ASSET PURCHASE AGREEMENT
This Agreement is made as of May 16, 1996, by and among MERIS LABORATORIES,
INC., a California corporation with offices at 2890 Zanker Road, San Jose,
California 95134 (the "Purchaser"), and ROCEL Clinical Diagnostics, Inc., a
California corporation (the "Seller") with offices at 2470 Alvin Ave. #7, San
Jose, California 95121, and CELIA BLANDO, and ROMEO TORRES, individuals
(collectively the "Shareholders"). The Seller and the Shareholders are sometimes
referred to herein collectively as the "Sellers."
A. The Seller is in the business of providing commercial clinical
laboratory services (the "Business").
B. The Shareholders own all of the partnership interests in the Seller.
C. The Seller desires to sell and the Purchaser desires to purchase certain
of the assets relating to the Business.
NOW, THEREFORE, in consideration of the mutual agreements, representations
and warranties contained in this Agreement, the parties agree as follows:
1. Sale and Purchase of Purchased Assets.
a. Purchase and Sale. Subject to the terms and conditions contained in this
Agreement, at the Closing (as defined below) the Seller shall sell, assign,
transfer and convey to the Purchaser, free and clear of all liens and
encumbrances, and the Purchaser shall purchase from the Seller, subject to
Section 1(b) below, the following tangible and intangible personal property
owned by the Seller and used in, derived from or necessary to the operation of
the Business (collectively, the "Purchased Assets"). Without limiting the
foregoing, the Purchased Assets shall be deemed to include the following:
(i) The list of clients and payors of the Business as set forth in Exhibit
A hereto (the "Customer List"), and the continuing business relationships with
such parties that relate to the Business;
(ii) All right, title and interest in the equipment, furniture, fixtures,
vehicles, computers and telecommunications equipment listed and described in
Exhibit B hereto (the "Equipment");
(iii) All of the Seller's rights under the leases, service contracts and
other agreements listed on Exhibit C hereto (the "Assigned Contracts"),
commencing as of the Closing Date;
(iv) All patents, trademarks, trade names, business names, service marks,
trade secrets, logos and copyrights, and all applications and registrations
therefor, which relate to the Business;
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(v) All prepaid expenses, deposits (including, without limitation, deposits
under the Assigned Contracts), supplies, reagents and inventory relating to the
Business; and
(vi) Work in process of the Business with respect to accessions received
prior to the Closing.
b. Property Excluded. The Purchased Assets shall not be deemed to include
any of the following assets of the Seller:
(i) Cash, other forms of bank deposits and stock, other securities and
accounts receivable; and
(ii) Personal property of the Seller which is not necessary to the
Business.
c. Liabilities. Except as expressly provided herein with respect to the
Assigned Contracts, Purchaser shall not assume, or take title to the Purchased
Assets subject to, or in any way be liable or responsible for, any liabilities
or obligations of any kind of the Sellers and the Sellers shall continue to
remain responsible for the same. Without limiting the generality of the
foregoing, the Purchaser shall not assume or take title to the Purchased Assets
subject to any of the following: (i) Except as specifically included in the
Assigned Contracts, any obligations of the Seller outstanding on the Closing
Date or arising after the Closing Date;
(ii) Any liability or obligation of the Sellers arising from claims for
personal injury (including death) or damage to property, including (without
limitation) in respect of any laboratory testing services provided by the
Sellers or any negligence, malpractice or other wrongful action in connection
therewith;
(iii) Any liability or obligation of the Seller, or any of their employees,
for any federal, state, local or foreign income, sales, use and other taxes,
including, without limitation, any of such taxes arising out of or in connection
with the purchase of the Purchased Assets by the Purchaser hereunder;
(iv) Any liability or obligation in respect of any plan, agreement,
arrangement or understanding under which benefits or compensation are provided
by the Seller for the employees of the Business (including but not limited to,
any contract or other obligation for health insurance, accrued vacation,
severance pay or other benefits, or any commissions or revenue or profit sharing
or other compensation for or on sales of accounts on the Customer List);
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(v) Any liability or obligation of the Seller based upon or arising under
any contract or agreement existing prior to or at the time of Closing, including
any contract with anyone on the Customer List for the provision of laboratory
testing services, other than pursuant to an Assigned Contract, from and after
the Closing Date;
(vi) Any lien, encumbrance, security interest or charge of any nature
whatsoever; or
(vii) Any liabilities or obligations arising from litigation to which
either of the Sellers is or would be a party that is pending, threatened or
based upon facts that arise prior to the Closing.
d. Closing and Closing Date. Unless otherwise agreed by the parties, the
consummation of the transactions contemplated by this Agreement shall take place
at a closing (the "Closing") to be held at the offices of the Purchaser, at the
address listed above, at the close of business (which shall be no later than
11:30 p.m. local time), on May 16, 1996, or such other time or date as the
Seller and the Purchaser shall mutually agree, such time and date being referred
to herein as the "Closing Date." At the Closing, (i) the Purchaser and each of
the Sellers shall enter into the Non-competition Agreement in the form attached
hereto as Exhibit D (the "Non-competition Agreement"), (ii) the Seller shall
deliver to the Purchaser an executed Bill of Sale in the form attached hereto as
Exhibit E, evidencing the purchase and sale of the Purchased Assets, and (iii)
the Sellers shall deliver to the Purchaser all title documents relating to the
Purchased Assets, duly executed or endorsed for transfer to the Purchaser to the
Purchaser's reasonable satisfaction. The Non-competition Agreement and the Bill
of Sale are referred to herein collectively as the "Related Agreements".
e. Assumption. Effective upon the Closing, the Purchaser will assume the
Assigned Contracts, only with respect to the obligations of the Seller arising
thereunder from and after the later of the Closing Date or the date of the
written assignment.
2. Purchase Price; Terms of Payment.
a. Purchase Price. The purchase price to be paid for the Purchased Assets
and the related covenants set forth in the Related Agreements (the "Purchase
Price") shall consist of the following: (i) the Closing Payment (as described in
Section 2(b) below); and (ii) the Contingent Payments (as described in Section
2(c) below).
b. Closing Payments. As part of the Purchase Price, the Purchaser shall pay
to the Seller the amount of five thousand dollars ($5,000) (the "Closing
Payment").
c. Contingent Payments
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(i) Terms of Payment. As part of the Purchase Price, the Purchaser also
will (subject to the conditions set forth herein) make eight (8) additional
payments (each a "Contingent Payment") on the basis of Net Collections (as
defined below) and Net Collections Per Accession (as defined below) for each of
the three (3) full calendar month periods (each, a "Revenue Period") commencing
June 1, 1996. The Contingent Payment for each Revenue Period shall be made by
bank check delivered by the Purchaser no later than thirty (30) days following
the end of such Revenue Period.
(ii) Computation of Amounts. The Contingent Payment for each Revenue Period
shall be equal to the amount of Net Collections for such Revenue Period
multiplied by (A) twenty five percent (25%) for those Revenue Periods in which
Net Collections per Accession equal or exceed $40.00, or (B) twenty percent
(20.0%) for those Revenue Periods in which Net Revenue per Accession are equal
to or greater than $30.00 but less than $40.00; provided that no Contingent
Payment shall be due for any Revenue Period for which Net Collections total less
than $90,000 or Net Collections Per Accession are less than $30.00.
(iii) Definitions. For the purposes of this Section 2, "Net Collections"
for any Revenue Period means cash collections (net of refunds and adjustments)
from Active Accounts (i.e., those identified as "Active Accounts" on the
Customer List) for services performed since March 26, 1996 and until the end of
such Revenue Period; provided that Net Collections for any given Revenue Period
will first exclude any portion of cash collections for an Active Account which
represents collections from billings of the Purchaser for clients of both the
Seller and the Purchaser prior to the Closing (based upon the average charges
during the three months preceding the Closing as indicated on the Customer
List); and provided further that with respect to any account for which average
monthly billings for the three (3) full calendar months prior to the Closing is
less than $200.00 (which are so identified on the Customer List), then Net
Collections for such accounts will exclude amounts received by Meris in excess
of the Maximum Collection amount shown on the Customer List. "Net Collections
Per Accession" for any Revenue Period means Net Collections for such Revenue
Period divided by the total number of accessions processed during such Revenue
Period, as determined in accordance with the Purchaser's standard billing
procedures. "Accession" means a patient encounter regardless of the number of
tests ordered for such patient or the location where such tests are performed.
