<PAGE>
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: May 14, 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 Master Merger Agreement among Asthma & Allergy CareAmerica, Inc.;
Vivra Incorporated; Brennan, Martell & Mirmelli, M.D.'s, P.A.;
Asthma & Allergy CareAmerica of Florida, Inc.; Frank R. Martell,
M.D.; Philip C. Mirmelli, M.D. and Asthma & Allergy Institute of
South Florida, Inc.
10.2 Agreement and Plan of Merger among Asthma & Allergy CareAmerica,
Inc.; Vivra Incorporated; Brennan, Martell & Mirmelli, M.D.'s,
P.A.; Asthma & Allergy CareAmerica of Florida, Inc.; Frank R.
Martell, M.D. and Philip C. Mirmelli, M.D.
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<PAGE>
10.3 Agreement and Plan of Merger among Asthma & Allergy CareAmerica,
Inc.; Vivra Incorporated; AACA-AAI Acquisition, Inc.; Asthma &
Allergy Institute of South Florida, Inc.; Frank R. Martell, M.D.
and Philip C. Mirmelli, M.D.
10.4 Agreement and Plan of Merger among Vivra Renal Care, Inc.; Vivra
Incorporated; Charleston Kidney Center, Inc.; George Malanos,
M.D.; Jerry Owens, M.D. and Arthur Smith, M.D.
10.5 Agreement and Plan of Merger among Vivra Specialty Partners,
Inc.; Vivra Incorporated; Melter, Inc.; Melter Rehabilitation
Services, Inc. and Melvyn Drucker, M.D.
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<PAGE>
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: May 14, 1996
VIVRA INCORPORATED
By /s/ LeAnne M. Zumwalt
___________________________________
LeAnne M. Zumwalt
Chief Financial Officer
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<PAGE>
MASTER MERGER AGREEMENT
-----------------------
THIS MASTER MERGER AGREEMENT (this "Agreement") is made and entered into as
of April 28, 1996, by and among ASTHMA & ALLERGY CAREAMERICA, INC., a Delaware
corporation ("AACA"); AACA's parent company, VIVRA INCORPORATED, a Delaware
corporation ("VIVRA"); VIVRA's newly formed, wholly owned subsidiary ASTHMA &
ALLERGY CAREAMERICA OF FLORIDA, INC., a Florida corporation ("AACAF"); BRENNAN,
MARTELL AND MIRMELLI, M.D.'S, P.A., a Florida professional service corporation
("BM&M"); BM&M's shareholders, FRANK R. MARTELL, M.D., an individual resident of
Florida ("Martell"), and PHILIP C. MIRMELLI, M.D., an individual resident of
Florida ("Mirmelli") (with Martell and Mirmelli being collectively referred to
herein as the "Physicians"); AACA's newly formed, wholly owned subsidiary AACA -
AAI ACQUISITION, INC., a Florida corporation ("AACA-AAI"); ALLERGY & ASTHMA
INSTITUTE OF SOUTH FLORIDA, P.A., a Florida professional service corporation
("AAI"); and the Physicians as AAI's shareholders.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, BM&M owns and operates an allergy, asthma and immunology practice
with its principal office located at 201 N. University Drive, #103, Plantation,
Florida 33324, together with any satellite locations in the South Florida area
(collectively the "BM&M Business");
WHEREAS, the Physicians own all of the outstanding stock of BM&M;
WHEREAS, AAI owns and operates an allergy, asthma and immunology practice
with its principal office located at 3661 South Miami Avenue, Miami, Florida
33133, together with any satellite locations in the Miami, Florida area
(collectively the "AAI Business");
WHEREAS, the Physicians own all of the outstanding stock of AAI;
WHEREAS, the parties wish to merge AACAF with and into BM&M (the "First
Merger"), with BM&M being the surviving corporation in the First Merger;
WHEREAS, the parties wish to merge AACA-AAI with and into AAI (the "Second
Merger"), with AAI being the surviving corporation in the Second Merger (with
the First Merger and the Second Merger being referred to hereinafter,
individually, as a "Merger" and, collectively, as the "Mergers");
<PAGE>
WHEREAS, VIVRA desires to operate the BM&M Business and the AAI Business
(referred to hereinafter, individually, as a "Business" and, collectively, as
the "Businesses") through BM&M under the name "Asthma & Allergy CareAmerica of
Florida, Inc." and intends following the Mergers, to cause AAI to merge with and
into BM&M, with BM&M, so renamed, being the surviving corporation (with BM&M, as
the surviving corporation of such merger, being sometimes referred to
hereinafter as "Newco" and with such merger being referred to hereinafter as the
"Newco Merger");
WHEREAS, the Physicians have no objection to the proposed Newco Merger and
name change;
WHEREAS, for federal income tax purposes, it is intended that each of the
Mergers and the Newco Merger shall qualify as a "reorganization" within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended;
WHEREAS, for accounting purposes, it is intended that each of the Mergers
and the Newco Merger shall be accounted for as a pooling of interests;
NOW, THEREFORE, in consideration of these premises and the agreements
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree as follows:
SECTION 1. THE MERGERS.
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1.1 AGREEMENTS TO MERGE. On the terms, subject to the conditions, and for
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the consideration stated herein, in that certain Agreement and Plan of Merger of
even date by and among VIVRA, AACA, BM&M, AACAF and the Physicians (the "BM&M
Merger Agreement") and in that certain Agreement and Plan of Merger of even date
by and among VIVRA, AACA, AAI, AACA-AAI and the Physicians (the "AAI Merger
Agreement") (with the BM&M Merger Agreement and the AAI Merger Agreement being
collectively referred to herein as the "Merger Agreements"), each of the parties
hereto, insofar as applicable to such party, agrees that AACAF shall be merged
into BM&M as contemplated in the BM&M Merger Agreement with BM&M being the first
surviving corporation (the "First Surviving Corporation"), and each of the
parties hereto, insofar as applicable to such party agrees that AACA-AAI shall
be merged into AAI as contemplated in the AAI Merger Agreement with AAI being
the second surviving corporation (the "Second Surviving Corporation"). The
Mergers shall become effective as of the "Effective Time" (as hereinafter
defined). Each of the parties agrees that the First Surviving Corporation shall
become a subsidiary of AACA as provided in the BM&M Merger Agreement.
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<PAGE>
1.2 EFFECTIVE TIME OF MERGERS. At the "Closing" (as hereinafter defined),
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the parties shall execute and deliver all agreements and documents as
contemplated in the Merger Agreement applicable to each Business to effect its
respective Merger in accordance with all appropriate legal requirements as
required by the Florida Business Corporation Act to be effective at the time and
date contemplated in the Merger Agreements (such time being referred to as the
"Effective Time").
SECTION 2. THE CLOSING.
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2.1 CLOSING AND CLOSING DATE. The Closing (the "Closing") of the Mergers
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and the execution and delivery of the agreements and documents contemplated by
each of the Merger Agreements and this Agreement shall take place on or before
April 28, 1996, at 10:00 a.m. E.D.T., at the offices of Akerman, Senterfitt &
Eidson, 28th Floor, SunTrust International Center, One Southeast Third Avenue,
Miami, Florida, 33131 or at such other place and time as may be deemed
appropriate by the parties hereto. At the Closing, the parties will execute and
deliver all agreements and documents and take such action as contemplated in the
Merger Agreements and in this Agreement.
2.2 SIMULTANEOUS CLOSINGS. The parties acknowledge and agree that the
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closings of all of the transactions contemplated by each of the Merger
Agreements shall constitute conditions precedent to AACA's obligations to close
the transactions contemplated by the other Merger Agreement, such that failure
to close the transactions contemplated under one Merger Agreement shall serve to
terminate automatically the other Merger Agreement unless all parties to the
Merger Agreements and this Agreement shall agree otherwise.
SECTION 3. CONDITIONS OF CLOSING.
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In addition to the conditions set forth in Section 2.2 above, all
obligations which are to be satisfied or performed under the Merger Agreements
at the Closing are subject to certain conditions set forth in the Merger
Agreements and are subject to the performance by the parties of the actions set
forth herein.
3.1 NEWCO MERGER AGREEMENT. At the Closing, AACA, AAI and BM&M, in
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anticipation of AAI's and BM&M's becoming subsidiaries of AACA after the
Effective Time, shall enter into an Agreement and Plan of Merger substantially
in the form attached as Exhibit 3.1 hereof (the "Newco Merger Agreement") to
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effect the merger of the Businesses to be operated as Newco immediately after
the Effective Time, with the Newco Merger being effective at the time and date
contemplated in the Newco Merger Agreement (the "Newco Effective Time").
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<PAGE>
3.2 GOVERNANCE OF NEWCO. In anticipation of BM&M's being operated as
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Newco, the BM&M Board of Directors shall have adopted the Action of the Board of
Directors Taken by Written Consent in Lieu of a Meeting in the form attached on
Exhibit 3.2(i) hereof (the "Action") pursuant to which the Bylaws attached to
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the Action will be adopted. At the Closing, in anticipation of becoming Newco's
sole shareholder following the consummation of the Newco Merger, AACA shall
certify that, subject to Newco's meeting or exceeding the performance standards
set forth on Exhibit 3.2(ii) hereof (the "Performance Standards"), (which
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performance shall be determined on an annual basis at Newco's annual meeting as
provided in the Bylaws), AACA shall continue to elect Martell (or Frank J.
Martell, M.D. if he shall succeed Martell or Mirmelli as provided in his
employment agreement with Newco) and Mirmelli to the Board of Directors of Newco
and as President and Executive Vice President of Newco, respectively, serving as
set forth in and subject to the Bylaws adopted in the Action.
3.3 EMPLOYMENT AGREEMENTS. At the Closing, each of the Physicians, Frank
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J. Martell, M.D. and Newco shall have entered into individual employment
agreements by and between each Physician and Newco and Frank J. Martell, M.D.
and Newco, respectively, as the parties thereto, in form and substance
acceptable to the respective parties thereto, which agreements shall become
effective upon the Newco Effective Time and shall supersede any prior employment
agreements of such Physician.
3.4 CONSULTING AGREEMENTS. At the Closing, each of the Physicians shall
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have entered into a Consulting Agreement by and between the Physician and AACA
as the parties thereto in form and substance acceptable to the Physician and
AACA.
3.5 DEFERRED COMPENSATION SETTLEMENT AGREEMENT AND RELEASE. BM&M, David
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Krayanek, M.D. and Hugo McFarlane, M.D. shall each have entered into the
Deferred Compensation Settlement Agreement and Release in the form of Exhibit
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3.5 hereto.
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3.6 AUDIT OPINION. AACA, BM&M and AAI shall have received the
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unconditional opinion of Arthur Andersen & Company that the financial statements
of BM&M and AAI for the year ending February 29, 1996, that such financial
statements present fairly, in all material respects, the financial positions of
BM&M and AAI, respectively, as of February 29, 1996, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
3.7 PURCHASE OF TAIL MALPRACTICE INSURANCE COVERAGE. The Physicians,
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through BM&M and AAI or otherwise, shall have secured
tail malpractice insurance covering all acts and omissions prior to the
Effective Time naming AACA and AACAF as additional insureds.
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<PAGE>
3.8 LEGAL OPINION. Gutter, Josepher, Ruffin & Sheehy shall have rendered
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an opinion to AACA and to Newco, in form and substance satisfactory to Newco
(with no opinion expressed with respect to the enforceability of (i) the
noncompetition provisions, (ii) provision regarding prohibition of disclosure of
confidential information, and (iii) provision regarding prohibition of employees
or patients), to the effect that the Individual Employment Agreements and the
method of compensation contemplated therein are legal and enforceable under
Florida law.
SECTION 4. MISCELLANEOUS.
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4.1 EXPENSES. All expenses of the preparation of this Agreement and of
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the other agreements and transactions contemplated hereby, including, without
limitation, counsel fees, accounting fees, investment advisor's fees and
disbursements, shall be borne by the Physicians or, prior to the closing but not
after the closing, by BM&M and AAI, respectively, in the case of BM&M or AAI or
either of the Physicians, and by AACA in the case of AACA, AACAF, AACA-AAI or
VIVRA. The Physicians shall remain liable for all such transaction costs, in
the case of BM&M, AAI or the Physicians, incurred but not paid before the
Effective Time.
4.2 NOTICES. All notices, demands and other communications hereunder
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shall be written and shall be deemed to have been duly given if delivered in
person or mailed by Federal Express (or other national air courier service),
charges prepaid, to the address set forth below:
To AACA, AACAF, Asthma & Allergy CareAmerica, Inc.
AACA-AAI or VIVRA Northridge Business Park
8601 Dunwoody Place, Suite 440
Atlanta, Georgia 30350
Attention: Mr. Thomas A. Friar
with a copy to: Paul L. Hudson, Jr., Esq.
Parker, Hudson, Rainer & Dobbs
1500 Marquis Two Tower
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
To BM&M, AAI or the Frank R. Martell, M.D.
Physicians: Philip C. Mirmelli, M.D.
201 University Drive, #103
Plantation, Florida 33324
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<PAGE>
with a copy to: Marvin C. Gutter, Esq.
Gutter, Josepher, Ruffin & Sheehy
Trade Centre South, Suite 900
100 West Cypress Creek Road
Ft. Lauderdale, Florida 33309
or to such other address as AACA or the Physicians may designate by notice each
to the other. Notices delivered in person shall be deemed delivered on the date
of delivery and notices sent via air courier service, as aforesaid, shall be
deemed delivered on the date of delivery as indicated by the records of the
courier service. Rejection or other refusal to accept or inability to deliver
because of a changed address of which no notice was given shall be deemed to be
a receipt of the notice, request or other communication. Any notice, request or
other communication required or permitted to be given by any party may be given
by such party's legal counsel.
4.3 ENTIRE AGREEMENT. This Agreement, the Merger Agreements and the other
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agreements, exhibits, schedules and documents delivered pursuant hereto and
thereto constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof and supersede all prior and contemporaneous
agreements, understandings, letters of intent negotiations and discussions,
whether written or oral, of the parties, and there are no representations,
warranties or other agreements between the parties in connection with the
subject matter hereof, except as specifically set forth herein. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party or parties to be bound thereby.
4.4 GOVERNING LAW. The validity and construction of this Agreement shall
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be governed by the laws of the State of Florida.
4.5 ARBITRATION.
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4.5.1 The parties will attempt through good faith negotiations to
resolve their disputes regarding this Agreement. The term "disputes" includes,
without limitation, any disagreements between the parties concerning the
existence, formation, interpretation and implementation of this Agreement. If
the parties are to resolve their disputes by negotiation, either party may
commence arbitration by sending a written notice of arbitration to the other
party. The notice will state the dispute with particularity.
4.5.2 There shall be three arbitrators. If the parties fail to
select mutually acceptable arbitrators within ten (10) days after the notice of
arbitration, a tribunal of arbitrators (one selected by the Physicians, one
selected by AACA, and one who shall be appointed by the first two arbitrators),
who shall be located in the Ft. Lauderdale, Florida, shall be appointed as soon
as possible on the request of either party. If
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<PAGE>
any party fails to select an arbitrator within ten (10) days after demand, such
arbitrator shall be appointed by the American Arbitration Association. The fee
payable to the arbitrators shall be based upon the then current fee schedule of
the American Arbitration Association.
4.5.3 The parties shall have reasonable rights of discovery.
4.5.4 Except as set forth in this Section, the tribunal shall conduct
the arbitration according to the Commercial Arbitration Rules of the American
Arbitration Association. Arbitration shall take place in Ft. Lauderdale,
Florida, unless the parties otherwise agree. The tribunal shall base the
decision on the express language of this Agreement. Within ten (10) days after
the tribunal is appointed, or as soon thereafter as shall be reasonably
practicable, the tribunal will conduct a hearing on the dispute. Each party may
make written submissions to the tribunal, and each party shall have a reasonable
opportunity for rebuttal, but no longer than ten (10) days. As soon as
reasonably practicable, but not later than ten (10 ) days after the hearing is
completed, the tribunal shall arrive at a final decision, which shall be reduced
to writing, signed by the tribunal and mailed to each party and its legal
counsel.
4.5.5 All decisions of the tribunal shall be final, and binding on
all parties, and (except as provided below) shall constitute the only method of
resolving disputes. Judgment may be entered upon the decision in accordance
with applicable law in any court having jurisdiction.
4.5.6 This arbitration section and all decisions of the tribunal
shall be specifically enforceable in a court of law, or in the arbitral
tribunal.
4.5.7 This arbitration section and all decisions of the arbitrator
shall be specifically enforceable in a court of law, or in the arbitral
tribunal.
4.6 SECTION HEADINGS. The Section headings are for reference only and
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shall not limit or control the meaning of any provisions of this Agreement.
4.7 WAIVER. No delay or omission on the part of any party hereto in
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exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.
4.8 NATURE AND SURVIVAL OF REPRESENTATIONS. All statements contained in
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any certificate delivered by or on behalf of a party to this Agreement in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties made by such party hereunder. The covenants,
representations and
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<PAGE>
warranties made by a party to another in such party's respective Merger
Agreement, this Agreement or pursuant thereto or hereto shall survive the
Closing for the applicable period stated in such Merger Agreement.
4.9 AMENDMENTS. This Agreement may be amended, but only in writing,
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signed by the parties hereto.
4.10 COUNTERPARTS. This Agreement may be executed in any number of
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counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument.
4.11 ATTORNEYS' FEES. In the event that a suit, action, arbitration, or
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other proceeding of any nature whatsoever, including, without limitation, any
proceeding under the U.S. Bankruptcy Code and involving issues peculiar to
federal bankruptcy law, any action seeking a declaration of rights or any action
for rescission, is instituted to interpret or enforce this Agreement or any
provision of this Agreement, each party shall be and remain liable for its
attorneys', paralegals', accountants', and other experts' professional fees and
all other fees, costs, and expenses actually incurred in connection therewith.
4.12 RULES OF CONSTRUCTION. All references herein to the singular shall
---------------------
include the plural, and vice versa, and all references herein to the neuter
shall include the masculine or feminine, as the case may be, and vice versa.
When general words or terms are used herein followed by the word "including" (or
another form of the word "include") and words of particular and specific
meaning, the general words shall be construed in their widest extent, and shall
not be limited to persons or things of the same general kind or class as those
specifically mentioned in the words of particular and specific meaning. All
parties have participated in the drafting of this Agreement. No provision of
this Agreement shall be construed against or interpreted to the disadvantage of
a party by reason of such party having or being deemed to have drafted,
structured or dictated such provisions.
4.13 TIME. Time is of the essence of this Agreement.
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4.14 DISCLOSURE. Full disclosure for one section of an agreement may
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be effected by a specific cross-reference to a disclosure or disclosures in
other, related agreements.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
VIVRA INCORPORATED, a Delaware
corporation ("VIVRA")
By: ___________________________________
Title: _____________________________
ASTHMA & ALLERGY CAREAMERICA, INC., a Delaware
corporation
By: ___________________________________
Title: _____________________________
ASTHMA & ALLERGY CAREAMERICA OF
FLORIDA, INC., a Florida
corporation
By: ___________________________________
Title: _____________________________
AACA-AAI ACQUISITION, INC., a Florida corporation
By: ___________________________________
Title: _____________________________
BRENNAN, MARTELL & MIRMELLI, P.A., a Florida
professional association
By: ___________________________________
Title: _____________________________
[Signatures continued on following page]
ALLERGY & ASTHMA INSTITUTE OF SOUTH
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<PAGE>
FLORIDA, P.A., a Florida
professional association
By: ___________________________________
Title: _____________________________
_____________________________________
FRANK R. MARTELL, M.D., an individual
resident of Florida and fifty
percent (50%) shareholder of BM&M
and of AAI
_____________________________________
PHILIP C. MIRMELLI, M.D., an
individual resident of Florida and
fifty percent (50%) shareholder of
BM&M and of AAI
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<PAGE>
EXHIBIT 3.1
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NEWCO MERGER AGREEMENT
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See Attached
<PAGE>
EXHIBIT 3.2(i)
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<PAGE>
AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into effective as of April 28, 1996, by and among ASTHMA & ALLERGY CAREAMERICA,
INC., a Delaware corporation ("AACA"), its parent company, VIVRA INCORPORATED, a
Delaware corporation ("VIVRA"), VIVRA's newly formed, wholly owned subsidiary
ASTHMA & ALLERGY CAREAMERICA OF FLORIDA, INC., a Florida corporation ("AACAF");
BRENNAN, MARTELL AND MIRMELLI, M.D.'S, P.A., a Florida professional association
(with such entity, existing either as a Florida professional association or as
Brennan, Martell and Mirmelli, M.D.'s, Inc., a Florida business corporation
following the amendment of its Articles of Incorporation as contemplated
hereinafter, being referred to as "BM&M"), and BM&M's shareholders, FRANK R.
MARTELL, M.D., ("Martell") and PHILIP C. MIRMELLI, M.D. ("Mirmelli") (Martell
and Mirmelli being sometimes referred to herein as the "BM&M Physicians").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, BM&M owns and operates an allergy practice with its principal
office location located at 201 N. University Drive, #103, Plantation, Florida
33324, together with its satellite locations in the South Florida area
(collectively the "Business");
WHEREAS, the BM&M Physicians own all of the outstanding stock of BM&M;
WHEREAS, the parties desire to convert BM&M to a Florida business
corporation and then to merge AACAF with and into BM&M, with BM&M being the
surviving corporation in the merger, exchanging BM&M Common Stock for VIVRA
Common Stock;
WHEREAS, for federal income tax purposes, it is intended that the merger
shall qualify as a "reorganization" within the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended;
WHEREAS, for accounting purposes, it is intended that the merger shall be
accounted for as a pooling of interests;
WHEREAS, BM&M and the BM&M Physicians have entered into that certain Master
Merger Agreement of even date (the "Master Merger Agreement") with VIVRA, AACA,
AACA's newly formed wholly owned subsidiary AACA-AAI Acquisition, Inc.
("AACA-AAI"), BM&M, and Asthma & Allergy Institute of South Florida, P.A.
("AAI"), which contemplates that AACA-AAI will merge with and into AAI at the
same time that AACAF merges into BM&M;
<PAGE>
WHEREAS, the merger of AACAF into BM&M is subject to the simultaneous
consummation of the merger of AACA-AAI with and into AAI; and
WHEREAS, VIVRA and AACA wish for AACA to be the sole shareholder of BM&M as
the surviving corporation in the merger;
NOW, THEREFORE, in consideration of these premises and the agreements
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree as follows:
SECTION 1. THE MERGER.
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1.1 AGREEMENT TO MERGE. On the terms, subject to the conditions, and
------------------
for the consideration hereinafter stated, the parties hereto agree that AACAF
shall be merged with and into BM&M, with BM&M being the surviving corporation
(the "Surviving Corporation"). The merger of AACAF with and into BM&M (the
"Merger") shall become effective as of the "Effective Time" (as hereinafter
defined).
1.2 AMENDMENT OF BM&M ARTICLES OF INCORPORATION; EFFECTIVE TIME OF
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MERGER. At or prior to the "Closing" (as hereinafter defined), BM&M shall
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execute articles of amendment ("Articles of Amendment") in the form attached
hereto as Exhibit 1.2(i) to convert BM&M from a professional association to a
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business corporation. Subsequently, at the Closing, AACAF, on the one hand, and
BM&M on the other hand, shall execute articles of merger in the form attached
hereto as Exhibit 1.2(ii) (the "Articles of Merger") to effect the Merger in
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accordance with all appropriate legal requirements. BM&M shall deliver and file
such Articles of Amendment as required by the Florida Business Corporation Act
to convert BM&M to a business corporation, to be effective immediately prior to
the Effective Time (as defined below). Then, AACAF, on the one hand, and BM&M
on the other hand, shall deliver and file such Articles of Merger as are
required by the Florida Business Corporation Act. The Merger shall become
effective upon the time and date of filing with the Florida Secretary of State,
or at such later date and time as may be specified by mutual agreement of the
parties in the Articles of Merger (the time and date of such filing or such
later time and date being referred to herein as the "Effective Time").
1.3 PLAN OF MERGER. In accordance with the requirements of the Florida
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Business Corporation Act, AACAF and BM&M hereby adopt the Plan of Merger set
forth as Exhibit A to the Articles of Merger (the "Plan of Merger"). If there
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are any inconsistencies between the provisions of the Plan of Merger and the
provisions of
2
<PAGE>
this Agreement, the provisions of this Agreement shall prevail.
SECTION 2. TERMS OF THE MERGER.
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2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of BM&M,
-------------------------
as amended, immediately prior to the consummation of the Merger shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed in accordance with law.
2.2 BYLAWS. The Bylaws of BM&M immediately prior to the consummation of
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the Merger shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed in accordance with law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of BM&M in
----------------------
office immediately prior to the consummation of the Merger shall be the
directors and officers of the Surviving Corporation. All such directors and
officers shall hold office in accordance with the Surviving Corporation's
Articles of Incorporation, Bylaws and applicable law.
2.4 MANNER AND BASIS OF CONVERTING SHARES.
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(a) At the Effective Time of the Merger, all of the issued and
outstanding shares of common stock, $.10 par value, of BM&M (the "BM&M Common
Stock") prior to the Effective Time of the Merger (other than such shares held
by BM&M in its treasury) shall, by virtue of the Merger and without any action
by the holder thereof, automatically be converted into the right to receive an
amount (the "Determined Amount") of the Common Stock, $ .01 par value per share,
of VIVRA ("VIVRA Common Stock"). For purposes hereof, the term "Determined
Amount" shall mean the number of shares of VIVRA Common Stock calculated by
dividing $11,900,005.00 (the "Merger Consideration"), adjusted up or down by the
amount of the "Closing Date Adjustment" (as hereinafter defined in Section
2.5(c)), by $27.75 (said price being referred to herein as the "Closing Price").
Each share of BM&M Common Stock held in the treasury of BM&M upon the Effective
Time of the Merger shall be cancelled, and no consideration shall be issued
therefor. The Determined Amount of VIVRA Common Stock less the number of shares
and the cash equivalent of fractional shares to be held in escrow as provided in
the Escrow Agreement shall be distributed to the BM&M Physicians as set forth in
Exhibit 2.4 and Section 2.4(d) hereof. As of the Effective Time of the Merger,
- -----------
all such shares of BM&M Common Stock issued and outstanding immediately prior to
the Effective Time shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist. Fractional shares may be paid
in cash.
3
<PAGE>
(b) At the Effective Time of the Merger, each share of common
stock, $.01 par value per share, of AACAF shall be converted into one share of
common stock, $.10 par value per share, of the Surviving Corporation (the
"Surviving Corporation Common Stock").
(c) Except as may be otherwise provided herein, in the event that
subsequent to the date of execution of this Agreement but prior to the Effective
Time of the Merger, the outstanding shares of VIVRA Common Stock or BM&M Common
Stock shall have been increased, decreased, changed into or exchanged for a
different number or kind of shares through a recapitalization, reclassification,
stock dividend, stock split or reverse stock split, then an appropriate and
proportionate adjustment shall be made in the VIVRA Common Stock to be
delivered hereunder.
(d) Certificates which represented shares of BM&M Common Stock
outstanding immediately prior to the Effective Time and converted pursuant to
this Agreement shall be deemed to represent the Determined Amount of shares of
VIVRA into which such shares have become converted and shall be exchangeable by
the holder thereof for new certificates representing the shares of VIVRA into
which such shares have been converted. As soon as reasonably practicable after
the Effective Time, VIVRA shall deliver such new share certificates to the BM&M
Physicians in exchange for the BM&M Physicians' share certificates representing
such converted shares. For each of the BM&M Physicians, the Determined Amount
of the VIVRA Common Stock shall be represented by two (2) share certificates;
(i) one, which shall be deposited (together with an executed stock power) with
the Escrow Agent as provided in the Escrow Agreement, representing such BM&M
Physician's pro rata portion of the escrowed shares; and (ii) one, which shall
--- ----
be delivered directly to each BM&M Physician, representing his pro rata portion
--- ----
of the Determined Amount less his pro rata portion of the escrowed shares.
--- ----
After the Effective Time, there shall be no transfers on the stock transfer
books of BM&M of shares of BM&M Common Stock which were issued and outstanding
immediately prior to the Effective Time and converted pursuant to this
Agreement.
(e) At the Closing, VIVRA shall execute a Stock Power in favor of
AACA in order to transfer to AACA the Surviving Corporation Common Stock as a
contribution to capital.
2.5 MERGER CONSIDERATION ADJUSTMENT.
-------------------------------
(a) The Merger Consideration deliverable as a number of shares of
VIVRA Common Stock hereunder is based on the assumption that BM&M's "Net Assets"
(as hereinafter defined) as of
4
<PAGE>
the Effective Time shall be at least $958,424.00 (the "Agreed Amount"). To the
extent that BM&M's Net Assets as of the Effective Time shall exceed the Agreed
Amount plus $95,000, then the BM&M Physicians, in the same percentages as set
forth in Exhibit 2.4, shall be entitled to receive
-----------
additional shares of VIVRA Common Stock in an amount equal to that number of
shares determined by dividing the excess of AAI's Net Assets over the Agreed
Amount by the Closing Price, and to the extent that BM&M's Net Assets as of
the Effective Time shall be more than $95,000 less than the Agreed Amount,
then VIVRA shall be entitled to receive from the
5
<PAGE>
BM&M Physicians a return of shares of VIVRA Common Stock in an amount equal to
that number of shares determined by dividing such deficit by the Closing Price
with such return to be effected by each BM&M Physician by a transfer to VIVRA as
provided under the Escrow Agreement.
(b) For purposes hereof, the term "Net Assets" shall mean the sum of
(i) the value of BM&M's "Accounts Receivable" (as hereinafter defined) as of the
Effective Time, plus (ii) the value of BM&M's fixed assets which, for purposes
of this calculation, shall be deemed to be $269,677.00, plus (iii) cash and cash
equivalents (including Federal income and Florida excise tax refunds applied for
prior to the Closing Date but unpaid as of the Effective Time, but solely to the
extent collected) minus the amount of all "Liabilities" (as hereinafter defined)
-----
of BM&M which have not been paid as of the Effective Time. For purposes hereof,
the term "Accounts Receivable" shall mean (x) the sum of all receivables BM&M
posted in accordance with historical practices with respect to the operations of
the Business prior to the Effective Time arising from the rendering of services
to patients up to the Effective Time, including, without limitation, those from
private pay patients, private insurance payers, third party payers or from
governmental programs, but not including accounts previously written off by
BM&M, and not including any accounts receivable for which there is an unposted
cash receipt as of the Effective Time, (y) multiplied times fifty percent (50%),
which represents an agreed-upon allowance for bad debts and contractual
allowances and payer discounts, (z) multiplied times sixty percent (60%), which
represents an agreed-upon after-
tax realization rate. For purposes hereof, the term "Liabilities" shall mean
all liabilities with respect to the operation of the Business and including,
without limitation, all liabilities of BM&M as of the Effective Time for accrued
sick leave and vacation pay of employees of BM&M as of the Effective Time and
including all liabilities for supplies, inventory and other goods ordered by
BM&M prior to the Effective Time but not paid for as of the Effective Time, but
not including liabilities accruing in the ordinary course of business after the
Effective Time under the contracts and leases listed on Exhibit 2.5.
-----------
(c) For purposes of establishing the Determined Amount on the
Closing Date, the Merger Consideration shall be adjusted initially on or prior
to the Closing Date using BM&M's pro forma April 30, 1996 balance sheet (the
--- -----
"Interim Balance Sheet"). Such initial calculation shall be set forth on a
schedule delivered by the BM&M Physicians to VIVRA or AACAF together with a copy
of the Interim Balance Sheet not less than 2 days prior to the Closing. Such
initial adjustment shall be deemed to be the "Closing Date Adjustment."
(d) Within ninety (90) days after the Effective Time (or as soon
thereafter as possible), the parties shall make final adjustments to the Merger
Consideration (the "Post-Closing
6
<PAGE>
Adjustments"). The Surviving Corporation shall furnish to the BM&M Physicians,
within sixty (60) days after the Effective Time, a balance sheet of BM&M with
respect to the Business as of the close of business at the Effective Time (the
"Closing Balance Sheet") and a statement of the Surviving Corporation's
proposed Post-Closing Adjustments. The Closing Balance Sheet will be used to
determine any final adjustments to the Merger Consideration. Should the BM&M
Physicians dispute any of the Post-Closing Adjustments proposed by the Surviving
Corporation or the accuracy of the Closing Balance Sheet, the BM&M Physicians
shall promptly (and in no event later than ten (10) days after receipt of the
Closing Balance Sheet and the Surviving Corporation's proposed Post-Closing
Adjustments) advise the Surviving Corporation in writing. If after thirty (30)
days after delivery of the Closing Balance Sheet, the Surviving Corporation and
the BM&M Physicians are unable to agree on the amount of the Post-Closing
Adjustments, the BM&M Physicians and the Surviving Corporation shall engage
Ernst & Young, Certified Public Accountants (the "Accountants") to review the
Closing Balance Sheet and the proposed Post-Closing Adjustments and to determine
the amount of Post-Closing Adjustments, such determination to be made as soon as
practicable. In making such review and determination, the Accountants shall
utilize the terms and provisions of this Agreement. The decision of the
Accountants shall be binding on both the BM&M Physicians and the Surviving
Corporation. They shall pay the reasonable fees and expenses of the engagement
of the Accountants.
(e) If any further adjustments are required in the Determined
Amount consideration by virtue of the foregoing provisions, the adjusted number
of shares shall be delivered to the party entitled to them or added to the
amount to be transferred to VIVRA under the Escrow Agreement, as the case may
be, within ten (10) days after the adjustments are determined pursuant to the
foregoing provisions.
2.6 HOLDING PERIOD WITH RESPECT TO POOLING. The BM&M
--------------------------------------
Physicians will hold their shares of VIVRA Common Stock for the required period
from the date of issuance until July 15, 1996 or until the date on which the
combined financial statements of AACA and BM&M are reported, if it should occur
earlier, in keeping with the intent of the parties for AACA to account for the
Merger as a pooling of interests.
2.7 PRESENT INTENTION NOT TO SELL. The BM&M Physicians agree that they
-----------------------------
have no present intention to sell the VIVRA Common Stock in a manner that would
cause the Merger to fail to qualify as a reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended.
7
<PAGE>
SECTION 3. CLOSING.
-------
3.1 CLOSING AND CLOSING DATE. The closing (the "Closing") of the Merger
------------------------
and the execution and delivery of the Articles of Merger and the agreements and
documents contemplated herein shall take place on or before April 28, 1996, at
10:00 a.m. E.D.T., at the offices of Akerman, Senterfitt & Eidson, 28th Floor,
SunTrust International Center, One Southeast Third Avenue, Miami, Florida,
33131, or at such other place and time as may be deemed appropriate by the
parties hereto. At or before the Closing, BM&M shall execute the Articles of
Amendment and BM&M and AACAF shall execute and deliver the Articles of Merger,
and thereafter cause them to be filed as provided in Section 1.2 hereof.
3.2 ACTION BY AACA AND AACAF. Upon the terms and subject to the
------------------------
conditions herein contained, at the Closing on the Closing Date, AACA will
deliver to the BM&M Physicians the following:
(i) The certificates referred to in Section 9.1 hereof;
(ii) The opinion of counsel for AACA in form and substance satisfactory
to BM&M and the BM&M Physicians; and
(iii) Resolutions of the Board of Directors of AACA, VIVRA and of AACAF
certified by an appropriate officer, authorizing the execution,
delivery and performance of this Agreement and the other agreements
to be delivered by AACA and AACAF in connection with the Closing
hereunder.
3.3 ACTION BY BM&M AND THE BM&M PHYSICIANS. Upon the
--------------------------------------
terms and subject to the conditions herein contained, at the Closing
on the Closing Date, the BM&M Physicians and BM&M will deliver to
VIVRA, AACA and AACAF the following:
(i) The certificate referred to in Section 10.1 hereof;
(ii) The opinion of counsel for the BM&M Physicians and BM&M in form and
substance satisfactory to AACA;
(iii) Resolutions of the shareholders and the Board of Directors of BM&M
certified by an appropriate officer, authorizing the execution,
delivery and performance of this Agreement, the Amendment of the
Articles of Incorporation, the Articles of Merger and the other
agreements to be delivered by BM&M in connection with the Closing
hereunder; and
(iv) The schedule showing the Closing Date Adjustment referred to in
Section 2.5(c) hereof.
8
<PAGE>
3.4 ACTION BY ALL PARTIES. Upon the terms and subject to the conditions
---------------------
herein contained, at the Closing on the Closing Date, the parties will, as
appropriate, execute and deliver to each other the following:
(i) the "Noncompetition Agreement" among Martell, Mirmelli, AACA and the
Surviving Corporation in substantially the form attached hereto as
Exhibit 3.4(i); and
--------------
(ii) the "Escrow Agreement" between the BM&M Physicians and VIVRA in
substantially the form attached hereto as Exhibit 3.4(ii).
