SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
____________________________________
Date of report (Date of earliest event reported):
December 31, 1998
CARDIAC SCIENCE, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-19567
33-045681
(State or Other Juris- (Commission File
No.) (IRS Employer
diction of Incorporation)
Identification No.)
1176 Main Street, Suite C, Irvine, CA
92614
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(949) 587-0357
N/A
(Former Name or Former Address, if Changed Since
Last Report)
ITEM 2. Acquisition or Disposition of Assets.
On December 31, 1998, Innovative Physician
Services, Inc. (d/b/a Diagnostic Monitoring) ("IPS"), a
wholly-owned subsidiary of Cardiac Science, Inc. (the
"Company"), completed the sale (the "Sale") of
substantially all of its assets (the "Assets") to Biosensor
Corporation ("Biosensor"), a Minnesota corporation,
pursuant to an Agreement for Purchase and Sale of Assets
(the "Purchase Agreement"), dated December 31, 1998,
between Biosensor and IPS.
IPS received, in consideration of the Sale,
1,440,000 shares of common stock of Biosensor, subject
to a post-closing adjustment based on the Net Book Value
of the Business (each as defined in the Purchase
Agreement). In addition, Biosensor assumed certain
liabilities amounting to approximately $110,000 as of
November 30, 1998.
Reference is made to the Purchase Agreement, a
copy of which is attached hereto as Exhibit 1 and which
is hereby incorporated by reference, for a more complete
description of the Sale.
ITEM 7. Financial Statements, Pro Forma Financial
Information and Exhibits
Exhibits:
1. Purchase Agreement
<PAGE>
Signatures:
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
CARDIAC SCIENCE, INC.
By: /s/ Raymond W. Cohen
Raymond W. Cohen
President
Date: January 12, 1999
<PAGE>
EXHIBIT 1
AGREEMENT FOR PURCHASE AND SALE OF
ASSETS
BETWEEN
INNOVATIVE PHYSICIAN SERVICES, INC. (DBA
DIAGNOSTIC MONITORING),
AND
BIOSENSOR CORPORATION
DATED DECEMBER 31, 1998
<PAGE>
Schedule 1.1.6 Records Transferred
Schedule 2.1 Assumed Liabilities
Schedule 4.3(i) Real Property
Schedule 4.3(ii) Executory Contracts
Schedule 4.3(iii) Intangible Property
Rights
Schedule 4.3(iv) Permits
Schedule 4.3(v) Contracts,
Agreements, Leases
Requiring Consent
Schedule 4.3(vi) Personal Property
Schedule 4.3(vii) Inventory
Schedule 4.3(viii) Accounts Receivable
Schedule 4.3(ix) Accounts Payable
and Accrued Expenses
Schedule 4.3(x) Equipment
Schedule 4.13 Environmental
Matters
Schedule 5.5 Capitalization
<PAGE>
LIST OF EXHIBITS
Exhibit A Condensed
Balance Sheet
<PAGE>
AGREEMENT FOR THE PURCHASE AND SALE
OF ASSETS
This Agreement for Purchase and Sale of Assets is
made December 31, 1998 by and between Innovative
Physician Services, Inc. (DBA Diagnostic Monitoring), a
Nevada corporation (Seller), and Biosensor Corporation,
a Minnesota corporation (Purchaser).
RECITALS:
A. Seller desires to sell to Purchaser, and
Purchaser desires to purchase from Seller, on
the terms and subject to the conditions set
forth in this Agreement, a product line
(collectively, the Product Line) consisting of
certain assets and operations conducted on the
date hereof by Seller under the name
Diagnostic Monitoring(including, without
limitation, the distribution of certain medical
monitoring devices).
NOW, THEREFORE, in consideration of the
premises, the respective covenants and
commitments of Seller and Purchaser set forth in
this Agreement, and other good and valuable
consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree as
follows:
1.0. Purchase and Sale of Assets
1.1 Assets: In reliance on the representations,
warranties and covenants contained in this
Agreement, on the Closing Date, but with effect as
and from 11:59:00 p.m. local time in Columbia,
S.C. on December 31, 1998, Seller shall sell,
assign, deliver and transfer to Purchaser, and
Purchaser agrees to purchase and acquire from
Seller, free and clear of all Encumbrances and on
the terms and subject to the conditions set forth in
this Agreement, those certain assets set forth
below in this Section 1.1, and including those
assets identified on Schedules prepared in
accordance with Section 4.3, owned by Seller and
used in the manufacture and distribution of the
Product Line distributed by Seller under the name
Diagnostic Monitoring (the Assets). The parties
acknowledge that the Assets totaled approximately
$251,000 on November 30,1998.
1.1.1. Inventories, Purchase Contracts. All
inventories of supplies, raw materials, parts,
finished goods, work-in-process, product labels
and packaging materials, all third party
manufacturers warranties applicable to the
inventories, all orders or contracts for the purchase
of inventories, raw materials, parts, or supplies
ordered by Seller in the ordinary course of
business under the name Diagnostic Monitoring
prior to the Closing Date;
1.1.2. Machinery, Tooling. All machinery,
equipment, fixtures and other fixed assets used by
Seller in manufacturing, procuring, testing or
distributing the Product Line.
