Exhibit 2.1
EXECUTION COPY
==============
DATED: September 7, 1996
ASSET PURCHASE AGREEMENT
BETWEEN RENAL TREATMENT CENTERS -
GEORGIA, INC.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
( "Buyer")
AND COLUMBUS REGIONAL DIALYSIS CENTER, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("Seller")
A. SCOPE Purchase of Substantially all the Non-Current and
Certain Other Assets of Seller's Dialysis Services
Business.
B. PURCHASE PRICE $5,175,000
C. AGREEMENT DATE September 7, 1996
D. CLOSING DATE On or prior to September 16, 1996, or as the parties
may agree.
E. EFFECTIVE DATE August 31, 1996, at 11:59 p.m.
AND TIME
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
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PAGE
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PARTIES TO AGREEMENT 4
BODY OF AGREEMENT 4
Article One Sale and Purchase 4
Article Two The Assets and Assumed Liabilities 4
Article Three The Purchase Price 5
Article Four The Closing 6
Article Five Representations and Warranties of Seller 7
Article Six Representations and Warranties of Buyer 12
Article Seven Seller's Obligations Before Closing 13
Article Eight Buyer's Obligations Before Closing 15
Article Nine Conditions Precedent to Buyer's Performance 15
Article Ten Conditions Precedent to Seller's Performance 17
Article Eleven Other Agreements 18
Article Twelve Fees and Expenses 21
Article Thirteen Form of Agreement 21
Article Fourteen Parties 22
Article Fifteen Remedies 23
Article Sixteen Notices 23
SIGNATURES 25
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ASSET PURCHASE AGREEMENT
EXHIBIT LIST
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("EXHIBITS")
1.01 Facilities and Hospitals
2.01 Transferred Assets
2.02 Excluded Assets
2.03 Assumed Liabilities
3.04 Allocation of Purchase Price
4.03 Memorandum of Closing (including form of closing documents)
5.02 Seller's Capital Stock
5.03 Consents and Approvals
5.06 Financial Statements
5.08 Disclosure of Liabilities
5.11 Tangible Asset List
5.12 Contracts
5.14 Patient List
5.15 Physician List
5.16 Insurance Policies
5.18 Litigation and Incident Reports
5.20 Licenses
5.22 Personnel List
5.23 Employee Benefit Plans
7.07 Form of Leases
7.08 Form of Medical Directors Agreement
7.10 Form of Assignments and Landlord Covenants
9.04 Form of Opinion of Seller's Counsel
9.09 CPA's Report
9.12 Agreements
10.04 Form of Opinion of Buyer's Counsel
SUPPLEMENTAL INFORMATION
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("SUPPLEMENTAL INFORMATION")
5.01 Seller's Articles or Certificate of Incorporation and Bylaws
5.06(ii) Tax Returns
5.06(iii) HCFA Form 265
5.12 Copies of Contracts
5.18 Incident Reports
5.19 Medicare and Other Surveys, Reports and Deficiency Notices
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of the 27th of August,
1996, between RENAL TREATMENT CENTERS - GEORGIA, INC., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Buyer") and COLUMBUS
REGIONAL DIALYSIS CENTER, INC., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ("Seller").
WITNESSETH:
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NOW THEREFORE, in consideration of the covenants and promises contained in this
Agreement and intending to be legally bound, the parties agree as follows:
ARTICLE ONE
SALE AND PURCHASE
1.01 The Business
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The subject of this Agreement is Seller's dialysis services business
("Business") consisting of the provision of outpatient dialysis services by and
through the dialysis facilities ("Facilities") as provided in attached Exhibit
1.01.
1.02 Sale and Purchase of Assets
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Subject to the terms and conditions of this Agreement, at the Closing as
provided in Article Four, Seller shall sell, assign and transfer to Buyer and
Buyer shall buy the Assets of the Business, as provided in Section 2.01, free
and clear of any liabilities, security interests, liens, claims, and
encumbrances, except the Assumed Liabilities as provided in Section 2.03, and
liens for accrued but unpaid taxes not yet due and payable to be paid by Seller
when due.
ARTICLE TWO
THE ASSETS AND ASSUMED LIABILITIES
2.01 The Assets
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The assets ("Assets") to be sold, assigned and transferred to Buyer consist of
all of the assets and properties of the Business of every kind, character, and
description, whether tangible,
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intangible, personal or mixed and wherever located, including those as provided
in attached Exhibit 2.01, but excluding the Excluded Assets as provided in
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Section 2.02.
2.02 Excluded Assets
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Specifically excluded from the Assets are the assets and properties as provided
in attached Exhibit 2.02 and no others.
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2.03 Assumed Liabilities
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The liabilities to be assumed by Buyer (the "Assumed Liabilities") are as
provided in attached Exhibit 2.03 and no others. Buyer shall not assume any
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other liability or obligation of Seller, including, without limitation, any
liability or obligation with respect to any litigation disclosed on Exhibit
5.08. On the Closing Date, Buyer shall assume the Assumed Liabilities.
ARTICLE THREE
THE PURCHASE PRICE
3.01 Purchase Price
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The purchase price ("Purchase Price") for the Assets and the Covenant Not To
Compete shall be the sum of Five Million One Hundred Seventy-Five Thousand
Dollars ($5,175,000.00), adjusted as provided in Section 3.03.
3.02 Payment of Purchase Price
-------------------------
The Purchase Price shall be paid as follows: (i) $1,552,500.00 at Closing by
wire transfer to Seller's specified bank account, and (ii) a Note issued by
Buyer in favor of Seller in the principal amount of $3,622,500.00 at a rate of
interest of 5.5% per annum payable by wire transfer on January 3, 1997, in Form
of Exhibit 3.02 hereof.
