ASSET PURCHASE AGREEMENT
Between
EDITEK, INC.
and
MEDTOX LABORATORIES, INC.
Dated Effective July 1, 1995
TABLE OF CONTENTS
ARTICLE I ASSET SALE. . . . . . . . . . . . . . . . . . . 1
Section 1.1 Asset Sale . . . . . . . . . . . . . . . . 1
Section 1.2 Affiliates . . . . . . . . . . . . . . . . 1
ARTICLE II LIABILITIES . . . . . . . . . . . . . . . . . . 1
Section 2.1 Assumed Liabilities. . . . . . . . . . . . 1
Section 2.2 Retained Liabilities . . . . . . . . . . . 2
Section 2.3 Litigation Administration. . . . . . . . . 2
ARTICLE III CONSIDERATION PAYABLE BY PURCHASER. . . . . . . 3
Section 3.1 Purchase Price . . . . . . . . . . . . . . 3
ARTICLE IV CLOSING . . . . . . . . . . . . . . . . . . . . 3
Section 4.1 Closing. . . . . . . . . . . . . . . . . . 3
Section 4.2 Conditions to Each Party's Obligation to
Close. . . . . . . . . . . . . . . . . . . 4
Section 4.3 Conditions to Obligation of Seller to
Close. . . . . . . . . . . . . . . . . . . 4
Section 4.4 Conditions to Obligation of Purchaser to
Close. . . . . . . . . . . . . . . . . . . 5
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER . . 6
Section 5.1 Corporate Organization and Good
Standing . . . . . . . . . . . . . . . . . 6
Section 5.2 Authorization; Binding Agreement . . . . . 6
Section 5.3 Certain Fees . . . . . . . . . . . . . . . 7
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLER. . . . 7
Section 6.1 Corporate Organization and Good
Standing . . . . . . . . . . . . . . . . . 7
Section 6.2 Authorization; Binding Agreement . . . . . 8
Section 6.3 Capitalization of Seller . . . . . . . . . 8
Section 6.4 Subsidiaries; Investments. . . . . . . . . 8
Section 6.5 Financial Statements . . . . . . . . . . . 8
Section 6.6 Absence of Certain Changes . . . . . . . . 9
Section 6.7 Certain Fees . . . . . . . . . . . . . . . 9
Section 6.8 Consents and Approvals; No Violations. . . 9
Section 6.9 Litigation . . . . . . . . . . . . . . . . 10
Section 6.10 Certain Employment Matters . . . . . . . . 10
Section 6.11 Employee Benefit Plans . . . . . . . . . . 11
Section 6.12 Tax Matters. . . . . . . . . . . . . . . . 14
Section 6.13 Assets.. . . . . . . . . . . . . . . . . . 14
Section 6.14 Intellectual Property. . . . . . . . . . . 15
Section 6.15 Contracts, Minutes and Other Instruments
and Information. . . . . . . . . . . . . . 15
Section 6.16 Permits and Licenses . . . . . . . . . . . 15
Section 6.17 Real Property; Environmental Matters . . . 16
Section 6.18 Related Party Transactions . . . . . . . . 17
Section 6.19 Customers. . . . . . . . . . . . . . . . . 17
Section 6.20 Insurance. . . . . . . . . . . . . . . . . 17
Section 6.21 Material Statements or Omissions . . . . . 17
ARTICLE VII CONDUCT OF BUSINESS PENDING THE CLOSING . . . . 18
Section 7.1 Conduct of Business by Seller Pending the
Closing. . . . . . . . . . . . . . . . . . 18
Section 7.2 Enforcement. . . . . . . . . . . . . . . . 20
ARTICLE VIII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . 20
Section 8.1 Access to Information. . . . . . . . . . . 20
Section 8.2 Shareholders' Approval . . . . . . . . . . 20
Section 8.3 Employees. . . . . . . . . . . . . . . . . 21
Section 8.4 Expenses . . . . . . . . . . . . . . . . . 21
Section 8.5 Agreement to Cooperate . . . . . . . . . . 21
Section 8.6 Public Statements. . . . . . . . . . . . . 21
Section 8.7 Allocation of Purchase Price . . . . . . . 22
ARTICLE IX POST CLOSING COVENANTS. . . . . . . . . . . . . 22
Section 9.1 Names and Marks. . . . . . . . . . . . . . 22
Section 9.2 Trade Secrets. . . . . . . . . . . . . . . 22
Section 9.3 Good Will and Customers. . . . . . . . . . 22
Section 9.4 Noncompetition . . . . . . . . . . . . . . 23
Section 9.5 Contract Rights. . . . . . . . . . . . . . 23
Section 9.6 Title; Liens; Assignments. . . . . . . . . 23
ARTICLE X TERMINATION, AMENDMENT AND WAIVER . . . . . . . 23
Section 10.1 Termination. . . . . . . . . . . . . . . . 23
Section 10.2 Effect of Termination. . . . . . . . . . . 24
Section 10.3 Amendment. . . . . . . . . . . . . . . . . 24
Section 10.4 Waiver . . . . . . . . . . . . . . . . . . 24
ARTICLE XI CONFIDENTIALITY . . . . . . . . . . . . . . . . 24
Section 11.1 Confidential Information . . . . . . . . . 24
ARTICLE XII INDEMNIFICATION . . . . . . . . . . . . . . . . 25
Section 12.1 Indemnification. . . . . . . . . . . . . . 25
Section 12.2 Indemnification of Seller. . . . . . . . . 26
Section 12.3 Other Remedies . . . . . . . . . . . . . . 27
Section 12.4 Setoff . . . . . . . . . . . . . . . . . . 27
Section 12.5 Knowledge of Breach. . . . . . . . . . . . 27
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ARTICLE XIII GENERAL PROVISIONS. . . . . . . . . . . . . . . 28
Section 13.1 Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . 28
Section 13.2 Notices. . . . . . . . . . . . . . . . . . 28
Section 13.3 Miscellaneous. . . . . . . . . . . . . . . 29
Section 13.4 Dispute Resolution . . . . . . . . . . . . 29
Section 13.5 Counterparts . . . . . . . . . . . . . . . 30
Section 13.6 Parties in Interest. . . . . . . . . . . . 30
Disclosure Schedules
Exhibit A - Escrow Agreement with Henson & Efron, P.A. as
Escrow Agent (3.1 (a))
Exhibit B - Escrow Agreement with Petree Stockton, L.L.P as
Escrow Agent (3.1 (b))
Exhibit C - Form of Opinion of Petree Stockton, L.L.P. (4.3
(b))
Exhibit D - Form of Opinion of Henson & Efron, P. A. (4.4 (b))
Exhibit E - Form of Noncompetition Agreements (4.4 (f))
Exhibit F- Financial Statements of Seller (6.5)
Exhibit G - Form of Opinion of Henson & Efron, P. A. (8.2)
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ASSET PURCHASE AGREEMENT
AGREEMENT, dated effective July 1, 1995 (the "Agreement"),
between EDITEK, Inc., a Delaware corporation ("Purchaser") and
MedTox Laboratories, Inc., a Minnesota corporation ("Seller").
WHEREAS, Seller desires to sell to Purchaser all the assets of
Seller, and Purchaser desires to purchase all the assets of Seller,
pursuant to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
ASSET SALE
Section 1.1 Asset Sale. Seller agrees to sell, and
Purchaser agrees to purchase, all the tangible and intangible
assets (other than cash in bank accounts) owned by Seller as of the
Closing Date (as hereinafter defined), including, without
limitation, all accounts receivable, all inventory, equipment,
contracts, leases, subleases, licenses, customer and supplier
lists, business records (other than Seller's minute books and stock
ledger), trade secrets, tradenames and marks and other intellectual
property (collectively, the "Assets"). Schedule 1.1 hereto
contains a list of all Assets of Seller on May 31, 1995. Until the
Closing Date Seller shall not incur any liabilities or transfer any
Assets without the prior consent of Purchaser, which shall not
unreasonably be withheld, except that Seller may sell inventory and
incur trade payables in the ordinary course of business consistent
with its prior practices as explained to Purchaser. All assets to
be sold by Seller hereunder, whether or not listed on Schedule 1.1
hereto, are hereinafter referred to as the "Assets."
Section 1.2 Affiliates. The term "Affiliates" shall mean
all of the current officers and directors of Seller.
ARTICLE II
LIABILITIES
Section 2.1 Assumed Liabilities. In addition to payment of
the purchase price payable pursuant to Section 3.1, Purchaser shall
undertake and assume on the Closing Date (as hereinafter defined)
to satisfy, perform or discharge, to the extent not satisfied,
performed, paid or discharged prior to the Closing Date, the
following liabilities and obligations of Seller (the "Assumed
Liabilities") to the extent such liabilities are not retained
liabilities covered by Section 2.2 hereof:
(a) All contractual liabilities and obligations of
Seller set forth on, reflected on or reserved against the unaudited
balance sheet of Seller furnished pursuant to Section 6.5 below,
including without limitation all trade payables, bank debt and
other long term liabilities;
(b) All contractual liabilities and obligations of
Seller accruing on or after the Closing Date or the performance of
which arises on or after the Closing Date under agreements, leases,
contracts and commitments (i) which are disclosed to Purchaser
pursuant to Section 6.15, or (ii) which are (A) entered into in the
ordinary course of Seller's business (or are consented to by
Purchaser) after the date hereof and prior to the Closing Date and
(B) if it is "material" (as defined in Section 6.15 hereof), it is
disclosed in writing to Purchaser at or prior to the Closing Date;
and
(c) All obligations of Seller under the Change in
Control and Employment Agreements set forth in Disclosure Schedule
2.1(c) ("Employee Agreements") for employees who are terminated by
Seller immediately prior to the Closing, provided that no
obligation of Seller is assumed by Purchaser under this Section 2.1
with respect any claim by any employee of Seller that the
termination of employment with Seller constitutes a termination of
employment for purposes of Section 3 of any such Employee
Agreement, unless Purchaser shall fail to offer to employ such
employee on terms that would not constitute a "Good Reason" as
defined in the Employee Agreements.
Section 2.2 Retained Liabilities. Except as provided in
Section 2.1 hereof, Purchaser assumes no liabilities of Seller and
Seller retains all its liabilities, including, without limitation:
(a) all federal, state and other income, withholding,
social security, workman's compensation and similar tax liabilities
of Seller and any associated interest or penalties;
(b) all liability for any lawsuits and claims asserted
against Seller, disclosed pursuant to Sections 6.9 and 6.10; and
(c) all liability for any law suits, claims or
administrative actions arising out of, or related to, acts or
omissions of Seller prior to the Closing, whether or not asserted
prior to the Closing and whether or not disclosed to Purchaser,
whether based on breach of contract, tort, fiduciary duty, strict
liability or any other theory, except suits to collect contractual
obligations assumed by Purchaser pursuant to Section 2.2 hereof.
Section 2.3 Litigation Administration. The parties agree
that defending suits, claims and actions may be difficult for
Seller after the Closing due to the Seller ceasing to conduct an
active business. Solely to facilitate defense by Seller of any
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minor suits, claims or actions for which Seller has retained
liability hereunder, until the first anniversary of the Closing,
Purchaser will, upon written request by Seller, assist Seller to
defend any suit, claim or action with potential liability of less
than Twenty Five Thousand ($25,000) for any single suit, claim or
action, provided that all such suits, claims and actions in the
aggregate do not exceed Fifty Thousand ($50,000) Dollars. Seller
shall pay to Purchaser all reasonable amounts incurred by Purchaser
in defense or settlement of any matter on which Seller requests
assistance as provided herein. At the option of Purchaser,
Purchaser may have such amounts paid to it from the Escrowed
Purchase Price.
ARTICLE III
CONSIDERATION PAYABLE BY PURCHASER
Section 3.1 Purchase Price. In addition to assumption of
the Assumed Liabilities, Purchaser shall pay Seller an aggregate
purchase price of Twenty-Four Million ($24,000,000) Dollars for the
Assets, as follows:
(a) Upon execution hereof, $500,000 earnest money,
deposited into escrow with legal counsel to Seller, as escrow
agent, to be held pursuant to the terms of the Escrow Agreement
attached hereto as Exhibit A, and delivered to Seller, together
with any interest or other income therefrom, upon the closing of
the transactions contemplated herein;
(b) At Closing, the sum of $500,000 to be deposited in
escrow (the "Escrowed Purchase Price") with legal counsel to
Purchaser to be held and delivered pursuant to the terms of the
Escrow Agreement attached hereto as Exhibit B; and
(c) At Closing, the remainder of the Purchase Price
shall be paid by wire transfer to Seller's bank account in
Minneapolis, Minnesota.
ARTICLE IV
CLOSING
Section 4.1 Closing. The Closing for the transactions
contemplated hereby shall be held on a date designated by Purchaser
within twenty (20) business days following approval of the
transactions contemplated hereby by the stockholders of the
Purchaser (but no later than the Seller Termination Date if Seller
exercises its termination rights under Section 10.1 hereof) or on
another mutually agreeable date (the "Closing Date") at a location
and time mutually agreeable to the parties.
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At the Closing, Seller shall deliver to Purchaser such bills
of sale, deeds, assignments and such other instruments of
conveyance as shall be effective to vest in Purchaser good and
marketable title to the Assets, free and clear of all liens, claims
and encumbrances, other than Permitted Liens (as defined in Section
4.4 (c)). Seller shall from and after the Closing Date, upon
request of Purchaser, execute, acknowledge and deliver, or cause to
be, executed, acknowledged or delivered, all such further acts,
deeds, assignments, transfers or conveyances as may be reasonably
required to assign, transfer, grant or convey to Purchaser, or to
aid in reducing to possession of Purchaser, title to and possession
of Purchaser, title to or possession of any of the Assets to be
transferred pursuant to this Agreement.
Section 4.2 Conditions to Each Party's Obligation to Close.
The respective obligations of each party to close the transactions
contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing of the following conditions:
(a) This Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote
of the shareholders and the Board of Directors of Seller and the
Board of Directors of Purchaser and the shareholders of Purchaser
shall have approved of the issuance of securities required to
finance the purchase of the Assets, under applicable law and
applicable listing requirements;
(b) No preliminary or permanent injunction or other
order or decree by any court which prevents the consummation of the
transactions contemplated hereby shall have been issued and remains
in effect (each party agreeing to use all best efforts to have any
such injunction, order or decree lifted); and
(c) All governmental consents and approvals required by
law for the consummation of the transactions contemplated hereby
shall have been obtained and be in effect on the Closing Date on
terms and conditions that would not have a material adverse effect
on the prospects of the business operated by Seller.
Section 4.3 Conditions to Obligation of Seller to Close.
The obligation of Seller to close the transactions contemplated by
this Agreement shall be subject to the fulfillment at or prior to
the Closing Date of the following additional conditions:
(a) Purchaser shall have performed in all material
respects its agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations
and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects on and as of the date of
this Agreement and at and as of the Closing Date as if made on and
as of such date or time, except as contemplated or permitted by
this Agreement, and Seller shall have received a certificate of the
4
Chief Executive Officer and Chief Financial Officer of Purchaser to
that effect;
(b) Seller shall have received an opinion addressed to
Seller from Petree Stockton, L.L.P., or other legal counsel
selected by Purchaser and reasonably satisfactory to Seller, dated
the Closing Date, substantially in the form set forth in Exhibit C
hereto; and
(c) Purchaser shall be ready, willing and able to pay
the Purchase Price in full as contemplated by Article III hereof.
Section 4.4 Conditions to Obligation of Purchaser to Close.
The obligation of Purchaser to close the transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the additional following conditions:
(a) Seller shall have performed in all material respects
its agreements contained in this Agreement required to be performed
at or prior to the Closing Date, and the representations and
warranties of Seller contained in this Agreement shall be true and
correct in all material respects on and as of the date of this
Agreement and at and as of the Closing Date as if made on and as of
such date or time, except as contemplated or permitted by this
Agreement, and Purchaser shall have received a Certificate of the
Chief Executive Officer and Chief Financial Officer of Seller to
that effect;
(b) Purchaser shall have received an opinion addressed
to Purchaser from Henson & Efron, P.A., or other legal counsel
selected by Seller and reasonably satisfactory to Purchaser, dated
as of the Closing date, substantially in the form set forth in
Exhibit D hereto;
(c) Seller shall have executed and delivered bills of
sale assignments, consents to assignment and transfer, waivers of
liens and other documents of title and related documents as
Purchaser shall reasonably request, in any event sufficient to
convey to Purchaser good and marketable title to all the Assets
free and clear of all liens, charges, claims and encumbrances of
any nature whatsoever, other than the liens, claims and
encumbrances set forth on Disclosure Schedule 4.4(c) (the
"Permitted Liens");
(d) Seller and Petree Stockton, L.L.P., as Escrow Agent,
shall have executed and delivered to Purchaser an Escrow Agreement
substantially in the form set forth in Exhibit B hereto;
(e) Purchaser shall be reasonably satisfied that the key
employees of Seller identified on Disclosure Schedule 4.4(e) are
willing to become employed by Purchaser on terms and conditions
5
acceptable to Purchaser and as generally described on Disclosure
Schedule 4.4(e);
(f) Seller and the key employees of Seller listed on
Disclosure Schedule 4.4 (f) hereto shall have executed and
delivered to Purchaser Noncompetition Agreements in substantially
the form of Exhibit E hereto;
(g) Seller and its officers, directors and key employees
shall have executed and delivered to Purchaser such other
certificates and other similar documents as Purchaser shall
reasonably request;
(h) Purchaser shall have raised at least Thirty Million
($30,000,000) Dollars from the sale of debt and/or equity
securities from the date of this Agreement through the Closing
Date; and
(i) No material adverse change shall have occurred in
the business of Seller, the business prospects of Seller or the
Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 5.1 Corporate Organization and Good Standing.
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, with all requisite
corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being
conducted, and is qualified or licensed to do business and is in
good standing in each jurisdiction in which the ownership or
leasing of property by it or the conduct of its business requires
such licensing or qualification, except for such failures to be so
qualified or licensed which would not have a material adverse
effect on Purchaser.
