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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 6, 2004
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DAVITA INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-4034 NO. 51-0354549
(STATE OR OTHER (COMMISSION FILE NUMBER) (IRS EMPLOYER
JURISDICTION OF INCORPORATION) IDENTIFICATION NO.)
601 HAWAII STREET
EL SEGUNDO, CALIFORNIA 90245
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
(310) 536-2400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On December 6, 2004, DaVita Inc. (the "Company") entered into a Stock
Purchase Agreement (the "Agreement") with Gambro AB, a company organized under
the laws of the Kingdom of Sweden (the "Parent"), and Gambro, Inc., a Colorado
corporation (the "Seller"), pursuant to which, subject to the terms and
conditions contained therein, the Company will purchase all of the issued and
outstanding shares of Gambro Healthcare, Inc. ("Gambro Healthcare"), a Tennessee
corporation and a direct wholly owned subsidiary of the Seller, for a total
purchase price of $3.05 billion, subject to adjustment. Gambro Healthcare is
engaged in the business of owning and operating a network of dialysis clinics
throughout the United States.
The Company's Board of Directors has unanimously approved the
Agreement.
The Agreement contains customary representations, warranties and
conditions to closing, including expiration or termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act and the receipt of
financing. The Company has received financing commitments necessary in order to
consummate the acquisition.
Under the terms of the Agreement, the Company and an affiliate of the
Parent will enter into a supply agreement with a 10 year term that will obligate
the Company to purchase from such affiliate a significant majority of its
hemodialysis product supply and equipment requirements.
The foregoing description of the Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Agreement, which is filed as an exhibit hereto and incorporated herein by
reference.
ITEM 8.01. OTHER EVENTS.
Attached hereto as Exhibit 99.1 is a press release issued on December 7,
2004, announcing the execution of the Stock Purchase Agreement.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
Exhibit No. Exhibit
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2.1 Stock Purchase Agreement dated as of December 6, 2004,
among Gambro AB, Gambro, Inc. and DaVita Inc.
99.1 Press release of DaVita Inc., dated December 7, 2004.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DAVITA INC.
Date: December 8, 2004 /S/ JOSEPH SCHOHL
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JOSEPH SCHOHL
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
EXHIBIT INDEX
Exhibit No. Exhibit
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2.1 Stock Purchase Agreement dated as of December 6, 2004,
among Gambro AB, Gambro, Inc. and DaVita Inc.
99.1 Press release of DaVita Inc., dated December 7, 2004.
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
--------------------
Among
GAMBRO AB,
GAMBRO, INC.
and
DAVITA INC.
Dated as of December 6, 2004
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
Article I
DEFINITIONS
<S> <C>
SECTION 1.01. Certain Defined Terms...............................................................................1
SECTION 1.02. Definitions.........................................................................................9
SECTION 1.03. Interpretation and Rules of Construction...........................................................10
Article II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares; Payment of the Inter-Company Debt.................................11
SECTION 2.02. Purchase Price.....................................................................................11
SECTION 2.03. Closing............................................................................................11
SECTION 2.04. Closing Deliveries by the Seller...................................................................11
SECTION 2.05. Closing Deliveries by the Purchaser................................................................12
SECTION 2.06. Pre-Closing Adjustment of Purchase Price...........................................................12
SECTION 2.07. Allocation of Consideration........................................................................12
Article III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.01. Incorporation, Authority and Qualification of the Seller...........................................13
SECTION 3.02. Incorporation, Authority and Qualification of the Company; Subsidiaries............................13
SECTION 3.03. Capital Stock of the Company; Ownership of the Shares..............................................14
SECTION 3.04. No Conflict........................................................................................14
SECTION 3.05. Governmental Consents and Approvals................................................................15
SECTION 3.06. Financial Information..............................................................................15
SECTION 3.07. Absence of Undisclosed Material Liabilities........................................................15
SECTION 3.08. Absence of Changes.................................................................................16
SECTION 3.09. Litigation.........................................................................................16
SECTION 3.10. Compliance with Laws...............................................................................16
SECTION 3.11. Environmental Matters..............................................................................16
SECTION 3.12. Intellectual Property..............................................................................17
SECTION 3.13. Real Property......................................................................................17
SECTION 3.14. Assets ............................................................................................17
SECTION 3.15. Employee Benefit Matters...........................................................................18
SECTION 3.16. Labor Relations....................................................................................19
SECTION 3.17. Taxes .............................................................................................19
SECTION 3.18. Material Contracts.................................................................................19
TABLE OF CONTENTS
(continued)
PAGE
SECTION 3.19. Certain Interests..................................................................................21
SECTION 3.20. Inter-Company Transactions.........................................................................21
SECTION 3.21. Brokers............................................................................................22
SECTION 3.22. Settlement Agreements..............................................................................22
SECTION 3.23. Disclaimer of the Seller...........................................................................22
Article IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Organization and Authority of the Purchaser........................................................23
SECTION 4.02. No Conflict........................................................................................23
SECTION 4.03. Governmental Consents and Approvals................................................................24
SECTION 4.04. Investment Purpose.................................................................................24
SECTION 4.05. Financing..........................................................................................24
SECTION 4.06. Litigation.........................................................................................24
SECTION 4.07. Brokers............................................................................................25
SECTION 4.08. Independent Investigation; Seller's Representations................................................25
Article V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing...........................................................25
SECTION 5.02. Access to Information..............................................................................27
SECTION 5.03. Confidentiality....................................................................................28
SECTION 5.04. Regulatory and Other Authorizations; Notices and Consents..........................................29
SECTION 5.05. Retained Names and Marks...........................................................................30
SECTION 5.06. Ancillary Agreements...............................................................................31
SECTION 5.07. Financing..........................................................................................31
SECTION 5.08. Further Action.....................................................................................32
SECTION 5.09. Non-Competition; Non-Solicitation..................................................................32
SECTION 5.10. Inter-Company Arrangements.........................................................................33
SECTION 5.11. Release of Indemnity Obligations...................................................................33
SECTION 5.12. Inter-Company Debt.................................................................................33
SECTION 5.13. Right of First Refusal.............................................................................33
Article VI
EMPLOYEE MATTERS
SECTION 6.01. Employee Benefits..................................................................................34
SECTION 6.02. Assumed Plans......................................................................................34
TABLE OF CONTENTS
(continued)
PAGE
SECTION 6.03. Tax-Qualified Savings/401(k) Plan..................................................................34
SECTION 6.04. Severance Plan.....................................................................................34
SECTION 6.05. Employee Notification..............................................................................35
SECTION 6.06. Flexible Spending Plans............................................................................35
SECTION 6.07. Service Credit.....................................................................................35
SECTION 6.08. Pre-Existing Conditions; Deductibles...............................................................35
SECTION 6.09. COBRA .............................................................................................35
SECTION 6.10. WARN ..............................................................................................35
SECTION 6.11. Assumption of Employment Agreements................................................................36
SECTION 6.12. Certain Plan Obligations...........................................................................36
Article VII
TAX MATTERS
SECTION 7.01. Tax Indemnities....................................................................................36
SECTION 7.02. Tax Refunds and Tax Benefits.......................................................................37
SECTION 7.03. Contests...........................................................................................37
SECTION 7.04. Preparation of Tax Returns.........................................................................38
SECTION 7.05. Tax Cooperation and Exchange of Information........................................................39
SECTION 7.06. Conveyance Taxes...................................................................................40
SECTION 7.07. Tax Covenants......................................................................................40
SECTION 7.08. Miscellaneous......................................................................................40
SECTION 7.09. Section 338(h)(10) Elections.......................................................................41
Article VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Seller............................................................41
SECTION 8.02. Conditions to Obligations of the Purchaser.........................................................42
Article IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties.........................................................43
SECTION 9.02. Indemnification by the Seller......................................................................43
SECTION 9.03. Indemnification by the Purchaser...................................................................43
SECTION 9.04. Limits on Indemnification..........................................................................44
SECTION 9.05. Notice of Loss; Third Party Claims.................................................................45
SECTION 9.06. Tax Matters........................................................................................45
TABLE OF CONTENTS
(continued)
PAGE
Article X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination.......................................................................................46
SECTION 10.02. Effect of Termination.............................................................................46
Article XI
GENERAL PROVISIONS
SECTION 11.01. Expenses..........................................................................................47
SECTION 11.02. Notices...........................................................................................47
SECTION 11.03. Public Announcements..............................................................................48
SECTION 11.04. Severability......................................................................................48
SECTION 11.05. Entire Agreement..................................................................................48
SECTION 11.06. Assignment........................................................................................48
SECTION 11.07. Amendment.........................................................................................49
SECTION 11.08. Waiver............................................................................................49
SECTION 11.09. No Third Party Beneficiaries......................................................................49
SECTION 11.10. Currency..........................................................................................49
SECTION 11.11. Specific Performance; Exclusive Remedies..........................................................49
SECTION 11.12. Governing Law.....................................................................................50
SECTION 11.13. Waiver of Jury Trial..............................................................................50
SECTION 11.14. Counterparts......................................................................................50
SECTION 11.15. Parent Guaranty...................................................................................50
EXHIBITS
1.01(a) Form of Alliance Agreement
1.01(b) Seller's Knowledge
1.01(c) Form of Transition Services Agreement
5.11 Form of General Release and Discharge
</TABLE>
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December 6,
2004, among GAMBRO AB, a company organized under the laws of the Kingdom of
Sweden ("Parent"), GAMBRO, INC., a Colorado corporation (the "Seller"), and
DAVITA INC., a Delaware corporation (the "Purchaser").
WHEREAS, the Seller owns all the issued and outstanding shares (the
"Shares") of common stock, $0.01 par value per share (the "Common Stock"), of
Gambro Healthcare, Inc., a Tennessee corporation (the "Company");
WHEREAS, the Company and the Subsidiaries are engaged in the business
of owning and operating a network of dialysis clinics at various locations in
the United States, excluding Puerto Rico (the "Business");
WHEREAS, the Seller is a direct wholly owned subsidiary of Parent; and
WHEREAS, the Seller wishes to sell to the Purchaser, and the Purchaser
wishes to purchase from the Seller, the Shares, all upon the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual
agreements and covenants hereinafter set forth, and intending to be legally
bound, the Seller and the Purchaser hereby agree as follows:
Article I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. For purposes of this
Agreement:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, such specified Person.
"Alliance Agreement" means the alliance and product supply
agreement to be entered into by GRP and the Purchaser as of the Closing
substantially in the form attached hereto as Exhibit 1.01(a).
"Ancillary Agreements" means the Transition Services Agreement
and the Alliance Agreement.
"Assets" means the assets and properties owned or leased by
the Company and the Subsidiaries.
"Business Day" means any day that is not a Saturday, a Sunday
or any other day on which banks are required or authorized by Law to be
closed in Stockholm, Sweden, The City of New York or Denver, Colorado.
"Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"Company Intellectual Property" means all Intellectual
Property owned by, or licensed to, the Company or a Subsidiary that is
material to the operation of the Company and the Subsidiaries as
currently conducted.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or
among two or more Persons, means the possession, directly or indirectly
or as trustee, personal representative or executor, of the power to
direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee,
personal representative or executor, by contract, credit arrangement or
otherwise.
"Conveyance Taxes" means sales, use, value added, transfer,
stamp, stock transfer, real property transfer or gains and similar
Taxes, but shall not include Taxes calculated by reference to net
income.
"Disclosure Schedule" means the disclosure schedule attached
hereto, dated as of the date hereof, delivered by the Seller to the
Purchaser in connection with this Agreement. The information and
disclosures contained in any section of the Disclosure Schedule shall
be deemed to be disclosed and incorporated by reference in any other
section of the Disclosure Schedule as though fully set forth in such
other section for which the applicability of such information and
disclosure is reasonably apparent on the face of such information or
disclosure.
"Disputed Conduct" means any of the following acts or
omissions of the Company or any of its Affiliates that were
investigated by or on behalf of any Governmental Authority relating to
the period from January 1, 1991 through December 1, 2004: (i) the
submission of claims to, and receipt of reimbursement from, Medicare,
Medicaid, and Tricare for home dialysis supplies, Epogen, Vitamin D,
Iron, Carnitor, Urokinase, IDPN, antibiotics, EKGs, bone density tests,
nerve conduction tests, Doppler tests, electrocardiograms, and X-Rays;
(ii) statements and representations concerning the medical necessity,
coding, and documentation of the above medical services and supplies;
(iii) cost reports reflecting costs for dialysis services rendered to
ESRD patients; (iv) remuneration paid and/or offered to physicians,
physician practices and groups, hospitals, and universities, or anyone
to induce patient referrals; (v) purchasing, procuring, supplying,
providing, administering or influencing the prescription or
recommendation of home dialysis supplies, Epogen, Vitamin D, Iron,
Carnitor, Urokinase, IDPN, antibiotics, EKGs, bone density tests, nerve
conduction tests, Doppler tests, and X-Rays; (vi) remuneration,
including but not limited to rebates, discounts, price reductions,
incentives, training, education, subsidies, gratuities, grants, gifts,
and fees, offered or received from those companies manufacturing,
distributing, supplying,
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marketing, and selling Epogen, Vitamin D, Iron, Carnitor and Urokinase;
(vi) forming, organizing, operating, managing, administering, and
contracting with the Company, Gambro Nephrology Services and/or Empire
State Dialysis Center or Huntington Artificial Kidney Center; (vii)
offering the "best price" to federal health care benefit programs;
(viii) patient quality of care issues related to the prescribing and
administration of Epogen, Vitamin D, Iron, Carnitor, Urokinase, IDPN,
antibiotics, EKGs, bone density tests, nerve conduction tests, Doppler
tests, and X-Rays; (ix) causing claims to be submitted to Medicare,
Medicaid or Tricare for non-emergency ambulance transports; and (x)
causing, through relationships with third party laboratories, claims to
be submitted to Medicare, Medicaid or Tricare for laboratory services
that were duplicative of claims already submitted by or on behalf of
the Company.
"EDNY Inquiry" means any Action undertaken by or on behalf of
any Governmental Authority in connection with the subpoenas that were
issued by the United States Department of Justice and served on the
Seller, the Company and Gambro Laboratory Services, Inc. on or about
November 5, 2004.
"Encumbrance" means any security interest, pledge,
hypothecation, mortgage, lien, adverse claim, restrictive covenant,
condition or restriction of any kind, including, without limitation,
any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership.
"Environmental Law" means any federal, state, local or
non-U.S. statute, law, ordinance, regulation, rule, code, order,
consent decree or judgment, in each case in effect as of the date
hereof, or the Closing Date, as appropriate, relating to human health
and safety, natural resources, pollution or protection of the
environment.
"Environmental Permits" means any permit, approval, license
and other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA Affiliate" means any person or entity that, together
with the Company or any Subsidiary, is treated as a single employer
under Section 414(b) or (c) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" means U.S. generally accepted accounting principles and
practices in effect from time to time applied consistently throughout
the periods involved.
"Gallen Litigation" means the case styled as J. Gallen, on
behalf of herself and all others similarly situated, and on behalf of
the general public, filed in Superior Court of California, Orange
County.
"Governmental Authority" means any federal, national,
supranational, state, provincial, local or other government,
governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.
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"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by, or
with, any Governmental Authority.
"GRP" means Gambro Renal Products, Inc., a Colorado
corporation.
"Hazardous Substance" means any substance that is: (a) listed,
classified or regulated pursuant to any Environmental Law, (b) any
petroleum product or by-product, asbestos-containing material, lead
containing paint, polychlorinated biphenyls, radioactive material or
radon, or (c) any other substance which is the subject of regulatory
action pursuant to any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Indemnified Party" means a Purchaser Indemnified Party or a
Seller Indemnified Party, as applicable.
"Indemnified Taxes" means (i) Taxes imposed on or payable by
the Company or any Subsidiary for any taxable period that ends on or
before the Closing Date; (ii) with respect to Straddle Periods, Taxes
imposed on the Company or any Subsidiary which are allocable, pursuant
to Section 7.01(b), to the portion of such period ending on the Closing
Date; (iii) all Taxes of any member of an affiliated, consolidated,
combined or unitary group of which the Company or any Subsidiary is or
was a member of on or prior to the Closing Date, including pursuant to
Treasury Regulation ss. 1.1502-6 or any similar state, local or foreign
law or regulation; and (iv) one-half of any liability for withholding
Taxes imposed on the portion of the Noncompete Allocation Amount paid
to Parent; provided, however, that Indemnified Taxes shall not include
Taxes (A) resulting from any act, transaction or omission of the
Purchaser, the Company or any Subsidiary not in the ordinary course of
business occurring after the Closing or (B) resulting from any Tax
election made by the Purchaser or any of its Affiliates (including the
Company and the Subsidiaries after the Closing Date) with respect to
the transactions contemplated by this Agreement, including an actual or
deemed election under Section 338 of the Code or any comparable
provision of state, local or non-U.S. Law.
