<PAGE>
FORM 10-K/A-1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[x] AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended November 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________________to_______________________
Commission file number: 1-10261
VIVRA INCORPORATED
----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-3096645
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1850 Gateway Drive, Suite 500, San Mateo, California 94404
----------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (415) 577-5700
------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $.01 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
------------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act:
None
------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant on August 9, 1996, based on the closing price on the New York Stock
Exchange, was: $1,267,825,252.
Number of shares of Common Stock outstanding on August 9, 1996: 39,931,504.
Documents Incorporated By Reference
Definitive Proxy Statement for the Company's May 2, 1996 Annual Meeting of
Stockholders to be filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 ( incorporated in Part III hereof to the extent indicated
in Items 10, 11, 12 and 13 hereof.
Page 1 of 27
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements. The Financial Statements listed in response
to Item 8 are filed herewith (previously filed).
2. The following Financial Statement Schedules are filed herewith:
Valuation and Qualifying Accounts (previously filed)
3. Exhibits:
(3) Articles of Incorporation and By-Laws of Registrant
(3.1) Amended and Restated Certificate of
Incorporation (filed as Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended
November 30, 1995 and incorporated herein by
reference.
(3.2) By-Laws (filed as Exhibit 3B to Registrant's
Registration Statement on Form 10, File No. 1-10261
incorporated herein by reference.)
(4) Instruments defining the Rights of Securities Holders
(4.1) Rights Agreement dated September 16, 1991 between
Registrant and the First National Bank of Boston
(filed as Exhibit 4.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended November 30,
1995 and incorporated herein by reference).
(10) Material Contracts
(10.1) Debenture Payment Assumption Agreement between
Registrant and Community Psychiatric Centers filed
as Exhibit 10.5A.6 to Registrant's Registration
Statement on Form 10, File No. 1-10261, filed May
26, 1989, incorporated herein by reference.
(10.2) Registrant's Transition Consultants Stock Option
Plan (Filed as Exhibit 10G to the Registrant's
Registration Statement on Form 10, File No. 1-10261
and incorporated herein by reference).
(10.2.1)Transition Consultants Stock Option Agreement
(filed as Exhibit 10.4.4 to Registrant's Report on
Form 10-K for its fiscal year ended November 30,
1989 and incorporated herein by reference).
(10.3) Registrant's Amended 1989 Stock Incentive Plan
(filed as Exhibit 10.3 to Registrant's Report
on Form 10-K for its fiscal year ended
November 30, 1995 and incorporated herein by
reference).
(10.4) Registrant's Profit Sharing Plan (Filed as Exhibit
10.11 to Registrant's Amendment on Form 8 to Report
on Form 10-K for its fiscal year ended November 30,
1992 and incorporated herein by reference.)
(10.5) Form of Officer and Director Indemnification
Agreement (filed as Exhibit 10.5 to Registrant's
report on Form 10-K for its fiscal
Page 2 of 27
<PAGE>
year ended November 30, 1991, and incorporated
herein by reference).
(10.6) Employment Agreements between Registrant and
(I) Kent J. Thiry, dated as of December 1, 1992
(filed as Exhibit 10.6 to Registrant's Amendment on
Form 8 to Report on Form 10-K for its fiscal year
ended November 30, 1992 and incorporated herein by
reference).
(10.7) Form of Employment Agreement between the Registrant
and certain executive officers of the Registrant
(filed as Exhibit 10.7 to the Registrant's Report
on Form 10-K for its fiscal year ended November 30,
1995 and incorporated herein by reference).
(10.8) Form of agreement between the Registrant and the
Medical Directors of its dialysis facilities (filed
as Exhibit 10.6 to Registrant's Registration
Statement on Form S-1, File No. 33-34438 and
incorporated herein by this reference).
(*10.9) Agreement effective February 1, 1996 between Amgen
Inc. and the Registrant.
(*10.10)Agreement effective February 1, 1996 between Bellco
Drug Corp., Metro Health Corp. and the Registrant.
(11) Statements re Computation of Per Share Earnings (filed as
Exhibit 11 to the Registrant's Report on Form 10-K for its
fiscal year ended November 30, 1995 and incorporated
herein by reference).
(21) Subsidiaries of the Registrant (filed as Exhibit 21 to the
Registrant's Report on Form 10-K for its fiscal year ended
November 30, 1995 and incorporated herein by reference).
(23) Consent of Independent Auditors (filed as Exhibit 23 to the
Registrant's Report on Form 10-K for its fiscal year ended
November 30, 1995 and incorporated herein by reference).
* Portions of the exhibit have been omitted pursuant to a request for
Confidential Treatment and have been filed separately with the Commission.
(b) Reports on Form 8-K, filed in the fourth quarter
of 1995: None.
Page 3 of 27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.
VIVRA INCORPORATED
Date: August 14, 1996
By /s/ LEANNE M. ZUMWALT
----------------------------------------
LeAnne M. Zumwalt
Executive Vice President, Secretary,
Treasurer and Director (Principal
Accounting and Financial Officer)
Page 4 of 27
<PAGE>
EXHIBIT INDEX
Exhibit No. Document Page No.
- ----------- --------------------------------------------------- --------
3 Articles of Incorporation and By-Laws of Registrant:
3.1 Amended and Restated Certificate of
Incorporation filed as Exhibit 3.1 to
the Company's Annual Report on Form
10-K for the fiscal year ended November
30, 1995 and incorporated herein by
reference.
3.2 By-Laws (filed as Exhibit 3B to Registrant's
Registration Statement on Form 10, File
No. 1-10261 incorporated herein by
reference.
4 Instruments defining the Rights of Securities Holders
4.1 Amended and Restated Rights Agreement dated
February 13, 1996 between Registrant
and the First National Bank of Boston
(filed as Exhibit 4D to the Company's
Form 10/A filed on February 15, 1996
and incorporated herein by reference.
10 Material Contracts
10.1 Debenture Payment Assumption Agreement
between Registrant and Community
Psychiatric Centers filed as Exhibit
10.5A.6 to Registrant's Statement on
Form 10, File No. 1-10261, filed May
26, 1989, incorporated herein by
reference.
10.2 Registrant's Transition Consultants Stock
Option Plan (Filed as Exhibit 10G to
the Registrant's Registration Statement
on Form 10, File No. 1-10261 and
incorporated herein by reference).
10.2.1 Transition Consultants Stock Option Plan
(Filed as Exhibit 10.4.4 to the
Registrant's Report on Form 10-K for
its fiscal year ended November 30, 1989
and incorporated herein by reference).
10.3 Registrant's Amended 1989 Stock Incentive
Plan (filed as Exhibit 10.3 to the
Registrant's Report on Form 10-K for its
fiscal year ended November 30, 1995 and
incorporated herein by reference).