Section 5.2 Authorization; Binding Agreement. Purchaser
has all requisite corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement by
Purchaser, and the consummation by Purchaser of the transactions
contemplated hereby, have been duly authorized by Purchaser's Board
of Directors, and no other corporate action or proceeding on the
part of Purchaser is necessary for the execution, delivery and
performance of this Agreement by Purchaser and the consummation of
the transactions contemplated hereby, other than approval by the
stockholders of Purchaser of the issuance of securities to finance
the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser and is a legal,
6
valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
Section 5.3 Certain Fees. Neither Purchaser, any
subsidiary of Purchaser nor any of their officers, directors,
employees or agents has employed any broker or finder or incurred
any liability for any financial advisory, brokerage or finder's fee
or commissions in connection with the transactions contemplated
herein. Purchaser agrees to indemnify and hold harmless Seller
from and against any and all claims, suits, liabilities, costs and
expenses, including reasonable attorneys' fees, resulting from any
claims that may be made against the parties by any broker or person
claiming a commission, fee or other compensation on the basis of
any communication or agreement such broker may have had or entered
into with Purchaser or any of its subsidiaries, officers,
directors, shareholders, employees or agents.
The representations and warranties made by Purchaser shall
survive the Closing and Seller shall be entitled to rely upon such
representations and warranties for a period of two years
notwithstanding any due diligence investigations of Purchaser
conducted by Seller or any other person or any statements made by
Purchaser or any other person or entity outside this Agreement or
any Disclosure Schedule, subject to Section 12.5 (a) hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER
The terms "to the knowledge of Seller" and "Seller is not
aware of" and other similar terms include the knowledge and
awareness of any Affiliate of Seller. If Seller has any subsidiary
or parent corporations or other entities, the representations and
warranties set forth herein shall apply to such entities to the
same extent they apply to Seller. Seller hereby represents and
warrants to Purchaser as follows:
Section 6.1 Corporate Organization and Good Standing.
Seller is a corporation duly organized, validly existing and in
good standing under the laws of Minnesota, with all requisite
corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being
conducted, and is qualified or licensed to do business and is in
good standing in each jurisdiction in which the ownership or
leasing of property by Seller or the conduct of its business
requires such licensing or qualification.
7
Section 6.2 Authorization; Binding Agreement. Seller has
all requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement by Seller,
and the consummation by Seller of the transactions contemplated
hereby, have been duly authorized by the Board of Directors of
Seller and no other corporate action or proceeding on the part of
Seller is necessary for the execution, delivery and performance of
this Agreement and the transactions contemplated hereby, other than
approval by Seller's shareholders, which shall be obtained prior to
the Closing. This Agreement has been duly and validly executed and
delivered by Seller and constitutes legal, valid and binding
obligations of Seller, enforceable against Seller in accordance
with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally
and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 6.3 Capitalization of Seller. The authorized
capital stock of Seller consists of 50,000 shares of Common Stock,
$1.00 par value per share. There are issued and outstanding 29,658
shares of Common Stock. There are no outstanding options,
warrants, subscriptions, conversion rights or other rights,
agreements or commitments obligating Seller to issue any additional
shares of the capital stock of Seller or any other securities
convertible into, exchangeable for or evidencing the right to
subscribe for or acquire from Seller or any of its subsidiaries any
shares of the capital stock of Seller, or any stock appreciation
rights. The names of each shareholder and the number of shares
owned by each are set forth on Disclosure Schedule 6.3 hereto. To
Seller's knowledge, no one other than the owner disclosed herein
has the right to vote any shares of capital stock of Seller, except
by duly executed proxy voted at a shareholders' meeting.
Section 6.4 Subsidiaries; Investments. Except as set forth
on Disclosure Schedule 6.4, Seller does not own, directly or
indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity or ownership
interest in any other business. Seller has no obligations or
commitments to invest any funds in any business or entity.
Section 6.5 Financial Statements. Attached as Exhibit F
hereto are true and complete copies of the audited financial
statements of Seller for the two fiscal years ended December 31,
1993 and 1994 and unaudited financial statements for the five-month
period ended May 31, 1995 (the "Financial Statements"). The
Financial Statements (including any related notes) were prepared in
conformity with generally accepted accounting principles applied on
a consistent basis (except as otherwise stated in such financial
statements), and present fairly the consolidated financial
position, results of operations and cash flows of Seller as of the
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dates and for the periods indicated, subject, in the case of
unaudited interim financial statements to condensation, the absence
of certain notes thereto and normal year-end audit adjustments.
The financial records of Seller are sufficient to allow the
accountants of Purchaser to audit the Financial Statements of
Seller for the periods covered by the Financial Statements.
Section 6.6 Absence of Certain Changes. Since the end of
the period covered by the Financial Statements (i) no material
adverse changes have occurred with respect to Seller or its
business or the Assets, (ii) Seller has not taken action or failed
to act, nor has any event occurred or failed to occur, which action
or event or failure is likely to result in a material adverse
effect on the business of Seller or the Assets compared to the
business and Assets reflected on the unaudited Financial Statements
or on the ability of Seller to perform this Agreement and close the
transactions contemplated hereby.
Section 6.7 Certain Fees. Neither Seller nor any of its
officers, directors, employees or agents has employed any broker or
finder or incurred any liability for any financial advisory,
brokerage or finder's fee or commissions in connection with the
transactions contemplated herein. No other agent or broker or
other person is entitled to any commission or finder's fee in
connection with the transaction contemplated by this Agreement.
Seller agrees to indemnify and hold harmless Purchaser from and
against any and all claims, suits, liabilities, costs and expenses,
including reasonable attorneys' fees, resulting from any claims
that may be made against the parties by any broker or person
claiming a commission, fee or other compensation on the basis of
any communication or agreement such broker may have had or entered
into with Seller, or any of its officers, directors, shareholders,
employees or agents.
Section 6.8 Consents and Approvals; No Violations.
(a) Seller is not in violation in any material respect,
of any applicable law, statute, ordinance, order, rule or
regulation promulgated or judgment, decree, order, concession,
grant, permit, license or other governmental authorization or
approval, issued or entered by, any federal, state or local, court
or governmental authority relating to or affecting the operation,
conduct or ownership of the property or business of Seller.
(b) No filing or registration with, no notice to and no
permit, authorization, consent or approval of any public or
governmental body or authority is necessary for the consummation by
Seller of the transactions contemplated by this Agreement or to
enable Purchaser after the Closing Date to continue to conduct the
same business conducted by Seller in a manner which is consistent
with that in which it is presently conducted by Seller.
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(c) Seller has provided Purchaser with true, complete
and correct copies of the Articles of Incorporation and Bylaws of
Seller, both as amended to date. Neither the execution and
delivery of this Agreement by Seller, the performance by Seller of
its obligations hereunder nor the consummation by Seller of the
transactions contemplated hereby will (i) conflict with or result
in any breach of any provision of the Articles of Incorporation or
By-laws of Seller, (ii) subject to obtaining any necessary
consents, all of which shall have been obtained by Seller prior to
the Closing Date unless waived by Purchaser, result in a violation
or breach of, or constitute (with or without due notice or lapse of
time or the happening or occurrence of any other event) a default
by Seller, or permit the termination of, or result in the
acceleration of, or entitle any party to accelerate (or give rise
to the creation of any lien, charge, security interest or
encumbrance upon any properties or assets of Seller), under, or
violate or breach, any of the terms, conditions or provisions of
any contract, note, bond, mortgage, indenture, license, agreement
or other instrument or obligation to which Seller is a party or by
which Seller or any of its properties or assets may be bound or
(iii) violate any order, writ, injunction, decree, statute, rule or
regulation of any court or governmental authority applicable to
Seller, or any of its properties or assets, provided that if Seller
is not named therein, this clause (iii) shall be to the knowledge
of Seller.
Section 6.9 Litigation. Except as set forth on Disclosure
Schedule 6.9 hereof, there is no action, suit, set of related
actions or suits concerning a common issue, complaint, arbitration,
inquiry, proceeding or investigation pending or, to the knowledge
of Seller, threatened against or involving Seller, or any
properties or rights of Seller, before any court, arbitrator or
administrative or governmental body, and there is no judgment,
decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator
outstanding against Seller which would individually or in the
aggregate, if adversely determined, have a material adverse effect
on Seller or result in any claim, lien or other encumbrance on any
of the Assets. There are no actions, suits or proceedings pending
or, to the knowledge of Seller, threatened against Seller arising
out of or in any way related to this Agreement, or any of the
transactions contemplated hereby.
Section 6.10 Certain Employment Matters. Except as set
forth in Disclosure Schedule 6.10, there are no written employment
or consulting agreements or contracts in effect between Seller with
any of the employees of Seller, nor any oral contracts or
understandings of employment or consultation, or any applicable
law, which (i) are not terminable upon the giving of notice not to
exceed ten (10) days, or (ii) provide for any severance or other
payments to any employee of Seller upon termination of employment
or upon any change of control of Seller or sale of the assets of
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Seller. Except as set forth on Disclosure Schedule 6.10, Seller
has complied with all applicable laws, rules and regulations
relating to the employment of labor which could have a material
adverse effect on the business, assets, condition or prospects,
financial or otherwise, of Seller, including without limitation
those relating to wages, hours, collective bargaining, age and sex
discrimination and the payment and withholding of taxes; Seller has
withheld all amounts required by law or agreement to be withheld
from the wages or salaries of employees of Seller and made all
required withholding payments to the appropriate government agency
within the required periods; and Seller has no unaccrued liability
for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing with respect to employees of
Seller. Except as set forth in Disclosure Schedule 6. 10, there
are no controversies pending, threatened or reasonably anticipated
between Seller and any employee or former employee of Seller. None
of the employees of Seller are represented by a labor union, and no
petition has been filed or proceeding instituted of which Seller
has notice by any employee or group of employees with any labor
relations boards seeking recognition of a bargaining
representative. There is no material dispute or controversy with
any union or other organization representing employees, and no
arbitration proceeding is pending or threatened involving such a
dispute or controversy.
Section 6.11 Employee Benefit Plans. (a) The following
terms shall have the meanings set forth below:
(i) "Benefit Plan" means each plan, program or agreement,
other than an ERISA Plan, providing deferred compensation,
insurance, bonuses or other incentive compensation which is
established or maintained by Seller.
(ii) "Code" means the Internal Revenue Code of 1986, as
amended.
(iii)"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(iv) "ERISA Plan" means any Pension Plan and any Welfare Plan.
(v) "IRS" means the Internal Revenue Service.
(vi) "PBGC" means the Pension Benefit Guaranty Corporation.
(vii)"Pension Plan" means any employee pension benefit plan as
defined in ERISA Section 3(2) which is established or maintained by
Seller.
(viii)"Plan" means any Benefit Plan, Pension Plan, Welfare
Plan and any ERISA Plan.
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(ix) "Welfare Plan" means any employee welfare benefit plan as
defined in ERISA Section 3(1) which is established or maintained by
Seller or any Subsidiary of Seller.
(b) Disclosure Schedule 6.11 (b) lists all Plans established,
maintained or contributed to by Seller during the six-year period
preceding the date of this Agreement. Each such Plan is correctly
labeled on Disclosure Schedule 6.11 (b) as a Benefit Plan, Pension
Plan or Welfare Plan. No Pension Plan is a multiemployer plan
within the meaning of ERISA Section 3(37). Seller has previously
provided to Purchaser true and complete copies of all Plans
together with (i) the three most recent actuarial and financial
reports prepared with respect to each ERISA Plan, (ii) the three
most recent annual reports filed with any government agency for
each ERISA Plan, and (iii) all rulings and determination letters
and any open requests for rulings or letters that pertain to each
ERISA Plan. Seller has no commitment to create any additional
plan, program, agreement, contract or arrangement that would
constitute a Plan or to amend any Plan so as to increase benefits
thereunder.
(c) Seller has fully complied in all material respects
with all provisions of ERISA and any and all other laws, rules, and
regulations applicable to the Plans. All reports and descriptions
required by ERISA with respect to the ERISA Plans have been timely
filed and distributed and all notices required by ERISA, the Code,
or any state or federal law or any ruling or regulation of any
state or federal administrative agency with respect to the Plans
have been appropriately given.
(d) A favorable determination letter has been issued by
the IRS with respect to each Pension Plan that is intended to be
qualified under Code Section 401 to the effect that such Pension
Plan is qualified under Code Section 401 and that the trust
associated with such Pension Plan is exempt from tax under Code
Section 501. No such letter has been revoked or threatened to be
revoked and Seller knows of grounds on which such revocation may be
based. Seller has no material liability under any such plan that
is not reflected on the Financial Statements of Seller. Each such
Plan is and has been administered in accordance with its provisions
and applicable law.
(e) All contributions required to be made by Seller on
or prior to the date of this Agreement under the terms of any Plan
have been timely made.
(f) Seller has not incurred any material liability to
the PBGC or the IRS with respect to any Pension Plan except
liabilities to the PBGC pursuant to ERISA Section 4007, all of
which have been fully paid. No "reportable event" (within the
meaning of ERISA Section 4043(b)) with respect to which notice must
be provided to the PBGC has occurred during the twelve-month period
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preceding the date hereof or is continuing with respect to any
Pension Plan, and there exists no condition or set of circumstances
presenting a material risk of the termination or partial
termination of any Pension Plan which could result in a material
liability on the part of Seller to the PBGC.
(g) No "prohibited transaction" (within the meaning of
ERISA Section 406 or Code Section 4975 which is not exempt under
ERISA Section 408, Code Section 4975 or an administrative
exemption) has occurred with respect to any Plan (i) which would
result in the imposition, directly or indirectly, of an excise tax
under Code Section 4975, or (ii) the correction of which would have
an adverse effect on the financial condition, results of operations
or business of the Seller.
(h) The present value of all benefits, whether or not
vested, under each Pension Plan did not exceed as of the most
recent actuarial valuation date, and will not exceed as of the
Effective Date, the then current fair market value of the assets of
such plan. For purposes of determining the present value of
benefits under any Pension Plan, the actuarial assumptions and
methods used under such Pension Plan for the most recent actuarial
valuation shall be used, other than any assumptions relating to
employee turnover (as to which it shall be assumed there will be
none). No Pension Plan has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Code Section 412 or
ERISA Section 302. Seller has not provided, nor is it required to
provide, security to any Pension Plan pursuant to Code Section
401(a)(29).
(i) Neither Seller nor any administrator or fiduciary of
any of such Benefit Plan (or agent or delegate of any of the
foregoing) has engaged in any transaction or acted or failed to act
in any manner which could subject Seller to any direct or indirect
liability for a breach of any fiduciary, co-fiduciary, or other
duty under ERISA, which individually or in the aggregate could
result in liability to Seller. No oral or written representation
or communication by Seller with respect to any aspect of the
Benefit Plans has been or will be made to employees of Seller prior
to the Closing which is not in accordance with the written or
otherwise preexisting terms and provisions of such Benefit Plans in
effect immediately prior to the Closing. There are no unresolved
claims or disputes under the terms of, or in connection with, the
Benefit Plans and no action, legal or otherwise, has been commenced
with respect to any claim.
(j) Each Welfare Plan providing health benefits, and any
plan providing health benefits that is maintained by an entity
which is a member of a group described in Code Section 414(b),(c),
(m) or (o) that includes the Seller, has been maintained in form
and in operation in compliance with the continuation coverage
13
requirements of Code Section 4980B, the corresponding provisions of
ERISA and any applicable state laws or regulations.
(k) Except as set forth on Disclosure Schedule 6.11 (k),
Seller is not obligated to provide any post-retirement welfare
benefits to its employees, including post-retirement health or life
insurance coverage.
(l) No liability under Subtitle C or D of Title IV of
ERISA has been, or is expected to be, incurred by the Seller with
respect to any ongoing, frozen or terminated "single-employer plan"
(within the meaning of ERISA Section 4001(a)(15)) currently or
formerly maintained by the Seller.
Section 6.12 Tax Matters. Seller and each of its
subsidiaries, if applicable, has filed all federal, state and other
tax returns and reports required to be filed for all periods on or
before the due dates (as extended by any valid extensions of time)
and has paid all taxes shown to be due by said returns. Such
returns reflect all taxes due and payable with respect to the
periods covered thereby and there are no liabilities, claims,
interest or penalties pending, assessed, asserted or threatened
against Seller or any of its subsidiaries in connection with any
such taxes and no basis therefor. The reserves for taxes (federal,
state and local) reflected in Seller's Financial Statements are
adequate to cover any and all taxes, including deferred taxes, and
any interest and penalties in connection therewith which may be
assessed with respect to the property, business and operations of
Seller or any of its subsidiaries up to the date of Seller's
Financial Statements and all prior periods. Seller has fully
complied with all withholding, social security and other similar
tax laws. Neither Seller nor any of its subsidiaries has given or
been requested to give waivers of any statutes of limitations
relating to the payment of taxes for any taxable period. No fact
exists which could constitute grounds for assessment of any tax
liability or lien against Purchaser or any of the Assets on account
of any tax liability of Seller.
Section 6.13 Assets. Seller has good title to all the
Assets to be sold to Purchaser hereunder free and clear of any
claim, lien or encumbrance of any third person or entity of any
nature whatsoever other than the Permitted Liens. All of the
equipment comprising the Assets is in good operating condition,
reasonable wear and tear excepted, and the use and operation of all
the Assets in the business of Seller comply in all material
respects to all applicable rules and other regulations of any
regulatory body having jurisdiction and all applicable building,
zoning and other laws, ordinances, regulations, permits, licenses
and certificates, and Seller has not received any notice of non-
compliance therewith (except for any non-compliance that has been
cured).
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Section 6.14 Intellectual Property. Seller has good title
to all the patents, trademarks, trade names, service marks,
copyrights, trade secrets and other intellectual property set forth
in Disclosure Schedule 6.14 ("Seller Intellectual Property"), free
and clear of all liens, charges or encumbrances of any nature
whatsoever, except for Permitted Liens. Seller has not granted any
person or entity any license or other rights to the Seller
Intellectual Property. Seller is not aware of any basis for any
claim by any other person or entity that Seller is infringing upon
any patent, trademark, trade name, copyright, publication right or
other intellectual property right of any other person or entity.
