1
Exhibit 2
AGREEMENT AND PLAN OF MERGER
By and Between
RENEX CORP.
a Florida corporation,
RENEX ACQUISITION CORP.
a Mississippi corporation,
DIALYSIS FACILITIES, INC.
a Mississippi corporation,
C. XXXXX XXXXX, JR., M.D.
XXXXXXX X. XXXXX, XX.
and
XXXXXXX X. XXXXX
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS...................................................................... 1
ARTICLE II. MERGER........................................................................... 3
2.1 The Merger.............................................................. 3
2.2 Effective Time of Merger................................................ 3
ARTICLE III. THE SURVIVING CORPORATION...................................................... 3
3.1 Certificate of Incorporation............................................ 3
3.2 Bylaws.................................................................. 3
3.3 Directors and Officers of Surviving Corporation......................... 3
ARTICLE IV. CONVERSION OF SHARES; CLOSING................................................... 4
4.1 Exchange Ratio.......................................................... 4
4.2 Exchange of Shares...................................................... 4
4.3 Investment Restrictions................................................. 4
4.4 Closing................................................................. 4
4.5 Shareholder and Company Performance at Closing.......................... 4
4.6 Parent and Sub Performance at Closing................................... 7
4.7 Right of Set-Off........................................................ 7
4.8 Termination in Absence of Closing....................................... 7
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
SHAREHOLDERS.................................................................... 8
5.1 Organization............................................................ 8
5.2 Capitalization.......................................................... 8
5.3 Corporate Documents..................................................... 8
5.4 Subsidiaries............................................................ 9
5.5 Authority............................................................... 9
5.6 Consents and Approvals.................................................. 9
5.7 Financial Statements.................................................... 9
5.8 Title to Assets......................................................... 9
5.9 Liabilities............................................................. 9
5.10 Obligations to Affiliates............................................... 10
5.11 Real Property........................................................... 10
5.12 Employee Benefits....................................................... 10
5.13 Labor and Employment Matters............................................ 11
5.14 Personal Property....................................................... 12
5.15 Insurance............................................................... 12
5.16 Contracts and Commitments............................................... 12
5.17 Contracts with Physicians, Hospitals, HMO's and Third Party Payors...... 13
5.18 Inspection of Records................................................... 13
5.19 Inventories............................................................. 13
5.20 Equipment and Other Tangible Property................................... 14
5.21 Permits................................................................. 14
5.22 Intangible Rights....................................................... 14
5.23 Litigation.............................................................. 14
5.24 Compliance with Laws.................................................... 14
5.25 Absence of Material Changes............................................. 14
5.26 Banking Information..................................................... 15
5.27 Tax Returns............................................................. 15
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5.28 Accounts Receivable..................................................... 16
5.29 Medicare Matters........................................................ 16
5.30 Compliance with Instruments............................................. 17
5.31 Brokers' Commissions.................................................... 17
5.32 Books and Records....................................................... 17
5.33 Accuracy of Information................................................. 17
5.34 Environmental Regulations............................................... 17
5.35 Accounting Matters...................................................... 17
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................................ 17
6.1 Parent Organization..................................................... 17
6.2 Sub Organization........................................................ 18
6.3 Parent Capitalization................................................... 18
6.4 Sub Capitalization...................................................... 18
6.5 Authority............................................................... 18
6.7 Medicare Matters........................................................ 18
6.8 Brokers' Commissions.................................................... 19
ARTICLE VII. OBLIGATIONS PRIOR TO CLOSING................................................... 19
7.1 Operation of Business................................................... 19
7.2 Access to Books and Records............................................. 19
7.3 Negative Covenants...................................................... 19
7.4 Affirmative Covenants................................................... 21
7.5 Company Acquisition Proposals........................................... 21
7.6 Accounting Matters...................................................... 21
7.7 Audit................................................................... 21
7.8 Current Information..................................................... 21
7.9 Public Announcements.................................................... 22
7.10 Leases for Facilities................................................... 22
ARTICLE VIII. CONDITIONS PRECEDENT TO THE CLOSING........................................... 23
8.1 Conditions to Obligations of Parent and Sub............................. 23
8.2 Conditions to Obligations of the Company and Shareholder................ 24
ARTICLE IX. POST-CLOSING OBLIGATIONS........................................................ 24
9.1 Survival of the Closing................................................. 24
9.2 Further Assurances...................................................... 24
9.3 Indemnification by Shareholders......................................... 24
9.4 Non-Competition Agreement............................................... 25
9.5 Publicity............................................................... 26
9.6 Employment Arrangement.................................................. 26
9.7 Audit................................................................... 26
9.8 Board of Directors...................................................... 27
9.9 Right of First Refusal.................................................. 27
ARTICLE X. MISCELLANEOUS.................................................................... 27
10.1 Costs and Expenses...................................................... 27
10.2 Remedies................................................................ 27
10.3 Exhibits and Schedules.................................................. 27
10.4 Attorneys' Fees......................................................... 27
10.5 Risk of Loss............................................................ 27
10.6 Assignment and Amendment of Agreement................................... 27
10.7 Notices................................................................. 28
10.8 Entire Agreement........................................................ 28
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10.9 Waiver.................................................................. 28
10.10 Governing Law........................................................... 28
10.11 Counterparts............................................................ 28
10.12 Captions................................................................ 29
10.13 Successors and Assigns.................................................. 29
10.14 Interpretation.......................................................... 29
10.15 Severability............................................................ 29
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") entered into as of
the _____ day of December, 1995 by and between RENEX CORP., a Florida
corporation ("Parent"), RENEX ACQUISITION CORP., a Mississippi corporation
("Sub"), DIALYSIS FACILITIES, INC., a Mississippi corporation (the "Company"),
C. XXXXX XXXXX, JR., M.D., XXXXXXX X. XXXXX, XX. and XXXXXXX X. XXXXX (C. XXXXX
XXXXX, JR., M.D., XXXXXXX X. XXXXX, XX. and XXXXXXX X. XXXXX are collectively
referred to as the "Shareholders").
R E C I T A L S:
A. The Company owns and operates three (3) kidney dialysis facilities
located in Mississippi and Louisiana, through which it provides various forms of
kidney dialysis treatments.
B. Parent, Sub and the Company desire to effect a transaction in which
the Company would be acquired by Parent through a merger of Sub with and into
the Company, or alternately through a merger of the Company with and into Sub)
upon the terms and subject to the conditions set forth herein (the "Merger").
C. The respective Boards of Directors of Parent, Sub and the Company
deem it advisable and in the best interest of their respective shareholders that
Parent acquire the Company in the Merger and such Boards of Directors have
approved the Merger, in each case, upon the terms and subject to the conditions
set forth herein.
D. The Shareholders own 100% of the outstanding capital stock of the
Company and have agreed to the terms and conditions set forth herein.
E. Parent, Sub, the Company and the Shareholders desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger.
F. For federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
G. For accounting purposes, it is intended that the Merger be accounted
for as a "pooling of interest" between Parent and the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived therefrom and of the respective mutual covenants and
agreements hereinafter set forth and such other good and valuable consideration,
the adequacy and receipt of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
ARTICLE I. DEFINITIONS
All capitalized terms used in this Agreement are used as defined in
this Article I or elsewhere in this Agreement.
1.1 Business. The provision of kidney dialysis treatments and related
services, through three (3) dialysis clinics located in Jackson, Mississippi,
Port Xxxxxx, Mississippi and Delta, Louisiana, respectively.
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1.2 Parent. RENEX CORP., a Florida corporation.
1.3 Closing Date. December 29, 1995, or such other date as may be
agreed upon in writing by all parties hereto.
1.4 Collateral Agreements. Any and all agreements, instruments,
certificates or documents required or expressly provided for in this Agreement
to be executed and delivered in connection with the transaction contemplated by
this Agreement, including all exhibits attached hereto or to the Disclosure
Schedule.
1.5 Company. DIALYSIS FACILITIES, INC., a Mississippi corporation.
1.6 Contracts. Any and all contracts, agreements (including management
agreements, provider agreements, partnership agreements and joint venture
agreements), franchises, understandings, arrangements, leases, licenses,
registrations, authorizations, easements, servitudes, rights of way, mortgages,
bonds, notes, guaranties, liens, indebtedness, approvals, or other instruments
or undertaking to which such person is a party or to which or by which such
person or the property of such person is subject or bound, excluding any
Permits.
1.7 Damages. Any and all damages, liabilities, obligations, penalties,
fines, judgments, claims, deficiencies, losses, costs, expenses and assessments,
including all attorneys' fees and costs and interest accruing (at the highest
annual rate permitted by law) on such Damages.
1.8 Disclosure Schedule. The Disclosure Schedule entered into between
the parties hereto containing the disclosures, exhibits and schedules required
pursuant to the terms of this Agreement.
1.9 Financial Statements. The Company's unaudited financial statements
consisting of a balance sheet as of November 30, 1995 and statements of income,
cash flow and stockholders' equity for the eleven (11) months ended November 30,
1995 and the notes to the financial statements thereto, all as attached to the
Disclosure Schedule as Exhibit "A" thereto.
1.10 Governmental Authority. Any nation, country (including, but not
limited to the United States of America) commonwealth, state, territory or
possession thereof and any political subdivision of any of the foregoing,
including, but not limited to courts, departments, commissions, boards, bureaus,
agencies, ministries or other instrumentalities.
1.11 Hazardous Materials. Any and all elements or compounds which are
contained in a list of hazardous substances by the United States Environmental
Protection Agency ("EPA") and the list of toxic pollutants designated by the
United States Congress or the EPA or defined by any other Federal, state or
local statute, law, ordinance, code rule, regulation order or degree regulating,
relating to or imposing liability or standards of conduct concerning any
hazardous, medical, toxic or dangerous waste, substance or material as now or at
any time in effect.
1.12 Intangible Rights. Any and all information, trade secrets,
patents, copyrights, trademarks, tradenames and other intangible properties that
are necessary or customarily used by the Company in the operation of its
Business.
