1
EXHIBIT 2.1
AGREEMENT FOR PURCHASE
AND SALE OF STOCK
This Stock Purchase Agreement, dated as of February 24, 1997
(this "Agreement"), is made by and among Physicians Clinical Laboratory, Inc.,
a Delaware corporation ("PCL"), Medical Science Institute, Inc. a California
corporation (the "Company"), and Nu-Tech Bio-Med, Inc., a Delaware corporation
("Nu-Tech").
R E C I T A L S:
A. WHEREAS, Nu-Tech is the beneficial and record owner
of all the issued and outstanding shares of capital stock of the Company (the
"Shares"); and
B. WHEREAS, Nu-Tech desires to sell to PCL, and PCL
desires to purchase from Nu-Tech, all of the Shares upon the terms and
conditions set forth in this Agreement; and
C. WHEREAS, on November 8, 1996, PCL filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code, 11 U.S.C. Section
Section 101-1330 (the "Bankruptcy Code") in the United States Bankruptcy
Court, Central District of California (the "Bankruptcy Court"); and
D. WHEREAS, PCL is continuing in possession of its
property and is operating and managing its business, as a debtor in possession,
pursuant to Section Section 1107 and 1108 of the Bankruptcy Code; and
E. WHEREAS, pursuant to an order (the "Court Order") of
the United States Bankruptcy Court for the Central District of California, Los
Angeles Division (the "Bankruptcy Court"), dated January 29, 1997, the sale of
the Shares by Nu-Tech to PCL has been approved by the Bankruptcy Court, and PCL
has been authorized, inter alia, to execute such documents as may be necessary
or appropriate to implement and effectuate the terms and conditions of the sale
of the Shares; and
WHEREAS, to supplement the Court Order, without in any way
diminishing or limiting the effect of the Court Order, the parties hereto
desire more fully to set forth their respective rights in connection with the
sale of the Shares.
F. NOW, THEREFORE, in consideration of the mutual
promises and subject to the terms and conditions herein set forth, the parties
hereto hereby agree as follows:
2
SECTION I DEFINITIONS
For purposes of this Agreement:
1.1 "Adjustment Amount" shall mean the amount equal to
the amount loaned or contributed by Nu-Tech to the Company during the period
from December 24, 1996 through the Closing Date, including interest paid or
accrued by Nu-Tech during the period from December 2, 1996 until the Closing
Date on that certain debt of up to $2,500,000.00 borrowed by it to finance its
initial purchase of the Company.
1.2 "Adverse Consequences" shall mean all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, Orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
Liens, losses, expenses, and fees, including court costs and reasonable
attorney's fees and expenses.
1.3 "Ancillary Agreements" shall mean the Note, the
Security Agreement, and the Escrow Agreement.
1.4 "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.5 "Governmental Authority" shall mean any government or
political subdivision, whether federal, state, local or foreign, or any agency
or instrumentality of any such government or political subdivision, or any
federal state, local or foreign court or arbitrator.
1.6 "Investment" shall mean any equity interest, directly
or indirectly, in any Person in excess of 5% of the total equity ownership of
such Person.
1.7 "Law" shall mean any law, statute, code, ordinance,
regulation or other requirement of any Governmental Authority.
1.8 "Lien" shall mean any mortgage, lien, pledge,
encumbrance, security interest, claim, charge, defect in title or other
restriction.
1.9 "1933 Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder, all as in effect
from time to time.
1.10 "1934 Act" shall mean the Securities and Exchange Act
of 1934, and the rules and regulations of the SEC thereunder, all as in effect
from time to time.
1.11 "Option" shall mean any option, warrant, call,
convertible or exchangeable security, right of conversion or exchange,
subscription, unsatisfied preemptive right, other agreement or right of similar
nature, whether oral or written.
1.12 "Order" shall mean any order, judgment, injunction,
award, decree, ruling, charge or writ of any Governmental Authority.
3
1.13 "Ordinary Course of Business" shall mean the ordinary
course of business consistent with past custom and practice (including with
respect to quantity and frequency).
1.14 "Person" shall mean any individual, sole
proprietorship, partnership, corporation, unincorporated society or
association, trust, or other entity.
1.15 "Subsidiary" shall mean any Person of which at least
a majority of the outstanding shares or other equity interests having ordinary
voting power for the election of directors or comparable managers of such
Person, whether or not at the time the shares of any other class or classes or
other equity interests of such Person shall have or might have voting power by
reason of the happening of any contingency, are at the time owned, directly or
indirectly, by the Company, by one or more Subsidiaries, or by the Company and
one or more Subsidiaries.
SECTION II SALE AND PURCHASE OF STOCK
2.1 Sale and Purchase of Stock. Subject to Section 2.3
hereof, at the Closing, (a) Nu-Tech shall sell, assign and transfer to PCL all
right, title and interest in and to the Shares, (b) Nu-Tech shall deliver or
cause to be delivered to PCL one or more stock certificates representing the
Shares, with duly executed stock powers attached in proper form for transfer,
(c) PCL shall purchase all of the Shares, and (d) PCL shall pay and deliver to
Nu-Tech the consideration required by Section 2.2 hereof.
2.2 Consideration. In full consideration for the Shares, PCL
shall:
2.2.1 pay an aggregate amount in cash equal to (a)
$2,220,874.05 plus (b) the Adjustment Amount; and
2.2.2 issue and deliver a Promissory Note in
substantially the form attached hereto as Exhibit A (the "Note") to Nu-Tech in
the principal amount of Five Million $5,000,000.00.
2.3 Payments at Closing. At the Closing:
2.3.1 On or prior to the Closing Date, PCL shall
(i) transfer an aggregate amount in cash equal to (a) $2,220,874.05 plus (b)
the Adjustment Amount (the "Escrow Amount") by bank wire transfer of
immediately available funds directly into the escrow account to be established
and administered in accordance with that certain Escrow Agreement, to be
entered into among the parties hereto (the "Escrow Agreement"), and (ii)
transfer the Note to the escrow agent in accordance with the Escrow Agreement.
2.3.2 On or prior to the Closing Date, Nu-Tech
shall deliver or cause to be delivered the stock certificates representing the
Shares, with duly executed stock powers attached in proper form for transfer,
to the escrow agent in accordance with the Escrow Agreement.
3
4
2.3.3 At the Closing, at such time as the
deliveries described in paragraphs 2.3.1 and 2.3.2, above, have been made or
caused to be made by PCL and Nu-Tech, the following events shall occur
simultaneously: (i) all liens set forth on Schedule 4.4 shall be released, in
the manner set forth in the Escrow Agreement, (ii) the escrow agent shall
deliver to Nu-Tech the Escrow Amount and the Note, and (iii) the escrow agent
shall deliver to PCL the stock certificates representing the Shares, with duly
executed stock powers attached in proper form for transfer
SECTION III CLOSING AND DELIVERIES
3.1 Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Xxxxx,
Day, Xxxxxx & Xxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000, on the date agreed to by the parties hereto (the "Closing Date").
3.2 Deliveries by Nu-Tech. Subject to Section 2.3 hereof,
at the Closing, Nu-Tech shall deliver or cause to be delivered to PCL the
following items:
3.2.1 one or more certificates representing the
Shares, accompanied by duly executed stock powers in proper form for transfer
and in a form satisfactory to PCL's counsel; and
3.2.2 such additional consents, releases,
authorizations, transfers and other documents as may be reasonably requested by
PCL to carry out the provisions of this Agreement and to fully accomplish their
purpose and intent.
3.3 Deliveries by PCL. Subject to Section 2.3 hereof, at the
Closing, PCL shall deliver or cause to be delivered the following items:
3.3.1 cash in the amounts as set forth in Section
2.2; and
3.3.2 the Note in substantially the form attached as
Exhibit A, as executed by PCL; and
3.3.3 the Security Agreement in substantially the
form attached as Exhibit B (the "Security Agreement"), as executed by PCL.
SECTION IV REPRESENTATIONS AND WARRANTIES OF NU-TECH AND THE COMPANY
Each of Nu-Tech and the Company jointly and severally represent and warrant to
PCL that:
4.1 Organization, Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California and has the corporate power and authority to
own, operate and lease its properties and to carry on its business as presently
being conducted. Nu-Tech is a
4
5
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to own,
operate and lease its properties and to carry on its business as presently
being conducted. Each of the Company and Nu-Tech is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of
its business or location of its properties makes such qualification necessary.
4.2 Validity of Agreement. This Agreement constitutes the
legal, valid and binding obligations of each of Nu-Tech and the Company,
enforceable against each of Nu-Tech and the Company in accordance with its
terms. Each of the Company and Nu-Tech has the corporate power and authority
to enter into this Agreement and to undertake and perform fully the
transactions contemplated hereby or thereby. All necessary corporate action
has been taken by and on behalf of each of the Company and Nu-Tech with respect
to the authorization, execution, delivery and performance of this Agreement.
4.3 No Breach. To the best knowledge of Nu-Tech and the
Company, neither the execution and delivery of this Agreement by the Company
and Nu-Tech nor the performance of by either of its obligations hereunder or
thereunder will (a) violate, conflict with or result in a breach of any Law or
Order or the Articles of Incorporation or Bylaws of the Company or Nu-Tech, (b)
except as set forth in Schedule 4.7, violate, conflict with or result in a
breach or termination of, or otherwise give any contracting party additional
rights or compensation under, or the right to terminate or accelerate, or
constitute (with notice or lapse of time, or both) a default under the terms
of, any note, deed, lease, instrument, security agreement, mortgage,
commitment, contract, agreement, license or other instrument or oral
understanding to which the Company or Nu-Tech is a party or by which any of the
assets or properties of the Company are bound, or (c) result in the creation or
imposition of any Lien with respect to, or otherwise have an adverse effect
upon, the Shares or any of the properties or assets of the Company.
