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EXHIBIT 99.8
TRANSITION SERVICES AGREEMENT
This Services Agreement ("Services Agreement") is made as of the 3rd
day of August, 1998 ("Effective Date"), between (i) Laboratory Corporation of
America Holdings, a Delaware corporation ("Purchaser"), and (ii) Universal
Standard Healthcare, Inc., a Michigan corporation ("Seller"). Pursuant to an
Asset Purchase Agreement ("Asset Purchase Agreement") dated as of July 16, 1998,
Seller sold certain assets and transferred certain liabilities relating to its
laboratory services business (the "Business") to Purchaser.
Purchaser desires to obtain from Seller, and Seller is willing to
furnish, (a) those services performed for the Business by Seller's EDP
Department (data processing) and Seller's Billing Department (cash, billing
edits, aged trial balances, denials) immediately prior to the Closing, all as
set forth in more detail on Schedule A (the "Services"), and (b) the services of
those of Seller's laboratory personnel described on Schedule B (the "Laboratory
Employees"), which Laboratory Employees were, immediately prior to the Closing,
provided to Seller under an agreement ("Employee Agreement") with National Human
Resources Committee, Inc. ("NHRC").
Seller desires to retain the right to use Laboratory Employees to
furnish laboratory services for Seller's customers ("Transition Customers") who
have not agreed to the assignment of their contracts in connection with the
transactions contemplated by the Asset Purchase Agreement, through the
termination notice period under those agreements ("Transition Services").
In consideration of the mutual covenants and agreements contained in
this Agreement, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions Incorporated. All capitalized terms not otherwise
defined in this Services Agreement have the meaning ascribed to them in the
Asset Purchase Agreement.
1.2 Additional Definitions. Unless the context otherwise requires,
the following terms, and their singular or plural, used in this Services
Agreement shall have the meanings set forth below:
"Business" shall have the meaning set forth in the Preamble to
this Services Agreement.
"Confidential Information" shall have the meaning set forth in
Section 8.1 of this Services Agreement.
"Effective Date" shall have the meaning set forth in the
Preamble to this Services Agreement.
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"Employee Agreement" shall have the meaning set forth in the
Preamble to this Services Agreement.
"Estimated Monthly Charge" shall have the meaning set forth in
Section 3.1(a) of this Services Agreement.
"Force Majeure" shall have the meaning set forth in Section 6.1
of this Services Agreement.
"Insurance Premiums" shall have the meaning set forth in Section
3.2(b) of this Services Agreement.
"Laboratory Employees" shall have the meaning set forth in the
Preamble to this Services Agreement.
"Midterm Reconciliation" shall have the meaning set forth in
Section 3.2 of this Services Agreement."Party" means either of Seller or
Purchaser.
"Person" means an individual, partnership, corporation, trust,
unincorporated association, or other entity or association.
"Purchaser" shall have the meaning set forth in the preamble to
this Services Agreement."Purchaser's Business" shall have the meaning set forth
in Section 2.1(a) of this Services Agreement.
"Purchaser's Laboratory Operations" shall have the meaning set
forth in Section 2.1(b) of this Services Agreement.
"Seller" shall have the meaning set forth in the preamble to
this Services Agreement.
"Seller's Business" shall have the meaning set forth in Section
2.1(a) of this Services Agreement.
"Services" shall have the meaning set forth in the preamble to
this Services Agreement.
"Term" shall have the meaning set forth in Section 4.1 of this
Services Agreement.
"Transition Customers" shall have the meaning set forth in the
Preamble to this Services Agreement.
"Transition Services" shall have the meaning set forth in the
Preamble to this Services Agreement.
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Other terms are used as defined elsewhere herein.
ARTICLE 2.
SCOPE OF AGREEMENT
2.1 Seller Provided Services.
(a) Services During the Term, Seller will provide the Services as
described in Schedule A. It is the Parties' intention that Seller will operate
the Billing and EDP Departments to service that portion of the Business
conducted before the Closing Date for the account of Seller ("Seller's
Business"), and that portion of the Business conducted on and after the Closing
Date for the account of Purchaser ("Purchaser's Business"), and it is expected
that the volume of work performed by those departments for the account of Seller
will decline and the volume performed for the account of Purchaser will increase
over the course of the Term.
(b) Laboratory Employees. During the Term, Seller will direct the
Laboratory Employees to take instruction from and work for Purchaser in the
Business ("Purchaser's Laboratory Operations"). The Laboratory Employees will
also continue to take instruction from and work for Seller in performing
Transition Services during the Term.
