Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

 

dated as of

February 23, 2005

between

AETNA INC.

and

MAGELLAN HEALTH SERVICES, INC.

 

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

 

TABLE OF CONTENTS

 

 

 

ARTICLE 1

 

DEFINITIONS

 

 

 

 

 

Section 1.01.

 

Definitions

 

 

 

 

 

ARTICLE 2

 

PURCHASE AND SALE

 

 

 

 

 

Section 2.01.

 

Purchase and Sale

 

Section 2.02.

 

Excluded Assets

 

Section 2.03.

 

Assumed Liabilities

 

Section 2.04.

 

Excluded Liabilities

 

Section 2.05.

 

Assignment of Contracts and Rights

 

Section 2.06.

 

Purchase Price; Allocation of Purchase Price

 

Section 2.07.

 

Closing

 

Section 2.08.

 

Network Adjustment

 

Section 2.09.

 

Adjustment of Purchase Price

 

 

 

 

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

 

 

 

 

Section 3.01.

 

Corporate Existence and Power

 

Section 3.02.

 

Corporate Authorization

 

Section 3.03.

 

Governmental Authorization

 

Section 3.04.

 

Noncontravention

 

Section 3.05.

 

Required and Other Consents

 

Section 3.06.

 

Litigation

 

Section 3.07.

 

Compliance with Laws and Court Orders

 

Section 3.08.

 

Properties

 

Section 3.09.

 

Sufficiency of and Title to the Purchased Assets

 

Section 3.10.

 

Intellectual Property

 

Section 3.11.

 

Licenses and Permits

 

Section 3.12.

 

Finders’ Fees

 

Section 3.13.

 

Environmental Compliance

 

Section 3.14.

 

Provider Contracts

 

 

 

 

 

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

 

 

 

 

Section 4.01.

 

Corporate Existence and Power

 

Section 4.02.

 

Corporate Authorization

 

 

i

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

 

Section 4.03.

 

Governmental Authorization

 

Section 4.04.

 

Noncontravention

 

Section 4.05.

 

Litigation

 

Section 4.06.

 

Finders’ Fees

 

 

 

 

 

ARTICLE 5

 

COVENANTS OF SELLER

 

 

 

 

 

Section 5.01.

 

Conduct of the Business

 

Section 5.02.

 

Access to Information; Confidentiality

 

Section 5.03.

 

Notices of Certain Events

 

 

 

 

 

ARTICLE 6

 

COVENANTS OF BUYER

 

 

 

 

 

Section 6.01.

 

Confidentiality

 

 

 

 

 

ARTICLE 7

 

COVENANTS OF BUYER AND SELLER

 

 

 

 

 

Section 7.01.

 

Best Efforts; Further Assurances

 

Section 7.02.

 

Certain Filings

 

Section 7.03.

 

Public Announcements

 

Section 7.04

 

 Trademarks; Tradenames

 

Section 7.05.

 

WARN Act

 

Section 7.06.

 

License Agreement; Provision of Services

 

 

 

 

 

ARTICLE 8

 

TAX MATTERS

 

 

 

 

 

Section 8.01.

 

Tax Definitions

 

Section 8.02.

 

Tax Representations and Warranties

 

Section 8.03.

 

Responsibility for Taxes

 

Section 8.04.

 

Tax Cooperation

 

Section 8.05.

 

Transfer Taxes

 

 

 

 

 

ARTICLE 9

 

EMPLOYEE BENEFITS

 

 

 

 

 

Section 9.01.

 

ERISA Representations

 

Section 9.02.

 

Employee and Offers of Employment

 

Section 9.03. [a05-4160_1ex10d1.htm#Section9_03_SellersEmployee_053628]

 

Seller’s Employee Benefit Plans
[a05-4160_1ex10d1.htm#Section9_03_SellersEmployee_053628]

 

Section 9.04. [a05-4160_1ex10d1.htm#Section9_04_BuyerBenefit_053634]

 

Buyer Benefit Plans [a05-4160_1ex10d1.htm#Section9_04_BuyerBenefit_053634]

 

Section 9.05. [a05-4160_1ex10d1.htm#Section9_05_NoThirdParty_053646]

 

No Third Party Beneficiaries
[a05-4160_1ex10d1.htm#Section9_05_NoThirdParty_053646]

 

 

ii

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

 

ARTICLE 10 [a05-4160_1ex10d1.htm#Article10_053650]

 

CONDITIONS TO CLOSING [a05-4160_1ex10d1.htm#ConditionsToClosing_053654]

 

 

 

 

 

Section 10.01. [a05-4160_1ex10d1.htm#Section10_01_ConditionsTo_053657]

 

Conditions to Obligations of Buyer and Seller
[a05-4160_1ex10d1.htm#Section10_01_ConditionsTo_053657]

 

Section 10.02. [a05-4160_1ex10d1.htm#Section10_02_ConditionsTo_053707]

 

Conditions to Obligation of Buyer
[a05-4160_1ex10d1.htm#Section10_02_ConditionsTo_053707]

 

Section 10.03. [a05-4160_1ex10d1.htm#Section10_03_ConditionsTo_053717]

 

Conditions to Obligation of Seller
[a05-4160_1ex10d1.htm#Section10_03_ConditionsTo_053717]

 

 

 

 

 

ARTICLE 11 [a05-4160_1ex10d1.htm#Article11_053723]

 

SURVIVAL; INDEMNIFICATION [a05-4160_1ex10d1.htm#SurvivalIndemnification_053724]

 

 

 

 

 

Section 11.01. [a05-4160_1ex10d1.htm#Section11_01_Survival_053728]

 

Survival [a05-4160_1ex10d1.htm#Section11_01_Survival_053728]

 

Section 11.02. [a05-4160_1ex10d1.htm#Section11_02_Indemnification_053735]

 

Indemnification [a05-4160_1ex10d1.htm#Section11_02_Indemnification_053735]

 

Section 11.03. [a05-4160_1ex10d1.htm#Section11_03_Procedures_053745]

 

Procedures for Third Party Claims
[a05-4160_1ex10d1.htm#Section11_03_Procedures_053745]

 

Section 11.04. [a05-4160_1ex10d1.htm#Section11_04_Procedures_053757]

 

Procedures for Direct Claims
[a05-4160_1ex10d1.htm#Section11_04_Procedures_053757]

 

Section 11.05. [a05-4160_1ex10d1.htm#Section11_05_PurchasePrice_053802]

 

Purchase Price Adjustment and Interest
[a05-4160_1ex10d1.htm#Section11_05_PurchasePrice_053802]

 

 

 

 

 

ARTICLE 12 [a05-4160_1ex10d1.htm#Article12_053810]

 

TERMINATION [a05-4160_1ex10d1.htm#Termination_053813]

 

 

 

 

 

Section 12.01. [a05-4160_1ex10d1.htm#Section12_01_GroundsFor_053817]

 

Grounds for Termination [a05-4160_1ex10d1.htm#Section12_01_GroundsFor_053817]

 

Section 12.02. [a05-4160_1ex10d1.htm#Section12_02_EffectOf_053825]

 

Effect of Termination [a05-4160_1ex10d1.htm#Section12_02_EffectOf_053825]

 

 

 

 

 

ARTICLE 13 [a05-4160_1ex10d1.htm#Article13_053831]

 

MISCELLANEOUS [a05-4160_1ex10d1.htm#Miscellaneous_053835]

 

 

 

 

 

Section 13.01. [a05-4160_1ex10d1.htm#Section13_01_Notices_053841]

 

Notices [a05-4160_1ex10d1.htm#Section13_01_Notices_053841]

 

Section 13.02. [a05-4160_1ex10d1.htm#Section13_02_AmendmentsAndWaivers_053901]

 

Amendments and Waivers
[a05-4160_1ex10d1.htm#Section13_02_AmendmentsAndWaivers_053901]

 

Section 13.03. [a05-4160_1ex10d1.htm#Section13_03_Expenses_053941]

 

Expenses [a05-4160_1ex10d1.htm#Section13_03_Expenses_053941]

 

Section 13.04. [a05-4160_1ex10d1.htm#Section13_04_SuccessorsAndAssigns_053945]

 

Successors and Assigns
[a05-4160_1ex10d1.htm#Section13_04_SuccessorsAndAssigns_053945]

 

Section 13.05. [a05-4160_1ex10d1.htm#Section13_05_GoverningLaw_053950]

 

Governing Law [a05-4160_1ex10d1.htm#Section13_05_GoverningLaw_053950]

 

Section 13.06. [a05-4160_1ex10d1.htm#Section13_06_Jurisdiction_053953]

 

Jurisdiction [a05-4160_1ex10d1.htm#Section13_06_Jurisdiction_053953]

 

Section 13.07. [a05-4160_1ex10d1.htm#Section13_07_WaiverOfJury_054002]

 

WAIVER OF JURY TRIAL [a05-4160_1ex10d1.htm#Section13_07_WaiverOfJury_054002]

 

Section 13.08. [a05-4160_1ex10d1.htm#Section13_08_Counterparts_054011]

 

Counterparts; Third Party Beneficiaries
[a05-4160_1ex10d1.htm#Section13_08_Counterparts_054011]

 

Section 13.09. [a05-4160_1ex10d1.htm#Section13_09_EntireAgreement_054015]

 

Entire Agreement [a05-4160_1ex10d1.htm#Section13_09_EntireAgreement_054015]

 

Section 13.10. [a05-4160_1ex10d1.htm#Section13_10_Captions_054019]

 

Captions [a05-4160_1ex10d1.htm#Section13_10_Captions_054019]

 

 

 

 

 

Exhibit A [a05-4160_1ex10d1.htm#ExhibitA_054033]

 

Assignment and Assumption Agreement [a05-4160_1ex10d1.htm#ExhibitA_054033]

 

 

iii

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

 

ASSET PURCHASE AGREEMENT

 

AGREEMENT dated as of February 23, 2005 between AETNA INC., a Pennsylvania
corporation (“Buyer”), and MAGELLAN HEALTH SERVICES, INC., a Delaware
corporation (“Seller”),

 

W I T N E S S E T H :

 

WHEREAS, Seller and its Subsidiaries conduct a business, excluding the Claims
Processing Business (as defined herein), (the “Business”) which operates and
manages the provision of behavioral healthcare services to members of the
healthcare plans of Buyer and its Subsidiaries pursuant to the Master Service
Agreement dated as of August 5, 1997 between Buyer, Seller and Human Affairs
International, Incorporated, a Subsidiary of Seller, as amended from time to
time after the date thereof (as so amended, the “MSA”);

 

WHEREAS, Buyer desires to purchase substantially all of the assets of the
Business from Seller, and Seller desires to sell substantially all of the assets
of the Business to Buyer, upon the terms and subject to the conditions
hereinafter set forth;

 

The parties hereto agree as follows:

 

ARTICLE 1
DEFINITIONS

 

Section 1.01.  Definitions.  (a) The following terms, as used herein, have the
following meanings:

 

“Aetna Addendum” shall have the meaning set forth in Schedule 3 to the MSA.

 

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such other
Person.

 

 “Claims Processing Business” means the operation and management by the Seller
and its Subsidiaries of claims processing services for the Business.

 

“Closing Date” means the date of the Closing.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.

 

1

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

 

“ERISA Affiliate” of any entity means any other entity which, together with such
entity, would be treated as a single employer under Section 414 of the Code.

 

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

 

“Intellectual Property Rights” means (i) inventions, whether or not patentable,
reduced to practice or made the subject of one or more pending patent
applications, (ii) national and multinational statutory invention registrations,
patents and patent applications (including all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations thereof)
registered or applied for in the United States and all other nations throughout
the world, all improvements to the inventions disclosed in each such
registration, patent or patent application, (iii) trademarks, service marks,
trade dress, logos, domain names, trade names and corporate names (whether or
not registered) in the United States and all other nations throughout the world,
including all variations, derivations, combinations, registrations and
applications for registration of the foregoing and all goodwill associated
therewith, (iv) copyrights (whether or not registered) and registrations and
applications for registration thereof in the United States and all other nations
throughout the world, including all derivative works, moral rights, renewals,
extensions, reversions or restorations associated with such copyrights, now or
hereafter provided by law, regardless of the medium of fixation or means of
expression, (v) computer software, (including source code, object code,
firmware, operating systems and specifications), (vi) trade secrets and, whether
or not confidential, business information (including pricing and cost
information, business and marketing plans and customer and supplier lists) and
know-how (including manufacturing and production processes and techniques,
algorithms and research and development information), (vii) industrial designs
(whether or not registered), (viii) databases and data collections, (ix) copies
and tangible embodiments of any of the foregoing, in whatever form or medium,
(x) all rights to obtain and rights to apply for patents, and to register
trademarks and copyrights, (xi) all rights in all of the foregoing provided by
treaties, conventions and common law and (xii) all rights to sue or recover and
retain damages and costs and attorneys’ fees for past, present and future
infringement or misappropriation of any of the foregoing.