4.4 Capitalization. The authorized capital stock of the
Company consists of 1,000,000 shares of common stock (the "Common Stock"), of
which 1,000 shares are issued and outstanding, all of which were validly issued
and are fully paid and nonassessable. Nu-Tech (a) is the record and beneficial
owner of all of the Shares; and (b) has good and marketable title to the Shares
free and clear of any Lien or Option. Delivery of certificates representing
the Shares will transfer good and valid title to the Shares to PCL, free and
clear of all liens and encumbrances except as set forth on Schedule 4.4.
4.5 Options or Other Rights. There are no authorized or
outstanding Options providing for or relating to the issuance, transfer or
voting of any Shares or any unissued securities of the Company or creating
rights in any person to purchase or otherwise acquire and Shares or any
unissued securities of the Company.
4.6 Subsidiaries and Investments. The Company has no
Subsidiaries and has no Investments.
5
6
4.7 Approvals and Consents. Except as set forth in Schedule
4.7, to the best knowledge of Nu-Tech and the Company, no consent, approval or
authorization of or waiver by, or filing with, any third party or Governmental
Authority is required in connection with the execution, delivery and
performance by the Company or Nu-Tech of this Agreement or the consummation of
the transactions contemplated hereby. Except as set forth in Schedule 4.7, to
the best knowledge of Nu-Tech and the Company, the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not, with or without the giving of notice or the
passage of time: (i) violate any Law applicable to the Company or Nu-Tech; (ii)
violate any Order applicable to the Company or Nu-Tech; (iii) conflict with any
provision of the Articles of Incorporation or Bylaws of the Company; (iv)
conflict with, result in the material breach of any provision of, result in the
modification or termination of or impose any lien or constitute a default under
any contract or other agreement of any private or governmental license or
franchise held by, or any other agreement or instrument to which the Company is
a party, or by which the Company or any of its properties or assets is bound;
or (v) conflict with, result in the breach of any provision of, result in the
modification or termination of or impose any lien or constitute a default under
any contract or other agreement of any private or governmental license or
franchise held by, or any other agreement or instrument to which Nu-Tech is a
party.
4.8 Financial Statements; No Undisclosed Liabilities. Prior
to the Closing Date the Company will deliver to PCL a copy of (i) the audited
balance sheets of the Company as of September 30, 1996, and the related audited
statements of operations and cash flows for the nine months ended September 30,
1996, together with the notes thereto and the reports thereon of the Company's
independent auditors, and the other financial information included therewith,
and (ii) the unaudited balance sheet of the Company as of November 18, 1996, as
compiled by the independent certified public accounting firm of Ernst & Young
LLP (with (i) and (ii) collectively referred to herein as the "Financial
Statements"). The Financial Statements were prepared from the books and records
of the Company, are accurate, complete and correct in all material respects,
have been prepared in accordance with generally accepted accounting principles,
consistently applied, and fairly present the financial position and the results
of operations of the Company as of the dates thereof and for the periods
covered thereby. The Company has no liabilities or obligations of any nature
(contingent, absolute, direct, indirect, matured, unmatured, accrued or
otherwise) except (a) liabilities which are fully reflected or reserved against
in the Financial Statements (which reserves are appropriate and reasonable) or
disclosed in the related notes; (b) liabilities incurred in the ordinary course
of business and consistent with past practice since the date of the Financial
Statements; and (c) liabilities set forth in Schedule 4.8 attached hereto. In
addition, except as set forth in Schedule 4.8, there have been no transactions
between either of J. Xxxxxx Xxxxxxxxxx or Nu-Tech, on the one hand, and the
Company, on the other hand.
4.9 No Material Adverse Changes. Except as set forth in
Schedule 4.9, from November 18, 1996 to the date of this Agreement, there has
been no material adverse change in the assets or liabilities, the financial
condition, the results of operations or the prospects of the Company.
6
7
4.10 Agreements, Etc.. Except as set forth in Schedule 4.10,
the Company is not a party to or bound by any material agreement, contract,
lease, arrangement, commitment, warranty or instrument, whether written or
oral, express or implied. All of such contracts, agreements, arrangements,
commitments and instruments set forth in Schedule 4.10 (or required to be set
forth in Schedule 4.10) are in full force and effect, and the Company has not
received any notice claiming that the Company has committed any such default or
breach or indicating the desire or intention of any party thereto to amend,
modify, rescind or terminate the same, and, to the best knowledge of Nu-Tech
and the Company, there exists no default or breach thereunder by any party
thereto.
4.11 Licenses and Permits. The Company holds all licenses,
permits, orders, approvals and other authorizations of any Governmental
Authority required in order to permit the Company to conduct its business as
presently conducted or own or use of any of its properties or assets. Except
as set forth in Schedule 4.11, the Company is in compliance with the terms of
such licenses, permits, orders, approvals and authorizations and there is no
pending or, to the best knowledge of Nu-Tech, threatened termination,
expiration or revocation thereof. Except for the licenses, permits, orders,
approvals and authorizations set forth and described in Schedule 4.11, to the
best knowledge of Nu-Tech and the Company, no other licenses, permits, orders,
approvals or authorizations are required in order to permit the Company to
conduct its business as presently conducted or own or use of any of its
properties or assets.
4.12 Intellectual Property. Schedule 4.12 sets forth an
accurate and complete list of all letters patents, patents, patent
applications, patent licenses, software licenses, know-how licenses, trade
names, brand names, trademarks, copyrights, service marks, trademark
registrations and applications, service xxxx registrations and applications and
copyright registrations and applications and all other intangible property
rights owned or used by the Company in the operation of its business
(collectively the "Intellectual Property"). Except as set forth in Schedule
4.12, the Company, without payment of any license fee, royalty or similar
charge, owns the entire right, title and interest in and to the Intellectual
Property and the trade secrets, know-how and technology used in the operation
of its business, and the Company has the exclusive right to use and license the
same without infringement or violation of the rights of others. To the best
knowledge of Nu-Tech and the Company, there are no pending or threatened
proceedings or litigation or other adverse claims affecting or challenging the
Intellectual Property. To the best knowledge of Nu-Tech, no Person is
infringing the Intellectual Property.
4.13 Litigation and Orders. Except as set forth on Schedule
4.13, there is no claim, litigation, action, suit, proceeding, arbitration,
investigation or inquiry, administrative or judicial, at law or in equity,
before or by any Governmental Authority pending or threatened against or
affecting the Company or any of its properties or assets, including, without
limitation, any seeking to enjoin or prevent the consummation of the
transactions contemplated hereby, or otherwise claiming this Agreement or the
transactions contemplated hereby or the consummation thereof are improper. To
the best knowledge of Nu-Tech and the Company, there is no basis upon which any
such claim, litigation, action, suit, proceeding, investigation or inquiry
could reasonably be
7
8
brought or initiated. Except as set forth on Schedule 4.13, the Company and
its properties and assets are not subject to any Order. To the best knowledge
of Nu-Tech and the Company, the Company is not in default under any Order.
4.14 Taxes. Except as set forth on Schedule 4.14, to the
best knowledge of Nu-Tech and the Company, (i) all federal, state, local and
foreign tax returns and reports that are or were required to be filed before
the Closing by, or with respect to, the Company have been duly filed or caused
to be filed, which returns were prepared in conformity with such applicable
Law, or a filing extension from the appropriate Governmental Authority has been
obtained, (ii) all federal, state, local or foreign income, franchise, sales,
use, excise and other taxes and assessments shown on such returns and reports,
or on any deficiency notice, 30-day letter, or similar notice, payable by or
due from the Company have been timely paid, and there is no basis for any
assessment, deficiency notice, 30-day letter, or similar notice with respect to
income, franchise, sales, use, excise or other taxes to be issued to the
Company with respect to any taxable period ending on or before the Closing
Date, (iii) the properties and assets of the Company are not subject to any
Lien, whether or not perfected, for any federal, state, local or foreign taxes
or assessments or similar government charges, and (iv) the Company is not a
party to any pending action or proceeding by any Governmental Authority for
assessment or collection of taxes and no claim for assessment or collection of
taxes has been asserted against them.
4.15 Insurance. The Company maintains policies of life,
fire, workmen's compensation, product liability, general liability and other
forms of insurance consistent with industry custom, all of which policies are
in full force and effect, and the Company is not in default under any of them.
4.16 Accounts Receivable. All trade and other accounts
receivable of the Company are valid and bona fide obligations due to the
Company and are collectible in the Ordinary Course of Business, net of any
allowance for doubtful accounts reflected on the Company's balance sheet as of
November 18, 1996.
4.17 Real Property and Leases. With respect to the real
properties owned by the Company, the Company has good and marketable title to
all such real properties, free and clear of all Liens except (i) Liens set
forth in Schedule 4.17 and (ii) Liens for current taxes, assessments or other
governmental charges not yet due and delinquent. With respect to the real
properties leased by the Company ("Leases"), each such Lease is valid and
existing and, to the best knowledge of the Company and Nu-Tech, no event or
condition exists which constitutes, or after notice or lapse of time or both
would constitute, a default under any Lease. The leasehold interest of the
Company in each of the Leases is subject to no Lien.
