Exhibit 10.1
OMNIBUS AGREEMENT
among
HENRY SCHEIN, INC.,
NATIONAL LOGISTICS SERVICES, LLC,
WINSLOW ACQUISITION COMPANY,
BUTLER ANIMAL HEALTH HOLDING COMPANY LLC,
BUTLER ANIMAL HEALTH SUPPLY, LLC,
OAK HILL CAPITAL PARTNERS II, L.P.,
OAK HILL CAPITAL MANAGEMENT PARTNERS II, L.P.,
W.A. BUTLER COMPANY,
DARBY GROUP COMPANIES, INC.,
BURNS VETERINARY SUPPLY INC.,
and
THE MANAGEMENT MEMBERS
NOVEMBER 29, 2009

 

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

 

TABLE OF CONTENTS

              Page   ARTICLE 1

 
        THE TRANSACTIONS

 
       
1.1 The Transactions
    2  
1.2 The Closing
    2  
1.3 Deliveries at Closing by HSI
    3  
1.4 Deliveries at Closing by Butler Holding
    3  
1.5 Deliveries at Closing by Oak Hill and WA Butler
    3  
1.6 Deliveries at Closing by Burns
    4  
1.7 Deliveries at Closing by the Management Members
    4  
1.8 Closing Mechanics
    4  
 
        ARTICLE 2

 
        PURCHASE PRICE ADJUSTMENTS

 
       
2.1 Payments at Closing
    5  
2.2 HSI Working Capital Adjustment
    6  
2.3 Butler Holding Working Capital Adjustment
    7  
2.4 Payments for Working Capital Adjustments
    9  
 
        ARTICLE 3

 
        REPRESENTATIONS AND WARRANTIES CONCERNING HSI AND THE CONTRIBUTED SCHEIN
VET BUSINESS AND MERGERSUB

 
       
3.1 Organization, Power and Standing
    10  
3.2 Power and Authority
    10  
3.3 Validity and Enforceability
    10  
3.4 Capitalization; Subsidiaries
    11  
3.5 Foreign Qualifications
    11  
3.6 Financial Statements
    12  
3.7 Absence of Certain Changes
    13  
3.8 Taxes
    13  
3.9 Personal Property
    14  
3.10 Real Property
    14  
3.11 Intellectual Property
    16  
3.12 Material Contracts
    16  
3.13 Litigation
    19  
3.14 No Conflict; Required Consents and Approvals
    19  
3.15 Licenses and Permits
    19  

i

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

 

              Page  
3.16 Compliance with Laws
    19  
3.17 Employees and Compensation
    20  
3.18 Benefit Plans
    21  
3.19 Insurance
    22  
3.20 Brokers
    23  
3.21 Compliance with Environmental Laws
    23  
3.22 Affiliate Transactions
    23  
3.23 Books and Records
    24  
3.24 Suppliers and Customers
    24  
3.25 Product Liability
    24  
3.26 Sales Representatives
    24  
3.27 Product Recalls
    25  
3.28 HSI Inventories
    25  
3.29 Certain Business Practices
    25  
3.30 No Other Agreements
    25  
3.31 Business of MergerSub and NLS
    25  
3.32 Accounts Receivable
    25  
3.33 Sufficiency of Contributed Assets
    25  
3.34 No Other Representations or Warranties
    25  
 
        ARTICLE 4

 
        REPRESENTATIONS AND WARRANTIES CONCERNING BUTLER HOLDING AND WA BUTLER

 
       
4.1 Organization, Power and Standing
    26  
4.2 Power and Authority
    26  
4.3 Validity and Enforceability
    27  
4.4 Capitalization; Subsidiaries
    27  
4.5 Foreign Qualifications
    28  
4.6 Financial Statements
    28  
4.7 Absence of Certain Changes
    28  
4.8 Taxes
    29  
4.9 Personal Property
    31  
4.10 Real Property
    31  
4.11 Intellectual Property
    32  
4.12 Material Contracts
    33  
4.13 Litigation
    35  
4.14 No Conflict; Required Consents and Approvals
    36  
4.15 Licenses and Permits
    36  
4.16 Compliance with Laws
    36  
4.17 Employees and Compensation
    37  
4.18 Benefit Plans
    37  
4.19 Insurance
    40  
4.20 Brokers
    40  
4.21 Compliance with Environmental Laws
    40  
4.22 Affiliate Transactions
    41  

ii

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

 

              Page  
4.23 Books and Records
    41  
4.24 Suppliers and Customers
    41  
4.25 Product Liability
    42  
4.26 Sales Representatives
    42  
4.27 Product Recalls
    42  
4.28 Butler Inventories
    42  
4.29 Certain Business Practices
    42  
4.30 No Other Agreements
    43  
4.31 Accounts Receivable
    43  
4.32 Regarding Oak Hill and WA Butler Capitalization Representations
    43  
4.33 No Other Representations or Warranties
    43  
 
        ARTICLE 5

 
        REPRESENTATIONS AND WARRANTIES CONCERNING BURNS

 
       
5.1 Organization, Power and Standing
    44  
5.2 Power and Authority
    44  
5.3 Consents and Approvals
    44  
5.4 Validity and Enforceability
    44  
5.5 Brokers
    44  
5.6 No Other Agreements
    44  
5.7 Holdings of Butler Holding Common Shares
    44  
5.8 No Other Representations or Warranties
    45  
5.9 Litigation
    45  
 
        ARTICLE 6

 
        REPRESENTATIONS AND WARRANTIES CONCERNING OAK HILL AND WA BUTLER

 
       
6.1 Organization, Power and Standing
    45  
6.2 Capitalization
    46  
6.3 Power and Authority
    46  
6.4 No Conflict; Required Consents and Approvals
    46  
6.5 Validity and Enforceability
    47  
6.6 Brokers
    47  
6.7 No Other Agreements
    47  
6.8 No Other Representations or Warranties
    47  
6.9 Litigation
    48  
6.10 Business of WA Butler
    48  
6.11 Taxes
    48  
6.12 Regarding Representations of WA Butler Taxes
    49  
6.13 Regarding Certain Representations of Oak Hill and WA Butler
    49  
 
        ARTICLE 7

 
        REPRESENTATIONS AND WARRANTIES CONCERNING THE MANAGEMENT MEMBERS

 
       
7.1 Power and Authority
    49  

iii

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

 

              Page  
7.2 Consents and Approvals
    49  
7.3 Validity and Enforceability
    50  
7.4 Brokers
    50  
7.5 No Other Agreements
    50  
7.6 Holdings of Butler Holding Common Shares
    50  
7.7 No Other Representations or Warranties
    50  
7.8 Litigation
    51  
 
        ARTICLE 8

 
        COVENANTS

 
       
8.1 Access to Information; Confidentiality
    51  
8.2 Conduct of Business
    52  
8.3 Exclusivity
    55  
8.4 Consents and Approvals
    55  
8.5 Employees and Employee Benefits
    55  
8.6 Reasonable Efforts
    57  
8.7 Books and Records
    57  
8.8 HSI Stub Period Financial Statements
    58  
8.9 Butler Holding Stub Period Financial Statements
    58  
8.10 Assistance with HSI’s Financial Statements
    58  
8.11 WARN Act
    58  
8.12 Non-Competition Agreement
    58  
8.13 Covenants Regarding WA Butler and MergerSub
    58  
8.14 Tax Matters
    59  
8.15 Financing Cooperation
    60  
8.16 Transition Services
    60  
8.17 Intellectual Property
    60  
8.18 Post-Closing Receivables
    61  
8.19 Waiver of Consents
    61  
8.20 HSI Payables
    61  
8.21 Darby Guaranty
    61  
8.22 Insurance
    61  
8.23 Bank Accounts; Outstanding Checks
    62  
 
        ARTICLE 9

 
        CONDITIONS TO CLOSING

 
       
9.1 Conditions Precedent to Each Party’s Obligations
    62  
9.2 Conditions Precedent to Butler Holding’s, Oak Hill’s and Burns’s Obligations
    62  
9.3 Conditions Precedent to HSI’s Obligations
    63  
 
       

iv

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

 

              Page   ARTICLE 10

 
        SURVIVAL; INDEMNIFICATION
 
10.1 Survival
    64  
10.2 Indemnification of the Butler Indemnified Parties
    64  
10.3 Indemnification of the HSI Indemnified Parties by the Butler Group
    66  
10.4 Indemnification of HSI by Oak Hill
    68  
10.5 Indemnification of HSI by Burns
    68  
10.6 Indemnification of HSI by Management Members
    68  
10.7 Indemnification of HSI by Butler Holding and BAHS
    68  
10.7A Indemnification of HSI by Butler Holding Members
    68  
10.8 Procedure for Indemnification
    69  
10.9 Remedies Exclusive
    70  
10.10 Tax Treatment of Indemnity Payments
    70  
10.11 Indemnification for Disclosures Related to Taxes and Brokers
    70  
10.12 No Consequential or Punitive Damages
    70  
 
        ARTICLE 11

 
        TERMINATION

 
       
11.1 Termination
    71  
11.2 Effect of Termination
    71  
 
        ARTICLE 12

 
        MISCELLANEOUS

 
       
12.1 Notices
    72  
12.2 No Waiver
    74  
12.3 Amendments and Waivers
    74  
12.4 Choice of Law; Forum; Waiver of Jury Trial
    74  
12.5 Binding Effects and Benefits
    75  
12.6 Integration; Schedules
    75  
12.7 Counterparts
    75  
12.8 Limitation on Scope of Agreement
    76  
12.9 Headings
    76  
12.10 Expenses; Filing Fees
    76  
12.11 No Third-Party Beneficiaries
    76  
12.12 Further Assurances
    76  
12.13 “Knowledge” Defined
    76  
12.14 Communication Plan; Publicity
    77  
12.15 Acknowledgment
    77  
12.16 No Strict Construction
    77  
 
        ARTICLE 13

 
        DEFINITIONS

 
       
13.1 Definitions
    78  
13.2 Defined Terms Relating to Closing Mechanics
    89  
13.3 Additional Defined Terms
    89  

v

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

 

     
SCHEDULES
   
 
   
Schedule A-1
  Certain Transaction Document Deliveries
Schedule A-2
  Certain Closing Document Deliveries
Schedule B
  Account Information
Schedule 1.1(a)
  Schein Contribution
 
  Annex A     Excluded HSI Real Property Leases
 
  Annex B     Certain Excluded Assets
 
  Annex C     Certain Excluded Liabilities
Schedule 1.1(b)
  Merger
Schedule 1.1(c)
  HSI Stock Purchase
Schedule 1.8
  Closing Mechanics
Schedule 2
  Working Capital Adjustments
Schedule 8.2(b)(xiii)
  Permitted Employment Consulting Agreements
Schedule 8.5(e)
  Severance Pay Plan
Schedule 9.3(e)
  Discharge of Certain Butler Holding Indebtedness
Schedule 13
  Permitted Liens
 
   
EXHIBITS
   
 
   
EXHIBIT 3.6A
  NLS Financials
EXHIBIT 3.6B
  Core Vet Financials
EXHIBIT 3.6C
  Schein Allocation Methodologies
EXHIBIT 4.6
  Butler Financial Statements
EXHIBIT A
  Management Members
EXHIBIT B
  [Intentionally Omitted.]
EXHIBIT C
  [Intentionally Omitted.]
EXHIBIT D
  [Intentionally Omitted.]
EXHIBIT E
  Form of MergerSub Stockholders Agreement
EXHIBIT F
  Form of Non-Competition Agreement
EXHIBIT G-1
  Form of Oak Hill Put Rights Agreement
EXHIBIT G-2
  Form of Burns Put Rights Agreement
EXHIBIT H-1
  Form of DE Certificate of Merger
EXHIBIT H-2
  Form of OH Certificate of Merger
EXHIBIT I
  Form of Demand Note
EXHIBIT J
  Form of Registration Rights Agreement
EXHIBIT K
  Balance Sheet Rules
EXHIBIT L-1
  Current Assets and Current Liabilities of Butler Holding
EXHIBIT L-2
  Current Assets and Current Liabilities of NLS
EXHIBIT L-3
  Current Assets and Current Liabilities of Core Vet Business
EXHIBIT M
  Calculation Existing Net Debt
EXHIBIT N-1
  Form of Butler Holding Operating Agreement
EXHIBIT N-2
  Form of Existing Operating Agreement
EXHIBIT O
  Indemnification Percentage Interests
EXHIBIT P
  Commitment Letter
EXHIBIT Q
  Pre-Closing Percentage Interests
EXHIBIT R
  License Agreement

vi

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

 

OMNIBUS AGREEMENT
     This Omnibus Agreement (this “Agreement”) is entered into as of
November 29, 2009 by and among Henry Schein, Inc., a Delaware corporation
(“HSI”), National Logistics Services, LLC, a Delaware limited liability company
(“NLS”), Winslow Acquisition Company, a Delaware corporation (“MergerSub”),
Butler Animal Health Holding Company LLC, a Delaware limited liability company
(“Butler Holding”), Butler Animal Health Supply, LLC, a Delaware limited
liability company (“BAHS”), Oak Hill Capital Partners II, L.P., a Delaware
limited partnership (“OHCP”), Oak Hill Capital Management Partners II, L.P., a
Delaware limited partnership (“OHCM” and together with OHCP, “Oak Hill”), W.A.
Butler Company, an Ohio corporation (“WA Butler”), Darby Group Companies, Inc.,
a New York corporation (“Darby”), Burns Veterinary Supply, Inc., a New York
corporation (“Burns” and together with Oak Hill, the “Butler Group”), and those
persons set forth on Exhibit A and party hereto (collectively, the “Management
Members” and each, a “Management Member”).
Introduction
     WHEREAS, each of HSI and Butler Holding is engaged in the Vet Business (as
defined herein);
     WHEREAS, the desire to combine the Schein Vet Business and the Butler Vet
Business, on the terms and subject to the conditions set forth herein, which, in
addition to the other transactions contemplated hereby, will be accomplished
pursuant to (a) the Schein Contribution, (b) the Merger between WA Butler and
MergerSub, with MergerSub as the surviving corporation, (c) the HSI Stock
Purchase, (d) the MergerSub Contribution, (e) the Butler Holding Contribution,
(f) the Redemptions and (g) the Butler Holding Conversion;
     WHEREAS, immediately after giving effect to the transactions contemplated
hereby, the issued and outstanding equity interests of Butler Holding will be
owned and held of record by Burns, OHCM, MergerSub and the Management Members;
     WHEREAS, immediately after giving effect to the transactions contemplated
hereby, the issued and outstanding capital stock of MergerSub will be owned and
held of record by OHCP and HSI;
     WHEREAS, as a condition to the Closing of the transactions contemplated
hereby, Butler Holding and its Subsidiaries shall repay the Existing
Indebtedness and enter into the Financing; and
     WHEREAS, after giving effect to the transactions contemplated hereby, HSI
will own a 50.1% indirect ownership interest in Butler Holding with the
intention that it is acquiring sufficient control of Butler Holding so that
Butler Holding and its Subsidiaries shall be treated as consolidated
subsidiaries of HSI for financial reporting purposes.

 

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

 

     Certain defined terms and an index of defined terms are set forth in
Article 13.
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
THE TRANSACTIONS
     1.1 The Transactions. Upon the terms and subject to the conditions set
forth in this Agreement, (a) Each of HSI and NLS, as applicable, shall
contribute and assign all of its right, title and interest in and to the
Contributed Assets to MergerSub and MergerSub shall assume the Assumed
Liabilities from HSI and NLS, in each case on the terms and subject to the
conditions set forth in Schedule 1.1(a) (the “Schein Contribution”), (b) WA
Butler shall merge with and into MergerSub, with MergerSub as the surviving
corporation, on the terms and subject to the conditions set forth in
Schedule 1.1(b) (the “Merger”), (c) HSI shall purchase the MergerSub Shares from
OHCP, on the terms and subject to the conditions set forth in Schedule 1.1(c)
(the “HSI Stock Purchase”), (d) MergerSub shall contribute and assign all of its
right, title and interest in and to the Contributed Assets to Butler Holding and
Butler Holding shall assume the Assumed Liabilities from MergerSub, in each
case, on the terms and subject to the conditions set forth herein and in the
Contribution Documents (the “MergerSub Contribution”), (e) Butler Holding shall
contribute and assign all of its right, title and interest in and to the
Contributed Assets to BAHS and BAHS shall assume the Assumed Liabilities from
Butler Holding, in each case, on the terms and subject to the conditions set
forth herein and in the Contribution Documents (the “Butler Holding
Contribution”), (f) Butler Holding shall redeem that number of Butler Holding
Preferred Shares and Butler Holding Common Shares, on the terms and subject to
the conditions set forth in the Closing Mechanics (collectively, the
“Redemptions”) and (g) MergerSub shall convert that number of Butler Holding
Preferred Shares for that number of Butler Holding Common Shares, on the terms
and subject to the conditions set forth in the Closing Mechanics (the “Butler
Holding Conversion”).
The parties acknowledge and agree that after giving effect to the transactions
contemplated hereby, HSI’s indirect ownership interest in Butler Holding shall
be equal to 50.1% (in the manner set forth in the Closing Mechanics) with the
intention that it is acquiring sufficient control of Butler Holding so that
Butler Holding and its Subsidiaries shall be treated as consolidated
subsidiaries of HSI for financial reporting purposes.
     1.2 The Closing. The consummation of the transactions contemplated hereby
(the “Closing”) will take place at the offices of Proskauer Rose LLP, 1585
Broadway, New York, New York 10036 (a) subject to the satisfaction or waiver of
the conditions set forth in Article 9, on December 31, 2009, or (b) on such
other date that is agreed to in writing by HSI and Butler Holding (the “Closing
Date”). Unless otherwise agreed to in writing by HSI and Butler Holding, the
Closing shall be deemed to have occurred at the close of business on the Closing
Date.

2

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

 

     1.3 Deliveries at Closing by HSI.
          (a) Closing Documents. At the Closing, and subject to the satisfaction
or waiver of the conditions set forth in Sections 9.1 and 9.3, HSI and NLS shall
deliver, or cause to be delivered, (i) each of the documents on Schedule A-1 to
which HSI, NLS and MergerSub is a party, to each other party thereto, in each
case, duly executed by HSI, NLS or MergerSub, as applicable, and (ii) each of
the documents listed on Schedule A-2(i) to the parties indicated thereon.
          (b) Payments. At the Closing, and subject to the satisfaction or
waiver of the conditions set forth in Sections 9.1 and 9.3, HSI and NLS shall
deliver, or cause to be delivered:
               (i) to OHCP the HSI Cash Payment by wire transfer of immediately
available funds to OHCP’s account set forth on Schedule B;
               (ii) by MergerSub, following receipt by MergerSub of the payment
by Butler Holding pursuant to Section 1.4(b), the payment to OHCP of the Demand
Note Amount in cash by wire transfer of immediately available funds to OHCP’s
account set forth on Schedule B; and
               (iii) the payment by HSI, if any, required pursuant to
Section 2.1.
     1.4 Deliveries at Closing by Butler Holding.
          (a) Butler Holding Closing Documents. At the Closing, and subject to
the satisfaction or waiver of the conditions set forth in Sections 9.1 and 9.2,
Butler Holding shall deliver or cause to be delivered, (i) each of the documents
on Schedule A to which Butler Holding and BAHS is a party, to each other party
thereto, in each case, duly executed by Butler Holding or BAHS, as applicable,
and (ii) each of the documents listed on Schedule A-2(ii) to the parties
indicated thereon.
          (b) Redemption Payments. At the Closing, and subject to the
satisfaction or waiver of the conditions set forth in Sections 9.1 and 9.2,
Butler Holding shall deliver or cause to be delivered to each of OHCM,
MergerSub, Burns and the Management Members, the redemption price specified on
Schedule 1.8, by payment in cash by wire transfer of immediately available
funds.
     1.5 Deliveries at Closing by Oak Hill and WA Butler.
          (a) Closing Documents. At the Closing, and subject to the satisfaction
or waiver of the conditions set forth in Section 9.1, Oak Hill and WA Butler
shall deliver or cause to be delivered, (i) each of the documents on Schedule A
to which Oak Hill and WA Butler is a party, to each other party thereto, in each
case, duly executed by Oak Hill or WA Butler, as applicable, and (ii) each of
the documents listed on Schedule A-2(iii) to the parties indicated thereon.

3

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

 

          (b) Payments. At the Closing, and subject to the satisfaction or
waiver of the conditions set forth in Section 9.1, Oak Hill and WA Butler shall
deliver or cause to be delivered the payment by Oak Hill, if any, required
pursuant to Section 2.1.
     1.6 Deliveries at Closing by Burns.
          (a) Closing Documents. At the Closing, and subject to the satisfaction
or waiver of the conditions set forth in Section 9.1, Burns shall deliver or
cause to be delivered, (i) each of the documents on Schedule A to which Burns,
Darby, Michael Ashkin, or Carl Ashkin is a party, to each other party thereto,
in each case, duly executed by Burns, Darby, Michael Ashkin, and Carl Ashkin, as
applicable, and (ii) each of the documents listed on Schedule A-2(iv) to the
parties indicated thereon.
          (b) Payment. At the Closing, and subject to the satisfaction or waiver
of the conditions set forth in Section 9.1, Burns shall deliver or cause to be
delivered the payment, if any, required pursuant to Section 2.1.
     1.7 Deliveries at Closing by the Management Members.
          (a) Closing Documents. At the Closing, and subject to the satisfaction
or waiver of the conditions set forth in Section 9.1, each Management Member
shall deliver, or cause to be delivered, (i) each of the documents on Schedule A
to which such Management Member is a party, to each other party thereto, in each
case, duly executed such Management Member, and (ii) each of the documents
listed on Schedule A-2(v) to the parties indicated thereon.
          (b) Payment. At the Closing, and subject to the satisfaction or waiver
of the conditions set forth in Section 9.1, each Management Member shall
deliver, or cause to be delivered, the payment, if any, required pursuant to
Section 2.1.
     1.8 Closing Mechanics.
          (a) Set forth on Schedule 1.8 hereto is an outline of the transaction
mechanics (the “Closing Mechanics”), including, without limitation, the
transactions set forth in Section 1.1. At least three (3) business days prior to
the Closing Date, Butler Holding shall deliver to HSI a certificate (the
“Closing Date Certificate”), which shall set forth estimates of the Aggregate
Preferred Face Amount, the Refinancing Expenses and the Existing Net Debt. The
amounts set forth on the Closing Date Certificate shall be used for purposes of
Closing Mechanics at the Closing, provided that any payments and distributions
made in accordance with Schedule 1.8 shall be subject to adjustment following
the Closing as set forth in Section 1.8(b) below.
          (b) Within ten (10) days after the Closing, the Butler Group shall
deliver to Butler Holding a statement setting forth the actual Aggregate
Preferred Face Amount, the Refinancing Expenses and Existing Net Debt (the
“Final Closing Statement”), which statement shall set forth in reasonable detail
the actual Refinancing Expenses and Existing Net Debt as of the Closing. If
Butler Holding delivers a dispute notice to the Butler Group within ten (10)
days after receipt by Butler Holding of the Final Closing Statement, then Butler
Holding and the Butler Group will attempt to resolve and finally determine and
agree upon the Final Closing Statement as promptly as practicable. If Butler
Holding and the Butler Group are unable to agree upon the Final Closing
Statement within thirty (30) days any items remaining in dispute, at the request
of either party at any time after the HSI Negotiation Period, shall be submitted
to the Accounting Firm to resolve such dispute pursuant to the dispute
resolution provisions of Section 2.2(c) hereof, mutatis mutandis. Upon final
determination of the amounts set forth on the Final Closing Statement, all
payments and distributions made pursuant to the Closing Mechanics shall be
recalculated as though the amounts set forth on the Final Closing Statement were
used for purposes of the Closing, and each of the Butler Holding Members and
Butler Holding agrees to make such payments or distributions as may be necessary
to true-up any such payments and distributions to reflect the amounts set forth
on the Final Closing Statement. The parties acknowledge that HSI and its
representatives on the Company Board shall have the right to exercise the rights
of Butler Holding under this Section 1.8(b) (including the resolution of
disputes).
          (c) Notwithstanding anything contained herein to the contrary, (i) the
aggregate cash payment by HSI pursuant to the Closing Mechanics is equal to
$55,323,439,22, subject to adjustment for the amount of Refinancing Expenses
(other than the payments, if any, required by Article 2), and (ii) immediately
after giving effect to all the transactions contemplated hereby, HSI shall own,
directly or indirectly, 50.1% of the outstanding equity interests in Butler
Holding and there shall be only one class of outstanding Equity Securities of
Butler Holding and MergerSub in accordance with the Closing Mechanics.

4

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

 

ARTICLE 2
PURCHASE PRICE ADJUSTMENTS
     2.1 Payments at Closing.
          (a) At least ten (10) days prior to the Closing, HSI will furnish to
Butler Holding a certificate (the “HSI Estimated Closing Working Capital
Certificate”) setting forth an estimate of HSI Closing Working Capital. In
preparing the HSI Estimated Closing Working Capital Certificate, HSI’s estimate
of the HSI Closing Working Capital will be made in accordance with the Balance
Sheet Rules.
          (b) At least ten (10) days prior to the Closing, Butler Holding will
furnish to HSI a certificate (the “Butler Holding Estimated Closing Working
Capital Certificate”) setting forth an estimate of Butler Holding Closing
Working Capital. In preparing the Butler Holding Estimated Closing Working
Capital Certificate, Butler Holding’s estimate of the Butler Holding Closing
Working Capital will be made in accordance with the Balance Sheet Rules.
          (c) At the Closing, (i) either (A) the Butler Holding Members
(severally, in accordance with their respective Pre-Closing Percentage
Interests) shall pay HSI an amount of cash equal to the excess, if any, of the
Butler Closing Working Capital Payment (as defined below) over the HSI Closing
Working Capital Payment (as defined below) or (B) HSI shall pay the Butler
Holding Members (in accordance with their respective Pre-Closing Percentage
Interests) an amount of cash equal to the excess, if any, of the HSI Closing
Working Capital Payment over the Butler Closing Working Capital Payment:
               (ii) For purposes of this Section 2.1(c):
“Butler Closing Working Capital Payment” shall mean an amount, equal to the sum
of:
          (W) the product of (1) the Butler Holding Post-Closing Percentage
Interest multiplied by (2) the excess, if any, of HSI Estimated Closing Working
Capital over HSI Target Closing Working Capital; plus
          (X) the product of (1) the HSI Post-Closing Percentage Interest
multiplied by (2) the excess, if any, of Butler Holding Target Closing Working
Capital over Butler Holding Estimated Closing Working Capital.
“HSI Closing Working Capital Payment” shall mean an amount, equal to the sum of:
          (Y) the product of (1) the HSI Post-Closing Percentage Interest
multiplied by (2) the excess, if any, of Butler Holding Estimated Closing
Working Capital over Butler Holding Target Closing Working Capital; plus

5

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

 

          (Z) the product of (1) the Butler Holding Post-Closing Percentage
Interest multiplied by (2) the excess, if any, of HSI Target Closing Working
Capital over HSI Estimated Closing Working Capital.
For the avoidance of doubt, for purposes of calculating the “excess, if any” in
each of clauses (W)(2), (X)(2), (Y)(2) and (Z)(2) above, if the result of such
calculation does not yield a positive number, such calculation shall be deemed
to equal zero. For the purposes of illustration, examples of the calculations to
determine the Butler Closing Working Capital Payment, the HSI Closing Working
Capital Payment and the amounts, if any, to be paid pursuant to Section 2.1(c)
are set forth on Schedule 2.
     2.2 HSI Working Capital Adjustment.
          (a) Within ninety (90) days after the Closing Date, HSI will deliver
to the Butler Group a certificate (the “HSI Closing Working Capital
Certificate”) executed by HSI setting forth an itemized statement of HSI Closing
Working Capital. The HSI Closing Working Capital Certificate will be prepared in
accordance with the Balance Sheet Rules.
          (b) If the Butler Group delivers written notice (the “HSI Disputed
Items Notice”) to HSI within thirty (30) days after receipt by the Butler Group
of the HSI Closing Working Capital Certificate, stating that the Butler Group
objects to any items in the HSI Closing Working Capital Certificate, specifying
in reasonable detail the basis for such objection and setting forth the Butler
Group’s proposed modification to HSI Closing Working Capital, HSI and the Butler
Group will attempt to resolve and finally determine and agree upon the HSI
Closing Working Capital as promptly as practicable.
          (c) If HSI and the Butler Group are unable to agree upon the HSI
Closing Working Capital within thirty (30) days after delivery of the HSI
Disputed Items Notice (the “HSI Negotiation Period”), any items remaining in
dispute, at the request of either party at any time after the HSI Negotiation
Period, shall be submitted to the New York office of Ernst & Young (the
“Accounting Firm”). If the New York office of Ernst & Young is unwilling to
serve as the Accounting Firm, then an independent, nationally recognized
accounting firm reasonably acceptable to each of HSI and the Butler Group (which
Accounting Firm shall not be HSI’s, Butler Holding’s, Darby’s, Burns’ or Oak
Hill’s or any of their respective Subsidiaries’ regular auditors) will resolve
the items set forth in the HSI Disputed Items Notice (the “HSI Disputed Items”).
If the Butler Group and HSI are unable to agree upon the selection of an
Accounting Firm within 10 days after the end of the HSI Negotiation Period, HSI
and the Butler Group shall each (at its own expense) select an independent
accounting firm and said firms shall promptly designate a third firm as the
Accounting Firm. The Accounting Firm will (i) resolve only the HSI Disputed
Items, and (ii) make a determination of HSI Closing Working Capital using the
calculations set forth in the HSI Closing Working Capital Certificate, as
modified only by the Accounting Firm’s resolution of the HSI Disputed Items. The
Accounting Firm shall address only the HSI Disputed Items and may not assign a
value greater than the greatest value claimed for such item by either party or
smaller than the smallest value claimed for such item by either party. The
determination of the Accounting Firm will be made within sixty (60) days after
being selected and will constitute an arbitral award that is final, binding and
non-appealable and upon which a judgment may be entered by a court with
jurisdiction

6

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

 

thereover. The fees, costs and expenses of the Accounting Firm will be borne by
the party whose positions generally did not prevail in such determination, as
determined by such Accounting Firm (i.e., HSI or the Butler Group (severally in
accordance with their respective Indemnification Percentage Interests)), or if
the Accounting Firm determines that neither party could be fairly found to be
the prevailing party, then such fees, costs and expenses will be borne fifty
percent (50%) by HSI and fifty percent (50%) by the Butler Group (severally in
accordance with their respective Indemnification Percentage Interests). If an
Accounting Firm is required to resolve HSI Disputed Items and Butler Holding
Disputed Items, such disputes shall be combined and resolved together to the
extent practicable.
          (d) If the Butler Group does not deliver the HSI Disputed Items Notice
to HSI within thirty (30) days after receipt by the Butler Group of the HSI
Closing Working Capital Certificate, the HSI Closing Working Capital specified
in the HSI Closing Working Capital Certificate will be conclusively presumed to
be true and correct in all respects and will be final and binding upon the
parties.
          (e) HSI will provide the Butler Group and its accountants, lawyers and
representatives with full access at all reasonable times to (and shall be
allowed to make copies of) the Schein Books and Records and to any personnel of
HSI reasonably requested by such persons, in each case in connection with the
final determination of the HSI Closing Working Capital or any dispute relating
thereto.
     2.3 Butler Holding Working Capital Adjustment.
          (a) Within ninety (90) days after the Closing Date, the Butler Group
will deliver to HSI a certificate (the “Butler Holding Closing Working Capital
Certificate”) executed by the Butler Group setting forth an itemized statement
of Butler Holding Closing Working Capital. The Butler Holding Closing Working
Capital Certificate will be prepared in accordance with the Balance Sheet Rules.
          (b) If HSI delivers written notice (the “Butler Holding Disputed Items
Notice”) to the Butler Group within thirty (30) days after receipt by HSI of the
Butler Holding Closing Working Capital Certificate, stating that HSI objects to
any items in the Butler Holding Closing Working Capital Certificate, specifying
in reasonable detail the basis for such objection and setting forth HSI’s
proposed modification to Butler Holding Closing Working Capital, the Butler
Group and HSI will attempt to resolve and finally determine and agree upon the
Butler Holding Closing Working Capital as promptly as practicable.
          (c) If the Butler Group and HSI are unable to agree upon the Butler
Holding Closing Working Capital within thirty (30) days after delivery of the
Butler Holding Disputed Items Notice (the “Butler Negotiation Period”), any
items remaining in dispute, at the request of either party at any time after the
Butler Negotiation Period, shall be submitted to the named Accounting Firm set
forth in the first sentence of Section 2.2(c). If such firm is unwilling to
serve as the Accounting Firm, then an Accounting Firm reasonably acceptable to
each of the Butler Group and HSI (which Accounting Firm shall not be HSI’s,
Butler Holding’s, Darby’s, Burns’ or Oak Hill’s or any of their respective
Subsidiaries’ regular auditors) will resolve the items set forth in the Butler
Holding Disputed Items Notice (the “Butler Holding Disputed Items”). If the
Butler Group and HSI are unable to

7

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

 

agree upon the selection of an Accounting Firm within 10 days after the end of
the Butler Negotiation Period, HSI and the Butler Group shall each (at its own
expense) select an independent accounting firm and said firms shall promptly
designate a third firm as the Accounting Firm. The Accounting Firm will
(i) resolve only the Butler Holding Disputed Items, and (ii) make a
determination of Butler Holding Closing Working Capital using the calculations
set forth in the Butler Holding Closing Working Capital Certificate, as modified
only by the Accounting Firm’s resolution of the Butler Holding Disputed Items.
The Accounting Firm shall address only the Butler Holding Disputed Items and may
not assign a value greater than the greatest value claimed for such item by
either party or smaller than the smallest value claimed for such item by either
party. The determination of the Accounting Firm will be made within sixty
(60) days after being selected and will constitute an arbitral award that is
final, binding and non-appealable and upon which a judgment may be entered by a
court with jurisdiction thereover. The fees, costs and expenses of the
Accounting Firm will be borne by the party whose positions generally did not
prevail in such determination, as determined by such accounting firm (i.e., the
Butler Group (severally in accordance with their respective Indemnification
Percentage Interests) or HSI), or if the accounting firm determines that neither
party could be fairly found to be the prevailing party, then such fees, costs
and expenses will be borne fifty percent (50%) by the Butler Group (severally in
accordance with their respective Indemnification Percentage Interests) and fifty
percent (50%) by HSI. If an Accounting Firm is required to resolve HSI Disputed
Items and Butler Holding Disputed Items, such disputes shall be combined and
resolved together to the extent practicable.
          (d) If HSI does not deliver the Butler Holding Disputed Items Notice
to the Butler Group within thirty (30) days after receipt by HSI of the Butler
Holding Closing Working Capital Certificate, the Butler Holding Closing Working
Capital specified in the Butler Holding Closing Working Capital Certificate will
be conclusively presumed to be true and correct in all respects and will be
final and binding upon the parties.
          (e) Butler Holding will provide HSI and its accountants, lawyers and
representatives with full access at all reasonable times to (and shall be
allowed to make copies of) the Butler Holding Books and Records and to any
personnel of Butler Holding reasonably requested by such persons, in each case
in connection with the final determination of the Butler Holding Closing Working
Capital or any dispute relating thereto.
     2.4 Payments for Working Capital Adjustments. At such time as the HSI
Closing Working Capital and the Butler Holding Closing Working Capital are
finally determined or otherwise agreed to in writing by Butler Holding and HSI
pursuant to Sections 2.2 and 2.3, then:
          (a) (i) Either (A) the Butler Holding Members (severally, in
accordance with their respective Pre-Closing Percentage Interests) shall pay HSI
an amount of cash equal to the excess, if any, of the Butler Post-Closing
Working Capital Payment (as defined below) over the HSI Post-Closing Working
Capital Payment (as defined below) or (B) HSI shall pay the Butler Holding
Members (in accordance with their respective Pre-Closing Percentage Interests)
an amount of cash equal to the excess, if any, of the HSI Post-Closing Working
Capital Payment over the Butler Post-Closing Working Capital Payment; and

8

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

 

               (ii) For purposes of this Section 2.4(a), “Butler Post-Closing
Working Capital Payment” shall mean an amount, equal to the sum of:
          (W) the product of (1) the Butler Holding Post-Closing Percentage
Interest multiplied by (2) the excess, if any, of HSI Closing Working Capital
over HSI Estimated Closing Working Capital; plus
          (X) the product of (1) the HSI Post-Closing Percentage Interest
multiplied by (2) the excess, if any, of Butler Holding Estimated Closing
Working Capital over Butler Holding Closing Working Capital; and
“HSI Post-Closing Working Capital Payment” shall mean an amount, equal to the
sum of:
          (Y) the product of (1) the HSI Post-Closing Percentage Interest
multiplied by (2) the excess, if any, of Butler Holding Closing Working Capital
over Butler Holding Estimated Closing Working Capital; plus
          (Z) the product of (1) the Butler Holding Post-Closing Percentage
Interest multiplied by (2) the excess, if any, of HSI Estimated Closing Working
Capital over HSI Closing Working Capital.
For the avoidance of doubt, for purposes of calculating the “excess, if any” in
each of clauses (W)(2), (X)(2), (Y)(2) and (Z)(2) above, if the result of such
calculation does not yield a positive number, such calculation shall be deemed
to equal zero. For the purposes of illustration, examples of the calculations to
determine the Butler Post-Closing Working Capital Payment, the HSI Post-Closing
Working Capital Payment and the amounts, if any, to be paid pursuant to
Section 2.4(a) are set forth on Schedule 2.
          (b) No adjustment to the HSI Closing Working Capital pursuant to this
Article 2 shall be considered a breach of any representation, warranty or other
provision of this Agreement. No adjustment to the Butler Holding Closing Working
Capital pursuant to this Article 2 shall be considered a breach of any
representation, warranty or other provision of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING HSI AND THE
CONTRIBUTED SCHEIN VET BUSINESS AND MERGERSUB
     HSI hereby represents and warrants to the Butler Holding Members solely
with respect to the Contributed Schein Vet Business (except where otherwise
expressly indicated in this Article 3) as follows. Except for the
representations and warranties set forth in this Article 3, HSI makes no other
representation or warranty (either express or implied) herein or with respect to
the transactions contemplated by this Agreement.

