EXHIBIT 2.3
AGREEMENT FOR
LABORATORY TESTING SERVICES
THIS AGREEMENT is made and entered into this the 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").
WITNESSETH:
WHEREAS, LSAI is engaged in providing forensic drug testing services to
corporate and institutional customers; and
WHEREAS, PLL is a duly licensed pathology testing laboratory which is also
engaged in providing forensic drug testing services; and
WHEREAS, simultaneously with the execution of this Agreement, PLL and LSAI
have entered into an Asset Purchase Agreement (the "Asset Purchase Agreement")
for the purchase by LSAI of certain assets of PLL, including PLL's customer
base, related to the operation of PLL's forensic drug testing operations, which
transaction is anticipated to be consummated (the "Closing") on or about January
31, 1997; and
WHEREAS, LSAI anticipates that a limited period of time will be required,
beginning on the date following the Closing and ending February 28, 1 997 (the
"Transition Period"), for LSAI to prepare to assume the forensic drug testing
responsibilities at its own facility, and LSAI desires to engage the services of
PLL to provide forensic drug testing services during the Transition Period; and
WHEREAS, PLL desires to provide such forensic drug testing services upon
the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties agree as follows:
1. Forensic Drug Testing Services. PLL hereby agrees to perform all
forensic drug tests during the Transition Period for the customers of LSAI.
Said tests shall be performed at the main laboratory facility of PLL located in
Hattiesburg, Mississippi. PLL will make consultative services available to LSAI
with respect to interpretation of test results and testing methods for all tests
performed.
2. Specimen Collection and Transportation.
A. PLL agrees to collect all specimens and samples for forensic drug
testing to be performed under this Agreement at the following collection sites
maintained by PLL :
3080 Milam, Beaumont, TX 0000 Xxxxx Xxxxxx, Xxxxxxxx, XX
0000 Xxxxx Xxxxxx, Xxxxxxxxxxx, XX 0 Xxxxxxxx Xxxxxx, Xxxxxxx, XX
00-X Xxxxx Xxxxxx, Xxxxxx, XX 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX
0000 Xxxx Xxxx., Xxx Xxxxxxx, XX 4213 Saxon Street, Metaire, LA
0000 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX
XXX shall assure that all specimens and samples are collected and prepared in
compliance with all laws and regulations concerning the handling of such
specimens and that such services are performed in conformance with accepted
forensic practice.
B. PLL agrees to provide courier services on a regular basis for the
transportation of specimens and samples from the PLL collection sites listed in
Paragraph A to PLL's Hattiesburg facility. The schedule for such courier
services will be set by PLL at its sole discretion.
3. Billing and Collection.
A. PLL shall directly xxxx each customer of LSAI for all forensic drug
testing services performed under the terms of this Agreement. All such billing
shall be done in accordance with PLL' s standard billing practices, but in no
event later than the date required for reporting to LSAI under the provisions of
Paragraph B of this Section. All accounts receivable resulting from such
billing shall be and remain an asset of PLL.
B. Within the sixty (60) day period following the end of the Transition
Period or other termination of this Agreement, PLL shall provide to LSAI a
written report of the gross xxxxxxxx and discounts allowed by client for the
forensic drug testing services performed by PLL under this Agreement.
4. Compensation to PLL.
A. For all services rendered, pursuant to the terms of this Agreement,
PLL shall be compensated by LSAI by the retention of an amount equal to ninety-
five percent (95%) of the "Net Xxxxxxxx" for the forensic drug testing services
performed by PLL under this Agreement, less the direct costs of operating the
Greenville, South Carolina office during the term of this Agreement. For this
purpose, "Net Xxxxxxxx" shall mean total gross xxxxxxxx for forensic drug
testing services rendered under this Agreement less any contractual discounts.
The direct costs of operating the Greenville, South Carolina office shall
include, but not necessarily be limited to, rent expense, employee compensation
and benefits, communication costs, sales costs, and transportation costs.
B. On the last day of the Transition Period, LSAI shall pay to PLL the
sum of One Hundred Fifty Thousand and no/100 Dollars ($150,000.00) as advanced
compensation for services rendered by PLL under the terms of this Agreement.
5. Settlement of Amounts Due PLL and LSAI.
A. In connection with the First Installment Payment under the Asset
Purchase Agreement, the total compensation due to PLL for services under this
Agreement shall be determined based on the net xxxxxxxx and LSAI's direct costs
of operating the Greenville, South Carolina office during the period in which
this Agreement remained in effect.