4.18 Title to Assets and Properties. The Company has good
and marketable title to or leasehold interests in all of its tangible assets
and properties, free and clear of all Liens, except (i) Liens set forth in
Schedule 4.18 and (ii) Liens for current taxes, assessments or other
governmental charges not yet due and delinquent. The assets and properties
owned or leased by the Company are in good condition and
8
9
repair (subject to normal wear and tear consistent with the age of the assets
and properties) and are sufficient for the conduct of the Company's business as
now conducted.
4.19 Customers and Suppliers The Company is not involved in
any claim, dispute or controversy with any of its customers or any of its
suppliers which, individually or in the aggregate, could reasonably be
anticipated to have a material adverse effect upon the Company's assets,
properties, liabilities, financial condition, results of operations, business
or prospects.
4.20 Compliance With Laws. Except as set forth in Schedule
4.20, the Company has complied with since November 18, 1996, and the Company is
not currently in violation of or in default under, any Law or Order applicable
to the Company or to any of its businesses, assets, properties or employees the
violation of which could reasonably be anticipated to have a material adverse
effect upon the Company's assets, properties, liabilities, financial condition,
results of operations, business or prospects.
4.21 Employee Benefit Plans; ERISA. Schedule 4.21 sets forth
a complete list of all employee benefit plans, as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), life insurance, hospitalization, medical and dental plans,
severance, executive compensation, bonus, deferred compensation, pension,
retirement, profit sharing, excess benefit, stock purchase and option plans
(including multi-employer and multiple employer plans), and all other plans,
arrangements or practices whether written or oral, qualified or nonqualified,
sponsored, maintained, contributed to or required to be contributed to by the
Company or any trade or business whether or not incorporated that together with
the Company is treated as a "single employer" under Code Section 414(b), (c),
(m) or (o) and the rules and regulations promulgated thereunder (referred to as
"ERISA Affiliate") (each such plan is hereinafter referred to as an "Employee
Benefit Plan"). Each Employee Benefit Plan has been operated and administered
in accordance with its provisions since November 18, 1996, and each Employee
Benefit Plan is currently in compliance in all respects with all applicable
Laws governing each such plan including but not limited to ERISA, the Code, and
COBRA. There have been no non-exempt "prohibited transactions" within the
meaning of Section 4975 of the Code or Section 406 of ERISA. Neither the
Company nor any ERISA affiliates has sponsored, ever maintained, or contributed
to an Employee Benefit Plan that is subject to Title IV of ERISA. Each
Employee Benefit Plan intended to be "qualified" within the meaning of Section
401(a) of the Code is so qualified and the trusts maintained thereunder are
exempt from taxation under Section 501(a) of the Code. No Employee Benefit
Plan provides benefits, including without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company or any ERISA affiliate beyond their retirement or other termination of
service other than coverage mandated by COBRA. There is no pending or
threatened assessment, complaint, proceeding, voluntary compliance application
or investigation of any kind in any Governmental Authority with respect to any
Employee Benefit Plan. All benefits, expenses and other amounts due and
payable under any Employee Benefit Plan and all
9
10
contributions, transfers, or payments required to be made to any Employee
Benefit Plan, have been paid or made, accrued, and booked.
4.22 Disclosure. Neither Nu-Tech nor the Company has
withheld from PCL any material facts relating to the assets, properties,
liabilities, business, operations, financial condition, results of operations
or prospects of the Company. Neither this Agreement (including the Exhibits
and Schedules hereto) nor any other agreement, document, certificate or written
statement furnished to PCL by or on behalf of Nu-Tech in connection with this
Agreement or the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading.
PCL acknowledges that it has received a copy of the First Amended Disclosure
Statement and Plan of Reorganization for Medical Science Institute, filed with
the Bankruptcy Court on October 18, 1996 by Medical Science Institute, Inc.,
the predecessor company to the Company,
SECTION V REPRESENTATIONS AND WARRANTIES OF PCL
PCL represents and warrants to Nu-Tech that:
5.1 Investment Intent. The Shares are being purchased for
its own account and not with the view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the 1933 Act.
5.2 Validity of Agreement. This Agreement constitutes, and
the Ancillary Agreements, when executed and delivered, will constitute, the
legal, valid and binding obligation of PCL, enforceable against PCL in
accordance with their terms. PCL has the corporate power and authority to
enter into this Agreement and the Ancillary Agreements and to undertake and
perform fully the transactions contemplated hereby or thereby. All necessary
corporate action has been taken by and on behalf of PCL with respect to the
authorization, execution, delivery and performance of this Agreement and the
Ancillary Agreements.
5.3 No Breach. Neither the execution and delivery of this
Agreement or the Ancillary Agreements by PCL nor the performance of its
obligations hereunder or thereunder will (a) violate, conflict with or result
in a breach of any Law or Order or the Certificate of Incorporation or Bylaws
of PCL or (b) result in the creation or imposition of any Lien with respect to,
or otherwise have an adverse effect upon, the capital stock or any of the
properties or assets of PCL.
5.4 No Untrue Statements. PCL's (a) Annual Report on Form
10-K for the year ended February 29, 1996, (b) Quarterly Report on Form 10-Q
for the three month period ended May 31, 1996, and (c) other reports and
registration statements filed with the SEC since February 29, 1996, as of their
respective dates, complied with the 1934 Act and the 1933 Act, as the case may
be, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein
10
11
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
SECTION VI PRE-CLOSING COVENANTS
6.1 General. Each of the parties hereto shall use its
reasonable efforts to take all action and to do all things necessary, proper,
or advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements.
6.2 Operations of Business; Conduct. Except as provided by
this Agreement or as PCL may otherwise consent in writing, prior to the Closing
Date, Nu-Tech shall not and shall not cause or permit the Company to, and the
Company shall not, (i) engage in any practice, take any action, or enter into
any transaction outside the Ordinary Course of Business, (ii) engage in any
practice, take any action, enter into any transaction or permit any event to
occur which would result in any of the representations and warranties contained
in this Agreement not being true and correct immediately after such transaction
has been entered into or consummated or such event has occurred.
6.3 Full Access. Nu-Tech shall permit and shall cause the
Company to permit, and the Company shall permit, representatives of PCL to have
access during reasonable times, and in a manner so as not to unreasonably
interfere with the normal business operations of the Company, to all premises,
properties, personnel, books, records (including tax records), contracts and
documents of or pertaining to the Company; provided, however, such access is
reasonably necessary to perform its due diligence review in connection with
this Agreement and the transactions contemplated hereby.
SECTION VII POST-CLOSING COVENANTS
7.1 Further Assurances. At the request of PCL, Nu-Tech
will cause the Company to promptly execute and deliver to PCL all such further
assignments, endorsements, and other documents as PCL may reasonably request in
order to consummate the transactions contemplated by this Agreement. At the
request of the Nu-Tech, PCL will execute and deliver to Nu-Tech all such
further documents as Nu-Tech may reasonably request in order to consummate the
transactions contemplated by this Agreement.
SECTION VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PCL
8.1 The obligations of PCL to consummate the transactions
contemplated at the closing are subject to the fulfillment on the Closing Date
each of the conditions set forth in this Section 8. PCL may waive any or all
of these conditions in whole or in part in writing without prior notice;
provided, however, that no such waiver of a condition shall constitute a waiver
by PCL of any of its other rights or remedies if Nu-Tech shall be in default of
any of representations, warranties or covenants under this Agreement.
11
12
8.2 Qualification Under State Securities Laws. All
registrations, qualifications, permits and approvals, if any, required under
applicable state securities laws for the lawful execution and delivery of this
Agreement and the offer, sale and delivery of the Shares shall have been
obtained.
8.3 No Stay of the Court Order. No stay of the Court Order
shall be in effect.
8.4 Deliveries. Nu-Tech shall have delivered all of the
items required by Section 3.2 of this Agreement.
8.5 Representations, Warranties and Covenants. The
representations and warranties set forth in Section 4 shall be true and correct
at and as of the Closing. Each of Nu-Tech and the Company shall have performed
or complied with all covenants and agreements contemplated by this Agreement to
be performed by it at or prior to the Closing.
8.6 Third-Party Consents. Nu-Tech and the Company shall have
obtained all consents from third parties that may be required in connection
with the consummation of the transactions contemplated by this Agreement.
8.7 No Material Adverse Change. There shall not have been
any material adverse change in or any material loss or damage to any of the
assets, business, financial condition, results of operations or prospects of
the Company.
8.8 No Actions. There shall not be any Order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement. No action, suit or proceeding by any
Governmental Authority, or by any private third party, seeking to restrain the
transactions contemplated by this Agreement or its consummation, shall have
been threatened or instituted and remain pending on or before the Closing Date.
SECTION IX CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NU-TECH
9.1 The obligations of Nu-Tech to consummate the
transactions contemplated at the closing are subject to the fulfillment on the
Closing Date each of the conditions set forth in this Section 9. Nu-Tech may
waive any or all of these conditions in whole or in part in writing without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by Nu-Tech of any of its other rights or remedies if PCL
shall be in default of any of representations, warranties or covenants under
this Agreement.
9.2 Qualification Under State Securities Laws. All
registrations, qualifications, permits and approvals, if any, required under
applicable state securities laws for the lawful execution and delivery of this
Agreement and the offer, sale and delivery of the Shares shall have been
obtained.
12
13
9.3 No Stay of the Court Order. No stay of the Court Order
shall be in effect.
9.4 Representations, Warranties and Covenants. The
representations and warranties set forth in Section 5 shall be true and correct
at and as of the Closing. PCL shall have performed or complied with all
covenants and agreements contemplated by this Agreement to be performed by it
at or prior to the Closing.
