Exhibit 10.1

 

 

 

EQUITY PURCHASE AGREEMENT

among

DAVITA INC.,

COLLABORATIVE CARE HOLDINGS, LLC,

and solely with respect to Section 9.3 and Section 9.18,

UNITEDHEALTH GROUP INCORPORATED

Dated as of December 5, 2017

 

 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page  

ARTICLE I

 

DEFINITIONS

 

Section 1.1

 

Certain Defined Terms

     1  

Section 1.2

 

Definitions

     18  

Section 1.3

 

Interpretation and Rules of Construction

     20  

ARTICLE II

 

PURCHASE AND SALE; CLOSING

 

Section 2.1

 

Purchase and Sale of the Acquired Interests

     21  

Section 2.2

 

Purchase Price

     21  

Section 2.3

 

Certain Events Immediately Prior to the Closing

     21  

Section 2.4

 

Closing

     22  

Section 2.5

 

Estimate of the Closing Date Balance Sheet and the Estimated Closing Statement

     22  

Section 2.6

 

Preliminary Adjustment Statement; Determination of Purchase Price

     23  

Section 2.7

 

Withholding

     26  

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

OF SELLER

 

Section 3.1

 

Organization, Authority and Qualification of Seller

     26  

Section 3.2

 

Organization, Authority and Qualification of the Acquired Companies and Related
Consolidated Entities

     27  

Section 3.3

 

Ownership of Equity Interests

     27  

Section 3.4

 

Capitalization

     28  

Section 3.5

 

No Conflict

     29  

Section 3.6

 

Governmental Consents and Approvals

     29  

Section 3.7

 

Financial Information

     30  

Section 3.8

 

Accounting Records; Internal Controls

     31  

Section 3.9

 

Absence of Undisclosed Liabilities

     31  

Section 3.10

 

Conduct in the Ordinary Course

     31  

Section 3.11

 

Litigation; Governmental Orders

     32  

Section 3.12

 

Compliance with Laws

     32  

Section 3.13

 

Healthcare Regulatory Compliance

     33  

Section 3.14

 

Environmental Matters

     35  

Section 3.15

 

Intellectual Property

     35  

Section 3.16

 

Real Property

     37  

Section 3.17

 

Tangible Personal Property; Sufficiency of Assets

     38  

Section 3.18

 

Employee Benefit Matters

     38  

Section 3.19

 

Labor Matters

     41  

 

i

--------------------------------------------------------------------------------

Section 3.20

 

Taxes

     41  

Section 3.21

 

Material Contracts

     43  

Section 3.22

 

Certain Interests

     46  

Section 3.23

 

Insurance

     47  

Section 3.24

 

Brokers

     47  

Section 3.25

 

No Other Representations and Warranties

     47  

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Section 4.1

 

Organization, Authority and Qualification of Buyer

     48  

Section 4.2

 

No Conflict

     48  

Section 4.3

 

Governmental Consents and Approvals

     49  

Section 4.4

 

Sufficient Funds

     49  

Section 4.5

 

Litigation

     49  

Section 4.6

 

Brokers

     49  

Section 4.7

 

Investment Representation

     49  

Section 4.8

 

No Other Representations and Warranties

     50  

ARTICLE V

 

ADDITIONAL AGREEMENTS

 

Section 5.1

 

Conduct of Business Prior to the Closing

     50  

Section 5.2

 

Access to Information

     54  

Section 5.3

 

Regulatory and Other Authorizations; Notices and Consents

     55  

Section 5.4

 

Further Action

     57  

Section 5.5

 

Parent Guarantee

     57  

Section 5.6

 

Restricted Names

     57  

Section 5.7

 

Notice of Certain Events

     58  

Section 5.8

 

Intercompany Arrangements

     59  

Section 5.9

 

Seller Release

     59  

Section 5.10

 

Directors’ and Officers’ Indemnification; Run-off “Tail” Insurance

     60  

Section 5.11

 

Tax Matters

     61  

Section 5.12

 

Employment and Employee Benefits Matters

     64  

Section 5.13

 

Retained Litigation

     66  

Section 5.14

 

No Solicitation of Competing Transactions

     67  

Section 5.15

 

Non-Competition; Non-Solicitation

     68  

Section 5.16

 

Miscellaneous

     68  

ARTICLE VI

 

CONDITIONS TO CLOSING

 

Section 6.1

 

Conditions to Obligations of Each Party to Effect the Transactions

     70  

Section 6.2

 

Additional Conditions to Obligations of Seller

     71  

Section 6.3

 

Additional Conditions to Obligations of Buyer

     71  

 

ii

--------------------------------------------------------------------------------

ARTICLE VII

 

INDEMNIFICATION

 

Section 7.1

 

Survival of Representations and Warranties and Covenants

     72  

Section 7.2

 

Indemnification by Seller

     73  

Section 7.3

 

Indemnification by Buyer

     74  

Section 7.4

 

Indemnification Principles

     75  

Section 7.5

 

Manner of Payment

     77  

Section 7.6

 

Defense of Third-Party Claims

     77  

Section 7.7

 

Limitation on Recourse

     78  

Section 7.8

 

Characterization of Indemnification Payments

     79  

Section 7.9

 

Effect of Waiver of Condition

     79  

Section 7.10

 

Sole and Exclusive Remedy

     79  

ARTICLE VIII

 

TERMINATION

 

Section 8.1

 

Termination

     79  

Section 8.2

 

Effect of Termination

     80  

ARTICLE IX

 

GENERAL PROVISIONS

 

Section 9.1

 

Expenses

     81  

Section 9.2

 

Notices

     81  

Section 9.3

 

Public Announcements

     82  

Section 9.4

 

Severability

     82  

Section 9.5

 

Entire Agreement

     82  

Section 9.6

 

Assignment

     83  

Section 9.7

 

Amendment

     83  

Section 9.8

 

Waiver

     83  

Section 9.9

 

No Third-Party Beneficiaries

     83  

Section 9.10

 

Specific Performance

     83  

Section 9.11

 

Governing Law and Venue

     84  

Section 9.12

 

Waiver of Jury Trial

     84  

Section 9.13

 

Arbitration

     85  

Section 9.14

 

Counterparts

     85  

Section 9.15

 

Waiver of Conflicts Regarding Representations; Non-Assertion of Attorney-Client
Privileges

     86  

Section 9.16

 

No Other Representations and Warranties

     87  

Section 9.17

 

Fulfillment of Obligations

     87  

Section 9.18

 

Guarantee; Representations and Warranties of Buyer Parent

     87  

 

iii

--------------------------------------------------------------------------------

EXHIBITS AND ANNEXES

Exhibit A – Illustrative Calculation of Net Working Capital

Exhibit B – FIRPTA Certificate

Exhibit C – Form of Closing Statement

Exhibit D – Illustrative Calculation of Required Statutory Capital

Exhibit E – Illustrative Adjusted Tax Benefit Payment

Annex A – Acquired Companies

Annex B – JV Entities

Annex C – Related Consolidated Entities

 

iv

--------------------------------------------------------------------------------

EQUITY PURCHASE AGREEMENT

THIS EQUITY PURCHASE AGREEMENT (this “Agreement”), dated as of December 5, 2017,
is by and among (i) DaVita Inc., a Delaware corporation (“Seller”),
(ii) Collaborative Care Holdings, LLC, a Delaware limited liability company
(“Buyer”, and together with Seller, the “Parties” and each individually, a
“Party”), and (iii) solely with respect to Section 9.3 and Section 9.18,
UnitedHealth Group Incorporated, a Delaware corporation (“Buyer Parent”).

RECITALS

WHEREAS, as of the date hereof, Seller (i) directly owns all of the issued and
outstanding equity interests (the “Acquired Interests”) of DaVita Medical
Holdings, LLC (“DaVita Holdings”), the holding company for DaVita Medical Group
(DaVita Holdings, and the direct and indirect Subsidiaries (as defined below) of
DaVita Holdings listed on Annex A, each an “Acquired Company” and, collectively,
the “Acquired Companies”); and (ii) directly or indirectly owns an equity
interest (the “JV Interests”) in the entities listed on Annex B (the “JV
Entities”);

WHEREAS, in order to effect Buyer’s acquisition of the Acquired Companies, Buyer
desires to acquire from Seller, and Seller desires to sell to Buyer, the
Acquired Interests; and

WHEREAS, concurrently with the execution and delivery of this Agreement, and as
a condition and material inducement to Buyer’s willingness to enter into this
Agreement, the Key Employees (as defined below) have entered into employment
agreements with an Affiliate of Buyer, which shall be effective at the Closing.

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements contained in this
Agreement, intending to be legally bound hereby, and incorporating the recitals
set forth above, Seller and Buyer hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Certain Defined Terms. For purposes of this Agreement:

“2016 Year-End Financial Statements” means the Year-End Financial Statements for
the fiscal year ended December 31, 2016.

“Accounting Principles” means GAAP applied in a manner consistent with the
accounting policies, practices, procedures, methods, classifications, judgments,
assumptions, techniques, elections, valuation and estimation methodologies and
materiality determinations used to prepare the historical consolidated financial
statements of the Acquired Companies and Related Consolidated Entities as
finally prepared and reported to Seller for each period for inclusion in
Seller’s consolidated financial statements for such period.

 

1

--------------------------------------------------------------------------------

“Acquired Companies Cash” means any and all cash and cash equivalents (other
than Restricted Cash) of the Acquired Companies and Related Consolidated
Entities as of the Effective Time required in accordance with the Accounting
Principles to be reflected as cash and cash equivalents on the Closing Date
Balance Sheet. For the avoidance of doubt, Acquired Companies Cash shall: (a) be
reduced by issued but uncleared checks and drafts and payables with respect to
such checks shall not be reflected on the Closing Date Balance Sheet and (b) be
increased by checks and drafts deposited for the account of any of the Acquired
Companies or Related Consolidated Entities to the extent the receivables with
respect to such checks and drafts have been reduced and are not reflected on the
Closing Date Balance Sheet.

“Acquired Companies Indebtedness” means the Indebtedness of the Acquired
Companies and Related Consolidated Entities as of the Effective Time.

“Action” means any claim, litigation, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.

“Adjusted Tax Benefit Payment” means an amount equal to 50% of the Tax Benefit
PV.

“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 (and with
respect to Seller, shall include the Related Consolidated Entities before the
consummation of the Transactions, and with respect to Buyer, shall include the
Related Consolidated Entities after such consummation).

“Assets” means any assets, properties, licenses, operations, rights, product
lines, businesses, other operations or interests therein.

“Basis Increase” means an increase in the tax basis of the amortizable or
depreciable assets of any Acquired Company or Buyer or its Affiliates (excluding
any Related Consolidated Entity that is not a member of Buyer’s consolidated
group for Tax purposes) as a result of a payment made relating to the matter
described in Schedule 1.1(a). Seller and Buyer hereby agree that any payment
made pursuant to Section 5.16(h) will not give rise to any Basis Increase.

“Business” means the business of the Acquired Companies and Related Consolidated
Entities, taken as a whole, in connection with: (a) the provision of
professional medical and related healthcare services to patients in each
jurisdiction that the Acquired Companies and Related Consolidated Entities
currently provide services, including in a coordinated care, managed care, or
fee-for-service model or otherwise; (b) the related care management, decision
support, information technology, and other administrative or management
services; and (c) the operation, management, coordination, or ownership of
physician groups and networks, clinics, healthcare facilities, ancillary
services, and other activities to provide such healthcare services.

“Business Day” means any day that is not a Saturday, a Sunday, or other day on
which banks are required or authorized by Law to be closed in the City of Los
Angeles, California or New York, New York.

 

2

--------------------------------------------------------------------------------

“Business Employee” means (a) the employees of the Acquired Companies and the
Related Consolidated Entities excluding those Persons identified on Schedule
1.1(b), and (b) the Seller-Level Employees.

“Buyer Fundamental Representations” means Section 4.1 (Organization, Authority
and Qualification of Buyer), Section 4.3 (Governmental Consents and Approvals)
and Section 4.6 (Brokers).

“Buyer Material Adverse Effect” means any Effect that, individually or in the
aggregate with all other Effects, prevents or materially impairs or delays, or
would reasonably be expected to prevent or materially impair or delay, Buyer
from performing its obligations under this Agreement or consummating the
Transactions.

“Buyer Plan” means all employee benefit plans (as defined in ERISA) and all
other employee benefit or compensation plans, policies or programs, practices,
agreements, contracts, arrangements or other obligations, including severance,
disability, retirement, pension, profit-sharing, deferred compensation, bonus,
change of control, stock purchase, stock option, medical insurance, and life
insurance plans, policies or programs, in each case, that are maintained,
contributed to or sponsored by Buyer or any Affiliate of Buyer and cover any
employee or former employee of Buyer or any Affiliate of Buyer, or with respect
to which Buyer or any Affiliate of Buyer has, or would reasonably be expected to
have, any liability.

“Change of Control Payments” means any and all management sale bonuses,
transaction bonuses, success fees, severance, parachute, change of control,
retention or similar compensation that is required or planned to be made, paid,
vested, or accelerated by any Acquired Company or Related Consolidated Entity in
connection with or by virtue of the consummation of the Transactions or the
entry into or adoption of this Agreement, together with the employer portion of
any payroll Tax and other contributions triggered by such payments to employees;
provided that any of the foregoing payments that are triggered by a termination
of employment that occurs on or following the Closing shall not be a Change of
Control Payment.

“CKD” means chronic kidney disease.

“Closing Date Balance Sheet” means an unaudited consolidated balance sheet of
the Acquired Companies and Related Consolidated Entities as of the moment
immediately prior to the Effective Time prepared in accordance with the
Accounting Principles; provided that the Closing Date Balance Sheet shall not
include any changes in assets or liabilities as a result of the purchase
accounting adjustments or other changes arising from or resulting as a
consequence of the Transactions, if any.

“CMS” means the Centers for Medicare and Medicaid Services.

“Code” means the United States Internal Revenue Code of 1986.

“Company IP Agreements” means all Contracts under which Intellectual Property
Rights or other licenses, covenants not to assert, or authorizations to use
Intellectual Property or Intellectual Property Rights are granted (a) from any
Acquired Company or Related Consolidated Entity to any other Person, excluding
licenses to customers and end users granted

 

3

--------------------------------------------------------------------------------

in the Ordinary Course, and (b) to any Acquired Company or Related Consolidated
Entity from any other Person, excluding, in each case, (i) Shrink-Wrap
Agreements, but including any modifications or amendments thereto, and
(ii) equipment or parts purchase agreements that include licenses to use such
parts or equipment.

“Company Plan” means all ERISA Plans and all other employee benefit or
compensation plans, policies, programs, practices, agreements, contracts,
arrangements or other obligations, including severance, disability, retirement,
pension, profit-sharing, deferred compensation, bonus, change of control, stock
purchase, stock option, medical insurance, and life insurance plans, policies or
programs, in each case, that are maintained, contributed to or sponsored by
Seller, the Acquired Companies, the Related Consolidated Entities or their
respective Affiliates and under which the Acquired Companies or the Related
Consolidated Entities have any liability, or would reasonably be expected to
have any liability, with respect to any Business Employee.

“Competing Business” means a business that directly competes with the
Non-Compete Business, but only to the extent it (a) relates primarily to Primary
Care Services, or (b) comprises a Primary Care Services Risk Business. For the
avoidance of doubt, the following examples of businesses are excluded from the
meaning of “Competing Business” but in no event shall such examples be
interpreted or construed as a comprehensive list of businesses that are excluded
from the meaning of “Competing Business”: (i) any business conducted by Seller
or its Subsidiaries (other than the Acquired Companies and Related Consolidated
Entities) as of the date hereof, including the businesses conducted as, or by
DaVita Kidney Care, Paladina Health, DaVita Health Solutions, Village Health,
DaVitaRX, LifeLine Vascular Access, DaVita Clinical Research, DaVita Labs,
Nephrology Practice Solutions or similar businesses; (ii) the business of
Tandigm Health, LLC, in which Seller, or its Subsidiaries, currently holds an
equity interest, but solely to the extent such business is conducted in the
Commonwealth of Pennsylvania; (iii) any business (A) that primarily provides
services supporting the care and management of CKD or ESRD patients and the
provision of dialysis services, including any business that may participate in a
Medicare demonstration program of integrated care for ESRD patients as
contemplated by the DPDA or similar legislation; (B) that primarily engages in
providing or supporting dialysis services, pharmacy services, laboratory
services, nephrology services, CKD services, kidney care services or vascular
access services or engages in the provision of Primary Care Services ancillary
to such services; (C) that enters into, maintains and performs Contracts, the
primary purpose of which are to provide or arrange for the provision of medical
or healthcare services or supplies, other than primarily Primary Care Services,
to a specific patient population (for example, without limitation, palliative
care, post-acute, behavioral health, organ transplant, orthopedic, poly chronic
diseased or high risk), or patients suffering a particular disease state(s) (for
example, without limitation, ESRD, cancer, or cardiovascular disease); or
(iv) any business engaged primarily in the operation, management, coordination,
or ownership of specialty physician groups or networks, specialty clinics,
rehabilitation or other healthcare facilities or ancillary services (solely to
the extent (A) such business activities are not primarily related to any Primary
Care Services and (B) such business receives no more than 15% of its
consolidated net revenue from Primary Care Services in its most recent fiscal
year).

“Consent” of a Person means any written or documentary consent, approval,
authorization, waiver, grant, concession, license, permit, variance, exemption
or order of, registration, certificate, declaration, or filing with, or report
or notice to, such Person.

 

4

--------------------------------------------------------------------------------

“Contract” means any agreement, contract, mutual understanding, arrangement,
commitment, or undertaking of any nature or other obligations (other than this
Agreement and the other Transaction Documents), whether written or oral.

“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.

“Current Assets” means assets of the Acquired Companies and Related Consolidated
Entities that qualify for recognition as current assets under the Accounting
Principles.

“Current Liabilities” means liabilities of the Acquired Companies and Related
Consolidated Entities that qualify for recognition as current liabilities under
the Accounting Principles.

“Data Room” means that certain “Project Eclipse” virtual data room made
available to Buyer or its Representatives in connection with the Transactions,
hosted by Intralinks, as populated and existing prior to the execution of this
Agreement.

“Disclosure Schedule” means the disclosure schedule, dated as of the date of
this Agreement, delivered by Seller to Buyer concurrent with the execution of
this Agreement.

“Dissolved Entity” means each of (a) Care NM ACO, LLC, (b) DaVita Pharmacy
Colorado, LLC, (c) DaVita Medical ASC Colorado, LLC, (d) DaVita Medical
Explorer, LLC, (e) DaVita Medical Group Florida, P.A., and (f) NM Partners ACO,
LLC.

“DPDA” means the “Dialysis PATIENT Demonstration Act of 2016” or the “Patient
Access to Integrated-care, Empowerment, Nephrologists and Treatment
Demonstration Act of 2016” (S.3090 — 114th Congress (2015-2016)).

“Effect” means any effect, event, development, change, state of facts,
condition, circumstance or occurrence.

“Effective Time” means 12:01 a.m. Los Angeles time on the Closing Date.

“Encumbrance” means any security interest, pledge, claim, covenant,
hypothecation, mortgage, lien, encumbrance, right of first refusal, right of
first offer, deed of trust, easement, servitude charge, option to purchase or
lease, or other restriction of any kind (whether on voting, sale, transfer,
disposition or otherwise), whether imposed by Contract or Law; provided that any
restrictions on the transfer of securities under applicable securities laws or
restrictions imposed by applicable Governing Documents shall not constitute an
“Encumbrance” hereunder.

“Environmental Law” means any applicable Law relating to pollution, or to the
protection of the indoor or outdoor environment, including any relating to the
treatment, storage, transportation, disposal, or generation of Hazardous
Materials.

 

5

--------------------------------------------------------------------------------

“Environmental Permit” means any permit, approval, or license required under any
applicable Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any Person that, together with any Acquired Company, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

“ERISA Plans” means all employee benefit plans as defined under Section 3(3) of
ERISA that are maintained, contributed to or sponsored by Seller, the Acquired
Companies, the Related Consolidated Entities or their respective Affiliates and
under which the Acquired Companies or Related Consolidated Entities have any
liability, or would reasonably be expected to have any liability, with respect
to any Business Employee.

“ESRD” means end-stage renal disease.

“Excluded Acquisitions” means all acquisitions consummated by any Acquired
Company or Related Consolidated Entity on or after the date hereof but on or
prior to the Closing Date in excess of an aggregate of $5,000,000 in purchase
price in cash that is paid in its entirety on or prior to the Closing.

“Fundamental Representations” means the Buyer Fundamental Representations and
Seller Fundamental Representations.

“GAAP” means United States generally accepted accounting principles.

“Governing Documents” means the documents by which any Person (other than a
natural person) establishes its legal existence or which govern its internal
affairs, and shall include: (a) in respect of a corporation, its certificate or
articles of incorporation or association or its bylaws; (b) in respect of a
partnership, its certificate of partnership and its partnership agreement; and
(c) in respect of a limited liability company, its certificate of formation and
its bylaws or operating or limited liability company agreement.

“Governmental Authority” means any federal, national, supranational, state,
territorial, commonwealth, provincial, local, foreign, or other government,
governmental, regulatory, or administrative authority, agency, bureau, board, or
commission, or any court, tribunal, or judicial or arbitral body, department,
political subdivision, tribunal or other instrumentality thereof.

“Governmental Order” means any order, writ, judgment, preliminary or permanent
injunction, decree, ruling, stipulation, determination, or award entered by or
with any Governmental Authority.

“Hazardous Material” means: (a) any petroleum, petroleum products, by-products,
or breakdown products, radioactive materials, asbestos-containing materials, or
polychlorinated biphenyls or (b) any chemical, material, waste, mixture, or
substance defined as “toxic” or “hazardous” or as a “contaminant” under any
Environmental Law.

 

6

--------------------------------------------------------------------------------

“HCP Names” means the names set forth on Schedule 1.1(c), and any Trademarks
associated with any of the foregoing.

“Health Care Laws” means all Laws relating to: (a) the licensure, certification,
qualification, or authority to transact business in connection with the
provision of, payment for, or arrangement of health benefits or health
insurance, including Laws that regulate managed care, Payors, and Persons
bearing the financial risk for the provision or arrangement of health care
services and, without limiting the generality of the foregoing, the Medicare
Program Laws (including Title XVIII of the Social Security Act) and Laws
relating to Medicaid programs (including Title XIX of the Social Security Act)
and the regulations adopted thereunder including 42 C.F.R. Parts 422 and 423,
the CMS guidance found in the Medicare Managed Care Manual and the Medicare
Prescription Drug Manual and the California Knox-Keene Health Care Service Plan
Act of 1975; (b) the solicitation or acceptance of improper incentives involving
Persons operating in the health care industry, including Laws prohibiting or
regulating fraud and abuse, patient inducements, patient referrals, or Provider
incentives generally or under the following statutes: the Federal anti-kickback
law (42 U.S.C. § 1320a-7b), the Stark laws (42 U.S.C. § 1395nn), the Federal
False Claims Act (31 U.S.C. §§ 3729 et seq.), the Federal Civil Monetary
Penalties Law (42 U.S.C. § 1320a-7a), the Federal Program Fraud Civil Remedies
Act (31 U.S.C. § 3801 et seq.), the Federal Health Care Fraud law (18 U.S.C. §
1347), and any similar state fraud and abuse laws; (c) the administration of
health-care claims or benefits or processing or payment for health care
services, treatment, or supplies furnished by Providers, including third party
administrators, utilization review agents, and Persons performing quality
assurance, credentialing, or coordination of benefits; (d) coding, coverage,
reimbursement, claims submission, billing, and collections related to Payors
including government programs or otherwise related to insurance fraud; (e) the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”); (f) HIPAA and
any Laws governing the privacy, security, integrity, accuracy, transmission,
storage, or other protection of information about or belonging to actual or
prospective individuals who are properly enrolled in a Medicare Advantage plan
offered by any Related Consolidated Entities; (g) any state insurance, health
maintenance organization or managed care Laws (including Laws relating to
Medicaid programs) pursuant to which any Related Consolidated Entity is required
to be licensed or authorized to transact business; (h) state medical practice
Laws; (i) the Medicare Program Laws; and (j) the Patient Protection and
Affordable Care Act (Pub. L. 111-148).

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996,
as amended by the Health Information Technology for Economic and Clinical Health
Act.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“Income Tax Return” means a Tax Return that is not a Non-Income Tax Return.

“Indebtedness” means, with respect to any Person, without duplication:
(a) indebtedness of such Person for borrowed money (including as guarantor
thereof, if the applicable guaranty is not released at Closing), whether current
or funded, secured or unsecured, whether evidenced by bonds, debentures, notes
or similar instruments or debt securities, and any prepayment premiums,
penalties, and any other fees and expenses paid to satisfy such indebtedness;
(b) indebtedness of such Person for the deferred purchase of property, assets,
goods or services but

 

7

--------------------------------------------------------------------------------

excluding accounts payable, and obligations to creditors for goods and services
incurred in the Ordinary Course; (c) obligations of such Person as lessee under
any leases which are required to be capitalized in accordance with GAAP,
contingently or otherwise, as obligor or guarantor; (d) liabilities of such
Person in respect of mandatorily redeemable or purchasable equity interests or
mandatorily redeemable or purchasable securities convertible into equity
interests; (e) obligations of such Person upon which interest charges are
customarily paid (excluding trade accounts payables); (f) obligations of such
Person under any interest rate or currency swap or other hedging transactions
(valued at the termination value thereof), including all obligations in respect
of breakage costs, close out amounts, unwind costs, termination costs,
redemption costs and other similar charges; (g) obligations of such Person with
respect to letters of credit issued for the account of such Person, performance
bond, banker’s acceptance or similar transaction (to the extent drawn and
unpaid); (h) obligations of another Person secured by an Encumbrance that will
not be released in connection with the Closing on property or assets owned by
such Person, whether or not the obligations secured thereby have been assumed
(but in the case of this clause (h), the amount of the applicable obligation
shall not exceed the actual amount of the secured obligation); (i) the amount of
all line items set forth under “Indebtedness” on Exhibit A, including “current
portion of capital lease obligations”, “2014 RAF overpayment”, and “other
acquisition-related liabilities” (with such amount calculated as of the date
Indebtedness is calculated hereunder); and (j) accrued interest or penalties on
any of the foregoing. Notwithstanding the foregoing, “Indebtedness” shall not
include: (i) any Intercompany Balances or other inter-company indebtedness with
respect to the Acquired Companies and Related Consolidated Entities, (ii) any
amounts included in Unpaid Transaction Expenses, and (iii) any liabilities taken
into account in the calculation of Net Working Capital.

“Indemnification Assets” means any indemnification right or claim of the
Acquired Companies or Related Consolidated Entities recognized as a Current
Asset under the Accounting Principles and which represents a claim of Seller or
any of the Acquired Companies or Related Consolidated Entities against third
parties, but solely to the extent corresponding to obligations that have been
included in the Pre-Acquisition and Litigation Liabilities.

“Indemnified Taxes” means: except to the extent taken into account in
determining the Purchase Price as finally determined pursuant to Section 2.6,
(a) any and all Taxes (other than Seller Taxes) imposed on or with respect to
any Acquired Company or Related Consolidated Entity, including for this purpose
Taxes of another Person imposed on an Acquired Company or Related Consolidated
Entity as a transferee or successor as a result of a transaction or event
occurring prior to the Closing, for any Pre-Closing Tax Period, or as a result
of a breach of Section 3.20(i), and (b) Taxes of any member of the Seller Group
or any other Person (other than an Acquired Company or Related Consolidated
Entity) for which any Acquired Company or Related Consolidated Entity becomes
liable pursuant to Treasury Regulations Section 1.1502-6 (or any similar
provision of federal, state, local or non-U.S. Law) as a result of such Acquired
Company or Related Consolidated Entity being included in a consolidated,
affiliated, combined, unitary or similar group for Tax purposes prior to the
Closing. In the case of any Straddle Period, the amount of any real property,
personal property or similar ad valorem Taxes which are imposed on a periodic
basis shall be determined ratably on a per diem basis, and the amount of any
other Taxes that are allocable to the Pre-Closing Tax Period shall be determined
based on an interim closing of the books of each of the Acquired Companies and
the Related Consolidated Entities as of the Closing Date and, to the extent
relevant, in accordance with the provisions of

 

8

--------------------------------------------------------------------------------

Treasury Regulations Section 1.1502-76(b)(1)(ii)(A) and (B) (and similar
provisions of state, local or non-U.S. Law). Notwithstanding the foregoing,
“Indemnified Taxes” shall not include any Taxes imposed on or with respect to
any Acquired Company or Related Consolidated Entity as a result of any
transaction occurring after the Closing on the Closing Date or a breach of
Section 5.11(c)(i).

“Indemnifying Party” means Seller pursuant to Section 7.2 or Buyer pursuant to
Section 7.3, as the case may be.

“Intellectual Property” means any and all forms of intellectual property,
including any and all (a) technology, procedures, processes, methods,
techniques, ideas, creations, inventions, and discoveries (whether patentable or
unpatentable and whether or not reduced to practice) and improvements thereto;
(b) confidential and proprietary information, including know-how and trade
secrets (collectively, “Trade Secrets”); (c) works of authorship and other
copyrightable subject matter; (d) trademarks, service marks, trade names, trade
dress, and domain names (collectively, “Trademarks”); and (e) software.

“Intellectual Property Rights” means any and all rights in or to any
Intellectual Property arising under the Laws of any jurisdiction, including
(a) patents and patent applications, including divisions, revisions,
supplementary protection certificates, continuations, continuations-in-part,
renewals, extensions, re-issues, re-examinations and inter partes review
proceedings; (b) rights with respect to Trademarks including all goodwill
related thereto; (c) copyrights, rights to compilations, collective works and
derivative works of any of the foregoing; (d) rights with respect to Trade
Secrets; and (e) issuances, registrations and applications for issuance or
registration of any of the foregoing.

“Intercompany Balances” means any receivables, payables, notes receivable or
payable, indebtedness, accruals or other assets and liabilities recognized on
the consolidated financial statements of the Acquired Companies and Related
Consolidated Entities in accordance with the Accounting Principles as being due
from or owed to the Acquired Companies and Related Consolidated Entities, on the
one hand, and Seller and its Affiliates (other than the Acquired Companies and
Related Consolidated Entities), on the other hand.

“Intercompany Contract” means: (a) any Contract between the Acquired Companies
and Related Consolidated Entities, on the one hand, and Seller or any Subsidiary
of Seller (other than the Acquired Companies and Related Consolidated Entities),
on the other hand, (b) any Shared Contract, and (c) any Seller-Level Contract.

“IRS” means the Internal Revenue Service of the United States of America.

“Key Employees” means the individuals identified on Schedule 1.1(d).

“Knowledge of Buyer” means the actual knowledge of Richard J. Mattera and Travis
Winkey.

“Knowledge of Seller” means the actual knowledge of the individuals identified
on Schedule 1.1(e) after the due inquiry of the additional individuals
identified on Schedule 1.1(e).

 

9

--------------------------------------------------------------------------------

“Law” means any federal, national, supranational, state, provincial, local, or
foreign statute, ordinance, decree, law, regulation, rule, code, Governmental
Order, legal requirement or rule of law (including common law) of any
Governmental Authority.

