EX-10.60 ASSET PURCHASE AGREEMENT






Exhibit 10.60




EXECUTION COPY




ASSET PURCHASE AGREEMENT




between




PROXYMED, INC.

dba MedAvant Healthcare Solutions,




and




PROXYMED TRANSACTION SERVICES, INC.




as Sellers




and




MHC ACQUISITION CORP.




as Purchaser




dated as of:




July 23, 2008




 









 





Table of Contents




	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	1
	Section 1.1
	 	Defined Terms	 	1
	Section 1.2
	 	General Principles of Construction	 	14
	Section 1.3
	 	Variations in Pronouns	 	14
	Section 1.4
	 	Headings	 	14
	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE OF ASSETS	 	14
	Section 2.1
	 	Purchase and Sale of Acquired Assets	 	14
	Section 2.2
	 	Excluded Assets	 	15
	Section 2.3
	 	Assumed Liabilities	 	16
	Section 2.4
	 	Excluded Liabilities	 	16
	Section 2.5
	 	Purchase Price	 	18
	Section 2.6
	 	Deposit Escrow	 	18
	Section 2.7
	 	Disbursement of Deposit on Termination	 	18
	Section 2.8
	 	Payment of Cure Amounts	 	19
	Section 2.9
	 	Apportionment	 	19
	Section 2.10
	 	Allocation of Purchase Price	 	19
	 
	 	 	 	 
	ARTICLE III THE CLOSING	 	20
	Section 3.1
	 	Closing	 	20
	Section 3.2
	 	Sellers’ Deliveries at Closing	 	20
	Section 3.3
	 	Purchaser’s Deliveries at Closing	 	22
	Section 3.4
	 	Required Documents	 	23
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS	 	23
	Section 4.1
	 	Organization	 	23
	Section 4.2
	 	Charter Documents and Corporate Records; No Investments	 	23
	Section 4.3
	 	Power and Authority	 	23
	Section 4.4
	 	Consents and Approvals	 	24
	Section 4.5
	 	No Conflicts	 	24
	Section 4.6
	 	Financial Statements	 	24
	Section 4.7
	 	Absence of the Material Adverse Change; Absence of Undisclosed Liabilities	 	25
	Section 4.8
	 	Litigation	 	25
	Section 4.9
	 	No Violation of Law	 	25
	Section 4.10
	 	Environmental Matters	 	25
	Section 4.11
	 	Permits	 	26
	Section 4.12
	 	Employee Benefits	 	26
	Section 4.13
	 	Title to and Use of Property	 	27
	Section 4.14
	 	Facilities	 	28
	Section 4.15
	 	Compliance with Laws	 	28
	Section 4.16
	 	Contracts	 	29
	Section 4.17
	 	Intellectual Property	 	29
	Section 4.18
	 	Employees and Labor Relations	 	37
	Section 4.19
	 	Insurance	 	38






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	Section 4.20
	 	Relationships with Customers	 	39
	Section 4.21
	 	Assigned Deposits	 	39
	Section 4.22
	 	Broker’s or Finder’s Fees	 	39
	Section 4.23
	 	No Other Representations or Warranties	 	39
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER	 	39
	Section 5.1
	 	Organization	 	39
	Section 5.2
	 	Power and Authority	 	39
	Section 5.3
	 	Consents and Approvals	 	39
	Section 5.4
	 	No Conflicts	 	40
	Section 5.5
	 	Financial Resources	 	40
	Section 5.6
	 	Brokers	 	40
	 
	 	 	 	 
	ARTICLE VI COVENANTS	 	40
	Section 6.1
	 	Conduct of Business by Sellers Pending the Closing	 	40
	Section 6.2
	 	Access and Information	 	42
	Section 6.3
	 	Publicity	 	42
	Section 6.4
	 	Expenses	 	42
	Section 6.5
	 	Indemnification of Brokers	 	42
	Section 6.6
	 	Cooperation	 	42
	Section 6.7
	 	Filings; Other Action	 	43
	Section 6.8
	 	Permit Transfers	 	43
	Section 6.9
	 	Bankruptcy Actions	 	43
	Section 6.10
	 	Executory Contracts	 	44
	 
	 	 	 	 
	ARTICLE VII ADDITIONAL POST-CLOSING COVENANTS; COVENANTS RELATING TO EMPLOYEES	 	46
	Section 7.1
	 	Further Assurances	 	46
	Section 7.2
	 	Books and Records; Personnel	 	46
	Section 7.3
	 	Employment of Sellers’ Employees	 	47
	Section 7.4
	 	Workers’ Compensation	 	48
	Section 7.6
	 	Employment Taxes	 	49
	Section 7.5
	 	Third Party Rights	 	49
	Section 7.7
	 	Tax Returns and Filings, Payment of Taxes	 	49
	Section 7.8
	 	Use of Trademarks	 	50
	Section 7.9
	 	Facilities Leases for Excluded Facilities	 	50
	 
	 	 	 	 
	ARTICLE VIII CONDITIONS PRECEDENT	 	51
	Section 8.1
	 	Conditions Precedent to Obligations of Sellers and Purchaser	 	51
	Section 8.2
	 	Conditions Precedent to Obligation of Sellers	 	51
	Section 8.3
	 	Conditions Precedent to Obligation of Purchaser	 	52
	 
	 	 	 	 
	ARTICLE IX TERMINATION, AMENDMENT AND WAIVER	 	52
	Section 9.1
	 	Termination by Mutual Consent	 	52
	Section 9.2
	 	Termination by Either Purchaser or Sellers	 	53
	Section 9.3
	 	Termination by Sellers	 	53
	Section 9.4
	 	Termination by Purchaser	 	53






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	Section 9.5
	 	Effect of Termination	 	54
	Section 9.6
	 	Break-Up Fee	 	54
	Section 9.7
	 	Expense Reimbursement	 	55
	 
	 	 	 	 
	ARTICLE X GENERAL PROVISIONS	 	56
	Section 10.1
	 	Survival of Representations, Warranties, Agreements and Covenants	 	56
	Section 10.2
	 	Notices	 	56
	Section 10.3
	 	Entire Agreement	 	57
	Section 10.4
	 	No Assignment	 	57
	Section 10.5
	 	GOVERNING LAW	 	57
	Section 10.6
	 	CONSENT TO JURISDICTION	 	58
	Section 10.7
	 	Amendment	 	58
	Section 10.8
	 	Waiver	 	58
	Section 10.9
	 	Severability; Validity; Parties in Interest	 	59
	Section 10.10
	 	Enforcement of Agreement	 	59
	Section 10.11
	 	Counterparts; Effectiveness	 	59
	Section 10.12
	 	Headings	 	59
	Section 10.13
	 	3 Liquidated Damages as Sole Remedy of Sellers	 	59
	Section 10.14
	 	4 Liquidated Damages as Sole Remedy of Purchaser	 	61







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ASSET PURCHASE AGREEMENT




     This Asset Purchase Agreement (this “Agreement”) is dated as of July 23, 2008 (the “Effective
Date”), between ProxyMed, Inc., a Florida corporation doing business as MedAvant Healthcare
Solutions (“Parent”), ProxyMed Transaction Services, Inc., a Delaware corporation (“PMTS”), and MHC
Acquisition Corp., a Delaware corporation, or its designee (“Purchaser”). In this Agreement,
Parent and PMTS are sometimes collectively referred to as the “Sellers.”



R E C I T A L S




     A. Sellers are engaged in the business of providing transaction services by means of the
electronic exchange of information between healthcare providers and payers, primarily through
Phoenix, Sellers’ electronic data interchange platform (the “Business”).



     B. On the Effective Date, Sellers have filed voluntary petitions (the “Petitions”) for relief
under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the
“Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the
“Bankruptcy Court”), commencing federal bankruptcy cases in respect of each of Sellers (such cases
being referred to herein collectively as the “Chapter 11 Case”).



     C. Purchaser desires to purchase and acquire from Sellers, and Sellers desire to sell, convey,
assign and transfer to Purchaser, certain of the assets and properties of Sellers relating to the
Business, including the sale, assumption and assignment of certain executory contracts and leases
pursuant to the terms hereof, all in the manner and subject to the terms and conditions set forth
herein and in accordance with Sections 105, 363 and 365 of the Bankruptcy Code (collectively, the
“Contemplated Transactions”).



     NOW, THEREFORE, in consideration of the foregoing and their respective representations,
warranties, covenants and agreements set forth herein, the parties hereto agree as follows:



ARTICLE I

DEFINITIONS




     Section 1.1 Defined Terms. As used herein, the terms below shall have the following meanings:



     “Acquired Assets” has the meaning set forth in Section 2.1.



     “Affiliate,” with respect to any Person, means a Person that controls, is controlled by or is
under common control with such Person. For the purposes hereof, “Control” and “Controlled” means
the possession, direct or indirect, of the power to direct or cause the direction of the management
and policies of an entity, whether through the ownership of voting securities, by contract,
management agreement or otherwise.



 









 





     “Agreement” has the meaning set forth in the preamble to this Agreement.



     “Allocation Schedule” has the meaning set forth in Section 2.10(a).



     “Alternative Transaction” means any agreement or transaction involving the sale (in a single
transaction or a series of related transactions) of all or substantially all of the Acquired
Assets, or the issuance or sale (in a single transaction or a series of related transactions) of
all or substantially all of the equity interests, of Sellers or any of their successors, to any
party other than Purchaser or a designee of Purchaser.



     “Apportionable Operating Expenses” has the meaning set forth in Section 2.9.



     “Arbitrating Accountants” has the meaning set forth in Section 2.10(c).



     “Assigned Claim” means any Claim of Sellers related to the Acquired Assets or the Assumed
Liabilities, including but not limited to (a) any Customer Avoidance Action, (b) any Claims related
to the Intellectual Property, including but not limited to any Claim or right to sue for damages by
reason of past, present and future infringement of, or otherwise to enforce the Intellectual
Property, (c) any Claim against a vendor, supplier, manufacturer, contractor, customer or other
third party arising out of or related to any contract or agreement assumed by Purchaser at the
Closing, whether by reason of a guaranty, representation, warranty or indemnity, or otherwise
relating to an Acquired Asset; and (d) any Claim or other right to enforce any Assigned Deposit.



     “Assigned Deposits” has the meaning set forth in Section 4.21.



     “Assumed Employment Agreements” means the following agreements: (a) Key Employee Retention
Agreement, dated May 16, 2008 between Kirk R. Willingham and ProxyMed, Inc., d/b/a MedAvant
Healthcare Solutions; (b) Key Employee Retention Agreement, dated May 16, 2008 between Krishnan
Aghoramurthy and ProxyMed, Inc., d/b/a MedAvant Healthcare Solutions; (c) Key Employee Retention
Agreement, dated June 9, 2008 between Kouri T. Andrews and ProxyMed, Inc., d/b/a MedAvant
Healthcare Solutions; (d) Key Employee Retention Agreement, dated May 16, 2008 between Martha D.
Burge and ProxyMed, Inc., d/b/a MedAvant Healthcare Solutions; (e) Key Employee Retention
Agreement, dated May 16, 2008 between Robert L. Frye and ProxyMed, Inc., d/b/a MedAvant Healthcare
Solutions; (f) Key Employee Retention Agreement, dated May 16, 2008 between Stephen A. Godfrey and
ProxyMed, Inc., d/b/a MedAvant Healthcare Solutions; (g) Key Employee Retention Agreement, dated
May 16, 2008 between Angela M. McKenna and ProxyMed, Inc., d/b/a MedAvant Healthcare Solutions; (h)
Key Employee Retention Agreement, dated May 16, 2008 between Eric D. Johnson and ProxyMed, Inc.,
d/b/a MedAvant Healthcare Solutions; (i) Key Employee Retention Agreement, dated May 16, 2008
between Karen D. Rocchi and ProxyMed, Inc., d/b/a MedAvant Healthcare Solutions; (j) Employment
Agreement, dated May 17, 2006 between Eric Arnson and ProxyMed, Inc., d/b/a MedAvant Healthcare
Solutions, as amended May 21, 2008; (k) Employment Agreement, dated March 29, 2001 between Lonnie
W. Hardin and ProxyMed, Inc., as amended March 8, 2005 and May 22, 2008; (l)



2









 







Employment Agreement,
dated May 17, 2006 between Adnane Khalil and ProxyMed, Inc., d/b/a MedAvant Healthcare Solutions,
as amended May 21, 2008; (m) Employment Agreement, dated May 17, 2006 between Allison Myers and
ProxyMed, Inc., d/b/a MedAvant Healthcare Solutions, as amended July 3, 2008; and (n) Employment
Agreement, dated April 29, 2008 between Peter E. Fleming, III and ProxyMed, Inc., d/b/a MedAvant
Healthcare Solutions; and (o) Employment Agreement, dated April 27, 2007 between Teresa Stubbs and
ProxyMed, Inc., d/b/a MedAvant Healthcare Solutions, as amended July 3, 2008.



     “Assumed Liabilities” has the meaning set forth in Section 2.3.



     “Assumed Section 365 Contract” has the meaning set forth in Section 6.10.



     “Atlanta Facility” means the Sellers’ Facility located in Atlanta, Georgia.



     “Atlanta TSA” means an Atlanta Transition Services Agreement in form and substance to be
agreed upon by the parties, under which agreement the parties shall agree that, from the Closing
Date to December 31, 2008, Sellers shall authorize Purchaser to occupy and use the entire Atlanta
Facility premises and utilize all personal property thereat and, in consideration therefor,
Purchaser shall be responsible for the operating costs of the Atlanta Facility during the period
during which the Atlanta TSA is in effect.



     “Auction” means the auction process for the purchase of Acquired Assets authorized by the
Bankruptcy Court and set forth in the Bidding Procedures Order.



     “Avoidance Actions” means any Claim under sections 502, 510, 541, 544, 545, 547, 548, 549,
550, 551, or 553 of the Bankruptcy Code or under related state or federal statutes or common law,
including fraudulent transfer of conveyance law.



     “Bankruptcy Code” has the meaning set forth in Recital B.



     “Bid Submission Deadline” means the deadline for submission of bids as established pursuant to
the Bidding Procedures Order.



     “Bidding Procedures Motion” means a motion, supporting papers, notices and form of Bidding
Procedures Order, all in form and substance acceptable to Purchaser in its reasonable discretion,
seeking the entry of the Bidding Procedures Order.



     “Bidding Procedures Order” means an Order of the Bankruptcy Court, in the form of Exhibit
A attached hereto, which shall provide for a Bid Submission Deadline of no later than 45 days
from the Petition Date and for completion of the Auction within 50 days of the Petition Date, with
the final form and substance of such Order to be acceptable to Purchaser in its sole discretion.



     “Break-Up Fee” has the meaning set forth in Section 9.6(a).



     “Business” has the meaning set forth in Recital A.



3









 





     “Business Day” means any day that is not a Saturday, Sunday or other day on which banking
institutions in Los Angeles, California are authorized or required by Law to close.



     “Business Records” means all books and records of Sellers (in any form or medium), Related to
the Business, including, without limitation, all financial statements, financial data, Tax Returns,
workpapers from accountants and auditors, budgets, data processing records, employment, payroll and
personnel records, vendor, supplier and customer records, ledgers, journals, files, reports, plans,
manuals, sales and credit records, studies, surveys, reports, marketing material, pricing
guidelines, customer lists and databases, customer records, test records, financing records,
performance benchmark reports, customer account histories and profiles, sales training and
presentation materials, customer support materials, support bulletins, computer files and programs,
retrieval programs, operating data and plans, projections, forecasts and plans.



     “Chapter 11 Case” has the meaning set forth in Recital B.



     “Chapter 11 Expenses” means the costs incurred and expenses paid or payable by Sellers in
connection with the administration of the Chapter 11 Case, including (a) obligations to pay
professionals’ fees and expenses in connection with the Chapter 11 Case (including fees of
attorneys, accountants, investment bankers, financial advisors and consultants retained by Sellers,
the Creditors’ Committee, the pre-Petition lenders, or any other official committee appointed in
the Chapter 11 Case and any compensation for making a substantial contribution in the Chapter 11
Case) and reimbursement of any expenses incurred by Sellers prior to the Closing Date in connection
therewith (including any obligations to pay any holdback of any such fees and expenses), (b) fees
and expenses payable to the United States trustee under Section 1930 of Title 28 of the United
States Code, and (c) expenses of members of the Creditors’ Committee.



     “Chapter 11 Plan” means any Chapter 11 plan of reorganization in the Chapter 11 Case.



     “Claim” means any claim, right, demand, action, cause of action, chose in action, lawsuit, or
judgment of any nature whatsoever, whether known or unknown, in Law, equity, or otherwise, whether
for recovery of money or property, or for consequential or other damages or other relief, and
whether arising by way of counterclaim or otherwise.



     “Closing” has the meaning set forth in Section 3.1.



     “Closing Date” has the meaning set forth in Section 3.1.



     “COBRA” means Section 4980B of the Code and Section 601 et. seq. of ERISA, and the proposed
or final regulations thereunder.



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



4









 





     “Confidentiality Agreement” means any agreement to which either of Sellers is a party and
under which any third party owes an obligation to maintain confidentiality or to refrain from
making disclosure regarding the Sellers, the Intellectual Property or the Business, whether entered
into before into after the filing of the Petition.



     “Consent” means any consent, approval, authorization, waiver, agreement or license by, or
report or notice to, any Person.



     “Contemplated Transactions” has the meaning set forth in Recital C.



     “Creditors’ Committee” means any official committee of unsecured creditors appointed by the
United States trustee in the Chapter 11 Case, as such committee may be constituted from time to
time.



     “Cure Amount” means the amount required to be paid as a cure amount under Section 365 of the
Bankruptcy Code so that Sellers may sell, assume and assign any Section 365 Contract to Purchaser.
Schedule 1.1 sets forth the best estimate of Purchaser of the Cure Amounts in respect of
the Section 365 Contracts (other than any Cure Amounts excluded from such schedule at the request
of Purchaser as pertaining to a Section 365 Contract as to which Purchaser does not wish to Sellers
to assume and assign to Purchaser) on and as of the date set forth thereon. For avoidance of
doubt, “Cure Amount” shall not include any pre-Petition Customer Obligations under any Customer
Incentive Programs.



     “Customer” means any customer of Seller in the Business.



     “Customer Avoidance Action” means any Avoidance Action against a Customer.



     “Customer Contract” means any contract or agreement of Sellers or its Affiliates, oral or
written, to which either a Customer or an aggregator of Customers is a party.



     “Customer Incentive Programs Motion” means a motion, supporting papers, notices and form of
Customer Incentive Programs Order, all in form and substance acceptable to Purchaser in its
reasonable discretion, seeking the entry of the Customer Incentive Programs Order.