 

“Key Software” means software used or held for use in the conduct of the
Business.

 

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, encumbrance or other adverse claim of any kind in
respect of such property or asset.  For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any property or asset which it has
acquired or holds subject to the interest of a vendor or lessor under any

 

2

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

 

conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.

 

 “Note” means the promissory note issued by Seller to Buyer under the MSA.

 

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

 

“Seller Entities” means Seller and each Subsidiary of Seller that holds
Purchased Assets or is subject to Assumed Liabilities.

 

“Subsidiary” of any Person means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person.

 

“Transaction Documents” means this Agreement, the Network Rental Agreement, the
Transition Services Agreement, the License Agreement and any other agreement to
be entered into in accordance with the terms hereof.

 

(b)           Each of the following terms is defined in the Section set forth
opposite such term:

 

Term

 

Section

Allocation Statement

 

2.06

Apportioned Taxes

 

8.03

Assumed Liabilities

 

2.03

Benefit Arrangements

 

9.01

Business

 

Recitals

Buyer

 

Preamble

Category I Contract

 

2.08

Category II Contract

 

2.08

Category III Contract

 

2.08

Closing

 

2.07

Closing Network Adjustment

 

2.08

Code

 

8.01

Contracts

 

2.01

Damages

 

11.02

Dedicated Staff

 

9.01

Defined Benefit Plan

 

9.01

Employee Plans

 

9.01

Environmental Laws

 

3.13

Excluded Assets

 

2.02

 

3

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

 

Term

 

Section

Excluded Liabilities

 

2.04

Final Network Adjustment

 

2.09

Final Determination

 

11.05

Indemnified Parties

 

11.03

Indemnifying Parties

 

11.03

IRS

 

9.01

Key Software

 

7.06

License Agreement

 

7.06

MSA

 

Recitals

Multi-Employer Plan

 

9.01

Network Rental Agreement

 

2.07

Non-Relevant Employees

 

9.02

Other Consents

 

3.05

Permits

 

3.11

Permitted Liens

 

3.08

Petty Cash

 

2.01

Post-Closing Tax Period

 

8.03

Pre-Closing Tax Period

 

8.01

Provider Contracts

 

3.14

Purchased Assets

 

2.01

Purchase Price

 

2.06

Real Property

 

3.08

Relevant Employees

 

9.02

Remaining Note Amount

 

2.07

Representatives

 

11.02

Required Consents

 

3.05

Revised Network Adjustment

 

2.08

Revised Network Adjustment Sheet

 

2.08

Seller

 

Preamble

Seller Trademarks and Tradenames

 

7.04

Shortfall

 

2.07

Tax

 

8.01

Taxing Authority

 

8.01

Third Party Claims

 

11.03

Transitional Services Agreement

 

7.06

WARN Act

 

7.05

Warranty Breach

 

11.02

 

ARTICLE 2
PURCHASE AND SALE

 

Section 2.01.  Purchase and Sale.  Except as otherwise provided below, upon the
terms and subject to the conditions of this Agreement, Buyer agrees to

 

4

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

 

purchase from Seller and Seller agrees to sell, convey, transfer, assign and
deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to
Buyer at the Closing, free and clear of all Liens, other than Permitted Liens,
all of Seller’s right, title and interest in, to and under the assets,
properties and business, of every kind and description, wherever located, real,
personal or mixed, tangible or intangible, owned, held or used primarily in the
conduct of the Business by Seller or any of its Subsidiaries (the “Purchased
Assets”), and including, without limitation, all right, title and interest of
Seller or any of its Subsidiaries in, to and under:

 

(a)           all real property and leases of, and other interests in, real
property used or held for use primarily in the conduct of the Business, in each
case together with all buildings, fixtures, and improvements erected thereon,
including without limitation the items listed on Schedule 3.08(a);

 

(b)           all personal property and interests therein, including machinery,
equipment, furniture, office equipment, communications equipment, vehicles,
supplies, spare and replacement parts, fuel and other tangible property used or
held for use primarily in the conduct of the Business;

 

(c)           all toll-free (and other) telephone numbers used primarily in, by
or to support the Business;

 

(d)           all rights under all contracts, agreements, leases, licenses,
commitments, sales and purchase orders and other instruments primarily related
to the Business (collectively, the “Contracts”);

 

(e)           all prepaid expenses primarily related to the Business, including
but not limited to leases and rentals;

 

(f)            all petty cash primarily related to the Business and located at
the operating facilities of the Business (“Petty Cash”);

 

(g)           all of Seller’s rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Purchased Assets,
including, without limitation, unliquidated rights under manufacturers’ and
vendors’ warranties;

 

(h)           all Intellectual Property Rights (excluding the “Magellan” name
and any derivative thereof, or any other Seller Trademarks and Tradenames)
primarily related to the Business;

 

(i)            all transferable licenses, permits or other governmental
authorizations affecting, or relating in any way to, the Business (other than

 

5

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

 

any PPO licenses, single-service HMO licenses, Knox-Keene licenses, third-party
administrator licenses, utilization review organization licenses, and any
similar type licenses and/or registrations, maintained by Seller or any of its
Subsidiaries);

 

(j)            all books, records, files and papers, whether in hard copy or
computer format, used to conduct the Business (including, without limitation,
engineering information, manuals and data, lists of present and former suppliers
and providers, claims data, utilization management data and other similar data,
personnel and employment records, and any information relating to any Tax
imposed on the Purchased Assets); it being understood that to the extent that
any of the foregoing is not primarily related to the Business then copies of
such books, records, files or papers shall constitute “Purchased Assets”, with
originals to be retained by Seller; and

 

(k)           all goodwill associated with the Business or the Purchased Assets,
together with the right to represent to third parties that Buyer is the
successor to the Business.

 

For the avoidance of doubt, it is understood that the inclusion of any asset in
the definition of “Purchased Assets” shall not affect the parties’ respective
ownership rights in any such assets prior to the Closing Date.

 

Section 2.02.  Excluded Assets.    Buyer expressly understands and agrees that
the following assets and properties of Seller or its Subsidiaries (the “Excluded
Assets”) shall be excluded from the Purchased Assets:

 

(a)           all cash and cash equivalents on hand and in banks, except for
Petty Cash;

 

(b)           insurance policies;

 

(c)           any Tax refunds and credits of Seller (or any member of any
consolidated, affiliated, combined or unitary group of which Seller is or has
been a member) relating to the Business for the Pre-Closing Tax Period;

 

(d)           any Intellectual Property Rights that are not primarily related to
the Business;

 

(e)           any claims that Seller may have against Buyer under the MSA;

 

(f)            any Purchased Assets sold or otherwise disposed of in the
ordinary course of business and not in violation of any provisions of this

 

6

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

 

Agreement or the MSA during the period from the date hereof until the Closing
Date; and

 

(g)           the Key Software.

 

For the avoidance of doubt, it is understood that the omission of any asset from
the list of “Excluded Assets” set forth in this Section 2.02 shall not cause any
such omitted asset to be purchased under this Agreement (unless such omitted
asset is a Purchased Asset under Section 2.01).

 

Section 2.03.  Assumed Liabilities. Upon the terms and subject to the conditions
of this Agreement, Buyer agrees, effective at the time of the Closing, to assume
only the following liabilities (the “Assumed Liabilities”):

 

(a)           all liabilities and obligations of Seller expressly assumed by
Buyer pursuant to Article 9 hereof.

 

Section 2.04.  Excluded Liabilities.  Notwithstanding any provision in this
Agreement or any other Transaction Document or other writing to the contrary,
Buyer is assuming only the Assumed Liabilities and is not assuming any other
liability or obligation of Seller or any of its Subsidiaries (or any predecessor
of Seller or any of its Subsidiaries or any prior owner of all or part of its
businesses and assets) of whatever nature, whether presently in existence or
arising hereafter.  All such other liabilities and obligations shall be retained
by and remain obligations and liabilities of Seller or any of its Subsidiaries
(all such liabilities and obligations not being assumed being herein referred to
as the “Excluded Liabilities”).  Without limiting the generality of the
foregoing, Excluded Liabilities include, without limitation:

 

(a)           any liability or obligation of Seller or any of its Subsidiaries
relating to or arising out of, directly or indirectly, events, acts, omissions,
conditions or facts occurring prior to or existing at the time of the Closing;

 

(b)           any liability or obligation of Seller, or any member of any
consolidated, affiliated, combined or unitary group of which Seller is or has
been a member, for Taxes;

 

(c)           any liabilities or obligations of Seller or any of its
Subsidiaries not expressly assumed by Buyer pursuant to Article 9 hereof; and

 

(d)           any liability or obligation relating to an Excluded Asset.

 

Section 2.05.  Assignment of Contracts and Rights.  Anything in this Agreement
or any other Transaction Document to the contrary notwithstanding,

 

7

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

 

this Agreement shall not constitute an agreement to assign any Purchased Asset
or any claim or right or any benefit arising thereunder or resulting therefrom
if such assignment, without the consent of a third party thereto, would
constitute a breach or other contravention of such Purchased Asset or in any way
adversely affect the rights of Buyer or Seller, or any of their respective
Subsidiaries, thereunder.  Seller and Buyer will use their best efforts (but
without any payment of money by Buyer) to obtain the consent of the other
parties to any such Purchased Asset or any claim or right or any benefit arising
thereunder for the assignment thereof to Buyer as Buyer may request.  If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of Seller or any of its
Subsidiaries thereunder so that Buyer would not in fact receive all such rights,
Seller and Buyer will cooperate in a mutually agreeable arrangement under which
Buyer would obtain the benefits and assume the obligations thereunder in
accordance with this Agreement, including sub-contracting, sub-licensing, or
sub-leasing to Buyer, or under which Seller would enforce for the benefit of
Buyer, with Buyer assuming Seller’s obligations, any and all rights of Seller
against a third party thereto.  Seller will promptly pay to Buyer when received
all monies received by Seller or any of its Subsidiaries under any Purchased
Asset or any claim or right or any benefit arising thereunder, except to the
extent the same represents an Excluded Asset. In such event, Seller and Buyer
shall, to the extent the benefits therefrom and obligations thereunder have not
been provided by alternate arrangements satisfactory to Buyer and Seller,
negotiate in good faith an adjustment in the consideration paid by Buyer for the
Purchased Assets, to the extent not otherwise adjusted pursuant to Section 2.08.

 

Section 2.06.  Purchase Price; Allocation of Purchase Price.  (a)  The purchase
price for the Purchased Assets (the “Purchase Price”) is $30,000,000 (Thirty
Million Dollars), payable through an offset against some or all of Seller’s
principal and interest payment obligations under the Note by way of a reduction
in the amount of principal and accrued but unpaid interest under the Note, plus
cash in the event the Purchase Price exceeds the principal amount of, and all
accrued but unpaid interest on, the Note.  The Purchase Price shall be paid as
provided in Section 2.07 and shall be subject to adjustment as provided in
Section 2.09.

 

(b)           As soon as practicable after the Closing (but no later than 90
days after the Closing), Buyer shall deliver to Seller a statement (the
“Allocation Statement”) allocating the Purchase Price (and any other items
required to be treated as additional purchase price for U.S. federal income tax
purposes) among the Purchased Assets in accordance with Section 1060 of the
Code.  If within 30 days after the delivery of the Allocation Statement Seller
notifies Buyer in writing that Seller objects to the allocation set forth in the
Allocation Statement, Buyer and Seller shall use commercially reasonable efforts
to resolve such

 

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dispute within 20 days.  In the event that Buyer and Seller are unable to
resolve such dispute within 20 days, Buyer and Seller shall jointly retain a
nationally recognized accounting firm to resolve the disputed items.  Upon
resolution of the disputed items, the allocation reflected on the Allocation
Statement shall be adjusted to reflect such resolution. The costs, fees and
expenses of such accounting firm shall be borne equally by Buyer and Seller.

