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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 30, 1996
APACHE MEDICAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 000-20805 23-2476415
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1650 Tysons Boulevard, McLean, Virginia 22102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 847-1400
None
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Acquisition of Health Research Network
APACHE Medical Systems, Inc. (the "Company") has acquired certain
assets and assumed certain liabilities of Dun & Bradstreet HealthCare
Information, Inc., an Illinois corporation (the "Seller"), pursuant to the
terms and conditions of an Asset Purchase Agreement dated as of December 30,
1996 by and among the Company, Seller and Cognizant Corporation, a Delaware
corporation ("Cognizant"). Assets acquired by the Company comprise a business
line, Health Research Network ("HRN"), which provides medical information
relating to HIV/AIDS. The Company has acquired substantially all HRN
intellectual property; all HRN contracts and commitments; certain HRN computer
hardware; certain HRN furniture and fixtures; all HRN notes and accounts
receivable; all HRN permits, franchises, licenses, bonds, approvals and
qualifications; and all causes of action, rights of action and claims relating
to the acquired assets of HRN; and all books and records primarily relating to
HRN.
The Company purchased HRN for $1,565,000 in cash, the source of which
was the Company's working capital.
Acquisition of CardioMac
The Company has acquired certain assets and assumed certain
liabilities of Iowa Health Centers, P.C., an Iowa professional corporation
d/b/a Iowa Heart Center, P.C. ("IHC"), Mercy Hospital Medical Center ("Mercy"),
an Iowa non-profit corporation, Mark A. Tannenbaum, M.D. and Iowa Heart
Institute, an Iowa non-profit corporation (collectively, with IHC, Mercy and
Dr. Tannenbaum, the "Sellers"), pursuant to the terms and conditions of an
Asset Purchase Agreement dated as of January 7, 1997. The Company has acquired
a cardiovascular section information system called CardioMac, including all
related intellectual property; all related contracts and commitments; certain
related computer equipment; all related notes and accounts receivable; all
related permits, franchises, licenses, bonds, approvals and qualifications; all
related causes of action, rights of action and claims; and all related books
and records.
The Company purchased CardioMac for $1,350,000 in cash, the source of
which was the Company's working capital, and options on an aggregate of 150,000
shares of the Company's Common Stock (the "Options"). The Company has valued
the Options at an aggregate of $223,000 based on the Black-Scholes
option-valuation formula.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements and Exhibits.
Not Applicable.
(b) Exhibits.
The exhibits listed in the accompanying Exhibit Index are
filed as part of this Current Report on Form 8-K.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
APACHE MEDICAL SYSTEMS, INC.
Date: January 13, 1997 By: /s/ Gerald E. Bisbee, Jr.
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Gerald E. Bisbee, Jr.
Chairman and Chief Executive Officer
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APACHE MEDICAL SYSTEMS, INC.
EXHIBIT INDEX TO FORM 8-K REPORT
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<CAPTION>
Exhibit Description
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2.1 Asset Purchase Agreement by and among the Company and Dun & Bradstreet HealthCare Information, Inc. and Cognizant
Corporation dated as of December 30, 1996*
2.2 Asset Purchase Agreement by and among the Company and Iowa Health Centers, P.C. d/b/a Iowa Heart Center, P.C.,
Mercy Hospital Medical Center, Mark A. Tannenbaum, M.D. and Iowa Heart Institute dated as of January 7, 1997*
2.3 Registration Agreement between the Company and each of Iowa Health Centers, P.C. d/b/a Iowa Heart Center, P.C.,
Mercy Hospital Medical Center, Mark A. Tannenbaum, M.D. and Iowa Heart Institute dated January 7, 1997
</TABLE>
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* The schedules and exhibits to these documents are not being filed herewith.
The registrant agrees to furnish supplementally a copy of any such schedule or
exhibit to the Securities and Exchange Commission upon request.
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ASSET PURCHASE AGREEMENT
BY AND AMONG
APACHE MEDICAL SYSTEMS, INC.
IOWA HEALTH CENTERS. P.C.,
MERCY HOSPITAL MEDICAL CENTER
AND MARK A. TANNENBAUM, M.D.
AND
IOWA HEART INSTITUTE
DATED AS OF JANUARY 7, 1997
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement") dated as of January 7, 1997, by
and among APACHE Medical Systems, Inc., a Delaware corporation ("Buyer"), and
Iowa Health Centers, P.C., an Iowa professional corporation d/b/a Iowa Heart
Center, P.C. ("IHC"), Mercy Hospital Medical Center, an Iowa not-for-profit
corporation ("Mercy"), and Mark A. Tannenbaum, M.D. ("Dr. Tannenbaum" and,
together with IHC and Mercy, the "CardioMac Principals").
WHEREAS, IHC, Mercy and Dr. Tannenbaum have developed a cardiovascular
section information system called CardioMac ("CardioMac") and (through Iowa
Heart Institute, an Iowa not-for-profit corporation ("IHI"), its appointed
agent) operate the development, production and sale of its CardioMac product
through an unincorporated division of IHC located in Des Moines, Iowa (the
"Business");
WHEREAS, the parties desire to provide for the sale and transfer of
certain of the assets of the Business and other covenants and agreements in
exchange for a combination of cash, unregistered shares of Common Stock, $.01
par value per share, of the Buyer ("Common Stock") and options on the Common
Stock (the "Options") upon the terms and subject to the conditions set forth
herein; and
WHEREAS, this Agreement sets forth the terms and conditions to which
the parties have agreed and further contemplates the execution and delivery of
certain collateral agreements hereinafter described.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.1. ASSETS SOLD AND PURCHASED. At the Closing on the Closing Date
(as such terms are hereinafter defined) IHC, Mercy, Dr. Tannenbaum and IHI
shall convey, sell, assign, transfer and deliver to Buyer, free and clear of
all liens, claims and encumbrances except as are specifically assumed by Buyer
hereunder, all right, title and interest of IHC, Mercy, Dr. Tannenbaum and IHI
in and to the following assets of the Business (the "Purchased Assets"):
(a) All intellectual property (whether as owner,
inventor, employer of an inventor, licensor, licensee or otherwise),
including, without limitation, patents or patent applications;
trademarks, service marks, trade dress, trade names, corporate names
or any registrations or applications to register any of the foregoing;
copyrights or copyright
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registrations; trade secrets or other proprietary rights or any licenses to or
from third parties with respect to any of the foregoing (including, without
limitation, all computer software, data and documentation and all copies
thereof) relating to the Business as now conducted, including, without
limitation, the intellectual property described on Schedule 5.13 hereto, but
excluding those items listed as Excluded Assets on Schedule 1.2;
(b) All computer equipment described on Schedule 1.1
hereto;
(c) All notes and accounts receivable existing as of the
Closing Date;
(d) All orders, contracts, commitments and proposals for
the sale of the products of the Business listed on Schedule 5.10
hereto, including, without limitation, leases, licenses, conditional
sale agreements, guarantees and confidentiality agreements;
(e) Except for IHI's sales tax permit which is excluded
an excluded asset as set forth on Section 1.2(d) below, all permits,
franchises, licenses, bonds, approvals, qualifications and the like
issued by any government or governmental unit, agency, board, body or
instrumentality, whether federal, state or local and all applications
therefor pertaining to the Business or the Purchased Assets,
including, without limitation, the intellectual property described on
Schedule 5.13 hereto;
(f) All books and records of the Business, including,
without limitation, all records on customers, suppliers, sales and
promotional literature, advertising services, correspondence and files
and material legal activities; and
(g) All causes of action, rights of action and claims
relating to the Purchased Assets of Business against any other person.
1.2. EXCLUDED ASSETS. Assets not specifically identified in
Section 1.1 shall not be sold or transferred to Buyer and shall hereinafter be
referred as the "Excluded Assets". It is specifically understood that the
following assets of the Business are part of the Excluded Assets which shall
not be sold and transferred to Buyer.
(a) All cash and cash equivalent items existing as of the
Closing Date;
(b) Any agreement, contract, commitment or understanding
not described on Schedule 5.10, including, without limitation, the
lease of the real property used by IHC and Mercy in the operation of
the Business located at 411 Laurel Street, Des Moines, Iowa,, any
insurance policies and any employment agreement;
(c) All personal property (whether owned, leased or
licensed) not specifically included in the Purchased Assets as
described in Section 1.1 above, including, without limitation,
computer equipment not described on Schedule 1.1, furniture, office
equipment and vehicles;
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(d) IHI's Iowa Sales Tax Permit; Buyer explicitly
understands that it shall be solely responsible to obtain all sales
tax permits it requires to market and sell CardioMac after the closing
date..; and
(e) Any asset identified as excluded on Schedule 1.2.
1.3. ASSUMED LIABILITIES. At the Closing on the Closing Date (as
such terms are hereinafter defined), Buyer shall assume and agree to perform
and discharge when and as due the contractual liabilities and obligations of
IHC and Mercy currently existing or in hereafter arising under any of the
contracts described in Schedule 5.10 hereto (the "Assumed Liabilities"), and no
others.
1.4. EXCLUDED LIABILITIES. Except as provided in Section 1.3
hereof, Buyer shall not assume, nor in any way become liable for, any
liabilities or obligations of any of the CardioMac Principals or of the
Business, of any kind or nature, whether accrued, absolute, contingent or
otherwise, or whether due or to become due, whether known or unknown.
Specifically, but without limiting the foregoing, Buyer shall not assume or be
liable for the following debts, liabilities and obligations (the "Excluded
Liabilities"):
(a) Any liability of the Business relating to its
accounts payable;
(b) Any wages, vacation and other fringe benefits and all
costs and benefits provided under any pension, profit sharing,
savings, retirement, health, medical, life, disability, dental,
deferred compensation, stock option, bonus, incentive, severance pay,
group insurance or other similar employee plans or arrangements, or
under any policies, handbooks, or custom or practice, or any
employment arrangements, whether express or implied, applicable to any
of the employees of the Business (the "Employee Plans"), except those
that are provided by Buyer from and after the Closing Date to
employees hired by Buyer;
(c) Any contingent liability of the Business of any kind
arising or existing on or prior to the Closing Date, including,
without limitation, claims, proceedings or causes of action which are
currently or hereafter become, the subject of claims, assertions,
litigation or arbitration;
(d) As relating to any Purchased Asset, any liability or
obligation of any of the CardioMac Principals arising out of any
wrongful or unlawful violation or infringement of any intellectual
property right of any person or entity occurring on or prior to the
Closing Date;
(e) Any liability relating to any tax which may be
imposed on any of the CardioMac Principals or assessable with respect
to the Business for periods prior to Closing; and
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(f) Any obligation owed to any licensee of the Business
not specifically described on Schedule 5.10 or set forth in the
license agreements described in Section 5.10.
ARTICLE II.
OTHER AGREEMENTS
2.1. MERCY. Mercy hereby covenants and agrees to purchase an
integrated critical care and cardiovascular system from Buyer for Two
Hundred-Fifty Thousand Dollars ($250,000) pursuant to a license agreement
executed on the date hereof and attached hereto as Exhibit A hereto (the "Mercy
Agreement"). Mercy acknowledges that such integrated system is a product under
development by Buyer and is not yet generally available for purchase by Buyer's
customers. Full payment will be made by Mercy and delivery of the system will
be made by Buyer as stated in the Mercy Agreement.
2.2. DR. TANNENBAUM. Dr. Tannenbaum will be available to Buyer for
consultation up to four days per month for a period of six months from the
Closing Date (the "Tannenbaum Services") pursuant to a Consulting Agreement
executed on the date hereof and attached hereto as Exhibit B. It is the
understanding of the parties that Dr. Tannenbaum will focus on integrating the
Buyer's cardiovascular programs with the Critical Care System purchased by
Mercy pursuant to the Mercy Agreement. Buyer agrees to reimburse Dr. Tannenbaum
for all reasonable travel and out-of-pocket expenses related to his work for
Buyer. Buyer shall provide Dr. Tannenbaum with a lap top computer as part of
his consideration for performance of his work as a consultant during the six
month period. Buyer agrees to provide the following notation on the CardioMac
software so long as more than 50% of the original code remains: "Mark A.
Tannenbaum M.D. of the Iowa Heart Center - Original Creator of the CardioMac
software"
2.3. NON-COMPETITION. The CardioMac Principals shall not, for
three years from the Closing Date:
(a) Directly or indirectly, on behalf of itself or on
behalf of any other person, firm, corporation, trust, or other entity,
and whether acting as an officer, director, employee, partner, agent,
consultant or otherwise, engage in, or assist in any way, financially
or otherwise, any person, firm, corporation, trust or other entity
that is engaged, or which proposes to engage, in the development,
production or sale of a cardiovascular section information system
substantially similar to CardioMac, which competes with Buyer in the
United States of America, provided that this section is not intended
to prohibit the CardioMac Principles from entering into other types of
software agreements that do not relate to the development, production
or sale of a cardiovascular section information system substantially
similar to CardioMac;
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(b) Directly or indirectly solicit, attempt to solicit,
or otherwise divert, or attempt to divert, any account or customer of
Buyer in the United States of America with respect to any product
which is substantially similar to and competes with CardioMac;
(c) Employ, engage, solicit for employment, or contract
for the services of any person who is employed by Buyer, provided that
the CardioMac Principles may employ former employees of the CardioMac
Principles who's employment with Buyer has been terminated;
(d) Conduct business using the name "CardioMac" or any
similar name; and
(e) If a court of competent jurisdiction finally holds
that the time, territory or any other provision set forth in this
Section constitutes an unreasonable restriction, such provision shall
not be rendered void, but shall apply as to such time, territory or to
such other extent as such court may determine constitutes a reasonable
restriction. The CardioMac Principals acknowledge that the
restrictions contained in this Section are reasonable and necessary to
protect the legitimate interests of Buyer and that any breach by any
of the CardioMac Principals will result in irreparable injury to
Buyer. The CardioMac Principals acknowledge that Buyer shall be
entitled to preliminary and permanent injunctive relief in any action
seeking to enforce the provisions of this Section. The CardioMac
Principals acknowledge that Buyer shall be entitled to an equitable
accounting of all earnings, profits or other benefits arising from
such breach and shall be entitled to receive such other damages,
direct or consequential, as may be appropriate
2.4. CONFIDENTIALITY. The CardioMac Principals shall not use for
the benefit of any of the CardioMac Principals or divulge or convey to any
third party, any confidential information obtained by any of the CardioMac
Principals. Confidential information consists of all information, knowledge or
data relating to the Business or the Purchased Assets including, without
limitation, customer and supplier lists, trade secrets, know-how, consultant
contracts, pricing information, marketing plans, product development plans,
business acquisition plans, technical processes, designs and design projects,
inventions and research projects and all other information relating to the
operation of Buyer not in the public domain or otherwise publicly available.
Information which enters the public domain or is publicly available loses its
confidential status hereunder so long as none of the CardioMac Principals
directly or indirectly has caused such information to enter the public domain.
The CardioMac Principals agree to deliver to Buyer as soon as practicable after
the Closing all memoranda, notes, plans, records, reports and other documents
(and all copies thereof) relating to the confidential information or the
business of Buyer or an affiliate which the CardioMac Principals may then
possess or have under their control;
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ARTICLE III.