10.4 Registrant's Profit Sharing Plan (filed as
Exhibit 10.11 to Registrant's Amendment
on Form 8 to Report on Form 10-K for
its fiscal year ended November 30, 1992
and incorporated herein by reference.)
Page 5 of 27
<PAGE>
Sequential
Exhibit No. Document Page No.
- ----------- ------------------------------------------------- --------
10.5 Form of Officer and Director Indemnification
Agreement (filed as Exhibit 10.5 to
Registrant's report on Form 10-K for
its fiscal year ended November 30,
1991, and incorporated herein by
reference).
10.6 Employment Agreements between Registrant and
Kent J. Thiry, dated as of December 1,
1992 (filed as Exhibit 10.6 to
Registrant's Amendment on Form 8 to
Report on Form 10-K for its fiscal year
ended November 30, 1992 and
incorporated herein by reference).
10.7 Form of Employment Agreement between the
Registrant and certain executive
officers of the Registrant (filed as
Exhibit 10.7 to the Registrant's Report
on Form 10-K for its fiscal year ended
November 30, 1995 and incorporated
herein by reference).
10.8 Form of agreement between the Registrant
and the Medical Directors of its
dialysis facilities (filed as Exhibit
10.6 to Registrant's Registration
Statement on Form S-1, File No.
33-34438 and incorporated herein by
this reference).
10.6 Employment Agreements between Registrant
and Kent J. Thiry, dated as of December
1, 1992 (filed as Exhibit 10.6 to
Registrant's Amendment on Form 8 to
Report on Form 10-K for its fiscal year
ended November 30, 1992 and
incorporated herein by reference).
*10.9 Agreement effective February 1, 1996 between
Amgen Inc. and the Registrant.
*10.10 Agreement effective February 1, 1996 between
Bellco Drug Corp., Metro Health Corp.
and the Registrant.
11 Statements re Computation of Per Share Earnings
(filed as Exhibit 11 to the Registrant's Report
on Form 10-K for its fiscal year ended
November 30, 1995 and incorporated herein by
reference).
21 Subsidiaries of the Registrant (filed as Exhibit
21 to the Registrant's Report on Form 10-K for
its fiscal year ended November 30, 1995 and
incorporated herein by reference).
23 Consent of Independent Auditors (filed as Exhibit
23 to the Registrant's Report on Form 10-K for
its fiscal year ended November 30, 1995 and
incorporated herein by reference).
* Portions of the Exhibit have been omitted pursuant to a request for
Confidential Treatment and have been filed separately with the Commission.
Page 6 of 27
<PAGE>
EXHIBIT 10.9
AMGEN EPOGEN-R- FREESTANDING DIALYSIS CENTER AGREEMENT
THIS AGREEMENT, between AMGEN INC. ("Amgen") and VIVRA, INCORPORATED,
including the freestanding dialysis center affiliate(s) listed on Appendix A,
(collectively, "Dialysis Center"), sets forth the terms and conditions for the
purchase of EPOGEN-R- (Epoetin alfa) by Dialysis Center.
1. Term of Agreement. This Agreement shall commence on February 1, 1996
-----------------
and shall terminate on January 31, 1997 ("Term").
2. Qualifying Purchases. All terms contained herein apply only to
--------------------
purchases made hereunder, by the dialysis center affiliate(s) listed on
Appendix A attached hereto ("Affiliates"), through wholesalers authorized by
Amgen to participate in this program ("Authorized Wholesalers") or directly from
Amgen. Amgen requires all Authorized Wholesalers to submit product sales
information to a third-party sales reporting organization approved by Amgen.
3. Contract Pricing. Amgen guarantees Dialysis Center the prices listed
----------------
below for EPOGEN-R- purchased during the Term, whether purchased directly from
Amgen or through Authorized Wholesalers. Notwithstanding the foregoing,
EPOGEN-R- purchased directly from Amgen must be in full case quantities or may
be subject to additional service charges.
<TABLE>
<CAPTION>
Item Number (NDC) Description Price per Box
- ----------------- ----------- -------------
<S> <C> <C>
55513-126-10 2,000 Units/mL, 1mL vial, 10 vials/box, $ *****
10 boxes/case
55513-267-10 3,000 Units/mL, 1mL vial, 10 vials/box, $ *****
10 boxes/case
55513-148-10 4,000 Units/mL, 1mL vial, 10 vials/box, $ *****
10 boxes/case
55513-144-10 10,000 Units/mL, 1mL vial, 10 vials/box, $ *****
10 boxes/case
55513-283-10 20,000 Unit (Multidose) vial, $ *****
10,000 Units/mL, 2mL vial, 10 vials/box,
4 boxes/case
</TABLE>
4. Payment Terms. During the Term, Amgen grants Dialysis Center payment
-------------
terms of ********** for EPOGEN-R- purchased through Authorized Wholesalers, or
********** for EPOGEN-R- purchased directly from Amgen, subject to the right of
Amgen to reasonably modify these terms in the event of a material adverse change
in the financial condition of Dialysis Center, as determined by Amgen in its
sole discretion. Option to purchase on a direct basis from Amgen is subject to
receipt and approval of an "Application for Direct Ship Account."
5. Discount. Dialysis Center is eligible to receive a discount in
--------
accordance with the schedule and terms set forth in Appendix B attached hereto.
6. Payment of Discount. Any discount hereunder shall be calculated in
-------------------
accordance with Amgen's discount calculation policies, based on purchases at the
calculation price of ********* per ********** units, except as otherwise
provided. Any discount shall be paid, at Amgen's discretion, either in the form
of a check payable to Dialysis Center's corporate headquarters or a purchase
credit against future purchases of EPOGEN-R- by Dialysis Center, except as
otherwise provided. Amgen will attempt to reasonably
- -------------------------
Portions of the Exhibit have been omitted pursuant to a request for
Confidential Treatment and have beenfiled separately with the Commission.
Page 7 of 27
<PAGE>
accommodate Dialysis Center's preference for method of payment. Purchase
credits are available only for accounts purchasing directly from Amgen, are not
transferable, and may not be used for the purchase of any product other than
EPOGEN-R-. Upon vesting, Amgen will use its best efforts to make such discount
available within sixty (60) days following receipt by Amgen of data, in a form
acceptable to Amgen, detailing Dialysis Center's EPOGEN-R- purchases for the
relevant period along with any other data required by the terms of Appendix B.
Final determination of purchases eligible hereunder will be made by Amgen.
