106-8 Asset Sale Agreement of Church Street Health Management

Execution Copy
ASSET SALE AGREEMENT BY AND AMONG CHURCH STREET HEALTH MANAGEMENT, LLC, THE OTHER ENTITIES IDENTIFIED HEREIN AS SELLERS AND CSHM LLC DATED AS OF March 2, 2012
8565755.15.2
Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page Exhibit F - Asset Sale Agreement 1 of 2611 of 261
TABLE OF CONTENTS Page ARTICLE I INTERPRETATION ...............................................................................................1 Section 1.1 Definitions..................................................................................................1 Section 1.2 Interpretation. ...........................................................................................17 ARTICLE II PURCHASE AND SALE OF ASSETS...............................................................18 Section 2.1 Purchase and Sale ....................................................................................18 Section 2.2 Purchase Price ..........................................................................................27 Section 2.3 Closing .....................................................................................................29 Section 2.4 Designated Purchaser(s)...........................................................................30 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...................................................................................................................30 Section 3.1 Organization and Corporate Power ..........................................................31 Section 3.2 Authorization; Binding Effect; No Breach ..............................................31 Section 3.3 Brokers .....................................................................................................32 Section 3.4 Direction Letter; Assignment Agreement ................................................32 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS ..............32 Section 4.1 Organization and Corporate Power ..........................................................32 Section 4.2 Subsidiaries and Investments ...................................................................33 Section 4.3 Authorization; Binding Effect; No Breach ..............................................33 Section 4.4 Title to Tangible Assets; Sufficiency of Assets .......................................33 Section 4.5 Material Contracts ....................................................................................34 Section 4.6 Intellectual Property .................................................................................35 Section 4.7 Litigation ..................................................................................................37 Section 4.8 Financial Statements ................................................................................37 Section 4.9 Compliance with Laws; Consents ............................................................38 Section 4.10 Real Property ...........................................................................................38 Section 4.11 Environmental Matters.............................................................................43 Section 4.12 Labor and Employee Benefits Matters ....................................................44 Section 4.13 Taxes ........................................................................................................47 Section 4.14 Absence of Certain Developments...........................................................47 Section 4.15 No Undisclosed Liabilities.......................................................................48 Section 4.16 Customers and Suppliers..........................................................................48 Section 4.17 Affiliate Transactions...............................................................................48 Section 4.18 Cure Costs ................................................................................................45 Section 4.19 Owned Inventory .....................................................................................45 Section 4.20 Bank Accounts Schedule .........................................................................48 Section 4.21 Powers of Attorney ..................................................................................48 Section 4.22 Brokers; Advisors Fees ............................................................................49 Section 4.23 No Additional Representations ................................................................46
8565755.15
ARTICLE V COVENANTS AND OTHER AGREEMENTS .................................................49 Section 5.1 Bankruptcy Actions .................................................................................49 Section 5.2 Cooperation ..............................................................................................51 Section 5.3 Regulatory Approvals ..............................................................................52 Section 5.4 Pre-Closing Access to Information ..........................................................53 Section 5.5 Public Announcements ............................................................................54 Section 5.6 Further Actions ........................................................................................54 Section 5.7 Conduct of Business and Compliance with DIP Credit Agreement ........55 Section 5.8 Exclusivity; No Solicitation of Transactions ...........................................56 Section 5.9 Transaction Expenses...............................................................................58 Section 5.10 Confidentiality .........................................................................................58 Section 5.11 Certain Payments or Instruments Received from Third Parties...............58 Section 5.12 Deemed Consent ......................................................................................59 Section 5.13 Maintenance of Books and Records ........................................................59 Section 5.14 Use of Cash ..............................................................................................59 Section 5.15 Wind-Down Amount ...............................................................................59 Section 5.16 Name Change ...........................................................................................60 Section 5.17 Certain Acknowledgement Regarding the Purchaser ..............................60 ARTICLE VI TAX MATTERS..................................................................................................61 Section 6.1 Transfer Taxes .........................................................................................61 Section 6.2 Withholding Taxes ...................................................................................61 Section 6.3 Tax Characterization of Payments Under This Agreement .....................62 Section 6.4 Records ....................................................................................................62 Section 6.5 Property Tax Allocation ...........................................................................62 Section 6.6 G Reorganization Structure......................................................................63 ARTICLE VII EMPLOYMENT MATTERS ...........................................................................63 Section 7.1 Employment Offers ..................................................................................63 Section 7.2 Employee Benefits ...................................................................................63 Section 7.3 Excluded Employee Liabilities ................................................................64 Section 7.4 Other Employee Covenants .....................................................................65 Section 7.5 WARN Act...............................................................................................65 Section 7.6 No Obligation...........................................................................................66 ARTICLE VIII CONDITIONS TO THE CLOSING ..............................................................66 Section 8.1 Conditions to Each Party's Obligation .....................................................66 Section 8.2 Conditions to Sellers' Obligation .............................................................66 Section 8.3 Conditions to Purchaser's Obligation .......................................................67 ARTICLE IX TERMINATION .................................................................................................68 Section 9.1 Termination ..............................................................................................68 Section 9.2 Effects of Termination .............................................................................69 ARTICLE X MISCELLANEOUS .............................................................................................70 Section 10.1 No Survival of Representations and Warranties or Covenants ................70 Section 10.2 Remedies ..................................................................................................70
8565755.15
ii
Section 10.3 No Third-Party Beneficiaries ...................................................................71 Section 10.4 Consent to Amendments; Waivers...........................................................71 Section 10.5 Successors and Assigns............................................................................71 Section 10.6 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial .........71 Section 10.7 Notices .....................................................................................................72 Section 10.8 Exhibits; Sellers Disclosure Letter...........................................................73 Section 10.9 Counterparts .............................................................................................74 Section 10.10 No Presumption .......................................................................................74 Section 10.11 Severability ..............................................................................................74 Section 10.12 Entire Agreement .....................................................................................74 Section 10.13 Damages ...................................................................................................75 Section 10.14 Bulk Sales Laws .......................................................................................75 Section 10.15 Risk of Loss .............................................................................................75 EXHIBITS Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G-1 Exhibit G-2 Exhibit G-3 List of Purchaser's Persons with Knowledge Sellers' Disclosure Letter Wind-Down Budget Form of Bidding Procedures Form of Stalking Horse and Bidding Procedures Order Form of Sale Order Purchaser and Lenders Release Parties Sellers Release Parties Form of Mutual Release
8565755.15
iii
ASSET SALE AGREEMENT This Asset Sale Agreement is dated as of March 2, 2012, by and among Church Street Health Management LLC, a Delaware limited liability company ("Church Street"), Small Smiles Holding Company, LLC, a Delaware limited liability company ("SSHC"), FORBA NY, LLC, a New York limited liability company ("Forba NY"), FORBA Services, Inc., a Delaware corporation ("Forba Services"), EEHC, Inc., a Delaware corporation ("EEHC", and each of Church Street, SSHC, Forba NY, Forba Services, and EEHC individually, a "Seller", and collectively, the "Sellers"), and CSHM LLC, a Delaware limited liability company (the "Purchaser"). W I T N E S S E T H: WHEREAS, the Sellers beneficially own and operate the Business; WHEREAS, the Sellers are debtors-in-possession (in such capacities, the "Debtors") under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. 101 et seq. (the "Bankruptcy Code"), that have all commenced voluntary proceedings (the "Chapter 11 Cases") on February 20, 2012 and February 21, 2012 (the "Petition Date") by filing petitions for relief in the United States Bankruptcy Court for the Middle District of Tennessee (the "Bankruptcy Court"); WHEREAS, pursuant to the Direction Letter, the Agent has been instructed by the Required Lenders, upon the request of the Purchaser, to submit the Credit Bid for the Assets pursuant to the terms and conditions of this Agreement and the Direction Letter; WHEREAS, in accordance with the terms hereof and pursuant to sections 363 and 365 of the Bankruptcy Code, each of the Sellers desires to transfer, sell, convey, assign and deliver to the Purchaser or the applicable Designated Purchaser, and the Purchaser desires to purchase, acquire and accept, or cause a Designated Purchaser to purchase, acquire and accept, the Assets free and clear of all Liabilities (other than the Assumed Liabilities and Permitted Encumbrances); and WHEREAS, in connection with such assignment, in accordance with the terms hereof and pursuant to sections 363 and 365 of the Bankruptcy Code, the Purchaser is willing to assume, or cause a Designated Purchaser to assume, and each of the Sellers desires to assign and transfer to the Purchaser or the applicable Designated Purchaser, the Assumed Liabilities. NOW, THEREFORE, in consideration of the foregoing and the respective covenants, representations, warranties and agreements made herein, and of the mutual benefits to be derived hereby (the sufficiency of which are acknowledged), and intending to be legally bound hereby, the Parties agree as follows: ARTICLE I INTERPRETATION Section 1.1 Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings set forth below:
8565755.15
"Action" means any claim, action, suit, arbitration, assessment, proceeding, litigation, injunction, citation, summons, subpoena or investigation of any nature by or before any Government Entity. "Affiliate" means, as to any Person, any other Person that directly or indirectly through one or more intermediaries Controls, or is under common Control with, or is Controlled by, such specified Person. "Agent" means CIT Healthcare LLC, as administrative agent under the Credit Agreements. "Agreement" means this Asset Sale Agreement, the Sellers Disclosure Letter and all Exhibits and Schedules attached hereto and thereto and all amendments hereto and thereto made in accordance with Section 10.4. "Allowed" means, with respect to any administrative expense claims against the Debtors, such claim or portion thereof: (a) as to which no objection or request for estimation has been Filed, no litigation has commenced, and the Debtors otherwise have assented to the validity thereof; (b) as to which any objection or request for estimation that has been Filed has been settled, waived, withdrawn or denied by a Final Order; or (c) that is allowed (i) pursuant to the terms of a Final Order or (ii) pursuant to the terms of an agreement by and among the holder of such claim and the Debtors. "Alternative Transaction" means the sale, transfer or other disposition, directly or indirectly, including through an asset sale, share sale, merger, amalgamation, recapitalization or other similar transaction, including a plan of reorganization or plan of arrangement approved by the Bankruptcy Court, or resulting from the Auction, of substantially all of the Assets of the Sellers. "Ancillary Agreements" means, in each case in a form reasonably acceptable to the Sellers and the Purchaser: (a) a Bill of Sale for the assignment and conveyance of the Assets from the Sellers to the Purchaser; (b) an Assignment and Assumption Agreement for the assignment of the Assumed Liabilities by the Sellers to and the assumption thereof by the Purchaser or the Designated Purchasers; and (c) instruments of assignment of the Patents, Trademarks, Copyrights, and any other assignments or instruments with respect to any Intellectual Property included in the Assets for which an assignment or instrument is required to assign, transfer, convey and deliver such Assets to the Purchaser or to record such assignment, transfer or conveyance with the appropriate government offices, domain name registrars or other similar authorities. "Asset Allocation Schedule(s)" has the meaning set forth in Section 2.2(b). "Assets" has the meaning set forth in Section 2.1(a). "Assigned Contracts" means all Designated Seller Contracts other than Non-Assigned Contracts. "Assumed Liabilities" has the meaning set forth in Section 2.1(c). 2 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page Exhibit F - Asset Sale Agreement 6 of 2616 of 261
"Assumed Trade Payables" has the meaning set forth in Section 2.1(c)(i). "Auction" has the meaning set forth in Section 5.1(b). "Bankruptcy Code" has the meaning set forth in the recitals to this Agreement. "Bankruptcy Consents" has the meaning set forth in Section 4.1(a). "Bankruptcy Court" has the meaning set forth in the recitals to this Agreement. "Bankruptcy Laws" means the Bankruptcy Code and the other applicable insolvency Laws of any jurisdiction where the Chapter 11 Cases are held. "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure. "Bid" means the transactions contemplated hereby, including (a) the Credit Bid, and (b) the assumption of the Assumed Liabilities by Purchaser or a Designated Purchaser, as applicable, and in exchange for the purchase and sale of the Assets and the assumption of the Assumed Liabilities. "Bidding Procedures" has the meaning set forth in Section 5.1(b). "Business" means the current business operated by the Sellers. "Business Day" means a day on which banks are open for business (Saturdays, Sundays, statutory and civic holidays excluded) in New York, New York. "Business Information" means all books of account, general, financial, Tax and personnel records, invoices, shipping records, supplier lists, correspondence and other documents, records, files, documentation and sales literature and any rights thereto owned, associated with or employed by the Sellers and in the possession or under control of the Sellers that are used or held for use in connection with the Business, including information, policies and procedures, Owned Equipment manuals and materials and procurement documentation used in the Business, including, without limitation, any Employee Records for Employees or former employees who are not Transferred Employees. "Causes of Action" has the meaning set forth in Section 5.1(b). "Chapter 11 Cases" has the meaning set forth in the recitals to this Agreement and shall, for the avoidance of doubt, include any other voluntary or involuntary bankruptcy, insolvency, administration or similar judicial proceedings concerning any of the Sellers that are held from time to time. Church Street has the meaning set forth in the preamble to this Agreement. "Claim" has the meaning set forth in section 101(5) of the Bankruptcy Code. "Cleanup" means all actions required under Environmental Laws to: (a) cleanup, remove, treat or remediate Hazardous Materials in the indoor or outdoor environment; (b) prevent the 3 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page Exhibit F - Asset Sale Agreement 7 of 2617 of 261
Release of Hazardous Materials so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (c) abate, decontaminate, or detoxify Hazardous Materials or areas or properties affected or impacted by Hazardous Materials; (d) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (e) respond to any Government Entity's request for information or documents in any way relating to cleanup, removal, treatment, remediation, abatement, decontamination, detoxification, or potential cleanup, removal, treatment, remediation, abatement, decontamination, or detoxification of Hazardous Materials in the indoor or outdoor environment. "Closing" has the meaning set forth in Section 2.3(a). "Closing Date" has the meaning set forth in Section 2.3(a). "COBRA" has the meaning set forth in Section 7.2(e). "Code" means the United States Internal Revenue Code of 1986, as amended. "Consent" means any approval, authorization, consent, order, certificate, license, permission, permit or Court Order, including any qualification, exemption or waiver, by any Government Entity or other Third Party. "Contract" means any legally binding contract, agreement, obligation, license, undertaking, instrument, lease, commitment or other arrangement, whether written or oral. "Control", including, with its correlative meanings, "Controlled by" and "under common Control with", means, in connection with a given Person, the possession, directly or indirectly, of the power to either (a) elect more than fifty percent (50%) of the directors or managers of such Person or (b) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, Contract or otherwise. "Copyrights" means all copyrights (including copyrights in Software) and copyrightable subject matter, whether registered or unregistered, in any jurisdiction throughout the world including (a) all copyright registrations and applications for registration, (b) all moral rights and rights of attribution and integrity, (c) all common law copyright rights, and (d) all rights to register and obtain renewals and extensions of copyright registrations, together with all other copyright interests accruing by reason of any international copyright convention or treaty. "Courts" has the meaning set forth in Section 10.6(b). "Credit Agreements" means (a) that certain prepetition Amended and Restated First Lien Credit Agreement dated as of February 1, 2010, among SSO Funding Corp. as borrower, the lenders from time to time party thereto, and CIT Healthcare LLC, as collateral agent and administrative agent; and (b) that certain prepetition Second Lien Credit Agreement dated as of February 1, 2010 among SSO Funding Corp. as borrower, the lenders from time to time party thereto, and CIT Healthcare LLC, as collateral agent and administrative agent, together, in each case, with all attendant notes, instruments, agreements and other documents, as the same have been amended, modified or supplemented from time to time. 4 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page Exhibit F - Asset Sale Agreement 8 of 2618 of 261
"Credit Bid" means the "credit bid" (pursuant to section 363(k) of the Bankruptcy Code) of the Credit Bid Amount in connection with the purchase of the Assets, which may be consummated pursuant to a transaction structure where the Credit Bid Amount with respect to Obligations is exchanged for all or substantially all of the Assets, in the sole discretion of the Required Lenders. "Credit Bid Amount" means an amount equal to Twenty-Five Million Dollars ($25,000,000), or such higher amount as Purchaser may agree in an amendment or supplement to this Agreement. "Cure Cost" means, as applicable, any amounts or assurances required by section 365(b)(1) of the Bankruptcy Code to assume any applicable Designated Seller Contract. "Cure Cost Cap" has the meaning set forth in Section 2.1(f)(i). "Debtors" has the meaning set forth in the recitals to this Agreement. "Designated Purchaser" has the meaning set forth in Section 2.4. "Designated Seller Contracts" means all Contracts and Leases of each Seller that relate to the Business and which are listed in Section 1.1(a) of the Sellers Disclosure Letter, which shall include all of the Governmental and Related Agreements and all management services agreements of the Sellers; but excluding such Contracts or Leases not to be assumed by and assigned to the Purchaser or Designated Purchasers pursuant to Section 2.1(a). DIP Budget" means the Budget as defined in the DIP Credit Agreement. "DIP Credit Agreement" means the $12 million Debtor-in-Possession Credit Agreement, by and among the Sellers, Garrison Loan Agency Services LLC and the lenders named therein, as amended, modified, supplemented or otherwise in effect from time to time, as filed with the Bankruptcy Court on the Petition Date. "DIP Loan Documents" means the Loan Documents as defined in the DIP Credit Agreement. "Direction Letter" means a written direction by the Required Lenders dated February 17, 2012 to the Agent to, among other things, submit the Credit Bid at the request on the Purchaser in connection with the Bid of the Purchaser. EEHC has the meaning set forth in the preamble to this Agreement. "Effective Hire Date" means the day on which the employment of an Employee commences with the Purchaser or its Affiliates as provided in this Agreement. "Employee" means each employee of any of the Sellers engaged in the Business. "Employee Information" has the meaning set forth in Section 4.12(b).
5 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page Exhibit F - Asset Sale Agreement 9 of 2619 of 261
"Employee Records" means books, records, files, or other documentation with respect to Employees or any former employee of any of the Sellers. "Employee Transfer Time" means with respect to each jurisdiction where Employees will become Transferred Employees in accordance with this Agreement, 12:00 a.m. midnight local time in such jurisdiction immediately following the Closing. "Environmental Claim" means any claim, Action, investigation, written notice, ministerial order, court order, notice of infraction, administrative fine or penalty, or statement of offence by any Person alleging potential liability (including potential liability for investigatory costs, Cleanup costs, Government Entity response costs, natural resources damages, property damages, personal injuries, or fines or penalties) arising out of, based on or resulting from (a) the presence, Release or threatened Release of, or exposure to, any Hazardous Materials at any location, whether or not owned or operated by the Sellers, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. "Environmental Law" means any applicable Law relating to pollution or protection of the environment, natural resources or human health and safety, including Laws relating to exposure to, or Releases or threatened Releases of, Hazardous Materials or otherwise relating to the manufacture, presence, processing, distribution, use, treatment, storage, transport or handling of Hazardous Materials and all Laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials. "Environmental Permit" means any permit, approval, license, certificate, consent, registration, certificate of authorization and depollution attestation or other authorization required under any Environmental Law to (a) conduct the Business as currently conducted or (b) own, occupy or operate the Assets as currently owned, occupied or operated. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" has the meaning set forth in Section 2.1(d)(v). Escrow Account means an escrow account established by the Sellers prior to the Closing into which shall be deposited the good faith estimated amount of accrued but unpaid professional fees and expenses of the Sellers in a maximum amount not to exceed the amounts set forth in the Budget for such fees and expenses. "Excluded Assets" has the meaning set forth in Section 2.1(b). "Excluded Employee Liabilities" has the meaning set forth in Section 7.3. "Excluded Liabilities" has the meaning set forth in Section 2.1(d). "Excluded Seller Contract" means any Contract or Lease of the Sellers that is not a Designated Seller Contract.
6 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 10Page 10 of 261
"Federal Settlement Agreement" means that certain Settlement Agreement, dated as of January 15, 2010, by and among Church Street, the United States, acting through the U.S. Department of Justice and the OIG-HHS, and the relators party thereto. "Federal and State Waivers" means those certain Waiver of Payment Acceleration Rights from each of the U.S. Department of Justice, the States of Alabama, Arizona, Colorado, Georgia, Idaho, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Nebraska, Nevada, New Hampshire, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas and, to the extent a Waiver of Payment Acceleration Right is obtained from the State of Virginia prior to the Closing Date, Virginia, and the District of Columbia. "Filed" means filed with the Bankruptcy Court (or agent thereof) in connection with the Chapter 11 Cases. "Final Order" means an action taken or Order issued by the applicable Government Entity as to which: (a) no request for stay of the action or Order is pending, no such stay is in effect, and, if any deadline for filing any such request is designated by statute or regulation, it is passed, including any extensions thereof, or any such request has been mooted pursuant to applicable Law; (b) no petition for rehearing or reconsideration of the action or Order, or protest of any kind, is pending before the Government Entity and the time for filing any such petition or protest is passed; (c) the Government Entity does not have the action or Order under reconsideration or review on its own motion and the time for such reconsideration or review has passed; and (d) the action or Order is not then under judicial review, there is no notice of leave to appeal, appeal or other application for judicial review pending, and the deadline for filing such notice of appeal or other application for judicial review has passed, including any extensions thereof; provided, however, that no action or Order will fail to be a "Final Order" solely because of the possibility that a motion pursuant to section 502(j) or 1144 of the Bankruptcy Code, Rule 59 or 60 of the Federal Rules of Civil Procedure or Rule 9024 of the Federal Rules of Bankruptcy Procedure may be filed with respect to such action or Order. "Financial Statements" has the meaning set forth in Section 4.8. Forba NY has the meaning set forth in the preamble to this Agreement. Forba Services has the meaning set forth in the preamble to this Agreement. "GAAP" means the United States generally accepted accounting principles, applied consistently throughout the periods involved. "G Reorganization Structure" has the meaning set forth in Section 6.6. "Government Entity" means any foreign, domestic, federal, national, territorial, provincial, state, municipal or local governmental authority, quasi-governmental authority, court or other tribunal, self-regulatory organization, bureau, commission or any regulatory, administrative or other governmental agency, or any political or other subdivision, department or branch of any of the foregoing having jurisdiction.
"Governmental and Related Agreements" means (a) the OIG-CIA, (b) the NY-CIA, (c) the Federal Settlement Agreement, (d) the State Settlement Agreements, (e) the Federal and State Waivers, (f) that certain Agreement, dated as of February 15, 2012, by and between Church Street, OMIG-NY and the New York State Office of the Attorney General, (g) that certain Corporate Integrity Agreement Monitoring Agreement, dated as of March 15, 2010, by and between Church Street and StrategicHealthSolutions, LLC, and that certain Retainer Agreement, dated as of December 22, 2011 by and between such parties, and (h) that certain letter agreement, dated as of February 12, 2010, by and between Church Street and FTI Consulting Inc., each as amended, modified, supplemented or otherwise in effect from time to time. "Hazardous Materials" means (a) petroleum, petroleum products, asbestos in any form that is friable, toxic mold, urea formaldehyde foam insulation, lead based paints, polychlorinated biphenyls or any other material or substance regulated pursuant to Environmental Laws, and (b) any waste, chemical, material or other substance which is regulated, defined or listed, alone or in any combination as "hazardous", "hazardous waste", "radioactive", "deleterious", "toxic", "caustic", "dangerous", a contaminant, a pollutant, a "waste", a "special waste", a "source of contamination" or "source of pollution", or words of similar meaning, under any Environmental Law. Healthcare Law means: (a) all applicable statutes, laws, ordinances, rules and regulations of any Government Entity with respect to regulatory matters primarily relating to patient healthcare, healthcare providers and healthcare services, including but not limited to Title XIX (Medicaid Program) of 42 U.S.C.; (b) the federal Anti-Kickback Statute (42 U.S.C. 1320a-7b), (ii) the Stark Law (42 U.S.C. 1395nn and 1395(q)), (iii) the civil False Claims Act (31 U.S.C. 3729 et seq.), (iv) Sections 1320a-7a and 1320a-7b of Title 42 of the United States Code, (v) applicable state statutes similar to any of the foregoing and (vi) the regulations promulgated pursuant to such federal and state statutes; (c) the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104191) and the regulations promulgated pursuant thereto; (d) laws, rules and regulations governing Medicaid and SCHIP Programs;
(e) the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173) and the regulations promulgated pursuant thereto; (f) quality, safety and accreditation standards and requirements of all applicable federal, state or local laws or regulatory bodies relating to the Sellers or any Practice's ownership, management or operation of a healthcare facility or business, or assets used in connection therewith; (g) any applicable law relating to the billing or submission of claims, collection of accounts receivable, underwriting the cost of, or provision of management or administrative 8 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 12Page 12 of 261
services in connection with, any and all of the foregoing, by the Company or any of its Subsidiaries or any Practice; and (h) any and all other applicable healthcare laws, regulations, manual provisions, policies and administrative guidance having the force of law with respect to each of clause (b) through (g) above, as may be amended from time to time. "Indebtedness" means, with respect to any Person, (a) all indebtedness for borrowed money, whether or not contingent, of such Person, including any loans, overdrafts and advances, any accrued but unpaid interest thereon and any cost, penalty or premium, or any guarantees of any of the foregoing, (b) any indebtedness evidenced by any note, bond, debenture or other debt security, (c) any indebtedness for the deferred purchase price of property or services with respect to which any Seller is liable, contingently or otherwise, as obligor or otherwise, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) any commitment by which such Person assures a creditor against loss (including contingent reimbursement liabilities with respect to letters of credit or similar facilities), (f) any indebtedness or Liabilities guaranteed in any manner by a Seller, (g) any Liabilities under capitalized leases, that have been or should be, in accordance with GAAP, recorded as capital leases, with respect to which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which Liabilities such Person assures a creditor against loss, (g) any indebtedness secured by a Lien on such Person's assets, (h) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (i) any unsatisfied or underfunded Liability related to any pension plan or multiemployer plan, (j) any fees or other amounts owed by any Seller to any other Seller or any of its Affiliates, (k) any unpaid transaction expenses of any of the Sellers, and (l) all Indebtedness of others referred to in clauses (a) through (k) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness; (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered), or (iv) otherwise to assure a creditor against loss; and (l) all Indebtedness referred to in clauses (a) through (l) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. "Intellectual Property" means all intellectual and industrial property rights of any kind in any jurisdiction throughout the world, including all rights in and to the following: (a) Trademarks; (b) Patents; (c) inventions, whether or not patentable and whether or not a patent has been issued or a patent application has been made therefor; (d) Copyrights; (e) Trade Secrets 9 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 13Page 13 of 261
and other proprietary, confidential, technical or business information; and (f) all rights and remedies (including the right to sue for and recover damages, profits, income, payments, proceeds, claims and any other rights and remedies) for past, present, or future infringement, misappropriation, or other violation relating to any of the foregoing. "IRS" means the United States Internal Revenue Service. "IT Assets" means Software, systems, servers, computers, hardware, firmware, middleware, networks, data communications lines, routers, hubs, switches and all other information technology equipment, and all associated documentation. "Know-How" means technical, scientific, engineering, mechanical, electrical, financial, marketing, practical and other similar knowledge or experience useful in the operation of the Business. "Knowledge" or "aware of" or "notice of" or a similar phrase shall mean, with reference to any of the Sellers, the actual knowledge, after due inquiry, of those Persons listed on Section 1.1(b) of the Sellers Disclosure Letter, and, with reference to the Purchaser, the actual knowledge, after due inquiry, of those Persons listed on Exhibit A. "Law" means any foreign, domestic, federal, national, territorial, state, provincial, local, municipal or administrative statute, law, common law, ordinance, rule, regulation, Order or rule of law (including common law) adopted by a Government Entity. "Leased Real Property" has the meaning set forth in Section 4.10(a). "Leases" has the meaning set forth in Section 4.10(a). "Liabilities" means any and all debts, losses, awards, judgments, liabilities, claims, damages, fines, royalties, proceedings, deficiencies, penalties, costs, charges, or obligations of any nature, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or undeterminable, including those arising under any Law or Action and those arising under any Contract or otherwise, including any Tax liability. "Lien" means any lien, mortgage, pledge or security interest, hypothec (including legal hypothecs), encumbrance, servitude, easement, encroachment, right-of-way, restrictive covenant on real or immovable property, real property license, other real rights in favor of Third Parties, charge, prior claim, lease, occupancy agreement, leasing agreement, statutory or deemed trust or conditional sale arrangement. "Material Adverse Effect" means any development, occurrence, fact, condition, change, violation, inaccuracy, circumstance, event, change in or effect on the Assets, the Business or the Sellers, taken as a whole, that, individually or in the aggregate with all other events, circumstances, changes in or effects on the Assets, the Business or the Sellers, taken as a whole, has, or would reasonably be expected to have, a material adverse effect on the Business, results of operations or condition (financial or otherwise) of the Sellers, taken as a whole, except that any such development, occurrence, fact, condition, change, violation, inaccuracy, circumstance or event that results from or arises out of any of the following shall not be taken into account in 10 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 14Page 14 of 261
determining whether there has been a Material Adverse Effect: (i) changes in general economic conditions, changes in applicable Law or changes affecting the industries and markets in which the Business operates (except to the extent that such changes have a disproportionate effect on the Assets or the Business), (ii) macroeconomic factors, interest rates, currency exchange rates, general financial market conditions, acts of God, war, terrorism or hostilities (except (1) to the extent that such changes have a disproportionate effect on the Assets or the Business and (2) to the extent such changes are the result of an adverse change in the enforcement of existing law by any Governmental Authority) or (iii) the filing or pendency of the Chapter 11 Cases, the entry into or announcement of this Agreement or the Chapter 11 Cases, and any action approved by, or motion made before, the Bankruptcy Court or required to be taken pursuant to this Agreement; provided, however, that any such development, occurrence, fact, condition, change, violation, inaccuracy, circumstance or event that results from or arises out of investigations existing on the date hereof may be taken into account in determining whether there has been a Material Adverse Effect. "Material Contracts" has the meaning set forth in Section 4.5. "Non-Assignable Contracts" has the meaning set forth in Section 2.1(f)(i). "Non-Assigned Contracts" means the Non-Assignable Contracts to the extent all applicable Consents to assignment thereof to the Purchaser or a Designated Purchaser have not been granted or obtained prior to the Closing Date. NY-CIA means that certain Amended Corporate Integrity Agreement dated on or about April 30, 2010 by and between the OMIG-NY and Church Street. "Obligations" has, with respect to any Credit Agreement, the meaning set forth in such Credit Agreement. "Off-the-Shelf Software" means all Software that is used by any Seller in the operation of the Business or otherwise owned or licensed by any Seller and which is widely commercially available off-the-shelf Software that is licensed by a Seller pursuant to a "click through" or "shrink-wrap" or similar Contract that is not customized or modified in any material respect. For the avoidance of doubt, off-the-shelf Software does not include Software licensed to any Seller by means of a formal written license agreement executed by both licensor and licensee parties. OIG-CIA means that certain Corporate Integrity Agreement dated on or about January 15, 2010 by and between the OIG-HHS and Church Street. "OIG-HHS" means the Office of the Inspector General of the Department of Health and Human Services. OMIG-NY" means the New York State Office of Medicaid Inspector General. "Order" means any order, injunction, treaty, resolution, edict, judgment, decree, ruling, writ, assessment or arbitration award of a Government Entity.
"Ordinary Course" means the ordinary course of the Business consistent with recent past practice, as such practice is, or may have been, modified as a result of the Chapter 11 Cases. "Owned Equipment" means those items of tangible personal or movable property including all machinery, equipment (including transportation and office equipment), supplies, materials, office furniture and office equipment, computers, mobile phones and devices, personal digital assistants, fixtures, trade fixtures, computer equipment, hardware, peripherals, information technology infrastructure (including systems and networks), telephone systems, computing and telecommunications equipment, systems and networks, production supplies, spare parts, other miscellaneous supplies and other items of personal property wherever located that are owned by any Seller that are held or used in connection with the Business. "Owned Inventory" means any inventories of raw materials, manufactured and purchased parts, work in process, packaging, stores and supplies and unassigned finished goods inventories (which are finished goods not yet assigned to a specific customer order), in each case owned by any Seller and held or used in connection with the Business, including any of the above items which is owned by a Seller but remains in the possession or control of a Third Party. "Owned Software" means all Software owned by or assigned to any of the Sellers which is used in, held for use or is useful for the operation of the Business. "Party" or "Parties" means individually or collectively, as the case may be, the Sellers and the Purchaser. "Patents" means all U.S., international, and foreign (whether national, multinational or regional) statutory invention registrations, patents (including certificates of invention and other patent equivalents), patent applications, provisional patent applications and patents issuing therefrom, industrial designs, and industrial models, as well as all reissues, divisions, substitutions, continuations, continuations-in-part, patent disclosures, extensions and reexaminations, and all rights therein including as provided by multinational treaties or conventions. "Periodic Taxes" has the meaning set forth in Section 6.5. "Permitted Encumbrances" means (a) any Liens imposed by the Bankruptcy Court in connection with the Chapter 11 Cases that are to be discharged from the Assets at Closing pursuant to the terms of the Sale Order; (b) zoning, entitlement, building and land use regulations, minor defects of title, servitudes, easements, rights of way, restrictions and other similar charges or encumbrances which do not impair in any material respect the use or the value of the related assets in the Business as currently conducted and for which affirmative title insurance coverage can be obtained; and (c) non-exclusive licenses and covenants not to sue in respect of Intellectual Property entered into in the Ordinary Course. "Person" means an individual, a partnership, a corporation, an association, a limited or unlimited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization or other legal entity or Government Entity. "Petition Date" has the meaning set forth in the recitals to this Agreement. 12 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 16Page 16 of 261
"Post-Closing Tax Period" has the meaning set forth in Section 6.5. Practice means a dental practice or professional entity party to any management services agreement with any Seller. "Pre-Closing Tax Period" has the meaning set forth in Section 6.5. "Products" means any and all products that are developed, manufactured, marketed or sold by or on behalf of the Sellers as part of the Business. "Purchase Price" means the aggregate amount of (i) the Credit Bid Amount and (ii) the aggregate amount of the Assumed Liabilities (including liabilities under the DIP Credit Agreement) assumed by the Purchaser or one or more of the Designated Purchasers. "Purchased Deposits" means all deposits (including customer deposits and security deposits for rent, electricity and otherwise) and prepaid charges and expenses of the Sellers, including the right to receive any refund of any unutilized amounts thereof, other than as described in Section 5.15 or Section 2.1(b)(x) or any deposits or prepaid charges and expenses paid in connection with or relating exclusively to any Excluded Assets or any Contracts or Leases that are not Assigned Contracts. "Purchaser" has the meaning set forth in the preamble to this Agreement. "Purchaser Affiliates" has the meaning set forth Section 5.17. "Purchaser Employee Plan" means any "employee benefit plan" within the meaning of Section 3(3) of ERISA (whether or not covered by ERISA) and any other employee benefit or compensation plan, program or arrangement, whether written or oral, including any profit sharing, savings, bonus, performance awards, change of control, incentive compensation, deferred compensation, stock purchase, stock option, vacation, leave of absence, employee assistance, automobile leasing/subsidy/allowance, meal allowance, redundancy or severance, relocation, family support, pension, supplemental pension, retirement, retirement savings, post retirement, medical, health, hospitalization or life insurance, disability, sick leave, retention, education assistance, expatriate assistance, compensation arrangement, including any base salary arrangement, overtime, on-call or call-in policy or death benefit plan, program or arrangement or any other similar plan, program, arrangement or policy that may be established by or on behalf of the Purchaser or any Designated Purchaser with respect to the Transferred Employees, other than government sponsored pension, health care, social security, employment insurance, workers compensation, parental insurance, prescription drugs and similar plans. "Registered" means issued by, registered, recorded or filed with, renewed by or the subject of a pending application before any Government Entity or Internet domain name registrar. "Regulatory Approvals" means those approvals set forth on Section 1.1(c) of the Sellers Disclosure Letter.
"Release" means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property. "Required Lenders" has, with respect to each Credit Agreement, the meaning set forth in such Credit Agreement. "Sale Hearing" has the meaning set forth in Section 5.1(b). "Sale Motion" has the meaning set forth in Section 5.1(b). "Sale Order" has the meaning set forth in Section 5.1(e). "Seller" has the meaning set forth in the preamble to this Agreement. "Seller Employee Plan" means (a) any "employee benefit plan" within the meaning of Section 3(3) of ERISA (whether or not covered by ERISA); (b) any other employee benefit or compensation plan, program, agreement or arrangement, whether written or oral, which may include any profit sharing, savings, bonus, performance awards, change of control, incentive compensation, deferred compensation, stock purchase, stock option, vacation, leave of absence, employee assistance, automobile leasing/subsidy/allowance, meal allowance, redundancy or severance, relocation, family support, pension, supplemental pension, retirement, retirement savings, post retirement, medical, health, hospitalization or life insurance, disability, sick leave, retention, education assistance, expatriate assistance, compensation arrangement, including any base salary arrangement, overtime, on-call or call-in policy or death benefit plan, program or arrangement; and (c) any other similar plan, program, arrangement or policy that is maintained or otherwise contributed to, or required to be maintained or contributed to, by or on behalf of the Sellers or any of their Affiliates for the benefit of current Employees, former Employees, retirees or their respective dependents, or with respect to which any Seller has any direct or contingent Liability, other than government sponsored pension, health care, social security, employment insurance, workers compensation, parental insurance, prescription drugs and similar plans. "Sellers Disclosure Letter" means the disclosure schedules dated as of the date hereof, delivered by the Sellers to the Purchaser in accordance with this Agreement and attached hereto as Exhibit B. "Software" means all computer software programs (whether in source code, object code, or other form), applications and software systems, including all websites, algorithms, models and methodologies, program interfaces, databases, compilations and data, tool sets, compilers, higher level or "proprietary" languages, related documentation and technology, technical manuals, documentations and materials, and any rights relating to the foregoing. SSHC has the meaning set forth in the preamble to this Agreement. "Stalking Horse and Bidding Procedures Order" has the meaning set forth in Section 5.1(c). 14 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 18Page 18 of 261
"State Settlement Agreements" means those certain Settlement Agreements by and between Church Street and each of the States of Alabama, Arizona, Colorado, Connecticut, Georgia, Idaho, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Nebraska, Nevada, New Hampshire, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas and Virginia, and the District of Columbia. "Straddle Period" has the meaning set forth in Section 6.5. "Subsidiary" of any Person means any Person Controlled by such first Person. "Tax" means (a) any domestic or foreign federal, state, local, provincial, territorial or municipal taxes or other similar impositions by any Government Entity, including Transfer Taxes and the following taxes and impositions: net income, gross income, capital, value added, goods and services, gross receipts, sales, use, ad valorem, business rates, transfer, franchise, profits, business, environmental, real or immovable property, municipal, school, withholding, workers' compensation levies, payroll, employment, unemployment, employer health, occupation, social security, excise, stamp, customs, and all other taxes, fees, duties, assessments, deductions, contributions, withholdings or charges of the same or of a similar nature, however denominated, together with any interest and penalties, additions to tax or additional amounts imposed or assessed with respect thereto; and (b) liability for the payment of any amount described in (a) of this definition (i) as a result of being a member of a consolidated, combined, unitary or affiliated group that includes any other Person, (ii) by reason of any obligation to indemnify or otherwise assume or succeed to the liability of any other Person for Taxes, including a Tax sharing, Tax indemnity or similar agreement, or (iii) by reason of transferee or successor liability. "Tax Authority" means any local, municipal, governmental, state, provincial, territorial, federal, including any U.S. or other fiscal, customs or excise authority, body or officials anywhere in the world with responsibility for, and competent to impose, collect or administer, any form of Tax. "Tax Returns" means all returns, reports (including elections, declarations, disclosures, schedules, estimates and information returns), claims for refund and other information filed or required to be filed relating to Taxes, together with all attachments thereto, and any amendments of the foregoing. "Third Party" means any Person that is neither a Party nor an Affiliate of a Party. "Third Party Payor" has the meaning set forth in Section 4.9(d). "Third Party Payor Programs" has the meaning set forth in Section 4.9(d). "Trade Secrets" means trade secrets and other confidential or proprietary ideas, concepts, methods, Know-How, processes, formulae, models, methodologies, algorithms, reports, data, customer and supplier lists, mailing lists, business plans, market surveys, market research studies, information contained on drawings, plans, specifications and other documents and information (including with respect to research, development and testing) whether or not any of 15 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 19Page 19 of 261
the foregoing have been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret. "Trademarks" means, together with the goodwill associated therewith or symbolized thereby, in any and all jurisdictions worldwide all trademarks, service marks, trade dress, logos, slogans, distinguishing guises and indicia, trade names (including all assumed or fictitious names under which the Business has been conducted), corporate names, business names, Internet domain names, and any other indicia of source or sponsorship of goods or services, whether or not registered, including all common law rights, and registrations, applications for registration and renewals thereof, including all marks registered in the United States Patent and Trademark Office, the trademark offices of the states and territories of the U.S., and the trademark offices of other nations throughout the world and all rights therein, including those provided by multinational treaties or conventions. "Transaction Documents" means this Agreement, the Ancillary Agreements, escrow agreement and all other ancillary agreements to be entered into, or amendments, schedules, certificates or other such documentation delivered or required to be delivered by, any Party and/or any Designated Purchaser pursuant to this Agreement or any Ancillary Agreement. "Transfer Taxes" means all goods and services, sales, excise, use, transfer, gross receipts, documentary, filing, recordation, value-added, stamp, stamp duty reserve, and all other similar Taxes however denominated (including any real or immovable property transfer taxes or duties and conveyance and recording fees). "Transferred Employee" means each Employee who accepts an offer of employment by, and commences employment with, the Purchaser or a Designated Purchaser in accordance with the terms of Section 7.1 or Section 7.2. "Transferred Employee Plan" means any Seller Employee Plan to the extent expressly assumed (in whole or in part) pursuant to Section 7.2 hereof. "Transferred Intellectual Property" means all Intellectual Property owned by a Seller and used in connection with, held for use in connection with or useful for the operation of the Business (or in connection with any product, service, technology or process currently or formerly manufactured, produced, marketed, distributed or offered for sale by or on behalf of a Seller or currently under development by or on behalf of a Seller), including the Owned Software and the Registered Intellectual Property listed in Section 1.1(c) of the Sellers Disclosure Letter. "U.S." means the United States of America. "WARN Act" has the meaning set forth in Section 4.12(q). "Welfare and Health Benefits" has the meaning set forth in Section 7.2(e). "Wholly-Owned Subsidiary" means any Subsidiary all of the capital stock or other equity interests of which is held directly or indirectly by the Purchaser.
"Wind-Down Account" means a bank account established by the Sellers to hold the Wind-Down Amount. "Wind-Down Agent" means James A. Skinner of Cumberland & Ohio, Co. of Texas. "Wind-Down Amount" means an amount of cash equal to $450,000 to be used to fund the costs of winding-down the Sellers' estates after the Closing, as set forth in the Wind-Down Budget, which amount shall be held in the Wind-Down Account to be administered by the WindDown Agent, in accordance with Section 5.15; provided that, any remaining amount of the Wind-Down Amount not required to fund the costs of winding-down such estates after Closing in accordance with Section 5.15 shall be promptly delivered by the Wind-Down Agent to the Purchaser. "Wind-Down Budget" means the budget for the post-Closing wind-down of the Sellers' estates that details the costs permitted to be paid from the Wind-Down Amount and attached hereto as Exhibit C. "Year-end Financial Statements" has the meaning set forth in Section 4.8. Section 1.2 Interpretation.
(a) Gender and Number. Any reference in this Agreement to gender includes all genders and words importing the singular include the plural and vice versa. (b) Certain Phrases and Calculation of Time. In this Agreement (i) the words "including" and "includes" mean "including (or includes) without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it, (ii) the terms "hereof", "herein", "hereunder" and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and Article, Section, paragraph, Exhibit and Schedule references are to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified, (iii) references to a Person are also to its successors and permitted assigns, and (iv) in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". If the last day of any such period is not a Business Day, such period will end on the next Business Day. When calculating the period of time "within" which, "prior to" or "following" which any act or event is required or permitted to be done, notice given or steps taken, the date which is the reference date in calculating such period is excluded from the calculation. If the last day of any such period is not a Business Day, such period will end on the next Business Day. (c) Headings, etc. The inclusion of a table of contents, the division of this Agreement into Articles and Sections and the insertion of headings are for convenient reference only and are not to affect or be used in the construction or interpretation of this 17 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 21Page 21 of 261
Agreement. All references in this Agreement to any "Section" are to the corresponding Section of this Agreement unless otherwise specified. (d) Currency. All monetary amounts in this Agreement, unless otherwise specifically indicated, are stated in U.S. currency. All calculations and estimates to be performed or undertaken, unless otherwise specifically indicated, are to be expressed in U.S. currency. All payments required under this Agreement shall be paid in U.S. currency in immediately available funds, unless otherwise specifically indicated herein. Where another currency is to be converted into U.S. currency it shall be converted on the basis of the exchange rate published in the Wall Street Journal for the day in question. (e) Statutory References. Unless otherwise specifically indicated, any Law defined or referred to herein or in any agreement or instrument that is referred to herein means such Law or statute as from time to time amended, modified or supplemented, including by succession of comparable successor Laws. (f) Exhibits and Schedules. All Exhibits and the Sellers Disclosure Letter annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set in full herein. Any capitalized terms used in any Exhibit or the Sellers Disclosure Letter but not otherwise defined therein shall be defined as set forth in this Agreement. ARTICLE II PURCHASE AND SALE OF ASSETS Section 2.1 Purchase and Sale.
(a) Assets. Subject to the terms and conditions of this Agreement, at the Closing, the Purchaser shall, and shall cause the relevant Designated Purchasers to, purchase and assume from the Sellers, and each Seller shall sell, transfer, assign, convey and deliver to the Purchaser or the relevant Designated Purchasers all of its right, title and interest in and to the properties and assets of the Sellers (other than the Excluded Assets) of every kind and description, wherever located, real, personal or mixed, tangible or intangible, owned, directly or indirectly or to which the Sellers are directly or indirectly entitled to, leased or licensed (herein collectively called the "Assets") free and clear of all Liens and Claims (other than Permitted Encumbrances, except for those Permitted Encumbrances that are to be expunged and discharged pursuant to the Sale Order, if any) pursuant to the Sale Order, when granted, including all right, title and interest of each Seller in, to and under, as applicable: (i) all cash and cash equivalents, including bank balances, term deposits, supplier deposits, vendor deposits and similar instruments, including restricted cash supporting letters of credit, except as set forth in Section 2.1(b)(i); (ii) accounts receivable, trade accounts, credit receivables, notes receivable, book debts and other debts due or accruing due to any Seller as of the Closing; 18 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 22Page 22 of 261
(iii) any refunds due from, or payments due on, claims with the insurers of any of the Sellers in respect of losses arising prior to the Closing, except as specifically agreed in writing by the Purchaser; (iv) (v) the Owned Inventory; the Owned Equipment;
(vi) the Assigned Contracts, including without limitation, all of the Governmental and Related Agreements and all management services agreements of the Sellers; (vii) 2.1(b)(v); the Business Information, subject to Section 2.1(b)(iv) and Section
(viii) Employee Records, except Employee Records for Employees or former employees who are not Transferred Employees; (ix) the Transferred Intellectual Property;
(x) to the extent related to or arising out of or in connection with the Assets or the Business and except as set forth in Section 2.1(b)(viii), any and all rights, claims or causes of action of any or all of the Sellers arising out of events occurring prior to the Closing, including and, for the avoidance of doubt, arising out of events occurring prior to the Petition Date, and including any rights under or pursuant to any and all warranties, representations and guarantees made by suppliers, manufacturers and contractors relating to products sold, or services provided, to the Sellers (collectively, the Causes of Action); (xi) any proprietary rights in Internet protocol addresses, ideas, concepts, methods, processes, formulae, models, methodologies, algorithms, reports, data, customer lists, mailing lists, business plans, market surveys, market research studies, websites, information contained on drawings and other documents, information relating to research, development or testing, and documentation and media constituting, describing or relating to the Intellectual Property, including memoranda, manuals, technical specifications and other records wherever created throughout the world, in each case to the extent not covered by Section 2.1(a)(ix); (xii) the Consents of any Third Party (including any Government Entities) (including those listed in Section 2.1(a)(xii) of the Sellers Disclosure Letter) to the extent transferable at Law; (xiii) all Products, including all products in development by the Sellers; (xiv) all pre-paid expenses, including any deposits, but not including any rights described in Section 2.1(b)(x);
(xv) all telephone, telex and telephone facsimile numbers and other directory listings and e-mail and website addresses used in connection with the Business; (xvi) all Purchased Deposits;
(xvii) all goodwill associated with the Business or the Assets, including (A) the right to carry on the Business under the names Church Street Health Management, "Small Smiles" and "FORBA", and (B) all customer lists, files, data and information relating to past and present customers and prospective customers of the Business; (xviii) copies of all Tax Returns and other Tax records, including work papers and other material supporting information, related to the Assets and the Business; (xix) all amounts remaining in the trust accounts referred to in Section 2.1(b)(x) following payments of the reasonable fees and disbursements contemplated by such Section; (xx) all rights to Tax refunds, credits or similar benefits relating to the Assets or the Business; (xxi) all rights and assets under any Transferred Employee Plan, including any associated funding media, assets, service agreements, documents and applicable insurance policies; provided, however, that the Transferred Employee Plans shall include only those Seller Employee Plans as the Purchaser notifies the Sellers in writing at least one business day prior to the Auction; (xxii) all promotional allowances and vendor rebates and similar items; (xxiii) all bank accounts, safety deposit boxes, lock boxes and the like, other than the Wind-Down Account and the Escrow Account; (xxiv) all equity interests held by a Seller, other than equity interests in a Seller; (xxv) all Board compliance reports, monitoring reports or similar documents; (xxvi) the DIP Loan Documents; and (xxvii) all other assets (including manufacturing and intangible assets) of the Sellers not specifically included in the definition of Excluded Assets. At any time at least one Business Days prior to the date of the Auction, the Purchaser, in its discretion by written notice to the Sellers, may exclude from being assigned pursuant hereto any Contracts or Leases (other than any of the Governmental 20 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 24Page 24 of 261
and Related Agreements, which shall not be so excluded), and, in such circumstances, such Contracts or Leases shall not constitute Designated Seller Contracts and shall be Excluded Seller Contracts and Excluded Assets, and the Purchaser shall not acquire any rights or assume any Liabilities with respect thereto pursuant to Section 2.1(c) hereof. Upon the Purchaser's request, the Sellers shall provide additional information as to the Liabilities under the Contracts and Leases reasonably sufficient for the Purchaser to make an informed assessment whether to accept an assignment and assumption of such Contracts or Leases hereunder. At any time at least one Business Day prior to the date of the Auction, the Purchaser may, in its discretion by written notice to the Sellers, designate any of the Assets (other than any of the Governmental and Related Agreements or Causes of Action (except for Causes of Action related to outstanding plaintiffs claims against the Sellers which may be Excluded Assets), which shall not be so excluded, and other than Contracts and Leases, which are addressed in the preceding paragraph) as additional Excluded Assets, which notice shall set forth in reasonable detail the Assets so designated. The Sellers acknowledge and agree that there may be a reduction in the Purchase Price if the Purchaser elects to designate any Assets as Excluded Assets; provided, however, that no such reduction shall cause the amount of the Purchase Price to be less than the Credit Bid Amount. Notwithstanding any other provision hereof, the Liabilities of the Sellers under or related to any Asset duly excluded pursuant to this paragraph will constitute Excluded Liabilities. (b) Excluded Assets. Notwithstanding anything in this Section 2.1 or elsewhere in this Agreement or in any of the Transaction Documents to the contrary, the Sellers shall retain their respective right, title and interest in and to, and the Purchaser and the Designated Purchasers shall have no rights with respect to the right, title and interest of the Sellers in and to, the following assets (collectively, the "Excluded Assets"): (i) the portion of the Wind-Down Amount used to pay the fees and expenses incurred in accordance with Section 5.15 in winding-down the Sellers' estates after the Closing in accordance with the Wind-Down Budget; (ii) except with respect to any Transferred Employee Plan, all rights and assets under any Seller Employee Plan; (iii) other than the Assigned Contracts, any rights of the Sellers under any Contract or Lease (including, for the avoidance of doubt, the Excluded Seller Contracts and the Non-Assigned Contracts); (iv) the minute books and stock ledgers of the Sellers;
(v) (A) the Employee Records for Employees or former employees who are not Transferred Employees, and (B) such portion of the Business Information to the extent that the Sellers are required by Law, including Laws relating to privacy, not to disclose (provided that copies of such information shall be provided to the Purchaser to the extent permitted by applicable Law); 21 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 25Page 25 of 261
(vi) all rights of the Sellers under this Agreement and the other Transaction Documents; (vii) all intercompany rights and claims between any Sellers;
(viii) all of the rights and claims available to the Sellers under sections 547 and 548 of the Bankruptcy Code, including any and all proceeds of the foregoing, in each case other than such rights, claims and Actions against a party to an Assumed Contract or Assumed Trade Payable; (ix) all shares, stock or other equity interests in any Seller;
(x) deposits held in one or more (A) trust accounts to secure payment of the fees and disbursements of the professional advisors of the Sellers in accordance with the Wind-Down Budget or (B) Escrow Account; (xi) copies of any book, record, literature, list and any other written or recorded information constituting Business Information (the original of which has already been assigned or transferred to the Purchaser or a Designated Purchaser) to which the Sellers in good faith determine they are reasonably likely to need access for bona fide legal purposes following the Closing; (xii) any of Sellers director and officer insurance policies, fiduciary policies or employment practices policies (in each case of the foregoing, including any tail policies or coverage thereon) and any of Sellers rights, claims, demands, proceedings, credits, causes of action or rights of set off thereunder; (xiii) all deposits or prepaid expenses paid in connection with or relating to any Excluded Assets; and (xiv) the corporate charter, qualifications to conduct business as a foreign corporation or limited liability, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, and other documents relating to the organization, maintenance and existence of each Seller as a corporation or a limited liability company, as the case may be. (c) Assumed Liabilities. On the terms and subject to the conditions set forth in this Agreement (including Section 2.1(d)), at the Closing, the Purchaser shall, and shall cause the relevant Designated Purchasers to, assume and become responsible for, and from and after the Closing the Purchaser shall, and shall cause the relevant Designated Purchaser to, perform, discharge and pay when due, only the following Liabilities of the Sellers (the "Assumed Liabilities"): (i) the Liabilities of the Sellers in respect of trade obligations of the Sellers accrued or arising in the Ordinary Course on or after the Petition Date in accordance with the DIP Budget and existing as of immediately prior to the Closing in an aggregate amount not to exceed $2,300,000 (the "Assumed Trade Payables"); 22 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 26Page 26 of 261