PURCHASE PRICE; ALLOCATION
3.1. CONSIDERATION PAYABLE AT THE CLOSING. In reliance on the
representations and warranties of the CardioMac Principals contained herein,
and on the terms and subject to the conditions of this Agreement, Buyer, in
consideration for the transfer and delivery to it of the Purchased Assets, the
execution and performance by Mercy of the Mercy Agreement, the performance of
the Tannenbaum Services by Dr. Tannenbaum and the non-competition and
confidentiality provisions, as provided herein, will, in addition to the
assumption of the Assumed Liabilities set forth in Section 1.3 above, provide
consideration to the CardioMac Principals at the Closing as follows (the
"Purchase Price"):
(a) To IHC: Option to purchase 50,000 shares of Common
Stock.
(b) To Mercy: Option to purchase 50,000 shares of Common
Stock.
(c) To Dr. Tannenbaum: Option to purchase 50,000 shares
of Common Stock.
(d) To IHI as agent for the CardioMac Principals: One
million, three hundred thousand fifty dollars ($1,350,000) cash
payable by wire transfer of funds.
3.2. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets and other covenants and agreements in the
manner set forth by Buyer which shall be reasonably acceptable to the CardioMac
Principals and shall not be in violation of IRS code..
ARTICLE IV.
CLOSING
4.1. CLOSING. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Gardner,
Carton and Douglas, on January 7, 1997 (the "Closing Date"), or at such other
time, date and place as the parties shall mutually agree. In the event of any
postponement thereof, all references in this Agreement to the Closing Date
shall be deemed to refer to the time and to the date to which the Closing Date
shall have been so postponed.
4.2. METHOD OF PAYMENT. Any party making a cash payment to another
party shall do so at Closing by delivery of a bank wire transfer of immediately
available funds to an account designated by the receiving party. In addition,
Buyer will execute with each of the CardioMac Principals an Option Agreement
substantially in the form of Exhibit C for the respective number of Options
designated in Section 3.1 above.
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4.3 INSTRUMENTS OF CONVEYANCE AND TRANSFER. At the Closing, the
CardioMac Principles and IHI shall deliver to Buyer such bills of sale,
endorsements, assignments and other good and sufficient instruments of
transfer, conveyance and assignment, in form satisfactory to Buyer's counsel as
shall be effective to vest in Buyer good and marketable title to the Purchased
Assets, free and clear of all liens, claims and encumbrances [except as
disclosed on Schedule 5.4]. The CardioMac Principles and IHI shall take all
such steps as may be required to put Buyer in actual possession and control of
the Purchased Assets and the Business as of the Closing.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE CARDIOMAC PRINCIPALS
The CardioMac Principals, severally (and not jointly and severally),
hereby represent and warrant as follows and IHI represents and warrants with
respect to sections 5.2, 5.3, 5.4 and 5.13:
5.1. ORGANIZATION; GOOD STANDING; QUALIFICATION. Each of IHC and
Mercy is duly organized and validly existing in good standing under the laws of
the State of [Iowa]. Each of IHC and Mercy has full corporate power and
authority to conduct its business as it is now being conducted.
5.2. AUTHORIZATION; VALID AND BINDING NATURE. The CardioMac
Principals and IHI each have full power and authority to execute, deliver and
perform this Agreement and all other agreements and transactions contemplated
herein and have taken all actions required by law, its charter or bylaws, if
any, or otherwise, to authorize the execution and delivery of this Agreement
and all other agreements and transactions contemplated herein and to consummate
the transactions contemplated hereby and thereby. This Agreement and all other
documents and agreements contemplated herein constitute the valid and binding
agreements of the CardioMac Principals, or an individual CardioMac Principal,
as applicable, enforceable in accordance with their terms.
5.3. NO VIOLATION. The execution and delivery of this Agreement
and all other documents and agreements contemplated herein and the consummation
of the transactions contemplated hereby and thereby will not violate any
provision of, or result in the breach of, or accelerate or permit the
acceleration of any obligation relating to the Business or the Purchased
Assets, or result in the creation of any lien, claim or encumbrance thereon,
under any applicable law, rule or regulation of any governmental body having
jurisdiction, the charter or bylaws of IHC or Mercy or IHI, any agreement to
which any of the CardioMac Principals or IHI is a party or by which any of them
may be bound, or any order, judgment, or decree applicable to any of them.
5.4. TITLE OF ASSETS. The CardioMac Principles and IHI have good
and marketable title to the Purchased Assets, free and clear of all liens,
claims or encumbrances of any nature. At the Closing, the CardioMac Principles
and IHI shall deliver the Purchased Assets to Buyer free and clear of all
liens, claims and encumbrances except as expressly agreed to by Buyer.
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5.5. FINANCIAL STATEMENTS. The income statement, statement of cash
flow, statement of net equipment and the attachments thereto relating to the
Business prepared by IHI for fiscal years 1993, 1994 and 1995 and year to date
1996 which were delivered to Buyer on September 27, 1996, and which are
attached as Schedule 5.5 and made a part hereof (collectively, the "CardioMac
Financial Information")are in accordance with the books of account and records
of the Business.
5.6. INTENTIONALLY OMITTED.
5.7. TAX MATTERS. All federal, state, local and foreign tax
returns and reports with respect to IHC and Mercy required by law to be filed
have been duly filed, and all federal, state, local, foreign and any other
taxes, assessments, fees and other governmental charges with respect to the
employees, properties, assets, income or franchises of IHC or Mercy, as
appropriate, shown on such returns and reports to be due and payable, or which
are otherwise due and payable, have been paid.
5.8. RIGHTS OF THIRD PARTIES. [Other than as disclosed on Schedule
5.10,] to best actual knowledge of CardioMac Principles, none of the CardioMac
Principals have entered into any leases, licenses or other agreements, recorded
or unrecorded, granting rights to third parties in any personal property of the
Business, and no person or entity has any right to possession of any of the
property of the Business.
5.9. INTENTIONALLY OMITTED
5.10. CONTRACTS. To best actual knowledge of CardioMac Principles,
set forth on Schedule 5.10 are all written contracts, agreements, commitments
or understandings of any of the CardioMac Principals relating to the Business
to be assumed hereunder. Each contract, agreement, commitment or understanding
described therein which requires the consent of any party to its assignment in
connection with the transactions contemplated hereby is appropriately
identified as such. To best actual knowledge of CardioMac Principles: (i) all
such written executed contracts are valid, legally binding and subject to the
receipt of any required consents from any of the third party licensees, shall
be enforceable as of and following the closing date, and (ii) there is no
breach or default with respect to any of the written executed license
agreements set forth on Schedule 5.10.
5.11. ACCOUNTS RECEIVABLE. Set forth on Schedule 5.11 as of a date
no more than five business days prior to the Closing Date is a complete and
accurate list of all notes and accounts receivable payable to or for the
benefit of the Business.
5.12. INTENTIONALLY OMITTED
5.13. PROPRIETARY RIGHTS. To best actual knowledge of CardioMac
Principles, except as set forth on Schedule 5.13, there are no patents or
patent applications; trademarks, service marks, trade dress, trade names,
corporate names or any applications to register any of the foregoing;
copyrights or copyright registrations; trade secrets or other proprietary
rights or any
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licenses to or from third parties with respect to the foregoing (including,
without limitation, all computer software, data and documentation and all
copies thereof) relating to the Business as now conducted. To best actual
knowledge of CardioMac Principles and IHI, respectively, except as indicated on
Schedule 5.13, IHC and Mercy and IHI own and possess all right, title and
interest in and to the proprietary rights set forth therein without any
infringement of or conflict with the rights of others. To best actual
knowledge of CardioMac Principles and IHI respectively, except as set forth on
Schedule 5.13, none of the CardioMac Principals or IHI has received or been
threatened with any notices of infringement or misappropriation from any third
party with respect to the proprietary rights which are listed thereon. To the
best actual knowledge of the CardioMac Principals, none of the CardioMac
Principals has infringed nor is it currently infringing on the proprietary
rights of any person.
5.14. DESCRIPTION OF CARDIOMAC. The CardioMac system includes the
following modules: the cath-lab module which has been completed and is
operational; the surgery module which is installed at two sites and is
currently undergoing further development; and the echo module which is still
under joint development with Dartmouth. All three modules of the CardioMac
system, in their current state of completion or development, are included in
the Purchased Assets as described in Section 1.1 hereof. All components of the
CardioMac system, tangible or intangible, are included in the Purchased Assets
as described in Section 1.1 hereof.
5.15. PURCHASED ASSETS NOT IN PUBLIC DOMAIN. To best actual
knowledge of CardioMac Principles, none of the Purchased Assets have entered
the public domain..
5.16. INTENTIONALLY OMITTED
5.17. DEFAULT. None of the CardioMac Principals is in default
under, nor has any event occurred which, with the lapse of time or action by a
third party, could result in a default under any outstanding note, indenture,
mortgage, contract or agreement relating to the Business by which it is bound,
or under any provision of the charter or bylaws of IHC or Mercy. The execution
and performance of this Agreement and the transactions contemplated hereby will
not violate any provision of or result in the breach of, modification of,
acceleration of, or constitute a default under the charter or bylaws of IHC or
Mercy, any law, order, writ, injunction or decree of any court, governmental
agency or arbitration tribunal or any contract, note, mortgage, security
agreement, agreement or instrument affecting the Purchased Assets.
5.18. LITIGATION. No action or proceeding before any court or
governmental body is pending or, to the knowledge of the CardioMac Principals,
threatened against any of the CardioMac Principals wherein a judgment, decree
or order would have an adverse effect on the Purchased Assets or this
transaction or would prevent the carrying out of this Agreement, declare
unlawful the transactions contemplated hereby, cause such transactions to be
rescinded, or require any of the CardioMac Principals or Buyer to divest itself
of any of the Purchased Assets.
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5.19. COURT ORDERS AND DECREES. There is not outstanding or
threatened any order, writ, injunction or decree of material nature of any
court, governmental agency or arbitration tribunal against or affecting the
Purchased Assets or this transaction.
5.20. LEGAL AND REGULATORY COMPLIANCE. To best actual knowledge of
CardioMac Principles, and with respect to the Business and the Purchased
Assets, each of the CardioMac Principals is in compliance with all applicable
laws, regulations and administrative orders of the United States or any state,
county, municipality or of any subdivision thereof to which the Business or the
Purchased Assets may be subject unless the non-compliance would not have a
material adverse effect on the Business or the Purchased Assets.
5.21. INTENTIONALLY OMITTED.
5.22. INVESTMENT REPRESENTATIONS. In connection with the receipt of
options to purchase shares of the Common Stock hereunder:
(a) Each of the CardioMac Principals is aware of the
business affairs and financial condition of Buyer, and has acquired
all such information about Buyer as it or he deems necessary and
appropriate to enable such CardioMac Principal to reach an informed
and knowledgeable decision to acquire the shares of the Common Stock.
Each of the CardioMac Principals is acquiring such shares for its or
his own account for investment and not with a view to, or for the
resale in connection with, any "distribution" thereof for purposes of
the Securities Act of 1933, as amended ("Securities Act").
(b) Each of the CardioMac Principals understands that the
shares of the Common Stock have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature the
investment intent of each of the CardioMac Principals as expressed
herein.
(c) Each of the CardioMac Principals further understands
that the shares of the Common Stock may not be sold publicly and must
be held indefinitely unless it is subsequently registered under the
Securities Act or unless an exemption from registration is available.
Each of the CardioMac Principal is able, without impairing its or his
financial condition, to hold such shares for an indefinite period of
time and to suffer a complete loss on the investment. Each of the
CardioMac Principals understands that Buyer is under no obligation to
register the shares of the Common Stock except as set forth in the
Registration Agreement between each of the CardioMac Principal and
Buyer dated January 7, 1997, a Form of which is attached hereto as
Exhibit D. In addition, each of the CardioMac Principals understands
that the certificate evidencing the shares of the Common Stock will be
imprinted with a legend which prohibits the transfer of such shares
unless they are registered or such registration is not required in the
opinion of counsel for Buyer.
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<PAGE> 12
(d) Each of the CardioMac Principals is familiar with the
provisions of Rule 144, promulgated under the Securities Act, which,
in substance, permits limited public resale of "restricted securities"
acquired, directly or indirectly, from the issuer thereof (or from an
affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions, including, among other things: (i)
the availability of certain public information about the issuer; (ii)
the resale occurring not less than two years after the party has
purchased, and made full payment for, within the meaning of Rule 144,
the securities to be sold; and, in the case of an affiliate, or of a
non-affiliate who has held the securities less than three (3) years
the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) and the amount of securities being sold during
any three-month period not exceeding the specified limitations stated
therein, if applicable.
(e) Each of the CardioMac Principals further understands
that at the time such CardioMac Principal wishes to sell the shares of
Common Stock there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Buyer
may not be satisfying the current public information requirements of
Rule 144, and that, in such event, such CardioMac Principal would be
precluded from selling such shares under Rule 144 even if the two-year
minimum holding period had been satisfied. Each of the CardioMac
Principals understands that Buyer is under no obligation to make Rule
144 available.
(f) Each of the CardioMac Principals further understands
that in the event all of the applicable requirements of Rule 144 are
not satisfied, registration under the Securities Act, compliance with
Regulation A, or some other registration exemption will be required;
and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the Securities and Exchange Commission (the "SEC") has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than
pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available from
such offers or sales, and that such persons and their respective
brokers who participate in such transactions do so at their own risk.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. ORGANIZATION; GOOD STANDING. Buyer is duly organized and
validly existing in good standing under the laws of the State of Delaware and
has full corporate power and authority to conduct its business as it is now
being conducted.
6.2. AUTHORIZATION; VALID AND BINDING NATURE. Buyer has full power
and authority to execute, deliver and perform this Agreement and all other
agreements and transactions
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<PAGE> 13
contemplated herein and has taken all actions required by law, its charter or
bylaws or otherwise, to authorize the execution and delivery of this Agreement
and all other agreements and transactions contemplated herein and to consummate
the transactions contemplated hereby and thereby. This Agreement and all other
documents and agreements contemplated herein constitute the valid and binding
agreements of Buyer, enforceable in accordance with their terms.
6.3. LITIGATION. No action or proceeding before any court or
governmental body is pending or, to the knowledge of Buyer, threatened against
the Buyer wherein a judgment, decree or order would have an adverse effect on
this transaction or would prevent the carrying out of this Agreement, declare
unlawful the transactions contemplated hereby or cause such transactions to be
rescinded.
6.4. EXCHANGE ACT REPORTS.
(a) Buyer has filed all forms, reports and documents
required to be filed with the SEC since April 26, 1996 and has made
available to the CardioMac Principals, as filed with the SEC, complete
and accurate copies of (i) the Registration Statement on Form S-1, as
amended, and (ii) all other reports and statements filed by Buyer with
the SEC since April 26, 1996, in each case including all amendments
and supplements (collectively, the "Buyer SEC Filings").
(b) The Buyer SEC Filings (including, without limitation,
any financial statements or schedules included therein) (i) were
prepared in compliance with the requirements of the Securities Act or
the Exchange Act and the rules and regulations thereunder, as the case
may be, and (ii) did not at the time of filing (or if amended,
supplemented or superseded by a filing prior to the date hereof, on
the date of that filing) contain any untrue statement of a material
fact or omit 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.
