Exhibit 10.48
PURCHASE & SALE AGREEMENT
THIS AGREEMENT is entered into effective the 27th day of July 2000 by
and between Medtox Scientific, Inc., a Delaware corporation ("Buyer"); and
NMRO, Inc., a Michigan corporation ("Seller")and ESP Employment Screening
Partners, Inc., a Delaware corporation ("Selling Shareholder") sometimes
hereinafter collectively referred to as ("Sellers"), and solely as to Section
2 hereof, by Xx Xxxxxx Xxxxx, a California resident ("Xxxxx").
RECITALS:
1. Selling Shareholder is the owner of 100% of all the issued and
outstanding stock and equity of Seller and Xxxxx is the controlling shareholder
of Selling Shareholder.
2. Seller and Selling Shareholder are the owners and operators of a specimen
collection business ("Business") operating out of the Sellers business location
at 0000, 00xx Xxxxxx Xxxxx, Xxxxxxxxxxx XX. 00000 ("Premises").
3. Seller and Selling Shareholder now wish to close down their
operations at the Premises and sell the Business to Buyer in exchange for the
consideration as hereinafter provided.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements of the parties herein contained, and intending to be
legally bound thereby, the parties mutually agree as follows:
Section 1. Purchase and Sale of Business. Subject to and in express
reliance of the warranties, representations and covenants contained in this
Agreement, and subject to the terms and conditions hereof, Seller and Selling
Shareholder hereby agree to sell, assign, convey and transfer to Buyer all of
their right, title and interest, in and to the specific assets of the Business,
as described in detail on Exhibit "A" attached hereto and made a part hereof,
for the consideration set forth herein (the "Assets").
Simultaneous with the Closing, Seller and Selling Shareholder shall do
all things as may be reasonably required to put Buyer into possession and
effective control over the conduct of the Business with the specific customers
identified in the list attached as Exhibit "B" (the "Customer List").
Section 2. Confidentiality and Non-Competition Agreements.
A. Seller and Selling Shareholder acknowledge that their services and their
knowledge of the Business are of unique value; and the entrance of Seller or
Selling Shareholders into competition, with Buyer, or any of its wholly owned
subsidiaries, directly or indirectly, by use of name, reference, or otherwise,
in the operation of the Business within the Restricted Territory, as defined
below, cannot adequately be compensated by damages in an action at law. In view
of the necessity of Seller and Selling Shareholder not entering into competition
with Buyer or any of its wholly owned subsidiaries, in the operation of the
Business within the Restricted Territory and as a material inducement to Buyer
to enter into this Agreement and to pay for the Business, Seller and Selling
Shareholder hereby covenant and agree that they will not directly or indirectly,
either as principal, agent, manager, employee, owner, partner, shareholder,
officer or director of a proprietorship, partnership, corporation or otherwise
engage in any activity competitive with the Business for the specific customers
identified in the Customer List within a fifty (50) mile radius of the Premises
(the "Restricted Territory"); or disparage or otherwise criticize the products
or services being provided by, or sold by Buyer or any of its wholly owned
subsidiaries within the Restricted Territory for a period of three (3) years
from the Closing Date; provided however, that the foregoing non-competition
covenant and the other provisions of this Section, shall not apply to either of
the following: (1) the solicitation for sale or the sale of on-site testing
services offered by eScreen, Inc, a subsidiary of Selling Shareholder
("eScreen"), within the Restricted Territory, to the following persons or
entities: Wal Mart, Target, Best Buy, Xxxxxx'x, ChoicePoint, UPS, Aerotek,
Hyatt, Yellow Freight, or Host Marriott; or (2) the solicitation for sale or the
sale of eScreen on-site testing services within the Restricted Territory, by any
eScreen-contracting physician, physician group, medical group, medical clinic,
occupational clinic or rehabilitation clinic (each, an "eScreen Contractor"), to
any persons or entities, regardless of whether they are included on the
Customers List, provided only that Sellers do not provide to any such eScreen
Contractor a copy of the Customer List or any names therefrom that are not
excluded under the immediately preceding clause (1) of this paragraph. Buyer
shall have the right to enforce the provisions of this Section and the
Confidentiality and Non-competition Agreement by specific remedies including but
not limited to temporary restraining orders, and temporary and permanent
injunctions, but such remedies shall be cumulative and shall not preclude said
parties from seeking damages resulting from a breach of this provision. Seller
and Selling Shareholder have carefully read and considered the provisions of
this Section and, having done so, agree that the restrictions set forth herein,
including but not limited to the time period of the restrictions, the
geographical limitation to the Restricted Territory, and the application of such
restrictions to particular customers are fair and reasonable and are reasonably
required for the protection of the interests of Buyer in the Business. In the
event that, notwithstanding the foregoing, any of the provisions of this section
shall be held to be invalid or unenforceable, the remaining provisions hereof
shall nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included herein.