1.13 Permits. Any and all permits, certificates of need, licenses,
agencies, orders or contracts granted by any Governmental Authority necessary or
used in the operation of the Business as presently conducted.
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1.14 Shareholders. C. XXXXX XXXXX, JR., M.D., XXXXXXX X. XXXXX, XX.,
and XXXXXXX X. XXXXX.
1.15 Sub. RENEX ACQUISITION CORP., a Mississippi corporation
ARTICLE II. MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 2.2 herein) Sub shall be merged
with and into the Company, with the Company to continue as the surviving
corporation on the Merger on the terms set forth herein (the "Surviving
Corporation"), and the separate existence of Sub shall thereupon cease.
Alternatively, the Company shall be merged with and into Sub, with the separate
existence of the Company ceasing at the Effective Time, if Parent, in it sole
judgment and discretion, deems such structure desirable and appropriate. In such
event, all corresponding changes shall be deemed to have been made to this
Agreement to reflect such structure. From and after the Effective Time, the
Surviving Corporation shall be a wholly-owned subsidiary of Parent. The Merger
shall have the effects set forth in Section 79-4-11.06 of the Mississippi
Business Corporation Act.
2.2 Effective Time of Merger. The Merger shall become effective when a
properly executed Articles of Merger is duly filed with the Secretary of State
of the State of Mississippi (or such later date as is specified in the Articles
of Merger) in accordance with Section 79-4-11.05 of the Mississippi Business
Corporation Act, which filing shall be made as soon as practicable after the
Closing Date. When used in this Agreement, the term "Effective Time" shall mean
the date and time at which such Articles of Merger is so filed or such later
date and/or time as is agreed upon by the parties and specified in the Articles
of Merger.
ARTICLE III. THE SURVIVING CORPORATION
3.1 Certificate of Incorporation. The Articles of Incorporation of the
Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation; provided however, that
the Articles of Incorporation shall be amended at or after the Effective Time
such that the name of the Surviving Corporation shall be "Renex Dialysis
Facilities, Inc."
3.2 Bylaws. The By-Laws of Sub as in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation.
3.3 Directors and Officers of Surviving Corporation.
(a) The Directors of Sub immediately prior to the Effective
Time, Xxxxx X. Xxxx and Xxxxx XxXxxxx, shall be the initial directors of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualify in the manner
provided in the Articles of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
(b) The officers of Sub immediately prior to the Effective
Time, Xxxxx X. Xxxx, President, Xxxxxxx Xxxx, Vice President-Finance and Xxxxx
XxXxxxx, Vice President-Operations/Secretary, together with Xxxxxxx X. Xxxxx as
Vice President, shall be the initial officers of the Surviving Corporation,
shall hold office at the discretion of the Board of Directors of the Surviving
Corporation and may be removed or replaced in accordance with and in the manner
as provided in the By-Laws of the Surviving Corporation.
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ARTICLE IV. CONVERSION OF SHARES; CLOSING
4.1 Exchange Ratio. At the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof:
(a) Each share of the two thousand (2,000) shares of common
stock, no par value per share of the Company (the "Company Shares") issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive 565.2845 shares of common stock, par value $.001 per share of
Parent ("Renex Shares") ("Exchange Ratio") payable upon the surrender of the
certificates formerly representing such Company Shares at the Closing.
Certificates representing Company Shares shall be exchanged for certificates
representing Renex Shares issued in consideration therefore in accordance with
the provisions herein. If prior to the Effective Time, Parent should split or
combine the Renex Shares, or pay a stock dividend or other stock distribution of
Renex Shares, then the Exchange Ratio will be appropriately adjusted to reflect
such split, combination, distribution or dividend.
(b) Each Company Share held in the treasury of the Company
immediately prior to the Effective Time shall be cancelled, retired and shall
cease to exist, and no Renex Shares shall be issued in exchange therefore.
(c) Each share of common stock, par value $1.00 per share of
Sub issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into and exchangeable for one Company Share of the Surviving
Corporation.
4.2 Exchange of Shares. At the Closing, Parent shall make available,
and each holder of Company Shares will be entitled to receive upon surrender to
the Parent of the certificates representing Company Shares, certificates
representing Renex Shares in accordance with the conditions set forth in this
Article IV based on the Exchange Ratio.
4.3 Investment Restrictions. The Renex Shares to be issued to the
Shareholders, shall be "Restricted Securities" as that term is defined pursuant
to the Securities Act of 1933, as amended, (the "1933 Act") and the rules and
regulations promulgated thereunder. Shareholders represent to Parent and Sub
that upon receipt of Renex Shares, that the Renex Shares are being acquired for
investment purposes only and not with a view to the distribution thereof, except
as may be permitted by the 1933 Act. The certificates representing Renex Shares
shall contain a restrictive legend to the effect that the Renex Shares have not
been registered pursuant to the 1933 Act or any state having jurisdiction
thereof, and may not be sold, transferred or otherwise disposed of, except in
compliance with the 1933 Act or unless Parent receives an opinion of counsel
satisfactory to it that an exemption is available. A stop transfer order shall
be placed on the Renex Shares with Parent's transfer agent.
4.4 Closing. Subject to the terms and conditions of this Agreement, the
Closing shall take place at 9:30 a.m. on the Closing Date, or such other date
and time as is mutually agreed between the parties. The Closing shall take place
at the offices of Wallace, Bauman, Fodiman & Xxxxxxx, P.A., 0000 Xxxxx xx Xxxx
Xxxxxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxx, Xxxxxxx 00000. The Closing shall be deemed
to have been completed as of 11:59 p.m. on the date immediately prior to Closing
Date.
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4.5 Shareholder and Company Performance at Closing. At or prior to the
Closing, the Shareholders and the Company shall deliver to Parent and Sub:
(a) duly executed certificates from the Shareholders, with
duly executed stock powers endorsed in blank, representing 100% of the
outstanding Company Shares;
(b) a certificate duly executed by the Shareholders and the
president of the Company to the effect that to the best of their knowledge:
(i) all of the representations and warranties made by
the Shareholders and the Company in this Agreement are true and correct in all
material respects as of the Closing Date;
(ii) none of the covenants made by the Shareholders
or the Company in this Agreement have been breached in any material respect as
of the Closing Date;
(iii) there have been no material adverse changes in
the condition of the Company since the date of the Financial Statements, whether
financial or otherwise, through the Closing Date;
(c) a schedule of liabilities of the Company as of the Closing
certified by the Shareholders and the Company as true and correct;
(d) all approvals and consents of all appropriate state
regulatory agencies, if any, including all consents to the transfer of ownership
of the Company as it impacts the Company's health care licenses, including its
certificates of need and Medicare and Medicaid licenses and certifications;
(e) Executed Articles of Merger as required on Section 2.1
herein;
(f) A Medical Director's Employment Agreement executed by C.
XXXXX XXXXX, JR., M.D. substantially in the form attached to the Disclosure
Schedule as Exhibit "B", whereby C. XXXXX XXXXX, JR., M.D. shall agree to be
employed by the Surviving Corporation, following the Closing, as its Medical
Director;
(g) An Escrow Agreement executed by the Shareholders as
required pursuant to Section 4.6(a) herein, together with duly executed stock
powers in blank, covering the Renex Shares placed in escrow.
(h) Non-Competition Agreements executed by the Shareholders as
required by Section 9.4 herein.
(i) Execution of a waiver by the Company and each Shareholder
of the right of first refusal contained in the Company's By-laws.
(j) an opinion of counsel in form and substance satisfactory
to Parent and Sub and its counsel that to their knowledge and based upon
representations of management of the Company:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of Mississippi
and is authorized and qualified to do business as a foreign corporation in
Louisiana and is in good standing in each jurisdiction
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where the character of its, business, properties or the nature of its activities
makes such qualifications necessary;
(ii) The Company and the Shareholders have the full
power to conduct their business as presently conducted and to execute and
deliver this Agreement and to perform its obligations hereunder;
(iii) The Company and the shareholders have
authorized the execution, delivery and performance of the Agreement by all
necessary corporate and shareholder action;
(iv) The execution and delivery of the Agreement,
performance by the Company of its obligations under the Agreement and the
exercise by the Company of the rights created by the Agreement do not (a)
violate the Company's Articles of Incorporation or By-laws; (b) constitute a
breach of or a default under any agreement or instrument to which the Company or
any Shareholders are a party or by which they or their assets are bound, or
result in the creation of a mortgage, security interest or other encumbrance
upon the assets of the Company (except as set forth in the Agreement); (c)
violate any judgment, decree or order of any court or administrative tribunal,
which judgment, decree or order is binding on the Company or its assets; or (d)
violate any Federal or state law, rule or regulation;
(v) Except as may be disclosed in the Disclosure
Schedule, no notice, report or other filing or registration with, and no
consent, approval or authorization of, any Federal, state or local governmental
authority is required to be submitted, made or obtained by the Company in
connection with the execution, delivery and performance of the Agreement, which,
if not obtained, could have a materially adverse impact on the transaction
contemplated by the Agreement;
(vi) The Agreement and each Collateral Agreement
executed in connection herewith, is a valid and binding obligation of the
Company and each Shareholder enforceable against the Company and each
Shareholder under the laws of the State of Mississippi and the Federal law of
the United States;
(vii) Except as set forth in the Disclosure Schedule,
counsel has no knowledge of any pending or threatened actions, claims,
investigations or other proceedings against the Company which would have a
materially adverse effect on the Company's business;
(viii) Except as described in the Disclosure Schedule
and Financial Statements, on the Closing Date, the Company has good and
marketable title to all of its assets free and clear of all liens, mortgages,
pledges, conditional sales agreements, security interests, restrictions,
judgments, options, charges, claims or encumbrances of any kind;
(ix) The instruments of conveyance and assignment
delivered by Shareholders to Parent and Sub in accordance with their terms have
vested in Parent all right, title, and interest to 100% of the capital stock of
the Company;
(x) All Leases (as hereinafter defined) and Contracts
described in the Disclosure Schedule are valid and subsisting and no default
exists thereunder;
(xi) There are no pending or threatened legal
proceedings against Shareholders or the Company which would have a material
adverse impact on their assets or the Business or otherwise prevent consummation
of the transaction contemplated herein;
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(xii) there are no liens, mortgages, encumbrances,
charges, or other rights of third parties with respect to the Company's assets
except as otherwise disclosed in the Disclosure Schedule hereto;
(k) Satisfactory evidence that Parent's designees shall be the
only authorized signatories with respect to each of the Company's bank accounts
and credit facilities listed in the Disclosure Schedule, or otherwise.