Payment amounts, as calculated by Amgen, must equal or exceed $********** for
the relevant period to qualify. Subject to the section entitled "Breach of
Agreement," in the event that Amgen is notified in writing that Vivra,
Incorporated and/or any Affiliates (the "Acquiree") is acquired by another
entity or a change of control otherwise occurs with respect to the Acquiree, any
discount which may have been earned hereunder shall be paid in the form of a
check payable to the Acquiree's corporate headquarters subject to the conditions
described herein.
7. Treatment of Discount. Dialysis Center agrees that it will account for
---------------------
any discount earned hereunder in a way that complies with all applicable
federal, state, and local laws and regulations, including without limitation,
Section 1128B(b) of the Social Security Act and its implementing regulations,
and (a) claim the benefit of such discount received, in whatever form, in the
fiscal year in which such discount was earned or the year after, (b) fully and
accurately report the value of such discount in any cost reports filed under
Title XVIII or Title XIX of the Social Security Act, or a state health care
program, and (c) provide, upon request by the U.S. Department of Health and
Human Services or a state agency or any other federally funded state health care
program, the information furnished by Amgen concerning the amount or value of
such discount. Dialysis Center's corporate headquarters agrees that it will
advise all Affiliates, in writing, of any discount received by Dialysis Center's
corporate headquarters hereunder with respect to purchases made by such
Affiliates and that said Affiliates will account for any such discount in
accordance with the above stated requirements.
8. Discount limitation. Notwithstanding anything contained herein to the
-------------------
contrary, the amount of any discount available to Dialysis Center from Amgen,
under this Agreement or otherwise, shall be limited only to the extent that the
resulting net price paid by Dialysis Center for each dosage form and strength of
EPOGEN-R- is less than the price used to determine the relevant quarter's
Medicaid Rebate for each dosage form and strength of EPOGEN-R- under the
Medicaid Best Price Rebate Legislation, taking into account the aggregate value
of all discounts ultimately available to Dialysis Center for the relevant
quarter.
9. Commitment to Purchase. Dialysis Center agrees to purchase EPOGEN-R-
----------------------
for all of its dialysis use requirements for recombinant human erythropoietin.
Dialysis Center may purchase another brand of recombinant human erythropoietin
for its dialysis use requirements only for the time, and only to the extent,
that Amgen has notified Dialysis Center's corporate headquarters in writing that
Amgen cannot supply EPOGEN-R- within and for the time period reasonably required
by Dialysis Center.
10. Own Use. Dialysis Center hereby certifies that EPOGEN-R- purchased
-------
hereunder shall be for Dialysis Center's "own use."
11. Designated Wholesalers List. Dialysis Center agrees to provide Amgen
---------------------------
with a complete list of its current designated wholesalers, through whom
Dialysis Center may purchase EPOGEN-R- hereunder, on or before the date this
Agreement is signed by Dialysis Center. Such list must include the name and
complete address of each designated wholesaler. Dialysis Center agrees to
promptly provide Amgen with any additions, deletions, or changes to the initial
wholesaler list. Amgen requires no less than thirty (30) days notice before the
effective date of change for any addition or deletion of designated wholesalers
hereunder. The initial list of designated wholesalers, and any changes thereto,
must be in writing and are subject to approval by Amgen.
12. Dialysis Center Affiliates. Modifications to Appendix A hereto may be
--------------------------
made pursuant to the request of Dialysis Center's corporate headquarters and are
subject to approval and acknowledgement by Amgen in writing. Amgen requires no
less than thirty (30) days notice before the effective date of change for any
addition or deletion of Affiliates hereunder. Amgen reserves the right in its
sole discretion to accept or reject any Affiliates with regard to participation
in this Agreement.
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 8 of 27
<PAGE>
13. Breach of Agreement. Either party may terminate this Agreement for
-------------------
breach upon thirty (30) days advance written notice. In addition, in the event
that Dialysis Center breaches any provision of this Agreement, Amgen shall have
no obligation to continue to offer the terms described herein or pay any further
discounts to Dialysis Center.
14. Confidentiality. Both Amgen and Dialysis Center agree that this
---------------
Agreement represents and contains confidential information which shall not be
disclosed to any third party, or otherwise made public, without prior written
authorization of the other party, except where such disclosure is contemplated
hereunder or required by law.
15. Warranties. Each party represents and warrants to the other that this
----------
Agreement (a) has been duly authorized, executed, and delivered by it, (b)
constitutes a valid, legal, and binding agreement enforceable against it in
accordance with the terms contained herein, and (c) does not conflict with or
violate any of its other contractual obligations, expressed or implied, to which
is a party or by which it may be bound. The party executing this Agreement on
behalf of Dialysis Center specifically warrants and represents to Amgen that it
is authorized to execute this Agreement on behalf of and has the power to bind
the Affiliates to the terms contained herein, including without limitation, the
sections entitled "Payment of Discount," "Treatment of Discount," and "Discount
Limitation."
16. Governing Law. This Agreement shall be governed by the laws of the
-------------
State of California and the parties submit to the jurisdiction of the California
courts, both state and federal.
17. Notices. Any notice or other communication required or permitted
-------
hereunder shall be in writing and shall be deemed given or made when delivered
in person or when sent to the other party by first class mail or other means of
written communication at the respective party's address set forth below or at
such other address as the party shall have furnished to the other in accordance
with this provision.
18. Health Care Pricing Legislation. Notwithstanding anything contained
-------------------------------
herein to the contrary, at any time following the enactment of any federal,
state, or local law or regulation that in any manner reforms, modifies, alters,
restricts, or otherwise affects the pricing of or reimbursement available for
EPOGEN-R-, Amgen may, in its sole discretion, upon thirty (30) days written
notice (a) terminate this Agreement, or (b) exclude any Affiliates from
participating in this Agreement.
19. Miscellaneous. No modification of this Agreement shall be effective
-------------
unless made in writing and signed by a duly authorized representative of each
party, except as otherwise provided hereunder. This Agreement constitutes the
entire agreement of the parties pertaining to the subject matter hereof and
supersedes all prior written and oral agreements and understandings pertaining
hereto. Neither party shall have the right to assign this Agreement to a third
party without the prior written consent of the other party. Neither party shall
be liable for delays in performance and nonperformance of this Agreement or any
covenant contained herein caused by fire, flood, storm, earthquake or other act
of God, war, rebellion, riot, failure of carriers to furnish transportation,
strike, lockout or other labor disturbances, act of government authority,
inability to obtain material or equipment, or any other cause of like or
different nature beyond the control of such party. The parties shall execute and
deliver all documents, provide all information, and take or refrain from taking
action as may be necessary or appropriate to achieve the purposes of this
Agreement. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement. Amgen reserves the right to rescind this
offer if the parties fail to execute this Agreement within thirty (30) days from
the date of its offering.