The Purchaser shall count the Accession in the Revenue Period in which the
primary payment is received on such Accession. (i.e., if a subsequent payment
such as a patient copay is received, the Accession will not be counted again).
(iv) No Representations. The Seller acknowledges and agrees that the
Purchaser has made no representation or warranty with respect to the amount of
Net Collections or Net Collections Per Accession to be received after the
Closing, and that the Purchaser will be entitled, in its sole discretion, to
determine the terms, including pricing and special services, if any, to any
account.
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(v) Accounting. The Purchaser shall provide a monthlyreporting of the gross
charges billed and Net Collections received by the Purchaser for the clients on
the Customer List. The Seller and its representatives shall be entitled to
review those books and records of the Purchaser relating to the determination of
each Contingent Payment.
d. Allocation of Purchase Price. The Purchase Price shall be allocated as
provided in Exhibit F hereto for purposes of complying with the requirements of
Section 1060 of the Internal Revenue Code of 1986. Each party hereto agrees to
prepare its federal and state income tax returns for all current and future tax
reporting periods and file Form 8594 (and corresponding state forms) with
respect to this transaction in a manner consistent with the allocations set
forth in said Exhibit F. If any state or federal taxing authority challenges
such allocation, the party receiving notice of such challenge shall give the
other prompt written notice of such challenge, and the parties shall cooperate
in good faith in responding to it in order to preserve the effectiveness of such
allocation, and shall take no position in any tax proceeding inconsistent
therewith. The allocation set forth on Exhibit F assumes a total purchase price
of $300,000; in the event that the actual Purchase Price shall be higher or
lower than such amount, an equivalent adjustment shall be made in the portion of
the Purchase Price allocated to the Client List and Goodwill.
e. Taxes. The Seller shall pay all sales, use, transfer, excise or other
similar taxes, if any, arising out of the transfer of the Purchased Assets, or
otherwise as a consequence of the transactions contemplated by this Agreement.
3. Representations and Warranties of the Sellers. Each of the Sellers,
jointly and severally, represents and warrants to the Purchaser that:
a. Organization. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and has
the requisite corporate power and authority to own, lease and operate its
properties and to transact its business as it is now being conducted, holds all
licenses and permits known by the Seller to be necessary and required therefor,
and is duly qualified or licensed to do business and is in good standing in each
place and jurisdiction where the nature of the business conducted by it or the
ownership, lease or operation of its properties requires such license or
qualification. The Seller has no subsidiaries and holds no equity investment in
any other person or entity. The Shareholders own of record and beneficially all
of the stock or other interests of the Seller, and no person has any right to
acquire any securities or interests of the Seller.
b. Title to Purchased Assets. The Seller has and will convey on the Closing
Date full, absolute, good and marketable title to the Purchased Assets, free and
clear of all security interests, mortgages, liens (including, but not limited
to, liens with respect to taxes), attachments, orders of court, rights of
redemption, debts, claims, charges, or other encumbrances of any kind whatsoever
and not subject to any continuing commission, profit or revenue sharing or other
compensation contract or obligation that could apply to the Purchaser or the
Purchased Assets.
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c. Due Authority; Valid and Binding Agreements. The Seller has the power
and authority to enter into and be bound by the terms and conditions of this
Agreement and the Related Agreements and to carry out its obligations pursuant
hereto and thereto. Each of this Agreement and the Related Agreements is a
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms.
d. No Conflicts or Violations. Neither the execution and delivery of this
Agreement and the Related Agreements nor the consummation of the transactions
contemplated hereby and thereby will (i) conflict with or result in any
violation of or constitute a default under any agreement, mortgage, bond,
indenture, franchise or other instrument or obligation to which either of the
Sellers are a party or by which they are bound, (ii) result in the creation of
any lien or other encumbrance upon the Purchased Assets pursuant to the terms of
any such mortgage, bond, indenture, franchise or other instrument or obligation,
(iii) violate any judgment, order, injunction, decree or award of any court,
administrative agency or governmental body against, or binding upon, either
Seller or upon any of the Purchased Assets, (iv) constitute a violation by
either Seller of any law or regulation of any jurisdiction in which such Seller
conducts its business, (v) result in the breach of any of the terms or
conditions of, or constitute a default under, or otherwise cause any impairment
of, any permit or license or other governmental authorization held by the
Seller, or (vi) result in any liability or expense to the Purchaser under any
collective bargaining agreements to which the Seller is a party.
e. Customer List. The Customer List is a true and correct list of the names
and addresses of all customers, clients and payors of the Business as of the
date hereof and (as shall be supplemented by the Seller in writing) as of the
Closing, and, to the best of each Shareholder's knowledge, the Seller maintains
good continuing business relations with each client and payor thereon. To the
knowledge of the Shareholders and except as disclosed in writing to the
Purchaser, since January 1, 1996, there has been no occurrence or circumstance
in which (A) any customer, client or payor listed on the Customer List has
canceled or significantly curtailed its purchase or referral of laboratory
testing services from the Seller, (B) any customer, client or payor having a
contractual relationship with the Seller which by its terms is subject to
renewal within twelve months of the date of this Agreement has informed either
Seller that he, she or it does not intend to renew such contractual
relationship, or (C) any customer, client or payor contract for the provision of
testing services has been lost or not renewed as a result of such customer,
client or payor becoming party to any managed care or similar arrangement. None
of the Sellers is aware that any client or payor listed on the Customer List (A)
intends to cease or reduce the purchase or referral of testing services
following the Closing, or (B) is subject to any agreement or understanding which
would prohibit such customer, client or payor from purchasing additional
clinical laboratory testing services from the Purchaser following the Closing
Date. Seller is not a party to any agreement or understanding with any HMO, IPA,
PPO, insurance provider, third party payor or other similar entity for the
provision of laboratory testing services that is not listed on Exhibit C.
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f. Financial Information; Asset Listing. The financial statements of the
Business for the fiscal year ended December 31, 1995, and for the four (4) month
period ended April 30, 1996, attached to this Agreement as Exhibit G or provided
by Seller before September 30, 1996 (including, in each case, a balance sheet
and income statement) are complete and correct and have been prepared in
accordance with the cash basis method of accounting applied on a consistent
basis throughout the periods indicated and with each other, and fairly and
accurately set forth the operating results of the Seller as of the dates and for
the periods indicated therein. Since the date of such financial statements,
there has not been any adverse change in the revenues from that reflected in
such financial statements. The revenues set forth in such financial statements
represent only the revenues from those customers and customer accounts relating
to the Business and included in the Customer List. Exhibit G also includes an
accurate and complete schedule of the Seller's gross charges, net collections
and accessions from customers and payors on the Customer List for each calendar
month in the twelve (12) months ended April 30, 1996.
g. No Violation of Law.
(i) The Business has been conducted in compliance with all applicable laws
and regulations of federal, state and local governmental authorities (including
without limitation laws relating to Medicare and Medicaid). The Seller
possesses, and is in compliance with, all licenses, permits, approvals and other
governmental authorizations necessary to the conduct of the Business (a listing
of which licenses, permits and approvals has been provided to the Purchaser). No
governmental authority which licenses or audits the Sellers has conducted any
audit during the last five (5) years.
(ii) The Seller has complied with all applicable Blue Cross/Blue Shield,
Medicare, Medicaid, CHAMPUS and all other third party payor billing policies,
procedures, limitations and restrictions (including, but not limited to, the
laboratory billing restrictions in Section 1833(h) of the Social Security Act,
42 U.S.C. ss. 13951(h)).
(iii) There is no pending or, to the knowledge of either Shareholder,
threatened recoupment or penalty action or proceeding against the Seller under
the Medicare or Medicaid programs or by Blue Cross/Blue Shield or by any other
third party payor.
