Share Exchange Agreement- American Laboratory

SHARE EXCHANGE AGREEMENT


THIS SHARE EXCHANGE AGREEMENT (the "Agreement"), is entered into as of February 15, 1996, in accordance with the General Corporation Law of the State of Delaware (the "DGCL"), by and among AMERICAN LABORATORY ASSOCIATES, INC., a Delaware corporation ("ALA"), AMERIPATH, INC., a Delaware corporation ("Holding"), the holders of Common Stock, $.01 par value per share (the "ALA Common Stock"), of ALA listed on SCHEDULE I attached hereto (the "ALA Common Stockholders"), and the holders of Series A Convertible Preferred Stock, $.01 par value per share (the "ALA Preferred Stock"), of ALA listed on SCHEDULE II attached hereto (the "ALA Preferred Stockholders" and, together with the ALA Common Stockholders, the "ALA Stockholders").


WHEREAS, as of the date hereof, the authorized capital stock of ALA consists of (i) 8,000,000 shares of ALA Common Stock, of which 912,004 shares are presently issued and outstanding (as set forth in Schedule I hereto); and (ii) 5,000,000 shares of ALA Preferred Stock, of which 3,088,116 shares are presently issued and outstanding (as set forth in Schedule II hereto); and


WHEREAS, ALA and the ALA Stockholders are parties to a Shareholders' Agreement dated as of January 1, 1994, as amended by a First Amendment to Shareholders' Agreement dated as of August 1, 1994 (collectively, the "ALA Shareholders' Agreement"), which ALA Shareholders' Agreement provides, among other things, for certain rights and restrictions relating to the transfer of capital stock of ALA owned by such ALA Stockholders;


WHEREAS, pursuant to the Amended and Restated American Laboratory Associates, Inc. 1994 Stock Option Plan (the "ALA Option Plan"), options to purchase up to 400,000 shares of ALA Common Stock are available for grant and issuance to employees of ALA under the plan, with options to purchase a total of 340,000 shares of ALA Common Stock (the "ALA Stock Options") having been granted to the persons covering the aggregate number of shares indicated in SCHEDULE III attached hereto, all pursuant to the ALA Option Plan;


WHEREAS, Holding is a newly formed Delaware corporation, with authorized capital stock consisting of (i) 8,000,000 shares of Common Stock, $.01 par value per share ("Holding Common Stock"), of which one (1) share is presently issued and outstanding and owned of record by ALA; and (ii) 5,000,000 shares of Preferred Stock, $.01 par value per share, of which 3,500,000 shares have been authorized and designated as the Series A Convertible Preferred Stock ("Holding Preferred Stock"), of which no shares are presently issued or outstanding; and


2


WHEREAS, pursuant to the AmeriPath, Inc. 1996 Stock Option Plan (the "Holding Option Plan"), previously approved by the Board of Directors of Holding, options to purchase up to 500,000 shares of Holding Common Stock are available for grant and issuance to employees of Holding or its subsidiaries under the plan, with no options having been granted under such plan as of the date hereof; and


WHEREAS, the Board of Directors and stockholders of ALA believe that it is in the best interests of ALA and its stockholders to reorganize ALA into a holding company structure and to transfer and exchange the equity ownership of ALA to Holding, such that, among other things, immediately following consummation of the agreements and transactions contemplated by this Agreement (the "Closing"): (i) ALA will become a wholly-owned subsidiary of Holding; (ii) Holding will be owned by persons who, prior to the Closing, constituted the ALA Stockholders, with such stockholders owning exactly the same type and amount of equity securities of Holding following the Closing as such stockholders owned in ALA immediately prior to the Closing; (iii) each holder of a stock option under the ALA Option Plan will surrender his stock options in exchange for an option to purchase a like number of shares of Holding Common Stock, all under the Holding Option Plan and in accordance with the terms of certain new non-qualified stock option agreements; and (iv) Holding will assume the rights and obligations of ALA under various agreements; all in accordance with and pursuant to the terms, provisions and conditions provided under this Agreement.


NOW, THEREFORE, for and in consideration of the premises and the mutual representations, covenants and agreements set forth herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by all parties, the parties hereto hereby agree as follows:


ARTICLE 1.


EXCHANGE OF SHARES


1.1 EFFECTIVE TIME. The exchange of shares and options, and the other agreements and transactions contemplated hereunder, shall be and become effective (the "Effective Time") upon the Closing, which shall take place (i) immediately following the satisfaction of the conditions to closing set forth in Article 5 hereof, and, assuming such satisfaction, (ii) on the date that (a) the Secretary of each of ALA and Holding files a fully executed original of this Agreement in the official stockholders' minute book of ALA and Holding, respectively, and (b) certificates representing the shares of Holding Common Stock and Holding Preferred Stock are issued, in exchange for certificates representing ALA Common Stock and ALA Preferred Stock, in accordance with the provisions of this


- 2 - 3


Agreement, with such issuance and exchange being recorded and reflected in the stock books of Holding.


