directly by Ballard ("Merger Sub"), and
Cardiotronics Systems, Incorporated, aka Cardiotronics
Systems, Inc., a Colorado corporation ("Cardiotronics").
Stock Purchase Agreements have been executed by
and among Ballard, Merger Sub, and certain stockholders of
Cardiotronics, whereby Merger Sub has purchased over
ninety percent (90%) of the outstanding shares of
Cardiotronics ("Stock Purchase Agreement").
The Boards of Directors of Ballard, Merger Sub and
Cardiotronics deem it advisable for the mutual benefit of
Ballard, Merger Sub and Cardiotronics, and their
respective shareholders, that Ballard acquire
Cardiotronics by the merger of Merger Sub into
Cardiotronics under the terms and conditions hereinafter
set forth (the "Merger"), and have adopted resolutions
authorizing the transactions contemplated by this Agreement.
Ballard, the sole shareholder of Merger Sub, deems it
advisable and in its best interest for Ballard to acquire
Cardiotronics by the Merger, and has adopted resolutions
authorizing the transactions contemplated by this Agreement.
In consideration of the premises and of the mutual
agreements, representations, warranties and covenants
contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 ACTIONS TO BE TAKEN. Subject to the terms
and conditions of this Agreement, including the fulfillment
(or waiver) of all conditions to the obligations of the
parties contained herein, at the Effective Time (as
hereinafter defined) and pursuant to Title 7 of the Colorado
Revised Statutes (the "Colorado Statutes"), the following
shall occur:
(a) Merger Sub shall be merged with and into
Cardiotronics, which shall be the surviving corporation
(the "Surviving Corporation"). The separate existence and
corporate organization of Merger Sub shall cease at the
Effective Time, and thereupon Cardiotronics and Merger
Sub shall be a single corporation, the name of which shall
be "Cardiotronics."
(b) At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of
the Colorado Statutes. Without limiting the generality of
the foregoing, at the Effective Time, all the property,
right, privileges, powers and franchises of Cardiotronics
and Merger Sub shall vest in the Surviving Corporation and
all debts, liabilities, obligations, restrictions,
disabilities and duties of Cardiotronics and Merger Sub
shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving
Corporation.
(c) The Articles of Incorporation of
Cardiotronics shall be and remain the articles of
incorporation of the Surviving Corporation until amended as
provided by law.
(d) The By-Laws of Cardiotronics shall be and
remain the by-laws of the Surviving Corporation until
amended, as provided by law or by the articles of
incorporation or the by- laws of the Surviving Corporation.
(e) The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors for the
Surviving Corporation, each to hold office in accordance
with the Articles of Incorporation and By-laws of the
Surviving Corporation, and the officers of Cardiotronics
immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or
appointed and qualified.
As soon as practicable after the execution of this
Agreement, Articles of Merger or such other documents as
are necessary, properly approved and executed in accordance
with the Colorado Statutes (the "Articles of Merger"), shall
be filed with the Secretary of State of the State of
Colorado. The Merger shall become effective when the
Articles of Merger are so filed. (The date and time when
the Merger becomes effective is referred to in this
Agreement as the "Effective Time".)
Section 1.2 COMMON STOCK OF SURVIVING CORPORATION. At
the Effective Time, each issued and outstanding share of
common stock of Merger Sub shall be converted into one
validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.
Section 1.3 CONVERSION OR CANCELLATION OF
CARDIOTRONICS COMMON STOCK AND CARDIOTRONICS PREFERRED
STOCK. As of the Effective Time, by virtue of the Merger
and without any action on the part of any holder thereof:
(a) Any shares of Cardiotronics' common stock,
par value $0.012 per share ("Cardiotronics Common Stock"),
and any shares of Cardiotronics Class B Preferred Stock,
par value $0.03 per share, Class C preferred stock, par
value $0.03 per share, Class D preferred stock, par value
$0.03 per share and Class E preferred stock, par value $0.03
per share (collectively, the "Cardiotronics Preferred
Stock"), (Cardiotronics Common Stock and Cardiotronics
Preferred Stock being sometimes collectively referred to
herein as "Cardiotronics Capital Stock") then held in the
treasury of Cardiotronics shall be canceled and retired.
(b) Any shares of Cardiotronics Preferred Stock
issued and outstanding immediately prior to the Effective
Time (other than any shares of Cardiotronics Preferred
Stock to be canceled pursuant to Section 1.3(a)) shall be
converted into the number of shares of Cardiotronics
Common Stock into which they are convertible according to
their rights and preferences under the Articles of
Incorporation of Cardiotronics. There are outstanding no
shares of Cardiotronics Class B Preferred Stock, 2,764,622
shares of Class C Convertible Preferred Stock, 2,119,828
shares of Class D Convertible Preferred Stock and 6,680,172
shares of Class E Convertible Preferred Stock. Each share
of Cardiotronics Preferred Stock is convertible into .25
shares of Cardiotronics Common Stock for a total of
2,891,155 shares of Cardiotronics Common Stock.
(c) Any shares of Cardiotronics Common Stock
issued and outstanding immediately prior to the Effective
Time,
INCLUDING shares of Cardiotronics Common Stock
resulting from the conversion of Cardiotronics Preferred
Stock pursuant to Section 1.3(b) above;
BUT EXCLUDING any shares of Cardiotronics Common
Stock to be canceled pursuant to Section 1.3(a) above;
AND EXCLUDING any shares with respect to which the
statutory right of dissent has been perfected, as provided
in Section 1.4 below;
shall be exchanged for Three Dollars and Seventy-Five Cents
($3.75) per share ("Purchase Price").
Section 1.4 DISSENTING SHARES. Each holder of shares
of Cardiotronics Capital Stock who has complied with all
requirements for perfecting shareholders rights of dissent,
as set forth in Article 113 of the Colorado Statutes, shall
be entitled to such dissenters' rights under the Colorado
Statutes with respect to such shares (the "Dissenting
Shares").
Section 1.5 CARDIOTRONICS OPTIONS. At the Closing
Date, each then outstanding option ("Cardiotronics
Option") granted under the Cardiotronics 1993 Stock Option
Plan, 1994 Stock Option Plan and 1995 Stock Option Plan
(collectively, the "Cardiotronics Stock Option Plans"),
which has an exercise price, regardless whether such option
has vested or is exercisable, of less than the Purchase
Price shall be converted into the right to receive from
Merger Sub an amount equal to the difference between the
Purchase Price and the exercise price for such option;
provided that such optionholder agrees to cancel in writing
any remaining options. All remaining outstanding
Cardiotronics Options granted under the Cardiotronics
Stock Option Plans will remain outstanding.
Section 1.6 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time,
Ballard shall deposit, or shall cause to be deposited, with
Corporate Stock Transfer or such other bank or trust company
as may be designated by Ballard and is reasonably
satisfactory to Cardiotronics (the "Exchange Agent"), for
the benefit of the holders of shares of Cardiotronics
Capital Stock, for exchange in accordance with this Article
I through the Exchange Agent, cash sufficient to purchase
all outstanding shares of Cardiotronics Capital Stock
purchasable pursuant to Section 1.3.