9

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

 

     3.1 Organization, Power and Standing.
          (a) HSI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. HSI has full corporate power
and authority to own, lease and operate its properties and to carry on its
business as such business is now conducted. The copies of the Charter Documents
of HSI, each as amended to date, that have been made available to the Butler
Group by HSI are complete and correct copies thereof.
          (b) NLS is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. NLS has
full limited liability company power and authority to own, lease and operate its
properties and to carry on its business as such business is now conducted. The
copies of the Charter Documents of NLS, each as amended to date, that have been
made available to the Butler Group by HSI are complete and correct copies
thereof.
          (c) MergerSub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. MergerSub has full
corporate power and authority to own, lease and operate its properties and to
carry on its business as such business is now conducted. The copies of the
Charter Documents of MergerSub, each as amended to date, that have been made
available to the Butler Group by HSI are complete and correct copies thereof.
     3.2 Power and Authority. Each of HSI, NLS and MergerSub has the corporate
power and authority and have taken all required corporate or limited liability
company action, as applicable, on its part necessary to permit it to execute and
deliver and to carry out the terms of this Agreement and the other Transaction
Documents to which it is a party.
     3.3 Validity and Enforceability. This Agreement is, and each of the other
Transaction Documents contemplated hereby will be when executed and delivered by
each of HSI, NLS and MergerSub, as applicable, the valid and binding obligations
of each of HSI, NLS and MergerSub, as applicable, enforceable against HSI, NLS
and MergerSub, as applicable, in accordance with their respective terms,
subject, however, to applicable bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors and to general equitable principles.
     3.4 Capitalization; Subsidiaries.
          (a) HSI is the record and beneficial owner of all outstanding
membership interests of NLS and there are no outstanding Equity Securities of,
or in, NLS to which NLS is a party or is bound requiring the issuance, delivery
or sale of membership interests of or equity securities in NLS.
          (b) Schedule 3.4(b)-1 sets forth a correct and complete list of all of
the authorized, issued and outstanding classes of Equity Securities of MergerSub
and the record or beneficial owners of such Equity Securities as of the date
hereof and, subject to the accuracy of the representations and warranties with
respect to WA Butler in Section 6.2, Schedule 3.4(b)-2 sets forth a correct and
complete list of all of the authorized, issued and outstanding classes of Equity
Securities of MergerSub and the record or beneficial owners of such Equity
Securities as of the Closing Date (immediately prior to the Closing of the
transactions contemplated

10

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

 

hereby). All of the issued and outstanding Equity Securities of MergerSub (the
“MergerSub Equity Securities”) have been (or, as of the Closing Date,
immediately following the Closing of the transactions contemplated hereby, they
will be) validly issued, are fully paid and are non-assessable. OHCP will have
(as of the Closing Date), good and valid title to the MergerSub Equity
Securities held by it immediately after giving effect to all the transactions
contemplated hereby, free and clear of all Liens other than restrictions on
transfer imposed under applicable securities laws and the Liens set forth in the
Transaction Documents. Other than HSI, there are no (and, as of the Closing
Date, other than HSI and OHCP, there will be no) other record or beneficial
owners of MergerSub Equity Securities.
          (c) Except as expressly contemplated by this Agreement, there are no
outstanding or authorized options, stock appreciation, phantom stock or profit
participation rights with respect to the capital stock of, or other equity
interests in, MergerSub to which MergerSub is bound. There are no (i) Contracts
to which MergerSub is a party or by which MergerSub is bound to repurchase,
redeem or otherwise acquire any shares of capital stock of, or other equity
security in, MergerSub or (ii) irrevocable proxies and voting agreements with
respect to any shares of capital stock of, or other equity interest in,
MergerSub. No Person has any right of first offer, right of first refusal or
preemptive right in connection with any future offer, sale or issuance of
securities by NLS or MergerSub.
          (d) Neither NLS nor MergerSub has any Subsidiaries and neither entity,
directly or indirectly, owns or has the right to acquire any equity interest in
any other Person and except as expressly contemplated by this Agreement is not
obligated to make any loans or equity contributions to any Person.
     3.5 Foreign Qualifications. Schedule 3.5 sets forth a complete and accurate
list of each jurisdiction in which HSI or any of its Subsidiaries is qualified
to do business as a foreign entity in which the conduct of the Contributed
Schein Vet Business or the ownership of the Contributed Assets makes such
qualification or licensing necessary, except for any jurisdiction(s) in which
the failure to so qualify would not have a Schein Material Adverse Effect.
     3.6 Financial Statements.
          (a) Attached hereto as Exhibit 3.6A are the (i) unaudited balance
sheets of NLS as of December 29, 2007 and December 27, 2008, and unaudited
statements of income for the fiscal years then ended, and (ii) unaudited balance
sheet of NLS as of September 26, 2009 (“NLS September Balance Sheet”), and an
unaudited statement of income for the twelve fiscal month period then ended
(collectively, the “NLS Financials”). Except as set forth on Schedule 3.6A, the
NLS Financials fairly present, in all material respects, the financial condition
of NLS as of the dates thereof and results of operations of NLS for the periods
shown therein, and were derived from the books and records of NLS in conformity
with GAAP consistently applied during the periods covered thereby (except as
otherwise stated therein and for the omission of footnotes and subject to year
end and other audit adjustments, which adjustments are, individually and in the
aggregate, immaterial). None of the $1,031,584 expenses under the category
“Medical Administration Allocation” charges on Exhibit 3.6A for the twelve (12)
fiscal month period ended September 26, 2009 contains any material costs or
expenses that directly support NLS.
          (b) Attached hereto as Exhibit 3.6B are the (i) unaudited Statement of
Contributed Assets and Assumed Liabilities of the Core Vet Business as of
December 29, 2007 and December 27, 2008, and unaudited statements of income for
the fiscal years then ended, and

11

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

 

(ii) unaudited Statement of Contributed Assets and Assumed Liabilities as of
September 26, 2009 (“Core Vet September Statement”), and an unaudited statement
of income for the twelve fiscal month period then ended (collectively, the “Core
Vet Financials”). Except as set forth on Schedule 3.6B, (A) the Core Vet
Financials have been derived from the accounting records that underlie the
consolidated financial statements of HSI as prepared as of the date hereof,
which have been prepared in accordance with GAAP consistently applied during the
periods covered thereby (except as otherwise stated therein or in the case of
unaudited financial statements, subject to year end and other audit adjustments,
which adjustments are, individually and in the aggregate, immaterial), (B) the
net sales and direct costs have been determined in accordance with GAAP,
consistently applied, (C) all other expenses reflected on the Core Vet
Financials were determined and allocated in accordance with the principles,
assumptions and methodologies on Exhibit 3.6C (the “Schein Allocation
Methodologies”), which have been consistently applied to the Core Vet
Financials, (D) HSI has not made any material mathematical error in applying the
Schein Allocation Methodologies, and (E) none of the expenses under the category
“Global SG&A Costs” on Exhibit 3.6C, other than “Corporate Overhead”, contains
any material costs or expenses that directly support the Core Vet Business. The
income statements in the Core Vet Financials fairly present, in all material
respects, the results of operations of the Core Vet Business for the periods
shown therein, in accordance with the application of the Schein Allocation
Methodologies and the immediately preceding sentence.
          (c) Butler Holding, BAHS and the Butler Holding Members acknowledge
and agree that (i) the Core Vet Business involves a carve out of operations of
HSI, which are not free standing operations, and (ii) they each hereby waive any
right to challenge or assert any claims in respect of the Schein Allocation
Methodologies or the treatment of Corporate Overhead (referenced in
Exhibit 3.6C), including their impact in determining purchase price.
          (d) Without limiting the representations set forth in Section 3.6(a)
above, except (i) for liabilities shown on the NLS September Balance Sheet or
the Core Vet September Statement, (ii) for liabilities which have arisen in the
ordinary course of business since the Balance Sheet Date, (iii) for liabilities
which are not Assumed Liabilities or liabilities allocated pursuant to the
Schein Allocation Methodologies, and (iv) as set forth on Schedule 3.6(d),
neither HSI nor any of its Subsidiaries has incurred any material liability or
obligation of any nature in respect of the Contributed Vet Business (whether
absolute, accrued, contingent, liquidated or unliquidated) which is required by
GAAP to be reflected as a liability on a balance sheet of the Contributed Schein
Vet Business. Except as set forth in the Core Vet Financials or the NLS
Financials, neither HSI nor any of its Subsidiaries maintains any “off-balance
sheet arrangement” (within the meaning of Item 303(a)(4)(ii) of Regulation S-K
of the Securities and Exchange Commission) relating to the Core Schein Vet
Business.
          (e) HSI and each of its Subsidiaries have in place systems and
processes reasonably designed to provide reasonable assurances regarding the
reliability of the consolidated financial statements of HSI.
     3.7 Absence of Certain Changes. Since the Balance Sheet Date, except as set
forth on Schedule 3.7, HSI and its Subsidiaries have conducted the Contributed
Schein Vet Business only in the ordinary course of business, in the same manner
as heretofore conducted (except as may be necessary to comply with Applicable
Laws) and, with respect to the Contributed Schein

12

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

 

Vet Business, HSI and NLS, as applicable, have not (a) subjected the Contributed
Assets to any Lien, other than Permitted Liens, (b) acquired or disposed of any
material assets, except in the ordinary course of business, (c) suffered any
damage, destruction or casualty loss (whether or not covered by insurance) which
individually or in the aggregate exceeds $150,000, (d) made any change in its
accounting, auditing or Tax methods, practices or principles, (e) made or
rescinded any express or deemed election relating to Taxes, settled or
compromised any claim, action, suit litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, (f) incurred any
Indebtedness other than in the ordinary course of business consistent with past
practices, or (g) suffered any Schein Material Adverse Effect. Since
September 26, 2009, except as set forth on Schedule 3.7, HSI and its
Subsidiaries have not increased any wages, salaries, bonuses or any other direct
or indirect cash compensation received by any employee or consultant whose
duties are primarily related to the Contributed Schein Vet Business and whose
current or committed annual rate of cash compensation (including bonuses and
commissions) exceeds $100,000. From the Balance Sheet Date until the date of
this Agreement, except as set forth on Schedule 3.7, HSI and its Subsidiaries
have complied with the covenants set forth in Sections 8.2(b)(x), (xi) and
(xii) of this Agreement.
     3.8 Taxes.
          (a) The representations set forth in this Section 3.8 are subject to
the qualifications and disclosures set forth on Schedule 3.8.
               (i) None of the Contributed Assets is “tax exempt use property”
within the meaning of Section 168(h) of the Code. None of the Contributed Assets
is a lease made pursuant to Section 168(f)(8) of the Internal Revenue Code of
1954. No audits or other similar proceedings are pending or have been asserted
in writing with respect to any Taxes due with respect to the Contributed Assets
or the Assumed Liabilities. In respect of the Contributed Assets and the Assumed
Liabilities, HSI, NLS and MergerSub have timely paid all Taxes owed by such
companies and have made adequate provision for any Taxes that are not yet due
and payable for all taxable periods ending on or before the Closing Date. In
respect of the Contributed Assets and the Assumed Liabilities, HSI, NLS and
MergerSub have filed all Tax Returns required to have been filed on or before
the date hereof, all Taxes shown to be due on the Tax Returns referred to in
this sentence have been timely paid and all such Tax Returns were correct and
complete in all material respects. Schedule 3.8 sets forth the jurisdictions in
which HSI (in respect of the Contributed Assets), NLS and MergerSub file Tax
Returns and no written claim has been made by any Governmental Authority in a
jurisdiction where HSI (in respect of the Contributed Assets), NLS or MergerSub,
whichever applicable, does not file Tax Returns that it is required to file Tax
Returns in that jurisdiction. There are no material Tax Liens pending or, to the
knowledge of HSI, NLS and MergerSub, threatened against HSI, NLS, MergerSub or
their assets or property (including, without limitation, the Contributed
Assets), other than Permitted Liens. Neither HSI, NLS, nor MergerSub is a
“foreign person” within the meaning of Section 1445(b)(2) of the Code; at the
Closing, HSI, NLS, and MergerSub shall provide to Butler Holding and OHCP, as
applicable, certificates to that effect that comply with the provisions of the
Treasury Regulations under Sections 897 and 1445 of the Code. Notwithstanding
anything herein to the contrary, and for the avoidance of doubt, no
representation is made in this Section 3.8(b) with respect to any Taxes to the
extent those Taxes

13

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

 

result from (i) the transactions contemplated herein or in any of the other
Transaction Documents or (ii)  Butler Holding or BAHS ceasing to utilize the
LIFO method of accounting.
     3.9 Personal Property. Except as set forth on Schedule 3.9, HSI is the
record owner of the Vedco Interests, free and clear of all Liens, other than
Permitted Liens. HSI and NLS, as applicable, have good title to or a valid
leasehold, license or other similar interest in the Tangible Property included
in the Contributed Assets, free and clear of all Liens, except for Permitted
Liens. The Tangible Property included in the Contributed Assets is in adequate
condition to conduct the Contributed Schein Vet Business as the same is
currently conducted, normal wear and tear excepted, has received continued
repair and replacement in accordance with past practice and is suitable for its
current use. To the knowledge of HSI, such Tangible Property is free of any
material structural or engineering defects.
     3.10 Real Property.
          (a) None of the Contributed Assets constitutes real property owned by
HSI or NLS.
          (b) Schedule 3.10(b) describes each interest in real property leased
by HSI and its Subsidiaries with respect to the Contributed Schein Vet Business,
including the lessor of such leased property, and identifies each lease or any
other agreement under which such property is leased (collectively, the “HSI Real
Property Leases,” and the real property subject to such HSI Real Property Leases
being herein called the “HSI Leased Premises”). HSI and each of its Subsidiaries
enjoys peaceful and quiet possession of the HSI Leased Premises and neither HSI
nor NLS has received any written notice from any landlord under any HSI Real
Property Lease asserting the existence of a material default under any HSI Real
Property Lease (or the existence of any condition which after the passage of
time or the giving of notice or both would constitute a default of or breach
under any HSI Real Property Lease) or been informed in writing that the lessor
under any HSI Real Property Lease has taken action or, to the knowledge of HSI,
threatened to terminate the HSI Real Property Lease before the expiration date
specified in the HSI Real Property Lease. Except as set forth on
Schedule 3.10(b), the transactions contemplated by this Agreement or any other
Transaction Document will not be the basis for any lessor under a HSI Real
Property Lease to terminate its HSI Real Property Lease prior to the expiration
date of the HSI Real Property Lease. The HSI Leased Premises, the condition
thereof, the purposes for which such HSI Leased Premises are used and the
activities of HSI with respect to the Contributed Schein Vet Business therein,
conform in all material respects with Applicable Laws (except Environmental
Laws, as to which only Section 3.21 applies) and all insurance requirements and
restrictive covenants affecting the HSI Leased Premises. The HSI Leased Premises
have adequate electric and other utility services for the operations conducted
therein by HSI with respect to the Contributed Schein Vet Business. There are no
“put” or other similar obligations requiring HSI to purchase or lease any real
property or facilities with respect to the Contributed Schein Vet Business.
Except as set forth on Schedule 3.10(b), there are no security deposits under
the HSI Real Property Leases and no security deposit or portion thereof
deposited with respect to any Real Property Lease has been applied in respect of
a breach of or default under such Real Property Lease. Except as set forth on
Schedule 3.10(b), none of the HSI Real Property Leases contains any “change of
control” provisions triggered by the consummation of the transactions
contemplated by this Agreement or any other Transaction Document.

14

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

 

          (c) Except as set forth on Schedule 3.10(c), the HSI Leased Premises
include all of the land, buildings, structures and other improvements used by
HSI and its Subsidiaries in the conduct of Contributed Schein Vet Business.
          (d) HSI Improvements are in good condition and repair and sufficient
for the operation of the Contributed Schein Vet Business.
          (e) There are no leases, subleases, licenses or other agreements
granting to any Person other than HSI or its Subsidiaries any right to the
possession, use, occupancy or enjoyment of the HSI Leased Premises or any
portion thereof (other than parking and other common areas used by other
tenants).
          (f) HSI and each of its Subsidiaries holds its leasehold interest in
the HSI Leased Premises (including each of the HSI Improvements) free and clear
of all Liens, except for Permitted Liens.
          (g) To the knowledge of HSI, there are no condemnation Proceedings
pending or, to the knowledge of HSI, threatened with respect to all or any part
of the HSI Leased Premises.
          (h) There are no outstanding leasing commissions with respect to the
HSI Real Property Leases and all real estate Taxes now and heretofore due or
payable with regard to the HSI Leased Premises have been paid. There is no
proposed or pending imposition of any special or other assessments for public
betterments or otherwise, affecting the HSI Leased Premises.
     3.11 Intellectual Property.
          (a) Schedule 3.11(a) hereto contains a list of all material Business
Intellectual Property included in clauses (i), (ii) (iii), (iv) and (vi) of the
definition of Intellectual Property which HSI or any of its Subsidiaries owns
and has registered with a Governmental Authority or other registrar, or with
respect to which HSI or any of its Subsidiaries has filed an application for
such a registration. Each of HSI and its Subsidiaries has taken all necessary
actions with the appropriate Governmental Authority to maintain each such
registration of Business Intellectual Property owned by HSI or such Subsidiary
and registered with a Governmental Authority, and such Business Intellectual
Property is subsisting and unexpired. Schedule 3.11(a) also contains a list of
all IP Licenses used primarily or exclusively in the Contributed Schein Vet
Business.
          (b) Except as set forth on Schedule 3.11(b), (i) neither HSI nor any
of its Subsidiaries is violating, infringing or misappropriating any
Intellectual Property of any other Person, and no Proceedings have been
instituted or, to HSI’s knowledge, threatened, nor, to HSI’s knowledge, has a
communication been received alleging any present or past violation, infringement
or misappropriation, and (ii) to HSI’s knowledge, no third party is violating,
infringing or misappropriating any Business Intellectual Property, nor is there
any Proceeding which is pending or threatened, that challenges the rights of HSI
or NLS in respect of any Business Intellectual Property owned by HSI, NLS or any
of its Subsidiaries.

15

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

 

          (c) Each of HSI and its Subsidiaries has taken all commercially
reasonable precautions to protect the secrecy and confidentiality of its trade
secrets and other proprietary Business Intellectual Property.
          (d) Either HSI or one of its Subsidiaries (i) owns, (ii) otherwise has
the right pursuant to a valid license, sublicense or other agreement to, or
(iii) has public domain or other legal access without the need for a license,
lease or consent of any third party to, the Business Intellectual Property.
HSI’s and NLS’s rights in and to the Business Intellectual Property are free and
clear of all Liens, other than Permitted Liens. Except as set forth on
Schedule 3.11(d), the execution and delivery of this Agreement and the
performance of the obligations hereunder will not result in the default under or
require consent of any other Person in respect of any IP License or otherwise
result in the loss or diminution of any rights of HSI or its Subsidiaries in or
to the Business Intellectual Property.
          (e) HSI’s and its Subsidiaries’ practices are and have always been in
compliance in all material respects with (i) their then current privacy policies
and (ii) their customers’ or any other party’s privacy policies when required to
do so by contract. Neither HSI nor its Subsidiaries has received a notice of
noncompliance relating to its actions relevant to this Section 3.11(e).
     3.12 Material Contracts. Schedule 3.12 hereto sets forth for HSI and its
Subsidiaries a true, complete and correct list of all of the following Contracts
in respect of the Contributed Schein Vet Business, except those which will be
terminated at or prior to the Closing:
          (a) Contracts with respect to which HSI or any of its Subsidiaries has
a stated liability or obligation of more than $250,000 within any twelve-month
period from and after the date hereof, other than purchase orders entered into
in the ordinary course of business consistent with past practice;
          (b) Contracts which place any limitation on the method of conducting
or scope of the Contributed Schein Vet Business or prohibit, impair or otherwise
limit any business practice of HSI, any of its Subsidiaries or any of their
respective present or future Affiliates, including, without limitation,
agreements containing covenants not to compete, non-disclosure or
non-solicitation Contracts or any Contract granting a party thereto exclusive
rights;
          (c) Contracts between HSI or NLS and their top twenty (20) vendors
based on the aggregate dollar amount of sales of vendor product by the
Contributed Schein Vet Business during the 2008 fiscal year, other than purchase
orders entered into in the ordinary course of business consistent with past
practice;
          (d) agency Contracts between HSI or its Subsidiaries and any
third-party manufacturer with revenues greater than $500,000 for the 2008 fiscal
year;
          (e) employment, consulting, severance, retention and deferred
compensation Contracts involving the Contributed Schein Vet Business;
          (f) Contracts of HSI or any of its Subsidiaries with any officer,
director or Affiliate of HSI or any of its Subsidiaries;

16

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

 

          (g) financing documents, loan agreements, security agreements, or
Contracts providing for the guaranty of the obligations of any party (other than
HSI or any of its Subsidiaries) primarily or exclusively relating to the
Contributed Schein Vet Business or other Contracts evidencing Indebtedness
primarily or exclusively relating to the Contributed Schein Vet Business;
          (h) Contracts with any labor union or association relating to any
current or former employee, or collective bargaining agreements;
          (i) partnership, joint venture or similar agreements;
          (j) Contracts regarding acquisitions or dispositions of all or a
material portion of the assets of the Contributed Schein Vet Business other than
in the ordinary course of business;
          (k) Contracts entered into since December 31, 2007 involving any
resolution or settlement of any actual or threatened litigation, arbitration,
claim or other dispute with a value of greater than $250,000;
          (l) Contracts with the twenty (20) largest customers of the
Contributed Schein Vet Business measured by dollar value for the twelve
(12) calendar months ended December 31, 2008;
          (m) [Intentionally Omitted.];
          (n) any Contract containing any covenant limiting the freedom of HSI
or any of its Subsidiaries or any of their present or future Affiliates with
respect to the Contributed Schein Vet Business to engage in any line of business
or in any geographic territory or to compete with any Person, or which grants to
any Person any exclusivity to any geographic territory, any customer, or any
product or service;
          (o) any agreement pursuant to which HSI or any of its Subsidiaries has
agreed to provide “most favored nation” pricing or other similar terms and
conditions to any Person with respect to the sale, distribution, license or
support of any products or services of the Contributed Schein Vet Business;
          (p) any Contract with any Governmental Authority with revenues greater
than $500,000 for the 2008 fiscal year;
          (q) (i) any purchase order or commitment for HSI Inventory items or
supplies that, together with amounts on hand, constitute in excess of six
(6) months normal usage, and (ii) any purchase order or commitment for the sale
of HSI Inventory of the Contributed Schein Vet Business not entered into in the
ordinary course of business;
          (r) any Contract providing for liquidated damages or similar penalties
in the event of a breach;

17

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

 

          (s) any Contract providing for indemnification of any other party
against incidental, consequential or similar losses;
          (t) management and financial advisory Contracts; and
          (u) independent sales representative Contracts.
     All of the foregoing, together with the IP Licenses used primarily or
exclusively in the Contributed Schein Vet Business and the HSI Real Property
Leases are herein called “HSI Material Contracts.” HSI has made available to the
Butler Group true and correct copies of all HSI Material Contracts (including
all amendments, modifications and side letters relating thereto). Each HSI
Material Contract is valid and in full force and effect and constitutes a legal,
valid, binding and enforceable obligation of HSI or such Subsidiary, as the case
may be, and, to the knowledge of HSI, the other parties thereto, except as
enforceability may be limited by applicable bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors and to general equitable
principles. HSI or such Subsidiary, as the case may be, and, to the knowledge of
HSI, each other party thereto has performed all material obligations required to
be performed by them thereunder. Neither HSI nor any of its Subsidiaries is in
default under any material provision of any HSI Material Contract. To the
knowledge of HSI, no third party is in default under any material provision of
any HSI Material Contract. Except as set forth on Schedule 3.12, the
transactions contemplated by this Agreement or any other Transaction Document
will not afford any other party the right to terminate any such HSI Material
Contract. Except as set forth on Schedule 3.12, none of the HSI Material
Contracts contains any “change of control,” “assignment” or “transfer”
provisions triggered by the consummation of the transactions contemplated by
this Agreement or any other Transaction Document. When used in this Agreement,
the term “HSI Material Contract” also shall include any Contract of the type
required to be disclosed on Schedule 3.12 that is entered into by HSI between
the date of this Agreement and the Closing Date in compliance with the
provisions of this Agreement.
     3.13 Litigation. Except as disclosed on Schedule 3.13, there is no
Proceeding pending or, to the knowledge of HSI, threatened against HSI or any of
its Subsidiaries with respect to the Contributed Schein Vet Business. Neither
the Contributed Schein Vet Business nor any of Contributed Assets is subject to
any unsatisfied order, judgment, injunction, decision, award or decree of any
Governmental Authority. To the knowledge of HSI, except as otherwise set forth
on Schedule 3.13, each of the claims set forth on Schedule 3.13 is covered under
the HSI Insurance Policies. Except as disclosed on Schedule 3.13, there are no
judgments unsatisfied against the Contributed Schein Vet Business or consent
decrees or injunctions to which the Contributed Schein Vet Business is subject.
     3.14 No Conflict; Required Consents and Approvals. Except as set forth on
Schedule 3.14, each of HSI’s, NLS’s and, subject to the accuracy of the
representations and warranties with respect to WA Butler in Section 6.4 for all
periods from and after the Merger, MergerSub’s execution, delivery and
performance of this Agreement and the other Transaction Documents will not
(a) cause a violation of, be in conflict with, constitute a default under or
permit the termination or acceleration of any obligations or loss of any
privileges under (i) the Charter Documents of HSI, NLS or MergerSub, (ii) any
HSI Material Contract, (iii) any HSI Authorization or (iv) any Applicable Law,
except for such violations, conflicts or defaults which

18

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

 

are not material to the Contributed Schein Vet Business, taken as whole or
(b) result in the imposition of any Lien upon the Contributed Assets, other than
Permitted Liens. Except as set forth on Schedule 3.14, no consent, order,
approval, authorization, declaration or filing with or from any Governmental
Authority or any party to a HSI Material Contract is required on the part of HSI
or any of its Subsidiaries for or in connection with the execution and delivery
of this Agreement or any other Transaction Document or the consummation of the
transactions contemplated hereby or thereby by HSI, except for those which, if
not obtained, are not material to HSI and its Subsidiaries, taken as whole.
     3.15 Licenses and Permits. Schedule 3.15 hereto sets forth a list of all
HSI Authorizations (except for licenses, permits and authorizations relating to
Environmental Laws, as to which only Section 3.21 applies). The HSI
Authorizations are in full force and effect. HSI and each of its Subsidiaries is
in compliance in all material respects with the HSI Authorizations. To the
knowledge of HSI, no Governmental Authority has threatened the suspension or
cancellation of any HSI Authorization. All HSI Authorizations have been obtained
by HSI or NLS in respect of controlled substances.
     3.16 Compliance with Laws.
          (a) HSI and each of its Subsidiaries is in compliance in all material
respects with all Applicable Laws (including, without limitation, those relating
to the purchasing, storing and distribution of controlled substances) with
respect to the Contributed Schein Vet Business, except as to Environmental Laws,
as to which only Section 3.21 applies. Within the past two (2) years, except as
set forth on Schedule 3.16, neither HSI nor NLS has received any written notice
alleging any material failure to comply with any such Applicable Laws.
          (b) HSI and its Subsidiaries have not violated in any material respect
any Applicable Law with respect to the Contributed Schein Vet Business in the
previous two (2) years and are not aware of any such violation where the
applicable statute of limitations has not lapsed, except as to Environmental
Laws, as to which Section 3.21 only applies.
     3.17 Employees and Compensation.
          (a) Except as described on Schedule 3.17(a) hereto, (i) no employee
whose duties are primarily related to the Contributed Schein Vet Business are
represented by any union, (ii) there is no labor strike, slowdown, stoppage,
labor dispute or organizational effort pending or to the knowledge of HSI,
threatened against HSI or any of its Subsidiaries in respect of the Contributed
Schein Vet Business, and (iii) during the past two (2) years, no labor strike,
slowdown, stoppage, labor dispute or organizational effort has occurred in
respect of the Contributed Schein Vet Business. HSI and its Subsidiaries as they
relate to the Contributed Schein Vet Business are not a party to or bound by any
collective bargaining agreement. There has been no unfair labor practice within
the meaning of the National Labor Relations Act with respect to HSI and its
Subsidiaries as they relate to the Contributed Schein Vet Business. HSI and its
Subsidiaries as they relate to the Contributed Schein Vet Business are in
compliance with all Applicable Laws relating to employment and employment
practices, workers’ compensation, terms and conditions of employment, worker
safety, wages and hours, civil rights, discrimination, immigration, collective
bargaining and the WARN Act. Except as set forth on

19

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

 

Schedule 3.17(a), there have been no claims of harassment, discrimination,
retaliatory act or similar actions against any employee, officer, director,
stockholder, consultant or other service provider of HSI and its Subsidiaries
whose duties are primarily related to the Contributed Schein Vet Business at any
time during the past four (4) years and, to the knowledge of HSI, no facts exist
that could reasonably be expected to give rise to such claims or actions. To
HSI’s knowledge, no employees or consultants of HSI and its Subsidiaries whose
duties primarily relate to the Contributed Schein Vet Business (“Schein Business
Employees”) are in any material respect in violation of any term of any
employment contract, non-disclosure agreement, non-competition agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Contributed Schein Vet Business because of the
nature of the business conducted or presently proposed to be conducted or to the
use of trade secrets or proprietary information of others.
          (b) Schedule 3.17(b) sets forth as of the date hereof (i) the name,
title and current total annual cash compensation of each employee or consultant
whose duties are primarily related to the Contributed Schein Vet Business and
whose current or committed annual rate of cash compensation (including bonuses
and commissions) exceeds $100,000, (ii) all wage and salary increases, bonuses
and increases in any other direct or indirect cash compensation received by such
Persons whose current or committed annual rate of cash compensation (including
bonuses and commissions) exceeds $100,000 since September 26, 2009 (other than
those applicable to employees generally), and (iii) any payments or commitments
to pay any severance or termination pay to any such Persons whose current or
committed annual rate of cash compensation (including bonuses and commissions)
exceeds $100,000. HSI has provided or shall provide prior to the Closing, a list
of the permanent employees as of the date hereof whose duties are primarily
related to the Contributed Schein Vet Business, it being understood that such
schedule is being furnished for informational purposes only and no Butler
Holding Member may assert any claims against HSI in respect thereof.
          (c) True and correct copies of each of the Contributed Schein Vet
Business’s forms of non-competition agreements for each of the employees are
attached to Schedule 3.17(c). Schedule 3.17(c) sets forth a complete list of all
employees and consultants of the Contributed Schein Vet Business who have
executed a non-competition agreement and, if applicable, any variances from a
disclosed form non-competition agreement reflected in such executed
non-competition agreement.
     3.18 Benefit Plans.
          (a) Schedule 3.18(a) hereto sets forth a list of all HSI Benefit
Plans.
          (b) With respect to each HSI Benefit Plan, HSI has made available to
the Butler Group true and complete copies of: (i) any and all material plan
texts and agreements including the current employee handbook(s) applicable to
Schein Business Employees, (ii) any and all outstanding summary plan
descriptions and material modifications thereto, (iii) the three (3) most recent
annual reports (Form 5500), if applicable, (iv) the most recent annual and
periodic accounting of plan assets, if applicable, (v) the most recent
determination letter or opinion letter received from the IRS, if applicable, and
(vi) the most recent actuarial reports (if applicable) for all HSI Benefit
Plans. The disclosures under this paragraph are only required to

20

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

 

the extent they relate to HSI Benefit Plans for service providers, whether
current, former or retired, whose duties are primarily or solely related to the
Contributed Schein Vet Business.
          (c) Each HSI Benefit Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter or
opinion letter from the IRS regarding such plan’s qualified status for all
statutory and regulatory changes with respect to plan qualification requirements
for which the IRS will issue such a letter for such plan (taking into account
any applicable remedial amendment period currently in effect for such plan), and
there are no facts or circumstances that could reasonably be expected to cause
the loss of such qualification. The representations in this paragraph relate
solely to HSI, its Subsidiaries and the HSI Benefit Plans as they relate to the
Contributed Schein Vet Business.
          (d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents will (either alone or in combination with another event)
result in the payment of any amount that could, individually or in combination
with any other such payment, constitute an “excess parachute payment,” as
defined in Section 280G(b)(l) of the Code, made or to be made to or for the
benefit of any “disqualified individual” with respect to HSI or any Affiliate.
          (e) No HSI Benefit Plan is a Multiemployer Plan or subject to ERISA
Section 312, Title IV of ERISA or Code Section 412. During the current year and
within the six (6) years prior, none of HSI, any ERISA Affiliate or any of their
predecessors has (i) maintained, contributed to, participated in, maintains,
contributes to or participates in or has or has had any liability with respect
to or has terminated or filed any notice of intent to terminate, any plan
subject to ERISA Section 312, Title IV of ERISA or Code Section 412;
(ii) incurred any outstanding liability under Section 4062 of ERISA to the
Pension Benefit Guaranty Corporation, or to a trustee appointed under
Section 4042 of ERISA, or (iii) incurred a complete or partial withdrawal from a
Multiemployer Plan.
          (f) All contributions (including all employer contributions and
employee salary reduction contributions) and payments (including all insurance
premiums and intercompany charges) required to have been made under the terms of
any HSI Benefit Plan, other agreement or in accordance with Applicable Law and
GAAP, as of the date hereof have been timely made or reflected on HSI’s
financial statements and all contributions and premium payments for any period
ending on or prior to the Closing which are not yet due will, on or prior to the
Closing, have been paid or accrued on HSI’s financial statements in accordance
with GAAP.
          (g) Except as set forth in Schedule 3.18(g), neither HSI, nor NLS, nor
any ERISA Affiliate has any obligation to provide or make available
post-employment welfare benefits or welfare benefit coverage for any employee,
officer, director, stockholder, consultant or other service provider whose
duties are primarily or solely related to the Contributed Schein Vet Business
(whether current, former or retired) or any beneficiary thereof, except as may
be required under COBRA, and at the expense of the employee or former employee.

21

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

 

          (h) No liability or obligation with respect to the Contributed Schein
Vet Business under the WARN Act or any similar state or local law has been
incurred which remains unsatisfied.
          (i) Neither HSI nor any of its Subsidiaries has any direct or indirect
liability, whether actual or contingent, with respect to any misclassification
of any person as an independent contractor rather than as an employee except
where any such misclassification would not result in material liability to
Butler Holding or any of its Subsidiaries.
     3.19 Insurance. HSI and its Subsidiaries, and their business, properties
and/or employees, solely with respect to the Contributed Schein Vet Business and
the Contributed Assets, are insured under the insurance policies listed on
Schedule 3.19, all of which are valid and in full force (the “HSI Insurance
Policies”). HSI has made available to the Butler Group copies of all material
HSI Insurance Policies, including, without limitation, all property and
casualty, product liability and directors and officers HSI Insurance Policies.
All premiums due and payable thereon have been paid in full. HSI and NLS are in
compliance in all material respects with the terms and provisions of the HSI
Insurance Policies. Except as disclosed on Schedule 3.19, as of the date hereof,
there are no pending material claims under any HSI Insurance Policy as to which
the respective insurers have denied coverage. As of the date hereof, neither HSI
nor any of its Subsidiaries has received a written notice of cancellation or
non-renewal of any HSI Insurance Policy. Except as set forth on Schedule 3.19,
none of the HSI Insurance Policies contains any “change of control” provisions
triggered by the consummation of the transactions contemplated by this Agreement
or any other Transaction Document. HSI has made available to the Butler Group
true and correct copies of all loss run reports for the past three (3) years to
the extent any such claims relate to the Contributed Schein Vet Business or the
Contributed Assets, which have been provided by HSI’s insurance agent to HSI or
NLS.
     3.20 Brokers. Except as set forth on Schedule 3.20, neither HSI nor NLS has
dealt with any broker, finder or similar agent with respect to the transactions
contemplated by this Agreement or the other Transaction Documents, and neither
HSI nor NLS is under any obligation to pay any broker’s fee, finder’s fee,
commission or similar amount in connection with the consummation of the
transactions contemplated by this Agreement or the other Transaction Documents.
     3.21 Compliance with Environmental Laws. Except as set forth on
Schedule 3.21:
          (a) All of the operations and properties of the Contributed Schein Vet
Business are, and have been, in compliance in all material respects with all
Environmental Laws.
          (b) The use, handling, manufacture, treatment, processing, storage,
generation, release, discharge and disposal of Hazardous Substances in the
operations of the Contributed Schein Vet Business are, and have been, in
compliance in all material respects with all Environmental Laws.
          (c) All material permits, licenses and authorizations required under
all Environmental Laws for the operations of the Contributed Schein Vet Business
have been obtained, and the current operations of the Contributed Schein Vet
Business are in compliance in

22

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

 

all material respects with the terms and conditions of such required permits,
licenses and authorizations.
          (d) There are no pending or, to the knowledge of HSI, threatened
material Environmental Claims in respect of the Contributed Schein Vet Business.
          (e) To the knowledge of HSI, there are no events, conditions or
circumstances reasonably likely to result in a material liability to the
Contributed Schein Vet Business pursuant to Environmental Laws.
          (f) HSI has provided to the Butler Group all material reports,
assessments, audits, studies, investigations, data, environmental permits,
licenses and authorizations and other written environmental information in the
custody or possession of HSI concerning the Contributed Schein Vet Business.
          (g) None of the matters disclosed on Schedule 3.21, individually or in
the aggregate, is reasonably expected to have a Schein Material Adverse Effect
on the Contributed Assets or the Contributed Schein Vet Business.
     3.22 Affiliate Transactions. Except for employment relationships and the
payment of compensation and benefits in the ordinary course of business or as
disclosed on Schedule 3.22, none of HSI’s or NLS’s respective officers,
directors or employees, or any Affiliate of any of them, is a party to any
Contributed Contract or proposed transaction relating to or affecting the
Contributed Schein Vet Business or is directly or indirectly interested in any
Contributed Contract. Except as set forth on Schedule 3.22, none of HSI’s or
NLS’s respective directors, officers or employees, or any Affiliate of any of
them, (a) has any direct or indirect financial interest in any competitor,
supplier or customer of the Contributed Schein Vet Business or (b) owns,
directly or indirectly, in whole or in part, or has any other interest in, any
Contributed Asset.
     3.23 Books and Records. The records of meetings of and corporate action
taken by (including action taken by written consent) the respective members and
management committee of NLS since March 31, 2006, as previously made available
to the Butler Group and its representatives, are accurate in all material
respects.
     3.24 Suppliers and Customers.
          (a) Schedule 3.24(a) sets forth the names of the twenty (20) largest
vendors of the Contributed Schein Vet Business measured by the aggregate dollar
value of vendor product sold by HSI or NLS for the fiscal year ended
December 27, 2008. None of the vendors listed on Schedule 3.24(a) has notified
in writing (including by email, text messaging or otherwise in writing) HSI or
NLS that it is (i) canceling or terminating its relationship with the
Contributed Schein Vet Business, or (ii) materially modifying its relationship
with the Contributed Schein Vet Business in a manner materially adverse to the
Contributed Schein Vet Business, except as otherwise set forth on such Schedule.
To the knowledge of HSI, except as set forth on Schedule 3.24(a), there have
been no material disputes with such vendors within the past two (2) years
concerning amounts in excess of $250,000.