---------------
3.5 ACTION BY VIVRA. Upon the terms and subject to the conditions herein
---------------
contained, at the Closing on the Closing Date, VIVRA will, as appropriate,
execute and deliver the share certificates representing 100% of the Common Stock
of the Surviving Corporation together with an executed stock power endorsing
over and transferring such common stock to AACA as provided in Section 2.4(e)
hereof.
3.6 AUDIT. AACA shall have the right, either before or after the Closing,
-----
to cause its accounting firm to audit the financial statements of BM&M for the
current year and for the three years prior to the current year. The BM&M
Physicians shall cooperate reasonably in connection with any such audit or
audits and will execute management letters and other documents reasonably
requested in connection with any such audit or audits and any equity offering by
AACA. AACA will pay the cost of the audits required by AACA under this
Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BM&M AND THE BM&M PHYSICIANS.
--------------------------------------------------------------
BM&M and the BM&M Physicians, jointly and severally, hereby represent,
warrant, covenant and agree to and with AACA and AACAF, as follows.
4.1 BM&M'S EXISTENCE AND POWER. BM&M is a professional service
--------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. Neither the nature of its business as now conducted
nor the character or location of its properties require qualification by BM&M to
do business in any other jurisdiction except for the states listed on Exhibit
-------
4.1 in which BM&M is duly qualified to do business. BM&M has the corporate
- ---
power to own its property and to carry on its business as now being conducted.
Except as provided in Exhibit 4.1, BM&M is not subject to any noncompetition
-----------
agreement.
4.2 ARTICLES OF INCORPORATION AND BYLAWS. True, correct and complete
------------------------------------
copies of the Articles of Incorporation and Bylaws
9
<PAGE>
of BM&M are attached hereto on Exhibit 4.2.
-----------
4.3 BM&M STOCK. BM&M's authorized capital stock consists solely of
----------
6,000 shares of common stock authorized, of which 300 shares are issued (and
outstanding) to Martell and 300 shares are issued (and outstanding) to Mirmelli
as reflected on Exhibit 4.3 attached hereto. All such outstanding shares of
-----------
capital stock of BM&M have been duly and validly authorized and issued and are
fully paid and nonassessable. There are 300 treasury shares of capital stock.
There are no outstanding options, contracts, preemptive rights, proxies, calls,
commitments, demands or rights of any character obligating BM&M to issue any
shares of stock or other securities of BM&M, or options or rights with respect
thereto, and there are no existing or outstanding securities convertible or
exchangeable into shares of stock or other securities of BM&M. No shares of
BM&M's capital stock have been issued in violation of any federal or state
securities law. There have been no transactions involving the equity interests
of BM&M since April 1, 1989.
4.4 OWNERSHIP OF BM&M. The BM&M Physicians are, and will be at the
-----------------
Closing and the Effective Time, owners of all of the issued and outstanding
stock of BM&M, free and clear of all claims, security interests, pledges,
options, rights of first refusal, liens, financing statements, deeds of trust,
mortgages, charges, assessments, restrictions, leases and other encumbrances
(all such claims, security interests, pledges, options, rights of first refusal,
liens, financing statements, deeds of trust, mortgages, charges, assessments,
restrictions, leases and other encumbrances being referred to individually as an
"Encumbrance" and collectively as "Encumbrances") whatsoever. The BM&M
Physicians have the full legal right, power and authority to enter into this
Agreement and, except as identified on Exhibit 4.4, the execution, delivery and
-----------
performance of this Agreement by the BM&M Physicians will not violate any
agreement to which either they or BM&M is a party or any agreement affecting the
BM&M Common Stock.
4.5 INSIDER TRANSACTIONS. Except as disclosed in Exhibit 4.5 hereto,
-------------------- -----------
BM&M is not, directly or indirectly, a party to any contract, lease or
commitment with any officer or director of BM&M or any affiliate of any such
director or officer. As used in this Section 4.5, the term "affiliate" shall
mean any member of the immediate family of such officer or director or any
corporation, partnership, trust or other entity in which such officer or
director has a substantial interest or is a director, officer, partner or
trustee.
4.6 AUTONOMY; SUBSIDIARIES. BM&M is autonomous and has not ever been a
----------------------
subsidiary of any other corporation. BM&M has no subsidiaries nor does it own
any shares of stock or other securities of, or interest in, any other
corporation, joint venture, partnership or business.
10
<PAGE>
4.7 ACCURACY OF FINANCIAL STATEMENTS AND CLOSING DATE BALANCE SHEET. The
---------------------------------------------------------------
BM&M Physicians have delivered to AACAF as Exhibit 4.7 a copy of the financial
-----------
statements of BM&M for the years ended February 28, 1992, 1993 and 1994 and 1995
(the "BM&M Financial Statements") and a pro forma balance sheet dated as at
--- -----
April 30, 1996 (the "Closing Date Balance Sheet"). The BM&M Financial
Statements have been prepared based upon cash basis accounting, are complete and
accurate and fairly present the financial condition of and the income expenses
of BM&M as of the respective dates thereof, except as disclosed on Exhibit 4.7.
-----------
The Closing Date Balance Sheet has been prepared based upon cash basis
accounting, is complete and accurate and fairly presents the financial condition
and the income and expenses of BM&M as of the date thereof, except as disclosed
on Exhibit 4.7. BM&M has no liabilities or obligations known or unknown,
-----------
accrued, absolute or contingent, whether or not now due and payable (including,
without limitation, any liability for federal, state or local taxes of BM&M),
for any period ended on or prior to the respective dates of the Financial
Statements and the Closing Date Balance Sheet or any liability or obligation in
connection with any transaction or state of affairs entered into or existing on
or before the respective dates thereof, which are not either fully reflected on
the Financial Statements and the Closing Date Balance Sheet or otherwise
disclosed to AACAF in Exhibit 4.14 and 4.16 hereto.
------------ ----
4.8 PROPERTIES.
----------
(i) Set forth on Exhibit 4.8(i) is an identification of the
--------------
material real and tangible personal properties presently owned by BM&M and used
in the Business. All tangible personal property, equipment, vehicles,
furnishings, and fixtures included within the assets of BM&M or required to be
used in the ordinary course of its business are being conveyed as a result of
the Merger "AS IS, WHERE IS."
(ii) Set forth on Exhibit 4.8(ii) is an accurate and
---------------
complete list of all real or personal property which is used by BM&M in the
Business and which is either not owned by BM&M or is leased or rented by BM&M.
4.9 TAXES AND TAX RETURNS. For all tax periods ended prior to the date
---------------------
of this Agreement, except as set forth on Exhibit 4.9, BM&M has filed all
-----------
federal, state, local and other tax returns required by law to be filed and,
except as set forth on Exhibit 4.9, such returns were filed on or before the due
-----------
dates of such returns (as extended by any valid extensions of time) ("Tax
Returns") and has paid or will pay all taxes of every kind and description
(including, without limitation, all net income, gross income, gross receipts,
sales, use, lease, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, property
or other taxes, customs, duties, fees, assessments or charges, together with any
11
<PAGE>
interest, penalties, additions to tax or additional amounts imposed by any
taxing authority, domestic, or foreign ("Taxes") which are due as of and for all
periods through the Effective Time. No claim has ever been made by an authority
in a jurisdiction where BM&M does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no liens or security
interests on any of BM&M's assets that arose in connection with any failure (or
alleged failure) to pay any Taxes. BM&M has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
All Tax Returns filed by BM&M correctly reflected all facts regarding the
income, business, assets, operations, activities and status of BM&M and all
other information required to be shown thereon. BM&M has complied in all
respects with all applicable laws, rules and regulations relating to the filing
of Tax Returns with respect to, and the payment of Taxes. The Tax Returns of
BM&M have not been audited by the Internal Revenue Service or any state or local
taxing authority. No federal, state, local or foreign audits, administrative
proceedings, court proceedings or ruling requests are presently pending with
respect to any Taxes or Tax Returns with respect thereto. BM&M has not filed a
consent pursuant to Section 341(f) of the Code, or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341 (f)(4) of the Code) owned by BM&M. No
property of BM&M is property that BM&M is required to treat as being owned by
another person pursuant to the provisions of Section 168(f)(6) of the Code, or
is "tax-exempt use property" within the meaning of Section 168(h) of the Code,
or is subject to a lease, other than a "true" lease for federal income tax
purposes. BM&M is not required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a voluntary change in accounting method
initiated by BM&M, nor does BM&M, nor any of the BM&M Physicians, have any
knowledge that the Internal Revenue Service has proposed any adjustment or
change in accounting methods. Except as set forth on Exhibits 4.9 and 4.10,
---------------------
with respect to BM&M Real and Personal Property Leases BM&M is not currently
under any contractual obligation to indemnify any person with respect to Taxes.
No person who is not a United States citizen, and no corporation or other
entity which was not organized within the United States owns beneficially more
than five percent (5%) of the outstanding shares of BM&M and therefore no
withholding of tax pursuant to Section 1445 of the Code is required. BM&M is
not a United States Real Property Holding Corporation as defined in Section 897
of the Code. BM&M is not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Code Section 280(G). No consent extending the statute of limitations has
been filed by or on behalf of BM&M with respect to any liability for Taxes for
any year.
4.10 CONTRACTS.
---------
12
<PAGE>
4.10.1. Exhibit 4.10(i) is a list of all agreements of BM&M (the
---------------
"BM&M Contracts") and Exhibit 4.10(ii) is a list of all agreements of each BM&M
----------------
Physician with respect to BM&M (the "BM&M Physician Contracts"). Except as set
forth in Exhibits 4.10(i) and 4.10 (ii) hereto, neither BM&M nor either of the
------------------------------
BM&M Physicians with respect to BM&M, respectively, is a party to any material
contract, agreement, lease, or power of attorney of any kind with respect to the
Business. As to BM&M, except as noted on Exhibit 4.10(i), all BM&M Contracts,
---------------
and as to the BM&M Physicians, all BM&M Physician Contracts, are valid and are
in full force and effect according to their material terms, and no material
default by BM&M or the BM&M Physician or Physicians, as the case may be, exists
under any such contract, lease or agreement and no condition or state of facts
exists which, with notice or the passage of time, or both, would constitute a
default under any such contract, lease or agreement. All BM&M Contracts and all
BM&M Physician Contracts are valid as to the other contracting parties thereto
and there is no material default by any such party existing under the contracts
and no condition or state of facts exists which, with notice or the passage of
time, or both would constitute a default by any such party thereunder. All BM&M
Contracts and all BM&M Physician Contracts are enforceable in accordance with
their respective terms by BM&M or the BM&M Physicians, as the case may be,
against all other parties thereto in all material respects (except as
enforceability may be restricted, limited or delayed by bankruptcy, insolvency,
moratorium or similar laws affecting or relating to the enforcement of
creditors' rights in general and except as enforceability is subject to general
principles of equity, regardless of whether enforceability is considered in a
proceeding at law or in equity).
4.10.2. Neither the execution, the delivery, nor the performance of
this Agreement by BM&M and the BM&M Physicians will cause any default in or
breach of any provision of the BM&M Articles of Incorporation, as amended, the
BM&M bylaws or any agreement or commitment to which BM&M is a party or by which
BM&M or the BM&M Physicians are bound, and none of such actions will result in
either acceleration, or any similar right of any other party, under any BM&M
Contract or BM&M Physician Contract, or constitute a default under any BM&M
Contract or BM&M Physician Contract, or result in the creation or imposition of
any Encumbrance against any of the assets of BM&M. With respect to the BM&M
Physician Contracts, all accounts receivable with respect to each BM&M
Physician's performance of each such contract has been assigned to BM&M and,
with respect to future performances by each such BM&M Physician, the accounts
receivable therefrom shall be assigned to Newco, as defined in the Master Merger
Agreement, pursuant to such BM&M Physician's Individual Employment Agreement
with Newco. Notwithstanding anything in this Section 4.10 to the contrary, BM&M
and BM&M Physicians do not warrant, covenant, or agree to or with AACAF with
respect to the enforceability or
13
<PAGE>
validity of any term of the BM&M Physician contracts concerning any agreement or
covenant restricting or prohibiting (i) competition with BM&M, (ii) disclosure
of confidential information of BM&M, or (iii) solicitation of employees or
patients of BM&M. BM&M and the BM&M Physicians make no representations that any
such provisions are enforceable.
4.11 COMPLIANCE WITH LAWS. Except as described in Exhibit 4.11, BM&M is
-------------------- ------------
in compliance with the laws, regulations, rules and decrees of all governmental
authorities whatsoever relating to the conduct of its business, including,
without limitation, the Fair Labor Standards Act.
4.12 LITIGATION. Except as described in Exhibit 4.12 hereof, there is no
---------- ------------
litigation, action, suit, proceeding or governmental investigation pending or
threatened against BM&M or affecting BM&M or the Business or any of its assets,
at law or in equity or before any federal, state, municipal, local or other
governmental authority, or before any arbitrator, nor is there any reasonable
basis for any such litigation, action, suit, proceeding or investigation. None
of the BM&M Physicians nor BM&M is subject to any order, writ or decree of any
court or other governmental authority.
4.13 EMPLOYEE BENEFITS.
-----------------
4.13.1 Except as identified on Exhibit 4.13.1, BM&M is not a party
--------------
to any collective bargaining or labor agreement or to any written employment
agreement, profit sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, welfare, or incentive
plan or policy or increases in the rate of remuneration entered into with or for
the benefit of present or former employees, whether or not unionized, of BM&M or
any other like agreement, plan or policy.
4.13.2 All BM&M plans, funds, programs, agreements, arrangements,
commitments or policies (collectively, the "Plans") which: (i) are or have ever
been maintained or participated in by BM&M and which are currently in effect or
as to which BM&M has any ongoing liability or obligation whatsoever; and (ii)
constitute (A) "pension plans" (as defined in ' 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or (B) "welfare plans" (as
defined in ERISA section 3(1)) are identified on Exhibit 4.13.2. BM&M has
--------------
provided copies of all Plans to AACAF.
4.13.3 Except as set forth on Exhibit 4.13.3, BM&M has never
--------------
maintained, sponsored, contributed to or been required to contribute to a
defined benefit plan (within the meaning of Code section 414(j)) and is not, and
has never been, a member of a controlled group of corporations (within the
meaning of Code section 414(b)), a group of trades or businesses under common
control (within the meaning of Code section 414(c)) or an affiliated service
group (within
14
<PAGE>
the meaning of Code section 414 (m)).
4.13.4 With respect to each Plan:
(i) Such Plan is, and at all times has been, operated and
administered substantially in compliance with the requirements of all applicable
statutes, orders or governmental rules or regulations currently in effect
including, without limitation, ERISA and the Code.
(ii) No prohibited transaction (as defined in ERISA section 406
or Code section 4975) has occurred in connection with which BM&M or any
fiduciary of such Plan is or could be subject to a civil penalty pursuant to
ERISA section 502, a tax imposed by Code section 4975 or liability for a breach
of fiduciary responsibility under ERISA.
(iii) No action, suit, grievance, arbitration or other manner of
litigation or claim with respect to such Plan or its assets (other than routine
claims for benefits made in the ordinary course of administration of such Plan)
is pending or, to the knowledge of BM&M or any of the BM&M Physicians,
threatened against or with respect to such Plan, BM&M or any fiduciary (as
defined in ERISA section 3(21)) of such Plan. To the knowledge of BM&M and the
BM&M Physicians, there is no basis for any such claim.
(iv) If such Plan provides medical benefits to any present or
former employee of BM&M, such Plan has been operated in compliance with ERISA
sections 601 through 609 and either Code section 162(i)(2) and (k) and the
regulations promulgated thereunder (prior to 1989) or Code section 4980B and the
regulations promulgated thereunder (after 1988).
(v) There has been no failure to file on a timely basis any
report or return required to be filed by law with respect to such Plan. All
disclosures required by law to be made to participants in such Plan have been
made on a timely basis.
(vi) No representation or communication with respect to
participation, eligibility for benefits, vesting, benefit accrual or coverage
under such Plan has been made by BM&M or any trustee, fiduciary, officer,
director, employee or other agent of BM&M to any of its employees or their
beneficiaries which (A) is not in accordance with the terms of such Plan and (B)
could have material adverse economic consequences to BM&M or such Plan.
(vii) Such Plan has been operated in accordance with such
provisions, if any, of the Code as may be applicable to obtain the federal
income tax consequences intended for such Plan.
4.13.5 Each Plan which is a "pension plan" (as defined in ERISA
section 3(2)) and its related trust, if any, are qualified under Code section
401(a) and exempt from tax under Code section
15
<PAGE>
501(a) and have been determined by the Internal Revenue Service to be so
qualified. Nothing has occurred since the most recent such determination which
has or could adversely affect the qualified status of such Plan or the tax
exempt status of its related trust.
4.14 LIABILITIES. All liabilities and obligations of BM&M direct,
-----------
indirect or contingent, are either listed in the BM&M Financial Statements or on
Exhibit 4.14 attached hereto.
- ------------
4.15 INSURANCE. All insurance maintained by BM&M is listed and described
---------
on Exhibit 4.15 attached hereto. Except as identified on Exhibit 4.15, BM&M has
------------ ------------
not in the past three years made any claims with respect to its insurance
coverage.
4.16 ABSENCE OF CERTAIN CHANGES. Except as described in Exhibit 4.16,
-------------------------- ------------
since December 31, 1995, BM&M has not:
(i) incurred or suffered any obligations or liabilities
(absolute or contingent) except current liabilities incurred in the ordinary
course of business;
(ii) issued any stock or other corporate securities or
granted any option or right with respect to the acquisition of any of its
corporate securities;
(iii) declared or made (or become obligated for) any payment
or distribution or dividend to shareholders or purchased or redeemed (or became
obligated to purchase or redeem) any shares of its capital stock;
(iv) mortgaged, pledged or subjected (whether or not
voluntarily) to any Encumbrance, any of its assets, other than Encumbrances
incidental to the conduct of its business or the ownership of its property and
assets which were not incurred in connection with the borrowing of money, or the
obtaining of advances or credit, and which do not in the aggregate impair the
use or value thereof in the operation of its business;
(v) sold, assigned or transferred or agreed to sell, assign or
transfer any of its tangible assets or canceled any debts or claims, except in
each case in the ordinary course of business;
(vi) sold, assigned, or transferred or agreed to sell,
assign or transfer any trade names, or other intangible assets, or permitted
existing rights with respect thereto to lapse;
(vii) suffered any extraordinary loss or knowingly waived or
permitted to lapse any right of substantial value;
(viii) made any capital expenditures, or otherwise entered
into any executory transactions or commitments
16
<PAGE>
to make any capital expenditures, in excess of $5,000 per item or $25,000 in the
aggregate;
(ix) failed to comply in any material respect with any
applicable local, state or federal law, rule or regulation; or
(x) suffered any event or condition of any character, materially
and adversely affecting its business, properties or prospects.
Transaction costs, including costs, expenses and fees associated with the
preparation and consummation of the transactions contemplated by the Master
Merger Agreement and costs associated with the purchase of the tail coverage for
the Senior Physicians for periods prior to the Effective Time, are listed on
Exhibit 4.16 as permitted under Section 4.1 of the Master Merger Agreement.
- ------------
Since these transaction costs are not reflected in the Closing Date Balance
Sheet, payment of such expenses may affect the results of the Merger
Consideration Adjustment described in Section 2.5.
4.17 EMPLOYEES. Attached as Exhibit 4.17 is a listing of all current
--------- ------------
BM&M employees and former BM&M employees who are eligible to continue to receive
benefits by virtue of their former employment by BM&M (including, as applicable,
their rates of pay, accrued sick leave, vacation and other benefits).
4.18 AUTHORITY. BM&M has the corporate power to execute and deliver this
---------
Agreement and consummate the Merger and the other transactions contemplated
hereby and has taken (or by the Closing Date will have taken) all action
required by law, its Articles of Incorporation, bylaws or otherwise to authorize
such execution and delivery and the consummation of the Merger and the other
transactions contemplated hereby.
4.19 LICENSES. Exhibit 4.19 contains a copy of all governmental or other
-------- ------------
licenses held by (i) BM&M relating to the operation of its business and (ii) the
BM&M Physicians. Except for the licenses of BM&M and the BM&M Physicians listed
in Exhibit 4.19, there are no other licenses or permits required for BM&M and
------------
the BM&M Physicians to operate the Business. Except as disclosed in Exhibit
-------
4.19, all such licenses are in full force and effect, and there have not been
- ----
(and there currently are not) any material default or deficiencies thereunder by
any party; and no event has occurred which (whether with or without
notice, lapse of time, or the happening or occurrence of any other
event) would constitute a material default or deficiency thereunder.
There are no pending or active proceedings or investigations by any
governmental agency (including, without limitation, the Health Care
Financing Administration or any Ethics Board) relating to the
Business. Except as disclosed in Exhibit 4.19, neither of the BM&M Physicians
------------
nor BM&M has been the subject of a malpractice suit. There is not now, nor has
there ever been, any investigation or
17
proceeding by any governmental agency or licensing board to restrict, suspend or
revoke any license of BM&M.
4.20 NO FINDERS OR BROKERS. None of the BM&M Physicians nor BM&M, nor
---------------------
any officer or director thereof, has engaged any finder or broker in connection
with the transactions contemplated hereunder. The BM&M Physicians will
indemnify and hold AACA harmless against claims (and attorneys' fees and
expenses in the defense thereof) of any person, firm or corporation for finder's
fees, broker's fees, brokerage commissions, sales commissions or the like
alleged in connection with the transactions contemplated hereunder due to acts
of the BM&M Physicians or BM&M.
4.21 DISCLOSURE. No representation or warranty by the BM&M Physicians or
----------
BM&M in this Agreement and no statement pertaining to the BM&M Physicians or
BM&M in this Agreement or any document, Exhibit or certificate furnished or to
be furnished to AACAF pursuant hereto will contain any materially untrue
statement or omits or will omit to state a relevant fact necessary in order to
make the statements contained herein or therein not misleading. There are no
facts known to the BM&M Physicians or BM&M not described herein which would
adversely affect the future operations of BM&M.
4.22 VALIDITY OF AGREEMENTS. Upon execution and delivery by all parties,
----------------------
this Agreement, the Articles of Merger, and all other agreements to be executed
by the BM&M Physicians or BM&M in connection herewith, will constitute the valid
and binding obligation of the BM&M Physicians and BM&M, as the case may be, and
be binding against them and enforceable in accordance with their respective
terms (except as enforceability may be restricted, limited, or delayed by
bankruptcy, insolvency, moratorium or similar laws affecting or relating to the
enforcement of creditors' rights in general and except as the enforceability is
subject to general principles of equity, regardless of whether enforceability is
considered in a proceeding at law or in equity).
4.23 TITLE TO ASSETS. Except as described in Exhibits 4.14 and 4.16
--------------- ------------- ----
hereto, BM&M holds good and marketable title to its assets, free and clear of
restrictions on or conditions to transfer or assignment, and free and clear of
Encumbrances.
4.24 TRANSFER NOT SUBJECT TO ENCUMBRANCES OR THIRD-PARTY APPROVAL.
------------------------------------------------------------
Except as set forth on Exhibit 4.24, the execution and delivery of this
------------
Agreement by the BM&M Physicians and BM&M, and the consummation of the
contemplated transactions, (i) will not result in the creation or imposition of
any Encumbrance on any of the assets of BM&M and (ii) will not require the
authorization, consent, or approval of any third party, including any
governmental subdivision or regulatory agency.
18
<PAGE>
4.25 ACCOUNTS RECEIVABLE. The accounts receivable of BM&M (the "Accounts
-------------------
Receivable") as of the Effective Time of the Merger, to the extent uncollected
as of the Effective Time of the Merger, will be validly existing and represent
monies due for goods sold and delivered or services performed subject to
customary discounts or other adjustments by third parties. An aged listing of
the Accounts Receivable of BM&M as of the Closing Date shall be delivered to
AACAF on or before the Closing Date in connection with the Closing Date Balance
Sheet.
4.26 SECURITIES LAWS.
---------------
4.26.1 RECEIPT OF INFORMATION. Since the commencement of
----------------------
negotiations, each BM&M Physician has had access to and each BM&M Physician has
received: (i) a copy of VIVRA's Prospectus dated February 9, 1995; (ii) a copy
of VIVRA's 1994 Annual Report to Stockholders and VIVRA's 1995 Annual Report to
Stockholders; (iii) a copy of VIVRA's Annual Report on Form 10-K for the fiscal
years ended November 30, 1994, and November 30, 1995; (iv) a copy of VIVRA's
Quarterly Reports on Form 10-Q for the quarters ended February 28, May 31 and
August 30, 1995, and February 29, 1996; (v) a copy of VIVRA's Proxy Statement
for VIVRA's Annual Meeting; (vi) a copy of the Prospectus Supplements to VIVRA's
Prospectus dated February 9, 1995; (vii) a copy of VIVRA's Forms 8-K dated
August 16, 1995, and December 21, 1995; and (viii) such other information as the
BM&M Physicians have reasonably requested.
4.26.2 INVESTMENT EXPERIENCE. Each BM&M Physician represents that
---------------------
such BM&M Physician is experienced in evaluating and investing in securities and
acknowledges that such BM&M Physician is able to fend for himself, can bear the
economic risk of such BM&M Physician's investment, and has such knowledge and
experience in financial and business matters that such BM&M Physician is capable
of evaluating the merits and risks of the investment in VIVRA stock.
4.27 POOLING REQUIREMENTS. BM&M and each BM&M Physician acknowledge that
--------------------
AACA and VIVRA intend to account for the business combination to be effected by
the Merger as a pooling of interests under generally accepted accounting
principles, warrant that they have fully disclosed all facts and information
available to them and their advisors regarding the financial condition of BM&M
and all transactions involving BM&M, the BM&M Physicians and the BM&M Common
Stock, and acknowledge that they have been advised by their counselors regarding
the APB No. 16 requirements governing eligibility for pooling treatment which
are set forth on Exhibit 4.27. Based upon the foregoing, to the best of their
------------
knowledge, BM&M and each BM&M Physician has taken no action or failed to take
action, as the case may be, in contravention of such pooling requirements.
19
<PAGE>
SECTION 5. REPRESENTATIONS AND WARRANTIES OF AACA AND AACAF.
------------------------------------------------
AACA and AACAF, jointly and severally, represent, warrant, covenant and
agree to and with BM&M and the BM&M Physicians, as follows.
5.1 ORGANIZATION AND STANDING OF AACAF. AACAF is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Florida and has full corporate power and authority to conduct its business as
now being conducted, and is duly qualified to do business, in each jurisdiction
in which the nature of the property owned or leased or the nature of the
businesses conducted, specifically including the State of Florida, so require.
5.2 ORGANIZATION AND STANDING OF AACA. AACA is a corporation duly organized,
---------------------------------
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as now being
conducted, and is duly qualified to do business, in each jurisdiction in which
the nature of the property owned or leased or the nature of the businesses
conducted so require.
5.3 AUTHORITY. AACA and AACAF each has corporate power to execute and
---------
deliver this Agreement and consummate the transactions contemplated hereby and
has taken (or by the Closing Date will have taken) all action required by law,
its respective Articles of Incorporation, its respective bylaws or otherwise to
authorize such execution and delivery and the consummation of the transactions
contemplated hereby.
5.4 NO FINDERS OR BROKERS. Neither AACA nor AACAF nor any officer or
---------------------
director thereof has engaged any finder or broker in connection with the
transactions contemplated hereunder. AACA will indemnify and hold the BM&M
Physicians harmless against claims (and attorneys' fees and expenses in the
defense thereof) of any person, firm or corporation for finder's fees, broker's
fees, brokerage commissions, sales commissions or the like alleged in connection
with the transactions contemplated hereunder due to acts of AACA or AACAF.
5.5 VALIDITY OF AGREEMENTS. Upon execution and delivery by all parties
----------------------
hereto, this Agreement, and all other agreements to be executed by AACA or AACAF
in connection herewith will constitute the valid and binding obligation of AACA
or AACAF, as the case may be, and be binding against AACA or AACAF, as the case
may be, and enforceable in accordance with their respective terms (except as
enforceability may be restricted, limited, or delayed by bankruptcy, insolvency,
moratorium or similar laws affecting or relating to the enforcement of
creditors' rights in general and except as the enforceability is subject to
general principles of equity, regardless of whether enforceability is considered
in a
20
<PAGE>
proceeding at law or in equity).
5.6 REQUIRED GOVERNMENTAL APPROVALS. AACA and AACAF each is in
-------------------------------
compliance in all material respects with the laws, rules, regulations and
decrees of all governmental authorities whatsoever relating to the conduct of
its businesses, and to the best of its knowledge no approval or consent of any
governmental authority or agency will be required at Closing for AACA and AACAF
to consummate the transactions contemplated hereby.
5.7 LITIGATION. There is no litigation, action, suit, proceeding or
----------
governmental investigation pending or (to the best of AACA's or AACAF's
knowledge) threatened against AACA or AACAF or affecting AACA or AACAF or any of
their respective businesses or any of their respective assets, nor does AACA or
AACAF know of any reasonable basis for such litigation, action, suit, proceeding
or investigation. Neither AACA nor AACAF is not subject to any order, writ or
decree of any court or governmental authority or agency.
5.8 ARTICLES OF INCORPORATION AND BYLAWS OF AACAF. A true, correct and
---------------------------------------------
complete copy of the Articles of Incorporation of AACAF is attached hereto as
Exhibit 5.8. AACAF has provided a copy of its Bylaws to BM&M and to the BM&M
- -----------
Physicians.
5.9 DISCLOSURE. No representation or warranty by AACA or AACAF in this
----------
Agreement and no statement pertaining to AACA or AACAF in this Agreement or any
document, Exhibit or certificate furnished or to be furnished to BM&M Physicians
or BM&M pursuant hereto will contain any material untrue statement or omits or
will omit to state a relevant fact necessary in order to make the statements
contained herein or therein not misleading.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF VIVRA.
---------------------------------------
VIVRA hereby represents, warrants, covenants and agrees to and with BM&M
and the BM&M Physicians as follows.
6.1 ORGANIZATION AND STANDING OF VIVRA. VIVRA is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full corporate power and authority to conduct its business as
now being conducted, and is duly qualified to do business, in each jurisdiction
in which the nature of the property owned or leased or the nature of the
businesses conducted so require.
6.2 AUTHORITY. VIVRA has corporate power to execute and deliver this
---------
Agreement and consummate the transactions contemplated hereby and has taken (or
by the Closing Date will have taken) all action required by law, its Certificate
of Incorporation, bylaws or otherwise to authorize such execution and delivery
and the consummation of the transactions contemplated
21
<PAGE>
hereby.
6.3 VALIDITY OF AGREEMENTS. Upon execution and delivery by all parties
----------------------
hereto, this Agreement, and all other agreements to be executed by VIVRA in
connection herewith to the extent that they relate to VIVRA, will constitute the
valid and binding obligation of VIVRA and be binding against VIVRA and
enforceable in accordance with their respective terms (except as enforceability
may be restricted, limited, or delayed by bankruptcy, insolvency, moratorium or
similar laws affecting or relating to the enforcement of creditors' rights in
general and except as the enforceability is subject to general principles of
equity, regardless of whether enforceability is considered in a proceeding at
law or in equity).
6.4 LITIGATION. There is no material suit, action, proceeding or
----------
investigation against or involving VIVRA or any of the properties or rights,
pending or, to the knowledge of VIVRA, threatened. There is no material
judgment, decree, injunction, rule or order of any governmental entity
outstanding against VIVRA. VIVRA is not in violation of any term of any
judgment, decree, injunction or order outstanding against it.
6.5 FINANCIAL STATEMENTS. VIVRA's audited consolidated financial
--------------------
statements including a balance sheet, income statement and statement of cash
flow, for the years ended November 30, 1994 and 1995, which have been previously
delivered to BM&M and the BM&M Physicians, fairly present in conformity with
generally accepted accounting principles applied on a consistent basis, the
consolidated financial position of VIVRA and its consolidated subsidiaries as of
the date thereof and their consolidated results of operation and cash flows for
the period then ended.
6.6 VIVRA COMMON STOCK. All of the shares of VIVRA Common Stock issued
------------------
under the provisions of this Agreement are duly authorized, fully paid and
nonassessable, are registered pursuant to VIVRA's currently effective
registration statement dated March 15, 1995, and are freely tradeable subject to
the limitations set forth in Section 2.6.
6.7 NO UNTRUE STATEMENTS. No representation or warranty by VIVRA
--------------------
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not misleading or
necessary in order to provide BM&M and BM&M Physicians with complete and
accurate information as to VIVRA and the VIVRA Common Stock. Except as
described in the S-4 Registration Statement and other materials delivered by
VIVRA under cover dated February 29, 1996, and April 8, 1996, there are no facts
known to VIVRA which would materially and adversely affect the VIVRA Common
Stock.
SECTION 7. COVENANTS OF AACA AND AACAF.
---------------------------
22
<PAGE>
7.1 BEST EFFORTS TO SECURE CONSENTS AND APPROVALS. AACA and AACAF will
---------------------------------------------
take all necessary corporate and other action and will use its best efforts to
obtain all consents and approvals required of AACAF to carry out the
transactions contemplated by this Agreement and the Master Merger Agreement and
to satisfy the conditions precedent specified herein and therein.
7.2 HANDLING OF DOCUMENTS. Until the Closing, AACA and AACAF shall keep
---------------------
confidential all information provided by BM&M or the BM&M Physicians pursuant to
this Agreement which is not in the public domain, and shall exercise the same
care in handling such information as it would exercise with similar information
of its own. If the Closing does not occur, AACAF shall return all such
documentation and keep the same confidential.
7.3 EMPLOYMENT. AACA (or its affiliated subsidiary) will offer
----------
employment to all of BM&M's employees, except the BM&M Physicians, who will be
dealt with on an individual basis, but these employees shall, upon acceptance of
employment with AACA, be "employees terminable at will" and subject to all
employment policies of AACA. Subsequent to the date of this Agreement, no
termination bonuses or severance pay is owed to or will be paid to any BM&M
employees terminated as a result of the Merger of AACAF into BM&M or of AAI into
the Surviving Corporation.
7.4 COMPENSATION. Subject to the consent of the "Senior Physicians" and
------------
to compliance with ERISA, AACA or the Surviving Corporation reserves the right
in the future to raise salaries of BM&M's former employees consistent with the
policies and standards governing AACA employees generally. AACA will credit
each former BM&M employee hired by AACA with his or her service anniversary with
BM&M for purposes of determining vacation, sick leave and holidays and other
fringe benefits provided by AACA to its employees. To the extent permitted by
ERISA, former BM&M employees shall be entitled to participate in all health,
disability, retirement and other benefit plans of AACA in accordance with the
terms of such plans; provided, however, that with respect to such health plans,
AACA shall ensure that such employees are eligible for coverage at the Effective
Time, are not subject to a "waiting period" as a result of the Merger, and are
not subject to exclusion for pre-existing conditions unless they have been
subject to such an exclusion under their current coverage.
7.5 REIMBURSEMENT. AACA or the Surviving Corporation
-------------
hereby waives any right or claim to reimbursement, on behalf of the Surviving
Corporation or otherwise, from the BM&M Physicians of any payments or
expenditures made by BM&M prior to the Effective Time to or for the benefit of
BM&M Physicians, notwithstanding any contrary or inconsistent position which may
be taken by any governmental entity with respect to such payments or
23
<PAGE>
expenditures.
7.6 COMPANY CAR. AACA and AACAF acknowledge that BM&M reflects among
-----------
the assets carried on its books a LEXUS automobile which was purchased by BM&M
to be used by Martell (such automobile being referred to hereinafter as the
"LEXUS"). After the Effective Time, the following shall apply with respect to
the LEXUS. Martell may have exclusive use of the LEXUS during his employment by
Surviving Corporation; after his retirement from Surviving Corporation, if
Martell retires, Frank J. Martell, M.D. may have exclusive use of the LEXUS;
upon request by Martell during his employment for a new automobile, AACA or
Surviving Corporation will sell the LEXUS for fair market value and enter into a
lease for a new automobile comparable to the lease in effect for Mirmelli; and
at any time prior to such sale of the LEXUS, Martell may purchase the LEXUS at
its then, net book value based upon Surviving Corporation's books and records
upon reasonable notice to Surviving Corporation of such election to purchase.
7.7 GOVERNANCE OF NEWCO. AACA shall govern the Surviving Corporation as
-------------------
contemplated in Section 3.2 of the Master Merger Agreement.
7.8 RETENTION OF EMPLOYEES. AACA will take no action to solicit or reassign
----------------------
to other practices managed by AACA any employees retained by Newco without the
prior written consent of the Senior Physicians during the time that they are
employed by Newco.
SECTION 8. COVENANTS OF THE BM&M PHYSICIANS AND BM&M.