B. Seller and Selling Shareholder shall keep in confidence all
confidential and proprietary information about the Business and the Business
operations of Seller being acquired by Buyer. All information relating to such
Business operations shall be presumed to be Confidential Information except to
the extent that such Confidential Information is otherwise publicly available or
is received from a third party not affiliated with Seller or Buyer after the
Closing Date. Seller and Selling Shareholder shall keep in confidence all such
Confidential Information and other financial information relating to Seller, the
Assets and Business operations and will not, without the prior written consent
of Buyer, except to the extent required by law or to the extent any such
information is otherwise publicly available or received from a third party not
affiliated with Buyer or Seller, reveal any such Confidential Information to any
third party. All documents relating to the Assets being acquired by Buyer shall
be delivered to Buyer at the Closing Date or thereafter if not available or
found as of the Closing Date. No such documents shall be reproduced without
Buyer's prior written approval.
X. Xxxxx represents and warrants that as the controlling shareholder of
the Selling Shareholder, Xxxxx will derive an indirect but nonetheless
recognizable economic benefit from the completion of the transactions
contemplated hereby, and therefor as an inducement to Buyer and in consideration
of Buyer's entering into this agreement, Xxxxx agrees that in addition to
Sellers, he too shall be personally bound by and shall personally comply with
each of the covenants contained within the Confidentiality and Non-Competition
Agreements set forth in this Section 2. Xxxxx represents and warrants that Xxxxx
has carefully read and considered the provisions of this Section and, having
done so, agrees that the restrictions set forth herein, including but not
limited to the time period of the restrictions, the geographical limitation to
the Restricted Territory, and the application of such restrictions to particular
customers are fair and reasonable and are reasonably required for the protection
of the interests of Buyer in the Business.
Section 3. Purchase Price and Allocation. The purchase price for the
Business, and the Sellers covenants contained in Section 2 hereof and all other
assets being acquired hereunder shall be Two Hundred and Ten Thousand Dollars
($210,000) ("Purchase Price"). It is agreed that the Purchase Price reflects the
fair market value of the Business and agreements contained herein. The parties
agree to allocate ten percent (10%) of the Purchase Price as consideration for
the Confidentiality and Non-Competition Agreements of Sellers and Xxxxx.
Section 4. Payment of Purchase Price. The Purchase Price set forth
in Section 3, shall be payable as follows:
A. Seventy-Five Thousand Dollars ($75,000) shall be paid in three equal
installments of $25,000 each. The first installment shall be due at the time of
Closing and the remaining two $25.000 installments payable on the 30th and 60th
day, respectively, following the Closing.
B. One Hundred Thirty-Five Thousand Dollars ($135,000) in non-cash
consideration shall be paid by Buyer by the deliver to Seller at Closing of
15,152 shares of the common stock of Medtox Scientific, Inc. ("Medtox Common
Stock").
C. During the period subsequent to the Closing Date and prior to
October 1, 2000, or such later date as the parties mutually agree in writing
that Buyer may file the Registration Statement as required by paragraph D of
Section 7 of this Agreement, Buyer shall have the right and option to
re-purchase from Seller the Medtox Common Stock in consideration for the payment
by Buyer to Seller of nine dollars per share (for an aggregate re-purchase price
of One Hundred Thirty-Six Thousand Three Hundred Sixty-Eight Dollars ($136,368).
Section 5. Assumption of Liabilities. The parties hereto agree that
Buyer is assuming absolutely no liabilities of Seller or Selling Shareholder
related in any way to the Business or the Business assets or operations.
