EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
this 31st day of January, 1997, by and between PATHOLOGY LABORATORIES, Ltd., a
Mississippi corporation ("PLL"), and LABORATORY SPECIALISTS OF AMERICA, INC., an
Oklahoma corporation ("LSAI").
R E C I T A L S
1. PLL and LSAI are each engaged in the providing of forensic drug testing
services to corporate and institutional customers.
2. LSAI desires to purchase from PLL and PLL desires to sell to LSAI
certain assets of PLL, principally the forensic drug testing customer base of
PLL and the assets related thereto, and in connection with such purchase the
assumption of the operations by LSAI of the Greenville, South Carolina, office
of PLL.
3. PLL and LSAI desire to make certain representations, warranties,
covenants and agreements in connection with the transactions contemplated under
this Agreement and to prescribe various conditions precedent to such
transactions and payment and delivery of the consideration for purchase of the
assets of PLL.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties to this Agreement have agreed, and
hereby agree, subject to the terms and conditions hereinafter set forth, as
follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Certain terms which are used primarily in individual
sections of this Agreement are defined when used in such sections. Other terms
used frequently throughout this Agreement are set forth below and have the
following meanings:
CLOSING: The consummation of the transactions contemplated by Section 2.1
hereof.
CLOSING DATE: The date on which the Closing shall occur which shall be January
31, 1997, or such other date mutually agreed upon by the parties.
FIRST ANNIVERSARY PERIOD: The period beginning with the day following the
Closing and ending twelve (12) months thereafter.
FORENSIC TESTING REVENUES: Determined in accordance with generally accepted
accounting principles, the sum of (i) the gross revenue directly attributable to
the PLL Assets during the First Anniversary Period, and (ii) the sales price
(without regard to whether the proceeds of sale are received by LSAI during the
First Anniversary Period) of any of the PLL Assets sold by LSAI during the First
Anniversary Period. Gross revenue is defined as total revenues billed by PLL or
LSAI during the First Anniversary Period less discounts and pass through
xxxxxxxx. Pass through xxxxxxxx is defined as any charges billed to LSAI by
third parties, other than PLL, which are then billed by LSAI to customers for
(1) the collection of specimens and (2) the Medical Review Officer charges for
review of specimens.
LEGAL REQUIREMENTS: Any law, statute, ordinance, decree, final order, final
judgment, rule or regulation of (including without limitation the terms of any
license, certificate, franchise or permit issued by) the United States, any
state, commonwealth, territory or possession thereof and any political or
judicial subdivision or instrumentality of the foregoing, including without
limitation, courts, departments, commissions, boards, bureaus or agencies.
LSAI: Laboratory Specialists of America, Inc., an Oklahoma corporation.
PLL: Pathology Laboratories, Ltd., a Mississippi corporation.
PLL ASSETS: The assets of PLL as defined in Section 2.1 hereof and as more
specifically identified on Schedule 2.1.1, attached hereto.
MISSISSIPPI LAW: The laws of the State of Mississippi.
1.2 INTERPRETATION. The words "hereof," "herein" and "hereunder" and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement. Article, section,
subsection and paragraph references in this Agreement are to articles, sections,
subsections and paragraphs of this Agreement, unless otherwise specified. The
article, section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. The Exhibit and all Schedules referred to herein are annexed
hereto and incorporated herein by reference. The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of such
terms.
ARTICLE II
ASSET PURCHASE
2.1 PURCHASE AND SALE OF PLL ASSETS. At the Closing, upon the terms and
subject to the conditions set forth in this Agreement, PLL shall sell, assign,
convey, set over, transfer and deliver to LSAI, and LSAI shall purchase, acquire
and accept all right, title and interest of PLL in and to the forensic drug
testing customer base (the "Customer Base"), all contracts and contract rights
for the providing of drug testing services related thereto, and all assets owned
by PLL used in connection with the PLL office in Greenville, South Carolina
office, as more specifically described in Schedule 2.1.1, hereto (the "PLL
Assets"), free and clear of any lien, charge, claim, pledge, security interest
or other encumbrance of any type or kind whatsoever, against receipt of the
consideration paid and delivered by LSAI pursuant to Section 2.2 hereof. PLL
has not received any written or verbal indication that any client a part of the
Customer Base intents to cease doing business with or materially diminish the
amount of business that it is now doing with PLL or after the Closing with LSAI.
Except as provided below, following the Closing, PLL shall deliver to LSAI
all records, files, instruments, correspondence and other documents possessed by
PLL relating to the clients included in the Customer Base , including, without
limitation, information concerning pricing, service requirements, sales billing,
accounts receivable aging, information pertinent to the process of reporting
test results to or invoicing any clients forming a part of the Customer Base,
utilization and composite reports and all other data and information in the
possessions of PLL related to the Customer Base and reasonably requested by
LSAI. Notwithstanding the foregoing, PLL shall not be obligated to deliver to
LSAI the following types of records and files: Test Requisitions, patient test
reports, or laboratory testing data. Provided, however, that PLL shall, upon
request, have reasonable and prompt access to any and all records, files,
instruments, correspondence and other documents concerning any of the assets
that have not been delivered, including, without limitation, records and files
pertaining to any client or clients on which are a part of the Customer Base or
to any patients of such clients. If requested, PLL shall provide to LSAI true
and complete copies of such records, files correspondence, instruments and other
documents. PLL shall retain for a period of time not less than the maximum
applicable document retention requirement, all test request forms, patient test
results, laboratory testing data, and other medical and patient data,
information, records and specimens. PLL shall retain all other records, files,
correspondence, instruments and other documents relating to the PLL Assets for a
period of at least one year following the Closing. PLL's obligations herein to
provide access to and copies of documents and to maintain records as required
herein shall survive the Closing.
