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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: March 29, 1996
VIVRA INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 1-10261 94-3096645
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Id. No.)
incorporation)
400 Primrose, Suite 200, Burlingame, California 94010
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(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 348-8200
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
10.1 Stock Exchange Agreement among Vivra Incorporated;
Mr. Qualls and Mr. Robins.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 29, 1996
VIVRA INCORPORATED
By /s/ LEANNE M. ZUMWALT
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Leanne M. Zumwalt
Executive Vice President
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EXHIBIT 10.1
STOCK EXCHANGE AGREEMENT
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THIS Stock Exchange Agreement (the "Agreement") is made as of made as
of March 15, 1996 by and among VIVRA INCORPORATED, a Delaware corporation
("Vivra" or "Buyer"), JAMES F. QUALLS and RICHARD ROBINS (collectively,
"Sellers").
R E C I T A L S
A. Rappahannock Dialysis Center, Inc., a Virginia corporation, (the
"Company" or "RDC"), owns and operates a facility (the "Facility") located at 77
Irvington Road, Kilmarnock, Virginia 22482. RDC provides (i) continuous
ambulatory peritoneal dialysis and hemodialysis services, treatments,
counselling and instruction at the Facility, in the home and on an out-patient
basis to persons with kidney diseases or conditions and (ii) acute care services
to patients at hospitals (collectively, the "Dialysis Business").
B. Sellers each own the number of shares of common stock, no par
value per share, of the Company set forth opposite their name on Exhibit A
(collectively, all such shares are referred to as the "RDC Shares").
C. It is the intention of the parties to exchange the RDC Shares
pursuant to the requirements of Section 368(a)(1)(B) of the Internal Revenue
Code (the "Code").
D. Buyer desires to acquire from Sellers and Sellers desire to sell to
Buyer all of the RDC Shares in exchange for capital stock of Buyer.
NOW, THEREFORE, it is agreed:
1. The Transaction.
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1.1 Exchange of Stock. Subject to the terms and conditions contained
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herein, at the Closing (as hereinafter defined) Sellers shall sell, transfer and
assign to Buyer, and Buyer shall purchase, accept and receive all right, title
and interest in and to all of the RDC Shares, free and clear of all options,
pledges, security interests, liens, charges or other encumbrances or
restrictions on transfer of any kind ("Encumbrances"), solely in exchange for
common stock of Vivra as required by Section 368(a)(1)(B) of the Code.
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1.2 Consideration.
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(a) Upon the terms and subject to the conditions hereof, and in
consideration of the transfer and delivery of the RDC Shares, Vivra shall
deliver to each Seller (i) at Closing, that number of shares of common stock,
$.01 par value per share of Vivra ("Vivra Common Stock") equal to (A) $ 600,000
divided by the Average Closing Price (as defined below) multiplied by (B) the
percentage set forth opposite the name of such Seller on Exhibit A hereto under
the heading "Percentage Ownership" (the "Seller's Percentage Ownership"), and
(ii) on the date set forth below in paragraph 1.3, that number of shares of
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Vivra Common Stock equal to (A) the Purchase Price less $600,000 divided by the
Average Closing Price, multiplied by (B) the Seller's Percentage Ownership, if
such number is greater than zero (the "Post Closing Payment").
(b) For purposes of this Agreement "Average Closing Price" shall mean the
average closing price of Vivra Common Stock on the New York Stock Exchange for
the twenty (20) consecutive trading days ending on the tenth (10) trading day
prior to the Closing Date.
(b) The shares of Vivra Common Stock to be issued to the Sellers
(including any Post Closing Payment (as hereinafter defined)) are referred to in
this Agreement as the "Vivra Shares". The Vivra Shares shall initially be
delivered to the Escrow Holder pursuant to paragraph 4.2 of this Agreement.
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1.3 Determination of Purchase Price. (a) The Purchase Price for the RDC
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Shares (the "Purchase Price") shall be equal to (i) $1,000,000, plus (ii) an
amount (which may be a negative amount) equal to the sum of the accounts
receivable, cash and cash equivalents of the Company less the liabilities of the
Company (each as reflected on the Final Closing Balance Sheet) and shall be
determined in accordance with the provisions of this paragraph 1.3. Within
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forty-five (45) days after the Closing, Vivra shall have prepared and delivered
to the Sellers a balance sheet for the Company as of the date of the Closing,
along with a statement setting forth in reasonable detail the computation of the
Purchase Price (the "Closing Balance Sheet"). The Closing Balance Sheet shall
be prepared in accordance with generally accepted accounting principles and
procedures used in, and on a basis consistent with, those applied by the Company
in preparing the December 31, 1994 balance sheet included within the Financials
(as hereinafter defined); provided, however, that for purposes of the Closing
Balance Sheet the following provisions shall govern:
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(i) accounts receivable which are ninety (90) days or more past due
shall not be recorded on the Closing Balance Sheet; and
(ii) the Closing Balance Sheet will reflect the liability for
taxes that will result from the Company converting from a cash basis
of accounting for tax purposes to an accrual basis of accounting.
(b) Vivra shall promptly provide the Sellers with access to all
information which the Sellers shall reasonably request to verify the Closing
Balance Sheet. The Closing Balance Sheet as delivered to the Sellers shall be
final for purposes of determining the Purchase Price unless Vivra is given
written notice that the Sellers dispute the calculation of the Purchase Price
(the "Dispute Notice") within ten (10) business days after the Closing Balance
Sheet has been given to the Sellers. Any Dispute Notice shall set forth in
reasonable detail the items in dispute. In the event a Dispute Notice is timely
given to Vivra, Vivra and the Sellers shall have thirty (30) days to resolve the
dispute and if not resolved, the dispute shall be submitted to a "Big Six"
accounting firm chosen by lot (the "Arbitrator") which shall be instructed to
arbitrate such dispute and determine the Purchase Price within thirty (30) days.
Each party shall pay its own fees and expenses in connection with resolving a
Dispute Notice. Buyer and Sellers shall each pay half of the fees and expenses
of such Arbitrator. The resolution of the dispute by the Arbitrator shall be
set forth in writing and shall be conclusive and binding upon and non-
appealable by the parties, and the determination of the Purchase Price shall
become final upon the date of such resolution and may be entered as a final
judgment in any court of proper jurisdiction. The Closing Balance Sheet as (i)
delivered by Vivra if a Dispute Notice is not properly delivered, (ii)
determined by mutual agreement of Vivra and the Sellers or (iii) determined by
the written resolution of the Arbitrator shall be the Final Balance Sheet.
Vivra shall pay the Post Closing Payment, if any, to the Sellers by delivery of
the required number of shares of Vivra Common Stock to the Escrow Holder within
fifteen (15) business days after the Final Closing Balance Sheet is determined.
(c) In the event that the Purchase Price as finally determined is less
than $600,000, then the Sellers shall pay to Vivra such deficiency within
fifteen (15) business days after the Final Closing Balance Sheet is determined.
Such deficiency shall be paid by delivering (or instructing the Escrow Holder to
deliver) that number of shares of Vivra Common Stock equal to the deficiency
divided by the Average Closing Price.
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1.4 Transfer of Custody of Patient Records. Sellers agree to turn over
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to Vivra on the Closing Date custody of all existing records, files, charts,
x-ray files and similar data pertaining to each Patient, as hereinafter defined,
and in Sellers' possession as of the Closing Date (collectively the "Patient
Records"). "Patient" shall mean any past or current patient treated at the
Facility and for whom Sellers keep, maintain or have custody of any records,
files, charts, x-ray files or any similar data. Vivra agrees to accept custody
of the Patient Records and to hold, utilize and deliver them pursuant to the
instructions of the Patient to whom they pertain. The parties agree to use
their best efforts to comply with all laws and regulations with respect to the
handling and storage of Patient Records.
1.5 Noncompetition, Nonsolicitation and Nondisclosure Covenants.
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1.5.1 Covenants.
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(a) Noncompetition Covenant. The Sellers agree that for a
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period (the "Restricted Period") beginning on the Closing and ending on the
tenth (10th) anniversary thereof, none of the Sellers nor any affiliate of the
Sellers will, either jointly or individually, directly or indirectly, compete
with Vivra or Vivra Renal Care, Inc. ("VRC") or own, manage, operate, join,
control, advise, consult with or participate in the ownership, operation,
management or control (other than as a shareholder owning less than 5% of the
capital stock of a company whose stock is publicly traded on a national
exchange) of any business engaged in the provision of chronic in-patient, out-
patient or home hemodialysis, continuous ambulatory peritoneal dialysis, acute
care dialysis services, intradialytic parenteral nutrition, nerve conduction
testing and bone densitometry services (individually and collectively, a
"Competing Business") within a 50 mile radius of the Facility (the "Restricted
Area"), nor will they advise, assist, consult with, lease or sell real property
to (or permit their successors or assigns to do so) or aid in the establishment
or operation of a Competing Business in the Restricted Area during the
Restricted Period.