Section 6. Representations, Warranties and Covenants of Seller and
Selling Shareholder. Seller and Selling Shareholder jointly and severally
represent, warrant and covenant to Buyer that as of the date hereof, the
Effective Time and Date of Closing:
A. Authorization and Authority. The execution, delivery and performance
by Seller of this Agreement and all other agreements contemplated hereby shall
have been duly and validly authorized and approved by all necessary actions.
Seller has the legal power and authority to enter into and perform this
Agreement and all other agreements contemplated hereby. Neither the execution
and delivery of this Agreement, nor the consummation of any transactions
contemplated hereby or thereby, has constituted or resulted in or will
constitute or result in a material default or violation by Sellers of any term
or provision in the Certificate of Incorporation, Bylaws, or organizing
instruments of Sellers, or any agreement to which Sellers are a party, or any
judgment, decree, governmental order, statute, rule or regulation by which they
are bound or to which their properties or assets, including the Assets referred
to herein, are subject.
B. Organization and Standing of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Michigan, and has all necessary corporation powers to own its properties and to
carry on its business as now owned and operated by it. All shares of Seller are
owned by the Selling Shareholder.
C. Laws and Governmental Orders. This Agreement and all other
agreements contemplated hereby are and will be valid and binding agreements of
Seller and Selling Shareholder, enforceable in accordance with their respective
terms. Neither the execution nor delivery by Seller or Selling Shareholder of
this Agreement or any other agreements contemplated hereby will violate any
applicable state or federal law or regulation.
D. Business of Seller. The Customer List attached as Exhibit B
contains a complete and accurate listing as maintained by Sellers of all of the
customers of the Business as of June 30, 2000, without any representation or
warranty as to the current status or activity level of any such customers of the
Business.
E. Agreements and Commitments. Seller has no material commitments
and/or agreements which have not been disclosed to and approved by Buyer with
any of the customers of the Business included on Exhibit "B" or which include
any special pricing, volume discounts, or similar terms that are not already
reflected in the gross sales revenue of the Business as of June 30, 2000.
F. Financial Information. Seller's financial information provided to Buyer
with respect to the customers identified on Exhibit "B" are true, accurate and
complete.
G. Commissions. Sellers have not incurred any obligation or liability,
contingent or otherwise, for broker's or finder's fees in connection with the
transactions contemplated by this Agreement.
H. Orderly Transition. Seller and Selling Shareholder shall assist
Buyer in every reasonable manner to insure an orderly transition of the
operation of the Business. As of the Closing Date, the Sellers shall discontinue
all specimen collection operations at the Premises and make arrangements for all
incoming telephone calls to the Premises to roll over directly to Buyer's
location at 0000, 00xx Xxxxxx Xxxxx, Xxxxxxxxxxx XX 00000 ("Buyer's Site").
Sellers shall also prominently post on the Premises that Sellers have
discontinued all specimen collection business and refer all such business to
Buyer's Site. As of the Closing Date Sellers shall authorize Buyer to mail a
notice (in a form reasonably satisfactory to Sellers) to all customers of the
Business identified on the Customer List that Sellers have transferred the
Business to Buyer.
I. Investment Intent. The Sellers acknowledge that the Medtox Common
Stock has not been registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws, and is being offered and sold in
reliance upon federal and state exemptions from such registration. The Sellers
have such knowledge and experience in financial and business matters that the
Sellers are capable of evaluating the merits and risks of the Medtox Common
Stock in connection with this Agreement. The Sellers have received certain
information concerning the Buyer and have had the opportunity to obtain
additional information as desired by Sellers in order to evaluate the merits and
the risks inherent in holding the Medtox Common Stock. The Sellers are able to
bear the economic risk and lack of liquidity inherent in holding the Medtox
Common Stock for an indefinite period. The Sellers are acquiring the Medtox
Common Stock for investment and not with a view toward or for sale or
distribution thereof within the meaning of the Securities Act, or with any
present intention of distributing or selling the Medtox Common Stock within the
meaning of the Securities Act. The Selling Shareholder acknowledges and agrees
that after the Closing the Medtox Common Stock may not be sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act and any applicable state securities laws,
except pursuant to an exemption from such registration available under the
Securities Act or such state securities laws.