(iv) No person has an ownership interest in the Business or any
compensation, lease, rebate, discount or other remuneration arrangement with the
Sellers triggering the restrictions of the provisions of the Stark Act, Section
1877 of the Social Security Act, 42 U.S.C. ss. 1395nn (as the same has been
amended by the Omnibus Budget and Reconciliation Act of 1993) or in violation of
the provisions of the Medicare-Medicaid Anti-Fraud and Abuse Amendments, Section
1128(b) of the Social Security Act, 42 U.S.C. ss. 1320a-7b(b) or of California
Business and Professions Code Section 650 or California Labor Code Section 3215
(as the same have been amended by the Physician Ownership and Referral Act of
1933).
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(v) The Seller has fully complied with the requirements of theStark Act
(including without limitation submission of the reports and completion of the
laboratory reference form required by such Act).
(vi) Neither the Seller or its agents, or managing employees (as defined as
42 U.S.C. ss. 1320a-5), has been excluded or is subject to exclusion from
participation in federal or state health care programs pursuant to Section 1128
of the Social Security Act, 42 U.S.C. ss. 1320a-7 or related regulations or
other federal or state laws and regulations and no such action is pending or has
been threatened against such persons.
(vii) Neither the Seller or its employees, agents or independent
contractors, has participated in or caused (i) any false statement or omission
or misrepresentation of fact in any application or claim for payment under
Medicare or a state application or claim, or (ii) any application or claim for
payment otherwise in violation of Section 1128A, 1128B or 1877 of the Social
Security Act, 42 U.S.C. ss.ss. 1320a-7a, 1320a-7b and 1395nn; the False Claims
Act, 31 U.S.C. ss. 3729 et seq.; the False Statements Act, 18 U.S.C. ss. 2002;
the Program Fraud Civil Penalties Act, 31 U.S.C. ss. 3801 et seq.; or related
regulations or other federal or state laws and regulations.
h. Litigation, etc. There are no suits, actions or administrative,
arbitration, unfair labor practice, worker's compensation or other proceedings
or governmental investigations, pending or threatened against or relating,
directly or indirectly, to the Purchased Assets or the Business, and there are
no judgments, orders, injunctions, decrees, stipulations or awards (whether
rendered by a court, administrative agency or by arbitration, pursuant to a
grievance or other procedure) against or relating to either the Seller or the
Purchased Assets which could result in a material adverse effect, or any lien or
other encumbrance, on the Purchased Assets.
i. Brokers, Finders and Consultants. Each of the Sellers jointly and
severally shall indemnify and defend the Purchaser and hold it harmless against
any claims for any expenses, fees or commissions of any broker, finder or
consultant retained by or working on behalf of either of the Sellers.
j. Assignability of Contracts; No Default. The Seller has no reason to
believe that assignments or other transfers of the Assigned Contracts (on terms
at least as favorable to the Purchaser) will not be obtained for transfer to the
Purchaser in accordance with Section 5(f) hereof at or prior to the Closing,
without default, penalty or other similar restriction. No default or condition
permitting declaration of default exists with respect to any of the Assigned
Contracts. The Seller is not aware of any payments (other than payment for rent
under Assigned Contracts relating to leased property) that will be required in
the future to be made under the Assigned Contracts.
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k. Certain Schedules. The Purchaser's test menu (including prices)that has
been provided to the Seller will be appropriate to service the accounts on the
Customer List, except for the modifications for custom panels, individual tests
and special client and/or patient prices listed on Exhibit H attached hereto.
There are no custom panels or special pricing arrangements with accounts on the
Customer List that are not reflected in such Exhibit H. The description of the
Seller's courier routes, pick up times and pick up locations provided verbally
or in writing to the Purchaser are accurate and complete.
l. Taxes. All sales and use taxes, real and personal property taxes, gross
receipts taxes, documentary transfer taxes, employment taxes, withholding taxes,
unemployment insurance contributions and other taxes or governmental charges of
any kind, however denominated, for which the Purchaser could become liable as a
result of acquiring the Purchased Assets or which could result in a lien on or
charge against the Purchased Assets (collectively, "Taxes") have been or will be
paid for all periods prior to and including the Closing Date. The Sellers have
duly and timely filed (or will file prior to the Closing Date) all returns and
reports of Taxes required to be filed prior to such date. There are not, and as
of the Closing will not be, any liens for Taxes on any of the Purchased Assets
(other than liens for Taxes not yet due and payable). The Seller has complied
with all record keeping and tax reporting obligations relating to income and
employment taxes due with respect to compensation paid to Employees. The Sellers
are not "foreign persons" within the meaning of Section 1445(f)(3) of the Code.
There are no pending or threatened proceedings with respect to Taxes. No
agreement or arrangement regarding compensation which will be assumed by the
Purchaser provides for any payments which could result in a nondeductible
expense to the Purchaser pursuant to Section 280G of the Code or an excise tax
to the recipient of such payment pursuant to Section 4999 of the Code.
m. Inventory. As of the Closing Date, the Purchased Assets shall include an
inventory of drawing supplies (including, without limitation, drawing supplies
located in client offices) that is sufficient for at least thirty (30) days of
operations at the same volume as for the thirty (30) day period preceding the
Closing Date.
n. Health, Safety, Employment and Environmental Matters.
(i) The Seller is in compliance with all federal, state, local and foreign
health and occupational safety laws and all federal, state, local and foreign
laws related to employment and employment practices, compensation and benefits,
which are applicable to the Seller or the Business, and the Sellers have
conducted the Business in compliance with the foregoing provisions.
(ii) The Seller is in compliance with the terms and conditions of all
environmental permits, licenses, and other authorizations required under
applicable laws relating in any way to pollution of the environment, and the
Seller has conducted the Business in compliance with the foregoing provisions.
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(iii) The Seller is in compliance with all applicable federal, state, local
and foreign laws relating to emissions, discharges, and releases of hazardous
materials into the environment and the generation, treatment, storage,
transportation and disposal of hazardous wastes, including, without limitation,
any applicable provisions of the Resource Conservation and Recovery Act of 1976
or the Comprehensive Environmental Response, Compensation and Liability Act of
1980, and the Seller has conducted the Business in compliance with the foregoing
provisions.
(iv) There are no conditions at, on, under or related to, any real property
of the Seller or at which they conduct or have conducted any of their operations
or business which presently or potentially pose a significant hazard to human
health or the environment, whether or not in compliance with law, and there has
been no production, use, treatment, storage, transportation or disposal by the
Seller of any Hazardous Substance, as hereinafter defined, at or on such real
property nor any release or threatened release by the Sellers of any Hazardous
Substance, pollutant or contaminant into or upon or over the real property or
into or upon ground or surface water at or within 2,000 feet of the boundaries
of such real property except in compliance with applicable law. No Hazardous
Substance is now or ever have been stored by the Seller on such real property in
underground tanks, pits or surface impoundments except in compliance with
applicable law.
(v) No action, investigation, proceeding, permit revocation, permit
amendment, writ, injunction or claim is pending, nor has the Seller received any
notice of any of the foregoing, concerning or relating to (i) the use, storage,
sale or disposal of any Hazardous Substance related to or affecting the
Purchased Assets, (ii) the exposure of any person to any Hazardous Substance as
a consequence of any activity related to or affecting the Purchased Assets or
(iii) the presence of any Hazardous Substance in, on or under any of the
Seller's facilities or any property owned, leased or occupied by the Seller
which is related to or affecting the Purchased Assets.
