doc 106-8 asset sale agreement of church street health management

7/31/2019 Doc 106-8 Asset Sale Agreement of Church Street Health Management

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Execution Copy

8565755.15.2

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

Case 3:12-bk-01573 Doc 106-6 Filed 03/02/12 Entered 03/02/12 17:26:14 DescExhibit F - Asset Sale Agreement Page 1 of 261

Case 3:12-bk-01573 Doc 106-8 Filed 03/02/12 Entered 03/02/12 17:26:14 DescRedacted Exhibit Page 1 of 261


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TABLE OF CONTENTS

Page

ARTICLE I INTERPRETATION ...............................................................................................1Section 1.1 Definitions..................................................................................................1Section 1.2 Interpretation. ...........................................................................................17

ARTICLE II PURCHASE AND SALE OF ASSETS ...............................................................18Section 2.1 Purchase and Sale ....................................................................................18Section 2.2 Purchase Price ..........................................................................................27Section 2.3 Closing .....................................................................................................29Section 2.4 Designated Purchaser(s)...........................................................................30

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE

PURCHASER ...................................................................................................................30Section 3.1 Organization and Corporate Power ..........................................................31

Section 3.2 Authorization; Binding Effect; No Breach ..............................................31Section 3.3 Brokers .....................................................................................................32Section 3.4 Direction Letter; Assignment Agreement ................................................32

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS ..............32Section 4.1 Organization and Corporate Power ..........................................................32Section 4.2 Subsidiaries and Investments ...................................................................33Section 4.3 Authorization; Binding Effect; No Breach ..............................................33Section 4.4 Title to Tangible Assets; Sufficiency of Assets .......................................33Section 4.5 Material Contracts ....................................................................................34Section 4.6 Intellectual Property .................................................................................35

Section 4.7 Litigation ..................................................................................................37Section 4.8 Financial Statements ................................................................................37Section 4.9 Compliance with Laws; Consents ............................................................38Section 4.10 Real Property ...........................................................................................38Section 4.11 Environmental Matters.............................................................................43Section 4.12 Labor and Employee Benefits Matters ....................................................44Section 4.13 Taxes ........................................................................................................47Section 4.14 Absence of Certain Developments...........................................................47Section 4.15 No Undisclosed Liabilities .......................................................................48Section 4.16 Customers and Suppliers..........................................................................48Section 4.17 Affiliate Transactions...............................................................................48

Section 4.18 Cure Costs ................................................................................................45Section 4.19 Owned Inventory .....................................................................................45Section 4.20 Bank Accounts Schedule .........................................................................48Section 4.21 Powers of Attorney ..................................................................................48Section 4.22 Brokers; Advisors Fees ............................................................................49Section 4.23 No Additional Representations ................................................................46




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ARTICLE V COVENANTS AND OTHER AGREEMENTS .................................................49Section 5.1 Bankruptcy Actions .................................................................................49Section 5.2 Cooperation ..............................................................................................51Section 5.3 Regulatory Approvals ..............................................................................52Section 5.4 Pre-Closing Access to Information ..........................................................53

Section 5.5 Public Announcements ............................................................................54Section 5.6 Further Actions ........................................................................................54Section 5.7 Conduct of Business and Compliance with DIP Credit Agreement ........55Section 5.8 Exclusivity; No Solicitation of Transactions ...........................................56Section 5.9 Transaction Expenses ...............................................................................58Section 5.10 Confidentiality .........................................................................................58Section 5.11 Certain Payments or Instruments Received from Third Parties...............58Section 5.12 Deemed Consent ......................................................................................59Section 5.13 Maintenance of Books and Records ........................................................59Section 5.14 Use of Cash ..............................................................................................59Section 5.15 Wind-Down Amount ...............................................................................59

Section 5.16 Name Change ...........................................................................................60Section 5.17 Certain Acknowledgement Regarding the Purchaser ..............................60

ARTICLE VI TAX MATTERS ..................................................................................................61Section 6.1 Transfer Taxes .........................................................................................61Section 6.2 Withholding Taxes ...................................................................................61Section 6.3 Tax Characterization of Payments Under This Agreement .....................62Section 6.4 Records ....................................................................................................62Section 6.5 Property Tax Allocation ...........................................................................62Section 6.6 G Reorganization Structure ......................................................................63

ARTICLE VII EMPLOYMENT MATTERS ...........................................................................63

Section 7.1 Employment Offers ..................................................................................63Section 7.2 Employee Benefits ...................................................................................63Section 7.3 Excluded Employee Liabilities ................................................................64Section 7.4 Other Employee Covenants .....................................................................65Section 7.5 WARN Act...............................................................................................65Section 7.6 No Obligation...........................................................................................66

ARTICLE VIII CONDITIONS TO THE CLOSING ..............................................................66Section 8.1 Conditions to Each Party's Obligation .....................................................66Section 8.2 Conditions to Sellers' Obligation .............................................................66Section 8.3 Conditions to Purchaser's Obligation .......................................................67

ARTICLE IX TERMINATION .................................................................................................68Section 9.1 Termination ..............................................................................................68Section 9.2 Effects of Termination .............................................................................69