J. Survival of Warranties. All representations and warranties of
Sellers regarding the subject matter hereof, are expressly set forth in this
Section 6, and Sellers make no other warranties either express or implied with
regard to the Business or the Assets, including, but not limited to, the implied
warranties of merchantability or fitness for a particular purpose. No
representation, covenant or warranty made by Seller or Selling Shareholder in
this Agreement or in any exhibit hereto or agreement contemplated hereby
contains or will contain on the Closing Date any untrue statement of a material
fact or omit or will fail to state material facts necessary to make any
statement made not misleading. All representations and warranties made herein by
Seller or Selling Shareholder shall be deemed remade on the Closing Date and the
obligation of the Sellers with respect to the completeness and accuracy of such
representations and warranties shall survive the Closing and continue thereafter
as provided in Section 14 hereof.
Section 7. Representations, Warranties and Covenants of Buyer. Buyer
represents, warrants and covenants to Seller and Selling Shareholder that as of
the Effective Time and the Date of Closing:
A. Authorization and Authority. The execution, delivery and performance
by Buyer of this Agreement and all other agreements contemplated hereby shall
have been duly and validly authorized and approved by all necessary actions.
Buyer has the legal power and authority to enter into and perform this Agreement
and all other agreements contemplated hereby. Neither the execution and delivery
of this Agreement, nor the consummation of any transactions contemplated hereby
or thereby, has constituted or resulted in or will constitute or result in a
material default or violation by Buyer of any term or provision in the
Certificate of Incorporation, Bylaws, or organizing instruments of Buyer, or any
agreement to which Buyer is a party, or any judgment, decree, governmental
order, statute, rule or regulation by which it is bound or to which its
properties or assets are subject.
B. Laws and Governmental Orders. This Agreement and all other
agreements contemplated hereby are and will be valid and binding agreements of
Buyer enforceable in accordance with their respective terms. Neither the
execution nor delivery by Buyer of this Agreement or any other agreements
contemplated hereby will violate any applicable state or federal law or
regulation.
C. Commissions. Buyer has not incurred any obligation or liability,
contingent or otherwise, for broker's or finder's fees in connection with the
transactions contemplated by this Agreement.
D. Issuance of Medtox Common Stock. With respect to the Medtox Common
Stock; (1) such shares are issuable upon and in payment of the Purchase Price as
set forth in this Agreement, when so issued, will be duly authorized, validly
issued and fully paid and nonassessable; (2) except as set forth in this
Agreement, there are no restrictions on the transfer of such shares other than
those imposed by state and federal securities laws applicable to the
transactions contemplated by this Agreement; and (3) the offer, sale and
issuance by the Buyer of all such shares to be issued on the Closing hereunder
will comply with or otherwise be exempt from all federal and state securities
laws.
E. Registration of Common Stock. Buyer agrees to use its best efforts
to file with the Securities and Exchange Commission on or before October 1,
2000, a registration statement for the purpose of registering the Medtox Common
Stock constituting the non-cash portion of the Purchase Price under the
Securities Act of 1933, as amended, and listing the Selling Shareholder as the
selling shareholder for purposes of such registration (the "Registration
Statement"). Selling Shareholder shall provide to Buyer all information
pertaining to the Selling Shareholder, as selling shareholders, necessary for
inclusion in such registration statement. Buyer shall bear the cost of
preparation and filing such Registration Statement, provided that Sellers shall
each bear the costs of their respective legal counsel, if any, engaged to
represent them in connection with such Registration Statement. The Buyer's last
10-K, 10-Q and proxy statement filed with the Securities Exchange Commission are
each attached hereto as Exhibit "C". Buyer is a reporting company under the
Securities Act of 1933 and is current in all of its reporting requirements.
F. Financial Statements. The profit and loss statements and the balance
sheets of Buyer for the fiscal year ended December 31, 1999, and the quarter
ended March 31, 2000 are attached hereto as Exhibit "C" and incorporated herein
by reference. Said financial statements fairly and accurately present the
operations of Buyer for the periods covered and the financial position of Buyer
without material errors as of the date thereof.