-----------------------------------------
8.1 ACCESS AND INFORMATION. The BM&M Physicians and BM&M shall give to
----------------------
AACA and AACAF and their lenders, underwriters, investors and representatives
reasonable access during normal business hours to their respective premises,
books, accounts and records and all other relevant documents and will make
available, and use their respective best efforts to cause their respective
independent accountants to make available, copies of all such
documents and information with respect to the business and properties of BM&M as
representatives of AACA may from time to time request, including, without
limitation, the working papers used to prepare the Financial Statements, all in
such manner as not unduly to disrupt their normal business activities. The
foregoing shall be subject to federal and state laws regarding the privacy of
medical records.
8.2 CONDUCT OF BUSINESS. If there shall be a lapse of time between the
-------------------
date hereof and the Effective Time, except as otherwise approved by AACAF, BM&M
shall conduct its business only in the ordinary course consistent with past
practice and in such a manner that representations and warranties contained in
Section 4
24
<PAGE>
shall be true and correct at and as of the Closing (except for changes
contemplated, permitted or required by this Agreement) and so that the
conditions to be satisfied by BM&M and the BM&M Physicians at the Closing shall
have been satisfied. BM&M shall, consistent with conducting its business in
accordance with reasonable business judgment, preserve its business intact; use
its best efforts to keep available to BM&M the services of its present employees
(except those dismissed by BM&M or those who voluntarily discontinue their
employment); and preserve for AACAF the goodwill of the suppliers, patients and
others having business relations with BM&M.
8.3 BEST EFFORTS TO SECURE CONSENTS AND APPROVALS. The BM&M Physicians
---------------------------------------------
and BM&M shall take the necessary corporate or other action and shall each use
its or their, as the case may be, best efforts to secure before the Closing all
necessary consents, approvals and amendments of agreements required of the BM&M
Physicians and BM&M to carry out the transactions contemplated by this Agreement
and to satisfy the conditions precedent specified herein. Each BM&M Physician
will use his best efforts to have all BM&M Physician Contracts of such BM&M
Physician continue in effect with respect to such BM&M Physician as an employee
of the Surviving Corporation following the Effective Time.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BM&M PHYSICIANS AND
------------------------------------------------------------------
BM&M.
- ----
All obligations of the BM&M Physicians and BM&M which are to be discharged
under this Agreement at the Closing are subject to the performance, at or prior
to the Closing, of all covenants and agreements contained herein which are to be
performed by AACA at or prior to the Closing and to the fulfillment at, or prior
to, the Closing, of each of the following conditions (unless expressly waived in
writing by the BM&M Physicians at any time at or prior to the Closing).
9.1 REPRESENTATIONS AND WARRANTIES TRUE. All of the representations and
-----------------------------------
warranties made by AACA, AACAF and VIVRA contained in Sections 5 and 6,
respectively, of this Agreement shall be true as of the date of this Agreement,
and shall be true at and as of the date of Closing in all material respects;
AACA and AACAF shall have performed and complied with in all material respects
all covenants and conditions required by this Agreement to be performed or
complied with by AACA and AACAF prior to or at the Closing; and the BM&M
Physicians shall have been furnished with a certificate of the President or any
Vice President of AACA and of VIVRA dated as of the Closing, certifying to the
truth of such representations and warranties as of the Closing and to the
fulfillment of such covenants and conditions.
9.2 AUTHORITY. All action required to be taken by or on the part of
---------
AACA, AACAF or VIVRA to authorize the execution, delivery and performance of
this Agreement by AACA, AACAF and
25
<PAGE>
VIVRA and the consummation of the transactions contemplated hereby shall have
been duly and validly taken by the Board of Directors of AACA, AACAF and of
VIVRA.
9.3 NO OBSTRUCTIVE PROCEEDING. No action or proceedings shall have been
-------------------------
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against the BM&M
Physicians which seek to, or would, render it unlawful as of the Closing to
effect the transactions contemplated hereby, and no such action shall seek
damages in a material amount by reason of the transactions contemplated hereby.
Also, no substantive legal objection to the transactions contemplated by this
Agreement shall have been received from or threatened by any governmental
department or agency.
9.4 NO MATERIAL ADVERSE CHANGE. As of the date of this Agreement,
--------------------------
there shall have been no material adverse changes in the business or assets of
AACA or AACAF.
9.5 MASTER MERGER AGREEMENT. All of the conditions precedent to the
-----------------------
obligations of the parties set forth in the Master Merger Agreement shall have
been met or waived, as the case maybe, by all parties to the Master Merger
Agreement except as otherwise specifically provided therein.
9.6 CONTINUITY OF REGISTRATION. The Registration Statement covering the
--------------------------
sale of the VIVRA Common Stock to the BM&M Physicians shall remain effective and
shall not be subject to a stop order or proceeding seeking a stop order, and the
VIVRA Common Stock shall have been authorized for listing on the New York Stock
Exchange upon official notice of issuance.
SECTION 10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AACAF.
------------------------------------------------
All obligations of VIVRA, AACA and AACAF which are to be discharged under
this Agreement at the Closing are subject to the performance, at or prior to the
Closing, of all covenants and agreements contained herein which are to be
performed by the BM&M Physicians and BM&M at or prior to the Closing and to the
fulfillment at or prior to the Closing of each of the following conditions
(unless expressly waived in writing by AACA at any time at or prior to the
Closing):
10.1 REPRESENTATIONS AND WARRANTIES TRUE. All of the representations and
-----------------------------------
warranties of the BM&M Physicians and BM&M contained in Section 4 of this
Agreement shall be true as of the date of this Agreement, and shall be true at
and as of the date of Closing in all material respects; the BM&M Physicians and
BM&M shall have performed or complied with in all material respects all
covenants and conditions required by this Agreement to be performed or complied
with by the BM&M Physicians and BM&M prior
26
<PAGE>
to or at the Closing; and AACA shall be furnished with a certificate of the BM&M
Physicians, dated the Closing, certifying to the truth of such representations
and warranties as of the time of the Closing and to the fulfillment of such
covenants and conditions.
10.2 NO OBSTRUCTIVE PROCEEDING. No action or proceedings shall have been
-------------------------
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against AACA or its
affiliates which seeks to, or would, render it unlawful as of the Closing to
effect the Merger in accordance with the terms hereof, and no such action shall
seek damages in a material amount by reason of the transactions contemplated
hereby. Also, no substantive legal objection to the transactions contemplated
by this Agreement shall have been received from or threatened by any
governmental department or agency.
10.3 CONSENTS AND APPROVALS. Each of the parties to any BM&M Contract
----------------------
under which the Merger contemplated hereby would constitute or result in a
default or acceleration of obligations shall have given such consent as may be
necessary to permit the consummation of the Merger contemplated hereby without
constituting or resulting in a default or acceleration under such agreement, and
any consents required from any public or regulatory agency or organization
having jurisdiction shall have been given.
10.4 NO ADVERSE CHANGE. As of the date of this Agreement, no event
-----------------
shall have occurred or have been threatened which has or would have a material
and adverse effect upon BM&M, and BM&M shall not have sustained any loss or
damage to its assets or property, whether or not insured, or union activity that
affects materially and adversely its ability to conduct its business.
10.5 RELEASE OF ENCUMBRANCES. All Encumbrances shall have been released
-----------------------
at or prior to the Closing.
10.6 LICENSES. AACA shall not have learned that there is any material
--------
impediment beyond its control to the Surviving Corporation's ability to obtain
all business licenses to operate the Business. The BM&M Physicians shall not
have learned that there is any material impediment beyond their control to their
ability to transfer or assign their licenses to practice medicine to, and to
practice medicine through, the Surviving Corporation.
10.7 POOLING. Having exercised its best efforts to comply with the SEC
-------
rules and regulations governing eligibility for pooling of interests accounting
treatment, AACA shall be satisfied that the business combination to be effected
by the Merger may be accounted for as a pooling of interests under generally
accepted accounting principles and all applicable SEC rules and regulations.
27
<PAGE>
10.8 MASTER MERGER AGREEMENT. All of the conditions precedent to the
-----------------------
obligations of the parties set forth in the Master Merger Agreement shall have
been met or waived by all parties to the Master Merger Agreement except as
otherwise specifically provided therein.
10.9 CONTINUITY OF REGISTRATION. The Registration Statement covering the
--------------------------
sale of the VIVRA Common Stock to the BM&M Physicians shall remain effective and
shall not be subject to a stop order or proceeding seeking a stop order, and the
VIVRA Common Stock shall have been authorized for listing on the New York Stock
Exchange upon official notice of issuance.
SECTION 11. TERMINATION.
-----------
AACAF on the one hand, or BM&M and the BM&M Physicians on the other hand,
by giving written notice to the other at any time on or prior to the Closing
Date (unless extended by mutual agreement of the parties) may terminate this
Agreement if (a) a material default shall be made by the other in the observance
of or in the due and timely performance of the covenants and agreements herein
contained, which default cannot be cured on or prior to the Closing, or (b) if,
as of the Closing, the conditions precedent to the performance of the
obligations of the one, including those specified in the Master Merger
Agreement, shall not have been fulfilled and shall not have been waived by such
party.
SECTION 12. INDEMNIFICATION.
---------------
12.1 INDEMNITY BY THE BM&M PHYSICIANS. The BM&M Physicians, jointly and
--------------------------------
severally (except as otherwise provided in Section 12.3 below), shall indemnify,
defend and hold harmless AACA and each affiliate of AACA (all of whom for
purposes of this Section 12 shall be considered to be AACA) from and against the
following, any one of which shall be deemed to be an "AACA indemnifiable loss"
under this Agreement:
(a) all Undisclosed Liabilities;
(b) any and all losses, damages, costs or deficiencies resulting from
any and all misrepresentations or breaches of warranty or failures
to perform agreements or undertakings by the BM&M Physicians or BM&M
contained in or made pursuant to this Agreement or in other
agreements executed by the BM&M Physicians or BM&M in connection
with this Agreement; and
(c) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including, without
limitation, attorneys' fees, interest, penalties and amounts paid in
settlement of
28
<PAGE>
any such claim) incident to any of the foregoing.
12.2 UNDISCLOSED LIABILITIES. For purposes of Section 12.1 hereof, the
-----------------------
term "Undisclosed Liabilities" shall mean:
(i) any liability for any sales tax (or any interest or
penalties with respect thereto) payable as a result of the consummation of the
transactions contemplated hereby that is not reflected in Exhibit 4.14;
------------
(ii) except as stated in Exhibit 4.14 hereto, any liability
------------
under any employee benefit or welfare plan or regarding withholding taxes owed
to or with respect to any employee or independent contractor of BM&M accruing
prior to the date of Closing;
(iii) liabilities and obligations of the BM&M Physicians or
BM&M for any breach or violation, as of the date of Closing, of any BM&M
Physician Contracts or BM&M Contracts;
(iv) liabilities and obligations of the BM&M Physicians or
BM&M for environmental or ecological matters or conditions existing at or before
the Closing, including those relating to the use, transport, disposal, handling
or storage of hazardous or toxic materials, pollutants, contaminants, petroleum
products, or waste (including, without limitation, medical waste);
(v) any liability or obligation of the BM&M Physicians or BM&M
accruing at or before the date of Closing for violations of law;
(vi) any liability of the BM&M Physicians or BM&M with
respect to a breach of this Agreement;
(vii) any liability or obligation to Medicare, Medicaid, Blue
Cross/Blue Shield (or any other third party payer) as a result of recapture of
amounts paid by any such payer to the BM&M Physicians or BM&M or any
overpayments made by such payer to the BM&M Physicians or BM&M or any
disallowance of any claim of the BM&M Physicians or BM&M;
(viii) any tort liability, products liability or malpractice
liability of the BM&M Physicians or BM&M accruing at or before the date of
Closing;
(ix) liabilities and obligations of the BM&M Physicians or
BM&M incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, legal and accounting fees;
(x) any liability of BM&M which is not reflected in the BM&M
Financial Statements referred to in Section 4.7
29
<PAGE>
hereof or in Exhibit 4.14 hereto; and
------------
(xi) any liability whatsoever, of BM&M, the BM&M Physicians,
ACCAF, VIVRA, or otherwise incurred in connection with the Qualified Plans
referred to in Section 10.9 hereof either before or after the Effective Time.
12.3 JOINT AND SEVERAL LIABILITY OF BM&M PHYSICIANS. The BM&M Physicians
----------------------------------------------
shall be jointly and severally liable for all ACCA indemnifiable losses except
for any ACCA indemnifiable losses arising from or connected with (i) each BM&M
Physician's malpractice, (ii) each BM&M Physician's violations of law or, (iii)
each BM&M Physician's violation of any BM&M Physician Contract, for which each
BM&M Physician shall remain severally liable only.
12.4 PAYMENT FOR ACCA INDEMNIFIABLE LOSSES. Subject to the materiality
-------------------------------------
standard set forth in Section 12.7 hereof, the BM&M Physicians shall pay to ACCA
or any affiliate of ACCA, as the case may be, all amounts owed to ACCA pursuant
to Section 12.1 within thirty (30) days after written demand therefor. In the
event that any third person, including, without limitation, any governmental
taxing authority, shall assert any claim or action against ACCA or an affiliate
of ACCA which, if successful, might result in an ACCA indemnifiable loss, ACCA
shall promptly notify the BM&M Physicians, in writing, of such claim or action,
and at the BM&M Physicians' option, they may, at their sole expense, assume
control over the defense of such claim or action, but in any event ACCA (and its
affiliate, as the case may be) shall have the right to participate in the
defense of any such claim or action. If, after notice thereof, the BM&M
Physicians shall not assume the defense of, or if after so assuming such defense
they shall fail to continue to defend, any such claim or action, ACCA (and its
affiliate, as the case may be) may defend any such claim or action and ACCA (and
its affiliate, as the case may be) may then settle or compromise such claim or
action on terms it deems reasonable. The BM&M Physicians shall promptly satisfy
and pay any final judgment rendered with respect to any
such claim or action or any compromise or settlement thereof and shall pay the
reasonable expenses, legal or otherwise of ACCA (and its affiliate, as the case
may be) in the defense of any such claim or action. If the BM&M Physicians do
not pay any such ACCA indemnifiable loss pursuant to any such judgment,
settlement or compromise within thirty (30) days after written demand, ACCA may
pay the same and set off the amount paid against any payments due the BM&M
Physicians. If ACCA (or an affiliate of ACCA) suffers an ACCA indemnifiable
loss directly (not as a result of a third party claim or action), ACCA will
first recover such ACCA indemnifiable loss pursuant to the terms of the Escrow
Agreement, then, if the remaining Escrowed Shares are insufficient to cover the
ACCA indemnifiable loss or if the Escrow Agreement has expired, ACCA may set off
the amount of the same against payments due the BM&M Physicians or demand
payment therefor from the BM&M Physicians.
30
<PAGE>
For purposes hereof, an "affiliate" of ACCA shall mean any person or entity
directly or indirectly controlling, controlled by, or under common control with
ACCA. Notwithstanding the foregoing, any AACA indemnifiable loss which is not
considered to be a specific indemnifiable loss consistent with the requirements
for pooling of interest accounting treatment may only be recovered during the
term of and according to the provisions of the Escrow Agreement.
12.5 INDEMNITY BY ACCA. ACCA shall indemnify, defend and hold harmless
-----------------
the BM&M Physicians from and against the following, any one of which shall be
defined to be a "BM&M indemnifiable loss" under this Agreement:
(a) any and all losses, damages, costs or deficiencies resulting
from any and all misrepresentations or breaches of warranty or failures to
perform agreements or undertakings by AACA or ACCAF contained in or made
pursuant to this Agreement or in other agreements executed by AACA or ACCAF in
connection with this Agreement;
(b) any and all losses, damages, costs or deficiencies incurred by
the BM&M Physicians arising from any failure by the Surviving Corporation to
satisfy any obligation under the BM&M Contracts to be performed by the Surviving
Corporation by their stated terms after the Closing Date; and
(c) any and all actions, suits, proceedings, claims, demands
assessments, judgments, costs and expenses (including, without limitation,
attorneys' fees, interest, penalties and amounts paid in settlement of any such
claim) relating to any of the foregoing.
12.6 PAYMENT FOR BM&M INDEMNIFIABLE LOSSES. Subject to the materiality
-------------------------------------
standard set forth in Section 12.7 hereof, ACCA, its successors and assigns
shall pay the BM&M Physicians all amounts owed to them pursuant to Section 12.5
within thirty (30) days after written demand therefor. In the event that any
third person shall assert any claim or action against the BM&M Physicians which,
if successful, might result in a claim for a BM&M indemnifiable loss, the BM&M
Physicians shall promptly notify ACCA in writing of such claim or action, and at
ACCA's option, ACCA may, at its sole expense, assume control over the defense of
such claim or action, but in any event the BM&M Physicians shall have the right
to participate in the defense of any such claim or action. If after notice
thereof, ACCA shall not assume the defense of, or if after so assuming it fails
to continue to defend, any such claim or action, the BM&M Physicians may defend
any such claim or action and the BM&M Physicians may then settle or compromise
such claim or action on terms they deem reasonable. ACCA shall promptly satisfy
any final judgment rendered with respect to any such claim or action or any
compromise or settlement thereof and shall pay the reasonable expenses, legal or
31
<PAGE>
otherwise, of the BM&M Physicians in the defense of any such claim or action.
If the BM&M Physicians suffer a BM&M indemnifiable loss directly (not as a
result of a third party claim or action), the BM&M Physicians may set off the
amount of the same against payments due ACCA or demand payment therefor from
ACCA.
12.7 MATERIALITY. BM&M's obligation to indemnify ACCA and ACCA's
-----------
obligation to indemnify BM&M set forth in this Section 12 shall be subject to a
materiality standard of $50,000, such that all indemnifiable losses shall be
accumulated and payable in full once the respective total of ACCA indemnifiable
losses or BM&M indemnifiable losses, as the case may be, equals or exceeds
$50,000 on a cumulative basis.
12.8 REMEDIES CUMULATIVE. The remedies provided herein shall be
-------------------
cumulative and shall not preclude any party from asserting any other rights or
seeking any other remedies to which such party is entitled by law.
12.9 SURVIVAL. The representations and warranties of the
--------
parties set forth in this Agreement shall expire one (1) year after the
Effective Time.
SECTION 13. MISCELLANEOUS.
-------------
13.1 EXPENSES. All expenses of the preparation of this Agreement and of
--------
the other agreements and transactions contemplated hereby, including, without
limitation, counsel fees, accounting fees, investment advisor's fees and
disbursements, shall be borne by the BM&M Physicians in the case of BM&M or any
of the BM&M Physicians and by AACA in the case of AACA and its affiliates.
13.2 NOTICES. All notices, demands and other communications hereunder
-------
shall be written and shall be deemed to have been duly given if delivered in
person or mailed by Federal Express (or other national air courier service),
charges prepaid, to the address set forth below:
To AACA, AACAF or Asthma & Allergy CareAmerica, Inc.
VIVRA: 8601 Dunwoody Place, Suite 440
Atlanta, Georgia 30350
Attention: Robert Prosek, President
with a copy to: Paul L. Hudson, Jr., Esq.
Parker, Hudson, Rainer & Dobbs
1500 Marquis Two Tower
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
32
<PAGE>
To BM&M or the Frank R. Martell, M.D.
BM&M Physicians: 120 Paloma Drive
Coral Gables, Florida 33143-6545
Philip C. Mirmelli, M.D.
6500 N. Bay
Miami Beach, Florida 33141
with a copy to: Marvin C. Gutter, Esq.
Gutter, Josepher, Ruffin & Sheehy
Trade Centre South, Suite 900,
100 West Cypress Creek Road
Ft. Lauderdale, Florida 33309
and a copy to: Charles Ruffner, Esq.
601 Brickell Key Drive
Suite 507
Miami, Florida 33131
or to such other address as AACA or the BM&M Physicians may designate by notice
to the other. Notices delivered in person shall be deemed delivered on the date
of delivery and notices sent via air courier service, as aforesaid, shall be
deemed delivered on the date of delivery as indicated by the records of the
courier service. Rejection or other refusal to accept or inability to deliver
because of a changed address of which no notice was given shall be deemed to be
a receipt of the notice, request or other communication. Any notice, request or
other communication required or permitted to be given by any party may be given
by such party's legal counsel.
13.3 ENTIRE AGREEMENT. This Agreement and the Exhibits, and the other
----------------
agreements and schedules and documents delivered pursuant hereto constitute the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersede all prior and contemporaneous agreements, understandings,
letters of intent negotiations and discussions, whether written or oral, of the
parties, and there are no representations, warranties or other agreements
between the parties in connection with the subject matter hereof, except as
specifically set forth herein. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the parties to be bound
thereby.
13.4 GOVERNING LAW; TAX REPORTING; ACCOUNTING TREATMENT. The validity
--------------------------------------------------
and construction of this Agreement shall be governed by the laws of the State of
Florida. With respect to tax reporting, the parties agree and intend that the
Merger will be treated for United States income tax purposes as a tax-free
reorganization described in the Internal Revenue Code of 1986, as amended (the
"Code"), Section 368, and all of the parties shall report the Merger in
accordance with the relevant tax regulations. In the event the Merger fails to
so qualify, the parties agree
33
<PAGE>
that VIVRA is acquiring the stock of BM&M. With respect to accounting
treatment, any increase or decrease in tax required by Section 481 of the Code
to place the accounts of BM&M on the accrual method of accounting shall be taken
into account by AACA and VIVRA and not by BM&M or the BM&M Physicians. The
parties agree and acknowledge that no election will be made for the 1996 year
under Section 338 of the Code (and no attempt otherwise to "step up" the basis
of the assets received by AACA in the Merger will be made) unless BM&M and/or
the BM&M Physicians are in breach of their representation and warranty given in
Section 4.27 hereof.
13.5 ARBITRATION.
-----------
13.5.1 The parties will attempt through good faith negotiations to
resolve their disputes regarding this Agreement. The term "disputes" includes,
without limitation, any disagreements between the parties concerning the
existence, formation, interpretation and implementation of this Agreement. If
the parties are to resolve their disputes by negotiation, either party may
commence arbitration by sending a written notice of arbitration to the other
party. The notice will state the dispute with particularity.
13.5.2 There shall be three arbitrators. If the parties fail to
select mutually acceptable arbitrators within ten (10) days after the notice of
arbitration, a tribunal of arbitrators (one selected by BM&M, one selected by
AACA, and one who shall be appointed by the first two arbitrators), who shall
be located in Ft. Lauderdale, Florida, shall be appointed as soon as possible on
the request of either party. If any party fails to select an arbitrator within
ten (10) days after demand, such arbitrator shall be appointed by the American
Arbitration Association. The fee payable to the arbitrators shall be based upon
the then current fee schedule of the American Arbitration Association.
13.5.3 The parties shall have reasonable rights of discovery.
13.5.4 Except as set forth in this Section, the tribunal shall
conduct the arbitration according to the Commercial Arbitration Rules of the
American Arbitration Association. Arbitration shall take place in Ft.
Lauderdale, Florida, unless the parties otherwise agree. The tribunal shall
base the decision on the express language of this Agreement. Within ten (10)
days after the tribunal is appointed, or as soon thereafter as shall be
reasonably practicable, the tribunal will conduct a hearing on the dispute.
Each party may make written submissions to the tribunal, and each party shall
have a reasonable opportunity for rebuttal, but no longer than ten (10) days.
As soon as reasonably practicable, but not later than ten (10) days after the
hearing
34
<PAGE>
is completed, the tribunal shall arrive at a final decision, which shall
be reduced to writing, signed by the tribunal and mailed to each party and its
legal counsel.
13.5.5 All decisions of the tribunal shall be final, and binding on
all parties, and (except as provided below) shall constitute the only method of
resolving disputes. Judgment may be entered upon the decision in accordance
with applicable law in any court having jurisdiction.
13.5.6 This arbitration section and all decisions of the tribunal
shall be specifically enforceable in a court of law, or in the arbitral
tribunal.
13.6 SECTION AND EXHIBIT HEADINGS. The Section and Exhibit headings are
----------------------------
for reference only and shall not limit or control the meaning of any provisions
of this Agreement.
13.7 WAIVER. No delay or omission on the part of any party hereto in
------
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.
13.8 NATURE AND SURVIVAL OF REPRESENTATIONS. All statements contained in
--------------------------------------
any certificate delivered by or on behalf of a party to this Agreement in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties made by such party hereunder. The covenants,
representations and warranties made by the parties each to the other in this
Agreement or pursuant hereto shall survive the Effective Time as set forth in
Section 12.8 of this Agreement.
13.9 EXHIBITS. All Exhibits, schedules and documents referred to in, or
--------
attached to, this Agreement are integral parts of this Agreement as if fully set
forth herein and all statements appearing therein shall be deemed to be
representations. All items disclosed hereunder shall be deemed disclosed only
in connection with the specific representation to which they are explicitly
referenced.
13.10 AMENDMENTS. This Agreement may be amended, but only in writing,
----------
signed by the parties hereto.
13.11 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument. Any signature page to this
Agreement may be witnessed by a telecopy or other facsimile of any original
signature page and any signature page of any counterpart hereof may be appended
to any other counterpart hereof to form a completely executed counterpart
hereof.
35
<PAGE>
13.12 ATTORNEYS' FEES. In the event that a suit, action, arbitration, or
---------------
other proceeding of any nature whatsoever, including, without limitation, any
proceeding under the U.S. Bankruptcy Code and involving issues peculiar to
federal bankruptcy law, any action seeking a declaration of rights or any action
for rescission, is instituted to interpret or enforce this Agreement or any
provision of this Agreement, each party shall be and remain liable for its
attorneys', paralegals', accountants', and other experts' professional fees and
all other fees, costs, and expenses actually incurred in connection therewith.
13.13 RULES OF CONSTRUCTION. All references herein to the singular shall
---------------------
include the plural, and vice versa, and all references herein to the neuter
shall include the masculine or feminine, as the case may be, and vice versa.
When general words or terms are used herein followed by the word "including" (or
another form of the word "include") and words of particular and specific
meaning, the general words shall be construed in their widest extent, and shall
not be limited to persons or things of the same general kind or class as those
specifically mentioned in the words of particular and specific meaning. All
parties have participated in the drafting of this Agreement. No provision of
this Agreement shall be construed against or interpreted to the disadvantage of
a party by reason of such party having or being deemed to have drafted,
structured or dictated such provisions.
13.14 TIME. Time is of the essence of this Agreement.
----
13.15 FURTHER ASSURANCES. Following the Closing, BM&M Physicians and AACA
------------------
will, at the request of the other, execute and deliver such other instruments or
assignment, transfer and conveyance and take such other actions as a party may
reasonably request to more effectively effect the Merger and other transactions
contemplated by this Agreement. To the extent that BM&M's rights under any BM&M
Contract, by virtue of the Merger, require the consent of another person which
consent has not been obtained prior to, or concurrent with, the execution
hereof, BM&M Physicians will cooperate with AACA and the Surviving Corporation
in any reasonable arrangement that is designed to provide for AACA and the
Surviving Corporation the benefit of such asset.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
ASTHMA & ALLERGY CAREAMERICA, INC.,
a Delaware corporation ("AACA")
By: __________________________________
Title: ____________________________
36
<PAGE>
ASTHMA & ALLERGY CAREAMERICA OF FLORIDA, INC., a
Florida corporation ("AACAF")
By: __________________________________
Title: ____________________________
VIVRA INCORPORATED, a Delaware
corporation ("VIVRA")
By: __________________________________
Title: ____________________________
BRENNAN, MARTELL AND MIRMELLI, M.D.'S, P.A., a
Florida professional service corporation ("BM&M")
By: __________________________________
Title: ____________________________
_______________________________________
FRANK R. MARTELL, M.D., an
individual resident of Florida
("Martell")
_______________________________________
PHILIP C. MIRMELLI, M.D., an individual resident
of Florida ("Mirmelli")
37
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into
effective as of April 28, 1996, by and among ASTHMA & ALLERGY CAREAMERICA, INC.,
a Delaware corporation ("AACA"), its parent company, VIVRA INCORPORATED, a
Delaware corporation ("VIVRA"), AACA's newly formed, wholly owned subsidiary
AACA - AAI ACQUISITION, INC., a Florida corporation ("AACA-AAI"); ALLERGY &
ASTHMA INSTITUTE OF SOUTH FLORIDA, P.A., a Florida professional association
(with such entity, existing either as a Florida professional association or as
Allergy & Asthma Institute of South Florida, Inc., a Florida business
corporation following the amendment of its Articles of Incorporation as
contemplated hereinafter, being referred to as "AAI"), and AAI's shareholders,
FRANK R. MARTELL, M.D., ("Martell") and PHILIP C. MIRMELLI, M.D. ("Mirmelli")
(Martell and Mirmelli being sometimes referred to herein as the "AAI
Physicians").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, AAI owns and operates an allergy practice with its principal office
location located at 3661 South Miami Avenue, Miami, FL 33133 together with its
satellite locations in the South Florida area (collectively the "Business");
WHEREAS, the AAI Physicians own all of the outstanding stock of AAI;
WHEREAS, the parties desire to convert AAI to a Florida business corporation
and then to merge AACA-AAI with and into AAI, with AAI being the surviving
corporation in the merger, exchanging AAI Common Stock for VIVRA Common Stock;
WHEREAS, for federal income tax purposes, it is intended that the merger shall
qualify as a "reorganization" within the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended;
WHEREAS, for accounting purposes, it is intended that the merger shall be
accounted for as a pooling of interests;
WHEREAS, AAI and the AAI Physicians have entered into that certain Master
Merger Agreement of even date (the "Master Merger Agreement") with VIVRA, AACA,
VIVRA's newly formed wholly owned subsidiary Asthma & Allergy CareAmerica of
Florida, Inc. ("AACAF"), AAI, and Asthma & Allergy Institute of South Florida,
P.A. ("AAI"), which contemplates that AACAF will merge with and into BM&M at the
same time that AACA-
AAI merges with and into AAI;
WHEREAS, the merger of AACA-AAI with and into AAI is subject to the
simultaneous consummation of the merger of AACAF with and into BM&M; and
WHEREAS, VIVRA and AACA wish for AACA to be the sole shareholder of AAI as the
surviving corporation in the merger;
<PAGE>
NOW, THEREFORE, in consideration of these premises and the agreements
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree as follows:
SECTION 1. THE MERGER.
----------
1.1 AGREEMENT TO MERGE. On the terms, subject to the conditions, and for the
------------------
consideration hereinafter stated, the parties hereto agree that AACA-AAI shall
be merged with and into AAI, with AAI being the surviving corporation (the
"Surviving Corporation"). The merger of AACA-AAI with and into AAI (the
"Merger") shall become effective as of the "Effective Time" (as hereinafter
defined).
1.2 AMENDMENT OF AAI ARTICLES OF INCORPORATION; EFFECTIVE TIME OF MERGER. At
--------------------------------------------------------------------
or prior to the "Closing" (as hereinafter defined), AAI shall execute articles
of amendment ("Articles of Amendment") in the form attached hereto as Exhibit
-------
1.2(i) to convert AAI from a professional association to a business corporation.
- ------
Subsequently, at the Closing, AACA-AAI, on the one hand, and AAI on the other
hand, shall execute articles of merger in the form attached hereto as Exhibit
-------
1.2(ii) (the "Articles of Merger") to effect the Merger in accordance with all
- -------
appropriate legal requirements. AAI shall deliver and file such Articles of
Amendment as required by the Florida Business Corporation Act to convert AAI to
a business corporation, to be effective immediately prior to the Effective Time
(as defined below). Then, AACA-AAI, on the one hand, and AAI on the other hand,
shall deliver and file such Articles of Merger as are required by the Florida
Business Corporation Act. The Merger shall become effective upon the time and
date of filing with the Florida Secretary of State, or at such later date and
time as may be specified by mutual agreement of the parties in the Articles of
Merger (the time and date of such filing or such later time and date being
referred to herein as the "Effective Time").
1.3 PLAN OF MERGER. In accordance with the requirements of the Florida
--------------
Business Corporation Act, AACA-AAI and AAI hereby adopt the Plan of Merger set
forth as Exhibit A to the Articles of Merger (the "Plan of Merger"). If there
---------
are any inconsistencies between the provisions of the Plan of Merger and the
provisions of this Agreement, the provisions of this Agreement shall prevail.
SECTION 2. TERMS OF THE MERGER.
-------------------
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of AAI, as
-------------------------
amended, immediately prior to the consummation of the Merger shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed in accordance with law.
2.2 BYLAWS. The Bylaws of AAI immediately prior to the consummation of the
------
Merger shall be the Bylaws of the Surviving Corporation until otherwise amended
or repealed in accordance with
2
<PAGE>
law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of AAI in office
----------------------
immediately prior to the consummation of the Merger shall be the directors and
officers of the Surviving Corporation. All such directors and officers shall
hold office in accordance with the Surviving Corporation's Articles of
Incorporation, Bylaws and applicable law.
2.4 MANNER AND BASIS OF CONVERTING SHARES.
-------------------------------------
(a) At the Effective Time of the Merger, all of the issued and
outstanding shares of common stock, $1.00 par value, of AAI (the "AAI Common
Stock") prior to the Effective Time of the Merger (other than such shares held
by AAI in its treasury) shall, by virtue of the Merger and without any action by
the holder thereof, automatically be converted into the right to receive an
amount (the "Determined Amount") of the Common Stock, $ .01 par value per share,
of VIVRA ("VIVRA Common Stock"). For purposes hereof, the term "Determined
Amount" shall mean the number of shares of VIVRA Common Stock calculated by
dividing $2,100,009.00 (the "Merger Consideration"), adjusted up or down by the
amount of the "Closing Date Adjustment" (as hereinafter defined in Section
2.5(c)), by $27.75 (said price being referred to herein as the "Closing Price").
Each share of AAI Common Stock held in the treasury of AAI upon the Effective
Time of the Merger shall be cancelled, and no consideration shall be issued
therefor. The Determined Amount of VIVRA Common Stock less the number of shares
and the cash equivalent of fractional shares to be held in escrow as provided in
the Escrow Agreement shall be distributed to the AAI Physicians as set forth in
Exhibit 2.4 and Section 12.4(d) hereof. As of the Effective Time of the Merger,
- -----------
all such shares of AAI Common Stock issued and outstanding immediately prior to
the Effective Time shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist. Fractional shares may be paid
in cash.
(b) At the Effective Time of the Merger, each share of common stock,
$.01 par value per share, of AACA-AAI shall be converted into one share of
common stock, $1.00 par value per share, of the Surviving Corporation (the
"Surviving Corporation Common Stock").
(c) Except as may be otherwise provided herein, in the event that
subsequent to the date of execution of this Agreement but prior to the Effective
Time of the Merger, the outstanding shares of VIVRA Common Stock or AAI Common
Stock shall have been increased, decreased, changed into or exchanged for a
different number or kind of shares through a recapitalization, reclassification,
stock dividend, stock split or reverse stock split, then an appropriate and
proportionate adjustment shall be made in the VIVRA Common Stock to be delivered
hereunder.
(d) Certificates which represented shares of AAI Common Stock
outstanding immediately prior to the Effective Time and converted
3
<PAGE>
pursuant to this Agreement shall be deemed to represent the Determined Amount of
shares of VIVRA into which such shares have become converted and shall be
exchangeable by the holder thereof for new certificates representing the shares
of VIVRA into which such shares have been converted. As soon as reasonably
practicable after the Effective Time, VIVRA shall deliver such new share
certificates to the AAI Physicians in exchange for the AAI Physicians' share
certificates representing such converted shares. For each of the AAI
Physicians, the Determined Amount of the VIVRA Common Stock shall be represented
by two (2) share certificates: (i) one, which shall be deposited (together with
an executed stock power) with the Escrow Agent as provided in the Escrow
Agreement, representing such AAI Physician's pro rata portion of the escrowed
--- ----
shares; and (ii) one, which shall be delivered directly to each AAI Physician,
representing his pro rata portion of the Determined Amount less his pro rata
--- ---- --- ----
portion of the escrowed shares. After the Effective Time, there shall be no
transfers on the stock transfer books of AAI of shares of AAI Common Stock which
were issued and outstanding immediately prior to the Effective Time and
converted pursuant to this Agreement.
2.5 MERGER CONSIDERATION ADJUSTMENT.
-------------------------------
(a) The Merger Consideration deliverable as a number of shares of VIVRA
Common Stock hereunder is based on the assumption that AAI's "Net Assets" (as
hereinafter defined) as of the Effective Time shall be at least $169,134.00 (the
"Agreed Amount"). In the event that AAI's Net Assets as of the Effective Time
shall exceed the Agreed Amount plus $95,000, then the AAI Physicians, in the
same percentages as set forth in Exhibit 2.4, shall be entitled to receive
-----------
additional shares of VIVRA Common Stock in an amount equal to that number of
shares determined by dividing the excess of AAI's Net Assets over the
Agreed Amount by the Closing Price, and to the extent that AAI's Net Assets as
of the Effective Time shall be more than $50,000 less than the Agreed Amount,
then VIVRA shall be entitled to receive from the AAI Physicians a return of
shares of VIVRA Common Stock in an amount equal to that number of shares
determined by dividing such deficit by the Closing Price with such return to be
effected by each AAI Physician by a transfer to VIVRA as provided under the
Escrow Agreement.