(b) EXCHANGE PROCEDURES. As promptly as
practicable after the Effective Time, Ballard shall cause
the Exchange Agent to mail to each holder of a certificate
or certificates which immediately prior to the Effective
Time represented outstanding shares of Cardiotronics
Capital Stock (the "Certificates") (i) a letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to
the Exchange Agent, and shall be in customary form) and (ii)
instructions for use in effecting the surrender of the
Certificates in exchange for cash. Upon surrender to the
Exchange Agent of a Certificate for cancellation, together
with such letter of transmittal, duly executed, and such
other documents as may be required pursuant to such
instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor cash equal to that
number of shares of Cardiotronics Common Stock formerly
represented by such Certificate (after taking into account
all shares of Cardiotronics Common Stock then held by such
holder) multiplied by the Purchase Price. In the event of
transfer of ownership of shares of Cardiotronics Capital
Stock which transfer is not registered in the transfer
records of Cardiotronics, cash equal to that number of
shares of Cardiotronics Common Stock multiplied by the
Purchase Price may be paid to a transferee if the
Certificate representing such shares of Cardiotronics
Capital Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.6, each Certificate shall
be deemed at any time after the Effective Time to represent
only the right to receive cash upon such surrender.
(c) LOST CERTIFICATES. Notwithstanding the
requirements of any provision of this Section 1.6 that
Certificates be deposited with or surrendered to the
Exchange Agent, in the event Certificates have become
destroyed, lost or stolen, in lieu of such deposit or
surrender registered holders of such Certificates shall
furnish to the Exchange Agent, evidence satisfactory to the
Exchange Agent, in its discretion, of the ownership of and
the destruction, loss or theft of such Certificates, and
shall furnish to the Exchange Agent, an indemnity
satisfactory to it and to Ballard, in their discretion,
and shall comply with such other reasonable regulations as
the Exchange Agent may prescribe.
Section 1.7 ARTICLES OF MERGER; OTHER NECESSARY
DOCUMENTS. The Board of Directors of Cardiotronics
shall take such actions as are necessary, as set forth in
Colorado Business Corporation Act Section 7-111-104, to
effectuate the Merger; including, but not limited to,
causing the Articles of Merger to be filed with the
Secretary of State of the State of Colorado and taking such
other and further actions as may be required by the Colorado
Statutes in connection with such filing and in order to
consummate the Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BALLARD AND MERGER SUB
Ballard and Merger Sub represent, warrant to, and agree
with, Cardiotronics as follows:
Section 2.1 CORPORATE ORGANIZATION. Ballard is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Utah, Merger Sub is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado and each
has all requisite corporate power and authority to own,
operate and lease its properties and to conduct its business
as it is now being conducted. Each of Ballard's significant
subsidiaries (the term "significant subsidiary" being
defined for purposes of this Agreement in Section 8.7) is a
corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of
incorporation, and Ballard and each of its significant
subsidiaries is duly qualified or licensed as a foreign
corporation in each other jurisdiction where it owns or
leases substantial properties, except where the failure to
be so qualified or licensed would not have a material
adverse effect on the financial condition, properties or
businesses of Ballard and its subsidiaries taken as a whole.
Ballard has previously delivered to Cardiotronics a true and
complete copy of its Articles of Incorporation and By-Laws.
Section 2.2 AUTHORIZATION, EXECUTION AND DELIVERY.
Ballard and Merger Sub each has the corporate power and
authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this
Agreement and the other agreements and documents referred to
herein to which Ballard or Merger Sub is or will be a party
or a signatory (the "Ballard Ancillary Agreements") by
Ballard and Merger Sub and the consummation of the
transactions contemplated hereby have been duly authorized
by the respective Board of Directors of Ballard and Merger
Sub and no other corporate proceedings on the part of
Ballard are necessary to authorize the execution and
delivery Agreement and the transactions contemplated hereby
or thereby. This Agreement has been duly and validly
executed and delivered by Ballard and Merger Sub and
constitutes, and upon execution and delivery thereof as
contemplated by this Agreement, the Ballard Ancillary
Agreements will constitute, the legal, valid and binding
agreements of Ballard and Merger Sub, enforceable against
Ballard and Merger Sub in accordance with its and their
respective terms, except to the extent that enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies
("Enforceability Exceptions"). Neither Ballard nor Merger
Sub is subject to or obligated under any charter, by-law or
contract provision or any note, mortgage, lease, agreement,
bond, indenture, instrument, license, franchise or permit,
or subject to any order, judgment, injunction, writ or
decree, which would be breached or violated by its executing
or carrying out of this Agreement, except for breaches or
violations, if any, which individually or in the aggregate
would not have a material adverse effect on the financial
condition, properties or businesses of Ballard and its
subsidiaries taken as a whole. Other than in connection
with or in compliance with the provisions and requirements
of the Colorado Statutes, the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the NYSE and the
securities or blue sky laws of the various states, no
authorization, consent or approval of, or filing with, any
public body or governmental authority is necessary for the
consummation by Ballard or Merger Sub of the transactions
contemplated by this Agreement, except for such
authorizations, consents, approvals or filings, the failure
to obtain or make which would not have a material adverse
effect on the financial condition, properties or businesses
of Ballard and its subsidiaries taken as a whole.
Section 2.3 REPORTS; ACCURACY OF INFORMATION. Ballard
has previously furnished to Cardiotronics true and complete
copies of its Annual Reports on Form 10-K (including all
amendments thereto) filed with the SEC for each of its
fiscal years ended September 30, 1993 through September 30,
1996, inclusive, and a true and complete copy of its
Quarterly Reports (including all amendments thereto) on Form
10-Q filed with the SEC for each of the fiscal quarters
ended December 31, 1995, March 31, 1996 and June 30, 1996
(the "Ballard Reports"). Each of the balance sheets
included in the Ballard Reports, as finally amended
(including any related notes and schedules), fairly presents
the consolidated financial position of Ballard as of its
date and the other financial statements included in the
Ballard Reports, as finally amended (including any related
notes and schedules), fairly present the consolidated
results of operations or other information included therein
of Ballard for the periods or as of the dates therein set
forth, subject, where appropriate, to normal year-end
adjustments, in each case in accordance with generally
accepted accounting principles consistently applied during
the periods involved (except as otherwise stated therein).
Ballard also has previously furnished to Cardiotronics a
true and complete copy of (i) each final prospectus and
definitive proxy statement filed by Ballard with the SEC
since September 30, 1996 and (ii) each report other than the
Ballard Reports filed by Ballard with the SEC since
September 30, 1996. None of the documents referred to in
this Section 2.3 contained, as of its date, any untrue
statement of a material fact or any omission to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 2.4 ABSENCE OF CHANGES. Except as described
in any document referred to in Section 2.3, since September
30, 1996, there has not been any material adverse change in
the financial condition, properties or businesses of Ballard
and its subsidiaries taken as a whole.
Section 2.5 COMPLIANCE WITH LAWS. The businesses of
Ballard and its subsidiaries are not being conducted in
violation of any applicable law, ordinance, regulation,
decree or order of any governmental entity ( Laws ), except
for violations which either singly or in the aggregate do
not and are not expected to have a material adverse effect
on the financial condition, properties or businesses of
Ballard and its subsidiaries taken as a whole.