 

(c)           Seller and Buyer agree to (i) be bound by the Allocation Statement
and (ii) act in accordance with the Allocation Statement in the preparation,
filing and audit of any Tax return (including, without limitation filing any
Form 8594 required to be filed with its federal income Tax return for the
taxable year that includes the date of the Closing).

 

(d)           If (i) an adjustment is made with respect to the Purchase Price
pursuant to Section 2.09 and/or (ii) the Closing Network Adjustment is not
reflected in the Allocation Statement submitted by Buyer to Seller in accordance
with Section 2.06(b), the Allocation Statement shall be adjusted in accordance
with Section 1060 of the Code and as mutually agreed by Buyer and Seller to
reflect such adjustment and/or the Closing Network Adjustment.  In the event
that an agreement is not reached within 20 days after the determination of the
Final Network Adjustment, any disputed items shall be resolved in the manner
described in Section 2.06(b).  Buyer and Seller agree to file any additional
information return required to be filed pursuant to Section 1060 of the Code and
to treat the Allocation Statement as adjusted in the manner described in Section
2.06(c).

 

(e)           Not later than 30 days prior to the filing of any Form 8594
relating to this transaction required to be filed, the party filing such form
shall deliver to the other party a copy of its Form 8594.

 

Section 2.07.  Closing.  The closing (the “Closing”) of the purchase and sale of
the Purchased Assets and the assumption of the Assumed Liabilities hereunder
shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue,
New York, New York, on December 30, 2005, for and as of December 31, 2005, or at
Buyer’s sole election, no later than 10 business day, after satisfaction of the
conditions set forth in Article 10, if such conditions were not satisfied on
December 30, 2005.

 

(a)           Buyer shall (i) offset some or all of Seller’s principal and
interest payment obligations under the Note (in an aggregate amount equal to the
Purchase Price plus the Closing Network Adjustment) by way of a reduction in the
amount of principal and accrued but unpaid interest under the Note, and (ii) in
the event the Purchase Price plus the Closing Network Adjustment exceeds the
offset amounts (the “Shortfall”), deliver to Seller an amount equal to the
Shortfall in immediately available funds by wire transfer to an account of
Seller with a bank in New York City designated by Seller, by notice to Buyer,
which notice

 

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shall be delivered not later than two business days prior to the Closing Date
(or if not so designated, then by certified or official bank check payable in
immediately available funds to the order of Seller in such amount).

 

(b)           In the event the sum of the Purchase Price and the Closing Network
Adjustment is less than the principal amount of, and accrued but unpaid interest
on, the Note (after giving effect to the offset contemplated by Section 2.07(a))
(such difference, the “Remaining Note Amount”), then at the Closing Seller shall
also make a payment of the Remaining Note Amount to Buyer, such payment to be
made by wire transfer of immediately available funds to an account of Buyer with
a bank in New York City designated by Buyer, by notice to Seller, which notice
shall be delivered not later than two business days prior to the Closing Date
(or if not so designated, then by certified or official bank check payable in
immediately available funds to the order of Buyer in such amount).

 

(c)           Seller and Buyer shall enter into an Assignment and Assumption
Agreement substantially in the form attached hereto as Exhibit A, and Seller
shall deliver to Buyer such deeds, bills of sale, endorsements, consents,
assignments and other good and sufficient instruments of conveyance and
assignment as the parties and their respective counsel shall deem reasonably
necessary or appropriate to vest in Buyer all right, title and interest in, to
and under the Purchased Assets.

 

(d)           Seller and Buyer shall enter into a Transitional Services
Agreement as contemplated by Section 7.06.

 

(e)           Upon the prior written request of Buyer (exercisable in its sole
discretion), Seller and Buyer shall enter into a Network Rental Agreement
substantially in the form attached as Attachment 1 to Schedule 3 to the MSA (the
“Network Rental Agreement”).

 

Section 2.08.  Network Adjustment.  (a) No later than 10 days prior to the
Closing Date, Buyer will cause to be prepared and delivered to Seller the
Closing Network Adjustment Sheet and a certificate based on such Closing Network
Adjustment Sheet setting forth Buyer’s good faith calculation of the Closing
Network Adjustment estimated as of the Closing Date.  As promptly as
practicable, but no later than 120 days, after the Closing Date, Buyer will
cause to be prepared and delivered to Seller the Revised Network Adjustment
Sheet and a certificate based on such Revised Network Adjustment Sheet setting
forth Buyer’s calculation of the Revised Network Adjustment as of the 90th day
after the Closing Date.  The “Closing Network Adjustment Sheet” means an
itemized list of each (i) outpatient provider Aetna Addendum (“Category I
Contract”), (ii) partial hospital and intensive outpatient facility provider
Aetna Addendum (“Category II Contract”) and (iii) inpatient facility provider
Aetna Addendum (“Category III Contract”), in each case (1) which have been
entered into

 

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pursuant to Section 5 of the MSA and (2) which are effective as of the Closing
Date and as to which no notice of termination has been received from the
provider thereunder.  The “Closing Network Adjustment” means a dollar amount
equal to 95% of the sum of (i) $500 for each Category I Contract, (ii) $2,500
for each Category II Contract and (iii) $5,000 for each Category III Contract,
based upon the figures set forth on the Closing Network Adjustment Sheet.  The
“Revised Network Adjustment Sheet” means an itemized list of each Category I
Contract, Category II Contract and Category III Contract, in each case (1) which
have been entered into prior to the Closing Date pursuant to Section 5 of the
MSA and (2) which are effective as of the 90th day after the Closing Date and as
to which no notice of termination has been received from the provider
thereunder; provided that no termination by Buyer (or any of its Affiliates) of
any such Aetna Addendum shall result in such Aetna Addendum being deemed “not
effective” for purposes of this sentence.  If Buyer shall, subsequent to the
Closing Date and prior to the 90th day after the Closing Date, take any action
or wrongfully fail to pay any material obligation to a provider, or breach any
other material obligation to a provider, in each case causing any provider to
terminate (or to deliver notice of termination of) any Aetna Addendum, then the
“Revised Network Adjustment” shall be calculated as if such provider had not
terminated (or delivered notice of termination) of such Aetna Addendum.  The
“Revised Network Adjustment” means a dollar amount equal to 100% of the sum of
(i) $500 for each Category I Contract, (ii) $2,500 for each Category II Contract
and (iii) $5,000 for each Category III Contract, based upon the figures set
forth on the Revised Network Adjustment Sheet.  For purposes of any
determination made pursuant to this Section 2.08(a), to the extent that any
provider contract qualifies in more than one of Categories I, II and III, then
such provider contract shall be considered to be in the one Category that
provides for the greatest network adjustment payment hereunder.

 

(b)           If Seller disagrees with Buyer’s calculation of the Revised
Network Adjustment delivered pursuant to Section 2.08(a), Seller may, within 20
days after delivery of the documents referred to in the second sentence of
Section 2.08(a), deliver a notice to Buyer disagreeing with such calculation and
setting forth Seller’s calculation of such amount.  Any such notice of
disagreement shall specify those items or amounts as to which Seller disagrees,
and Seller shall be deemed to have agreed with all other items and amounts
contained in the Revised Network Adjustment Sheet and the calculation of the
Revised Network Adjustment delivered pursuant to Section 2.08(a).

 

(c)           If a notice of disagreement shall be duly delivered pursuant to
Section 2.08(b), Buyer and Seller shall, during the 15 days following such
delivery, use their best efforts to reach agreement on the disputed items or
amounts in order to determine, as may be required, the amount of the Revised
Network Adjustment, which amount shall not be less than the amount thereof shown
in Buyer’s calculations delivered pursuant to Section 2.08(a) nor more than

 

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the amount thereof shown in Seller’s calculation delivered pursuant to Section
2.08(b).  If during such period, Buyer and Seller are unable to reach such
agreement, then they shall be entitled to exercise their remedies under Section
13.06.

 

(d)           Buyer and Seller agree that they will cooperate and assist in the
preparation of the Closing Network Adjustment Sheet and the Revised Network
Adjustment Sheet, the calculation of the Closing Network Adjustment and the
Revised Network Adjustment and in the conduct of any reviews referred to in this
Section 2.08, including without limitation, the making available to the extent
necessary of books, records and personnel.

 

Section 2.09.  Adjustment of Purchase Price.  (a) If the Closing Network
Adjustment exceeds the Final Network adjustment, Seller shall pay to Buyer, as
an adjustment to the Purchase Price and in the manner and with interest as
provided in Section 2.09(b), the amount of such excess.  If the Final Network
Adjustment exceeds the Closing Network Adjustment, Buyer shall pay to Seller, as
an adjustment to the Purchase Price and in the manner and with interest as
provided in Section 2.09(b), the amount of such excess.  “Final Network
Adjustment” means the Revised Network Adjustment (i) as shown in Buyer’s
calculation delivered pursuant to the second sentence of Section 2.08(a) if no
notice of disagreement with respect thereto is duly delivered pursuant to
Section 2.08(b); or (ii) if such a notice of disagreement is delivered, (A) as
agreed by Buyer and Seller pursuant to Section 2.08(c), or (B) in the absence of
such agreement, as determined pursuant to Section 13.06.

 

(b)           Any payment pursuant to Section 2.09(a) shall be made at a
mutually convenient time and place within 10 days after the Final Network
Adjustment has been determined by delivery by Buyer or Seller, as the case may
be, of a certified or official bank check payable in immediately available funds
to the other party or by causing such payments to be credited to such account of
such other party as may be designated by such other party.  The amount of any
payment to be made pursuant to this Section 2.09 shall bear interest from and
including the Closing Date to but excluding the date of payment at a rate per
annum equal to the interest rate under the Note.  Such interest shall be
calculated daily and shall be payable at the same time as the payment to which
it relates.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer as of the date hereof and as of the
Closing Date that:

 

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Section 3.01.  Corporate Existence and Power.  Each of the Seller Entities is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on the business as now conducted.  Each of the Seller Entities is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary. 

 

Section 3.02.  Corporate Authorization.  The execution, delivery and performance
by each Seller Entity of the Transaction Documents to which it is a party and
the consummation of the transactions contemplated hereby and thereby are within
the corporate powers and have been duly authorized by all necessary corporate
action on the part of such Seller Entity.  Each Transaction Document to which
any Seller Entity is a party constitutes a valid and binding agreement of such
Seller Entity.

 

Section 3.03.  Governmental Authorization.  Except as set forth in Schedule
3.03, the execution, delivery and performance by each Seller Entity of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby require no action by or in respect
of, or filing with, any governmental body, agency or official other than
compliance with any applicable requirements of the HSR Act.

 

Section 3.04.  Noncontravention.  The execution, delivery and performance by
each Seller Entity of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby do not and will
not (i) violate the certificate of incorporation or bylaws of such Seller
Entity, (ii) assuming compliance with the matters referred to in Section 3.03,
violate any applicable law, rule, regulation, judgment, injunction, order or
decree, (iii) assuming the obtaining of all Required and Other Consents,
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Buyer or to a loss of
any benefit relating to the Business to which such Seller Entity is entitled
under any provision of any agreement or other instrument binding upon such
Seller Entity or by which any of the Purchased Assets is or may be bound or (iv)
result in the creation or imposition of any Lien on any Purchased Asset, other
than Permitted Liens.

 

Section 3.05.  Required and Other Consents.  (a)  Schedule 3.05(a) sets forth
each agreement, contract or other instrument binding upon Seller or any of its
Subsidiaries or any Permit requiring a consent or other action by any Person as
a result of the execution, delivery and performance of this Agreement or any
other Transaction Document (the “Required Consents”).

 

(b)           Schedule 3.05(b) sets forth each other consent or action by any
Person (the “Other Consents”) under such agreements, contracts or other

 

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instruments or such Permits that is necessary with respect to the execution,
delivery and performance of this Agreement or any other Transaction Document.