“Leased Real Property” means the real property occupied by any Acquired Company
or Related Consolidated Entity pursuant to a lease, sublease, license or other
use or occupancy agreement, together with, to the extent the subject of such
lease, license, or other use or occupancy agreement, all buildings and other
structures, facilities, or improvements currently or hereafter located thereon,
all fixtures, systems, equipment, and items of personal property of any Acquired
Company or Related Consolidated Entity attached or appurtenant thereto, and all
easements, licenses, rights, and appurtenances relating to the foregoing.

“Licensed Intellectual Property” means all Intellectual Property and
Intellectual Property Rights that any Acquired Company or Related Consolidated
Entity is licensed or otherwise authorized to use (or with respect to which it
has received a covenant not to assert) pursuant to any Company IP Agreement,
Shrink-Wrap Agreement or equipment or parts purchase agreement which include
licenses to use such parts or equipment.

“Medicare Advantage” means Title XVIII of the Social Security Act, Part C.

“Medicare Program Laws” means Title XVIII of the Social Security Act (Pub. L.
74-271) including the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 and the Medicare Improvements for Patients and Providers Act of
2008, and any written directives, instructions, guidelines, bulletins, manuals,
requirements, policies and standards issued by CMS.

“Net Working Capital” means Current Assets minus Current Liabilities of the
Acquired Companies and Related Consolidated Entities, calculated on the basis of
consolidated financial statements for the Acquired Companies and Related
Consolidated Entities as determined using the Accounting Principles, in effect
as of the date hereof, as adjusted to exclude (a) Acquired Companies Cash;
(b) any Intercompany Balances; (c) any Indebtedness, irrespective of when due;
(d) any Indemnification Assets; (e) any Pre-Acquisition and Litigation
Liabilities; (f) any Unpaid Transaction Expenses; (g) any current or deferred
income Tax assets or liabilities; and (h) the cumulative net amount of Current
Assets minus Current Liabilities acquired in connection with an Excluded
Acquisition, as adjusted for any items of the nature described in items
(a) through (g) of this definition. Further, Net Working Capital will be
adjusted to include the following amounts as Current Liabilities (the names of
which correspond to the names of accounts included in the Unaudited Financial
Statements (with such amounts calculated as of the date Net Working Capital is
calculated hereunder)): (i) any long-term accrued medical malpractice claims;
(ii) any long-term accrued workers’ compensation claims; (iii) any long-term
incentive plan liability; (iv) any long-term incentive plan-local liability;
(v) any long-term accrued retirement liability; and (vi) any long-term portion
of deferred revenue. For avoidance of doubt, Exhibit A includes an illustrative
calculation of Net Working Capital assuming a Closing Date of October 1, 2017.

“Neutral Accountant” means Ernst & Young LLP (or, if such firm shall decline or
is unable to act, another independent accounting or financial consulting firm of
national reputation which is mutually agreed upon by the Parties).

 

10

--------------------------------------------------------------------------------

“Non-Compete Business” means the business of Seller and its Subsidiaries in
connection with: (a) the provision of professional medical and related
healthcare services to patients, including in a coordinated care, managed care,
or fee-for-service model or otherwise; (b) the related care management, decision
support, information technology, and other administrative or management
services; and (c) the operation, management, coordination, or ownership of
physician groups and networks, clinics, healthcare facilities, ancillary
services, and other activities to provide such healthcare services.

“Non-Income Tax Return” means a Tax Return relating to any real property,
personal property, sales and use, or gross receipts Tax.

“OIG” means the Office of the Inspector General of the United States Department
of Health and Human Services.

“Ordinary Course” means, with respect to an action taken by any Person, that
such action is consistent with the ordinary course of business and past
practices of such Person.

“Owned Intellectual Property” means all Intellectual Property and Intellectual
Property Rights owned by any Acquired Company or Related Consolidated Entity.

“Owned Real Property” means the real property in which any Acquired Company or
Related Consolidated Entity 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 any Acquired Company or Related Consolidated Entity
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.

“Parent Guarantee” means the guarantee by Seller or its Affiliates of the
obligations of any Acquired Company or Related Consolidated Entity under the
Contracts set forth on Schedule 1.1(f).

“Payment Date” means (a) if the Relevant Tax Return is a Tax Return of Seller or
its Affiliates, 20 days after Seller shall have provided Buyer a written
certification that a Payment Trigger Date has occurred, or (b) if the Relevant
Tax Return is a Tax Return of the Buyer or its Affiliates, 20 days after a
Payment Trigger Date has occurred.

“Payment Trigger Date” means the earliest of the following dates: (a) the date
on which the U.S. federal income Tax statute of limitations (taking into account
all extensions properly obtained) relating to the Relevant Tax Return has
expired, (b) the date on which an audit by the IRS of the Relevant Tax Return is
completed (provided that Buyer may not unreasonably delay the completion of such
audit for purposes of delaying the Payment Trigger Date), and (c) the date on
which any challenge by the IRS in respect of the Basis Increase claimed in the
Relevant Tax Return is resolved.

“Payor” means any private payor or programs, including any private insurance
payor or program, health care service plan, health insurance company, health
maintenance organization, self-insured employer, or other third-party payor,
Medicare, Medicaid and such other federal, state or local reimbursement or
governmental programs in which any Acquired Company or Related Consolidated
Entity is enrolled or participates.

 

11

--------------------------------------------------------------------------------

“Permitted Encumbrances” means the following: (a) liens for Taxes not yet due
and payable, or for Taxes the validity or amount of which is being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP; (b) materialmen’s, mechanics’, carriers’,
workmen’s, repairmen’s, vendors’, suppliers’, warehousemen’s liens and other
similar common law or statutory Encumbrances arising or incurred in the Ordinary
Course and that are not material in amount; (c) pledges or deposits to secure
obligations under Laws or similar legislation or to secure public or statutory
obligations; (d) non-exclusive licenses of Intellectual Property entered into in
the Ordinary Course; (e) with respect to real property, (i) easements,
quasi-easements, licenses, covenants, rights-of-way, rights of re-entry or other
similar Encumbrances or restrictions, including any other agreements, covenants,
conditions or restrictions that would be shown by a current title report or
other similar report or listing, (ii) any conditions that may be shown by a
current survey or physical inspection, (iii) zoning, building, subdivision or
other similar requirements or restrictions, and (iv) liens on leases, subleases,
easement, licenses, right of use, right to access, rights of way and other
non-fee estates, interests or rights in property benefitting or created by any
superior estate, right or interest, in each case, that: (A) were not incurred in
connection with any indebtedness for borrowed money and (B) do not materially
impair the present use of any property or asset that is material to the portion
of the Business conducted in the state in which such property or asset is
located; and (f) any lien arising under any Contract evidencing indebtedness for
borrowed money that will be released at or prior to the Closing.

“Person” means any individual, partnership, firm, corporation, limited liability
company, association, trust, unincorporated organization, or other entity, as
well as any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Securities Exchange Act of 1934.

“Personal Information” means any information that alone or in combination with
other information can be used to identify an individual Person, including any
health information regarding any individual Person.

“Physician Partner” means each physician or physician group identified on
Schedule 1.1(g), each of whom holds equity interests in a Related Consolidated
Entity.

“Pre-Acquisition and Litigation Liabilities” means any obligation of any
Acquired Company or Related Consolidated Entity that Seller acquired from
HealthCare Partners Holdings, LLC that is recognized as a Current Liability in
Net Working Capital that (a) arose prior to the effective date of the merger of
HealthCare Partners Holdings, LLC with a subsidiary of Seller or (b) arose from
litigation costs applicable thereto.

“Pre-Closing Tax Period” means, collectively, all taxable periods beginning
before and ending before or on the Closing Date, and in the case of all Straddle
Periods, the portion of the Straddle Period through (and including) the Closing
Date.

 

12

--------------------------------------------------------------------------------

“Primary Care Services” means the provision of professional medical services
primarily in the specialties of internal medicine, general practice, family
practice, geriatric medicine, pediatric medicine and obstetrics and
gynecological medicine, as routinely accessed by patients in a medical office or
clinic. The provision of professional medical services in such specialties
(a) in an alternative setting, such as in-home, a health facility (including an
acute care or long term acute care hospital, skilled nursing facility,
rehabilitation facility, specialized clinic), or (b) focused on a particular
disease state(s), or patient population, in each case, shall not comprise
Primary Care Services.

“Primary Care Services Risk Business” means any business that contracts,
directly or indirectly, with physicians engaged in providing Primary Care
Services, and assumes the financial risk for the provision of or arranging for
the provision of all or substantially all of the healthcare needs of a
comprehensive, non-disease state differentiated, patient population (comprised
of members, enrollees, beneficiaries or subscribers) through a capitated or
similar payment arrangement that represents at least 50% or more of the total
insurance premium or other periodic payment for provision of a full-range of
healthcare services (i.e., global—including professional, institutional,
pharmacy and behavioral) to such patient population; provided that “Primary Care
Services Risk Business” shall not include any business focused on specialty risk
models or a specific patient population or disease state(s).

“Providers” means any primary care physicians or physician groups, medical
groups, ambulatory surgery centers, independent practice associations,
specialist physicians, dentists, optometrists, pharmacies and pharmacists,
radiologists or radiology centers, laboratories, mental health professionals,
chiropractors, physical therapists, any hospitals, skilled nursing facilities,
extended care facilities, other health care or services facilities, durable
medical equipment suppliers, home health agencies, and any other specialty,
ancillary or allied health professional.

“Registered” means issued by, registered with, renewed by, or the subject of a
pending application before any Governmental Authority or Internet domain name
registrar.

“Related Consolidated Entities” means the entities, including each of their
respective direct and indirect Subsidiaries, through which the Business is
conducted other than the Acquired Companies, each of which is consolidated with
the Acquired Companies in the Year-End Financial Statements and set forth on
Annex C.

“Relevant Tax Return” means the U.S. federal income Tax Return of either Buyer
or Seller (or their Affiliates), as the case may be, for the taxable year in
which there is a Basis Increase and on which such Basis Increase is first
reflected.

“Remedial Action” means all action to: (a) clean up, remove, treat or handle in
any other way Hazardous Materials in the environment or (b) perform remedial
investigations, feasibility studies, corrective actions, closures, and
post-remedial or post-closure studies, investigations, operations, maintenance,
or monitoring.

“Representatives” means with respect to a Person, such Person’s officers,
directors, employees, stockholders, partners, members, managers, agents,
attorneys, accountants, consultants, advisors and other representatives.

 

13

--------------------------------------------------------------------------------

“Required Statutory Capital Amount Target” means, as of the Effective Time, the
aggregate amount of “Total Required Cash” (which corresponds to a row in Exhibit
D) calculated in accordance with Exhibit D, with the amounts in each row of
Exhibit D updated as of the Effective Time.

“Restricted Cash” means any cash of a type recorded, consistent with past
practice, by the Acquired Companies or Related Consolidated Entities under the
ledger item named “109220 Restricted Investments/Cash” of Exhibit A.

“Restricted Employee” means any employee in a vice-president or higher position
employed by any of the Acquired Companies or Related Consolidated Entities as of
immediately prior to the Closing.

“Restricted Names” means the names set forth on Schedule 1.1(h) or any
derivative or variation thereof, and any Trademarks associated with any such
name.

“Restricted Territories” means the United States of America.

“Retained Litigation” means the Actions set forth on Schedule 1.1(i).

“SEC” means the Securities and Exchange Commission.

“Seller Fundamental Representations” means Section 3.1 (Organization, Authority
and Qualification of Seller), Section 3.2 (Organization, Authority and
Qualification of the Acquired Companies and Related Consolidated Entities),
Section 3.3 (Ownership of Equity Interests), Sections 3.4(a) and
(b) (Capitalization), Section 3.6 (Governmental Consents and Approvals) and
Section 3.24 (Brokers).

“Seller Group” means Seller and its Affiliates, excluding the Acquired Companies
and Related Consolidated Entities.

“Seller-Level Contract” means each Contract between a third party, on the one
hand, and Seller or any of its Subsidiaries (other than the Acquired Companies
and Related Consolidated Entities), on the other hand, but under which an
Acquired Company or Related Consolidated Entity may derive benefits, such as
enterprise-wide licenses or “master” agreements.

“Seller-Level Employees” means the individuals identified on Schedule 1.1(j).

“Seller Material Adverse Effect” means any Effect that, either alone or in
combination with any other Effect is, or would be reasonably likely to be
materially adverse to the business, assets, financial condition or results of
operations of the Acquired Companies and Related Consolidated Entities, taken as
a whole; provided that no Effect resulting from, arising out of, or relating to
any of the following shall be deemed to constitute, or shall be taken into
account in determining whether there has been, a Seller Material Adverse Effect,
or whether a Seller Material Adverse Effect would reasonably be expected to
occur: (a) Effects that generally affect the industries or segments thereof in
which the Acquired Companies and Related Consolidated Entities operate
(including legal, regulatory and reimbursement policy or practice changes),
including any changes in conditions generally affecting the health care
industry; (b) general

 

14

--------------------------------------------------------------------------------

economic or political conditions (or changes therein); (c) Effects affecting the
financial, credit or securities markets in the United States generally,
including changes in interest rates or foreign exchange rates; (d) the identity
of Buyer, the Transactions or the announcement or execution of this Agreement
and the Transactions, including the impact thereof on the relationships,
contractual or otherwise, with customers, suppliers, licensors, Payors,
distributors, partners, Providers and employees of any of the Acquired Companies
or Related Consolidated Entities; (e) any Effect caused by acts of civil unrest,
armed hostility, terrorism or war (whether or not declared), including any
escalation or worsening thereof; (f) earthquakes, hurricanes, tsunamis,
tornadoes, floods, mudslides, volcanic eruptions or other natural disasters;
(g) changes or modifications in GAAP, accounting principles or accounting
practices otherwise applicable to any Acquired Company or Related Consolidated
Entity; (h) the matters set forth on Schedule 1.1(k); (i) any adoption,
implementation, promulgation, repeal, modification, amendment, authoritative
interpretation, change or proposal of any Law of or by any Governmental
Authority, including the implementation, repeal or partial repeal of the Patient
Protection and Affordable Care Act; (j) any changes to reimbursement rates or in
methods or procedures for determining such rates, any changes to eligibility
requirements or any other programmatic changes, in each case, only to the extent
such changes are imposed by a Governmental Authority, but regardless of whether
such changes are applicable nationally or to only certain geographic areas; and
(k) any Effect that results from any actions required to be taken or not taken
pursuant to this Agreement (including any action taken to obtain any approval or
authorization under applicable Antitrust Laws) or upon the request, or with the
consent, of Buyer (except, in each case, excluding matters with respect to which
Buyer notifies Seller in writing at the time of granting its consent that it
would have withheld its consent pursuant to Section 5.1 but for the requirement
that Buyer not unreasonably withhold its consent pursuant to Section 5.1);
provided, however, that any Effect referred to in the foregoing clauses (a),
(b), (c), (e), (f), (g), (i) and (j) above may be taken into account in
determining whether a Seller Material Adverse Effect has occurred if such Effect
materially and adversely affects the Acquired Companies and Related Consolidated
Entities, taken as a whole, in a substantially disproportionate manner relative
to other participants in the industries in which the Acquired Companies and
Related Consolidated Entities operate. Additionally, any failure of the Acquired
Companies and Related Consolidated Entities, taken as a whole, to meet any
internal or published projections, forecasts, budgets or revenue or earning
predictions or other financial metrics for any period shall not be taken into
account in determining whether there has been a Seller Material Adverse Effect;
provided that the underlying causes of such failure may be considered in
determining whether there is a Seller Material Adverse Effect, but only to the
extent such change or effect is not otherwise excluded from this definition of
Seller Material Adverse Effect.

“Seller Tax Returns” means (a) any Tax Return that includes one or more of the
Acquired Companies or Related Consolidated Entities, on the one hand, and one or
more members of the Seller Group, on the other hand, and (b) to the extent not
described in clause (a), all Income Tax Returns that are filed or required to be
filed by one or more of the Acquired Companies or Related Consolidated Entities
for all taxable periods ending on or prior to the Closing Date.

“Shared Contract” means each Contract among: (i) a third party, (ii) Seller or
any of its Subsidiaries (other than the Acquired Companies and Related
Consolidated Entities) and (iii) an Acquired Company or Related Consolidated
Entity.

 

15

--------------------------------------------------------------------------------

“Shrink-Wrap Agreements” means non-exclusive licenses to use non-customized
off-the-shelf software that is generally available on reasonable terms to the
public.

“Specified Companies Indebtedness” means the Acquired Companies Indebtedness
that: (a) as mutually agreed upon by Buyer and Seller, shall be repaid or
prepaid or released, as the case may be, pursuant to any Debt Discharge
Procedures on the Closing Date, or (b) is otherwise required to be repaid or
prepaid, as the case may be, in connection with the Closing pursuant to the
provisions of any Acquired Companies Indebtedness.

“Specified Discount Rate” means 5%, compounded annually.

“Straddle Period” means each taxable period beginning on or before and ending
after the Closing Date.

“Subsidiaries” means, with respect to a Person, any corporation, partnership,
limited liability company, joint venture or other entity in which such Person,
directly or indirectly, owns a majority of the shares, capital stock or other
equity interests or which such Person otherwise, directly or indirectly,
controls through an investment or participation in the equity of such entity

“Systems” means the information technology systems and associated assets in the
custody or control of any Acquired Company or Related Consolidated Entity,
including all hardware, software, computers, networks (excluding any public
networks), communications equipment, data processing systems, firmware,
middleware, servers, routers, hubs, switches, data communications lines,
workstations and any other information technology equipment, including all
associated documentation, in each case, that are in the custody or control of
any Acquired Company or Related Consolidated Entity.

“Target Net Working Capital” means -$141,000,000 (i.e., negative $141,000,000).

“Tax” or “Taxes” means any federal, state, local, or non-U.S. income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax, or any similar
assessment, governmental charge or levy, including any interest, penalty, or
addition thereto, imposed by a Governmental Authority.

“Tax Benefit PV” means the present value as of the Closing Date (calculated
using the Specified Discount Rate) of the decrease in the liability for income
Taxes of Buyer and its Affiliates (excluding any Related Consolidated Entity
that is not a member of Buyer’s consolidated group for Tax purposes)
attributable to the Basis Increase, determined using the Valuation Assumptions
and in accordance with Section 5.16(h).

“Tax Return” means any return, declaration, report, claim for refund, or
information return, in each case, relating to Taxes, including any election,
schedule or attachment thereto, and including any amendment thereof, filed or
required to be filed with any Governmental Authority.

 

16

--------------------------------------------------------------------------------

“Transaction Documents” means, collectively, this Agreement, and to the extent
the final terms are mutually agreed, the Transition Services Agreement and the
Trademark License Agreement.

“Transaction Expenses” means: any amount paid or payable by the Acquired
Companies, the Related Consolidated Entities and Seller (to the extent Seller
seeks reimbursement from the Acquired Companies or Related Consolidated Entities
therefor or such amounts are paid by the Acquired Companies or Related
Consolidated Entities) for: (a) costs, fees and expenses in connection with the
preparation, execution, negotiation and performance of this Agreement and the
other Transaction Documents and the transactions contemplated hereby and
thereby, including all fees and expenses of all Representatives of Seller, the
Acquired Companies and Related Consolidated Entities, including attorneys,
accountants, consultants, financial advisors and other professional advisors,
(b) all Change of Control Payments, (c) the fees and expenses of the Data Room,
(d) any premiums for any directors’ and officers’ liability insurance that
Seller may purchase and maintain, or cause to be purchased and maintained, that
remains payable by the Acquired Companies or Related Consolidated Entities, and
(e) the payments set forth on Schedule 1.1(l).

“Transactions” means, collectively, the sale of the Acquired Interests by Seller
to Buyer and the other transactions contemplated hereby.

“Transfer Taxes” means any and all sales, use, value added, goods and services,
transfer, stamp, stock transfer, or real property transfer Taxes and any similar
Taxes imposed by any Governmental Authority in connection with the Transactions.

“Treasury Regulations” means the United States Treasury Regulations promulgated
under the Code.

“Unpaid Transaction Expenses” means, as of the Effective Time, the sum of the
unpaid Transaction Expenses.

“Valuation Assumptions” means the assumptions that (a) in each taxable year
ending after the Closing, Buyer and its Affiliates (including for this purpose
the Acquired Companies and Related Consolidated Entities after the Closing but
excluding any Related Consolidated Entity that is not a member of Buyer’s
consolidated group for Tax purposes) will have taxable income sufficient to
fully use the deductions arising from the Basis Increase, (b) the U.S. federal
income tax rate in effect for each such taxable year is or will be (i) for
taxable years ending after the Closing that have ended on or before the Payment
Trigger Date, the actual U.S. federal income tax rate in effect for such years
and (ii) for each other taxable year, what is specified for each such taxable
year by the Code as in effect as of the Payment Trigger Date (for the avoidance
of doubt, taking into account any “sunset” of or increase in rates that are
specified by applicable Law as of the Payment Trigger Date), (c) in all taxable
years ending after the Closing, the state income tax rate is 2% and state income
tax is not deductible against federal income tax, and (d) no asset of the
Acquired Companies or Related Consolidated Entities reflecting a Basis Increase
has been or will be sold or otherwise transferred after the Closing.

 

17

--------------------------------------------------------------------------------

Section 1.2 Definitions. The following terms have the meanings set forth in the
Sections set forth below:

 

Definition

  

Location

401(k) Plans

   Section 5.12(d)

Acquired Companies

   Recitals

Acquired Interests

   Recitals

Agreement

   Preamble

Antitrust Laws

   Section 5.3(b)

Arbitrator

   Section 9.13(b)

Balance Sheet Date

   Section 3.7(b)

Business NDA

   Section 5.14(b)

Buyer

   Preamble

Buyer Indemnified Parties

   Section 7.2(a)

Buyer Parent

   Preamble

Buyer’s Obligations

   Section 9.18(a)

Claim Notice

   Section 7.6(a)

Closing

   Section 2.4(a)

Closing Date

   Section 2.4(a)

Closing Statement

   Section 2.6(a)(ii)

Competing Transaction

   Section 5.14(a)

Confidentiality Agreement

   Section 5.2(a)

Controlled Group Liability

   Section 3.18(e)

Current Representation

   Section 9.15(a)

Debt Discharge Procedures

   Section 2.3(a)

DaVita Financial Statements

   Section 3.7(a)

DaVita Holdings

   Recitals

D&O Indemnified Parties

   Section 5.10(a)

D&O Tail

   Section 5.10(b)

Debt Payoff Amount

   Section 2.3(a)

Designated Person

   Section 9.15(a)

Disputed Items

   Section 2.6(c)

Employee Communications

   Section 5.12(j)

EPA Dispute Notice

   Section 9.13(a)

EPA Disputes

   Section 9.13

EPL Tail

   Section 5.10(b)

Estimated Acquired Companies Cash

   Section 2.5

Estimated Acquired Companies Indebtedness

   Section 2.5

Estimated Closing Statement

   Section 2.5

Estimated Net Working Capital

   Section 2.5

Estimated Purchase Price

   Section 2.5

Estimated Required Statutory Capital Amount Target

   Section 2.5

Estimated Unpaid Transaction Expenses

   Section 2.5

Fiduciary Tail

   Section 5.10(b)

Final Acquired Companies Cash

   Section 2.6(e)

Final Acquired Companies Indebtedness

   Section 2.6(e)

Final Net Working Capital

   Section 2.6(e)

Final Purchase Price

   Section 2.6(f)

 

18

--------------------------------------------------------------------------------

Definition

  

Location

Final Required Statutory Capital Amount Target

   Section 2.6(e)

Final Unpaid Transaction Expenses

   Section 2.6(e)

Financial Statements

   Section 3.7(c)

Indemnified Party

   Section 7.3(a)

Insurance Policies

   Section 3.23

JAMS

   Section 9.13(b)

JV Entities

   Recitals

JV Interests

   Recitals

Leases

   Section 3.16(b)

Losses

   Section 7.2(a)

Material Contracts

   Section 3.21(a)

Notice Period

   Section 7.6(a)

Omitted Asset

   Section 5.16(e)

Party or Parties

   Preamble

Payoff Letters

   Section 2.3(a)

Per Claim Amount

   Section 7.2(b)(iii)

Permits

   Section 3.12(b)

Post-Closing Representation

   Section 9.15(a)

Preliminary Adjustment Statement

   Section 2.6(a)

Prior Company Counsel

   Section 9.15(a)

Privacy Obligations

   Section 3.13(g)

Protest Notice

   Section 2.6(c)

Purchase Price

   Section 2.2

Registered Owned Intellectual Property

   Section 3.15(a)

Releasee

   Section 5.9

Remedies Exception

   Section 3.1

Rules

   Section 9.13(b)

SEC Financial Statements

   Section 3.7(a)

Securities Act

   Section 4.7

Seller

   Preamble

Seller Indemnified Parties

   Section 7.3(a)

Seller Taxes

   Section 5.11(a)

Settlement Action

   Section 5.3(c)

Specified Representations

   Section 7.4(b)

Tax Matters

   Section 5.11(f)(i)

Termination Date

   Section 8.1(a)

Third-Party Claim

   Section 7.6(a)

Threshold

   Section 7.2(b)(i)

Trademark License Agreement

   Section 5.16(f)

Transferred Employee

   Section 5.12(b)

Transition Services Agreement

   Section 5.16(f)

Unaudited Financial Statements

   Section 3.7(b)

Year-End Financial Statements

   Section 3.7(b)

 

19

--------------------------------------------------------------------------------

Section 1.3 Interpretation and Rules of Construction.

(a) In this Agreement, except to the extent otherwise provided or the context
otherwise requires: (i) when a reference is made in this Agreement to an
Article, Section, or Exhibit, such reference is to an Article or Section of, or
an Exhibit to, this Agreement; (ii) the table of contents and headings of this
Agreement are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement; (iii) whenever the words “include,”
“includes” or “including” are used in this Agreement, they are deemed to be
followed by the words “without limitation”; (iv) 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; (v) all terms defined in this Agreement have the defined meanings
when used in any certificate or other document delivered or made available
pursuant hereto, unless otherwise defined therein; (vi) the definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms; (vii) all accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP; (viii) the
phrase “directly or indirectly” means directly, or indirectly through one or
more intermediate Persons or through contractual or other legal arrangements,
and “direct or indirect” has the correlative meaning; (ix) a reference to any
document (including this Agreement) is to that document as amended,
consolidated, supplemented, novated or replaced prior to the date hereof;
(x) references to a Person are also to its successors and permitted assigns;
(xi) a reference to any legislation or to any provision of any legislation shall
include any modification, amendment, re-enactment thereof, any legislative
provision substituted therefor and all rules, regulations and statutory
instruments issued or related to such legislation; (xii) a reference to a number
of days, such number shall refer to calendar days unless Business Days are
specified; (xiii) when calculating the period of time before which, within which
or following which, any act is to be done or step taken pursuant to this
Agreement, the date that is the reference date in calculating such period shall
be excluded (if the last day of such period is a non-Business Day, the period in
question shall end on the next succeeding Business Day); (xiv) the use of “or”
is not intended to be exclusive unless expressly indicated otherwise; (xv) the
language used in this Agreement shall be deemed to be the language chosen
jointly by the parties to express their mutual intent and no rule of strict
construction shall be applied against any party; and (xvi) references to sums of
money are expressed in lawful currency of the United States of America, and “$”
refers to U.S. dollars.

(b) Notwithstanding anything to the contrary contained in the Disclosure
Schedule or in this Agreement, the information and disclosures contained in any
section or subsection of the Disclosure Schedule shall be deemed to be disclosed
and incorporated by reference in any other section or subsection of the
Disclosure Schedule as though fully set forth in such other section or
subsection to the extent the relevance of such information to such other Section
is reasonably applicable on the face of such information. No reference to or
disclosure of any item or other matter in any Section of this Agreement,
including any section or subsection of the Disclosure Schedule, shall be
construed as an admission or indication that such item or other matter is
material or that such item or other matter is required to be referred to or
disclosed in this Agreement. Without limiting the foregoing, no such reference
to or disclosure of a possible breach or violation of any Contract or Law shall
be construed as an admission or indication that a breach or violation exists or
has actually occurred.

 

20

--------------------------------------------------------------------------------

ARTICLE II

PURCHASE AND SALE; CLOSING

Section 2.1 Purchase and Sale of the Acquired Interests. Upon the terms and
subject to the conditions of this Agreement, at the Closing, Seller shall sell,
assign, convey, transfer and deliver, free and clear of any Encumbrances, the
Acquired Interests to Buyer, and Buyer shall purchase, acquire and accept the
Acquired Interests from Seller.

Section 2.2 Purchase Price. The aggregate consideration to be paid by Buyer at
the Closing shall be: (a) $4,900,000,000, minus (b) the amount of the Estimated
Acquired Companies Indebtedness (including the Debt Payoff Amount, if any), plus
(c) the amount, if any, by which Estimated Net Working Capital is greater than
the Target Net Working Capital, minus (d) the amount, if any, by which Estimated
Net Working Capital is less than the Target Net Working Capital, minus (e) the
amount of the Estimated Unpaid Transaction Expenses, plus (f) the cumulative
amount of purchase price(s) of the Excluded Acquisitions, plus (g) the amount,
if any, by which the Estimated Acquired Companies Cash is greater than the
Estimated Required Statutory Capital Amount Target, minus (h) the amount, if
any, by which the Estimated Acquired Companies Cash is less than the Estimated
Required Statutory Capital Amount Target (the “Purchase Price”). The Purchase
Price will be subject to further adjustment after the Closing pursuant to
Section 2.6.

Section 2.3 Certain Events Immediately Prior to the Closing. Prior to the
Closing, in addition to such other actions as may be provided for herein:

(a) Seller shall obtain and deliver to Buyer at least three days prior to the
Closing Date either (i) payoff letters (the “Payoff Letters”) providing for:
(A) the payment of certain Specified Companies Indebtedness, together with
interest, premiums, penalties, make-whole payments, breakage costs and other
fees and expenses (if any) that are required to be paid by the Acquired
Companies or Related Consolidated Entities (with funds provided by Buyer) as a
result of the repayment on the Closing Date of such Specified Companies
Indebtedness (the “Debt Payoff Amount”), by wire transfer of immediately
available funds in accordance with the wire transfer instructions set forth in
such Payoff Letters and (B) the release, upon receipt of the Debt Payoff Amount,
of all Encumbrances over the properties and assets of the Acquired Companies or
Related Consolidated Entities securing obligations under such Specified
Companies Indebtedness, or (ii) evidence that the Acquired Companies or Related
Consolidated Entities shall, effective upon the Closing, be released from all
obligations in respect of certain Specified Companies Indebtedness and all
Encumbrances over the properties and assets of the Acquired Companies or Related
Consolidated Entities securing obligations under such Specified Companies
Indebtedness (clauses (i) and (ii), collectively, the “Debt Discharge
Procedures”).

(b) Seller shall deliver to Buyer at least three Business Days prior to the
Closing Date a schedule setting forth the Unpaid Transaction Expenses and wire
transfer instructions for each recipient thereof.

 

21

--------------------------------------------------------------------------------

Section 2.4 Closing.