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Following the Closing, LSAI shall assume all operations of the South
Carolina Office of PLL located at 0000 Xxxx Xxxxx Xxxxxx Extension, Greenville,
South Carolina, including assumption of the lease associated with such office
operations, as described in Schedule 2.1.3, hereto. Following the Closing , LSAI
shall continue to utilize the net work courier services offered and provided by
PLL in all areas of the United States, other than within the area serviced by
the South Carolina office operations, upon terms of the Specimen Collection and
Courier Services Agreement a copy of which is attached as Schedule 2.1.4,
hereto. The parties agree to enter into an agreement for laboratory testing
services effective the day following the Closing upon the terms and conditions
of the Agreement for Laboratory Testing Services, a copy of which is attached as
Schedule 2.1.5, hereto.
Following the closing, employment shall be offered to the current personnel
of PLL listed on Schedule 2.1.2, hereto on terms and conditions agreed to by
LSAI and such personnel. Persons listed on Schedule 2.1.2, hired by LSAI within
three months after the Closing shall be credited with their seniority and levels
of benefits under the benefit programs and employment policies of LSAI as they
may be modified by LSAI from time to time. LSAI shall also reimburse the cost of
COBRA health care coverage for the persons listed on Schedule 2.1.2, hired by
LSAI for the first 90 day period of their employment by LSAI to such persons.
LSAI shall not be responsible for any accrued payments or benefits pertaining to
any such employee as a result of such employee's employment with PLL, including,
without limitation, any accrued wages, sick or vacation pay. In the event that
any such person elects not to become an employee of LSAI, then LSAI shall have
no obligation to PLL with respect to such person and PLL shall indemnify LSAI
against any liability on account of any termination of such person by PLL.
LSAI hereby agrees to return to PLL all printers constituting a part of the
PLL Assets and located in the facilities of the clients included in the Customer
Base as these printers are removed from service and returned to LSAI by such
clients. Such printers shall be returned within (30) days of receipt by LSAI to
PLL's facility in Hattiesburg Mississippi.
2.2 PURCHASE PRICE OF PLL ASSETS. In consideration for the PLL Assets to
be sold, assigned, conveyed, transferred and delivered to LSAI pursuant to
Section 2.1 hereof, LSAI shall pay (i) at Closing of the Asset Purchase, One
Million Six Hundred Thousand Dollars ($1,600,000.00) to PLL in immediately
available funds and (ii) during the First Anniversary Period, pay an additional
amount equal to the Forensic Testing Revenues during the First Anniversary
Period less the One Million Six Hundred Thousand Dollars ($1,600,000.00), paid
at closing, (the "Installment Purchase Price"). The Installment Purchase Price
shall be paid in four installments, as follows:
(i) the first installment shall be payable within 60 days following
the end of the three-month period following the Closing of the Asset
Purchase ("Three-Month Period") and shall be in an amount equal to seventy-
five percent (75%) of Forensic Testing Revenues of the Three-Month Period
in excess of Four Hundred Thousand Dollars ($400,000.00) (the "First
Installment Payment");
(ii) the second installment shall be payable within 60 days following
the end of the six-month period following closing of the Asset Purchase
("Six-Month Period") and shall be in an amount equal to seventy-five
percent (75%) of Forensic Testing Revenues of the Six-Month Period in
excess of the aggregate sum of the First Installment payment and Eight
Hundred Thousand Dollars ($800,000.00) (the "Second Installment Payment");
(iii) the third installment shall be payable within 60 days following
the end of the nine-month period following Closing of the Asset Purchase
("Nine-Month Period") and shall be in an amount equal to eighty-five (85%)
of Forensic Testing Revenues of the Nine-Month Period in excess of the
aggregate sum of the First Installment Payment, the Second Installment
Payment, and One Million Two Hundred Thousand Dollars ($1,200,000.00) (the
"Third Installment Payment"); and
(iv) the fourth installment shall be payable within 60 days following
the end of the First Anniversary Period and shall be in an amount equal to
the amount of Forensic Testing Revenues of the First Anniversary Period in
excess of the aggregate sum of the First Installment Payment, the Second
Installment Payment, the Third
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Installment Payment, One million Six Hundred Thousand Dollars
($1,600,000.00); provided, however, that in the event the aggregate sum of
the First Installment Payment, the Second Installment Payment, the Third
Installment Payment and One Million Six Hundred Thousand Dollars
($1,600,000.00) exceed Forensic Testing Revenues of the First Anniversary
Period, PLL shall repay to LSAI within 60 days following the end of the
First Anniversary Period an amount equal to the excess of the aggregate sum
of the First Installment Payment, the Second Installment Payment, the Third
Installment Payment and One Million Six Hundred Thousand Dollars
($1,600,000.00) in excess of Forensic Testing Revenues of the First
Anniversary Period.
