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ASSET PURCHASE AGREEMENT
BY AND AMONG
APACHE MEDICAL SYSTEMS, INC.
IOWA HEALTH CENTERS. P.C.,
MERCY HOSPITAL MEDICAL CENTER
AND XXXX X. XXXXXXXXXX, 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 Xxxx X. Xxxxxxxxxx, M.D. ("Xx. Xxxxxxxxxx" and,
together with IHC and Mercy, the "CardioMac Principals").
WHEREAS, IHC, Mercy and Xx. Xxxxxxxxxx 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, Xx. Xxxxxxxxxx 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, Xx. Xxxxxxxxxx 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 000 Xxxxxx Xxxxxx, Xxx Xxxxxx, Xxxx,, 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. XX. XXXXXXXXXX. Xx. Xxxxxxxxxx will be available to Buyer for
consultation up to four days per month for a period of six months from the
Closing Date (the "Xxxxxxxxxx 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 Xx. Xxxxxxxxxx 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 Xx. Xxxxxxxxxx
for all reasonable travel and out-of-pocket expenses related to his work for
Buyer. Buyer shall provide Xx. Xxxxxxxxxx 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: "Xxxx X.
Xxxxxxxxxx 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 Xxxxxxxxxx Services by Xx. Xxxxxxxxxx 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 Xx. Xxxxxxxxxx: 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 Xxxxxxx,
Carton and Xxxxxxx, 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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(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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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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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 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxx
Xxxx 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 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxx Xxxx 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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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 XX. XXXXXXXXXX. During the
period of performance of the Xxxxxxxxxx Services, Buyer and Xx. Xxxxxxxxxx
agree to seek a mutually acceptable rate and time commitment for the
continuation of the Xxxxxxxxxx Services beyond such initial period. Buyer
hereby agrees that upon the formation of its cardiovascular advisory board,
Buyer will issue to Xx. Xxxxxxxxxx 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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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. Xx. Xxxxxxxxxx shall have
agreed to perform the Xxxxxxxxxx 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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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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(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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(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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(a) If to Buyer: APACHE Medical Systems, Inc.
0000 Xxxxxx Xxxxxxxxx
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
With a copy to: Xxxxxxx, Carton & Xxxxxxx
000 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
(b) If to CardioMac Principals: Iowa Health Centers, P.C.
d/b/a Iowa Heart Center, P.C.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx Administrator
Mercy Hospital Medical Center
Sixth and University
Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, President
Xxxx X. Xxxxxxxxxx, M.D.
0000 Xxxx Xxxxxxx Xxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
With a copy to: Xxxxx Xxxxxx Xxxxxx XxXxxxxxx
A Professional Corporation
0000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx
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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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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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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By:
----------------------------
Name:
Title:
MERCY HOSPITAL MEDICAL CENTER
By:
----------------------------
Name:
Title:
XXXX X.. XXXXXXXXXX, M.D.
----------------------------
IOWA HEART INSTITUTE
By:
----------------------------
Name:
Title:
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