2.2 Purchaser Provided Services. Purchaser shall provide laboratory
services to Seller so as to permit Seller to satisfy its obligations under its
agreements with Transition Customers during the period of termination notice.
2.3 Status of Laboratory Employees. Nothing in this Agreement shall
be deemed to cause a change in the status of the employment of the Laboratory
Employees as such employment existed before the Effective Date. Seller shall be
solely responsible for the continuation of the Employee Agreement after the
Effective Date. All payment of salary (including withholding of income taxes and
social security), worker's compensation, disability benefits, and the like, for
the Laboratory Employees shall continue unchanged from the arrangements in place
before the Effective Date. Nothing contained in this Agreement shall be
construed as creating an employment relationship between Purchaser and the
Laboratory Employees, nor granting to Laboratory Employees any rights under
Purchaser's employee benefit plans. Seller will comply with the WARN Act by
giving notice of plant closing to the employees, entitled to notice under WARN.
ARTICLE 3.
FEES
3.1 Initial Fees to Seller.
(a) Services. Until the completion of the Midterm Reconciliation,
Purchaser shall pay
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to Seller the Estimated Monthly Charge set forth on Schedule A for Services by
5:00 p.m. on the day prior to the day on which Seller is required to pay NHRC
amounts due for leased employees performing services for Seller's Billing and
EDP Departments for the prior pay period (the "Employee Lease Costs"). It is
understood that the Estimated Monthly Charge equals one-half of an estimate of
the fully allocated monthly costs of the Billing and EDP Departments, excluding
the Employee Lease Costs.
(b) Laboratory Employees. Until the completion of the Midterm
Reconciliation, Purchaser shall pay Seller by 5:00 p.m. on the day prior to the
day on which Seller is required to pay NHRC amounts due for the leased
Laboratory Employees for the prior pay period (the "Laboratory Employee Lease
Costs") and monthly in advance the Estimated Monthly Charge set forth on
Schedule B for Seller's premiums ("Insurance Premiums") for general liability
and malpractice insurance maintained by Seller to cover services rendered by the
Laboratory Employees during the Term (provided that Purchaser shall not be
obliged to pay the Insurance Premiums if Purchaser causes Seller to be named as
an additional insured on Purchaser's insurance policies for the purposes of this
Agreement). It is understood that the Estimated Monthly Charge is an estimate of
the total monthly cost to Seller of the Insurance Premiums (subject to the
preceding proviso).
3.2 Midterm Reconciliation. As soon as practicable following
completion of the first three months of the Term, the Parties will perform a
reconciliation ("Midterm Reconciliation"), as follows:
(a) Services. The Parties shall (i) calculate (A) the actual fully
allocated costs of Billing and EDP Departments during the first three month
period; and (B) the total accounts receivable balances for each of Seller and
Purchaser processed through the Accounts Receivable system; (ii) allocate the
costs in subparagraph (A) in accordance with the relative percentages of
Accounts Receivable processed as determined in subparagraph (B); and (iii)
reconcile such calculation against the payments actually made under Section
3.1(a) (with one party reimbursing the other within ten business days after the
completion of the Midterm Reconciliation). As soon as the Midterm Reconciliation
is complete, all further fees charged for Services during the Term shall be
based upon the average actual monthly cost and the relative percentages
calculated monthly under this Section 3.2.
(b) Laboratory Employees. The Parties shall (i) determine the actual
total cost of the Laboratory Employees under the Employee Agreement during the
first three month period; and (ii) reconcile such calculation against the
payments actually made under Section 3.1(b) (with one party reimbursing the
other within ten business days after the completion of the Midterm
Reconciliation). Seller will pay to Purchaser an amount equal to the amount
charged by Seller to its Transition Customers for Transition Services during the
first three month period.
3.3 Final Reconciliation. As soon as practicable following the Term,
the parties will perform a reconcilement for all months not covered by the
Midterm Reconciliation in a similar manner to that described in Section 3.2.
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ARTICLE 4.
TERM
4.1 Term. Except as expressly provided otherwise in this Services
Agreement, or with respect to specific services as indicated on the Schedules
hereto, the term of this Services Agreement shall be for six months commencing
at 12:01 a.m. on the date immediately following the Effective Date (the "Initial
Term"). The term of this Agreement may automatically be extended on a month to
month basis after the expiration of the Initial Term by written notice of
Purchaser to Seller delivered at least thirty (30) days prior to the end of the
Initial Term ("Extended Term") and thereafter during the Extended Term delivered
at least thirty days before the first day of the next month. The obligation of
the Parties to make payments under this Agreement shall not be affected by the
expiration of the Initial Term or Extended Term and shall continue until full
payment is made
ARTICLE 5.