(l) Written resignations of all of the directors and officers
of the Company; and
(m) Such other documents, certifications, instruments or
Collateral Agreements as may be reasonably required by counsel to Parent and
Sub.
4.6 Parent and Sub Performance at Closing. At or prior to the Closing,
Parent and Sub shall deliver or cause to be delivered to Shareholders the
following:
(a) Certificates of Renex Shares duly issued in the names of
each Shareholder in accordance with the Exchange Ratio, except that an aggregate
of 113,000 Renex Shares, divided proportionately among the Shareholders, shall
be issued in the name of such Shareholders, but delivered to Wallace, Bauman,
Fodiman & Xxxxxxx, P.A. (the "Escrow Agent") to be held in escrow pursuant to
that certain Escrow Agreement attached to the Disclosure Schedule as Exhibit "C"
(the "Escrow Agreement");
(b) a certificate executed by an officer of Parent and Sub to
the effect that all of the representations and warranties made by Parent and Sub
in this Agreement are true and correct as of the Closing Date;
(c) written evidence that Parent's and Sub's boards of
directors approved consummation of the transaction; and
(d) an opinion of counsel in form and substance satisfactory
to the Company and the Shareholders that:
(i) the representations and warranties of Parent and
Sub contained in Article VI are correct as of the Closing Date; and
(ii) this Agreement and each Collateral Agreement
executed in connection therewith, is valid and enforceable against Parent and
Sub in accordance with its terms;
4.7 Right of Set-Off. The Renex Shares held in escrow by the Escrow
Agent will be subject to a right of set-off in the event the Shareholders are
required to provide indemnifica tion pursuant to Section 9.3 of this Agreement.
The terms and conditions of the escrow and the right of set-off, are more
particularly described in the Escrow Agreement.
4.8 Termination in Absence of Closing.
(a) If by the close of business on the Closing Date, the
Closing has not occurred, then any party may thereafter terminate this Agreement
by written notice to the other parties hereto, without liability of or to any
other party to this Agreement, unless the reason for closing having not occurred
is (i) such party's breach of any of its obligations, representations,
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warranties or covenants or other provisions of this Agreement; or (ii) the
failure of such party to perform its obligations hereunder.
(b) This Agreement and the transaction contemplated herein may
be terminated and abandoned at any time on or prior to the Closing Date by
either party if:
(i) any representation or warranty made herein for
the benefit of such party or any certificate, schedule or document furnished to
such party pursuant to this Agreement is untrue; or
(ii) the other party shall have defaulted in any
respect in the performance of any obligation under this Agreement; or
(iii) a material adverse change has occurred to the
other party's financial or business condition.
(c) if this Agreement is terminated other than for any reason
evidenced in Section 4.8(b) herein, Parent agrees to pay one-half (1/2) of the
cost of the audit required pursuant to Section 7.7 herein.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SHAREHOLDERS
The Shareholders and the Company represent and warrant to Parent and
Sub that, except as set forth in the Disclosure Schedule (which Disclosure
Schedule is dated the date hereof and delivered by the Shareholders and the
Company to Parent and Sub and deemed a part hereof by this reference), to the
best of their knowledge that the representations and warranties contained in
Article V are true and correct as of the date hereof and as of the Closing Date:
5.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Mississippi. The
Company has the corporate power to carry on its business as it is now being
conducted or presently proposed to be conducted and has the power to own,
manage, lease and hold its assets where such assets are located. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in each jurisdiction in which the character and location of the properties owned
by it or the nature of the business transacted by it makes such qualification
necessary. The Company is qualified to do business in each of the states as set
forth in the Disclosure Schedule.
5.2 Capitalization. The Company is authorized to issue ten thousand
(10,000) Company Shares, no par value, of which two thousand (2,000) Company
Shares are issued and outstanding in the names of Shareholders as provided in
the Disclosure Schedule. There is no other capital stock authorized by the
Company. All Company Shares outstanding are validly issued, fully paid and
non-assessable. There are no stockholder agreements, voting trust agreement or
any other agreements restricting the transfer of the Company Shares. The Company
has not authorized, and there is not outstanding at the date hereof, any
preferred stock, options, warrants, calls, puts, convertible securities or other
agreements or commitments obligating the Company to issue, or sell shares of its
capital stock or other rights to purchase capital stock of the Company. All of
the Shareholders' Company Shares are owned free and clear of any and all
encumbrances, liens, claims, security agreements, pledges or other restrictions.
None of the Company Shares were issued in violation of, or subject to, (i) any
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preemptive rights of any person to acquire securities of the Company or (ii) any
Federal or state securities laws.
5.3 Corporate Documents. The Articles of Incorporation and Bylaws of
the Company attached as Exhibits "D" and "E" to the Disclosure Schedule are true
and correct as of the Closing Date. The stock and minute books of the Company
that have been made available to Parent for review contain a complete and
accurate record of all shareholders of the Company and all actions of the
shareholders and directors (and any committees thereof) of the Company.
5.4 Subsidiaries. The Company does not have any subsidiaries or any
interest or investment, direct or indirect, and has no commitment to purchase
any interest or make any investment in, any other corporation, partnership,
joint venture or other business enterprise or entity. The Company's Business has
not been conducted through any direct or indirect subsidiary or affiliate of the
Company or the Shareholders.
5.5 Authority. The Company and each Shareholder have full power and
authority to enter into this Agreement, to consummate the transaction
contemplated hereby and to carry out their obligations hereunder. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated herein have been duly authorized by the
Company's Board of Directors and its Shareholders and no other corporate
proceeding on the part of the Company and its Shareholders are necessary to
approve this Agreement or the transactions contemplated hereby. This Agreement,
and any Collateral Agreement executed in connection with the Closing,
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligations of such parties enforceable in accordance with their
respective terms.
5.6 Consents and Approvals. Except for the filing and recordation of
the Articles of Merger, the transfer of the Certificates of Need with the State
of Mississippi, and as otherwise set forth on the Disclosure Schedule, no filing
with and no Permit, authorization, consent or approval of, any public or
Governmental Authority is necessary for the consummation by the Company of the
transactions contemplated by this Agreement.
5.7 Financial Statements. The Financial Statements attached to the
Disclosure Schedule are correct and complete and present fairly the financial
condition of the Company as of the date of such balance sheet and the results of
its operations for the periods of such statements of operations and have been
prepared on a consistent basis with all prior periods and in accordance with
generally accepted accounting principles ("GAAP") except for the omission of
substantially all disclosures and the statements of cash flows for such period.
Since the date of the Financial Statements, there has been no material adverse
change in the assets, liabilities, business, operations or condition, financial
or otherwise of the Company from that shown on the Financial Statements. The
Company and Shareholders represent that the Financial Statements and books and
records can be audited in accordance with GAAP, without extended auditing
procedures.
5.8 Title to Assets. Except as provided in the Disclosure Schedule, the
Company has good, marketable and insurable title to its assets, including all
assets listed on the Financial Statements, free and clear of any and all liens,
mortgages, pledges, conditional sales assignments, security interests,
judgments, options, adverse claims, encumbrances or other restrictions or
limitations whatsoever. The Company's present assets represent all of the assets
necessary to operate the Business in the same manner as operated prior to the
date hereof, and for the balance of their estimated useful lives, will be
suitable and sufficient for the conduct of the Business in the same manner as
presently conducted.
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14
5.9 Liabilities. As of the date hereof, the Company had no liabilities,
fixed or contingent, which are not fully shown or provided for in the Financial
Statements or as listed in the Disclosure Schedule. The Company shall provide a
list of all liabilities of the Company as of the Closing Date which shall be
certified as true and correct by the Company and each Shareholder and shall be
incorporated herein. All of such liabilities were incurred in the ordinary
course of business.
5.10 Obligations to Affiliates. Except as described in the Disclosure
Schedule, the Company does not owe any amount to, have any contract with, or
commitment to, any of its Shareholders, directors, officers, employees,
consultants or affiliates, or any of the foregoing, and none of such persons owe
any amounts to the Company.
5.11 Real Property. The Company does not own any real property other
than as identified on the Disclosure Schedule (the "Real Property"). The
Disclosure Schedule identifies each lease (the "Leases") devising to the Company
all leasehold interests in all Real Property entered into by the Company (the
"Leased Property"). Each Lease so listed is valid, subsisting and fully
enforceable in accordance with its terms, and there exists no default thereunder
by either the lessee or lessor thereof. The Company has not received any notice,
and has no knowledge, of any defaults by the Company under any lease. The Real
and Leased Properties are free and clear of any and all liens, mortgages and
restrictions as a condition to transfer or assignment. No person other than the
Company is in actual possession of any of such Leased Property. The Real and
Leased Properties are not subject to any pending or threatened special
assessments or threatened condemnation or eminent domain proceedings.
5.12 Employee Benefits Plans.
(a) Attached to the Disclosure Schedule is a description of
all employee benefit plans sponsored, maintained, or contributed to, by the
Company for the benefit of the Company's employees or has been sponsored,
maintained or contributed to anytime during the Company's existence, including
the following plans:
(i) each employee benefit plan as such term is
defined in Section 3(3) of the Employment Retirement Income Security Act of 1974
("ERISA"), including but not limited to employee benefit plans which are not
subject to the provisions of ERISA (collectively referred to as "Plans");
(ii) each personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay policy or agreement, deferred
compensation agreement or arrangement and each other employee benefit plan,
agreement, arrangement, program, practice or understanding which is not
described in Section 5.12(a) above ("Benefit Programs")
(b) True, correct and complete copies of each of the Plans,
related trusts and Benefit Programs, including all amendments thereto, have been
furnished to Parent.