(a) The consummation of the sale and purchase of the Acquired Interests and the
other Transactions (the “Closing”) shall take place at 10:00 a.m., Los Angeles
time, on a date to be specified by the Parties, which shall be no later than the
third Business Day after the satisfaction or waiver of all of the conditions set
forth in Article VI (other than those conditions that by their nature are to be
satisfied at the Closing, it being understood that the occurrence of the Closing
shall remain subject to the satisfaction or waiver of such conditions at the
Closing), at the offices of Latham & Watkins LLP, 355 South Grand Avenue, Suite
100, Los Angeles, California 90072-1560, unless another time, date, or place is
agreed to in writing by Seller and Buyer. The date on which the Closing occurs
is referred to herein as the “Closing Date”.

(b) At the Closing, in addition to such other actions as may be provided for
herein:

(i) Buyer shall pay, or cause to be paid, to Seller an amount equal to the
Estimated Purchase Price as determined pursuant to Section 2.5, by wire transfer
in immediately available funds pursuant to the wire transfer instructions
provided by Seller to Buyer in writing at least two Business Days prior to the
Closing Date, in exchange for the Acquired Interests.

(ii) Seller shall deliver to Buyer duly executed assignments of membership
interests of DaVita Holdings.

(iii) Seller shall deliver to Buyer the certificates required to be provided by
it in Section 6.3(a), and Buyer shall deliver to Seller the certificates
required to be provided by it in Section 6.2(a).

(iv) Buyer shall pay, or cause to be paid, in full the Debt Payoff Amount, if
any, set forth in any applicable Payoff Letters.

(v) Buyer shall pay, or cause to be paid, on behalf of Seller, the Unpaid
Transaction Expenses by wire transfer of immediately available funds pursuant to
the wire transfer instructions delivered to Buyer pursuant to Section 2.3(b).

(vi) Seller shall deliver to Buyer the certificate required to be provided by
Seller pursuant to Section 6.3(b).

(vii) Seller shall have received any resignations requested by Buyer pursuant to
Section 5.16(c).

Section 2.5 Estimate of the Closing Date Balance Sheet and the Estimated Closing
Statement. Seller shall deliver to Buyer at least three Business Days prior to
the Closing Date: (a) Seller’s good faith estimates of the Closing Date Balance
Sheet and (b) a closing statement (the “Estimated Closing Statement”), setting
forth Seller’s good faith calculation of the Purchase Price (the “Estimated
Purchase Price”), which shall be determined as of the Effective Time and taking
into account, and setting forth as separate line items, all provisions
establishing the basis for such calculation set forth in Section 2.2, including
Seller’s good faith calculation of Net Working Capital (“Estimated Net Working
Capital”), Acquired Companies Cash (“Estimated Acquired Companies Cash”), Unpaid
Transaction Expenses (“Estimated Unpaid

 

22

--------------------------------------------------------------------------------

Transaction Expenses”), the Required Statutory Capital Amount Target (“Estimated
Required Statutory Capital Amount Target”) and Acquired Companies Indebtedness
(“Estimated Acquired Companies Indebtedness”), in each case, together with
supporting documentation used by Seller in calculating such amounts. The
Estimated Closing Statement (including the calculations therein) shall be
prepared in a manner consistent with Exhibit C and in accordance with the
Accounting Principles, applied on a basis consistent with the 2016 Year-End
Financial Statements; provided that Net Working Capital, Acquired Companies
Cash, Unpaid Transaction Expenses, Estimated Required Statutory Capital Amount
Target and Acquired Companies Indebtedness shall also be calculated in
accordance with the definitions of those terms herein (and any other defined
terms incorporated therein).

Section 2.6 Preliminary Adjustment Statement; Determination of Purchase Price.

(a) As soon as practicable, but in no event later than 90 days after the Closing
Date, Buyer shall prepare and deliver to Seller the following (collectively, the
“Preliminary Adjustment Statement”):

(i) the Closing Date Balance Sheet; and

(ii) a closing statement (the “Closing Statement”), setting forth Buyer’s good
faith calculation of the Purchase Price, which shall be determined as of the
Effective Time and taking into account, and setting forth as separate line
items, all provisions establishing the basis for such calculation set forth in
Section 2.2, including Buyer’s good faith calculation of Net Working Capital, in
each case, together with supporting documentation used by Buyer in calculating
such amount. The Closing Statement (including the calculations therein) shall be
prepared in a manner consistent with Exhibit C and in accordance with the
Accounting Principles, applied on a basis consistent with the 2016 Year-End
Financial Statements; provided that Net Working Capital, Acquired Companies
Cash, Unpaid Transaction Expenses, the Required Statutory Capital Amount Target
and Acquired Companies Indebtedness shall also be calculated in accordance with
the definitions of those terms herein (and any other defined terms incorporated
therein).

(b) Seller shall be given reasonable access during normal business hours and in
such a manner as not to interfere unreasonably with the normal operations of
Buyer and its Affiliates to all supporting documents and work papers used in the
preparation of the Preliminary Adjustment Statement (including, the Closing Date
Balance Sheet and the Closing Statement) as reasonably requested in connection
with the matters discussed in Section 2.6(a).

(c) Seller may dispute any amounts reflected on the Preliminary Adjustment
Statement; provided, however, that Seller shall have notified Buyer in writing
of each disputed item (collectively, the “Disputed Items”), specifying the
amount thereof in dispute and setting forth, in reasonable detail, the basis for
such dispute (a “Protest Notice”), within 45 days following Seller’s receipt of
the deliverables specified in Section 2.6(a). To the extent Seller provides a
Protest Notice within 45 days following Seller’s receipt of the deliverables
specified in Section 2.6(a), all items that are not Disputed Items shall be
final and binding for all purposes hereunder. In the event Seller does not
provide a Protest Notice to Buyer within 45

 

23

--------------------------------------------------------------------------------

days following Seller’s receipt of the deliverables specified in Section 2.6(a),
Seller shall be deemed to have accepted in full the Preliminary Adjustment
Statement. After receipt by Buyer of a Protest Notice, Buyer and Seller shall
meet by telephone, or at a mutually agreeable location, to discuss and attempt
to reconcile their differences, in good faith, with respect to, and the amounts
in respect of, the Disputed Items. If Seller and Buyer are unable to reach a
resolution within 30 days after receipt by Buyer of the Protest Notice (unless
such period is otherwise extended by the mutual agreement of Buyer and Seller),
Buyer and Seller shall within 60 days after receipt by Buyer of the Protest
Notice submit the remaining Disputed Items for resolution to the Neutral
Accountant, which shall be instructed by Buyer and Seller to determine and
report to Buyer and Seller upon the resolution of such remaining Disputed Items
within 30 days after such submission (and for the avoidance of doubt, the
Neutral Accountant shall consider only those items and amounts which are
remaining Disputed Items). Each of Buyer and Seller will be afforded the
opportunity to present to the Neutral Accountant any material such Party deems
relevant to the Neutral Accountant’s determination. Buyer and Seller shall each
furnish to the Neutral Accountant such work papers, financial information,
books, records, schedules, memoranda, and other documents and information
relating to the remaining Disputed Items as the Neutral Accountant may request;
provided that such access shall not include any access to documents to the
extent prepared primarily in anticipation of, or for the purposes of evaluating,
any potential dispute, litigation, or arbitration relating to the Preliminary
Adjustment Statement or the Protest Notice. The Neutral Accountant’s
determination shall be based solely on the supporting material provided by Buyer
and Seller which are in accordance with the terms and procedures set forth in
this Agreement and not on the basis of an independent investigation or review.
Notwithstanding anything herein to the contrary, with respect to its
determination of each Disputed Item, the Neutral Accountant: (i) may not assign
a value to any Disputed Item greater than the greatest value for such Disputed
Item claimed by Buyer and Seller, or less than the lowest value for such
Disputed Item claimed by Buyer and Seller and (ii) must make its determinations
in accordance with the standards and definitions in this Agreement. The costs,
fees and disbursements of the Neutral Accountant shall be allocated between
Buyer and Seller, in the same proportion that the aggregate amount of such
remaining Disputed Items so submitted to the Neutral Accountant that is
unsuccessfully disputed by each such Party (as finally determined by the Neutral
Accountant) bears to the total amount of such remaining Disputed Items so
submitted. For example, if it is Buyer’s position that the adjustment owed is
$300, it is Seller’s position that the adjustment owed is $100 and the Neutral
Accountant’s finding is that the adjustment owed is $250, then Buyer shall pay
25% ((300-250) / (300-100)) of the Neutral Accountant’s fees and expenses and
Seller shall pay 75% ((250-100) / (300-100)) of the Neutral Accountant’s fees
and expenses. Notwithstanding anything to the contrary in this Section 2.6, the
Neutral Accountant will act as an expert and not as an arbitrator and will
address only those elements of the Closing Statement that are in dispute and
submitted to the Neutral Accountant for resolution. The scope of the disputes to
be resolved by the Neutral Accountant shall be limited to whether the relevant
calculations were performed in accordance with the terms hereof, whether the
accounting methods, standards, policies, practices, classifications, estimation
methodologies, assumptions and procedures used to prepare the Closing Statement
were consistent with the terms of this Agreement, and whether there were
mathematical errors in the calculation of the Closing Statements, and the
Neutral Accountant shall not make any other determination. The Neutral
Accountant is not authorized or permitted to make any determination as to the
interpretation of any provision of this Agreement (except this Section 2.6 and
the defined terms used herein), the accuracy of any representation or warranty
in this Agreement or the compliance by any Party or any of its Affiliates with
any of the covenants in this Agreement.

 

24

--------------------------------------------------------------------------------

(d) It is the intent of the Parties to have any determination of Disputed Items
by the Neutral Accountant proceed in an expeditious manner; provided that, any
deadline or time period contained herein relating to the determination of the
Disputed Items may be extended or modified by agreement of the Parties and the
Parties agree that the failure of the Neutral Accountant to strictly conform to
any deadline or time period contained herein shall not be a basis for seeking to
overturn any determination rendered by the Neutral Accountant.

(e) The items set forth on the Preliminary Adjustment Statement shall be deemed
final for the purposes of this Section 2.6 upon the earlier of: (i) the failure
of Seller to issue a Protest Notice to Buyer within 45 days following Seller’s
receipt of the deliverables specified in Section 2.6(a), (ii) the resolution of
all Disputed Items pursuant to Section 2.6(a) by Buyer and Seller, and (iii) the
resolution of all remaining Disputed Items pursuant to Section 2.6(c) by the
Neutral Accountant (which shall constitute an arbitral award that is final,
binding and non-appealable and upon which a judgment may be entered by a court
having jurisdiction thereover). The amount of Acquired Companies Cash, the
amount of Acquired Companies Indebtedness, Net Working Capital, the Required
Statutory Capital Amount Target and the amount of Unpaid Transaction Expenses as
finally determined pursuant to this Section 2.6 shall be referred to herein
respectively as “Final Acquired Companies Cash,” “Final Acquired Companies
Indebtedness,” “Final Net Working Capital,” “Final Required Statutory Capital
Amount Target” and “Final Unpaid Transaction Expenses”. Neither Buyer nor Seller
will disclose to the Neutral Accountant, and the Neutral Accountant will not
consider for any purpose, any settlement discussions or settlement offer made by
or on behalf of Buyer or Seller, unless otherwise agreed in a writing signed by
Buyer and Seller. The final determinations of such matters shall be
non-appealable and incontestable by the Parties and each of their respective
Affiliates and not subject to collateral attack for any reason other than actual
and deliberate fraud.

(f) If, after the final determination of Final Acquired Companies Cash, Final
Acquired Companies Indebtedness, Final Net Working Capital, Final Required
Statutory Capital Amount Target and Final Unpaid Transaction Expenses pursuant
to this Section 2.6, the Estimated Purchase Price is less than the Purchase
Price as finally determined in accordance with this Section 2.6 (the “Final
Purchase Price”), then promptly after such final determination (but, in any
event, within three Business Days thereof) Buyer shall pay, or shall cause the
payment of, such difference to Seller by wire transfer in immediately available
funds to an account designated by Seller within two Business Days thereof. In
the event that the Final Purchase Price is less than the Estimated Purchase
Price, then promptly after such final determination (but, in any event, within
three Business Days thereof) Seller shall pay, or shall cause the payment of,
such difference to Buyer by wire transfer in immediately available funds to an
account designated by Buyer within two Business Days thereof.

 

25

--------------------------------------------------------------------------------

(g) The Parties agree that the Closing Date Balance Sheet, the Closing Statement
and the estimates thereof delivered pursuant to Section 2.5 shall be prepared,
and this Agreement shall otherwise be interpreted, so that no asset, liability
or other item is double-counted against any Party hereunder and shall not
include any changes in assets or liabilities resulting from purchase accounting
adjustments or other changes arising from or resulting as a consequence of the
Transactions. The Parties further agree that the purpose of preparing the
Closing Date Balance Sheet, the Closing Statement and determining the Net
Working Capital is to measure variations in the components taken into
consideration in determining the estimates delivered pursuant to Section 2.5
compared to the actual values, and, without limiting the generality of the
foregoing, such process is not intended to permit the introduction of accounting
principles different from those described in the Accounting Principles.

(h) The Parties agree that the dispute resolution provisions provided for in
this Section 2.6 shall be the exclusive remedies for determination of Acquired
Companies Cash, Acquired Companies Indebtedness, Net Working Capital, Required
Statutory Capital Amount Target and Unpaid Transaction Expenses, in each case,
as of the Effective Time.

Section 2.7 Withholding. Buyer shall be entitled to deduct and withhold from the
consideration otherwise payable or deliverable in connection with the
Transactions, to any Person such amounts that Buyer is required to deduct and
withhold with respect to any such deliveries and payments under the Code, any
other Tax Law or any other applicable Law requiring the amount deducted or
withheld to be deposited with a Governmental Authority; provided that: (a) Buyer
shall provide Seller with notice (which shall include the authority, basis and
method of calculation of the proposed deduction or withholding) as soon as
reasonably practicable (and in any case prior to making the deduction or
withholding) upon becoming aware of any such requirement to deduct and withhold
from any consideration otherwise payable to Seller, and (b) the Parties shall
use their respective reasonable best efforts in seeking to reduce or eliminate
any such withholding or deduction. To the extent that amounts are so withheld,
and duly and timely deposited with the appropriate Governmental Authority, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Person in respect of which such deduction and withholding was
made.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF SELLER

Except as set forth in the corresponding sections or subsections of the
Disclosure Schedule, subject to Section 1.3(b), Seller hereby represents and
warrants to Buyer as of the date hereof and as of the Closing Date (other than
such representations and warranties that are expressly made as of a certain
date, which are made as of such date) as follows:

Section 3.1 Organization, Authority and Qualification of Seller. Seller is a
legal entity duly organized, validly existing and in good standing under the
Laws of the State of its formation and has all requisite corporate or similar
power and authority to enter into this Agreement and the other Transaction
Documents to which it is a party, to carry out its obligations hereunder and
thereunder, and to consummate the Transactions. Seller is qualified to do
business and is in good standing (to the extent that such concepts are
recognized under applicable Law) in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such qualification
necessary, except to the extent that the failure to be so qualified or in good
standing would not have, and would not reasonably be expected to

 

26

--------------------------------------------------------------------------------

have, individually or in the aggregate, a Seller Material Adverse Effect. The
execution and delivery by Seller of this Agreement and the other Transaction
Documents to which it is a party, the performance by Seller of its obligations
hereunder and thereunder, and the consummation by Seller of the Transactions
have been duly authorized by all requisite action on the part of Seller, and no
other proceedings on the part of Seller are necessary to authorize this
Agreement or the other Transaction Documents to which Seller is a party or to
consummate the Transactions. This Agreement and the other Transaction Documents
to which Seller is a party have been or will be duly executed and delivered by
Seller, and (assuming due authorization, execution, and delivery by Buyer and
any other party thereto) this Agreement and the other Transaction Documents to
which Seller is a party constitute legal, valid, and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms,
subject to the effect of any applicable bankruptcy, insolvency (including Laws
relating to fraudulent transfers), reorganization, moratorium, or similar Laws
affecting creditors’ rights generally and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding at law or
in equity) (collectively, the “Remedies Exception”). No vote of the holders of
any securities of Seller is necessary to approve this Agreement or consummate
the Transactions.

Section 3.2 Organization, Authority and Qualification of the Acquired Companies
and Related Consolidated Entities. Each of the Acquired Companies and Related
Consolidated Entities: (a) is a legal entity duly organized, validly existing
and in good standing under the Laws of the State of its formation, (b) has all
requisite corporate or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted and
(c) is qualified to do business and is in good standing (to the extent that such
concepts are recognized under applicable Law) in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes such
qualification necessary, except, in each case, to the extent that the failure to
have such power or authority or to be so qualified or in good standing, would
not have, and would not reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect. Schedule 3.2 contains a true and
complete list of each jurisdiction where each of the Acquired Companies and
Related Consolidated Entities are organized and qualified to do business.

Section 3.3 Ownership of Equity Interests.

(a) Seller or its wholly owned Subsidiaries, beneficially and of record, own,
directly or indirectly, the percentage, number and type of equity interests (as
applicable) of (i) each Acquired Company, (ii) certain of the Related
Consolidated Entities, and (iii) each JV Entity, each as set forth on Schedule
3.3(a). Except as set forth on Schedule 3.3(a), Seller has good and valid title
to the Acquired Interests, free and clear of all Encumbrances. At the Closing,
by virtue of the transactions contemplated by this Agreement, Seller shall
transfer to Buyer good and marketable title to the equity interests of the
Acquired Companies (other than (1) the Acquired Interests (which are the subject
of Section 3.3(b)) and (2) the equity interests of North Puget Sound Oncology
Equipment Leasing Company, LLC and DaVita Medical ASC-LB California, LLC not
held directly or indirectly by Seller), free and clear of any and all
Encumbrances.

 

27

--------------------------------------------------------------------------------

(b) Seller or its wholly owned Subsidiaries, beneficially and of record, own,
directly or indirectly, all of the equity interests of each Acquired Company
(other than North Puget Sound Oncology Equipment Leasing Company, LLC and DaVita
Medical ASC-LB California, LLC). At the Closing, Seller shall transfer to Buyer
good and marketable title to the Acquired Interests, free and clear of any and
all Encumbrances.

(c) Prior to the date of this Agreement, Seller has furnished or made available
to Buyer true and complete copies of the Governing Documents of each of the
Acquired Companies, Related Consolidated Entities and, to the Knowledge of
Seller, the JV Entities, and the Governing Documents of each of the Acquired
Companies, Related Consolidated Entities and, to the Knowledge of Seller, of the
JV Entities, each as so delivered is in full force and effect. The Governing
Documents of each of the Acquired Companies, the Related Consolidated Entities
and, to the Knowledge of Seller, the JV Entities are in full force and effect
and, as of the date hereof, the versions thereof made available to Buyer have
not been amended or otherwise modified. No Acquired Company or Related
Consolidated Entity or, to the Knowledge of Seller, JV Entity is in material
violation of any provision of its Governing Documents.

Section 3.4 Capitalization.

(a) Schedule 3.4(a) sets forth the name of each Acquired Company and Related
Consolidated Entity, the jurisdiction of its organization, its outstanding
equity interests, shares of capital stock, or other ownership interests and the
current record and beneficial ownership of such interests, shares, or other
ownership interests. None of the Acquired Companies or Related Consolidated
Entities has any other membership interests or securities or other equity
interests issued, or outstanding.

(b) Except as set forth on Schedule 3.4(b), there are no outstanding options,
warrants, convertible securities, rights of first refusal, rights of first offer
or other rights, agreements, arrangements, or commitments relating to the equity
interests of the Acquired Companies and Related Consolidated Entities to issue
or sell any equity interests in, shares of capital stock of, or any other
interest in, any Acquired Company or Related Consolidated Entity to any third
person. There are no outstanding contractual obligations of any Acquired Company
or Related Consolidated Entity to repurchase, redeem, or otherwise acquire any
equity interests, shares of capital stock, or other ownership interests of any
other Person. The equity interests of each Acquired Company and Related
Consolidated Entity have been duly authorized and validly issued and are fully
paid and non-assessable and were not issued in violation of any preemptive
rights. There are no declared or accrued but unpaid distributions with respect
to any equity interests in any Acquired Company and Related Consolidated Entity.
Except as set forth on Schedule 3.4(b), none of Seller or any of its Affiliates
is a party to any voting agreement, voting trust or proxy relating to the voting
of any of the Acquired Interests, the equity interests of the other Acquired
Companies or Related Consolidated Entities.

(c) Except for (i) the JV Interests held directly or indirectly by Seller,
(ii) the Dissolved Entities, and (iii) as set forth on Schedule 3.4(c), there
are no corporations, partnerships, joint ventures, associations, or other
entities (other than another Acquired Company or Related Consolidated Entity) in
which any Acquired Company or Related Consolidated Entity owns, of record or
beneficially, any direct or indirect equity or other interest or any right to
acquire the same.

 

28

--------------------------------------------------------------------------------

(d) Except as set forth on Schedule 3.4(d), the Dissolved Entities have no
assets or liabilities other than intercompany balances between and among
themselves and the Acquired Companies and Related Consolidated Entities that
will be resolved upon their dissolution and certain other de minimis assets and
liabilities related to their dissolution.

Section 3.5 No Conflict.

(a) Assuming all Consents and other actions described in Section 3.6 have been
obtained or made and any applicable waiting period under the HSR Act has expired
or been terminated and, except as may result from any facts or circumstances
relating solely to Buyer or its Affiliates, the execution, delivery, and
performance by Seller of this Agreement and the other Transaction Documents to
which it is a party (including the consummation of the Transactions) does not
and will not: (i) violate, conflict with, or result in the breach of any
provision of the Governing Documents of any of Seller, the Acquired Companies or
the Related Consolidated Entities, (ii) conflict with or violate any Law
applicable to Seller, the Acquired Companies or the Related Consolidated
Entities, and (iii) conflict with, result in any breach of, give rise to the
creation of any Encumbrance on any of the assets of the Acquired Companies or
Related Consolidated Entities, taken as a whole, constitute a default (or an
event which, with the giving of notice or lapse of time, or both, would become a
default) under, require any Consent under, or give to others any right to
exercise any remedy under, or rights of termination, acceleration or
cancellation of any Material Contract, except with respect to the foregoing
clauses (ii) and (iii) as would not have, and would not reasonably be expected
to have, individually or in the aggregate, a Seller Material Adverse Effect.
Schedule 3.5 sets forth a true and complete list of Material Contracts pursuant
to which Consents are required prior to consummation of the Transactions
(whether or not subject to the exception set forth with respect to clause (iii)
above).

(b) Except as expressly contemplated by this Agreement or set forth in the
Disclosure Schedule, to the Knowledge of Seller, there is no Effect, the
occurrence or existence of which, either alone or in combination with any other
Effect, would reasonably be expected to prevent or materially delay or impair
the ability of Seller to perform its obligations under this Agreement or to
consummate the Transactions.

Section 3.6 Governmental Consents and Approvals. The execution, delivery, and
performance by Seller of this Agreement and the other Transaction Documents to
which it is a party (including the consummation of the Transactions) does not
and will not require any material notices, reports or other filings by Seller
with, nor any material Consents by, any Governmental Authority, except for:
(a) the notification and waiting period requirements under the HSR Act, (b) any
Consents set forth on Schedule 3.6(b), or (c) any notice, report or other filing
by Seller with, or any Consent by, any Governmental Authority where the failure
to make such notice, report or other filing by Seller with, or obtain such
Consent of, such Governmental Authority would not, or would not reasonably be
expected to, individually or in the aggregate, be material to the Acquired
Companies and Related Consolidated Entities, taken as a whole.

 

29

--------------------------------------------------------------------------------

Section 3.7 Financial Information.

(a) Seller has filed with the SEC audited consolidated financial statements for
the fiscal year ended December 31, 2016 (the “DaVita Financial Statements”) and
has filed with the SEC unaudited condensed consolidated financial statements for
the nine months ended September 30, 2017, each of which include segment
reporting for the DaVita Medical Group business segment (together with the
DaVita Financial Statements, the “SEC Financial Statements”). The SEC Financial
Statements, solely to the extent relating to the DaVita Medical Group business
segment, present fairly in all material respects the financial position and
results of operations of the DaVita Medical Group business segment for the
periods covered thereby, and have been prepared in accordance with GAAP, applied
on a consistent basis.

(b) Prior to the date of this Agreement, true and complete copies of: (i) the
unaudited consolidated balance sheet of the Acquired Companies and Related
Consolidated Entities as of December 31, 2016, December 31, 2015 and
December 31, 2014 and the related unaudited consolidated statements of income
and cash flows of the Acquired Companies and Related Consolidated Entities for
each of the years then ended (collectively, the “Year-End Financial Statements”)
and (ii) the unaudited consolidated balance sheet of the Acquired Companies and
Related Consolidated Entities as of September 30, 2017 (such date, the “Balance
Sheet Date”) and the related unaudited consolidated statements of income and
cash flows of the Acquired Companies and Related Consolidated Entities for the
quarter ended on such date (the “Unaudited Financial Statements”), in each case,
have been prepared in accordance with the Accounting Principles, applied on a
consistent basis, in all material respects and have been made available by (or
on behalf of) Seller to Buyer.

(c) Except as set forth on Schedule 3.7, the Year-End Financial Statements and
the Unaudited Financial Statements (together, the “Financial Statements”):
(i) were derived from the books and records of the Acquired Companies and
Related Consolidated Entities, (ii) present fairly, in all material respects,
the consolidated financial position of the Acquired Companies and Related
Consolidated Entities as of the dates thereof and the results of operations and
cash flows of the Acquired Companies and Related Consolidated Entities for the
periods covered thereby, and (iii) except for the absence of consolidated
statements of comprehensive income, equity, cash flows and notes thereto, were
prepared in accordance with the Accounting Principles, applied on a consistent
basis, throughout the periods indicated (subject, in the case of the Unaudited
Financial Statements, to normal and recurring year-end adjustments that are not,
individually or in the aggregate, material in amount or nature and the absence
of notes).

(d) The accounts receivable and other receivables reflected on the Financial
Statements: (i) have been prepared in accordance with the Accounting Principles,
applied on a consistent basis, in all material respects, (ii) have arisen from
bona fide transactions in the Ordinary Course, and (iii) are not subject to any
material valid counterclaims or setoffs other than adjustments and modifications
in the Ordinary Course and for which adequate reserves have been established in
the Financial Statements (to the extent required by the Accounting Principles,
applied on a consistent basis).

 

30

--------------------------------------------------------------------------------

Section 3.8 Accounting Records; Internal Controls.

(a) The books and records of the Acquired Companies and Related Consolidated
Entities have been maintained in all material respects in accordance with
commercially reasonable business practices and fairly reflect, in all material
respects, the financial position of the Acquired Companies and Related
Consolidated Entities and all material transactions of the Acquired Companies
and Related Consolidated Entities.

(b) Seller has disclosed, based on its most recent evaluations of internal
controls over financial reporting, to its independent auditors (i) any
identified significant deficiencies or material weaknesses in the design or
operation of internal control over financial reporting that are reasonably
likely to adversely affect the Acquired Companies’ and Related Consolidated
Entities’ ability to record, process, summarize, and report financial
information for inclusion in Seller’s consolidated financial statements and
(ii) any fraud that involves any current or former employee of the Acquired
Companies or Related Consolidated Entities who have (or had) a significant role
in Seller’s internal control over financial reporting for the past three years
to the extent such fraud materially affected the Acquired Companies and Related
Consolidated Entities, taken as a whole. To the Knowledge of Seller, since the
date of the completion of the audit with respect to Seller’s financial
statements for the fiscal year ended as of December 31, 2016, no written
complaints that are reasonably likely to be a significant deficiency or material
weakness in the internal controls over financial reporting of any Acquired
Company or Related Consolidated Entity have been received by any officer of
Seller’s executive accounting team or, to the Knowledge of Seller, any of its
outside public accounting firms.

Section 3.9 Absence of Undisclosed Liabilities. There are no liabilities of the
Acquired Companies or Related Consolidated Entities, other than liabilities
(a) reflected or properly reserved against in the 2016 Year-End Financial
Statements or the Unaudited Financial Statements (or in any notes thereto),
(b) incurred since the Balance Sheet Date in the Ordinary Course, (c) that would
not be required to be reflected on or reserved against or disclosed in the notes
to a consolidated balance sheet of the Acquired Companies and Related
Consolidated Entities prepared in accordance with the Accounting Principles and
are less than $10,000,000 individually or $45,000,000 in the aggregate, (d) as
set forth in Schedule 3.9, or (e) incurred under this Agreement or in connection
with the Transactions.

Section 3.10 Conduct in the Ordinary Course. Except as set forth on Schedule
3.10 or as otherwise contemplated, required, or permitted by this Agreement,
between the Balance Sheet Date and the date of this Agreement: (a) the Business
has been conducted in the Ordinary Course in all material respects, (b) none of
the Acquired Companies or Related Consolidated Entities has taken any action
that, if taken after the date hereof, would constitute a violation of
Section 5.1(a), and (c) there has not occurred, nor has any Effect occurred that
would have, or would, individually or in the aggregate, reasonably be expected
to have, a Seller Material Adverse Effect.

 

31

--------------------------------------------------------------------------------

Section 3.11 Litigation; Governmental Orders.

(a) Except as set forth on Schedule 3.11(a), there is no Action by or against
Seller (to the extent relating to any Acquired Company or Related Consolidated
Entity) or any Acquired Company or Related Consolidated Entity that is pending,
or, to the Knowledge of Seller, threatened in writing, that would, if adversely
determined: (i) materially and adversely affect the legality, validity, or
enforceability of this Agreement or the consummation of the Transactions,
(ii) result, or would reasonably be expected to result, in any liability which
would be material to the Acquired Companies or Related Consolidated Entities,
taken as a whole, (iii) require, or would reasonably be expected to require, a
payment by any Acquired Company and any Related Consolidated Entity in excess of
$5,000,000, or (iv) would otherwise reasonably be expected to prevent or
materially delay or impair the consummation of the Transactions.

(b) Except as set forth on Schedule 3.11(b), there is no Governmental Order
outstanding against or, to the Knowledge of Seller, investigation by any
Governmental Authority involving any of the Acquired Companies or Related
Consolidated Entities, or any of their respective assets that has had or would
result, or would reasonably be expected to result in any liability that would be
material to the Acquired Companies or Related Consolidated Entities, taken as a
whole, or that would reasonably be expected to prevent or materially delay or
impair the consummation of the Transactions.

Section 3.12 Compliance with Laws.

(a) Except (i) as set forth on Schedule 3.12(a) and (ii) with respect to
Environmental Matters (which are covered exclusively by Section 3.14), Employee
Benefit Matters (which are covered exclusively by Section 3.18), Labor Matters
(which are covered exclusively by Section 3.19) and Taxes (which are covered
exclusively by Section 3.20), (A) each of the Acquired Companies and Related
Consolidated Entities is, and has been for the past three years, in compliance
in all material respects with all applicable Laws and continues to conduct its
business in compliance in all material respects with all applicable Laws and is
not in default or violation of any such Law in any material respect; and
(B) none of Seller, the Acquired Companies and, to the Knowledge of Seller, the
Related Consolidated Entities has received any written communication during the
prior 12 months from a Governmental Authority that alleges that such Acquired
Company or Related Consolidated Entity is not in compliance in any material
respect with any applicable Law. Each of the Acquired Companies and Related
Consolidated Entities has in place compliance programs reasonably designed to
cause the Acquired Companies and Related Consolidated Entities and their
respective employees and agents to be in compliance in all material respects
with all applicable Laws.