Forensic Testing Revenues shall be separately accounted for by LSAI on a
customer basis so as to identify each customer and the revenues attributable to
each customer in order to further determine the Forensic Testing Revenues that
are attributable to the customers comprising in part the Customer Base of PLL
purchased as a portion of the PLL Assets.
Forensic Testing Revenues shall be reduced by the amount of any billing
which is uncollectible as a result of the failure to assign, or to obtain the
prior consent to any assignment by PLL of any agreement for drug testing
services between PLL and clients in the Customer Base.
2.3 CLOSING. Subject to the terms and conditions hereof, the Closing
shall take place at the offices of Dunn, Swan, & Xxxxxxxxxx 2800 Oklahoma Tower,
210 Park Avenue, Oklahoma City, Oklahoma, or at such other place as the parties
hereto shall agree.
2.4 NO ASSUMPTION OF LIABILITIES. In connection with the purchase of
the PLL Assets and consummation of the transactions contemplated under this
Agreement, except with respect to the lease agreements described on Schedule
2.1.3 hereto, LSAI shall not nor shall any provision of this Agreement be
construed to cause LSAI to, assume or become liable for any liability,
obligation, performance, duty, debt, lien or any other claim of any kind or
nature of PLL, and PLL hereby acknowledges that it shall remain liable for all
of its liabilities, obligations, performances, duties, debts, liens or any other
claim of any kind or nature which arise prior to the Closing, including without
limitation the obligation of PLL to maintain any and all records and information
required to be maintained and the continuing obligation to maintain all urine
samples in a frozen state in accordance with the regulations of the Substance
Abuse and Mental Health Services Administration ("SAMHSA").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LSAI
LSAI hereby represents and warrants to PLL as follows:
3.1 ORGANIZATION, GOOD STANDING, POWER, ETC. LSAI is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma and has all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as
contemplated following the Closing. LSAI has furnished to PLL true, correct and
complete copies of its Certificate of Incorporation and Bylaws, as amended and
supplemented to the date hereof.
3.2 AUTHORIZATION OF AGREEMENT. LSAI has all requisite corporate
power and authority to enter into and perform all of its obligations under this
Agreement. The execution and delivery of this Agreement by LSAI and the
consummation by LSAI of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of LSAI. This Agreement
has been duly executed and delivered by LSAI, and constitutes the legal, valid
and binding obligation of LSAI, enforceable against LSAI in accordance with its
terms, except as enforceability may be limited by (i) any applicable bankruptcy,
insolvency, reorganization or other law relating to or
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affecting creditors' rights generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.3 NO CONFLICTING AGREEMENTS. To the best of the knowledge of LSAI,
neither the execution and delivery of this Agreement by LSAI nor the
consummation of the transactions contemplated hereby, will (a) violate or
conflict with any provision of the Certificate of Incorporation or Bylaws of
LSAI, as currently in effect; (b) violate or conflict with any provision of any
law, rule, regulation, order, permit, certificate, writ, judgment, injunction,
decree, determination, award or other decision of any governmental authority,
other regulatory or self-regulatory body or association or arbitrator binding
upon LSAI or any of its properties or assets; (c) result in a breach of or
constitute a default under (or with notice or lapse of time or both result in a
breach of or constitute a default under), or give rise to a right of
termination, cancellation, acceleration or repurchase of any obligation or a
right of first refusal with respect to any material property or asset or a loss
of a material benefit or the imposition of a material penalty under, any of the
terms, conditions or provisions of (i) any mortgage, indenture, loan or credit
agreement or any other agreement or instrument evidencing indebtedness for money
borrowed to which LSAI is a party or by which LSAI or any of its properties or
assets is bound or affected, or (ii) any lease, license, tariff, contract or
other agreement or instrument to which LSAI is a party or by which LSAI or any
of its properties or assets is bound or affected; or (d) result in, or require,
the creation or imposition of any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance of any nature upon or with
respect to any of the properties or assets now or hereafter owned by LSAI.
3.4 CONSENTS AND APPROVALS. No consent, approval, order, certificate
or authorization of, or registration, declaration or filing with, any
governmental authority or other third party is required by or with respect to
LSAI in connection with the execution and delivery of this Agreement by LSAI or
the consummation by LSAI of the transactions contemplated hereby.
3.5 CONTRACTS. Other than this Agreement and the commitments
contemplated herein, LSAI is not a party to any material agreements, contracts,
guarantees and commitments pursuant to which LSAI or any of its properties or
assets are or will be bound and which involve in each case aggregate future
payments in an aggregate amount which is material.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PLL
PLL hereby represents and warrants to LSAI as follows:
4.1 ORGANIZATION, GOOD STANDING, POWER, ETC. PLL is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Mississippi and has all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as now
being conducted. PLL is duly qualified to do business and is in good standing in
the state of South Carolina.
4.2 AUTHORIZATION OF AGREEMENT. PLL has all requisite power and
authority to enter into and perform all of its obligations under this Agreement.