(b) Nonsolicitation Covenant. Each Seller agrees that during
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the Restricted Period, it will not, either jointly or individually, directly or
indirectly, solicit any employees of Vivra, VRC or the Company for or on behalf
of any business similar to the Dialysis Business within the Restricted Area.
(c) Nondisclosure Covenant By Sellers. In the operation and
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development of Vivra's and VRC's existing businesses and the planning and
development of their proposed businesses,
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Vivra and its affiliates (and, after the Closing, the Company) generate
information and data which is and will be proprietary and confidential (the
"Confidential Information") the disclosure of which would be extremely
detrimental to their business and of great assistance to their competitors. The
Confidential Information includes, but is not limited to:
(i) Development. Data, plans and projections regarding the
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location, development and expansion of existing and proposed facilities;
(ii) Marketing. Market surveys, studies and analyses;
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(iii) Services. Information concerning the identities,
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locations and qualifications of professionals and other persons presently, or
prospectively to be, retained or employed by Vivra or any of its affiliates;
(iv) Suppliers, etc. Information concerning: the
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identities, locations, prices, costs and other terms of dealings with referral
and reimbursement sources, suppliers, providers and supplier and provider
organizations and entities; administrative and accounting procedures and
policies of the U.S. Department of Health and Human Services and the Health Care
Finance Administration, the Medicare Program ("Medicare"), the End Stage Renal
Disease Program ("ESRD"), the Medicaid Program ("Medicaid"), comparable state
offices and programs, insurers and other third-party payors and information
about contractual and other arrangements, and affiliations with any of the
foregoing;
(v) Regulatory Matters. Information concerning
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legislative, administrative, regulatory and zoning requirements, bodies and
officials;
(vi) Records. Medical, patient and personnel records;
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(vii) Data. Statistical, financial, cost and accounting
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data;
(viii) Patients. Existing and prospective patient lists,
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names and addresses;
(ix) Manuals. Administrative, accounting, operations and
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procedures manuals; and
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(x) This Transaction. All writings, conversations and
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information regarding the transactions contemplated by this Agreement.
Sellers understand and agree that, due to the highly competitive nature of
the health care industry and the Dialysis Business, disclosure of any of the
Confidential Information would be extremely damaging to Vivra and its
affiliates. To the extent that any such Confidential Information becomes
available to Sellers each Seller agrees that it will not use or divulge such
information without the prior written consent of Vivra and that it holds such
information in a fiduciary capacity for the sole benefit of Vivra. Sellers also
agree that the Confidential Information includes but is not limited to trade
secrets within the meaning of any and all applicable state and federal statutes,
rules and regulations, and that if any Seller breaches this covenant, Vivra
shall in addition to all other remedies, have available the remedies provided by
all such state and federal statutes, rules and regulations as well as such
remedies as may otherwise be available. The restrictions set forth in this
paragraph 1.5.1(c) shall not apply to any part of the Confidential Information:
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(i) which is or becomes generally available to the public or publicly known
other than as a result of disclosure by Sellers; (ii) which becomes available to
Sellers on a nonconfidential basis from a source other than Vivra or its or
affiliates who is not bound by a non-disclosure obligation; or (iii) to the
extent it is disclosed by Sellers pursuant to the requirement of a governmental
agency or court of competent jurisdiction or as otherwise required under
applicable law.
(d) Buyer's Nondisclosure Covenant. Prior to the Closing Date,
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Buyer agrees to (i) keep all writings, conversations and information regarding
the transactions contemplated by this Agreement strictly confidential and not to
disclose them to any third parties, except its officers, attorneys, accountants,
and other consultants, and (ii) keep in the strictest confidence all financial
and other information and data provided to it by the Sellers with respect to the
Company, and not to divulge or discuss any such information, or provide copies
or extracts thereof to any third parties.
1.5.2 Transferability. Sellers agree that the covenants contained in
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paragraph 1.5.1 (the "Covenants") may be assigned by Vivra to any person, firm
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or business entity to whom the ownership and operation of the Facility may be
transferred, it being the intention of the parties that the Covenants shall be
binding on or inure to the benefit of, as the case may be, any of their
successors with the same force and effect as if the Covenants had been made by
and with such successors.
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1.5.3 Severability. It is further understood and agreed that the
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scope of the Covenants is reasonable in activities, time and area, and the
Covenants are fairly necessary to protect the investment of Vivra hereunder.
Nevertheless, it is further agreed that the Covenants shall be regarded as
severable and shall be operative as to activities, time and area to the extent
that they may be made so operative, and if any part of them is declared invalid
or unenforceable as to activities, time or area, the validity and enforceability
of the remainder shall not be affected.
1.5.4 Injunction. It is further understood and agreed that Vivra
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will suffer irreparable injury for which it may have no adequate remedy at law
as a result of the breach of these Covenants, and that Vivra shall be entitled
to appropriate remedies of specific performance and injunctive relief in the
event of such breach.
2. Representations and Warranties of Sellers. Each of the Sellers, jointly and
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severally, represents and warrants to Buyer as of the date hereof, and as of the
Closing Date, as follows:
2.1 Organization and Capitalization.
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(a) The Company is, and on the Closing Date will be, a Virginia
corporation duly organized, validly existing and in good standing under the laws
of the State of Virginia, and has full power and authority to carry on the
Dialysis Business.
(b) The authorized capital stock of the Company consists of
5,000 shares of common stock, no par value, of which 300 shares are issued and
outstanding on the date hereof. All of the RDC Shares have been duly authorized
and validly issued and are fully paid and nonassessable and were not issued in
violation of any preemptive or other right of any person. There are no
outstanding options, rights, warrants, conversion rights or other agreements or
commitments to which any Seller or the Company is a party or binding upon any
Seller or the Company providing for the issuance or transfer by any Seller or
the Company of any of the capital stock of the Company. Each Seller is the sole
record and beneficial owners of the RDC Shares set forth opposite his name on
Exhibit A, and has good and marketable title to such RDC Shares and the absolute
right, power and capacity to sell, assign, transfer and deliver such RDC Shares
to Buyer free and clear of any liens, encumbrances, pledges, security interests,
restrictive agreements, options, rights of first refusal, transfer restrictions,
conditional sales agreements, voting trust arrangements, voting agreements or
claims of any nature whatsoever. Each Seller is conveying to Buyer good and
marketable title to such RDC Shares free of any interest whatsoever of third
parties.
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2.2 Authority. All actions required to be taken by any Seller to
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authorize and approve the execution, delivery and performance of this Agreement
and the other agreements to be delivered at Closing, and the consummation of the
transactions described herein have been duly authorized and approved by all
necessary action. Sellers have the power and authority (without the consent of
any other person) to enter into, deliver, and perform this Agreement and the
other agreements to be delivered at Closing. This Agreement, and the other
agreements to be delivered at Closing, when executed and delivered by each
Seller, will be their valid and binding obligations enforceable against such
Seller according to their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws, regulations and authorities
from time to time in effect affecting creditors' rights generally and to general
principles of equity, whether considered in a proceeding in equity or at law.
2.3 Financial Statements.
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2.3.1 Statements Delivered. Sellers have delivered or, in the case
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of statements covering February and March 1996, will deliver as soon as
practicable after Closing, but in no event later than 30 days thereafter, to
Buyer the following financial statements:
(a) Balance Sheet and Income Statement. Balance sheets and
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statements of profit and loss for the Dialysis Business at and for the years
ended December 31, 1993, 1994 and 1995 and at and for the two months ended
February 29, 1996 (Schedule 2.3.1(a)) (the "Financials").
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(b) Treatment Report. A report showing treatments provided by
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the Dialysis Business from January 1, 1993 through March 15, 1996 (Schedule
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2.3.1(b)) (the "Treatment Report").
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2.3.2 Representation. All of the Financials have been prepared on
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the accrual basis of accounting according to generally accepted accounting
principles consistently applied and fairly present the financial position and
results of operations of the Dialysis Business as of the dates and for the
periods indicated. The Company is not subject to any liability or obligation
(whether absolute, accrued, contingent or otherwise) which is not shown or
provided for on the Financials or otherwise described in narrative form on
Schedule 2.3.1(a). The Treatment Report accurately presents the number of
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treatments provided at or by the Facility on the dates thereof and for the
period covered thereby.
2.4 Assets. Schedule 2.4 contains a complete and correct list of all
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material items of personal property used in connection
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with the Dialysis Business or owned by the Company (the "Personal Property");
2.4.1 Extent. The Personal Property constitutes all material items
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of personal property used in or necessary for the operation of the Dialysis
Business as presently operated; and the inventory on the Closing Date will be of
quality, quantity and variety customary for facilities of size and utilization
and with storage capacity comparable to the Facility;
2.4.2 Condition. There are no material defects or unsafe conditions
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with respect to the Assets (as defined below) and the Sellers do not know of any
facts which would make the Assets unsuitable for the uses for which they are
intended. All of the Personal Property is in good operating condition and
repair, ordinary wear and tear excepted. The Assets will furnish Buyer with all
of the capacity and rights to operate the Dialysis Business in the same manner
as presently and historically operated by the Company and Sellers.