(b) For purposes hereof, the term "Net Assets" shall mean the sum of (i)
the value of AAI's "Accounts Receivable" (as hereinafter defined) as of the
Effective Time, plus (ii) the value of AAI's fixed assets which, for purposes of
this calculation, shall be deemed to be $47,590.00, plus (iii) cash and cash
equivalents (including Federal income and Florida excise tax refunds applied for
prior to the Closing Date but unpaid as of the Effective Time, but solely to the
extent collected) minus the amount of all "Liabilities" (as hereinafter defined)
-----
of AAI which have not been paid as of the Effective Time. For purposes hereof,
the term "Accounts Receivable" shall mean (x) the sum of all receivables AAI
posted in accordance with historical
4
<PAGE>
practices with respect to the operations of the Business prior to the Effective
Time arising from the rendering of services to patients up to the Effective
Time, including, without limitation, those from private pay patients, private
insurance payers, third party payers or from governmental programs, but not
including accounts previously written off by AAI, and not including any accounts
receivable for which there
5
<PAGE>
is an unposted cash receipt as of the Effective Time, (y) multiplied times fifty
percent (50%), which represents an agreed-upon allowance for bad debts and
contractual allowances and payer discounts, (z) multiplied times sixty percent
(60%), which represents an agreed-upon after-tax realization rate. For purposes
hereof, the term "Liabilities" shall mean all liabilities with respect to the
operation of the Business and including, without limitation, all liabilities of
AAI as of the Effective Time for accrued sick leave and vacation pay of
employees of AAI as of the Effective Time and including all liabilities for
supplies, inventory and other goods ordered by AAI prior to the Effective Time
but not paid for as of the Effective Time, but not including liabilities
accruing in the ordinary course of business after the Effective Time under the
contracts and leases listed on Exhibit 2.5.
-----------
(c) For purposes of establishing the Determined Amount on the Closing
Date, the Merger Consideration shall be adjusted initially on or prior to the
Closing Date using AAI's pro forma April 30, 1996 balance sheet (the "Interim
--- -----
Balance Sheet"). Such initial calculation shall be set forth on a schedule
delivered by the AAI Physicians to VIVRA or AACA-AAI together with a copy of the
Interim Balance Sheet not less than 2 days prior to the Closing. Such initial
adjustment shall be deemed to be the "Closing Date Adjustment."
(d) Within ninety (90) days after the Effective Time (or as soon
thereafter as possible), the parties shall make final adjustments to the Merger
Consideration (the "Post-Closing Adjustments"). The Surviving Corporation shall
furnish to the AAI Physicians, within sixty (60) days after the Effective Time,
a balance sheet of AAI with respect to the Business as of the close of business
at the Effective Time (the "Closing Balance Sheet") and a statement of the
Surviving Corporation's proposed Post-Closing Adjustments. The Closing Balance
Sheet will be used to determine any final adjustments to the Merger
Consideration. Should the AAI Physicians dispute any of the Post-Closing
Adjustments proposed by the Surviving Corporation or the accuracy of the Closing
Balance Sheet, the AAI Physicians shall promptly (and in no event later than ten
(10) days after receipt of the Closing Balance Sheet and the Surviving
Corporation's proposed Post-Closing Adjustments) advise the Surviving
Corporation in writing. If after thirty (30) days after delivery of the Closing
Balance Sheet, the Surviving Corporation and the AAI Physicians are unable to
agree on the amount of the Post-Closing Adjustments, the AAI Physicians and the
Surviving Corporation shall engage Ernst & Young, Certified Public Accountants
(the "Accountants") to review the Closing Balance Sheet and the proposed
Post-Closing Adjustments and to determine the amount of Post-Closing
Adjustments, such determination to be made as soon as practicable. In making
such review and determination, the Accountants shall utilize the terms and
provisions of this Agreement. The decision of the Accountants shall be binding
on both the AAI Physicians and the Surviving Corporation. They shall pay the
reasonable fees and expenses of the engagement of the Accountants.
6
<PAGE>
(e) If any further adjustments are required in the Determined Amount
consideration by virtue of the foregoing provisions, the adjusted number of
shares shall be delivered to the party entitled to them or added to the amount
to be transferred to VIVRA under the Escrow Agreement, as the case may be,
within ten (10) days after the adjustments are determined pursuant to the
foregoing provisions.
2.6 HOLDING PERIOD WITH RESPECT TO POOLING. The AAI Physicians will hold
--------------------------------------
their shares of VIVRA Common Stock for the required period from the date of
issuance until July 15, 1996 or until the date on which the combined financial
statements of AACA and AAI are reported, if it should occur earlier, in keeping
with the intent of the parties for AACA to account for the Merger as a pooling
of interests.
2.7 PRESENT INTENTION NOT TO SELL. The AAI Physicians agree that they have
-----------------------------
no present intention to sell the VIVRA Common Stock in a manner that would cause
the Merger to fail to qualify as a reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended.
SECTION 3. CLOSING.
-------
3.1 CLOSING AND CLOSING DATE. The closing (the "Closing") of the Merger and
------------------------
the execution and delivery of the Articles of Merger and the agreements and
documents contemplated herein shall take place on or before April 28, 1996, at
10:00 a.m. E.D.T., at the offices of Akerman, Senterfitt & Eidson, 28th Floor,
SunTrust International Center, One Southeast Third Avenue, Miami, Florida,
33131, or at such other place and time as may be deemed appropriate by the
parties hereto. At or before the Closing, AAI shall execute the Articles of
Amendment and AAI and AACA-AAI shall execute and deliver the Articles of Merger,
and thereafter cause them to be filed as provided in Section 1.2 hereof.
3.2 ACTION BY AACA AND AACA-AAI. Upon the terms and subject to the
---------------------------
conditions herein contained, at the Closing on the Closing Date, AACA will
deliver to the AAI Physicians the following:
(i) The certificates referred to in Section 9.1 hereof;
(ii) The opinion of counsel for AACA in form and substance satisfactory
to AAI and the AAI Physicians; and
(iii) Resolutions of the Board of Directors of AACA, VIVRA and of
AACA-AAI certified by an appropriate officer, authorizing the execution,
delivery and performance of this Agreement and the other agreements to be
delivered by AACA and AACA-AAI in connection with the Closing hereunder.
3.3 ACTION BY AAI AND THE AAI PHYSICIANS. Upon the terms and subject to the
------------------------------------
conditions herein contained, at the Closing on the Closing Date, the AAI
Physicians and AAI will deliver to VIVRA, AACA
7
<PAGE>
and AACA-AAI the following:
(i) The certificate referred to in Section 10.1 hereof;
(ii) The opinion of counsel for the AAI Physicians and AAI in form and
substance satisfactory to AACA;
(iii) Resolutions of the shareholders and the Board of Directors of AAI
certified by an appropriate officer, authorizing the execution, delivery
and performance of this Agreement, the Amendment of the Articles of
Incorporation, the Articles of Merger and the other agreements to be
delivered by AAI in connection with the Closing hereunder; and
(iv) The schedule showing the Closing Date Adjustment referred to in Section
2.5(c) hereof.
3.4 ACTION BY ALL PARTIES. Upon the terms and subject to the conditions
---------------------
herein contained, at the Closing on the Closing Date, the parties will, as
appropriate, execute and deliver to each other the following:
(i) the "Noncompetition Agreement" among Martell, Mirmelli, AACA and the
Surviving Corporation in substantially the form attached hereto as
Exhibit 3.4(i); and
--------------
(ii) the "Escrow Agreement" between the AAI Physicians and VIVRA in
substantially the form attached hereto as Exhibit 3.4(ii).
---------------
3.5 AUDIT. AACA shall have the right, either before or after the Closing, to
-----
cause its accounting firm to audit the financial statements of AAI for the
current year and for the three years prior to the current year. The AAI
Physicians shall cooperate reasonably in connection with any such audit or
audits and will execute management letters and other documents reasonably
requested in connection with any such audit or audits and any equity offering by
AACA. AACA will pay the cost of the audits required by AACA under this
Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF AAI AND THE AAI PHYSICIANS.
------------------------------------------------------------
AAI and the AAI Physicians, jointly and severally, hereby represent, warrant,
covenant and agree to and with AACA and AACA-AAI, as follows.
4.1 AAI'S EXISTENCE AND POWER. AAI is a professional service corporation
-------------------------
duly organized, validly existing and in good standing under the laws of the
State of Florida. Neither the nature of its business as now conducted nor the
character or location of its properties require qualification by AAI to do
business in any other jurisdiction except for the states listed on Exhibit 4.1
-----------
in which AAI is duly qualified to do business. AAI has the corporate power to
own its property and to carry on its business as now being conducted.
8
<PAGE>
Except as provided in Exhibit 4.1, AAI is not subject to any noncompetition
-----------
agreement.
4.2 ARTICLES OF INCORPORATION AND BYLAWS. True, correct and complete copies
------------------------------------
of the Articles of Incorporation and Bylaws of AAI are attached hereto on
Exhibit 4.2.
- -----------
4.3 AAI STOCK. AAI's authorized capital stock consists solely of 10,000
---------
shares of common stock authorized, of which 300 shares are issued (and
outstanding) to Martell and 300 shares are issued (and outstanding) to Mirmelli
as reflected on Exhibit 4.3 attached hereto. All such outstanding shares of
-----------
capital stock of AAI have been duly and validly authorized and issued and are
fully paid and nonassessable. There are 600 treasury shares of capital stock.
There are no outstanding options, contracts, preemptive rights, proxies, calls,
commitments, demands or rights of any character obligating AAI to issue any
shares of stock or other securities of AAI, or options or rights with respect
thereto, and there are no existing or outstanding securities convertible or
exchangeable into shares of stock or other securities of AAI. No shares of
AAI's capital stock have been issued in violation of any federal or state
securities law. There have been no transactions involving the equity interests
of AAI since February 28, 1989.
4.4 OWNERSHIP OF AAI. The AAI Physicians are, and will be at the Closing
----------------
and the Effective Time, owners of all of the issued and outstanding stock of
AAI, free and clear of all claims, security interests, pledges, options, rights
of first refusal, liens, financing statements, deeds of trust, mortgages,
charges, assessments, restrictions, leases and other encumbrances (all such
claims, security interests, pledges, options, rights of first refusal, liens,
financing statements, deeds of trust, mortgages, charges, assessments,
restrictions, leases and other encumbrances being referred to individually as an
"Encumbrance" and collectively as "Encumbrances") whatsoever. The AAI
Physicians have the full legal right, power and authority to enter into this
Agreement and, except as identified on Exhibit 4.4, the execution, delivery and
-----------
performance of this Agreement by the AAI Physicians will not violate any
agreement to which either they or AAI is a party or any agreement affecting the
AAI Common Stock.
4.5 INSIDER TRANSACTIONS. Except as disclosed in Exhibit 4.5 hereto, AAI is
-------------------- -----------
not, directly or indirectly, a party to any contract, lease or commitment with
any officer or director of AAI or any affiliate of any such director or officer.
As used in this Section 4.5, the term "affiliate" shall mean any member of the
immediate family of such officer or director or any corporation, partnership,
trust or other entity in which such officer or director has a substantial
interest or is a director, officer, partner or trustee.
4.6 AUTONOMY; SUBSIDIARIES. AAI is autonomous and has not ever been a
----------------------
subsidiary of any other corporation. AAI has no subsidiaries
9
<PAGE>
nor does it own any shares of stock or other securities of, or interest in, any
other corporation, joint venture, partnership or business.
4.7 ACCURACY OF FINANCIAL STATEMENTS AND CLOSING DATE BALANCE SHEET. The
---------------------------------------------------------------
AAI Physicians have delivered to AACA-AAI as Exhibit 4.7 a copy of the financial
-----------
statements of AAI for the years ended February 28, 1992, 1993 and 1994 and 1995
(the "AAI Financial
Statements") and a pro forma balance sheet dated as at April 30, 1996 (the
--- -----
"Closing Date Balance Sheet"). The AAI Financial Statements have been prepared
based upon cash basis accounting, are complete and accurate and fairly present
the financial condition of and the income and expenses of AAI as of the
respective dates thereof, except as disclosed on Exhibit 4.7. The Closing Date
-----------
Balance Sheet has been prepared based upon cash basis accounting, is complete
and accurate and fairly presents the financial condition and the income and
expenses of AAI as of the date thereof, except as disclosed on Exhibit 4.7. AAI
-----------
has no liabilities or obligations known or unknown, accrued, absolute or
contingent, whether or not now due and payable (including, without limitation,
any liability for federal, state or local taxes of AAI), for any period ended on
or prior to the respective dates of the Financial Statements and the Closing
Date Balance Sheet or any liability or obligation in connection with any
transaction or state of affairs entered into or existing on or before the
respective dates thereof, which are not either fully reflected on the Financial
Statements and the Closing Date Balance Sheet or otherwise disclosed to AACA-AAI
in Exhibit 4.14 and 4.16 hereto.
------------ ----
4.8 PROPERTIES.
----------
(i) Set forth on Exhibit 4.8(i) is an identification of the
--------------
material real and tangible personal properties presently owned by AAI and used
in the Business. All tangible personal property, equipment, vehicles,
furnishings, and fixtures included within the assets of AAI or required to be
used in the ordinary course of its business are being conveyed as a result of
the Merger "AS IS, WHERE IS."
(ii) Set forth on Exhibit 4.8(ii) is an accurate and complete
---------------
list of all real or personal property which is used by AAI in the Business and
which is either not owned by AAI or is leased or rented by AAI.
4.9 TAXES AND TAX RETURNS. For all tax periods ended prior to the date of
---------------------
this Agreement, except as set forth on Exhibit 4.9, AAI has filed all federal,
-----------
state, local and other tax returns required by law to be filed and, except as
set forth on Exhibit 4.9, such returns were filed on or before the due dates of
-----------
such returns (as extended by any valid extensions of time) ("Tax Returns") and
has paid or will pay all taxes of every kind and description (including, without
limitation, all net income, gross income, gross receipts, sales, use, lease, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, property or other
10
<PAGE>
taxes, customs, duties, fees, assessments or charges, together with any
interest, penalties, additions to tax or additional amounts imposed by any
taxing authority, domestic, or foreign ("Taxes") which are due as of and for all
periods through the Effective Time. No claim has ever been made by an authority
in a jurisdiction where AAI does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no liens or security
interests on any of AAI's assets that arose in connection with any failure (or
alleged failure) to pay any Taxes. AAI has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
All Tax Returns filed by AAI correctly reflected all facts regarding the income,
business, assets, operations, activities and status of AAI and all other
information required to be shown thereon. AAI has complied in all respects with
all applicable laws, rules and regulations relating to the filing of Tax Returns
with respect to, and the payment of Taxes. The Tax Returns of AAI have not been
audited by the Internal Revenue Service or any state or local taxing authority.
No federal, state, local or foreign audits, administrative proceedings, court
proceedings or ruling requests are presently pending with respect to any Taxes
or Tax Returns with respect thereto. AAI has not filed a consent pursuant to
Section 341(f) of the Code, or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is defined in
Section 341 (f)(4) of the Code) owned by AAI. No property of AAI is property
that AAI is required to treat as being owned by another person pursuant to the
provisions of Section 168(f)(6) of the Code, or is "tax-exempt use property"
within the meaning of Section 168(h) of the Code, or is subject to a lease,
other than a "true" lease for federal income tax purposes. AAI is not required
to include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by AAI, nor does
AAI, nor any of the AAI Physicians, have any knowledge that the Internal Revenue
Service has proposed any adjustment or change in accounting methods. Except as
set forth on Exhibits 4.9 and 4.10, with respect to AAI Real and Personal
---------------------
Property Leases AAI is not currently under any contractual obligation to
indemnify any person with respect to Taxes. No person who is not a United
States citizen, and no corporation or other entity which was not organized
within the United States owns beneficially more than five percent (5%) of the
outstanding shares of AAI and therefore no withholding of tax pursuant to
Section 1445 of the Code is required. AAI is not a United States Real Property
Holding Corporation as defined in Section 897 of the Code. AAI is not a party
to any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280(G). No consent
extending the statute of limitations has been filed by or on behalf of AAI with
respect to any liability for Taxes for any year.
4.10 CONTRACTS.
---------
4.10.1. Exhibit 4.10(i) is a list of all agreements of AAI (the "AAI
---------------
Contracts") and Exhibit 4.10(ii) is a list of all agreements
----------------
11
<PAGE>
of each AAI Physician with respect to AAI (the "AAI Physician Contracts").
Except as set forth in Exhibits 4.10(i) and 4.10 (ii) hereto, neither AAI nor
------------------------------
either of the AAI Physicians with respect to AAI, respectively, is a party to
any material contract, agreement, lease, or power of attorney of any kind with
respect to the Business. As to AAI, except as noted on Exhibit 4.10(i), all AAI
---------------
Contracts, and as to the AAI Physicians, all AAI Physician Contracts, are valid
and are in full force and effect according to their material terms, and no
material default by AAI or the AAI Physician or Physicians, as the case may be,
exists under any such contract, lease or agreement and no condition or state of
facts exists which, with notice or the passage of time, or both, would
constitute a default under any such contract, lease or agreement. All AAI
Contracts and all AAI Physician Contracts are valid as to the other contracting
parties thereto and there is no material default by any such party existing
under the contracts and no condition or state of facts exists which, with notice
or the passage of time, or both would constitute a default by any such party
thereunder. All AAI Contracts and all AAI Physician Contracts are enforceable
in accordance with their respective terms by AAI or the AAI Physicians, as the
case may be, against all other parties thereto in all material respects (except
as enforceability may be restricted, limited or delayed by bankruptcy,
insolvency, moratorium or similar laws affecting or relating to the enforcement
of creditors' rights in general and except as enforceability is subject to
general principles of equity, regardless of whether enforceability is considered
in a proceeding at law or in equity).
4.10.2. Neither the execution, the delivery, nor the performance of this
Agreement by AAI and the AAI Physicians will cause any default in or breach of
any provision of the AAI Articles of Incorporation, as amended, the AAI bylaws
or any agreement or commitment to which AAI is a party or by which AAI or the
AAI Physicians are bound, and none of such actions will result in either
acceleration, or any similar right of any other party, under any AAI Contract or
AAI Physician Contract, or constitute a default under any AAI Contract or AAI
Physician Contract, or result in the creation or imposition of any Encumbrance
against any of the assets of AAI. With respect to the AAI Physician Contracts,
all accounts receivable with respect to each AAI Physician's performance of each
such contract has been assigned to AAI and, with respect to future performances
by each such AAI Physician, the accounts receivable therefrom shall be assigned
to Newco, as defined in the Master Merger Agreement, pursuant to such AAI
Physician's Individual Employment Agreement with Newco. Notwithstanding
anything in this Section 4.10 to the contrary, AAI and AAI Physicians do not
warrant, covenant, or agree to or with AACA-AAI with respect to the
enforceability or validity of any term of the AAI Physician contracts concerning
any agreement or covenant restricting or prohibiting (i) competition with AAI,
(ii) disclosure of confidential information of AAI, or (iii) solicitation of
employees or patients of AAI. AAI and the AAI Physicians make no
representations that any such provisions are enforceable.
4.11 COMPLIANCE WITH LAWS. Except as described in Exhibit 4.11,
-------------------- ------------
12
<PAGE>
AAI is in compliance with the laws, regulations, rules and decrees of all
governmental authorities whatsoever relating to the conduct of its business,
including, without limitation, the Fair Labor Standards Act.
4.12 LITIGATION. Except as described in Exhibit 4.12 hereof, there is no
---------- ------------
litigation, action, suit, proceeding or governmental investigation pending or
threatened against AAI or affecting AAI or the Business or any of its assets, at
law or in equity or before any federal, state, municipal, local or other
governmental authority, or before any arbitrator, nor is there any reasonable
basis for any such litigation, action, suit, proceeding or investigation. None
of the AAI Physicians nor AAI is subject to any order, writ or decree of any
court or other governmental authority.
4.13 EMPLOYEE BENEFITS.
-----------------
4.13.1 Except as identified on Exhibit 4.13.1, AAI is not a party to
--------------
any collective bargaining or labor agreement or to any written employment
agreement, profit sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, welfare, or incentive plan
or policy or increases in the rate of remuneration entered into with or for the
benefit of present or former employees, whether or not unionized, of AAI or any
other like agreement, plan or policy.
4.13.2 All AAI plans, funds, programs, agreements, arrangements,
commitments or policies (collectively, the "Plans") which: (i) are or have ever
been maintained or participated in by AAI and which are currently in effect or
as to which AAI has any ongoing liability or obligation whatsoever; and (ii)
constitute (A) "pension plans" (as defined in section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or (B) "welfare
plans" (as defined in ERISA section 3(1)) are identified on Exhibit 4.13.2. AAI
--------------
has provided copies of all Plans to AACA-AAI.
4.13.3 Except as set forth on Exhibit 4.13.3, AAI has never maintained,
--------------
sponsored, contributed to or been required to contribute to a defined benefit
plan (within the meaning of Code section 414(j)) and is not, and has never been,
a member of a controlled group of corporations (within the meaning of Code
section 414(b)), a group of trades or businesses under common control (within
the meaning of Code section 414(c)) or an affiliated service group (within the
meaning of Code section 414 (m)).
4.13.4 With respect to each Plan:
(i) Such Plan is, and at all times has been, operated and
administered substantially in compliance with the requirements of all applicable
statutes, orders or governmental rules or regulations currently in effect
including, without limitation, ERISA and the Code.
13
<PAGE>
(ii) No prohibited transaction (as defined in ERISA section 406
or Code section 4975) has occurred in connection with which AAI or any fiduciary
of such Plan is or could be subject to a civil penalty pursuant to ERISA section
502, a tax imposed by Code section 4975 or liability for a breach of fiduciary
responsibility under ERISA.
(iii) No action, suit, grievance, arbitration or other manner of
litigation or claim with respect to such Plan or its assets (other than routine
claims for benefits made in the ordinary course of administration of such Plan)
is pending or, to the knowledge of AAI or any of the AAI Physicians, threatened
against or with respect to such Plan, AAI or any fiduciary (as defined in ERISA
section 3(21)) of such Plan. To the knowledge of AAI and the AAI Physicians,
there is no basis for any such claim.
(iv) If such Plan provides medical benefits to any present or
former employee of AAI, such Plan has been operated in compliance with ERISA
sections 601 through 609 and either Code section 162(i)(2) and (k) and the
regulations promulgated thereunder (prior to 1989) or Code section 4980B and the
regulations promulgated thereunder (after 1988).
(v) There has been no failure to file on a timely basis any
report or return required to be filed by law with respect to such Plan. All
disclosures required by law to be made to participants in such Plan have been
made on a timely basis.
(vi) No representation or communication with respect to
participation, eligibility for benefits, vesting, benefit accrual or coverage
under such Plan has been made by AAI or any trustee, fiduciary, officer,
director, employee or other agent of AAI to any of its employees or their
beneficiaries which (A) is not in accordance with the terms of such Plan and (B)
could have material adverse economic consequences to AAI or such Plan.
(vii) Such Plan has been operated in accordance with such
provisions, if any, of the Code as may be applicable to obtain the federal
income tax consequences intended for such Plan.
4.13.5 Each Plan which is a "pension plan" (as defined in ERISA section
3(2)) and its related trust, if any, are qualified under Code section 401(a) and
exempt from tax under Code section 501(a) and have been determined by the
Internal Revenue Service to be so qualified. Nothing has occurred since the
most recent such determination which has or could adversely affect the qualified
status of such Plan or the tax exempt status of its related trust.
4.14 LIABILITIES. All liabilities and obligations of AAI direct,
-----------
indirect or contingent, are either listed in the AAI Financial Statements or on
Exhibit 4.14 attached hereto.
- ------------
4.15 INSURANCE. All insurance maintained by AAI is listed and
---------
described on Exhibit 4.15 attached hereto. Except as identified on
------------
14
Exhibit 4.15, AAI has not in the past three years made any claims with respect
- ------------
to its insurance coverage.
4.16 ABSENCE OF CERTAIN CHANGES. Except as described in Exhibit 4.16,
-------------------------- ------------
since December 31, 1995, AAI has not:
(i) incurred or suffered any obligations or liabilities
(absolute or contingent) except current liabilities incurred in the ordinary
course of business;
(ii) issued any stock or other corporate securities or granted
any option or right with respect to the acquisition of any of its corporate
securities;
(iii) declared or made (or become obligated for) any payment or
distribution or dividend to shareholders or purchased or redeemed (or became
obligated to purchase or redeem) any shares of its capital stock;
(iv) mortgaged, pledged or subjected (whether or not
voluntarily) to any Encumbrance, any of its assets, other than Encumbrances
incidental to the conduct of its business or the ownership of its property and
assets which were not incurred in connection with the borrowing of money, or the
obtaining of advances or credit, and which do not in the aggregate impair the
use or value thereof in the operation of its business;
(v) sold, assigned or transferred or agreed to sell, assign or
transfer any of its tangible assets or canceled any debts or claims, except in
each case in the ordinary course of business;
(vi) sold, assigned, or transferred or agreed to sell, assign
or transfer any trade names, or other intangible assets, or permitted existing
rights with respect thereto to lapse;
(vii) suffered any extraordinary loss or knowingly waived or
permitted to lapse any right of substantial value;
(viii) made any capital expenditures, or otherwise entered into
any executory transactions or commitments to make any capital expenditures, in
excess of $5,000 per item or $25,000 in the aggregate;
(ix) failed to comply in any material respect with any
applicable local, state or federal law, rule or regulation; or
(x) suffered any event or condition of any character,
materially and adversely affecting its business, properties or prospects.
Transaction costs, including costs, expenses and fees associated with the
preparation and consummation of the transactions contemplated by the Master
Merger Agreement and costs associated with the purchase of
15
<PAGE>
the tail coverage for the Senior Physicians for periods prior to the Effective
Time, are listed on Exhibit 4.16 as permitted under Section 4.1 of the Master
------------
Merger Agreement. Since these transaction costs are not reflected in the Closing
Date Balance Sheet, payment of such expenses may affect the results of the
Merger Consideration Adjustment described in Section 2.5.
4.17 EMPLOYEES. Attached as Exhibit 4.17 is a listing of all current
--------- ------------
AAI employees and former AAI employees who are eligible to continue to receive
benefits by virtue of their former employment by AAI (including, as applicable,
their rates of pay, accrued sick leave, vacation and other benefits).
4.18 AUTHORITY. AAI has the corporate power to execute and deliver
---------
this Agreement and consummate the Merger and the other transactions contemplated
hereby and has taken (or by the Closing Date will have taken) all action
required by law, its Articles of Incorporation, bylaws or otherwise to authorize
such execution and delivery and the consummation of the Merger and the other
transactions contemplated hereby.
4.19 LICENSES. Exhibit 4.19 contains a copy of all governmental or
-------- ------------
other licenses held by (i) AAI relating to the operation of its business and
(ii) the AAI Physicians. Except for the licenses of AAI and the AAI Physicians
listed in Exhibit 4.19, there are no other licenses or permits required for AAI
------------
and the AAI Physicians to operate the Business. Except as disclosed in Exhibit
-------
4.19, all such licenses are in full force and effect, and there have not been
- ----
(and there currently are not) any material default or deficiencies thereunder by
any party; and no event has occurred which (whether with or without notice,
lapse of time, or the happening or occurrence of any other event) would
constitute a material default or deficiency thereunder. There are no pending or
active proceedings or investigations by any governmental agency (including,
without limitation, the Health Care Financing Administration or any Ethics
Board) relating to the Business. Except as disclosed in Exhibit 4.19, neither
------------
of the AAI Physicians nor AAI has been the subject of a malpractice suit. There
is not now, nor has there ever been, any investigation or proceeding by any
governmental agency or licensing board to restrict, suspend or revoke any
license of AAI.
4.20 NO FINDERS OR BROKERS. None of the AAI Physicians nor AAI, nor
---------------------
any officer or director thereof, has engaged any finder or broker in connection
with the transactions contemplated hereunder. The AAI Physicians will indemnify
and hold AACA harmless against claims (and attorneys' fees and expenses in the
defense thereof) of any person, firm or corporation for finder's fees, broker's
fees, brokerage commissions, sales commissions or the like alleged in connection
with the transactions contemplated hereunder due to acts of the AAI Physicians
or AAI.
4.21 DISCLOSURE. No representation or warranty by the AAI
----------
16
<PAGE>
Physicians or AAI in this Agreement and no statement pertaining to the AAI
Physicians or AAI in this Agreement or any document, Exhibit or certificate
furnished or to be furnished to AACA-AAI pursuant hereto will contain any
materially untrue statement or omits or will omit to state a relevant fact
necessary in order to make the statements contained herein or therein not
misleading. There are no facts known to the AAI Physicians or AAI not described
herein which would adversely affect the future operations of AAI.
4.22 VALIDITY OF AGREEMENTS. Upon execution and delivery by all
----------------------
parties, this Agreement, the Articles of Merger, and all other agreements to be
executed by the AAI Physicians or AAI in connection herewith, will constitute
the valid and binding obligation of the AAI Physicians and AAI, as the case may
be, and be binding against them and enforceable in accordance with their
respective terms (except as enforceability may be restricted, limited, or
delayed by bankruptcy, insolvency, moratorium or similar laws affecting or
relating to the enforcement of creditors' rights in general and except as the
enforceability is subject to general principles of equity, regardless of whether
enforceability is considered in a proceeding at law or in equity).
4.23 TITLE TO ASSETS. Except as described in Exhibits 4.14 and 4.16
--------------- ------------- ----
hereto, AAI holds good and marketable title to its assets, free
and clear of restrictions on or conditions to transfer or assignment, and free
and clear of Encumbrances.
4.24 TRANSFER NOT SUBJECT TO ENCUMBRANCES OR THIRD-PARTY APPROVAL.
------------------------------------------------------------
Except as set forth on Exhibit 4.24, the execution and delivery of this
------------
Agreement by the AAI Physicians and AAI, and the consummation of the
contemplated transactions, (i) will not result in the creation or imposition of
any Encumbrance on any of the assets of AAI and (ii) will not require the
authorization, consent, or approval of any third party, including any
governmental subdivision or regulatory agency.
4.25 ACCOUNTS RECEIVABLE. The accounts receivable of AAI (the
-------------------
"Accounts Receivable") as of the Effective Time of the Merger, to the extent
uncollected as of the Effective Time of the Merger, will be validly existing and
represent monies due for goods sold and delivered or services performed subject
to customary discounts or other adjustments by third parties. An aged listing
of the Accounts Receivable of AAI as of the Closing Date shall be delivered to
AACA-AAI on or before the Closing Date in connection with the Closing Date
Balance Sheet.
4.26 SECURITIES LAWS.
--------------
4.26.1 RECEIPT OF INFORMATION. Since the commencement of negotiations,
----------------------
each AAI Physician has had access to and each AAI Physician has received: (i) a
copy of VIVRA's Prospectus dated February 9, 1995; (ii) a copy of VIVRA's 1994
Annual Report to Stockholders and VIVRA's 1995 Annual Report to Stockholders;
(iii) a
17
<PAGE>
copy of VIVRA's Annual Report on Form 10-K for the fiscal years ended
November 30, 1994, and November 30, 1995; (iv) a copy of VIVRA's Quarterly
Reports on Form 10-Q for the quarters ended February 28, May 31 and August 30,
1995, and February 29, 1996; (v) a copy of VIVRA's Proxy Statement for VIVRA's
Annual Meeting; (vi) a copy of the Prospectus Supplements to VIVRA's Prospectus
dated February 9, 1995; (vii) a copy of VIVRA's Forms 8-K dated August 16, 1995,
and December 21, 1995; and (viii) such other information as the AAI Physicians
have reasonably requested.
4.26.2 INVESTMENT EXPERIENCE. Each AAI Physician represents that such
---------------------
AAI Physician is experienced in evaluating and investing in securities and
acknowledges that such AAI Physician is able to fend for himself, can bear the
economic risk of such AAI Physician's investment, and has such knowledge and
experience in financial and business matters that such AAI Physician is capable
of evaluating the merits and risks of the investment in VIVRA stock.
4.27 POOLING REQUIREMENTS. AAI and each AAI Physician acknowledge that
--------------------
AACA and VIVRA intend to account for the business combination to be effected by
the Merger as a pooling of interests under generally accepted accounting
principles, warrant that they have fully disclosed all facts and information
available to them and their advisors regarding the financial condition of AAI
and all transactions involving AAI, the AAI Physicians and the AAI Common Stock,
and acknowledge that they have been advised by their counselors regarding the
APB No. 16 requirements governing eligibility for pooling treatment which are
set forth on Exhibit 4.27. Based upon the foregoing, to the best of their
------------
knowledge, AAI and each AAI Physician has taken no action or failed to take
action, as the case may be, in contravention of such pooling requirements.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF AACA AND AACA-AAI.
---------------------------------------------------
AACA and AACA-AAI, jointly and severally, represent, warrant, covenant and
agree to and with AAI and the AAI Physicians, as follows.
5.1 ORGANIZATION AND STANDING OF AACA-AAI. AACA-AAI is a corporation duly
-------------------------------------
organized, validly existing and in good standing under the laws of the State of
Florida and has full corporate power and authority to conduct its business as
now being conducted, and is duly qualified to do business, in each jurisdiction
in which the nature of the property owned or leased or the nature of the
businesses conducted, specifically including the State of Florida, so require.
5.2 ORGANIZATION AND STANDING FOR AACA. AACA is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to conduct its business as
now being conducted, and is duly qualified to do business, in each jurisdiction
in which the nature of the property owned or leased or the nature of the
businesses conducted so require.
18
<PAGE>
5.3 AUTHORITY. AACA and AACA-AAI each has corporate power to execute and
---------
deliver this Agreement and consummate the transactions contemplated hereby and
has taken (or by the Closing Date will have taken) all action required by law,
its respective Articles of Incorporation, its respective bylaws or otherwise to
authorize such execution and delivery and the consummation of the transactions
contemplated hereby.
5.4 NO FINDERS OR BROKERS. Neither AACA nor AACA-AAI nor any officer or
---------------------
director thereof has engaged any finder or broker in connection with the
transactions contemplated hereunder. AACA will indemnify and hold the AAI
Physicians harmless against claims (and attorneys' fees and expenses in the
defense thereof) of any person, firm or corporation for finder's fees, broker's
fees, brokerage commissions, sales commissions or the like alleged in connection
with the transactions contemplated hereunder due to acts of AACA or AACA-
AAI.
5.5 VALIDITY OF AGREEMENTS. Upon execution and delivery by all parties
----------------------
hereto, this Agreement, and all other agreements to be executed by AACA or
AACA-AAI in connection herewith will constitute the valid and binding obligation
of AACA or AACA-AAI, as the case may be, and be binding against AACA or
AACA-AAI, as the case may be, and enforceable in accordance with their
respective terms (except as enforceability may be restricted, limited, or
delayed by bankruptcy, insolvency, moratorium or similar laws affecting or
relating to the enforcement of creditors' rights in general and except as the
enforceability is subject to general principles of equity, regardless of whether
enforceability is considered in a proceeding at law or in equity).
5.6 REQUIRED GOVERNMENTAL APPROVALS. AACA and AACA-AAI each is in compliance
-------------------------------
in all material respects with the laws, rules, regulations and decrees of all
governmental authorities whatsoever relating to the conduct of its businesses,
and to the best of its knowledge no approval or consent of any governmental
authority or agency will be required at Closing for AACA and AACA-AAI to
consummate the transactions contemplated hereby.
5.7 LITIGATION. There is no litigation, action, suit, proceeding or
----------
governmental investigation pending or (to the best of AACA's or AACA-AAI's
knowledge) threatened against AACA or AACA-AAI or affecting AACA or AACA-AAI or
any of their respective businesses or any of their respective assets, nor does
AACA or AACA-AAI know of any reasonable basis for such litigation, action, suit,
proceeding or investigation. Neither AACA nor AACA-AAI is not subject to any
order, writ or decree of any court or governmental authority or agency.
5.8 ARTICLES OF INCORPORATION AND BYLAWS OF AACA-AAI. A true, correct and
------------------------------------------------
complete copy of the Articles of Incorporation of AACA-
AAI is attached hereto as Exhibit 5.8. AACA-AAI has provided a copy of its
-----------
Bylaws to AAI and to the AAI Physicians.
19
<PAGE>
5.9 DISCLOSURE. No representation or warranty by AACA or AACA-
----------
AAI in this Agreement and no statement pertaining to AACA or AACA-AAI in this
Agreement or any document, Exhibit or certificate furnished or to be furnished
to AAI Physicians or AAI pursuant hereto will contain any material untrue
statement or omits or will omit to state a relevant fact necessary in order to
make the statements contained herein or therein not misleading.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF VIVRA.
---------------------------------------
VIVRA hereby represents, warrants, covenants and agrees to and with AAI and
the AAI Physicians as follows.
