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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 22, 1995
CONMED CORPORATION
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(Exact name of registrant as specified in its charter)
New York 0-16093 16-0977505
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
310 Broad Street, Utica, New York 13501
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(Address of principal executive offices) (Zip Code)
(315) 797-8375
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(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On May 22, 1995, CONMED Corporation acquired the business of The Master
Medical Corporation ("Master Medical") in a purchase transaction. Assets
acquired included accounts receivable and inventory. Certain accounts payable
were also assumed.
Master Medical is a manufacturer and distributor of I.V. gravity flow
controllers used to control the rate of fluid infusion during intravenous
therapy. It had sales of approximately $8 million in 1994. Master Medical has
ten employees in Phoenix, Arizona and relies on independent suppliers for
manufacturing and warehousing. Non-employee manufacturers' representatives
promote the product to hospitals.
The purchase price was $9,500,000, paid in cash, and is subject to
final adjustment based on a determination of the value of the assets acquired.
The acquisition will be accounted for using the purchase method of accounting.
Goodwill will amount to approximately $7.5 million.
The purchase price was financed through the Company's term loan
facility with banks.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
It is impracticable for the Registrant to provide at this time any of
the financial statements required by this item. The Registrant will file the
required financial statements as soon as practicable and, in any event, within
sixty (60) days after the required filing date of this report
(b) Pro Forma Financial Information
See Item 7(a) above.
(c) Exhibits
Press Release dated May 22, 1995
Asset Purchase Agreement
<PAGE>
Signature
Pursuant to the requirements of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONMED CORPORATION
By:/s/ Robert D. Shallish, Jr.
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Robert D. Shallish, Jr.
Vice President-Finance
Dated: June 5, 1995
<PAGE>
May 22, 1995
FOR IMMEDIATE RELEASE
CONTACT: ROBERT D. SHALLISH, JR.
(315) 797-8375 EXT. 2219
CONMED ACQUIRES AN I.V. CONTROLLER PRODUCTS BUSINESS
Utica, New York - CONMED Corporation (NASDAQ:CNMD) has today acquired
the business of The Master Medical Corporation in a purchase transaction. Master
Medical develops, manufactures and sells intravenous (I.V.) therapy disposable
medical devices used to control the flow rate of I.V. fluids to the patient.
Sales of these products amounted to approximately $8 million for 1994. Terms of
the transaction were not disclosed.
Mr. Eugene R. Corasanti, Chairman of the Board and President of CONMED
said, "These products are an excellent addition to the product offerings in our
Patient Care Division as our sales people currently market to the areas of the
hospital that are the buying points for I.V. products. We look forward to sales
and marketing synergies this business will provide to us."
CONMED is a manufacturer and world-wide distributor of electrosurgery,
heart monitoring and other medical products used primarily in hospital operating
rooms and other critical care areas.
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of the 22nd day of May, 1995 by
and between The Master Medical Corporation, an Arizona corporation ("Seller"),
Jerry Aslanian and Gena Aslanian, husband and wife, the, sole shareholders of
The Master Medical Corporation (collectively, the "Shareholder"), Birtcher
Medical Systems, Inc., a California corporation ("Buyer"), and CONMED
Corporation, a New York corporation ("Parent").
WITNESSETH:
WHEREAS, Seller is engaged in the business of developing, marketing and
selling disposable I.V. gravity control devices and related products (the
"Business"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms set forth herein, substantially all of the assets
relating to the Business; and
WHEREAS, Shareholder is the sole shareholder of Seller and is entering
into this Agreement as an inducement to Buyer to consummate the transactions
contemplated hereby; and
WHEREAS, Buyer is a wholly owned subsidiary of Parent; and Parent is
entering into this Agreement as an inducement to Seller and Shareholder to
consummate the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1) Specific Definitions. As used in this Agreement, the following
terms have the meanings set forth or referenced below: "Act" means the United
States Food, Drug and Cosmetic Act of 1938, as amended, and all regulations,
promulgated thereunder.
"Ancillary Agreements " means all other agreements required to be
executed and delivered pursuant to this Agreement.
"Affiliate" of any entity means any other entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the first entity. Control shall mean owning more
than fifty percent (50%) of the total voting power of the entity.
"Agreement" means this Agreement and all Exhibits and Schedules hereto.
"Assets" means (i) the tangible assets of the Business described on
Schedule 1.1(a) and (ii) all other assets which are used in the Business whether
tangible or intangible, wherever located, including, without limitation, the
Intellectual Property, Seller's rights under the Contracts, the Authorizations
(to the extent assignable), marketing materials and customer records of the
Business, and all goodwill of the Business, excluding, however, the Excluded
Assets .
"Assumed Obligations" means the accounts payable and accrued
commissions of Seller as reflected in the Closing Date Balance Sheet as well as
the contracts, obligations and agreements as are listed in Schedule 3.10.
Pension plan contributions are specifically excluded.
"Authorizations" has the meaning set forth in Section 3.6.
"Business" has the meaning set forth in the Preamble.
"Buyer" has the meaning set forth in the Preamble.
"Claim Notice" has the meaning set forth in Section 8.3.
"Closing" has the meaning set forth in Section 2.3(a).
"Closing Date" has the meaning set forth in Section 2.3(a).
"Confidential Information" means know-how, trade secrets, and
proprietary or unpublished information disclosed by one of the parties (the
"disclosing party") to the other party (the "receiving party") or generated
under this Agreement or which is otherwise considered Confidential Information
under that certain "Confidentiality Agreement" dated August 11, 1994 between the
parties hereto, excluding information which:
(a) was already in the possession of the receiving party (on a
non-confidential basis and without limitations on the use thereof) prior to its
receipt from the disclosing party; provided that the receiving party shall
provide the disclosing party with reasonable documentary proof thereof;
(b) is or becomes part of the public domain through no fault of the
receiving party;
(c) is or becomes available to the receiving party from a source other
than the disclosing party which source, to the best of the receiving party's
knowledge, has rightfully obtained such information and has no obligation of
nondisclosure or confidentiality with respect thereto; or
(d) is made available by the disclosing party to a third party
unaffiliated with the disclosing party on an unrestricted basis.
"Consents" has the meaning set forth in Section 3.8.
"Contracts" means purchase orders for Finished Goods which are
outstanding as of the Closing or which are issued after the Closing pursuant to
agreements or commitments entered into or given prior to the Closing and the
other license agreements and obligations listed on Schedules 3.10 hereto.
"Excluded Assets" means the assets identified on Schedule 1.1(c).
"Facility" means Seller's leased office located at 6991 East Camelback
Road, Scottsdale, Arizona.
"Facility Lease" means the lease dated May 11, 1994 by and between 6991
Camelback Ltd. (Landlord) and The Master Medical Corporation (Tenant) for the
real property described as Suite B-111, 6991 East Camelback Road, Scottsdale,
Arizona 85251.
"FDA" means the U.S. Food and Drug Administration.
"Finished Goods" means finished goods which are packaged and ready for
immediate shipment to Seller's end purchasers. Said Finished Goods of the
Business are described in Schedule 1.1(d).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8.3.
"Indemnifying Party" has the meaning set forth in Section 8.3.
"Intellectual Property" means all patents, trademarks, trade names,
copyrights, know-how, manufacturing drawings, instructions and processes,
product specifications and trade secrets owned by Seller and Shareholder and
used in the Business, including the name "MASTER MEDICAL", any abbreviation,
combination or logo thereof, and any trade or service mark or name related
thereto and those items listed on Schedule 1.1(b).
The "knowledge" of the party or "known" means the actual knowledge of
any of the officers or management employees of such party who, because of their
positions with such party, would in the ordinary course of business have the
knowledge relevant to the subject matter at issue.
"Liens" means liens, mortgages, pledges, encumbrances, or security
interests.
"M & E" means the manufacturing equipment, tools, molds, fixtures,
equipment supplies and related accessories listed on Schedule 1.1(a) and related
documentation (such as drawings and operating instructions).
"Material Adverse Effect" means an effect which is materially adverse
to the Business and the Assets considered as a whole.
