EXHIBIT 10
#1-6107
[Bracketed] sections of this Agreement are confidential and have been
omitted. They have been filed separately with the Commission.
ASSET PURCHASE AGREEMENT
An ASSET PURCHASE AGREEMENT, made and effective November 10, 1994
("Effective Date") by and between ▇▇▇▇▇ Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a Delaware corporation ("Purchaser") and
General Medical Manufacturing Company ("GMMC"), a Virginia Corporation, and its
parent corporation, General Medical Corporation ("GM"), a Virginia corporation,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and their subsidiary and
affiliated companies (the "Company").
This Agreement sets forth the terms and conditions pursuant to which GMMC
will sell to the Purchaser, and the Purchaser will purchase from GMMC, certain
of the assets ("the Assets") associated with the ▇▇▇▇▇▇ Instrument Division of
GMMC ("▇▇▇▇▇▇") and a continuing marketing relationship between Purchaser and
the Company.
In consideration of the mutual promises in this Agreement, and for other
good and variable consideration, receipt of which is acknowledged, the parties
agree as follows:
1. Term. The term of this Agreement shall be fifty (50) consecutive months,
beginning on the Effective Date and ending on December 31, 1998 (the "Term").
All references to "calendar quarter" mean the three (3) month periods in each
year ending on March 31, June 30, September 30, and December 31, except that the
first quarter of 1995 shall include December, 1994, purchases for the purposes
of Section 3.2.
2. Purchase and Sale of Assets. At the Closing (as defined below), GMMC
shall sell to the Purchaser, and the Purchaser shall purchase from GMMC, the
Assets (as listed in Schedule 1) free of any mortgage, lien, charge, security
interest, or other incumbrance. GMMC will not sell, and the Purchaser will not
purchase from GMMC, the Excluded Assets (as listed in Schedule 2).
2.1. Liability. Except as expressly provided herein, the Purchaser
assumes no liabilities of the Company.
2.2. The Closing. The Closing shall take place at the offices of the
Company on November 22, 1994, at 9:00 a.m., or on such other date and
time as may be mutually agreed upon by the parties, but in any event
not later than December 15, 1994. The date on which the Closing occurs
is referred to hereafter as the "Closing Date." All transactions to be
effected at the Closing will be deemed to have been effected at the
opening of business on the Closing Date.
3. Purchase Price. The purchase price for the Assets shall be paid to the
Company by the Purchaser in cash and marketing incentives, as follows:
3.1 Cash. At the Closing, the Purchaser shall pay the gross book value
of the Assets described in Schedule 1 (as determined in accordance
with standard accounting principles), not to exceed $1,000,000, in
cash by transfer of immediately available funds to a bank account
designated by the Company, but subject to the purchase price
adjustment described in Section 4 below.
3.2 Marketing Incentives. After the Closing, the Company shall purchase
Products, as defined in Section 5 below, from Purchaser and, as part of
the consideration for the Assets, shall receive the following marketing
incentives, rebates, and fees:
3.2.1 Rebate on Products. During the Term, the Purchaser shall
pay to the Company a quarterly rebate of [ ] Said rebate shall be
paid within forty-five (45) days after the close of each calendar
quarter, commencing with the calendar quarter ending March 31,
1995. This rebate shall not apply to [ ]
3.2.2 Western Rebate. During the Term, the Purchaser shall pay to
the Company a separate rebate ("Western Rebate") equal to [ ]
during each calendar quarter of this Agreement. [ ] Said Western
Rebate shall be paid within forty-five (45) days after the close
of each calendar quarter.
3.2.3 Free Goods. As additional consideration, the Purchaser
shall provide to the Company for its sales representatives free
goods having a retail value of [ ] The free goods shall be made
available to the Company's sales representatives within thirty
(30) days after the Effective Date.