(vi) For purposes of this Agreement, "Hazardous Substance" shall mean any
environmentally hazardous or toxic substance, material or waste which is
currently regulated as such by any local governmental authority, any state or
the United States Government.
o. Material Misstatements and Omissions. No representation or warranty by
either of the Sellers in this Agreement, any Related Agreement or in any
certificate furnished or to be furnished by either of the Sellers 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
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller as follows:
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a. Organization. The Purchaser is a corporation duly organized and validly
existing under the laws of the State of California and has all requisite power
and authority to own, operate and carry on its business as it is now conducted.
b. Due Authority; Valid and Binding Agreements. The Purchaser has the power
and authority to enter into and be bound by the terms and conditions of this
Agreement and the Related Agreements to which it is a party and to carry out its
obligations pursuant hereto and thereto. Each of this Agreement and the Related
Agreements to which the Purchaser is a party is or, upon execution and delivery
thereof, will be, a legal, valid and binding obligation of the Purchaser, in
each case enforceable against the Purchaser in accordance with its terms. The
execution, delivery and performance by the Purchaser of this Agreement and the
Related Agreements has been authorized and approved by all necessary corporate
action.
c. No Conflicts or Violations. Neither the execution or delivery of this
Agreement and the Related Agreements nor the consummation of the transactions
contemplated hereby and thereby will (i) conflict with or result in any
violation of or constitute a default under any provision of the Purchaser's
Articles of Incorporation or Bylaws or any agreement, mortgage, bond, indenture,
franchise or other instrument or obligation to which the Purchaser is a party or
by which it is bound, (ii) violate any judgment, order, injunction, decree or
award of any court, administrative agency or governmental body against, or
binding upon, the Purchaser or upon the property or business regulation of any
jurisdiction as such law or regulation relates to the Purchaser or the property
or business or the Purchaser, (iii) constitute a violation by the Purchaser of
any law or regulation of any jurisdiction, or (iv) result in the breach of any
of the terms or conditions of, or constitute a default under, or otherwise cause
any impairment of, any permit, license or other governmental authorization held
by the Purchaser or required of the Purchaser to conduct its business.
d. Brokers, Finders and Consultants. The Purchaser shall indemnify and
defend the Sellers and hold each of them harmless against any claims for any
expenses, fees or commissions of any broker, finder or consultant retained by or
working in the Purchaser's behalf.
e. Materials Misstatements and Omissions. No representation or warranty by
the Purchaser in this Agreement or the Related Agreements or in any certificate
furnished or to be furnished by the Purchaser 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 state a material fact
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading.
5. Interim Agreements.
a. Access; Confidentiality. The Sellers agree to make available all books,
records, facilities, employees and information necessary for the Purchaser to
evaluate thePurchased Assets. Each party hereto shall keep confidential and
shall not make use of any information treated by the other party as confidential
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(including, without limitation, the existence of this Agreement), obtained from
the other party concerning the assets, properties, business or operations of the
other party other than to legal counsel, auditors, board members, consultants,
financial advisers, key employees, lenders and investment bankers where such
disclosure is related to the performance of obligations under this Agreement or
the consummation of the transactions contemplated under this Agreement (all of
whom shall be similarly bound by the provisions of this Section 5(a)), except as
may be required to be disclosed by applicable law. Notwithstanding the
foregoing, the foregoing confidentiality restrictions shall not apply to (i)
information that was in the receiving party's possession prior to receipt from
the disclosing party, (ii) information that becomes generally available to the
public other than as a result of the receiving party's fault or action, (iii)
information that becomes available to the receiving party from some source other
than the disclosing party, provided that such source is under no non-disclosure
obligation, or (iv) information that is developed independently by the receiving
party without reference to the disclosing party's information.
b. Public Announcements. The Purchaser and the Sellers agree to cooperate
in good faith and mutually consent to any press release or public statement with
respect to the existence of this Agreement or the transactions contemplated
hereby, and further agree not to issue any such press release or public
statement prior to consultation with the other, except as may be required by
law; provided, however, that the Purchaser shall be entitled to include
information in any filing with the Securities and Exchange Commission or such
press release or public statement which is reasonably necessary to comply with
the Purchaser's securities law reporting and disclosure requirements or
policies.
c. Interim Operations. The Seller agrees that, from the date of this
Agreement to the Closing Date, the Seller will carry on its activities with
respect to the Purchased Assets and the Business in the ordinary course and in
substantially the same manner as it has prior to this Agreement, and shall take
no action (i) that could diminish the value of the Purchased Assets, or (ii)
that would result in any representation or warranty of the Sellers being untrue
at the Closing Date. The Sellers agree to use their respective best efforts
prior to the Closing Date to cause the retention of all clients and payors on
the Customer List and to maintain the level of service provided to such clients
and payors.
d. Occurrence of Conditions. Each party hereto shall use its best efforts,
or where appropriate cooperate in the efforts of the other party, to cause the
occurrence of the conditions specified in Section 6 and Section 7 of this
Agreement.
e. Non-solicitation Agreement. From the date hereof and until the Closing
Date or the termination of this Agreement, whichever occurs earlier, neither of
the Sellers shall, whether directly or indirectly or through any shareholder,
officer, employee, affiliate, advisor or other consultant, initiate or
participate in any discussion or negotiation relating to, or provide any
information in connection with, any possible sale, directly or indirectly, of
12
the Sellers, any of their assets or business (including, without limitation, the
Purchased Assets), to any party other than the Purchaser.
f. Certain Assignments. The Seller shall use their respective best efforts
to obtain assignments to Purchaser of each of the Assigned Contracts on the same
terms or terms more favorable to the Purchaser as currently exist with respect
to the Seller.
g. Employment Arrangements. The Purchaser shall pay the Shareholders a
commission for new accounts that are approved by the Purchaser and commence
service within 90 days after the Closing Date. The commission rate paid shall be
eight percent (8.0%) of Net Collections (as defined in Section 2.c.iii.)
received by Meris for the twelve (12) consecutive months following submission by
the Shareholders of such new account for payment. The Purchaser will have no
obligation to employ any employees of the Sellers after the Closing Date and the
Seller shall be solely responsible for all severance, termination and other
employment-related liabilities.
6. Conditions to Obligations of the Purchaser. Absent a waiver in writing,
all obligations of the Purchaser under this Agreement, except the obligations
set forth in Section 5 and Section 9 hereof, are subject to the satisfaction of
the following conditions, to the Purchaser's reasonable satisfaction, on or
before the completion of the Closing on the Closing Date:
a. Representations, Warranties and Performance. The representations and
warranties of the Sellers contained herein shall be deemed to have been made
again at and as of the Closing Date and shall then be true and correct with the
same force and effect as if such representations and warranties have been made
at and as of the Closing Date; the Sellers shall have performed and complied
with all agreements, conditions and covenants required by this Agreement to be
performed or complied with by the Sellers prior to or at the Closing Date; and
each of the Sellers shall have furnished to the Purchaser a certificate dated
the Closing Date, verifying, in such detail as the Purchaser may reasonably
request, to the fulfillment of the foregoing conditions.
b. Litigation. There shall not be pending any litigation before any court
or governmental agency (i) the outcome of which could reasonably be expected to
have a material adverse affect on the Purchased Assets or their value to the
Purchaser, or (ii) to restrain or prohibit or to obtain damages or other relief
in connection with, or which is related to or arises out of, this Agreement, the
Related Agreements or the transactions contemplated hereby or thereby.
c. Certain Assignments. The assignments of the Assigned Contracts as
described in Section 5(f) hereof shall have been received to the Purchaser's
satisfaction, or the Seller shall have provided the Purchaser with reasonable
assurances that such assignments will be obtained promptly following the Closing
Date.
13
d. Absence of Material Changes. There shall not have been any adverse
change in or to the Purchased Assets or revenues obtained or anticipated to be
obtained therefrom. e. Related Agreements. The Sellers shall have executed and
delivered each of the Related Agreements to which they are a party.
f. Approvals. All consents, approvals and filings required under any
applicable law, rule or regulation to be completed or obtained prior to the
transactions contemplated by this Agreement and the Related Agreements shall
have been so completed or obtained, as the case may be.
g. FIRPTA Affidavit. The Seller shall have provided the Purchaser with an
affidavit stating, under penalty of perjury, that the Seller is not a foreign
person and providing such Seller's U.S. taxpayer identification number.
h. Cooperation in Transition. At least five (5) business days prior to the
Closing Date, the Seller shall have provided the Purchaser with an opportunity
to meet with an interview the Seller's employees and representatives of accounts
listed on the Customer List, in order for the Purchaser to familiarize itself
with the operation of the Seller's business and to facilitate the transition of
the Business to the Purchaser.