"Indemnifying Party" means the Seller pursuant to Section 9.02
or the Purchaser pursuant to Section 9.03, as applicable.
"Intellectual Property" means all intellectual property
rights, including (a) patents, patent applications and inventions, (b)
trademarks, service marks, trade names, trade dress and domain names,
together with the goodwill associated exclusively therewith, (c)
copyrights, including copyrights in computer software, (d) confidential
and proprietary information, including trade secrets and know-how and
(e) registrations and applications for registration of the foregoing.
"Inter-Company Debt" means, as of a particular date of
determination, any indebtedness of the Company or any of the
Subsidiaries for borrowed money outstanding and owing to the
Non-Company Affiliates, measured on a GAAP basis, which
-4-
indebtedness includes the cash settlement of payables and receivables
(other than the Inter-Company Payables) between the Company and the
Non-Company Affiliates.
"Inter-Company Payables" means, as of a particular date of
determination, the aggregate amount of accounts payable outstanding and
owing by the Company or any Subsidiary to GRP and arising from the sale
of goods in the ordinary course of business consistent with past
practice.
"Interim Balance Sheet Date" means September 30, 2004.
"IRS" means the Internal Revenue Service of the United States.
"JV Buyouts" means the actions taken or proposed to be taken
by the Company either prior to, on or after the date hereof in order to
acquire all of the outstanding minority interests in certain of the
Subsidiaries as set forth on Section 1.01 of the Disclosure Schedule.
"knowledge of the Seller" or similar terms used in this
Agreement mean the actual knowledge, following due inquiry, of the
Persons listed in Exhibit 1.01(b) as of the date of this Agreement (or,
with respect to a certificate delivered pursuant to this Agreement, as
of the date of delivery of such certificate).
"Law" means any federal, national, supranational, state,
provincial, local or similar statute, law, ordinance, regulation, rule,
code, order, requirement or rule of law.
"Leased Real Property" means the real property leased by the
Company or any Subsidiary, in each case, as tenant, together with, to
the extent leased by the Company or any Subsidiary, all buildings and
other structures, facilities or improvements currently or hereafter
located thereon, all fixtures, systems, equipment and items of personal
property of the Company or any Subsidiary attached or appurtenant
thereto and all easements, licenses, rights and appurtenances relating
to the foregoing.
"Liabilities" means any and all debts, liabilities and
obligations of the Company, whether accrued or fixed, absolute or
contingent, matured or unmatured or determined or determinable,
including those arising under any Law, Action or Governmental Order and
those arising under any contract, agreement, arrangement, commitment or
undertaking.
"Material Adverse Effect" means any circumstance, change in or
effect on the Company and the Subsidiaries that, individually or in the
aggregate, is, or is reasonably likely to be, materially adverse to the
consolidated results of operations or the consolidated financial
condition of the Company and the Subsidiaries, taken as a whole;
provided, however, that none of the following, either alone or in
combination, shall be considered in determining whether there has been
a "Material Adverse Effect" or breach of a representation, warranty,
covenant or agreement that is qualified by the term "Material Adverse
Effect": (a) events, circumstances, changes or effects that generally
affect providers of dialysis services in the United States, (b) general
economic or political conditions or events, circumstances, changes or
effects affecting the securities markets generally, (c) changes arising
from the consummation of the transactions contemplated
-5-
by, or the announcement of the execution of, this Agreement, (d) any
circumstance, change or effect that results from any action required to
be taken pursuant to this Agreement or upon the request of the
Purchaser and (e) changes caused by acts of terrorism or war (whether
or not declared) occurring after the date hereof.
"Medicaid Settlement" means the settlement of all civil claims
by any state Governmental Authority related to the Disputed Conduct
(other than the conduct set forth under (ix) or (x) of such definition)
to be ratified by such state Governmental Authorities by execution of a
definitive settlement agreement and the payment by the Company of an
amount equal to $15,000,000, as such amount shall be increased by an
amount equal to the interest thereon accruing at a rate of 5% per annum
from December 1, 2004 until the payment thereof.
"Non-Company Affiliates" means the Seller, Parent or any
subsidiary of Parent, other than the Company and the Subsidiaries.
"Owned Real Property" means the real property in which the
Company or any Subsidiary has fee title (or equivalent) interest,
together with all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the Company or any
Subsidiary attached or appurtenant thereto and all easements, licenses,
rights and appurtenances relating to the foregoing.
"Permitted Business" means any of the following activities
that Parent, the Seller and/or their respective Affiliates may engage
in:
(i) the manufacture, sale and distribution of
devices, equipment, apparatus, software, disposables,
consumables, solutions and other products and vendor debt or
lease financing in respect of product sales, servicing,
maintenance, repair, training and provision of spare parts in
connection therewith to any Person anywhere in the world,
including Persons engaged in the Restricted Business;
(ii) the performance of the activities enumerated in
the definition of Restricted Business, solely as reasonably
necessary to conduct clinical and market trials of, and sale,
servicing, maintenance or repair and training related to,
devices, equipment, apparatus, software, disposables,
consumables, solutions and other products, in the Restricted
Territory;
(iii) the provision or distribution of dialysis
equipment and supplies directly to patients, or through or on
behalf of any dialysis services provider whose patients are
enrolled in home dialysis programs owned or operated by any
Person in the Restricted Territory, other than the Purchaser
or its Affiliates; and
(iv) the performance of the activities enumerated in
the definition of Restricted Business outside the Restricted
Territory.
"Permitted Encumbrances" means the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced:
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(a) statutory liens for Taxes not yet due and payable or the validity
or amount of which is being contested in good faith by appropriate
proceedings; (b) Encumbrances imposed by Law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing
obligations that are not overdue for a period of more than 30 days; (c)
pledges or deposits to secure obligations under workers' compensation
Laws or similar legislation or to secure public or statutory
obligations; and (d) minor survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to Real Property
that (i) were not incurred in connection with any indebtedness for
borrowed money and (ii) do not, individually or in the aggregate,
materially adversely affect the use of such Real Property for its
current purposes.
"Person" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated
organization or other entity, including a government or political
subdivision or an agency or instrumentality thereof, as well as any
syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act.
"Purchase Price Bank Account" means a bank account to be
designated by the Seller in a written notice to the Purchaser at least
three Business Days before the Closing.
"Purchaser Disclosure Schedule" means the disclosure schedule
attached hereto, dated as of the date hereof, delivered by the
Purchaser to the Seller in connection with this Agreement.
Notwithstanding anything to the contrary contained in the Purchaser
Disclosure Schedule or in this Agreement, the information and
disclosures contained in any section of the Purchaser Disclosure
Schedule shall be deemed to be disclosed and incorporated by reference
in any other section of the Purchaser Disclosure Schedule as though
fully set forth in such other section for which the applicability of
such information and disclosure is reasonably apparent on the face of
such information or disclosure.
"Real Property" means all land, buildings, improvements and
fixtures erected thereon and all appurtenances related thereto.
"Restricted Business" means, in the Restricted Territory, (i)
owning or operating any chronic dialysis, home dialysis or acute
dialysis program, outpatient renal dialysis center, unit or facility,
(ii) providing or distributing dialysis equipment or supplies directly
to patients (rather than through or on behalf of the Purchaser) that
are enrolled in home dialysis programs owned or operated by the
Purchaser or its Affiliates, (iii) providing day-to-day general
management of the business of any such outpatient dialysis center, unit
or facility or to any home dialysis program, (iv) owning or operating
any laboratory or other facility engaged primarily in the testing of
bodily fluids of dialysis patients, (v) providing ESRD or CKD disease
management services, vascular access services, or any other
dialysis-related services or treatments to patients diagnosed as having
ESRD or CKD or (vi) delivering pharmaceuticals and related services
directly to patients diagnosed as having ESRD or CKD; provided,
however, that the Restricted Business does not include the Permitted
Business.
-7-
"Restricted Period" means the lesser of (i) ten years and (ii)
the period commencing on the Closing Date and ending on the date of
termination of the Alliance Agreement pursuant to Section 12.03 thereof
due to a material breach by the Purchaser.
"Restricted Territory" means the United States, excluding
Puerto Rico.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller's Accountants" means PricewaterhouseCoopers,
independent accountants of the Seller.
"Settlement Agreements" means the following agreements and
documents executed by or on behalf of the Company and Gambro Supply
Corp. in connection with the resolution of the Department of Justice
investigation relating to the June 2001 subpoena received by the
Company and the Department of Justice investigation relating to the
June 2003 subpoena received by the Company: (i) the Settlement
Agreement, dated as of December 1, 2004 among the United States of
America, acting through the United States Department of Justice, and on
behalf of the Office of Inspector General of the Department of Health
and Human Services, TRICARE Management Activity, Steven J. Bander, M.D.
and the Company, (ii) the Corporate Integrity Agreement, dated as of
December 1, 2004, between the Office of Inspector General of the
Department of Health and Human Services and the Company, (iii) the Plea
Agreement, Guidelines, Recommendations and Stipulations, dated as of
November 30, 2004 among the United States Attorney for the Eastern
District of Missouri, the United States Department of Justice and
Gambro Supply Corp., (iv) the Information filed in the United Stated
District Court for the Eastern District of Missouri, Eastern Division
in the matter of United States of America v. Gambro Supply Corp. f/k/a
REN supply Corporation, (v) the letter agreement, dated December 1,
2004, between the Assistant United States Attorney for the Eastern
District of Missouri and the Company regarding Cooperation and
Confidentiality, (vi) the side letter, dated as of November 18, 2004,
to Felicia Heimer, Senior Counsel of the Department of Health and Human
Services, Office of Inspector General, related to certain "Best
Efforts" to Secure Written Contracts for Arrangements, (vii) the side
letter, dated as of November 18, 2004, to Felicia Heimer, Senior
Counsel of the Department of Health and Human Services, Office of
Inspector General, related to Report of Government Investigations,
(viii) the side letter, dated as of November 18, 2004, to Felicia
Heimer, Senior Counsel of the Department of Health and Human Services,
Office of Inspector General, related to "Best Efforts" for Physician
Training, and (ix) the Settlement Agreement, dated as of December 1,
2004, between the United States of America, acting through the United
States Department of Justice, and the Company.
"Straddle Period" means any taxable period beginning on or
before the Closing Date and ending after the Closing Date.
"Subsidiary" means any corporation or other legal entity of
which the Company owns, directly or indirectly, 50% or more of the
outstanding common stock or other
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equity interests, the holders of which are entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
"Tax" or "Taxes" means any and all taxes of any kind (together
with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or
taxing authority.
"Tax Returns" means any and all returns, reports and forms
(including elections, declarations, amendments, schedules, information
returns or attachments thereto) required to be filed with a
Governmental Authority with respect to Taxes.
"Transition Services Agreement" means the transition services
agreement to be entered into by the Seller and the Purchaser as of the
Closing substantially in the form attached hereto as Exhibit 1.01(c).
SECTION 1.02. Definitions. The following terms have the meanings set
forth in the Sections set forth below:
Definition Location
---------- --------
"Agreement" Preamble
---------
"Assumed Plans" 6.02
-------------
"Audited Financial Statements" 3.06(a)
----------------------------
"Business" Recitals
--------
"Closing" 2.03
-------
"Closing Date" 2.03
------------
"COBRA" 6.09
-----
"Commitment Letter" 4.05
-----------------
"Common Stock" Recitals
------------
"Company" Recitals
-------
"Company Plan" 3.15(b)
------------
"Confidentiality Agreement" 5.03(a)
-------------------------
"Contest" 7.03(b)
-------
"Current Business Employees" 6.01
--------------------------
"DHI" 7.09
---
"ERISA" 3.15(a)
-----
"Estimated Inter-Company Debt" 2.01(b)
----------------------------
"Existing Stock" 5.05(d)
--------------
"Financial Statements" 3.06(a)
--------------------
"Interim Balance Sheet" 3.06(a)
---------------------
"Loss" 9.02
----
"Material Contracts" 3.18(a)
------------------
"Noncompete Allocation Amount" 2.07
----------------------------
"Offer" 5.13
-----
"Offer Period" 5.13
------------
"Parent" Preamble
------
"Plans" 3.15(a)
-----
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Definition Location
---------- --------
"Proposed Transaction" 5.13
--------------------
"Proposed Transferee" 5.13
-------------------
"Purchase Price" 2.02
--------------
"Purchaser" Preamble
---------
"Purchaser Indemnified Party" 9.02
---------------------------
"Retained Claims" 9.02
---------------
"Retained Names and Marks" 5.05(a)
------------------------
"Section 338(h)(10) Elections" 7.09
----------------------------
"Seller" Preamble
------
"Seller Indemnified Party" 9.03
------------------------
"Seller's Flex Plans" 6.06
-------------------
"Shares" Recitals
------
"Termination Date" 10.01(a)
----------------
"Third Party Claim" 9.05(b)
-----------------
"WARN" 6.10
----
SECTION 1.03. Interpretation and Rules of Construction. In this
Agreement, except to the extent otherwise provided or that the context otherwise
requires:
(a) when a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference is to an Article or
Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated;
(b) the table of contents and headings for this Agreement are
for reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement;
(c) whenever the words "include," "includes" or "including"
are used in this Agreement, they are deemed to be followed by the words
"without limitation";
(d) the words "hereof," "herein" and "hereunder" and words of
similar import, when used in this Agreement, refer to this Agreement as
a whole and not to any particular provision of this Agreement;
(e) all terms defined in this Agreement have the defined
meanings when used in any certificate or other document made or
delivered pursuant hereto, unless otherwise defined therein;
(f) the definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms;
(g) references to a Person are also to its successors and
permitted assigns; and
(h) the use of "or" is not intended to be exclusive unless
expressly indicated otherwise.
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Article II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares; Payment of the
Inter- Company Debt. (a) Upon the terms and subject to the conditions of this
Agreement, at the Closing, (i) the Seller shall sell to the Purchaser, and the
Purchaser shall purchase from the Seller, the Shares free and clear of all
Encumbrances, for the Purchase Price set forth in Section 2.02 and (ii) the
Purchaser shall cause the Company to pay to the Seller the Estimated
Inter-Company Debt.
(b) Not later than the fifth Business Day prior to the Closing
Date, the Seller shall deliver to the Purchaser a certificate signed by the
Seller's president setting forth (i) the amount of Inter-Company Debt (including
all accrued and unpaid interest thereon) outstanding as of the most recent month
end preceding the date of delivery of such certificate, and (ii) the Seller's
good faith estimate of the amount of Inter-Company Debt (including all accrued
and unpaid interest thereon) expected to be outstanding as of the Closing Date
(the "Estimated Inter-Company Debt").
(c) Within ten Business Days after the Closing Date, the
Company shall pay to the Seller, or the Seller shall pay to the Company, such
amounts as shall be necessary to reconcile the actual Inter-Company Debt
(including all accrued and unpaid interest thereon) outstanding on the Closing
Date with the Estimated Inter-Company Debt.
SECTION 2.02. Purchase Price. Subject to the adjustments set
forth in Section 2.06, the aggregate purchase price for the Shares and the
covenant not to compete in Section 5.09 shall be $1,701,157,500, as such amount
shall be increased pursuant to Section 2.06 (the "Purchase Price"), payable in
accordance with Section 2.05(a).
SECTION 2.03. Closing. Subject to the terms and conditions of
this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York at
10:00 A.M. New York time on the third Business Day following the satisfaction or
waiver of the conditions to the obligations of the parties hereto set forth in
Sections 8.01 and 8.02 or at such other place or at such other time or on such
other date as the Seller and the Purchaser may mutually agree upon in writing
(the date on which the Closing takes place being the "Closing Date"). The
Closing shall be deemed to have occurred at the close of business Pacific time
on the Closing Date.
SECTION 2.04. Closing Deliveries by the Seller. At the
Closing, the Seller shall deliver or cause to be delivered to the Purchaser:
(a) stock certificates evidencing the Shares duly endorsed in
blank or accompanied by stock powers duly executed in blank and with,
if required, stock transfer tax stamps affixed;
(b) executed counterparts of each Ancillary Agreement;
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(c) certificates of the Secretaries of State (or other
applicable office) in each jurisdiction in which each of the Seller,
GRP, the Company and the Subsidiaries is organized, dated as of the
Closing Date (or as close thereto as reasonably practicable),
certifying as to the good standing (or similar concept, to the extent
such concept is not recognized in such jurisdiction) and non-delinquent
status of such entities;
(d) a receipt for the Purchase Price and cash in an amount
equal to the Estimated Inter-Company Debt; and
(e) a certificate of a duly authorized officer of the Seller
certifying as to the matters set forth in Section 8.02(a).