3.2.4. [ ] Protection. During the Terms of this Agreement, the
Purchaser shall use reasonable best efforts to sell Products to
the Company at a competitive price, as compared with the
competitors of Purchaser for the same or similar Products, that
will enable the Company to resell the Products at a minimum [ ]
3.2.5 Promotional Fees. Purchaser shall pay to the Company a fee
equal to [ ] net after rebate of the Purchase Price actually paid
by the Company for Products during the preceding quarter. This
fee shall be used by the Company and the Purchaser to cover the
costs of meetings, promotions, awards, and bonuses related to the
Products, including the expenses for Purchaser's participation in
the Company's National Sales Meeting and market literature, as
mutually agreed upon by the parties. The Company shall allocate
at least [ ] described in Sections 3.2.1 and 3.2.2 above to the
budget of the Marketing Department for promotion of Products.
3.2.6 Hospital Orders. Purchaser shall use reasonable commercial
efforts to refer hospital orders for Products to the Company for
sale and distribution; provided, however, that Purchaser may
honor the request of a customer for any other specific
distributor.
3.2.7. Sales Support. During the Term, the Purchaser shall
support the sales efforts of the Company by employing [ ] sales
representatives to service and support the Company's district
offices, current hospital sales representatives, and customer
service representatives; [ ] customer service representatives
specifically to support the district offices and sales
representatives of the Company; and [ ] telemarketing sales
representatives to work exclusively with the district offices of
the Company, subject to the provisions in Section 3.2.6 above.
Vacancies shall be filled within a reasonable period of time. The
new sales representatives shall be hired not later than June 1,
1995, the additional customer service representatives shall be
hired not later than January 15, 1995, and the additional
telemarketing sales representatives shall be hired not later than
February 15, 1995. The Purchaser shall maintain the positions
described in this Section 3.8 for the duration of the Term,
except as otherwise mutually agreed upon by the Purchaser and the
Company, commensurate with the Company's sales of Products.
4. Purchase Price Adjustment. The Company acknowledges that the ▇▇▇▇▇▇
inventory may contain slow-moving, outdated, obsolete, or excess items. The
parties shall use best efforts to sell all of the ▇▇▇▇▇▇ inventory acquired by
the Purchaser. The Purchaser shall give the Company, upon written request, a
report of the ▇▇▇▇▇▇ inventory which remains unsold. Any ▇▇▇▇▇▇ inventory
remaining unsold after two (2) years from the Effective Date ("Excess
Inventory") shall be sold, returned to the Company, or otherwise disposes of as
the Company shall direct in writing and on or about January 15, 1997, the
Company shall pay to the Purchaser, in cash or by bank check, the Purchaser's
actual acquisition cost (i.e., the gross book value determined in accordance
with Section 3.1) of such Excess Inventory as an adjustment to the purchase
price and return the Excess Inventory to the Company.
5. Products, Fill Rate, and Delivery. After the Closing, the Company shall
purchase from the Purchaser, via same day facsimile, general surgical
instruments, including items from the ▇▇▇▇▇▇ inventory (the "Products"), in such
quantities as the Company shall choose. The Purchaser shall ship Products
ordered by the Company and guarantees a Fill Rate of not less than [ ] on all
Products listed in Purchaser's current catalog at the time of the order. "Fill
Rate" means the arithmetic average of the fill rates for all line items ordered
during each month. The fill rate for a line item is the ratio of the total
number of said line items actually shipped on the next business day divided by
the total number of such line items ordered. The Purchaser shall accept the
Company's orders via electronic order entry or in writing. All shipments shall
be made by regular United Parcel Service or an equivalent service, except that
the Company may request any faster means of shipment, at its sole expense.
5.1. Terms of Sale. All purchases of Products shall be governed
by the terms of sale in Schedule 3.
5.2. Audit Rights. The Fill Rate shall be determined by the
Purchaser's order and shipping records, which the Company shall
be permitted to audit to verify the Purchaser's compliance with
the Fill Rate guarantee above. The Purchaser shall be granted not
less than forty-eight (48) hours advance notice of each audit.