9.5 No Actions. There shall not be any Order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement. No action, suit or proceeding by any
Governmental Authority, or by any private third party, seeking to restrain the
transactions contemplated by this Agreement or its consummation, shall have
been threatened or instituted and remain pending on or before the Closing Date.
SECTION X INDEMNIFICATION AND SURVIVAL
10.1 Indemnification by Nu-Tech. Subject to the terms and
conditions of this Section 10, in the event that Nu-Tech or the Company
breaches any of their covenants contained herein, or there is any inaccuracy in
any representations or warranties made by Nu-Tech or the Company, then Nu-Tech
shall indemnify, defend and hold harmless PCL, and any agent, employee,
affiliate, successor or nominee of PCL, or the officers, directors,
shareholders, subsidiaries, affiliates, employees and agents of each of the
aforesaid, from and against any Adverse Consequences suffered as a result of or
relating to (i) any representation or warranty of Nu-Tech or the Company
contained in this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or to be furnished by Nu-Tech or the Company under this
Agreement being untrue or inaccurate, and (ii) any breach of or failure by
Nu-Tech or the Company to perform any of their covenants or agreements
contained in this Agreement.
10.2 Indemnification by PCL. Subject to the terms and
conditions of this Section 10, in the event PCL breaches any of its covenants
contained herein, or there is any inaccuracy in any representations or
warranties made by PCL, then PCL shall indemnify, defend and hold harmless
Nu-Tech, and any agent, employee, affiliate, successor or nominee of Nu-Tech,
or the officers, directors, shareholders, subsidiaries, affiliates, employees
and agents of each of the aforesaid, from and against any Adverse Consequences
Nu-Tech shall suffer as a result of or relating to (i) any representation or
warranty of PCL contained in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by PCL under this
Agreement being materially untrue or inaccurate, and (ii) any breach of or
failure by PCL to perform any of its covenants or agreements contained in this
Agreement.
10.3 Direct Claims. In the event Nu-Tech or PCL (the
"Claimant") desires to make a claim for indemnification pursuant to Sections
10.1 or 10.2 hereof against the other (the "Indemnitor"), the Claimant shall
give prompt written notice of the claim to the Indemnitor, describing, in
reasonable detail, the nature of the claim. Failure to give such notice shall
not affect the indemnification provided hereunder except to the extent
13
14
that such failure shall have actually and materially prejudiced the Indemnitor
as a result thereof.
10.4 Third Party Claims.
10.4.1 If any third party shall notify one of
Nu-Tech or PCL (the "Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for indemnification against
Nu-Tech or PCL (the "Indemnifying Party") under this Section 10, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing. Failure to give such reasonable notice shall not affect the
indemnification provided hereunder except to the extent that such failure shall
have actually and materially prejudiced the Indemnitor as a result thereof.
10.4.2 Any Indemnifying Party will have the right to
assume and thereafter conduct at its own expense the defense of the Third Party
Claim with counsel of his or its choice, which shall be reasonably satisfactory
to the Indemnified Party; provided, however, that the Indemnifying Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of each
Indemnified Party. If the Indemnifying Party assumes the defense then the
Indemnified Party may participate in, but not control, any such defense or
settlement, at its sole cost and expense.
10.4.3 In no event will the Indemnified Party
consent to the entry of any judgment or enter into any settlement with respect
to a Third Party Claim without the prior written consent of each of the
Indemnifying Parties, which consent shall not be unreasonably withheld.
10.5 Survival of Representations and Warranties. All of the
representations and warranties of Nu-Tech, the Company and PCL contained in
Sections 4 and 5 above shall survive the Closing hereunder and continue in full
force and effect for a period of six months thereafter. Notwithstanding
anything to the contrary herein, no claim for indemnification under this
Section 10 shall be made with respect to any representation or warranty herein
after the survival period for such representation or warranty.
10.6 Certain Limitations on Indemnification. No claim for
indemnification under this Section 10 may be made unless such claim is,
individually or in the aggregate, in excess of $75,000.00. In the event that
the independent Directors of PCL determine in good faith that a claim under
this Section 10 in an amount in excess of $75,000.00 exists, such Directors may
cause PCL to bring such claim irrespective of the vote of any other Directors
of PCL to the contrary; provided, however, that the liability of Nu-Tech under
this Section 10.6 shall be limited to the consideration paid to Nu-Tech under
this Agreement; and provided further that such consideration shall be reduced
by any amounts not collected by Nu-Tech under the Note, it being understood
that the receipt of the New Common Stock (as defined in that certain Second
Amended Joint Plan of Reorganization of Physicians Clinical Laboratory, Inc.
and Its Affiliated Debtors (the
14
15
"Plan"), filed with the Bankruptcy Court on February 7, 1997) by Nu-Tech
pursuant to the Plan shall constitute payment of the Note in full.
SECTION XI TERMINATION
11.1 Termination of Agreement. This Agreement may be
terminated as provided below:
11.1.1 The parties may terminate this Agreement by
mutual written consent at any time prior to the Closing;
11.1.2 PCL may terminate this Agreement by giving
written notice to Nu-Tech at any time prior to the Closing (i) in the event
that Nu-Tech or the Company have breached any of their covenants contained in
this Agreement or there is any inaccuracy in the representations or warranties
made by Nu-Tech or the Company in this Agreement, PCL has notified Nu-Tech of
the breach or inaccuracy, and the breach or inaccuracy has continued without
cure for a period of 10 days after the notice of breach or inaccuracy or (ii)
if the Closing shall not have occurred on or before March 31, 1997 by reason of
the failure of any condition precedent under Section 8 hereof (unless the
failure results primarily from PCL breaching any representation, warranty, or
covenant contained in this Agreement); and
11.1.3 Nu-Tech may terminate this Agreement by
giving written notice to PCL at any time prior to the Closing (i) in the event
PCL has breached any of its covenants contained in this Agreement or there is
any inaccuracy in the representations or warranties made by PCL contained in
this Agreement, Nu-Tech has notified PCL of the breach or inaccuracy, and the
breach or inaccuracy has continued without cure for a period of 10 days after
the notice of breach or inaccuracy or (ii) if the Closing shall not have
occurred on or before March 31, 1997 by reason of the failure of any condition
precedent under Section 9 hereof (unless the failure results primarily from
Nu-Tech or the Company or parties under their control breaching any
representation, warranty, or covenant contained in this Agreement).
11.2 Effect of Termination. If any party terminates this
Agreement pursuant to Section 11.1 above, all rights and obligations of the
parties hereunder shall terminate without any liability of any party to any
other party.
SECTION XII MISCELLANEOUS
12.1 Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereto, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representation, warranty, covenant or agreement contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach. The waiver
by PCL, the Company or Nu-Tech of any of the conditions precedent to its or
their respective obligations under this Agreement shall not preclude it or them
from seeking redress for breach of this Agreement.
15
16
12.2 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given if
it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to PCL:
Physicians Clinical Laboratory, Inc.
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
With a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxx Xxxxx, Esq.
If to the Company:
Medical Science Institute, Inc.
000 Xxxxx Xxx Xxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: _______________________
If to Nu-Tech:
Nu-Tech Bio-Med, Inc.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxx Xxxxxxxxxx
With a copy to:
Xxxxxxxxx & XxXxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
12.3 Fees and Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, each of the parties hereto
shall pay its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
thereby.
16
17
12.4 Binding Effect; Benefits. This Agreement shall inure to
the benefit of and shall be binding upon the parties hereto and their
respective heirs, legal representatives, successors and assigns. Nothing in
this Agreement, expressed or implied, is intended to or shall confer on any
person other than the parties hereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
12.5 Governing Law. The validity, performance and
enforcement of this Agreement shall be governed by the internal, substantive
laws of the State of California.
12.6 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
12.7 Entire Agreement; Amendments. This Agreement (including
the documents referred to herein) constitutes the entire agreement among the
parties and supersedes any prior understandings, agreements, or representations
by or among the parties, written or oral, to the extent they have related in
any way to the subject matter hereof. This Agreement may not be amended or
terminated orally, and may only be amended or terminated by a writing signed by
the party against whom such change or termination is sought.
12.8 Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean "including without limitation".
12.9 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
12.10 Headings and Recitals. The section headings and
recitals contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.
12.11 Counterparts. This Agreement may be executed
concurrently in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
17
18
IN WITNESS WHEREOF, the parties hereto have executed or caused
this Agreement to be executed as of the day and year first above written.
NU-TECH BIO-MED, INC.
/S/ J. XXXXXX XXXXXXXXXX
------------------------------------
By: J. Xxxxxx Xxxxxxxxxx
Title: Chairman of the Board,
President and
Chief Executive Officer
PHYSICIANS CLINICAL LABORATORY, INC.
/S/ XXXX X. XXXXXX
------------------------------------
By: Xxxx X. Xxxxxx
Title: Chairman of the Board
MEDICAL SCIENCE INSTITUTE, INC.
/S/ J. XXXXXX XXXXXXXXXX
------------------------------------
By: J. Xxxxxx Xxxxxxxxxx
Title: President
18
19
SCHEDULE 4.3
A. NU-TECH BIO-MED, INC.
NONE
B. MSI
NONE
20
SCHEDULE 4.4
LIENS UPON STOCK OF MSI
1. LIEN IN FAVOR OF XXXXXXX XXXXXXXXX TO SECURE A LOAN IN THE PRINCIPAL
AMOUNT OF $2,000,000. LOAN TO BE REPAID OUT OF SALE OF MSI PROCEEDS AND
LIEN TO BE TERMINATED AT CLOSING.