No infringement claim has been asserted by any other person against
Seller. Seller has no liability for, nor has Seller given any
indemnification for, patent, trademark or copyright infringement as
to any equipment, materials, services, products or supplies
manufactured, produced, used or sold by Seller. No rights of
Seller under any agreement regarding ownership, protection or
confidentiality of any trade secret or other intellectual property
of Seller have been waived by Seller. Seller has taken all
reasonable measures to protect its trade secrets, such trade
secrets have not been disclosed to others except pursuant to
reasonable confidentiality agreements and Seller has no reason to
believe any confidentiality agreement involving its trade secrets
has been breached.
Section 6.15 Contracts, Minutes and Other Instruments and
Information. Disclosure Schedule 6.15 lists all material contracts
and agreements. For purposes of this Agreement, the phrase
"material contracts and agreements" shall mean all leases for real
and personal property and all contracts, agreements and license to
which Seller is a party or by which Seller is bound (i) which have
a term longer than six months or (ii) which involve payment of
consideration in excess of $25,000 (including all similar
agreements which in the aggregate exceed $25,000). Seller has made
available to Purchaser true, correct and complete copies of all
such material contracts. Except as set forth on Disclosure
Schedule 6.15, all such material contracts and agreements are
assignable to Purchaser without the consent of the other parties
thereto. Seller is in compliance in all material aspects with all
such material contracts and agreements, and to the knowledge of
Seller, no other party is in breach thereof and no other party is
incapable of performing, or unwilling to perform, their obligations
thereunder. True, correct and complete copies of all minutes
and/or consents of all actions taken by the shareholders and Board
of Directors of Seller and all committees of the Board, all of
which are contained in the minute books of Seller or in other
records of Seller made available to Purchaser.
Section 6.16 Permits and Licenses. Seller has acquired and
currently holds all permits, licenses, franchises, authorizations,
approvals and other certificates of authority (the "Licenses") as
are required for Seller to conduct its business, and copies of all
15
such documents have been provided to Purchaser. Except as
disclosed on Disclosure Schedule 6.16, Seller is in material
compliance with all the terms thereof, the Licenses are
transferable and are being transferred to Purchaser with the Assets
and Seller is not aware of any reason which any such License could
not be renewed on terms at least as advantageous to Purchaser as
the current License held by Seller. Seller is not aware of any
change in any law, rule or regulation, whether or not yet
effective, which is likely to require Purchaser to obtain in the
future any additional License to conduct the business currently
conducted by Seller. Seller has been certified by the Substance
Abuse and Mental Health Services Administration ("SAMSHA") and the
organizations and agencies listed on Disclosure Schedule 6.16
hereto, which certifications are in good standing and will be in
good standing as of the Closing Date. Pursuant to such
certifications, Seller has designated the persons listed on
Disclosure Schedule 6.16 to be the responsible parties where
responsible parties are required for such certifications. Seller
has made available to Purchaser all material correspondence and
other documents relating to such certifying organizations.
Section 6.17 Real Property; Environmental Matters. Seller
does not own any real property and is not a party to any agreement
to acquire ownership of any real property or any interests in real
property, and does not occupy or otherwise use any real property,
other than real property subject to lease(s) to which Seller is a
party and are being assigned to Purchaser as part of the Seller
Assets, copies of which have been provided to Purchaser. Seller
has not (either with or without negligence) caused or permitted the
escape, disposal or release in violation of applicable law of any
biologically active or other hazardous substances, or materials
causing harm in or on any real property occupied or utilized by
Seller in conducting its business (the "Premises"). Seller has not
allowed the storage or use of such substances or materials in any
manner not sanctioned by law or by commercially reasonable
standards in the industry for the storage and use of such
substances or materials. Seller has not allowed to be brought onto
the Premises any such materials or substances except to use in the
ordinary course of Seller's business. During the use and occupancy
of the Premises by Seller, Seller has kept and maintained the
Premises so as to be in material compliance with all then existing
statutes, laws, rules, ordinances, orders, permits and regulations
of all governmental and regulatory authorities, agencies and bodies
pertaining to environmental matters, or regulating, prohibiting or
otherwise having to do with asbestos and all other toxic,
radioactive or hazardous wastes or materials. Seller is not aware
of any hazardous waste, toxic material, asbestos or other
environmental or health problem associated with the Premises,
whether or not caused by Seller or any other person or entity, and
whether or not pre-dating Seller's occupancy of the Premises.
16
Section 6.18 Related Party Transactions. Set forth on
Disclosure Schedule 6.18 hereto, is a true and complete list of all
transactions between the Seller and any Interested Party (i) which
have been agreed to in the immediately preceding twelve months, or
(ii) which all or any part have been performed in the immediately
preceding twelve months or (iii) which all or any part are to be
performed in the future. True, complete and accurate copies of all
documents relating to the transactions so disclosed have been
provided to Purchaser. "Interested Party" shall mean: (i) any
director, officer or employee of Seller; (ii) any current nominee
for election as a director or officer of Seller; (iii) any security
holder of Seller owning (including options, warrants or other
rights to acquire) more than five (5%) percent of any class of
Seller's securities; (iv) any member of the immediate family of any
of the foregoing persons; and (v) any entity in which any person
described in any of the preceding clauses of this sentence is an
officer, director, partner, nominee, or ten (10%) percent owner.
Section 6.19 Customers. All customers of Seller, who in
any of the three preceding fiscal years of Seller was responsible
for more than two (2%) percent of the gross revenues of Seller, are
listed on Disclosure Schedule 6.19, together with the volume of
business each such year. No such customer has notified Seller of
its intention to reduce or terminate its business with Seller or
demanded to change the terms (including price) of its business, and
Seller is not otherwise aware of any reason any such customer would
decide to terminate or reduce its business with Seller.
Section 6.20 Insurance. Disclosure Schedule 6.20 hereto
contains a list of all insurance policies maintained by Seller,
true, complete and correct copies of which have been provided to
Purchaser. Copies of all claims and correspondence with any
insurer during the past three years have been provided to
Purchaser. Seller has paid all premiums due under all such
policies and no circumstances exist which could justify any insurer
denying the coverage stated in such policies.
Section 6.21 Material Statements or Omissions. Seller has
fully described to Purchaser all facts that are material to
understanding the business of Seller, has not misstated any facts
material to understanding the business of Seller and has not
omitted any fact which is necessary to understand the facts that
have been disclosed, or which is necessary to avoid having any of
the facts disclosed be misleading in any respect.
The representation and warranties made by Seller shall survive
the Closing and Purchaser shall be entitled to rely upon such
representations and warranties for a period of two years
notwithstanding any due diligence investigations of Seller
conducted by Purchaser or any other person or any statements made
by Seller or any other person or entity outside this Agreement or
any Disclosure Schedule, subject to Section 12.5 (a) hereof.
17
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE CLOSING
Section 7.1 Conduct of Business by Seller Pending the
Closing. Except as otherwise expressly contemplated hereby, after
the date hereof and prior to the Closing or earlier termination of
this Agreement, unless Purchaser shall otherwise agree in writing
or as otherwise expressly contemplated by this Agreement, Seller
shall:
(a) conduct its business only in the ordinary and usual
course of business and consistent with past practice as previously
disclosed to Purchaser;
(b) use its best efforts to: preserve intact its
business organization and goodwill, keep available the services of
its present officers and key employees, and preserve the goodwill
and business relationships with suppliers, distributors, customers,
employees and others having business relationships with Seller;
(c) confer on a regular and frequent basis with one or
more representatives of Purchaser to discuss operational matters of
materiality and the general status of ongoing operations of Seller,
provided that Seller need not follow any course of action requested
by Purchaser;
(d) promptly notify Purchaser of any significant changes
in the business, properties, assets, condition (financial or other)
or results of operations of Seller;
(e) not directly or indirectly, (i) sell, lease,
encumber or otherwise transfer any Assets or stock of Seller,
(including, any merger, consolidation or similar transactions)
other than sales of nonmaterial amounts of inventory in the
ordinary course of business ("Prohibited Transactions"), (ii) enter
into or negotiate any agreement with respect to any Prohibited
Transaction, (iii) submit to any other person or entity any offer
or proposal for, or provide any information useful for, or relating
to, any Prohibited Transaction, (iv) solicit or encourage any offer
from any third party for any Prohibited Transaction, (v) otherwise
participate in discussions or take any other action that is
designed to promote any Prohibited Transaction or (vi) take any
other action that is inconsistent with a good faith attempt to
fulfill the purposes of this Agreement;
(f) not enter into any material contract, agreement or
lease;
(g) not increase the salary or other compensation of any
employee of Seller or enter into or amend any employment,
noncompetition, severance, bonus, special pay arrangement with
18
respect to termination of employment or other similar arrangements
or agreements other than pursuant to normal annual reviews
consistent with past practice of Seller as previously disclosed to
Purchaser;
(h) not adopt, enter into or amend any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred
compensation, health care, employment or other employee benefit
plan, agreement, trust, fund or arrangement for the benefit or
welfare of any employee or retiree of Seller, except (i) as
required to comply with changes in applicable law occurring after
the date hereof and (ii) with respect to all plans other than in
the ordinary course of business and consistent with past practice
as previously disclosed to Purchaser;
(i) maintain and pay premiums for all insurance policies
in effect on the date of this Agreement until the Closing and at
the option of the Purchaser for a period of thirty (30) days
following the Closing, provided Purchaser pays all post-closing
premiums.
(j) use reasonable efforts to obtain any consent or
approval required to assign any of the contracts and agreements
being assigned to Purchaser hereunder;
(k) not take any action that a reasonable person would
have reason to believe may harm the good will or reputation of the
business purchased from Seller by Purchaser or relationship with
customers, suppliers or employees of Seller;
(l) take all reasonable actions requested by Purchaser,
but not including the expenditure of any money, to extend the term
of any contract or agreement being assigned to Purchaser hereunder;
(m) not disclose any of its trade secrets to others,
except in the ordinary course of its business, consistent with past
practice as previously disclosed to Seller, and shall cooperate
with Purchaser to protect against further use of such trade secrets
by others;
(n) maintain normal levels of inventory and conduct
normal levels of equipment maintenance consistent with past
practice as previously disclosed to Purchaser;
(o) not accelerate collection of account receivables
faster than past practice as previously disclosed to Purchaser;
(p) pay all trade payables, employment withholding,
social security, workmen's compensation, sales and other taxes,
pension plan, 401 (k), health and other contributions, and other
obligations as and when due consistent with past practice as
previously disclosed to Purchaser; and
19
(q) not agree orally or in writing, or otherwise, to
take any of the foregoing actions or any other action which would
make any representation or warranty contained in Article VI untrue
or incorrect in any material respect as of the time of the Closing.
Section 7.2 Enforcement. Purchaser shall be entitled to
obtain an injunction or other restraining order requiring
compliance with this Article VII. In the event Seller or any of
its Affiliates shall engage in any activity prohibited by Section
7.1 (e) hereof, if Seller consummates a sale with the person or
entity involved in such activity, Seller shall pay Purchaser the
sum of Eight Hundred Fifty Thousand ($850,000) Dollars as a break-
up fee in addition to expense reimbursement pursuant to Section 8.4
hereof.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Access to Information. (a) Seller shall
afford to Purchaser and its accountants, counsel, investment
bankers, potential investors and other representatives reasonable
access during normal business hours and upon reasonable notice
throughout the period prior to the Closing to all properties,
books, contracts, commitments and records related to the business
of Seller or the Assets and all other information concerning the
businesses, properties and personnel of Seller as Purchaser may
reasonably request. Seller shall promptly advise Purchaser in
writing of any change or occurrence of any event after the date of
this Agreement having, or which, insofar as can reasonably be
foreseen, in the future may have, a material adverse affect on
Seller.
Section 8.2 Shareholders' Approval. Seller in accordance
with applicable law, shall promptly submit this Agreement and the
transactions contemplated hereby for the approval of its respective
Board of Directors and shareholders. Purchaser shall not be
required to solicit proxies from its shareholders until this
Agreement and the transactions contemplated hereby have been
approved by the Board of Directors and the shareholders of Seller.
If both such approvals are not obtained, or if an opinion of
Seller's legal counsel with respect to such approvals in
substantially the form attached as Exhibit G hereto is not
delivered to Purchaser within twenty (20) days after the date of
this Agreement, the date of the Seller Termination Date pursuant to
Section 10.1(b) and the time afforded Purchaser to raise funds as
provided in Section 10.1(d) shall be extended by the amount of the
delay in obtaining such approvals or delivering such opinion.
Purchaser shall use its best efforts to submit its preliminary
proxy materials to the Securities and Exchange Commission within
thirty (30) days after this Agreement is executed and delivered by
Seller and Purchaser, but notwithstanding the foregoing, Purchaser
20
shall not be required to file such proxy materials until fifteen
(15) days after the earlier of the (i) Purchaser's receipt of
notice that Seller's shareholders have approved the transactions
contemplated hereby or (ii) Purchaser's receipt of an opinion from
Seller's legal counsel in the form specified above.
Section 8.3 Employees. Seller agrees to take efforts
reasonably requested by Purchaser to encourage Seller's employees
to accept employment with Purchaser. Purchaser has no obligation
to hire any employee of Seller, provided, that if Purchaser shall
hire any of Seller's employees, Purchaser shall assume any and all
obligations of Seller accruing after the Closing Date under any
employment agreement between Seller and such employee if such
agreement has been disclosed and provided to Seller prior to the
date of this Agreement. Purchaser covenants that if the
transactions contemplated hereby are not consummated for any
reason, it will not, for a period of one year from the date of this
Agreement, solicit the employment of any employee of Seller.
Section 8.4 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, except
that if either party breaches this Agreement causing the Closing
not to be held the breaching party shall pay the expenses of the
nonbreaching party, including any expenses of Purchaser associated
with fundraising, provided that any recovery by Purchaser for
fundraising expenses shall not exceed One Hundred Fifty Thousand
($150,000) Dollars.
Section 8.5 Agreement to Cooperate. Subject to the terms
and conditions herein provided, each of the parties hereto shall
use reasonable efforts to take, or cause to be taken, all action to
do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement.
Section 8.6 Public Statements. Purchaser shall have the
right to issue a press release immediately following execution and
delivery of this Agreement and/or file a Report on Form 8-K with
the Securities and Exchange Commission, which press release and
report may disclose this Agreement and the transactions
contemplated hereby. Purchaser shall also have the right to make
disclosures in accordance with proxy solicitation and other
securities rules and regulations. Seller and its legal counsel
shall have the right to review and comment upon such statements
before they are released provided such comments shall not
unreasonably be delayed. Seller and Purchaser shall consult with
each other prior to issuing any other public announcement or
statement with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such public
announcement or statement prior to such consultation, except as may
be required by law or any listing agreement with the American Stock
21
Exchange or other national securities exchange, in which case prior
oral or written notice shall be sent to Seller. No public
statement by either party shall be made for the purpose of harming
the business of the other party.
Section 8.7 Allocation of Purchase Price. The purchase
price shall be allocated among the Assets in accordance with
Schedule 8.7 attached hereto, subject to adjustment as shall be
appropriate to reflect changes in the Assets between the date
hereof and the Closing Date.
ARTICLE IX
POST CLOSING COVENANTS
Section 9.1 Names and Marks. From and after the Closing
Date neither Seller nor any of its Affiliates shall use the names
or marks sold to Purchaser nor any name or mark similar to any name
or mark sold to Purchaser. Within ten (10) days after the Closing
Date, Seller shall have amended its corporate charter to change its
corporate name. All rights to use names and marks shall be
assigned to Purchaser and on the Closing Date, or at any time after
the Closing Date, Seller shall execute such documents as are
requested by Purchaser to allow Purchaser to use such names and
marks. Where any name or mark is registered or otherwise
protected, Seller shall so inform Purchaser and facilitate transfer
of such registration or other protection to Purchaser.
Section 9.2 Trade Secrets. From and after the Closing
Date, neither Seller nor any of its Affiliates shall use or
disclose, whether orally or in writing, the trade secrets or other
intellectual property sold to Purchaser. Seller has delivered to
Purchaser a list of all the trade secrets of Seller, any license
of, and copies of, such trade secrets and on or prior to the
Closing Date Seller shall deliver to Purchaser the information
required to enable Purchaser to utilize such trade secrets. All
copies of such information in whatever form not delivered to
Purchaser shall be destroyed. From and after the date hereof,
Seller (i) shall not disclose such trade secrets to others, whether
orally or in writing, and (ii) shall cooperate with Purchaser to
protect against future use of such trade secrets by others.
Section 9.3 Good Will and Customers. As Purchaser is
paying for the goods of Seller as a going concern, from and after
the date hereof neither Seller nor any of its Affiliates shall take
any action that a reasonable person would have reason to believe
may harm the good will or reputation of the business purchased from
Seller by Purchaser or relationships with customers, suppliers or
employees of Seller. For a period of sixty (60) days after the
Closing Date, Seller and the Affiliates of Seller shall, without
additional compensation, assist Purchaser to encourage the
customers of Seller to become customers of Purchaser.
22
Section 9.4 Noncompetition. For a period of two (2) years
following the Closing, Seller shall not directly or indirectly
engage in the business conducted by Seller prior to the Closing,
nor any other similar business at any location in the United States
or at any location outside the United States if such business
solicits customers located in the United States.
Section 9.5 Contract Rights. To the extent that any of the
Assets include contracts, licenses, sublicenses, leases or other
agreements ("Contract Rights") that require the consent or approval
of any other parties thereto, Seller and its Affiliates shall
arrange for the consent or approval of the assignment of all such
Contract Rights to Purchaser in form and substance acceptable to
Purchaser, unless Purchaser executes a waiver of this requirement.