7. Conditions to Obligations of the Sellers. Absent a waiver in writing,
all obligations of the Sellers under this Agreement, except the obligations set
forth in Sections 5 and 9 hereof, are subject to the satisfaction of the
following conditions, to the Seller's reasonable satisfaction, on or before the
completion of the Closing on the Closing Date:
a. Representations, Warranties and Performance. The representations and
warranties of the Purchaser shall be deemed to have been made again at and as of
the Closing Date and shall then be true and correct with the same force and
effect as if such representations and warranties had been made at and as of the
Closing Date; the Purchaser shall have performed and complied with all
agreements, conditions and covenants required by this Agreement to be performed
or complied with by it prior to or at the Closing Date.
b. Litigation. There shall not be pending any litigation before any court
or governmental agency to restrain or prohibit or to obtain damages or other
relief in connection with, or which is related to or arises out of, this
Agreement, the Related Agreements or the transactions contemplated hereby or
thereby.
c. Related Agreements. The Purchaser shall have executed and delivered the
Related Agreements to which it is a party.
d. Approvals. All consents, approvals and filings required under any
applicable law, rule or regulation to be completed or obtained prior to the
transactions contemplated by this Agreement and the Related Agreements shall
have been so completed or obtained, as the case may be.
14
8. Termination; Survival and Effect of Termination.
a. Termination. Anything contained herein to the contrary notwithstanding,
this Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing Date:
(i) By mutual consent of the Purchaser and the Seller;
(ii) By the Purchaser, if any of the conditions set forth in Section 6
shall have become incapable of fulfillment prior to May 30, 1996, through no
fault of the Purchaser and shall not have been waived by the Purchaser;
(iii) By the Seller, if any of the conditions set forth in Section 7 shall
have become incapable of fulfillment prior to May 30, 1996 through no fault of
the Sellers and shall not have been waived by the Sellers;
(iv) By either the Purchaser, on one hand, or the Sellers, on the other
hand, if (A) the other has breached this Agreement in any material respect, (B)
any of the representations and warranties made by the other in Section 3 or
Section 4 of this Agreement (as the case may be) is false or inaccurate in any
material respect, or (C) the Closing does not occur on or before May 30, 1996
(unless such date is extended by mutual agreement), but only if the failure to
consummate such transaction on or before such date did not result from the
failure by the party seeking such termination to fulfill any condition set forth
in Section 5(d), Section 6 or Section 7, as the case may be, which is a
condition precedent to the obligation of the other under this Agreement to
consummate the transactions contemplated hereby; or
(v) Without limiting the foregoing, by the Purchaser if there has been a
material adverse change in the Purchased Assets or the revenue and income
expected to be obtained therefrom.
b. Survival. If this Agreement is terminated prior to Closing and the
transactions contemplated hereby are not consummated at such time as described
above, this Agreement shall become void and of no further force and effect,
except for the provisions of Section 5(a) (relating to the obligations of
confidentiality); Section 5(b) (relating to disclosure); Section 8 (relating to
termination); Section 9(a) (relating to indemnification); Section 9(b) (relating
to arbitration); and Section 10 (relating to certain miscellaneous provisions);
provided, however, that such termination shall not limit any rights or
obligations of any party hereto for breach of this Agreement or any Related
Agreement.
15
c. Effect of Termination. Notwithstanding Section 8(b) hereof, if
theSellers terminates this Agreement prior to the Closing pursuant to paragraph
8(a)(iii), 8(a)(iv)(A) or 8(a)(iv)(B) above or if the Purchaser terminates this
Agreement pursuant to paragraph 8(a)(ii), 8(a)(iv)(A), 8(a)(iv)(B) or 8(a)(v)
above, the terminating party shall be entitled to recover from the other party
all reasonable costs and expenses incurred by the terminating party with respect
to the transactions contemplated by this Agreement, including attorneys' and
consultants' fees, as well as any damages or other relief the terminating party
may be entitled to collect by law.
9. Covenants Following Closing.
a. Indemnification.
(i) Indemnification by Seller and the Shareholders. Each of the Seller and
the Shareholders, jointly and severally, agrees to indemnify, defend and hold
the Purchaser harmless from and against any and all losses, claims, demands,
damages, costs and expenses (including without limitation, reasonable attorneys'
fees and disbursements) of every kind, nature and description (collectively
"Claims") based upon, arising out of or otherwise in respect of (A) any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of the Sellers contained in this Agreement or in any certificate,
document or instrument delivered pursuant to this Agreement (including, without
limitation, any expenses incurred by the Purchaser in connection with any
governmental proceeding or investigation relating to the conduct of the Business
prior to the Closing Date); (B) any claim arising out of or made in connection
with the conduct of the Business prior to the Closing Date; (C) any claim
arising out of or related to the liabilities not expressly assumed by the
Purchaser pursuant to this Agreement (including, without limitation, those
described in Section 1(c) hereof; or (D) any claim arising out of or related to
performance of any Assigned Contract prior to the date of assignment thereof to
the Purchaser. Each of the Sellers agrees that any breach of this Agreement by
the other Seller shall be deemed to be a breach of this Agreement by each
Seller, and that all of the obligations of the Sellers under this Agreement
shall be, in all cases, joint and several. The Purchaser may, at its option (and
without limiting any other rights or remedies available to the Purchaser),
deduct the amount of any Claim described above from any amounts required to be
paid to the Sellers under Section 2(c) of this Agreement.
(ii) Indemnification by the Purchaser. The Purchaser agrees to indemnify,
defend and hold the Sellers harmless from and against any and all Claims based
upon, arising out of or otherwise in respect of (A) any inaccuracy in or any
breach of any representation, warranty, covenant or Agreement of the Purchaser
contained in this Agreement or in any certificate, document or instrument
delivered pursuant to this Agreement; (B) any claim arising out of or made in
connection with the Purchaser's conduct of its business after the Closing Date;
or (C) any claim arising out of or related to performance of any Assigned
Contract following the date of assignment thereof to the Purchaser.
16
b. Arbitration. Any dispute arising between the parties with respect to
this Agreement (including, without limitation, in regard to any claim under
Section 9(a) hereof) orany Related Agreement, shall be settled by arbitration
conducted in San Jose, California. If either party wishes to commence an
arbitration hereunder, it shall serve written notice to such effect on the other
party and, within 45 days thereafter, the parties shall mutually select a single
arbitrator to conduct such arbitration from among a list of retired federal and
state trial court judges eligible to serve in such capacity furnished to the
parties by the American Arbitration Association. If the parties are unable to
select an arbitrator by mutual agreement within such period, the arbitrator
shall be selected by the American Arbitration Association in accordance with its
procedures. In conducting the arbitration, the arbitrator shall apply the
Commercial Arbitration Rules of the American Arbitration Association as modified
by any other instructions that the parties may agree upon at the time, except
that each party shall have the right to conduct discovery in any manner and to
any extent authorized by the Federal Rules of Civil Procedure as interpreted by
the federal courts. Costs and expenses, including reasonable attorneys' fees
incurred with respect to the arbitration, shall be borne by the losing party,
unless otherwise determined by the arbitrator based on a showing of good cause
to vary from the usual rule expressed in this sentence. The arbitrator's award
shall be final and unappealable. A judgment upon the award may be entered in any
court having jurisdiction of the parties.
c. Seller's Employees. The Seller agrees that it shall bear sole
responsibility for all amounts due and payable or otherwise arising with respect
to the Seller's employees at and prior to the Closing Date, including but not
limited to, all salaries, wages, commissions, profit and revenue sharing, and
holiday, vacation and severance pay, bonuses and past service credits and shall
have made and remitted, for all periods through and including the Closing Date,
all payroll deductions, remittances and contributions, including, but not
limited to, employees' salaries and wages, commissions, bonuses and
profit-sharing required under contract, any collective bargaining agreements or
applicable laws and regulations.
d. Use of Name. Following the Closing Date, neither of the Sellers shall
use the name "ROCEL" or any variations thereon, except in connection with
winding up of the Business.
f. Transition Support.