21
SCHEDULE 4.7
CONSENTS REQUIRED.
1. OTHER THAN UNITED STATES BANKRUPTCY COURT HAVING JURISDICTION OVER PCL,
WHICH CONSENT HAS BEEN OBTAINED, NO CONSENT OR APPROVAL OR
AUTHORIZATIONS REQUIRED.
2. SEE SCHEDULE 4.4
22
SCHEDULE 4.8
LIABILITIES NOT ON FINANCIAL STATEMENTS
1. LIABILITIES INCURRED BY NU-TECH IN THE OPERATION OF MSI SINCE NOVEMBER
18, 1996 WHICH ARE BEING PAID BY PCL AS "ADJUSTMENT AMOUNT" UNDER THE
PURCHASE AGREEMENT.
2. LIABILITIES SET FORTH IN THE PLAN OF REORGANIZATION OF MSI APPROVED BY
THE UNITED STATES BANKRUPTCY COURT ON NOVEMBER 18, 1996, A COPY OF
WHICH HAS BEEN DELIVERED TO PCL.
23
SCHEDULE 4.9
1. SEE SCHEDULE 4.8
24
SCHEDULE 4.10
AGREEMENTS, ETC.
A COPY OF EACH OF THE FOLLOWING HAS BEEN DELIVERED TO PCL
1. PLAN OF REORGANIZATION AS APPROVED BY UNITED STATES BANKRUPTCY COURT ON
NOVEMBER 18, 1996
2. NOTE PAYABLE TO CONTINENTAL ALAMEDA DATED DECEMBER 11, 1996
3. XXXXXXX PROFESSIONAL LEASE DATED MARCH 1996
4. HESPERIAN CA. LEASE DATED JANUARY 18, 1995 WITH AMENDMENT DATED MAY 29,
1996
5. PIONEER PROFESSIONAL PLAZA LEASE DATED JUNE 1, 1996
6. BURBANK CA. LEASE DATED AUGUST 11, 1989 WITH AMENDMENT DATED MAY 6,
1996 AND ADDENDUM
7. SUBLEASE AGREEMENT JANUARY 4, 1996 FOR 0000 XXXX XXXXXX XXX XXXXXXXXX XX
8. LEASE DATED JUNE 6, 1996 FOR 0000 XXXXXXXX XXXXXX XXXXX 000 XX XXXX
XXXXX XX
9. COMMISSION AND BONUS PROGRAM FOR EMPLOYEES
10. PATHOLOGY-CYTOPATHOLOGY MEDICAL ASSOCIATES AGREEMENT DATED JANUARY 24,
1997
11. BOEHRINGER MANNHEIM CORPORATION DIAGNOSTIC AGREEMENT DATED MAY 1996
12. SANOFI DIAGNOSTIC PASTEUR ADDENDUMS NO. 1, 2 AND 3
13. ALASTAT MICROPLATE AGREEMENT DATED DECEMBER 28, 1995
14. BECTON XXXXXXXXX MICROBIOLOGY SYSTEMS AGREEMENT DATED JANUARY 21, 1997
15. INTERNAL REVENUE SERVICE PAYMENT PLAN DATED OCTOBER 9, 1996 (ALSO
CONTAINED IN PLAN OF REORGANIZATION)
16. REAL PROPERTY LEASES SET FORTH ON THE FACILITY LEASE TRACKING SHEET
ANNEXED HERETO AS EXHIBIT 4.10A
17. EQUIPMENT LEASE SET FORTH ON THE EQUIPMENT LEASE SUMMARY ANNEXED HERETO
AS EXHIBIT 4.10B
18. GUARDIAN MEDICAL GROUP LABORATORY SERVICE AGREEMENT DATED OCTOBER 1,
1996
25
19. XXXXXX MEDICAL GROUP LABORATORY SERVICE AGREEMENT DATED JULY 1, 1996
20. FAMILY HEALTH ALLIANCE MEDICAL GROUP LABORATORY SERVICE AGREEMENT DATED
OCTOBER 1, 1996
21. HEALTH QUEST 2000 LABORATORY AGREEMENT DECEMBER 9, 1993
22. LATINOCARE DOCTOR'S NETWORK IPA LABORATORY SERVICE AGREEMENT DATED
SEPTEMBER 1, 1995
23. MANCHESTER MEDICAL GROUP/TOWER HEALTH SERVICES LABORATORY SERVICES
AGREEMENT DATED FEBRUARY 1, 1995
24. MIPA EAST SAN XXXXXXX VALLEY LABORATORY AGREEMENT DATED JANUARY 10,
1994
25. XXXXXXXX INDEPENDENT PHYSICIAN ASSOCIATION LABORATORY SERVICES AGREEMENT
DATED JUNE 1, 1994
26. MIPA-SCAN LABORATORY SERVICE AGREEMENT DATED NOVEMBER 1, 1993
27. HMO/IPA LABORATORY SERVICE AGREEMENT DATED JANUARY 1, 1992
28. PRIME CARE HEALTH NETWORK IPA LABORATORY SERVICE AGREEMENT DATED JULY 1,
1995
29. UNITED PACIFIC MEDICAL GROUP LABORATORY AGREEMENT DATED FEBRUARY 24,
1994
30. FOLSOM STATE PRISON CONTRACT DATED DECEMBER 5, 1995
31. CAMARILLO STATE HOSPITAL DEPARTMENT OF DEVELOPMENTAL SERVICES CONTRACT
DATED JUNE 29, 1995
32. SONOMA DEVELOPMENT-DEPARTMENT OF DEVELOPMENTAL SERVICES CONTRACT DATED
NOVEMBER 5, 1995
33. CALIFORNIA STATE UNIVERSITY (LA) CONTRACT DATED JUNE 26, 1995
34. AIR FORCE CONTRACT DATED OCTOBER 4, 1996
35. CALIFORNIA STATE UNIVERSITY (LA) CONTRACT DATED OCTOBER 20, 1995
36. CALIFORNIA STATE UNIVERSITY (CHICO) CONTRACT DATED JULY 1, 1995
37. CALIFORNIA DEPARTMENT OF EDUCATION -- DIAGNOSTIC CENTER SOUTHERN CA
CONTRACT DATED JUNE 21, 1993
38. CALIFORNIA STATE UNIVERSITY LONG BEACH CONTRACT DATED JULY
26
23, 1996
39. DEPARTMENT OF CORRECTIONS PELICAN BAY STATE PRISON CONTRACT DATED
NOVEMBER 8, 1996
40. DEPARTMENT OF CORRECTIONS WASCO STATE PRISON CONTRACT DATED SEPTEMBER
18, 1995
41. DEPARTMENT OF CORRECTIONS XX XXXXXXX CORRECTIONAL FACILITY CONTRACT
DATED OCTOBER 11, 1996
42. DEPARTMENT OF CORRECTIONS AVENAL STATE PRISON CONTRACT DATED JANUARY 31,
1996
43. ADVANCED BUSINESS MACHINE COPY AGREEMENT DATED FEBRUARY 14, 1995
27
SCHEDULE 4.11
LICENSES AND PERMITS
1. MSI PERSONNEL MUST HAVE LABORATORY SCIENTIST LICENSES FROM THE STATE OF
CALIFORNIA. MSI PERSONNEL HAVE STATE OF CALIFORNIA DEPARTMENT OF HEALTH
SERVICES CLINICAL LABORATORY SCIENTIST LICENSES FOR
XXXXXX XXXXX
XXXXXXXXX XXXXXXX
XXXXXXX XXXXXXXX
XXXXXX XXXXXXX
XXXXXXX XXX
XXXXXXX XXXXXX
XXXXX XXXX
XXXXXX XXXXXXX
XXXXXXXX XXXXXX
XXXXXXX XXXXXXX
XXXXX XXXXXX
XXXXXXX XXXXXXXXXXX
XXXXXXX XXXXX
XXXXX XXXXXXXXXXX
XXXXXXX XXXXXX
XXXXX XXXXX
XXXXX XXXX
XXXXXX XXXXXX
XXXXXXXX XXXXX
XXXXXXX XXXXXX
XXXXXXX XXXXXX
YI-XXX XXX
XXXXXX XXXXXXXX
2. SEE MSI LICENSE CERTIFICATE AND LICENSE NUMBER SUMMARY ATTACHED AS
EXHIBIT 4.11A.
28
SCHEDULE 4.12
INTELLECTUAL PROPERTY
MSI HAS NO PATENTS, PATENT APPLICATIONS PATENT LICENSES SOFTWARE LICENSES,
COPYRIGHTS OR OTHER INTELLECTUAL PROPERTY EXCEPT:
1. STANDARD SOFTWARE LICENSES OBTAINED IN CONNECTION WITH THE PURCHASE OF
COMPUTER EQUIPMENT
2. MEDICAL SCIENCE INSTITUTE IS NOT A REGISTERED TRADENAME BUT IS UTILIZED
BY THE COMPANY
29
SCHEDULE 4.13
LITIGATION AND ORDERS
1. PLAN OF REORGANIZATION AS APPROVED BY THE BANKRUPTCY COURT ON NOVEMBER
18, 1996 AND THE RESOLUTION OF PROCEEDINGS AS DESCRIBED THEREIN.
30
SCHEDULE 4.14
TAXES
1. IRS REPAYMENT AGREEMENT AS SET FORTH IN PLAN OF REORGANIZATION DATED
NOVEMBER 18, 1996
31
SCHEDULE 4.17
LIENS UPON REAL PROPERTY AND LEASES
NONE
32
SCHEDULE 4.18
TITLE TO ASSETS AND PROPERTIES AND LIENS
NONE EXCEPT AS SET FORTH IN THE PLAN OF REORGANIZATION DATED NOVEMBER 18, 1996.
