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EXHIBIT 99.2
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this "Agreement") is made and entered
into as of September 30, 1997, by and among Physicians Clinical Laboratory,
Inc., a Delaware corporation (the "Company"), and Nu-Tech Bio-Med, Inc., a
Delaware corporation (the "Stockholder").
W I T N E S S E T H
WHEREAS, the Company acquired all of the issued and outstanding
shares of capital stock of Medical Science Institute, Inc., a California
corporation ("MSI"), from the Stockholder pursuant to that certain Agreement for
Purchase and Sale of Stock dated as of September 30, 1997 by and among the
Company, the Stockholder and MSI;
WHEREAS, the Stockholder owns a majority of the issued and
outstanding capital stock of the Company; and
WHEREAS, the Stockholder will derive certain financial benefits from
the ownership of its interest in the Company, including without limitation the
ability to sell certain of its products to the Company as more fully detailed
below; and
WHEREAS, in consideration of the purchase of the MSI stock by the
Company from the Stockholder and to further the business development of the
Company for the benefit of the Stockholder and the other equityholders of the
Company, the parties hereto agree that it is in their mutual best interests to
define certain parameters relating to competition by the Stockholder with the
Company.
NOW, THEREFORE, in consideration of the agreements and mutual
covenants set forth herein, the parties agree as follows:
Section 1. Definitions. As used in this Agreement, the following
terms have the following meanings:
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"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting stock of a Person shall be
deemed to be control.
"Agreement" means this Agreement, as the same shall be amended from
time to time.
"Business Day" means a day other than Saturday, Sunday or any other
day on which banks located in the State of California and New York are
authorized or obligated to close.
"Common Stock" means the Company's common stock, $0.01 par value per
share.
"Company" has the meaning assigned to such term in the preamble.
"Employment Agreement" means that certain Employment Agreement dated
as of September 30, 1997 by and between the Company and J. Xxxxxx Xxxxxxxxxx.
"Noteholders" means the holders of the Company's Senior Notes due
2004, issued pursuant to that certain indenture dated as of September 30, 1997
by and between the Company and First Trust National Association, as trustee.
"Qualifying Acquisition" has the meaning assigned to such term in
Section 3.
"Securities" shall mean the shares of Common Stock and any
securities exercisable for or convertible into shares of
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Common Stock, and whenever an amount of Securities is calculated or used in any
provision of this Agreement, exercisable and convertible securities shall be
counted as the number of shares of Common Stock issuable upon such exercise or
conversion.
"Stockholder" has the meaning assigned to such term in the preamble.
Section 2. Covenants of the Stockholder. (a) In consideration of the
purchase of the MSI stock by the Company from the Stockholder, the Stockholder
hereby agrees that it will not directly or indirectly enter into or become
associated with or engage in any business which is directly or indirectly
involved in the provision of clinical laboratory services anywhere in the United
States during such time as the Stockholder or its Affiliates beneficially own at
least 25% of the issued and outstanding shares of Common Stock of the Company
(the "Noncompete Period"); provided that (A) the parties hereto agree that the
provision of specialized cancer or genetic diagnostic laboratory services shall
not be deemed to be clinical laboratory services for purposes of this Agreement,
(B) the requirement that the Stockholder and its Affiliates beneficially own at
least 25% of the issued and outstanding Common Stock shall be adjusted in the
event of the issuance by the Company of shares of Common Stock in a Qualifying
Acquisition (as hereinafter defined) such that the percentage of the issued and
outstanding Common Stock required to be beneficially owned by the Stockholder
and its Affiliates following such issuance of Common Stock shall be equal to the
quotient determined by dividing (x) the number of shares held by the Stockholder
as of the date hereof by (y) the sum of (I) the number of shares of Common Stock
issued and outstanding as of the date hereof plus (II) the number of shares of
Common Stock and shares of Common Stock issuable upon conversion of any
Securities issued in such Qualifying Acquisition, plus (III) the number of
shares of Common Stock and shares of Common Stock issuable upon conversion of
Securities issued in all previously consummated Qualifying Acquisitions, and (C)
any shares of Common Stock distributed by the Stockholder in a distribution of
such shares of Common Stock to the Stockholder's stockholders or other holders
of its securities shall be deemed to be owned by the Stockholder for purposes of
this Section 2. As used herein, Qualifying Acquisition means (A) a merger with
respect to which the equity holders of the Company immediately prior to such
merger beneficially own a majority of the issued and outstanding
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shares of capital stock of the surviving entity or (B) an acquisition of assets
or stock by the Company that, in either the case of (A) or (B), is approved by
the affirmative vote of at least one director nominated by OCM Administrative
Services, L.L.C.