(i) The Sellers will use their respective best efforts to assist the
Purchaser in achieving the orderly transition of the Purchased Assets to the
Purchaser, and the Sellers shall cooperate in connection with such transition
(including, without limitation, in providing any introduction to customers,
clients and payors on the Customer List), in order that the Purchaser may
incorporate the Purchased Assets into its existing laboratory operations with no
interruption in service to clients or diminution in quality and no diminution in
the value of the Purchased Assets.
(ii) The Seller shall observe faithfully the terms of all Assigned
Contracts until assignments or transfers thereof have been obtained.
17
(iii) For a period of four (4) years following the Closing Date, the
Purchaser shall make available such books and records included in the Purchased
Assets as are requested by the Secretary of Health and Human Services, the
Comptroller General of the United States, or their authorized representatives,
pursuant to Section 952 of the Omnibus Reconciliation Act of 1980 (or any
successor or other applicable statute or regulation), in compliance with the
time, place and manner of providing access set forth in such request.
(iv) The Sellers shall provide each other with such information and access
to books and records as may reasonably be requested by the other in connection
with any Claim or the preparation of any returns of Taxes and audits or other
proceedings relating to Taxes.
10. Miscellaneous.
a. Survival of Representations and Warranties. All representations and
warranties of the Purchaser and the Sellers made in this Agreement or in any
certificate, document or other instrument delivered pursuant hereto shall
survive the execution and delivery hereof and the Closing.
b. Fees and Expenses. Subject to the provisions of Sections 8(c) and 9(e)
hereof, each of the parties hereto shall bear its own fees and expenses,
including fees of counsel and accountants, incurred in connection with the
negotiation of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby or otherwise arising out of, or
by reason of, this Agreement or any Related Agreement.
c. Entire Agreement; Third Party Beneficiaries. This Agreement and the
Related Agreements (including the exhibits and schedules hereto and thereto)
constitute the entire agreement between the parties hereto and thereto with
respect to the subject matter hereof and thereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties with respect thereto. The parties hereto
acknowledge and agree that no third party (including any employee of the
Sellers) is intended to be a third-party beneficiary of this Agreement or any
Related Agreement.
d. Amendments. No amendment, modification or rescission of this Agreement
or any Related Agreement shall be effective unless set forth in writing executed
by the party sought to be bound thereby.
e. Notices. Any notice given hereunder or under any Related Agreement
(except as otherwise provided therein) shall be in writing and shall be deemed
effective upon the earlier of personal delivery (including personal delivery by
telex or other means), the day after delivery by commercial courier to a
responsible individual or the third day after mailing by certified or registered
mail, postage prepaid, as follows:
18
(1) If to the Purchaser:
Meris Laboratories, Inc.
2890 Zanker Road
San Jose, CA 95134
(408) 434-9200
Attention: William Neeley, MD, President
1) If to the Sellers:
c/o ROCEL Clinical Diagnostics, Inc.
Celia Blando or Romeo Torres
P.O. Box 7368
Oxnard, CA 93031
or to such other address as any party may have furnished in writing to the other
party in the manner provided above.
f. Assignment. No party may assign this Agreement or any Related Agreement,
nor may any of its rights hereunder be assignable or transferable, in any manner
by a party, without the prior written consent of the other party.
Notwithstanding the foregoing, however, the Purchaser (and its successors) may
assign this Agreement or any Related Agreement and any or all of the Purchaser's
rights and obligations hereunder or thereunder, to another entity (i) if such
entity has at least the same net worth immediately following such assignment as
the Purchaser immediately prior to such assignment, or (ii) in connection with
any sale of all or substantially all of the Purchaser's assets or the sale of at
least a majority of the Purchaser's capital stock, and so long as, in either
case, such entity acknowledges and accepts in writing the obligations assumed
pursuant to such assignment. Any proposed assignment in violation of this
Section 10(f) shall be void. Subject to the foregoing, this Agreement and the
Related Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective transferees, successors, assigns and legal
representatives.
g. Incorporation by Reference. All Exhibits referred to in this Agreement
are by this reference incorporated herein as an integral part hereof.
h. Governing Law. This Agreement and the Related Agreements and the
respective rights and obligations of the parties hereto and thereto shall be
construed under and by the laws of the State of California, without reference to
conflicts of laws principles.
i. Captions. The title to the Sections and subsections of this Agreement
and the Related Agreements are included herein solely for convenience, are not a
part of this Agreement or any Related Agreement and do not in any way limit or
amplify the terms of this Agreement or any Related Agreement.
19
j. Attorneys' Fees. If any legal action or proceeding is brought to enforce
or interpret this Agreement or any Related Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with this agreement,
the prevailing party shall be entitled to reasonable attorneys' fees and costs
in connection with such action or proceeding in addition to all other relief to
which such party may be entitled.
k. No Waiver. It is understood and agreed that no failure or delay by any
party in exercising any right, power, or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege be deemed to operate as a waiver of any other right, power or
privilege hereunder.
l. Counterparts. This Agreement and any Related Agreement may be executed
in any number of counterparts, each of which shall be considered to be an
original, but all of which together shall constitute one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
20
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
PURCHASER: MERIS LABORATORIES, INC.,
a California corporation
By: /S/ William Neeley, M.D.
---------------------------
William Neeley, M.D.
President
SELLER:
ROCEL Clinical Diagnostics, Inc.
a California corporation
By: /s/ Celia Blanda
----------------------------
Title: TECH. DIRECTOR
----------------------------
SHAREHOLDERS:
/s/ Celia Blanda
----------------------------------
Celia Blando, an individual
/s/ Romeo Torres
----------------------------------
Romeo Torres, an individual
21
LIST OF EXHIBITS
Exhibit A Customer List
Exhibit B Equipment
Exhibit C Assigned Contracts
Exhibit D Non-competition Agreement
Exhibit E Bill of Sale
Exhibit F Purchase Price Allocation
Exhibit G Seller's Financial Statements
Exhibit H Special Panels and Pricing
22
EXHIBIT A
CUSTOMER LIST
Group A GROUP B
- ------- -------
David Kerwin Chris Mele/Indian Health
E. Leslie Weeks David Shields
Hien-Van Nguyen Burt McDowell
Tung Phan Antoine Pham
Minh-Tam Nguyen Ngai-Xuan Nguyen
Nora Ancheta Thinh Nguyen
Renuka Patel Raphael Chu
Howard Thornton/Infinity Home Care Thuan Luu
John McClain Youbert Kavalian
Kenneth Rebong Chau Minh Nguyen
Marie-Anson Rebong Leticia Lutap
Rom Romero Cao Van Tran
Sam Khieu Rafia Parveen
A. Clients listed in Group A are considered Active for purposes of each
earnout period.
B. Any physician listed in Group B will be considered Active if during the two
(2) month period from June 1, 1996 to July 31, 1996 adjusted gross charges
for that account averages $1,000 per month. Any physician in Group B that
does not fit the above criteria will not be considered Active.
1
EXHIBIT B
DESCRIPTION OF EQUIPMENT
Purchased Assets:
Tangible purchased assets shall include the following items located in the
remote draw stations:
1. Modesto
1 centrifuge $100
1 refrigerator 50
1 table 50
1 chair, for drawing 25
waiting room chairs 25
----
$250
2. Riverbank
1 centrifuge $100
1 refrigerator 50
1 table 50
1 chair, for drawing 25
waiting room chairs 25
----
$250
TOTAL $500
====
1
EXHIBIT C
ASSIGNED CONTRACTS
1. Lease or sublease agreements for the Seller's offices or draw stations
at the following locations:
a. 110 Santa Barbara Ave.