     “Customer Incentive Program” has the meaning set forth in the Customer Incentive Programs
Order.



     “Customer Incentive Programs Order” means an Order of the Bankruptcy Court, in form and
substance acceptable to Purchaser in its reasonable discretion, authorizing the Sellers to honor or
pay pre-Petition obligations to Customers under existing Customer Incentive Programs, in form and
substance acceptable to Purchaser in its reasonable discretion.



     “Deposit” has the meaning set forth in Section 2.6(a).



5









 





     “Designated Purchaser Representatives” has the meaning set forth in Section 6.6.



     “Development Environments” means any device, programming, documentation, media and other
objects, including compilers, “workbenches,” tools, and higher-level or “proprietary” languages,
used by Sellers for the development, maintenance and implementation of any Software excluding,
however, any third party software and hardware used by Sellers for such purposes, to the extent
such objects may be necessary for any subsequent maintenance or enhancement of such Software.



     “DIP Financing Agreement” means a DIP Financing Agreement or other documents evidencing the
DIP facility debtor between Sellers and the Senior Lender, as referenced in and approved by the
Bankruptcy Court in the Chapter 11 Case.



     “Disabling Code” means any known virus, Trojan horse, worm, software lock, drop dead device or
any other limiting routine or instructions that would erase data or render the Software incapable
of being used in accordance with the documentation therefor or render the Software out of
compliance with its documentation.



     “Effective Date” has the meaning set forth in the preamble to this Agreement.



     “Effective Time of Employment” has the meaning set forth in Section 7.3(b).



     “End User License Agreements” has the meaning given to it in Section 4.17(h) of this
Agreement.



     “Environmental Laws” means all federal, state and local Laws governing health and safety,
pollution or the protection of the environment.



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



     “Escrow Agreement” has the meaning set forth in Section 2.6(a).



     “Escrow Holder” has the meaning set forth in Section 2.6(a).



     “Excluded Assets” has the meaning set forth in Section 2.2.



     “Excluded Contract” has the meaning set forth in Section 2.2(c).



     “Excluded Assets” has the meaning set forth in Section 2.2.



     “Excluded Facility” means any Facility other than an Acquired Facility, and for avoidance of
doubt includes the Atlanta Facility, the Florida Facilities and the Jeffersonville Facility.



     “Facility” means any of the facilities occupied by any of the Sellers in connection with the
Business.



6









 





     “Facilities Lease” means any real property lease or sublease for any Facility of Sellers,
including all amendments and modifications thereto.



     “FICA” means the United States Federal Insurance Contributions Act, as amended from time to
time.



     “Final Order” means an Order of the Bankruptcy Court the operation or effect of which has not
been stayed, reversed or amended, and as to which Order the time to appeal or to seek review or
rehearing has expired and as to which (i) no appeal or request for review or rehearing was filed,
or (ii) if an appeal or request for review or rehearing was filed, such appeal or request for
review or rehearing is no longer pending.



     “Florida Facilities” means the Facilities of Sellers located in Tampa and Plantation, Florida.



     “FUTA” means the United States Federal Unemployment Tax Act, as amended from time to time.



     “GAAP” means United States generally accepted accounting principles, applied on a consistent
basis during the periods involved.



     “General Release” means a general release by Sellers, in the form attached hereto as Exhibit
J, of any Claims against Purchaser or its Affiliates, other than Claims arising under this
Agreement or as otherwise specified therein.



     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any government authority,
agency, department, board, commission or instrumentality of the United States, any state of the
United States or any political subdivision thereof, and any court, tribunal or arbitrator(s) of
competent jurisdiction, and any self-regulatory organization, and shall include the Bankruptcy
Court.



     “Hazardous Substance” means any hazardous waste, toxic substance, pollutant or contaminant as
those terms are defined in Environmental Laws.



     “Inactive Employee” means an employee who is not actively at work due to approved leave of
absence, short-term disability leave or military leave.



     “Inbound License Agreements” means all agreements granting to Sellers or any of their
Affiliates any right to use, exploit or practice any Intellectual Property or Licensed Software
owned or controlled by Persons other than Sellers and any of their Affiliates (excluding Shrinkwrap
Software).



     “Income Tax” or “Income Taxes” means any franchise Tax and any Tax based on or measured by
gross or net revenues, income or profits (including any and all fines,



7









 







penalties, interest and
additions attributable to or otherwise imposed on or with respect to any such Tax).



     “Initial Expense Payment” means the non-refundable payment of $100,000 made by Sellers to
Purchaser pursuant to paragraph 6 of the Letter Agreement.



     “Intangible Property” means all intangible personal property of Sellers, including, without
limitation, (i) all goodwill of the Business; (ii) all Intellectual Property; (iii) all income,
royalties or payments due and payable and all rights of priority and protection of interests in the
Intellectual Property and all legal privileges associated therewith; (iv) all Business Records; (v)
all guaranties, representations, warranties, indemnities, whether by vendors, suppliers,
manufacturers, contractors, Customers or others, and similar rights, in favor of Sellers to the
extent related to any of the Acquired Assets; (vi) all rights under any geographic distribution
agreements between Sellers and any vendor, supplier, manufacturer or contractor; (vii) all Assigned
Deposits; (viii) all Permits, to the extent such licenses and permits are assignable under the
Bankruptcy Code; (ix) all Assigned Claims; and (x) all telephone and facsimile numbers and all
listings in all telephone books and directories (in any media) used by Sellers in the conduct of
the Business.



     “Intellectual Property” means all of the following as they exist in any jurisdictions, in each
case, to the extent used or held for use by Sellers in connection with the Business: (i) patents,
patent applications and the inventions, designs and improvements described and claimed therein,
patentable inventions, and other patent rights (including any divisions, continuations,
continuations-in-part, renewals, substitutions or reissues thereof, whether or not patents are
issued on any such applications and whether or not any such applications are amended modified,
withdrawn or refiled) (“Patents”); (ii) trademarks, service marks, trade dress, trade names, brand
names, Internet domain names, websites or web pages, designs, logos or corporate names (including,
in each case, the goodwill associated therewith), whether registered or unregistered, and all
registrations and applications for registration thereof (“Marks”); (iii) copyrights, including all
renewals and extensions thereof, copyright registrations and applications for registration thereof,
and non-registered copyrights (“Copyrights”); (iv) trade secrets, confidential business information
and other proprietary information including, without limitation, designs, research and development
information, technical information, specifications, operating and maintenance manuals, methods,
engineering drawings, know-how, data, databases, mask works, discoveries, inventions, industrial
designs and other proprietary rights (whether or not patentable or subject to copyright, mask work,
or trade secret protection) (“Trade Secrets”); (v) Software; and (vi) all licenses, sublicenses,
and other agreements or permissions related to the property described in clauses (i) to (v) of this
definition.



     “Inventory” means all goods, supplies, materials, stock in trade and other inventory, wherever
located, of Sellers for use or sale in the ordinary course of business, including but not limited
to business forms and marketing brochures, and packing and packaging materials.



8









 





     “Jeffersonville Facility” means the Facility located in Jeffersonville, Indiana.



     “Laws” means any (i) statutes, laws, rules, regulations, ordinances, codes or Orders of any
Governmental Authority, (ii) Governmental Approvals, and (iii) Orders decisions, judgments, and
awards of or agreements with any Governmental Authority.



     “Legal Proceeding” means any complaint, suit, charge, action, Claim, arbitration, inquiry,
investigation or other proceeding (whether at Law or equity and whether judicial, administrative,
regulatory or arbitral) before or by any Governmental Authority.



     “Letter Agreement” means the letter agreement dated June 18, 2008 between Sellers and
Purchaser, as amended and related term sheet dated June 14, 2008.



     “Liability” means any debt, liability, commitment, guaranty, warranty or obligation of any
kind, character or nature whatsoever, whether known or unknown, secured or unsecured, conditional
or unconditional, liquidated or unliquidated, choate or inchoate, accrued, fixed, absolute,
potential, contingent or otherwise, and whether due or to become due.



     “Licensed Software” has the meaning given to it in Section 4.17(f) of this Agreement.



     “Lien” means any mortgage, pledge, lien (statutory or otherwise), charge, equity, encumbrance,
right of way, covenant, right of first refusal, defect in title, security interest, hypothecation,
conditional sale or other title retention agreement, assessment, easement, encroachment, Consent,
Claim, option, reservation, restriction, condemnation proceeding, burden or conflict of any kind.



     “Material Adverse Change” means any Legal Proceeding, event, occurrence, fact, condition,
change or effect that (individually or together with any other events, facts, conditions, changes
or effects) has, or would reasonably be expected to have, a material adverse effect on (a) the
value, transferability or condition of the Acquired Assets, (b) the amount of the Assumed
Liabilities, or (c) the consolidated financial condition or results of operations of the Business,
taken as a whole, other than the filing of the Petitions, but excludes any effect: (i) affecting
companies in its industry or its markets generally; (ii) that is cured before the date of any
termination of this Agreement by the Purchaser; or (iii) by reason of the identity of the Purchaser
or communications by the Purchaser or any of their Affiliates of its plans or intentions regarding
the operation of the Business.



     “Material Breach” means, with respect to a party to this Agreement, (a) any breach by such
party of a representation or warranty contained in this Agreement that is qualified as to
materiality or a material breach of any representation and warranty that is not so qualified, which
breach is not capable of being cured or, if capable of being cured, is not cured within five (5)
days after written notice of such breach is given by another party to this Agreement to such party
or (b) any breach by such party of the covenants or agreements set forth in this Agreement, which
breach is not capable of being cured or, if



9









 







capable of being cured, is not cured within three (3)
days after written notice of such breach is given by another party to such party.



     “Non-Customer Contract” means any contract or agreement of Sellers or its Affiliates, oral or
written, Related to the Business (other than a Customer Contract).



     “Offer Employee” has the meaning set forth in Section 7.3(b).



     “Order” means any order, injunction, writ, decree, adjudication, determination or ruling by a
Governmental Authority.



     “Outside Date” means September 22, 2008 or, if Purchaser by written notice to Sellers given on
or before September 15 expressly designates a later date (not later than October 15, 2008), such
later date.



     “Owned Software” has the meaning set forth in Section 4.17(f).



     “Parent” has the meaning set forth in the preamble to this Agreement.



     “Party” means, with respect to this Agreement, either Sellers or Purchaser and Sellers and
Purchaser are the “parties” to this Agreement, as the context may require.



     “Permit” means any license, certificate of occupancy, franchise, permit, exemption, Consent,
right, or Order by, or required registration with, any Governmental Authority.



     “Permitted Lien” means (i) any easement, encroachment or similar reservation, restriction or
burden or other Lien that would not individually or in the aggregate adversely affect the use or
enjoyment of the Acquired Assets by Purchaser and (ii) any Lien that Purchaser agrees in writing to
accept.



     “Person” means any natural person, firm, partnership, association, corporation, limited
liability company, joint venture, trust, unincorporated organization, business trust, Governmental
Authority, official and unofficial committees in the Chapter 11 Case or any other entity.



     “Personal Property Lease” means any equipment, personal property or intangible property lease,
sublease, rental agreement, license, contract or similar arrangement to which Sellers is a party.



     “Petition” has the meaning set forth in Recital B.



     “Petition Date” means the date on which the Petitions are filed in the Bankruptcy Court,
commencing the Chapter 11 Case.



     “PMTS” has the meaning set forth in the preamble to this Agreement.



10









 





     “Pre-Closing Tax Period” means any Tax period (or any portion thereof) ending on or before the
Closing Date.



     “Purchase Price” has the meaning set forth in Section 2.5(a).



     “Purchaser” has the meaning set forth in the preamble to this Agreement.



     “Related to the Business” means required for, arising out of, or used in connection with the
Business as conducted by Sellers before the Closing Date.



     “Rule” or “Rules” means the Federal Rules of Bankruptcy Procedure.



     “Sale Hearing” means the hearing of the Bankruptcy Court to approve the Sale Motion and the
Contemplated Transactions.



     “Sale Motion” means a motion, supporting papers, notices and form of Sale Order, all in form
and substance acceptable to Purchaser in its reasonable discretion, seeking the entry of the Sale
Order.



     “Sale Order” means an Order of the Bankruptcy Court, in the form attached hereto as
Exhibit B, approving the sale of the Acquired Assets, assumption of the Assumed
Liabilities, and assignment of all Assumed Section 365 Contracts free and clear of any Liens
(except for Permitted Liens and any Assumed Liabilities under this Agreement) and finding that
Purchaser is a “good faith purchaser” for purposes of Section 363(m) of the Bankruptcy Code, with
the final form and substance of such Order to be acceptable to Purchaser in its sole discretion.



     “Scheduled Section 365 Contract” has the meaning set forth in Section 6.10(b).



     “Section 365 Contract” means any executory contract or unexpired lease of any of Sellers.



     “Sellers” has the meaning set forth in the preamble to this Agreement.



     “Sellers’ Benefit Plan” or “Sellers’ Benefit Plans” means any plan, program, arrangement,
agreement or commitment which is an employment, consulting or deferred compensation agreement, or
an executive compensation, incentive bonus or other bonus, employee pension, profit-sharing,
savings, retirement, stock option or other equity-based compensation, severance pay, life, medical,
dental, death benefit, disability or accident insurance plan, vacation, Code Section 125
“cafeteria” or “flexible benefit” plan or other employee benefit plan, program, arrangement,
agreement or commitment, including, without limitation, any “employee benefit plan” as defined in
Section 3(3) of ERISA or any “employee welfare benefit plan” as defined in Section 3(1) of ERISA.



     “Sellers’ Copyrights” has the meaning given to it in Section 4.17(d) of this
Agreement.



11









 





     “Sellers’ Financial Statements” has the meaning given in Section 4.6.



     “Sellers’ Marks” has the meaning given to it in Section 4.17(b) of this Agreement.



     “Sellers’ Patents“ has the meaning given to it in Section 4.17(e) of this Agreement.



     “Sellers’ Representatives” has the meaning set forth in Section 7.2(b).



     “Sellers’ Required Approvals” has the meaning set forth in Section 4.4.



     “Sellers’ Trade Secrets” has the meaning given to it in Section 4.17(e) of this
Agreement.



     “Senior Lender” means Laurus Master Fund, Ltd. and its Affiliates, successors and assigns.



     “Shrinkwrap Software” means off-the-shelf desktop applications available on reasonable terms
through commercial distributors or in consumer retail stores for a license fee of no more than
$5,000 per licensed user.



     “Software” means any and all (a) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code or object code, (b)
databases and compilations, including any and all data and collections of data, whether machine
readable or otherwise, (c) descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, and (d) all documentation, including user manuals and
training documentation, relating to any of the foregoing, in each case developed by or for, or
licensed or made available to, Sellers and Related to the Business.



     “Straddle Period” has the meaning set forth in Section 7.7(a).



     “Straddle Period Taxes” has the meaning set forth in Section 7.7(b).



     “Subsidiary” of any Person means any corporation or other organization whether incorporated or
unincorporated of which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of directors or other
similar governing body of such corporation or other organization is directly or indirectly owned or
controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries.



     “Systems” has the meaning given to it in Section 4.17(m) of this Agreement.



     “Tangible Personal Property” means all tangible personal property of Sellers, including
furniture, fixtures, furnishings, equipment, machinery, motor vehicles, tools, computers, computer
hardware, photocopiers, facsimile machines and other business equipment and devices (including data
processing hardware and related



12









 







telecommunications equipment, media, and tools), tools, racking,
molds, forms, dies and tooling and miscellaneous items, other than any tangible personal property
held by Sellers subject to a Personal Property Lease unless such Personal Property Lease is an
Assumed Section 365 Contract.



     “Tax” or “Taxes” means all taxes of any kind, charges, fees, customs, duties, imposts, levies,
or other assessments, including all net income, gross receipts, ad valorem, value added, transfer,
gains, franchise, profits, inventory, net worth, capital stock, asset, sales, use, license,
estimated, withholding, payroll, transaction, capital, employment, social security, workers
compensation, unemployment, excise, severance, stamp, occupation, and property taxes, together with
any interest and any penalties, additions to tax, or additional amounts, imposed by any taxing
authority (domestic or foreign) and shall include any transferee Liability in respect of Taxes.



     “Tax Returns” means all federal, state, local and foreign tax returns, declarations,
statements, reports, schedules, forms, estimates and information returns and any amended Tax
Returns relating to Taxes.



     “To the Knowledge” of a Person means to the Person’s best knowledge after due inquiry.



     “Trade Receivables” has the meaning set forth in Section 2.2(b).



     “Transaction Expenses” means all fees, charges, disbursements and expenses, paid out-of-pocket
to third parties, and whether incurred before or after the Effective Date, including fees, expenses
and costs of legal counsel, accountants, financial advisors, consultants, agents and other
representatives, incurred in connection with the Contemplated Transactions, including (i) the
negotiation of the Letter Agreement; (ii) business, financial and legal due diligence
investigation; (iii) consideration, preparation and negotiation of the terms of the Contemplated
Transactions, including this Agreement and related financing documentation, and the negotiation,
execution and delivery of any documentation and any amendments thereto related to the Contemplated
Transactions and the financing of the Contemplated Transactions; (iv) actions and proceedings in or
related to the Chapter 11 Case; and (v) the consummation of the Contemplated Transactions and the
definitive documentation.



     “Transfer Taxes” means all personal property transfer, documentary, sales, use, registration,
value-added, stamp, deed and other similar Taxes (including interest, penalties and additions to
Tax) incurred in connection with the Contemplated Transactions.



     “Transitioned Employee” has the meaning set forth in Section 7.3(b).



     “Utilities” has the meaning set forth in Section 2.9.



     “WARN Act” has the meaning set forth in Section 4.18(d).



13









 





     Section 1.2 General Principles of Construction. Unless otherwise specified, references
herein to Articles, Sections, Exhibits and Schedules refer to the Articles, Sections, Exhibits and
Schedules to this Agreement. The words “hereof,” “herein” and “hereunder,” and words of like
import, refer to this Agreement as a whole and not to any particular Article or Section of this
Agreement. References to this Agreement herein shall, unless the context otherwise requires,
include the Exhibits and Schedules hereto. The words “without limitation” shall be deemed to
follow any use of the word “include” or “including” herein.



     Section 1.3 Variations in Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.



     Section 1.4 Headings. The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.