B. Simultaneously with receipt of said First Installment Payment from
LSAI, PLL agrees to remit to LSAI an amount equal to the sum of the following:
(1) five percent (5%) of the "Net Xxxxxxxx" for the forensic drug testing
services performed under this Agreement;
(2) the direct costs of operating the Greenville, South Carolina office
during the term of this Agreement; and
(3) One Hundred Fifty Thousand Dollars ($150,000) in reimbursement of the
advanced compensation paid to PLL by LSAI pursuant to Section 4 of this
Agreement.
6. Records. PLL shall keep accurate records of all tests performed
pursuant to the terms of this Agreement. PLL shall have full ownership rights in
the records and in the specimens and samples used in the testing performed under
this Agreement, and agrees to retain all such records for such periods of time
as required by applicable statutes, rules and regulations. During such period as
PLL is required by statutes, rules or regulations to retain such records, upon
written request by LSAI, PLL shall make available to LSAI all such records and
specimens and samples as shall be reasonably required.
7. Standards. PLL shall ensure that services under this Agreement are at
all times rendered in a competent and professional manner and in compliance with
all applicable standards, statutes, regulations, rules and directives. PLL
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shall at all times meet the licensing requirements of the State of Mississippi,
as well as the federal certification requirements, and shall be accredited by
the Substance Abuse and Mental Health Services Administration ("SAMHSA") and/or
the College of American Pathologist Forensic Urine Drug Testing ("CAPFUDT"). All
services performed hereunder shall be done in conformity with the standards of
quality of the field, as set forth by SAMHSA and CAPFUDT.
8. Status of Parties. In the performance of services under this
Agreement, PLL and its agents, contractors and employees shall at all times act
as independent contractors of LSAI. Nothing in this Agreement shall be construed
in such a manner as to constitute PLL or any of its employees as an employee,
agent, partner of or joint venturer with LSAI. LSAI shall neither have nor
exercise any specific control or direction over the particular methods by which
PLL shall perform the services required by this Agreement. Nothing in this
Agreement shall be construed to interfere with or otherwise affect the
independent professional judgement of PLL in rendering services hereunder.
9. Insurance and Indemnification. PLL shall purchase and maintain
professional liability insurance in accordance with its established corporate
policy, naming as insureds its professional personnel providing services under
this Agreement. In the event such insurance maintained by PLL is on a claims
basis as opposed to an occurrence basis, PLL shall also obtain "tail insurance."
Each party to this Agreement shall be responsible for its own acts and/or
omissions and for those of its employees, officers, directors and agents in the
performance of services under this Agreement; and neither party should be
responsible for the acts or omissions of the other party, its employees,
officers, directors or agents. PLL and LSAI mutually agree to protect, defend,
indemnify and hold the other free and harmless from any and all losses, damages,
claims or causes of action, and expenses connected therewith (including
reasonable attorneys fees) caused by the sole negligence, malfeasance,
malpractice or other actions or omissions of the other party to this Agreement,
its employees, officers, directors or agents.
10. Effective Date, Transition Period and Termination.
A. This Agreement shall become effective on February 1, 1997 or such
later date on which the Closing of the sale of assets by PLL to LSAI occurs (the
"Effective Date") and shall remain in effect during the Transition Period. The
Transition Period shall begin on the Effective Date 0*" this Agreement and shall
end on February 28, 1997.
B. Notwithstanding the preceding paragraph, this Agreement shall
terminate, at the election of either party, in the event of the failure of the
other party to perform the services or pay the fees required hereunder, on the
date written notice is given by personal delivery or first-class mail to the
defaulting party.
11. Entire Agreement. This Agreement contains the entire Agreement between
the parties hereto and supersedes all prior agreements, contracts and
undertakings whether written or oral between the parties related to the subject
matter hereof. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
12. Assignment. This Agreement shall be binding upon and enure to the
benefit of PLL and LSAI and to their respective successors. The duties and
obligations of the parties hereto shall not be assigned by either party without
the written consent of the other party to this Agreement.
13. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Mississippi.
14. Amendment. This Agreement may be amended at any time by written
agreement signed by both parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first written above.
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PATHOLOGY LABORATORIES, LTD.
BY: /s/ XXXXX X. XXXXXXXXX
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Xxxxx X. Xxxxxxxxx, President
LABORATORY SPECIALISTS OF AMERICA, INC.
BY: /s/ XXXX XXXXXXXXX
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Xxxx Xxxxxxxxx, Chief Executive Officer
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