EXHIBIT 10.5
STOCK EXCHANGE AGREEMENT
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THIS STOCK EXCHANGE AGREEMENT (the "Agreement") is made as of July 31, 1995
by and among VIVRA INCORPORATED, a Delaware corporation ("Vivra" or "Buyer"),
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and RAJ & XXX, INC., VADAKKIPALAYAM XXXXXXXXX, M.D., CHEMMALE XXXXXXXXXXXX,
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M.D., XXXXX X. XXXX, M.D. and XXXXXX XXXXXXXXX, M.D. (collectively, "Sellers").
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RECITALS:
A. St. Xxxxxxx Xxxxxx Dialysis Center, Inc., a Louisiana corporation, (the
"Company" or "SCDC"), owns and operates a facility (the "Facility") located at
000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx 00000. SCDC provides (i) continuous
ambulatory peritoneal dialysis and hemodialysis services, treatments,
counselling and instruction at the Facility, in the home and on an out-patient
basis to persons with kidney diseases or conditions and (ii) acute care services
to patients at hospitals (collectively, the "Dialysis Business").
X. Xxxxxxx each own the number of shares of common stock, no par value per
share, of the Company set forth opposite their name on Exhibit A (collectively,
all such shares are referred to as the "SCDC Shares").
C. Vadakkipalayam Xxxxxxxxx, M.D. and Chemmale Xxxxxxxxxxxx, M.D. each own
50% of the common stock of Raj & Xxx, Inc.
D. It is the intention of the parties to exchange the SCDC Shares pursuant
to the requirements of section 368(a)(1)(B) of the Internal Revenue Code (the
"Code").
E. Buyer desires to acquire from Sellers and Sellers desire to sell to
Buyer all of the SCDC Shares in exchange for capital stock of Buyer.
NOW, THEREFORE, it is agreed:
1. The Transaction.
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1.1 Exchange of Stock. Subject to the terms and conditions contained
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herein, at the Closing (as hereinafter defined) Sellers shall sell, transfer and
assign to Buyer, and Buyer shall purchase, accept and receive all right, title
and interest in and to all of the SCDC Shares, free and clear of all options,
pledges, security interests, liens, charges or other encumbrances or
restrictions on transfer of any kind ("Encumbrances"), solely in exchange for
common stock of Vivra as required by section 368(a)(1)(B) of the Code.
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1.2 Consideration.
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(a) Upon the terms and subject to the conditions hereof, and in
consideration of the transfer and delivery of the SCDC Shares, Vivra shall
deliver to each Seller (i) on or before August 15, 1995, that number of shares
of common stock, $.01 par value per share of Vivra ("Vivra Common Stock") equal
to (A) $700,000 divided by the Average Closing Price (as defined below)
multiplied by (B) the percentage set forth opposite the name of such Seller on
Exhibit A hereto under the heading "Percentage Ownership" (the "Seller's
Percentage Ownership"), and (ii) on the date set forth below in paragraph 1.3,
that number of shares of Vivra Common Stock equal to (A) the Purchase Price less
$700,000 divided by the Average Closing Price, multiplied by (B) the Seller's
Percentage Ownership, if such number is greater than zero (the "Post Closing
Payment").
(b) For purposes of this Agreement "Average Closing Price" shall mean the
average closing price of Vivra Common Stock on the New York Stock Exchange for
the twenty (20) consecutive trading days ending on the tenth (10th) trading day
prior to the Closing Date.
(c) All references in this Agreement to Vivra Common Stock shall be deemed
to include the associated right to purchase a share of Vivra Series A Junior
Participating Preferred Stock pursuant to the Rights Agreement between Vivra and
Bank of America National Trust and Savings Association. The shares of Vivra
Common Stock to be issued to the Sellers (including any Post Closing Payment (as
hereinafter defined)) are referred to in this Agreement as the "Vivra Shares."
The Vivra Shares shall initially be delivered to the Escrow Holder pursuant to
paragraph 4.2 of this Agreement.
1.3 Determination of Purchase Price. (a) The Purchase Price for the SCDC
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Shares (the "Purchase Price") shall be equal to (i) $1,120,000, plus (ii) an
amount (which may be a negative amount) equal to the sum of the accounts
receivable, cash and cash equivalents of the Company less the liabilities of the
Company (each as reflected on the Final Closing Balance Sheet) and shall be
determined in accordance with the provisions of this paragraph 1.3. Within
forty-five (45) days after the Closing, Vivra shall have prepared and delivered
to the Sellers a balance sheet for the Company as of the date of the Closing,
along with a statement setting forth in reasonable detail the computation of the
Purchase Price (the "Closing Balance Sheet"). The Closing Balance Sheet shall
be prepared in accordance with generally accepted accounting principles and
procedures used in, and on a basis consistent with, those applied by the Company
in preparing the December 31, 1994 balance sheet included within the Financials
(as hereinafter defined); provided, however, that for purposes of the Closing
Balance Sheet the following provisions shall govern:
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to an accrual basis of accounting.
(b) Vivra shall promptly provide the Sellers with access to all
information which the Sellers shall reasonably request to verify the Closing
Balance Sheet. The Closing Balance Sheet as delivered to the Sellers shall be
final for purposes of determining the Purchase Price unless Vivra is given
written notice that the Sellers dispute the calculation of the Purchase Price
(the "Dispute Notice") within ten (10) business days after the Closing Balance
Sheet has been given to the Sellers. Any Dispute Notice shall set forth in
reasonable detail the items in dispute. In the event a Dispute Notice is timely
given to Vivra, Vivra and the Sellers shall have thirty (30) days to resolve the
dispute and if not resolved, the dispute shall be submitted to a "Big Six"
accounting firm chosen by lot (the "Arbitrator") which shall be instructed to
arbitrate such dispute and determine the Purchase Price within thirty (30) days.
Each party shall pay its own fees and expenses in connection with resolving a
Dispute Notice. Buyer and Sellers shall each pay half of the fees and expenses
of such Arbitrator. The resolution of the dispute by the Arbitrator shall be
set forth in writing and shall be conclusive and binding upon and non-appealable
by the parties, and the determination of the Purchase Price shall become final
upon the date of such resolution and may be entered as a final judgment in any
court of proper jurisdiction. The Closing Balance Sheet as (i) delivered by
Vivra if a Dispute Notice is not properly delivered, (ii) determined by mutual
agreement of Vivra and the Sellers or (iii) determined by the written resolution
of the Arbitrator shall be the Final Balance Sheet. Vivra shall pay the Post
Closing Payment, if any, to the Sellers by delivery of the required number of
shares of Vivra Common Stock to the Escrow Holder within fifteen (15) business
days after the Final Closing Balance Sheet is determined.
(c) In the event that the Purchase Price as finally determined is less
than $700,000, then the Sellers shall pay to Vivra such deficiency within
fifteen (15) business days after the Final Closing Balance Sheet is determined.
Such deficiency shall be paid by delivering (or instructing the Escrow Holder to
deliver) that number of shares of Vivra Common Stock equal to the deficiency
divided by the Average Closing Price.
1.4 Transfer of Custody of Patient Records. Sellers agree to turn over to
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Vivra on the Closing Date custody of all existing records, files, charts, x-ray
files and similar data pertaining to each Patient, as hereinafter defined, and
in Sellers' possession as of the Closing Date (collectively the "Patient
Records"). "Patient" shall mean any past or current patient treated at the
Facility and for whom Sellers keep, maintain or have custody of any records,
files, charts, x-ray files or any similar data. Vivra agrees to accept custody
of the Patient Records and to hold, utilize and deliver them pursuant to the
instructions of the Patient to whom they
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pertain. The parties agree to use their best efforts to comply with all laws
and regulations with respect to the handling and storage of the Patient Records.
1.5 Noncompetition, Nonsolicitation and Nondisclosure Covenants.
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1.5.1 Covenants.
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(a) Noncompetition Covenant. The Sellers agree that for a period (the
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"Restricted Period") beginning on the Closing and ending on the tenth (10th)
anniversary thereof, no Sellers nor any affiliate of the Sellers will, either
jointly or individually, directly or indirectly, compete with Vivra or its
affiliates or own, manage, operate, join, control, advise, consult with or
participate in the ownership, operation, management or control (other than as a
shareholder owning less than five percent (5%) of the capital stock of a company
whose stock is publicly traded on a national exchange) of any business engaged
in the provision of chronic in-patient, outpatient or home hemodialysis,
continuous ambulatory peritoneal dialysis, acute care dialysis services,
intradialytic parenteral nutrition, nerve conduction testing and bone
densitometry services (individually and collectively, a "Competing Business")
within a fifty (50) mile radius of the Facility (the "Restricted Area"), nor
will they advise, assist, consult with, lease or sell real property to (or
permit their successors or assigns to do so) or aid in the establishment or
operation of a Competing Business in the Restricted Area during the Restricted
Period; provided, however, that Sellers will not be prevented from (a)
practicing medicine, including the treatment of patients at any facility, within
the Restricted Area or from engaging in teaching, research or other academically
oriented activities or (b) operating one dialysis facility in Plaquemines
Parish, Louisiana.