"Net Tangible Asset Balance" as of any point in time means (i) the
aggregate balance reflected on Seller's balance sheet as of such time prepared
in accordance with Seller's historical accounting practices consistently
applied, of Seller's accounts receivable, prepaid assets, inventory and net
fixed assets, increased by (ii) the total amount of depreciation of fixed assets
included on such balance sheet attributable to the period commencing February
28, 1995 and ending as of such time and reduced by (iii) the aggregate balance
reflected on such balance sheet for accounts payable and accrued commissions
payables prepared in accordance with Seller's historical accounting practices. A
calculation of the Net Tangible Asset Balance as of February 28, 1995 is
attached hereto a part of Schedule 2.4(b).
"Parent" has the meaning set forth in the Preamble.
"Purchase Price" has the meaning set forth in Section 2.2.
"Raw Goods Inventory" means all inventory items except for Finished
Goods. Said Raw Goods are specifically described in Schedule 1.1(e).
"Seller" has the meaning set forth in the Preamble.
"Shareholder" has the meaning set forth in the Preamble.
"Transfer Taxes" means all taxes imposed by the United States or any
state of the United States including sales taxes, use taxes, stamp taxes,
conveyance taxes, transfer taxes, recording fees, reporting fees and other
similar duties, taxes and fees, if any, imposed upon, or resulting from, the
transfer of the Assets hereunder and under the Ancillary Agreements and the
filing of any instruments relating to such transfer.
1.2) Other Terms. Other terms may be defined elsewhere in the text of
this Agreement and shall have the meaning indicated throughout this Agreement.
1.3) Other Definitional Provisions.
(a) The words "hereto", "herein", and "hereunder" and words of similar
import, when used in the Agreement, shall refer to this Agreement as a whole and
not to any particular provisions of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The term "Dollars" or "$" shall refer to the currency of the United
States of America.
ARTICLE II
PURCHASE AND SALE OF ASSETS AND INVENTORY
2.1) Purchase and Sale of Assets. Upon the terms and subject to the
conditions set forth in this Agreement and in reliance on the representations
and warranties of each party, effective as of the Closing, Seller hereby sells,
transfers and assigns to Buyer, and Buyer hereby purchases from Seller, all of
the Assets except Excluded Assets.
2.2) Purchase Price, Contingent Payment and Allocation. As the total
consideration (the "Purchase Price") for the Assets and the covenant not to
compete:
(a) Buyer and Parent shall pay Seller $9,500,000.00 in cash at the
Closing as described below, subject to adjustment after the Closing as set forth
in Section 2.4(a).
(b) Buyer and Parent shall pay Shareholder an annual payment
("Contingent Payment") pursuant to the Contingent Payment Agreement included
among the Ancillary Agreements.
(c) Buyer and Parent shall assume as of the Closing, and thereafter
fully discharge and perform, each of the Assumed Obligations. Such assumption
shall be evidenced by an Assumption Agreement.
(d) The parties shall allocate the Purchase Price among the covenant not to
compete and the Assets as set forth on Schedule 2.2(d).
2.3) Closing; Delivery and Payment.
(a) Closing Date. The Closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Gallagher and
Kennedy located at 2600 North Central Avenue, Phoenix, Arizona on May 22, 1995
or on such other date or at such other time as may be mutually agreed upon in
writing by Buyer and Seller (the "Closing Date") and the Closing shall be deemed
to be effective as of the close of business on such Closing Date.
(b) Delivery and Payment. At the Closing, Seller, Shareholder, Buyer
and Parent shall deliver, each to the other, the Ancillary Agreements, and such
documents as are required pursuant to Article VI hereof, and Buyer shall pay
$9,500,000.00 to Seller in immediately available funds by bank wire transfer to
an account designated by Seller, which account shall be specified by Seller at
least two (2) business days prior to the Closing Date. The Assets shall be
delivered to Buyer in the manner contemplated in Article V.
2.4) Post Closing Purchase Price Adjustment.
(a) Purchase Price Adjustment. The Purchase Price shall be adjusted
(the "Purchase Price Adjustment") as follows:
(i) The Purchase Price shall be reduced by the amount
by which the Net Tangible Asset Balance as of the Closing is less than
$2,493,622; or
(ii) The Purchase Price shall be increased by the
amount by which the Net Tangible Asset Balance as the Closing is
greater than $2,493,622.
(b) Net Tangible Asset Balance Calculation. To establish the amount of
the Net Tangible Asset Balance as of the Closing for purposes of Section 2.4(a)
above, Seller shall prepare and deliver to Buyer, within forty-five (45) days
after the Closing a balance sheet of Sellers as of the date of the Closing (the
"Closing Date Balance Sheet") and a calculation of the Net Tangible Asset
Balance as of such time in the same manner and upon the same basis as reflected
in the calculation as of February 28, 1995, attached hereto as Schedule 2.4(b).
(c) Dispute Resolution. If Buyer objects in writing to such proposed
Closing Date Balance Sheet and Net Tangible Asset Balance within ten days after
Buyer's receipt of the Closing Date Balance Sheet, Seller and Buyer shall
promptly meet and attempt in good faith to agree on the Purchase Price
Adjustment. Any objection by Buyer shall be limited to the failure of the Seller
to accurately determine the Net Tangible Asset Balance in the manner
contemplated by the definition of such term, as set forth in Section 1.1 of this
Agreement. If Buyer fails to make written objection to the proposed Closing Date
Balance Sheet and Net Tangible Asset Balance within the foregoing ten-day
period, such calculation shall be deemed final, conclusive and binding upon
Buyer and Seller. Any disputes with respect to such proposed Closing Date
Balance Sheet and Net Tangible Asset Balance which are not resolved by Seller,
and Buyer and their respective accountants within ninety (90) days after the
Closing shall, upon written request by either Seller, or Buyer, be referred to a
"Big 6" accounting firm which shall be selected by and from a list of such firms
with which neither Seller, Shareholder or Buyer have had any business dealings
during the three year period preceding selection, or such other independent
public accounting firm selected jointly by Seller's accountant and Buyer's
accountant, for final resolution. Each party shall, within twenty (20) business
days after submission of such dispute, deliver to such firm the information such
party wishes to have considered by such firm in making its determination. Such
firm shall present its determination and resolution of any such disputes within
thirty (30) business days after the submission of such dispute to the firm.
Seller, Shareholder and Buyer agree that the determination and resolution by
such firm shall be binding and conclusive among the parties. The fees of the
accounting firm selected to resolve such dispute shall be borne one-half by
Seller and Shareholder and one-half by Buyer.
(d) Settlement. If the Purchase Price Adjustment results in an increase
in the Purchase Price, Buyer shall pay to Seller such increase within five (5)
days from the date in which the Purchase Price Adjustment is deemed final or as
agreed to pursuant to Section 2.4(c) above. If the Purchase Price Adjustment
results in decrease of the Purchase Price, Seller and Shareholder shall pay to
Buyer such decrease within five (5) days following the date in which the
Purchase Price Adjustment is deemed final or as agreed to pursuant to Section
2.4(c) above. The amount payable under this Section 2.4(d) shall be paid by wire
transfer of immediately available funds to the account designated by the
receiving party and such amount shall bear interest from the Closing Date to the
date of payment at an annual interest rate equal to the prime interest rate as
quoted as of Closing Date by Chase Manhattan Bank.
2.5) Taxes and Fees. All Transfer Taxes and any interest and/or penalty
relating thereto shall be promptly paid by Buyer.
2.6) No Assumption of Liabilities. Except as expressly required by this
Agreement or otherwise expressly agreed to by the parties, there shall be no
assumption of any liability or liabilities by Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and Shareholder represent and warrant to Buyer as follows:
3.1) Organization of Seller. Seller has been duly incorporated and is
validly existing and in good standing under the laws of the State of Arizona.
Seller is duly qualified and in good standing as a foreign corporation in each
state where the nature of Seller's activities and properties would require
Seller to be so qualified and where the failure to be so qualified would have a
Material Adverse Effect.