3.03 Adjustment of Purchase Price
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a) The Purchase Price shall be adjusted at Closing as follows: at the Closing,
Seller and Buyer shall jointly prepare a statement (the "Statement of
Adjustments") in form as provided in attached Exhibit 4.03, setting forth all
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expenses pre-paid by Seller which will benefit Buyer, and accrued compensable
employee vacation and sick pay not yet due and payable of Seller as of the
Closing Date. In the event that Seller and Buyer cannot agree on the Statement
of Adjustments, the parties shall within thirty (30) days of the Closing Date
jointly choose an independent accounting firm of national stature which shall
prepare the Statement of Adjustments on the foregoing basis, and whose
determination shall be conclusive and binding
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on all parties and whose fees shall be paid equally by Seller and Buyer. In the
event that the parties cannot agree upon the identity of such accounting firm,
Coopers & ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company shall jointly choose such
accounting firm. The Purchase Price payable on the Closing Date shall be
increased or decreased, as the case may be, on a dollar-for-dollar basis equal
to the amount, if any, by which such vacation and sick pay fail to equal or
exceed such pre-paid expenses. Such adjustment shall be satisfied by payment by
Seller or Buyer, as the case may be, equal to the amount of the adjustment,
which payment shall be made on the Closing Date or within fifteen (15) days
after determination by the third-party auditor.
b) Personal property ad valorem taxes and all other items such as utility
charges, fees for transferable licenses, assumed liabilities, and obligations
assumed by Buyer reflected on Exhibit 2.03, and equipment maintenance charges,
etc., as applicable, shall be pro-rated as between Seller and Buyer, as of the
effective Date, either at Closing, or subsequently thereto, as and when a
payment, ▇▇▇▇ or invoice is presented with respect to same.
3.04 Allocation of Purchase Price
----------------------------
The Purchase Price (and all other capitalizable costs) shall be allocated (for
all purposes including financial accounting and tax purposes) as provided in
attached Exhibit 3.04.
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ARTICLE FOUR
THE CLOSING
4.01 Place of Closing
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Closing and settlement of this transaction ("Closing") shall take place at the
offices of ▇▇▇▇▇ ▇▇▇▇, Esquire, Suite 301 Heritage Tower, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
4.02 Closing Date
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The execution of this Agreement shall take place on September 7, 1996. Pre-
Closing shall commence at 9:00 a.m. on September 15, 1996, and Closing shall
commence at 9:00 a.m. on September 16, 1996 (the "Closing Date"). Upon
consummation of Closing, Closing shall be deemed effective as of 11:59 p.m. on
August 31, 1996.
4.03 Memorandum of Closing
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On the Closing Date, the parties shall execute a Memorandum of Closing, in form
as provided in attached Exhibit 4.03, which shall state the events that occurred
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at the Closing. All transactions at the Closing shall be considered to take
place simultaneously. No delivery shall be considered to be made until all
transactions are completed.
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4.04 Deliveries at Closing
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(i) Seller's Obligations. At the Closing, Seller shall deliver to Buyer and
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its counsel the items as provided in attached Exhibit 4.03 against delivery of
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the items by Buyer as provided in Subsection 4.04(ii).
(ii) Buyer's Obligations. At the Closing, Buyer shall deliver to seller and
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its counsel the items as provided in attached Exhibit 4.03 against delivery of
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the items by Seller as provided in Subsection 4.04(i).
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF SELLER
To induce Buyer to enter into this Agreement, Seller makes the following
representations and warranties to Buyer:
5.01 Organization
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Seller is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Georgia. Copies of Seller's articles of
incorporation and bylaws, as amended to date, have been delivered to Buyer, are
true, correct and complete, and are in full force and effect.
5.02 Capitalization and Ownership
----------------------------
The authorized, issued, and outstanding capital stock of Seller is held as
provided in attached Exhibit 5.02. Seller has no interest in any corporation,
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partnership, joint venture or other legal entity.
5.03 Authority
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Seller has the right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement, and no further approvals or
consents of any persons are necessary in connection with the performance of its
obligations under this Agreement except as set forth in Exhibit 5.03 hereto.
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The execution and delivery of this Agreement and the consummation of this
transaction by Seller have been duly authorized by its Board of Directors. This
Agreement has been duly executed and delivered by the Seller and constitutes the
legal, valid, and binding obligation of Seller enforceable in accordance with
its terms.
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5.04 No Breach or Violation
----------------------
The execution and delivery of this Agreement do not and consummation of the
transactions contemplated by this Agreement and compliance with the terms of
this Agreement by Seller will not result in or constitute any of the following:
(i) a default or an event that, with notice or lapse of time or both, would be a
default, breach, or violation of the articles of incorporation or bylaws of
Seller, or any document, agreement, instrument, or arrangement to which Seller
is a party or by which Seller is bound; (ii) an event that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of Seller unless such obligations are to be
satisfied at Closing; or (iii) the creation or imposition of any lien, charge,
or encumbrance on any of the Assets.
5.05 Title
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Seller is presently the owner, beneficially and of record, of good and
marketable title to the Assets free and clear of all liens, security interests,
restrictions, claims, and encumbrances.
5.06 Financial Information
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(i) Seller has delivered to Buyer a true, correct and complete copy of the
financial statements as provided in attached Exhibit 5.06 ("Financial
------------
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
period indicated, and fairly present the financial condition and the results of
operation of Seller for the periods indicated.
(ii) Seller has delivered to Buyer a correct and complete copy of its U.S.