(ii) all Liabilities of the Sellers under the Assigned Contracts, but solely to the extent such Liabilities arise or are required to be performed after the Closing Date and do not relate to any obligation or Liability incurred prior to the Closing Date or are otherwise related to a breach or failure to perform by the Sellers and any Cure Costs payable pursuant to Section 2.1(f) (to the extent applicable) that Purchasers liability for Cure Costs is not expected to exceed and shall not exceed the aggregate amount set forth in Section 2.1(c)(ii) of the Sellers Disclosure Letter, the amount in such schedule not to exceed $1,100,000; provided, that such amount shall be decreased by the amount of the Cure Cost associated with any Contract or Lease listed on Section 2.1(c)(ii) of the Sellers Disclosure Letter that is not an Assigned Contract (such amount, as may be decreased, the "Cure Cost Cap") and Sellers shall pay any overage of such amount; (iii) all Liabilities of the Sellers under the Governmental and Related Contracts, including all principal amounts, accrued interest, fee amounts and other amounts and obligations due to the United States and the various States thereunder; (iv) Liabilities under any Transferred Employee Plan and Liabilities in respect of employee obligations owed to Transferred Employees, other than the Excluded Employee Liabilities; (v) Liabilities owed to the Agent in respect of professional fees and agency fees as of the Closing Date, to the extent not already paid or fully accounted for in the Wind-Down Budget and funded by the Wind-Down Amount; (vi) Liabilities under the DIP Loan Documents, but excluding all Liabilities flowing from breaches of or other disputes under any DIP Loan Document occurring or arising prior to the Closing Date; and (vii) all Liabilities of the Sellers in respect of employee wages, salaries, commissions, benefits, vacation days, sick days and paid personal days or other paid-time-off, and all liabilities for withholding, trust fund, sales, use or other employment-related Taxes obligations and related trust funds, that accrue or arise in the Ordinary Course in accordance with the DIP Budget on or after the Petition Date and existing as of immediately prior to the Closing, but not including any severance obligations and obligations related to certain key employee retention plans identified by the Purchaser prior to Closing. (d) Excluded Liabilities. Notwithstanding any provision in this Agreement to the contrary (including Section 2.1(c)), other than the Assumed Liabilities, neither the Purchaser nor any of the Designated Purchasers shall assume or shall be obligated to assume or be obligated to pay, perform or otherwise discharge any Liability of the Sellers or their Affiliates, and the Sellers shall be solely and exclusively liable with respect to all Liabilities of the Sellers, including the Excluded Employee Liabilities (collectively, the
"Excluded Liabilities"). For the avoidance of doubt, the Excluded Liabilities include, but are not limited to, the following (except as expressly assumed pursuant to Section 2.1(c)): (i) any Liability of the Sellers arising out of, or relating to, this Agreement or the transactions contemplated by this Agreement, whether incurred prior to, at or subsequent to the Closing Date, including all finders or brokers fees and expenses and any and all fees and expenses of any representatives of the Sellers; (ii) any Liability relating to (A) events or conditions occurring or existing in connection with, or arising out of, the Business as operated prior to the Closing, or (B) the ownership, possession, use, operation or sale or other disposition prior to the Closing of any Assets (or any other assets, properties, rights or interests associated, at any time prior to the Closing, with the Business), including (x) any obligation or Liability arising out of any Proceeding commenced against the Sellers or any predecessor or Affiliate of any Seller arising out of, or relating to, any occurrence or event happening prior to the Closing; (y) any obligation or Liability arising out of or relating to Products and/or services of the Sellers or any predecessor or Affiliate of any Seller to the extent provided, developed, made, manufactured, marketed, sold or distributed prior to the Closing, including any obligation or Liability for (1) infringement or misappropriation of Intellectual Property of any Person including those actions (whether or not filed) set forth in Section 4.6(c) of the Sellers Disclosure Letter; (2) product Liabilities, and (3) product recalls or similar actions and (z) any obligation or Liability under any Assigned Contract which arises after the Closing but which relates to any breach or other dispute occurring or arising prior to the Closing; (iii) any Liability to any Person at any time employed by the Sellers or to any such Person's spouse, children, other dependents or beneficiaries, with respect to agreements entered into or applicable to or with respect to incidents, events, exposures or circumstances occurring at any time during the period or periods of any such Person's employment by the Sellers, whenever such claims mature or are asserted, including all Liabilities arising (A) under the Seller Employee Plans (other than Transferred Employee Plans), (B) under any employment, wage and hour restriction, equal opportunity, discrimination, plant closing or immigration and naturalization Laws, (C) under any collective bargaining Laws, agreements or arrangements or (D) in connection with any workers' compensation or any other employee health, accident, disability or safety claims; (iv) any Liability relating to the Assets or the Business based on actions, activities, incidents, events, conditions or circumstances occurring or existing prior to the Closing Date and connected with, arising out of or relating to: (A) Hazardous Materials, Cleanups, Environmental Laws, Environmental Permits or Environmental Claims, (B) claims relating to employee health and safety, including claims for injury, sickness, disease or death of any Person or (C) 24 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 28Page 28 of 261
compliance with any applicable Law relating to any of the foregoing; in each case except for any such Liability that may not be discharged by the Sale Order; (v) without impacting the scope of Section 2.1(d)(iii), any Liability of the Sellers under Title IV of ERISA or any other pension or retirement Liability of the Sellers or any Person that could be aggregated with any of the Sellers pursuant to Section 414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate"); (vi) any Liability for Taxes;
(vii) any Liability incurred by the Sellers or their respective directors, officers, stockholders, agents or employees (acting in such capacities) after the Closing; (viii) any Liability of the Sellers to any Person on account of any Action; (ix) any Liability relating to or arising out of the ownership or operation of an Excluded Asset; (x) any Liability resulting from a Lien that is not a Permitted Encumbrance; (xi) any Liability for professional fees or transaction fees owed to any party, other than any fees owed by the Sellers to the Agent as set forth in Section 2.1(c)(v) and fees to be paid from the Escrow Account; and (xii) except as expressly assumed in connection with an Assigned Contract pursuant to Section 2.1(c)(i) or as set forth in Section 2.1(c)(i), any Indebtedness of any of the Sellers. The Parties acknowledge and agree that disclosure of any obligation or Liability in any Section of the Sellers Disclosure Letter shall not create an Assumed Liability or other Liability of the Purchaser, except where such disclosed obligation has been expressly assumed as an Assumed Liability in accordance with the provisions of Section 2.1(c) hereof. (e) Assignment and Assumption of Designated Seller Contracts.
(i) Subject to Section 2.1(f)(i) and the Sale Order, all the Designated Seller Contracts in force at the Closing shall be assigned by the Sellers to, and assumed by, the Purchaser or a Designated Purchaser at the Closing pursuant to Section 2.1(a)(vi). (ii) The Parties shall use their best efforts to obtain all Consents required to permit the assignment to the Purchaser or a Designated Purchaser of the Designated Seller Contracts. In the case of Consents, Leases, Contracts and other commitments included in the Assets (A) that cannot be transferred or assigned effectively without the Consent of Third Parties, which Consent has not 25 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 29Page 29 of 261
been obtained prior to the Closing (after giving effect to the Sale Order and the Bankruptcy Laws, or other Order of the Bankruptcy Court permitting the transfer or assignment thereof), the Sellers shall, subject to any approval of the Bankruptcy Court that may be required and provided that such expense is included in the Wind-Down Amount, cooperate with the Purchaser, at the sole cost and expense of the Sellers, and use their best efforts in endeavoring to obtain such Consent and, if any such Consent is not obtained, the Sellers shall, during the four month period following Closing, and subject to any approval of the Bankruptcy Court that may be required, cooperate with the Purchaser in all respects and at the Sellers' sole cost and expense, use commercially reasonable efforts to enter into such arrangements or to seek alternate equitable arrangements with Third Parties, in each case, as reasonably requested by Purchaser, in order to ensure that the Purchaser receives substantially similar economic and commercial rights that it would have possessed had such Lease, Contract or other commitments been transferred or assigned at the Closing, or (B) that are otherwise not transferable or assignable (after giving effect to the Sale Order and the Bankruptcy Laws, or other Order of the Bankruptcy Court permitting the transfer or assignment thereof), the Sellers shall, during the four (4) month period following Closing, and subject to any approval of the Bankruptcy Court that may be required, cooperate with the Purchaser, at the sole cost and expense of the Sellers, use commercially reasonable efforts (including the exercise of the rights of the Sellers thereunder) to enter into such arrangements or to seek alternate equitable arrangements with Third Parties, in each case, as reasonably requested by Purchaser, in order to ensure that the Purchaser receives substantially similar economic and commercial rights that it would have possessed had such Lease, Contract or other commitments been transferred or assigned at the Closing; provided, however, that nothing in this Section 2.1(e) shall require the Purchaser to reimburse the Sellers for any attorneys' fees and expenses, as such fees and expenses will be paid as part of the Wind-Down Amount in accordance with the Wind-Down Budget. (f) Cure Costs; Non-Assignable Contracts; Adequate Assurance.
(i) To the extent that any Designated Seller Contract is subject to a Cure Cost, the Purchaser shall directly pay or otherwise provide for payment of such Cure Cost to the Contract or Lease party and Sellers shall pay an overage amount as contemplated by Section 2.1(c)(ii); provided, that the Purchaser shall not be obligated to pay any Cure Cost in respect of a Non-Assigned Contract. (ii) To the extent that any Designated Seller Contract is not assignable under section 365 of the Bankruptcy Code (or, if inapplicable, pursuant to other applicable Laws or the terms of such Contract or Lease) to the Purchaser or a Designated Purchaser at the Closing without the Consent of any Third Party (including a Government Entity), and such Consent has not been obtained (collectively, the "Non-Assignable Contracts"), this Agreement will not constitute an assignment thereof, or an attempted assignment thereof, unless any such Consent is obtained. Any payment to be made in order to obtain any Consent 26 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 30Page 30 of 261
required by the terms of any Non-Assignable Contract shall be the sole responsibility of the Purchaser in its sole discretion. (iii) Prior to the hearings for the entry of the Stalking Horse and Bidding Procedures Order, the Purchaser shall take such actions as are reasonably required to provide adequate assurances of its and the relevant Designated Purchasers' future performance under each applicable Designated Seller Contract to the parties thereto in satisfaction of section 365(f)(2)(B) of the Bankruptcy Code. (g) Non-Assignable Assets. Notwithstanding anything in this Agreement to the contrary, if any Consent required to assign any of the Assets pursuant to Section 2.1(h) has not been obtained on or prior to Closing, then, unless such Consent is subsequently obtained, this Agreement shall not constitute an agreement to sell, transfer or assign, directly or indirectly, any such Asset or any obligation or benefit arising thereunder if an attempted direct or indirect sale, transfer or assignment thereof, without the Consent of a Third Party (including a Government Entity), would constitute a breach, default, violation or other contravention of the rights of such Third Party or would be ineffective with respect to any party to a Contract concerning such Asset. For greater certainty, failure to obtain any such Consent, except as set forth in Section 8.3(h) of the Sellers Disclosure Letter, shall not entitle the Purchaser to terminate this Agreement or fail to complete the transactions contemplated hereby or entitle the Purchaser to any adjustment of the Purchase Price. (h) Post-Closing Assignment of Contracts. With respect to any Contract which is not set forth in Section 1.1(a) of the Sellers Disclosure Letter and provided such Contract has not been rejected by the Sellers pursuant to section 365 of the Bankruptcy Code, upon written notice(s) from the Purchaser, which notice has been delivered within 120 days after the Closing, to the extent the expense is provided for in the Wind-Down Amount, the Sellers shall take all actions reasonably necessary to assume and assign to the Purchaser (or a Designated Purchaser) pursuant to section 365 of the Bankruptcy Code any Contract(s) set forth in the Purchaser's notice(s); provided, that any applicable Cure Cost related thereto or any other cost or fee incurred by any Seller in connection therewith (including reasonable attorney's fees and expenses) shall be satisfied by the Purchaser in accordance with the terms of Section 2.1(h). The Sellers agree and acknowledge that (i) they shall provide the Purchaser with reasonable advance notice of any motion(s) to reject any Contract and (ii) the covenant set forth in this Section 2.1(h) shall survive for 120 days after the Closing. Notwithstanding anything in this Agreement to the contrary, on the date any Contract is assigned to and assumed by the Purchaser pursuant to this Section 2.1(h), such Contract shall be deemed an Assigned Contract and shall be deemed and treated as such, as the case may be, under the appropriate provisions and headings for all purposes under this Agreement. Section 2.2 Purchase Price.
(a) Pursuant to sections 363 and 365 of the Bankruptcy Code, upon the terms and subject to the conditions set forth in this Agreement, at the Closing the Sellers shall 27 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 31Page 31 of 261
transfer, sell, convey, assign and deliver to the Purchaser (or the applicable Designated Purchaser), and Purchaser shall purchase, acquire and accept, or cause one or more of the Designated Purchasers to purchase, acquire and accept, from the Sellers, free and clear of all Liens, Claims and Liabilities (other than the Assumed Liabilities and Permitted Encumbrances), all of the Assets in consideration for the Purchase Price, including the Assumed Liabilities. (b) Purchase Price Allocation. Within 30 days after the Closing, the Purchaser shall deliver to the Sellers for their respective review and approval, such approval not to be unreasonably withheld, conditioned or delayed, allocation schedule(s) (the "Asset Allocation Schedule(s)") allocating the Purchase Price (including specific allocation of the Assumed Liabilities that are liabilities for federal income Tax purposes) on a dollar basis among the Sellers and the Assets (but only to the extent of the level of detail required by Section 1060 of the Code and IRS Form 8594). If the Sellers do not object to the Asset Allocation Schedule(s) within 20 days after delivery, they shall be deemed to have approved them. The Asset Allocation Schedule(s) shall be reasonable and, to the extent applicable, shall be prepared in accordance with Section 1060 of the Code and the regulations thereunder. The Purchaser and the Sellers will each file IRS Form 8594, to the extent applicable, and all Tax Returns, in accordance with the Asset Allocation Schedule(s). To the extent applicable, the Purchaser, on the one hand, and the Sellers, on the other hand, each agrees to provide the other promptly with any other information required to complete IRS Form 8594. Subject to the foregoing provisions of this Section 2.2(b), for U.S. federal, state and local income Tax purposes, the Purchaser and the Sellers agree that the transactions contemplated by this Agreement shall be reported in a manner consistent with the terms of this Agreement, including the Asset Allocation Schedule(s), and that none of them will take any position inconsistent therewith in any Tax Return, in any refund claim, in any litigation, or otherwise. Additionally, the Purchaser and the Sellers agree that any subsequent adjustments to the Purchase Price hereunder shall be reflected in the Asset Allocation Schedule(s) in accordance with any applicable Tax requirements. If the Asset Allocation Schedule(s) is disputed by any Government Entity or Tax Authority, the Party receiving notice of such dispute will promptly notify the other Party, and the Parties will use their reasonable best efforts to sustain the Asset Allocation Schedule(s). The Parties will share information and cooperate in good faith to permit the transactions contemplated by this Agreement to be properly, timely and consistently reported (including in the preparation of IRS Form 8594 and any subsequent adjustments required thereto) and to provide each other with a copy of any forms required to be submitted to any Government Entity or Tax Authority within a reasonable period (and in no event less than thirty (30) days) before the filing due date for such form. In the event of a dispute with respect to any part of the Asset Allocation Schedule(s), the Purchaser and the Sellers shall attempt to reconcile their differences and any resolution by them as to any disputed allocation shall be final, binding and conclusive on the Parties. If the Purchaser and the Sellers are unable to reach a resolution on such differences within 30 days after the date any such dispute arises, the Purchaser and the Sellers shall submit the disputed allocations for determination and resolution to the Bankruptcy Court, which shall be instructed to determine and report to the Parties, upon such disputed allocations, and such report shall be final, binding and conclusive on the Parties with respect to the disputed allocations. 28 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 32Page 32 of 261
(c) Except as otherwise provided herein or as settled at the Closing, within 30 days after the Closing Date, Seller and the Purchaser shall prorate as of the Closing Date any amounts which become due and payable after the Closing Date with respect to (i) the Assigned Contracts and (ii) any utilities. Any such amounts which are not available within 30 days after the Closing Date shall be similarly prorated as soon as practicable thereafter. Section 2.3 Closing.
(a) Closing Date. The completion of the purchase and sale of the Assets and the assumption of the Assumed Liabilities (the "Closing") shall take place at the New York, New York offices of Gibson, Dunn & Crutcher LLP, commencing at 10:00 a.m. local time on a mutually agreed upon date no later than two (2) Business Days after the day upon which all of the conditions set forth under ARTICLE VIII (other than conditions to be satisfied at the Closing, but subject to the waiver or fulfillment of those conditions) have been satisfied or, if permissible, waived by the Sellers and/or the Purchaser (as applicable), or on such other place, date and time as shall be mutually agreed upon in writing by the Purchaser and the Sellers (the day on which the Closing takes place being the "Closing Date"). Legal title, equitable title and risk of loss with respect to the Assets will transfer to the Purchaser or the relevant Designated Purchaser, and the Assumed Liabilities will be assumed by the Purchaser and the relevant Designated Purchasers, only at the Closing. (b) Closing Actions and Deliveries of the Sellers. At the Closing, the Sellers shall deliver to the Purchaser the following: (i) duly executed copies of the Transaction Documents to which any of the Sellers is a party; (ii) the officer's certificates required to be delivered pursuant to Section 8.3(a) and Section 8.3(a); (iii) a statement of the Assumed Trade Payables reasonably acceptable to the Purchaser certified by an officer of the Sellers; (iv) (v) a certified copy of the Sale Order; a receipt for the Purchase Price;
(vi) a duly executed and acknowledged certificate from each Seller, in form and substance acceptable to the Purchaser and in compliance with the Code and the treasury regulations thereunder, certifying such facts as to establish that such Seller is exempt from withholding under Section 1445 of the Code; and (vii) any other documents reasonably requested by the Purchaser in order to effect, or evidence the consummation of, the transactions contemplated herein or otherwise provided for under this Agreement. 29 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 33Page 33 of 261
(c) Closing Actions and Deliveries of the Purchaser. At the Closing, the Purchaser and the Designated Purchasers, if applicable, shall deliver to the Sellers the following: (i) duly executed copies of the Transaction Documents to which the Purchaser or any Designated Purchaser is a party; (ii) the officer's certificates required to be delivered pursuant to Section 8.2(a) and Section 8.2(b); (iii) the Purchase Price; and
(iv) any other documents reasonably requested by the Sellers in order to effect, or evidence the consummation of, the transactions contemplated herein or otherwise provided for under this Agreement. Section 2.4 Designated Purchaser(s).
(a) The Purchaser shall be entitled to designate, in accordance with the terms and subject to the limitations set forth in this Section 2.4, one or more Wholly-Owned Subsidiaries or Affiliates to (i) purchase specified Assets (including specified Assigned Contracts), (ii) assume specified Assumed Liabilities, and/or (iii) employ specified Transferred Employees on and after the Closing Date (any such Wholly-Owned Subsidiary or Affiliate of the Purchaser that shall be properly designated by the Purchaser in accordance with this clause, a "Designated Purchaser"). No such designation shall relieve the Purchaser of any of its obligations hereunder, and the Purchaser and each Designated Purchaser shall be jointly and severally liable for any obligations assumed by any of them hereunder. Any reference to the Purchaser made in this Agreement in respect of any purchase, assumption or employment referred to in clauses (i) through (iii) of this Section 2.4(a) shall include reference to the appropriate Designated Purchaser, if any. (b) The designation in Section 2.4(a) shall be made by the Purchaser by way of a written notice to be delivered to the Sellers in no event later than the tenth (10th) Business Day prior to Closing which written notice shall contain appropriate information about the Designated Purchaser(s) and shall indicate which Assets, Assumed Liabilities and Transferred Employees (other than Employees which are transferred by operation of Law) the Purchaser intends such Designated Purchaser(s) to purchase, assume and/or employ, as applicable, hereunder and include a signed counterpart to this Agreement by such Designated Purchaser(s) in a form acceptable to the Sellers, agreeing to be bound by the terms of this Agreement and authorizing the Purchaser to act as such Designated Purchaser(s)' agent for all purposes hereunder. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser hereby represents and warrants to the Sellers as follows: 30 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 34Page 34 of 261
Section 3.1
Organization and Corporate Power.
(a) The Purchaser is duly organized and validly existing under the Laws of the jurisdiction in which it is organized. Each Designated Purchaser is (or will as of Closing be if not formed or incorporated as of the date hereof) duly organized and validly existing under the Laws of the jurisdiction in which it is organized. The Purchaser and each Designated Purchaser is (or will as of Closing be if not formed or incorporated as of the date hereof) in good standing in each of the jurisdictions in which the ownership or leasing of its properties or the conduct of its businesses requires such qualification. Each of the Purchaser and the Designated Purchasers has (or will as of Closing be if not formed or incorporated as of the date hereof) the requisite corporate or similar power and authority to enter into, deliver and perform its obligations pursuant to each of the Transaction Documents to which it is or will become a party. (b) The Purchaser and each of the Designated Purchasers is (or will as of Closing be if not formed or incorporated as of the date hereof) qualified to do business and to own or lease and operate its properties and assets, including the Assets, as applicable, in each jurisdiction in which the ownership of property or conduct of business requires it to so qualify, except to the extent that the failure to be so qualified would not materially hinder, delay or impair the Purchaser's or any such Designated Purchaser's ability to carry out its obligations under, and to consummate the transactions contemplated by, this Agreement and the other Transaction Documents to which it is or will become a party. Section 3.2 Authorization; Binding Effect; No Breach.
(a) The execution, delivery and performance of each Transaction Document to which the Purchaser and each any of the Designated Purchasers is a party, or is to be a party to, by the Purchaser or such Designated Purchaser have been (or will be at the time of its execution and delivery) duly authorized by the Purchaser and the relevant Designated Purchasers, as applicable. Assuming due authorization, execution and delivery by the relevant Sellers, each Transaction Document to which the Purchaser or any Designated Purchaser is a party constitutes, or upon execution thereof will constitute, a legal, valid and binding obligation of the Purchaser and each such Designated Purchaser, as applicable, enforceable against such Person in accordance with its respective terms, except as such enforceability is limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors' rights generally or general principles of equity (regardless of whether considered in a proceeding at Law or in equity). (b) The execution, delivery and performance by each of the Purchaser and the Designated Purchasers of the Transaction Documents to which the Purchaser or such Designated Purchaser is, or on the Closing Date will be, a party do not and will not conflict with or result in a breach of the terms, conditions or provisions of, constitute a default under, result in a violation of, or require any Consent (other than the Regulatory Approvals) or other action by or declaration or notice to any Government Entity pursuant to (i) the articles, charter, by-laws, partnership agreement or operating agreement of the 31 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 35Page 35 of 261
Purchaser or the relevant Designated Purchaser, (ii) any Contract or other document to which the Purchaser or the relevant Designated Purchaser is a party, (iii) any Laws to which the Purchaser, the Designated Purchaser, or any of their assets is subject, or (iv) any Order to which the Purchaser, the Designated Purchaser, or any of their assets is subject, except, in the case of (ii) and (iii) above, as would not, individually or in the aggregate, adversely affect the ability of the Purchaser or such Designated Purchasers to carry out its obligations under, and consummate the transactions contemplated by, this Agreement and the other Transaction Agreements to which it is or will become a party. Section 3.3 Brokers. Except for fees and commissions that will be paid by the Purchaser, no broker, finder or investment banker is entitled to any brokerage, finder's or similar fee or commission in connection with the transactions contemplated by this Agreement and the other Transaction Documents based upon arrangements made by or on behalf of the Purchaser or any of its Affiliates. Section 3.4 Financial Capability. The Purchaser has, or at the Closing will have, sufficient funds or financing available to it to pay all expenses, Cure Costs and other amounts to be paid by the Purchaser or a Designated Purchaser in connection with the transactions contemplated by this Agreement, and has not incurred any obligation, restriction or Liability that would materially impair or adversely affect its capability of performing its obligations under this Agreement. Section 3.5 Direction Letter; Assignment Agreement. The Direction Letter has been duly authorized and executed by the necessary Required Lenders and such Required Lenders have directed the Agent to make the Credit Bid. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS Except (a) as set forth in the Sellers Disclosure Letter (as determined in accordance with Section 10.8) or (b) as disclosed in the Financial Statements, each of the Sellers jointly and severally represents and warrants to the Purchaser as set forth in this ARTICLE IV: Section 4.1 Organization and Corporate Power.
(a) Each Seller is duly organized and validly existing under the Laws of the jurisdiction in which it is organized. Each Seller is in good standing in each of the jurisdictions in which the ownership or leasing of its properties or the conduct of its businesses requires such qualification. Subject to the entry of the Stalking Horse and Bidding Procedures Order and the Sale Order from the Bankruptcy Court in connection with the transactions contemplated hereby and in the other Transaction Documents (collectively, the "Bankruptcy Consents"), each of the Sellers has the requisite corporate or similar power and authority to own or lease and to operate and use the Assets and carry on the Business as now conducted and to enter into, deliver and perform its obligations pursuant to each of the Transaction Documents to which it is or will become a party. 32 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 36Page 36 of 261
(b) Each of the Sellers is qualified to do business and to own and operate its assets, including the Assets, as applicable in each jurisdiction in which its ownership of property or conduct of business relating to the Business requires it to so qualify. Section 4.2 Subsidiaries and Investments. The Sellers do not, directly or indirectly, own, of record or beneficially, any outstanding voting securities, membership interests or other equity interest in any Person (other than another Seller). Section 4.3 Authorization; Binding Effect; No Breach.
(a) Subject to the receipt of the Bankruptcy Consents, the execution, delivery and performance of this Agreement by each Seller has been duly authorized by such Seller. Subject to receipt of the Bankruptcy Consents, and assuming due authorization, execution and delivery by the Purchaser, this Agreement will constitute, a legal, valid and binding obligation of each Seller, enforceable against it in accordance with its terms, except as such enforceability is limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors' rights generally or general principles of equity (regardless of whether considered in a proceeding at Law or in equity). (b) Subject to the receipt of the Bankruptcy Consents, the execution, delivery and performance by each Seller of the Transaction Documents to which such Seller is, or on the Closing Date will be, a party do not and will not conflict with or result in a breach of the terms, conditions or provisions of, constitute a default under, result in a violation of, result in the creation or imposition of any Lien upon any of the Assets (other than Permitted Encumbrances), or require any Consent (other than the Regulatory Approvals and the Bankruptcy Consents) or other action by or declaration or notice to any Government Entity pursuant to (i) the articles, charter, by-laws, partnership agreement or operating agreement of the relevant Sellers, (ii) any Contract to which the relevant Seller is a party or to which any of its assets is subject, (iii) any Order to which any of the Sellers or any of the Assets are subject, or (iv) any Laws to which any of the Sellers or any of the Assets are subject, except, in the case of (ii), (iii) and (iv) above, as would not materially and adversely affect the Business. Section 4.4 Title to Tangible Assets; Sufficiency of Assets.
(a) Immediately prior to Closing, the Sellers will have, and, upon delivery to the Purchaser on the Closing Date of the instruments of transfer contemplated by Section 2.3(b), and subject to the terms of the Sale Order, the Sellers will thereby transfer to the Purchaser, good, marketable and valid title to, or, in the case of property leased or licensed by the Sellers, a valid leasehold or licensed interest in, all of the Assets, free and clear of all Liens, except (i) for the Assumed Liabilities and (ii) for Permitted Encumbrances. (b) The tangible Assets, taken as a whole, in all material respects, are in good operating condition and repair (ordinary wear and tear excepted), suitable for the purposes for which they are used and intended to be used and constitute all the properties, 33 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 37Page 37 of 261
assets and rights that are necessary and sufficient to conduct the Business in the Ordinary Course substantially in the manner conducted as of the date hereof. Section 4.5 Material Contracts.
(a) Section 4.5 of the Sellers Disclosure Letter sets forth, as of the date hereof, a complete list of all of the following Contracts, Leases and any Third Party or intercompany agreements relating to the Business to which any Seller is a party (collectively, the "Material Contracts"): (i) all Contracts (or group of related Contracts) for the lease of personal property from any Person providing for lease payments in excess of $25,000 per annum; (ii) all Contracts (or group of related Contracts) for the purchase or sale of inventory, spare parts, raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of goods or services that: (x) the performance of which will extend over a period of more than one year; (y) involve consideration or projected consideration in excess of $50,000 per year; or (z) cannot be cancelled by the applicable Seller without penalty or further payment and without more than sixty (60) days' notice; (iii) all Contracts (or group of related Contracts) concerning a partnership or joint venture or which otherwise involve the sharing of profits, losses, costs or liabilities in any material fashion between any Seller and any other Person; (iv) all Contracts (or group of related Contracts) under which any Seller has (x) created, incurred, assumed, or guaranteed any Indebtedness in an amount currently outstanding in excess of $100,000; (y) imposed a Lien (other than Permitted Encumbrances) on any of its assets, tangible or intangible; or (z) agreed to indemnify any other Person; (v) (vi) all Seller Employee Plans; all collective bargaining agreements or similar such agreements;
(vii) all Contracts for the employment of any Employee or other service provider on a full-time, part-time, consulting, or other basis or that provides severance benefits; (viii) all Contracts relating to Intellectual Property (including Contracts containing any grants of license under, restrictions on or rights to use or disclose any Intellectual Property), except for Contracts for Off-the-Shelf Software; (ix) all take or pay Contracts and all Contracts with the Sellers respective sales representatives and distributors;
(x) all Contracts under which any Seller has advanced or loaned any other Person currently outstanding amounts in the aggregate exceeding $25,000; (xi) all Contracts between or among any Seller on the one hand, and any officer, director or equityholder of any Seller or an Affiliate of any Seller, an Affiliate, or another Seller on the other hand; (xii) all Contracts relating to settlement, conciliation, leniency or similar agreement with respect to any Action during the three (3) years prior to the date of this Agreement; (xiii) all Contracts for the purchase on or after the date hereof of any debt or equity security or other ownership interest of any Person or for the issuance of any debt or equity security or other ownership interest, or the conversion of any obligation, instrument or security into debt or equity securities or other ownership interests of any Seller or any Affiliate of a Seller; (xiv) all material confidentiality agreements or similar arrangements;
(xv) all Contracts containing (i) any non-competition, non-solicitation or similar agreements or arrangements or (ii) any earn-out or similar agreements or arrangements; (xvi) all other Contracts (or group of related Contracts) the performance of which involves consideration in excess of $100,000 per year; (xvii) all Contracts that materially restrict any Seller or the Business from engaging in any business activity anywhere in the world; (xviii) all Contracts that are management services or similar agreements; (xix) all Contracts with any Government Entity; and
(xx) all Contracts entered into outside of the Ordinary Course that involve payment by or to any of the Sellers in excess of $100,000 per annum. (b) Each of the Material Contracts is, or will be upon Closing, in full force and effect and is a valid and binding obligation of the Seller party thereto and, to the Sellers' Knowledge, the other parties thereto, in accordance with its terms and conditions, except as such enforceability may be limited by the Chapter 11 Cases, bankruptcy, insolvency or other similar Laws affecting the enforcement of creditors' rights generally and limitations on the availability of equitable remedies. (c) The Sellers have provided the Purchaser with true and complete copies of each of the Contracts required to be disclosed in Section 4.5 of the Sellers Disclosure Letter. Section 4.6 Intellectual Property. 35 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 39Page 39 of 261
(a) The Sellers own, or have a valid right to use, free and clear of all Liens (other than Permitted Encumbrances), all Intellectual Property used or held for use in the Business, substantially in the manner conducted prior to the Petition Date and the Transferred Intellectual Property shall be owned or available for use by the Purchaser on identical terms and conditions immediately after the Closing. (b) Section 4.6(b) of the Sellers Disclosure Letter sets forth a true and complete list of all Registered Transferred Intellectual Property in all jurisdictions throughout the world, including (i) Registered Patents; (ii) Registered Trademarks; (iii) Registered Copyrights; and (iv) Registered Internet domain names, indicating for each such item the identity of the current applicant or registered owner and the dates and numbers of registration and/or application therefor. The Sellers are the sole and exclusive beneficial and record owner of all of the Transferred Intellectual Property, and all such Transferred Intellectual Property is (A) subsisting, valid, and enforceable, (B) currently in compliance with any and all formal legal requirements necessary to maintain the validity and enforceability thereof, and (C) not subject to any outstanding order, judgment, injunction, decree, ruling or agreement adversely affecting the Sellers' use thereof or rights thereto, or that would impair the validity or enforceability thereof. The Registered Transferred Intellectual Property is currently in compliance with any and all formal legal requirements necessary to record and perfect the Sellers' interest therein and chain of title thereof. (c) Except as disclosed on Section 4.6(c) of the Sellers Disclosure Letter, (i) to the Sellers Knowledge, the conduct of the Business (including the Products and services of the Sellers) does not infringe, misappropriate, or otherwise violate or conflict, in any material respects, with any Person's Intellectual Property rights, and there has been no such claim or Action asserted or threatened in the past three (3) years against any Sellers or, to the Knowledge of the Sellers, any other Person, (ii) there is no Action or claim pending, asserted or, to the Knowledge of the Sellers, threatened by or against the Sellers concerning (x) the infringement, misappropriation, violation of or conflict with any other Person's Intellectual Property by any Products or services of the Sellers, (y) the ownership, validity, registerability, enforceability or use of any Transferred Intellectual Property, or (z) the Sellers licensed right to use any Intellectual Property, and the Sellers have not received any notification that a license under any other Person's Intellectual Property (other than licenses to which any Seller is a party as of the date hereof, including those included in the Material Contracts) is or may be required to operate the Business, substantially in the manner conducted prior to the Petition Date, and (iii) to the Sellers Knowledge, no Person is infringing, misappropriating, or otherwise violating or conflicting with any Transferred Intellectual Property, and no such claims or Actions have been asserted or threatened against any Person by the Sellers in the past three (3) years. (d) The Sellers have taken commercially reasonable measures to protect the confidentiality of Trade Secrets used or held for use in the operation of the Business, including the source code for any Software owned by or licensed to the Sellers, and to maintain the value of such Trade Secrets. No Trade Secrets have been disclosed by the Sellers to or, to the Knowledge of the Sellers, discovered by any Person except pursuant 36 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 40Page 40 of 261
to non-disclosure or license agreements that obligate such Person to keep such Trade Secrets confidential and with respect to which, to the Knowledge of the Sellers, no party thereto is in material default thereunder and no condition exists that with notice or the lapse of time or both could constitute a material default thereunder. (e) To the Sellers Knowledge, no senior executive of the Sellers, and no employee, contractor or agent of the Sellers is in default or breach of any term of any non-disclosure agreement, assignment of invention agreement or the provisions of any other agreement relating to the protection, ownership, development, use or transfer of the Transferred Intellectual Property. (f) Section 4.6(f) of the Sellers Disclosure Letter sets forth a true and complete list of and accurately identifies all (i) Owned Software and (ii) Software that is used by the Sellers in the operation of the Business (other than Off-the-Shelf Software) and that is licensed to the Sellers. (g) Neither the negotiation, execution, delivery or performance of this Agreement or the Ancillary Agreements, nor the consummation of the transactions contemplated by this Agreement, will result in (i) the grant or transfer to any Third Party of any license or other interest under, the abandonment, assignment to any Third Party, or modification or loss of any rights with respect to, or the creation of any Lien on, any Transferred Intellectual Property, or (ii) Purchaser being obligated to (1) pay any royalties, honoraria, fees or other payments to any Person in excess of those payable by such party prior to the Closing, or (2) provide or offer any discounts or other reduced payment obligations to any Person in excess of those provided to such Person prior to the Closing. (h) The IT Assets owned or used by the Sellers are adequate for, and operate and perform in all material respects in accordance with their documentation and functional specifications and otherwise as required in connection with, the operation of the Business. The Sellers have implemented reasonable backup, security and disaster recovery measures and technology consistent with industry practices, and no Person has gained unauthorized access to any IT Assets of the Sellers. (i) No Seller is party to any agreement or is otherwise obligated to indemnify any other Person against any claim of infringement, misappropriation or other violation of or conflict with the Intellectual Property rights of any Third Party, other than customary indemnities agreed to in the Ordinary Course. Section 4.7 Litigation. Except as set forth on Section 4.8 of the Sellers Disclosure Letter, (and excluding the Chapter 11 Cases), there is no Action pending or, to the Knowledge of the Sellers, threatened before any Government Entity or arbitration tribunal against any Seller involving the Business or Assets, that would be reasonably expected to have a Material Adverse Effect. Section 4.8 Financial Statements. Attached hereto as Section 4.8 of the Sellers Disclosure Letter, are copies of the Sellers' (i) audited consolidated balance sheets as at 37 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 41Page 41 of 261
December 31, 2010 and related consolidated audited statements of income or operations, shareholders' equity and cash flows for the year ended as of such date, and (ii) unaudited consolidated balance sheet as at December 31, 2011 and related consolidated unaudited statements of income or operations, shareholders' equity and cash flow for the year ended as of such date ((i) and (ii) collectively, the "Year-end Financial Statements") and the unaudited monthly management statements of results of operations of the Business for the month ending January 31, 2012 (together with the Year-end Financial Statements, the "Financial Statements"). The Financial Statements were prepared in accordance with GAAP, consistently applied and maintained throughout the periods indicated, and in accordance with and consistent with the Sellers' books and records, and present fairly, in all material respects, the consolidated financial position of the Sellers as at their respective dates and the consolidated results of their operations and cash flows for such periods, all as required and in conformity with GAAP and subject to normal recurring year-end adjustments and the absence of notes, the effect of which are not, individually or in the aggregate, material. Section 4.9 Compliance with Laws; Consents. Except as disclosed in Section 4.8 of the Sellers Disclosure Letter or as disclosed in a signed writing delivered by Church Street to the administrative agent under the DIP Credit Agreement on or within nine months prior to the date of this Agreement: (a) Each Seller, and to the Knowledge of the Sellers, each Practice, is in compliance in all material respects with all Healthcare Laws applicable to it, its products and its properties or other assets or the Business, including its provision of professional services, except as would not reasonably be expected to have a Material Adverse Effect. (b) Each Seller and, to the Knowledge of the Sellers, each Practice (to the extent required), has in effect all necessary and material permits and accreditations, including, without limitation, all permits and accreditations necessary for it to own, lease or operate its properties and other assets and to carry on the Business, including its provision of professional services, as presently conducted. All such permits and accreditations are valid and in full force and effect and there is no default under, or violation of, any such permits or accreditations, except as would not reasonably be expected to have a Material Adverse Effect. No action, demand, requirement or, to the Knowledge of the Sellers, investigation by any Government Entity and no suit, action or proceeding by any other person, in each case with respect to any Seller or any Practice, or any of their respective properties or other assets relating to the provision of professional services under any applicable Law, is pending or, to the Knowledge of the Sellers, threatened, except as would not reasonably be expected to have a Material Adverse Effect. (c) No Seller nor, to Sellers Knowledge, any of the Practices or any officer, Affiliate, Subsidiary, employee or agent of any Seller (in their capacity as such acting on behalf of any Seller), has made an untrue statement of a material fact or fraudulent statement to any Government Entity, failed to disclose a material fact required to any Government Entity, or committed an act, made a statement of a material fact, or failed to make a statement of a material fact related to the Business, including its provision of professional services, that, at the time such disclosure was made, would reasonably be 38 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 42Page 42 of 261
expected to constitute a violation of any Healthcare Law, except as would not reasonably be expected to have a Material Adverse Effect. Neither any Seller nor, to Sellers Knowledge, any of the Practices, nor any officer, Affiliate, employee or agent of any Seller (in their capacity as such acting on behalf of any Seller), has made any untrue statement of material fact regarding claims incurred but not reported, that, at the time such material statement was made, would reasonably be expected to constitute a violation of any Healthcare Law, except as would not reasonably be expected to have a Material Adverse Effect. (d) Each Practice (to the extent required) has the requisite provider number or other permit to bill the respective Medicaid program in the state or states in which such entity operates, and all other Third Party Payor Programs (as defined below), that each Seller and such Practice currently bill. There is no action, or to Sellers Knowledge, investigation, audit, claim or review pending or, to Sellers Knowledge, threatened which could reasonably be expected to result in a revocation, suspension, termination, probation, material restriction, material limitation or non-renewal of any Third Party Payor (as defined below) provider number or result in any Practices exclusion from any Third Party Payor Program, except as would not reasonably be expected to have a Material Adverse Effect. To Sellers Knowledge, no Practice has billed or received any payment or reimbursement in excess of amounts allowed by any Healthcare Law or other applicable Law, except overpayments received and refunded in the ordinary course of business, except as would not reasonably be expected to have a Material Adverse Effect. For purposes of this Agreement, a Third Party Payor means Medicaid, TRICARE, state government insurers, private insurers and any other person or entity which presently or in the future maintains Third Party Payor Programs. In addition, for purposes of this Agreement, Third Party Payor Programs means all third party payor programs in which each Seller and each Practice participates (including, without limitation, Medicaid, TRICARE, SCHIP Programs or any other federal or state health care programs, as well as managed care plans, or any other private insurance programs). (e) To the Sellers Knowledge, there are no facts, circumstances or conditions that would reasonably be expected to form the basis for any material investigation, suit, claim, audit (except in the ordinary course), action (legal or regulatory) or proceeding (legal or regulatory) by a Government Entity against any Seller or, to Sellers Knowledge, any of the Practices relating to any of the Healthcare Laws that would reasonably be expected to have a Material Adverse Effect. Except for the OIG-CIA and the NY-CIA, no Seller or any Practice is subject to the terms of a corporate integrity agreement with a Government Entity. (f) No Seller nor, to the Sellers Knowledge, any Practice is a party to any contract, lease agreement or other arrangement (including any joint venture or consulting agreement) with any dentist, orthodontist, physician, health care facility, hospital, nursing facility, home health agency or other Person who is in a position to make or influence referrals to any Practice to or otherwise generate business to provide services, lease space, lease equipment or engage in any other venture or activity, other than contracts, agreements or other arrangements which are in compliance with all applicable Healthcare Laws except as would not reasonably to have a Material Adverse Effect. No Seller, nor, 39 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 43Page 43 of 261
to the Sellers Knowledge, any Person acting on behalf or any Seller or any Subsidiary, directly or indirectly: (i) offered or paid any remuneration, in cash or in kind, to, or made any financial arrangements with, any past, present or potential patient, supplier, medical staff member, contractor or Third Party Payor of the Sellers or any Practice in order to illegally obtain business or payments from such Person; (ii) has given or agreed to give, or is aware that there has been made or that there is any illegal agreement to make, any illegal gift or gratuitous payment of any kind, nature or description (whether in money, property or services) to any past, present or potential patient, supplier, contractor, Third Party Payor or any other Person; (iii) made or agreed to make, or is aware that there has been made or that there is any agreement to make, any contribution, payment or gift of funds or property to, or for the private use of, any governmental official, employee or agent where either the contribution, payment or gift or the purpose of such contribution, payment or gift is or was illegal under the laws of any Government Entity having jurisdiction over such payment, contribution or gift; (iv) established or maintained any unrecorded fund or asset for any purpose or made any misleading, false or artificial entries on any of its books or records for any reason; or (v) made, or agreed to make, or is aware that there has been made or that there is any agreement to make, any payment to any Person with the intention or understanding that any part of such payment would be used or was given for any purpose other than that described in the documents supporting such payment, except in all cases as would not reasonably be expected to have a Material Adverse Effect. (g) Without limiting the generality of clause (f) above, to the Sellers Knowledge, each Practice that is a participating provider of services under Third Party Payor Programs is in compliance in all material respects with the conditions for participation and reimbursement under the Medicaid programs, the federal and state regulations thereunder, and the conditions for participation and reimbursement established by third party Medicaid administrators and other federal agents, state agents, and private payors, except where such noncompliance would not reasonably be expected to have a Material Adverse Effect. No Seller is a participating provider of services under Third Party Payor Programs. (h) Each of the Practices have entered into provider agreements with Medicaid, other federal and state programs, and private insurers to the extent required by any Government Entity to engage in the Business as presently conducted, except where failure to do so would not reasonably be expected to have a Material Adverse Effect. The provider agreements relating to the requisite provider numbers for such Practice are in full force and effect, and to the Sellers Knowledge, there is no threatened or reasonably expected withdrawal of such provider agreements. There are no Medicare or Medicaid termination or exclusion proceedings currently pending with respect to any of the Sellers or any Practice, and, to the Sellers Knowledge, no current Employee or independent contractor of any Seller or of any Practice, has been excluded from participating in Medicare or Medicaid or any similar federal healthcare programs, and, to the Sellers Knowledge, no proceedings are underway to so exclude any such current Employee or independent contractor, except in each case as would not reasonably be expected to have a Material Adverse Effect. 40 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 44Page 44 of 261
(i) To the extent required by any Government Entity to engage in the Business as presently conducted, each Practice (to the extent such entity participates in Medicaid programs) currently maintains certifications by the Centers for Medicare & Medicaid Services, except where the failure to have such Governmental Authorization would not reasonably be expected to have a Material Adverse Effect. To the extent required by any Government Entity to engage in the Business as presently conducted, each Practice (to the extent such entity participates in Medicaid programs) is duly certified and authorized to provide services under Medicaid programs and is eligible for reimbursement thereunder, except where the failure to have such Governmental Authorization would not reasonably be expected to have a Material Adverse Effect. (j) Except as would not reasonably be expected to have a Material Adverse Effect, there are no judgments, lawsuits, actions, proceedings, claims, complaints, injunctions, orders or, to the Sellers Knowledge, investigations pending, or to Sellers Knowledge, threatened (either orally or in writing) against any Seller, or to the Knowledge of the Sellers, any Practice, by or before any Government Entity with respect to the Medicaid program. Within the past three (3) years, no Seller nor, to Sellers Knowledge, any Practice has received any written notice or other communication from any Government Entity regarding any actual or alleged violation in any material respect of, or failure to comply in any material respect with, any of the requirements of any applicable Healthcare Laws (excluding any such actual or alleged violation or failure to comply that was resolved pursuant to the Federal Settlement Agreement and the State Settlement Agreement) except as would not reasonably be expected to have a Material Adverse Effect. (k) Each Seller and each Practice is in compliance in all material respects with the DOJ Settlement, OIG-CIA and NY-CIA. (l) Each Seller and each Practice has timely filed all material filings, reports, billings and claims required to be filed in accordance with governmental and private programs, with third party administrators and state programs and other insurance carriers and all such filings, reports, billings and claims are complete and accurate in all material respects and have been prepared in compliance in all material respects with all applicable Healthcare Laws, rules and regulations governing reimbursement and payment of claims, except in each case as would not reasonably be expected to have a Material Adverse Effect. Each Seller and each Practice has paid, is paying in the Ordinary Course or has caused to be paid all known and undisputed refunds, overpayments or adjustments relating to a Practice, and, there are no pending appeals, adjustments, challenges or audits of any such reports, billings or claims, except in each case as would not reasonably be expected to have a Material Adverse Effect. (m) To the Sellers Knowledge, no Seller and no Practice currently employs any officer, manager or Employee excluded from a federal health care program pursuant to Section 1128 and 1156 of the Social Security Act, 42 U.S.C. 1320a 7, 1320c 5, except as would not reasonably be expected to have a Material Adverse Effect. Section 4.10 Real Property. 41 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 45Page 45 of 261
(a)
None of the Sellers own, or has ever owned, any fee real property.
(b) Section 4.10(a) of the Sellers Disclosure Letter sets forth all unexpired leases, licenses or other occupancy agreements (collectively, the "Leases") (or other property interests) for real property under which any Seller is a lessee, licensee or occupant (the "Leased Real Property"). (c) The Sellers have received or will receive prior to Closing all Third Party Consents that are necessary pursuant to the Leases for the assignment thereof to the Purchaser, and the present use of the Leased Real Property does not violate the Third Party Consents applicable thereto, except where the failure to receive, or violation of, a Third Party Consent would not reasonably be expected to have a Material Adverse Effect. (d) No Seller has received written notice of, nor, to the Sellers' Knowledge, is there pending or threatened, (i) any condemnation, expropriation or other proceeding in eminent domain or any similar proceeding affecting any Seller's interest in Leased Real Property, (ii) any proceeding to change the zoning classification of any portion of the Leased Real Property or (iii) any imposition by a Government Entity of any special assessments for public betterments affecting the Leased Real Property, which in any case would reasonably be expected to have a Material Adverse Effect. (e) The present uses of the Leased Real Property by the Sellers are in compliance with, and not in default under or in violation of, any building, zoning, land use, public health, public safety, sewage, water, sanitation or other comparable Law, except for such noncompliance, default or violation that would not reasonably be expected to have a Material Adverse Effect. (f) Upon entry of the Sale Order and payment of the Cure Costs, (i) no Seller will be in breach or default of its obligations under any of the Leases; (ii) no condition exists that with notice or lapse of time or both would constitute a default under any of the Leases; (iii) no Seller has been disturbed in any material respect in its possession and quiet enjoyment of the Leased Real Property under any Lease; (iv) no security deposit or portion thereof deposited with respect to any Lease has been applied in respect of a breach or default under such Lease which has not been redeposited in full; (v) no Seller owes, or will in the future owe, any brokerage commissions or finder's fees with respect to any Lease; (vi) no other party to any Lease is an Affiliate of, or otherwise has an economic interest in, any Seller; (vii) no Seller has subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Real Property or any portion thereof; (viii) no Seller has collaterally assigned or granted any other security interest in any Lease or any interest therein; and (ix) there are no Liens, other than Permitted Liens, on any Seller's estate or interest created by any Lease. (g) The Sellers have not given notice to, or received notice from, any landlords of any defaults in connection with the Leases that has not been cured as of the date hereof.
(h) To the Knowledge of the Sellers, there are no material defects or deficiencies in the buildings and other structures that are subject to the Leases that adversely affect the Business. Section 4.11 Environmental Matters. (a) Effect, (i) The Business of the Sellers, the Assets, and (to the Knowledge of the Sellers) the Leased Real Property are and have been in compliance with Environmental Laws and the Sellers have obtained and are in compliance with all Environmental Permits. The Sellers have not received any written communication, whether from a Government Entity, citizens group, employee or otherwise, alleging that the Business, the Assets, or the Leased Real Property is not in such compliance, and there are no present or, to the Knowledge of the Sellers, past actions, activities, circumstances, conditions, events or incidents with respect to the Business, the Assets, or the Leased Real Property that would reasonably be expected to prevent or interfere with such compliance in the future under current Environmental Laws. (ii) There are no Environmental Claims relating to the Business or the Assets pending or, to the Knowledge of the Sellers, threatened against any Seller or Person whose liability for any Environmental Claim the Sellers have or may have retained or assumed contractually or by operation of Law. There are no present or, to the Knowledge of the Sellers, past actions, activities, circumstances, conditions, events or incidents, including the Release, threatened Release or presence of, or exposure to, any Hazardous Material, which would reasonably be expected to form the basis of any Environmental Claim relating to the Business or the Assets against the Sellers, or to the Knowledge of the Sellers, against any Person whose liability for any such Environmental Claim any Seller has or may have retained or assumed either contractually or by operation of Law. (iii) No Hazardous Materials are present at, on or, to the Knowledge of the Sellers, under or adjacent to the Leased Real Property that are reasonably anticipated to result in Liabilities, including obligations for investigation or remediation, to any Seller pursuant to Environmental Laws. (iv) The Sellers in connection with the Assets or the Business are not conducting or funding any Cleanup. To the Knowledge of the Sellers, there are no Cleanups being conducted at any of the Leased Real Property. The Sellers in connection with the Assets or the Business are not subject or a party to any Order relating to Hazardous Materials, Cleanups, Environmental Laws or Environmental Permits. (b) The Sellers have delivered or otherwise made available for inspection to the Purchaser copies of all material reports, studies, audits, analyses, tests, monitoring 43 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 47Page 47 of 261 Except as would not reasonably be expected to have a Material Adverse
data, Environmental Permits, or documents possessed by the Sellers pertaining to any environmental matter with respect to the Assets, the Leased Real Property or the Business. Section 4.12 Labor and Employee Benefits Matters. (a) Section 4.12(a) of the Sellers Disclosure Letter contains an accurate and complete list of all Seller Employee Plans. The Sellers have provided the Purchaser with a complete and current copy of the plan document of each Seller Employee Plan listed in Section 4.12(a) of the Sellers Disclosure Letter or, if such plan document does not exist, an accurate written summary of such Seller Employee Plan, together with all booklets and communications concerning the Seller Employee Plans having been provided to persons entitled to benefits under such plans. In addition, the Sellers have provided the Purchaser with true and complete copies of (i) the most recently filed IRS Form 5500, including all schedules thereto, (ii) the most recent determination letter from the IRS, if applicable, and (iii) all current trust agreements, insurance contracts, financial statements and other documents relating to the funding or payment of benefits under any Seller Employee Plan. (b) The information contained in Section 4.12(b) of the Sellers Disclosure Letter in respect of the Employees (the "Employee Information") is accurate in all material respects as of the date hereof and contains an accurate and complete list of the names, job classifications, dates of hire, wage rates, base compensation, and any supplemental or bonus compensation (including any retention or stay bonus arrangements) for all persons employed by or providing independent contract services to the Sellers including: (i) full information about each Seller's obligations to make current wage or salary payments to employees who are terminable at will and without notice, and (ii) all other commitments that exist with respect to employees or independent contractors service providers, whether oral or in writing, including all collective bargaining agreements, employment agreements, consulting agreements, independent contractor agreements, retainers and severance agreements, under which any Seller has any obligation to provide wages, salary, commissions, or other compensation, remuneration or benefits to any employee, former employee, consultant or contractor. No Seller is in default with respect to any material obligation to any of such employees or independent contract service providers. (c) There has not been for a period of twenty-four (24) consecutive months prior to the date hereof, any actual, or to the Sellers' Knowledge, threatened strike, arbitration, labor dispute or grievance under any collective bargaining agreement or similar such agreement, slowdown, lockout, picketing or work stoppage against or affecting the Sellers. No Seller is party to or bound by any collective bargaining agreement (or otherwise have any material relationship with any labor organization in connection with the Business in any manner whatsoever) and for a period of twenty-four (24) consecutive months prior to the date hereof, no petition has been filed or proceedings instituted by a union, collective bargaining agent, employee or group of employees with any Government Entity seeking recognition or certification of a collective bargaining agent with respect to any Employees, and, to the Sellers' 44 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 48Page 48 of 261
Knowledge, no such organizational effort is currently being made or has been threatened by or on behalf of any union, employee, group of employees or collective bargaining agent to organize any Employees. (d) With respect to each Transferred Employee Plan: (i) if intended to qualify under Section 401(a), 401(k) or 403(a) of the Code, such plan and the related trust has received a favorable determination letter from the IRS that has not been revoked, or an application for such a favorable determination letter is pending, and nothing has happened since the date of such letter that would reasonably be expected to adversely affect the qualified status of such plan; (ii) it is and has been established, registered, amended, funded, administered and invested in compliance with its terms and applicable Law and the Sellers have not received any notice from any Person or Government Entity questioning or challenging such compliance; (iii) there is no investigation by a Government Entity nor any pending or, to Seller's Knowledge, threatened claims against, by or on behalf of any Transferred Employee Plan or the assets, fiduciaries or administrators thereof (other than routine claims for benefits), and to the Knowledge of the Sellers no fact exists which could reasonably be expected to give rise to any such investigation or claim; (iv) there has been no pending or, to the Sellers Knowledge, threatened action with respect to any Seller Employee Plan (other than routine claims for benefits in the Ordinary Course); and (v) all required employee and employer contributions, premiums and expenses, to or in respect of, such Transferred Employee Plans have been timely paid in full. (e) The Sellers have no formal plan and have made no promise or commitment, whether legally binding or not, to create any additional Seller Employee Plan, or to improve or change the benefits provided under any Seller Employee Plan. (f) All data necessary to administer each Transferred Employee Plan is in the possession of the Sellers or their agents and is in a form which is sufficient for the proper administration of the Transferred Employee Plan in accordance with its terms and all Laws and such data is complete and correct. (g) Plans. (h) There is no entity, other than the Sellers and Practices or their Affiliates, participating in any of the Transferred Employee Plans. (i) No Seller Employee Plan is, or in the past six years was, subject to Title IV of ERISA, and none of the Sellers nor or any of their ERISA Affiliates has any Liability with respect to Title IV of ERISA, including on account of a multiemployer plan (within the meaning of Section 3(37) of ERISA). Certain of the Seller Employee Plans are maintained by more than one employer within the meaning of Section 413(c) of the Code (i.e., multiemployer plans). (j) Except as may be required upon the disposition of a Seller Employee Plan that is not a Transferred Employee Plan, pursuant to Section 7.2, the consummation of 45 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 49Page 49 of 261 There are no unfunded Liabilities in respect of any Transferred Employee