33
SCHEDULE 4.21
EMPLOYEE BENEFIT PLANS
MEDICAL SCIENCE INSTITUTE EMPLOYEE BENEFIT PLAN
(HEALTH/DENTAL/VISION INSURANCE PLAN)
34
ACCREDITATIONS
--------------------------------------------------------------------------------
Medical Science Institute is fully approved by State and Federal Health
(MEDI/MEDI) agencies. In addition, Medical Science Institute participates in
the various proficiency testing programs offered by the College of American
Pathologists (CAP) and the State of California.
Attached are copies of certificates, licenses and approvals given to Medical
Science Institute Laboratories and our Medical Director, Xx. Xxxxxx Xxxxxxx.
CERTIFICATE AND LICENSE NUMBERS SUMMARY
--------------------------------------------------------------------------------
Federal Tax Identification Number: 00-0000000
--------------------------------------------------------------------------------
Laboratory License Number: 207064
--------------------------------------------------------------------------------
Laboratory I.D. Number: CLF8
--------------------------------------------------------------------------------
Clinical Laboratory Improvement Amendments (CLIA) ID: 05D-0642841
--------------------------------------------------------------------------------
CAP Accreditation Lab Number: 29982-01
--------------------------------------------------------------------------------
Xx. Xxxxxxx'x Physician and Surgeon's Certificate Number: G49695
--------------------------------------------------------------------------------
Drug Enforcement Administration (DEA) Registration Number: A52449204
--------------------------------------------------------------------------------
Xx. Xxxxxxx'x Physician's Certificate Number: G49695
--------------------------------------------------------------------------------
Xx. Xxxxxxx'x DEA Registration Number: A52449204
--------------------------------------------------------------------------------
Medicare Provider Number: X058002
--------------------------------------------------------------------------------
Medi-Cal Provider Number: LAB 00008F
--------------------------------------------------------------------------------
CHDP Provider Number: LAB 00008F
--------------------------------------------------------------------------------
35
EXHIBIT A
PROMISSORY NOTE
36
PROMISSORY NOTE
$5,000,000.00 Los Angeles, California
February 24, 1997
FOR VALUE RECEIVED, the undersigned, Physicians Clinical
Laboratory, Inc., a California corporation (the "Buyer"), promises to pay to
the order of Nu-Tech Bio-Med, Inc., a Delaware corporation (the "Seller"), at
the Seller's offices at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
or at such other place as the holder of this Promissory Note (this "Note") may
from time to time designate in writing, the principal sum of Five Million
Dollars ($5,000,000.00), plus interest on the unpaid principal balance of this
Note outstanding from time to time, on the terms and conditions set forth
below. This Note is made pursuant to that certain Stock Purchase Agreement
("Stock Purchase Agreement") dated February 24, 1997 between Buyer and Seller.
Terms not otherwise defined herein shall have the meanings set forth in the
Stock Purchase Agreement or that certain Security Agreement dated of even date
herewith between Buyer and Seller executed in connection therewith (the
"Security Agreement").
1. Payments of Interest and Principal; Security Interest.
a. Interest Rate. The principal amount of this Note
outstanding from time to time shall bear interest at the rate of 10.00% per
annum, commencing on the date hereof, and calculated on the basis of a 365 day
year factor applied to the actual number of days elapsed.
b. Payments of Interest. No interest payments shall be
due until the Maturity Date, as defined below. All accrued and unpaid interest
shall be due and payable on the Maturity Date, as defined below.
c. Payments of Principal. No payments of principal
shall be due until the Maturity Date, as defined below. All unpaid principal
and all accrued and unpaid interest shall be immediately due and payable in
each of the following events (collectively, the "Maturity Date"):
(i) Upon an Event of Default under that certain
Amended Stipulation: (1) Regarding Terms And Conditions Of Use Of Cash
Collateral Pursuant To 11 U.S.C. Section 363; (2) Regarding Terms And
Conditions Of Post-Petition Secured Financing From Senior Lenders Pursuant To 11
U.S.C. Section 364; (3) Validating Pre-Bankruptcy Liens, Security Interests And
Claims; (4) Providing Adequate Protection; (5) Granting Post-Petition Liens and
Security Interests; (6) Granting Claims Pursuant To 11 U.S.C. Sections 503 and
507 (b); And (7) Granting Relief From The Automatic Stay (the "DIP Financing"),
by and between Buyer and the Senior Lenders (as that term is defined in
-1-
37
that certain First Amended Joint Plan of Reorganization of Physicians Clinical
Laboratory, Inc. and Its Affiliated Debtors (the "Plan"), filed with the United
States Bankruptcy Court for the Central District of California, Los Angeles
Division (the "Bankruptcy Court"), on December 2, 1996, in connection with the
Buyer's voluntary petition for relief under Chapter 11 of Title 11 of the
United States Code, filed with the Bankruptcy Court on November 8, 1996);
(ii) 12:01 am on November 9, 1997, if a final
order confirming the Plan, in form and substance acceptable to Seller and the
Senior Lenders, has not been entered; or
(iii) Upon a sale of all or substantially all of
Buyer's stock or assets to a party other than Seller or the Senior Lenders.
d. Security Interest. Seller, as holder of this Note,
is entitled to all rights of Nu-Tech Bio-Med, Inc. as set forth in the Security
Agreement.
2. Prepayment; Application of Payments.
a. The Buyer may prepay the outstanding principal
balance of this Note, together with all accrued but unpaid interest thereon, at
any time without premium or penalty. All sums paid by the undersigned to
Seller in connection with this Note shall be applied first to accrued and
unpaid interest, and the balance, if any, to principal.
b. If a final order confirming the Plan is entered on or
before November 8, 1997, all of Buyer's obligations under this Note, including
but not limited to the obligations to pay principal, accrued interest and any
other fees and charges hereunder, shall be satisfied in full by the issuance of
seventeen percent (17%) of the issued and outstanding stock of Reorganized PCL
(as defined in the Plan) as of the date of the order confirming the Plan, under
the terms and in accordance with the conditions set forth in the Plan, and
Buyer shall accept cancellation of the Note as full and complete consideration
for the issuance of such stock.
3. Miscellaneous.
a. Waivers. The Buyer and any endorsers, guarantors or
sureties of this Note severally waive presentment, notice of nonpayment,
dishonor, notice of dishonor, protest, notice of protest, demand for payment
and all other notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note. The holder of this Note shall not be
deemed, by any act of omission or commission, to have waived any of its rights
or remedies under this Note unless such waiver is in writing and signed by the
holder and then only to the extent specifically set forth in the writing. A
waiver by the holder with reference to one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy as to a subsequent
event. No delay or omission of the holder to exercise any right, whether
before or after a default under this Note, shall impair any such right or shall
be construed to be a waiver of any right or default, and the acceptance at any
time by the
-2-
38
holder of any past-due amounts shall not be deemed to be a waiver of the right
to require prompt payment when due of any other amounts then or thereafter due
and payable.
b. Costs of Collection. The Buyer shall pay all costs
of collection, including without limitation attorneys' fees, whether or not
suit is filed, upon the nonperformance by the Buyer of any duty or obligation
arising out of or in connection with this Note.
c. Attorneys' Fees. If any lawsuit, reference or
arbitration is commenced which arises out of, or which relates to, this Note,
the prevailing party shall be entitled to recover from each other party such
sums as the court, referee or arbitrator may adjudge to be reasonable
attorneys' fees in the action, reference or arbitration, in addition to costs
and expenses otherwise allowed by law.
d. Governing Law. This Note is governed by the laws of
the State of California.
e. Successors and Assigns. This Note inures to and
binds the heirs, successors and assigns of Buyer and Seller. Seller may assign
its rights under this Note. However, Buyer may not assign any rights or
obligations under this Note without Seller's prior written consent.
f. Remedies Cumulative. All of Seller's remedies in
connection with this Note or under applicable law shall be cumulative, and
Seller's exercise of any one or more of those remedies shall not constitute an
election of remedies.
g. Transfers. Buyer understands that Seller may
transfer this Note. In connection with any such transaction, Seller may
disclose to each prospective and actual transferee, purchaser or participant
all documents and information relating to the Note. If Seller so requests,
Buyer shall sign and deliver a new note to be issued in exchange for this Note.
h. Currency. All amounts payable under this Note are
payable in lawful money of the United States. Checks constitute payment only
when collected.
-3-
39
i. Interpretation. As used in this Note, the terms
"Seller," "holder" and "holder of this Note" are interchangeable. As used in
this Note, the word "include(s)" means "include(s), without limitation," and
the word "including" means "including, but not limited to."
j. Joint and Several Liability. If more than one person
or entity is signing this Note as Buyer, their obligations under this Note will
be joint and several.
IN WITNESS WHEREOF, the Buyer has caused this Note to be
executed by its duly authorized representative as of the date first written
above.
"Buyer"
PHYSICIANS CLINICAL LABORATORY, INC.,
a California corporation
By: /S/ XXXXXXX X. XXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
-4-
40
EXHIBIT B
SECURITY AGREEMENT
41
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and dated this 24th day of
February, 1997 by and between Nu-Tech Bio-Med, Inc. ("Nu-Tech"), a Delaware
corporation, and Physicians Clinical Laboratory, Inc. ("PCL"), a Delaware
corporation and a debtor and debtor in possession under chapter 11 of the
Bankruptcy Code, 11 U.S.C. Sections 101-1330 (the "Bankruptcy Code").