6.1 ORGANIZATION AND STANDING OF VIVRA. VIVRA is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full corporate power and authority to conduct its business as
now being conducted, and is duly qualified to do business, in each jurisdiction
in which the nature of the property owned or leased or the nature of the
businesses conducted so require.
6.2 AUTHORITY. VIVRA has corporate power to execute and deliver this
---------
Agreement and consummate the transactions contemplated hereby and has taken (or
by the Closing Date will have taken) all action required by law, its Certificate
of Incorporation, bylaws or otherwise to authorize such execution and delivery
and the consummation of the transactions contemplated hereby.
6.3 VALIDITY OF AGREEMENTS. Upon execution and delivery by all parties
----------------------
hereto, this Agreement, and all other agreements to be executed by VIVRA in
connection herewith to the extent that they relate to VIVRA, will constitute the
valid and binding obligation of VIVRA and be binding against VIVRA and
enforceable in accordance with their respective terms (except as enforceability
may be restricted, limited, or delayed by bankruptcy, insolvency, moratorium or
similar laws affecting or relating to the enforcement of creditors' rights in
general and except as the enforceability is subject to general principles of
equity, regardless of whether enforceability is considered in a proceeding at
law or in equity).
6.4 LITIGATION. There is no material suit, action, proceeding or
----------
investigation against or involving VIVRA or any of the properties or rights,
pending or, to the knowledge of VIVRA, threatened. There is no material
judgment, decree, injunction, rule or order of any governmental entity
outstanding against VIVRA. VIVRA is not in violation of any term of any
judgment, decree, injunction or order outstanding against it.
6.5 FINANCIAL STATEMENTS. VIVRA's audited consolidated financial statements
--------------------
including a balance sheet, income statement and statement of cash flow, for the
years ended November 30, 1994 and 1995, which
20
<PAGE>
have been previously delivered to AAI and the AAI Physicians, fairly present in
conformity with generally accepted accounting principles applied on a consistent
basis, the consolidated financial position of VIVRA and its consolidated
subsidiaries as of the date thereof and their consolidated results of operation
and cash flows for the period then ended.
6.6 VIVRA COMMON STOCK. All of the shares of VIVRA Common Stock issued under
------------------
the provisions of this Agreement are duly authorized, fully paid and
nonassessable, are registered pursuant to VIVRA's currently effective
registration statement dated March 15, 1995, and are freely tradeable subject to
the limitations set forth in Section 2.6.
6.7 NO UNTRUE STATEMENTS. No representation or warranty by VIVRA contains
--------------------
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained therein not misleading or necessary
in order to provide AAI and AAI Physicians with complete and accurate
information as to VIVRA and the VIVRA Common Stock. Except as described in the
S-4 Registration Statement and other materials delivered by VIVRA under cover
dated February 29, 1996, and April 8, 1996, there are no facts known to VIVRA
which would materially and adversely affect the VIVRA Common Stock.
SECTION 7. COVENANTS OF AACA AND AACA-AAI.
------------------------------
7.1 BEST EFFORTS TO SECURE CONSENTS AND APPROVALS. AACA and AACA-
---------------------------------------------
AAI will take all necessary corporate and other action and will use its best
efforts to obtain all consents and approvals required of AACA-AAI to carry out
the transactions contemplated by this Agreement and the Master Merger Agreement
and to satisfy the conditions precedent specified herein and therein.
7.2 HANDLING OF DOCUMENTS. Until the Closing, AACA and AACA-AAI shall keep
---------------------
confidential all information provided by AAI or the AAI Physicians pursuant to
this Agreement which is not in the public domain, and shall exercise the same
care in handling such information as it would exercise with similar information
of its own. If the Closing does not occur, AACA-AAI shall return all such
documentation and keep the same confidential.
7.3 EMPLOYMENT. AACA (or its affiliated subsidiary) will offer employment to
----------
all of AAI's employees, except the AAI Physicians, who will be dealt with on an
individual basis, but these employees shall, upon acceptance of employment with
AACA, be "employees terminable at will" and subject to all employment policies
of AACA. Subsequent to the date of this Agreement, no termination bonuses or
severance pay is owed to or will be paid to any AAI employees terminated as a
result of the Merger of AACA-AAI into AAI or of AAI into the Surviving
Corporation.
7.4 COMPENSATION. Subject to the consent of the "Senior
------------
21
<PAGE>
Physicians" and to compliance with ERISA, AACA or the Surviving Corporation
reserves the right in the future to raise salaries of AAI's former employees
consistent with the policies and standards governing AACA employees generally.
AACA will credit each former AAI employee hired by AACA with his or her service
anniversary with AAI for purposes of determining vacation, sick leave and
holidays and other fringe benefits provided by AACA to its employees. To the
extent permitted by ERISA, former AAI employees shall be entitled to participate
in all health, disability, retirement and other benefit plans of AACA in
accordance with the terms of such plans; provided, however, that with respect to
such health plans, AACA shall ensure that such employees are eligible for
coverage at the Effective Time, are not subject to a "waiting period" as a
result of the Merger, and are not subject to exclusion for pre-existing
conditions unless they have been subject to such an exclusion under their
current coverage.
7.5 REIMBURSEMENT. AACA or the Surviving Corporation hereby waives any right
-------------
or claim to reimbursement, on behalf of the Surviving Corporation or otherwise,
from the AAI Physicians of any payments or expenditures made by AAI prior to the
Effective Time to or for the benefit of AAI Physicians, notwithstanding any
contrary or inconsistent position which may be taken by any governmental entity
with respect to such payments or expenditures.
7.6 RETENTION OF EMPLOYEES. AACA will take no action to solicit
----------------------
or reassign to other practices managed by AACA any employees retained by Newco
without the prior written consent of the Senior Physicians during the time that
they are employed by Newco.
SECTION 8. COVENANTS OF THE AAI PHYSICIANS AND AAI.
---------------------------------------
8.1 ACCESS AND INFORMATION. The AAI Physicians and AAI shall give to AACA
----------------------
and AACA-AAI and their lenders, underwriters, investors and representatives
reasonable access during normal business hours to their respective premises,
books, accounts and records and all other relevant documents and will make
available, and use their respective best efforts to cause their respective
independent accountants to make available, copies of all such documents and
information with respect to the business and properties of AAI as
representatives of AACA may from time to time request, including, without
limitation, the working papers used to prepare the Financial Statements, all in
such manner as not unduly to disrupt their normal business activities. The
foregoing shall be subject to federal and state laws regarding the privacy of
medical records.
8.2 CONDUCT OF BUSINESS. If there shall be a lapse of time between the date
-------------------
hereof and the Effective Time, except as otherwise approved by AACA-AAI, AAI
shall conduct its business only in the ordinary course consistent with past
practice and in such a manner that representations and warranties contained in
Section 4 shall be true and correct at and as of the Closing (except for changes
contemplated,
22
<PAGE>
permitted or required by this Agreement) and so that the conditions to be
satisfied by AAI and the AAI Physicians at the Closing shall have been
satisfied. AAI shall, consistent with conducting its business in accordance
with reasonable business judgment, preserve its business intact; use its best
efforts to keep available to AAI the services of its present employees (except
those dismissed by AAI or those who voluntarily discontinue their employment);
and preserve for AACA-AAI the goodwill of the suppliers, patients and others
having business relations with AAI.
8.3 BEST EFFORTS TO SECURE CONSENTS AND APPROVALS. The AAI Physicians and
---------------------------------------------
AAI shall take the necessary corporate or other action and shall each use its or
their, as the case may be, best efforts to secure before the Closing all
necessary consents, approvals and amendments of agreements required of the AAI
Physicians and AAI to carry out the transactions contemplated by this Agreement
and to satisfy the conditions precedent specified herein. Each AAI Physician
will use his best efforts to have all AAI Physician Contracts of such AAI
Physician continue in effect with respect to such AAI Physician as an
employee of the Surviving Corporation following the Effective Time.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE AAI PHYSICIANS AND
-----------------------------------------------------------------
AAI.
- ---
All obligations of the AAI Physicians and AAI which are to be discharged under
this Agreement at the Closing are subject to the performance, at or prior to the
Closing, of all covenants and agreements contained herein which are to be
performed by AACA at or prior to the Closing and to the fulfillment at, or prior
to, the Closing, of each of the following conditions (unless expressly waived in
writing by the AAI Physicians at any time at or prior to the Closing).
9.1 REPRESENTATIONS AND WARRANTIES TRUE. All of the representations and
-----------------------------------
warranties made by AACA, AACA-AAI and VIVRA contained in Sections 5 and 6,
respectively, of this Agreement shall be true as of the date of this Agreement,
and shall be true at and as of the date of Closing in all material respects;
AACA and AACA-AAI shall have performed and complied with in all material
respects all covenants and conditions required by this Agreement to be performed
or complied with by AACA and AACA-AAI prior to or at the Closing; and the AAI
Physicians shall have been furnished with a certificate of the President or any
Vice President of AACA and of VIVRA dated as of the Closing, certifying to the
truth of such representations and warranties as of the Closing and to the
fulfillment of such covenants and conditions.
9.2 AUTHORITY. All action required to be taken by or on the part of AACA,
---------
AACA-AAI or VIVRA to authorize the execution, delivery and performance of this
Agreement by AACA, AACA-AAI and VIVRA and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Board of
Directors of AACA, AACA-AAI and
23
<PAGE>
of VIVRA.
9.3 NO OBSTRUCTIVE PROCEEDING. No action or proceedings shall have been
-------------------------
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against the AAI
Physicians which seek to, or would, render it unlawful as of the Closing to
effect the transactions contemplated hereby, and no such action shall seek
damages in a material amount by
reason of the transactions contemplated hereby. Also, no substantive legal
objection to the transactions contemplated by this Agreement shall have been
received from or threatened by any governmental department or agency.
9.4 NO MATERIAL ADVERSE CHANGE. As of the date of this Agreement, there
--------------------------
shall have been no material adverse changes in the business or assets of AACA or
AACA-AAI.
9.5 MASTER MERGER AGREEMENT. All of the conditions precedent to the
-----------------------
obligations of the parties set forth in the Master Merger Agreement shall have
been met or waived, as the case maybe, by all parties to the Master Merger
Agreement except as otherwise specifically provided therein.
9.6 CONTINUITY OF REGISTRATION. The Registration Statement covering the sale
--------------------------
of the VIVRA Common Stock to the AAI Physicians shall remain effective and shall
not be subject to a stop order or proceeding seeking a stop order, and the VIVRA
Common Stock shall have been authorized for listing on the New York Stock
Exchange upon official notice of issuance.
SECTION 10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AACA-AAI.
---------------------------------------------------
All obligations of VIVRA, AACA and AACA-AAI which are to be discharged under
this Agreement at the Closing are subject to the performance, at or prior to the
Closing, of all covenants and agreements contained herein which are to be
performed by the AAI Physicians and AAI at or prior to the Closing and to the
fulfillment at or prior to the Closing of each of the following conditions
(unless expressly waived in writing by AACA at any time at or prior to the
Closing):
10.1 REPRESENTATIONS AND WARRANTIES TRUE. All of the representations
-----------------------------------
and warranties of the AAI Physicians and AAI contained in Section 4 of this
Agreement shall be true as of the date of this Agreement, and shall be true at
and as of the date of Closing in all material respects; the AAI Physicians and
AAI shall have performed or complied with in all material respects all covenants
and conditions required by this Agreement to be performed or complied with by
the AAI Physicians and AAI prior to or at the Closing; and AACA shall be
furnished with a certificate of the AAI Physicians, dated the Closing,
certifying to the truth of such representations and warranties as of the time of
the Closing and to the fulfillment of such covenants and
24
<PAGE>
conditions.
10.2 NO OBSTRUCTIVE PROCEEDING. No action or proceedings shall have
-------------------------
been instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against AACA or its
affiliates which seeks to, or would, render it unlawful as of the Closing to
effect the Merger in accordance with the terms hereof, and no such action shall
seek damages in a material amount by reason of the transactions contemplated
hereby. Also, no substantive legal objection to the transactions contemplated
by this Agreement shall have been received from or threatened by any
governmental department or agency.
10.3 CONSENTS AND APPROVALS. Each of the parties to any AAI Contract
----------------------
under which the Merger contemplated hereby would constitute or result in a
default or acceleration of obligations shall have given such consent as may be
necessary to permit the consummation of the Merger contemplated hereby without
constituting or resulting in a default or acceleration under such agreement, and
any consents required from any public or regulatory agency or organization
having jurisdiction shall have been given.
10.4 NO ADVERSE CHANGE. As of the date of this Agreement, no event
-----------------
shall have occurred or have been threatened which has or would have a material
and adverse effect upon AAI, and AAI shall not have sustained any loss or damage
to its assets or property, whether or not insured, or union activity that
affects materially and adversely its ability to conduct its business.
10.5 RELEASE OF ENCUMBRANCES. All Encumbrances shall have been
-----------------------
released at or prior to the Closing.
10.6 LICENSES. AACA shall not have learned that there is any material
--------
impediment beyond its control to the Surviving Corporation's ability to obtain
all business licenses to operate the Business. The AAI Physicians shall not
have learned that there is any material impediment beyond their control to their
ability to transfer or assign their licenses to practice medicine to, and to
practice medicine through, the Surviving Corporation.
10.7 POOLING. Having exercised its best efforts to comply with the SEC
-------
rules and regulations governing eligibility for pooling of interests accounting
treatment, AACA shall be satisfied that the business combination to be effected
by the Merger may be accounted for as a pooling of interests under generally
accepted accounting principles and all applicable SEC rules and regulations.
10.8 MASTER MERGER AGREEMENT. All of the conditions precedent to the
-----------------------
obligations of the parties set forth in the Master Merger Agreement shall have
been met or waived by all parties to the Master Merger Agreement except as
otherwise specifically provided therein.
25
<PAGE>
10.9 CONTINUITY OF REGISTRATION. The Registration Statement covering
--------------------------
the sale of the VIVRA Common Stock to the AAI Physicians shall remain effective
and shall not be subject to a stop order or proceeding seeking a stop order, and
the VIVRA Common Stock shall have been authorized for listing on the New York
Stock Exchange upon official notice of issuance.
SECTION 11. TERMINATION.
-----------
AACA-AAI on the one hand, or AAI and the AAI Physicians on the other hand, by
giving written notice to the other at any time on or prior to the Closing Date
(unless extended by mutual agreement of the parties) may terminate this
Agreement if (a) a material default shall be made by the other in the observance
of or in the due and timely performance of the covenants and agreements herein
contained, which default cannot be cured on or prior to the Closing, or (b) if,
as of the Closing, the conditions precedent to the performance of the
obligations of the one, including those specified in the Master Merger
Agreement, shall not have been fulfilled and shall not have been waived by such
party.
SECTION 12. INDEMNIFICATION.
---------------
12.1 INDEMNITY BY THE AAI PHYSICIANS. The AAI Physicians, jointly and
-------------------------------
severally (except as otherwise provided in Section 12.3 below), shall indemnify,
defend and hold harmless AACA and each affiliate of AACA (all of whom for
purposes of this Section 12 shall be considered to be AACA) from and against the
following, any one of which shall be deemed to be an "AACA indemnifiable loss"
under this Agreement:
(a) all Undisclosed Liabilities;
(b) any and all losses, damages, costs or deficiencies resulting from any and
all misrepresentations or breaches of warranty or failures to perform
agreements or undertakings by the AAI Physicians or AAI contained in or
made pursuant to this Agreement or in other agreements executed
by the AAI Physicians or AAI in connection with this Agreement; and
(c) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses (including, without limitation, attorneys'
fees, interest, penalties and amounts paid in settlement of any such
claim) incident to any of the foregoing.
12.2 UNDISCLOSED LIABILITIES. For purposes of Section 12.1 hereof, the
-----------------------
term "Undisclosed Liabilities" shall mean:
(i) any liability for any sales tax (or any interest or
penalties with respect thereto) payable as a result of the consummation of the
transactions contemplated hereby that is not reflected in Exhibit 4.14;
------------
26
<PAGE>
(ii) except as stated in Exhibit 4.14 hereto, any liability
------------
under any employee benefit or welfare plan or regarding withholding taxes owed
to or with respect to any employee or independent contractor of AAI accruing
prior to the date of Closing;
(iii) liabilities and obligations of the AAI Physicians or AAI
for any breach or violation, as of the date of Closing, of any AAI Physician
Contracts or AAI Contracts;
(iv) liabilities and obligations of the AAI Physicians or AAI
for environmental or ecological matters or conditions existing at or before the
Closing, including those relating to the use, transport, disposal, handling or
storage of hazardous or toxic materials, pollutants, contaminants, petroleum
products, or waste (including, without limitation, medical waste);
(v) any liability or obligation of the AAI Physicians or AAI
accruing at or before the date of Closing for violations of law;
(vi) any liability of the AAI Physicians or AAI with respect to
a breach of this Agreement;
(vii) any liability or obligation to Medicare, Medicaid, Blue
Cross/Blue Shield (or any other third party payer) as a result of recapture of
amounts paid by any such payer to the AAI Physicians or AAI or any overpayments
made by such payer to the AAI Physicians or AAI or any disallowance of any claim
of the AAI Physicians or AAI;
(viii) any tort liability, products liability or malpractice
liability of the AAI Physicians or AAI accruing at or before the date of
Closing;
(ix) liabilities and obligations of the AAI Physicians or AAI
incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, legal and accounting fees;
(x) any liability of AAI which is not reflected in the AAI
Financial Statements referred to in Section 4.7 hereof or in Exhibit 4.14
------------
hereto; and
(xi) any liability whatsoever, of AAI, the AAI Physicians,
ACCAF, VIVRA, or otherwise incurred in connection with the Qualified Plans
referred to in Section 10.9 hereof either before or after the Effective Time.
12.3 JOINT AND SEVERAL LIABILITY OF AAI PHYSICIANS. The AAI Physicians
---------------------------------------------
shall be jointly and severally liable for all ACCA indemnifiable losses except
for any ACCA indemnifiable losses arising from or connected with (i) each AAI
Physician's malpractice, (ii) each AAI Physician's violations of law or, (iii)
each AAI Physician's violation of any AAI Physician Contract, for which each AAI
Physician
27
<PAGE>
shall remain severally liable only.
12.4 PAYMENT FOR ACCA INDEMNIFIABLE LOSSES. Subject to the materiality
-------------------------------------
standard set forth in Section 12.7 hereof, the AAI Physicians shall pay to ACCA
or any affiliate of ACCA, as the case may be, all amounts owed to ACCA pursuant
to Section 12.1 within thirty (30) days after written demand therefor. In the
event that any third person, including, without limitation, any governmental
taxing authority, shall assert any claim or action against ACCA or an affiliate
of ACCA which, if successful, might result in an ACCA indemnifiable loss, ACCA
shall promptly notify the AAI Physicians, in writing, of such claim or action,
and at the AAI Physicians' option, they may, at their sole expense, assume
control over the defense of such claim or action, but in any event ACCA (and its
affiliate, as the case may be) shall have the right to participate in the
defense of any such claim or action. If, after notice thereof, the AAI
Physicians shall not assume the defense of, or if after so assuming
such defense they shall fail to continue to defend, any such claim or action,
ACCA (and its affiliate, as the case may be) may defend any such claim or action
and ACCA (and its affiliate, as the case may be) may then settle or compromise
such claim or action on terms it deems reasonable. The AAI Physicians shall
promptly satisfy and pay any final judgment rendered with respect to any such
claim or action or any compromise or settlement thereof and shall pay the
reasonable expenses, legal or otherwise of ACCA (and its affiliate, as the case
may be) in the defense of any such claim or action. If the AAI Physicians do
not pay any such ACCA indemnifiable loss pursuant to any such judgment,
settlement or compromise within thirty (30) days after written demand, ACCA may
pay the same and set off the amount paid against any payments due the AAI
Physicians. If ACCA (or an affiliate of ACCA) suffers an ACCA indemnifiable
loss directly (not as a result of a third party claim or action), ACCA will
first recover such ACCA indemnifiable loss pursuant to the terms of the Escrow
Agreement, then, if the remaining Escrowed Shares are insufficient to cover the
ACCA indemnifiable loss or if the Escrow Agreement has expired, ACCA may set off
the amount of the same against payments due the AAI Physicians or demand payment
therefor from the AAI Physicians. For purposes hereof, an "affiliate" of ACCA
shall mean any person or entity directly or indirectly controlling, controlled
by, or under common control with ACCA. Notwithstanding the foregoing, any AACA
indemnifiable loss which is not considered to be a specific indemnifiable loss
consistent with the requirements for pooling of interest accounting treatment
may only be recovered during the term of and according to the provisions of the
Escrow Agreement.
12.5 INDEMNITY BY ACCA. ACCA shall indemnify, defend and hold harmless
-----------------
the AAI Physicians from and against the following, any one of which shall be
defined to be a "AAI indemnifiable loss" under this Agreement:
(a) any and all losses, damages, costs or deficiencies resulting from
any and all misrepresentations or breaches of warranty or failures to perform
agreements or undertakings by AACA or ACCAF
28
<PAGE>
contained in or made pursuant to this Agreement or in other agreements executed
by AACA or ACCAF in connection with this Agreement;
(b) any and all losses, damages, costs or deficiencies incurred by the
AAI Physicians arising from any failure by the Surviving Corporation to satisfy
any obligation under the AAI Contracts to be performed by the Surviving
Corporation by their stated terms after the Closing Date; and
(c) any and all actions, suits, proceedings, claims, demands
assessments, judgments, costs and expenses (including, without limitation,
attorneys' fees, interest, penalties and amounts paid in settlement of any such
claim) relating to any of the foregoing.
12.6 PAYMENT FOR AAI INDEMNIFIABLE LOSSES. Subject to the materiality
------------------------------------
standard set forth in Section 12.7 hereof, ACCA, its successors and assigns
shall pay the AAI Physicians all amounts owed to them pursuant to Section 12.5
within thirty (30) days after written demand therefor. In the event that any
third person shall assert any claim or action against the AAI Physicians which,
if successful, might result in a claim for a AAI indemnifiable loss, the AAI
Physicians shall promptly notify ACCA in writing of such claim or action, and at
ACCA's option, ACCA may, at its sole expense, assume control over the defense of
such claim or action, but in any event the AAI Physicians shall have the right
to participate in the defense of any such claim or action. If after notice
thereof, ACCA shall not assume the defense of, or if after so assuming it fails
to continue to defend, any such claim or action, the AAI Physicians may defend
any such claim or action and the AAI Physicians may then settle or compromise
such claim or action on terms they deem reasonable. ACCA shall promptly satisfy
any final judgment rendered with respect to any such claim or action or any
compromise or settlement thereof and shall pay the reasonable expenses, legal or
otherwise, of the AAI Physicians in the defense of any such claim or action.
If the AAI Physicians suffer a AAI indemnifiable loss directly (not as a
result of a third party claim or action), the AAI Physicians may set off the
amount of the same against payments due ACCA or demand payment therefor from
ACCA.
12.7 MATERIALITY. AAI's obligation to indemnify ACCA and ACCA's
-----------
obligation to indemnify AAI set forth in this Section 12 shall be subject to a
materiality standard of $50,000, such that all indemnifiable losses shall be
accumulated and payable in full once the respective total of ACCA indemnifiable
losses or AAI indemnifiable losses, as the case may be, equals or exceeds
$50,000 on a cumulative basis.
12.8 REMEDIES CUMULATIVE. The remedies provided herein shall be
-------------------
cumulative and shall not preclude any party from asserting any other rights or
seeking any other remedies to which such party is entitled by law.
29
<PAGE>
12.9 SURVIVAL. The representations and warranties of the parties set
--------
forth in this Agreement shall expire one (1) year after the Effective Time.
SECTION 13. MISCELLANEOUS.
-------------
13.1 EXPENSES. All expenses of the preparation of this Agreement and
--------
of the other agreements and transactions contemplated hereby, including, without
limitation, counsel fees, accounting fees, investment advisor's fees and
disbursements, shall be borne by the AAI Physicians in the case of AAI or any of
the AAI Physicians and by AACA in the case of AACA and its affiliates.
13.2 NOTICES. All notices, demands and other communications hereunder
-------
shall be written and shall be deemed to have been duly given if delivered in
person or mailed by Federal Express (or other national air courier service),
charges prepaid, to the address set forth below:
To AACA, AACA-AAI or Asthma & Allergy CareAmerica, Inc.
VIVRA: 8601 Dunwoody Place, Suite 440
Atlanta, Georgia 30350
Attention: Robert Prosek, President
with a copy to: Paul L. Hudson, Jr., Esq.
Parker, Hudson, Rainer & Dobbs
1500 Marquis Two Tower
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
To AAI or the Frank R. Martell, M.D.
AAI Physicians: 120 Paloma Drive
Coral Gables, Florida 33143-6545
Philip C. Mirmelli, M.D.
6500 N. Bay
Miami Beach, Florida 33141
with a copy to: Marvin C. Gutter, Esq.
Gutter, Josepher, Ruffin & Sheehy
Trade Centre South, Suite 900,
100 West Cypress Creek Road
Ft. Lauderdale, Florida 33309
and a copy to: Charles Ruffner, Esq.
601 Brickell Key Drive
Suite 507
Miami, Florida 33131
or to such other address as AACA or the AAI Physicians may designate by notice
to the other. Notices delivered in person shall be deemed delivered on the date
of delivery and notices sent via air courier service, as aforesaid, shall be
deemed delivered on the date of
30
<PAGE>
delivery as indicated by the records of the courier service. Rejection or other
refusal to accept or inability to deliver because of a changed address of which
no notice was given shall be deemed to be a receipt of the notice, request or
other communication. Any notice, request or other communication required or
permitted to be given by any party may be given by such party's legal counsel.
13.3 ENTIRE AGREEMENT. This Agreement and the Exhibits, and the other
----------------
agreements and schedules and documents delivered pursuant hereto constitute the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersede all prior and contemporaneous agreements, understandings,
letters of intent negotiations and discussions, whether written or oral, of the
parties, and there are no representations, warranties or other agreements
between the parties in connection with the subject matter hereof, except as
specifically set forth herein. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the parties to be bound
thereby.
13.4 GOVERNING LAW; TAX REPORTING; ACCOUNTING TREATMENT. The validity
--------------------------------------------------
and construction of this Agreement shall be governed by the laws of the State of
Florida. With respect to tax reporting, the parties agree and intend that the
Merger will be treated for United States income tax purposes as a tax-free
reorganization described in the Internal Revenue Code of 1986, as amended (the
"Code"), Section 368, and all of the parties shall report the Merger in
accordance with the relevant tax regulations. In the event the Merger fails to
so qualify, the parties agree that VIVRA is acquiring the stock of AAI. With
respect to accounting treatment, any increase or decrease in tax required by
Section 481 of the Code to place the accounts of AAI on the accrual method of
accounting shall be taken into account by AACA and VIVRA and not by AAI or the
AAI Physicians. The parties agree and acknowledge that no election will be made
for the 1996 year under Section 338 of the Code (and no attempt otherwise to
"step up" the basis of the assets received by AACA in the Merger will be made)
unless AAI and/or the AAI Physicians are in breach of their representation and
warranty given in Section 4.27 hereof.
13.5 ARBITRATION.
-----------
13.5.1 The parties will attempt through good faith negotiations to
resolve their disputes regarding this Agreement. The term "disputes" includes,
without limitation, any disagreements between the parties concerning the
existence, formation, interpretation and implementation of this Agreement. If
the parties are to resolve their disputes by negotiation, either party may
commence arbitration by sending a written notice of arbitration to the other
party. The notice will state the dispute with particularity.
13.5.2 There shall be three arbitrators. If the parties fail to
select mutually acceptable arbitrators within ten (10) days after the notice of
arbitration, a tribunal of arbitrators (one selected by
31
<PAGE>
AAI, one selected by AACA, and one who shall be appointed by the first two
arbitrators), who shall be located in Ft. Lauderdale, Florida, shall be
appointed as soon as possible on the request of either party. If any party
fails to select an arbitrator within ten (10) days after demand, such arbitrator
shall be appointed by the American Arbitration Association. The fee payable to
the arbitrators shall be based upon the then current fee schedule of the
American Arbitration Association.
13.5.3 The parties shall have reasonable rights of discovery.
13.5.4 Except as set forth in this Section, the tribunal shall conduct
the arbitration according to the Commercial Arbitration Rules of the American
Arbitration Association. Arbitration shall take place in Ft. Lauderdale,
Florida, unless the parties otherwise agree. The tribunal shall base the
decision on the express language of this Agreement. Within ten (10) days after
the tribunal is appointed, or as soon thereafter as shall be reasonably
practicable, the tribunal will conduct a hearing on the dispute. Each party may
make written submissions to the tribunal, and each party shall have a reasonable
opportunity for rebuttal, but no longer than ten (10) days. As soon as
reasonably practicable, but not later than ten (10 ) days after the hearing is
completed, the tribunal shall arrive at a final decision, which shall be reduced
to writing, signed by the tribunal and mailed to each party and its legal
counsel.
13.5.5 All decisions of the tribunal shall be final, and binding on
all parties, and (except as provided below) shall constitute the only method of
resolving disputes. Judgment may be entered upon the decision in accordance
with applicable law in any court having jurisdiction.
13.5.6 This arbitration section and all decisions of the tribunal
shall be specifically enforceable in a court of law, or in the arbitral
tribunal.
13.6 SECTION AND EXHIBIT HEADINGS. The Section and Exhibit headings
----------------------------
are for reference only and shall not limit or control the meaning of any
provisions of this Agreement.
13.7 WAIVER. No delay or omission on the part of any party hereto in
------
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.
13.8 NATURE AND SURVIVAL OF REPRESENTATIONS. All statements contained
--------------------------------------
in any certificate delivered by or on behalf of a party to this Agreement in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties made by such party hereunder. The covenants,
representations and warranties made by the parties each to the other in this
Agreement or pursuant hereto shall survive the Effective Time as set forth in
Section 12.8 of this Agreement.
32
<PAGE>
13.9 EXHIBITS. All Exhibits, schedules and documents referred to in,
--------
or attached to, this Agreement are integral parts of this Agreement as if fully
set forth herein and all statements appearing therein shall be deemed to be
representations. All items disclosed hereunder shall be deemed disclosed only
in connection with the specific representation to which they are explicitly
referenced.
13.10 AMENDMENTS. This Agreement may be amended, but only in writing, signed
----------
by the parties hereto.
13.11 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument. Any signature page to this
Agreement may be witnessed by a telecopy or other facsimile of any original
signature page and any signature page of
any counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
13.12 ATTORNEYS' FEES. In the event that a suit, action, arbitration, or
---------------
other proceeding of any nature whatsoever, including, without limitation, any
proceeding under the U.S. Bankruptcy Code and involving issues peculiar to
federal bankruptcy law, any action seeking a declaration of rights or any action
for rescission, is instituted to interpret or enforce this Agreement or any
provision of this Agreement, each party shall be and remain liable for its
attorneys', paralegals', accountants', and other experts' professional fees and
all other fees, costs, and expenses actually incurred in connection therewith.
13.13 RULES OF CONSTRUCTION. All references herein to the singular shall
---------------------
include the plural, and vice versa, and all references herein to the neuter
shall include the masculine or feminine, as the case may be, and vice versa.
When general words or terms are used herein followed by the word "including" (or
another form of the word "include") and words of particular and specific
meaning, the general words shall be construed in their widest extent, and shall
not be limited to persons or things of the same general kind or class as those
specifically mentioned in the words of particular and specific meaning. All
parties have participated in the drafting of this Agreement. No provision of
this Agreement shall be construed against or interpreted to the disadvantage of
a party by reason of such party having or being deemed to have drafted,
structured or dictated such provisions.
13.14 TIME. Time is of the essence of this Agreement.
----
13.15 FURTHER ASSURANCES. Following the Closing, AAI Physicians and AACA
------------------
will, at the request of the other, execute and deliver such other instruments or
assignment, transfer and conveyance and take such other actions as a party may
reasonably request to more effectively effect the Merger and other transactions
contemplated by this Agreement. To the extent that AAI's rights under any AAI
Contract, by virtue of the
33
<PAGE>
Merger, require the consent of another person which consent has not been
obtained prior to, or concurrent with, the execution hereof, AAI Physicians will
cooperate with AACA and the Surviving Corporation in any reasonable arrangement
that is designed to provide for AACA and the Surviving Corporation the benefit
of such asset.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
ASTHMA & ALLERGY CAREAMERICA, INC.,
a Delaware corporation ("AACA")
By: _____________________________________
Title: _______________________________
AACA - AAI ACQUISITION, INC., a Florida corporation
("AACA-AAI")
By: _____________________________________
Title: _______________________________
VIVRA INCORPORATED, a Delaware
corporation ("VIVRA")
By: _____________________________________
Title: _______________________________
ALLERGY & ASTHMA INSTITUTE OF SOUTH FLORIDA, P.A., a
Florida professional service corporation ("AAI")
By: _____________________________________
Title: _______________________________
_________________________________________
FRANK R. MARTELL, M.D., an
individual resident of Florida
("Martell")
_____________________________________
<PAGE>
PHILIP C. MIRMELLI, M.D., an individual resident of
Florida ("Mirmelli")
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS Agreement and Plan of Merger (the "Agreement") is made as of May
1, 1996 by and among VIVRA RENAL CARE, INC., a Nevada corporation ("VRC" or
"Buyer"), VIVRA INCORPORATED, a corporation ("Vivra"), KIDNEY CENTERS OF
CHARLESTON, INC., a South Carolina corporation, (the "Company" or "KCC"), GEORGE
MALANOS, M.D., JERRY OWENS, M.D. and ARTHUR SMITH, M.D. (collectively, the
"Shareholders").
R E C I T A L S
A. KCC owns and operates facilities (the "Facilities") located at
9305 Medical Plaza Drive in N. Charleston, South Carolina 29406; 2308 Cosgrove
at I-26, Charleston, South Carolina 29405; 219 Highway 52 N, Suite J, Moncks
Corner, South Carolina 29461; and 109 Burton Avenue, Summerville, South Carolina
29485. KCC provides continuous ambulatory peritoneal dialysis and hemodialysis
services, treatments, counselling and instruction at the Facilities, in the home
and on an out-patient basis to persons with kidney diseases or conditions
(collectively, the "Dialysis Business").
B. The Shareholders each own the number of common shares, $100 par
value per share, of the Company set forth opposite his name on Exhibit A
(collectively, all such shares are referred to as the "KCC Shares").
C. It is the intention of the parties to adopt a plan of
reorganization pursuant to the requirements of Section 368(a)(2)(D) of the
Internal Revenue Code (the "Code").
NOW, THEREFORE, it is agreed:
1. The Merger.
----------
1.1 The Merger. Upon the terms and subject to the conditions hereof and
----------
in accordance with the Nevada General Corporation Law (the "NGCL") and the South
Carolina Business Corporation Act (the "SCBCA"), the Company shall be merged
with and into VRC and the separate existence of the Company shall thereupon
cease, and VRC, as the Surviving Corporation, shall continue to exist under and
be governed by the NGCL.
<PAGE>
1.2 Effect of the Merger. At and after the Effective Time, the effect of
--------------------
the Merger shall, in all respects, be as provided in the SCBCA and NGCL. From
and after the Effective Time, the Surviving Corporation shall be a Nevada
corporation whose purpose shall be to engage in such business activities for
which corporations may be organized under the NGCL. The total number of shares
and the par value of each class of stock which the Surviving Corporation shall
be authorized to issue shall be as set forth in the Articles of Incorporation
described in Section 1.4 hereof.
-----------
1.3 Effective Time; Filing of Certificate of Merger. The Merger shall be
-----------------------------------------------
effected by the filing at the time of the Closing (as defined herein) of the
Articles of Merger and the Plan of Merger substantially in the form of Exhibit B
annexed hereto (the "Articles of Merger") with the Secretary of State of South
Carolina in accordance with the provisions of the SCBCA and with the Secretary
of State of Nevada in accordance with the provisions of the NGCL. The Merger
shall become effective at the close of business on the date of such filings (the
"Effective Time"). At the Closing, KCC and VRC shall cause the Articles of
Merger and the Plan of Merger to be filed with the Secretary of State of South
Carolina as provided in the SCBCA and the Secretary of State of Nevada as
provided in the NGCL, and shall take any and all other lawful actions and do any
and all other lawful things to cause the Merger to become effective.
1.4 Articles of Incorporation. At the Effective Time, the Articles of
-------------------------
Incorporation of VRC, as in effect immediately prior to the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law.
1.5 By-Laws. The By-laws of VRC, as in effect immediately prior to the
-------
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended in accordance with applicable law.
1.6 Directors and Officers. The directors and officers of VRC immediately
----------------------
prior to the Effective Time shall be the directors and officers of the Surviving
Corporation. Each director and officer of the Surviving Corporation shall hold
office in accordance with the Articles of Incorporation and By-laws of the
Surviving Corporation.