(b) Nonsolicitation Covenant. Each Seller agrees that during the
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Restricted Period, he will not, either jointly or individually, directly or
indirectly, solicit any employees of Vivra, its affiliates or the Company for or
on behalf of any business similar to the Dialysis Business within the Restricted
Area.
(c) Nondisclosure Covenant By Sellers. In the operation and development
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of Vivra's existing businesses and the planning and development of their
proposed businesses, Vivra and its affiliates (including the Company) generate
information and data which is and will be proprietary and confidential (the
"Confidential Information") the disclosure of which would be extremely
detrimental to their business and of great assistance to their competitors. The
Confidential Information includes, but is not limited to:
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(i) Development. Data, plans and projections regarding the location,
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development and expansion of existing and proposed facilities;
(ii) Marketing. Market surveys, studies and analyses;
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(iii) Services. Information concerning the identities,
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locations and qualifications of professionals and other persons
presently, or prospectively to be, retained or employed by Vivra or
any of its affiliates;
(iv) Suppliers, etc. Information concerning: the identities,
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locations, prices, costs and other terms of dealings with referral and
reimbursement sources, suppliers, providers and supplier and provider
organizations and entities; administrative and accounting procedures
and policies of the U.S. Department of Health and Human Services and
the Health Care Finance Administration, the Medicare Program
("Medicare"), the End Stage Renal Disease Program ("ESRD"), the
Medicaid Program ("Medicaid"), comparable state offices and programs,
insurers and other third-party payers and information about
contractual and other arrangements, and affiliations with any of the
foregoing;
(v) Regulatory Matters. Information concerning legislative,
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administrative, regulatory and zoning requirements, bodies and
officials;
(vi) Records. Medical, patient and personnel records;
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(vii) Data. Statistical, financial, cost and accounting data;
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(viii) Patients. Existing and prospective patient lists, names
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and addresses;
(ix) Manuals. Administrative, accounting, operations and
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procedures manuals; and
(x) This Transaction. All writings, conversations and
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information regarding the transactions contemplated by this Agreement.
Sellers understand and agree that, due to the highly competitive nature of
the health care industry and the Dialysis Business, disclosure of any of the
Confidential Information would be extremely damaging to Vivra and its
affiliates. To the extent that any such Confidential Information becomes
available to Sellers each Seller agrees that he will not use or divulge
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such information without the prior written consent of Vivra and that he holds
such information in a fiduciary capacity for the sole benefit of Vivra. Sellers
also agree that the Confidential Information includes but is not limited to
trade secrets within the meaning of any and all applicable state and federal
statutes, rules and regulations, and that if any Seller breaches this covenant,
Vivra shall in addition to all other remedies, have available the remedies
provided by all such state and federal statutes, rules and regulations as well
as such remedies as may otherwise be available. The restrictions set forth in
this paragraph 1.5.1(c) shall not apply to any part of the Confidential
Information: (i) which is or becomes generally available to the public or
publicly known other than as a result of disclosure by Sellers; (ii) which
becomes available to Sellers on a nonconfidential basis from a source other than
Vivra or its or affiliates who is not bound by a non-disclosure obligation; or
(iii) to the extent it is disclosed by Sellers pursuant to the requirement of a
governmental agency or court of competent jurisdiction or as otherwise required
under applicable law.
(d) Buyer's Nondisclosure Covenant. Prior to the Closing Date, Buyer
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agrees to (i) keep all writings, conversations and information regarding the
transactions contemplated by this Agreement strictly confidential and not to
disclose them to any third parties, except its officers, attorneys, accountants,
and other consultants, and (ii) keep in the strictest confidence all financial
and other information and data provided to it by the Sellers with respect to the
Company, and not to divulge or discuss any such information, or provide copies
or extracts thereof to any third parties.
1.5.2 Transferability. Sellers agree that the covenants contained in
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paragraph 1.5.1 (the "Covenants") may be assigned by Vivra to any person, firm
or business entity to whom the ownership and operation of the Facility may be
transferred, it being the intention of the parties that the Covenants shall be
binding on or inure to the benefit of, as the case may be, any of their
successors with the same force and effect as if the Covenants had been made by
and with such successors.
1.5.3 Severability. It is further understood and agreed that the scope of
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the Covenants is reasonable in activities, time and area, and the Covenants are
fairly necessary to protect the investment of Vivra hereunder. Nevertheless, it
is further agreed that the Covenants shall be regarded as severable and shall be
operative as to activities, time and area to the extent that they may be made so
operative, and if any part of them is declared invalid or unenforceable as to
activities, time or area, the validity and enforceability of the remainder shall
not be affected.
1.5.4 Injunction. It is further understood and agreed that Vivra will
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suffer irreparable injury for which it may have
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no adequate remedy at law as a result of the breach of these Covenants, and that
Vivra shall be entitled to appropriate remedies of specific performance and
injunctive relief in the event of such breach.
2. Representations and Warranties of Sellers. Each of the Sellers,
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jointly and severally, represents and warrants to Buyer as of the date hereof,
and as of the Closing Date, as follows:
2.1 Organization and Capitalization.
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(a) The Company is, and on the Closing Date will be, a Louisiana
corporation duly organized, validly existing and in good standing under the laws
of the State of Louisiana, and has full power and authority to carry on the
Dialysis Business.
(b) The authorized capital stock of the Company consists of one hundred
(100) shares of common stock, no par value, of which one hundred (100) shares
are issued and outstanding on the date hereof. All of the SCDC Shares have been
duly authorized and validly issued and are fully paid and nonassessable and were
not issued in violation of any preemptive or other right of any person. There
are no outstanding options, rights, warrants, conversion rights or other
agreements or commitments to which any Seller or the Company is a party or
binding upon any Seller or the Company providing for the issuance or transfer by
any Seller or the Company of any of the capital stock of the Company. Each
Seller is the sole record and beneficial owner of the SCDC Shares set forth
opposite his name on Exhibit A, and has good and marketable title to such SCDC
Shares and the absolute right, power and capacity to sell, assign, transfer and
deliver such SCDC Shares to Buyer free and clear of any liens, encumbrances,
pledges, security interests, restrictive agreements, options, rights of first
refusal, transfer restrictions, conditional sales agreements, voting trust
arrangements, voting agreements or claims of any nature whatsoever. Each Seller
is conveying to Buyer good and marketable title to such SCDC Shares free of any
interest whatsoever of third parties.
2.2 Authority. All actions required to be taken by any Seller to
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authorize and approve the execution, delivery and performance of this Agreement
and the other agreements to be delivered at Closing, and the consummation of the
transactions described herein have been duly taken. Sellers have the power and
authority (without the consent of any other person) to enter into, deliver, and
perform this Agreement and the other agreements to be delivered at Closing.
This Agreement, and the other agreements to be delivered at Closing, when
executed and delivered by each Seller, will be the valid and binding obligations
of Sellers enforceable against each such Seller according to their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws, regulations and authorities from time to time in effect
affecting creditors' rights generally and to general principles
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of equity, whether considered in a proceeding in equity or at law.
2.3 Financial Statements.
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2.3.1 Statements Delivered. Sellers have delivered or will deliver to
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Buyer the following statements:
(a) Balance Sheet and Income Statement. Balance sheets and statements of
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profit and loss for the Dialysis Business at and for the years ended December
31, 1993 and December 31, 1994 and at and for the six (6) months ended June 30,
1995 (Schedule 2.3.1(a)) (the "Financials").
(b) Treatment Report. A report showing all treatments provided by the
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Dialysis Business from January 1, 1993 through June 30, 1995 (Schedule 2.3.1(b))
(the "Treatment Report").
2.3.2 Representation. All of the Financials have been prepared on the
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cash basis of accounting according to generally accepted accounting principles
consistently applied and fairly present the financial position and results of
operations of the Dialysis Business as of the dates and for the periods
indicated. The Company is not subject to any liability or obligation (whether
absolute, accrued, contingent or otherwise) which is not shown or provided for
on the Financials or otherwise described in narrative form on Schedule 2.3 1(a).