ARTICLE X MISCELLANEOUS .............................................................................................70Section 10.1 No Survival of Representations and Warranties or Covenants ................70Section 10.2 Remedies ..................................................................................................70




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Section 10.3 No Third-Party Beneficiaries ...................................................................71Section 10.4 Consent to Amendments; Waivers...........................................................71Section 10.5 Successors and Assigns............................................................................71Section 10.6 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial .........71Section 10.7 Notices .....................................................................................................72

Section 10.8 Exhibits; Sellers Disclosure Letter...........................................................73Section 10.9 Counterparts .............................................................................................74Section 10.10 No Presumption .......................................................................................74Section 10.11 Severability ..............................................................................................74Section 10.12 Entire Agreement .....................................................................................74Section 10.13 Damages ...................................................................................................75Section 10.14 Bulk Sales Laws .......................................................................................75Section 10.15 Risk of Loss .............................................................................................75

EXHIBITS

Exhibit A List of Purchaser's Persons with KnowledgeExhibit B Sellers' Disclosure LetterExhibit C Wind-Down BudgetExhibit D Form of Bidding ProceduresExhibit E Form of Stalking Horse and Bidding Procedures OrderExhibit F Form of Sale OrderExhibit G-1 Purchaser and Lenders Release PartiesExhibit G-2 Sellers Release PartiesExhibit G-3 Form of Mutual Release




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ASSET SALE AGREEMENT

This Asset Sale Agreement is dated as of March 2, 2012, by and among Church StreetHealth Management LLC, a Delaware limited liability company ("Church Street"), Small SmilesHolding Company, LLC, a Delaware limited liability company ("SSHC"), FORBA NY, LLC, aNew York limited liability company ("Forba NY"), FORBA Services, Inc., a Delawarecorporation ("Forba Services"), EEHC, Inc., a Delaware corporation ("EEHC", and each ofChurch Street, SSHC, Forba NY, Forba Services, and EEHC individually, a "Seller", andcollectively, 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 February20, 2012 and February 21, 2012 (the "Petition Date") by filing petitions for relief in the UnitedStates Bankruptcy Court for the Middle District of Tennessee (the "Bankruptcy Court");

WHEREAS, pursuant to the Direction Letter, the Agent has been instructed by theRequired Lenders, upon the request of the Purchaser, to submit the Credit Bid for the Assetspursuant 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 ofthe Bankruptcy Code, each of the Sellers desires to transfer, sell, convey, assign and deliver tothe 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 Assetsfree and clear of all Liabilities (other than the Assumed Liabilities and PermittedEncumbrances); and

WHEREAS, in connection with such assignment, in accordance with the terms hereofand pursuant to sections 363 and 365 of the Bankruptcy Code, the Purchaser is willing toassume, or cause a Designated Purchaser to assume, and each of the Sellers desires to assign andtransfer 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 derivedhereby (the sufficiency of which are acknowledged), and intending to be legally bound hereby,the Parties agree as follows:

ARTICLE IINTERPRETATION

Section 1.1 Definitions. Capitalized terms used but not otherwise defined herein shallhave the meanings set forth below:




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"Action" means any claim, action, suit, arbitration, assessment, proceeding, litigation,injunction, citation, summons, subpoena or investigation of any nature by or before anyGovernment Entity.

"Affiliate" means, as to any Person, any other Person that directly or indirectly throughone or more intermediaries Controls, or is under common Control with, or is Controlled by, suchspecified Person.

"Agent" means CIT Healthcare LLC, as administrative agent under the CreditAgreements.

"Agreement" means this Asset Sale Agreement, the Sellers Disclosure Letter and allExhibits and Schedules attached hereto and thereto and all amendments hereto and thereto madein 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 validitythereof; (b) as to which any objection or request for estimation that has been Filed has beensettled, waived, withdrawn or denied by a Final Order; or (c) that is allowed (i) pursuant to theterms of a Final Order or (ii) pursuant to the terms of an agreement by and among the holder ofsuch claim and the Debtors.

"Alternative Transaction" means the sale, transfer or other disposition, directly orindirectly, including through an asset sale, share sale, merger, amalgamation, recapitalization orother similar transaction, including a plan of reorganization or plan of arrangement approved bythe Bankruptcy Court, or resulting from the Auction, of substantially all of the Assets of theSellers.

"Ancillary Agreements" means, in each case in a form reasonably acceptable to theSellers and the Purchaser: (a) a Bill of Sale for the assignment and conveyance of the Assetsfrom the Sellers to the Purchaser; (b) an Assignment and Assumption Agreement for theassignment of the Assumed Liabilities by the Sellers to and the assumption thereof by thePurchaser or the Designated Purchasers; and (c) instruments of assignment of the Patents,Trademarks, Copyrights, and any other assignments or instruments with respect to anyIntellectual Property included in the Assets for which an assignment or instrument is required toassign, 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 othersimilar 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-AssignedContracts.

"Assumed Liabilities" has the meaning set forth in Section 2.1(c).