SECTION 2.05. Closing Deliveries by the Purchaser. (a) At the
Closing, the Purchaser shall deliver to the Seller:
(i) the Purchase Price (not including the Noncompete
Allocation Amount) and cash in an amount equal to the Estimated
Inter-Company Debt by wire transfer in immediately available funds to
the Purchase Price Bank Account;
(ii) executed counterparts of each Ancillary Agreement; and
(iii) a certificate of a duly authorized officer of the
Purchaser certifying as to the matters set forth in Section 8.01(a).
(b) At the Closing, the Purchaser shall pay the Noncompete
Allocation Amount by wire transfer in immediately available funds to one or more
bank accounts designated by Parent.
SECTION 2.06. Pre-Closing Adjustment of Purchase Price. The
Purchase Price shall be subject to adjustment prior to the Closing as specified
in this Section 2.06:
(a) In the event that the Closing occurs on or before the
ninetieth day after the date hereof, the Purchase Price shall be
increased by an amount equal to the interest on $1,701,157,500 accruing
at the rate of 4% per annum for the period beginning on the date hereof
and ending on the Closing Date.
(b) In the event that the Closing occurs after the ninetieth
day after the date hereof, the Purchase Price shall be increased by an
amount equal to the interest on $1,701,157,500 accruing at the rate of
4% per annum for the period beginning on the date hereof and ending on
the ninetieth day after the date hereof and at the rate of 8% per annum
for the period beginning on the ninety-first day after the date hereof
and ending on the Closing Date.
SECTION 2.07. Allocation of Consideration. The parties hereto
agree that the portion of the Purchase Price to be allocated for Tax purposes to
the covenant of Parent and the Non-Company Affiliates not to compete contained
in Section 5.09 (the "Noncompete Allocation Amount") shall be the value as
determined by an independent valuation firm reasonably acceptable to the Seller
retained by the Purchaser, at its own expense, for this purpose, which
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amount in no event shall be greater than $250,000,000, and that the remainder of
the Purchase Price shall be allocated to the Shares. The Noncompete Allocation
Amount shall be paid to one or more bank accounts designated by Parent. The
Noncompete Allocation Amount shall be paid free and clear of, and without
reduction for or on account of, any withholding Tax applicable in connection
with the payment of such amount, provided that Parent shall provide the
Purchaser with a properly completed Form W-8 BEN claiming entitlement to
exemption from withholding Tax with respect to such amount. If there is an
increase in the Purchase Price, then such increase shall be allocated to the
Shares. Except to the extent that a contrary position is required by Law, the
Purchaser, the Seller and Parent agree to be bound by the allocation set forth
in this Section 2.07 for all purposes of Tax reporting, including the filing of
applicable IRS forms in accordance with such allocation, and the filing of
applicable IRS forms in the event the allocation is revised pursuant to this
Section 2.07.
Article III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser, subject to
such exceptions as are disclosed in writing in the Disclosure Schedule, as
follows:
SECTION 3.01. Incorporation, Authority and Qualification of
the Seller. Each of the Seller and GRP is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Colorado
and has all necessary corporate power and authority to enter into this Agreement
and the Ancillary Agreements to which it is a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. Each of the Seller and GRP is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed, qualified or in good standing would not (a) adversely affect the
ability of the Seller or GRP to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Ancillary
Agreements or (b) otherwise have a Material Adverse Effect. The execution and
delivery of this Agreement and the Ancillary Agreements by the Seller and GRP,
the performance by the Seller and GRP of their respective obligations hereunder
and thereunder and the consummation by the Seller and GRP of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of the Seller and GRP. This Agreement has been, and upon
their execution the Ancillary Agreements shall have been, duly executed and
delivered by the Seller and GRP, as the case may be, and (assuming due
authorization, execution and delivery by the Purchaser) this Agreement
constitutes, and upon their execution the Ancillary Agreements shall constitute,
legal, valid and binding obligations of the Seller and GRP, as the case may be,
enforceable against the Seller and GRP, as the case may be, in accordance with
their respective terms.
SECTION 3.02. Incorporation, Authority and Qualification of
the Company; Subsidiaries. (a) Each of the Company and the Subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all necessary corporate
power and authority to own, operate or lease the properties and assets
-13-
now owned, operated or leased by it and to carry on its business as it has been
and is currently conducted. Each of the Company and the Subsidiaries is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary, except for
jurisdictions where the failure to be so qualified would not have a Material
Adverse Effect.
(b) A true and complete list of the Subsidiaries, together
with the jurisdiction of organization of each Subsidiary, the number of
authorized, issued and outstanding shares of capital stock or other equity
interests of each Subsidiary and the percentage of the outstanding capital stock
or other equity interests of each Subsidiary owned by the Company or another
Subsidiary, is set forth in Section 3.02(b)(i) of the Disclosure Schedule.
Except as set forth in Section 3.02(b)(i) or Section 3.02(b)(ii) of the
Disclosure Schedule, there are no other outstanding shares of capital stock,
other equity interests, options, warrants, convertible securities, registration
rights or other rights or agreements of any character relating to dividend or
other distribution rights or to the purchase, sale, allotment, issuance or
voting of, or the granting of rights to acquire, any shares of the capital stock
or other equity interests, as applicable of any Subsidiary. The Company owns of
record and beneficially, directly or indirectly, its shares of capital stock or
other equity interests of each Subsidiary free and clear of all Encumbrances.
Other than the Subsidiaries and except as set forth in Section 3.02(b)(iii) of
the Disclosure Schedule, there are no other corporations, partnerships, joint
ventures, associations or other entities in which the Company or any Subsidiary
owns, of record or beneficially, any direct or indirect equity or other interest
or any right or obligation (contingent or otherwise) to acquire the same.
(c) True and correct copies of the certificates of
incorporation and bylaws (or similar organizational documents) of the Company
and each Subsidiary in effect on the date hereof have been made available to the
Purchaser.
SECTION 3.03. Capital Stock of the Company; Ownership of the
Shares. The authorized capital stock of the Company consists of 100,000 shares
of Common Stock. As of the date hereof, 10,000 shares of Common Stock are issued
and outstanding, all of which are validly issued, fully paid and nonassessable
and were not issued in violation of any preemptive rights. There are no options,
warrants, convertible securities, registration rights or other rights,
agreements, arrangements or commitments relating to the Shares or obligating
either the Seller or the Company to issue or sell any shares of Common Stock, or
any other interest in, the Company. The Shares constitute all the issued and
outstanding capital stock of the Company and are owned of record and
beneficially by the Seller free and clear of all Encumbrances.
SECTION 3.04. No Conflict. Assuming that all consents,
approvals, authorizations and other actions described in Section 3.05 have been
obtained, all filings and notifications listed in Section 3.05 of the Disclosure
Schedule have been made and any applicable waiting period has expired or been
terminated, and except as may result from any facts or circumstances relating
solely to the Purchaser, the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Seller do not and will not (a)
violate, conflict with or result in the breach of the certificate of
incorporation or bylaws (or similar organizational documents) of the Seller,
GRP, the Company or any Subsidiary, (b) conflict with or violate any Law or
Governmental Order applicable to the Seller, GRP, the Company or any
-14-
Subsidiary or (c) conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, require any consent or the giving of notice under, or
give to others any right to purchase or sell assets or securities or to exercise
any remedy or modify any obligation or term under, or any rights of termination,
cancellation, modification or acceleration of, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which the Seller, the Company or any
Subsidiary is a party, except, in the case of clauses (b) and (c), as would not
(i) materially and adversely affect the ability of the Seller to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements or (ii) otherwise have a Material Adverse
Effect.
SECTION 3.05. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement and each Ancillary
Agreement by Parent, the Seller and GRP do not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority, except (a) the premerger
notification and waiting period requirements of the HSR Act, (b) where failure
to obtain such consent, approval, authorization or action, or to make such
filing or notification, would not prevent or materially delay the consummation
by the Seller of the transactions contemplated by this Agreement and the
Ancillary Agreements or would not have a Material Adverse Effect or (c) as may
be necessary as a result of any facts or circumstances relating solely to the
Purchaser or any of its Affiliates.
SECTION 3.06. Financial Information. (a) True and complete
copies of (i) the audited consolidated balance sheet of the Company for each of
the two fiscal years ended as of December 31, 2002 and 2003 and the audited
consolidated statements of income and cash flows of the Company for each of the
three fiscal years ended as of December 31, 2001, 2002 and 2003, together with
all related notes and schedules thereto, accompanied by the reports thereon of
the Seller's Accountants (the "Audited Financial Statements") and (ii) the
unaudited consolidated balance sheet of the Company as of September 30, 2004
(the "Interim Balance Sheet") and the related unaudited consolidated statement
of income of the Company for the nine months ended September 30, 2004 (together
with the Audited Financial Statements and the Interim Balance Sheet, the
"Financial Statements") are set forth in Section 3.06(a) of the Disclosure
Schedule.
(b) The Financial Statements (i) were prepared in accordance
with the books of account and other financial records of the Company (except as
may be indicated in the notes thereto), (ii) present fairly in all material
respects the consolidated financial condition and results of operations of the
Company and the Subsidiaries as of the respective dates thereof or for the
respective periods covered thereby and (iii) were prepared in accordance with
GAAP applied on a consistent basis for each of the periods covered thereby.
SECTION 3.07. Absence of Undisclosed Material Liabilities. As
of the date hereof, there are no Liabilities of the Company or any Subsidiary of
a nature required to be reflected on a balance sheet prepared in accordance with
GAAP, including the notes thereto, other than Liabilities (a) reflected or
reserved against on the Financial Statements or referred to in the notes
thereto, (b) incurred since the Interim Balance Sheet Date in the ordinary
course of business of the Company and the Subsidiaries consistent with past
practice, (c) relating to or
-15-
arising from any Action, (d) of the type described in Section 3.17 or (e) which
would not have a Material Adverse Effect.
SECTION 3.08. Absence of Changes. Since the Interim Balance
Sheet Date, (a) the Company has not suffered a Material Adverse Effect, (b) the
Business has been conducted in the ordinary course and consistent with past
practice, and (c) none of the Company or any Subsidiary has taken any action
that, if taken after the date hereof, would constitute a violation of Section
5.01(a)-(u).
SECTION 3.09. Litigation. As of the date hereof, there is no
Action by or against the Seller, GRP, the Company, any Subsidiary or any of
their respective Affiliates pending or, to the knowledge of the Seller,
threatened, before any Governmental Authority that would have a Material Adverse
Effect or would adversely affect the legality, validity or enforceability of
this Agreement, any Ancillary Agreement or the consummation of the transactions
contemplated hereby or thereby. None of the Seller, the Company, any Subsidiary
or any of their respective assets or properties, including the Assets, is
subject to any Governmental Order (nor, to the knowledge of the Seller, are
there any such Governmental Orders threatened to be imposed by any Governmental
Authority) which has or has had a Material Adverse Effect or reasonably would be
expected to affect the legality, validity or enforceability of this Agreement,
any Ancillary Agreement or the consummation of the transactions contemplated
hereby or thereby.
SECTION 3.10. Compliance with Laws. As of the date hereof,
except (i) as would not adversely affect the ability of the Seller to carry out
its obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements, (ii) as would not have a Material
Adverse Effect and (iii) for the Disputed Conduct and any conduct of the Company
or the Subsidiaries covered by the EDNY Inquiry, the Company and the
Subsidiaries have each conducted and continue to conduct the Business in
accordance with all Laws and Governmental Orders applicable to the Company or
any Subsidiary, and neither the Company nor any Subsidiary is in violation of
any such Law or Governmental Order.
SECTION 3.11. Environmental Matters. (a) Except as would not
(i) adversely affect the ability of the Seller to carry out its obligations
under, and to consummate the transactions contemplated by, this Agreement and
the Ancillary Agreements or (ii) otherwise have a Material Adverse Effect, (x)
the Company and each Subsidiary are in compliance with all applicable
Environmental Laws and have obtained and are in compliance with all
Environmental Permits, (y) there are no written claims, notices, demands,
letters alleging material violation of or material liability under any
Environmental Law pending or, to the knowledge of the Seller, threatened against
the Company and each Subsidiary and (z) there has been no disposal, release, or
threatened release of Hazardous Substances on, under, in, from or about the
Company or each Subsidiary property (whether owned or leased) or otherwise
related to the operations of the Company and each Subsidiary, nor has the
Company or each Subsidiary disposed or arranged for the disposal of Hazardous
Substances on any third party property that would reasonably be expected to
subject the Company or a Subsidiary to material liability under any
Environmental Law.
-16-
(b) The Purchaser acknowledges that (i) the representations
and warranties contained in this Section 3.11 are the only representations and
warranties being made with respect to compliance with or liability under
Environmental Laws or with respect to any environmental, health or safety
matter, including natural resources, related in any way to the Business,
including the Assets, or to this Agreement or its subject matter and (ii) no
other representation contained in this Agreement shall apply to any such matters
and no other representation or warranty, express or implied, is being made with
respect thereto.
SECTION 3.12. Intellectual Property. Section 3.12 of the
Disclosure Schedule sets forth a true and complete list of all patents, patent
applications and inventions, registered trademarks and trademark applications,
and registered copyrights and copyright applications included in the Company
Intellectual Property. Except as would not have a Material Adverse Effect, with
respect to each item of Company Intellectual Property, the Company is the owner
of the entire right, title and interest in and to such Company Intellectual
Property. To the knowledge of the Seller, (a) no Person is engaging in any
activity that infringes any Company Intellectual Property, (b) no claim has been
asserted to the Seller that the use of any Company Intellectual Property or the
operation of the Business infringes or violates the Intellectual Property of any
third party and (c) and, except as would not have a Material Adverse Effect, the
Company or the Subsidiaries are the owner or have the right to use the
Intellectual Property material to the operation of the Business.
SECTION 3.13. Real Property. (a) Section 3.13(a) of the
Disclosure Schedule lists the street address of each parcel of Owned Real
Property. Except as would not have a Material Adverse Effect, (i) the Company
has title in fee simple to each parcel of Owned Real Property free and clear of
all Encumbrances, other than Permitted Encumbrances, and (ii) the Seller has
made available to the Purchaser copies of each deed for each parcel of Owned
Real Property and all title insurance policies and surveys relating to the Owned
Real Property, in each case to the extent in the Seller's possession.
(b) Section 3.13(b) of the Disclosure Schedule lists the
street address of each parcel of Leased Real Property and the identity of the
lessor, lessee and current occupant (if different from lessee) of each such
parcel of Leased Real Property.
SECTION 3.14. Assets. (a) Each of the Company or the
Subsidiaries, as the case may be, owns, leases or has the legal right to use all
the properties and assets, including the Company Intellectual Property, the
Owned Real Property, the Leased Real Property and the tangible Assets, used in
the conduct of the Business or otherwise owned, leased or used by the Company or
any Subsidiary. Each of the Company or the Subsidiaries, as the case may be, has
good and marketable title to, or, in the case of leased or subleased Assets,
valid and subsisting leasehold interests in, all the Assets, free and clear of
all Encumbrances, except Permitted Encumbrances.
(b) The Assets, together with the goods and services to be
provided to the Company pursuant to the Alliance Agreement and pursuant to the
Transition Services Agreement, constitute substantially all of the properties,
assets and rights as are necessary in the conduct of the Business as it is
currently conducted. Section 3.14 of the Disclosure Schedule lists the location
of all facilities that are not owned or leased by the Company or any Subsidiary
-17-
but for which, directly or indirectly, revenues are received or expenses are
incurred by the Company or any Subsidiary.
SECTION 3.15. Employee Benefit Matters. (a) Plans and Material
Documents. Section 3.15(a) of the Disclosure Schedule lists all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) and all bonus, employment, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement, severance or other benefit plans,
programs or arrangements, with respect to which the Company or any Subsidiary
has any obligation or which are maintained, contributed to, or sponsored by the
Seller, the Company or any Subsidiary for the benefit of any current or former
employee, officer or director of the Company or any Subsidiary (collectively,
the "Plans"). As applicable with respect to each Company Plan, the Seller has
made available to the Purchaser copies of (i) each current plan document or
other governing contract, including any amendments, (ii) all trust documents and
custodial agreements relating thereto, (iii) the current summary plan
description and each current summary of material modifications thereto, (iv) the
most recently filed annual report (Form 5500 and all schedules thereto), and (v)
the most recent IRS determination letter.
(b) Except as would not have a Material Adverse Effect, (i)
each Plan sponsored by the Company or a Subsidiary and each Assumed Plan (each,
a "Company Plan") has been operated in accordance with its terms and the
requirements of all applicable Laws and (ii) all contributions and all payments
and premiums required to have been made to or under any Company Plan have been
timely and properly made (or otherwise properly accrued if not yet due), and
nothing has occurred with respect to the operation of the Company Plans that
would cause the imposition of any liability, penalty or tax on the Company, the
Subsidiaries or the Purchaser under ERISA, the Code or applicable Law. No Action
is pending or, to the knowledge of the Seller, threatened with respect to any
Company Plan (other than claims for benefits in the ordinary course) and, to the
knowledge of the Seller, no fact or event exists that could give rise to any
such Action.