The Treatment Report accurately presents the number of treatments provided at or
by the Facility on the dates thereof and for the period covered thereby.
2.4 Assets. Schedule 2.4 contains a complete and correct list of all
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material items of personal property used in connection with the Dialysis
Business or owned by the Company (the "Personal Property");
2.4.1 Extent. The Personal Property constitutes all material items of
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personal property used in or necessary for the operation of the Dialysis
Business as presently operated; and the inventory on the Closing Date will be of
quality, quantity and variety customary for facilities of size and utilization
and with storage capacity comparable to the Facility;
2.4.2 Condition. There are no material defects or unsafe conditions with
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respect to the Assets (as defined below) and the Sellers do not know of any
facts which would make the Assets unsuitable for the uses for which they are
intended. All of the Personal Property is in good operating condition and
repair, ordinary wear and tear excepted. The Assets will furnish Buyer with all
of the capacity and rights to operate the Dialysis Business in the same manner
as presently and historically operated by the Company and Sellers.
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2.4.3 Title. Except as set forth on Schedule 2.4, the Company has all
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right, title and interest in, and good and marketable title to, all of the
assets, properties and rights used in the Dialysis Business (the "Assets") free
and clear of any Encumbrance.
2.5 Effect of Agreement. The execution and delivery of this Agreement by
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Sellers and the consummation of the transactions described herein, do not and
will not:
2.5.1 Articles of Incorporation. Violate the Company's Articles of
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Incorporation or Bylaws;
2.5.2 Breach of Agreements. Violate, constitute a breach of, cause a
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default under, or permit the termination of any agreement, obligation, or give
rise to any liability, penalty, mortgage or deed of trust, security agreement or
other lien, charge or encumbrance, to which the Company is a party or to which
the Assets are subject or for which the Company or Buyer might become liable;
2.5.3 Acceleration of Indebtedness. Accelerate or constitute an event
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entitling the holder of any indebtedness of the Company to accelerate the
maturity of any such indebtedness or to increase the rate of interest presently
in effect thereon; or
2.5.4 Judgments, etc. Violate, conflict with or result in the breach of
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any judgment, order, writ, injunction, decree or any rule or regulation of any
court, governmental agency or instrumentality affecting the Sellers, the
Company, the Dialysis Business or the Assets.
2.6 Compliance with Law. The Dialysis Business has been conducted in
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conformity, and Sellers and the Company are in compliance with all federal,
state and local laws, regulations or orders, including without limitation,
employment, insurance, zoning, occupancy, building, occupational and licensure
laws, regulations and orders which affect the Dialysis Business and all laws
relating to Medicare and/or Medicaid, including, but not limited to, 42 U.S.C.
Section 1320(a)-7(a) et seq., 42 U.S.C. Section 1320(a)-7(b) et seq., 31 U.S.C.
Section 3729, and any other federal or state provision relating to the filing of
false claims or payments for referrals. Sellers have not received any notice
asserting a failure to comply with any such law, regulation or order which
notice has not prior hereto been fully and completely resolved to the
satisfaction of, or abandoned by, the noticing party. Without limitation of
paragraph 2.6:
2.6.1 Licenses etc. The Company holds all rights, permits, authority,
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consents, licenses, certificates of need, exemptions, accreditations and the
like, including zoning approvals, variances and use or occupancy permits
necessary to enable it to (i) conduct the Dialysis Business as heretofore
conducted and (ii) obtain reimbursement under the Medicare,
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Medicaid and ESRD Programs and under all contracts, programs and other
arrangements with third-party payors, insurers or fiscal intermediaries
(collectively, the "Licenses"). Schedule 2.6.1 contains a complete and correct
list of the Licenses, showing their dates of expiration where applicable. The
Licenses are valid and in full force and effect and no violations exist in
respect thereof. There are no pending, or, to the knowledge of Sellers,
threatened, investigations or proceedings with respect to the Licenses. The
Facility has an existing Medicare Provider Agreement with the Health Care
Finance Administration of the Department of Health and Human Services and is
certified for participation in the Medicare, Medicaid and ESRD Programs, all of
which licenses, agreements, certifications, contracts and instruments are in
full force and effect. No defaults have occurred thereunder, and, to the best
knowledge of each Seller, no event has occurred which, with the giving of notice
or passage of time or both, would constitute a material default thereunder.
2.6.2 Hazardous Materials. Except as disclosed in Schedule 2.6.2, no
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hazardous or toxic material of any type has ever been generated, treated,
produced, stored, transported, released or disposed of on, around or beneath the
Facility (as hereinafter defined). No written notification has been received
with respect to the space occupied by the Facility (the "Premises") and there
are no proceedings or inquiries, pending or, to the knowledge of Sellers,
threatened, before any court, agency, authority or tribunal, involving,
concerning, or affecting the Premises, in which is in issue the violation of any
federal, state or local law or regulation pertaining to hazardous or toxic
materials. For purposes of this section, the phrase "hazardous or toxic
materials" includes substances defined as "hazardous substances," "hazardous
materials," "toxic substances," "hazardous waste," "extremely hazardous waste,"
or "restricted hazardous wastes," under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. section
9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. section
1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. section
6901, et seq.; the Federal Water Pollution Control Act, 33 U.S.C. section 1251,
et seq.; and comparable provisions of state and local county and city
ordinances, or any substances so defined or stated in any of the regulations
adopted and publications promulgated pursuant to those laws as they may have
been amended from time to time.
2.6.3 Filing of Reports. Other than claims or reports pertaining to
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individual patients, Sellers will cause to be timely filed, all cost reports of
every kind whatsoever required by law or by written or oral contract or
otherwise to have been filed or made on or prior to the Closing Date with
respect to the purchase of services by third-party purchasers, including, but
not limited to, Medicare and Medicaid, insurance carriers and other fiscal
intermediaries. The Company and each Seller
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has timely filed, in a complete and correct manner, all requisite claims and
other reports required to be filed in connection with all state and federal
Medicare and Medicaid programs due on or before the date hereof. There are no
claims, actions, payment reviews or appeals pending or threatened before any
commission, board or agency, including, without limitation, any intermediary or
carrier, the Administrator of the Health Care Financing Administration, or the
Louisiana Department of Health and Rehabilitative Services or any other state or
federal agency with respect to any Medicare or Medicaid claims filed by Seller
on or before the date hereof or program compliance matters, which would
adversely affect the Company, any Seller, the Assets, the operation or utility
thereof, or the consummation of the transactions contemplated hereby. No
validation review or program integrity review related to any Seller or the
Company has been conducted by any commission, board or agency in connection with
the Medicare or Medicaid program, and no such reviews are scheduled, pending or,
to any Seller's knowledge, threatened against or affecting any Seller, the
Company, any of the Assets or the consummation of the transactions contemplated
hereby.
2.6.4 Occupational Safety. The Company has complied in all material
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respects with all requirements of the Occupational Safety and Health Act and its
state equivalents and regulations promulgated under any such legislation, the
consequences of a violation of which could have material adverse effect on the
Dialysis Business, and with all orders, judgments and decrees of any tribunal
under such legislation that apply to the Dialysis Business or the Assets.
2.6.5 Zoning. The operation and current use of the Premises are permitted
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under existing zoning and other land use laws and regulations applicable to the
Premises, and there are no plans, studies or efforts of any governmental or
nongovernmental authority, association, agency, person or entity which would
affect Buyer's proposed use or operation of the Premises.
2.7 Litigation.
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2.7.1 Claims Actions, etc. Except as set forth in Schedule 2.7, there are
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no claims, actions, suits, arbitrations, legal or other proceedings pending or,
to the best knowledge of Sellers, threatened before any court or governmental or
administrative body or agency, or arbitration tribunal, nor are there any
outstanding orders, writs, judgments, injunctions or decrees of any court,
arbitrator or governmental agency to which any Seller or the Company is a party
related to the Dialysis Business;
2.7.2 Governmental Investigation. Except as shown on Schedule 2.7, no
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investigations for claims against (i) the Company, any Seller, the Dialysis
Business or the Facility or (ii) to the best knowledge of any Seller, any of the
medical
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staff members or employees of the Facility, are pending or threatened by any
governmental agency or instrumentality; and
2.7.3 Judgments. Except as shown on Schedule 3.7, none of the Sellers or
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the Company is party to, nor are they the subject of, any judgment, order, writ,
injunction, or decree of any court or governmental agency or instrumentality
which relates to the Assets, the Company, the Dialysis Business, the condition
or operation of the Facility or the consummation of any of the transactions
described in this Agreement.