1.1.3. Engineering and Production Data. All
blueprints, drawings, forms, raw material
specifications, manufacturing specifications,
quality assurance specifications, engineering data,
production data, development data, design data,
formulae, plans, and other data owned by Seller
and used in connection with the Product Line,
whether such properties are located on the site at
which business is being conducted or on the
business premises of Sellers suppliers;
1.1.4 Executory Contracts. To the extent
assignable, all executory licenses, contracts,
agreements, sales orders, purchase orders and
commitments relating to the Product Line
including, without limitation, those listed on
Schedule 4.3(ii) and (v) to this Agreement, with
such additions and deletions as may hereafter arise
in the ordinary course of business, excluding,
however, all facility leases;
1.1.5. Intangible Property Rights. All intangible
property rights used in connection with the
Product Line, including patents, patent
applications, copyrights, copyright applications,
trade names (including the name Diagnostic
Monitoring and any and all other names similar to
the foregoing), trade dress, goodwill, trademarks
or service marks, registered or unregistered and
applications therefor, logos, processes, computer
programs and software, inventions, trade secrets,
discoveries, improvements, drawings, designs,
patterns, know-how, manufacturing standards and
procedures, computer software, data bases,
product names, Web page, internet domain names
and other intellectual property rights listed on
Schedule 4.3 (iii) to this Agreement, with such
additions and deletions as may hereafter arise in
the ordinary course of business (collectively, the
Intangible Property Rights);
1.1.6. Books and Records. Originals (or, where
appropriate, copies) of all books, accounting
records, records and other documents and
information relating to the Assets and the Product
Line as specified on Schedule 1.1.6, including,
without limitation, all customer, prospect, dealer
and distributor lists, sales literature, inventory
records, purchase orders and invoices, sales orders
and sales order log books, customer information,
commission records, correspondence, outstanding
proposals, product data, price lists, product
demonstrations, quotes and bids, catalogues and
brochures of every kind and nature;
1.1.7. Accounts Receivable. All accounts
receivable owing to Seller on the Closing Date, as
a result of sales of the Product Line prior to the
Closing Date, listed on Schedule 4.3 (viii) to this
Agreement, with such additions and deletions as
may hereafter arise in the ordinary course of
business (collectively, the Accounts Receivables);
1.1.8. Telephone Listings. Sellers current
telephone listings for Diagnostic Monitoring and
the right to use the telephone numbers currently
being used at the principal offices and at any sales,
warehouse, or distribution facilities of the Product
Line;
1.1.9. Permits. To the extent assignable, all
permits, licenses and other approvals (including
Food and Drug Administration approvals) relating
to the Product Line as listed on Schedule 4.3(iv) to
this Agreement, with such additions and deletions
as may hereafter arise in the ordinary course of
business;
1.1.10. Prepaid Expenses and Deposits. All
prepaid expenses and deposits required for the
operation of the Product Line or relating to the
Assets;
1.1.11. Goodwill. All goodwill associated with
or attributable to the Product line;
1.1.12. Claims. All of the Sellers right, title and
interest to claims and causes of action relating to
the Assets or the Product Line;
1.1.13. Rights. Seller's rights under all supply
agreements, customer agreements, licenses, and
other contracts relating to Diagnostic Monitoring
to which it is a party; but not including any facility
leases;
1.1.14 Other. All other assets that are related to
or used in connection with Seller's business and
that are owned by Seller, or by any affiliate of
Seller.
1.2 Excluded Assets. Assets do not include any
books and records of account of Seller, cash, and
personal property or equipment other than those
identified on Schedules 1.1.6 and 4.3(x).
2.0 Assumption of Liabilities.
2.1 Obligations to be Assumed by Purchaser.
Purchaser agrees to assume and to pay, perform
and discharge in accordance with their respective
terms, from and after the Closing Date, each of
the following obligations or commitments of Seller
(the Assumed Liabilities):(A) trade accounts
payable and accrued expenses incurred in the
normal course of business and directly associated
with the Product Line sold under the name
Diagnostic Monitoring (excluding employment and
travel expenses incurred by Victor Bravo through
the Closing Date), to be agreed upon by Purchaser
and Seller prior to Closing and a complete
schedule of which is attached as Schedule 2.1, and
(B) warranty obligations accrued in the ordinary
course of business for Seller, but solely with
respect to 1/0 board patient recorders which have
been sold or delivered prior to the Closing Date,
but only if and to the extent the same have not
been paid or discharged prior to the Closing Date.
The parties acknowledge that the foregoing
liabilities and obligations, excluding warranty
obligations, if any, referred to in (B) above,
totaled approximately $110,000 as of November
30, 1998. Assets less Assumed Liabilities (Net
Book Value) shall not be less than $100,000.
Any special obligations or liabilities, if any, to
employees, or ex-employees of Seller are not
assumed by Purchaser.
The assumption by Purchaser of the Assumed
Liabilities shall not enlarge any rights of any
person under contracts or arrangements with
Seller.
Nothing contained herein shall prevent Purchaser
from contesting in good faith any of the Assumed
Liabilities with any third party obligee.
3.0 Purchase Price.
The purchase price for the Assets shall equal the
aggregate of (i) the Assumed Liabilities, and (ii)
1,440,000 shares of common stock of Purchaser
(this amount represents the Initial Purchase Price),
subject to the post closing adjustments provided in
Section 3.1. On the Closing Date, Purchaser shall
(I) assume the Assumed Liabilities, and (II) issue
to Seller 1,440,000 shares of its common stock.
Seller acknowledges that Purchaser has proposed
a one share for six reverse stock split that is
pending shareholder approval, and upon approval
of same the consideration hereunder shall represent
240,000 shares, all as described in Purchasers
Preliminary Proxy Statement filed with the
Securities and Exchange Commission on
December 4, 1998. Following the reverse stock
split (A) there will be a total of approximately
3,125,000 shares of Purchasers common stock
outstanding, (B) no preferred stock issued and
outstanding, and (C) options, warrants, convertible
securities and other commitments for an additional
13,750 shares of its common stock outstanding.
Seller acknowledges that the most recent price paid
by new investors of Purchasers common stock was
in May of 1998, and was the equivalent of $2.08
per share (on a post-reverse stock split basis).
3.1 Post Closing Adjustment. The Initial
Purchase Price is based on the assumption that the
Net Book Value of the Business will be at least
$100,000 as of the Closing Date. Within twenty
(20) days after the Closing Date, Seller shall cause
to be prepared and delivered to Purchaser an
unaudited list of Assets and Assumed Liabilities
for the Product Line as of the close of business on
the Closing Date (the Closing Balance Sheet) and
a computation of the Net Book Value of the
Product Line as of the Closing Date. The Closing
Balance Sheet shall be prepared in conformity with
generally accepted accounting principles (GAAP),
applied on a basis consistent with Sellers Financial
Statements and shall present fairly the Assets and
Assumed Liabilities of Seller as of that date;
provided that there shall not be included in the
Closing Balance Sheet any asset which is an
Excluded Asset.