Section 2.6 LEGAL PROCEEDINGS. Except for matters
referred to in any of the documents referred to in Section
2.3, (i) to the best of Ballard's knowledge, no material
investigation or review by any governmental entity with
respect to Ballard or any of its subsidiaries is pending or
threatened, nor has any governmental entity indicated to
Ballard an intention to conduct the same, and (ii) there is
no action, suit or proceeding, pending or, to the best of
Ballard's knowledge, threatened against or affecting Ballard
or its subsidiaries at law or in equity, or before any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, which
either singly or in the aggregate is likely to result in any
material adverse change in the financial condition,
properties or businesses of Ballard and its subsidiaries
taken as a whole.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CARDIOTRONICS
Except as set forth in the Disclosure Memorandum to the
Merger Agreement, dated as of the Closing Date
("Cardiotronics Disclosure Memorandum"), Cardiotronics
represents, warrants to, and agrees with, Ballard and Merger
Sub as follows:
Section 3.1 CORPORATE ORGANIZATION. Cardiotronics is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado and is duly
qualified or licensed as a foreign corporation in each other
jurisdiction where it owns or leases substantial properties,
except where the failure to be so qualified or licensed
would not have a material adverse effect on the financial
condition, properties or businesses of Cardiotronics and its
subsidiaries taken as a whole ("Cardiotronics' Business").
Cardiotronics has one subsidiary, R2 Medical Systems, Inc. (R2"),
which is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified or
licensed as a foreign corporation in each other jurisdiction
where it owns or leases substantial properties, except where
the failure to be so qualified or licensed would not have a
material adverse effect on the financial condition,
properties or businesses of Cardiotronics and its subsidiary
taken as a whole. Cardiotronics has no subsidiaries other
than R2. Cardiotronics has no interest, direct or indirect,
and has no commitment to purchase any interest, direct or
indirect, in any other corporation (except R2) or in any
partnership, joint venture or other business enterprise or
entity. Cardiotronics and its subsidiary have the requisite
corporate power and authority to carry on their respective
business as it is now being conducted. Cardiotronics has
previously delivered to Ballard a true and complete copy of
its Certificate of Incorporation and By-Laws.
Section 3.2 CAPITALIZATION. The authorized capital
stock of Cardiotronics consists of 100,000,000 shares of
Cardiotronics Common Stock, of which 476,686 shares were
outstanding on November 27, 1996, and 40,000,000 shares of
Preferred Stock, par value $0.03 per share ("Cardiotronics
Preferred Stock"), of which 0 shares of Class B Preferred
Stock ( Cardiotronics Class B Preferred Stock ), 2,764,622
shares of Class C Convertible Preferred Stock
("Cardiotronics Class C Preferred Stock"), 2,119,828 shares
of Class D Convertible Preferred Stock ("Cardiotronics
Class D Preferred Stock") and 6,680,172 shares of Class E
Convertible Preferred Stock ("Cardiotronics Class E
Preferred Stock") were outstanding on November 27, 1996. As
of November 27, 1996, each share of Cardiotronics Preferred
Stock is convertible into .25 shares of Cardiotronics Common
Stock for a total of 2,891,155 shares of Cardiotronics
Common Stock. All of the outstanding shares of
Cardiotronics Common Stock and Cardiotronics Preferred Stock
have been validly issued and are fully paid and
nonassessable. The issuance and sale of all Cardiotronics
Capital Stock has been in full compliance with all
applicable federal and state securities laws. As of
November 27, 1996, Cardiotronics had reserved up to
11,973,369 authorized but unissued shares of Cardiotronics
Common Stock for issuance: (i) pursuant to outstanding
options under the Cardiotronics 1993 Stock Option Plan, (ii)
pursuant to outstanding options under the Cardiotronics 1994
Stock Option Plan, (iii) pursuant to outstanding options
under the Cardiotronics 1995 Stock Option Plan, (iv)
pursuant to outstanding underwriter's warrants, (v) pursuant
to options granted to key employees under their employment
agreements and (vi) upon conversion of the Cardiotronics
Preferred Stock. Except as set forth above, Cardiotronics
does not have any shares of its capital stock issued or
outstanding. Except for options to purchase and rights to
acquire shares of Cardiotronics Common Stock granted
pursuant to the stock option plans referred to above,
outstanding warrants, options granted pursuant to employment
agreements and rights to acquire shares of Cardiotronics
Common Stock upon conversion of Cardiotronics Preferred
Stock (all of the shares of Cardiotronics Common Stock
issuable pursuant to the foregoing being included in the
aggregate number of shares reserved for issuance as of
November 27, 1996, as set forth above), Cardiotronics does
not have any outstanding subscriptions, options, warrants,
rights or other agreements or commitments obligating
Cardiotronics to issue shares of its capital stock and there
is no authorized or outstanding security of any kind
convertible into or exchangeable for any Cardiotronics
capital stock or securities. All of the shares of
Cardiotronics' subsidiary, R2, have been validly issued, are
fully paid and nonassessable and are owned free and clear of
all liens, charges, claims and encumbrances.
Section 3.3 AUTHORIZATION, EXECUTION AND DELIVERY.
Cardiotronics has the corporate power and authority to enter
into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and
the other agreements and documents referred to herein to
which Cardiotronics is or will be a party or a signatory
(the "Cardiotronics Ancillary Agreements") and the
consummation of the transactions contemplated hereby have
been duly authorized by its Board of Directors and, no other
corporate proceedings on the part of Cardiotronics are
necessary to authorize this Agreement and the transactions
contemplated hereby or thereby. This Agreement has been
duly and validly executed and delivered by Cardiotronics and
constitutes, and upon execution and delivery thereof as
contemplated by this Agreement, the Cardiotronics Ancillary
Agreements will constitute, the legal, valid and binding
agreements of Cardiotronics, enforceable against
Cardiotronics in accordance with its and their respective
terms, subject to the Enforceability Exceptions.
Cardiotronics is not subject to or obligated under any
charter, by- law or contract provision or any note,
mortgage, lease, agreement, bond, indenture, instrument,
license, franchise or permit, or subject to any order,
judgment, injunction, writ or decree, which would be
breached or violated by its executing or carrying out this
Agreement except for breaches or violations, if any, which
individually and in the aggregate would not have a material
adverse effect on Cardiotronics' Business. Other than in
connection with or in compliance with the provisions and
requirements of the Colorado Statutes, the Securities Act,
the Exchange Act, the Nasdaq SmallCap Market and the
securities or blue sky laws of the various states, no
authorization, consent or approval of, or filing with, any
public body or governmental authority is necessary for the
consummation by Cardiotronics of the transactions
contemplated by this Agreement, except for such
authorizations, consents, approvals or filings, the failure
to obtain or make which would not have a material adverse
effect on Cardiotronics' Business.
Section 3.4 REPORT, ACCURACY OF INFORMATION.
Cardiotronics has previously furnished to Ballard true and
complete copies of its Annual Reports on Form 10-K
(including all amendments thereto) filed with the SEC for
each of its fiscal years ended December 31, 1993 through
December 31, 1995, inclusive, and a true and complete copy
of its Quarterly Reports (including all amendments thereto)
on Form 10-Q filed with the SEC for each of the fiscal
quarters ended March 31, 1996, June 30, 1996, and September
30, 1996 (the "Cardiotronics Reports"). Each of the balance
sheets included in the Cardiotronics Reports, as finally
amended (including any related notes and schedules), fairly
presents the consolidated financial position of
Cardiotronics as of its date and the other financial
statements included in the Cardiotronics Reports, as finally
amended (including any related notes and schedules), fairly
present the consolidated results of operations or other
information included therein of Cardiotronics for the
periods or as of the dates therein set forth, subject, where
appropriate, to normal year-end adjustments, in each case in
accordance with generally accepted accounting principles
consistently applied during the periods involved (except as
otherwise stated therein). Cardiotronics has also
previously furnished to Ballard a true and complete copy of
(i) each final prospectus and definitive proxy statement
filed by Cardiotronics or any of its significant
subsidiaries with the SEC since December 31, 1995, and (ii)
each report other than the Cardiotronics Reports filed by
Cardiotronics with the SEC since December 31, 1995. None of
the documents referred to in this Section 3.4 contained, as
of its date, any untrue statement of a material fact or any
omission to state a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
Section 3.5 LIABILITIES.