(c) The financial statements included in the Buyer SEC
Filings have been prepared in accordance with GAAP consistently
applied and consistent with prior periods indicated and fairly present
the consolidated financial position of Buyer as of the dates thereof
and the consolidated results of operations and cash flows for the
periods then ended. Since September 30, 1996, there has been no
change in any of the significant accounting (including tax accounting)
policies, practices or procedures of the Buyer.
6.5. NO VIOLATION. The execution and delivery of this Agreement
and all other documents and agreements contemplated herein and the consummation
of the transactions contemplated hereby and thereby will not violate any
provision of, or result in the breach of, or accelerate or permit the
acceleration of any obligation relating to the charter or bylaws of Buyer, any
agreement to which Buyer is a party or by which it may be bound, or any order,
judgment, or decree applicable to it.
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<PAGE> 14
6.6. DEFAULT. Buyer is not in default under, nor has any event
occurred which, with the lapse of time or action by a third party, could result
in a default under any provision of the charter or bylaws of Buyer. The
execution and performance of this Agreement and the transactions contemplated
hereby will not violate any provision of or result in the breach of,
modification of, acceleration of, or constitute a default under the charter or
bylaws of Buyer, any law, order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal.
6.7. COURT ORDERS AND DECREES. There is not outstanding or
threatened any order, writ, injunction or decree of material nature of any
court, governmental agency or arbitration tribunal against or affecting this
transaction.
ARTICLE VII.
COVENANTS
7.1. EMPLOYEE SALARIES; RENT. Buyer shall be solely responsible to
offer employment to any current employees of the Business which Buyer desires
to hire, and the CardioMac Principals shall have no obligation to obtain the
agreement of any such individuals to accept any employment so offered by Buyer.
The CardioMac Principals agree to make rent payments on the leased space
currently used by the Business at 411 Laurel Street, Suite 3250, Des Moines
Iowa until February 28, 1997 and shall allow Buyer to use two rooms in
connection with Buyer's conduction of the Business in the post closing period
through January 31, 1997. Seller will make available until January 31, 1998,
space as described above at 411 Laurel Street, Suite 3250, Des Moines Iowa for
Buyer at a mutually agreeable rental rate.
7.2. CONSENTS AND APPROVALS. The CardioMac Principals shall use
their best efforts to obtain all consents, approvals, amendments and agreements
required in order to duly and validly carry out the transactions contemplated
by this Agreement and to satisfy the conditions precedent herein and to do all
other things necessary in order to make effective the transactions contemplated
herein, including, but not limited to, the assignment of agreements listed on
Schedule 5.10 form IHI to Buyer which may not be obtained until after the
Closing. Buyer agrees to cooperate in the CardioMac Principals' efforts with
respect to this Section 7.2.
7.3. EMPLOYEE PLANS. The CardioMac Principals shall remain
obligated to pay and shall pay all wages, salaries, benefits and/or the
monetary equivalent of benefits, including but not limited to the employer
portion of FICA payments, vacation pay, severance pay, bonuses, commissions,
pensions, personal leave pay and sick leave, accrued by employees of the
Business to which they are entitled by law, rule or regulation or under the
employment practices, policies or procedures of the Business. The CardioMac
Principals shall also remain responsible for the payment of all health
insurance, pension, workers' compensation, unemployment compensation and
disability claims which relate to periods of employment with the Business, as
well as all payments under Employee Plans related to the Business, relating to
service of employees of the
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<PAGE> 15
Business, except those that are provided by Buyer from and after the Closing
Date to employees hired by Buyer.
7.4. FURTHER ASSURANCES. The CardioMac Principals hereby covenant
and agree that from time to time at the request of Buyer, and without further
consideration, to execute and deliver such additional instruments and to take
such other action as Buyer reasonably may require to convey, assign, transfer
and deliver the Purchased Assets of the Business and to otherwise to carry out
the terms of the Agreement.
7.5. REGISTRATION RIGHTS. Buyer hereby covenants and agrees to
grant to the CardioMac Principals registration rights with respect to the
Common Stock, Options and Performance Options offered hereunder subject to the
terms and conditions set forth in the Registration Agreement, a Form of which
is attached hereto as Exhibit D.
7.6. MUTUAL COVENANTS OF BUYER AND DR. TANNENBAUM. During the
period of performance of the Tannenbaum Services, Buyer and Dr. Tannenbaum
agree to seek a mutually acceptable rate and time commitment for the
continuation of the Tannenbaum Services beyond such initial period. Buyer
hereby agrees that upon the formation of its cardiovascular advisory board,
Buyer will issue to Dr. Tannenbaum an invitation to sit on such board.
7.7. FINANCIAL RECORDS AND INFORMATION. The CardioMac Principles
hereby covenants and agrees to use good faith and best efforts to assist Buyer
and to make available any financial records and information relating to the
Business in the event that Buyer is required to produce historical or pro forma
financial records and information that relate to the time period prior to the
Closing.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE CARDIOMAC PRINCIPALS
All obligations of the CardioMac Principals under this Agreement are
subject to the performance, at or prior to Closing, of the following
conditions, unless expressly waived in writing by the CardioMac Principals at
or prior to Closing:
8.1. CONSENTS AND APPROVALS. All consents, approvals, amendments
and agreements required of Buyer to duly and validly carry out the transactions
contemplated by this Agreement shall have been obtained.
8.2. OTHER AGREEMENTS. Buyer shall have executed and delivered the
Mercy Agreement as described in Section 2.1 above.
8.3. INSTRUMENTS OF TRANSFER, ETC. Buyer shall have duly executed
and delivered to the CardioMac Principals, or to an individual CardioMac
Principal, as applicable, all closing documents, instruments and certificates
as shall have been reasonably and customarily requested.
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<PAGE> 16
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
All obligations of Buyer under this Agreement are subject to the
performance, at or prior to Closing, of the following conditions, unless
expressly waived in writing by Buyer at or prior to Closing:
9.1. CONSENTS AND APPROVALS. All consents, approvals, amendments
and agreements required of the CardioMac Principals to duly and validly carry
out the transactions contemplated by this Agreement shall have been obtained,
except that it is understood that licensee consents required to assign the
agreements listed on Schedule 5.10 from IHI to Buyer may not be obtained until
after the Closing and that the CardioMac Principal's and IHI's only obligation
with respect thereto is to use their best efforts to obtain all such consents
desired by Buyer.
9.2. MATERIAL ADVERSE CHANGES. The business, operations, assets or
properties of the Business shall not have been and shall not be threatened to
be materially adversely affected in any way as a result of any event or
occurrence on or prior to the Closing.
9.3. OTHER AGREEMENTS. Mercy shall have executed and delivered the
Mercy Agreement as described in Section 2.1 above. Dr. Tannenbaum shall have
agreed to perform the Tannenbaum Services as described in Section 2.2 above.
9.4. INSTRUMENTS OF TRANSFER, ETC. The CardioMac Principals, or an
individual CardioMac Principal, as applicable, shall have duly executed and
delivered to Buyer all documents and instruments necessary or desirable to
transfer the Purchased Assets to Buyer and such other closing documents,
instruments and certificates as shall have been reasonably and customarily
requested.
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<PAGE> 17
ARTICLE X.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION
10.1. NATURE OF REPRESENTATIONS. The CardioMac Principals and IHI
have not made any representations or warranties other than those specifically
set forth in Article V of this Agreement and in any exhibit, schedule or other
item incorporated by reference by Article V of this Agreement. The Buyer has
not made any representations or warranties other than those specifically set
forth in Article VI of this Agreement and in any exhibit, schedule or other
item incorporated by reference by Article VI of this Agreement. Further, Buyer
acknowledges that the CardioMac Principles and IHI have made no representations
or warranties whatsoever regarding future sales, future revenues and the
financial or other results of Buyer's future development and marketing efforts
with respect to the Business and the CardioMac software nor with respect to
results that may be obtained from the CardioMac software as it now exists or
may be made in the future by Buyer. Further, Buyer acknowledges that the
CardioMac Principals and IHI have made no representation or warranty as to the
condition, merchantability or fitness for a particular purpose of any of the
assets being sold to Buyer and that Buyer is to be solely responsible for all
further development of the CardioMac source code and all other assets purchased
by Buyer pursuant to this Agreement.
10.2. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS, TIME
FOR MAKING CLAIMS. Except as set forth below, the representations, warranties
and covenants of the parties contained in this Agreement or made in connection
with this transaction shall survive the Closing, where practicable, and any
investigation by the parties with respect thereto until the second anniversary
of the Closing Date; provided that such representations and warranties shall
not terminate for purposes of any claim made by an Indemnitee prior to the
expiration of the respective representation or warranty; and provided further
that (i) all representations and warranties made in or pursuant to Sections
5.1, 5.2, 5.3, 5.4 and 5.22 and 6.1, 6.2 and 6.5 and covenants made in or
pursuant to section 1.4(a) and 1.4(b) and related indemnification obligations,
shall survive the Closing without limitations as to time; and (ii) the
representations and warranties contained in Sections 5.7 and covenants made in
or pursuant to section 1.4(e) related indemnification obligations shall survive
the Closing until such time as the assessment of any claims deficiencies or
penalties therefor shall be barred by applicable periods of limitation under
applicable federal and state tax laws as the same may be extended by waiver.
Any claim for indemnification must be presented to the indemnifying party at
the time the other party becomes aware of such a claim and, in any event, must
be presented to the indemnifying party within the applicable survival period
set forth in this paragraph.
10.3. INDEMNIFICATION OF BUYER. The CardioMac Principals shall,
severally, indemnify, defend and hold Buyer harmless from and against any and
all damages, losses, liabilities, claims and expenses arising out of:
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<PAGE> 18
(a) The breach of or any inaccuracy in any representation
or warranty that survives the Closing up to an aggregate cap of
$200,000 for each of the CardioMac Principles, except for the
representations and warranties in Sections 5.1, 5.2, 5.3 and 5.4 where
the aggregate cap shall be $1,350,000;
(b) The nonfulfillment of any covenant or agreement made
by any of the CardioMac Principals in this Agreement or any other
agreement furnished to Buyer pursuant to this Agreement up to an
aggregate cap of $200,000 for each of the CardioMac Principles;
(c) Any Excluded Liabilities, provided that the
indemnification pursuant to this Section shall not be exclusive of any
other remedies available at law up to an aggregate cap of $200,000 for
each of the CardioMac Principles for Sections 1.4(c), 1.4(d), 1.4(f)
and 1.4(g) (there shall be no cap for 1.4(a), 1.4(b) and 1.4(e); and
(d) Any and all actions, suits, claims, proceedings,
investigations, audits, demands, assessments, fines, judgments, costs
and other expenses incurred by Buyer resulting from the circumstances
described in this Section 10.3, provided that the indemnification
obligations under this sub paragraph shall be limited by any
applicable cap in sub sections 10.3(a) - (c).
(e) Notwithstanding any other provision of this
Agreement, the CardioMac Principals shall have no obligation to
indemnify or hold Buyer free or harmless as required by any provision
of the Agreement unless and until the aggregate losses, damages, costs
or expenses incurred by Buyer exceeds $25,000. Further, the CardioMac
Principals shall not have any indemnification obligation for any
indemnification claim unless the CardioMac Principals are provided
with an opportunity to participate at their own expense in the defense
or settlement of the underlying claim or other matter which gives rise
to the indemnification claim; provided, however, that the CardioMac
Principals shall not be entitled to unreasonably withhold consent with
respect to settlement and further provided that Buyer shall have no
obligation to provide an opportunity to participate in the defense or
settlement of such underlying claim or other matter until such time as
Buyer has determined that such underlying claim or other matter arises
as a breach of this Agreement.
10.4. INDEMNIFICATION OF THE CARDIOMAC PRINCIPALS. Buyer shall
indemnify, defend and hold each of the CardioMac Principals harmless from and
against any and all damages, losses, liabilities, claims and expenses arising
out of:
(a) The breach of or any inaccuracy in any representation
or warranty that survives the Closing;
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<PAGE> 19
(b) The nonfulfillment of any covenant or agreement made
by the Buyer in this Agreement or any other agreement furnished to the
CardioMac Principals, or an individual CardioMac Principal, as
applicable, pursuant to this Agreement;
(c) any Assumed Liabilities or the use of the Purchased
Assets after the Closing Date, provided that the indemnification
pursuant to this Section shall not be exclusive of any other remedies
available at law; and
(d) any and all actions, suits, claims, proceedings,
investigations, audits, demands, assessments, fines, judgments, costs
and other expenses incurred by Buyer resulting from the circumstances
described in this Section 10.4.
(e) Notwithstanding any other provision of this
Agreement, the Buyer shall have no obligation to indemnify or hold the
CardioMac Principals free or harmless as required by any provision of
the Agreement unless and until the aggregate losses, damages, costs or
expenses incurred by the CardioMac Principals exceeds $25,000; this
indemnification "basket" shall not, however, apply to any claim
related to the payment of the cash consideration or the receipt of the
stock option consideration to be received by the CardioMac Principals
under this Agreement nor to any claim related to mutually agreeable
rent owed by Buyer to the CardioMac Principals. Further, the Buyer
shall not have any indemnification obligation for any indemnification
claim unless the Buyer is provided with an opportunity to participate
at its own expense in the defense or settlement of the underlying
claim or other matter which gives rise to the indemnification claim;
provided, however, that the Buyer shall not be entitled to
unreasonably withhold consent with respect to settlement and further
provided that the CardioMac Principals shall have no obligation to
provide an opportunity to participate in the defense or settlement of
such underlying claim or other matter until such time as CardioMac
Principals have determined that such underlying claim or other matter
arises as a breach of this Agreement.
10.5. NO INDEMNIFICATION OBLIGATION OF IHI. IHI shall have no
indemnification obligations under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1. NOTICES. Any notice, request, demand, waiver, consent,
approval or other communication required or permitted hereunder shall be in
writing and shall be deemed given when delivered personally or sent by telecopy
(with an appropriate acknowledgment of receipt) or five days after sending by
registered or certified mail with return receipt requested, postage prepaid, as
follows:
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<TABLE>
<S> <C> <C>
(a) If to Buyer: APACHE Medical Systems, Inc.
1650 Tysons Boulevard
McLean, Virginia 22102
Attn: Gerald E. Bisbee, Jr.
With a copy to: Gardner, Carton & Douglas
321 N. Clark Street
Suite 3400
Chicago, Illinois 60610
Attn: Nancy M. Borders
(b) If to CardioMac Principals: Iowa Health Centers, P.C.
d/b/a Iowa Heart Center, P.C.
411 Laurel Street, Suite 3250
Des Moines, Iowa 50314
Attn: Daniel C. Aten Administrator
Mercy Hospital Medical Center
Sixth and University
Des Moines, Iowa 50314
Attn: Thomas A. Reitinger, President
Mark A. Tannenbaum, M.D.
1705 Plum Thicket Lane
West Des Moines, Iowa 50266
With a copy to: Belin Harris Lamson McCormick
A Professional Corporation
2000 Financial Center
Des Moines, Iowa 50309
Attn: Quentin R. Boyken
</TABLE>
or at such other place or places or to such other person or persons as shall be
designated by notice given in the same manner by any party hereto.
11.2. AMENDMENTS AND TERMINATION; WAIVER. This Agreement may be
amended or modified only by a written instrument executed by the parties
hereto. Any term or provision of this Agreement may be waived at any time by
the party entitled to the benefit thereof by a written instrument duly executed
by such party.