Within ten (10) days after the delivery of the
Closing Balance Sheet, Purchaser may notify
Seller in writing of any objections or changes to
the Closing Balance Sheet or computation of Net
Book Value, specifying in reasonable detail any
such objections or changes, and the parties shall
attempt in good faith to resolve any such dispute.
If the parties cannot resolve such dispute within a
period of twenty (20) days commencing from
Sellers receipt of the Purchasers notification, the
parties shall submit the matter to McGladrey
Pullen, LLP (the Accountant) whose decision with
respect to the disputed matter shall be binding on
the parties. The prevailing party shall be entitled
to receive from the other party its costs and
expenses, including reasonable attorneys fees in
connection with its objection or defense to the
calculation of Net Book Value. The fees and
expenses of the Accountant shall be paid by the
party against whom a decision is rendered. The
prevailing party shall be the party whose proposed
Net Book Value is closest to the Net Book Value
finally determined by the Accountant.
If the Net Book Value as of the Closing Date, as
finally determined as provided in this Section 3.1,
is less than $100,000, the Seller shall pay to
Purchaser the amount of the deficit in cash; and if
the Net Book Value is greater than $100,000,
Purchaser shall pay to Seller the amount of the
excess in additional shares of common stock based
on a pre-reverse split value of $0.3472 per share,
not to exceed 210,000 additional shares (or 35,000
shares post reverse stock split).
3.2 Unregistered Shares All shares of common
stock of the Purchaser issued to the Seller will not
have been registered under the Securities Act of
1933, as amended (the "Act"), on the basis that (i)
this transaction is exempt under the Act and such
shares shall have the status of securities acquired
under Section 4(2) of the Act, as not involving any
public offering, and (ii) in the view of the
Securities and Exchange Commission (the "SEC"),
the statutory basis for the exemption would not be
present , if, notwithstanding the forgoing, the
Seller has a present intention to dispose of such
shares or any portion thereof.
3.3 Piggyback Registration Rights All of the
shares of common stock of the Purchaser issued to
the Seller shall have "piggy back" registration
rights to be included in the next registration
statement filed by the Purchaser with the Securities
and Exchange Commission. Purchaser has a
current intention to file an S-4 Registration
Statement during the first calendar quarter of
1999, but no assurance can be given that any
Registration Statement will be filed, or if filed,
whether it will become effective. If registered
under the Act, Sellers shares of Purchasers stock
shall also be registered under such state securities
laws as Seller may reasonably request.
3.4 Sellers Reliance on Purchasers Financial and
Other Information Publicly on File. In
determining the value of the securities to be issued
in exchange for the Assets purchased, Seller
acknowledges that it is relying solely on the
financial and other information regarding the
Purchasers financial condition, operating results
and business and other matters that is on file with
the Securities and Exchange Commission (Forms
10-KSB, 10-QSB, 8-K and Preliminary Proxy
Statements). Such financial information has been
prepared in accordance with GAAP, is audited
where appropriate, and to the best of the
Purchasers belief is current as regards SEC filing
requirements. Seller further acknowledges that
Purchaser has not made and is not making any
representations or warranties with respect to itself
other than as expressly set forth in this Agreement
and for the information contained in its materials
filed with the Securities and Exchange
Commission.
4.0 Representations and Warranties of Seller.
As a material inducement to Purchaser to enter
into this Agreement and with the understanding
that Purchaser will be relying thereon in
consummating the transactions contemplated by
this Agreement, Seller represents and warrants to
Purchaser as follows:
4.1 Corporate Authorization. Seller has full
corporate power and authority to enter into this
Agreement and to sell the Assets and the Product
Line in accordance with the terms of this
Agreement. The execution, delivery and
performance of this Agreement by Seller, and all
other agreements or instruments to be executed by
Seller pursuant to this Agreement, have been duly
and effectively authorized by its board of directors
and its sole shareholder, and no other corporate
proceedings on its part are necessary to authorize
this Agreement or the transactions contemplated by
this Agreement. This Agreement constitutes, and
such other agreements or instruments will
constitute, the legal, valid and binding obligations
of Seller and Cardiac Science, Inc. (CSI),
enforceable in accordance with their respective
terms, except as enforcement may be limited by
bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors rights in
general, moratorium laws or by general principles
of equity.
4.2 No Liens or Encumbrances. Seller has, and
on the Closing Date will transfer and convey to
Purchaser, good, marketable and insurable title to
the Assets, and, except as set forth in this
Agreement and the Schedules hereto, the Assets
shall be free and clear of all mortgages, liens,
claims, charges, encumbrances, leases, security
interests, pledges, and title retention agreements of
any kind or nature (collectively, Encumbrances)
4.3 Schedules. Each of the following schedules,
which have been furnished to Purchaser by Seller
and which are incorporated into this Agreement by
reference, is complete and the information
contained in the schedules is correct in all material
respects as of the date of this Agreement:
Schedule 4.3(i) This Schedule contains a
description of each lease of real property of
Seller with respect to the Product Line.
Schedule 4.3(ii) This Schedule lists the
following executory agreements, whether oral
or written, to which Seller is a party, that
relate to the Product Line:
(1) Each contract with any dealer, distributor,
broker, agent or sales representative;
(2) Each contract, agreement, or commitment
for delivery by Seller of its products or
services for more than $___________ or over
a period of more than thirty (30) days from the
date of this Agreement.
Schedule 4.3(iii): This Schedule lists all
Intangible Property Rights owned by Seller
and used or useful in the manufacture and
distribution of the Product Line.
Schedule 4.3(iv): This Schedule lists all
permits, licenses and other approvals
(including Food and Drug Administration
approvals) and authorizations including,
without limitation, those required under the
Environmental Laws, issued to the Seller
related to the Product Line, and sets forth the
title, issuing agency and expiration date
thereof.
Schedule 4.3(v): This Schedule lists all
contracts, agreements, leases, documents,
permits, and licenses relating to the Product
Line required to be listed on any of the
Schedules described in this Section 4.3
(including governmental and regulatory bodies
and agencies) requiring the consent or approval
of a third party to Sellers sale or assignment
and Purchasers assumption of such contracts,
agreements, leases, documents, permits and
licenses on the Closing Date.