the transactions contemplated by this Agreement (whether alone or together with any other event) will not entitle any Employee or former employee of the Business to severance pay, unemployment compensation or any other payment or accelerate the time of payment or vesting, or increase the amount of compensation due any such Employee or former employee. (k) No Transferred Employee Plan provides benefits, including without limitation death or medical benefits (whether or not insured), beyond retirement or other termination of service, other than health care continuation coverage required by Section 4980B of the Code for which the covered individual pays the full cost of coverage. (l) The Sellers are in compliance in all material respects with all applicable Laws respecting employment and employment practices, including all Laws respecting terms and conditions of employment, health and safety, wages and hours, worker classifications, child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity, pay equity (including maintenance of pay equity), Government Entity sponsored plans, including pension, social security, parental insurance, prescription drugs and similar plans, plant closures and layoffs, affirmative action, workers' compensation, labor relations, employee leave issues and unemployment insurance. (m) During the past five (5) years the Sellers have not received (i) notice of any unfair labor practice charge or of any complaint pending or threatened before the National Labor Relations Board or any other Government Entity against it, (ii) notice of any charge or complaint with respect to or relating to it pending before the Equal Employment Opportunity Commission or any other Government Entity responsible for the prevention of unlawful employment practices, (iii) notice of the intent of any Government Entity responsible for the enforcement of labor, employment, wages and hours of work, pay equity, human rights, worker classification, child labor, immigration, or occupational safety and health laws to conduct an inspection or investigation with respect to or relating to it or notice that such inspection or investigation is in progress, (iv) notice of violation, infringement, breach or lack of compliance by any Government Entity responsible for the enforcement of labor, employment, wages and hours of work, pay equity, human rights, worker classification, child labor, immigration, or occupational safety and health Laws, or (v) notice of any complaint, lawsuit or other proceeding of any kind pending or, to Sellers Knowledge, threatened in any forum by any Government Entity, by any union or bargaining agent, or by or on behalf of any Employee or former employee, any applicant for employment or classes of the foregoing alleging breach of any express or implied contract of employment, any applicable Law governing labor, employment, wages and hours or work, pay equity, human rights, worker classification, child labor, immigration or occupation safety and health or the termination of employment or any discriminatory, wrongful or tortious conduct in connection with the employment relationship. (n) To the Knowledge of the Sellers, no Employee is in any respect in material violation of any nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive covenant or other 46 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 50Page 50 of 261
obligation to a former employer of any such Employee relating (i) to the right of any such Employee to be employed by the Business or (ii) to the knowledge or use of trade secrets or proprietary information, or any obligations of the same nature contained in any employment agreement. (o) To the Knowledge of the Sellers, no Employee whose annual salary exceeds $100,000 has notified any Seller that he or she intends to terminate his or her employment. (p) The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in any breach or other violation of any employment agreement, consulting agreement or any other labor-related agreement. (q) As of the date hereof, none of the Sellers has taken any action that could reasonably be expected to result in a "plant closing" or "mass layoff (within the meaning of the Worker Adjustment and Retraining Notification Act of 1988, as amended (together with any applicable state or local equivalent, collectively, the "WARN Act"), or any similar applicable Law with respect to any current or former employee associated with the Business. Section 4.13 Taxes. Sellers have (a) each timely filed all Tax Returns required to be filed with the appropriate Government Entity or Tax Authority in all jurisdictions in which such Tax Returns are required to be filed (taking into account any extension of time to file granted, or to be obtained on behalf of, the Sellers), and such Tax Returns were complete and accurate in all material respects; (b) paid, collected and remitted all Taxes owed by, or required to be collected and remitted by, any of the Sellers, whether or not shown as due on any Tax Return; and (c) duly and on a timely basis withheld from any amount paid or credited to any Person the amount of any Taxes required by Law to be withheld therefrom and have duly and on a timely basis remitted such amounts as required by Law. To Sellers Knowledge, no material examination of any Tax Return of the Sellers is currently in progress by any Government Entity or Tax Authority; no material unresolved adjustment has been proposed in writing with respect to any such Tax Returns by any Government Entity or Tax Authority; no material unresolved claim has been made in writing by any Government Entity or Tax Authority in a jurisdiction where the Sellers do not file Tax Returns that any Seller is or may be subject to Taxes by that jurisdiction for Taxes; and there no Liens for Taxes, other than Permitted Encumbrances. There are no current or pending administrative or court proceedings for the assessment, adjustment or collection of Taxes of the Sellers or relating to the Business or the Assets. There is no currently effective extension or waiver of the application of any statute of limitations of any jurisdiction regarding the assessment or collection of any Taxes of the Sellers or relating to the Business or the Assets. Section 4.14 Absence of Certain Developments. Except as required by applicable Law or GAAP, or as a result of, or in connection with, the Chapter 11 Cases, since December 31, 2011: (a) there have not occurred any facts, conditions, changes, violations, inaccuracies, circumstances, effects or events that would result in damage, destruction or losses to the Assets, whether covered by insurance or not, having an aggregate cost of $50,000; and (b) no Seller (to 47 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 51Page 51 of 261
the extent it relates solely to the Assets) has taken any action in contravention of Section 5.7 except as expressly contemplated by this Agreement or any other Transaction Documents. Section 4.15 No Undisclosed Liabilities. The Sellers do not have any Liabilities, except Liabilities (a) reflected or reserved against in the Financial Statements; (b) incurred in the Ordinary Course and not required under GAAP to be reflected in the Financial Statements; (c) incurred in connection with the DIP Credit Agreement; (d) incurred since December 31, 2011 in the Ordinary Course or as required by applicable Law; (e) incurred in connection with this Agreement or the transactions contemplated hereby; or (f) which individually or in the aggregate (not including Liabilities referred to in clauses (a) through (e) above) would not reasonably be expected to have a Material Adverse Effect. Section 4.16 Suppliers. Section 4.16 of the Sellers Disclosure Letter sets forth a true, complete and correct list of the Sellers, collectively, ten (10) largest vendors by dollar amount for the fiscal year ended December 31, 2011 (excluding professionals, advisors and consultants) . No Seller has received any notice or has any reason to believe that any material supplier to the Sellers will stop, materially decrease the rate of, or materially change the terms (whether related to payment, price or otherwise) with respect to, supplying materials, products or services to such Seller (whether as a result of the consummation of the transactions contemplated hereby or otherwise). Section 4.17 Affiliate Transactions. No Affiliate, officer, director or executive of any Seller (other than any other Seller) (a) is a competitor, creditor, debtor, customer, distributor, supplier or vendor of any Seller, (b) is a party to any Material Contract with any Seller that results in payment or receipt by the Business of more than $50,000 per annum in the aggregate (other than in such Person's capacity as an employee of any of the Sellers), (c) has any Action against any Seller, (d) has a loan outstanding from any Seller, or (e) has any interest in or owns any assets, tangible or intangible, that are used in the Business. Section 4.18 Cure Costs. Section 4.18 of the Sellers Disclosure Letter sets forth, as of the date hereof, all of the Sellers proposed Cure Costs to be paid with respect to the Assigned Contracts. Section 4.19 Owned Inventory. The Owned Inventory, in all material respects, (a) consists of materials and goods useable or saleable in the Ordinary Course (taking into account, without limitation, the quantity and quality of the Owned Inventory), and (b) is not defective, slow moving, obsolete or damaged. None of the Owned Inventory is subject to any consignment, bailment, warehousing or similar agreement. Section 4.20 Bank Accounts Schedule. Section 4.18 of the Sellers Disclosure Letter lists all bank accounts, safety deposit boxes and lock boxes (designating each authorized signatory with respect thereto) for each Seller. Section 4.21 Powers of Attorney. Except for powers of attorney granted to legal counsel in the Ordinary Course with respect to the owned Registered Intellectual Property, there are no outstanding powers of attorney executed on behalf of any Seller with respect to the Business. 48 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 52Page 52 of 261
Section 4.22 Brokers; Advisors Fees. Except for fees and commissions that will be paid or otherwise settled or provided for by the Sellers, no broker, finder or investment banker is entitled to any brokerage, finder's or other similar fee or commission in connection with the transactions contemplated by this Agreement and the other Transaction Documents based upon arrangements made by or on behalf of the Sellers or any of their Affiliates. Section 4.23 No Additional Representations. (A) , EXCEPT AS SET FORTH IN THIS ARTICLE IV, THE BUSINESS, INCLUDING THE ASSETS, IS BEING SOLD ON AN "AS IS", "WHERE IS" BASIS AS OF THE CLOSING AND IN ITS CONDITION AS OF CLOSING WITH "ALL FAULTS" AND NONE OF THE SELLERS NOR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE BUSINESS OR ANY OF THE ASSETS, INCLUDING WITH RESPECT TO (I) MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, (II) THE OPERATION OF THE BUSINESS BY THE PURCHASER AFTER THE CLOSING IN ANY MANNER OTHER THAN AS USED AND OPERATED BY THE SELLERS OR (III) THE PROBABLE SUCCESS OR PROFITABILITY OF THE BUSINESS AFTER THE CLOSING AND (B) NONE OF THE SELLERS NOR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES WILL HAVE OR BE SUBJECT TO ANY LIABILITY OR INDEMNIFICATION OBLIGATION TO THE PURCHASER OR TO ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO THE PURCHASER, ANY DESIGNATED PURCHASER OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES OF, OR THE PURCHASER'S USE OF, ANY INFORMATION RELATING TO THE BUSINESS, INCLUDING ANY INFORMATION, DOCUMENTS OR MATERIAL MADE AVAILABLE TO THE PURCHASER, WHETHER ORALLY OR IN WRITING, IN CERTAIN "DATA ROOMS," MANAGEMENT PRESENTATIONS, FUNCTIONAL "BREAK OUT" DISCUSSIONS, RESPONSES TO QUESTIONS SUBMITTED ON BEHALF OF THE PURCHASER OR IN ANY OTHER FORM IN EXPECTATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED. ARTICLE V COVENANTS AND OTHER AGREEMENTS Section 5.1 Bankruptcy Actions.
(a) The Sellers and the Purchaser acknowledge that this Agreement and the transactions contemplated hereby are subject to Bankruptcy Court approval. (b) The Sellers shall (i) by March 2, 2012 file, and on such date or promptly thereafter properly serve, motions in form and substance acceptable to the Purchaser (together, the "Sale Motion"), which Sale Motion shall include copies of the Bidding Procedures and of the Stalking Horse and Bidding Procedures Order, in form and substance acceptable to the Purchaser and the Sellers, seeking Bankruptcy Court approval of: (A) the sale of the Assets to the Purchaser pursuant to this Agreement, subject to 49 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 53Page 53 of 261
higher or otherwise better offers under the Bidding Procedures; (B) bidding procedures in connection with the sale of the Assets in the form and substance of Exhibit D hereto (the "Bidding Procedures"); and (C) the scheduling of an auction for the sale of the Assets and a sale hearing with respect thereto (the "Auction" and "Sale Hearing", respectively) and (ii) by no later than the date proscribed in the Stalking Horse and Bidding Procedures Order, properly serve each counterparty to a Designated Seller Contract, a notice, in form and substance reasonably satisfactory to the Purchaser, setting forth the amount necessary to satisfy any Cure Cost. The Sale Motion shall be served by Sellers' counsel or court appointed claims agent on all parties that are required to receive notice in the Chapter 11 Cases. (c) The Sellers shall use their best efforts to have the Bankruptcy Court enter an Order within twenty-one (21) days of the filing of the Sale Motion in substantially the form of Exhibit E (i) approving the form of this Agreement and the Bidding Procedures; and (ii) scheduling the Auction and Sale Hearing (together, the "Stalking Horse and Bidding Procedures Order"). (d) The Sellers shall use their best efforts to conduct the Auction for the Assets by April 20, 2012. (e) The Sellers shall use their best efforts to have the Bankruptcy Court enter an Order no later than ten (10) Business Days prior to the Closing Date in substantially the form of Exhibit F (the "Sale Order") approving the sale of the Assets to the Purchaser pursuant to this Agreement or to the Person otherwise submitting the highest or otherwise best bid(s) for the Assets at the Auction (the Winning Bidder) on such terms as included in the wining bid in the Auction, free and clear of all Liens. If the Purchaser is the Winning Bidder, the Sale Order shall also provide for (i) approval of the assumption and assignment to the Purchasers of the Assigned Contracts, without adequate assurance of future performance liability pursuant to Section 365(f)(2) of the Bankruptcy Code, except Purchaser's promise to perform the following Closing obligations under the Assigned Contracts; (ii) transfer and assignment of the Assigned Contracts such that the Assigned Contracts will be in full force and effect from and after the Closing with nondebtor parties being barred and enjoined from asserting against Purchaser, among other things, defaults, breaches or claims of pecuniary losses existing as of the Closing or by reason of the Closing; (iii) a finding that the Purchaser and the Designated Purchasers are good-faith purchasers entitled to the protections of section 363(m) of the Bankruptcy Code; (iv) confirmation that the Purchaser and the Designated Purchasers are acquiring the Acquired Assets free and clear of the Excluded Assets and the Excluded Liabilities; (v) confirmation that to the extent Purchaser is owed funds from Sellers pursuant to this Agreement, any liability of any Seller to Purchaser under this Agreement shall, pursuant to section 364(c)(1) of the Bankruptcy Code, constitute a super-priority administrative expense in the Sellers' Chapter 11 Cases with priority over all administrative expenses of the kind specified in section 503(b) or 507(a) of the Bankruptcy Code, (vi) provision that the provisions of Bankruptcy Rules 6004(g) and 6006(d) are waived and there will be no stay of execution of the Sale Order under Rule 62(a) of the Federal Rules of Civil Procedure; (vii) retention of jurisdiction of the Bankruptcy Court to interpret and enforce 50 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 54Page 54 of 261
the terms and provisions of this Agreement; and (viii) authorization and approval of the results of the Auction. (f) The Sellers shall use their best efforts to complete the purchase and sale of the Assets and the assumption of the Assumed Liabilities on the terms described herein on or before May 11, 2012. (g) In the event leave to appeal is sought, an appeal is taken or a stay pending appeal is requested with respect to the Stalking Horse and Bidding Procedures Order or the Sale Order, the Sellers shall promptly notify the Purchaser of such leave to appeal, appeal or stay request and shall promptly provide to the Purchaser a copy of the related notice(s) or Order(s). The Sellers shall also provide the Purchaser with copies of any motion or application filed in connection with any leave to appeal or appeal from such Orders within one Business Day after receipt thereof by any Seller. (h) From and after the date hereof, the Sellers shall not take any action that is intended to result in, or fail to take any action the intent of which failure to act would result in, the reversal, voiding, modification or staying of the Stalking Horse and Bidding Procedures Order or, if the Purchaser is the successful bidder at the Auction, the Sale Order. (i) From and after the date hereof, the Sellers shall provide such prior notice as may be reasonable under the circumstances before filing any materials with the Bankruptcy Court that relate, in whole or in part, to this Agreement, the Purchaser or the Auction and shall consult in good faith with the Purchaser regarding the content of such materials prior to any such filing. (j) With respect to each Assigned Contract, the Purchaser will satisfy any and all Cure Costs on the terms set forth herein and provide adequate assurance of future performance on its behalf and on behalf of its Designated Purchasers as required under the Bankruptcy Code, including section 365(f)(2)(B) thereof, and shall cause its Designated Purchasers to perform thereunder as required. The Purchaser and the Sellers agree that they will promptly take all actions reasonably required to assist in obtaining a Bankruptcy Court finding that there has been an adequate demonstration of adequate assurance of future performance under each Assigned Contract, such as furnishing affidavits, non-confidential financial information or other documents or information for filing with the Bankruptcy Court and making the Purchaser's and the Sellers' employees and representatives available to testify before the Bankruptcy Court. Failure to perform all such actions and bear all such costs and expenses shall result in the relevant Designated Seller Contract being deemed to be a Non-Assigned Contract at Closing, unless otherwise agreed in writing by the Seller that is a party thereto. Section 5.2 Cooperation.
(a) Prior to the Closing, upon the terms and subject to the conditions of this Agreement, each of the Parties shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, and cooperate with each other in order to 51 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 55Page 55 of 261
do, all things necessary, proper or advisable under applicable Law to consummate the transactions contemplated by this Agreement as soon as practicable, including the preparation and filing of all forms, registrations and notices required to be filed to consummate the Closing, and the taking of such actions as are necessary to obtain any requisite Consent. (b) Each of the Sellers and the Purchaser shall promptly notify the other of the occurrence, to such Party's Knowledge, of any event or condition, or the existence, to such Party's Knowledge, of any fact, that would reasonably be expected to result in (i) any of the conditions set forth in ARTICLE VIII not being satisfied or (ii) any of the representations and warranties in ARTICLE IV not being true and correct. Section 5.3 Regulatory Approvals.
(a) In furtherance and not in limitation of the provisions of Section 5.1(b), each of the Parties agrees to prepare and file as promptly as practicable any necessary documents, registrations, statements, petitions, filings, notifications and applications for any Consent of any other Government Entities required to satisfy the condition set forth in Section 8.1(a). (b) If a Party or any of its Affiliates receives a request for information or documentary material from any Government Entity with respect to this Agreement or any of the transactions contemplated hereby, then such Party shall promptly notify the other Party(ies) of such request and use best efforts to make, or cause to be made, as soon as reasonably practicable and after consultation with the other Party(ies), an appropriate response in compliance with such request. (c) The Parties shall keep each other apprised of the status of matters relating to the completion of the transactions contemplated by this Agreement and work cooperatively in connection with obtaining the Regulatory Approvals and other Consents of a Government Entity, including, to the extent permitted by the relevant Government Entity and applicable Law, promptly notifying each other of any communications from or with any Government Entity with respect to the transactions contemplated by this Agreement and ensuring that each of the Parties is entitled to attend any meetings with or other appearances before, and participate in any discussions with, to the extent permissible, any Government Entity with respect to the transactions contemplated by this Agreement. (d) In addition, the Purchaser shall, and shall cause each of the Designated Purchasers to, use its commercially reasonable efforts to satisfy (or cause the satisfaction of) the conditions precedent to the Purchaser's obligations hereunder as set forth in Section 8.1(a) to the extent the same is within its control and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable under all applicable Laws to consummate the transactions contemplated by this Agreement, including using its commercially reasonable efforts to obtain all Regulatory Approvals and any other Consent of a Government Entity required to be obtained in order for the Parties to consummate the transactions contemplated by this Agreement. 52 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 56Page 56 of 261
(e) The Purchaser shall not enter into any transaction, or any agreement to effect any transaction (including any merger or acquisition), that might reasonably be expected to make it more difficult, or increase the time required, to (i) avoid the entry of, the commencement of litigation seeking the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other Order that would materially delay or prevent the consummation of the transactions contemplated hereby or (ii) obtain all Consents or Orders of Government Entities necessary for the consummation of the transactions contemplated by this Agreement. (f) For the avoidance of doubt, the covenants under this Section 5.2(b) shall not apply to any action, effort, filing, Consent, proceedings, or other activity or matter relating to the Bankruptcy Court, the Chapter 11 Cases and/or the Bankruptcy Consents. (g) The Purchaser shall pay any requisite filing fees in relation to any filing or application made in respect of obtaining Regulatory Approvals. Section 5.4 Pre-Closing Access to Information.
(a) Prior to the Closing, the Sellers shall (i) give the Purchaser and its authorized representatives, upon advance notice and during regular business hours, access to all books, records, reports, plans, certificates, files, documents and information related to the Assets, Employees, officers and other facilities and properties of the Business, (ii) permit the Purchaser to make such copies and inspections thereof, upon advance notice and during regular business hours, as the Purchaser may reasonably request and (iii) cause the officers of the Sellers to furnish the Purchaser with such unaudited financial and operating data and other information with respect to the Business as is regularly prepared in the Ordinary Course that the Purchaser may from time to time request; provided, however, that (A) any such access shall be conducted at the Purchaser's sole cost and expense, in accordance with Law (including any applicable Bankruptcy Law), under the supervision of the Sellers' personnel and in such a manner as to maintain confidentiality and not to interfere with the normal operations of the businesses of the Sellers and their Affiliates and (B) the Sellers will not be required to provide to the Purchaser access to or copies of any Employee Records or patient records or charts to the extent such would be in violation of Healthcare Laws and other Laws relating to the protection of privacy. (b) Notwithstanding anything contained in this Agreement or any other agreement between the Purchaser and the Sellers executed on or prior to the date hereof, the Sellers shall not have any obligation to make available to the Purchaser or its representatives, or provide the Purchaser or its representatives with (i) any information to the extent making such information available would (A) jeopardize any attorney-client privilege or attorney work product privilege available to any Seller, or (B) cause the Sellers to be found in contravention of any applicable Law or binding agreement entered into prior to the date hereof, it being understood that the Sellers shall cooperate in any efforts and requests for waivers that would enable otherwise required disclosure to the Purchaser to occur without so jeopardizing privilege or contravening such Law, duty or
agreement; or (ii) any information relating to other bids or potential bids for any of the Assets. (c) As requested by the Purchaser from time to time, the Sellers shall use best efforts to cooperate with the Purchaser in connection with the Purchaser and the Sellers contacting suppliers and customers of the Business in connection with the Purchasers operation of the Business after Closing. (d) The Sellers shall use reasonable best efforts to cooperate and assist Purchaser with respect to the arrangement of any Indebtedness arranged by the Purchaser that is separate from the Indebtedness set forth in the DIP Loan Documents. The Sellers agree to provide, and to cause their representatives to provide, on a timely basis, all cooperation in connection with the arrangement of any Indebtedness as may be requested by the Purchaser, including (i) participation in meetings, drafting sessions and due diligence sessions led by the Purchaser, (ii) furnishing the Purchaser and any potential sources of Indebtedness with financial and other pertinent information regarding the Sellers as may be requested by the Purchaser, including all financial statements and financial data, (iii) assisting the Purchaser and any potential sources of Indebtedness and counsel in the preparation by the Purchaser of an offering document or information memorandum relating to any potential Indebtedness, (iv) cooperating with the marketing efforts, (v) making senior officers and representatives of the Sellers available for presentations to ratings agencies, and (vi) facilitating the pledge of the Assets (effective as of the Closing) that may be used as collateral; provided, however, that nothing in this Section 5.4(d) shall require the Sellers to incur any binding obligations with respect to any such Indebtedness. Section 5.5 Public Announcements. Subject to (a) the provisions of Section 7.4(a) with respect to communications and announcements to the Employees and the employees of the Purchaser and the Designated Purchasers and (b) the Purchaser's disclosure obligations imposed by Law (including any obligations under any Bankruptcy Laws), the Purchaser shall, and shall cause each of the Designated Purchasers to, (i) cooperate reasonably with the Sellers in the development and distribution of all news releases, other public information disclosures and announcements, including announcements and notices to customers and suppliers, with respect to this Agreement, or any of the transactions contemplated by this Agreement and the other Transaction Documents and (ii) not issue any such announcement or statement prior to consultation with, and the approval of, the Sellers (such approval not to be unreasonably withheld or delayed); provided, however, that approval shall not be required where the Purchaser determines, based on advice of counsel and after advance notice to the Sellers, that such disclosure is required by Law. Section 5.6 Further Actions.
(a) Each of the Parties shall use all reasonable efforts to (i) take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable Law; and (ii) execute and deliver the Transaction Documents and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and the Transaction Documents to which it is a party 54 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 58Page 58 of 261
and consummate and make effective the transactions contemplated hereby and thereby, including the execution and delivery of such assignments, deeds and other documents as may be necessary to transfer any Assets as provided in this Agreement; provided, however, that, subject to Section 5.2(b), neither the Purchaser nor the Sellers shall be obligated to make any payment or deliver anything of value to any Third Party (other than filing with and payment of any application fees to Government Entities, all of which shall be paid by the Purchaser) in order to obtain any Consent to the transfer of Assets or the assumption of Assumed Liabilities. (b) Subject to the terms of Sections 2.1(e) and 5.12, the Sellers shall, as promptly as practicable, use their commercially reasonable efforts to obtain, or cause to be obtained, all Consents necessary to be obtained in order to consummate the transactions contemplated by this Agreement. (c) From and after the Closing Date, the Sellers shall, and shall cause their Affiliates to, perform their respective obligations in all material respects under each Transaction Document to which it is a party until such Transaction Document is validly terminated in accordance with its terms. (d) Promptly after any Seller obtains Knowledge thereof, but in all events prior to the Closing, such Seller will inform the Purchaser in writing of (i) any fact or circumstance which, if it existed on the Closing Date, would constitute a breach of any representation or warranty of such Seller set forth in this Agreement or any breach of any covenant or agreement of such Seller set forth in this Agreement, or any threatened or instituted Order as described in Section 8.1(b) and (ii) all other material developments outside the Ordinary Course affecting the Assets, Liabilities, business, financial condition, results of operation, or customer or supplier relations of the Business or the Sellers; provided, however, that the delivery of such notice pursuant to this Section 5.6(a) shall not limit or otherwise affect the remedies available to the Purchaser hereunder. Promptly after the Purchaser obtains Knowledge thereof, but in all events prior to the Closing, the Purchaser will inform the Sellers in writing of any fact or circumstance which, if it existed on the Closing Date, would constitute a breach of any representation or warranty of the Purchaser set forth in this Agreement or any breach of any covenant or agreement of the Purchaser set forth in this Agreement, or any threatened or instituted Order as described in Section 8.1(b). Section 5.7 Conduct of Business and Compliance with DIP Credit Agreement.
(a) The Sellers covenant that, subject to any limitation imposed as a result of being subject to the Chapter 11 Cases and except as (i) the Purchaser may approve otherwise in writing, (ii) set forth in Section 5.7(a) of the Sellers Disclosure Letter, (iii) otherwise required pursuant to this Agreement or another Transaction Document, (iv) required by Law (including any applicable Bankruptcy Law) or by any Order of a Bankruptcy Court, (v) permitted by a "first day order" of the Bankruptcy Court in the Chapter 11 Cases, (vi) necessary to comply with the DIP Loan Documents, including not violating any representation, warranty, covenant or agreement in the DIP Credit Agreement (or any other documents executed and delivered in connection therewith), 55 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 59Page 59 of 261
(vii) necessary to comply with the Order of the Bankruptcy Court approving the DIP Credit Agreement, (viii) necessary to comply with the Bidding Procedures or (ix) relates to Excluded Assets or Excluded Liabilities, the Sellers shall (A) conduct the Business only in the Ordinary Course, (B) take such actions as necessary to comply with the DIP Loan Documents, including not violating any representation, warranty, covenant or agreement in the DIP Loan Documents (or any other documents executed and delivered in connection therewith), (C) take such actions as necessary to comply with the Order of the Bankruptcy Court approving the DIP Credit Agreement and (D) take such actions as necessary to comply with the Bidding Procedures. (b) Except (A) as expressly provided in this Agreement, (B) as set forth in Section 5.7(b) of the Sellers Disclosure Letter, (C) as provided otherwise in a "first day order" of the Bankruptcy Court in the Chapter 11 Cases, (D) with the express written approval of Purchaser, (E) as necessary to comply with the DIP Loan Documents, including not violating any representation, warranty, covenant or agreement in the DIP Credit Agreement (or any other documents executed and delivered in connection therewith), (F) as necessary to comply with the Order of the Bankruptcy Court approving the DIP Credit Agreement or (G) as necessary to comply with the Bidding Procedures, Sellers shall: (i) maintain in full force and effect any permits, licenses and agreements necessary to operate the Business in the Ordinary Course; (ii) maintain all of the Assets in a manner consistent with past practices and maintain the types and levels of insurance currently in effect in respect of the Assets; (iii) (1) not abandon, disclaim, dedicate to the public, sell, assign or grant any security interest in, to or under any Transferred Intellectual Property, or (2) not grant to any Third Party any license, or enter into any covenant not to sue, with respect to any Transferred Intellectual Property, except in the Ordinary Course; (iv) upon any damage, destruction or loss to any Asset, apply any insurance proceeds received with respect thereto to the prompt repair, replacement and restoration thereof to the condition of such Asset before such event or, if required, to such other (better) condition as may be required by applicable Law; and (v) consult with the Purchaser on all aspects of the Business as may be reasonably requested from time to time by the Purchaser, including, but not limited to, personnel, accounting and financial functions, sales and marketing, and the development and implementation of business strategies, plans and objectives. Section 5.8 Solicitation of Alternative Transactions. The Sellers jointly and severally represent that, other than the transactions contemplated by this Agreement and the other Transaction Documents, or as set forth in Section 5.7(b) of the Sellers Disclosure Letter, no 56 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 60Page 60 of 261
Seller is as of the date hereof a party to or bound by any agreement with respect to a possible merger, sale, restructuring, refinancing or other disposition of all or any material part of the Business or the Assets. Prior to the entry of the Stalking Horse and Bidding Procedures Order on the Bankruptcy Court's docket, the Sellers and their Affiliates and officers, directors, Employees, agents, professionals, advisors or other representatives may, directly or indirectly, solicit or participate in negotiations or discussions regarding any Alternative Transaction, regardless of whether such offer was unsolicited, and may furnish any information with respect to, assist and participate in or facilitate in any other manner any effort or attempt by any Person with respect thereto; provided, however, that, prior to such entry, the Sellers shall not, directly or indirectly, (a) enter into an agreement with a Third Party with respect to an Alternative Transaction with such Third Party, other than a confidentiality or nondisclosure agreement, or (b) except as provided in this Agreement, seek or support Bankruptcy Court approval of a motion or Order inconsistent in any way with the transactions contemplated in this Agreement and the other Transaction Documents. Subsequent to the entry of the Stalking Horse and Bidding Procedures Order on the Bankruptcy Court's docket, no Seller shall, directly or indirectly, through any officer, director, Employee, agent, professional or advisor, solicit any Alternative Transaction (other than as expressly permitted under the Stalking Horse and Bidding Procedures Order) or participate in any negotiations or discussions with respect to any Alternative Transaction in a manner inconsistent with the Stalking Horse and Bidding Procedures Order; provided, that the Sellers shall not, in any event, release any Trade Secrets or other unique or competitively sensitive information or material to any Person who directly or indirectly (through an Affiliate or otherwise), competes, has competed or proposes to compete with the Business (it being understood that the Sellers may release such information to such Person's third party representatives who have agreed in writing to keep such information confidential (including not to disclose such competitive information to its client)); provided, however, that the Sellers may release such information directly to such Person if (I) (x) such Person has submitted a bona fide proposal for an Alternative Transaction which has as a final condition for entering into an agreement with respect to such Alternative Transaction, the release of such information to such Person or (y) Church Streets board of managers has determined, in its good faith judgment (after having received the advice of its financial advisor and legal counsel) that an agreement with respect to an Alternative Transaction cannot be executed without the release of such information to such Person, and (II) the Sellers have provided prior notice to the Purchaser of such disclosure and, if the Purchaser has objected in writing to such disclosure within three Business Days of receipt of such notice, the Bankruptcy Court after notice and a hearing has determined that such disclosure is appropriate in furtherance of the Auction; provided, further, in each case, that the Sellers have obtained from such Person a confidentiality or nondisclosure agreement with respect to such competitively sensitive information in form and substance reasonably satisfactory to the Purchaser. From the date of the issuance of the Sale Order and until the Closing Date and provided that the Purchaser is proceeding in good faith to consummate the transactions contemplated hereby in a timely manner, no Seller or any of its Affiliates shall, without the consent of the Purchaser (which shall not be unreasonably withheld, conditioned or delayed), discuss, negotiate or consummate with any Third Party any transaction involving (i) the issuance, redemption, sale or exchange or other disposition of any equity interest in any Seller (other than the purchase or redemption of outstanding equity interests from employees) or (ii) the sale, exchange, liquidation, reorganization, or other disposition of all or any material part of the
Assets. For the avoidance of doubt, nothing in this Section shall be construed to mean that any Seller must abrogate any of its fiduciary duties to obtain the highest and best price for the Assets. Section 5.9 Transaction Expenses. Except as otherwise provided in this Agreement or the Ancillary Agreements, each of the Purchaser and the Sellers shall bear its own costs and expenses (including brokerage commissions, finders' fees or similar compensation, and legal fees and expenses) incurred in connection with this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby. Section 5.10 Confidentiality. Subject to the requirements of the Bankruptcy Laws or as may be imposed by any Bankruptcy Court or as otherwise required by applicable Law, from and after the date hereof, the Sellers shall, and shall cause their Affiliates to, maintain as confidential and shall hold in confidence and shall not use or disclose (except as required by Law or as authorized in writing by the Purchaser) (a) any and all information provided by the Purchaser, any of its Lenders, or their respective Affiliates, (b) any information or materials relating to the Business, operations and affairs of the Sellers as it relates to the Business and (c) any materials developed by the Purchaser or any of their Affiliates or any of its or their representatives (including their accountants, advisors, environmental, labor, employee benefits and any other consultants, lenders and legal counsel). Except as otherwise permitted and provided above, in the event any Seller is required by Law to disclose any such confidential information, such Seller shall promptly notify the Purchaser in writing, which notification shall include the nature of the legal requirement and the extent of the required disclosure, and shall cooperate with the Purchaser in connection with the Purchasers efforts to obtain a protective Order (at the Purchaser's sole cost and expense) and in the event that such protective Order or other remedy is not obtained, the Sellers or their Affiliates shall furnish only such information as is legally required to be provided and shall otherwise preserve the confidentiality of such information consistent with applicable Law. Information subject to the confidentiality obligations in this Section 5.10 does not include any information which (i) at the time of disclosure is generally available to or known by the public (other than as a result of its disclosure in breach of this Agreement or any other Transaction Document) or (ii) becomes available on a non-confidential basis from a Person who is not known to be bound by a confidentiality agreement with the Purchaser or its Affiliates, or who is not otherwise prohibited from transmitting the information. The Parties acknowledge and agree that the Purchasers shall be at liberty to disclose the terms of this Agreement and the other Transaction Documents to the Purchaser's officers, directors, bidding partners, advisors, investors, representatives and potential financing sources, provided that such Persons acknowledge the existence of the confidentiality obligations and agree to be bound thereby, and any court or to any liquidator or in connection with any auction process approved by the Bankruptcy Court and show appropriate figures in their administration records, accounts and returns; provided, that the foregoing obligations shall terminate at Closing except with respect to confidential information of the Sellers which are not related to the Assets, which shall terminate one year from the date hereof. Section 5.11 Certain Payments or Instruments Received from Third Parties. To the extent that, for 120 days after the Closing Date, (a) the Purchaser or any Designated Purchaser receives any payment or instrument that is for the account of any Seller according to the terms of this Agreement, the Purchaser shall, and shall cause the Designated Purchasers to, promptly deliver such amount or instrument to the relevant Seller, and (b) any of the Sellers receives any 58 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 62Page 62 of 261
payment that is for the account of the Purchaser or any of the Designated Purchasers according to the terms of this Agreement or relates to the Business, the Sellers shall promptly (but in no event later than two (2) Business Days) deliver such amount or instrument to the Purchaser or the relevant Designated Purchasers. All amounts due and payable under this Section 5.11 shall be due and payable by the applicable Party in immediately available funds, by wire transfer to the account designated in writing by the relevant Party. Notwithstanding the foregoing, each Party hereby undertakes to use reasonable best efforts to direct or forward all bills, invoices or like instruments to the appropriate Party. Section 5.12 Deemed Consent. For the purposes of this Agreement, the relevant Sellers shall be deemed to have obtained all required Consents in respect of the assignment of any Designated Seller Contract if, and to the extent that, pursuant to the Sale Order, the Sellers are authorized to assume and assign to the Purchaser or the relevant Designated Purchaser such Designated Seller Contract pursuant to section 365 of the Bankruptcy Code and any applicable Cure Cost has been satisfied as provided in Section 2.1(f). Section 5.13 Maintenance of Books and Records. After the Closing, the Purchaser shall, and shall cause the Designated Purchasers to, use commercially reasonable efforts to preserve, until at least the second anniversary of the Closing Date, all pre-Closing Date records acquired hereby to the extent relating to the Business possessed or to be possessed by such Person and required by Law to be maintained. After the Closing Date and up until at least the sixth anniversary of the Closing Date, upon any reasonable request from the Sellers or their representatives, the Purchaser shall, and/or shall cause the Person holding such records to, use commercially reasonable efforts to (a) provide to the Sellers or their representatives reasonable access to such records in their possession during normal business hours without unreasonably interfering with the operations of the Business and (b) permit the Sellers or their representatives to make copies of such records. Section 5.14 Use of Cash. Simultaneously with the Closing, all cash owned by the Sellers (including amounts payable hereunder) shall be used, first, to pay the Wind-Down Amount, and, second, to pay professional fees and expenses of the Sellers, Purchaser, and Agent then due and owing up to and including the Closing. Section 5.15 Wind-Down Amount. On the Closing Date, Sellers will deliver the WindDown Amount to the Wind-Down Agent to be held in the Wind-Down Account for the benefit of Persons entitled to be paid costs covered by the Wind-Down Amount in accordance with the Wind-Down Budget and the following provisions: (a) Each claim for costs to be paid from the Wind-Down Amount pursuant to the Wind-Down Budget in excess of $5,000 must be submitted to the Wind-Down Agent and the Purchaser in writing. (b) Upon the submission of any such claims for costs to be paid from the Wind-Down Amount, the Purchaser shall have five (5) Business Days to object in writing to any such claim on the basis that it: (i) is not consistent in kind or amount with the Wind-Down Budget or (ii) is not reasonably necessary for the winding-down of the Sellers' estates. 59 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 63Page 63 of 261
(c) In the event that an objection is made by the Purchaser and an agreement cannot be reached between the claimant and the Purchaser, the amount of any such payment still in dispute shall be determined, on application by the Purchaser or the WindDown Agent, on notice to the Purchaser and any affected beneficiary of the Wind-Down Amount in each case, by Order of the Bankruptcy Court. The costs of any such application shall be paid: (i) in the case of the Wind-Down Agent, from the Wind-Down Amount; (ii) in the case of the claimant, by the claimant unless the claimant is successful in defending its claim in which case the claimant's costs of the application shall be reimbursed from the Wind-Down Amount; and (iii) in the case of the Purchaser, by the Purchaser unless the Purchaser is successful in its complaint in which case its costs of the application shall be paid from the Wind-Down Amount. (d) Once the amount of any such claim has either been agreed to or determined by the Bankruptcy Court, as set forth above, the Wind-Down Agent shall promptly pay such claim from the Wind-Down Amount. (e) Subsequent to Closing, the Wind-Down Agent shall reduce the amount of the Wind-Down Amount as and to the extent that the Wind-Down Agent may agree, or the Bankruptcy Court determines, that it, or portions of it, are no longer required to fund the wind-down costs of the Sellers' estates, by distributing to Purchaser the amount of such reductions. (f) Pursuant to the Sale Order, all right, title and interest in and to any amounts in the Wind-Down Amount that are not used to pay costs associated with winding-down Sellers' estate shall vest absolutely in the Purchaser as at the Closing Date and shall promptly be distributed to the Purchaser in accordance with this Section 5.15. Section 5.16 Name Change. Within ten (10) days after the Closing Date, Sellers shall take such corporate and other actions necessary to change their respective corporate and company names to ones that are not similar to, or confusing with, their current names or any Trademark included in the Transferred Intellectual Property, including any necessary filings required by applicable Law. Section 5.17 Compliance Report. Two (2) Business Days after the submission thereof with the appropriate Governmental Authority, the Sellers shall deliver to the Purchaser a copy of the final, executed annual report for the reporting period ended on or about January 15, 2012, submitted by Church Street to the OIG-HHS pursuant to the OIG-CIA. Section 5.18 Pending Actions. The Sellers will continue to pursue the strategy discussed with the Purchaser to address certain litigation Claims and disputes in a manner reasonably satisfactory to the Purchaser. Section 5.19 Certain Acknowledgement Regarding the Purchaser. The Sellers agree and acknowledge that no Person other than the Purchaser has any obligations to the Sellers hereunder and that the Sellers have no remedy, recourse or right of recovery against, or contribution from, (a) any former, current or future stockholders, holders of any equity, limited liability company interest, officer, member, manager, director, employees, agents or controlling 60 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 64Page 64 of 261
persons of the Purchaser, (b) any lender or prospective lender, lead arranger, arranger, agent or representative of or to the Purchaser or (c) any former, current or future limited partners, stockholders, holders of any equity, partnership or limited liability company interest, officer, member, manager, director, employees, agents, attorneys, controlling persons, assignee or Affiliates of any of the foregoing (those persons and entities described in the foregoing clauses (a), (b) and (c) being referred to herein collectively as "Purchaser Affiliates"), through the Purchaser or otherwise, whether by or through attempted piercing of the corporate veil or similar action, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable law, by or through a claim by or on behalf of the Purchaser or otherwise, except for its rights against the Purchaser and any Designated Purchasers under this Agreement. Furthermore, nothing herein shall require any Purchaser Affiliate to take any action in connection with this Agreement and the transactions contemplated hereby or otherwise, nor shall anything herein prejudice any rights, claims, other Actions or remedies any Purchaser Affiliate may have, including pursuant to the Credit Agreements. ARTICLE VI TAX MATTERS Section 6.1 Transfer Taxes.
(a) The Parties agree that the Purchase Price is exclusive of any Transfer Taxes. The Sellers shall promptly pay directly to the appropriate Tax Authority all applicable Transfer Taxes that are properly payable by Sellers or the Purchaser under applicable Law in connection with this Agreement and the transactions contemplated herein and the other Transaction Documents and the transactions contemplated therein. (b) If the Sellers or any Seller wish to claim any exemption relating to, or a reduced rate of, Transfer Taxes, in connection with this Agreement or the transactions contemplated herein or the other Transaction Documents and the transactions contemplated therein, such Sellers shall be solely responsible for ensuring that such exemption or election applies and, in that regard, shall provide the Purchaser prior to Closing with its permit number or other similar registration numbers and/or any appropriate certificate of exemption, election and/or other document or evidence to support the claimed entitlement to such exemption or reduced rate by such Sellers. The Purchaser shall make reasonable efforts to cooperate to the extent necessary to obtain any such exemption or reduced rate. Section 6.2 Withholding Taxes. Notwithstanding any other provision in this Agreement, the Purchaser shall have the right to deduct and withhold Taxes from any payments to be made hereunder if such withholding is required by Law and to collect any necessary Tax forms, including IRS Forms W-8 or W-9, as applicable, or any similar information, from Sellers and any other recipients of payments hereunder. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to Sellers or any such other recipient of payments in respect of which such deduction and withholding was made.
Section 6.3 Tax Characterization of Payments Under This Agreement. The Sellers and the Purchaser agree to treat all payments made either to or for the benefit of the other Party under this Agreement as adjustments to the Purchase Price for Tax purposes and that such treatment shall govern for purposes hereof to the extent permitted under applicable Tax Law. Section 6.4 Records. Notwithstanding the provisions of Section 5.4, (a) after the Closing Date, the Purchaser and the Designated Purchasers on the one hand, and the Sellers, on the other hand, will make available to the other, as reasonably requested, and to any Tax Authority, all information, records or documents relating to liability for Taxes with respect to the Assets, the Assumed Liabilities, the Business for all periods prior to or including the Closing Date, and will preserve such information, records or documents until the later of (i) expiration of any applicable statute of limitations and (ii) six years after the date of the Tax Return relating to such Taxes, and (b) in the event that one Party needs access to records in the possession of a second Party relating to any of the Assets, the Assumed Liabilities or the Business for purposes of preparing Tax Returns or complying with any Tax audit request, subpoena or other investigative demand by any Tax Authority, or for any other legitimate Tax-related purpose not injurious to the second Party, the second Party will allow representatives of the other Party access to such records during regular business hours at the second Party's place of business for the sole purpose of obtaining information for use as aforesaid and will permit such other Party to make extracts and copies thereof as may be necessary or convenient. The obligation to cooperate pursuant to this paragraph shall terminate at the time the relevant applicable statute of limitations expires. Section 6.5 Property Tax Allocation. All real and personal property Taxes and similar ad valorem obligations levied with respect to the Assets, whether imposed or assessed before or after the Closing Date ("Periodic Taxes") for a taxable period that includes (but does not end on) the Closing Date (a "Straddle Period"), shall be apportioned between Sellers and Purchaser or the applicable Designated Purchaser as of the Closing Date based on the number of days of such taxable period included in the period ending with and including the Closing Date (together with periods ending on or before the Closing Date, the "Pre-Closing Tax Period"), and the number of days of such taxable period beginning after the Closing Date (together with any periods beginning after the Closing Date, the "Post-Closing Tax Period"). At the Closing, Periodic Taxes with respect to each Asset for the applicable Tax period shall be prorated in accordance with the foregoing provisions based on the Tax assessment for such Asset for the applicable Tax period, if available, or otherwise, based on the last available Tax assessment with respect to such Asset. The Sellers shall be responsible for such Periodic Taxes attributable to Pre-Closing Tax Periods and the applicable Purchaser shall be responsible for such Periodic Taxes attributable to Post-Closing Tax Periods. At the Closing, (a) Sellers shall pay to the applicable Purchaser an amount equal to excess, if any, of the (i) unpaid Periodic Taxes attributable to Pre-Closing Tax Periods over (ii) Periodic Taxes paid by Sellers but apportioned hereunder to the applicable Purchaser for Straddle Periods (each determined in accordance with the foregoing principles), or (b) the applicable Purchaser shall pay to Sellers an amount equal to Periodic Taxes apportioned to the applicable Purchaser with respect to Straddle Periods but previously paid by Sellers, as applicable. The applicable Purchaser shall also be responsible for preparing and filing all Periodic Tax returns required to be filed after the Closing Date.
Section 6.6 G Reorganization Structure. With the Purchaser's prior written consent (which consent may be given or not in its sole discretion), the Purchaser and the Sellers may structure the transactions contemplated by this Agreement as a reorganization under section 368(a)(1)(G) of the Code ("G Reorganization Structure"), in a manner that is mutually acceptable to the Purchaser and Sellers and otherwise consistent with the rights and obligations of the Purchaser and the Sellers under this Agreement. If the transactions contemplated hereby are structured as a G Reorganization Structure, this Agreement shall constitute a plan of reorganization within the meaning of Section 1.368-2(g) of the Treasury regulations and neither the Purchaser nor the Sellers will take any action or fail to take an action that will preclude such transactions from qualifying as a reorganization. The Sellers and the Purchaser shall provide each other with reasonable cooperation in determining the United States federal income Tax consequences of the G Reorganization Structure and in preparing any tax filings or elections in connection therewith. ARTICLE VII EMPLOYMENT MATTERS Section 7.1 Employment Offers. Prior to the Closing, the Purchaser shall, or shall cause the relevant Designated Purchaser to, extend an offer of employment to those Employees of Sellers whom the Purchaser or Designated Purchaser has determined to offer employment to, with such employment to take effect commencing immediately upon the Closing under the terms stated herein as of the Effective Hire Date. Section 7.2 Employee Benefits.
(a) After the date hereof, the Sellers and the Purchaser shall cooperate promptly and in good faith in (i) preparing the transition of the Seller Employee Plans to the Purchaser, and (ii) the transition of the Transferred Employees as applicable from coverage under the Seller Employee Plans to coverage under the Purchaser Employee Plans effective as of the Transferred Employee's Effective Hire Date and to the extent necessary to comply with this Article VII. (b) The Purchaser shall assume the accrued and unused vacation days, sick days and paid personal days of the Transferred Employees up to their Effective Hire Date. (c) Nothing in this Article VII restricts the right of the Purchaser to terminate the employment of any Transferred Employee after the Closing. (d) Purchaser and each applicable Seller hereby agree to follow the standard procedure for employment Tax withholding as provided under applicable Law. (e) The Purchaser shall use commercially reasonable efforts to cause the medical, dental and health plans of the Purchaser applicable to Transferred Employees (i) to not contain any exclusions for pre-existing conditions (to the extent the conditions had been covered under the Seller Employee Plans as of the Closing Date); and (ii) to credit each Transferred Employee for the plan year of the Sellers in which the Closing Date occurs with all deductibles and co-payments applicable to the portion of such plan year 63 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 67Page 67 of 261
occurring prior to the Closing Date. The Sellers shall be solely responsible for (A) claims for the type of benefits described in Section 3(1) of ERISA (whether or not covered by ERISA) ("Welfare and Health Benefits") and for workers' compensation, in each case that are incurred by or with respect to any Transferred Employee before the Closing Date; and (B) claims relating to COBRA coverage, as defined below, attributable to "qualifying events" with respect to any Transferred Employee and his or her beneficiaries and dependents that occur before the Closing Date. The Purchaser shall be solely responsible for (A) claims for Welfare and Health Benefits and for workers' compensation, in each case that are incurred by or with respect to any Transferred Employee on or after the Closing Date, and (B) claims relating to COBRA coverage attributable to "qualifying events" with respect to any Transferred Employee and his or her beneficiaries and dependents that occur on or after the Closing Date. Following the Closing Date, the Purchaser shall, or shall cause its Affiliates to, satisfy its obligations to provide continuation health care coverage in accordance with Section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA ("COBRA") to Transferred Employees and/or their qualified beneficiaries who have a qualifying event after such Transferred Employees' Employee Transfer Time or as otherwise required by applicable Law. For purposes of the foregoing, a medical/dental claim shall be considered incurred when the condition arose; for the avoidance of doubt, claims relating to a hospital confinement that begins on or before the Closing Date but continues thereafter shall be treated as incurred on or before the Closing Date. A disability or workers' compensation claim shall be considered incurred on or before the Closing Date if the injury or condition giving rise to the claim occurs on or before the Closing Date. (f) The Purchaser shall, no later than twenty (20) days prior to Closing, deliver a notice to the Sellers indicating which of the Seller Employee Plans, if any, shall not be designated as Transferred Employee Plans under this Agreement. To the extent the Purchaser elects not to assume any Seller Employee Plans, the Sellers and the Purchaser shall cooperate promptly and in good faith to deal with such Seller Employee Plans prior to Closing. Section 7.3 Excluded Employee Liabilities. For purposes of clarity, and notwithstanding any other provision in this Agreement, the Sellers shall retain, and neither the Purchaser nor any of the Designated Purchasers shall assume at the Closing, any of the following Liabilities of the Sellers (the "Excluded Employee Liabilities") except as expressly assumed pursuant to Section 2.1(c)): (a) the Seller Employee Plans and any Liabilities thereunder (other than any Transferred Employee Plans and any Liabilities thereunder); (b) the Sellers' or any of their Affiliates' obligations to make payments or provide benefits under any Seller Employee Plan or otherwise except with respect to any Transferred Employee Plans; (c) Liabilities resulting from any Action, or with respect to any potential or threatened Action which the Sellers have received notice of an intent to file, on or prior to
the Closing Date, (i) by any Employee, or (ii) an applicant with respect to potential employment with any of the Sellers in the Business; and (d) all Liabilities with respect to any Employees or former employees who are not Transferred Employees. Section 7.4 Other Employee Covenants.
(a) After the date hereof, and subject to each Party's disclosure obligations imposed by Law or by Government Entities and each Party's obligations hereunder, the Purchaser shall not, and shall procure that the Designated Purchasers and any of the Purchaser's Affiliates shall not, issue any announcement or communication to their respective employees or the Employees, prior to consultation with, and the approval of, the Sellers (not to be unreasonably withheld or delayed) with respect to this Agreement or any of the transactions contemplated hereby. If requested, the Sellers shall cooperate with the Purchaser in respect of the development and distribution of any announcement and communication to the employees of the Sellers, including Employees, with respect to this Agreement or any of the transactions contemplated hereby. (b) The Purchaser undertakes to keep the Employee Information in confidence and that, until the relevant Employee Transfer Time: (i) the Purchaser shall, and shall cause the Designated Purchasers to, restrict the disclosure of the Employee Information only to such of its employees, agents and advisors as is necessary for the purposes of effectuating this Agreement prior to the Employee Transfer Time; (ii) prior to the Employee Transfer Time, the Employee Information shall not be used except for effectuating this Agreement and shall be returned to the Sellers or destroyed, at the Sellers' election, if this Agreement is terminated; and (iii) the Purchaser shall, and shall cause the Designated Purchasers to, comply with such additional obligations as may be reasonably required in any particular jurisdiction to comply with any applicable data privacy Laws. (c) The Purchaser and the Sellers shall cooperate with each other to provide for an orderly transition of the Transferred Employees from the Sellers to the Purchaser or the Designated Purchasers, as applicable, and to minimize the disruption to the respective businesses of the Parties resulting from the transactions contemplated hereby. Section 7.5 WARN Act. On or after the Closing Date, the Purchaser or the Designated Purchasers, as applicable, shall be responsible for compliance with the WARN Act and any obligation with respect to the Transferred Employees under the WARN Act. The Sellers shall be responsible for compliance with the WARN Act and any such obligation arising or accruing before the Closing Date. The Parties agree to cooperate in good faith to determine whether any notification may be required under the WARN Act as a result of the transactions contemplated by this Agreement. On or after the Closing Date, the Purchaser shall not take, or 65 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 69Page 69 of 261
cause the Designated Purchasers or its Affiliates to take, any actions that will cause the Sellers to have any obligations under the WARN Act, and the Purchaser shall be responsible and indemnify the Sellers for any Liabilities arising under the WARN Act as a result of any such action. Section 7.6 No Obligation. Other than as expressly set forth herein, nothing contained in this Agreement shall be construed to require the employment of (or prevent the termination of employment of) any individual, require minimum benefit or compensation levels or prevent any change in the employee benefits provided to any individual Transferred Employee. Except as set forth in Section 5.17(a), no provision of this Agreement shall create any Third Party beneficiary rights in any Employee or former Employee of Sellers or any other Person (including any beneficiary or dependent thereof) of any nature or kind whatsoever, including in respect of continued employment (or resumed employment) for any specified period. ARTICLE VIII CONDITIONS TO THE CLOSING Section 8.1 Conditions to Each Party's Obligation. The Parties' obligation to effect, and, as to the Purchaser, to cause the relevant Designated Purchasers to effect, the Closing is subject to the satisfaction or the express written waiver of the Parties, at or prior to the Closing, of the following conditions: (a) obtained. Regulatory Approvals. All Regulatory Approvals shall have been
(b) No Injunctions or Restraints. There shall be in effect no Law or Order prohibiting the consummation of the transactions contemplated hereby that has not been withdrawn or terminated. Section 8.2 Conditions to Sellers' Obligation. The Sellers' obligation to effect the Closing shall be subject to the fulfillment (or express written waiver by the Sellers), at or prior to the Closing, of each of the following additional conditions: (a) Representations and Warranties. Each representation and warranty contained in ARTICLE III (disregarding all materiality and material adverse effect qualifications contained therein) shall be true and correct as if made on and as of the Closing Date (unless such representation or warranty is made as of another date, in which case, as of such other date), except for such failures to be so true and correct as would not, individually or in the aggregate, materially impair or delay the Purchaser's ability to consummate the transactions contemplated by this Agreement and the other Transaction Documents. The Sellers shall have received a certificate of the Purchaser to such effect signed by a duly authorized representative thereof. (b) Covenants. The covenants contained in this Agreement to be complied with by the Purchaser on or before the Closing shall have been complied with in all material respects. The Sellers shall have received a certificate of the Purchaser to such effect signed by a duly authorized officer thereof. 66 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 70Page 70 of 261
(c) Closing Deliveries. Each of the deliveries required to be made to the Sellers pursuant to Section 2.3(c) shall have been so delivered. (d) Court Orders. The Stalking Horse and Bidding Procedures Order and the Sale Order, each in form and substance satisfactory to the Purchaser, shall have been entered by the Bankruptcy Court and shall not have been stayed or modified as of the Closing. (e) Releases. Each of Purchaser, the Designated Purchasers and the other Persons listed on Exhibit G-1 hereto shall have executed and delivered releases in substantially the form of Exhibit G-3 hereto. Section 8.3 Conditions to Purchaser's Obligation. The Purchaser's obligation to effect, and to cause the relevant Designated Purchasers to effect, the Closing shall be subject to the fulfillment (or express written waiver by the Purchaser), at or prior to the Closing, of each of the following additional conditions: (a) Representations and Warranties. Each of the representations and warranties, other than the representations and warranties in Section 4.9, set forth in ARTICLE IV (disregarding all materiality and material adverse effect qualifications contained therein) shall be true and correct as if made on and as of the Closing Date (unless such representation or warranty is made as of another date, in which case, as of such other date), except, for each of the representations and warranties set forth in ARTICLE IV, for such failures to be so true and correct that have not had a Material Adverse Effect. Each of the representations and warranties set forth in Section 4.9 shall be true and correct as if made on and as of the Closing Date. The Purchasers shall have received a certificate of each of the Sellers to such effect signed by a duly authorized officer thereof. (b) Covenants. The covenants, obligations and agreements contained in this Agreement to be complied with by the Sellers on or before the Closing shall have been complied with in all material respects. The Purchasers shall have received a certificate of each of the Sellers to such effect signed by a duly authorized representative thereof. (c) No Material Adverse Effect. There shall not have occurred any changes, effects or circumstances constituting, or which would be reasonably likely to result in a Material Adverse Effect. (d) Assigned Contracts Approval. Subject to Section 2.1(e), the Bankruptcy Court shall have approved and authorized the assumption and assignment of such Assigned Contracts with respect to which the Purchaser shall have provided the requisite adequate assurance. (e) Closing Deliveries. Each of the deliveries required to be made to Purchaser pursuant to Section 2.3 shall have been so delivered (f) Violations of Law. Seller shall not have any Knowledge of any violation or violations of Law arising after the date hereof that would result in fines, penalties or 67 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 71Page 71 of 261