 

Section 3.06.  Litigation.  There is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or to the know ledge of
Seller, threatened (with a reasonable likelihood of being commenced) against or
affecting, the Business or any Purchased Asset before any court or arbitrator or
any governmental body, agency or official which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by the Transaction Documents.

 

Section 3.07.  Compliance with Laws and Court Orders.  Neither Seller nor any
Subsidiary of Seller is in violation of, has since the date of the MSA violated,
or to the knowledge of Seller is under investigation with respect to or has been
threatened to be charged with or given notice of any violation of, any law,
rule, regulation, judgment, injunction, order or decree applicable to the
Purchased Assets or the conduct of the Business.

 

Section 3.08.  Properties.  (a)  Schedule 3.08(a) correctly describes all real
property used or held for use in the Business included in the Purchased Assets
(the “Real Property”), which Seller or any of its Subsidiaries owns, leases,
operates or subleases, any title insurance policies and surveys with respect
thereto, and any Liens thereon, specifying in the case of leases or subleases,
the name of the lessor or sublessor, the lease term and basic annual rent.

 

(b)           Schedule 3.08(b) correctly describes all personal property used or
held for use in the Business included in the Purchased Assets, including,
without limitation, machinery, equipment, furniture, vehicles, supplies, spare
and replacement parts, fuel and other trade fixtures and fixed assets, which
Seller or any of its Subsidiaries owns, leases or subleases, and any Liens
thereon, specifying in the case of leases or subleases, the name of the lessor
or sublessor, the lease term and basic annual rent.

 

(c)           The Seller Entities have good and marketable, indefeasible, fee
simple title to, or in the case of leased Real Property or personal property
have valid leasehold interests in, all Purchased Assets (whether real, personal,
tangible or intangible).  No Purchased Asset is subject to any Lien, except for
(i) Liens disclosed on Schedule 3.08(c) or (ii) Liens which do not materially
detract from the value of such Purchased Asset, or materially interfere with any
present or intended use of such Purchased Asset (collectively, the “Permitted
Liens”).

 

(d)           There are no developments affecting any of the Purchased Assets
pending or, to the knowledge of Seller threatened, which might materially
detract from the value, materially interfere with any present or intended use or
materially adversely affect the marketability of such Purchased Assets.

 

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(e)           The Real Property includes all real property, and only such real
property, as is used or held for use in connection with the conduct of the
business and operations of the Business as heretofore conducted and as presently
planned to be conducted by Buyer.

 

(f)            All leases of Real Property or personal property are in good
standing and are valid, binding and enforceable in accordance with their
respective terms and there does not exist under any such lease any default or
any event which with notice or lapse of time or both would constitute a
default.  True and complete copies of each such lease have been delivered to
Buyer.

 

(g)           The buildings, structures and equipment included in the Purchased
Assets have no material defects, are in good operating condition and repair and
have been reasonably maintained consistent with standards generally followed in
the industry (giving due account to the age and length of use of same, ordinary
wear and tear excepted), are adequate and suitable for their present and
intended uses.

 

(h)           None of the Purchased Assets is an equity interest in an entity.

 

Section 3.09.  Sufficiency of and Title to the Purchased Assets.  (a) The
Purchased Assets, together with the rights of Buyer under the Transaction
Documents (including the arrangements contemplated by Section 2.05), constitute
all of the property and assets used or held for use in the Business other than
the Key Software and are adequate to conduct the Business as conducted as of the
date hereof and as of the Closing Date disregarding the Key Software.

 

(b)           Upon consummation of the transactions contemplated hereby, Buyer
will have acquired good and marketable title in and to, or a valid leasehold
interest in, each of the Purchased Assets, free and clear of all Liens, except
for Permitted Liens.

 

Section 3.10.  Intellectual Property.  (a) Schedule 3.10 is a list of all
Intellectual Property Rights (i) owned by Seller or its Subsidiaries for use or
held for use in the conduct of the Business, and (ii) licensed or sub-licensed
by Seller or its Subsidiaries for use or held for use in the conduct of the
Business, specifying as to each, (x) the owner of such Intellectual Property
Right and (y) the jurisdiction by or in which such Intellectual Property Right
is recognized without regard to registration or has been issued or registered or
in which an application for such issuance or registration has been filed,
including the respective registration or application number.  Seller or its
Subsidiaries, as applicable, (i) holds all rights, title and interest in and to
all Intellectual Property Rights owned by such Person for use or held for use in
the conduct of the Business, free and clear of any Lien, and (ii) has a valid
and binding license or sublicense to, or other legally enforceable right to, all
Intellectual Property Rights used or held for use by

 

15

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such Person in, or necessary for the conduct of the Business, except for the
Intellectual Property Rights owned by such Person.

 

(b)           Neither Seller nor any of its Subsidiaries or any other Person, is
in default (or with or without the giving of notice, the lapse of time, or both,
would be in default) in any respect under any license, sublicense or other right
to use any Intellectual Property Rights used or held for use by Seller or its
Subsidiaries in, or necessary for the conduct of the Business.  No Intellectual
Property Right used or held for use by the by Seller or its Subsidiaries in, or
necessary for the conduct of the Business is subject to any outstanding claim,
audit, demand, order, judgment, decree, stipulation or agreement restricting the
use thereof by Seller or its Subsidiaries or restricting the licensing thereof
by Seller or its Subsidiaries to any Person.  There is no infringement of or
unlawful use by any Person of any of (i) Intellectual Property Rights listed in
Schedule 3.10, or (ii) the Intellectual Property Rights covered by the last
sentence of Section 3.10(a).

 

Section 3.11.  Licenses and Permits.  Schedule 3.11 correctly describes each
license, franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the Business (the “Permits”) together with
the name of the government agency or entity issuing such Permit.  Except as set
forth on Schedule 3.11, (i) the Permits are valid and in full force and effect,
(ii) none of Seller or any of its Subsidiaries is in default, and no condition
exists that with notice or lapse of time or both would constitute a default,
under the Permits and (iii) none of the Permits will, assuming the related
Required Consents and Other Consents have been obtained prior to the Closing
Date, be terminated or impaired or become terminable, in whole or in part, as a
result of the transactions contemplated hereby.  Except as set forth in Schedule
3.11, upon consummation of such transactions, Buyer will, assuming the related
Required Consents and Other Consents have been obtained prior to the Closing
Date, have all of the right, title and interest in all the Permits.

 

Section 3.12.  Finders’ Fees.  There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Seller who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.

 

Section 3.13.  Environmental Compliance.  No written notice, request for
information, order, complaint or penalty has been received, and there are no
judicial, administrative or other actions, suits or proceedings pending or
threatened which allege a violation of any Environmental Law, in each case
relating to the Purchased Assets or Real Property and arising out of any
Environmental Law.  Seller has obtained or caused to be obtained all
environmental permits necessary for the operation of the Purchased Assets and
the Real Property to comply with all applicable Environmental Laws and Seller is
in compliance with the terms of such permits and, with respect to the operation
of

 

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the Purchased Assets and the Real Property, with all other applicable
Environmental Laws.  There has been no written environmental audit conducted
within the past five years by Seller of any Purchased Asset or any of the Real
Property which has not been delivered to Buyer prior to the date hereof.  For
purposes of this Section 3.13, “Environmental Laws” means any federal, state,
local or foreign law (including, without limitation, common law), treaty,
judicial decision, regulation, rule, judgment, order, decree, injunction, permit
or governmental restriction or any agreement with any governmental authority or
other third party, whether now or hereafter in effect, relating to the
environment, human health and safety or to pollutants, contaminants, wastes or
chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise
hazardous substances, wastes or materials.

 

Section 3.14.  Provider Contracts.  Prior to the date of this Agreement, Seller
has delivered to Buyer (i) true and complete originals of each executed Aetna
Addendum in effect as of the date of this Agreement and (ii) all rates (other
than individual facility rates) applicable to the providers who have executed
such Aetna Addenda..  Seller is not bound by any arrangements or commitments
with any network provider that has executed an Aetna Addendum other than (x)
Provider Contracts and (y) arrangements or commitments that are not primarily
related to the Business.  Each Provider Contract is a valid and binding
agreement of Seller or the Subsidiary of Seller that is party thereto, is in
full force and effect and is in compliance with applicable laws.  None of
Seller, Seller’s Subsidiaries or, to the knowledge of Seller, any other party
thereto is in default or breach under the terms of any such Provider Contract,
and, to the knowledge of Seller, no event or circumstance has occurred that,
with notice or lapse of time or both, would constitute any event of default
thereunder.

 

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as of the date hereof and as of the
Closing Date that:

 

Section 4.01.  Corporate Existence and Power.  Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of
Pennsylvania and has all corporate powers and all material governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.

 

Section 4.02.  Corporate Authorization.  The execution, delivery and performance
by Buyer of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby are within the
corporate powers of Buyer and have been duly authorized by all necessary

 

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corporate action on the part of Buyer.  Each Transaction Document constitutes a
valid and binding agreement of Buyer.

 

Section 4.03.  Governmental Authorization.  Except as set forth in Schedule
4.03, the execution, delivery and performance by Buyer of the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby require no material action by or in respect of,
or material filing with, any governmental body, agency or official other than
compliance with any applicable requirements of the HSR Act.

 

Section 4.04.  Noncontravention.  The execution, delivery and performance by
Buyer of the Transaction Documents to which it is a party and the consummation
of the transactions contemplated hereby and thereby do not and will not (i)
violate the certificate of incorporation or bylaws of Buyer or (ii) assuming
compliance with the matters referred to in Section 4.03, violate any applicable
material law, rule, regulation, judgment, injunction, order or decree.

 

Section 4.05.  Litigation.  There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting, Buyer before any court or arbitrator or any governmental body, agency
or official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by the Transaction Documents.

 

Section 4.06.  Finders’ Fees.  There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission from Seller or any of
its Subsidiaries upon consummation of the transactions contemplated by this
Agreement.

 

ARTICLE 5
COVENANTS OF SELLER

 

Seller agrees that:

 

Section 5.01.  Conduct of the Business.  From the date hereof until the Closing
Date, Seller shall, and shall cause each of its Subsidiaries to, conduct the
Business in accordance with the MSA and, to the extent not addressed in the MSA,
in the ordinary course consistent with past practice, and shall use its best
efforts to preserve intact the business organizations and relationships with
third parties and to keep available the services of the present employees of the
Business. On or prior to September 1, 2005, Seller will provide Buyer with true
and complete copies (which copies may be in an electronic scanned form that is
deemed acceptable by the Buyer and is reasonably organized and searchable) of
(i) each executed Aetna Addendum in effect as of such date (excepting those

 

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previously provided pursuant to Section 3.14 hereof) and (ii) each executed
network provider contract underlying each Aetna Addendum (including those
previously provided pursuant to Section 3.14 hereof), including each applicable
amendment and compensation schedule, including all of the individual facility
rates, in effect as of such date (collectively, the “Provider Contracts”), and,
prior to the Closing, shall provide Buyer with copies of any additional copies
of any such documents executed after such date. Without limiting the generality
of the foregoing, from the date hereof until the Closing Date, Seller will not
and will cause each of its Subsidiaries not to:

 

(a)           with respect to the Business acquire a material amount of assets
from any other Person;

 

(b)           sell, lease, license or otherwise dispose of any Purchased Assets
except (i) pursuant to existing contracts or commitments and (ii) in the
ordinary course consistent with past practice;

 

(c)           modify the compensation or benefits of any Dedicated Staff except
for increases in the ordinary course consistent with past practice; provided
that any modification to the compensation or benefits of any Dedicated Staff
with a base salary in excess of $75,000 per year shall require the consent of
Buyer except for merit increases in the ordinary course of business consistent
with past practice planned to go into effect in March 2005, and provided that
the average base salary increase for all such Dedicated staff with base salaries
in excess of $75,000 is not greater than four percent (4%) of current base
salaries;

 

(d)           agree or commit to do any of the foregoing; or

 

(e)           (i) take or agree or commit to take any action that would make any
representation or warranty of Seller hereunder inaccurate in any respect at, or
as of any time prior to, the Closing Date or (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.