Schedule 4.3(vi): This Schedule lists all
personal property owned by any third party
(whether a customer, supplier or other person)
relating to the operation of the business of the
Product Line for which the Seller is
responsible.
Schedule 4.3(vii): This Schedule lists all
inventory relating to the Product Line which
will include cost, location and item.
Schedule 4.3(viii):This Schedule lists all trade
accounts receivable relating to the Product
Line which will include customer name,
invoice number, and amount due.
Schedule 4.3(ix): This Schedule will list all
accounts payable and accrued expenses relating
to the Product Line which will include vendor
name, invoice number and amount due.
Schedule 4.3(x): This Schedule will list all
equipment relating to the Product Line which
will include a brief description, cost and
location.
4.4 Seller as an Investor in the Purchaser's
Securities Seller acknowledges that in accepting
Purchaser's common stock as payment for the
Assets, Seller becomes an investor in the common
stock of the Purchaser, and in that capacity Seller
represents and warrants to and with Purchaser as
follows:
4.4.1 High Degree of Risk Seller
acknowledges that investment in Purchasers
stock is speculative and involves a high degree
of risk and the possible loss of its entire
investment.
4.4.2 Review of Available Financial
Information Seller is familiar with the
operations of the Purchaser, has evaluated the
merits and risks of this transaction, has made
its independent judgment as to the value of the
securities to be issued in exchange for the
Assets purchased by reviewing the financial
and other information regarding the Purchaser
that is publicly available and on file with the
Securities and Exchange Commission (Forms
10-KSB, 10-QSB, 8-K and Preliminary Proxy
Statements). Seller has had the opportunity to
request additional information and to ask
questions and receive answers concerning the
business operations of Purchaser, and is
satisfied with the results of it investigation of
the Purchaser.
4.4.3 Acquired Shares for Investment Seller
is acquiring the Purchaser's shares in good
faith for the purpose of investment in the
Purchaser and not for the purpose of
distributing or publicly selling the shares to
others, reselling, assigning, pledging or
hypothecating the shares, or dividing its
participation in ownership of the shares with
others, except that Seller may transfer the
shares to its parent company, CSI.
4.4.4. Unregistered Shares. Seller
understands and acknowledges that it has been
advised by the Purchaser that shares of the
common stock of Purchaser will not have been
registered under the Act, on the basis that (i)
this transaction is exempt under the Act and
the shares shall have the status of securities
acquired under Section 4(2) of the Act, as not
involving any public offering, and (ii) in the
view of the Securities and Exchange
Commission (the "SEC"), the statutory basis
for the exemption would not be present , if,
notwithstanding the forgoing, the Seller has a
present intention to dispose of such shares or
any portion thereof. Seller acknowledges that
the Purchaser is relying on the statutory
exemption from the registration requirements
under the Minnesota Securities Act, basing its
reliance in part on the Seller's representations
set forth in this agreement.
4.4.5. [Intentionally Omitted]
4.4.6. No Assurance of Liquidity Seller
recognizes that the Purchaser may not comply
in the future with the requirements which
would permit it to sell the shares of Purchaser
pursuant to Rule 144. As such, Seller agrees
that such shares may have to be held for an
indeterminate period of time. Seller
understands that the certificates representing
the shares shall be stamped with a legend in
substantially the following form:
"The shares of common stock
represented by this certificate have
not been registered under the
Securities Act of 1933 or under
applicable state securities laws and
may not be sold, transferred, or
pledged in the absence of such
registration, unless pursuant to an
exemption from the registration
requirements of the Securities Act
of 1933 and applicable state
securities laws. The Company
reserves the right to require on
opinion of counsel satisfactory to it
before effecting any transfer of the
shares."
Purchasers shares cannot be expected to be readily
liquidated, if at all. Seller is aware that there is currently
a very limited public market for the shares of Purchaser
and that there is no assurance that a more liquid market
will develop.
4.4.7 Forward Looking Statements Not Indicative Seller
acknowledges that the available financial statements and
forecasts cannot be relied upon as an indication of future
results. Future operations of Purchaser will be
dependent, in part, on the market acceptance of its
products, "Health Care Reform" legislation, health
insurance reimbursement policies, the status of the
economy and its effect on the market for diagnostic health
care products, competition, changes in demographic
characteristics of the market or shifts in emphasis
regarding health care, and on management's ability to
control operating expenses. Many of these factors cannot
be controlled by Purchaser. No representation had been
made that actual results of operations will conform to
historical results or forecasted results.
4.5 Lawsuits; Proceedings; Etc. Seller is not
engaged in any legal action or other proceedings
before any court or administrative agency. Seller is
not a party to any action or proceeding, nor has Seller
been threatened with any such action or proceeding,
nor, to the Knowledge of Seller, does there exist any
basis therefor, which will or could have a material
adverse effect on the condition, financial or otherwise,
of the Assets or the Product Line. No order, writ,
injunction or decree has been issued by, or requested
of, any court or governmental agency which does or
may result in any material adverse change in the
Assets or in the selling or servicing of the Product
Line.
4.6 Assets. All of the tangible Assets, whether or
not reflected on the Balance Sheet, are being acquired
by Purchaser on an as-is, where is basis. Except as
otherwise set forth in this Agreement, SELLER
MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY SUCH
ASSETS ACQUIRED BY PURCHASER
HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. The
Assets constitute all of the operating assets and
properties that have been used by Seller in the
manufacturing and distribution of the Product Line
and comprise all those properties, assets and rights of
Seller necessary to operate the Product Line under the
name Diagnostic Monitoring in the ordinary course of
business.