23

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

 

          (b) Schedule 3.24(b) sets forth the names of the twenty (20) largest
customers of the Contributed Schein Vet Business measured by dollar value for
the fiscal year ended December 27, 2008. None of the customers listed on
Schedule 3.24(b) has notified in writing (including by email, text messaging or
otherwise in writing) HSI or NLS that it is (i) canceling or terminating its
relationship with the Contributed Schein Vet Business, or (ii) materially
modifying its relationship with the Contributed Schein Vet Business in a manner
materially adverse to the Contributed Schein Vet Business, except as otherwise
set forth on such Schedule. To the knowledge of HSI, except as set forth on
Schedule 3.24(b), there has been no material dispute with any such customer
within the past two (2) years concerning an amount in excess of $30,000.
     3.25 Product Liability. During the past five (5) years, there have been no
material product liability claims, suits, actions or Proceedings involving the
Contributed Schein Vet Business or relating to products or services
manufactured, sold or provided by the Contributed Schein Vet Business, in each
case resulting in liability to the Contributed Schein Vet Business in excess of
$100,000. To the knowledge of HSI, (a) no such claim, suit, action or proceeding
has been threatened and (b) no circumstance exists that would reasonably be
expected to result in any of the foregoing.
     3.26 Sales Representatives. Except as set forth on Schedule 3.26 (on a
no-name basis), as of the date of this Agreement, none of the top twenty
(20) sales representatives of the Contributed Schein Vet Business (measured by
total commissions for the 2008 fiscal year) has notified HSI or NLS in writing
(including by e-mail, text messaging or otherwise in writing) that such sales
representative is terminating his or her employment with HSI or NLS.
     3.27 Product Recalls. Schedule 3.27 contains a true and correct list of all
products sold by the Contributed Schein Vet Business which have been the subject
of a product recall requested by the U.S. Food and Drug Administration within
the past three (3) years.
     3.28 HSI Inventories. HSI and its Subsidiaries have good and valid title to
the HSI Inventory free and clear of all Liens, except Permitted Liens and any
Inventory held on consignment as set forth on Schedule 3.28. Except as set forth
on Schedule 3.28, no clearance or extraordinary sale of the HSI Inventories has
been conducted.
     3.29 Certain Business Practices. HSI, each of its Affiliates, and each
other Person associated with or acting for or on behalf of any of them, has not
directly or indirectly: (a) made any contribution, gift, bribe, payoff,
influence payment, kickback or other similar payment to any Person, private or
public, regardless of form, whether in money, property or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained or (iv) in violation of any Applicable Law, or
(b) established or maintained any fund or asset that has not been recorded in
its books and records.
     3.30 No Other Agreements. Except for the agreements expressly contemplated
hereby, and as set forth on Schedule 3.30, neither HSI nor any of its Affiliates
or Associates have any other agreements, arrangements or understandings with any
other party or any Affiliate or Associate of such party in respect of the
transactions contemplated hereby.

24

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

 

     3.31 Business of MergerSub and NLS.
          (a) MergerSub was incorporated on November 19, 2009 solely for
purposes of consummating the transactions contemplated hereby, and except as may
arise in connection with the consummation of the transactions contemplated
hereby, (i) has not directly or indirectly engaged in any business operations,
(ii) has no assets, liabilities or Indebtedness, other than nominal liabilities
incident to its formation and its consummation of the transactions contemplated
hereby in accordance with the terms hereof and (iii) has not had any employees,
other than unpaid corporate officers with no entitlement to benefits or other
compensation that was, is or will be a liability of MergerSub.
          (b) NLS has only engaged in the Vet Business.
     3.32 Accounts Receivable. The receivables included in the Contributed
Schein Vet Business (including accounts receivable, loans receivable and
advances) which are reflected in the HSI Vet Financial Statements have arisen
only in the ordinary course of business from bona fide transactions involving
third party customers not affiliated with HSI or any of its Affiliates.
     3.33 Sufficiency of Contributed Assets. Except for back office and
corporate services, any services (whether or not requested by BAHS) contemplated
under Section 8.16, any Excluded Assets, or as set forth on Schedule 3.33, the
Contributed Assets, are adequate and sufficient in all material respects, for
all current operations of the Schein Vet Business.
     3.34 No Other Representations or Warranties. HSI and NLS acknowledge that:
          (a) none of Burns or any of its directors, officers, Affiliates,
managers, stockholders, members, employees, consultants, agents, counsel or
advisors makes or has made any other representation or warranty, except for the
representations and warranties of Burns expressly set forth in Article 5;
          (b) none of Oak Hill, WA Butler or any of their directors, officers,
Affiliates, managers, stockholders, members, employees, consultants, agents,
counsel or advisors makes or has made any other representation or warranty
concerning Oak Hill or WA Butler, except for the representations and warranties
of Oak Hill expressly set forth in Article 6; and
          (c) none of the Management Members or any of their Affiliates,
consultants, agents, counsel or advisors makes or has made any other
representation or warranty concerning any Management Member, except for the
representations and warranties of the Management Members expressly set forth in
Article 7.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
CONCERNING BUTLER HOLDING AND WA BUTLER
     Butler Holding and the Management Members hereby represent and warrant to
HSI as follows. Except for the representations and warranties set forth in this
Article 4, Butler Holding makes no other representation or warranty (either
express or implied) herein or with respect to the transactions contemplated by
this Agreement. Except for the representations and warranties

25

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

 

set forth in this Article 4 and Article 7, the Management Members make no other
representation or warranty (either express or implied) herein or with respect to
the transactions contemplated by this Agreement.
     4.1 Organization, Power and Standing.
          (a) Butler Holding is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Butler Holding has full limited liability company power and authority to own,
lease and operate its properties and to carry on its business as such business
is now conducted. The copies of the Charter Documents of Butler Holding, each as
amended to date, that have been made available to HSI are complete and correct
copies thereof. The name of each managing member and officer of Butler Holding,
and the position held by each such individual, is set forth in Schedule 4.1(a)
hereto.
          (b) BAHS is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. BAHS has
full limited liability company power and authority to own, lease and operate its
properties and to carry on its business as such business is now conducted. The
copies of the Charter Documents of BAHS, each as amended to date, that have been
made available to HSI are complete and correct copies thereof. The name of each
managing member and officer of BAHS, and the position held by each such
individual, is set forth in Schedule 4.1(b) hereto.
     4.2 Power and Authority. Each of Butler Holding and BAHS has the limited
liability company power and authority and have taken all required limited
liability action on its part necessary to permit it to execute and deliver and
to carry out the terms of this Agreement and the other Transaction Documents to
which it is a party.
     4.3 Validity and Enforceability. This Agreement is, and each of the other
Transaction Documents contemplated hereby will be when executed and delivered by
each of Butler Holding and BAHS, as applicable, the valid and binding
obligations of each of Butler Holding and BAHS, as applicable, enforceable
against Butler Holding and BAHS, as applicable, in accordance with their
respective terms, subject, however, to applicable bankruptcy, insolvency and
other laws affecting the rights and remedies of creditors and to general
equitable principles.
     4.4 Capitalization; Subsidiaries.
          (a) Butler Holding is the record and beneficial owner of all
outstanding membership interests of BAHS and there are no outstanding Equity
Securities of, or in, BAHS to which BAHS is a party or is bound requiring the
issuance, delivery or sale of membership interests of or equity securities in
BAHS.
          (b) Schedule 4.4(b)-1 sets forth a correct and complete list of all of
the authorized, issued and outstanding classes of Equity Securities of Butler
Holding and its Subsidiaries and the record or beneficial owners of such Equity
Securities as of the date hereof and Schedule 4.4(b)-2 sets forth a correct and
complete list of all of the authorized, issued and outstanding classes of Equity
Securities of Butler Holding and its Subsidiaries and the record or beneficial
owners of such Equity Securities as of the Closing Date (immediately following
the Closing of the transaction contemplated hereby). All of the issued and
outstanding Equity

26

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

 

Securities of Butler Holding and its Subsidiaries (the “Butler Equity
Securities”) have been (or, as of the Closing Date, will be) validly issued, are
fully paid and are non-assessable. The Persons listed on Schedule 4.4(b)-1 and
Schedule 4.4(b)-2 have, or will have (as of the Closing Date), good and valid
title to the Butler Equity Securities listed thereon free and clear of all Liens
other than restrictions on transfer imposed under applicable securities laws.
Other than as set forth on Schedule 4.4(b)-1 and Schedule 4.4(b)-2, there are no
(and, as of the Closing Date, will be no) other Butler Equity Securities or
record or beneficial owners of Butler Equity Securities.
          (c) Except as set forth on Schedule 4.4(b)-1, there are, and except as
set forth on Schedule 4.4(b)-2, there will be (as of the Closing Date) no
outstanding or authorized options, stock appreciation, phantom stock or profit
participation rights with respect to the capital stock of, or other equity
interests in, Butler Holding or its Subsidiaries to which Butler Holding or its
Subsidiaries is bound. There are no (i) Contracts to which Butler Holding or its
Subsidiaries is a party or by which Butler Holding or its Subsidiaries is bound
to repurchase, redeem or otherwise acquire any shares of capital stock of, or
other equity security in, Butler Holding or its Subsidiaries or (ii) irrevocable
proxies and voting agreements with respect to any shares of capital stock of, or
other equity interest in, Butler Holding or its Subsidiaries. No Person has any
right of first offer, right of first refusal or preemptive right in connection
with any future offer, sale or issuance of securities by Butler Holding or its
Subsidiaries.
          (d) Except as set forth on Schedule 4.4(d), BAHS does not have any
Subsidiaries. Other than BAHS, Butler Holding does not have any Subsidiaries and
neither Butler Holding nor BAHS, directly or indirectly, owns or has the right
to acquire any equity interest in any other Person and is not obligated to make
any loans or equity contributions to any Person.
     4.5 Foreign Qualifications. Schedule 4.5 sets forth a complete and accurate
list of each jurisdiction in which Butler Holding and its Subsidiaries is
qualified to do business as a foreign entity in which, because of their business
conducted there or the nature of their assets, or property there, makes such
qualification or licensing necessary, except for any jurisdiction(s) in which
the failure to so qualify would not have a Butler Holding Material Adverse
Effect.
     4.6 Financial Statements.
          (a) Attached hereto as Exhibit 4.6 are the (i) audited balance sheets
of Butler Holding and its Subsidiaries as of December 31, 2007 and December 31,
2008, and audited consolidated statements of income for the fiscal years then
ended, and (ii) unaudited consolidated balance sheet of Butler Holding and its
Subsidiaries as of September 30, 2009, and an unaudited consolidated statement
of income for the twelve fiscal month period then ended (collectively, the
“Butler Financial Statements”). Except as set forth on Schedule 4.6, each of the
Butler Financial Statements and the notes thereto, if any, fairly present, in
all material respects, the consolidated financial condition of Butler Holding
and its Subsidiaries as of the dates thereof and the results of operations of
Butler Holding and its Subsidiaries for the periods shown therein, and were
prepared in accordance with the books and records of Butler Holding in
conformity with GAAP consistently applied during the periods covered thereby
(except as otherwise stated therein or in the case of unaudited financial
statements for the omission of

27

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

 

footnotes and subject to year end adjustments, which adjustments are,
individually and in the aggregate, immaterial).
          (b) Without limiting the representations set forth in Section 4.6(a)
above, except (i) for liabilities shown on the Butler Balance Sheet, (ii) for
liabilities which have arisen in the ordinary course of business since the
Balance Sheet Date, and (iii) as set forth on Schedule 4.6(b), neither Butler
Holding nor its Subsidiaries has incurred any material liability or obligation
of any nature in respect of Butler Holding or its Subsidiaries (whether
absolute, accrued, contingent, liquidated or unliquidated) which is required by
GAAP to be reflected as a liability on a balance sheet of Butler Holding and its
Subsidiaries. Except as set forth in the financial statements delivered to HSI
pursuant to this Agreement, neither Butler Holding nor its Subsidiaries
maintains any “off-balance sheet arrangement” (within the meaning of Item
303(a)(4)(ii) of Regulation S-K of the Securities and Exchange Commission).
          (c) Butler Holding and its Subsidiaries have in place systems and
processes reasonably designed to provide reasonable assurances regarding the
reliability of the consolidated financial statements of Butler Holding and its
Subsidiaries.
     4.7 Absence of Certain Changes. Since the Balance Sheet Date, except as set
forth on Schedule 4.7, Butler Holding and its Subsidiaries have conducted their
business only in the ordinary course of business, in the same manner as
heretofore conducted (except as may be necessary to comply with Applicable Laws)
and have not (a) subjected their assets to any Lien, other than Permitted Liens,
(b) acquired or disposed of any material assets, except in the ordinary course
of business, (c) suffered any damage, destruction or casualty loss (whether or
not covered by insurance) which individually or in the aggregate exceeds
$150,000, (d) made any change in its accounting, auditing or Tax methods,
practices or principles, (e) made or rescinded any express or deemed election
relating to Taxes, settled or compromised any claim, action, suit litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
(f) incurred any Indebtedness other than in the ordinary course of business
consistent with past practices, or (g) suffered any Butler Holding Material
Adverse Effect. Since September 30, 2009, except as set forth on Schedule 4.7,
Butler Holding and its Subsidiaries have not increased any wages, salaries,
bonuses or any other direct or indirect cash compensation received by any Butler
Employee whose current or committed annual rate of cash compensation (including
bonuses and commissions) exceeds $100,000. From the Balance Sheet Date until the
date of this Agreement, except as set forth on Schedule 4.7, Butler Holding and
its Subsidiaries have complied with the covenants set forth in
Sections 8.2(b)(v), (vi), (x), (xi) and (xii) of this Agreement.
     4.8 Taxes.
          (a) The representations set forth in this Section 4.8 are subject to
the qualifications and disclosures set forth on Schedule 4.8.
          (b) Butler Holding. For all periods (or portions thereof) beginning on
or after July 1, 2005 with respect to transactions (or portions thereof) that
were provided for in the 2005 Transaction Documents and July 2, 2005 with
respect to all other transactions: Butler Holding has made available to HSI true
and correct copies of the income Tax Returns filed by Butler

28

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

 

Holding and each of its Subsidiaries for the most recent three (3) years. All
Tax Returns required to be filed by Butler Holding and each of its Subsidiaries
have been properly prepared in all material respects and timely filed. All such
Tax Returns (including information provided therewith or with respect thereto)
are true, correct and complete in all material respects. Butler Holding and each
of its Subsidiaries has paid when due all Taxes owed by each of them whether or
not shown on any Tax Return. Butler Holding and each of its Subsidiaries has
made adequate provision for any Taxes that are not yet due and payable for all
taxable periods ending on or before the Closing Date. Neither Butler Holding nor
any of its Subsidiaries is subject to any currently effective waiver that would
have the effect of extending any applicable statute of limitations for the
collection or assessment or reassessment of any Tax liability of Butler Holding
or any of its Subsidiaries, and no request for any such waiver is currently
pending. There is no unpaid assessment against Butler Holding or any of its
Subsidiaries for any material Taxes for any fiscal period, and no audit or other
proceeding by any Governmental Authority is pending or, to the knowledge of
Butler Holding or any of its Subsidiaries, threatened with respect to any Taxes
due from Butler Holding or any of its Subsidiaries. No Governmental Authority
has given notice of any intention to assert any deficiency or claim for
additional Taxes against Butler Holding or any of its Subsidiaries, and no
written claim has been made by any Governmental Authority against Butler Holding
or any of its Subsidiaries that it is required to file Tax Returns in a
jurisdiction where Butler Holding or such Subsidiary does not file Tax Returns,
and all deficiencies for Taxes asserted or assessed against Butler Holding and
each of its Subsidiaries have been fully and timely paid or settled. All
material Taxes that Butler Holding and its Subsidiaries are required by law to
withhold or to collect for payment have been duly withheld and collected and, to
the extent required, paid to the proper Governmental Authority. There are no
material Tax Liens pending or, to the knowledge of Butler Holding, threatened
against Butler Holding or any of its Subsidiaries or any of their assets or
property, other than Permitted Liens. Neither Butler Holding nor any of its
Subsidiaries is a party to any agreement relating to the sharing, allocation or
indemnification of Taxes, or any similar agreement, contract or arrangement, or
has any liability for Taxes of any Person under Treasury Regulation § 1.1502-6,
Treasury Regulation § 1.1502-78 or any similar provision of state, local or
foreign law, as a transferee or successor, by contract, or otherwise. Neither
Butler Holding nor any of its Subsidiaries has agreed, or is required to make,
any adjustment under Section 481(a) of the Code, and no Governmental Authority
has, to the knowledge of Butler Holding, proposed any such adjustment or change
in accounting method. Neither Butler Holding nor any of its Subsidiaries has
used any method of accounting that defers the recognition of income. Neither
Butler Holding nor any of its Subsidiaries has engaged in any “listed
transactions” within the meaning of Treasury Regulations Section 1.6011-4(b)(2)
or any comparable provision of state or local Tax law. None of the assets or
properties of Butler Holding or any of its Subsidiaries is “tax exempt use
property” within the meaning of Section 168(h) of the Code. None of the assets
or properties of Butler Holding or any of its Subsidiaries is a lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954. Butler
Holding and each of its Subsidiaries has fully complied with all statutes and
regulations relating to the accounting for and paying over of unclaimed or
abandoned funds or other property. Notwithstanding anything herein to the
contrary, and for the avoidance of doubt, no representation is made in this
Section 4.8(b) with respect to any Taxes to the extent those Taxes result from
(i) the transactions contemplated herein or in any of the other Transaction
Documents or (ii) Butler Holding or BAHS ceasing to utilize the LIFO method of
accounting.

29

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

 

          (c) WA Butler.
               (i) Except to the extent that any of the representations set
forth in Section 4.8(c)(ii) would fail to be true as a result of the of the
failure of the representations set forth in Section 6.10(b) and Section 6.11(a)
to be true, Butler Holding represents and warrants to HSI as set forth in
Section 4.8(c)(ii).
               (ii) For all periods (or portions thereof) beginning on or after
July 1, 2005 with respect to transactions (or portions thereof) that were
provided for in the 2005 Transaction Documents and July 2, 2005 with respect to
all other transactions: Butler Holding has made available to HSI true and
correct copies of the income Tax Returns filed by WA Butler for the most recent
three (3) years. All Tax Returns required to be filed by WA Butler have been
properly prepared in all material respects and timely filed. All such Tax
Returns (including information provided therewith or with respect thereto) are
true, correct and complete in all material respects. WA Butler has paid when due
all Taxes owed by it whether or not shown on any Tax Return. WA Butler is not
subject to any currently effective waiver that would have the effect of
extending any applicable statute of limitations for the collection or assessment
or reassessment of any WA Butler Tax liability and no request for any such
waiver is currently pending. There is no unpaid assessment against WA Butler for
any material Taxes for any fiscal period, and no audit or other proceeding by
any Governmental Authority is pending or, to the knowledge of WA Butler,
threatened with respect to any Taxes due from WA Butler. No Governmental
Authority has given notice of any intention to assert any deficiency or claim
for additional Taxes against WA Butler, and no written claim has been made by
any Governmental Authority in a jurisdiction where WA Butler does not file Tax
Returns that it is required to file Tax Returns in that jurisdiction, and all
deficiencies for Taxes asserted or assessed against WA Butler have been fully
and timely paid or settled. All material Taxes that WA Butler is required by law
to withhold or to collect for payment have been duly withheld and collected and,
to the extent required, paid to the proper Governmental Authority. There are no
material Tax Liens pending or, to the knowledge of WA Butler, threatened against
WA Butler or its assets or property, other than Permitted Liens. WA Butler is
not a party to any Tax Sharing Agreement, or have any liability for Taxes of any
Person under Treasury Regulation § 1.1502-6, Treasury Regulation § 1.1502-78 or
any similar provision of state, local or foreign law, as a transferee or
successor, by contract, or otherwise. WA Butler has not agreed, and is not
required to make, any adjustment under Section 481(a) of the Code, and, to the
knowledge of WA Butler, no Governmental Authority has proposed any such
adjustment or change in accounting method. WA Butler has not used any method of
accounting that defers the recognition of income. WA Butler has not engaged in
any “listed transactions” within the meaning of Treasury Regulations
Section 1.6011-4(b)(2) or any comparable provision of state or local Tax law. WA
Butler has fully complied with all statutes and regulations relating to the
accounting for and paying over of unclaimed or abandoned funds or other
property. Notwithstanding anything herein to the contrary, and for the avoidance
of doubt, no representation is made in this Section 4.8(c) with respect to any
Taxes to the extent those Taxes result from (i) the transactions contemplated
herein or in any of the other Transaction Documents or (ii) Butler Holding or
BAHS ceasing to utilize the LIFO method of accounting.
     4.9 Personal Property. Butler Holding and its Subsidiaries, as applicable,
have good title to or a valid leasehold, license or other similar interest in
their tangible personal property,

30

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

 

free and clear of all Liens, except for Permitted Liens. The equipment and other
tangible operating assets of Butler Holding and its Subsidiaries are in adequate
condition to conduct the business of Butler Holding and its Subsidiaries as the
same is currently conducted, normal wear and tear excepted, have received
continued repair and replacement in accordance with past practice and are
suitable for their current use. To the knowledge of Butler Holding, such
property and assets are free of any material structural or engineering defects.
     4.10 Real Property.
          (a) None of Butler Holding and its Subsidiaries owns any real
property.
          (b) Schedule 4.10(b) describes each interest in real property leased
by Butler Holding and its Subsidiaries, including the lessor of such leased
property, and identifies each lease or any other agreement under which such
property is leased (collectively, the “Butler Real Property Leases,” and the
real property subject to such Butler Real Property Leases being herein called
the “Butler Leased Premises”). Butler Holding and each of its Subsidiaries
enjoys peaceful and quiet possession of the Butler Leased Premises and Butler
Holding has not received any written notice from any landlord under any Butler
Real Property Lease asserting the existence of a material default under any
Butler Real Property Lease (or the existence of any condition which after the
passage of time or the giving of notice or both would constitute a default of or
breach under any Butler Real Property Lease) or been informed in writing that
the lessor under any Butler Real Property Lease has taken action or, to the
knowledge of Butler Holding, threatened to terminate the Butler Real Property
Lease before the expiration date specified in the Butler Real Property Lease.
Except as set forth on Schedule 4.10(b), the transactions contemplated by this
Agreement or any other Transaction Document will not be the basis for any lessor
under a Butler Real Property Lease to terminate its Butler Real Property Lease
prior to the expiration date of the Butler Real Property Lease. The Butler
Leased Premises, the condition thereof, the purposes for which such Butler
Leased Premises are used and the activities of Butler Holding and its
Subsidiaries, conform in all material respects with Applicable Laws (except
Environmental Laws, as to which only Section 4.21 applies) and all insurance
requirements and restrictive covenants affecting the Butler Leased Premises. The
Butler Leased Premises have adequate electric and other utility services for the
operations conducted therein by Butler Holding and its Subsidiaries. There are
no “put” or other similar obligations requiring Butler Holding or its
Subsidiaries to purchase or lease any real property or facilities. Except as set
forth on Schedule 4.10(b), there are no security deposits under the Butler Real
Property Leases and no security deposit or portion thereof deposited with
respect to any Butler Real Property Lease has been applied in respect of a
breach of or default under such Butler Real Property Lease. Except as set forth
on Schedule 4.10(b), none of the Butler Real Property Leases contains any
“change of control” provisions triggered by the consummation of the transactions
contemplated by this Agreement or any other Transaction Document.
          (c) The Butler Leased Premises include all of the land, buildings,
structures and other improvements used by Butler Holding and its Subsidiaries.
          (d) The Butler Improvements are in good condition and repair and
sufficient for the operation of the business of Butler Holding and its
Subsidiaries.

31

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

 

          (e) Except as set forth on Schedule 4.10(e), there are no leases,
subleases, licenses or other agreements granting to any Person other than Butler
Holding or its Subsidiaries any right to the possession, use, occupancy or
enjoyment of the Butler Leased Premises or any portion thereof (other than
parking and other common areas used by other tenants).
          (f) Butler Holding and each of its Subsidiaries holds its leasehold
interest in the Butler Leased Premises (including each of the Butler
Improvements) free and clear of all Liens, except for Permitted Liens.
          (g) To the knowledge of Butler Holding, there are no condemnation
Proceedings pending or, to the knowledge of Butler Holding, threatened with
respect to all or any part of the Butler Leased Premises.
          (h) There are no outstanding leasing commissions with respect to the
Butler Real Property Leases and all real estate Taxes now and heretofore due or
payable with regard to the Butler Leased Premises have been paid. There is no
proposed or pending imposition of any special or other assessments for public
betterments or otherwise, affecting the Butler Leased Premises.
     4.11 Intellectual Property.
          (a) Schedule 4.11(a) hereto contains a list of all material Business
Intellectual Property included in clauses (i), (ii) (iii), (iv) and (vi) of the
definition of Intellectual Property which Butler Holding or any of its
Subsidiaries owns and has registered with a Governmental Authority or other
registrar, or with respect to which Butler Holding or any of its Subsidiaries
has filed an application for such a registration. Each of Butler Holding and its
Subsidiaries has taken all necessary actions with the appropriate Governmental
Authority to maintain each such registration of Business Intellectual Property
owned by Butler Holding or such Subsidiary and registered with a Governmental
Authority, and such Business Intellectual Property is subsisting and unexpired.
Schedule 4.11(a) also contains a list of all IP Licenses.
          (b) Except as set forth on Schedule 4.11(b), (i) neither Butler
Holding nor any of its Subsidiaries is violating, infringing or misappropriating
any Intellectual Property of any other Person, and no Proceedings have been
instituted or, to Butler Holding’s knowledge, threatened, nor, to Butler
Holding’s knowledge, has a communication been received alleging any present or
past violation, infringement or misappropriation, and (ii) to Butler Holding’s
knowledge, no third party is violating, infringing or misappropriating any
Business Intellectual Property, nor is there any Proceeding which is pending or
threatened, that challenges the rights of Butler Holding or its Subsidiaries in
respect of any Business Intellectual Property owned by Butler Holding or any of
its Subsidiaries.
          (c) Each of Butler Holding and its Subsidiaries has taken all
commercially reasonable precautions to protect the secrecy and confidentiality
of its trade secrets and other proprietary Business Intellectual Property.
          (d) Either Butler Holding or one of its Subsidiaries (i) owns,
(ii) otherwise has the right pursuant to a valid license, sublicense or other
agreement to, or (iii) has public domain or other legal access without the need
for a license, lease or consent of any third party to, the

32

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

 

Business Intellectual Property. Butler Holding’s and its Subsidiaries’ rights in
and to the Business Intellectual Property are free and clear of all Liens, other
than Permitted Liens. Except as set forth on Schedule 4.11(d), the execution and
delivery of this Agreement and the performance of the obligations hereunder will
not result in the default under or require consent of any other Person in
respect of any IP License or otherwise result in the loss or diminution of any
rights of Butler Holding or its Subsidiaries in or to the Business Intellectual
Property.
          (e) Butler Holding’s and its Subsidiaries’ practices are and have
always been in compliance in all material respects with (i) their then current
privacy policies and (ii) their customers’ or any other party’s privacy policies
when required to do so by contract. Neither Butler Holding nor its Subsidiaries
has received a notice of noncompliance relating to its actions relevant to this
Section 4.11(e).
     4.12 Material Contracts. Schedule 4.12 hereto sets forth for Butler Holding
and its Subsidiaries a true, complete and correct list of all of the following
Contracts, except those which will be terminated at or prior to the Closing:
          (a) Contracts with respect to which Butler Holding or any of its
Subsidiaries has a stated liability or obligation of more than $250,000 within
any twelve-month period from and after the date hereof, other than purchase
orders entered into in the ordinary course of business consistent with past
practice;
          (b) Contracts which place any limitation on the method of conducting
business or scope of the business conducted or prohibit, impair or otherwise
limit any business practice of Butler Holding, any of its Subsidiaries or any of
their respective present or future Affiliates, including, without limitation,
agreements containing covenants not to compete, non-disclosure or
non-solicitation Contracts or any Contract granting a party thereto exclusive
rights;
          (c) Contracts between Butler Holding or any of its Subsidiaries and
the top twenty (20) vendors based on the aggregate dollar amount of sales of
vendor product by Butler Holding and its Subsidiaries during the 2008 fiscal
year, other than purchase orders entered into in the ordinary course of business
consistent with past practice;
          (d) agency Contracts between Butler Holding or its Subsidiaries and
any third-party manufacturer with revenues greater than $500,000 for the 2008
fiscal year;
          (e) employment, consulting, severance, retention and deferred
compensation Contracts involving Butler Holding or any of its Subsidiaries for
any employee whose total annual compensation equals or exceeds $100,000;
          (f) Contracts of Butler Holding or any of its Subsidiaries with any
officer, director or Affiliate of Butler Holding or any of its Subsidiaries;
          (g) financing documents, loan agreements, security agreements, or
Contracts providing for the guaranty of the obligations of any party (other than
Butler Holding or any of its Subsidiaries) or other Contracts evidencing
Indebtedness of Butler Holding or any of its Subsidiaries;

33

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

 

          (h) Contracts with any labor union or association relating to any
current or former employee, or collective bargaining agreements;
          (i) partnership, joint venture or similar agreements;
          (j) Contracts regarding acquisitions or dispositions of all or a
material portion of the assets of Butler Holding or any of its Subsidiaries
other than in the ordinary course of business;
          (k) Contracts entered into since December 31, 2007 involving any
resolution or settlement of any actual or threatened litigation, arbitration,
claim or other dispute with a value of greater than $250,000;
          (l) Contracts with the twenty (20) largest customers of Butler Holding
and its Subsidiaries measured by dollar value for the twelve (12) calendar
months ended December 31, 2008;
          (m) [Intentionally Omitted.];
          (n) any Contract containing any covenant limiting the freedom of
Butler Holding or any of its Subsidiaries or any of their present or future
Affiliates to engage in any line of business or in any geographic territory or
to compete with any Person, or which grants to any Person any exclusivity to any
geographic territory, any customer, or any product or service;
          (o) any agreement pursuant to which Butler Holding or any of its
Subsidiaries has agreed to provide “most favored nation” pricing or other
similar terms and conditions to any Person with respect to the sale,
distribution, license or support of any products or services;
          (p) any Contract with any Governmental Authority with revenues greater
than $500,000 for the 2008 fiscal year;
          (q) (i) any purchase order or commitment for Butler Inventory items or
supplies that, together with amounts on hand, constitute in excess of six
(6) months normal usage, and (ii) any purchase order or commitment for the sale
of Butler Inventory not entered into in the ordinary course of business;
          (r) any Contract providing for liquidated damages or similar penalties
in the event of a breach;
          (s) any Contract providing for indemnification of any other party
against incidental, consequential or similar losses;
          (t) management and financial advisory Contracts; and
          (u) independent sales representative Contracts.
     All of the foregoing and the Butler Real Property Leases and IP Licenses of
Butler Holding and its Subsidiaries are herein called “Butler Material
Contracts.” Butler Holding has

34

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

 

made available to the Butler Group true and correct copies of all Butler
Material Contracts (including all amendments, modifications and side letters
relating thereto). Each Butler Material Contract is valid and in full force and
effect and constitutes a legal, valid, binding and enforceable obligation of
Butler Holding or such Subsidiary, as the case may be, and, to the knowledge of
Butler Holding, the other parties thereto, except as enforceability may be
limited by applicable bankruptcy, insolvency and other laws affecting the rights
and remedies of creditors and to general equitable principles. Butler Holding or
such Subsidiary, as the case may be, and, to the knowledge of Butler Holding,
each other party thereto has performed all material obligations required to be
performed by them thereunder. Neither Butler Holding nor any of its Subsidiaries
is in default under any material provision of any Butler Material Contract. To
the knowledge of Butler Holding, no third party is in default under any material
provision of any Butler Material Contract. Except as set forth on Schedule 4.12,
the transactions contemplated by this Agreement or any other Transaction
Document will not afford any other party the right to terminate any such Butler
Material Contract. Except as set forth on Schedule 4.12, none of the Butler
Material Contracts contains any “change of control,” “assignment” or “transfer”
provisions triggered by the consummation of the transactions contemplated by
this Agreement or any other Transaction Document. When used in this Agreement,
the term “Butler Material Contract” also shall include any Contract of the type
required to be disclosed on Schedule 4.12 that is entered into by Butler Holding
or BAHS between the date of this Agreement and the Closing Date in compliance
with the provisions of this Agreement.
     4.13 Litigation. Except as disclosed on Schedule 4.13, there is no
Proceeding pending or, to the knowledge of Butler Holding, BAHS or the Butler
Group, threatened against Butler Holding or any of its Subsidiaries. Neither
Butler Holding nor any of its Subsidiaries is subject to any unsatisfied order,
judgment, injunction, decision, award or decree of any Governmental Authority.
To the knowledge of Butler Holding, except as otherwise set forth on
Schedule 4.13, each of the claims set forth on Schedule 4.13 is covered under
the Butler Insurance Policies. Except as disclosed on Schedule 4.13, there are
no judgments unsatisfied against Butler Holding or any of its Subsidiaries or
consent decrees or injunctions to which the Butler Holding or any of its
Subsidiaries is subject.
     4.14 No Conflict; Required Consents and Approvals. Except as set forth on
Schedule 4.14, each of Butler Holding’s and BAHS’s execution, delivery and
performance of this Agreement and the other Transaction Documents will not
(a) cause a violation of, be in conflict with, constitute a default under or
permit the termination or acceleration of any obligations or loss of any
privileges under (i) the Charter Documents of Butler Holding or BAHS, (ii) any
Butler Material Contract, (iii) any Butler Authorization or (iv) any Applicable
Law, except for such violations, conflicts or defaults which are not material to
Butler Holding and its Subsidiaries, taken as whole or (b) result in the
imposition of any Lien upon any assets of Butler Holding or any of its
Subsidiaries, other than Permitted Liens. Except as set forth on Schedule 4.14,
no consent, order, approval, authorization, declaration or filing with or from
any Governmental Authority or any party to a Butler Material Contract is
required on the part of Butler Holding or any of its Subsidiaries for or in
connection with the execution and delivery of this Agreement or any other
Transaction Document or the consummation of the transactions contemplated hereby
or thereby by Butler Holding, except for those which, if not obtained, are not
material to Butler Holding and its Subsidiaries, taken as whole.

35

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

 

     4.15 Licenses and Permits. Schedule 4.15 hereto sets forth a list of all
Butler Authorizations (except for licenses, permits and authorizations relating
to Environmental Laws, as to which only Section 4.21 applies). The Butler
Authorizations are in full force and effect. Butler Holding and each of its
Subsidiaries is in compliance in all material respects with the Butler
Authorizations. To the knowledge of Butler Holding, no Governmental Authority
has threatened the suspension or cancellation of any Butler Authorization. All
Butler Authorizations have been obtained by Butler Holding in respect of
controlled substances.
     4.16 Compliance with Laws.
          (a) Butler Holding and each of its Subsidiaries is in compliance in
all material respects with all Applicable Laws (including, without limitation,
those relating to the purchasing, storing and distribution of controlled
substances), except as to Environmental Laws, as to which only Section 4.21
applies. Within the past two (2) years, except as set forth on Schedule 4.16,
Butler Holding and its Subsidiaries have not received any written notice
alleging any material failure to comply with any such Applicable Laws.
          (b) Butler Holding and its Subsidiaries have not violated in any
material respect any Applicable Law in the previous two (2) years and are not
aware of any such violation where the applicable statute of limitations has not
lapsed, except as to Environmental Laws, as to which Section 4.21 only applies.
     4.17 Employees and Compensation.
          (a) Except as described on Schedule 4.17(a) hereto, (i) no employee of
Butler Holding or any of its Subsidiaries are represented by any union,
(ii) there is no labor strike, slowdown, stoppage, labor dispute or
organizational effort pending or to the knowledge of Butler Holding, threatened
against Butler Holding or any of its Subsidiaries, and (iii) during the past two
(2) years, no labor strike, slowdown, stoppage, labor dispute or organizational
effort has occurred. None of Butler Holding or any of its Subsidiaries is a
party to or bound by any collective bargaining agreement. There has been no
unfair labor practice within the meaning of the National Labor Relations Act
with respect to Butler Holding or any of its Subsidiaries. Butler Holding and
each of its Subsidiaries are in compliance with all Applicable Laws relating to
employment and employment practices, workers’ compensation, terms and conditions
of employment, worker safety, wages and hours, civil rights, discrimination,
immigration, collective bargaining and the WARN Act. Except as set forth on
Schedule 4.17(a), there have been no claims of harassment, discrimination,
retaliatory act or similar actions against any employee, officer, director,
stockholder, consultant or other service provider of Butler Holding or its
Subsidiaries at any time during the past four (4) years and, to the knowledge of
Butler Holding, BAHS or the Butler Group, no facts exist that could reasonably
be expected to give rise to such claims or actions. To the knowledge of Butler
Holding, BAHS or the Butler Group, no employees or consultants of Butler Holding
and its Subsidiaries (“Butler Employees”) are in any material respect in
violation of any term of any employment contract, non-disclosure agreement,
non-competition agreement, or any restrictive covenant to a former employer
relating to the right of any such employee or consultant to be employed or
retained by Butler Holding or any of its Subsidiaries because of the nature of
the business conducted or presently proposed to be conducted or to the use of
trade secrets or proprietary information of others.