(c) there has been furnished to Parent and Sub, with respect
to all Plans or Benefit Programs required to comply with ERISA, all reports and
summary plan descriptions. Except as otherwise set forth in the Disclosure
Schedule:
(i) the Company does not contribute to or have any
obligation to contribute to, and has not at any time contributed to or had an
obligation to contribute to, a multi-employer plan within the meaning of Section
3(37) of ERISA ("Multi-Employer Plan") or a multiple
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15
employer plan within the meaning of Section 413(b) and (c) of the Internal
Revenue Code of 1986, as amended (the "Code");
(ii) the Company has performed all obligations
whether arising by operation of law or by contract required to be performed by
it in connection with the Plans and Benefit Programs and there have been no
defaults or violations by any other party to the Plans or Benefit Programs.
(iii) all reports and disclosures relating to the
Plans required to be filed with or furnished to governmental agencies, Plan
participants or Plan beneficiaries have been filed or furnished in accordance
with applicable law in a timely manner and each Plan and each Benefit Program
has been administered in compliance with its governing documents;
(iv) each of the Plans intended to be qualified under
Section 401 of the Code satisfies the requirements of the Code and has received
a favorable determination letter from the Internal Revenue Service regarding
such status and has not, since receipt of the most recent favorable
determination letters, been amended or operated in a way which could adversely
affect such qualified status;
(v) there are no actions, suits, or claims pending
(other than routine claims for benefits) or threatened against or with respect
to, any of the Plans, Benefit Programs or their respective assets;
(vi) all contributions required to be made to the
Plans and Benefit Programs pursuant to their respective terms and provisions and
applicable law have been timely made;
(vii) as to any Plan subject to ERISA, no event or
condition which presents a risk of Plan termination or accumulated funding
deficiency within the meaning of Section 302 of ERISA or Section 412 of the Code
has occurred. No reportable event within the meaning of Section 4043 of ERISA
has occurred, no notice of intent to terminate the Plans has been given, no
proceeding to terminate the Plan has been instituted, there has been no
termination of the Plan and no liability to the Pension Benefit Guaranty
Corporation has been incurred;
(viii) none of the Plans or their trustees has
engaged in any prohibited transactions or party in intent transactions as such
terms are defined in Section 4975 of the Code and Section 406 of ERISA;
(ix) there is no matter pending with respect to any
Plan or Benefit Program before the Internal Revenue Service, the U.S. Department
of Labor, or the Pension Benefit Guaranty Corporation;
(d) Except as otherwise set forth on the Disclosure Schedule,
neither the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby will:
(i) entitle any current or former employee of the
Company to severance pay, unemployment compensation or any similar payment;
(ii) accelerate the time of payment or vesting or
cause any increase in the amount of any compensation due to any such employee or
former employee; or
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(iii) directly or indirectly result in any payment
made to or on behalf of any person to constitute a parachute payment within the
meaning of Section 2805 of the Code.
5.13 Labor and Employment Matters.
(a) The Company is presently, and has at all times been, in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation the following: The Fair Labor Standards Act ("FLSA"), the
Immigration and Control Act ("IRCA"), the Workers Adjustment and Retraining
Notification Act ("WARN"), the Americans with Disabilities Act ("ADA") and such
laws respecting employment discrimination, equal opportunity, affirmative
action, workers compensation, occupational safety and health requirements and
unemployment insurance and related matters.
(b) No investigation or review by, or before, any Governmental
Authority is pending, nor is any investigation threatened, or has any
investigation occurred during the last three (3) years and no Governmental
Authority has provided any notice to the Company or any Shareholder asserting an
intention to conduct any such investigation.
(c) The Company does not have any (i) controversies between it
and its employees, (ii) unresolved labor liens, grievances or organization
efforts; or (iii) unfair labor practices or labor arbitration proceedings
pending or threatened.
(d) Except as described in the Disclosure Schedule, the
Company is not a party to any agreement and has not established any policy or
practice requiring the Company to make a payment or provide any other form of
compensation or benefit to any person including any officer, director or
Shareholder performing services for the Company upon termination of such
services.
(e) The Disclosure Schedule sets forth, by number and
employment classification, the approximate number of employees of the Company as
of the date hereof. None of such employees are subject to collective bargaining
agreements with the Company. The Company has not at any time had, or been
threatened with, any work stoppages or other labor disputes or controversies
with respect to its employees.
5.14 Personal Property. The Disclosure Schedule contains a list of all
personal property owned or leased by the Company. All assets and properties
reflected in the Disclosure Schedule or the Financial Statements or acquired
after such date, other than such assets and properties sold or otherwise
disposed of in the ordinary course of Business subsequent to such date, and all
of such equipment and other assets and properties are owned free and clear of
all liens, mortgages, pledges, claims and encumbrances.
5.15 Insurance. The Disclosure Schedule contains a list of all policies
of insurance owned by the Company, and the amounts of such coverage of each
policy, all premiums on such policies or renewals thereof having been paid. All
policies of insurance insuring the Company or its business, assets, employees,
officers and directors are in full force and effect. The Company has previously
delivered copies of all such insurance policies and proof of payment of such
premiums to Parent. There are no material claims by the Company under any such
policy as to which any insurance company is denying liability or defending under
a reservation of rights.
5.16 Contracts and Commitments. Except as set forth on the Disclosure
Schedule, the Company is not a party to, or bound or affected by any contract,
lease, agreement, covenant, license, instrument or commitment (whether written
or oral) of any type, including the following:
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(a) contracts for the employment or compensation of any
officer or individual employee, not terminable without further liability at any
time:
(b) contracts with any labor union;
(c) continuing contracts for the future purchase of materials,
supplies or equipment, at a cost of $1,000 or more, or to be delivered more than
thirty (30) days after the date hereof;
(d) continuing contracts for the future provision of its
services;
(e) distribution or agency contracts, franchise contracts, or
advertising commitments, which cannot be terminated without further liability to
the Company upon no more than thirty (30) days' notice;
(f) pension, profit sharing, deferred compensation, retirement
or stock option or stock purchase plans in effect with respect to officers,
employees or others;
(g) leases under which it is lessor or lessee;
(h) underwriting agreements or agreements with a broker or
finder;
(i) consulting agreements;
(j) contracts for the acquisition of a business, or
substantially all of the property, assets, or stock of a business under which
there are any continuing or unperformed obligations on the part of any of the
parties thereto; or
(k) Any other contract, agreement, or commitment involving
$1,000 or more or which is not terminable without further liability to the
Company upon no more than thirty (30) days' notice.
There have been delivered to Parent true and correct copies of each of
the Contracts listed in the Disclosure Schedule. All Contracts are valid,
binding and in full force and effect and are enforceable in accordance with
their terms against all other parties to such Contracts. The Company has
performed all obligations required to be performed by it to date and is not in
default in any material respect under any Contract to which it is a party. None
of the Contracts were arrived at, or otherwise reflect, less than arms length
negotiations or bargaining.
5.17 Contracts with Physicians, Hospitals, HMO's and Third Party
Payors. The Disclosure Schedule contains a list of all outstanding contracts,
partnerships, joint ventures and other arrangements or understandings (written
or oral) between the Company and any physicians, hospital, HMO, other managed
care organization or other third party payor related to the provision of medical
or other services, treatments, patients, referrals or similar activities.
5.18 Inspection of Records. The Company and Shareholders have made, or
will make, available for inspection by Parent and Sub full and complete
information concerning the Company's patients, suppliers, vendors and all
aspects of the Company's business, including complete copies of any customer,
vendor, or supplier contracts.
5.19 Inventories. The inventory of the Company as of the Closing Date
shall, in all material respects, consist of items of a quality, condition and
quantity consistent with normal inventory levels of the Company and be useable
and saleable in the ordinary and usual course
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of business for the purposes for which intended. Such inventory is carried on
the Company's books of account in accordance with GAAP consistently applied.
5.20 Equipment and Other Tangible Property. The Company's equipment,
furniture, machinery, vehicles, structures, fixtures and other tangible property
included in the Financial Statements or as listed in the Disclosure Schedule
shall, as of the Closing Date, be in all material respects suitable for the
purposes for which intended and in good operating condition and repair
consistent with normal industry standards, except for reasonable and ordinary
wear and tear.
5.21 Permits. The Company has all material Permits necessary to
construct, own, operate, use and/or maintain its assets and the Business in all
locations where the Company conducts such business. Such Permits are valid and
subsisting and all fees required to be paid thereon have been paid. No
proceeding is pending or threatened to modify, suspend, revoke, withdraw,
terminate or otherwise limit any Permit which could adversely affect the ability
of the Company to own, operate, use or conduct the Business currently operated.
5.22 Intangible Rights. The Company owns or has the right to use all of
the Intangible Rights listed on the Disclosure Schedule. The conduct of the
Business does not infringe or conflict with, and has not in the past infringed
or conflicted with, and the Company is not in receipt of any notice or complaint
of conflict with or infringement of, the asserted rights of others in any
Intangible Rights of others.
5.23 Litigation. Except as listed on the Disclosure Schedule:
(a) There is no action, suit, judicial or administrative
proceeding (whether or not on behalf of the Company), arbitration or
investigation pending or threatened against or affecting or involving the
Company, the Shareholders or their properties or which involve the possibility
of any judgment or liability before any court, arbitrator or other Governmental
Authority;
(b) There is no judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company or any Shareholders. The Company is
not in default with respect to any order, writ, injunction or decree of any
court or Governmental Authority. The Company is in compliance in all material
respects with all laws, rules, regulations and orders materially applicable to
its Business.