(c) None of the Seller, the Company, the Subsidiaries or any
ERISA Affiliate has incurred any liability under, arising out of, or by
operation of Title IV of ERISA (other than liability for premiums to the Pension
Benefit Guaranty Corporation arising in the ordinary course). No Company Plan is
subject to Title IV of ERISA, or Section 412 of the Code, nor is any Plan a
"multiemployer plan" as defined in Section 3(37) of ERISA.
(d) Each Company Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has timely received a
favorable determination letter from the IRS covering all of the provisions
applicable to the Company Plan for which determination letters are currently
available that the Company Plan is so qualified (or has an application for such
a letter timely filed and pending with the IRS), and no fact or event has
occurred since the date of such determination letter or letters from the IRS to
adversely affect the qualified status of any such Company Plan or the exempt
status of any such trust.
(e) No Company Plan provides retiree medical or other welfare
benefits, other than coverage mandated by Section 4980B of the Code or similar
state laws.
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(f) Section 3.15(f) of the Disclosure Schedule describes the
payments or other entitlements that will be received (whether in cash or
property or the vesting of property) solely as a result of any of the
transactions contemplated by this Agreement by any employee, officer or director
of the Company or any Subsidiary under a Plan.
SECTION 3.16. Labor Relations. Except as disclosed in Section
3.16 of the Disclosure Schedule, as of the date hereof, there is no pending or,
to the knowledge of the Seller, threatened strike, slowdown, picketing, work
stoppage, or application for certification of a collective bargaining agent
against the Company or any Subsidiary, except to the extent such actions or
certification would not have a Material Adverse Effect. There are no collective
bargaining agreements or other labor union contracts applicable to any employees
of the Company or the Subsidiaries. Except as would not have a Material Adverse
Effect, there is no unfair labor practice charge or complaint against the
Company or the Subsidiaries pending or, to the knowledge of the Seller,
threatened before any Governmental Authority. Neither the Company nor the
Subsidiaries have experienced a strike, lockout, work stoppage or work slowdown
at any time during the three years immediately preceding the date of this
Agreement.
SECTION 3.17. Taxes. Except as disclosed in Section 3.17 of
the Disclosure Schedule or for matters that would not have a Material Adverse
Effect, (a) all Tax Returns required to have been filed by or with respect to
the Company or any Subsidiary have been timely filed (taking into account any
extension of time to file granted or obtained), and such Tax Returns are true,
correct and complete in all material respects; (b) all Taxes shown to be payable
on such Tax Returns have been paid or will be timely paid; (c) no deficiency for
any Tax has been asserted or assessed by a Governmental Authority in writing
against the Company or any Subsidiary that has not been satisfied by payment,
settled or withdrawn; (d) there are no Tax liens on any Assets (other than
Permitted Encumbrances); (e) none of the Company or the Subsidiaries has
received any written notice of pending audits or examinations regarding any
Taxes of the Company or any Subsidiary; (f) during the five-year period ending
on the date hereof, none of the Company or the Subsidiaries was a distributing
corporation or a controlled corporation in a transaction intended to be governed
by Section 355 of the Code; (g) none of the Company or the Subsidiaries has
agreed to any extension of the time for assessment or collection of Taxes (other
than pursuant to extension of time to file Tax Returns granted or obtained); and
(h) none of the Company or the Subsidiaries will be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any change in method of accounting for a taxable period ending on or before the
Closing Date.
SECTION 3.18. Material Contracts. (a) Section 3.18(a) of the
Disclosure Schedule lists each of the following contracts and agreements of the
Company and the Subsidiaries (such contracts and agreements being "Material
Contracts"):
(i) all management contracts and contracts with independent
contractors or consultants or similar arrangements (other than medical
director agreements) that are reasonably likely to (x) involve
consideration of more than $500,000 in the aggregate during any of the
calendar years ending December 31, 2004, 2005 and 2006 and (y) are not
cancelable without penalty or further payment and without more than 90
days' notice;
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(ii) all medical director agreements;
(iii) the agreements with the 100 largest payors, based upon
revenues received by the Company from such payors in the nine months
ended September 30, 2004;
(iv) the agreements with the 25 largest acute care facilities,
based upon revenues received by the Company pursuant to such agreements
in the nine months ended September 30, 2004;
(v) all contracts and agreements relating to indebtedness for
borrowed money, other than indebtedness that will be repaid in full
prior to the Closing;
(vi) all contracts and agreements that limit or purport to
limit the ability of the Company or any Subsidiary to compete in any
line of business or with any Person or in any geographic area or during
any period of time;
(vii) all contracts involving total annual payments to or from
the Company or any Subsidiary in excess of $1,000,000;
(viii) all joint venture contracts, partnership arrangements
or other agreements involving a sharing of profits, losses, costs or
liabilities by the Company or any Subsidiary with a third party,
including those joint venture contracts, partnership arrangements or
other agreements that will be terminated prior to the Closing or that
have been terminated within three months prior to the date of this
Agreement;
(ix) all material contracts and agreements between or among
the Company or any Subsidiary, on the one hand, and the Seller or any
Affiliate of the Seller, on the other hand, other than those contracts
or agreements that will be terminated prior to the Closing without
further liability or obligation on the part of the Company;
(x) all contracts or commitments providing for an interest
rate, currency or commodity swap, derivative, hedge, forward purchase
or sale or other transaction similar in nature or effect or involving
any off-balance sheet financing;
(xi) all insurance policies covering the Assets and the
operations of the Company and the Subsidiaries including the holder of
the insurance policy and the named insured on such insurance policy;
(xii) all acquisition or disposition contracts (other than
this Agreement and the Ancillary Agreements) providing for
indemnification by the Company or any Subsidiary of any person with
respect to liabilities relating to any current or former business of
the Company or the relevant Subsidiary or any predecessor Person;
(xiii) all contracts related to capital expenditures not
contemplated by the capital expenditures budget of the Company and the
Subsidiaries, copies of which have been provided to the Purchaser, and
involving future payments which, individually or in the aggregate,
exceed $1,000,000;
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(xiv) all leases of real property;
(xv) all contracts creating an Encumbrance upon any Assets
that are material, individually or in the aggregate, to the Business;
and
(xvi) all other contracts and agreements, whether or not made
in the ordinary course of business, which are material to the Company
or the conduct of the Business, or the absence of which would have a
Material Adverse Effect.
(b) Each Material Contract (i) has been made available, in
true and correct form, to the Purchaser, (ii) is valid and binding on the
Company or a Subsidiary, as the case may be, and, to the knowledge of the
Seller, the counterparties thereto, and is in full force and effect and (iii)
upon consummation of the transactions contemplated by this Agreement, except to
the extent that any consents set forth in Section 3.04 of the Disclosure
Schedule are not obtained or except as set forth in Section 3.18(b) of the
Disclosure Schedule, shall continue in full force and effect without penalty or
other adverse consequence. Neither the Company nor any Subsidiary is in material
breach of, or material default under, any Material Contract to which it is a
party.
(c) To the knowledge of the Seller, no other party to any
Material Contract is in breach thereof or default thereunder, and neither the
Seller nor the Company has received any notice of termination, cancellation,
material breach or material default under any Material Contract.
(d) There is no contract, agreement or other arrangement
granting any Person any preferential right to purchase a material amount of the
Assets or any of the Shares.
SECTION 3.19. Certain Interests. (a) No stockholder, officer
or member of the board of directors of the Company or any Subsidiary and no
relative or spouse (or relative of such spouse) who resides with, or is a
dependent of, any such stockholder, officer or member of the board of directors:
(i) owns, directly or indirectly, in whole or in part, or has
any other interest in any tangible or intangible property which the
Company or any Subsidiary uses or has used in the conduct of the
Business or otherwise; or
(ii) has outstanding any indebtedness for borrowed money to
the Company or any Subsidiary.
(b) The Company does not have any Liability or any other
obligation of any nature whatsoever to any officer, member of the board of
directors or stockholder of the Company or to any relative or spouse (or
relative of such spouse) who resides with, or is a dependent of, any such
officer, member of the board of directors or stockholder, other than obligations
arising out of employment of such individual by the Company.
SECTION 3.20. Inter-Company Transactions. (a) As of September
30, 2004, the aggregate amount of Inter-Company Debt was equal to
$1,039,000,000. The Inter-Company Debt bears interest at the rate per annum
equal to 1.00% above the rate of interest per annum appearing on Moneyline
Telerate Markets Page 3750 (or any successor page) as the London
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interbank offered rate for deposits in U.S. dollars with a term equivalent to 12
months at 11:00 A.M. (London time) two Business Days before the beginning of the
relevant interest period.
(b) As of September 30, 2004, the amount of Inter-Company
Payables was $7,615,000.
(c) Since the Interim Balance Sheet Date until the date
hereof, none of the Company or the Subsidiaries has incurred any Inter-Company
Debt other than (i) Inter-Company Debt in an aggregate amount equal to
$275,579,313 to fund the Company's payment obligations under the Settlement
Agreements, (ii) Inter-Company Debt incurred in order to fund the working
capital requirements and operations of the Company and the Subsidiaries in the
ordinary course of business consistent with past practice, (iii) Inter-Company
Debt incurred in connection with the JV Buyouts, (iv) Inter-Company Debt
incurred to fund capital expenditures of the Company and the Subsidiaries in
accordance with Section 5.01(f) of the Disclosure Schedule and (v) Inter-Company
Debt incurred in respect of accrued and unpaid interest on the outstanding
Inter-Company Debt. Since the Interim Balance Sheet Date, the Inter-Company Debt
also reflects the payment of Taxes by the Seller or any Non-Company Affiliate,
to the extent such Taxes relate to the Company and the Subsidiaries, which Taxes
have been allocated to the Company and the Subsidiaries in accordance with past
practices.
(d) Other than the Inter-Company Debt and the Inter-Company
Payables, neither the Company nor any Subsidiary owes any indebtedness or has
any Liability for any other amount to any Non-Company Affiliate.
(e) The prices reflected on Exhibit 1 on the date of the
Alliance Agreement are no less favorable than the prices which underlie the
Company's strategic plan for 2005-2007 dated October 8, 2004 relating to product
sales to the Company by GRP, except for zone pricing with respect to acid
concentrates and the pricing of spare parts.
SECTION 3.21. Brokers. Except for Goldman, Sachs & Co. and PK
Partners AB, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of Parent, the Seller, the Company or the
Subsidiaries. The Seller is solely responsible for the fees and expenses of
Goldman, Sachs & Co. and PK Partners AB.
SECTION 3.22. Settlement Agreements. The Settlement Agreements
were entered into on December 1, 2004, and all amounts due and payable prior to
the date hereof pursuant to the terms of the Settlement Agreements set forth on
Section 3.22 of the Disclosure Schedule have been paid in full. The Seller has
delivered to the Purchaser true and correct copies of the Settlement Agreements.
Payment of such amounts in accordance with the Settlement Agreements resulted in
an increase in the amount of Inter-Company Debt by $275,579,313.
SECTION 3.23. Disclaimer of the Seller. EXCEPT AS SET FORTH IN
THIS ARTICLE III AND IN ANY SCHEDULES AND CERTIFICATES DELIVERED PURSUANT
HERETO, THE SELLER DOES NOT MAKE AND HAS NOT MADE ANY OTHER
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REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT
OF THE BUSINESS OR ANY OF THE ASSETS, AND ANY SUCH OTHER REPRESENTATIONS OR
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
Article IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary corporate power
and authority to enter into this Agreement and the Ancillary Agreements, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The Purchaser is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed, qualified or in good standing would not reasonably be expected
to adversely affect the ability of the Purchaser to carry out its obligations
under, and to consummate the transactions contemplated by, this Agreement and
the Ancillary Agreements. The execution and delivery by the Purchaser of this
Agreement and the Ancillary Agreements, the performance by the Purchaser of its
obligations hereunder and thereunder and the consummation by the Purchaser of
the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action on the part of the Purchaser and no other
corporate proceedings on the part of the Purchaser or its shareholders are
necessary in order to authorize the execution, delivery or performance of this
Agreement or the Ancillary Agreements to which it is a party. This Agreement has
been, and upon their execution the Ancillary Agreements shall have been, duly
executed and delivered by the Purchaser, and (assuming due authorization,
execution and delivery by Parent and the Seller) this Agreement constitutes, and
upon their execution the Ancillary Agreements shall constitute, legal, valid and
binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms.
SECTION 4.02. No Conflict. Assuming compliance with the
premerger notification and waiting period requirements of the HSR Act and the
making and obtaining of all filings, notifications, consents, approvals,
authorizations and other actions referred to in Section 4.03, the execution,
delivery and performance by the Purchaser of this Agreement and the Ancillary
Agreements do not and will not (a) violate, conflict with or result in the
breach of any provision of the certificate of incorporation or bylaws (or
similar organizational documents) of the Purchaser, (b) conflict with or violate
any Law or Governmental Order applicable to the Purchaser or its respective
assets, properties or businesses or (c) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent or the giving of
notice under, or give to others any right to purchase or sell assets or
securities or to exercise any remedy or modify any obligation under, or any
rights of termination, cancellation, modification or acceleration of, any note,
bond, mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise
-23-
or other instrument or arrangement to which the Purchaser is a party, except, in
the case of clauses (b) and (c), as would not reasonably be expected to
materially and adversely affect the ability of the Purchaser to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements.
SECTION 4.03. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement and each Ancillary
Agreement by the Purchaser do not and will not require any consent, approval,
authorization or other order of, action by, filing with, or notification to, any
Governmental Authority, except (a) the premerger notification and waiting period
requirements of the HSR Act or (b) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not prevent or materially delay the consummation by the Purchaser of the
transactions contemplated by this Agreement and the Ancillary Agreements.
SECTION 4.04. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof other than in
compliance with all applicable laws, including United States federal securities
Laws. The Purchaser agrees that the Shares may not be sold, transferred, offered
for sale, pledged, hypothecated or otherwise disposed of without registration
under the Securities Act and any applicable state securities Laws, except
pursuant to an exemption from such registration under the Securities Act and
such Laws. The Purchaser is able to bear the economic risk of holding the Shares
for an indefinite period (including total loss of its investment), and (either
alone or together with its advisors) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risk of its investment. The Purchaser has had an opportunity to obtain such
financial and other information from the Seller as it deems necessary or
appropriate in connection with evaluating the merits of the investment in the
Shares.
SECTION 4.05. Financing. Subject to the receipt of funds
pursuant to the commitment letter from JPMorgan Chase Bank, N.A. and J.P. Morgan
Securities Inc. (the "Commitment Letter"), the Purchaser has, or will have prior
to the Closing, sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to pay, in cash, the Purchase Price,
the Inter-Company Debt and all other amounts payable pursuant to this Agreement
and the Ancillary Agreements or otherwise necessary to consummate all the
transactions contemplated hereby and thereby. The Purchaser has delivered to the
Seller a true and complete copy of the Commitment Letter. The Commitment Letter
is in full force and effect and has not been amended or terminated in any manner
adverse to the Seller. The Purchaser has taken all actions required to cause the
Commitment Letter to be effective, and the Commitment Letter is a valid and
binding commitment of the Purchaser and, to the knowledge of the Purchaser, the
financing sources party thereto. As of the date hereof, the Purchaser is not
aware of any fact or circumstance in existence as of the date hereof that would
reasonably be expected to give rise to the failure to satisfy any condition
precedent set forth in the Commitment Letters.
SECTION 4.06. Litigation. As of the date hereof, no Action by
or against the Purchaser is pending or, to the knowledge of the Purchaser,
threatened, which reasonably would be expected to affect the legality, validity
or enforceability of this Agreement, any Ancillary Agreement or the consummation
of the transactions contemplated hereby or thereby.
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SECTION 4.07. Brokers. Except for J.P. Morgan Securities Inc.,
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Purchaser. The
Purchaser shall be solely responsible for payment of the fees and expenses of
J.P. Morgan Securities Inc.
SECTION 4.08. Independent Investigation; Seller's
Representations. The Purchaser has conducted its own independent investigation,
review and analysis of operations, Assets, Liabilities, results of operations,
financial condition, software, technology and prospects of the Business, which
investigation, review and analysis was done by the Purchaser and its Affiliates
and representatives. In entering into this Agreement, the Purchaser acknowledges
that it has relied solely upon the aforementioned investigation, review and
analysis and the specific representations and warranties of the Seller set forth
in Article III and the schedules thereto and not on any factual representations
or opinions of the Seller or its representatives (except the specific
representations and warranties of the Seller set forth in Article III and the
schedules thereto). The Purchaser hereby acknowledges and agrees that, other
than the representations and warranties made in Article III or any certificates
delivered in accordance with the terms of this Agreement, none of the Seller,
its Affiliates, or any of their respective officers, corporate directors,
employees or representatives make or have made any representation or warranty,
express or implied, at law or in equity, with respect to the Company, the
Subsidiaries, the Shares, the Assets or the Business.