Section 9.6 Title; Liens; Assignments. After the Closing
Seller shall execute and deliver any and all documents reasonably
requested by Purchaser to evidence transfer of title to the Assets
to Purchaser and to remove any liens. Seller shall also assist
Purchaser to obtain consents from any person whose consent is
required to assign any contract, license or other agreement
assigned by Seller to Purchaser, unless Purchaser executes a waiver
of this requirement.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any
time prior to the Closing:
(a) by mutual consent of Seller and Purchaser; or
(b) by Seller, if Purchaser shall have breached any of
its material obligations under this Agreement, if any material
representation or warranty of Purchaser shall have been untrue when
made or shall have subsequently become untrue as of any date prior
to the Closing or if the Closing shall not have been consummated on
or before one hundred twenty days (120) after the date of this
Agreement (the "Seller Termination Date") through no fault of
either Seller or any of its Affiliates; or
(c) by Purchaser, if Seller shall have breached any of
its material obligations under this Agreement, any material
representation or warranty of Seller shall have been untrue when
made or shall have subsequently become untrue as of any date prior
to the Closing or if the Closing shall not have been consummated on
or before one hundred twenty days after the date of this Agreement
(the "Purchaser Termination Date") without breach of this Agreement
by Purchaser; or
23
(d) by Seller or Purchaser, if within one hundred twenty
(120) days following the date of this Agreement Purchaser, or the
investment bankers or other agents of Purchaser on behalf of
Purchaser, do not have in its possession an amount of cash equal to
the full Purchase Price, provided that in the event the proxy
materials for the stockholders meeting of Purchaser to be called to
approve the transactions contemplated hereby are not approved by
the Securities and Exchange Commission within thirty (30) days
after the filing of preliminary proxy materials with the
Commission, the Seller Termination Date pursuant to Section 10.1(b)
hereof and such 120-day period shall automatically be extended by
the number of days delay in obtaining approval from the Commission.
Purchaser agrees to seek to move expeditiously in obtaining
approval of the proxy materials.
Section 10.2 Effect of Termination. In the event of
termination of this Agreement, as provided in Section 10.1, this
Agreement shall forthwith become void, and there shall be no
obligation hereunder on the part of any party, except pursuant to
Sections 7.2, 8.4, 11.1 and 13.4 hereof and the Escrow Agreement in
the form of Exhibit A hereto. Nothing in this Section 10.2 shall
relieve any party from liability for any breach of this Agreement.
Section 10.3 Amendment. This Agreement may be amended by
the parties hereto at any time but only by an instrument in writing
signed by each of the parties hereto.
Section 10.4 Waiver. At any time prior to the Closing, the
parties hereto may (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions
contained herein; provided, however, that waiver of compliance with
any agreements or conditions herein shall not limit the parties'
obligations to comply with all other agreements or conditions
herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE XI
CONFIDENTIALITY
Section 11.1 Confidential Information. The parties agree
that in the event the transactions contemplated by this Agreement
are not consummated, all information of one another (i) shall be
treated in accordance with the existing nondisclosure agreements
executed by the parties prior to this Agreement and (ii) all
recorded evidence thereof shall be delivered to Seller together
with a certificate to the effect that no copies thereof remain in
possession of Purchaser or Purchaser's agents, affiliates, counsel
or auditors except to the extent required by any party to document
24
a justifiable termination of this Agreement, breach by the other
party of this Agreement or to assert any legal right or to defend
against the assertion of any legal right. The obligations of the
parties under this Article XI shall survive the termination of this
Agreement.
ARTICLE XII
INDEMNIFICATION
Section 12.1 Indemnification. (a) From and after the
Closing, Seller will indemnify and hold Purchaser and its
subsidiaries, divisions, affiliates, officers, directors, agents
and employees (the "Purchaser Parties") harmless from and against
any damage, loss, liability or expense, including reasonable
attorneys' fees and court costs (collectively, "Indemnifiable
Damages") incurred as a result of, or in connection with, any
untruth, inaccuracy, violation or breach of any representations,
warranties, or covenants of Seller set forth in this Agreement.
Purchaser shall have the right to defend or compromise any claim,
proceeding or other action by any third party in its sole
discretion. Prior to settling any claim, Purchaser shall consult
with Seller. Purchaser need not follow any course of action
suggested by Seller, unless Seller deposits into escrow with legal
counsel for Purchaser under the terms of the escrow agreement to
which such legal counsel, Seller and Purchaser are parties, the
amount of potential liability and estimated defense expenses
associated with the claim, in which case Purchaser shall follow the
reasonable suggestions of Seller with respect to settlement of
claims. Seller shall not be required to make such deposits until
Excess Claims (as defined in Section 12.1 (e) hereof) exist.
(b) Purchaser hereby agrees not to make any claim for
indemnity hereunder except in good faith and for reasonable cause.
Purchaser will give Seller notice of each time that Purchaser
becomes aware of any fact or circumstance which may give rise to an
obligation of the Seller to indemnify any Purchaser Parties under
this Section, which notice shall be accompanied by a copy of any
claim made which may result in such indemnification obligation.
Notice shall be given as promptly as possible, but in no event more
than thirty (30) days after Purchaser becomes aware of the facts or
circumstances giving rise to the potential indemnification
obligation. Failure to provide timely notice as required by this
Paragraph (b) shall not relieve Seller of its indemnification
obligations hereunder, unless such notice is not provided within
one hundred twenty (120) days after Purchaser becomes aware of the
facts or circumstances giving rise to the potential indemnification
obligation.
(c) Except with respect to any matter (i) which results from
the fraud or willful misconduct of Seller or any of its Affiliates,
or (ii) which involves the reporting, payment or liability for
federal, state, local and foreign taxes, or (iii) which involves
25
the title of Seller to the Assets, including any lien, encumbrance
or other claim against the Assets, Seller will have no obligation
to indemnify Purchaser hereunder, unless written notice of claim is
received by Seller no later than the first anniversary of the
Closing. With respect to claims for indemnification involving the
matters which survive the first anniversary of the Closing
described in subclauses (i), (ii) and (iii) of this Section
12.1(c), no claim may be made later than the running of all
applicable statutes of limitation, after giving effect to any
tolling or waiver of any time periods or statutes of limitation
granted by Seller or any third party, if any.
(d) Any recovery by Purchaser for Indemnifiable Damages shall
be limited as follows: (i) Purchaser shall not be entitled to
recover any Indemnifiable Damages under this Article XII until the
aggregate amount of Purchaser's Indemnifiable Damages shall exceed
Fifty Thousand ($50,000) Dollars in the aggregate (the
"Deductible"), except that Purchaser shall be entitled to recover
Indemnifiable Damages for any claim that exceeds Twenty Five
Thousand ($25,000) Dollars notwithstanding that aggregate claims do
not exceed the Deductible; and (ii) in no event shall Seller be
liable for indemnification for an amount greater than the Purchase
Price.
(e) Purchaser shall be entitled to recover any Indemnifiable
Damages from funds other than the funds held by the Escrow Agent
only if Excess Claims exist. "Excess Claims" shall be deemed to
exist if the aggregate unpaid claims of Purchaser for Indemnifiable
Damages (including Purchaser's estimate of the cost of defense of
any claim), that have not been resolved against Purchaser pursuant
to arbitration hereunder, exceed the amount then held by the escrow
agent for the purpose of compensating Purchaser for Indemnifiable
Damages.
Section 12.2 Indemnification of Seller. (a) From and after
the Closing, Purchaser will indemnify and hold Seller and its
subsidiaries, officers, directors, shareholders, agents and
employees (the "Seller Parties") harmless from and against any
Indemnifiable Damages incurred as a result of, or in connection
with, any untruth, inaccuracy, violation or breach of any
representations, warranties or covenants of Purchaser set forth in
this Agreement or out of the failure of Purchaser to pay, discharge
or perform any liability or obligation assumed by Purchaser
hereunder.
(b) Seller hereby agrees not to make any claim for
indemnity hereunder except in good faith and for reasonable cause.
Seller will give Purchaser notice of each time that Seller becomes
aware of any fact or circumstance which may give rise to an
obligation of the Purchaser to indemnify any Seller Parties under
this Section, which notice shall be accompanied by a copy of any
claim made which may result in such indemnification obligation.
26
Notice shall be given as promptly as possible but in no event more
than thirty (30) days after Seller becomes aware of the facts or
circumstances giving rise to the potential indemnification
obligation. Failure to provide timely notice as required by this
Paragraph (b) shall not relieve Purchaser of its indemnification
obligations hereunder, unless such notice is not provided within
one hundred twenty (120) days after Seller becomes aware of the
facts or circumstances giving rise to the potential indemnification
obligation.
(c) Purchaser shall have no liability for any claim,
unless Seller has complied with the notice provisions of Section
12.2 (b) prior to the first anniversary of the Closing Date. The
liability of Purchaser for indemnity hereunder shall be limited to
the actual direct damages suffered as a result of the untruth,
inaccuracy, violation or breach by Purchaser. Seller shall not be
entitled to recover any Indemnifiable Damages under this Article
XII until the aggregate amount of Seller's Indemnifiable Damages
shall exceed Fifty Thousand ($50,000) Dollars in the aggregate (the
"Deductible"), except that Seller shall be entitled to recover
Indemnifiable Damages for any claim that exceeds Twenty Five
Thousand ($25,000) Dollars notwithstanding that aggregate claims do
not exceed the Deductible. Notwithstanding the foregoing, in the
case of any breach by Purchaser of its obligations to pay Assumed
Liabilities (as defined in Section 2.1 hereof), the Deductible and
the one-year notice of claim requirement contained in this Section
12.2 (c) shall not apply to any claim for Indemnifiable Damages
made by Seller.
Section 12.3 Other Remedies. The remedies provided for
in this Article XII and the Escrow Agreement shall be in addition
to and not in lieu of any other remedies available to Purchaser
under this Agreement or otherwise. Seller acknowledges that the
amount Purchaser is entitled to claim as Indemnifiable Damages is
not limited by the amount of the Escrowed Purchase Price. All
claims of Purchaser or Seller under this Article XII shall be
deemed to be a "claim" for purposes of the Minnesota Uniform
Fraudulent Transfer Act. Minn St. Section 513.41 (3).
Section 12.4 Setoff. Purchaser may withhold payment of
any obligation due to Seller to the extent Purchaser has reason to
believe (i) it is entitled to indemnification hereunder and (ii)
the amount of the indemnity obligation is equal to or greater than
the amount withheld. Upon determination of such indemnification
rights, the indemnity obligation may be set-off against the
obligation for which payment was withheld or any other obligation
of Purchaser to Seller.
Section 12.5 Knowledge of Breach (a) In the event any
party to whom a representation or warranty is made (the "Warranty
Receiving Party") pursuant to Article V or VI hereof has actual
knowledge on the Closing Date that the representation or warranty
27
is materially inaccurate or incomplete, the Warranty Receiving
Party shall not be entitled to Indemnifiable Damages caused by such
breached representation or warranty, unless the party making such
breached representation or warranty had actual knowledge at the
time the representation or warranty was made of the inaccuracy or
incompleteness of the representation or warranty. Notwithstanding
that the Warranty Receiving Party is not entitled to Indemnifiable
Damages, the representation or warranty in question will be deemed
to have been breached for all purposes of this Agreement other than
the collection of Indemnifiable Damages, including the
determination whether conditions to closing by the Warranty
Receiving Party contained in Article IV hereof have been satisfied.
(b) The failure of any party to comply with any covenant or
agreement of such party pursuant to this Agreement shall entitle
the other party (the "Covenant Receiving Party") to Indemnifiable
Damages caused by such breach if the Covenant Receiving Party
decides to close the transactions contemplated hereby
nothwithstanding knowledge by the Covenant Receiving Party of the
breach by the other party. Notwithstanding that Indemnifiable
Damages are available if the Covenant Receiving Party decides to
close the transactions contemplated hereby, the breach shall be
considered in determining whether conditions to closing by the
Covenant Receiving Party contained in Article IV hereof have been
satisfied.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1 Survival of Representations, Warranties
and Agreements. All representations, warranties and agreements in
this Agreement shall survive the Closing for a period of two years.
Section 13.2 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given and effective (i) when delivered personally to the persons
named below at any location or (ii) when delivered by any means
(including Fax, mail or expedited delivery service, such as Federal
Express) to the locations provided below, addressed as follows:
(a) If to Purchaser to:
EDITEK, Inc.
1238 Anthony Rd.
Burlington, NC 27215
Attention: James D. Skinner
with copies to:
Petree Stockton, L. L. P.
4101 Lake Boone Trail, Suite 400
28
Raleigh, NC 27607
Attention: James F. Verdonik, Esq.
(b) If to Seller, to:
Medtox Laboratories, Inc.
402 West County Road D
New Brighton, MN 55112
Attention: James S. Arrington
with a copy to:
Henson & Efron, P.A.
1200 Title Insurance Building
400 Second Avenue South
Minneapolis, MN 55401
Attention: Alan C. Eidness, Esq.
Any party hereto may change the address provided hereinabove
or the person to whom notice is to be given by giving notice to the
other parties in the manner hereinabove provided.
Section 13.3 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (a) constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof; (b) shall not be
assigned except that Purchaser may assign this agreement to any
Affiliate of Purchaser or any subsequent purchaser of all or any
substantial part of the Assets, provided such assignment shall not
relieve Purchaser of any obligation of Purchaser hereunder; and (c)
shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Minnesota
(without giving effect to the provisions thereof relating to
conflicts of law). The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
Section 13.4 Dispute Resolution. Any controversy or claim
between Seller and Purchaser arising out of or in connection with
this Agreement, other than a matter under one of the two escrow
agreements which shall be arbitrated as provided in such
agreements, shall be settled in binding arbitration in Chicago,
Illinois or at another location acceptable to both Seller and
Purchaser. Seller or Purchaser may initiate arbitration by sending
notice of such initiation to the other party and to the American
Arbitration Association ("AAA"). Such arbitration shall be
conducted before a panel of three arbitrators (one appointed by
Seller, one appointed by Purchaser, and one appointed by the other
29
two so appointed all of which appointments shall be made within
twenty (20) days after arbitration is instituted) in accordance
with the then-current commercial arbitration rules of the AAA. The
arbitrators shall make their determination within forty-five (45)
days after their appointment and the determination of the
arbitrator(s) shall be final, binding and nonappealable. No party
shall be precluded hereby from seeking provisional remedies in the
courts of any jurisdiction, including, without limitation,
temporary restraining orders and preliminary injunctions, nor shall
the pursuit of such provisional relief constitute a waiver of such
party's right to arbitrate a dispute arising under this Agreement,
unless such waiver is expressed in writing and signed by such
party. The losing party shall bear all costs of the arbitration.
Section 13.5 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
agreement. Facsimile signatures shall be binding on all parties
upon delivery thereof.
Section 13.6 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto
and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature
whatsoever under this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
30
IN WITNESS WHEREOF, Seller and Purchaser have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
PURCHASER:
EDITEK, INC.
By:_________________________________
Title:______________________________
ATTEST:
[SEAL]
_______________________
Secretary
MEDTOX LABORATORIES, INC.
By:_________________________________
Title:______________________________
ATTEST:
[SEAL]
_________________________
Secretary
31
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made by and among MedTox
Laboratories, a Minnesota corporation ("Seller"), EDITEK, Inc., a Delaware
corporation ("Purchaser"), and Henson & Efron, P.A., a Minnesota professional
association (the "Escrow Agent").
WHEREAS, Seller and Purchaser have executed and delivered an Asset
Purchase Agreement, dated effective as of July 1, 1995 (the "Asset Purchase
Agreement"), pursuant to which Purchaser is to purchase all the assets of
Seller; and
WHEREAS, Seller desires to have Purchaser deposit with the Escrow Agent
the amount of Five Hundred Thousand Dollars ($500,000) Dollars to demonstrate
the good faith of Purchaser (the "Escrowed Funds") for the Escrow Agent to hold
and deliver in accordance with the provisions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Deposits. Immediately upon execution and delivery of the Asset
Purchase Agreement, Purchaser shall deliver the Escrowed Funds to the Escrow
Agent to hold and deliver in accordance with the provisions of this Agreement.
2. Escrow Agent. The Escrow Agent agrees to accept the Escrowed Funds
from Purchaser and to hold and deliver the Escrowed Funds in accordance with the
provisions of this Agreement. The Escrow Agent shall issue to Purchaser a
receipt for the Escrowed Funds and shall deliver to Seller a written notice that
the Escrowed Funds have been received by the Escrow Agent. The Escrow Agent may
require any person to whom the Escrowed Funds are delivered to execute a receipt
therefor as a condition to delivery. The Escrow Agent is, and shall be
considered, an independent contractor, and not an agent of Seller or Purchaser.
3. Investment. The Escrow Agent shall hold the Escrowed Funds in a
trust account, which may be interest bearing or noninterest bearing in the sole
discretion of the Escrow Agent. In the event the Escrow Agent is delivered a
written notice executed by Seller and Purchaser, which specifies an investment
of the Escrowed Funds, the Escrow Agent shall invest the Escrowed Funds in the
investment specified in such written notice. The Escrow Agent shall implement
any order to sell or otherwise change the investment contained in any written
notice executed by Seller and Purchaser. If the investment expires prior to the
Escrow Agent delivering the Escrowed Funds, the Escrow Agent shall renew the
investment in the same type of investment, unless the Escrow Agent receives
written notice executed by Seller and Purchaser instructing the Escrow Agent to
not renew such investment, in which case the Escrow Agent shall
implement such instructions. The Escrow Agent shall have no liability whatsoever
for any losses associated with investment of the Escrowed Funds or delays in
implementing investment instructions. Any interest, gains or other income
derived from investment of the Escrowed Funds shall constitute Escrowed Funds to
be held and delivered by the Escrow Agent in accordance with the provisions of
this Agreement. The Escrow Agent shall pay any expenses associated with
investments from the Escrowed Funds.
4. Notices. The Escrow Agent shall be protected in acting upon any
written notice request, waiver, consent, receipt or other paper or document
furnished to it in accordance with the terms of this Agreement, not only in
assuming its due execution and the validity and effectiveness of its provisions,
but also as to the truth and acceptability of any information therein contained,
which it in good faith believes to be genuine and what it purports to be.