Income Tax Returns, filed by Seller for tax years ending December 31, 1993,
December 31, 1994, and December 31, 1995.
(iii) Seller has delivered to Buyer a correct and complete copy of HCFA Form
265, Renal Dialysis Facility Statistical Data, for the Facility for Fiscal years
ending December 31, 1993, December 31, 1994, and December 31, 1995.
5.07 Sources of Revenue
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The source of revenue of the Business consists of reimbursement for dialysis
services, items and supplies and related tests, studies, drugs, biologicals and
blood provided by and through the Facilities and inpatient dialysis services
provided at the Hospitals. Other than miscellaneous income derived from vending
machines and rental income from Renal Associates, P.C., there are no other
sources of revenue of the Business, other than interest and dividend income
reflected on the U.S. Income Tax Returns described in Section 5.06(ii) above.
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5.08 No Undisclosed Liabilities and Solvency
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(i) Seller has no liability or obligation of any nature, whether due or to
become due, absolute, contingent or otherwise, including liabilities for or in
respect of federal, state and local taxes and any interest or penalties relating
thereto, except (a) to the extent fully reflected on the Financial Statements,
(b) liabilities incurred in the ordinary course of business since December 31,
1995, or (c) as specifically provided in attached Exhibit 5.08.
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(ii) Seller is solvent, having assets which at a fair valuation exceed its
liabilities, and Seller is able to meet its debts as they mature and will not
become insolvent as a result of the transactions contemplated hereby. Seller is
not entering into the transactions contemplated by this Agreement with the
intent to hinder, delay or defraud any entity to which it is indebted. Following
consummation of the transactions contemplated by this Agreement, Seller will
have sufficient capital and property remaining to conduct the business in which
it will thereafter be engaged.
5.09 No Changes
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Since December 31, 1995, Seller has conducted its business only in the ordinary
course. Without limiting the generality of the foregoing sentence, since
December 31, 1995, there has not been:
(i) Any change in the financial condition, assets, liabilities, or prospects
of Seller, except changes in the ordinary course of business;
(ii) Any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the Assets, Business or prospects of Seller,
or any material deterioration in the operating condition of the Assets;
(iii) Any increase in the salaries or other compensation payable or to become
payable to (other than increases in the ordinary course of Seller's business),
or any advance (excluding advances for ordinary business expenses) or loan to,
any employee of Seller, or any increase in, or any addition to, other benefits
(including without limitation any bonus, profit-sharing, pension or other plan)
to which any of Seller's employees may be entitled; or
(iv) Any change by Seller in any method of accounting or keeping its books of
account or accounting practices.
Notwithstanding anything to the contrary hereof, except as to new leases entered
into with respect to the real property on which the Facility is located in form
of Exhibit 7.07 hereof and the execution of a Medical Directors Agreement in the
form of Exhibit 7.08.
5.10 Taxes
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Seller has: (i) timely filed, or joined in the filing of, all returns required
to be filed by it with respect to all federal, state and local income, payroll,
withholding, excise, sales, use, personal property, use and occupancy, business
and occupation, mercantile, real estate, capital stock and franchise or other
taxes (all the foregoing taxes, including interest and penalties thereon and
including estimated taxes, being hereinafter collectively called "Taxes"); (ii)
paid all Taxes shown to have become due, whether pursuant to such returns or
otherwise; (iii) paid all other Taxes for which a notice of or assessment or
demand for payment has been received; and (iv) adequately accrued and reserved
for the payment of all Taxes not yet due and payable. To the best of Seller's
knowledge, all such returns have been prepared in accordance with all applicable
laws and requirements and accurately reflect the taxable income (or other
measure of Tax) of the corporation or person filing the same.
5.11 Tangible Assets and Premises
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Exhibit 5.11 contains a complete and accurate list identifying and specifying
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the location of all tangible assets used in the Business. On the Closing Date,
the tangible assets used in the Business are in good operating condition and
repair, except as provided in Exhibit 5.11. The premises and leasehold
improvements of the Facility are in tenantable condition and repair. There
exists no defect or condition which interferes with or prevents the use and
occupancy of the Facility as a dialysis facility in compliance with law.
5.12 Contracts
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Except as provided in attached Exhibit 5.12 ("Contracts"), Seller is not party
------------
to or bound by any lease, contract, agreement, or commitment, oral or written,
formal or informal, including contracts with any third party payor or state
kidney disease program, which is material to the Assets or Business. The
Contracts are in full force and effect. The copies of the Contracts delivered
to Buyer are correct and complete. There is no default or event that with
notice or lapse of time or both would constitute a default by any party to the
Contracts. Seller has not received notice that any party to the Contracts
intends to terminate any of the Contracts or to exercise or not exercise any
option under the Contracts. The Contracts contain the entire agreement between
the parties thereto pertaining to the subject matter contained therein; there
are no other agreements, representations or understandings between or among
Seller and the parties to the Contracts, pertaining to the matters contained
therein, which would conflict with the performance of the Contracts.
5.13 Inventory
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The inventory of Seller consists of items of a quality and quantity useable in
the ordinary course of the Business and is no less inventory than necessary to
conduct the Business for fourteen (14) business days as of the Closing Date.
5.14 Patients
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Attached Exhibit 5.14 is a complete and correct list ("Patient List") of all end
------------
stage renal disease ("ESRD") patients ("Patients") of the Facility indicating
the age of the patient, the type of service provided and the current utilization
rate of such service. All Patients covered by Medicare have elected Method I
reimbursement.
5.15 Physicians
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Attached Exhibit 5.15 is a complete and correct list ("Physician List") of all
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physicians or groups of physicians ("Physicians") attending or admitting
patients to the Facility, indicating the number of patients appearing on the
Patient List admitted by each.