Modesto, California
b. 3227 Stanislaus
Riverbank, California 95367
2
EXHIBIT D
NON-COMPETITION AGREEMENT
Agreement is made and entered into as of May 16, 1996, by and between
Meris Laboratories, Inc., a California corporation, (the "Purchaser"), and ROCEL
Clinical Diagnostics, Inc., a California corporation (the "Seller"), and Celia
Blando and Romeo Torres, individuals (collectively, the "Shareholders") (the
Seller and the Shareholders are referred to herein collectively as the "Selling
Parties").
A. The Selling Parties are parties to that certain Asset Purchase Agreement
dated May 16, 1996 (the "Purchase Agreement"), pursuant to which the Purchaser
has purchased certain assets (including the customer list attached thereto as
Exhibit A (the "Customer List") relating to the Selling Parties' clinical
laboratory testing business; and
B. The Shareholders are the only shareholders of the Seller.
C. The business relationships that the Selling Parties have maintained with
the Seller's clients contribute substantially and materially to the value of the
Customer List, and the Selling Parties' knowledge and experience in the
laboratory business and their financial and investment ability could be used in
a manner which would prevent the Purchaser from realizing the benefits it
bargained for in purchasing such Customer List; and
D. The Selling Parties are willing to enter into this Agreement in further
consideration of the obligations undertaken by the Purchaser in the Purchase
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Agreement and in the Purchase Agreement, the parties agree as follows:
1. Noncompetition Covenant of the Selling Parties. No Selling Party shall,
during the period specified in Section 2 below, do any of the following without
the prior written consent of the Purchaser:
a. Carry on in any county or other political subdivision of any state or
commonwealth of the United States of America in which a client or client account
listed on the Customer List is located, including (without limitation) Santa
Clara and Stanislaus County (collectively, the "Restricted Territory") any
business or activity in the field of commercial medical laboratory testing
services, (collectively, "Laboratory Services"), whether directly or indirectly,
as a partner, shareholder, principal, agent, medical director, affiliate or
consultant;
b. Solicit or influence or attempt to influence any customer, client, payor
or other person located within the Restricted Territory, including (without
limitation) those listed on the Customer List, either directly or indirectly, to
direct, his, her or its purchases of Laboratory Services to any person, firm,
corporation, institution or other entity in competition with the business of the
Purchaser; or
1
c. Solicit or influence or attempt to influence any person employed by the
Purchaser, including any such employee who may previously have been employed by
any Selling Party, to terminate or otherwise cease his or her employment with
the Purchaser or become an employee of any Selling Party, any affiliate of any
Selling Party, or any competitor of the Purchaser.
2. Duration. The covenants set forth in Section 1 shall be effective
commencing as of the date hereof and shall continue with respect to a Selling
Party until the fifth (5th) anniversary of the date of this Agreement.
3. Certain Inquiries. Each Selling Party agrees that to the extent any of
them receive during the term hereof any inquiries or requests for Laboratory
Services of the type provided by the Sellers prior to the date hereof in the
Restricted Territory from any person, whether or not such person is listed on
the Customer List, such Selling Party shall state only that the Customer List
has been acquired by the Purchaser.
4. Limitations on Non-Competition Covenant. Section 1 of this Agreement
shall not be deemed to apply to any investments any Selling Party may make in
any publicly traded company so long as such Selling Party's aggregate holdings
do not exceed one percent (1%) of the outstanding voting securities of such
company.
5. Confidentiality. During the term hereof, each Selling Party agrees not
to disclose, communicate, use to the detriment of the Purchaser (or its
business) or for the benefit of any other person, or misuse in any way, any
proprietary or confidential information of the Purchaser such as information
relating to the Seller's business, trade secrets, personnel, processes,
techniques, know-how, customer lists, formulas and other information and
technical data.
6. Severability. The scope and effect of the covenants contained in this
Agreement shall be as broad in time (but not beyond the duration specified in
Section 2 hereof), geography, and in all other respects as is permitted pursuant
to the provisions of Sections 16600 through 16602 of the Business and
Professions Code of the State of California, or other applicable law. Should a
court or other body of competent jurisdiction determine that any term or
provision of this Agreement restricts competition to a greater degree than is
permitted by law, such term or provisions shall be adjusted rather than voided,
if possible, in accordance with the preceding sentence and with applicable law,
and all other terms and provisions of this Agreement shall be deemed valid and
enforceable to the maximum extent possible.
7. Remedies. The parties hereto acknowledge and agree that the extent of
damages to the Purchaser in the event of a breach of the covenants contained in
this Agreement by any of the Selling Parties would be difficult or impossible to
2
ascertain and that there is and will be available to the Purchaser no adequate
remedy at law in the event of any such breach. Consequently, each of the Selling
Parties hereby agrees that in the event of such breach, the Purchaser shall be
entitled to enforce any or all of the covenants contained in this Agreement by
injunctive or other equitable relief.
8. Publicity. During the period specified in Section 2 hereof, the Selling
Parties will not make any public statement concerning the Purchaser or the
existence or terms of this Agreement, except as required by applicable
securities laws.
9. Miscellaneous. The provisions of Section 10(b), (c), (d), (e), (f), (h),
(i), (j), (k) and (l) of the Purchase Agreement are incorporated herein by
reference and made a part hereof (with all references to the "Agreement" therein
being construed to be references to this Agreement).
[SIGNATURE PAGE FOLLOWS]
3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
MERIS LABORATORIES, INC.,
a California corporation
By: /s/ William Neeley. M.D.
------------------------
William Neeley. M.D.
President
SELLING PARTIES:
ROCEL Clinical Diagnostics, Inc.
a California corporation
By: /s/ Celia Blando
-------------------------------
Title: TECH. DIRECTOR
----------------------------
/s/ Celia Blando
-----------------------------------
Celia Blando, an individual
/s/ Romeo Torres
------------------------------------
Romeo Torres, an individual
1
EXHIBIT E
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that ROCEL Clinical Diagnostics, Inc., a
California corporation (the "Transferor"), in exchange for consideration set
forth in the Asset Purchase Agreement (the "Agreement") dated as of May 16,
1996, by and among the Transferor and MERIS LABORATORIES, INC., a California
corporation (the "Transferee"), hereby sells, transfers, assigns and conveys
unto Transferee, its successors and assigns, free and clear of all liens and
encumbrances, all of the right, title and interest of Transferor in and to the
Purchased Assets (as described in the Agreement), including (without limitation)
the customer list attached hereto as Exhibit A and the equipment and other
personal property described in Exhibit B attached hereto.
TO HAVE AND TO HOLD the same unto the Transferee, its successors or
assigns, forever, and the Transferor hereby agrees that the Transferor will from
time to time, if requested by the Transferee, its successors and assigns,
execute, acknowledge and deliver, or will cause to be done, executed and
delivered to the Transferee, or its successors or assigns, all further acts,
transfers, assignments, deeds, powers and assurances of title, and additional
papers and instruments, and do or cause to be done all acts or things as often
as may be proper or necessary for better assuring, conveying, transferring and
assigning all of the property hereby conveyed, transferred or assigned, and
effectively to carry out the intent hereof, and to vest in the Transferee the
entire right, title and interest of the Transferor in and to all of the said
property, and the Transferors will warrant and defend the same to the
Transferee, its successors and assigns, forever against all claims or demands
whatsoever.
IN WITNESS WHEREOF, the Transferor has executed this instrument as of May 16,
1996.
ROCEL Clinical Diagnostics, Inc.,
a California corporation
By: /s/ Celia Blando
----------------------
Title: TECH. DIRECTOR
-------------------
1
EXHIBIT F
PURCHASE PRICE ALLOCATION
Customer List and and Goodwill $249,500
Equipment (See Exhibit B) 500
Noncompete Agreement (See Exhibit D) 50,000
--------
$300,000
========
1
EXHIBIT G
SELLER'S FINANCIAL STATEMENTS
[TO BE PROVIDED BY SELLER BY SEPTEMBER 30, 1996]
Note:The Company anticipates to file Exhibit G to Exhibit 10.1 (filed to the
June 30, 1996 Quarterly Report on Form 10-Q) along with the Quarterly
Report on Form 10-Q for the period ended September 30, 1996.