36

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

 

          (b) Schedule 4.17(b) sets forth as of the date hereof (i) the name,
title and current total annual cash compensation of each Butler Employee whose
current or committed annual rate of cash compensation (including bonuses and
commissions) exceeds $100,000, (ii) all wage and salary increases, bonuses and
increases in any other direct or indirect cash compensation received by any such
Butler Employee whose current or committed annual rate of cash compensation
(including bonuses and commissions) exceeds $100,000 since September 30, 2009
(other than those applicable to employees generally), and (iii) any payments or
commitments to pay any severance or termination pay to any such Butler Employee
whose current or committed annual rate of cash compensation (including bonuses
and commissions) exceeds $100,000.
          (c) True and correct copies of each of the forms of non-competition
agreements for each Butler Employee are attached to Schedule 4.17(c). sets forth
a complete list of each Butler Employee who has executed a non-competition
agreement and, if applicable, any variances from a disclosed form
non-competition agreement reflected in such executed non-competition agreement.
     4.18 Benefit Plans.
          (a) Schedule 4.18(a) hereto sets forth a list of all Butler Benefit
Plans.
          (b) With respect to each Butler Benefit Plan, Butler Holding has made
available to HSI true and complete copies of: (i) any and all plan texts and
agreements including the current employee handbook(s), (ii) any and all
outstanding summary plan descriptions and material modifications thereto,
(iii) the three (3) most recent annual reports (Form 5500), if applicable,
(iv) the most recent annual and periodic accounting of plan assets, if
applicable, (v) the most recent determination letter or opinion letter received
from the IRS, if applicable, and (vi) the most recent actuarial reports (if
applicable) for all Butler Benefit Plans; and (vii) all filings under the IRS’
Employee Plans Compliance Resolution System Program or any of its predecessors
or the Department of Labor Delinquent Filer Program.
          (c) Except as set forth on Schedule 4.18(c), with respect to each
Butler Benefit Plan: (i) such plan has been established in accordance with all
Applicable Laws in all material respects, complies in form and has been operated
and administered in accordance with its terms and all Applicable Laws including
ERISA and the Code in all material respects, (ii) no breach of fiduciary duty
has occurred with respect to which Butler Holding, any of its Subsidiaries or
any Butler Benefit Plan would be liable, (iii) no material disputes are pending
or, to the knowledge of Butler Holding, threatened, (iv) no Proceeding has been
threatened, asserted, instituted or, to the best knowledge of Butler Holding, is
anticipated against any of the Butler Benefit Plans (other than non-material,
routine claims for benefits and appeals of such claims), any trustee or
fiduciaries thereof, any ERISA Affiliate, any employee, officer, director,
stockholder, consultant or other service provider of Butler Holding or its
Subsidiaries (whether current, former or retired), or any of the assets of any
trust of any of the Butler Benefit Plans, (v) no non-exempt “prohibited
transaction” (within the meaning of either Section 4975(c) of the Code or
Section 406 of ERISA) has occurred or is reasonably expected to occur with
respect to which Butler Holding, any of its Subsidiaries or any Butler Benefit
Plan would be liable, (vi) each Butler Benefit Plan intended to be qualified
under Section 401(a) of the Code has

37

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

 

received a favorable determination letter or opinion letter from the IRS
regarding each such plan’s qualified status for all statutory and regulatory
changes with respect to plan qualification requirements for which the IRS will
issue such a letter for such plan (taking into account any applicable remedial
amendment period currently in effect for such plan), and there are no facts or
circumstances that could reasonably be expected to cause the loss of such
qualification or the imposition of any material liability, and (vii) no Butler
Benefit Plan is under, and neither Butler Holding nor BAHS has received any
notice of, an audit or investigation by the IRS, Department of Labor or any
other Governmental Authority and no such completed audit, if any, has resulted
in the imposition of any Tax or penalty.
          (d) Except as set forth on Schedule 4.18(d), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
by this Agreement and the other Transaction Documents will (either alone or in
combination with another event): (i) accelerate the time of payment or vesting
under any Butler Benefit Plan, (ii) give rise to any liability, including,
without limitation, liability for severance pay, unemployment compensation,
termination pay or withdrawal liability or result in severance pay or any
increase in severance pay or any termination of employment after the date of
this Agreement, (iii) increase the amount of compensation or benefits due to any
individual under any Butler Benefit Plan, or (iv) result in the payment of any
amount that could, individually or in combination with any other such payment,
constitute an “excess parachute payment,” as defined in Section 280G(b)(l) of
the Code, made or to be made to or for the benefit of any “disqualified
individual” with respect to HSI or any Affiliate.
          (e) Except as set forth on Schedule 4.18(e), no Butler Benefit Plan is
a Multiemployer Plan or subject to ERISA Section 312, Title IV of ERISA or Code
Section 412. During the current year and within the six (6) years prior, except
as set forth in Schedule 4.18(e), none of Butler Holding, BAHS, any ERISA
Affiliate or any of their predecessors has (i) maintained, contributed to,
participated in, maintains, contributes to or participates in or has or has had
any liability with respect to or has terminated or filed any notice of intent to
terminate, any plan subject to ERISA Section 312, Title IV of ERISA or Code
Section 412; (ii) incurred any outstanding liability under Section 4062 of ERISA
to the Pension Benefit Guaranty Corporation, or to a trustee appointed under
Section 4042 of ERISA, or (iii) incurred a complete or partial withdrawal from a
Multiemployer Plan. Neither Butler Holding nor any Subsidiary has any liability
with respect to any plan subject to Title IV of ERISA maintained or contributed
to by an ERISA Affiliate or with respect to which any ERISA Affiliate had any
obligation to contribute, in each case in the six-year period prior to the date
hereof.
          (f) Except as set forth in Schedule 4.18(f), Butler Holding or its
Subsidiaries may amend or terminate any Butler Benefit Plan (other than an
employment agreement or any similar agreement between Butler Holding or its
Subsidiaries and another party that cannot be amended or terminated without the
consent of such other party) at any time without incurring liability thereunder
other than in respect of accrued and vested obligations and medical or welfare
claims incurred prior to such amendment or termination. None of Butler Holding,
BAHS, any ERISA Affiliate, or any employee, officer, director, stockholder,
consultant or other service provider of Butler Holding, BAHS or any ERISA
Affiliate has made any promises or commitments, whether legally binding or not,
to create any additional plan, agreement or arrangement, or to modify or change
in any material way any existing Butler Benefit Plan.

38

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

 

          (g) All contributions (including all employer contributions and
employee salary reduction contributions) and payments (including all insurance
premiums and intercompany charges) required to have been made under the terms of
any Butler Benefit Plan, other agreement or in accordance with Applicable Law
and GAAP, as of the date hereof have been timely made or reflected on Butler
Holding’s or BAHS’s financial statements and all contributions and premium
payments for any period ending on or prior to the Closing which are not yet due
will, on or prior to the Closing, have been paid or accrued on Butler Holding’s
financial statements in accordance with GAAP.
          (h) Except as set forth in Schedule 4.18(h), neither Butler Holding,
any of its Subsidiaries nor any ERISA Affiliate has any obligation to provide or
make available post-employment welfare benefits or welfare benefit coverage for
any employee, officer, director, stockholder, consultant or other service
provider of Butler Holding or its Subsidiaries (whether current, former or
retired) or any beneficiary thereof, except as may be required under COBRA, and
at the expense of the employee or former employee.
          (i) No liability or obligation under the WARN Act or any similar state
or local law has been incurred by Butler Holding or any of its Subsidiaries
which remains unsatisfied.
          (j) Neither Butler Holding, any of its Subsidiaries nor any ERISA
Affiliate has unfunded liabilities pursuant to any Butler Benefit Plan that is
not intended to be qualified under Section 401(a) of the Code and is an employee
pension benefit plan within the meaning of Section 3(2) of ERISA, a nonqualified
deferred compensation plan or an excess benefit plan.
          (k) No individual who has performed services for Butler Holding or any
of its Subsidiaries has been improperly excluded from participation in any
Butler Benefit Plan, and neither Butler Holding nor any of its Subsidiaries has
any direct or indirect liability, whether actual or contingent, with respect to
any misclassification of any person as an independent contractor rather than as
an employee, except where any such misclassification would not result in any
material liability to HSI or any of its Subsidiaries.
     4.19 Insurance. Butler Holding and its Subsidiaries, and their business,
properties and/or employees are insured under the insurance policies listed on
Schedule 4.19, all of which are valid and in full force (the “Butler Insurance
Policies”). Butler Holding has made available to HSI copies of all material
Butler Insurance Policies, including, without limitation, all property and
casualty, product liability and directors and officers Butler Insurance
Policies. All premiums due and payable thereon have been paid in full. Butler
Holding and its Subsidiaries is in compliance in all material respects with the
terms and provisions of the Butler Insurance Policies. Except as disclosed on
Schedule 4.19, as of the date hereof, there are no pending material claims under
any Butler Insurance Policy as to which the respective insurers have denied
coverage. As of the date hereof, neither Butler Holding nor any of its
Subsidiaries has received a written notice of cancellation or non-renewal of any
Butler Insurance Policy. Except as set forth on Schedule 4.19, none of the
Butler Insurance Policies contains any “change of control” provisions triggered
by the consummation of the transactions contemplated by this Agreement or any
other Transaction Document. Butler Holding has made available to HSI true

39

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

 

and correct copies of all loss run reports for the past three (3) years, which
have been provided by Butler Holding’s or BAHS’s insurance agent to Butler
Holding or BAHS, as applicable.
     4.20 Brokers. Except as set forth on Schedule 4.20, Butler Holding has not
dealt with any broker, finder or similar agent with respect to the transactions
contemplated by this Agreement or the other Transaction Documents, and Butler
Holding is not under any obligation to pay any broker’s fee, finder’s fee,
commission or similar amount in connection with the consummation of the
transactions contemplated by this Agreement or the other Transaction Documents.
Neither Butler Holding nor BAHS nor any of their respective Affiliates will
incur any Liability under the Consulting Agreement, dated Sept 24, 2008, between
BAHS and Brakke Consulting, Inc. in connection with the consummation of the
transactions contemplated by this Agreement or the other Transaction Documents.
     4.21 Compliance with Environmental Laws. Except as set forth on
Schedule 4.21:
          (a) All of the operations and properties of Butler Holding and its
Subsidiaries are, and have been, in compliance in all material respects with all
Environmental Laws.
          (b) The use, handling, manufacture, treatment, processing, storage,
generation, release, discharge and disposal of Hazardous Substances in the
operations of Butler Holding and its Subsidiaries are, and have been, in
compliance in all material respects with all Environmental Laws.
          (c) All material permits, licenses and authorizations required under
all Environmental Laws have been obtained, and the current operations of Butler
Holding and its Subsidiaries are in compliance in all material respects with the
terms and conditions of such required permits, licenses and authorizations.
          (d) There are no pending or, to the knowledge of Butler Holding,
threatened material Environmental Claims against Butler Holding or any of its
Subsidiaries.
          (e) To the knowledge of Butler Holding, there are no events,
conditions or circumstances reasonably likely to result in a material liability
to Butler Holding or any of its Subsidiaries pursuant to Environmental Laws.
          (f) Butler Holding has provided to HSI all material reports,
assessments, audits, studies, investigations, data, environmental permits,
licenses and authorizations and other written environmental information in the
custody or possession of Butler Holding or its Subsidiaries.
          (g) None of the matters disclosed on Schedule 4.21, individually or in
the aggregate, is reasonably expected to have a Butler Material Adverse Effect.
     4.22 Affiliate Transactions. Except for employment relationships and the
payment of compensation and benefits in the ordinary course of business or as
disclosed on Schedule 4.22, none of Butler Holding’s or any of its Subsidiaries’
officers, directors or employees, or any Affiliate of any of them, is a party to
any Contract or proposed transaction relating to or affecting Butler Holding or
any of its Subsidiaries or is directly or indirectly interested in any such
Contract or proposed transaction. Except as set forth on Schedule 4.22, none of
Butler Holding’s or any of its Subsidiaries’ directors, officers or employees,
or any Affiliate of any of them, (a) has any direct or indirect financial
interest in any competitor, supplier or customer of

40

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

 

Butler Holding or any of its Subsidiaries or (b) owns, directly or indirectly,
in whole or in part, or has any other interest in, any asset of Butler Holding
or its Subsidiaries.
     4.23 Books and Records. The records of meetings of and corporate action
taken by (including action taken by written consent) the respective members and
management committee of BAHS, as previously made available to the Butler Group
and its representatives, are true, complete and accurate in all material
respects.
     4.24 Suppliers and Customers.
          (a) Schedule 4.24(a) sets forth the names of the twenty (20) largest
vendors of Butler Holding and its Subsidiaries measured by the aggregate dollar
value of vendor product sold by Butler Holding and its Subsidiaries for the
fiscal year ended December 31, 2008. None of the vendors listed on
Schedule 4.24(a) has notified in writing (including by email, text messaging or
otherwise in writing) Butler Holding or any of its Subsidiaries that it is
(i) canceling or terminating its relationship with Butler Holding or any of its
Subsidiaries, or (ii) materially modifying its relationship with Butler Holding
or any of its Subsidiaries in a manner materially adverse to Butler Holding or
any of its Subsidiaries, except as otherwise set forth on such Schedule. To the
knowledge of Butler Holding, except as set forth on Schedule 4.24(a), there have
been no material disputes with such vendors within the past two (2) years
concerning amounts in excess of $250,000.
          (b) Schedule 4.24(b) sets forth the names of the twenty (20) largest
customers of Butler Holding and its Subsidiaries measured by dollar value for
the fiscal year ended December 31, 2008. None of the customers listed on
Schedule 4.24(b) has notified in writing (including by email, text messaging or
otherwise in writing) Butler Holding or any of its Subsidiaries that it is
(i) canceling or terminating its relationship with Butler Holding or any of its
Subsidiaries, or (ii) materially modifying its relationship with Butler Holding
or any of its Subsidiaries in a manner materially adverse to Butler Holding or
any of its Subsidiaries, except as otherwise set forth on such Schedule. To the
knowledge of Butler Holding, except as set forth on Schedule 4.24(b), there has
been no material dispute with any such customer within the past two (2) years
concerning an amount in excess of $30,000.
     4.25 Product Liability. During the past five (5) years, there have been no
material product liability claims, suits, actions or Proceedings involving
Butler Holding or any of its Subsidiaries or relating to products or services
manufactured, sold or provided by Butler Holding or any of its Subsidiaries in
excess of $100,000. To the knowledge of Butler Holding, (a) no such claim, suit,
action or proceeding has been threatened and (b) no circumstance exists that
would reasonably be expected to result in any of the foregoing.
     4.26 Sales Representatives. Except as set forth on Schedule 4.26 (on a
no-name basis), as of the date of this Agreement, none of the top twenty
(20) sales representatives of Butler Holding and its Subsidiaries (measured by
total commissions for the 2008 fiscal year) has notified Butler Holding or any
its Subsidiaries in writing (including by e-mail, text messaging or otherwise in
writing) that such sales representative is terminating his or her employment
with BAHS.

41

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

 

     4.27 Product Recalls. Schedule 4.27 contains a true and correct list of all
products sold by Butler Holding and its Subsidiaries which have been the subject
of a product recall requested by the U.S. Food and Drug Administration within
the past three (3) years.
     4.28 Butler Inventories. Butler Holding and its Subsidiaries have good and
valid title to the Butler Inventory free and clear of all Liens, except
Permitted Liens and any Inventory held on consignment as set forth on
Schedule 4.28. Except as set forth on Schedule 4.28, no clearance or
extraordinary sale of the Butler Inventories has been conducted.
     4.29 Certain Business Practices. Butler Holding and its Subsidiaries, each
of their Affiliates, and each other Person associated with or acting for or on
behalf of any of them, has not directly or indirectly: (a) made any
contribution, gift, bribe, payoff, influence payment, kickback or other similar
payment to any Person, private or public, regardless of form, whether in money,
property or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained or (iv) in
violation of any Applicable Law, or (b) established or maintained any fund or
asset that has not been recorded in its books and records.
     4.30 No Other Agreements. Except for the agreements expressly contemplated
hereby, and as set forth on Schedule 4.30, neither Butler Holding, any of its
Subsidiaries, nor any of its Affiliates or Associates have any other agreements,
arrangements or understandings with any other party or any Affiliate or
Associate of such party in respect of the transactions contemplated hereby.
     4.31 Accounts Receivable. The receivables of Butler Holding and its
Subsidiaries (including accounts receivable, loans receivable and advances)
which are reflected in the Butler Financial Statements have arisen only in the
ordinary course of business from bona fide transactions involving third party
customers not affiliated with Butler Holding or any of its Affiliates.
     4.32 Regarding Oak Hill and WA Butler Capitalization Representations. The
Butler Group acknowledges that the representations of Oak Hill and WA Butler set
forth in Sections 6.2, 6.4 and 6.6 may be breached as a result of facts or
circumstances arising prior to the transactions consummated pursuant to the 2005
Transaction Documents. The Butler Group hereby agrees that to the extent
Sections 6.2, 6.4 and 6.6 are breached by reason of facts or circumstances
arising prior to the transactions consummated pursuant to the 2005 Transaction
Documents, the Butler Group shall indemnify for such breach of Sections 6.2, 6.4
and 6.6 as if Butler Holding and the Management Members made such
representations pursuant to this Article 4 (and not by Oak Hill under Article
6).
     4.33 No Other Representations or Warranties. Butler Holding acknowledges
that:
          (a) none of HSI, NLS or any of its directors, officers, Affiliates,
managers, stockholders, members, employees, consultants, agents, counsel or
advisors makes or has made any other representation or warranty, except for the
representations and warranties of HSI and NLS expressly set forth in Article 3;
          (b) none of Burns or any of its directors, officers, Affiliates,
managers, stockholders, members, employees, consultants, agents, counsel or
advisors makes or has made any other representation or warranty, except for the
representations and warranties of Burns expressly set forth in Article 5;
          (c) none of Oak Hill, WA Butler or any of their directors, officers,
Affiliates, managers, stockholders, members, employees, consultants, agents,
counsel or advisors makes or has made any other representation or warranty,
except for the representations and warranties of Oak Hill expressly set forth in
Article 6; and
          (d) none of the Management Members or any of their Affiliates,
consultants,

42

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

 

agents, counsel or advisors makes or has made any other representation or
warranty, except for the representations and warranties of the Management
Members expressly set forth in Article 7.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES CONCERNING BURNS
     Burns hereby represents and warrants to HSI as follows. Except for the
representations and warranties set forth in Article 4 and this Article 5, Burns
makes no other representation or warranty (either express or implied) herein or
with respect to the transactions contemplated by this Agreement.
     5.1 Organization, Power and Standing. Burns is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, with all requisite organizational power and authority to own its
properties and to carry on its business as such business is now conducted and
presently proposed to be conducted.
     5.2 Power and Authority. Burns has full power and authority and has taken
all required organizational action necessary to permit it to execute and deliver
and to carry out the terms of this Agreement and the other Transaction Documents
and none of such actions will result in any violation of, be in conflict with or
constitute a default under any charter, by laws, organizational documents, law,
statute, regulation, ordinance, Contract, agreement, instrument, judgment,
decree or order to which it is a party or by which it or its assets are bound.
     5.3 Consents and Approvals. No consent, order, approval, authorization,
declaration or filing from or with any Governmental Authority or third party is
required on the part of Burns in connection with the execution, delivery and
performance of this Agreement by Burns and the consummation by Burns of any of
the transactions contemplated by this Agreement and the other Transaction
Documents.
     5.4 Validity and Enforceability. This Agreement constitutes, and each other
Transaction Document contemplated hereby will be when executed and delivered by
Burns, the valid and legally binding obligation of Burns enforceable against it
in accordance with their respective terms, subject, however, to applicable
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors and to general equitable principles.
     5.5 Brokers. Burns has not dealt with any broker, finder or similar agent
with respect to the transactions contemplated by this Agreement or the other
Transaction Documents, and Burns is not under any obligation to pay any broker’s
fee, finder’s fee, commission or similar amount in connection with the
consummation of the transactions contemplated by this Agreement or the other
Transaction Documents.
     5.6 No Other Agreements. Except for the agreements expressly contemplated
hereby and as set forth on Schedule 6.7, neither Burns nor any of its Affiliates
or Associates have any other agreements, arrangements or understandings with any
other party or any Affiliate or Associate of such party in respect of the
transactions contemplated hereby.

43

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

 

     5.7 Holdings of Butler Holding Common Shares. As of the date hereof, Burns
is the record and beneficial owner of 27,206,796.80 Butler Holding Common Shares
and 485.8357 Butler Holding Preferred Shares (and no other Butler Holding
securities), free and clear of any Liens and any other limitation or restriction
(including any restriction on its right to vote, sell or otherwise dispose of
its Butler Holding Common Shares and Butler Holding Preferred Shares but
excluding any restrictions imposed by applicable securities laws).
     5.8 No Other Representations or Warranties. Burns acknowledges that:
          (a) none of HSI, NLS or any of its directors, officers, Affiliates,
managers, stockholders, members, employees, consultants, agents, counsel or
advisors makes or has made any other representation or warranty, except for the
representations and warranties of HSI and NLS expressly set forth in Article 3;
          (b) none of Oak Hill, WA Butler or any of their directors, officers,
Affiliates, managers, stockholders, members, employees, consultants, agents,
counsel or advisors makes or has made any other representation or warranty,
except for the representations and warranties of Oak Hill expressly set forth in
Article 6; and
          (c) none the Management Members or any of their Affiliates,
consultants, agents, counsel or advisors makes or has made any other
representation or warranty, except for the representations and warranties of the
Management Members expressly set forth in Article 7.
     5.9 Litigation. There is no claim, action, suit or legal proceeding pending
or, to the knowledge of Burns, threatened against Burns or any of its Affiliates
before any Governmental Authority which seeks to prevent Burns or its Affiliates
from consummating the transactions contemplated by this Agreement or the other
Transaction Documents.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
CONCERNING OAK HILL AND WA BUTLER
     Oak Hill hereby represents and warrants to HSI as follows. Except for the
representations and warranties set forth in Article 4 and this Article 6, Oak
Hill makes no other representation or warranty (either express or implied)
herein or with respect to the transactions contemplated by this Agreement.
     6.1 Organization, Power and Standing.
          (a) OHCP is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware, with all requisite
organizational power and authority to own its properties and to carry on its
business as such business is now conducted and presently proposed to be
conducted.
          (b) OHCM is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware, with all requisite
organizational power and authority to own its properties and to carry on its
business as such business is now conducted and presently proposed to be
conducted.

44

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

 

          (c) WA Butler is a corporation duly organized, validly existing and in
good standing under the laws of the State of Ohio, with all requisite
organizational power and authority to own its properties and to carry on its
business as such business is now conducted and presently proposed to be
conducted.
     6.2 Capitalization.
          (a) OHCP is the record and beneficial owner of all outstanding shares
of capital stock of WA Butler.
          (b) Schedule 6.2(b)-1 sets forth a correct and complete list of all of
the authorized, issued and outstanding classes of Equity Securities of WA Butler
and the record or beneficial owners of such Equity Securities as of the date
hereof and Schedule 6.2(b)-2 sets forth a correct and complete list of all of
the authorized, issued and outstanding classes of Equity Securities of WA Butler
and the record or beneficial owners of such Equity Securities as of the Closing
Date (immediately prior to the Closing of the transaction contemplated hereby).
All of the issued and outstanding Equity Securities of WA Butler (the “WA Butler
Equity Securities”) have been (or, as of the Closing Date, will be) validly
issued, are fully paid and are non-assessable. The Persons listed on
Schedule 6.2(b)-1 and Schedule 6.2(b)-2 have, or will have (as of the Closing
Date), good and valid title to the WA Butler Equity Securities listed thereon
free and clear of all Liens other than restrictions on transfer imposed under
applicable securities laws. Other than as set forth on Schedule 6.2(b)-1 and
Schedule 6.2(b)-2, there are no (and, as of the Closing Date, will be no) other
WA Butler Equity Securities or record or beneficial owners of WA Butler Equity
Securities.
          (c) There are no outstanding or authorized stock appreciation, phantom
stock or profit participation rights with respect to the capital stock of, or
other equity interests in, WA Butler to which WA Butler is bound. There are no
(i) Contracts to which WA Butler is a party or by which the WA Butler is bound
to repurchase, redeem or otherwise acquire any shares of capital stock of, or
other equity security in, WA Butler or (ii) irrevocable proxies and voting
agreements with respect to any shares of capital stock of, or other equity
interest in, WA Butler. No Person has any right of first offer, right of first
refusal or preemptive right in connection with any future offer, sale or
issuance of securities by WA Butler.
          (d) WA Butler does not have any Subsidiaries except for Butler Holding
and its Subsidiaries or, directly or indirectly, own or have the right to
acquire any equity interest in any other Person and except as expressly
contemplated by this Agreement is not obligated to make any loans or equity
contributions to any Person.
          (e) The MergerSub Shares, when delivered by OHCP to HSI in accordance
with the terms of Schedule 1.1(c) (i) will be duly and validly transferred and
(ii) will be free and clear of all Liens.
     6.3 Power and Authority. Each of Oak Hill and WA Butler has full power and
authority and has taken all required organizational action necessary to permit
it to execute and deliver and to carry out the terms of this Agreement and the
other Transaction Documents to which it is a party.

45

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

 

     6.4 No Conflict; Required Consents and Approvals. Except as set forth on
Schedule 6.4, each of Oak Hill’s and WA Butler’s execution, delivery and
performance of this Agreement and the other Transaction Documents will not
(a) cause a violation of, be in conflict with, constitute a default under or
permit the termination or acceleration of any obligations or loss of any
privileges under (i) the Charter Documents of Oak Hill or WA Butler, (ii) any of
Oak Hill’s or WA Butler’s material Contracts, (iii) any licenses, permits and
authorizations of Governmental Authorities applicable to Oak Hill or WA Butler
or (iv) any Applicable Law, except for such violations, conflicts or defaults
which are not material, taken as whole or (b) result in the imposition of any
Lien upon the shares of WA Butler Common Stock, other than Permitted Liens.
Except as set forth on Schedule 6.4, no consent, order, approval, authorization,
declaration or filing with or from any Governmental Authority or any party to
any of their material Contracts is required on the part of Oak Hill or WA Butler
for or in connection with the execution and delivery of this Agreement or any
other Transaction Document or the consummation of the transactions contemplated
hereby or thereby by either Oak Hill or WA Butler, except for those which, if
not obtained, are not material to either Oak Hill or WA Butler. The
representations set forth in this Section 6.4 do not relate to BAHS or any of
its Contracts or operations.
     6.5 Validity and Enforceability. This Agreement constitutes, and each other
Transaction Document contemplated hereby will be when executed and delivered by
Oak Hill and WA Butler, the valid and legally binding obligation of Oak Hill and
WA Butler enforceable against it in accordance with their respective terms,
subject, however, to applicable bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors and to general equitable principles.
     6.6 Brokers. Except as set forth on Schedule 6.6, neither Oak Hill nor WA
Butler has dealt with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement or the other Transaction Documents,
and neither Oak Hill nor WA Butler is under any obligation to pay any broker’s
fee, finder’s fee, commission or similar amount in connection with the
consummation of the transactions contemplated by this Agreement or the other
Transaction Documents.
     6.7 No Other Agreements. Except for the agreements expressly contemplated
hereby and as set forth on Schedule 6.7, neither Oak Hill nor WA Butler or any
of their respective Affiliates or Associates have any other agreements,
arrangements or understandings with any other party or any Affiliate or
Associate of such party in respect of the transactions contemplated hereby.
     6.8 No Other Representations or Warranties. Each of Oak Hill and WA Butler
acknowledges that:
          (a) none of HSI or any of its directors, officers, Affiliates,
managers, stockholders, members, employees, consultants, agents, counsel or
advisors makes or has made any other representation or warranty, except for the
representations and warranties of HSI expressly set forth in Article 3.

46

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

 

          (b) none of Burns or any of its directors, officers, Affiliates,
managers, stockholders, members, employees, consultants, agents, counsel or
advisors makes or has made any other representation or warranty, except for the
representations and warranties of Burns expressly set forth in Article 5; and
          (c) none the Management Members or any of their Affiliates,
consultants, agents, counsel or advisors makes or has made any other
representation or warranty, except for the representations and warranties of the
Management Members expressly set forth in Article 7.
     6.9 Litigation. There is no claim, action, suit or legal proceeding pending
or, to the knowledge of Oak Hill and WA Butler, threatened against Oak Hill or
WA Butler or any of their Affiliates before any Governmental Authority which
seeks to prevent Oak Hill or WA Butler or any of their Affiliates from
consummating the transactions contemplated by this Agreement or the other
Transaction Documents.
     6.10 Business of WA Butler.
          (a) WA Butler is the record and beneficial owner of 26,743,577.60
Butler Holding Common Shares and 477.5639 Butler Holding Preferred Shares (and
no other Butler Holding securities), free and clear of any Liens and any other
limitation or restriction (including any restriction on its right to vote, sell
or otherwise dispose of its Butler Holding Common Shares and Butler Holding
Preferred Shares but excluding any restrictions imposed by applicable securities
laws).
          (b) Immediately following the closing of the transactions contemplated
by the 2005 Transaction Documents, since July 1, 2005, WA Butler:
               (i) has not directly or indirectly owned any assets other than
the securities referred to in Section 6.10(a) and rights under the Existing
Operating Agreement;
               (ii) has not directly or indirectly engaged in any business other
than holding the securities referred to in Section 6.10(a);
               (iii) has not been party to any Contract or other obligation,
whether written or oral, other than the Existing Operating Agreement and those
disclosed in Schedule 6.10(b)(iii); and
               (iv) has not had any employees, other than unpaid corporate
officers with no entitlement to benefits or other compensation that was, is or
will be a liability of WA Butler.
          (c) WA Butler does not have any Liabilities other than (i) Liabilities
arising under the Transaction Documents, (ii) Liabilities disclosed in
Schedule 6.10(c), (iii) Liabilities for which it is indemnified under
Sections 7.1(b) through (e) of the Existing Operating Agreement and (iv) nominal
Liabilities necessary to maintain its corporate existence.

47

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

 

     6.11 Taxes.
          (a) For all periods (or portions thereof) beginning on or after
July 2, 2005, (i) WA Butler has filed all material Tax Returns in a manner
consistent with the Schedule K-1s it received from Butler Holding and paid all
Taxes due in respect of income and gains of Butler Holding allocated to WA
Butler as shown on such Schedule K-1s and (ii) has not realized for Tax purposes
any income or gains other than through Butler Holding. Notwithstanding anything
herein to the contrary, and for the avoidance of doubt, no representation is
made in this Section 6.11 with respect to any Taxes to the extent those Taxes
result from (i) the transactions contemplated herein or in any of the other
Transaction Documents or (ii) Butler Holding or BAHS ceasing to utilize the LIFO
method of accounting.
          (b) OHCP is not a “foreign person” within the meaning of
Section 1445(b)(2) of the Code; at the Closing OHCP shall provide to HSI a
certificate to that effect that complies with the provisions of the Treasury
Regulations under Sections 897 and 1445 of the Code.
     6.12 Regarding Representations of WA Butler Taxes. Oak Hill and WA Butler
acknowledge that the representations of Butler Holding and the Management
Members set forth in Section 4.8(c) regarding WA Butler assume the truth and
accuracy of the Oak Hill and WA Butler representations set forth in Sections
6.10(b) and 6.11(a). Oak Hill hereby agrees that if Section 4.8(c) is breached
by reason of a breach of the representations set forth in Sections 6.10(b) or
6.11(a), Oak Hill will be responsible for the indemnification of such breach of
Section 4.8(c) to the extent attributable to such breach of Sections 6.10(b) or
6.11(a), as if Oak Hill made such representation pursuant to this Article 6.
     6.13 Regarding Certain Representations of Oak Hill and WA Butler. To the
extent any of the representations set forth in Sections 6.2, 6.4 or 6.6 would
fail to be true as a result of any facts or circumstances arising prior to the
transactions consummated pursuant to the 2005 Transaction Documents, the Butler
Group agrees to be responsible for the indemnification of such breach of
Sections 6.2, 6.4 or 6.6 as if such representation was made pursuant to Article
4 (with no cap or basket applicable thereto).
ARTICLE 7
REPRESENTATIONS AND WARRANTIES CONCERNING
THE MANAGEMENT MEMBERS
     Each Management Member hereby represents and warrants to HSI, solely as to
himself or herself and not as to any other person, as follows. Except for the
representations and warranties set forth in Article 4 and this Article 7, the
Management Members make no other representation or warranty (either express or
implied) herein or with respect to the transactions contemplated by this
Agreement.
     7.1 Power and Authority. Each Management Member has the legal capacity and
the right, authority and power under Applicable Laws necessary to permit him to
execute and deliver and to carry out the terms of this Agreement and the other
Transaction Documents to which such Management Member is a party and none of
such actions will result in any violation of, be in conflict with or constitute
a default under any law, statute, regulation, ordinance, Contract, agreement,
instrument, judgment, decree or order to which such Management Member is a party
or by which such Management Member or his assets are bound.
     7.2 Consents and Approvals. No consent, order, approval, authorization,
declaration or filing from or with any Governmental Authority or third party is
required on the part of any Management Member in connection with the execution,
delivery and performance of this Agreement by each Management Member and the
consummation by each Management Member of any of the transactions contemplated
by this Agreement and the other Transaction Documents to which such Management
Member is a party.

48

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

 

     7.3 Validity and Enforceability. This Agreement constitutes, and each other
Transaction Document contemplated hereby will be when executed and delivered by
the Management Members, the valid and legally binding obligation of such
Management Member enforceable against him or her in accordance with their
respective terms, subject, however, to applicable bankruptcy, insolvency and
other laws affecting the rights and remedies of creditors and to general
equitable principles.
     7.4 Brokers. No Management Member has dealt with any broker, finder or
similar agent with respect to the transactions contemplated by this Agreement or
the other Transaction Documents, and no Management Member is under any
obligation to pay any broker’s fee, finder’s fee, commission or similar amount
in connection with the consummation of the transactions contemplated by this
Agreement or the other Transaction Documents.
     7.5 No Other Agreements. Except for the agreements expressly contemplated
hereby, no Management Member nor any of their respective Affiliates or
Associates have any other agreements, arrangements or understandings with any
other party or any Affiliate or Associate of such party in respect of the
transactions contemplated hereby.
     7.6 Holdings of Butler Holding Common Shares. As of the date hereof, each
Management Member is the record and beneficial owner of the number of Butler
Holding Common Shares and/or Butler Holding Preferred Shares (and no other
Butler Holding securities) set forth opposite his or her name on
Schedule 4.4(b)-1, in each case, free and clear of any Liens and any other
limitation or restriction (including any restriction on its right to vote, sell
or otherwise dispose of its Butler Holding Common Shares and Butler Holding
Preferred Shares but excluding any restrictions imposed by applicable securities
laws).
     7.7 No Other Representations or Warranties. Each Management Members
acknowledge that:
          (a) none of HSI or any of its directors, officers, Affiliates,
managers, stockholders, members, employees, consultants, agents, counsel or
advisors makes or has made any other representation or warranty, except for the
representations and warranties of HSI expressly set forth in Article 3;
          (b) none of Burns or any of its directors, officers, Affiliates,
managers, stockholders, members, employees, consultants, agents, counsel or
advisors makes or has made any other representation or warranty, except for the
representations and warranties of Burns expressly set forth in Article 5; and
          (c) none of Oak Hill, WA Butler or any of their directors, officers,
Affiliates, managers, stockholders, members, employees, consultants, agents,
counsel or advisors makes or has made any other representation or warranty,
except for the representations and warranties of Oak Hill expressly set forth in
Article 6.
     7.8 Litigation. There is no claim, action, suit or legal proceeding pending
or, to the knowledge of any Management Member, threatened against any Management
Member or any of their respective Affiliates before any Governmental Authority
which seeks to prevent any

49

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

 

Management Member or such Affiliates from consummating the transactions
contemplated by this Agreement or the other Transaction Documents.
ARTICLE 8
COVENANTS
     8.1 Access to Information; Confidentiality.
          (a) (i) HSI shall permit Butler Holding and its counsel, accountants
and other representatives access, upon reasonable notice and during normal
business hours throughout the period prior to the Closing, to the Schein Books
and Records. Pending the Closing, HSI shall also permit Butler Holding
reasonable access during normal business hours to senior management of the
Contributed Schein Vet Business for the purpose of discussing integration after
the Closing of the Contributed Schein Vet Business with Butler Holding. Any
access under this Section shall be managed by and conducted through HSI, and
shall be subject to such reasonable additional limitations as HSI may reasonably
require to prevent disclosure of the transactions contemplated hereby and/or the
material disruption of the business of HSI or any of its Subsidiaries.
               (ii) Butler Holding shall permit HSI and its counsel, accountants
and other representatives access, upon reasonable notice and during normal
business hours throughout the period prior to the Closing, to the Butler Holding
Books and Records. Pending the Closing, Butler Holding shall also permit HSI
reasonable access during normal business hours to senior management of Butler
Holding for the purpose of discussing integration after the Closing of the
Contributed Schein Vet Business with Butler Holding. Any access under this
Section shall be managed by and conducted through Butler Holding, and shall be
subject to such reasonable additional limitations as Butler Holding may
reasonably require to prevent disclosure of the transactions contemplated hereby
and/or the material disruption of the business of Butler Holding or any of its
Subsidiaries.
               (iii) Oak Hill and WA Butler shall permit HSI and its counsel,
accountants and other representatives access, upon reasonable notice and during
normal business hours throughout the period prior to the Closing, to the books
and records of WA Butler and its Subsidiaries. Pending the Closing, Oak Hill and
WA Butler shall also permit HSI reasonable access during normal business hours
to senior management of Oak Hill and WA Butler. Any access under this Section
shall be managed by and conducted through Oak Hill, and shall be subject to such
reasonable additional limitations as Oak Hill may reasonably require to prevent
disclosure of the transactions contemplated hereby and/or the material
disruption of the business of Oak Hill or WA Butler.
          (b) HSI, Butler Holding and WA Butler acknowledge and agree that the
access and information rights provided in Section 8.1(a) may be restricted by
HSI, Butler Holding and WA Butler to the extent HSI, Butler Holding or WA
Butler, as applicable, are advised by antitrust counsel to do so.
          (c) The confidentiality agreement among HSI, Butler Holding, OHCP,
Michael Ashkin and Carl Ashkin dated February 25, 2008, as amended, modified or

50

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

 

supplemented from time to time (the “Confidentiality Agreement”), shall remain
in full force and effect. Each of the Management Members, Burns and OHCM hereby
agrees to comply with the confidentiality provisions set forth in the
Confidentiality Agreement as though a party thereto with respect to any
“Evaluation Materials” (as defined in the Confidentiality Agreement) that such
party received in connection with the negotiation, execution and delivery of
this Agreement and the other Transaction Documents.
          (d) Each of (i) Butler Holding, the Butler Holding Members and WA
Butler, and any Affiliate or Associate of any of the foregoing shall maintain in
strict confidence and shall not disclose to any Person any information with
respect to HSI or any of its Affiliates, including any pricing information for
the products and services of HSI and its Affiliates, and (ii) each of the
parties hereto and its Affiliates or Associates shall maintain in strict
confidence and shall not disclose to any Person any information with respect to
Butler Holding or any of its Affiliates, including any pricing information for
the products and services of Butler Holding and its Affiliates.
          (e) The obligations and restrictions set forth in Section 8.1(d) shall
not apply, with respect to any Person described in such Section, to any
information that (i) has come into the public domain prior to, or after the
disclosure thereof other than as a result of a breach of this Agreement or the
Confidentiality Agreement, (ii) is approved for release or use by written
authorization of the party which owns such information or to which such
information pertains (the “Relevant NDA Party”), (iii) is independently
developed by such Person without reference to any information disclosed as
result of the transactions contemplated by this Agreement, or (iv) is requested
or required pursuant to Section 8.1(f).
          (f) In the event that any party or party’s Affiliate or Associate
described in Section 8.1(d) is requested or required by applicable law,
regulation or legal process (including oral questions, interrogatories, requests
for information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process) to disclose any information described in such
Section, the party (or the party whose Affiliate or Associate is) requested or
required to make the disclosure shall provide the Relevant NDA Party with prompt
notice, unless notice is prohibited by law, of any such request or requirement
so that the Relevant NDA Party may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by the
Relevant NDA Party, the party (or the party whose Affiliate or Associate is)
requested or required to make the disclosure is nonetheless, under the advice of
counsel, required to make such disclosure, such party may, without liability
hereunder, make only that portion of the disclosure that such counsel advises is
required to be disclosed.
     8.2 Conduct of Business. Between the date of this Agreement and the Closing
or earlier termination of this Agreement, unless otherwise specified below,
(x) solely with respect to the Contributed Schein Vet Business, HSI shall, and
shall cause its Subsidiaries to, comply with the following covenants unless
Butler Holding shall otherwise consent in writing (such consent not to be
unreasonably withheld, delayed or conditioned), and (y) Butler Holding shall,
and shall cause its Subsidiaries to, comply with the following covenants, unless
HSI shall otherwise consent in writing (such consent not to be unreasonably
withheld, delayed or conditioned):

51

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

 

          (a) Required Actions. HSI and Butler Holding shall, and shall cause
its respective Subsidiaries (with respect to HSI and its Subsidiaries, solely
with respect to the Contributed Schein Vet Business) to:
               (i) use commercially reasonable efforts to take all actions and
to do all things necessary to consummate the transactions contemplated by this
Agreement and the other Transaction Documents;
               (ii) file or supply, or cause to be filed or supplied, all
applications, and information required to be filed or supplied by such party
pursuant to any Applicable Law in connection with this Agreement or the other
Transaction Documents, the contribution and transfer of the Contributed Assets
to Butler Holding and the consummation of the other transactions contemplated by
this Agreement and the other Transaction Documents;
               (iii) maintain its corporate existence;
               (iv) conduct its business only in the ordinary course;
               (v) prepare and timely file in the ordinary course of business
consistent with past practice (except as otherwise required by Applicable Law)
all Tax Returns required to be filed by it before the Closing Date, and pay all
Taxes due prior to the Closing Date with respect to such Tax Returns;
               (vi) promptly notify the other party of any material federal,
state, local or foreign audit, claim, investigation or proceeding with respect
to Taxes (including refunds) brought against such party from and after the date
hereof, and shall not settle or compromise any such audit, claim, investigation
or proceeding, except as expressly contemplated hereby; and
               (vii) use reasonable best efforts to preserve its relationships
with customers, suppliers and others having business dealings with such Person.
          (b) Prohibited Actions. Such party shall not, and shall not permit its
respective Subsidiaries (with respect to HSI and its Subsidiaries, solely with
respect to the Contributed Schein Vet Business) to, do any of the following:
               (i) solely with respect to Butler Holding and its Subsidiary,
effect any change to the Charter Documents of Butler Holding or any of its
Subsidiaries, except as expressly contemplated by this Agreement;
               (ii) dispose of any of its properties or assets (including any
Intellectual Property), except in the ordinary course of business;
               (iii) incur any Indebtedness for borrowed money, other than in
the ordinary course of business;
               (iv) subject any of its properties or assets to any Lien, other
than Permitted Liens;