5.16 Insurance
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For the five (5) year period prior to the date of this Agreement, to the best of
Seller's knowledge, Seller has maintained adequate insurance for the Business
and Assets with respect to risks normally insured against by similar businesses.
Attached to Exhibit 5.16 are complete and correct copies of all policies of
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insurance ("Insurance Policies") of which Seller is the owner, insured or
beneficiary, or covering any of the Assets or the Business.
5.17 Compliance with Laws
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Seller has complied with, and is not in violation of, applicable federal state
or local statutes, laws, and regulations affecting Seller, the Facility, the
Business or the Assets.
5.18 Claims and Litigation
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There is no claim, suit, action, arbitration, or legal, administrative or other
proceeding, or governmental investigation ("Claims and Litigation") pending or
to the knowledge of the Seller threatened against or affecting Seller, the
Facility, the Business or the Assets. Attached Exhibit 5.18 is a complete and
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correct list of all Claims and Litigation involving Seller during the past two
(2) years. Seller has delivered to Buyer complete and correct copies of all
incident reports of Facility for the past two (2) years.
5.19 Medicare Certification
----------------------
The Facility is certified under the conditions of coverage and participates in
the federal Medicare program as an ESRD facility providing ESRD services
indicated on the Patient List. Seller has delivered to Buyer complete and
correct copies of all surveys, reports or deficiency notices concerning the
Facility by the Medicare program, the state survey agency, the Medicaid program
or the Georgia Kidney Disease Program. The Medicare certification of the
Facility is in full force and effect and, to the best of Seller's knowledeg, no
violation of the conditions and standards of coverage, participation or
certification exists and, to the best of
Seller's knowledge, no event or circumstances exist which, with the giving of
notice or passage of time, or both, would constitute a violation thereof.
5.20 Other Licenses and Certificates
-------------------------------
Complete and correct copies of all other licenses, certifications,
accreditation, consents, permits, approvals or certificates of need ("Licenses")
held and used in connection with conduct of the Business are attached as Exhibit
-------
5.20. To the best of Seller's knowledge, Seller has all Licenses as are
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necessary to conduct the Business as now being conducted, and all Licenses are
in full force and effect. No violation of any License exists and no event or
circumstance exists which, with giving of notice or passage of time, would
constitute a violation.
5.21 Overpayments
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Except as described in Exhibit 5.21, Seller has no liability for any
overpayment, refund, discount or adjustment ("Overpayment") in connection with
Medicare, Medicaid or any other reimbursement program or third party payor,
other than standard and customary Overpayments made in the ordinary course of
Seller's business, provided that in the event Overpayments do arise and are paid
by Buyer, Seller hereby agrees to reimburse Buyer for such amounts. No
reimbursement program or payor has made or threatened any claim for any
Overpayment. The Facility has never claimed or received from the Medicare
program reimbursement for bad debts.
5.22 Personnel
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Attached Exhibit 5.22 is a complete and correct list of the names and addresses
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of all employees, stating the rates or terms of compensation and health and life
benefits of each. Seller is not party to any collective bargaining or labor
agreement or arrangement. To the knowledge of Seller, there is no work stoppage
pending or threatened with respect to Seller, and no application for
certification as a collective bargaining agent with respect to Seller is pending
or anticipated.
5.23 Employee Benefits
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Seller is not under any obligation to make any payment or contribution to a
"multi-employer plan" as defined in Section 3(37) of the Employee Retirement
Income Security Act ("ERISA"), 29 U.S.C. Section 1002(37), and Seller has no
actual or potential liability under Section 4201 of ERISA, 29 U.S.C. Section
1381, for any complete or partial withdrawal from a multi-employer plan. The
only retirement, pension, profit sharing, or health or insurance benefit plans
("Plans") of Seller are as provided in attached Exhibit 5.23, which Plans comply
------------
with the applicable provisions of ERISA.
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5.24 Full Disclosure
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To the best of Seller's knowledge, none of the representations and warranties
made by Seller in the Agreement or in any Exhibit or Supplemental Information
furnished or to be furnished by it, or on its behalf, contains or will contain
any untrue statement of material fact, or omit any material fact the omission of
which would be misleading, which would have a material adverse effect on
Seller's business.
5.25 Purchase Price
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The Purchase Price represents not less than reasonably equivalent value for the
purchase of the Assets, the Business and the Covenant Not to Compete.
ARTICLE SIX
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement, Buyer makes the following
representations and warranties to Seller:
6.01 Organization
------------
Buyer is a corporation duly organized, existing, and in good standing under the
laws of the State of Delaware and is duly qualified to do business in the
Commonwealth of Pennsylvania. Copies of Buyer's certificate of incorporation and
bylaws, as amended to date, have been delivered to Seller, are correct and
complete and are in full force and effect.
6.02 Authorization
-------------
Buyer has the right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement and no further approvals or
consents of any persons are necessary in connection with it. The execution and
delivery of this Agreement and the consummation of this transaction by Buyer
have been duly authorized and approved by its board of directors. This
Agreement has been duly executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer enforceable in accordance with its
terms.
6.03 No Breach or Violation
----------------------
The execution and delivery of this Agreement do not and the consummation of the
transactions contemplated by this Agreement and compliance with the Terms of
this Agreement by Buyer will not result in or constitute any of the following:
(i) a default or an event that, with notice
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or lapse of time or both, would be a default, breach, or violation of the
certificate of incorporation or bylaws of Buyer or any document, agreement,
instrument, or arrangement to which Buyer is a party or by which Buyer is bound;
or (ii) an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation of Buyer.