2.4.3 Title. Except as set forth on Schedule 2.4, the Company has
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all right, title and interest in, and good and marketable title to, all of the
assets, properties and rights used in the Dialysis Business (the "Assets") free
and clear of any Encumbrance.
2.5 Effect of Agreement. The execution and delivery of this Agreement by
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Sellers and the consummation of the transactions described herein, do not and
will not:
2.5.1 Articles of Incorporation. Violate the Company's Articles of
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Incorporation or Bylaws;
2.5.2 Breach of Agreements. Violate, constitute a breach of, cause a
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default under, or permit the termination of any agreement, obligation, or give
rise to any liability, penalty, mortgage or deed of trust, security agreement or
other lien, charge or encumbrance, to which the Company is a party or to which
the Assets are subject or for which the Company or Buyer might become liable;
2.5.3 Acceleration of Indebtedness. Accelerate or constitute an
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event entitling the holder of any indebtedness of the Company to accelerate the
maturity of any such indebtedness or to increase the rate of interest presently
in effect thereon; or
2.5.4 Judgments, etc. Violate, conflict with or result in the breach
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of any judgment, order, writ, injunction, decree or any rule or regulation of
any court, governmental agency or
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instrumentality affecting the Sellers, the Company, the Dialysis Business or the
Assets.
2.6 Compliance with Law. The Dialysis Business has been conducted in
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conformity, and Sellers and the Company are in compliance with all federal,
state and local laws, regulations or orders, including without limitation,
employment, insurance, zoning, occupancy, building, occupational and licensure
laws, regulations and orders which affect the Dialysis Business and all laws
relating to Medicate and/or Medicaid, including, but not limited to, 42 U.S.C.
Section1320(a)-7(a) et seq., 42 U.S.C. Section 1320(a)-
-- ---
7(b) et seq., 31 U.S.C. Section3729, and any other federal or state provision
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relating to the filing of false claims or payments for referrals. Sellers have
not received any notice asserting a failure to comply with any such law,
regulation or order which notice has not prior hereto been fully and completely
resolved to the satisfaction of, or abandoned by, the noticing party. Without
limitation of paragraph 2.6:
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2.6.1 Licenses, etc. The Company holds all rights, permits,
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authority, consents, licenses, certificates of need, exemptions, accreditations
and the like, including zoning approvals, variances and use or occupancy permits
necessary to enable it to (i) conduct the Dialysis Business as heretofore
conducted and (ii) obtain reimbursement under the Medicare, Medicaid and ESRD
Programs and under all contracts, programs and other arrangements with third--
party payors, insurers or fiscal intermediaries (collectively, the "Licenses").
Schedule 2.6.1 contains a complete and correct list of the Licenses, showing
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their dates of expiration where applicable. The Licenses are valid and in full
force and effect and no violations exist in respect thereof. There are no
pending, or, to the knowledge of Sellers, threatened, any investigations or
proceedings with respect to the Licenses. The Facility has an existing Medicare
Provider Agreement with the Health Care Finance Administration of the Department
of Health and Human Services and is certified for participation in the Medicare,
Medicaid and ESRD Programs, all of which licenses, agreements, certifications,
contracts and instruments are in full force and effect. No defaults have
occurred thereunder, and, to the best knowledge of each Seller, no event has
occurred which, with the giving of notice or passage of time or both, would
constitute a material default thereunder.
2.6.2 Hazardous Materials. Except as disclosed in Schedule 2.6.2,
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during Sellers' operation of the Facility, no hazardous or toxic material of any
type has ever been generated, treated, produced, stored, transported, released
or disposed of on, around or beneath the Facility. No written notification has
been received by Seller in the past with respect to the space occupied
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by the Facility (the "Premises") and, to Sellers' knowledge, there are no
proceedings or inquiries, pending or threatened, before any court, agency,
authority or tribunal, involving, concerning, or affecting the Premises in which
is in issue the violation of any federal, state or local law or regulation
pertaining to hazardous or toxic materials. For purposes of this section, the
phrase "hazardous or toxic materials" includes, substances defined as "hazardous
substances," "hazardous materials," "toxic substances," "hazardous waste,"
"extremely hazardous waste," or "restricted hazardous wastes," under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601, et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, et seq.; the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq.; the Federal Water Pollution Control Act,
33 U.S.C. Section 1251, et seq.; and comparable provisions of state and local
county and city ordinances, or any substances so defined or stated in any of the
regulations adopted and publications promulgated pursuant to those laws as they
may have been amended from time to time.
2.6.3 Filing of Reports. Other than claims or reports pertaining to
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individual patients, Sellers will cause to be timely filed, all cost reports of
every kind whatsoever required by law or by written or oral contract or
otherwise to have been filed or made on or prior to the Closing Date with
respect to the purchase of services by third-party purchasers, including, but
not limited to, Medicare and Medicaid, insurance carriers and other fiscal
intermediaries. The Company and each Seller has timely filed, in a complete and
correct manner, all requisite claims and other reports required to be filed in
connection with all state and federal Medicare and Medicaid programs due on or
before the date hereof. There are no claims, actions, payment reviews or
appeals pending or, to Sellers knowledge, threatened before any commission,
board or agency, including, without limitation, any intermediary or carrier, the
Administrator of the Health Care Financing Administration, or the Virginia
Department of Health and Rehabilitative Services or any other state or federal
agency with respect to any Medicare or Medicaid claims filed by Seller on or
before the date hereof or program compliance matters, which would adversely
affect the Company, any Seller, the Assets, the operation or utility thereof, or
the consummation of the transactions contemplated hereby. No validation review
or program integrity review related to any Seller or the Company has been
conducted by any commission, board or agency in connection with the Medicare or
Medicaid program, and no such reviews are scheduled, pending or, to any Seller's
knowledge, threatened against or affecting any Seller, the Company, any of the
Assets or the consummation of the transactions contemplated hereby.
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2.6.4 Occupational Safety. The Company has complied in all material
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respects with all requirements of the Occupational Safety and Health Act and its
state equivalents and regulations promulgated under any such legislation, the
consequences of a violation of which could have material adverse effect on the
Dialysis Business, and with all orders, judgments and decrees of any tribunal
under such legislation that apply to the Dialysis Business or the Assets.
2.6.5 Zoning. The operation and current use of the Premises are
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permitted under existing zoning and other land use laws and regulations
applicable to the Premises, and there are no plans, studies or efforts of any
governmental or nongovernmental authority, association, agency, person or entity
which would affect Buyer's proposed use or operation of the Premises.
2.7 Litigation.
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2.7.1 Claims, Actions, etc. Except as set forth in Schedule 2.7,
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there are no claims, actions, suits, arbitrations, legal or other proceedings
pending or, to the best knowledge of Sellers, threatened before any court or
governmental or administrative body or agency, or arbitration tribunal, nor are
there any outstanding orders, writs, judgments, injunctions or decrees of any
court, arbitrator or governmental agency to which any Seller or the Company is a
party related to the Dialysis Business;
2.7.2 Governmental Investigation. Except as shown on Schedule 2.7,
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no investigations for claims against (i) the Company, any Seller, the Dialysis
Business or the Facility or (ii) to the best knowledge of any Seller, any of the
medical staff members or employees of the Facility, are pending or threatened by
any governmental agency or instrumentality; and
2.7.3 Judgments. Except as shown on Schedule 3.7, none of the
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Sellers or the Company is party to, nor are they the subject of, any judgment,
order, writ, injunction, or decree of any court or governmental agency or
instrumentality which relates to the Assets, the Company, the Dialysis Business,
the condition or operation of the Facility or the consummation of any of the
transactions described in this Agreement.
2.8 Improper Payments. None of the Sellers, the Company or any of the
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Sellers' or the Company's affiliates, employees, representatives or agents has,
directly or indirectly, within the past four (4) years, given or made or agreed
to give or make any illegal commission, payment, gratuity, gift, political
contribution or similar benefit to any customer, supplier, governmental employee
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or other person who may be in a position to help or hinder the Dialysis
Business. None of the Sellers or the Company has filed any reports with any
governmental agency which disclose that it has participated in any of the
foregoing practices or acts giving rise to such practices.
2.9 Eminent Domain. There are no pending or, to the best knowledge of any
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Seller, threatened proceedings in eminent domain or otherwise, affecting any of
the Assets or the Facility.