(a) As of September 30, 1996, Cardiotronics did
not have any liabilities or obligations of any nature
whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due), in excess of
$10,000 in any single instance and $25,000 in the aggregate
(including without limitation any tax liabilities or
deferred tax liabilities, or any other debts, liabilities,
or obligations relating to or arising out of any act,
omission, transaction, circumstance, sale of goods or
services, state of facts, or other condition which occurred
on or before September 30, 1996, whether or not then known,
due, or payable), which were not accurately and fully
reflected or reserved against in accordance with generally
accepted accounting principles in the September 30, 1996
Balance Sheet included in Cardiotronics' Form 10-Q for the
quarter ending September 30, 1996.
(b) As of December 31, 1995, Cardiotronics did
not have any liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise and
whether due or to become due), in excess of $10,000 in any
single instance and $25,000 in the aggregate (including
without limitation any tax liabilities or deferred tax
liabilities, or any other debts, liabilities, or obligations
relating to or arising out of any act, omission,
transaction, circumstance, sale of goods or services, state
of facts, or other condition which occurred on or before
December 31, 1995, whether or not then known, due, or
payable), which were not accurately and fully reflected or
reserved against in the December 31, 1995 Balance Sheet
included in Cardiotronics' Form 10-K for the year ending
December 31, 1995.
(c) All of Cardiotronics' liabilities and
obligations of any nature whatsoever (whether absolute,
accrued, contingent, or otherwise and whether due or to
become due), arising after September 30, 1996 and in excess
of $10,000 in any single instance and $25,000 in the
aggregate, as of October 31, 1996 are itemized in the
Cardiotronics Disclosure Memorandum, including the name,
telephone number, and address of the creditor, the nature of
the obligation, and the balance owed.
Section 3.6 CERTAIN ASSET LISTINGS AND DESCRIPTIONS.
(a) The Cardiotronics Disclosure Memorandum sets
forth an accurate and complete list and description, as of
the Closing Date, of all real property in which
Cardiotronics has a leasehold or other interest or which is
used by Cardiotronics in connection with the operation of
its business, together with a description of each lease,
sublease, license, or any other instrument under which
Cardiotronics claims or holds such leasehold or other
interest or right to the use thereof or pursuant to which
Cardiotronics has assigned, sublet or granted any rights
therein, identifying the parties thereto, the rental or
other payment terms, expiration date and cancellation and
renewal terms thereof. Cardiotronics has previously
delivered to Ballard true and complete copies of all such
leases, subleases, licenses and other instruments.
(b) The Cardiotronics Disclosure Memorandum
contains an accurate and complete list and description, as
of November 30, 1996, of all machinery, tools, equipment,
motor vehicles, rolling stock and other tangible personal
property (except for individual items having a book value of
less than $5,000 or which do not, in the aggregate, have a
total book value of more than $10,000), setting forth with
respect to all such listed property a summary description of
all leases, liens, claims, encumbrances, charges,
restrictions, covenants and conditions relating thereto
identifying the parties thereto, the rental or other payment
terms, expiration date and cancellation and renewal terms
thereof.
(c) Cardiotronics has delivered to Ballard an
accurate and complete list and description, as of December
6, 1996, of Cardiotronics' inventory of finished goods,
semi-finished goods, work in process, and raw materials.
Section 3.7 Absence of Changes or Events. Except as
described in any document referred to in Section 3.4, since
December 31, 1995 Cardiotronics has conducted its business
only in the ordinary course, and there has not been:
(a) Any material adverse change in Cardiotronics'
Business;
(b) Any material loss (whether by damage or
destruction, in the nature of a casualty loss or otherwise,
and whether covered by insurance or not), affecting any
tangible property or asset or any intangible assets of
Cardiotronics;
(c) Any entering into of any collective
bargaining or other labor agreement, or any actual or, to
the best knowledge of Cardiotronics, any threatened strike
or other labor trouble or dispute which materially affects
or might materially affect the condition (financial or
otherwise), properties, business, operations or prospects of
Cardiotronics, nor has there been any labor union
organizing activity;
(d) Any loss or, to the best knowledge of
Cardiotronics, any threatened loss of any permit, license,
qualification, special charter or certificate of authority
held or enjoyed or formerly held or enjoyed by Cardiotronics
which loss has had or upon occurrence would have a material
adverse effect on the condition (financial or otherwise),
properties, business, operations or prospects of
Cardiotronics;
(e) The adoption or rescission of any statute,
regulation, order, ordinance or other law, which materially
adversely affects the condition (financial or otherwise),
properties, business, operations or prospects of
Cardiotronics;
(f) Any material indebtedness, liability or
obligation (whether absolute, accrued, contingent or
otherwise) incurred by Cardiotronics or any transaction
entered into by Cardiotronics, other than in the ordinary
course of business and consistent with past practice, or any
guarantee by Cardiotronics of any indebtedness, liability or
obligation of any other person;
(g) Any declaration, setting aside or payment of
any dividend or other distribution in respect of any of the
capital stock or other securities of Cardiotronics;
(h) Any material obligation, liability, lien or
encumbrance paid, discharged or satisfied by or on behalf of
Cardiotronics other than current liabilities reflected on
the December 31, 1995 Balance Sheet and current liabilities
incurred since December 31, 1995 in the ordinary course of
business and consistent with past practices;
(i) Any material mortgage, lien, pledge, charge
or encumbrance affecting the properties of Cardiotronics
(except liens for current property taxes not yet due and
payable) created, suffered or assumed by or on behalf of
Cardiotronics;
(j) Any sale, transfer or other disposition of
any material tangible asset of Cardiotronics or any
cancellation or compromise of any debt to or claim of
Cardiotronics, except in the ordinary course of business and
consistent with past practice, nor has there been any
disposition of any of Cardiotronics' material intangible or
intellectual properties, assets or rights, nor has there
been any waiver or cancellation of any right of substantial
value;
(k) Any loan made or increased by Cardiotronics,
including any loan to any officer, director, employee or
agent of Cardiotronics or to any member of any of their
families;
(l) Any material capital expenditure, addition or
improvement made or committed to be made by or on behalf of
Cardiotronics;
(m) Any material failure on the part of
Cardiotronics to operate in the ordinary course so as to
preserve its Business organization intact, to retain the
services of its employees and to preserve its goodwill and
relationships with customers, suppliers, creditors and
others having business relationships with it;
(n) Any material write-off as uncollectible of
any notes or accounts receivable, or any portions thereof;
(o) Any material failure to maintain the
financial books and records of Cardiotronics in the usual,
regular and ordinary manner and in accordance with good
business practice or any material change in any accounting
principle or practice of Cardiotronics;
(p) Any notice received by Cardiotronics of
termination of any material contract, lease, or other
agreement;
(q) Any change by Cardiotronics in its banking or
safe deposit arrangements;
(r) Any institution, settlement, or agreement to
settle, any litigation, action, or proceeding before any
court or governmental body relating to Cardiotronics'
Business or assets which would have a material adverse
effect on the business, operations or financial condition of
Cardiotronics;
(s) Any material failure to replenish
Cardiotronics' inventories and supplies in a normal and
customary manner consistent with its prior practice and
prudent business practices; nor has there been any purchase
commitment in excess of the normal, ordinary, and usual
requirements of Cardiotronics' Business; nor has there been
any change in Cardiotronics' selling, pricing, advertising,
or personnel practices inconsistent with prior practice and
prudent business practices; or
(t) Any agreement or commitment by Cardiotronics
to do any of the foregoing items set forth in paragraphs
(c), (f), (g), (h), (i), (j), (k), (l), (n), (q), (r) or
(s).