52

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

 

               (v) solely with respect to Butler Holding and its Subsidiaries,
make any dividend or distribution on or redemption of its equity interests,
except for dividends or distributions of cash (A) to the Butler Holding Members
for purposes of paying income Taxes allocable to such members pursuant to the
operating agreement for Butler Holding as in effect on the date hereof or
(B) expressly contemplated by this Agreement;
               (vi) (A) solely with respect to Butler Holding and its
Subsidiaries, issue, sell, purchase or redeem any capital stock or equity
interest except as expressly contemplated by this Agreement, and (B) solely with
respect to MergerSub, issue, sell, purchase or redeem any Equity Securities
except as expressly contemplated by this Agreement;
               (vii) modify, amend, cancel or terminate any HSI Material
Contract or Butler Material Contract, as applicable, in any material respect,
other than in the ordinary course of business;
               (viii) make any material change in its Tax or accounting
practices, methods or policies or systems of internal accounting controls, other
than any change required by Applicable Law, regulatory accounting requirements
or GAAP;
               (ix) make any change to any material Tax election or material Tax
Return, other than any change required by Applicable Law;
               (x) make any material change to its customer pricing, rebates or
discounts, other than in the ordinary course of business;
               (xi) make any capital expenditure or commitment therefor in
excess of $100,000 individually or $200,000 in the aggregate;
               (xii) make any loans, advances or capital contributions to, or
investments in, any other Person other than loans, advances or capital
contributions by such party (A) to any employee in connection with business
expenses in the ordinary course of business, (B) to trade creditors in the
ordinary course of business, or (C) pursuant to HSI Benefit Plans or Butler
Benefit Plans, as applicable, in the ordinary course of business;
               (xiii) except as may be required by this Agreement or Applicable
Law, (A) amend in any material respect, or adopt or terminate, any HSI Benefit
Plans or Butler Benefit Plans, as applicable, for the benefit of its employees,
former employees, consultants or directors, (B) grant any general increase in
the compensation or benefits of its employees, consultants, officers or
directors, except in the ordinary course and consistent with past practice,
(C) enter into any employment or consulting agreement, except as set forth on
Schedule 8.2(b)(xiii) or with the written consent of the other party, or
(D) enter into any collective bargaining agreement; and
               (xiv) commit to do any of the foregoing.
     8.3 Exclusivity. From the date of this Agreement until the Closing Date or
the earlier termination of this Agreement:

53

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

 

          (a) HSI will not, directly or indirectly, solicit any competing offers
for the acquisition or sale of the Contributed Schein Vet Business or any
substantial portion of the Contributed Assets, or negotiate or discuss with any
third party with respect to any offer or indication of interest with respect to
any such acquisition or sale.
          (b) Each of Burns, Oak Hill, BAHS and Butler Holding agrees not to,
directly or indirectly, solicit any competing offers for the acquisition of
Butler Holding or any of its Subsidiaries, the sale of any of the shares of
membership interests in Butler Holding or any of its Subsidiaries or the sale of
all or a substantial portion of the assets or business of Butler Holding or any
of its Subsidiaries, or negotiate or discuss with any third party with respect
to any offer or indication of interest with respect to any such acquisition or
sale.
     8.4 Consents and Approvals. From the date of this Agreement until the
Closing Date or the earlier termination of this Agreement, the parties shall
cooperate and use all reasonable efforts to obtain (a) all governmental and
regulatory approvals and actions necessary to consummate the transactions
contemplated hereby which HSI, NLS or Butler Holding or any of its Subsidiaries
is required, by Applicable Law or regulations or otherwise, to obtain, and
(b) all consents and approvals as the parties may agree to obtain.
     8.5 Employees and Employee Benefits.
          (a) Prior to the Closing Date, BAHS shall make an offer of employment,
to be effective as of the Closing Date (or, with respect to employees on
approved leave of absence or disability leave, at the conclusion of such leave),
to each employee whose duties are primarily or exclusively related to the
Contributed Schein Vet Business (“Vet Business Employee”). Offers of employment
to such employees shall be on the same or substantially the same terms in
aggregate and conditions of employment with respect to wages, salary,
commission, eligibility for benefits and position applicable to each such
employee immediately prior to the Closing Date. Employees who affirmatively
accept BAHS’s offer of employment and commence working for BAHS on the Closing
Date (or, if later, on the date the employee’s approved leave of absence
terminates or the employee returns from disability) are hereinafter referred to
as “Transferred Employees” and BAHS and its Affiliates shall ensure that each
Transferred Employee shall receive credit for all service or employment
recognized in accordance with each such employee’s “seniority date” by HSI and
NLS prior to the Closing Date for purposes of eligibility, vesting and the
calculation of benefits (but not for the accrual of benefits under any defined
benefit plan or for the calculation of or vesting of any benefits under any
equity compensation plan) under any employee benefit plan or arrangement,
including any severance plan, sick pay plan, vacation, personal or floating day
policy, cash incentive awards based in whole or in part on service, or other
program continued, established, maintained or contributed to by BAHS or any of
its Affiliates under which such Transferred Employee may be eligible to
participate on and after the Closing Date; provided, however, that for purposes
of service awards, each Transferred Employee shall receive such credit based
upon such employee’s “service date” recognized by HSI; and provided further,
that such crediting of service shall not operate to duplicate any benefit.
          (b) As of the Closing Date, BAHS shall cause any medical or dental
plan established or maintained by BAHS or its Affiliates after the Closing Date
(such plans, “BAHS’s Welfare Plans”) to waive any pre-existing condition
exclusions, evidence of insurability provisions or waiting periods (except to
the extent that such exclusions would have then applied

54

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

 

or waiting periods were not satisfied under HSI’s or its Affiliate’s health
plans) or any similar provisions with respect to Transferred Employees (and
their dependents or other beneficiaries) after the Closing Date, provided such
Transferred Employees (and their dependents or other beneficiaries) timely
enroll for coverage under BAHS’s Welfare Plans upon becoming employed with BAHS
or an Affiliate of BAHS. For purposes of computing deductible amounts under
BAHS’s Welfare Plans, expenses and claims incurred by a Transferred Employee (or
a beneficiary thereof) under a welfare plan of HSI or any Affiliate for the year
in which the Closing occurs shall be credited or recognized under BAHS’s Welfare
Plans to the extent such plans would have credited or recognized such expenses
or claims if the individual had been covered under BAHS’s Welfare Plans at the
time the expenses or claims were incurred.
          (c) In any termination or layoff of any Transferred Employee by BAHS
after the Closing Date, BAHS shall fully comply, if applicable, with all
Applicable Laws. BAHS will bear the cost of compliance with (or failure to
comply with) any such laws after the Closing.
          (d) HSI and its Affiliates shall be responsible for any legally
mandated continuation of health care coverage for employees who are not
Transferred Employees and/or their dependents who have a loss of health care
coverage due to a qualifying event which occurs at or before the Closing Date,
and for satisfaction of any related notice requirements with respect to such
employees and their dependents, and BAHS and its Affiliates shall be responsible
for any legally mandated continuation of health care coverage for Transferred
Employees and/or their dependents who have a loss of health care coverage due to
a qualifying event which occurs on and after the Closing Date, and for
satisfaction of any related notice requirements.
          (e) BAHS shall be responsible for any claims by any Transferred
Employee (and any beneficiary thereof) for any liabilities for severance pay,
notice pay, accrued vacation pay, workers’ compensation and similar laws or
under COBRA or in connection with any other liability related to such person’s
employment with BAHS or an Affiliate of BAHS or arising out of a termination of
such person’s employment with BAHS or an Affiliate of BAHS on and after the
Closing Date. BAHS shall not be responsible for any unpaid and unused vacation,
sick, personal and floating days accrued by each Transferred Employee as of the
Closing Date. Any severance pay or notice pay (including but not limited to
liability under WARN) with respect to a Vet Business Employee as a result of a
termination of employment with HSI, NLS, BAHS, or any Affiliate of any of them
occurring during the period beginning on the Closing Date and ending on the date
that is the nine month anniversary of the Closing Date shall be a liability of
BAHS, and neither HSI nor any Subsidiary of HSI shall have any liability or
obligation therefor. Severance to Transferred Employees shall be paid according
to the terms of the BAHS severance pay plan described on Schedule 8.5(e).
          (f) Effective as of the Closing Date, the Transferred Employees who
have vested account balances in the Henry Schein, Inc. 401(k) Savings Plan or
any other 401(k) plan maintained by HSI or any Affiliate thereof (collectively,
the “HSI 401(k) Plan”) shall be entitled to receive distributions of their
vested account balances in accordance with, and subject to, the terms of the HSI
401(k) Plan and shall be permitted to roll over their eligible rollover
distributions, which may include promissory notes evidencing outstanding
participant loans (“Loans”) under the HSI 401(k) Plan, to any 401(k) plan
qualified under Section 401(a) of the Code established or maintained by BAHS (or
an Affiliate thereof) (the “Butler 401(k) Plan”) in

55

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

 

which they participate, provided that such plan shall be amended, as necessary,
to accept rollover contributions and to provide for the assumption and
continuation of the rolled over Loans on the same terms and conditions as in
effect under the HSI 401(k) Plan immediately prior to the rollover.
          (g) HSI, NLS and BAHS shall use the alternate procedure provided for
in Section 5 of Internal Revenue Service Revenue Procedure 2004-53 with regard
to the preparation and filing of Forms W-2 and other employment tax forms
relating to Transferred Employees.
          (h) BAHS shall be responsible for the payment of all salary and wages,
employment and payroll taxes, and related withholding, with respect to each Vet
Business Employee for any payroll period ending on a date following the Closing
Date. HSI shall reimburse BAHS for the aggregate amount of salary and wages, and
amounts equal to any additional employment and payroll taxes with respect to Vet
Business Employees for the period beginning on the first day of the applicable
payroll period in which the Closing Date occurs and ending at the close of
business on the Closing Date. Additionally, BAHS shall be responsible for the
payment of unpaid bonuses, in amounts to be determined by HSI in its sole
discretion, in respect of calendar year 2009, payable to Vet Business Employees
following the Closing Date, all employment and payroll taxes thereon, and
related withholding. HSI shall reimburse BAHS for the aggregate amount of such
bonuses, and amounts equal to any additional employment and payroll taxes, and,
if applicable, any employer match contributed to the Butler 401(k) Plan in
respect of such bonuses. Reimbursements under this Section 8.5(h) shall be made
within 15 days following receipt by HSI of documentation of the applicable
payment(s) for which such reimbursement is sought. HSI shall be entitled to all
of the Tax deductions relating to reimbursements under this Section 8.5(h).
     8.6 Reasonable Efforts. From the date of this Agreement until the Closing
Date or the earlier termination of this Agreement, the parties agree to act in
good faith and use commercially reasonable efforts to (a) take all actions and
to do all things necessary to consummate the transactions contemplated by this
Agreement and the other Transaction Documents, including without limitation, to
obtain the satisfaction of the conditions specified in this Agreement necessary
to consummate the transactions contemplated hereby and (b) file or supply, or
cause to be filed or supplied, all applications, and information required to be
filed or supplied by HSI, Butler Holding or any of their Subsidiaries pursuant
to any Applicable Law in connection with this Agreement or the other Transaction
Documents, the contribution and transfer of the Contributed Assets to Butler
Holding and the consummation of the other transactions contemplated by this
Agreement and the other Transaction Documents.
     8.7 Books and Records. From and after the Closing, HSI will maintain a
reasonable records retention policy. After the Closing, Butler Holding and its
accountants, lawyers and representatives shall be entitled at all reasonable
times to have access to and to make copies of the Schein Books and Records and
other information of HSI and NLS, for any purpose relating to HSI and NLS’s
ownership of the Contributed Schein Vet Business prior to the Closing including,
without limitation, the preparation of Tax Returns and the determination of the
Tax basis of the Contributed Assets. In the event of any litigation or
threatened litigation between the parties relating to this Agreement or the
transactions contemplated hereby, the covenants

56

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

 

contained in this Section 8.7 shall not be considered a waiver by any party of
any right to assert the attorney-client privilege.
     8.8 HSI Stub Period Financial Statements. Between the date of this
Agreement and the Closing or the earlier termination of this Agreement, HSI
shall use reasonable efforts to deliver to Butler Holding the HSI Stub Period
Financial Statements within fifteen (15) days of the end of the applicable
month.
     8.9 Butler Holding Stub Period Financial Statements. Between the date of
this Agreement and the Closing or the earlier termination of this Agreement,
Butler Holding shall use reasonable efforts to deliver to HSI the Butler Holding
Stub Period Financial Statements within fifteen (15) days of the end of the
applicable month or, if earlier, when made available to Butler Holding’s senior
lenders.
     8.10 Assistance with HSI’s Financial Statements. From and after the date
hereof, upon HSI’s request, Oak Hill and Butler Holding shall cooperate with,
and use their reasonable best efforts to assist HSI and such independent auditor
as HSI shall designate with respect to the preparation of such financial
statements relating to WA Butler and Butler Holding and its Subsidiaries as HSI
shall be required to file under Regulation S-X under U.S. federal securities
laws.
     8.11 WARN Act. No later than five (5) business days prior to the Closing
Date, HSI and Butler Holding shall provide to each other a list setting forth
the number of employees terminated or anticipated to be terminated from each
site of employment of HSI and its Subsidiaries with respect to the Contributed
Schein Vet Business or Butler Holding and its Subsidiaries, as the case may be,
during the 90 day period ending on the Closing Date (which, in the case of HSI,
such list shall not include any employees who may be terminated on the Closing
Date at the direction of Butler Holding) for reasons qualifying the termination
as “employment losses” under the WARN Act and the date of each such termination
with respect to each termination; provided that this sentence shall not apply
with respect to any site of employment at which sufficient employees have not
been employed at any time in such 90 day period for terminations of employment
at such site to be subject to the WARN Act.
     8.12 Non-Competition Agreement. At the Closing, each of Burns, HSI, Oak
Hill and the Management Members shall enter into the Non-Competition Agreement.
     8.13 Covenants Regarding WA Butler and MergerSub.
          (a) From the date hereof until the Closing Date, Oak Hill shall not,
and Oak Hill shall cause WA Butler not to, (i) take, or agree or commit to take,
any action that would make any representation or warranty contained in Article 6
relating to WA Butler inaccurate in any respect at, or as of any time prior to,
the Closing, (ii) omit, or agree or commit to omit, to take any action necessary
to prevent any such representation or warranty from being inaccurate in any
respect at any such time or (iii) amend the certificate of incorporation or
bylaws of WA Butler or amend the terms of the shares of WA Butler Common Stock.
          (b) From and after the date hereof, Oak Hill shall, and Oak Hill shall
cause WA Butler to, (i) give HSI, its counsel, financial advisors, auditors and
other authorized

57

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

 

representatives full access to the offices, properties, books and records of WA
Butler, (ii) furnish to HSI, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information relating to WA Butler as such Persons may reasonably request and
(iii) instruct the officers, directors, employees, counsel and financial
advisors of WA Butler to cooperate with HSI in its investigation of WA Butler.
          (c) From the date hereof until the Closing Date, HSI shall not, and
HSI shall cause MergerSub not to, (i) take, or agree or commit to take, any
action that would make any representation or warranty contained in Article 3
relating to MergerSub inaccurate in any respect at, or as of any time prior to,
the Closing, (ii) omit, or agree or commit to omit, to take any action necessary
to prevent any such representation or warranty from being inaccurate in any
respect at any such time or (iii) except as expressly contemplated by this
Agreement, amend the certificate of incorporation or bylaws of MergerSub or
amend the terms of the shares of MergerSub common stock.
          (d) From and after the date hereof, HSI shall, and HSI shall cause
MergerSub to, (i) give Oak Hill, its counsel, financial advisors, auditors and
other authorized representatives full access to the offices, properties, books
and records of MergerSub, (ii) furnish to Oak Hill, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information relating to MergerSub as such Persons may
reasonably request and (iii) instruct the officers, directors, employees,
counsel and financial advisors of MergerSub to cooperate with Oak Hill in its
investigation of MergerSub.
     8.14 Tax Matters.
          (a) Each party hereto shall use commercially reasonable efforts to
obtain all certificates and other documents from any Governmental Authority that
may be necessary to eliminate or mitigate any Transfer Tax that may be imposed
on a party in connection with the consummation of the transactions consummated
hereby.
          (b) Butler Holding shall pay all applicable sales and transfer Taxes
and filing, recording (mortgage or otherwise), registration, stamp, documentary,
collateral assignment and other similar Taxes and fees (the “Transfer Taxes”)
resulting from the transactions contemplated by this Agreement. The parties
shall cooperate in the preparation and filing of all Tax Returns relating to
such Transfer Taxes.
          (c) HSI, MergerSub and OHCP intend that the Merger qualify as a
reorganization within the meaning of Section 368(a) of the Code and agree to
file all Tax Returns in a manner consistent with the treatment of the Merger as
such a reorganization. Following the Merger, MergerSub shall not take, and HSI
shall not cause MergerSub to take, any action (other than any action consented
to or caused by Oak Hill or any action required by the Transaction Documents)
that will cause the Merger to not qualify as a reorganization within the meaning
of Section 368(a) of the Code. Neither HSI nor MergerSub has any present plan or
intention to take any action following the Closing that would cause a
discontinuance of the historic business of WA Butler or a discontinuance of the
use of a significant portion of WA Butler’s historic business assets in a
business.

58

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

 

     8.15 Financing Cooperation. The parties hereto shall use their commercially
reasonable efforts to, and shall cause their respective Subsidiaries to,
reasonably cooperate with Butler Holding and its Subsidiaries and their lenders
in connection with Butler Holding and its Subsidiaries obtaining the financing
on the terms provided for in the Commitment Letter (the “Financing”), including
(i) making representatives of all parties hereto available at reasonable times
in connection with the syndication of any debt financing and (ii) assisting
Butler Holding and its Subsidiaries in obtaining all customary waivers,
estoppels, approvals, opinions, transfer documents and consents from
counterparties to the HSI Material Contracts and the Butler Material Contracts.
Butler Holding and its Subsidiaries will use their commercially reasonable
efforts to perform all of its obligations under the Commitment Letter and
satisfy all conditions precedent to the funding thereunder. Butler Holding and
its Subsidiaries shall not amend the Commitment Letter in any manner that shall
make the consummation of the transactions contemplated hereby materially less
likely to occur. In the event that the Financing is not available to consummate
the transactions contemplated by this Agreement, the parties hereto shall, and
shall cause their respective Subsidiaries to, use commercially reasonable
efforts to obtain alternative financing on terms, taken in the aggregate, that
are, in the reasonable judgment of Butler Holding and HSI, no less favorable to
Butler Holding and its Subsidiaries than those set forth in the Commitment
Letter (the “Alternative Financing”). Subject to the Shared Expenses Agreement,
nothing in this Section 8.15 shall require any party other than Butler Holding,
BAHS and any Subsidiary of Butler Holding and BAHS to provide any credit
enhancement or other credit support (including, without limitation, guaranty,
indemnification or collateral) or incur a material cost in connection with the
Financing or Alternative Financing.
     8.16 Transition Services. From and after the Closing, at BAHS’s request,
HSI shall provide substantially the same services and other assistance to the
Contributed Schein Vet Business as may be reasonably necessary to operate the
Contributed Schein Vet Business after the Closing (the “Post-Closing Services”).
Butler Holding and BAHS shall reimburse HSI and its Subsidiaries for all direct
costs and expenses and all allocated costs and expenses (allocated in the same
manner and methodology used to derive the Core Vet Financials for the twelve
(12) month period ended September 26, 2009, with such modifications as the
parties may mutually agree are reasonably necessary to reflect the operations of
the Contributed Schein Vet Business after the Closing) incurred in connection
with the provision of such Post-Closing Services within twenty (20) days after
invoicing (such invoices to include reasonable detail of the costs and expenses
for the Post-Closing Services provided). Butler Holding may terminate any
Post-Closing Service upon at least thirty (30) days prior written notice to HSI.
HSI and its Subsidiaries shall not be under any obligation to provide
Post-Closing Services after the date that is ninety (90) days following the
Closing Date.
     8.17 Intellectual Property. HSI agrees to provide a non-exclusive,
non-transferable, non-sublicensable, royalty-free license or sub-license to
Butler Holding and its Subsidiaries to use Excluded IP solely for use in the Vet
Business within North America, South America and Central America on terms and
conditions reasonably acceptable to HSI and Butler Holding; provided, however,
that (a) HSI shall not be obligated to provide any such license or sub-license
if it would be in violation of any Applicable Law or Contract and (b) HSI shall
not be under any obligation to obtain any third party consents or incur any
additional costs or expenses in connection therewith.
     8.18 Post-Closing Receivables. From and after the Closing Date, if HSI
receives payment (including by set-off) for (i) any accounts receivable included
as HSI Current Assets in the final determination of HSI Closing Working Capital
as of the Closing Date or (ii)  rebates receivable to the extent related

59

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

 

to the Contributed Schein Vet Business and allocated in a manner consistent with
HSI’s past practices, HSI shall, as promptly as practicable, remit such payment
to BAHS.
     8.19 Waiver of Consents. The parties acknowledge that certain Contracts
included in the Contributed Assets and certain Contracts of BAHS by their terms
require consent with respect to the transactions contemplated hereby. HSI and
Butler Holding agree to waive any requirements to obtain consents for such
Contracts prior to Closing and shall cooperate with each other and use
commercially reasonable efforts to obtain such consents before and after the
Closing as they shall mutually agree. Butler Holding shall assume any and all
Liabilities related thereto, and indemnify and hold harmless HSI and NLS from
and against any and all Liabilities related thereto or arising therefrom.
     8.20 HSI Payables. Butler Holding shall pay to HSI an amount equal to
$6,700,000 within thirty (30) days following the Closing Date (the “HSI
Payable”).
     8.21 Darby Guaranty. Darby hereby unconditionally guarantees to HSI the
full prompt payment and punctual performance by Burns of any and all obligations
of Burns arising under this Agreement, including, without limitation, those
obligations arising under Article 10. The liability of Darby hereunder shall not
be conditioned or contingent upon pursuit by HSI or any other HSI Indemnified
Party of any remedies either may have against Burns with respect to this
Agreement. No exercise or nonexercise by HSI or any other HSI Indemnified Party
of any right given to it hereunder, and no change, impairment or suspension of
any right or remedy of HSI or any other HSI Indemnified Party hereunder, shall
in any way affect Darby’s obligations hereunder. Darby acknowledges and agrees
that this Section 8.21 is a guaranty of payment and performance, and not merely
of collectability, and constitutes a direct obligation of Darby.
     8.22 Insurance.
          (a) On or prior to the Closing Date, Butler Holding shall provide
evidence to HSI that Butler Holding, at the expense of Butler Holding, (to be
paid following the Closing Date), obtained a six year tail for its director and
officer liability insurance policy. HSI and Butler Holding shall mutually
determine an appropriate insurance program for BAHS from and after the Closing
Date.
          (b) From and after the Closing Date, HSI will provide that WA Butler,
Butler Holding and BAHS shall be insured under the HSI director and officer
liability insurance policy. HSI shall allocate and charge Butler Holding for
such insurance in a manner consistent with HSI’s past practices with respect to
its allocations of such charges to NLS. Payment for such charges shall be due
within twenty (20) days after invoicing therefor.
          8.23 Bank Accounts; Outstanding Checks. On or prior to Closing, Butler
Holding and BAHS shall cooperate with HSI and NLS to cause the bank accounts of
NLS (with no cash) to be transferred to or merged into the bank accounts of BAHS
such that any outstanding checks made by NLS which are outstanding as of the
Closing shall be funded by a bank account of BAHS. If such bank accounts are not
transferred on or prior to Closing, then any obligations for checks made by NLS
but not cashed as of the Closing (provided that such underlying liability or
obligation is included as HSI Current Liabilities in the final determination of
the HSI Closing Working Capital) that are satisfied by NLS shall be treated as a
Current Asset of the Contributed Schein Vet Business for purposes the final
determination of HSI Closing Working Capital pursuant to Section 2.4.

60

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

 

ARTICLE 9
CONDITIONS TO CLOSING
     9.1 Conditions Precedent to Each Party’s Obligations. The obligation of
each party to consummate the transactions contemplated by this Agreement is
expressly subject to the fulfillment or express written waiver of the following
conditions on or prior to the Closing Date:
          (a) Regulatory Approvals. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, judgment, decree, legal restraint or other order (whether temporary,
preliminary or permanent) (an “Order”) that is in effect and prohibits
consummation of the transactions contemplated by this Agreement and there shall
not be any material investigation or proceeding by any Governmental Authority
with respect to the business or operations of Butler Holding or any of its
Subsidiaries or the Contributed Schein Vet Business, in each case, other than
related to warehouse licenses.
          (b) No Injunction, Etc. There shall not be any order or threat of any
order of any Governmental Authority restraining or invalidating the transactions
which are the subject of this Agreement.
          (c) [Intentionally Omitted.]
          (d) Deliverables. Such party shall have received those payments,
instruments, consents, certificates and other documents required to be delivered
to such party at or prior to the Closing pursuant to Article 1.
          (e) Financing. Butler Holding and its Subsidiaries shall have received
the Financing or the Alternative Financing on terms no less favorable to Butler
Holding than the terms set forth in the Commitment Letter.
     9.2 Conditions Precedent to Butler Holding’s, Oak Hill’s and Burns’s
Obligations. The obligations of each of Butler Holding, Oak Hill and Burns to
consummate the transactions contemplated by this Agreement is expressly subject
to the fulfillment or express written waiver of the following conditions on or
prior to the Closing Date:
          (a) Representations and Warranties True. Each of the representations
and warranties contained in Article 3 of this Agreement and the other
Transaction Documents shall be true and correct at and as of the Closing (except
as otherwise approved in writing by Butler Holding, Oak Hill and Burns and
except for any representation or warranty that speaks as of a specified date,
which shall be true and correct as of such date), unless the failure to be true
and correct at and as of the Closing does not, individually or in the aggregate,
have a Schein Material Adverse Effect (it being agreed that any materiality or
“material adverse effect” qualification in a representation or warranty shall be
disregarded for purposes of this sentence). Each of the representations and
warranties made in Section 3.4 shall be true and correct in all respects at and
as of the Closing.
          (b) Covenants Performed. HSI shall have performed, on or before the
Closing Date, all obligations contained in this Agreement and the other
Transaction Documents which by the terms hereof or thereof are required to be
performed by them on or before the

61

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

 

Closing Date, unless the failure to perform such obligations does not,
individually or in the aggregate, have a Schein Material Adverse Effect.
Notwithstanding the foregoing, HSI shall have performed in all material
respects, on or before the Closing Date, all obligations set forth in
Section 8.3 and, subject to the satisfaction of all other applicable conditions
to Closing, shall have paid and delivered all payments, instruments, consents,
certificates and other documents required to be delivered at or prior to the
Closing pursuant to Article 1.
          (c) No Material Adverse Change. From the Balance Sheet Date to the
Closing, there shall not have occurred a Schein Material Adverse Effect.
     9.3 Conditions Precedent to HSI’s Obligations. The obligation of HSI to
consummate the transactions contemplated by this Agreement is expressly subject
to the fulfillment or express written waiver of the following conditions on or
prior to the Closing Date:
          (a) Representations and Warranties True. Each of the representations
and warranties contained in Articles 4, 5 and 6 of this Agreement and the other
Transaction Documents shall be true and correct at and as of the Closing (except
as otherwise approved in writing by HSI and except for any representation or
warranty that speaks as of a specified date, which shall be true and correct as
of such date), unless the failure to be true and correct at and as of the
Closing does not, individually or in the aggregate, have a Butler Holding
Material Adverse Effect or a WA Butler Material Adverse Effect (it being agreed
that any materiality or “material adverse effect” qualification in a
representation or warranty shall be disregarded for purposes of this sentence).
Each of the representations and warranties made in Sections 4.4, 5.7, 6.2 and
6.10(c) shall be true and correct in all respects at and as of the Closing.
          (b) Obligations Performed. Each of Butler Holding, Oak Hill, Burns, WA
Butler and the Management Members shall have performed, on or before the Closing
Date, all of their respective obligations contained in this Agreement which by
the terms hereof are required to be performed by any of them on or before the
Closing Date, unless the failure to perform such obligation does not,
individually or in the aggregate, have a Butler Holding Material Adverse Effect
or a WA Butler Material Adverse Effect. Notwithstanding the foregoing, each of
Butler Holding, Oak Hill, Burns, WA Butler and the Management Members shall have
performed in all material respects, on or before the Closing Date, all
obligations set forth in Section 8.3 and, subject to the satisfaction of all
other applicable conditions to Closing, shall have paid and delivered all
payments, instruments, consents, certificates and other documents required to be
delivered at or prior to the Closing pursuant to Article 1.
          (c) No Material Adverse Change. From the Balance Sheet Date to the
Closing, there shall not have occurred a Butler Holding Material Adverse Effect.
          (d) [Intentionally Omitted.]
          (e) Discharge of Certain Butler Holding Indebtedness. HSI shall have
received the evidence of discharge of all Indebtedness listed on Schedule 9.3(e)
(the “Existing Indebtedness”) and the release of any Lien securing such
Indebtedness.

62

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

 

ARTICLE 10
SURVIVAL; INDEMNIFICATION
     10.1 Survival. The parties agree that the representations, warranties and
covenants (requiring performance prior to Closing) contained in this Agreement
shall survive the Closing until the date that is fifteen (15) months after the
Closing, except that the Specified Representations, 5.1 (Organization, Power and
Standing), 5.2 (Power and Authority), 5.5 (Brokers), 5.8 (No Other
Representations or Warranties), 6.1 (Organization, Power and Standing), 6.2
(Capitalization), 6.3 (Power and Authority), 6.6 (Brokers), 6.8 (No other
Representations or Warranties), 6.10 (Business of WA Butler), 6.11 (Taxes), 7.1
(Power and Authority), 7.4 (Brokers), and 7.6 (No Other Representations or
Warranties) shall survive until the expiration of the applicable statute of
limitations, and (b) the representations and warranties contained in 3.21
(Compliance with Environmental Laws) and 4.21 (Compliance with Environmental
Laws) shall survive until the three (3) year anniversary of the Closing. The
applicable date of termination for the survival period of each representation or
warranty is sometimes referred to herein as its “Cut-Off Date”. No claim for
indemnification hereunder for breach of any representation or warranty may be
brought after its applicable Cut-Off Date, except for claims of which the
Indemnifying Party has been notified in writing with reasonable specificity by
the Indemnified Party prior to its Cut-Off Date. All covenants and agreements to
be performed after the Closing contained in this Agreement shall survive the
Closing in accordance with their terms.
     10.2 Indemnification of the Butler Indemnified Parties. Subject to the
other terms of this Article 10, from and after the Closing, HSI agrees to
indemnify each of the Butler Holding Members, and each of their respective
officers, directors, employees, partners, members, agents and Affiliates (the
“Butler Indemnified Parties”) and hold them harmless against and in respect of
any and all damages, losses, expenses, costs, obligations and liabilities,
including without limitation reasonable attorneys’ fees (collectively,
“Losses”), which arise or result from (a) any breach of any of the
representations or warranties made by HSI contained in Article 3 of this
Agreement or contained in any other Transaction Document delivered by HSI to
Butler Holding at the Closing pursuant to this Agreement, (b) the failure of HSI
to perform any of its covenants or agreements contained herein to be performed
after the Closing, (c) the failure of HSI to perform any agreement or covenant
contained herein which by its terms is required to be fully performed prior to
the Closing, (d) the Excluded Assets, and (e) the Excluded Liabilities. HSI’s
indemnification obligations under this Agreement, however, shall be subject to
the following limitations and conditions:
               (i) For purposes of this Section 10.2, Losses shall include any
diminution in the value of the direct or indirect economic interest of the
Butler Holding Members in Butler Holding. If an indemnifiable Loss under this
Section 10.2 is suffered directly by a Butler Holding Member, the
indemnification payment in respect of such Loss shall be paid by HSI in respect
of the full amount of such direct Loss. If an indemnifiable Loss under this
Section 10.2 is suffered directly by Butler Holding, BAHS or any of their
Subsidiaries (as opposed to directly suffered by another Butler Indemnified
Party), the indemnification payment in respect of such Loss shall be paid
directly to the Butler Holding Members and the determination of the amount of
such Loss to each Butler Holding Member shall reflect the direct

63

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

 

and indirect percentage interest of such Butler Holding Member in Butler Holding
immediately following the Closing.
               (ii) HSI shall have no indemnification obligation under
Section 10.2(a) unless, and only to the extent that, the cumulative amount of
Losses incurred by the Butler Indemnified Parties exceeds $2,000,000; provided,
however, that this limitation shall not apply to the Specified Representations
or any agreements or covenants contained herein.
               (iii) HSI’s cumulative liability for indemnification payments
under Sections 10.2(a) shall not exceed, in the aggregate, $15,000,000;
provided, however, that this limitation shall not apply to the Specified
Representations or any agreements or covenants contained herein.
               (iv) HSI shall have no indemnification obligation with respect to
Losses for any breach of the representations and warranties contained in
Section 3.21, except to the extent such Losses represent amounts actually
incurred by the Butler Indemnified Parties for the performance of investigation
or remedial action, or the payment of any fine, penalty or damage award, in each
case required by an Environmental Law or ordered by any Governmental Authority
with jurisdiction over the matter, or in defense of or reasonable settlement of
an Environmental Claim asserted by any Governmental Authority or third party in
accordance with Section 10.8(b).
               (v) No claim for indemnification in respect of the Schein
Pre-Closing Taxes shall be made unless, and to the extent that, the amount of
unpaid Schein Pre-Closing Taxes exceeds the aggregate amount of Taxes which are
included as HSI Current Liabilities in the final determination of the HSI
Closing Working Capital.
               (vi) The final determination of the Closing Working Capital at
Closing shall be made pursuant to Article 2, and no claim under this Article 10
shall be made against HSI in respect of the determination of the components of
HSI Closing Working Capital other than a claim for breach of Article 2.
               (vii) [Intentionally Omitted.]
               (viii) For purposes of HSI’s indemnification obligations
contained in this Section 10.2 with respect to the representations and
warranties contained in Article 3 with respect to MergerSub (the “MergerSub
Indemnity”) (a) OHCP shall be the only Butler Indemnified Party entitled to
indemnification; (b) all indemnification payments in respect of the MergerSub
Indemnity shall be paid by HSI directly to OHCP and (c) the MergerSub Indemnity
shall not be subject to any cap or basket hereunder.
               (ix) For purposes of the indemnification provisions contained in
this Section 10.2, all materiality qualifications in respect of the
representations and warranties contained herein (other than the representations
and warranties contained in Sections 3.6 (Financial Statements) and 3.7(g)
(Absence of Certain Changes)) shall be disregarded; it is understood, however,
that where a representation or warranty requires a list of certain items on a

64

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

 

Schedule to this Agreement (e.g., the Material Contracts Schedule), it is not
the intent of the parties that this clause (ix) would broaden the scope of the
disclosures required to be set forth on such Schedule.
               In determining the foregoing thresholds and in otherwise
determining the amount of any Losses for which the Butler Indemnified Parties
are entitled to assert a claim for indemnification hereunder, the amount of any
such Losses shall be determined after deducting therefrom the amount of any
insurance proceeds (after giving effect to any applicable deductible or
retention) and other third-party recoveries (net of any costs incurred to obtain
such insurance proceeds or recoveries), in such cases, actually received by the
Butler Indemnified Parties or Butler Holding in respect of such Losses (which
proceeds and recoveries the Butler Indemnified Parties and Butler Holding agree
to use diligent efforts to obtain). If an indemnification payment is received by
a Butler Indemnified Party, and such Butler Indemnified Party later receives
insurance proceeds or other third-party recoveries in respect of such Losses,
such Butler Indemnified Party shall immediately pay to HSI a sum equal to the
lesser of (y) the actual amount of such insurance proceeds and other third-party
recoveries (net of any costs incurred to obtain such insurance proceeds or
recoveries) or (z) the actual amount of the indemnification payment previously
paid by HSI, with respect to such Losses.
     10.3 Indemnification of the HSI Indemnified Parties by the Butler Group.
Subject to the other terms of this Article 10, from and after the Closing, each
member of the Butler Group severally (based on their respective Indemnification
Percentage Interests), and not jointly and severally, agrees to indemnify HSI,
each of its officers, directors, employees, partners, members, agents and
Affiliates (the “HSI Indemnified Parties”) and hold them harmless against and in
respect of any and all Losses, which arise or result from (a) any breach of any
of the representations or warranties contained in Article 4 of this Agreement or
contained in any other Transaction Document delivered by Butler Holding or any
of its Subsidiaries to HSI at the Closing pursuant to this Agreement, (b) the
failure of Butler Holding or any of its Subsidiaries to perform any of its
covenants or agreements contained herein to be performed after the Closing,
(c) the failure of Butler Holding or any of its Subsidiaries to perform any
agreement or covenant contained herein which by its terms is required to be
fully performed prior to the Closing, and (d) any disputes or Liabilities
involving a holder of any class of Butler Holding Common Shares or any other
Equity Securities issued or outstanding (or alleged to have been issued or
outstanding) at any time at or prior to the Closing arising out of or relating
to the transactions contemplated hereby, including, without limitation, the
allocation of any purchase price or redemptions paid hereunder. The Butler
Group’s indemnification obligations pursuant to this Section 10.3, however,
shall be subject to the following limitations and conditions:
               (i) Each member of the Butler Group shall be responsible for its
Indemnification Percentage Interest of any indemnifiable Losses pursuant to this
Section 10.3.
               (ii) For purposes of this Section 10.3, Losses shall include any
diminution in the value of the direct or indirect economic interest of HSI in
Butler Holding. If an indemnifiable Loss under this Section 10.3 is suffered
directly by an HSI Indemnified Party, the indemnification payment in respect of
such Loss shall be paid by the Butler Group in respect of the full amount of
such direct Loss. If an indemnifiable Loss under this Section 10.3 is suffered
directly by Butler Holding, BAHS or any of their Subsidiaries (as opposed to
directly suffered by

65

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

 

another Butler Indemnified Party), the indemnification payment in respect of
such Loss shall be paid directly to HSI and the determination of the amount of
such Loss to HSI shall reflect the direct and indirect percentage interest of
HSI in Butler Holding immediately following the Closing.
               (iii) The Butler Group shall have no indemnification obligation
under Section 10.3(a) unless, and only to the extent that, the cumulative amount
of Losses incurred by HSI Indemnified Parties for any claims pursuant to this
Section 10.3 exceeds $2,000,000; provided, however, that this limitation shall
not apply to the Specified Representations, or any agreements or covenants
contained herein.
               (iv) The Butler Group’s cumulative liability for indemnification
payments under Section 10.3(a) shall not exceed, in the aggregate, $20,000,000;
provided, however, that this limitation shall not apply to the Specified
Representations, or any agreements or covenants contained herein.
               (v) The Butler Group shall have no indemnification obligation
with respect to Losses for any breach of the representations and warranties
contained in Section 4.21, except to the extent such Losses represent amounts
actually incurred for the performance of investigation or remedial action, or
the payment of any fine, penalty or damage award, in each case required by an
Environmental Law or ordered by any Governmental Authority with jurisdiction
over the matter, or in defense of or reasonable settlement of an Environmental
Claim asserted by any Governmental Authority or third party in accordance with
Section 10.8(b).
               (vi) No claim for indemnification in respect of the Butler
Holding Pre-Closing Taxes shall be made unless, and to the extent that, the
amount of unpaid Butler Holding Pre-Closing Taxes exceeds the aggregate amount
of Taxes which are included as Butler Holding Current Liabilities in the final
determination of the Butler Holding Closing Working Capital.
               (vii) The final determination of the Butler Holding Closing
Working Capital at Closing shall be made pursuant to Article 2, and no claim
under this Article 10 shall be made against the Butler Group in respect of the
determination of the components of Butler Holding Closing Working Capital at
Closing other than a claim for breach of Article 2.
               (viii) [Intentionally Omitted.]
               (ix) For purposes of the indemnification provisions contained in
this Section 10.3, all materiality qualifications in respect of the
representations and warranties contained herein (other than the representations
and warranties contained in Sections 4.6 (Financial Statements) and 4.7(g)
(Absence of Certain Changes)) shall be disregarded; it is understood, however,
that where a representation or warranty requires a list of certain items on a
Schedule to this Agreement (e.g., the Material Contracts Schedule), it is not
the intent of the parties that this clause (ix) would broaden the scope of the
disclosures required to be set forth on such Schedule.