2.10 Insurance. Schedule 2.10 sets forth a complete and correct list and
--------- -------------
a brief description of all policies of fire, extended coverage, liability
(including, without limitation, medical malpractice and professional liability)
and all other kinds of insurance held by the Company covering the Assets, the
Facility and the Dialysis Business. These policies are and will be maintained,
in full force and effect, until the Closing Date. Schedule 2.10 also contains a
-------------
list of all claims made on such policies since January 1, 1993. There are no
pending or asserted claims against any insurance as to which any insurer has
denied liability.
2.11 Labor Arrangements. Except as shown on Schedule 2.11, the Company is
------------------ -------------
not a party to, bound by or obligated to contribute to, any collective
bargaining agreement or other similar contract with any labor organization, nor
is it a member of or affiliated with any organization, group or association as a
result of which it is bound as to the terms and conditions of employment or its
hiring or termination policies at the Facility with respect to any of its
employees. Except as disclosed in Schedule 2.11, the Company has not
-------------
experienced, and there is not pending or, to the best knowledge of any Seller,
threatened, any labor dispute, strike, work stoppage or slowdown or labor
disturbance affecting the Facility, nor has there been any labor union
organizing activity at the Facility within the last three (3) years. There is
no unfair labor practice or other charge or complaint pending, or, to the best
knowledge of any Seller, threatened against the Company, before any court, the
National Labor Relations Board or any other governmental agency.
2.12 Personnel; Compensation. Schedule 2.12 is a complete and correct
----------------------- -------------
list of the names and addresses of all employees of the Company showing the
compensation payable to each and all accrued vacation time, sick leave and
holiday time through March 15, 1996. The Company has not increased the
compensation payable to any employee of the Company since November 21, 1995,
without the prior written consent of Vivra, except with respect to one-dollar
per hour pay increases given to two employees upon successful completion of a
probationary period.
-13-
<PAGE>
2.13 Employment Contracts and Employee Benefit Plans. Schedule 2.13
----------------------------------------------- -------------
contains a complete and correct list and description of all employment contracts
to which the Company is a party or by which it is bound and of all pension,
bonus, profit sharing, retirement, stock option, medical expense, dental
expense, hospitalization, life insurance or other death benefit, severance, and
other benefit plans, agreements, arrangements or other programs providing
remuneration or benefits for employees at the Facility, including without
limitation any employee benefit plan defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not
funded and whether or not reflected in any plan documents. There have been no
material defaults, breaches, omissions or other failings by the Company or, to
the best knowledge of any Seller, any fiduciary under any of these contracts or
programs.
2.13.1 Employee Benefit Plans. Without limitation of paragraph 2.13,
---------------------- --------------
as to each employee benefit plan, as defined in Section 3(3) of ERISA sponsored
by the Company:
(a) Compliance. The Company is in compliance in all material
----------
respects with, and has taken all steps necessary to satisfy the requirements
which are prescribed by, any and all statutes, orders or governmental rules or
regulations currently in effect.
(b) Qualification. Where applicable, each such plan is
-------------
qualified under Section 401 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the plan sponsor has received a determination letter as to the
continued qualification of each such plan under the Code.
(c) Contributions. The Company has made all contributions to
-------------
each such plan required by the terms of the plan or any related collective
bargaining agreement as well as, where applicable, all contributions required to
be made in order to satisfy the minimum funding standards of Section 302 of
ERISA to the extent such standards are applicable.
(d) Funding. With respect to any such plan subject to the
-------
minimum funding standards of Section 302 of ERISA, if any, there is no
accumulated funding deficiency within the meaning of such Section and there are
no unfunded past service liabilities.
(e) Prohibited Transactions. The Company has not engaged in or
-----------------------
been a party to any prohibited transaction in connection with which the Company
or the Sellers or their successors could be subject to either a civil penalty
assessed
-14-
<PAGE>
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code.
(f) Reporting. The Company has complied with and prior to
---------
Closing will comply with reporting requirement as to any event which has
occurred and any condition which exists which would be deemed a reportable event
with respect to such plans within the meaning of Section 404 of ERISA.
(g) Pension Benefit Guaranty Corporation. The Company has not
------------------------------------
incurred, and will not incur, any financial liability to the Pension Benefit
Guaranty Corporation except for premiums due, all of which have been or will be
paid.
(h) Terminations. The Company has not terminated any such plan
------------
or any trust related thereto.
2.14 Brokers. Other than Gateson, Inc., whose expenses shall be paid by
-------
Sellers, neither the Company nor any of the Sellers has employed, contracted for
the services of, or authorized any broker or finder with respect to the
negotiations leading up to the execution of this Agreement or the consummation
of the transactions contemplated hereby.
2.15 Liabilities. Buyer will not be obligated for, nor will the Assets
-----------
secure or be subject to any liabilities or obligations of Sellers of any kind or
nature whether absolute, accrued, contingent, known, or unknown otherwise, and
whether normally set forth or reflected in a financial statement in connection
with, as result of or following the consummation of the transactions
contemplated hereby.
2.16 Material Contracts. Schedule 2.16 contains a correct and complete
------------------
list of all contracts, agreements, commitments, instruments, leases and
arrangements, including all amendments or supplements thereto, to which the
Company is a party or by which it is bound, or by which any of the Assets or the
Dialysis Business is subject or bound which: (a) are material to the Dialysis
Business or (b) meet any of the following descriptions: (i) any contracts,
agreements or arrangements with insurance companies, managed care plans,
hospitals, employers or other third parties pursuant to which health care
services are provided to patients; (ii) any contract or agreement not entered
into in the normal course of business; (iii) any contract or agreement which
involves future payments or receipts in excess of $ 5,000; (iv) any contract or
agreement not terminable without penalty or cause on 30 days or less notice; and
(v) any contracts or agreements with physicians or other providers of medical
services on behalf of the Company (collectively, the "Material Contracts").
Sellers have delivered
-15-
<PAGE>
accurate and complete copies of each Material Contract to Buyer. All Material
Contracts are valid, binding and enforceable in accordance with their terms and
are in full force and effect. Neither Sellers nor the Company nor to the best
of any Seller's knowledge, any other party to any Material Contract is in breach
of any provision of, in violation of, or in default under the terms of any
Material Contract. Except as indicated on Schedule 2.16, no Material Contract
-------------
will be effected by the transactions contemplated by this Agreement.
2.17 Pooling of Interests. Except as contemplated or required under this
--------------------
Agreement:
(a) the Company has not been a division or subsidiary of another
corporation for the two years preceding the Closing;
(b) the Company has not held more than 10% of the stock of any
other company or of Vivra at the date of initiation of the transactions
contemplated by this Agreement;
(c) the transactions contemplated by this Agreement shall be
completed in a single transaction or within one year after the plan is
initiated;
(d) the transactions contemplated by this Agreement shall be
substantially voting common stock in exchange for voting common stock;
(e) the Company has not, in order to consummate this
transaction, changed its voting common stock structure during the two years
immediately preceding the Closing;
(f) during the two years preceding the Closing, the Company has
not purchased treasury stock to consummate or avoid a business combination
transaction;
(g) the Company has not rearranged the relative ownership shares
among its existing voting shareholders as a part of this transaction;
(h) none of the Vivra Shares shall be restricted as to voting
rights as part of this transaction;
(i) there is no "earnout" contingency as part of this
transaction;
-16-
<PAGE>
(j) no financial arrangements have been made with the Sellers
which negate the exchange of equity securities (such as loans made against stock
issued); and
(k) to the best of the knowledge of the Sellers, neither the
Company, nor any of its affiliates, officers, or directors has taken any action
or failed to take action which action or failure to take action would jeopardize
the treatment of Buyer's acquisition of the Company as a "pooling of interests"
for accounting purposes.
2.18 Receipt of Information. Seller has received: (i) a copy of Vivra's
----------------------
prospectus dated February 9, 1995; (ii) a copy of Vivra's 1994 Annual Report to
Stockholders; (iii) a copy of Vivra's Annual Report on Form 10-K for the fiscal
year ended November 30, 1994; (iv) a copy of Vivra's Quarterly Reports on Form
10-Q for the quarters ended February 28 and May 31, 1995; (v) a copy of Vivra's
Proxy Statement for Vivra's annual meeting held on April __, 1995.
2.19 Accounts Receivable. Schedule 2.19 sets forth an accurate and
------------------- -------------
complete aging of all outstanding accounts and notes receivables as of February
29, 1996. All outstanding accounts and notes receivable reflected on the
Financials are due and valid claims against account debtors for services
rendered, and are not subject to any defenses, offsets or counterclaims. All
receivables arose in the ordinary course of business. No receivables are
subject to any prior assignments, claim, lien or security interest. The Company
has no liability for any discounts, refunds or otherwise except as set forth on
the Financial Statements.