RECITALS
WHEREAS, PCL, Nu-Tech and Medical Science Institute, Inc.
("MSI"), a California corporation, have entered into that certain Agreement for
Purchase and Sale of Stock of Medical Science Institute, Inc., dated February
24, 1997 (the "Stock Purchase Agreement"), pursuant to which Nu-Tech has agreed
to sell and PCL has agreed to purchase all of the issued and outstanding shares
of capital stock of MSI (the "Shares"); and
WHEREAS, as partial consideration for the purchase of the
Shares, PCL has executed a promissory note in favor of Nu-Tech, dated of even
date herewith, in the principal amount of $5,000,000.00 (the "Note"); and
WHEREAS, it is a condition precedent to Nu-Tech's performance
of its obligations under the Stock Purchase Agreement that PCL shall have
granted to Nu-Tech the security interest contemplated by this Security
Agreement and shall have executed and delivered this Security Agreement to
Nu-Tech to secure the Obligations (as hereinafter defined); and
WHEREAS, pursuant to an order (the "Order") of the United
States Bankruptcy Court for the Central District of California, Los Angeles
Division (the "Bankruptcy Court"), dated January 29, 1997, the security
interest referred to above has been granted by the court and PCL has been
authorized, inter alia, to execute such documents as may be necessary or
appropriate to implement and effectuate the terms and conditions of the sale of
the Shares; and
WHEREAS, to supplement the Order, without in any way
diminishing or limiting the effect of the Order or the security interest
granted thereunder, the parties hereto desire more fully to set forth their
respective rights in connection with such security interest.
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
4. Creation of Security Interest and Description of
Collateral.
a. For the benefit of Nu-Tech, PCL hereby
conveys, pledges, assigns, transfers and grants to Nu-Tech a continuing
security interest in and lien upon
-1-
42
(the "Security Interest") all of PCL's presently owned and hereafter acquired
property, assets and rights of any kind or nature, or in which PCL now has or
may in the future acquire any right, title or interest, wherever located (the
"Collateral Security"). THE SECURITY INTEREST OF NU-TECH GRANTED PURSUANT TO
THIS SECURITY AGREEMENT IS SUBJECT AND SUBORDINATE TO THE PERMITTED
ENCUMBRANCES (AS HEREINAFTER DEFINED); PROVIDED, HOWEVER, THAT THE SECURITY
INTEREST OF NU-TECH GRANTED PURSUANT TO THIS SECURITY AGREEMENT IS AN
ADMINISTRATIVE CLAIM SENIOR IN PRIORITY TO ALL OTHER ADMINISTRATIVE CLAIMS
EXCEPT THOSE CERTAIN ADMINISTRATIVE CLAIMS OF (I) PCL'S BANKRUPTCY COUNSEL IN
AN AMOUNT OF UP TO $350,000.00, AND (II) THE PROFESSIONALS ENGAGED BY THE
COMMITTEE (AS DEFINED IN THE PLAN) IN AN AMOUNT OF UP TO $250,000.00, IN EITHER
EVENT WHICH CLAIMS HAVE BEEN APPROVED BY THE BANKRUPTCY COURT IN ACCORDANCE
WITH SECTION 330 OF THE BANKRUPTCY CODE. FOR PURPOSES OF THIS SECURITY
AGREEMENT, "PERMITTED ENCUMBRANCES" SHALL MEAN (I) THAT CERTAIN LIEN GRANTED TO
THE SENIOR LENDERS (AS HEREINAFTER DEFINED) PURSUANT TO THAT CERTAIN AMENDED
STIPULATION: (1) REGARDING TERMS AND CONDITIONS OF USE OF CASH COLLATERAL
PURSUANT TO 11 U.S.C. Section 363; (2) REGARDING TERMS AND CONDITIONS OF
POST-PETITION SECURED FINANCING FROM SENIOR LENDERS PURSUANT TO 11 U.S.C.
Section 364; (3) VALIDATING PRE-BANKRUPTCY LIENS, SECURITY INTERESTS AND
CLAIMS; (4) PROVIDING ADEQUATE PROTECTION; (5) GRANTING POST-PETITION LIENS AND
SECURITY INTERESTS; (6) GRANTING CLAIMS PURSUANT TO 11 U.S.C. SECTIONS
503 AND 507 (B); AND (7) GRANTING RELIEF FROM THE AUTOMATIC STAY (THE "DIP
FINANCING"), BY AND BETWEEN BUYER AND THE SENIOR LENDERS, AND (II) ALL VALIDLY
PERFECTED LIENS ARISING PRIOR TO NOVEMBER 8, 1996 IN AND TO THE COLLATERAL
SECURITY, WITH THE EXCEPTION OF ANY AND ALL LIENS SECURING REPAYMENT OF ANY
PREPETITION INDEBTEDNESS OF PCL OWED TO THE SENIOR LENDERS AND NU-TECH. FOR
PURPOSES OF THIS AGREEMENT, "SENIOR LENDERS" SHALL HAVE THE MEANING ASSIGNED TO
IT IN THAT CERTAIN SECOND AMENDED JOINT PLAN OF REORGANIZATION OF PHYSICIANS
CLINICAL LABORATORY, INC. AND ITS AFFILIATED DEBTORS (THE "PLAN"), FILED WITH
THE BANKRUPTCY COURT ON FEBRUARY 7, 1997. The Collateral Security includes,
but is not limited to, the following:
(A) All rights to payment of money,
whether due or to become due, including, without limitation, any right to
payment for goods sold or leased, or to be sold or leased, or for services
rendered or to be rendered, no matter how evidenced and whether or not earned
by performance, any account, accounts receivable, instruments, and chattel
paper;
(B) All inventory including, without
limitation, goods, merchandise, raw materials, work in progress, finished and
unfinished goods, and other tangible personal property held for sale or lease
or furnished or to be furnished under contracts of service or used or consumed
in PCL's business;
(C) All equipment, furniture and
fixtures, including, without limitation, all personal property or fixtures,
wherever situated including all substitutions, accretions, component parts,
replacements and additions;
(D) All general intangibles, including
without limitation, good will, trademarks, trade names, trade secrets,
licenses, franchises, permits, customer lists, income tax refund claims,
copyrights, processes, patents, patent rights, patent applications, inventions,
royalties and commissions, general and limited partnership
-2-
43
interests, whether partnership assets constitute real or personal property, and
proceeds from such partnership interests; and
(E) All of PCL's right, title and
interest in and to any securities, including the Shares, and all new,
substituted and additional securities issued with respect thereto, together
with all voting or other rights now or hereafter exercisable and all cash and
noncash dividends and all other property now or hereafter receivable with
respect to any of the foregoing.
b. This Security Agreement shall constitute a
security agreement pursuant to the California Uniform Commercial Code with
respect to the Collateral Security. For purposes of this Security Agreement,
PCL shall be deemed to be the "Debtor" and Nu-Tech the "Secured Party." For
purposes of this Security Agreement, the term "proceeds" shall include whatever
is received or receivable when the Collateral Security referred to above or
proceeds therefrom are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary.
c. The Security Interest granted hereby is made
for the purpose of securing the payment and performance of all present and
future liabilities and obligations from PCL to Nu-Tech arising under the Note
and under this Security Agreement (collectively, the "Obligations"), in each
case whether such debt, liability, covenant, agreement and obligation now
exists or is hereafter created or incurred, and whether it is or may be direct
or indirect, due or to become due, absolute or contingent, primary or
secondary, liquidated or unliquidated, or sole, joint, several or joint and
several, whether or not from time to time decreased or extinguished and later
increased, created or incurred.
5. Representations, Warranties and Covenants of PCL. In
order to induce Nu-Tech to accept this security agreement, PCL represents,
warrants and covenants that:
a. Except for the Permitted Encumbrances, the
liens granted pursuant to this Security Agreement constitute perfected liens on
the Collateral Security in favor of Nu-Tech which are prior to all other liens
on the Collateral Security created by PCL and in existence on the date hereof
and which are enforceable as such against all creditors of and purchasers from
PCL.
b. PCL will, at its sole cost and expense,
defend the Collateral Security against all claims, proceedings or demands of
all persons other than Nu-Tech challenging PCL's title to the Collateral
Security or the validity or priority of Nu-Tech's security interest hereunder.
c. As soon as practicable, and in any event
within five (5) business days, PCL shall notify Nu-Tech in writing of:
(A) The commencement of any cause of
action, levy, attachment or other legal process in respect of any of the
Collateral Security;
-3-
44
(B) Any information received by PCL which
may in any manner materially and adversely affect the value of the Collateral
Security or the rights and remedies of Nu-Tech with respect thereto; and
(C) The removal of any of the Collateral
Security other than in the ordinary course to a new location and the removal of
any records of PCL relating to the Collateral Security to any location other
than its address set forth in Asset Purchase and Sale Agreement.