G. Survival of Warranties. All representations and warranties of Buyer
regarding the subject matter hereof, are expressly set forth in this Section 7,
and Buyers make no other warranties either express or implied, including but not
limited to, any warranty with regard to the financial condition of Buyer, the
Medtox Common Stock or the value thereof. No representation, covenant or
warranty made by Buyer in this Agreement or in any exhibit hereto or agreement
contemplated hereby contains or will contain on the Closing Date any untrue
statement of a material fact or omit or will fail to state material facts
necessary to make any statement made not misleading. All representations and
warranties made herein by Buyer shall be deemed remade on the Closing Date, and
the obligations of Buyer with respect to the completeness and accuracy of such
representations and warranties shall survive Closing and continue thereafter as
provided in Section 14 hereof.
Section 8. Seller's Obligations Before Closing. Seller covenants that
from the date of this Agreement until Closing Buyer and its counsel,
accountants, and other representatives shall have full access during normal
business hours to all properties', books, accounts, records, contracts and
documents that relate to both the Business and the customers included on the
Customer List of the Business (i.e., Seller is not obligated to provide access
to its books and records that do not relate to the Business, or that relate to
products or services of Seller that are not part of the Business and that are
provided by Seller to customers that are included on the Customer List. Seller
shall furnish or cause to be furnished to Buyer and their representatives all
data and information concerning the customers of the Business serviced on or off
the Premises as may be requested. Seller and Selling Shareholder will assist
Buyer in every reasonable manner between the date hereof and the Date of Closing
for an orderly transition of the operations of the Business.
Section 9. Buyer's Obligations Before Closing. Buyer covenants that
from the date of this Agreement until the Date of Closing Buyer and its
representatives will hold in strict confidence, and will not use to the
detriment of Seller or Selling Shareholder any confidential customer data and
information obtained in connection with this transaction or agreement, with
respect to the Business of Sellers; and if the transactions contemplated by this
Agreement are not consummated. Buyer will return to Seller all data and
information that Seller may reasonably request, including all extracts and
summaries, prepared by or made available to Buyer in connection with this
transaction. All such information disclosed shall be kept confidential by Buyer.
Section 10. Conditions Precedent to Buyer's Closing. The obligations of
Buyer under this Agreement to be performed at the Date of Closing shall be
subject to Seller meeting the following conditions at or prior to the Date of
Closing, any of which may be waived by Buyer at its option provided, however,
that no such waiver of a condition shall constitute a waiver by Buyer of any of
its other rights or remedies, at law or in equity, if Seller shall be in default
of any of its representations, warranties, or covenants under this Agreement not
specifically so waived:
A. Representations, Warranties and Covenants. Each of the representations,
warranties and covenants made by Seller and Selling Shareholder in this
Agreement shall be true in all material respects.
B. Compliance with Agreement. Seller and Selling Shareholder shall have
materially performed and complied with all of their obligations under this
Agreement and all other agreements contemplated hereby which are to be performed
or complied with by Seller or Selling Shareholder prior to or at the Date of
Closing.
C. Closing Documents. The form and substance of all documents delivered to
Buyer on or before the Date of Closing pursuant to this Agreement shall be in
form reasonably satisfactory to Buyer and Buyer's counsel.
D. Absence of Litigation. No action, suit, or proceeding before any court
or any government body or authority not previously disclosed pertaining to the
transaction contemplated by this Agreement or its consummation, shall have been
instituted on or threatened on or before the Date of Closing.
E. Buyer's Inspection Contingency. Buyer's performance hereunder is
contingent upon Buyer's inspection and approval of the Customer List and related
financial records of Seller. Such documents shall be true, accurate and complete
in all material respects and reflect a level of gross sales revenues of at least
$30,000 per month, in the aggregate, for the six (6) months up to and including
June 30, 2000 (except to the extent that such gross sales revenue will be
reduced for periods subsequent to June 30, 2000 as a result of the loss of gross
sales revenue from the Multi-Care entities, which reduction Buyer acknowledges
and accepts), with revenues from specimen collection provided to the customers
identified on the Customer List constituting at least ninety-five percent (95%)
of total revenue, and the balance of total revenue derived primarily from
breath-alcohol testing services. In the event Buyer, in Buyer's sole discretion,
is not completely satisfied with the Customer List and related financial records
of Seller, Seller hereby agrees that Buyer shall have the right to terminate
this Agreement by serving written notice thereof on Seller or Seller's agent in
person or by registered or certified mail on or before the Closing date.