3.2) Authority of Seller. Seller has full corporate power to enter into
this Agreement and the Ancillary Agreements to which Seller is a party and to
perform its respective obligations hereunder and thereunder. This Agreement and
the Ancillary Agreements to which Seller is a party have been duly authorized,
executed, and delivered by Seller and constitute the legal, valid and binding
agreements of Seller, enforceable against it in accordance with their terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. No further proceeding on the
part of Seller is necessary to authorize this Agreement and the Ancillary
Agreements to which Seller is a party and the transactions contemplated hereby
and thereby. Except as disclosed in Schedule 3.2 or 3.8 neither the execution
and delivery of this Agreement and the Ancillary Agreements to which Seller is a
party nor compliance by Seller with their terms and provisions will violate (i)
any provision of the certificate or articles of incorporation or by-laws of
Seller, (ii) to Seller's knowledge, the Contracts transferred to Buyer or any
other contract, license, franchise or permit to which Seller is a party or by
which it is bound, or (iii) to Seller's knowledge, any law, statute, regulation,
injunction, order or decree of any government agency or authority or court to
which Seller is subject, where, in all cases, such violation would have a
Material Adverse Effect.
3.3) Financial Information. Schedule 3.3(a) sets forth the units, gross
sales dollars and gross profits for the past three (3) fiscal years ending
December 31, 1994. Schedule 3.3(b) represents Seller's 1995 Standard Product
Costs by element by Catalog Number. Schedule 3.3(a) has been derived from
Seller's Sales Records for the applicable fiscal years while Schedule 3.3(b) has
been extracted from Seller's standard cost reports. Both the Sales Records and
the Standard Cost Reports are true and correct in all material respects.
Schedule 3.3(c) sets forth the unaudited balance sheet of Seller as of February
28, 1995. Said balance sheet has been prepared in accordance with Seller's
historical accounting practices consistently applied ("Seller's Historical
Accounting Practices"), and fairly represents the financial position of Seller
as of its respective date. Except as set forth in Schedule 3.3(d), all of the
books and records necessary to operate the Business as it currently is being
conducted are located at Seller's Facility. The December 31, 1993, December 31,
1994 and February 28, 1995 financial statements previously furnished to Buyer
have been prepared in accordance with Seller's Historical Accounting Practices
and fairly represent the results of operations for the periods covered thereby
and with respect to the balance sheets included therein the financial position
of Seller as of their respective dates. Except as set forth in Schedule 3.3(e),
since February 28, 1995, Seller has not incurred any material liability, other
than in the ordinary course of business, with respect to the Business or the
Assets which if incurred before February 28, 1995, would, in accordance with
Seller's Historical Accounting Practices, have been required to be reflected on
the February 28, 1995 balance sheet.
3.3A) Reconciliation to GAAP. Seller's Historical Accounting Practices
are in accordance with GAAP except for (a) differences which in the aggregate
would not result in a disparity over $75,000 on any balance sheet of Seller
described in this Agreement and (b) the omission of notes normally accompanying
GAAP financial statements.
3.4) Absence of Certain Changes and Events. Except as disclosed in
Schedule 3.4, since February 28, 1995:
(a) To Seller's knowledge, there has not been any change in the general
affairs, management, or condition (financial or otherwise) of the Business which
has had or would have a Material Adverse Effect.
(b) Seller has not, other than in the ordinary course of business, (i)
entered into any material contract, license, franchise or commitment, waived any
material rights, or made any amendment or termination of any material contract,
license, franchise or agreement, relating to the Assets or the Business; (ii)
altered or revised, in any material respect, its accounting principles,
procedures, methods or practices relating to the Assets or the Business; (iii)
transferred, disposed of, or otherwise removed from the Facility any material
Assets; or (iv) incurred, discharged or satisfied any material liability or Lien
relating to the Assets or the Business.
3.5) Litigation. Set forth on Schedule 3.5 hereto is a list which is
complete and accurate in all material respects of all currently pending actions,
suits, proceedings, audits and investigations involving the Assets and the
Business, as to which Seller, has received written notice, which would have a
Material Adverse Effect and a brief description of the nature and status
thereof. Except as disclosed in Schedule 3.5 hereto, to Seller's and
Shareholder's knowledge, there are no other actions, suits, or proceedings
pending or threatened against Seller with respect to the Business and/or the
Assets, at law, in equity or otherwise, in, before, or by, any court or
governmental agency or authority which would have a Material Adverse Effect.
Except as disclosed on Schedule 3.5 hereto, to Seller's and Shareholder's
knowledge there are no unsatisfied judgments or outstanding orders, injunctions,
decrees, stipulations or awards (whether rendered by a court or administrative
agency or by arbitration) against Seller with respect to the Business or against
any of the Assets which would have a Material Adverse Effect.
3.6) Compliance with Law. Subject to the following provisions, to
Seller's and Shareholder's knowledge during the time period up to and including
the Closing ("Pre-Closing Period"), (i) the Business is not in violation of any
law, ordinance or regulation of any governmental entity, which violation would
have a Material Adverse Effect, (ii) all governmental approvals, permits,
licenses and other authorizations required in connection with the conduct of any
material aspect of the Business (collectively, "Authorizations") have been
obtained and are in full force and effect and are being complied with in all
material respects. Except as disclosed in Schedule 3.6, Seller has not received
any written notification of any asserted past or present violation in connection
with the conduct of the Business of any law, ordinance or regulation, which
violation would have a Material Adverse Effect, or any written complaint,
inquiry or request for information from any governmental entity relating
thereto. Notwithstanding anything contained in this Section 3.6 to the contrary,
Seller and Shareholder make no representation or warranty herein as to any of
the foregoing matters with respect to any time period other than the Pre-Closing
Period, it being acknowledged and agreed by Buyer that Buyer shall be solely
responsible for determining the truth and accuracy of all of such matters, and
shall not be entitled to rely upon any of the representations or warranties of
Seller or Shareholder in this Section 3.6, with respect to the time period from
and after the Closing.
3.7) Taxes. Notwithstanding anything to the contrary herein, Seller
shall retain all responsibility for all liabilities or obligations involving any
taxes, or interest or penalties related thereto, arising out of or relating to
the operation of the Business by the Seller prior to the Closing Date.
3.8) Consents. Schedule 3.8 lists each consent, approval, waiver or
authorization (collectively, the "Consent"), that are legally or contractually
required on the part of Seller to duly and validly transfer or assign any of the
Assets (including the Contracts) as contemplated hereby, where the failure to
obtain such Consent, would have a Material Adverse Effect.
3.9) Condition of Assets. Seller has, and, upon consummation of the
transactions contemplated hereby will convey to Buyer good and marketable title
to the Assets free and clear of all Liens except as disclosed on Schedule 3.9.
The Assets constitute, in all material respects, all assets necessary to, or
used in, the conduct of the Business as presently conducted by Seller. The
Assets are, in all material respects, suitable for the uses for which they are
presently used by the Business, in normal operating condition and free from any
significant defects, excepting (i) ordinary wear and tear and (ii) conditions
disclosed in writing to Buyer prior to the Closing.
3.10) Contracts, Obligations and Agreements. Schedule 3.10 is a
complete and accurate list of all contracts, agreements, licenses, commitments
and obligations that Seller shall assign to Buyer and Buyer shall assume. Except
as expressly set forth on Schedule 3.10 each such Contract listed on Schedule
3.10 is fully assignable to Buyer and is valid and in full force and effect in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors rights and to general equity principles, and
there have been no material amendments, modifications, or supplements to any
such listed Contracts and Seller is not in default under each such Contract, the
result of which would cause a Material Adverse Effect.
3.11) Accounts Receivable. The accounts receivable reflected on the
February 28, 1995 balance sheet and the accounts receivable arising between
February 28, 1995 and the Closing arose, or will arise, in the ordinary course
of the Business for products sold, are properly recorded in accordance with
Seller's Historical Accounting Practices are valid and, are not subject to
set-offs or counterclaims.