6.04 Purchase Price
--------------
The Purchase Price represents not less than reasonably equivalent value for the
purchase of the Assets, the Business and the Covenant Not to Compete.
ARTICLE SEVEN
SELLER'S OBLIGATIONS BEFORE CLOSING
Seller agrees that from and after the date of this Agreement and to and
including the Closing Date:
7.01 Access to Information
---------------------
Buyer and its representatives shall have, at all reasonable times during regular
business hours, upon the giving of reasonable notice, access to Seller's
premises and to the books and records of Seller, and Seller shall furnish to
Buyer and its representatives such financial and operating data, and such other
information with respect to the Assets, the Facility and the Business, as Buyer
may from time to time reasonably request. In connection therewith, Buyer and
its representatives shall be privileged to communicate with Seller's
administrators, head nurse, medical director, business office manager and such
other persons as Buyer may reasonably request. All such access, investigations
and contacts shall be conducted in such manner as not to unreasonably interfere
with the normal conduct of Seller's business.
7.02 Conduct of Business
-------------------
Seller shall conduct the Business diligently and in substantially the same
manner as previously conducted. Seller shall not remove, sell, lease or
otherwise dispose of any Assets except in the ordinary course of business.
Except as reflected on Exhibit 2.02 hereof, and except as otherwise specifically
provided for herein, Seller shall neither make nor agree to make any material
change in the operation or conduct of the Business or the Facility.
7.03 Business Relationships
----------------------
Seller shall preserve its business as a going concern and shall use its best
efforts to maintain its relationships with all Patients, Physicians and
Hospitals. Except as set forth herein, Seller
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shall not make or permit, or agree to make or permit, any amendment,
modification or termination of any Assigned Agreement.
7.04 Insurance and Risk of Loss
--------------------------
Seller shall maintain its existing policies of insurance. Until the
consummation of Closing Seller shall bear the risk of loss and damage to the
Business and the Assets.
7.05 Personnel Changes
-----------------
Except in the ordinary course of business or as already disclosed to Buyer in
writing, Seller shall not increase compensation, benefits or other amounts
payable to any of its employees. Seller shall not hire additional permanent
employees without the written approval of Buyer, except such hiring necessary to
maintain adequate levels of staffing.
7.06 Exclusive Dealing
-----------------
Seller shall not take any action to seek, encourage, solicit or support any
inquiry, proposal, expression of interest or offer from any other person or
entity with respect to an acquisition, combination or similar transaction
involving Seller, the Business, the Facility or any portion of the Assets
(except sales of inventory in the ordinary course of business), and Seller will
promptly inform Buyer of the existence of any such inquiry, proposal, expression
of interest or offer and shall not, without the written consent of Buyer,
furnish any information to or participate in any discussions or negotiations
with any other person or entity regarding the same.
7.07 Leases
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Seller shall have caused to be delivered duly executed lease agreements with
respect to the Facilities in form of Exhibit 7.07 hereof.
7.08 Medical Director Agreement
--------------------------
Seller shall have caused to be delivered a duly executed Medical Director
Agreement in the form of Exhibit 7.08 hereof.
7.09 Phenix Facility
---------------
Seller shall simultaneously with the Closing hereunder finalize and consummate
the Closing of the sale to Renal Treatment Centers - Alabama, Inc. of the
dialysis facility referred to in the Asset Purchase Agreement between Renal
Treatment Centers - Alabama, Inc. and Phenix Nephrology Referral Center, Inc. in
accordance with the terms therein and the related documents.
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7.10 Assignments
-----------
Seller shall have caused to be delivered a duly executed Landlord's Consent and
Assignment by all appropriate parties covering the premises located at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ in the form of Exhibit 7.10 hereof.
7.11 Other Agreements
----------------
Seller shall have delivered all the agreements, documents and opinions set forth
in the Memorandum of Closing provided for in Exhibit 4.03.
7.12 Consents to Assignment
----------------------
Seller shall use reasonable and diligent effort to secure, in the form provided
in attached Exhibit 4.03, consents to the assignment of the Assigned Agreements.
------------
ARTICLE EIGHT
BUYER'S OBLIGATIONS BEFORE CLOSING
Buyer agrees that from and after the date of this Agreement and to and including
the Closing Date:
8.01 Confidentiality
---------------
Unless and until the Closing has been completed, Buyer and its officers,
directors, and other representatives will hold in strict confidence, and will
not use to the detriment of Seller, all data and information obtained from
Seller in connection with this transaction or Agreement. If Closing is not
completed, this covenant shall survive and Buyer will promptly return to Seller
all such data and information.
8.02 Consents
--------
Buyer shall make reasonable and diligent effort to secure the certification,
consent, or approval of any federal, state or local agencies or authorities
necessary to permit consummation of the transactions contemplated by this
Agreement, except as provided in Section 7.07.
ARTICLE NINE
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
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The obligations of Buyer to purchase the Assets and complete Closing are subject
to the satisfaction, at or before the Closing, of all the conditions set out
below in this Article Nine. Buyer may waive any or all of these conditions in
whole or in part without prior notice.
9.01 Accuracy of Seller's Representations
------------------------------------
All representations and warranties by Seller in this Agreement of a material
nature will be true, correct and complete in all respects on and as of the
Closing Date as though made on and as of the Closing Date.
9.02 Performance of Seller
---------------------
Seller will have performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by Seller on or before the Closing Date.
9.03 Certificate of Seller's President
---------------------------------
Buyer will have received a certificate, dated the Closing Date, executed by
Seller's President, certifying that the conditions specified in Sections 9.01
and 9.02 have been fulfilled, in form and substance as provided in attached
Exhibit 4.03.