The execution and delivery of this Agreement by PLL and the consummation by PLL
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of PLL. This Agreement has been duly
executed and delivered by PLL, and constitutes the legal, valid and binding
obligation of PLL, enforceable against PLL in accordance with the terms of this
Agreement, except as enforceability may be limited by (a) any applicable
bankruptcy, insolvency, reorganization or other law relating to or affecting
creditors' rights generally, and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
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4.3 NO CONFLICTING AGREEMENTS. To the best of the knowledge of PLL,
neither the execution and delivery of this Agreement by PLL, nor the
consummation of the transactions contemplated hereby, will (a) violate or
conflict with any provision of the Certificate of Incorporation or By-laws of
PLL, as currently in effect; (b) violate or conflict with any provision of any
law, rule, regulation, order, permit, certificate, writ, judgment, injunction,
decree, determination, award or other decision of any governmental authority,
other regulatory or self-regulatory body or association or arbitrator binding
upon PLL or any of its properties or assets; (c) result in a breach of or
constitute a default under (or with notice or lapse of time or both result in a
breach of or constitute a default under), or give rise to a right of
termination, cancellation, acceleration or repurchase of any obligation or a
right of first refusal with respect to any material property or asset or a loss
of a material benefit or the imposition of a material penalty under, any of the
terms, conditions or provisions of (i) any mortgage, indenture, loan or credit
agreement or any other agreement or instrument evidencing indebtedness for money
borrowed to which PLL is a party or by which PLL or any of the PLL Assets is
bound or affected, or (ii) any lease, license, tariff, contract or other
agreement or instrument to which PLL is a party or by which PLL or any of the
PLL Assets is bound or affected; or (d) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature upon or with respect to any of the PLL
Assets.
4.4 CONSENTS AND APPROVALS. Except as provided on Schedule 4.4.1, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental authority or other third party is required by or
with respect to PLL in connection with the execution and delivery of this
Agreement by PLL, or the consummation by PLL of the transactions contemplated
hereby.
4.5 FINANCIAL STATEMENTS. PLL has delivered to LSAI certain financial
reports of its forensic drug testing operations and will deliver audited balance
sheets and income statements of such forensic drug testing operations as of
December 31, 1995, and December 31, 1996, in order to meet LSAI's SEC reporting
requirements (the "PLL Financial Statements"). Each PLL Financial Statement (and
the notes relating thereto) were or shall be prepared in accordance with
generally accepted accounting principles consistently applied and fairly
presents the financial condition of the forensic drug testing operations of PLL
as of the date thereof and the related results of operations and cash flows of
the forensic drug testing operations of PLL for and during the periods covered
thereby.
4.6 INDEBTEDNESS. PLL is not in default in any material respect under
any note, mortgage, indenture, security agreement or other obligation or
instrument for or relating to any borrowing effected by PLL, related to the PLL
Assets and there has not occurred any event which, with or without the giving of
notice or the lapse of time or both, would constitute such a default.
4.7 TITLE TO THE PLL ASSETS; ABSENCE OF LIENS AND ENCUMBRANCES. At
the Closing PLL shall hold good and defensible title to the PLL Assets, free and
clear of all mortgages, liens, pledges, charges and encumbrances of any nature
whatsoever.
4.8 LITIGATION. (i) There is no claim, action, suit, proceeding,
arbitration, investigation or inquiry ("proceeding") before any governmental
authority or arbitrator, now pending or threatened against, relating to or
affecting PLL and/or the PLL Assets or business of PLL or that questions the
validity of this Agreement or affects the transactions contemplated herein, and
there is no basis for any such claim, action, suit, proceeding, arbitration,
investigation or inquiry.
(ii) PLL has not been permanently or temporarily enjoined or
prohibited by order, judgment or decree of any governmental authority or
arbitrator from engaging in or continuing any conduct or practice in connection
with the business engaged in by PLL or which would prevent or hinder the sale,
assignment, conveyance, setting over, transfer and delivery of the PLL Assets by
PLL to LSAI of all right, title and interest of PLL in and to the PLL Assets
free and clear of all mortgages, liens, pledges, charges and encumbrances of any
nature whatsoever, as contemplated hereunder.
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(iii) There is not in existence any order, judgment or decree of
any governmental authority or arbitrator (other than general industry orders)
enjoining or prohibiting PLL from taking, or requiring PLL to take, any action
of any kind or to which PLL or any of the PLL Assets, are subject or bound.
(iv) PLL is not in default in any respect under any Legal
Requirement or any order, writ, injunction or decree of any governmental
authority or arbitrator which would prevent or hinder the sale, assignment,
conveyance, setting over, transfer and delivery of the PLL Assets by PLL to LSAI
of all right, title and interest of PLL in and to the PLL Assets free and clear
of all mortgages, liens, pledges, charges and encumbrances of any nature
whatsoever, as contemplated hereunder.
4.9 COMPLIANCE WITH LAWS. To the best of the knowledge of PLL, it is
in compliance with all Legal Requirements applicable to any of its properties or
assets including the PLL Assets and/or the ownership, operation or use thereof,
and PLL has not received notice of any noncompliance or alleged noncompliance
with any Legal Requirement relating or applicable to any of its properties or
assets including the PLL Assets or to the operation of its business.