3.12) Infringement of Intellectual Property. Except as disclosed in
Schedule 3.12, to Seller's knowledge; (i) Seller or Shareholder owns, or has
valid licenses, in all material respects, to use, each patent, trademark, trade
name, copyright, know-how or trade secret as currently used in the Business;
(ii) Seller's operation of the Business does not infringe, misuse or
misappropriate any intellectual property rights not owned by or licensed to
Seller; and (iii) no third party is infringing any Intellectual Property rights
of Seller.
3.13) Brokers and Finders. Seller has employed Mr. David Cleary as a
broker, finder, consultant and intermediary in connection with the transactions
contemplated by this Agreement. Mr. Cleary is entitled to a broker's, finder's
or similar fee or commission in connection herewith, upon the consummation of
the Closing. Buyer has no liability to Seller or to Mr. Cleary directly for said
broker's, finder's or similar fee or commission.
3.14) Current Manufacturing and Product Drawings. All product drawings
and specifications and manufacturing instructions and processes are current
master copies of the latest revision and copies thereof will be maintained at
the Facility or at manufacturing or assembly locations as of the Closing.
3.15) FDA 510(K) Documents. Subject to the following provisions to
Seller's and Shareholder's knowledge, during the Pre-Closing Period (i) all
Finished Goods have been approved for sale by the FDA under Section 510(K) of
the Act or are pre-amendment devices (as evidenced by the documents listed and
described on Schedule 3.15, copies of which have been delivered to Buyer) which
may be legally marketed without Section 510(K) premarket notification clearance
and (ii) any changes to the Finished Goods which have been made from May 1976 to
the present are not significant changes within the meaning of the applicable
regulations. Notwithstanding anything contained in this Section 3.15 to the
contrary, Seller and Shareholder make no representations or warranties herein as
to any of the foregoing matters with respect to any time period other than the
Pre-Closing Period, it being acknowledged and agreed by Buyer that Buyer shall
be solely responsible for determining the truth and accuracy of all of such
matters, and shall not be entitled to rely upon any of the representations or
warranties of Seller or Shareholder in this Section 3.15, with respect to the
time period from and after the Closing.
3.16) Customers. The sales history documents furnished to Buyer prior
to the Closing are true and accurate and reflect the sales history of the
Business for the past two (2) fiscal years. Such records are attached hereto as
Schedule 3.16.
3.17) Leased Real Estate. Schedule 3.17 is a list of all leased real
estate that is used in the operation of the Business (the "Leased Real Estate").
Except as disclosed on Schedule 3.17, Seller has a valid leasehold interest in
and to the Leased Real Estate, free and clear of all liens, created or permitted
by Seller, other than liens for current taxes not yet due and payable and such
matters of record and minor imperfections of title and encroachments, which, so
far as Seller can reasonably foresee, would not have a Material Adverse Effect.
A true and correct copy of the Facility Lease has been provided to Buyer.
3.18) Environmental Compliance. Except as disclosed in Schedule 3.18:
(a) In connection with the Business, and to Seller's and Shareholder's
knowledge, Seller is not in violation, or alleged violation, of any judgment,
decree, order, law, license, rule or regulation pertaining to environmental
matters, including without limitation, those arising under the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any
state or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "Environmental Laws"), which
violation, so far as the Seller can reasonably foresee, would have a Material
Adverse Effect.
(b) Neither Seller nor Shareholder has received written notice from any
third party, including, without limitation, any federal, state or local
governmental authority, (i) that Seller has been identified by the United States
Environmental Protection Agency ("EPA") as a potentially responsible party under
CERCLA with respect to a site which is included in the real property owned or
leased by Seller in connection with the Business (the "Real Estate") and is
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986),
(ii) that any hazardous waste, as defined by 42 U.S.C. 9601(5), any hazardous
substances, as defined by 42 U.S.C. 9601(14), any pollutant or contaminant, as
defined by 42 U.S.C. 9601(33), and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any Environmental Laws
("Hazardous Substances") that it has generated, transported or disposed of has
been found at any site used or occupied by the Business at which a federal,
state or local agency or other third party has conducted or has ordered that
Seller conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law, or (iii) that Seller is or shall be a named
party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising out of
any third party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Substances with respect
to the Business.
3.19) Finished Goods. The Finished Goods on hand as inventory as of the
Closing (the "Finished Goods Inventory") consists of, and as of the Closing Date
will consist of, items of a quality usable or salable in the ordinary course of
business. The Finished Goods Inventory has been manufactured in accordance with
and is consistent with the most recent revision level specifications established
therefor by the Seller. Since February 28, 1995, Seller has continued to
replenish its inventories in a normal and customary manner consistent with past
practices.
3.20) Baxter. Seller and Shareholder represent and warrant to Buyer
that the rights, benefits and obligations of Seller and Shareholder pursuant to
the Settlement Agreement dated as of March 23, 1994 between Seller and
Shareholder, on one hand, and Baxter International, Inc. and Baxter Healthcare
Corporation, on the other (the "Baxter Settlement Agreement") are fully
assignable by Seller and Shareholder to Buyer and Parent pursuant to this
Agreement, and that effective upon consummation of this Agreement, all of the
rights and benefits theretofore held by Seller and Shareholder under the Baxter
Settlement Agreement shall have been fully and effectively assigned to, and
vested in, Buyer. As a result of the foregoing assignment, Buyer shall, from and
after the Closing, have and enjoy all of the rights and benefits theretofore
possessed by Seller and Shareholder pursuant to the Baxter Settlement Agreement.
3.21) Disclaimer of Other Representations and Warranties. With the
exception of the representations and warranties expressly contained in this
Article III, Seller makes no other representations and warranties, express or
implied, with respect to any of the Assets being purchased hereunder or with
respect to the Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent represent and warrant to Seller and Shareholder as
follows:
4.1) Organization of Buyer and Parent. Buyer and Parent have been duly
incorporated, are validly existing and are in good standing under the laws of
the States of California and New York, respectively. Buyer and Parent are duly
qualified and in good standing as foreign corporations in each state where the
nature of Buyer's activities and properties would require Buyer and Parent to be
so qualified and, where the failure to be so qualified, would have a material
adverse effect on Buyer and Parent or their ability to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements.
4.2) Authority of Buyer and Parent. Buyer and Parent have full
corporate power and authority to enter into this Agreement and the Ancillary
Agreements and to perform their respective obligations hereunder and thereunder.
This Agreement and the Ancillary Agreements have been duly authorized, executed,
and delivered by Buyer and Parent and constitute the legal, valid and binding
agreements of Buyer and Parent, enforceable against Buyer and Parent in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles. No
further proceeding on the part of Buyer or Parent is necessary to authorize this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby. Neither the execution and delivery of this Agreement and the
Ancillary Agreements nor compliance by Buyer and Parent with their terms and
provisions will violate (i) any provision of the certificate or articles of
incorporation or by-laws of Buyer and Parent, (ii) to Buyer's and Parent's
knowledge, any contract provision, license, franchise or permit to which Buyer
or Parent is a party or by which it is bound, or (iii) to Buyer's and Parent's
knowledge, any law, statute, regulation, injunction, order or decree of any
government agency or authority or court to which Buyer or Parent is subject,
where, in all cases, such violation would have a material adverse effect upon
Buyer or Parent or their ability to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements.
4.3) Brokers and Finders. Buyer and Parent have not employed any
broker, finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement who would be entitled to a broker's, finder's or
similar fee or commission in connection therewith or upon the consummation
thereof or if the Closing does not occur.
4.4) Financial Capacity. Buyer and Parent have the power, authority,
and sufficient currently available financial resources to consummate the
transactions contemplated hereby and by the Ancillary Agreements. Such funds
are, and will continue to be, currently available to enable Buyer and Parent to
consummate the transactions contemplated hereby and thereby.
4.5) Litigation. To Buyer's and Parent's knowledge, there are no
actions, suits, or proceedings pending or threatened against Buyer or Parent, at
law, in equity or otherwise in, before, or by, any court or government agency or
authority which would have a Material Adverse Effect on Buyer or Parent or their
ability to consummate the transactions contemplated hereby and by the Ancillary
Agreements.