5.3. Fill Rate Guaranty. If the Fill Rate is less than [ ] in any
month, the Company shall receive credit for such unfilled and
cancelled orders for the purpose of calculating the rebate
described in Sections 3.2 and 3.3 above, as if such unfilled and
cancelled orders had actually been purchased by the Company,
which shall be the Company's sole remedy for Purchaser's breach
of the Fill Rate Guaranty. The Company may cancel any order that
remains unfilled [ ] after the date of order.
5.4. Payment. The terms of payment for Products shall be [ ] or
any terms more favorable to the Company that the Purchaser may
choose to extend to the Company from time to time.
5.5. Prospective Electronic Ordering. The Company shall cooperate
with Purchaser in utilizing electronic order entry at such time
as the Purchaser makes it available.
6. Business Review. In the first year following the Closing, the parties
shall confer quarterly, in person or by telephone, to review their respective
performances under this Agreement. In the second through the fourth year
following the Closing, the parties shall meet semi-annually to review their
respective performances. The parties shall use their reasonable best efforts to
resolve any discrepancies in performance and to enhance their respective profit
opportunities for the future.
7. Commitments of the Company. As part of the consideration for this
Agreement, the Company agrees to make the following marketing commitment with
respect to the Products:
7.1. The Company shall emphasize the Products in communications
to its sales representatives and encourage their sale
preferentially.
7.2. The Company shall exclusively promote the Products to its
customers.
7.3. The Company shall feature the Products exclusively at the
Company's National Sales Meeting and shall feature the Products
exclusively in the Company's product literature.
7.4. The Company shall invite four (4) representatives of the
Purchaser to participate in the Company's National Sales Meeting
and at the discretion of the Purchaser to participate in any
regularly scheduled Company district sales meeting.
7.5.[ ]
7.6. The Company shall not use the ▇▇▇▇▇▇ name or logo for any
purpose after the Closing Date, except usage incidental to the
sales of ▇▇▇▇▇▇ items at the Company's district locations or
Products.
8. Quality Assurance. The Company with respect to ▇▇▇▇▇▇ inventory in
Attachment 1.1 states that to its knowledge, the ▇▇▇▇▇▇ inventory meets all
requirements of the laws and regulations of the Food and Drug Administration,
including the metallurgical requirements for surgical grade stainless steel, if
so described or designated in the literature or on the labels or labelling, and
agrees to replace or refund the purchase price for any item from the ▇▇▇▇▇▇
inventory that is deemed to be adulterated or misbranded by the Food and Drug
Administration or subject to any recall, seizure, or injunction. The Purchaser
with respect to the Products to be furnished under the terms of this Agreement
states that to the knowledge of the Purchaser all said Products (except for the
items from the ▇▇▇▇▇▇ inventory) shall meet all requirements of the laws and
regulations of the Food and Drug Administration, including the metallurgical
requirements for surgical grade stainless steel, if so described or designated
in the literature or on the labels or labelling, and agrees to replace or refund
the purchase price for any such item that is deemed to be adulterated or
misbranded by the Food and Drug Administration or subject to any recall,
seizure, or injunction. Upon written request, the Purchaser shall provide the
Company with metallurgical certification for the manufacturer or vendor for any
lot or shipment of Products. The rebates in Sections 3.2.1 and 3.2.2 shall not
apply to Products for which a refund is paid.
8.1. Quality Audit. The Company (or its agent or representative)
may conduct a quality audit or Purchaser's quality and purchasing
procedures from receipt of Products or materials for Products to
sale of Products to the Company. The Company shall give Purchaser
at least seventy-two (72) hours notice of any audit, and shall
not conduct more than one (1) audit per calendar quarter.
9. Repair Services. Purchaser shall make available its in-house repair
services to the Company, generally featuring a turnaround time of forty-eight
(48) hours or less to refurbish or repair all Products made available for sale
by the Purchaser and any other medical-surgical instruments serviced by the
Purchaser, including laser and electro-surgery instruments sold to customers by
other distributors or manufacturers. The prices for repair services will be
quoted to the Company at time of order and shall not exceed the prices generally
charged by the Purchaser to its preferred customers.