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Release of Hazardous Materials so that they do not migrate, endanger or threaten to endangerpublic health or welfare or the indoor or outdoor environment; (c) abate, decontaminate, ordetoxify Hazardous Materials or areas or properties affected or impacted by HazardousMaterials; (d) perform pre-remedial studies and investigations and post-remedial monitoring andcare; 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, ordetoxification 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 anyGovernment 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 commonControl with", means, in connection with a given Person, the possession, directly or indirectly, ofthe power to either (a) elect more than fifty percent (50%) of the directors or managers of suchPerson 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 copyrightablesubject matter, whether registered or unregistered, in any jurisdiction throughout the worldincluding (a) all copyright registrations and applications for registration, (b) all moral rights andrights of attribution and integrity, (c) all common law copyright rights, and (d) all rights toregister and obtain renewals and extensions of copyright registrations, together with all othercopyright 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, thelenders from time to time party thereto, and CIT Healthcare LLC, as collateral agent andadministrative agent; and (b) that certain prepetition Second Lien Credit Agreement dated as ofFebruary 1, 2010 among SSO Funding Corp. as borrower, the lenders from time to time partythereto, and CIT Healthcare LLC, as collateral agent and administrative agent, together, in eachcase, with all attendant notes, instruments, agreements and other documents, as the same havebeen amended, modified or supplemented from time to time.




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"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 beconsummated pursuant to a transaction structure where the Credit Bid Amount with respect toObligations is exchanged for all or substantially all of the Assets, in the sole discretion of theRequired 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 tothis Agreement.

"Cure Cost" means, as applicable, any amounts or assurances required by section365(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 tothe Business and which are listed in Section 1.1(a) of the Sellers Disclosure Letter, which shallinclude all of the Governmental and Related Agreements and all management servicesagreements of the Sellers; but excluding such Contracts or Leases not to be assumed by andassigned 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 theBankruptcy Court on the Petition Date.

"DIP Loan Documents" means the Loan Documents as defined in the DIP CreditAgreement.

"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 Purchaserin 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 Employeecommences 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).




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"Employee Records" means books, records, files, or other documentation with respect toEmployees or any former employee of any of the Sellers.

"Employee Transfer Time" means with respect to each jurisdiction where Employees willbecome Transferred Employees in accordance with this Agreement, 12:00 a.m. midnight localtime 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 ofoffence by any Person alleging potential liability (including potential liability for investigatorycosts, Cleanup costs, Government Entity response costs, natural resources damages, propertydamages, personal injuries, or fines or penalties) arising out of, based on or resulting from (a) thepresence, Release or threatened Release of, or exposure to, any Hazardous Materials at anylocation, whether or not owned or operated by the Sellers, or (b) circumstances forming the basisof 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 exposureto, or Releases or threatened Releases of, Hazardous Materials or otherwise relating to themanufacture, presence, processing, distribution, use, treatment, storage, transport or handling ofHazardous Materials and all Laws with regard to recordkeeping, notification, disclosure andreporting requirements respecting Hazardous Materials.

"Environmental Permit" means any permit, approval, license, certificate, consent,registration, certificate of authorization and depollution attestation or other authorizationrequired 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 theClosing into which shall be deposited the good faith estimated amount of accrued but unpaidprofessional fees and expenses of the Sellers in a maximum amount not to exceed the amountsset 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 aDesignated Seller Contract.




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"Federal Settlement Agreement" means that certain Settlement Agreement, dated as ofJanuary 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 Rightsfrom each of the U.S. Department of Justice, the States of Alabama, Arizona, Colorado, Georgia,Idaho, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Nebraska, Nevada, NewHampshire, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Texasand, to the extent a Waiver of Payment Acceleration Right is obtained from the State of Virginiaprior to the Closing Date, Virginia, and the District of Columbia.

"Filed" means filed with the Bankruptcy Court (or agent thereof) in connection with theChapter 11 Cases.

"Final Order" means an action taken or Order issued by the applicable Government Entityas 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 applicableLaw; (b) no petition for rehearing or reconsideration of the action or Order, or protest of anykind, is pending before the Government Entity and the time for filing any such petition or protestis passed; (c) the Government Entity does not have the action or Order under reconsideration orreview on its own motion and the time for such reconsideration or review has passed; and (d) theaction or Order is not then under judicial review, there is no notice of leave to appeal, appeal orother application for judicial review pending, and the deadline for filing such notice of appeal orother 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 possibilitythat a motion pursuant to section 502(j) or 1144 of the Bankruptcy Code, Rule 59 or 60 of theFederal 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, appliedconsistently 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, courtor other tribunal, self-regulatory organization, bureau, commission or any regulatory,administrative or other governmental agency, or any political or other subdivision, department orbranch of any of the foregoing having jurisdiction.




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"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 StateWaivers, (f) that certain Agreement, dated as of February 15, 2012, by and between ChurchStreet, OMIG-NY and the New York State Office of the Attorney General, (g) that certainCorporate 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 letteragreement, dated as of February 12, 2010, by and between Church Street and FTI ConsultingInc., each as amended, modified, supplemented or otherwise in effect from time to time.