(b) Except as would not have, or reasonably be expected to have, individually or
in the aggregate, a Seller Material Adverse Effect, all material approvals,
permits, registrations, franchises, certificates, licenses and other similar
requirements of any Governmental Authority (collectively, “Permits”) necessary
for the Acquired Companies and Related Consolidated Entities to conduct their
respective businesses as they are currently being conducted, or that are
necessary for the lawful ownership of their respective properties and assets are
valid and in full force and effect, and are not subject to any administrative or
judicial proceeding that would be reasonably expected to result in any
modification, termination or revocation thereof and, to the Knowledge of Seller,
no suspension or cancellation of any such Permit is threatened by a Governmental
Authority in writing.

 

32

--------------------------------------------------------------------------------

Section 3.13 Healthcare Regulatory Compliance.

(a) Except as set forth on Schedule 3.13(a), each of the Acquired Companies and
Related Consolidated Entities has been for the past three years in compliance in
all material respects with all applicable Health Care Laws and continues to
conduct its business in compliance in all material respects with all applicable
Health Care Laws and, to the Knowledge of Seller, is not in default or violation
of any Health Care Law in any material respect.

(b) To the Knowledge of Seller, each current employee or any other authorized
Person acting on behalf of any Acquired Company or Related Consolidated Entity
who is required by applicable Law to hold a Permit or other qualification to
deliver healthcare services, holds such Permit and, in the course and scope of
their employment duties, is performing only those services which are permitted
by such Permit.

(c) Except as set forth on Schedule 3.13(c), none of the Acquired Companies or
Related Consolidated Entities nor, to the Knowledge of Seller, any of their
current respective Representatives: (i) has been assessed a civil monetary
penalty under Section 1128A of the Social Security Act or any regulations
promulgated thereunder; (ii) is or has been excluded from participation in any
federal health care program or state health care program (as such terms are
defined by the Social Security Act) in any state where the Acquired Companies or
Related Consolidated Entities operate; (iii) is or has been a party to a
corporate integrity agreement with the OIG; (iv) has been convicted of any
criminal offense relating to the delivery of any item or service reimbursable
under a federal or state health care program; or (v) is a party to any action
concerning any of the matters described in clauses (i) through (iv) above.

(d) To the extent required by applicable Law, to the Knowledge of Seller, the
Acquired Companies and Related Consolidated Entities have timely filed all
material regulatory reports, contracts, documents, schedules, statements,
filings, submissions, forms, registrations, applications, data and other
documents, together with any amendments required to be made with respect
thereto, that the Acquired Companies and Related Consolidated Entities have been
required to file for the past three years, with any Governmental Authority with
appropriate jurisdiction over the Acquired Companies or Related Consolidated
Entities, except where the failure to make such timely filings would not,
individually or in the aggregate, be material to the conduct or operation of the
respective business of the Acquired Companies and Related Consolidated Entities.
To the Knowledge of Seller, no material deficiencies or liabilities have been
asserted by any Governmental Authority with respect to such filings. Prior to
the date hereof, Seller has made available to Buyer requested copies of such
material filings, responses to audit letter requests and comment letters
concerning the affairs of the Acquired Companies and Related Consolidated
Entities, as applicable, filed with or requested by any Governmental Authority,
and all documents related to other material regulatory actions, enforcement
actions, consent decrees or other similar material actions, for the past three
years. To the Knowledge of Seller, no deficiencies or violations have been
asserted in writing by any Governmental Authority regarding such reports or
documents for occurrences for the past three years, except those that would
reasonably be expected in the Ordinary Course of the conduct or operation of the
Business.

 

33

--------------------------------------------------------------------------------

(e) Except as set forth on Schedule 3.13(e) and except for claims repayments in
the Ordinary Course, for the past three years, no Acquired Company or Related
Consolidated Entity, nor any of their current respective Representatives has
made a formal, written voluntary disclosure to any Governmental Authority,
including a voluntary disclosure pursuant to the OIG’s self-disclosure protocol,
the CMS self-referral disclosure protocol or otherwise. Except as set forth on
Schedule 3.13(e), for the past three years, no Acquired Company or Related
Consolidated Entity nor, to the Knowledge of Seller, any of their current
respective Representatives: (i) has been notified in writing or, to the
Knowledge of Seller, orally that it is the subject of any Payor investigation,
(ii) is or has been a defendant in any qui tam/False Claims Act litigation for
which any Acquired Company or, to the Knowledge of Seller, Related Consolidated
Entity has received service of process or has otherwise received notice in
writing of such litigation, or (iii) has been served with or received any search
warrant, subpoena or civil investigative demand from any Governmental Authority.

(f) Except as set forth on Schedule 3.13(f) and except for regularly scheduled
audits and reviews conducted within the Ordinary Course, for the past three
years, to the Knowledge of Seller, no Acquired Company and no Related
Consolidated Entity has conducted any material audits, coding validation review
or program integrity review, and no material audits or reviews have been
conducted, by any entity, commission, board or agency in connection with any
Payor, and no such reviews are scheduled (for which any Acquired Company or
Related Consolidated Entity has received notice) or, to the Knowledge of Seller,
pending against any Acquired Company or Related Consolidated Entity.

(g) Except as set forth on Schedule 3.13(g), for the past three years and to the
Knowledge of Seller, none of the Acquired Companies or Related Consolidated
Entities has received written notice that it is under investigation by any
Governmental Authority for a violation of any Laws concerning privacy and
security, including the receipt of any notices from the United States Department
of Health and Human Services Office for Civil Rights or Department of Justice
relating to any such violations. Except as set forth on Schedule 3.13(g), for
the past three years, each Acquired Company and Related Consolidated Entity has
(i) complied in all material respects with all applicable Laws and contractual
and fiduciary obligations relating to the collection, storage, use, transfer or
any other processing of any Personal Information, including their respective
privacy and security policies (collectively, “Privacy Obligations”), and
(ii) implemented commercially reasonable measures with respect to technical and
physical security designed to ensure that all Personal Information is protected
against loss and against unauthorized access, use, modification or disclosure.
Except as set forth on Schedule 3.13(g) and except as would not reasonably be
expected to be material to the Business, no Acquired Company or Related
Consolidated Entity has made or suffered any unauthorized acquisition, access,
use or disclosure of any Personal Information, and no claims have been asserted
or threatened against any Acquired Company or Related Consolidated Entity in
writing, or, to the Knowledge of Seller, not in writing, by any Person or
Governmental Authority alleging any violation of any Privacy Obligations, in
each case, that individually or in the aggregate, materially compromises the
security or privacy of such Personal Information or has required notification to
affected individuals, the media, or any Governmental Authority.

 

34

--------------------------------------------------------------------------------

(h) Except for the matters disclosed in the Schedules with respect to this
Section 3.13, the Acquired Companies and Related Consolidated Entities have in
all material respects submitted all requests for payment, whether to Medicare,
Medicaid or other federal or state health care program, plan or contract, or
other Payor, in compliance in all material respects with their respective
billing and coding requirements.

Section 3.14 Environmental Matters.

(a) Except as set forth on Schedule 3.14, (i) each of the Acquired Companies and
Related Consolidated Entities is, and has at all times during the past three
years, been in material compliance with all applicable Environmental Laws and
has obtained and is in material compliance with all material Environmental
Permits required for its operations as currently conducted; (ii) as of the date
hereof, there are no written material claims, notices, letters, demands, or
requests pursuant to any Environmental Law pending or, to the Knowledge of
Seller, threatened against any Acquired Company or Related Consolidated Entity,
including those that that seek penalties or to compel an Acquired Company or
Related Consolidated Entity to perform a Remedial Action or take action to
comply with Environmental Laws; (iii) as of the date hereof, there has been no
disposal, release, or threatened release of Hazardous Materials by the Acquired
Companies or Related Consolidated Entities on, under, in, from, or about the
Owned Real Property or the Leased Real Property that would reasonably be
expected to subject any of the Acquired Companies or Related Consolidated
Entities to any material liabilities or any material legal obligation to conduct
any Remedial Action under any Environmental Law; (iv) as of the date hereof, no
Acquired Company or any Related Consolidated Entity is subject to any order,
decree, injunction or other agreement with any Governmental Authority or any
indemnity or other agreement with any third party that imposes or could
reasonably be expected to impose material liability or obligations relating to
any Environmental Law upon the Acquired Companies or Related Consolidated
Entities; and (v) prior to the date of this Agreement the Acquired Companies
have made available to Buyer copies of all material Phase I and Phase II reports
and other material environmental documents in the possession or control of
Seller or any of its Subsidiaries relating to the environment or the presence or
release of any Hazardous Materials, related to the Owned Real Property, the
Leased Real Property or the Business.

(b) The representations and warranties contained in this Section 3.14 are the
only representations and warranties being made by Seller with respect to the
subject matter hereof, and no other representation or warranty of Seller
contained in this Agreement shall apply to any such matters.

Section 3.15 Intellectual Property.

(a) Schedule 3.15(a) sets forth an accurate and complete list of all Owned
Intellectual Property that is Registered (“Registered Owned Intellectual
Property”), specifying as to each such item, as applicable: (i) the
jurisdictions by or in which such Registered Owned Intellectual Property has
been issued or registered or in which an application for such issuance or
registration has been filed (or for Internet domain names, the applicable
registrar), (ii) the respective registration or application numbers, (iii) the
date of issuance, registration or filing, and (iv) the name of the current owner
of record.

 

35

--------------------------------------------------------------------------------

(b) Except as is not and would not reasonably be expected to be material to any
of the Acquired Companies or Related Consolidated Entities and except as set
forth on Schedule 3.15(b):

(i) with respect to all Owned Intellectual Property, the applicable Acquired
Company or Related Consolidated Entity, as the case may be, exclusively owns all
right, title and interest in and to such Owned Intellectual Property (in each
case, free and clear of any Encumbrances, except Permitted Encumbrances);

(ii) (A) each Person who is or was an employee since July 1, 2016 and involved
in the development or creation of Intellectual Property or Intellectual Property
Rights material to any business of any Acquired Company or Related Consolidated
Entity has entered into a Confidentiality, Assignment and Non-Solicitation
Agreement (the form of which has been provided to Buyer) and (B) to the
Knowledge of Seller, each Person who is or was a contractor of any Acquired
Company or Related Consolidated Entity and involved in the development or
creation of Intellectual Property or Intellectual Property Rights material to
any business of any Acquired Company or Related Consolidated Entity has assigned
all such Intellectual Property or Intellectual Property Rights to the applicable
Acquired Company or Related Consolidated Entity pursuant to a present and valid
assignment, to the extent such Intellectual Property or Intellectual Property
Rights were not deemed a work-made-for-hire created within the scope of such
Person’s engagement and automatically assigned to an Acquired Company or a
Related Consolidated Entity by operation of applicable Law;

(iii) with respect to the Licensed Intellectual Property, the applicable
Acquired Company or Related Consolidated Entity, as the case may be, has a valid
and enforceable license, covenant not to assert or other authorization to use
such Licensed Intellectual Property as it is used in connection with the
operation of their businesses as currently conducted;

(iv) the Registered Owned Intellectual Property is subsisting in full force and
effect, is valid and enforceable, and, except as set forth on Schedule 3.15(a),
has not been abandoned or passed into the public domain;

(v) the use and other exploitation of Owned Intellectual Property, and the
conduct of the businesses of the Acquired Companies or Related Consolidated
Entities, have not, for the past three years, infringed, misappropriated or
otherwise violated, and are not, infringing, misappropriating, or otherwise
violating the Intellectual Property or Intellectual Property Rights of any other
Person; no written claim by any Person contesting the legality, validity,
enforceability, use or ownership of any Owned Intellectual Property has been
made or is currently outstanding; and the Owned Intellectual Property is not,
and, for the past three years, has not been, the subject of any written Action,
whether threatened or pending at any time, which challenges or challenged the
legality, validity, enforceability, use, or ownership thereof;

(vi) to the Knowledge of Seller, for the past three years, there has been no,
and there is no, unauthorized use or disclosure of Trade Secrets constituting
Owned Intellectual Property or other infringement, misappropriation or violation
of any Owned Intellectual Property by any Person (including any present or
former manager, director, partner, officer, or employee of any Acquired Company
or Related Consolidated Entity);

 

36

--------------------------------------------------------------------------------

(vii) the Acquired Companies and Related Consolidated Entities have exercised
reasonable care to maintain the confidentiality of all material Trade Secrets
included in the Owned Intellectual Property;

(viii) the Systems operate and perform in a manner that permits the Acquired
Companies and Related Consolidated Entities to conduct their respective
businesses as currently conducted;

(ix) the Systems are (A) operating in substantial compliance with any applicable
written documentation, and (B) to the Knowledge of Seller, not infected by any
virus or other externally induced malfunction that could reasonably be expected
to result in any material disruption or interruption in the operation of any of
the businesses of the Acquired Companies or Related Consolidated Entities; and

(x) for the past three years, (A) the Systems have not been subject to any
breach of security or any unauthorized access that has resulted in a material
disruption or interruption in the operation of any of the businesses of the
Acquired Companies or Related Consolidated Entities and (B) there has been no
material failure of any portion of the Systems that has resulted in any material
disruption or interruption in the operation of any of the businesses of the
Acquired Companies or the Related Consolidated Entities.

Section 3.16 Real Property.

(a) Schedule 3.16(a) contains a true and complete list of the Owned Real
Property. An Acquired Company or Related Consolidated Entity has good and
insurable title in fee simple to each parcel of Owned Real Property free and
clear of all Encumbrances, except for Permitted Encumbrances. No condemnation or
eminent domain proceeding or similar proceeding before any Governmental
Authority is pending or, to the Knowledge of Seller, threatened in writing with
respect to any Owned Real Property. To the Knowledge of Seller, the Owned Real
Property is in good operating condition and repair, subject to ordinary wear and
tear, and there are no facts or conditions affecting the Owned Real Property
that, in the aggregate, would reasonably be expected to materially interfere
with the current use, occupancy or operation thereof, if any. To the Knowledge
of Seller: (i) there are no material violations of any Laws, Governmental
Orders, permits or certificates of occupancy (including zoning, subdivision and
use or building Laws) affecting the Owned Real Property, and (ii) the operation
and use of the Owned Real Property does not violate in any material respects
certificates of occupancy or any conditions, covenants, restrictions, easements
or rights-of-way affecting the Owned Real Property.

(b) Schedule 3.16(b) identifies: (i) the street address and suite number, if
any, by which each parcel of Leased Real Property is customarily known, (ii) the
current lessor (to the Knowledge of Seller), lessee, and occupant (if different
from lessee) of each parcel of Leased Real Property, and (iii) whether such
parcel of Leased Real Property is the subject of a sublease. Prior to the date
hereof, Seller has made available to Buyer copies of the written

 

37

--------------------------------------------------------------------------------

leases, subleases, licenses, or other use or occupancy agreements in effect, to
the Knowledge of Seller, as of the date of this Agreement relating to each
parcel of Leased Real Property (the “Leases”). To the Knowledge of Seller, each
Lease is in full force and effect, valid and binding on the applicable Acquired
Company or Related Consolidated Entity that is a party thereto. None of the
Acquired Companies or Related Consolidated Entities is in material breach of, or
material default under, any Lease to which it is a party. No tenant or subtenant
under any Lease is holding over beyond the expiration of its Lease, except in
accordance with any hold over provision in such Lease. To the Knowledge of
Seller, the Leased Real Property is in good operating condition and repair,
subject only to ordinary wear and tear and there are no facts or conditions
affecting the Leased Real Property that, in the aggregate, would reasonably be
expected to materially interfere with the current use, occupancy or operation
thereof. For the purposes of this Section 3.16(b), “sublease” shall mean a
written sublease agreement with total annual rental payments in excess of
$50,000.

(c) The Owned Real Property and Leased Real Property are together sufficient to
operate the Business in substantially the same manner as it is conducted as of
the date hereof and as of immediately prior to the Closing.

Section 3.17 Tangible Personal Property; Sufficiency of Assets.

(a) An Acquired Company or Related Consolidated Entity owns and has good title
to, or has sufficient rights to use pursuant to license, sublicense, agreement
or written permission, all material machinery, equipment and other tangible
personal property reflected in the books and records or the Financial Statements
as owned by the Acquired Companies or Related Consolidated Entities, free and
clear of any Encumbrance, other than Permitted Encumbrances. Such material
machinery, equipment and other tangible personal property are in good condition
and repair (ordinary wear and tear excepted), have been maintained in accordance
with commercially reasonable industry practices in all material respects, and
are sufficient to operate the Business as it has been conducted in the Ordinary
Course.

(b) Except as set forth on Schedule 3.17(b), the Acquired Interests and the
other assets, rights, licenses, properties, services and benefits to be acquired
or provided pursuant to this Agreement, the Trademark License Agreement, and the
Transition Services Agreement, constitute all of the assets, properties and
rights owned, leased or licensed by Seller and its Affiliates sufficient to
operate the Business on the Closing Date as currently conducted in the Ordinary
Course in all material respects.

Section 3.18 Employee Benefit Matters.

(a) Schedule 3.18(a) sets forth a correct and complete list of each ERISA Plan
and each other material Company Plan that is not an ERISA Plan.

(b) With respect to each ERISA Plan and each other material Company Plan that is
not an ERISA Plan, prior to the date hereof, Seller has made available to Buyer,
to the extent applicable, true and complete copies of: (i) the Company Plan
document (including amendments thereto), and all related trust documents,
insurance contracts or other funding vehicles, (ii) a written description of
such Company Plan if such plan is not set forth in a

 

38

--------------------------------------------------------------------------------

written document, (iii) the most recently prepared actuarial report, (iv) all
material correspondence to or from any Governmental Authority received in the
last three years from the date of this Agreement with respect to such Company
Plan, (v) the most recent summary plan description together with any summaries
of all material modifications thereto, (vi) the most recent IRS determination or
opinion letter, and (vii) the two most recent annual reports (Form 5500 or 990
series and all schedules and financial statements attached thereto).

(c) (i) Each Company Plan (including any related trusts) has been established,
operated and administered in all material respects in accordance with its terms
and in compliance with all applicable Laws, including, without limitation, ERISA
and the Code, (ii) except as would not reasonably be expected to result in any
material liability to Seller, the Acquired Companies or the Related Consolidated
Entities, all contributions or other amounts payable by Seller, the Acquired
Companies or the Related Consolidated Entities with respect to each Company Plan
in respect of current or prior plan years have been paid or accrued in
accordance with GAAP, and (iii) as of the date hereof, there are no pending or,
to the Knowledge of Seller, threatened claims (other than routine claims for
benefits) or proceedings by a Governmental Authority by, on behalf of or against
any Company Plan or any trust related thereto which would reasonably be expected
to result in any material liability to Seller, the Acquired Companies or the
Related Consolidated Entities. None of Seller, the Acquired Companies or the
Related Consolidated Entities is in any material respect in default or violation
of any Company Plan.

(d) Each Company Plan that is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS or may rely
on a favorable prototype opinion letter as to its qualified status under the
Code, and, to the Knowledge of Seller, nothing has occurred since the latest
favorable determination letter or prototype opinion letter that would reasonably
be expected to adversely affect the qualification or tax exemption of any such
Company Plan.

(e) No Controlled Group Liability has been incurred by the Acquired Companies,
Related Consolidated Entities or their respective ERISA Affiliates that has not
been satisfied in full, and no condition exists that would reasonably be
expected to result in any Controlled Group Liability to the Acquired Companies,
Related Consolidated Entities or their ERISA Affiliates. “Controlled Group
Liability” means any and all material liabilities: (i) under Title IV of ERISA,
(ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code,
and (iv) as a result of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and section 4980B of the Code.

(f) Except as provided in Schedule 3.18(f), no Company Plan is a, and none of
the Acquired Companies, Related Consolidated Entities or any of their respective
ERISA Affiliates have previously or currently maintain, contribute to, or
participate in any, nor do any of the Acquired Companies, Related Consolidated
Entities or any ERISA Affiliates have any obligation to maintain, contribute to,
or otherwise participate in any: (i) “multiemployer plan” (within the meaning of
Section 3(37) of ERISA), (ii) “plan maintained by more than one employer”
(within the meaning of Section 413(c) of the Code), (iii) “multiple employer
welfare arrangement” (within the meaning of Section 3(40) of ERISA), or
(iv) plan that is subject to the provisions of Title IV of ERISA or Section 412
of the Code.

 

39

--------------------------------------------------------------------------------

(g) Each Company Plan that is a “nonqualified deferred compensation plan”
(within the meaning of Section 409A of the Code) is in material documentary
compliance with, and has been operated and administered in all material respects
in compliance with, Section 409A of the Code and the guidance issued by the IRS
provided thereunder.

(h) Except as provided in Schedule 3.18(h), no Company Plan provides for
post-retirement or other post-employment welfare benefits (other than health
care continuation coverage as required by Section 4980B of the Code or any
similar state law (COBRA) or ERISA or coverage through the end of the calendar
month in which a termination of employment occurs).

(i) With respect to each applicable Company Plan, as of the date hereof: (i) to
the Knowledge of Seller, none of the Acquired Companies, Related Consolidated
Entities or any of their respective managers, directors, partners, officers, or
employees have incurred any material liability in connection with any non-exempt
“prohibited transaction”, within the meaning of Section 4975 of the Code or
Section 406 of ERISA (and not otherwise exempt under Section 408 of ERISA),
(ii) there are no Actions pending, or, to the Knowledge of Seller, threatened or
anticipated (other than routine claims for benefits) against any such Company
Plan or fiduciary thereto or against the assets of any such Company Plan, and
(iii) there are no audits, inquiries, or proceedings pending or, to the
Knowledge of Seller, threatened by any Governmental Authority with respect to
any Company Plan.

(j) Neither the execution and delivery of this Agreement, shareholder or other
approval of this Agreement nor the consummation of the Transactions could,
either alone or in combination with another event, result in the payment of any
amount that could, either alone or in combination with any other such payment,
constitute an “excess parachute payment” within the meaning of
Section 280G(b)(1) of the Code. There is no written or unwritten agreement,
arrangement, or other Contract by which the Acquired Companies or Related
Consolidated Entities are bound to compensate any individual for excise taxes
paid pursuant to Section 4999 of the Code.

(k) Except as provided in Schedule 3.18(k), no Company Plan provides for any
gross-up, reimbursement or additional payment by reason of any Tax imposed under
Section 409A of the Code or Section 4999 of the Code.

(l) Except as provided in Schedule 3.18(l) and except as provided by the terms
of this Agreement, none of the execution and delivery of this Agreement,
shareholder or other approval of this Agreement or the consummation of the
Transactions will (either alone or together with any other event): (i) entitle
any current or former Business Employee, consultant or independent contractor of
the Acquired Companies or Related Consolidated Entities to severance pay or any
material increase in severance pay, bonus, retirement, job security, or other
similar compensation; (ii) accelerate the time of payment or vesting of
compensation due to any Business Employee, consultant or independent contractor
of the Acquired Companies or Related Consolidated Entities; (iii) trigger any
funding obligation or directly or indirectly cause the Acquired Companies or
Related Consolidated Entities to transfer or set aside any assets to fund any
compensation or benefits; or (iv) increase the amount of compensation or
benefits payable under any Company Plan or payable to any Business Employee or
consultant or independent contractor of the Acquired Companies or Related
Consolidated Entities.

 

40

--------------------------------------------------------------------------------

(m) The representations and warranties contained in this Section 3.18 are the
only representations and warranties being made by Seller with respect to the
subject matter hereof, and no other representation or warranty of Seller
contained in this Agreement shall apply to any such matters.

Section 3.19 Labor Matters.

(a) Schedule 3.19(a) sets forth an accurate and complete list of all Business
Employees as of the date of this Agreement with titles of Vice President or
above, including each such employee’s name, title, employing entity, and present
annual base salary and cash bonus opportunities. Seller has made available to
Buyer a list of all Business Employees as of a date that is not more than 60
Business Days prior to the date of this Agreement, including each such
employee’s unique employee identification number, title, employing entity,
present annual base salary or wage rate and cash bonus opportunities.

(b) Except as set forth on Schedule 3.19(b), none of the Acquired Companies or
Related Consolidated Entities is a party to any collective bargaining agreement,
works council agreement or other similar labor-related Contract applicable to
any Business Employee, and, to the Knowledge of Seller, there are no
organizational campaigns, petitions, or other unionization activities seeking to
authorize representation of any Business Employee. No work stoppage, slowdown,
lockout, strike, unfair labor practice or other material labor or similar
activity or dispute concerning Business Employees is pending or, to the
Knowledge of Seller, threatened in writing.

(c) The Acquired Companies and Related Consolidated Entities are in compliance
in all material respects with all applicable Laws relating to labor, employment
and employment practices, including those relating to wages, overtime
regulations, hours of work, occupational safety and health, visa and work permit
requirements.

(d) The representations and warranties contained in this Section 3.19 are the
only representations and warranties being made by Seller with respect to the
subject matter hereof, and no other representation or warranty of Seller
contained in this Agreement shall apply to any such matters.

Section 3.20 Taxes.

(a) All material Tax Returns required to have been filed by or with respect to
the Acquired Companies and Related Consolidated Entities have been timely filed
(taking into account any valid extension of time to file) and such Tax Returns
were true, correct and complete in all material respects.

(b) All material Taxes required to be paid by the Acquired Companies and Related
Consolidated Entities (whether or not shown on any Tax Returns) have been paid.

 

41

--------------------------------------------------------------------------------

(c) The U.S. federal income tax classification of each of the Acquired Companies
and Related Consolidated Entities is as listed on Schedule 3.20(c).

(d) There are no material Tax liens on any assets of the Acquired Companies or
Related Consolidated Entities (other than Permitted Encumbrances).

(e) Since November 1, 2012 (or, if later, since the acquisition of such Acquired
Company (or acquisition of control of a Related Consolidated Entity) by Seller
or a Subsidiary of Seller), none of the Acquired Companies or Related
Consolidated Entities has received or applied for a material Tax ruling or
entered into a material closing agreement pursuant to Section 7121 of the Code
(or any similar provision of state or local law).

(f) Since November 1, 2012 (or, if later, since the acquisition of such Acquired
Company (or acquisition of control of a Related Consolidated Entity) by Seller
or a Subsidiary of Seller), none of the Acquired Companies or Related
Consolidated Entities has been a member of any affiliated, consolidated,
combined or unitary group for income Tax purposes, other than an affiliated,
consolidated, combined or unitary group where a member of the Seller Group, any
Acquired Company or Related Consolidated Entity is the common parent.

(g) Except as set forth on Schedule 3.20(g), as of the date hereof, (i) there
are no material federal, state, local or foreign audits, examinations, actions,
or suits relating to Taxes or any Tax Returns of the Acquired Companies or
Related Consolidated Entities now pending or threatened in writing, (ii) none of
the Acquired Companies or Related Consolidated Entities has received any written
notice of any threatened or proposed material Tax audit, assessment or other
action with respect to the Acquired Companies or Related Consolidated Entities
for which the Acquired Companies or Related Consolidated Entities have not made
provision in accordance with the Accounting Principles in the Financial
Statements, and (iii) no written claim has been received by Seller, its
Subsidiary or a Related Consolidated Entity by a Governmental Authority in any
jurisdiction where any Acquired Company or Related Consolidated Entities do not
file Tax Returns that the Acquired Companies or Related Consolidated Entities
are or may be subject to material taxation by such jurisdiction.

(h) There is no written agreement in effect to extend the period of limitations
for the assessment or collection of any material Tax for which the Acquired
Companies or Related Consolidated Entities may be liable.

(i) None of the Acquired Companies or Related Consolidated Entities is party to
or bound by any Tax sharing or indemnity agreement pursuant to which it will
have any obligation to make any payments exceeding, in the aggregate, $500,000
for Taxes after the Closing Date (other than credit agreements, derivatives,
leases, supply agreements, management services agreements or other commercial
agreements, each of which was entered into in the Ordinary Course and the
principal purpose of which is not to govern the sharing of Taxes, and other than
the Transaction Documents).

 

42

--------------------------------------------------------------------------------

(j) Since November 1, 2012 (or, if later, since the acquisition of such Acquired
Company (or acquisition of control of a Related Consolidated Entity) by Seller
or a Subsidiary of Seller), none of the Acquired Companies or Related
Consolidated Entities has been either a “distributing corporation” or a
“controlled corporation” within the meaning of Section 355 of the Code and in a
transaction intended to qualify under Section 355 of the Code.

(k) None of the Acquired Companies or Related Consolidated Entities has entered
into any “listed transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b)(2) (or any similar provision of state, local or non-U.S.
Law).

(l) None of the Acquired Companies or Related Consolidated Entities will be
required to include any material item of income in, or exclude any material item
of deduction from, taxable income for any taxable period (or portion thereof)
beginning after the Closing Date as a result of any: (i) change in method of
accounting (or the use of an incorrect method of accounting, other than as a
result of a change in Law after the date hereof) with respect to a taxable
period ending on or prior to the Closing Date under Section 481 of the Code (or
any similar provision of state, local or non-U.S. Law), (ii) installment sale or
open transaction disposition made on or prior to the Closing Date outside the
Ordinary Course, (iii) prepaid amount received on or prior to the Closing Date
outside the Ordinary Course, (iv) (to the Knowledge of Seller) “deferred gain”
of an Acquired Company or Related Consolidated Entity with respect to an
“intercompany transaction” (effected prior to the date of the Closing) described
in Section 1502 of the Code in existence on the date hereof, or (v) election
under Section 108(i) of the Code filed prior to the Closing Date.

(m) Each of the Acquired Companies and Related Consolidated Entities has
withheld and paid all material Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.

(n) Notwithstanding anything in this Agreement to the contrary, no
representations or warranties are made in respect of the amount or availability
in any Tax period or portion thereof beginning after the Closing Date of any of
the net operating loss carryforwards, capital loss carryforwards or tax credit
carryforwards of the Acquired Companies or the Related Consolidated Entities
arising in a Pre-Closing Tax Period.

(o) The representations and warranties contained in this Section 3.20 are the
only representations and warranties being made by Seller with respect to the
subject matter hereof, and no other representation or warranty of Seller
contained in this Agreement shall apply to any such matters.

Section 3.21 Material Contracts.