10. Bids. To address the needs of customer bids of [ ] or more in the
aggregate, at the request of the Company, the Purchaser may provide special
pricing to the Company, lower than the prices quoted in the Purchaser's standard
price list, said prices to be dependent upon the terms and circumstances of the
bid, including, but not limited to, the projected volume, the opposing bidders,
and the prevailing market conditions for instruments of the type being bid. The
Purchaser's special pricing for each hospital bid shall be designated as a
special rebate contract with net pricing for that specific customer, and the
rebates described in this Agreement shall not apply to any of the purchases
under said special rebate contract.
11. Transition. The Purchaser shall remove all of the Assets from the
Company's facility in Richmond, Virginia within a reasonable period of time
following the Closing, but in any event not later than fifteen (15) days after
the Closing Date. From the Effective Date through the Closing Date, the Company
will cooperate with the Purchaser by assisting the Purchaser in completing its
due diligence review of the Assets, making available to the Purchaser and its
financial institutions, attorneys, accountants, and advisors any other
information pertaining to the Assets reasonably required in connection herewith,
working with existing management to formulate business and operating plans and
to develop and implement a plan for transition of the Assets. The Company shall
provide the services of the ▇▇▇▇▇▇ General Manger, ▇▇▇▇▇ ▇▇▇▇▇▇, or another
knowledgeable executive to assist the Purchaser with the transition of the
Assets through January 1, 1995, with the Purchaser to pay all related expenses
(excluding salary and benefits) and travel requested by Purchaser.
12. Representation and Warranties. The Company and the Purchaser each
represents and warrants to the other that it is a corporation duly organized,
validly existing, and in good standing under the laws of its respective State of
Incorporation and has all requisite corporate power and authority to enter into
this Agreement and the assignment of contracts, intellectual property, and any
other documents related to or part of the Assets ("Related Documents") as listed
in Schedule 1 and to consummate the transaction and carry out the obligations of
the parties hereunder and thereunder. The execution and delivery of this
Agreement and the Related Documents and the consummation of the transactions
contemplated herein and therein have been duly and validly authorized by the
Board of Directors of each party. No other corporate acts or proceedings on the
part of either party are necessary to authorize this Agreement, the Related
Documents, or the consummation of the transactions contemplated herein and
therein. When duly executed and delivered by the parties, this Agreement and the
Related Documents will constitute valid and binding obligations of each party
and will be enforceable against the respective party in accordance with the
terms of said documents.
12.1. Agreements. Any and all contracts, agreements, and
commitments listed in Schedule 1 shall be assigned to the
Purchaser to the extent permitted by the terms of said contracts,
agreements, and commitments. The Company is not aware of any
breach of said contracts, agreements, or commitments that would
cause the Purchaser to incur liability therefor.
13. Litigation. There are no judicial, administrative, or arbitration
actions, suits, proceedings, claims, or investigations pending or, to the
knowledge of the Company, threatened against the Company affecting any of the
Assets nor is the Company aware of any grounds therefor.
14. Third Party Consents and Governmental Approval. Except as set forth in
Schedule 5, no consent or approval of any third party or of any court or
governmental agency or instrumentality is required for the Purchaser or the
Company to execute and delivery this Agreement and the Related Documents or to
consummate the transactions contemplated herein or therein.
15. Purchaser's Investigation. As of the Closing date, the Purchaser has
completed its due diligence investigation of the Assets and has been granted
access to the books, records, and financial statements of the Company insofar as
they pertain to the Assets and has had the opportunity to question or receive
answers from representatives of the Company with regard to the Assets. Purchaser
is satisfied with the quantity, quality, and condition of the Assets, as
signified by Purchaser's execution of this Agreement.