1.7 Tax and Accounting Consequences. It is intended by the parties hereto
-------------------------------
that the Merger shall (i) constitute a reorganization within the meaning of
Section 368 of the Code, and (ii) qualify for accounting treatment as a pooling
of interests.
-2-
<PAGE>
1.8 Additional Actions. If, at any time after the Effective Time, the
------------------
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (i) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, title
to and possession of any property or right of either KCC or VRC acquired or to
be acquired by reason of, or as a result of, the Merger, or (ii) otherwise to
carry out the purposes of this Agreement, each of KCC or VRC and its officers
and directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such deeds, assignments
and assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement; and the
officers and directors of the Surviving corporation are fully authorized in the
name of either KCC or VRC to take any and all such action.
2. Conversion of Shares.
--------------------
2.1 Conversion of KCC Shares. Each of the KCC Shares issued and
------------------------
outstanding immediately prior to the Effective Time (other than any shares held
in the Company's treasury) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive that
certain number of shares of common stock, $.01 par value per share, of Vivra
("Vivra Common Stock") determined as follows: (A) the Aggregate Consideration
(as defined below) divided by the Average Closing Price (as defined below)
divided by (B) the total number of KCC Shares outstanding.
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. Any KCC Share held in the treasury of the Company
shall be canceled and no payment shall be made in respect thereof.
The shares of Vivra Common Stock to be issued to the Shareholders are
referred to in this Agreement as the "Vivra Shares." The Vivra Shares shall
initially be delivered to the Escrow Holder pursuant to Section 7.2 of this
-----------
Agreement.
2.2 Conversion of VRC Common Stock. Each share of common stock of VRC
------------------------------
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 (1) validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation. Each
certificate of VRC evidencing ownership of any such shares
-3-
<PAGE>
shall, following the Merger, evidence ownership of the same number of shares of
common stock of the Surviving Corporation.
2.3 Fractional Shares. No fraction of a share of Vivra Common Stock will
-----------------
be issued by virtue of the Merger, but in lieu thereof each holder of KCC Shares
who would otherwise be entitled to a fraction of a share of Vivra Common Stock
(after aggregating all fractional shares of Vivra Common Stock to be received by
such holder) shall receive from Buyer an amount of cash (rounded to the nearest
whole cent) equal to the product of (i) such fraction, multiplied by (ii) the
Average Closing Price (the "Cash").
2.4 No Further Transfers. At the Effective Time, the stock transfer books
--------------------
of KCC shall be closed and no transfer of KCC Shares shall thereafter be made.
2.5 No Dissenters' Rights. The Shareholders have unanimously approved the
---------------------
Merger and, consequently, no Shareholder is entitled to dissenters' rights under
the SCBCA.
2.6 Determination of Aggregate Consideration. (a) The aggregate
----------------------------------------
consideration for the KCC Shares (the "Aggregate Consideration") shall be equal
to (i) $18,000,000, plus (ii) an amount (which may be a negative amount) equal
to (A) the sum of the accounts receivable (less reserve for doubtful accounts,
reserve for disallowances, contractual allowances and administrative
allowances), cash and cash equivalents deposits, and the unaccrued portion of
prepaid items, such as the Facilities' professional and public liability
insurance, personal property taxes, and similar items of the Company less (B)
the liabilities of the Company (as reflected on the Final Closing Balance Sheet
(as defined herein). Within forty-five (45) days after the Closing, VRC, at its
expense, shall hire Pratt-Thomas, Gumb & Co., P.A., and prepare and deliver to
the Shareholders 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
Aggregate Consideration (the "Closing Balance Sheet"). The Closing Balance
Sheet shall be prepared in accordance with generally accepted accounting
principles and procedures; provided, however, that for purposes of the Closing
-------- -------
Balance Sheet, (x) accounts receivable which are one hundred twenty (120) days
or more past due and accounts receivable - Collection Agency shall not be
recorded on the Closing Balance Sheet, (y) the income tax liability resulting
from the conversion from a cash to an accrual accounting method shall be
recorded as a liability, and (z) and the income tax liability resulting from the
conversion of the Company from an S-corporation to a C-corporation such that all
income tax liability for the period prior to Closing is recorded as a liability.
-4-
<PAGE>
(b) VRC shall promptly provide the Shareholders with access to all
information which the Shareholders shall reasonably request to verify the
Closing Balance Sheet. The Closing Balance Sheet as delivered to the
Shareholders shall be final for purposes of determining the Aggregate
Consideration unless VRC is given written notice that the Shareholders dispute
the calculation of the Aggregate Consideration (the "Dispute Notice") within ten
(10) business days after the Closing Balance Sheet has been given to the
Shareholders. Any Dispute Notice shall set forth in reasonable detail the items
in dispute. In the event a Dispute Notice is timely given to VRC, VRC and the
Shareholders shall have thirty (30) days to resolve the dispute and if not
resolved, the dispute shall be submitted to a "Big Six" accounting firm which,
during the five (5) years preceding the date of the Dispute Notice, has not
performed services for the Shareholders, the Company, Vivra Incorporated, or any
affiliate of any of them, chosen by lot, unless otherwise agreed by the parties
in writing (the "Arbitrator"). The Arbitrator shall be instructed to arbitrate
such dispute and determine the Aggregate Consideration using the principles and
procedures described in Section 2.6(a), within thirty (30) days. Each party
--------------
shall pay its own fees and expenses in connection with resolving a Dispute
Notice. Buyer and the Shareholders 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 Aggregate Consideration 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 VRC if a Dispute Notice is not properly delivered, (ii) determined
by mutual agreement of VRC and the Shareholders or (iii) determined by the
written resolution of the Arbitrator shall be the "Final Closing Balance Sheet".
3. Surrender of Certificates.
-------------------------
3.1 At the Closing, each Shareholder shall be required to surrender all of
his certificates which immediately prior to the Effective Time represented any
of the KCC Shares held of record and owned by him (the "Certificates") shall be
required to surrender such Certificates for cancellation to the Escrow Holder
(together with stock powers endorsed in blank). Until so surrendered, each
Certificate which immediately prior to the Effective Time represented KCC Shares
(other than shares held in the treasury) shall upon and after the Effective Time
be deemed for all purposes to represent and evidence only the right to receive
the Vivra Shares determined in accordance with Section 2.1, and the Cash
-----------
pursuant to Section 2.3. Within five (5) business days after the receipt of the
-----------
Certificates, through such reasonable procedures as
-5-
<PAGE>
Buyer may adopt, Buyer or
any agent appointed by Buyer shall deliver to the Escrow Holder certificates
representing the Vivra Shares determined in accordance with Section 2.1, and the
-----------
Cash pursuant to Section 2.3. Upon receipt of the certificates representing
-----------
the Vivra Shares and the Cash (if any), the Escrow Holder shall deliver the
Certificates to VRC.
3.2 No dividends or other distributions declared or made after the date of
this Agreement with respect to the Vivra Shares with a record date after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the Vivra Shares represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificate representing whole Vivra Shares issued in exchange
therefor, without interest, at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
payable with respect to such whole Vivra Shares.
4. Transfer of Patient Records; Covenants.
--------------------------------------
4.1 Transfer of Custody of Patient Records. The Company and the
--------------------------------------
Shareholders agree to turn over to VRC 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 the Company's and the Shareholders'
possession as of the Closing Date (collectively the "Patient Records").
"Patient" shall mean any past or current patient treated at the Facilities and
for whom the Company and the Shareholders keep, maintain or have custody of any
records, files, charts, x-ray files or any similar data. VRC 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. Buyer shall grant the Shareholders
access to any such records which shall be during normal business hours, with
prior notice to Buyer or Vivra of the time when such access shall be needed.
Shareholders shall be entitled to copy such records, at their expense, as
necessary to comply with applicable law or for billing purposes.
4.2 Noncompetition, Nonsolicitation and Nondisclosure Covenants.
-----------------------------------------------------------
4.2.1 Covenants.
---------
(a) Noncompetition Covenant. The Company and the Shareholders
-----------------------
each agree that for a period (the "Restricted Period")
-6-
<PAGE>
beginning on the Closing and ending on the fifth (5th) anniversary thereof,
it/he nor any of its/his Affiliates (as defined herein) will, either jointly or
individually, directly or indirectly, compete with VRC or its affiliates or own,
manage, operate, join, control, advise, consult with or participate in the
ownership, operation, management or control (other than as a shareholder owning
less than 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 each of the
Facilities (the "Restricted Area"), nor will it/he advise, assist, consult with,
lease or sell real property to (or permit its/his 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. The Company and the Shareholders
------------------------
agree that during the Restricted Period, it/he 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) Company's and Shareholders' Nondisclosure Covenant. In the
--------------------------------------------------
operation and development of VRC's and its affiliates' existing businesses and
the planning and development of their proposed businesses, VRC and its
affiliates 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 location, development and expansion of existing and proposed
facilities;
(ii) Marketing. Market surveys, studies and analyses;
---------
(iii) Services. Information concerning the identities,
--------
locations and qualifications of professionals and other persons presently, or
prospectively to be, retained or employed by VRC or any of its affiliates;
-7-
<PAGE>
(iv) Suppliers, etc. Information concerning: the
---------------
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
------------------
legislative, administrative, regulatory and zoning requirements, bodies and
officials;
(vi) Records. Medical, patient and personnel records;
-------
(vii) Data. Statistical, financial, cost and accounting
----
data;
(viii) Patients. Existing and prospective patient lists,
--------
names and addresses;
(ix) Manuals. Administrative, accounting, operations and
-------
procedures manuals; and
(x) This Transaction. All writings, conversations and
----------------
information regarding the transactions
contemplated by this Agreement, including information regarding the Company.
The Company and the Shareholders each 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
VRC and its affiliates. To the extent that any such Confidential Information
becomes available to the Company and the Shareholders, the Company and the
Shareholders each agree that it/he will not use or divulge such information
without the prior written consent of VRC and that it/he holds such information
in a fiduciary capacity for the sole benefit of VRC. The Company and the
Shareholders each 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 either the Company or
the Shareholders breach this covenant, VRC shall have available the remedies
provided by all such state and federal statutes, rules and regulations as well
as such other remedies
-8-
<PAGE>
as may otherwise be available. The restrictions set forth in this Section
-------
4.2.1(c) shall not apply to any part of the Confidential Information:
- -------
(i) which is or becomes generally available to the public or publicly known
other than as a result of disclosure by the Company or the Shareholders; (ii)
which becomes available to the Company or the Shareholders on a nonconfidential
basis from a source other than VRC or its or affiliates who is not bound by a
non-disclosure obligation; or (iii) to the extent it is disclosed by the Company
or the Shareholders pursuant to the requirement of a governmental agency or
court of competent jurisdiction or as otherwise required under
applicable law.
(d) Buyer's and Vivra's Nondisclosure Covenant. Prior to the
------------------------------------------
Closing Date, Buyer and Vivra each agree 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 Company and the Shareholders with respect to the Company, and not to
divulge or discuss any such information, or provide copies or extracts thereof
to any third parties. Buyer and Vivra agree not to intentionally publish a
press release in the Charleston, South Carolina area containing the price for
the KCC Shares; provided, however, that it is understood between the parties
that Buyer and Vivra will disclose the price for the KCC Shares in publicly
available filings with the Securities and Exchange Commission and other
regulatory authorities.
4.2.2 Transferability. The Company and the Shareholders each agree
---------------
that the covenants contained in Section 4.2.1 (the "Covenants") may be assigned
-------------
by VRC to any person, firm or business entity to whom the ownership and
operation of the Facilities 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.
4.2.3 Severability. It is further understood and agreed that the
------------
scope of the Covenants is reasonable in activities, time and area, and the
Covenants are fairly necessary to protect the investment of VRC 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.
-9-
<PAGE>
4.2.4 Injunction. It is further understood and agreed that VRC 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 VRC shall be entitled to
appropriate remedies of specific performance and injunctive relief in the event
of such breach.
5. Representations and Warranties of the Company and the Shareholders. The
------------------------------------------------------------------
Company and each of the Shareholders, jointly and severally, represent and
warrant to Buyer and Vivra as of the date hereof, and as of the Closing Date, as
follows:
5.1 Organization and Capitalization.
-------------------------------
(a) The Company is, and on the Closing Date will be, a South
Carolina corporation duly organized, validly existing and in good standing under
the laws of the State of South Carolina, and has full power and authority to
carry on its Dialysis Business.
(b) The authorized capital stock of KCC consists of One Thousand
(1,000) shares of Common Stock, $100 par value. The Shares constitute all of
the shares of KCC (the "KCC Common Stock") issued and outstanding on the date
hereof. All of the 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
Shareholder or the Company is a party or binding upon any Shareholder or the
Company providing for the issuance or transfer by any Shareholder or the Company
of any of the capital stock of the Company. Each Shareholder is the sole record
and beneficial owner of the Shares set forth opposite his name on Exhibit A, and
has good and marketable title to such Shares and the absolute right, power and
capacity to sell, assign, transfer and deliver such 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 Shareholder is conveying to Buyer good and marketable
title to such Shares free of any interest whatsoever of third parties.
5.2 Authority. All actions required to be taken by the Company and the
---------
Shareholders to 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. The Company and the Shareholders have the
power and authority (without the consent of any other
-10-
<PAGE>
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 the Company and the
Shareholders, will be their valid and binding obligations enforceable against
the Company and the Shareholders 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.
5.3 Financial Statements.
--------------------
5.3.1 Statements Delivered. The Company has delivered or will
--------------------
deliver to Buyer the following financial statements:
(a) Balance Sheet and Income Statement. Balance sheets and
----------------------------------
statements of profit and loss for the Company at and for the years ended
December 31, 1993, 1994 and 1995 and at and for the four months ended April 30,
1996 (Schedule 5.3.1(a)) (collectively, the "Financials").
-----------------
(b) Treatment Report. A report for the Company showing
----------------
treatments provided by the Dialysis Business from January 1, 1993 through April
30, 1996 (Schedule 5.3.1(b)) (collectively, the "Treatment Report").
-----------------
5.3.2 Representation. All of the Financials have been prepared on
--------------
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 5.3.1(a). The Treatment Report accurately presents the number of
- -----------------
treatments provided at or by the Facilities on the dates thereof and for the
period covered thereby.
5.4 Assets. Schedule 5.4 contains a complete and correct list of all
------ ------------
material items of personal property used in connection with the Dialysis
Business (collectively, the "Personal Property").
5.4.1 Extent. The Personal Property constitutes all
------
material items 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
-11-
<PAGE>
variety customary for facilities of size and utilization and with storage
capacity comparable to the Facilities;
5.4.2 Condition. There are no material defects or unsafe conditions
---------
with respect to the Assets (as defined below) and the Company and the
Shareholders 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 the Shareholders.
5.4.3 Title. Except as set forth on Schedule 5.4, the Company has
----- ------------
all right, title and interest in, and good and marketable title to, all of the
assets, properties and rights used in the Dialysis Business (collectively, the
"Assets") free and clear of any Encumbrance.
5.5 Effect of Agreement. The execution and delivery of this Agreement by
-------------------
the Company and the Shareholders and the consummation of the transactions
described herein, do not and will not:
5.5.1 Articles of Incorporation. Violate the Company's Articles of
-------------------------
Incorporation or Bylaws;
5.5.2 Breach of Agreements. Violate, constitute a breach of, cause a
--------------------
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 or any of the
Shareholders is a party or to which the Assets are subject or for which the
Company, Buyer or Vivra might become liable;
5.5.3 Acceleration of Indebtedness. Accelerate or constitute an
----------------------------
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
5.5.4 Judgments, etc. Violate, conflict with or result in the breach
---------------
of any judgment, order, writ, injunction, decree or any rule or regulation of
any court, governmental agency or instrumentality affecting the Shareholders,
the Company, the Dialysis Business or the Assets.
5.6 Compliance with Law. The Dialysis Business has been conducted in
-------------------
conformity, and the Shareholders and the Company are in compliance, with all
federal, state and local laws, regulations or orders, including without
limitation, employment, insurance,
-12-
<PAGE>
zoning, occupancy, building, occupational and licensure laws, regulations and
orders which affect the Dialysis Business and all laws relating to Medicare
and/or Medicaid, including, but not limited to, 42 U.S.C. section 1320(a)-7(a)
et seq., 42 U.S.C. section 1320(a)-7(b) et seq., 31 U.S.C. section 3729, and
- -- --- -- ---
any other federal or state provision relating to the filing of false claims or
payments for referrals. Neither the Company nor the Shareholders have 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
Section 5.6:
- -----------
5.6.1 Licenses, etc. The Company holds all rights, permits,
--------------
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 5.6.1 contains a complete and correct list of the Licenses, showing
- --------------
their dates of expiration where applicable. The Licenses are valid and in full
force and effect and no violations exist in respect thereof. There are no
pending, or, to the knowledge of the Company and the Shareholders, threatened,
any investigations or proceedings with respect to the Licenses. The Facilities
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 the Company and the Shareholders, no event has occurred which, with
the giving of notice or passage of time or both, would constitute a material
default thereunder.
5.6.2 Hazardous Materials. Except as disclosed in Schedule 5.6.2,
------------------- --------------
other than in compliance with all applicable laws, 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 Facilities (as
hereinafter defined). No written notification has been received with respect to
the space occupied by the Facilities (the "Premises") and there are no
proceedings or inquiries, pending or, to the knowledge of the Company and the
Shareholders, threatened, before any court, agency, authority or tribunal,
involving, concerning, or affecting the Premises, which an issue is the
violation of any federal, state or local law or regulation pertaining to
hazardous or toxic materials.
-13-
<PAGE>
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.
5.6.3 Filing of Reports. Other than claims or reports pertaining to
-----------------
individual patients, the Company will, and the Shareholders shall cause the
Company to, timely file 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 the
Shareholders have timely filed, in a complete and correct manner, all requisite
claims and other reports required to be filed in connection with all state and
federal Medicare and Medicaid programs due on or before the date hereof. There
are no claims, actions, payment reviews or appeals pending or threatened before
any commission, board or agency, including, without limitation, any intermediary
or carrier, the Administrator of the Health Care Financing Administration, or
the South Carolina Department of Health and Rehabilitative Services or any other
state or federal agency with respect to any Medicare or Medicaid claims filed by
the Company or the Shareholders on or before the date hereof or program
compliance matters, which would adversely affect the Company, the Shareholders,
the Assets, the operation or utility thereof, or the consummation of the
transactions contemplated hereby. No validation review or program integrity
review related to the Shareholders 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 the Company's or the
Shareholders' knowledge, threatened against or affecting either the
Shareholders, the Company, any of the Assets or the consummation of
the transactions contemplated hereby.
5.6.4 Occupational Safety. The Company has complied in all material
-------------------
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
-14-
<PAGE>
violation of which could have material adverse effect on the Dialysis Business,
the Assets or the Company, and with all orders, judgments and decrees of any
tribunal under such legislation that apply to the Dialysis Business, the Assets
or the Company.
5.6.5 Zoning. The operation and current use of the Premises are
------
permitted under existing zoning and other land use laws and regulations
applicable to the Premises, and there are no material plans, studies or efforts
of any governmental or nongovernmental authority, association, agency, person or
entity which would affect Buyer's or Vivra's proposed use or operation of the
Premises.
5.7 Litigation.
----------
5.7.1 Claims, Actions, etc. Except as set forth in Schedule 5.7,
--------------------- ------------
there are no claims, actions, suits, arbitrations, legal or other proceedings
pending or, to the best knowledge of the Company and the Shareholders,
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
the Shareholders or the Company is a party related to the Dialysis Business;
5.7.2 Governmental Investigation. Except as shown on Schedule 5.7,
-------------------------- ------------
no investigations for claims against (i) the Company, the Dialysis Business or
the Facilities or (ii) to the best knowledge of the Company and the
Shareholders, any of the medical staff members or employees of the Facilities,
are pending or threatened by any governmental agency or instrumentality; and
5.7.3 Judgments. Except as shown on Schedule 5.7, none of the
--------- ------------
Shareholders 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 Facilities or the consummation of
any of the transactions described in this Agreement.
5.8 Improper Payments. None of the Shareholders or the Company or any of
-----------------
their Affiliates, employees, representatives or agents has, directly or
indirectly, within the past four (4) years, given or made or agreed to give or
make any illegal commission, payment, gratuity, gift, political contribution or
similar benefit to any customer, supplier, governmental employee or other person
who may be in a position to help or hinder the Dialysis Business or the Company.
None of the Shareholders or the Company has filed any reports with any
governmental agency which disclose that he/it has
-15-
<PAGE>
participated in any of the foregoing practices or acts giving rise to such
practices.
5.9 Eminent Domain. There are no pending or, to the best knowledge of the
--------------
Company and the Shareholders, threatened proceedings in eminent domain or
otherwise, affecting any of the Assets or the Facilities.
5.10 Insurance. Schedule 5.10 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 or the Shareholders
covering the Assets, the Facilities and the Dialysis Business. These policies
are and will be maintained, in full force and effect, until the Closing Date.
Schedule 5.10 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.
5.11 Labor Arrangements. Except as shown on Schedule 5.11, 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 Facilities with respect to any of its
employees. Except as disclosed in Schedule 5.11, the Company has not
-------------
experienced, and there is not pending or, to the best knowledge of the Company
and the Shareholders, threatened, any labor dispute, strike, work stoppage or
slowdown or labor disturbance affecting the Facilities, nor has there been any
labor union organizing activity at the Facilities within the last three (3)
years. There is no unfair labor practice or other charge or complaint pending,
or, to the best knowledge of the Company and the Shareholders, threatened
against the Company, before any court, the National Labor Relations Board or any
other governmental agency.
5.12 Personnel; Compensation. Schedule 5.12 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 April 30, 1996. The Company has not increased the
compensation payable to any employee since February 20, 1996, without the prior
written consent of VRC.
5.13 Employment Contracts and Employee Benefit Plans. Schedule 5.13
----------------------------------------------- -------------
contains a complete and correct list and description of all employment contracts
to which the Company is a party or by
-16-
<PAGE>
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 Facilities, 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 either of the Company or, to the best knowledge of the Company
and the Shareholders, any fiduciary under any of these contracts or programs.
5.13.1 Employee Benefit Plans. Without limitation of Section 5.13,
---------------------- ------------
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 it or the
Shareholders or their successors could be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Code.
-17-
<PAGE>
(f) Reporting. The Company has complied with and prior to
---------
Closing will comply with all reporting requirements 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, nor will it 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.
5.14 Brokers. Neither the Company nor the Shareholders have 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.
5.15 Liabilities. Buyer will not be obligated for, nor will the Assets
-----------
secure or be subject to any liabilities or obligations of the Shareholders 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.
5.16 Material Contracts. Schedule 5.16 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 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 its behalf (collectively, the "Material Contracts"). The Company
has delivered accurate and complete copies of each Material Contract to Buyer.
All Material Contracts are valid, binding and enforceable in accordance with
their terms and are in full force and effect. Neither the Shareholders, the
Company nor, to the best knowledge of the Company
-18-
<PAGE>
and the Shareholders, 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 5.16, no Material Contract will be
-------------
affected by the transactions contemplated by this Agreement.
5.17 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;
(j) no financial arrangements have been made with the
Shareholders which negate the exchange of equity securities (such as loans made
against stock issued); and
(k) to the best knowledge of the Company and the Shareholders,
the Company, nor any of its affiliates, officers, or
-19-
<PAGE>
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.
5.18 Receipt of Information. The Shareholders have 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 May 9, 1995;
(vi) a copy of Vivra's Annual Report on Form 10-K for the fiscal year ended
November 30, 1995; (vii) a copy of Vivra's Proxy Statement for Vivra's annual
meeting to be held on May 2, 1996; and (viii) a copy of Vivra's prospectus on
Form S4 dated March 14, 1995 and all prospectus supplements.
5.19 Accounts Receivable. Schedule 5.19 sets forth an accurate and
------------------- -------------
complete aging of all outstanding accounts and notes receivables of the Company
as of April 30, 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.
5.20 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 it 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 of the Company
accurately and correctly reflected, the income, business, assets, operations,
activities and status of the Dialysis Business, the Company 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
-20-
<PAGE>
which have not been paid on the date hereof have been properly accrued for on
the Financial Statements. Since its incorporation and up to the Closing Date,
the Company has been taxable as an "S" corporation under the Code.
5.21 Bank Accounts. Schedule 5.21 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
<PAGE>
nature and the names of all persons authorized to draw thereon, make withdrawals
therefrom or have access thereto. Schedule 5.21 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 its
Investments.
5.22 Transactions with Affiliates. Except as otherwise set forth on
----------------------------
Schedule 5.22, neither of the Company, the Shareholders nor any of their
- -------------
Affiliates, 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 Company or the Shareholders, individually or collectively, or any member
of any Shareholder's immediate family.
5.23 Interim Change. Except as set forth in Schedule 5.23 or in the
-------------- -------------
Financials, since March 31, 1996 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;
-21-
<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 change in treatments provided by the Dialysis Business
greater than five percent;
(h) any declaration or payment of any dividends or other
distributions in respect of the capital stock of the Company; or
(i) any transaction not in the ordinary course of business.
Except as disclosed on Schedule 5.23, since March 31, 1996 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 5.16 or not required to
-------------
be so disclosed in the ordinary course of business.
5.24 Disclosure by the Company and the Shareholders. Set forth on
----------------------------------------------
Schedule 5.24 is a description of any of the following events:
- -------------
(a) any disciplinary, peer review or professional review
investigation, proceeding or action instituted against the Company or any
Shareholder (as applicable) 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 the Company or any Shareholder
of filing false health care claims, violating anti-kickback laws or
engaging in other billing improprieties;
-22-
<PAGE>
(c) any allegation, or any investigation or proceeding based on any
allegation or proceeding based on any allegation, against the Company or
any Shareholder (as applicable) of violating professional ethics or
standards, or engaging in illegal, immoral or other misconduct (of any
nature or degree), relating to the practice of medicine; and
(d) any denial or withdrawal of an application of the Company or any
Shareholder (as applicable) 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.
5.25 No Untrue Representation or Warranty. No representation or warranty
------------------------------------
by the Company and/or the Shareholders in this Agreement, and no statement,
schedule or certificate furnished or to be furnished to Buyer or Vivra 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.
6. Representations and Warranties of Buyer. Buyer represents and warrants to
---------------------------------------
the Company and the Shareholders that:
6.1 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 Nevada. Vivra 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.
6.2 Authority. The execution, delivery and performance of this Agreement
---------
and the consummation of the transactions described in it by Vivra and VRC have
been duly authorized and approved by VRC's and Vivra's Boards of Directors
(either specifically or by appropriate grant of general authority), and by all
other necessary corporate action on its part. The persons who have executed
this Agreement on behalf of Buyer and Vivra have been duly authorized to do so
by all necessary corporate action by Buyer and Vivra, respectively. Each of
Buyer and Vivra have the corporate power and authority to enter into, deliver,
and perform this Agreement, and this Agreement, when executed and delivered by
each of Buyer and Vivra, respectively, will be a valid and binding obligation of
Buyer and Vivra, respectively, enforceable against Buyer and Vivra,
respectively, according to its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other
-23-
<PAGE>
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.
6.3 Brokers. Neither Buyer nor Vivra has 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.
6.4 Effect of Agreement. Neither the execution and delivery of this
-------------------
Agreement by Buyer or Vivra nor the consummation of the transactions described
herein at the Closing will:
6.4.1 Articles and Bylaws. Violate Vivra's Certificate of
-------------------
Incorporation or Restated Bylaws or VRC's Articles of Incorporation or Bylaws;
6.4.2 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 or Vivra is subject or for which Shareholders
might become liable;
6.4.3 Acceleration of Indebtedness. Accelerate or constitute an
----------------------------
event entitling the holder of any indebtedness of Buyer or Vivra to accelerate
the maturity of any such indebtedness or to increase the rate of interest
presently in effect thereon; or
6.4.4 Judgments, etc. Violate, conflict with or result in the breach
---------------
of any judgment, order, writ, injunction, decree, or, to the best knowledge of
Buyer or Vivra, any rule or regulation of any court, governmental agency or
instrumentality affecting Buyer or Vivra.
6.5 Litigation. There is no material litigation, governmental
----------
investigation or other proceeding pending or, to the best knowledge of Buyer,
threatened to which Buyer or Vivra is a party that would adversely affect the
ability of Buyer or Vivra to consummate the transactions described in this
Agreement.
6.6 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. Vivra has properly filed all reports
required under the 1934 Securities and Exchange Act.
-24-
<PAGE>
7. Covenants of the Company and the Shareholders. The Company and the
---------------------------------------------
Shareholders, jointly and severally, covenant and agree that:
7.1 Conduct of Business Pending the Closing. From the date of this
---------------------------------------
Agreement to the Closing Date, the Company will, and the Shareholders shall
cause the Company to:
7.1.1 Conduct of Dialysis Business; Operation of Facilities. Conduct
-----------------------------------------------------
the Dialysis Business and operate the Facilities 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;
7.1.2 Preservation of Organization. Use best efforts to preserve the
----------------------------
Dialysis Business and the Facilities intact and to preserve the goodwill of all
suppliers, customers, patients, physicians, providers and others with whom
Shareholders or the Company have business relationships;
7.1.3 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;
7.1.4 Employees. Take no action which would interfere with Vivra's
---------
or VRC's relations with employees at the Facilities and not increase the
compensation payable to any of such employees;
7.1.5 Liabilities. Not incur any obligation or liability other than
-----------
current liabilities incurred in the ordinary course of business consistent with
past practices; and
7.1.6 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.
7.1.7 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.
7.1.8 Material Contracts. Not enter into, amend or terminate any
------------------
Material Contracts.
7.2 Restrictions on Transfer. Each Shareholder agrees that he will not
------------------------
directly or indirectly sell, assign, transfer, give, pledge, encumber or
otherwise dispose of any interest in his Shares, prior to the Closing and will
not directly or indirectly
-25-
<PAGE>
sell, assign, transfer, give, pledge, encumber or otherwise dispose of any
interest in the Vivra Shares acquired by such Shareholder 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"). Vivra
shall cause the Combined Earnings Report to be published and shall complete any
other actions necessary to be taken by it to permit the Vivra Shares to be
tradeable under Rule 145(d) of the Securities Act of 1933, as amended, as soon
as possible, but no more than 75 days after the Closing. Legal counsel for the
Company and the Shareholders (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 the Shareholders
and upon such delivery, the provisions of this Section 7.2 shall be no longer
-----------
effective. The Escrow Holder shall be entitled to deposit such shares with a
court of law in the event of a dispute and VRC shall not seek to have the Escrow
Holder disqualified from representing the Shareholders in such dispute. VRC and
the Shareholders shall jointly indemnify, defend and hold the 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.
7.3 Insurance.
---------
7.3.1 Maintenance of Existing Insurance. The Company shall, and the
---------------------------------
Shareholders shall cause the Company to, maintain in full force and effect to
the Closing Date all policies of insurance relating to the Assets and Facilities
now in effect and will give all notices and present all respective claims under
such policies of insurance in a timely fashion up to the Closing Date.
7.3.2 Tail Coverage. Shareholders shall, at Shareholders' expense,
-------------
obtain liability insurance coverage for all occurrences prior to the Closing
Date and shall list VRC as an additional insured under such policy.
7.4 Audited Financial Statements. On and after Closing, the Shareholders
----------------------------
shall cooperate with VRC in the preparation of such audited financial
statements, prepared at VRC's expense, in respect of the Assets and results of
operations of the Dialysis Business prior to Closing as VRC reasonably deems
appropriate for VRC's financial and tax reporting purposes.
7.5 Satisfaction of Conditions Precedent. The Company and the
------------------------------------
Shareholders (as applicable), in addition to specific obligations set forth
elsewhere in this Section 7, shall (i) upon satisfaction of the conditions
---------
precedent set forth in Section 10, execute and deliver the documents required to
----------
be delivered by the
-26-
<PAGE>
Company and the Shareholders (as applicable) pursuant to Section 11 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 Section 9.
---------
7.6 Supplements. If any representation, warranty or statement of the
-----------
Company and/or the Shareholders or any schedule delivered to Buyer or Vivra
shall become incorrect, the Company and/or the Shareholders 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 Section 9.1 and no such
-----------
supplement or amendment shall affect the Company's and/or the Shareholders'
obligations under Section 12.
----------
8. Covenants of Buyer. Buyer covenants and agrees that:
------------------
8.1 Maintenance of Records; Access by Shareholders. Subject to the
----------------------------------------------
applicable law of confidentiality and privacy, Buyer shall for a period of 7
years maintain all business records of the Facilities and make such records
available for use by the Shareholders as needed. Access to any such records
shall be during normal business hours, with prior notice to Buyer or Vivra of
the time when such access shall be needed. The Shareholders' employees,
representatives and agents shall conduct themselves in such a manner as to not
unnecessarily or unreasonably disrupt Buyer's or Vivra's normal business
activities.
8.2 Audited Financial Statements. On and after the Closing Date (and
----------------------------
after Closing), Buyer shall, or shall cause VRC to, cooperate with the
Shareholders 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 the Shareholders reasonably deem appropriate for the Shareholders'
financial and tax reporting purposes.
8.3 Satisfaction of Conditions Precedent. Buyer shall (i) upon
------------------------------------
satisfaction of the conditions precedent set forth in Section 9, execute and
---------
deliver, and cause VRC to execute and deliver, the documents required to be
delivered by Buyer and/or VRC pursuant to Section 11, 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
Section 10.
- ----------
8.4 Public Announcement. VRC agrees to assist the Shareholders in
-------------------
announcing this transaction to the public in such
-27-
<PAGE>
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.
9. Buyer's Conditions Precedent to Closing. Buyer's obligation to perform
---------------------------------------
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:
9.1 Warranties True and Correct. Each of the representations and
---------------------------
warranties of the Company and/or the Shareholders 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 the Company and/or the Shareholders by such
date shall have been performed and complied with in all material respects.
9.2 Deliveries. The Company and/or the Shareholders shall have executed
----------
and delivered all of the documents required to be delivered by the Company
and/or the Shareholders (as applicable) pursuant to Section 11.
----------
9.3 Approval. The form and substance of all certificates, instruments,
--------
opinions and other documents delivered to Buyer or Vivra pursuant to this
Agreement shall be reasonably satisfactory to VRC and its counsel.
9.4 Litigation. No litigation or governmental investigation, proposed or
----------
pending, shall have been commenced or threatened by persons other than Buyer,
Vivra or their 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 Facilities or
the Assets or any party's ability to consummate the transactions contemplated by
this Agreement.
9.5 Condition of Assets. The Dialysis Business, the Assets and the
-------------------
Facilities 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.
9.6 Registration of Vivra Shares. The registration statement covering the
----------------------------
Vivra Shares 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.
-28-
<PAGE>
9.7 Consents. All consents by third parties that are required for the
--------
transfer of the 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 and/or the
Shareholders are a party or to which any portion of their property is subject,
shall have been obtained or provided for and shall remain in effect.
9.8 Due Diligence. VRC 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 VRC in its sole but good faith discretion.
10. Company's and Shareholders' Conditions Precedent to Closing. The Company's
-----------------------------------------------------------
and/or the Shareholders' obligation to perform 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 the Shareholders and may be waived by the
Shareholders:
10.1 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 and Vivra by such dates shall have been performed and complied with in all
material respects.
10.2 Deliveries. Vivra and VRC shall have executed and delivered all of
----------
the documents required to be delivered by Vivra and VRC pursuant to Section 11.
----------
10.3 Approval. The form and substance of all certificates, instruments,
--------
opinions and other documents delivered to the Company and/or the Shareholders
pursuant to this Agreement shall be satisfactory in all reasonable respects to
the Company, the Shareholders and their counsel.
10.4 Litigation. No litigation or governmental investigation, proposed or
----------
pending, shall have been commenced or threatened by persons other than the
Company, the Shareholders or their 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.
10.5 Registration of Vivra Shares. The registration statement covering
----------------------------
the Vivra Shares shall have remained effective
-29-
<PAGE>
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.
11. Closing. The Closing of the transactions hereunder shall be effected as
-------
set forth in Section 11.
----------
11.1 Closing. The closing of the Merger (the "Closing") shall occur on
-------
May 1, 1996 or on such other date as the parties may agree (the "Closing Date")
at the offices of McDermott, Will & Emery, Chicago, Illinois.
11.2 Deliveries. On the Closing Date, deliveries shall be made by the
----------
Company and/or the Shareholders (as applicable) as set forth in Section 11.2.1
--------------
and by Buyer and/or Vivra (as applicable) as set forth in Section 11.2.2.
--------------
11.2.1 Deliveries by the Company and/or the Shareholders. The
-------------------------------------------------
Company and/or the Shareholders shall deliver to Buyer (except, in the case of
subSection (a), to the Escrow Holder) the following documents and instruments,
in form and substance reasonably satisfactory to Buyer and its counsel, against
delivery by Buyer and/or Vivra of the items specified in Section 11.2.2:
--------------
(a) Certificates. Certificates duly endorsed for transfer;
------------
(b) Good Standing. A Certificate of good standing of the
-------------
Company as of a recent date from the Secretary of State of South Carolina;
(c) Corporate Documents. The minute books, by-laws and stock
-------------------
records of the Company, certified by the Secretary of the Company;
(d) Investment Letter. A letter substantially in the form
-----------------
attached hereto as Exhibit C, executed by each of the Shareholders.