ARTICLE II

PURCHASE AND SALE OF ASSETS




     Section 2.1 Purchase and Sale of Acquired Assets. On the terms and subject to the conditions
set forth in this Agreement, at the Closing, Sellers shall sell, assign, transfer, convey and
deliver to Purchaser, and Purchaser shall purchase and accept from Sellers, all of Sellers’ right,
title and interest in and to the assets of Sellers Related to the Business as set forth below
(except for the Excluded Assets set forth in Section 2.2), wherever located, whether
tangible or intangible, real, personal or mixed, as the same shall exist at the Closing (such
right, title and interest in and to all such assets being collectively referred to herein as the
“Acquired Assets”), free and clear of all Liens, other than Permitted Liens. The Acquired Assets
shall include all Sellers’ right, title and interest in and to the assets described in clauses (a)
through (i) below (but shall specifically exclude the Excluded Assets):




     (a) The Facilities described on Schedule 2.1(a), subject to the Facilities
Leases for such Facilities becoming Assumed Section 365 Contracts pursuant to Section
6.10, and any real property improvements located thereat (the “Acquired Facilities”);




     (b) All Tangible Personal Property Related to the Business, including but not limited
to those items described on Schedule 2.1(b);




     (c) all Inventory Related to the Business; and




     (d) the Intangible Property;




     (e) the Facilities Leases for the Acquired Facilities described on Schedule
2.1(e), subject in the case of any Facilities Leases that are Section 365 Contracts to
such Facilities Leases becoming Assumed Section 365 Contracts pursuant to Section
6.10 (such Facilities Leases, the “Acquired Facilities Leases”);



14









 






     (f) the Personal Property Leases described on Schedule 2.1(f), subject in the
case of any Personal Property Leases that are Section 365 Contracts to such Personal
Property Leases becoming Assumed Section 365 Contracts pursuant to Section 6.10
(such Personal Property Leases, the “Acquired Personal Property Leases”);




     (g) all Customer Contracts (other than any Customer Contracts that are Section 365
Contracts rejected by Sellers), subject in the case of any Customer Contracts that are
Section 365 Contracts to such Customer Contracts becoming Assumed Section 365 Contracts
pursuant to Section 6.10;




     (h) all Non-Customer Contracts (other than the Acquired Facilities Leases and Acquired
Personal Property Leases) either described on Schedule 2.1(h) or constituting
Confidentiality Agreements, subject in the case of any such Non-Customer Contracts that are
Section 365 Contracts to such Non-Customer Contracts becoming Assumed Section 365 Contracts
pursuant to Section 6.10; and




     (i) all accounts receivable Related to the Business, whenever arising, including
recoverable deposits by customers of the Business and all rights to rebates and discounts
payable by manufacturers, vendors, suppliers, contractors or others in connection with the
Business (collectively, the “Trade Receivables”).



     Section 2.2 Excluded Assets. The following assets, properties and rights of Sellers (the “Excluded Assets”) are not
included in the Acquired Assets and shall be retained by Sellers and shall not be acquired by
Purchaser pursuant to this Agreement:




     (a) Except for any Assigned Deposits, any cash on hand or on deposit in accounts of
Sellers at banks or other financial institutions, including but not limited to any amount
due to Sellers pursuant to that certain Escrow Agreement made and entered into as of
January 31, 2008 by and among CCB Acquisition, LLC, a Delaware limited liability company,
Parent, and SunTrust Bank, a Georgia banking corporation;




     (b) the Excluded Facilities;




     (c) the Facilities Leases for any of the Excluded Facilities, any contract or
agreement not described on Schedule 2.1(f) or Schedule 2.1(h), and any
contract or lease or with respect to which Purchaser does not assume all Liabilities that
arise on or after the Closing Date in accordance with the Sale Order (an “Excluded
Contract”);




     (d) any assets of any of Sellers’ Benefit Plans, and any rights under any of the
Sellers’ Benefits Plans or any contract, agreement or arrangement between any employee or
consultant and Sellers;



15









 






     (e) except for any Assigned Claims, all Claims of Sellers as of the Closing Date,
including but not limited to (i) any such Claims arising under this Agreement, (ii) any
such Claims against any Governmental Authority for refund or credit of any type with
respect to the Sellers’ Taxes for the Pre-Closing Tax Period or Income Taxes of the Sellers
for any period, (ii) any such Claims against any Person related exclusively to any Excluded
Liabilities or Excluded Assets, including any insurance Claims, (iii) any Avoidance Actions
(other than Customer Avoidance Actions, which for avoidance of doubt, shall be included
among the Assigned Claims), (iv) any commercial tort Claims, and (v) any Claims against the
directors or officers of Sellers; and




     (f) any other asset, property, right, contract or Claim not described in Section
2.1.



     Section 2.3 Assumed Liabilities. Purchaser shall assume no Liabilities of any of the Sellers
except as set forth in this Section 2.3. On the terms and subject to the conditions set
forth in this Agreement, effective as of the Closing and from and after the Closing, Purchaser
shall assume from Sellers and thereafter pay, perform and discharge when due, the following, and
only the following, Liabilities of the Sellers (the “Assumed Liabilities”):




     (a) all obligations of the Sellers under any Assumed Section 365 Contracts (including
but not limited to the Assumed Employment Agreements) or any other Contracts expressly
assumed by Purchaser in writing at the Closing which, by the terms thereof, first arise
after the Closing Date;




     (b) all Liabilities for Cure Amounts, to the extent such Cure Amounts are the
responsibility of Purchaser under Section 2.8;




     (c) all Liabilities for accrued vacation pay of the Transitioned Employees as of the
Closing Date to the extent set forth in 
Schedule 4.18(a);




     (d) all Liabilities for the provision of the other accrued employee benefits of the
Transitioned Employees as of the Closing Date, to the extent set forth in Schedule
4.18(a); and




     (e) all Liabilities for severance, in the amount specified on Schedule
4.18(a), owed by Sellers to any individual (i) who is identified on such schedule, (ii)
who continues to be an employee of Sellers up to the Closing Date, (iii) who is not
included on the list of employees delivered by Purchaser in accordance with Section 7.3(b),
and (iv) whose employment with Sellers is terminated by Sellers as of the Closing Date.



     Section 2.4 Excluded Liabilities. Notwithstanding anything to the contrary contained herein,
Purchaser shall not assume, or in any way be liable or responsible for, any Liabilities of any of
the Sellers except for the Assumed Liabilities (collectively,



16









 







“Excluded Liabilities”). Without
limiting the generality of the foregoing, Purchaser shall not assume the following:




     (a) any Liability of Sellers or their Affiliates for Taxes accrued for, applicable to
or arising from any period on or prior to the Closing Date or Income Taxes accrued for,
applicable to, or arising from any period;




     (b) any Liability of Sellers or their Affiliates pursuant to Environmental Laws based
upon or arising from events, conditions or circumstances occurring or existing on or prior
to the Closing Date;




     (c) except as otherwise expressly provided in this Agreement, any Liability of Sellers
or their Affiliates in respect of Sellers’ Benefit Plans, consulting, severance, change in
control or similar agreements;




     (d) any Chapter 11 Expenses or Transaction Expenses of Sellers or their Affiliates;




     (e) any Liabilities of Sellers or their Affiliates to any of their directors,
officers, employees, agents or Affiliates (except as expressly included in Assumed
Liabilities);




     (f) any Liabilities of Sellers or their Affiliates (x) to financial institutions or
other Persons for borrowed money (whether under the DIP Financing Agreement or otherwise),
for any interest rate or currency swap, collar, floor or similar arrangement or for any
commodity swap or futures or forward contract, or (y) with respect to indebtedness or
obligations of others which Sellers has directly or indirectly guaranteed;




     (g) any Liabilities of Sellers or their Affiliates not Related to the Business or the
Acquired Assets or, except as otherwise expressly provided in this Agreement, any
Liabilities of Sellers or their Affiliates that are Related to the Business but arise on or
before the Closing;




     (h) any Liabilities of Sellers or their Affiliates for broker’s commissions, fees or
other compensation arising out of this Agreement or the Contemplated Transactions;




     (i) any Liabilities of Sellers or their Affiliates relating to the Excluded Assets;




     (j) any Liabilities of Sellers or their Affiliates relating to Claims by Customers,
regardless of when the Claims are brought and whether arising out of indemnity, warranty,
contract or tort, relating to services rendered by or on behalf of Sellers or their
Affiliates prior to the Closing Date; and



17









 






     (k) any Liabilities of Sellers expressly identified in Section 7.3(d) or other
provision of this Agreement as not the responsibility of Purchaser.



     Section 2.5 Purchase Price.




     (a) The aggregate amount to be paid for the Acquired Assets shall be cash in an amount
equal to the sum of $11,000,000 (the “Purchase Price”).




     (b) Except as set forth in Section 2.6 and Section 2.7, the Purchase
Price shall be paid in full on the Closing Date.



     Section 2.6 Deposit Escrow.




     (a) Upon execution of this Agreement, Purchaser will deposit $500,000 (the “Deposit”)
with a third party escrow holder (the “Escrow Holder”), who will hold the funds in a
segregated, interest-bearing escrow account designated to receive the Deposit pursuant to
an escrow agreement executed by the parties (the “Escrow Agreement”). The Escrow Agreement
shall be consistent with the terms and conditions of this Agreement. Interest accrued on
the Deposit shall belong and be paid to the party to whom the Deposit is disbursed.




     (b) The Deposit shall be held by the Escrow Holder until the earlier of the Closing or
the Termination Date. At the Closing, the Deposit and any accrued interest thereon shall
be disbursed to Sellers for application against the Purchase Price. In the event of a
termination of this Agreement, the Deposit and any accrued interest thereon shall be
immediately disbursed in accordance with Section 2.7 hereof. Purchaser and Sellers
shall equally share all fees and costs of the Escrow Holder.



     Section 2.7 Disbursement of Deposit on Termination. Upon termination of this Agreement:




     (a) Purchaser shall be entitled to a refund of the Deposit, together with any interest
earned on such sum, if this Agreement is terminated (i) in accordance with Section
9.1, unless, in connection with such termination, the parties otherwise expressly agree
in writing; (ii) in accordance with Section 9.3(b), unless the relevant condition
precedent to the obligation of Sellers that has not been satisfied or waived or that has
become impossible to satisfy is specified in Section 8.2(a) or Section
8.2(d), (iii) in accordance with Section 9.2 or Section 9.4(i), unless
the event giving rise to the right of termination specified therein shall have been caused
primarily by a Material Breach by Purchaser; or (iv) in accordance with Section
9.4(a), Section 9.4(b), Section 9.4(c), Section 9.4(d),
Section 9.4(e), Section 9.4(f), or Section 9.4(g), or Section
9.4(h).




     (b) Sellers shall be entitled to receive the Deposit, together with any interest
earned on such sum, as liquidated damages, if this Agreement is



18









 







terminated (i) in
accordance with Section 9.1, if in connection with such termination the parties
agree in writing that Sellers are entitled to the Deposit, (ii) in accordance with
Section 9.3(a), (iii) in accordance with Section 9.3(b), if the relevant
condition precedent to the obligation of Sellers that has not been satisfied or waived or
that has become impossible to satisfy is specified in Section 8.2(a) or Section
8.2(d), or (iii) in accordance with Section 9.2 or Section 9.4(i), if
the event giving rise to the right of termination specified therein shall have been caused
primarily by a Material Breach by Purchaser.




     (c) The parties shall instruct the Escrow Holder in writing to disburse the Deposit,
together with any interest earned on such sum, to the party entitled thereto under this
Section 2.7, in immediately available funds by wire transfer to an account
designated in writing by such party.



     Section 2.8 Payment of Cure Amounts. All Cure Amounts under Assumed Section 365 Contracts, up
to an aggregate amount of $500,000, shall be the responsibility of the Sellers. Upon payment by
the Sellers of an aggregate of $500,000 of Cure Amounts under Assumed Section 365 Contracts,
Purchaser thereafter shall be responsible for all Cure Amounts under Assumed Section 365 Contracts
in excess of such aggregate $500,000 of Cure Amounts. Cure Amounts under any Assumed Section 365
Contract shall be paid by the responsible party promptly to the parties to whom and pursuant to the
terms by which the Bankruptcy Court directs such payments to be made.



     Section 2.9 Apportionment. At or about the Closing Date, the Sellers and Purchaser shall (i)
make mutually satisfactory arrangements with respect to, or take readings or other measurements of,
gas, water, electricity and other utilities (the “Utilities”); (ii) mutually determine all charges,
fees or other expenses arising out of or relating to any Assumed Section 365 Contract, other than
Cure Amounts, which accrued but were not paid by Sellers during or in respect of any period prior
to Closing or which were paid by the Sellers in respect of any period following the Closing, other
than any such charges, fees or expenses that are (a) the subject of the Atlanta TSA or (b) under
express provision of this Agreement or other agreement or instrument related hereto, expressly
provided to be paid or borne by Purchaser or Sellers (the “Apportionable Operating Expenses”).
Responsibility for the Utilities and Apportionable Operating Expenses are to be apportioned
equitably as of the Closing Date.



     Section 2.10 Allocation of Purchase Price.




     (a) Within 90 days after the Closing, Purchaser shall prepare and deliver to Sellers a
schedule (an “Allocation Schedule”) allocating the sum of the Purchase Price and the
Assumed Liabilities among the Acquired Assets, in such amounts reasonably determined by
Purchaser to be consistent with Section 1060 of the Code, and the regulations thereunder.




     (b) Sellers shall have a period of ten (10) Business Days after the delivery of the
Allocation Schedule to deliver to Purchaser a written notice of



19









 







objection thereto. Unless
Sellers timely object, the Allocation Schedule shall be binding on the parties without
further adjustment, absent manifest error.




     (c) If Sellers shall deliver a written notice of objection regarding the Allocation
Schedule as described in Section 2.10(b), Purchaser and Sellers shall negotiate in
good faith and use all commercially reasonable efforts to resolve such dispute. If the
parties fail to agree within fifteen (15) days after the delivery of such notice, then the
disputed items shall be resolved by an independent firm of public accountants selected by
the independent auditors of Sellers and Purchaser (the “Arbitrating Accountants”). The
determination of the Arbitrating Accountants shall be final and binding on the parties.
The Arbitrating Accountants shall resolve the dispute within thirty (30) days after the
item has been referred to them. The costs, fees and expenses of the Arbitrating
Accountants shall be borne equally by Purchaser and Sellers.




     (d) For all Tax and other purposes, Purchaser and Sellers agree to report the
Contemplated Transactions in a manner consistent with the terms of this Agreement, and that
neither of them will take any position inconsistent therewith in any Tax Return.




     (e) The Allocation Schedule shall not be binding for any purpose on the Senior Lender.



ARTICLE III

THE CLOSING




     Section 3.1 Closing. The closing of the Contemplated Transactions (the “Closing”) shall take
place at the offices of Pachulski Stang Ziehl Young & Jones LLP, 10100 Santa Monica Boulevard,
Eleventh Floor, Los Angeles, California 90067 at 10:00 a.m. Pacific time, which shall be the
Business Day after the conditions set forth in Article VIII shall have been satisfied or
waived in writing or at such other time, date and place as shall be fixed by agreement between the
parties, but not later than the 5:00 p.m. Pacific time on the Outside Date (the date of the Closing
being herein referred to as the “Closing Date”).



     Section 3.2 Sellers’ Deliveries at Closing. At the Closing, Sellers shall deliver, or cause
to be delivered, to Purchaser the following items all in form and substance satisfactory to
Purchaser in its sole discretion:




     (a) the certificate contemplated by Section 8.3(a), dated the Closing Date;




     (b) all documents, certificates and agreements necessary to transfer to Purchaser good
and marketable title to the Acquired Assets in accordance with this Agreement, free and
clear of all Liens thereon other than Permitted Liens, including:



20









 






     (i) an Assignment and Assumption of Real Property Lease, in the form attached
hereto as Exhibit C, duly executed by Sellers, with respect to each of the
Acquired Facilities Leases, together with any necessary transfer declarations or
other filings (and in recordable form if required by Purchaser);




     (ii) an Assignment and Assumption of Section 365 Contracts, in the form
attached hereto as Exhibit D, duly executed by Sellers;




     (iii) a Bill of Sale, in the form attached hereto as Exhibit E, duly
executed by Sellers;




     (iv) an Assignment of Trademarks, in the form attached hereto as Exhibit
F, duly executed by Sellers;




     (v) an Assignment of Copyrights, in the form attached hereto as Exhibit
G, duly executed by Sellers; and




     (vi) an Assignment and Acceptance of Intangible Property, in the form attached
hereto as Exhibit H, duly executed by Sellers.




     (c) copies of resolutions of the boards of directors of Sellers, authorizing the
execution, delivery and performance hereof by Sellers, certified by authorized officers and
dated the Closing Date;




     (d) a copy of a certificate of the Secretary of State of the State of Florida
certifying that Parent is in good standing under the Law of the State of Florida and a copy
of a certificate of the Secretary of State of the State of Delaware certifying that PMTS is
in good standing under the Law of the State of Delaware;




     (e) certified copies of all Orders of the Bankruptcy Court pertaining to the
Contemplated Transactions, including the Bidding Procedures Order and the Sale Order (which
are Final Orders), evidence of the entry of all such Orders on the docket of the Chapter 11
Case and of the absence on the docket of any pending appeal or motion for rehearing or
reconsideration;




     (f) a copy of all Sellers’ Required Approvals;




     (g) any and all real property Transfer Tax returns and other similar filings required
by Law in connection with the Contemplated Transactions hereby and relating to the
Facilities, any part thereof or ownership interest therein, all duly and properly executed
and acknowledged by Sellers or an Order from the Bankruptcy Court exempting Sellers and
Purchaser from filing such returns and making such filings;




     (h) the Atlanta TSA, duly executed by Sellers;



21









 






     (i) the General Release in the form attached hereto as Exhibit J, duly
executed by Sellers; and




     (j) an affidavit of an officer of Sellers, sworn to under penalty of perjury, setting
forth Sellers’ name, address and Federal tax identification number and stating that Sellers
is not a “foreign person” within the meaning of Section 1445 of the Code. If, on or before
the Closing Date, Purchaser shall not have received such affidavit, Purchaser may withhold
from the cash payments to Sellers at Closing such sums as are required to be withheld
therefrom under Section 1445 of the Code.