2.8 Improper Payments. None of the Sellers, the Company or any of the
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Sellers' or the Company's affiliates, employees, representatives or agents has,
directly or indirectly, within the past four (4) years, given or made or agreed
to give or make any illegal commission, payment, gratuity, gift, political
contribution or similar benefit to any customer, supplier, governmental employee
or other person who may be in a position to help or hinder the Dialysis
Business. None of the Sellers or the Company has filed any reports with any
governmental agency which disclose that it has participated in any of the
foregoing practices or acts giving rise to such practices.
2.9 Eminent Domain. There are no pending or, to the best knowledge of any
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Seller, threatened proceedings in eminent domain or otherwise, affecting any of
the Assets or the Facility.
2.10 Insurance. Schedule 2.10 sets forth a complete and correct list and
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a brief description of all policies of fire, extended coverage, liability
(including, without limitation, medical malpractice and professional liability)
and all other kinds of insurance held by the Company covering the Assets, the
Facility and the Dialysis Business. These policies are and will be maintained,
in full force and effect, until the Closing Date. Schedule 2.10 also contains a
list of all claims made on such policies since January 1, 1993. There are no
pending or asserted claims against any insurance as to which any insurer has
denied liability.
2.11 Labor Arrangements. Except as shown on Schedule 2.11, the Company is
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not a party to, bound by or obligated to contribute to, any collective
bargaining agreement or other similar contract with any labor organization, nor
is it a member of or affiliated with any organization, group or association as a
result of which it is bound as to the terms and conditions of employment or its
hiring or termination policies at the Facility with respect to any of its
employees. Except as disclosed in Schedule 2.11, the Company has not
experienced, and there is not pending or, to the best knowledge of any Seller,
threatened, any labor dispute, strike, work stoppage or slowdown or labor
disturbance affecting the Facility, nor has there been any labor union
organizing activity at the Facility within the last three (3) years. There is
no unfair labor practice or other charge or
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complaint pending, or, to the best knowledge of any Seller, threatened against
the Company, before any court, the National Labor Relations Board or any other
governmental agency.
2.12 Personnel; Compensation. Schedule 2.12 is a complete and correct
-----------------------
list of the names and addresses of all employees of the Company showing the
compensation payable to each and all accrued vacation time, sick leave and
holiday time through [July 31, 1995]. The Company has not increased the
compensation payable to any employee of the Company since May 26, 1995, without
the prior written consent of Vivra.
2.13 Employment Contracts and Employee Benefit Plans. Schedule 2.13
-----------------------------------------------
contains a complete and correct list and description of all employment contracts
to which the Company is a party or by which it is bound and of all pension,
bonus, profit sharing, retirement, stock option, medical expense, dental
expense, hospitalization, life insurance or other death benefit, severance, and
other benefit plans, agreements, arrangements or other programs providing
remuneration or benefits for employees at the Facility, including without
limitation any employee benefit plan defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not
funded and whether or not reflected in any plan documents. There have been no
material defaults, breaches, omissions or other failings by the Company or, to
the best knowledge of any Seller, any fiduciary under any of these contracts or
programs.
2.13.1 Employee Benefit Plans. Without limitation of paragraph 2.13, as
----------------------
to each employee benefit plan, as defined in section 3(3) of ERISA sponsored by
the Company:
(a) Compliance. The Company is in compliance in all material respects
----------
with, and has taken all steps necessary to satisfy the requirements which are
prescribed by, any and all statutes, orders or governmental rules or regulations
currently in effect.
(b) Qualification. Where applicable, each such plan is qualified under
-------------
section 401 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the plan sponsor has received a determination letter as to the continued
qualification of each such plan under the Code.
(c) Contributions. The Company has made all contributions to each such
-------------
plan required by the terms of the plan or any related collective bargaining
agreement as well as, where applicable, all contributions required to be made in
order to satisfy the minimum funding standards of section 302 of ERISA to the
extent such standards are applicable.
(d) Funding. With respect to any such plan subject to the minimum funding
-------
standards of section 302 of ERISA, if any, there
-13-
is no accumulated funding deficiency within the meaning of such section and
there are no unfunded past service liabilities.
(e) Prohibited Transactions. The Company has not engaged in or been a
-----------------------
party to any prohibited transaction in connection with which the Company or the
Sellers or their successors could be subject to either a civil penalty assessed
pursuant to section 502(i) of ERISA or a tax imposed by section 4975 of the
Code.
(f) Reporting. The Company has complied with and prior to Closing will
---------
comply with reporting requirement as to any event which has occurred and any
condition which exists which would be deemed a reportable event with respect to
such plans within the meaning of section 404 of ERISA.
(g) Pension Benefit Guaranty Corporation. The Company has not incurred,
------------------------------------
and will not incur, any financial liability to the Pension Benefit Guaranty
Corporation except for premiums due, all of which have been or will be paid.
(h) Terminations. The Company has not terminated any such plan or any
------------
trust related thereto.
2.14 Brokers. Neither the Company nor any of the Sellers has employed,
-------
contracted for the services of, or authorized any broker or finder with respect
to the negotiations leading up to the execution of this Agreement or the
consummation of the transactions contemplated hereby.
2.15 Liabilities. Buyer will not be obligated for, nor will the Assets
-----------
secure or be subject to any liabilities or obligations of Sellers of any kind or
nature whether absolute, accrued, contingent, known, unknown or otherwise, and
whether normally set forth or reflected in a financial statement in connection
with, as result of or following the consummation of the transactions
contemplated hereby.
2.16 Material Contracts. Schedule 2.16 contains a correct and complete
------------------
list of all contracts, agreements, commitments, instruments, leases and
arrangements, including all amendments or supplements thereto, to which the
Company is a party or by which it is bound, or by which any of the Assets or the
Dialysis Business is subject or bound which: (a) are material to the Dialysis
Business or (b) meet any of the following descriptions: (i) any contracts,
agreements or arrangements with insurance companies, managed care plans,
hospitals, employers or other third parties pursuant to which health care
services are provided to patients; (ii) any contract or agreement not entered
into in the normal course of business; (iii) any contract or agreement which
involves future payments or receipts in excess of $ 5,000; (iv) any contract or
agreement not terminable without penalty or cause on 30 days or less notice; and
(v) any contracts or agreements with physicians or other providers of
-14-
medical services on behalf of the Company (collectively, the "Material
Contracts"). Sellers have delivered accurate and complete copies of each
Material Contract to Buyer. All Material Contracts are valid, binding and
enforceable in accordance with their terms and are in full force and effect.
Neither Sellers nor the Company nor to the best of any Seller's knowledge, any
other party to any Material Contract is in breach of any provision of, in
violation of, or in default under the terms of any Material Contract. Except as
indicated on Schedule 2.16, no Material Contract will be effected by the
transactions contemplated by this Agreement.
2.17 Pooling of Interests. Except as contemplated or required under this
--------------------
Agreement:
(a) the Company has not been a division or subsidiary of another
corporation for the two (2) years preceding the Closing;
(b) the Company has not held more than 10% of the stock of any other
company or of Vivra at the date of initiation of the transactions contemplated
by this Agreement;
(c) the transactions contemplated by this Agreement shall be completed in
a single transaction or within one (1) year after the plan is initiated;
(d) the transactions contemplated by this Agreement shall be substantially
voting common stock in exchange for voting common stock;
(e) the Company has not, in order to consummate this transaction, changed
its voting common stock structure during the two years immediately preceding the
Closing;
(f) during the two years preceding the Closing, the Company has not
purchased treasury stock to consummate or avoid a business combination
transaction;
(g) the Company has not rearranged the relative ownership of shares among
its existing voting shareholders as a part of this transaction;
(h) none of the Vivra Shares shall be restricted as to voting rights as
part of this transaction;
(i) there is no "earnout" contingency as part of this transaction;
(j) no financial arrangements have been made with the Sellers which negate
the exchange of equity securities (such as loans made against stock issued); and
(k) to the best of the knowledge of the Sellers, neither the Company, nor
any of its affiliates, officers, or directors
-15-
has taken any action or failed to take action which action or failure to take
action would jeopardize the treatment of Buyer's acquisition of the Company as a
"pooling of interests" for accounting purposes.