---------
(e) Certificate. Certificates (the "Certificate") signed by
-----------
each of the Company and the Shareholders, dated the Closing Date, to the effect
that each of the representations and warranties made by the Company and the
Shareholders 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 the Company and/or the Shareholders by such date have been
so performed or complied with in all material respects, and that, to the best
knowledge of such
-30-
<PAGE>
signatory, there is no fact or condition which would cause the Company and/or
the Shareholders 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
Certificate by the Company and the Shareholders shall not limit their liability
and obligations following the Closing Date;
(f) Articles of Merger. Articles of Merger executed by the
------------------
Company;
(g) Tail Insurance. Evidence that the insurance required by
--------------
Section 7.4.2 of this Agreement has been obtained; and
- -------------
(h) Other. At the Closing, the Company and the Shareholders
-----
shall take such other steps as may be necessary or appropriate to place VRC in
actual possession and operating control of the Dialysis Business and the Assets.
11.2.2 Deliveries by Buyer and/or Vivra. Buyer and/or Vivra (as
--------------------------------
applicable) shall deliver to the Company and/or the Shareholders (except in the
case of subSection (a), to the Escrow Holder) the following items against
delivery by the Company and/or the Shareholders of the items specified in
Section 11.2.1:
- --------------
(a) Vivra Shares. Certificates evidencing the Vivra Shares to
------------
be issued to each Shareholder;
(b) Resolutions. Copies of resolutions of the Board of
-----------
Directors of Vivra and VRC, duly certified by its Secretary in form reasonably
satisfactory to counsel for Shareholders, authorizing and approving the
execution, delivery and performance of this Agreement by Vivra and VRC and all
actions to be taken by Vivra and VRC hereunder;
(c) Buyer's Certificate. A certificate ("Buyer's Certificate")
-------------------
signed by an authorized officer of Buyer, dated the Closing Date to the effect
that each of the representations and warranties made by the Buyer in this
Agreement are true and correct at and as of the Closing Date and that each of
the covenants, conditions and agreements to be performed or complied with by
Buyer and/or Vivra by such date have been so performed or complied with by Buyer
and/or Vivra 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; and
-31-
<PAGE>
(d) Articles of Merger. Articles of Merger executed by VRC.
------------------
11.3 Closing Agreements. At the Closing, the parties shall execute,
------------------
acknowledge and deliver the following:
11.3.1 Medical Director Contract. A Medical Director
-------------------------
Contract between VRC and Shareholders with a term of no less than ten (10)
years, substantially in the form attached hereto as Exhibit D.
11.4 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
11.4.1 by mutual consent of the Shareholders and Buyer;
11.4.2 by either the Shareholders 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
11.4.3 by either Buyer or the Shareholders if the Closing has not
occurred by June 30, 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.
12. Indemnification.
---------------
12.1 Indemnification. No claim for indemnification may be brought
---------------
hereunder until the Claims (as hereinafter defined) exceed $40,000; provided
however that once such threshold is met, the entire amount of Claims shall be
recoverable subject to the provisions of this Section. No claims for
indemnification hereunder shall be brought after the first anniversary of the
Closing Date. The parties shall seek recovery under all insurance policies
covering any Claim to the same extent as they would if such Claim was not
subject to indemnification hereunder. In the event that an insurance recovery
is made by an indemnitee, then a refund equal to the aggregate amount of the
recovery (net all collection expenses and any resulting increase in premium)
shall be made promptly to the indemnitor.
12.1.1 By the Company and the Shareholders. The Company
-----------------------------------
and the Shareholders, jointly and severally, shall, on demand, indemnify, defend
and hold Buyer and Vivra and their employees,
-32-
<PAGE>
agents, representatives, successors and assigns, harmless from, against and in
respect of any and all claims, losses, costs, expenses, liabilities and damages,
including interest, penalties and reasonable attorneys' fees and costs
(collectively, "Claims"), that any of them shall incur or suffer in connection
with (i) the claims of any third party, including but not limited to the
Company's employees, against any of them for alleged obligations or liabilities
of the Company and/or the Shareholders arising out of the Company's operation of
the Dialysis Business prior to the Closing Date; or (ii) the breach by the
Company or the Shareholders of any covenant or agreement or the inaccuracy of
any representation or warranty made by the Company and/or the Shareholders
herein.
12.1.2 By Buyer. VRC shall, on demand, indemnify, defend and hold
--------
the Shareholders 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 the
Shareholders arising out of VRC's operation of the Dialysis Business after the
Closing Date; or (ii) the breach by VRC of any covenant or agreement or the
inaccuracy of any representation or warranty made by VRC herein.
12.2 No Limitation. The indemnities in Sections 12.1.1 and 12.1.2 shall
------------- --------------- ------
not foreclose any other rights or remedies the parties may have to enforce the
provisions of this Agreement.
12.3 Notice and Right to Defend. If any Claim arises after the Closing
--------------------------
Date for which Buyer, on one hand, or the Company and the Shareholders, on the
other hand, may be liable under Section 12.1.1 or 12.1.2, 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 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,
-33-
<PAGE>
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.
13. Miscellaneous.
-------------
13.1 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:
-34-
<PAGE>
If to Buyer or Vivra:
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:
Chuck Ott, Esq.
Vivra General Counsel
400 Primrose, #200
Burlingame, CA 94010
Fax: (415) 375-7550
If to Shareholders:
George Malanos, M.D.
69 East Bay Street
Charleston, South Carolina 29401
Arthur Smith, M.D.
1862 Peaceful Way
Mount Pleasant, South Carolina 29464
C. Jerry Owens, M.D.
2162 Wappoo Hall Road
Charleston, South Carolina 29412
with a copy to:
Mr. Carl F. Muller, Esq.
Wyche, Burgess, Freeman & Parham
44 East Camperdown Way; P.O. Box 728
Greenville, South Carolina 29602-0728
or such other address as any person may request by notice given as aforesaid.
13.1.1 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.
13.1.2 Effective Time. All notice given pursuant to this paragraph
--------------
shall be deemed given and effective when received if
-35-
<PAGE>
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.
13.2 Payment of Expenses. The Company and the Shareholders, on the one
-------------------
hand, and Buyer and Vivra, on the other hand, shall pay their 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.
13.3 Sales Tax. The Shareholders shall pay any and all sales or use taxes
---------
arising as a result of the transactions hereunder.
13.2 Schedules. The Company and the Shareholders 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.
13.3 Termination. If the transactions contemplated hereby are not
-----------
consummated, Buyer will return, and will cause Vivra to return, to the Company
and the Shareholders, and the Company and the Shareholders 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.
13.4 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 the
Company and the Shareholders. In the event of a material loss, damage to or
taking of the Facilities, Buyer shall have the option of either (i) terminating
this Agreement or (ii) continuing this Agreement, in which event the
Shareholders and the Company shall assign to Buyer all of their 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.
13.5 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.
-36-
<PAGE>
13.6 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.
13.7 Entire Agreement. This Agreement (including the Schedules hereto)
----------------
and all other agreements and documents executed in connection herewith
constitute the entire agreement between the parties hereto with respect to the
subject hereof and supersede all prior agreements, understandings, negotiations
and discussions of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein. No amendment, alteration or modification of this Agreement
shall be valid unless in each instance such amendment, alteration or
modification is expressed in a written instrument duly executed by the parties.
13.8 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. VRC may assign
any of its rights or obligations under this Agreement to any of its wholly owned
subsidiaries without the consent of any Shareholder; provided such subsidiary
has a net worth of $20 million or greater. The Shareholders may not assign any
of their rights or obligations under this Agreement without the prior written
consent of VRC.
13.9 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.
13.10 Survival of Representations and Warranties. Subject to Section 12,
------------------------------------------ ----------
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.
13.11 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.
13.12 Severability. If any provision, clause or part of this Agreement,
------------
or the application thereof under certain circumstances,
-37-
<PAGE>
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.
13.13 Release. Shareholders hereby irrevocably and unconditionally
-------
release and discharge the Company and its officers, directors, successors and
assigns (the "Released Parties") from any and all actions, claims, causes of
action, suits, charges, complaints, contracts, agreements, liabilities or
obligations of any kind whatsoever in law or in equity, which the Shareholders
or their affiliates, heirs, executors, successors and assigns, can, shall or may
have against the Released Parties.
13.14 Governing Law. This Agreement is to be governed by, and interpreted
-------------
under, the laws of the State of Delaware.
-38-
<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
VIVRA RENAL CARE, INC., a Nevada corporation
By: ______________________________________
David P. Barry,
President
KIDNEY CENTERS OF CHARLESTON, INC., a South
Carolina corporation
By: ______________________________________
George Malanos, M.D.,
President
Shareholders:
______________________________________
GEORGE MALANOS, M.D.
______________________________________
JERRY OWENS, M.D.
______________________________________
ARTHUR SMITH, M.D.
<PAGE>
================================================================================
AGREEMENT AND PLAN OF MERGER
dated May 1, 1996
by and among
Melter, Inc.,
Melter Rehabilitation Services, Inc.,
Melvyn Drucker, M.D.,
Vivra Specialty Partners, Inc.
and
Vivra Incorporated
================================================================================
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER is made and entered into this 1st day of May,
1996, by and among Melter, Inc., a Florida corporation ("Melter"), Melter
Rehabilitation Services, Inc. ("Melter Rehabilitation"), Melvyn Drucker, M.D.
("Seller") Vivra Specialty Partners, Inc. a Nevada corporation ("VSP") and Vivra
Incorporated, a Delaware corporation ("Vivra").
WHEREAS, Melter and Melter Rehabilitation (collectively, the
"Companies") are engaged in the business of owning and/or operating orthopaedic
and/or physical therapy networks in the State of Florida (referred to herein as
the "Florida Business");
WHEREAS, Seller owns 500 shares of common stock, $1.00 par value, of
Melter (the "Melter Shares") and 100 shares of common stock, $0.01 par value, of
Melter Rehabilitation (the "Melter Rehabilitation Shares" and collectively with
the Melter Shares, the "Company Shares"); and
WHEREAS, Seller and Vivra will derive significant benefits from the
consummation of the transactions contemplated by this Agreement and wish to
induce the other to enter into this Agreement by entering into certain covenants
and agreements.
WHEREAS, it is the intention of the parties to adopt a plan of
reorganization pursuant to the requirements of Sections 368(a)(1)(D) and
368(a)(2)(D) of the Internal Revenue Code (the "Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties agree as follows:
ARTICLE I
THE TRANSACTION
The Merger.
- ----------
1.1. The Merger. Upon the terms and subject to the conditions hereof and
----------
in accordance with the provisions of Chapter 78, Nevada Revised Status (the
"NRS") and the Florida Business Corporation Act (the "FBCA"), each of the
Companies shall be merged with and into VSP and the separate existence of the
Companies shall thereupon cease, and VSP, as the Surviving
<PAGE>
Corporation, shall continue to exist under and be governed by the NRS.
1.2. Effect of the Merger. At and after the Effective Time, the effect of
--------------------
the Merger shall, in all respects, be as provided in the FBCA and NRS. From and
after the Effective Time, the Surviving Corporation shall continue to be a
Nevada corporation.
1.3. Effective Time; Filing of Certificate of Merger. The Merger shall
-----------------------------------------------
be effected by the filing at the time of the Closing (as defined herein) of the
Articles of Merger substantially in the form of Exhibit D annexed hereto (the
"Articles of Merger") with the Secretary of State of Florida in accordance with
the provisions of the FBCA and with the Secretary of State of Delaware in
accordance with the provisions of the NRS. The Merger shall become effective at
the close of business on the date of such filings (the "Effective Time"). At
the Closing, the Companies and VSP shall cause the Articles of Merger to be
filed with the Secretary of State of Florida as provided in the FBCA and the
Secretary of State of Nevada as provided in the NRS, and shall take any and all
other lawful actions and do any and all other lawful things to cause the Merger
to become effective.
1.4. Articles of Incorporation. At the Effective Time, the Articles of
-------------------------
Incorporation of VSP, as in effect immediately prior to the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law.
1.5. By-Laws. The By-laws of VSP, as in effect immediately prior to the
-------
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended in accordance with applicable law.
1.6. Directors and Officers. The directors and officers of VSP
----------------------
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation. Each director and officer of the Surviving
Corporation shall hold office in accordance with the Articles of Incorporation
and By-laws of the Surviving Corporation.
1.7. Tax and Accounting Consequences. It is intended by the parties
-------------------------------
hereto that the Merger shall (i) constitute a reorganization within the meaning
of Section 368 of the Code, and (ii) qualify for accounting treatment as a
pooling of interests.
1.8. Additional Actions. If, at any time after the Effective Time, the
------------------
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any
-2-
<PAGE>
other acts are necessary or desirable (i) to vest, perfect or confirm, of record
or otherwise, in the Surviving Corporation, title to and possession of any
property or right of either of the Companies or VSP acquired or to be acquired
by reason of, or as a result of, the Merger, or (ii) otherwise to carry out the
purposes of this Agreement, each of Seller, the Companies or VSP and its
officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
deeds, assignments and assurances in law and to do all acts necessary or proper
to vest, perfect or confirm title to and possession of such property or rights
in the Surviving Corporation and otherwise to carry out the purposes of this
Agreement; and the officers and directors of the Surviving Corporation are fully
authorized in the name of Seller, either of the Companies or VSP to take any and
all such action.
ARTICLE II
CONSIDERATION FOR TRANSFER
2.1. Conversion of the Companies Shares. (a) Each of the Melter Shares
----------------------------------
issued and outstanding immediately prior to the Effective Time (other than any
shares held in the Company's treasury) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive 249.6301 shares of common stock, $.01 par value per share, of
Vivra ("Vivra Common Stock") determined as follows: (A) $4,387,000 (the
"Aggregate Consideration") divided by the Average Closing Price (as defined
below) divided by (B) the total number of Company Shares outstanding.
(b) Each of the Melter Rehabilitation Shares issued and outstanding
immediately prior to the Effective Time (other than any shares held in the
Company's treasury) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive 249.6301
shares of common stock, $.01 par value per share, of Vivra ("Vivra Common
Stock") determined as follows: (A) the Aggregate Consideration divided by the
Average Closing Price (as defined below) divided by (B) the total number of
Company Shares outstanding.
(c) 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 ten (10) consecutive trading days ending on April 2, 1996. Based on this
calculation (a copy of which is attached as Schedule 2.1(c)), the Average
Closing Price is $29.29.
-3-
<PAGE>
(d) The shares of Vivra Common Stock to be issued to the Seller are
referred to in this Agreement as the "Vivra Shares." 137,828 Vivra Shares shall
initially be delivered to the Seller Representative pursuant to Section 6.11 of
------------
this Agreement and 11,949 Vivra shares shall be delivered to the Escrow Agent
pursuant to the Escrow Agreement (defined in Section 3.4(b) of this Agreement).
2.2. VSP Common Stock. Each share of capital stock of VSP issued and
----------------
outstanding immediately prior to the Effective Time shall continue to represent
one (1) validly issued, fully paid and nonassessable share of capital stock of
the Surviving Corporation. Each certificate of VSP evidencing ownership of any
such shares shall, following the Merger, continue to evidence ownership of the
same number of shares of common stock of the Surviving Corporation.
2.3. Fractional Shares. No fraction of a share of Vivra Common Stock
-----------------
will be issued by virtue of the Merger, but in lieu thereof each holder of
Company Shares who would otherwise be entitled to a fraction of a share of Vivra
Common Stock (after aggregating all fractional shares of Vivra Common Stock to
be received by such holder) shall receive from Vivra an amount of cash (rounded
to the nearest whole cent) equal to the product of (i) such fraction, multiplied
by (ii) the Average Closing Price (the "Cash").
2.4. No Further Transfers. At the Effective Time, the stock transfer
--------------------
books of each Company shall be closed and no transfer of Company Shares shall
thereafter be made.
2.5. No Dissenters' Rights. The Seller has unanimously approved the
---------------------
Merger and, consequently, the Seller is not entitled to dissenters' rights under
the FBCA.
2.6. Surrender of Certificates.
-------------------------
(a) At the Closing, the Seller shall be required to surrender the
certificates which immediately prior to the Effective Time represented all of
the Company Shares (the "Certificates") to the Escrow Agent (together with stock
powers endorsed in blank). Until so surrendered, each Certificate which
immediately prior to the Effective Time represented Company Shares (other than
shares held in the treasury) shall upon and after the Effective Time be deemed
for all purposes to represent and evidence only the right to receive the Vivra
Shares determined in accordance with Section 2.1, and the Cash pursuant to
-----------
Section 2.3. Within seven (7) business days after the receipt of the
- -----------
Certificates, VSP or any agent appointed by VSP shall deliver to the Escrow
Agent certificates representing the Vivra
-4-
<PAGE>
Shares determined in accordance with Section 2.1, and the Cash pursuant to
-----------
Section 2.3. Upon receipt of the certificates representing the Vivra
- -----------
Shares and the Cash (if any), the Escrow Agent shall deliver the Certificates to
VSP.
(b) No dividends or other distributions declared or made after the date of
this Agreement with respect to the Vivra Shares with a record date after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the Vivra Shares represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificate representing whole Vivra Shares issued in exchange
therefor, without interest, at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
payable with respect to such whole Vivra Shares.
ARTICLE III
THE CLOSING
3.1. Closing. The Closing of the transfer of the Company Shares
-------
contemplated by this Agreement (the "Closing") will occur on May 1, 1996, or on
such other date as the parties may agree (the "Closing Date"). Upon
consummation, the Closing shall be deemed to take place as of the opening of
business on the Closing Date.
3.2. Deliveries by Vivra. Vivra shall deliver the following at the
-------------------
Closing (provided, however, that Vivra may deliver the Vivra Shares at any time
within 10 days of Closing):
(a) certificates evidencing the number of Vivra Shares to be
delivered to the Seller Representative and the Escrow Agent; and
(b) an Officer's Certificate as to the accuracy at Closing of
all of Vivra's representations and warranties as if made at and as of
Closing, the fulfillment of all of Vivra's agreements and covenants
and the satisfaction of all Closing conditions to be satisfied by
Vivra; and
(c) such other instruments or documents as may be necessary or
appropriate to carry out the transactions contemplated hereby.
-5-
<PAGE>
3.3. Deliveries by Seller. At the Closing, Seller shall deliver
--------------------
the following:
(a) certificate(s) evidencing all of the Company Shares, duly
endorsed for transfer to VSP;
(b) a Good Standing Certificate for each Company as of a recent date
from the Secretary of State of Florida;
(c) a Certificate as to the accuracy at Closing of all of
Seller's representations and warranties as if made at and as of
Closing, the fulfillment of all of Seller's agreements and covenants
and the satisfaction of all Closing conditions to be satisfied by
Seller;
(d) the minute books, bylaws and stock records of each of the
Companies certified by the secretary of each such Company;
(e) the written resignation of Seller as an officer and director
of each of the Companies;
(f) a letter substantially in the form attached hereto as
Exhibit A, executed by Seller;
---------
(g) the Articles of Merger, executed by the Companies;
(h) certified copies of the resolutions adopted by each of the
Companies' Board of Directors and shareholders unanimously approving
the Merger and all of the transactions contemplated by this Agreement;
and
(i) such other endorsements, instruments or documents as may be
necessary or appropriate to carry out the transactions contemplated
hereby.
At the Closing, the Seller shall take all steps necessary to place VSP in actual
possession and operating control of the Florida Business.
3.4. Closing Agreements. At the Closing, the parties shall
------------------
execute, acknowledge and deliver the following (collectively, the "Closing
Agreements"):
(a) an Employment Agreement between Vivra Orthopaedics, Inc.
("VOR") and Seller in substantially the form attached hereto as
Exhibit B (the "Employment Agreement");
---------
-6-
<PAGE>
(b) an Escrow Agreement among VSP, Seller and Adorno & Zeder, as
Escrow Agent, in substantially the form attached hereto as Exhibit C;
---------
and
(c) such other instruments or documents as may be
<PAGE>
necessary or appropriate to carry out the transactions contemplated by this
Agreement and to comply with the terms hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to Vivra and VSP as of the
date hereof and as of the Closing Date as follows:
4.1. Authority. The Seller has all requisite right, power and
---------
authority, without the consent of any other person or entity, to execute and
deliver this Agreement and the agreements to be executed and delivered by Seller
at Closing and to carry out the transactions contemplated hereby and thereby,
including the sale of the Company Shares. All actions required to be taken by
Seller to authorize the execution, delivery and performance of this Agreement
and all agreements and transactions contemplated hereby have been duly and
properly taken.
4.2. Validity. This Agreement and the agreements and other
--------
documents to be delivered at Closing by Seller have been duly executed and
delivered by Seller and constitute valid and binding obligations of Seller,
enforceable in accordance with their respective terms. The execution and
delivery of this Agreement and the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby will not
(immediately, upon notice, with the passage of time, or both) result in the
creation of any lien, charge or encumbrance of any kind or the termination or
acceleration of any indebtedness or other obligation of either Company, and are
not prohibited by, do not and will not violate or conflict with any provision
of, and do not and will not constitute a default under or a breach of (i) the
articles of incorporation or by-laws of either Company, (ii) any contract,
agreement or other instrument to which Seller or either Company is a party or by
which Seller or either Company or any of their assets is bound, (iii) any order,
decree or judgment of any court or governmental agency, or (iv) to the best
knowledge of Seller after due inquiry, any law, rule or regulation applicable to
either Company, Seller or the Florida Business.
4.3. Due Organization and Ownership.
------------------------------
-7-
<PAGE>
(a) Each Company is a corporation duly organized, validly existing
and in good standing under the laws of Florida, and has full power and authority
and all requisite rights, licenses and permits to carry on the Florida Business
as it is presently conducted by such Company. Neither Company engages in
business in any state other than the State of Florida.
(b) The authorized capital stock of Melter consists of five thousand
(5,000) shares of common stock, $1.00 par value, of which 500 shares are issued
and outstanding. The authorized capital stock of Melter Rehabilitation consists
of 1,000 shares of common stock, $0.01 par value, of which 100 shares are issued
and outstanding. All of the Company 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 Seller or either Company is a party or binding upon Seller
or either Company providing for the issuance or transfer by Seller or either
Company of any of the capital stock of either Company. Seller is the sole
record and beneficial owner of the Company Shares and has good and marketable
title to such Company Shares and the absolute right, power and capacity to sell,
assign, transfer and deliver such Company Shares to VSP 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. Seller is conveying to VSP good and marketable title to the Company
Shares free of any interest whatsoever of third parties. Seller is the only
officer or director of either Company.
4.4. Consents. Except as described on Schedule 4.4, no approval,
-------- ------------
authorization, registration, consent, order or other action of or filing with
any person, including any court, administrative agency or other governmental
authority, is required for (i) the execution and delivery by Seller of this
Agreement or the agreements contemplated hereby, (ii) the consummation of the
transactions contemplated hereby and thereby, including the Merger, or (iii) a
subsequent transfer of the assets related to the Florida Business to a
subsidiary of VSP.
4.5. Transactions with Affiliates. Except as described on Schedule
---------------------------- --------
4.5, neither Seller, nor any of its Affiliates (as hereinafter defined) directly
- ---
or indirectly: (a) owns any debt, equity or other interest in any corporation,
association or other entity which is a competitor, provider, lessor, lessee,
customer or supplier of Vivra, any of its affiliates or the Florida Business;
(b) has any cause of action
-8-
<PAGE>
or other claim against or owes any amount to, or is owed any amount by, either
Company; (c) has any interest in or owns any property or right used in the
conduct of the Florida Business; (d) is a party to any contract, lease,
agreement, arrangement or commitment of which either Company is a party or which
is used in the conduct of the Florida Business; or (e) received from or
furnished to the Florida Business any goods or services. For purposes of this
Agreement, the term "Affiliate" means any member of the immediate family of
Seller, or any corporation, partnership, trust or other entity in which Seller
or any member of its immediate family is a director, officer, partner or trustee
or has an equity interest in excess of 5%.
4.6. Financial Statements. The balance sheet for Melter as of
--------------------
December 31, 1994, the balance sheet and income statement of Melter as of and
for the fiscal year ended December 31, 1995 and as of and for the three months
ended March 31, 1996 (i) are attached hereto as Schedule 4.6 (the "Financial
------------
Statements"); (ii) are accurate, correct and complete; (iii) fairly present the
financial condition and results of operations of each Company as of the dates
and for the periods indicated; and (iv) are prepared on a modified cash basis in
accordance with the books of account and records of each Company. The Florida
Business is not subject to any liability or obligation (whether absolute,
accrued, contingent or otherwise and whether matured or unmatured) other than
(a) amounts owed to physicians or physical therapists and (b) liabilities and
obligations described on Schedule 4.6. Melter Rehabilitation has never had any
------------
operations and is not subject to any liability or obligation (whether absolute,
accrued, contingent or otherwise and whether matured or unmatured). Neither of
the Companies has any liability pursuant to leases for personal property,
including, but not limited to, leases for automobiles. The Seller represents
and warrants as follows:
(a) the aggregate of all capitated revenues collected by the
Florida Business for the period from April 1, 1995 to March 31, 1996
was $3,662,133.56 and the aggregate of all compensation paid to
physicians or physical therapists by the Florida Business during such
period was $2,703,605.07;
(b) as of the date hereof and as of Closing, after giving effect
to any outstanding checks or debit orders of any type, the Companies
have cash in their bank accounts equal to the sum of (i) $445,000
(such amount being referred to as the "Additional Reserves"), plus
(ii) an amount sufficient to pay all amounts owed, to physicians,
physical therapists or other service providers for services rendered
prior to the Closing and all other liabilities of the Companies
(including, but not limited to, the cost of the insurance required
by Section 7.6, an amount sufficient to prepare all tax
-9-
<PAGE>
returns of the Companies for periods ending on or prior to the Closing and
all accounting and legal fees rendered prior to Closing or related to the
consummation of the transactions contemplated by this Agreement, if any)
(the amount in clause (ii) being referred to herein as the "Base
Reserves"); and
(c) the Base Reserves are equal to or greater than 82% of the
aggregate gross revenues collected by the Companies in the months of
February, March and April, 1996 pursuant to the Companies' payor
contracts.
The parties agree to prepare a Settlement Statement pursuant to the provisions
of Section 5 of the Escrow Agreement. The Settlement Statement will set forth,
among other things, the actual Base Reserves, Additional Reserves and
liabilities of the Companies as of the Closing Date.
4.7. Books and Records. The books of account and other records
-----------------
(financial and otherwise) of the Florida Business are complete and correct and
are maintained in accordance with good business practices.
4.8. Interim Change. Except as described in reasonable detail on
--------------
Schedule 4.8, since December 31, 1995, the Companies have each operated their
- ------------
respective businesses only in the ordinary course, consistent with past
practices, and there has not been any of the following in connection with the
Florida Business:
(a) any material adverse change in the financial condition,
assets, liabilities, personnel, prospects or business affairs of the
Florida Business or in its relationships with suppliers, vendors,
customers, patients, payors, providers, representatives, employees or
others nor has there been the occurrence of any event or condition
which could reasonably be expected to have such an effect;
(b) any declaration or payment of any dividend or other
distribution with respect to the equity interests of either Company
except as set forth on Schedule 4.26;
-------------
(c) any forgiveness, cancellation, write-off or write-down of
debts or claims, or waiver of any rights related to the Florida
Business other than in the ordinary course of business;
(d) any increase or decrease in the compensation, benefits or
method or rate of reimbursement paid,
-10-
<PAGE>
payable or to become payable by either Company or the Florida Business
to any employee, independent contractor or other person who renders
services in connection with the Florida Business, or any payments of
compensation other than salary to any of such employees;
(e) any incurrence of debt other than trade payables incurred in
the ordinary course of business;
(f) any entry into any material agreement, commitment or
transaction by either Company or any capital expenditure in excess of
$5,000;
(g) any incurrence of any security interest, lien, charge,
encumbrance or claim on, or any damage or loss to, any of the Assets;
(h) any change in the method of operation or practices of the
Florida Business, including any change in the accounting, billing or
invoicing procedures of the Florida Business;
(i) any sale, transfer or disposal by or for the Florida
Business or purchase by or for the Florida Business of any properties
or assets, except in the ordinary course consistent with past
practices; or
(j) any agreement, commitment or understanding by Seller or
either Company to do any of the foregoing.
4.9. Insurance. Neither Company has ever maintained any insurance
---------
of any type.
4.10. Licenses and Permits. Schedule 4.10 contains an accurate,
-------------------- -------------
correct and complete list of each license, permit, provider number, certificate,
approval, exemption, franchise, registration, variance, accreditation or
authorization used or required for the operation of the Florida Business
(collectively, the "Licenses and Permits"). The Licenses and Permits are valid
and in full force and effect and there are not pending, or, to the knowledge of
Seller threatened, any proceedings which could result in the termination,
revocation, limitation or impairment of any License or Permit. The Licenses and
Permits are all of the licenses, permits, provider numbers, certificates,
approvals, franchises, registrations, accreditations and other authorizations as
are necessary or appropriate in order to enable each Company to own and conduct
the Florida Business and to occupy its real property. No violations have been
recorded in
-11-
<PAGE>
respect of any Licenses and Permits, and the Seller knows of no
meritorious basis therefor.
4.11. Assets. Each Company is the sole and exclusive legal and
------
equitable owner of all right, title and interest in all of the assets,
properties, contracts, rights and claims used in, relating to or arising from
the conduct of the Florida Business (the "Assets"). Each Company has good and
marketable title to the Assets and such Assets are not and will not be subject
to any pledge, option, escrow, hypothecation, lien, security interest, financing
statement, lease, license, easement, right of way, encumbrance or other
restriction of any kind. All of the Assets, whether owned or leased by each
Company, are in good operating condition and repair (reasonable wear and tear
excepted) and are suitable for the purposes for which they are presently being
used. The Assets will furnish VSP and its successors and assigns with all of
the capacity and rights to operate the Florida Business in the same manner as it
is presently being operated by each Company and Seller and to otherwise conduct
the Florida Business in the same manner as presently conducted (although VSP
shall be entitled to change the operations of the Companies after Closing).
4.12. Real Estate. Neither Company owns any real property.
-----------
Schedule 4.12 sets forth an accurate, correct and complete list of all real
- -------------
property used in the conduct of the Florida Business (the "Real Estate") by
either Company. Each Company has been in peaceable possession of the Real
Estate since the commencement of the original term of the lease related thereto.
The Seller does not know of any environmental audits or similar reports relating
to the Real Estate.
4.13. Personal Property Leases. Except as described on Schedule
------------------------ --------
4.13, neither Company leases any of the personal property that is used in the
- ----
Florida Business. Schedule 4.13 sets forth an accurate, correct and complete
-------------
list of all office furnishings and equipment owned by each Company.
4.14. Trade Secrets, Know-How and Proprietary Information. Schedule
--------------------------------------------------- --------
4.14 contains a list of all information in the nature of trade secrets, know-how
- ----
or proprietary information, including but not limited to, software, copyrighted
and copyrightable material, electronic data processing systems, program
specifications and technical information relating to or used in the Florida
Business (the "Proprietary Information"). All Proprietary Information: (a) is
owned solely and exclusively by one of the Companies; and (b) has been
maintained as a trade secret by such Company by taking all necessary action to
protect such Proprietary Information as a trade secret. To the best of Seller's
knowledge the Proprietary Information is not being
-12-
<PAGE>
violated or infringed upon by any other person, nor does it violate or infringe
upon any trade secret rights, patents, trademarks or copyrights of any other
person.
<PAGE>
4.15. Material Contracts. Schedule 4.15 contains a list of all
------------------ -------------
contracts, agreements, commitments, instruments, leases and arrangements,
including all amendments or supplements thereto, related to the Florida Business
to which Seller or either Company is a party or bound, or by which any of the
Assets or the Florida Business are subject or bound, which (a) are material to
the Florida Business or (b) meet any of the following descriptions
(collectively, the "Material Contracts"): (i) any contracts, agreements or
arrangements with insurance companies, managed care plans, 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; and (iv) any contracts or agreements with
physicians or other providers of medical services on behalf of the Florida
Business. Seller has delivered to Vivra accurate and complete copies of each
Material Contract and all amendments, memorandums and correspondence related
thereto. Each physician or physical therapist listed on Schedule 4.16(b) has
----------------
executed an agreement substantially in the form of the provider agreement
attached hereto as Schedule 4.15(b) (collectively, the "Provider Agreements").
----------------
Each of the Provider Agreements shall be deemed to be a Material Contract. All
Material Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect. Neither Company, nor to the best of
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. No event has occurred which with notice or passage of time or both
would result in a breach of any provision of, or default under, the terms of any
Material Contract. Except as indicated on Schedule 4.15, (a) the Merger and (b)
-------------
a subsequent transfer and assignment of the Material Contracts to a subsidiary
of VSP, in each case without notice to, or the consent of, any other party will
not constitute a default under, or a breach of, any Material Contract, and after
Closing and any such merger and transfer of assets, each Material Contract will
continue to be valid and binding and enforceable by VSP or its successors
according to its terms.
4.16. Employees; Independent Contractors.
----------------------------------
(a) The Companies do not have, and have never had, any employees.
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<PAGE>
(b) Schedule 4.16(b) is an accurate, correct and complete schedule
----------------
containing the name of all independent contractors (including, but not limited
to, all orthopaedic physicians, physical therapists and other service providers)
used by each Company in the conduct of the Florida Business and a brief
description of the types of services provided to the Florida Business by such
independent contractor. During the past 24 months the average compensation paid
by each Company to the independent contractors listed on Schedule 4.16(b) in any
month has been less than 80% of the revenues collected by the Florida Business
for such month. Seller has no knowledge of any fact, condition or event which
would cause either Company's relationship with any independent contractor after
the Closing to be materially different than the current relationship of such
independent contractor with such Company. The Companies have not made any
payments to physicians, physical therapists or other service providers since
April 15, 1996.
4.17. Employee Benefit Plans. Schedule 4.17 sets forth an accurate,
---------------------- -------------
correct and complete list of all bonus, profit sharing, pension, perquisites,
deferred compensation, incentive or other compensation plans or arrangements
(all of the foregoing, whether in existence by virtue of agreement, policy,
course of dealing or applicable law, being herein called "Benefit Plans")
-------------
maintained or contributed to by either Company. All contributions to, and
payments from, the Benefit Plans that may have been required to be made in
accordance with the Benefits Plans and all applicable laws, rules and
regulations have been timely made. All Benefit Plans have been operated and
maintained in accordance with the terms thereof and all applicable laws, rules
and regulations. All reports, returns and similar documents with respect to the
Benefit Plans required to be filed with any government agency or distributed to
any Benefit Plan participant have been fully and timely filed or distributed.
4.18. Taxes. (a) Seller has filed or will file all returns,
-----
declarations and reports and all information returns and statements
(collectively, "Returns") required to be filed or sent by or on behalf of each
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, and
Returns not yet filed as of the date hereof will accurately and correctly
reflect, the income, business, assets, operations, activities and status of each
Company and any other information required to be shown thereon. Seller and each
Company has timely paid all Taxes required to be paid prior to the date hereof.
The Seller agrees to pay, and indemnify VSP and its affiliates and successors
from,
-14-
<PAGE>
any Taxes relating in any way to any period ending on or prior to the Closing
Date(including, but not limited to, any Taxes relating in any way to each
Company failing to qualify as an "S Corporation" under the Code; provided,
however, that VSP will pay any Taxes, if any, relating to the recognition after
the Closing Date of the Additional Reserves as income; provided, however, that
VSP shall not be responsible for, and Seller shall pay any related interest and
penalties which accrue prior to the date that VSP determines that the Additional
Reserves are not owed to physicians, physical therapists, other service
providers or payors.
(b) At all times since its incorporation, each Company has filed all
notices, tax returns, documents or other forms, met all eligibility
requirements, and taken all other actions as is, or was, necessary to validly
elect and maintain "S Corporation" status under Section 1361 of the Code. The
State of Florida does not tax the net income of S Corporations. At all times
prior to the date hereof, each Company has used the accrual method of accounting
for income tax purposes. During the past two years neither Company has made,
and as a result of the transactions contemplated by this Agreement, it will not
be necessary or appropriate for either Company to make, any adjustments pursuant
to Section 481 of the Code.