"Hazardous Materials" means (a) petroleum, petroleum products, asbestos in any formthat is friable, toxic mold, urea formaldehyde foam insulation, lead based paints, polychlorinatedbiphenyls 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 inany combination as "hazardous", "hazardous waste", "radioactive", "deleterious", "toxic","caustic", "dangerous", a contaminant, a pollutant, a "waste", a "special waste", a "source ofcontamination" or "source of pollution", or words of similar meaning, under any EnvironmentalLaw.

Healthcare Law means:

(a) all applicable statutes, laws, ordinances, rules and regulations of any GovernmentEntity with respect to regulatory matters primarily relating to patient healthcare, healthcareproviders and healthcare services, including but not limited to Title XIX (Medicaid Program) of42 U.S.C.;

(b) the federal Anti-Kickback Statute (42 U.S.C. 1320a-7b), (ii) the Stark Law (42U.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 statestatutes similar to any of the foregoing and (vi) the regulations promulgated pursuant to suchfederal and state statutes;

(c) the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191) 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 applicablefederal, state or local laws or regulatory bodies relating to the Sellers or any Practice'sownership, management or operation of a healthcare facility or business, or assets used inconnection therewith;

(g) any applicable law relating to the billing or submission of claims, collection ofaccounts receivable, underwriting the cost of, or provision of management or administrative




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services in connection with, any and all of the foregoing, by the Company or any of itsSubsidiaries 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 borrowedmoney, 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 ofany of the foregoing, (b) any indebtedness evidenced by any note, bond, debenture or other debtsecurity, (c) any indebtedness for the deferred purchase price of property or services with respectto which any Seller is liable, contingently or otherwise, as obligor or otherwise, (d) allindebtedness created or arising under any conditional sale or other title retention agreement withrespect to property acquired by such Person (even though the rights and remedies of the seller orlender under such agreement in the event of default are limited to repossession or sale of suchproperty), (e) any commitment by which such Person assures a creditor against loss (includingcontingent reimbursement liabilities with respect to letters of credit or similar facilities), (f) anyindebtedness or Liabilities guaranteed in any manner by a Seller, (g) any Liabilities undercapitalized leases, that have been or should be, in accordance with GAAP, recorded as capitalleases, 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 againstloss, (g) any indebtedness secured by a Lien on such Person's assets, (h) all obligations of suchPerson to purchase, redeem, retire, defease or otherwise acquire for value any capital stock ofsuch Person or any warrants, rights or options to acquire such capital stock, valued, in the case ofredeemable preferred stock, at the greater of its voluntary or involuntary liquidation preferenceplus accrued and unpaid dividends, (i) any unsatisfied or underfunded Liability related to anypension 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 orindirectly in any manner by such Person, or in effect guaranteed directly or indirectly by suchPerson through an agreement (i) to pay or purchase such Indebtedness or to advance or supplyfunds for the payment or purchase of such Indebtedness; (ii) to purchase, sell or lease (as lesseeor lessor) property, or to purchase or sell services, primarily for the purpose of enabling thedebtor to make payment of such Indebtedness or to assure the holder of such Indebtednessagainst loss, (iii) to supply funds to or in any other manner invest in the debtor (including anyagreement to pay for property or services irrespective of whether such property is received orsuch services are rendered), or (iv) otherwise to assure a creditor against loss; and (l) allIndebtedness 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 onproperty (including accounts and contract rights) owned by such Person, even though suchPerson has not assumed or become liable for the payment of such Indebtedness.

"Intellectual Property" means all intellectual and industrial property rights of any kind inany 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 patenthas been issued or a patent application has been made therefor; (d) Copyrights; (e) Trade Secrets




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and other proprietary, confidential, technical or business information; and (f) all rights andremedies (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 otherinformation 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 theBusiness.

"Knowledge" or "aware of" or "notice of" or a similar phrase shall mean, with referenceto 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 actualknowledge, 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 ruleof 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 ofany nature, whether accrued or fixed, absolute or contingent, matured or unmatured ordetermined or undeterminable, including those arising under any Law or Action and those arisingunder any Contract or otherwise, including any Tax liability.

"Lien" means any lien, mortgage, pledge or security interest, hypothec (including legalhypothecs), encumbrance, servitude, easement, encroachment, right-of-way, restrictive covenanton 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 orconditional 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 theSellers, 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, resultsof operations or condition (financial or otherwise) of the Sellers, taken as a whole, except thatany such development, occurrence, fact, condition, change, violation, inaccuracy, circumstanceor event that results from or arises out of any of the following shall not be taken into account in




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determining whether there has been a Material Adverse Effect: (i) changes in general economicconditions, changes in applicable Law or changes affecting the industries and markets in whichthe Business operates (except to the extent that such changes have a disproportionate effect onthe 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) tothe extent such changes are the result of an adverse change in the enforcement of existing law byany Governmental Authority) or (iii) the filing or pendency of the Chapter 11 Cases, the entryinto or announcement of this Agreement or the Chapter 11 Cases, and any action approved by, ormotion 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 thedate hereof may be taken into account in determining whether there has been a Material AdverseEffect.

"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 allapplicable Consents to assignment thereof to the Purchaser or a Designated Purchaser have notbeen granted or obtained prior to the Closing Date.