2.20 Taxes. The Company has filed all returns, declarations and reports
-----
and all information returns and statements (collectively, "Returns") required to
-------
be filed or sent by or on behalf of the Company with respect to all foreign,
federal, state, county, local and other taxes of every kind, including income,
gross receipts, excise, franchise, property, value added, import duties,
employment, transfer, payroll, sales and use taxes and any additions to tax and
any interest or penalties thereon (collectively, "Taxes") for any period ending
-----
on or before the Closing Date. As of the time of filing, the Returns accurately
and correctly reflected, the income, business, assets, operations, activities
and status of the Business and any other information required to be shown
thereon. No extension of time in which to file a Return is currently in effect.
The Company has timely paid all Taxes required to be paid prior to the date
hereof. All Taxes which the Company is required by law to withhold or to
collect for payment have been duly withheld and collected, and have been paid to
the proper governmental entity or are being withheld by the Company for such
payment. All taxes which have not been paid on
-17-
<PAGE>
the date hereof have been properly accrued for on the Financial Statements.
Since its incorporation, the Company has been taxable as an "S" corporation
under the Internal Revenue Code of 1986, as amended.
2.21 Bank Accounts. Schedule 2.21 sets forth the names and locations
------------- -------------
of all banks, trust companies, savings and loan associations and other financial
institutions at which the Company maintains an account, deposit, safe deposit
box, lock box or line of credit or other loan facility relationship or account
of any nature and the names of all persons authorized to draw thereon, make
withdrawals therefrom or have access thereto. Schedule 2.21 sets forth an
-------------
accurate and complete list of all certificates of deposit, debt or equity
securities and other investments owned, beneficially or of record, by the
Company ("Investments"). The Company has good and marketable title to all of
the Investments.
2.22 Transactions with Affiliates. Except as otherwise set forth on
----------------------------
Schedule 2.22, none of the Sellers nor any Affiliate (as hereinafter defined) of
- - -------------
any Seller, directly or indirectly: (a) owns any debt, equity or other interest
in any corporation, association or other entity which is a competitor, lessor,
lessee, customer or supplier of the Company, (b) has any cause of action or
other claim against or owes any amount to, or is owed any amount by, the
Company; (c) has any interest in or owns any property or right used in the
conduct of the Dialysis Business; (d) is a party to any contract, lease,
agreement, arrangement or commitment of which the Company is a party or which is
used in the conduct of the Dialysis Business; or (e) received from or furnished
to the Company any goods or services. For purposes of this Agreement, the term
"Affiliate" means any corporation, partnership, trust or other entity controlled
by the Sellers, individually or collectively, or any member of any Seller's
immediate family.
2.23 Interim Change. Except as set forth in Schedule 2.23 or in the
-------------- -------------
Financials, since December 31, 1995 there has not been:
(a) any material adverse change in the financial condition, assets,
liabilities, personnel or business of the Company or in its relationships with
suppliers, patients, lessors, lessees or regulators;
(b) any damage, destruction or loss of property, whether or not
covered by insurance, materially and adversely affecting the Company;
-18-
<PAGE>
(c) any increase in the compensation or benefits payable or to become
payable by the Company to any of its officers or to employees;
(d) any extension of credit by the Company other than in the ordinary
course of business;
(e) any redemption, purchase or other acquisition by the Company of
any of its Shares;
(f) any sale, transfer or disposal by the Company or purchase, or
agreement therefor by the Company of any properties or assets or provision of
services except in the ordinary course of business and consistent with past
practices;
(g) any declaration or payment of any dividends or other
distributions in respect of the capital stock of the Company; or
(h) any transaction not in the ordinary course of business.
Except as disclosed on Schedule 2.23, since December 31, 1995 the Company has
-------------
not incurred or become subject to, or agreed to incur or become subject to, any
liability or obligation, contingent or otherwise, except current liabilities and
contractual obligations which are disclosed on Schedule 2.16 or not required to
-------------
be so disclosed in the ordinary course of business.
2.24 Disclosure by Seller. Set forth on Schedule 2.24 is a
-------------------- -------------
description of any of the following events:
(a) any disciplinary, peer review or professional review
investigation, proceeding or action instituted against any Seller by any
licensure board, hospital, medical school, health care facility or entity,
professional society or association, third party payor, peer review or
professional review committee or body, or governmental agency;
(b) any investigation or proceeding, whether administrative, civil or
criminal, relating to an allegation against any Seller of filing false
health care claims, violating anti-kickback laws or engaging in other
billing improprieties;
(c) any allegation, or any investigation or proceeding based on any
allegation or proceeding based on any allegation, against any Seller of
violating professional ethics or standards, or engaging in illegal, immoral
or other misconduct
-19-
<PAGE>
(of any nature or degree), relating to the practice of medicine; and
(d) any denial or withdrawal of an application of any Seller in any
state for licensure as a physician, for medical staff privileges at any
hospital or other health care entity, for board certification or
recertification, for participation in any third party payment program, for
state or federal controlled substances registration, or for malpractice
insurance.
2.25 No Untrue Representation or Warranty. No representation or warranty
------------------------------------
by Sellers in this Agreement, and no statement, schedule certificate furnished
or to be furnished to Buyer pursuant to this Agreement, or in connection with
the transactions described it, contains or will contain any untrue statement of
a material fact, or omits or will omit to state a material fact necessary to
make the statements contained therein not misleading.
3. Representations and Warranties of Buyer. Buyer represents and warrants to
---------------------------------------
Sellers that:
3.1 Organization and Good Standing. Buyer is, and on the Closing Date,
------------------------------
will be, a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
3.2 Authority. The execution, delivery and performance of this Agreement
---------
and the consummation of the transactions described in it by Buyer have been duly
authorized and approved by Buyer's Board of Directors (either specifically or by
appropriate grant of general authority), and by all other necessary corporate
action on its part, and no stockholder approval is required of such actions.
The person who has executed this Agreement on behalf of Buyer has been duly
authorized to do so by all necessary corporate action by Buyer. Buyer has the
corporate power and authority to enter into, deliver, and perform this
Agreement, and this Agreement, when executed and delivered by Buyer, will be a
valid and binding obligation of Buyer enforceable against Buyer according to its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws, regulations and authorities from time to time in effect
affecting creditors' rights generally and to general principles of equity,
whether considered in a proceeding in equity or at law.
3.3 Brokers. Buyer has not employed, contracted for the services of, or
-------
authorized any broker or finder with respect to the negotiations, execution or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
-20-
<PAGE>
3.4 Effect of Agreement. Neither the execution and delivery of this
-------------------
Agreement by Buyer nor the consummation of the transactions described in it at
the Closing will:
3.4.1 Articles and Bylaws. Violate Buyer's Certificate of
-------------------
Incorporation or Restated Bylaws;
3.4.2 Breach of Agreements. Violate, constitute a breach of, cause a
--------------------
default under, or permit the termination of any agreement, obligation,
liability, mortgage or deed of trust, security agreement or other lien, charge
or encumbrance, to which Buyer is subject or for which Sellers might become
liable;
3.4.3 Acceleration of Indebtedness. Accelerate or constitute an
----------------------------
event entitling the holder of any indebtedness of Buyer to accelerate the
maturity of any such indebtedness or to increase the rate of interest presently
in effect thereon; or
3.4.4 Judgments, etc. Violate, conflict with or result in the breach
---------------
of any judgment, order, writ, injunction, decree, or, to the best knowledge of
Buyer, any rule or regulation of any court, governmental agency or
instrumentality affecting Buyer.
3.5 Litigation. There is no material litigation, governmental
----------
investigation or other proceeding pending or, to the best knowledge of Buyer,
threatened to which Buyer is a party that would adversely affect the ability of
Buyer to consummate the transactions described in this Agreement.
3.6 Vivra Stock. The Vivra Shares have been duly authorized by all
-----------
necessary corporate action of Vivra and when delivered hereunder will be validly
issued, fully paid and nonassessable.
4. Covenants of Sellers. Sellers jointly and severally covenant and agree
--------------------
that:
4.1 Conduct of Business Pending the Closing. From the date of this
---------------------------------------
Agreement to the Closing Date, Sellers will or will cause the Company to:
4.1.1 Conduct of Dialysis Business; Operation of Facility. Conduct
---------------------------------------------------
the Dialysis Business and operate the Facility as presently conducted and
operated and only in the ordinary course of business and will comply in all
material respects with all applicable legal and contractual obligations;
4.1.2 Preservation of Organization. Use best efforts to preserve the
----------------------------
Dialysis Business and the Facility intact and to preserve the goodwill of all
suppliers, customers, patients,
-21-
<PAGE>
physicians, providers and others with whom Sellers or the Company have business
relationships;
4.1.3 Maintenance of Premises. Use best efforts to preserve and
-----------------------
maintain the Premises in good condition, ordinary wear and tear excepted, and
repair any damage to the Premises;
4.1.4 Employees. Take no action which would interfere with Vivra's
---------
relations with employees at the Facility and not increase the compensation
payable to any of such employees;
4.1.5 Liabilities. Not incur any obligation or liability other than
-----------
current liabilities incurred in the ordinary course of business consistent with
past practices; and
4.1.6 Alienation of Assets. Not sell, transfer, distribute or
--------------------
encumber any of the Assets, except for Inventory expended or sold in the
ordinary course of business.