     Section 3.3 Purchaser’s Deliveries at Closing. At the Closing, Purchaser shall deliver, or
cause to be delivered, to Sellers the following:




     (a) by wire transfer of immediately available funds to an account designated by
Sellers no later than one (1) Business Day before the Closing Date, payment of the Purchase
Price, less the Deposit;




     (b) the certificate contemplated by Section 8.2(a), dated the Closing Date;




     (c) an Assignment and Assumption of Real Property Lease, in the form attached hereto
as Exhibit C, duly executed by Purchaser;




     (d) an Assignment and Assumption of Section 365 Contracts, in the form attached hereto
as Exhibit D, duly executed by Purchaser;




     (e) a Bill of Sale, in the form attached hereto as Exhibit E, duly executed by
Purchaser;




     (f) an Assignment of Trademarks, in the form attached hereto as Exhibit F,
duly executed by Purchaser;




     (g) an Assignment of Copyrights, in the form attached hereto as Exhibit G,
duly executed by Purchaser;




     (h) an Assignment and Acceptance of Intangible Property, in the form attached hereto
as Exhibit H, duly executed by Purchaser;




     (i) the Assumption Agreement, in the form attached hereto as Exhibit I, duly
executed by Purchaser;




     (j) the General Release, in the form attached hereto as Exhibit J, duly
executed by Purchaser;




     (k) the Atlanta TSA, duly executed by Purchaser;



22









 






     (l) a copy of any resolutions evidencing corporate action by Purchaser, authorizing
the execution, delivery and performance hereof by Purchaser, certified by an authorized
officer of Purchaser and dated as of the Closing Date; and




     (m) a copy of a certificate of the Secretary of State of the State of Delaware
certifying that Purchaser is in good standing under the Law of the State of Delaware.



     Section 3.4 Required Documents. All documents to be delivered by Sellers or to be entered
into by Sellers and Purchaser necessary to carry out the Contemplated Transactions or contemplated
by the terms of this Agreement shall be reasonably satisfactory in form and substance to Purchaser
and counsel to Purchaser and all documents to be delivered by Purchaser necessary to carry out the
Contemplated Transactions or to be entered into by Sellers and Purchaser necessary to carry out the
Contemplated Transactions shall be reasonably satisfactory in form and substance to Sellers and
counsel to Sellers.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLERS




     Each of the Sellers represents and warrants to Purchaser as follows:



     Section 4.1 Organization. Each of the Sellers is duly incorporated, validly existing and in
good standing under the Laws of its respective state of incorporation and has the corporate power
and authority to own, use and operate its properties and to carry on business as it is now being
conducted. Each of the Sellers is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary.



     Section 4.2 Charter Documents and Corporate Records; No Investments.




     (a) Each of the Sellers has delivered to Purchaser true and complete copies of its
certificate of incorporation and bylaws, in each case as in effect on the Effective Date.
The minute books of each of the Sellers have been made available to Purchaser for its
inspection and are accurate in all material respects.




     (b) None of the Sellers has any Subsidiaries or owns any capital stock or other
proprietary interest, directly or indirectly, in any Person.



     Section 4.3 Power and Authority. Each of the Sellers has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and
performance of this Agreement by each of the Sellers and the consummation by each of the Sellers of
the Contemplated Transactions has been duly authorized by all requisite corporate action. Subject
to the entry and effectiveness of the Bidding Procedures Order and the Sale Order, this Agreement
has



23









 







been duly and validly executed and delivered by each of the Sellers and (assuming this Agreement constitutes a valid and binding agreement of Purchaser) constitutes a valid and
binding agreement of each of the Sellers, enforceable against each of the Sellers in accordance
with its terms, except as to the effect, if any, of (i) applicable bankruptcy, insolvency,
moratorium, reorganization, or other similar laws affecting the rights of creditors generally and
(ii) rules of law governing specific performance, injunctive relief and other equitable remedies.
Assuming the entry and effectiveness of the Sale Order, neither the entering into of this Agreement
nor the consummation of any of the Contemplated Transactions or performance of any obligations
provided for herein requires the affirmative vote, Consent or approval of or by holders of any
class or series of shares of the capital stock of any of the Sellers (or securities convertible
into or exchangeable for shares of any of the Sellers’ capital stock) or debt of any of the
Sellers. Subject to the entry and effectiveness of the Sale Order, each of the Sellers has all
requisite power to transfer to Purchaser good and marketable title to the Acquired Assets free and
clear of all Liens other than Permitted Liens.



     Section 4.4 Consents and Approvals. No Consent by, or declaration, filing or registration
with, any Governmental Authority or any other Person is required to be made or obtained by any of
the Sellers in connection with the execution, delivery and performance of this Agreement by each of
the Sellers and the consummation of the Contemplated Transactions, except for (a) Consents by, or
declarations or filings with, the Bankruptcy Court and (b) Consents, declarations, filings,
registrations or rulings identified in Schedule 4.4 and except where the failure to obtain
such Consents , declarations, filings, registrations or rulings would not create a Material Adverse
Change. The items referred to in clauses (a) and (b) of this Section 4.4 are hereinafter
referred to as the “Sellers’ Required Approvals.”



     Section 4.5 No Conflicts. Except for the Sellers’ Required Approvals, neither the execution,
delivery or performance of this Agreement by any of the Sellers, nor the consummation by any of the
Sellers of the Contemplated Transactions, nor compliance by any the Sellers with any of the
provisions hereof, will (a) conflict with or result in any breach of any provisions of the
certificate of incorporation or by-laws of any of the Sellers, (b) result in a violation or breach
of, or constitute (with or without notice or lapse of time) a default (or give rise to any right of
termination, cancellation, vesting, payment, exercise, acceleration, suspension or revocation)
under, any of the terms, conditions or provisions of, any note, bond, mortgage, deed of trust,
security interest, indenture, lease, license, contract or agreement to which any of the Sellers is
a party or by which any of the Sellers’ properties or assets may be bound or affected, which
violation, breach or default would have a material adverse effect on the ability of any of the
Sellers to perform its obligations hereunder or to consummate the Contemplated Transactions, (c)
violate any Order or Law applicable to the Sellers or to the Sellers’ properties or assets, (d)
result in the creation or imposition of any Lien (other than a Permitted Lien) on any asset of the
Sellers, or (e) cause the suspension or revocation of any Permit.



     Section 4.6 Financial Statements. Schedule 4.6 contains a true, correct and complete
copy of (a) the unaudited consolidated balance sheet of Parent as at May 31,



24









 







2008, and the related
unaudited consolidated statements of income, changes in stockholders’ equity, and cash flow for the
five months then ended, and (b) a consolidated balance sheet of Parent as at December 31, 2007 (including the notes thereto),
and the related consolidated statement of income, changes in stockholders equity, and cash flow for
the fiscal year then ended, together with the report thereon of UHY LLP, independent certified
public accountants (the “Sellers’ Financial Statements”). The Sellers Financial Statements have
been prepared in a consistent manner and fairly and accurately present the financial condition and
the results of operations, changes in stockholders’ equity, and cash flow of the as at the
respective dates of and for the periods referred to in the Sellers’ Financial Statements, all in
accordance with GAAP, subject, in the case of interim financial statements to normal recurring
year-end adjustments and the absence of notes.



     Section 4.7 Absence of the Material Adverse Change; Absence of Undisclosed Liabilities.




     (a) Since May 31, 2008, there has been no Material Adverse Change, other than the
filing of the Chapter 11 Case.




     (b) None of the Sellers has incurred any Liability, secured or unsecured, whether
absolute, accrued, contingent or otherwise and whether due or to become due, other than as
specifically set forth on the Sellers Financial Statements. Since May 31, 2008, none of
the Sellers has incurred any such Liability not in the ordinary course, other than with
respect to the Contemplated Transactions.



     Section 4.8 Litigation. Except for the Chapter 11 Case and except as set forth in
Schedule 4.8, there is no material Legal Proceeding pending that, once the Sale Order is
given effect, will result in any Liability on Purchaser or, to the Sellers’ Knowledge, threatened
against or affecting any of the Sellers that could result in the imposition of any Liability on
Purchaser or in respect of the Acquired Assets, nor is there any material judgment or Order of any
Governmental Authority (other than the Bankruptcy Court) outstanding against Sellers.



     Section 4.9 No Violation of Law. None of the Sellers has been given notice or been charged
with any material violation of any Law (including any applicable Environmental Law) of any
Governmental Authority. None of the Sellers is in violation of any Law (including any applicable
Environmental Law) of any Governmental Authority. No material investigation or review by any
Governmental Authority is pending or, to the Knowledge of the Sellers, threatened, against any of
the Sellers or any of its assets and properties, nor has any Governmental Authority indicated to
any of the Sellers an intention to conduct the same.



     Section 4.10 Environmental Matters. Each of the Sellers has provided Purchaser with copies of
all material documents and reports in its possession or control describing or otherwise relating to
past or present events, conditions, circumstances,



25









 







activities, practices, incidents, agreements,
actions or plans which have given rise to or would be reasonably likely to give rise to any
material Liability of any of the Sellers under Environmental Laws and any material environmental
Liability that would adversely affect the value of the Acquired Assets. Each of the Sellers is in material
compliance with all Environmental Laws, which compliance includes the possession by each of the
Sellers of all permits and other governmental authorizations required under applicable
Environmental Laws for the operation of the Business, and compliance with the terms and conditions
thereof. None of the Sellers has received any written notice not subsequently resolved with
respect to the Business of, or any property owned or leased by, any of the Sellers from any
Governmental Authority or third party alleging that the Sellers is not in compliance with or
subject to any Liability under any Environmental Laws. Except for Releases authorized under or
pursuant to Environmental Laws, or Permits issued thereunder, there has been no Release of any
Hazardous Substance in excess of a quantity for which a report is required under Environmental
Laws, on any real property of the Sellers Related to the Business. None of the Sellers is liable
for any costs, obligations, penalties, fines or forfeitures for failure to comply with any
Environmental Laws or necessary to achieve or maintain compliance with Environmental Laws, other
than such costs in the ordinary course of business, or with respect to any environmental conditions
or any release or presence of any Hazardous Substance, nor is any of the Sellers required to remedy
any such existing condition or remove any Hazardous Substance from any real property.



     Section 4.11 Permits. The Sellers have all Permits that are material to the conduct of the
Business. All Permits are listed on Schedule 4.11 and are in full force and effect. No
material violations are or have been committed in respect of any Permit and no proceeding is
pending or, to the Knowledge of the Sellers, threatened to revoke or limit any Permit.



     Section 4.12 Employee Benefits.




     (a) None of the Sellers has ever maintained or contributed to or has any obligation to
contribute to, or has any direct or indirect Liability, whether contingent or otherwise,
with respect to any Sellers’ Benefit Plan that is (i) a multiemployer plan within the
meaning of Section 3(37) or 4001(a)(3) of ERISA; (ii) a single employer pension plan
(within the meaning of Section 4001(a)(15) of ERISA; or (iii) a pension plan to which more
than one employer contributes (a “multiple employer plan”) within the meaning Section 4063
of ERISA.




     (b) No event has occurred in connection with which any of the Sellers, directly or
indirectly, that could be subject to any material Liability under ERISA, the Code or any
other Law applicable to any Sellers’ Benefit Plan, including, without limitation, Section
406, 409, 502(i), 502(l) or 4069 of ERISA, or Section 4971, 4975 or 4976 of the Code, or
under any agreement, instrument, or Law pursuant to or under which any of the Sellers has
agreed to indemnify any person against Liability incurred under, or for a violation or
failure to satisfy the requirement of, any such Law or Order.



26









 






     (c) With respect to each Sellers’ Benefit Plan (i) each of the Sellers has complied
with, and each such Sellers’ Benefit Plan conforms in form and operation to, all applicable
Laws, including, but not limited to, ERISA and the Code, in all material respects; (ii) each such Sellers’ Benefit Plan which is an
“employee pension benefit plan” (as defined in Section 3(2) of ERISA) and intended to
qualify under Section 401 of the Code is a nonstandardized prototype plan and trust through
Fidelity Investments as to which the Company is relying on the favorable determination
letter from the Internal Revenue Service with respect to the form of such preapproved plan
and trust, and, to the knowledge of Sellers, nothing has occurred that has or is likely to
adversely affect the tax qualification or exemption of such Sellers’ Benefit Plan; and
(iii) there are no Claims or Legal Proceedings pending (other than routine Claims for
benefits) or threatened with respect to such Sellers’ Benefit Plan or against the assets of
such Sellers’ Benefit Plan.




     (d) Only the Sellers’ Santa Ana Facility has had in excess of fifty (50) employees
since April 1, 2008. Since April 1, 2008, three (3) employees at this Facility have been
terminated for cause and four (4) employees have terminated at the request of the Sellers.
As of July 11, 2008, the Santa Ana Facility has fifty-eight employees and there are
thirty-two (32) remote employees who may be counted as employees at this Facility, for a
maximum potential total of ninety (90) employees.




     (e) None of the Sellers has any obligation to provide or any direct or indirect
Liability, whether contingent or otherwise, with respect to the provision of health or
death benefits to or in respect of former employees, except as may be required pursuant to
COBRA and the cost of which are fully paid by such former employees.




     (f) With respect to each Sellers’ Benefit Plan, the Sellers have delivered to
Purchaser a current, accurate and complete copy (to the extent such copy exists) thereof
and, to the extent applicable: (i) any related trust agreement or other funding instrument;
(ii) the most recent Internal Revenue Service determination letter, if applicable; (iii)
any summary plan description and other written communication (or a description of any oral
communications) by the Sellers to its employees concerning the benefits provided under the
Sellers’ Benefit Plan; and (iv) for the two most recent years (A) the Form 5500 and
attached schedules, (B) financial statements, and (C) actuarial valuation reports related
to each such Sellers’ Benefit Plan.



     Section 4.13 Title to and Use of Property. Sellers have, and at the Closing shall convey to
Purchaser subject to the Sale Order, good and marketable title to all of the Acquired Assets, in
each case free and clear of all Liens (including any Claims that may arise by reason of the
execution, delivery or performance by the Sellers of this Agreement) other than Permitted Liens.
The Acquired Assets include property of the Sellers, tangible and intangible, used or useable in
connection with the Business or



27









 







necessary to conduct the Business as it is currently conducted.
Except as disclosed on Schedule 4.13, all of the Acquired Assets are and, at the Closing,
will be located at the Facilities.



     Section 4.14 Facilities.




     (a) Sellers own no real estate other than leasehold improvements in the Facilities.
Attached as Schedule 4.14(a) is a true and correct list of all of the Facilities.




     (b) Schedule 4.14(b) sets forth the date of, and parties to, each Facilities
Lease, the date of, and parties to, each amendment, modification and supplement thereto,
the term and renewal terms (whether or not exercised) thereof and a brief description of
the Facilities covered thereby. None of the Sellers has any ownership, financial or other
interest in the landlord under any Acquired Facilities Lease.




     (c) As to the Acquired Facilities Leases, either (A) none of the Sellers is in default
or delinquent in any material respect in performing its obligations under the applicable
Acquired Facilities Lease, except as disclosed on Schedule 4.14(c), or (B) any such
default or delinquency will be fully cured (in accordance with the terms of this Agreement
or otherwise, including by payment of the Cure Amount), or otherwise may not be asserted
against Purchaser or the Acquired Assets, as a result of the entry by the Bankruptcy Court
of the Bidding Procedures Order and the Sale Order, such that the Sellers’ rights in and
under all such Acquired Facilities Leases shall vest in Purchaser upon the Closing without
reversion or diminution.




     (d) All buildings, structures and other improvements included within the Facilities
are in good operating condition and repair, subject to continued repair and replacement in
accordance with past practice. There are no leases, subleases, licenses and other
agreements granting to any Person or entity other than the Sellers any right to the
possession, use, occupancy or enjoyment of the Facilities, or any portion thereof. No
portion of the Facilities has suffered any material damage by fire or other casualty which
has not heretofore been completely repaired and restored to its original condition.




     (e) None of the Sellers owns or holds, and none of the Sellers is obligated under or a
party to, any option, right of first refusal or other contractual right to purchase,
acquire, sell or dispose of the Facilities or any portion thereof or interest therein.



     Section 4.15 Compliance with Laws. Each of the Sellers has complied in all material respects
with all applicable Laws in the operation of the Business and ownership and use of the Acquired
Assets. None of the Sellers have received any written notice alleging any conflict, violation,
breach or default under any Laws




28











 




applicable to it, the operation of the Business or the ownership or use of the Acquired Assets that
has not been cured or waived. All of the Governmental Approvals and other Permits necessary for,
or otherwise material to, the operation of the Business have been duly obtained and are in full
force and effect and, to the extent permitted by Law, each of the Sellers has the power to assign
such Governmental Approvals and Permits.




     Section 4.16 Contracts.




     (a) Schedule 4.16(a) contains a complete and accurate list of each Customer
Contract of the Sellers involving payments or other consideration in excess of $50,000 in
the 12 month period ended May 31, 2008.




     (b) Schedule 4.16(b) contains a complete and accurate list of each
Non-Customer Contract of the Sellers (x) involving payments or other consideration in
excess of (i) $10,000 in the 12-month period ended May 31, 2008, or (ii) $25,000 over the
term of the Non-Customer Contract or (y) which is otherwise material to the Business. True
and complete copies of each such written Non-Customer Contract (or written summaries of the
terms of any such oral Non-Customer Contract or any oral modification of a written
Non-Customer Contract) have been delivered to Purchaser.




     (c) Except as set forth on Schedule 4.16(c), (i) to the Knowledge of the
Sellers, no other party to any Section 365 Contract is in default in any material respect
thereunder nor does any condition exist that with notice or lapse of time or both would
constitute such a default thereunder, and (ii) none of the Sellers has received any written
notice, nor does any of the Sellers otherwise have Knowledge, that any party to any Section
365 Contract intends to cancel, terminate or refuse to renew such Section 365 Contract or
to exercise or decline to exercise any option or right thereunder, except to the extent
that any such notice would be ineffective and unenforceable as a result of the Chapter 11
Case.




     (d) To the Knowledge of the Sellers and subject to the entry and effectiveness of the
Sale Order, all Section 365 Contracts shall be, as of the Closing Date, valid and binding
and enforceable against each other party thereto.




     (e) None of the Sellers has expressly waived any material right under any contract or
other agreement of the type required to be set forth on any Schedule.



     Section 4.17 Intellectual Property.