Article V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. The
Seller agrees that, except as described in Section 5.01 of the Disclosure
Schedule, between the date hereof and the earlier of the Closing and the
termination of this Agreement, the Seller shall cause the Company and each
Subsidiary to (i) conduct its business in the ordinary course and in the
reasonable business judgment of the Seller, the Company and the Subsidiaries in
all material respects, except that the Company may take any lawful actions to
effect the JV Buyouts, and to enter into, and satisfy any obligations under, the
Medicaid Settlement, (ii) use its reasonable best efforts to preserve intact in
all material respects the present business operations, organization and goodwill
of the Company and the Subsidiaries and (iii) use its reasonable best efforts to
keep available the services of key employees and to preserve the relationships
with key customers, suppliers and others having material business dealings with
the Company and the Subsidiaries, including medical directors. Without limiting
the generality of the foregoing, except as described in this Section 5.01 or
Section 5.01 of the Disclosure Schedule, the Seller covenants and agrees that,
between the date hereof and the earlier of the Closing and the termination of
this Agreement, without the prior written consent of the Purchaser, neither the
Company nor any Subsidiary will:
(a) make any change in any method of accounting or accounting
practice or policy used by the Company, other than changes required by
GAAP or applicable Law;
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(b) amend, terminate, cancel or compromise any material claims
of or against the Company or waive any other rights of substantial
value to the Business;
(c) transfer, issue, sell or dispose of any capital stock,
notes, bonds or other securities of the Company or any Subsidiary (or
any option, warrant or other right to acquire the same) or redeem or
repurchase any of the capital stock of the Company or any Subsidiary;
(d) effect any recapitalization, reclassification, stock split
or like change in the capitalization of the Company or any Subsidiary;
(e) declare, make or pay any dividends or distributions to the
holders of capital stock of the Company;
(f) make, or enter into any new commitment for, any capital
expenditure other than (i) those reflected on Schedule 5.01(f) of the
Disclosure Schedule or (ii) those in excess of $1,000,000 individually
or $5,000,000 in the aggregate in any fiscal quarter;
(g) make, revoke or change any material Tax election (other
than as required by applicable Law), or settle or compromise any
liability with respect to a material amount of Taxes or enter into any
closing agreement with respect to a material amount of Taxes, in each
case, with respect to the Company or any Subsidiary;
(h) incur any indebtedness for borrowed money other than (i)
Inter-Company Debt incurred in order to fund the working capital
requirements and operations of the Company and the Subsidiaries in the
ordinary course of business consistent with past practice, (ii)
Inter-Company Debt incurred in connection with the JV Buyouts, (iii)
Inter-Company Debt incurred to fund capital expenditures of the Company
and the Subsidiaries in accordance with Section 5.01(f), (iv)
Inter-Company Debt incurred to satisfy the Company's obligations under
the Medicaid Settlement and (v) Inter-Company Debt incurred in respect
of accrued and unpaid interest on the outstanding Inter-Company Debt
(it being understood that the Inter-Company Debt will continue to
reflect the payment of Taxes by the Seller or any Non-Company
Affiliate, to the extent such Taxes, in accordance with past practices,
are determined to relate to the Company and the Subsidiaries);
(i) become the guarantor, surety, endorser or otherwise liable
for any liability (contingent or otherwise) of any other Person (except
with respect to those rendered by the Company on behalf of its
Subsidiaries);
(j) subject to any Encumbrance (except for Permitted
Encumbrances) any of the material Assets (whether tangible or
intangible);
(k) authorize, propose, enter into or agree to enter into (i)
any merger, consolidation or business combination with any Person, (ii)
any acquisition of a kidney dialysis center or any interest therein or
a material amount of assets or securities, or (iii) any disposition of
a kidney dialysis center or any interest therein or a material amount
of assets or securities or any release;
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(l) enter into any agreement, arrangement or transaction with
any of its corporate directors or officers (or with any relative,
beneficiary, spouse or Affiliate of such Persons);
(m) enter into, modify, amend or terminate any payor
agreements where the new, modified or amended agreement entails a
reduction in rates with the payor or cannot be cancelled by the Company
within 90 days following notice of termination;
(n) incur any obligations between the Company and the
Subsidiaries, on the one hand, and any Non-Company Affiliate, on the
other hand, other than Inter-Company Payables, in each case arising in
the ordinary course of business consistent with past practice;
(o) amend or restate, or propose to amend or restate, the
certificate of incorporation or bylaws (or similar organizational
documents) of the Company or any Subsidiary;
(p) grant or announce any increase in the salaries, bonuses or
other benefits payable by the Company or any Subsidiary to any of the
employees of the Company or any Subsidiary, other than as required by
Law, pursuant to any plans, programs or agreements existing on the date
hereof or other than ordinary increases consistent with the past
practices of the Company or such Subsidiary;
(q) enter into or offer to enter into any employment or
consulting contract with any person who is (or as a result of such
contract, would be) an officer of the Company or any Subsidiary;
(r) establish, adopt, terminate, modify, or amend any
collective bargaining
agreement or Plan, other than as may be required by a Governmental
Authority or applicable Law;
(s) enter into any contract or agreement providing for
disbursements by the Company or any Subsidiary in excess of $1,000,000
in any fiscal year or $2,000,000 in the aggregate during the term of
such contract or agreement;
(t) agree to take any of the actions specified in this Section
5.01, except as contemplated by this Agreement and the Ancillary
Agreements; or
(u) agree in writing or otherwise to do anything prohibited by
this Section 5.01 or anything which would make any of the
representations or warranties of the Seller in this Agreement or the
Ancillary Agreements untrue or incorrect in any material respect as of
any time, through and including the Closing Date.
SECTION 5.02. Access to Information. (a) From the date hereof
until the earlier of the Closing or termination of this Agreement, upon
reasonable notice, the Seller shall cause the Company and each Subsidiary and
each of their respective officers, directors, employees, agents, financial
advisors, accountants, counsel and other representatives to (i) afford the
Purchaser and its officers, directors, employees, agents, financial advisors,
accountants, counsel,
-27-
lenders and other representatives reasonable access to the offices, properties,
personnel and books, contracts, commitments, Tax Returns and records of the
Company and each Subsidiary and (ii) furnish to the officers, directors,
employees and authorized agents, financial advisors, accountants, counsel,
lenders and other representatives of the Purchaser such additional financial and
operating data and other information regarding the Business (or copies thereof)
as the Purchaser may from time to time reasonably request; provided, however,
that any such access or furnishing of information shall be conducted at the
Purchaser's expense, during normal business hours, and in such a manner as not
to interfere unreasonably with the normal operations of the Business.
Notwithstanding anything to the contrary in this Agreement, the Seller shall not
be required to disclose any information to the Purchaser if such disclosure
would (i) jeopardize any attorney-client or other legal privilege, (ii)
contravene any applicable Laws, fiduciary duty or binding agreement entered into
prior to the date hereof, (iii) disrupt any material customer or vendor
relationship or (iv) include Tax information pertaining to the Seller or its
Affiliates other than the Company and the Subsidiaries.
(b) In order to facilitate the resolution of any claims made
against or incurred by the Seller relating to the Business, for a period of
seven years after the Closing, the Purchaser shall (i) retain the books and
records relating to the Business, the Company and the Subsidiaries relating to
periods prior to the Closing and (ii) upon reasonable notice, afford the
officers, employees, agents and representatives of the Seller reasonable access
(including the right to make, at the Seller's expense, photocopies), during
normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made
against or incurred by the Purchaser, the Company or any Subsidiary relating to
the Business, for a period of seven years after the Closing, the Seller shall
(i) retain the books and records relating to the Business, the Company and the
Subsidiaries relating to periods prior to the Closing which shall not otherwise
have been delivered to the Purchaser, the Company or any Subsidiary and (ii)
upon reasonable notice, afford the officers, employees, agents and
representatives of the Purchaser reasonable access (including the right to make,
at the Purchaser's expense, photocopies), during normal business hours, to such
books and records.
SECTION 5.03. Confidentiality. (a) The terms of the letter
agreement dated as of September 15, 2004 (the "Confidentiality Agreement")
between the Seller and the Purchaser are hereby incorporated herein by reference
and shall continue in full force and effect until the Closing, at which time
such Confidentiality Agreement and the obligations of the Purchaser under this
Section 5.03 shall terminate. If this Agreement is, for any reason, terminated
prior to the Closing, the Confidentiality Agreement shall nonetheless continue
in full force and effect.
(b) Nothing provided to the Purchaser pursuant to Section
5.02(a) shall in any way amend or diminish the Purchaser's obligations under the
Confidentiality Agreement. The Purchaser acknowledges and agrees that any
Evaluation Material (as defined in the Confidentiality Agreement) provided to
the Purchaser pursuant to Section 5.02(a) or otherwise by the Seller, the
Company, or any officer, director, employee, agent, representative, accountant
or counsel thereof shall be subject to the terms and conditions of the
Confidentiality Agreement.
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(c) Notwithstanding anything to the contrary contained in this
Agreement, any Ancillary Agreement or in the Confidentiality Agreement, the
Purchaser may disclose (i) Evaluation Material and (ii) the terms and conditions
of this Agreement and the Ancillary Agreements to any lender or potential
lender, rating agency or other third party, to the extent reasonably necessary
or advisable, in order to consummate the Purchaser financing contemplated by
this Agreement and the Ancillary Agreements.
SECTION 5.04. Regulatory and Other Authorizations; Notices and
Consents. (a) Each of the parties hereto shall use its best efforts to promptly
obtain (or, in the case of the Seller, cause the Company and the Subsidiaries to
obtain) all authorizations, consents, orders and approvals of all Governmental
Authorities and officials that may be or become necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and the Ancillary Agreements and will cooperate fully with the other party in
promptly seeking to obtain all such authorizations, consents, orders and
approvals. Each party hereto agrees to make its filing pursuant to the HSR Act
with respect to the transactions contemplated by this Agreement within twenty
Business Days of the date hereof and to supply as promptly as practicable to the
appropriate Governmental Authorities any information and documentary material
that may be requested pursuant to the HSR Act.
(b) Without limiting the generality of the Purchaser's
undertaking pursuant to Section 5.04(a), the Purchaser agrees to use its best
efforts, and to take any and all steps necessary, to avoid or eliminate each and
every impediment under any antitrust, competition or trade regulation Law that
may be asserted by any United States governmental antitrust authority or any
other party so as to enable the parties hereto to close the transactions
contemplated hereby as promptly as practicable, and in any event no later than
the Termination Date, including negotiating, committing to and effecting as
promptly as practicable, by consent decree, hold separate orders, or otherwise,
the sale, divesture or disposition of such of its assets, properties or
businesses or of the Assets, properties or businesses to be acquired by it
pursuant hereto, and the entrance into such other arrangements, as are necessary
or advisable in order to avoid the entry of, and the commencement of litigation
seeking the entry of, or to effect the dissolution of, any injunction, temporary
restraining order or other order in any suit or proceeding, which would
otherwise have the effect of materially delaying or preventing the consummation
of the transactions contemplated by this Agreement and the Ancillary Agreements.
In addition, the Purchaser shall use its best efforts to defend through
litigation on the merits any claim asserted in court by any party in order to
avoid entry of, or to have vacated or terminated, any decree, order or judgment
(whether temporary, preliminary or permanent) that would prevent the Closing
from occurring as promptly as practicable.
(c) Each party to this Agreement shall promptly notify the
other party of any communication it or any of its Affiliates receives from any
Governmental Authority relating to the matters that are the subject of this
Agreement or the Settlement Agreements and permit the other party to review in
advance any proposed communication by such party to any Governmental Authority.
Neither party to this Agreement shall agree to participate in any meeting with
any Governmental Authority in respect of any filings, investigation or other
inquiry unless it consults with the other party in advance and, to the extent
permitted by such Governmental Authority, gives the other party the opportunity
to attend and participate at such meeting. The parties to this Agreement will
coordinate and cooperate fully with each other in
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exchanging such information and providing such assistance as the other party may
reasonably request in connection with the foregoing and in seeking early
termination of any applicable waiting periods, including under the HSR Act. The
parties to this Agreement will provide each other with copies of all
correspondence, filings or communications between them or any of their
representatives, on the one hand, and any Governmental Authority or members of
its staff, on the other hand, with respect to this Agreement and the
transactions contemplated by this Agreement.
(d) Neither party shall enter into any transaction, or any
agreement to effect any transaction (including any merger or acquisition) that
might reasonably be expected to make it more difficult, or to increase the time
required, to: (i) obtain the expiration or termination of the waiting period
under the HSR Act applicable to the transactions contemplated by this Agreement
and the Ancillary Agreements, (ii) avoid the entry of, the commencement of
litigation seeking the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order that would materially
delay or prevent the completion of the transaction contemplated hereby, or (iii)
obtain all authorizations, consents, orders and approvals of Governmental
Authorities necessary for the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements.
SECTION 5.05. Retained Names and Marks. (a) The Purchaser
hereby acknowledges that all right, title and interest in and to the names set
forth on Section 5.05(a) of the Disclosure Schedule, together with all
variations thereof and all trademarks, service marks, domain names, trade names,
trade dress, corporate names and other identifiers of source containing,
incorporating or associated with any of the foregoing (the "Retained Names and
Marks") are owned exclusively by the Seller or its Affiliates (other than the
Company and the Subsidiaries) and that, except as expressly provided below, any
and all right of the Company and its Subsidiaries to use the Retained Names and
Marks shall terminate as of the Closing and shall immediately revert to the
owner thereof. The Purchaser further acknowledges that it has no rights, and is
not acquiring any rights, to use the Retained Names and Marks, except as
provided herein.
(b) The Purchaser shall, as soon as practicable after the
Closing, but in no event later than five Business Days thereafter, cause the
Company and each Subsidiary, as applicable, to file amended articles of
incorporation with the appropriate authorities changing its corporate name to a
corporate name that does not contain any Retained Names and Marks and to supply
promptly any additional information and documentary materials that may be
requested by the Seller with respect to such filings.
(c) The Company and its Subsidiaries shall remove all of the
Company's and its Subsidiaries' existing signage as soon as practicable, but in
any event no later than 180 days after the Closing. The Company and its
Subsidiaries shall be entitled to use existing signage until such signage is
removed in accordance with the terms of this Section 5.05(c).
(d) The Company and its Subsidiaries shall, for a period of 90
days after the date of the Closing, be entitled to use all of the Company's and
its Subsidiaries' existing stocks of letterheads, advertisements and promotional
materials, Internet web sites and Internet domain names, inventory and other
documents and materials ("Existing Stock") containing the Retained Names and
Marks. From and after such date, the Purchaser shall cause the Company and each
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Subsidiary to remove or obliterate all Retained Names and Marks from such
Existing Stock or cease using such Existing Stock, and transfer to the Seller
any rights with respect to Internet domain names incorporating any Retained
Names or Marks.
(e) Except as expressly provided in this Agreement, no other
right to use the Retained Names and Marks is granted by the Seller to the
Purchaser or the Company and its Subsidiaries, whether by implication or
otherwise, and nothing hereunder permits the Purchaser, the Company or any of
its Subsidiaries to use the Retained Names and Marks on any documents,
materials, products or services other than as provided in this Section 5.05. The
Purchaser shall ensure that all use of the Retained Names and Marks by the
Company and its Subsidiaries as provided in this Section 5.05 shall be only with
respect to goods and services of a level of quality equal to or greater than the
quality of goods and services with respect to which the Business used the
Retained Names and Marks prior to the Closing.
(f) The Purchaser agrees that the Seller shall have no
responsibility for claims by third parties arising out of, or relating to, the
use by the Business of any Retained Names and Marks after the Closing, and the
Purchaser shall indemnify and hold harmless the Seller and its Affiliates from
any and all claims that may arise out of the use thereof by the Business.
SECTION 5.06. Ancillary Agreements. At the Closing, the
Purchaser and the Seller shall, and shall cause their Affiliates to, enter into
the Ancillary Agreements.
SECTION 5.07. Financing. (a) From the date hereof until the
earlier of the Closing or the termination of this Agreement, the Purchaser shall
use its reasonable best efforts to enter into definitive agreements with respect
to, and to obtain funding under, the financing provided for in the Commitment
Letter. The Purchaser shall use its reasonable best efforts to take any and all
actions necessary to satisfy the conditions precedent set forth in such
definitive agreements. In the event any portion of such financing becomes
unavailable, in the manner or from the sources originally contemplated, the
Purchaser will use its reasonable best efforts to obtain any such portion from
alternative sources.