4.1.7 Certain Payments. Not (a) declare or pay any dividend or make
----------------
any other distribution with respect to its securities or redeem or purchase any
securities, or (b) perform, pay or otherwise discharge, any obligation or
liability except for current liabilities paid in the ordinary course of business
consistent with past practices.
4.1.8 Material Contracts. Not enter into, amend or terminate any
------------------
Material Contracts.
4.2 Restrictions on Transfer. Each Seller agrees that he will not
------------------------
directly or indirectly sell, assign, transfer, give, pledge, encumber or
otherwise dispose of any interest in his RDC Shares, prior to the Closing and
will not directly or indirectly sell, assign, transfer, give, pledge, encumber
or otherwise dispose of any interest in the Vivra Shares acquired by such Seller
until an earnings report including at least 30 days of the combined operations
of Vivra and the Dialysis Business has been published (the "Combined Earnings
Report"). Legal counsel for the Sellers (the "Escrow Holder") shall hold the
Vivra Shares in escrow until the Combined Earnings Report has been published and
thereafter the Escrow Holder shall deliver the Vivra Shares to Sellers and upon
such delivery, the provisions of this paragraph 4.2 shall be no longer
-------------
effective. Escrow Holder shall be entitled to deposit such shares with a court
of law in the event of a dispute and Vivra shall not seek to have Escrow Holder
disqualified from representing Sellers in such dispute. Vivra and Sellers shall
jointly indemnify, defend and hold Escrow Holder harmless from any and all
reasonable expenses and fees, costs, damages and liabilities arising or incurred
by reason of it serving as Escrow Holder.
-22-
<PAGE>
4.3 Insurance.
---------
4.3.1 Maintenance of Existing Insurance. Sellers shall cause the
---------------------------------
Company to maintain in full force and effect to the Closing Date all policies of
insurance relating to the Assets and the Facility now in effect and will give
all notices and present all claims under such policies of insurance in a timely
fashion up to the Closing Date.
4.4.2 Tail Coverage: Sellers shall, at Sellers' expense, obtain
-------------
liability insurance coverage for all occurrences prior to the Closing Date and
shall list Vivra as an additional insured under such policy.
4.4 Audited Financial Statements. On and after Closing, Sellers shall
----------------------------
cooperate with Vivra in the preparation of such audited financial statements in
respect of the Assets and results of operations of the Dialysis Business prior
to Closing as Vivra reasonably deems appropriate for Vivra's financial and tax
reporting purposes. Vivra shall pay the reasonable accounting fees incurred by
Sellers in connection with the preparation of such audited financial statements
but only to the extent that such fees would not otherwise have been incurred by
Seller.
4.5 Satisfaction of Conditions Precedent. Sellers, in addition to
------------------------------------
specific obligations set forth elsewhere in this paragraph 4, shall (i) upon
-----------
satisfaction of the conditions precedent set forth in paragraph 7, execute and
-----------
deliver the documents required to be delivered by Sellers pursuant to paragraph
---------
8 and (ii) use their best efforts to consummate the transaction contemplated by
- - -
this Agreement and to satisfy or cause to be satisfied all of the conditions
precedent set forth in paragraph 6.
-----------
4.6 Supplements. If any representation, warranty or statement of Sellers
-----------
or any schedule delivered to Buyer shall become incorrect, Sellers shall
promptly deliver to Buyer a supplement in order that said representation,
warranty, statement, or schedule, as so supplemented, shall be true and correct,
provided, however, that no such supplement or amendment shall be considered in
determining the satisfaction of the conditions set forth in paragraph 6.1 and no
-------------
such supplement or amendment shall affect Sellers' obligations under paragraph
---------
9.
- - -
5. Covenants of Buyer. Buyer covenants and agrees that:
------------------
5.1 Maintenance of Records; Access by Sellers. Subject to the applicable
-----------------------------------------
law of confidentiality and privacy, Buyer shall for a period of 7 years maintain
all business records of the Facility and make such records available for use by
Sellers as needed.
-23-
<PAGE>
Access to any such records shall be during normal business hours, with prior
notice to Buyer of the time when such access shall be needed. Sellers'
employees, representatives and agents shall conduct themselves in such a manner
as to not unnecessarily or unreasonably disrupt Buyer's normal business
activities.
5.2 Audited Financial Statements. On and after the Closing Date (and
----------------------------
after Closing), Buyer shall cooperate with Sellers in the preparation of such
audited financial statements in respect of the Assets and the results of
operations of the Dialysis Business prior to Closing as Sellers reasonably deem
appropriate for Sellers' financial and tax reporting purposes.
5.3 Satisfaction of Conditions Precedent. Buyer shall (i) upon
------------------------------------
satisfaction of the conditions precedent set forth in paragraph 6, execute and
-----------
deliver the documents required to be delivered by Buyer pursuant to paragraph 8,
-----------
use its best efforts to consummate the transactions contemplated by this
Agreement and to satisfy or cause to be satisfied all of the conditions
precedent which are set forth in paragraph 7.
-----------
5.4 Public Announcement. Vivra agrees to assist the Sellers in
-------------------
announcing this transaction to the public in such a way that the Company's
goodwill will be preserved and the public's perception of the transaction will
be that of a continuation of the Company's business and not a disposition of
assets.
6. Buyer's Conditions Precedent to Closing. Buyer's obligations to purchase
---------------------------------------
the RDC Shares, deliver the Vivra Shares and perform its other obligations under
this Agreement are subject to the occurrence of or compliance with each of the
following conditions, all of which are for the sole benefit of Buyer and may be
waived by Buyer:
6.1 Warranties True and Correct. Each of the representations and
---------------------------
warranties of Sellers set forth in this Agreement shall be true and correct in
all material respects at and as of the Closing Date, and the covenants,
agreements and conditions required by this Agreement to be performed and
complied with by Sellers by such date shall have been performed and complied
with in all material respects.
6.2 Deliveries. Sellers shall have executed and delivered all of the
----------
documents required to be delivered by Sellers pursuant to paragraph 8.
-----------
6.3 Approval. The form and substance of all certificates, instruments,
--------
opinions and other documents delivered to Buyer
-24-
<PAGE>
pursuant to this Agreement shall be reasonably satisfactory to Vivra and its
counsel.
6.4 Litigation. No litigation or governmental investigation, proposed or
----------
pending, shall have been commenced or threatened by persons other than Buyer or
its affiliates with regard to the transactions described in this Agreement,
which if successful, would have a material adverse effect on the operations or
financial condition of the Dialysis Business, the Facility or the Assets or any
party's ability to consummate the transactions contemplated by this Agreement.
6.5 Condition of Assets. The Dialysis Business and the Assets shall not
-------------------
have been adversely affected in any material way by any act of God, fire, flood,
accident, labor disturbance, legislation (proposed or enacted) or other event or
condition.
6.6 Registration of Vivra Shares. The registration statement covering the
----------------------------
sale of Vivra Shares to Sellers shall have remained effective and shall not be
the subject of any stop order or proceeding seeking a stop order and the Vivra
Shares shall have been authorized for listing on the New York Stock Exchange,
upon official notice of issuance.
6.7 Consents. All consents by third parties that are required for the
--------
transfer of the RDC Shares or are required for the consummation of the
transactions contemplated hereby, or that are required in order to prevent a
breach of or a default under or a termination of any agreement to which the
Company is a party or to which any portion of the property of the Company is
subject, shall have been obtained or provided for and shall remain in effect.
6.8 Due Diligence. Vivra shall have investigated the ownership,
-------------
conditions and nature of the business conducted by the Company and its financial
condition and results of operations in a due diligence investigation, the
results of which are satisfactory to Vivra in its sole but good faith
discretion.
7. Seller's Conditions Precedent to Closing. Sellers' obligation to sell the
----------------------------------------
RDC Shares is subject to the occurrence of or compliance with each of the
following conditions, all of which are for the sole benefit of Sellers and may
be waived by Sellers:
7.1 Warranties True and Correct. Each of the representations and
---------------------------
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects at and as of the Closing Date, and the covenants, agreements,
and conditions required by this Agreement to be performed and complied with by
Buyer by such dates
-25-
<PAGE>
shall have been performed and complied with in all material respects.
7.2 Deliveries. Vivra shall have executed and delivered all of the
----------
documents required to be delivered by Vivra pursuant to paragraph 8.
-----------
7.3 Approval. The form and substance of all certificates, instruments,
--------
opinions and other documents delivered to Sellers pursuant to this Agreement
shall be satisfactory in all reasonable respects to Sellers and their counsel.
7.4 Litigation. No litigation or governmental investigation, proposed or
----------
pending, shall have been commenced or threatened by persons other than Sellers
or its affiliates with regard to the transactions described in this Agreement
which, if successful, would have a material adverse effect on any party's
ability to consummate the transactions contemplated by this Agreement.