F. Failure to Meet Conditions Precedent. In the event that any of the
aforementioned conditions are not met prior to or as of the Closing Date, Buyer
may, at its sole option, terminate this Agreement, in which case it shall become
null, void and of no effect after Buyer provides written notice of such failure
to Seller on the Closing Date and Seller's failure to cure the same within ten
(10) days following receipt of such written notice from Buyer.
Section 11. Conditions Precedent to Seller's Closing. The obligations
of Seller and Selling Shareholder under this Agreement to be performed at the
Date of Closing shall be subject to the reasonable satisfaction, at the Date of
Closing, of the following conditions, any of which-may be waived by Seller at
its option:
A. Representations, Warranties and Covenants. Each of the representations,
warranties and covenants made by Buyer in this Agreement shall be true in all
material respects on the Date of Closing.
B. Compliance with Agreement. Buyer shall have materially performed and
complied with all of its obligations under this Agreement and all other
agreements contemplated hereby which are to be performed or
complied with prior to or at the Date of Closing.
C. Closing Documents. The form and substance of all documents delivered to
Seller pursuant to this Agreement shall be in form reasonably satisfactory to
Seller and Seller's counsel.
D. No Material Changes. During the period from the date hereof to the Date
of Closing, there shall not have been any material adverse change in the
financial condition or the operations of Buyer.
E. Failure to Meet Conditions Precedent. In the event that any of the
aforementioned conditions are not met prior to or as of the Closing Date, Seller
may, at its sole option, terminate this Agreement, in which case it shall become
null, void and of no effect after Seller provides written notice of such failure
to Buyer on the Closing Date and Buyer's failure to cure the same within ten
(10) days following receipt of such written notice from Seller.
Section 12. Date of Closing and Effective Time. The Date of Closing
shall be on or before August 3, 2000, or such later date as the parties may
agree ("Closing Date"). The Closing shall take place at Buyer's Site, or such
other location as the parties may agree. The effective time of the Closing of
this Agreement shall be as of midnight on the Closing Date (the "Effective
Time").
Section 13. Delivery of Documents at Closing.
A. On the Date of Closing, Seller and Selling Shareholder shall deliver or
cause to be delivered to Buyer, the following:
(1) A copy of any necessary resolutions authorizing the execution, delivery
and/or performance of this Agreement and all other agreements contemplated
hereby.
(2) The Customer List in substantially the form of Exhibit "B".
(3) Final approval of the exact form and substance of the letter to be sent
out to all customers on the Customer List following the Closing.
(4) Simultaneous with such delivery, Seller shall do all things as may be
reasonably required to put Buyer into effective possession and control of the
conduct of the Business with the customers identified on the Customer List of
the Business.
Such other instruments and documents as may be required by any provision of this
Agreement or reasonably necessary, in the opinion of Buyer or Buyer's counsel,
to reflect the performance of this Agreement and all other agreements
contemplated hereunder.
B. On the Date of Closing, Buyer shall deliver or cause to be delivered to
Seller, the following:
(1) A copy of any necessary resolutions authorizing the execution, delivery
and performance of this Agreement and all other agreements contemplated
(2) Such other instruments and documents as may be required by any other
provision of this Agreement or reasonably necessary, in the opinion of Seller or
Seller's counsel, to reflect the performance of this Agreement and all other
agreements contemplated hereby.
(3) A certificate or certificates representing 15,152 shares of Medtox
Common Stock registered in the name of the Seller.
C. All documents and instruments to be delivered on the Date of Closing
shall be regarded as having been delivered simultaneously, and no document or
instrument shall be regarded as having been delivered until all have been
delivered.
Section 14. Obligations After Closing.