(b) Notwithstanding anything in this Agreement to the
contrary, in connection with the Purchaser's financing contemplated by this
Agreement, the Seller will reasonably cooperate with the Purchaser to (i)
provide any necessary financial statements, any audits in connection therewith
and any necessary representation letters addressed to the auditors in connection
therewith; (ii) cause the Company and its Subsidiaries to provide any customary
affidavits required by title insurers; (iii) provide the banks and other
institutions arranging or providing the Purchaser's financing all material
information (financial and other) with respect to the Seller and the
transactions contemplated by this Agreement reasonably requested by the
Purchaser, it being understood that a request for the provision of such
information which would constitute a violation of Law will be deemed
unreasonable; (iv) cause the Company's senior officers and other Company
representatives to be reasonably available to the Purchaser and the banks and
other institutions arranging or providing the Purchaser's financing to
participate in due diligence sessions and to participate in presentations
related to any transaction comprising the Purchaser's financing; (v) assist in
the preparation of one or more appropriate offering documents, including MD&A
and business description and assisting the Purchaser and the banks and other
institutions arranging or providing the Purchaser's financing in preparing other
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appropriate marketing materials, in each case to be used in
connection with such financing; and (vi) request the Seller's independent
auditors to prepare and deliver "comfort letters", dated the date of each
offering document used in connection with any transaction comprising the
Purchaser's financing (with appropriate bring down comfort letters delivered on
the closing date for each financing), in compliance with professional standards,
in each of the foregoing cases as may be necessary for the Purchaser to obtain
the financing described in the Commitment Letter.
(c) As promptly as practicable, the Seller shall deliver to
the Purchaser the unaudited consolidated statement of cash flows of the Company
and the Subsidiaries for the nine months ended September 30, 2004 and the
unaudited consolidated balance sheet of the Company and the Subsidiaries as of
September 30, 2003 and the unaudited consolidated statements of income and cash
flows of the Company and the Subsidiaries for the nine months ended September
30, 2003, in each case prepared in accordance with GAAP.
SECTION 5.08. Further Action. The parties hereto shall use
their reasonable best efforts to take, or cause to be taken, all appropriate
action, to do or cause to be done all things necessary, proper or advisable
under applicable Law, and to execute and deliver such documents and other
papers, as may be required to carry out the provisions of this Agreement and
consummate and make effective the transactions contemplated by this Agreement.
SECTION 5.09. Non-Competition; Non-Solicitation. (a) For the
Restricted Period, Parent shall not, and shall not permit any Non-Company
Affiliates to, engage, directly or indirectly, in the Restricted Business or,
without the prior written consent of the Purchaser, directly or indirectly, own
an interest in, manage, operate, or control any Person that is engaged in the
Restricted Business.
(b) The restrictions set forth in Section 5.09(a) shall not be
construed to prohibit or restrict any Person from acquiring Parent or any
Non-Company Affiliates, nor shall they be construed to restrict Parent or any
Non-Company Affiliates from:
(i) acquiring any business engaged in the Restricted Business,
as long as the percentage of revenues of such business attributable to
such Restricted Business during the preceding fiscal year represents
less than 20% of such business' total revenues in the Restricted
Territory during such period (based on such business' latest financial
statements); provided, however, that Parent or such Non-Company
Affiliate, as applicable, shall divest that portion of such business
attributable to such Restricted Business within one year from the date
of any such acquisition; or
(ii) owning securities having no more than 5% of the
outstanding voting power of any Person engaged in the Restricted
Business which are listed on any national securities exchange as long
as Parent or such Non-Company Affiliate have no other connection or
relationship with such competitor.
(c) Parent agrees with the Purchaser that, for the Restricted
Period, Parent will not, and will cause the Non-Company Affiliates not to,
induce or attempt to induce any officers or employees of the Company to leave
the employ of the Company or the Subsidiaries or violate the terms of their
contracts, or any employment arrangements, with the Company or the
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Subsidiaries; provided, however, that the foregoing will not prohibit Parent or
any Non-Company Affiliates from (i) making generalized searches for employees by
the use of advertisements in the media (including trade media) or by engaging
search firms to engage in searches that are not targeted or focused on the
employees of the Purchaser or any of its Affiliates, (ii) employing any person
who contacts Parent or any Non-Company Affiliate as a result of such general,
non-targeted solicitations for employment or (iii) hiring any person whose
employment has been terminated by the Purchaser or its Affiliates.
SECTION 5.10. Inter-Company Arrangements. (a) The
Inter-Company Payables outstanding as of the Closing shall remain outstanding
from and after the Closing Date and shall be paid by the Company in accordance
with their terms.
(b) At or prior to the Closing, Parent shall cause all
contracts and agreements, other than the Alliance Agreement and the Transition
Services Agreement, between or among the Company or any Subsidiary, on the one
hand, and Parent or any Non-Company Affiliate, on the other hand, to be
terminated or otherwise amended to exclude the Company or relevant Subsidiary as
a party thereto and without further obligation or liability, other than the
Inter-Company Payables, on the part of the Company or such Subsidiary.
SECTION 5.11. Release of Indemnity Obligations. (a) Parent
covenants and agrees, on or prior to the Closing, to execute and deliver to the
Purchaser, for the benefit of each of the Company and its Subsidiaries, a
general release and discharge, in substantially the form attached hereto as
Exhibit 5.11.
(b) The Purchaser shall use its reasonable best efforts to
cause the unconditional release of Parent and the Non-Company Affiliates (as
applicable) from the guarantees set forth in Section 5.11 of the Disclosure
Schedule at the Closing or as promptly as practicable thereafter, including by
effecting such release by issuing Purchaser guarantees or other credit support.
In the event such releases are not effected for any reason, the Purchaser shall
indemnify Parent and the Non-Company Affiliates, as applicable, for any and all
liabilities arising from or relating to such guarantees.
SECTION 5.12. Inter-Company Debt. (a) During the period from
the date hereof to the Closing Date, the Company shall finance its working
capital requirements and operations, including those items set forth in Section
5.01(h), through borrowing from the Seller, and the Seller agrees to lend money
to the Company as necessary to finance such working capital and operational
needs. All such borrowing shall be reflected as Inter-Company Debt.
(b) During the period from the date hereof to the Closing
Date, the Company shall use all cash generated by, and not used in the operation
of, the Business to repay the Inter-Company Debt.
SECTION 5.13. Right of First Refusal. For the Restricted
Period, the Seller shall not sell, transfer or otherwise dispose of any of its
dialysis clinics in Puerto Rico to any Person other than the Purchaser or an
Affiliate of the Purchaser (a "Proposed Transferee") unless (i) the Seller has
received a bona fide offer from the Proposed Transferee to purchase such clinics
(the "Proposed Transaction") and (ii) the Seller has offered to sell, transfer
or otherwise dispose of
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such clinics to the Purchaser on the same terms and conditions as contemplated
in the Proposed Transaction (the "Offer"). The Purchaser shall have the option
to accept the Offer and enter into definitive agreements reflecting the terms of
the Offer with the Seller within thirty (30) days following the date that the
Offer was made by the Seller under (ii) above (the "Offer Period"). In the event
the Purchaser does not accept the Offer and enter into definitive agreements
with the Seller within the Offer Period, the Seller may consummate the Proposed
Transaction with the Proposed Transferee.
Article VI
EMPLOYEE MATTERS
SECTION 6.01. Employee Benefits. As of the Closing Date, each
of the then current employees of the Company and the Subsidiaries ("Current
Business Employees") shall continue to be employed by the Purchaser, the Company
or the Subsidiaries and shall cease to be covered under the Plans that are not
Company Plans, and shall be covered by either the Company Plans or the
corresponding benefit plans of the Purchaser. For a period of one (1) year
following the Closing Date, the Purchaser shall, or shall cause the Company and
the Subsidiaries to, provide to the Current Business Employees (a) base salary
at least equal to the base salary in effect for the Current Business Employees
as of the Closing Date and (b) employee benefit plans, programs and arrangements
(excluding any equity-based plans) that are substantially comparable in the
aggregate to those provided to the Current Business Employees as of the Closing
Date.
SECTION 6.02. Assumed Plans. As of the Closing Date, each of
the current or former employees of the Seller who participates in a Company Plan
shall cease to be covered under such Company Plan and shall be covered by the
corresponding benefit plan of the Seller. As of the Closing Date, the Purchaser
shall, or shall cause the Company and the Subsidiaries to, adopt, assume or
continue to operate, as applicable, the Plans disclosed on Section 6.02 of the
Disclosure Schedule ("Assumed Plans") for the benefit of the Current Business
Employees, including arrangements related to obligations for accrued but unused
vacation pay and benefits.
SECTION 6.03. Tax-Qualified Savings/401(k) Plan. Prior to the
Closing Date, the Seller shall use its reasonable best efforts (i) to transfer
each account of a Current Business Employee under a defined contribution plan of
the Seller or its Affiliates (other than the Company or a Subsidiary) to the
Gambro Healthcare 401(k) Retirement Plan, and (ii) to transfer each account of
an employee of the Seller under the Gambro Healthcare 401(k) Retirement Plan to
a defined contribution plan of the Seller or its Affiliates (other than the
Company or a Subsidiary).
SECTION 6.04. Severance Plan. For a period of one (1) year
following the Closing Date, the Purchaser shall, or shall cause the Company and
the Subsidiaries to, provide the Current Business Employees with severance
protection (including levels of severance and the circumstances under which
severance is payable) that is comparable, taken as a whole, to the severance
benefits currently provided to the Current Business Employees under the Seller's
and the Company's severance plans as in effect on the date hereof, copies of
which have been made available to the Purchaser.
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SECTION 6.05. Employee Notification. The Purchaser shall use
its reasonable best efforts to provide each Current Business Employee with
written notice, on or prior to the Closing Date, regarding the type and level of
compensation and benefits that shall be provided by the Purchaser to such
Current Business Employee following the Closing Date.
SECTION 6.06. Flexible Spending Plans. The Seller shall cause
the Company to establish, effective as of January 1, 2005, one or more
replacement flexible spending plans to replace the Seller's medical, dependent
care, and commuter expense flexible spending reimbursement plans (collectively,
the "Seller's Flex Plans") for the employees of the Company and the
Subsidiaries. The terms of each such replacement plan shall be substantially
equivalent to the Seller's Flex Plans. Each such replacement plan shall, for all
purposes of this Agreement, be treated as a Company Plan. If requested by the
Purchaser, the Seller shall give the Purchaser the opportunity to review and
comment on such replacement plans, and the Seller shall make such changes
consistent with the foregoing to each such replacement plan prior to adoption
thereof as shall be reasonably requested by the Purchaser.
SECTION 6.07. Service Credit. To the extent that length of
service is relevant for purposes of eligibility or vesting or benefit accrual
under any employee benefit plan, program or arrangement (other than benefit
accrual for the purposes of any defined benefit pension plan) established or
maintained by the Purchaser or the Company for the benefit of the Current
Business Employees (including any plan, program or arrangement providing for
vacation, sick leave or severance benefits), such plan, program or arrangement
shall credit such Current Business Employees for length of service on or prior
to the Closing Date with the Company, the Seller or its Affiliates.
SECTION 6.08. Pre-Existing Conditions; Deductibles. With
respect to any welfare benefit plans maintained for the benefit of the Current
Business Employees or their dependents on and after the Closing Date, the
Purchaser shall, or shall cause the Company and the Subsidiaries to, waive any
pre-existing condition exclusions (if the condition was covered under the Plans)
and provide that any expenses incurred on or before the Closing Date by a
Current Business Employee (or such Current Business Employee's dependents) shall
be taken into account for purposes of satisfying applicable deductible,
coinsurance and maximum out of pocket provisions.
SECTION 6.09. COBRA. The Purchaser shall, or shall cause the
Company and the Subsidiaries to, be liable and bear all responsibility for
providing health care continuation coverage in accordance with the requirements
of Section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA ("COBRA")
to all Current Business Employees and their qualified dependents and
beneficiaries who incur a qualifying event after the Closing Date. The Seller
shall be responsible for providing health care continuation coverage in
accordance with COBRA for Current Business Employees and former employees of the
Company or any Subsidiary (and their qualified dependents and beneficiaries) who
incur a qualifying event on or prior to the Closing Date, except with respect to
any such coverage obligation in respect of a Company Plan.
SECTION 6.10. WARN. The Purchaser shall be responsible for any
obligation with respect to the Current Business Employees under the Worker
Adjustment Retraining and Notification Act of 1988 and any applicable state or
local equivalent arising or accruing on or
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after the Closing Date (collectively, "WARN"). The Seller shall be responsible
for any such obligation arising or accruing before the Closing Date.
SECTION 6.11. Assumption of Employment Agreements. Effective
as of the Closing Date, the Purchaser shall, or shall cause the Company to,
honor or assume, as applicable, (i) the employment agreements with Current
Business Employees listed on Section 6.11 of the Disclosure Schedule and (ii)
the employment agreements with the individuals listed on Section 6.11 of the
Disclosure Schedule who are not employed by the Company or a Subsidiary, which
individuals shall, for all purposes of this Agreement, be treated as Current
Business Employees.
SECTION 6.12. Certain Plan Obligations. The Seller shall
remain liable for the payment of all compensation and benefits arising under any
Plan that is not a Company Plan (including all claims for such compensation or
benefits, whenever occurring) to the employees of the Company and the
Subsidiaries. For purposes of clarification of the preceding sentence, (i) the
Seller shall retain responsibility for and continue to pay all medical, dental,
life insurance, short-term disability and other long-term disability expenses
and benefits for each Current Business Employee with respect to claims incurred
by such employee or their covered dependents prior to the Closing Date, and (ii)
expenses and benefits with respect to claims incurred by Current Business
Employees or their covered dependents on and after the Closing Date shall be the
responsibility of the Purchaser. For purposes of this Section 6.12, (a) a claim
for medical benefits is incurred on the date the relevant medical services are
provided, (b) a claim for life insurance benefits is incurred on the date of
death, (c) a claim for short-term disability benefits is incurred on the date
the employee becomes eligible for short-term disability benefits and (d) a claim
for long-term disability benefits is incurred on the date the employee becomes
eligible for short-term disability benefits in connection with the condition
resulting in such employee's long-term disability.
Article VII
TAX MATTERS
SECTION 7.01. Tax Indemnities. (a) The Seller shall indemnify
and hold the Purchaser, the Company and the Subsidiaries harmless against
Indemnified Taxes (and associated expenses). The Purchaser shall be responsible
for and shall indemnify and hold the Seller and its Affiliates harmless against
all Taxes relating to the Company and the Subsidiaries (and associated expenses)
other than Indemnified Taxes.
(b) In the case of Taxes that are payable with respect to a
Straddle Period, the portion of any such Tax that is allocable to the portion of
the taxable period ending on the Closing Date shall be:
(i) in the case of income Taxes, sales Taxes, employment Taxes
and other Taxes that are readily apportionable based on an actual or
deemed closing of the books that are deemed to equal the amount which
would be payable if the taxable year ended on the Closing Date; and
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(ii) in the case of all other Taxes, deemed to be the amount
of such Taxes for the entire Straddle Period multiplied by a fraction
the numerator of which is the number of calendar days in the portion of
the Straddle Period ending on the Closing Date and the denominator of
which is the number of calendar days in the entire Straddle Period.
(c) Payment by the indemnifying party of any amount under this
Section 7.01 shall be made within 30 days following written notice by the
indemnified party that payment of such amounts to the appropriate taxing
authority is due, provided that the Purchaser shall comply with its obligation
to promptly notify the Seller under Section 7.03(a) and provided further that
the indemnifying party shall not be required to make any payment earlier than
two days before it is due to the appropriate taxing authority. If the Seller
receives an assessment or other notice of Taxes due with respect to the Company
and any Subsidiary for any taxable period (or portion of any taxable period)
ending on or before the Closing Date for which the Seller is not responsible, in
whole or in part, pursuant to this Agreement, then the Purchaser shall pay such
Taxes and the Seller shall pay to the Purchaser the portion of such Taxes for
which the Seller is responsible, or if the Seller pays such Taxes, then the
Purchaser, the Company or any Subsidiary shall pay to the Seller the amount of
such Taxes for which the Seller is not responsible within five days following
such payment. In the case of a Tax that is contested in accordance with the
provisions of Section 7.03, payment of the Tax to the appropriate taxing
authority will be considered to be due no earlier than the date a final
determination to such effect is made by the appropriate taxing authority or
court.
SECTION 7.02. Tax Refunds and Tax Benefits. (a) Any Tax refund
or credit attributable to the Company or any Subsidiary (including any interest
paid or credited with respect thereto) relating to taxable periods (or portions
of Straddle Periods) ending on or before the Closing Date shall be the property
of the Seller and, if received by the Purchaser, the Company or any Subsidiary,
shall be paid over promptly to the Seller. The Purchaser shall, if the Seller so
requests and at the Seller's expense, cause the Company or other relevant entity
to file for and use its reasonable best efforts to obtain and expedite the
receipt of any refund to which the Seller is entitled under this Section 7.02.
The Purchaser shall permit the Seller to participate in (at the Seller's
expense) the prosecution of any such refund claim.