NY-CIA means that certain Amended Corporate Integrity Agreement dated on or aboutApril 30, 2010 by and between the OMIG-NY and Church Street.

"Obligations" has, with respect to any Credit Agreement, the meaning set forth in suchCredit Agreement.

"Off-the-Shelf Software" means all Software that is used by any Seller in the operation ofthe Business or otherwise owned or licensed by any Seller and which is widely commerciallyavailable 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. Forthe avoidance of doubt, off-the-shelf Software does not include Software licensed to any Sellerby 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 January15, 2010 by and between the OIG-HHS and Church Street.

"OIG-HHS" means the Office of the Inspector General of the Department of Health andHuman 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.




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"Ordinary Course" means the ordinary course of the Business consistent with recent pastpractice, 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 propertyincluding all machinery, equipment (including transportation and office equipment), supplies,materials, office furniture and office equipment, computers, mobile phones and devices, personaldigital 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, spareparts, other miscellaneous supplies and other items of personal property wherever located thatare owned by any Seller that are held or used in connection with the Business.

"Owned Inventory" means any inventories of raw materials, manufactured and purchasedparts, 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 byany Seller and held or used in connection with the Business, including any of the above itemswhich 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 whichis 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 Sellersand the Purchaser.

"Patents" means all U.S., international, and foreign (whether national, multinational orregional) statutory invention registrations, patents (including certificates of invention and otherpatent equivalents), patent applications, provisional patent applications and patents issuingtherefrom, industrial designs, and industrial models, as well as all reissues, divisions,

substitutions, continuations, continuations-in-part, patent disclosures, extensions andreexaminations, and all rights therein including as provided by multinational treaties orconventions.

"Periodic Taxes" has the meaning set forth in Section 6.5.

"Permitted Encumbrances" means (a) any Liens imposed by the Bankruptcy Court inconnection with the Chapter 11 Cases that are to be discharged from the Assets at Closingpursuant to the terms of the Sale Order; (b) zoning, entitlement, building and land useregulations, minor defects of title, servitudes, easements, rights of way, restrictions and othersimilar charges or encumbrances which do not impair in any material respect the use or the valueof the related assets in the Business as currently conducted and for which affirmative titleinsurance coverage can be obtained; and (c) non-exclusive licenses and covenants not to sue inrespect of Intellectual Property entered into in the Ordinary Course.

"Person" means an individual, a partnership, a corporation, an association, a limited orunlimited liability company, a joint stock company, a trust, a joint venture, an unincorporatedorganization or other legal entity or Government Entity.

"Petition Date" has the meaning set forth in the recitals to this Agreement.




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"Post-Closing Tax Period" has the meaning set forth in Section 6.5.

Practice means a dental practice or professional entity party to any managementservices 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 orsold 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) theaggregate amount of the Assumed Liabilities (including liabilities under the DIP CreditAgreement) assumed by the Purchaser or one or more of the Designated Purchasers.

"Purchased Deposits" means all deposits (including customer deposits and securitydeposits 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 expensespaid in connection with or relating exclusively to any Excluded Assets or any Contracts orLeases 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 ofSection 3(3) of ERISA (whether or not covered by ERISA) and any other employee benefit orcompensation plan, program or arrangement, whether written or oral, including any profitsharing, savings, bonus, performance awards, change of control, incentive compensation,deferred compensation, stock purchase, stock option, vacation, leave of absence, employeeassistance, automobile leasing/subsidy/allowance, meal allowance, redundancy or severance,relocation, family support, pension, supplemental pension, retirement, retirement savings, postretirement, medical, health, hospitalization or life insurance, disability, sick leave, retention,education assistance, expatriate assistance, compensation arrangement, including any base salaryarrangement, overtime, on-call or call-in policy or death benefit plan, program or arrangement orany other similar plan, program, arrangement or policy that may be established by or on behalf ofthe Purchaser or any Designated Purchaser with respect to the Transferred Employees, other thangovernment sponsored pension, health care, social security, employment insurance, workerscompensation, parental insurance, prescription drugs and similar plans.

"Registered" means issued by, registered, recorded or filed with, renewed by or thesubject of a pending application before any Government Entity or Internet domain nameregistrar.

"Regulatory Approvals" means those approvals set forth on Section 1.1(c) of the SellersDisclosure Letter.




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"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 outof any property.

"Required Lenders" has, with respect to each Credit Agreement, the meaning set forth insuch 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 orcompensation plan, program, agreement or arrangement, whether written or oral, which mayinclude any profit sharing, savings, bonus, performance awards, change of control, incentivecompensation, deferred compensation, stock purchase, stock option, vacation, leave of absence,employee assistance, automobile leasing/subsidy/allowance, meal allowance, redundancy orseverance, relocation, family support, pension, supplemental pension, retirement, retirementsavings, post retirement, medical, health, hospitalization or life insurance, disability, sick leave,retention, education assistance, expatriate assistance, compensation arrangement, including anybase salary arrangement, overtime, on-call or call-in policy or death benefit plan, program orarrangement; and (c) any other similar plan, program, arrangement or policy that is maintained orotherwise 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, retireesor their respective dependents, or with respect to which any Seller has any direct or contingentLiability, other than government sponsored pension, health care, social security, employmentinsurance, 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 heretoas 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 andmethodologies, program interfaces, databases, compilations and data, tool sets, compilers, higherlevel 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 Section5.1(c).