5. Additional Duties or Liabilities. In no event shall the Escrow Agent
be liable for any act or failure to act under the provisions of this Agreement,
except where its acts are the result of its gross negligence or malfeasance. The
Escrow Agent shall have no duties except those which are expressly set forth
herein, and it shall not be bound by any notice of a claim, or demand with
respect thereto, or any waiver, modification, amendment, termination or
rescission of this Agreement, unless received in writing by it, and, if its
duties or liabilities herein are affected, unless it shall have given its prior
written consent thereto.
6. Indemnity. The parties to this Agreement hereby jointly and
severally indemnify the Escrow Agent against any loss, liability, or damage
(other than any caused by the gross negligence or malfeasance of the Escrow
Agent), including reasonable costs of litigation and counsel fees, arising from
or in connection with the performance of its duties under this Agreement.
7. Conditions to Release of Escrowed Funds. Seller and Purchaser hereby
agree that the Escrowed Funds shall be owned, held and delivered as provided
below:
(a) The Escrowed Funds shall be owned by Purchaser until such time as it is
determined pursuant to the terms of this Section 7 or Section 8 that
the Escrowed Funds are owned by Seller.
(b) If the transactions contemplated by the Asset Purchase Agreement close,
Five Hundred Thousand Dollars ($500,000) (or such lesser amount if
investment losses and expenses have reduced the Escrowed Funds or such
greater amount if interest or other income has been earned), shall be
delivered by the Escrow Agent to Seller at the closing of the
transactions contemplated by the Asset Purchase Agreement as a credit
against the purchase price payable by Purchaser in connection with the
Asset Purchase Agreement.
(c) Purchaser shall have the right to have the Escrowed Funds delivered to
Purchaser, or to any designee of Purchaser, and all claims of Seller to
the Escrowed Funds
2
shall terminate, upon the earlier to occur of (i) failure of Seller to
satisfy all conditions to Purchaser's obligation to close set forth in
Sections 4.1, 4.2 and 4.4 of the Asset Purchase Agreement on or before
the Purchaser Termination Date (as defined in Section 10.1(c) of the
Asset Purchase Agreement) or (ii) Purchaser's or Seller's determination
not to close the asset purchase contemplated by the Asset Purchase
Agreement, except under the circumstances described in Section 7(d)
hereof.
(d) Seller shall have the right to have the Escrowed Funds delivered to
Seller, or a designee of Seller, and all claims of Purchaser to the
Escrowed Funds shall terminate, if all the following conditions are
satisfied (i) all conditions to Purchaser closing set forth in Sections
4.1, 4.2 and 4.4 of the Asset Purchase Agreement, have been satisfied
on or before the Purchaser Termination Date (as defined in Section
10.1(c) of the Asset Purchase Agreement), (ii) following satisfaction
of such conditions, Purchaser shall fail to notify Seller on or before
the Seller Termination Date (as defined in Section 10.1(b) of the Asset
Purchase Agreement that Purchaser is ready, willing and able to close,
(iii) Seller terminates the Asset Purchase Agreement pursuant to
Section 10.1(b) of the Asset Purchase Agreement before Purchaser
notifies Seller that Purchaser is ready, willing and able to close,
(iv) Purchaser's failure to notify Seller as to its ability to close
was caused solely by the failure of the Purchaser to raise an amount
equal to the purchase price pursuant to the Asset Purchase Agreement
from sales of securities or loans and (v) Purchaser's failure to raise
such amount of funds was not caused, in whole or in part, directly or
indirectly, by Seller or any Affiliate of Seller other than by (x) any
action of Seller taken after the date of this Agreement in the ordinary
course of its business as previously disclosed to Seller, if such act
would not breach the Asset Purchase Agreement, (y) any aspect of
Seller's financial condition or results of operations, if the same has
been disclosed to Purchaser by Seller in the Asset Purchase Agreement
or in the due diligence review of Seller by Purchaser conducted prior
to the date of the Asset Purchase Agreement and (z) any nonmaterial
change in the financial condition or results of operations of Seller,
if such nonmaterial change was caused by any action of Seller (A) that
is taken after the date of this Agreement in the ordinary course of
business as previously disclosed to Purchaser and (B) that would not
breach the Asset Purchase Agreement. Notwithstanding clause (iv) of the
preceding sentence, if Purchaser raises $24,000,000 (the amount equal
to the purchase price pursuant to the Asset Purchase Agreement) and
fails to raise $30,000,000, which is a condition to Purchaser closing
pursuant to Section 4.4 (h) of the Asset Purchase Agreement, and if
Purchaser shall fail to waive such Section 4.4 (h) of the Asset
Purchase Agreement prior to the Seller terminating the Asset Purchase
Agreement pursuant to Section 10.1 (b) thereof, Purchaser shall be
deemed not to have raised the $24,000,000 for purposes of clause (iv)
of the preceding sentence.
3
(e) Purchaser shall have the right to have the Escrowed Funds delivered to
Purchaser, or a designee of Purchaser, and all claims of Seller to the
Escrowed Funds shall terminate, upon Purchaser's or Seller's
determination not to close the asset purchase contemplated by the Asset
Purchase Agreement except under the circumstances described in Section
7 (d) hereof.
(f) Upon determination by Purchaser that Purchaser or Seller is entitled to
delivery of the Escrowed Funds as provided above in this Section 7,
Purchaser may instruct the Escrow Agent in writing either (i) to
deliver all or part of the Escrowed Funds to Seller, in which case the
Escrow Agent shall deliver the specified Escrowed Funds to Seller as
soon as practicable after receipt of such notice from Purchaser or (ii)
to deliver all or part of the Escrowed Funds to Purchaser, in which
case the Escrow Agent shall afford Seller the opportunity to object to
such delivery as follows. As soon as practical after receipt of the
written instructions from Purchaser, the Escrow Agent shall provide a
copy of such written instructions to Seller. Unless within fifteen (15)
days following the date the Escrow Agent sends to Seller a copy of the
instructions of Purchaser, the Escrow Agent receives from Seller a
written notice executed by Seller objecting to delivery of the Escrowed
Funds to Purchaser, the Escrow Agent shall deliver to Purchaser the
Escrowed Funds specified in Purchaser's notice, and all claims of
Seller to such specified Escrowed Funds shall terminate notwithstanding
the underlying reasons for the failure to close the asset purchase
contemplated by the Asset Purchase Agreement. Seller's rights to the
Escrowed Funds shall survive delivery of such funds to the Purchaser.
(g) Upon determination by Seller that Seller or Purchaser is entitled to
delivery of the Escrowed Funds as provided in this Section 7, Seller
may instruct the Escrow Agent in writing either (i) to deliver all or
part of the Escrowed Funds to Purchaser, in which case the Escrow Agent
shall deliver the specified Escrowed Funds to Purchaser as soon as
practicable after receipt of such instructions from Seller, or (ii) to
deliver all or part of the Escrowed Funds to Seller, in which case the
Escrow Agent shall afford Purchaser the opportunity to object to such
delivery as follows. As soon as practical after receipt of written
instructions from Seller, the Escrow Agent shall provide a copy of such
written instructions to Purchaser. Unless within fifteen (15) days
following the date the Escrow Agent sends to Purchaser a copy of the
instructions of Seller, the Escrow Agent receives a written notice
executed by Purchaser objecting to delivery of the Escrowed Funds to
Seller, the Escrow Agent shall deliver to Seller the Escrowed Funds
specified in Seller's notice, and any balance owed to Purchaser and all
claims of Purchaser to such specified Escrowed Funds shall terminate
notwithstanding the underlying reasons for the failure to close the
asset purchase contemplated by the Asset Purchase Agreement.
(h) Seller and Purchaser hereby agree not to make any claim for the
Escrowed Funds, and not to dispute any claim for the Escrowed Funds
made by the other party, except in good faith and for reasonable cause.
(i) In performing its duties as escrow agent hereunder to hold or deliver
the Escrowed Funds, the Escrow Agent shall follow the provisions set
forth above and shall not allow any
4
independent judgment it may form about the validity of any claims of
either Seller or Purchaser to the Escrowed Funds to affect its
performance hereunder, notwithstanding any independent knowledge the
Escrow Agent may have of the validity or invalidity of such claims.
8. Dispute Resolution. Any controversy or claim between Seller and the
Escrow Agent or Purchaser and the Escrow Agent (but not any dispute between
Purchaser and Seller, which shall be arbitrated pursuant to the Asset Purchase
Agreement) arising out of or in connection with this Agreement shall be settled
in binding arbitration in the City of Minneapolis, Minnesota. Any of Seller,
Purchaser or the Escrow Agent may initiate arbitration by sending notice of such
initiation to the other parties hereto and to the American Arbitration
Association ("AAA"). Such arbitration shall be conducted before a panel of three
arbitrators (one appointed by Seller, one appointed by Purchaser, and one
appointed by the other two so appointed, all of which appointments shall be made
within twenty (20) days after arbitration is instituted) in accordance with the
then-current commercial arbitration rules of the AAA. The arbitrators shall make
their decision within forty-five (45) days after their appointment and the
determination of the arbitrator(s) shall be final, binding and nonappealable. No
party shall be precluded hereby from seeking provisional remedies in the courts
of any jurisdiction, including, without limitation, temporary restraining orders
and preliminary injunctions, nor shall the pursuit of such provisional relief
constitute a waiver of such party's right to arbitrate a dispute arising under
this Agreement, unless such waiver is expressed in writing and signed by such
party. The Escrow Agent, upon receipt of any order of any court or arbitrator
shall hold or deliver the Escrowed Funds in accordance with such order. The
Escrow Agent shall not question the jurisdiction or authority of the court or
arbitrator or whether the order is appealable. The losing party, if other than
the Escrow Agent, shall bear all costs of the arbitration.
9. Payment of Fees. The Escrow Agent shall be entitled to reimbursement
of expenses, plus a fee at its normal hourly rates, for performance of its
duties hereunder. Fees and expenses shall be paid 50% by Seller and 50% by
Purchaser, provided that any fees or expenses of the Escrow Agent associated
with the preparation or negotiation of this Agreement, or any amendment or
modification for this Agreement shall be the exclusive responsibility of Seller.
The Escrow Agent shall not be entitled to deduct expenses or fees from the
Escrowed Funds (except as provided above with respect to expenses incurred in
connection with investing the Escrowed Funds), nor shall the Escrow Agent be
entitled to delay delivery of the Escrowed Funds on account of any party's
failure to pay its fees or expenses.
10. Termination. This Agreement shall terminate upon delivery of the
Escrowed Funds pursuant to Section 7 hereof or pursuant to an order entered by
the arbitrator(s) pursuant to Section 8.
11. Resignation or Removal of the Escrow Agent. The Escrow Agent may at
any time resign, which resignation shall be effective on the thirtieth (30th)
day following the effective date of written notice of resignation sent to Seller
and Purchaser. Upon such resignation, the Escrow Agent shall deliver the
Escrowed Funds to a substitute Escrow Agent designated in a written
5
notice executed by both Seller and Purchaser. If Seller and Purchaser fail to
provide written notice of the same substitute Escrow Agent prior to
effectiveness of resignation, the Escrow Agent shall deliver the Escrowed Funds
to a substitute Escrow Agent of its own choice and shall notify Seller and
Purchaser of same. The Escrow Agent may be removed at any time upon written
notice executed by both Seller and Purchaser, whereupon the Escrow Agent shall
deliver the Escrowed Funds in accordance with the instructions set forth in such
notice. Upon delivery of the Escrowed Funds, the duties of the Escrow Agent
hereunder shall immediately terminate.
12. Miscellaneous.
12.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes any and all prior agreements, understandings, promises, and
representations concerning the subject matter hereof and the terms applicable
thereto other than those expressly set forth herein.
12.2 Amendments. This Agreement may not be modified, amended,
altered, or supplemented except by a written instrument executed and delivered
by all of the parties hereto.
12.3 Assignments: Binding Effect. This Agreement shall not be
assigned by operation of law or otherwise without the prior written consent of
the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors and assigns.
12.4 Severability. If any term or other provision of this
Agreement is invalid, illegal, or unenforceable by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in a manner which is
materially adverse to any party. Upon determination that any term or other
provision is invalid, illegal, or unenforceable, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties.
12.5 Notice. Unless otherwise expressly provided herein, all
notices and other communications to be given or made pursuant to this Agreement
shall be in writing and if sent by the Escrow Agent shall be deemed to have been
received, effective (i) on the third day following deposit in the United States
Mail, postage prepaid, certified, return receipt requested, or (ii) or on the
day following delivery to Federal Express, Express Mail, or other nationally
recognized expedited mail or package service, next day delivery, delivery
prepaid, addressed to the parties as follows:
If to Seller: Medtox Laboratories, Inc.
402 West County Road D
New Brighton, MN 55112
Attn: James S. Arrington
6
With a copy to: Henson & Efron, P.A.
1200 Title Insurance Building
400 Second Avenue South
Minneapolis, MN 55401
Attn: Alan C. Eidsness, Esq.
If to Purchaser: EDITEK, Inc.
1238 Anthony Road
Burlington, NC 27215
Attn: James D. Skinner
With a copy to: Petree Stockton, L.L.P.
4101 Lake Boone Trail
Suite 400
Raleigh, NC 27607
Attn: James F. Verdonik, Esq.
If to Escrow Agent: Henson & Efron, P.A.
1200 Title Insurance Building
400 Second Avenue South
Minneapolis, MN 55401
Attn: Alan C. Eidsness, Esq.
Any notice sent by a party to the Escrow Agent shall be deemed
to have been received by the Escrow Agent when it is actually received by the
Escrow Agent at the address indicated above. Any notice sent by Seller or
Purchaser to the other shall be subject to the notice provisions of the Asset
Purchase Agreement.
Any party hereto may change the address provided hereinabove
or the person to whose attention the notice is to be given by giving notice to
the other parties in the manner hereinabove provided.
12.6 Headings. The headings contained in this Agreement are
for reference purposes only, and shall not affect in any way the meaning or
interpretation of this Agreement.
12.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the substantive law of the State of Minnesota
without giving effect to the principles of conflicts of law thereof.
12.8. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall together constitute one and the same instrument.
7
12.9 Waivers. The failure of any party hereto to insist, in
any one or more instances, upon the performance of any term, covenant, or
condition of this Agreement, or to exercise any rights hereunder, shall not be
construed as a waiver or relinquishment of the future performance of any such
term, covenant, or condition, or the future exercise of such right, but the
obligations of the non-performing party with respect to such future performance
shall continue in full force and effect.
12.10 Further Assurances. The parties hereto will execute and
deliver all such further documents and instruments, and take all further actions
as may be necessary to consummate the transactions contemplated hereby.
12.11 Escrow Agent Representation of Seller; Conflict of
Interest. The parties hereby acknowledge that the Escrow Agent regularly
represents Seller as legal counsel and has acted as legal counsel for Seller in
connection with the negotiation of the Asset Purchase Agreement and this
Agreement. Purchaser agrees that it will not raise any objection to any future
representation of Seller by the Escrow Agent on account of the Escrow Agent
acting as escrow agent pursuant to the Agreement, including, without limitation,
in connection with any dispute arising out of, or in connection with, the Asset
Purchase Agreement or this Agreement.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of this ___ day of June, 1995.
[CORPORATE SEAL] MEDTOX LABORATORIES, INC.
ATTEST: By:______________________________
Name:_________________________
Title:__________________________
By:_________________________
______________, Secretary
[CORPORATE SEAL] EDITEK, INC.
ATTEST: By:______________________________
Name:_________________________
Title:________________________
By:_________________________
______________, Secretary
ESCROW AGENT:
HENSON & EFRON, P.A.
By:______________________________
Name:_________________________
Title:________________________
9
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made by and among MedTox
Laboratories, a Minnesota corporation ("Seller"), EDITEK, Inc., a
Delaware corporation ("Purchaser"), and Petree Stockton, L. L. P., a
North Carolina Limited Liability Partnership (the "Escrow Agent").
WHEREAS, Seller and Purchaser have executed and delivered an Asset
Purchase Agreement dated effective as of July 1, 1995 (the "Asset
Purchase Agreement"), pursuant to which Purchaser is to purchase all the
assets of Seller; and
WHEREAS, Article XII of the Asset Purchase Agreement provides for
Seller to indemnify Purchaser for Indemnifiable Damages (as defined in
the Asset Purchase Agreement); and
WHEREAS, the Asset Purchase Agreement provides for Five Hundred
Thousand ($500,000) of the Purchase Price to be delivered into escrow by
Purchaser at the Closing to be held and delivered pursuant to this
Agreement (the "Escrowed Funds") for the Escrow Agent to provide a ready
source of payment to Purchaser should there be any Indemnifiable
Damages.
NOW, THEREFORE, in consideration of the foregoing premises, the
mutual promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Deposits. At the Closing Purchaser shall deliver the
Escrowed Funds to the Escrow Agent to hold and deliver in accordance
with the provisions of this Agreement.
2. Escrow Agent. The Escrow Agent agrees to accept the Escrowed
Funds from Purchaser and to hold and deliver the Escrowed Funds in
accordance with the provisions of this Agreement. The Escrow Agent
shall issue to Purchaser a receipt for the Escrowed Funds and shall
deliver to Seller a written notice that the Escrowed Funds have been
received by the Escrow Agent. The Escrow Agent may require any person
to whom the Escrowed Funds are delivered to execute a receipt therefor
as a condition to delivery. The Escrow Agent is, and shall be
considered, an independent contractor, and not an agent of Seller or
Purchaser.
3. Investment. The Escrow Agent shall hold the Escrowed Funds
in a trust account, which may be interest bearing or noninterest bearing
in the sole discretion of the Escrow Agent. In the event the Escrow
Agent is delivered a written notice executed by Seller and Purchaser,
which specifies an investment of the Escrowed Funds, the Escrow Agent
shall invest the Escrowed Funds in the investment specified in such
written notice. The Escrow Agent shall implement any order to sell or
otherwise change the investment contained in any written notice executed
by Seller and Purchaser. If the investment expires prior to the Escrow
Agent delivering the Escrowed Funds, the Escrow Agent shall renew the
investment in the same type of investment, unless the Escrow Agent
receives written notice executed by Seller and Purchaser
instructing the Escrow Agent to not renew such investment, in which case
the Escrow Agent shall implement such instructions. The Escrow Agent
shall have no liability whatsoever for any losses associated with
investment of the Escrowed Funds, or delays in implementing investment
instructions. Any interest, gains or other income derived from
investment of the Escrowed Funds shall constitute Escrowed Funds to be
held and delivered by the Escrow Agent in accordance with the provisions
of this Agreement. The Escrow Agent shall pay any expenses associated
with investments from the Escrowed Funds.