(b) During the Noncompete Period the Stockholder shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee, consultant, independent contractor or agent of the Company or any of
its subsidiaries to leave the employ of the Company or such subsidiary, or in
any way interfere with the relationship between the Company or any of its
subsidiaries and any employee, consultant, independent contractor or agent
thereof, (ii) hire or otherwise retain any person who was an employee,
consultant, independent contractor or agent of the Company or any of its
subsidiaries at any time during the six-month period immediately prior to the
date on which such hiring or engagement would take place, provided that this
clause (ii) shall not apply to the hiring or retaining of any bona fide
consultant, independent contractor or agent of the Company that is also retained
by persons other than the Company and its subsidiaries or the employment by the
Stockholder of J. Xxxxxx Xxxxxxxxxx, or (iii) induce or attempt to induce any
customer, supplier, licensee, licensor, franchisee or other business relation of
the Company or any of its subsidiaries to cease doing business with the Company
or such subsidiary, or in any way interfere with the relationship between any
such customer, supplier, licensee, franchisee or business relation and the
Company or any of its subsidiaries (including making any negative statements or
communications about the Company or any of its subsidiaries).
(c) The parties hereto agree that, based upon the Company's present
business and plans for future expansion, the covenants and agreements contained
in this Section 2 are reasonable in duration, scope and geographic area and are
necessary to protect the goodwill of the Company's business. The breach of the
provisions of this Section 2 would irreparably harm the Company. If, however,
any court shall hold that the duration of non-competition or any other
restriction contained in this Section 2 is unenforceable, it the intention of
the parties hereto that this Section 2 shall not thereby be terminated but shall
be deemed amended to delete therefrom or modify such provision or portion
adjudicated to be invalid or unenforceable
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or in the alternative such judicially substituted term may be substituted
therefor.
(d) The Stockholder hereby acknowledges that J. Xxxxxx Xxxxxxxxxx
has or will enter into the Employment Agreement with the Company and hereby
waives any claims it may currently have or that may arise in the future against
the Company with respect to the employment by the Company of Xx. Xxxxxxxxxx.
Section 3. Equitable Relief. The parties hereto agree and declare
that legal remedies may be inadequate to enforce the provisions of this
Agreement and that equitable relief, including specific performance and
injunctive relief, may be used to enforce such provisions.
Section 4. Miscellaneous.
(a) Notices. All communications under this Agreement shall be in
writing and shall be personally delivered, sent by facsimile transmission or
mailed by first class mail, postage prepaid:
i) if to the Company, at
PHYSICIANS CLINICAL LABORATORY, INC.
0000 X Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
with a copy to each member of the board of directors of the
Company;
ii) if to the Stockholder, at
NU-TECH BIO-MED, INC.
Attn: Mr. J. Xxxxxx Xxxxxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
or at such other address as the appropriate party to this Agreement may have
furnished in writing to each other party hereto. Any notice shall be deemed to
have been duly given when delivered by hand if personally delivered, by
confirmation of
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completed facsimile transmission if delivered by facsimile, and if sent by mail,
two (2) Business Days after being deposited in the mail, postage prepaid.
(b) Waiver. No failure or delay on the part of the parties or any of
them in exercising any right, power or privilege hereunder, nor any course of
dealing between the parties or any of them shall operate as a waiver of any such
right, power or privilege nor shall any single or partial exercise of any such
right, power or privilege preclude the simultaneous or later exercise of any
other right, power or privilege. The rights and remedies herein expressly
provided are cumulative and are not exclusive of any rights or remedies which
the parties or any of them would otherwise have. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
the other parties or any of them to take any other or further action in any
circumstances without notice or demand.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(d) Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York.
(e) Amendment or Termination. This Agreement may be amended or
terminated at any time only by an instrument in writing signed by each of the
parties hereto.
(f) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
(g) Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and the Noteholders, which are hereby expressly
made third-party beneficiaries hereof with the right to enforce the provisions
of
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this Agreement on behalf of the Company as if they were parties hereto.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this
Noncompetition Agreement as of the day and year first above written.
The Company: PHYSICIANS CLINICAL LABORATORY, INC.
By: ______________________________
J. Xxxxxx Xxxxxxxxxx
Chief Operating Officer
The Stockholder:
NU-TECH BIO-MED, INC.
By: ______________________________
J. Xxxxxx Xxxxxxxxxx
Chief Executive Officer
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