(a) Schedule 3.21(a) sets forth a true and complete list of each of the
following written Contracts to which any Acquired Company or Related
Consolidated Entity is a party in effect as of the date of this Agreement (such
Contracts, the “Material Contracts”):

(i) any Contract with any Governmental Authority involving total annual payments
in excess of $1,000,000;

 

43

--------------------------------------------------------------------------------

(ii) (A) any Contract with a Payor, where an Acquired Company or Related
Consolidated Entity is engaging in a risk business to perform such Contract; or
(B) in any state in which the aggregate total annual payments received under all
currently in effect Contracts with a Payor in such state (1) is in excess of
$5,000,000, or (2) is in the top three for aggregate total annual payments
received, and under such Contracts, an Acquired Company or Related Consolidated
Entity is not engaging in a risk business to perform such Contract and
compensated, generally on a fee-for-service basis;

(iii) any Contract between any Acquired Company or Related Consolidated Entity,
on the one hand, and any Physician Partner, on the other hand;

(iv) any material Contract between or among any Acquired Company or Related
Consolidated Entity, on the one hand, and any Related Consolidated Entity (or
other Related Consolidated Entity, as applicable), on the other hand;

(v) any pharmacy benefit management Contract or material patient assistance
program Contract involving annual expenditures in excess of $1,000,000;

(vi) any Contract still in effect with any of the top 10 Providers (identified
by expenditure by the Acquired Companies and Related Consolidated Entities on a
combined basis under a risk business) in each state in which any Acquired
Company or Related Consolidated Entity operates, other than Providers employed
by any Acquired Company or Related Consolidated Entity, during calendar year
2016 in each of the following categories: (A) primary care physicians;
(B) specialist physicians; (C) hospitals; (D) ambulatory surgery centers;
(E) imaging; (F) other ancillary service providers; and (G) skilled nursing
facilities and other extended care or subacute care facilities;

(vii) each joint venture, partnership and other similar Contract involving the
sharing of profits with any third party;

(viii) any Contract or policy for risk sharing or reinsurance with a
professional reinsurance company;

(ix) any material Contract relating to access to or use of a third-party
physician or other health care provider leased network, “network rental” or
other similar arrangement; provided that this section shall not apply to any
Contract with a Payor identified under Section 3.21(a)(ii)(A) of this Agreement
or with a medical group;

(x) any Contract pursuant to which an Acquired Company or Related Consolidated
Entity provides management or administrative services to any third party
customer of an Acquired Company or Related Consolidated Entity;

(xi) any Contract under which any Acquired Company or Related Consolidated
Entity is (A) a lessee of, or holds or uses, any machinery, equipment, vehicle,
or other tangible personal property owned by a third person or entity or (B) a
lessor of any tangible personal property owned by any Acquired Company or
Related Consolidated Entity, in any case referred to in clauses (A) and (B) that
requires future annual payments in excess of $1,000,000;

 

44

--------------------------------------------------------------------------------

(xii) any Contract for capital expenditures or the acquisition or construction
of fixed assets which requires aggregate future payments in excess of
$10,000,000 by any Acquired Company or Related Consolidated Entity;

(xiii) any Contract between an Acquired Company or Related Consolidated Entity
and any employee or former employee, officer, manager, director, partner,
individual consultant, or individual independent contractor of an Acquired
Company or Related Consolidated Entity (excluding any Contracts with Providers
who are individual consultants or independent contractors) providing for
aggregate compensation (i.e., for employees, annual base salary plus bonus
opportunities for a given fiscal year) in excess of $1,000,000 in the 12 month
period immediately preceding the date of the Agreement;

(xiv) any Lease for Leased Real Property with square footage over 50,000 square
feet;

(xv) any Company IP Agreement that is material to the Business;

(xvi) any Contract entered into other than in the Ordinary Course containing
covenants of any Acquired Company or Related Consolidated Entity to indemnify or
hold harmless another Person, unless such indemnification or hold harmless
obligation to such Person, or group of Persons, as the case may be, is less than
$10,000,000;

(xvii) any acquisition or divestiture (whether by merger, sale of stock or
assets, or otherwise) Contract that contains “earn-out” or other contingent
payment obligations (other than with respect to funds or assets held in escrow
and obligations related thereto) that are in effect and not fully-satisfied on
the date hereof, other than this Agreement, and could reasonably be expected to
result in payments in excess of $5,000,000, individually or in the aggregate;

(xviii) any Contract still in effect with expenditure in 2016 in excess of
$1,000,000 by an Acquired Company or Related Consolidated Entity: (A) that
limits the right of an Acquired Company or a Related Consolidated Entity to
engage in any material aspect of its business, (B) that limits the right of an
Acquired Company or a Related Consolidated Entity to participate or compete in
any line of business, market, or geographic area, or (C) grants a right of first
refusal, first offer, or first negotiation, with respect to any material assets,
rights or properties of any Acquired Company or Related Consolidated Entity;

(xix) any Intercompany Contract reasonably expected to result in total annual
payments received or annual expenditures by an Acquired Company or Related
Consolidated Entity in excess of $1,000,000;

(xx) any Contract requiring aggregate future payments or expenditures by an
Acquired Company or Related Consolidated Entity in excess of $1,000,000 for
cleanup, abatement or remediation required by Environmental Laws;

(xxi) any Contract that relates to indebtedness for borrowed money, any credit
agreement, note, bond, mortgage, indenture, pledge, security agreement or other
instrument evidencing indebtedness, or any guarantee with respect to an
obligation of any other Person that is in effect and could reasonably be
expected to result in payments by any Acquired Company or Related Consolidated
Entity in excess of $5,000,000, individually or in the aggregate;

 

45

--------------------------------------------------------------------------------

(xxii) any material Contract of any Acquired Company or Related Consolidated
Entity containing a “change of control” or similar provision requiring the
counterparty’s Consent that would be triggered by Seller’s execution, delivery,
or performance of this Agreement or the consummation of the Transactions;

(xxiii) any Contract to which an Acquired Company or Related Consolidated Entity
is a party the termination or breach of which, or in respect of which the
failure to obtain any Consent required in connection with this Agreement or the
Transactions, would have, or would reasonably be expected to have, individually,
a Seller Material Adverse Effect; and

(xxiv) any Contract entered into by an Acquired Company or Related Consolidated
Entity that to the Knowledge of Seller, (A) would not otherwise be disclosed
pursuant to the foregoing clauses (i) through (xxiii), (B) was not provided in
the Data Room as of the date hereof, (C) with expenditures in 2016 in excess of
$1,000,000 by an Acquired Company or Related Consolidated Entity and
(D) contains material terms that would reasonably be expected to be binding on
Buyer or any of its Affiliates (other than any Acquired Company or Related
Consolidated Entity) following the Closing.

(b) Prior to the date of this Agreement, Seller has made available to Buyer true
and correct copies of all Material Contracts.

(c) Each Material Contract is valid and binding on the applicable Acquired
Company or Related Consolidated Entity that is a party thereto and, to the
Knowledge of Seller, the counterparty thereto, and is in full force and effect.
Except as set forth on Schedule 3.21(c), none of the Acquired Companies or
Related Consolidated Entities is in material breach of, or material default
under, any Material Contract to which it is a party (for avoidance of doubt,
with the materiality of any such breach or default measured against the
applicable Material Contract). To the Knowledge of Seller, as of the date hereof
no event has occurred which, with the giving of notice or passage of time or
both, would constitute a breach or default, under any Material Contract. No
Acquired Company or Related Consolidated Entity has any present expectation or
intention of not fully performing any material obligation pursuant to any
Material Contract to which it is a party. As of the date hereof, no Acquired
Company or Related Consolidated Entity has received any written notice from any
counterparties in connection with any Material Contract of (i) any material
breach or default under any Material Contract, (ii) such party’s intention to
terminate, not renew, cancel or materially decrease its business with any
Acquired Company or Related Consolidated Entity outside of the Ordinary Course,
or (iii) any claim for damages or indemnification thereunder.

Section 3.22 Certain Interests. No Acquired Company or Related Consolidated
Entity has any liability to any officer or member of the board of managers (or
equivalent body) of such Acquired Company or Related Consolidated Entity or to
any relative or spouse (or relative of such spouse) of any such officer or
member of the board of managers (or equivalent

 

46

--------------------------------------------------------------------------------

body), other than obligations arising out of: (a)(i) the employment (or former
employment) of or (ii) any agreement for consulting or administrative services
entered into by, any such individual with such Acquired Company or Related
Consolidated Entity; (b) such individual’s service (or former service) on such
board of managers (or equivalent body); or (c) a Physician Partner ownership in
a Related Consolidated Entity.

Section 3.23 Insurance. Schedule 3.23 sets forth a list of all material policies
of insurance owned or held by or on behalf of the Acquired Companies and Related
Consolidated Entities (the “Insurance Policies”), true and complete copies of
which have been made available to Buyer prior to the date of this Agreement.
With respect to each such Insurance Policy: (a) such Insurance Policy is legal,
valid and binding in accordance with its terms and, except for policies that
have expired under their terms in the Ordinary Course, is in full force and
effect, in each case, as applicable to the applicable Acquired Company or
Related Consolidated Entity, as the case may be; (b) the applicable Acquired
Company or Related Consolidated Entity is not in material breach or default
(including any such breach or default with respect to the payment of premiums or
the giving of notice), and, to the Knowledge of Seller, no event has occurred
which, with notice or the lapse of time, would constitute such a material breach
or default, or permit termination or material modification, under any such
Insurance Policy; and (c) no written notice of cancellation or termination has
been received by the applicable Acquired Company or Related Consolidated Entity
and, to the Knowledge of Seller, there has been no threatened (in writing)
termination of, or material premium increase with respect to, any of the
Insurance Policies. There is no claim pending on behalf of any Acquired Company
or Related Consolidated Entity under any of the Insurance Policies for which any
Acquired Company or Related Consolidated Entity has received a final written
denial of coverage. For the 12 months prior to Closing, each Acquired Company or
Related Consolidated Entity has provided notice to its insurance carriers in the
Ordinary Course of all claims for such Acquired Company or Related Consolidated
Entity that it reasonably believes could give rise to an insurance claim.

Section 3.24 Brokers.Except for an arrangement with Goldman Sachs & Co. LLC, no
broker, finder, or investment banker is entitled to any brokerage, finder’s, or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Seller or any Acquired Company or Related
Consolidated Entity.

Section 3.25 No Other Representations and Warranties. Except for the express
representations and warranties provided in this Article III, neither Seller nor
any of its Representatives has made, or is making, any representation or
warranty of any kind or nature whatsoever, oral or written, express or implied,
relating to Seller or any of the Acquired Companies or Related Consolidated
Entities (including any representation or warranty relating to financial
condition, results of operations, assets or liabilities of Seller or any of the
Acquired Companies or Related Consolidated Entities) to Buyer or its
Representatives, and Seller hereby disclaims any such other representations or
warranties.

 

47

--------------------------------------------------------------------------------

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as of the date hereof and as of
the Closing (other than such representations and warranties that are expressly
made as of a certain date, which are made as of such date) as follows:

Section 4.1 Organization, Authority and Qualification of Buyer. Buyer is a legal
entity duly organized, validly existing and in good standing under the Laws of
the State of its formation and has all requisite corporate or similar power and
authority to enter into this Agreement and the other Transaction Documents to
which it is a party, to carry out its obligations hereunder and thereunder, and
to consummate the Transactions. Buyer is qualified to do business and is in good
standing (to the extent that such concepts are recognized under applicable Law)
in each jurisdiction in which the properties owned or leased by it or the
operation of its business makes such qualification necessary, except to the
extent that the failure to be so qualified or in good standing would not
adversely affect the ability of Buyer to carry out its obligations under this
Agreement or the other Transaction Documents to which it is a party or to
consummate the Transactions. The execution and delivery by Buyer of this
Agreement and the other Transaction Documents to which it is a party, the
performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the Transactions have been duly authorized by all
requisite action on the part of Buyer, and no other proceedings on the part of
Buyer are necessary to authorize this Agreement or the other Transaction
Documents to which Buyer is a party or to consummate the Transactions. This
Agreement and the other Transaction Documents to which it is a party have been
or will be duly executed and delivered by Buyer, and (assuming due
authorization, execution and delivery by Seller and any other party thereto)
this Agreement and the other Transaction Documents to which Buyer is a party
constitute legal, valid, and binding obligations of Buyer, enforceable against
Buyer in accordance with their respective terms, subject to the effect of any
applicable Remedies Exception. No vote of the holders of any securities of Buyer
is necessary to approve this Agreement or consummate the Transactions.

Section 4.2 No Conflict. Assuming all Consents and other actions described in
Section 4.3 have been obtained or made and any applicable waiting period under
the HSR Act has expired or been terminated and, except as may result from any
facts or circumstances relating solely to Seller or its Affiliates, the
execution, delivery, and performance by Buyer of this Agreement and the other
Transaction Documents to which it is a party (including the consummation of the
Transactions) does not and will not: (a) violate, conflict with, or result in
the breach of any provision of the Governing Documents of Buyer, (b) conflict
with or violate any Law applicable to Buyer, and (c) conflict with, result in
any breach of, constitute a default (or an event which, with the giving of
notice or lapse of time, or both, would become a default) under, require any
Consent under, or give to others any right to exercise any remedy under, or
rights of termination, acceleration, cancellation, modification or cancellation
of any material Contract to which Buyer is a party, except with respect to the
foregoing clauses (b) and (c) as would not, individually or in the aggregate,
reasonably be expected to have a Buyer Material Adverse Effect.

 

48

--------------------------------------------------------------------------------

Section 4.3 Governmental Consents and Approvals. The execution, delivery, and
performance by Buyer of this Agreement and the other Transaction Documents to
which it is a party (including the consummation of the Transactions) does not
and will not require any material notices, reports or other filings by Buyer
with, nor any material Consents by any Governmental Authority, except for:
(a) the notification and waiting period requirements under the HSR Act, (b) any
Consents as are necessary as a result of any facts or circumstances relating
solely to Seller or any of its Affiliates, or (c) any notice, report or other
filing by Buyer with, or any Consent by, any Governmental Authority where the
failure to make such notice, report or other filing by Buyer with, or obtain
such Consent of, such Governmental Authority would not, individually or in the
aggregate, have, and would not reasonably be expected to have, a Buyer Material
Adverse Effect.

Section 4.4 Sufficient Funds. As of the date hereof, Buyer has, or as of the
Closing, Buyer will have, available cash or other sources of immediately
available funds sufficient to make the payments required under Article II and to
pay all fees and expenses to be paid by Buyer in connection with this Agreement
and the other Transaction Documents and the transactions contemplated hereby and
thereby and to fund the working capital of the Acquired Companies and Related
Consolidated Entities after the Closing.

Section 4.5 Litigation.

(a) As of the date hereof, there is no Action by or against Buyer pending, or,
to the Knowledge of Buyer, threatened in writing that would, if adversely
determined: (i) materially and adversely affect the legality, validity, or
enforceability of this Agreement or the consummation of the Transactions, or
(ii) would, individually or in the aggregate, reasonably be expected to have a
Buyer Material Adverse Effect.

(b) As of the date hereof, there is no Governmental Order outstanding against
or, to the Knowledge of Buyer, investigation by any Governmental Authority
involving Buyer, or any of its assets that would, individually or in the
aggregate, reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.6 Brokers. No broker, finder, or investment banker is entitled to any
brokerage, finder’s, or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Buyer.

Section 4.7 Investment Representation. Buyer is not acquiring any of the
Acquired Interests with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933 (the
“Securities Act”). Buyer (a) is an “accredited investor” (as defined in
Regulation D under the Securities Act); (b) is able to bear the economic risk of
its investment in the Acquired Interests; (c) acknowledges that the Acquired
Interests have not been registered under the Securities Act and therefore are
subject to certain restrictions on transfer unless registered for resale or
subject to an exempt transaction under the Securities Act and any applicable
state securities law and the Acquired Companies are under no obligation to file
a registration statement with the SEC with respect to the Acquired Interests in
connection with the Transactions or after the Closing; and (d) has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in the Acquired Interests.

 

49

--------------------------------------------------------------------------------

Section 4.8 No Other Representations and Warranties. Except for the express
representations and warranties provided in this Article IV and Section 9.18,
neither Buyer nor any of its Representatives has made, or is making, any
representation or warranty of any kind or nature whatsoever, oral or written,
express or implied, relating to Buyer (including any representation or warranty
relating to financial condition, results of operations, assets or liabilities of
Buyer) to Seller or its Representatives, and Buyer hereby disclaims any such
other representations or warranties.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1 Conduct of Business Prior to the Closing.

(a) Seller covenants and agrees that, except as described on Schedule 5.1(b), as
expressly contemplated, permitted, or required by this Agreement, or as required
by applicable Law, between the date hereof and the Closing, or such earlier date
on which this Agreement may be terminated in accordance with its terms, Seller
shall cause each Acquired Company and Related Consolidated Entity to:
(i) conduct its business in the Ordinary Course in all material respects,
(ii) use its commercially reasonable efforts to preserve intact in all material
respects its business organization, assets and operations, (iii) use its
Ordinary Course efforts to keep available services of key employees and to
preserve its relationships with clients, Payors, Providers, suppliers,
licensors, licensees, advertisers, and others having business dealings with any
Acquired Company or Related Consolidated Entity in all material respects, and
(iv) maintain its books and records in the Ordinary Course in all material
respects; provided, however, that no action by such Acquired Company or Related
Consolidated Entity with respect to matters specifically addressed by any
provision of Section 5.1(a) shall be deemed a breach of this Section 5.1(a)
unless such action would constitute a breach of one or more of the provisions of
Section 5.1(b).

(b) Without limiting the generality of the foregoing, except as described on
Schedule 5.1(b), as expressly contemplated, permitted, or required by this
Agreement, or as required by applicable Law, Seller covenants and agrees that
between the date hereof and the Closing, or such earlier date on which this
Agreement may be terminated in accordance with its terms, without the prior
written consent of Buyer (such consent not to be unreasonably withheld,
conditioned or delayed; provided, that with respect to clause (viii) below,
Buyer may withhold consent at its sole discretion), (x) Seller shall not to the
extent applicable to the Acquired Companies and Related Consolidated Entities
and solely with respect to the below clauses (vi), (vii), (xii), (xiv), (xv),
(xvi), (xvii), (xviii), (xix), (xx) and, to the extent relating to the
foregoing, (xxii), and (y) Seller shall cause each of the Acquired Companies and
Related Consolidated Entities not to:

(i) amend or restate its Governing Documents;

 

50

--------------------------------------------------------------------------------

(ii) merge or consolidate with any other Person, or restructure, reorganize,
file for or declare bankruptcy, or completely or partially liquidate or
otherwise enter into any agreements or arrangements imposing material changes or
restrictions on its assets, operations or businesses; provided that Seller may
take (or cause to be taken) all actions necessary to dissolve the Dissolved
Entities;

(iii) effect any recapitalization, reclassification, stock split, or like change
in its capitalization;

(iv) declare, set aside, make or pay any dividend or other distribution payable
in cash, stock, property or otherwise with respect to any equity interests or
other securities of any Acquired Company or Related Consolidated Entity or enter
into any agreement with respect to any securities of any Acquired Company or
Related Consolidated Entity, in each case, other than transactions between or
among Acquired Companies;

(v) acquire, redeem, repurchase, issue, sell, transfer, grant, encumber, pledge,
or otherwise dispose of any equity interests or other securities of any Acquired
Company or Related Consolidated Entity or any other Person, or securities
convertible or exchangeable into or exercisable for any shares of such equity
interests or other securities, or any options, warrants or other rights of any
kind to acquire any shares of such equity interests or other securities or such
convertible or exchangeable securities, in each case, other than transactions
between or among Acquired Companies;

(vi) make any change in any method of accounting or accounting practice or
policy used by any Acquired Company or Related Consolidated Entity, other than
such changes as are required by Law or GAAP;

(vii) make or enter into any new commitment for any material capital
expenditures by the Acquired Companies and Related Consolidated Entities, other
than: (A) the budget set forth in Schedule 5.1(b)(vii), (B) pursuant to
Contracts in force on the date hereof and made available to Buyer prior to the
date hereof, or (C) as necessary to prevent the destruction, removal, wasting,
deterioration, or impairment of the assets of any Acquired Company or Related
Consolidated Entity;

(viii) acquire by merger or consolidation, by the purchase of all or a
substantial portion of its assets or equity interests, or by any other
transaction or series of related transactions, any business or any Person, in
each case for a purchase price in excess of $5,000,000 individually or
$25,000,000 in the aggregate;

(ix) transfer, sell, lease, license, mortgage, pledge, surrender, encumber
(other than Permitted Encumbrances), divest, cancel, abandon or allow to lapse
or expire or otherwise dispose of any material Assets or otherwise create or
incur any Encumbrance material to the Acquired Companies and Related
Consolidated Entities, taken as a whole, not in the Ordinary Course, other than:
(A) pursuant to Contracts in effect prior to the date hereof, (B) sales or
dispositions of obsolete assets (as determined in Seller’s reasonable
discretion), or (C) transfers among the Acquired Companies and Related
Consolidated Entities;

 

51

--------------------------------------------------------------------------------

(x) (A) incur or assume any liabilities, obligations, or indebtedness for
borrowed money or capitalized lease obligations or guarantee or otherwise
provide credit support in respect of any such liabilities, obligations, or
indebtedness, or issue or sell any debt securities or warrants or other rights
to acquire any debt security of the Acquired Companies and Related Consolidated
Entities, other than in the Ordinary Course, or (B) fail to pay or discharge any
material indebtedness when due in accordance with its terms;

(xi) make any loans, advances, guarantees, capital contributions or charitable
contributions or pledges to or investments in any Person (other than between
Acquired Companies and Related Consolidated Entities) in excess of $5,000,000
individually or $10,000,000 in the aggregate, other than in the Ordinary Course;

(xii) other than in the Ordinary Course, accelerate, in any material respect
beyond the normal collection cycle, the collection of accounts receivable or
waive any rights of material value or take any actions with respect to
collection practices that would result in any material losses or material
adverse changes on collections;

(xiii) other than in the Ordinary Course, enter into, extend, materially amend,
waive any material provision of, cancel, or terminate any Material Contract, or
any Contract that if entered into prior to the date hereof would be a Material
Contract, provided that existing Material Contracts may be renewed on
substantially the same terms;

(xiv) cancel or terminate any insurance policies or fail to keep in force
insurance policies with respect to the assets, operations, and activities of the
Acquired Companies or Related Consolidated Entities that are consistent in all
material respects with the insurance policies with respect to the assets,
operations, and activities of the Acquired Companies or Related Consolidated
Entities that are currently in effect as of the date hereof, other than in the
Ordinary Course;

(xv) except as required by applicable Law or the terms of any Company Plan in
existence on the date hereof, as applicable, and except for any action in the
Ordinary Course or reasonably necessary or appropriate to effect or reflect the
transfer of a Seller-Level Employee’s employment from Seller or a Seller
Affiliate to an Acquired Company: (A) materially increase the compensation or
consulting fees, bonus, pension, welfare, fringe or other benefits, severance or
termination pay, determined collectively in the aggregate, of any Business
Employee, (B) become a party to, establish, adopt or amend in any material
respect, commence participation in or terminate any Company Plan in respect of
any Business Employee or any arrangement that would have been a Company Plan had
it been entered into prior to this Agreement in respect of any Business
Employee, (C) grant any new awards, or amend or modify the terms of any
outstanding awards to Business Employees under any Company Plan, (D) take any
action to accelerate the vesting or lapsing of restrictions or payment, or fund
or in any other way secure the payment, of compensation or benefits payable to
Business Employees under any Company Plan, (E) change any actuarial or other
assumptions used to calculate funding obligations with respect to any Company
Plan in respect of any Business Employee that is required by applicable Law to
be funded or change the manner in which contributions to such plans are made or
the basis on which such contributions are determined, except as may be required
by GAAP, (F) forgive any loans or issue any loans (other than routine travel
advances

 

52

--------------------------------------------------------------------------------

issued in the Ordinary Course) to any Business Employee, (G) hire any employee
or engage any independent contractor (who is a natural person), in each case,
whose primary function is to provide services to the Business, with an annual
base salary or wage rate or consulting fees in excess of $300,000, other than
the hiring of an employee or engagement of an independent contractor (who is a
natural person) to replace a terminated employee or independent contractor
serving in a similar role and other than as reasonably necessary or appropriate
to effect or reflect the transfer of a Seller-Level Employee’s employment from
Seller or an Affiliate of Seller to an Acquired Company, or (H) terminate the
employment of any Business Employee with the title of Vice President or above
other than for cause;

(xvi) establish, adopt, or enter into any collective bargaining or other labor
union Contract;

(xvii) (A) make any payment to or for the benefit of any Business Employee or
any entity in which any of such persons owns any beneficial interest (other than
any publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 1% of the stock of
which is beneficially owned by any of such persons), except for the payment of
salary or other employment related compensation in the Ordinary Course or as
otherwise permitted under this Agreement, or (B) make or obligate itself to make
any payment to or for the benefit of any Business Employee in contemplation of
the change in control of any Acquired Company or Related Consolidated Entity;

(xviii) enter into or materially modify any Contract with any of its officers or
members of the board of directors (or equivalent body) (or, to the Knowledge of
Seller, with any relative, spouse, beneficiary, or Affiliate of such Person),
other than obligations incidental to the employment (or former employment) of
any such individual by such Acquired Company or Related Consolidated Entity or
such individual’s service (or former service) on such board of directors (or
equivalent body);

(xix) commence, settle, terminate, conclude or compromise any Action by or
against any Acquired Company or Related Consolidated Entity, other than: (A) in
the Ordinary Course involving an amount at issue of less than $5,000,000,
(B) with respect to the Retained Litigation (subject to the rights of Buyer set
forth in Section 5.13(a) (Retained Litigation)), or (C) to enforce rights under
this Agreement;

(xx) make or change any material Tax election; adopt or change any material
method of Tax accounting (except as required by applicable Tax Law); file any
amended material Tax Return; settle or compromise any material Tax liability,
claim or assessment; enter into any closing agreement with respect to Taxes;
waive or extend any statute of limitations with respect to a material amount of
Taxes; or surrender any right to claim a material refund of Taxes; except, in
each case, where such action would not reasonably be expected to result in any
material increase in the Tax liability of the Acquired Companies or the Related
Consolidated Entities for any taxable period, or for the portion of any Straddle
Period, beginning after the Closing Date (other than any such increase resulting
from the reduction or elimination of a net operating loss, capital loss or tax
credit of the Acquired Companies or the Related Consolidated Entities arising in
a Pre-Closing Tax Period);

 

53

--------------------------------------------------------------------------------

(xxi) abandon, cancel or allow to lapse or expire any Registered Owned
Intellectual Property; or

(xxii) agree, authorize or commit to do any of the foregoing.

(c) Nothing contained in this Agreement is intended to give Buyer, directly or
indirectly, the right to control or direct the operations of the Acquired
Companies and Related Consolidated Entities prior to the Closing. Prior to the
Closing, Seller shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over the Acquired Companies’ and
Related Consolidated Entities’ operations.

Section 5.2 Access to Information.

(a) The terms of the confidentiality agreement, dated as of June 16, 2017 (the
“Confidentiality Agreement”), between Optum, Inc. and HealthCare Partners, LLC,
are hereby incorporated by reference and, notwithstanding anything contained in
the Confidentiality Agreement to the contrary, shall continue in full force and
effect until the Closing, at which time such Confidentiality Agreement shall
terminate. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall, as provided in Section 8.2,
continue in full force and effect in accordance with its terms.

(b) Subject to the Confidentiality Agreement, from the date hereof until the
Closing, or such earlier date on which this Agreement may be terminated in
accordance with its terms, upon reasonable notice, Seller shall, and shall cause
each Acquired Company and Related Consolidated Entity and each of its and their
respective Representatives to: (i) afford Buyer and its authorized
Representatives reasonable access to the officers, personnel, properties,
Contracts, and books and records of the Acquired Companies and Related
Consolidated Entities and (ii) furnish to the authorized Representatives of
Buyer such additional financial and operating data and other information
regarding the Acquired Companies and Related Consolidated Entities (or copies
thereof) as Buyer and its authorized Representatives may from time to time
reasonably request; provided, however, that any reasonable and documented
out-of-pocket expenses incurred by Seller and its Affiliates in connection with
such access or furnishing of information shall be reimbursed by Buyer, and such
access shall be during normal business hours and in such a manner as not to
interfere unreasonably with the normal operations of Seller and each of the
Acquired Companies and Related Consolidated Entities. Notwithstanding anything
to the contrary in this Agreement, none of Seller, the Acquired Companies and
Related Consolidated Entities shall be required to provide any such access or
disclose any such information to Buyer or its authorized Representatives if such
access or disclosure would (or would be reasonably likely to): (A) jeopardize
any attorney-client or other legal privilege, (B) contravene any applicable
Laws, fiduciary duty, or binding confidentiality agreement entered into prior to
the date hereof (but shall use commercially reasonable efforts to provide Buyer
with alternative disclosure sufficient to convey the economic effect of and
other substantive details and information concerning such matter), or
(C) involve any environmental investigation or testing for Hazardous Materials.
When accessing any of the properties of any of the Acquired Companies and
Related Consolidated Entities, Buyer shall, and shall cause its Representatives
to, comply with all safety and security requirements for such property.

 

54

--------------------------------------------------------------------------------

Section 5.3 Regulatory and Other Authorizations; Notices and Consents.

(a) Except as otherwise provided in this Agreement, each Party agrees to, and
shall cause its respective controlled Affiliates to, use its reasonable best
efforts to: (i) promptly obtain all Consents of all Governmental Authorities
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and the other
Transaction Documents, (ii) cooperate fully with the other Party in promptly
seeking to obtain all such Consents, and (iii) provide such other information to
any Governmental Authority as such Governmental Authority may reasonably request
in connection herewith.

(b) Each Party agrees to, and shall cause its respective Affiliates to, make its
respective filing, if necessary, pursuant to the HSR Act with respect to the
Transactions as promptly as reasonably practicable after the date hereof and no
later than 15 Business Days thereafter unless otherwise agreed by the Parties
and to supply as promptly as reasonably practicable to the appropriate
Governmental Authorities any additional information and documentary material
that may be requested pursuant to the HSR Act. Each Party agrees to, and shall
cause its respective Affiliates to, make as promptly as reasonably practicable
its filings and notifications, if any, and cooperate with the other Party if
required for making such filings under any other applicable antitrust,
competition, or trade regulation Law (together with the HSR Act, the “Antitrust
Laws”), to supply as promptly as reasonably practicable to the appropriate
Governmental Authorities any additional information and documentary material
that may be requested pursuant to the applicable Antitrust Law. Buyer shall pay
the filing fees required under the HSR Act.