4.10 COLLECTIVE BARGAINING AGREEMENT. Neither PLL nor the PLL
employees described in schedule 2.1.2, are parties to or covered under any
collective bargaining agreement or any written employment contract other than
those set forth on Schedule 4.10, hereto. Further, PLL has provided to LSAI
copies of all of its written employment policies and employee manuals.
4.11 FULL DISCLOSURE. No representation, covenant or warranty by PLL
contained in this Agreement and no written information or agreements furnished
or to be furnished to LSAI by PLL pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to contain a material fact necessary
in order to make the statements and information contained herein or therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS OF PLL
PLL covenants and agrees with LSAI that, at all times between the date
hereof and the Closing, PLL will comply with all covenants and provisions of
this Article V, except to the extent LSAI may otherwise consent in writing or to
the extent otherwise expressly required or permitted by this Agreement.
5.1 APPROVALS. PLL will (i) take all reasonable steps and use all
reasonable efforts necessary or desirable to recommend the granting of and to
obtain, as promptly as practicable, all approvals, authorizations and clearances
of governmental authorities and of third parties, required of it to consummate
the transactions contemplated hereby, (ii) provide such other information and
communications to such governmental authorities as LSAI or such authorities may
reasonably request, and (iii) cooperate with LSAI in obtaining, as promptly as
practicable, all approvals, authorizations and clearances of governmental
authorities required of LSAI to consummate the transactions contemplated hereby.
5.2 INVESTIGATION BY LSAI. PLL will provide LSAI, its counsel,
accountants, and other representatives with reasonable access (at the sole cost,
risk and expense of LSAI), upon prior notice and during normal business hours,
to all facilities, officers, directors, employees, agents, accountants, assets,
properties, books and records of PLL as they pertain to forensic drug testing
operations. PLL will furnish to LSAI and such other persons during such period
all such other information and data concerning the business, operations and
affairs of PLL pertaining to forensic drug testing operations or the
transactions contemplated hereby as LSAI or any of such other persons reasonably
may
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request. LSAI hereby agrees to indemnify and hold PLL harmless from all claims,
losses or damages arising out of exercise of such information access rights
pursuant to this Section 5.2.
5.3 NO NEGOTIATIONS. Except as contemplated in this Agreement, PLL
will not take (or permit any other person acting for or on behalf of PLL to
take), directly or indirectly, any action to (i) seek or encourage any offer or
proposal from any person to acquire any of the PLL Assets or any interest
therein, (ii) merge, consolidate or combine, or permit any other person to
merge, consolidate or combine, with PLL, (iii) liquidate, dissolve or reorganize
PLL, (iv) acquire or transfer any of the PLL Assets or any interests therein,
other than in the ordinary course of business; or (v) reach any agreement or
understanding (regardless of whether such agreement or understanding is
absolute, revocable, contingent or conditional) for, or otherwise to attempt to
consummate, any such acquisition, transfer, merger, consolidation, combination,
liquidation, dissolution or reorganization.
5.4 CONDUCT OF BUSINESS. PLL will conduct its business related to
the PLL Assets only in the ordinary course and consistent with past practices.
Without limiting the generality of the foregoing:
(i) PLL will maintain its books and records related to the operation
of the PLL Assets in the usual manner and consistent with past practices and
customs, and will not permit a material change in any operational or financial
reporting or accounting practice or policy of PLL or in any assumption
underlying such a practice or policy.
(ii) PLL will (A) prepare properly and file duly and timely all
reports and all tax returns required to be filed with governmental authorities
with respect to its business, operations or affairs, and (B) pay duly and fully
all taxes indicated by such tax returns or otherwise levied or assessed upon it
or any of its assets and properties, and withhold or collect and pay to the
proper taxing authorities or reserve for such payment all taxes that it is
required to so withhold or collect and pay, unless such Taxes are being
contested in good faith.
(iii) PLL (A) will not convey, encumber, mortgage, pledge or dispose
of any portion of the PLL Assets, (B) will use its best efforts to conduct its
business in the ordinary course in a prudent and diligent manner in accordance
with industry standards,(C) will promptly notify LSAI in writing of the receipt
of any written notice or written claim of default or breach by PLL or of any
termination or cancellation, or written threat of termination or cancellation,
of any contracts or agreements, including without limitation any contracts or
agreement with PLL's customers comprising a part of the Customer Base, (D) will
promptly notify LSAI in writing of the loss or suspension of any certification,
which would have a material adverse effect upon PLL and its operations,
including without limitation, loss or suspension of certification by the
National Institute on Drug Abuse.
5.5 NO DISTRIBUTIONS. PLL will not make any distributions of the PLL
Assets, to its shareholders.
5.6 NO DISPOSAL OF PLL ASSETS. Except as contemplated in this
Agreement, PLL will not (a) dispose of or assign any of the PLL Assets or permit
any of the PLL Assets to be subjected to any liens, or (b) sell any portion of
the PLL Assets to any third party.
5.7 CONTRACTS. PLL will not enter into any contract for the
providing of drug testing services, except contracts entered into in the
ordinary course of business consistent with past practices.