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"State Settlement Agreements" means those certain Settlement Agreements by andbetween Church Street and each of the States of Alabama, Arizona, Colorado, Connecticut,Georgia, Idaho, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Nebraska, Nevada, NewHampshire, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas andVirginia, 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 ormunicipal taxes or other similar impositions by any Government Entity, including TransferTaxes 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, howeverdenominated, together with any interest and penalties, additions to tax or additional amountsimposed or assessed with respect thereto; and (b) liability for the payment of any amountdescribed 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 toindemnify 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 orsuccessor 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 orrequired to be filed relating to Taxes, together with all attachments thereto, and any amendmentsof 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 researchstudies, information contained on drawings, plans, specifications and other documents andinformation (including with respect to research, development and testing) whether or not any of




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the foregoing have been reduced to a writing or other tangible form, including all documents andthings embodying, incorporating, or referring in any way to such Trade Secret.

"Trademarks" means, together with the goodwill associated therewith or symbolizedthereby, 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 namesunder which the Business has been conducted), corporate names, business names, Internetdomain names, and any other indicia of source or sponsorship of goods or services, whether ornot registered, including all common law rights, and registrations, applications for registrationand renewals thereof, including all marks registered in the United States Patent and TrademarkOffice, the trademark offices of the states and territories of the U.S., and the trademark offices ofother nations throughout the world and all rights therein, including those provided bymultinational treaties or conventions.

"Transaction Documents" means this Agreement, the Ancillary Agreements, escrowagreement 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 Partyand/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 similarTaxes however denominated (including any real or immovable property transfer taxes or dutiesand 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 withthe terms of Section 7.1 or Section 7.2.

"Transferred Employee Plan" means any Seller Employee Plan to the extent expresslyassumed (in whole or in part) pursuant to Section 7.2 hereof.

"Transferred Intellectual Property" means all Intellectual Property owned by a Seller andused in connection with, held for use in connection with or useful for the operation of theBusiness (or in connection with any product, service, technology or process currently or formerlymanufactured, produced, marketed, distributed or offered for sale by or on behalf of a Seller orcurrently under development by or on behalf of a Seller), including the Owned Software and theRegistered 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 equityinterests of which is held directly or indirectly by the Purchaser.




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"Wind-Down Account" means a bank account established by the Sellers to hold theWind-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 fundthe costs of winding-down the Sellers' estates after the Closing, as set forth in the Wind-DownBudget, which amount shall be held in the Wind-Down Account to be administered by the Wind-Down Agent, in accordance with Section 5.15; provided that, any remaining amount of theWind-Down Amount not required to fund the costs of winding-down such estates after Closingin accordance with Section 5.15 shall be promptly delivered by the Wind-Down Agent to thePurchaser.

"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 attachedhereto 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 shallnot be construed to limit any general statement that it follows to the specific or similaritems or matters immediately following it, (ii) the terms "hereof", "herein", "hereunder"

and "herewith" and words of similar import shall, unless otherwise stated, be construed torefer to this Agreement and not to any particular provision of this Agreement, andArticle, 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 thecomputation of periods of time from a specified date to a later specified date, unlessotherwise 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 aBusiness 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 thecalculation. If the last day of any such period is not a Business Day, such period will endon the next Business Day.

(c) Headings, etc. The inclusion of a table of contents, the division of thisAgreement into Articles and Sections and the insertion of headings are for convenientreference only and are not to affect or be used in the construction or interpretation of this




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Agreement. All references in this Agreement to any "Section" are to the correspondingSection of this Agreement unless otherwise specified.

(d) Currency. All monetary amounts in this Agreement, unless otherwisespecifically indicated, are stated in U.S. currency. All calculations and estimates to beperformed or undertaken, unless otherwise specifically indicated, are to be expressed inU.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 thebasis of the exchange rate published in the Wall Street Journal for the day in question.

(e) Statutory References. Unless otherwise specifically indicated, any Lawdefined or referred to herein or in any agreement or instrument that is referred to hereinmeans 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 Letterannexed hereto or referred to herein are hereby incorporated in and made a part of thisAgreement as if set in full herein. Any capitalized terms used in any Exhibit or theSellers Disclosure Letter but not otherwise defined therein shall be defined as set forth inthis Agreement.