5.24 Compliance with Laws.
(a) The Company is and has been in compliance in all respects
with any and all laws, regulations, ordinances, rules, orders or decrees
applicable to the Company. The Company has not received or entered into any
citation, complaints, consent order, compliance schedules or other similar
enforcement order or received written notice from any Governmental Authority
that would indicate that the Company is not currently in compliance with all
such laws, regulations, ordinances, rules, orders or decrees.
(b) Neither the Company or any Shareholder has directly or
indirectly paid or delivered any fees, commission or any money or property,
however characterized, to any physician or any other party for the referral of
patients to the Company or its Business or any business or operation of the
Company or the Shareholders.
5.25 Absence of Material Changes. From the date of the Financial
Statements to the date hereof, the Company has not:
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(a) issued any capital stock or other corporate securities or
granted any option to any person for the acquisition of any capital stock or
other corporate securities;
(b) incurred any obligations or liabilities (absolute or
contingent) except current liabilities incurred, and obligations under contracts
entered into, in the ordinary course of business;
(c) discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent) other than obligations or
liabilities referred to in (b) above;
(d) declared or made any payment or distribution to
shareholders, or purchased or redeemed any shares of its capital stock;
(e) mortgaged, pledged, or subjected to any lien, charge, or
other encumbrance, any of its assets, tangible or intangible, other than liens
for taxes not yet due or which are being contested in good faith by appropriate
proceedings;
(f) sold or transferred any of its tangible assets or canceled
any debts or claims, except in each case in the ordinary course of business;
(g) sold, assigned, or transferred any Intangible Rights;
(h) suffered any material operating or extraordinary loss or
waived any right of substantial value;
(i) made any loan to, borrowed money from, or entered into any
contract or understanding with, any employee, officer, director or Shareholder
of the Company;
(j) made any payment or contracted for payment of any bonus,
gratuity, or other compensation to employees other than wages and salaries in
effect as of the date of the Financial Statements, except wage and salary
adjustments made in the ordinary course of business for employees who are not
officers or directors of the Company;
(k) had any union or labor difficulties or work stoppage;
(l) entered into any transaction other than in the ordinary
course of business (as defined in Section 7.1 herein);
(m) entered into any leases of real or personal property; or
(n) received any notice of termination of any contract, lease
or other agreement which in the aggregate would have a material adverse affect
on the Company.
(o) entered into any contracts for which the Company will
incur a loss from the provision of services.
5.26 Banking Information. The Disclosure Schedule contains a list of
all bank accounts and credit facilities and authorized signatories on bank
accounts and credit facilities of the Company. No other persons, other than as
listed on the Disclosure Schedule, are authorized to withdraw any funds on the
bank accounts or to draw down on such credit facilities.
5.27 Tax Returns. The Company has duly filed, or duly received
extensions for the filing, of all federal, state, local or foreign tax returns
required to have been filed by it and have
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paid the tax shown to be due on any such returns filed and no waivers or
extension of the statutory period of limitation within which assessments may be
made have been granted with respect to any such tax return. For the purpose of
this Agreement, the term "tax" (including "taxes" and "taxable") shall include
all federal, state, local and foreign income, profit, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise and other taxes,
duties or assessments of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such matters. Such tax returns
are accurate and complete in all material respects. No federal, state or local
tax returns of the Company have ever been examined by the Internal Revenue
Service or any other Governmental Authority. The Company is not a party to any
action or proceeding by any governmental authority for assessment or collection
of taxes nor have any claims for assessment and collection been asserted against
the Company. The reserves made for taxes, governmental charges and duties on the
Company's balance sheet are sufficient in all material respects for the payment
of all unpaid taxes, governmental charges and duties payable by the Company,
attributable to all periods on or before the date of the Company's balance sheet
and there is no basis or claim for any penalties or interest through the Closing
Date. The Company shall (i) make adequate provision on its books for all taxes
accruable and (ii) timely remit all withholding, 1099's, 1120's, employment,
sales, ad valorem, personal property and estimated income taxes due and payable
to date and which becomes due prior to, or on, the Closing Date. The Company has
made available to Parent copies of all the Company's federal, state and local
tax returns.
5.28 Accounts Receivable. The accounts receivable and other receivables
shown on the Financial Statements or thereafter acquired prior to the Closing
Date hereof, have been collected or are collectible in amounts not less in the
aggregate than the net book amount thereof. All such accounts receivable arose
from bona fide transactions in the ordinary course of business and the goods and
services involved have been sold, delivered and performed for the Company's
patients. No further goods are required to be provided and no services are
required to be rendered in order to complete the sales and to entitle the
Company to collect the account receivables. None of the accounts receivable are
subject to set-off or counterclaim. Since the date of the Financial Statements,
there has been no significant reduction in the accounts receivable and other
receivables of the Company. The Company's accounts receivable as of the date
herein are listed on the Disclosure Schedule.
5.29 Medicare Matters. The Company is receiving payments under Titles
XVIII and XIX of the Social Security Act and the Medicaid programs in each state
in which it conducts business. There is no pending or threatened termination of
such status. The Company and Shareholders have no knowledge of and have not
received any notice of any claims, actions, payment reviews or appeals pending
or threatened before any commission, board or agency, including without
limitation, any intermediary or carrier or the Administrator of the Health Care
Financing Administration with respect to any Medicare and Medicaid claims filed
by or on behalf of the Company, or program compliance matters, which if
adversely determined would have a material adverse effect on the Company or its
Business. The Company and Shareholders have no knowledge of, and has not
received any notice of, any validation review or program integrity review or
investigation or review with respect to false claims, fraud and abuse or other
violations of federal or state laws, rules and regulations respecting the
Medicare and Medicaid programs or the delivery of payment for health care
services, by any commission, board or agency in connection with the Medicare and
Medicaid programs, including the Health Care Financing Administration, the U.S.
Department of Justice or the HHS Office of Inspector General and no such reviews
are scheduled, pending or threatened against the Company. All of the Company's
Medicare and Medicare xxxxxxxx and collections thereof are in all respects
appropriate and in compliance with all applicable federal and state laws, rules,
regulations and orders and there are no denials, past payment denials or
recoupments pending or threatened with respect to the
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xxxxxxxx and collections. The Medicare and Medicaid accounts receivables
reflected on the Company's books and records are valid claims in the full
amounts so reflected.
5.30 Compliance with Instruments. The consummation of the transaction
contemplated by this Agreement will not result in a breach or violation of any
of the terms, provisions or conditions of, or constitute a default under, or
result in the creation of any lien, charge or encumbrance on any property or
assets of the Company pursuant to its Articles of Incorporation, all amendments
thereto, By-Laws, any provision of law, judgment, decree, indenture, agreement
or instrument to which the Company is a party or by which it is bound.
5.31 Brokers' Commissions. Neither the Company or any Shareholder have
entered into any agreement or understanding with any person, firm or entity or
have become indirectly a party to any agreement for the payment or any
commission, finders or brokerage fee in connection with this Agreement and the
transaction contemplated hereof. The Company and the Shareholders hereby agree
to indemnify and hold harmless the Parent and Sub from any claims for a
commission, finder's or broker's fee.
5.32 Books and Records. The books of account and other records of the
Company are materially complete and correct and in the aggregate present and
reflect all of the transactions entered into by it or to which it is a party.
The Company and the Shareholders have no knowledge of any condition whether
pending or threatened which would have a material adverse effect upon the
Business of the Company or prevent such Business from being carried on in
substantially the same manner in which it is presently carried on.
5.33 Accuracy of Information. All information provided to Parent and
Sub by the Company and Shareholders as an inducement to Parent and Sub to enter
into this Agreement or in compliance with the provisions of this Agreement are
accurate and complete and do not contain any untrue statement of a material fact
or omit any material fact necessary to make the information provided not
misleading.
5.34 Environmental Regulations. The Business and the Company are in
compliance with all applicable federal, state and local laws and regulations
governing the environment, public health and safety and employee health and
safety (including all provisions of the Occupational Safety and Health Act) and
no charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand or notice has been filed or commenced against the Company or the
Shareholders alleging any failure to comply with any such law or regulation.
Neither the Company or any of its affiliates, agents or licensees has engaged in
the storage, release, holding, emission, discharge, generation, processing,
disposition, handling or transportation of any substance or material designated
as a Hazardous Material in violation of any federal, state or local law,
ordinance or regulation. There are no Hazardous Materials at, on or in any of
the Company's properties in violation of any federal, state or local laws,
ordinances or regulations and there is no proceeding or inquiry pending or
threatened by any federal, state or local governmental agency with respect
thereto.
5.35 Accounting Matters. Neither the Company, nor any Shareholder nor
any of their affiliates, have taken, or agreed to take, any action that would
hinder or prevent Parent from accounting for the Merger as a "pooling of
interest."
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ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represents and warrants that:
6.1 Parent Organization. Parent is duly organized and validly existing
as a corporation in good standing under the laws of the State of Florida and has
full corporate power to carry on its business as now conducted and is entitled
to own or lease its properties and to carry on its business as now conducted in
the places where such properties are now leased, owned or operated or such
business is now conducted.
6.2 Sub Organization. Sub is duly organized and validly existing as
a corporation in good standing under the laws of the State of Mississippi and
has full corporate power to carry on its business as now conducted and is
entitled to own or lease its properties and to carry on its business as now
conducted in the places where such properties are now leased, owned or operated
or such business is now conducted.
6.3 Parent Capitalization. Parent is authorized to issue 30,000,000
shares of capital stock, consisting of 25,000,000 Renex Shares and 5,000,000
shares of preferred stock $.01 par value. As of November 30, 1995, Parent has
5,946,500 Renex Shares and 1,000,000 shares of Series A Preferred Stock
outstanding, all of which are validly issued, fully paid and nonassessable. Each
share of Series A Preferred Stock is convertible under certain circumstances,
into two (2) shares of Common Stock. In addition, as of November 30, 1995 the
Company has outstanding common stock purchase warrants entitling the holders to
purchase an aggregate of 738,500 Renex Shares for an exercise price of $3.00 per
share and common stock purchase warrants entitling the holder to purchase an
aggregate of 633,029 Renex Shares for an exercise price of $2.00 per share. The
Company has a Directors Stock Option Plan ("Directors Plan") and an Employee
Stock Option Plan ("Employee Plan"). The Directors and Employee Plan each have
500,000 Renex Shares available for issuance upon grants of options. As of the
date of this Agreement, there were outstanding options to purchase 35,000 Renex
Shares under the Directors Plan, options to purchase 271,000 Renex Shares under
the Employee Plan and options to purchase 110,000 Renex Shares not granted under
any plan.