Page 9 of 27
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
<PAGE>
The parties executed this Agreement as of the dates set forth below.
AMGEN, INC. VIVRA INCORPORATED
a Delaware corporation a California corporation
1840 DeHavilland Drive 115 Columbia
Thousand Oaks, CA 91320-1789 Aliso Viejo, CA 92656
Signature:_________________________ Signature:_________________________
Print Name:________________________ Print Name:________________________
Print Title:_______________________ Print Title:_______________________
Date:______________________________ Date:______________________________
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 10 of 27
<PAGE>
APPENDIX A: LIST OF DIALYSIS CENTER AFFILIATE(S)
See Contract List for EPOGEN-R- dated 12/4/95 (Enclosed)
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 11 of 27
<PAGE>
APPENDIX B: DISCOUNT SCHEDULE AND TERMS
1. Commitment Incentive.
--------------------
(a) Calculation: Dialysis Center's Commitment Incentive ("CI") shall be
calculated in accordance with the following
formula:
CI = A x B
where
A = Dialysis Center's aggregate EPOGEN-R- purchases
for the Term.
B = **********%
(b) Vesting: Dialysis Center's CI shall vest **********.
2. 1996 Freestanding Dialysis Center Volume Performance Incentive.
--------------------------------------------------------------
(a) Calculation: Dialysis Center's 1996 Freestanding Dialysis Center
Volume Performance Incentive ("VPI") shall be calculated
in accordance with the following formula:
VPI = A x B
where
A = Dialysis Center's aggregate EPOGEN-R- purchases
for the Term. B = A percent in accordance with the
table listed below.
C = Aggregate EPOGEN-R- purchases for the Term, by all
Affiliates as listed at the beginning of the Term.
D = Aggregate EPOGEN-R- purchases by those same
Affiliates for the same time period during the
previous year.
Percent Growth B
(C - D)/D
****% - **** ****%
****% - ****% ****%
****% - ****% ****%
****% - ****% ****%
****% - ****% ****%
and where, for the relevant period,
(i) Notwithstanding the definition of "C" above,
if any Affiliates are added to or deleted
from this Agreement during either of the
periods used for comparison, Amgen reserves
the right in its sole discretion to
appropriately adjust Dialysis Center's
purchases for the relevant periods, for
purposes of comparison, by including or
excluding any purchases made by those
Affiliates during either of those periods,
and
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 12 of 27
<PAGE>
(ii) Quarterly payments shall be estimated by
Amgen using Amgen's discount calculation
policies, and the VPI will be reconciled at
the end of the Term.
(b) Vesting: Dialysis Center's VPI shall vest **********.
3. Volume Achievement Incentive.
----------------------------
(a) Calculation: Dialysis Center's Volume Achievement Incentive
("VAI") shall be calculated in accordance with the
following formula:
VAI = A x B
where
A = Dialysis Center's aggregate EPOGEN-R-
purchases for the Term by Affilliates as listed
at the beginning of the Term.
B = A percent in accordance with the table listed
below.
AGGREGATE EPOGEN-R- PURCHASES FOR THE
TERM BY ALL AFFILIATES AS LISTED AT THE VOLUME ACHIEVEMENT
BEGINNING OF THE TERM INCENTIVE PERCENTAGE
$********* - ********* ***%
$********* - ********* ***%
$********* - ********* ***%
$********* - ********* ***%
$********* - ********* ***%
$********* - ********* ***%
$********* - ********* ***%
$********* - ********* ***%
and where, for the relevant period,
(i) The maximum payment available under this
incentive will be $********** and
(ii) Dialysis Center will not receive any payment
under the VAI until the Affiliates listed at
the beginning of the Term have met the
minimum purchase requirement of $**********
outlined above. At such time as this minimum
purchase requirement is met, Amgen will
reconcile the VAI for any previous unpaid
quarters and will continue to reconcile the
VAI until the end of the Term, and
(iii) Aggregate EPOGEN-R- purchases for the Term,
by all Affiliates as listed at the beginning
of the Term, must equal or exceed the
aggregate purchases by those same Affiliates
for the same time period during the previous
year to qualify for any VAI, and
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 13 of 27
<PAGE>
(iv) if any Affiliates are added to or deleted
from this Agreement during either of the
periods used for comparison, Amgen reserves
the right in its sole discretion to
appropriately adjust Dialysis Center's
purchases for the relevant periods, for
purposes of comparison, by including or
excluding any purchases made by those
Affiliates during either of those periods.
(b) Vesting: Dialysis Center's VAI shall vest **********.
4. Optional Hematocrit Incentive.
-----------------------------
(a) Description: Dialysis Center can qualify for the Optional
Hematocrit Incentive ("OHN"), as described herein,
provided Dialysis Center can obtain the information
and data ("Data") listed in the Sample Report on
Attachment #1 to this Agreement from their clinical
laboratory, for each Affiliate, and provide the Data
and Certification Letter attached hereto as
Attachment #2 to Amgen as described herein, at the
address listed on Attachment #1. Certification
Letters will be mailed to Dialysis Center's
corporate headquarters for signature prior to each
period for which the Data is required. Amgen shall
have the right to utilize the Data for any purpose,
and reserves the right to audit the Data. The
identity of the account submitting the Data and any
association with the Data will remain confidential.
A Sample Letter to the clinical laboratory which
describes the Data requirements is also included on
Attachment #3 to assist Dialysis Center in obtaining
the Data.
(b) Reports: Hematocrit results reported must be from samples
taken immediately prior to the dialysis treatment
(pre-dialysis) using Coulter-Counter or Technicon
Measurement System testing methods, and shall be
reported to the nearest tenth of a percent. Data for
the month of February 1996 shall be provided to
Amgen in a report no later than March 31, 1996. Data
for the month of May 1996 shall be provided to Amgen
in a report no later than June 30, 1996. Data for
the month of August 1996 shall be provided to Amgen
in a report no later than September 30, 1996. Data
for the month of November 1996 shall be provided to
Amgen in a report no later than December 31, 1996.
Dialysis Center shall cause each report to be
submitted in a format acceptable to Amgen with a
signed copy of the Certification Letter.
(c) Calculation: Dialysis Center's OHI shall be calculated and paid
on two separate occasions, following receipt by
Amgen of the Data and Certification Letter described
herein, in accordance with the schedule listed
below. The first payment shall be based on Data for
the month of May 1996, and shall equal a percentage
of Dialysis Center's aggregate EPOGEN-R- purchases
during the period consisting of February 1, 1996
through July 31, 1996 ("First Component"). The
second payment shall be based on Data for the month
of November 1996, and shall equal a percentage of
Dialysis Center's aggregate EPOGEN-R- purchases
during the period consisting of August 1, 1996
through January 31, 1997 ("second Component").