Section 3.8 TITLE TO ASSETS AND PROPERTIES; CONDITION.
(a) Cardiotronics owns or leases or otherwise has
the right to use all of its assets and properties, which are
presently being used in or are reasonably necessary to carry
on its business and operations as presently conducted, and
such assets, properties and agreements are all of the
assets, properties and agreements which are used in or are
reasonably necessary to carry on its business and operations
as presently conducted. All assets and properties leased or
owned are located in Cardiotronics' offices in Carlsbad,
California.
(b) Each lease or agreement under which
Cardiotronics is a lessee of any property, real or personal,
owned by a third party is a valid and continuing agreement
without any default of Cardiotronics thereunder or, to the
best knowledge of Cardiotronics, of the other party thereto,
and this Agreement and the consummation of the transactions
contemplated hereby will not cause any default under any
such lease or agreement.
(c) Cardiotronics has good and marketable title
to all property and assets which it owns, free and clear of
all mortgages, liens, pledges, charges, claims, encumbrances
or restrictions of any kind whatsoever (whether accrued,
absolute, contingent, or otherwise), except liens for
current property taxes not yet due and payable and liens
that do not materially interfere with the ability of
Cardiotronics to conduct its business or qualify as
material liens.
(d) Cardiotronics has not received any notice of
violation of any regulation, ordinance, law, order or other
requirement relating to the property, real or personal, or
Cardiotronics' Business. Cardiotronics is unaware of any
changes in any such regulation, ordinance, law, order or
other requirement affecting any such property or any
condemnation proceeding, pending or threatened, which might
prohibit Cardiotronics from continuing its present use of
such property or from using such property for the purpose
for which it was acquired, or which might curtail or
interfere with the present or proposed use of such property.
(e) The furniture, fixtures, leaseholds,
equipment and other personal property of Cardiotronics are
in good operating condition and repair.
Section 3.9 ACCOUNTS RECEIVABLES. The Cardiotronics
Disclosure Memorandum contains an accurate and complete list
of all receivables of Cardiotronics as of December 6, 1996.
All receivables of Cardiotronics (including accounts
receivable, loans receivable, and advances) have arisen from
and represent arms- length, bona fide transactions made in
the ordinary course of business. The receivables of
Cardiotronics are good and collectible (net of applicable
reserve for bad debts).
Section 3.10 TAXES. Cardiotronics has filed all
federal Tax returns and all state and foreign tax returns
required to be filed, and has paid, or has made adequate
provision or set up an adequate accrual or reserve for the
payment of, all Taxes required to be paid in respect of all
periods for which returns have been made or are due, and has
established an adequate accrual or reserve for the payment
of all Taxes payable in respect of the period subsequent to
the last of said periods required to be so accrued or
reserved (except in either case in an amount not material),
and in its opinion it has no material liability for Taxes in
excess of the amount so paid or accruals or reserves so
established. Cardiotronics is not delinquent in the payment
of any material Tax and is not delinquent in the filing of
any Tax returns, and no material deficiencies for any Tax
have been threatened, claimed, proposed or assessed. The
Cardiotronics U.S., state and foreign income tax returns,
respectively, have never been audited by the Internal
Revenue Service or comparable state or foreign agencies.
For the purposes of this Agreement (except for purposes of
the preceding sentence), the term "Tax" shall include all
federal, state, local, foreign, income, gains, franchise,
excise, property, sales, use, license, payroll, occupation,
recording, value added or transfer taxes, governmental
charges, fees, levies or assessments (whether payable
directly or by withholding), and includes, with respect to
such taxes, any estimated tax, interest and penalties or
additions to tax and interest on such penalties and
additions to tax.
Section 3.11 COMPLIANCE WITH LAWS.
(a) The Business of Cardiotronics and its
subsidiary are not being conducted in violation of any
applicable Laws, except for violations which either singly
or in the aggregate do not and are not expected to have a
material adverse effect on Cardiotronics' Business.
(b) Cardiotronics is in material compliance with
all Federal, state and local laws and regulations regarding
the release of toxic or hazardous materials or other
pollutants or contaminants (together "Hazardous Substances")
into the atmosphere or the generation, storage or treatment
of Hazardous Substances, and there are no Hazardous
Substances in the buildings or soil on, or in the ground
water under, any properties which are owned or leased by
Cardiotronics which could result in an obligation of
Cardiotronics to remedy the condition. There is no other
liability of Cardiotronics under any Federal, state or local
law or regulation relating to the environment.
Section 3.12 LEGAL PROCEEDINGS. Except for matters
referred to in any of the documents referred to in Section
3.4, (i) no material investigation or review by any
governmental entity with respect to Cardiotronics or any of
its subsidiaries is pending or, to the best knowledge of
Cardiotronics, threatened, nor has any governmental entity
indicated to Cardiotronics an intention to conduct the same,
and (ii) there is no action, suit or proceeding pending or,
to the best knowledge of Cardiotronics, threatened against
or affecting Cardiotronics or its subsidiaries at law or in
equity, or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency
or instrumentality, which either singly or in the aggregate
is likely to result in any material adverse change in
Cardiotronics' Business.
Section 3.13 AGREEMENTS WITH EMPLOYEES.
(a) The Cardiotronics Disclosure Memorandum
contains a list of (i) all written employment agreements,
commission plans, bonus plans and all material unwritten
employment agreements with any employee or agent of
Cardiotronics, and the total compensation (separately
stating salary and bonus or other compensation) payable to
each of them, including the fringe benefits (other than
those made available to employees generally) provided to
each of them, (ii) all officers and directors of
Cardiotronics and the total compensation (separately stating
salary and bonus) paid to each of them in 1995 and payable
to each of them in 1996, including the fringe benefits
(other than those made available to employees generally)
provided to each of them, (iii) a list of each present and
former employee of Cardiotronics paid in excess of $30,000
during the year ended December 31, 1995; and any employee
of Cardiotronics paid in excess of $30,000 on an annualized
basis after December 31, 1995, and the job description or
title and the total compensation of each such employee, and
(iv) all employee handbooks, brochures or booklets setting
forth the employment policies or practices of Cardiotronics.
(b) Cardiotronics is not in default in any
material respect with respect to its payment or benefit
obligations to its employees.
(c) A listing of departments of Cardiotronics,
including employee job classifications, numbers of employees
and compensation ranges is referenced in the Cardiotronics
Disclosure Memorandum.