 

Section 5.02.  Access to Information; Confidentiality.  (a)  From the date
hereof until the Closing Date, Seller will, and will cause each of its
Subsidiaries to, (i) give Buyer, its Subsidiaries, counsel, financial advisors,
auditors and other authorized representatives full access to the offices,
properties, books and records of Seller or its Subsidiaries relating to the
Business, (ii) furnish to Buyer, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information relating to the Business (including any information necessary in the
credentialing of providers) as such Persons may reasonably request and (iii)
instruct the employees, counsel and

 

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financial advisors of Seller and its Subsidiaries to cooperate with Buyer in its
investigation of the Business.  Any investigation pursuant to this Section shall
be conducted in such manner as not to interfere unreasonably with the conduct of
the business of Seller or its Subsidiaries.  No investigation by Buyer or other
information received by Buyer shall operate as a waiver or otherwise affect any
representation, warranty or agreement given or made by Seller hereunder.

 

(b)           After the Closing, Seller and its Subsidiaries will hold, and will
use their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Business, except to the extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by Seller, (ii) in the public
domain through no fault of Seller or its Subsidiaries or (iii) later lawfully
acquired by Seller or its Subsidiaries from sources other than those related to
its prior ownership of the Business.  The obligation of Seller and its
Subsidiaries to hold any such information in confidence shall be satisfied if
they exercise the same care with respect to such information as they would take
to preserve the confidentiality of their own similar information.

 

(c)           On and after the Closing Date, Seller will, and will cause each of
its Subsidiaries to, afford promptly to Buyer and its agents reasonable access
to its books of account, financial and other records (including, without
limitation, accountant’s work papers), information, employees and auditors to
the extent necessary or useful for Buyer in connection with any audit,
investigation, dispute or litigation or any other reasonable business purpose
relating to the Business; provided that any such access by Buyer shall not
unreasonably interfere with the conduct of the business of Seller or its
Subsidiaries.

 

Section 5.03.  Notices of Certain Events.  Seller shall promptly notify Buyer
of:

 

(a)           any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by the Transaction Documents;

 

(b)           any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by the Transaction Documents;

 

(c)           any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving or
otherwise affecting Seller, any of its Subsidiaries or the

 

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Business that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.06 or that relate to the
consummation of the transactions contemplated by the Transaction Documents; and

 

(d)           the damage or destruction by fire or other casualty of any
Purchased Asset or part thereof or in the event that any Purchased Asset or part
thereof becomes the subject of any proceeding or, to the knowledge of Seller,
threatened proceeding for the taking thereof or any part thereof or of any right
relating thereto by condemnation, eminent domain or other similar governmental
action.

 

ARTICLE 6
COVENANTS OF BUYER

 

Buyer agrees that:

 

Section 6.01.  Confidentiality;Access to Information.  Prior to the Closing Date
and after any termination of this Agreement, Buyer and its Subsidiaries will
hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the Business, Seller or any of its Subsidiaries furnished
to Buyer or its Subsidiaries in connection with the transactions contemplated by
the Transaction Documents, except to the extent that such information can be
shown to have been (i) previously known on a nonconfidential basis by Buyer or
any of its Subsidiaries, (ii) in the public domain through no fault of Buyer or
its Subsidiaries or (iii) later lawfully acquired by Buyer or its Subsidiaries
from sources other than Seller; provided that Buyer and any Subsidiary of Buyer
may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by the Transaction Documents and to its lenders or
other Persons in connection with obtaining the financing for the transactions
contemplated by the Transaction Documents so long as such Persons are informed
by Buyer of the confidential nature of such information and are directed by
Buyer to treat such information confidentially.  The obligation of Buyer and its
Subsidiaries to hold any such information in confidence shall be satisfied if
they exercise the same care with respect to such information as they would take
to preserve the confidentiality of their own similar information.  If this
Agreement is terminated, Buyer and its Subsidiaries will, and will use their
best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver to
Seller, upon request, all documents and other materials, and

 

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all copies thereof, obtained by Buyer or its Subsidiaries or on their behalf
from Seller or its Subsidiaries in connection with this Agreement that are
subject to such confidence.  On or after the Closing Date, Buyer will, and will
cause each of its Subsidiaries to  reasonably cooperate with Seller and its
agents and to provide Seller and its agents with information reasonably
necessary to comply with regulatory reporting requirements (e.g., information
for utilization management and third party administrative reports).

 

ARTICLE 7
COVENANTS OF BUYER AND SELLER

 

Buyer and Seller agree that:

 

Section 7.01.  Best Efforts; Further Assurances.  (a) Subject to the terms and
conditions of this Agreement, Buyer and Seller will use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by the Transaction Documents.  Seller
and Buyer agree to execute and deliver, or cause to be executed and delivered,
such other documents, certificates, agreements and other writings and to take or
to cause to be taken such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated by
the Transaction Documents and to vest in Buyer good and marketable title to the
Purchased Assets.

 

(b)           Seller hereby constitutes and appoints, effective as of the
Closing Date, Buyer and its successors and assigns as the true and lawful
attorney of Seller with full power of substitution in the name of Buyer, or in
the name of Seller but for the benefit of Buyer, (i) to collect for the account
of Buyer any items of Purchased Assets and (ii) to institute and prosecute all
proceedings which Buyer may in its sole discretion deem proper in order to
assert or enforce any right, title or interest in, to or under the Purchased
Assets, and to defend or compromise any and all actions, suits or proceedings in
respect of the Purchased Assets.  Buyer shall be entitled to retain for its own
account any amounts collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof.

 

Section 7.02.  Certain Filings.  Seller and Buyer shall cooperate with one
another (i) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by the Transaction Documents and (ii) in taking such
actions or

 

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making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.

 

Section 7.03.  Public Announcements.  The parties agree to consult with each
other before issuing any press release with respect to this Agreement or the
transactions contemplated hereby or by any other Transaction Document and,
except for any press releases the making of which may be required by applicable
law or any listing agreement with any national securities exchange, will not
issue any such press release prior to such consultation.

 

Section 7.04.  Trademarks; Tradenames.  (a) Except as set forth in the other
subsections of this Section 7.04, after the Closing, Buyer and its Subsidiaries
shall not use any of the marks or names set forth on Schedule 7.04 (collectively
or individually as the context requires, the “Seller Trademarks and
Tradenames”).

 

(b)           Buyer agrees to use reasonable efforts to cease using the Seller
Trademarks and Tradenames on buildings and other fixed assets as soon as
possible within a period not to exceed one year after the Closing Date.

 

Section 7.05.  WARN Act.  The parties agree to cooperate in good faith to
determine whether any notification may be required under the Worker Adjustment
and Retraining Notification Act (the “WARN Act”) as a result of the transactions
contemplated by the Transaction Documents.  Buyer will be responsible for
providing any notification that may be required under the WARN Act with respect
to any Relevant Employees.  Seller will be responsible for providing any
notification that may be required under the WARN Act with respect to any
Non-Relevant Employees.

 

Section 7.06.  License Agreement; Provision of Services.  (a)  Intentionally
Omitted.

 

(b)           For a period of 45 days following the Closing Date, Seller shall,
and shall cause its Subsidiaries to, provide at Buyer’s request payroll,
accounts receivable collection, accounts payable/cost accounting, general
accounting and financial reporting, IT systems operation and technical support,
and human resources and employee benefits services, as well as the claims
processing, utilization management and similar services (utilizing, to the
extent elected by Buyer, Seller’s systems) (together with such other services as
are reasonably necessary to operate the Business in the ordinary course
consistent with past practices) to Buyer of the type Seller and its Subsidiaries
have provided to the Business prior to the Closing Date.  Such services shall be
provided at a cost equal to the direct and indirect costs Seller or the
applicable Subsidiary of Seller assesses to Subsidiaries of Seller from time to
time for the same or similar services as of the Closing Date (including any cost
specifically associated with

 

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providing such services but excluding any cost attributable to general overhead
allocation), plus a fee equal to 10% of such direct and indirect costs.  Such
services shall be of a quality and scope at least equal to the quality and scope
of similar services being provided to the Business as of such date.  In the
event the Claims Processing Business is purchased by Buyer under this Agreement,
then subsequent to such purchase, Buyer shall pay on Seller’s behalf (and Seller
shall, within five business days, reimburse Buyer for any such payments) all
amounts due and owing to providers in respect of claims relating to services
provided by such providers prior to the Closing Date.  Prior to Closing, the
parties will agree on documentation (the “Transitional Services Agreement”)
setting forth the detailed terms of Seller’s and Buyer’s obligations under this
Section 7.06(b).

 

Section 7.07.  Additional Assets.  To the extent that Seller or any of its
Subsidiaries own any assets that are neither Purchased Assets nor the Key
Software, but that are necessary or appropriate to ensure that the Buyer is able
to operate the Business after the Closing Date in a manner consistent with past
practice of Seller before the Closing Date, then Buyer and Seller shall work
together in good faith to enter into an arrangement that will provide Buyer with
access to such assets as may be reasonably necessary in the conduct of the
Business after the Closing Date.

 

ARTICLE 8
TAX MATTERS

 

Section 8.01.  Tax Definitions.  The following terms, as used in this Agreement,
have the following meanings:

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Pre-Closing Tax Period” means, collectively, (i) all Tax periods ending on or
before the Closing Date and (ii) with respect to a Tax period that commences
before and ends after the Closing Date, the portion of such period up to and
including the Closing Date.

 

“Tax” means (i) any tax, governmental fee or other like assessment or charge of
any kind (including, but not limited to, withholding on amounts paid to or by
any Person), together with any interest, penalty, addition to tax or additional
amount imposed by any domestic or foreign governmental authority responsible for
the imposition of any such tax (a “Taxing Authority”), or (ii) liability for the
payment of any amounts of the type described in (i) as a result of being party
to any agreement or any express or implied obligation to indemnify any other
Person.

 

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Section 8.02.  Tax Representations and Warranties.  Seller represents and
warrants to Buyer that:

 

(a)           Except for Taxes set forth on Schedule 8.02 (which Taxes shall not
be material, individually or in the aggregate) Seller has timely paid all Taxes
required to be paid, the non-payment of which would result in a Lien on any
Purchased Asset, would otherwise adversely affect the Business or the Purchased
Assets or would result in Buyer becoming liable therefor.

 

(b)           Seller has established, in accordance with generally accepted
accounting principles consistently applied, adequate reserves for the payment of
all Taxes not yet due that arise from or with respect to the Purchased Assets or
the Business, the non-payment of which would result in a Lien on any Purchased
Asset, would otherwise adversely affect the Business or the Purchased Assets or
would result in Buyer becoming liable therefor.

 

Section 8.03.  Responsibility for Taxes.  (a) Seller shall timely pay all Taxes
that arise from or with respect to the Purchased Assets or the Business and that
are incurred in or attributable to the Pre-Closing Tax Period.

 

(b)           All real property Taxes, personal property Taxes and similar ad
valorem obligations levied with respect to the Purchased Assets for a taxable
period which includes (but does not end on) the Closing Date (collectively, the
“Apportioned Taxes”) shall be apportioned between Seller and Buyer based on the
number of days of such taxable period included in the Pre-Closing Tax Period and
the number of days of such taxable period after the Closing Date (with respect
to any such taxable period, the “Post-Closing Tax Period”).  Seller shall be
liable for the proportionate amount of such Taxes that is attributable to the
Pre-Closing Tax Period, and Buyer shall be liable for the proportionate amount
of such Taxes that is attributable to the Post-Closing Tax Period.

 

(c)           Apportioned Taxes shall be timely paid, and all applicable
filings, reports and returns shall be filed, as provided by applicable law.  The
paying party shall be entitled to reimbursement from the non-paying party in
accordance with Section 8.03(b).  Upon payment of any such Apportioned Tax, the
paying party shall present a statement to the non-paying party setting forth the
amount of reimbursement to which the paying party is entitled under Section
8.03(b), together with such supporting evidence as is reasonably necessary to
calculate the amount to be reimbursed.  The non-paying party shall make such
reimbursement promptly but in no event later than 10 days after the receipt of
such statement.