------------
9.04 Opinion of Seller's Counsel
---------------------------
Buyer will have received from counsel for Seller an opinion, dated the Closing
Date, in form and substance as provided in attached Exhibit 9.04.
------------
9.05 Absence of Litigation
---------------------
No action, suit, or proceeding before any court or any governmental body or
authority, pertaining to the transactions contemplated by this Agreement or to
its Closing will have been instituted or threatened on or before the Closing
Date.
9.06 Minimum Utilization
-------------------
On the Closing Date the total number of Registered Patients of the Facilities
and Phenix City Nephrology Center facility, located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ will be no less than two (210) ("Minimum Utilization Level" or
"MUL"). No Patient or group of Patients, whose transfer in the aggregate would
reduce the total number of Patients of the Facility below the MUL, have
threatened or indicated an intention to transfer from the Facility. As used
herein, the term "Registered Patients" shall mean Patients who have completed
and mailed Health Care Financing Administration Form 2728 indicating that they
are registered patients of the Facility.
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9.07 Physician Referrals
-------------------
No physician or group of physicians, who in the aggregate serve as attending
physician to more than ten percent (10%) of the total number of non-transient
patients of the Facility on the date of this Agreement, have threatened or
indicated an intention to cease, reduce, limit or restrict their referral of
patients to the Facility.
9.08 Reimbursement Changes
---------------------
There have been no material changes announced after the date of this Agreement
and on or before the Closing Date in the Medicare program's reimbursement of
institutional dialysis services and supplies.
9.09 Auditor's Report
----------------
Seller hereby agrees, in good faith, to cooperate and assist Buyer and its
accountants in performing at Buyer's cost any audit of Sellers books and records
required in connection with the Closing.
9.10 Employees
---------
Seller shall have delivered to Buyer evidence satisfactory to Buyer that each of
Seller's employees has been compensated for all paid time off, including
vacation and sick pay, which has accrued to each such employee as of the Closing
Date, in accordance with Seller's standard policies and procedures, as may be
adjusted pursuant to Section 3.03 hereof.
9.11 Consents and Approvals
----------------------
All certifications, consents or approvals necessary to permit consummation of
the Closing will have been received on or before the Closing Date.
9.12 Agreements
----------
In addition to the Agreements set forth in the Memorandum of Closing, Buyer
shall have entered into, on or before the Closing Date, the additional
Agreements as provided in attached Exhibit 9.12 in form and substance acceptable
------------
to Buyer.
ARTICLE TEN
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
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The obligations of Seller to sell, assign and transfer the Assets and complete
the Closing are subject to the satisfaction, at or before the Closing, of all
the conditions in this Article Ten. Seller may waive any or all of these
conditions in whole or in part without prior notice.
10.01 Accuracy of Buyer's Representations
-----------------------------------
All representations and warranties by Buyer in this Agreement of a material
nature will be true, correct and complete in all respects on and as of the
Closing Date as though made on and as of the Closing Date.
10.02 Performance of Buyer
--------------------
Buyer will have performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by Buyer on or before the Closing Date.
10.03 Certificate of Buyer
--------------------
Seller will have received a certificate, dated the Closing Date, executed by
Buyer's President, certifying that the conditions specified in Sections 10.01
and 10.02 have been fulfilled, in form and substance as provided in attached
Exhibit 4.03.
------------
10.04 Opinion of Buyer's Counsel
--------------------------
Seller will have received from counsel for Buyer an opinion, dated the Closing
Date, in form and substance as provided in attached Exhibit 10.04.
-------------
ARTICLE ELEVEN
OTHER AGREEMENTS
11.01 Certain Payments
----------------
Except for such liabilities and obligations expressly assumed by the Buyer
hereby, Seller shall promptly as and when due and in due course pay and fully
discharge all liabilities, claims, obligations, debts and expenses which relate
to, or arise out of, the operation or ownership of the Business, the Facility or
the Assets on or before the Closing Date, including without limitation amounts
owed to employees, Taxes and Overpayments, and which, if not satisfied, would
constitute a lien on the Assets or give rise to successor liability on the part
of Buyer.
11.02 Accounts Receivable
-------------------
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In the event Seller shall receive any payment which relates to the accounts
receivable generated from services rendered at the Facility after the Closing
Date, Seller shall promptly transmit these funds to Buyer. In the event Buyer
receives any payment which relates to accounts receivable generated from
services rendered at the Facility on or before the Closing Date, Buyer shall
promptly transmit these funds to Seller.
11.03 Medicare Cost Reports
---------------------
Seller shall promptly prepare, submit to Buyer for its review, and file Medicare
cost reports for the Facility for all periods up to and including the Closing
Date within the time provided by applicable law and regulations. Buyer agrees
to cooperate and assist Seller at Seller's cost in the preparation of Seller's
Medicare cost reports.
11.04 Tail Insurance
--------------
Seller shall deliver to Buyer at the Closing a Certificate of Insurance
evidencing the effective date of insurance coverage issued on a per occurrence
basis, in form and substance satisfactory to Buyer. The insurance shall be
health care service professional liability coverage with a financially sound and
reputable insurance company or association selected by Seller and acceptable to
Buyer, with limits of liability of $1,000,000 per loss and $3,000,000 annual
aggregate, naming Seller, its individual shareholders or its successor in
interest, as may be appropriate, as an insured and covering the health care
services professional liability risk arising out of Seller's operation of the
Business and Facilities on or before the Closing Date. Buyer will cooperate
with Seller in obtaining the most favorable rates on tail coverage reasonably
possible from its current provider.