16. No Brokers or Finders. Neither the Company nor the Purchaser has
retained a broker to assist either party in consummating the transaction
described in this Agreement. No person has or will have, as the result of the
transactions contemplated by this Agreement and the Related Documents, any
right, interest, or valid claim against or upon the Company or the Purchaser for
any commission, fee, or other compensation as a finder or broker because of any
act or omission of the Purchaser or any agent of the Purchaser.
17. Disclosure. No representation or warranty made by the Purchaser or the
Company in this Agreement contains any untrue statement or fails to state a
material fact necessary to make the statements contained herein not misleading.
From the Effective Date through the Closing Date, each party shall give promptly
to the other notice in writing of any event, condition, or circumstances which
would cause any representation or warranty of the party contained in this
Agreement to become misleading or inaccurate or which would constitute a breach
of this Agreement.
18. Conduct of ▇▇▇▇▇▇. From the Effective Date until the Closing, the
Company will carry on the business of ▇▇▇▇▇▇ in the ordinary course in
substantially the same manner in which it previously has been conducted and use
reasonable efforts to preserve its relationships with customers, suppliers, and
others having business dealings with ▇▇▇▇▇▇; maintain the Company's books of
account and records with respect to the Assets and the business of ▇▇▇▇▇▇ in a
customary manner, consistent with past practices; and notify the Purchaser of
any emergency or material change in the normal conduct of the business or the
operations of ▇▇▇▇▇▇ or the threat or initiation of any material litigation
against the Company which relates to the Assets or the business of ▇▇▇▇▇▇. In
addition, from the Effective Date until the Closing, without the written consent
of the Purchaser, the Company shall not sell, dispose of, transfer, mortgage,
pledge, or otherwise encumber any of the Assets or amend or cancel any of the
contracts to be assigned. The Purchaser understands that the Assets are
presently subject to a lien granted by the Company's bank lenders, which liens
will be released at the Closing.
19. Indemnity.
19.1. Indemnity by the Company. The Company shall indemnify,
defend, and hold harmless the Purchaser and the Purchaser's
directors, officers, agents, and affiliates from and against any
claim, demand, cause of action, judgment, loss, liability, cost,
or other expense whatsoever, including, without limitation,
reasonable expenses of litigation and investigation and
reasonable fees and costs of attorneys, accountants, and other
professionals incurred in the defense thereof or the enforcement
of rights hereunder incurred by the Purchaser as a result of any
breach of any material representation, warranty, covenant, or
agreement of the Company contained in this Agreement. In
addition, the Company shall indemnify, defend, and hold the
Purchaser harmless from and against any product liability claim
or lawsuit based on or arising out of the sale of any product of
▇▇▇▇▇▇ sold by ▇▇▇▇▇▇ or the Company on or before the Closing
Date.
19.2. Indemnity by the Purchaser. The Purchaser shall indemnify,
defend, and hold harmless the Company and the Company's
directors, officers, agents, and affiliates harmless from and
against any claim, demand, cause of action, judgment, loss,
liability, cost, or other expense whatsoever, including, without
limitation, reasonable expenses of litigation and investigation
and reasonable fees and costs of attorneys, accountants, and
other professionals incurred in the defense thereof or the
enforcement of rights hereunder incurred by the Company as a
result of any breach of any material representation, warranty,
covenant, or agreement of the Purchaser contained in this
Agreement. Purchaser also provides the Products indemnity in
Schedule 3.
19.3. Defense and Settlement of Claims. If any person entitled to
indemnification hereunder is threatened in writing with any claim
or lawsuit by any third party, the indemnified party shall give
written notice thereof as promptly as reasonably practicable to
the party required to provide indemnification ("the Indemnifying
Party") and the Indemnifying Party shall assume the defense of
such claim or lawsuit. The Indemnifying Party shall not make any
settlement of such claim or lawsuit without the written consent
of the Indemnified Party, which consent shall not be unreasonably
withheld.