4. Notices. The Escrow Agent shall be protected in acting upon
any written notice request, waiver, consent, receipt or other paper or
document furnished to it in accordance with the terms of this Agreement,
not only in assuming its due execution and the validity and
effectiveness of its provisions, but also as to the truth and
acceptability of any information therein contained, which it in good
faith believes to be genuine and what it purports to be.
5. Additional Duties or Liabilities. In no event shall the
Escrow Agent be liable for any act or failure to act under the
provisions of this Agreement, except where its acts are the result of
its gross negligence or malfeasance. The Escrow Agent shall have no
duties except those which are expressly set forth herein, and it shall
not be bound by any notice of a claim, or demand with respect thereto,
or any waiver, modification, amendment, termination or rescission of
this Agreement, unless received in writing by it, and, if its duties or
liabilities herein are affected, unless it shall have given its prior
written consent thereto.
6. Indemnity. The parties to this Agreement hereby jointly and
severally indemnify the Escrow Agent against any loss, liability, or
damage (other than any caused by the gross negligence or malfeasance of
the Escrow Agent), including reasonable costs of litigation and counsel
fees, arising from or in connection with the performance of its duties
under this Agreement.
7. Conditions to Release of Escrowed Funds. Seller and
Purchaser hereby agree that the Escrowed Funds shall be owned, held and
delivered as provided below:
(a) The Escrowed Funds shall be owned by Seller until such time as it
is determined pursuant to the terms of this Section 7 or Section 8
that the Escrowed Funds are owned by Purchaser.
(b) In the event Purchaser has any claims for Indemnifiable Damages for
which Seller may be responsible pursuant to the Asset Purchase
Agreement, the following procedures shall be followed:
(i) Purchaser shall give written notice to Seller, and shall send
a copy of such notice to the Escrow Agent, which notice shall
set forth a detailed description of the claimed breach and
the amount of loss, damage, cost or expense which Purchaser
claims to have sustained by reason thereof;
2
(ii) The Escrow Agent shall pay to Purchaser the amount of such
claim from the Escrowed Purchase Price upon the expiration of
thirty (30) days from the date a copy of such notice is
received by the Escrow Agent (the "Notice of Contest Period")
if a written notice of dispute from Seller is not received by
the Escrow Agent prior to expiration of the Notice of Contest
Period; and
(iii) If, prior to the expiration of the Notice of Contest Period,
Seller shall notify Purchaser in writing of an intention to
dispute the claim and if such dispute is not resolved by
agreement of both Purchaser and Seller delivered to the
Escrow Agent within 30 days after expiration of such Period
(the "Resolution Period"), then any party may submit the
dispute to arbitration pursuant to Section 8 hereof.
(iv) If a written notice of dispute from Seller is received by the
Escrow Agent prior to expiration of the Notice of Contest
Period, the Escrow Agent shall pay Purchaser the amount (i)
set forth in any written instruction executed by Seller and
Purchaser and/or (ii) set forth in any arbitration award or
order pursuant to Section 8 hereof.
(c) On the first anniversary of the date of this Agreement, the Escrow
Agent shall pay to Seller the amount, if any, by which (i) the
Escrowed Funds then held by the Escrow Agent on such date exceed
(ii) the amount of claims against the Escrowed Funds made by
Purchaser that have not been either paid from the Escrowed Funds or
determined against Purchaser pursuant to Section 8 hereof.
(d) Seller and Purchaser hereby agree not to make any claim for the
Escrowed Funds, and not to dispute any claim for the Escrowed Funds
made by the other party, except in good faith and for reasonable
cause.
(e) In performing its duties as escrow agent hereunder to hold or
deliver the Escrowed Funds, the Escrow Agent shall follow the
provisions set forth above and shall not allow any independent
judgment it may form about the validity of any claims of either
Purchaser or Seller to the Escrowed Funds under the terms of the
Asset Purchase Agreement to affect its performance hereunder,
notwithstanding any independent knowledge the Escrow Agent may have
of the validity of such claims.
8. Dispute Resolution. Any controversy or claim between Seller
and the Escrow Agent or between Purchaser and the Escrow Agent (but not any
dispute between Seller and Purchaser, which shall be arbitrated pursuant to the
Asset Purchase Agreement) arising out of or in connection with this
Agreement shall be settled in binding arbitration in the City of
Raleigh, North Carolina. Any of Seller, Purchaser or the Escrow Agent
may initiate arbitration by sending notice of such initiation to the
other parties hereto and to the American Arbitration Association
("AAA"). Such arbitration shall be conducted before a panel of three
arbitrators (one appointed by Seller, one appointed by Purchaser, and
one appointed by the other two so appointed all of which appointments
shall be made within twenty (20) days after arbitration is instituted) in
3
accordance with the then-current commercial arbitration rules of the
AAA. The arbitrators shall make their decision within forty-five (45)
days after their appointment and the determination of the arbitrator(s)
shall be final, binding and nonappealable. No party shall be precluded
hereby from seeking provisional remedies in the courts of any
jurisdiction, including, without limitation, temporary restraining
orders and preliminary injunctions, nor shall the pursuit of such
provisional relief constitute a waiver of such party's right to
arbitrate a dispute arising under this Agreement, unless such waiver is
expressed in writing and signed by such party. The Escrow Agent, upon
receipt of any order of any court or arbitrator shall hold or deliver
the Escrowed Funds in accordance with such order. The Escrow Agent
shall not question the jurisdiction or authority of the court or
arbitrator or whether the order is appealable. The losing party, if
other than the Escrow Agent, shall bear all costs of the arbitration.
9. Payment of Fees. The Escrow Agent shall be entitled to
reimbursement of expenses, plus a fee at its normal hourly rates, for
performance of its duties hereunder. Fees and expenses shall be paid
50% by Seller and 50% by Purchaser, provided that any fees or expenses
of the Escrow Agent associated with the preparation or negotiation of
this Agreement, or any amendment or modification for this Agreement
shall be the exclusive responsibility of Purchaser. The Escrow Agent
shall not be entitled to deduct expenses or fees from the Escrowed Funds
(except as provided above with respect to expenses incurred in
connection with investing the Escrowed Funds), nor shall the Escrow
Agent be entitled to delay delivery of the Escrowed Funds on account of
any party's failure to pay its fees or expenses.
10. Termination. This Agreement shall terminate upon delivery of
the Escrowed Funds pursuant to Section 7 hereof or pursuant to an order
entered by the arbitrator(s) pursuant to Section 8.
11. Resignation or Removal of the Escrow Agent. The Escrow Agent
may at any time resign, which resignation shall be effective on the
thirtieth (30th) day following the effective date of written notice of
resignation sent to Seller and Purchaser. Upon such resignation, the
Escrow Agent shall deliver the Escrowed Funds to a substitute Escrow
Agent designated in a written notice executed by both Seller and
Purchaser. If Seller and Purchaser fail to provide written notice of
the same substitute Escrow Agent prior to effectiveness of resignation,
the Escrow Agent shall deliver the Escrowed Funds to a substitute Escrow
Agent of its own choice and shall notify Seller and Purchaser of same.
The Escrow Agent may be removed at any time upon written notice executed
by both Seller and Purchaser, whereupon the Escrow Agent shall deliver
the Escrowed Funds in accordance with the instructions set forth in such
notice. Upon delivery of the Escrowed Funds, the duties of the Escrow
Agent hereunder shall immediately terminate.
12. Miscellaneous.
12.1 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject
matter hereof, and supersedes any and all prior agreements,
understandings, promises, and representations concerning the subject
matter hereof and the terms applicable thereto other than those
expressly set forth herein.
4
12.2 Amendments. This Agreement may not be modified,
amended, altered, or supplemented except by a written instrument
executed and delivered by all of the parties hereto.
12.3 Assignments: Binding Effect. This Agreement shall not
be assigned by operation of law or otherwise without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and
assigns.
12.4 Severability. If any term or other provision of this
Agreement is invalid, illegal, or unenforceable by any rule of law or
public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is
not affected in a manner which is materially adverse to any party. Upon
determination that any term or other provision is invalid, illegal, or
unenforceable, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties.
12.5 Notice. Unless otherwise expressly provided herein,
all notices and other communications to be given or made pursuant to
this Agreement shall be in writing and if sent by the Escrow Agent shall
be deemed to have been received, effective (i) on the third day
following deposit in the United States Mail, postage prepaid, certified,
return receipt requested, or (ii) or on the day following delivery to
Federal Express, Express Mail, or other nationally recognized expedited
mail or package service, next day delivery, delivery prepaid, addressed
to the parties as follows:
If to Seller: Medtox Laboratories, Inc.
402 West County Road D
New Brighton, MN 55112
Attn: James S. Arrington
With a copy to: Henson & Efron, P.A.
1200 Title Insurance Building
400 Second Avenue South
Minneapolis, MN 55401
Attn: Alan C. Eidsness, Esq.
If to Purchaser: EDITEK, Inc.
1238 Anthony Road
Burlington, NC 27215
Attn: James D. Skinner
With a copy to: Petree Stockton, L.L.P.
4101 Lake Boone Trail
Suite 400
5
Raleigh, NC 27607
Attn: James F. Verdonik, Esq.
If to Escrow Agent: Henson & Efron, P.A.
1200 Title Insurance Building
400 Second Avenue South
Minneapolis, MN 55401
Attn: Alan C. Eidsness, Esq.
Any notice sent by a party to the Escrow Agent shall be deemed to
have been received when it is actually received by the Escrow Agent at
the address indicated above. Any notice sent by Seller or Purchaser to
the other shall be subject to the notice provisions of the Asset
Purchase Agreement.
Any party hereto may change the address provided hereinabove or the
person to whose attention the notice is to be given by giving notice to
the other parties in the manner hereinabove provided.
12.6 Headings. The headings contained in this Agreement are
for reference purposes only, and shall not affect in any way the meaning
or interpretation of this Agreement.
12.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the substantive law of the State of
North Carolina without giving effect to the principles of conflicts of
law thereof.
12.8. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same instrument.
12.9 Waivers. The failure of any party hereto to insist, in
any one or more instances, upon the performance of any term, covenant,
or condition of this Agreement, or to exercise any rights hereunder,
shall not be construed as a waiver or relinquishment of the future
performance of any such term, covenant, or condition, or the future
exercise of such right, but the obligations of the non-performing party
with respect to such future performance shall continue in full force and
effect.
12.10 Further Assurances. The parties hereto will execute
and deliver all such further documents and instruments, and take all
further actions as may be necessary to consummate the transactions
contemplated hereby.
12.11 Escrow Agent Representation of Purchaser; Conflict of
Interest. The parties hereby acknowledge that the Escrow Agent
regularly represents Purchaser as legal counsel and has acted as legal
counsel for Purchaser in connection with the Asset Purchase Agreement
and this Agreement. Seller agrees that it will not raise any objection
to any future representation of
6
Purchaser by the Escrow Agent on account of the Escrow Agent acting as
escrow agent pursuant to the Agreement, including, without limitation,
in connection with any dispute arising out of, or in connection with,
the Asset Purchase Agreement or this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of this ___ day of June, 1995.
[CORPORATE SEAL] MEDTOX LABORATORIES, INC.
ATTEST: By:______________________________
Name:_________________________
Title:__________________________
By:_________________________
______________, Secretary
[CORPORATE SEAL] EDITEK, INC.
ATTEST: By:______________________________
Name:_________________________
Title:________________________
By:_________________________
______________, Secretary
ESCROW AGENT:
PETREE STOCKTON, L. L. P.
By:______________________________
Name:_________________________
Title:________________________
EXHIBIT C
______________, 1996
MedTox Laboratories, Inc.
402 West County Road D
New Brighton, MN 55112
Re: Sale of Certain Assets of MedTox Laboratories, Inc.
Gentlemen:
This opinion letter is being delivered pursuant to paragraph 4.3(b) of
that certain Asset Purchase Agreement dated effective July 1, 1995 by and
between MedTox Laboratories, Inc., a Minnesota corporation ("Seller"), and
EDITEK, Inc., a Delaware corporation ("Purchaser"), as amended by an Amendment
Agreement dated as of December 1, 1995 (the "Purchase Agreement"), in our
capacity as counsel to Purchaser in connection with the negotiation, execution
and delivery of the Purchase Agreement and the closing of the transactions
contemplated by the Purchase Agreement.
Capitalized terms used in this opinion letter and not defined in it
have the respective meanings given to those terms in the Purchase Agreement.
In our capacity as such counsel, we have reviewed the Purchase
Agreement (including the exhibits and schedules thereto), agreements in the form
attached as Exhibits to the Purchase Agreement, as amended ("the Exhibit
Agreements"), the Certificate of Incorporation (as amended), Bylaws (as
amended), and minutes of meetings of the Board of Directors and stockholders of
Purchaser and such other documents, records, agreements and certificates and
have made such inquiries as we deemed appropriate. We have relied as to factual
matters upon certificates of officers of Purchaser, but we have no reason to
believe the facts stated therein are incorrect, incomplete or misleading, and
upon certificates or statements or both of various governmental officials. In
all examinations of such documents, we have assumed the genuineness of
signatures on original documents and the conformity to original documents of all
copies submitted to us as certified, conformed or
photographic copies, the legal competence of natural persons and that the
Purchaser Delivered Documents (as defined below) are enforceable against all
parties thereto (other than Purchaser). As to certificates or statements or both
of public officials, we have assumed that they have been properly given and to
be accurate.
Except as set forth in the following sentence, the opinions set forth
in this letter are based upon and limited to (i) the laws of the State of North
Carolina, (ii) the General Corporation Law of the State of Delaware, and (iii)
the federal laws of the United States of America, and we express no opinion
herein concerning the laws of any other jurisdiction. The opinions set forth in
numbered paragraphs 1, 2(a) and 2(b) below are also based upon and limited to
the Delaware General Corporation Law.
Based upon the foregoing and subject to the qualifications and
limitations set forth herein, we are of the following opinions:
1. Purchaser is a corporation duly incorporated,
organized and entitled to conduct business under, and is validly
existing and in good standing under, the laws of the State of Delaware.
2. With respect to the Purchase Agreement and any
other agreements, instruments and documents executed and delivered by
Purchaser pursuant to the Purchase Agreement (collectively, together
with the Purchase Agreement, the "Purchaser Delivered Agreements"):
(a) Buyer has the corporate power and
authority to execute and deliver the Purchaser Delivered
Agreements and to consummate the transactions contemplated by,
and otherwise to comply with and perform under, them;
(b) the execution and delivery by Purchaser
of the Purchaser Delivered Agreements, the consummation by
Purchaser of the transactions contemplated by them and
Purchaser's other compliance with or performance under them
have been duly authorized by all necessary corporate action on
the part of Purchaser in compliance with any governing or
applicable agreements,
instruments or other documents (including without limitation
its Certificate of Incorporation and Bylaws) and applicable
law; and
(c) Buyer has duly executed and delivered the Buyer Delivered
Agreements.
3. The Purchaser Delivered Agreements constitute
valid and binding agreements of Purchaser that are enforceable against
it in accordance with their terms.
4. Neither the execution and delivery by Purchaser of
the Purchaser Delivered Agreements nor the consummation by Purchaser of
the transactions contemplated thereby nor other compliance with or
performance under them will (with the passage of time or the giving of
notice or both) constitute a violation of (i) any term or provision of
the Certificate of Incorporation or Bylaws of Purchaser, (ii) any
permit, judgment, decree or order of any governmental authority known
to us or (iii) any applicable law which in our experience is normally
applicable to the transactions of the type contemplated in the
Purchaser Delivered Agreements.
5. No consent, approval, order or authorization of,
or registration, declaration of filing with, any governmental authority
or other person on the part of Purchaser is required in connection with
Purchaser's execution or delivery of the Purchase Agreement or the
other Purchaser Delivered Agreements, or Purchaser's consummation of
the transactions contemplated by them or Purchaser's other compliance
with or performance under them, including the issuance of the Closing
Shares and the Additional Shares, except that offers and sales of the
Closing Shares and the Additional Shares may require filings with, and
approvals by state securities regulators following the Closing and
Purchaser is required to file a Form D with the Securities and Exchange
Commission following the Closing and the performance of the
Registration Rights Agreement will require filings with, and approvals
by, the Securities and Exchange Commission and various state securities
regulators.
6. Upon issuance in accordance with the provisions of
the Purchase Agreement, the Closing Shares and the Additional Shares
will constitute duly and validly authorized, fully-
paid and nonassessable shares of Common Stock of the Purchaser
The foregoing opinions are further subject to the following
qualifications and assumptions:
Our opinions as to enforceability (i) are given as if
the laws of the State of North Carolina govern the Purchase Agreement,
the other Purchaser Delivered Agreements (ii) may be limited by
applicable bankruptcy, insolvency and other laws (including without
limitation fraudulent conveyance and other laws of similar import), by
equitable principles affecting creditors' rights generally, and by the
discretion of the courts in granting equitable remedies (regardless of
whether such enforceability is considered in a proceeding at law or in
equity and regardless of whether such limitations are derived from
constitutions, statutes, judicial decisions or otherwise). In addition,
no opinion is expressed herein as to the enforceability of any
provision in the Registration Rights Agreement regarding
indemnification, contribution or related matters set forth in Sections
6 and 7 of the Registration Rights Agreement.
In addition, and subject to the qualifications and assumptions set
forth previously in this letter, we confirm to you that to our knowledge no
litigation or other proceeding against Purchaser has been instituted or
threatened to restrain or prohibit any of the transactions contemplated by the
Purchase Agreement.
This opinion letter is delivered in connection with the consummation of
the transactions contemplated in the Purchase Agreement, may be relied upon only
by you and your counsel in connection therewith, may not be relied upon by you
for any other purpose or by anyone else for any purpose, and may not be quoted,
published or otherwise disseminated without our prior written consent.