5.8 NOTICE AND CURE. PLL will notify LSAI promptly in writing of,
and contemporaneously will provide LSAI with true, complete and correct copies
of, any and all information or documents relating to, and will use all
reasonable efforts to cure prior to the Closing, any event, transaction or
circumstance occurring after the date of this Agreement that results in or will
result in any covenant or agreement of PLL being breached under this Agreement,
or that renders or will render untrue any representation or warranty of PLL
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. PLL also will use all reasonable
efforts to cure, at the earliest practicable date and before the Closing, any
violation or breach of any representation, warranty, covenant or agreement made
by PLL in this Agreement.
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5.9 AGREEMENTS AND COVENANTS. PLL will not make any commitment,
either in writing or orally, which would violate any of the provisions set forth
in this Article V.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE PARTIES
Notwithstanding any other provision of this Agreement, the obligation
of PLL, on the one hand, and LSAI, on the other hand, to consummate the
transactions contemplated hereby shall be subject to the fulfillment, prior to
or at the Closing, of each of the following conditions precedent, any one of
which may be waived by such entity:
6.1 CONSENTS AND APPROVALS. All approvals of and consents by all
governmental authorities and other persons, and all permits by and all filings
with and submissions to all such governmental authorities and other persons as
may be required for the consummation of the transactions contemplated by this
Agreement, shall have been obtained or made and reasonably satisfactory evidence
thereof shall have been received and any waiting period, if applicable, shall
have expired.
6.2 CERTAIN ACTIONS. There shall not have been instituted and be
continuing or threatened against LSAI, PLL or any of their respective directors
or officers, any action, suit or proceeding by or before any governmental
authority that would restrain, prohibit or invalidate, or result in the payment
of substantial damages in respect of, any transaction contemplated by this
Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PLL
Notwithstanding any other provision of this Agreement, the obligations
of PLL to consummate the transactions contemplated hereby shall be subject to
the fulfillment prior to or at the Closing, of each of the following conditions
precedent, any of which may be waived by PLL:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of LSAI set forth in Article III above shall be true and correct
as of the date of this Agreement and as of the Closing, with the same effect as
though such representations had been made at and as of the Closing.
7.2 PERFORMANCE OF COVENANTS, AGREEMENTS AND CONDITIONS. LSAI shall
have duly performed, complied with and satisfied in all material respects all
covenants, agreements and conditions required by this Agreement to be performed,
complied with or satisfied by it at or prior to the Closing.
7.2 AUTHORIZATION OF AGREEMENT. PLL shall have received a
certificate from the corporate secretary of LSAI certifying a copy of all
corporate actions required for the execution and delivery of this Agreement and
the performance of all of their obligation hereunder.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF LSAI
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Notwithstanding any other provision of this Agreement, the obligations
of LSAI to consummate the transactions contemplated hereunder shall be subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions precedent, any of which may be waived by LSAI:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in Article IV above shall be true and correct as of the
date of this Agreement and as of the Closing, with the same effect as though
such representations and warranties had been made at and as of the Closing.
8.2 PERFORMANCE OF COVENANTS, AGREEMENTS AND CONDITIONS. PLL shall
have duly performed, complied with and satisfied all covenants, agreements and
conditions required by this Agreement to be performed, complied with or
satisfied by PLL, at or prior to the Closing.
8.3 OFFICERS' CERTIFICATES, ETC. LSAI shall have received a
certificate, dated the date of the Closing and signed by the Chief Executive
Officer or President of PLL to the effect set forth in Sections 8.1 and 8.2
above.
8.4 OPINION OF COUNSEL FOR PLL. LSAI shall have received an opinion,
dated the date of the Closing, of Xxxxxx Xxxxxx, L.L.P., counsel for PLL, in
form and substance satisfactory to LSAI covering the subjects set forth in
Sections 4.1, 4.2, 4.7, and 4.9 hereof. In rendering such opinion, counsel may
rely to the extent specified therein on certificates of representatives of PLL
and public officials.
8.5 NO ADVERSE CHANGE. No material adverse change shall have
occurred in the business, prospects, operations, properties or financial
condition of PLL operations of the Greenville, South Carolina office since
December 31, 1996.
8.6 CERTAIN ACTIONS. There shall not have been instituted and be
continuing or threatened against LSAI, PLL, or any of their respective directors
or officers, any action, suit or proceeding by or before any governmental
authority that would prohibit LSAI's ownership of all of the PLL Assets.
8.7 DUE DILIGENCE. LSAI shall have performed and completed its due
diligence to verify, to its satisfaction, the existence of the Forensic Testing
Revenue Base of PLL as represented.
ARTICLE IX
PLL'S NON-COMPETITION AGREEMENTS
9.1 PLL'S AGREEMENT NOT TO COMPETE. For a period of five years after
the Closing Date, PLL agrees that it will not directly or indirectly: (i) engage
or become interested in, whether as a partner, owner, stockholder (other than a
less than 2% interest in a corporation having securities listed for trading on a
national securities exchange), investor, lender, provider of services, whether
alone or in association with others, any business that offers, forensic drug
testing services ("Testing Services") to any client included in the Customer
Base, including without limitation Testing Services referred by any physician
associated with a client; (ii) induce or attempt to induce any client included
in the Customer Base to reduce its use of the forensic services of LSAI.