6.4 Sub Capitalization. Sub is authorized to issue 1,000 shares of
common stock par value $1.00 per share, of which 100 shares of common stock are
validly issued and outstanding, fully paid and non-assessable. All such shares
of common stock are owned by Parent.
6.5 Authority. Parent and Sub have full power and authority to enter
into this Agreement and the consummation of the transaction contemplated by this
Agreement will not result in any breach of any of the terms, provisions, or
conditions of, or constitute a default under, or result in the creation of, any
lien, charge, or encumbrance of any property or assets of Parent and Sub
pursuant to their respective Articles of Incorporation, By-Laws or any
indenture, agreement, instrument, order, judgment, or decree to which they are
parties or by which they are bound.
6.6 Litigation.
(a) There is no action, suit, judicial or administrative
proceeding (whether or not on behalf of the Parent or Sub), arbitration or
investigation pending or threatened against or affecting or involving the
Parent, Sub, or their properties or which involve the possibility of any
judgment or liability before any court, arbitrator or other Governmental
Authority;
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(b) There is no judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Parent or Sub. Parent and Sub are not in
default with respect to any order, writ, injunction or decree of any court or
Governmental Authority. Parent and Sub are in compliance in all material
respects with all laws, rules, regulations and orders materially applicable to
its Business.
6.7 Medicare Matters. Parent is receiving payments under Titles XVIII
and XIX of the Social Security Act and the Medicaid programs in each state in
which it conducts business. There is no pending or threatened termination of
such status. Parent has no knowledge of and has not received any notice of any
claims, actions, payment reviews or appeals pending or threatened before any
commission, board or agency, including without limitation, any intermediary or
carrier or the Administrator of the Health Care Financing Administration with
respect to any Medicare and Medicaid claims filed by or on behalf of Parent, or
program compliance matters, which if adversely determined have a material
adverse effect on Parent or its business. Parent has no knowledge of, and has
not received any notice of, any validation review or program integrity review or
investigation or review with respect to false claims, fraud and abuse or other
violations of federal or state laws, rules and regulations respecting the
Medicare and Medicaid programs or the delivery of payment for health care
services, by any commission, board or agency in connection with the Medicare and
Medicaid programs, including the Health Care Financing Administration, the U.S.
Department of Justice or the HHS Office of Inspector General and no such reviews
are scheduled, pending or threatened against Parent. All of Parent's Medicare
and Medicaid xxxxxxxx and collections thereof are in all respects appropriate
and in compliance with all applicable federal and state laws, rules, regulations
and orders and there are no denials, past payment denials or recoupments pending
or threatened with respect to the xxxxxxxx and collections. The Medicare and
Medicaid accounts receivables reflected on Parent's books and records are valid
claims in the full amounts so reflected.
6.8 Brokers' Commissions. Except for a finder's fee payable to Xxxxxx
Xxxxxx, neither the Parent or Sub have entered into any agreement or
understanding with any person, firm or entity or have become indirectly a party
to any agreement for the payment or any commission, finders or brokerage fee in
connection with this Agreement and the transaction contemplated hereof. Parent
hereby agrees to indemnify and hold harmless the Shareholders from any claims
for a commission, finder's or broker's fee resulting from any agreement by
Parent.
ARTICLE VII. OBLIGATIONS PRIOR TO CLOSING
7.1 Operation of Business. The Company and Shareholders agree that,
from the date hereof to the Closing Date, the Company shall conduct its Business
and affairs only in the ordinary course. For the purpose of this Agreement, the
phrases "the ordinary course" and "the ordinary course of business" shall mean
the conduct and operation of the Business of the Company only in the manner in
which it conducted and operated such Business during the period represented by
the Financial Statements, its usual and ordinary accounting practices, making
ordinary accruals, incurring ordinary liabilities and expenditures, and making
ordinary commitments for merchandise, insurance, rentals, and other ordinary
Business purposes.
7.2 Access to Books and Records. From and after the date hereof, the
Company shall (a) afford to the officers, employees and representatives of
Parent and Sub full and free access to its assets, personnel, properties,
records and books of account at all reasonable times during business hours, (b)
to furnish to such officers, employees and representatives such other
information as Parent and Sub may reasonably request, and (c) to authorize its
accountants and auditors to permit Parent's independent public accountants and
representatives to examine
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24
records pertaining to the Company's Financial Statements and other books and
records of the Company. Parent and Sub agree to treat all such material as
confidential and not make use of such materials except for the purposes
expressed in this Agreement unless such use comes into the public domain.
7.3 Negative Covenants. The Company and Shareholders covenant that from
and after the date hereof and through the Closing Date, without the prior
written consent of Parent, the Company will not:
(a) enter into any material written or oral contract,
agreement, or commitment of any type, including the following,
(i) contracts for the employment or compensation of
any officer, director, or individual employee;
(ii) contracts with any labor union;
(iii) continuing contracts for the future purchase of
inventory, materials, supplies, or equipment at a cost of $5,000 or more;
(iv) continuing contracts for future services;
(v) distribution or agency contracts, franchise
contracts, or advertising commitments;
(vi) pension, profit sharing, deferred compensation
retirement, stock option, stock purchase plans, group health insurance, or
similar plans with respect to officers, directors, employees, or others;
(vii) leases under which the Company is a lessor or
lessee;
(viii) underwriting agreements or agreements with a
broker or finder;
(ix) consulting agreements;
(x) contracts for the acquisition of a business or
substantially all of the property, assets or capital stock of a business;
(xi) any other contract, agreement, or commitment
involving $1,000 or more.
(b) declare or pay any dividend, or make any distribution of
its properties or assets to its shareholders, or allow the issuance of any of
its securities.
(c) discharge or satisfy any lien or encumbrance or pay any
obligation or liability except in the ordinary course of business;
(d) make any change in its Articles of Incorporation or
By-Laws;
(e) issue any capital stock or other corporate securities or
grant options, warrants or rights of any kind to purchase any of its capital
stock or corporate securities;
- 20 -
25
(f) mortgage, pledge or subject to any lien, charge or other
encumbrance any of its tangible or intangible assets;
(g) make any payment, or enter into any contract for payment
of any bonus, gratuity or other compensation, or increase the rate or form of
compensation payable to any agent or employee, except salary adjustments in the
ordinary course of business for employees who are not officers, directors or
stockholders of the Company;
(h) dispose of any of its properties or assets except in the
ordinary course of business;
(i) incur any indebtedness, except for operating expenses in
the ordinary course of business, nor allow any material adverse change to be
made in its financial affairs, nor allow any tax or other liability to be
extended by waiver of the statutes of limitation or otherwise;
(j) make any loan to, borrow any money from, or entered into
any contract or understanding with, any officer, director or shareholder of the
Company; or
(k) enter into any transaction other than in the ordinary
course of business.
(l) fail to use all reasonable efforts to take, or omit to
take, any action which would make any representation or warranties of the
Company and Shareholders herein untrue or incorrect in any material subject.
7.4 Affirmative Covenants. The Company and Shareholders covenant that
from and after the date hereof and through the Closing Date, the Company and the
Shareholders will:
(a) keep the Company's properties and assets insured
consistent with its prior practices in respect thereto;
(b) perform in the normal course of business all of their
obligations under contracts, leases and documents relating to or affecting its
assets, properties and business;
(c) materially preserve intact the Company's Business,
organization, agencies and goodwill, to the end that Parent shall continue to
operate the Company as a going business as now constituted, after the
consummation of the Transaction contemplated hereunder;
7.5 Company Acquisition Proposals. The Company and the Shareholders
will not, and will cause each of their respective directors, officers,
employees, financial advisors, legal counsel, accountants and agents and
representatives not to initiate, encourage or solicit, directly or indirectly,
any inquiries or the making of any proposal with respect to or engage in
negotiation concerning, providing any non-public or confidential information or
data to, or have any discussions with, or otherwise assist any person relating
to, any acquisition, business combination or purchase of all or any significant
position of the Business or assets of, or any equity interest in the Company
other than in connection with the Merger. The Company and each Shareholder will
promptly notify Parent if any such inquiries or proposals are received by
Company or a Shareholder or if any negotiations or discussions are sought to be
initiated or continued with the Company or any Shareholders.
7.6 Accounting Matters. Except as contemplated under this Agreement,
neither the Company nor any Shareholder shall (i) take any action which could
jeopardize the treatment of the Merger as a pooling of interest or (ii) take or
allow to be taken or fail to take any action which
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26
act or omission would jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
7.7 Current Information. From the date of this Agreement to the
Effective Time, the Company and each Shareholder will cause one or more of its
designated representatives to confer on a regular and frequent basis with
representatives of the Parent and to report the status of the Business and to
deliver to Parent (not less than monthly) unaudited consolidated balance sheets
and related consolidated statements of income and cash flows for each month end
prior to the Effective Time. The Company shall promptly notify Parent of any
material changes to the operations or financial condition of the Company. From
the date of this Agreement to the Closing Date, Parent shall deliver to the
Shareholders monthly unaudited consolidated financial statements within
forty-five (45) days of each month end and shall keep Shareholders informed of
any material changes to the operations or financial conditions of Parent.
7.8 Public Announcements. Prior to the Closing Date, the parties hereto
agree that they will not issue any press release or other information regarding
the transaction contemplated hereby, without the prior approval of the other
party.