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<PAGE> 21
11.3. PARTIES IN INTEREST; ASSIGNMENT. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns. This Agreement shall not be assigned by any party
hereto without the prior written consent of the other parties. Nothing in this
Agreement, expressed or implied, is intended to confer upon any third person
any rights or remedies under or by reason of this Agreement.
11.4. EXPENSES. Except as provided in Section 11.5 below, each
party hereto shall pay its own expenses including, without limitation, fees and
expenses of any agents, representatives, counsel, auditors, and accountants
incidental to the preparation and carrying out of this Agreement.
11.5. ATTORNEY'S FEES. In the event of any controversy, claim or
dispute between or among any of the parties hereto arising out of or relating
to this Agreement, or any default or breach or alleged default or breach
thereof, then the party prevailing in such action shall be entitled to be
reimbursed by the non-prevailing party for reasonable attorney's fees and costs
associated with any such action. In addition, if any party hereto shall be
joined as a party in any judicial, administrative, or other legal proceeding
arising from or incidental to any obligation, conduct or action of another
party hereto, the party so joined shall be entitled to be reimbursed by the
other party for its reasonable attorney's fees and costs associated therewith.
11.6. BROKERS. The parties agree that neither party has engaged the
services of a broker. The CardioMac Principals agree to indemnify Buyer
against any claim by any third person for any commission, brokerage or finder's
fee or any other payment based upon any alleged agreement or understanding
between such third person and the CardioMac Principals, whether expressed or
implied.
11.7. SPECIFIC PERFORMANCE. The parties hereto agree that damages
for breach of the agreements and covenants contained herein will be inadequate
and that each of the parties shall be entitled to specific performance or
injunctive relief, or both.
11.8. GOVERNING LAW. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of Iowa.
Each of the parties hereby irrevocably submits to the exclusive jurisdiction of
any United States Federal or Iowa District Court sitting in Polk County, Iowa
in any action or proceeding arising out of or relating to this Agreement, and
each party irrevocably agrees that all claims and response to such action or
proceeding shall be hear and determined in any such United States Federal or
Iowa District Court.
11.9. ENTIRE AGREEMENT. This instrument, including Schedules and
Exhibits hereto and documents and agreements referred to herein, embodies the
whole agreement of the parties. There are no promises, terms, conditions, or
obligations other than those contained herein. All previous negotiations,
representations or agreements between the parties, either verbal or written,
not contained herein are hereby withdrawn and annulled.
11.10. SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without
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<PAGE> 22
invalidating or rendering unenforceable the remaining provisions hereof, and
any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
11.11. CAPTIONS; SCHEDULES AND EXHIBITS; COUNTERPARTS. The section
and subsection captions contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Unless otherwise indicated, all references in this Agreement to a
particular schedule or exhibit are references to a schedule or exhibit attached
hereto, which such schedules and exhibits are made a part hereof. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement on the date first above written.
APACHE MEDICAL SYSTEMS, INC.
By:
----------------------------
Name:
Title:
IOWA HEALTH CENTERS, P.C.,
D/B/A IOWA HEART CENTER, P.C.
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<PAGE> 23
By:
----------------------------
Name:
Title:
MERCY HOSPITAL MEDICAL CENTER
By:
----------------------------
Name:
Title:
MARK A.. TANNENBAUM, M.D.
----------------------------
IOWA HEART INSTITUTE
By:
----------------------------
Name:
Title:
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<PAGE> 1
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND AMONG
APACHE MEDICAL SYSTEMS, INC.
AND
COGNIZANT CORPORATION
AND
DUN & BRADSTREET HEALTHCARE INFORMATION, INC.
DATED AS OF DECEMBER 30, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement") dated as of December 30, 1996,
by and between APACHE Medical Systems, Inc., a Delaware corporation ("Buyer"),
Cognizant Corporation, a Delaware corporation ("Cognizant"), and Dun &
Bradstreet HealthCare Information, Inc., an Illinois corporation. ("Seller").
WHEREAS, Cognizant, through the Seller, owns and operates a business
line called Health Research Network (the "Business") in Chicago, Illinois,
which provides medical information relating to HIV/AIDS through its proprietary
database (the "HIV Insight Database"), proprietary software ("Clinical Practice
Analyst Software") and proprietary reports ("HIV Insight Report Library" and,
together with the HIV Insight Database and the Clinical Practice Analyst
Software, the "Proprietary Products");
WHEREAS, the parties desire to provide for the sale and transfer of
certain of the assets of the Business and other covenants and agreements in
exchange for cash upon the terms and subject to the conditions set forth
herein; and
WHEREAS, this Agreement sets forth the terms and conditions to which
the parties have agreed and further contemplates the execution and delivery of
certain collateral agreements hereinafter described.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.1. ASSETS SOLD AND PURCHASED. At the Closing on the Closing Date
(as such terms are hereinafter defined) Seller shall convey, sell, assign,
transfer and deliver to Buyer, free and clear of all liens, claims and
encumbrances except as are specifically assumed by Buyer hereunder, all right,
title and interest of Seller in and to the following assets of the Business,
except to the extent included in Excluded Assets (the "Purchased Assets"):
(a) All intellectual property (whether as owner,
inventor, employer of an inventor, licensor, licensee or otherwise),
including, without limitation, the Proprietary Products (subject to
the limitations in Schedule 1.1); the names "Health Research Network",
"HRN","HIV Insight" and "Clinical Practice Analyst"; the intellectual
property described on Schedule 4.13 hereto; patents or patent
applications; trademarks, service marks, trade dress, trade names,
corporate names or any registrations or applications to register any
of the foregoing; copyrights or copyright registrations; trade
1
<PAGE> 3
secrets or other proprietary rights or any licenses to or from
third parties with respect to any of the foregoing (including, without
limitation, all computer software, data and documentation and all
copies thereof) primarily relating to the Business as now conducted
(subject to the assets specifically referred to in Schedule 1.1);
(b) All computer equipment and furniture and fixtures
described on Schedule 1.1 hereto;
(c) All notes or accounts receivable due to Seller except
to the extent included in Schedule 1.2;
(d) All orders, contracts, commitments and proposals for
the sale of the products of the Business listed on Schedule 4.10
hereto, including, without limitation, leases, licenses, conditional
sale agreements, guarantees and confidentiality agreements;
(e) All permits, franchises, licenses, bonds, approvals,
qualifications and the like issued by any government or governmental
unit, agency, board, body or instrumentality, whether federal, state
or local and all applications therefor pertaining primarily to the
Business or the Purchased Assets, including, without limitation, the
intellectual property described on Schedule 4.13 hereto;
(f) All books and records primarily related to the
Business, including, without limitation, all records on finance,
operations, legal activities, customers, suppliers, sales and
promotional literature, advertising services, correspondence and
files;
(g) Any other assets identified on Schedule 1.1; and
(h) All causes of action, rights of action and claims
relating to the Purchased Assets of the Business against any other
person.
1.2. EXCLUDED ASSETS. Seller shall not sell to Buyer and Buyer
shall not purchase from Seller the following assets of the Business (the
"Excluded Assets"):
(a) All cash and cash equivalent items existing as of the
Closing Date;
(b) The lease of the real property used by Seller in the
operation of the Business located at Suite 300, 224 South Michigan
Avenue, Chicago, Illinois (the "Lease"), any insurance policy and any
employment agreement;
(c) All personal property (whether owned, leased or
licensed) not specifically included in the Purchased Assets as
described in Section 1.1 above, including, without limitation,
computer equipment not described on Schedule 1.1, furniture, office
equipment (other than leased equipment) and vehicles;
(d) The corporate minute books and stock ledgers of
Seller;
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(e) All claims, rights and interests in and to any
refunds for federal, state or local franchise, income or other taxes
or fees of any nature whatsoever relating to the Assets, the Business
or the Seller for periods prior to the Closing Date;
(f) Any of the employee benefit agreements, plans or
arrangements maintained by Seller on behalf of persons employed in the
Business;
(g) Any right to use the name "The Dun & Bradstreet
Corporation", "Dun & Bradstreet", "Cognizant", "IMS", or any part or
variation of those names, including the names "Dun", "Bradstreet",
"D&B", "IMSIGHT", or any acronym. logo, name, trademark or tradestyle
associated with those names; and
(h) Any other asset identified on Schedule 1.2.
1.3. ASSUMED LIABILITIES. On the Closing Date, Buyer shall
assume and agree to pay, perform and discharge all of the liabilities and
obligations of Seller relating to the Business which exist as of the Closing or
which arise out of events occurring prior to the Closing (except to the extent
such obligations and liabilities constitute Excluded Liabilities, as
hereinafter defined) in accordance with their terms.
All of the foregoing liabilities to be assumed by Buyer
hereunder (excepting any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities". Buyer will indemnify and hold harmless Seller against
any and all liabilities, losses, damages, deficiencies and expenses (including,
without limitation, the reasonable fees and expenses of counsel) resulting from
any and all of the Assumed Liabilities.
1.4. EXCLUDED LIABILITIES. Except as provided in Section 1.3
hereof, Buyer shall not assume, nor in any way become liable for, any
liabilities or obligations of Seller or of the Business, of any kind or nature,
whether accrued, absolute, contingent or otherwise, or whether due or to become
due, whether known or unknown. Specifically, but without limiting the
foregoing, Buyer shall not assume or be liable for the following debts,
liabilities and obligations (the "Excluded Liabilities"):
(a) Any liability of the Business relating to its
accounts payable (other than bonuses which are addressed below)
accrued prior to the Closing Date;
(b) To the extent accrued or relating to claims occurring
prior to the Closing Date and as more specifically provided for in
Section 6.1 any wages, vacation and other fringe benefits and all
costs and benefits provided under any pension, profit sharing,
savings, retirement, health, medical, life, disability, dental,
deferred compensation, stock option, bonus, except as provided in (h)
below, incentive, severance pay, group insurance or other similar
employee plans or arrangements, or under any policies, handbooks, or
custom or practice, or any employment arrangements, whether express or
implied, applicable to any of the employees of the Business (the
"Employee Plans");
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(c) As relating to any Purchased Asset, any liability or
obligation of Seller arising out of unlawful violation or infringement
of any intellectual property right, or breach of confidentiality of
patient data, of any person or entity occurring on or prior to the
Closing Date (excluding, however, any liability or obligation arising
out of any claim by the Center for Disease Control ("CDC"), physicians
who have provided data ("Physicians"), or patients whose data is in
the HIV Insight Database ("Patients") regarding ownership of the HIV
Insight Database or any data included therein which liability and
obligation shall be assumed by the Buyer);
(d) Any liability relating to any tax which may be
imposed on Seller or assessable with respect to the Business for
periods prior to Closing;
(e) Any other liability or obligation identified as
excluded on Schedule 1.4;
(f) Any costs and expenses incurred by Seller incident to
its negotiation and preparation of this Agreement and its performance
and compliance with the agreements and conditions contained herein;
(g) Any liabilities relating to the Excluded Assets; and
(h) Liabilities for the bonus payable to Diane Aschman
upon consummation of the sale hereunder in excess of $35,000 in the
aggregate (i.e., Buyer shall assume up to $35,000 of such bonus).
ARTICLE II.
PURCHASE PRICE; ALLOCATION
2.1. CONSIDERATION PAYABLE AT THE CLOSING. In reliance on the
representations and warranties of Seller and Cognizant contained herein, and
on the terms and subject to the conditions of this Agreement, Buyer, in
consideration for the transfer and delivery to it of the Purchased Assets, the
Seller's payment of rent on the Leased Space (as hereinafter defined) and the
non-competition and confidentiality provisions, as provided herein, will, in
addition to the assumption of the Assumed Liabilities set forth in Section 1.3
above, provide consideration to Seller at Closing of $1,565,000 in cash,
payable by wire transfer of funds, (the "Purchase Price").
2.2. ALLOCATION OF PURCHASE PRICE. Cognizant and Buyer agree to
allocate the Purchase Price in accordance with the rules under Section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations promulgated thereunder. Cognizant and Buyer shall, in good faith,
seek to reach agreement on such allocation by January
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24, 1997 (provided that Buyer agrees to provide to Seller by January 16, 1997,
a proposed allocation). If Cognizant and the Buyer are unable to reach
agreement, Cognizant and Buyer, at their shared expense, shall retain an
independent nationally recognized big six accounting firm to settle any dispute
between Cognizant and Buyer regarding the allocations prior to the date upon
which either party is required to file any 1060 Forms (as defined below).
Cognizant and Buyer agree to act in accordance with the computations and
allocations contained in the allocation in any relevant tax returns or filings
(including any forms or reports required to be filed pursuant to Section 1060
of the Code, the Treasury Regulations promulgated thereunder or any provisions
of local and state law ("1060 Forms") and to cooperate in the preparation of
any 1060 Forms and to file such 1060 Forms in the manner required by applicable
law.
ARTICLE III.
CLOSING
3.1. CLOSING. Subject to the terms and conditions of this
Agreement, consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Gardner, Carton & Douglas, on
December 30, 1996 (the "Closing Date"), or at such other time, date and place
as the parties shall mutually agree. In the event of any postponement thereof,
all references in this Agreement to the Closing Date shall be deemed to refer
to the time and to the date to which the Closing Date shall have been so
postponed.
3.2. METHOD OF PAYMENT ASSUMPTION AGREEMENT. Buyer shall make the
cash payment to Seller at Closing by delivery of a bank wire transfer of
immediately available funds to a bank account designated by Cognizant prior to
Closing. Buyer shall deliver to Cognizant an undertaking and assumption, in
form reasonably satisfactory to Cognizant's counsel, pursuant to which the
Buyer will assume and agree to discharge the Assumed Liabilities.
3.3. INSTRUMENTS OF CONVEYANCE AND TRANSFER. At the Closing,
Seller shall deliver to Buyer such bills of sale, endorsements, assignments and
other good and sufficient instruments of transfer, conveyance and assignment,
in form reasonably satisfactory to Buyer's counsel as shall be effective to
vest in Buyer good and marketable title to the Purchased Assets, free and clear
of all liens, claims and encumbrances. Seller shall take all such steps as may
be required to put Buyer in actual possession and control of the Purchased
Assets and the Business as of the Closing.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF COGNIZANT AND SELLER
Cognizant and Seller hereby represent and warrant as follows:
4.1. ORGANIZATION; GOOD STANDING; QUALIFICATION; STATUS OF HRN.
Each of Cognizant and Seller are duly organized and validly existing in good
standing under the laws of the State of Delaware and Illinois respectively.
Each of Cognizant and Seller has full power and authority to conduct its
business as it is now being conducted and is duly qualified to do business
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in each jurisdiction in which the nature of property owned or leased, or the
nature of the business conducted by it requires such qualification. HRN is a
division of Seller and does not constitute a separate legal entity.
4.2. AUTHORIZATION; VALID AND BINDING NATURE. Each of Cognizant
and Seller has full power and authority to execute, deliver and perform this
Agreement and all other agreements and transactions contemplated herein and has
taken all corporate actions required by law and its charter or bylaws to
authorize the execution and delivery of this Agreement and all other agreements
and transactions contemplated herein and to consummate the transactions
contemplated hereby and thereby. This Agreement and all other documents and
agreements contemplated herein constitute the valid and binding agreements of
each of Cognizant and Seller enforceable in accordance with their terms except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding at law or in equity).