(d) Cardiotronics has no contract or collective
bargaining agreement with any union. None of the employees
of Cardiotronics are members of any union.
(e) There is no employee of Cardiotronics who
cannot be dismissed upon receiving reasonable notice of
termination.
(f) Cardiotronics has withheld from payments to
employees all Taxes (as defined in Section 3.10) and other
deductions required to be withheld under federal, state, and
local law, and has timely paid and remitted such amounts
(together with required employer contributions in respect
thereof) to the appropriate authorities.
Section 3.14 EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Section 3.14, the term
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the terms "employee welfare benefit
plan" and "employee pension benefit plan" have the meanings
set forth in ERISA Section 3(1) and 3(2), respectively.
(b) Cardiotronics has never maintained or
participated in any profit sharing (defined contribution)
plan or in any employee welfare benefit plan or employee
pension benefit plan.
(c) No employee of Cardiotronics participates in,
and Cardiotronics does not participate in or contribute to,
a multi-employer plan (as defined in Section 3(37) of
ERISA).
(d) Cardiotronics is not a member of a controlled
group of corporations (as defined in Section 414(b) of the
Code) or under common control (as defined in Section 414(c)
of the Code) with any other trade or business (whether or
not incorporated).
Section 3.15 Licenses, Patents, Trademarks, Etc.
(a) The Cardiotronics Disclosure Memorandum sets
forth an accurate and complete list, as of the Closing Date,
of all permits, franchises, approvals, authorizations,
consents, licenses, identification numbers, accreditations
and registrations ("Licenses"), if any, issued or granted
to, or held by Cardiotronics or any affiliate of
Cardiotronics, and indicating the person or entity to which
any such License was issued. All such Licenses are valid
and in full force and effect, no proceedings or actions with
respect to the suspension, cancellation or any other aspect
of any of them is pending or, to the best knowledge of
Cardiotronics, threatened, and no basis exists therefor and
the transactions contemplated hereby will not affect such
Licenses.
(b) The Cardiotronics Disclosure Memorandum sets
forth an accurate and complete list, as of the Closing Date,
of all domestic and foreign patents, patent and know-how
licenses, trade names, trademark and service mark
registrations, common law trademarks, copyright
registrations, copyrights, and applications for any of the
foregoing ("Intellectual Properties"), owned or used in the
conduct of the Business of Cardiotronics, specifying the
jurisdiction in or by which such Intellectual Properties
have been registered, filed or issued. All Intellectual
Properties are valid.
(c) Cardiotronics has all Licenses and owns, or
possesses adequate rights to use, all Intellectual
Properties and all inventions, technology, processes,
products, designs, computer programs, know-how, trade
secrets and formulae necessary to conduct its Business and
there are no actual or, to the best knowledge of
Cardiotronics, threatened claims, assertions or litigation
(nor to the best knowledge of Cardiotronics is there any
basis therefor) relating to Cardiotronics' ability to use
the foregoing. There are no pending, and to the best of
knowledge of Cardiotronics knowledge, no threatened
interferences or oppositions involving any patents or patent
applications of Cardiotronics. Cardiotronics is not
infringing upon or otherwise violating the rights of any
third party with respect to any of Cardiotronics' products.
Cardiotronics has not received any written claim or notice
alleging any such infringement or violation. No proceedings
have been instituted against Cardiotronics, nor, to the best
knowledge of Cardiotronics, are any proceedings threatened
alleging any such infringement or violation. Cardiotronics
does not know of any basis for any such proceeding or claim.
There is no infringement claim or other adverse judgment or
order against Cardiotronics with respect to any of the
foregoing. There are no material infringements of any
Cardiotronics Intellectual Properties.
(d) Cardiotronics has not received any claim that
any employee affiliated with Cardiotronics has, in respect
of his or her activities to date, violated any of the terms
or conditions of an employment contract with any third
party, or disclosed or utilized any trade secrets or
proprietary information or documentation of any third party,
or interfered in the employment relationship between any
third party and any of its employees.
(e) Cardiotronics has taken reasonable measures
to maintain the confidentiality of its processes and
formulas, research and development results, and other
know-how, the value of which is dependent upon the
maintenance of the confidentiality thereof.
(f) Cardiotronics owns all of the technology,
patents, trade secrets, and other intellectual properties
and assets it received in the merger transaction with R2,
and R2 owns all of its technology, patents, trade secrets,
and other intellectual properties and assets, free and clear
of any liens, valid claims, encumbrances, or title defects
whatsoever.
Section 3.16 CONTRACTS, AGREEMENTS, ETC.
(a) Except as set forth and briefly described in
the Cardiotronics Disclosure Memorandum, Cardiotronics is
not a party to, or bound by, any material contract,
agreement, understanding, commitment or engagement. Other
than purchase and sales orders entered into in the ordinary
course of business, the Cardiotronics Disclosure Memorandum
lists and describes any and all contracts, agreements,
commitments and engagements material to Cardiotronics (the
"Contracts"), as of the Closing Date, including without
limitation all (i) supply and service contracts to which
Cardiotronics is a party as vendor or vendee, (ii) contracts
for the purchase or lease of capital equipment, (iii)
consulting contracts and agreements, (iv) OEM contracts, (v)
employee health and welfare, pension, bonus, life,
hospitalization or other insurance, medical, deferred or
incentive compensation, profit sharing, loan and other
employee benefit plans or arrangements, (vi) contracts or
agreements regarding credit or borrowed money, (vii)
guaranties, (viii) letters of credit, (ix) surety and
indemnification agreements, (x) confidentiality agreements,
(xi) covenants not to compete, (xii) leases of real
property, as lessor or lessee, (xiii) leases of personal
property, as lessor or lessee, (xiv) all contracts and
agreements regarding Licenses and Intellectual Properties,
(xv) all agreements or commitments regarding debts and
equity securities of Cardiotronics and any interest therein,
(xvi) all contracts and agreements regarding the
distribution or payment of profits or dividends, (xvii) all
contracts and agreements regarding the allocation or sharing
of Taxes or otherwise with respect to Taxes, (xviii) all
agreements regarding financial, Cardiotronics or advisory
services to be rendered by or for Cardiotronics, (xix) all
contracts regarding product distribution, (xx) all contracts
and agreements involving more than $20,000, and (xxi) any
contract or agreement not entered into in the ordinary
course of business.
(b) All such Contracts are valid and binding
obligations of Cardiotronics and in full force and effect as
of the Closing Date, and no breach or default (or event or
condition, which after notice or lapse of time, or both
would constitute a breach or default) by Cardiotronics or,
to the best knowledge of Cardiotronics, any other party
thereto exists with respect thereto, and this Agreement and
the transactions contemplated hereby will not cause any
breach or default thereof.
Section 3.17 CUSTOMERS. The Cardiotronics Disclosure
Memorandum contains an accurate and complete list of the
fifty largest customers of Cardiotronics for the calendar
year 1995 and through the first ten months of 1996,
including the revenues from such customers for those
reporting periods.
Section 3.18 INSURANCE. The Cardiotronics Disclosure
Memorandum contains an accurate and complete list and brief
description (including policy number, nature of coverage,
limits, deductibles, premiums, carriers and effective and
termination dates) of all policies of insurance in effect as
of the Closing Date with respect to Cardiotronics. All such
policies are in full force and effect. Cardiotronics has
not been denied any insurance or indemnity bond and no
insurance carrier has canceled or reduced any insurance
coverage of Cardiotronics. Cardiotronics has not received
any written notice from any insurer or agent of any intent
to cancel or reduce any insurance coverage or that any
substantial improvement or other expenditure with respect to
any insured property is necessary in order to continue such
insurance.