2.18 Receipt of Information. Seller has received: (i) a copy of Vivra's
----------------------
prospectus dated February 9, 1995; (ii) a copy of Vivra's 1994 Annual Report to
Stockholders; (iii) a copy of Vivra's Annual Report on Form 10-K for the fiscal
year ended November 30, 1994; (iv) a copy of Vivra's Quarterly Reports on Form
10-Q for the quarters ended February 28 and May 31, 1995; (v) a copy of Vivra's
Proxy Statement for Vivra's annual meeting held on April __, 1995.
2.19 Accounts Receivable. Schedule 2.19 sets forth an accurate and
-------------------
complete aging of all outstanding accounts and notes receivables as of June 30,
1995. All outstanding accounts and notes receivable reflected on the Financials
are due and valid claims against account debtors for services rendered, and are
not subject to any defenses, offsets or counterclaims. All receivables arose in
the ordinary course of business. No receivables are subject to any prior
assignments, claim, lien or security interest. The Company has no liability for
any discounts, refunds or otherwise except as set forth on the Financial
Statements.
2.20 Taxes. The Company has filed all returns, declarations and reports
-----
and all information returns and statements (collectively, "Returns") required to
be filed or sent by or on behalf of the Company with respect to all foreign,
federal, state, county, local and other taxes of every kind, including income,
gross receipts, excise, franchise, property, value added, import duties,
employment, transfer, payroll, sales and use taxes and any additions to tax and
any interest or penalties thereon (collectively, "Taxes") for any period ending
on or before the Closing Date. As of the time of filing, the Returns accurately
and correctly reflected, the income, business, assets, operations, activities
and status of the Business and any other information required to be shown
thereon. No extension of time in which to file a Return is currently in effect.
The Company has timely paid all Taxes required to be paid prior to the date
hereof. All Taxes which the Company is required by law to withhold or to
collect for payment have been duly withheld and collected, and have been paid to
the proper governmental entity or are being withheld by the Company for such
payment. All taxes which have not been paid on the date hereof have been
properly accrued for on the Financial Statements. Since its incorporation, the
Company has been taxable as an "S" corporation under the Internal Revenue Code
of 1986, as amended.
2.21 Bank Accounts. Schedule 2.21 sets forth the names and locations of
-------------
all banks, trust companies, savings and loan associations and other financial
institutions at which the
-16-
Company maintains an account, deposit, safe deposit box, lock box or line of
credit or other loan facility relationship or account of any nature and the
names of all persons authorized to draw thereon, make withdrawals therefrom or
have access thereto. Schedule 2.21 sets forth an accurate and complete list of
all certificates of deposit, debt or equity securities and other investments
owned, beneficially or of record, by the Company ("Investments"). The Company
has good and marketable title to all of the Investments.
2.22 Transactions with Affiliates. Except as otherwise set forth on
----------------------------
Schedule 2.22, none of the Sellers nor any Affiliate (as hereinafter defined) of
any Seller, directly or indirectly: (a) owns any debt, equity or other interest
in any corporation, association or other entity which is a competitor, lessor,
lessee, customer or supplier of the Company, (b) has any cause of action or
other claim against or owes any amount to, or is owed any amount by, the
Company; (c) has any interest in or owns any property or right used in the
conduct of the Dialysis Business; (d) is a party to any contract, lease,
agreement, arrangement or commitment of which the Company is a party or which is
used in the conduct of the Dialysis Business; or (e) received from or furnished
to the Company any goods or services. For purposes of this Agreement, the term
"Affiliate" means any corporation, partnership, trust or other entity controlled
by the Sellers, individually or collectively, or any member of any Seller's
immediate family.
2.23 Interim Change. Except as set forth in Schedule 2.23 or in the
--------------
Financials, since December 31, 1994 there has not been:
(a) any material adverse change in the financial condition, assets,
liabilities, personnel or business of the Company or in its relationships with
suppliers, patients, lessors, lessees or regulators;
(b) any damage, destruction or loss of property, whether or not covered by
insurance, materially and adversely affecting the Company;
(c) any increase in the compensation or benefits payable or to become
payable by the Company to any of its officers or to employees;
(d) any extension of credit by the Company other than in the ordinary
course of business;
(e) any redemption, purchase or other acquisition by the Company of any of
its Shares;
(f) any sale, transfer or disposal by the Company or purchase, or
agreement therefor by the Company of any properties
-17-
or assets or provision of services except in the ordinary course of business and
consistent with past practices;
(g) any declaration or payment of any dividends or other distributions in
respect of the capital stock of the Company; or
(h) any transaction not in the ordinary course of business.
Except as disclosed on Schedule 2.23, since December 31, 1994 the Company has
not incurred or become subject to, or agreed to incur or become subject to, any
liability or obligation, contingent or otherwise, except current liabilities and
contractual obligations which are disclosed on Schedule 2.16 or not required to
be so disclosed in the ordinary course of business.
2.24 Disclosure by Seller. Set forth on Schedule 2.24 is a description of
--------------------
any of the following events:
(a) any disciplinary, peer review or professional review investigation,
proceeding or action instituted against any Seller by any licensure board,
hospital, medical school, health care facility or entity, professional society
or association, third party payor, peer review or professional review committee
or body, or governmental agency;
(b) any investigation or proceeding, whether administrative, civil or
criminal, relating to an allegation against any Seller of filing false health
care claims, violating anti-kickback laws or engaging in other billing
improprieties;
(c) any allegation, or any investigation or proceeding based on any
allegation or proceeding based on any allegation, against any Seller of
violating professional ethics or standards, or engaging in illegal, immoral or
other misconduct (of any nature or degree), relating to the practice of
medicine; and
(d) any denial or withdrawal of an application of any Seller in any state
for licensure as a physician, for medical staff privileges at any hospital or
other health care entity, for board certification or recertification, for
participation in any third party payment program, for state or federal
controlled substances registration, or for malpractice insurance.
2.25 No Untrue Representation or Warranty. No representation or warranty
------------------------------------
by Sellers in this Agreement, and no statement, schedule, certificate furnished
or to be furnished to Buyer pursuant to this Agreement, or in connection with
the transactions described it, contains or will contain any untrue statement of
a material fact, or omits or will omit to state a material fact necessary to
make the statements contained therein not misleading.
-18-
3. Representations and Warranties of Buyer. Buyer represents and warrants
---------------------------------------
to Sellers that:
3.1 Organization and Good Standing. Buyer is, and on the Closing Date,
------------------------------
will be, a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
3.2 Authority. The execution, delivery and performance of this Agreement
---------
and the consummation of the transactions described in it by Buyer have been duly
authorized and approved by Buyer's Board of Directors (either specifically or by
appropriate grant of general authority), and by all other necessary corporate
action on its part, and no stockholder approval is required of such actions.
The person who has executed this Agreement on behalf of Buyer has been duly
authorized to do so by all necessary corporate action by Buyer. Buyer has the
corporate power and authority to enter into, deliver, and perform this
Agreement, and this Agreement, when executed and delivered by Buyer, will be a
valid and binding obligation of Buyer enforceable against Buyer according to its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws, regulations and authorities from time to time in effect
affecting creditors' rights generally and to general principles of equity,
whether considered in a proceeding in equity or at law.
3.3 Brokers. Buyer has not employed, contracted for the services of, or
-------
authorized any broker or finder with respect to the negotiations, execution or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
3.4 Effect of Agreement. Neither the execution and delivery of this
-------------------
Agreement by Buyer nor the consummation of the transactions described in it at
the Closing will:
3.4.1 Articles and Bylaws. Violate Buyer's Certificate of Incorporation
-------------------
or Restated Bylaws;
3.4.2 Breach of Agreements. Violate, constitute a breach of, cause a
--------------------
default under, or permit the termination of any agreement, obligation,
liability, mortgage or deed of trust, security agreement or other lien, charge
or encumbrance, to which Buyer is subject or for which Sellers might become
liable;
3.4.3 Acceleration of Indebtedness. Accelerate or constitute an event
----------------------------
entitling the holder of any indebtedness of Buyer to accelerate the maturity of
any such indebtedness or to increase the rate of interest presently in effect
thereon; or
3.4.4 Judgments, etc. Violate, conflict with or result in the breach of
---------------
any judgment, order, writ, injunction, decree, or, to the best knowledge of
Buyer, any rule or regulation of any court, governmental agency or
instrumentality affecting Buyer.
-19-
3.5 Litigation. There is no material litigation, governmental
----------
investigation or other proceeding pending or, to the best knowledge of Buyer,
threatened to which Buyer is a party that would adversely affect the ability of
Buyer to consummate the transactions described in this Agreement.
3.6 Vivra Stock. The Vivra Shares have been duly authorized by all
-----------
necessary corporate action of Vivra and when delivered hereunder will be validly
issued, fully paid and nonassessable.