(b) Any amount otherwise payable by the Seller under Section
7.01 shall be reduced by any Tax benefit actually realized by the Purchaser, its
Affiliates, the Company or any Subsidiary arising in connection with any
underlying adjustment resulting in the obligation of the Purchaser, its
Affiliates, the Company or any Subsidiary to pay Taxes or other amounts for
which the Seller is responsible under Section 7.01 or the accrual, incurrence or
payment of such Taxes. The Purchaser, its Affiliates, the Company or any
Subsidiary shall be deemed to have "actually realized" a Tax benefit to the
extent that the Purchaser and the Seller, acting reasonably and in good faith,
determine that the amount of Taxes payable over time (as determined on a present
value basis in the taxable year in which such indemnity payment is being made
using a discount rate of 5%) by such indemnified party is reduced below the
amount of Taxes that such indemnified party would be required to pay but for the
incurrence or payment of such indemnified amount.
SECTION 7.03. Contests. (a) After the Closing, the Purchaser
shall promptly notify the Seller in writing of the proposed assessment or the
commencement of any Tax audit or
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administrative or judicial proceeding or of any demand or claim on the
Purchaser, its Affiliates, the Company or any Subsidiary which, if determined
adversely to the taxpayer or after the lapse of time, could be grounds for
indemnification by the Seller under Section 7.01. Such notice shall contain
factual information (to the extent known to the Purchaser, its Affiliates, the
Company or any Subsidiary) describing the asserted Tax liability in reasonable
detail and shall include copies of any notice or other document received from
any taxing authority in respect of any such asserted Tax liability. If the
Purchaser fails to give the Seller prompt notice of an asserted Tax liability as
required by this Section 7.03, then the Seller shall not have any obligation to
indemnify for any loss arising out of such asserted Tax liability, but only to
the extent that failure to give such notice results in a detriment to the
Seller.
(b) In the case of a Tax audit or administrative or judicial
proceeding (a "Contest") that relates to taxable periods ending on or before the
date of the Closing, the Seller shall have the sole right, at its expense, to
control the conduct of such Contest, provided that, with respect to Contests
that relate solely to the Company and the Subsidiaries, the Seller may not
settle or compromise any asserted liability that would materially adversely
affect the liability for Taxes of the Purchaser pursuant to Section 7.01(a)
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld.
(c) With respect to Straddle Periods, the Seller may elect to
direct and control, through counsel of its own choosing, any Contest involving
any asserted Tax liability with respect to which indemnity may be sought from
the Seller pursuant to Section 7.01. If the Seller elects to direct a Contest,
the Seller shall within 90 calendar days of receipt of the notice of asserted
Tax liability notify the Purchaser of its intent to do so, and the Purchaser
shall cooperate and shall cause the Company and the Subsidiaries to fully
cooperate, at the Seller's expense, in each phase of such Contest; provided,
that the Purchaser may participate at its own expense, in the Contest and,
provided, further, that the Seller may not settle or compromise any asserted
liability that would adversely affect the liability for Taxes of the Purchaser
pursuant to Section 7.01(a) without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld. If the Seller elects not to
direct the Contest, the Purchaser, the Company or any Subsidiary may assume
control of such Contest (at the Purchaser's own expense). However, in such case,
none of the Purchaser, the Company or any Subsidiary may settle or compromise
any asserted liability without prior written consent of the Seller; provided,
however, that consent to settlement or compromise shall not be unreasonably
withheld. In any event, the Seller may participate, at its own expense, in the
Contest.
(d) The Purchaser and the Seller agree to cooperate, and the
Purchaser agrees to cause the Company and the Subsidiaries to cooperate, in the
defense against or compromise of any claim in any Contest.
SECTION 7.04. Preparation of Tax Returns. (a) Except as
provided in Section 7.04(b), the Seller shall prepare and file (or cause the
Company and the Subsidiaries to prepare and file) all Tax Returns relating to
the Company and each Subsidiary for taxable periods ending on or before the
Closing Date. With respect to such Tax Returns that are final Income Tax Returns
and that relate solely to the Company and the Subsidiaries, the Seller shall
provide the Purchaser and its authorized representative with a copy of such
completed Tax Return at least 30 days prior to the due date (including any
extension thereof) for filing of such Tax Return, and the
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Purchaser and its authorized representative shall have the right to review and
comment on such Tax Return prior to the filing of such Tax Return. The Seller
and the Purchaser agree to consult and to attempt in good faith to resolve any
issues arising as a result of the review of such Tax Return by the Purchaser or
its authorized representative.
(b) The Purchaser shall prepare and file (or cause the Company
and the Subsidiaries to prepare and file) all Tax Returns that relate to the
Company for taxable periods ending after the Closing Date (including Straddle
Periods); it being understood that all Taxes shown as due and payable on such
Tax Returns shall be the responsibility of the Purchaser, subject to the
Purchaser's right of indemnification from the Seller for Taxes which are the
responsibility of the Seller pursuant to Section 7.01. Tax Returns for Straddle
Periods shall be prepared on a basis consistent with those prepared for prior
taxable periods unless a different treatment of any item is required by
applicable Law. With respect to any Tax Return required to be filed with respect
to the Company or any Subsidiary after the Closing Date and as to which Taxes
are allocable to the Seller under Section 7.01 hereof, the Purchaser shall
provide the Seller and its authorized representative with a copy of such
completed Tax Return and a statement (with which the Purchaser will make
available supporting schedules and information) certifying the amount of Tax
shown on such Tax Return that is allocable to the Seller pursuant to Section
7.01 at least 30 days prior to the due date (including any extension thereof)
for filing of such Tax Return, and the Seller and its authorized representative
shall have the right to review and comment on such Tax Return and statement
prior to the filing of such Tax Return. The Seller and the Purchaser agree to
consult and to attempt in good faith to resolve any issues arising as a result
of the review of such Tax Return and statement by the Seller or its authorized
representative.
SECTION 7.05. Tax Cooperation and Exchange of Information. The
Seller and the Purchaser shall provide each other with such cooperation and
information as either of them reasonably may request of the other (and the
Purchaser shall cause the Company and the Subsidiaries to provide such
cooperation and information) in filing any Tax Return, amended Tax Return or
claim for refund, determining a liability for Taxes or a right to a refund of
Taxes or participating in or conducting any audit or other proceeding in respect
of Taxes. Such cooperation and information shall include providing copies of
relevant Tax Returns or portions thereof, together with related work papers and
documents relating to rulings or other determinations by taxing authorities. The
Seller and the Purchaser shall make themselves (and their respective employees)
reasonably available on a mutually convenient basis to provide explanations of
any documents or information provided under this Section 7.05. Notwithstanding
anything to the contrary in Section 5.02, each of the Seller and the Purchaser
shall retain all Tax Returns, work papers and all material records or other
documents in its possession (or in the possession of its Affiliates) relating to
Tax matters of the Company or any Subsidiary for any taxable period that
includes the Closing Date and for all prior taxable periods until the later of
(i) the expiration of the statute of limitations of the taxable periods to which
such Tax Returns and other documents relate, without regard to extensions or
(ii) six years following the due date (without extension) for such Tax Returns.
After such time, before the Seller or the Purchaser shall dispose of any such
documents in its possession (or in the possession of its Affiliates), the other
party shall be given an opportunity, after 90 days' prior written notice, to
remove and retain all or any part of such documents as such other party may
select (at such other party's expense). Any information obtained under this
Section 7.05 shall be
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kept confidential, except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund or in conducting an audit or other
proceeding.
SECTION 7.06. Conveyance Taxes. The Seller and the Purchaser
shall each be liable for, and agree to pay one-half of, any and all Conveyance
Taxes that may be imposed upon, or payable or collectible or incurred in
connection with this Agreement and the transactions contemplated hereby. The
Purchaser and the Seller agree to cooperate in the execution and delivery of all
instruments and certificates necessary to enable the Purchaser to comply with
any pre-Closing filing requirements.
SECTION 7.07. Tax Covenants. (a) Neither the Purchaser nor any
Affiliate of the Purchaser shall amend, refile or otherwise modify, or cause or
permit the Company or any Subsidiary to amend, refile or otherwise modify, any
Tax election or Tax Return with respect to any taxable period (or portion of any
taxable period) ending on or before the Closing Date without the prior written
consent of the Seller.
(b) The Purchaser, the Company and the Subsidiaries shall make
any and all elections under Section 172(b)(3) of the Code (and under any
comparable provision of state, local or non-U.S. Law) to relinquish the entire
carryback period with respect to the Tax attributes (including any net operating
loss) attributable to the Company or any Subsidiary with respect to any taxable
period (or any portion thereof) ending after the Closing Date (including the
Straddle Periods) that could be carried back to any taxable period (or any
portion thereof) ending on or before the Closing Date. Notwithstanding anything
to the contrary contained in this Agreement, neither the Seller nor its
Affiliates shall be required to pay to the Purchaser any refund or credit of
Taxes that results from the carryback to any taxable period (or any portion
thereof) ending on or before the Closing Date of any net operating loss, capital
loss or Tax credit attributable to the Company or any Subsidiary in any taxable
period (or any portion thereof) ending after the Closing Date (including the
Straddle Periods).
SECTION 7.08. Miscellaneous. (a) For Tax purposes, the parties
agree to treat all payments made under this Article VII and for any
misrepresentations or breaches of warranties or covenants, as adjustments to the
Purchase Price or as capital contributions.
(b) This Article VII shall be the sole provision governing
indemnities for Taxes under this Agreement.
(c) For purposes of this Article VII, all references to the
Purchaser, the Seller, Affiliates, the Company and any Subsidiary include
successors.
(d) Notwithstanding any provision in this Agreement to the
contrary, the covenants and agreements of the parties hereto contained in this
Article VII shall survive the Closing and shall remain in full force until the
expiration of the applicable statutes of limitations for the Taxes in question
(taking into account any extensions or waivers thereof).
(e) Any Tax sharing agreement or arrangement between the
Seller or any of its Affiliates (other than the Company and the Subsidiaries),
on the one hand, and the Company and the Subsidiaries, on the other hand, shall
have been terminated, and all payments thereunder
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settled, immediately prior to the Closing with no payments permitted to be made
thereunder on and after the Closing Date.
(f) Payments by the Seller under this Article VII shall be
limited to the amount of any liability or damage that remains after deducting
therefrom any indemnity, contribution or other similar payment recoverable by
the Purchaser, the Company or any of the Subsidiaries or any Affiliates of the
Purchaser from any third party with respect thereto.
SECTION 7.09. Section 338(h)(10) Elections. Upon the
Purchaser's written request, the Seller shall join with the Purchaser in
elections to have the provisions of Section 338(h)(10) of the Code and similar
provisions of state or local income Tax law (where permissible) (the "Section
338(h)(10) Elections") apply to the Purchaser's acquisition of the Shares, and
the Purchaser's deemed acquisition of the stock of those Subsidiaries designated
by the Purchaser which are U.S. corporations wholly-owned by the Company or any
Subsidiary; provided that Section 338(h)(10) Elections shall not be made with
respect to the Purchaser's deemed acquisition of the stock of Dialysis Holdings,
Inc. ("DHI") or the deemed acquisition of the stock of any corporation
wholly-owned, directly or indirectly, by DHI; and provided further, that the
Purchaser shall reimburse the Seller (on or before the date on which the
applicable IRS Forms 8023 (Elections Under Section 338 for Corporations Making
Qualified Stock Purchases) are filed) for any additional Taxes incurred by the
Seller and its Affiliates which would not have been incurred had the sale of the
Shares to the Purchaser occurred pursuant to the terms of this Agreement but no
Section 338(h)(10) Elections had been made.
Article VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Seller. The
obligations of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or written waiver, at or prior to
the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of the Purchaser contained in this
Agreement (A) that are qualified as to materiality shall be true and
correct and (B) that are not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement
and as of the Closing as though made on and as of the Closing, except
to the extent such representations and warranties are made as of a
particular date, in which case such representations and warranties
shall be true and correct in all material respects as of such date,
(ii) the covenants and agreements contained in this Agreement to be
complied with by the Purchaser on or before the Closing shall have been
complied with in all material respects and (iii) the Seller shall have
received a certificate dated as of the Closing Date from the Purchaser
certifying the matters set forth in clauses (i) and (ii) above signed
by a duly authorized officer;
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(b) HSR Waiting Period. Any waiting period (and any extension
thereof) under the HSR Act applicable to the purchase of the Shares
contemplated by this Agreement shall have expired or shall have been
terminated;
(c) No Action. No Action initiated by any Governmental
Authority against the Purchaser or the Seller seeking to prohibit the
transactions contemplated by this Agreement and the Ancillary
Agreements shall be pending;
(d) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law or Governmental Order
(whether temporary, preliminary or permanent) that has the effect of
making the transactions contemplated by this Agreement or the Ancillary
Agreements illegal or otherwise prohibiting the consummation of such
transactions; and
(e) Ancillary Agreements. The Ancillary Agreements shall have
been duly executed and delivered by the Purchaser and shall be in full
force and effect.
SECTION 8.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or written waiver, at or prior to
the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of the Seller contained in this
Agreement, without giving effect to any materiality or Material Adverse
Effect qualifiers contained therein, shall be true and correct as of
the date of this Agreement and as of the Closing as though made on and
as of the Closing, except to the extent such representations and
warranties are made as of a particular date, in which case such
representations and warranties shall be true and correct as of such
date, except where the failure of such representations and warranties
in the aggregate to be true and correct would not have a Material
Adverse Effect, (ii) the covenants and agreements contained in this
Agreement to be complied with by the Seller at or before the Closing
shall have been complied with in all material respects and (iii) the
Purchaser shall have received a certificate dated as of the Closing
Date from the Seller certifying the matters set forth in clauses (i)
and (ii) above signed by a duly authorized officer;
(b) HSR Waiting Period. Any waiting period (and any extension
thereof) under the HSR Act applicable to the purchase of the Shares
contemplated by this Agreement shall have expired or shall have been
terminated;
(c) No Action. No Action initiated by any Governmental
Authority against the Purchaser or the Seller seeking to prohibit the
transactions contemplated by this Agreement and the Ancillary
Agreements shall be pending;
(d) Conditions to Financing. As of the Closing Date, all
conditions precedent to the initial funding of the financing
commitments contained in clause (i) of the Conditions section of the
Commitment Letter and clauses (1) (to the extent relating to the
Acquisition and the Acquisition Documents), (2) and (3) (to the extent,
with respect to the first sentence thereof, relating to the Company and
the Subsidiaries) of Annex III of
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the Commitment Letter shall have been satisfied or waived in writing by
the lenders providing such commitments;
(e) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law or Governmental Order
(whether temporary, preliminary or permanent) that has the effect of
making the transactions contemplated by this Agreement or the Ancillary
Agreements illegal or otherwise prohibiting the consummation of such
transactions; and
(f) Ancillary Agreements. The Ancillary Agreements shall have been duly
executed and delivered by the Seller and shall be in full force and
effect.
Article IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing until the date that is 18 months following the
Closing, except for (a) the representations and warranties in Sections 3.01,
3.02, 3.03, 3.05, 3.21 and 4.01, which shall survive indefinitely and (b) the
representations and warranties in Section 3.17, which shall survive until the
Closing and thereafter shall have no further force and effect; provided,
however, that any claim made with reasonable specificity by the party seeking to
be indemnified within the time periods set forth in this Section 9.01 shall
survive until such claim is finally and fully resolved.
SECTION 9.02. Indemnification by the Seller. The Purchaser and
its Affiliates, officers, directors, employees, agents, successors and assigns
(each, a "Purchaser Indemnified Party") shall be indemnified and held harmless
by the Seller from and against all losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including reasonable attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
(hereinafter, a "Loss"), arising out of or resulting from: (a) the breach of any
representation or warranty made by the Seller contained in this Agreement or any
certificates delivered in connection herewith without giving any effect to the
terms "material", "materiality", "Material Adverse Effect" or terms of similar
meaning,
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(b) the breach of any covenant or agreement by the Seller contained in this
Agreement or any certificates delivered in connection herewith and (c) the
Actions set forth on Section 9.02(c) of the Disclosure Schedule (the "Retained
Claims"); provided, that, indemnifiable Losses with respect to the Gallen
Litigation shall be limited to monetary damages pursuant to any settlement or
judgment in the Gallen Litigation and defense costs.
SECTION 9.03. Indemnification by the Purchaser. The Seller and
its Affiliates, officers, directors, employees, agents, successors and assigns
(each, a "Seller Indemnified Party") shall be indemnified and held harmless by
the Purchaser from and against any and all Losses arising out of or resulting
from: (a) the breach of any representation or warranty made by the Purchaser
contained in this Agreement or any certificates delivered in connection herewith
without giving any effect to the terms "material", "materiality" or terms of
similar meaning; (b) the breach of any covenant or agreement by the Purchaser
contained in this Agreement or any certificates delivered in connection
herewith; or (c) any claim or cause of action by any Person arising before or
after the Closing against any Seller Indemnified Party from the operations of
the Company or any Subsidiary (including in respect of any Action), except for
claims or causes of action with respect to which the Seller is obligated to
indemnify the Purchaser Indemnified Parties pursuant to Section 9.02.