POINTS OF CONTACT
5.1 Points of Contact. Seller and Purchaser have each named a
point of contact for each service as set forth on Schedules A and B. Such points
of contact shall be responsible for the implementation of this Services
Agreement between Seller and Purchaser, including resolution of any issues which
may arise during the performance hereunder on a day-to-day basis.
ARTICLE 6.
FORCE MAJEURE
6.1 Force Majeure. Neither Party shall bear any responsibility or
liability for any losses arising out of any delay, inability to perform or
interruption of its performance of obligations under this Services Agreement due
to any acts or omissions of the other or for events beyond the Party's
reasonable control (hereinafter referred to as "Force Majeure") including,
without limitation, acts of God, act of governmental authority, act of the
public enemy or due to war, riot, flood, civil commotion, insurrection, labor
difficulty, severe or adverse weather conditions, lack of or shortage of
electrical power, malfunctions of equipment or software programs to the extent
beyond the reasonable control of the applicable Party, or any other cause beyond
the reasonable control of the Party whose performance is affected by the Force
Majeure event.
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ARTICLE 7.
INDEMNITY
7.1 Indemnity.
(a) Except as set forth in the next sentence, Purchaser will
indemnify and hold harmless Seller, its agents, employees and invitees, against
all liabilities, claims, losses, penalties, recoupments of overpayments,
damages, death or personal injury whatever nature or kind, arising out of
Purchaser's Business or Purchaser's Laboratory Operations (other than Transition
Services). Seller retains all liability for actions of the Billing and EDP
Department undertaken before the Closing Date.
(b) Seller will indemnify and hold Purchaser, its agents, employees
and invitees, against all liabilities, claims, losses, damages, death or
personal injury whatever nature or kind, arising out of the Transition Services.
(c) Except with respect to damages based on third party claims
covered under Sections 7.1(a) or 7.1(b) above, no Party shall be entitled to any
damages with respect to lost profits or other consequential damages or punitive
damages with respect to the performance by any other Party under this Services
Agreement.
ARTICLE 8.
CONFIDENTIALITY
8.1 With respect to any information disclosed by one Party to
another Party for the purpose of this Services Agreement or otherwise accessible
to such other Party during the performance hereunder ("Confidential
Information"), the receiving Party agrees that it will use at least that degree
of skill and care that it would exercise in similar circumstances in carrying
out its own business to prevent the disclosure or accessibility to others of the
disclosing Party's Confidential Information and will use such Confidential
Information only for the purpose of this Services Agreement.
8.2 Specifically excluded from the foregoing obligation is any
and all information that:
(a) is already known to the receiving Party at the time of
disclosure or thereafter is independently developed by the receiving Party
without breach of this Agreement;
(b) is already in the public domain at the time of
disclosure, or thereafter becomes publicly known other than as the result of a
breach by the receiving Party of its obligations under this Services Agreement;
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(c) is rightfully received from a third party without breach
of this Agreement;
(d) is furnished by the disclosing Party to a third party
without a similar restriction on its rights; or
(e) upon advice of counsel, must be produced by the receiving
Party as a matter of law; provided, however, that in such case the receiving
Party shall promptly notify the disclosing Party and, insofar as is permissible
and reasonably practicable without placing the disclosing Party under penalty of
law, give it an opportunity to appear and to object to such production before
producing the requested information.
ARTICLE 9
MISCELLANEOUS
9.1 Internal Dispute Resolution. In the event of any dispute between
Seller and Purchaser arising under or relating to this Services Agreement, they
shall first attempt to resolve such dispute by negotiating in good faith over a
period of at least thirty days.
9.2 Notices. The notice provisions of the Asset Purchase Agreement
are incorporated herein by reference.
9.3 Entire Agreement. Except for those matters provided for in the
Asset Purchase Agreement or the other agreements contemplated therein, this
Services Agreement sets forth the entire agreement of the Parties with respect
to its subject matter. This Services Agreement shall not be modified or amended
except by written instrument executed by each Party.
9.4 Waiver. The failure of a Party to insist upon strict performance
of any provision of this Services Agreement shall not constitute a waiver of, or
estoppel against, asserting the right to require such performance in the future,
nor shall a waiver or estoppel in any one instance constitute a waiver or
estoppel with respect to a later breach of a similar nature or otherwise.