11.05 Tax Matters
-----------
Each party will provide the other such assistance as may reasonably be requested
in connection with the preparation of any tax return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for taxes, and each will retain and provide
the other with any records or information which may be relevant to such return,
audit or examination, proceedings or determination. The party requesting
assistance hereunder shall reimburse the other party for reasonable expenses
incurred in providing such assistance. Any information obtained pursuant to this
Section or pursuant to any other Section hereof providing for the sharing of
information or the review of any tax return or other schedule relating to taxes
shall be kept confidential by the parties, and shall not be used to the
detriment of the other party or for the benefit of the requesting party.
11.06 Records and Documents
---------------------
For ten (10) years following the Closing Date, Seller and Buyer shall grant to
each other and its respective representatives, at the other's request, at such
reasonable times during regular
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business hours as may be requested by such other party, access to and the right
to make copies of those records and documents related to the Business, the
Facility or the Assets, possession of which is retained by the other, as such
other party may deem to be necessary or useful in regard to the Business, the
Facility or the Assets. If during such period the other party elects to dispose
of such records, such other party shall first give the other 90 days' written
notice, during which period the other party shall have the right to take such
records.
11.07 Seller's Indemnification
------------------------
(i) Extent of Indemnity. Seller agrees to indemnify and hold harmless Buyer
-------------------
from and against:
(a) Any loss, liability, claim, obligation, damage or deficiency
arising out or resulting from any material misrepresentation, breach of warranty
or nonfulfillment of any agreement on the part of the Seller.
(b) Any loss, liability, claim, obligation, damage or deficiency
arising out of or resulting from operation or ownership of the Business, the
Facility or Assets on or before the Closing Date;
(c) Any actions, judgements, costs and expenses (including reasonable
actual fees of attorneys and all other expenses incurred by Buyer in
investigating, preparing for, or defending any litigation or proceeding,
commenced or threatened) incident to any of the foregoing or the enforcement of
this Section 11.07.
For the purposes of this Agreement, the aggregate amount of such losses,
liabilities, claims, obligations, damages, deficiencies, costs, expenses and
fees shall be hereinafter referred to as "Damage" or "Damages".
(ii) Limitations on Liability. Seller shall not be liable under Section 11.07
------------------------
for Damages in the event Damages in the aggregate are less than $25,000. If the
aggregate amount of Damages exceeds $25,000, then Buyer may claim
indemnification for the entire aggregate amount of Damages. In no event shall
Seller's obligation for Damages exceed the Purchase Price.
(iii) Time Limit on Claims. Any claim for Damages under Section 11.07 must be
--------------------
made on or before March 31, 1998. A claim shall be made by written notice
specifying the nature of the claim and as otherwise provided in Section 11.07
and shall be deemed to be made on the date as provided in Section 16.01.
Notwithstanding the foregoing there shall be no time limit on claims involving
personal injury or malpractice, Taxes or Overpayments.
(iv) Certain Matters Excluded. Notwithstanding anything to the contrary in
------------------------
this Section 11.07, no limitation or condition of liability provided in this
Section shall apply to the breach
- 22 -
of any of the representations and warranties contained herein if such
representation or warranty was made with the intent to deceive.
(v) Procedure. Buyer shall give prompt written notice of any indemnification
---------
claim hereunder to the Seller specifying the amount and nature of the claim, and
giving the Seller the right to contest any such claim; provided, however, that
the failure of Buyer to so notify Seller shall not relieve the Seller of its
obligations hereunder, unless and only to the extent that such failure to notify
prejudices Seller. If any such claim is made hereunder by the Buyer and the
Seller does not elect to undertake the defense thereof by written notice within
thirty (30) days after receipt of the original notice from the Buyer, the Buyer
shall be entitled to indemnity hereunder to the extent of its Damages in respect
of such claim. To the extent that the Seller undertakes the defense of such
claim in good faith by proceeding diligently at its expense, and without
materially impairing the financial condition or operations of the Buyer, the
Buyer shall be entitled to indemnity hereunder only if, and to the extent that,
such defense is unsuccessful as determined by a final judgement of a court of
competent jurisdiction or is settled with the consent of the Seller. The Buyer
shall have the right to participate in the defense of such claim at its sole
cost and expense.
11.08 Buyer's Indemnification.
-----------------------
(i) Extent of Indemnity. Buyer agrees to indemnify and hold harmless Seller
-------------------
from and against:
(a) Any loss, liability, claim, obligation, damage or deficiency arising
out or resulting from any material misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of the Buyer.
(b) Any loss, liability, claim, obligation, damage or deficiency arising
out of or resulting from operation or ownership of the Business, the Facility or
Assets after the Closing Date;
(c) Any actions, judgements, costs and expenses (including reasonable
actual fees of attorneys and all other expenses incurred by Seller in
investigating, preparing for, or defending any litigation or proceeding,
commenced or threatened) incident to any of the foregoing or the enforcement of
this Section 11.08.
(d) Any and all claims arising as a result of any assumed Liability on or
after the Effective Date.
For the purposes of this Agreement, the aggregate amount of such losses,
liabilities, claims, obligations, damages, deficiencies, costs, expenses and
fees shall be hereinafter referred to as "Damage" or "Damages".
- 23 -
(ii) Limitations on Liability. Buyer shall not be liable under Section 11.08
------------------------
for Damages in the event Damages in the aggregate are less than $25,000; provide
that such limitations shall not be applied to assumed Liabilities. If the
aggregate amount of Damages exceeds $25,000, then Seller may claim
indemnification for the entire aggregate amount of Damages. In no event shall
Buyer's obligation for Damages exceed the Purchase Price.