4. Covenants of Sellers. Sellers jointly and severally covenant and agree
--------------------
that:
4.1 Conduct of Business Pending the Closing. From the date of this
---------------------------------------
Agreement to the Closing Date, Sellers will or will cause the Company to:
4.1.1 Conduct of Dialysis Business: Operation of Facility. Conduct the
---------------------------------------------------
Dialysis Business and operate the Facility as presently conducted and operated
and only in the ordinary course of business and will comply in all material
respects with all applicable legal and contractual obligations;
4.1.2 Preservation of Organization. Use best efforts to preserve the
----------------------------
Dialysis Business and the Facility intact and to preserve the goodwill of all
suppliers, customers, patients, physicians, providers and others with whom
Sellers or the Company have business relationships;
4.1.3 Maintenance of Premises. Use best efforts to preserve and maintain
-----------------------
the Premises in good condition, ordinary wear and tear excepted, and repair any
damage to the Premises;
4.1.4 Employees. Take no action which would interfere with Vivra's
---------
relations with employees at the Facility and not increase the compensation
payable to any of such employees;
4.1.5 Liabilities. Not incur any obligation or liability other than
-----------
current liabilities incurred in the ordinary course of business consistent with
past practices; and
4.1.6 Alienation of Assets. Not sell, transfer, distribute or encumber
--------------------
any of the Assets, except for Inventory expended or sold in the ordinary course
of business.
4.1.7 Certain Payments. Not (a) declare or pay any dividend or make any
----------------
other distribution with respect to its securities or redeem or purchase any
securities, or (b) perform, pay or otherwise discharge, any obligation or
liability except for current liabilities paid in the ordinary course of business
consistent with past practices.
-20-
4.1.8 Material Contracts. Not enter into, amend or terminate any Material
------------------
Contracts.
4.2 Restrictions on Transfer. Each Seller agrees that he will not
------------------------
directly or indirectly sell, assign, transfer, give, pledge, encumber or
otherwise dispose of any interest in his SCDC Shares, prior to the Closing and
will not directly or indirectly sell, assign, transfer, give, pledge, encumber
or otherwise dispose of any interest in the Vivra Shares acquired by such Seller
(including any Vivra Shares issued as part of the Post Closing Payments) until
an earnings report including at least 30 days of the combined operations of
Vivra and the Dialysis Business has been published (the "Combined Earnings
Report"). Legal counsel for the Sellers (the "Escrow Holder") shall hold the
Vivra Shares in escrow until the Combined Earnings Report has been published and
thereafter the Escrow Holder shall deliver the Vivra Shares to Sellers and upon
such delivery, the provisions of this paragraph 4.3 shall be no longer
effective. Escrow Holder shall be entitled to deposit such shares with a court
of law in the event of a dispute and Vivra shall not seek to have Escrow Holder
disqualified from representing Sellers in such dispute. Vivra and Sellers shall
jointly indemnify, defend and hold Escrow Holder harmless from any and all
reasonable expenses and fees, costs, damages and liabilities arising or incurred
by reason of it serving as Escrow Holder.
4.3 Facility Lease. Sellers shall cause the owner of the Premises to
--------------
enter into the Facility Leases (as hereinafter defined).
4.4 Insurance.
---------
4.4.1 Maintenance of Existing Insurance. Sellers shall cause the Company
---------------------------------
to maintain in full force and effect to the Closing Date all policies of
insurance relating to the Assets and the Facility now in effect and will give
all notices and present all claims under such policies of insurance in a timely
fashion up to the Closing Date.
4.4.2 Tail Coverage. Sellers shall, at Sellers' expense, obtain liability
-------------
insurance coverage for all occurrences prior to the Closing Date and shall list
Vivra as an additional insured under such policy.
4.5 Audited Financial Statements. On and after Closing, Sellers shall
----------------------------
cooperate with Vivra in the preparation of such audited financial statements in
respect of the Assets and results of operations of the Dialysis Business prior
to Closing as Vivra reasonably deems appropriate for Vivra's financial and tax
reporting purposes. Vivra shall pay the reasonable accounting fees incurred by
Sellers in connection with the preparation of such audited financial statements
but only to the
-21-
extent that such fees would not otherwise have been incurred by Seller.
4.6 Satisfaction of Conditions Precedent. Sellers, in addition to
------------------------------------
specific obligations set forth elsewhere in this paragraph 4, shall (i) upon
satisfaction of the conditions precedent set forth in paragraph 7, execute and
deliver the documents required to be delivered by Sellers pursuant to paragraph
8 and (ii) use their best efforts to consummate the transaction contemplated by
this Agreement and to satisfy or cause to be satisfied all of the conditions
precedent set forth in paragraph 6.
4.7 Supplements. If any representation, warranty or statement of Sellers
-----------
or any schedule delivered to Buyer shall become incorrect, Sellers shall
promptly deliver to Buyer a supplement in order that said representation,
warranty, statement, or schedule, as so supplemented, shall be true and correct,
provided, however, that no such supplement or amendment shall be considered in
determining the satisfaction of the conditions set forth in paragraph 6.1 and no
such supplement or amendment shall affect Sellers' obligations under paragraph
9.
5. Covenants of Buyer. Buyer covenants and agrees that:
------------------
5.1 Maintenance of Records; Access by Sellers. Subject to the applicable
-----------------------------------------
law of confidentiality and privacy, Buyer shall for a period of 7 years maintain
all business records of the Facility and make such records available for use by
Sellers as needed. Access to any such records shall be during normal business
hours, with prior notice to Buyer of the time when such access shall be needed.
Sellers' employees, representatives and agents shall conduct themselves in such
a manner as to not unnecessarily or unreasonably disrupt Buyer's normal business
activities.
5.2 Audited Financial Statements. On and after the Closing Date (and
----------------------------
after Closing), Buyer shall cooperate with Sellers in the preparation of such
audited financial statements in respect of the Assets and the results of
operations of the Dialysis Business prior to Closing as Sellers reasonably deem
appropriate for Sellers' financial and tax reporting purposes.
5.3 Satisfaction of Conditions Precedent. Buyer shall upon satisfaction
------------------------------------
of the conditions precedent set forth in paragraph 6, execute and deliver the
documents required to be delivered by Buyer pursuant to paragraph 8, use its
best efforts to consummate the transactions contemplated by this Agreement and
to satisfy or cause to be satisfied all of the conditions precedent which are
set forth in paragraph 7.
5.4 Public Announcement. Vivra agrees to assist the Sellers in announcing
-------------------
this transaction to the public in such a way that the Company's goodwill will be
preserved and the
-22-
public's perception of the transaction will be that of a continuation of the
Company's business and not a disposition of assets.
6. Buyer's Conditions Precedent to Closing. Buyer's obligations to
---------------------------------------
purchase the SCDC Shares, deliver the Vivra Shares and perform its other
obligations under this Agreement are subject to the occurrence of or compliance
with each of the following conditions, all of which are for the sole benefit of
Buyer and may be waived by Buyer:
6.1 Warranties True and Correct. Each of the representations and
---------------------------
warranties of Sellers set forth in this Agreement shall be true and correct in
all material respects at and as of the Closing Date, and the covenants,
agreements and conditions required by this Agreement to be performed and
complied with by Sellers by such date shall have been performed and complied
with in all material respects.
6.2 Deliveries. Sellers shall have executed and delivered all of the
----------
documents required to be delivered by Sellers pursuant to paragraph 8.
6.3 Approval. The form and substance of all certificates, instruments,
--------
opinions and other documents delivered to Buyer pursuant to this Agreement shall
be reasonably satisfactory to Vivra and its counsel.
6.4 Litigation. No litigation or governmental investigation, proposed or
----------
pending, shall have been commenced or threatened by persons other than Buyer or
its affiliates with regard to the transactions described in this Agreement,
which if successful, would have a material adverse effect on the operations or
financial condition of the Dialysis Business, the Facility or the Assets or any
party's ability to consummate the transactions contemplated by this Agreement.
6.5 Condition of Assets. The Dialysis Business and the Assets shall not
-------------------
have been adversely affected in any material way by any act of God, fire, flood,
accident, labor disturbance, legislation (proposed or enacted) or other event or
condition.
6.6 Registration of Vivra Shares. The registration statement covering the
----------------------------
sale of Vivra Shares to Sellers shall have remained effective and shall not be
the subject of any stop order or proceeding seeking a stop order and the Vivra
Shares shall have been authorized for listing on the New York Stock Exchange,
upon official notice of issuance.