7.5 Registration of Vivra Shares. The registration statement covering the
----------------------------
sale of the Vivra Shares to the Sellers shall have remained effective and shall
not be the subject of any stop order or proceeding seeking a stop order and the
Vivra Shares shall have been authorized for listing on the New York Stock
Exchange upon official notice of issuance.
8. Closing. The Closing of the transactions hereunder shall be effected as set
-------
forth in paragraph 8.
-----------
8.1 Closing. "Closing" means the transfer of all of the RDC Shares from
-------
Sellers to Buyer. The Closing shall occur on March 15, 1996 (the "Closing
Date") at the offices of McDermott, Will & Emery, Chicago, Illinois.
8.2 Deliveries. On the Closing Date, deliveries shall be made by Sellers
----------
as set forth in paragraph 8.2.1 and by Buyer as set forth in paragraph 8.2.2.
--------------- ---------------
8.2.1 Deliveries by Sellers. Sellers shall deliver to Buyer the
---------------------
following documents and instruments, in form and substance reasonably
satisfactory to Buyer and its counsel, against delivery by Buyer of the items
specified in paragraph 8.2.2:
---------------
(a) Certificates. Certificate(s) evidencing all of the RDC
------------
Shares, endorsed for transfer to the Buyer;
(b) Good Standing. A Certificate of good standing of the
-------------
Company as of a recent date from the Secretary of State of Virginia;
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<PAGE>
(c) Corporate Documents. The minute books, by-laws and stock
-------------------
records of the Company, certified by the Secretary of the Company; and
(d) Resignations. Resignations of each member of the Board of
------------
Directors of the Company and each officer of the Company.
(e) Investment Letter. A letter substantially in the form
-----------------
attached hereto as Exhibit B, executed by each of the Sellers.
---------
(f) Sellers' Certificate. Certificates ("Sellers' Certificate")
--------------------
signed by each of the Sellers, dated the Closing Date, to the effect that each
of the representations and warranties made by Sellers in this Agreement are true
and correct at and as of the Closing Date and that each of the covenants,
conditions and agreements to be performed or complied with by Sellers by such
date have been so performed or complied with in all material respects, and that,
to the best knowledge of such signatory, there is no fact or condition which
would cause Sellers to be in breach of any of the covenants or representations
and warranties hereunder as of the Closing Date. The execution and delivery of
the Sellers' Certificate by Sellers shall not limit their liability and
obligations following the Closing Date.
(g) Tail Insurance. Evidence that the insurance required by
--------------
paragraph 4.4.2 of this Agreement has been obtained.
(h) Other. At the Closing, the Sellers shall take such other
-----
steps as may be necessary or appropriate to place the Buyer in actual possession
and operating control of the Dialysis Business and the Assets.
8.2.2 Deliveries by Buyer. Buyer shall deliver to Sellers (or, in
-------------------
the case of subparagraph (a), to the Escrow Holder) the following items against
delivery by Sellers of the items specified in paragraph 8.2.1:
---------------
(a) Vivra Shares. A certificate evidencing the number of Vivra
------------
Shares to be issued to each Seller at Closing.
(b) Resolutions. Copies of resolutions of the Board of
-----------
Directors of Vivra, duly certified by its Secretaries in form reasonably
satisfactory to counsel for Sellers, authorizing and approving the execution,
delivery and performance of this Agreement by Vivra and all actions to be taken
by Vivra hereunder.
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<PAGE>
(c) Buyer's Certificate. A certificate ("Buyer's Certificate")
-------------------
signed by an authorized officer of Buyer, dated the Closing Date to the effect
that each of the representations and warranties made by the Buyer in this
Agreement are true and correct at and as of the Closing Date and that each of
the covenants, conditions and agreements to be performed or complied with by
Buyer by such date have been so performed or complied with by Buyer by such date
in all material respects, and that, to the best knowledge of such signatory,
there is no fact or condition which would cause Buyer to be in breach of any of
its representations and warranties hereunder as of the Closing Date. The
execution and delivery of the Buyer's Certificate by Buyer shall not serve to
limit any of Buyer's liabilities and obligations following the Closing Date.
8.3 Closing Agreements. At the Closing, the parties shall execute,
------------------
acknowledge and deliver the following:
8.3.1 Medical Director Contract. A Medical Director Contract between
-------------------------
Community Dialysis Centers, Inc. and Vicki Kinsel, M.D., substantially in the
form attached hereto as Exhibit C.
8.4 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
8.4.1 by mutual consent to Sellers and Buyer;
8.4.2 by either Sellers or Buyer if there has been a material
misrepresentation or material breach of warranty on the part of the other party
in the representations and warranties set forth in this Agreement, or if events
have occurred which have made it impossible to satisfy a condition precedent to
the terminating party's obligations to consummate the transactions contemplated
hereby; or
8.4.3 by either Buyer or Sellers if the Closing has not occurred by
May 1, 1996.
Termination of this Agreement shall not serve to relieve any party of
any responsibility or obligation for any breach of this Agreement occurring
prior to such termination.
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<PAGE>
9. Indemnification.
---------------
9.1 Indemnification. No claim for indemnification may be brought
---------------
hereunder until the Claims (as hereinafter defined) exceed $10,000; provided
however that (a) once such threshold is met, the entire amount of Claims shall
be recoverable subject to the provisions of this Section and (b) the Claims in
the aggregate shall not exceed $1,000,000. No claim for indemnification may be
brought hereunder after the fifth anniversary hereof.
9.1.1 By Sellers. Sellers shall, on demand, indemnify, defend and
----------
hold Buyer and its employees, agents, representatives, successors and assigns
(and, after the Closing, the Company), harmless from, against and in respect of
any and all claims, losses, costs, expenses, liabilities and damages, including
interest, penalties and reasonable attorneys' fees and costs (collectively,
"Claims"), that any of them shall incur or suffer in connection with (i) the
claims of any third party, including but not limited to Sellers' employees,
against any of them for alleged obligations or liabilities of Sellers arising
out of Sellers' operation of the Dialysis Business prior to the Closing Date; or
(ii) the breach by any Seller of any covenant or agreement or the inaccuracy of
any representation or warranty made by any Seller herein.
9.1.2 By Buyer. Vivra shall, on demand, indemnify, defend and hold
--------
Sellers and their successors and assigns harmless from, against and in respect
of any Claims, that any of them shall incur or suffer in connection with (i) the
Claims of any third party for alleged liabilities or obligations of Sellers
arising out of Buyer's operation of the Dialysis Business after the Closing
Date; or (ii) the breach by Vivra of any covenant or agreement or the inaccuracy
of any representation or warranty made by Vivra herein.
9.2 No Limitation. Subject to the limitations contained in paragraph 9.1,
------------- -------------
the indemnities in paragraphs 9.1.1 and 9.1.2 shall not foreclose any other
---------------- -----
rights or remedies the parties may have to enforce the provisions of this
Agreement.
9.3 Notice and Right to Defend. If any Claim arises after the Closing
--------------------------
Date for which Buyer or Sellers may be liable under paragraph 9.1.1 or 9.1.2,
--------------- -----
the indemnitee shall notify the indemnitor within a reasonable time after the
indemnitee receives written notice of any Claim, and shall give the indemnitor a
reasonable opportunity to settle or defend any such Claim; provided, however,
that the indemnitee's failure to give such notice or opportunity shall not
impair or otherwise affect the indemnitor's obligation to indemnify against such
Claim except to
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<PAGE>
the extent that the indemnitor demonstrates actual damage caused by such
failure; and, provided further, that the indemnitee may commence to settle or
defend the Claim as circumstances warrant, but any settlement shall require the
prior written consent of the indemnitor. The expenses of all proceedings,
contests or lawsuits with respect to Claims shall be borne by the indemnitor.
If an indemnitor wishes to assume the defense of a Claim, it shall give written
notice to the indemnitee within ten (10) days after notice from the indemnitee
of such Claim, and the indemnitor shall thereafter defend the Claim, employing
counsel reasonably satisfactory to the indemnitee, provided that the indemnitee
may participate in the defense at its own expense.
If the indemnitor does not assume the defense of, or if after so assuming
it fails to defend, any such claim, the indemnitee may defend it in such manner
as it may reasonably deem appropriate, and the indemnitee may settle such Claim
on such terms as it may reasonably deem appropriate so long as such settlement
only requires the payment of cash. The indemnitor shall promptly reimburse the
indemnitee for all reasonable expenses, legal and otherwise, as incurred by the
indemnitee in connection with the defense, appeal and settlement of such Claim.
If no settlement of such a Claim is made, the indemnitor shall satisfy any
judgment rendered with respect to it before the indemnitee is required to do so.