4.3. NO VIOLATION. The execution and delivery of this Agreement
and all other documents and agreements contemplated herein and the consummation
of the transactions contemplated hereby and thereby will not violate any
provision of, or result in the breach of, or accelerate or permit the
acceleration of any obligation relating to the Business or the Purchased
Assets, or result in the creation of any lien, claim or encumbrance thereon,
under
(i)any applicable law, rule or regulation of any governmental body
having jurisdiction,
(ii)Cognizant or Seller's charter or bylaws,
(iii)any agreement to which Cognizant or Seller is a party or by which
it may be bound, or
(iv)any order, judgment, or decree applicable to it.
Except in the cases of clauses (i),(iii) and (iv), to the extent any
such events would not, individually or in the aggregate, reasonably be expected
to have material adverse effect on the business, properties or financial
condition of the Business, taken as a whole ("Material Adverse Effect") and
except to the extent the consent of a third party is required to assign such
agreement where the required consent has been disclosed to Buyer in writing.
4.4. TITLE AND CONDITION OF ASSETS. Seller has good and marketable
title to the Purchased Assets, free and clear of all liens, claims or
encumbrances of any nature except for liens, claims and encumbrances disclosed
on Schedule 4.4. At the Closing, Seller shall deliver the Purchased Assets to
Buyer free and clear of all liens, claims and encumbrances except as expressly
agreed to by Buyer.
4.5. FINANCIAL STATEMENTS. The balance sheet, income statement,
and the attachments thereto relating to the Business for fiscal years 1994 and
1995 and a balance sheet for September
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30, 1996, which are attached as Schedule 4.5 and made a part hereof
(collectively, the "Financial Information"):
(a) are derived from the books of account and records of
the Business; and
(b) fairly present, in all material respects, the
financial condition and the results of operations of the Business at
and for the period specified therein.
4.6. ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule
4.6, since September 30, 1996, there has not been, at any time, any:
(a) transaction by Cognizant or Seller relating to the
Business, including, without limitation, the amendment or termination
of any contract, agreement or license material to the conduct of the
Business, except in the ordinary course of the Business;
(b) sale, assignment, transfer or abandonment of any
patent, trademark, trade name, copyright, license or other intangible
asset; nor any sale, assignment, transfer or abandonment of any other
asset other than in the ordinary course of the Business for fair
value;
(c) damage, destruction or loss, whether or not covered
by insurance, which materially and adversely affects the assets or
business of the Business; or
(d) a Material, Adverse Effect nor has the Seller made
any distribution in kind of any assets of the Business other than
Excluded Assets.
4.7. TAX MATTERS. All federal, state, local and foreign tax
returns and reports with respect to Cognizant, Seller or the Business required
by law to be filed have been duly filed (except those under valid extension),
and all federal, state, local, foreign and any other taxes, assessments, fees
and other governmental charges with respect to the employees, properties,
assets, income or franchises of Cognizant, Seller or the Business, shown on
such returns and reports to be due and payable, or which are otherwise due and
payable, have been paid (unless being contested in good faith).
4.8. RIGHTS OF THIRD PARTIES. Other than as disclosed on Schedule
4.8, Cognizant and Seller have not entered into any leases, licenses or other
agreements, recorded or unrecorded, granting rights to third parties in any
personal property of the Business, and no person or entity has, to the
knowledge of Cognizant and Seller, asserted or threatened to assert any right
to possession of any of the property of the Business.
4.9. FORMS. The forms of all contracts executed in consideration
for services and/or products provided or to be provided by the Business are in
compliance in all material respects with all federal, state and local laws,
orders and regulations.
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4.10. CONTRACTS. Set forth on Schedule 4.10 are all written
contracts, agreements, commitments or understandings of Seller relating to the
Business which provide for annual expenditures or revenues by the Seller of
more than $5,000 (excluding the Lease and Physician Site Contracts (as defined
below) third-party software license and maintenance agreements and the
distribution agreement with IMS) (collectively, "Material Contracts"). Each
Material Contract which requires the consent of any party to its assignment in
connection with the transactions contemplated hereby is appropriately
identified as such. Seller is not a party to any executory Material Contract
relating to the Business in which any of the parties thereto is in breach or
default. All such Material Contracts are valid, legally binding and
enforceable.
4.11 INTENTIONALLY BLANK.
4.12. CUSTOMERS. To the knowledge of Cognizant and Seller, the
Seller has overall good relations with its customers and neither Cognizant nor
Seller has reason to believe that such relations will in the foreseeable future
deteriorate or suffer any changes which would be reasonably be expected to have
a Material Adverse Effect.
4.13. PROPRIETARY RIGHTS. Except as set forth on Schedule 4.13 and
the Excluded Assets, there are no patents or patent applications; registered
trademarks, service marks, trade dress, trade names, corporate names or any
applications to register any of the foregoing; copyrights or copyright
registrations; computer software, or trade secrets or any licenses to or from
third parties with respect to the foregoing (including, without limitation, the
Proprietary Assets and all other computer software, data and documentation and
all copies thereof) relating to the Business as now conducted. Except as
indicated on Schedule 4.13, and other than any claims by the CDC, Patients, or
Physicians, in or to the HIV Insight Database or any data included therein,
Seller owns and possesses all right, title and interest in and to the
proprietary rights set forth therein or has licenses from third parties with
respect thereto. Except as set forth on Schedule 4.13, Cognizant and Seller
have not received nor, to the knowledge of Seller, been threatened with any
notices of infringement or misappropriation from any third party with respect
to the proprietary rights which are listed thereon. To the knowledge of
Seller, it has not infringed nor is it currently infringing on the proprietary
rights of any person.
4.14. PHYSICIAN SITE CONTRACTS. An accurate and complete list of
the existing contracts between Seller and physician sites is attached as
Schedule 4.14 (the "Physician Site Contracts"). Any Untransferred Physician
Site Contracts as of the date hereof (as hereinafter defined in Section 6.3)
are indicated on such Schedule. All Physician Site Contracts are included in
the Purchased Assets as described in Section 1.1 hereof.
4.15. HIV INSIGHT DATABASE. To Cognizant and Seller's knowledge,
the information and data provided to Buyer under the terms hereof is, in all
material respects, the complete and accurate information and data currently
utilized by Cognizant and Seller in connection with the HIV Insight Database
and the operation of the Business (the "Data"). The Data purchased by Buyer
hereunder includes the entire HIV Insight Database. An accurate and complete
description of the HIV Insight Database is attached as Schedule 4.15.
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4.16. THIRD PARTY SOFTWARE. An accurate and complete list of all
third party software necessary to run the Clinical Practice Analyst Software is
attached as Schedule 4.16 (the "Third Party Software"). All Third Party
Software and respective licenses are included in the Purchased Assets as
described in Section 1.1 hereof.
4.17. PURCHASED ASSETS NOT IN PUBLIC DOMAIN. To Seller's and
Cognizant's knowledge, except as described in Schedule 4.17, the data in the
HIV Insight Database and the Clinical Practice Analyst have not entered the
public domain.
4.18 INTENTIONALLY BLANK
4.19. DEFAULT. Cognizant and Seller are not in default under, nor
has any event occurred which, with the lapse of time or action by a third
party, would constitute in a default under
(i) any outstanding note, indenture, mortgage, contract or agreement
relating to the Business by which it is bound, or
(ii)under any provision of the charter or bylaws of Seller except for
breaches in the case of clause (i) which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect. Subject to
obtaining the consents of third parties, where such required consents have been
disclosed to Buyer in writing, the execution and performance of this Agreement
and the transactions contemplated hereby will not violate any provision of or
result in the breach of, modification of, acceleration of, or constitute a
default under the charter or bylaws of Cognizant and Seller, any law, order,
writ, injunction or decree of any court, governmental agency or arbitration
tribunal or any contract, note, mortgage, security agreement, agreement or
instrument affecting the Purchased Assets.
4.20. LITIGATION. No action or proceeding before any court or
governmental body is pending or, to the knowledge of Cognizant or Seller,
threatened against Cognizant, Seller or the Business wherein a judgment, decree
or order would resonably expected to have a Material Adverse Effect or would
prevent the carrying out of this Agreement, declare unlawful the transactions
contemplated hereby, cause such transactions to be rescinded, or require
Cognizant, Seller or Buyer to divest itself of any of the Purchased Assets.
4.21. COURT ORDERS AND DECREES. There is no outstanding or, to
Cognizant or the Seller's knowledge, threatened order, writ, injunction or
decree of material nature of any court, governmental agency or arbitration
tribunal against or affecting the Business, the Purchased Assets or this
transaction.
4.22. LEGAL AND REGULATORY COMPLIANCE. Other than an audit required
by the Center for Disease Control, with respect to the Business and the
Purchased Assets, Seller is in compliance with all applicable laws, regulations
and administrative orders of the United States or any state, county,
municipality or of any subdivision thereof to which the Business or the
Purchased Assets may be subject except where the failure to be in compliance
would not reasonably be expected to have a Material Adverse Effect.
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4.23. LICENSES AND CONTINUATION OF BUSINESS. Seller has and is in
possession of all licenses, permits, consents, approvals and authorizations
under all applicable laws, regulations, rules and ordinances as may be
necessary, appropriate or convenient to enable Seller to own and operate the
Business and to continue to conduct the Business under the name now being used
except where the failure to possess such a license, permit, consent, approval
or authorization would not reasonably be expected to have a Material Adverse
Effect.
4.24. LIABILITIES. To the knowledge of Cognizant of Seller other
than as disclosed herein (including the Schedules hereto) there are no
liabilities of the Business that are required pursuant to FASB Statement No. 5
(Accounting for Contingencies) to be included in the financial statements of
the Business or a footnote thereto.
4.25 LIABILITIES Other than (i) as disclosed herein (including the
Schedules hereto), (ii) liabilities or obligations arising in the ordinary
course of business since September 30, 1996, and (iii) liabilities or
obligations arising under contracts and agreements entered into by the Seller
in the ordinary course of business, there are no liabilities of the business of
any kind arising from events occurring on or prior to the Closing Date or
existing on or prior to the Closing Date.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1. ORGANIZATION; GOOD STANDING. Buyer is duly organized and
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as it is now
being conducted.
5.2. AUTHORIZATION; VALID AND BINDING NATURE. Buyer has full power
and authority to execute, deliver and perform this Agreement and all other
agreements and transactions contemplated herein and has taken all actions
required by law, its charter or bylaws or otherwise, to authorize the execution
and delivery of this Agreement and all other agreements and transactions
contemplated herein and to consummate the transactions contemplated hereby and
thereby. This Agreement and all other documents and agreements contemplated
herein constitute the valid and binding agreements of Buyer, enforceable in
accordance with their terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally, subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
5.3. LITIGATION. No action or proceeding before any court or
governmental body is pending or, to the knowledge of Buyer, threatened against
Buyer wherein a judgment, decree or order would prevent the carrying out of
this Agreement, declare unlawful the transactions contemplated hereby or cause
such transactions to be rescinded.
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ARTICLE VI.
COVENANTS
6.1. NON-COMPETITION.
(a) Other than as agreed by APACHE in writing and other
than pursuant to the IMS marketing agreement, for a period ending the
earlier of (i) two years from the Closing and (ii) the termination or
nonrenewal by APACHE of the IMS marketing agreement (the "Non-Compete
Period"), Cognizant shall not, and Cognizant shall procure that each
corporation, partnership or other entity in which Cognizant owns,
directly or indirectly through one or more intermediaries, shares of
stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership
or other entity ("Cognizant Entity"), shall not, develop or market
products which are derived from a data source providing solely
longitudinal HIV/AIDS clinical patient data collected within the
United States ("Competitive Products").
(b) Notwithstanding (a) above, nothing herein shall
prohibit Cognizant or any Cognizant Entity from acquiring any Person
(an "Acquired Person") which conducts a business which develops or
markets a Competitive Product (a "Competitive Business") provided that
such Acquired Person derived less than 33% of its revenue from the
Competing Business during the 12 month period immediately prior to the
acquisition thereof and nothing herein shall prohibit such Acquired
Person from continuing to engage in the Competitive Business.
(c) If a court of competent jurisdiction finally
holds that the time, territory or any other provision set forth in
this Section constitutes an unreasonable restriction, such provision
shall not be rendered void, but shall apply as to such time, territory
or to such other extent as such court may determine constitutes a
reasonable restriction. Cognizant acknowledges that the restrictions
set forth in this Section 6.1 are reasonable and necessary to protect
the legitimate interests of Buyer and that any breach of the terms,
conditions or covenants set forth herein (a) may be competitively
unfair and may cause irreparable damage to the Buyer because of the
special, unique, unusual and extraordinary character of the Business
and the Buyer's recovery of damages at law may not be an adequate
remedy. Accordingly, Cognizant agrees that for any breach of the
terms, covenants or agreements set forth in this Section 6.1, a
restraining order or injunction or both may be issued against
Cognizant, in addition to any other rights or remedies the Buyer may
have. Cognizant acknowledges that Buyer shall be entitled to an
equitable accounting of all earnings, profits or other benefits
arising from such breach and shall be entitled to receive such other
damages, direct or consequential, as may be appropriate.
(d) During the Non-Compete Period, Cognizant will not
solicit to employ any employee of the Business, as of December 1,
1996, so long as they are employed by the
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Buyer. Nothing herein shall prohibit Cognizant from any
advertisement or general solicitation (or any hiring pursuant
thereto).
6.2. CONFIDENTIALITY. Cognizant and Seller shall not use for its
own benefit or divulge or convey to any third party the terms of the IMS
Agreement while such agreement is in effect, the terms of the CDC Cooperative
Agreement, the HIV Insight Database, the Clinical Practice Analyst software,
the list of physicians who have entered into the Physician Site Contracts.
Information which enters the public domain or is publicly available loses its
confidential status hereunder so long as Seller directly or indirectly has not
caused such information to enter the public domain. Seller agrees to deliver
to Buyer as soon as practicable after the Closing all copies of the HIV Insight
Database, the Clinical Practice Analyst Software (to the extent not installed
in a Physician Site) and the list of physicians who have entered into the
Physician Site Contracts which Cognizant or Seller may then possess or have
under its control.
6.3. PHYSICIAN SITE CONTRACTS. Subsequent to the Closing Date,
Seller will act as Buyer's agent to secure for Buyer the benefit of any
Physician Site Contracts which have not been assigned to Buyer or replaced by a
similar contract between Buyer and the physician site formerly a party to such
Physician Site Contract (the "Untransferred Physician Site Contracts"). Seller
agrees to use good faith and reasonable commercial efforts (which shall not
require the expenditure of funds) to cause an assignment to Buyer of any
Untransferred Physician Site Contracts or the other part thereto, to enter into
a replacement contract between Buyer and each physician site which is a party
to an Untransferred Physician Site Contract.
6.4. RENT DUE UNDER LEASE OF REAL PROPERTY. Subject to the terms of
the Use and Occupancy Agreement (as defined below), Seller agrees to make rent
payments on behalf of Buyer, including all pass-through expenses (on a triple
net basis) on the leased real property located at Suite 300, 224 South Michigan
Avenue, Chicago, Illinois (the "Leased Space") through December 31, 1997.