9.2 CONFIDENTIAL INFORMATION. PLL acknowledges that it has and may
continue to have access to and the use of confidential materials and information
and trade secrets concerning the PLL Assets (including without limitation the
identity of and other information concerning clients included in the Customer
Base). PLL shall not use, for itself or others, or divulge or convey to any
other, except as required to fulfill the obligations of this Agreement, any
secret or confidential information, knowledge or data related to the PLL Assets
or LSAI or to the clients or customers, or former clients or customers, of LSAI.
Such information, knowledge or data includes, but is not limited to, secret or
confidential matters not published or generally known in the industry, pricing
information, service requirements, sales, profits, costs or market.
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9.3 REMEDIES. PLL acknowledges and agrees that the provisions of
this Article IX are necessary to protect all of the PLL Assets being acquired by
LSAI and in no way impose a significant hardship or prevents PLL from earning a
livelihood. In the event that this Article IX or any other portion thereof shall
be determined by any court of competent jurisdiction to be unenforceable by
reason of its extending for too great a period of time or over too great a range
of activities, it shall be interpreted to extend only over the maximum time
period and range of activities as to which it may be enforceable. PLL recognizes
and acknowledges that in the event of PLL's failure to comply with any of the
covenants contained in this Article IX, it may be impossible to measure in money
the damages to LSAI or its successor and that in the event of such a failure,
LSAI or its successor may not have an adequate remedy at law. It is therefore
agreed that LSAI or its successor, in addition to any other rights or remedies
which it may have, shall be entitled to immediate injunctive relief to enforce
such covenants, and that if any action or proceeding is brought in equity to
enforce the same, PLL will not urge as a defense, that there is an adequate
remedy at law.
ARTICLE X
TERMINATION AND AMENDMENTS
10.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing, as follows:
(i) by mutual consent of LSAI and PLL;
(ii) by either LSAI or PLL in the event the Closing shall not have
been consummated on or before February 28, 1997; or
(iii) by either LSAI or PLL if there shall have been entered or
rendered against LSAI, PLL, or any of their respective directors or officers in
any action or proceeding referred to in Sections 6.2, or 8.6 hereof an
injunction or a final judgment having one of the effects specified in such
Sections.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either LSAI or PLL, as provided in Section 10.1 hereof, this
Agreement shall forthwith become void and there shall be no obligation or
liability on the part of LSAI, PLL or their respective officers, directors or
shareholders, except as stated in Section 12.8 hereof; provided, however, that
such limitation shall not apply in the event of a willful breach by LSAI or PLL
of any of their respective material covenants contained herein in which case the
non-breaching party shall be entitled to recover from the breaching party all
out-of-pocket costs (including without limitation reasonable attorney fees' and
expenses) which the non-breaching party has incurred in connection herewith.
10.3 AMENDMENT. This Agreement may be amended by the parties hereto,
at any time prior to the Closing. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
ARTICLE XI
SURVIVAL OF PROVISIONS; REMEDIES; INDEMNIFICATION
11.1 SURVIVAL. The representations, warranties, covenants and
agreements respectively made by LSAI and PLL in this Agreement, in the Schedules
hereto, or on any certificate delivered pursuant to the provisions hereof shall
not survive, other than those set forth in Sections 2.1, 4.9, 11.3, 12.2 , and
Article IX hereof, and shall terminate upon, the Closing, and neither LSAI nor
PLL or any of their respective officers, directors or shareholders shall be
under any liability whatsoever, with respect to such representation, warranty,
covenant or agreement which does not survive the Closing. The representations,
warranties, covenants and agreements set forth in Sections 2.1, 4.9, 11.3, 12.2,
and Article IX hereof shall survive the Closing and consummation of the
transactions contemplated hereby. The parties
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hereto acknowledge that the representations and warranties contained in this
Agreement, other than those set forth in 2.1, 4.9, and Article IX hereof, are
included solely for purposes of Articles VII and VIII hereof and are not
intended to and shall not in any way give rise to any liability, claim, action
or cause of action on the part of any party hereof on account of breach of any
such representation or warranty. The parties hereto further acknowledge that
they may, after the Closing, discover facts in addition to or different from
those which they believed to be true at the Closing relating to the
representations, warranties, covenants and agreements made by the other party to
this Agreement. Notwithstanding the foregoing, except as otherwise specifically
agreed to in writing by the parties hereto, each of the parties hereto hereby
releases the other party at and effective as of the Closing from any and all
claims, liabilities, actions, and causes of action, of whatever nature, kind or
description known or unknown, direct or indirect, fixed or contingent, in law or
equity, arising under or relating to any representations, warranties, covenants
or agreements made by the other paer than those set forth in Sections 2.1, 4.9,
11.3, 12.2, and Article IX hereof).
11.2 AVAILABLE REMEDIES. Each party expressly agrees that, consistent
with its intention and agreement to be bound by the terms of this Agreement and
to consummate the transactions contemplated hereby, subject only to the
satisfaction of conditions precedent, the remedy of specific performance shall
be available to a non-breaching and non-defaulting party to enforce performance
of this Agreement by a breaching or defaulting party, including, without
limitation, to require the consummation of the Closing.
11.3 INDEMNITY. (i) PLL, in addition to the remedies accorded the
parties in Section 11.2 hereof, agrees to indemnify and hold LSAI harmless from
and against any and all claims, actions, causes of action, damages, costs and
expenses, including without limitation attorneys' fees, arising from or relating
to a breach by PLL of the representations and warranties set forth in Article
IV, hereof.