If a judgment is rendered against the indemnitee on any Claim, or any lien
attaches to any of the assets of any indemnitee, the indemnitor shall
immediately upon such entry or attachment pay such judgment in full or discharge
such lien unless, at the expense and direction of the indemnitor, an appeal is
taken under which the execution of the judgment or satisfaction of the lien is
stayed. If and when a final judgment is rendered in any such action, the
indemnitor shall forthwith pay such judgment or discharge such lien before any
indemnitee is compelled to do so.
10. Miscellaneous.
-------------
10.1 Notices. Any notice provided for in this Agreement and any other
-------
notice, demand or communication required or permitted to be given hereunder or
which any party may wish to send to another ("Notice" or "Notices") shall be in
writing and shall be deemed to have been properly given if served by (i)
personal delivery or (ii) registered or certified U.S. mail, or by comparable
private carrier, First Class, return receipt requested in a sealed envelope,
postage or other charges prepaid, or (iii) telegram, telecopy, facsimile, telex
or other similar form of communication, if followed by other physical delivery
in writing, addressed to the party for whom the Notice is intended as follows:
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<PAGE>
If to Buyer:
Mr. David P. Barry
Vice President
Vivra Incorporated
2 Mareblu
P.O. Box 31059
Laguna Hills, CA 92654
FAX: (714) 831-6538
with a copy to:
Helen R. Friedli, Esq.
McDermott, Will & Emery
227 W. Monroe Street, Suite 3100
Chicago, IL 60606
FAX: (312) 984-3669
If to Sellers:
James F. Qualls
102 Durrington Court
Richmond, Virginia 23236
Richard Robins
7642 Idlewyld Drive
Richmond, Virginia 23220
with a copy to:
Robert E. Lee, Esq.
Mezzulio & McCandlish
1111 E. Main Street, Suite 1500
Richmond, Virginia 23219
or such other address as any person may request by notice given as aforesaid.
10.1.1 Change of Address. Any party to this Agreement may change its
-----------------
address for Notice from time to time by notice given in accordance with the
foregoing provisions.
10.1.2 Effective Time. All notice given pursuant to this paragraph
--------------
shall be deemed given and effective when received if personally delivered or
sent by telegram, telecopy, telex or similar form of communication or, if mailed
on the date shown on the return receipt or if a receipt has not then been
received, five (5) days after mailing.
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<PAGE>
10.2 Payment of Expenses. The Sellers and Buyer shall each pay their or
-------------------
its own expenses, including without limitation, the disbursements and fees of
all their respective attorneys, accountants, advisors, agents and other
representatives, incidental to the preparation and carrying out of this
Agreement, whether or not the transactions contemplated hereby are consummated.
10.3 Sales Tax. Sellers shall pay any and all sales or use taxes arising
---------
as a result of the transactions hereunder.
10.4 Schedules. Sellers agree to provide at Closing such materials,
---------
documents, and information as may be necessary to update the information
contained in any Schedule attached to this Agreement.
10.5 Termination. If the transactions contemplated hereby are not
-----------
consummated, Buyer will return to Sellers, and Sellers will return to Buyer,
upon request, the respective materials, information, documents, instruments and
records supplied by the other party in respect to such party's business
operations and shall keep confidential all information which that party has
gathered with respect to the business of the other.
10.6 Risk of Loss. Risk of loss or damage by fire or other casualty to
------------
the Assets or their taking by eminent domain before Closing is assumed by
Sellers. In the event of a material loss, damage to or taking of the Facility,
Buyer shall have the option of either (i) terminating this Agreement or (ii)
continuing this Agreement, in which event Sellers shall assign to Buyer all of
Sellers' rights against third persons and under any applicable insurance policy
and any condemnation awards and pay over to Buyer any sums received as a result
of such loss, damage or taking.
10.7 Waiver. The failure of any party to insist, in any one or more
------
instances, on performances of any of the terms and conditions of this Agreement
shall not be construed as a waiver or relinquishment of any rights granted
hereunder or of the future performance of any such term, covenant (or condition,
but the obligations of the parties with respect thereto shall continue in full
force and effect.
10.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Entire Agreement. This Agreement (including the Schedules hereto)
----------------
and all other agreements and documents executed in connection herewith
constitute the entire agreement between the
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<PAGE>
parties hereto with respect to the subject hereof and supersede all prior
agreements, understandings, negotiations and discussions of the parties, whether
oral or written, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof,
except as specifically set forth herein or therein. No amendment, alteration or
modification of this Agreement shall be valid unless in each instance such
amendment, alteration or modification is expressed in a written instrument duly
executed by the parties.
10.10 Successors and Assigns. All the terms and provisions of this
----------------------
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto. Vivra may
assign any of its rights or obligations under this Agreement to any of its
wholly owned subsidiaries without the consent of any Seller. The Sellers may
not assign any of their rights or obligations under this Agreement without the
prior written consent of Vivra.
10.11 Further Assurances. Both before and after the Closing Date, the
------------------
parties will exercise good faith with the others and will take all appropriate
action and execute any documents, instruments or conveyances of any kind which
may be reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder.
10.12 Survival of Representations and Warranties. All of the
------------------------------------------
representations, warranties, covenants and agreements contained in this
Agreement and in any certificate delivered pursuant hereto shall survive the
Closing and shall continue to be fully effective and enforceable, except as
provided herein.
10.13 Interpretation. Unless the context requires otherwise, all words
--------------
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular
and all words in any gender shall extend to and include all genders.
10.14 Severability. If any provision, clause or part of this Agreement,
------------
or the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause or
part under other circumstances, shall not be affected thereby.
10.15 Release. Sellers hereby irrevocably and unconditionally release and
-------
discharge the Company and its officers, directors, successors and assigns (the
"Released Parties") from any and all actions, claims, causes of action, suits,
charges, complaints, contracts, agreements, liabilities or obligations of
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<PAGE>
any kind whatsoever in law or in equity, which Sellers or his affiliates, heirs,
executors, successors and assigns, can, shall or may have against the Released
Parties.
10.16 Governing Law. This Agreement is to be governed by, and interpreted
-------------
under, the laws of the State of Delaware.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first written above.
VIVRA INCORPORATED, a Delaware corporation
By:
------------------------------------------
David P. Barry,
Vice President
SELLERS:
---------------------------------------------
JAMES F. QUALLS
---------------------------------------------
RICHARD ROBINS
<PAGE>
Exhibit A
---------
Sellers
-------
Number of RDC Percentage
Seller Shares Owned Ownership
- - ------ ------------- ----------
James F. Qualls 300 75
Richard Robins 100 25
------------- -----------
TOTAL 400 100
<PAGE>
Exhibit B
---------
Vivra Incorporated
March 15, 1996
James F. Qualls
102 Durrington Court
Richmond, Virginia 23236
Richard Robins
7642 Idlewyld Drive
Richmond, Virginia 23220
Re: Vivra Incorporated ("Vivra")
Rappahannock Dialysis Center, Shares of Common Stock
----------------------------------------------------
Dear Mr. Qualls and Mr. Robins:
This letter is written to you to comply with the Federal Securities Law
requirements relating to the exchange of your stock in Rappahannock Dialysis
Center, Inc. for stock of Vivra Incorporated.
The above-captioned shares are registered on Form S-4 under the Securities
Act of 1933, and as such are not considered "restricted securities" within the
meaning of SEC Rule 144. Nevertheless, there are SEC interpretations which
analogize this transaction to a transaction covered by SEC Rule 145.
Specifically, SEC Rule 145(d) requires you for two years after the exchange
of shares (until March 15, 1998) to sell any of the securities so exchanged in
accordance with the provisions of (c), (e), (f) and (g) of SEC Rule 144.
Subparagraph (c) requires Vivra to be current in its public information.
Subparagraph (e) contains a volume limitation which limits your sales during any
three months period to the greater of 1% of the outstanding common stock or the
average weekly trading volume for the four calendar weeks proceeding the sale.
As we understand it, the shares acquired by
<PAGE>
you are less than 1% of the outstanding stock of Vivra. Subparagraphs (f) and
(g) relate to the manner of sale. The sale must be conducted in accordance with
an unsolicited brokers' transaction. Any responsible broker will know how to
conduct such a transaction if it is told that the sale has to be made as an
unsolicited brokers' transaction.
Accordingly, the only relevant requirement in SEC Rule 145(d) relates to
the unsolicited brokers' transaction. In lieu of legending your stock
certificates, we have written this letter to you to explain the requirements.
Please return a copy of this letter to us signed with your acknowledgement
and keep a copy of this letter with your stock certificate so that you may show
it to a broker whenever you wish to effect a sale.
Very truly yours
[ ]
--------------------------------------------
I hereby acknowledge the resale restrictions described above and agree to
conform with until after March 15, 1998.
- - ----------------------------
JAMES F. QUALLS
- - ----------------------------
RICHARD ROBINS
Dated as of: March 15, 1996
<PAGE>
Exhibit C
Medical Director Contract
-------------------------
To be provided