Section 3.19 FEES OR COMMISSIONS. Except for the
obligation to Dillon Read & Co., Inc. ( Dillon Read )
previously disclosed by Cardiotronics to Ballard,
Cardiotronics, (including its officers, directors and
employees), has not employed any broker, agent or finder or
incurred any liability for any brokerage fees, agent's
commissions or finder's fees or other similar obligations in
connection with the transactions contemplated hereby.
Section 3.20 ILLEGAL PAYMENTS. Neither Cardiotronics
nor any officer, director, employee or agent of
Cardiotronics, or any other person or entity on behalf of
Cardiotronics, has made or authorized any payment of funds
of, or relating to, Cardiotronics which is prohibited by
law, and no funds of Cardiotronics have been set aside to be
used for any payment prohibited by law.
Section 3.21 POWERS OF ATTORNEY. Except for powers of
attorney granted to its Intellectual Property counsel,
neither Cardiotronics nor R2 have granted any powers of
attorney to any entity or person.
Section 3.22 BANK ACCOUNTS. The Cardiotronics
Disclosure Memorandum contains a correct and complete list
and description of all bank accounts, the balances thereof
as of October 31, 1996, the persons authorized to access
such accounts and to incur indebtedness on behalf of
Cardiotronics and a correct and complete list of all safe
deposit boxes of Cardiotronics has previously been provided
to Ballard.
Section 3.23 NO CONFLICT OF INTEREST. No present (or,
to the best knowledge of Cardiotronics, former) officer or
director, and no shareholder, subsidiary, affiliate or
related entity thereof, has or claims to have (a) any
interest in the property, real or personal, tangible or
intangible, including without limitation, Intellectual
Properties, Licenses, inventions, technology, processes,
designs, computer programs, knowhow and formulae used in or
pertaining to the Business of Cardiotronics, or (b) any
contract, commitment, arrangement or understanding regarding
any of the foregoing. No present officer or director of
Cardiotronics, and no subsidiary has any ownership or stock
interest in any other enterprise, firm, corporation, trust
or any other entity which is engaged in any line or lines of
business which are the same as, or similar to, or
competitive with, the line or lines of business of
Cardiotronics. For purposes of this representation,
ownership of not more than five percent of the voting stock
of any publicly held corporation whose stock is listed on
any recognized securities exchange or traded over the
counter shall be disregarded.
Section 3.24 FAIRNESS OPINION. Cardiotronics' Board
of Directors has received from its financial advisors,
Dillon Read, a written opinion addressed to it to the effect
that the Purchase Price is fair to the holders of
Cardiotronics Capital Stock from a financial point of view.
ARTICLE IV
COVENANTS OF CARDIOTRONICS
Section 4.1 CONSENTS, APPROVALS AND FILINGS.
Cardiotronics will use commercially reasonable efforts to
comply as promptly as practicable with the governmental
requirements specified in Section 3.3 which are applicable
to the Merger, if any, and to obtain all applicable orders
of governmental and regulatory authorities referred to in
Section 3.3.
Section 4.2 ACCESS TO RECORDS AND PROPERTIES. Ballard
may, prior to the Effective Time, through its employees,
agents and representatives, make or cause to be made a
detailed review of the business and financial condition of
Cardiotronics, and make or cause to be made such
investigation as it deems necessary or advisable of the
properties, assets, businesses, books and records of
Cardiotronics. Cardiotronics agrees to furnish such
assistance as Ballard may reasonably request in conducting
such review and investigation and will provide, and will
cause its independent public accountants to provide, Ballard
and its employees, agents and representatives full access to
all books, records (including tax returns filed or in
preparation), personnel and premises of Cardiotronics and
the audit work papers and other records of its independent
public accountants and shall provide to Ballard such other
information concerning the business of Cardiotronics and its
subsidiary as Ballard may reasonably request.
Section 4.3 BROKERAGE. Cardiotronics will indemnify
and hold Ballard harmless from any claim for brokerage or
finder's or investment advisor's fees or commissions arising
out of the transactions contemplated hereby by any person
claiming to have been engaged by Cardiotronics.
Section 4.4 PAYMENT OF TAXES. Cardiotronics shall pay
all Taxes and other charges, incurred prior to the Effective
Time, upon or against its assets, or sales or income of
Cardiotronics' Business, before such Taxes or other charges
become delinquent, except such Taxes or other charges
incurred that result from the Merger and the summation of
the transactions contemplated under this Agreement, and
shall pay when due all current liabilities relating to its
assets, except those Taxes, charges and liabilities being
contested in good faith and for which proper reserves are
being maintained, or which are not material in amount.
Section 4.5 NOTIFICATION OF LITIGATION, CHANGES.
Cardiotronics shall promptly notify Ballard in writing of
the filing of any litigation, arbitration, or similar
proceeding or the commencement of any dispute which could
materially affect Cardiotronics or its assets or Business.
Section 4.6 INSURANCE. Cardiotronics shall maintain
insurance with good and responsible companies, including,
but not limited to, general liability, product liability,
workers compensation, directors and officers liability, and
property damage insurance, to the extent as is customarily
retained by it with respect to its assets prior to the date
of this Agreement, until the Merger has been fully
consummated.
ARTICLE V
COVENANTS OF BALLARD
Section 5.1 BROKERAGE. Ballard will indemnify and
hold Cardiotronics harmless from any claim for brokerage or
finder's or investment advisor's fees or commissions arising
out of the transactions contemplated hereby by any person
claiming to have been engaged by Ballard.
Section 5.2 CONDUCT OF BUSINESS OF MERGER SUB. From
the date of this Agreement to the Effective Time, Merger Sub
shall not engage in any activities of any nature except as
contemplated by this Agreement.
Section 5.3 GUARANTEE OF MERGER SUB OBLIGATIONS.
Ballard shall cause Merger Sub to perform in a timely manner
all its obligations, and to comply with all its agreements,
in this Agreement and the Articles of Merger.
Section 5.4 EMPLOYEE BENEFIT PLANS.
(a) BENEFIT PLANS. After the Effective Time,
Ballard shall arrange for each employee participating in any
of the Benefit Plans of Cardiotronics or its subsidiary as
are in effect on the date hereof to participate in any
counterpart Benefit Plans of Ballard in accordance with the
eligibility criteria thereof, provided that (i) such
participants shall receive full credit for years of service
with Cardiotronics or its subsidiary prior to the Merger for
all purposes for which such service was recognized under the
Benefit Plan of Cardiotronics or its subsidiary including,
but not limited to, recognition of service for eligibility,
vesting, and, to the extent not duplicative of benefits
received under such Benefit Plan of Cardiotronics or its
subsidiary, the amount of benefits, (ii) such participants
shall participate in the Benefit Plans of Ballard on terms
no less favorable than those offered by Ballard to similarly
situated employees of Ballard; and (iii) Ballard shall cause
any and all pre-existing condition limitation and
eligibility waiting periods under any group health plans to
be waived with respect to such participants and their
eligible dependents to the extent they are already satisfied
or waived.