A. Seller's Indemnification. Seller and Selling Shareholder hereby
agree to indemnify Buyer and hold it harmless from and against any and all
losses, costs, damages, assessments, fines and other expenses, including
reasonable attorney's fees and court costs ("Damages") arising out of or
resulting from; (1) any liabilities or obligations of Seller or Selling
Shareholder not expressly assumed by Buyer; (2) any material breach by Seller or
Selling Shareholder of any covenant, warranty or representation contained in
this Agreement, the exhibits hereto or any agreement contemplated hereunder; (3)
or any material inaccuracy in any document delivered by Seller or Selling
Shareholder to Buyer pursuant to the terms of this Agreement; and (4) any or all
liabilities of every kind and nature and howsoever originating and existing
arising out of any and all of Seller's or Selling Shareholder' business
operations prior to or subsequent to the Date of Closing hereunder and not
payable by Buyer in accordance with this Agreement, provided however, that
Sellers' obligations under this Section 14(A) clauses (2) and (3) shall
terminate and have no further effect at any time after the expiration of three
(3) years from the Closing Date, provided, however, that the foregoing
limitation shall not apply to the Confidentiality and Non-Competition Agreements
of Sellers and Xx. Xxxxx set forth in Section 2 of this Agreement, which shall
expire separately four (4) years from the Closing Date. Buyer shall have the
right to set off any amounts due hereunder against any amount due Seller or
Selling Shareholder as the same may become due.
B. Buyer's Indemnification of Seller. Buyer hereby agrees to indemnify
Seller and Selling Shareholder and hold them harmless from and against any and
all losses, damages costs, assessments, fines and other expenses, including
reasonable attorney's fees and court costs ("Damages"), arising out of or
resulting from; (1) any material breach by Buyer of any covenant, warranty or
representation contained in this Agreement, the exhibits hereto or any agreement
contemplated hereunder; (2) any material inaccuracy in any document delivered by
Buyer to Seller pursuant to the terms of this Agreement; and (3) from any and
all liabilities of every kind and nature and howsoever originating and existing
arising out of any and all of Buyer's business operations subsequent to the Date
of Closing, provided, however that Buyer's obligations under this Section 14 (B)
clauses (2) and (3) shall terminate and have no further force or effect at any
time after the expiration of three (3) years from the Closing Date.
C. Defense of Indemnification Claims. If any party shall claim
indemnification pursuant to the provisions of this Section, the party seeking
indemnification shall promptly notify the party from whom indemnification is
sought in writing of the basis for such claim or demand, setting forth the
nature of the claim or demand in detail. The party against whom indemnification
is sought shall have the right to compromise or, if appropriate, defend at its
own cost and through counsel of its own choosing, any claim or demand of any
third party giving rise to such claim for indemnification. Such notice and
opportunity to compromise or, if applicable, to defend shall be conditions
precedent to any payment by way of indemnification to the party claiming
indemnification pursuant to this Section. In the event the party against whom
indemnification is sought undertakes to compromise or defend any such claim or
demand, it shall promptly notify the other party in writing of its intention to
do so and shall give the other party such security as the party claiming
indemnification reasonably may request. The party claiming indemnification shall
fully cooperate with the other party and its counsel in the defense or
compromise of such claim or demand. The party seeking indemnification shall at
all times also have the right to fully participate in the defense at its own
expense. If the indemnifying party shall, within a reasonable time after this
notice, fail to defend, the party seeking indemnification shall have the right,
but not the obligation, to undertake the defense of, and to compromise or settle
(exercising reasonable business judgment) the claim or other matter on behalf,
for the account, and at the risk, of the indemnifying party.
D. Limitations on Indemnification. No party shall be liable for any
Damages to a person claiming indemnification under this Section 14 until the
amount of such Damages, in the aggregate, exceeds Five Thousand Dollars
($5,000.00). After the foregoing threshold is met, the indemnifying party shall
be liable for all Damages, including the threshold amount, provided however,
that each party's total indemnification obligation hereunder shall be limited to
the amount of the Purchase Price.
Section 15. Expenses. Each of the parties shall pay all costs and expenses
incurred by it in negotiation and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
Section 16. Miscellaneous
A. Further Assurances. The parties agree that after the Date of Closing
they will from time to time, upon the reasonable request of the other, execute,
acknowledge and deliver in proper form any instruments of conveyance or further
assurance necessary or reasonably desirable to meet its obligations, liabilities
and agreements contemplated hereunder.