4.7 Inventory: All inventories reflected on Schedule
4.3 (vii) are stated at the lower of cost or market
value determined using the first-in, first-out (FIFO)
method of accounting. All inventories reflected on
such Schedule shall be stated at the lower of cost or
market determined using the FIFO method of
accounting. All inventories reflected on such
Schedule are used in the manufacture and distribution
of the Product Line, regularly offered from current
price lists. All inventories are being acquired by
Purchaser on an as-is, where is basis. Except as
otherwise set forth in this Agreement, SELLER
MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY
INVENTORIES, WORK IN PROGRESS OR RAW
MATERIALS ACQUIRED BY PURCHASER
HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
4.8 Compliance with Laws; Permits. Seller has
complied in all material respects with all applicable
statutes, regulations, orders, ordinances and other
laws of the United States of America, all state, local
and foreign governments and other governmental
bodies and authorities, and agencies of any of the
foregoing to which they are subject in connection with
the operation of the Product Line under the name
Diagnostic Monitoring. Seller has not received any
notice to the effect that, or otherwise been advised
that, Seller is not in compliance with any of such
statutes, regulations and orders, ordinances, other
laws or undertakings as they might relate to any
manner whatsoever to the Product Line.
4.9 Intangible Properties. The Intangible Property
Rights listed on Schedule 4.3 (iii) to this Agreement
are all those used by or useful to the Product Line and
are valid and in full force and effect. All patents,
copyrights and trademarks have been duly registered
or filed in the United States Patent and Trademark
Office, and such registrations have been properly
maintained and renewed in accordance with all
applicable laws, rules and regulations.
Seller has good and marketable title to and owns or
exclusively holds all rights to use, free and clear of all
liens, claims, restrictions, and infringements, the
Intangible Property Rights. The Intangible Property
Rights are valid, subsisting, enforceable and in full
force and effect. There is no infringement or other
adverse claim pending against any of the Intangible
Property Rights. In connection with the operation of
the Business, Seller is not obligated or under any
liability whatsoever to make any payments by way of
royalties, fees or otherwise with respect to third-party
patents, trademarks, copyrights or other intellectual
property in connection with the conduct of the
Business.
4.10 Changes in Customers or Suppliers. Seller has
not received any notice that any major customer or
supplier of the Product Line intends to terminate, limit
or reduce its business relations with Seller either
currently or following the consummation of the
transactions contemplated by this Agreement. No
customer or supplier which was material to the
Product Line in the past twelve month period has
terminated, materially reduced or, to the knowledge of
Seller, threatened to terminate or materially reduce its
purchases from or provision of products or services to
the Product Line.
4.11 Brokers or Finders. No person, firm or
corporation has or will have, as a result of any act or
omission of the Seller, any right, interest or valid
claim against Purchaser for any commission, fee or
other compensation as a finder or broker in connection
with the transactions contemplated by this Agreement.
4.12 Accounts and Notes Receivable. The accounts
receivable of Seller that are part of the Assets being
transferred hereby (i) have and shall have arisen only
from bona fide transactions in the ordinary course of
business, and (ii) represent and will represent valid
and binding obligations of the account debtors, not
subject to defense or offset to which such receivables
relate.
4.13 Environmental Matters. Schedule 4.13 to this
Agreement contains a complete list of all permits,
consents, licenses and authorizations related to the
Product Line obtained by Seller under the
Environmental Laws. The Seller is in compliance
with all terms and conditions of the permits, consents,
licenses, approvals, and authorizations listed on
Schedule 4.13 to this Agreement.
There is no civil, criminal, or administrative action,
suit, demand, claim, hearing, notice or demand letter,
notice of violation, investigation, or proceeding
pending or, to the Knowledge of Seller, threatened
against Seller, the Assets, or the operations and
properties currently or previously owned, leased, or
used with respect to the Product Line relating in any
way to the Environmental Laws.
With respect to the Product Line, and any currently or
previously owned, leased, or used properties or
operations, there are no past or present events,
conditions, circumstances, activities, practices,
incidents, actions, or plans that interfere with or
prevent compliance or continued compliance with the
Environmental Laws or which may give rise to any
liability (whether statutory or common law) or
otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, notice of violation,
study, or investigation arising under any
Environmental Law or otherwise based on or related
to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal,
transport, or handling, or the release into the
workplace, the community, or the environment of any
contaminant.
No environmental lien has attached to any Asset.
4.14 No Other Agreements to Sell the Assets or the
Product Line. Seller has no legal obligation, absolute
or contingent, to any other person or firm to sell the
Assets or the Product Line (other than sales of
inventory in the ordinary course of business).
4.15 Disclosure. Seller has not withheld from
Purchaser any material facts relating to the Assets, or
the operations of the Product Line. No representation
or warranty of Seller in this Agreement contains any
untrue statement of material fact required to be stated
herein to make the statement not misleading.
4.16 No Breaches; etc. Neither Seller nor CSI is in
violation of, and the execution, delivery and
performance of this Agreement by Seller or the other
agreements contemplated by this Agreement and the
consummation of the transactions contemplated by this
Agreement does not and will not result in any breach
or acceleration of, any of the terms or conditions of
their articles of incorporation or by-laws, or of any
mortgage, bond, indenture, contract, agreement,
license or other instrument or obligation to which
Seller or CSI is a party or by which the Assets are
bound. The execution, delivery and performance of
this Agreement or the other agreements contemplated
by this Agreement will not result in the violation of
any statute, regulation, judgment, writ, injunction or
decree of any court, nor require the consent, approval,
permission or other authorization of any court,
arbitrator or governmental, administrative or self-
regulatory authority or any other third party.
4.17 Representations and Warranties. The
representations and warranties of Seller have been
made with the Knowledge and expectation that
Purchaser is relying on them, and such representations
and warranties shall survive the Closing Date in
accordance with Section 9.1.
5.0 Representations and Warranties of Purchaser
As a material inducement to Seller to enter into this
Agreement and with the understanding that Seller will
be relying thereon in consummating the transactions
contemplated by this Agreement, Purchaser represents
and warrants to Seller as follows:
5.1 Organization and Standing. Purchaser is a
corporation duly organized, validly existing and in
good standing under the laws of the State of
Minnesota, and has all requisite corporate power and
capital assets to carry on its business as it is now
being conducted.
5.2 Corporate Authorization. Purchaser has the full
corporate power and authority to enter into this
Agreement and purchase the Assets and Product Line
in accordance with the terms of this Agreement. The
execution, delivery and performance of this
Agreement by Purchaser pursuant to this Agreement
have been duly and effectively authorized by the board
of directors of Purchaser and no other corporate
proceedings on the part of Purchaser are necessary to
authorize this Agreement or the transactions
contemplated by this Agreement. This Agreement
constitutes, and such other agreements and instruments
will constitute, the legal, valid and binding obligations
of Purchaser which are, or will be, enforceable
against Purchaser in accordance with their respective
terms, except as enforcement may be limited by
bankruptcy, insolvency, or other similar laws affecting
the enforcement of creditors rights in general,
moratorium laws or by general principles of equity.