(c) Without limiting the generality of the foregoing and subject to the
limitations set forth in this Section 5.3(c), if any objection is asserted with
respect to the Transactions under any Antitrust Law or if any Action, whether
administrative or judicial, is instituted (or threatened to be instituted) by a
Governmental Authority challenging the Transactions as violative of any
applicable Antitrust Law or which would otherwise make the Transactions illegal
or prevent, prohibit, delay or materially impair the consummation of the
Transactions, each Party and its respective Subsidiaries or other Affiliates
shall use their respective reasonable best efforts to resolve any such
objections or Actions (or threatened Actions) so as to permit consummation of
the Transactions as promptly as reasonably practicable, including (x) at Buyer’s
option, with the consent of Seller (such consent not to be unreasonably
withheld, conditioned or delayed), to contest and resist any such objection or
Action and (y) to use their respective reasonable best efforts to have vacated,
lifted, reversed or overturned any Governmental Order (including any statute,
rule, regulation), whether temporary, preliminary or permanent and whether
judicial or administrative in nature, that is in effect and that prohibits,
prevents or restricts consummation of the Transactions and to have such
Governmental Order repealed, rescinded or made inapplicable so as to permit
consummation of the Transactions; provided that, notwithstanding anything to the
contrary contained in this Section 5.3, neither this Section 5.3(c), nor the
“reasonable best efforts” standard herein shall require, or be construed to
require, any Party or any of their respective Subsidiaries or other Affiliates,
in order to resolve any such objections or Actions (or threatened Actions) or
otherwise, to: (i) (A) sell, lease, license, transfer, dispose of, divest or
otherwise encumber, or hold separate pending any such action, or (B) propose,
negotiate or

 

55

--------------------------------------------------------------------------------

offer to effect, or consent or commit to, any such sale, leasing, licensing,
transfer, disposal, divestiture or other encumbrance, or holding separate,
before or after the Closing, of any Assets of Buyer, its Affiliates or the
Acquired Companies or Related Consolidated Entities (or any of their respective
Subsidiaries or other Affiliates), or (ii) take or agree to take any other
action or agree or consent to any limitations or restrictions on freedom of
actions with respect to, or its ability to retain, or make changes in, any
Assets of Buyer, its Affiliates or the Acquired Companies or Related
Consolidated Entities (or any of their respective Subsidiaries or other
Affiliates) (any such action described in clauses (i) and (ii) above, a
“Settlement Action”) that would, individually or in the aggregate with all other
such requirements, reasonably be expected to have a Seller Material Adverse
Effect (without giving effect to the provisos contained in the definition of
Seller Material Adverse Effect) after the Closing Date (provided that any
Settlement Action imposed on Buyer or its Affiliates (other than the Acquired
Companies and Related Consolidated Entities), together with any Settlement
Actions imposed on the Acquired Companies and Related Consolidated Entities,
shall be considered to result in a Seller Material Adverse Effect pursuant to
this Section 5.3(c) if such actions would reasonably be expected to,
individually or in the aggregate, constitute a Seller Material Adverse Effect if
measured by reference to the business, assets, financial condition or results of
operations of (and as though imposed upon) the Acquired Companies and Related
Consolidated Entities, taken as a whole). In the event that any Settlement
Action is proposed by or acceptable to a Governmental Authority, Buyer shall
have the sole right to determine whether to and the manner in which to implement
the requirement of such Governmental Authority; provided that in no event will
Buyer or the Acquired Companies or Related Consolidated Entities (or any of
their respective Subsidiaries or other Affiliates) be required to take or effect
any Settlement Action that is not conditioned upon the consummation of the
Closing.

(d) To the extent permitted by applicable Law and subject to all applicable
privileges (including the attorney-client privilege), each Party shall promptly
notify the other Party of any substantive communication it or any of its
Affiliates receives from any Governmental Authority relating to the matters that
are the subject of this Section 5.3 and permit the other Party to review in
advance (and to consider any comments made by the other Party in relation to)
any proposed substantive communication by such Party to any Governmental
Authority relating to such matters. No Party shall agree to participate in any
substantive meeting, telephone call, or discussion with any Governmental
Authority in respect of any submissions, filings, investigation (including any
settlement of the investigation), or any other inquiry relating to such matters
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, telephone call, or discussion. Each Party
shall, and shall cause its Affiliates to, coordinate and cooperate fully with
the other Party in exchanging such information and providing such assistance as
the other Party may reasonably request in connection with the foregoing,
investigation, or any other inquiry under any applicable Antitrust Laws. The
Parties shall, and shall cause their respective Affiliates to, provide each
other with copies of all substantive correspondence, filings, or substantive
communications between them or any of their respective 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; provided, however,
that materials may be redacted: (i) as necessary to comply with contractual
arrangements or applicable Laws; and (ii) as necessary to address reasonable
attorney-client or other privilege or confidentiality concerns.

 

56

--------------------------------------------------------------------------------

(e) The Parties, or their respective Subsidiaries, as applicable, shall give any
notices to non-Governmental Authority third parties and use commercially
reasonable efforts to obtain any non-Governmental Authority third-party
Consents, approvals or waivers that are necessary, proper or advisable to
consummate the Transactions or otherwise in connection with the Transactions;
provided, however, that the Parties shall coordinate and cooperate in
determining whether any actions or Consents are required to be obtained from
parties to any Contracts of the Acquired Companies and Related Consolidated
Entities in connection with consummation of the Transactions or otherwise in
connection with the Transactions and seeking any such actions or Consents. The
Parties shall each, upon request, furnish the other Party with all information
concerning itself, its Subsidiaries and Representatives and such other matters
as may be reasonably necessary or advisable in connection with any statement,
filing, notice or application made by or on behalf the Parties or any of their
respective Subsidiaries to any third party in connection with the Transactions
and in obtaining any non-Governmental Authority third-party Consents.

Section 5.4 Further Action. The Parties shall, and shall cause their respective
Affiliates to, except as otherwise expressly provided herein, use reasonable
best efforts to take, or cause to be taken, all necessary or 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 the other
Transaction Documents to which it is a party and consummate and make effective
the Transactions as promptly as reasonably practicable.

Section 5.5 Parent Guarantee. Prior to the Closing, each of the Parties shall,
and shall cause its Affiliates to, use commercially reasonable efforts to
replace “Seller” with “Buyer” (or an Affiliate of Buyer) as the guarantor entity
with respect to each Parent Guarantee and to provide a full and irrevocable
release of Seller with respect to any obligations or liabilities under such
Parent Guarantee. For so long as any Parent Guarantee remains outstanding
following the Closing, each of the Parties shall, and shall cause its Affiliates
to, use commercially reasonable efforts to replace “Seller” with “Buyer” (or an
Affiliate of Buyer) as the guarantor entity with respect to each Parent
Guarantee and to provide a full and irrevocable release of Seller with respect
to any obligations or liabilities under such Parent Guarantee. From and after
the Closing, Buyer shall indemnify and hold the Seller Indemnified Parties
harmless from and against any and all Losses which the Seller Indemnified
Parties may suffer as a result of the failure of any Acquired Company or Related
Consolidated Entity to perform any of its obligations under any Contract set
forth on Schedule 1.1(f) for which Seller remains the guarantor.

Section 5.6 Restricted Names.

(a) Except as otherwise permitted in the Trademark License Agreement, within 10
Business Days after the Closing Date, Buyer shall, and shall cause its
Subsidiaries to, (i) take all action necessary to change the name of each
Acquired Company and Related Consolidated Entity that includes a Restricted Name
to a name that is not confusingly similar to

 

57

--------------------------------------------------------------------------------

any Restricted Name, (ii) take all actions and execute all documents as may be
necessary to evidence any such name changes, (iii) cease and discontinue all
uses of the Restricted Names, and (iv) eliminate the Restricted Names from,
revise, paint over or otherwise permanently obscure the Restricted Names on any
signage or other public-facing materials (including any publicly distributable
documents and other digital or physical public-facing materials bearing such
Restricted Names) owned or controlled by Buyer or its Subsidiaries (including
the Acquired Companies or Related Consolidated Entities) after the Closing Date.

(b) Except as otherwise permitted in the Trademark License Agreement, within 10
Business Days after the Closing Date, Seller shall, and shall cause its
Subsidiaries to, (i) cease and discontinue all uses of the HCP Names, and
(ii) eliminate the HCP Names from, revise, paint over or otherwise permanently
obscure the HCP Names or any derivative or variation thereof, on any signage or
other public-facing materials (including any publicly distributable documents
and other digital or physical public-facing materials bearing such HCP Names)
owned or controlled by Seller or its Subsidiaries after the Closing Date.

(c) Except as set forth in this Section 5.6(c), within 10 Business Days after
the Closing Date, Seller shall, and shall cause its Subsidiaries to, for a
period of two years after the Closing Date and solely within the United States,
(i) cease and discontinue all uses of “DaVita Medical Group”, and (ii) eliminate
“DaVita Medical Group” from, revise, paint over or otherwise obscure “DaVita
Medical Group”, on any signage or other public-facing materials (including any
publicly distributable documents and other digital or physical public-facing
materials bearing “DaVita Medical Group”) owned or controlled by Seller or any
of its Subsidiaries after the Closing Date; provided, that Seller shall not be
obligated to remove “DaVita Medical Group” from any printed materials that have
already been distributed to the public as of the Closing Date or revise any
printed materials used as of the Closing Date until such materials are replaced
in the Ordinary Course. Notwithstanding the foregoing, neither Seller nor any of
its Subsidiaries shall be in breach of this Section 5.6(c) if, after the Closing
Date, Seller or any of its Subsidiaries (a) uses “DaVita Medical Group” in a
nominative manner in textual sentences referencing the historical relationship
between Seller, on the one hand, and the Acquired Companies and Related
Consolidated Entities, on the other hand, which references are factually
accurate, (b) retains copies of any books, records and other materials that, as
of the Closing Date, contain or display “DaVita Medical Group” and such copies
are used solely for internal or archival purposes (and not public display) or
(c) uses “DaVita Medical Group” to comply with applicable Laws or for
litigation, regulatory or corporate filings and documents filed by Seller or any
of its Subsidiaries with any Governmental Authority. Nothing in this
Section 5.6(c) shall prohibit, restrict or limit Seller’s or any of its
Subsidiaries’ right to use the name “DAVITA” provided that such name is not used
when directly followed with the words “MEDICAL GROUP”.

Section 5.7 Notice of Certain Events. Each Party shall give reasonably prompt
notice to the other Party of: (a) receipt by such Party of any material written
notice from any Person alleging that the Consent of such Person is or may be
required in connection with the Transactions, or (b) any Effect which could:
(i) individually or in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect or Buyer Material Adverse Effect, as applicable, or
(ii) result in any of the conditions in this Agreement set forth in Article VI
not being satisfied; provided that the delivery of any notice pursuant to this
Section 5.7 shall not, unless agreed to in writing by the Party receiving such
notice, affect or be deemed to modify any representation, warranty, covenant,
right, remedy, or condition to any obligation of any Party or update the
Disclosure Schedule.

 

58

--------------------------------------------------------------------------------

Section 5.8 Intercompany Arrangements.

(a) Seller shall, and shall cause its Affiliates to, take such action and make
such payments as necessary so that, prior to or concurrently with the Closing
and without any liability of the Acquired Companies and Related Consolidated
Entities following the Closing, the Acquired Companies and Related Consolidated
Entities, on the one hand, and Seller and its Affiliates (other than the
Acquired Companies and Related Consolidated Entities), on the other hand, shall
settle, discharge, offset, pay, repay in full, capitalize, terminate, commute or
extinguish all Intercompany Balances, including any accrued and unpaid interest
to but excluding the date of payment, for the amount due; provided that such
elimination of Intercompany Balances shall not be required to the extent:
(i) there is insufficient cash maintained on the balance sheet of any Acquired
Company or Related Consolidated Entity to pay down any Intercompany Balance,
(ii) any such Intercompany Balance is required for any Acquired Company or
Related Consolidated Entity to remain in compliance with applicable financial
solvency ratios, including those established by the California Department of
Managed Health Care, or (iii) any such Intercompany Balance is required to
ensure that an Acquired Company or a Related Consolidated Entity maintains
sufficient working capital and cash-on-hand to fund its ongoing business
operations.

(b) Seller shall, and shall cause its Affiliates to, take such action as
necessary to terminate, prior to or concurrently with the Closing and without
any liability of the Acquired Companies and Related Consolidated Entities
following the Closing, all Intercompany Contracts; provided, however, that this
Section 5.8(b) shall not apply to: (i) any Seller-Level Contract, (ii) any
Shared Contract, (iii) the Transaction Documents, or (iv) any Intercompany
Contract set forth on Schedule 5.8(b)(i). For the avoidance of doubt, except as
set forth on Schedule 5.8(b)(ii) or otherwise in the Ordinary Course, the
agreements between one or more Acquired Companies, on the one hand, and one or
more Related Consolidated Entities, on the other hand, shall remain in full
force and effect following the Closing, each in accordance with their respective
terms.

(c) Seller shall, and shall cause its Affiliates to, take such action as
necessary to release, prior to or concurrently with the Closing, any Encumbrance
on the assets and properties of the Acquired Companies and Related Consolidated
Entities pursuant to any Indebtedness of Seller, Intercompany Contract or
Intercompany Balance and shall execute and deliver to Buyer Uniform Commercial
Code termination statements and such other documents or endorsements necessary
to release any such Encumbrance.

Section 5.9 Seller Release. Effective as of the Closing, Seller, on behalf of
itself and its Subsidiaries, hereby releases, remises and discharges any and all
rights, claims and Losses arising out of any actions, omissions or facts that
occurred prior to the Closing Date that it or any of its Subsidiaries has had,
now has or might now or hereafter have against the Acquired Companies, Related
Consolidated Entities and JV Entities (a “Releasee”); provided that the
foregoing release shall not apply to any rights, claims or Losses arising under
or related

 

59

--------------------------------------------------------------------------------

to the Transaction Documents or the Retained Litigation. Seller, for itself and
its Subsidiaries, hereby covenants to refrain from, directly or indirectly,
asserting any claim or demand, or commencing any Action against any Releasee,
based upon any matter expressly released hereby. The Parties agree that this
Section 5.9 shall not apply to any Action, or rights or claims relating thereto,
between Seller (and any Affiliate thereof), on the one hand, and Buyer (and any
Affiliate thereof, other than the Acquired Companies and Related Consolidated
Entities), on the other. For the avoidance of doubt, Seller shall indemnify
Buyer with respect to the Retained Litigation in accordance with Section 5.13
and Article VII.

Section 5.10 Directors’ and Officers’ Indemnification; Run-off “Tail” Insurance.

(a) For a period of six years after the Closing Date (and such additional period
of time as may be necessary to fully and finally resolve any claims for
indemnification which have been duly submitted prior to the six-year anniversary
of the Closing Date), unless otherwise required by applicable Law, the
certificate of incorporation and bylaws (or equivalent Governing Documents) of
the Acquired Companies and Related Consolidated Entities with respect to
indemnification, exculpation and advancement of expenses shall not be amended or
altered in any way that would be detrimental to a D&O Indemnified Party (as
defined below). Buyer and each of the Acquired Companies and the Related
Consolidated Entities (following the Closing) shall indemnify, and advance
expenses to, each present director or officer of each of the Acquired Companies
and Related Consolidated Entities that is a Transferred Employee (collectively,
the “D&O Indemnified Parties”), in and to the extent of their respective
capacities as such and not as equity holders of any of the Acquired Companies
and the Related Consolidated Entities, in respect of actions, omissions or
events through the Closing to the fullest extent permitted by Law. Without
limiting the generality of the preceding sentence, if any D&O Indemnified Party
becomes involved in any actual or threatened action, suit, claim, proceeding or
investigation covered by this Section 5.10(a) after the Closing, Buyer, the
Acquired Companies and the Related Consolidated Entities shall, to the fullest
extent permitted by Law, promptly indemnify and advance to such D&O Indemnified
Party his or her legal or other expenses (including the cost of any
investigation and preparation incurred in connection therewith). Notwithstanding
anything herein to the contrary, Buyer shall have no obligation pursuant to this
Section 5.10(a) to the extent that any indemnification, exculpation and
advancement of expenses hereunder is a result of any actions, omissions or
events for which Buyer is entitled to indemnification pursuant to Article VII.

(b) Prior to the Closing, Seller shall secure (i) a six-year term Directors’ &
Officers’ Liability run-off insurance policy or extended reporting period
endorsement (“D&O Tail”) covering claims made for alleged wrongful acts
occurring prior to the Closing Date, (ii) a six-year term Fiduciary Liability
run-off insurance policy, or extended reporting endorsement (“Fiduciary Tail”)
covering claims made for alleged wrongful acts occurring prior to the Closing
Date, and (iii) a three-year term Employment Practices Liability run-off
insurance policy or extended reporting period endorsement (“EPL Tail”) covering
claims made for alleged wrongful acts occurring prior to the Closing Date.

 

60

--------------------------------------------------------------------------------

(c) All tail policies must have an effective date on the Closing Date. The
one-time premium cost for the D&O Tail, Fiduciary Tail, and EPL Tail policies
shall be prepaid by Seller for the indicated policy term(s).

(d) All tail insurance policies shall be written by one or more insurance
companies having an A.M. Best financial strength rating at least equal to that
of the insurance company that was writing the insurance coverage as of the date
of Closing.

(e) The obligations under this Section 5.10 shall not be terminated or modified
in such a manner as to adversely affect any D&O Indemnified Party to whom this
Section 5.10 applies without the consent of such D&O Indemnified Party (it being
expressly agreed that the D&O Indemnified Parties to whom this Section 5.10
applies shall be third-party beneficiaries of this Section 5.10 and shall be
entitled to enforce the covenants contained herein).

Section 5.11 Tax Matters.

(a) Seller Tax Returns and Payment of Taxes. Seller shall be responsible for
preparing and filing all Seller Tax Returns. All such Tax Returns shall, to the
extent relating to the Acquired Companies or Related Consolidated Entities, be
prepared in a manner consistent with the most recent past practice of the
Acquired Companies or Related Consolidated Entities, as applicable, unless
otherwise required by applicable Tax Law, and Seller shall timely remit or cause
to be remitted to the applicable Governmental Authority any Taxes due in respect
of such Tax Returns (the “Seller Taxes”); provided that Seller Taxes shall not
include Taxes that are taken into account in the calculation of the Net Working
Capital. Any Taxes that would have been Seller Taxes but for the proviso in the
preceding sentence shall be paid by Buyer to Seller within five days of payment
by Seller to the applicable Governmental Authority.

(b) Other Tax Returns and Payment of Taxes. Buyer shall be responsible for
preparing and filing all Tax Returns of the Acquired Companies and Related
Consolidated Entities that are not described in Section 5.11(a); provided, that,
in the case of any such Tax Return with respect to a Straddle Period or any
Non-Income Tax Return with respect to a Tax period ending on or before the
Closing Date, such Tax Returns shall be prepared and filed in a manner
consistent with the most recent past practice of the Acquired Companies or
Related Consolidated Entities, as applicable, unless otherwise required by
applicable Tax Law; and provided, further, that not later than 30 days prior to
the due date (taking into account all extensions properly obtained) for filing
such Tax Return by Buyer (or as soon as reasonably practicable if such Tax
Return is due (taking into account all extensions properly obtained) within 30
days after the Closing Date), Buyer shall provide Seller with a copy of relevant
portions of the draft of such Tax Return for Seller’s approval. In the case of
any disagreement between Buyer and Seller regarding any Tax Return furnished for
approval under this Section 5.11(a) that cannot be resolved by the 15th day
prior to the due date for such Tax Return, such disagreement shall be resolved
by the Neutral Accountant and any such determination by the Neutral Accountant
shall be final and binding on the parties. The fees and expenses of the Neutral
Accountant shall be borne by the parties in a manner consistent with the
provisions of Section 2.6(c). Buyer shall bear all Taxes of the Acquired
Companies and Related Consolidated Entities other than Indemnified Taxes, and
Seller shall bear all Indemnified Taxes.

 

61

--------------------------------------------------------------------------------

(c) Certain Conduct.

(i) Without the prior written consent of Seller, not to be unreasonably
withheld, conditioned or delayed, Buyer shall not (and shall not cause or permit
any of its Affiliates, the Acquired Companies or the Related Consolidated
Entities to): (x) amend, refile or otherwise modify any Tax Return of or
relating (in whole or in part) to the Acquired Companies or Related Consolidated
Entities with respect to any Pre-Closing Tax Period, or (y) make any Tax
election (A) with respect to any of the Acquired Companies or Related
Consolidated Entities that has retroactive effect to a Pre-Closing Tax Period or
relates to any Seller Tax Return or (B) if such election would reasonably be
expected to result in a material adverse consequence to Seller under this
Agreement or to any member of the Seller Group. Neither Buyer nor Seller (nor
any of their Affiliates) shall file or cause to be filed any election under
Section 338 or Section 336 of the Code (or any similar election under state,
local or non-U.S. law) with respect to the Transactions.

(ii) Seller hereby agrees to make an election (which may be on a protective
basis) under Treasury Regulations Section 1.1502-36(d)(6)(i)(A) (and under any
comparable provisions of state or local Law) to reduce Seller’s basis in the
Acquired Interests in order to avoid any reduction in the Tax attributes of any
of the Acquired Companies or Related Consolidated Entities pursuant to Treasury
Regulations Section 1.1502-36 (and pursuant to any comparable provisions of
state or local Law). Seller shall provide a copy of any election described in
this Section 5.11(c)(ii) (together with reasonable supporting documentation
setting forth any relevant calculations) to Buyer at least 30 days prior to the
due date for such election and shall reflect any reasonable comments delivered
by Buyer on such election.

(d) Tax Refunds. Any Tax refunds or credits that are received by Buyer and its
Affiliates (including for this purpose the Acquired Companies and Related
Consolidated Entities) that relate to Indemnified Taxes (including, for the
avoidance of doubt, Taxes of any member of the Seller Group) shall be for the
account of Seller, and Buyer shall pay over the amount of any such refund or
credit to Seller within five Business Days after Buyer’s receipt thereof.
Neither Buyer nor any of the Acquired Companies or Related Consolidated Entities
shall, unless otherwise required under applicable Tax Law, carry back to a
Pre-Closing Tax Period any item of loss, deduction or credit or any net
operating loss, net capital loss or other tax credit or benefit that is
attributable to, arises from or relates to any taxable period (or portion
thereof) commencing after the Closing Date.

(e) Cooperation on Tax Matters. Buyer and Seller shall (and shall cause their
respective Affiliates to): (A) promptly provide the other Party and its
Affiliates with such information, records, documents or assistance as may be
reasonably requested in connection with the preparation, signing and filing of
any Tax Return or any audit or other examination by any Governmental Authority
or any judicial or administrative proceeding relating to Taxes or in connection
with other legitimate matters related to Taxes and (B) retain for a period of
seven years after the Closing Date all records or information which may be
relevant to such Tax Return, audit, examination or proceeding; provided that the
foregoing shall be done in a

 

62

--------------------------------------------------------------------------------

manner so as not to interfere unreasonably with the conduct of the business of
the Parties. Notwithstanding anything to the contrary in this Agreement, Seller
shall not be required to transfer or make available to Buyer any Tax Returns or
information with respect to Taxes of Seller or any of Seller’s Affiliates
(except to the extent relating to the Acquired Companies or Related Consolidated
Entities).

(f) Tax Contests.

(i) Buyer or Seller, as the case may be, shall notify the other Party within 20
Business Days after receipt by such Party or any of its Affiliates of written
notice of any pending federal, state, local or foreign Tax audit or examination
or notice of deficiency or other adjustment, assessment or redetermination
relating to Taxes for which such other Party or its Affiliates may be
responsible under this Agreement (“Tax Matters”).

(ii) Seller and its Affiliates shall have the right to control, contest, resolve
and defend against any Tax Matters relating in whole or in part to (A) Taxes of
any Acquired Company or Related Consolidated Entity for which Seller is
responsible under this Agreement or (B) Taxes of any member of the Seller Group;
provided that, in the case of a Tax Matter described in (A) and not in (B) of
this sentence which Tax Matter could be reasonably expected to materially and
adversely affect Buyer’s or its Affiliates’ (including after the Closing, the
Acquired Companies and Related Consolidated Entities) liability for Taxes (other
than any such liability resulting from the reduction or elimination of a net
operating loss, capital loss or tax credit of the Acquired Companies or the
Related Consolidated Entities arising in a Pre-Closing Tax Period), Seller shall
keep Buyer reasonably informed regarding the progress of such Tax Matter and
Seller shall not, and shall not permit its Affiliates to, concede, settle or
compromise a Tax Matter (or portion thereof) controlled by Seller under this
Section 5.11(f)(ii) without the prior consent of Buyer (which consent shall not
be unreasonably withheld, conditioned or delayed).

(iii) Buyer shall have the right to control all Tax Matters of any Acquired
Company or Related Consolidated Entity not controlled by Seller pursuant to
Section 5.11(f)(ii); provided that, in the case of a Tax Matter that may give
rise to a claim for indemnification under this Agreement, Buyer shall keep
Seller reasonably informed regarding the progress of such Tax Matter and shall
not, and shall not permit its Affiliates to, concede, settle or compromise such
Tax Matter (or portion thereof) controlled by Buyer under this
Section 5.11(f)(iii) without the prior consent of Seller (which consent shall
not be unreasonably withheld, conditioned or delayed).

(iv) In the event of any conflict between Article VII and this Section 5.11(f),
this Section 5.11(f) shall control.

(g) Transfer Taxes. Notwithstanding anything to the contrary contained herein,
the liability for all Transfer Taxes shall be borne 50% by Seller and 50% by
Buyer. Each of Buyer and Seller, as applicable, shall cooperate and, as required
by applicable Law, join in the execution of all necessary Tax Returns and other
documentation with respect to Transfer Taxes.

 

63

--------------------------------------------------------------------------------

Section 5.12 Employment and Employee Benefits Matters.

(a) As soon as practicable after the date of this Agreement, but in no event
later than 30 days after the date of this Agreement, Seller shall provide to
Buyer an updated list of all Business Employees, including each such employee’s
unique employee identification number, title, employing entity, present annual
base salary or wage rate and cash bonus opportunities. Seller shall provide
Buyer with an updated list of all Business Employees once every 30 days between
the date hereof and the Closing and shall further provide a final updated list
of all Business Employees as of no earlier than 10 days before Closing.

(b) Buyer agrees that Business Employees who continue to remain employed with
the Acquired Companies, Buyer or any Affiliate of Buyer following the Closing
Date (the “Transferred Employees”) shall, for a period of not less than 24
months following the Closing Date, be provided with (i) the same or superior
base salary or hourly wage rate, as applicable, provided to such Transferred
Employee as of immediately prior to the Closing and (ii) incentive compensation
opportunities (excluding any equity incentive compensation) that are no less
favorable in the aggregate to such Transferred Employees than those provided to
such Transferred Employee as of immediately prior to the Closing.

(c) Buyer agrees that the Transferred Employees shall, until the end of the
applicable plan year in which the Closing occurs, be provided with health,
welfare and retirement benefits that are no less favorable in the aggregate to
such Transferred Employees than those provided to such Transferred Employees as
of immediately prior to the Closing. Buyer shall, and shall cause its Affiliates
to, provide each Transferred Employee with full credit for all service
recognized by the Acquired Companies, the Related Consolidated Entities and
Seller prior to the Closing for purposes of determining eligibility to
participate, vesting and benefit accruals, under any applicable Buyer Plan
(excluding any Buyer equity plan); provided that such service shall not be
recognized for benefit accrual under defined benefit pension plans, for purposes
of qualifying for subsidies, early retirement benefits or to the extent such
recognition would result in a duplication of benefits. Buyer shall use its best
efforts to waive all limitations as to preexisting conditions exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Transferred Employees under any welfare benefit plans (except
Buyer’s supplemental life insurance plan) that such employees may be eligible to
participate in after the Closing Date, other than limitations or waiting periods
that are already in effect with respect to such employees and that have not been
satisfied as of the Closing Date under any welfare benefit plan maintained for
the Transferred Employees immediately prior to the Closing Date.

(d) Buyer shall, or shall cause its Affiliates to, cause any Code Section 401(k)
plan maintained by Buyer or its Affiliates in which the Transferred Employees
are eligible to participate following the Closing to accept rollover
contributions of “eligible rollover distributions” (within the meaning of
Section 401(a)(31) of the Code) from under Seller’s 401(k) plans (the “401(k)
Plans”), including the amount of any unpaid balance of any participant loan made
under the 401(k) Plans.

 

64

--------------------------------------------------------------------------------

(e) If requested by Buyer in writing delivered to the Seller not less than 10
Business Days prior to the Closing, Seller shall adopt resolutions and take such
corporate action as is reasonably necessary to delegate plan administration
authority for the applicable Company Plan (which for the avoidance of doubt,
shall not include any Company Plans that will not be assumed by Buyer by
operation of law as a result of the Closing) to UnitedHealth Group
Incorporated’s Employee Benefits Plans Administrative Committee and investment
authority for such Company Plan to UnitedHealth Group Incorporated’s Employee
Benefits Plans Investment Committee, effective as of the Closing Date and
contingent upon the occurrence of the Closing. In the event that Buyer requests
that Seller delegate such authority with respect to such Company Plan, Seller
shall provide Buyer with evidence of such delegation (the form and substance of
which shall be subject to review and approval by Buyer) not later than the day
immediately preceding the Closing.

(f) Buyer shall indemnify and hold harmless Seller and its Affiliates with
respect to any liability or obligation under COBRA or similar applicable Law
arising from the actions (or inactions) of Buyer or any of its Affiliates with
respect to Transferred Employees or their respective dependents after the
Closing Date. Seller shall retain all liabilities or obligations, including with
respect to any “qualifying event” (as defined under COBRA), under COBRA or
similar applicable Law incurred by Seller on or prior to the Closing Date or
arising as a result of the Transactions, each with respect to the Business
Employees or their respective dependents.

(g) The Parties hereby agree to honor the terms and conditions set forth on
Schedule 5.12(g).

(h) Except as set forth on Schedule 5.12(h), with respect to any unused vacation
time that has been accrued on the Financial Statements as of the Closing Date to
which any Transferred Employee is entitled pursuant to the vacation time policy
applicable to such Transferred Employee immediately prior to the Closing Date,
to the extent consented to by the Transferred Employee or otherwise permitted by
applicable Law, Buyer shall, or shall cause its Affiliates to, assume the
liability for such accrued but unused vacation time and allow such Transferred
Employee to use such accrued but unused vacation time, provided that Buyer may,
in its discretion, pay such Transferred Employee in respect of such accrued but
unused vacation time in excess of any accrual cap under the applicable vacation
policy of Buyer or its Affiliates. For the purposes of this Section 5.12(h),
“vacation time” shall include vacation time, floating holidays, paid/flexible
time off and similarly arrangements, and any such vacation time assumed by Buyer
(or its Affiliates) shall not be subject to any accrual caps or other
limitations imposed by the vacation, paid/flexible time off or similar policies
of Buyer and or its Affiliates. In addition, Buyer shall, or shall cause its
Affiliates to, credit each Transferred Employee with the amount of sick leave
that has been accrued on the Financial Statements and to which such Transferred
Employee is entitled pursuant to the sick leave policy applicable to the
Transferred Employee as of immediately prior to the Closing Date, towards his or
her sick leave for purposes of the sick leave policy maintained by Buyer or one
of its Affiliates, as applicable.

(i) Buyer shall be solely responsible for complying with the Worker Adjustment
and Retraining Notification Act of 1988, as amended, and any and all obligations
under other applicable Laws requiring notice of plant closings, relocations,
mass layoffs, reductions in force or similar actions (and for any failures to so
comply), in any case, applicable to the Business Employees as a result of any
action by Buyer or its Affiliates on or after to the Closing Date. Buyer shall
indemnify and hold harmless Seller and its Affiliates against any and all
liabilities arising in connection with any failure to comply with the
requirements of this Section 5.12(i).

 

65

--------------------------------------------------------------------------------

(j) Prior to making any written or oral communications to any Business Employee
pertaining to compensation or benefit matters related to the Transactions
(“Employee Communications”), Seller shall provide Buyer with a copy of the
intended communication, Buyer shall have a reasonable period of time to review
and comment on the communication (not to exceed two Business Days), and Seller
shall consider any such comments in good faith. Buyer shall use best efforts to
review and comment on the communication as quickly as possible. Notwithstanding
the foregoing, Seller and its Affiliates may make Employee Communications
without providing Buyer with a copy of such intended Employee Communications so
long as such Employee Communications are materially consistent with Employee
Communications previously approved in writing by Buyer.