     (a) Intellectual Property Generally. Except as disclosed in the Schedules to
this Agreement:




     (i) Sellers own, have licenses to use, or otherwise possess legally
enforceable rights to use, all Intellectual Property, used or useable



29









 







in connection with the Business or necessary for the conduct of the Business
as presently conducted;




     (ii) Neither Sellers nor any of their Affiliates have received any notice or
Claim (whether written or oral) challenging Sellers’ right to use any of the
Intellectual Property or suggesting that any other Person has any Claim of any kind
with respect thereto;




     (iii) No Claim or Legal Proceeding is pending or, to the Knowledge of the
Sellers, threatened, and none of the Sellers knows of any basis for any Claim or
Legal Proceeding, that challenges the validity, enforceability, ownership, or right
to use, sell or license any Intellectual Property, and no item of Intellectual
Property owned by Sellers is subject to any outstanding Order, stipulation, charge
or agreement restricting in any manner the use or the licensing thereof;




     (iv) None of the Sellers are, or have been during the three (3) year period
prior to the Effective Date, a party to any action, nor are there, or during the
one (1) year period prior to the Effective Date have there been, any actions, or to
Sellers’ knowledge, threatened, alleging infringement, misappropriation or other
wrongful use or exploitation by Sellers or challenging Sellers’ ownership, use,
validity, or enforceability, of any Intellectual Property, nor, to the Knowledge of
Sellers, is there any reasonable basis therefor;




     (v) The Intellectual Property may be used by Sellers without need for further
permission or license from any Person;




     (vi) Each of the Sellers has taken commercially reasonable actions to protect
the secrecy, confidentiality, and value of its trade secrets;




     (vii) Except as otherwise expressly disclosed in the Schedules to this
Agreement, none of the Sellers have granted to any Person any right, license or
permission to use, exploit or exercise any rights to any of the Intellectual
Property and the proprietary nature of the Intellectual Property;




     (viii) No Intellectual Property owned by Sellers is subject to any outstanding
Order, judgment, stipulation or agreement restricting the use, sale, transfer,
assignment or licensing thereof by any of the Sellers to any Person;




     (ix) Sellers have the exclusive right to take action against any Person that
is infringing any Intellectual Property owned by Sellers and to retain for
themselves any damages recovered in any such action;



30









 






     (x) Except as otherwise expressly disclosed in the Schedules to this
Agreement, the Sellers are the sole and exclusive owners of the Intellectual
Property, free and clear of any and all Liens other than Permitted Liens,
including, without limitation, licenses, shop rights and covenants not to sue third
persons, with full right to pledge, sell, assign, and transfer the Intellectual
Property owned by Sellers;




     (xi) True and complete copies of each written Inbound License Agreement and a
sample of the End User License Agreement currently in use by Seller have been
delivered to Purchaser (previous versions of the End User License Agreement contain
similar terms and conditions to the current version of the End User License
Agreement);




     (xii) The Intellectual Property is valid and enforceable in whole and/or in
part;




     (xiii) To the Knowledge of Sellers, none of the Sellers has infringed upon or
otherwise violated the intellectual property rights of third parties or received
any Claim, complaint, demand or notice alleging any such infringement or violation,
or knows of any basis for any such Claim. The continued use of the Intellectual
Property by Purchaser will not infringe upon or otherwise violate the intellectual
property rights of third parties;




     (xiv) To the Knowledge of the Sellers, no third party is infringing upon or
otherwise violating the Intellectual Property; and




     (xv) None of the Sellers is or, as a result of the execution and delivery of
this Agreement or the performance of its obligations hereunder, will be in
violation of any agreement relating to any Intellectual Property.




     (b) Marks. Schedule 4.17(b) sets forth an accurate and complete list
of all Marks (i) owned by any of the Sellers, (ii) used by any of the Sellers in the
Business, or (iii) registered or pending applications for registration of any Marks
described in (i) or (ii) in any jurisdiction (collectively “Sellers’ Marks”), specifying as
to each item, as applicable, the owner of the Sellers’ Mark, the jurisdiction(s) in which
the Sellers’ Mark has been issued or registered or in which an application for registration
has been filed, and the issuance, registration or application numbers and dates. Except as
may be set forth in Schedule 4.17(b):




     (i) To the Knowledge of Sellers, the use of any of Sellers’ Marks by Purchaser
does not create a likelihood of confusion with any Marks of any other Person used
prior to Sellers’ use of Sellers’ Marks;



31









 






     (ii) There has been no use of any of Sellers’ Marks by any third party that
might confer upon said third party any rights in any such Mark;




     (iii) All of Sellers’ Marks which are registered in the United States have
been in substantially continuous use by Sellers in connection with the products or
services for which each such Mark is registered;




     (iv) None of Sellers’ Marks is the subject of any opposition or cancellation
proceeding in a trademark office in any jurisdiction; and




     (v) Sellers have taken commercially reasonable actions to police and enforce
their rights in Sellers’ Marks against third Persons.




     (c) Patents. Schedule 4.17(c) sets forth an accurate and complete
list of all Patents (i) owned by Sellers, (ii) used or useable by Sellers in the Business,
or (iii) registered or pending applications for registration of any Patents described in
(i) or (ii) in any jurisdiction (collectively “Sellers’ Patents”).




     (d) Copyrights. Schedule 4.17(d) of this Agreement sets forth a
complete and accurate list of all registered Copyrights owned by Sellers including
designation of those registered copyrights possessed by Sellers, and any pending
applications for registration of any Copyrights listed on Schedule 4.17(d) in any
jurisdiction (collectively “Sellers’ Copyrights”). Except as may be set forth on
Schedule 4.17(d):




     (i) Each of Sellers’ Copyrights are valid, enforceable and subsisting, and are
not subject to any maintenance fees or actions;




     (ii) None of the Sellers have not taken any action or, to Sellers’ knowledge,
failed to take any action (including a failure to disclose required information to
the United States Copyright Office) in connection with any registration of a
registered copyright therewith, or used or enforced (or failed to use or enforce)
any of Sellers’ Copyrights, in each case in a manner that would result in the
unenforceability of any of Sellers’ Copyrights or the invalidity of the
registration of any of Sellers’ Copyrights.




     (e) Trade Secrets. Except as may be set forth in Schedule 4.17(e):




     (i) Each of the Sellers has taken reasonable precautions in accordance with
standard industry practice to protect the secrecy, confidentiality and value of all
trade secrets used by Sellers in the Business (collectively “Sellers’ Trade
Secrets”);




     (ii) except under appropriate confidentiality obligations that, to the
Knowledge of Sellers, have been fully observed and performed, there



32









 







has been no disclosure by any of the Sellers of material confidential
information or Sellers’ Trade Secrets to any other Person; and




     (iii) each of the Sellers has taken all reasonable steps to protect the
respective rights in the confidential information and the Trade Secrets of Persons
in accordance with the terms of any agreements to which any of the Sellers is bound
relating to such confidential information or Trade Secrets.




     (f) Software. Schedule 4.17(f) sets forth a complete and accurate
list of all of the Software (A) that is owned or purported to be owned by Sellers (“Owned
Software”), and (B) all Software that is used by Sellers in the conduct of the Business
that is not owned by Sellers, excluding Shrinkwrap Software (“Licensed Software”). Except
as may be set forth in Schedule 4.17(f):




     (i) no source code of any Owned Software has been licensed or otherwise made
available to any Person other than Purchaser, each of the Sellers has treated the
source code of the Owned Software, and the data associated therewith, as
confidential and proprietary business information, and has taken all reasonable
steps to protect the same as Trade Secrets;




     (ii) any Person identified in Schedule 4.17(f) as having received any
such source code or data is bound by an appropriate confidentiality and
nondisclosure agreement with respect thereto, and none of the Sellers are aware of
any material breach of any such agreement or any threatened disputes or
disagreements with respect thereto;




     (iii) none of the Software developed by or for Sellers contains any
programming code, documentation, or other materials or any Development Environments
that embody Intellectual Property of any Person other than Sellers, except for such
materials or Development Environments obtained by Sellers from Persons that make
such materials or Development Environments generally available on standard
commercial terms and that have expressly licensed Sellers to utilize such materials
or Development Environments in the manner they have been utilized;




     (iv) each of the Sellers has lawfully acquired the right to use the Licensed
Software pursuant to valid, enforceable written agreements executed by all parties
thereto, the rights to such Licensed Software are consistent with the way and to
the extent it is used in the conduct of the Business, and none of the Sellers have
exercised any rights in respect of any Licensed Software, including any
reproduction, distribution or creation of derivative works, outside the scope of
any license expressly



33









 







granted by the Person from whom the right to use such Licensed Software was
obtained;




     (v) other than Software license fees specifically disclosed in the Schedules,
no royalties, fees, honoraria or other payments are payable by Sellers to any
Person by reason of the ownership, use, sale, licensing, distribution or other
exploitation of any Owned Software;




     (vi) none of the Owned Software contains any lines of code or derivative works
thereof licensed to Sellers subject to the condition that Sellers not charge a fee
or otherwise seek any compensation in connection with redistributing or otherwise
exploiting such code;




     (vii) the Owned Software was (a) developed by employees of Sellers in the
course of their employment, (b) developed by independent contractors that have
assigned in writing to Sellers all such contractors’ respective rights in the Owned
Software, or (c) otherwise acquired by Sellers from Persons pursuant to written
agreements containing an express assignment of all rights of such Persons to
Sellers;




     (viii) The Owned Software performs, (a) free of Disabling Codes, (b)
substantially in accordance with the functions described in any specifications or
end user documentation or other information provided or made available to users of
the Owned Software, and (c) consistent with representations and warranties made to
users of the Software or on which such users relied when licensing or otherwise
acquiring such Software;




     (ix) All material Software used in the Business is fully and freely
transferable to Purchaser without any third party Consent, to the Knowledge of
Sellers is free from any significant software defect, performs in conformance with
its documentation, and does not contain any material bugs or viruses or any code or
mechanism that could be used to interfere with the operation of the Software. The
Sellers have furnished all documentation relating to the use, maintenance, and
operation of such Software, all of which, to the Knowledge of the Sellers, is true
and accurate.




     (x) To Sellers’ Knowledge, no party is in breach of or has failed to perform
under any agreement pursuant to which Sellers have received any right to Licensed
Software.




     (g) Software Documentation. Except as may be set forth in Schedule
4.17(g), each of the Sellers has taken all actions customary in the United States
software industry to document the Owned Software and its operation, such that the materials
comprising the Owned Software, including the source code and documentation, have been
written in a clear and professional manner so that they



34









 







may be understood, modified and maintained in an efficient manner by reasonably
competent programmers.




     (h) Agreements in Respect of Licensed Technology. Schedule 4.17(h)
sets forth a complete and accurate list of all Inbound License Agreements, indicating for
each the title and the parties thereto. Except as disclosed in the Schedules to this
Agreement, no royalty or other amounts are due under the Inbound License Agreements that
have not been fully paid or reserved for by Sellers, and no such payment will be due after
the Closing Date. A sample of the End User License Agreement currently in use by Seller
has been delivered to Purchaser (previous versions of the End User License Agreement
contain similar terms and conditions to the current version of the End User License
Agreement). Sellers own or possess adequate licenses or other rights to use all of the
Intellectual Property. Schedule 4.17(h) contains a complete and accurate list and
summary description, including any royalties paid or received by Sellers, other royalty
obligations or other volume or milestone-based payment obligations of Sellers, of all
Section 365 Contracts relating to the Intellectual Property to which Sellers are a party or
by which Sellers are bound. Except as may be set forth in Schedule 4.17(h):




     (i) all Inbound License Agreements and End User License Agreements are in full
force and effect, and none of the Sellers are in breach thereof, nor are they aware
of any Claim or information to the contrary;




     (ii) there are no outstanding, pending or threatened Legal Proceedings,
Claims, disputes or disagreements with respect to any Inbound License Agreement or
End User License Agreement;




     (iii) the rights licensed under each Inbound License Agreement and End User
License Agreement will be exercisable by Purchaser on and after the Closing to the
same extent as exercisable by any of the Sellers prior to the Closing (subject to
any applicable Consent requirement); and




     (iv) Neither the execution and delivery of this Agreement, nor the
consummation of the Contemplated Transactions, will conflict with or result in a
material breach of any of the terms, conditions or provisions of, or constitute a
material default under, or result in the impairment of any material rights under,
any Inbound License Agreement or End User License Agreement.




     (i) Sufficiency of Owned and Licensed Intellectual Property. Except as set
forth in Schedule 4.17(i), the Intellectual Property constitutes all of the
intellectual property necessary to own, operate and use the Acquired Assets from and after
the Closing Date in substantially the same manner as such Acquired Assets have been used
by Sellers prior thereto, excluding Shrinkwrap Software.



35









 






     (j) Performance of Existing Software. Except as set forth in Schedule
4.17(j), the Owned Software conforms to the documentation for such Owned Software and
performs in all material respects, free of Disabling Codes. Except as set forth in
Schedule 4.17(j), no Person has been allowed to access, use, copy or distribute any
Owned Software except pursuant to a valid, enforceable End User License Agreement.




     (k) Employee Confidentiality Agreements. Except as set forth in Schedule
4.17(k)(A), all current and former employees and consultants of any of the Sellers
whose duties or responsibilities relate to the Acquired Assets have entered into
confidentiality, invention assignment and proprietary information agreements with such
Seller in substantially the form provided to Purchaser. To the Knowledge of Sellers, no
employee or consultant of Sellers whose duties or responsibilities relate to the Acquired
Assets is obligated under any agreement (including licenses, covenants or commitments of
any nature) or subject to any judgment or Order of any Governmental Authority, or any other
restriction that would interfere with the use of his or her commercially reasonable efforts
to carry out his or her duties for Sellers. Except as set forth in Schedule
4.17(k)(B), to the Knowledge of Sellers, it will not be necessary for any individuals
to utilize any Intellectual Property acquired prior to their employment by Sellers (or of
such employees’ prior employers) in order to perform services for Purchaser from and after
the Closing Date consistent with such services previously provided to Sellers by such
employees. To the Knowledge of Sellers, at no time during the conception of or reduction
to practice of any of Intellectual Property owned by Sellers was any developer, inventor or
other contributor to such Intellectual Property operating under any grants from any
governmental entity or agency or private source, performing research sponsored by any
governmental entity or agency or private source or subject to any employment agreement or
invention assignment or nondisclosure agreement or other obligation with any third party
that could adversely affect Sellers’ rights in such Intellectual Property. Schedule
4.17(k)(C) lists each present and past employee, independent contractor and consultant
who participated in a material way in the creation or development of any of Sellers’
Software or any other material Intellectual Property, indicating, in the case of any such
employee, whether such employee is a present or past employee. Without limiting the
generality of the foregoing, Schedule 4.17(k)(D) specifically identifies each
inventor named in any of Sellers’ Patents (either individually or jointly with others), and
indicates whether such inventor is a current employee of any of the Sellers and, if not a
current employee of any of the Sellers, the relationship of such inventor to Sellers at the
time the respective invention was made and the present relationship, if any, of such
inventor with Sellers.




     (l) Export Restrictions. None of the Sellers have exported or transmitted
Software to any country to which such export or transmission is restricted by any
applicable United States regulation or statute, without first having obtained all necessary
and appropriate United States or foreign



36









 







government licenses or permits and complying with all other requirements in relation
thereto.




     (m) Disabling Code. The Owned Software is free of any Disabling Codes that may
be used to, access, modify, delete, damage or disable any Systems or that may result in
impaired usage thereof or damage thereto. Each of the Sellers have taken reasonable steps
and implemented reasonable procedures to ensure that its internal computer systems Related
to the Business (consisting of hardware, software, databases or embedded control systems,
“Systems”) are free from Disabling Codes. The components Related to the Business and
obtained by Sellers from third party suppliers are, to the Knowledge of Sellers, free of
any Disabling Codes that may, or may be used to, access, modify, delete, damage or disable
any of the Systems or that might result in damage thereto. Except as may be set forth in
Schedule 4.17(m), each of the Sellers has in place appropriate disaster recovery
plans and procedures and has taken all reasonable steps to safeguard its Systems and
restrict unauthorized access thereto.




     (n) Assignment; Change of Control. Except as set forth in Schedule
4.17(n) of this Agreement, the execution, delivery and performance by Sellers of this
Agreement, and the consummation of the Contemplated Transactions, will not result in any
Lien upon, or the loss or impairment of, or give rise to any right of any third party to
terminate, any of Sellers’ rights to own any of its Intellectual Property or rights under
any Inbound License Agreement or End User License Agreement, nor require the Consent of any
Governmental Authority or third party in respect of any such Intellectual Property.



     Section 4.18 Employees and Labor Relations .




     (a) Schedule 4.18(a) contains a complete and accurate list of the following
information for each employee of the Sellers, including each Inactive Employee: name; job
title; current compensation paid or payable; vacation accrued; service credited for
purposes of vesting and eligibility to participate in Sellers’ Benefit Plans.




     (b) There are no labor disputes, material grievances, arbitration proceedings, or any
material union organization activities, strikes or work stoppages pending, or to the
Sellers’ Knowledge, threatened between any of the Sellers and any of its employees. None
of the employees of any of the Sellers is represented by a labor union and none of the
Sellers is a party to any collective bargaining agreement. There are no unfair labor
practice charges, complaints or proceedings pending or, to the Sellers Knowledge,
threatened against or involving any of the Sellers. There are no representation
proceedings pending and no labor organization or group of employees has made a demand for
recognition which is currently pending.



37









 






     (c) Each of the Sellers is in compliance in all material respects with all applicable
Laws relating to employment and employment practices, the employment of labor, and has not
engaged in any unfair labor practice or unlawful employment practice, except, in each case,
to the extent such failure to comply or such engagement, as the case may be, would not,
individually or in the aggregate, have a Material Adverse Change. None of the Sellers has
received written or, to Sellers’ knowledge, oral notice of any employment-related charge or
complaint against any of the Sellers before the Equal Employment Opportunity Commission or
the Department of Labor or any other Governmental Authority, except for such notices,
charges or complaints relating to alleged violations that, individually or in the
aggregate, would not have a Material Adverse Change.




     (d) Sellers have not implemented any plant closing or mass layoff of employees that
could implicate the Worker Adjustment and Refraining Notification Act of 1988, as amended
or any similar state, local or foreign Laws (collectively, the “WARN Act”). All previous
reductions in workforce implemented by Seller have complied with the WARN Act.




     (e) Schedule 4.18(b) contains a true and correct list of all former employees
of Sellers who, in connection with the Contemplated Transactions, will become “M & A
qualified beneficiaries” for whose COBRA benefits Purchaser shall become responsible as a
“successor employer” under Treasury Regulation 54.4980B-9.