5.3 Fully Paid and Validly Issued Shares.
Purchaser's shares, when issued and delivered to
Seller, shall be deemed to be, and shall be, fully paid
and validly issued shares of stock of Purchaser and
Seller shall not be liable to any further call or
assessment thereon, and any holder of said shares of
stock shall not be liable for any further payment in
respect thereto.
5.4 Reliable Financial Information. The audited
fiscal year financial statements and the unaudited
quarterly and pro forma combined financial statements
filed by the Purchaser with the SEC in Forms 8-K,
10-KSB, 10-QSB and the Preliminary Proxy
Statement, were prepared in accordance with GAAP
and fairly present Purchasers financial position and
results of operations for the covered periods.
5.5 Capitalization. The current capitalization of
Purchaser, and the pro forma capitalization of
Purchaser giving effect to the contemplated reverse
stock-split, is set forth in Schedule 5.5 hereto. Such
capitalization shall include the authorized and issued
and outstanding shares of common and preferred stock
of Purchaser, the terms of the preferred stock and the
options, warrants, and convertible securities (and the
like) of Purchaser, including the terms thereof.
5.6 No Breaches; etc. Purchaser is not in violation
of, and the execution, delivery, and performance of
this Agreement or the other agreements contemplated
by this Agreement and the consummation of the
transactions contemplated by this Agreement do not
and will not result in any breach or acceleration of,
any of the terms or conditions of its articles of
incorporation or by-laws, or of any mortgage, bond,
indenture, contract, agreement, license or other
instrument or obligation to which Purchaser is a party.
The execution, delivery and performance of this
Agreement or the other agreements contemplated by
this Agreement will not result in the material violation
of any statute, regulation, judgment, writ, injunction
or decree of any court, threatened or entered in a
proceeding or action in which Purchaser is, was or
may be bound.
5.7 No Brokers or Finders. No person, firm or
corporation has or will have, as a result of any act or
omission of Purchaser, any right, interest or valid
claim against Seller for any commission, fee or other
compensation as a finder or broker in connection with
the transactions contemplated by this Agreement.
5.8 Disclosure. No representation or warranty of
Purchaser in this Agreement contains any untrue
statement of material fact required to be stated herein
to make the statement not misleading. The Forms 10-
KSB, 10-QSB and 8-K, and the Preliminary Proxy
Statement of Purchaser do not contain any untrue
statement of material fact, or omit to state any
material fact required to be stated therein.
5.9 Representations and Warranties. The
representations and warranties of Purchaser have been
made with the Knowledge and expectation that Seller
is relying on them, and such representations and
warranties shall survive the Closing Date in
accordance with Section 9.1.
6.0 Post-Closing Agreement. Seller hereby
covenants and agrees with Purchaser as follows:
6.1 Non-Competition. In consideration of the
benefits to Seller hereunder and in order to induce
Purchaser to enter into this Agreement, Seller hereby
covenants and agrees that for a period of two (2) years
after the Closing Date, Seller shall not, and Seller
shall cause each corporation or other entity,
controlling, controlled by or under common control
with, Seller to not, directly or indirectly, anywhere in
the world where the Product Line is currently
produced, marketed, sold or used, as a proprietor,
partner, stockholder, director, officer, employee, joint
venturer, investor, lender, guarantor or in any other
capacity own, engage in, conduct, manage, operate or
control, or participate in, be associated with or be
connected in any manner whatsoever in the
ownership, management, operation or control of, any
business which, directly or indirectly, is competitive
with the Product Line, except that this non-
competition obligation shall not apply as follows:
(i) Ownership by Seller or any of
its affiliates, in the aggregate, of
less than five (5%) percent of
the outstanding shares of capital
stock of any corporation with
one (1) or more classes of its
capital stock listed on a national
securities exchange or publicly
traded in the over-the-counter
market shall not constitute a
violation of this Section 6.1;
and
(ii) The provisions of
this Section 6.1
shall not preclude
Seller or any of
its affiliates from
acquiring control
of an entity which
has a portion of
its business which
competes with the
Business (the
Competing
Business),
provided the
Competing
Business does not
represent more
than five (5%)
percent of the
total business
conducted by
such entity.
(a) Seller hereby covenants and
agrees that for a period of two
(2) years after the Closing Date,
Seller shall not, and Seller shall
cause each person, corporation
or other entity related to,
controlling or controlled by,
directly or indirectly, Seller to
not, without the prior written
consent of Purchaser, (A) solicit
or employ any employee of
Purchaser (i.e.: Victor Bravo) at
any time on or after the date
hereof to become an officer,
director, employee, agent,
consultant or otherwise affiliated
with Seller, or any entity in
which Seller owns an equity or
debt interest or has the power to
direct management or (B) solicit
at any time on or after the date
hereof any employee of
Purchaser (i.e.: Victor Bravo) to
terminate his or her relationship
with the Purchaser.
(b) Seller will not at any time from
and after the Closing Date
divulge, furnish to or make
accessible to anyone any
knowledge or information with
respect to confidential or secret
processes, inventions,
discoveries, improvements,
formulae, plans, material,
devices or ideas or know-how,
whether patentable or not, with
respect to any confidential or
secret aspects of the Product
Line (including, without
limitation, customer lists,
supplier lists and pricing
arrangements with customers or
suppliers) (collectively,
Confidential Information). Any
portion of such information and
only such portion, which (i) at
or prior to the time of disclosure
was generally available to the
public through no breach of this
covenant, (ii) was available to
the public on a non-confidential
basis prior to its disclosure, or
(iii) is required to be disclosed
by law or by order of a court of
competent jurisdiction, shall not
be deemed Confidential
Information for purposes of this
Agreement, and the
undertakings in this covenant
with respect to Confidential
Information shall not apply
thereto.