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 14 of 27
<PAGE>
<TABLE>
<CAPTION>
Percentage of all Dialysis
Patients with Hematocrit
Levels greater than or equal
to ***% (Please direct your
attention to the EPOGEN-R- Optional Hematocrit
package insert) Incentive Percentage
<S> <C>
85.0% - Over ***%
90.0% - 84.9% ***%
75.0% - 79.9% ***%
70.0% - 74.9% ***%
65.0% - 69.9% ***%
</TABLE>
where,
(i) Amgen will calculate the OHI based on corporate
performance in accordance with Amgen's discount
calculation policies, and
(ii) if Dialysis Center is unable to provide the
Data and Certification Letter for the required
reports within the specified time period, Dialysis
Center will not qualify for the OHI during the
corresponding period, and
(iii) Dialysis Center agrees to provide Amgen with
information detailing purchases for each Affiliate
during the Term, if so requested by Amgen.
(d) Vesting: The First Component of the OHI shall vest on **********.
The Second Component of the OHI shall vest on **********.
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 15 of 27
<PAGE>
Attachment #1 to Agreement No. 953429
Sample Report
XYZ Dialysis Unit
Street Address
City, ST Zip
(800) 966-XXXX
HEMATOCRIT INCENTIVE REPORT
All Patient/Test Hematocrit Lab Results for the Relevant Period
Patient ID Date Hematocrit
---------- ---- ----------
1022 2/21/96 29.8
1134 2/23/96 35.0
4ACC3 2/23/96 28.6
1-456 2/21/96 33.2
HAB 2/21/96 21.9
(Black out any patient names or confidential identifiers.)
- -------------------------------------------------------------------------------
SELECT PATIENT HEMATOCRIT LAB RESULTS FOR THE RELEVANT PERIOD
SORTED FOR ALL PATIENT/TEST LAB RESULTS WITH
HEMATOCRIT LEVELS GREATER THAN OR EQUAL TO ***%
Patient ID Date Hematocrit
---------- ---- ----------
1024 2/21/96 30.8
1134 2/23/96 35.0
3BCC2 2/23/96 31.6
1-456 2/21/96 33.2
FWB 2/21/96 32.9
(Black out any patient names or confidential identifiers.)
- -------------------------------------------------------------------------------
HEMATOCRIT LAB RESULTS FOR THE RELEVANT PERIOD
Total Hematocrit Tests: 198
Percentage of Patients/Tests with Hematocrit Levels greater than or equal to
***%: 85%
- -------------------------------------------------------------------------------
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 16 0f 27
<PAGE>
Hematocrit results reported must be from samples taken
immediately prior to the dialysis treatment
(pre-dialysis) using Coulter-Counter or Technicon
Measurement System testing methods,
and shall be reported to the nearest tenth of a percent.
Reports are to be provided to Amgen at the
address listed below:
EPOGEN-R- Marketing Department - FSDC
Amgen Inc.
1840 DeHavilland Drive
Thousand Oaks, CA 91320-1789
Mail Stop: 26-1-B
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 17 of 27
<PAGE>
Attachment #2 to Agreement No. 953429
Sample Certification Letter
Month X, 199X
FSDC Legal Name
Street Address
City, ST Zip
Attn: _________
RE: EPOGEN-R- Freestanding Dialysis Center Agreement No. 9XXXXX
Dear _________:
Thank you for your participation in the Optional Hematocrit Incentive Program.
In order for us to enroll you, we require that a duly authorized representative
of your organization sign the certification below.
Upon receipt of this signed document, we will calculate the value of your
incentive. If we do not receive the signed certification, we cannot provide you
with this incentive.
If you have any questions regarding this letter please contact me at (805)
447-3339. Thank you for your assistance in returning this certification.
Sincerely,
David Boyd
FSDC Marketing Segment Manager
CERTIFICATION:
On behalf of FSDC Legal Name and all eligible affiliates participating in the
Optional Hematocrit Incentive Program under Agreement No. 9XXXXX, the
undersigned hereby certifies that the hematocrit data submitted for each
eligible affiliate includes the required hematocrit results from all dialysis
patients of such affiliate, and does not include hematocrit results from
non-patients. The party executing this document also represents and warrants
that it (i) has no reason to believe that the submitted hematocrit data is
incorrect and (ii) is authorized to make this certification on behalf of all
eligible affiliates submitting hematocrit data.
FSDC LEGAL NAME
Signature:__________________________
Print Name:_________________________
Print Title:________________________
Date:_______________________________
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 18 of 27
<PAGE>
Attachment #3 to Agreement No. 953429
Sample Letter to Laboratory
---------------------------
Month X, 199X
ABC Laboratory
Street Address
City, ST Zip
Attn: _________
Dear __________:
As a means to monitor quality care, this facility will have future requirements
to report certain patient lab results relating to hematocrit levels for all
patients in the facility at each testing period. Your laboratory has excelled in
meeting our testing needs in the past. I am writing this letter to determine if
your laboratory will be able to meet these future needs.
Enclosure 1 details the format and requirements. The four reports should be
mailed to me four times per year as follows:
Testing Period Covered: Report Submitted on or Before:
- ---------------------- -----------------------------
February 1 to February 29, 1996 March 15, 1996
May 1 to May 31, 1996 June 15,
1996 August 1 to August 31, 1996 September 15, 1996
November 1 to November 30, 1996 December 15, 1996
I will follow this letter up with a telephone call to you to confirm these
arrangements.
Sincerely,
Renal Administrator
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 19 of 27
<PAGE>
EXHIBIT 10.10
AGREEMENT
---------
AGREEMENT made this ____ day of January, 1996 between VIVRA RENAL CARE,
INC. ("VIVRA"), a Nevada corporation with offices at 2 Mareblu, Aliso Viejo, CA
92656 and BELLCO DRUG CORP. ("BELLCO "), a New York corporation with offices at
101 East Hoffman Ave., Lindenhurst, NY 11757 and METRO HEALTH CORP. ("METRO
HEALTH"), a New York Corporation with offices at 180 Route 109, West Babylon, NY
11703 (BELLCO and METRO HEALTH sometimes collectively referred to herein as
"SUPPLIER").