     Section 4.19 Insurance. Schedule 4.19 sets forth a list (specifying the insurer, describing each pending
Claim thereunder for which the administrator of the Sellers’ insurance policies or the Sellers has
established a reserve in excess of $50,000 of the insurer’s Liability thereunder) of all policies
or binders of fire, liability, product liability, workers’ compensation, vehicular and other
insurance held by or on behalf of the Sellers. Such policies or binders are valid and binding in
accordance with its terms, are in full force and effect, and insure against risks and Liabilities
to an extent and in a manner customary in the industry in which the Sellers operates. None of the
Sellers is in default with respect to any provisions contained in any such policy or binder nor has
any of the Sellers failed to give any notice or present any Claims under any such policy or binder
in due and timely fashion. Except as set forth on Schedule 4.19, there are no outstanding
unpaid Claims for which the administrator of the Sellers’ insurance policies or the Sellers has
established a reserve in excess of $50,000 under any such policy or binder, and none of the Sellers
has received any notice of cancellation or non-renewal of any such policy or binder. There is no
inaccuracy in any application for such policies or binders, no failure to pay premiums when due and
no similar state of facts that might form the basis for termination of any such insurance. Except
as set forth on Schedule 4.19, none of the Sellers has received any written notice from any
of its insurance carriers or any Governmental Authority that any insurance premiums will or may be
materially increased in the future or that any insurance coverage listed on Schedule 4.19
will or may
not be available in the future on substantially the same terms as now in effect, and to the
Sellers’ Knowledge, there is no basis for the issuance of any such action.



38









 





     Section 4.20 Relationships with Customers. Schedule 4.20 sets forth a true and accurate list of the names and addresses of the
top ten Customers (by dollar volume of sales to such Customers for 2007). Except as set forth on
Schedule 4.20, none of such Customers has terminated or adversely changed in any material
respect or, to the knowledge of Sellers, intends to terminate or adversely change in any material
respect its relationship with the Business.



     Section 4.21 Assigned Deposits. Schedule 4.21 sets forth a true and accurate list of all security, escrow or other
deposits (including utility deposits), credits, prepaid expenses, deferred charges, advance
payments, and prepaid items and duties to the extent related to an Acquired Asset (the “Assigned
Deposits”).



     Section 4.22 Broker’s or Finder’s Fees. No agent, broker, person or firm acting on behalf of any of the Sellers is, or will be,
entitled to any commission or broker’s or finder’s fees from Purchaser in connection with the
Contemplated Transactions.



     Section 4.23 No Other Representations or Warranties. Except for any representations or warranties contained in this Agreement or in any agreement
or instrument entered into in connection with the Contemplated Transactions, neither Sellers nor
any other Person makes any other representation or warranty, express or implied, on behalf of
Sellers.



ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER




     Purchaser represents and warrants to Sellers as follows:



     Section 5.1 Organization . Purchaser is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware.



     Section 5.2 Power and Authority. Purchaser has the corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder. The execution, delivery and performance of this Agreement by
Purchaser and the consummation by Purchaser of the Contemplated Transactions have been duly
authorized by all requisite corporate action. This
Agreement has been duly and validly executed and delivered by Purchaser and (assuming this
Agreement constitutes a valid and binding agreement of Sellers) constitutes a valid and binding
agreement of Purchaser, enforceable against Purchaser in accordance with its terms.



     Section 5.3 Consents and Approvals. Except for the approvals of the Contemplated Transactions required to be given by the
Bankruptcy Court, no Consent by, or declaration, filing or registration with, any Governmental
Authority or any other Person is required to be made or obtained by Purchaser in connection with
the execution, delivery and performance by Purchaser of this Agreement and the consummation of the
Contemplated Transactions.



39









 





     Section 5.4 No Conflicts. Neither the execution, delivery or performance of this Agreement by Purchaser, nor the
consummation by Purchaser of the Contemplated Transactions, nor compliance by Purchaser with any of
the provisions hereof, will (a) conflict with or result in any breach of any provisions of the
articles of organization or operating agreement of Purchaser, (b) result in a violation or breach
of, or constitute (with or without notice or lapse of time) a default (or give rise to any right of
termination, cancellation, acceleration, vesting, payment, exercise, suspension or revocation)
under, any of the terms, conditions or provisions of, any material note, bond, mortgage, deed of
trust, security interest, indenture, lease, license, contract, agreement, plan or other instrument
or obligation to which Purchaser is a party or by which Purchaser or any of Purchaser’s properties
or assets may be bound or affected, or (c) violate in any material respect any Order or Law
applicable to Purchaser or any of Purchaser’s properties or assets.



     Section 5.5 Financial Resources . The Purchaser has the financial resources necessary to consummate the Contemplated
Transactions upon the terms and conditions set forth in this Agreement, and such financial
resources are not subject to any constraints, conditions, or contingencies that could in any way
materially affect the Purchaser’s ability to consummate the Contemplated Transactions or perform
thereunder.



     Section 5.6 Brokers . No Person is entitled to any brokerage, financial advisory, finder’s or similar fee or
commission payable by Purchaser in connection with the Contemplated Transactions based upon
arrangements made by or on behalf of Purchaser.



ARTICLE VI

COVENANTS




     Section 6.1 Conduct of Business by Sellers Pending the Closing.




     (a) Subject to any obligations as a debtor or debtor-in-possession under the
Bankruptcy Code, or Order of the Bankruptcy Court, from the Effective Date until the
Closing Date, Sellers shall use all commercially reasonable efforts to conduct the Business
(x) in conformity with all applicable Laws, rules and ordinances and (y) in the ordinary
course consistent with past practice and taking into account the filing of the Petitions,
including meeting its post-Petition obligations as they become due. Sellers shall also use
commercially reasonable efforts to preserve intact its business organization and
relationships with third parties and to keep available the services of its present officers
and key employees, subject to the terms of this Agreement.




     (b) Without limiting the generality of the foregoing, except as provided in the
Schedules or except as otherwise contemplated under this Agreement, from the Effective Date
until and including the Closing Date, without the prior written Consent of Purchaser:



40









 






     (i) Except as required under the Sellers’ Benefit Plans listed on Schedule
6.1(a), Sellers shall not establish or increase the benefits under, or promise
to establish, modify or increase the benefits under, any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock option
(including the granting of stock options, stock appreciation rights, performance
awards or restricted stock awards), stock purchase or other employee benefit plan
or employment, consulting or severance agreement, or otherwise increase the
compensation payable to any directors, officers or employees of Sellers, except in
the ordinary course of business and consistent with past practice, or establish,
adopt or enter into any collective bargaining agreement;




     (ii) Sellers shall not make or agree to make any capital expenditures or
capital additions other than (x) to meet its post-Petition obligations, (y) for the
necessary maintenance of the Acquired Assets, or (z) in the ordinary course
consistent with past practice;




     (iii) Sellers shall not replace, modify and/or terminate any Customer
Incentive Programs or implement any new Customer Incentive Program, or amend,
modify or waive any material provision of any agreement with any of its Customers
and suppliers or make any material change to its operations, services or policies
relating to its Customers and suppliers, except which come up for renewal in the
ordinary course;




     (iv) Sellers shall not fail to pay any premiums when due in respect of any of
the insurance policies and binders set forth on Schedule 4.19;




     (v) Sellers shall not fail to maintain any of the Acquired Assets that is used
or held by Sellers pursuant to any lease or other contractual arrangement in its
current condition, ordinary “wear and tear” excepted;




     (vi) Sellers shall (a) not close or shut down any of the Excluded Facilities
or (b) terminate or reject any of the Facilities Leases for the Excluded
Facilities; and




     (vii) except to the extent necessary to comply with the requirements of
applicable Laws and regulations, Sellers shall not (i) take, or agree or commit to
take, any action that would make any representation or warranty of Sellers
hereunder inaccurate in any material respect at, or as of any time prior to, the
Closing Date, (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
material respect at, or as of any time prior to, the Closing Date, or (iii) take,
or agree or commit to take, any action that would result in, or is reasonably
likely to result in, any of the conditions set forth in Article VIII not
being satisfied. Sellers shall



41









 







give Purchaser prompt notice of any event,
condition or circumstance, occurring from the Effective Date until the Closing
Date, that would constitute a violation or breach of any representation or warranty
of Sellers, whether made as of the Effective Date or as of the Closing Date, or
that would constitute a violation or breach of any covenant of Sellers contained in
this Agreement.



     Section 6.2 Access and Information. Sellers shall afford to Purchaser and to Purchaser’s financial advisors, legal counsel,
accountants, consultants, financing sources and other authorized representatives reasonable access
during normal business hours and without material disruption to the Business throughout the period
prior to the Closing Date to all the Business Records and properties, plants and personnel which
relate to the Business and, during such period, shall furnish as promptly as practicable to
Purchaser and such persons all other information as Purchaser or any of such persons may reasonably
request in furtherance of the Contemplated Transactions; provided, however, that no investigation
pursuant to this Section 6.2 shall affect any representations or warranties made herein or
the conditions herein to the obligations of the parties to consummate the Contemplated
Transactions.



     Section 6.3 Publicity. Each party agrees that it will not make any public announcement or issue any press release
or respond to any press inquiry with respect to this Agreement or the Contemplated Transactions
without the prior approval of the other party (which approval will not be unreasonably withheld),
except as may be required (i) by applicable Law, or (ii) to administer the Chapter 11 Case.



     Section 6.4 Expenses . Each party shall, except as otherwise specifically provided herein, bear all Transaction
Expenses incurred by it. To the extent not exempt by operation of the Sale Order, all Transfer
Taxes shall be borne in equal amounts by the Purchaser and the Sellers. Purchaser shall bear the
expense of any legal recording or filing fees or costs (including any fees payable to a
Governmental Authority with respect to the transfer of any Permits) that are necessary to make
effective or are associated with the transfer of Acquired Assets or consummation of the
Contemplated Transactions.



     Section 6.5 Indemnification of Brokers . Sellers shall indemnify and hold harmless Purchaser from any Claim or demand for commission
or other compensation by any broker, finder or investment banker claiming to have been employed by
or on behalf of Sellers, and to bear the cost of legal expenses incurred in defending against any
such Claim. Purchaser shall indemnify and hold harmless Sellers from any Claim for commission or
other compensation by any broker, finder or investment banker claiming to have been employed by or
on behalf of Purchaser, and to bear the cost of legal expenses incurred in defending against any
such Claim.



     Section 6.6 Cooperation . Purchaser shall have the right to have its designated representatives, as designated to
Sellers from time to time (the “Designated Purchaser Representatives”), present within normal
business hours and without material disruption to the Business for consultation at Sellers’
facilities in California from the Effective Date



42









 







until the Closing. Such Designated Purchaser
Representatives shall have the right to review and become familiar with the conduct of the
Business.



     Section 6.7 Filings; Other Action . Subject to the terms and conditions herein provided, as promptly as practicable, Sellers
and Purchaser shall use all commercially reasonable efforts (a) to obtain the Sellers’ Required
Approvals, and (b) to take, or cause to be taken, all other actions and do, or cause to be done,
all other things reasonably necessary or appropriate to consummate the Contemplated Transactions as
soon as practicable. In connection with the foregoing, each party will promptly provide the other
party with copies of all correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or any of its representatives, on the one hand, and any
Governmental Authority or members of its respective staffs, on the other hand, with respect to this
Agreement and the Contemplated Transactions.



     Section 6.8 Permit Transfers . Sellers shall, prior to or at the Closing (except for Permits that Schedule 4.11
describes as being transferable only subsequent to the Closing, for which Permits the
transfer or modification described herein shall be effected as promptly as practicable
subsequent to the Closing), at Purchaser’s expense (including any fees that are payable to a
Governmental Authority with respect to such transfer), cause the transfer or modification of any
Permits (including any Permits issued pursuant to Environmental Laws) to the extent that such is
required or advisable to cause the Permits to remain in full force and effect, on the same terms as
those existing prior to the Closing, after the Closing. Purchaser will provide all reasonable
cooperation to Sellers necessary to effect such transfers or modifications. Sellers and Purchaser
agree to cooperate as necessary to effect the reissuance of any Permits (including any Permits
issued pursuant to Environmental Laws) to the extent that such is required or advisable. Any
reasonable costs associated with a reissuance of any Permit to Purchaser shall be borne by
Purchaser.



     Section 6.9 Bankruptcy Actions.




     (a) On the Effective Date, Sellers shall file the Petitions in the Bankruptcy Court.
Sellers shall use commercially reasonable efforts to file any required schedules therewith
on or as soon as practicable after the Effective Date.




     (b) On the Petition Date, Sellers shall file and, with proper notice thereof on
interested parties as required by the Bankruptcy Code and Rules, serve the Bidding
Procedures Motion and the Sale Motion.




     (c) Sellers shall use their commercially reasonable efforts to set a hearing in the
Bankruptcy Court to approve the Bidding Procedures Motion (with shortened notice if
necessary) no later than 15 days after the Petition Date.




     (d) Sellers shall use their commercially reasonable efforts to obtain entry of the
Bidding Procedures Order and the Sale Order. Purchaser shall use



43









 







commercially reasonable
efforts to assist Sellers in demonstrating that Purchaser is a “good faith” purchaser under
Section 363(m) of the Bankruptcy Code.




     (e) Sellers shall use their commercially reasonable efforts to obtain the Sale Order
no later than seven (7) days after the Auction.




     (f) Sellers shall provide Purchaser, prior to the filing thereof in the Chapter 11
Case, with copies of all motions, applications and supporting papers prepared by Sellers
(including forms of Orders and notices to interested parties) relating to Purchaser or the
Contemplated Transactions and shall provide such copies sufficiently far in advance of the
filing thereof as to permit Purchaser a reasonable opportunity to review and comment
thereon.




     (g) On or promptly after the Petition Date, Sellers shall file and, with proper notice
thereof on interested parties as required by the Bankruptcy Code and Rules, serve the
Customer Incentive Programs Motion and the Customer Incentive Programs Order. Sellers
shall use their commercially reasonable efforts to set a hearing in the Bankruptcy Court to
approve the Customer Incentive
Programs Motion as soon as practicable and otherwise to obtain entry of the Customer
Incentive Programs Order.




     (h) Sellers shall give appropriate notice, and provide appropriate opportunity for
hearing, to all parties entitled thereto, of all motions, Orders, hearings or other
proceedings relating to this Agreement or the Contemplated Transactions.



     Section 6.10 Executory Contracts.




     (a) The Section 365 Contracts to be assumed by Sellers and assigned and sold to
Purchaser at the Closing pursuant to section 365 of the Bankruptcy Code (the “Assumed
Section 365 Contracts”) shall consist of (i) the Assumed Employment Agreements, (ii) all
Customer Contracts not expressly excluded by Purchaser on or before the Bid
Submission
Deadline by written notice from time to time to Sellers given on or before such date, and
(iii) if expressly designated by Purchaser on or before the Bid Submission Deadline as
Assumed Section 365 Contracts by written notice from time to time to Sellers given on or
before such date, the Facilities Leases for the Acquired Facilities described on
Schedule 2.1(e), the Personal Property Leases described on Schedule 2.1(f),
the Confidentiality Agreements, and other Non-Customer Contracts described on Schedule
2.1(h) (other than Assumed Employment Agreements). All such exclusions and
designations shall be made in Purchaser’s sole discretion, and shall be subject to change
by Purchaser from time to time by giving written notice thereof to Sellers, so long as any
such changes are delivered prior to the Bid
Submission Deadline. All exclusions and
designations of Assumed Section 365 Contracts that Purchaser is entitled to exclude or
designate hereunder shall be become final and binding upon Purchaser at 5:00 Eastern time
on the Bid



44









 







Submission Deadline. Notwithstanding the foregoing, (i) Purchaser shall not
exclude any Assumed Employment Agreement, (ii) unless Purchaser expressly designates
otherwise by written notice to Sellers given on or before the Bid Submission Deadline, the
Facilities Leases for the Excluded Facilities shall not be included among the Assumed
Section 365 Contracts, and (iii) if at any time Sellers become aware of any Section 365
Contract not disclosed in writing to Purchaser on or before the Effective Date, Sellers
shall promptly thereafter advise Purchaser of the existence, and provide Purchaser with a
copy, of such Section 365 Contract and Purchaser thereupon shall have the right to request,
by written notice to Sellers within five (5) days, that Sellers assume, assign and sell
such Section 365 Contract to Purchaser, in which case Sellers shall use commercially
reasonable efforts to assume, assign and sell such Section 365 Contract to Purchaser, as
promptly as reasonably practicable, on the same terms and conditions as would be applicable
under this Agreement to the Assumed Section 365 Contracts, it being understood that such
assumption, assignment and sale shall not be required to take place on or before the
Closing or constitute a condition precedent to Purchaser’s obligation to consummate the
Contemplated Transactions.




     (b) As part of the Sale Motion, Sellers shall seek approval by the Bankruptcy Court of
the sale, assumption and assignment by Sellers to Purchaser of (i) the Assumed Employment
Agreements, (ii) all Customer Contracts, (iii) the Facilities Leases for the Acquired
Facilities described on Schedule 2.1(e), (iv) the Personal Property Leases
described on Schedule 2.1(f), (v) the Confidentiality Agreements, and (v) the other
Non-Customer Contracts described on Schedule 2.1(h) (the “Scheduled Section 365
Contracts”). Sellers shall serve the Sale Motion on all counterparties to all Scheduled
Section 365 Contracts along with a notice specifically stating that Sellers are or may be
seeking the sale, assumption and assignment of the Scheduled Section 365 Contracts and
shall notify such parties of the deadline for objecting to the amounts listed in
Schedule 1.1, which deadline shall be not less than three (3) Business Days prior
to the Sale Hearing. Sellers shall seek authority to file with the Bankruptcy Court, not
later than ten (10) days prior to the Sale Hearing, the list identifying the Scheduled
Section 365 Contracts and the amounts necessary to cure defaults under each of such Section
365 Contract as determined by Sellers in accordance with Schedule 1.1, so as to
enable any such party to object to the proposed Cure Amounts and the Bankruptcy Court to
determine such Cure Amounts as promptly as reasonably possible. In cases in which Sellers
are unable to establish that a default exists, the relevant Cure Amount shall be set at
$0.00. The Sale Motion shall reflect Purchaser’s promise to perform from and after the
Closing under the Assumed Section 365 Contracts, and such promise shall be the only
adequate assurance of future performance necessary to satisfy the requirements of section
365 of the Bankruptcy Code in respect of the assignment to Purchaser of such Assumed
Section 365 Contracts.