similar charges by a Governmental Authority to the Sellers in the aggregate in excess of $100,000, other than Liabilities related to inadvertent over-billings and similar immaterial and inadvertent violations that have occurred in the ordinary course of business. (g) Court Orders. The Stalking Horse and Bidding Procedures Order and the Sale Order shall have been entered by the Bankruptcy Court, shall not have been stayed or modified, and shall have become Final Orders. (h) No Default or Event of Default Under the DIP Credit Agreement. No Default or Event of Default (each as defined in the DIP Credit Agreement) shall have occurred and is continuing and not waived under the DIP Loan Documents, subject to any applicable cure period under the DIP Loan Documents. (i) Wind-Down Amount and Other Fees. Sellers shall have sufficient cash available for (i) the payment of all requisite filing fees related to any filing or application made in respect of obtaining Regulatory Approvals and (ii) the Wind-Down Amount. (j) Third Party Consents. All Consents listed in Section 8.3(i) of the Sellers Disclosure Letter (or waivers thereof) shall have been obtained. (k) Releases. Each Seller and each of the Persons listed on Exhibit G-2 hereto shall have executed and delivered releases in substantially the form of Exhibit G-3 hereto. ARTICLE IX TERMINATION Section 9.1 Closing: (a) (b) Termination. This Agreement may be terminated at any time prior to the by mutual written consent of the Sellers and the Purchaser; by either Party, upon written notice to the other:
(i) in the event of a material breach by the other Party of such other Party's representations, warranties, agreements or covenants set forth in this Agreement, which breach (A) would result in a failure of the conditions to Closing set forth in Section 8.1, Section 8.2 or Section 8.3, as applicable, and (B) is not cured within 20 days from receipt of a written notice from the nonbreaching Party; (ii) if a Government Entity issues an Order prohibiting the transactions contemplated hereby that shall have become final and non-appealable; (iii) if the Closing does not take place by May 18, 2012; provided, that, if the Closing does not take place within such period due to a material breach of this Agreement by any Seller, on the one hand, or the Purchaser or any Designated Purchaser, on the other hand, then such breaching Party may not terminate this Agreement pursuant this clause (iii); or 68 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 72Page 72 of 261
(iv) upon the entry of an Order by the Bankruptcy Court authorizing an Alternative Transaction; (c) by the Purchaser, upon written notice to the Sellers:
(i) if the Sale Order, in form and substance acceptable to Purchaser and the Sellers, each in its respective sole discretion, has not been entered no later than ten (10) Business Days prior to the Closing Date; (ii) Motion; if the Sellers withdraw or seek authority to withdraw the Sale
(iii) if the purchase and sale of the Assets and the assumption of the Assumed Liabilities on the terms described herein has not been completed on or before May 11, 2012; (iv) if the Sellers announce any plan of liquidation or a sale pursuant to the Auction, in each case, in lieu of consummating this Agreement; (v) upon the sale, transfer or other disposition, directly or indirectly, of any material portion of the Business or the Assets (other than as a going concern) in connection with the closure, liquidation or winding up of the Business or any of the Sellers, except in connection with the Chapter 11 Cases and except with the consent of the Purchaser; (vi) if the Chapter 11 Cases are dismissed or converted to cases under Chapter 7 of the Bankruptcy Code and neither such dismissal nor conversion expressly contemplates the transactions provided for in this Agreement, or a trustee is appointed for the Sellers and such trustee rejects the transactions contemplated by this Agreement; (vii) if there shall have occurred and is continuing and not waived under the DIP Loan Documents, any Default or Event of Default (each as defined in the DIP Credit Agreement), subject to any applicable cure period under the DIP Loan Documents; or (viii) if, after the date hereof, a Material Adverse Effect occurs; provided, however, that the right to terminate this Agreement pursuant to Section 9.1(b)(i) and Section 9.1(b)(iii) shall not be available to any Party whose breach hereof has been the principal cause of, or has directly resulted in, the event or condition purportedly giving rise to a right to terminate this Agreement under such clauses. Section 9.2 to Section 9.1: Effects of Termination. If this Agreement is validly terminated pursuant
(a) all further obligations of the Parties under or pursuant to this Agreement shall terminate without further liability of any Party to the other except for the provisions 69 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 73Page 73 of 261
of (i) Section 5.5 (Public Announcements), (ii) Section 5.9 (Transaction Expenses), (iii) Section 5.10 (Confidentiality), (iv) Section 7.4(b)(ii) (Other Employee Covenants), (v) this Section 9.2 (Effects of Termination), and (vi) ARTICLE X (Miscellaneous); provided, that nothing herein shall relieve any Party from Liability for any breach of this Agreement occurring before the termination hereof; (b) the amount necessary to payoff in full and terminate the DIP Credit Agreement will be paid by the Sellers in cash pursuant to the terms of the DIP Credit Agreement; and (c) if an Alternative Transaction is consummated, the Purchaser shall be entitled to (i) a break-up fee in an amount of Two Million Dollars ($2,000,000) (the Break-Up Fee), and (ii) reimbursement of its reasonable out-of-pocket fees and expenses actually incurred in connection with this Agreement and the transactions contemplated hereby, in an amount not to exceed $250,000. The obligations of the Sellers under this clause (c) survive the termination of this Agreement. ARTICLE X MISCELLANEOUS Section 10.1 No Survival of Representations and Warranties or Covenants. No representations or warranties, covenants or agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive beyond the Closing. Accordingly, no claim of any nature whatsoever for breach of such representations, warranties, covenants or agreements may be made, or Action instituted, after the Closing. Notwithstanding the foregoing, the covenants and agreements that by their terms are to be satisfied after the Closing shall survive the Closing until satisfied in accordance with their terms, and each Party shall be liable to the other Party after the Closing for any breach thereof. Section 10.2 Remedies. (a) No failure to exercise, and no delay in exercising, any right, remedy, power or privilege under this Agreement by any Party will operate as a waiver of such right, remedy, power or privilege, nor will any single or partial exercise of any right, remedy, power or privilege under this Agreement preclude any other or further exercise of such right, remedy, power or privilege or the exercise of any other right, remedy, power or privilege. The rights and remedies of the Parties to this Agreement are cumulative and are not exclusive of any other remedies provided by Law. (b) Sellers, on the one hand, and the Purchaser, on the other, acknowledge and agree that the other Party would be irreparably damaged if any of the provisions of this Agreement are not performed by such Party in accordance with their specific terms or are otherwise breached and that any non-performance or breach of this Agreement by such Party could not be adequately compensated by monetary damages alone and that the other Party would not have any adequate remedy at Law. Accordingly, in addition to any other right or remedy to which the Sellers or Purchaser may be entitled, at Law or in equity (including monetary damages), the Sellers and Purchaser shall be entitled to 70 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 74Page 74 of 261
enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement without posting any bond or other undertaking. The Sellers and Purchaser agree that they will not contest the appropriateness of specific performance as a remedy. Section 10.3 No Third-Party Beneficiaries. Except as provided in Section 5.17(a), this Agreement is for the sole benefit of the Parties and their 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 under or by reason of this Agreement. Section 10.4 Consent to Amendments; Waivers. No Party shall be deemed to have waived any provision of this Agreement or any of the other Transaction Documents unless such waiver is in writing, and then such waiver shall be limited to the circumstances set forth in such written waiver. This Agreement and the other Transaction Documents shall not be amended, altered or qualified except by an instrument in writing signed by all the parties hereto or thereto, as the case may be. Section 10.5 Successors and Assigns. This Agreement and the agreements set forth in the other Transaction Documents in connection with the transactions contemplated hereby, will be binding upon and inure to the benefit of such Parties and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any Party without the prior written consent of the other Party, which consent may be withheld in such Party's sole discretion, except for (a) assignment to an Affiliate of a Party (provided, that such Party remains liable jointly and severally with its assignee Affiliate for the assigned obligations to the other Party) and (b) assignment by the Sellers to a succeeding entity following the Sellers' emergence from the Chapter 11 Cases. Notwithstanding the foregoing, no failure or delay by any party hereto 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 or under any Transaction Document. The failure of any party hereto or thereto to assert any of its rights hereunder or thereunder shall not constitute a waiver of any of such rights. Section 10.6 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. (a) Any questions, claims, disputes, remedies or Actions arising from or related to this Agreement, and any relief or remedies sought by any Parties, shall be governed exclusively by the Laws of the State of New York without regard to the rules of conflict of laws applied therein or any other jurisdiction. (b) To the fullest extent permitted by applicable Law, each Party (i) agrees that any claim or Action by such Party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the Bankruptcy Court, if brought prior to the entry of a final decree closing the Chapter 11 Cases or in the federal courts in the Southern District of New York (collectively, the "Courts"), if brought after entry of such final decree closing the Chapter 11 Cases, mutatis mutandis, and shall not be brought in any other U.S. court or any court 71 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 75Page 75 of 261
in any other country, (ii) agrees to submit to the exclusive jurisdiction of the Courts, as applicable pursuant to the preceding clause (i), for purposes of all legal proceedings arising out of, or in connection with, this Agreement or the transactions contemplated hereby, (iii) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such Action brought in such a court or any claim that any such Action brought in such a court has been brought in an inconvenient forum, (iv) agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 10.7 or any other manner as may be permitted by Law shall be valid and sufficient service thereof, and (v) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law. (c) EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.6. Section 10.7 Notices. All demands, notices, communications and reports provided for in this Agreement shall be in writing and shall be either sent by facsimile transmission with confirmation to the number specified below or personally delivered or sent by reputable overnight courier service (delivery charges prepaid) to any Party at the address specified below, or at such address, to the attention of such other Person, and with such other copy, as the recipient Party has specified by prior written notice to the sending Party pursuant to the provisions of this Section 10.7. If to the Purchaser to: CSHM LLC c/o Garrison Investment Group 9th Floor 1350 Avenue of Americas New York, New York 10019 Attention: Terence Moore/ Susan George Facsimile: (212) 372-9525 With copies (that shall not constitute notice) to: 72 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 76Page 76 of 261
Gibson, Dunn & Crutcher LLP 200 Park Ave. New York, NY 10166 Attention: David Feldman/J. Eric Wise Facsimile: (212) 351-6366/6220 and Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 Attention: Steven Sherman Robert Britton Facsimile: (646) 848-7786 If to the Sellers to: Church Street Health Management, LLC 628 Church Street, Suite 520 Nashville, TN 37219 Attn: Sheila Sawyer, General Counsel Facsimile: (615) 986-1706 With copies (that shall not constitute notice) to: Waller Lansden Dortch & Davis, LLP 511 Union Street, Suite 2700 Nashville, TN 37219 Attn: John Tishler Donald Moody Katie Stenberg Facsimile: (615) 244-6804 Any such demand, notice, communication or report shall be deemed to have been given pursuant to this Agreement when delivered personally, when confirmed if by facsimile transmission, or on the calendar day after deposit with a reputable overnight courier service, as applicable. Section 10.8 Exhibits; Sellers Disclosure Letter. (a) The Sellers Disclosure Letter and the Exhibits attached hereto constitute a part of this Agreement and are incorporated into this Agreement for all purposes as if fully set forth herein. (b) For purposes of the representations and warranties of the Sellers contained in this Agreement, disclosure in any section of the Sellers Disclosure Letter of any facts 73 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 77Page 77 of 261
or circumstances shall be deemed to be adequate response and disclosure of such facts or circumstances with respect to all representations or warranties by the Sellers calling for disclosure of such information, whether or not such disclosure is specifically associated with or purports to respond to one or more of such representations or warranties, only if it is reasonably apparent from the Sellers Disclosure Letter that such disclosure is applicable. The inclusion of any information in any section of the Sellers Disclosure Letter or other document delivered by the Sellers pursuant to this Agreement shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever. No disclosure in the Sellers Disclosure Letter relating to any possible breach or violation of any Contract or Law shall be construed as an admission or indication that any such breach or violation exists or has actually occurred, and nothing in the Sellers Disclosure Letter shall constitute an admission of any Liability of any Seller to any Third Party or shall confer or give to any Third Party any remedy, claim, liability, reimbursement, cause of action or other right. Section 10.9 Counterparts. The Parties may execute this Agreement in two or more counterparts (no one of which need contain the signatures of all Parties), each of which will be an original and all of which together will constitute one and the same instrument. Section 10.10 No Presumption. The Parties agree that this Agreement was negotiated fairly between them at arm's length and that the final terms of this Agreement are the product of the Parties' negotiations. Each Party represents and warrants that it has sought and received experienced legal counsel of its own choosing with regard to the contents of this Agreement and the rights and obligations affected hereby. The Parties agree that this Agreement shall be deemed to have been jointly and equally drafted by them, and that the provisions of this Agreement therefore should not be construed against a Party on the grounds that such Party drafted or was more responsible for drafting the provisions. Section 10.11 Severability. If any provision, clause, or part of this Agreement, or the application thereof under certain circumstances, is held invalid, illegal or incapable of being enforced in any jurisdiction, (a) as to such jurisdiction, the remainder of this Agreement or the application of such provision, clause or part under other circumstances, and (b) as for any other jurisdiction, any provision of this Agreement, shall not be affected and shall remain in full force and effect, unless, in each case, such invalidity, illegality or unenforceability in such jurisdiction materially impairs the ability of the Parties to consummate the transactions contemplated by this Agreement. Upon such determination that any clause or other provision is invalid, illegal or incapable of being enforced in such jurisdiction, 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 contemplated hereby be consummated as originally contemplated to the greatest extent possible even in such jurisdiction. Section 10.12 Entire Agreement. This Agreement (including the Sellers Disclosure Letter and the Exhibits hereto) and the other Transaction Documents set forth the entire understanding of the Parties relating to the subject matter hereof and thereof, and all prior or contemporaneous understandings, agreements, representations and warranties, whether written or oral, are superseded by this Agreement and the other Transaction Documents, and all such prior 74 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 78Page 78 of 261
or contemporaneous understandings, agreements, representations and warranties are hereby terminated. In the event of any irreconcilable conflict between this Agreement and any of the other Transaction Documents, the provisions of this Agreement shall prevail, regardless of the fact that certain other Transaction Documents may be subject to different governing Laws (unless the other Transaction Documents expressly provide otherwise). Section 10.13 Damages. Under no circumstances shall any Party be liable for punitive damages arising out of or in connection with this Agreement or the transactions contemplated hereby or any breach or alleged breach of any of the terms hereof (unless payable to a Third Party). Section 10.14 Bulk Sales Laws. Each Party waives compliance by the other Party with any applicable bulk sales Law. Section 10.15 Risk of Loss. Until the Closing, any loss of or damage to the assets of the Assets from fire, casualty or any other occurrence shall be the sole responsibility of the Sellers; provided, that if the Closing occurs following any such loss or damage and such loss or damage has not been remedied by the Sellers, the Sellers shall remit, or cause to be remitted, to the Purchaser any insurance proceeds related to such loss or damage that are received by any Seller (or its estate). *****
Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page of 261 Exhibit F - Asset Sale Agreement 80Page 80 of 261
Exhibit A List of Purchaser's Persons with Knowledge Susan George Terence Moore
8565755.15
Exhibit B Sellers Disclosure Letter Attached.
8565755.15
EXHIBIT B SELLERS DISCLOSURE LETTER TO ASSET SALE AGREEMENT BY AND AMONG CHURCH STREET HEALTH MANAGEMENT, LLC, THE OTHER ENTITIES IDENTIFIED HEREIN AS SELLERS AND CSHM LLC DATED AS OF MARCH 2, 2012
This Sellers Disclosure Letter is delivered by the Sellers to the Purchaser in connection with the Asset Sale Agreement (the Agreement), dated as of March 2, 2012, by and among Church Street Health Management LLC, a Delaware limited liability company, Small Smiles Holding Company, LLC, a Delaware limited liability company, FORBA NY, LLC, a New York limited liability company, FORBA Services, Inc., a Delaware corporation, EEHC, Inc., a Delaware Corporation, and CSHM LLC, a Delaware limited liability company. Capitalized terms not expressly defined in this Sellers Disclosure Letter have the meanings given to them in the Agreement. The headings contained in this Sellers Disclosure Letter are for convenience of reference only and shall not be deemed to modify or influence the interpretation of the Agreement or the information contained in this Sellers Disclosure Letter. Unless otherwise indicated herein, all section references are to sections of the Agreement. Disclosure in any section of this Sellers Disclosure Letter of any facts or circumstances shall be deemed to be adequate response and disclosure of such facts or circumstances with respect to all representations or warranties by the Sellers calling for disclosure of such information, whether or not such disclosure is specifically associated with or purports to respond to one or more of such representations or warranties, only if it is reasonably apparent from this Sellers Disclosure Letter that such disclosure is applicable. The inclusion of any information in any section of this Sellers Disclosure Letter shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever. No disclosure in this Sellers Disclosure Letter relating to any possible breach or violation of any Contract or Law shall be construed as an admission or indication that any such breach or violation exists or has actually occurred, and nothing in this Sellers Disclosure Letter shall constitute an admission of any Liability of any Seller to any Third Party or shall confer or give to any Third Party any remedy, claim, liability, reimbursement, cause of action or other right. The information contained in this Sellers Disclosure Letter is qualified in its entirety by reference to the Agreement, and is not intended to constitute, and shall not be construed as constituting, representations or warranties of any Seller or the Business except as and to the extent provided in the Agreement.
8568727.13
Section 1.1(a) Designated Seller Contracts Management Services Agreements Practice Name Small Smiles of Akron, LLC - Jodi Kuhn, DDS and Olivia Croom, DDS Albany Access Dentistry, PLLC [To be rejected] Small Smiles Dentistry for Children, Albuquerque, PC Small Smiles of Atlanta, P.C. Small Smiles of Augusta, P.C. 6th Street of Denver Dental Clinic, PC Texas Smiles Dental Center of Austin, PLLC Small Smiles Dental Center of North Austin, PLLC Small Smiles of Baltimore, P.C. Small Smiles Dental Center of Central Baltimore, PC Gillian RobinsonWarner, DDS Texas Smiles Dental Center of Beaumont, PLLC Small Smiles Dental Clinic of Boise, PLLC Small Smiles Dental Center of Brockton, LLC Childrens Dental Clinic of Charleston, LLC Small Smiles of Cincinnati, LLC - Jodi Kuhn, DDS and Olivia Croom, DDS Small Smiles Dentistry for Children, PC Small Smiles Dental Centers of Columbia, LLC Small Smiles of Columbus, LLC - Jodi Kuhn, DDS and Olivia Croom, DDS Small Smiles Dental Center of West Columbus, LLC Kenneth E. Knott, DDS and Robert F. Andrus, DDS Small Smiles of Dayton, LLC - Jodi Kuhn, DDS and Olivia Croom, DDS Smile High Dentistry for Children, PC Small Smiles of Dothan, P.C. Small Smiles of East Albuquerque, PC Childrens Dental Clinic of Florence, LLC Small Smiles of Fort Wayne, LLC Childrens Dental Clinic of Gary, LLC Small Smiles of Greeley, P.C. Effective Date 02/22/07 06/27/08 09/26/06 09/26/06 09/26/06 09/26/06 06/14/07 09/11/07 09/26/06 Practice Number 054 029 003 016 021 005 065 N/A 047 Akron Albany Albuquerque Atlanta Augusta Aurora Austin Austin Baltimore City Ohio New York New Mexico Georgia Georgia Colorado Texas Texas Maryland State
01/12/11 04/16/07 09/26/06 07/10/07 09/26/06 09/26/06 09/26/06 09/26/06 09/26/06
075 059 028 063 013 036 001 011 027
Baltimore Beaumont Boise Brockton Charleston Cincinnati Colorado Springs Columbia Columbus
Maryland Texas Idaho Massachusetts South Carolina Ohio Colorado South Carolina Ohio
07/25/07 09/26/06 09/26/06 02/02/07 09/26/06 09/26/06 09/26/06 09/26/06 10/18/06
N/A 033 002 056 038 017 039 008 051
Columbus Dayton Denver Dothan Albuquerque Florence Fort Wayne Gary Greeley
Ohio Ohio Colorado Alabama New Mexico South Carolina Indiana Indiana Colorado
8568727.13
Section 1.1(a) 1
Practice Name Small Smiles Dental Centers of Greenville, LLC Small Smiles Dental Center of Hartford, PC Small Smiles of Hartford West, PC Small Smiles Dental Center of Holyoke, LLC Wild Smiles Dental Center of Houston, PLLC The Childrens Dental Clinic of Indianapolis, LLC Dental Clinic of Indianapolis at Eagledale Plaza, LLC The Indian Springs Dental Clinic, LLC Small Smiles of Langley Park, PC [To be rejected] Small Smiles of Lawrence, LLC Small Smiles Dental Center of Lexington, P.S.C. Small Smiles of Louisville, P.S.C. Small Smiles of Lynn, LLC Small Smiles of Macon, P.C. Small Smiles of Manassas, LLC Small Smiles Dental Center of Manchester, PLLC Small Smiles of Mattapan, LLC Small Smiles of Montgomery, P.C. Small Smiles of Myrtle Beach, LLC Small Smiles Dentistry of Newburgh, LLC [To be rejected] Small Smiles of North Baltimore, P.C. Small Smiles Dental Center of Odessa, PLLC Childrens Dental Clinic of Oklahoma City, PLLC [To be rejected] Small Smiles of Oxon Hill, PC Childrens Medicaid Dental Clinic, PC [To be rejected] Small Smiles Dental Center of East Liberty, LLC Small Smiles Dental Center of Pueblo, P.C. Small Smiles of Reno, LLC Small Smiles of Richmond, LLC Small Smiles of Roanoke, LLC Straight Smiles of Roanoke, PLLC Small Smiles Dentistry of Rochester, LLC Small Smiles of Roselawn, LLC - Jodi Kuhn, DDS and Olivia Croom, DDS
Effective Date 09/26/06 08/15/07 08/12/08 07/10/07 07/19/07 09/26/06 09/26/06 09/09/03 03/29/07 09/26/06 09/13/07 07/01/07 09/26/06 09/26/06 02/23/07 07/30/07 09/26/06 12/06/06 09/26/06 07/17/07 07/02/07 08/22/07
Practice Number 010 067 074 066 069 007 014 015 N/A 030 N/A 058 035 019 055 064 034 050 043 N/A 053 N/A
City Greenville Hartford Hartford Holyoke Houston Indianapolis Indianapolis Kansas City Langley Park Lawrence Lexington Louisville Lynn Macon Manassas Manchester Mattapan Montgomery Myrtle Beach Newburgh Baltimore Odessa
State South Carolina Connecticut Connecticut Massachusetts Texas Indiana Indiana Kansas Maryland Massachusetts Kentucky Kentucky Massachusetts Georgia Virginia New Hampshire Massachusetts Alabama South Carolina New York Maryland Texas
09/26/06 08/10/07 09/26/06 07/19/07 09/26/06 02/10/09 09/26/06 09/26/06 09/15/10 09/26/06 09/26/06
024 060 006 068 000 037 041 045 901 025 032
Oklahoma City Oxon Hill Phoenix Pittsburgh Pueblo Reno Richmond Roanoke Roanoke Rochester Roselawn
Oklahoma Maryland Arizona Pennsylvania Colorado Nevada Virginia Virginia Virginia New York Ohio
8568727.13
Section 1.1(a) 2
Practice Name Small Smiles Dental Center of San Antonio, PLLC Small Smiles Dentistry for Children, Santa Fe, PC Small Smiles of Savannah, P.C. Small Smiles of South Bend, LLC Small Smiles of Spartanburg, LLC Small Smiles of Springfield, LLC Small Smiles Dentistry of Syracuse, LLC Childrens Dental Clinic of Thornton, PC Small Smiles of Toledo, LLC - Jodi Kuhn, DDS and Olivia Croom, DDS [To be rejected] Topeka Dental Clinic, LLC Childrens Dental Clinic of Tucson, LLC [To be rejected] Childrens Dental Clinic of Tulsa, PLLC Texas Smiles Dental Center of Waco, PLLC Small Smiles of South Washington, D.C., PC Small Smiles of Washington D.C., PC Small Smiles of Wichita, LLC Straight Smiles of Worcester, LLC Small Smiles of Worcester, LLC Small Smiles of Youngstown, LLC Michael Crites, DDS
Effective Date 08/14/07 09/26/06 09/26/06 05/02/07 09/26/06 09/26/06 09/26/06 09/26/06
Practice Number 070 004 023 061 040 026 022 009
City San Antonio Santa Fe Savannah South Bend Spartanburg Springfield Syracuse Thornton Texas
State
New Mexico Georgia Indiana South Carolina Massachusetts New York Colorado
09/26/06 03/01/06 09/26/06 09/26/06 01/02/08 05/27/10 09/26/06 06/01/06 01/01/11 09/26/06 10/01/10
042 044 012 020 N/A 071 049 018 031 057
Toledo Topeka Tucson Tulsa Waco Washington Washington Wichita Worcester Worcester Youngstown
Ohio Kansas Arizona Oklahoma Texas District of Columbia District of Columbia Kansas Massachusetts Massachusetts Ohio
Corporate Integrity Agreements, Settlement Agreements and Waivers Agreement Government Entity Corporate Integrity Agreement Office of the Inspector General Amended Corporate Integrity Agreement New York Office of Medicaid Inspector General Civil Settlement Agreement U.S. Department of Justice Waiver of Payment Acceleration Rights U.S. Department of Justice Agreement between Church Street Health New York State Office of Management, LLC, New York State Office Medicaid Inspector General and of Medicaid Inspector General and the New the New York State Office of the York State Office of the Attorney General Attorney General State Settlement Agreement State of Alabama Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights
Date January 15, 2010 January 15, 2010 January 15, 2010 January 30, 2012 February 15, 2012
January 14, 2010 February 16, 2012 January 16, 2010 February 16, 2012 January 14, 2010 February 16, 2012
State of Arizona
State of Colorado
8568727.13
Section 1.1(a) 3
Agreement State Settlement Agreement State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights by Deputy Attorney General for Law Enforcement State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights
Government Entity State of Connecticut District of Columbia
Date January 28, 2010 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 6, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 20, 2010 February 15, 2012
State of Georgia
State of Idaho
State of Indiana
State of Kansas
Commonwealth of Kentucky
State of Maryland
Commonwealth of Massachusetts
State of Nebraska
State of Nevada
State of New Hampshire
State of New Mexico
State of New York
State of Ohio
January 14, 2010 February 16, 2012 February 16, 2012
State of Oklahoma
January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012
Commonwealth of Pennsylvania
8568727.13
Section 1.1(a) 4
Agreement State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Waiver of Payment Acceleration Rights State Settlement Agreement Prepetition Facilities Facility Amended and Restated Registered Lease and License Financing and Purchase Option Agreement Amended and Restated Senior Murabaha Facility Agreement Amended and Restated Subordinated Murabaha Facility Agreement
Government Entity State of South Carolina
Date January 14, 2010 February 16, 2012 January 14, 2010 February 16, 2012 January 14, 2010
State of Texas
Commonwealth of Virginia
Civil Settlement Agreement
Lenders Lenders from time to time party thereto, and CIT Healthcare LLC, as collateral agent and administrative agent CIT Healthcare LLC, Arcapita Investment Funding Limited and AIA Limited American Capital, Ltd., Carlyle Mezzanine Partners, L.P., Arcapita Investment Funding Limited and AIA Limited U.S. Department of Justice
Borrowing Parties SSO Funding Corp., Church Street Health Management, LLC (formerly FORBA Holdings, LLC) SSO Funding Corp., Church Street Health Management, LLC (formerly FORBA Holdings, LLC) SSH Funding Corp., Church Street Health Management, LLC (formerly FORBA Holdings, LLC)
Date February 1, 2010
February 1, 2010
February 1, 2010
FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC)
January 15, 2010
Monitor Agreements 1. Corporate Integrity Agreement Monitoring Agreement, dated as of March 15, 2010, by and between FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) and StrategicHealth Solutions, LLC. 2. Letter Agreement, dated as of February 12, 2010, by and between FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) and FTI Consulting Inc.
Employment Agreements 1. Employment Agreement, dated as of June 1, 2009, by and between EEHC, Inc. and Steven M. Adair, DDS, as amended as of February 3, 2011. 2. Amended and Restated Employment Agreement, dated as of September 1, 2010, by and among Small Smiles Holding Company, LLC, FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC), EEHC, Inc. and Rodney Cawood. Employment Agreement, dated as of December 7, 2011, by and between EEHC, Inc. and Olivia Croom, DDS. Severance Agreement, dated as of January 4, 2012, by and between EEHC, Inc. and Tracye Mayolo. Employment Agreement, dated as of January 12, 2012, by and between EEHC, Inc. and Ghassan Souri, DDS. Employment Agreement, dated as of April 8, 2011, by and between EEHC, Inc. and Lorri Steiner.
3.
4. 5.
6.
8568727.13
Section 1.1(a) 5
7.
Employment Agreement, dated as of September 16, 2011, by and between EEHC, Inc. and Sheila Sawyer. Employment Agreement, dated on or about June 15, 2011, by and between EEHC, Inc. and Brad Gardner. Employment Agreement, dated as of February 7, 2011, by and between EEHC, Inc. and Marlene Navedo, DDS.
8.
9.
10. Employment Agreement, dated as of September 10, 2007, by and between EEHC, Inc. and Kevin M. Reilly, DDS, as amended as of April 8, 2008 and February 3, 2011. 11. New York State Dental Director Agreement, dated as of September 1, 2011, by and between Church Street Health Management, LLC and Joseph Bernat. 12. Amended and Restated Employment Agreement, dated as of September 1, 2010, by and among Small Smiles Holding Company, LLC, FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC), EEHC, Inc. and Michael G. Lindley. [To be rejected] 13. Amended and Restated Employment Agreement, dated as of September 1, 2010, by and among Small Smiles Holding Company, LLC, FORBA Holdings, LLC, EEHC, Inc. and Al J. Smith. 14. Employment Agreement, dates as of October 31, 2008, between FORBA Services, Inc. and Jason P. Owen, as amended by that certain First Amendment to Employment Agreement dated February 3, 2011, as modified by that certain Transition, Separation, Confidential Severance and General Release Agreement effective December 9, 2011. KEIP Agreements Key Employee Incentive Plans between Church Street and certain employees dated December 19, 2011. Severance Agreements Various Severance Agreements by and among Small Smiles Holding Company, LLC, FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC), EEHC, Inc. and/or FORBA Services, Inc., as applicable, and each of the following: 1. Brandon Dyson 2. Tom Hillebrand 3. Allison K. Luke 4. Alana Denney 5. Jason Owen Separation Agreements Various Separation Agreements by and between FORBA Services, Inc. or EEHC, Inc., as applicable, and each of the following: 1. Robert F. Andrus 2. Kenneth Knott 3. Amber Behles 4. Janice Lewis 5. Laurie Knight 6. Kallene West 7. Elizabeth P. Tran 8. Jerry Crenshaw
8568727.13
Section 1.1(a) 6
Non-Compete Agreements Various Non-Compete Agreements, dated as of September 26, 2006, by and between Sanus Holdings, LLC (n/k/a Church Street Health Management, LLC), and each of the following: 1. FORBA, LLC 2. DD Marketing, Inc. 3. DeRose Management, LLC 4. FORBA NY, LLC 5. Dan DeRose 6. Michael W. Roumph 7. Richard B. Lane 8. William A. Mueller 9. Adolph R. Padula 10. Michael A. DeRose 11. Elsa McTavish 12. Jack McTavish 13. John Parrish 14. Lisa DeRose 15. Mark DeRose 16. Paula Kochenberger Indemnification Agreements Various Indemnification Agreements by and among Sanus Holdings, LLC (n/k/a Church Street Health Management, LLC) and/or FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC), as applicable, and each of the following: 1. Mareen George, DMD 2. Yogita Kanorwalla, DMD 3. Karen Chu-Gongora, DMD 4. Monica Switzer, DDS 5. Gillian Robinson-Warner, DDS 6. Toni Adderley, DDS 7. Maziar Izadi, DDS 8. Mike Lindley 9. Al Smith 10. Rodney Cawood 11. Adolph Padula Employee Special Percentage Interests Agreements Various Employee Special Percentage Interests Agreements by and between Small Smiles Holding Company, LLC and each of the following: 1. Steven M. Adair 2. Robert F. Andrus 3. Michelle M. Campbell 4. Patsy Cresswell 5. Todd R. Cruse 6. Daniel E. Dunn 7. Brandon F. Dyson 8. Bradford N. Gardner 9. Tammy Green 10. Kenneth Knott 11. Jacob Kochenberger 12. Jenna L. Kochenberger 13. Lara L. Lott 14. Allison Luke 15. Michael Francis McCulla 16. Lisa Mullinix 17. Steven W. Nitchen
8568727.13
Section 1.1(a) 7
18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29.
Jason P. Owen Kevin G. Reilly Kevin M. Reilly Timothy Richter Gary Sisco Amanda L. Skelley Lorri L. Steiner Chase W. Trivett Jacob C. West Kallene M. West Bradley B. Williams Linda Zoeller
Employee Membership Interests Subscription Agreements Various Employee Membership Interest Subscription Agreements by and between Small Smiles Holding Company, LLC and each of the following: 1. Vincent J. Benfatti 2. Trevor M. Blazer 3. Phyllis B. Brown 4. Joseph D. Bower 5. Michelle M. Campbell 6. Anna M. Casarez 7. Todd R. Cruse 8. Daniel E. Dunn 9. Brandon F. Dyson 10. Bradford N. Gardner 11. Christopher Hatch 12. Jacob Kochenberger 13. Elizabeth A. Lown 14. Michael Francis McCulla 15. Timothy G. Richter 16. Suzanne Seigenthaler 17. Amanda L. Skelley 18. Lorri L. Steiner 19. Chase W. Trivett 20. Bradley B. Williams IP Agreements Those certain Domain Names and Trademarks, Unregistered Trademarks/Service Marks, Registered Copyrights, Software and Material IP Agreements set forth in Section 1.1(d) of this Sellers Disclosure Letter. Lease Agreements Those certain Lease Agreements set forth in Section 4.10(b) of this Sellers Disclosure Letter. Lease Guarantees Practice Name Small Smiles Dentistry for Children, Albuquerque, PC Small Smiles of Baltimore, P.C. Small Smiles Dental of Central Baltimore, P.C. Gillian RobinsonWarner, DDS Texas Smiles Dental Center of Beaumont, PLLC Date 11/24/09 03/31/06 Practice Number 003 047 City Albuquerque Baltimore State New Mexico Maryland
02/03/11 03/30/07 059
Baltimore Beaumont
Maryland Texas
8568727.13
Section 1.1(a) 8
Practice Name Small Smiles Dentistry for Children, P.C. Small Smiles Dental Centers of Columbia, LLC Small Smiles of Dothan, P.C. Childrens Dental Clinic of Gary, LLC Small Smiles of Hartford West, P.C. Small Smiles Dental Center of Holyoke, LLC Dental Clinic of Indianapolis at Eagledale Plaza, LLC The Childrens Dental Clinic of Indianapolis, LLC Small Smiles Dental Center of Manchester, PLLC Small Smiles of Oxon Hill, PC Small Smiles Dental Center of San Antonio, PLLC Small Smiles Dentistry for Children, Santa Fe, PC Small Smiles of South Bend, LLC Small Smiles of Springfield, LLC Childrens Dental Clinic of Thornton, PC Topeka Dental Clinic, LLC Childrens Dental Clinic of Tucson, LLC Small Smiles of South Washington, D.C., PC Texas Smiles Dental Center of Mission, PLLC Small Smiles Dental Center of Muncie, LLC Small Smiles of Toledo, Inc. Jodi Kuhn, DDS and Olivia Croom, DDS Small Smiles of Manassas, LLC
Date 08/01/95 10/03/02 02/26/07 08/31/07 12/07/10 08/01/07 04/18/03 12/21/01 05/30/07 08/10/07 08/22/07 02/04/00 4/24/07 12/14/04 7/22/02 02/17/06 09/18/02 6/28/10 07/27/10 10/08/10 2/16/10 06/06/11
Practice Number 001 011 056 008 074 066 014 007 064 060 070 004 061 026 009 044 012 071 073 072 042 055
City Colorado Springs Columbia Dothan Gary Hartford Holyoke Indianapolis Indianapolis Manchester Oxon Hill San Antonio Santa Fe South Bend Springfield Thornton Topeka Tucson Washington Mission Muncie Toledo Manassas
State Colorado South Carolina Alabama Indiana Connecticut Massachusetts Indiana Indiana New Hampshire Maryland Texas New Mexico Indiana Massachusetts Colorado Kansas Arizona District of Columbia Texas Indiana Ohio Virginia
Miscellaneous Agreements 1. Asset Purchase Agreement, dated as of June 14, 2006 and amended as of July 28, 2006, by and among Sanus Holdings, LLC (n/k/a Church Street Health Management, LLC), FORBA, LLC, DD Marketing, Inc., DeRose Management, LLC and FORBA NY, LLC. 2. Employee Services Agreement, dated as of September 26, 2006, by and between Sanus Services, Inc. (n/k/a FORBA Services, Inc.) and Sanus Holdings, LLC (n/k/a Church Street Health Management, LLC). 3. Amended and Restated Investors Rights Agreement, dated as of February 1, 2010, by and among Small Smiles Holding Company, LLC, SS Holding Company, Inc., Oak Hill EP, Inc., Al Smith, Rodney Cawood, SSH Member, LLC, MezzF LLC, ACAS Equity Holdings Corp. and certain individual signatories thereto. 4. Confidential Settlement Agreement, General Release, and Covenant Not to Sue, dated as of February 28, 2010, between Licsac LLC (f/k/a/ FORBA LLC), DD Marketing, Inc., Derose Management, LLC, Licsac NY, LLC (f/k/a FORBA NY, LLC), Danny E. Derose, Edward J. Derose, Michael A. Derose, Michael W. Roumph, Richard B. Lane, William A. Mueller, Adolph R. Padula, and Padula Family
8568727.13
Section 1.1(a) 9
5. 6.
7. 8.
Partnership, LLP on the one hand and Sanus Holdings, LLC (n/k/a Church Street Health Management, LLC) on the other hand. Agreement, dated as of May 13, 2011, by and between National Union Fire Insurance Company of Pittsburgh, PA and Small Smiles Holding Company, LLC. Indemnification and Limitation of Liability Agreement, dated as of September 1, 2011, by and among Alvarez & Marsal Healthcare Industry Group, LLC, Church Street Health Management, LLC and Waller Lansden Dortch and Davis LLP. Confidentiality Agreement, dated as of December 16, 2011, by and between Jason Owen and Church Street Health Management, LLC. [To be rejected] Omnibus Waiver, dated as of February 20, 2012, by Small Smiles Holding Company, LLC and each of the individuals listed above under Employee Membership Interests Subscription Agreements and Employee Special Percentage Interests Agreements.
Insurance Policies Various insurances policies issued to FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC), Small Smiles Holding Company, LLC, and/or EEHC, Inc., as applicable, by each of the following: 1. Affinity Insurance Services, Inc. 2. Westchester Fire Insurance Company 3. Travelers Casualty and Surety Company of America 4. Hartford Casualty Insurance Company 5. Columbia Casualty Company 6. Accountants Professional Liability 7. The American Insurance Company Deposit Account Control Agreements 1. Deposit Account Control Agreement, dated as of February 1, 2010, by and among FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC), Small Smiles Holding Company, LLC, FORBA NY, LLC, FORBA Services, Inc., EEHC, Inc., SSO Funding Corp., Associated Bank, National Association and CIT Healthcare, LLC. 2. Deposit Account Control Agreement, dated as of May 10, 2011, by and among Church Street Health Management, LLC, Small Smiles Holding Company, LLC, FORBA NY, LLC, FORBA Services, Inc., EEHC, Inc., SSO Funding Corp., Pinnacle National Bank, National Association and CIT Healthcare, LLC. Business Associate Agreements Certain business associate agreements with the following parties: 1. Ameriforce Management Services 2. Perkins Coie LLP 3. Berkley Research Group, LLC 4. Bernard Hodes Group, Inc. 5. Dr. Joseph Bernat 6. Balch & Bingham LLP 7. ProviderTrust, L.L.C. 8. Randstad US 9. Linda M. McKinney 10. Indian Springs Dental Clinic, LLC 11. Intalytics 12. Kendrick Financial Services, LLC 13. Kevin Kuehn 14. Medusind Solutions, Inc. 15. Mobile Record Shredders 16. Robert Half Management Resources Salaried Professional Service 17. Brad Smoot 18. TCN Consulting, LLC/Tore Nelson 19. Small Smiles of Wichita, LLC 20. The Indian Springs Dental Clinic, LLC
8568727.13
Section 1.1(a) 10
21. Topeka Dental Clinic, LLC Vendor Contracts Name of Third Party A.J. Riggins Health Search LLC Aaron & Sanders, PLLC Altair Data Resources, Inc. Alvarez & Marsal Healthcare Industry Group, LLC Ambulatory Surgery Center Consultants, LLC Ameri-Force Management Services Arcapita Inc. Arcapita Inc. and AT&T Service Agreement AT&T Corp Autonomy Baker, Donelson, Bearman, Caldwell, & Berkowitz PC Balch & Bingham LLP Barnes & Thornburg LLP Bender, Robert R. Berkley Research Group Bernard Hodes Group, Inc. Bernard Hodes Group, Inc. Bernat, Joseph DDS Better Business Solutions Co., Inc. (DeLage Landen Financial Services) Bradley Arant Boult Cummings Brasfield & Gorrie, LLC Brentwood Communications, Inc. BullsEye Telecom, Inc. Capitol Advocates Centier Bank Cincinnati Bell Any Distance, Inc. Citrix Online, LLC Comcast Cornerstone Healthcare Services, Inc. EPSSonline Coverall North America, Inc. CT Corporation DeLage Landen Financial Services Dental Power International, Inc. Earthlink FIOS, Inc.
Services or Scope of Contract Patent, trademark, etc. services Customer Intelligence Services Consulting services regarding reorganization efforts AAAHC accreditation standards guidance Call handling services for advertising purposes Management services agreement Agreement to purchase and use services under Arcapita AT&T Service Agreement Internet Service Autonomy vault service; connected backup service Tennessee Government consulting and lobbying services Consulting Engagement letter re: Macri Matter Lead Dentist Candidate Assessment Services Expert Consulting and Support Services assisting with Craft spreadsheet Internet-based recruiting management solutions Recruiting job posting and advertising NY dental director Equipment Leases 2 copiers
Date 11/18/11 5/12/10 9/1/11 11/19/11 7/17/07 9/26/06 9/26/08 10/27/08 11/11/11 9/1/11 4/6/11 8/26/2011 5/16/11 5/3/11 1/7/11 8/1/11 9/1/11 7/11/11
Construction Marketing and Management Services Telecommunications Ohio development and legislative consulting Auto Rollover Services Fiduciary/Agency Agreement Conferencing Online Meetings EPLS Online Subscription Services Global Janitorial Cleaning Services State representation services Equipment Lease - copier Temporary to Hire and Direct Hire Placement Services Phone System IT processing of CSHM documents for K&S
2/17/10 10/1/08 10/28/08 1/1/11 3/29/06 2/2/09 8/30/07 2/18/10 10/28/09 8/31/07 3/31/10 3/7/11 6/14/11 4/19/11
8568727.13
Section 1.1(a) 11
Name of Third Party FocusOne Services, Inc. FoleyHoag FTI Healthcare FWLLI Gaffney, Bennett & Associates The Garden City Group, Inc. d/b/a GCG Global Compliance Services, Inc. Golden Dental Services, LLC Grubb & Ellis Company Helfrich, Loring R. Jr. Henry Schein, Inc. HILLCO Partners Homewood Suites Hilton Infosurv, Inc. Intalytics, Inc. Intero Office Solutions JLH Consulting and Public Affairs, LLC Johnson Haley, LP Johnson Johnson Crabtree Architects, P.C. Johnson Johnson Crabtree Architects, P.C. Kendrick Financial Services, LLC King & Spalding LBMC Technologies, LLC
Services or Scope of Contract Telephone service reviewer - contract negotiator Consulting Federal wage and labor law posters Connecticut Development and legislative consulting Bankruptcy administration services Corporate and Workplace Compliance Services Handpiece repair, maintenance, and replacements Lease restructuring Health and Wellness services Dental Supplies Consulting Secured special corporate rate for 2011 Data collection from telephone surveys Development of a Small Smiles Management System Primary janitorial/sanitation supply distributor Colorado Government consulting and lobbying services Massachusetts Government consulting and lobbying services Architectural Services Architectural Services for Worcester Consulting services re CIA Agreement and other tasks as assigned by Legal and HR Support, training and installation of accounting and network systems and custom development services Management Company Payroll Professional liability insurance broker / Health insurance TPA D&O Broker Environmental Graphic Design and Project Management Services Software Motion Picture License Registered agent for all entities New Mexico Government consulting and lobbying services Transcription of Marketing Materials Advertising Ads for Recruiting
Date 1/1/11
2/12/10 1/1/12 1/1/11 2/17/12 12/7/11 3/8/11 1/13/11 3/2/11 7/13/11 1/1/11 1/1/12 4/15/09 12/3/09 6/1/11 1/1/11 1/1/11 4/15/07 2/16/11 4/28/11
1/5/12
LBMC Technologies, LLC Lockton Marsh USA Inc. McCoy, Tolleson Microsoft Licensing GP Mobile Record Shredders Motion Picture Licensing Corporation National Register Agents, Inc. New Mexico Government Affairs Optimum Translations LLC Pacific and Southern Company Incorporated d/b/a Indystar.com (Career Builders) Patterson Dental Supply, Inc. Perkins Coie Brown & Bain, P.A.
5/1/11 2/24/11 3/17/09 1/1/12 9/26/06 1/1/11 7/7/11 7/14/11
Sundry merchandise - billing of Eaglesoft software Legal Services for Dr. Karen in Phoenix
5/1/03 7/1/11
8568727.13
Section 1.1(a) 12
Name of Third Party PivotHealth, LLC Pomeroy IT Solutions Sales Company, Inc. Prophix Software, Inc. Propio Language Services, LLC Provider Trust, LLC Pueblo Marriott Quest Diagnostics, Inc. Randstad US, L.P. RDH Temps, Inc. Richards & Richards Office Records Management , Inc. Robert Half Management Resources Salaried Professional Service Ross, Brittain & Schonberg Co., L.P.A Rubin Meyer Communications, LLC Skylight Financial Inc. Smoot, Brad Snagajob Staples Contract & Commercial, Inc. Stericycle, Inc. Strategic Health Solutions, LLC TCN Consulting, LLC The Hudson Group, LLC The Standard Thomas & Thorngren, Inc. TMG CO. LLC Tompkins & Kinard, LLC Transcontinental Direct U.S.A. Inc. d/b/a IWCO Direct Travelink Incorporated American Express Travel UMR Vaco, LLC d/b/a Financial Visual Data Software Corporation Walker Tipps Waller Lansden Dortch & Davis Warren, James M. Jr. Waste Management National Services, Inc. Young, Angel
Services or Scope of Contract Provider Satisfaction Survey Program Services IT solutions Consulting/training services consolidating budget figures Foreign language translation services Healthcare provider checks Lodging Substance Abuse Testing Permanent Placement Services Staffing Services Storage Staffing Services
Date 2/18/11 4/6/11 8/8/11
5/11/11 2/3/09 1/1/11 4/13/11 5/20/11 2/23/10 5/2/11
Crisis communications, public relations, online profile management, etc. Credit Card Services Kansas development and lobbying Consulting Assessments online hour job applications Supply services Waste Services Independent Quality of Care Monitoring Services - See also Retainer Agreement Interim CEO Georgia development and legislative consulting Exclusive Membership Unemployment review, experience rating, claims supervision and reporting functions Gas Supply Services South Carolina Government consulting and lobbying services Print and Direct Mail Production Services Travel Agent Health insurance claims and premiums Identify prospects for employment Interactiive Voice Response for advertising
1/1/11 7/27/07 1/1/11 9/30/11 12/12/11 4/1/11 1/15/10 11/14/11 1/1/10 12/16/10 6/5/07 3/30/10 1/11/11 11/1/2009 12/29/10 1/1/11 7/22/11 1/24/09
DRTV Direct Response Television Consulting Waste management services Consulting services
7/13/09 6/20/11 1/24/12
8568727.13
Section 1.1(a) 13
Section 1.1(b) Knowledge 1. Tore Nelson, Chief Executive Officer 2. Rodney Cawood, Executive Vice President and Chief Financial Officer 3. Sheila Sawyer, General Counsel, CAO and Secretary 4. Dr. Kevin Reilly, Executive Vice President (Dental Center Operations) 5. Brad Gardner, Senior Vice President and Controller 6. Lorri Steiner, Senior Vice President and Chief Compliance Officer 7. Brad Williams, Senior Vice President (Tax & Treasury)
8568727.13
Section 1.1(b) 1
Section 1.1(c) Regulatory Approvals Pursuant to the terms of that certain Settlement Agreement, dated as of January 15, 2010, by and among Church Street, the United States, acting through the U.S. Department of Justice and the OIG-HHS (the DOJ), and the relators party thereto, in the event of a Company Change of Control, all principal and interest remaining outstanding and unpaid pursuant to the Settlement Agreement shall accelerate and become immediately due and payable. Church Street has obtained a waiver of such payment acceleration right from the DOJ and certain states, as listed on Section 1.1(a) of this Sellers Disclosure Letter. As of the date hereof, the State of Virginia has not waived such rights.
8568727.13
Section 1.1(c) 1
Section 1.1(d) Transferred Intellectual Property Patents None
Domain Names and Trademarks 1. Federal Trademark/Service Mark Registrations Serial Number 77-295,516 Registration Number 3,538,249
Grantor FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a
Mark BETTER ACCESS FOR A BETTER AMERICA
Country United States
Filing Date 10/03/07
Issue Date 11/25/08
United States
85-214,341
Application Pending
1/10/11
Pending
FORBA
United States
77-156,357
3,339,163
04/13/07
11/20/07
GIVING AMERICAS KIDS THE SMILES THEY DESERVE
United States
77-402,245
3,613,514
02/21/08
04/28/09
United States
77-399,110
3,535,270
02/17/08
11/18/08
OKLAHOMA SMILES
United States
77-399,111
3,535,271
02/17/08
11/18/08
8568727.13
Section 1.1(d) 1
Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page 100 Exhibit F - Asset Sale Agreement 100 of 261 of 261
Grantor Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC)
Mark
Country
Serial Number
Registration Number
Filing Date
Issue Date
SMALL SMILES
United States
78-953,016
3,529,322
08/16/06
11/04/08
United States
77-295,476
3,440,297
10/03/07
06/03/08
SMALL SMILES
United States
77-295,429
3,440,292
10/03/07
06/03/08
SMALL SMILES, BIG DIFFERENCE
United States
77-380,387
3,584,346
01/25/08
03/03/09
STRAIGHT SMILES
United States
85-257,143
Application Pending
3/3/07
Pending
United States
77-295,422
3,538,248
10/03/07
11/25/08
8568727.13
Section 1.1(d) 2
Grantor FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC)
Mark
Serial Number 77-295,488
Registration Number 3,751,029
Filing Date 10/03/07
Issue Date 2/10/10
TEXAS SMILES
United States
77-295,503
3,710,878
10/03/07
11/17/09
United States
77-601,313
3,684,344
10/27/08
09/15/09
United States
77-601,305
3,684,343
10/27/08
09/15/09
United States
77-601,300
3,684,342
10/27/08
09/15/09
2.
State Trademark/Service Mark Registrations Registration Number 801027912 801027917
Mark WILD SMILES
State Texas Texas
Issue Date 09/10/08 09/29/08
8568727.13
Section 1.1(d) 3
3.
Unregistered Trademarks/Service Marks
Mark
Registration Number N/A (unregistered)
Date of First Use 6/13/1995
Products or Services Provision of business management and related technical services for dental office development and operations
4.
Trade Names Small Smiles Date of First Use 6/13/1995 Products or services: Provision of business management and related technical services for dental office development and operations Location of use: Every state in which there is a dental practice FORBA Date of First Use 6/13/1995 Products or services: Provision of business management and related technical services for dental office development and operations Location of use: Every state in which there is a dental practice
5.
Domain names x x x x x x x x x x x x x x x x x x x x x x x Forba.com Smallsmilesusa.com Texassmilesusa.com Oklahomasmilesusa.com Albanyaccessdentistry.com Wildsmilesdental.com Topekadentalclinic.com Smallsmiles.com Indianspringsdental.com Newdentaljob.com Dentalcontact.com Indianspringsdental.net Smallsmilescenter.com Smallsmilescenters.com Smallsmilesdentalcenter.com Smallsmilesdentalcenters.com Smallsmilesus.com Ssroanoke.com Ss-roanoke.com Texassmiles.us Smallsmiles.us Smallsmileswichita.com Topekadental.com
8568727.13
Section 1.1(d) 4
Registered Copyrights Copyright Claimant FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) Description of Work Registration Number VA 1-655-453
Author GSD&M Idea City, LLC
Title of Work FORBA Holly Hippo Headshot
Issue Date 12/31/08
Visual art FORBA Luis Leopard Headshot United States VA 1-655-450 12/31/08
GSD&M Idea City, LLC
Visual art FORBA DJ Z Zebra Headshot United States VA 1-655-451 12/31/08
GSD&M Idea City, LLC
Visual art Guide to Dental Health Screenings United States Text TXu 1-595-221 11/14/08
FORBA Holdings, LLC
FORBA Holdings, LLC
National Childrens Dental Health Month
United States
Text
TXu 1-595-222
11/14/08
FORBA Holdings, LLC
Preventive Resin Restorations
United States
Text
Txu 6-891-260
11/14/08
Software 1. Licensed Software x Microsoft Windows Professional (XP, 7)
8568727.13
Section 1.1(d) 5
x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 2.
Microsoft Windows Server (2003, 2008) Microsoft Hyper-V (Virtual server through Windows 2008 Enterprise) Microsoft Windows Terminal Server (2003, 2008) Microsoft Office Professional (2003, 2007, 2010) Microsoft Visio (2003, 2007) Microsoft Exchange Server (2003, 2010 - 95% of users have been migrated to new 2010 server) Microsoft SQL (2005, 2008) Microsoft SQL Report Manager (2008) Microsoft Visual Studio (2005, 2008) Microsoft SharePoint Services (2003 - Used for the Intranet and CE Tracking systems) McAfee Antivirus (Managed by Sonicwall Firewall Devices) Sonicwall Global VPN Client Sage MAS500 AP/GL System Sage ABRA HR/Payroll System Unitime Time & Attendance System (Ties into ABRA) FRx 6.7 Reporting Tool (Packaged with MAS500) Crystal Reports v.10 (Packaged with ABRA) Prophix Budgeting/Reporting System Prophix Enterprise System CS Thomson Fixed Assets CS CS Thomson File Cabinet CS Patterson Eaglesoft Dental Management Application Sharpdesk Scanning software (Utility used to scan from copier to desktop) FTP Utility (Utility used to scan from copier to desktop) Adobe Acrobat Reader (6.0, 8.0, 10.0) Adobe Acrobat Standard (8.0, 10.0) Adobe Acrobat Professional (10.0) Symantec Backup Exec 2010 (Used to backup Exchange server) LiveVault Connected software (Used to backup laptops offsite) LiveVault Software (Used to backup data offsite from servers in centers, Pueblo and Nashville)
Owned/Developed Software x Business Intelligence Data Warehouse System (Centralized database containing detailed data from Eaglesoft applications located in the centers) x Licensing & Credentialing System (Used to track licensing for our back office staff) x CE Tracking system (Used to track Continuing Education for staff)
Trade Secrets None
Material IP Agreements 1. Assignment of Copyright Agreement between GSD&M Idea City, LLC and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) dated December 8, 2008 assigning certain copyrights in and to the following works (for which no registrations have been filed with the United States Copyright Office):
8568727.13
Section 1.1(d) 6
2.
Concurrent Use and Registration Agreement between FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) and Texas Smiles P.A. regarding use of the trademark TEXAS SMILES (Serial Nos. 77295488 and 77429327). Agreed Permanent Injunction and Final Judgment entered into by Dr. Anthony Bain d/b/a Small Smiles and Small Smiles of Austin, PLLC, Small Smiles Dental Center of North Austin, PLLC, Kenneth E. Knott, D.D.S. and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC). AMENDED AND RESTATED REGISTERED LEASE AND LICENSE FINANCING AND PURCHASE OPTION AGREEMENT, dated as of February 1, 2010 among SSO FUNDING CORP., a Delaware corporation), FORBA Holdings, LLC (f/k/a Sanus Holdings, LLC and n/k/a Church Street Health Management, LLC), a Delaware limited liability company and CIT HEALTHCARE LLC, as collateral agent for the benefit of SSO, and associated AMENDED AND RESTATED INTELLECTUAL PROPERTY SECURITY AGREEMENT (LEASE), dated as of February 1, 2010. AMENDED AND RESTATED SENIOR MURABAHA FACILITY AGREEMENT, dated as of February 1, 2010, and associated AMENDED AND RESTATED INTELLECTUAL PROPERTY SECURITY AGREEMENT (MURABAHA), dated as of February 1, 2010.
3.
4.
5.
8568727.13
Section 1.1(d) 7
Section 2.1(a)(xii) Consents of Government Entities Waiver Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights with Deputy Attorney General for Law Enforcement Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Waiver of Payment Acceleration Rights Government Entity U.S. Department of Justice State of Alabama State of Arizona State of Colorado District of Columbia State of Georgia State of Idaho State of Indiana State of Kansas Commonwealth of Kentucky State of Maryland Commonwealth of Massachusetts State of Nebraska State of Nevada State of New Hampshire State of New Mexico State of New York State of Ohio Date January 30, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 6, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012 February 15, 2012 February 16, 2012 February 16, 2012
State of Oklahoma Commonwealth of Pennsylvania State of South Carolina State of Texas
February 16, 2012 February 16, 2012 February 16, 2012 February 16, 2012
8568727.13
Section 2.1(a)(xii) 1
Section 2.1(c)(ii) Cure Costs Cap See attached.
8568727.13
Section 2.1(c)(ii) 1
Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Entered 03/02/12 17:26:14 Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Redacted Exhibit Page 109 of 261 Exhibit F - Asset Sale Agreement Page 109 of 261
Desc
Desc
Desc
Section 4.5 Material Contracts 1. Those certain Management Services Agreements set forth in Section 1.1(a) of this Sellers Disclosure Letter. Those certain Prepetition Facilities set forth in Section 1.1(a) of this Sellers Disclosure Letter. Those certain Employment Agreements set forth in Section 1.1(a) of this Sellers Disclosure Letter. Those certain Corporate Integrity Agreements, Settlement Agreements and Waivers set forth in Section 1.1(a) of this Sellers Disclosure Letter. Those certain Non-Compete Agreements set forth in Section 1.1(a) of this Sellers Disclosure Letter. Those certain Lease Agreements set forth in Section 4.10(b) of this Sellers Disclosure Letter. Those certain Lease Guarantees set forth in Section 1.1(a) of this Sellers Disclosure Letter. Those certain Monitor Agreements set forth in Section 1.1(a) of this Sellers Disclosure Letter. Employee Services Agreement, dated as of September 26, 2006, by and between Sanus Services, Inc. (n/k/a FORBA Services, Inc.) and Sanus Holdings, LLC (n/k/a Church Street Health Management, LLC).
2. 3. 4.
5. 6. 7. 8. 9.
10. Those certain Material IP Agreements set forth in Section 1.1(d) of this Sellers Disclosure Letter. 11. Those certain Seller Employee Plans set forth in Section 4.12(a) of this Sellers Disclosure Letter. 12. Those certain agreements with the following vendors, suppliers and other third parties: Name of Third Party Altair Data Resources, Inc. Alvarez & Marsal Healthcare Industry Group, LLC Autonomy Baker, Donelson, Bearman, Caldwell, & Berkowitz PC Balch & Bingham LLP Bender, Robert R. Bernat, Joseph DDS Brasfield & Gorrie, LLC Brentwood Communications, Inc. Capitol Advocates Coverall North America, Inc. FIOS, Inc. FocusOne Services, Inc. FTI Healthcare Gaffney, Bennett & Associates Golden Dental Services, LLC Grubb & Ellis Company Helfrich, Loring R. Jr. Henry Schein, Inc. Services or Scope of Contract Customer Intelligence Services Consulting services regarding reorganization efforts Autonomy vault service; connected backup service Tennessee Government consulting and lobbying services Consulting Lead Dentist Candidate Assessment Services NY dental director Construction Marketing and Management Services Ohio development and legislative consulting Global Janitorial Cleaning Services IT processing of CSHM documents for K&S Telephone service reviewer - contract negotiator Consulting Connecticut Development and legislative consulting Handpiece repair, maintenance, and replacements Lease restructuring Health and Wellness services Dental Supplies Date 5/12/10 9/1/11 11/11/11 9/1/11 4/6/11 5/16/11 9/1/11 2/17/10 10/1/08 1/1/11 10/28/09 4/19/11 1/1/11 2/12/10 1/1/11 3/8/11 1/13/11 3/2/11 7/13/11
8568727.13
Section 4.5 1
Name of Third Party HILLCO Partners Homewood Suites Hilton Intero Office Solutions JLH Consulting and Public Affairs, LLC Johnson Haley, LP Kendrick Financial Services, LLC King & Spalding LBMC Technologies, LLC Lockton Marsh USA Inc. McCoy, Tolleson Microsoft Licensing GP New Mexico Government Affairs Patterson Dental Supply, Inc. Pomeroy IT Solutions Sales Company, Inc. Prophix Software, Inc. Rubin Meyer Communications, LLC Smoot, Brad Staples Contract & Commercial, Inc. Stericycle, Inc. Strategic Health Solutions, LLC TCN Consulting, LLC The Hudson Group, LLC Tompkins & Kinard, LLC Transcontinental Direct U.S.A. Inc. d/b/a IWCO Direct Visual Data Software Corporation Walker Tipps Waller Lansden Dortch & Davis Warren, James M. Jr Waste Management National Services, Inc. Young, Angel
Services or Scope of Contract Consulting Secured special corporate rate for 2011 Primary janitorial/sanitation supply distributor Colorado Government consulting and lobbying services Massachusetts Government consulting and lobbying services Consulting services re CIA Agreement and other tasks as assigned by Legal and HR Support, training and installation of accounting and network systems and custom development services Professional liability insurance broker / Health insurance TPA D&O Broker Environmental Graphic Design and Project Management Services Software New Mexico Government consulting and lobbying services Sundry merchandise - billing of Eaglesoft software IT solutions Consulting/training services consolidating budget figures Crisis communications, public relations, online profile management, etc. Kansas development and lobbying Consulting Supply services Waste Services Independent Quality of Care Monitoring Services See also Retainer Agreement Interim CEO Georgia development and legislative consulting South Carolina Government consulting and lobbying services Print and Direct Mail Production Services Interactiive Voice Response for advertising
Date 1/1/11 1/1/12 6/1/11 1/1/11 1/1/11 4/28/11
1/5/12
5/1/11 2/24/11 3/17/09 1/1/11 5/1/03 4/6/11 8/8/11 1/1/11 1/1/11 12/12/11 4/1/11 1/15/10 11/14/11 1/1/10 1/11/11 11/1/2009 1/24/09
DRTV Direct Response Television Consulting Waste management services Consulting services
7/13/09 6/20/11 1/24/12
8568727.13
Section 4.5 2
Section 4.6(b) Registered Transferred Intellectual Property All Intellectual Property set forth in Section 1.1(d) of this Sellers Disclosure Letter.
8568727.13
Section 4.6(b) 1
Section 4.6(c) Intellectual Property Exceptions A trademark opposition (#91203683) is pending before the U.S. Trademark Trial and Appeal Board with respect to Church Streets pending trademark application for STRAIGHT SMILES. The plaintiff in this matter is Jacqueline I. Fulop.
8568727.13
Section 4.6(c) 1
Section 4.6(f) Software All Software set forth in Section 1.1(e) of this Sellers Disclosure Letter.
8568727.13
Section 4.6(f) 1
Section 4.7 Litigation Litigation Filed Seller Party FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC); FORBA Services, Inc. FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC); FORBA NY, LLC
Practice Small Smiles of South Bend, LLC
Claimant Maria Macri
Claimant Attorney Michael P. Misch Anderson Agostino & Keller 131 South Taylor South Bend, IN 46601 Patrick J. Higgins Powers & Santola LLP 39 North Pearl Street Albany, NY 12207 P. Kevin Leyendecker Moriarty Leyendecker PC 4203 Montrose Blvd., Suite 150 Houston, TX 77006 Hackerman Frankel PC 4203 Montrose Blvd., Suite 600 Houston, TX 77006 Patrick J. Higgins Powers & Santola LLP 39 North Pearl Street Albany, NY 12207 P. Kevin Leyendecker Moriarty Leyendecker PC 4203 Montrose Blvd., Suite 150 Houston, TX 77006 Hackerman Frankel PC 4203 Montrose Blvd., Suite 600 Houston, TX 77006 Patrick J. Higgins Powers & Santola LLP 39 North Pearl Street Albany, NY 12207 P. Kevin Leyendecker Moriarty Leyendecker PC 4203 Montrose Blvd., Suite 150 Houston, TX 77006 Hackerman Frankel PC 4203 Montrose Blvd., Suite 600 Houston, TX 77006
Albany Access Dentistry, PLLC
Jennifer Hill
FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC); FORBA NY, LLC
Albany Access Dentistry, PLLC
Jacob Angus et al.
FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC); FORBA NY, LLC
Small Smiles Dentistry of Rochester, LLC
Kevin Butler et al.
8568727.13
Section 4.7 1
Seller Party FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC); FORBA NY, LLC
Practice Small Smiles Dentistry of Syracuse, LLC
Claimant Jeremy Bohn et al.
Claimant Attorney Patrick J. Higgins Powers & Santola LLP 39 North Pearl Street Albany, NY 12207 P. Kevin Leyendecker Moriarty Leyendecker PC 4203 Montrose Blvd., Suite 150 Houston, TX 77006 Hackerman Frankel PC 4203 Montrose Blvd., Suite 600 Houston, TX 77006 Wesley D. Merillat Zoll Kranz & Borgess LLC Suite 100 6620 W. Central Avenue Toledo, OH 43617
FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC); FORBA Services, Inc.; Small Smiles Holding Company, LLC) Small Smiles Holding Company, LLC
Small Smiles of Toledo, LLC
Alisha Higgs et al.
N/A
National Union
W. Brantley Phillips Jr. Bass Berry & Sims PLC Suite 2800 150 Third Avenue South Nashville, TN 37201 John C. Speer 100 Peabody Place, Suite 900 Memphis, TN 38103-3672 Steve T. Horton Brent L. Neighbors Horton & Neighbors, P.C. 114 N.W. 6th Street, Suite 201 Oklahoma City, OK 73102
FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC); FORBA Services, Inc.; Small Smiles Holding Company, LLC
Childrens Dental Clinic of Oklahoma City, PLLC
Henry A. Meyer, III as Guardian Ad Litem et al.
Litigation Threatened Threatened Seller Party Church Street Health Management, LLC; FORBA Services, Inc.; Small Smiles Holding Company, LLC Church Street Health Management, LLC; FORBA Services, Inc.; Small Smiles Holding Company, LLC
Type of Claim Patient related tort and fraud claims
Patient related tort and fraud claims
Claimant Attorney Steve T. Horton Brent L. Neighbors Horton & Neighbors, P.C. 114 N.W. 6th Street, Suite 201 Oklahoma City, OK 73102 Wesley D. Merillat Zoll Kranz & Borgess LLC Suite 100 6620 W. Central Avenue Toledo, OH 43617
8568727.13
Section 4.7 2
Threatened Seller Party Church Street Health Management, LLC; FORBA NY, LLC; Small Smiles Dental Holdings Company, LLC
Type of Claim Patient related tort and fraud claims
Claimant Attorney Patrick J. Higgins Powers & Santola LLP 39 North Pearl Street Albany, NY 12207 P. Kevin Leyendecker Moriarty Leyendecker PC 4203 Montrose Blvd., Suite 150 Houston, TX 77006 Hackerman Frankel PC 4203 Montrose Blvd., Suite 600 Houston, TX 77006
EEOC Cases Filed Seller Party Practice Church Street Small Smiles Health Dental Center of Management, Muncie, LLC LLC Church Street Small Smiles Health Dental Center of Management, Muncie, LLC LLC Church Street Albany Access Health Dentistry, PLLC Management, LLC Church Street Childrens Health Dental Clinic of Management, Charleston, LLC LLC Church Street Childrens Health Dental Clinic of Management, Charleston, LLC LLC EEOC Cases Threatened Threatened Practice Seller Party Church Street Small Smiles of Health Atlanta, P.C. Management, LLC Church Street Small Smiles of Health Atlanta, P.C. Management, LLC Church Street Texas Smiles Health Dental Center of Management, Mission, PLLC LLC
Claimant Alma Shoopman
Stacey Foster
Paul Masuicca
Claimant Attorney David Carr Ice Miller LLP One American Square, Suite 2900 Indianapolis, IN 46282-0200 David Carr Ice Miller LLP One American Square, Suite 2900 Indianapolis, IN 46282-0200 Pro Se 461 Sixty-six Road Hannibal, NY 13074 Casey Crumbley Wigger Law Firm Inc. 8086 Rivers Avenue, Suite A North Charleston, SC 29406 Casey Crumbley Wigger Law Firm Inc. 8086 Rivers Avenue, Suite A North Charleston, SC 29406
Helen Fortner
Leigh LaPlante
Claimant Toccarra Robinson
Claimant Attorney Michael Cohen Barrett & Farahany LLP 1100 Peachtree Street NE, Suite 500 Atlanta, GA 30309 Michael Cohen Barrett & Farahany LLP 1100 Peachtree Street NE, Suite 500 Atlanta, GA 30309 Carlos E. Herandez, Jr. 200 E. Cano Street Edinburg, TX 78539
Katina Kemp
Renee Hanna
8568727.13
Section 4.7 3
Colorado Department of Labor Audit In February 2012, the Colorado Department of Labor notified the Practice located in Thornton, Colorado that it was the subject of a random audit. As a result, the Practice must submit certain written affirmations and proof of the legal work status of each employee by March 1, 2012. If such affirmations and proof are not provided, a fine of $5,000 per incident could result.
8568727.13
Section 4.7 4
Section 4.8 Financial Statements See attached.
8568727.13
Section 4.8 1
Draft4/28/2011 3:34 PM
AUDITED CONSOLIDATED FINANCIAL STATEMENTS Small Smiles Holding Company, LLC For the years ended December 31, 2010 and 2009 With Report of Independent Auditors
PRELIMINARY AND TENTATIVE FOR DISCUSSION ONLY
Small Smiles Holding Company, LLC Audited Consolidated Financial Statements