4.6) Compliance With Law. To Buyer's and Parent's knowledge, Buyer and
Parent are not in violation of any law, ordinance, or regulation of any
governmental entity, which violation would have a material adverse effect on
Buyer or Parent or their ability to consummate the transactions contemplated
hereby and by the Ancillary Agreements. Neither Buyer nor Parent has received
any written notification of any asserted past or present violation of any law,
ordinance or regulation, which violation would have a material adverse effect on
Buyer or Parent or their respective ability to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements or any written
complaint, inquiry or request for information from any governmental entity
relating thereto which would have a material adverse effect on Buyer or Parent
or their respective ability to consummate the transactions contemplated hereby
and by the Ancillary Agreements.
4.7) Consents. There are no consents, approvals, waivers or
authorizations that are legally or contractually required on the part of Buyer
or Parent to duly and validly purchase and receive any of the Assets
contemplated hereby, or to perform its obligations under this Agreement or the
Ancillary Agreements, where the failure to obtain such consents, approvals,
waivers or authorizations would have a material adverse effect on Buyer or
Parent or their respective ability to consummate the transactions contemplated
hereby and by the Ancillary Agreements.
4.8) Disclaimer of Other Representations and Warranties. Buyer and
Parent make and have made no warranties or representations other than those
expressly set out in this Article IV.
ARTICLE V
CERTAIN COVENANTS AND AGREEMENTS
5.1) Access and Information. Seller shall permit Buyer and its
representatives after the date of execution of this Agreement to have access,
during regular business hours and upon reasonable advance notice to Seller, to
the Facilities, subject to Seller's reasonable rules and regulations, and shall
furnish, or cause to be furnished, to Buyer any financial and operating data and
other information that is available with respect to the Business and the Assets
including quality assurance and regulatory affairs records (including,
compliance records, FDA Section 483 letters, "Medical Device Reports" and
"Warning Letters") as Buyer shall from time to time reasonably request for the
purposes of verifying the representations and warranties of Seller hereunder. To
the extent any records reasonably necessary for the continued conduct of the
Business are retained by Seller at other locations, Seller shall permit Buyer
and its representatives to have access to such records, during regular business
hours and upon reasonable advance notice to Seller and subject to Seller's
reasonable rules and regulations, to have the right to copy the same, at Buyer's
expense, for the foregoing purpose.
5.2) Registrations, Filings and Consents. Seller and Buyer will
cooperate and use all reasonable efforts to make all registrations, filings and
applications, to give all notices and to obtain any governmental or other
consents, transfers, approvals, orders, qualifications and waivers necessary or
desirable for the consummation of the transactions contemplated hereby.
5.3) Conduct of Business. Prior to the Closing, and except as otherwise
contemplated by this Agreement and the Ancillary Agreements or consented to or
approved by Buyer, Seller covenants and agrees that:
(a) Seller shall operate the Business only in the ordinary and usual
course and use reasonable efforts to preserve the business and relationships
with suppliers, and customers of the Business;
(b) Seller shall not permit the Business, other than in the ordinary
and usual course of business, to (i) acquire or dispose of any material assets,
(ii) materially encumber any of the Assets, incur a material amount of
additional indebtedness or enter into any other material transaction or incur
any other material liabilities, or (iii) enter into any material contract,
agreement, commitment or arrangement with respect to any of the foregoing
without the consent of the Buyer.
5.4) Delivery. All of the Assets shall be delivered to Buyer as of the
Closing.
5.5) Non-Competition Agreement. For a period of five (5) years
following the Closing Date, neither Seller, Shareholder, nor any of the
Affiliates of the Seller or Shareholder shall manufacture and sell directly or
indirectly anywhere within the United States or U.S. territory and any foreign
country any I.V. gravity controllers, generally or Finished Goods, specifically
nor shall Seller and Shareholder directly or indirectly work with any competitor
of Seller. If at the time of enforcement of this Section 5.5, the court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area, but in no event in excess of
the stated duration, scope or area. In an action in law or in equity for breach
or enforcement of this Section 5.5 brought in any court having competent
jurisdiction over the parties to such an action, the prevailing party shall be
entitled to recover from the other party or parties its reasonable attorneys
fees, costs and expenses associated with prosecuting or defending such an action
to its final disposition (including final dispositions by summary adjudication,
judge or jury verdict or final appeal).
5.6) Further Assurances; SEC Audited Financials. For a period of five
(5) years following the Closing Date, Seller and Shareholder shall promptly
execute, acknowledge and deliver any further assignments, conveyances and other
assurances and documents and instruments of transfer reasonably requested by
Buyer and necessary for Seller to comply with its representations, warranties,
and covenants contained herein and, at Buyer's expense, will take any action
consistent with the terms of this Agreement that may reasonably be requested by
Buyer for the purpose of assigning, transferring, granting, conveying, and
confirming ownership in or to Buyer, or reducing to Buyer's possession, any or
all of the Assets. Seller further agrees to cause its independent auditors,
Mansperger, Patterson and McMullin, Tempe, Arizona to prepare audited financial
statements of the Business for the years ended December 31, 1993 and December
31, 1994 as necessary in order to comply with any requirements of the Securities
and Exchange Commission which may be applicable to Buyer, to be reviewed for
Buyer by the Syracuse office of Price Waterhouse. Buyer shall use its best
efforts to cooperate fully with and to assist Seller and its independent
auditors in the preparation of such audited financial statements. Buyer will pay
directly (or in Seller's discretion reimburse Seller for) any out of pocket
expenses incurred by Seller in providing such audited financials, including the
fees and expenses of its independent auditors for services rendered in
connection therewith but excluding any charge for Seller's internal accounting
staff time and efforts. In the event such audited financial statements are not
delivered by Seller to Buyer on or before the sixtieth (60th) calendar day
following the Closing and such failure is not due in whole or in part to action
or inaction by Buyer or its representatives, then Seller shall be required to
pay Buyer $500 for each full day that the delivery of such audited financials is
delayed beyond such sixtieth (60th) day, subject to a maximum payment of
$50,000.
5.7) Administrative Assistance by Seller Post Closing. Pursuant to the
terms of the Ancillary Agreement executed concurrently herewith, Seller agrees
to provide Buyer with the use of certain of its employees following the Closing,
Buyer agrees to reimburse Seller for all reasonable costs associated with the
use of Sellers employees as more specifically set forth in said Ancillary
Agreement attached hereto as Exhibit D.
5.8) Assigned Contracts. To the extent that any of the Contracts are
not assignable without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof, if such assignment
or attempted assignment would constitute a breach thereof. Seller and Buyer
agree to use reasonable efforts to obtain any necessary consent to the
assignment of the Contracts.
5.9) Bulk Sales. Buyer and Seller specifically waive compliance under
all laws relating to the sale of Assets in bulk, (the "Bulk Sales Law")
including Article VI of the uniform commercial code, if applicable. Waiver by
Buyer is made in reliance upon Seller's certification to Buyer that all
creditors having rights or remedies under the Bulk Sales Law, other than those
for whom Buyer is assuming liability pursuant to Section 2.2(c), are listed on
said certification and that Seller will satisfy said creditors with the proceeds
of the Purchase Price ("Bulk Sales Certification"). Seller will completely fund
any qualified plans without liability to Buyer. Said Bulk Sales Certification
shall be attached hereto as Exhibit E.
5.10) No Third Party Beneficiaries. None of the provisions of this
Agreement are intended or shall be deemed to confer upon any person or entity
not a party to this Agreement any rights or benefits, including the status of
third party beneficiary of any provision hereof.
5.11) Access to Records and Information. During the seven-year period
immediately following the Closing, Buyer shall cooperate with Seller and
Shareholder in providing them all information reasonably requested and
permitting access to all records relating to the period of ownership of the
Assets by Seller prior to the Closing, when requested in writing by Seller or
Shareholder to provide or permit the same for all legitimate purposes. The cost
and expense in providing information hereunder shall be borne by Seller or the
Shareholder.
5.12) Customer Notification Letter. Promptly following the Closing,
Seller and Buyer shall send a letter signed by both parties to customers of the
Business informing customers that Buyer has purchased the Business of Seller.