(ii) LSAI, in addition to the remedies accorded the parties in
Section 11.2 hereof, agrees to indemnify and hold PLL harmless from and against
any and all claims, actions, causes of action, damages, costs and expenses,
including without limitation attorneys' fees arising from or relating to a
breach by LSAI of the representations and warranties set froth in Article III,
hereof.
ARTICLE XII
MISCELLANEOUS
12.1 EXPENSES. LSAI will pay its own costs and expenses, and PLL will
pay own costs and expenses, incurred in connection with this Agreement and the
transactions contemplated hereby, including without limitation fees and expenses
of counsel, irrespective of when incurred and regardless of whether this
transaction is consummated.
12.2 FINDER'S FEE'S. Each of LSAI , on the one hand, and PLL, on the
other, represent to the other that no finder's or fee or commission will be owed
to any party in connection with the transactions contemplated herein, other than
the broker's fee or commission payable to Xxxxxxxxxxx Xxxxxx and /or Haverford
Health Care Advisors, which shall be paid by PLL.
12.3 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been given
when delivered personally, or on the next day after being sent by facsimile
transmission or a nationally recognized overnight delivery service, or on the
third (3rd) day after being sent by registered or certified mail (return receipt
requested), postage prepaid to the parties to this Agreement at the following
addresses or at such other address for a party as shall be specified by like
notice:
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If to LSAI:
Laboratory Specialists of America, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxx, Esq.
Dunn, Swan, & Xxxxxxxxxx
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
If to PLL:
Pathology Laboratories, Ltd.
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With copies to:
C. Xxxxxxx Xxxxxxxx, Xx.
Xxxxxx Xxxxxx, L.L.P.
Suite 500, Mtel Centre
000 X. Xxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxxxxx 39225-3066
Facsimile: (000) 000-0000
12.4 ENTIRE AGREEMENT. This Agreement (including the Exhibit and
Schedules hereto and the documents and instruments referred to herein)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, written and
oral.
12.5 BINDING EFFECT; BENEFITS. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. Neither this Agreement nor any right, remedy,
obligation or liability hereunder or by reason hereof shall be assignable by any
of the parties to this Agreement without the prior written consent of the
others. Nothing expressed or implied in this Agreement is intended to or shall
be construed to give any person other than the parties to this Agreement or
their respective successors or permitted assigns any legal or equitable right,
remedy or claim under or in respect of this Agreement, it being the intention of
the parties to this Agreement that this Agreement shall be for the sole and
exclusive benefit of the parties hereto or such successors or assigns and for
the benefit of no other person.
12.6 WAIVER. Any term or provision of this Agreement may be waived in
writing at any time by LSAI, if it is entitled to the benefits thereof, or by
PLL, if it is entitled to the benefits thereof. No such waiver shall, unless
explicitly stated, be a continuing waiver. No failure to exercise or delay in
exercising any right hereunder shall constitute a waiver thereof.
12.7 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Mississippi applicable to
contracts made and to be performed within that State.
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12.8 CONFIDENTIALITY. Prior to the consummation of the transactions
contemplated herein, PLL and LSAI shall each keep confidential, and not disclose
to any third party, information it may obtain hereunder about the other;
provided, however, that this restriction shall not apply to information which
(a) is now in or may hereafter enter the public domain without breach of this
covenant, (b) was already in the possession of PLL or LSAI, as the case may be,
prior to receipt from the other, (c) is lawfully received by PLL or LSAI, as the
case may be, from an unrelated third party after receipt of the same from the
other, (d) PLL or LSAI, as the case may be, is required by law to disclose, or
(e) PLL or LSAI, as the case may be, discloses to independent consultants or
financial institutions, provided there are restrictions prohibiting further
dissemination of such information by any such consultant or financial
institution. If the transactions contemplated herein are not consummated, each
of PLL and LSAI shall return to the other all data obtained hereunder.
12.9 PUBLICITY. All press releases and other publicity concerning the
transactions contemplated herein shall be jointly planned and coordinated by and
between PLL and LSAI. Neither party shall act unilaterally in this regard
without the prior written approval of the other, except to the extent required
by law.
12.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be a single agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed by their duly authorized representatives as of the
date first written above.
"LSAI" LABORATORY SPECIALISTS OF
AMERICA, INC.
By: /s/ XXXX XXXXXXXXX
-------------------------------------
Xxxx Xxxxxxxxx
Chief Executive Officer
"PLL" PATHOLOGY LABORATORIES, Ltd.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------
Xx. Xxxxxx X. Xxxxxxx
Chief Executive Officer
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LIST OF SCHEDULES (Omitted)
Schedule 2.1.1 Description of PLL Forensic Drug Testing Customer List and
assets owned and used by PLL in connection with the
Greenville, South Carolina office of PLL.
Schedule 2.1.2 List of Employees to be hired by LSAI.
Schedule 2.1.3 Description of Leases to be Assumed.
Schedule 2.1.4 Specimen Collection and Courier Service Agreement.
Schedule 2.1.5 Agreement for Laboratory Testing Services.
Schedule 4.4.1 List of required consents or releases needed by PLL.
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