(k) Prior to the Closing, Seller shall use commercially reasonable efforts to
cause the transfer of employment of the Seller-Level Employees to an Acquired
Company.

(l) The Parties acknowledge and agree that all provisions contained in this
Section 5.12 with respect to Business Employees are included for the sole
benefit of the Parties and shall not create any right in any other Person,
including any employees or former employees of Seller, the Acquired Companies or
the Related Consolidated Entities, any participant in any Company Plan or any
beneficiary thereof or any right to continued employment with Seller, the
Acquired Companies, the Related Consolidated Entities or Buyer (or any of their
respective Affiliates), nor require Buyer or any of its Affiliates to continue
or amend any Buyer Plan on or after the Closing Date for Transferred Employees,
and any such plan may be amended or terminated in accordance with its terms and
applicable Law.

Section 5.13 Retained Litigation.

(a) From and after the Closing, Seller shall indemnify and hold the Buyer
Indemnified Parties harmless from and against any costs or expenses (except
internal administrative expenses, including employee salaries) of the Acquired
Companies or Related Consolidated Entities incurred to defend or settle the
Retained Litigation, or satisfy any judgment against Buyer or its Affiliates in
connection therewith; provided, that: (i) Seller shall, subject to
Section 5.13(b), retain sole control over the defense or settlement of the
Retained Litigation; (ii) Buyer, on behalf of itself and its Affiliates
(A) agrees that it shall not take, and shall cause its Affiliates not to take,
any action without Seller’s prior written consent (such consent not to be
unreasonably withheld, conditioned or delayed) to obtain indemnification for the
Retained Litigation from another source, and (B) shall pay to Seller any
proceeds Buyer or its Affiliates, including the Acquired Companies or Related
Consolidated Entities, may receive as indemnification for any Retained
Litigation from another source (provided that Seller has otherwise indemnified
and held harmless the Buyer Indemnified Parties as contemplated by this
Section 5.13(a)) and (iii) Buyer and its Affiliates shall provide Seller with
reasonable cooperation in the defense, investigation, or settlement of the
Retained Litigation, including, using commercially reasonable efforts in
providing data, testimony or documents at Seller’s reasonable request and
expense (not including Buyer’s internal administrative expenses, including
employee salaries). For the avoidance of doubt and notwithstanding anything

 

66

--------------------------------------------------------------------------------

contained herein to the contrary, all rights with respect to the Indemnification
Assets and any corresponding direct claims against the former direct and
indirect owners of the Business shall remain the rights of Seller and its
Affiliates and shall not be affected in any manner by this Agreement. Prior to
the Closing, the Parties hereby agree to enter into a joint defense agreement in
a form reasonably satisfactory to the Parties. Seller shall use commercially
reasonable efforts to avoid Buyer’s production of confidential information
without a protective order.

(b) Notwithstanding Section 5.13(a), no settlement of any Retained Litigation
that includes a non-monetary component applicable to the Acquired Companies or
Related Consolidated Entities shall be agreed to without Buyer’s prior written
consent; provided that with respect to certain Retained Litigation matters, the
provisions of Schedule 5.13(b) shall govern.

Section 5.14 No Solicitation of Competing Transactions.

(a) From the date hereof until the Closing or such earlier date on which this
Agreement may be terminated in accordance with its terms, Seller shall not, and
shall cause each of the Acquired Companies and Related Consolidated Entities and
its and their respective Representatives not to, directly or indirectly:
(a) initiate, solicit, or encourage any proposal or any inquiry that may
reasonably be expected to lead to any proposal concerning the sale of any
Acquired Company or Related Consolidated Entity or any business thereof (whether
by way of merger, purchase of equity interests, purchase of assets, or
otherwise) or a sale of any material Assets of the Acquired Companies and
Related Consolidated Entities, taken as a whole, or any transaction the
consummation of which would be inconsistent with or interfere with or prevent,
or materially delay, in any way whatsoever, the consummation of the Transactions
(each, a “Competing Transaction”); or (b) hold any discussions or enter into any
Contracts or other arrangements with, or provide any information or respond to,
any third party concerning a proposed Competing Transaction or cooperate in any
way with, agree to, assist or participate in, solicit, consider, entertain,
facilitate, or encourage any effort or attempt by any third party to do or seek
any of the foregoing. If at any time from the date hereof until the Closing, or
such earlier date on which this Agreement may be terminated in accordance with
its terms, Seller, any Affiliate thereof or any of its and their respective
Representatives is approached in any manner by a third party concerning a
Competing Transaction, Seller shall promptly, and in any event within three
Business Days of such contact, inform such third party of the restrictions set
forth in this Section 5.14.

(b) To the extent Seller and its Affiliates have not previously done so, Seller
shall, or shall cause its Affiliates to, promptly after the public announcement
of the entry into this Agreement, request that each Person (other than Buyer and
its Representatives) that has in the six months prior to the date hereof
executed a confidentiality agreement with Seller or its Affiliates in connection
with its consideration of a Competing Transaction (the “Business NDAs”) to
promptly return or destroy any confidential information to the extent related to
the Business, the Acquired Companies or the Related Consolidated Entities
furnished to such Person in connection with its consideration of a Competing
Transaction in accordance with the terms of the applicable Business NDA. To the
extent Seller and its Affiliates have not previously done so, Seller shall, or
shall cause its Affiliates to, promptly after the date hereof, revoke the access
of any Person other than Seller, Buyer and their respective Affiliates and
Representatives to any data room established in connection with a Competing
Transaction to

 

67

--------------------------------------------------------------------------------

the extent the information contained therein relates to the Business, the
Acquired Companies or the Related Consolidated Entities. Seller agrees not to
release, and to cause its Affiliates not to release, any third party from the
confidentiality provisions of any Business NDA and to enforce, at Buyer’s
expense, the confidentiality provisions of the Business NDAs (to the extent
related to the Business, the Acquired Companies or the Related Consolidated
Entities) to the extent reasonably requested by Buyer in writing.

Section 5.15 Non-Competition; Non-Solicitation.

(a) Non-Competition. From the Closing Date until the date that is three years
from the Closing Date, Seller and its Subsidiaries shall not engage, directly or
indirectly, in any Competing Business in the Restricted Territories; provided
that notwithstanding the foregoing, nothing in this Section 5.15(a) shall
prohibit Seller or its Subsidiaries from acquiring, directly or indirectly,
(i) the ownership of securities having no more than 5% of the outstanding voting
power of any Person engaged in a Competing Business that is listed on a national
or international securities exchange or traded actively in a national
over-the-counter market, or (ii) the ownership or operation of any business that
either (A) received less than 15% of its consolidated net revenue from any
Competing Business for the most recent fiscal year prior to the acquisition date
of such business, or (B) received less than $50,000,000 in annual net revenue
for the most recent fiscal year prior to the acquisition date of such business
from any Competing Business.

(b) Employee Non-Solicit. Seller hereby agrees that it and its Subsidiaries
shall not, from the Closing Date until the date that is two years from the
Closing Date, directly or indirectly, induce or solicit any Restricted Employee
to leave the service or employment of Buyer and its Affiliates or hire any
Restricted Employee as an employee or as a consultant; provided, however, that
such prohibitions shall not apply to (i) general solicitations for employment
through advertisements or similarly undirected efforts, (ii) general
solicitations by third parties (such as recruiters), (iii) any such employee
that has been terminated, or (iv) any hiring of any Restricted Employee who
resigned as an employee of Buyer or its Affiliates at least six months prior to
such hiring.

Section 5.16 Miscellaneous.

(a) Commercial Property Insurance Proceeds. Prior to the Closing Date, Seller
and its Affiliates shall notify the relevant commercial property insurance
carriers in the Ordinary Course of any material claims arising under any of the
commercial property Insurance Policies and reinvest all net proceeds realized or
recovered from any of the Insurance Policies, received subsequent to the date
hereof, to rebuild, repair or replace any assets of the Acquired Companies,
Related Consolidated Entities or JV Entities covered by such Insurance Policies
(or to pay related fees and expenses) in the Ordinary Course in a reasonably
timely manner. At and following the Closing, Seller shall, or shall cause its
Affiliates to, assign, to the extent assignable, to Buyer any such proceeds of
Seller’s or any of its Affiliates’ insurance policies to the extent related to
the Business or the Acquired Companies, Related Consolidated Entities or JV
Entities and not so reinvested. If such proceeds are not assignable, Seller
agrees to pay any such proceeds received by it or any of its Affiliates to Buyer
reasonably promptly following the receipt thereof. For the avoidance of doubt,
(i) any proceeds received by Buyer

 

68

--------------------------------------------------------------------------------

or its Affiliates pursuant to this Section 5.16(a) shall be disregarded for
purposes of calculating the Purchase Price and any adjustment thereto and
(ii) Seller shall have no obligation to deliver to Buyer the amount of any
proceeds pursuant to this Section 5.16(a) to the extent reinvested in accordance
herewith.

(b) Bank Accounts. At Buyer’s election (in its sole discretion), in writing and
at least 15 Business Days prior to the Closing Date, Seller shall use its
commercially reasonable efforts to, effective as of the Closing, add specified
employees of Buyer as signatories to the bank accounts of the Acquired Companies
and Related Consolidated Entities and update the Acquired Companies and Related
Consolidated Entities’ bank account mandates and electronic banking system to
include specified signatories of Buyer (and to remove specified employees or
signatories of the Acquired Companies and Related Consolidated Entities in
Buyer’s sole discretion), and Buyer shall cooperate with Seller’s efforts to
make such additions and updates.

(c) Resignations. At Buyer’s election (in its sole discretion), in writing and
delivered to Seller at least 15 Business Days prior to the Closing Date, Seller
shall use commercially reasonable efforts to cause any directors or managers of
the Acquired Companies or Related Consolidated Entities specified in writing by
Buyer to Seller, to deliver letters of resignation to Buyer or its Affiliates
resigning from his or her position as director or manager with the Acquired
Companies or Related Consolidated Entities, as applicable, prior to the Closing
Date, effective as of the Closing Date.

(d) Hedges/Swaps. Seller shall use its commercially reasonable efforts to
terminate any obligations arising under any instruments described in clause
(f) of the definition of Indebtedness (Hedges/Swaps) as of the Closing, such
that there are no obligations or liabilities (contingent or otherwise) remaining
on behalf of the Acquired Companies and Related Consolidated Entities under such
instruments following the Closing.

(e) Wrong Pockets. To the extent that, during the one year following the Closing
Date, Buyer or Seller discovers that any Assets exclusively used in the Business
were not transferred directly or indirectly to Buyer at the Closing (each, an
“Omitted Asset”), Seller shall, and shall cause its Affiliates to, promptly
assign and transfer all right, title and interest in such Omitted Asset to Buyer
or its designated assignee. To the extent permitted by applicable Law, for Tax
purposes, any Omitted Asset shall be considered to have been transferred as of
the Closing; provided, however, that for the avoidance of doubt, “Omitted
Assets” shall not include any Assets transferred outside of the Business in
accordance with Section 5.1(b).

(f) Transition Services Agreement; Trademark License Agreement. Buyer and Seller
each agree to discuss in good faith following the date hereof and prior to the
Closing Date the terms and conditions of agreements pursuant to which Seller
would provide (i) to the Acquired Companies and Related Consolidated Entities,
on an interim transition basis commencing after the Closing, certain
transitional services (such agreement, the “Transition Services Agreement”), and
(ii) Buyer with a non-exclusive license to use the Restricted Names in a limited
manner after the Closing (such agreement, the “Trademark License Agreement”), in
each of case, upon the terms to be mutually agreed upon by Buyer and Seller.

 

69

--------------------------------------------------------------------------------

(g) Cooperation on References. Without limiting anything else in this Agreement,
for a period of one year following the Closing Date, Buyer agrees to use its
commercially reasonable efforts to make the Transferred Employees reasonably
available during normal business hours and without unreasonable interference
with the normal operations of Buyer and its Affiliates, to provide general
non-confidential and non-privileged background information regarding the
historical relationship between Seller, on the one hand, and the Acquired
Companies and Related Consolidated Entities, on the other hand; provided that
neither Buyer, its Affiliates, any Transferred Employee or any other
Representative of Buyer or its Affiliates, shall be liable to Seller, its
Affiliates or any third party as a result of its services or information
provided pursuant to this Section 5.16(g) and Seller acknowledges and agrees
that the services and information provided pursuant to this Section 5.16(g) are
provided “as is”, without warranty of any kind, that the receiving party assumes
all risks and liability arising from or relating to its and its affiliates’ use
of and reliance upon such services or information.

(h) Tax Benefit. Promptly following the occurrence of a Payment Trigger Date,
Seller (if the Relevant Tax Return is a Tax Return of Seller or its Affiliates)
or Buyer (if the Relevant Tax Return is a Tax Return of the Buyer or its
Affiliates), as applicable, shall provide written notice of such occurrence to
the other Party. On the Payment Date, Buyer shall pay (or cause to be paid) to
Seller or its designated Affiliate an amount equal to the Adjusted Tax Benefit
Payment. For the avoidance of doubt, the “Basis Increase” used to calculate the
Adjusted Tax Benefit Payment shall take into account any adjustment made by the
IRS to such Basis Increase as a result of an IRS audit of the Relevant Tax
Return, and the Adjusted Tax Benefit Payment shall be reduced accordingly to the
extent the Basis Increase originally claimed has been reduced; and, for the
avoidance of doubt, if the entire amount of the Basis Increase is disallowed as
a result of an IRS audit of the Relevant Tax Return, no payment is required to
be made from Buyer to Seller under this Section 5.16(h). Recognizing the
complexity of this provision, an illustrative example of the calculation of the
Adjusted Tax Benefit Payment is attached hereto as Exhibit E.

(i) Certain Actions. Prior to the Closing, Seller shall take the actions set
forth on Schedule 5.16(i).

ARTICLE VI

CONDITIONS TO CLOSING

Section 6.1 Conditions to Obligations of Each Party to Effect the Transactions.
The respective obligations of each Party to effect the Transactions are subject
to the fulfillment or waiver by consent in writing of the other Party at or
prior to the Closing Date, of each of the following conditions:

(a) Competition Approvals. The waiting period (and any extension thereof)
applicable to the consummation of the Transactions under the HSR Act shall have
expired or been terminated.

(b) Regulatory Approvals. The Parties shall have obtained, and received
documentation evidencing, the Consents listed on Schedule 6.1(b).

 

70

--------------------------------------------------------------------------------

(c) No Injunctions, Orders or Restraints; Illegality. No preliminary or
permanent injunction or other order, decree or ruling issued by a court or other
Governmental Authority of competent jurisdiction nor any statute, rule,
regulation or executive order promulgated or enacted by any Governmental
Authority of competent jurisdiction shall be in effect which would have the
effect of: (i) making the consummation of the Transactions illegal or
(ii) otherwise prohibiting the consummation of the Transactions.

Section 6.2 Additional Conditions to Obligations of Seller. The obligations of
Seller to consummate the Transactions 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 of Buyer. (i)(A) Each of the
Buyer Fundamental Representations shall be true and correct in all but de
minimis respects at and as of the date of this Agreement and at and as of the
Closing, as though made at and as of the Closing (or, if made as of a specific
date, on and as of such date); and (B) the other representations and warranties
of Buyer contained in this Agreement, after disregarding all qualifications
contained therein relating to materiality or Buyer Material Adverse Effect,
shall be true and correct at and as of the date of this Agreement and at and as
of the Closing, as though made at and as of the Closing (or, if made as of a
specific date, on and as of such date), except where the failure of all such
representations or warranties to be so true and correct has not had, and would
not reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect; (ii) the covenants and agreements contained in this
Agreement to be complied with by Buyer on or before the Closing shall have been
complied with in all material respects; and (iii) Seller shall have received a
certificate of Buyer signed by a duly authorized officer thereof dated as of the
Closing Date certifying the matters set forth in clauses (i) and
(ii) immediately above; and

Section 6.3 Additional Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the Transactions 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 of Seller. (i)(A) The
representations and warranties set forth in
Section 3.3(b) (Ownership of Equity Interests) shall be true and correct in all
respects as of the date of this Agreement and at and as of the Closing, as
though made at and as of the Closing (or, if made as of a specific date, on and
as of such date); (B) each of the other Seller Fundamental Representations shall
be true and correct in all but de minimis respects at and as of the date of this
Agreement and at and as of the Closing, as though made at and as of the Closing
(or, if made as of a specific date, on and as of such date); and (C) each of the
other representations and warranties of Seller contained in this Agreement,
after disregarding all qualifications contained therein relating to materiality
or Seller Material Adverse Effect, shall be true and correct at and as of the
date of this Agreement and at and as of the Closing, as though made at and as of
the Closing (or, if made as of a specific date, on and as of such date), except
where the failure of all such representations or warranties to be so true and
correct has not had, and would not reasonably be expected to have, individually
or in the aggregate, a Seller Material Adverse Effect; (ii) each of the
covenants and agreements contained in this Agreement to be complied with by
Seller on or before the Closing shall have been complied with in all material
respects; and (iii) Buyer shall have received a certificate from Seller signed
by a duly authorized officer of Seller dated as of the Closing Date certifying
the matters set forth in clauses (i) and (ii) immediately above;

 

71

--------------------------------------------------------------------------------

(b) FIRPTA Certificate. Seller shall have delivered to Buyer a certificate
pursuant to Treasury Regulations Section 1.1445-2(b) in the form of Exhibit B;
and

(c) No Seller Material Adverse Effect. Since the date hereof, there shall not
have occurred a Seller Material Adverse Effect.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Survival of Representations and Warranties and Covenants.

(a) The representations and warranties set forth in this Agreement and all
claims with respect thereto shall survive the execution and delivery of this
Agreement and the consummation of the Transactions until the date that is 12
months following the Closing Date, except that:

(i) the Fundamental Representations and all claims with respect thereto shall
survive until the date that is six years following the Closing Date;

(ii) the representations and warranties contained in Section 3.13 (Healthcare
Regulatory Compliance) and all claims with respect thereto shall survive the
Closing for a period of four years; and

(iii) the representations and warranties contained in Section 3.20 (Taxes) and
all claims with respect thereto shall survive the Closing until three months
following the expiration of the applicable Tax statute of limitations, giving
effect to any extensions thereof.

(b) All covenants and agreements contained herein to be performed by their terms
(i) prior to the Closing shall survive the Closing until the date on which the
Final Purchase Price is determined in accordance with Section 2.6 and (ii) on or
after the Closing Date shall survive the Closing until fully performed in
accordance with the terms specified herein with respect to such covenant or
agreement.

(c) In the event that notice of any claim for indemnification under this Article
VII has been given, within the applicable survival period, the representations
and warranties or covenants or other agreements that are the subject of such
indemnification claim (and the right to pursue such claim) shall survive with
respect to such claim until such time as such claim is finally resolved. Any
claim for a breach of a representation or warranty or covenant or other
agreement must be delivered prior to the expiration of the applicable survival
term set forth in this Section 7.1. The right of a Person to any remedy pursuant
to this Article VII shall not be affected by any investigation or examination
conducted, or any knowledge possessed or acquired (or capable of being possessed
or acquired), by such Person at any time concerning any circumstance, action,
omission or event relating to the accuracy or performance of any representation,
warranty, covenant or obligation. Except as may be required by applicable Law in
the case of fraud, no Indemnified Party shall be required to show reliance on
any representation, warranty, certificate or other agreement in order for such
Indemnified Party to be entitled to indemnification, compensation or
reimbursement hereunder.

 

72

--------------------------------------------------------------------------------

Section 7.2 Indemnification by Seller.

(a) Subject to the provisions of this Article VII, from and after the Closing,
Seller shall indemnify, defend and hold harmless Buyer, its Affiliates
(including the Acquired Companies and Related Consolidated Entities after the
Closing) and its and their respective Representatives (collectively, the “Buyer
Indemnified Parties”) from, against and in respect of any and all damages,
losses (including reasonably foreseeable lost profits and future earnings),
charges, liabilities, claims, demands, actions, suits, proceedings, payments,
judgments, settlements, assessments, deficiencies, Taxes, interest, penalties,
and costs and expenses (including reasonable and documented out-of-pocket
attorneys’ fees) (collectively, “Losses”), actually incurred or suffered by any
Buyer Indemnified Party relating to, arising out of, resulting from, with
respect to or by reason of:

(i) the breach or inaccuracy of any representation or warranty made in Article
III (or the certificate delivered pursuant to Section 6.3(a)(iii) by or on
behalf of Seller at or prior to the Closing) that is not (A) a Seller
Fundamental Representation or (B) a representation or warranty made in
Section 3.20 (Taxes);

(ii) the breach or inaccuracy of any Seller Fundamental Representation (or the
certificate delivered pursuant to Section 6.3(a)(iii) by or on behalf of Seller
at or prior to the Closing with respect thereto);

(iii) the breach or inaccuracy of any representation or warranty made in
Section 3.20 (Taxes) (or the certificate delivered pursuant to
Section 6.3(a)(iii) by or on behalf of Seller at or prior to the Closing with
respect thereto);

(iv) any Acquired Companies Indebtedness or Unpaid Transaction Expenses not
properly disclosed and included in the calculation of Acquired Companies
Indebtedness, Unpaid Transaction Expenses, or Net Working Capital;

(v) the amount of any non-ordinary course adjustments made to capitation
payments prior to, at or after the Closing from Payors to Seller or any Acquired
Companies or Related Consolidated Entities by such Payors, CMS, or its
contractors pursuant to an audit or claim brought by such Payors, CMS, or its
contractors, as a result of or related to the billing or coding practices of
Seller or any of the Acquired Companies or Related Consolidated Entities or
their respective employees or employed or contracted Providers, including any
adverse impact on management fees to be paid to the Acquired Companies and
Related Consolidated Entities after the Closing;

(vi) any breach of any covenant or agreement contained in this Agreement to be
performed or complied with by the Acquired Companies or Related Consolidated
Entities prior to the Closing or Seller prior to or after the Closing;

(vii) any Indemnified Taxes; and

 

73

--------------------------------------------------------------------------------

(viii) any liabilities associated with Tandigm Health, LLC, and, to the extent
not properly disclosed and included in the calculation of Net Working Capital,
the Pre-Acquisition and Litigation Liabilities.

(b) Notwithstanding any other provision in this Agreement to the contrary, the
indemnification provided for in
Section 7.2(a) shall be subject to the following limitations:

(i) Seller shall not have any liability under Section 7.2(a)(i) and
Section 7.2(a)(v) unless the aggregate amount of all Losses relating to claims
under Section 7.2(a)(i) and Section 7.2(a)(v) for which Seller would be liable
to the Buyer Indemnified Parties pursuant to this Article VII exceeds, in the
aggregate, $73,500,000 (the “Threshold”), and then only to the extent such
Losses exceed the Threshold; provided, that this Section 7.2(b)(i) shall not
apply to claims arising under Section 7.2(a)(v) to the extent arising from an
audit or claim the proceeds of which are paid or payable directly to CMS or its
designated contractor (excluding through any private health insurance payor or
health maintenance organization participating in the Medicare Advantage program
and having contracted with any of the Acquired Companies or Related Consolidated
Entities);

(ii) Seller’s aggregate liability for Losses arising out of or resulting from
claims under Section 7.2(a)(i),
Section 7.2(a)(iii) and Section 7.2(a)(v) shall in no event exceed $367,500,000;

(iii) Except for claims arising out of or resulting from the Specified
Representations, Seller shall not be required to indemnify the Buyer Indemnified
Parties under Section 7.2(a) for any claim (or series of related claims) for
which the amount that would otherwise be payable hereunder relating to such
claim (or series of related claims) is less than $150,000 (the “Per Claim
Amount”); provided that the amount of any such claim (or series of related
claims) that is less than the Per Claim Amount shall nonetheless be Losses
applied towards and aggregated for purposes of calculating the Threshold
pursuant to Section 7.2(b)(i);

(iv) Except in the case of (A) fraud or (B) claims under Section 5.13 with
respect to Retained Litigation, Seller’s aggregate liability for Losses arising
out of or resulting from claims under this Agreement shall in no event exceed
the Purchase Price;

(v) Seller’s limitations on liability set forth on Schedule 7.2(b)(v); and

(vi) Seller shall have no liability under Section 7.2(a)(iii) for any Losses
relating to Taxes for a Tax period or portion thereof beginning after the
Closing Date, except to the extent such Losses relate to a breach of the
representations and warranties contained in Section 3.20(c), (e), (j), (k) or
(l).

Section 7.3 Indemnification by Buyer.

(a) Subject to the provisions of this Article VII, from and after the Closing,
Buyer shall indemnify, defend and hold harmless Seller, its Affiliates and their
respective Representatives (collectively, the “Seller Indemnified Parties” and,
each of the Buyer Indemnified Parties and the Seller Indemnified Parties, an
“Indemnified Party”) against any Losses actually incurred or suffered by any
Seller Indemnified Party relating to, arising out of, resulting from, with
respect to or by reason of:

 

74

--------------------------------------------------------------------------------

(i) the breach or inaccuracy of any representation or warranty made in Article
IV (or the certificate delivered pursuant to Section 6.2(a)(iii) by or on behalf
of Buyer at or prior to the Closing with respect thereto) that is not a Buyer
Fundamental Representation;

(ii) the breach or inaccuracy of any Buyer Fundamental Representation (or the
certificate delivered pursuant to Section 6.2(a)(iii) by or on behalf of Buyer
at or prior to the Closing with respect thereto); and

(iii) any breach of any covenant or agreement contained in this Agreement to be
performed or complied with by any of the Acquired Companies or Related
Consolidated Entities after the Closing or Buyer prior to or after the Closing.

(b) Notwithstanding any other provision in this Agreement to the contrary, the
indemnification provided for in
Section 7.3(a) shall be subject to the following limitation:

(i) Buyer shall not have any liability under Section 7.3(a)(i) unless the
aggregate amount of all Losses relating to Section 7.3(a)(i) for which Buyer
would be liable to the Seller Indemnified Parties pursuant to this Article VII
exceeds, in the aggregate, the Threshold, and then only to the extent such
Losses exceed the Threshold;

(ii) Buyer shall not be required to indemnify the Seller Indemnified Parties
under Section 7.3(a) for any claim (or series of related claims) for which the
amount that would otherwise be payable hereunder relating to such claim (or
series of related claims) is less than the Per Claim Amount; provided that the
amount of any such claim (or series of related claims) that is less than the Per
Claim Amount shall nonetheless be Losses applied towards and aggregated for
purposes of calculating the Threshold pursuant to Section 7.3(b)(i); and

(iii) Except in the case of fraud, Buyer’s aggregate liability for Losses
arising out of or resulting from claims under this Agreement shall in no event
exceed the Purchase Price.

Section 7.4 Indemnification Principles.

(a) Notwithstanding any other provision in this Agreement to the contrary,
neither Seller nor Buyer shall be liable to, or indemnify, the Buyer Indemnified
Parties or Seller Indemnified Parties, as applicable, for any Losses: (i) that
are punitive, special, consequential, incidental, exemplary or indirect damages,
other than (x) any such damages claimed by a Party against another Party to this
Agreement to the extent they were: (A) a natural, probable and reasonably
foreseeable result of a breach by the breaching Party, (B) within the reasonable
contemplation of the Parties, and (C) can be proven with reasonable certainty,
and (y) to the extent actually paid to a non-Affiliated third party pursuant to
a final and non-appealable judgment or arbitral decision issued by a court of
competent jurisdiction, or (ii) with respect to any amount that was taken into
account in the final determination of Acquired Companies Cash, Net Working
Capital, Unpaid Transaction Expenses or Acquired Companies Indebtedness pursuant
to Section 2.6.

 

75

--------------------------------------------------------------------------------

(b) For purposes of this Article VII, (i) for determining the breach or
inaccuracy of a representation or warranty set forth in Article III other than
the Seller Fundamental Representations, Section 3.7 (Financial Information),
Section 3.8 (Accounting Records; Internal Controls), Section 3.13(d) (Healthcare
Regulatory Compliance), Section 3.17(b) (Sufficiency of Assets) and Section 3.21
(Material Contracts) (collectively, the “Specified Representations”), references
to “materiality”, “Seller Material Adverse Effect” or similar materiality
qualifications therein shall be disregarded, and (ii) for calculating the amount
of Losses incurred out of or relating to any breach of, a representation,
warranty, covenant or agreement set forth in this Agreement, references to
“materiality”, “Seller Material Adverse Effect”, “Buyer Material Adverse Effect”
or similar materiality qualifications therein shall be disregarded; provided,
however, that in no event shall dollar thresholds referred to in this Agreement
be disregarded pursuant to the foregoing clause (ii); and provided, further,
with respect to the foregoing clauses (i) and (ii), in no event shall “Material
Contract” be read to mean “Contract”.

(c) The Indemnified Parties shall act in good faith and in a commercially
reasonable manner to mitigate any Losses upon and after becoming aware of any
event which could reasonably be expected to give rise to Losses.

(d) No claim for indemnification shall be made with respect to Losses to the
extent there has been a corresponding reduction or reserve related thereto in
the calculation of the Final Purchase Price.

(e) The amount of any and all indemnification payments in respect of Losses
under this Agreement shall be determined net of the proceeds actually received
by an Indemnified Party under any insurance policies or pursuant to any claim,
recovery, settlement or payment by or against any other collateral sources (such
as contractual indemnities of any Person which are contained outside of this
Agreement), in each case, net of costs or expenses incurred in connection with
securing or obtaining such proceeds.

(f) In calculating the amount of any Loss, the amount of such Loss shall be
determined net of any Tax benefit actually realized in the taxable year of the
Loss by the Indemnified Party (less reasonable expenses incurred to obtain such
benefit) or in the next two succeeding years as a result of the incurrence or
payment of any such Loss (including as a result of the facts, events or
circumstances giving rise to such Loss); provided that, for the avoidance of
doubt, this Section 7.4(f) shall not provide any Indemnifying Party the right to
review any Indemnified Party’s Tax Returns.

(g) The Indemnified Parties shall not be entitled to recover any Losses relating
to any matter arising under one provision of this Agreement to the extent that
such Indemnified Party had already recovered Losses with respect to such matter
pursuant to any other provisions of this Agreement.

 

76

--------------------------------------------------------------------------------

(h) Seller (including any Representative of Seller) shall not have, and hereby
waives, any right of contribution, indemnification or right of advancement from
the Acquired Companies and Related Consolidated Entities (including any
Representative thereof) with respect to any Loss claimed by a Buyer Indemnified
Party, except as expressly provided in this Agreement, the other Transaction
Documents or any Intercompany Contracts that survive the Closing pursuant to the
terms hereof.

Section 7.5 Manner of Payment. Any indemnification payment pursuant to
Section 7.2 or Section 7.3 shall be effected by wire transfer of immediately
available funds to an account designated by the applicable Indemnified Party
within 10 Business Days after the determination thereof.

Section 7.6 Defense of Third-Party Claims.