 

Section 8.04.  Tax Cooperation.  Buyer and Seller shall furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to the Business and the Purchased Assets
(including, without limitation, access to books and records) as is reasonably

 

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necessary for the filing of all Tax returns, the making of any election relating
to Taxes, the preparation for any audit by any Taxing Authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax. 
Buyer and Seller shall retain all books and records with respect to Taxes
pertaining to the Purchased Assets for a period of at least six years following
the Closing Date.  At the end of such period, each party shall provide the other
with at least ten days prior written notice before destroying any such books and
records, during which period the party receiving such notice can elect to take
possession, at its own expense, of such books and records (to the extent that
such books and records may be relevant to a Tax matter of such party).  Seller
and Buyer shall cooperate with each other in the conduct of any audit or other
proceeding relating to Taxes involving the Purchased Assets or the Business.

 

Section 8.05.  Transfer Taxes.  (a) In accordance with Section 1146(c) of the
Bankruptcy Code, the making or delivery of any instrument of transfer under a
plan confirmed under Section 1129 of the Bankruptcy Code shall not be taxed
under any law imposing a stamp or similar tax.  The instruments transferring the
Purchased Assets to Buyer shall contain the following endorsement: “Because this
Assignment and Assumption Agreement has been authorized pursuant to Order of the
United States Bankruptcy Court for the Southern District of New York relating to
a plan of reorganization of Magellan Health Services, Inc., it is exempt from
transfer taxes, stamp taxes or similar taxes pursuant to 11 U.S.C. §1146(c).”

 

(b)           In the event sales, use or other transfer Taxes are assessed at
Closing or at any time thereafter on the transfer of any Purchased Assets, such
Taxes incurred as a result of the transactions contemplated hereby shall be
borne 50% by Buyer and 50% by Seller.  The party that is responsible under
applicable law for filing a return and other documentation with respect to any
such transfer Taxes and paying such transfer Taxes to a Taxing Authority shall
be entitled to receive from the other party, no later than on the date of
payment, an amount equal to 50% of such Taxes.  Buyer and Seller shall cooperate
in providing each other with any appropriate resale exemption certifications and
other similar documentation.

 

ARTICLE 9
EMPLOYEE BENEFITS

 

Section 9.01.  ERISA Representations.  Seller represents and warrants to Buyer
that:

 

(a)           Schedule 9.01(a) lists each “employee benefit plan,” as such term
is defined in Section 3(3) of ERISA, which (1) is subject to any provision of
ERISA, (2) is or at any time has been maintained, administered or contributed to
by Seller or any of its ERISA Affiliates and (3) covers or covered in the past
any member of the Dedicated Staff (hereinafter referred to collectively as the

 

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“Employee Plans”).  “Dedicated Staff” means the employees reasonably necessary
to deliver the services required under the MSA, excluding, however, any
employees performing functions in the Claims Processing Business.

 

(b)           (i) No Employee Plan is a “Multiemployer Plan” (within the meaning
of Section 3(37) of ERISA) and no Employee Plan is subject to Title IV of ERISA
(a “Defined Benefit Plan”).

 

(ii)           Neither Seller nor any of Seller’s Subsidiaries has incurred any
liability under Title IV of ERISA arising in connection with the termination of
or complete or partial withdrawal from any plan covered or previously covered by
Title IV of ERISA that could become, after the Closing Date, an obligation of
Buyer or any of its Subsidiaries.  Seller warrants that the Closing will not
result in the imposition or assessment against Buyer or the Purchased Assets of
any liability with respect to any Multiemployer Plan, Defined Benefit Plan or
any employee benefit plan sponsored or contributed to at any time by Seller or
any Subsidiary of Seller.  Seller agrees to indemnify and hold harmless Buyer
with respect to imposition or assessment against Buyer or the Purchased Assets
of any liability related to any obligation to contribute to or otherwise
relating to or arising out of any Multiemployer Plan, Defined Benefit Plan or
Employee Plan.

 

(c)           Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, has been determined by the Internal Revenue Service
to be so qualified and Seller knows of no fact or set of circumstances that has
adversely affected, or is reasonably likely to adversely affect, the
qualification of such Employee Plan prior to the Closing, and each trust forming
a part thereof is exempt from tax pursuant to Section 501(a) of the Code.

 

(d)           True and complete copies (including any amendments thereto) of all
of the following documents have been provided or otherwise made available to
Buyer: (i) Employee Plan documents, any trust instruments, insurance contracts,
written interpretations and written descriptions forming a part of any Employee
Plan; (ii) the most recent determination or opinion letter issued by the
Internal Revenue Service (the “IRS”) with respect to each Employee Plan; (iii)
for the most recent plan year, Annual Reports on Form 5500 Series required to be
filed with any governmental agency for each Employee Plan; (iv) all summary plan
descriptions for each Employee Plan which is required to prepare and distribute
summary plan descriptions.

 

(e)           Each Employee Plan and each related trust agreement, annuity
contract or other funding instrument is in substantial compliance, both as to
form and operation, with its terms and is in substantial compliance with
applicable law

 

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(including, where applicable, ERISA and the Code), except where the failure to
so administer such Employee Plan has been corrected in accordance with the IRS
Employee Plan Compliance Resolution System and will not result in the
disqualification of any of such Employee Plan.

 

(f)            None of Seller, any of its Subsidiaries or any ERISA Affiliates
has any liability with respect to any transaction in violation of Sections 404
or 406 of ERISA or any “prohibited transaction,” as defined in Section
4975(c)(1) of the Code, for which no exemption exists under Section 408 of ERISA
or Section 4975(c)(2) or (d) of the Code to which any Employee Plan or any other
employee benefit plan sponsored or contributed to by Seller or any Subsidiary of
Seller is subject which could result in imposition or assessment on the
Purchased Assets or Buyer of any liability.  None of Seller, any of its
Subsidiaries or any ERISA Affiliates has knowingly participated in a violation
of Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary of any Employee
Plan or any other employee benefit plan sponsored or contributed to by Seller or
any Subsidiary of Seller which could result in imposition or assessment on the
Purchased Assets or Buyer of any liability.  The Secretary of Labor has not
assessed Seller or any of its Subsidiaries a civil penalty under Section 502(l)
of ERISA that remains unpaid.

 

(g)           None of the Seller, its Subsidiaries or any ERISA Affiliate has
any liability for unpaid contributions with respect to any Employee Plan or any
other employee benefit plan sponsored or contributed to by Seller or any
Subsidiary of Seller.  The Seller, its Subsidiaries or an ERISA Affiliate has
made all required contributions under each Employee Plan or any other employee
benefit plan sponsored or contributed to by Seller or any Subsidiary of Seller,
for all prior periods and proper accruals have been made and are reflected on
the appropriate balance sheet and books and records.  No Employee Plan is
subject to any tax under Section 511 of the Code.

 

(h)           Schedule 9.01(h) includes a list of each employment, severance or
other similar contract, arrangement or policy (written or oral) and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers’ compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits or
for deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (1) is not an Employee Plan, (2) is
entered into, maintained or contributed to, as the case may be, by Seller or any
of its ERISA Affiliates and (3) covers or covered in the past any member of the
Dedicated Staff.  Such contracts, policies, plans and arrangements as are
described above, true and complete copies or descriptions of all of which have
been made available or furnished previously to Buyer are hereinafter referred to
collectively as the “Benefit Arrangements.”  Each Benefit Arrangement has been
maintained in

 

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substantial compliance with its terms and with the requirements prescribed by
applicable law.

 

(i)            With respect to the Dedicated Staff, there are no employee
post-retirement medical or health plans in effect, except as required by Section
601 of ERISA.

 

(j)            Seller warrants that neither the execution and delivery of this
Agreement by Seller, nor the consummation of the transaction contemplated
hereby, will result in the acceleration or creation of any rights of any person
to benefits under any Employee Plan, Benefit Arrangement, program or employment
agreement including, without limitation, the acceleration of vesting or
exercisability of any stock options, the acceleration of vesting of any
restricted stock, the acceleration of accrual or vesting of any benefits under
any pension benefit plan or the acceleration or creation of any rights under any
severance plan, parachute provision or change in control provision that would
result in the imposition of any liability on Buyer or the Purchased Assets.

 

(k)           The Purchased Assets are not now nor will they after the passage
of time be subject to any Lien imposed under Section 412(n) of the Code by
reason of the failure of Seller or its Subsidiaries to make timely installments
or other payments required by Section 412 of the Code.

 

(l)            There are no pending or, to the knowledge of Seller, threatened
claims (other than routine requests for benefits) by, on behalf of or against
any of the Employee Plans or any trusts related thereto. No Employee Plan is, or
within the last three (3) years has been, the subject of examination or audit by
a governmental authority or a participant in a government sponsored amnesty,
voluntary compliance or similar program.

 

(m)          Neither Seller nor any of its Subsidiaries is, with respect to the
Business, a party to or bound by any collective bargaining agreement nor, with
respect to the Business, has Seller or its Subsidiaries experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. Seller and its Subsidiaries have not committed any unfair labor
practice with respect to the Business.  None of the stockholders, directors,
officers, or employees with responsibility for employment matters of Seller or
its Subsidiaries has any knowledge of any organizational effort presently being
made or threatened by, or on behalf of, any labor union with respect to the
Business.

 

Section 9.02.  Employee and Offers of Employment.  (a) Buyer may, on or prior to
the Closing Date and in its sole discretion, offer to employ each employee of
Seller who is a member of the Dedicated Staff (all such employees who receive
such an offer being referred to herein as “Relevant Employees”) effective on the
Closing Date (or, in the case of Relevant Employees who are on disability or

 

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leave of absence, as soon as they are removed from disability status or return
from leave) with salary or wages consistent with the salary or wages provided by
Seller to such Relevant Employee immediately prior to the Closing Date;
provided, however, that Buyer shall be obligated to hire any such Relevant
Employee on disability status or leave only if (i) Buyer is, on the date of such
Relevant Employee’s removal from disability status or return from leave,
operating the facility at which the Relevant Employee was last employed, and
(ii) the Relevant Employee accepts Buyer’s offer of employment.  Buyer’s offers
of employment shall not require any Relevant Employee to relocate his or her
site of employment more than 35 miles from the site in effect immediately prior
to the Closing Date.  Buyer and Seller shall cooperate in ensuring that benefit
coverage for Relevant Employees prior to Closing is coordinated with coverage
provided after the Closing.

 

(b)           (i) Schedule 9.02(b) sets forth for each member of the Dedicated
Staff his or her name, title, base salary and target bonus (excluding any
long-term incentive plan bonus).  Seller will fully cooperate with Buyer’s
efforts to hire any Relevant Employees.  Seller shall provide (and shall amend
its severance or bonus plans to the extent necessary to provide) that Relevant
Employees (other than Dennis P. Moody) will not be entitled to treat the offer
from Buyer or any subsequent employment with Buyer as a “termination” of
employment with Seller or similar event for purposes of any Employee Plan or
Benefit Arrangement.  Seller makes no representation as to whether Relevant
Employees will accept employment with Buyer.

 

(ii)           During the 12-month period beginning on the day following the
Closing Date, (i) Seller shall not solicit, hire or employ any Relevant Employee
(other than Dennis P. Moody) and (ii) Buyer shall not solicit, hire or employ
any Dedicated Staff who is not a Relevant Employee, or any Relevant Employee who
does not accept an offer the employment contemplated by Section 9.02(a)
(collectively, “Non-Relevant Employees”) or any other employee of Seller.

 

(iii)          Seller shall cooperate and assist with the implementation of any
retention or incentive bonus arrangement with respect to any Relevant Employees
that Buyer, in its sole direction, elects to adopt; provided, however, that the
cost of any such arrangements shall be borne by Buyer.

 

(c)           No later than 35 days prior to the Closing Date Seller shall
provide Buyer with written notice of any changes to the information set forth in
Schedule 9.02(b).  No later than 30 days prior to the Closing Date Buyer shall
provide Seller a list of the members of the Dedicated Staff who will not be
given offers of employment pursuant to Section 9.02(a).  During the 60-day
period beginning on the Closing Date, no more than 20 positions in the Business
formerly held by Non-Relevant Employees will be filled by the transfer of Buyer
employees to the

 

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employment site of such Non-Relevant Employees.  No later than 60 days after the
Closing Date Buyer shall provide Seller written information about the positions
in the Business held by Non-Relevant Employees that will be filled by Buyer
employees.