Notwithstanding the foregoing, Seller may, upon 60 days written notice, request
that Buyer relocate, provided that in such event Seller is obligated to pay
Buyer the reasonable costs of relocation and the lesser of (a) $5,000 per
month, or (b) the actual monthly rent due on the new space, including all
pass-through expenses (on a triple net basis) charged to Seller through
December 31, 1997. Seller will use reasonable commercial efforts (which shall
not require the expenditure of funds) to obtain any and all consents required
by the lessor of the Leased Space to allow Buyer to occupy such space and to
operate the Business thereon through December 31, 1997. Seller is not
obligated to make the payments described in this paragraph relating to space
occupied by Buyer outside of the Chicago metropolitan area if prior to December
31, 1997 Buyer relocates the Business to a site outside of the Chicago
metropolitan area.
6.5. USE OF "HEALTH RESEARCH NETWORK" AND "HRN". Each of Cognizant
and Seller agrees not to use, in any manner, the names "Health Research
Network", "HRN", "HIV Manager", "HIV Insight", or "Clinical Practice Analyst"
or any similar name. Notwithstanding
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the foregoing, nothing herein shall affect Cognizant's right to use the name
"IMSIGHT" in connection with any product or service.
6.6. CONSENTS AND APPROVALS. In addition to its obligations
pursuant to Section 6.3 above, Seller agrees to use good faith and reasonable
commercial efforts to cause an assignment to Buyer of the CDC Cooperative
Agreement. Buyer, Cognizant and Seller shall each use reasonable commercial
efforts (which shall not require the expenditure of funds) to obtain all other
consents, approvals, amendments and agreements required in order to duly and
validly carry out the transactions contemplated by this Agreement and to
satisfy the conditions precedent herein and to do all other things necessary in
order to make effective the transactions contemplated herein. Each party
agrees to cooperate with the other in their respective efforts with respect to
this Section 6.6.
6.7. EMPLOYEE PLANS. Seller shall remain obligated to pay
and shall pay all wages, salaries, benefits and/or the monetary equivalent of
benefits, including but not limited to the employer portion of FICA payments,
vacation pay, severance pay, bonuses, commissions, pensions, personal leave pay
and sick leave, accrued by employees of the Business to which they are entitled
by law, rule or regulation or under the employment practices, policies or
procedures of the Business. Seller shall also remain responsible for the
payment of all health insurance, pension, worker's compensation, unemployment
compensation and disability claims which relate to periods of employment with
the Business, as well as all payments under Employee Plans related to the
Business, relating to the service of employees of the Business.
6.8. FURTHER ASSURANCES. Cognizant and Seller hereby covenants and
agrees that from time to time at the request of Buyer, and without further
consideration, to execute and deliver such additional instruments and to take
such other action as Buyer reasonably may require to convey, assign, transfer
and deliver the Purchased Assets of the Business and to otherwise to carry out
the terms of the Agreement Notwithstanding anything to the contrary set forth
in this Agreement, to the extent that any consent or approval required for
assignment of agreements is not obtained with respect to any contract, lease,
license or agreement as contemplated above, this Agreement shall not constitute
an assignment or an attempted assignment thereof In each such case, Cognizant
agrees to cooperate with Buyer in any reasonable arrangement designed to (i)
provide for Buyer the benefits under any such contract, lease, license or
agreement, including enforcement at the cost and for the account of Buyer of
any and all rights of Seller against the other party or otherwise and (ii)
insure performance by Buyer of Cognizant and Seller's obligations thereunder to
the extent Buyer receives such benefits. Until the CDC Cooperative Agreement
is transferred to Buyer, Cognizant and Seller shall cooperate with Buyer to
maintain the CDC Cooperative Agreement for the benefit of the Buyer. Buyer
shall perform the obligations of the CDC Cooperative Agreement and Cognizant
and Seller shall forward all funding under the CDC Cooperative Agreement to
Buyer.
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6.9 REVENUE RECOGNITION POLICY. Seller shall and Cognizant will
cause Seller to continue its normal revenue recognition policy (i.e., revenue
is not recognized until delivery of reports to IMS).
6.10 FINANCIAL RECORDS AND INFORMATION.
After the Closing, upon reasonable written notice, the Buyer, on the one hand,
and the Seller and Cognizant, on the other hand, shall furnish or cause to be
furnished to each other and their employees, counsel, auditors and
representatives access, during normal business hours, such information and
assistance relating to the Business as is reasonably necessary for financial
reporting and accounting matters, government audits, the preparation and filing
of any tax returns, or the defense of any tax claim or assessment or filings
made with other government entities. Each party shall reimburse the other
party for reasonable out-of-pocket costs and expenses incurred in assisting the
other pursuant to this Section 6.10 promptly upon receipt of statements
therefor. Neither party shall be required by this Section 6.10 to take any
action that would unreasonably interfere with the conduct of its business or
unreasonable disrupt its normal operations.
6.11 BENEFIT PLANs
a) Buyer shall make offers of employment to all employees of the Seller
primarily engaged in the Business listed upon Schedule 6.11 on the same terms
(including salary, job responsibility and location) as immediately prior to
Closing. Those employees who accept Buyer's offer of employment shall be
"Transferred Employees"("TE"). Effective as of the Closing Date, all
Transferred Employees shall cease participation in all Cognizant Benefit Plans.
(b) No assets and liabilities shall be transferred in respect of
employees of the Seller primarily involved in the Business who participate in
the Master Retirement Plan of the Dun & Bradstreet Corporation (or successor
Cognizant plan), and benefits accrued under such plan shall be in accordance
with the terms of such plans.
(c) The Buyer shall cause each TE to be given credit for all
service prior to the Closing Date with Cognizant, the Seller(and The Dun &
Bradstreet Corporation) and their affiliates (to the extent taken into account
under similar plans, programs and arrangements in effect immediately prior to
the Closing Date) under each type of employee benefit plan (including, without
limitation, any severance plan), program and arrangement maintained for his or
her benefit on or after the Closing Date.
(d) Cognizant and Seller shall retain responsibility for and
continue to pay all medical, life insurance, disability and other welfare plan
expenses and benefits for each TE with respect to claims incurred by such
employees or their covered dependents prior to the Closing Date. For purposes
of this paragraph, a medical claim shall be deemed incurred when the services
that are the subject of such claim are performed. Claims incurred by any TE
under any applicable workers' compensation legislation shall if incurred prior
to the Closing Date, be the sole responsibility and liability of Cognizant and
the Seller. Seller and Cognizant shall be responsible for all legally mandated
continuation of health care coverage for any former TE and
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<PAGE> 16
their covered dependents who participated in a plan maintained by HRN or the
Seller and who had or have a loss of health care coverage due to a qualifying
event occurring prior to Closing Date. Legally mandated health care coverage to
which a former TE is entitled as a result of a qualifying event occurring on or
after the Closing Date shall be the responsibility of the Buyer.
(i) As of the later of the Closing Date or the date on which the
Cognizant Savings Plan (the "Cognizant 401(k) Plan") receives a transfer of
assets and liabilities in respect of the TE, (the "Transfer Date"), Cognizant
shall (A) cause the trustee of the Cognizant 401(k) Plan to segregate, in
accordance with the spin-off provisions set forth under Section 414(l) of the
Code, the assets of the Cognizant 401(k) Plan representing the full account
balances of TEs who participate therein ("Participants") for all periods of
participation through the Closing Date (including, as applicable, all employee
and employer contributions attributable thereto); (B) make all required filings
and submissions to appropriate Governmental Entities; and (C) make all required
amendments to the D&B 401(k) Plan and related trust agreement necessary to
provide for such segregation and the distribution or transfer of assets
described in this Section 6.10. The Cognizant 401(k) Plan shall be amended to
provide that contributions thereto with respect to the Participants for periods
after the Closing Date shall cease as of the Closing Date. Prior to the
Transfer Date, the Buyer shall give Cognizant written notice of the name of the
trustee of a qualified 401(k) plan (the "Buyer 401(k) Plan") it designates to
receive a transfer of assets and liabilities from the Cognizant 401(k) Plan
accompanied by a copy of the most recent favorable determination letter for
such plan received by the Buyer and (y) make all required filings and
submissions to appropriate governmental entities.
(ii) To the extent permitted under the applicable plan, prior to the
Closing Date, each Participant shall be offered an election (the "Cognizant
401(k) Election") to (A) receive a distribution of such Participant's account
balance (or cause the trustee of the Cognizant 401(k) Plan to make a direct
rollover to an eligible retirement plan (as defined in Code Section 402(c)(8))
trustee or custodian designated by the Participant pursuant to the terms of the
Cognizant 401(k) Plan); (B) direct the trustee of the Cognizant 401(k) Plan to
transfer assets and liabilities equal to such account balance to the Buyer
401(k) Plan if Participant is a full time employee of APACHE; or (C) cause his
or her account balance to remain in the Cognizant 401(k) Plan. If the
Participant elects to have his or her account balance distributed or rolled
over, such account balance shall be distributed or rolled over after the
Transfer Date, in accordance with the terms of the Cognizant 401(k) Plan. As
soon as practicable after the Transfer date, Cognizant shall cause the trustee
of the Cognizant 401(k) Plan to transfer in cash, in notes held by the
Cognizant 401(k) Plan in respect of participant loans, or in the form of
guaranteed insurance contracts, the full account balance of each participant
who has elected to cause the trustee to transfer his or her account balance to
the Buyer 401(k) Plan (the "Transfer Participants") which account balance
shall have been credited with appropriate earnings or losses, if any,
attributable to the period ending on the close of business of the last day of
the month preceding the Transfer Date, reduced by any benefit or withdrawal
payments in respect of the Transfer Participant prior to the Transfer Date, to
the trustee of the Buyer 401(k) Plan. In consideration of the transfer of
assets hereunder, the Buyer shall cause the trustee of the Buyer 401(k) Plan
to assume the corresponding liabilities for benefits of the Transfer
Participant for whom assets were transferred. For a Participant who elects to
cause his or her account balance to
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<PAGE> 17
remain with the Cognizant 401(k) Plan, such balance shall remain in such plan
subject to the terms thereof. Each of the parties hereto shall pay its own
expenses in connection with any transfer of assets and liabilities hereunder.
(iii)Cognizant retains the right to modify the terms of the Cognizant
401(k) Election described in Section 6.11(g)(ii) for Participants whose account
balances are $3500 or less.
(e) With respect to any welfare benefit plans maintained for the
benefit of TE's on and after the Closing Date, the Buyer shall cause there to
be waived any pre-existing condition limitations.
(f) Buyer shall immediately following the Closing, pay the bonus
referred to in Section 1.4(h) as being assumed by Buyer.
6.12 PUBLICITY. Prior to the Closing and for a period of six (6)
months following the Closing, each party shall consult with and obtain the
consent of the other before issuing any press release or making any other
public disclosure concerning this Agreement or the transactions contemplated by
the Agreement, unless, in the reasonable judgment of counsel to the party
issuing the release or making the disclosure, the release or disclosure is
required to discharge its disclosure obligations (in which case it shall
consult with the other party before issuing the release or making the
disclosure) under applicable law or the rules of any national securities
exchanges on which such party's securities are listed.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF COGNIZANT AND SELLER
All obligations of Cognizant and Seller under this Agreement are
subject to the performance, at or prior to Closing, of the following
conditions, unless expressly waived in writing by Cognizant and Seller at or
prior to Closing:
7.1. REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties made by Buyer in this Agreement or in any related Schedule,
Exhibit, certificate or document shall be true in all material respects as of
the date of this Agreement and on the Closing Date except that those
representations and warranties which are made as of a specific date shall be
true only as of such date
7.2. COMPLIANCE WITH THIS AGREEMENT. Buyer shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by it to the extent
required hereunder on the Closing Date.
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7.3. CLOSING CERTIFICATE. Seller shall have received a certificate
from Buyer dated the Closing Date, certifying that the conditions specified in
Sections 7.1 and 7.2 hereof have been fulfilled.
7.4. NO LITIGATION. On the Closing Date, no suit, action or other
proceeding, or injunction or final judgment relating thereto, shall be pending
before any court or governmental or regulatory official, body or authority in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
7.5. CONSENTS AND APPROVALS. All material consents, approvals,
amendments and agreements required of Buyer to duly and validly carry out the
transactions contemplated by this Agreement shall have been obtained.
7.6. INSTRUMENTS OF TRANSFER, ETC. Buyer shall have duly executed
and delivered to Seller all closing documents, instruments and certificates,
including an undertaking, and assumption agreement, as shall have been
reasonably and customarily requested.
7.7 USE AND OCCUPANCY AGREEMENT. Buyer shall have executed a Use
and Occupancy Agreement substantially in the form attached hereto (the "Use and
Occupancy Agreement").
7.8 IMS AGREEMENT. Buyer shall have entered into the Marketing
Agreement (as defined under Section 8.6) with IMS on mutually acceptable terms
for the sale by IMS of HIV Insight products through December 31, 1997.
ARTICLE VIII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
All obligations of Buyer under this Agreement are subject to the
performance, at or prior to Closing, of the following conditions, unless
expressly waived in writing by Buyer at or prior to Closing:
8.1. REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties made by Cognizant in this Agreement or in any related Schedule,
Exhibit, certificate or document shall be true as of the date of this
Agreement and on the Closing Date except that those representations and
warranties which are made as of a specific date shall be true in all material
respects only as of such date and those representations and warranties that are
qualified by materiality shall be true.
8.2. COMPLIANCE WITH THIS AGREEMENT. Each of Cognizant and Seller
shall have performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with by
it to the extent required hereunder on the Closing Date.
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8.3. CLOSING CERTIFICATE. Buyer shall have received a certificate
from Seller dated the Closing Date, certifying in such detail as Buyer may
reasonably request that the conditions specified in Sections 8.1 and 8.2 and
8.8 hereof have been fulfilled.
8.4. PHYSICIAN SITE CONTRACTS. At least twelve (12) of the
Physician Site Contracts, including at least six (6) HOPS sites, shall have
been assigned to Buyer or shall have been replaced with a similar contract
between Buyer and the physician site formerly a party to such Physician Site
Contract.
8.5. THIRD PARTY SOFTWARE CONTRACTS. All Third Party Software
Contracts and or Licenses as described in Section 4.16, shall have been
assigned to Buyer (subject to Buyer's, Agreement to be bound by the terms
thereof).
8.6. IMS AGREEMENT. IMS shall have entered into a written
agreement (the "Marketing Agreement") with Buyer on mutually acceptable terms
for the sale by IMS of Buyer's HIV Insight products for the period through
December 31, 1997.
8.7. NO THREATENED OR PENDING LITIGATION. On the Closing Date, no
suit, action or other proceeding, or injunction or final judgment relating
thereto, shall be threatened or pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby.
8.8. CONSENTS AND APPROVALS. All material consents, approvals,
amendments and agreements required of Seller to duly and validly carry out the
transactions contemplated by this Agreement shall have been obtained (excluding
consents to assign any Physician Site Contracts which are addressed by Section
8.4) provided that the consent of the landlord to the Use and Occupy Agreement
(and Buyer's occupancy thereunder) and the consent of the Center for Disease
Control for the assignment of contracts with it shall not be conditions to
Buyer's obligations hereunder.
8.9. INSTRUMENTS OF TRANSFER, ETC. Seller shall have duly executed
and delivered to Buyer all documents and instruments necessary or desirable to
transfer the Purchased Assets to Buyer and such other closing documents,
instruments and certificates as shall have been reasonably and customarily
requested.