66

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

 

In determining the foregoing thresholds and in otherwise determining the amount
of any Losses for which an HSI Indemnified Party is entitled to assert a claim
for indemnification hereunder, the amount of any such Losses shall be determined
after deducting therefrom the amount of any insurance proceeds (after giving
effect to any applicable deductible or retention) and other third-party
recoveries (net of any costs incurred to obtain such insurance proceeds or
recoveries), in such cases, actually received by such HSI Indemnified Party in
respect of such Losses (which proceeds and recoveries the HSI Indemnified
Parties agree to use diligent efforts to obtain). If an indemnification payment
is received by an HSI Indemnified Party, and such HSI Indemnified Party later
receives insurance proceeds or other third-party recoveries in respect of such
Losses, such HSI Indemnified Party shall immediately pay to the Butler Group (in
proportion to their respective Indemnification Percentage Interests) a sum equal
to the lesser of (y) the actual amount of such insurance proceeds and other
third-party recoveries (net of any costs incurred to obtain such insurance
proceeds or recoveries) or (z) the actual amount of the indemnification payment
previously paid by the Butler Group, with respect to such Losses.
     10.4 Indemnification of HSI by Oak Hill. From and after the Closing, OHCP
and OHCM, jointly and severally, agree to indemnify the HSI Indemnified Parties
and hold them harmless against and in respect of any and all Losses which arise
or result from any (a) breach of any of representations and warranties contained
in Article 6 and (b) the failure of OHCP, OHCM or WA Butler to perform any of
their respective covenants or agreements set forth in this Agreement. The
indemnity obligations set forth in this Section 10.4 shall not be subject to any
cap or basket hereunder.
     10.5 Indemnification of HSI by Burns. From and after the Closing, Burns
agrees to indemnify the HSI Indemnified Parties and hold them harmless against
and in respect of any and all Losses which arise or result from any (a) breach
of any of representations and warranties made by Burns contained in Article 5 or
(b) the failure of Burns to perform any of its covenants or agreements set forth
in this Agreement. The indemnity obligations set forth in this Section 10.5
shall not be subject to any cap or basket hereunder.
     10.6 Indemnification of HSI by Management Members. From and after the
Closing, each of the Management Members agree to indemnify the HSI Indemnified
Parties and hold them harmless against and in respect of any and all Losses
which arise or result from any (a) breach of any of representations and
warranties made by such Management Member contained in Article 7 or (b) the
failure of such Managing Member to perform any of their respective covenants or
agreements set forth in this Agreement. The indemnity obligations set forth in
this Section 10.6 shall not be subject to any cap or basket hereunder.
     10.7 Indemnification of HSI by Butler Holding and BAHS. From and after the
Closing, Butler Holding and BAHS, jointly and severally, shall, and shall cause
each of their respective Subsidiaries to, indemnify the HSI Indemnified Parties
and hold them harmless against and in respect of any and all Losses based on,
attributable to, arising from or relating to (i) the Assumed Liabilities,
(i) the Liabilities under Sections 8.5(e) and (h), and (iii) the ownership and
operation of the Schein Vet Business after the Closing; provided, however, that
neither Butler Holding and BAHS shall be required to indemnify the HSI
Indemnified Parties for any Losses for which HSI is required to indemnify the
Butler Holding Members pursuant to

67

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

 

Section 10.2. The indemnity obligations set forth in this Section 10.7 shall not
be subject to any cap or basket hereunder.
     10.7A Indemnification of HSI by Butler Holding Members. From and after the
Closing, each of the Butler Holding Members (severally, in accordance with their
respective Pre-Closing Percentage Interests) agree to indemnify the HSI
Indemnified Parties and hold them harmless against and in respect of any and all
Losses based on or attributable to Taxes of WA Butler or MergerSub in the
taxable year of the Closing Date relating to or arising from the distribution of
cash to WA Butler or MergerSub on the Closing Date in accordance with the
Closing Mechanics, determined as if no other relevant transactions occurred
other than those set forth on Schedule 1.8. The indemnity obligations set forth
in this Section 10.7A shall not be subject to any cap or basket hereunder and
shall expire three (3) months after the expiration of any applicable statute of
limitations (or extensions thereof). The Butler Group shall prepare the Tax
Returns of WA Butler and the Company for such taxable year. They will provide
HSI with a reasonable opportunity to review drafts of such returns and comment
prior to filing, it being understood that the Butler Group shall make the final
decision with respect thereto.
     10.8 Procedure for Indemnification.
          (a) Any party making a claim for indemnification hereunder (the
“Indemnified Party”) shall promptly notify the indemnifying party (the
“Indemnifying Party”) of the claim in writing, describing the claim in
reasonable detail, the amount thereof, and the basis therefor; provided, that
the failure to provide prompt notice shall not relieve the Indemnifying Party of
its indemnification obligations hereunder, except to the extent that the
Indemnifying Party is actually prejudiced by the failure to give such prompt
notice. The party from whom indemnification is sought shall respond to each such
claim within thirty (30) days of receipt of such notice. No action shall be
taken pursuant to the provisions of this Agreement or otherwise by the
Indemnified Party (unless reasonably necessary to protect the rights of the
Indemnified Party) until the expiration of the 30-day response period.
          (b) If a claim for indemnification hereunder is based on a claim by a
third party, the Indemnifying Party shall have the right to assume the entire
control of the defense thereof, at its own expense, including employment of
counsel reasonably satisfactory to the Indemnified Party, by providing written
notice to the party seeking indemnification that it will assume the defense of
such claim within thirty (30) days after its receipt of notice in accordance
with Section 10.8(a) above by the Indemnified Party, and, in connection
therewith, the Indemnified Party shall cooperate fully with the Indemnifying
Party and make available to the Indemnifying Party all pertinent information
under its control; provided, that the Indemnified Party may participate in any
proceeding with counsel of its choice at its expense; and provided, however,
that the Indemnifying Party shall not be entitled to assume control of the
defense if (i) upon petition by the Indemnified Party, the appropriate court
rules that the Indemnifying Party failed or is failing to vigorously prosecute
or defend such claim, (ii) the claim would reasonably be expected to give rise
to Losses which are more than twice the amount indemnifiable by such
Indemnifying Party pursuant to this Article 10 or (iii) the claim is for
injunctive or equitable relief or relates to a criminal prosecution or
indictment of Butler Holding or any of its Affiliates (and the Indemnified
Party’s reasonable costs in conducting the defense thereof shall be considered
“Losses”). In the event that the Indemnifying Party assumes the defense, the
Indemnifying Party shall have the right to settle or resolve any such claim by a
third party; provided, that any such settlement or resolution contemplated the
Indemnifying Party, shall not be concluded without the prior written approval of
the Indemnified Party, which approval shall not be unreasonably withheld,
delayed or conditioned.
     10.9 Remedies Exclusive. The remedies provided in this Article 10 shall be
the exclusive remedies of the parties hereto after the Closing in connection
with the transactions contemplated by this Agreement, including, without
limitation, for any breach or non-performance of any representation, warranty,
covenant or agreement contained herein, except (a) in the case of fraud and
willful misconduct, in which case the harmed party shall have all rights and
remedies under this Agreement and provided by law against the party that
committed the fraud or willful misconduct, (b) any equitable remedies that do
not involve the payment of monetary damages and (c) as set forth in
Sections 2.2, 2.3 and 2.4. No party may commence any suit, action or proceeding
against any other party hereto or any of their respective Affiliates with

68

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

 

respect to the subject matter of this Agreement, whether in contract, tort or
otherwise, except (i) to enforce such party’s express rights under this
Article 10, (ii) to bring a claim for fraud and willful misconduct or (iii) to
seek injunctive relief or specific performance to enforce specifically the terms
of this Agreement to the extent permitted by law.
     10.10 Tax Treatment of Indemnity Payments. It is the intention of the
parties to treat any indemnity payment made under this Agreement as a direct or
indirect contribution, as an adjustment to a direct or indirect contribution or
as an adjustment to purchase price or other consideration, as the case may be,
for all federal, state, local and foreign Tax purposes, and the parties agree to
file their Tax Returns accordingly and not take any inconsistent position.
     10.11 Indemnification for Disclosures Related to Taxes and Brokers.
Notwithstanding the disclosure of any item on Schedules 4.8 or 6.11 with respect
to Taxes, and Schedules 4.20, 5.5 or 6.6 with respect to brokers, the HSI
Indemnified Parties shall be indemnified with respect thereto as if no such
disclosure had been set forth on such Schedule, and the representation and
warranty was not so qualified by such disclosure; provided, however, that in the
case of Taxes, this Section 10.11 shall apply only to the extent of Taxes
payable to Taxing authorities with respect to periods (or portions thereof)
ending on or prior to the Closing Date).
     10.12 No Consequential or Punitive Damages. None of the parties hereto
shall have any indemnification obligation for consequential damages, punitive or
exemplary damages, special damages or lost profits, except with respect to a
claim for such damages by a third party against the party seeking
indemnification.
ARTICLE 11
TERMINATION
     11.1 Termination. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated prior to the Closing:
          (a) by mutual written consent of HSI and Butler Holding;
          (b) by Butler Holding, if both (i) any of the representations and
warranties of HSI set forth in this Agreement shall not be true and correct to
the extent set forth in Section 9.2(a), or HSI shall have breached or failed to
perform any of its obligations, covenants or agreements under this Agreement to
the extent set forth in Sections 9.2(b), and (ii) such breach, failure or
misrepresentation has resulted in a Schein Material Adverse Effect;
          (c) by HSI, if both (i) any of the representations and warranties of
Butler Holding, Oak Hill, Burns or the Management Members set forth in this
Agreement shall not be true and correct to the extent set forth in
Section 9.3(a), or if Butler Holding, Oak Hill, Burns or any Managing Members
shall have breached or failed to perform any of its obligations, covenants or
agreements under this Agreement to the extent set forth in Section 9.3(b), and
(ii) such breach, failure or misrepresentation has resulted in a Butler Holding
Material Adverse Effect;
          (d) by either HSI or Butler Holding, if any Governmental Authority has
issued a final and non-appealable order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
          (e) by either HSI or Butler Holding, if the Closing has not occurred
by the Termination Date or such other date, if any, as HSI and Butler Holding
may agree in writing, provided that the right to terminate this Agreement under
this Section 11.1(e) will not be available to any party whose material breach of
this Agreement has been the cause of the failure of the Closing to occur on or
before such date;
     As used herein, the “Termination Date” shall mean March 31, 2010.

69

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

 

     11.2 Effect of Termination.
          (a) If this Agreement is terminated as provided in Section 11.1 above,
this Agreement shall become null and void and have no further force or effect
and the parties shall have no further obligations hereunder (including, without
limitation, for costs and expenses incurred by other parties in connection with
this Agreement and the transactions contemplated hereby), except as provided
below and except that each party shall be liable for its willful breach of the
provisions of this Agreement and the non-breaching party hereto shall be
entitled to all rights and remedies provided by law or equity in respect of such
breach.
          (b) The obligations of the parties under Sections 8.1(c) through
(f) and the provisions contained in Sections 12.4 and 12.10 shall survive the
termination of this Agreement.
ARTICLE 12
MISCELLANEOUS
     12.1 Notices. All notices and communications to a party hereunder shall be
made in writing and shall deemed to have been adequately given if (a) delivered
in person (in a manner through which delivery may be verified), (b) sent by
facsimile transmission (with another method of notice specified in this
Section 12.1 contemporaneously given), (c) sent by nationally recognized
overnight delivery service or (d) mailed, certified mail, return receipt
requested, to such party at its address set forth below (or such other address
as it may from time to time designate in writing to the other parties hereto)
pursuant to this Section 12.1. All notices shall only be duly given and
effective upon receipt (or refusal of receipt).
     If to HSI, to:
Henry Schein, Inc.
135 Duryea Road
Melville, NY 11747
Facsimile: (631) 843-5660
Attn: General Counsel
     with a copy (which shall not constitute notice) to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Facsimile: (212) 969-2900
Attn: Steven L. Kirshenbaum, Esq.

70

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

 

     If to Butler Holding (for all periods prior to the Closing), to:
Oak Hill Capital Management, LLC
Park Avenue Tower
65 East 55th Street, 36th Floor
New York, New York 10022
Facsimile: (517) 339-7330
Attn: John Monsky, Esq.
And
Darby Group Companies, Inc.
300 Jericho Quadrangle
Jericho, NY 11753
Facsimile: (516) 688-2813
Attn: Michael Caputo
     with a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 492-0570
Attn: Angelo Bonvino, Esq.
And
Salon, Marrow, Dyckman, Newman & Broudy LLP
292 Madison Avenue
New York, NY 10017
Facsimile: (212) 661-3339
Attn: Joel Salon, Esq.
     If to Butler Holding (for any period from and after the Closing), to:
Henry Schein, Inc.
135 Duryea Road
Melville, NY 11747
Facsimile: (631) 843-5660
Attn: General Counsel
And

71

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

 

Oak Hill Capital Management, LLC
Park Avenue Tower
65 East 55th Street, 36th Floor
New York, New York 10022
Facsimile: (517) 339-7330
Attn: John Monsky, Esq.
And
Darby Group Companies, Inc.
300 Jericho Quadrangle
Jericho, NY 11753
Facsimile: (516) 688-2813
Attn: Michael Caputo
     with a copy (which shall not constitute notice) to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Facsimile: (212) 969-2900
Attn: Steven L. Kirshenbaum, Esq.
And
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 492-0570
Attn: Angelo Bonvino, Esq.
And
Salon, Marrow, Dyckman, Newman & Broudy LLP
292 Madison Avenue
New York, NY 10017
Facsimile: (212) 661-3339
Attn: Joel Salon, Esq.
     If to Oak Hill, to:
Oak Hill Capital Management, LLC
Park Avenue Tower
65 East 55th Street, 36th Floor
New York, New York 10022
Facsimile: (517) 339-7330
Attn: John Monsky, Esq.

72

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

 

     with a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 492-0570
Attn: Angelo Bonvino, Esq.
     If to any Management Member, to such address set forth next to such
Management Member’s name on Exhibit A or if no address is set forth on
Exhibit A, then such address set forth in Butler Holding’s records.
     12.2 No Waiver. No failure of any party to exercise and no delay in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder.
     12.3 Amendments and Waivers. This Agreement may be modified, amended or
waived only by a writing signed by HSI and Butler Holding.
     12.4 Choice of Law; Forum; Waiver of Jury Trial. This Agreement and all
claims and controversies hereunder (whether based on contract, tort or any other
theory) shall be governed by and construed in accordance with the internal laws
of the state of New York, without regard to the choice of law provisions
thereof. Any proceeding arising out of or relating to this Agreement shall be
brought in the courts of the state of New York sitting exclusively in the County
of New York, State of New York, or, if it has or can acquire jurisdiction, in
the United States District Court for the Southern District of New York. Each
party hereby expressly submits to the personal jurisdiction and venue of such
courts as provided above for the purposes thereof and expressly waives any claim
of improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth or referred to in Section 12.1. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) 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 (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
     12.5 Binding Effects and Benefits. No party may assign either this
Agreement or any of its rights or interests, or delegate any of its duties
hereunder, in whole or in part, without the

73

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

 

prior written consent of the other parties. Any attempt to make any such
prohibited assignment without such consent shall be null and void. Subject to
the preceding sentences of this Section 12.5, this Agreement will be binding
upon, inure to the benefit of and be enforceable by, the parties and their
respective successors and permitted assigns.
     12.6 Integration; Schedules. This writing, together with the Exhibits and
Schedules attached hereto, the Transaction Documents, and the Confidentiality
Agreement, embody the entire agreement and understanding among the parties with
respect to this transaction and supersede all prior discussions, understandings
and agreements concerning the matters covered hereby and thereby. Information
set forth on any Schedule shall be deemed to qualify each other Section of this
Agreement to which such information is applicable (regardless of whether or not
such other Section is qualified by reference to a Schedule), so long as
application to such Section is reasonably apparent on its face from the reading
of such disclosure. No information set forth on any Schedule shall be deemed to
broaden in any way the scope of HSI’s or Butler Holding’s representations and
warranties. The inclusion of any item on a Schedule is not evidence of the
materiality of such item for purposes of the Agreement, or that such item is a
disclosure required under the Agreement. No disclosure in any Schedule relating
to any possible breach or violation of any agreement, law or regulation shall be
construed as an admission or indication that any such breach or violation exists
or has actually occurred, or shall constitute an admission of liability to any
third party.
     12.7 Counterparts. This Agreement may be executed in one or more
counterparts, and counterparts by facsimile, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
     12.8 Limitation on Scope of Agreement. If any provision of this Agreement
is unenforceable or illegal, such provision shall be enforced to the fullest
extent permitted by law and the remainder of the Agreement shall remain in full
force and effect.
     12.9 Headings. The headings of Articles, Sections, Exhibits and Schedules
herein are inserted for convenience of reference only and shall be ignored in
the construction or interpretation hereof.
     12.10 Expenses; Filing Fees. All legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses, except as
otherwise expressly provided herein or the Shared Expenses Agreement. Effective
from and after the Closing, Butler Holding will pay as and when due any and all
Shared Expenses (as defined in the Shared Expenses Agreement) and any
Refinancing Expenses not set forth on the Closing Date Certificate, and in
connection with the Closing, reimburse any party with respect to any Shared
Expenses paid by such party.
     12.11 No Third-Party Beneficiaries. Except as otherwise expressly set forth
in this Agreement, nothing in this Agreement will be construed as giving any
Person, other than parties hereto and their respective heirs, successors and
permitted assigns, any right, remedy or claim under or in respect of this
Agreement or any provision hereof. HSI and its Subsidiaries and Butler Holding,
BAHS and its Subsidiaries and Affiliates acknowledge and agree that all
provisions contained herein with respect to employees are included for the sole
benefit of HSI,

74

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

 

Butler Holding, BAHS and their respective Affiliates and shall not create any
right in any other Person, including any employees, former employees,
participants or former participants in any Benefit Plans or any beneficiary
thereof, or any other third parties. In addition, except as expressly provided
herein, nothing contained herein, expressed or implied, is intended to confer
upon any Vet Business Employee or Transferred Employee any right to employment
or continued employment with HSI, NLS, Butler Holding, BAHS or any of their
respective Subsidiaries and Affiliates or any rights under any Benefit Plan,
including severance benefits, by reason of this Agreement.
     12.12 Further Assurances. Following the Closing, the parties shall execute
and deliver to each other such documents and take such other actions as may
reasonably be requested in order to consummate more effectively the transactions
contemplated hereby.
     12.13 “Knowledge” Defined.
          (a) As used herein, “to the knowledge of HSI,” “to HSI’s knowledge,”
or any other similar phrase shall mean the actual knowledge of Edward “Reed”
Presnell, Steven Paladino, Ken Williams and Ronald South, after reasonable
inquiry.
          (b) As used herein, “to the knowledge of Butler Holding,” “to Butler
Holding’s knowledge,” “to the knowledge of WA Butler,” “to WA Butler’s
knowledge,” or any other similar phrase shall mean the actual knowledge of Leo
“Mac” McNeil, Kevin Vasquez, Charles B. Patton and Michael Caputo, after
reasonable inquiry.
     12.14 Communication Plan; Publicity.
          (a) As soon as reasonably practicable after the date of this
Agreement, the parties will work in good faith and cooperate in the joint
development of a communication plan to customers, vendors, landlords and
employees concerning the proposed transactions contemplated by this Agreement
(the “Communication Plan”). The Communication Plan shall be reasonably
acceptable to HSI and Butler Holding.
          (b) It is the current intent of the parties to commence with the
communications contemplated by the Communications Plan promptly following the
execution of this Agreement, provided, however, that HSI and Butler Holding each
reserve the right to suspend all communications contemplated by such plan if it
determines in good faith that (i) there is a reasonable possibility that the
transactions contemplated hereby may not close, or (ii) such disclosure could
have a materially adverse impact on such party’s business or the ability of HSI
or Butler Holding to close the transactions contemplated hereby. If it is
reasonably necessary to correct any false or misleading information which may
become public concerning the transactions contemplated hereby or to prevent a
material adverse impact on HSI or Butler Holding, the parties will consider in
good faith whether or not to accelerate the communications contemplated by the
Communication Plan.
          (c) Pending the Closing, except as expressly permitted by
Section 12.14(b) above, no party shall issue a press release or make any other
public announcement (including any internal communication to employees)
concerning the transactions contemplated by this Agreement without the prior
written consent of HSI or Butler Holding, as applicable, except to the extent
required by law, in which case the other party shall have a reasonable
opportunity to

75

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

 

review and comment prior to disclosure. For clarity, it is understood that this
Section 12.14(c) shall not prohibit internal communications to the employees of
the parties involved in planning the integration of HSI and Butler Holding
post-Closing concerning the proposed transactions.
     12.15 Acknowledgment. Each party hereto acknowledges that, anything in this
Agreement or in any Transaction Document to the contrary notwithstanding, the
representations, warranties, covenants and agreements of such party contained in
this Agreement or in any Transaction Document shall not be deemed waived by any
investigation by another party or any of its officers, directors, employees,
counsel, accountants, advisors, representatives and agents. The right to
indemnification, reimbursement or other remedy based upon any of such
representations, warranties, covenants and agreements shall not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with any such representation, warranty, covenant
or agreement. The waiver of any condition based upon the accuracy of any
representation or warranty, or on the performance of or compliance with any
agreement or covenant, will not affect the right to indemnification,
reimbursement or other remedy based upon such representation, warranty,
agreement or covenant.
     12.16 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and the other Transaction
Documents. In the event an ambiguity or question of intent or interpretation
arises under any provision of this Agreement or any other Transaction Document,
this Agreement and such other Transaction Document shall be construed as if
drafted jointly by the parties thereto, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of authoring any of the
provisions of this Agreement or any other Transaction Document.
ARTICLE 13
DEFINITIONS
     13.1 Definitions. For the purposes of this Agreement, terms defined in this
Agreement (including in the Schedules to this Agreement) shall have the
respective meanings given to such terms thereby and each of the following terms
shall have the following respective meanings:
     “2005 Transaction Documents” means the Amended and Restated Contribution
Agreement, dated as of June 30, 2005, by and among Oak Hill, Burns, Vet
Acquisition Corp., Darby, Butler Holding and BAHS (without giving effect to any
subsequent amendments, modifications, supplements or waivers in respect
thereof), the Agreement and Plan of Merger, dated as of March 30, 2005, by and
among WA Butler, Vet Supply Acquisition Corporation and W.A. Butler Holdings,
LLC (without giving effect to any subsequent amendments, modifications,
supplements or waivers in respect thereof), and the Amended and Restated Burns
Transfer, Representation and Indemnity Agreement, dated as of July 1, 2005, by
and among Darby, Burns, Vet Supply Acquisition Corp, Butler Holding and BAHS,
together with any other agreements, instruments, certificates and documents
executed in connection therewith.
     “Affiliate” of a Person means a Person that directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Person. For the

76

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

 

purpose of this definition, “control” (including the terms “controlled by” and
“under common control with”) means, the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
person, whether through the ownership of voting securities, by contract or
credit arrangement, as trustee or executor, or otherwise.
     “Applicable Law” means all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (ii) HSI
Authorizations or Butler Authorizations, as applicable, and (iii) orders,
decisions, injunctions, judgments, awards and decrees of or agreements with any
Governmental Authority.
     “Associate”, when used to indicate a relationship with any Person, means
(i) a corporation or organization of which such Person is an officer, director,
member or partner or is, directly or indirectly, the beneficial owner of any
class of equity securities, (ii) any trust or other estate in which such Person
has a beneficial interest or as to which such Person serves as trustee or in a
similar capacity, and (iii) any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person, any Person who is
a descendent, sibling or descendant of a sibling, or the spouse of a descendent,
sibling or a descendant of a sibling, of such Person.
     “Authorizations” means, with respect to any Person, all licenses, permits
and authorizations of Governmental Authorities held by such Person and each of
its Subsidiaries.
     “Balance Sheet Date” means (a) with respect to HSI and the Contributed
Schein Vet Business, December 27, 2008 and (b) with respect to Butler Holding
and its Subsidiaries, December 31, 2008.
     “Balance Sheet Rules” means, collectively, the rules set forth on
Exhibit K.
     “Benefit Plans” means with respect to any Person, any employee benefit
plans or arrangements that are pension, profit-sharing, savings, retirement,
supplemental retirement, employment, consulting, severance pay, termination,
executive compensation, incentive compensation, deferred compensation, bonus,
stock purchase, stock option, phantom stock or other equity-based compensation,
change-in-control, retention, salary continuation, vacation, sick leave,
disability, accident, workers’ compensation, death benefit, group insurance,
hospitalization, medical, dental, life, Code Section 125 “cafeteria” or
“flexible” benefit, employee loan, education assistance, welfare or fringe
benefit plan (whether written or oral, qualified or non-qualified or insured or
uninsured), including, without limitation, any plans within the meaning of
Section 3.3 of ERISA, or any other employer benefit plan or arrangement, whether
or not subject to ERISA, maintained, established, sponsored or contributed to
(or with respect to which any obligation to contribute has been undertaken) by
such Person or any of its Subsidiaries for the general benefit of any employee,
officer, director, stockholder, consultant or other service provider (whether
current, former or retired) or any beneficiary thereof, or with respect to which
such Person or any of its Subsidiaries has or has had a liability (including,
but not limited to,

77

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

 

liabilities arising from affiliation under Section 414(b), (c), (m) or (o) of
the Code, or Section 4001 of ERISA) on behalf of any employee, officer,
director, stockholder, consultant or other service provider (whether current,
former or retired) or any beneficiary thereof.
     “Burns Put Rights Agreement” means that certain Put Rights Agreement in the
form attached hereto as Exhibit G-2.
     “Business Intellectual Property” means Intellectual Property owned, used or
held for use (1) primarily or exclusively in connection with the Contributed
Schein Vet Business or (2) in connection with the Butler Vet Business, as
applicable.
     “Butler Authorizations” means all Authorizations which are material to
Butler Holding and its Subsidiaries.
     “Butler Balance Sheet” means the unaudited consolidated balance sheet of
Butler Holding and its Subsidiaries as of December 31, 2008.
     “Butler Benefit Plans” means the Benefit Plans of Butler Holding and its
Subsidiaries.
     “Butler Holding Books and Records” means all books and records, manuals,
price lists, mailing lists, lists of customers (including telephone and fax
numbers and email addresses of customers), slides and promotional materials,
purchasing materials, personnel records, quality control records and procedures,
research and development files, financial and accounting records (exclusive of
records and work papers maintained by Butler Holding’s independent accountants),
environmental records and litigation files (regardless of the media in which
stated), in each case relating to or used by Butler Holding and BAHS and their
respective Subsidiaries.
     “Butler Holding Closing Working Capital” means all Butler Holding Current
Assets as of the close of business on the Closing Date minus all Butler Holding
Current Liabilities as of the close of business on the Closing Date in each
case, without giving effect to the transactions contemplated hereby.
     “Butler Holding Common Shares” means the Pre-Closing Common Shares as
defined in the Existing Operating Agreement.
     “Butler Holding Current Assets” means, as of any date, the consolidated
current assets of Butler Holding and its subsidiaries, on a consolidated basis,
which current assets shall include only the line items set forth on Exhibit L-1
under the heading “Current Assets” and no other assets.

78

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

 

     “Butler Holding Current Liabilities” means, as of any date, the
consolidated current liabilities of Butler Holding and its subsidiaries, on a
consolidated basis, which current liabilities shall include only the line items
set forth on Exhibit L-1 under the heading “Current Liabilities” and no other
liabilities (including, without limitation, any Transaction Expenses of any
Person charged to Butler Holding or any of its Subsidiaries).
     “Butler Holding Estimated Closing Working Capital” means the Butler Holding
Closing Working Capital, determined using the estimate of the Butler Holding
Closing Working Capital set forth in the Butler Holding Estimated Closing
Working Capital Certificate.
     “Butler Holding Inventory” or “Butler Holding Inventories” means all
inventories of raw materials, work in process, finished products, goods, spare
parts, replacement and component parts, and office and other supplies (whether
on hand, in-transit or on order) with respect to Butler Holding.
     “Butler Holding Material Adverse Effect” shall mean a change, event,
development, condition or occurrence which, individually or in the aggregate,
has had or would reasonably be expected to have or result in a material adverse
effect on the assets, business, properties or financial condition of Butler
Holding and its Subsidiaries, taken as a whole; provided, however, that in no
event shall any of the following constitute a Butler Holding Material Adverse
Effect: any change, event, development, condition or occurrence resulting from
changes in general business or economic conditions that do not
disproportionately affect Butler Holding and its Subsidiaries, taken as a whole,
relative to the effects on others within the industry in which Butler Holding
and its Subsidiaries operate.
     “Butler Holding Member” means each of Burns, Oak Hill and the Management
Members.
     “Butler Holding Pre-Closing Taxes” means any unpaid Taxes of Butler Holding
or any of its Subsidiaries (including, without limitation, any liability for
Taxes of any Person under Treasury Regulation § 1.1502-6, Treasury Regulation §
1.1502-78 or any similar provision of state, local or foreign law, as a
transferee or successor, by contract, or otherwise) for any period or portion
thereof ending before the Closing Date.
     “Butler Holding Operating Agreement” means that certain Third Amended and
Restated Limited Liability Company Agreement of Butler Animal Health Holding
Company, LLC in the form attached hereto as Exhibit N-1.
     “Butler Holding Post-Closing Percentage Interest” means 49.9%.
     “Butler Holding Preferred Shares” shall mean the Preferred Shares as
defined in the Existing Operating Agreement.
     “Butler Holding Stub Period Financial Statements” means, for each full
calendar month beginning on October 1, 2009, each of the month end, unaudited
consolidated balance sheets of Butler Holding and the unaudited consolidated
statements of income of Butler Holding for the month then ended, in each case
prepared consistently with the Butler Financial Statements

79

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

 

     “Butler Holding Target Closing Working Capital” means $94,000,000.
     “Butler Improvements” means Improvements included in the Butler Leased
Premises.
     “Butler Inventory” or “Butler Inventories” means all inventories of raw
materials, work in process, finished products, goods, spare parts, replacement
and component parts, and office and other supplies (whether on hand, in-transit
or on order) of Butler Holding and its Subsidiaries.
     “Butler Vet Business” means the Vet Business operated by Butler Holding and
its Subsidiaries.
     “Charter Documents” means, with respect to any entity, the charter, bylaws,
operating agreement, partnership agreement and other organizational documents of
such entity, as applicable.
     “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Commitment Letter” means the commitment letter of J.P. Morgan Securities
Inc. and JPMorgan Chase Bank, N.A. to BAHS, dated as of November 29, 2009, a
copy of which is attached hereto as Exhibit P.
     “Contracts” means all agreements, contracts, commitments, orders, licenses,
leases and other instruments, arrangements and understandings (whether written
or oral) to which a Person is a party or by which any of the assets or
liabilities of such Person are bound or under which such Person has any
obligations, provided that, in each case, if such Person is HSI or any of its
Subsidiaries, only with respect to the Contributed Schein Vet Business.

80

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

 

     “Contributed Business IP” means the Business Intellectual Property owned,
used, or held for use exclusively in connection with the Contributed Schein Vet
Business.
     “Contributed Schein Vet Business” means the Contributed Assets and the
Assumed Liabilities.
     “Contribution Documents” means a bill of sale in respect of the Contributed
Assets and an assignment and assumption agreement in respect of the Contributed
Assets and Assumed Liabilities, in each case in form and substance satisfactory
to Butler Holding and HSI.
     “Core Vet Business” means that portion of the Contributed Schein Vet
Business other than the Contributed Assets and Contributed Liabilities from NLS.
     “DE Certificate of Merger” means the certificate of merger with respect to
the Merger prescribed by the DGCL, in the form attached hereto as Exhibit H-1.
     “Demand Note” means the demand note with a principal amount equal to the
Demand Note Amount, issued and delivered by MergerSub to Oak Hill as evidenced
by a demand note in the form of Exhibit I attached to this Agreement.
     “DGCL” means the General Corporation Law of the State of Delaware.
     “Environment” shall mean any surface or subsurface, physical medium or
natural resource, including soil, surface waters, groundwaters, stream and river
sediments, land, surface or subsurface strata, ambient air and biota.
     “Environmental Claim” shall mean any litigation, proceeding, order,
directive, summons, complaint, investigation, claim, notice, fine, penalty,
violation or citation, from any Governmental Authority or other Person relating
to or arising out of Environmental Laws or the use, treatment, storage,
handling, disposal or release of or exposure to Hazardous Substances.
     “Environmental Laws” shall mean all applicable foreign, federal, state and
local laws (including the common law), statutes, regulations, rules, codes and
ordinances relating to human health and safety, or the pollution, or protection
of the Environment, or the discharge of Hazardous Substances into the
Environment.
     “Equity Securities” means, with respect to any Person (i) the capital
stock, shares, membership interests, partnership interests, voting interests,
profits interests, restricted stock, units or other forms of equity or other
ownership interests of such Person and (ii) options, warrants, calls, rights to
acquire (including preemptive rights) or other securities (including equity
securities or debt securities) that are directly or indirectly convertible into,
or exercisable

81

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

 

or exchangeable for, or require the issuance, delivery or sale of, any type of
Equity Security as described in the foregoing clause (i).
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “ERISA Affiliate” means, with respect to any Person, any entity which is
(or at any relevant time was) a member of a “controlled group of corporations,”
under “common control” or in “an affiliated service group” with such Person
within the meaning of Section 414(b), (c) or (m) of the Code.
     “Excluded IP” means any Intellectual Property used in the Contributed
Schein Vet Business other than (i) Contributed Business IP; and (ii) generally
commercially available software that is available (or a comparable alternative
to which is available) to Butler Holding or any of its Subsidiaries from a third
party vendor.
     “Existing Operating Agreement” shall mean the Second Amended and Restated
Limited Liability Company Operating Agreement of Butler Holding dated as of
October 31, 2006, a copy of which is attached hereto as Exhibit N-2.
     “Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including any government authority, agency, department, board, commission or
instrumentality of the United States, any State of the United States or any
political subdivision thereof, and any tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization or accreditation body
(including the National Association of Boards of Pharmacy but not including any
research institute).
     “Hazardous Substances” shall mean any chemical material or substance which
is defined or regulated under applicable Environmental Laws or defined as a
“hazardous substance,” “hazardous waste,” “hazardous materials,” “hazardous
constituents,” “toxic substances,” “toxic waste,” “pollutants,” “contaminants”
or words of similar import under any Environmental Law, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. §9601 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. §6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251
et seq.), and the Clean Air Act (42 U.S.C. §7401 et seq.), and including without
limitation, any chemicals, materials or substances that contain polychlorinated
biphenyl or gasoline, diesel fuel or other petroleum hydrocarbons or petroleum
products or petroleum derived substances, radioactive materials, urea
formaldehyde, pesticides, volatile organic compounds, asbestos, mold or radon
gas.
     “HSI Authorizations” means all Authorizations which are material to the
Contributed Schein Vet Business.

82

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

 

     “HSI Benefit Plans” means the material Benefit Plans of HSI and its
Subsidiaries for the general benefit of any employee, officer, director,
stockholder, consultant or other service provider (whether current, former or
retired) whose duties are primarily related to the Contributed Schein Vet
Business.
     “HSI Closing Working Capital” means all HSI Current Assets as of the close
of business on the Closing Date minus all HSI Current Liabilities as of the
close of business on the Closing Date, in each case, without giving effect to
the transactions contemplated hereby.
     “HSI Current Assets” means, as of any date, the consolidated current assets
of the Schein Vet Business that are Contributed Assets, which current assets
shall include only the line items set forth on Exhibits L-2 and L-3 under the
heading “Current Assets” and no other assets, and shall exclude any Excluded
Assets.
     “HSI Current Liabilities” means, as of any date, the consolidated current
liabilities of the Contributed Schein Vet Business that are Assumed Liabilities,
which current liabilities shall include only the line items set forth on
Exhibits L-2 and L-3 under the heading “Current Liabilities” and no other
liabilities, and shall exclude any Excluded Liabilities.
     “HSI Estimated Closing Working Capital” means the HSI Closing Working
Capital, determined using the estimate of the HSI Closing Working Capital set
forth in the HSI Estimated Closing Working Capital Certificate.
     “HSI Improvements” means all Improvements included in the HSI Leased
Premises.
     “HSI Inventory” or “HSI Inventories” means all inventories of raw
materials, work in process, finished products, goods, spare parts, replacement
and component parts, and office and other supplies (whether on hand, in-transit
or on order) primarily or exclusively relating to, or primarily or exclusively
used in the operation of the Contributed Schein Vet Business.
     “HSI Post-Closing Percentage Interest” means, as of immediately following
the consummation of the transactions contemplated by this Agreement, a
percentage, equal to 50.1%.
     “HSI Stub Period Financial Statements” means, for each full fiscal month
beginning on September 27, 2009, each of the month end, unaudited balance sheets
of the Contributed Schein Vet Business and the unaudited consolidated statements
of income of the Contributed Schein Vet Business for the month then ended, in
each case prepared consistently with the HSI Vet Financial Statements.
     “HSI Target Closing Working Capital” means $24,650,000.