 

(d)           If Seller terminates the employment of any Non-Relevant Employee
(other than Dennis P. Moody) during the 60-day period beginning on the Closing
Date, Buyer shall be responsible for and shall promptly reimburse Seller for 50%
of the severance costs paid to each such Non-Relevant Employee.  Seller shall be
solely responsible, and Buyer shall have no liability, for any severance costs
in respect of any other Non-Relevant Employees.

 

Section 9.03.  Seller’s Employee Benefit Plans.  (a) Seller shall retain all
obligations and liabilities under the Employee Plans and Benefit Arrangements in
respect of each current or former member of the Dedicated Staff (including any
beneficiary thereof).  Except as expressly set forth in Section 2.03 and this
Article 9, Seller or its designated Subsidiary shall retain all liabilities and
obligations in respect of Relevant Employees under the Employee Plans and
Benefit Arrangements, and neither Buyer nor any of its Subsidiaries shall have
any liability with respect thereto.  No assets or liabilities of any Employee
Plan or Benefit Arrangement shall be transferred to, or assumed by, Buyer or any
of its Subsidiaries or to any plan of Buyer or any of its Subsidiaries.

 

(b)           Seller’s plans shall be responsible for medical expenses covered
by Seller’s welfare benefit plans; provided that such expenses were incurred
prior to the Closing Date regardless of whether payments are made after
Closing.  As of the Closing, any member of the Dedicated Staff who is receiving
benefits under Seller’s short-term disability program shall be deemed to be an
employee of Seller until such time as such employee is no longer eligible for
Seller’s short-term disability program. If at such time the employee is eligible
for long-term disability benefits or disability retirement, the employee shall
receive such benefits under Seller’s long-term disability program or pension
plan.

 

(c)           Seller shall vest all Relevant Employees in all benefits accrued
through the Closing Date under Seller’s Employee Plans that are intended to
qualify under Section 401(a) of the Code.

 

(d)           Seller will remain responsible for (i) all benefits payable to
members of the Dedicated Staff who, as of the close of business on the day
immediately preceding the Closing Date, were determined to be totally and
permanently disabled in accordance with the applicable provisions of Seller’s
health, accident, sickness, salary continuation, or short-term or long-term
disability benefit plans or programs, and (ii) all benefits payable to members
of the Dedicated Staff, who as of the close of business on the business day
immediately preceding the Closing Date, were receiving short-term disability
benefits in accordance with the

 

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applicable provisions of Seller’s short-term disability benefit- plans or
programs; and (iii) all benefits payable to members of the Dedicated Staff who,
as of the close of business on the business day immediately preceding the
Closing Date, were on any type of leave other than vacation leave.

 

Section 9.04.  Buyer Benefit Plans.  (a) Buyer’s health and welfare plans shall
be responsible for health and accident claims incurred after the Closing Date
relating to Relevant Employees.  With respect to each Relevant Employee:

 

(i)            Buyer shall waive pre-existing condition requirements, evidence
of insurability provisions, waiting period requirements or any similar
provisions under any employee benefit plan or compensation arrangements
maintained or sponsored by or contributed to by Buyer for such Relevant Employee
to the extent such exclusion, restriction, limitation, or requirement has been
waived, satisfied or does not apply under the terms of any Employee Plan prior
to Closing.

 

(ii)           Buyer shall apply toward any deductible requirements and
out-of-pocket maximum limits under its employee welfare benefit plans any
amounts paid (or accrued) by each Relevant Employee under Seller’s welfare
benefit plans during the current plan year.

 

(b)           Buyer shall recognize for purposes of participation, eligibility
and vesting (but not for purposes of benefit accrual and compensation
arrangements) under its employee benefit plans, the service of any Relevant
Employee with Seller or any of its affiliates prior to the Closing Date.

 

(c)           Seller shall be responsible for satisfying obligations under
Section 601 et seq. of ERISA and Section 4980B of the Code, to provide
continuation coverage to or with respect to any member of the Dedicated Staff
(or beneficiary thereof) who is not a Relevant Employee in accordance with law
with respect to any “qualifying event” occurring on, prior to, or after the
Closing Date.  Buyer shall be responsible for satisfying obligations under
Section 601 et seq. of ERISA and Section 4980B of the Code, to provide
continuation coverage to or with respect to any Relevant Employee in accordance
with law with respect to any “qualifying event” which occurs on or after the
Closing Date.

 

(d)           Buyer shall be responsible for all workers’ compensation benefits
payable to Relevant Employees with respect to injuries to Relevant Employees
occurring after the Closing Date.

 

(e)           Seller shall be responsible for all vacation earned by Relevant
Employees but not taken as of the Closing Date in excess of the lesser of (i)
seven days or (ii) the number of annual carryover days permitted under Seller’s
policy

 

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applicable to its employees generally at the Closing Date, in each case per
Relevant Employee.

 

Section 9.05.  No Third Party Beneficiaries.  No provision of this Article 9
shall create any third party beneficiary or other rights in any employee or
former employee (including any beneficiary or dependent thereof) of Seller or of
any of its Subsidiaries in respect of continued employment (or resumed
employment) with either Buyer or any of its Subsidiaries and no provision of
this Article 9 shall create any such rights in any such Persons in respect of
any benefits that may be provided, directly or indirectly, under any Employee
Plan or Benefit Arrangement or any plan or arrangement which may be established
by Buyer or any of its Subsidiaries.

 

ARTICLE 10
CONDITIONS TO CLOSING

 

Section 10.01.  Conditions to Obligations of Buyer and Seller.  The obligations
of Buyer and Seller to consummate the Closing are subject to the satisfaction of
the following conditions:

 

(a)           Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.

 

(b)           No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.

 

(c)           All actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation of the
Closing shall have been taken, made or obtained.

 

Section 10.02.  Conditions to Obligation of Buyer.  The obligation of Buyer to
consummate the Closing is subject to the satisfaction of the following further
conditions:

 

(a)           (i) Each Seller Entity shall have performed in all material
respects all of its obligations under the Transaction Documents and the MSA
required to be performed by it on or prior to the Closing Date, (ii) the
representations and warranties of Seller contained in this Agreement and in any
certificate or other writing delivered by Seller pursuant hereto (A) that are
qualified by materiality shall be true at and as of the Closing Date as if made
at and as of such date, and (B) that are not qualified by materiality shall be
true in all material respects at and as of the Closing Date as if made at and as
of such time, in each case individually and in the aggregate, and (iii) Buyer
shall have received a certificate signed by the Vice President of Seller to the
foregoing effect.

 

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(b)           There shall not be threatened (with a reasonable likelihood of
being commenced), instituted or pending any action or proceeding by any Person
before any court or governmental authority or agency, domestic or foreign, (i)
seeking to restrain, prohibit or otherwise interfere with the ownership or
operation by Buyer or any of its Subsidiaries of all or any material portion of
the Purchased Assets or the business or assets of Buyer or any of its
Subsidiaries or to compel Buyer or any of its Subsidiaries to dispose of all or
any material portion of the Purchased Assets or of Buyer or any of its
Subsidiaries or (ii) seeking to require divestiture by Buyer or any of its
Subsidiaries of any Purchased Assets.

 

(c)           There shall not be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the purchase of the Purchased
Assets, by any court, government or governmental authority or agency, domestic
or foreign, other than the application of the waiting period provisions of the
HSR Act to the purchase of the Purchased Assets, that, in the reasonable
judgment of Buyer could, directly or indirectly, result in any of the
consequences referred to in Sections 10.02(b)(i) and 10.02(b)(ii) above.

 

(d)           Each Seller Entity shall have received all Required Consents (or
entered into alternative arrangements (other than with respects to leases of
Real Property) as contemplated by Section 2.05) and all consents, authorizations
or approvals from the governmental agencies referred to in Section 3.03 in each
case in form and substance reasonably satisfactory to Buyer, and no such
consent, authorization or approval shall have been revoked.

 

(e)           Buyer shall have obtained an ALTA extended coverage form of
owner’s or leasehold owner’s title insurance policies, or binders to issue the
same, dated the Closing Date and in amounts satisfactory to Buyer insuring or
committing to insure, at ordinary premium rates without any requirement for
additional premiums, good and marketable title to the Real Property being
transferred pursuant to the terms of this Agreement free and clear of any Liens,
except for Permitted Liens.

 

(f)            The Transitional Services Agreement and the License Agreement, in
each case in form and substance satisfactory to Buyer in its reasonable
discretion, shall have been entered into by Seller or one of its Subsidiaries,
on the one hand, with Buyer or one of its Subsidiaries, on the other.

 

(g)           Upon the prior written request of Buyer (exercisable in its sole
discretion), a Network Rental Agreement in form and substance satisfactory to
Buyer in its reasonable discretion shall have been entered into by Seller or one
of its Subsidiaries, on the one hand, with Buyer or one of its Subsidiaries, on
the other.

 

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(h)           Buyer shall have received all documents it may reasonably request
relating to the existence of each Seller Entity and the authority of each Seller
Entity for each Transaction Document to which it is a party, all in form and
substance reasonably satisfactory to Buyer.

 

Section 10.03.  Conditions to Obligation of Seller.  The obligation of Seller to
consummate the Closing is subject to the satisfaction of the following further
conditions:

 

(a)           (i) Buyer shall have performed in all material respects all of its
obligations under the Transaction Documents and the MSA required to be performed
by it at or prior to the Closing Date, (ii) the representations and warranties
of Buyer contained in this Agreement and in any certificate or other writing
delivered by Buyer pursuant hereto shall be true in all material respects at and
as of the Closing Date, as if made at and as of such date, in each case
individually and in the aggregate, and (iii) Seller shall have received a
certificate signed by the Vice President of Buyer to the foregoing effect.

 

(b)           Buyer shall have received all consents, authorizations or
approvals from governmental agencies referred to in Section 4.03, in each case
in form and substance reasonably satisfactory to Seller, and no such consent,
authorization or approval shall have been revoked.

 

(c)           Seller shall have received all documents it may reasonably request
relating to the existence of Buyer and the authority of Buyer for each
Transaction Document to which it is a party, all in form and substance
reasonably satisfactory to Seller.

 

ARTICLE 11
SURVIVAL; INDEMNIFICATION

 

Section 11.01.  Survival.  The representations and warranties of the parties
hereto contained in this Agreement or in any other Transaction Document or in
any certificate or other writing delivered pursuant to or in connection with any
Transaction Document shall survive the Closing until the second anniversary of
the Closing Date; provided that the representations and warranties contained in
Articles 8 or 9 shall survive until expiration of the statute of limitations
applicable to the matters covered thereby (giving effect to any waiver,
mitigation or extension thereof), if later and; provided, further, that the
representations and warranties set forth in Sections 3.02, 3.08, 3.09, 3.12,
3.13, 4.02 and 4.06 shall survive indefinitely.  Notwithstanding the preceding
sentence, any representation or warranty in respect of which indemnity may be
sought under this Agreement shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the inaccuracy
thereof giving rise to such right of

 

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indemnity shall have been given to the party against whom such indemnity may be
sought prior to such time.  The covenants and agreements of the parties
(including, without limitation, the covenants and agreements of the parties set
forth in this Article 11) contained in this Agreement or in any other
Transaction Document shall survive indefinitely.

 

Section 11.02.  Indemnification.  (a) Seller hereby indemnifies Buyer, its
Subsidiaries and their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents (collectively, with respect to any
Person, such Person’s “Representatives”) against and agrees to hold each of them
harmless on an after-Tax basis (as described in Section 11.05) from any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys’ fees and expenses in
connection with any action, suit or proceeding whether involving a third-party
claim or a claim solely between the parties hereto) (“Damages”) incurred or
suffered by them arising out of:

 

(i)            any misrepresentation or breach of warranty (disregarding any
qualification or exception contained in such representation or warranty relating
to materiality), covenant or agreement made or to be performed by Seller or any
other Seller Entity pursuant to any of the Transaction Documents;

 

(ii)           any Excluded Liability (including, without limitation, the
failure of any Seller Entity to perform or in due course pay and discharge any
Excluded Liability); or

 

(iii)          the enforcement of their rights under this Section 11.02.