Said letter shall be substantially in the form of Exhibit G.
5.13) Vendor Notification Letter. Promptly following the Closing,
Seller and Buyer shall send a letter signed by both parties to vendors of the
Business informing vendors that Buyer has purchased the Business of Seller. Said
letter shall be substantially in the form of Exhibit H.
5.14) Independent Sales Representative Letter. Promptly following the
Closing, Seller and Buyer shall send a letter signed by both parties to
independent sales representatives of Seller informing them that their
representations of Seller will terminate on the Closing and Buyer will pay
commission on sales until June 2, 1995. Said letter shall substantially be in
the form of Exhibit I.
ARTICLE VI
CONDITIONS TO THE PURCHASE AND SALE
6.1) Conditions to the Purchase and Sale Relating to Buyer. The
obligation of Buyer to consummate the transactions contemplated hereby shall be
subject to the satisfaction, or waiver by Buyer, at or prior to the Closing of
each of the following conditions:
(a) The representations and warranties of Seller and Shareholder
contained in this Agreement shall be true in all material respects when made and
as of the Closing, with the same effect as though such representations and
warranties had been made at and as of the Closing (except that representations
and warranties made as of a specific date need be true in all material respects
only as of such date); the covenants and agreements of Seller and Shareholder to
be performed at or prior to the Closing shall have been duly performed in all
material respects; and Buyer shall have received at the Closing a certificate to
that effect dated as of the Closing Date and executed on behalf of Seller by the
President or any Vice President.
(b) There shall not have been issued and be in effect any order, decree
or judgment of or in any court or tribunal of competent jurisdiction which makes
the consummation of the transactions contemplated hereby illegal.
(c) Buyer shall have received from Seller or Shareholder such
instruments of transfer, assignment, conveyance and other instruments sufficient
to convey, transfer or assign to Buyer all right, title and interest in the
Assets together with possession of such Assets, all in form and substance
reasonably satisfactory to Buyer.
(d) Buyer shall have received from Seller an opinion from Gallagher &
Kennedy counsel for Seller, dated as of the Closing Date and substantially in
the form shown in Exhibit A
(e) Buyer shall have received from Seller:
(i) A Bill of Sale and Assignment in the form of
Exhibit B.
(ii) All customer records relating to the Business.
(iii) Certificate of Good Standing for Seller.
(iv) Certified copies of Seller's corporate
resolutions authorizing the transactions contemplated hereby and by the
Ancillary Agreements.
(v) UCC searches and termination statements.
(vi) Sellers Bulk Sales Certificate in the form of
Exhibit E.
(vii) December 31, 1994 year end audited financials.
6.2) Conditions to the Purchase and Sale Relating to Seller. The
obligation of Seller to consummate the transactions contemplated hereby shall be
subject to the satisfaction, or waiver by Seller, at or prior to the Closing of
each of the following conditions:
(a) The representations and warranties of Buyer and Parent contained in
this Agreement shall be true in all material respects when made and as of the
Closing, with the same effect as though such representations and warranties had
been made at and as of the Closing (except that representations and warranties
made as of a specific date need be true in all material respects only as of such
date); the covenants and agreements of Buyer to be performed at or prior to the
Closing shall have been duly performed in all material respects; and Seller
shall have received at the Closing a certificate to that effect dated as of the
Closing Date and executed on behalf of Buyer and Parent by the President or Vice
President.
(b) There shall not have been issued and be in effect any order, decree
or judgment of or in any court or tribunal of competent jurisdiction which makes
the consummation of the transactions contemplated hereby illegal.
(c) Seller shall have received from Buyer and Parent (i) an opinion of
counsel, dated as of the Closing Date and substantially in the form shown on
Exhibit C (ii) a Certificate of Good Standing for Buyer and Parent (iii)
certified copies of Buyer's and Parent's corporate resolutions authorizing the
transactions contemplated hereby and by the Ancillary Agreements and (iv) an
executed Assumption Agreement.
ARTICLE VII
AMENDMENT AND WAIVER
7.1) Amendment and Modification. This Agreement may only be amended or
modified in writing, signed by Seller and Buyer, with respect to any of the
terms contained herein.
7.2) Waiver. At any time prior to the Closing either Seller or Buyer
may (i) extend the time for the performance of any of the obligations or other
acts due to it from the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions of the other party contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party granting such extension or
waiver.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1) Survival of Representations and Warranties; Knowledge of Breach.
(a) The representations and warranties set forth in this Agreement and
the Ancillary Agreements shall survive for a period of eighteen (18) months
following the Closing Date.
(b) Except for any claim which: (i) is based on an obligation or
liability of Seller not assumed by Buyer pursuant to Section 2.2(c), (ii) is
based on Buyer's agreement in Section 2.2(c) to assume certain obligations and
liabilities of Seller, (iii) is based on Seller's covenant not to compete in
Section 5.5, (iv) is based on Seller's obligations stated in Section 5.6, (v) is
based on Buyer's obligations stated in Section 5.11, or (vi) is based on a
breach by Seller or Shareholder of the representation made in Section 3.20
neither party shall be liable for any claim or cause of action arising out of
this Agreement or the Ancillary Agreements except pursuant to the provisions of
this Article VIII and unless the other party shall have given written notice of
such claim or cause of action within eighteen (18) months following the Closing
Date; , any such claim not so asserted within such time period shall be
unenforceable against the party against whom it is asserted, except that claims
described in subsection (i) through (v) of this Section 8.1(b) may be asserted
at any time within the applicable statutes of limitation and any claim described
in (vi) may be asserted at any time within two (2) years following the Closing.
(c) No party hereto shall assert a claim arising out of or relating to
the breach of any representation, warranty, or covenant if (i) prior to the
Closing such party had knowledge of the breach of, or inaccuracy in, or of any
facts or circumstances constituting or resulting in the breach of, or inaccuracy
in, such representation, warranty or covenant, and (ii) such party permitted the
Closing to occur and, for purposes of this Agreement, thereby shall be deemed to
have waived such breach or inaccuracy.
8.2) Indemnification Against Claims.
(a) Seller and Shareholder shall jointly and severally indemnify and
hold Buyer and Parent harmless from and against damages, costs or expenses
(including reasonable attorneys' fees and costs) suffered by Buyer or Parent
(except to the extent caused by the acts or omissions of Buyer or Parent and net
of any insurance proceeds received by Buyer or Parent in respect thereof ) as a
direct result of or directly arising from:
(i) (A) any breach of representation or warranty
hereunder or under the Ancillary Agreements on the part of Seller and
(B) any failure by Seller to perform or otherwise fulfill any
undertaking or other agreement or obligation of Seller hereunder or
under the Ancillary Agreements;
(ii) (A) any product liability claim for death,
personal injury, other injury to persons, property damage, loss or
deprivation of rights, or other product liability claim (whether based
on statute, negligence, breach of warranty, strict liability or any
other theory) directly caused by or resulting from Finished Goods sold
by Seller to purchasers other than Buyer during the Pre-Closing Period.
and (B) any recall of Finished Goods sold by Seller; and
(iii) any and all actions, suits, proceedings, claims
or demands by third parties, or assessments or judgments in their
favor, directly resulting or arising from any of the foregoing.
(b) Buyer and Parent shall jointly and severally indemnify and hold
Seller harmless from and against damages, costs or expenses (including
reasonable attorneys' fees and costs) suffered by Seller (except to the extent
caused by the acts or omissions of Seller and net of any insurance proceeds
received by Seller in respect thereof) as a direct result of or directly arising
from:
(i) (A) any breach of representation and warranty
hereunder or under the Ancillary Agreements on the part of Buyer; and
(B) any failure by Buyer to perform or otherwise fulfill any
undertaking or agreement or obligation hereunder or under the Ancillary
Agreements;
(ii) (A) any product liability claim for death,
personal injury, other injury to persons, property damage, loss or
deprivation of rights, or other product liability claim (whether based
on statute, negligence, breach of warranty, strict liability or any
other theory) directly caused by or resulting from Finished Goods sold
by Buyer after the Closing and (B) any recall of Finished Goods sold by
Buyer after the Closing; and
(iii) any and all actions, suits, proceedings, claims
or demands by third parties, or assessments or judgments in their
favor, directly resulting or arising from any of the foregoing.