Very truly yours,
PETREE STOCKTON, L.L.P.
EXHIBIT C
______________, 1995
MedTox Laboratories, Inc.
402 West County Road D
New Brighton, MN 55112
Re: Sale of Certain Assets of MedTox Laboratories, Inc.
Gentlemen:
This opinion letter is being delivered pursuant to paragraph
4.3(b) of that certain Asset Purchase Agreement (the "Purchase
Agreement") dated effective July 1, 1995 by and between MedTox
Laboratories, Inc., a Minnesota corporation ("Seller"), and EDITEK,
Inc., a Delaware corporation ("Purchaser"), in our capacity as
counsel to Purchaser in connection with the negotiation, execution
and delivery of the Purchase Agreement and the closing of the
transactions contemplated by the Purchase Agreement.
Capitalized terms used in this opinion letter and not defined
in it have the respective meanings given to those terms in the
Purchase Agreement.
In our capacity as such counsel, we have reviewed the Purchase
Agreement (including the exhibits and schedules thereto),
agreements in the form attached as Exhibits to the Purchase
Agreement ("the Exhibit Agreements") the Certificate of
Incorporation (as amended), Bylaws (as amended), and minutes of
meetings of the Board of Directors and stockholders of Purchaser
and such other documents, records, agreements and certificates and
have made such inquiries as we deemed appropriate. We have relied
as to factual matters upon certificates of officers of Purchaser,
but we have no reason to believe the facts stated therein are
incorrect, incomplete or misleading, and upon certificates or
statements or both of various governmental officials. In all
examinations of such documents, we have assumed the genuineness of
signatures on original documents and the conformity to original
documents of all copies submitted to us as certified, conformed or
photographic copies, the legal competence of natural persons and
that the Purchaser Delivered Documents (as defined below) are
enforceable against all parties thereto (other than Purchaser). As
to certificates or statements or both of public officials, we have
assumed that they have been properly given and to be accurate.
Except as set forth in the following sentence, the opinions
set forth in this letter are based upon and limited to (i) the laws
of the State of North Carolina, (ii) the General Corporation Law of
the State of Delaware, and (iii) the federal laws of the United
States of America, and we express no opinion herein concerning the
MedTox Laboratories, Inc.
, 1995
Page 2
laws of any other jurisdiction. The opinions set forth in numbered
paragraphs 1, 2(a) and 2(b) below are also based upon and limited
to the Delaware General Corporation Law.
Based upon the foregoing and subject to the qualifications and
limitations set forth herein, we are of the following opinions:
1. Purchaser is a corporation duly incorporated,
organized and entitled to conduct business under, and is
validly existing and in good standing under, the laws of the
State of Delaware.
2. With respect to the Purchase Agreement and any other
agreements, instruments and documents executed and delivered
by Purchaser pursuant to the Purchase Agreement (collectively,
together with the Purchase Agreement, the "Purchaser Delivered
Agreements"):
(a) Buyer has the corporate power and authority to
execute and deliver the Purchaser Delivered Agreements
and to consummate the transactions contemplated by, and
otherwise to comply with and perform under, them;
(b) the execution and delivery by Purchaser of the
Purchaser Delivered Agreements, the consummation by
Purchaser of the transactions contemplated by them and
Purchaser's other compliance with or performance under
them have been duly authorized by all necessary corporate
action on the part of Purchaser in compliance with any
governing or applicable agreements, instruments or other
documents (including without limitation its Certificate
of Incorporation and Bylaws) and applicable law; and
(c) Buyer has duly executed and delivered the Buyer
Delivered Agreements.
3. The Purchaser Delivered Agreements constitute valid
and binding agreements of Purchaser that are enforceable
against it in accordance with their terms.
4. Neither the execution and delivery by Purchaser of
the Purchaser Delivered Agreements nor the consummation by
Purchaser of the transactions contemplated thereby nor other
compliance with or performance under them will (with the
passage of time or the giving of notice or both) constitute a
violation of (i) any term or provision of the Certificate of
Incorporation or Bylaws of Purchaser, (ii) any permit,
judgment, decree or order of any governmental authority known
to us or (iii) any applicable law which in our experience is
MedTox Laboratories, Inc.
, 1995
Page 3
normally applicable to the transactions of the type
contemplated in the Purchaser Delivered Agreements.
5. No consent, approval, order or authorization of, or
registration, declaration of filing with, any governmental
authority or other person on the part of Purchaser is required
in connection with Buyer's execution or delivery of the
Purchase Agreement or the other Purchaser Delivered
Agreements, or Purchaser's consummation of the transactions
contemplated by them or Purchaser's other compliance with or
performance under them.
The foregoing opinions are further subject to the following
qualifications and assumptions:
Our opinions as to enforceability (i) are given as
if the laws of the State of North Carolina govern the Purchase
Agreement, the other Purchaser Delivered Agreements (ii) may
be limited by applicable bankruptcy, insolvency and other laws
(including without limitation fraudulent conveyance and other
laws of similar import), by equitable principles affecting
creditors' rights generally, and by the discretion of the
courts in granting equitable remedies (regardless of whether
such enforceability is considered in a proceeding at law or in
equity and regardless of whether such limitations are derived
from constitutions, statutes, judicial decisions or
otherwise).
In addition, and subject to the qualifications and assumptions
set forth previously in this letter, we confirm to you that to our
knowledge no litigation or other proceeding against Purchaser has
been instituted or threatened to restrain or prohibit any of the
transactions contemplated by the Purchase Agreement.
This opinion letter is delivered in connection with the
consummation of the transactions contemplated in the Purchase
Agreement, may be relied upon only by you and your counsel in
connection therewith, may not be relied upon by you for any other
purpose or by anyone else for any purpose, and may not be quoted,
published or otherwise disseminated without our prior written
consent.
Very truly yours,
PETREE STOCKTON, L.L.P.
EXHIBIT D
_______, 1996
EDITEK, Inc.
1238 Anthony Road
Burlington, NC 27215
Re: Sale of Certain Assets of MedTox Laboratories
Gentlemen:
This opinion letter is being delivered pursuant to paragraph
4.4(b) of that certain Asset Purchase Agreement dated effective
July 1, 1995 by and between MedTox Laboratories, a Minnesota
corporation ("Seller"), and EDITEK, Inc., a Delaware corporation
("Purchaser"), as amended by an Amendment Agreement dated as of
December 1, 1995 (the "Purchase Agreement"), in our capacity as
counsel to Seller in connection with the negotiation, execution
and delivery of the Purchase Agreement and the closing of the
transactions contemplated by the Purchase Agreement.
Capitalized terms used in this opinion letter and not
defined in it have the respective meanings given to those terms
in the Purchase Agreement.
In our capacity as such counsel, we have reviewed the
Purchase Agreement, as amended (including the exhibits and
schedules thereto), the Articles of Incorporation (as amended),
Bylaws (as amended), and minutes books of Seller and such other
documents, records, agreements and certificates and have made
such inquiries as we deemed appropriate. We have relied as to
factual matters upon a certificate of an officer of Seller, but
we have no reason to believe the facts stated therein are
incorrect, incomplete or misleading, and upon certificates or
statements or both of various governmental officials. In all
examinations of such documents, we have assumed the genuineness
of signatures on original documents and the conformity to
original documents of all copies submitted to us as certified,
conformed or photographic copies, the legal competence of natural
persons and that the Seller Delivered Agreements (as defined
below) are enforceable against all parties thereto (other than
Seller). As to certificates or statements or both of public
EDITEK, Inc.
, 1996
Page 2
officials, we have assumed that they have been properly given and
to be accurate.
Except as set forth in the following sentence, the opinions
set forth in this letter are based upon and limited to (i) the
laws of the State of Minnesota and (ii) the federal laws of the
United States of America, and we express no opinion herein
concerning the laws of any other jurisdiction.
Based upon the foregoing and subject to the qualifications
and limitations set forth herein, we are of the following
opinions:
1. Seller and The Forensic Resource Group, Inc.
("Subsidiary") are corporations duly incorporated, organized and
entitled to conduct business under, and are validly existing and
in good standing under the laws of the State of Minnesota.
2. Seller and Subsidiary have all requisite corporate
power and authority to own, operate and lease their properties
and to carry on their businesses as conducted on the date hereof.
Seller is qualified or licensed to do business in the States of
Illinois, California, New Jersey and Connecticut.
3. With respect to the Purchase Agreement and any
other agreements, instruments and documents executed and
delivered by Seller, pursuant to the Purchase Agreement
(collectively, together with the Purchase Agreement, the "Seller
Delivered Agreements"):
(a) Seller has the corporate power and authority
to execute and deliver the Seller Delivered Agreements to which
it is a party and to consummate the transactions contemplated by,
and otherwise to comply with and perform under, them;
(b) The execution and delivery by Seller of the
Seller Delivered Agreements, the consummation by Seller of the
transactions contemplated by them and Seller's other compliance
with or performance under them have been duly authorized by all
necessary corporate action on the part of Seller in compliance
with any governing or applicable agreements, instruments or other
documents (including without limitation its Articles of
Incorporation and Bylaws) and applicable law, and no other
corporate action or proceeding on the part of Seller or any of
its shareholders, directors or officers is necessary for the
execution, delivery and performance of the Seller Delivered
EDITEK, Inc.
, 1996
Page 3
Agreements by Seller and the consummation of the transactions
contemplated hereby.
(c) Seller has duly executed and delivered the
Seller Delivered Agreements; and
(d) the transfer instruments included in the
Seller Delivered Agreements effectively convey to Purchaser all
of Seller's right, title and interest to and in the Assets.
4. The Seller Delivered Agreements (including without
limitation the transfer instruments delivered by Seller with
respect to the Assets) constitute valid and binding obligations
of Seller enforceable against it in accordance with their terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, by general
equitable principles and by discretion of the courts in granting
equitable remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law). In addition, no
opinion is expressed herein as to the enforceability of any
provision in the Registration Rights Agreement regarding
indemnification, contribution or related matters set forth in
Sections 6 and 7 of the Registration Rights Agreement.
5. The Noncompetition Agreements have been duly
executed and delivered by Harry G. McCoy and D. Gary Hemphill and
constitute valid and binding obligations of each of them
enforceable against them in accordance with their respective
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, by general
equitable principles and by discretion of the courts in granting
equitable remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
6. Except as set forth in the Purchase Agreement,
neither the execution or delivery of the Seller Delivered
Agreements nor the consummation by Seller of the transactions
contemplated thereby nor other compliance with or performance
under them will (with the passage of time or the giving of notice
or both):
(a) constitute a violation of, constitute a
default or require any payment under, permit a termination of, or
result in the creation or imposition of any security interest,
lien or other encumbrance or adverse claim against Seller or upon
EDITEK, Inc.
, 1996
Page 4
any of the Assets (with or without due notice or lapse of time or
the happening or occurrence of any other event) under (i) any
term or provision of the Articles of Incorporation (as amended)
or Bylaws (as amended) of Seller, or (ii) any applicable law
which in our experience is normally applicable to transactions of
the type contemplated by the Purchase Agreement; or
(b) create, or cause the acceleration of the
maturity of, any indebtedness, obligation, or liability of Seller
known to us.
7. Except for any notice or filing which may be
required in connection with licenses and permits which are
identified by Seller in Schedule 6.16 to the Purchase Agreement,
no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental authority or other
person on the part of Seller is required in connection with
Seller's execution or delivery of the Purchase Agreement or the
other Seller Delivered Agreements, Seller's consummation of the
transactions contemplated by them, or Seller's other compliance
with or performance under them.
8. Except as set forth in the Disclosure Schedule to
the Purchase Agreement, to the best of our knowledge upon due
inquiry, (i) there is no action, suit, set of related actions or
suits concerning a common issue, complaint, arbitration, inquiry,
proceeding or investigation pending or threatened against or
involving Seller, Subsidiary or any of the Assets, before any
court, arbitrator or administrative or governmental body, and
there is no judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Seller,
Subsidiary or any of the Assets, which would, individually or in
the aggregate, if adversely determined against Seller or
Subsidiary, subject Seller or Subsidiary to liability in excess
of $25,000 for any single event or $50,000 for all events in the
aggregate, or result in a claim lien or other encumbrance on any
of the Assets; and (ii) there are no actions, suits or
proceedings pending or threatened against Seller, Subsidiary or
any of the Assets arising out of or in any way related to the
Seller Delivered Agreements, or any of the transactions
contemplated thereby. We have not conducted any investigation to
determine whether, and Seller has not provided us with any
information that would cause us to, advise Seller that it is in
violation of any applicable material law, statute, ordinance,
order, rule or regulation promulgated or judgment, decree, order,
concession, grant, permit, license or other governmental
EDITEK, Inc.
, 1996
Page 5
authorization or approval, issued or entered by, any federal,
state or local, court or governmental authority relating to or
affecting the operation, conduct or ownership of the property or
business of Seller or Subsidiary.
9. The authorized capital stock of Seller consists of
50,000 shares of Common Stock, $1.00 par value per share, of
which 29,658 shares are issued and outstanding. The authorized
capital stock of Subsidiary consists of 25,000 shares of Common
Stock, $1.00 par value per share, of which 1,000 shares are
issued and outstanding. To the best of our knowledge upon due
inquiry, (i) there are no outstanding options, warrants,
subscriptions, conversion rights or other rights, agreements or
commitments obligating Seller or Subsidiary to issue any
additional shares of the capital stock of Seller or any other
securities convertible into, exchangeable for or evidencing the
right to subscribe for or acquire from Seller or Subsidiary or
any stock appreciation rights; (ii) no one other than the owner
disclosed in the Purchase Agreement has the right to vote any
shares of capital stock of Seller or Subsidiary; and (iii)
neither Seller nor Subsidiary owns, directly or indirectly, any
capital stock or other equity securities of any corporation or
have any direct or indirect equity or ownership interest in any
other business other than Subsidiary.
10. We have not conducted any investigation to
determine whether, and Seller has not provided us with any
information that would cause us to, advise Seller that it is in
violation of any provisions of ERISA or any other law, rule, or
regulation applicable to Seller's Plans.
11. Except as set forth in the Purchase Agreement, to
our actual knowledge, (i) Seller has good title to all the
Assets, free and clear of all liens, charges or encumbrances of
any nature whatsoever; and (ii) neither Seller nor Subsidiary has
granted any person or entity any license or other rights to the
Seller Intellectual Property. Seller has not sought our advice
with respect to any claims by any other person or entity that the
business conducted by Seller and/or Subsidiary infringes the
intellectual property of any other person or entity and no person
or entity has asserted any such infringement claim and Seller has
not otherwise advised of any such claim or of any basis for any
such claim.
12. We have not conducted any investigation to
determine whether, and Seller has not provided us with any
EDITEK, Inc.
, 1996
Page 6
information that would cause us to, advise Seller that it is in
violation of any material Licenses.
13. To our actual knowledge, there are no false
statements by Seller in the Purchase Agreement or in any of the
Disclosure Schedules thereto.
This opinion letter is delivered in connection with the
consummation of the transactions contemplated in the Purchase
Agreement, may be relied upon only by you and your counsel in
connection therewith, may not be relied upon by you for any other
purpose or by anyone else for any purpose, and may not be quoted,
published or otherwise disseminated without our prior written
consent.
Very truly yours,
HENSON & EFRON, P.A.
EXHIBIT D
_______, 1995
EDITEK, Inc.
1238 Anthony Road
Burlington, NC 27215
Re: Sale of Certain Assets of MedTox Laboratories
Gentlemen:
This opinion letter is being delivered pursuant to paragraph
4.4(b) of that certain Asset Purchase Agreement (the "Purchase
Agreement") dated effective July 1, 1995 by and between MedTox
Laboratories, a Minnesota corporation ("Seller"), and EDITEK,
Inc., a Delaware corporation ("Purchaser"), in our capacity as
counsel to Seller in connection with the negotiation, execution
and delivery of the Purchase Agreement and the closing of the
transactions contemplated by the Purchase Agreement.
Capitalized terms used in this opinion letter and not
defined in it have the respective meanings given to those terms
in the Purchase Agreement.
In our capacity as such counsel, we have reviewed the
Purchase Agreement (including the exhibits and schedules
thereto), the Articles of Incorporation (as amended), Bylaws (as
amended), and minutes books of Seller and such other documents,
records, agreements and certificates and have made such inquiries
as we deemed appropriate. We have relied as to factual matters
upon a certificate of an officer of Seller, but we have no reason
to believe the facts stated therein are incorrect, incomplete or
misleading, and upon certificates or statements or both of
various governmental officials. In all examinations of such
documents, we have assumed the genuineness of signatures on
original documents and the conformity to original documents of
all copies submitted to us as certified, conformed or
photographic copies, the legal competence of natural persons and
that the Seller Delivered Agreements (as defined below) are
enforceable against all parties thereto (other than Seller). As
to certificates or statements or both of public officials, we
have assumed that they have been properly given and to be
accurate.
EDITEK, Inc.
, 1995
Page 2
Except as set forth in the following sentence, the opinions
set forth in this letter are based upon and limited to (i) the
laws of the State of Minnesota and (ii) the federal laws of the
United States of America, and we express no opinion herein
concerning the laws of any other jurisdiction.
Based upon the foregoing and subject to the qualifications
and limitations set forth herein, we are of the following
opinions:
1. Seller and The Forensic Resource Group, Inc.
("Subsidiary") are corporations duly incorporated, organized and
entitled to conduct business under, and are validly existing and
in good standing under the laws of the State of Minnesota.
2. Seller and Subsidiary have all requisite corporate
power and authority to own, operate and lease their properties
and to carry on their businesses as conducted on the date hereof.
Seller is qualified or licensed to do business in the States of
Illinois, California, New Jersey and Connecticut.
