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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 11, 2000
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Date of Report
(Date of earliest event reported)
DATA CRITICAL CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-27855 91-1901482
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(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
19820 North Creek Parkway, Suite 100
Bothell, Washington 98011
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(Address of principal executive offices, including Zip Code)
(425) 482-7000
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(Registrant's telephone number, including area code)
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Item 2. Other Events
On September 11, 2000, Datacritical.com Inc. acquired all rights to own and
operate the business of Paceart Associates, L.P., a New Jersey limited
partnership ("Paceart"), pursuant to a Limited Partnership Interest and Stock
Purchase Agreement, dated as of August 31, 2000 (the "Purchase Agreement") among
Data Critical Corporation ("Data Critical"), Datacritical.com Inc., a wholly-
owned subsidiary of Data Critical ("Datacritical.com"), Paceart, the limited
partners of Paceart (the "Limited Partners"), Paceart G.P., Inc., a New Jersey
corporation and the general partner of Paceart ("Paceart GP"), the stockholders
of Paceart GP (the "Stockholders"), and Dr. Michael N. Bergelson, as agent for
the Limited Partners and the Stockholders (the "Sellers' Agent"). By the terms
of the Purchase Agreement, Datacritical.com irrevocably purchased all rights to
own and operate the business of Paceart.
Under the terms of the Purchase Agreement, the Limited Partners and the
Stockholders were paid an aggregate cash purchase price of $6,162,000 in
exchange for their limited partnership interests in the Limited Partnership and
shares of common stock of Paceart GP, respectively. The Stockholders also were
issued 300,000 unregistered shares of Data Critical common stock. As described
below, a portion of the cash consideration payable to the Limited Partners and
the shares issuable to the Stockholders were withheld and placed in an escrow
account for the next 18 months.
In addition, if, and only to the extent that, the division or subsidiary of
Data Critical or Datacritical.com comprised of the operations of the former
Paceart after the acquisition achieves sales revenues of more than $5,000,000
during the fiscal year ending December 31, 2001, Data Critical will pay an
additional $400,000 in cash to the Limited Partners and the Stockholders.
In connection with the acquisition, Data Critical entered into an
employment agreement with the founder and president of Paceart, Dr. Michael N.
Bergelson, pursuant to which Data Critical granted Dr. Bergelson options to
purchase 100,000 shares of Data Critical common stock at an exercise price of
$8.781 per share. Dr. Bergelson's options will vest monthly for the next three
years. Data Critical also entered into transition agreements with two officers
of Paceart GP, pursuant to which Data Critical made a cash payment of $50,000 to
one consultant and granted each consultant fully-vested, nonqualified options to
purchase 10,000 shares of Data Critical common stock at an exercise price of
$8.781 per share in exchange for the provision of certain consulting services to
Data Critical and Datacritical.com for a period of three months after closing of
the acquisition. In addition, Data Critical agreed to grant options under its
1999 Stock Option Plan to purchase an aggregate of 112,500 shares at an exercise
price of $8.781 per share to employees of Paceart who are continuing their
employment with Data Critical.
A portion of the initial purchase price will be held in escrow for a period
of 18 months after closing to protect Data Critical and Datacritical.com from
losses, costs,
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damages, claims and expenses ("Losses") resulting from any breaches by Paceart,
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Paceart GP, the Stockholders or the Limited Partners of their respective
representations and warranties in the Purchase Agreement. The amount of the
escrow comprises $382,500 of cash held back from the Limited Partners'
consideration and 75,000 shares of Data Critical common stock held back from the
initial consideration to be paid to the Stockholders.
In connection with the consummation of the Purchase Agreement and the grant
of the stock options to Dr. Bergelson and the former Paceart GP officers
described above, Data Critical granted the Stockholders, pursuant to a
Registration Rights Agreement dated as of August 31, 2000, certain Form S-3 and
piggyback registration rights in respect of the Data Critical common stock
issued to the Stockholders pursuant to the Purchase Agreement and the shares of
Data Critical common stock to be issued upon exercise of such options.
Data Critical issued the shares of Data Critical common stock to the
Stockholders pursuant to the exemptions from the registration requirements of
the Securities Act of 1933 provided by Section 4(2) and Regulation D of the
Securities Act.
On September 11, 2000, Data Critical issued a press release announcing that
Data Critical had signed an agreement to purchase the business of Paceart. The
press release is filed as an exhibit to this Current Report on Form 8-K and is
incorporated into this report by reference.
The Purchase Agreement, the Registration Rights Agreement and the
employment agreement with Dr. Bergelson are filed as exhibits and are
incorporated into this report by reference. The summary of the provisions of
those agreements contained herein is not complete, and you should refer to the
exhibits for a copy of the actual agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Information: Financial information shall be filed by
amendment no later than 60 days after the effective filing date of this Form
8-K.
(b) Pro Forma Financial Information: Pro forma financial information shall
be filed by amendment no later than 60 days after the effective filing date of
this Form 8-K.
(c) Exhibits
2.1 Limited Partnership Interest and Stock Purchase
Agreement, dated as of August 31, 2000 among Data
Critical Corporation, Datacritical.com Inc., Paceart
Associates, L.P., the limited partners of Paceart
Associates, L.P., Paceart G.P., Inc., the stockholders
of Paceart G.P., Inc., and Dr. Michael N. Bergelson, as
Sellers' Agent
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4.1 Registration Rights Agreement, dated as of August 31,
2000 among Data Critical Corporation, Dr. Michael N.
Bergelson, Richard W. Schurig, Richard Puzo, Wayne
Casebolt, Eric Reidman and Anthony Marchesini
10.1 Employment Agreement, dated as of August 31, 2000 by
and between Data Critical Corporation and Dr. Michael
N. Bergelson
99.1 Press Release dated September 11, 2000.
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.
DATA CRITICAL CORPORATION
Dated: September 21, 2000 By /s/ Michael E. Singer
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Michael E. Singer
Vice President and Chief Financial Officer
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EXHIBIT INDEX
Exhibit Number Description
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2.1 Limited Partnership Interest and Stock Purchase
Agreement, dated as of August 31, 2000 among Data
Critical Corporation, Datacritical.com Inc., Paceart
Associates, L.P., the limited partners of Paceart
Associates, L.P., Paceart G.P., Inc., the
stockholders of Paceart G.P., Inc., and Dr. Michael
N. Bergelson, as Sellers' Agent
4.1 Registration Rights Agreement, dated as of August
31, 2000 among Data Critical Corporation, Dr.
Michael N. Bergelson, Richard W. Schurig, Richard
Puzo, Wayne Casebolt, Eric Reidman and Anthony
Marchesini
10.1 Employment Agreement, dated as of August 31, 2000 by
and between Data Critical Corporation and Dr.
Michael N. Bergelson
99.1 Press Release dated September 11, 2000.
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