W I T N E S S E T H:
-------------------
WHEREAS, SUPPLIER is in the business of providing pharmaceutical and
related supplies and products to kidney dialysis centers and end users; and
WHEREAS, VIVRA owns and operates kidney dialysis units throughout the
United States, and
WHEREAS, SUPPLIER desires to be the primary supplier of pharmaceuticals and
related supplies to VIVRA, and VIVRA desires to utilize SUPPLIER as its primary
supplier of pharmaceuticals and related supplies,
NOW, THEREFORE, in consideration of the premises above recited and the
mutual covenants and obligations hereinafter contained, the parties agree as
follow:
1. TERM OF AGREEMENT.
-----------------
The term of this Agreement shall be for three (3) years commencing February
1, 1996 (the "Commencement Date"), provided, however, that either party may at
any time terminate the Agreement upon one hundred twenty days (120) advance
written notice to the other party. Provided the Agreement is not sooner
terminated, upon expiration of the three (3) year term this Agreement shall
automatically renew for successive one (1) year periods thereafter.
2. PRICING.
-------
All products sold to VIVRA will be invoiced at the prices determined in
accordance with the terms of this Agreement. SUPPLIER agrees that the pricing
shall be ********** to any other individual kidney dialysis unit which is not
part of a group of kidney dialysis units or to any other company that owns and
operates a group of kidney dialysis units wherein that number of units is less
than the number of units operated by VIVRA. When VIVRA is eligible for contract
pricing either under a group contract or individual contract for the same
product, SUPPLIER will automatically ********** and which SUPPLIER can access.
All contract pricing is contingent upon VIVRA becoming a member of any groups
suggested by SUPPLIER and maintaining its membership in good standing with such
groups during the term of this Agreement.
(a) Dialysis Purchasing Alliance (DPA) contract pricing. VIVRA agrees to
promptly submit all necessary enrollment forms in order to become eligible to
participate in DPA. Membership in DPA will be at ********** to VIVRA for the
term of this Agreement. DPA contract products will be billed at a contract price
that will be attached to this Agreement as Schedule A and which will be updated
from time to time. The term of the individual contracts that comprise the DPA
buying group and continued eligibility is subject to each participating
manufacturer's policy.
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 20 of 27
<PAGE>
(b) Direct pharmaceutical contract pricing. Any pharmaceutical or
prescription drug product contract that VIVRA negotiates directly with a
manufacturer and which SUPPLIER is permitted by manufacturer to utilize on
VIVRA's behalf will be billed at the contract price **********. Unless otherwise
negotiated on a product by product basis, SUPPLIER **********.
(c) Non-contract pharmaceutical products. Pharmaceutical products that are
not available to VIVRA under any pricing contracts will be billed at SUPPLIER's
**********. SUPPLIER **********.
(d) Non-contract medical/surgical products. Medical/surgical products will
be quoted on a product by product basis.
(e) Epogen pricing. Epogen shall be sold to VIVRA at SUPPLIER's Net Cost
specified below. For purposes of this Agreement, Net cost is defined as
SUPPLIER's wholesale acquisition cost of Epogen from the manufacturer less cash
discounts and service fees offered by the manufacturer. The price to be paid by
VIVRA for shipments of Epogen will vary depending upon the discounts and service
fees available to SUPPLIER from the manufacturer, which discounts and fees are
determined in the manufacturer's sole and absolute discretion, and are
specifically related to VIVRA's purchases of Epogen from SUPPLIER. Such
discounts and fees may also be related to matters which are beyond the control
of SUPPLIER including, without limitation, agreements between VIVRA and the
manufacturer of Epogen to which SUPPLIER is not a party. Pricing is also
dependent upon the ********** chosen by VIVRA. As of the date hereof SUPPLIER
anticipates that the manufacturer will offer to SUPPLIER ********** and
**********, for a total discount of ********** from SUPPLIER's wholesale
acquisition cost of Epogen for sale to VIVRA. VIVRA acknowledges and agrees that
such discounts and service fees can be revised by the manufacturer from time to
time and that SUPPLIER's wholesale acquisition cost and the Net cost to VIVRA
shall vary accordingly.
(i) For the initial ********** of this Agreement Epogen will be billed
at SUPPLIER's ********** as defined above plus a mark up of $********** per
********** units of Epogen based upon compliance with the payment and terms
contained in paragraph 5, sub-paragraph (a) below entitled Phase One
Payment Terms.
(ii) At any time after the initial ********** of this Agreement, upon
30 days advance written notice, VIVRA may elect for Epogen to be billed at
SUPPLIER's ********** as defined above plus a mark up of $********** per
********** units of Epogen based upon compliance with the payment and terms
contained in paragraph 5, sub-paragraph (b) below entitled Phase Two
Payment Terms.
(iii) At any time after the initial ********** of this Agreement, upon
30 days advance written notice, VIVRA may elect for Epogen to be billed at
SUPPLIER's ********** as defined above plus a mark up of $********** per
********** units of Epogen based upon compliance with the payment and terms
contained in paragraph 5, subparagraph (c) below entitled Phase Three
Payment Terms - Pre Pay Option.
The discount offered to SUPPLIER by manufacturer for the sale of Epogen to
VIVRA is subject to change, from time to time, at the sole discretion of
manufacturer. Immediately upon SUPPLIER's receipt of notice of any discounting
change from the manufacturer, SUPPLIER will forward a copy of same to VIVRA and
immediately recompute its ********** in determining the price to be billed to
VIVRA for all orders of Epogen. In the event the discount and service fees
available to SUPPLIER are more favorable than those referenced above
(**********) the mark up to be charged by SUPPLIER shall be subject to upward
revision solely by mutual agreement of the parties.
3. INVOICING.
---------
(a) SUPPLIER will provide a corresponding invoice and packing slip packed
inside all product shipments SUPPLIER delivers to the kidney dialysis units.
Invoices or copies of same will be in a format ready for standard fax
transmission. Additionally, SUPPLIER will provide via overnight delivery a
statement of invoices to VIVRA each Tuesday representing invoices from shipments
made by SUPPLIER for the preceding Monday through Friday less any applicable
credits issued by SUPPLIER and accepted by VIVRA during the applicable period.
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 21 of 27
<PAGE>
(b) VIVRA and any kidney dialysis unit receiving product from SUPPLIER will
forward written correspondence and copies of any shipping claims or disputed
invoice(s) to SUPPLIER within 5 business days of receipt of a corresponding
invoice related to a disputed order. Once SUPPLIER receives written
correspondence regarding any disputed invoice(s), said disputed invoice(s) will
not be subject to finance charges specified in paragraph 6 below, but will be
required to be resolved and reconciled by both parties within 20 business days.
(c) Returns of any products shipped to VIVRA by SUPPLIER shall be made in
accordance with SUPPLIER's return policy, as amended from time to time. A copy
of SUPPLIER's return policy in effect on the date hereof has been provided to
VIVRA by SUPPLIER, and VIVRA acknowledges receipt of same.