8.3) Third Party Claims. In the event that any third party asserts a
claim against a party (the "Indemnified Party") for which such Indemnified Party
intends to seek indemnity from the other party hereto (the "Indemnifying
Party"), then the Indemnified Party shall promptly, but in no event more that
fifteen (15) days following such Indemnified Party's receipt of such claim or
demand, notify the Indemnifying Party of such claim or demand and the amount
thereof (the "Claim Notice"). The Indemnifying Party shall have thirty (30) days
from actual receipt of the Claim Notice to undertake, conduct and control the
defense of such third party claim. All costs and expenses incurred by the
Indemnifying Party in defending such third party claim shall be paid by the
Indemnifying Party. If the Indemnified Party desires to participate in any such
defense or settlement, it may do so at its sole cost and expense (it being
understood that the Indemnifying Party shall be entitled to control of the
defense). So long as the Indemnifying Party is defending such third party claim,
the Indemnified Party shall not settle such claim. The Indemnifying Party shall
not, without the prior written consent of the Indemnified Party, settle,
compromise or offer to settle or compromise any third party claim on a basis
which would result in the imposition of a consent order, injunction or decree
which would restrict the future activity or conduct of the Indemnified Party or
any Affiliate thereof. To the extent the Indemnifying Party shall control or
participate in the defense or settlement of any third party claim or demand, the
Indemnified Party will give to the Indemnifying Party and its counsel access to,
during normal business hours, the relevant business records and other documents,
and shall permit them to consult with the employees and counsel of the
Indemnified Party. The Indemnified Party shall use all reasonable efforts to
assist the Indemnifying Party in the defense of all such claims.
8.4) Damage Limitation. The parties' liability under this Article VIII
shall expire pursuant to Section 8.1 and except for the matters addressed in
Section 8.1(b)(i) through (vi) and in Section 8.5, no claim for indemnity shall
be made by a party pursuant to this Article VIII unless the aggregate amount of
such claim exceeds $75,000. Indemnity claims properly made pursuant to Article
VIII are not subject to any deductible amounts. Notwithstanding anything herein
to the contrary, no claims or causes of action arising out of or related to the
transactions contemplated by this Agreement may be asserted by either party for
punitive, presumptive, special, exemplary, incidental, or consequential damages
(including without limitation, loss of profits or business interruption loss),
or for any other damages other than actual damages. Nothing contained in the
immediately preceding sentence is intended to or shall preclude any party from
obtaining indemnification with respect to third party claims pursuant to Section
8.3.
8.5) Returned Goods; Rebates.
A) Buyer will promptly replace all Finished Goods sold by Seller during
the Pre-Closing Period that are rightfully returned by an end user within
forty-five (45) days following the Closing due to quality and manufacturing
defects. Seller will promptly reimburse Buyer for the standard costs of said
returned Finished Goods plus reasonable shipping costs for all such replacement
Finished Goods shipped by Buyer pursuant to this Section 8.5.
B) Following the Closing, Seller retains the rebate expense for all
rebates with an end user invoice date of on or before forty-five (45) days
following the Closing Date, while Buyer assumes the rebate expense for all
rebates with an end user invoice date after such date. Buyer agrees to promptly
reimburse Seller for any such claims relating to an end user invoice date more
than forty-five (45) days following the Closing Date processed and paid by
Seller. Seller agrees to promptly reimburse Buyer for any such claims relating
to an end user invoice date on or before forty-five (45) days from the Closing
Date processed and paid by Buyer.
ARTICLE IX
ALTERNATIVE DISPUTE RESOLUTION
9.1) Negotiations. If any dispute arises among the parties hereto with
respect to this Agreement or the Ancillary Agreements or any alleged breach
hereof, any party hereto may, by written notice to the other parties hereto,
have such dispute referred to their respective representatives designated below
or their successors for attempted resolution by good faith negotiations within
forty-five (45) days after such written notice is received. Such designated
representatives are as follows:
For Buyer - Chief Executive Officer of Buyer, or another officer
designated by him or her; and
For Seller and Shareholder - Jerry Aslanian
Any settlement reached by the parties under this Section 9.1 shall not be
binding until reduced to writing and signed by the above-specified
representatives of Seller, Shareholder and Buyer. When reduced to writing, such
settlement agreement shall supersede all other agreements, written or oral, to
the extent such agreements specifically pertain to the matters so settled.
If the above-designated employees are unable to resolve such dispute within such
forty-five (45) day period, any party may invoke the provisions of Section 9.2
below.
9.2) Arbitration. All claims, disputes, controversies, and other
matters in question arising out of or relating to this Agreement or the
Ancillary Agreements (other than disputes regarding the Closing Date Balance
Sheet or the Purchase Price Adjustment which shall be resolved in accordance
with Section 2.4(c)), or to the alleged breach hereof, shall be settled by
negotiation between the parties as described in Section 9.1 above or, if
negotiation is unsuccessful, by binding arbitration in accordance with
procedures set forth in Section 9.3 and 9.4 below.
9.3) Notice. Notice of demand for binding arbitration shall be given in
writing to the other parties pursuant to Section 10.8. In no event may a notice
of demand of any kind be filed more than one (1) year after the date the claim,
dispute, controversy, or other matter in question was asserted, pursuant to
Section 9.1, and if such demand is not timely filed, the claim, dispute,
controversy, or other matter in question referenced in the demand shall be
deemed released, waived, barred, and unenforceable for all time, and barred as
if by statute of limitations.
9.4) Binding Arbbitration. Upon filing of a notice of demand for
binding arbitration by any party hereto, arbitration shall be commenced and
conducted as follows:
(a) Arbitrators. All claims, disputes, controversies, and other matters
(collectively "matters") in question shall be referred to and decided and
settled by a standing panel of three arbitrators, one selected by each of
Seller, Shareholder and Buyer and the third by the two arbitrators so selected.
The third shall be a former judge of one of the U.S. District Courts or one of
the U.S. Court of Appeals or such other classes of persons as the parties may
agree. Selection of arbitrators shall be made within thirty (30) days after the
date of the first notice of demand given pursuant to Section 9.3 and within
thirty (30) days after any resignation, disability or other removal of such
arbitrator. Following appointment, each arbitrator shall remain a member of the
standing panel, subject to recusal for just cause or resignation or disability.
(b) Cost of Arbitration. The cost of each arbitration proceeding,
including without limitation the arbitrators' compensation and expenses, hearing
room charges, court reporter transcript charges etc., shall be borne by the
party whom the arbitrators determine has not prevailed in such proceeding, or
borne on half by Seller and Shareholder and one half by Buyer if the arbitrators
determine that neither party has prevailed. The arbitrators shall also award the
party that prevails substantially in its pre-hearing position its reasonable
attorneys' fees and costs incurred in connection with the arbitration. The
arbitrators are specifically instructed to award attorneys' fees for instances
of abuse of the discovery process.
(c) Location of Proceedings. All arbitration proceedings shall be held
in Phoenix, Arizona, unless the parties agree otherwise.
(d) Pre-hearing Discovery. The parties shall have the right to conduct
and enforce pre-hearing discovery in accordance with the then current Federal
Rules of Civil Procedure, subject to these limitations:
(i) Each party may serve no more than two sets of
interrogatories;
(ii) Each party may depose the other party's expert
witnesses who will be called to testify at the hearing, plus two fact
witnesses without regard to whether they will be called to testify
(each party will be entitled to a total of not more than 24 hours of
depositions of the other party's witnesses); and
(iii) Document discovery and other discovery shall be
under the control of and enforceable by the arbitrators.
Discovery disputes shall be decided by the arbitrators. The arbitrators
are empowered:
(i) to issue subpoenas to compel pre-hearing document
or deposition discovery;
(ii) to enforce the discovery rights and obligations
of the parties; and
(iii) to otherwise to control the scheduling and
conduct of the proceedings.