 

The fact that the survival period with respect to any representation or warranty
has terminated or that indemnification for breaches of representations and
warranties is subject to the limitations set forth in this Section 11.02(a)
shall not limit or affect in any respect the Seller’s indemnification
obligations with respect to any Excluded Liabilities (even if such Excluded
Liability is also the subject of a representation or warranty).

 

(b)           Buyer hereby indemnifies Seller, its Subsidiaries and their
respective Representatives against and agrees to hold each of them harmless on
an after-Tax basis (as described in Section 11.05) from any and all Damages
incurred or suffered by them arising out of:

 

(i)            any misrepresentation or breach of warranty (disregarding any
qualification or exception contained in such representation or warranty relating
to materiality), covenant or agreement made or to be performed by Buyer pursuant
to any of the Transaction Documents;

 

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(ii)           any Assumed Liability (including, without limitation, any failure
by Buyer to perform or in due course pay and discharge any Assumed Liability);
or

 

(iii)          the enforcement of their rights under this Section 11.02.

 

Section 11.03.  Procedures for Third Party Claims.  (a) The parties seeking
indemnification under Section 11.02 (the “Indemnified Parties”) agree to give
prompt notice to the parties against whom indemnity is sought (the “Indemnifying
Parties”) of the assertion of any claim, or the commencement of any suit, action
or proceeding in respect of which indemnity may be sought under Section 11.02
(the “Third Party Claims”).  The failure by any Indemnified Party so to notify
the Indemnifying Parties shall not relieve any Indemnifying Party from any
liability which it may have to such Indemnified Party with respect to any claim
made pursuant to this Section 11.03, except to the extent such failure shall
actually prejudice an Indemnifying Party.

 

(b)           Upon receipt of notice from the Indemnified Parties pursuant to
Section 11.03(a), the Indemnifying Parties will, subject to the provisions of
Section 11.03(c), assume the defense and control of such Third Party Claims but
shall allow the Indemnified Parties a reasonable opportunity to participate in
the defense of such Third Party Claims with their own counsel and at their own
expense (except as provided in Section 11.03(d)).  The Indemnifying Parties
shall select counsel, contractors and consultants of recognized standing and
competence after consultation with the Indemnified Parties; shall take all steps
necessary in the defense or settlement of such Third Party Claims; and shall at
all times diligently and promptly pursue the resolution of such Third Party
Claims.  The Indemnified Parties shall, and shall cause each of their
Subsidiaries and Representatives to, cooperate fully with the Indemnifying
Parties in the defense of any Third Party Claim defended by the Indemnifying
Parties.

 

(c)           The Indemnifying Parties shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any Third Party Claim,
without the consent of any Indemnified Party; but only if the Indemnifying
Parties shall (i) pay or cause to be paid all amounts arising out of such
settlement or judgment concurrently with the effectiveness of such settlement;
(ii) not encumber any of the assets of any Indemnified Party or agree to any
restriction or condition that would apply or adversely affect any Indemnified
Party or to the conduct of any Indemnified Party’s business; and (iii) obtain,
as a condition of any settlement or other resolution, a complete release of any
Indemnified Party potentially affected by such Third Party Claim.

 

(d)           The Indemnifying Parties shall also be liable for the reasonable
fees and expenses of counsel incurred by each Indemnified Party in defending any
Third Party Claim if such Third Party Claim, if successful, is likely to result
in a

 

37

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judgment, decree or order of injunction or other equitable relief or relief for
other than money Damages against such Indemnified Party.

 

Section 11.04.  Procedures for Direct Claims.  In the event any Indemnified
Party should have a claim for indemnity against any Indemnifying Party that does
not involve a Third Party Claim, the Indemnified Party shall deliver notice of
such claim with reasonable promptness to the Indemnifying Party.  The failure by
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability that it may have to such Indemnified Party
with respect to any claim made pursuant to this Section 11.04, it being
understood that notices for claims in respect of a breach of a representation or
warranty must be delivered prior to the expiration of the survival period for
such representation or warranty.  If the Indemnifying Party does not notify the
Indemnified Party within 30 calendar days following its receipt of such notice
that the Indemnifying Party disputes its liability to the Indemnified Party
under this Article, the claim specified by the Indemnified Party in such notice
shall be conclusively deemed a liability of the Indemnifying Party under this
Article 11, and the Indemnifying Party shall pay the amount of such liability to
the Indemnified Party on demand or, in the case of any notice in which the
amount of the claim (or any portion of the claim) is estimated, on such later
date when the amount of such claim (or such portion of such claim) becomes
finally determined.  If the Indemnifying Party has timely disputed its liability
with respect to such claim as provided above, the Indemnifying Party and the
Indemnified Party shall resolve such dispute in accordance with Section 13.06.

 

Section 11.05.  Purchase Price Adjustment and Interest.  Any amount paid by a
party to another party under Section 11.02 will be treated for all Tax purposes
as an adjustment (which shall be allocated pursuant to the procedures set forth
in Section 2.06) to the Purchase Price unless a Final Determination (as defined
below) causes any such amount not to constitute such an adjustment for federal
income Tax purposes.  In the event of such a Final Determination, the payor
party shall pay an additional amount that reflects the hypothetical Tax
consequences of the receipt or accrual of such payment, using the maximum
statutory rate (or rates, in the case of an item that affects more than one Tax)
applicable to the recipient of such payment for the relevant year, reflecting
for example, the effect of deductions available for interest paid or accrued and
for Taxes such as state and local income Taxes.  Any payment required to be made
by a party under Section 11.02 that is not made when due shall bear interest at
the rate per annum determined, from time to time, under the provision of Section
6621(a)(2) of the Code for each day until paid.  A “Final Determination” means
(i) any final determination of liability in respect of a Tax that, under
applicable law, is not subject to further appeal, review or modification through
proceedings or otherwise (including the expiration of a statute of limitations
or a period for the filing of claims for refunds, amended returns or appeals
from adverse determinations), or (ii) the payment of Tax by Buyer, Seller or any
of their

 

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Subsidiaries, whichever is responsible for payment of such Tax under applicable
law, with respect to any item disallowed or adjusted by a Taxing Authority,
provided that such responsible party determines that no action should be taken
to recoup such payment and the other party agrees. 

 

ARTICLE 12
TERMINATION

 

Section 12.01.  Grounds for Termination.  This Agreement may be terminated at
any time prior to the Closing:

 

(a)           by mutual written agreement of Seller and Buyer;

 

(b)           by either Seller or Buyer if the Closing shall not have been
consummated on or before June 30, 2006 (which date may be extended by Aetna in
its sole discretion as provided in Section 9(B) of the MSA, so long as Aetna
agrees to extend the term of the MSA until such date of Closing (it being
understood that the MSA shall be so extended if Aetna so elects)); or

 

(c)           by either Seller or Buyer if there shall be any law or regulation
that makes consummation of the transactions contemplated hereby illegal or
otherwise prohibited or consummation of the transactions contemplated hereby
would violate any nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction.

 

The party desiring to terminate this Agreement pursuant to clauses 12.01(b) and
12.01(c) shall give notice of such termination to the other party.

 

Section 12.02.  Effect of Termination.  If this Agreement is terminated as
permitted by Section 12.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the (i) willful failure of either
party to fulfill a condition to the performance of the obligations of the other
party, (ii) failure to perform a covenant of this Agreement or (iii) breach by
either party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all Damages incurred or
suffered by the other party as a result of such failure or breach.  The
provisions of Section 6.01, 13.03, 13.05, 13.06 and 13.07 shall survive any
termination hereof pursuant to Section 12.01.

 

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ARTICLE 13
MISCELLANEOUS

 

Section 13.01.  Notices.  All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,

 

if to Buyer, to:

 

Aetna Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Attention:, Louis Briskman, General Counsel
Fax: (860) 273-8340

 

with a copy to:

 

Davis Polk & Wardwell
450 Lexington Avenue
New York, New York  10017
Attention: David L. Caplan
Fax: (212) 450-4800

 

if to Seller, to:

 

Magellan Health Services, Inc.
6950 Columbia Gateway Drive
Columbia, Maryland  21046

Attention:  President and General Counsel

Fax:  (410) 953-4715

 

All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5:00 p.m. in
the place of receipt and such day is a business day in the place of receipt. 
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt.

 

Section 13.02.  Amendments and Waivers.  (a) Any provision of this Agreement may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement, or in
the case of a waiver, by the party against whom the waiver is to be effective.

 

(b)           No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of

 

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any other right, power or privilege.  The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

 

Section 13.03.  Expenses.  Except as otherwise provided herein, all costs and
expenses incurred in connection with the Transaction Documents shall be paid by
the party incurring such cost or expense.

 

Section 13.04.  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 assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its
Subsidiaries, the right to purchase all or a portion of the Purchased Assets,
but no such transfer or assignment will relieve Buyer of its obligations
hereunder.

 

Section 13.05.  Governing Law.  Agreement shall be governed by and construed in
accordance with the law of the State of New York, without regard to the
conflicts of law rules of such state.

 

Section 13.06.  Jurisdiction.  Except as otherwise expressly provided in this
Agreement, the parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in the United States District Court for the Southern District of New
York or any New York State court sitting in New York City, so long as one of
such courts shall have subject matter jurisdiction over such suit, action or
proceeding, and that any cause of action arising out of this Agreement shall be
deemed to have arisen from a transaction of business in the State of New York,
and each of the parties hereby irrevocably consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum.  Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court.  Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 13.01 shall
be deemed effective service of process on such party.

 

Section 13.07.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR

 

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RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 13.08.  Counterparts; Third Party Beneficiaries.  This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.  This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto.  No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.

 

Section 13.09.  Entire Agreement.  This Agreement and the other Transaction
Documents constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.

 

Section 13.10.  Captions.  The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

AETNA INC.

 

 

 

 

 

By:

/s/ John Bridge

 

 

 

Name: John Bridge

 

 

Title: Vice President - Development

 

 

 

 

 

 

 

MAGELLAN HEALTH SERVICES, INC.

 

 

 

 

 

By:

/s/ Daniel N. Gregoire

 

 

 

Name: Daniel N. Gregoire

 

 

Title: Executive Vice President,
General Counsel

 

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EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of December 30, 2005, between
AETNA INC., a Pennsylvania corporation (“Buyer”), and [MAGELLAN HEALTH SERVICES,
INC.] [OTHER SELLER ENTITIES], a Delaware corporation (“Seller”).

 

W I T N E S S E T H :

 

WHEREAS, Buyer and Seller have concurrently herewith consummated the purchase by
Buyer of the Purchased Assets pursuant to the terms and conditions of the Asset
Purchase Agreement dated [                     , 200   ] between Buyer and
Seller, (the “Asset Purchase Agreement”; terms defined in the Asset Purchase
Agreement and not otherwise defined herein being used herein as therein
defined);

 

WHEREAS, pursuant to the Asset Purchase Agreement, Buyer has agreed to assume
certain liabilities and obligations of Seller with respect to the Purchased
Assets and the Business;

 

NOW, THEREFORE, in consideration of the sale of the Purchased Assets and in
accordance with the terms of the Asset Purchase Agreement, Buyer and Seller
agree as follows:

 

1.             (a) Seller does hereby sell, transfer, assign and deliver to
Buyer all of the right, title and interest of Seller in, to and under the
Purchased Assets; provided that no sale, transfer, assignment or delivery shall
be made of any or any material portion of any of the Contracts or Permits if an
attempted sale, assignment, transfer or delivery, without the consent of a third
party, would constitute a breach or other contravention thereof or in any way
adversely affect the rights of Buyer or Seller thereunder.

 

(b)           Buyer does hereby accept all the right, title and interest of
Seller in, to and under all of the Purchased Assets (except as aforesaid) and
Buyer assumes and agrees to pay, perform and discharge promptly and fully when
due all of the Assumed Liabilities and to perform all of the obligations of
Seller to be performed under the Contracts except to the extent liabilities
thereunder constitute Excluded Liabilities.

 

2.             This Agreement shall be governed by and construed in accordance
with the law of the State of New York, without regard to the conflicts of law
rules of such state.

 

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3.             This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

 

 

 

AETNA INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

[MAGELLAN HEALTH SERVICES, INC.]  [OTHER SELLER ENTITIES]

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

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