Any notice delivered pursuant to this paragraph (b) shall set forth the nature
of such event and the action which PCL proposes to take with respect thereto.
d. PCL will (i) promptly pay all taxes levied or
assessed upon or against any Collateral Security or upon or against the
creation, perfection or continuance of the Security Interest; (ii) at all
reasonable times, permit Nu-Tech or its representatives to examine or inspect
any Collateral Security, wherever located, and to examine, inspect and copy
PCL's books and records pertaining to the Collateral Security and its business
and financial condition; (iii) keep accurate and complete records pertaining to
the Collateral Security and pertaining to PCL's business and financial
condition; (iv) promptly notify Nu-Tech of any loss of or material damage to
any Collateral Security; (v) at all times keep all Collateral Security insured
in the ordinary course of its business; (vi) from time to time execute such
financing statements as Nu-Tech may reasonably deem necessary to perfect the
Security Interest; (vii) pay when due or reimburse Nu-Tech on demand for all
costs of collection of any of the Obligations and all other out-of-pocket
expenses (including in each case all reasonable attorneys' fees) incurred by
Nu-Tech in connection with the creation, perfection, satisfaction or
enforcement of the Security Interest or the execution or creation, continuance
or enforcement of this Security Agreement or any or all of the Obligations;
(viii) execute, deliver or endorse any and all instruments, documents,
assignments, security agreements and other agreements and writings which
Nu-Tech may at any time reasonably request in order to secure, protect, perfect
or enforce the Security Interest and Nu-Tech's rights under this Security
Agreement; and (ix) not use or keep any Collateral Security, or permit it to be
used or kept, for any unlawful purpose or in violation of any law.
e. Limitation on Liens on Collateral Security.
PCL will not create, permit or suffer to exist, and will defend the Collateral
Security against and take such other action as is necessary to remove, any lien
on the Collateral Security except Permitted Encumbrances, and will defend the
right, title and interest of Nu-Tech in and to any of PCL's rights under the
Collateral Security.
6. Appointment of Nu-Tech as Attorney-in-Fact. Upon the
occurrence of an Event of Default (as hereinafter defined), PCL hereby
irrevocably constitutes and appoints Nu-Tech, or its delegate, as its
attorney-in-fact with the right (but not the duty) to create, prepare,
complete, execute, deliver, endorse or file, in the name and on behalf of PCL,
any and all instruments, documents, financing statements, applications for
insurance and other agreements and writings required to be obtained, executed,
delivered or endorsed by PCL hereunder.
-4-
45
7. Administrative Claims. Without limiting any
provision contained in this Security Agreement, the claims of Nu-Tech secured
by the Security Interest shall be senior in priority and right of payment to
any and all administrative expense claims in PCL's chapter 11 case, including
claims with priority pursuant to sections 364(c) and 507(b) of the Bankruptcy
Code, other than administrative claims "carved-out" of the lien granted to the
Senior Lenders pursuant to the DIP Financing.
8. Default. The occurrence of any of the following
events shall constitute an event of default ("Event of Default") hereunder:
a. PCL shall fail to pay the principal of, or
interest on, the Note within five (5) business days after the Maturity Date (as
defined in the Note) of the Note; or
b. PCL shall fail to fully and timely perform or
observe any term, covenant or agreement contained in this Security Agreement or
the Note, and each failure or violation shall not be remediable or, if
remediable and PCL is proceeding diligently so to remedy, shall continue
unremedied for a period terminating on the thirtieth (30th) day after PCL knows
or reasonably ought to know of the occurrence thereof.
9. Remedies Upon Event of Default.
Upon the occurrence of an Event of Default hereunder
and the expiration of any applicable grace period, and to the extent not
inconsistent with the Order, Nu-Tech may, upon application to and approval of
the Bankruptcy Court for relief from the automatic stay of section 362 of the
Bankruptcy Code, take any one or more of the actions set forth in paragraphs
(1) through (7), below:
(A) Declare, without presentment, demand,
protest or notice of any kind, all of which PCL hereby expressly waives (except
such notice as may be required in the Note), the Obligations secured hereby to
be immediately due and payable, whereupon all of said Obligations and other
amounts declared due and payable shall be and become immediately due and
payable;
(B) Make such payments and do such acts as
Nu-Tech may deem reasonably necessary or desirable to establish, perfect or
maintain the Security Interest in, and the value of, the Collateral Security
including, without limitation, paying, purchasing, contesting or compromising
any encumbrance, charge or lien which is, or purports to be, prior to or
superior to the Security Interest, the right to commence, appear or otherwise
participate in or control any action or proceeding purporting to affect the
Security Interest in, or the value or ownership of, the Collateral Security,
and in exercising any such powers or authority to pay all expenses incurred in
connection therewith; PCL agrees to pay Nu-Tech, on demand, the amount of any
payment made or expense (including reasonable attorneys' fees) incurred by
Nu-Tech pursuant to the foregoing authorizations, together with interest
thereon, as in effect from time to time, from the date of demand for each such
payment by Nu-Tech;
-5-
46
(C) Require PCL to assemble the
Collateral Security, or any portion thereof, and promptly to deliver such
Collateral Security to Nu-Tech;
(D) Foreclose this Security Agreement as
herein provided or in any manner permitted by law and exercise any and all of
the rights and remedies conferred upon Nu-Tech by the Note or this Security
Agreement or in such order as Nu-Tech may determine;
(E) Sell, lease or otherwise dispose of
the Collateral Security at public sale, without having the Collateral Security
at the place of sale, and upon terms and in such manner as Nu-Tech may
determine; and
(F) Exercise in respect of the Collateral
Security, in addition to all other rights and remedies provided for herein or
otherwise available to it, all rights and remedies of a secured party after
default under the Uniform Commercial Code in force and effect in the State of
California at that time;
provided, however, that in the event that the Senior Lenders have been granted
relief from the automatic stay in order to exercise their remedies in
connection with any liens granted under the DIP Financing, Nu-Tech shall not be
required to obtain Bankruptcy Court approval in order to take any of the
foregoing actions.
10. Other Remedies. Any and all remedies herein
expressly conferred upon Nu-Tech shall be deemed cumulative with, and not
exclusive of, any other remedy conferred hereby or by law on Nu-Tech, and the
exercise of any one remedy shall not estop, prevent or preclude the exercise of
any other remedy which Nu-Tech may have until such time as the Obligations
shall have been satisfied, released and discharged in full. Any repossession
or retaking or sale of the Collateral Security to satisfy the Obligations shall
not operate to release PCL from its obligations under the Stock Purchase
Agreement until PCL has fully performed its obligations thereunder and has made
payment in full to Nu-Tech of any deficiency.
11. Nu-Tech May Perform. Should PCL fail or refuse to
make any payment, perform any Obligation or take any other action which PCL is
obligated hereunder to perform or do at the time or in the manner herein
provided, then Nu-Tech, without releasing PCL from its obligations under the
Note, may perform, or cause performance of any action in such manner and to
such extent as Nu-Tech may deem necessary or desirable to establish, perfect or
maintain the Security Interest in, or the value of, the Collateral Security.
Furthermore, should PCL fail to satisfy its Obligations hereunder, Nu-Tech may
commence, appear or otherwise participate in any action or proceeding
purporting to affect the Security Interest in, or the value or ownership of,
the Collateral Security.
12. Costs and Expenses. PCL hereby agrees to pay all
costs and expenses (including without limitation reasonable attorneys' fees)
which Nu-Tech may incur in exercising and enforcing any of its rights and
remedies under this Security Agreement.
-6-
47
13. Successors and Assigns. This Security Agreement
shall be binding upon PCL and its successors and assigns, and shall inure to
the benefit of Nu-Tech and its successors and assigns.
14. Amendment. This Security Agreement can be waived,
modified, amended, terminated or discharged only explicitly in a writing signed
by Nu-Tech and PCL. A waiver signed by Nu-Tech shall be effective only in a
specific instance and for the specific purpose given. Mere delay or failure to
act shall not preclude the exercise or enforcement of any of the rights or
remedies of Nu-Tech hereunder. All rights and remedies of Nu-Tech shall be
cumulative and may be exercised singularly or concurrently, at the option of
Nu-Tech, and the exercise or enforcement of any one such right or remedy shall
neither be a condition to nor bar the exercise of enforcement of any other.
15. Termination. Nu-Tech shall release all Collateral
Security upon the first to occur of (i) the entry by the Bankruptcy Court of a
final order confirming the Plan on or before November 8, 1997, in which event
all of the Obligations shall be satisfied in full by the issuance, on the
Effective Date (as defined in the Plan), of seventeen percent (17%) of the then
issued and outstanding shares of the capital stock of Reorganized PCL (as
defined in the Plan), or (ii) the payment in full of all amounts outstanding
from PCL under the Note.
16. Choice of Laws. This Security Agreement shall be
deemed made in and shall be governed by the internal laws of the State of
California.
17. Notices. All notices to be given to PCL shall be
deemed sufficiently given if given in accordance with the notice provisions
contained in the Stock Purchase Agreement.
18. Captions. The captions, headings, table of contents,
and arrangements used in this Security Agreement are for convenience only and
do not and shall not be deemed to affect, limit, amplify or modify the terms
and provisions hereof.
19. Severability. If any provision or application of
this Security Agreement is held unlawful or unenforceable in any respect, such
illegality or unenforceability shall not affect other provisions or
applications which can be given
-7-
48
effect, and this Security Agreement shall be construed as if the unlawful or
unenforceable provision or application had never been contained herein or
prescribed hereby.
20. Integration. This Security Agreement, the Note and
the Stock Purchase Agreement set forth the entire agreement of PCL and Nu-Tech
as to its subject matter, and may not be contradicted by evidence of any
agreement or statement unless make in a writing (which writing shall be
narrowly construed) signed by Nu-Tech contemporaneously with or after the
execution and delivery of this Security Agreement.
NU-TECH BIO-MED, INC.
By: /S/ J. XXXXXX XXXXXXXXXX
--------------------------------
Title: Chairman of the Board,
President and Chief
Executive Officer
PHYSICIANS CLINICAL LABORATORY, INC.
By: /S/ XXXXXXX X. XXXXXX
--------------------------------
Title: Senior Vice President and
Chief Financial Officer
-8-