83

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

 

      “HSI Vet Financial Statements” means, collectively, the NLS Financials and
the Core Vet Financials.
      “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
      “Improvements” means all buildings, structures, fixtures, building systems
and equipment, and all components thereof.
      “Indebtedness” means, with respect to any Person, without duplication of
amounts, (i) indebtedness for borrowed money or indebtedness issued or incurred
in substitution or exchange for indebtedness for borrowed money,
(ii) indebtedness evidenced by any note, bond, debenture or other debt
instrument or debt security, (iii) obligations under any letter of credit,
(iv) the amount of the obligation required to be recorded by United States
generally accepted accounting principles (“GAAP”) in respect of all capitalized
lease obligations, (v) obligations under any interest rate, currency or other
hedging arrangement, (vi) amounts owing as deferred purchase price for property
(but expressly excluding trade payables, operating leases and any amount
included as a Butler Holding Current Liability or HSI Current Liability, as
applicable, in the final calculation of such party’s closing working capital
pursuant Article 2), (vii) guarantees with respect to any indebtedness of any
other Person of a type described in clauses (i) through (vi) above, and (viii)
for clauses (i) through (vii) above, all accrued interest thereon, if any, and
any termination fees, prepayment penalties, “breakage” cost or similar payments
associated with the repayment of any Indebtedness on the Closing Date; provided,
however, that, with respect to HSI and the Schein Vet Business, “Indebtedness”
shall not include any Excluded Liabilities.
      “Indemnification Percentage Interest” means, in reference to each member
of the Butler Group, that percentage set forth opposite such Person’s name on
Exhibit O hereto.
      “Intellectual Property” means, anywhere in the world, all (i) patents,
patent applications, patent disclosures and related rights, (ii) trademarks,
service marks, trade dress, trade names and corporate names (in each case,
whether registered or unregistered) and registrations and applications for
registration thereof together, to the extent applicable, with all of the
goodwill associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) computer software, data, databases and documentation thereof, (v) trade
secrets and other confidential information (including, without limitation,
ideas, formulae, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information)
and (vi) domain names.
      “IP Licenses” means with respect to any Person, (i) all licenses granted
by such Person or any of its Subsidiaries to any third party with respect to any
owned Business Intellectual Property and (ii) all material licenses granted by
any third party to such Person or any of its Subsidiaries with respect to any
Business Intellectual Property, excluding “off-the-shelf” or “shrink wrap”
programs with a value of less than $20,000 licensed to such person or any of its
Subsidiaries in the ordinary course of business.

84

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

 

     “IRS” means the Internal Revenue Service.
     “Liabilities” shall mean any direct or indirect liability, indebtedness,
obligation, commitment, claim, deficiency or guaranty of or by any Person of any
type, whether known or unknown, disputed or undisputed, secured or unsecured,
due or to become due, vested or unvested, liquidated or unliquidated, accrued,
absolute, contingent, matured or unmatured, whether or not the same is required
to be accrued on the financial statements of such Person.
     “License Agreement” means that certain license agreement in the form
attached hereto as Exhibit R.
     “Lien” means any mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, lease, sublease, license, occupancy agreement,
adverse claim or interest, easement, covenant, encroachment, burden, title
defect, title retention agreement, voting trust agreement, interest, equity,
option, lien, right of first refusal, charge or other restriction or limitation.
     “Management Agreement” means that certain Management Services Agreement
dated July 1, 2005 by and among OHCP, Darby, Butler Holding and BAHS.
     “MergerSub Common Stock” means the shares of common stock, par value $0.01
per share, of MergerSub.
     “MergerSub Stockholders Agreement” means that certain Stockholders
Agreement in the form attached hereto as Exhibit E.
     “Multiemployer Plan” means a “multiemployer” plan within the meaning of
Code Section 414(f), Section 3(37) of ERISA or Section 4001(a)(3) of ERISA.
     “Non-Competition Agreement” means that certain Confidentiality,
Non-Competition and Non-Solicitation Agreement in the form attached hereto as
Exhibit F.
     “Oak Hill Put Rights Agreement” means that certain Put Rights Agreement in
the form attached hereto as Exhibit G-1.
     “OH Certificate of Merger” means the certificate of merger with respect to
the Merger prescribed by the ORC in the form attached hereto as Exhibit H-2.

85

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

 

     “ORC” means the Revised Code of the State of Ohio.
     “Permitted Liens” means (i) such imperfections of title, easements,
encumbrances or restrictions which do not materially impair the current use of
the Contributed Assets of HSI or its Subsidiaries, or assets of Butler Holding
or its Subsidiaries, as the case may be, (ii) materialmen’s, mechanics’,
carriers’, workmen’s, warehousemen’s, repairmen’s and other like Liens arising
in the ordinary course of business with respect to obligations which are not due
or which are being contested in good faith and are accrued on the most recent
balance sheet delivered by HSI to the Butler Group or the Butler Group to HSI,
as the case may be pursuant to this Agreement, (iii) Liens for Taxes that
constitute Assumed Liabilities and that are not yet due and payable, or being
contested in good faith (provided that such Taxes being contested in good faith
are accrued on the most recent balance sheet delivered by HSI to the Butler
Group or the Butler Group to HSI, as the case may be, pursuant to this
Agreement), (iv) the Liens set forth on Schedule 13, and (v) restrictions under
applicable securities laws, in all cases, not including any Liens relating to
Excluded Liabilities.
     “Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a Governmental Authority or any
department, agency or political subdivision thereof.
     “Pre-Closing Percentage Interests” means, in reference to each member
Butler Holding Member, that percentage set forth opposite such Person’s name on
Exhibit Q hereto.
     “Preferred Shares” means the number of Preferred Shares of Butler Holding
held by such Member immediately prior to the Closing Date.
     “Proceeding” means any action, claim, demand, suit, proceeding,
arbitration, grievance, citation, summons, subpoena, inquiry or investigation,
civil, criminal, regulatory or otherwise, in law or in equity.

86

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

 

     “Registration Rights Agreement” means that certain Registration Rights
Agreement in the form attached hereto as Exhibit J.
     “Schein Balance Sheet” means the unaudited balance sheets of the Core Vet
Business and of NLS as of December 27, 2008.
     “Schein Books and Records” means all books and records, manuals, price
lists, mailing lists, lists of customers (including telephone and fax numbers
and email addresses of customers), slides and promotional materials, purchasing
materials, personnel records, quality control records and procedures, research
and development files, financial and accounting records (exclusive of records
and work papers maintained by HSI’s independent accountants), environmental
records and litigation files (regardless of the media in which stated), in each
case, exclusively relating to or used by HSI with respect to the Contributed
Schein Vet Business, provided, however, at HSI’s option, HSI may provide copies
in lieu of originals of such Schein Books and Records.
     “Schein Material Adverse Effect” means a change, event, development,
condition or occurrence which, individually or in the aggregate, has had or
would reasonably be expected to have or result in a material adverse effect on
the assets, business, properties or financial condition of the Contributed
Schein Vet Business, taken as a whole; provided, however, that in no event shall
any of the following constitute a Schein Material Adverse Effect: any change,
event, development, condition or occurrence resulting from changes in general
business or economic conditions that do not disproportionately affect the
Contributed Schein Vet Business, taken as a whole, relative to the effects on
others within the industry in which the Contributed Schein Vet Business
operates.
     “Schein Pre-Closing Taxes” means any unpaid Taxes with respect to the
Contributed Schein Vet Business (including, without limitation, any liability
for Taxes of any Person under Treasury Regulation § 1.1502-6, Treasury
Regulation § 1.1502-78 or any similar provision of state, local or foreign law,
as a transferee or successor, by contract, or otherwise) for any period or
portion thereof ending before the Closing Date.
     “Schein Vet Business” means the Vet Business operated by Henry Schein and
its Subsidiaries.
     “Shared Expenses Agreement” means the letter agreement re: Shared
Transaction Expenses, dated November 1, 2009, between BAHS, Butler Holding and
HSI.
     “Specified Representations” means the representations and warranties
contained in Sections 3.1 (Organization, Power and Standing), 3.2 (Power and
Authority), 3.4 (Capitalization; Subsidiaries), 3.8 (Taxes), Sections 3.18
(Benefit Plans), 3.20 (Brokers), 3.31 (Business of MergerSub and NLS), 3.34 (No
Other Representations or Warranties), 4.1 (Organization, Power and Standing),
4.2 (Power and Authority), 4.4 (Capitalization; Subsidiaries), 4.8 (Taxes), 4.18

87

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

 

(Benefit Plans), 4.20 (Brokers), 4.32 (Regarding Oak Hill and WA Butler
Capitalization Represenations), and 4.33 (No Other Representations or
Warranties) of this Agreement.
     “Subsidiary” or “Subsidiaries” means, with respect to any Person, all
corporations and other Persons in which the Person owns or controls, directly or
indirectly, capital stock or other equity interests representing at least 50% of
the outstanding voting stock or other equity interests.
     “Tangible Property” means machinery, equipment, furniture, computer
hardware, leasehold and other improvements, fixtures, vehicles, structures, any
related capitalized items and other tangible property primarily or exclusively
relating to, or primarily or exclusively used in the operation of the
Contributed Schein Vet Business.
     “Tax” or “Taxes” means any and all federal, state, provincial, local,
foreign and other taxes, levies, fees, imposts, duties, and similar governmental
charges (including any interest, fines, assessments, penalties, suspense
liabilities, or additions to tax imposed in connection therewith or with respect
thereto) including, without limitation (A) taxes imposed on, or measured by,
income, franchise, profits or gross receipts, and (B) ad valorem, value added,
capital gains, sales, goods and services, use, real or personal property,
capital stock, license, branch, payroll, estimated, withholding, employment,
social security (or similar), unemployment, compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits, transfer and
gains taxes, customs duties and requirements to account for and pay over
unclaimed or abandoned funds or other property.
     “Tax Returns” means all reports, estimates, declarations of estimated Tax,
information statements and returns relating to Taxes and any schedules attached
to or amendments of any of the foregoing.
     “Transaction Documents” means this Agreement, the Non-Competition
Agreement, the Contribution Documents, the Demand Note, the Burns Put Rights
Agreement, the Oak Hill Put Rights Agreement, the Registration Rights Agreement,
the MergerSub Stockholders Agreement, the Butler Holding Operating Agreement,
and the Shared Expense Agreement, together with any other agreements,
instruments, certificates and documents executed in connection herewith or
therewith.
     “Transaction Expenses” means all outstanding fees, expenses and payments to
outside counsel, accountants, financial advisors, investment bankers and other
advisors of any Party in connection with or related to this Agreement or the
transactions contemplated hereby excluding the Shared Expenses (as defined in
the Shared Expense Agreement).
     “Vedco” means VEDCO, Inc., a Delaware corporation.

88

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

 

     “Vedco Interests” means six (6) shares of common stock, par value $500.00
per share, issued by Vedco to HSI.
     “Vet Business” means the business of purchasing, marketing, selling and/or
distributing veterinary supply products, including diagnostics, biologicals,
pharmaceuticals, vaccines, parasiticides, instruments, equipment and supplies
used for the maintenance, treatment and prevention of ailments of and diseases
in animals, including companion pets, to veterinary practitioners and animal
health clinics in the United States of America.
     “WA Butler Common Stock” means the shares of common stock, $1.00 par value
per share, of WA Butler.
     “WA Butler Material Adverse Effect” shall mean a change, event,
development, condition or occurrence which, individually or in the aggregate,
has had or would reasonably be expected to have or result in a material adverse
effect on the assets, business, properties or financial condition of WA Butler;
provided, however, that in no event shall any of the following constitute a WA
Butler Material Adverse Effect: any change, event, development, condition or
occurrence resulting from changes in general business or economic conditions
that do not disproportionately affect WA Butler relative to the effects on
others within the industry in which WA Butler operates.
     “WARN Act” means the Worker Adjustment and Retraining Act, and the
regulations promulgated thereunder, any successor U.S. law, and any other
applicable plant closing notification law.
     13.2 Defined Terms Relating to Closing Mechanics. Additional terms used in
this Agreement with respect to Sections 1.1, 1.3 and 1.8 (including the
Schedules referenced therein) are set forth on Schedule 1.8 hereto.
     13.3 Additional Defined Terms. The following terms used in this Agreement
shall have the meanings set forth in the corresponding Articles, Sections or
subsections of this Agreement:

      Term   Section or Place Where Defined
Accounting Firm
  Section 2.2(c)
Agreement
  Preamble
Alternative Financing
  Section 8.15
Assumed Liabilities
  Schedule 1.1(a)
BAHS
  Preamble
BAHS’s Welfare Plans
  Section 8.5(b)
Burns
  Preamble
Butler Closing Working Capital Payment
  Section 2.1(c)(ii)
Butler Employees
  Section 4.17(a)
Butler Equity Securities
  Section 4.4(b)
Butler Financial Statements
  Section 4.6(a)
Butler Group
  Preamble
Butler Holding
  Preamble
Butler Holding Closing Working Capital Certificate
  Section 2.3(a)
Butler Holding Contribution
  Section 1.1
Butler Holding Disputed Items
  Section 2.3(c)

89

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

 

      Term   Section or Place Where Defined
Butler Holding Disputed Items Notice
  Section 2.3(b)
Butler Holding Estimated Closing Working Capital Certificate
  Section 2.1(b)
Butler Holding Conversion
  Section 1.1
Butler Insurance Policies
  Section 4.19
Butler Indemnified Parties
  Section 10.2
Butler Leased Premises
  Section 4.10(b)
Butler Material Contracts
  Section 4.12
Butler Negotiation Period
  Section 2.3(c)
Butler Post-Closing Working Capital Payment
  Section 2.4(a)(ii)
Butler Real Property Leases
  Section 4.10(b)
Brakke Agreement
  Section 4.20
Closing
  Section 1.2
Closing Date
  Section 1.2
Closing Date Certificate
  Section 1.8(a)
Closing Mechanics
  Section 1.8(a)
Communication Plan
  Section 12.14(a)
Confidentiality Agreement
  Section 8.1(c)
Contributed Assets
  Schedule 1.1(a)
Contributed Contracts
  Schedule 1.1(a)
Core Vet Business
  Section 3.6
Core Vet Financials
  Section 3.6(b)
Core Vet September Statement
  Section 3.6(b)
Cut-Off Date
  Section 10.1
Darby
  Preamble
Effective Time
  Schedule 1.1(b)
Excluded Assets
  Schedule 1.1(a)
Excluded Liabilities
  Schedule 1.1(a)
Existing Indebtedness
  Section 9.3(e)
Final Closing Statement
  Section 1.8(b)
Financing
  Section 8.15
HSI
  Preamble
HSI 401(k) Plan
  Section 8.5(f)
HSI Closing Working Capital Certificate
  Section 2.2(a)
HSI Closing Working Capital Payment
  Section 2.1(c)(ii)
HSI Contributed Assets
  Schedule 1.1(a)
HSI Disputed Items
  Section 2.2(c)
HSI Disputed Items Notice
  Section 2.2(b)
HSI Estimated Closing Working Capital Certificate
  Section 2.1(a)
HSI Indemnified Parties
  Section 10.3
HSI Insurance Policies
  Section 3.19
HSI Leased Premises
  Section 3.10(b)
HSI Material Contracts
  Section 3.12
HSI Negotiation Period
  Section 2.2(c)
HSI Payable
  Section 8.20
HSI Real Property Leases
  Section 3.10(b)

90

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

 

      Term   Section or Place Where Defined
HSI Stock Purchase
  Section 1.1
Indemnified Party
  Section 10.8(a)
Indemnifying Party
  Section 10.8(a)
Loans
  Section 8.5(f)
Losses
  Section 10.2
Management Member
  Preamble
Management Members
  Preamble
Merger
  Section 1.1
Merger Consideration
  Schedule 1.1(b)
MergerSub
  Preamble
MergerSub Contribution
  Section 1.1
MergerSub Equity Securities
  Section 3.4(b)
MergerSub Indemnity
  Section 10.2(viii)
MergerSub Shares
  Schedule 1.1(c)
NLS
  Preamble
NLS Contributed Assets
  Schedule 1.1(a)
NLS Financials
  Section 3.6(a)
Oak Hill
  Preamble
OHCM
  Preamble
OHCP
  Preamble
Order
  Section 9.1(a)
Post-Closing Services
  Section 8.16
Relevant NDA Party
  Section 8.1(e)
Redeemed Member
  Schedule 1.1(f)
Redemptions
  Section 1.1
Schein Allocation Methodologies
  Section 3.6(b)
Schein Business Employees
  Section 3.17(a)
Schein Contribution
  Section 1.1
Stock Merger Consideration
  Schedule 1.1(b)
Surviving Corporation
  Schedule 1.1(b)
Termination Date
  Section 11.1
Transferred Employees
  Section 8.5(a)
Transfer Taxes
  Section 8.14(b)
WA Butler
  Preamble
WA Butler Equity Securities
  Section 6.2(b)
Vet Business Employee
  Section 8.5(a)

[The remainder of this page is intentionally left blank.]

91

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

 

     IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered as of the date first above written.

            HENRY SCHEIN, INC.
      By:   /s/ Mark E. Mlotek       Name:   Mark E. Mlotek       Title:  
Executive Vice President       NATIONAL LOGISTICS SERVICES, LLC
      By:   /s/ Mark E. Mlotek       Name:   Mark E. Mlotek       Title:   Vice
President       WINSLOW ACQUISITION COMPANY
      By:   /s/ Mark E. Mlotek       Name:   Mark E. Mlotek       Title:  
Executive Vice President    

 

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

 

            BUTLER ANIMAL HEALTH HOLDING
COMPANY LLC
      By: /s/ Kevin R. Vasquez       Name:   Kevin R. Vasquez       Title:   CEO
& President    

            BUTLER ANIMAL HEALTH SUPPLY, LLC

By: Butler Animal Health Holding Company LLC,
its sole member
      By: /s/ Kevin R. Vasquez       Name:   Kevin R. Vasquez       Title:   CEO
& President    

            OAK HILL CAPITAL PARTNERS II, L.P.

By: OHCP II GenPar, L.P., its general partner
By: HCP II MGP, LLC, its general partner
      By:  /s/ John Monsky       Name:   John Monsky       Title:   Partner    

            OAK HILL CAPITAL MANAGEMENT
PARTNERS II, L.P.

By: OHCP II GenPar, L.P., its general partner
By: OHCP II MGP, LLC, its general partner
      By:  /s/ John Monsky       Name:   John Monsky       Title:   Partner  

 

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

 

         

            W.A. BUTLER COMPANY
      By:  /s/ John Monsky        Name:    John Monsky       Title:   President
      BURNS VETERINARY SUPPLY, INC.
      By: /s/ Michael Caputo       Name:   Michael Caputo       Title:  
President       DARBY GROUP COMPANIES, INC.
      By: /s/ Michael Caputo       Name:   Michael Caputo       Title:  
President    

         
 
  /s/ Kevin R. Vasquez    
 
 
 
   
 
  KEVIN R. VASQUEZ      
 
  /s/ Kimberly E. Allen    
 
 
 
   
 
  KIMBERLY E. ALLEN      
 
  /s/ Fred Bravo    
 
 
 
   
 
  FRED BRAVO      
 
  /s/ Tony Johnson     
 
 
 
   
 
  TONY JOHNSON      
 
  /s/ Jerry Savage    
 
 
 
   
 
  JERRY SAVAGE      
 
  /s/ Sally Baker    
 
 
 
   
 
  SALLY BAKER    

 

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

 

         
 
  /s/ Thomas Rogan    
 
 
 
   
 
  THOMAS ROGAN      
 
  /s/ Ben Coe    
 
 
 
   
 
  BEN COE      
 
  /s/ Davey Stone    
 
 
 
   
 
  DAVEY STONE      
 
  /s/ Robert Miller    
 
 
 
   
 
  ROBERT MILLER      
 
  /s/ John Nicholson    
 
 
 
   
 
  JOHN NICHOLSON      
 
  /s/ Michael Caputo    
 
 
 
   
 
  MICHAEL CAPUTO      
 
  /s/ Anthony Ricigliano    
 
 
 
   
 
  ANTHONY RICIGLIANO      
 
  /s/ Robert Anderson    
 
 
 
   
 
  ROBERT ANDERSON      
 
  /s/ Ronald Zumbro    
 
 
 
   
 
  RONALD ZUMBRO      
 
  /s/ Michael Powers    
 
 
 
   
 
  MICHAEL POWERS      
 
  /s/ Dawn Burdette    
 
 
 
   
 
  DAWN BURDETTE      
 
  /s/ Justina Gordon    
 
 
 
   
 
  JUSTINA GORDON    

 

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

 

            The McNeil Family Limited Partnership
      By:  /s/ Leo E. McNeil       Name: Leo E. McNeil       Title: General
Partner    

 

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

 

Exhibit G-1
to the Omnibus Agreement
PUT RIGHTS AGREEMENT
          This Put Rights Agreement (this “Agreement”), dated as of
                                  , 2009, is entered into by and among Henry
Schein, Inc., a Delaware corporation, or its successor (“HSI”), Oak Hill Capital
Management Partners II, L.P., a Delaware limited partnership (“OHCM”), Oak Hill
Capital Partners II, L.P., a Delaware limited partnership (“OHCP” and together
with OHCM, “Oak Hill”) and, solely for purposes of Sections 2.5(d) and 2.5(e) of
this Agreement, Butler Schein Animal Health Holding Company, LLC, a Delaware
limited liability company, or its successor (the “Company”).
          WHEREAS, as a condition to the consummation of the transactions
contemplated by the Omnibus Agreement (as defined below), the parties have
agreed to enter into this Agreement.
          NOW, THEREFORE, in consideration of the promises and of the covenants
and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
     1.1. Definitions.
          (a) Capitalized terms used but not defined herein shall have the
respective meanings given to such terms in the Operating Agreement (as defined
below).
          (b) For the purposes of this Agreement, each of the following terms
shall have the following respective meanings:
               “Agreement” shall have the meaning set forth in the Preamble.
               “Annual Put Limitation Amount” means an amount equal to (i)
$125,000,000 for the first Put Year, (ii) $137,500,000 for the second Put Year
and (iii) $150,000,000 for the third Put Year and for each Put Year thereafter.
               “BAHHC Common Shares” means the “Common Shares” or, following an
Initial Public Offering, the “Successor Common Stock” (each as defined in the
Operating Agreement), in each case, as adjusted for any reclassification,
recapitalization, distribution, split, combination, exchange or similar
adjustment thereof.
               “Burns” shall mean Burns Veterinary Supply Inc., a New York
corporation.
               “Closing Date” shall have the meaning set forth in the Omnibus
Agreement.

 

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

 

               “Commission” means the United States Securities and Exchange
Commission, or any other federal agency administering the Securities Act and the
Exchange Act at the time.
               “Company” shall have the meaning set forth in the Preamble.
               “Convertible Security” means any capital stock, equity or debt
security convertible into, exchangeable for or representing any rights to
subscribe for or acquire any BAHHC Common Shares. For purposes of clarification,
“Convertible Security” shall not include any options.
               “Darby” means the Darby Group Companies, Inc., a New York
corporation.
               “Decision Period” shall have the meaning set forth in
Section 2.2(a)(ii)(2).
               “Designated Investment Banker” shall have the meaning set forth
in Section 2.2(a)(ii)(1).
               “Discount Rate” means the National Municipal Bond yields for AAA
Rated Tax Exempt General Obligations Bonds as reported by Bloomberg for the
nearest period of time remaining with respect to the tax liabilities applicable
to the FIFO tax adjustment, which, as of November 29, 2009 is 0.66% for the two
(2) year bond.
               “Enterprise Value Methodology” means a methodology to be
considered by the Designated Investment Banker in connection with its
determination of Fair Market Value, whereby first, the enterprise value of the
Company is calculated by multiplying (i) normalized EBITDA by (ii) an
appropriate multiple as determined by the Designated Investment Banker, and
second, total cash and cash equivalents of the Company and its subsidiaries as
of the most recent full month-end balance sheet date immediately preceding the
applicable Put Notice Date would be added thereto, and third, from the
enterprise value so calculated, the total indebtedness of the Company and its
subsidiaries for borrowed monies as of the most recent full month-end balance
sheet date immediately preceding the applicable Put Notice Date would be
subtracted.
               “Excess Tax Distribution Adjustment Amount” for OHCP or OHCM
means an amount equal to the difference between (i) the aggregate net amount
that would have been received by OHCP or OHCM, as applicable, with respect to
the Put Securities if on the day immediately preceding the Put Closing Date the
Company had made a distribution to its members in the minimum amount sufficient
to eliminate the distribution advances to all members (including accrued amounts
in the nature of interest) provided for in Section 6.6(a)(ii) of the Operating
Agreement outstanding as of that day (the “First Distribution”) and then
redistributed the amount of distribution advances treated as repaid pursuant to
Section 6.6(a)(ii) (followed, in the case of OHCP, by a distribution by WABC of
the proceeds of those distributions) and (ii) the aggregate amount that would
have been received by Oak Hill with respect to the Put Securities if on the day
immediately preceding the Put Closing Date the Company had made a distribution
to its members in the amount of the First Distribution (and, in the case of
OHCP, followed by a distribution of the proceeds of this distribution) but on
that date the amount of the distribution advances provided for in that
Section 6.6(a)(ii) for all members had been zero (in both cases not taking
account of any adjustments relating to tax liabilities resulting from the change
by the Company from the LIFO to the FIFO inventory accounting method). To the
extent the amount determined under clause (i) of the immediately preceding
sentence exceeds the amount determined under clause (ii) of that sentence the
Excess Tax Distribution Adjustment Amount shall be considered “positive”; to the
extent the amount

2

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

 

determined under that clause (ii) exceeds the amount determined under that
clause (i) the Excess Tax Distribution Adjustment Amount shall be considered
“negative.” Attached hereto as Exhibit A is an example of the Excess Tax
Distribution Adjustment Amount calculation set forth above.
               “Fair Market Value” means the fair market value of 100% of the
equity interests of the Company, calculated as of the relevant Put Notice Date
(except as specifically provided in the definition of Enterprise Value
Methodology), determined pursuant to Section 2.2(a) or Section 2.2(b)(ii), as
applicable.
               “Final Determination” shall have the meaning set forth in Section
2.2(a)(ii)(1).
               “Final Notice” shall have the meaning set forth in
Section 2.2(a)(ii)(2).
               “Governmental Authority” shall mean any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local.
               “HSI” shall have the meaning set forth in the Preamble.
               “In the Money Options” means (i) all issued and outstanding
options for BAHHC Common Shares for which the applicable exercise price is less
than the Put Price and which are either vested as of the applicable Put Closing
Date or may become vested in accordance with their terms within six (6) months
after the applicable Put Closing Date, and (ii) any BAHHC Common Shares issued
upon exercise of any options at any time on or after the applicable Put Notice
Date through the date immediately preceding the applicable Put Closing Date.
               “HSI Change of Control” means (a) if any “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act), is or
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of 50% or more of the voting stock of HSI
or, in the context of a consolidation, merger or other corporate reorganization
in which HSI is not the surviving entity, 50% or more of the voting stock
generally entitled to elect directors of such surviving entity (or in the case
of a triangular merger, of the parent entity of such surviving entity),
calculated on a fully diluted basis; or (b) the sale of all or substantially all
the assets of HSI and its subsidiaries (on a consolidated basis).
               “Initial Public Offering” means the initial underwritten public
offering of common stock by the Company pursuant to an effective registration
statement on Form S-1 (or any successor form) under the Security Act.
               “Lien” means any pledge, hypothecation, right of others, claim,
security interest, encumbrance, adverse claim or interest, voting trust
agreement, interest, equity, option, lien, right of first refusal, charge or
other restriction or limitation.
               “LIFO Tax Adjustment Amount” means, with respect to the tax
distributions to be made by the Company on or after the Put Closing Date with
regard to the income already recognized, and to be recognized, for tax purposes
by the Company as a result of the change from the LIFO to the FIFO inventory
accounting method in accordance with Section 4.1 of the Operating Agreement, the
amount calculated by multiplying (x) the present value (discounted at the
Discount Rate) of the amount of tax liability to be borne by OHCP or OHCM, as
applicable, with regard to that income pursuant to the last sentence of
Section 4.1 of the Operating Agreement, based on the Corporate Tax Rate (as
defined in the Operating Agreement, based on the operations of the Company as of
the day immediately preceding the Put Closing Date for the purpose of
determining allocation and apportionment) in effect for the relevant periods on
the day immediately preceding the Put Closing Date, by (y) a fraction, (i) the
denominator of which shall be the Effective

3

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

 

Percentage Interest (as defined in the Operating Agreement) of Oak Hill
immediately following the consummation of the transactions contemplated by the
Omnibus Agreement, and (ii) the numerator of which shall be the Effective
Percentage Interest represented by the Put Securities as of immediately
following the consummation of the transactions contemplated by the Omnibus
Agreement.
               “Market Price” means the closing sale price per BAHHC Common
Share on the applicable Put Notice Date (or the nearest preceding business day).
               “Notice” shall have the meaning set forth in Section 3.2.
               “Oak Hill” shall have the meaning set forth in the Preamble.
               “OHCM” shall have the meaning set forth in the Preamble.
               “OHCP” shall have the meaning set forth in the Preamble.
               “Omnibus Agreement” means the Omnibus Agreement, dated as of
November 29, 2009, by and among HSI, National Logistics Services, LLC, Oak Hill,
WABC, Darby, Burns, the Company and the other Persons party thereto.
               “Operating Agreement” means the Third Amended and Restated
Limited Liability Company Operating Agreement of the Company, dated as of the
date hereof, between WABC, OHCM, HSI, OHCP, Darby, Burns and the other members
party thereto, as amended from time to time in accordance with the terms
thereof.
               “Person” means an individual, a corporation, a partnership, a
joint venture, a trust, an unincorporated organization, a limited liability
company or partnership, a government and any agency or political subdivision
thereof.
               “Put Closing” shall have the meaning set forth in Section 2.4(a).
               “Put Closing Date” shall have the meaning set forth in
Section 2.4(a).
               “Put Interest Percentage” means a percentage equal to the sum of:
(i) the number of BAHHC Common Shares designated as Put Securities in the
relevant Put Notice divided by the total number of BAHHC Common Shares and
Convertible Securities then issued and outstanding determined on a fully diluted
as-converted basis as of the Put Notice Date taking into account option dilution
for In the Money Options, plus (ii) the product of (A) the number of shares of
WABC Common Stock designated as Put Securities in the relevant Put Notice
divided by the total number of shares of WABC Common Stock, multiplied by
(B) the WABC Ownership

4

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

 

Percentage, in each case as calculated as of the Put Notice Date (except as
indicated in the definition of In the Money Options).
               “Put Notice” shall have the meaning set forth in Section 2.1(b).
               “Put Notice Date” means, with respect to each Put Notice, the
date on which such Put Notice is delivered to HSI.
               “Put Price” means the aggregate amount payable to Oak Hill in
connection with the exercise of a Put Right, calculated by multiplying either
(1) the Put Interest Percentage and the Fair Market Value in the case of
Sections 2.2(a) and 2.2(b)(ii) or (2) the Market Price and the number of BAHHC
Common Shares designated as Put Securities in the case of Section 2.2(b)(i), as
applicable; provided, that, in the case of Section 2.2(a), the Put Price shall
equal (w) the amount as provided in clause (1) above plus (x) the Excess Tax
Distribution Adjustment Amount, if it is positive, or minus (y) the Excess Tax
Distribution Adjustment Amount, if it is negative, and minus (z) the LIFO Tax
Adjustment Amount, and on the Put Closing Date (A) Oak Hill shall transfer to
HSI the entitlement with respect to the amounts in clause (x) and (B) HSI shall
assume from Oak Hill the obligations with respect to the amounts in clauses
(y) and (z).
               “Put Right” shall have the meaning set forth in Section 2.1(a).
               “Put Securities” shall have the meaning set forth in
Section 2.1(b).
               “Put Year” means the one year period commencing on the first
anniversary of the Closing Date and ending on the date immediately prior to the
second anniversary of the Closing Date and each successive one year period
thereafter.
               “Qualified Initial Public Offering” has the meaning given to such
term in the Registration Rights Agreement.
               “Regulatory Approvals” means all regulatory approvals from and
notices to any Governmental Authority that are required in order to consummate
the transactions contemplated at the applicable Put Closing, including any such
regulatory approvals or notices required to be obtained by the Company or any of
its subsidiaries.
               “Securities” means, collectively, all or any portion of, the
[                    ] BAHHC Common Shares owned by OHCM as of the date hereof
(as adjusted for reclassification, recapitalization, distributions, splits,
combinations, exchanges or similar events) and, all or any portion of, the
[                    ] shares of WABC Common Stock owned by OHCP, as of the date
hereof (as adjusted for reclassification, recapitalization, distributions,
splits, combinations, exchanges or similar events).

5

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

 

               “Securities Act” means the Securities Act of 1933, as amended, or
any similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
               “WABC” means W.A. Butler Company, a Delaware corporation, or its
successor.
               “WABC Common Stock” means the shares of common stock of WABC, par
value $0.01 per share, as adjusted for any reclassification, recapitalization,
distribution, split or combination, exchange or similar adjustment thereof.
               “WABC Ownership Percentage” means a percentage equal to the
number of BAHHC Common Shares owned by WABC divided by the total number of BAHHC
Common Shares then issued and outstanding, determined on a fully diluted basis,
taking into account option dilution for In the Money Options, in each case as
calculated as of the Put Notice Date (except as indicated in the definition of
In the Money Options).
ARTICLE II
PUT RIGHTS
     2.1. Put Right Grants and Mechanics.
              (a) HSI hereby grants to Oak Hill the right (a “Put Right”), at
any time and from time to time on or after the earlier of (x) first anniversary
of the Closing Date or (y) an HSI Change of Control, to require HSI to purchase
all or any portion of the Securities then owned by Oak Hill, on the terms and
subject to the conditions set forth in this Agreement.
              (b) Oak Hill may exercise its Put Right by delivery of a written
Notice (a “Put Notice”) to HSI, which Put Notice shall state that Oak Hill is
exercising its Put Right to require HSI to purchase the number and type of
Securities specified in such Put Notice (the “Put Securities”).
          2.2. Determination of Fair Market Value. For purposes of calculating
Put Price payable in connection with the exercise of any Put Right, the Fair
Market Value shall be determined as follows:
              (a) Pre-QPO. If the Put Notice is delivered prior to a Qualified
Initial Public Offering, the Put Price payable in connection with the exercise
of any Put Right shall be determined as follows:
     (i) Mutual Agreement. Oak Hill and HSI shall use all reasonable efforts and
negotiate in good faith to agree upon the Fair Market Value. If Oak Hill and HSI
agree upon the Fair Market Value, then, subject to the conditions to closing set
forth in Section 2.4 below, Oak Hill shall sell, transfer and convey, and HSI
shall purchase and accept, the Put Securities free and clear of all Liens at the
Put Closing for the Put Price calculated based on such agreed-upon Fair Market
Value.