8.10. USE AND OCCUPANCY AGREEMENT. The Seller shall have executed a
Use and Occupancy Agreement substantially in the form attached hereto.
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ARTICLE IX.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION
9.1. NATURE OF REPRESENTATIONS. The contents of all schedules and
the certificates delivered or executed pursuant to this Agreement shall, in
addition to the representations and warranties contained in this Agreement, be
deemed representations and warranties by Cognizant, Seller or Buyer.
9.2. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants of the parties contained in this
Agreement or made in connection with this transaction shall survive the
Closing, where practicable, and any investigation by the parties with respect
thereto. However, a party shall have no liability under this Agreement (other
than under those provisions of this Agreement requiring performance of an
obligation after the Closing) for breach of warranty or agreement, or
misrepresentation, unless a claim therefor is asserted by the other party in a
written notice delivered prior to the second anniversary following the Closing.
Any notice of such claim shall set forth with particularity the
representations, warranties, and agreements with respect to which the claim is
made, the facts giving rise to and the alleged basis for the claim and the
amount of liability asserted by reason of the claim.
9.3. INDEMNIFICATION OF BUYER. Cognizant and Seller shall
indemnify, defend and hold Buyer harmless from and against any and all damages,
losses, liabilities, claims and expenses arising out of:
(a) The breach of or any inaccuracy of any representation
or warranty that survives the Closing and the nonfulfillment of any
covenant or agreement made by Cognizant or Seller in this Agreement or
any other agreement furnished to Buyer pursuant to this Agreement, and
any and all actions, suits, claims, proceedings, investigations,
audits, demands, assessments, fines, judgments, costs and other
expenses (including reasonable attorney's fees) incurred by Buyer
resulting therefrom provided that Cognizant's and Seller's liability
for the foregoing (other than with respect to Sections 4.24 and 4.25)
shall be limited to $750,000, in the aggregate, provided further that
to the extent Cognizant's and Seller's liability relates to the
representation and warranties in Sections 4.4, 4.13, 4.15 and 4.17
herein and the covenants and agreements under Sections 6.1 and 6.2
herein, the limitation on Cognizant's and Seller's liability shall be
increased by the lesser of (i) an additional $750,000, in the
aggregate, and (ii) the aggregate amount of liability pursuant to the
foregoing sections; and
(b) Any Excluded Liabilities, provided that the
indemnification pursuant to this Sub-Section shall not be exclusive of
any other remedies available at law.
9.4. INDEMNIFICATION OF SELLER. Buyer shall indemnify, defend and
hold Cognizant and Seller harmless from and against any and all damages,
losses, liabilities, claims and expenses arising out of:
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(a) The breach of or any inaccuracy of any representation
or warranty that survives the Closing and the nonfulfillment of any
covenant or agreement made by Buyer in this Agreement and any and all
actions, suits, claims, proceedings, investigations, audits, demands,
assessments, fines, judgments, costs and other expenses (including
reasonable attorney's fees) incurred by Buyer resulting therefrom or
any other agreement furnished to Cognizant pursuant to this Agreement,
provided that Buyer's liability for the foregoing shall be limited to
$750,000, in the aggregate; and
(b) Any Assumed Liabilities or the use of the Purchased
Assets, provided that after the Closing Date, the indemnification
pursuant to this Sub-Section shall not be exclusive of any other
remedies available at law.
9.5 DETERMINATION OF DAMAGES AND RELATED MATTERS
(a) In calculating any amounts payable to either party under Sections
9.3 and 9.4: (i) the indemnifying party shall receive credit for any
reduction in the indemnified party's tax liability as a result of the
facts giving rise to the claim for indemnification and any insurance
recoveries by the indemnified party; (ii) any payments shall be
deemed an increase or decrease, as the case may be, in the Purchase
Price., and (iii) no amount shall be included for the indemnified
party's special or consequential damages.
(b) EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY HAS MADE OR SHALL HAVE LIABILITY FOR ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF
ANY INFORMATION REGARDING THE BUSINESS.
(c) Neither the Buyer, on the one hand, nor Cognizant and
Seller, on the other hand, shall have liability to the other under
this Agreement or otherwise for breach of warranty or agreement, or
misrepresentation, unless, and only to the extent that, the aggregate
amount of the losses, liabilities, damages and expenses of that party
from all claims under this Agreement or otherwise for breach of
warranty or agreement, and misrepresentation, (other than of Sections
4.24 and 4.25) exceeds $35,000. Cognizant and Seller shall have no
liability to Buyer under this Agreement or otherwise for a breach or
inaccuracy of the representation and warranty set forth in Section
4.25 unless, and only to the extent that, the aggregate amount of the
losses, liabilities, damages and expenses of the Buyer for breach of
such representation or warranty exceeds the sum of $1,500,000 plus the
amount of any recovery by Buyer under Section 9.3 hereof for a breach
or inaccuracy of any representation or warranty other than in Section
4.25, where such recovery is from the same underlying facts or events.
Cognizant and Seller shall not have liability to Buyer under this
Agreement or otherwise for a breach or inaccuracy of the
representation and warranty set forth in Section 4.24 unless, and only
to the extent that, the aggregate amount of the losses, liabilities,
damages and expenses of that party from
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all claims under this Agreement or otherwise for breach of the
representation and warranty in Section 4.24, exceeds $50,000.
9.6. DEFENSE OF CLAIMS BY THIRD PARTIES
If any claim is made against a third party that, if sustained, would give rise
to a liability of the other party under this Agreement, the party against whom
the claim is made shall promptly cause notice of the claim to be delivered to
the other party within the time set forth in Section 9.2 and shall afford the
other party and its counsel, at the other party's sole expense, the opportunity
to defend or settle the claim. The failure to provide the notice referred to
above shall not relieve the indemnifying party of liability under this
Agreement, except to the extent the indemnifying party has actually been
prejudiced by such failure. If any claim is compromised or settled without the
consent of the indemnifying party which consent shall not be unreasonably
withheld, no liability shall be imposed upon the indemnifying party by reason
of the claim which consent shall not be unreasonably withheld.
ARTICLE X.
MISCELLANEOUS
10.1. NOTICES. Any notice, request, demand, waiver, consent,
approval or other communication required or permitted hereunder shall be in
writing and may be given by any of the following methods: (a) personal
delivery against a signed receipt; (b) facsimile transmission; (c) registered
or certified mail, postage prepaid, return receipt requested; or (d) overnight
delivery service. Notices shall be sent to the appropriate party at its
address or facsimile number given below (or at such other address or facsimile
number for such party as shall be specified by notice given hereunder):
<TABLE>
<S> <C> <C>
(a) If to Buyer: APACHE Medical Systems, Inc.
1650 Tysons Boulevard
McLean, Virginia 22102
Attention: Gerald E. Bisbee, Jr.
Fax No.: (703) 847-1401
With a copy to: Gardner, Carton & Douglas
321 N. Clark Street
Suite 3400
Chicago, Illinois 60610
Attention: Nancy M. Borders
Fax No: (312) 644-3381
(b) If to Seller: The Cognizant Corporation
200 Nyala Farms
Westport, Connecticut 06880
Attention: John M. Raveret
Fax No: (203) 222-4392
</TABLE>
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<TABLE>
<S> <C>
With a copy to: Cognizant Corporation
200 Nyala Farms
Westport, Connecticut 06880
Attention: Jared T. Finkelstein, Esq.
Fax: (203) 222-4268
</TABLE>
All such notices and communications shall be deemed upon (a) actual receipt
thereof by the addressee, (b) actual delivery thereof to the appropriate
address, or (c) in the case of a facsimile transmission, upon transmission
thereof by the sender and confirmation of receipt via telephone. In the case
of notices sent by facsimile transmission, the sender shall contemporaneously
dispatch a copy of the notice to the addresses at the address(es) provided for
above by an overnight courier service. However, such mailing shall in no way
alter the time at which the facsimile notice is deemed received.
10.2. AMENDMENTS AND TERMINATION; WAIVER. This Agreement may be
amended or modified only by a written instrument executed by the parties
hereto. Any term or provision of this Agreement may be waived at any time by
the party entitled to the benefit thereof by a written instrument duly executed
by such party.
10.3. PARTIES IN INTEREST; ASSIGNMENT. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns. This Agreement shall not be assigned by any party
hereto without the prior written consent of the other parties except for
Section 6.11. Except as provided in the next sentence, nothing in this
Agreement, expressed or implied, is intended to confer upon any third person
any rights or remedies under or by reason of this Agreement. The TEs shall be
third party beneficiaries of Section 6.11.
10.4. EXPENSES. Except as provided below in Section 10.5, each
party hereto shall pay its own expenses including, without limitation, fees and
expenses of any agents, representatives, counsel, auditors, and accountants
incidental to the preparation and carrying out of this Agreement. Any sales tax
or use taxes payable by reason of the transfer of the Assets hereunder shall be
paid by the Buyer.
10.5. ATTORNEY'S FEES. In the event of any controversy, claim or
dispute between or among any of the parties hereto arising out of or relating
to this Agreement, or any default or breach or alleged default or breach
thereof, then the party prevailing in such action shall be entitled to be
reimbursed by the non-prevailing party for reasonable attorney's fees and costs
associated with any such action. In addition, if any party hereto shall be
joined as a party in any judicial, administrative, or other legal proceeding
arising from or incidental to any obligation, conduct or action of another
party hereto, the party so joined shall be entitled to be reimbursed by the
other party for its reasonable attorney's fees and costs associated therewith.
10.6. BROKERS. The parties agree that neither party has engaged the
services of a broker. Cognizant and Seller agrees to indemnify Buyer against
any claim by any third person for any commission, brokerage or finder's fee or
any other payment based upon any alleged
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agreement or understanding between such third person and Seller, whether
expressed or implied. Buyer agrees to indemnify Cognizant and Seller against
any claim by any third person for any commission, brokerage or finder's fee or
any other payment based upon any alleged agreement or understanding between
such third person and Buyer, whether expressed or implied.
10.7. SPECIFIC PERFORMANCE. The parties hereto agree that damages
for breach of the agreements and covenants contained herein will be inadequate
and that each of the parties shall be entitled to specific performance or
injunctive relief, or both.
10.8. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws of the
State of Delaware, excluding any choice of law rules which may direct the
application of the laws of another jurisdiction.
10.9. ENTIRE AGREEMENT. This instrument, including Schedules and
Exhibits hereto and documents and agreements referred to herein, embodies the
whole agreement of the parties. There are no promises, terms, conditions, or
obligations other than those contained herein. All previous negotiations,
representations or agreements between the parties, either verbal or written,
not contained herein are hereby withdrawn and annulled.
10.10. SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11. CAPTIONS; SCHEDULES AND EXHIBITS; COUNTERPARTS. The section
and subsection captions contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Unless otherwise indicated, all references in this Agreement to a
particular schedule or exhibit are references to a schedule or exhibit attached
hereto, which such schedules and exhibits are made a part hereof. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
10.12 DEFINITIONS. (a) References to this Agreement to any gender
include references to all genders, and references to the singular include
references to the plural and vice versa.
(b) The words "include", "includes" and "including" when used in this
Agreement shall be deemed to be followed by the phrase "without limitation".
(c) Unless the context otherwise requires, references in this
Agreement to Articles, Sections, Exhibits, Schedules, Appendices and
Attachments shall be deemed references to Articles and Sections of, and
Exhibits, Schedules, Appendices and Attachments to, this Agreement.
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(d) Unless the context otherwise requires, the words "hereof",
"hereby" and "herein" and words of similar meaning when used in this Agreement
refer to this Agreement in its entirety and not to any particular Article,
Section or provision of this Agreement.
(e) "Knowledge of Cognizant and Seller" shall mean the actual
knowledge of John Raveret, Dennis Viellieu Thomas Reepmeyer and the TEs.
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IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement on the date first above written.
APACHE MEDICAL SYSTEMS, INC.
By:
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Name:
Title:
COGNIZANT CORPORATION
By:
------------------------------------
Name:
Title:
DUN & BRADSTREET
HEALTHCARE INFORMATION, INC.
By:
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Name:
Title:
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<PAGE> 1
REGISTRATION AGREEMENT
REGISTRATION AGREEMENT, dated as of January 7, 1997 (the "Agreement"),
by and among APACHE Medical Systems, Inc., a Delaware corporation (the
"Company"), Iowa Health Centers, P.C., an Iowa professional corporation d/b/a
Iowa Heart Center, P.C., an Iowa professional corporation ("IHC"), Mercy
Hospital Medical Center, an Iowa not-for-profit corporation ("Mercy"), and Mark
A. Tannenbaum, M.D. ("Dr. Tannenbaum" and, together with IHC and Mercy, the
"CardioMac Principals").
RECITALS
A. In connection with the issuance of Series E and Series F
Preferred Stock in December 1995, the Company, the holders of all of the
outstanding Series of Preferred Stock of the Company and Key Employees (as
defined herein) entered into a Registration Agreement, dated as of December 28,
1995 (the "Preferred Registration Agreement"), which amended, restated and
superseded the terms of all prior registration agreements and combined all
registration provisions applicable to the capital stock of the Company.
B. In connection with the grant to American Healthcare Systems
Purchasing Partners, L.P. ("Purchasing Partners") of options to purchase Common
Stock of the Company in consideration of Purchasing Partners' entering into
that certain Marketing Agreement, dated as of June 3, 1996, the Company and
Purchasing Partners entered into a Registration Agreement, dated as of July 3,
1996 (the "Purchasing Partners Registration Agreement" and, together with the
Preferred Registration Agreement, the "Other Registration Agreements").
C. The Company now wishes to grant registration rights to the
CardioMac Principals as permitted by Section 12 of the Preferred Registration
Agreement and Section 13 of the Purchasing Partners Registration Agreement in
connection with the issuance to the CardioMac Principals of options to purchase
up to 150,000 shares of Common Stock of the Company pursuant to the exercise of
certain options (the "Options") granted in consideration of the CardioMac
Principals' entering into that certain Asset Purchase Agreement, dated as of
January 7, 1997, (or such greater or lesser number of shares as to which the
150,000 shares are adjusted pursuant to the terms of the Options).
1. Definitions. As used in this Agreement, the following terms
have the following meanings:
Common Stock: The common stock, $.01 par value, of the Company.
Holder: A holder of Registrable Stock as defined in the Preferred
Registration Agreement.
<PAGE> 2
Investors: Collectively, the holders of the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, the Series
D Preferred Stock, the Series E Preferred Stock and the Series F
Preferred Stock.
Key Employees: William A. Knaus, Elizabeth A. Draper, Douglas P.
Wagner, Jack E. Zimmerman and Gerald E. Bisbee, Jr.
"Register", "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the
Securities Act and the declaration or ordering by the Commission of
effectiveness of such registration statement.
Registrable Stock: All shares of Common Stock included in the
definition of Registrable Stock in the Other Registration Agreements
and all shares of Common Stock issued to the CardioMac Principals or
issuable upon exercise of the Options.
Subject Stock: All Registrable Stock held (or to be held after giving
effect to exercise of options or warrants) by the CardioMac
Principals, Purchasing Partners, the Investors and the Key Employees,
other than shares acquired in a distribution pursuant to a
registration statement filed by the Company under the Securities Act.