(b) CHANGE IN CONTROL PROVISIONS. Ballard and
Cardiotronics hereby acknowledge that the Merger and the
consummation of the transactions contemplated under this
Agreement will be treated as a "Change in Control" for
purposes of each of the applicable Cardiotronics Benefit
Plans and each applicable employment, severance or similar
agreement applicable to any employee of Cardiotronics or its
subsidiary (collectively, "Change in Control Agreements")
and agree to abide by the provisions of any Benefit Plans
and Change in Control Agreements which relate to a Change in
Control, including, but not limited to, the accelerated
vesting and/or payment of equity-based awards.
ARTICLE VI
MUTUAL COVENANTS
Section 6.1 CONFIDENTIALITY. Ballard, Merger Sub and
Cardiotronics will use their best efforts to keep
confidential any and all information furnished to one of
them by the other or such other's subsidiaries or
independent public accountants in connection with the
transactions contemplated by this Agreement, and the
business and financial review and investigation referred to
in Section 4.2, except to the extent any such information
may be generally available to the public, and Ballard,
Merger Sub and Cardiotronics have instructed their
respective officers, employees and other representatives
having access to such information to comply with the
obligation of confidentiality.
Section 6.2 EXPENSES. Whether or not the Merger is
consummated, Ballard, Merger Sub and Cardiotronics each will
bear separately its own expenses incurred in connection with
this Agreement or any transaction contemplated by this
Agreement.
Section 6.3 PUBLIC ANNOUNCEMENTS. Cardiotronics and
Ballard agree that, recognizing that each has independent
obligations with respect to the dissemination of material
information to the public and to its shareholders, they
will, to the maximum extent feasible, advise and confer with
each other prior to the issuance of any reports, statements
or releases (including reports, statements or releases to
their respective employees) pertaining to this Agreement and
any transaction contemplated by this Agreement.
Section 6.4 FURTHER ASSURANCES. Each party hereto
agrees to execute and deliver such instruments and take such
other actions as any other party may reasonably require in
order to carry out the intent of this Agreement.
ARTICLE VII
CLOSING
A closing is being held at the offices of Luce,
Forward, Hamilton & Scripps LLP, 600 West Broadway, Suite
2600, San Diego, California 92101, or such other place as
may be mutually satisfactory to the parties. On the Closing
Date such closing documents as agreed to by the parties will
be executed and delivered by the parties.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 AMENDMENT AND MODIFICATION. This
Agreement may not be amended, modified and supplemented with
respect to any of the terms contained herein; provided,
however, that this Agreement may be amended, pursuant to an
amendment approved in writing by all of the parties to this
Agreement and Robert S. Grimes or any subsequent independent
director of Cardiotronics, with respect to any of the terms
contained herein.
Section 8.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND
ASSIGNS. Neither party hereto may assign any of its rights
or obligations hereunder without the prior written consent
of the other party hereto. This Agreement will be binding
upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 8.3 SURVIVAL OF PROVISIONS. The respective
representations, warranties, covenants and agreements of
each of the parties to this Agreement shall survive the
Closing Date and the consummation of the transactions
contemplated by this Agreement.
Section 8.4 INDEMNIFICATION. After the Effective
Time, Ballard and Merger Sub shall indemnify and hold
harmless any person who was a director or officer of
Cardiotronics at any time prior to the Effective Time and
the heirs, executors and administrators of any such person,
to the extent authorized or permitted by Cardiotronics'
certificate of incorporation or by-laws or provided pursuant
to the Colorado Revised Statutes in effect immediately prior
to the Effective Time, against any liabilities, costs or
expenses (including attorneys' fees) imposed upon or
reasonably incurred by him or her in his or her capacity as,
or arising out of his or her status as, or because of his or
her having been a director or officer of Cardiotronics or
any of its subsidiaries at any time prior to the Effective
Time, provided that in each such case, such director or
officer reasonably believed that he or she acted in the
interest of Cardiotronics and did not violate his or her
fiduciary duty to Cardiotronics. Such obligations shall
apply to any action, suit or proceeding commenced or
threatened before or after the Effective Time. To the
extent available, Ballard agrees to cause the Surviving
Corporation to maintain in effect for not less than three
years after the Closing Date policies of directors' and
officers' liability insurance comparable to those maintained
by Cardiotronics with carriers comparable to Cardiotronics'
existing carriers and containing terms and conditions which
are no less advantageous in any material respect to the
officers, directors and employees of Cardiotronics;
provided, however, that the Surviving Corporation shall not
be required to pay an annual premium for such insurance in
excess of two times the last annual premium paid prior to
the date hereof, but in such case shall purchase as much
coverage as possible for such amount. Notwithstanding the
above, neither Ballard nor Merger Sub will have any
indemnity liability under this Section 8.4 with respect to
any claim, lawsuit or proceeding brought or commenced by or
on behalf of any "affiliates" of Cardiotronics within the
meaning of Rule 145 promulgated by the SEC under the
Securities Act, including, but not limited to, all officers
and directors of Cardiotronics.
Section 8.5 COUNTERPARTS; FACSIMILE SIGNATURE. This
Agreement may be executed in one or more counterparts, any
of which counterparts may be executed by facsimile
signatures, all of which shall be considered one and the
same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other parties.
Section 8.6 NOTICES. All notices and other
communications hereunder shall be in writing and shall be
deemed given if delivered by hand or mailed by registered or
certified mail (return receipt requested) to the parties at
the following addresses (or at such other addresses for a
party as shall be specified by like notice) and shall be
deemed given on the date on which so hand-delivered or on
the third business day following the date on which so
mailed:
If to Ballard or Merger Sub:
Ballard Medical Products
12050 Lone Peak Parkway
Draper, Utah 84020
Attn: Dale H. Ballard, President
with a copy to:
Paul Hess, Esq.
General Counsel
Ballard Medical Products
12050 Lone Peak Parkway
Draper, Utah 84020
If to Cardiotronics:
Cardiotronics Systems, Inc.
5966 La Place Court
Carlsbad, California 92008
Attn: Ronald R. Bromfield, President and CEO
with a copy to:
Luce, Forward, Hamilton & Scripps LLP
600 West Broadway, Suite 2600
San Diego, California 2101-3391
Attn: Dennis J. Doucette, Esq.
Section 8.7 SUBSIDIARIES. When a reference is made in
this Agreement to subsidiaries of Ballard, the word
"subsidiaries" means any corporations of which more than 50%
of their outstanding voting securities are directly or
indirectly owned by Ballard (as the case may be). When a
reference is made in this Agreement to significant
subsidiaries of Ballard, the words "significant
subsidiaries" shall refer to subsidiaries (as defined above)
which constitute "significant subsidiaries" under Rule 405
promulgated by the SEC under the Securities Act.
Notwithstanding anything contained herein, Cardiotronics
shall not be considered a "subsidiary" or a "significant
subsidiary" of Ballard.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date and year first
written above.
BALLARD MEDICAL PRODUCTS,
a Utah corporation
By: Dale H. Ballard,
President
ATTEST:
E. Martin Chamberlain, Jr.
Secretary
BALLARD ACQUISITION
CORPORATION,
a Colorado corporation
By: Dale H. Ballard,
President
ATTEST:
E. Martin Chamberlain, Jr.
Secretary
CARDIOTRONICS SYSTEMS, INC.,
a Colorado corporation
By: Ronald R. Bromfield,
President and CEO
ATTEST:
Tim J. Way, Secretary