6.7 Consents. All consents by third parties that are required for the
--------
transfer of the SCDC Shares or are required for the consummation of the
transactions contemplated hereby, or that are required in order to prevent a
breach of or a default under or a termination of any agreement to which the
Company is a party or to which any portion of the property of the Company
-23-
is subject, shall have been obtained or provided for and shall remain in effect.
The Environmental Report shall be satisfactory to Vivra in its sole but good
faith discretion.
6.8 Due Diligence. Vivra shall have investigated the ownership,
-------------
conditions and nature of the business conducted by the Company and its financial
condition and results of operations in a due diligence investigation, the
results of which are satisfactory to Vivra in its sole but good faith
discretion. The Environmental Report shall be satisfactory to Vivra in its sole
but good faith discretion.
7. Seller's Conditions Precedent to Closing. Sellers' obligation to sell
----------------------------------------
the SCDC Shares is subject to the occurrence of or compliance with each of the
following conditions, all of which are for the sole benefit of Sellers and may
be waived by Sellers:
7.1 Warranties True and Correct. Each of the representations and
---------------------------
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects at and as of the Closing Date, and the covenants, agreements,
and conditions required by this Agreement to be performed and complied with by
Buyer by such dates shall have been performed and complied with in all material
respects.
7.2 Deliveries. Vivra shall have executed and delivered all of the
----------
documents required to be delivered by Vivra pursuant to paragraph 8.
7.3 Approval. The form and substance of all certificates, instruments,
--------
opinions and other documents delivered to Sellers pursuant to this Agreement
shall be satisfactory in all reasonable respects to Sellers and their counsel.
7.4 Litigation. No litigation or governmental investigation, proposed or
----------
pending, shall have been commenced or threatened by persons other than Sellers
or its affiliates with regard to the transactions described in this Agreement
which, if successful, would have a material adverse effect on any party's
ability to consummate the transactions contemplated by this Agreement.
7.5 Registration of Vivra Shares. The registration statement covering the
----------------------------
sale of the Vivra Shares to the Sellers shall have remained effective and shall
not be the subject of any stop order or proceeding seeking a stop order and the
Vivra Shares shall have been authorized for listing on the New York Stock
Exchange upon official notice of issuance.
8. Closing. The Closing of the transactions hereunder shall be effected
-------
as set forth in paragraph 8.
-24-
8.1 Closing. "Closing" means the transfer of all of the SCDC Shares from
-------
Sellers to Buyer. The Closing shall occur on July 31, 1995 (the "Closing Date")
at the offices of XxXxxxxxx, Will & Xxxxx, Chicago, Illinois.
8.2 Deliveries. On the Closing Date, deliveries shall be made by Sellers
----------
as set forth in paragraph 8.2.1 and by Buyer as set forth in paragraph 8.2.2.
8.2.1 Deliveries by Sellers. Sellers shall deliver to Buyer the following
---------------------
documents and instruments, in form and substance reasonably satisfactory to
Buyer and its counsel, against delivery by Buyer of the items specified in
paragraph 8.2.2:
(a) Certificates. Certificate(s) evidencing all of the SCDC Shares,
------------
endorsed for transfer to the Buyer;
(b) Good Standing. A Certificate of good standing of the Company as of a
-------------
recent date from the Secretary of State of Louisiana;
(c) Corporate Documents. The minute books, by-laws and stock records of
-------------------
the Company, certified by the Secretary of the Company; and
(d) Resignations. Resignations of each member of the Board of Directors
------------
of the Company and each officer of the Company.
(e) Facility Lease. A lease for the premises currently occupied by the
--------------
Facility (the "Facility Leases") substantially in the form attached as Exhibit B
hereto, duly executed by the owner of the Premises;
(f) Investment Letter. A letter substantially in the form attached hereto
-----------------
as Exhibit C, executed by each of the Sellers.
(g) Sellers' Certificate. Certificates ("Sellers' Certificate") signed by
--------------------
each of the Sellers, dated the Closing Date, to the effect that each of the
representations and warranties made by Sellers in this Agreement are true and
correct at and as of the Closing Date and that each of the covenants, conditions
and agreements to be performed or complied with by Sellers by such date have
been so performed or complied with in all material respects, and that, to the
best knowledge of such signatory, there is no fact or condition which would
cause Sellers to be in breach of any of the covenants or representations and
warranties hereunder as of the Closing Date. The execution and delivery of the
Sellers' Certificate by Sellers shall not limit their liability and obligations
following the Closing Date.
-25-
(h) Tail Insurance. Evidence that the insurance required by paragraph
--------------
4.4.2 of this Agreement has been obtained.
(i) Other. At the Closing, the Sellers shall take such other steps as may
-----
be necessary or appropriate to place the Buyer in actual possession and
operating control of the Dialysis Business and the Assets.
8.2.2 Deliveries by Buyer. Buyer shall deliver to Sellers (or, in the
-------------------
case of subparagraph (a), to the Escrow Holder) the following items against
delivery by Sellers of the items specified in paragraph 8.2.1:
(a) Vivra Shares. A certificate evidencing the number of Vivra Shares to
------------
be issued to each Seller at Closing.
(b) Resolutions. Copies of resolutions of the Board of Directors of
-----------
Vivra, duly certified by its Secretaries in form reasonably satisfactory to
counsel for Sellers, authorizing and approving the execution, delivery and
performance of this Agreement by Vivra and all actions to be taken by Vivra
hereunder.
(c) Buyer's Certificate. A certificate ("Buyer's Certificate") signed by
-------------------
an authorized officer of Buyer, dated the Closing Date to the effect that each
of the representations and warranties made by the Buyer in this Agreement are
true and correct at and as of the Closing Date and that each of the covenants,
conditions and agreements to be performed or complied with by Buyer by such date
have been so performed or complied with by Buyer by such date in all material
respects, and that, to the best knowledge of such signatory, there is no fact or
condition which would cause Buyer to be in breach of any of its representations
and warranties hereunder as of the Closing Date. The execution and delivery of
the Buyer's Certificate by Buyer shall not serve to limit any of Buyer's
liabilities and obligations following the Closing Date.
8.3 Closing Agreements. At the Closing, the parties shall execute,
------------------
acknowledge and deliver the following:
8.3.1 Medical Director Contract. A Medical Director Contract between
-------------------------
Community Dialysis Centers, Inc. and V.N. Xxxxxxxxx, M.D., with a term of no
less than ten (10) years, substantially in the form attached hereto as Exhibit
D.
8.4 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
8.4.1 by mutual consent of Sellers and Buyer;
8.4.2 by either Sellers or Buyer if there has been a material
misrepresentation or material breach of warranty on the part of the other party
in the representations and warranties set forth in this Agreement, or if events
have occurred which
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have made it impossible to satisfy a condition precedent to the terminating
party's obligations to consummate the transactions contemplated hereby; or
8.4.3 by either Buyer or Sellers if the Closing has not occurred by
September 1, 1995.
Termination of this Agreement shall not serve to relieve any party of any
responsibility or obligation for any breach of this Agreement occurring prior to
such termination.
9. Indemnification.
---------------
9.1 Indemnification.
---------------
9.1.1 By Sellers. Sellers jointly and severally shall, on demand,
----------
indemnify, defend and hold Buyer and its employees, agents, representatives,
successors and assigns (and, after the Closing, the Company), harmless from,
against and in respect of any and all claims, losses, costs, expenses,
liabilities and damages, including interest, penalties and reasonable attorneys'
fees and costs (collectively, "Claims"), that any of them shall incur or suffer
in connection with (i) the claims of any third party, including but not limited
to the Company's employees, against any of them for alleged obligations or
liabilities of the Company arising out of Sellers' operation of the Dialysis
Business prior to the Closing Date; or (ii) the breach by any Seller of any
covenant or agreement or the inaccuracy of any representation or warranty made
by any Seller herein. Notwithstanding anything contained herein, it is
expressly agreed that each of Xxxxx X. Xxxx, M.D. and Xxxxxx Xxxxxxxxx, M.D.
shall not be liable for the inaccuracy of the representations contained in
Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12, 2.13, 2.15, 2.16, 2.17,
2.19, 2.20, 2.21 and 2.23 which to their respective knowledge was true and
correct at the time of this Agreement and further provided that each of their
liability for breach of the representations contained in Sections 2.3, 2.4, 2.5,
2.6, 2.7, 2.9, 2.10, 2.11, 2.12, 2.13, 2.15, 2.16, 2.17, 2.19, 2.20, 2.21 and
2.23 shall not exceed 12.5% of the Purchase Price.