3. With respect to the Purchase Agreement and any
other agreements, instruments and documents executed and
delivered by Seller, pursuant to the Purchase Agreement
(collectively, together with the Purchase Agreement, the "Seller
Delivered Agreements"):
(a) Seller has the corporate power and authority
to execute and deliver the Seller Delivered Agreements to which
it is a party and to consummate the transactions contemplated by,
and otherwise to comply with and perform under, them;
(b) The execution and delivery by Seller of the
Seller Delivered Agreements, the consummation by Seller of the
transactions contemplated by them and Seller's other compliance
with or performance under them have been duly authorized by all
necessary corporate action on the part of Seller in compliance
with any governing or applicable agreements, instruments or other
documents (including without limitation its Articles of
Incorporation and Bylaws) and applicable law, and no other
corporate action or proceeding on the part of Seller or any of
its shareholders, directors or officers is necessary for the
execution, delivery and performance of the Seller Delivered
Agreements by Seller and the consummation of the transactions
contemplated hereby.
EDITEK, Inc.
, 1995
Page 3
(c) Seller has duly executed and delivered the
Seller Delivered Agreements; and
(d) the transfer instruments included in the
Seller Delivered Agreements effectively convey to Purchaser all
of Seller's right, title and interest to and in the Assets.
4. The Seller Delivered Agreements (including without
limitation the transfer instruments delivered by Seller with
respect to the Assets) constitute valid and binding obligations
of Seller enforceable against it in accordance with their terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, by general
equitable principles and by discretion of the courts in granting
equitable remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5. The Noncompetition Agreements have been duly
executed and delivered by Harry G. McCoy and D. Gary Hemphill and
constitute valid and binding obligations of each of them
enforceable against them in accordance with their respective
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, by general
equitable principles and by discretion of the courts in granting
equitable remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
6. Except as set forth in the Purchase Agreement,
neither the execution or delivery of the Seller Delivered
Agreements nor the consummation by Seller of the transactions
contemplated thereby nor other compliance with or performance
under them will (with the passage of time or the giving of notice
or both):
(a) constitute a violation of, constitute a
default or require any payment under, permit a termination of, or
result in the creation or imposition of any security interest,
lien or other encumbrance or adverse claim against Seller or upon
any of the Assets (with or without due notice or lapse of time or
the happening or occurrence of any other event) under (i) any
term or provision of the Articles of Incorporation (as amended)
or Bylaws (as amended) of Seller, or (ii) any applicable law
which in our experience is normally applicable to transactions of
the type contemplated by the Purchase Agreement; or
EDITEK, Inc.
, 1995
Page 4
(b) create, or cause the acceleration of the
maturity of, any indebtedness, obligation, or liability of Seller
known to us.
7. Except for any notice or filing which may be
required in connection with licenses and permits which are
identified by Seller in Schedule 6.16 to the Purchase Agreement,
no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental authority or other
person on the part of Seller is required in connection with
Seller's execution or delivery of the Purchase Agreement or the
other Seller Delivered Agreements, Seller's consummation of the
transactions contemplated by them, or Seller's other compliance
with or performance under them.
8. Except as set forth in the Disclosure Schedule to
the Purchase Agreement, to the best of our knowledge upon due
inquiry, (i) there is no action, suit, set of related actions or
suits concerning a common issue, complaint, arbitration, inquiry,
proceeding or investigation pending or threatened against or
involving Seller, Subsidiary or any of the Assets, before any
court, arbitrator or administrative or governmental body, and
there is no judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Seller,
Subsidiary or any of the Assets, which would, individually or in
the aggregate, if adversely determined against Seller or
Subsidiary, subject Seller or Subsidiary to liability in excess
of $25,000 for any single event or $50,000 for all events in the
aggregate, or result in a claim lien or other encumbrance on any
of the Assets; and (ii) there are no actions, suits or
proceedings pending or threatened against Seller, Subsidiary or
any of the Assets arising out of or in any way related to the
Seller Delivered Agreements, or any of the transactions
contemplated thereby. We have not conducted any investigation to
determine whether, and Seller has not provided us with any
information that would cause us to, advise Seller that it is in
violation of any applicable material law, statute, ordinance,
order, rule or regulation promulgated or judgment, decree, order,
concession, grant, permit, license or other governmental
authorization or approval, issued or entered by, any federal,
state or local, court or governmental authority relating to or
affecting the operation, conduct or ownership of the property or
business of Seller or Subsidiary.
9. The authorized capital stock of Seller consists of
50,000 shares of Common Stock, $1.00 par value per share, of
EDITEK, Inc.
, 1995
Page 5
which 29,658 shares are issued and outstanding. The authorized
capital stock of Subsidiary consists of 25,000 shares of Common
Stock, $1.00 par value per share, of which 1,000 shares are
issued and outstanding. To the best of our knowledge upon due
inquiry, (i) there are no outstanding options, warrants,
subscriptions, conversion rights or other rights, agreements or
commitments obligating Seller or Subsidiary to issue any
additional shares of the capital stock of Seller or any other
securities convertible into, exchangeable for or evidencing the
right to subscribe for or acquire from Seller or Subsidiary or
any stock appreciation rights; (ii) no one other than the owner
disclosed in the Purchase Agreement has the right to vote any
shares of capital stock of Seller or Subsidiary; and (iii)
neither Seller nor Subsidiary owns, directly or indirectly, any
capital stock or other equity securities of any corporation or
have any direct or indirect equity or ownership interest in any
other business other than Subsidiary.
10. We have not conducted any investigation to
determine whether, and Seller has not provided us with any
information that would cause us to, advise Seller that it is in
violation of any provisions of ERISA or any other law, rule, or
regulation applicable to Seller's Plans.
11. Except as set forth in the Purchase Agreement, to
our actual knowledge, (i) Seller has good title to all the
Assets, free and clear of all liens, charges or encumbrances of
any nature whatsoever; and (ii) neither Seller nor Subsidiary has
granted any person or entity any license or other rights to the
Seller Intellectual Property. Seller has not sought our advice
with respect to any claims by any other person or entity that the
business conducted by Seller and/or Subsidiary infringes the
intellectual property of any other person or entity and no person
or entity has asserted any such infringement claim and Seller has
not otherwise advised of any such claim or of any basis for any
such claim.
12. We have not conducted any investigation to
determine whether, and Seller has not provided us with any
information that would cause us to, advise Seller that it is in
violation of any material Licenses.
13. To our actual knowledge, there are no false
statements by Seller in the Purchase Agreement or in any of the
Disclosure Schedules thereto.
EDITEK, Inc.
, 1995
Page 6
This opinion letter is delivered in connection with the
consummation of the transactions contemplated in the Purchase
Agreement, may be relied upon only by you and your counsel in
connection therewith, may not be relied upon by you for any other
purpose or by anyone else for any purpose, and may not be quoted,
published or otherwise disseminated without our prior written
consent.
Very truly yours,
HENSON & EFRON, P.A.
EXHIBIT E
FORM OF NONCOMPETITION AGREEMENT
NONCOMPETITION AGREEMENT ("this Agreement") dated __________ ___,
1995 by and among EDITEK, INC., a Delaware corporation ("Purchaser") and
__________________ ("Employee").
The parties to this Agreement, in consideration of the mutual
agreements set forth below in this Agreement (the mutuality, adequacy,
receipt and sufficiency of which are hereby acknowledged), hereby agree
as follows:
1. Background. This Agreement is being executed and delivered
contemporaneously with and as a condition to the acquisition by
Purchaser of substantially all the assets of MedTox Laboratories, Inc.,
a Minnesota corporation ("Seller") the Company (the "Acquisition").
Seller is in the business of forensic, medical, clinical, biological
and/or pharmacological toxicology (the "Business"). Employee is
_______________________ of Seller. Employee understands that Purchaser
will not consummate such acquisition without the assurance that Employee
will not engage in the activities prohibited by this Agreement, and in
order to induce the Purchaser to consummate the acquisition and other
transactions contemplated by the acquisition agreement, Employee agrees
to restrict his actions as provided in this Agreement. Employee
acknowledges and agrees that such restrictions are reasonable in light
of the business of Seller and the direct and substantial benefits of the
acquisition to Employee.
2. Territory. Employee acknowledges and agrees that Seller sells
its services throughout the United States (the "Territory") and that
Purchaser intends to continue and to increase its sales and operations
throughout the Territory.
3. Noncompetition Period. The Noncompetition Period commences on
the date of this Agreement and shall terminate on the later of (i) the
second anniversary of the closing date of the Acquisition or (ii) the
first anniversary of termination of employment with Purchaser.
4. Noncompetition. Employee agrees that during the
Noncompetition Period, he will not, directly or indirectly, either:
(a) have any interest in (whether as proprietor, officer,
director or otherwise),
(b) enter the employment of,
(c) act as agent, broker, or distributor for or adviser or
consultant to, or
(d) provide information useful in conducting the Business to,
solicit customers or employees on behalf of or otherwise provide any
substantial assistance useful in conducting the Business to any person,
firm, corporation or business entity which is engaged, or which Employee
reasonably knows is undertaking to become engaged, in the Territory in
the Business or outside the Territory if sales are solicited from
customers located inside the Territory.
Notwithstanding the foregoing, Employee shall not be prohibited
from (i) being employed by or acting as an agent, broker or distributor
for or advisor or consultant to any Non-Business Affiliate of a person,
division, firm, corporation, a business entity ("Parent") which
("Parent"), as one of its businesses, is or may become engaged in the
Business so long as (x) Employee has no relationship or contact with any
portion of Parent which is competitive with the Business, (y) Employee's
activities are not described in clause (d) above and (z) the Business
does not constitute more than ten (10%) of the aggregate revenues of
Parent on a consolidated basis; or (ii) owning not more than 1% of the
issued and outstanding securities of a publicly traded entity which may
be engaged in whole or in part in the Business. A Non-Business
Affiliate is a person, division, firm, corporation or business entity
which does not, and is not preparing to, engage in the Business.
5. No Interference with Purchaser Customers. Employee agrees
that during the Noncompetition Period, he will not, directly or
indirectly:
(a) solicit, divert or take away, or attempt to solicit,
divert or take away, the business of any Purchaser Customer; or
(b) attempt or seek to cause any of the Purchaser Customers
to refrain, in any respect, from maintaining or acquiring from or
through the Purchaser any product or service of the Business sold (or
offered for sale) to such Purchaser Customer by Seller or Purchaser
during the twelve-month period prior to the date of this Agreement or
during the Noncompetition Period.
As used in this section, "Purchaser Customer" means any customer of
Seller or Purchaser located in the Territory served or solicited by
Seller or Purchaser within the twenty-four (24) month period prior to
termination of employment with Purchaser.
6. No Interference With Employees. Employee agrees that for the
Noncompetition Period, he will not, directly or indirectly, request or
induce any employee of Purchaser to terminate his employment with
Purchaser or accept employment with another business entity engaged in
the Business in the Territory or which is located outside the Territory
if sales are solicited from customers located inside the Territory.
7. Notice to Others. Employee hereby agrees that Purchaser may
disclose the provisions of this Agreement to any person or entity,
including without limitation one that at the time employs or is
considering employing Employee.
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8. Remedies. Employee acknowledges that any violation of this
Agreement may cause irreparable harm to Purchaser and that damages are
not an adequate remedy. Employee therefore agrees that Purchaser shall
be entitled to injunctive relief, including temporary, preliminary and
permanent injunctions, by an appropriate court in the appropriate
jurisdiction, enjoining, prohibiting and restraining Employee from the
continuance of any such violation, in addition to any monetary damages
which might occur by reason of the violation of this Agreement. The
remedies provided in this Agreement are cumulative and shall not exclude
any other remedies to which any party to this Agreement may be entitled
under this Agreement or applicable law, and the exercise of a remedy
shall not be deemed an election excluding any other remedy (any such
claim by the other party to this Agreement being hereby waived).
9. Modification. It is understood and agreed by the parties
hereto that should any portion, provision or clause of the foregoing be
deemed too broad to permit enforcement to its full extent, then it shall
be enforced to the maximum extent permitted by law, and the Employee
hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
10. Independent. The covenants and agreements set forth in this
Agreement shall be deemed, and shall be construed as, separate and
independent covenants and agreements, and should any part or provision
of such covenants or agreements be held invalid, void or unenforceable
by any court of competent jurisdiction, such invalidity, voidness or
unenforceability shall in no way render invalid, void or unenforceable
any other part or provision thereof or any separate covenant not
declared invalid, void or unenforceable; and this Agreement shall in
that case be construed as if the void, invalid or unenforceable
provisions were omitted.
11. Miscellaneous.
(a) Notice. All notices under this Agreement shall be in
writing and given either in person, by express overnight service (with
all fees prepaid) or sent by registered or certified mail, return
receipt requested, postage prepaid, to the address of the party to this
Agreement set forth below his or its signature or to such other address
as a party to this Agreement may furnish to the other as provided in
this sentence, and shall be deemed received on the date of personal
delivery, on the first business day after sent by express overnight
service or on the date of delivery or attempted delivery as indicated by
the return receipt if sent by registered or certified mail; and if
notice is given pursuant to the foregoing of a permitted successor or
assign, then notice shall thereafter be given pursuant to the foregoing
to such permitted successor or assign.
(b) Assignment; Binding Effect. No assignment, transfer or
delegation of any rights or obligations under this Agreement by a party
shall be made without the prior written consent of the other parties to
this Agreement (which shall not be unreasonably withheld.) This
Agreement shall be binding upon the parties to this Agreement and their
respective legal representatives, heirs, devisees, legatees or other
successors and assigns, and shall inure to the benefit of the parties to
this Agreement and their respective permitted legal representatives,
heirs, devisees, legatees or other permitted successors and assigns.
3
(c) Gender; Captions. Whenever the context so requires, the
singular number shall include the plural and the plural shall include
the singular, and the gender of any pronoun shall include the other
genders. Titles and captions of or in this Agreement are inserted only
as a matter of convenience and for reference and in no way affect the
scope of this Agreement or the intent of its provisions.
(d) Certain Definitions. The parties agree that "applicable
law" means all provisions of any constitution, statute, law, rule,
regulation, decision, order, decree, judgment, release, license, permit,
stipulation or the official pronouncement enacted, promulgated or issued
by any governmental authority or arbitrator or arbitration panel; that
"governmental authority" means any legislative, executive, judicial,
quasi-judicial or other public authority, agency, department, bureau,
division, unit, court or other public body, person or entity; and that
"including" and other words or phrases of inclusion, if any, shall not
be construed as terms of limitation, so that references to "included"
matters shall be regarded as non-exclusive, non- characterizing
illustrations.
(e) Entire Agreement. This Agreement constitutes the entire
agreement of the parties to this Agreement with respect to its subject
matter, supersedes all prior agreements, if any, of the parties to this
Agreement with respect to its subject matter, and may not be amended
except in writing signed by the party to this Agreement against whom the
change is being asserted.
(f) No Waiver. The failure of any party to this Agreement at
any time or times to require the performance of any provisions of this
Agreement shall in no manner affect the right to enforce the same; and
no waiver by any party to this Agreement of any provision (or of a
breach of any provision) of this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed or construed
either as a further or continuing waiver of any such provision or breach
or as a waiver of any other provision (or of a breach of any other
provision) of this Agreement.
(g) Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of
Minnesota.
(h) Counterparts. This Agreement may be executed in two or
more copies, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement or its terms to produce
or account for more than one of such copies.
DULY EXECUTED and delivered by the parties to this Agreement, under
seal, on _____________, 1995.
THE EMPLOYEE:
4
__________________________________(SEAL)
Address:
__________________________________
__________________________________
THE PURCHASER: EDITEK, INC.
By:________________________________
Name:______________________________
Title:_____________________________
Address:
__________________________________
__________________________________
5
EXHIBIT G
_______, 1995
EDITEK, Inc.
1238 Anthony Road
Burlington, NC 27215
Re: Sale of Certain Assets of MedTox Laboratories
Gentlemen:
This opinion letter is being delivered pursuant to paragraph
8.2 of that certain Asset Purchase Agreement (the "Purchase
Agreement") dated effective July 1, 1995 by and between MedTox
Laboratories, a Minnesota corporation ("Seller"), and EDITEK,
Inc., a Delaware corporation ("Purchaser"), in our capacity as
counsel to Seller in connection with the negotiation, execution
and delivery of the Purchase Agreement and the closing of the
transactions contemplated by the Purchase Agreement.
Capitalized terms used in this opinion letter and not
defined in it have the respective meanings given to those terms
in the Purchase Agreement.
In our capacity as such counsel, we have reviewed the
Purchase Agreement (including the exhibits and schedules
thereto), the Articles of Incorporation (as amended), Bylaws (as
amended), and minutes books of Seller and such other documents,
records, agreements and certificates and have made such inquiries
as we deemed appropriate. We have relied as to factual matters
upon a certificate of an officer of Seller, and we have no reason
to believe the facts stated therein are incorrect, incomplete or
misleading. In all examinations of such documents, we have
assumed the genuineness of signatures on original documents and
the conformity to original documents of all copies submitted to
us as certified, conformed or photographic copies, the legal
competence of natural persons and that the Seller Delivered
Agreements (as defined below) are enforceable against all parties
thereto (other than Seller). As to certificates or statements or
both of public officials, we have assumed that they have been
properly given and to be accurate.
Except as set forth in the following sentence, the opinions
set forth in this letter are based upon and limited to (i) the
laws of the State of Minnesota and (ii) the federal laws of the
United States of America, and we express no opinion herein
concerning the laws of any other jurisdiction.
, 1995
Page 2
Based upon the foregoing and subject to the qualifications
and limitations set forth herein, we are of the following
opinion:
The Purchase Agreement and any other agreements, instruments
and documents to be executed and delivered by Seller, pursuant to
the Purchase Agreement are hereinafter collectively referred to
as the "Seller Delivered Agreements").
The execution and delivery by Seller of the Seller Delivered
Agreements, the consummation by Seller of the transactions
contemplated by them and Seller's other compliance with or
performance under them have been duly authorized by all necessary
corporate action on the part of Seller, including approval by
Seller's Board of Directors on ________, 1995 and approval by
Seller's shareholders on ________, 1995.
This opinion letter is delivered in connection with the
consummation of the transactions contemplated in the Purchase
Agreement, may be relied upon only by you and your counsel in
connection therewith, may not be relied upon by you for any other
purpose or by anyone else for any purpose, and may not be quoted,
published or otherwise disseminated without our prior written
consent.
Very truly yours,
HENSON & EFRON, P.A.