(a) Any Indemnified Party making a claim for indemnification under Section 7.2
or Section 7.3 shall notify the Indemnifying Party of the claim in writing
promptly, but in no event more than 30 days, after receiving notice of any
action, lawsuit, proceeding, investigation, demand or other claim against the
Indemnified Party by a third party (a “Third-Party Claim”), describing in
reasonable detail the claim, the amount or estimated amount of damages sought
thereunder (if known and quantifiable, which estimate shall not be conclusive of
the final amount of such Third-Party Claim), any other remedy sought thereunder,
any relevant time constraints relating thereto, the basis thereof and the
provisions of this Agreement upon which such claim for indemnification is made
and, to the extent practicable, any other material details pertaining thereto (a
“Claim Notice”); provided that the failure to so notify an Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder except to
the extent that such failure has a prejudicial effect on the defenses or other
rights available to the Indemnifying Party with respect to such Third-Party
Claim. The Indemnifying Party shall have 30 days after receipt by the
Indemnifying Party of the Claim Notice (the “Notice Period”) to notify the
Indemnified Party that it desires to defend the Indemnified Party against such
Third-Party Claim.

(b) In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that it desires to defend the Indemnified Party against
a Third-Party Claim, the Indemnifying Party shall have the power to direct and
control the defense of such Third-Party Claim giving rise to an Indemnified
Party’s claim for indemnification at such Indemnifying Party’s expense, with
reputable counsel in connection with such defense. Once the Indemnifying Party
has duly assumed the defense of a Third-Party Claim, the Indemnified Party shall
have the right, but not the obligation, to participate in the defense of such
claim and to employ separate counsel of its choice for such purpose; provided
that the fees and expenses of such separate counsel shall be borne by the
Indemnified Party and shall not be recoverable from such Indemnifying Party
under this Section 7.6. The Indemnified Party’s participation in any such
defense shall be at its sole cost and expense unless: (i) the Indemnified Party
and Indemnifying Party are both named parties to the proceedings and the
Indemnified Party shall have reasonably concluded that representation of both
parties by the same counsel would be inappropriate due to actual or potential
conflicts between them or (ii) the Indemnified Party assumes the defense of a
Third-Party Claim after the Indemnifying Party has failed to diligently pursue a
Third-Party Claim it has assumed, as provided in the first sentence of this

 

77

--------------------------------------------------------------------------------

Section 7.6(b) in which case the Indemnifying Party shall bear the reasonable
and documented out-of-pocket costs and expenses of one additional counsel (in
addition to, but only to the extent necessary, one local counsel) which shall
represent all Indemnified Parties arising out of the same or similar set of
circumstances in connection with such defense. If the Indemnifying Party shall
control the defense of any such claim, the Indemnifying Party shall be entitled
to settle such claims; provided that the Indemnifying Party shall obtain the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, conditioned or delayed) before settling, compromising,
offering to settle or compromise, or ceasing to defend such claim if, pursuant
to or as a result of such settlement, compromise or cessation, (A) a
Governmental Order would be imposed that would materially restrict the future
activity or conduct of the Indemnified Party or any of its Affiliates, (B) a
violation of Law by the Indemnified Party or any of its Affiliates would be
found or admitted, (C) any monetary liability of the Indemnified Party that
would not be paid or reimbursed by the Indemnifying Party, or (D) any material
non-monetary condition or obligation would be imposed on any Indemnified Party
or any of its Affiliates.

(c) If the Indemnifying Party: (i) elects not to assume the defense of any such
Third-Party Claim, or (ii) after assuming the defense of a Third-Party Claim,
fails to defend diligently such Third-Party Claim within five days after
receiving written notice from the Indemnified Party to the effect that the
Indemnifying Party has so failed, the Indemnified Party shall have the right,
but not the obligation, to assume its own defense and defend against such matter
as it deems appropriate; provided that the Indemnified Party may not settle any
such matter without the prior written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld, conditioned or delayed) if the
Indemnified Party is seeking or will seek indemnification hereunder with respect
to such matter.

(d) The Indemnified Party and the Indemnifying Party shall cooperate in
connection with the defense of a Third-Party Claim, including by providing
reasonable access to each other’s relevant business records, other documents and
Representatives. The Indemnified Party and the Indemnifying Party shall keep
each other fully informed with respect to the status of such Third-Party Claim.

(e) The Indemnified Party and the Indemnifying Party shall use commercially
reasonable efforts to avoid production of confidential information (consistent
with applicable Law), and to cause all communications among employees, counsel
and others representing any party to a Third-Party Claim to be made so as to
preserve any applicable attorney-client or work-product privileges.

Section 7.7 Limitation on Recourse. No claim shall be brought or maintained by a
Party or any of its Subsidiaries or their respective successors or permitted
assigns against any officer, director, employee (present or former) or Affiliate
of any Party which is not otherwise expressly identified as a Party, and no
recourse shall be brought or granted against any of them, by virtue of or based
upon any alleged misrepresentation or inaccuracy in or breach of any of the
representations, warranties or covenants of any Party as set forth or contained
in this Agreement or any exhibit or schedule hereto or any certificate delivered
hereunder.

 

78

--------------------------------------------------------------------------------

Section 7.8 Characterization of Indemnification Payments. All payments made by
an Indemnifying Party to an Indemnified Party in respect of any claim pursuant
to this Article VII shall be treated as adjustments to the consideration paid
pursuant to the Transactions for Tax purposes. Except to the extent required by
applicable Law, the Parties agree to, and shall cause their respective
Affiliates to, file their Tax Returns accordingly.

Section 7.9 Effect of Waiver of Condition. A Party’s right to indemnity pursuant
to this Article VII shall not be adversely affected by its waiver of a condition
set forth in Article VI, unless such Party states in writing in connection with
such waiver that it is foreclosing its right to indemnity with respect to the
matter that is the subject of the waiver; provided, however, that in the event
the non-waiving Party (i) advises the waiving Party in writing with reasonable
specificity that there has been a breach of this Agreement by the non-waiving
Party such that a condition set forth in Article VI could not be satisfied at
the Closing, and (ii) the waiving Party agrees in writing to waive the
satisfaction of such condition and consummate the Closing, then, from and after
the Closing, the waiving Party’s right to indemnity with respect to the matter
that is the subject of the waiver shall be foreclosed to the extent it was
disclosed in the written notice provided by the non-waiving Party.

Section 7.10 Sole and Exclusive Remedy. Except in the case of fraud, from and
after the Closing, the contractual right to indemnification under this Article
VII, subject to the terms, conditions and limitations hereof, shall constitute
the sole and exclusive right and remedy available to the Buyer Indemnified
Parties and the Seller Indemnified Parties for any and all Losses or other
claims relating to or arising from this Agreement and the Transactions;
provided, however, that notwithstanding the foregoing: (a) the Parties shall be
entitled to enforce the right to specific performance as set forth in
Section 9.10, and (b) the parties to the Transaction Documents shall be entitled
to enforce the terms of each of the Transaction Documents (as applicable). In
furtherance of the foregoing, except pursuant to the indemnification provisions
set forth in this Article VII, each of Buyer and Seller hereby waives, from and
after the Closing, to the fullest extent permitted under applicable Law, any and
all rights, claims and causes of action (including for rescission) that such
Party or any of its Affiliates may have against the other Party and its
Affiliates arising under or based upon this Agreement, any document or
certificate delivered in connection herewith or the Transactions; provided,
however, that notwithstanding the foregoing, the parties to the Transaction
Documents shall be entitled to enforce the terms of each of the Transaction
Documents (as applicable). Notwithstanding anything contained herein to the
contrary, this Article VII shall not apply to the transactions contemplated by
the Transition Services Agreement or the Trademark License Agreement, which, in
each case, shall be governed by the terms and conditions thereof in all
respects.

ARTICLE VIII

TERMINATION

Section 8.1 Termination. This Agreement may be terminated at any time prior to
the Closing:

(a) by either Seller or Buyer if the Closing shall not have occurred by June 5,
2018 (the “Termination Date”); provided, however, that the right to terminate
this Agreement under this Section 8.1(a) shall not be available to any Party
whose breach or failure

 

79

--------------------------------------------------------------------------------

to fulfill any of its obligations 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; provided, however, that if the conditions set forth in
Section 6.1(a), Section 6.1(b) or, with respect to matters addressed in such
Section, Section 6.1(c), have not been satisfied or waived on or prior to such
date, but all other conditions set forth in Article VI have been satisfied or
waived (except for those conditions that by their nature are to be satisfied at
the Closing), then the Termination Date may be extended by either Party by
delivery of written notice to the other Party to a date not beyond September 5,
2018; provided, further, that if the conditions set forth in Section 6.1(a),
Section 6.1(b) or, with respect to matters addressed in such Section,
Section 6.1(c) have not been satisfied or waived on or prior to such extended
date, but all other conditions set forth in Article VI have been satisfied or
waived (except for those conditions that by their nature are to be satisfied at
the Closing), then the Termination Date may be further extended by either Party
by delivery of written notice to the other Party to a date not beyond
December 5, 2018;

(b) by either Seller or Buyer in the event that any Governmental Order enjoining
or otherwise prohibiting the Transactions shall have become final and
nonappealable;

(c) by Seller if a breach of any representation, warranty, covenant, or
agreement on the part of Buyer set forth in this Agreement (including an
obligation to consummate the Transactions) shall have occurred that would, if
occurring or continuing on the Closing Date, cause any of the conditions set
forth in Section 6.1 or Section 6.2 not to be satisfied, and such breach is not
cured, or is incapable of being cured, within 30 days (but no later than the
Termination Date) of receipt of written notice by Seller to Buyer of such
breach; provided that Seller is not then in breach of this Agreement so as to
cause any of the conditions set forth in Section 6.1 or Section 6.3 not to be
satisfied;

(d) by Buyer if a breach of any representation, warranty, covenant or agreement
on the part of Seller set forth in this Agreement (including an obligation to
consummate the Transactions) shall have occurred that would, if occurring or
continuing on the Closing Date, cause any of the conditions set forth in
Section 6.1 or Section 6.3 not to be satisfied, and such breach is not cured, or
is incapable of being cured, within 30 days (but no later than the Termination
Date) of receipt of written notice by Buyer to Seller of such breach; provided
that Buyer is not then in breach of this Agreement so as to cause any of the
conditions set forth in Section 6.1 or Section 6.2 not to be satisfied; or

(e) by the mutual written consent of Seller and Buyer.

Section 8.2 Effect of Termination. In the event of a termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
ab initio and there shall be no liability on the part of any Party, its
Affiliates or its and their respective Representatives, except that (a) this
Section 8.2 and Article IX shall survive any such termination; (b) the
Confidentiality Agreement shall continue in full force and effect in accordance
with its terms; and (c) nothing herein shall relieve any Party from any
liability for any intentional breach of this Agreement occurring prior to such
termination.

 

80

--------------------------------------------------------------------------------

ARTICLE IX

GENERAL PROVISIONS

Section 9.1 Expenses. Except as otherwise specified in this Agreement, all costs
and expenses, including fees and disbursements of counsel, financial advisors,
accountants, and printers and filing, processing, or other fees, incurred in
connection with this Agreement and the other Transaction Documents and the
Transactions shall be borne by the Party incurring such costs and expenses,
whether or not the Closing shall have occurred.

Section 9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given: (a) when delivered in person or (b) on the next Business
Day when sent by national overnight courier, in each case, to the respective
Parties 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 9.2):

 

  (a) if to Seller:

DaVita Inc.

2000 16th Street

Denver, Colorado 80202

Attention: Chief Legal Officer

and to:

DaVita Inc.

2000 16th Street

Denver, Colorado 80202

Attention: Chief Financial Officer

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP

355 South Grand Avenue, Suite 100

Los Angeles, California 90071

  Attention: James Beaubien

    Daniel Settelmayer

 

  (b) if to Buyer or Buyer Parent:

UnitedHealth Group Incorporated

9900 Bren Road East

Minnetonka, MN 55343

  Attention: Chief Legal Officer

and to:

UnitedHealth Group Incorporated

9900 Bren Road East

Minnetonka, MN 55343

  Attention: Vice President, Corporate Development

 

81

--------------------------------------------------------------------------------

with a copy (which shall not constitute notice) to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

  Attention: Keith A. Pagnani

    Melissa Sawyer

Section 9.3 Public Announcements. The initial press release with respect to the
execution of this Agreement shall be a joint press release to be agreed upon by
Seller and Buyer. Thereafter, until the Closing Date (unless this Agreement is
validly terminated prior to the Closing Date), neither Seller or any of the
Acquired Companies or Related Consolidated Entities, on the one hand, nor Buyer
or Buyer Parent, on the other hand, shall make, or cause to be made, any press
release or public announcement in respect of this Agreement, the other
Transaction Documents, or the Transactions or otherwise communicate with any
news media regarding this Agreement, the other Transaction Documents, or the
Transactions without the prior written consent of the other Party (such consent
not to be unreasonably withheld, conditioned or delayed) unless such press
release or public announcement is otherwise required by applicable Law or
applicable stock exchange regulation, in which case Buyer and Seller shall, to
the extent practicable and lawful, consult with each other and cooperate as to
the timing and contents of any such press release, public announcement, or
communication. Notwithstanding the foregoing, Seller or any of the Acquired
Companies or Related Consolidated Entities (prior to Closing), on the one hand,
and Buyer or any of the Acquired Companies or Related Consolidated Entities
(following the Closing), on the other hand, may make, or cause to be made,
public statements in respect of this Agreement, the other Transaction Documents,
or the Transactions or otherwise communicate with any news media regarding this
Agreement, the other Transaction Documents, or the Transactions without the
prior written consent of the other Party so long as such statements or
communications are generally consistent with press releases, public
announcements, or other communications previously approved in writing by the
Parties. For the avoidance of doubt, no provision in this Agreement shall
restrict Seller or any of its Affiliates from making any internal statements, or
issuing any internal notices or announcements to any employees of Seller or its
Affiliates (other than to any Business Employees who are not Seller-Level
Employees) regarding this Agreement, the other Transaction Documents, or the
Transactions.

Section 9.4 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced under any Law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect; provided that the economic and legal substance of the
Transactions is not affected in any manner materially adverse to any Party. Upon
such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the Parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as
possible in a mutually acceptable manner in order that the Transactions are
consummated as originally contemplated by this Agreement to the greatest extent
possible.

Section 9.5 Entire Agreement. This Agreement, the other Transaction Documents,
the Disclosure Schedule, and the Confidentiality Agreement constitute the entire
agreement of the Parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and undertakings, both written and oral,
between the Parties with respect to the subject matter hereof and thereof.

 

82

--------------------------------------------------------------------------------

Section 9.6 Assignment. This Agreement may not be assigned by operation of Law
or otherwise without the express written consent of Seller and Buyer (which
consent may be granted or withheld in the sole discretion of Seller or Buyer),
as the case may be, and any attempted assignment without such consent shall be
null and void; provided that Buyer may assign its right to receive the Acquired
Interests at the Closing to one or more of its wholly owned Subsidiaries (but no
such assignment shall relieve Buyer of any of its obligations hereunder);
provided, further, that, notwithstanding anything to the contrary contained in
this Agreement, nothing shall restrict Seller from the sale, transfer, exchange,
assignment or other disposition by any means of a majority of its equity
securities, or all or substantially all of its assets.

Section 9.7 Amendment. This Agreement may not be amended or modified except:
(a) by an instrument in writing signed by, or on behalf of, Seller and Buyer or
(b) by a waiver in accordance with Section 9.8.

Section 9.8 Waiver. Any Party 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 to this
Agreement or (c) waive compliance with any of the agreements of any other Party
or conditions to such obligations contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the
Parties to be bound thereby. Notwithstanding the foregoing, no failure or delay
by any Party in exercising any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or future
exercise of any other right hereunder. The failure of any Party to assert any of
its rights hereunder shall not constitute a waiver of any of such rights.

Section 9.9 No Third-Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the Parties and their respective successors
and permitted assigns and 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; provided, however, that
the D&O Indemnified Parties are express third-party beneficiaries of
Section 5.10 (Directors’ and Officers’ Indemnification).

Section 9.10 Specific Performance. The Parties agree that irreparable damage for
which monetary damages, even if available, would not be an adequate remedy,
would occur in the event that the Parties do not perform their respective
obligations under the provisions of this Agreement (including failing to take
such actions as are required of them hereunder to consummate this Agreement and
the Transactions) in accordance with its specified terms or otherwise breach
such provisions. The Parties acknowledge and agree that: (a) the Parties shall
be entitled to an injunction, specific performance, or other equitable relief,
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof, without proof of damages, prior to the valid termination of
this Agreement in accordance with Section 8.1, in

 

83

--------------------------------------------------------------------------------

addition to any other remedy to which they are entitled under this Agreement,
and (b) the right of specific performance is an integral part of the
Transactions and without that right, neither of the Parties would have entered
into this Agreement. Each Party agrees that it will not oppose the granting of
specific performance and other equitable relief on the basis that the other
Party has an adequate remedy at law or that an award of specific performance is
not an appropriate remedy for any reason at law or equity. The Parties
acknowledge and agree that any Party seeking an injunction to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement in accordance with this Section 9.10 shall not be required to provide
any bond or other security in connection with any such injunction. While a Party
may pursue both a grant of specific performance in accordance with this
Section 9.10 and concurrently pursue the payment of any Losses under
Section 8.2, under no circumstances shall a Party be permitted or entitled to
receive both (i) a grant of specific performance that results in the Closing
(and the payment of any fees, costs and expenses (including legal fees) incurred
by or on behalf of such Party or any of its Affiliates in connection with such
Party’s pursuit of such grant of specific performance) and (ii) Losses under
Section 8.2.

Section 9.11 Governing Law and Venue.

(a) This Agreement, and all claims or causes of action based upon, arising out
of, or related to this Agreement or the Transactions, shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to conflicts of laws principles or rules to the extent such principles or
rules would require or permit the application of Laws of another jurisdiction.

(b) Prior to the Closing, the exclusive venue for any and all disputes arising
out of or in connection with the interpretation and enforcement of the
provisions of this Agreement shall be the courts of the State of Delaware and
the federal courts of the United States of America located in the State of
Delaware and such courts shall have exclusive jurisdiction to adjudicate such
disputes. Each Party hereby expressly consents to the exercise of jurisdiction
by such courts and hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to such laying of venue (including the defense of inconvenient
forum).

Section 9.12 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH OF THE
PARTIES HEREBY: (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF ANY SUCH ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.12.

 

84

--------------------------------------------------------------------------------

Section 9.13 Arbitration. It is understood and agreed between the Parties that
if the Transactions are consummated, from and after the Closing Date, any and
all claims, grievances, demands, controversies, causes of action or disputes of
any nature whatsoever (including tort and contract claims, and claims upon any
law, statute, order, or regulation) (hereinafter “EPA Disputes”), arising out
of, in connection with, or in relation to: (i) this Agreement or the
Transactions, or (ii) questions of arbitrability under this Agreement, shall be
resolved by final, binding, nonjudicial arbitration in accordance with the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq. pursuant to the following
procedures:

(a) Any Party may send the other Party written notice identifying the matter in
dispute and invoking the procedures of this Section 9.13 (the “EPA Dispute
Notice”). Within 30 days from delivery of the EPA Dispute Notice, each Party
involved in the dispute shall meet at a mutually agreed location in Denver,
Colorado, for the purpose of determining whether they can resolve the dispute
themselves by written agreement.

(b) If the Parties fail to resolve the dispute by written agreement within the
later of 14 days from any such initial meeting or within 30 days from the
delivery of the EPA Dispute Notice, any such party may make written application
to the Judicial Arbitration and Mediation Services (“JAMS”), in New York, New
York to resolve the dispute by arbitration. For disputes valued at less than
$5,000,000, the arbitration shall be conducted by one neutral arbitrator
(“Arbitrator”) selected in accordance with the JAMS Comprehensive Arbitration
Rules & Procedures (the “Rules”); provided that such Arbitrator shall not be a
current or former employee or director, or a current stockholder, of either
Party or any of their respective Affiliates. For disputes valued at or more than
$5,000,000, the arbitration shall be conducted by a panel of three neutral
Arbitrators selected in accordance with the Rules; provided that any such
Arbitrator shall not be a current or former employee or director, or a current
stockholder, of either Party or any of their respective Affiliates. Except as
otherwise specified in this Agreement, the Parties agree that any arbitration
shall be governed by the Rules.

(c) Within 45 days of the selection of the Arbitrator(s), the parties involved
in the dispute shall meet in New York, New York with such Arbitrator(s) at a
place and time designated by such Arbitrator(s) after consultation with such
parties and present their respective positions on the dispute. Each Party shall
have no longer than one day to present its position, the entire proceedings
before the Arbitrator shall be no more than three consecutive days, and the
decision of the Arbitrator(s) shall be made in writing no more than 30 days
following the end of the proceeding. Such an award shall be a final and binding
determination of the EPA Dispute and shall be fully enforceable as an
arbitration decision in any court having jurisdiction and venue over the
Parties. Each party shall bear its own attorney’s fees, costs, and disbursements
arising out of the arbitration, and shall pay an equal share of the fees and
costs of the Arbitrator(s); provided, however, that the Arbitrator(s) shall be
authorized to determine whether a party is the prevailing party, and if so, to
award to that prevailing party reimbursement for any or all of its reasonable
attorneys’ fees, costs and disbursements, or the fees and costs of the
Arbitrator(s).

Section 9.14 Counterparts. This Agreement may be executed and delivered
(including by facsimile or other means of electronic transmission, such as by
electronic mail in “.pdf” form) in one or more counterparts, and by the
different Parties 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.

 

85

--------------------------------------------------------------------------------

Section 9.15 Waiver of Conflicts Regarding Representations; Non-Assertion of
Attorney-Client Privileges.

(a) Buyer hereby waives and shall not assert, and agrees after the Closing to
cause any other applicable Affiliates of Buyer (including the Acquired Companies
and Related Consolidated Entities following the Closing) to waive and to not
assert, any conflict of interest arising out of or relating to the
representation, after the Closing (the “Post-Closing Representation”), of Seller
or any of its Subsidiaries or other Affiliates, or any of their respective
officers, employees or directors (any such person, a “Designated Person”) in any
matter involving this Agreement or the Transactions, by any legal counsel
(“Prior Company Counsel”) currently representing any Designated Person in
connection with this Agreement or the Transactions (the “Current
Representation”). Without limiting the foregoing, Buyer, on behalf of itself and
its Affiliates (including the Acquired Companies and Related Consolidated
Entities following the Closing) agrees that, following the Closing, Prior
Company Counsel may serve as counsel to any Designated Person in connection with
any matters related to this Agreement and the Transactions, including any
litigation, claim or obligation arising out of or relating to this Agreement or
the Transactions notwithstanding any representation by Prior Company Counsel
prior to the Closing, and Buyer (on behalf of itself and the Acquired Companies
following Closing) hereby agrees that, in the event that a dispute arises after
the Closing between Buyer or any Acquired Company or Related Consolidated
Entity, on the one hand, and any Designated Person, on the other hand, Prior
Company Counsel may represent one or more Designated Persons in such dispute
even though the interests of such Person(s) may be directly adverse to Buyer or
any Acquired Company or Related Consolidated Entity and even though Prior
Company Counsel may have represented an Acquired Company or Related Consolidated
Entity or any of its respective Subsidiaries in a matter substantially related
to such dispute.

(b) Attorney-Client Privilege. Buyer waives and shall not assert, and agrees
after the Closing to cause the Acquired Companies, the Related Consolidated
Entities and their respective Affiliates to waive and to not assert, any
attorney-client privilege with respect to any communication between any Prior
Company Counsel and any Designated Person occurring during the Current
Representation in connection with any Post-Closing Representation, including in
connection with a dispute between any Designated Person and one or more of
Buyer, the Acquired Companies, the Related Consolidated Entities and their
respective Affiliates, it being the intention of the Parties that all rights to
such attorney-client privilege and to control such attorney-client privilege
shall be retained by Seller. Furthermore, Buyer acknowledges and agrees that any
advice given to or communication with any of the Designated Persons with respect
to the Current Representation shall not be subject to any joint privilege and
shall be owned solely by Seller. The portion of the books and records of the
Acquired Companies and Related Consolidated Entities containing any such
privileged communications shall be excluded from the purchase, and shall be
distributed to Seller (on behalf of the applicable Designated Persons)
immediately prior to the Closing with no copies retained by the Acquired
Companies, the Related Consolidated Entities or any of their respective
Subsidiaries. Buyer hereby acknowledges that it has had the opportunity
(including on behalf of its Affiliates) to discuss and obtain adequate
information concerning the significance and material risks of, and reasonable
available alternatives to, the waivers, permissions and other provisions of this
Agreement, including the opportunity to consult with counsel other than Prior
Company Counsel. This Section 9.15 shall be irrevocable, and no term of this
Section 9.15 may be amended, waived or modified, without the prior written
consent of Seller and its Affiliates and Prior Company Counsel affected thereby.

 

86

--------------------------------------------------------------------------------

Section 9.16 No Other Representations and Warranties. Except for the
representations and warranties expressly set forth in Article III or any
certificate delivered pursuant to this Agreement by or on behalf of Seller at or
prior to the Closing, Buyer acknowledges that none of Seller or any of its
Affiliates makes any representation or warranty, express or implied, at law or
in equity, with respect to Seller, the Acquired Companies, the Related
Consolidated Entities, the Acquired Interests, the other equity interests of the
Acquired Companies or Related Consolidated Entities or the Business or any of
the assets or liabilities of the Acquired Companies or Related Consolidated
Entities and their respective Affiliates, or with respect to any other
information provided to Buyer, whether on behalf of Seller or any other Person,
including as to the probable success or profitability of the Business after the
Closing, and Buyer acknowledges and agrees that Seller expressly disclaims any
such representations or warranties. Except for the representations and
warranties expressly set forth in Article IV, Section 9.18 or any certificate
delivered pursuant to this Agreement by or on behalf of Buyer at or prior to the
Closing, Seller acknowledges that none of Buyer or any of its Affiliates makes
any representation or warranty, express or implied, at law or in equity, with
respect to Buyer, its Affiliates, their respective businesses or any of the
assets or liabilities of Buyer and its Affiliates, or with respect to any other
information provided to Seller, whether on behalf of Buyer or any other Person,
and Seller acknowledges and agrees that Buyer expressly disclaims any such
representations or warranties. Other than in the case of fraud or as expressly
contemplated by this Agreement, or any certificate delivered pursuant to this
Agreement, neither Seller, Buyer nor any of their respective Affiliates or
Representatives shall have or be subject to any liability or indemnification
obligation to Buyer or Seller, as the case may be, or any other Person,
resulting from the distribution to Buyer or Seller, as the case may be, or
Buyer’s or Seller’s use of, as the case may be, any information not set forth in
or incorporated by reference into this Agreement or any Schedule or Exhibit
hereto, including any information, document or material made available in
certain “data rooms” (including the Data Room), management presentations or in
any other form in expectation or contemplation of the Transactions.

Section 9.17 Fulfillment of Obligations. Any obligation of any Party to any
other Party under this Agreement, which obligation is performed, satisfied or
fulfilled completely by an Affiliate of such Party, shall be deemed to have been
performed, satisfied or fulfilled by such Party.

Section 9.18 Guarantee; Representations and Warranties of Buyer Parent.

(a) As material inducement to Seller to enter into this Agreement and to
consummate the Transactions, Buyer Parent hereby irrevocably and unconditionally
guarantees to Seller the full and timely payment, performance and satisfaction
of each covenant, agreement, obligation and liability of Buyer arising under
this Agreement (the “Buyer’s Obligations”). To the fullest extent permitted by
applicable Law, Buyer Parent hereby expressly waives any and all rights and
defenses arising by reason of any Law that would otherwise require any election
of remedies by Seller. Without limiting the generality of the foregoing, Buyer
Parent expressly waives: (i) notice of the acceptance by Seller of this

 

87

--------------------------------------------------------------------------------

guarantee; (ii) notice of the non-performance of all or any of the Buyer’s
Obligations; (iii) presentment, demand, notice of dishonor, protest, notice of
protest and all other notices whatsoever, in respect of any or all of the
Buyer’s Obligations; (iv) any defense arising by reason of any claim or defense
based upon an election of remedies, including the failure or delay in exercising
remedies against Buyer, by Seller which in any manner affects any of its rights
to proceed against Buyer Parent; (v) any defense arising by reason of any
modification, termination or release of any of the Buyer’s Obligations pursuant
to applicable Law; and (vi) any defense arising from the bankruptcy or
insolvency of Buyer. Buyer Parent agrees that its liability hereunder shall be
primary and direct, not merely of collection and not merely that of a surety,
and that Seller shall not be required to pursue any right or remedy it may have
against Buyer under this Agreement or otherwise or to first commence any
proceeding or obtain any judgment against Buyer in order to enforce this
Section 9.18(a). In the event that any payment to Seller in respect of the
Buyer’s Obligations is rescinded or must otherwise be returned for any reason
whatsoever, Buyer Parent shall remain liable hereunder with respect to the
Buyer’s Obligations as if such payment had not been made. This Section 9.18(a)
represents a continuing guarantee and shall be binding upon Buyer Parent until
the Buyer’s Obligations have been satisfied or paid in full.

(b) Buyer Parent hereby represents and warrants to Seller as of the date hereof
and as of the Closing as follows:

(i) The execution and delivery by Buyer Parent of this Agreement and the
performance by Buyer Parent of its obligations hereunder have been duly
authorized by all requisite action on the part of Buyer Parent, and no other
proceedings on the part of Buyer Parent are necessary to authorize this
Agreement. This Agreement has been duly executed and delivered by Buyer Parent,
and (assuming due authorization, execution and delivery by Seller) this
Agreement constitutes legal, valid, and binding obligations of Buyer Parent,
enforceable against Buyer Parent in accordance with its terms, subject to the
effect of any applicable Remedies Exception.

(ii) The execution, delivery, and performance by Buyer Parent of this Agreement
does not and will not require any material notices, reports or other filings by
Buyer Parent with, nor any material Consents by any Governmental Authority,
except for: (A) the notification and waiting period requirements under the HSR
Act, (B) any Consents as are necessary as a result of any facts or circumstances
relating solely to Seller or any of its Affiliates, or (C) any notice, report or
other filing by Buyer Parent with, or any Consent by, any Governmental Authority
where the failure to make such notice, report or other filing by Buyer with, or
obtain such Consent of, such Governmental Authority would not, individually or
in the aggregate, reasonably be expected to impair or delay Buyer Parent’s
performance of its obligations hereunder in any material respect.

(c) Buyer Parent shall not assign its rights, interests or obligations hereunder
to any other Person without the prior written consent of Seller. Any attempted
assignment in violation of this section shall be null and void; provided, that,
notwithstanding anything to the contrary contained in this Agreement, nothing
shall restrict Buyer Parent from the sale, transfer, exchange, assignment or
other disposition by any means of a majority of its equity securities, or all or
substantially all of its assets.

 

88

--------------------------------------------------------------------------------

[SIGNATURE PAGE FOLLOWS]

 

89

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
as of the date first written above by its representative thereunto duly
authorized.

 

SELLER: DAVITA INC. By:  

/s/ Kent J. Thiry

  Name:  Kent J. Thiry   Title:    Chairman and Chief Executive Officer

BUYER:

 

COLLABORATIVE CARE HOLDINGS, LLC

By:  

/s/ Travis Winkey

  Name:  Travis Winkey   Title:    Authorized Representative

BUYER PARENT:

 

UNITEDHEALTH GROUP INCORPORATED

By:  

/s/ David S. Wichmann

  Name:  David S. Wichmann   Title:    Chief Executive Officer