ARTICLE IIPURCHASE 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, conveyand deliver to the Purchaser or the relevant Designated Purchasers all of its right, title andinterest 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 orintangible, owned, directly or indirectly or to which the Sellers are directly or indirectlyentitled to, leased or licensed (herein collectively called the "Assets") free and clear of allLiens and Claims (other than Permitted Encumbrances, except for those PermittedEncumbrances 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 eachSeller in, to and under, as applicable:

(i) all cash and cash equivalents, including bank balances, termdeposits, supplier deposits, vendor deposits and similar instruments, includingrestricted cash supporting letters of credit, except as set forth in Section 2.1(b)(i);

(ii) accounts receivable, trade accounts, credit receivables, notesreceivable, book debts and other debts due or accruing due to any Seller as of theClosing;




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(iii) any refunds due from, or payments due on, claims with the insurersof any of the Sellers in respect of losses arising prior to the Closing, except asspecifically agreed in writing by the Purchaser;

(iv) the Owned Inventory;(v) the Owned Equipment;(vi) the Assigned Contracts, including without limitation, all of the

Governmental and Related Agreements and all management services agreementsof the Sellers;

(vii) the Business Information, subject to Section 2.1(b)(iv) and Section2.1(b)(v);

(viii) Employee Records, except Employee Records for Employees orformer 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 allrights, claims or causes of action of any or all of the Sellers arising out of eventsoccurring prior to the Closing, including and, for the avoidance of doubt, arisingout of events occurring prior to the Petition Date, and including any rights underor pursuant to any and all warranties, representations and guarantees made bysuppliers, manufacturers and contractors relating to products sold, or servicesprovided, 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, marketresearch studies, websites, information contained on drawings and otherdocuments, information relating to research, development or testing, anddocumentation and media constituting, describing or relating to the IntellectualProperty, including memoranda, manuals, technical specifications and otherrecords wherever created throughout the world, in each case to the extent notcovered by Section 2.1(a)(ix);

(xii) the Consents of any Third Party (including any GovernmentEntities) (including those listed in Section 2.1(a)(xii) of the Sellers DisclosureLetter) 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);




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(xv) all telephone, telex and telephone facsimile numbers and otherdirectory listings and e-mail and website addresses used in connection with theBusiness;

(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 HealthManagement, "Small Smiles" and "FORBA", and (B) all customer lists, files,data and information relating to past and present customers and prospectivecustomers of the Business;

(xviii) copies of all Tax Returns and other Tax records, including workpapers and other material supporting information, related to the Assets and theBusiness;

(xix) all amounts remaining in the trust accounts referred to in Section2.1(b)(x) following payments of the reasonable fees and disbursementscontemplated by such Section;

(xx) all rights to Tax refunds, credits or similar benefits relating to theAssets or the Business;

(xxi) all rights and assets under any Transferred Employee Plan,including any associated funding media, assets, service agreements, documentsand applicable insurance policies; provided, however, that the TransferredEmployee Plans shall include only those Seller Employee Plans as the Purchasernotifies 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 aSeller;

(xxv) all Board compliance reports, monitoring reports or similardocuments;

(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, thePurchaser, in its discretion by written notice to the Sellers, may exclude from beingassigned pursuant hereto any Contracts or Leases (other than any of the Governmental




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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 beExcluded Seller Contracts and Excluded Assets, and the Purchaser shall not acquire anyrights 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 makean informed assessment whether to accept an assignment and assumption of suchContracts or Leases hereunder.

At any time at least one Business Day prior to the date of the Auction, thePurchaser may, in its discretion by written notice to the Sellers, designate any of theAssets (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 Sellerswhich may be Excluded Assets), which shall not be so excluded, and other than Contractsand Leases, which are addressed in the preceding paragraph) as additional ExcludedAssets, which notice shall set forth in reasonable detail the Assets so designated. TheSellers acknowledge and agree that there may be a reduction in the Purchase Price if thePurchaser elects to designate any Assets as Excluded Assets; provided, however, that nosuch reduction shall cause the amount of the Purchase Price to be less than the Credit BidAmount. Notwithstanding any other provision hereof, the Liabilities of the Sellers underor related to any Asset duly excluded pursuant to this paragraph will constitute ExcludedLiabilities.

(b) Excluded Assets. Notwithstanding anything in this Section 2.1 orelsewhere in this Agreement or in any of the Transaction Documents to the contrary, theSellers shall retain their respective right, title and interest in and to, and the Purchaser andthe Designated Purchasers shall have no rights with respect to the right, title and interestof 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 andexpenses 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 rightsand assets under any Seller Employee Plan;

(iii) other than the Assigned Contracts, any rights of the Sellers underany Contract or Lease (including, for the avoidance of doubt, the Excluded SellerContracts 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 BusinessInformation to the extent that the Sellers are required by Law, including Lawsrelating to privacy, not to disclose (provided that copies of such information shallbe provided to the Purchaser to the extent permitted by applicable Law);




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(vi) all rights of the Sellers under this Agreement and the otherTransaction 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 theforegoing, in each case other than such rights, claims and Actions against a partyto 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 inaccordance with the Wind-Down Budget or (B) Escrow Account;

(xi) copies of any book, record, literature, list and any other written orrecorded information constituting Business Information (the original of which hasalready been assigned or transferred to the Purchaser or a Designated Purchaser)to which the Sellers in good faith determine they are reasonably likely to needaccess for bona fide legal purposes following the Closing;

(xii) any of Sellers director and officer insurance policies, fiduciarypolicies or employment practices policies (in each case of the foregoing, includingany 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 relatingto any Excluded Assets; and