Years Ended December 31, 2010 and 2009
Contents
Report of Independent Auditors.......................................................................................................1 Audited Consolidated Financial Statements Consolidated Balance Sheets ...........................................................................................................2 Consolidated Statements of Operations ...........................................................................................3 Consolidated Statements of Changes in Members Equity (Deficit) ...............................................4 Consolidated Statements of Cash Flows ..........................................................................................5 Notes to Consolidated Financial Statements....................................................................................6

1104-1251796
Ernst & Young LLP One Nashville Place 150 Fourth Avenue North, Suite 1400 Nashville, TN 37219 Tel: +1 615 252 2000 www.ey.com
Report of Independent Auditors

The Audit Committee, Board of Managers and Members Small Smiles Holding Company, LLC We have audited the accompanying consolidated balance sheets of Small Smiles Holding Company, LLC and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of operations, members equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated balance sheets of Small Smiles Holding Company, LLC and subsidiaries at December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. The accompanying financial statements have been prepared assuming that Small Smiles Holding Company, LLC and subsidiaries will continue as a going concern. As more fully described in Note 1, the Company is unable to assert that it will be in compliance through 2011 with certain covenants included in credit agreements with lenders. Such condition raises substantial doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters also are described in Note 1. The December 31, 2010 financial statements do not include any adjustments that might result from the outcome of this uncertainty.
April 29, 2011

1104-1251796
1 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 of17:26:14 Limited Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Desc A member firm Ernst & Young Global Redacted Exhibit Page Page 124 Exhibit F - Asset Sale Agreement 124 of 261 of 261
Small Smiles Holding Company, LLC Consolidated Balance Sheets

As of December 31, 2010 and 2009
2010 2009 (In Thousands) Assets Current assets: Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $1,393 and $2,440 in 2010 and 2009, respectively Prepaid expenses and other current assets Total current assets Property and equipment, net of accumulated depreciation of $41,909 and $31,290 in 2010 and 2009, respectively Goodwill Noncompete agreements, net of accumulated amortization of $15,179 and $11,607 in 2010 and 2009, respectively Deferred loan costs, net of accumulated amortization of $4,267 and $5,037 in 2010 and 2009, respectively Other assets Total assets Liabilities and members deficit Current liabilities: Accounts payable Accrued salaries and wages Accrued interest Current portion of long-term debt Current liabilities payable to related party Other accrued liabilities Total current liabilities Long-term debt, net of current portion Long term liabilities payable to related party Additional carrying value under troubled debt restructuring Other long-term liabilities Total liabilities Small Smiles Holding Company, LLC members deficit Non-controlling interests Total members deficit Total liabilities and members deficit See accompanying notes.
11,236 7,255 2,668 21,159
4,910 10,162 1,508 16,580
31,238 68,976 9,821 2,172 1,295 134,661
35,304 68,976 13,393 4,772 1,068 140,093
4,420 5,176 32 225,068 1,456 236,152 17,948 6,955 38,180 910 300,145
4,926 7,082 378 5,384 453 3,888 22,111 338,718 5,155 25,913 391,897 (251,816) 12 (251,804) 140,093
(165,602) 118 (165,484) 134,661 $
2 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page 125 Exhibit F - Asset Sale Agreement 125 of 261 of 261
1104-1251796
Small Smiles Holding Company, LLC Consolidated Statements of Operations

Year Ended December 31 2010 2009 (In Thousands) Net revenue Costs and expenses: Salaries and benefits Supplies Advertising Rent and lease Purchased services Management fees Other operating expenses Legal, restructuring and media costs Settlement Provision for (net recovery of) bad debts Depreciation and amortization Total costs and expenses Total operating income (loss) Other (income) expense Gain on debt restructuring Interest expense, net Total other (income) expense Income (loss) from continuing operations before taxes Provision for income taxes Net income (loss) from continuing operations Gain / (loss) from discontinued operations Loss on discontinued operations disposal Net gain (loss) from discontinued operations Net income (loss) Net income attributable to non-controlling interests Net income (loss) attributable to Small Smiles Holding Company, LLC See accompanying notes. $ 166,798 103,884 13,934 4,771 7,932 5,791 1,500 8,804 4,531 (7,000) (392) 14,825 158,580 8,218 (67,014) 11,859 (55,155) 63,373 15 63,358 (21) (21) 63,337 157 $ 63,180 $ $ 174,927 105,012 13,797 5,864 8,032 5,525 1,500 8,777 11,646 2,300 531 14,638 177,622 (2,695) 37,459 37,459 (40,154) 85 (40,239) 53 53 (40,186) 206 (40,392)
1104-1251796
Small Smiles Holding Company, LLC Consolidated Statements of Changes in Members Equity (Deficit)
Years Ended December 31, 2010 and 2009 (In Thousands)
Controlling Interests Balance at January 1, 2009 Special member interests Distributions Net income (loss) Other comprehensive income Balance at December 31, 2009 Special member interests Preferred interests issued Contributions Distributions Net income Other comprehensive income Balance at December 31, 2010 See accompanying notes. $ (212,208) $ 241 (29) (40,392) 572 (251,816) 547 22,525 (38) 63,180 (165,602) $
Non-controlling Interests 25 (219) 206 12 100 (151) 157 118
1104-1251796
Small Smiles Holding Company, LLC Consolidated Statements of Cash Flows

Year Ended December 31 2010 2009 (In Thousands) Operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by (used in) by operating activities: Depreciation Amortization of noncompete agreements Amortization of deferred loan costs Provision for (net recovery of) bad debts Impairment and loss on disposal of long-lived assets Gain on debt restructuring Ineffective portion of interest rate swap Special member interests Interest expense paid through issuance of notes payable Payments for restructuring Changes in operating assets and liabilities: Accounts receivable Prepaid expenses and other assets Accounts payable and other liabilities Accrued salaries and wages Liabilities payable to related party Accrued interest Net cash provided by operating activities Investing activities Purchases of property and equipment, net Proceeds from property and equipment disposition Net cash used in investing activities Financing activities Member distributions Additional loan costs Payment of long term debt Borrowing of long term debt Payments for restructuring Contributions by non-controlling interest holders Distributions paid to non-controlling interest holders Net cash provided by (used in) financing activities Decrease in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Supplemental disclosure of cash flow information Cash paid for interest See accompanying notes. $ 63,337 $ (40,186)
11,253 3,572 935 (392) 160 (67,014) 60 4,459 3,299 (1,386) (3,385) (1,906) 1,500 (346) 14,146
11,067 3,571 1,598 531 198 (178) 241 8,931 5,501 (2,365) 384 441 157 2,567 13,965 6,423
(7,362) 15 (7,347)
(1,805) (1,805)
(38) (30,384) 30,000 100 (151) (473) 6,326 4,910 11,236 $
(29) (100) (5,501) (219) (5,849) (1,231) 6,141 4,910
6,474
13,161
1104-1251796
Small Smiles Holding Company, LLC Notes to Consolidated Financial Statements