4. PAYMENT.
-------
Payments will be made to SUPPLIER via federal funds wire transfer from
VIVRA's account to a designated BELLCO bank account. Where the payment due date
falls on a holiday or weekend the payment is due on the next business day.
5. TERMS.
-----
(a) Phase One Payment Terms:
Invoices dated Monday through Friday for any given week will be payable via
federal funds wire transfer to a designated BELLCO account within **********
from the Wednesday of such week. Therefore, starting the ********** of this
Agreement and assuming VIVRA places at least **********, VIVRA will make a
payment every **********.
(b) Phase Two Payment Terms:
Invoices dated Monday through Friday for any given week will be payable via
federal funds wire transfer to a designated BELLCO account within **********
from the Wednesday of such week. Therefore, assuming VIVRA places at least
**********, VIVRA will make a payment every **********.
(c) Phase Three Payment Terms - **********:
Every ********** VIVRA will ********** via federal funds wire transfer to a
designated BELLCO account for ********** Monday through Friday. The **********
will be an amount equal to ********** from the previous month. Any **********
balance will be reconciled by the ********** of the following month wherein
SUPPLIER will ********** VIVRA and VIVRA will make ********** to SUPPLIER for
********** from the previous month, or SUPPLIER will issue ********** VIVRA for
********** from the previous month.
(i) In the event VIVRA chooses Phase Three Payment Terms, SUPPLIER
will provide copies of the quarterly financial reports which BELLCO is
required to supply to the financial institution which provides BELLCO with
its operating line of credit. Such reports will be provided to VIVRA
concurrently with their submission to said financial institution. All such
financial reports provided to VIVRA will be deemed confidential information
and VIVRA agrees to execute a separate confidentiality agreement acceptable
to BELLCO in its sole and absolute discretion relating to such confidential
information.
6. LATE PAYMENT CHARGE.
-------------------
VIVRA will be subject to charges for late payments at a rate of 12% per
annum (but in no event more than the maximum rate permitted by law). When
calculating the monthly charge for late payment, all non disputed invoices are
deemed due for payment
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 22 of 27
<PAGE>
********** days from invoice date for Phase One Payment Terms, and
********** days from invoice date for Phase Two Payment Terms. The calculation
to determine the charge for late payment is as follows:
When the total amount of invoices paid late, weighted by the days paid
late, exceeds the total amount of invoices paid early, weighted by the days paid
early, the difference will be subject to charges at a rate of 12% per annum (but
in no event more than the maximum rate permitted by law.)
SUPPLIER will create a summary of late charges and a corresponding invoice
for late charges for a given month and deliver same via overnight delivery to
VIVRA by the 10th of the following month. The invoice for late charges will be
payable by the 24th of such month that summary and invoice late charges is
received by VIVRA.
7. DELIVERY.
--------
All Epogen orders only will be shipped via overnight delivery. Next day
delivery for Epogen is available only for orders transmitted to and received by
SUPPLIER no later than 4:00 p.m. Eastern Standard Time, Monday through Thursday.
Orders for other products will be shipped F.O.B. destination via overland
delivery with all packing, shipping, and delivery charges borne by SUPPLIER. The
pricing of Epogen is contingent upon the understanding that SUPPLIER will bear
full cost of shipment of Epogen to VIVRA or any kidney dialysis unit operated by
it an average of 1.5 times per month per kidney dialysis unit. For example,
based on VIVRA operating 200 kidney dialysis units, SUPPLIER shall bear the
overnight delivery charges for 300 overnight deliveries of Epogen per month. In
the event shipments of Epogen are required to be made by SUPPLIER to VIVRA or
the kidney dialysis units more than an average of 1.5 times per month, VIVRA
will be obligated to pay a delivery surcharge at a rate of **********, per
shipment for each delivery in excess of 1.5 shipments per month per kidney
dialysis unit. Monthly, SUPPLIER shall prepare a statement detailing any excess
overnight delivery charges incurred by it for the shipment of Epogen in excess
of 1.5 shipments per unit per month for the preceding month. VIVRA shall pay
such amounts within thirty days of receipt of such statement from SUPPLIER. Not
withstanding the foregoing, SUPPLIER shall bear all overnight delivery costs for
all Epogen orders transmitted to and received by SUPPLIER prior to **********,
1996.
8. VOLUME REQUIREMENTS.
-------------------
In order for VIVRA to continue to receive the pricing terms contained in
paragraph 2 above, effective no later than three months from the Commencement
Date VIVRA shall order and purchase from SUPPLIER an amount of products equal to
not less than $********** of product per month based on the pricing terms set
forth in this Agreement. If VIVRA does not reach this monthly minimum for
**********, SUPPLIER reserves the right to adjust upward the pricing contained
in paragraph 2 above. If, solely due to SUPPLIER's fault, SUPPLIER is unable to
provide Epogen to VIVRA for five or more consecutive business days, the monthly
minimum stated above will be reduced by the dollar amount of Epogen orders
transmitted to, received and unfilled by SUPPLIER during the period of time
SUPPLIER is unable to provide Epogen.
9. AUTOMATED ORDERING SYSTEM.
-------------------------
(a) It is agreed that as soon as practicable after the Commencement Date
and finalization of Schedule B (referred to below) SUPPLIER will provide at no
cost to VIVRA an electronic ordering System (the "System"). The System will
facilitate the electronic transmission of purchasing, inventory, and receiving
data over standard phone lines from VIVRA's individual kidney dialysis units to
a personal computer-based System (the "Base") at a VIVRA designated centralized
location. The Base will receive this data and then have the capability to
review, edit, print, and transmit this data in batch to SUPPLIER for order
processing. Additionally, the System will be capable of transmitting inventory
counts from the kidney dialysis units to the Base. Finally, the Base will be
capable of exporting data received and accumulated in its database to a
predefined DOS-based file.
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 23 of 27
<PAGE>
(b) The System will include the following:
- Hand-held scanning and order entry device for all current and future
VIVRA kidney dialysis units to which SUPPLIER ships pharmaceuticals and
related supplies.
- Personal computer hardware at the centralized location chosen by
VIVRA to accept transmissions and manage data from the kidney dialysis
units.
- Application software to allow VIVRA to perform above specified
functionality.
(c) The System will be developed based upon a written specification that
VIVRA & SUPPLIER will mutually develop and attach to and make part of this
Agreement as Schedule B.
(d) During the term of this Agreement SUPPLIER shall maintain the System in
working order in accordance with the specifications contained in Schedule B at
the centralized location chosen by VIVRA and at the kidney dialysis units,
provided however, that SUPPLIER shall not be responsible for maintenance or
repair caused by the substantial negligence of VIVRA, its agents or employees.