20. Termination. This Agreement may be terminated prior to the Closing Date
by mutual agreement of the parties; by the Company by notice to the Purchaser if
the Closing shall not have taken place on or before December 15, 1994; by either
party if there has been a breach by the other party of any representation,
warranty, covenant, or agreement contained herein or if any condition contained
in this Agreement which must be met prior to the Closing becomes impossible to
fulfill; or if either party is unable to obtain any consent, authorization, or
approval of a third party necessary to consummate this Agreement. If this
Agreement is terminated, it shall become wholly void and of no further force and
effect.
21. Expenses. Each of the parties shall bear its own expenses incident to
this Agreement and the transactions contemplated hereby, including without
limitation, all fees and disbursements of counsel, accountants, and financial
advisors retained by such party, whether or not the transactions contemplated in
this Agreement are consummated.
22. Confidentiality/Publicity. It is intended by the parties that this
transaction and this Purchase Agreement shall be confidential and not disclosed
publicly until the Closing, except for any notices to financial institutions,
legal advisors, or governmental agencies required by law or necessary to the
consummation of this transaction; provided, however, that either party shall be
free to make such notices as are required by law with respect to the
transactions contemplated in this Agreement. At the Closing, the parties shall
issue the joint press release attached as Schedule 6. Thereafter, the respective
obligations of the parties under this provision of confidentiality shall lapse
and be of no further effect.
23. Miscellaneous. The following miscellaneous provisions may apply to this
Agreement:
23.1. Counterparts. This Agreement shall be executed
simultaneously in one (1) or more counterparts, each of which
shall be deemed an original, but all of which together shall
constitute and be the same instrument.
23.2. Severability. Any provision of this Agreement which is
deemed invalid, illegal or unenforceable by a court of law in any
jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of such invalidity, illegality, or unenforceability,
without affecting in any way the remaining provisions hereof in
such jurisdiction and without rendering that or any other
provision of this Agreement invalid, illegal, or unenforceable in
any other jurisdiction.
23.3. Governing Law. This Agreement shall be deemed to be made in
the Commonwealth of Virginia and shall in all respects be
interpreted, construed, and governed by and in accordance with
the laws of the Commonwealth of Virginia without any presumption
or construction against the party causing the Agreement to be
drafted.
23.4. Headings. The headings and subheadings are inserted for
convenience of reference only and shall not affect the
interpretation of this Agreement.
23.5. Amendment. This Agreement may be amended only in writing,
signed by all of the parties.
23.6. No Waiver. The failure of either party to enforce at any
time any of the provisions of this Agreement shall not be
construed to be a waiver of the right of such party hereafter to
enforce each and every provision of this Agreement.
23.7. Independent Contractors. The parties are independent
contractors, and neither party shall act or attempt to act, or
represent itself as, an agent of the other party.
23.8. Successors and Assign. This Agreement shall be binding
upon, shall inure to the benefit of, and shall be enforceable by
the respective successors and assigns of the parties.
23.9. Notices. Any notice due under this Agreement, including any
notice of termination, shall be in writing and delivered by
certified mail, return receipt requested, and mailed to each
party at its address above, addressed to "Chief Executive
Officer," with a copy to the General Counsel.
23.10 Authorization. This Agreement is executed by an officer of
each party duly authorized by its Board of Directors to enter
into the obligations and commitments set forth in this Agreement.
This Agreement represents a valid and binding Agreement of each
party.
23.11. Assignment. Either party may assign this Agreement in its
entirety only with the written consent of the other party, which
consent shall not be unreasonably withheld. A party's proposed
assignment of this Agreement to a competitor of the other party
is understood to be inherently unreasonable.
24. Entire Agreement. This Agreement constitutes the entire understanding
of the parties with respect to the subject matter of this Agreement, all prior
agreements, proposals, or understandings being merged into this Agreement or
cancelled.
IN WITNESS WHEREOF, the parties have signed and dated this Agreement in the
spaces below.
GENERAL MEDICAL CORPORATION ▇▇▇▇▇ CORPORATION
("Company") ("Purchaser")
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------- -------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Senior Vice President and President
Chief Financial Officer
Date: 11/10/94 Date: Nov. 10, 1994