(iii) Time Limit on Claims. Any claim for Damages under Section 11.08 must be
--------------------
made on or before March 31, 1998. A claim shall be made by written notice
specifying the nature of the claim and as otherwise provided in Section 11.08
and shall be deemed to be made on the date as provided in Section 16.01.
Notwithstanding the foregoing there shall be no time limit on claims involving
Assumed Liabilities under Section 2.03.
(iv) Certain Matters Excluded. Notwithstanding anything to the contrary in
------------------------
this Section 11.08, no limitation or condition of liability provided in this
Section shall apply to the breach of any of the representations and warranties
contained herein if such representation or warranty was made with the intent to
deceive with respect to any Assumed Liabilities under Section 2.03.
(v) Procedure. Seller shall give prompt written notice of any
---------
indemnification claim hereunder to the Buyer specifying the amount and nature of
the claim, and giving the Buyer the right to contest any such claim; provided,
however, that the failure of Seller to so notify Buyer shall not relieve the
Buyer of its obligations hereunder, unless and only to the extent that such
failure to notify prejudices Buyer. If any such claim is made hereunder by the
Seller and the Buyer does not elect to undertake the defense thereof by written
notice within thirty (30) days after receipt of the original notice from the
Seller, the Seller shall be entitled to indemnity hereunder to the extent of its
Damages in respect of such claim. To the extent that the Buyer undertakes the
defense of such claim in good faith by proceeding diligently at its expense, and
without materially impairing the financial condition or operations of the Seller
the Seller shall be entitled to indemnity hereunder only if, and to the extent
that, such defense is unsuccessful as determined by a final judgement of a court
of competent jurisdiction or is settled with the consent of the Buyer. The
Seller shall have the right to participate in the defense of such claim at its
sole cost and expense.
11.09 Survival
--------
All representations, warranties, covenants, and agreements made by any party to
this Agreement or pursuant hereto shall survive the Closing and any
investigation at any time made by or on behalf of any party hereto.
11.10 Other Documents and Action
--------------------------
- 24 -
Buyer and Seller shall, at any time at or after the Closing Date, execute and
deliver all such documents and instruments and do or cause to be done all such
other acts and things as may be reasonably necessary to carry out the terms of
this Agreement.
11.11 Notice
------
If requested by either party, Buyer and Seller shall issue a joint notice
advising of the purchase of the Assets by Buyer.
ARTICLE TWELVE
FEES AND EXPENSES
12.01 Transaction Costs
-----------------
Each of the parties shall pay the respective costs and expenses incurred or to
be incurred by it in negotiation and preparation of this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
ARTICLE THIRTEEN
FORM OF AGREEMENT
13.01 Headings
--------
The subject headings of the articles and sections of this Agreement are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.
13.02 Modification and Waiver
-----------------------
This Agreement constitutes the entire Agreement between the parties pertaining
to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and understandings of the parties.
No supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by all the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
13.03 Counterparts
------------
- 25 -
This Agreement may be executed simultaneously in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Executed counterparts may be delivered by
telecopier which counterparts shall have the same effect as the Agreement
itself.
13.04 Governing Law
-------------
This Agreement shall be construed in accordance with, and governed by, the laws
of the Commonwealth of Pennsylvania, conflict of laws provisions
notwithstanding.
13.05 Time
----
Time is of the essence to this Agreement.
ARTICLE FOURTEEN
PARTIES
14.01 Successors and Assigns; Assignment
----------------------------------
This Agreement shall be binding on, and shall inure to the benefit of, the
parties hereto and their respective heirs, legal representatives, successors,
and assigns. Neither party may assign this Agreement, except Buyer which may
assign this Agreement and its rights and obligations hereunder, in whole or in
part, to Renal Treatment Centers, Inc. or any wholly-owned subsidiary of Renal
Treatment Centers, Inc.; provided that it does not release Renal Treatment
Center, Inc. from any of its obligations to Seller.
ARTICLE FIFTEEN
REMEDIES
15.01 Mediation After Closing
-----------------------
(i) If, after the consummation of Closing, a dispute relating to this
Agreement arises between the parties hereto, the parties agree to use the
following procedure prior to either party's pursuing other available remedies.
(a) A meeting shall be held promptly between the parties, attended by
individuals with decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute.
- 26 -
(b) If, within thirty (30) days after such meeting, the parties have
not succeeded in negotiating a resolution of the dispute, they agree to submit
the dispute to mediation in accordance with the Commercial Mediation Rules of
the American Arbitration Association and to bear equally the costs of the
mediation.
(c) The parties will jointly appoint a mutually acceptable mediator,
seeking assistance in such regard from the American Arbitration Association if
they have been unable to agree upon such appointment within twenty (20) days
from the conclusion of the negotiation period.
(d) The parties agree to participate in good faith in the mediation
and negotiations related thereto for a period of thirty (30) days. If the
parties are not successful in resolving the dispute through mediation, then the
parties may agree to submit the matter to binding arbitration or a private
adjudicator, or either party may seek an adjudicated resolution through the
appropriate court.
(ii) Notwithstanding the foregoing, nothing herein shall be construed as
limiting a party's right to seek at any time injunctive relief from any court of
appropriate jurisdiction.
ARTICLE SIXTEEN
NOTICES
16.01 Notices
-------
All notices, claims, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given or
made on the date of service if served personally or on the third day after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed as set
forth above. Any party may change its address for the purposes of this Section
by giving the other party written notice of the new address in the manner set
forth above.
- 27 -
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on the
day and year first above written.
COLUMBUS REGIONAL DIALYSIS RENAL TREATMENT CENTERS -
CENTER, INC. GEORGIA, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------ ----------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇
President Vice President
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