45









 






     (c) Anything contained in this Agreement to the contrary notwithstanding, (i) this
Agreement shall not constitute an agreement to assign any Section 365 Contracts if, after
giving effect to the provisions of sections 363 and 365 of the Bankruptcy Code, an
attempted assignment thereof, without obtaining a Consent, would constitute a breach
thereof or in any way negatively affect the rights of Sellers or Purchaser, as the assignee
of such Section 365 Contracts and (ii) no breach of this Agreement shall have occurred by
virtue of such non-assignment. If, after giving effect to the provisions of sections 363
and 365 of the Bankruptcy Code, such Consent is required but not obtained, Sellers shall,
at Purchaser’s sole cost and expense, cooperate with Purchaser in any reasonable
arrangement, including Purchaser’s provision of credit support, designed to provide for
Purchaser the benefits and obligations of or under any of such Section 365 Contracts,
including enforcement for the benefit of Purchaser of any and all rights of Sellers against
a third party thereto arising out of the breach or cancellation thereof by such third
party. Any assignment to Purchaser of any Section 365 Contracts that shall, after giving
effect to the provisions of sections 363 and 365 of the Bankruptcy Code, require the
Consent of any third party for such assignment as aforesaid shall be made subject to such
Consent being obtained. Any contract that would be a Section 365 Contract but is not
assigned in accordance with the terms of this Section 6.10 shall not be considered
a “Assumed Section 365 Contract” for purposes hereof unless and until such contract is
assigned to Purchaser following the Closing Date upon receipt of the requisite Consents to
assignment and Bankruptcy Court approval.



ARTICLE VII

ADDITIONAL POST-CLOSING COVENANTS;

COVENANTS RELATING TO EMPLOYEES




     Section 7.1 Further Assurances . From time to time after the Closing Date, Sellers and Purchaser will execute and deliver
such other instruments of conveyance, transfer or assumption, as the case may be, and use all
commercially reasonable efforts to take such other actions as may be reasonably requested to
implement more effectively the conveyance and transfer of the Acquired Assets to Purchaser and
assumption of the Section 365 Contracts by Purchaser.



     Section 7.2 Books and Records; Personnel.




     (a) Purchaser shall not dispose of or destroy any of the Business Records material to
Sellers and created prior to the Closing until after the second anniversary of the Closing
Date. Thereafter, if Purchaser wishes to dispose of or destroy any of the Business Records
material to Sellers and created prior to the Closing, it shall first give 60 days’ prior
written notice to Sellers and Sellers shall have the right, at its option and expense, upon
prior written notice to Purchaser within such 60-day period, to take possession of such
Business Records within 90 days after the date of the notice from Sellers.



46









 






     (b) Purchaser shall allow Sellers and any of its directors, officers, employees,
counsel, representatives, accountants and auditors (collectively, the “Sellers’
Representatives”) reasonable access to all Business Records that are transferred to it in
connection herewith, in connection with Sellers’ rights and obligations as the former owner
of the Acquired Assets, during regular business hours and upon reasonable notice at
Purchaser’s principal place of business or at any location where such records are stored,
and Sellers Representatives shall have the right to make copies of any such Business
Records to the extent such Business Records relate to pre-Closing periods; provided,
however, that any such access or copying shall be had or done in such a manner so as not to
interfere with the normal conduct of Purchaser’s business or operations.




     (c) From the Closing Date through the date the Chapter 11 Case is closed, Purchaser
shall give to Sellers’ Representatives, its counsel, financial advisors, auditors and other
authorized representatives full access (during normal business hours and upon reasonable
notice) to the Business Records to the extent such Business Records relate to pre-Closing
periods, and will furnish to Sellers’ Representatives, its counsel, financial advisors,
auditors and other authorized representatives such financial, operating and
property-related data and other
information relating to the Business, and relating solely to pre-Closing periods, as
may be necessary for administration of the Chapter 11 Case.




     (d) From the Closing Date, Sellers shall allow Purchaser and any of its directors,
officers, employees, counsel, representatives, accountants and auditors reasonable access
to Sellers’ corporate records and taxes during regular business hours and upon reasonable
notice at Sellers’ principal places of business or at any location where such records are
stored, and such representatives of Purchaser shall have the right to make copies of any
such records and files; provided, however, that any such access or copying shall be had or
done in such a manner so as not to interfere with the normal conduct of Sellers’ business
or operations.



     Section 7.3 Employment of Sellers’ Employees.




     (a) Sellers shall use its best efforts to retain all of its employees, and to maintain
in good standing through the Closing all relationships and agreements with employees and
independent contractors, in each case from the Effective Date through the Closing Date and
to cooperate with Purchaser in hiring the employees offered employment pursuant to
Section 7.3(b).




     (b) On or before the Closing Date, Purchaser shall deliver to Sellers a list of the
employees of Sellers whom Purchaser wishes to employ (each such employee, an “Offer
Employee”) on such terms and conditions as Purchaser shall determine (subject to the
provisions of this Article VII) effective as of the Closing Date. The time at
which the employment by Purchaser of each Offer Employee who is not an Inactive Employee as
of the Closing and who accepts such offer of employment shall become effective (the
“Effective Time of Employment”) shall



47









 







be as of the Closing Date. The Effective Time of
Employment of any Offer Employee who is an Inactive Employee as of the Closing shall be
such time (if any) within 180 days following the Closing Date when such Inactive Employee
returns to active status and reports to work with Purchaser and Purchaser shall have no
obligation to employ any such Inactive Employee who fails to return to active status or to
report to work with Purchaser within such 180-day period. Each employee who becomes
employed by Purchaser pursuant to one of the two preceding sentences shall be considered a
“Transitioned Employee” from and after his or her Effective Time of Employment. Purchaser
shall be obligated to make an offer of employment to such number of employees of the
Sellers’ so that no federal and/or state WARN Act liability is incurred by the Sellers.




     (c) From the Effective Date through the Closing Date, Sellers shall permit Purchaser
to communicate with Sellers’ employees and consultants, at reasonable times and upon
reasonable notice, concerning Purchaser’s plans, operations, business, Customer relations
and general personnel matters and to interview Sellers’ employees and consultants and
review the personnel records and such other information concerning Sellers’ employees and
consultants as Purchaser may reasonably request (subject to obtaining any legally required
written permission of any affected employee or consultant and to other applicable
Law); provided that such contacts shall be conducted in a manner that is reasonably
acceptable to Sellers.




     (d) Purchaser shall not be responsible for any Liabilities (other than the Assumed
Liabilities) relating to or arising in connection with any actual, constructive or deemed
termination of employment (including severance or separation pay or benefits or other
similar compensation or benefits under any applicable Law, regulation or the Sellers’
Benefit Plan) (i) to or with respect to any employee other than a Transitioned Employee,
whether as a result of the consummation of the Contemplated Transactions or otherwise, and
whether before, on or after the Closing Date, or (ii) to any Transitioned Employee, whether
as a result of (A) the consummation of the Contemplated Transactions, (B) any event
occurring before the Closing, or (C) any action or failure to act on the part of Sellers.
Except as provided in this Section 7.3(d), Purchaser shall be solely responsible
for all Liabilities relating to or arising in connection with any actual, constructive or
deemed termination of employment of any Transitioned Employee with Purchaser after such
Transitioned Employee’s Effective Time of Employment. Notwithstanding the foregoing,
Purchaser acknowledges that, upon Closing, it will be a “successor employer” with respect
to any “M & A qualified beneficiaries” as provided by Treasury Regulation 54.4980B-9.



     Section 7.4 Workers’ Compensation.




     (a) From and after the Closing Date, (i) Purchaser shall not be responsible for any
Liabilities relating to or arising in connection with any Claim for workers’ compensation
benefits (A) incurred by or in respect of any employee



48









 







who is not a Transitioned Employee
on, prior to or after the Closing Date, and (B) incurred by or in respect of Transitioned
Employees on or before the Closing Date, and (ii) Purchaser shall be solely responsible for
any and all Liabilities relating to or in respect of any Transitioned Employee relating to
or arising in connection with any and all Claims for workers’ compensation benefits
incurred after the Closing Date.




     (b) For purposes of this Section 7.4, a Claim for workers’ compensation
benefits shall be deemed to be incurred when the first event giving rise to the Claim
occurs.



     Section 7.5 Employment Taxes.




     (a) Sellers and Purchaser shall (i) treat Purchaser as a “successor employer” and the
Sellers as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the
Code, with respect to Transitioned Employees who are employed by Purchaser for purposes of
Taxes imposed under FUTA or FICA, and (ii) cooperate with each other to avoid, to the
extent possible, the filing
of more than one IRS Form W-2 with respect to each such Transitioned Employee for the
calendar year within which the Closing Date occurs.




     (b) At the reasonable request of Purchaser with respect to any particular applicable
Tax Law relating to employment, unemployment insurance, social security, disability,
workers’ compensation, payroll, health care or other similar Tax other than Taxes imposed
under FICA and FUTA, Sellers and Purchaser shall (i) treat Purchaser as a “successor
employer” and Sellers as a “predecessor employer,” within the meaning of the relevant
provisions of such Tax Law, with respect to Transitioned Employees who are employed by
Purchaser, and (ii) cooperate with each other to avoid, to the extent possible, the filing
of more than one individual information reporting form pursuant to each such Tax Law with
respect to each such Transitioned Employee for the calendar year within which the Closing
Date occurs.



     Section 7.6 Third Party Rights. No provision of this Agreement shall create any third party beneficiary rights in any employee
or former employee of Sellers or any other persons or entities (including any beneficiary or
dependent thereof), in respect of continued employment (or resumed employment) for any specified
period of any nature or kind whatsoever, and no provision of this Agreement shall create such third
party beneficiary rights in any such persons or entities in respect of any benefits that may be
provided, directly or indirectly, under any of the Sellers’ Benefit Plans.



     Section 7.7 Tax Returns and Filings, Payment of Taxes.




     (a) Sellers shall prepare or cause to be prepared all Tax Returns that Sellers are
required to file by applicable Law relating to the Acquired Assets and the operation of the
Business for all periods (i) ending on or before the Closing



49









 







Date or (ii) beginning on or
before and ending after the Closing Date (a “Straddle Period”). Purchaser shall prepare or
cause to be prepared all Tax Returns relating to the Acquired Assets for periods after the
Closing Date.




     (b) With respect to all real property Taxes, personal property Taxes, or similar ad
valorem obligations levied with respect to the Acquired Assets for any Straddle Period
(“Straddle Period Taxes”), whether imposed or assessed before or after the Closing Date,
the Liability for payment of each such Straddle Period Tax shall be prorated between
Purchaser and Sellers at the Closing Date based on 100% of the amount of such Straddle
Period Tax imposed for the prior taxable period. The portion of each such Straddle Period
Tax that is allocable to the Sellers shall be the product of (i) 100% of the amount of such
Tax for the prior taxable period and (ii) a fraction, the numerator of which is the number
of days in the Tax period ending on the Closing Date and the denominator of which is the
number of days in the entire Tax period. The portion of each such Straddle Period Tax that
is allocable to Purchaser shall be the product of (i) 100% of the amount
of such Tax for the prior taxable period and (ii) a fraction, the numerator of which
is the number of days in the Tax period remaining after the Closing Date and the
denominator of which is the number of days in the entire Tax period. At Closing, the
Purchase Price shall be adjusted to reflect the allocation of the Straddle Period Taxes as
provided in this Section.




     (c) Sellers and Purchaser shall furnish to each other upon request, as promptly as
practicable, such information and assistance relating to the Acquired Assets and the
Business (including access to Business Records) as is reasonably necessary for the filing
of all Tax Returns and other Tax filings, the making of any election related to Taxes, the
preparation for any audit by any Taxing authority, and the prosecution or defense of any
Claim or Legal Proceeding relating to any Tax Return. Sellers and Purchaser shall
cooperate with each other in the conduct of any audit or other proceeding related to Taxes.
Sellers and Purchaser shall provide timely notice to each other in writing of any pending
or threatened Tax audits, assessments or litigation with respect to the Acquired Assets or
the Business for any taxable period for which the other party may have Liability under this
Agreement.



     Section 7.8 Use of Trademarks . Except as specified on Schedule 7.8, following the Closing Date, (a) Sellers shall
not, and shall cause their Affiliates not to, use any name, domain name, mark, logo, trade name,
trademark or service mark transferred to Purchaser or any of the Sellers’ Marks containing
“ProxyMed,” MedAvant, or variation thereof or any mark confusingly similar thereto in any business
activity, and (b) Sellers shall, and shall cause their Affiliates to, change their corporate names
so that no such Seller’s Marks or other names or trademarks or any confusingly similar variation
thereof are not incorporated or used therein.



     Section 7.9 Facilities Leases for Excluded Facilities . It is acknowledged that certain items of tangible personal property included within the
Acquired Assets are to be



50









 







acquired by Purchaser under this Agreement may be located at the Florida
Facilities and the Jeffersonville Facility, which Facilities are among the Excluded Assets. To
facilitate Purchaser’s orderly removal of such Acquired Assets from such Facilities following the
Closing Date, during the period of fifteen (15) days following the Closing Date Sellers shall not,
and shall cause their Affiliates not to close or shutdown the Florida Facilities or the
Jeffersonville Facility. Upon the Closing Date and for a period of fifteen (15) days thereafter,
Sellers shall (a) provide or cause to be provided to Purchaser and to Purchaser’s authorized
representatives reasonable access during normal business hours to the Florida Facilities and the
Jeffersonville Facilities and (b) furnish as promptly as practicable to Purchaser and such
representatives such assistance as Purchaser may reasonably request in furtherance of the
Purchaser’s removal from the premises of such Facilities any Acquired Assets located thereat and
transferred to Purchaser under this Agreement.



ARTICLE VIII

CONDITIONS PRECEDENT




     Section 8.1 Conditions Precedent to Obligations of Sellers and Purchaser . The respective obligations of each party to effect the Contemplated Transactions shall be
subject to the absence, at the Closing Date, of any Law or Order of any Governmental Authority,
pending or threatened, that would materially and adversely alter, or prohibit, restrain, enjoin or
restrict the consummation of, the Contemplated Transactions.



     Section 8.2 Conditions Precedent to Obligation of Sellers . The obligation of Sellers to effect the Contemplated Transactions shall be subject to the
satisfaction at or prior to the Closing Date of the following additional conditions:




     (a) Purchaser shall have performed in all material respects its obligations under this
Agreement required to be performed by it at or prior to the Closing Date; the
representations and warranties of Purchaser contained in this Agreement that are qualified
as to materiality shall be true and correct in all respects and the representations and
warranties that are not so qualified shall be true and correct in all material respects, in
each case as of the Effective Date and as of the Closing Date as if made at and as of such
date; and Sellers shall have received a certificate of an authorized officer of Purchaser
as to the satisfaction of this condition;




     (b) Sellers shall have obtained all material Sellers’ Required Approvals;




     (c) The Bidding Procedures Order and the Sale Order shall have been entered by the
Bankruptcy Court and shall have become Final Orders; and




     (d) Purchaser shall have paid the Purchase Price in accordance with Section
2.5 and Section 3.3(a) and shall have delivered to Sellers the documents set
forth in Section 3.3.



51









 





     Section 8.3 Conditions Precedent to Obligation of Purchaser . The obligation of Purchaser to effect the Contemplated Transactions shall be subject to the
satisfaction at or prior to the Closing Date of the following conditions:




     (a) Sellers shall have performed in all material respects its obligations under this
Agreement required to be performed by it at or prior to the Closing Date; the
representations and warranties of Sellers contained in this Agreement that are qualified as
to materiality or as to Material Adverse Change shall be true and correct in all respects
and the representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case as of the
Effective Date and as of the Closing Date as if made at and as of such date; and Purchaser
shall have received a certificate of an authorized officer of Sellers as to the
satisfaction of this condition;




     (b) No material Permits shall have been revoked or, to the extent applicable, shall
have failed to have been transferred to Purchaser subject to no additional restrictions or
burdens on the permittee other than those which, in the aggregate, are immaterial;




     (c) Sellers shall have obtained all of the material Sellers’ Required Approvals;




     (d) The Bidding Procedures Order and the Sale Order shall have been entered by the
Bankruptcy Court in form and substance acceptable to Purchaser in its sole discretion, and
such Orders shall have become Final Orders




     (e) The Customer Incentive Programs Order shall have been entered by the Bankruptcy
Court in form and substance acceptable to Purchaser in its reasonable discretion and shall
have become a Final Order, and Sellers shall have paid and discharged all pre-Petition
Customer Obligations under the existing Customer Incentive Programs (as defined in the
Customer Incentive Programs Order);




     (f) Sellers shall have delivered to Purchaser the documents set forth in Section
3.2; and




     (g) There shall have been no Material Adverse Change since the Effective Date.



ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER




     Section 9.1 Termination by Mutual Consent . This Agreement may be terminated at any time prior to the Closing Date by mutual written
agreement of the parties.



52









 





     Section 9.2 Termination by Either Purchaser or Sellers. This Agreement may be terminated at
any time prior to the Closing Date by either Purchaser or Sellers if any Governmental Authority
shall have issued an Order or taken any other action permanently restraining, enjoining or
otherwise prohibiting the consummation of the Contemplated Transactions and either (i) thirty (30)
days shall have elapsed from the issuance of such Order or other action and such Order or other
action has not been removed or vacated, or (ii) such Order or other action shall have become final
and non-appealable.



     Section 9.3 Termination by Sellers . This Agreement may be terminated at any time prior to the Closing Date by Sellers as
follows:




     (a) if there has been a Material Breach by Purchaser;




     (b) if any condition precedent to the obligation of Sellers to effect the Contemplated
Transactions specified in Section 8.1 or Section 8.2 shall not have been
satisfied or waived and shall have become impossible to satisfy, unless the failure of such
condition to have been satisfied was caused primarily by a Material Breach by Sellers; or




     (c) if the Closing Date shall not have occurred on or before 5:00 p.m. Pacific time on
the Outside Date.



     Section 9.4 Termination by Purchaser . This Agreement may be terminated at any time prior to the Closing Date by Purchaser as
follows:




     (a) if the Petitions are not filed contemporaneously with the execution and delivery
of this Agreement;




     (b) if (i) a hearing before the Bankruptcy Court on the Bidding Procedures Order is
not held within 15 days of the Petition Date, (ii) no Bidding Procedures Order has been
entered by the Bankruptcy Court within 20 days of the Petition Date; (iii) any Bidding
Procedures Order is entered by the Bankruptcy Court setting a Bid Submission Deadline later
than 45 days after the Petition Date; (iv) the Auction has not been held within 50 days
after the Petition Date; or (v) if the Sale Order has not been entered by the Bankruptcy
Court within seven days Business Day after the Auction, unless, in each such case (i)
through (v) above, the failure of such action to be taken or completed, or such event to
have occurred, is caused primarily by a Material Breach by Purchaser;




     (c) if there has been a Material Breach by Sellers;




     (d) if the Senior Lender has not agreed in writing, on or before the earlier of the
date of the DIP Financing Agreement or the date of entry of the interim Order of the
Bankruptcy Court approving the DIP Financing Agreement, to subordinate its liens in right
of payment to Purchaser’s Claim for payment of the Transaction Expenses under Section
9.7;



53









 






     (e) If (i) any of the Sellers or any of their boards of directors determines to
pursue, (ii) any of the Sellers files any motion with the Bankruptcy Court seeking an Order
approving, or (iii) any of the Sellers files any Chapter 11 Plan involving, any Alternative
Transaction or Alternative Transactions;




     (f) if Sellers enter into a definitive agreement with a third party for an Alternative
Transaction;




     (g) if the Bankruptcy Court enters any Order approving any Alternative Transaction or
confirming any Chapter 11 Plan involving any Alternative Transaction;




     (h) if any condition precedent to the obligation of Purchaser to effect the
Contemplated Transactions specified in Section 8.1 or Section 8.3 shall not
have been satisfied or waived and shall have become impossible to satisfy, unless the
failure of such condition to have been satisfied was caused primarily by a Material Breach
by Purchaser; or




     (i) if the Closing Date shall not have occurred on or before 5:00 p.m. Pacific time on
the Outside Date.



