Form 8-K
UNITED STATES
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): May 27, 2010
eResearchTechnology, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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0-29100
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22-3264604 |
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.) |
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1818 Market Street,
Philadelphia, PA
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19103 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: 215-972-0420
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On May 27, 2010, eResearchTechnology, Inc. (ERT) entered into a Credit Agreement (the
Credit Agreement) with Citizens Bank of Pennsylvania (the
Lender) which provided for a $40 million revolving credit facility and, in connection therewith, ERT
executed a Revolver Note dated May 27, 2010 in the original principal amount of $40 million payable
to the order of the Lender (the Note). ERTs wholly-owned subsidiaries, ERT Tech Corporation,
ERT Investment Corporation and Covance Cardiac Safety Services Inc. (individually a Guarantor and
collectively the Guarantors) executed an acknowledgement to the Credit Agreement and also
executed a Guaranty dated May 27, 2010 (the Guaranty) in favor of the Lender, to which ERT was a
party solely for purposes of certain subordination provisions. To secure its obligations under the
Credit Agreement, ERT and the Lender executed a Charge Over Shares and Securities dated May 27,
2010 (the Charge) pursuant to which ERT pledged to the Lender its rights with respect to 169
ordinary shares of eResearchTechnology UK1 Limited (the Shares), representing 65% of the
outstanding shares of eResearchTechnology UK1 Limited. Please see Item 2.03 of this Report for
further discussion of the terms of the Credit Agreement, the Note, the Guaranty and the Charge.
On May 28, 2010, Blitz F10-acht-drei-fünf GmbH & Co. KG (the Purchaser), an indirect
wholly-owned subsidiary of ERT, entered into an amendment to the previously reported Definitive
Purchase Agreement dated April 29, 2010 (the Purchase Agreement) between the Purchaser and
CareFusion Germany 234 GmbH (the Seller), an indirect wholly-owned subsidiary of CareFusion
Corporation (CareFusion). The amendment provided for the transfer of the shares of Research
Services Germany 234 GmbH, a wholly-owned subsidiary of the Seller (the Company) upon confirmation of an irrevocable wire transfer by
Purchaser of the purchase price and provided the Seller with a call option should the funds not
arrive by June 8, 2010. Seller has provided confirmation of the receipt of the funds. The
amendment also provided for the payment of additional retention bonuses to certain employees of the
Seller who will remain with the Company.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On May 28, 2010, the parties completed the transactions contemplated by the Purchase
Agreement, as amended, and the Purchaser acquired all of the outstanding stock of the Company and
thereby acquired the clinical research services business of CareFusion pursuant to the terms of the
Purchase Agreement. The purchase price was $80.8 million after giving effect to preliminary
closing balance sheet adjustments, and remains subject to final closing balance sheet adjustments
that ERT does not anticipate will be material. The purchase price was paid in cash, including
$10.8 million drawn under the Credit Agreement.
The obligations of the Seller and the Purchaser under the Purchase Agreement were guaranteed
by CareFusion and ERT, respectively, under a Reciprocal Guaranty (the Reciprocal Guaranty). In
addition, CareFusion has agreed that, for a period of five years, it
will not, and will cause its Affiliates
not to, disclose any confidential information, compete with the business of the Company or directly
or indirectly solicit employees of the Company, subject to certain
permitted exceptions.
Other than with respect to the transactions reported in this Item 2.01 of this Report, there
is no material relationship between CareFusion or any of its affiliates, including the Seller, and
ERT or any of its affiliates or, to ERTs knowledge, any director or officer of ERT, or any
associate of any such director or officer.
The Purchase Agreement and the Reciprocal Guaranty were filed as exhibits to ERTs Report on
Form 10-Q filed on May 7, 2010, and the amendment to the Purchase
Agreement is being filed as an exhibit to this Report. The summaries of the Purchase Agreement, as
amended, and the Reciprocal Guaranty contained in this Report may not
contain all of the information about these agreements that is important to investors. Therefore,
it is recommended that each investor read carefully the copy of these agreements. These agreements
are intended to provide information about their respective terms. They are not intended to provide
any other factual information about ERT, CareFusion, the Seller or the Purchaser. The
representations and warranties contained therein were made as of specific dates, may be subject to
important qualifications and limitations and may have been included therein for the purpose of
allocating risk between the parties rather than to establish matters as facts. Moreover,
information concerning the subject matter of the representations and warranties, which do not
purport to be accurate as of the date of filing of this Report, may have changed since the date
they were made, and subsequent developments or new information qualifying a representation or
warranty may be included in documents filed with the Securities and Exchange Commission (the SEC)
in the future. Accordingly, these representations and warranties should not be relied upon as
statements of factual information. Investors are not third-party beneficiaries under these
agreements and should not rely on any representations, warranties and covenants or any descriptions
thereof as characterizations of the actual state of facts or
condition of the Company, ERT or the Company.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
On May 27, 2010, ERT and the Lender entered into the Credit Agreement, which provides for a
$40 million revolving credit facility, and ERT executed and delivered the Note payable to the order
of the Lender. The Guarantors have guaranteed ERTs obligations under the Credit Agreement and the
Note pursuant to the Guaranty. To secure its obligations under the Credit Agreement and the Note,
ERT pledged to the Lender its rights with respect to the Shares pursuant to the terms of the
Charge. Also on May 27, 2010, ERT borrowed $23 million under the Credit Agreement to finance a
portion of the purchase price for the Company and related transaction costs and to provide working capital.