If the centralized location is changed by VIVRA during the term of this
Agreement or if VIVRA desires any upgrades, modifications, or peripherals, the
cost for same shall be at VIVRA's expense, except for modifications necessary
for the System to operate in compliance with Schedule B. All upgrades,
enhancements, and modifications shall be the property of SUPPLIER, provided,
however, that VIVRA shall be granted a non-exclusive, perpetual and royalty-free
license to use any such upgrades, enhancements, or modifications.
(e) Upon expiration of the term of this Agreement, VIVRA shall own the
hardware comprising the System. Upon expiration of the term of this Agreement
VIVRA shall have the right and is hereby granted a license to continue to use
the software comprising the System as set forth in Schedule B, provided VIVRA is
not in default of this Agreement. Upon payment of the annual license fee,
SUPPLIER will license said software to VIVRA for an amount not to exceed
$**********, per year. Upon VIVRA's written notice of intent to continue to use
the software comprising the System as set forth in Schedule B sent to SUPPLIER
by VIVRA, an invoice for the annual license fee will be mailed to VIVRA with
said invoice payable within thirty days of invoice date. Annual renewals of the
license to use the software specified in Schedule B shall be at a cost not to
exceed $**********.
(f) It is understood and agreed that SUPPLIER is making a significant
financial investment to develop, provide, and support the System. If this
Agreement is terminated by VIVRA for any reason other than as specified below
after 120 days from the Commencement Date but prior to the expiration of the
three year term, VIVRA will be responsible to purchase all hardware and
peripherals, and to reimburse SUPPLIER for the System's software development
costs. If this Agreement is terminated by VIVRA for any reason other than as
specified below after 120 days from the Commencement Date but prior to the
expiration of the three year term, VIVRA will either return all software and
documentation constituting the System and all copies thereof within 30 days of
such termination, or continue to use the software comprising the System as set
forth in Schedule B at a licensing fee schedule to be determined. The price
VIVRA will pay for the hardware constituting the System and the System's
software development costs will be calculated at SUPPLIER's invoiced acquisition
cost less straight line depreciation pro-rated on a three year basis. Software
development costs shall only include costs incurred by SUPPLIER after February
1, 1996 for developing the System for VIVRA. It is further agreed that such
invoiced acquisition cost will not exceed $**********, and shall be paid within
30 days of SUPPLIER's invoice date. In the event VIVRA terminates this Agreement
solely because the System fails to perform in accordance with Schedule B, VIVRA
shall have no obligation to reimburse SUPPLIER for any acquisition or
development costs, shall return the hardware, software and documentation (and
all copies thereof) within 30 days of such termination, and all licenses granted
hereunder shall terminate.
(g) The System will be managed by a designated employee of SUPPLIER (such
employee hereinafter referred to as the "Project Manager"). The Project Manager
will be the contact person for designated VIVRA staff relating to all
operational aspects of the System, including finalization of Schedule B,
implementation and training, and post-installation technical and application
support.
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 24 of 27
<PAGE>
(h) Exclusively relating to the implementation, training, and
post-installation technical and application support of the System, SUPPLIER will
provide reasonable consultation via telephone at no charge to the designated
VIVRA personnel. Additionally SUPPLIER will provide up to three (3) consecutive
days of on-site training at the VIVRA designated location which is the site of
the Base, with such training and travel related to same at no cost to VIVRA. If
VIVRA elects to request more than three (3) consecutive days on-site training at
the site of the Base, or if VIVRA requests SUPPLIER to perform any form of
on-site training for VIVRA's individual kidney dialysis units, SUPPLIER agrees
to provide, for a fee, the services of the Project Manager and/or other
qualified training staff. SUPPLIER will invoice VIVRA for such services at a
rate of $30 per man hour, with such $30 per hour applicable to travel time. If
VIVRA elects to utilize such services, VIVRA agrees to reimburse SUPPLIER for
all related round trip travel, ground transportation, hotel, and meal expenses,
and to pay such invoices within 30 days.
10. CONSULTATION SERVICES.
---------------------
At VIVRA's request and for a fee, SUPPLIER agrees to provide VIVRA
technical or application consultation services to integrate the System
referenced in paragraph 9 to VIVRA's current or future hardware or software
platforms. Any enhancements, modifications, or customization of the software
constituting the System shall be performed by SUPPLIER at an agreed upon fee
plus reimbursement of all out of pocket expenses incurred by SUPPLIER.
Consultation services will also be provided by SUPPLIER to assist VIVRA in the
analysis and/or implementation of future business software applications and/or
hardware platforms on the same fee basis as enhancements, modifications, or
customization. SUPPLIER will invoice VIVRA for such consultation services at a
rate to be negotiated on a project by project basis. If VIVRA elects to utilize
such consultation services, VIVRA agrees to reimburse SUPPLIER for all related
round trip travel, ground transportation, hotel, and meal expense, and to pay
such invoices within 30 days.
11. NOTICES.
-------
Any notices which is desired or required to be given hereunder shall be
deemed to be sufficiently given if personally delivered or sent by certified
mail and addressed as follows :
If to VIVRA:
VIVRA RENAL CARE, INC.
115 Columbia
Aliso Viejo, CA 92656
If to BELLCO:
BELLCO DRUG CORP.
101 East Hoffman Avenue
Lindenhurst, NY 11757
If to METRO HEALTH:
METRO HEALTH CORP.
180 Route 109
West Babylon, NY 11703
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 25 of 27
<PAGE>
12. SEVERABILITY.
------------
If any one or more of the provisions contained herein shall be held for any
reason to be invalid, illegal or unenforceable in any respect, such provision
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provisions had never been
contained herein.
13. BINDING EFFECT.
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, provided, however,
that this Agreement may not be assigned by either party without the prior
written consent of the other.
14. ENTIRE AGREEMENT.
----------------
This Agreement contains the entire understanding and agreement between the
parties concerning the subject matter hereof, and all other prior written and
oral agreements, understandings or arrangements are merged herein. No amendment
or modification hereof shall be binding upon either party unless in writing
signed by the party to be charged therewith.
15. MISCELLANEOUS.
-------------
SUPPLIER shall submit to VIVRA information concerning any material
litigation instituted against SUPPLIER. All such information provided to VIVRA
will be deemed confidential information and VIVRA agrees to execute a separate
confidentiality agreement acceptable to BELLCO in its sole and absolute
discretion relating to such confidential information.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first written above.
VIVRA INCORPORATED
By:_____________________________
BELLCO DRUG CORP.
By:_____________________________
METRO HEALTH CORP.
By:______________________________
- ----------------------------
Portions of the Exhibit have been omitted pursuant to a request for Confidential
Treatment and have been filed separately with the Commission.
Page 26 of 27