9.5 Severability. If any of the terms and conditions of this
Services Agreement are held by any court of competent jurisdiction to
contravene, or to be invalid under, the laws of any political body having
jurisdiction over the subject matter of this Services Agreement, such
contravention or invalidity shall not invalidate the entire Services Agreement.
Instead, this Services Agreement shall be construed as if it did not contain the
particular provision or provisions held to be invalid, and an equitable
adjustment shall be made and necessary provisions added so as to give effect to
the intention of the Parties as expressed in this Services Agreement at the time
of the execution of this Services Agreement and of any amendments to this
Services Agreement.
9.6 Governing Law; Construction. This Services Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Michigan, without reference
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to its conflicts of law rules or principles. The headings in this Services
Agreement are not to be considered part of this Services Agreement and are
inserted for convenience, identification and reference only and are not intended
to interpret, define, or limit the scope, extent, or intent of this Services
Agreement or any provision of this Services Agreement. Whenever the context
requires, the gender of all words used in this Services Agreement shall include
the masculine, feminine and neuter, and the number of all words shall include
the singular and the plural.
9.7 Counterpart Execution. This Services Agreement may be executed
in counterparts with the same effect as if all of the Parties had signed the
same document. Such counterparts shall be construed together and shall
constitute one and the same instrument, notwithstanding that all of the Parties
are not signatories to the original or the same instrument, or that signature
pages from different counterparts are combined. The signature of any Party to
one counterpart shall be deemed to be a signature to and may be appended to any
other counterpart.
9.8 Successors and Assigns. This Services Agreement shall inure
to the benefit of and shall be binding upon the Parties, their respective legal
representatives, successors, and permitted assignees, and all Persons claiming
by, through, or under right of any of the aforesaid Persons. This Services
Agreement may not be assigned by any Party without the prior written consent of
the other Party.
IN WITNESS WHEREOF, the duly authorized officers or
representatives of the parties hereto have duly executed this Services Agreement
as of the date first written above.
LABORATORY CORPORATION UNIVERSAL STANDARD
OF AMERICA HOLDINGS HEALTHCARE, INC.
By: /s/ Xxxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------- -------------------------
Name: Xxxxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxxx
Title: E.V. President Title: President
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SCHEDULE A
SHARED SERVICES ALLOCATION
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Dept Dept Detailed Function Proratio Universal % Labcorp %
Name # Description Basis
------------------------------------------------------------------------------------------------------------------------------------
Finance 703
Xxxx Xxx, CFO 100% 0%
* Revenue Transition 70% 30%
* Managed Care 100% 0%
* Staff Accountant 10% 90%
* Coding 50% 50%
* Coding 10% 90%
Employees 20% 80%
Other Departmental Expenses 50% 50%
------------------------------------------------------------------------------------------------------------------------------------
EDP 704
* A/R Balance TBD on Mthly Basis TBD on Mthly Basis
* A/R Balance TBD on Mthly Basis TBD on Mthly Basis
* Antrim Programmer 10% 90%
* 100% 0%
* Transsend 0% 100%
* Operations 50% 50%
* Transsend 0% 100%
* Operations 50% 50%
* File Definition 0% 100%
* File Definition 0% 100%
* File Definition 0% 100%
* Transsend, File Def, 20% 80%
Cash
* Operations 50% 50%
* File Definition 0% 100%
Other Departmental Expenses 50% 50%
------------------------------------------------------------------------------------------------------------------------------------
* Denotes information filed separately with the Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 governing requests for
confidential treatment of information.
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Dept Dept Detailed Function Proratio Universal % Labcorp %
Name # Description Basis
------------------------------------------------------------------------------------------------------------------------------------
Billing 303
Billing
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
* A/R BALANCE TBD on Mthly Basis TBD on Mthly Basis
Other Departmental Expenses
------------------------------------------------------------------------------------------------------------------------------------
* Denotes information filed separately with the Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 governing requests for
confidential treatment of information.
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------------------------------------------------------------------------------------------------------------------------------------
Dept Dept Detailed Function Proratio Universal % Labcorp %
Name # Description Basis
------------------------------------------------------------------------------------------------------------------------------------
308
Data
Entry
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
* 0% 100%
Other Departmental Expenses
------------------------------------------------------------------------------------------------------------------------------------
* Denotes information filed separately with the Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 governing requests for
confidential treatment of information.
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SCHEDULE B
LABORATORY EMPLOYEES
All employees leased under the Employee Agreement, except those listed
on Schedule A and Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxx and *.
* Denotes information filed separately with the Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 governing requests for
confidential treatment of information.