1
EXHIBIT H
SPECIAL PANELS AND PRICING
UNIT CODE INFORMATION - COMPLETE
PAGE 1
ACTIVE AND INACTIVE
USER: HT 5/17/96
11:17:18
1)Unit Code 350345
2)Ordering Mnemonics CH20R
3)Reporting Title CHEM 20
5)Specimen Type S
6)Worklist CHEM
7)Test Code 35000 - SODIUM
35020 - POTASSIUM
35040 - CHLORIDE
35060 - CO2
35100 - GLUCOSE
35940 - BUN
36040 - CREATININE
36220 - TOTAL PROTEIN
36260 - ALBUMIN
36280 - GLOBULIN
36300 - A/G RATIO
36860 - URIC ACID
36900 - CALCIUM
36940 - PHOSPHORUS
37020 - TOTAL BILIRUBIN
37140 - ALKALINE PHOSPHATASE
37280 - AST (SGOT)
37300 - ALT (SGPT)
37320 - LD
37460 - CK TOTAL
37740 - CHOLESTEROL
37760 - TRIGLYCERIDES
11)Pathologist Review N
13)Container Type SST
15)Transport Temperature REFRIGERATE
17)Laboratory Area RTA
19)Day (s) Test Set-up DAILY
30)Special Instructions for Draw List
1 ML SERUM
40)Report Sequence 350345
10056260(PROFILE) Unit Code: 350550 Unit Code Name: CHEM 23
ROCEL 24 PROFILE 39140 T4
Mnemonic: ROC24
1
10056250 (PROFILE) Unit Code: 350550 Unit Code Name: CHEM 23
ROCEL 28 PROFILE 39140 T4
100000 CBC, 4 INDICES,5 PART DIFF
Mnemonic: ROC28
10056060 (PROFILE) Unit Code: 350550 Unit Code Name: CHEM 23
ROCEL 30 COMPREHENSIVE 377860 HDL,LDL,C/H,L/H
37820 VLDL
391400 THYROID SCREEN
39340 TSH - HIGHLY SENSITIVE
11040 SED RATE, WESTERGREN
61220 RPR
150000 URINALYSIS
150020 UA MICROSCOPIC
Mnemonic: ROC30
2
UNIT CODE INFORMATION - COMPLETE
PAGE 2 ACTIVE AND INACTIVE
USER: HT 5/17/96
11:17:18
10056080 (PROFILE) Unit Code: 37640 Unit Code Name: IRON
ANEMIA PANEL 376600 TIBC,UIBC,%SAT
37720 FERRITIN
41520 FOLATE, SERUM
100000 CBC, 4 INDICES,5 PART DIFF
10640 RETICULOCYTE COUNT
Mnemonic: ROCANEM
10056070 (PROFILE) Unit Code: 36860 Unit Code Name: URIC ACID
ARTHRITIS PANEL 36900 CALCIUM
36940 PHOSPHORUS
37140 ALKALINE PHOSPHATASE
61440 RHEUMATOID FACTOR
11040 SED RATE, WESTERGREN
Mnemonic: ROCARTH
1) Unit Code 351070
2) Ordering Mnemonics CH10R
3) Reporting Title CHEM 10
5) Specimen Type S
6) Worklist CHEM
7) Test Code 35100 - GLUCOSE
35940 - BUN
36040 - CREATININE
36220 - TOTAL PROTEIN
36260 - ALBUMIN
36280 - GLOBULIN
36300 - A/G RATIO
36860 - URIC ACID
36900 - CALCIUM
36940 - PHOSPHORUS
37020 - TOTAL BILIRUBIN
37740 - CHOLESTEROL
11) Pathologist Review N
13) Container Type SST
15) Transport Temperature REFRIGERATE
17) Laboratory Area CHEMISTRY
19) Day (s) Test Set-up DAILY
30) Special Instructions for Draw List
1 ML SERUM
40) Report Sequence 351070
1) Unit Code 350125
2) Ordering Mnemonics CH10G
3) Reporting Title CHEM 10
5) Specimen Type S
6) Worklist CHEM
7) Test Code 35000 - SODIUM
35020 - POTASSIUM
35100 - GLUCOSE
35940 - BUN
36040 - CREATININE
3
UNIT CODE INFORMATION - COMPLETE
PAGE 3 ACTIVE AND INACTIVE
USER: HT 5/17/96
11:17:18
7) Test Code cont'd 36900 - CALCIUM
37020 - TOTAL BILIRUBIN
37280 - AST(SGOT)
37740 - CHOLESTEROL
37760 - TRIGLYCERIDES
11) Pathologist Review N
13) Container Type SST
15) Transport Temperature REFRIGERATE
17) Laboratory Area CHEMISTRY
19) Day(s) Test Set-up DAILY
30) Special Instructions for Draw List
1 ML SERUM
40) Report Sequence 350125
10056090 (PROFILE) Unit Code: 35000 Unit Code Name: SODIUM
HYPERTENSION PROFILE 35020 POTASSIUM
35100 GLUCOSE, RANDOM
35940 BUN
Mnemonic: ROCHYP
1) Unit Code 360030
2) Ordering Mnemonics LIVRR
3) Reporting Title LIVER PROFILE
5) Specimen Type S
6) Worklist CHEM
7) Test Code 36220 - TOTAL PROTEIN
36260 - ALBUMIN
36280 - GLOBULIN
36300 - A/G RATIO
37020 - TOTAL BILIRUBIN
37040 - DIRECT BILIRUBIN
37060 - IND BILIRUBIN
37100 - GGT
37280 - AST(SGOT)
37300 - ALT(SGPT)
37320 - LD
11) Pathologist Review N
17) Laboratory Area CHEMISTRY
40) Report Sequence 360030
10056270 (PROFILE) Unit Code: 37560 Unit Code Name: AMYLASE, TOTAL
PANCREATIC PROFILE 37620 LIPASE
37760 TRIGLYCERIDES
36900 CALCIUM
37100 GGT
Mnemonic: ROCPAN
4
UNIT CODE INFORMATION - COMPLETE
PAGE 4 ACTIVE AND INACTIVE
USER: HT 5/17/96
11:17:18
1) Unit Code 351060
2) Ordering Mnemonics CH7R
3) Reporting Title CHEM 7
5) Specimen Type S
6) Worklist CHEM
7) Test Code 35000 - SODIUM
35020 - POTASSIUM
35100 - GLUCOSE
35940 - BUN
36040 - CREATININE
36220 - TOTAL PROTEIN
36260 - ALBUMIN
36280 - GLOBULIN
36300 - A/G RATIO
11) Pathologist Review N
13) Container Type SST
17) Laboratory Area CHEMISTRY
19) Day(s)Test Set-up DAILY
30) Special Instructions for Draw List
0.5 ML
40) Report Sequence 351060
10056310 (PROFILE) Unit Code: 350550 Unit Code Name:CHEM 23
CH23,HDL/LDL,THYSCN,TSH,ESR,RPR 377860 HDL,LDL,C/H,L/H
37820 VLDL
391400 THYROID SCREEN
39340 TSH - HIGHLY SENSITIVE
11040 SED RATE, WESTERGREN
61220 RPR
Mnemonic: HSP3
5
UNIT CODE INFORMATION - COMPLETE
PAGE 5 CROSS REFERENCE
USER: HT 5/17/96
11:17:18
NAME CODE NAME CODE NAME
CODE
- -------------------------------------- ------------- -------- ----------
- ------------------- ----
ANEMIA PANEL 10056080 CHEM 20 350345 PANCREATIC
PROFILE 10056270
ARTHRITIS PANEL 10056070 CHEM 7 351060 ROCEL 24 P
ROFILE 10056260
CH23,HDL/LDL,THYSCN,TSH,ESR,RPR10056310 HYPERTENSION PROFILE 10056090 ROCEL 28 P
ROFILE 10056250
CHEM 10 350125 LIVER PROFILE 360030 ROCEL 30 C
OMPREHENSIVE 10056060
CHEM 10 351070
6