(xiv) the corporate charter, qualifications to conduct business as aforeign corporation or limited liability, arrangements with registered agentsrelating to foreign qualifications, taxpayer and other identification numbers, seals,and other documents relating to the organization, maintenance and existence ofeach 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 forthin this Agreement (including Section 2.1(d)), at the Closing, the Purchaser shall, and shallcause the relevant Designated Purchasers to, assume and become responsible for, andfrom 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 theSellers (the "Assumed Liabilities"):

(i) the Liabilities of the Sellers in respect of trade obligations of theSellers accrued or arising in the Ordinary Course on or after the Petition Date inaccordance with the DIP Budget and existing as of immediately prior to theClosing in an aggregate amount not to exceed $2,300,000 (the "Assumed TradePayables");




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(ii) all Liabilities of the Sellers under the Assigned Contracts, butsolely to the extent such Liabilities arise or are required to be performed after theClosing Date and do not relate to any obligation or Liability incurred prior to theClosing Date or are otherwise related to a breach or failure to perform by theSellers 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 andshall not exceed the aggregate amount set forth in Section 2.1(c)(ii) of the SellersDisclosure 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 Costassociated with any Contract or Lease listed on Section 2.1(c)(ii) of the SellersDisclosure Letter that is not an Assigned Contract (such amount, as may bedecreased, the "Cure Cost Cap") and Sellers shall pay any overage of suchamount;

(iii) all Liabilities of the Sellers under the Governmental and RelatedContracts, including all principal amounts, accrued interest, fee amounts and otheramounts and obligations due to the United States and the various Statesthereunder;

(iv) Liabilities under any Transferred Employee Plan and Liabilities inrespect of employee obligations owed to Transferred Employees, other than theExcluded Employee Liabilities;

(v) Liabilities owed to the Agent in respect of professional fees andagency fees as of the Closing Date, to the extent not already paid or fullyaccounted for in the Wind-Down Budget and funded by the Wind-Down Amount;

(vi) Liabilities under the DIP Loan Documents, but excluding allLiabilities flowing from breaches of or other disputes under any DIP LoanDocument 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 otherpaid-time-off, and all liabilities for withholding, trust fund, sales, use or otheremployment-related Taxes obligations and related trust funds, that accrue or arisein the Ordinary Course in accordance with the DIP Budget on or after the PetitionDate and existing as of immediately prior to the Closing, but not including anyseverance obligations and obligations related to certain key employee retentionplans identified by the Purchaser prior to Closing.

(d) Excluded Liabilities. Notwithstanding any provision in this Agreement tothe contrary (including Section 2.1(c)), other than the Assumed Liabilities, neither thePurchaser nor any of the Designated Purchasers shall assume or shall be obligated toassume or be obligated to pay, perform or otherwise discharge any Liability of the Sellersor their Affiliates, and the Sellers shall be solely and exclusively liable with respect to allLiabilities of the Sellers, including the Excluded Employee Liabilities (collectively, the




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"Excluded Liabilities"). For the avoidance of doubt, the Excluded Liabilities include, butare 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, thisAgreement or the transactions contemplated by this Agreement, whether incurredprior to, at or subsequent to the Closing Date, including all finders or brokersfees and expenses and any and all fees and expenses of any representatives of theSellers;

(ii) any Liability relating to (A) events or conditions occurring orexisting in connection with, or arising out of, the Business as operated prior to theClosing, or (B) the ownership, possession, use, operation or sale or otherdisposition 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 Proceedingcommenced against the Sellers or any predecessor or Affiliate of any Sellerarising out of, or relating to, any occurrence or event happening prior to theClosing; (y) any obligation or Liability arising out of or relating to Productsand/or services of the Sellers or any predecessor or Affiliate of any Seller to theextent provided, developed, made, manufactured, marketed, sold or distributedprior to the Closing, including any obligation or Liability for (1) infringement ormisappropriation 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) anyobligation or Liability under any Assigned Contract which arises after the Closingbut which relates to any breach or other dispute occurring or arising prior to theClosing;

(iii) any Liability to any Person at any time employed by the Sellers orto any such Person's spouse, children, other dependents or beneficiaries, withrespect to agreements entered into or applicable to or with respect to incidents,events, exposures or circumstances occurring at any time during the period orperiods of any such Person's employment by the Sellers, whenever such claimsmature or are asserted, including all Liabilities arising (A) under the SellerEmployee Plans (other than Transferred Employee Plans), (B) under anyemployment, wage and hour restriction, equal opportunity, discrimination, plantclosing or immigration and naturalization Laws, (C) under any collectivebargaining Laws, agreements or arrangements or (D) in connection with anyworkers' compensation or any other employee health, accident, disability or safety

claims;

(iv) any Liability relating to the Assets or the Business based onactions, activities, incidents, events, conditions or circumstances occurring orexisting prior to the Closing Date and connected with, arising out of or relating to:(A) Hazardous Materials, Cleanups, Environmental Laws, Environmental Permitsor Environmental Claims, (B) claims relating to employee health and safety,including claims for injury, sickness, disease or death of any Person or (C)




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compliance with any applicable Law relating to any of the foregoing; in each caseexcept 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 ofthe Sellers under Title IV of ERISA or any other pension or retirement Liabilityof the Sellers or any Person that could be aggregated with any of the Sellerspursuant 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 theClosing;

(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

op