Notwithstanding any contrary foregoing provisions, the arbitrators
shall have the power and authority to, and to the fullest extent practicable
shall, abbreviate arbitration discovery in a manner which is fair to all parties
in order to expedite the conclusion of each alternative dispute resolution
proceeding.
(e) Pre-hearing Conference. Within forty-five (45) days after filing of
notice of demand for binding arbitration, the arbitrators shall hold a
pre-hearing conference to establish schedules for completion of discovery, for
exchange of exhibit and witness lists, for arbitration briefs, for the hearing,
and to decide procedural matters and all other questions that may be presented.
(f) Hearing Procedures. The hearing shall be conducted to preserve its
privacy and to allow reasonable procedural due process. Rules of evidence need
not be strictly followed, and the hearing shall be streamlined as follows:
(i) Documents shall be self-authenticating, subject
to valid objection by the opposing party;
(ii) Expert reports, witness biographies,
depositions, and affidavits may be utilized, subject to the opponent's
right of a live cross-examination of the witness in person;
(iii) Charts, graphs, and summaries shall be utilized
to present voluminous data, provided (i) that the underlying data was
made available to the opposing party thirty (30) days prior to the
hearing, and (ii) that the preparer of each chart, graph, or summary is
available for explanation and live cross-examination in person;
(iv) The hearing should be held on consecutive
business days without interruption to the maximum extent practicable;
and
(v) The arbitrators shall establish all other
procedural rules for the conduct of the arbitration in accordance with
the rules of arbitration of the Center for Public Resources.
(g) Governing Law. This arbitration provision shall be governed by, and
all rights and obligations specifically enforceable under and pursuant to, the
Federal Arbitration Act (9 U.S.C. ss. 1, et seq.) and the laws of the State of
Arizona shall be applied, without reference to the choice of law principles
thereof, in resolving matters submitted to such arbitration.
(h) Consolidation. No arbitration shall include, by consolidation,
joinder, or in any other manner, any additional person not a party to this
Agreement (other than Affiliates of any such party, which Affiliates may be
included in the arbitration), except by written consent of the parties hereto
containing a specific reference to this Agreement.
(i) Award. The arbitrators are empowered to render an award of general
compensatory damages and equitable relief (including, without limitation,
injunctive relief), but is not empowered to award punitive, presumptive,
special, exemplary, contingent, incidental, speculative or consequential
damages, or any other damages other than actual damages. The award rendered by
the arbitrators (1) shall be final; (2) shall not constitute a basis for
collateral estoppel as to any issue; and (3) shall not be subject to vacation or
modification.
(j) Confidentiality. The parties hereto will maintain the substance of
any proceedings hereunder in confidence and the arbitrators, prior to any
proceedings hereunder, will sign an agreement whereby the arbitrator agrees to
keep the substance of any proceedings hereunder in confidence.
ARTICLE X
MISCELLANEOUS
10.1) Termination Prior to Closing. Notwithstanding any contrary
provisions of this Agreement, the respective obligations of the parties hereto
to consummate the Closing may be terminated and abandoned at any time at or
before the Closing only as follows:
(a) By and at the option of Buyer if, through no fault of Buyer, the
Closing shall not have occurred by July 5, 1995.
(b) By and at the option of Seller if, through no fault of Seller, the
Closing shall not have occurred by July 5, 1995.
(c) At any time, without liability of any party to the others, upon the
mutual written consent of Buyer and Seller.
Nothing contained in this Section shall be construed as a release or
waiver by any party hereto of any of its rights against any other party arising
out of any breach of this Agreement by the other party.
10.2) Return of Information. If for any reason whatsoever this
Agreement is terminated prior to Closing, (i) each party shall promptly deliver
(without retaining any copies thereof) to the other respective party, or certify
to the other party that it has destroyed, all documents, work papers and other
material obtained by such party or on its behalf from the other party or any of
its agents, employees or representatives as a result hereof or in connection
herewith, whether so obtained before or after the execution hereof, and (ii)
each party shall cause any Confidential Information obtained from the other
party pursuant to this Agreement or otherwise to be kept confidential and will
not use, or permit the use of, such Confidential Information in its business or
in any other manner or for any other purpose.
10.3) Expenses. Unless otherwise provided herein, the parties shall
bear their own respective expenses (including, but not limited to, all
compensation and expenses of counsel, financial advisers, consultants, actuaries
and independent accountants) incurred in connection with the preparation and
execution of this Agreement and the Ancillary Agreements and consummation of the
transactions contemplated hereby and thereby.
10.4) Public Disclosure. Until and through the Closing, each of the
parties to this Agreement hereby agrees with the other parties hereto that,
except as may be required to comply with the requirements of applicable law, no
press release or similar public announcement or communication will be made or
caused to be made concerning the execution or performance of this Agreement or
the Ancillary Agreements unless specifically approved in advance by all parties
hereto. Buyer and Seller will mutually agree on the content of the press release
to be issued immediately following the Closing in the form of Exhibit F.
10.5) Entire Agreement. This Agreement together with the Ancillary
Agreements: (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties, with
respect to the subject matter hereof; (b) is not intended to confer upon any
other persons any rights or remedies hereunder; and (c) shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
permitted successors and assigns.
10.6) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
10.7) Interpretation. The section and article headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement. This Agreement shall be
construed without regard to any presumption or other rule requiring construction
hereof against the party causing this Agreement to be drafted.
10.8) Notices. All notices hereunder shall be deemed given if in
writing and delivered personally or sent by telecopy (with confirmation of
transmission) or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses as shall be specified by like
notice):
(a) if to Seller and Shareholder, to:
Jerry Aslanian
6210 North Camelback Manor Drive
Paradise Valley, Arizona 85253
(b) if to Buyer and Parent, to:
CONMED Corporation
310 Broad Street
Utica, New York 13501
Attention: Eugene R. Corasanti, President
Any party may change the above-specified recipient and/or mailing
address by notice to the other party given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the second business day
after date postmarked (if delivered by mail).
10.9) Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of Arizona,
without reference to the choice of law principles thereof.
10.10) Illegality. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties hereto as of the date first above written.
THE MASTER MEDICAL CORPORATION
By:_________________________________
Its______________________________
----------------------------------
JERRY L. ASLANIAN, SHAREHOLDER
----------------------------------
GENA ASLANIAN, SHAREHOLDER
CONMED CORPORATION
By:_________________________________
Its_____________________________
BIRTCHER MEDICAL SYSTEMS, INC.
By:_________________________________
Its_____________________________
<PAGE>
ADDENDUM
This Addendum is made with reference to that certain Asset Purchase
Agreement (the "Agreement") by and between The Master Medical Corporation, an
Arizona Corporation, ("Seller"), Jerry Aslanian and Gena Aslanian, husband and
wife, the sole shareholders of The Master Medical Corporation (collectively, the
"Shareholder"), Birtcher Medical Systems, Inc., a California Corporation
("Buyer"), and CONMED Corporation, a New York Corporation ("Parent").
The final sentence of section 5.6 of the Agreement is hereby stricken
and replaced with the following sentence:
In the event such audited financial statements are not delivered by
Seller to Buyer on or before the sixtieth (60th) calendar day following
the Closing and such failure is not due in whole or in part to any
action or inaction by Buyer or its representatives or due to
circumstances beyond the control of Seller or Seller's representatives,
then Seller shall be required to pay Buyer $500 for each full day that
the delivery of such audited financials is delayed beyond the sixtieth
(60th) day, subject to a maximum payment of $50,000.
THE MASTER MEDICAL CORPORATION,
an Arizona corporation
By: /s/ Jerry L. Aslanian
--------------------------------
Its: President
/s/ Jerry L. Aslanian
--------------------------------
Jerry L. Aslanian, Shareholder
/s/ Gena L. Aslanian
--------------------------------
Gena L. Aslanian, Shareholder
CONMED CORPORATION,
a New York corporation
By: /s/ Joseph J. Corasanti
--------------------------------
Its: Vice President
BIRTCHER MEDICAL SYSTEMS, INC.
By: /s/ Joseph J. Corasanti
--------------------------------
Its: Vice President