(Dollars in thousands) December 31, 2010 and 2009
1. Organization and Significant Accounting Policies Organization Small Smiles Holding Company, LLC is a Delaware limited liability company and owns, directly or indirectly, 100% of the outstanding ownership interest of Church Street Health Management, LLC (CSHM) (formerly FORBA Holdings, LLC), the management company, and its subsidiaries. Small Smiles Holding Company, LLC and CSHM are hereafter collectively referred to as the Company. The Company also consolidates the financial position and results of SSO Funding Corp. and SSH Funding Corp. under the Financial Accounting Standards Board (FASB) authoritative guidance on consolidation. The Company was formed on September 22, 2006. Effective September 26, 2006, the Company completed its acquisition of substantially all the assets of FORBA, LLC, DD Marketing, Inc., and DeRose Management, LLC (Acquisition), which included management contracts with 50 dental centers. At December 31, 2010, the Company managed 70 dental centers in the following 22 states as well as the District of Columbia: Alabama, Arizona, Colorado, Connecticut, Georgia, Idaho, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Nebraska, Nevada, New Hampshire, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas and Virginia. Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The Company consolidates all entities that are controlled by ownership of a majority voting interest as well as variable interest entities for which the Company is the primary beneficiary. Refer to the heading Variable Interest Entities below for further discussion. All intercompany accounts and transactions have been eliminated in consolidation, including the intercompany transactions with consolidated variable interest entities. The prior period has been reclassified to reflect FASB issued authoritative guidance on noncontrolling interest presentation.
1104-1251796
Small Smiles Holding Company, LLC Notes to Consolidated Financial Statements (continued)
(Dollars in thousands)
1. Organization and Significant Accounting Policies (continued) Variable Interest Entities FASB issued authoritative guidance on variable interest entities that addresses the consolidation of business enterprises to which the usual condition (ownership of a majority voting interest) of consolidation does not apply. This guidance focuses on controlling financial interests that may be achieved through arrangements that do not involve voting interests. It concludes that in the absence of clear control through voting interests, a companys exposure (variable interest) to the economic risks and potential rewards from the variable interest entitys assets and activities is the best evidence of control. If an enterprise will absorb a majority of the variable interests expected losses, receive a majority of the variable interests expected residual returns, or both, it would be considered the primary beneficiary. Upon consolidation, the primary beneficiary is generally required to include assets, liabilities and noncontrolling interests at fair value and subsequently account for the variable interest as if it were consolidated based on majority voting interest. In the consolidated financial statements, all the dental centers managed by the Company are considered variable interest entities of which the Company is considered the primary beneficiary and have been consolidated as such. Fair Value of Financial Instruments The Company adopted the FASB issued guidance on fair value measurements. This guidance clarifies how companies are required to use a fair value measure for recognition and disclosure by establishing a common definition of fair value, a framework for measuring fair value, and expanding disclosures about fair value instruments. It establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. In estimating fair value disclosures for cash and cash equivalents, accounts receivable and accounts payable, the carrying amounts reported in the accompanying consolidated balance sheets approximate fair value based on their short-term nature.
1104-1251796
1. Organization and Significant Accounting Policies (continued) The carrying amounts of the Companys senior debt note and revolving line of credit are subject to variable rates of interest but include a fixed margin which may not represent the current market margin. The subordinated debt note and PIK notes carry fixed rates of interest. Revenue Recognition The Company recognizes revenues in the period in which services are performed. Accounts receivable primarily consist of amounts due from state-managed Medicaid programs and other third-party payors of state-sponsored medical assistance programs. The Company derives a significant portion of its revenues from state-managed Medicaid programs and other payors that receive discounts from customary charges. The Company records these revenues at the contracted price outlined in the various Medicaid and payor programs. Laws and regulations governing Medicaid programs are complex and subject to interpretation. The Company believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrong doing that would have a material effect on the Companys financial statements. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as significant regulatory action, including fines, penalties and exclusion from the Medicaid program. Concentration of Revenues For both the 2010 and 2009 fiscal years, over 90% of the Companys net revenue related to patients participating in the Medicaid and State Childrens Health programs. The Companys management recognizes that revenues and receivables from government agencies are significant to the Companys operations, but it does not believe that there are significant credit risks associated with these government agencies. The Companys management does not believe that there are any other significant concentrations of revenues from any particular payor that would subject the Company to any significant credit risks in the collection of its accounts receivable.
1104-1251796
1. Organization and Significant Accounting Policies (continued) Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less. The Company places its cash in financial institutions that are federally insured. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable primarily consist of amounts due from third-party payors and patients. The Companys ability to collect outstanding receivables is critical to its results of operations and cash flows. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. Additions to the allowance for doubtful accounts are made by means of the provision for doubtful accounts. The amount of the provision for doubtful accounts is based upon managements assessment of historical and expected net collections, business and economic conditions, trends in federal, state, and private employer health care coverage and other collection indicators. Accounts are written off when all reasonable internal and external collection efforts have been performed. Accounts written off are based upon specific identification and the write-off process requires a write-off adjustment entry to the patient accounting system. Management relies on the results of detailed reviews of historical write-offs and recoveries as a primary source of information to utilize in estimating the collectability of the Companys accounts receivable. Adverse changes in general economic conditions, billing and collections operations, payor mix, or trends in federal or state governmental health care coverage could affect the Companys collection of accounts receivable, cash flows and results of operations.
1104-1251796
1. Organization and Significant Accounting Policies (continued) Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Routine maintenance and repairs are charged to expense as incurred. Expenditures that increase capacities or extend useful lives are capitalized. Fully depreciated assets are retained in property and equipment accounts until they are disposed. Below is a listing of property and equipment as of December 31: 2010 Leasehold improvements Dental equipment Office furniture and equipment Less accumulated depreciation Property and equipment, net $ 46,505 $ 18,399 8,243 73,147 41,909 31,238 $ 2009 43,374 17,323 5,897 66,594 31,290 35,304
Depreciation is computed by applying the straight-line method over the estimated useful lives of improvements and equipment. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the assets or the lease term, excluding any lease renewals, unless the lease renewals are reasonably assured. Estimated useful lives of equipment vary generally from three to ten years. The Company evaluates its long-lived assets for possible impairment whenever circumstances indicate that the carrying amount of the asset, or related group of assets, may not be recoverable from estimated future cash flows. Fair value estimates are derived from independent appraisals, established market values of comparable assets, or internal calculations of estimated future net cash flows. The Companys estimates of future cash flows are based on assumptions and projections it believes to be reasonable and supportable. The Companys assumptions take into account revenue and expense growth rates, patient volumes, changes in payor mix, and changes in legislation and other payor payment patterns.
1104-1251796
1. Organization and Significant Accounting Policies (continued) Deferred Loan Costs The Company records deferred loan costs for expenditures related to acquiring or issuing new debt instruments. These expenditures include bank fees, premiums, and attorneys fees. Deferred loan costs totaled approximately $2,172 and $4,772, net of accumulated amortization of $4,267 and $5,037 at December 31, 2010 and 2009. The Company amortizes these deferred loan costs over the life of the respective debt instrument using the effective interest method and amounts amortized are included in interest expense on the consolidated statement of income. Amortization expense relating to deferred loan costs is expected to be $546 in 2011, $539 in 2012, $530 in 2013, $515 in 2014 and $42 in 2015. Goodwill and Other Intangible Assets The Company accounts for its acquisitions in accordance with FASB authoritative guidance using the purchase method of accounting. Goodwill represents the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed. Under the FASB guidance, goodwill and intangible assets with indefinite lives are reviewed by the Company at least annually for impairment. In addition to the annual impairment reviews, impairment reviews are performed whenever circumstances indicate a possible impairment may exist. Impairment testing for goodwill is performed at the reporting unit level. The Company is comprised of one reporting unit, the consolidated company. Fair value is estimated based upon internal evaluations of the related long-lived assets that include quantitative analyses of revenues and cash flows as a reasonableness test using valuation methods based on market multiples. The Company compares its fair value to its carrying amount, on at least an annual basis, to determine if there is potential impairment. If its fair value is less than its carrying value, the Company compares the implied fair value of the goodwill to its carrying value. If the fair value of the goodwill is less than its carrying value, an impairment loss is recognized. Based on the analyses performed in 2010 and 2009, the Company calculated no impairment losses. The Company also has non-compete agreements with the owners of FORBA, LLC, DD Marketing, Inc. and DeRose Management, LLC. Such assets are recorded net of accumulated amortization of $4,267 and $5,037 at December 31, 2010 and 2009, respectively, and are being
1104-1251796
1. Organization and Significant Accounting Policies (continued) amortized using the straight-line method over 7 years. The amortization expense recognized in both 2010 and 2009 was $3,571 and $3,571, respectively. Annual amortization expense relating to this asset will approximate $3,571 in 2011 and 2012 and $2,679 in 2013. Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with guidance that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The owners of the Company and its managed dental centers are responsible for reporting their allocable share of federal and state taxable income or loss, as well as other tax items, on their separate income tax returns, except in states that subject the Company to tax at the entity level. In addition, the Company subsidiaries formed as corporations are subject to federal and state tax. Effective January 1, 2009, the Company adopted the provision for FASB issued guidance regarding accounting for uncertainty in income taxes. The Company classifies interest and penalties related to unrecognized tax benefits in the consolidated financial statements in the provision for income taxes. Professional and General Liability Insurance Given the nature of the Companys operating environment, the Company is subject to potential malpractice lawsuits and other claims as part of providing healthcare services. To mitigate a portion of this risk, the Company maintains insurance for malpractice claims for each dentist up to $1,000 per occurrence and $3,000 in the aggregate per policy year. Additionally, the managed dental centers have a separate policy with coverage up to $1,000 per occurrence and $3,000 in the aggregate per policy year. The Company maintains a separate general liability policy. The policy insures the Company up to $1,000 per occurrence and $2,000 in the aggregate. Additionally, each managed dental center has a separate policy with the above insurance limitations.
1104-1251796
1. Organization and Significant Accounting Policies (continued) The Company also maintains a separate umbrella liability policy. The umbrella liability policy provides insurance up to $2,000 above other insurance policy limitations. Additionally, each managed dental center has a separate policy with the above insurance limits. The Company maintains a directors and officers liability policy. The policy insures the Company up to $10,000. Workers Compensation Given the nature of the Companys operating environment, it is subject to potential workers compensation claims as part of providing dental services. To mitigate this risk, the Company maintains insurance for workers compensation claims up to a $500 aggregate policy limit. Each managed dental center has a separate policy with the above insurance limitations. The Companys managed dental centers located in the state of Ohio participate in a state-specific program rather than the Companys established program. Self-Insured Medical Benefits The Company is self-insured for substantially all of the medical benefits of its employees up to a stop loss of $100 per individual. The accrual for medical benefits primarily reflects the current estimate of incurred but not reported losses, based upon a calculation of the incurred but not recorded lag period as of the balance sheet date. The undiscounted reserve for self-insured medical benefits was approximately $597 and $827 at December 31, 2010 and 2009, and is included in other accrued liabilities in the accompanying consolidated balance sheets. Non-Controlling Interests in Consolidated Entities The consolidated financial statements include all assets, liabilities, revenues, and expenses of less-than-100%-owned entities that the Company consolidates. Accordingly, the Company recorded non-controlling interest in the earnings of such entities. The Company records adjustments to these interest holders for the allocable portion of income or loss to which the holders are entitled based upon their portion of the entities that they own.
1104-1251796
1. Organization and Significant Accounting Policies (continued) Advertising Advertising costs consist of expenses incurred in connection with television, direct mail and other promotions. Costs are expensed when incurred with the exception of television production costs, which are expensed upon first showing. Advertising expense for the years ended December 31, 2010 and 2009 was $4,771 and $5,864, respectively. Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Derivative Instruments and Hedging Activities In accordance with FASB issued authoritative guidance on accounting for derivative instruments, the Company records derivative instruments on the consolidated balance sheet as either an asset or liability measured at its fair value. Changes in a derivatives fair value are recorded each period in earnings or other comprehensive income, depending on whether the derivative is designated and is effective as a hedged transaction. Changes in the fair value of derivative instruments recorded to other comprehensive income are reclassified to earnings in the period affected by the underlying hedged item. Any portion of the fair value of a derivative instrument determined to be ineffective under the standard is recognized in current earnings. The Company previously entered into an interest rate swap agreement subject to the scope of this pronouncement which ended in 2009. Recently Issued Accounting Pronouncements In June 2009, the FASB issued authoritative guidance on the consolidation of variable interest entities. This guidance is effective for fiscal years beginning after November 15, 2009 and was adopted by the Company in 2010. The adoption of this guidance did not have a material impact to the consolidated financial statements.
1104-1251796
1. Organization and Significant Accounting Policies (continued) In January 2010, the FASB issued additional guidance on improving disclosures about fair value measurements. This guidance amended previous fair value measurements and disclosure guidance. The additional guidance requires a number of additional disclosures regarding the fair value measurements including the requirement that companies disclose the amounts of significant transfers between Level 1 ad Level 2 of the fair value hierarchy and the reasons for these transfers. The guidance also provided clarification on the requirement that companies are required to provide fair value measurement disclosures for each class of assets and liabilities. The Company has implemented this guidance in 2010. Going Concern On January 15, 2010, the Company entered into a settlement with the Civil Division of the DOJ, 22 states and the District of Columbia, agreeing to pay $24,000 (plus interest) to settle all civil claims by the DOJ, the District of Columbia, and the 22 states in which it operates. The settlement covered only specifically enumerated Covered Conduct, did not release individual dentists, and did not include a release of any potential criminal exposures. In connection with the settlement, the Company entered into a five-year Corporate Integrity Agreement (CIA) with the OIG, committing to implement certain policies and procedures to ensure compliance with laws and regulations and with the accepted standards of care in the industry. The CIA also requires that external reviewers monitor quality of care at the Company and the Centers. The Independent Monitor conducted site visits to seven Centers during the first year of the CIA and, with the OIG monitor, conducted an annual review visit at the Companys Nashville headquarters on February 1 and February 2, 2011 with the Companys compliance, quality, and internal audit teams. Pursuant to the CIA, the Company submitted its Annual Report to the OIG on March 15, 2011. Following the annual review visit and the submission of the Annual Report, the OIG told the Company that they do not believe that the Company is in full compliance with the CIA, and that they will be seeking remedies for the breach. At this time, the Company does not know what remedies the OIG will seek. Those remedies could include stipulated penalties in excess of $1,000 or exclusion. The Company will have an opportunity to respond to any notice of breach by the OIG. Amendment No. 1 to the Amended Credit Agreement (Amendment No. 1) contains additional covenants. Events of default under these covenants include notice of intent to exclude, or exclusion, from participation in state or Federal healthcare programs and payment of stipulated
1104-1251796
1. Organization and Significant Accounting Policies (continued) penalties as defined in the Companys CIA, in excess of $1,000. Due to uncertainty as to remedies which the OIG may seek, the Company has classified its debt as short term in the December 31, 2010 balance sheet, which raises substantial doubt about the Companys ability to continue as a going concern. The December 31, 2010 financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management plans to respond to any notice of breach by the OIG and seek appropriate cures of debt covenant defaults, as necessary. 2. Discontinued Operations Effective April 4, 2008 and July 3, 2008, the Company decided to close the Newburgh, NY and Langley Park, MD dental centers, respectively. The leases were cancelled and the leasehold improvements were abandoned. An impairment loss of $688 was recognized in 2008. The 2009 and 2010 activity includes final collections on accounts receivable and costs associated with these collections. Summary financial information related to discontinued operations is as follows: Year Ended December 31 2010 2009 (31) $ $ (21) (21) $ 53 53
Net revenues (adjustments) Gain / (loss) from operations of dental centers Impairment of long-lived assets on dental centers Gain / (loss) on discontinued operations 3. Troubled Debt Restructuring
On February 1, 2010, the Company entered into an Amended and Restated Credit Agreement (Amended Senior Credit Agreement) and an Amended and Restated Limited Liability Company Agreement of Small Smiles Holding Company, LLC (Amended LLC Agreement). The Company issued a Subordinated Facility Agreement (Arcapita OpCo note) to Arcapita, Inc. in exchange for cash of $30,000. Proceeds of $25,000 from the Arcapita OpCo note were used to pay down outstanding debt of the Amended Senior Credit Agreement with CIT Healthcare LLC
1104-1251796
(CIT) and other creditors (collectively, the Lenders) which included a $170,000 senior debt note (Senior Note) and a $30,000 revolving line of credit (collectively the Senior Credit Agreement). 3. Troubled Debt Restructuring (continued) Upon execution of the Amended Senior Credit Agreement, the Company had outstanding debt of $181,475 consisting of $164,475 in Senior Notes and $17,000 under the revolving line of credit. The Company amended the Senior Notes and terminated the revolving line of credit for $25,000 cash from the Arcapita OpCo Note, a First Lien Note of $131,475, and a Second Lien Note of $25,000. The Lenders forgave unpaid principal payments of $2,125 and unpaid interest of $4,622. No gain was recognized on the Senior Notes as the total of the cash consideration, First and Second Lien Notes and total future interest payments exceeded the carrying value of the Senior Notes. Pursuant to the FASB guidance related to troubled debt restructurings, the Company has retained $6,729 of the carrying value of the Senior Notes which will be amortized in future periods through interest expense using the effective interest method on the First and Second Lien Notes. On February 1, 2010, the Company exchanged the Subordinated Senior Note of $85,500 and PIK Note of $21,000 with American Capital, Ltd. (ACAS) and Carlyle Mezzanine Partners, L.P. (Carlyle) as well as accrued and unpaid interest of $44,448 for an Amended and Restated Senior Subordinated Term Note (ACAS/Carlyle OpCo Note) totaling $31,000. The Company also issued Class A Preferred interests to ACAS and Carlyle and common interests equal to 27.41%. The Company recognized a gain under ASC 470-60-35, Troubled Debt Restructuring, of $59,456. In connection with the gain recognition, the Company recorded additional carrying value of $36,004 for total future PIK interest. Such additional carrying value will increase the ACAS/Carlyle OpCo Note over the life of the note using the effective interest method with a corresponding reduction in this additional carrying value. Also, on February 1, 2010, the Company exchanged the Revolving Advance of $7,000 and accrued and unpaid interest of $1,686 payable to Arcapita, ACAS and Carlyle in exchange for Subordinated Preferred Interests of $7,000. The Company recognized a gain under Codification 470-60-35 of $8,686.
1104-1251796
3. Troubled Debt Restructuring (continued) Below is a summary of the calculation of the gain on troubled debt restructuring recorded in 2010: Balances before troubled debt restructuring: Carrying amount of debt and accrued interest Subordinated Carrying amount of debt and accrued interest Revolving Advance Total carrying amount of Subordinated and Revolving Advance Balances immediately following troubled debt restructuring: Carrying amount ACAS/Carlyle OpCo Note Carrying amount of future interest Subordinated Class A Preferred interests fair market value Consideration given Gain prior to transaction costs Transaction costs Gain on troubled debt restructuring 4. Debt The Company entered into an Amended Senior Credit Agreement as of February 1, 2010.
148,985 8,686 157,671
(31,000) (36,004) (22,525) (89,529) 68,142 (1,128) 67,014
1104-1251796
4. Debt (continued) A summary of the Companys debt at December 31 is as follows: 2010 Senior debt note Subordinated debt note PIK note Revolving line of credit Senior debt First Lien Senior debt Second Lien OpCo note ACAS / Carlyle OpCo note Arcapita Settlement note Total debt Less: current portion of long-term debt Total long-term debt $ $ 129,775 25,466 34,279 33,180 20,316 243,016 (225,068) 17,948 $ 2009 166,600 100,907 35,595 17,000 24,000 344,102 (5,384) 338,718
The Company was not in compliance with certain of its financial covenants for the senior debt (including the revolving line of credit), subordinated debt and PIK notes as of December 31, 2009. In addition, the Company was in payment default for the subordinated debt as of December 31, 2009. However, on February 1, 2010, the Company entered into an Amended Senior Credit Agreement. Bank Credit Agreements On September 26, 2006, the Company entered into the Credit Agreement with the Lenders, consisting of a $170,000 Senior Note and a $30,000 revolving line of credit. The Senior Note was to mature in September 2012, but was callable upon noncompliance with financial covenants. Under the Senior Note, the Company was to make quarterly principal payments of $425 and was subject to mandatory prepayment of the Senior Note based upon excess cash calculations.
1104-1251796
4. Debt (continued) The Senior Credit Agreement contained certain covenants which include, but were not limited to, limitations on (i) annual capital expenditures, (ii) asset disposals, (iii) additional financings, and (iv) dividend payments. In addition, the Senior Credit Agreement required satisfaction of certain financial covenants. The borrowings under the Senior Credit Agreement were collateralized by substantially all of the Companys assets. On February 1, 2010, the Company entered into an Amended Senior Credit Agreement which allowed the Company to cure covenant defaults, modify financial covenants and restructure debt commitments to reflect expected cash flows. The Amended Senior Credit Agreement exchanged the $170,000 Senior Note and $30,000 revolving line of credit for a First Lien Note of $131,475 and a Second Lien Note of $25,000. In addition, Arcapita provided a $30,000 Arcapita OpCo Note, which allowed the Company to pay $25,000 to the Lenders. The First Lien Note matures February 1, 2015 and bears cash interest at London Interbank Offered Rate (LIBOR) plus 3.50%. The interest rate increases to LIBOR plus 3.75% in 2013 and LIBOR plus 4.00% in 2014. The Company pays interest monthly and quarterly principal payments of $425. The quarterly principal payments will increase to $750 in 2013 and $1,000 in 2014. The Second Lien Note matures February 1, 2015 and bears cash interest of LIBOR plus 1.00% with a floor of 2.00%. The note also bears PIK interest of 2.00%. Cash interest will increase in 2011 to LIBOR plus 2.50% with a floor of 3.50% and PIK interest of 0.50%. Cash interest is payable quarterly. Subordinated Debt Notes On September 26, 2006, the Company entered into a Subordinated Senior Note (the Subordinated Debt) with ACAS and Carlyle. The Subordinated Debt bore interest at 14.50%, which included cash interest of 12.25% and payment-in-kind interest of 2.25% and was to mature in September 2013. Under the Subordinated Debt, the Company was to make quarterly payments of cash interest only. There was a mandatory prepayment that was triggered by certain events including, but not limited to, a change in control or any public offering. No principal payments were currently required. The Company did not make the 2008 second, third or fourth quarter interest payments, nor any interest payments in 2009. The accrued interest is recorded in other long-term liabilities at December 31, 2009.
1104-1251796
4. Debt (continued) On September 26, 2006, the Company entered into a PIK Note with ACAS and Carlyle. The PIK Note bore payment-in-kind interest of 16.50% and was to mature in September 2014. Under the PIK Note, the Company was to make no quarterly payments of interest or principal. There was a mandatory prepayment that was triggered by certain events including, but not limited to, a change in control or any public offering. No principal payments were currently required. On February 1, 2010, the Company entered into the ACAS/Carlyle OpCo Note with a carrying value of $31,000. These notes were in exchange for the Subordinated Senior Note and PIK Note. The Company also issued Class A Preferred interests to ACAS and Carlyle with a carrying amount of $60,400 and common interests equal to 27.41%. The ACAS/Carlyle OpCo Note bears PIK interest of 11% and matures February 1, 2017. No principal or interest payments are required until maturity. In September 2008, the Company entered into a Revolving Advance with Arcapita, ACAS and Carlyle. The Revolving Advance bore payment-in-kind interest of 16.50% and was to mature in September 2014. Under the Revolving Advance, the Company was to make no quarterly payments or interest or principal. No principal payments were currently required. On February 1, 2010, the Company exchanged the Revolving Advance and accrued interest in full for Subordinated Preferred interests with a carrying amount of $7,000. On February 1, 2010, the Company entered into the Arcapita OpCo Note with a carrying value of $30,000. The note was issued for cash which was used to pay a portion of the senior lender debt, as well as fund operations. The note bears PIK interest of 11% and matures February 1, 2017. No principal or interest payments are required until maturity. Settlement Note In January 2010, the Company executed a settlement note with the Department of Justice for $24,000. The Company made principal payments of $3,559 plus accrued interest since June 2009 at 2.75%. Beginning in 2011, the Company will make quarterly principal payments of $623 through September 30, 2011 and $499 per quarter thereafter through the end of the note. Accrued interest is payable at the time of the quarterly principal payments. The note matures on September 30, 2014 and all remaining amounts are due and payable.
1104-1251796
4. Debt (continued) Interest Rate Swap The Company entered into an interest rate swap agreement as of April 3, 2007 to manage exposure to fluctuations in interest rates. The interest rate swap converted $85,500 of the senior debt note to a fixed rate of 4.975% plus the applicable rate margin and terminated March 31, 2009. The Company determined the fair value of its interest rate swap based on the amount at which it could be settled, which is referred to in FASB authoritative guidance as the exit price. This price was based upon observable market assumptions and appropriate valuation adjustments for credit risk. The Company categorized its interest rate swap as Level 2 under this guidance. The components of accumulated other comprehensive income (loss) is as follows: Balance at January 1, 2009 Amortization of effective portion of interest rate swap Balance at December 31, 2009 5. Member Interests The Company was recapitalized on September 26, 2006 in conjunction with the acquisition. The Limited Liability Company Agreement of Small Smiles Holding Company, LLC (LLC Agreement) outlined the five initial approved equity member classes: Management Members, SS Holding Company, Inc. Members (Holdings), Investor Members, Special Members and Employee Members. Prior to the restructuring mentioned below, all member classes received tax distributions in proportion to their allocable taxable income, as well as any approved distributions by the Board of Managers. In conjunction with the restructuring of the long term debt instruments, the Company entered into an Amended LLC Agreement as of February 1, 2010. $ $ (572) 572
1104-1251796
5. Member Interests (continued) Under the Amended LLC Agreement, two new equity interests Class A Preferred and Subordinated Preferred were created. The Class A Preferred interests were issued to ACAS and Carlyle in partial exchange for the Subordinated Debt Notes. The Preferred Subordinated interests were issued to Holdings, SSH Member, LLC, ACAS Equity Holdings Corp. and MezzF, LLC in exchange for the Revolving Advance. The face values of the Class A Preferred and Subordinated Preferred interests (collectively, Preferred Interests) are $60,400 and $7,000 as of December 31, 2010. The recorded values of these interests are $22,525 and $0, respectively as of December 31, 2010. The Preferred Interests can be redeemed for the face value of the interests after satisfaction of debt obligations 1) at the execution of an approved sale of the Company, 2) upon debt refinancing which provides for excess cash proceeds or 3) upon a public offering. The Preferred Interests are not entitled to proceeds in excess of $67,400, collectively. Management, Holdings and Investor Members The Company received proceeds from the Management, Holdings and Investor Members of approximately $169,900 (net of $12,000 of transaction costs) as of September 26, 2006, which represented 100% of the member interest percentage. The percentage for each member was in direct proportion to the invested funds by that member as a percentage of the total invested capital. As additional members were added in the other equity member classes, the individual percentages were diluted. The Management, Holdings and Investor Members were to receive a priority seven percent return on the initial capital investment compounded monthly. After payment of the priority seven percent return, as well as return of capital and Special Member distributions, Management Members were entitled to payouts of 20% of distributions up to an internal rate of return (IRR) for Holdings of 30%. Management Members were entitled to 30% of distributions above the 30% IRR for Holdings.
1104-1251796
5. Member Interests (continued) Special Members The Special Member class was allocated up to 5% of the total equity, though no capital contributions were required. The Special Member interests were granted to various employees for services rendered and vested equally over a period of four years. The Special Members received non-tax distributions in accordance with the order of priority as detailed in the LLC Agreement. There were 431,250 and 2,466,250 (2.476% of total equity interests) Special Member interests issued and outstanding as of December 31, 2010 and 2009, respectively. The Special Member interests were canceled upon execution of the Amended LLC Agreement on February 1, 2010. Weighted Avg. Grant Special Membership Date Fair Value Units Unvested at January 1, 2009 Granted Vested Forfeited Unvested at December 31, 2009 Granted Vested Cancelled Unvested at December 31, 2010 1,346,250 $ (440,000) (10,000) 896,250 (896,250) $ .11 .09 .12 .11 .12
The Company received an independent appraisal of the fair value of the Special Member units as of January 1, 2007, which was the initial issue date, of $0.12 per unit. The Company recognized expense in 2010 and 2009 of $547 and $241, respectively, relating to the issued units. The unvested Special Member units and employee vested units were cancelled in the Amended LLC Agreement, resulting in the recognition in 2010 of all previously unrecognized compensation costs associated with such units.
1104-1251796
5. Member Interests (continued) Employee Members The Employee Member class was eligible to acquire an interest in Small Smiles Holding Company, LLC with Board of Managers approval. Employees of CSHM Holdings, LLC and its subsidiaries were eligible to participate. Employee Members received non-tax distributions in accordance with the order of priority as detailed in the Amended LLC Agreement. They were not eligible to receive a seven percent priority return. Board of Managers Under the Amended LLC Agreement, the Board of Managers is comprised of two Management Members, four members from Holdings, two members from ACAS Equity Holdings Corp., an Investor Member and one member from MezzF, LLC, an Investor Member. The Board of Managers is responsible for, but not limited to: 1) approval of acquisition or disposition of assets, 2) obtaining financing, and 3) issuance of limited liability interests to new or existing shareholders. 6. Commitments and Contingencies Employment Agreements The Company has executed senior management agreements with seven of its senior executive officers. The agreements provide for minimum salary levels, adjusted based upon individual and Company performance criteria, as well as for participation in bonus plans which are payable if specific management goals are met. The agreements also provide for severance benefits, if certain criteria are met, for a period of up to two years. The senior management agreements remain in place for each of the senior executive officers during their period of employment with the Company or any of its subsidiaries.
1104-1251796
6. Commitments and Contingencies (continued) Litigation The United States Department of Justice (DOJ), the Office of the Inspector General of the United States Department of Health and Human Services (OIG) and a number of states conducted investigations into the operations of the Company and a number of Small Smiles Centers. On January 15, 2010, the Company entered into a settlement with the Civil Division of the DOJ, 22 states and the District of Columbia, agreeing to pay $24,000 (plus interest) to settle all civil claims by the DOJ, the District of Columbia, and the 22 states in which it operates. The settlement covered only specifically enumerated Covered Conduct, did not release individual dentists, and did not include a release of any potential criminal exposures. In connection with the settlement, the Company entered into a five-year Corporate Integrity Agreement (CIA) with OIG, committing to implement certain policies and procedures to ensure compliance with laws and regulations and with the accepted standards of care in the industry. The CIA also requires that external reviewers monitor quality of care at the Company and the Centers. The Company also agreed to pay $2,300 to settle claims by the New York Office of Medicaid Inspector General (OMIG) relating to alleged overpayments made to the Syracuse and Rochester Centers during the time the Centers were managed by Old FORBA. In addition, as a condition of New Yorks participation in the DOJ settlement described above, the Company agreed to enter into a separate Corporate Integrity Agreement with OMIG. The OMIG CIA is for a term of three years and imposes certain requirements in addition to those imposed by the federal CIA. For instance, the OMIG CIA obligates the Company to retain a New York State Dental Director and requires the Independent Monitor to conduct an annual New York-specific review of claims. In 2008, the Company and LICSAC, LLC, DD Marketing, Inc., DeRose Management, LLC, and LICSAC, NY, LLC (collectively Old FORBA) asserted indemnification demands, pursuant to the 2006 Asset Purchase Agreement (APA), against each other and engaged in litigation regarding the need to maintain funds in the escrow account pursuant to the APA. Certain funds remained in escrow. In September 2009, the Company filed suit against Old FORBA in federal court in Colorado, alleging that Old FORBA breached the representations and warranties in the APA, including the representations and warranties relating to Old FORBAs financial condition. Defendants moved to dismiss on October 26, 2009, and the motion was granted on January 11, 2010, with leave granted to amend the complaint. On January 22, 2010, the Company filed an Amended Complaint against Old FORBA and certain individuals.
1104-1251796
6. Commitments and Contingencies (continued) On February 18, 2010, Old FORBA agreed to pay the Company $7,000 in a confidential settlement to resolve the Colorado action. The settlement agreement provided for mutual releases between the Company and Old FORBA of any claims and/or counterclaims in the Colorado lawsuit, as well as any government or third party investigations related to the business or operations of the parties and the Dental Centers, and all claims related to the APA between the parties. The case was dismissed with prejudice on February 26, 2010. On January 25, 2010, a Class Action Complaint against the Company and the Toledo Small Smiles Center was filed in the United States District Court for the Northern District of Ohio (Parnell, Individually and as Guardian of Webb and Lee, Minors, on Behalf of Herself and Others Similarly Situated v. FORBA Holdings, LLC, et al). The Complaint was a putative national class action on behalf of all patients (and their parents/guardians) treated at the Small Smiles-affiliated Dental Centers nationwide (with an Ohio sub-class), and alleged a nationwide conspiracy to perform unnecessary dental procedures and to use unnecessary nitrous oxide and physical restraints. The Complaint asserted claims of fraud, Ohio RICO, assault and battery, intentional/negligent infliction of emotional distress, loss of consortium, and violation of the Ohio Consumer Sales Practices Act. The plaintiffs sought compensatory, punitive, and treble damages, as well as attorneys fees. On June 30, 2010, the plaintiffs filed an Amended Complaint adding American Capital, Ltd. as a defendant and adding a claim of malpractice. On September 30, 2010, the plaintiffs filed a Second Amended Complaint dropping American Capital as a defendant and adding Arcapita, Inc. as a defendant instead. On October 29, 2010, the plaintiffs filed a Notice of Voluntary Dismissal of the Parnell class action without prejudice, which the Court entered on November 5, 2010. Plaintiffs counsel indicated their intention to file claims on behalf of individual Small Smiles patients in Ohio state court. On December 29, 2010, a Complaint was filed against the Company, the Toledo Center, a single dentist, and Arcapita, Inc. in state court in Lucas County, Ohio (Montarey Barbour, Individually and as Guardian of Juliana Barbour, a Minor v. FORBA Holdings, LLC et al). The Complaint alleged unnecessary dental procedures and the use of unnecessary nitrous oxide and physical restraints, and asserted claims of fraud, Ohio RICO, assault and battery, intentional/negligent infliction of emotional distress, negligence and malpractice, loss of consortium, and violation of the Ohio Consumer Sales Practices Act. The plaintiff sought compensatory and punitive damages, as well as attorneys fees. On December 30, 2010, the case was voluntarily dismissed without prejudice.
1104-1251796
6. Commitments and Contingencies (continued) Ohio plaintiffs counsel has represented that cases on behalf of Dental Center patients will be filed against the Company in the future. The Company plans to vigorously defend against such claims, but cannot predict the outcome of the claims nor estimate the amount of damages that could be assessed in the event of an adverse outcome. On June 7, 2010, a putative state class action was filed against the Company and the Oklahoma Dental Centers in the District Court of Oklahoma County, Oklahoma (Hernandez, Individually and as Mother and Next Friend of Aaliyah Esparza, a Minor, on Behalf of Herself and Others Similarly Situated v. FORBA Holdings, LLC, et al). The Petition alleged a conspiracy to perform unnecessary dental procedures and to use unnecessary nitrous oxide and physical restraints and asserted claims of fraud, negligence, assault and battery, intentional/negligent infliction of emotional distress, and violation of the Oklahoma Consumer Protection Act. The plaintiffs sought unspecified compensatory and punitive damages, as well as attorneys fees. On August 30, 2010, the plaintiffs filed the Second Amended Petition naming several individual dentists as defendants. On September 27, 2010, the plaintiffs further amended the Petition to name several additional individual dentists. On November 23, 2010, the Court granted the defendants Motion to Dismiss with leave for the plaintiffs to amend the Petition. On December 1, 2010, the plaintiffs filed a Fourth Amended Petition in which they withdrew the class claims and solely asserted claims on behalf of a single plaintiff against the Company, a single Dental Center, and a single dentist. On December 17, 2010, the Company, the Dental Center and the dentist filed Answers to the Fourth Amended Petition. The Company plans to vigorously defend against these claims, but cannot predict the outcome of the claims nor estimate the amount of damages that could be assessed in the event of an adverse outcome. Oklahoma plaintiffs counsel have indicated that additional cases on behalf of other individual Small Smiles patients will be filed against the Company in Oklahoma state court in the near future.
1104-1251796
6. Commitments and Contingencies (continued) By letter dated September 22, 2010, the law firm of Hackerman Frankel gave formal notice to the Company of claims for damages asserted on behalf of more than 500 current and former patients of the Small Smiles Dental Centers. The letter states that the Company, the Dental Centers and other named entities were negligent in connection with dental care the patients received at one of the Small Smiles clinics. According to the notice, the claims arise out of acts or omissions committed by agents of [these entities] and by others for whose acts, errors or omissions one or more of the [entities] may be legally liable. Moreover, the letter states that the patients may also assert additional causes of action related to their treatment at a Small Smiles clinic against one or more of the entities named in the notice. The majority of the claims involve the three New York Dental Centers and the Colorado Dental Centers. In addition, on November 5, 2010 and November 11, 2010, Hackerman Frankel sent notice letters to a number of current and former Small Smiles dentists stating that former patients are asserting claims for damages against you arising out of a dental incident. These patients may also assert additional causes of action against you. Furthermore, these patients may assert claims against Small Smiles, its affiliates, and other parties arising out of the same dental care treatment. To date, no lawsuits have been filed by Hackerman Frankel or its co-counsel Moriarty Leyendecker on behalf on any of the patients listed in the September and November notices. We expect that lawsuits will be filed on behalf of many of those listed in the notices. No specific damages amounts have been asserted to this point. The Company intends to vigorously defend against these claims, but cannot predict the outcome of the claims nor estimate the amount of damages that could be assessed in the event of an adverse outcome. On December 2, 2009, a Complaint was filed against Dr. Chase Dighton, Small Smiles of East Albuquerque and FORBA Dental Management Company, in Bernalillo County New Mexico (Havens v. Dighton., et al.). On December 28, 2010, Plaintiffs amended the Complaint, dropping FORBA Dental Management Company, and naming FORBA Holdings, LLC as a defendant. The Amended Complaint alleges that Dr. Dighton is liable for compensatory and punitive damages because he recklessly, or at least negligently, treated Konnor Havens, causing him to suffer physical and psychological injuries. The Complaint further alleges that the Center and FORBA are vicariously liable for Dr. Dightons conduct, and that all defendants conduct was fraudulent and constituted an unfair trade practice. Discovery is ongoing. Mediation is scheduled for March 9, 2011. Trial is scheduled for July 25, 2011. Plaintiffs have not made a settlement demand. 29 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page 152 Exhibit F - Asset Sale Agreement 152 of 261 of 261
1104-1251796
6. Commitments and Contingencies (continued) On March 8, 2010, a Complaint was filed against the Company and the Toledo Center in the United States District Court for the Northern District of Ohio (National Union Fire Insurance Company of Pittsburgh, PA v. FORBA Holdings, LLC, et al). The Complaint seeks a declaratory judgment that National Unions dental professional liability insurance policies issued to the Company, the Dental Centers and the dentists employed by the Dental Centers do not provide coverage for the claims alleged in the Parnell lawsuit. The Company has asserted counterclaims for breach of contract and declaratory judgment seeking damages and a declaration that National Union must defend and indemnify the Company and all other insureds under the policies for the Parnell lawsuit, the Hernandez lawsuit, and any similar claims that have been or may be asserted by patients of the Dental Centers. National Union filed an Amended Complaint on November 1, 2010, in which it added Arcapita, Inc. as a defendant. Arcapita, Inc. was subsequently voluntarily dismissed from the case without prejudice. The Companys Amended Answer and Counterclaims was filed on December 3, 2010. On January 7, 2011, National Union filed a Motion to Dismiss the counterclaims. The Company plans to vigorously defend against this claim and assert its counterclaims, but cannot predict the outcome of the claims/counterclaims. On August 5, 2010, a Complaint was filed against the Company in the United States District Court for the Middle District of Tennessee (National Union Fire Insurance Co. of Pittsburgh, PA v. Small Smiles Holding Co., LLC). The Complaint seeks to void and rescind the dental professional liability insurance policies issued by National Union to the Company, the Dental Centers, and the dentists employed by the Dental Centers for the 2008-2009 and 2009-2010 policy periods. The Company has asserted counterclaims against National Union seeking damages for breach of the Tennessee Deceptive Trade Practices Act and for bad faith denial of coverage benefits. On December 2, 2010, National Union moved to dismiss the counterclaims. The Companys Opposition to the Motion to Dismiss was submitted on January 11, 2011. On December 16, 2010, the Company filed a Third-Party Complaint against Affinity Insurance Services, Inc., asserting claims of negligence, negligent misrepresentation and for violation of the Tennessee Consumer Protection Act in connection with Affinitys conduct as National Unions agent. Discovery in the case has commenced, and trial currently is scheduled for January 31, 2012. The Company plans to vigorously defend against this claim and assert its counterclaims and thirdparty claims, but cannot predict the outcome of the claims.
1104-1251796
6. Commitments and Contingencies (continued) On October 28, 2010, the Company filed a Complaint in the United States District Court for the Middle District of Tennessee against Zurich American Insurance Co. (FORBA Holdings, LLC v. Zurich American Insurance Co.). The Complaint asserts claims for breach of contract and declaratory judgment against its directors and officers liability insurance carrier, Zurich American Insurance Co., seeking reimbursement of amounts paid to defend and settle the underlying government investigation. Zurich filed its Answer on December 23, 2010 and discovery is underway. The Company plans to vigorously prosecute this case, but cannot predict the outcome of the claims or any recovery of damages that may result. The Company is also, from time to time, subject to claims and suits arising in the ordinary course of business, including claims for damages for personal injuries, medical malpractice, breach of management contracts, and employment related claims. In certain of these actions, plaintiffs may request punitive or other damages against the Company which may not be covered by insurance. The Company is currently not a party to any such proceeding, including the matters discussed above within Note 6, which, in managements opinion, would have a material adverse effect on the Companys business, financial condition or results of operations. 7. Leases The Company leases various buildings and equipment under operating lease agreements. The leases expire at various times, have various renewal options, and have various rent escalation clauses. Operating lease expense relating primarily to the rental of buildings for the periods ending December 31, 2010 and 2009 was $7,932 and $8,032, respectively.
1104-1251796
7. Leases (continued) Future minimum rental commitments under noncancelable operating leases with an initial term in excess of one year at December 31, 2010, consist of the following: Fiscal year: 2011 2012 2013 2014 2015 Thereafter Total minimum lease commitments 8. Income Taxes Significant components of provision for income taxes are as follows: Year Ended December 31, 2010 2009 Current: Federal State Deferred: Federal State Total $ $ 14 $ 2 16 (1) (1) 15 $ 70 20 90 (5) (5) 85
7,005 5,599 3,747 3,182 1,744 1,067 22,344
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources of the differences include income (loss) of pass-through entities that is taxed directly to its owners, valuation allowance changes affecting the provision for income taxes and other differences.
1104-1251796
8. Income Taxes (continued) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Companys deferred tax assets include amortization, net operating loss (NOL) carryforwards, accrued expenses and other temporary differences. As of December 31, 2010, the Company has a net current deferred tax asset of $6, comprising total deferred tax assets of $21,935 offset by a total valuation allowance of $21,929, that is reflected in prepaid expenses and other current assets in the consolidated balance sheet. As of December 31, 2010, the Company has NOL carryforwards for state income tax purposes of approximately $88,325. These NOL carryforwards will expire from 2022 to 2025. Effective January 1, 2009, the Company adopted the relevant guidance for accounting for uncertainty in income taxes and did not have any cumulative effect of changes to members deficit. In connection with the adoption of the guidance, the Company recorded an additional $15 net liability for unrecognized tax benefits and accrued interest for tax positions of prior years reduced for the lapse of statutes of limitations during the year ended December 31, 2010. The Companys ending net liability for unrecognized tax benefits and accrued interest was $100 and $85 for the years ended December 31, 2010 and 2009, respectively. The Company classifies interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company recorded $1 and $4 for such amounts during the years ended December 31, 2010 and 2009, respectively. The Company had approximately $5 and $4 for the payment of interest and penalties accrued at December 31, 2010 and 2009, respectively. The Companys income tax returns for tax years 2007 and beyond remain subject to examination by taxing authorities. 9. Related Party Transactions The Company accrues a $1,500 annual management fee payable to Arcapita, an affiliate of Holdings, for advisory services rendered. The payable is subordinated to the debt instruments. The Company recognized expense of $1,500 and $1,500 in 2010 and 2009, respectively. As of December 31, 2010 and 2009, the accrued fees of $3,750 and $2,250, respectively, are reflected in long term liabilities payable to related party on the consolidated balance sheets.
1104-1251796
9. Related Party Transactions (continued) CIT, ACAS, Carlyle, and Arcapita hold Company debt instruments. They are also equity investors or affiliates of equity investors in the Company. The total equity investments received from these four entities and their affiliates was $166,246. In 2008, the Company borrowed $7,000 on the revolver line of credit, which required repayment by September 2008. Due to the inability of the Company to repay the revolver borrowing, Arcapita, ACS and Carlyle were required to repay the senior lenders. In exchange for payment by these equity investors, the Company issued PIK notes of $7,000 accruing interest at 16.5% annually. These notes were later exchanged for Preferred Equity Subordinated interests. In 2009 and 2008, on behalf of the Company, Arcapita advanced funds to pay certain restructuring and legal costs. As of December 31, 2010 and 2009, the payables of $3,205 and $2,905, respectively, for those advances are reflected in long term liabilities payable to related party on the consolidated balance sheets. As of December 31, 2009, an additional $453 is included in current liabilities payable to related party on the consolidated balance sheets. During the years ended December 31, 2010 and 2009, the Company paid $153 and $85, respectively, relating to airplane rentals to Ameris Health Systems, LLC (Ameris). The primary shareholder of Ameris is also a shareholder in the Company. During the years ended December 31, 2010 and 2009, the Company paid $32 and $10, respectively, relating to airplane rentals to TOH Aircraft Partners (TOH). Two Company shareholders, one of which is a member of management, are shareholders in TOH. 10. Employee Benefits The Company started a multi-employer defined contribution plan in October 2007. The Companys defined contribution plan covers substantially all management company employees and employees at the managed dental centers. The plan is qualified under Section 401(k) of the Internal Revenue Service Code. Participants may contribute a portion of their compensation, not exceeding a limit set annually by the Internal Revenue Service. The plan includes a provision for the Company to match a portion of employee contributions. Total expense to the Company under the 401(k) plan was $486 and $480 for the years ended December 31, 2010 and 2009, respectively.
1104-1251796
11. Subsequent Events The Company has evaluated subsequent events for the year ended December 31, 2010 through April 29, 2011, the date these financial statements were issued. On April 28, 2011, the Company entered into Amendment No. 1, which allowed the Company to modify future financial covenants and capital expenditure thresholds. The amendment includes additional covenants. Events of default under these covenants include notice of intent to exclude, or exclusion, from participation in state or Federal healthcare programs and payment of stipulated penalties as defined in the Companys CIA, in excess of $1,000. Amendment No. 1 increases the principal payments relating to the Senior debt First Lien in 2011 and 2012 from $425 per quarter to $775 per quarter. Effective April 1, 2011, the interest rate on the Senior debt First Lien increases 0.25% per quarter until an aggregate amount equal to 1.00% as of 1st quarter of 2012. In addition, the interest rate will be subject to a LIBOR floor of 1.50%. Amendment No. 1 also increases the interest rate on the Senior debt Second Lien by 1.25% per quarter beginning in 2nd quarter of 2011 until an aggregate increase of 5.00% as of 1st quarter of 2012. Upon execution of Amendment No. 1, the Company paid an amendment fee of $954. The Company is also required to pay a deferred restructuring fee equal to 2.00% of the outstanding principal amount of the senior debt upon maturity of the senior debt. The deferred restructuring fee will be reduced 0.25% per quarter in the event the senior debt is repaid prior to maturity. The Independent Monitor conducted site visits to seven Centers during the first year of the CIA and, with the OIG monitor, conducted an annual review visit at the Companys Nashville headquarters on February 1 and February 2, 2011 with the Companys compliance, quality, and internal audit teams. Pursuant to the CIA, the Company submitted its Annual Report to the OIG on March 15, 2011. Following the annual review visit and the submission of the Annual Report, the OIG told the Company that they do not believe that the Company is in full compliance with the CIA, and that they will be seeking remedies for the breach. At this time, the Company does not know what remedies the OIG will seek. Those remedies could include stipulated penalties in excess of $1,000 or exclusion. The Company will have an opportunity to respond to any notice of breach by the OIG.
1104-1251796
Section 4.9 Compliance with Laws Settlement Agreements In 2007, the Office of Inspector General of the U.S. Department of Health and Human Services (OIG) began an investigation of CSHM and the Practices. At about the same time period, the United States Department of Justice (the DOJ) began an investigation of CSHM and the Practices. Thereafter, a number of state Attorneys General commenced parallel state investigations of CSHM and the Practices. The New York State Office of Medicaid Inspector General (OMIG) also commenced an investigation of CSHM and the Practices. On January 15, 2010, CSHM entered into that certain Settlement Agreement with the United States of America, acting through the DOJ and on behalf of the OIG, and the relators party thereto, whereby CSHM agreed, among other things, to make settlement payments to the United States, the participating states and the relators. On January 15, 2010, CSHM entered into that certain Settlement Agreement with the State of New York. OIG CIA On January 15, 2010, CSHM entered into that certain Corporate Integrity Agreement with the OIG. OMIG CIA On January 15, 2010, CSHM entered into that certain Corporate Integrity Agreement with OMIG, which was amended and restated on April 30, 2010 in that certain Amended Corporate Integrity Agreement between CSHM and OMIG. CIA Monitoring Agreement On March 15, 2010, CSHM entered into that certain Corporate Integrity Agreement Monitoring Agreement with an independent monitor, StrategicHealthSolutions, LLC (the Monitor). The Monitor has conducted more than 24 site visits and 18 desk audits.
8568727.13
Section 4.9 1
Section 4.10(b) Leased Real Property 1. Lease Agreement by and between 200 South Broadway, LLC and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) for property located at 201 W. 8th Street, Suite 810, Pueblo, CO 81003. Lease Agreement by and between Adventure 3 Properties, LP and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) for property located at 618 Church Street, Suite 520, Nashville, TN 37219. Lease Agreement by and between Adventure 3 Properties, LP and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) for property located at 618 Church Street, Suite 310, Nashville, TN 37219. Lease Agreement by and between Adventure 3 Properties, LP and Church Street Health Management, LLC for property located at 618 Church Street, Suite 130, Nashville, TN 37219. Lease Agreement by and between Regus and Church Street Health Management, LLC for property located at 5600 N. River Road, Suite 800, Rosemont, IL 60018.
2.
3.
4.
5.
8568727.13
Section 4.10(b) 1
Section 4.12(a) Seller Employee Plans 1. 2. 3. 4. 5. 6. 7. 8. 9. Church Street Health Management, LLC Retirement Plan* Church Street Health Management Group Vision Care Plan* Church Street Health Management Term Life & Long Term Disability Insurance* Church Street Health Management Group Dental Insurance* Church Street Health Management Flexible Benefits Plan* Paid Time Off Policy (including sick leave, FMLA, other leave, vacation)* Dentists Performance Bonus Program* Church Street Health Management Health Plan Small Smiles New York Health Plan
10. Small Smiles of Colorado Health Plan 11. Small Smiles of Arizona Health Plan 12. Small Smiles of Idaho Health Plan 13. Small Smiles of Indiana Health Plan 14. Small Smiles of New Mexico Health Plan 15. Small Smiles of Kansas Health Plan 16. Small Smiles of Massachusetts Health Plan 17. Small Smiles of Connecticut Health Plan 18. Small Smiles of Nevada Health Plan 19. Small Smiles of Ohio Health Plan 20. Small Smiles of New Hampshire Health Plan 21. Small Smiles of Maryland Health Plan 22. Small Smiles of Virginia Health Plan 23. Small Smiles of Washington, D.C. Health Plan 24. Small Smiles of Pennsylvania Health Plan 25. Small Smiles of Oklahoma Health Plan 26. Small Smiles of Alabama Health Plan
8568727.13
Section 4.12(a) 1
27. Small Smiles of South Carolina Health Plan 28. Small Smiles of Texas Health Plan *Indicates multiple-employer plan
8568727.13
Section 4.12(a) 2
Section 4.12(b) Employee Information See attached.
8568727.13
Section 4.12(b) 1
EEHC, Inc.
Current Employee Listing
Current Employee Adair, Steven M. Badger-Rodriguez, Catherine Benfatti, Vince Brown, Phyllis Burbank, Judy Carrico, Kara K. Casarez-Herrera, Anna Cash, Shelly Cawood, Rodney Chestnut, Susan Cook, Moni Cranshaw, Joy Croom, Olivia Dearinger, Ashley R. Dunn, Daniel Fentriss, Candice Fincher-Gray, Cheri Foster, Jeanean S. Gardner, Bradford Gardner, Sherri R. Graham, Jennifer Green, Melissa Green, Tamrah Harrington, Lauren W. Hatch, Chris Hausback, Shauna K. Higgins, Marc T. Jeffrey, Patricia Johnson, Carolyn R. Kochenberger, Jacob Kochenberger, Jenna Krummel, Liz LaChance, Angela Larrison, Crystal Lester, Kerry Marciante, MaryAnne Massey, Shawn Mayolo, Tracye McCulla, Mike McKenzie, Tahnee L. Montgomery, Rick Moore, Christopher Moulton, Richard Mulvihill, Paige Navedo DDS, Marlene Nesbit, Ebin Newberry, Angela Nicholson, Shawn
Title Director, Clinical Quality Initiatives & Education Patient Advocate Coordinator Director - Accounting Manager - Accounts Payable Specialist - Accounts Payable Clinical Chart Auditor Specialist - Accounting National Director - Clinical Coordinator EVP - CFO Audit Manager, Clinical Review VP - Internal Audit Manager, Training - Dental Office Systems SVP, Regional Operations Specialist - AR Director - Development Human Resources Assistant Manager - Educational Information Design Director - Licensing and Credentialing SVP - Controller Director - Regional OM Manager - Senior Financial Analyst Admin Assistant VP - Training Admin Assistant - HR Manager - Facilities Executive Assistant Network Administrator Specialist - Account Payable Audit Manager - Clinical Review AVP - Dentist Recruitment Director of Dentist Recruitment Director - Payroll Data Entry Specialist Admin. Asst - Compliance/L&C Specialist - HR Assistant Senior Staff Auditor Manager - Chart Review Auditor AVP, Human Resources SVP - Marketing and Development Specialist - GL Accounting Senior Financial Analyst Compliance Attorney Director, Business Intelligence VP - Financial Operations SVP, Regional Operations Senior Network Engineer Patient Advocate Director - Regional OM
Exempt/Non-Exempt Exempt Non-Exempt Exempt Exempt Non-Exempt Exempt Exempt Exempt Exempt Exempt Exempt Exempt Exempt Non-Exempt Exempt Non-Exempt Exempt Exempt Exempt Exempt Exempt Exempt Exempt Non-Exempt Exempt Exempt Exempt Non-Exempt Exempt Exempt Exempt Exempt Non-Exempt Non-Exempt Exempt Exempt Exempt Exempt Exempt Non-Exempt Exempt Exempt Exempt Exempt Exempt Exempt Exempt Exempt
DOH 1-Jul-09 15-Sep-10 6-Jun-05 8-Nov-06 19-Nov-07 1-Aug-11 14-Aug-06 1-Jun-09 26-Sep-06 8-Sep-09 30-Nov-09 31-Dec-10 23-Dec-11 29-Jun-09 19-Mar-07 3-Jan-12 28-May-10 20-Oct-10 26-Sep-06 26-Nov-07 2-Apr-09 30-Aug-06 15-Jan-07 22-Jun-09 1-Jun-08 25-Apr-11 8-Dec-08 12-Nov-07 20-May-09 1-Aug-02 1-Jun-04 6-Feb-06 10-Jan-11 26-Jul-10 20-Oct-08 7-Feb-11 30-Mar-09 9-Jan-12 26-Sep-06 8-Dec-08 7-Feb-11 9-May-11 30-May-11 21-Apr-11 28-Mar-11 8-Mar-11 5-Jan-09 19-Jan-09
Nuss, Erica M. Reilly, Kevin M Richter, Timothy Sawyer, Sheila W. Shealey, Melissa Skelley, Amanda Smith, Calaudre Souri, Gus Steiner, Lorri Stinson, McLean Stringer, Jenell Taylor, Laura Tinch, Brittany Travis, Ashley Trivett, Chase Williams, Bradley Wooley, Estina Young, Angel Zoeller, Linda Independent Contractors Tore Nelson Termed Employees Michael Lindley Alfred Smith Jason Owen
Director - Regional OM SVP - Regional Operation SVP -IT General Counsel & Chief Admin. Officer Director - Regional OM Director - Accounting Licensing and Credentialing Specialist Chief Dental Officer SVP - Financial Operations Manager - Development Specialist, Licensing and Credentialing Marketing Coordinator Training Assistant Senior Financial Analyst Director - Construction SVP - Tax and Treasury Specialist - Payroll Senior Staff Auditor Manager - Paralegal
Exempt Exempt Exempt Exempt Exempt Exempt Non-Exempt Exempt Exempt Exempt Exempt Exempt Non-Exempt Exempt Exempt Exempt Non-Exempt TEMP Exempt
5-Jun-06 17-Sep-07 26-Sep-06 18-Jul-11 19-Jan-09 4-Jan-07 18-Apr-11 30-Jan-12 8-Feb-07 1-Jun-09 23-Mar-09 1-Oct-07 27-Jun-11 17-Jan-11 12-Feb-07 26-Sep-06 3-May-10 24-Jan-12 25-Jun-07
Interim CEO
Document redacted by court 3/7/12