9.1.2 By Buyer. Vivra shall, on demand, indemnify, defend and hold
--------
Sellers and their successors and assigns harmless from, against and in respect
of any Claims, that any of them shall incur or suffer in connection with (i) the
Claims of any third party for alleged liabilities or obligations of Sellers
arising out of Buyer's operation of the Dialysis Business after the Closing
Date; or (ii) 9.1.1 or 9.1.2, the indemnitee shall notify the indemnitor within
a reasonable time after the indemnitee receives written notice of any Claim, and
shall give the indemnitor a reasonable opportunity to settle or defend any such
Claim; provided, however, that the indemnitee's failure to give such notice or
opportunity shall not impair or otherwise affect the indemnitor's obligation to
indemnify against such
-27-
Claim except to the extent that the indemnitor demonstrates actual damage caused
by such failure; and, provided further, that the indemnitee may commence to
settle or defend the Claim as circumstances warrant, but any settlement shall
require the prior written consent of the indemnitor. The expenses of all
proceedings, contests or lawsuits with respect to Claims shall be borne by the
indemnitor. If an indemnitor wishes to assume the defense of a Claim, it shall
give written notice to the indemnitee within ten (10) days after notice from the
indemnitee of such Claim, and the indemnitor shall thereafter defend the Claim,
employing counsel reasonably satisfactory to the indemnitee, provided that the
indemnitee may participate in the defense at its own expense.
If the indemnitor does not assume the defense of, or if after so assuming
it fails to defend, any such claim, the indemnitee may defend it in such manner
as it may reasonably deem appropriate, and the indemnitee may settle such Claim
on such terms as it may reasonably deem appropriate so long as such settlement
only requires the payment of cash. The indemnitor shall promptly reimburse the
indemnitee for all reasonable expenses, legal and otherwise, as incurred by the
indemnitee in connection with the defense, appeal and settlement of such Claim.
If no settlement of such a Claim is made, the indemnitor shall satisfy any
judgment rendered with respect to it before the indemnitee is required to do so.
If a judgment is rendered against the indemnitee on any Claim, or any lien
attaches to any of the assets of any indemnitee, the indemnitor shall
immediately upon such entry or attachment pay such judgment in full or discharge
such lien unless, at the expense and direction of the indemnitor, an appeal is
taken under which the execution of the judgment or satisfaction of the lien is
stayed. If and when a final judgment is rendered in any such action, the
indemnitor shall forthwith pay such judgment or discharge such lien before any
indemnitee is compelled to do so.
10. Miscellaneous.
-------------
10.1 Notices. Any notice provided for in this Agreement and any other
-------
notice, demand or communication required or permitted to be given hereunder or
which any party may wish to send to another ("Notice" or "Notices") shall be in
writing and shall be deemed to have been properly given if served by (i)
personal delivery or (ii) registered or certified U.S. mail, or by comparable
private carrier, First Class, return receipt requested in a sealed envelope,
postage or other charges prepaid, or (iii) telegram, telecopy, facsimile, telex
or other similar form of communication, if followed by other physical delivery
in writing, addressed to the party for whom the Notice is intended as follows:
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If to Buyer:
Xx. Xxxxx X. Xxxxx
Vice President
Vivra Incorporated
2 Mareblu
X.X. Xxx 00000
Xxxxxx Xxxxx, XX 00000
FAX: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
XxXxxxxxx, Will & Xxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
FAX: (000) 000-0000
If to Sellers:
Vadakkipalayam Xxxxxxxxx, M.D.
Chemmale Xxxxxxxxxxxx, M.D.
Xxxxx X. Xxxx, M.D.
Xxxxxx Xxxxxxxxx, M.D.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
with a copy to:
Xxxxxx Xxxxx, Esq.
X.X. Xxx 00
Xxxxxx, Xxxxxxxxx 00000
or such other address as any person may request by notice given as aforesaid.
10.1.1 Chance of Address. Any party to this Agreement may change its
-----------------
address for Notice from time to time by notice given in accordance with the
foregoing provisions.
10.1.2 Effective Time. All notice given pursuant to this paragraph shall
--------------
be deemed given and effective when received if personally delivered or sent by
telegram telecopy, telex or similar form of communication or, if mailed on the
date shown on the return receipt or if a receipt has not then been received,
five (5) days after mailing.
10.2 Payment of Expenses. The Sellers and Buyer shall each pay their or
-------------------
its own expenses, including without limitation, the disbursements and fees of
all their respective attorneys, accountants, advisors, agents and other
representatives, incidental to the preparation and carrying out of this Agree-
ment, whether or not the transactions contemplated hereby are consummated.
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10.3 Sales Tax. Sellers shall pay any and all sales or use taxes arising
---------
as a result of the transactions hereunder.
10.4 Schedules. Sellers agree to provide at Closing such materials,
---------
documents, and information as may be necessary to update the information
contained in any Schedule attached to this Agreement.
10.5 Termination. If the transactions contemplated hereby are not
-----------
consummated, Buyer will return to Sellers, and Sellers will return to Buyer,
upon request, the respective materials, information, documents, instruments and
records supplied by the other party in respect to such party's business
operations and shall keep confidential all information which that party has
gathered with respect to the business of the other.
10.6 Risk of Loss. Risk of loss or damage by fire or other casualty to
------------
the Assets or their taking by eminent domain before Closing is assumed by
Sellers. In the event of a material loss, damage to or taking of the Facility,
Buyer shall have the option of either (i) terminating this Agreement or (ii)
continuing this Agreement, in which event Sellers shall assign to Buyer all of
Sellers' rights against third persons and under any applicable insurance policy
and any condemnation awards and pay over to Buyer any sums received as a result
of such loss, damage or taking.
10.7 Waiver. The failure of any party to insist, in any one or more
------
instances, on performances of any of the terms and conditions of this Agreement
shall not be construed as a waiver or relinquishment of any rights granted
hereunder or of the future performance of any such term, covenant (or condition,
but the obligations of the parties with respect thereto shall continue in full
force and effect.
10.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Entire Agreement. This Agreement (including the Schedules hereto)
----------------
and all other agreements and documents executed in connection herewith
constitute the entire agreement between the parties hereto with respect to the
subject hereof and supersede all prior agreements, understandings, negotiations
and discussions of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein. No amendment, alteration or modification of this Agreement
shall be valid unless in each instance such amendment, alteration or
modification is expressed in a written instrument duly executed by the parties.
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10.10 Successors and Assigns. All the terms and provisions of this
----------------------
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto. Vivra may
assign any of its rights or obligations under this Agreement to any of its
wholly owned subsidiaries without the consent of any Seller. The Sellers may
not assign any of their rights or obligations under this Agreement without the
prior written consent of Vivra.
10.11 Further Assurances. Both before and after the Closing Date, the
------------------
parties will exercise good faith with the others and will take all appropriate
action and execute any documents, instruments or conveyances of any kind which
may be reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder.
10.12 Survival of Representations and Warranties. All of the
------------------------------------------
representations, warranties, covenants and agreements contained in this
Agreement and in any certificate delivered pursuant hereto shall survive the
Closing and shall continue to be fully effective and enforceable.
10.13 Interpretation. Unless the context requires otherwise, all words
--------------
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular
and all words in any gender shall extend to and include all genders.
10.14 Severability. If any provision, clause or part of this Agreement,
------------
or the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause or
part under other circumstances, shall not be affected thereby.
10.15 Release. Sellers hereby irrevocably and unconditionally release and
-------
discharge the Company and its officers, directors, successors and assigns (the
"Released Parties") from any and all actions, claims, causes of action, suits,
charges, complaints, contracts, agreements, liabilities or obligations of any
kind whatsoever in law or in equity, which Sellers or his affiliates, heirs,
executors, successors and assigns, can, shall or may have against the Released
Parties.
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10.16 Governing Law. This Agreement is to be governed by, and interpreted
-------------
under, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first written above.
VIVRA INCORPORATED, a Delaware corporation
By
----------------------------------------------
Xxxxx X. Xxxxx
Vice President
SELLERS:
RAJ & XXX, INC.
By
----------------------------------------------
Vadakkipalayam Xxxxxxxxx, M.D.
-------------------------------------------------
Vadakkipalayam Xxxxxxxxx, M.D.
-------------------------------------------------
Chemmale Xxxxxxxxxxxx, M.D.
-------------------------------------------------
Xxxxx X. Xxxx, M.D.
-------------------------------------------------
Xxxxxx Xxxxxxxxx, M.D.