(c) As soon as practicable after the close of each Company's tax
year, Seller and his accountants, at Seller's expense, shall prepare the federal
and state S corporation income tax returns for each Company for 1995 and the
period in 1996 through Closing. Such tax returns shall be completed using the
accrual method of accounting. Vivra and each Company shall permit the Seller
and his accountants to have full and free access to each Company's books and
records, without charge, to the extent such access is necessary or helpful for
preparation of such tax returns. Such tax returns shall reflect the income of
each Company for the period beginning January 1, 1995 and ending December 31,
1995 and beginning January 1, 1996 and ending on the Closing Date and shall be
prepared consistent with each Company's historical practices. Vivra shall have
the right to review and approve such tax returns prior to such returns being
filed. Such tax returns shall be filed by Seller no later than the due dates
for such returns. Seller shall pay when due all Taxes payable with respect to
such tax returns.
(d) Seller hereby represents and warrants that to the best of his
knowledge each Company has timely filed all Form 1099s required to be filed
since inception for each physician, physical therapist or other service provider
that has provided services for, or on behalf of, either Company.
-15-
<PAGE>
4.19. Litigation. Except as set forth in
----------
Schedule 4.19, the Companies and Seller are not engaged in, or a party to, or to
- -------------
the best of the Seller's knowledge, threatened with, any suit, action,
proceeding, or investigation or legal, administrative, arbitration or other
method of settling disputes and Seller does not know, anticipate or have notice
of any basis for any such action. Neither Seller nor either Company has
received notice of any investigation threatened or contemplated by any foreign,
federal, state or local government or regulatory authority, including those
involving the Florida Business' employment practices or policies or compliance
with environmental regulations. The Florida Business, the Companies and the
Assets are not subject to any order, decree or judgment of any court or
governmental agency or instrumentality. Neither Seller nor either Company has
received notice of any adverse finding or determination in connection with any
review conducted by any entity, commission, board or agency in connection with
the Medicare or Medicaid program or in connection with any health insurer or
health care payor.
4.20. Compliance. The Florida Business and the Assets, and Seller's
----------
and each Company's operation thereof, conform and have conformed in all material
respects to all applicable statutes, codes, ordinances, licensing requirements,
laws, rules and regulations. Each Company has complied in all material respects
with all statutes, codes, ordinances, licensing requirements, laws, rules,
regulations, decrees, awards or orders applicable to the Florida Business or its
operations, including those relating to employment and environmental matters and
all laws relating to Medicare and/or Medicaid, including, but not limited to, 42
U.S.C. section 1320(a)-7(a) et seq., 42 U.S.C. section 1320(a)-7(b) et seq., 31
-- --- -- ---
U.S.C. section 3729, and any other federal or state provision relating to the
filing of false claims or payments for referrals; and there is not and will not
be any liability arising from or related to any violations thereof and Seller
has no knowledge of any violations of such laws. Seller has not received any
notice from any governmental body or other person alleging that Seller or either
Company has failed to comply with any such law, rule or regulation. To the
Seller's knowledge, there is no anticipated change in any such law, rule or
regulation which would adversely affect the Florida Business or the Assets.
Each Company 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 or in connection with any of
the Material Contracts, in either case, which are due on or before the date
hereof. There are no claims, actions, payment reviews, or appeals pending or,
to the best of the Seller's knowledge,
-16-
<PAGE>
threatened before any commission, board or agency, including, without
limitation, any intermediary or carrier, the Administrator of the Health Care
Financing Administration, or the Florida Department of Health and Rehabilitation
Services or any other state or federal agency with respect to any Medicare or
Medicaid claims filed by either Company on or before the date hereof or program
compliance matters, which would adversely affect either Company, the Assets,
the operation or utility thereof, or the consummation of the transactions
contemplated hereby. No validation review or program integrity review related
to either Company or the Florida Business has been conducted by any commission,
board or agency in connection with the Medicare or Medicaid program, and no such
reviews are scheduled, pending nor threatened against or affecting either
Company, the Florida Business, any of the Assets or the consummation of the
transactions contemplated hereby.
4.21. Brokers. Neither Seller nor either Company has retained any
-------
broker or finder or incurred any liability or obligation for any brokerage fees,
commissions or finder's fees with respect to this Agreement or the transactions
contemplated hereby.
4.22. Certain Agreements. All contracts or agreements with
-------------------
insurance companies, managed care plans, employers and physicians entered into
with either Company were entered into in the ordinary course of business at
usual and normal prices and rates. The Seller has no reason to believe that any
insurance company, managed care plan, employer or other customer of the Business
(including, but not limited to, the parties to the Material Contracts) will
cease to do business with either Company, VSP or any of their successors, or
will seek to impose lower charges or reimbursement rates, after the consummation
of the transactions contemplated hereby. Seller has no reason to believe that
any physician, physical therapist or other service provider will cease to
provide services to, or for the benefit of, either Company, VSP or their
successors after the consummation of the transactions contemplated by this
Agreement. Neither Company is involved, directly or indirectly, in any improper
or illegal activities with respect to any of its referral sources, including but
not limited to the payment of gratuities, gifts or otherwise to such referral
sources. Except as specifically described on Schedule 4.22, there is no (a)
-------------
law, rule or regulation, (b) provision or term in any Material Contract or any
other written or oral agreement between either Company (or Seller on behalf of
Company) and any payor, physician or physical therapist, or (c) policy of either
Company or of any of the entities listed on Schedules 4.15 and 4.16, which (I)
-----------------------
limits the amount or percent of revenues generated under any of the Material
Contracts which either Company, VSP or its
-17-
<PAGE>
affiliates or successors may retain (and not pay to physicians, physical
therapists, other service providers or payors) or (II) establishes or provides
for a minimum amount which VSP, its affiliates or successors or either Company
must pay to physicians, physical therapists, other service providers or payors
under any of the Material Contracts. Seller has never directed, advised or
consulted in any way with, the physicians, physical therapists and other
providers providing services to, or on behalf of, either Company, as to the
method, type, advisability or permissibility of treatment to be rendered to
patients.
4.23. Physicians. To the best of the Seller's knowledge, during the
----------
past five years and as of the date hereof, and at the Closing, each physician
who is or was employed by, or who renders or has rendered services on behalf of,
the Florida Business:
(a) Has been duly licensed and registered, and in good standing
under the laws of the State of Florida, to engage in the practice of
medicine, and said license and registration have not been suspended,
revoked or restricted in any manner;
(b) Has current controlled substances registrations issued by
the State of Florida and the United States Drug Enforcement
Administration, which registrations have not been surrendered,
suspended, revoked or restricted in any manner;
(c) Except as set forth on Schedule 4.23, has not been a party
-------------
or subject to:
(i) any malpractice suit, claim (whether or not filed
in court), settlement, settlement allocation, judgment,
verdict or decree;
(ii) any disciplinary, peer review or professional
review investigation, proceeding or action instituted 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;
(iii) any criminal complaint, indictment or criminal
proceedings;
(iv) any investigation or proceedings, whether
administrative, civil or criminal, relating to an allegation
of filing false health care claims, violating anti-kickback
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<PAGE>
laws, or engaging in other billing improprieties;
(v) any organic or mental illness or condition that
impairs or may impair such person's ability to practice
physical therapy;
(vi) any dependency on, habitual use or episodic abuse
of alcohol or controlled substances, or any participation in
any alcohol or controlled substance detoxification,
treatment, recovery, rehabilitation, counseling, screening
or monitoring program;
(vii) any allegation, or any investigation or
proceeding based on any allegation of violating professional
ethics or standards, or engaging in illegal, immoral or
other misconduct (of any nature or degree), relating to the
practice of physical therapy; and
(viii) any denial or withdrawal of an application in
any state for licensure as a physical therapist, for board
certification or recertification, for participation in any
third party payment program, for state or federal controlled
substances registration, or for malpractice insurance.
(d) complies with the requirements, if any, set forth in all
applicable Material Contracts.
4.24. Physical Therapist. To the best of the Seller's knowledge,
------------------
during the past five years and as of the date hereof, and at the Closing, each
physical therapist who is or was employed by, or who renders or has rendered
services on behalf of, the Florida Business:
(a) Has been duly licensed and registered, and in good standing
under the laws of the State of Florida, and said license and
registration have not been suspended, revoked or restricted in any
manner;
(b) Except as set forth on Schedule 4.24, has not been a party
-------------
or subject to:
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<PAGE>
(i) any malpractice suit, claim (whether or not filed
in court), settlement, settlement allocation, judgment,
verdict or decree;
(ii) any disciplinary, peer review or professional
review investigation, proceeding or action instituted 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;
(iii) any criminal complaint, indictment or criminal
proceedings;
(iv) any investigation or proceedings, whether
administrative, civil or criminal, relating to an allegation
of filing false health care claims, violating anti-kickback
laws, or engaging in other billing improprieties;
(v) any organic or mental illness or condition that
impairs or may impair such person's ability to practice
physical therapy;
(vi) any dependency on, habitual use or episodic abuse
of alcohol or controlled substances, or any participation in
any alcohol or controlled substance detoxification,
treatment, recovery, rehabilitation, counseling, screening
or monitoring program;
(vii) any allegation, or any investigation or
proceeding based on any allegation of violating professional
ethics or standards, or engaging in illegal, immoral or
other misconduct (of any nature or degree), relating to the
practice of physical therapy; and
(viii) any denial or withdrawal of an application in
any state for licensure as a physical therapist, for board
certification or recertification, for participation in any
third party payment program, for state
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<PAGE>
or federal controlled substances registration, or for malpractice
insurance.
(c) complies with the requirements, if any, set forth in all
applicable Material Contracts.
4.25. Accounts Receivable. Neither Company has any accounts or
-------------------
notes receivable.
4.26. Audits/Accountings. There are no audits, accountings or
------------------
payment reviews pending or, to the best of Seller's knowledge, threatened in
connection with any Material Contracts including without limitation any
agreements with physicians or with insurance companies, managed care plans,
employers, or other third party payors, and all amounts owed under any such
agreements have been appropriately reconciled and there are no outstanding
balances in connection therewith. Neither Company is a party to any
risk-pooling agreements or arrangements whatsoever.
4.27. Pooling of Interests. Except as contemplated or required
--------------------
under this Agreement:
(a) neither Company has been a division or subsidiary of another
corporation for the two years preceding the Closing;
(b) neither Company has 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) neither Company has, in order to consummate this
transaction, changed its voting common stock structure during the two
years immediately preceding the Closing;
(e) during the two years preceding the Closing, neither Company
has purchased treasury stock to consummate or avoid a business
combination transaction;
(f) neither Company has rearranged the relative ownership shares
among its existing voting shareholders as a part of this transaction;
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<PAGE>
(g) none of the Vivra Shares shall be restricted as to voting
rights as part of this transaction;
(h) there is no "earnout" contingency as part of this transaction;
(i) no financial arrangements have been made with the Seller which
negate the exchange of equity securities (such as loans made against stock
issued);
(j) Schedule 4.27 sets forth an accurate and complete list of
-------------
(i) the amount and date of all dividends or distributions that either
Company has declared or paid to its stockholders (or affiliates of its
stockholders), since January 1, 1994 through Closing, and (ii) the
amount of any salary or other compensation paid by either Company to
Seller or any of his affiliates since January 1, 1994 through Closing;
and
(k) to the best knowledge of the Seller, neither Company, nor
any of their 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 Vivra's acquisition of the Companies as a
"pooling of interests" for accounting purposes.
4.28. Receipt of Information. Seller has received: a copy of
----------------------
Vivra's (1) prospectus dated March 14, 1995 (the "Prospectus"); (2) Annual
Report on Form 10-K (File No. 1-10261) for the fiscal year ended November 30,
1995; (3) Prospectus Supplement to the Prospectus (File No. 33-85736) filed on
June 6, 1995; (4) Prospectus Supplement to the Prospectus (File No. 33-
85736) filed on August 8, 1995; (5) Current Report on Form 8-K (File No.
1-10261) filed on August 16, 1995; (6) Current Report on Form 8-K (File No.
1-10261) filed on January 26, 1996; (7) Prospectus Supplement to the Prospectus
(File No. 33-85736) filed on January 26, 1996; (8) Current Report on Form 8-K
(File No. 1-10261) filed on March 14, 1996; (9) Prospectus Supplement to the
Prospectus (File No. 33-85736) filed March 14, 1996; (10) Current Report on Form
8-K (File No. 1-10261) filed on March 15, 1996; (11) Prospectus Supplement to
the Prospectus (File No. 33-85736) dated March 15, 1996; (12) Current Report on
Form 8-K (File No. 1-10261) filed on March 29, 1996; (13) Prospectus Supplement
to the Prospectus (File No. 33-85736) filed on March 29, 1996; and (14) a copy
of Vivra's Proxy Statement for Vivra's annual meeting to be held on May 2, 1996
(collectively, the "Vivra SEC Documents").
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<PAGE>
4.29. Disclosure. Neither this Agreement nor any attachment,
----------
schedule, certificate or other statement delivered pursuant to this Agreement or
in connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements and information
contained herein or therein, in light of the circumstances in which they were
made, not misleading. Each list and description contained on any Schedule
delivered pursuant to this Agreement is accurate and complete. To the Seller's
knowledge there is no information necessary to enable a prospective purchaser of
the Company Shares or the Florida Business to make an informed decision with
respect to the purchase of the Company Shares which has not been expressly
disclosed to Vivra in writing in this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF VIVRA
Vivra hereby represents and warrants to the Seller as of the date
hereof as follows:
5.1. Authority. Vivra has all requisite right, power and authority,
---------
without the consent of any other person, to execute and deliver this Agreement
and the agreements to be delivered at Closing and to carry out the transactions
contemplated hereby and thereby. All actions required to be taken by Vivra to
authorize the execution, delivery and performance of this Agreement and all
agreements and transactions contemplated hereby have been duly and properly
taken.
5.2. Validity. This Agreement has been, and the agreements and other
--------
documents to be delivered at Closing by Vivra will be, duly executed and
delivered by Vivra and constitute valid and binding obligations of Vivra,
enforceable in accordance with their respective terms. The execution and
delivery of this Agreement and the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby do not and will
not violate or conflict with any provision of, and do not and will not
constitute a default under or a breach of (i) the charter or By-laws of Vivra,
(ii) any contract, agreement or other instrument to which Vivra is a party,
(iii) any order or judgment of any court or governmental agency or (iv) any law,
rule or regulation applicable to Vivra.
5.3. Consents. No approval, authorization, registration,
--------
consent, order or other action of or filing with any person, including any
court, administrative agency or other
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<PAGE>
governmental authority is required for the execution and delivery by Vivra of
this Agreement or the agreements contemplated hereby or the consummation of the
transactions contemplated hereby and thereby.
5.4. Due Organization. Vivra is a corporation organized and validly
----------------
existing under the laws of the State of Delaware and has full corporate power
and authority to carry on the business in which it is engaged.
5.5. Brokers. Vivra has not retained any broker or finder or
-------
incurred any liability or obligation for any brokerage fees, commissions or
finder's fees with respect to this Agreement or the transactions contemplated
hereby.
5.6. 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. The Vivra Shares, when delivered to
Seller will be approved for listing on the New York Stock Exchange and
registered for resale under a registration statement which is effective with the
Securities and Exchange Commission (the "SEC"). The Vivra Shares are subject to
the restrictions on transfer set forth in Section 6.10.
5.7. SEC Filings. The Vivra SEC Documents, when read together, do
-----------
not contain any untrue statement of a material fact, and do not omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading.
ARTICLE VI
COVENANTS
Seller and Vivra, as applicable, hereby agree to keep, perform and
fully discharge the following covenants and agreements.
6.1. Continued Assistance. The Seller and Vivra shall cooperate in
--------------------
an orderly transfer of the Florida Business and the continuation thereof by
Vivra or its successor or assigns. From time to time, at Vivra's request and
without further consideration, the Seller shall execute, acknowledge and deliver
such documents, instruments or assurances and take such other action as Vivra
may reasonably request to more effectively assign, convey and transfer the
Florida Business and its operations and will assist Vivra in the vesting,
collection or reduction to possession of its assets, properties, rights and
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<PAGE>
claims. The Seller shall give Vivra and its affiliates access to such books and
records as Vivra may request in order to allow Vivra or its affiliates to audit
the financial statements of the Florida Business for prior years.
6.2. Records and Documents. For five (5) years following the
---------------------
Closing Date, each party hereto shall retain and grant to the other party and
its representatives, at such other party's request, access to and the right to
make copies of those records and documents of the Companies which are retained
by such party, as may be necessary in connection with the business and affairs
of such other party after the Closing. If during such time any party elects to
dispose of such records, such party shall first give each other party hereto
sixty (60) days' written notice, during which period such other party shall have
the right to obtain the records without further consideration.
6.3. Certain Payments. Seller shall promptly pay when due and fully
----------------
discharge any income, excise, employment, sales or use taxes arising as a result
of the Merger. The Seller shall keep Vivra apprised of the status and all
aspects of any litigation which might affect Vivra or the Florida Business,
either directly or indirectly, and Seller shall comply with all court orders
relating directly or indirectly to such litigation. Vivra shall provide
reasonable cooperation to the Seller in handling such litigation; provided, that
the Seller shall reimburse Vivra for its out-of-pocket expenses incurred in
connection with such cooperation.
6.4. Confidentiality. After the Closing Date, except as may be
---------------
required for tax purposes or other regulatory purposes, neither the Seller nor
any of his affiliates nor any of the respective successors and assigns of the
Seller or any of his affiliates shall (a) retain any document, databases or
other media embodying any confidential or proprietary know-how which is used in
the Florida Business or use, publish or disclose to any third person any such
confidential or proprietary know-how or (b) use, publish or disclose any
information concerning Vivra, its affiliates, the Assets, the Florida Business,
the customers of the Florida Business or the terms of this Agreement or the
Employment Agreement or any of the transactions contemplated thereby, except
information which: (i) is or becomes generally available to the public or
publicly known other than as a result of disclosure in breach of any obligation
of confidentiality; (ii) is disclosed pursuant to the requirement of a
governmental agency or court of competent jurisdiction or as otherwise required
under applicable law (but only after notice of such required disclosure is first
given to Vivra).
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<PAGE>
6.5. Covenant Not to Compete. (a) Seller hereby agrees that for a
-----------------------
period of three (3) years after the Closing, the Seller shall not, directly or
indirectly, whether acting alone or as a director, officer, employee, agent,
consultant, partner, owner or member, as appropriate, of any person, firm,
company, corporation, association, partnership or other entity:
(i) have any ownership or economic interest in, or
participate in or manage any business directly or indirectly engaged in
a business (A) the same as, or similar to, the Florida Business or (B)
which provides any of the following types of services: (i) administering,
managing, developing or assisting in the development of a network of
orthopaedic physicians or physical therapists, (ii) performing prospective,
concurrent or retrospective utilization review of orthopaedic or physical
therapy claims, (iii) assisting in acquiring or arranging for the
acquisition of orthopaedic or physical therapy practices or managing such
practices, or (v) providing related ancillary services;
(ii) solicit, serve or accept any business from patients,
insurance companies, managed care plans, employers or other customers
of the business then conducted by Vivra or any of its affiliates for
services competitive with those of the Florida Business or request,
induce or advise patients, insurance companies, managed care plans,
employers or other customers of the business as then conducted by
Vivra or any of its affiliates to withdraw, curtail or cancel their
business with Vivra or any of its affiliates or assist, induce, help
or join any other person or company in doing either of the above
activities;
(iii) solicit the services of any employee, consultant or
provider which renders services to, or for the benefit of, Vivra or
any of its affiliates for its own use or benefit or for any other
person's or company's use or benefit, or induce or help to induce any
employee, consultant or provider which renders services to, or for the
benefit of, Vivra or any of its affiliates to leave for other
employment, without Vivra's prior written consent; or
(iv) employ or hire, or cause to be employed or hired, any
person who is an employee, consultant or provider which renders
services to, or for the benefit of, the Florida Business, Vivra or any
of its affiliates;
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<PAGE>
(b) Nothing in Section 6.5 shall be construed to prohibit Seller's
right to conduct a standard private medical practice, provided that the
following activities shall not be considered part of a private medical practice
and shall be prohibited under Section 6.5: (i) administering, managing,
developing or assisting in the development of a network of orthopaedic
physicians or physical therapists, (ii) performing prospective, concurrent or
retrospective utilization review of orthopaedic or physical therapy claims,
(iii) assisting in acquiring or arranging for the acquisition of orthopaedic or
physical therapy practices or managing such practices, and (v) related ancillary
services.
(c) Seller agrees that any breach of this Section 6.5 will result in
-----------
irreparable damage to Vivra for which Vivra will have no adequate remedy at law,
and, therefore, the Seller consents to any temporary or permanent injunction or
decree of specific performance by any court of competent jurisdiction in favor
of Vivra enjoining any such breach, without prejudice to any other right or
remedy to which Vivra shall be entitled.
(d) The necessity of each of the restrictions set forth in this
Section 6.5 and the nature and scope of each such restriction have been
- -----------
carefully considered, bargained for and agreed to by the parties. However, in
the event that any portion of this Section 6.5 shall be determined by any court
-----------
of competent jurisdiction to be unenforceable by reason of its being extended
over too great a period of time or too large a geographic area or over too great
a range of activities, it shall be interpreted or rewritten to extend only over
the maximum period of time, geographic area, or range of activities as to which
it may be enforceable. Each of the provisions herein shall be deemed a separate
and severable covenant.
6.6. Form 1099's. Seller agrees to indemnify, hold harmless and
-----------
defend Vivra, VSP and their affiliates, from and against any and all loss,
diminution in value, damage, cost, penalties, expense (including court costs and
attorneys' fees and expenses and costs of investigation), suit, action, claim,
deficiency, liability or obligation related to or caused by or arising from (a)
either Company's failure to file a Form 1099 for any physician, physical
therapist or other service providers which rendered services to, or for the
benefit of, either Company for any period prior to December 31, 1995, or (b)
either Company filing an incorrect Form 1099.
6.7. [Reserved]
6.8. Tax Returns. Vivra agrees not to file an amended income tax
-----------
return for either Company for any taxable period of
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<PAGE>
either Company ending prior to or on Closing, without the prior written consent
of Seller, which may not be unreasonably withheld.
6.9. Supplements. If any representation, warranty or statement of
-----------
the Seller, or any schedule delivered to Vivra, shall become incorrect, Seller
shall promptly deliver to Vivra 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 Section 7.1 and no
-----------
such supplement or amendment shall affect each Warrantor's obligations under
Article IX.
- ----------
6.10. Restrictions on Transfer. Seller agrees that he will not
------------------------
directly or indirectly sell, assign, transfer, give, pledge, encumber or
otherwise dispose of any interest in his Company Shares, prior to the Closing
and will not directly or indirectly (a) sell, assign, transfer, give, pledge,
encumber or otherwise dispose of any economic or other interest in the Vivra
Shares acquired by Seller, or (b) in any way reduce his risk with respect to
such Vivra Shares (including but not limited to, by entering into a "put" with
respect to such Vivra Shares), until an earnings report including at least 30
days of the combined post- Closing operations of Vivra and the Florida Business
has been published (the "Combined Earnings Report"). Certificates representing
the Vivra Shares shall be issued in the name of legal counsel for the Seller as
Seller Representative (the "Seller Representative") who shall hold the Vivra
Shares delivered pursuant to Section 2.1(a)(i) in escrow until the Combined
-----------------
Earnings Report has been published and thereafter the Seller Representative
shall deliver such Vivra Shares to Seller and upon such delivery, the provisions
of this paragraph 6.11 shall be no longer effective. Seller Representative
--------------
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 Seller Representative disqualified from
representing Seller in such dispute. Vivra and Seller shall jointly indemnify,
defend and hold Seller Representative harmless from any and all reasonable
expenses and fees, costs, damages and liabilities arising or incurred by reason
of it serving as Seller Representative. Vivra agrees to use good faith efforts
to publish the Combined Earnings Report within 70 days of the end of the first
complete calendar month after Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF VIVRA
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<PAGE>
Each and all of the obligations of Vivra to consummate the
transactions contemplated by this Agreement are subject to fulfillment prior to
or at the Closing of the following conditions:
7.1. Accuracy of Warranties and Performance of Covenants. The
---------------------------------------------------
representations and warranties of the Seller contained herein shall be accurate
in all respects as if made on and as of the Closing Date. The Seller shall have
performed all of the obligations and complied with each and all of the
covenants, agreements and conditions required to be performed or complied with
on or prior to the Closing, including, without limitation, delivery of the items
set forth in Sections 3.3 and 3.4.
------------ ---
7.2. No Pending Action. No action, suit, proceeding or
-----------------
investigation before any court, administrative agency or other governmental
authority shall be pending or threatened wherein an unfavorable judgment, decree
or order would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
hereby, cause such transactions to be rescinded, or which might affect the right
of Vivra or its affiliates to own, operate or control the Florida Business or
the Assets.
7.3. Consents. All consents by third parties that are required for
--------
the transfer of the Florida Business or any of the Assets 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 either Company is a party or to which any portion of the
property of either Company is subject, shall have been obtained or provided for
and shall remain in effect. All consents listed as Schedule 4.15 shall have
-------------
been obtained, including without limitation appropriate consents to transfer of
all agreements between either Company and third party payors or managed care
plans.
7.4. Condition of Business and Assets. The Business and the Assets
--------------------------------
shall not have been adversely affected in any way by any act of God, fire,
flood, accident, war, labor disturbance, legislation (proposed or enacted), or
other event or occurrence, whether or not covered by insurance, and there shall
have been no change in the Assets or the Florida Business, its financial
condition, properties or prospects, which would have an material adverse effect
thereon.
7.5. Satisfaction of Counsel. All corporate and other actions and
-----------------------
proceedings in connection with the transactions contemplated hereby and all
documents incidental thereto, and all
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<PAGE>
other related legal matters, shall be reasonably satisfactory in form and
substance to counsel for Vivra and Vivra shall have received all such
resolutions, documents and instruments, or copies thereof, certified if
requested, as its counsel shall have reasonably requested.
7.6. Tail Insurance. Seller agrees to obtain,
--------------
within 60 days of Closing, liability insurance coverage for the benefit of
Vivra, VSP and VOR. Such insurance shall be in amounts, and with coverages
substantially similar to that described on Schedule 7.6 and shall name Vivra,
VSP and VOR as additional insured and loss payee.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Each and all of the obligations of Seller to consummate the
transactions contemplated by this Agreement are subject to fulfillment prior to
or at the Closing of the following conditions:
8.1. Accuracy of Warranties and Performance of Covenants. The
---------------------------------------------------
representations and warranties of Vivra contained herein shall be accurate in
all respects as if made on and as of the Closing Date. Vivra shall have
performed all of the obligations and complied with each and all of the
covenants, agreements and conditions required to be performed or complied with
on or prior to the Closing, including, without limitation, delivery of the items
set forth in Sections 3.2 and 3.4.
------------ ---
8.2. No Pending Action. No action, suit, proceeding or
-----------------
investigation before any court, administrative agency or other governmental
authority shall be pending or threatened wherein an unfavorable judgment, decree
or order would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
hereby or cause such transactions to be rescinded.
8.3. Satisfaction of Counsel. All corporate and other actions and
-----------------------
proceedings in connection with the transactions contemplated hereby and all
documents incidental thereto, and all other related legal matters, shall be
reasonably satisfactory in form and substance to counsel for Seller, and Seller
shall have received all such resolutions, documents and instruments, or copies
thereof, certified if requested, as its counsel shall have reasonably requested.
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<PAGE>
8.4. Registration of Vivra Shares. The registration statement
----------------------------
covering the sale of the Vivra Shares to the Seller shall be 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.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1. Survival. All representations, warranties, covenants and
--------
agreements contained in this Agreement or in any document delivered pursuant
hereto shall be deemed to be material and to have been relied upon by the
parties hereto. The representations and warranties contained in Section 4.6
shall survive the Closing until Vivra issues its first set of audited financial
statements after the closing containing the combined operations of the Companies
and VSP and all other representations and warranties contained in this Agreement
shall survive the Closing for a period of one year from the Closing. Any claim
for indemnification that is asserted within the time periods set forth in the
prior sentence shall survive until resolved or judicially determined. The
representations and warranties contained in this Agreement shall not be affected
by any investigation, verification or examination by any party hereto or by
anyone on behalf of any such party.
9.2. Indemnification.
---------------
(a) The Seller shall indemnify, hold harmless and defend Vivra, VSP
and their successors from and against any and all loss, diminution in value,
damage, cost, expense (including court costs and reasonable attorneys' fees at
all levels of trial and appeal and expenses and costs of investigation), suit,
action, claim, deficiency, liability or obligation related to, caused by or
arising from (i) any misrepresentation, breach of warranty or failure to fulfill
any covenant or agreement of Seller contained herein or in any agreement or
other document delivered pursuant hereto, and (ii) any and all claims of third
parties made based upon facts alleged that, if true, would have constituted such
a misrepresentation, breach or failure.
(b) Vivra shall indemnify, hold harmless and defend the Seller, from
and against any and all loss, diminution in value, damage, cost, expense
(including court costs and reasonable attorneys' fees and expenses and costs of
investigation), suit, action, claim, deficiency, liability or obligation related
to, caused by or arising from (i) any misrepresentation, breach of warranty or
failure to fulfill any covenant or agreement of Vivra contained herein or in any
agreement or other document delivered pursuant hereto, and (ii) any and all
claims of third parties made based upon facts alleged that, if true, would
constitute such a misrepresentation, breach or failure.
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<PAGE>
(c) The party seeking indemnification under this Article shall give
prompt written notice to the indemnifying party of the facts and circumstances
giving rise to any claim for indemnification, provided, however, that a party's
failure to give such notice shall not impair or otherwise affect such party's
right to indemnification except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. All rights contained in this
Article are cumulative and are in addition to all other rights and remedies
which are otherwise available, pursuant to the terms of this Agreement or
applicable law. All indemnification rights shall be deemed to apply in favor of
the indemnified party's officers, directors, representatives, subsidiaries,
affiliates, successors and assigns.
(d) If any such cost, loss, damage, expense, liability, claim, or
obligation, as referenced in Section 9.2(a) above occurs or is incurred by
Vivra, then Vivra shall have the right, at their option and in addition to any
other actions permitted by law, to offset the amount of any such cost, loss,
damage, expense, liability, obligation or claim against amounts due from Vivra
to Seller under this Agreement, the Employment Agreement or any other agreement,
whether or not such amounts are due from Vivra by the express terms of any such
agreement or as a result of settlement or judgment with respect to any such
agreement. Vivra's continuing right of set-off shall not be deemed Vivra's
exclusive remedy for Seller's breach of any of the representations, warranties
or agreements set forth herein.
9.3. Defense Against Asserted Claims. Any party seeking
-------------------------------
indemnification (the "Indemnified Party") shall give written notice to the
indemnifying party (the "Indemnifying Party") of the facts and the circumstances
giving rise to any claim (the "Notice"). The Indemnified Party shall not settle
or compromise any claim by a third party for which the Indemnified Party is
entitled to indemnification hereunder without the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld), unless
legal action shall have been instituted against the Indemnified Party and the
Indemnifying Party shall not have taken control of such suit within 15 days
after notification thereof as provided herein. In connection with any claim
giving rise to indemnification hereunder resulting from or arising out of any
claim or legal proceeding by a person other than the Indemnified Party, the
Indemnifying Party shall, upon written notice to the Indemnified Party, assume
the defense of any such claim or legal proceeding without prejudice to the right
of the Indemnifying Party thereafter to contest its obligation to indemnify the
Indemnified Party in respect to the claims asserted therein. If the
Indemnifying Party assumes the defense of any such claim or legal
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proceeding, the Indemnifying Party shall select counsel to conduct the
defense in such claims and legal proceedings and at its sole cost and expense
shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any claim or legal proceeding, without the prior written
consent of the Indemnified Party, unless the Indemnifying Party admits in
writing its liability to hold the Indemnified Party harmless from and against
any losses, damages, expenses and liabilities arising out of such settlement.
The Indemnified Party shall be entitled to participate in the defense of any
such action with its own counsel and at its own expense. If the Indemnifying
Party does not assume the defense of any such claim or litigation resulting
therefrom in accordance with the terms hereof, the Indemnified Party may defend
such claim or litigation in such a manner as it may deem appropriate, including
settling such claim or litigation after giving notice of the same to the
Indemnifying Party on such terms as the Indemnified Party may deem appropriate
and any action by the Indemnified Party seeking indemnification from the
Indemnifying Party in accordance with the provisions of this Section, the
Indemnifying Party shall not be entitled to question the manner in which the
Indemnified Party defended such claim or litigation or the amount or nature of
any such settlement. In the event of a claim by a third party, the Indemnified
Party shall cooperate with the Indemnifying Party in the defense of such action
(including making a personal contact with the third party if deemed beneficial)
and the relevant records of each party shall be made available on a timely
basis.
ARTICLE X
GENERAL PROVISIONS
10.1. Amendments and Waiver. No amendment, waiver or consent with
---------------------
respect to any provision of this Agreement shall in any event be effective,
unless the same shall be in writing and signed by the parties hereto and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.
10.2. Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall be delivered in person or
sent by overnight courier or by first-class prepaid certified mail as follows:
(a) If to the Seller:
16020 N. Prestwick Place
Miami, Florida 33614
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<PAGE>
Attention: Melvyn Drucker
Telephone: (305) 823-7718
(b) If to Vivra:
Vivra Orthopaedics, Inc.
1440 Chapin
Suite 300
Burlingame, CA 94010
Attention: President
Telephone: (415) 373-4600
with a copy to:
Vivra Incorporated
400 Primrose
Suite 200
Burlingame, California 94010
Attention: Secretary
Telephone: (415) 348-8700
Any party may change its address for receiving notice by written notice given to
the others named above. Overnight notices shall be deemed given on the day of
scheduled delivery and mailed notices shall be deemed given three business days
after the date of mailing.
10.3. Expenses. Each party to this Agreement shall pay its own costs
--------
and expenses in connection with the transactions contemplated hereby. If any
action is brought by either party to enforce any provision of this Agreement,
the prevailing party shall be entitled to recover court costs and reasonable
attorneys fees from the non-prevailing party.
10.4. 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.
10.5. Benefit. This Agreement shall bind and inure to the benefit of
-------
the parties named herein and their respective successors and assigns. Neither
party hereto may assign any rights, benefits, duties or obligations under this
Agreement without the prior written consent of the other party, provided,
however, that Vivra may, without the consent of Seller, assign all of its
rights, benefits, duties or obligations under this Agreement to VSP or VOR.
10.6. Entire Transaction. This Agreement and the documents referred
------------------
to herein contain the entire understanding
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<PAGE>
among the parties with respect to the transactions contemplated hereby and
supersede all other agreements, understandings and undertakings among the
parties with respect to the subject matter hereof.
10.7. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal substantive laws of the State of
Florida, without regard to conflicts of laws principles.
10.8. Waiver. Any party's lack of enforcement of any provision of
------
this Agreement shall not be construed as a waiver of any such provision and the
nonbreaching party may elect to enforce any such provision in the event of past,
repeated or continuing breach. No waiver in one or more instances of any of the
provisions of this Agreement shall be deemed a continuing waiver or a waiver of
any other provision.
10.9. Other Rules of Construction. References in this Agreement to
---------------------------
sections, schedules and exhibits are to sections of, and schedules and exhibits
to, this Agreement unless otherwise indicated. Words in the singular include
the plural and in the plural include the singular. The word "or" is not
exclusive. The word "including" shall mean including, without limitation. The
section and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
10.10. Announcements. Vivra shall be entitled to notify providers,
-------------
payors and others of the completion of the transactions contemplated by this
Agreement. If requested by Vivra, Seller shall (a) assist Vivra in
communicating with providers or payors, and (b) jointly issue a statement,
mailing or press release with Vivra.
10.11. Partial Invalidity. In the event that any provision of this
------------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
10.12. Release. Seller hereby irrevocably and unconditionally
-------
releases and discharges each Company and their officers, directors, successors
and assigns (the "Released Parties") from any and all actions, claims, causes of
action, suits, charges, complaints, contracts, agreements, liabilities or
obligations of any kind whatsoever in law or in equity, which Seller or his
affiliates, heirs, executors, successors and assigns, can, shall or may have
against the Released Parties.
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<PAGE>
10.13. Venue. Vivra and Seller hereby irrevocably submit to the
-----
jurisdiction of any Florida State or federal court sitting in Dade County,
Florida over any action arising out of or relating to this Agreement.
10.14. Termination. This Agreement may be terminated at any time
-----------
prior to the Closing:
(a) by mutual consent of Seller and Vivra;
(b) by either Seller or Vivra 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
(c) by either Seller or Vivra if the Closing has not occurred by
May 15, 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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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by a duly authorized officer all as of the date first
written above.
MELTER, INC.
By: _____________________________________
Its: ____________________________________
MELTER REHABILITATION
SERVICES, INC.
By: _____________________________________
Its: ____________________________________
SELLER
_________________________________________
MELVYN DRUCKER, M.D.
VIVRA INCORPORATED
By: _____________________________________
Its: ____________________________________
VIVRA SPECIALTY PARTNERS
By: _____________________________________
Its: ____________________________________
With respect to Section 6.10 only:
ADORNO & ZEDER
By: _____________________________________
Its: ____________________________________