FORBA NY, LLC Current Status A A A A A A L A A Name BELL, CHAWAKA L BROWN, TERESA GONZALEZ, DAMARIS JIMENEZ, MARISOL L MORBILLO, CAROL ANN PEPE, ALANA PROPHETER, PAMELA R SOBOTKA, MICHELLE S SYPNIER, JENNIFER Job Title Rochester Office Manager Rochester Front Ofc Asst Rochester Front Ofc Asst Syracuse Front Ofc Asst Albany Front Ofc Asst Rochester Front Ofc Asst Syracuse Asst Ofc Mgr Syracuse Office Manager Rochester Asst Ofc Mgr Home Address Home Address 2 9 YANKEE CT. 255 BREMEN STREET 68 HEARLD ST 203 WEST BRIGHTON AVENUE APT. 15 3 WREN LANE 3489 ST. PAUL BLVD 3207 EAST AVE. 2070 CO RT 11 1365 WEILAND RD City ROCHESTER ROCHESTER ROCHESTER SYRACUSE CORAM ROCHESTER CENTRAL SQUARE PARISH ROCHESTER State NY NY NY NY NY NY NY NY NY Zip 14624 14621 14621 13205 11727 14617 13036 13131 14626 Type Original DOH Annual Comp Accrued PR RFT 1/2/2007 $52,267.50 $2,010.29 RFT 12/18/2009 $25,461.70 $979.30 RFT 2/21/2011 $26,000.00 $1,000.00 RFT 9/18/2007 $23,642.07 $909.31 TEM 9/27/2011 $39,000.00 $1,500.00 RFT 1/9/2012 $24,960.00 $960.00 RFT 4/25/2005 $29,974.78 $0.00 RFT 11/15/2004 $48,795.13 $1,876.74 RFT 7/13/2009 $30,160.00 $1,160.00
Case 3:12-bk-01573
Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Redacted Exhibit Page 166 of 261
Desc
Section 4.16 Largest Vendors 1. 2. 3. 4. 5. 6. 7. 8. 9. Henry Schein Inc. UMR, Inc. Instant Web, Inc. CIGNA Intero Office Solutions Coverall North America, Inc. Strategic Health Solutions, LLC Brentwood Communications, Inc. Staples Business Advantage
10. Metropolitan Life Ins. Co.
8568727.13
Section 4.16 1
Section 4.18 Cure Costs Approximately $1,100,000, subject to the rejection or non-assignment of any Contract set forth on Section 1.1(a) of this Sellers Disclosure Letter.
8568727.13
Section 4.18 1
Section 4.20 Bank Accounts Schedule Bank Associated Bank Associated Bank Associated Bank Account Number 221308xxxx 221308 xxxx 221308 xxxx Account Type Checking/Operating Checking/Operating Checking/Operating Account Name FORBA NY, LLC FORBA SERVICES, INC. FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) FORBA NY, LLC EEHC, Inc. Church Street Health Management, LLC Church Street Health Management, LLC Church Street Health Management, LLC Church Street Health Management, LLC
Associated Bank
221308 xxxx
Money Market
Associated Bank
221303 xxxx
Checking/Payroll Centers
Pinnacle Bank Pinnacle Bank Pinnacle Bank Pinnacle Bank Pinnacle Bank Pinnacle Bank
527 xxxx 527 xxxx 526 xxxx 527 xxxx 527 xxxx 528 xxxx
Checking/Operating Checking/Payroll Management Company Checking/Operating Checking/Payroll Centers Checking/Operating Money Market
8568727.13
Section 4.20 1
Section 5.7(a) Exceptions to Ordinary Course of Business None.
8568727.13
Section 5.7(a) 1
Section 5.7(b) Exceptions to Ordinary Course of Business None.
8568727.13
Section 5.7(b) 1
Section 8.3(i) Third Party Consents 1. Corporate Integrity Agreement, dated as of January 15, 2010, by and between Church Street and the OIG-HHS. Amended Corporate Integrity Agreement, dated as of April 30, 2010, by and between Church Street and the OMIG-NY. Agreement, dated as of February 15, 2012, by and between Church Street, OMIG-NY and the New York State Office of the Attorney General. Services Agreement, dated as of February 2, 2007, by and between Small Smiles of Dothan, P.C. and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC). Services Agreement, dated as of December 6, 2006, by and between Small Smiles of Montgomery, P.C. and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC). Lease Agreement by and between 200 South Broadway, LLC and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) for property located at 201 W. 8th Street, Suite 810, Pueblo, CO 81003. Lease Agreement by and between Adventure 3 Properties, LP and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) for property located at 618 Church Street, Suite 520, Nashville, TN 37219. Lease Agreement by and between Adventure 3 Properties, LP and FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC) for property located at 618 Church Street, Suite 310, Nashville, TN 37219. Lease Agreement by and between Adventure 3 Properties, LP and Church Street Health Management, LLC for property located at 618 Church Street, Suite 130, Nashville, TN 37219.
2.
3.
4.
5.
6.
7.
8.
9.
8568727.13
Section 8.3(i) 1
Exhibit C Wind-Down Budget Attached.
8565755.15
Small Smiles Holding Company, LLC
Wind Down Budget
Assume 363 Sale closes on May 18, 2012 and Liquidating Chapter 11 concluded by September 30, 2012
Monthly May 12 1,000 2,778 15,000 10,000 5,000 200 200 200 15,000 45,000 30,000 10,000 7,500 40,000 50,000 10,000 40,000 20,000 30,000 200 2,000 5,556 2,000 5,556 2,000 5,556 Jun 12 Jul 12 Aug 12 Sep 12 2,000 5,556 35,000 20,000 10,000 7,500 200 10,000 Total 9,000 25,000 175,000 130,000 65,000 15,000 1,000 25,000
Responsible Officer Independent Manager Foley Hoag (Special Counsel) (1) Debtors Counsel Noticing Agent UST Fees Bank Fees (2) Financial Advisor (Testimony, advisory, etc) Records Storage and Other Expenses for Closed Centers (3) Other (Name Change, etc.) TOTAL $ 1,000 33,978 $ 1,000 100,256 $ 1,000 122,756 $
Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Redacted Exhibit Page 174 of 261
(1) Total Foley Hoag fees for the National Union matter are forecasted at $750,000 with $585,000 included in the DIP budget assuming settlement agreement reached by mid May. (2) Monthly fees for one account to be maintained. (3) Assumed by NewCo. NOTE: Any financial, tax and other necessary services to be provided by NewCo under TSA at no cost
Case 3:12-bk-01573
1,000 97,756 $ 1,000 90,256 $
5,000 450,000
Desc Desc
Draft Filed 03/02/12 Entered Case 3:12-bk-01573 Doc 106-6 For Discussion Purposes Only 03/02/12 17:26:14 Privileged & Confidential Exhibit F - Asset Sale Agreement Page 174 of 261
Exhibit D Form of Bidding Procedures Attached.
8565755.15
BIDDING PROCEDURES Set forth below are the bidding procedures (the Bidding Procedures) to be employed with respect to the sale of substantially all of the assets (the Assets) of Church Street Health Management, LLC, Small Smiles Holding Company, LLC, FORBA NY, LLC, FORBA Services, Inc., and EEHC, Inc. (collectively, the Sellers or Debtors). The Assets being acquired and the terms and conditions upon which the Sellers contemplate consummating a sale are further described in the form of the Asset Sale Agreement (the Stalking Horse Agreement) among the Sellers and CSHM LLC (the Stalking Horse Bidder). Copies of the form Stalking Horse Agreement are available for free by (i) sending a written request to the Sellers claims and noticing agent, GCG, Inc. (GCG), at 190 S. LaSalle Street, Suite 1520, Chicago, IL 60603, (ii) calling GCG at (877) 906-0209, or (iii) emailing GCG at cshminfo@gcginc.com. The sale of the Assets of the Sellers (the Sale) pursuant to the Stalking Horse Agreement is subject to competitive bidding as set forth herein and approval by the United States Bankruptcy Court for the Middle District of Tennessee (the Bankruptcy Court) pursuant to sections 105, 363, 365, 503 and 507 of title 11 of the United States Code (the Bankruptcy Code), Rules 2002, 6004, 6006, 9007 and 9014 of the Federal Rules of Bankruptcy Procedure and Rules 6004-1 and 90141 of the Local Rules of Court for the United States Bankruptcy Court for the Middle District of Tennessee. I. The Sale Hearing
At a hearing before the Bankruptcy Court (the Sale Hearing), the Seller will seek entry of an order from the Bankruptcy Court approving and authorizing the Sale to the Successful Bidder (as defined below) on terms and conditions consistent with the Stalking Horse Agreement (as modified solely to the extent accepted by the Seller) and in accordance with these Bidding Procedures. II. Participation Requirements
Unless otherwise ordered by the Bankruptcy Court for cause shown, to participate in the Bidding Process (as defined below), each person or entity other than the Stalking Horse Bidder must deliver (unless previously delivered) to the Sellers, on or before the Bid Deadline (as defined below), (i) an executed confidentiality agreement in form and substance satisfactory to the Sellers (the Confidentiality Agreement) and (ii) a bona fide, non-binding letter of intent or expression of interest with respect to a purchase of the Assets (together with the Confidentiality Agreement, the Participation Requirements). Each person or entity that delivers the Participation Requirements to the Sellers on or before the Bid Deadline is hereinafter referred to as a Potential Bidder. After a Potential Bidder delivers the Participation Requirements to the Sellers, the Sellers shall deliver or make available (unless previously delivered or made available) to each Potential Bidder certain designated information and financial data with respect to the Assets; provided, however, that the Sellers may decline to make such information available to a Potential Bidder if the Sellers believe that such Potential Bidder poses a competitive threat to the Sellers businesses. The Sellers shall use commercially reasonable efforts to promptly provide, or identify and make available to the Stalking Horse Bidder, any information concerning Sellers,
8613062.5
any of their subsidiaries, the Assets or the Sellers businesses provided to any Potential Bidder which was not previously provided to the Stalking Horse Bidder. III. Determination by the Sellers
The Sellers shall (a) coordinate the efforts of Potential Bidders in conducting their respective due diligence, (b) evaluate bids from Potential Bidders, (c) negotiate any bid made to acquire the Assets and (d) make such other determinations as are provided in these Bidding Procedures (collectively, the Bidding Process). Neither the Sellers nor their representatives shall be obligated to furnish any information of any kind whatsoever relating to the Assets to any person who is not a Potential Bidder (other than the Stalking Horse Bidder). IV. Due Diligence
Up to and including the date that is one day prior to the Auction, as defined herein (the Diligence Period), the Sellers shall afford any Potential Bidder such due diligence access or additional information as may be reasonably requested by the Potential Bidder that the Sellers, in their business judgment, determine to be reasonable and appropriate. The Sellers may designate a representative to coordinate all reasonable requests for additional information and due diligence access from such Potential Bidders. Each Potential Bidder shall be required to acknowledge that it has had an opportunity to conduct any and all due diligence regarding the Assets prior to submitting its Bid. V. Bid Deadline
A Potential Bidder that desires to make a bid shall deliver copies of its bid by facsimile and/or email to (a) proposed counsel to the Sellers, Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, TN 37219, Attn: John C. Tishler, Esq. and Donald R. Moody, Esq.; (b) proposed Chief Restructuring Officer of the Sellers, Martin McGahan, Alvarez & Marsal Healthcare Industry Group, LLC, c/o 618 Church Street, Suite 520, Nashville, TN 37219; (c) proposed counsel for any official committee of unsecured creditors appointed in these cases (the Committee); (d) proposed local counsel for the Committee, if any; and (e) proposed financial advisor to the Committee, if any; by no later than [April 16], 2012 at 4:00 p.m. Central Standard Time (the Bid Deadline).
8613062.5
VI.
Bid Requirements All bids (each hereinafter, a Bid), other than the Stalking Horse Agreement, must be
(a) in cash, (b) accompanied by a letter: (i) Offering to acquire the Assets on terms substantially identical to the Stalking Horse Agreement and providing for the releases contemplated therein and expressly agreeing to assume, at a minimum, all of the liabilities provided for in the Stalking Horse Agreement; Accompanied by a duly executed agreement attached to the letter, marked to show any proposed amendments and modifications to the Stalking Horse Agreement and its schedules and exhibits (the Marked Agreement); Specifying Bid terms that are substantially the same or better (as determined in the Sellers reasonable business judgment) than the terms of the Stalking Horse Agreement; Agreeing that the Potential Bidders offer, irrespective of whether such Potential Bidder is the Successful Bidder or the Backstop Bidder, is binding and irrevocable until the earlier of (i) the Closing Date (as defined below), or (ii) twenty (20) days after the Sale Hearing; Providing that such Bid is not subject to any due diligence or financing contingency; Agreeing not to request or assert entitlement to any transaction or breakup fee, expense reimbursement or similar type of payment; and Agreeing to serve as the Backstop Bidder (as defined below) in accordance with these Bidding Procedures; and
(ii)
(iii)
(iv)
(v) (vi) (vii)
(c) accompanied by adequate assurance information (the Adequate Assurance Information), including (i) information about the Potential Bidders financial condition, such as federal tax returns for two years, a current financial statement, or bank account statements, (ii) information demonstrating (in the Sellers reasonable business judgment) that the Potential Bidder has the financial capacity to consummate the proposed Sale, (iii) evidence that the Potential Bidder has obtained authorization or approval from its board of directors (or comparable governing body) with respect to the submission of its Bid, (iv) the identity and exact name of the Potential Bidder (including any equity holder or other financial backer if the Potential Bidder is an entity formed for the purpose of consummating the Sale), and (v) such additional information regarding the Potential Bidder as the Potential Bidder may elect to include. By submitting a Bid, Potential Bidders agree that the Sellers may disseminate their Adequate Assurance Information to affected landlords or contract counterparties in the event that the Sellers determine such bid to be (a) a Qualified Bid (as defined below) and (b) a higher and better bid than the Stalking Horse Agreement.
8613062.5
All Bids (other than the Stalking Horse Agreement) must be accompanied by (a) a certified check or wire transfer, payable to the order of the Sellers, in an amount equal to 10% of the Purchase Price (as defined in the Stalking Horse Agreement) in cash, which funds will be deposited into an interest bearing escrow account to be identified and established by the Sellers (a Good Faith Deposit) and (b) written evidence, documented to the Sellers reasonable satisfaction, that demonstrates the Potential Bidder has available cash or a commitment for financing and such other evidence of ability to consummate the transaction as the Sellers may reasonably request, including proof that such funding commitments or other financing are not subject to any internal approvals, syndication requirements, diligence or credit committee approvals (provided, that such commitments may have covenants and conditions reasonably acceptable to the Sellers). The Sellers will review each Bid received from a Potential Bidder to ensure that it meets the requirements set forth above. A Bid received from a Potential Bidder that meets the above requirements will be considered a Qualified Bid and each Potential Bidder that submits a Qualified Bid will be considered a Qualified Bidder. Anything herein to the contrary notwithstanding, the Stalking Horse Agreement is a Qualified Bid and the Stalking Horse Bidder is a Qualified Bidder, for all purposes and requirements pursuant to the Bidding Procedures. Upon determination that a Bid received from a Potential Bidder constitutes a Qualified Bid, the Sellers shall, within one (1) business day, provide the Stalking Horse Bidder with a copy of the Qualified Bid. A Qualified Bid will be valued by the Sellers based upon any and all factors that the Sellers deem pertinent, including, among others, (a) the amount of the Qualified Bid, (b) the risks and timing associated with consummating a transaction with the Potential Bidder, (c) any excluded assets or executory contracts and leases, and (d) any other factors that the Sellers may deem relevant to the Sale. The Sellers, in their business judgment, reserve the right to reject any Bid if such Bid: (a) (b) (c) (d) Is on terms that are more burdensome or conditional than the terms of the Stalking Horse Agreement; Requires any indemnification of the Potential Bidder in its Marked Agreement; Is not received by the Bid Deadline; Is subject to any contingencies (including representations, warranties, covenants and timing requirements) of any kind or any other conditions precedent to such partys obligation to acquire the Assets (other than as may be included in the Stalking Horse Agreement); or Is not a Qualified Bid for any other reason as set forth above.
(e)
Any Bid rejected pursuant to this paragraph shall not be deemed to be a Qualified Bid. In the event that any Bid is so rejected, the Sellers shall cause such Potential Bidder to be refunded its Good Faith Deposit and all accumulated interest thereon within three (3) business days after the
8613062.5
Bid Deadline. Notwithstanding anything set forth in these Bidding Procedures, in no event shall the Sellers determine that a Bid is a Qualified Bid unless each of the Bid requirements enumerated herein is satisfied. VII. Auction Participation
Unless otherwise ordered by the Bankruptcy Court for cause shown, only the Stalking Horse Bidder and each Qualified Bidder are eligible to participate at the Auction (as defined below). At least two (2) business days prior to the Auction, each Qualified Bidder must inform the Sellers in writing whether it intends to participate in the Auction. The Sellers will promptly thereafter inform (in writing) each Qualified Bidder, who has expressed its intent to participate in the Auction, (a) of the identity of all other Qualified Bidders that may participate in the Auction (and shall provide copies of the Qualified Bids to the Stalking Horse Bidder and any other Qualified Bidder who requests a copy of the Qualified Bids); and (b) of the Qualified Bid which the Sellers have deemed to be the highest and best Qualified Bid (the Highest and Best Bid). If the Sellers do not receive any Qualified Bids other than the Stalking Horse Agreement: (a) the Sellers will not hold an Auction; (b) the Stalking Horse Agreement will be the Successful Bid (as defined below); and (c) the Stalking Horse Bidder will be named the Successful Bidder. VIII. Auction If at least one Qualified Bid other than the Stalking Horse Agreement is received by the Bid Deadline, the Sellers will conduct an auction (the Auction). The Auction shall take place on April 20, 2012 at 9:00 a.m. Central Standard Time, at the offices of proposed counsel to the Sellers, Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, Tennessee 37219, or such later time or such other place as the Sellers shall designate and notify to all Qualified Bidders who have submitted Qualified Bids. Only a Stalking Horse Bidder and each other Qualified Bidder who has submitted a Qualified Bid will be eligible to participate at the Auction. Professionals for (a) the Committee (if any), (b) the Stalking Horse Bidder, (c) each other Qualified Bidder, and (d) the agent for the Sellers prepetition secured lenders, along with any other parties the Sellers deem appropriate, shall be able to attend and observe the Auction. Each Qualified Bidder participating in the Auction will be required to confirm, in writing, that (a) it has not engaged in any collusion with respect to the Bidding Process, and (b) its Qualified Bid is a good faith bona fide offer that it intends to consummate if selected as the Successful Bidder. At the Auction, participants will be permitted to increase their Qualified Bids. Bidding at the Auction will commence with the Highest and Best Bid and will continue in increments of at least $500,000 (the Overbid Amount, and each successive bid an Overbid), provided, however, that the initial Overbid (the Initial Overbid) must be at least equal to the Stalking Horse Agreement plus (i) $1,000,000, (ii) the Break-Up Fee and (iii) the Expense Reimbursement (each as defined in the Stalking Horse Agreement); provided further, however, that if the Stalking Horse Agreement is not the Highest and Best Bid, the Initial Overbid, if made by the Stalking Horse Bidder, may be in an amount at least equal to the Overbid Amount. An Overbid shall remain open and binding on the Qualified Bidder until and unless (a) the Sellers accept an alternate Overbid as the Highest and Best Bid, and (b) such Overbid is not selected as
8613062.5
the Backstop Bid (as defined below). During the course of the Auction, the Sellers shall, after submission of each Overbid, promptly inform each participant which Overbid reflects, in the Sellers view, the highest or otherwise best offer. For the avoidance of doubt, the DIP Lender, the DIP Agent, the Prepetition Lenders, the Prepetition Agent, and/or any authorized designee of the DIP Agent and/or Prepetition Agent may submit credit bids on behalf of the Stalking Horse Bidder to the fullest extent permitted by section 363(k) of the Bankruptcy Code. Any and all Overbids made by the Stalking Horse Bidder including, if applicable, the Initial Overbid, may be in the form of a credit bid. For the avoidance of doubt, any and all Bids, Initial Overbids and Overbids, other than those submitted by or on behalf of the Stalking Horse Bidder, shall be in cash. The Sellers may announce at the Auction additional procedural rules (e.g., the amount of time to make subsequent Overbids) for conducting the Auction so long as the rules are not inconsistent with these Bidding Procedures. The bidding at the Auction shall be transcribed or videotaped and the Sellers shall maintain a transcript of all Bids made and announced at the Auction, including all Overbids and the Successful Bid. Immediately prior to the conclusion of the Auction, the Sellers will: (a) review each Qualified Bid made at the Auction on the basis of financial and contractual terms and such factors relevant to the Sale, including those factors affecting the speed and certainty of consummating the Sale; (b) identify the highest and best Bid for the Assets of the Seller at the Auction (the Successful Bid); and (c) notify all Qualified Bidders at the Auction, prior to its conclusion, of the name or names of the maker of the Successful Bid (the Successful Bidder), and the amount and other material terms of the Successful Bid. The Sellers shall not consider any Bids or Overbids submitted after the conclusion of the Auction and any and all such Bids and Overbids shall be deemed untimely and shall under no circumstances constitute a Qualified Bid. All bidders at the Auction will be deemed to have consented to the core jurisdiction of the Bankruptcy Court and waived any right to jury trial in connection with any disputes relating to the Auction, the Sale and the construction and enforcement of the Stalking Horse Agreement. IX. Acceptance of Qualified Bids
The Sellers may (a) determine, in their reasonable business judgment which Qualified Bid is the Successful Bid and the next best Qualified Bid (the Backstop Bid); and (b) reject at any time, before entry of an order of the Bankruptcy Court approving the Sale, any Bid (other than the Stalking Horse Agreement) that, in the Sellers reasonable judgment is (i) inadequate or insufficient, (ii) not in conformity with the requirements of the Bankruptcy Code, the Bidding Procedures or the terms and conditions of the Sale or (iii) contrary to the best interests of the Sellers and their estates. The Sellers presently intend to convey the Assets to the Qualified Bidder that submits the Successful Bid, whether such entity is the Stalking Horse Bidder or another Qualified Bidder. The Sellers presentation to the Bankruptcy Court for approval of the selected Qualified Bid as the Successful Bid does not constitute the Sellers acceptance of such Bid. The Sellers will have
8613062.5
accepted a Successful Bid only when such Successful Bid has been approved by the Bankruptcy Court at the Sale Hearing. The Sellers and the Successful Bidder will close the Sale on or before a date that is three (3) business days after the order approving the Sale becomes a final, nonappealable order, unless another time or date, or both, are agreed to in writing by the Sellers and the Stalking Horse Bidder (the Closing Date). If the Successful Bidder does not close the Sale by the Closing Date, then the Sellers will be authorized, but not required, to close with the party that submitted the Backstop Bid (the Backstop Bidder), without a further court order, and such Backstop Bidder shall thereafter be deemed to be the Successful Bidder. In no event shall the Closing Date occur later than May 11, 2012. Notwithstanding anything set forth herein, under no circumstances shall the Stalking Horse Bidder be selected as the Backstop Bidder without its express written consent. X. No Fees for Potential Bidders or Qualified Bidders, Other Than the Stalking Horse Bidder
Potential Bidders or Qualified Bidders, other than the Stalking Horse Bidder, shall not be allowed any breakup, termination or similar fee or any expense reimbursement. Moreover, all Potential Bidders and Qualified Bidders, other than the Stalking Horse Bidder, waive any right to seek a claim for substantial contribution. XI. Return of Good Faith Deposit
The Good Faith Deposits of all Potential Bidders shall be held in escrow by the Sellers, but shall not become property of the Sellers estates absent further order of the Bankruptcy Court. The Good Faith Deposits of all Potential Bidders (other than the Stalking Horse Bidder, which shall not be required to submit a Good Faith Deposit) shall be retained by the Sellers, notwithstanding Bankruptcy Court approval of a Sale, until three (3) business days after the earlier of (a) the Closing Date, or (b) twenty (20) days following the Sale Hearing. The Sellers shall retain indefinitely any Good Faith Deposit submitted by the Successful Bidder. At the closing of the Sale contemplated by the Successful Bid, the Successful Bidder, other than the Stalking Horse Bidder, will be entitled to a credit for the amount of its Good Faith Deposit to the extent a Good Faith Deposit was provided. Upon the return of the Good Faith Deposits, their respective owners shall receive any and all interest that will have accrued thereon.
8613062.5
Exhibit E Form of Stalking Horse and Bidding Procedures Order Attached.
8565755.15
IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION -----------------------------------------------------------------------IN RE: ) ) Chapter 11 CHURCH STREET HEALTH MANAGEMENT, LLC, ) ) Case No. 12-01573 et al. 1 ) Debtors ) (Jointly Administered) -----------------------------------------------------------------------ORDER (A) AUTHORIZING AND SCHEDULING AN AUCTION, (B) AUTHORIZING AND APPROVING (i) BIDDING PROCEDURES, (ii) NOTICE OF THE AUCTION, (iii) BREAK-UP FEE AND EXPENSE REIMBURSEMENT, (iv) THE FORM AND MANNER OF SALE NOTICE, (v) THE FORM AND MANNER OF SALE SUMMARY AND (vi) THE FORM AND MANNER OF ASSUMPTION AND ASSIGNMENT NOTICE, (C) SCHEDULING A SALE HEARING AND (D) GRANTING RELATED RELIEF Upon the motion (the Sale Motion),2 dated March 2, 2012, of Church Street Health Management, LLC and its affiliated debtors, as debtors in possession (collectively, the Debtors or the Sellers), pursuant to sections 105, 363, 365, and 503 of title 11 of the United States Code (the Bankruptcy Code), Rules 2002, 6004, 6006, 7004 and 9014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), and Rules 6004-1 and 9014-1 of the Local Rules of Court for the United States Bankruptcy Court for the Middle District of Tennessee (the Local Rules) for entry of an order (i) authorizing and scheduling an auction (the Auction) for the sale by the Sellers of substantially all of the Debtors assets (the Assets) as more fully described in the Stalking Horse Agreement (defined below) and
The Debtors (with the last four digits of each Debtors federal tax identification number and chapter 11 case number), are: Church Street Health Management, LLC (2335; Case No. 12-01573), Small Smiles Holding Company, LLC (4993; Case No. 12-01574), FORBA NY, LLC (8013; Case No. 12-01575), FORBA Services, Inc. (6506; Case No. 12-01577), EEHC, Inc. (4973; Case No. 12-01576). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Sale Motion.
8613061.6
approving bidding procedures (the Bidding Procedures) in connection therewith; (ii) authorizing and approving notice of the Auction; (iii) authorizing and approving a break-up fee and expense reimbursement in connection with the sale (the Sale) of the Assets in accordance with that certain Asset Sale Agreement, dated March 2, 2012, by and among the Sellers and the Stalking Horse Bidder, a copy of which is annexed to the Sale Motion as Exhibit F (the Stalking Horse Agreement); (iv) authorizing the form and manner of the notice of sale of the Assets and scheduling a hearing in relation therewith; and (v) authorizing and approving the form and manner of the notice for assumption and assignment (the Assumption and Assignment Notice) of certain prepetition executory contracts and unexpired leases (the Assigned Contracts) and proposed cure costs associated with such assumption (the Cure Costs) in connection with the Sale, and (vi) scheduling a hearing to approve a Sale (the Sale Hearing), all as is more fully set forth in the Sale Motion; and the Court having jurisdiction to consider the Sale Motion and the relief requested therein in accordance with 28 U.S.C. 157 and 1334; and consideration of the Sale Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b); and venue being proper before this Court pursuant to 28 U.S.C. 1408 and 1409; and due and proper notice of the Sale Motion having been provided and it appearing that no other or further notice need be provided; and the Court having determined that the relief sought in the Sale Motion is in the best interests of the Debtors, their creditors and all parties in interest; and the Court having determined that the legal and factual bases set forth in the Sale Motion establish just cause for the relief granted herein; and upon all of the proceedings had before the Court and after due deliberation and sufficient cause appearing therefor; IT IS HEREBY FOUND, DETERMINED, AND CONCLUDED THAT:
8613061.6
A.
The findings and conclusions set forth herein constitute the Courts findings of
fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. To the extent any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such. B. This Court has jurisdiction over the Sale Motion and the relief requested therein
pursuant to 28 U.S.C. 157 and 1334, and this matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A), (N) and (O). Venue is proper pursuant to 28 U.S.C. 1408 and 1409. C. Good and sufficient notice of the Bidding Procedures and the other related relief
sought in the Sale Motion has been given to all interested persons and entities, including, without limitation, (i) the United States Trustee for the Middle District of Tennessee (the U.S. Trustee), (ii) the attorneys for the agent for the Debtors prepetition secured lenders, (iii) the Debtors fifty (50) largest unsecured creditors on a consolidated basis or, if an official committee of unsecured creditors (the Committee) has been appointed, counsel to the Committee, (iv) all entities known to have asserted any lien, claim, interest or encumbrance in or on the Assets, and (v) all other parties entitled to notice pursuant to the submitted proposed order establishing notice procedures in these chapter 11 cases [Docket No. 72]. D. The Sellers have articulated good and sufficient reasons for, and the best interests
of the Sellers will be served by, this Court granting the preliminary relief requested in the Sale Motion, including approval of (i) the Bidding Procedures, substantially in the form annexed hereto as Exhibit A; (ii) the Sale Notice, substantially in the form annexed hereto as Exhibit B; (iii) the Sale Summary (as defined below), substantially in the form annexed hereto as Exhibit C; (iv) the Assumption and Assignment Notice, substantially in the form annexed hereto as Exhibit
8613061.6
D; (v) the Break-Up Fee (defined below) and the Expense Reimbursement (defined below); and (vi) the Sellers execution of the Stalking Horse Agreement. E. The proposed notice of the Sale of the Assets and the Bidding Procedures, as set
forth in the Sale Motion, is good, appropriate, adequate and sufficient, and is reasonably calculated to provide all interested parties with timely and proper notice of the Sale and the Bidding Procedures, and no other or further notice is required for the Sale of the Assets to the Stalking Horse Bidder (or the Successful Bidder, as applicable), and the assumption and assignment of the Assigned Contracts as contemplated in the Bidding Procedures, as set forth herein and in the Sale Motion. F. The Sellers have articulated good and sufficient reasons for, and the best interests
of the Sellers estates will be served by, this Court (i) authorizing the Sellers execution of the Stalking Horse Agreement following the Petition Date but prior to the Auction, and (ii) scheduling an Auction and a hearing to consider the approval of the Sale and the transfer of the Assets to the Stalking Horse Bidder (or the Successful Bidder, as applicable), free and clear of all liens, claims, interests and encumbrances (other than Permitted Encumbrances, as defined in the Stalking Horse Agreement), including, without limitation, claims arising under the doctrine of successor liability, pursuant to section 363 of the Bankruptcy Code. G. The Break-Up Fee and the Expense Reimbursement (each as defined below) are
actual and necessary costs and expenses of preserving the Debtors estates within the meaning of section 503(b) of the Bankruptcy Code, commensurate to the real and substantial benefit conferred upon the Debtors estates by the Stalking Horse Bidder, and necessary to induce the Stalking Horse Bidder to continue to pursue the transactions contemplated by the Stalking Horse Agreement.
8613061.6
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT: 1. The Sale Motion is GRANTED to the extent set forth herein and with respect to
the relief requested in relation to the Bidding Procedures and other related relief in respect of the Sale. 2. All objections to the relief requested in the Sale Motion that have not been
withdrawn, waived, or settled as announced to this Court at the hearing on the Sale Motion or by stipulation filed with this Court, are overruled. 3. The Debtors shall take any and all actions necessary or appropriate to implement
this Order in connection with the Sale, and the Debtors and their advisors may engage in the marketing of the Assets (including the entry into confidentiality agreements with potential purchasers) in accordance with the Bidding Procedures. 4. The Bidding Procedures, substantially in the form annexed hereto as Exhibit A,
are hereby approved, are incorporated herein by reference, and shall govern all Bids and Bid proceedings relating to the Assets. The Sellers are authorized to take any and all actions necessary or appropriate to implement the Bidding Procedures and conduct the Auction in accordance with the terms thereof. 5. The deadline for submitting a Qualifying Bid (as such term is defined in the
Bidding Procedures) shall be April 16, 2012 at 4:00 p.m. Central Standard Time (the Bid Deadline). 6. To the extent at least one Qualified Bid, other than the Stalking Horse Bidders
bid, is timely received, the Sellers shall conduct the Auction on April 20, 2012 at 9:00 a.m. Central Standard Time at the offices of Waller Lansden Dortch & Davis, LLP, 511 Union
8613061.6
Street, Suite 2700, Nashville, Tennessee 37219, or at any such other location as the Debtors may hereafter designate (with notice of such alternate location given to all Qualified Bidders and the Notice Parties (defined below)). Only the Stalking Horse Bidder and any other Qualified Bidder will be permitted to participate in the Auction. The Auction will be transcribed or videotaped. 7. Agreement. 8. At the Auction, when only one Qualified Bidder remains and the Sellers have Prior to the Auction the Sellers will be authorized to execute the Stalking Horse
selected that Qualified Bidders Bid as the Highest and Best Bid (as described in the Bidding Procedures), the Auction will conclude. As soon as reasonably practicable following the conclusion of the Auction (but no later than one (1) business day after the conclusion of the Auction), the Sellers shall file a notice identifying the Successful Bidder and the Backstop Bidder, if any, and will serve such notice on the counterparties to the Assigned Contracts via facsimile or email (if available), or otherwise via overnight mail delivery (but only if facsimile or email are not available). 9. All bidders submitting a Qualified Bid are deemed to have submitted to the
exclusive jurisdiction of this Court with respect to all matters related to the Auction and the terms and conditions of the transfer of the Assets. 10. Consistent with the requirements of the Bidding Procedures, each Bid by a Bidder
other than the Stalking Horse Bidder must be accompanied by, among other things, a Good Faith Deposit in an amount equal to 10% of the Purchase Price (as defined in the Stalking Horse Agreement) in cash, which shall only be refunded to such Bidder upon the entry of an order which becomes final and nonappealable approving a transaction between the Debtors and
8613061.6
another buyer (other than such Bidder) (unless such finality and nonappealability shall have been waived by the Debtors and the buyer). 11. The Good Faith Deposit of any Bidder shall become nonrefundable if and when
the Court enters an order which has become final and nonappealable approving the higher or better Bid of such Bidder (unless such finality and nonappealability shall have been waived by the Debtors and such Bidder). 12. By March 16, 2012, or as soon thereafter as practicable (but no later than three (3)
business days following that date), the Debtors (or their agents) shall serve a copy of this Order, the Sale Motion, the Stalking Horse Agreement, the Bidding Procedures and the proposed Sale Order (as hereinafter defined) by first-class mail, postage prepaid, or other method reasonably calculated to provide notice of the Sale and the Auction, upon (i) all entities known to have expressed an interest in a transaction with respect to the Assets during the past six (6) months, (ii) all entities known to have asserted any lien, claim, interest or encumbrance in or on the Assets, and (iii) the Notice Parties (as defined below). 13. The notice of Sale of the Assets pursuant to the Auction and of the Sale Hearing
(the Sale Notice), substantially in the form annexed hereto as Exhibit B, is hereby approved. 14. The Summary of Sale Process (the Sale Summary), substantially in the form
annexed hereto as Exhibit C is hereby approved for service to all individuals and entities on the Debtors mailing matrix. 15. A notice substantially in the form of the Sale Notice shall be published on one
occasion in the Wall Street Journal, National Edition at least twenty (20) days prior to the Auction.
8613061.6
16.
The Debtors shall serve a copy of the Sale Notice and the Sale Summary by first
class mail, by March 16, 2012 or as soon thereafter as practicable (but no later than three (3) business days following that date), on (i) the Notice Parties (as defined below), (ii) all entities known to have asserted any lien, claim, interest or encumbrance in or on the Assets, and (iii) all individuals and entities listed on the Debtors mailing matrix. 17. Notwithstanding any confidentiality agreement that may be contained in any
agreement, contract, or other document to which the Sellers are a party, the Sellers are authorized to disclose the contents of such agreement, contract or document to prospective bidders for the Assets in connection with the Bidding Procedures and sale of the Assets, provided that such prospective bidders execute and deliver non-disclosure agreements acceptable to the Debtors. 18. To the extent the Auction occurs, the Stalking Horse Bidder shall be deemed to be
a Qualified Bidder under the Bidding Procedures, and shall be permitted to credit bid any or all of its claims under the Credit Agreements and/or the DIP Credit Agreement (each as defined in the Stalking Horse Agreement), and/or the amount of the Break-Up Fee and Expense Reimbursement (each as defined below), in the amount of expenses actually incurred through the date of the Auction, all pursuant to section 363(k) of the Bankruptcy Code. 19. Pursuant to and in accordance with the terms and conditions of the Stalking Horse
Agreement, the Stalking Horse Bidder shall be entitled to receive from the funds deposited by the Successful Bidder, in accordance with the Bidding Procedures and pursuant to the terms of the Stalking Horse Agreement, a break-up fee (the Break-Up Fee) in an amount equal $2,000,000, plus reasonable documented costs and expenses not to exceed $250,000 (the Expense Reimbursement), with such amount to be due and payable in the event that the Court has entered an order approving a Sale of the Assets to a Successful Bidder (as defined in the
8613061.6
Bidding Procedures) other than the Stalking Horse Bidder (an Alternative Agreement) and such order has become final and nonappealable (unless such finality and nonappealability shall have been waived by the Debtors and such Bidder). 20. The Break-Up Fee and the Expense Reimbursement are approved and allowed,
pursuant to section 364(c)(1) of the Bankruptcy Code, as super-priority administrative expenses in the Debtors chapter 11 cases with priority over all administrative expenses of the kind specified in sections 503(b) and/or 507(a) of the Bankruptcy Code and shall be payable pursuant to paragraph 21 hereof. 21. Debtors shall pay the Stalking Horse Bidder the Break-Up Fee and Expense
Reimbursement from the Good Faith Deposit tendered by another third party bidder upon entry of an order which has become final and nonappealable approving the sale of the Assets to such third party bidder making a higher or better offer for the Assets (unless such finality and nonappealability shall have been waived by the Debtors and such Bidder and the transaction is consummated). 22. The Sale Hearing will be held before the Honorable Keith M. Lundin of the
United States Bankruptcy Court for the Middle District of Tennessee on _____ __, 2012, at __:__ _.m. or as soon thereafter as the Court may be available at the United States Bankruptcy Court, 701 Broadway, Room 2, Nashville, Tennessee 37203, to consider, among other things, entry of an order (the Sale Order), (i) authorizing and approving the sale of the Assets to the Stalking Horse Bidder pursuant to the Stalking Horse Agreement or to the party otherwise submitting the highest or otherwise best bid(s) for the Assets at the Auction free and clear of all liens, claims, interests and encumbrances (other than Permitted Encumbrances, as defined in the
8613061.6
Stalking Horse Agreement); (ii) authorizing and approving the Stalking Horse Agreement and each of the related agreements referred to therein; and (iii) granting related relief. 23. Responses or objections, if any, to the relief to be considered at the Sale Hearing,
including, but not limited to, approval of the Sale, including the sale of the Assets free and clear of liens, claims, interests and encumbrances (other than Permitted Encumbrances, as defined in the Stalking Horse Agreement), must be in writing and set forth with particularity all legal and factual bases for the response or objection and filed with this Court (with a copy to Chambers) and served on: (i) the U.S. Trustee, (ii) the Debtors fifty (50) largest unsecured creditors on a consolidated basis or, if a Committee has been appointed, counsel to the Committee, (iii) counsel to the Debtors, Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, TN 37219, Attn: John C. Tishler, Esq. and Donald R. Moody, Esq., (iv) co-counsel to the Agent (as defined in the Stalking Horse Agreement), Shearman & Sterling, 599 Lexington Avenue, New York, NY 10022, Attn: Steven E. Sherman, Esq., and Bass, Berry & Sims PLC, 150 Third Avenue South, Suite 2800, Nashville, TN 37201, Attn: Paul G. Jennings, Esq., and (v) cocounsel to the Stalking Horse Bidder, Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, NY 10166, Attn: David M. Feldman, Esq. and J. Eric Wise, Esq., and Burr & Forman LLP, 700 Two American Center, 3102 West End Avenue, Nashville, TN 37203, Attn: David W. Houston IV, Esq. (collectively, (i) through (v), the Notice Parties), so as to be received by 4:00 p.m. Central Standard Time on April 23, 2012 (the Sale Objection Deadline). 24. The Sale of the Assets is consistent with section 363(b)(1)(A) of the Bankruptcy
Code and, as the Sale does not violate the Sellers privacy policy, no consumer privacy ombudsman is necessary in connection with the Sale.
8613061.6
10
25.
The Assumption and Assignment Notice, substantially in the form annexed hereto
as Exhibit D, is hereby approved. 26. The Debtors shall serve the Assumption and Assignment Notice by first class
mail, no later than three (3) days after service of the Sale Notice, or as soon thereafter as practicable, on all counterparties to the Assigned Contracts. 27. The Debtors shall file on the Courts docket (the Docket) a schedule listing
each Assigned Contract and the proposed Cure Cost associated therewith (the Schedule of Contracts) within three (3) days of the mailing of the Assumption and Assignment Notice. 28. Provided that it does not do more than identify the contract name, the date of the
contract, the parties thereto and the proposed Cure Cost, the limited information to be provided on the Schedule of Contracts to be published on the Docket does not violate the confidentiality provisions in any of the Assigned Contracts. 29. Any party seeking to (i) object to the validity of the Cure Costs as determined by
the Sellers in respect of an Assigned Contract or otherwise assert that any other amounts, defaults, conditions or pecuniary losses must be cured or satisfied under any of the Assigned Contracts in order for such executory contract or lease to be assumed and assigned or (ii) object to the assumption and assignment of any Assigned Contracts on any other basis (including, but not limited to, objections to adequate assurance of future performance by the Successful Bidder), must file with the Bankruptcy Court (contemporaneously with a proof of service), in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and any order of this Court, an objection that must: (a) state with particularity the legal and factual basis for the objection and if practicable, a proposed modification to the terms of the Sale that would resolve such objection, and (b) if applicable, include any and all documentation relied upon by the objector in support of
8613061.6
11
its determination of Cure Costs, setting forth the cure amount the objector asserts to be due, and the specific types and dates of the alleged defaults, pecuniary losses and conditions to assignment and the support therefor, so as to be actually received on or before the Sale Objection Deadline. 30. If a timely objection to the proposed Cure Costs in respect of an Assigned
Contract is not received in accordance with the Assumption and Assignment Notice and this Order, (i) the Debtors shall be authorized to assume and assign such Assigned Contract, (ii) Cure Costs listed in the Schedule of Contracts shall be binding for all purposes in these chapter 11 cases and will constitute a final determination of total cure amounts required to be paid by the Debtors in connection with the assumption and assignment of each such Assigned Contract, and (iii) adequate assurance of future performance of each such Assigned Contract shall also be deemed sufficient by the assignment. 31. If a timely objection(s) to the assumption or assignment of any Assigned Contract
or the amount of any Cure Cost is properly and timely filed, the hearing to consider such objection(s) will be held at the Sale Hearing or at such later hearing mutually acceptable to the Debtors and an objecting Assigned Contract counterparty. 32. The assumption and assignment of the Assigned Contracts shall be effective only
upon the Closing or the occurrence of a closing with respect to any Alternative Agreement. 33. Any counterparty to an Assigned Contract who does not timely file an objection
to the proposed Cure Costs will be deemed to have waived and released any right to assert an objection to the assumption and assignment of any Assigned Contract and to have otherwise consented to such assumption and assignment, and will be forever barred and estopped from asserting or claiming against the Debtors or any member, shareholder, or partner of the Debtors,
8613061.6
12
their estates, or the Stalking Horse Bidder (or any other assignee of the relevant Assigned Contract) or any member, shareholder, or partner of the Stalking Horse Bidder, that any additional amounts are due or that conditions to assumption and assignment must be satisfied under such Assigned Contract for the period before the date of the Sale Hearing, absent any subsequent defaults by the Stalking Horse Bidder. 34. Compliance with the foregoing notice and publication requirements shall
constitute good and sufficient notice of the Bidding Procedures, Auction and Sale Hearing and no other or further notice of the Bidding Procedures, Auction or Sale Hearing shall be necessary or required. 35. At the Sale Hearing, the Debtors will seek the entry of an order of this Court
approving and authorizing the Sale to the Successful Bidder. The Sale Hearing may be continued from time to time by this Court or the Debtors without further notice other than by such adjournment being announced in open court or by a notice of adjournment filed with this Court and served on the Notice Parties. 36. All time periods set forth in this Order shall be calculated in accordance with
Bankruptcy Rule 9006(a). 37. This Court retains jurisdiction with respect to all matters arising from or related to
the interpretation or implementation of the Stalking Horse Agreement and this Order. To the extent any provision of this Order shall be inconsistent with the Sale Motion, the terms of this Order shall control.
8613061.6
13
THIS ORDER WAS SIGNED AND ENTERED ELECTRONICALLY AS INDICATED AT THE TOP OF THE FIRST PAGE.
Submitted for Entry by: /s/ _______ John C. Tishler, BPR No. 13441 Katie G. Stenberg, BPR No. 22301 Robert P. Sweeter, BPR No. 28859 WALLER LANSDEN DORTCH & DAVIS, LLP 511 Union Street, Suite 2700 Nashville, TN 37219 Telephone: (615) 244-6380 Facsimile: (615) 244-6804 Email: john.tishler@wallerlaw.com katie.stenberg@wallerlaw.com robert.sweeter@wallerlaw.com Proposed Attorneys for the Debtors and Debtors in Possession
8613061.6
14
EXHIBIT B
Form of Sale Notice
8613063.4
IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION -----------------------------------------------------------------------IN RE: ) ) CHURCH STREET HEALTH MANAGEMENT, LLC, ) et al. 1 ) ) Debtors ) ------------------------------------------------------------------------
Chapter 11 Case No. 12-01573 (Jointly Administered)
NOTICE OF (I) SALE AND SOLICITATION OF BIDS TO ACQUIRE CERTAIN OF THE DEBTORS ASSETS; (II) TERMS AND CONDITIONS OF BIDDING PROCEDURES AND; (III) ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES PLEASE TAKE NOTICE OF THE FOLLOWING: 1. Church Street Health Management, LLC, Small Smiles Holding
Company, LLC, FORBA NY, LLC, FORBA Services, Inc., and EEHC, Inc. (collectively, the Sellers) have entered into an Asset Sale Agreement, dated as of March 2, 2012, (the Stalking Horse Agreement), by and among the Sellers and CSHM LLC (the Stalking Horse Bidder) to sell (the Sale) substantially all of the Sellers assets (the Assets), including (i) accounts receivable; (ii) intellectual property (including, patents, copyrights, trademarks and proprietary information); (iii) certain executory contracts (including executory agreements and licenses) and leased real property interests (collectively, the Assigned Contracts) that are to be assumed by the Sellers and assigned to the Stalking Horse Bidder; (iv) documents, permits, licenses, and all books and records of the Sellers in whatever form and wherever located; and (v) all rights, claims and causes of action against third parties pertaining to the Assets, including
1
The Debtors (with the last four digits of each Debtors federal tax identification number and chapter 11 case number), are: Church Street Health Management, LLC (2335; Case No. 12-01573), Small Smiles Holding Company, LLC (4993; Case No. 12-01574), FORBA NY, LLC (8013; Case No. 12-01575), FORBA Services, Inc. (6506; Case No. 12-01577), EEHC, Inc. (4973; Case No. 12-01576).
8613063.4
any and all claims and causes of action arising under, or available pursuant to, the Bankruptcy Code2 and all assets of the Sellers used or necessary to provide services in connection therewith. The purchase price (the Purchase Price) for the Assets shall be the aggregate amount of (i) the Credit Bid Amount and (ii) the aggregate amount of the Assumed Liabilities (as set forth in the Stalking Horse Agreement). The Sellers are inviting bids on the Assets. The Bankruptcy Court has entered an order (the Bidding Procedures Order)3 approving auction and sale procedures (the Bidding Procedures, a copy of which is attached hereto as Exhibit 1) for the Assets. 2. The Debtors propose to: (i) sell the Assets free and clear of all liens,
claims or encumbrances thereon (except for Permitted Encumbrances, as defined in the Stalking Horse Agreement), including, without limitation, claims otherwise arising under the doctrine of successor liability; and (ii) assume and assign the Assigned Contracts as described in the Stalking Horse Agreement. You may obtain a copy of the Stalking Horse Agreement for free by (i) sending a written request to the Sellers claims and noticing agent, GCG, Inc. (GCG), at 190 S. LaSalle Street, Suite 1520, Chicago, IL 60603, (ii) calling GCG at (877) 906-0209, or (iii) emailing cshminfo@gcginc.com. 3. On or before the date that is no later than two (2) business days prior to the
Bid Deadline (as defined in the Bidding Procedures), the Sellers will file a schedule of cure obligations (the Schedule of Contracts) for all potential Assigned Contracts. The Schedule of Contracts will include a description of each of the Sellers contracts and leases potentially to be assumed and assigned under the Stalking Horse Agreement and the amount, if any, the Sellers believe is necessary to cure such agreements pursuant to section 365 of the Bankruptcy Code
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Bidding Procedures (as defined below). A copy of the Bidding Procedures Order can be obtained for free by calling GCG, at (877) 906-0209 or by emailing cshminfo@gcginc.com.
8613063.4
3 2
-2Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page 200 Exhibit F - Asset Sale Agreement 200 of 261 of 261
(the Cure Costs). A copy of the Schedule of Contracts, together with the Assumption and Assignment Notice, will be served on each of the non-Debtor parties listed on the Schedule of Contracts by first-class mail, postage prepaid, on or before April 12, 2012. 4. The Bankruptcy Court has scheduled an auction of the Assets (the
Auction) for April 20, 2012 at 9:00 a.m. Central Standard Time at the offices of counsel for the Sellers, Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, Tennessee 37219, or at such other location as the Debtors may hereafter designate (with notice of such alternate location given to all Qualified Bidders and the Notice Parties (as defined below). All interested parties are invited to submit a Qualifying Bid to acquire the Assets. 5. A hearing to approve the sale of the Assets to the Stalking Horse Bidder,
or a Successful Bidder other than the Stalking Horse Bidder (the Sale Hearing), is scheduled to be conducted on [April 26], 2012 at __:__ _.m. Central Standard Time, in the United States Bankruptcy Court for the Middle District of Tennessee, Nashville, Tennessee, or as soon thereafter as counsel may be heard. 6. Any party seeking to (i) object to the validity of the Cure Costs as
determined by the Sellers in respect of an Assigned Contract or otherwise assert that any other amounts, defaults, conditions or pecuniary losses must be cured or satisfied under any of the Assigned Contracts in order for such executory contract or lease to be assumed and assigned or (ii) object to the assumption and assignment of any Assigned Contracts on any other basis (including, but not limited to, objections to adequate assurance of future performance by the Successful Bidder), must file with the Bankruptcy Court (contemporaneously with a proof of service), in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and any order of this Court, an objection (an Assumption and Assignment Objection) that must: (a)
8613063.4
state with particularity the legal and factual basis for the objection and if practicable, a proposed modification to the terms of the Sale that would resolve such objection, and (b) if applicable, include any and all documentation relied upon by the objector in support of its determination of Cure Costs, setting forth the cure amount the objector asserts to be due, and the specific types and dates of the alleged defaults, pecuniary losses and conditions to assignment and the support therefor, so that such objection is filed no later than 4:00 p.m. Central Standard Time on April 23, 2012 (the Assumption and Assignment Objection Deadline), and such objection shall also be served so the same is actually received on or before the Assumption and Assignment Objection Deadline by (i) the U.S. Trustee, (ii) counsel to the Committee, [_____], (iii) counsel to the Debtors, Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, TN 37219, Attn: John C. Tishler, Esq., (iv) co-counsel to the Agent (as defined in the Stalking Horse Agreement), Shearman & Sterling, 599 Lexington Avenue, New York, NY 10022, Attn: Steven E. Sherman, Esq., and Bass, Berry & Sims PLC, 150 Third Avenue South, Suite 2800, Nashville, TN 37201, Attn: Paul G. Jennings, Esq., and (v) co-counsel to the Stalking Horse Bidder, Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, NY 10166, Attn: David M. Feldman, Esq. and J. Eric Wise, Esq., and Burr & Forman LLP, 700 Two American Center, 3102 West End Avenue, Nashville, TN 37203, Attn: David W. Houston IV, Esq. (collectively, (i) through (v), the Notice Parties). 7. Objections to approval of the Sale, including the sale of the Assets free
and clear of liens, claims, interests and encumbrances (other than Permitted Encumbrances, as defined in the Stalking Horse Agreement), must be in writing, state the basis of such objection with specificity and be filed with this Court and served so as to be received by the Notice Parties on or before 4:00 p.m. Central Standard Time on April 23, 2012.
8613063.4
8.
The Sale Hearing (at which the Court will consider approval of the
proposed Sale) may be adjourned, from time to time, without further notice to creditors or parties in interest other than by announcement of the adjournment in open court or on the Courts calendar. Dated: Nashville, Tennessee _____ __, 2012 Respectfully submitted, WALLER LANSDEN DORTCH & DAVIS, LLP __________________________________________ John C. Tishler, BPR No. 13441 Katie G. Stenberg, BPR No. 22301 Robert P. Sweeter, BPR No. 28859 511 Union Street, Suite 2700 Nashville, TN 37219 Telephone: (615) 244-6380 Facsimile: (615) 244-6804 Email: john.tishler@wallerlaw.com katie.stenberg@wallerlaw.com robert.sweeter@wallerlaw.com
Proposed Counsel to the Debtors and Debtors-in-Possession
8613063.4
EXHIBIT C
Form of Sale Summary
8613063.4
IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION -----------------------------------------------------------------------IN RE: ) ) CHURCH STREET HEALTH MANAGEMENT, LLC, ) 1 et al. ) ) Debtors ) ------------------------------------------------------------------------
Chapter 11 Case No. 12-01573 (Jointly Administered)
SUMMARY OF SALE PROCESS AND EFFECT ON HOLDERS OF CLAIMS AGAINST THE DEBTORS You are receiving this Summary of Sale Process from Church Street Health Management, LLC, Small Smiles Holding Company, LLC, FORBA NY, LLC, FORBA Services, Inc., and EEHC, Inc. (collectively, the Sellers) because you supply goods and services to the Sellers, or because the Sellers believe that you may have a claim against them based on treatment you or a family member may have received at one of the dental centers that has a management services agreement with one of the Sellers. The Sellers intend to sell (the Sale) substantially all of their assets (the Assets) to a buyer. Currently, that buyer is proposed to be CSHM LLC (the Proposed Buyer). The Proposed Buyer is a company that is separately owned by some of the lenders to the Sellers. The Sellers believe that the lenders to the Sellers have mortgages and liens against the Assets that entitle them to receive the first approximately $150 million of proceeds from the Sale. The Sellers, however, do not believe that the Sale is likely to generate more than $150 million in cash. If the Sale generates less than $150 million, the Sellers will be obligated to turn over all proceeds from the Sale to the lenders and will have few, if any, other assets of value that can be applied to claims you may have against them. If you are a vendor or otherwise provide or have provided goods or services to the Sellers pursuant to a written agreement, the Proposed Buyer may be assuming the obligation to pay some or all of what the Sellers owe you. If you have any questions regarding whether the Sellers will continue with your contract and pay you what is owed, please contact Maria Arnaoudona at _________________. If you believe you have a claim against the Sellers relating to treatment you or a family member received at a dental center that has a management services agreement with one of the
1
8613063.4
Sellers, you may still be able to make a claim and receive money under certain insurance policies held by the Sellers or otherwise. The insurance companies dispute that your claims are covered. Your receipt of this notice does not mean that you have a claim or that your claim is covered under the insurance policies. You should consult with an attorney to determine whether you have such a claim. A committee of creditors has been appointed to investigate and possibly object to the sale on behalf of all creditors who have no mortgages and liens against the Sellers. If you would like to obtain additional information from this committee, you may do so by contacting _______________ at _________________.] An auction for the Sale of the Assets is scheduled to occur on Friday, April 20, 2012 at 9:00 a.m. Central time. If you wish to object to the Sale, you must do so no later than April 23, 2012 at 4:00 p.m. Central time. You should consult with an attorney about what rights you have to make an objection and how to make an objection if appropriate. If you fail to object by 4:00 p.m. Central time on April 23, 2012, you will not be allowed to object to the Sale in the future. You are also receiving this notice to make sure you understand that after the Sale you will not be able to assert claim of any kind against the Proposed Buyer or any other buyer of the Assets. If you would like to obtain additional information about the Sale or its process, please call the Sellers claims and noticing agent, GCG, Inc., at (877) 906-0209 or send an email to cshminfo@gcginc.com and request copies of the court filings and other documents related to the Sale referenced in the Notice of Sale provided to you along with this summary. Dated: Nashville, Tennessee _____ __, 2012 Respectfully submitted, WALLER LANSDEN DORTCH & DAVIS, LLP __________________________________________ John C. Tishler, BPR No. 13441 Katie G. Stenberg, BPR No. 22301 Robert P. Sweeter, BPR No. 28859 511 Union Street, Suite 2700 Nashville, TN 37219 Telephone: (615) 244-6380 Facsimile: (615) 244-6804 Email: john.tishler@wallerlaw.com katie.stenberg@wallerlaw.com robert.sweeter@wallerlaw.com Counsel to the Debtors and Debtors-in-Possession
8613063.4
EXHIBIT D
Form of Assumption and Assignment Notice
8613063.4
IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION -----------------------------------------------------------------------IN RE: ) ) Chapter 11 CHURCH STREET HEALTH MANAGEMENT, LLC, ) et al. 1 ) Case No. 12-01573 ) Debtors ) (Jointly Administered) -----------------------------------------------------------------------NOTICE OF (I) DEBTORS INTENT TO ASSUME AND ASSIGN CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES RELATED TO THEIR BUSINESSES AND (II) CURE COSTS PLEASE TAKE NOTICE that, Church Street Health Management, LLC, Small Smiles Holding Company, LLC, FORBA NY, LLC, FORBA Services, Inc., and EEHC, Inc. (collectively, the Sellers) have requested that the United States Bankruptcy Court for the Middle District of Tennessee (the Bankruptcy Court), approve an order (the Bidding Procedures Order) authorizing the Debtors to conduct an auction to sell (the Sale) substantially all of the Sellers assets (the Assets) to the highest and best qualified bidder (the Successful Bidder). A hearing (the Sale Hearing) will be scheduled by the Bankruptcy Court to consider (i) the sale of the Assets to the Successful Bidder free and clear of liens, claims and encumbrances (except for certain assumed liabilities and permitted encumbrances as more particularly detailed in the Asset Sale Agreement (the Stalking Horse Agreement) between the Sellers and CSHM LLC (the Stalking Horse Bidder), and, (ii) the assumption and assignment of certain of the Sellers executory contracts and unexpired leases in connection with the Sale. At the Sale Hearing, the Sellers will ask that the Bankruptcy Court enter an order (the Sale Order) approving the Sale. PLEASE TAKE FURTHER NOTICE that, pursuant to the proposed Sale Order, the Sellers may assume and assign to the Successful Bidder those executory contracts and unexpired leases listed on Schedule A attached hereto (collectively, the Assigned Contracts), pursuant to section 365 of title 11 of the United States Code (the Bankruptcy Code). For the purposes of this paragraph, the Successful Bidder shall be read to potentially include Potential Bidders (as defined in the Bidding Procedures). PLEASE TAKE FURTHER NOTICE that the Sellers have indicated on Schedule A attached hereto (the Schedule of Contracts) the cure amounts that the Sellers believe must be paid to cure all prepetition defaults under the Assigned Contracts as of February 20, 2012 (in each instance, the Cure Costs).
1
8613063.4
PLEASE TAKE FURTHER NOTICE that any party seeking to (i) object to the validity of the Cure Costs as determined by the Sellers in respect of an Assigned Contract or otherwise assert that any other amounts, defaults, conditions or pecuniary losses must be cured or satisfied under any of the Assigned Contracts in order for such executory contract or lease to be assumed and assigned or (ii) object to the assumption and assignment of any Assigned Contracts on any other basis (including, but not limited to, objections to adequate assurance of future performance by the Successful Bidder), must file with the Bankruptcy Court (contemporaneously with a proof of service), in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and any order of this Court, an objection (an Assumption and Assignment Objection) that must: (a) state with particularity the legal and factual basis for the objection and if practicable, a proposed modification to the terms of the Sale that would resolve such objection, and (b) if applicable, include any and all documentation relied upon by the objector in support of its determination of Cure Costs, setting forth the cure amount the objector asserts to be due, and the specific types and dates of the alleged defaults, pecuniary losses and conditions to assignment and the support therefor, so that such objection is filed no later than 4:00 p.m. Central Standard Time on April 23, 2012 (the Assumption and Assignment Objection Deadline), and such objection shall also be served so the same is actually received on or before the Assumption and Assignment Objection Deadline by (i) the U.S. Trustee, (ii) counsel to the Committee, [_____], (iii) counsel to the Debtors, Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, TN 37219, Attn: John C. Tishler, Esq., (iv) co-counsel to the Agent (as defined in the Stalking Horse Agreement), Shearman & Sterling, 599 Lexington Avenue, New York, NY 10022, Attn: Steven E. Sherman, Esq., and Bass, Berry & Sims PLC, 150 Third Avenue South, Suite 2800, Nashville, TN 37201, Attn: Paul G. Jennings, Esq., and (v) co-counsel to the Stalking Horse Bidder, Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, NY 10166, Attn: David M. Feldman, Esq. and J. Eric Wise, Esq., and Burr & Forman LLP, 700 Two American Center, 3102 West End Avenue, Nashville, TN 37203, Attn: David W. Houston IV, Esq. (collectively, (i) through (v), the Notice Parties); provided, however, that in the event the Auction results in a Successful Bidder other than the Stalking Horse Bidder (as defined in the Bidding Procedures Order), the Debtors shall file a notice identifying such Successful Bidder with the Court and serve such notice upon each party identified in the Schedule of Contracts, and the deadline for objecting to the assignment of the Assigned Contract to such Successful Bidder on the basis of adequate assurance of future performance shall be the commencement of the Sale Hearing. PLEASE TAKE FURTHER NOTICE that unless an Assumption and Assignment Objection is filed and served before the Assumption and Assignment Objection Deadline, all parties shall (i) be forever barred from objecting to the Cure Costs and from asserting any additional cure or other amounts with respect to the Assigned Contracts, and the Sellers and the Successful Bidder shall be entitled to rely solely upon the Cure Costs; (ii) be deemed to have consented to the assumption and assignment of the Assigned Contracts, and (iii) be forever barred and estopped from asserting or claiming against the Sellers or the Successful Bidder that any additional amounts are due or other defaults exist, that conditions to assignment must be satisfied under such Assigned Contracts or that there is any objection or defense to the assumption and assignment of such Assigned Contracts. PLEASE TAKE FURTHER NOTICE that hearing with respect to the Assumption and Assignment Objections may be held at the Sale Hearing or such other date as
8613063.4
the Bankruptcy Court may designate that is mutually acceptable to the Sellers, the Successful Bidder and the objecting Assigned Contract counterparty. Where a non-Debtor counterparty to an Assigned Contract files an objection asserting a cure amount higher than the proposed Cure Costs (the Disputed Cure Costs), then (i) to the extent that the parties are able to consensually resolve the Disputed Cure Costs prior to the Sale Hearing, the Sellers shall promptly provide the Successful Bidder notice and opportunity to object to such proposed resolution or (ii) to the extent the parties are unable to consensually resolve the dispute prior to the Sale Hearing, then the amount to be paid under section 365 of the Bankruptcy Code with respect to such Disputed Cure Costs will be determined at the Sale Hearing or at such other date and time as may be fixed by this Court. PLEASE TAKE FURTHER NOTICE that if you agree with the Cure Costs indicated on Schedule A and otherwise do not object to the Sellers assignment and assumption of your executory contract or unexpired lease, you need not take any further action. PLEASE TAKE FURTHER NOTICE that the Sellers decision to assume and assign the Assigned Contracts is subject to Bankruptcy Court approval and the consummation of the Sale of the Assets. Accordingly, the Sellers shall be deemed to have assumed and assigned each of the Assigned Contracts as of the date of, and effective only upon, the closing of the Sale of the Assets, and absent such closing, each of the Assigned Contracts shall neither be deemed assumed nor assigned and shall in all respects be subject to further administration under the Bankruptcy Code. Inclusion of any document on the list of Assigned Contracts shall not constitute or be deemed to be a determination or admission by the Sellers or the Successful Bidder that such document is, in fact, an executory contract or unexpired lease within the meaning of the Bankruptcy Code, all rights with respect thereto being expressly reserved. For the purposes of this paragraph, Successful Bidder shall be read to potentially include Potential Bidders. Dated: Nashville, Tennessee _____ __, 2012 Respectfully submitted, WALLER LANSDEN DORTCH & DAVIS, LLP __________________________________________ John C. Tishler, BPR No. 13441 Katie G. Stenberg, BPR No. 22301 Robert P. Sweeter, BPR No. 28859 511 Union Street, Suite 2700 Nashville, TN 37219 Telephone: (615) 244-6380 Facsimile: (615) 244-6804 Email: john.tishler@wallerlaw.com katie.stenberg@wallerlaw.com robert.sweeter@wallerlaw.com Counsel to the Debtors and Debtors-in-Possession
8613063.4
SCHEDULE A List of Executory Contracts and Unexpired Leases Potentially to Be Assumed and Assigned at Closing
8613063.4
Exhibit F Form of Sale Order Attached.
8565755.15
EXHIBIT F IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION -----------------------------------------------------------------------IN RE: ) ) Chapter 11 CHURCH STREET HEALTH MANAGEMENT, LLC, ) et al. 1 ) Case No. 12-01573 ) Debtors ) (Jointly Administered) -----------------------------------------------------------------------ORDER (I) AUTHORIZING SALE OF SUBSTANTIALLY ALL OF THE DEBTORS ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS AND ENCUMBRANCES; (II) APPROVING THE ASSET SALE AGREEMENT; AND (III) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES Upon consideration of the motion (the Sale Motion)2 of the Debtors, pursuant to sections 105, 363, 365 and 503 of title 11 of the United States Code (the Bankruptcy Code), Rules 2002, 6004, 6006, 7004 and 9014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) and Rules 6004-1, 9014-1 and 9075-1 of the Local Rules of Court for the United States Bankruptcy Court for the Middle District of Tennessee (the Local Rules), for entry of an order (the Sale Order) (a) authorizing the sale (the Sale) by the Sellers of the Assets free and clear of all liens, claims and encumbrances, other than Permitted Encumbrances, in accordance with the Asset Sale Agreement (the Stalking Horse Agreement), dated as of
1
The Debtors in these chapter 11 cases are jointly administered for procedural purposes only under a single case number. The Debtors (with the last four digits of each Debtors federal tax identification number and chapter 11 case number), are: Church Street Health Management, LLC (2335; Case No. 12-01573), Small Smiles Holding Company, LLC (4993; Case No. 12-01574), FORBA NY, LLC (8013; Case No. 12-01575), FORBA Services, Inc. (6506; Case No. 12-01577), EEHC, Inc. (4973; Case No. 12-01576).
Capitalized terms used but otherwise not defined herein shall have the meanings set forth in the Debtors Expedited Motion for Entry of an Order: (A) Authorizing and Scheduling an Auction, (B) Authorizing and Approving (i) Bidding Procedures, (ii) Notice of the Auction, (iii) Break-Up Fee and Expense Reimbursement, (iv) the Form and Manner of Sale Notice, (v) the Form and Manner of Sale Summary, and (vi) the Form and Manner of Assumption ad Assignment Notice; (C) Scheduling a Sale Hearing, and (D) Granting Related Relief [Docket No. __].
NY: 709306-3
March 2, 2012, by and between the Sellers and CSHM LLC (NewCo), to NewCo pursuant to the Stalking Horse Agreement or to the Person otherwise submitting the highest or otherwise best bid(s) for the Assets at the Auction (such winning bidder, the Purchaser); (b) authorizing the assumption and assignment of the Assigned Contracts to the Purchaser; and (c) granting certain related relief, all as more fully set forth in the Sale Motion; and the Court having entered an order dated March __, 2012 (the Bidding Procedures Order, and attached as Exhibit l thereto, the Bidding Procedures) approving the Bidding Procedures, scheduling an Auction and Sale Hearing, approving the Sellers execution of the Stalking Horse Agreement, approving the form and manner of notice of the Sale Summary, Sale Notice, and Assumption and Assignment Notice (each as defined in the Bidding Procedures Order) and establishing procedures relating to the assumption and assignment of the Assigned Contracts; and the Court having jurisdiction to consider the Sale Motion and the relief requested therein in accordance with 28 U.S.C. 157(b)(2) and 1334; and consideration of the Sale Motion, the relief requested therein, and the responses thereto being a core proceeding in accordance with 28 U.S.C. 157(b); and the appearance of all interested parties and all responses and objections, if any, to the Sale Motion having been duly noted in the record of the Sale Hearing; and upon the record of the Sale Hearing, and all other pleadings and proceedings in this case, including the Sale Motion and the First Day Affidavit; and it appearing that the relief requested in the Sale Motion is in the best interests of the Debtors, their estates, their creditors and all other parties in interest; and after due deliberation and sufficient cause appearing therefore; IT IS HEREBY FOUND, DETERMINED, AND CONCLUDED THAT: A. The findings and conclusions set forth herein constitute the Courts findings of
fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this
proceeding pursuant to Bankruptcy Rule 9014. To the extent any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such. B. This Court has jurisdiction over the Sale Motion and the transactions
contemplated by the Stalking Horse Agreement pursuant to 28 U.S.C. 157 and 1334, and this matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A), (N) and (O). Venue is proper pursuant to 28 U.S.C. 1408 and 1409. C. This Sale Order constitutes a final and appealable order within the meaning of 28
U.S.C. 158(a). D. Good and sufficient notice of the Sale Motion and the relief sought therein has
been given to all interested persons and entities, including, without limitation, (a) the United States Trustee for the Middle District of Tennessee; (b) counsel to the administrative agent for the Debtors prepetition secured lenders; (c) counsel for any official unsecured creditors committee appointed in these cases, or until such time as counsel is named, the holders of the fifty (50) largest unsecured claims on a consolidated basis against the Debtors; (d) counsel to all postpetition lenders or their agent(s); (e) counsel of record representing patients of Dental Centers associated with CSHM with litigation pending against the Debtors as of the Petition Date; (f) the Internal Revenue Service; (g) all parties known or reasonably believed to have asserted any lien, claim, interest or encumbrance on any of the Assets; (h) all persons or entities known or reasonably believed to have expressed an interest in acquiring the Assets during the past six (6) months; (i) the U.S. Attorney General; (j) the United States Department of Health and Human Services, Office of Inspector General; (k) the New York State Office of Medicaid Inspector General; (l) the Attorney General for each State that is a party to a settlement
agreement with a Debtor; and (m) all parties that have requested personal notice pursuant to Bankruptcy Rule 2002 (collectively, the Notice Parties). E. The Bidding Procedures set forth in the Bidding Procedures Order were non-
collusive and substantively and procedurally fair to all parties. F. The Seller solicited offers for, scheduled an Auction of, and selected the
Purchaser for the Sale of the Assets in accordance with the Bidding Procedures Order. The Seller (i) afforded interested Potential Bidders a full, fair and reasonable opportunity to qualify as Qualified Bidders (as defined in the Bidding Procedures) and submit their highest or otherwise best offer to purchase the Assets, (ii) provided Potential Bidders, upon request, sufficient information to enable them to make an informed judgment on whether to submit a Bid on the Assets; and (iii) considered any Bids submitted on or before the Bid Deadline. G. [No Qualified Bids (as defined in the Bidding Procedures), other than the Bid
submitted by NewCo, were submitted. Accordingly, no Auction (as defined in the Bidding Procedures) was held.] H. [The Credit Bid constitutes a portion of the aggregate consideration to be paid by
NewCo to the Sellers under the Stalking Horse Agreement. In compliance with the Bidding Procedures, the Prepetition Agent submitted the Credit Bid at the Auction. The Debtors accepted the Credit Bid pursuant to the Bidding Procedures at the Auction. The Credit Bid was a valid and proper offer under, and complied with the provisions of, Section 363(k) of the Bankruptcy Code, and was a valid exercise of the Prepetition Agents rights, responsibilities, and obligations.] I. The consideration to be provided by the Purchaser : (i) is fair and reasonable; (ii)
is the highest or otherwise best offer received by the Sellers for the Assets; (iii) is in the best
interests of the Sellers creditors and estates; (iv) constitutes reasonably equivalent value and fair consideration under the Bankruptcy Code or any similar laws of any state or other jurisdiction whose law is applicable to the contemplated transactions; and (v) is greater than any other practically available alternative. In reaching this determination, the Court has taken into account both the consideration to be realized directly by the Sellers, including the assumption of claims against the Sellers estates, and the indirect benefits of such Sale for the Sellers employees, the Sellers vendors and suppliers and the public served, directly and indirectly, by the functions performed by the Sellers employees and the Sellers businesses. J. [Entry into the Stalking Horse Agreement and consummation of the transactions
contemplated thereby constitute the exercise of the Sellers sound business judgment and fiduciary duties and such acts are in the best interests of the Sellers and their creditors and estates, and the Sellers have demonstrated a sufficient basis and compelling circumstances requiring them to enter into the Stalking Horse Agreement, sell the Assets and assume and assign the Assigned Contracts as set forth therein. Such business reasons include, but are not limited to, the fact that (i) there is substantial risk of deterioration of the value of the Assets if the Sale is not consummated quickly; (ii) the Stalking Horse Agreement constitutes the highest and best offer for the Assets; (iii) the Stalking Horse Agreement and the Closing (as defined in the Stalking Horse Agreement) will present the best opportunity to realize the value of the Sellers on a goingconcern basis and avoid decline and devaluation of the Sellers businesses; and (iv) unless the Sale is concluded expeditiously as provided for in the Sale Motion and pursuant to the Stalking Horse Agreement, stakeholders recoveries may be diminished.] K. The transactions contemplated by the Stalking Horse Agreement are undertaken
by the Sellers and the Purchaser at arms length, without collusion and in good faith within the
meaning of section 363(m) of the Bankruptcy Code. The Purchaser is a good faith purchaser under section 363(m) of the Bankruptcy Code and, as such, is entitled to all of the protections afforded thereby and otherwise has proceeded in good faith in all respects in connection with this proceeding in that: (i) the Purchaser recognized that the Sellers were free to deal with any other party interested in acquiring the Assets; (ii) the Purchaser in no way induced or caused the chapter 11 filing of the Sellers; (iii) the Purchaser made the Highest and Best Bid (as defined in the Bidding Procedures) for the Assets; (iv) all payments to be made to the Purchaser and other agreements or arrangements entered into by the Purchaser in connection with the transactions have been disclosed; and (v) the negotiation and execution of the Stalking Horse Agreement (and any other agreements or instruments related thereto) was done in good faith and at arms length between the Purchaser and the Sellers. L. The Sellers and the Purchaser have not engaged in any conduct that would permit
the Stalking Horse Agreement or the Sale to be avoided under section 363(n) of the Bankruptcy Code. M. The Stalking Horse Agreement was not entered into for the purpose of hindering,
delaying or defrauding creditors under the Bankruptcy Code or under the laws of the United States, any state, territory, possession or the District of Columbia. N. The Sale of the Assets outside of a plan of reorganization [pursuant to] [as
contemplated by] the Stalking Horse Agreement neither impermissibly restructures the rights of the Sellers creditors nor impermissibly dictates the terms of a liquidating plan or plan of reorganization for the Debtors. The Sale does not constitute a sub rosa chapter 11 plan. O. Based upon the representations of the Sellers, the Assets constitute property of the
Sellers estates and title thereto is vested in the Sellers estates within the meaning of section
541(a) of the Bankruptcy Code. Based upon the representations of the Sellers, the Sellers have all right, title and interest in, to and under the Assets to transfer and convey the Assets as contemplated by the Stalking Horse Agreement. P. The consummation of the Sale [pursuant to the Stalking Horse Agreement] will be
a legal, valid and effective Sale of the Assets and will vest the Purchaser (and its designees or assignees, as applicable) with all right, title and interest of the Sellers and their bankruptcy estates in and to the Assets free and clear of all liens, claims and interests, except for Permitted Encumbrances, including any such liens, claims and interests (i) that purport to give to any party a right or option to effect any forfeiture, modification, right of first refusal or termination of the Sellers, the Sellers estates or the Purchasers interest in the Assets, or any similar rights; or (ii) relating to taxes or any other liabilities, arising under or out of, in connection with or in any way relating to the Assets, the Sellers, the Sellers estates or their respective operations or activities prior to the Closing Date. Q. A sale of the Assets other than one free and clear of liens, claims and interests
(other than Permitted Encumbrances) would be of substantially less benefit to and would adversely affect the Sellers bankruptcy estates. R. With respect to all parties asserting liens, claims and interests (other than
Permitted Encumbrances) in, to or against the Assets, the Sale complies with all the requirements of section 363(f) of the Bankruptcy Code. With respect to each such interest in the Assets: (i) applicable non-bankruptcy law permits the Sale free and clear of such interest; (ii) the holder of such interest consents to the Sale; (iii) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on the Assets; (iv) such interest is in
bona fide dispute; or (v) the holder of such interest could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. S. All parties with liens, claims and interests (other than Permitted Encumbrances)
against the Assets identified to be sold under the Stalking Horse Agreement, if any, who did not object to the Sale Motion and the relief requested therein, or who withdrew their objections to the Sale Motion, are deemed to have consented pursuant to section 363(f)(2) of the Bankruptcy Code; and all parties with liens, claims and interests (other than Permitted Encumbrances) against the Assets who objected to the Sale Motion, but who did not withdraw any such objection, can be compelled to accept a monetary satisfaction of their liens, claims and interests within the meaning of section 363(f)(5) of the Bankruptcy Code, and in each case, are enjoined from taking any action against the Assets, the Purchaser, its affiliates or any agent of the foregoing to recover any claim which such person or entity has solely against the Sellers, or any of their respective affiliates. T. The Sale and related transactions are not and do not amount to a consolidation,
merger or de facto merger of the Purchaser and the Sellers and/or any of the Sellers estates or affiliates, there is not substantial continuity between the Purchaser and the Sellers, there is no common identity between the Purchaser and the Sellers, there is no continuity of enterprise between the Purchaser and the Sellers, the Purchaser is not a mere continuation of the Sellers or any of their estates and the Purchaser does not constitute a successor to the Sellers or any of their estates with respect to any and all claims, including federal or state tax claims, multi-employer pension plan claims or other pension claims and claims arising under collective bargaining agreements.
U.
By virtue of the Stalking Horse Agreement or otherwise, the Purchaser will not
acquire any liabilities of the Sellers, other than the Assumed Liabilities as set forth in the Stalking Horse Agreement. V. Without limiting the generality of the foregoing, the Purchaser would not have
entered into the Stalking Horse Agreement and would not consummate the transactions contemplated thereby, thus adversely affecting the Sellers, their estates and their creditors, if the Sale of the Assets to the Purchaser and the assignment of the Assigned Contracts to the Purchaser were not free and clear of all liens, claims and interests of any kind or nature whatsoever, other than the Permitted Encumbrances, or if the Purchaser would, or in the future could, be liable for the Excluded Liabilities (as defined in the Stalking Horse Agreement). W. Good and sufficient notice of the possible transfer, assumption and assignment of
the Assigned Contracts has been given to all non-debtor parties to the Assigned Contracts and no other or further notice is required. A reasonable opportunity to object or be heard has been offered to parties in interest. X. The Assigned Contracts are valid and binding, in full force and effect, and
enforceable in accordance with their terms. Y. The Cure Costs are deemed to be amounts necessary to cure (within the
meaning of section 365(b)(1) of the Bankruptcy Code) all defaults (within the meaning of section 365(b) of the Bankruptcy Code) under such Assigned Contracts to the extent required by section 365 of the Bankruptcy Code. Z. The Purchaser has demonstrated adequate assurance of future performance with
respect to the Assigned Contracts pursuant to section 365(b)(1)(C) of the Bankruptcy Code.
AA.
The Assigned Contracts are assignable notwithstanding any provisions contained
therein to the contrary. Failure to object to the assumption and assignment of an Assigned Contract is deemed consent to the assumption and assignment. BB. [The assumption and assignment of the Assigned Contracts as set forth in the
Stalking Horse Agreement is integral to the Stalking Horse Agreement and is in the best interests of the Sellers, their creditors and estates and other parties-in-interest, and represents the exercise of sound and prudent business judgment by the Sellers.] CC. The legal and factual bases set forth in the Sale Motion and at the Sale Hearing
establish just cause for the relief granted herein. DD. Upon entry of this Sale Order, the Sellers shall have full power and authority to
consummate the Sale contemplated by the Stalking Horse Agreement. The Stalking Horse Agreement and the Sale have been duly and validly authorized by all necessary action of the Sellers and no shareholder vote, board resolution or other corporate action is required of the Sellers for the Sellers to consummate such Sale or the other transactions contemplated in the Stalking Horse Agreement. EE. Cause has been shown as to why this Sale Order should not be subject to the stay
provided by Bankruptcy Rules 6004 and 6006. FF. The entry of this Sale Order is in the best interests of the Sellers, their creditors
and estates and other parties in interest. NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT: 1. The Sale Motion, the Stalking Horse Agreement and the transactions
contemplated thereby, shall be, and hereby are, AUTHORIZED AND APPROVED in all respects. 10 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page 222 Exhibit F - Asset Sale Agreement 222 of 261 of 261
2.
All objections, responses and requests for continuance concerning the Sale
Motion are resolved in accordance with the terms of this Sale Order as set forth in the record of the Sale Hearing. To the extent any such objection, response or request for continuance was not otherwise withdrawn, waived or settled, it, and all reservations of rights contained therein, is overruled and denied. 3. Notice of the Auction and the Sale Hearing was fair and equitable under the
circumstances and complied in all respects with Bankruptcy Rules 2002, 6004, 6006, 7004 and 9014. The Sale Motion or notice thereof shall be deemed to provide sufficient notice of the Sale free and clear of liens, claims and interests in accordance with Local Rules 6004-1, 9014-1 and 9075-1. 4. The Sellers are authorized and directed to close, consummate and comply with the
Stalking Horse Agreement and all other agreements and documents related to and contemplated thereby (collectively, the Sale Documents), which Sale Documents hereby are authorized and approved in all respects, and to execute such other documents and take such other actions as are necessary or appropriate to effectuate the Stalking Horse Agreement. 5. The Purchasers offer for the Assets, [as embodied in the Stalking Horse
Agreement,] is the Highest and Best Bid for the Assets and is hereby approved. 6. Pursuant to sections 105(a) and 363(b) of the Bankruptcy Code, the Sale by the
Sellers to the Purchaser of the Assets and the transactions related thereto, [upon the Closing under the Stalking Horse Agreement,] are authorized and approved in all respects. 7. Subject to the payment by the Purchaser to the Sellers of the consideration
provided for in the Stalking Horse Agreement pursuant to sections 363 and 365(a) of the Bankruptcy Code, the Sale of the Assets by the Sellers to the Purchaser shall constitute a legal,
valid and effective transfer of the Assets and shall vest the Purchaser with all right, title and interest of the Sellers in and to the Assets free and clear of all liens, claims and interests (except Permitted Encumbrances) pursuant to section 363(f) of the Bankruptcy Code, effective as of the Closing Date. 8. [The Sellers and the Prepetition Agent, for the benefit of the Purchaser, are
authorized to consummate the Credit Bid as set forth in the Stalking Horse Agreement (subject to such further Sale Documents, as the Purchaser, Debtors, the Prepetition Agent and the DIP Lenders may agree). The Credit Bid shall be allocated on a pro rata basis among all Senior Lenders. Upon consummation of the Sale: (i) the Prepetition Secured Obligations, to the extent of the Credit Bid, shall be deemed satisfied and discharged; (ii) amounts funded under the DIP Facility shall be assumed by the Purchaser and the DIP Facility amended and restated as a postpetition first lien revolving credit facility and the DIP Lenders shall receive their pro rata share of 70% of the equity of NewCo; and (iii) the Existing Lenders claims under the Prepetition Facilities shall be cancelled to the extent of the Credit Bid, and the Existing Lenders shall receive their pro rata share of (a) 100% of the second lien indebtedness of NewCo (in the amount of $25 million) and (b) 30% of the equity of NewCo.] 9. To the greatest extent available under applicable law, the Purchaser shall be
authorized, as of the Closing Date, to operate under any license, permit, registration and governmental authorization or approval of the Sellers with respect to the Assets, and all such licenses, permits, registrations and governmental authorizations and approvals are deemed to have been, and hereby are, authorized to be transferred to the Purchaser as of the Closing Date. Pursuant to section 525 of the Bankruptcy Code, no governmental unit may revoke or suspend any permit or license relating to the operation of the Assets sold, transferred or conveyed to the
Purchaser on account of the filing or pendency of the Chapter 11 Cases or the consummation of the Sale transaction contemplated by the Stalking Horse Agreement. 10. Pursuant to section 363(f) of the Bankruptcy Code, the Sale of the Assets shall be
free and clear of all liens, claims and interests and all liabilities of the Sellers whether known or unknown, other than Permitted Encumbrances, including, but not limited to, liens, claims and interests asserted by any of the Sellers creditors, vendors, suppliers, employees, executory contract counterparties, governmental units or lessors. The Purchaser shall not be liable in any way (as successor entity or otherwise) for any claims that any of the foregoing parties or any other third party may have against the Sellers, other than the Assumed Liabilities and Permitted Encumbrances. Any and all valid and enforceable liens, claims and interests on, against or in the Assets, other than Permitted Encumbrances, shall be transferred, affixed and attached to any net proceeds of the Sale with the same validity, priority, force and effect such liens, claims and interests had on the Assets immediately prior to the Sale and subject to the rights, claims, defenses and objections, if any, of the Sellers and all interested parties with respect to any such asserted liens, claims and interests. The Sale of the Assets to the Purchaser shall vest the Purchaser with all the right, title and interest of the Sellers to the Assets free and clear of liens, claims and interests, other than Permitted Encumbrances. 11. The Purchaser has not assumed or otherwise become obligated for any of the
Sellers liabilities (other than the Assumed Liabilities), and the Purchaser has not purchased any of the Excluded Assets as defined in section 2.1(b) of the Stalking Horse Agreement. Upon the Closing Date, the Sellers and the Sellers estates shall be relieved from any liability for the Assumed Liabilities and Permitted Encumbrances.
12.
Except for the Assumed Liabilities and Permitted Encumbrances, pursuant to
sections 105(a), 363, and 365 of the Bankruptcy Code, all persons and entities, including, without limitation, the Sellers, the Sellers affiliates, all debt security holders, equity security holders, the Sellers employees or former employees, governmental, tax, and regulatory authorities, lenders, parties to, beneficiaries under, sponsors of or contributors to any benefit plan, trade and other creditors asserting or holding any liens, claims and interests, in or with respect to the Sellers or the Assets (whether legal or equitable, secured or unsecured, matured or unmatured, contingent or non-contingent, senior or subordinated), arising under or out of, in connection with, or in any way relating to the Sellers, the Assets, the operation of the Sellers businesses prior to the Closing Date under the Stalking Horse Agreement or the transfer of the Assets to the Purchaser, shall be forever barred, estopped and permanently enjoined from asserting, prosecuting or otherwise pursuing such liens, claims and interests against the Purchaser or any affiliate, successor or assign thereof and each of their respective current and former members, officers, directors, managed funds, investment advisors, financial advisors, attorneys, employees, partners, affiliates and representatives (each of the foregoing in its individual capacity), or the Assets, including claims under section 365(n) of the Bankruptcy Code against the Purchaser with respect to the Assets. 13. Except for the Assumed Liabilities, the Purchaser shall not acquire or assume, and
shall have no liability or obligation for any liabilities of the Sellers, as a successor in interest, successor-in-title or otherwise, including, without limitation any liability for any remedies sought under the National Labor Relations Act (NLRA), by the National Labor Relations Board, or by any Person (as defined in the Stalking Horse Agreement) under the WARN Act or similar state statute or ERISA or any liability with respect to COBRA Coverage for employees or consultants
of the Sellers terminated prior to or as part of the consummation of the transactions set forth in the Stalking Horse Agreement with regard to any conduct by the Sellers occurring prior to the Closing Date or any other liability to, arising out of or related to the Excluded Assets, in each case whether arising prior to or after the Closing Date. 14. If any Person that has filed any financing statement, mortgage, mechanics lien,
lis pendens or other document or instrument evidencing liens with respect to any of the Assets shall have failed to deliver to the Sellers and the Purchaser prior to the Closing of the Sale, in proper form for filing and executed by the appropriate entity or entities, termination statements, instruments of satisfaction and releases of all liens, claims and interests which such Person has with respect to the Assets, then (i) the Sellers are authorized to execute and file such statements, instruments, releases and other documents on behalf of such Person, and (ii) the Purchaser is authorized to file, register or otherwise record a certified copy of this Sale Order, which, once filed, registered or otherwise recorded, shall constitute conclusive evidence of the release of all liens, claims and interests in the Assets as of the Closing Dates, in each case, other than Permitted Encumbrances. 15. This Sale Order (a) is and shall be effective as a determination that, upon Closing,
other than the Assumed Liabilities and Permitted Encumbrances, claims and interests existing as to the Assets conveyed to the Purchaser have been and hereby are adjudged and declared to be unconditionally released, discharged and terminated, and (b) is and shall be binding upon and govern the acts of all entities, including, all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds, administrative agencies or units, governmental departments or units, secretaries of state, federal, state and local officials and all other Persons who may be required by operation of law, the duties of their office
or contract, to accept, file, register or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state of title in or to any of the Assets conveyed to the Purchaser. 16. The provisions of this Sale Order authorizing the sale of the Assets free and clear
of liens, claims and interests, other than Permitted Encumbrances, shall be self-executing, and neither the Sellers nor the Purchaser shall be required to execute or file releases, termination statements, assignments, consents or other instruments to effectuate, consummate and implement the provisions of this Sale Order. However, the Sellers and the Purchaser, and each of their respective officers, employees and agents, are authorized and empowered to take all actions and execute and deliver any and all documents and instruments that either the Sellers or the Purchaser deem necessary or appropriate to implement and effectuate the terms of the Stalking Horse Agreement and this Sale Order. 17. Each and every federal, state and local governmental agency or department is
hereby directed to accept any and all documents and instruments necessary and appropriate to consummate the transactions contemplated by the Stalking Horse Agreement and this Sale Order. 18. Other than with respect to the Assumed Liabilities, after the Closing Date, no
Person, including, without limitation, any federal, state or local taxing authority, may (a) attach or perfect liens or a security interest against any of the Assets on account of, or (b) collect or attempt to collect from the Purchaser or any of its affiliates, any tax (or other amount alleged to be owing by the Sellers) (i) for any period commencing before and concluding prior to or on the Closing Date or (ii) assessed prior to and payable after the Closing Date.
19.
This Sale Order shall be binding upon and govern the acts of all entities,
including, without limitation, all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds, administrative agencies, governmental departments, secretaries of state, federal, state and local officials and all other persons or entities who may be required by operation of law, the duties of their office or contract to accept, file, register or otherwise record or release any documents or instruments, or who may be required to report to or insure title or state of title in or to any of the Assets. 20. Other than as to the Assumed Liabilities, pursuant to sections 105(a) and 363(b)
of the Bankruptcy Code, all persons (as that term is defined in section 101(41) of the Bankruptcy Code) are hereby enjoined from taking any action against the Purchaser, the Purchasers affiliates (as they existed immediately prior to the Closing) or the Assets to recover any claim which such person has solely against the Sellers or the Sellers affiliates (as they exist immediately following the Closing). 21. The transactions contemplated under the Stalking Horse Agreement and the Sale
Documents do not amount to a consolidation, merger or de facto merger of the Purchaser and the Sellers and/or the Sellers estates, there is not substantial continuity between the Purchaser and the Sellers, there is no continuity of enterprise between the Sellers and the Purchaser, the Purchaser is not a mere continuation of the Sellers or the Sellers estates and the Purchaser does not constitute a successor to the Sellers or their estates. Other than the Assumed Liabilities and Permitted Encumbrances, the Purchaser shall not assume, nor be deemed to assume or in any way be responsible for any liability or obligation of any of the Sellers and/or their estates including, but not limited to, any bulk sales law, successor or transferee liability, liability or responsibility for any claim against the Sellers or against any insider of the Sellers or similar
liability. The Sale Motion and notice thereof contains sufficient notice of such limitation in accordance with Local Rule 6004-1. Other than with respect to the Assumed Liabilities, neither the purchase of the Assets by the Purchaser, nor the fact that the Purchaser or its affiliates are using any Assets previously used by the Seller, will cause the Purchaser or any of its affiliates to be deemed a successor in any respect to the Sellers business with respect to (i) any foreign, federal, state or local revenue, pension, ERISA, tax, labor, employment, antitrust, environmental, or other law, rule or regulation (including without limitation filing requirements under any such laws, rules or regulations); (ii) under any products liability law or doctrine with respect to the Sellers liability under such law, rule or regulation or doctrine, or under any product warranty liability law or doctrine with respect to the Sellers liability under such law, rule or regulation or doctrine; (iii) any employment or labor agreements, consulting agreements, severance arrangements, change-in-control agreements or other similar agreement to which the Sellers are a party; (iv) any pension, welfare, compensation or other employee benefit plans, agreements, practices and programs, including, without limitation, any pension plan maintained, sponsored or contributed to by the Sellers (including, without limitation, contributions or payments on account of any under-funding with respect to any pension plans); (v) the cessation of the Sellers operations, dismissal of employees or termination of employment or labor agreements or pension, welfare, compensation or other employee benefit plans, agreements, practices and programs; or (vi) the other Excluded Liabilities. 22. All Persons who are presently, or at the Closing of the Sale will be, in possession
of any of the Assets conveyed to the Purchaser hereunder are hereby directed to surrender possession of such Assets to the Purchaser at the Closing.
23.
Any landlord under any nonresidential lease of real property in the possession or
occupancy of the Sellers as of the Closing Date shall not interfere with the Purchasers right to take possession of any Assets at any leased premises whether or not the term of such premises has expired prior to the Closing Date. 24. From and after the date of the entry of this Sale Order, the Sellers or any creditor
or other party in interest shall not take or cause to be taken any action that would interfere with the transfer of the Assets to the Purchaser in accordance with the terms of this Sale Order. 25. Pursuant to section 365 of the Bankruptcy Code, the Sellers are authorized and
directed to assume and assign the Assigned Contracts to the Purchaser upon written direction from the Purchaser as set forth herein and in Article II of the Stalking Horse Agreement and to execute and deliver to Purchaser such documents or other instruments as the Purchaser deems necessary to assign and transfer the Assigned Contracts 26. Upon assumption and assignment, the Purchaser and the Sellers shall make
provision for the payment of the Cure Costs provided in the Schedule of Contracts, unless otherwise provided in this Sale Order. Except as set forth herein, payment of the Cure Costs by the Purchaser shall be deemed the satisfaction of the entire cure obligation of the Sellers due and owing under section 365 of the Bankruptcy Code. Any non-debtor party to an Assigned Contract is barred, enjoined and prohibited from asserting any claim against the Sellers or their property or estates other than the Cure Costs with respect to such Assigned Contract or from offsetting, seeking to offset, recoup, deduct or set-off any claims such party may have against the Cure Costs from any amounts that may be or may become due in the future to the Purchaser under such Assigned Contract. With respect to Cure Costs, the Purchaser shall pay the Cure Costs as provided in the Stalking Horse Agreement. The amounts set forth on Schedule 2.1(c)(ii) of the
Sellers Disclosure Letter reflect the maximum amounts necessary under section 365(b) of the Bankruptcy Code to cure all monetary defaults under the Assigned Contracts. 27. The failure of the Sellers or the Purchaser to enforce at any time one or more
terms or conditions of any Assigned Contract shall not be a waiver of such terms or conditions, or of the Sellers or the Purchasers right to enforce every term and condition, of the Assigned Contracts. 28. The Purchaser has demonstrated adequate assurance of future performance with
respect to all Assigned Contracts. The proposed assumption and assignment of the Assigned Contracts satisfies the requirements of the Bankruptcy Code including, inter alia, sections 365(b)(1) and (3) and 365(f) of the Bankruptcy Code to the extent applicable. 29. All parties to the Assigned Contracts are forever barred and enjoined from raising
or asserting against the Purchaser, the Purchasers affiliates, the Assets, or the Sellers any assignment fee, default or breach under, or any claim or pecuniary loss or condition to assignment, arising under or related to, the Assigned Contracts existing as of the Closing Date or arising by reason of the Closing. 30. The Assigned Contracts, upon assignment to the Purchaser, shall be deemed valid
and binding, in full force and effect in accordance with their terms, subject to the provisions of this Sale Order and, pursuant to section 365(k) of the Bankruptcy Code, the Sellers shall be relieved from any further liability thereunder. 31. Any provision in any Assigned Contract that purports to declare a breach, default
or payment right as a result of an assignment or a change of control in respect of the Sellers is unenforceable and is hereby nullified with respect to the sale and assignments authorized by this Sale Order, and all Assigned Contracts shall remain in full force and effect, subject only to
payment of the appropriate Cure Costs, if any. No sections or provisions of any Assigned Contract that purport to provide for additional payments, penalties, charges or other financial accommodations in favor of the non-debtor third party to the Assigned Contracts or restrict use of the premises which are demised by an Assigned Contract to a specific named tenant or business shall have any force and effect with respect to the sale and assignments authorized by this Sale Order, and such provisions constitute unenforceable anti-assignment provisions under section 365(f) of the Bankruptcy Code and/or are otherwise unenforceable under section 365(e) of the Bankruptcy Code. 32. Any party having the right to consent to the assumption and assignment of an
Assigned Contract that failed to object to such assumption and assignment is deemed to have consented to such assumption and assignment as required by section 365(c) of the Bankruptcy Code. The Purchaser shall enjoy all of the rights and benefits under each such Assigned Contract as of the applicable date of assumption and assignment without the necessity of obtaining such non-debtor partys written consent to the assumption or assignment thereof. 33. Upon assignment, the Purchaser, and its successors and assigns, shall have the
express right to exercise any and all unexercised extension options, renewal options and/or nondisturbance rights or protections, notwithstanding any language in the Assigned Contracts making the exercise of such rights personal to any party or limiting the exercise of such rights only to an assignee who is an affiliate of the original named party under such Assigned Contract or an entity that acquires all or substantially all of the assets of the original named party to such Assigned Contract. Upon assignment, the Purchaser shall exercise said rights consistent with the terms of any such Assigned Contract.
34.
The Purchaser is a good faith purchaser entitled to the benefits and protections
afforded by section 363(m) of the Bankruptcy Code (including with respect to the transfer of the Assigned Contracts assigned as part of the Sale of the Assets pursuant to section 365 of the Bankruptcy Code and this Sale Order); accordingly, the reversal, modification on appeal or vacatur by subsequent order of the Court of the authorization provided herein to consummate the Sale of the Assets shall not affect the validity of the Sale of the Assets to the Purchaser (including with respect to the transfer of the Assigned Contracts assigned as part of the Sale of the Assets pursuant to section 365 of the Bankruptcy Code and this Sale Order). 35. The consideration provided by the Purchaser for the Assets under the Stalking
Horse Agreement is fair and reasonable and shall be deemed for all purposes to constitute a transfer for reasonably equivalent value and fair consideration under the Bankruptcy Code and any other applicable law, and the Sale may not be avoided under section 363(n) of the Bankruptcy Code. 36. With respect to the transactions consummated pursuant to this Sale Order, this
Sale Order shall be sufficient evidence of the transfer of title to the Purchaser, and the Sale consummated pursuant to this Sale Order shall be binding upon and shall govern the acts of all persons and entities who may be required by operation of law, the duties of their office or contract, to accept, file, register or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state of title in or to any of the property sold pursuant to this Sale Order, including, without limitation, all foreign affiliates and foreign receivers, filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, administrative agencies, governmental departments, secretaries of state and federal, state and local officials, and each of such persons and entities is hereby directed to
accept this Sale Order as sole and sufficient evidence of such transfer of title and shall rely upon this Sale Order in consummating the transactions contemplated hereby. 37. This Court shall retain exclusive jurisdiction to interpret and enforce the
provisions of the [Stalking Horse Agreement] and the other Sale Documents, the Bidding Procedures Order and this Sale Order in all respects and further to hear and determine any and all disputes between the Sellers and/or the Purchaser, as the case may be, and any non-debtors party to, among other things, any Assigned Contracts; provided, however, that in the event the Court abstains from exercising or declines to exercise such jurisdiction or is without jurisdiction with respect to the [Stalking Horse Agreement] and the other Sale Documents, the Bidding Procedures Order and this Sale Order, such abstention, refusal or lack of jurisdiction shall have no effect upon, and shall not control, prohibit or limit the exercise of jurisdiction of any other court having competent jurisdiction with respect to any such matter. 38. The [Stalking Horse Agreement] and the other Sale Documents or other related
instruments may be modified, amended or supplemented by the parties thereto, in a writing signed by such parties, in accordance with the terms thereof without further order of the Court; provided that any such modification, amendment or supplement does not have a material adverse effect on the Sellers estates. 39. [From and after the date hereof, each Seller, the Purchaser, the Prepetition Agent
and the DIP Lenders shall act in accordance with the terms of the Stalking Horse Agreement and each Seller and the Purchaser, to the extent it already has not done so, shall execute any Sale Document at or prior to Closing.] 40. [The failure specifically to include any particular provisions of the Stalking Horse
Agreement, the other Sale Documents or any related agreements in this Sale Order shall not
diminish or impair the effectiveness of such provision, it being the intent of the Court, the Sellers and the Purchaser that the Stalking Horse Agreement, the other Sale Documents and any related agreements are authorized and approved in their entirety with such amendments thereto as may be made by the parties in accordance with the Sale Order prior to Closing.] 41. To the extent of any inconsistency between the provisions of this Sale Order and
the [Stalking Horse Agreement], or any documents executed in connection therewith, the provisions contained in this Sale Order shall govern and control. 42. 43. The provisions of this Sale Order are non-severable and mutually dependent. This Sale Order shall inure to the benefit of the Purchaser, the Sellers, the
Prepetition Agent and the DIP Lenders, and their respective successors and assigns, including, but not limited to, any chapter 11 or chapter 7 trustee that may be appointed in the Sellers cases, and shall be binding upon the Senior Lenders, any trustee, party, entity or fiduciary that may be appointed in connection with these Chapter 11 Cases or any other or further case involving the Sellers, whether under chapter 7 or chapter 11 of the Bankruptcy Code. 44. Nothing in any order of this Court or contained in any plan of reorganization or
liquidation confirmed in these Chapter 11 Cases, or in any subsequent or converted cases of the Sellers under chapter 7 or chapter 11 of the Bankruptcy Code, shall conflict with or derogate from [the provisions of the Stalking Horse Agreement or] the terms of this Sale Order. The provisions of this Sale Order and any actions taken pursuant hereto shall survive the entry of any order which may be entered confirming any chapter 11 plan of the Sellers, converting the Sellers cases from chapter 11 to cases under chapter 7 of the Bankruptcy Code or dismissing the Sellers Chapter 11 Cases.
45.
All time periods set forth in this Sale Order shall be calculated in accordance with
Bankruptcy Rule 9006(a). 46. This Sale Order shall be effective and enforceable immediately upon entry and its
provisions shall be self-executing, and the stay of (i) orders authorizing the sale, use or lease of property of the estate, as set forth in Bankruptcy Rule 6004(h); (ii) orders authorizing the assignment of an executory contract or unexpired lease, as set forth in Bankruptcy Rule 6006(d); and (iii) proceedings to enforce a judgment, as set forth in Bankruptcy Rule 7062, or otherwise shall not apply to this Sale Order. 47. The Sellers are authorized to close the Sale immediately upon entry of this Sale
Order in accordance with the Stalking Horse Agreement and the other Sale Documents.
THIS ORDER WAS SIGNED AND ENTERED ELECTRONICALLY AS INDICATED AT THE TOP OF THE FIRST PAGE.
Submitted for Entry by: /s/ _______ John C. Tishler, BPR No. 13441 Katie G. Stenberg, BPR No. 22301 Robert P. Sweeter, BPR No. 28859 WALLER LANSDEN DORTCH & DAVIS, LLP 511 Union Street, Suite 2700 Nashville, TN 37219 Telephone: (615) 244-6380 Facsimile: (615) 244-6804 Email: john.tishler@wallerlaw.com katie.stenberg@wallerlaw.com robert.sweeter@wallerlaw.com Proposed Attorneys for the Debtors and Debtors in Possession
Exhibit G-1 Purchaser and Lenders Release Parties Agent Supporting Lenders party to the Lock-Up Agreement (as defined in the DIP Credit Agreement) Garrison Loan Agency Services LLC, as agent under the DIP Credit Agreement The Lenders party to the DIP Credit Agreement
8565755.15
Exhibit G-2 Sellers Release Parties Church Street Health Management, LLC, a Delaware limited liability company Small Smiles Holding Company, LLC, a Delaware limited liability company FORBA NY, LLC, a New York limited liability company FORBA Services, Inc., a Delaware corporation EEHC, Inc., a Delaware corporation the existing and certain former members of the boards of directors (or comparable governing body) of the foregoing Arcapita Inc. SS Holding Company, Inc. American Capital Ltd. Carlyle Mezzanine Partners, L.P.
8565755.15
Exhibit G-3 Forms of Mutual Release Attached.
8565755.15
RELEASE Dated [_____], 2012 Release (this Release) by and among Church Street Health Management, LLC, a Delaware limited liability company ("Church Street"), Small Smiles Holding Company, LLC, a Delaware limited liability company ("SSHC"), FORBA NY, LLC, a New York limited liability company ("Forba NY"), FORBA Services, Inc., a Delaware corporation ("Forba Services"), EEHC, Inc., a Delaware corporation ("EEHC", and each of Church Street, SSHC, Forba NY, Forba Services, and EEHC individually, a "Seller", and collectively, the "Sellers"), and CSHM LLC, a Delaware limited liability company (the "Purchaser"). WHEREAS, the Sellers and the Purchaser are parties to the Asset Sale Agreement dated as of March 2, 2012 (the Asset Sale Agreement). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Asset Sale Agreement. WHEREAS, as a condition to the Closing under the Asset Sale Agreement, the Purchaser has agreed to enter into this Release. NOW, THEREFORE, each of the Sellers and the Purchaser agrees as follows: The Purchaser for itself and on behalf of its successors, heirs and permitted assigns (collectively, Releasing Parties), hereby fully and unconditionally releases each Seller and each such Sellers respective past and present Affiliates, parent corporations, direct or indirect equity holders, Subsidiaries, officers, managing members, managers, directors, employees, attorneys, advisors, representatives and agents, successors, heirs and permitted assigns (collectively, Released Parties), from any and all manner of actions, causes of action, suits, investigations or similar proceedings, debts, dues, sums of money, accounts, reckonings, bonds, bill, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, liabilities, torts, demands and other relief, whether in law or equity, foreseen or unforeseen, fixed or contingent, matured or unmatured, accrued or unaccrued, whether direct, indirect or derivative that, in each case, such Releasing Parties had or may have had against any Released Parties as of the Closing, arising out of, concerning, or in any way relating, directly or indirectly, to or accruing from the Sellers or the Business, including, without limitation, any and all Causes of Action (collectively, Released Claims); provided, however, the Released Claims shall not include any covenants or agreements in the Asset Sale Agreement that by their terms are to be satisfied after the Closing, which covenants shall survive the Closing to the extent provided in the Asset Sale Agreement; provided, further, that no Released Party shall be released from any Released Claim to the extent such Released Claim is caused by or arises out of such Released Partys fraud or willful misconduct; provided, further, no Releasing Party shall authorize, encourage, or solicit any Person or entity to commence or assert any Released Claims released or purported to be released hereby; provided, further, that no Obligations shall be included in the Released Claims. This Release is intended to be for the benefit of, and enforceable by, each Released Party and his, her or its respective estate, heirs,
representatives and successors, each of whom is intended to be third party beneficiary of this Release.
This Release shall be governed exclusively by the Laws of the State of New York without regard to the rules of conflict of laws applied therein or any other jurisdiction. Each party hereto (i) consents and agrees that any claim or action by such party seeking any relief whatsoever arising out of, or in connection with, this Release shall be brought in the federal courts in the Southern District of New York (collectively, the "Courts"), and shall not be brought in any other U.S. court or any court in any other country, (ii) agrees to submit to the exclusive jurisdiction of the Courts, as applicable pursuant to the preceding clause (i), for purposes of all legal proceedings arising out of, or in connection with, this Release, (iii) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such claim or action brought in such a court or any claim that any such claim or action brought in such a court has been brought in an inconvenient forum, and (iv) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law. [Signature page follows.]
[Signature Page to ASA Release] Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page 242 Exhibit F - Asset Sale Agreement 242 of 261 of 261
PURCHASER: CSHM LLC By:________________________ Name: Title: ACKNOWLEDGED AND AGREED SELLERS: CHURCH STREET HEALTH MANAGEMENT, LLC By:_______________________ Name: Title: SMALL SMILES HOLDING COMPANY, LLC, By:_______________________ Name: Title: FORBA NY, LLC By:_______________________ Name: Title: FORBA SERVICES, INC. By:_______________________ Name: Title: EEHC, Inc. By:________________________ Name: Title:
[SIGNATURE PAGE TO RELEASE BY PURCHASER]
RELEASE Dated [_____], 2012 Release (this Release) by and among Church Street Health Management, LLC, a Delaware limited liability company ("Church Street"), Small Smiles Holding Company, LLC, a Delaware limited liability company ("SSHC"), FORBA NY, LLC, a New York limited liability company ("Forba NY"), FORBA Services, Inc., a Delaware corporation ("Forba Services"), EEHC, Inc., a Delaware corporation ("EEHC", and each of Church Street, SSHC, Forba NY, Forba Services, and EEHC individually, a "Company", and collectively, the "Companies"), CIT Healthcare LLC, as agent under the Prepetition Facilities (as defined below) (the Prepetition Agent), the Locked-up Lenders (as defined below), Garrison Loan Agency Services LLC, as agent under the DIP Credit Agreement (as defined below) (the DIP Agent), the DIP Lenders (as defined below), the existing and former members of the Companies boards of directors (or comparable governing body) as set forth on the signature pages hereto (the Board Members), Arcapita Inc., SS Holding Company, Inc., American Capital Ltd., SSH Member, LLC, MezzF LLC, Carlyle Mezzanine Partners, L.P. and such other lenders party to the Prepetition Facilities that may join this Release by affixing their signature hereto (the Additional Prepetition Lenders). WHEREAS, the Companies, the lenders party thereto (the DIP Lenders) and the DIP Agent, are parties to the Debtor-In-Possession Credit Agreement (the DIP Credit Agreement) dated as of February 22, 2012. WHEREAS, the Companies and certain of the lenders (the Locked-up Lenders and together with the Additional Prepetition Lenders, the Supporting Prepetition Lenders) under the Companies prepetition credit facilities (collectively, the Prepetition Facilities) have entered into the Lock-Up and Plan Support Agreement dated as of February 11, 2012 (as amended from time to time, the Lock-Up Agreement) pursuant to which the parties thereto agreed in principal to the terms of a financial restructuring of the Companies (the Restructuring) and Supporting Prepetition Lenders constituting Required Lenders under the Prepetition Facilities have authorized and directed the Prepetition Agent to take steps necessary to consummate the Restructuring, including the execution of this Release. WHEREAS, such Restructuring was consummated, in part, pursuant to the Asset Sale Agreement dated as of March 2, 2012 (the Asset Sale Agreement) among the Companies, as sellers and CSHM LLC, as purchaser. WHEREAS, as a condition to the closing under the Asset Sale Agreement, each of the parties hereto shall have entered into this Release. NOW, THEREFORE, each of the Prepetition Agent, the Supporting Prepetition Lenders, the DIP Agent, the DIP Lenders, the Companies, the Board Members, Arcapita Inc., SS Holding Company, Inc., American Capital Ltd., SSH Member LLC, MezzF LLC and Carlyle Mezzanine Partners, L.P., for themselves and on behalf of each of their 1 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page 244 Exhibit F - Asset Sale Agreement 244 of 261 of 261
respective successors, heirs and permitted assigns (the Releasing Parties) hereby fully and unconditionally release each of the other Releasing Parties and each of its and their respective past and present affiliates, parent corporations, direct or indirect equity holders, subsidiaries, officers, managing members, managers, directors, employees, attorneys, advisors, representatives and agents, successors, heirs and permitted assigns (collectively, Released Parties) from any and all manner of actions, causes of action, suits, investigations or similar proceedings, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, liabilities, torts, demands and other relief, whether in law or equity, foreseen or unforeseen, fixed or contingent, matured or unmatured, accrued or unaccrued, whether direct, indirect or derivative that, in each case, such Released Parties had or may have had as of the Closing (as defined in the Asset Sale Agreement), arising out of, concerning, or in any way relating, directly or indirectly, to or accruing from the Companies or their Business (collectively, Released Claims); provided, however, that (i) the Companies are not hereby released by the DIP Agent, the DIP Lenders, the Prepetition Agent or the Supporting Prepetition Lenders from any Obligations (as defined in (a) DIP Credit Agreement or (b) the Asset Sale Agreement); (ii) none of the Board Members hereby release any of the Companies, and the Companies are not hereby released, from any indemnification or exculpation rights or claims that such Board Member has, had or may have, whether prior to or as of the date hereof or that may arise in the future, under applicable law or any of the Companies certificate of formation, limited liability company agreement, certificate of incorporation, bylaws or other governing documents or other applicable agreements or insurance policies; (iii) none of the Supporting Prepetition Lenders or American Capital Ltd. (or any of its Affiliates) are hereby released from any obligation to indemnify or reimburse the Prepetition Agent in accordance with the terms of the Prepetition Facilities and any other agreement among the Prepetition Lenders and the Prepetition Agent; (iv) none of the DIP Lenders are hereby released from any obligation to indemnify or reimburse the DIP Agent in accordance with the terms of the DIP Credit Agreement; (v) none of the Supporting Prepetition Lenders or American Capital Ltd. (or any of its Affiliates) are hereby released from any obligation to any other Supporting Prepetition Lender or American Capital Ltd. (or any of its Affiliates) arising under the Prepetition Facilities including, without limitation, any rights of indemnification, contribution, or sharing; (vi) none of the DIP Lenders are hereby released from any obligation to any other DIP Lender arising under the DIP Credit Agreement including, without limitation, any rights of indemnification, contribution, or sharing; (vii) no Released Party shall be released from any Released Claim to the extent such Released Claim is caused by or arises out of such Released Partys fraud or willful misconduct; (viii) no Released Party shall authorize, encourage, or solicit any person or entity to commence or assert any Released Claims released or purported to be released hereby; (ix) each Board Member who is an employee of any of the Companies as of the Petition Date (as defined in the Asset Sale Agreement) does not hereby release any of the Companies, and the Companies are not hereby released, from any claims for salary, wages, bonuses, benefits, paid-time-off or expense reimbursement, payable or owing to such Board Member, nor any employment agreement or other employment-related agreement between such Board Member and any of the Companies; (x) the Companies 2 Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 Desc Redacted Exhibit Page Page 245 Exhibit F - Asset Sale Agreement 245 of 261 of 261
are not hereby released by American Capital, Ltd., from any Obligations (as defined in the Asset Sale Agreement); and (xi) the Companies are not hereby released from any obligations arising under the Amended and Restated Subordinate Debt Note Purchase Agreement, dated as of February 1, 2010, by and among SSH Funding Corp., American Capital, Ltd. and Caryle Mezzanine Partners, L.P. (the Mezzanine Loan Facility), the Subordinated SSH Commodities Purchase Agreement, the Note Documents, the Subordinated Opco Commodities Purchase Documents (each as defined in the Mezzanine Loan Facility) or any document, instrument or agreement entered into in connection therewith. This Release is intended to be for the benefit of, and enforceable by, each Released Party and his, her or its respective estate, heirs, representatives and successors, each of whom is intended to be third party beneficiary of this Release. This Release shall be governed exclusively by the Laws of the State of New York without regard to the rules of conflict of laws applied therein or any other jurisdiction. Each party hereto (i) consents and agrees that any claim or action by such party seeking any relief whatsoever arising out of, or in connection with, this Release shall be brought in the federal courts in the Southern District of New York (collectively, the "Courts"), and shall not be brought in any other U.S. court or any court in any other country, (ii) agrees to submit to the exclusive jurisdiction of the Courts, as applicable pursuant to the preceding clause (i), for purposes of all legal proceedings arising out of, or in connection with, this Release, (iii) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such claim or action brought in such a court or any claim that any such claim or action brought in such a court has been brought in an inconvenient forum, and (iv) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law. [Signature page follows.]
COMPANIES: CHURCH STREET HEALTH MANAGEMENT, LLC By:_______________________ Name: Title: SMALL SMILES HOLDING COMPANY, LLC, By:_______________________ Name: Title: FORBA NY, LLC By:_______________________ Name: Title: FORBA SERVICES, INC. By:_______________________ Name: Title: EEHC, Inc. By:________________________ Name: Title:
[SIGNATURE PAGE TO RELEASE]
PREPETITION AGENT: CIT HEALTHCARE LLC By:________________________ Name: Title:
SUPPORTING PRE-PETITION LENDERS: [LENDER] By:________________________ Name: Title:
DIP AGENT: GARRISON LOAN AGENCY SERVICES LLC By:________________________ Name: Title:
DIP LENDERS: GOF CLASS A AND B LLC By:________________________ Name: Title:
GOF CLASS C LLC By:________________________ Name: Title:
OFS FUNDING I, LLC By:________________________ Name: Title:
THE GOVERNOR & COMPANY OF THE BANK OF IRELAND By:________________________ Name: Title:
BOARD MEMBERS: [______________] By:________________________ Name: Title:
ARCAPITA INC. By:________________________ Name: Title:
SS Holding Company, Inc. By:________________________ Name: Title:
American Capital Ltd. By:________________________ Name: Title:
SSH Member LLC By:________________________ Name: Title:
Carlyle Mezzanine Partners, L.P. By:________________________ Name: Title:
MezzF LLC By:________________________ Name: Title:
RELEASE Dated [_____], 2012 Release (this Release) by and among Church Street Health Management, LLC, a Delaware limited liability company ("Church Street"), Small Smiles Holding Company, LLC, a Delaware limited liability company ("SSHC"), FORBA NY, LLC, a New York limited liability company ("Forba NY"), FORBA Services, Inc., a Delaware corporation ("Forba Services"), EEHC, Inc., a Delaware corporation ("EEHC", and each of Church Street, SSHC, Forba NY, Forba Services, and EEHC individually, a "Seller", and collectively, the "Sellers"), and CSHM LLC, a Delaware limited liability company (the "Purchaser"). WHEREAS, the Sellers and the Purchaser are parties to the Asset Sale Agreement dated as of March 2, 2012 (the Asset Sale Agreement). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Asset Sale Agreement. WHEREAS, as a condition to the Closing under the Asset Sale Agreement, each of the Sellers has agreed to enter into this Release. NOW, THEREFORE, each of the Sellers, for itself and on behalf of each of its successors, heirs and permitted assigns (collectively, Releasing Parties), hereby fully and unconditionally releases the Purchaser, and its respective past and present Affiliates, parent corporations, equity holders, Subsidiaries, officers, managing members, managers, directors, employees, attorneys, representatives and agents, successors, heirs and permitted assigns (collectively, Released Parties), from any and all manner of actions, causes of action, suits, investigations or similar proceedings, debts, dues, sums of money, accounts, reckonings, bonds, bill, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, liabilities, torts, demands and other relief, whether in law or equity, foreseen or unforeseen, fixed or contingent, matured or unmatured, accrued or unaccrued, whether direct, indirect or derivative that, in each case, such Releasing Parties had or may have had against any Released Parties as of the Closing, arising out of, concerning, or in any way relating, directly or indirectly, to or accruing from the Sellers or the Business (collectively, Released Claims); provided, however, the Released Claims shall not include any covenants or agreements in the Asset Sale Agreement that by their terms are to be satisfied after the Closing, which covenants shall survive the Closing to the extent provided in the Asset Sale Agreement; provided, further, that no Released Party shall be released from any Released Claim to the extent such Released Claim is caused by or arises out of such Released Partys fraud or willful misconduct; provided, further, no Releasing Party shall authorize, encourage, or solicit any Person or entity to commence or assert any Released Claims released or purported to be released hereby; provided, further, that no Obligations shall be included in the Released Claims. This Release is intended to be for the benefit of, and enforceable by, each Released Party and his, her or its respective estate, heirs, representatives and successors, each of whom is intended to be third party beneficiary of this Release.
This Release shall be governed exclusively by the Laws of the State of New York without regard to the rules of conflict of laws applied therein or any other jurisdiction. Each party hereto (i) consents and agrees that any claim or action by such party seeking any relief whatsoever arising out of, or in connection with, this Release shall be brought in the federal courts in the Southern District of New York (collectively, the "Courts"), and shall not be brought in any other U.S. court or any court in any other country, (ii) agrees to submit to the exclusive jurisdiction of the Courts, as applicable pursuant to the preceding clause (i), for purposes of all legal proceedings arising out of, or in connection with, this Release, (iii) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such claim or action brought in such a court or any claim that any such claim or action brought in such a court has been brought in an inconvenient forum, and (iv) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law. [Signature page follows.]
SELLERS: CHURCH STREET HEALTH MANAGEMENT, LLC By:_______________________ Name: Title: SMALL SMILES HOLDING COMPANY, LLC, By:_______________________ Name: Title: FORBA NY, LLC By:_______________________ Name: Title: FORBA SERVICES, INC. By:_______________________ Name: Title: EEHC, Inc. By:________________________ Name: Title: ACKOWLEDGED AND AGREED PURCHASER: CSHM LLC By:________________________ Name: Title:
[SIGNATURE PAGE TO RELEASE BY SELLERS]