2. Incidental Registration. If the Company at any time proposes
to register any of its securities under the Securities Act (other than a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 of the Commission is applicable), including
registrations made at the request of Purchasing Partners or one or more Holders
under the Other Registration Agreements, the Company will each such time give
written notice to the CardioMac Principals, Purchasing Partners, all Holders
and all Key Employees of its intention so to do. Upon the written request of
the CardioMac Principals, Purchasing Partners, a Holder or Holders or a Key
Employee or Key Employees (stating the number of shares of Subject Stock to be
disposed of thereby and the intended method of disposition) given within 20
days after receipt of any such notice, the Company will use its best efforts to
cause all such shares of Subject Stock intended to be disposed of, the
CardioMac Principals, Purchasing Partners, the Holders or the Key Employees of
which shall have requested registration thereof, to be registered under the
Securities Act so as to permit the disposition (in accordance with the methods
in said request) by the CardioMac Principals, Purchasing Partners, such Holder
or Holders or Key Employee or Key Employees of the shares so registered,
subject, however, to the limitations set forth in Section 3.
3. Limitations on Incidental Registration. If the registration
of which the Company gives notice pursuant to Section 2 is for an underwritten
offering, only securities which are to be included in the underwriting may be
included in the registration. Notwithstanding any provision of Section 2, if
the underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the underwriter may exclude or otherwise
limit the number of shares of Subject Stock to be included in the registration
and underwriting. In the case of a registration initiated by the Company, the
Company shall advise the CardioMac Principals, Purchasing Partners, all Holders
and Key Employees (except those Holders and Key Employees who have not
indicated to the Company their decision to distribute any of their Subject
Stock
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<PAGE> 3
through such underwriting) of the limitations imposed by the underwriter, and
the number of shares of Subject Stock that may be included in the registration
and underwriting shall be allocated among the CardioMac Principals, Purchasing
Partners, such Holders and Key Employees in proportion, as nearly as
practicable, to the respective amounts of Subject Stock owned by (or as to
which there is a current vested right to acquire) the CardioMac Principals,
Purchasing Partners, such Holders and Key Employees at the time of filing the
registration statement. In the case of a registration initiated by Purchasing
Partners or one or more Holders under either of the Other Registration
Agreements, the Company shall comply with the terms of the Other Registration
Statements with respect to allocation of shares of Subject Stock to be included
in the underwriting first among Purchasing Partner, the Holders and Key
Employees and shall advise the CardioMac Principals of the limitations imposed
by the underwriter, and the number of shares of Subject Stock that may be
included in the registration and underwriting by the CardioMac Principals shall
be limited to such number of shares as is remaining after inclusion of the
Subject Stock of Purchasing Partners, all Holders and all Key Employees who
wish to distribute their Subject Stock through such registration and
underwriting. No Subject Stock excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. If
the CardioMac Principals, Purchasing Partners or any Holder or Key Employee
disapproves of any such underwriting, such person may elect to withdraw
therefrom by written notice to the Company and the underwriter. The securities
so withdrawn from such underwriting shall also be withdrawn from such
registration.
4. Termination of Agreement. The registration rights granted
under Section 2 shall terminate as to the CardioMac Principals or any successor
of such rights at such time as such person (i) no longer holds or has the right
to acquire an aggregate number of shares of Common Stock equal to one percent
(1%) or more of the outstanding shares of Common Stock of the Company, and (ii)
would then be permitted to sell all of such shares within one three-month
period pursuant to Rule 144.
5. Designation of Underwriter.
(a) In the case of any registration effected pursuant to
Section 2 of the Purchasing Partners Registration Agreement,
Purchasing Partners shall have the right to designate the managing
underwriter in any underwritten offering.
(b) In the case of any registration initiated by Holders
pursuant to Section 2 of the Preferred Registration Agreement, such
Holders shall have the right to designate the managing underwriter in
any underwritten offering.
(c) In the case of any registration initiated by the
Company, the Company shall have the right to designate the managing
underwriter in any underwritten offering.
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<PAGE> 4
6. Cooperation by the CardioMac Principals.
(a) The CardioMac Principals will furnish to the Company
such information as the Company may reasonably require from the
CardioMac Principals in connection with the registration statement
(and the prospectus included therein).
(b) Failure of the CardioMac Principals to furnish the
information and agreements described in this Agreement shall not
affect the obligations of the Company under the Other Registration
Agreements to remaining sellers who furnish such information and
agreements, unless in the reasonable opinion of counsel to the Company
or the underwriters, such failure impairs or may impair the viability
of the offering or the legality of the registration statement or the
underlying offering.
(c) The CardioMac Principals, to the extent that they
have shares included in the registration statement, will suspend
(until further notice) further sales of such shares after receipt of
telegraphic or written notice from the Company to suspend sales to
permit the Company to correct or update a registration statement or
prospectus; but the obligations of the Company with respect to
maintaining any registration statement current and effective shall be
extended by a period of days equal to the period such suspension is in
effect.
At the end of the period during which the Company is obligated to keep
the registration statement current and effective as described in the Other
Registration Agreements (and any extensions thereof required by the preceding
sentence), the CardioMac Principals, to the extent that they have shares
included in the registration statement, shall discontinue sales of shares
pursuant to such registration statement upon receipt of notice from the Company
of its intention to remove from registration the shares covered by such
registration statement which remain unsold, and the CardioMac Principals shall
(after written request for such notice, describing the information required in
the response) notify the Company of the number of shares registered which
remain unsold promptly upon receipt of such notice from the Company.
7. Expenses of Registration. All expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration and filing fees, printing expenses, expenses of compliance with
blue sky laws, fees and disbursements of counsel for the Company and expenses
of any audits incidental to or required by any such registration, shall be
borne by the Company, except that all underwriting discounts and commissions,
if any, shall be borne by the CardioMac Principals, Purchasing Partners, the
Holders and the Key Employees holding the securities registered pursuant to
such registration, pro-rata according to the quantity of their securities so
registered.
8. Indemnification.
(a) To the extent permitted by law, the Company will
indemnify the CardioMac Principals, each agent, officer and director
of a CardioMac Principal, each person controlling a CardioMac
Principal, and each underwriter and selling broker of the securities
so registered (collectively, "Representative" and collectively with
the
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<PAGE> 5
CardioMac Principals, each such agent, officer, director or person,
"Indemnitees") against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related
registration statement, notification or the like) or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances in which they were made,
or any violation by the Company of any rule or regulation promulgated
under the Securities Act and any state law applicable to the Company
and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance,
and will reimburse each such Indemnitee for any legal and any other
expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, provided,
however, that the Company will not be liable to any Indemnitee in any
such case to the extent that any such claim, loss, damage or liability
is caused by any untrue statement or omission so made in strict
conformity with written information furnished to the Company by an
instrument duly executed by such Indemnitee and stated to be
specifically for use therein and except that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to
any such untrue statement (or alleged untrue statement) or omission
(or alleged omission) made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or
in the amended prospectus filed with the Commission pursuant to Rule
424(b) (the "Final Prospectus"), such indemnity agreement shall not
inure to the benefit of any Representative, if a copy of the Final
Prospectus was not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the time such
furnishing is required by the Securities Act; provided, further, that
the indemnity agreement contained in this subsection 8(a) shall not
apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent
of the Company, which consent shall not be unreasonably withheld.
(b) To the extent permitted by law, the CardioMac
Principals and each underwriter of the securities registered will
indemnify each other, the Company and its officers and directors and
each person, if any, who controls any thereof within the meaning of
Section 15 of the Securities Act and their respective successors
against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related
registration statement, notification or the like) or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances in which they were made;
and will reimburse the Company and each other person indemnified
pursuant to this paragraph 8(b) for all legal and any other expenses
reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, provided, however, that
this paragraph 8(b) shall
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<PAGE> 6
apply only if (and only to the extent that) such statement or omission
was made in reliance upon and in strict conformity with written
information (including, without limitation, written negative responses
to inquiries) furnished to the Company by an instrument duly executed
by the CardioMac Principals or such underwriter and stated to be
specifically for use in such prospectus, offering circular or other
document (or related registration statement, notification or the like)
or any amendment or supplement thereto and except that the foregoing
indemnity agreement is subject to the condition that, insofar as it
relates to any such untrue statement (or alleged untrue statement) or
omission (or alleged omission) made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or
in the Final Prospectus, such indemnity agreement shall not inure to
the benefit of (i) the Company and (ii) any Representative, if a copy
of the Final Prospectus was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the Securities Act; provided, further,
that this indemnity shall not be deemed to relieve any underwriter of
any of its due diligence obligations; provided, further, that the
indemnity agreement contained in this subsection 8(b) shall not apply
to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent
of the CardioMac Principals, which consent shall not be unreasonably
withheld; and provided, further, that the obligations of the CardioMac
Principals shall be limited to an amount equal to the proceeds to the
CardioMac Principals of the Subject Stock sold by them as contemplated
herein, unless such claim, loss, damage, liability or action resulted
from the CardioMac Principals' fraudulent misconduct.
(c) Each party entitled to indemnification hereunder (the
"indemnified party") shall give notice to the party required to
provide indemnification (the "indemnifying party") promptly after such
indemnified party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the indemnifying party (at
its expense) to assume the defense of any claim or any litigation
resulting therefrom, provided that counsel for the indemnifying party,
who shall conduct the defense of such claim or litigation, shall be
satisfactory to the indemnified party, and the indemnified party may
participate in such defense at such party's expense, and provided,
further, the omission by any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under this Section 8, except to the extent that the
omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the
failure to give notice. No indemnifying party, in the defense of any
such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) The reimbursement required by this Section 8 shall be
made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred.
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(e) The obligation of the Company under this Section 8
shall survive the completion of any offering of Subject Stock in a
registration statement under this Agreement, or otherwise.
9. Rights Which May Be Granted to Subsequent Investors.
(a) Within the limitations prescribed by this paragraph
(a), but not otherwise, the Company may grant to subsequent investors
in the Company and to persons who as of the date hereof are holders of
Common Stock or holders of options to purchase Common Stock rights of
incidental registration (such as those provided in Section 5). Such
rights may only pertain to shares of Common Stock, including shares of
Common Stock into which any other securities may be converted. Such
rights may be granted with respect to (i) a registration requested by
Purchasing Partners pursuant to Section 2, but only in respect to that
portion of such registration as remains available after inclusion of
all Registrable Stock requested by Purchasing Partners, Holders and
Key Employees, (ii) registrations initiated by the Company, but only
in respect of that portion of such registration as is available under
the limitations set forth in Section 3 (which limitations shall apply
pro-rata to the CardioMac Principals, Purchasing Partners, all Holders
and Key Employees (to the extent Purchasing Partners and such Holders
and Key Employees still have rights under the Other Registration
Agreements)), and such rights shall be limited in all cases to sharing
pro-rata in the available portion of the registration in question with
the CardioMac Principals, Purchasing Partners, Holders and Key
Employees, such sharing to be based on the number of shares of Common
Stock held or to be held by the CardioMac Principals, Purchasing
Partners, Holders and Key Employees and held or to be held by such
other investors, plus the number of shares of Common Stock into which
other securities held by such other investors are convertible, which
are entitled to registration rights, and (iii) registrations requested
by Holders under the Other Registration Agreement, but only with
respect to that portion of such registration as remains available
after inclusion of all Registrable Stock requested by Holders, Key
Employees and Purchasing Partners. With respect to registrations
which are for underwritten public offerings, "available portion" shall
mean the portion of the underwritten shares which is available as
specified in clauses (i), (ii) and (iii) of the third sentence of this
paragraph (a). Shares not included in such underwriting shall not be
registered.
(b) The Company may grant to subsequent investors in the
Company rights of registration upon request (such as those provided in
Section 2 of the Other Registration Agreements), to the extent so
permitted in the Other Registration Agreements.
10. Transfer of Registration Rights. The registration rights
granted to the CardioMac Principals under this Agreement may not be
transferred, except that the CardioMac Principals may assign and transfer such
rights to underwriters of the Subject Stock.
11. "Stand-Off" Agreement. In consideration for the Company
performing its obligations under this Agreement, the CardioMac Principals agree
for a period of time (not to
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exceed 180 days) from the effective date of any registration of securities of
the Company (upon request of the Company or of the underwriters managing any
underwritten offering of the Company's securities) not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of
any Registrable Stock, other than shares of Registrable Stock included in the
registration, without the prior written consent of the Company or such
underwriters, as the case may be, provided that all officers and directors of
the Company, Purchasing Partners and each Holder who is then entitled to
registration rights under the Other Registration Agreements and each holder of
more than 5% of the outstanding Common Stock shall enter into similar
agreement.
12. Delay of Registration. The CardioMac Principals shall have no
right to take any action to restrain, enjoin, or otherwise delay any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
13. Notices. All notices, requests, consents and other
communications herein (except as stated in the last sentence of this Section
13) shall be in writing, and shall be mailed by first-class or certified mail,
postage prepaid, delivered by Federal Express or similar overnight courier, or
personally delivered, as follows:
If to the Company:
Apache Medical Systems, Inc.
1650 Tysons Boulevard - Suite 300
McLean, Virginia 22102-3915
Attention: Gerald E. Bisbee, Jr., Ph.D., Chairman and Chief
Executive Officer
with a copy to:
Gardner, Carton & Douglas
321 North Clark Street - Suite 3200
Chicago, Illinois 60610
Attention: Nancy M. Borders
If to CardioMac Principals:
Iowa Health Centers, P.C.,
d/b/a Iowa Heart Center, P.C.
411 Laurel Street, Suite 3250
Des Moines, Iowa 50314
Attn: Daniel C. Aten Administrator
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Mercy Hospital Medical Center
Sixth and University
Des Moines, Iowa 50314
Attn: Thomas A. Reitinger, President
Mark A. Tannenbaum, M.D.
1705 Plum Thicket Lane
West Des Moines, Iowa 50266
With a copy to:
Belin Harris Lamson McCormick
A Professional Corporation
2000 Financial Center
Des Moines, Iowa 50309
Attn: Quentin R. Boyken
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other party.
14. Conflict with Other Agreements. The terms of this Agreement
shall be binding upon the parties hereof notwithstanding any conflicting
provision in any other agreement to which either is a party.
15. Modifications; Waiver. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated unless
effected by a writing executed and delivered by the Company and each of the
CardioMac Principals.
16. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all negotiations, agreements, representations, warranties,
commitments, whether in writing or oral, prior to the date hereof.
17. Successors. All of the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors of the parties hereto, including, without limitation the estate of
Dr. Tannenbaum.
18. Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument.
19. Governing Law and Severability. This Agreement shall be
governed by the laws of the State of Delaware as applied to agreements entered
into and to be performed entirely within Delaware. In the event any provision
of this Agreement or the application of such provision to any party shall be
held by a court of competent jurisdiction to be contrary to law, the remaining
provisions of this Agreement shall remain in full force and effect.
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20. Headings. The descriptive headings of the Sections hereof and
the Schedules hereto are inserted for convenience only, and do not constitute a
part of this Agreement.
This Agreement is hereby executed as of the date first above written.
APACHE MEDICAL SYSTEMS, INC.
By:
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Name:
Title:
IOWA HEALTH CENTERS, P.C.,
D/B/A IOWA HEART CENTER, P.C.
By:
By:
--------------------------------
Name:
Title:
MERCY HOSPITAL MEDICAL CENTER
By:
By:
--------------------------------
Name:
Title:
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MARK A. TANNENBAUM, M.D.
10