7.9 Leases for Facilities.
(a) Xxxxxxx Clinic. Following the Closing Date, a partnership
consisting of the Shareholders (the "JCD Partnership") shall cause to be
constructed a new 5,000 square foot building on the real property where the
Company's present Xxxxxxx clinic is located. The JCD Partnership shall pay all
costs of construction of the building. The Company will lease the building from
the JCD Partnership for a period of ten (10) years at the rate of $11 per square
foot, which amount includes maintenance of the structure and other items not
included in tenant finishes, taxes and insurance, all subject to, and in
accordance with, a lease substantially in the form attached as Exhibit "F" to
the Disclosure Schedule. The JCD Partnership shall build-out the facility in
accordance with plans, specifications and budget approved by Parent at Parent's
expense not to exceed $175,000. Any amounts in excess of $175,000 would be paid
by the JCD Partnership. The Company shall provide insurance covering its
leasehold improvements and damages caused by its use of such property. The JCD
Partnership shall ensure adequate parking for all of the Company's personnel and
patients. In addition, the JCD Partnership shall lease to the Company the
existing facility at 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx for use as
additional office space and home training for a period of five (5) years at the
rate of $2,200 per month on the same terms and conditions as the new facility,
with an option to extend such lease for a period of five (5) years at the same
rent and terms.
(b) Delta Clinic. Following the Closing Date, the Company will
lease the real property on which the Delta clinic is situated to the JCD
Partnership at the rate of $160 per month, for a term of thirty (30) years with
an option to purchase the real property at the end of the second lease year for
its book value as shown on the Financial Statements, all subject to, and in
accordance with, a lease substantially in the form attached as Exhibit "G" to
the Disclosure Schedule. The JCD Partnership shall cause to be constructed on
such real property a 7,500 square foot building for use as a dialysis clinic.
The Company will lease the building from the JCD Partnership for a period of ten
(10) years at the rate of $11 per square foot, which amount includes maintenance
of the structure and other items not included in tenant finishes, taxes and
insurance, all subject to the lease substantially in the form attached as
Exhibit "H" to the Disclosure Schedule. The JCD Partnership shall build out the
facility in accordance with plans, specifications and budget approved by Parent
at Parent's expense not to exceed $262,500. The Company shall provide insurance
covering its leasehold improvements and damages caused by its use of the
property. Any amounts in excess of $262,500 would be paid by the JCD
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27
Partnership. The JCD Partnership shall ensure adequate parking for all of the
Company's personnel and patients.
ARTICLE VIII. CONDITIONS PRECEDENT TO THE CLOSING
8.1 Conditions to Obligations of Parent and Sub. The obligations of
Parent and Sub to consummate this Agreement shall be subject to, and be
conditioned upon, each of the following conditions:
(a) Properties Intact. No properties or assets of the Company
shall have suffered any destruction or damage by fire, accident or other
casualty or act of God not fully covered by insurance or affecting in a material
and adverse way the conduct of the Business of the Company considered as a
whole.
(b) Representations and Warranties. The representations and
warranties made by the Company and Shareholders in Article V hereof shall be
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations had been on and as of the
Closing Date; none of the covenants of the Company or Shareholders contained in
Articles VII hereof shall have been breached in any material respect as of the
Closing Date.
(c) No Material Adverse Changes. That since the date of the
Financial Statements, there has been no material adverse change in the condition
of the Company, financial or otherwise, from that set forth in the Financial
Statements.
(d) Approvals and Consents. All consents, approvals,
authorizations or orders of any individual entity, court or Governmental
Authority or administrative body, if any, shall have been obtained and in effect
on the Closing Date which are required for the consummation of the transaction
be contemplated by this Agreement, including any approvals or consents necessary
with regard to the certificates of need issued by the Mississippi State
Department of Health as a result of the change of control of the Company.
(e) No Litigation. No claim, proceeding, investigation, or
litigation, either administrative or judicial, shall be threatened or be pending
against the Parent, Sub, Company or any Shareholder which, in the opinion of
counsel for Parent, presents a reasonable probability that the transaction
contemplated by this Agreement would be enjoined or prevented or that the right
of Parent to continue the operations of the property, assets and Business of the
Company would be materially affected.
(f) Due Diligence. Parent shall have completed its due
diligence investigation and the results thereof shall not have revealed that any
of the representations, warranties or covenants made by the Company or any
Shareholder in this Agreement are untrue or incorrect in any material respect or
otherwise be unsatisfactory to Parent.
(g) No Violations of Law. At the Closing Date, there shall
exist no violations of any Federal, state or local law, ordinance or regulation
materially affecting the assets, properties or Business of the Company.
(h) Performance by Shareholders and the Company. All of the
terms and conditions of this Agreement to be complied with and performed by the
Shareholders and the Company on or before the Closing Date shall have been
complied with and performed.
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28
(i) Leases. All consents or approvals regarding any Contracts
or Leases shall have been obtained, if necessary.
(j) Medical Director's Employment Agreement. C. XXXXX XXXXX,
JR., M.D. shall have entered into a new Medical Director's employment agreement
with the Company as Medical Director as required in Section 4.5(e) hereof.
(k) Financial Statements. Parent shall have commenced the
audit of its financial statements as of December 31, 1994 and for the year then
ended.
(l) Accounting Treatment. Parent shall have received a letter
dated no later than the Closing Date from Parent's independent auditors,
addressed to Parent, in form and substance satisfactory to it, to the effect
that the Merger qualifies for "pooling of interests" treatment for financial
reporting requirements and that such accounting treatment is in accordance with
generally accepted accounting principles.
8.2 Conditions to Obligations of the Company and Shareholder. The
obligations of the Company and Shareholders to consummate this Agreement are
subject to, and shall be conditioned upon, each of the following conditions:
(a) Representations and Warranties. The representations and
warranties made by Parent and Sub herein shall be correct in all material
respects on and as of the Closing Date with the same force and effect (except as
affected by the transactions contemplated herein or otherwise approved in
writing by the Company and the Shareholders and changes occurring after the date
hereof in the ordinary course of Parent's business) as though such
representations had been made on and as of the Closing Date. The covenants of
Parent and Sub contained herein shall not have been breached in any material
respects as of the Closing Date, and Parent and Sub shall have delivered to the
Shareholders and the Company, a certificate to such effect signed by a duly
authorized officer of Parent.
(b) Performance by Parent and Sub. All of the terms, covenants
and conditions of this Agreement to be complied with and performed by Parent and
Sub on or before the Closing Date shall have been complied with and performed.
ARTICLE IX. POST-CLOSING OBLIGATIONS
9.1 Survival of the Closing. All covenants, agreements,
representations, and warranties made hereunder and in any certificates delivered
at the Closing pursuant hereto shall be deemed to have been relied upon by
Parent, Sub, Shareholders and the Company, and shall survive the Closing for the
applicable statute of limitation period.
9.2 Further Assurances. Following the Closing, each of the
Shareholders, the Company and Parent shall execute and deliver such documents,
and take such other action as shall be reasonably requested by any other party
hereto to carry out the transaction contemplated by this Agreement.
9.3 Indemnification by Shareholders. The Shareholders agree to
indemnify, reimburse and hold harmless Parent, Sub and the Surviving Corporation
against and from:
(a) All damages in excess of $50,000 in the aggregate
suffered, incurred, or sustained by Parent or the Surviving Corporation as a
result of (i) the existence on or before the Closing Date of any material
liabilities, absolute or contingent, of the Company which were not
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29
disclosed to Parent in accordance with the terms of this Agreement or any
Collateral Agreement and which the Shareholders knew or should have known
existed; (ii) the material untruth of any other representation or the breach of
any other warranty made in this Agreement or any Collateral Agreement; (iii) the
material untruth of any certificate required under this Agreement or any
Collateral Agreement to be delivered by the Shareholders or the Company to
Parent on the Closing Date; (iv) the material breach of this Agreement by the
Company or the Shareholders.
(b) Parent shall give the Shareholders prompt notice of any
claim to indemnification it may wish to assert pursuant to this Article IX as
soon as reasonably practicable. Before being required to make any payments
pursuant to this Section 9.3, the Shareholders may, in their discretion and at
their expense, take all necessary steps properly to contest any claim or
liability or action in respect thereof involving third parties, or to prosecute
such contest or action to conclusion or settlement satisfactory to Parent and
themselves. Parent shall cooperate fully with the Shareholders in the reasonable
conduct of any such contest or action, legal proceedings, negotiation, or
settlement and will not permit compromise voluntarily or settle any such
contest, action, legal proceeding, claim or demand without prior notice to and
approval by the Shareholders.
(c) Upon the payment to Parent by the Shareholders of any
amount which Parent is entitled to receive by way of indemnification under this
Article IX, Parent and the Surviving Corporation shall forthwith assign to the
Shareholders all of their right, title, and interest in any item for which
indemnification shall so be made, including claims against third parties.
(d) In the event that the Shareholders shall dispute the right
of Parent to be indemnified under this Article IX of any item with respect to
which Parent shall so request indemnification, or if the Shareholders shall
dispute the amount which Parent shall be entitled to receive with respect to
such item by way of indemnification, such dispute shall be submitted to
arbitration in the City of Miami, in accordance with the rules then in effect of
the American Arbitration Association.
(e) Parent shall have the right to set-off any amounts due it
pursuant to a claim for indemnification against the Renex Shares held by the
Escrow Agent pursuant to the Escrow Agent.
9.4 Non-Competition Agreement. The Shareholders shall enter into
agreements at the Closing substantially in the form attached as Exhibit "I" of
the Disclosure Schedule, in which such Shareholders agree as follows:
(a) The Shareholders covenant and agree that for a period of
ten (10) years from the Closing Date without the prior written consent of
Parent, they will not be an employee (except with Parent or the Surviving
Corporation), independent contractor, agent, director, stockholder or owner
(except of not more than one percent (1%) of the securities of a publicly traded
entity), partner, consultant, financial backer, creditor or be otherwise
directly or indirectly connected with or participate in the management,
operation or control of any business, firm, proprietorship, corporation,
partnership, association, entity or venture engaged in a business similar to the
Business within fifty (50) miles of any existing or future location of the
Surviving Corporation for any remuneration.