At the option of ERT, borrowings under the Credit Agreement bear interest either at the
Lenders prime rate or at a rate equal to LIBOR plus a margin ranging from 1.00% to 1.75% based on
ERTs senior leverage ratio as calculated under the Credit
Agreement. In addition, ERT will pay a quarterly unused commitment
fee ranging from 0.10% to 0.20% of the unused commitment based on
ERTs senior leverage ratio. Borrowings under the Credit
Agreement may be prepaid at any time in whole or in part without premium or penalty, other than
customary breakage costs, if any. The Credit Agreement terminates, and any outstanding borrowings
mature, on May 27, 2013.
The Credit Agreement requires ERT to maintain a maximum senior leverage ratio of 2.0 to 1.0
and a minimum debt service coverage ratio of 1.5 to 1.0, in each case as calculated under the
Credit Agreement. The Credit Agreement contains other customary affirmative and negative covenants
including, but not limited to, limitation upon ERTs ability to:
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incur liens or indebtedness; |
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merge, consolidate or dispose of assets; |
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make loans or investments; |
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pay dividends or other distributions; |
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engage in certain transactions with affiliates; and |
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change its business or amend its organizational documents. |
The Credit Agreement contains events of default customary for facilities of this type
including, but not limited to:
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nonpayment of principal, interest, fees or other amounts when due; |
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breach of any representations or warranties; |
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breach of any affirmative or negative covenants, subject to any applicable cure
periods; |
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default in respect of any indebtedness of ERT or any of its subsidiaries in an
amount in excess of $1.0 million; |
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bankruptcy, insolvency or similar events involving ERT or any of its subsidiaries; |
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entry of a judgment against ERT or any of its subsidiaries of at least $750,000; |
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certain adverse events under ERTs ERISA plans or those of its subsidiaries; and |
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the occurrence of any event that has or could reasonably be expected to have a
material adverse effect as defined in the Credit Agreement. |
The description of the provisions of the Credit Agreement, the Note, the Guaranty and the
Charge may not contain all of the information that is important to investors. Therefore, it is
recommended that each investor read carefully a copy of these agreements, which are filed as
exhibits to this Report. These agreements are intended to provide information about their
respective terms. They are not intended to provide any other factual information about ERT or its
subsidiaries. The representations and warranties contained therein were made as of specific dates,
may be subject to important qualifications and limitations and may have been included therein for
the purpose of allocating risk between the parties rather than to establish matters as facts.
Moreover, information concerning the subject matter of the representations and warranties, which do
not purport to be accurate as of the date of filing of this Report, may have changed since the date
they were made, and subsequent developments or new information qualifying a representation or
warranty may be included in documents filed with the SEC in the future. Accordingly, these
representations and warranties should not be relied upon as statements of factual information.
Investors are not third-party beneficiaries under these agreements and should not rely on any
representations, warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or condition of ERT or any of its subsidiaries.
Item 7.01. Regulation FD Disclosure.
On June 1, 2010, ERT issued a press release announcing the completion of the acquisition and
the establishment of the credit facility discussed in this Report. A copy of that press release is
furnished herewith as Exhibit 99.1
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The requisite financial statements of the Company will be filed by amendment to this Report
within seventy-one (71) calendar days after the date of filing of this Report.
(b) Pro forma financial information.
The requisite pro forma financial information regarding the acquisition of the Company will be
filed by amendment to this Report within seventy-one (71) calendar days after the date of filing of
this Report.
(c) Shell company transactions.
None.
(d) Exhibits.
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Exhibit |
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Exhibit Title |
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10.1 |
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Credit Agreement dated May 27, 2010 between eResearchTechnology,
Inc. and Citizens Bank of Pennsylvania. |
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10.2 |
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Revolver Note dated May 27, 2010 made by eResearchTechnology, Inc.
payable to the order of Citizens Bank of Pennsylvania. |
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10.3 |
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Guaranty dated May 27, 2010 by ERT Tech Corporation, ERT
Investment Corporation, Covance Cardiac Safety Services Inc. and
eResearchTechnology, Inc. in favor of Citizens Bank of
Pennsylvania. |
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10.4 |
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Charge Over Shares and Securities dated May 27, 2010 between
eResearchTechnology, Inc. and Citizens Bank of Pennsylvania. |
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10.5 |
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First Amendment dated May 28, 2010 to the Agreement Relating to
the Sale, Purchase and Transfer of All Shares of Research Services
Germany 234 GmbH between CareFusion Germany 234 GmbH and Blitz
F10-acht-drei-fünf GmbH & Co. KG. |
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99.1 |
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Press Release dated June 1, 2010 of eResearchTechnology, Inc. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
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eResearchTechnology, Inc.
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By: |
/s/ Keith D. Schneck |
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Keith D. Schneck |
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Executive Vice President, Chief Financial Officer and Secretary |
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Dated: June 3, 2010
EXHIBIT INDEX
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Exhibit |
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Exhibit Title |
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10.1 |
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Credit Agreement dated May 27, 2010 between eResearchTechnology,
Inc. and Citizens Bank of Pennsylvania. |
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10.2 |
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Revolver Note dated May 27, 2010 made by eResearchTechnology, Inc.
payable to the order of Citizens Bank of Pennsylvania. |
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10.3 |
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Guaranty dated May 27, 2010 by ERT Tech Corporation, ERT
Investment Corporation, Covance Cardiac Safety Services Inc. and
eResearchTechnology, Inc. in favor of Citizens Bank of
Pennsylvania. |
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10.4 |
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Charge Over Shares and Securities dated May 27, 2010 between
eResearchTechnology, Inc. and Citizens Bank of Pennsylvania. |
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10.5 |
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First Amendment dated May 28, 2010 to the Agreement Relating to
the Sale, Purchase and Transfer of All Shares of Research Services
Germany 234 GmbH between CareFusion Germany 234 GmbH and Blitz
F10-acht-drei-fünf GmbH & Co. KG. |
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99.1 |
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Press Release dated June 1, 2010 of eResearchTechnology, Inc. |