     Section 9.5 Effect of Termination. In the event of termination of this Agreement pursuant to this Article IX, written
notice thereof shall as promptly as practicable be given to the other party and this Agreement
shall terminate and the Contemplated Transactions shall be abandoned, without further action by the
parties hereto. Upon termination of this Agreement, (a) except as provided in this Section 9.5
this Agreement shall cease to have any force or effect, (b) the parties to this Agreement shall not
have any Liability to each other, except for fraud occurring on or before the date of such
termination; provided, however, that if this Agreement is terminated by reason of (i) any Material
Breach hereof by the non-terminating party or (ii) any non-compliance by the non-terminating party
with its obligations under this Agreement, which non-compliance shall have been the cause of the
failure of one or more of the conditions to the terminating party’s obligations to effect the
Contemplated Transactions to have been satisfied, the terminating party’s right to pursue any
available remedies at law, subject to Section 10.13, will survive such termination unimpaired, and
(c) the parties under this Agreement shall cease to have any further obligations under this
Agreement except pursuant to Section 2.7, Section 6.3, Section 6.4,
Section 6.5, this Section 9.5, Section 9.6, Section 9.7,
Section 10.1(b), Section 10.5, Section 10.6, Section 10.10, and
Section 10.13 (as such obligations are affected by any defined terms in Section 1.1
relating thereto or any general principles of constructions set forth in Section 1.2,
Section 1.3 or Section 1.4), and (d) all filings, applications and other
submissions made pursuant to the Contemplated Transactions shall, to the extent practicable, be
withdrawn from the Government Authority or Person to which made.



     Section 9.6 Break-Up Fee.



54









 






     (a) Sellers agree and acknowledge that Purchaser’s negotiation and execution of this
Agreement have required a substantial investment of management time and a significant
commitment of financial and other resources by Purchaser, and that the negotiation and
execution of this Agreement have
provided value to Sellers. Therefore, if this Agreement is terminated (other than any
termination (i) by Purchaser not in accordance with this Agreement or at any time at which
Purchaser is in Material Breach or (ii) by Sellers in accordance with either (A)
Section 9.3(a), (B) Section 9.3(b), if the relevant condition precedent to
the obligation of Sellers that has not been satisfied or waived or that has become
impossible to satisfy either (x) is set forth in Section 8.2(a) or 8.2(d) or (y) has been
caused primarily by a Material Breach by Purchaser, or (C) Section 9.3(c), if the failure
of the Closing Date to have timely occurred has been caused primarily by a Material Breach
by Purchaser), and if thereafter any Break-Up Fee Event occurs, and Sellers shall pay
Purchaser an amount equal to $350,000 (the “Break-Up Fee”).




     (b) “Break-Up Fee Event” means the consummation of any Alternative Transaction, or the
confirmation of any Chapter 11 Plan, within 180 days of the termination of this Agreement.




     (c) Sellers shall pay the Break-Up Fee on the earlier of (a) the date of the
consummation of an Alternative Transaction or (b) within two (2) Business Days of the
confirmation by the Bankruptcy Court of any Chapter 11 Plan; so long as such Alternative
Transaction is consummated or such Chapter 11 Plan is confirmed within 180 days after the
date of termination. Sellers’ obligation to pay the Break-Up Fee shall constitute and be
treated as a superpriority administrative expense of Sellers under Sections 503(b) and
507(a)(1) of the Bankruptcy Code and paid in cash immediately when due.



     Section 9.7 Expense Reimbursement. Sellers shall reimburse Purchaser for all reasonable Transaction Expenses incurred by
Purchaser in excess of the Initial Expense Payment, to the extent not previously reimbursed, but
not to exceed $150,000 of such excess, if this Agreement is terminated (a) by Purchaser in
accordance with this Agreement, (b) by Sellers in accordance with Section 9.3(b) if the
relevant condition precedent to the obligation of Sellers that has not been satisfied or waived or
that has become impossible to satisfy has not been caused primarily by a Material Breach by
Purchaser, or (c) by Sellers in accordance with Section 9.3(c), unless the failure of the
Closing Date to have timely occurred has been caused primarily by a Material Breach by Purchaser.
Such reimbursement shall be paid by Sellers promptly upon Purchaser’s request and submission by
Purchaser to Sellers of summary documentation (redacted as necessary in Purchaser’s discretion to
preserve any attorney-client communication, work product or other privilege) of the Transaction
Expenses in respect of which reimbursement is sought.



55









 





ARTICLE X

GENERAL PROVISIONS




     Section 10.1 Survival of Representations, Warranties, Agreements and Covenants.




     (a) The representations and warranties in this Agreement or in any other instrument
delivered pursuant to this Agreement shall not survive the Closing.




     (b) Except as otherwise expressly provided in this Agreement, the agreements and
covenants of the parties in this Agreement shall survive the Closing and remain in full
force and effect without time limit in accordance with the terms thereof.



     Section 10.2 Notices . All notices, Claims, demands and other communications required or permitted hereunder shall
be in writing and shall be deemed given (i) if personally delivered, (ii) if sent by facsimile
transmission, (iii) if sent by a nationally recognized courier service, or (iv) if sent by
registered or certified mail (postage prepaid, return receipt requested), addressed to the
respective parties at the following addresses (or such other address for a party as shall be
specified by like notice):




	 	(a)	 	If to Purchaser, to:
	 
	 	 	 	MHC Acquisition Corp.

c/o Marlin Equity Partners, LLC

2121 Rosecrans Avenue, Suite 4325

El Segundo, CA 90245

Attn: Mr. George Kase

Fax: 310 364-0110






     with a copy to:




	 	 	 	Pachulski Stang Ziehl & Jones LLP

10100 Santa Monica Boulevard

Eleventh Floor

Los Angeles, CA 90067

Attn: Jeffrey N. Pomerantz, Esq.

Fax: 310 201-0760
	 
	 	(b)	 	If to Sellers, to:
	 
	 	 	 	ProxyMed, Inc. dba MedAvant Healthcare Solutions




56









 






	 	 	 	1854 Shackleford Court

Suite 200

Norcross, Georgia 30093-2924

Attn: Mr. Peter Fleming

Fax: 404 877-3324






     with a copy to:




	 	 	 	Foley & Lardner LLP

90 Park Avenue

New York, NY 10016

Attn: Michael Richman, Esq.

Fax: 212 687-2329





     Any such notice, Claim, demand or other communication shall be deemed to have been received
(i) when delivered, if personally delivered or sent by fax, (ii) on the next Business Day after
dispatch if sent by nationally recognized courier service, and (iii) on the fifth Business Day
following the date the piece of mail containing such notice, Claim, demand or other communication
is posted, if sent by mail.



     Section 10.3 Entire Agreement. This Agreement (including the Exhibits, the Schedules, and the other documents and
instruments referred to herein) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, between the parties, with respect to the
subject matter hereof. Notwithstanding the foregoing, nothing contained in this Agreement shall be
deemed to cancel, release, terminate, restrict, limit or modify any obligations of Purchaser under
its Confidentiality Agreement with Sellers dated August 13, 2007, which obligations shall continue
in full force and effect until the earlier of (a) the expiration thereof under such agreement or
applicable Law or (b) the Closing, at which time such obligations shall terminate.



     Section 10.4 No Assignment . This Agreement shall be binding upon and shall inure to the benefit of and be enforceable
by the parties and its respective successors and permitted assigns. Neither the rights nor the
obligations of either party may be assigned or delegated, whether by operation of Law or otherwise,
without the prior written Consent of the other party, except that Purchaser may assign any or all
of its rights (but not its obligations, except as specifically set forth in this Agreement)
hereunder to any of its Affiliates. Notwithstanding any provision to the contrary in this
Agreement, Purchaser may collaterally assign any or all of its rights (but not its obligations,
except as specifically set forth in this Agreement) hereunder to a lender of Purchaser.



     Section 10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA WITHOUT REGARD TO THE RULES OF CONFLICT OF LAWS OF THE STATE OF
CALIFORNIA OR ANY OTHER



57









 







JURISDICTION AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE.



     Section 10.6 CONSENT TO JURISDICTION . THE PARTIES AGREE THAT THE BANKRUPTCY COURT SHALL BE THE EXCLUSIVE FORUM FOR ENFORCEMENT OF
THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS AND (ONLY FOR THE LIMITED PURPOSE OF SUCH
ENFORCEMENT) SUBMIT TO THE JURISDICTION THEREOF; PROVIDED THAT IF THE BANKRUPTCY COURT DETERMINES
THAT IT DOES NOT HAVE SUBJECT MATTER JURISDICTION OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THEN EACH PARTY (A) AGREES THAT ALL SUCH ACTIONS OR PROCEEDINGS SHALL
BE HEARD AND DETERMINED IN A FEDERAL COURT OF THE UNITED STATES SITTING IN THE CITY OF LOS ANGELES,
(B) IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING, (C)
CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION
THAT SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE VENUE OR JURISDICTION OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT, AND (D) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS AS PROVIDED
IN SECTION 10.2 (PROVIDED THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY CALIFORNIA LAW).



     Section 10.7 Amendment. This Agreement may not be amended except by an instrument in writing signed by or on behalf
of both parties.



     Section 10.8 Waiver.




     (a) At any time prior to the Closing Date, a party may (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained herein or
in any other document delivered pursuant hereto, and (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by or on behalf of the party against whom such extension or
waiver is to be effective.




     (b) No failure or delay by either 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 any
other right, power or privilege.



58









 





     Section 10.9 Severability; Validity; Parties in Interest. If any provision of this Agreement or the application thereof to any Person or circumstance
is held invalid or unenforceable, the remainder of this Agreement, and the application of such
provision to other Persons or circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable. Nothing in this Agreement, express or
implied, is intended to confer upon any Person not a party to this Agreement any rights or remedies
of any nature whatsoever under or by reason of this Agreement.



     Section 10.10 Enforcement of Agreement. The parties agree that irreparable damage would occur in the event that any provision of
this Agreement was not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to all other remedies available at Law or in equity.



     Section 10.11 Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, each of which shall be deemed
to be an original but all of which shall constitute one and the same agreement. This Agreement
shall become effective when either party shall have received a counterpart thereof signed by the
other party.



     Section 10.12 Headings. The Section title and headings in this Agreement are and shall be without substantive
meaning or context of any kind whatsoever and are for convenience of reference only.



     Section 10.13 Liquidated Damages as Sole Remedy of Sellers.



59









 






     (a) THE PARTIES ACKNOWLEDGE THAT SELLERS’ ACTUAL DAMAGES IN THE EVENT THAT THE
CONTEMPLATED TRANSACTIONS ARE NOT CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE
TO DETERMINE. THEREFORE, BY SEPARATELY EXECUTING THIS SECTION 10.13 BELOW, THE
PARTIES ACKNOWLEDGE THAT THE AMOUNT OF THE DEPOSIT THAT IS THE SUBJECT OF SECTION 2.6 OF
THIS AGREEMENT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE
OF THE SELLERS’ DAMAGES, AND AS THE SELLERS’ SOLE AND EXCLUSIVE REMEDY AGAINST THE
PURCHASER (OTHER THAN FOR INTENTIONAL MISREPRESENTATION OR FRAUD), WHETHER AT LAW OR IN
EQUITY, FOR ANY LIABILITY UNDER THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO,
INCLUDING THE FAILURE OF THE PURCHASER TO PERFORM ANY OF ITS OBLIGATIONS UNDER THIS
AGREEMENT OR ANY OF THE EXHIBITS OR SCHEDULES HERETO.




     (b) BY SEPARATELY EXECUTING THIS 10.13 BELOW THE PURCHASER AND SELLERS ACKNOWLEDGE
THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE PROVISIONS COVERING LIQUIDATED DAMAGES, AND
THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS
LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS EXECUTED.



	 	 	 	 	 
	     SELLERS:	 	 	 	 
	 	 	 

	 	 






	 	 	 	 	 
	     PURCHASER:	 	 	 	 
	 	 	 	 	 





60









 






     Section 10.14 Liquidated Damages as Sole Remedy of Purchaser.




     (a) THE PARTIES ACKNOWLEDGE THAT PURCHASER’S ACTUAL DAMAGES IN THE EVENT THAT THE
CONTEMPLATED TRANSACTIONS ARE NOT CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE
TO DETERMINE. THEREFORE, BY SEPARATELY EXECUTING THIS SECTION 10.14 BELOW, THE
PARTIES ACKNOWLEDGE THAT THE AMOUNT OF THE EXPENSE REIMBURSEMENT THE SUBJECT OF SECTION 9.7
OF THIS AGREEMENT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE
ESTIMATE OF THE PURCHASER’S DAMAGES, AND AS THE PURCHASER’S SOLE AND EXCLUSIVE REMEDY
(OTHER THAN FOR INTENTIONAL MISREPRESENTATION OR FRAUD) AGAINST THE PURCHASER, WHETHER AT
LAW OR IN EQUITY, FOR ANY LIABILITY UNDER THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES
HERETO, INCLUDING THE FAILURE OF THE SELLERS TO PERFORM ANY OF THEIR OBLIGATIONS UNDER THIS
AGREEMENT OR ANY OF THE EXHIBITS OR SCHEDULES HERETO.




     (b) BY SEPARATELY EXECUTING THIS 10.14 BELOW THE PURCHASER AND SELLERS ACKNOWLEDGE
THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE PROVISIONS COVERING LIQUIDATED DAMAGES, AND
THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS
LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS EXECUTED.



	 	 	 	 	 
	     SELLERS:	 	 	 	 
	 	 	 

	 	 






	 	 	 	 	 
	     PURCHASER:	 	 	 	 
	 	 	 	 	 





61









 





     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on their behalf by
their respective officers thereunto duly authorized, as of the date first above written.



	 	 	 	 	 	 	 
	 	 	SELLERS:	 	 
	 
	 	 	 	 	 	 
	 	 	PROXYMED, INC., dba
MEDAVANT HEALTHCARE SOLUTIONS,
A Florida corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/
Peter E. Fleming, III
	 	 
	 

	 	Name:
	 	Peter E. Fleming, III
	 	 
	 

	 	Title:	 	Interim Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	PROXYMED TRANSACTION SERVICES, INC.

A Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/
Peter E. Fleming, III
	 	 
	 

	 	Name:
	 	Peter E. Fleming, III
	 	 
	 

	 	Title:	 	Interim Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	 	 	MHC ACQUISITION CORP.,

A Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/
George W. Kase
	 	 
	 

	 	Name:
	 	George W. Kase
	 	 
	 

	 	Title:	 	President and Secretary	 	 






[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]




 









 






EXHIBIT INDEX





	 	 	 
	Exhibit A

	 	Bidding Procedures Order
	Exhibit B

	 	Sale Order
	Exhibit C

	 	Assignment and Assumption of Real Property Lease
	Exhibit D

	 	Assignment and Assumption of Section 365 Contracts
	Exhibit E

	 	Bill of Sale
	Exhibit F

	 	Assignment of Trademarks
	Exhibit G

	 	Assignment of Copyrights
	Exhibit H

	 	Assignment and Acceptance of Intangible Property
	Exhibit I

	 	Assumption Agreement
	Exhibit J

	 	General Release
	Exhibit K

	 	Management Incentive Plan






SCHEDULE INDEX




	 	 	 
	Schedule 1.1

	 	Cure Amounts
	Schedule 2.1(a)

	 	Acquired Facilities
	Schedule 2.1(b)

	 	Tangible Personal Property
	Schedule 2.1(e)

	 	Acquired Facilities Leases
	Schedule 2.1(f)

	 	Acquired Personal Property Leases
	Schedule 2.1(h)

	 	Non-Customer Contracts
	Schedule 4.4

	 	Sellers’ Required Approvals
	Schedule 4.6

	 	Sellers’ Financial Statements
	Schedule 4.8

	 	Legal Proceedings
	Schedule 4.11

	 	Permits
	Schedule 4.13

	 	Acquired Assets Located Other Than At Facilities
	Schedule 4.14(a)

	 	Facilities
	Schedule 4.14(b)

	 	Facilities Leases
	Schedule 4.14(c)

	 	Defaults under Contracts
	Schedule 4.16(a)

	 	Customer Contracts
	Schedule 4.16(b)

	 	Non-Customer Contracts
	Schedule 4.16(c)

	 	Defaults under Contracts
	Schedule 4.17(b)

	 	Intellectual Property—Marks
	Schedule 4.17(c)

	 	Intellectual Property—Patents
	Schedule 4.17(d)

	 	Intellectual Property—Copyrights
	Schedule 4.17(e)

	 	Intellectual Property—Trade Secrets
	Schedule 4.17(f)

	 	Intellectual Property—Software
	Schedule 4.17(g)

	 	Intellectual Property—Software Documentation
	Schedule 4.17(h)

	 	Intellectual Property—Inbound License Agreements
	Schedule 4.17(i)

	 	Intellectual Property—Sufficiency
	Schedule 4.17(j)

	 	Intellectual Property—Performance of Software
	Schedule 4.17(k)(A)

	 	Intellectual Property—Lack of Documents
	Schedule 4.17(k)(B)

	 	Intellectual Property—IP Required from Former Employment
	Schedule 4.17(k)(C)

	 	Intellectual Property—Participants in Development
	Schedule 4.17(k)(D)

	 	Intellectual Property—Patent Inventors
	Schedule 4.17(m)

	 	Exceptions to Disaster Recovery Plans
	Schedule 4.17(n)

	 	Intellectual Property—Assignment
	Schedule 4.18(a)

	 	Employees
	Schedule 4.18(b)

	 	M&A Qualified Beneficiaries
	Schedule 4.19

	 	Insurance
	Schedule 4.20

	 	Customers
	Schedule 4.21

	 	Assigned Deposits
	Schedule 6.1

	 	Sellers’ Benefit Plans
	Schedule 7.8

	 	Exceptions to Trademark Use