Item 1.01 Entry into a Material Definitive Agreement
Share and Asset Purchase Agreement
On December 1, 2016, BioTelemetry, Inc. (the Company), through its directly or indirectly wholly-owned subsidiaries Telcare Acquisition, LLC (Telcare Acquisition) and BioTelemetry Care Management, LLC (BioTelemetry Care Management, and together with Telcare Acquisition, the Buyers), acquired TelCare Medical Supply, Inc. (TelCare Supply), a wholly-owned subsidiary of Telcare, Inc. (the Seller), and substantially all of the assets of the Seller pursuant to the terms and conditions of a Share and Asset Purchase Agreement dated as of December 1, 2016 by and among the Company, the Buyers and the Seller (the Purchase Agreement). All transactions contemplated in the Purchase Agreement (the Transaction) were consummated on December 1, 2016.
At the closing of the Transaction, the Company, through the Buyers, (i) acquired all of the issued and outstanding shares of the capital stock of TelCare Supply, and (ii) acquired substantially all of the assets of, and assumed certain liabilities relating to, the Sellers manufacturing, marketing, sale and distribution of blood glucose meters, test strips and the accessories associated with the testing of blood in connection with diabetes, including, without limitation, the provision of FDA cleared cellular enabled blood glucose meters and related telehealth services (the Business). The acquired assets include, but are not limited to, inventory, contracts, intellectual property, equipment, furniture and fixtures and the associated goodwill, in each case, relating to the Business.
Upon the closing of the Transaction, the Company paid an aggregate purchase price of $7 million in cash. This purchase price is subject to certain post-closing adjustments. The Company also deposited $500,000 of the purchase price into an escrow fund for 12 months for the purposes of securing the indemnification obligations of the Seller to the Buyers for any and all losses for which the Buyers are entitled under the Purchase Agreement. Under the terms of the Purchase Agreement, the Buyers are also obligated to pay up to an aggregate of $5 million in cash to the Seller upon the achievement of certain revenue targets during the fiscal years ending December 31, 2017 and December 31, 2018.
The Purchase Agreement includes certain customary representations, warranties and covenants on the part of the Buyers and the Seller. The representations and warranties of the parties in the Purchase Agreement (i) have been made solely for the benefit of the other parties to the Purchase Agreement, and were not intended to be, and should not be, relied upon by any person other than such parties, including shareholders of the Company; (ii) should not be treated as categorical statements of fact, but rather as a way of allocating risk between the parties; (iii) in some cases have been qualified by disclosures that were made to the other parties in connection with the negotiation of the Purchase Agreement, which disclosures are not necessarily reflected in the Purchase Agreement; and (iv) may apply standards of materiality in a way that may differ from standards of materiality applied by investors. The Purchase Agreement includes various other provisions customary for transactions of this nature, including indemnification provisions. The foregoing is a summary of the material provisions of the Purchase Agreement. This summary is not intended to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement that will be filed as an exhibit to the Companys Annual Report on Form 10-K for the period ending December 31, 2016.
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