106-8 Asset Sale Agreement of Church Street Health Management

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

106-8 Asset Sale Agreement of Church Street Health Management

Hochgeladen von

Copyright:

Verfügbare Formate

Execution Copy

Organization and Corporate Power.

Exhibit B Sellers Disclosure Letter Attached.

01/12/11 04/16/07 09/26/06 07/10/07 09/26/06 09/26/06 09/26/06 09/26/06 09/26/06

075 059 028 063 013 036 001 011 027

07/25/07 09/26/06 09/26/06 02/02/07 09/26/06 09/26/06 09/26/06 09/26/06 10/18/06

N/A 033 002 056 038 017 039 008 051

Government Entity State of Connecticut District of Columbia

State of New Hampshire

State of New Mexico

State of New York

January 14, 2010 February 16, 2012 February 16, 2012

Government Entity State of South Carolina

Civil Settlement Agreement

Date February 1, 2010

FORBA Holdings, LLC (n/k/a Church Street Health Management, LLC)

January 15, 2010

02/03/11 03/30/07 059

5/1/11 2/24/11 3/17/09 1/1/12 9/26/06 1/1/11 7/7/11 7/14/11

Date 2/18/11 4/6/11 8/8/11

5/11/11 2/3/09 1/1/11 4/13/11 5/20/11 2/23/10 5/2/11

7/13/09 6/20/11 1/24/12

Section 1.1(d) Transferred Intellectual Property Patents None

Mark BETTER ACCESS FOR A BETTER AMERICA

Country United States

Filing Date 10/03/07

Issue Date 11/25/08

GIVING AMERICAS KIDS THE SMILES THEY DESERVE

SMALL SMILES, BIG DIFFERENCE

Country United States

Serial Number 77-295,488

Registration Number 3,751,029

Filing Date 10/03/07

Issue Date 2/10/10

State Trademark/Service Mark Registrations Registration Number 801027912 801027917

Mark WILD SMILES

State Texas Texas

Issue Date 09/10/08 09/29/08

Unregistered Trademarks/Service Marks

Registration Number N/A (unregistered)

Date of First Use 6/13/1995

Author GSD&M Idea City, LLC

Title of Work FORBA Holly Hippo Headshot

Country United States

Issue Date 12/31/08

GSD&M Idea City, LLC

Visual art FORBA DJ Z Zebra Headshot United States VA 1-655-451 12/31/08

GSD&M Idea City, LLC

FORBA Holdings, LLC

FORBA Holdings, LLC

National Childrens Dental Health Month

FORBA Holdings, LLC

Preventive Resin Restorations

Software 1. Licensed Software x Microsoft Windows Professional (XP, 7)

Trade Secrets None

State of Oklahoma Commonwealth of Pennsylvania State of South Carolina State of Texas

Section 2.1(c)(ii) Cure Costs Cap See attached.

Date 1/1/11 1/1/12 6/1/11 1/1/11 1/1/11 4/28/11

7/13/09 6/20/11 1/24/12

Practice Small Smiles of South Bend, LLC

Claimant Maria Macri

Albany Access Dentistry, PLLC

Albany Access Dentistry, PLLC