1.2 MANNER AND BASIS OF EXCHANGING SHARES. At the Effective Time:


(a) each share of ALA Common Stock issued and
outstanding immediately prior to the Effective Time shall be exchanged
for one share of Holding Common Stock, which upon such issuance shall
be duly authorized, validly issued, fully paid and non-assessable;


(b) each share (and/or fraction of a share) of ALA
Preferred Stock issued and outstanding immediately prior to the
Effective Time shall be exchanged for one share (and/or like fraction
of a share) of Holding Preferred Stock, which upon such issuance shall
be duly authorized, validly issued, fully paid and non-assessable;


(c) The one (1) share of Holding Common Stock issued and
outstanding prior to the Effective Time, as owned and held by ALA,
shall be canceled and shall thereupon become an authorized and
unissued share of Holding Common Stock;


(d) each share (and/or fraction of a share) of ALA
Preferred Stock, upon surrender for exchange pursuant to Section
1.2(b) above, shall be contributed by Holding to ALA, shall no longer
be issued or outstanding, shall be canceled and retired and shall
thereupon become authorized but unissued shares of ALA (in accordance
with and subject to ALA's certificate of incorporation, as such may be
amended from time to time);


(e) each share of ALA Common Stock, upon surrender for
exchange pursuant to Section 1.2(a) above, shall be owned and held by
Holding, and shall remain issued and outstanding; provided, however,
that, to the extent the number of such shares of ALA Common Stock
exceeds One Hundred (100), all of such shares of ALA Common Stock in
excess of 100 shares shall be cancelled and retired and shall
thereupon become authorized but unissued shares of ALA (in accordance
with and subject to ALA's certificate of incorporation, as such may be
amended from time to time); and


(f) Holding shall become the owner and holder of all the
issued and outstanding shares of ALA Common Stock.


1.3 TREATMENT OF PREFERRED STOCK. In consideration of the surrender and cancelation of the issued and outstanding ALA Preferred Stock by the ALA Preferred Stockholders pursuant to Section 1.2(d) above, which ALA Preferred Stock has accumulated dividends, which have remained unpaid, since January 1, 1994, the


- 3 - 4


parties hereto expressly acknowledge, understand and agree that (a) the Holding Preferred Stock, as authorized and designated in Holding's restated certificate of incorporation, provides for the accumulation of dividends on such ALA Preferred Stock from January 1, 1994 (notwithstanding that Holding was not in existence on that date), and (b) by virtue of such accumulation of dividends provision(s), as of the Effective Time, Holding is assuming the dividend obligation of ALA, as accumulated and unpaid through the Effective Time, in connection with the issued and outstanding ALA Preferred Stock.


1.4 MANNER AND BASIS OF EXCHANGING OPTIONS. As a condition to consummation of the transactions contemplated by this Agreement, pursuant to Article 5 hereof, prior to the Effective Time, each holder of one or more options to purchase ALA Common Stock granted under the ALA Option Plan (each, an "ALA Option Holder") shall have entered into (i) a surrender and grant letter agreement, and (ii) a Holding non-qualified stock option agreement, each in the form set forth in EXHIBIT A attached hereto (the "Holding Surrender/Option Agreements"). Accordingly, at the Effective Time, each ALA Stock Option outstanding immediately prior to the Effective Time will be surrendered in exchange for an option to purchase that number of shares of Holding Common Stock (each, a "Holding Stock Option") equal to the number of shares of ALA Common Stock subject to the ALA Stock Option immediately prior to the surrender of such option, all in accordance with the Holding Surrender/Option Agreements. From and after the Effective Time, all Holding Stock Options shall be subject to adjustment in accordance with the terms and provisions of the respective Holding Option Agreement and the Holding Option Plan.


1.5 POST CLOSING MATTERS.


(a) Amendment of ALA Certificate of Incorporation. Immediately following the Effective Time, Holding, as sole stockholder of ALA, shall cause the ARTICLE FOURTH of the Certificate of Incorporation of ALA to be amended so as to (i) reduce the authorized number of shares of common stock of ALA from 8,000,000 shares to 10,000 shares, and (ii) delete from such Article any authorization with respect to shares of preferred stock of ALA.


(b) Termination of ALA Option Plan. Immediately following the Effective Time, the ALA Option Plan shall be terminated.


ARTICLE 2.


ASSIGNMENT AND ASSUMPTION OF RIGHTS AND OBLIGATIONS


2.1 SHAREHOLDERS' AGREEMENTS. Effective immediately prior to the Effective Time, the parties hereto (insofar as such parties are parties to the ALA Shareholders' Agreement) hereby agree to


- 4 - 5


terminate the ALA Shareholders' Agreement, such that at the Effective Time the ALA Shareholders' Agreement shall be terminated, canceled, null, void and of no further force or effect. As a condition to consummation of the transactions contemplated by this Agreement, Holding and each person who, immediately prior to the Effective Time, is a holder of ALA Common Stock or ALA Preferred Stock shall have executed and delivered a counterpart signature page to the AmeriPath, Inc. Shareholders' Agreement dated as of February 15, 1996, in the form of EXHIBIT B attached hereto (the "Holding Shareholders' Agreement"). All such parties agree to be bound by and comply with the terms and provisions of the Holding Shareholders' Agreement.


2.2 SECURITIES PURCHASE AGREEMENT. Evangelos Poulos, M.D., Michael Demaray, M.D., Alexander Kowalczyk, M.D. (collectively, the "Original ALA Common Stockholders"), the ALA Preferred Stockholders (together with the Original ALA Common Stockholders, the "Original ALA Stockholders") and ALA are parties to that certain Series A Preferred Stock, Common Stock and Junior Subordinated Note Purchase Agreement dated as of January 1, 1994, a complete copy of which is attached hereto as EXHIBIT C (the "ALA Purchase Agreement"). The parties to the ALA Purchase Agreement acknowledge, understand and agree that various provisions of such agreement were intended to provide for certain rights and obligations of the Original ALA Stockholders, as holders of issued and outstanding capital stock of ALA, and for certain rights and obligations of ALA, a ...