SECTION 9.04. Limits on Indemnification. (a) No claim may be
asserted nor may any Action be commenced against either party for breach of any
representation, warranty, covenant or agreement contained herein, unless written
notice of such claim or action is received by such party describing in
reasonable detail the facts and circumstances with respect to the subject matter
of such claim or Action on or prior to the date on which the representation,
warranty, covenant or agreement on which such claim or Action is based ceases to
survive as set forth in Section 9.01, irrespective of whether the subject matter
of such claim or action shall have occurred before or after such date.
(b) Notwithstanding anything to the contrary contained in this
Agreement: (i) an Indemnifying Party shall not be liable for any claim for
indemnification pursuant to Section 9.02(a), unless and until the aggregate
amount of indemnifiable Losses which may be recovered from the Indemnifying
Party equals or exceeds $30,500,000 after which the Indemnifying Party shall be
liable only for all Losses in excess of such amount; (ii) no Losses may be
claimed under Section 9.02(a) by any Indemnified Party or shall be included in
calculating the aggregate Losses set forth in clause (i) above other than Losses
in excess of $100,000 resulting from any single claim or aggregated claims
arising out of the same or substantially similar facts, events or circumstances;
(iii) the maximum amount of indemnifiable Losses which may be recovered from an
Indemnifying Party arising out of or resulting from the causes set forth in
Section 9.02(a) shall be an amount equal to $534,000,000; and (iv) neither party
hereto shall have any liability under any provision of this Agreement or any
Ancillary Agreement for any punitive, incidental, consequential, special or
indirect damages, including loss of future revenue or income, or loss of
business reputation or opportunity relating to the breach or alleged breach of
this Agreement or any Ancillary Agreement; provided, however, that the limits
set forth in clauses (i), (ii) and (iii) shall not apply to (x) any
indemnifiable Losses arising out of the breach of the representations and
warranties in Sections 3.01, 3.02, 3.03, 3.20, 3.21 and 4.01, (y) any actions,
omissions, facts and circumstances occurring prior to the Closing Date which are
violations of any of the obligations of the Company and its Affiliates contained
in the Settlement Agreements or (z) any indemnifiable Losses arising out of the
Retained Claims; provided, further, that the Seller shall be liable for only 50%
of the monetary damages and defense costs arising out of the Gallen Litigation,
but in no event shall the Seller be liable for any amount in excess of
$5,000,000 with respect to the Gallen Litigation.
(c) For all purposes of this Article IX, "Losses" shall be net
of (i) any insurance or other recoveries payable to the Indemnified Party or its
Affiliates in connection with the facts giving rise to the right of
indemnification, (ii) any Tax benefit actually realized by the Indemnified Party
or its Affiliates arising in connection with the accrual, incurrence or payment
of any such Losses and (iii) any amounts reserved on the Interim Balance Sheet
with respect to such Loss. The Purchaser, its Affiliates, the Company or any
Subsidiary shall be deemed to have "actually realized" a Tax benefit to the
extent that the Purchaser and the Seller, acting reasonably
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and in good faith, determine that the amount of Taxes payable over time (as
determined on a present value basis in the taxable year in which such indemnity
payment is being made using a discount rate of 5%) by such indemnified party is
reduced below the amount of Taxes that such indemnified party would be required
to pay but for the incurrence or payment of such indemnified amount.
SECTION 9.05. Notice of Loss; Third Party Claims. (a) An
Indemnified Party shall give the Indemnifying Party notice of any matter which
an Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement, within 30 days of such determination,
stating the amount of the Loss, if known, and method of computation thereof, and
containing a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises.
(b) If an Indemnified Party shall receive notice of any
Action, audit, claim, demand or assessment (each, a "Third Party Claim") against
it which may give rise to a claim for Loss under this Article IX, within 30 days
of the receipt of such notice, the Indemnified Party shall give the Indemnifying
Party notice of such Third Party Claim; provided, however, that the failure to
provide such notice shall not release the Indemnifying Party from any of its
obligations under this Article IX except to the extent that the Indemnifying
Party is materially prejudiced by such failure. The Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the Indemnified Party within 30 days of the receipt of such notice from
the Indemnified Party. If the Indemnifying Party elects to undertake any such
defense against a Third Party Claim the Indemnified Party may participate in
such defense at its own expense. The Indemnified Party shall cooperate with the
Indemnifying Party in such defense and make available to the Indemnifying Party,
at the Indemnifying Party's expense, all witnesses, pertinent records, materials
and information in the Indemnified Party's possession or under the Indemnified
Party's control relating thereto as is reasonably required by the Indemnifying
Party. The Indemnified Party shall not pay, or permit to be paid, any part of
such Third Party Claim unless the Indemnifying Party consents in writing to such
payment or unless a final judgment from which no appeal may be taken by or on
behalf of the Indemnifying Party is entered against the Indemnified Party for
such Third Party Claim. If the Indemnified Party assumes the defense of any such
claims or proceeding pursuant to this Section 9.05 and proposes to settle such
claims or proceeding prior to a final judgment thereon or to forgo any appeal
with respect thereto, then the Indemnified Party shall give the Indemnifying
Party prompt written notice thereof and the Indemnifying Party shall have the
right to participate in the settlement or assume or reassume the defense of such
claims or proceeding; provided, however, the Seller shall have the sole right to
conduct and otherwise control any of the Retained Claims (including the
settlement thereof) (other than the Gallen Litigation, which shall be controlled
by the Purchaser) provided that any settlement thereof shall include the payment
of money only and shall not include any admission of liability or any other
non-monetary obligations on the part of the Company or any of its Subsidiaries
or the Seller in the case of the Gallen Litigation.
SECTION 9.06. Tax Matters. Anything in this Article IX to the
contrary notwithstanding, the rights and obligations of the parties with respect
to indemnification for any and all Tax matters shall be solely governed by
Article VII and shall not be subject to the provisions of this Article IX.
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Article X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated
at any time prior to the Closing:
(a) by either the Seller or the Purchaser if the Closing shall
not have occurred prior to the first anniversary of the date hereof
(the "Termination Date"); provided, however, that the right to
terminate this Agreement under this Section 10.01(a) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur on or prior to such date;
(b) by either the Purchaser or the Seller in the event that
any Governmental Order restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement shall have become final
and nonappealable;
(c) by the Seller if the Purchaser shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement
which breach or failure to perform would give rise to the failure of a
condition set forth in Section 8.01(a) and either (i) has not been
cured within 20 days after notice of such breach or failure to perform
has been delivered to the Purchaser or (ii) is incapable of being cured
prior to the Termination Date (other than as a result of the Seller's
failure to perform the agreements set forth herein required to be
performed by the Seller);
(d) by the Purchaser if the Seller shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in the Agreement
which breach or failure to perform would give rise to the failure of a
condition set forth in Section 8.02(a) and either (i) has not been
cured within 20 days after notice of such breach or failure to perform
has been delivered to the Seller or (ii) is incapable of being cured
prior to the Termination Date (other than as a result of the
Purchaser's failure to perform the agreements set forth herein required
to be performed by it); or
(e) by the mutual written consent of Parent, the Seller and
the Purchaser.
SECTION 10.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 10.01, this Agreement shall
forthwith become void and there shall be no liability on the part of either
party hereto except (a) that the last sentence of Section 5.03(a), this Section
10.02 and Article XI shall survive any such termination and (b) that nothing
herein shall relieve either party from liability for any breach of this
Agreement occurring prior to such termination.
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Article XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated by this Agreement shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred.
SECTION 11.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by an internationally recognized overnight courier service,
by facsimile or registered or certified mail (postage prepaid, return receipt
requested) to the respective parties hereto at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 11.02):
(a) if to Parent or the Seller:
Gambro, Inc.
10810 W. Collins Avenue
Lakewood, CO 80215
Telecopy: (303) 231-4915
Attention: Kevin Smith
with a copies to:
Gambro AB
P.O. Box 7373
Hamngatan 2
103 91 Stockholm, SE
Sweden
Telecopy: +46 46 169 294
Attention: Ingmar Magnusson
and
Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: (212) 848-7179
Attention: Peter D. Lyons, Esq.
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(b) if to the Purchaser:
DaVita Inc.
60 Hawaii Street
El Segundo, CA 90275
Telecopy: (866) 891-4866
Attention: Joseph Schohl, Esq.
with a copy to:
McDermott Will & Emery LLP
50 Rockefeller Plaza
New York, NY 10020
Telecopy: (212) 547-5444
Attention: Spencer D. Klein, Esq.
Gregory D. Puff, Esq.
SECTION 11.03. Public Announcements. No party to this
Agreement shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated by
this Agreement or otherwise communicate with any news media without the prior
written consent of the other parties, unless otherwise required by Law or
applicable stock exchange regulation, or is otherwise consistent with such
party's prior communication practices with investors, analysts and the like (so
long as the substance of such communications with investors, analysts and the
like is not inconsistent with other prior communications, press releases or
other announcements made pursuant to this Section 11.03), and the parties to
this Agreement shall cooperate as to the timing and contents of any such press
release, public announcement or communication.
SECTION 11.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic and
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to either party hereto. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent
possible.
SECTION 11.05. Entire Agreement. This Agreement, the Ancillary
Agreements and the Confidentiality Agreement constitute the entire agreement of
the parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements and undertakings, both written and oral, between
the Seller and the Purchaser with respect to the subject matter hereof and
thereof.
SECTION 11.06. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Seller and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Seller or the Purchaser),
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as the case may be; provided, however, the Purchaser shall have the right to
assign this Agreement to (i) a direct or indirect wholly owned subsidiary of the
Purchaser or (ii) any lender or lenders providing financing for the transactions
contemplated hereby for collateral security purposes; provided, further,
however, that any such assignment shall not relieve the Purchaser of its
obligations hereunder.
SECTION 11.07. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, each
of the Seller and the Purchaser or (b) by a waiver in accordance with Section
11.08.
SECTION 11.08. Waiver. Any party to this Agreement may (a)
extend the time for the performance of any of the obligations or other acts of
any other party, (b) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any document delivered by
any other party pursuant hereto or (c) waive compliance with any of the
agreements of any other party or conditions to such party's obligations
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition of this Agreement. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of any of such
rights.
SECTION 11.09. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their respective successors and permitted assigns and except for the provisions
of Article IX relating to indemnified parties, nothing herein, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever, including any
rights of employment for any specified period, under or by reason of this
Agreement.
SECTION 11.10. Currency. All references to currency, monetary
values and dollars set forth herein shall mean U.S. dollars and all payments
hereunder shall be made in U.S. dollars.
SECTION 11.11. Specific Performance; Exclusive Remedies. (a)
The parties hereto agree that irreparable damage would occur in the event that
any provision of this Agreement was not performed in accordance with the terms
hereof. Accordingly, in addition to any other right or remedy to which the
parties may be entitled, at Law or in equity, the parties shall be entitled to
enforce any provision of this Agreement by a decree of specific performance and
to temporary, preliminary and permanent injunctive relief to prevent breaches or
threatened breaches of any of the provisions of this Agreement, without posting
any bond or other undertaking.
(b) The parties acknowledge and agree that the indemnification provisions of
Section 9.02 and Section 9.03 and the specific performance
provisions of Section
11.11(a) shall be the sole and exclusive remedies of the parties for any breach
by any party of the representations and warranties in this Agreement and for any
failure by any party to perform and comply with any covenants and agreements in
this Agreement. Each party hereto shall take all
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reasonable steps to mitigate its Losses upon and after becoming aware of any
event that could reasonably be expected to give rise to any Losses.
SECTION 11.12. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York. The
parties hereto unconditionally and irrevocably agree and consent to the
exclusive jurisdiction of, and service of process and venue in, the United
States District Court for the Southern District of New York and the courts of
the State of New York located in the County of New York, State of New York and
waive any objection with respect thereto, for the purpose of any action, suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby and further agree not to commence any such action, suit or
proceeding except in any such court.
SECTION 11.13. Waiver of Jury Trial. EACH OF THE PARTIES
HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.13.
SECTION 11.14. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
SECTION 11.15. Parent Guaranty. Parent hereby agrees to
severally, irrevocably, absolutely, fully and unconditionally guaranty to the
Purchaser the prompt and complete payment and performance by the Seller of its
obligations hereunder.
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IN WITNESS WHEREOF, Parent, the Seller and the Purchaser have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
GAMBRO AB
By: /s/ SOREN MELLSTIG
-------------------
Name: Soren Mellstig
Title: CEO & President
By: /s/ LARS GRANLOF
-----------------
Name: Lars Granlof
Title: CFO
GAMBRO, INC.
By: /s/ SCOTT T. LARSON
---------------------
Name: Scott T. Larson
Title: Assistant Secretary
DAVITA INC.
By: /s/ KENT J. THIRY
------------------
Name: Kent J. Thiry
Title: Chairman & CEO
DaVita
[logo]
Contact: LeAnne Zumwalt
Investor Relations
DaVita Inc.
310-536-2420
DAVITA TO ACQUIRE GAMBRO HEALTHCARE, A RENAL DIALYSIS SERVICES COMPANY
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EL SEGUNDO, Calif., Dec 7, 2004 /PRNewswire-FirstCall via COMTEX/ -- DaVita Inc.
(NYSE: DVA), announced that it has entered into a definitive agreement to
acquire Gambro Healthcare, for a total consideration of approximately $3.05
billion in cash.
DaVita plans to finance the acquisition through a new credit facility and the
issuance of notes. JPMorgan Chase Bank has committed financing for the
transaction. DaVita will also enter into a 10-year supply agreement with Gambro
Renal Products Inc. to provide a significant majority of its hemodialysis
product supply and equipment requirements.
DaVita's acquisition will add approximately 565 dialysis centers to its
operations representing a total census of approximately 43,200 patients.
Subsequent to this transaction DaVita will serve approximately 96,000 patients
at over 1,200 clinics in 41 states and the District of Columbia.
Kent Thiry, Chairman and CEO of DaVita stated, "This is an important transaction
for the future of dialysis care in the United States. As a combined entity we
will be able to more effectively offer chronic kidney disease services and
technologies in a cost efficient manner. Our patients will benefit from the
broader array of products and services available."
Kent Thiry continued, "We are excited to partner with the Gambro team of
caregivers and affiliated physicians. It gives me great pleasure to once again
work with many of the same individuals I worked with at Vivra in the 1990's.
Together we will continue to focus on providing high quality dialysis care to
all of our patients. We also look forward to working with the Gambro Renal
Products team."
Gambro Healthcare's current annualized revenue is approximately $2 billion. It
is anticipated that upon completion of the transaction, DaVita will have
combined revenues of approximately $4.4 billion and will have 25,000 employees
after the transaction is completed. The acquisition is anticipated to be
dilutive to EPS in the first year, neutral in the second year and accretive
thereafter.
Completion of the transaction is subject to customary closing conditions
including Hart-Scott-Rodino antitrust clearance for this transaction.
JPMorgan Securities Inc. acted as financial advisor and, McDermott Will & Emery
LLP, and Bingham McCutchen LLP acted as legal counsel on the transaction.
DaVita is a leading provider of dialysis services for patients suffering from
chronic kidney failure. The Company operates and provides administrative
services to kidney dialysis centers and home peritoneal dialysis programs
domestically in 37 states, as well as Washington, D.C. As of September 30, 2004,
DaVita operates or provides administrative services to 636 outpatient facilities
serving 53,000 patients.
This release contains forward-looking statements. Factors which could
impact future results include the uncertainties associated with governmental
regulations, general economic and other market conditions, acquisitions and the
risk factors set forth in the Company's SEC filings, including its Form 10-Q for
the quarter ended September 30, 2004. The forward-looking statements should be
considered in light of these risks and uncertainties.
These risks and uncertainties include those relating to:
o the concentration of profits generated from PPO and private indemnity
patients and from the administration of pharmaceuticals,
o possible reductions in private and government reimbursement rates,
o changes in pharmaceutical practice patterns or reimbursement policies,
o the Company's ability to maintain contracts with physician medical
directors, and
o legal compliance risks, including our continued compliance with complex
government regulations and the ongoing review by the U.S. Attorney's Office
and HHS Office of the Inspector General in Philadelphia and the recently
announced subpoena from the U.S. Attorney's Office, Eastern District of New
York.
THIS COMPANY UNDERTAKES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
CONFERENCE CALL
DaVita will be holding a conference call to discuss the acquisition today
at 12 Noon Eastern Time to discuss this matter. The dial in number is
800-399-4406. A replay of the conference call will be available on DaVita's
official web page, http://www.davita.com/, for the following 30 days.
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