(b) The Shareholders covenant and agree that for a period of
ten (10) years from the Closing without the prior written consent of Parent,
they will not contact, call upon, solicit business from, sell or render services
to any patient or customer of the Surviving Corporation or Parent with respect
to the provision of any services or supplies similar to the Business or
otherwise directly or indirectly aid or assist any other person, firm or entity
to do any of the
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30
aforesaid acts, except on behalf of the Surviving Corporation, Parent or their
subsidiaries or affiliates.
(c) The Shareholders covenant and agree that for a period of
ten (10) years from the Closing without the prior written consent of Parent,
they will not directly or indirectly as principal, agent, owner, partner,
stockholder, officer, director, employee, independent contractor or consultant
or in any individual or representative capacity for themselves or on behalf of
any business firm, corporation, partnership, association or proprietorship enter
into any agreements with or solicit, or directly or indirectly cause others to
solicit, the employment of any officer or other employee of the Surviving
Corporation, Parent or any of their subsidiaries and affiliates for the purpose
of causing said officer or employee to terminate employment with the Surviving
Corporation, Parent or their subsidiaries and affiliates.
(d) The Shareholders agree that they shall not at any time
disclose directly or indirectly to any person, firm or entity any confidential
information about the Surviving Corporation, the Business or Parent or any
information concerning their respective financial condition, customers, sources
of patients and methods of obtaining business or any other methods generally of
doing and operating the Business, except to the extent that such information is
a matter of public knowledge or is required to be disclosed by law through
judicial or administrative process.
(e) It is recognized and acknowledged by the parties hereto
that a breach, threatened breach, or violation by any Shareholder of any of the
covenants and agreements contained in Section 9.4 may cause irreparable harm and
Damage to the Surviving Corporation and Parent in a monetary amount which may be
impossible to ascertain. Each Shareholder agrees that Parent shall be entitled
to an injunction from any court of competent jurisdiction enjoining or
restraining any breach or violation of any or all of the covenants and
agreements contained in this Section 9.4 and that such right to injunction shall
be cumulative and in addition to whatever other rights or remedies the Parent or
the Surviving Corporation may possess hereunder at law or in equity.
(f) Parent and Sub agree that the provisions of this Section
9.4 shall not be enforceable by Parent or Sub: (i) following termination of the
leases described in Section 7.9 herein, if such termination results from a
default in the provisions thereof by the Surviving Corporation following the
Closing; or (ii) upon exercise of the right of first refusal contained in
Section 9.9 herein.
9.5 Publicity. The Company and Shareholder shall not issue or make, or
cause to have made, any public release or announcement concerning this Agreement
or the transaction contemplated hereby, without the advance written approval of
the form and substance by Parent, which approval shall not be unreasonably
withheld.
9.6 Employment Arrangement. The Surviving Corporation agrees to employ
XXXXXXX XXXXX and XXXXXXX X. XXXXX, XX. following the Closing on the terms and
conditions set forth in those Employment Letters attached to the Disclosure
Schedule as Exhibits "J" and "K."
9.7 Audit. The Company shall cause to be completed an audit of its
financial statements as of December 31, 1994 and December 31, 1995 and for the
twelve (12) months in each of the periods then ended, by an independent public
accounting firm to be chosen by Parent. The financial statements shall be
audited in accordance with GAAP.
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31
9.8 Board of Directors. Parent shall use its best efforts to cause the
nomination and election of C. XXXXX XXXXX, JR., M.D. to Parent's Board of
Directors in accordance with Parent's Articles of Incorporation and By-laws.
9.9 Right of First Refusal. Parent and Shareholders shall enter into
Right of First Refusal Agreement substantially in the form attached to the
Disclosure Schedule as Exhibit "L", whereby Parent shall grant to Shareholders
a right of first refusal on the sale of the Company. In the event of a bona
fide offer, accepted by Parent, in which Parent agrees to sell the Company or
substantially all of its assets to a third party, the Shareholders shall have
the right to purchase the Company on the same terms and conditions of the bona
fide offer. The right of first refusal shall not apply to any sale or other
transaction involving other assets of Parent not involving the Company or the
sale of the Company in conjunction with the sale of other assets of Parent,
which assets have a value in excess of the value of the Company's assets. The
right of first refusal shall terminate on the earlier of (a) ten (10) years; or
(b) upon the sale by Shareholders of more than thirty percent (30%) of the
Renex Shares issued in connection with this transaction.
9.10 Personal Guarantees of Shareholders. Parent shall use its best
efforts to have personal guarantees of the Shareholders which were executed for
the benefit of the Company, terminated following the Closing. If any lender,
lessor or other party obligor on such liabilities refuses to terminate such
guarantees, Parent agrees to indemnify the Shareholders against any claims or
liabilities arising out of their guarantees. Parent shall take no action which
would in any way cause such guarantees to be increased.
ARTICLE X. MISCELLANEOUS
10.1 Costs and Expenses. Except as otherwise provided if this Agreement
is terminated in accordance with Section 4.8, each of the parties to this
Agreement shall bear their own expenses incurred in connection with the
negotiation, preparation, execution and closing of this Agreement and the
transaction contemplated hereby, including but not limited to, transfer taxes,
legal fees and accounting fees.
10.2 Remedies. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any and all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute or otherwise.
10.3 Exhibits and Schedules. The Exhibits and Schedules referred to
herein, including the Disclosure Schedule and its exhibits, are incorporated
herein by this reference.
10.4 Attorneys' Fees. In the event of any litigation or arbitration
proceedings arising out of this Agreement, the prevailing party shall be
entitled to an award of its attorneys' fees and costs (including any fees and
costs incurred in appellate proceedings) against the losing party.
10.5 Risk of Loss. Prior to the Closing, the risk of loss, damage to,
or destruction of any assets of the Company shall remain with the Company and
the Shareholders.
10.6 Assignment and Amendment of Agreement. This Agreement shall not be
assignable by any of the parties hereto except with the written consent of the
other party. This Agreement may be amended by written agreement of the parties
hereto and any such amendment may:
(a) change the time or place for performance of any of the
obligations or acts of the parties hereto, including changes of time and date of
the Closing Date or of the place of Closing,
(b) waive any inaccuracies in or modify the representations
contained in this Agreement or in any Exhibits or Schedules hereto or in any
documents delivered pursuant hereto, and
(c) waive compliance with or modify any of the covenants
herein contained and waive or modify performance of any of the obligations of
the parties hereto.
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32
10.7 Notices. Any notice or communication given pursuant hereto by
either party to the other party shall be in writing and delivered or mailed by
certified mail, return receipt requested, postage prepaid, as follows:
If to Parent or Sub: Renex Corp.
0000 Xxxxx xx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx, President
Copy to: Wallace, Bauman, Fodiman & Xxxxxxx, P.A.
0000 Xxxxx xx Xxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company Dialysis Facilities, Inc.
or Shareholders: 0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx
Attention: Xxxxxxx X. Xxxxx
Copy to: Xxxxxx Xxxxx Xxxxxx & Xxxx
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
or at such other address as hereafter shall be furnished in writing by any party
hereto to the other parties.
10.8 Entire Agreement. This Agreement, the Disclosure Schedule and all
exhibits attached thereto, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written of the parties.
10.9 Waiver. Any forbearance, failure or delay by any of the parties
hereto to exercise any right, power or remedy hereunder shall not be deemed a
waiver of such right, power or remedy and any single or partial exercise of any
such right, power or remedy hereunder shall not preclude the further exercise
thereof and every right, power or remedy of either party shall continue in full
force and effect unless waived specifically by an instrument in writing executed
by such party.
10.10 Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Florida. Each party hereto irrevocably submits to
the jurisdiction of the Circuit Court of Dade County, Florida, in any action or
proceeding arising out of or relating to this Agreement and each party
irrevocably agrees that all claims in respect of any such action or proceeding
must be brought and/or defended in such court.
10.11 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
10.12 Captions. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
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10.13 Successors and Assigns. All of the terms of this Agreement shall
be binding upon and inure to the benefit of, and be enforceable by and against
the parties and their respective successors and assigns.
10.14 Interpretation. Handwritten provisions inserted in this
Agreement, initialed in ink, shall control all typewritten provisions in
conflict therewith. This Agreement shall not be construed more strongly against
or in favor of any party, regardless of who is responsible for its preparation.
10.15 Severability. In the event any provision of this Agreement or the
application of such provision to any part shall be held by a court of competent
jurisdiction to be contrary to any rule of law or public policy, the remaining
provisions of this Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Signed, sealed, and delivered in the PARENT:
presence of:
RENEX CORP., a Florida corporation
-------------------------------------
Print Name:
--------------------------
By: /s/ XXXXX X. XXXX
------------------------------------- ------------------------------------
Print Name: XXXXX X. XXXX, President
--------------------------
SUB:
RENEX ACQUISITION CORP., a Mississippi
corporation
Print Name:
--------------------------
By: /s/ XXXXX X. XXXX
------------------------------------- ------------------------------------
Print Name: XXXXX X. XXXX, President
--------------------------
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COMPANY:
DIALYSIS FACILITIES, INC., a Mississippi
corporation
-------------------------------------
Print Name:
--------------------------
By: /s/ C. XXXXX XXXXX, JR., M.D.
------------------------------------- -------------------------------------
Print Name: Name: C. XXXXX XXXXX, JR., M.D.
-------------------------- -----------------------------------
Title: President
----------------------------------
SHAREHOLDERS:
/s/ C. XXXXX XXXXX, JR., M.D.
----------------------------------------
C. XXXXX XXXXX, JR., M.D.
/s/ XXXXXXX X. XXXXX, XX.
----------------------------------------
XXXXXXX X. XXXXX, XX.
/s/ XXXXXXX X. XXXXX
----------------------------------------
XXXXXXX X. XXXXX
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