(c) Seller hereby covenants and
agrees that, for a period of two
(2) years after the Closing Date,
Seller shall not, and Seller shall
cause each person, corporation
or other entity related to,
controlling or controlled by,
directly or indirectly, Seller to
not solicit or attempt to solicit
any of the current customers,
clients or accounts with respect
to the Product Line and such
other customers, clients or
accounts to whom Seller,
directly or indirectly, sold goods
or services in the Product Line
during the 24 month period
immediately preceding the
Closing Date, with the intent or
purpose to perform for such
customer, client or account the
same or similar services sold by
Seller or to sell to such
customer, client or account the
same or similar goods or
services which was performed
by Seller for or sold to such
customer, client or account.
(d) In the event a court of
competent jurisdiction deems
any provision in this Section 6.1
to be unreasonable,
unenforceable or invalid, then
such provision (s) shall be
interpreted as broadly as may be
considered reasonable by such
court and this Section 6.1 shall
be deemed amended to the
maximum scope of business,
duration or geographic scope as
such court determines to be
reasonable and , as so amended,
shall be enforced.
The parties acknowledge and agree that the breach of
the provisions of this Section 6.1 could not be
adequately compensated with monetary damages and
would irreparably injure Purchaser, and, accordingly,
that injunctive relief and specific performance shall be
appropriate remedies to enforce the provisions of this
Section, and the parties waive (a) any claim or defense
that there is an adequate remedy at law for such
breach, and (b) the necessity of posting a bond or
similar security; provided, however, that nothing
contained herein shall limit the remedies, legal, or
equitable, otherwise available to Purchaser, and all
remedies of the parties herein are in addition to any
remedies available to the parties at law or otherwise.
6.2 Access to Books and Records.
(a) Seller shall afford to Purchaser
and Purchasers auditing staff,
accountants and other authorized
representatives, upon reasonable
notice, full access to the books
and records of the Product Line
not acquired by Purchaser
hereunder pertaining to the
Product Line operations prior to
the Closing Date for a period of
three (3) years following the
Closing Date in connection with
tax and accounting matters and
other reasonable business
purposes. Purchaser shall
reimburse Seller for all out-of-
pocket costs incurred in
complying with this Section 6.2
other than with respect to the
storage of records.
For a period of three (3) years after the Closing Date,
Purchaser shall allow Seller, its affiliates and their
auditing staffs, accountants and other authorized
representatives, at Sellers expense, and during normal
business hours upon reasonable notice to Purchaser, to
inspect and copy any records of the Product Line with
respect to periods prior to the Closing Date for the
purposes of (a) preparing and /or defending tax
returns for any period prior to the Closing Date, (b)
obtaining information relating to claims arising from
the conduct of the business of the Product Line prior
to the Closing Date, or (c) for such other purposes as
Seller may reasonably request. During such three (3)
year period, Purchaser shall make the records
available to Seller and shall not destroy or discard
such financial records without giving Seller thirty (30)
days prior written notice of its intentions and giving
Seller the right, at its expense, to remove from
Purchasers premises any such financial records.
Seller shall reimburse Purchaser for all out-of-pocket
costs incurred in complying with this Section 6.2,
other than with respect to the storage of records.
6.3 Collection of Receivables. After the Closing
Date, all cash, checks or other proceeds received by
Seller or its banks that relate to the accounts
receivable of Seller purchased by Purchaser shall be
paid to Purchaser within five (5) days after receipt by
Seller, which payments shall be accompanied by a
statement identifying the payee, the amount of the
payment and the related invoice number. Seller agrees
to endorse and Purchaser shall have the right to
endorse the name of Seller on any such checks or
proceeds (whether received directly by Purchaser or
received from Seller or its banks) and shall deposit
such checks and other proceeds in bank accounts
maintained in Purchasers name. From and after the
Closing Date, Seller shall cooperate with, and provide
reasonable assistance to, Purchaser in collecting such
accounts.
7.0 [Intentionally Omitted]
7.1 [Intentionally Omitted]
8.0 Closing
8.1 Time and Place. The Closing shall take place at
9:00 o'clock a.m. on December 31, 1998 by facsimile
transmission (and overnight mailing) of the signature
pages to this Agreement and all ancillary agreements.
As soon as practicable following the Closing, Seller
shall cause to be delivered to Purchaser and its
counsel an original set of the closing documents.
8.2 Deliveries At the Closing:
(a) Seller shall execute and deliver to
Purchaser such bills of sale, assignments and
other good and sufficient instruments of
conveyance and transfer, in form and substance
reasonably satisfactory to Purchaser, as are
effective to transfer the Assets.
(b) Purchaser shall execute and deliver to
Seller such documents of assumption, in form
and substance reasonably satisfactory to Seller,
as are effective to assume the Assumed
Liabilities.
(c) Purchaser shall issue to Seller, in
accordance with Section 3.0 of this Agreement,
shares of fully paid, non assessable Common
Stock of Purchaser.
(d) The parties shall each deliver to the other
such other documentation, such as Board of
Director and Shareholder resolutions, as the
other party shall reasonably request.
9.0 Survival of Representations and Warranties;
Identification
9.1 Survival of Representations, Warranties, etc. All
representations and warranties of the parties made in
this Agreement or as provided in this Agreement shall
survive the Closing Date for a period of two (2) years
thereafter notwithstanding any investigation at any
time made by or on behalf of the other party (Survival
Period). All representations and warranties related to
any specific claim asserted in writing prior to the
expiration of the Survival Period shall survive until
such claim shall be resolved and payment in respect
thereof, if any is owing, shall be made.
9.2 Indemnification.
(a) Seller will fully indemnify and hold
harmless Purchaser, its officers, directors,
employees and affiliates against and in respect
of any and all liabilities, losses, damages,
deficiencies, costs, or expenses (including,
without limitation, the reasonable fees and
expenses of investigation and counsel)
(collectively, Losses) resulting from:
(i) any misrepresentation or breach of any
representation, warranty, covenant or
agreement by Seller made in this Agreement;
(ii) any claims, proceedings, actions or
investigations made or brought by third parties
based on or arising from acts, omissions or
states of fact relating to Seller, the Assets or
the Product Line and occurring or in existence
prior to the Closing Date, except to the extent
they constitute an Assumed Liability;
(iii) the failure of Seller to timely pay any
taxes relating to or resulting from the operation
of the Product Line for any and all periods
through and including the Closing Date (except
where an Assumed Liability); or
(iv) the noncompliance with any Bulk Sales
Law.