6

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

 

     (ii) Dispute Procedures. (1) If Oak Hill and HSI are unable to agree upon
the Fair Market Value pursuant to Section 2.2(a)(i) within twenty-one (21) days
of the Put Notice Date, then either party may request, by delivery of a written
Notice to the other party, a reputable independent nationally recognized
investment bank retained by the Company, or, if such investment bank is not
acceptable to Oak Hill or HSI, another reputable independent nationally
recognized investment bank as to which HSI and Oak Hill mutually agree (the
“Designated Investment Banker”), that the Designated Investment Banker determine
the Fair Market Value. If HSI and Oak Hill are unable to agree upon the
selection of the Designated Investment Banker, then each shall select one
nationally recognized investment bank and the Designated Investment Banker shall
be selected by those two investment banks, whose determination of the Designated
Investment Banker will constitute an arbitral award that is final, binding and
non-appealable and upon which a judgment may be entered by a court with
jurisdiction thereover. The Designated Investment Banker shall determine the
Fair Market Value, using such method or methods of determining Fair Market Value
as it, in its sole discretion, shall determine; provided, however, that in
determining Fair Market Value, the Designated Investment Banker shall (A) not
include a discount for lack of control, minority interests, lack of a public
market in the Company’s securities or leverage levels, block sale discounts or
otherwise take into account any contractual restrictions on the Company’s
ability to operate anywhere in the world or limiting HSI’s ability to consummate
the Put Closing (other than as set forth in this Agreement), (B) consider, among
other things, the value that could be realized by a sophisticated seller seeking
to maximize the consideration to be received for the Put Securities, whether
through a private sale of 100% of the Company or a strategic combination or in
an Initial Public Offering (determined on a fully distributed basis) and
assuming, for purposes of the valuation, that the capital stock of the Company
is widely held and no one shareholder holds a control position), without taking
into consideration any initial public offering discount or underwriter’s
discount or any other costs or expenses of sale, and (C) consider, in addition
to any other methods deemed by the Designated Investment Banker, in its sole
discretion, to be customary or appropriate, the Enterprise Value Methodology.
For the avoidance of doubt, the Designated Investment Banker shall not consider
or attribute any value (or negative value) to any distribution advances by the
Company provided for in Section 6.6(a)(ii) of the Operating Agreement or tax
liabilities relating to the change from the LIFO to the FIFO inventory
accounting method, which is the subject of the last sentence of Section 4.1 of
the Operating Agreement. Upon reasonable notice, the Designated Investment
Banker shall provide each of Oak Hill and HSI the opportunity to make one
presentation (with representatives of the non-presenting party present) of
reasonable length to the Designated Investment Banker regarding their respective
views on the determination of Fair Market Value; provided that any materials
provided by any party to the Designated Investment Banker in connection with
such presentation shall be simultaneously provided to the other party. The
Designated Investment Banker shall issue its determination in writing to Oak
Hill and HSI (the “Final Determination”) within forty-five (45) days of

7

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

 

delivery of the initial Notice to the Designated Investment Banker requesting
such determination and will constitute an arbitral award that is final, binding
and non-appealable and upon which judgment may be entered by a court with
jurisdiction thereover.
     (2) Oak Hill shall have fifteen (15) days after delivery of the Final
Determination (the “Decision Period”) to decide whether to (A) withdraw its Put
Notice or (B) require HSI to purchase the Put Securities indicated in its Put
Notice for a price equal to the Put Price calculated based on the Fair Market
Value set forth in the Final Determination, which decision shall be furnished to
HSI by written Notice delivered prior to the expiration of the Decision Period,
notifying HSI of such decision (the “Final Notice”). If the Final Notice
indicates that Oak Hill is withdrawing its Put Notice or if Oak Hill fails to
deliver a Final Notice prior to the expiration of the Decision Period, then the
Put Notice shall be deemed to be irrevocably withdrawn and HSI shall not be
required to purchase the Put Securities specified in such Put Notice. Any Put
Notice that is withdrawn pursuant to this Section 2.2(a)(ii)(2) shall continue
to be deemed to have been delivered for purposes of Section 2.5(c).
          (b) Post-QPO. If the Put Notice is delivered after a Qualified Initial
Public Offering: (i) if the BAHHC Common Shares are then listed or quoted on
NASDAQ or NYSE, the Put Price shall be equal to the Market Price, and (ii) if
the BAHHC Common Shares are not then listed or quoted on NASDAQ or NYSE, the
Fair Market Value shall be determined in accordance with Section 2.2(a). In lieu
of exercising a Put Right hereunder, Oak Hill may, subject to any restriction
set forth in the Registration Rights Agreement and any applicable securities law
restrictions, sell any or all of their respective BAHHC Common Shares on the
open market pursuant to Rule 144 of the Securities Act or the Registration
Rights Agreement.
     2.3. Payment of Put Price. The Put Price payable by HSI at the Put Closing
shall be payable in a single cash payment by wire transfer of immediately
available funds to an account designated by Oak Hill in writing at least two
(2) days prior to the Put Closing.
     2.4. Put Closing; Conditions Precedent.
          (a) HSI and Oak Hill shall consummate the sale of the Put Shares (the
“Put Closing”) as soon as reasonably practicable after the delivery of the Final
Notice to HSI, but in no event later than thirty (30) days after delivery of the
Final Notice (the “Put Closing Date”), subject in all respects to the
satisfaction of the conditions set forth in Sections 2.4(b) and 2.4(c).
          (b) HSI’s obligations to purchase the Put Securities at a Put Closing
shall be expressly subject to the fulfillment or express written waiver by HSI
of the following conditions on or prior to the applicable Put Closing Date:
     (i) HSI shall have received from Oak Hill certificates or other instruments
representing the Put Securities, together with unit, stock or other appropriate
powers duly endorsed with respect thereto, together with and any other
documentation reasonably requested by HSI in order to confirm that such

8

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

 

Put Shares, and all rights in respect thereof (including, without limitation,
all economic and voting rights) are being transferred to HSI free and clear of
all Liens.
     (ii) There shall not be any order of any Governmental Authority restraining
or invalidating the transactions which are the subject of this Agreement.
     (iii) The purchase and sale of the Put Securities at the Put Closing would
not violate the Securities Act or any state securities or “blue sky” laws
applicable to Oak Hill, HSI, the Company or the Put Securities.
          (c) Oak Hill’s obligations to sell the Put Securities at a Put Closing
shall be expressly subject to the fulfillment or express written waiver by Oak
Hill of the following conditions on or prior to the applicable Put Closing Date:
     (i) HSI shall have paid the Put Price.
     (ii) There shall not be any order of any Governmental Authority restraining
or invalidating the transactions which are the subject of this Agreement.
     (iii) The purchase and sale of the Put Securities at the Put Closing would
not violate the Securities Act or any state securities or “blue sky” laws
applicable to Oak Hill, HSI, the Company or the Put Securities.
          (d) If any of the conditions set forth in Section 2.4(b) and 2.4(c)
are not or are not reasonably expected to be satisfied on the Put Closing Date,
HSI and Oak Hill shall cooperate in good faith to cause such conditions to be
satisfied.
     2.5. Additional Terms and Conditions Applicable to Put Rights.
          (a) Oak Hill shall only be permitted to exercise its Put Right if the
Put Price for the Put Securities to be acquired from Oak Hill at the applicable
Put Closing is equal to or greater than fifty million dollars ($50,000,000),
unless the Put Securities constitute all of the Put Securities then owned by Oak
Hill. If, upon determination of the Put Price payable to Oak Hill in connection
with its exercise of a Put Right in accordance with the terms hereof, the Put
Price is less than fifty million dollars ($50,000,000), unless the Put
Securities constitute all of the Put Securities then owned by Oak Hill, then the
Put Notice corresponding to such Put Right shall be void ab initio and HSI shall
have no obligation with respect thereto.
          (b) In any Put Year, HSI shall not be required to pay, in the
aggregate, Put Prices hereunder in excess of the applicable Annual Put
Limitation Amount. If the Put Price otherwise payable by HSI hereunder on a Put
Closing Date, when combined with all other Put Prices paid by HSI hereunder
during the Put Year in which such Put Closing Date is to occur, would exceed the
Annual Put Limitation Amount, then, subject to Section 2.5(a), HSI shall only be
obligated to purchase that portion of the Put Securities that have an aggregate
Put Price so that, when combined with all other Put Prices paid by HSI hereunder
during the Put Year in which such Put Closing Date is to occur, the

9

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

 

Annual Put Limitation Amount is not exceeded, and the number of Put Securities
to be acquired on such Put Closing Date shall be reduced accordingly on a pro
rata basis.
          (c) No Put Notice may be delivered if a Put Notice has already been
delivered during the immediately preceding twelve (12) month period, and any
such Put Notice shall be void ab initio; provided, however, if a Put Notice is
withdrawn pursuant to Sections 2.2(a)(ii)(2) or 2.5(a), then Oak Hill may
deliver a Put Notice after the date that is six (6) months following the
(x) expiration of the applicable Decision Period in the case of
Section 2.2(a)(ii)(2) and (y) date of determination that the Put Price is less
than $50,000,000 under Section 2.5.
          (d) The Company shall, and HSI and Oak Hill shall cause the Company
to, provide the Designated Investment Banker with access, upon reasonable notice
and during normal business hours, to management of the Company and to such
documents and information as it shall reasonably request, including, without
limitation, the most recently approved Company Budget and projections for the
Company’s next fiscal year presented by Company management to the Company Board.
Any access under this Section 2.5(d) shall be subject to such limitations as the
Company may reasonably require to prevent the disclosure of non-public
information and/or the material disruption of the business of the Company,
including, without limitation, the execution of a non-disclosure agreement by
the Designated Investment Banker in form and substance reasonably satisfactory
to the Company. The Company shall provide reasonable prior written notice to HSI
and Oak Hill of any access to be provided by the Company to the Designated
Investment Banker. HSI, Oak Hill and their respective representatives shall have
the right to accompany the Designated Investment Banker on any visits to
Company’s facilities or in any meetings between the Designated Investment Banker
and management of the Company.
          (e) All fees, costs and expenses of the Designated Investment Banker
incurred in connection with the determination of the Put Price hereunder shall
be borne by the Company.
          (f) The Put Rights granted hereunder are personal to Oak Hill and may
not be transferred or assigned by Oak Hill other than in accordance with
Section 3.8 hereof.
ARTICLE III
MISCELLANEOUS
     3.1. Choice of Law; Forum; Waiver of Jury Trial. This Agreement and all
claims and controversies hereunder (whether based on contract, tort or any other
theory) shall be governed by and construed in accordance with the internal laws
of the state of New York, without regard to the choice of law provisions
thereof. Any proceeding arising out of or relating to this Agreement shall be
brought in the courts of the state of New York sitting in the County of New
York, State of New York, or, if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of New York. Each party
hereby expressly submits to the personal jurisdiction and venue of such courts
as provided above for the purposes thereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth or referred to in Section 3.2. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT

10

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

 

PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) 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 (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
     3.2. Notices. All notices, requests, demands, approvals, consents, waivers
and other communications required or permitted to be given under this Agreement
(each, a “Notice”) shall be in writing and delivered in person, by facsimile
transmission (with a Notice contemporaneously given by another method specified
in this Section 3.2) or by overnight courier service, at the following addresses
(or at such other address for a party as shall be specified to the other parties
by like Notice). All such Notices shall only be duly given and effective upon
receipt (or refusal of receipt).

  (a)   If to HSI, to:

Henry Schein, Inc.
135 Duryea Road
Melville, NY 11747
Facsimile: (631) 843-5660
Attn: General Counsel

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

      Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Facsimile: (212) 969-2900
Attn: Steven Kirshenbaum, Esq.

  (b)   If to Oak Hill, to:

Oak Hill Capital Partners II, L.P.
Oak Hill Capital Management Partners II, L.P.
201 Main Street, Suite 1680
Fort Worth, TX 76102
Facsimile: (817) 339-7350
Attn: Ray Pinson

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

11

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

 

      Oak Hill Capital Management, LLC
Park Avenue Tower
65 East 55th Street, 36th Floor
New York, NY 10022
Facsimile: (212) 527-8454
Attn: John Monsky

and

      Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 492-0570
Attn: Angelo Bonvino, Esq.

     3.3. Amendments. Any provision of this Agreement may be modified, amended
or waived only by a writing signed by each of the parties hereto. For the
purposes of this Agreement and all agreements executed pursuant hereto, no
course of dealing between or among any of the parties hereto and no delay on the
part of any party hereto in exercising any rights hereunder or thereunder shall
operate as a waiver of the rights hereof and thereof.
     3.4. Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
     3.5. Integration. This Agreement, including the exhibits, documents and
instruments referred to herein or therein, constitutes the entire agreement
among the parties with respect to the subject matter hereof.
     3.6. Construction. The Article and Section headings used or contained in
this Agreement are for convenience of reference only and shall not affect the
construction of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement with counsel sophisticated in
investment transactions. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
     3.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
     3.8. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, that no party may directly or
indirectly assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the prior written consent of HSI and

12

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

 

Oak Hill. Notwithstanding the foregoing, (a) HSI shall be entitled to assign its
rights and obligations under this Agreement, without the consent of any other
party hereto, to any Affiliate of HSI; and (b) OHCM and OHCP shall be entitled
to assign their respective rights and obligations under this Agreement, without
the consent of any other party hereto, to its Permitted Primary Transferees;
provided, however, that (i) one Person reasonably acceptable to HSI shall be
appointed as agent with full power and authority to act conclusively and timely
for and on behalf of all such Permitted Primary Transferees with respect to
their rights and obligations hereunder, on terms and conditions reasonably
satisfactory to HSI and (ii) HSI shall not incur or become subject to any
additional obligations as a result of any such assignment. For the avoidance of
doubt, in the event that HSI (i) consolidates with or merges into any other
person and shall not be the continuing or surviving entity in such consolidation
or merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, in each case, the successors and purchasers of HSI
or HSI’s properties and assets, as appropriate, shall agree to fulfill and
comply with the obligations set forth in this Agreement. Notwithstanding any
assignment by any party of its obligations hereunder, such assigning party shall
remain primarily liable for all obligations so assigned.
[Signature Page Follows.]

13

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

 

     IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.

                  HENRY SCHEIN, INC.    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        
 
                OAK HILL CAPITAL MANAGEMENT
PARTNERS II, L.P.    
 
                By: OHCP GenPar, L.P., its general partner         By: OHCP MGP,
LLC, its general partner    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        
 
                OAK HILL CAPITAL PARTNERS II, L.P.    
 
                By: OHCP GenPar, L.P., its general partner         By: OHCP MGP,
LLC, its general partner    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
  Title:        
 
                BUTLER SCHEIN ANIMAL HEALTH HOLDING         COMPANY, LLC (solely
with respect to         Sections 2.5(d) and 2.5(e) of this Agreement)    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
  Title:        

[Signature Page to Put Rights Agreement]

 

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

 

Exhibit G-2
to the Omnibus Agreement
PUT RIGHTS AGREEMENT
          This Put Rights Agreement (this “Agreement”), dated as of
                     ___, 2009, is entered into by and among Henry Schein, Inc.,
a Delaware corporation, or its successor (“HSI”), Burns Veterinary Supply Inc.,
a New York corporation (“Burns”) and, solely for purposes of Sections 2.5(d) and
2.5(e) of this Agreement, Butler Schein Animal Health Holding Company, LLC, a
Delaware limited liability company, or its successor (the “Company”).
          WHEREAS, as a condition to the consummation of the transactions
contemplated by the Omnibus Agreement (as defined below), the parties have
agreed to enter into this Agreement.
          NOW, THEREFORE, in consideration of the promises and of the covenants
and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
     1.1. Definitions.
          (a) Capitalized terms used but not defined herein shall have the
respective meanings given to such terms in the Operating Agreement (as defined
below).
          (b) For the purposes of this Agreement, each of the following terms
shall have the following respective meanings:
               “30-Day True-Up Period” means a 30-day period commencing on the
day that HSI provides notice to Burns that either (a) an Oak Hill Put Closing
has occurred and the Oak Hill Put Price has been paid to Oak Hill or (b) no Oak
Hill Put Notice was given during a Put Year; provided, however, that a 30-day
True-Up Period shall only commence from and after the fifth anniversary of the
Closing Date.
               “Agreement” shall have the meaning set forth in the Preamble.
               “Annual Burns Put Limitation Amount” means, (i) for any Pre
Divestiture Put Year, the lesser of (x) the number of BAHHC Common Shares valued
(in accordance with Section 2.2) at an amount equal to the difference between
$150,000,000 and any Oak Hill Put Price paid by HSI to Oak Hill with respect to
an Oak Hill Put Notice delivered during such Pre Divestiture Put Year, and (y)
[___]1 BAHHC Common Shares, and (ii) for any Post Divestiture Put Year, [___]1
BAHHC Common Shares. Notwithstanding the foregoing, in no event shall the Annual
Burns Put Limitation Amount exceed an amount equal to the difference between
$150,000,000 and any Oak Hill Put Price paid by HSI to Oak Hill during the
twelve month period immediately prior to any Burns Put Closing.
               “BAHHC Common Shares” means the “Common Shares” or, following an
Initial Public Offering, the “Successor Common Stock” (each as defined in the
Operating Agreement), in each case, as adjusted for any reclassification,
recapitalization, distribution, split, combination, exchange or similar
adjustment thereof.
               “Burns” shall have the meaning set forth in the Preamble.
 

1   The number of BAHHC Common Shares equal to 20% of Burns’ ownership interest
in the Company determined as of the Closing Date.

 

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

 

               “Burns Put Closing” shall have the meaning set forth in
Section 2.4(a).
               “Burns Put Closing Date” shall have the meaning set forth in
Section 2.4(a).
               “Burns Put Price” means the aggregate amount payable to Burns in
connection with the exercise of a Burns Put Right, calculated by multiplying
either (1) the Put Interest Percentage and the Fair Market Value in the case of
Sections 2.2(a) and 2.2(b)(ii) or (2) the Market Price and the number of BAHHC
Common Shares designated as Put Securities in the case of Section 2.2(b)(i), as
applicable; provided, that, in the case of Section 2.2(a), the Burns Put Price
shall equal (w) the amount as provided in clause (1) above plus (x) the Excess
Tax Distribution Adjustment Amount, if it is positive, or minus (y) the Excess
Tax Distribution Adjustment Amount, if it is negative, and minus (z) the LIFO
Tax Adjustment Amount, and on the Put Closing Date (A) Burns shall transfer to
HSI the entitlement with respect to the amounts in clause (x) and (B) HSI shall
assume from Burns the obligations with respect to the amounts in clauses (y) and
(z).
               “Burns Put Right” shall have the meaning set forth in
Section 2.1(a).
               “Closing Date” shall have the meaning set forth in the Omnibus
Agreement.
               “Commission” means the United States Securities and Exchange
Commission, or any other federal agency administering the Securities Act and the
Exchange Act at the time.
               “Company” shall have the meaning set forth in the Preamble.
               “Convertible Security” means any capital stock, equity or debt
security convertible into, exchangeable for or representing any rights to
subscribe for or acquire any BAHHC Common Shares. For purposes of clarification,
“Convertible Security” shall not include any options.
               “Darby” means the Darby Group Companies, Inc., a New York
corporation.
               “Decision Period” shall have the meaning set forth in
Section 2.2(a)(ii)(2).
               “Designated Investment Banker” shall have the meaning set forth
in Section 2.2(a)(ii)(1).
               “Discount Rate” means the National Municipal Bond Yields for AAA
Rated Tax Exempt General Obligations Bonds as reported by Bloomberg for the
nearest period of time remaining with respect to the tax liabilities to the FIFO
tax adjustment, which as of November 29, 2009 is 0.66% for the two (2) year
bond.
               “Enterprise Value Methodology” means a methodology to be
considered by the Designated Investment Banker in connection with its
determination of Fair Market Value, whereby first, the enterprise value of the
Company is calculated by multiplying (i) normalized EBITDA by (ii) an
appropriate multiple as determined by the Designated Investment Banker, and
second, total cash and cash equivalents of the Company and its subsidiaries as
of the most

2

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

 

recent full month-end balance sheet date immediately preceding the applicable
Put Notice Date would be added thereto, and third, from the enterprise value so
calculated, the total indebtedness of the Company and its subsidiaries for
borrowed monies as of the most recent full month-end balance sheet date
immediately preceding the applicable Put Notice Date would be subtracted.
               “Excess Tax Distribution Adjustment Amount” means an amount equal
to the difference between (i) the aggregate net amount that would have been
received by Burns with respect to the Put Securities if on the day immediately
preceding the Burns Put Closing Date the Company had made a distribution to its
members in the minimum amount sufficient to eliminate the distribution advances
to all members (including accrued amounts in the nature of interest) provided
for in Section 6.6(a)(ii) of the Operating Agreement outstanding as of that day
(the “First Distribution”) and then redistributed the amount of distribution
advances treated as repaid pursuant to Section 6.6(a)(ii), and (ii) the
aggregate amount that would have been received by Burns with respect to the Put
Securities if on the day immediately preceding the Burns Put Closing Date the
Company had made a distribution to its members in the amount of the First
Distribution but on that date the amount of the distribution advances provided
for in that Section 6.6(a)(ii) for all members had been zero (in both cases not
taking account of any adjustments relating to tax liabilities resulting from the
change by the Company from the LIFO to the FIFO inventory accounting method). To
the extent the amount determined under clause (i) of the immediately preceding
sentence exceeds the amount determined under clause (ii) of that sentence the
Excess Tax Distribution Adjustment Amount shall be considered “positive”; to the
extent the amount determined under that clause (ii) exceeds the amount
determined under that clause (i) the Excess Tax Distribution Adjustment Amount
shall be considered “negative”. Attached hereto as Exhibit A is an example of
the Excess Tax Distribution Adjustment Amount calculation set forth above.
               “Fair Market Value” means the fair market value of 100% of the
equity interests of the Company, calculated as of the relevant Put Notice Date
(except as specifically provided in the definition of Enterprise Value
Methodology), determined pursuant to Section 2.2(a) or Section 2.2(b)(ii), as
applicable.
               “Final Determination” shall have the meaning set forth in Section
2.2(a)(ii)(1).
               “Final Notice” shall have the meaning set forth in Section
2.2(a)(ii)(2).
               “Governmental Authority” shall mean any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local.
               “HSI” shall have the meaning set forth in the Preamble.
               “In the Money Options” means (i) all issued and outstanding
options for BAHHC Common Shares for which the applicable exercise price is less
than the Put Price and which are either vested as of the applicable Put Closing
Date or may become vested in accordance with their terms within six (6) months
after the applicable Put Closing Date, and (ii) any BAHHC Common Shares issued
upon exercise of any options at any time on or after the applicable Put Notice
Date through the date immediately preceding the applicable Put Closing Date.
               “Initial Public Offering” means the initial underwritten public
offering of common stock by the Company pursuant to an effective registration
statement on Form S-1 (or any successor form) under the Security Act.
               “Lien” means any pledge, hypothecation, right of others, claim,
security interest, encumbrance, adverse claim or interest, voting trust
agreement, interest, equity, option, lien, right of first refusal, charge or
other restriction or limitation.

3

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

 

               “LIFO Tax Adjustment Amount” means, with respect to the tax
distributions to be made by the Company on or after the Burns Put Closing Date
with regard to the income already recognized, and to be recognized, for tax
purposes by the Company as a result of the change from the LIFO to the FIFO
inventory accounting method in accordance with Section 4.1 of the Operating
Agreement, the amount calculated by multiplying (x) the present value
(discounted at the Discount Rate) of the amount of tax liability to be borne by
Burns with regard to that income pursuant to the last sentence of Section 4.1 of
the Operating Agreement, based on the Corporate Tax Rate (as defined in the
Operating Agreement, based on the operations of the Company as of the day
immediately preceding the Burns Put Closing Date for the purpose of determining
allocation and apportionment) in effect for the relevant periods on the day
immediately preceding the Burns Put Closing Date, by (y) a fraction, (i) the
denominator of which shall be the Effective Percentage Interest (as defined in
the Operating Agreement) of Burns immediately following the consummation of the
transactions contemplated by the Omnibus Agreement, and (ii) the numerator of
which shall be the Effective Percentage Interest represented by the Put
Securities as of immediately following the consummation of the transactions
contemplated by the Omnibus Agreement.
               “Market Price” means the closing sale price per BAHHC Common
Share on the applicable Put Notice Date (or the nearest preceding business day).
               “Notice” shall have the meaning set forth in Section 3.2.
               “Oak Hill” means OHCM together with OHCP.
               “Oak Hill Divestiture Date” means the date upon which Oak Hill no
longer owns any “Securities”, as that term is defined in the Oak Hill Put Rights
Agreement.
               “Oak Hill Put Closing” means the occurrence of a Put Closing (as
defined in the Oak Hill Put Rights Agreement) pursuant to the Oak Hill Put
Rights Agreement.
               “Oak Hill Put Notice” means the Put Notice as defined in the Oak
Hill Put Rights Agreement.
               “Oak Hill Put Price” means the Put Price (as defined in the Oak
Hill Put Rights Agreement).
               “Oak Hill Put Rights Agreement” means the Put Rights Agreement,
dated as of the date hereof, between HSI, Oak Hill and the Company.
               “OHCM” means Oak Hill Capital Management Partners II, L.P., a
Delaware limited partnership.
               “OHCP” means Oak Hill Capital Partners II, L.P., a Delaware
limited partnership.
               “Omnibus Agreement” means the Omnibus Agreement, dated as of
November 29, 2009, by and among HSI, National Logistics Services, LLC, Oak Hill,
WABC, Darby, Burns, the Company and the other Persons party thereto.
               “Operating Agreement” means the Third Amended and Restated
Limited Liability Company Operating Agreement of the Company, dated as of the
date hereof, between

4

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

 

WABC, OHCM, HSI, OHCP, Darby, Burns and the other members party thereto, as
amended from time to time in accordance with the terms thereof.
               “Person” means an individual, a corporation, a partnership, a
joint venture, a trust, an unincorporated organization, a limited liability
company or partnership, a government and any agency or political subdivision
thereof.
               “Post Divestiture Put Year” means any Put Year following the Oak
Hill Divestiture Date. For purposes of clarification, if such date occurs during
any Put Year, then the first Post Divestiture Put Year shall be the following
Put Year.
               “Pre Divestiture Put Year” means any Put Year beginning prior to
the first Post Divestiture Put Year.
               “Put Interest Percentage” means a percentage equal to the number
of BAHHC Common Shares designated as Put Securities in the relevant Put Notice
divided by the total number of BAHHC Common Shares and Convertible Securities
then issued and outstanding determined on a fully diluted as-converted basis
taking into account option dilution for In the Money Options, in each case as
calculated as of the Put Notice Date (except as indicated in the definition of
In the Money Options).
               “Put Notice” shall have the meaning set forth in Section 2.1(b).
               “Put Notice Date” means, with respect to each Put Notice, the
date on which such Put Notice is delivered to HSI.
               “Put Securities” shall have the meaning set forth in
Section 2.1(b).
               “Put Year” means the one year period commencing on the fifth
anniversary of the Closing Date and ending on the date immediately prior to the
sixth anniversary of the Closing Date and each successive one year period
thereafter.
               “Qualified Initial Public Offering” has the meaning given to such
term in the Registration Rights Agreement.
               “Securities Act” means the Securities Act of 1933, as amended, or
any similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
               “WABC” means W.A. Butler Company, a Delaware corporation, or its
successor.

5

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

 

ARTICLE II
PUT RIGHTS
     2.1. Burns Put Right Grants and Mechanics.
          (a) HSI hereby grants to Burns the right (a “Burns Put Right”), at any
time and from time to time on or after the fifth anniversary of the Closing
Date, to require HSI to purchase all or any portion of the BAHHC Common Shares
then owned by Burns, on the terms and subject to the conditions set forth in
this Agreement.
          (b) Subject to Sections 2.5(a) through (c), Burns may exercise its
Burns Put Right by delivery of a written Notice (a “Put Notice”) to HSI, which
Put Notice shall state that Burns is exercising its Burns Put Right to require
HSI to purchase the number and type of BAHHC Common Shares specified in such Put
Notice (the “Put Securities”) and may, if such Put Notice is being delivered at
any time prior to the first anniversary of the Oak Hill Divestiture Date, state
the minimum number of Put Securities that would be acceptable to Burns if all
such Put Securities are greater than the Annual Burns Put Limitation Amount.
     2.2. Determination of Fair Market Value. For purposes of calculating Burns
Put Price payable in connection with the exercise of any Burns Put Right, the
Fair Market Value shall be determined as follows:
       (a) Pre-QPO. If the Put Notice is delivered prior to a Qualified Initial
Public Offering, the Burns Put Price payable in connection with the exercise of
any Burns Put Right shall be determined as follows:
     (i) Mutual Agreement. Burns and HSI shall use all reasonable efforts and
negotiate in good faith to agree upon the Fair Market Value. If Burns and HSI
agree upon the Fair Market Value, then, subject to the conditions to closing set
forth in Section 2.4 below, Burns shall sell, transfer and convey, and HSI shall
purchase and accept, the Put Securities free and clear of all Liens at the Burns
Put Closing for the Burns Put Price calculated based on such agreed-upon Fair
Market Value.
     (ii) Dispute Procedures. (1) If Burns and HSI are unable to agree upon the
Fair Market Value pursuant to Section 2.2(a)(i) within twenty-one (21) days of
the Put Notice Date, then either party may request, by delivery of a written
Notice to the other party, an independent investment bank retained by the
Company, or, if such investment bank is not acceptable to Burns or HSI, another
reputable independent nationally recognized investment bank as to which HSI and
Burns mutually agree (the “Designated Investment Banker”), that the Designated
Investment Banker determine the Fair Market Value. If HSI and Burns are unable
to agree upon the selection of the Designated Investment Banker, then each shall
select one nationally recognized investment bank and the Designated Investment
Banker shall be selected by those two investment banks, whose determination of
the Designated Investment Banker will constitute an arbitral award that is
final, binding and non-appealable and upon which a judgment may be entered by a
court with jurisdiction thereover. The Designated Investment Banker shall
determine the Fair Market Value, using such method or methods of determining
Fair Market Value as it, in its sole discretion, shall determine; provided,
however, that in determining Fair Market Value, the Designated Investment Banker
shall (A) not include a discount for lack of control, minority interests, lack
of a public market in the Company’s securities or leverage levels, block sale
discounts or

6

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

 

otherwise take into account any contractual restrictions on the Company’s
ability to operate anywhere in the world or limiting HSI’s ability to consummate
the Burns Put Closing (other than as set forth in this Agreement), (B) consider,
among other things, the value that could be realized by a sophisticated seller
seeking to maximize the consideration to be received for the Put Securities,
whether through a private sale of 100% of the Company or a strategic combination
or in an Initial Public Offering (determined on a fully distributed basis) and
assuming, for purposes of the valuation, that the capital stock of the Company
is widely held and no one shareholder holds a control position), without taking
into consideration any initial public offering discount or underwriter’s
discount or any other costs or expenses of sale, and (C) consider, in addition
to any other methods deemed by the Designated Investment Banker, in its sole
discretion, to be customary or appropriate, the Enterprise Value Methodology.
For the avoidance of doubt, the Designated Investment Banker shall not consider
or attribute any value (or negative value) to any distribution advances by the
Company provided for in Section 6.6(a)(ii) of the Operating Agreement or tax
liabilities relating to the change from the LIFO to the FIFO inventory
accounting method, which is the subject of the last sentence of Section 4.1 of
the Operating Agreement. Upon reasonable notice, the Designated Investment
Banker shall provide each of Burns and HSI the opportunity to make one
presentation (with representatives of the non-presenting party present) of
reasonable length to the Designated Investment Banker regarding their respective
views on the determination of Fair Market Value; provided that any materials
provided by any party to the Designated Investment Banker in connection with
such presentation shall be simultaneously provided to the other party. The
Designated Investment Banker shall issue its determination in writing to Burns
and HSI (the “Final Determination”) within forty-five (45) days of delivery of
the initial Notice to the Designated Investment Banker requesting such
determination and will constitute an arbitral award that is final, binding and
non-appealable and upon which judgment may be entered by a court with
jurisdiction thereover.
     (2) Burns shall have fifteen (15) days after delivery of the Final
Determination (the “Decision Period”) to decide whether to (A) withdraw its Put
Notice or (B) require HSI to purchase the Put Securities indicated in its Put
Notice for a price equal to the Burns Put Price calculated based on the Fair
Market Value set forth in the Final Determination, which decision shall be
furnished to HSI by written Notice delivered prior to the expiration of the
Decision Period, notifying HSI of such decision (the “Final Notice”). If the
Final Notice indicates that Burns is withdrawing its Put Notice or if Burns
fails to deliver a Final Notice prior to the expiration of the Decision Period,
then the Put Notice shall be deemed to be irrevocably withdrawn and HSI shall
not be required to purchase the Put Securities specified in such Put Notice. Any
Put Notice that is withdrawn pursuant to this Section 2.2(a)(ii)(2) shall
continue to be deemed to have been delivered for purposes of Section 2.5(c).
          (b) Post-QPO. If the Put Notice is delivered after a Qualified Initial
Public Offering: (i) if the BAHHC Common Shares are then listed or quoted on
NASDAQ or NYSE,

7

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

 

the Burns Put Price shall be equal to the Market Price, and (ii) if the BAHHC
Common Shares are not then listed or quoted on NASDAQ or NYSE, the Fair Market
Value shall be determined in accordance with Section 2.2(a). In lieu of
exercising a Burns Put Right hereunder, Burns may, subject to any restriction
set forth in the Registration Rights Agreement and any applicable securities law
restrictions, sell any or all of their respective BAHHC Common Shares on the
open market pursuant to Rule 144 of the Securities Act or the Registration
Rights Agreement.
     2.3. Payment of Burns Put Price. The Burns Put Price payable by HSI at the
Burns Put Closing shall be payable in a single cash payment by wire transfer of
immediately available funds to an account designated by Burns in writing at
least two (2) days prior to the Burns Put Closing.
     2.4. Burns Put Closing; Conditions Precedent.
          (a) HSI and Burns shall consummate the sale of the Put Shares (the
“Burns Put Closing”) as soon as reasonably practicable after the delivery of the
Final Notice to HSI, but in no event later than thirty (30) days after delivery
of the Final Notice (the “Burns Put Closing Date”), subject in all respects to
the satisfaction of the conditions set forth in Sections 2.4(b) and 2.4(c).
          (b) HSI’s obligations to purchase the Put Securities at a Burns Put
Closing shall be expressly subject to the fulfillment or express written waiver
by HSI of the following conditions on or prior to the applicable Burns Put
Closing Date:
     (i) HSI shall have received from Burns certificates or other instruments
representing the Put Securities, together with unit, stock or other appropriate
powers duly endorsed with respect thereto, if applicable, together with and any
other documentation reasonably requested by HSI in order to confirm that such
Put Shares, and all rights in respect thereof (including, without limitation,
all economic and voting rights) are being transferred to HSI free and clear of
all Liens.
     (ii) There shall not be any order of any Governmental Authority restraining
or invalidating the transactions which are the subject of this Agreement.
     (iii) The purchase and sale of the Put Securities at the Burns Put Closing
would not violate the Securities Act or any state securities or “blue sky” laws
applicable to Burns, HSI, the Company or the Put Securities.
          (c) Burns’s obligations to sell the Put Securities at a Burns Put
Closing shall be expressly subject to the fulfillment or express written waiver
by Burns of the following conditions on or prior to the applicable Burns Put
Closing Date:
     (i) HSI shall have paid the Burns Put Price.

8

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

 

     (ii) There shall not be any order of any Governmental Authority restraining
or invalidating the transactions which are the subject of this Agreement.
     (iii) The purchase and sale of the Put Securities at the Burns Put Closing
would not violate the Securities Act or any state securities or “blue sky” laws
applicable to Burns, HSI, the Company or the Put Securities.
          (d) If any of the conditions set forth in Section 2.4(b) and 2.4(c)
are not or are not reasonably expected to be satisfied on the Burns Put Closing
Date, HSI and Burns shall cooperate in good faith to cause such conditions to be
satisfied.
     2.5. Additional Terms and Conditions Applicable to Burns Put Rights.
          (a) During any Pre Divestiture Put Year, Burns shall only be permitted
to exercise its Burns Put Right during the 30-Day True-Up Period.
          (b) In any Put Year, HSI shall not be required to pay, in the
aggregate, Burns Put Prices or acquire, in the aggregate, that number of Put
Securities, as applicable, in excess of the applicable Annual Burns Put
Limitation Amount. If the Burns Put Price otherwise payable by HSI, or the
number of Put Securities otherwise to be acquired by HSI, on a Burns Put Closing
Date, when combined with all other Burns Put Prices and Oak Hill Put Prices paid
by HSI during the Put Year in which such Burns Put Closing Date is to occur,
would exceed the Annual Burns Put Limitation Amount, then HSI shall only be
obligated to purchase that portion of the Put Securities so that, when combined
with all other Burns Put Prices paid by HSI and Put Securities acquired by HSI
during the Put Year in which such Burns Put Closing Date is to occur (or deemed
to occur), the Annual Burns Put Limitation Amount is not exceeded, and the
number of Put Securities to be acquired on such Burns Put Closing Date shall be
reduced accordingly. If Burns exercises its Burns Put Right during a 30-Day
True-Up Period pursuant to sub-section (b) of the definition of 30-Day True-Up
Period, then the prior year’s Annual Burns Put Limitation Amount shall be
applicable; provided, however, that, if Oak Hill delivers an Oak Hill Put Notice
following the delivery of a Put Notice by Burns but prior to the applicable Put
Closing therefor, then (x) the Put Closing in respect of such Put Notice from
Burns shall be delayed so that such Put Closing shall occur immediately
following the applicable Oak Hill Put Closing, (y) the Fair Market Value or
Market Price, as applicable, shall equal the value or price used in connection
with the applicable Oak Hill Put Closing and (z) if, after giving effect to such
Oak Hill Put Closing, the number of Put Securities that would be within the
applicable Annual Burns Put Limitation Amount is less than the minimum number
specified in the Put Notice, then Burns may withdraw such Put Notice and the
next Put Notice delivered by Burns during the remainder of such Put Year shall
not be subject to the provisions of Section 2.5(c).
          (c) No Put Notice may be delivered if a Put Notice has already been
delivered during the immediately preceding twelve (12) month period, and any
such Put Notice shall be void ab initio; provided, however, if a Put Notice is
withdrawn pursuant to Sections 2.2(a)(ii)(2) then Burns may deliver a Put Notice
after the date that is six (6) months following the expiration of the applicable
Decision Period in the case of Section 2.2(a)(ii)(2).
          (d) The Company shall, and HSI and Burns shall cause the Company to,
provide the Designated Investment Banker with access, upon reasonable notice and
during normal business hours, to management of the Company and to such documents
and information as it shall reasonably request, including, without limitation,
the most recently approved Company Budget and projections for the Company’s next
fiscal year presented by Company management to the Company Board. Any access
under this Section 2.5(d) shall be subject to such limitations

9

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

 

as the Company may reasonably require to prevent the disclosure of non-public
information and/or the material disruption of the business of the Company,
including, without limitation, the execution of a non-disclosure agreement by
the Designated Investment Banker in form and substance reasonably satisfactory
to the Company. The Company shall provide reasonable prior written notice to HSI
and Burns of any access to be provided by the Company to the Designated
Investment Banker. HSI, Burns and their respective representatives shall have
the right to accompany the Designated Investment Banker on any visits to
Company’s facilities or in any meetings between the Designated Investment Banker
and management of the Company.
          (e) All fees, costs and expenses of the Designated Investment Banker
incurred in connection with the determination of the Burns Put Price hereunder
shall be borne by the Company.
          (f) The Burns Put Rights granted hereunder are personal to Burns and
may not be transferred or assigned by Burns other than in accordance with
Section 3.8 hereof.
ARTICLE III
MISCELLANEOUS
     3.1. Choice of Law; Forum; Waiver of Jury Trial. This Agreement and all
claims and controversies hereunder (whether based on contract, tort or any other
theory) shall be governed by and construed in accordance with the internal laws
of the state of New York, without regard to the choice of law provisions
thereof. Any proceeding arising out of or relating to this Agreement shall be
brought in the courts of the state of New York sitting in the County of New
York, State of New York, or, if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of New York. Each party
hereby expressly submits to the personal jurisdiction and venue of such courts
as provided above for the purposes thereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth or referred to in Section 3.2. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) 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 (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
     3.2. Notices. All notices, requests, demands, approvals, consents, waivers
and other communications required or permitted to be given under this Agreement
(each, a “Notice”) shall be in writing and delivered in person, by facsimile
transmission (with a Notice

10

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

 

contemporaneously given by another method specified in this Section 3.2) or by
overnight courier service, at the following addresses (or at such other address
for a party as shall be specified to the other parties by like Notice). All such
Notices shall only be duly given and effective upon receipt (or refusal of
receipt).

  (a)   If to HSI, to:

Henry Schein, Inc.
135 Duryea Road
Melville, NY 11747
Facsimile: (631) 843-5660
Attn: General Counsel

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

Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Facsimile: (212) 969-2900
Attn: Steven Kirshenbaum, Esq.

  (b)   If to Burns, to:

c/o Darby Group Companies, Inc.
300 Jericho Quadrangle
Jericho, NY 11753
Facsimile: (516) 688-2813
Attn: President

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

Salon, Marrow, Dyckman Newman & Broudy LLP
292 Madison Avenue
New York, NY 10017
Facsimile: (212) 661-3339
Attn: Joel Salon, Esq.

     3.3. Amendments. Any provision of this Agreement may be modified, amended
or waived only by a writing signed by each of the parties hereto. For the
purposes of this Agreement and all agreements executed pursuant hereto, no
course of dealing between or among any of the parties hereto and no delay on the
part of any party hereto in exercising any rights hereunder or thereunder shall
operate as a waiver of the rights hereof and thereof.
     3.4. Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other

11

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

 

provision of this Agreement, and this Agreement shall be carried out as if any
such illegal, invalid or unenforceable provision were not contained herein.
     3.5. Integration. This Agreement, including the exhibits, documents and
instruments referred to herein or therein, constitutes the entire agreement
among the parties with respect to the subject matter hereof.
     3.6. Construction. The Article and Section headings used or contained in
this Agreement are for convenience of reference only and shall not affect the
construction of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement with counsel sophisticated in
investment transactions. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
     3.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
     3.8. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, that no party may directly or
indirectly assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the prior written consent of HSI and
Burns. Notwithstanding the foregoing, (a) HSI shall be entitled to assign its
rights and obligations under this Agreement, without the consent of any other
party hereto, to any Affiliate of HSI; and (b) Burns shall be entitled to assign
its rights and obligations under this Agreement, without the consent of any
other party hereto to its Permitted Primary Transferees; provided, however, that
(i) one Person reasonably acceptable to HSI, shall be appointed as agent with
full power and authority to act conclusively and timely for and on behalf of all
such Permitted Primary Transferees with respect to their rights and obligations
hereunder, on terms and conditions reasonably satisfactory to HSI and (ii) HSI
shall not incur or become subject to any additional obligations as a result of
any such assignment. For the avoidance of doubt, in the event that HSI
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving entity in such consolidation or merger or (ii) transfers
all or substantially all of its properties and assets to any person, then, in
each case, the successors and purchasers of HSI or HSI’s properties and assets,
as appropriate, shall agree to fulfill and comply with the obligations set forth
in this Agreement. Notwithstanding any assignment by any party of its
obligations hereunder, such assigning party shall remain primarily liable for
all obligations so assigned.
[Signature Page Follows.]

12

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

 

     IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.

                  HENRY SCHEIN, INC.    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        
 
                BURNS VETERINARY SUPPLY, INC.    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        
 
                BUTLER ANIMAL HEALTH HOLDING COMPANY, LLC
(solely with respect to Sections 2.5(d)
and 2.5(e) of this Agreement)    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page to Burns Put Rights Agreement]