B. Entire Agreement. Except as supplemented in a writing signed by the
party against whom enforcement is sought, this Agreement and the exhibits and
documents referred to herein contain all of the terms and conditions agreed upon
by the parties with respect to the subject matter of this Agreement, and no
other promises, agreements or understandings, written or oral, regarding the
subject matter of this Agreement, shall be of any force or effect.
C. Modifications. No change, modification or waiver of any provision of
this Agreement shall be valid or binding unless it is in writing, dated
subsequent to the date hereof and signed by the parties intended to be bound. No
waiver of any breach, term or condition of this Agreement by any party shall
constitute a subsequent waiver of the same or any other breach, term or
condition.
D. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
E. Notices. All notices, requests, demands or other communications required
or permitted by this Agreement shall be in writing, and delivery shall
b(degree)deemed to be sufficient if delivered personally or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Buyer: Medtox Scientific, Inc.
000 Xxxx Xxxxxx Xxxx X
Xx. Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, CFO
If to Sellers: National Medical Review Offices, Inc.
0000 Xxxxxxxx Xxxx. 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: President
or to such other addresses as may be specified pursuant to notice
given by either party in accordance with the provisions of this
Subsection.
F. Headings. The headings used in this Agreement are for convenience only
and shall not be deemed to constitute a part hereof, and shall not be deemed to
limit, characterize or in any way affect the provisions of this Agreement.
G. Recitals Incorporated. The recitals to this Agreement are incorporated
into and constitute an integral part of this Agreement.
H. Cross-References. References in this Agreement, or in any document
executed pursuant hereto to any Section or-Subsection are, unless otherwise
specified, to such Section or Subsection of this Agreement or such document, as
the case may be.
I. Possession. Ownership and possession of the Business Assets shall be
deemed effective on the Effective Time and shall actually be transferred as of
the Date of Closing.
J. Relationship Between Buyer and Seller. Nothing in this Agreement
shall be construed as creating a joint venture between Buyer and Seller or any
relationship other than that of buyer and seller, and neither party hereto, nor
anyone else, shall have the authority or power by virtue of the provisions of
this Agreement to incur any liability or obligation, other than as provided by
the specific provisions of this Agreement which would be binding upon the other
party hereto.
K. Severability. If any term, covenant or condition in this Agreement
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement and the covenants contained herein shall not be affected thereby and
the residue shall be valid and enforceable to the fullest extent permitted by
law.
L. Survival of Terms. The agreements, representations and warranties
contained in this Agreement shall be deemed to be remade at and the respective
obligations of the parties for the completeness and accuracy thereof shall
survive the closing. Each party agrees to indemnify the other for and save it
harmless against any breach of any warranty or representation made by the
indemnifying party under this Agreement in accordance with Section 14 hereof.
M. Access to Files. Seller agrees that all files relating to the
Business Assets shall become the property of the Buyer; provided that Seller
shall have reasonable access to said files at ail reasonable times, including
the ability to copy said files for its own use.
N. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Minnesota.
O. Nondisclosure. If this Agreement is terminated for failure of either the
Buyer or Seller to meet any their respective obligations, Buyer and Seller
hereby covenant that they will not disclose to any person other than the Buyer
or Seller any proprietary information about the other party or any information
about the transaction contemplated herein, except as may be necessary to enforce
that party's rights under this Agreement.
P. Binding Agreement. Except as otherwise provided herein, this Agreement
and the terms, conditions and covenants contained herein and transactions
contemplated hereunder shall be binding upon and inure to the benefit of the
parties hereto and their representative successors, representatives and
permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective the date and year first above written.
SELLER: BUYER:
BY:_________________________ BY:_________________________
Its:________________________ Its:________________________
SELLING SHAREHOLDER:
-------------------------
XXXXXX X. XXXXX, SOLELY AS TO SECTION 2
-------------------------
Exhibit "A"
Assets of Business Purchased by Buyer
Sellers agrees that on the Date of Closing, they shall deliver to
Buyer:
A. All of Seller's customer lists, customer records and other data relating
to the customers of the Business; and
B. All of Sellers inventory of forms and kits used to perform specimen
collections services for the customers of the Business's; and
C. The breath-alcohol equipment (5 units) used by Sellers in the Business.