(b) Purchaser will fully indemnify and hold
harmless the Seller, its officers, directors,
shareholders, employees and affiliates against
and in respect of any and all Losses resulting
from:
(i) any misrepresentation or breach of any
representation, warranty, covenant or
agreement by Purchaser made in this
Agreement (including, without limitation, the
certificates delivered under this Agreement) or
as provided in this Agreement;
(ii) the failure by Purchaser to pay, perform
or discharge when due any Assumed Liability;
or
(iii) any claims, proceedings, actions or
investigations made or brought by third parties
based on or arising from acts, omissions or
states of fact relating to Purchaser, the Assets
or the Product Line and occurring after the
Closing Date.
(c) Any indemnification claim of a party must
be asserted prior to the expiration of the
Survival Period. Following the expiration of
the Survival Period, a party may not assert any
claims for indemnification under this Section
9.2.
(d) Each parties responsibility shall not apply
to the first $1,000 of Losses, and is subject to
a maximum responsibility of $500,000.
9.3 Procedure for Indemnification. Any person
entitled to indemnification under this Agreement shall
(i) give prompt notice to the indemnifying party of
any third party claim with respect to which it seeks
indemnification and (ii) permit such indemnifying
party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified
party; provided, that any person entitled to
indemnification under this Agreement shall have the
right to employ separate counsel and to participate in
the defense of such claim, but the fees and expenses
of such counsel shall be at the expense of such person.
10.0 Miscellaneous.
10.1 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of and be enforceable
against the parties and their respective successors and
permitted assigns. Nothing in this Agreement,
express or implied, is intended to, or shall confer on,
any person other than any of the parties hereto any
rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
10.2 Governing Law. This Agreement shall in all
respects be governed by, and enforced and interpreted
in accordance with the laws of the State of Minnesota
without giving effect to choice of law principles.
10.3 Notices. All notices, consents, requests,
demands, instructions or other communications
provided for in this Agreement shall be in writing and
shall be deemed validly given, made and served when
delivered personally, or sent by certified or registered
mail, postage prepaid, overnight courier or by
telephone facsimile, pending the designation of
another address, addressed as follows:
If to Seller:
Cardiac Science Inc.
1176 Main Street Bldg. AC
Irvine, Ca 92614
Attn: Mr. Raymond Cohen
Fax No. (949) 951-7315
With a copy to:
Breslow & Walker
767 Third Avenue
New York, New York 10017
Attn: Mr. Howard Breslow
Fax No. (212) 888-4955
If to Purchaser:
Biosensor Corporation
6 Woodcross Drive
Columbia, SC 29212
Attn: Ronald G. Moyer
Fax No. (803) 407-1967
With a copy to:
Blanco, Tackabery, Combs &
Matamoros
P.O. Drawer 25000
Winston-Salem, NC 27114-5000
Attn: Brian L. Herndon
Fax No. (910) 761-1530
10.4 Entire Agreement and Counterparts. This
Agreement and the attached Exhibits and Schedules
evidence the entire agreement among the Seller and
Purchaser relating to the purchase and sale of the
Assets and the Product Line and supersede in all
respects any and all prior oral or written agreements
or understandings. This Agreement shall be amended
or modified only by written instrument signed by
Seller and Purchaser. This Agreement may be
executed in counterparts.
10.5 Headings. Section and article headings used in
this Agreement have no legal significance and are
used solely for convenience of reference.
10.6 Expenses. Each party shall pay for its own
legal, accounting and other similar expenses incurred
in connection with the transactions contemplated by
this Agreement, whether or not such transactions are
consummated.
10.7 Bulk Sales Laws. Purchaser and Seller waive
compliance with the provisions of any bulk sales laws,
including Article 6 of the Uniform Commercial Code
as it may be in effect in any applicable jurisdiction
(Bulk Sales Laws).
10.8 Taxes. Any sales, use or excise taxes payable
in connection with these transactions shall be shared
equally by Seller and Purchaser. Each party agrees to
execute all of the documents and to take such other
action or corporate proceedings as may be necessary
or desirable to structure the transaction which is the
subject of this Agreement as an exempt occasional sale
under applicable tax law, to obtain the relevant tax
exemption certificates and to provide copies of such
certificates to the other parties hereto.
10.9 Severability. Each and every provision of this
Agreement shall be deemed valid, legal and
enforceable in all jurisdictions to the fullest extent
possible. Any provision of this Agreement that is
determined to be invalid, illegal or enforceable in any
jurisdiction shall, as to that jurisdiction, be adjusted
and reformed rather than voided, if possible, in order
to achieve the intent of the parties. Any provision of
this Agreement that is determined to be invalid, illegal
or unenforceable in any jurisdiction which cannot be
adjusted and reformed shall for the purposes of that
jurisdiction, be voided. Any adjustment, reformation
or voidance of any provision of this Agreement shall
only be effective in the jurisdiction requiring such
adjustment or voidance, without affecting in any way
the remaining provisions of this Agreement in such
jurisdiction or adjusting, reforming, voiding or
rendering that provision or any other provision of this
Agreement invalid, illegal or unenforceable in any
other jurisdiction.
10.10 Interpretive Provision. Whenever used in this
Agreement to the Knowledge of or similar language
shall mean the actual knowledge, after reasonable
inquiry, of any person who, on the date hereof is an
officer of Seller.
IN WITNESS WHEREOF, each of the
parties hereto have executed this Agreement as of the date
set forth in the first paragraph.
INNOVATIVE PHYSICIAN SERVICES, INC.
d/b/a Diagnostic Monitoring
By: /s/ Raymond W. Cohen
Name: Raymond W. Cohen
Title: President
Date: 12/31/98
BIOSENSOR CORPORATION
By: /s/ Ronald G. Moyer
Name: Ronald G. Moyer
Title: President
Date: 12/31/98
